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EXHIBIT 10.3
CREDIT AND SECURITY AGREEMENT
THIS AGREEMENT is made as of April 8, 1994, by and between FBS
BUSINESS FINANCE CORPORATION, a Delaware corporation (the "Lender"), and
PRIMEGG, LTD., a Delaware corporation (the "Borrower").
In consideration of the mutual agreements herein contained, the
parties hereto agree as follows:
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS
1.1 DEFINITIONS. In addition to terms defined elsewhere in this
Agreement or any Supplement, Exhibit or Schedule hereto, the following terms
shall have the following respective meanings (and such meanings shall be
equally applicable to both the singular and plural forms of the terms defined,
as the context may require):
"Account Debtor": Any Person who is or who may become obligated to the
Borrower under, with respect to, or on account of an Account Receivable,
General Intangible or other Collateral.
"Account Receivable": Any account of the Borrower and any other right
of the Borrower to payment for goods sold or leased or for services rendered,
whether or not evidenced by an instrument or chattel paper and whether or not
yet earned by performance.
"Adverse Event": The occurrence of any event that could have a
material adverse effect on the business, operations, property, assets or
condition (financial or otherwise) of the Borrower or on the ability of the
Borrower or any other Obligor to perform its obligations under the Loan
Documents.
"Affiliate" means any Person which directly or indirectly through one
or more intermediaries controls, or is controlled by, or is under common
control with, the Lender, including, without limitation, FBNA. The term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through ownership of stock, by contract or otherwise.
"Agreement": This Credit and Security Agreement, as it may be
amended, modified, supplemented, restated or replaced from time to time.
"Application": An application by the Borrower, in a form and
containing terms and provisions acceptable to the Lender, for the issuance by
the Lender, or any Affiliate, of a Letter of Credit.
"Assignment of Life Insurance": An Assignment of Life Insurance Policy
as Collateral, substantially in the form set forth as Exhibit A, of the
Borrower in favor of the Lender.
"Attorneys' Fees": The value of the services (and costs, charges and
expenses related thereto) of the attorneys employed by the Lender
(including, without limitation, attorneys and paralegals who are employees of
the Lender or any Affiliate) from time to time (a) in connection with the
negotiation, preparation, execution, delivery, administration and
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enforcement of the Loan Documents, (b) to prepare documentation related to the
Loans and other Obligations incurred hereunder, (c) to represent the Lender in
any litigation, contest, dispute, suit or proceeding or to commence, defend or
intervene in any litigation contest, dispute, suit or proceeding or to file a
petition, complaint, answer, motion or other pleading, or to take any other
action in or with respect to, any litigation, contest, dispute, suit or
proceeding (whether instituted by the Lender, the Borrower or any other Person
and whether in bankruptcy or otherwise) in any way or respect relating to the
Collateral, any Third Party Collateral, the Loan Documents, or the Borrower's or
any other Obligor's or any Subsidiary's affairs, (d) to protect, collect, lease,
sell, take possession of, or liquidate any of the Collateral or any Third Party
Collateral, (v) to attempt to enforce any security interest in any of the
Collateral or any Third Party Collateral or to give any advice with respect to
such enforcement, and (e) to enforce any of the Lender's rights to collect any
of the Obligations.
"Average Maturity Period": The weighted average time to scheduled
maturity of the total dollar amount of principal being prepaid at any one time.
Average Maturity Period shall be computed by (a) multiplying the dollar amount
of each installment of principal prepaid by the number of days until the
scheduled maturity of that installment, (b) adding together the resulting
products, and (c) dividing the resulting sum by the total dollar amount of
principal being prepaid.
"Borrowing Base": The term "Borrowing Base" shall have the meaning
given such term in Supplement A.
"Borrowing Base Certificate": The term "Borrowing Base Certificate"
shall have the meaning given such term in Section 2.5(c).
"Business Day": Any day (other than a Saturday, Sunday or legal
holiday in the State of Minnesota) on which national banks are permitted to be
open in Minneapolis, Minnesota.
"Capital Base": At any determination date, the total of (a) the sum of
(i) all assets appearing on a consolidated balance sheet of the
Borrower at such date, prepared in accordance with GAAP, after deducting all
proper reserves (including reserves for depreciation, obsolescence and
amortization), plus (ii) Subordinated Debt; minus (b) all liabilities which in
accordance with GAAP would be included on the liability side of a consolidated
balance sheet
"Capital Expenditure": Any amount debited to the fixed asset account
on the consolidated balance sheet of the Borrower in respect of (a) the
acquisition (including, without limitation, acquisition by entry into a
Capitalized Lease), construction, improvement, replacement or betterment of
land, buildings, machinery, equipment or of any other fixed assets or
leaseholds, and (b) to the extent related to and not included in clause (a),
materials, contract labor and direct labor (excluding expenditures properly
chargeable to repairs or maintenance in accordance with GAAP).
"Capitalized Lease": Any lease which is or should be capitalized on
the books of the lessee in accordance with GAAP.
"Cash Flow Coverage Ratio": For any period, the ratio of (a) the
Borrower's EBITDA to (b) the sum of (i) consolidated interest expense
(including, without limitation, imputed interest expense on Capitalized
Leases), plus (ii) mandatory principal payments on Long Term Debt,
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plus (iii) Capital Expenditures which have not been financed using Long Term
Debt, plus (iv) income taxes actually paid during such period.
"Closing Date": The date on which all of the conditions precedent to
the initial Loans are satisfied.
"Code": The Internal Revenue Code of 1986, as amended, or any
successor statute, together with the regulations thereunder.
"Collateral": The term "Collateral" shall have the meaning given such
term in Section 3.1.
"Collateral Account": The term "Collateral Account" shall have the
meaning given such term in Section 3.2(d).
"Collateral Letter of Credit": The term "Collateral Letter of Credit"
shall have the meaning given such term in Section 3.5.
"Committed Inventory": Finished Goods Inventory of the Borrower which
an Account Debtor has agreed in writing to purchase from the Borrower.
"Credit": The facility established under this Agreement pursuant to
which the Lender will make Revolving Loans and the Term Loans to the Borrower
or issue, or cause any Affiliate to issue, Letters of Credit for the account of
the Borrower.
"Default Rate": With respect to a Loan, the rate of interest which is
applicable to such Loan after any amount thereof is not paid when due, as
determined pursuant to Supplement A.
"Disbursement Account": The term "Disbursement Account" shall
have the meaning given such term in Section 2.3(b).
"EBITDA": For any period, the consolidated net income of the Borrower
and the Subsidiaries before provision for income taxes, interest expense
(including, without limitation, implicit interest expense on Capitalized
Leases), depreciation, amortization and other non-cash expenses or charges, all
as determined in accordance with GAAP, excluding therefrom (to the
extent included): (a) non-operating gains (including, without limitation,
extraordinary or nonrecurring gains, gains from discontinuance of
operations and gains arising from the sale of assets other than Inventory)
during the applicable period; and (b) similar non-operating losses during such
period.
"Eligible Account Receivable": An Account Receivable owing to the
Borrower which meets the following requirements:
(a) it is genuine and in all respects what it purports to be;
(b) it arises from either (i) the performance of services by
the Borrower, which services have been fully performed and, if
applicable, acknowledged and/or accepted by the Account Debtor with
respect thereto; or (ii) the sale or lease of goods by the Borrower
and (A) such goods comply with such Account Debtor's specifications
(if any) and have been shipped to, or delivered to and accepted by,
such Account Debtor, (B)
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the Borrower has possession of, or has delivered to the Lender,
at the Lender's request, shipping and delivery receipts evidencing such
shipment, delivery and acceptance, and (C) such goods have not been
returned to the Borrower;
(c) it (i) is evidenced by an invoice rendered to the Account
Debtor with respect thereto which (A) is dated not earlier than the
date of shipment or performance and (B) has payment terms not
unacceptable to the Lender; and (ii) meets the Eligible Account
Receivable requirements set forth in Supplement A;
(d) it is not subject to any assignment, claim or Lien other
than (i) a Lien in favor of the Lender and (ii) Liens consented to by
the Lender in writing;
(e) it is a valid, legally enforceable and unconditional
obligation of the Account Debtor with respect thereto and is not
subject to setoff, counterclaim, credit or allowance (except any
credit or allowance which has been deducted in computing the net
amount of the applicable invoice as shown in the original schedule or
Borrowing Base Certificate furnished to the Lender identifying or
including such Account Receivable) or adjustment by the Account Debtor
with respect thereto, or to any claim by such Account Debtor denying
liability thereunder in whole or in part, and such Account Debtor has
not refused to accept any of the goods or services which are the
subject of such Account Receivable or offered or attempted to return
any of such goods;
(f) there are no proceedings or actions which are then
threatened or pending against the Account Debtor with respect thereto
or to which such Account Debtor is a party which might result in any
material adverse change in such Account Debtor's financial condition
or in its ability to pay any Account Receivable in full when due;
(g) it does not arise out of a contract or order which, by its
terms, forbids, restricts or makes void or unenforceable the
assignment by the Borrower to the Lender of such Account Receivable;
(h) the Account Debtor with respect thereto is not a
Subsidiary, Related Party or Obligor, or a director, officer, employee
or agent of the Borrower, a Subsidiary, Related Party or Obligor;
(i) the Account Debtor with respect thereto is a resident or
citizen of and is located within the United States of America or,
provided such Account Debtor is acceptable to the Lender in its sole
discretion, Canada, unless the sale of goods giving rise to such
Account Receivable is on letter of credit, banker's acceptance or
other letter of credit support terms satisfactory to the Lender;
j) it does not arise from a "sale on approval," "sale or
return" or "consignment," nor is it subject to any other repurchase or
return agreement;
(k) it is not an Account Receivable with respect to which
possession and/or control of the goods sold giving rise thereto is
held, maintained or retained by the Borrower, any Subsidiary, Related
Party or Obligor (or by any agent or custodian of the Borrower, any
Subsidiary, Related Party or Obligor) for the account of or subject to
further and/or future direction from the Account Debtor with respect
thereto;
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(l) it does not, in any way, fail to meet or violate any
warranty, representation or covenant contained in the Loan Documents
relating directly or indirectly to the Borrower's Accounts Receivable;
(m) the Account Debtor with respect thereto is not located in
the States of Indiana, New Jersey or Minnesota, provided, however,
that such restriction shall not apply if (i) the Borrower has filed
and has effective a Notice of Business Activities Report with the
appropriate office or agency of the States of Indiana, New Jersey or
Minnesota, as applicable, for the then current year or (ii) the
Borrower is exempt from the filing of such report;
(n) it arises in the ordinary course of the Borrower's
business;
(o) if the Account Debtor with respect thereto is the United
States of America or any department, agency or instrumentality
thereof, the Borrower has assigned its right to payment of such
Account Receivable to the Lender pursuant to the Assignment of Claims
Act of 1940 as amended;
(p) if the Lender, in its sole and absolute discretion, has
established a credit limit for the Account Debtor with respect
thereto, the aggregate dollar amount of Accounts Receivable due from
such Account Debtor, including such Account Receivable, does not
exceed such credit limit; and
(q) if it is evidenced by chattel paper or instruments, (i) the
Lender shall have specifically agreed to include such Account
Receivable as an Eligible Account Receivable, (ii) only payments then
due and payable under such chattel paper or instrument shall be
included as an Eligible Account Receivable and (iii) the originals of
such chattel paper or instruments have been assigned and delivered to
the Lender in a manner satisfactory to the Lender.
An Account Receivable which is at any time an Eligible Account Receivable but
which subsequently fails to meet any of the foregoing requirements shall
forthwith cease to be an Eligible Account Receivable. Further, with respect to
any Account Receivable, if the Lender at any time or times hereafter
determines, in its sole and absolute discretion, that the prospect of payment
or performance by the Account Debtor with respect thereto is or will be
impaired for any reason whatsoever, notwithstanding anything to the contrary
contained above, such Account Receivable shall forthwith cease to be an
Eligible Account Receivable.
"Eligible Committed Inventory": Committed Inventory of the Borrower
with respect to which the Account Debtor has been approved by the Lender, in
its sole and absolute discretion, and the Account Receivable arising therefrom
would otherwise constitute an Eligible Account Receivable. Further, with
respect to any Committed Inventory, if the Lender at any time or times
hereafter determines, in its sole and absolute discretion, that the prospect of
payment or performance by the Account Debtor with respect thereto is or will be
impaired for any reason whatsoever, notwithstanding anything to the contrary
contained herein, such Committed Inventory shall forthwith cease to be Eligible
Committed Inventory.
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"Eligible Inventory": Inventory of the Borrower which meets the
following requirements:
(a) it is owned by the Borrower and is not subject to any prior
assignment, claim or Lien other than (i) a Lien in favor of the Lender
and (ii) Liens consented to by the Lender in writing;
(b) if held for sale or lease or furnishing under contracts of
service, it is (except as the Lender may otherwise consent in writing)
new and unused;
(c) except as the Lender may otherwise consent, it is not
stored with a bailee, warehouseman or similar party; if so stored with
the Lender's consent, such bailee, warehouseman or similar party has
issued and delivered to the Lender, in form and substance acceptable
to the Lender, such documents and agreements as the Lender may
require, including, without limitation, warehouse receipts therefor in
the Lender's name;
(d) the Lender has determined, in its sole and absolute
discretion, that it is not unacceptable due to age, type, category,
quality and/or quantity;
(e) it is not held by the Borrower on "consignment" and is not
subject to any other repurchase or return agreement;
(f) it complies with all standards imposed by any governmental
agency having regulatory authority over such goods and/or their use,
manufacture or sale;
(g) it does not, in any way, fail to meet or violate any
warranty, representation or covenant contained in the Loan Documents
relating directly or indirectly to the Borrower's Inventory; and
(h) it satisfies the Eligible Inventory requirements, if any,
set forth in Supplement A.
Inventory of the Borrower which is at any time Eligible Inventory but which
subsequently fails to meet any of the foregoing requirements shall forthwith
cease to be Eligible Inventory.
"Environmental Laws": The Resource Conservation and Recovery Act of
1987, the Comprehensive Environmental Response, Compensation and Liability Act,
any so-called "Superfund" or "Superlien" law, the Toxic Substances Control Act,
and any other federal, state or local statue, law, ordinance, code, rule,
regulation, order or decree regulating, relating to, or imposing liability or
standards of conduct concerning any Hazardous Materials or other hazardous,
toxic or dangerous waste, substance or constituent, or other substance, whether
solid, liquid or gas, as now or at any time hereafter in effect.
"Environmental Lien": A Lien in favor of any governmental entity for
(a) any liability under any Environmental Law, or (b) damages arising from or
costs incurred by such governmental entity in response to a spillage, disposal,
or release into the environment of any Hazardous Material or other hazardous,
toxic or dangerous waste, substance or constituent, or other substance.
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"Equipment": All equipment of the Borrower of every description,
including, without limitation, fixtures, furniture, vehicles and trade
fixtures, together with any and all accessions, parts and equipment attached
thereto or used in connection therewith, and any substitutions therefor and
replacements thereof.
"ERISA": The Employee Retirement Income Security Act of 1974, as
amended, or any successor statute, together with the regulations thereunder.
"ERISA Affiliate": Any trade or business (whether or not incorporated)
that is a member of a group of which the Borrower is a member and which
is treated as a single employer under Section 414 of the Code.
"Event of Default": The term "Event of Default" shall have the meaning
given such term in Section 7.1.
"FBNA": First Bank National Association, a national banking
association having its offices at First Bank Place, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇.
"Federal Reserve Board": The Board of Governors of the Federal Reserve
System or any successor thereto.
"Finished Goods Inventory": Inventory of the Borrower which consists
of finished goods.
"Fixed Rate": A rate per annum equal to the sum of (a) the yield
(converted as necessary to the equivalent semi-annual compound rate) on U.S.
Treasury Securities having a maturity date closest to the Termination Date, as
published by The Wall Street Journal (or, if not so published, as determined by
the Lender by using the average quotes obtained by the Lender from three
primary dealers that market U.S. Treasury Securities on the secondary market);
plus (b) the amount by which the Lender's cost of funds exceeded the
aforementioned yield as of the day of the establishment of the Fixed Rate.
"Fixed Rate Loan": Any Loan which bears interest from time to time
with reference to the Fixed Rate.
"GAAP": Generally accepted accounting principles promulgated by the
Financial Accounting Standards Board, as applied in the preparation of the
audited financial statement of the Borrower referred to in Section 4.6.
"General Intangibles": All of the Borrower's intangible personal
property including things in action, causes of action and all other personal
property of the Borrower of every kind and nature (other than goods, accounts,
chattel paper, documents, instruments and money) including, without limitation,
corporate or other business records, inventions, designs, patents, patent
applications, trademarks, trademark applications, trade names, trade secrets,
goodwill, copyrights, registrations, licenses, franchises, customer lists, tax
refund claims, claims against carriers and shippers, guarantee claims, security
interests, security deposits or other security held by or granted to the
Borrower to secure payment by an Account Debtor of any of the Accounts
Receivable, any other rights to payment, including, without limitation, rights
to reimbursement or indemnification, and any other rights of whatsoever nature.
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"Government Yield": As of any date of determination, the yield
(converted as necessary to the equivalent semi-annual compound rate) on
U.S. Treasury Securities having a maturity date closest to the Average
Maturity Period, as published by The Wall Street Journal (or, if not so
published, as determined by the Lender by using the average quotes obtained by
the Lender from three primary dealers that market U.S. Treasury Securities on
the secondary market).
"Guarantor": ▇▇▇▇ ▇. ▇▇▇▇▇▇, individually.
"Guaranty": A Guaranty, substantially in the form set forth as Exhibit
B, of the Guarantor in favor of the Lender.
"Hazardous Materials": Any hazardous substance or pollutant or
contaminant defined as such in (or for the purposes of) any Environmental Law
including, without limitation, petroleum, including crude oil or any fraction
thereof which is liquid at standard conditions of temperature or pressure (60
degrees fahrenheit and 14.7 pounds per square inch absolute), any radioactive
material, including any source, special nuclear or by-product material as
defined at 42 U.S.C. section 2011 et. seq., as amended or hereafter amended,
and asbestos in any form or condition.
"Indebtedness": Without duplication, all obligations, contingent or
otherwise, which in accordance with GAAP should be classified upon the obligors
balance sheet as liabilities, but in any event including the following (whether
or not they should be classified as liabilities upon such balance sheet): (a)
any obligation secured by any mortgage, pledge, security interest, lien, charge
or other encumbrance existing on property owned or acquired subject thereto,
whether or not such obligation shall have been assumed and whether or not such
obligation is the obligation of the owner or another party; (b) any obligation
on account of deposits or advances; (c) any obligation for the deferred
purchase price of any property or services, except accounts payable arising in
the ordinary course of business; (d) any obligation as lessee under any
Capitalized Lease; (e) any guaranty, endorsement or other contingent obligation
in respect to Indebtedness of others; and (f) any undertaking or agreement to
reimburse or indemnify issuers of letters of credit. For all purposes of this
Agreement, the Indebtedness of any Person shall include the Indebtedness of any
partnership or joint venture in which such Person is a general partner or a
joint venturer.
"Indemnified Liabilities": The term "Indemnified Liabilities" shall
have the meaning given such term in Section 10.2.
"Indemnitees": The term "Indemnitees" shall have the meaning given
such term in Section 10.2.
"Issuing Bank": For purposes of the original Collateral Letter of
Credit, Bank Leumi LeIsrael, and for purposes of any substititute Collateral
Letter of Credit, such other financial institution as shall be satisfactory to
the Lender in its sole and absolute discretion.
"Interest Differential": As of the date of any full or partial
prepayment, the rate of interest payable on Term Loan A minus the sum
of (a) the Government Yield as of the date of prepayment plus (b) the amount by
which the Lender's cost of funds exceeded the Government Yield as of the day of
the establishment of the Fixed Rate for the Loan.
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"Inventory": Any and all of the Borrower's goods, including, without
limitation, goods in transit, wheresoever located which are or may at any time
be leased by the Borrower to a lessee, held for sale or lease, furnished under
any contract of service or held as raw materials, work in process, or supplies
or materials used or consumed in the Borrower's business, or which are held for
use in connection with the manufacture, packing, shipping, advertising, selling
or finishing of such goods, and all goods, the sale or other disposition of
which has given rise to an Account Receivable, which are returned to and/or
repossessed and/or stopped in transit by the Borrower or the Lender, or at any
time hereafter in the possession or under the control of the Borrower or the
Lender, or any agent or bailee of either thereof, and all documents of title or
other documents representing the same.
"Investment": The acquisition, purchase, making or holding of any
stock or other security, any loan, advance, contribution to capital, extension
of credit (except for trade and customer accounts receivable for inventory sold
or services rendered in the ordinary course of business and payable in
accordance with customary trade terms), any acquisitions of real and personal
property (other than real and personal property acquired in the ordinary course
of business) and any purchase or commitment or option to purchase stock or
other debt or equity securities of, or any interest in, another Person or any
integral part of any business or the assets comprising such business or part
thereof.
"L/C Draft": A draft drawn on the Lender, or any Affiliate, pursuant
to a Letter of Credit.
"Letter of Credit": A letter of credit issued by the Lender, or any
Affiliate, on the Application of the Borrower.
"Letter of Credit Obligations": An amount equal to the aggregate of
the original face amounts of all Letters of Credit minus the sum of (a)
the amount of any reduction(s) in the original face amount of any Letter of
Credit which did not result from a draw made under such Letter of Credit, (b)
the amount of any payments made by the Lender, or any Affiliate, with respect
to a Letter of Credit or L/C Draft for which the Borrower has reimbursed the
Lender, or such Affiliate, and (c) the undrawn portion of any issued, but
expired, Letter of Credit plus the amount of any increase(s) in the original
face amount of any Letter of Credit. For purposes of determining the
outstanding Letter of Credit Obligations at any time, the Lender's, or any
Affiliate's, acceptance of an L/C Draft shall constitute a draw on the
applicable Letter of Credit at the time of such acceptance.
"Letter of Credit Sublimit": The term "Letter of Credit Sublimit"
shall have the meaning given such term in Supplement A.
"Lien": Any security interest, mortgage, pledge, lien, hypothecation,
judgment lien or similar legal process, charge, encumbrance, title retention
agreement or analogous instrument or device (including, without limitation, the
interest of lessors under Capitalized Leases and the interest of a vendor under
any conditional sale or other title retention agreement).
"Loan": Any Revolving Loan made by the Lender to the Borrower pursuant
to Section 2.1.1, Term Loan A made by the Lender to the Borrower pursuant to
Section 2.1.2, Term Loan B made by the Lender to the Borrower pursuant to
Section 2.1.3, and any other loan or advance made by the Lender to the Borrower
under or pursuant to this Agreement.
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"Loan Account": The term "Loan Account" shall have the meaning given
such term in Section 2.3(A).
"Loan Documents": This Agreement, any Note, the Guaranty, the
Subordination Agreements, the Collateral Letter of Credit and each other
instrument, document, guaranty, mortgage, deed of trust, chattel mortgage,
pledge, power of attorney, consent, assignment, contract, notice, security
agreement, lease, financing statement, subordination agreement, trust account
agreement, or other agreement executed and delivered by the Borrower or any
guarantor or party granting security interests in connection with this
Agreement, the Loans or the Collateral.
"Long Term Debt": All Indebtedness of any Person for borrowed money or
which has been incurred in connection with the acquisition of assets in each
case having a final maturity of one or more than one year from the date of
origin thereof (or which is renewable or extendble at the option of
the obligor for a period or periods more than one year from the date of
origin), including all payments in respect thereof that are required to be made
within one year from the date of any determination of Long Term Debt,
whether or not the obligation to make such payments shall constitute a current
liability of the obligor under GAAP.
"Note": Any promissory note of the Borrower evidencing any loan or
advance (including but not limited to the Loans) made by the Lender to the
Borrower pursuant to this Agreement.
"Obligations": All of the liabilities, obligations and indebtedness of
the Borrower to the Lender, or any Affiliate, of any kind or nature, however
created, arising or evidenced, whether direct or indirect, absolute or
contingent, now or hereafter existing or due or to become due, and including,
without limitation, (a) the Borrower's obligations under the Loan Documents,
including obligations of performance, (b) the Borrower's obligations with
respect to any Letter of Credit or any Application, and (c) interest, charges,
expenses, Attorneys' Fees and other sums chargeable to the Borrower by the
Lender under the Loan Documents. "Obligations" shall also include any and all
amendments, extensions, renewals, refundings or refinancings of any of the
foregoing.
"Obligor": The Borrower and each other Person who is or shall become
primarily or secondarily liable on any of the Obligations or who grants to the
Lender a Lien on any property of such Person as security for any of the
Obligations.
"Occupational Safety and Health Law": The Occupational Safety and
Health Act of 1970 and any other federal, state or local statute, law,
ordinance, code, rule, regulation, order or decree regulating, relating to or
imposing liability or standards of conduct concerning employee health and/or
safety.
"Over Advance": The term "Over Advance" shall have the meaning given
such term in Section 2.8.
"Overdraft Loan": The term "Overdraft Loan" shall have the meaning
given such term in Section 2.7.
"Participant": Any Person, now or at any time or times hereafter,
participating with the Lender in the Loans made to the Borrower hereunder.
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"PBGC": The Pension Benefit Guaranty Corporation, established pursuant
to Subtitle A of Title IV of ERISA, or any successor thereto or to the
functions thereof.
"Person": Any natural person, corporation, partnership, joint venture,
firm, association, trust, unincorporated organization, government or
governmental agency or political subdivision thereof, or any other entity,
whether acting in an individual, fiduciary or other capacity.
"Plan": An employee benefit plan or other plan, maintained for
employees of the Borrower or of any ERISA Affiliate, and subject to Title IV of
ERISA or Section 412 of the Code.
"Quotient": The term "Quotient" shall have the meaning given such term
in Section 2.1.2(d).
"Reference Rate": The rate of interest from time to time publicly
announced by FBNA as its "reference rate." The Lender may lend to its customers
at rates that are at, above or below the Reference Rate. For purposes of
determining any interest rate which is based on the Reference Rate, such
interest rate shall change on the effective date of any change in the Reference
Rate.
"Related Party": Any Person (other than a Subsidiary): (a) which
directly or indirectly, through one of more intermediaries, controls, is
controlled by or is under common control with, the Borrower, (b) which
beneficially owns or holds 5% or more of the equity interest of the Borrower,
or (c) 5% or more of the equity interest of which is beneficially owned or held
by the Borrower or a Subsidiary. The term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
"Reportable Event": A reportable event, as defined in Section 4043 of
ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC, by regulation, has waived
the requirement of Section 4043(a) of ERISA that it be notified within 30 days
of the occurrence of such event; provided, however that a failure to
meet the minimum funding standard of Section 412 of the Code and Section 302 of
ERISA shall be a reportable event regardless of the issuance of any such
waivers in accordance with Section 412(d) of the Code.
"Revolving Credit Amount": The term "Revolving Credit Amount" shall
have the meaning given such term in Supplement A.
"Revolving Loan": The term "Revolving Loan" shall have the meaning
given such term in Section 2.1.1.
"Revolving Loan Availability": The lesser of (a) the Revolving Credit
Amount minus the Letter of Credit Obligations and (b) the Borrowing Base minus
the Letter of Credit Obligations.
"Subordinated Debt": That portion of any liabilities, obligations or
Indebtedness of the Borrower which contains terms satisfactory to the Lender
and is subordinated, in a manner satisfactory to the Lender, as to right and
time of payment of principal and interest thereon, to any and all of the
Obligations.
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"Subordinated Lender(s)": Bleeman Holdings Limited, Caftan Holdings
Limited, Egis Holdings Limited, Greenwin Florida Investments, ▇▇▇▇▇▇▇▇ Holdings
Limited, H&R Developments, Seaford Holdings Limited and the Guarantor.
"Subordination Agreement": A Subordination Agreement, substantially in
the form set forth as Exhibit C, of each Subordinated Lender in favor of the
Lender.
"Subsidiary": Any Person of which or in which the Borrower and its
other Subsidiaries own directly or indirectly 50% or more of: (a) the combined
voting power of all classes of stock having general voting power under ordinary
circumstances to elect a majority of the board of directors of such Person, if
it is a corporation, (b) the capital interest or profits interest of such
Person, if it is a partnership, joint venture or similar entity, or (c) the
beneficial interest of such Person, if it is a trust, association or other
unincorporated organization.
"Supplemental Documentation": The term "Supplemental Documentation"
shall have the meaning given such term in Section 3.6.
"Taxes": With respect to any Person means taxes, assessments or other
governmental charges or levies imposed upon such Person, its income or any of
its properties, franchises or assets.
"Term Loan A": The term "Term Loan A" shall have the meaning given such
term in Section 2.1.2.
"Term Loan B": The term "Term Loan B" shall have the meaning given such
term in Section 2.1.3.
"Term Loan(s)": Individually or collectively, Term Loan A and Term Loan
B.
"Termination Date": The term "Termination Date" shall have the meaning
given such term in Supplement A.
"Third Party Collateral": Any property of any Person other than the
Borrower which secures payment or performance of any Obligations.
"UCC": The Uniform Commercial Code as in effect in the State of
Minnesota and any successor statute, together with any regulations thereunder,
in each case as in effect from time to time. References to sections of the UCC
shall be construed to also refer to any successor sections.
"Unmatured Event of Default": Any event which, with the giving of
notice to the Borrower or lapse of time, or both, would constitute an Event of
Default.
"Unused Revolving Credit Amount": The Revolving Credit Amount minus the
sum of (a) the outstanding principal balance of the Revolving Loans plus (b)
the Letter of Credit Obligations.
"U.S. Treasury Securities": Actively traded U.S. Treasury bonds, bills
and notes and, if more than one issue of U.S. Treasury Securities is scheduled
to mature at or about the time of
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the Termination Date, then to the extent possible, the U.S. Treasury Security
most recently issued will be chosen.
"Variable Rate Loan": Any Loan which bears interest from time to time
with reference to the Reference Rate.
1.2 ACCOUNTING TERMS AND CALCULATIONS. Except as may be expressly
provided to the contrary herein, all accounting terms used herein or in any
certificate or other document made or delivered pursuant hereto shall be
interpreted and all accounting determinations hereunder (including, without
limitation, determination of compliance with financial ratios and restrictions
in Articles V and VI shall be made in accordance with GAAP consistently
applied, using a first in first out method of Inventory valuation. Any
reference to "consolidated" financial terms shall be deemed to refer to those
financial terms as applied to the Borrower and the Subsidiaries in accordance
with GAAP.
1.3 OTHER DEFINITIONAL PROVISIONS. Unless otherwise defined herein,
all terms defined in this Agreement shall have such defined meanings when used
in any other Loan Document. Terms used in this Agreement which are defined in
any Supplement, Exhibit or Schedule hereto shall, unless the context otherwise
indicates, have the meanings given them in such Supplement, Exhibit or
Schedule. Other terms used in this Agreement shall, unless the context
otherwise indicates, have the meanings given such terms in the Minnesota
Uniform Commercial Code to the extent the same are used or defined therein. The
words "hereof," "herein," and "hereunder" and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. Reference to "this Agreement" shall
include the provisions of Supplement A. References to Sections, Exhibits,
Schedules and like references are to this Agreement unless otherwise
expressly provided. Section captions used in this Agreement are for convenience
only, and shall not affect the construction of this Agreement.
ARTICLE 11 REVOLVING LOANS; TERM LOANS; OTHER MATTERS
2.1 LOANS.
2.1.1 REVOLVING LOANS.
(a) Subject to the terms and conditions of the Loan
Documents, and in reliance upon the warranties of the Borrower
set forth herein and in the other Loan Documents, the Lender agrees
to make such loans or advances (individually, a "Revolving Loan"
and collectively, the "Revolving Loans") to the Borrower as the
Borrower may from time to time request, up to but not in excess of
the Revolving Loan Availability. Revolving Loans made by the Lender
may be repaid and, subject to the terms and conditions hereof,
reborrowed to the Termination Date unless the Credit extended under
this Agreement is otherwise terminated as provided in this
Agreement.
(b) In the event the aggregate outstanding principal balance
of the Revolving Loans exceeds the Revolving Loan Availability,
the Borrower shall, unless the Lender shall otherwise consent,
immediately and without notice of
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any kind, make such payments or take such other action as shall
be necessary to eliminate such excess.
2.1.2 TERM LOAN A.
(a) Subject to the terms and conditions of the Loan Documents,
and in reliance upon the warranties of the Borrower set forth herein
and in the other Loan Documents, the Lender agrees to make a loan
("Term Loan A") to the Borrower on the Closing Date in the
amount of TWO MILLION THREE HUNDRED THOUSAND AND NO/100 DOLLARS
($2,300,000) or such lesser amount as the Borrower shall request.
(b) Unless otherwise required to be sooner paid pursuant to
this Agreement, the principal of Term Loan A shall mature and be
payable in consecutive equal monthly installments of $38,333 payable
on the fifteenth day of each month for the immediately preceding
month, commencing on the first such day to occur following the date of
this Agreement, and a final installment in the outstanding principal
balance of Term Loan A on the Termination Date.
(c) During any period in which Term Loan A is a Variable Rate
Loan, the Borrower may, upon three Business Days' notice to the
Lender, prepay the principal of Term Loan A in whole or in part
without premium. Any partial prepayment of principal of Term Loan A
shall be in a minimum amount of the lesser of (i) the outstanding
principal balance of Term Loan A and (ii) $10,000 or an integral
multiple thereof, and shall be applied to the unpaid installments of
Term Loan A in the inverse order of their maturities. Any principal of
Term Loan A which is repaid may not be reborrowed.
(d) During any period in which Term Loan A is a Fixed Rate
Loan, the Borrower may, upon five Business Days' prior written notice
to the Lender, prepay the principal of Term Loan A in whole or in
part. Any partial prepayment of principal of Term Loan A shall be in a
minimum amount of the lesser of (i) the outstanding principal balance
of Term Loan A and (ii) $10,000 or an integral multiple thereof, and
shall be applied to the unpaid installments of Term Loan A in the
inverse order of their maturities. If at the time of any prepayment
(whether voluntary or involuntary, including, without limitation, any
payment prior to the scheduled maturity following acceleration of Term
Loan A), the Interest Differential is greater than zero, the Borrower
shall pay to the Lender a prepayment premium equal to the present
value (determined in accordance with standard financial practice) of
the product of (1) the Interest Differential, (2) the amount prepaid,
and (3) the Average Maturity Period. The amount of the prepayment
premium shall be calculated as follows: The amount prepaid shall be
multiplied by the product of (A) the Interest Differential, and (B) a
fraction, the numerator of which is the number of days in the Average
Maturity Period and the denominator of which is 360. The resulting
product shall then be divided by the number of whole months (using a
thirty day month) in the Average Maturity Period, yielding a quotient
(the "Quotient"). The amount of the prepayment premium shall be the
present value (determined in accordance with standard financial
practice) on the date of prepayment (using Government Yield as of
the
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date of such prepayment as the discount factor) of a stream of equal
monthly payments in number equal to the number of whole months (using
a thirty day month) in the Average Maturity Period, with the
amount of each hypothetical monthly payment being equal to the
Quotient and with the first payment payable thirty days after the date
of prepayment.
(e) Any payment of Term Loan A may be made with the proceeds of
a Revolving Loan only if, immediately before and after giving effect
to such payment, no Event of Default or Unmatured Event of Default
then exists or would result therefrom.
2.1.3 TERM LOAN B.
(a) Subject to the terms and conditions of the Loan Documents,
and in reliance upon the warranties of the Borrower set forth herein
and in the other Loan Documents, the Lender agrees to make a loan
("Term Loan B") to the Borrower on the Closing Date in the
amount of FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($500,000) or such
lesser amount as the Borrower shall request.
(b) Unless otherwise required to be sooner paid pursuant to
this Agreement, the entire outstanding principal balance of Term Loan
B shall mature and be payable on March 31, 1995.
(c) The Borrower may, upon three Business Days' notice to the
Lender, prepay the principal of Term Loan B in whole or in part
without premium. Any partial prepayment of principal of Term Loan B
shall be in a minimum amount of the lesser of (i) the outstanding
principal balance of Term Loan B and (ii) $10,000 or an integral
multiple thereof, and shall be applied to the unpaid installments of
Term Loan B in the inverse order of their maturities. Any principal of
Term Loan B which is repaid may not be reborrowed.
(d) Any payment of Term Loan B may be made with the proceeds of
a Revolving Loan only if, immediately before and after giving effect
to such payment, no Event of Default or Unmatured Event of Default
then exists or would result therefrom.
2.1.4 ALL LOANS PAYABLE ON TERMINATION DATE. All Loans and other
Obligations hereunder shall be paid by the Borrower on the Termination Date,
unless payable sooner pursuant to the provisions of this Agreement.
2.2 LETTERS OF CREDIT.
(a) In addition to Loans made pursuant to Section 2.1, the Lender, or
any Affiliate, may, upon receipt of duly executed Applications and such other
documents, instruments and/or agreements as the Lender, or such Affiliate, may
require, issue Letters of Credit on such terms as are satisfactory to the
Lender; provided, however, that no Letter of Credit will be issued if, before
or after taking such Letter of Credit into account, the Letter of Credit
Obligations exceeds the least of (i) the Letter of Credit
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Sublimit, (ii) the Revolving Credit Amount minus the outstanding
principal balance of the Revolving Loans and (iii) the Borrowing Base
minus the outstanding principal balance of the Revolving Loans.
(b) The Borrower agrees to pay the Lender, or any Affiliate, on
demand, the Lender's, or such Affiliate's, standard administrative
operating fees and charges in effect from time to time for issuing and
administering any Letters of Credit. The Borrower further agrees to
pay the Lender, or any Affiliate, a commission on the undrawn amount
of each Letter of Credit and on each L/C Draft accepted by the Lender,
or such Affiliate, in the amount indicated in Supplement A.
Such commissions shall be paid at such frequency as the Lender, or
such Affiliate, shall determine.
(c) The Borrower agrees to reimburse the Lender, or any
Affiliate, on demand for each payment made by the Lender, or such
Affiliate, under or pursuant to any Letter of Credit or L/C Draft. The
Borrower further agrees to pay to the Lender, or any Affiliate, on
demand, interest at the Default Rate, on any amount paid by the
Lender, or such Affiliate, under or pursuant to any Letter of Credit
or L/C Draft from the date of payment until the date of reimbursement
to the Lender, or such Affiliate.
(d) Notwithstanding anything to the contrary herein or in any
Application of the Borrower, upon the occurrence of an Event of
Default, or on the Termination Date, an amount equal to the aggregate
amount of the outstanding Letter of Credit Obligations shall, at the
Lender's option and without further notice to the Borrower, be deemed
(as between the Lender and the Borrower) to have been paid or
disbursed by the Lender under the Letters of Credit and L/C Drafts
accepted by the Lender, or any Affiliate, notwithstanding that such
amounts may not in fact have been so paid or disbursed, and a Loan to
the Borrower, in the amount of such Letter of Credit Obligations, to
have been made and accepted, which Loan shall be immediately due and
payable. In lieu of the foregoing, at the election of the Lender, the
Borrower shall, upon the Lender's demand, deliver to the Lender, or
any Affiliate, cash or other Collateral of a type satisfactory to the
Lender, or such Affiliate, having a value, as determined by the
Lender, or such Affiliate, equal to the aggregate Letter of Credit
Obligations. Any such Collateral and/or any amounts received by the
Lender, or any Affiliate, in payment of the Loan made pursuant to this
paragraph (d) shall be held by the Lender, or such Affiliate,
in the Collateral Account or a separate account appropriately
designated as a cash collateral account in relation to this Agreement
and the Letters of Credit and retained by the Lender, or such
Affiliate, as collateral security for the Obligations and each of the
Letters of Credit and L/C Drafts. Such amounts shall not be used by
the Lender, or any Affiliate, to pay any amounts drawn or paid under
or pursuant to any Letter of Credit or L/C Draft but may be applied to
reimburse the Lender, or any Affiliate, for drawings or payments under
or pursuant to Letters of Credit or L/C Drafts which the Lender, or
such Affiliate, has paid or, if no such reimbursement is required, to
payment of such other Obligations as the Lender shall determine.
Following payment in full of all Obligations, any amounts remaining in
any cash collateral account established pursuant to this paragraph
(d) which are not (as determined by the Lender) to be applied to
reimburse the Lender, or any Affiliate, for amounts actually paid by
the Lender, or such Affiliate, in respect of a Letter of Credit or L/C
Draft shall be returned to the Borrower (after deduction of the
Lender's, or such Affiliate's expenses).
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2.3 LOAN ACCOUNT; DISBURSEMENT ACCOUNT.
(a) LOAN ACCOUNT. The Lender shall establish or cause to be established on
its books in the Borrower's name one or more accounts (each, a "Loan
Account") to evidence Loans made to the Borrower. Any amounts advanced
as Loans which are credited to the Disbursement Account, together with
any other amounts advanced to the Borrower as a Loan pursuant to this
Agreement, will be debited to the applicable Loan Account and result
in an increase in the principal balance outstanding in such Loan
Account in the amount thereof.
(b) DISBURSEMENT ACCOUNT. Unless otherwise provided in this Agreement, the
Lender will credit or cause to be credited to a commercial account
(the "Disbursement Account") maintained by the Borrower at FBNA's
First Bank Place, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇ office the amount of any sums advanced as Loans.
2.4 INTEREST; FEES.
(a) INTEREST. The outstanding principal balance of each Loan to the
Borrower hereunder shall bear interest at the rate(s) applicable to
such Loan indicated in Supplement A; provided, however, that no
provision of this Agreement or any Note shall require the payment or
permit the collection of interest in excess of the rate permitted by
applicable law. Interest as aforesaid shall be charged for the actual
number of days elapsed over a year consisting of 360 days on the
actual daily balance of such Loan. Interest on the unpaid principal of
any Loan shall accrue from the date such Loan is made to the date such
Loan is paid. Interest shall be paid by the Borrower on the last day
of each month, commencing on the first such day to occur after the
date hereof, and on maturity. After maturity of any Loan, whether by
acceleration or otherwise, interest shall be payable on demand.
(b) INTEREST AFTER DEFAULT. If any Loan or any amount thereof is not paid
in full when due, whether by acceleration or otherwise, the entire
unpaid principal balance of such Loan shall bear interest at the
Default Rate applicable to such Loan,
(c) COMMITMENT FEE. The Borrower shall pay to the Lender a commitment fee
for the period from the date hereof to the date the Credit terminates
in the amount indicated in Supplement A. The commitment fee shall be
charged for the actual number of days elapsed over a year consisting
of 360 days on the actual daily balance of the Revolving Loans. The
commitment fee shall be paid by the Borrower in arrears on the last
day of each March, June, September and December, commencing on the
first such day to occur after the date hereof, and on the date the
Credit terminates for the period then ended.
(d) CREDIT TERMINATION FEE. Upon termination or cancellation of the Credit
by the Borrower, the Borrower shall pay to the Lender a termination
fee in the amount indicated in Supplement A.
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2.5 REQUESTS FOR REVOLVING LOANS; BORROWING BASE CERTIFICATES; OTHER
INFORMATION.
(a) Revolving Loans shall be requested by telephone, except for
Overdraft Loans. Any such telephonic notice shall be promptly confirmed by
the Borrower in writing. The Borrower's failure to confirm any such
telephonic notice or otherwise comply with the provisions of this Section
2.5(a) shall not in any manner affect the obligation of the Borrower to
repay such Revolving Loan in accordance with the terms of this Agreement.
(b) In the event that the Borrower shall at any time, or from time to
time, (i) make a request for a Revolving Loan, or (ii) be deemed to have
requested an Overdraft Loan, the Borrower agrees to forthwith provide the
Lender with such information, at such frequency and in such format, as is
required by the Lender, such information to be current as of the time of
such request.
(c) The Borrower further agrees to provide to the Lender a current
borrowing base certificate ("Borrowing Base Certificate") at the end of
each month and at such other times as the Lender may request. Such
Borrowing Base Certificate shall be in substantially the form of Exhibit
D, executed and certified as accurate by such person or persons as the
Borrower designates in writing to the Lender pursuant to duly adopted
resolutions of the Borrower's Board of Directors authorizing such action.
(d) The Borrower shall provide the Lender with documentation
satisfactory to the Lender indicating the names of those employees of the
Borrower authorized by the Borrower to sign Borrowing Base Certificates,
among other things, and/or to make a telephone request for a Revolving
Loan, and/or to authorize disbursement of the proceeds of a Loan by wire
transfer or otherwise, and the Lender shall be entitled to rely upon such
documentation until notified in writing by the Borrower of any change(s)
in the names of persons so authorized. The Lender shall be entitled to act
on the instructions of anyone identifying himself as one of the persons
authorized to request Revolving Loans or disbursements of Loan proceeds by
telephone and the Borrower shall be bound thereby in the same manner as if
the person were actually so authorized. The Borrower agrees to indemnify
and hold the Lender harmless from any and all claims, damages,
liabilities, losses, costs and expenses (including Attorneys' Fees) which
may arise or be created by the acceptance of instructions for making or
paying Loans or wire transfers by telephone.
2.6 NOTES. Except to the extent a Loan may, in the Lender's sole and
absolute discretion, be evidenced by a Note, all Loans and payments hereunder
shall be recorded on the Lender's books, which shall be rebuttable presumptive
evidence of the amount of such Loans outstanding at any time hereunder. The
Lender will account monthly as to all Loans and payments hereunder and each
monthly accounting will be fully binding on the Borrower unless, within 15 days
following the Borrower's receipt thereof, the Borrower shall provide the Lender
with a specific listing of exceptions. Notwithstanding any term or condition of
this Agreement to the contrary, the failure of the Lender to record the date
and amount of any Loan shall not limit or otherwise affect the obligation of
the Borrower to repay any such Loan.
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2.7 OVERDRAFT LOANS. The Lender, in its sole and absolute discretion and
subject to the terms hereof, may make a Loan to the Borrower in an amount equal
to the amount of any overdraft which may from time to time exist with respect
to the Disbursement Account or any other bank account which the Borrower may
now hereafter have with FBNA or any other Affiliate. The existence of such
overdraft shall be deemed to be a request by the Borrower for such Loan. The
Borrower acknowledges that the Lender is under no duty or obligation to make
any Loan to the Borrower to cover any overdraft. The Borrower further agrees
that an overdraft shall constitute a separate Loan under this Agreement (an
"Overdraft Loan"), which shall bear, from the date on which the overdraft
occurred until paid, interest in an amount, equal to the greater of 130% of the
highest rate of interest then charged for Loans (other than Overdraft Loans)
made hereunder, or $50.00 per day. If the Lender, in its sole and absolute
discretion, decides not to make a Loan to cover part or all of any overdraft,
the Lender may return any check(s) which created such overdraft.
2.8 OVER ADVANCES. The Lender, in its sole and absolute discretion, may
make Loans to the Borrower, either at the Borrower's request or to pay amounts
due to the Lender under this Agreement or any other Loan Document, in excess of
the Loan Availability or permit the total Loans to at any time exceed the Loan
Availability (such excess Obligations are hereinafter referred to as "Over
Advances") and no such event or occurrence shall cause or constitute a waiver
by the Lender of its right to refuse to make any further Loan or issue, or
cause to be issued, any Letters of Credit at any time that an Over Advance
exists or would result therefrom. During any period in which an Over Advance
exists, the amount of the Over Advances shall bear interest at a rate equal to
130% of the highest rate of interest then charged for Loans (other than
Overdraft Loans) made hereunder.
2.9 ALL LOANS ONE OBLIGATION. All Loans under this Agreement shall
constitute one Loan, and all Indebtedness and other Obligations shall
constitute one general obligation secured by the Lien granted by the Borrower
hereunder on all of the Collateral and by all other Liens heretofore, now or at
any time or times hereafter granted by the Borrower or any other Obligor to
secure the Obligations. The Borrower agrees that all of the rights of the
Lender set forth in the Loan Documents shall, unless otherwise agreed to in
writing, apply to any modification of or supplement to the Loan Documents.
2.10 MAKING OF PAYMENTS; APPLICATION OF COLLECTIONS; CHARGING OF ACCOUNTS.
(a) All payments hereunder (including payments with respect to any
Notes) shall be made without set-off or counterclaim and shall be made to
the Lender in immediately available funds (or as the Lender may otherwise
consent) prior to 12:30 p.m., Minneapolis time, on the date due at its
office at First Bank Place, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, or at such other place as may be designated by the
Lender to the Borrower in writing. Any payments received after such time
shall be deemed received on the next Business Day. Whenever any payment to
be made hereunder or under any Note shall be stated to be due on a date
other than a Business Day such payment may be made on the next succeeding
Business Day and such extension of time shall be included in the
computation of payment of interest or any fees.
(b) The Borrower authorizes the Lender to, and the Lender will,
subject to the provisions of this Section 2.10(b), apply the whole or any
part of any amounts received
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by the Lender, or any Affiliate (whether deposited in the Collateral
Account or otherwise received by the Lender, or any Affiliate) from the
collection of items of payment and proceeds of any Collateral or Third
Party Collateral against the principal and/or interest of any Loans made
HEREUNDER AND/OR ANY other Obligations, whether or not then due, in such
order of application as the Lender may determine, unless such payments or
proceeds are, in the Lender's sole and absolute discretion, released to
the Borrower; provided, however, that no checks, drafts or other
instruments received by the Lender, or any Affiliate, shall constitute
final payment to the Lender unless and until such item of payment has
actually been collected. All items or amounts which are delivered to the
Lender, or any Affiliate, by or on behalf of the Borrower or any Obligor
or any Account Debtor on account of partial or full payment or otherwise
as proceeds of any of the Collateral or Third Party Collateral (including
any items or amounts which may have been deposited to the Collateral
Account) may from time to time, in the Lender's sole and absolute
discretion, be released to the Borrower or may be applied by the Lender
towards such of the Obligations, whether or not then due, in such order of
application as the Lender may determine. Notwithstanding anything to the
contrary herein, (i) all cash, checks, instruments and other items of
payment, solely for purposes of determining the occurrence of an Event of
Default hereunder, shall be deemed received upon actual receipt by the
Lender unless the same is subsequently dishonored for any reason
whatsoever, (ii) for purposes of determining whether, under Sections 2.1
and 2.2, there is availability for Loans or Letters of Credit, all cash,
checks, instruments and other items of payment shall be applied against
the Obligations on the first Business Day following receipt thereof by the
Lender in Minneapolis, Minnesota or the first Business Day following the
initiation by the Lender of an ACH transaction from a Collateral Account,
and (iii) solely for purposes of interest calculation hereunder, all cash,
checks, instruments and other items of payment shall be deemed to have
been applied against the Obligations on the second Business Day following
receipt thereof by the Lender in Minneapolis, Minnesota or the second
Business Day following the initiation by the Lender of an ACH transaction
from a Collateral Account.
(c) The Borrower hereby authorizes the Lender and the Lender may, in
its sole and absolute discretion, charge to the Borrower, at any time, all
or any portion of any of the Obligations (and interest, if any, thereon)
including, without limitation, any Attorneys' Fees and other costs and
expenses of the Lender for which the Borrower is liable pursuant to the
terms of the Loan Documents, by charging the Disbursement Account or any
other bank account of the Borrower with FBNA or by advancing the amount
thereof to the Borrower as a Loan; provided, however, that the provisions
of this Section 2.10(c) shall not affect the Borrowers obligation to pay
when due all amounts payable by the Borrower under any of the Loan
Documents whether or not there are sufficient funds therefor in the
Disbursement Account or any such other bank account of the Borrower with
FBNA, or sufficient Loan Availability.
2.11 LENDER'S ELECTION NOT TO ENFORCE. Notwithstanding any term or
condition of this Agreement to the contrary, the Lender, in its sole and
absolute discretion, at any time and from time to time may suspend or refrain
from enforcing any or all of the restrictions imposed in this Section 2 but no
such suspension or failure to enforce shall impair the Lender's right and power
under this Agreement to refrain from making a Loan or issuing, or causing to be
issued, a Letter of Credit requested by the Borrower if all conditions
precedent to the Lender's
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obligation to make such Loan or issue, or cause to be issued, such Letter of
Credit have not been satisfied.
ARTICLE III COLLATERAL; COLLATERAL LETTER OF CREDIT
3.1 GRANT OF SECURITY INTEREST. As security for the payment of all Loans
now or hereafter made by the Lender to the Borrower hereunder or under any
Note, and as security for the payment or other satisfaction of all other
Obligations, the Borrower hereby grants to the Lender, and its Affiliates, a
security interest in and to the following property of the Borrower, whether now
owned or existing, or hereafter acquired or coming into existence, wherever now
or hereafter located (all such property is hereinafter referred to collectively
as the "Collateral"):
(a) Accounts Receivable (whether or not Eligible Accounts
Receivable), including all other rights and interests (including all liens
and security interests) that the Borrower may at any time have by law or
agreement against any Account Debtor or other obligor obligated to make
any such payment or against any of the property of such Account Debtor or
other obligor;
(b) Equipment;
(c) Inventory (whether or not Eligible Inventory or Eligible
Committed Inventory);
(d) General Intangibles;
(e) documents;
(f) all chattel paper and instruments evidencing, arising out of or
relating to any obligation to the Borrower for goods sold or leased or
services rendered or otherwise arising out of or relating to any property
described in clauses (a) through (e) above;
(g) goods, instruments, documents or chattel paper that are in the
possession or control of, or in transit to, the Borrower or any agent
or bailee for the Lender for any reason and all interest on, dividends and
distributions and other rights in connection with such property, and any
and all balances, credits, deposits (general or special, time or demand,
provisional or final), accounts or monies of or in the name of the
Borrower now or hereafter with the Lender, or any Affiliate, and any and
all property of every kind or description of or in the name of the
Borrower now or hereafter, for any reason or purpose whatsoever, in the
possession or control of, in transit to or standing to the Borrower's
credit on the books of, the Lender, any Affiliate, or any agent or bailee
for the Lender or any Affiliate or any Participant;
(h) all interest of the Borrower in any goods the sale or lease of
which shall have given or shall give rise to, and in all guaranties and
other property securing the payment of or performance under, any Accounts
Receivable, General Intangibles or any chattel paper or instruments
referred to in clause (f) above;
(i) any and all other property of the Borrower of any kind or
description, including, without limitation, real estate of the Borrower,
subject to a separate mortgage, pledge or security interest in favor of
the Lender or in which the Lender now
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or hereafter has or acquires a security interest securing any Obligations,
pursuant to any written agreement or instrument other than this Agreement;
(j) all replacements, substitutions, additions or accessions to or
for any of the foregoing;
(k) to the extent related to the property described in clauses (a)
through (i) above, all books, correspondence, credit files, records,
invoices and other papers and documents, including, without limitation, to
the extent so related, all tapes, cards, computer runs, computer programs
and other papers and documents in the possession or control of the
Borrower or any computer bureau from time to time acting for the Borrower,
and, to the extent so related, all rights in, to and under all policies of
insurance, including claims of rights to payments thereunder and proceeds
therefrom, including any credit insurance; and
(l) all proceeds (including, without limitation, any Accounts
Receivable or other proceeds arising from the sale or other disposition
of any Collateral, any returns of any Equipment or Inventory sold by the
Borrower and the proceeds of any insurance covering any of the Collateral)
of any of the foregoing.
3.2 ACCOUNTS RECEIVABLE.
(a) The Borrower shall notify the Lender immediately of all disputes
and claims by any Account Debtor and settle or adjust them at no
expense to the Lender. If the Lender directs, no discount or credit
allowance shall be granted thereafter by the Borrower to any Account
Debtor. All Account Debtor payments and all net amounts received by the
Lender in settlement, adjustment or liquidation of any Account Receivable
may be applied by the Lender to the Borrower's Obligations or credited to
the Disbursement Account (subject to collection), as the Lender may deem
appropriate, as more fully described in Section 2.10. If requested by the
Lender, the Borrower will make proper entries in its books, disclosing the
assignment of Accounts Receivable to the Lender.
(b) Unless otherwise consented to by the Lender, the Borrower will,
forthwith upon receipt by the Borrower of all checks, drafts, cash and
other remittances in payment or as proceeds of, or on account of, any of
the Accounts Receivable or other Collateral, deposit the same in a special
bank account (the "Collateral Account") with FBNA or such other bank or
financial institution as the Lender shall consent, over which the Lender
alone has power of withdrawal, and will designate with each such deposit
the particular Accounts Receivable or other item of Collateral upon which
the remittance was made. The Borrower acknowledges that the maintenance of
the Collateral Account is solely for the convenience of the Lender in
facilitating its own operations and the Borrower does not and shall not
have any right, title or interest in the Collateral Account or in the
amounts at any time appearing to the credit thereof. Said proceeds shall
be deposited in precisely the form received except for the Borrower's
endorsement where necessary to permit collection of items, which
endorsement the Borrower agrees to make. Pending such deposit, the
Borrower agrees not to commingle any such checks, drafts, cash and other
remittances with any of its funds or property, but will hold them separate
and apart therefrom and upon an
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express trust for the Lender until deposit thereof if made in the
Collateral Account. Upon the full and final liquidation of all
Obligations, the Lender will pay over to the Borrower any excess amounts
received by the Lender as payment or proceeds of Collateral, whether
received by the Lender as a deposit in the Collateral Account or received
by the Lender as a direct payment on any of the sums due hereunder.
(c) If any Accounts Receivable, chattel paper or General Intangible
arises out of contracts with the United States or any department, agency,
or instrumentality thereof, the Borrower will, unless the Lender shall
otherwise agree, immediately notify the Lender in writing and execute any
instruments and take any steps required by the Lender in order that all
monies due and to become due under such contracts shall be assigned to the
Lender and notice thereof given to the government under the Federal
Assignment of Claims Act of 1940, as amended.
(d) If any Accounts Receivable is evidenced by chattel paper or
instruments, the Borrower will, unless the Lender shall otherwise
agree, deliver the originals of same to the Lender, appropriately endorsed
to the Lender's order and, regardless of the form of such endorsement, the
Borrower hereby expressly waives presentment, demand, notice of dishonor,
protest and notice of protest and all other notices with respect thereto.
3.3 INVENTORY.
(a) Unless the Lender shall otherwise agree, if the Borrower
sells Inventory for cash, all full and partial payments therefor shall
immediately be delivered by the Borrower to the Lender in their original
form for deposit in the Collateral Account or other application to
reduction of the Obligations. All such cash shall be held by the Borrower
in trust for the Lender and shall be remitted to the Lender at the end of
the day received or at such other time as the Lender may designate.
(b) The Lender shall not be liable or responsible in any way for
the safekeeping of any Inventory delivered to it, to any bailee
appointed by or for it, to any warehouseman, or under any other
circumstances. The Lender shall not be responsible for collection of any
proceeds or for losses in collected proceeds held by the Borrower in trust
for the Lender. Any and all risk of loss for any or all of the foregoing
shall be upon the Borrower except for such loss as shall result from the
Lender's gross negligence or willful misconduct.
(c) The Borrower shall, upon acquiring an interest in any
Inventory, deliver to the Lender schedules of such Inventory, together
with supplier's invoices, warranties, production, cost and other
records as the Lender may request. If requested by the Lender, the
Borrower shall deliver to the Lender schedules of the sale of any
Inventory immediately upon its sale. Any material change in the value or
condition of any Inventory and any errors discovered in schedules
delivered to the Lender shall be reported to the Lender immediately.
(d) The Borrower shall (i) notify the Lender immediately if the
Borrower obtains possession (by return, repossession or otherwise) of
any Inventory which has been sold and shall inform the Lender of the
identity of the returned or repossessed Inventory, the
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applicable Account Debtor and the amount of the applicable Account
Receivable; (ii) receive such Inventory in trust; and (iii) resell such
Inventory for the Lender unless instructed to deliver it to the Lender.
3.4 EQUIPMENT.
(a) In the event any Equipment is sold, transferred or otherwise
disposed of, unless the Lender shall agree otherwise, the Borrower shall
deliver all of the proceeds of any such sale, transfer or disposition to
the Lender, which proceeds shall be deposited in the Collateral Account or
otherwise applied to the repayment of the Obligations.
(b) The Borrower will, upon request of the Lender, submit to the
Lender a current listing of all of the Borrower's Equipment which listing
shall indicate the type, model, serial number and location of such
Equipment.
3.5 COLLATERAL LETTER OF CREDIT. The Borrower shall cause to be delivered
to the Lender an Irrevocable Standby Letter of Credit, substantially in the
form set forth as Exhibit E, issued by the Issuing Bank in favor of the Lender,
as beneficiary, in the face amount of $1,250,000 and having an expiry of March
31, 1995 (the "Collateral Letter of Credit"). Upon the occurrence of an Event
of Default or Unmatured Event of Default, the Lender shall, at its option and
without making any prior demand or claim upon the Borrower, make a drawing
under and in accordance with the terms of the Collateral Letter of Credit. Any
amounts received by the Lender under the Collateral Letter of Credit shall be
deposited into a Collateral Account and shall be held as collateral security
for the Borrower's Obligations in respect of this Agreement or, at the Lender's
option, be applied against the Obligations in such order of application as the
Lender shall determine in its sole discretion. If the Lender at any time or
times hereafter determines, in its sole and absolute discretion, that the
prospect of payment or performance by the Issuing Bank is or will be impaired
for any reason whatsoever, the Lender shall give the Borrower written notice of
such determination and the Borrower will, within 30 days following receipt by
the Borrower of such notice, deliver to the Lender a substitute Collateral
Letter of Credit issued by an Issuing Bank which shall be acceptable to the
Lender in its sole discretion. The terms of the substitute Collateral Letter of
Credit shall in all material respects be the same as the original Collateral
Letter of Credit.
3.6 SUPPLEMENTAL DOCUMENTATION. At the Lender's request, the Borrower
shall execute and/or deliver to the Lender, at any time or times hereafter,
such agreements, documents, financing statements, warehouse receipts, bills of
lading, notices of assignment of Accounts Receivable, schedules of Accounts
Receivable assigned, and other written matter necessary or requested by the
Lender to perfect and maintain perfected the security interest in the
Collateral granted hereunder (all the above hereinafter referred to as
"Supplemental Documentation"), in form and substance acceptable to the Lender,
and pay all taxes, fees and other costs and expenses associated with any
recording or filing of the same. The Borrower hereby irrevocably makes,
constitutes and appoints the Lender (and all Persons designated by the Lender
for that purpose) as the Borrower's true and lawful attorney (and
agent-in-fact) to sign the name of the Borrower on any of the Supplemental
Documentation and to deliver any of the Supplemental Documentation to such
Persons as the Lender in its sole and absolute discretion, may elect. The
Borrower agrees that a carbon, photographic, photostatic, and
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other reproduction of this Agreement or of a financing statement is sufficient
as a financing statement.
3.7 POWER OF ATTORNEY. The Borrower irrevocably designates, makes,
constitutes, and appoints the Lender (and all Persons designated by the Lender)
as the Borrower's true and lawful attorney (and agent-in-fact) and the Lender,
or the Lender's agent, may, without notice to the Borrower:
(a) at such time or times hereafter as the Lender or said agent, in
its sole and absolute discretion, may determine, in the Borrower's or the
Lender's name, (i) notify and/or require the Borrower to notify, any
Account Debtor or other Person obligated under or in respect of any
Collateral, of the fact of the Lender's Lien thereon and of the collateral
assignment thereof to the Lender; (ii) direct and/or require the Borrower
to direct, any Account Debtor or other Person obligated under or in
respect of any Collateral, to make payment directly to the Lender of any
amounts due or to become due thereunder or with respect thereto; (iii)
endorse the Borrower's name on any checks, notes, drafts or any other
items of payment relating to and/or proceeds of the Collateral which come
into the possession of the Lender or under the Lender's control and apply
such payment or proceeds to the Obligations; and (iv) endorse the
Borrower's name on any chattel paper, document, instrument, invoice,
freight ▇▇▇▇, ▇▇▇▇ of lading or similar document or agreement in the
Lender's possession relating to Accounts Receivable, Inventory Equipment or
any other Collateral; and
(b) at such time or times after the occurrence of an Event of
Default, as the Lender or said agent, in its sole and absolute discretion,
may determine, in the Borrower's or the Lender's name: (i) receive, open
and dispose of all mail received at the street address or any post office
box address of the Borrower; (ii) demand, collect, surrender, release or
exchange all or any part of any Collateral or any amounts due thereunder
or with respect thereto; (iii) settle, adjust, compromise, extend or renew
for any period (whether or not longer than the initial period) any and all
sums which are now or may hereafter become due or owing upon or with
respect to any of the Collateral; (iv) enforce, by suit or otherwise,
payment or performance of any of the Collateral; (v) settle, adjust or
compromise any legal proceedings brought to collect any sums due or owing
upon or with respect to any of the Collateral; (vi) exercise all of the
Borrower's rights and remedies with respect to the collection of any
amounts due upon or with respect to any of the Collateral; (vii) if
permitted by applicable law, sell or assign the Collateral upon such
terms, for such amounts and at such time or times as the Lender may deem
advisable; (viii) discharge and release the Collateral; (ix) prepare, file
and sign the Borrower's name on any proof of claim in bankruptcy or similar
document against any Account Debtor; (x) prepare, file and sign the
Borrower's name on any notice of lien, assignment or satisfaction of lien
or similar document in connection with the Accounts Receivable and/or
other Collateral; and (xi) do all acts and things necessary, in the
Lender's sole and absolute discretion, to obtain repayment of the
Obligations and to fulfill the Borrower's other obligations under this
Agreement.
(c) at such time or times after the assertion by the Lender that an
Event of Default has occurred and is continuing (whether or not an Event
of Default has in fact occurred), as the Lender or said agent, in its
reasonable discretion, may determine, in
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the Borrower's or the Lender's name, notify the post office authorities to
change the address for delivery of the Borrower's mail to an address
designated by the Lender.
Under no circumstances shall the Lender be under any duty to act in regard to
any of the foregoing matters. The costs relating to any of the foregoing
matters, including Attorneys' Fees and out-of-pocket expenses shall be borne
solely by the Borrower whether the same are incurred by the Lender or the
Borrower.
Neither the Lender nor any of its directors, officers, employees or agents will
be liable for any acts of commission or omission nor for any error in judgment
or mistake of fact or law, unless the same shall have resulted from gross
negligence or willful misconduct. This power, being coupled with an interest,
is irrevocable until either (i) all Obligations under this Agreement are paid
in full, or (ii) this Agreement is terminated, whichever shall last occur.
ARTICLE IV REPRESENTATIONS AND WARRANTIES
To induce the Lender to enter into this Agreement and to make Loans to the
Borrower hereunder, the Borrower makes the following representations and
warranties, all of which shall be true and correct as of the date the initial
Loans are made and survive the execution of this Agreement and the making of
the initial Loans:
4.1 ORGANIZATION. The Borrower and each of its corporate Subsidiaries are
corporations duly incorporated, validly existing and in good standing under the
laws of the jurisdiction of their respective incorporation. All of the
Borrower's other Subsidiaries, if any, are entities duly organized, validly
existing and in good standing under the laws of the jurisdictions of their
respective organization. The Borrower and all of its Subsidiaries are in good
standing and are duly qualified to do business in each state where, because of
the nature of their respective activities or properties, such qualification is
required. On the date hereof, the Borrower and each Subsidiary conducts
business in its own name exclusively and has no trade names, styles or doing
business forms except as disclosed on Schedule 4.1. The Borrower's taxpayer
identification number is I.D. No. ▇▇-▇▇▇▇▇▇▇.
4.2 AUTHORIZATION. The Borrower is duly authorized to execute and deliver
the Loan Documents and any Supplemental Documentation contemplated by this
Agreement, and is and will continue to be duly authorized to borrow monies
hereunder and to perform its obligations under the Loan Documents and any
Supplemental Documentation contemplated by this Agreement and the borrowings
hereunder do not and will not require any consent or approval of any
governmental agency or authority.
4.3 NO CONFLICTS. The execution, delivery and performance by the Borrower
of the Loan Documents and any Supplemental Documentation contemplated by this
Agreement, do not and will not conflict with (a) any provision of law, (b) the
charter or by-laws of the Borrower, (c) any agreement binding upon the
Borrower, or (d) any court or administrative order or decree applicable to the
Borrower, and do not and will not require, or result in, the creation or
imposition of any Lien on any asset of the Borrower or any of the Subsidiaries
except as provided herein.
4.4 Validity and Binding Effect. The Loan Documents and any Supplemental
Documentation contemplated by this Agreement, when duly executed and delivered
will be,
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legal, valid and binding obligations of the Borrower, enforceable against the
Borrower in accordance with their respective terms, except as enforceability
may be limited by bankruptcy, insolvency or other similar laws of general
application affecting the enforcement of creditors' rights or by general
principles of equity limiting the availability of equitable remedies.
4.5 NO DEFAULT. Neither the Borrower nor any of the Subsidiaries is in
default under any agreement or instrument to which the Borrower or any
Subsidiary is a party or by which any of their respective properties or assets
is bound or affected, which default (a) might materially and adversely affect
the Lender's Lien on or rights with respect to any Collateral or Third Party
Collateral or (b) constitutes an Adverse Event. No Event of Default or
Unmatured Event of Default has occurred and is continuing.
4.6 FINANCIAL STATEMENTS. The Borrower's audited consolidated and
consolidating financial statement as at September 30, 1993 and the Borrower's
unaudited consolidated and consolidating financial statement as at January 31,
1994, copies of which have been furnished to the Lender, have been prepared in
conformity with generally accepted accounting principles promulgated by the
Financial Accounting Standards Board and applied on a basis consistent with
that of the preceding fiscal year and period and present fairly the financial
condition of the Borrower and the Subsidiaries as at such dates and the results
of their operations for the periods then ended, subject (in the case of the
interim financial statement) to year-end audit adjustments. Since January 31,
1994, no Adverse Event has occurred.
4.7 INSURANCE. Schedule 4.7 sets forth a summary of the property and
casualty insurance program carried by the Borrower and the Subsidiaries on the
date hereof, including the insurer's(s') name(s), policy number(s), expiration
date(s), amount(s) of coverage, type(s) of coverage, the annual premium(s),
Best's policyholder's and financial size ratings of the insurers, exclusions,
deductibles and self-insured retention, and describes in detail any
retrospective rating plan, fronting arrangement or any other self-insurance or
risk assumption agreed to by the Borrower or any Subsidiary or imposed upon the
Borrower or any Subsidiary by any such insurer. This summary also includes any
self-insurance program that is in effect.
4.8 LITIGATION; CONTINGENT LIABILITIES.
(a) Except for those referred to in Schedule 4.8, no claims
litigation, arbitration proceedings or governmental proceedings are
pending or threatened against or are affecting the Borrower or any
Subsidiary.
(b) Other than any liability incident to the claims,
litigation or proceedings disclosed in Schedule 4.8, neither
the Borrower nor any the Subsidiary has any contingent liabilities
which are material to the Borrower or any Subsidiary.
4.9 LIENS. None of the Collateral or other property or assets of the
Borrower or any Subsidiary is subject to any Lien (including, without
limitation, Liens pursuant to Capitalized Leases under which the Borrower or
any Subsidiary is a lessee) except: (a) Liens in favor of the Lender; (b) Liens
for current Taxes not delinquent or Taxes being contested in good faith and by
appropriate proceedings and as to which such reserves or other appropriate
provisions as may be required by GAAP are being maintained; (c) carriers',
warehousemen's, mechanics', materialmen's and other like statutory Liens
arising in the ordinary course of business securing obligations which are not
overdue or which are being contested in good faith and by
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appropriate proceedings and as to which such reserves or other appropriate
provisions as may be required by GAAP are being maintained; and (d) Liens
listed on Schedule 4.9.
4.10 SUBSIDIARIES. The Borrower has no Subsidiaries except as listed
on Schedule 4.10. The Borrower and the Subsidiaries own the percentage of the
Subsidiaries as set forth on Schedule 4.10.
4.11 PARTNERSHIPS. Neither the Borrower nor any of the Subsidiaries is
a partner or joint venturer in any partnership or joint venture other than the
partnerships and joint ventures listed on Schedule 4.11.
4.12 BUSINESS LOCATIONS. On the date hereof the office where the
Borrower keeps the Borrower's books and records concerning the Borrower's
Accounts Receivable and other Collateral, and the Borrower's chief place of
business and chief executive office, is located at the address of the Borrower
set forth on the signature pages of this Agreement, and all of the Borrower's
other places of business and all locations and places of business of each
Subsidiary are listed on Schedule 4.12. On the date hereof, the names of any
landlords and/or mortgagees of any of such locations are identified in Schedule
4.12.
4.13 COLLATERAL LOCATIONS. On the date hereof the Borrower's Inventory,
Equipment and, if applicable, fixtures (except any part thereof which prior to
the execution of this Agreement the Borrower shall have advised the Lender in
writing consists of Collateral normally used in more than one state) is located
at the addresses set forth in Schedule 4.13. The legal descriptions of any real
property on which any fixtures are located and the name(s) of the record owner
of such real property is set forth in Schedule 4.13.
4.14 ELIGIBILITY OF COLLATERAL. (a) All of the Accounts Receivable are
and will continue to be bona fide existing obligations created by the sale of
goods, the rendering of services, or the furnishing of other good and
sufficient consideration to Accounts Debtors in the regular course of business
and all shipping or delivery receipts and other documents furnished or to be
furnished to the Lender in connection therewith are and will be genuine; (b)
Each Account Receivable, item of Inventory or item of Equipment which the
Borrower shall, expressly or by implication, request the Lender to classify as
an Eligible Account Receivable, as Eligible Inventory or as Eligible Committed
Inventory, respectively, will, as of the time when such request is made,
conform in all respects to the requirements of such classification set forth in
the respective definitions of "Eligible Account Receivable," "Eligible
Inventory" and "Eligible Committed Inventory" set forth herein; (c) with
respect to each schedule of Inventory delivered to the Lender pursuant to
Section 3.3: (i) the descriptions, origins, size, qualities, quantities,
weights, and markings of all goods stated thereon, or on any attachment
thereto, are true and correct in all material respects; (ii) all goods stated
thereon have been produced by the Borrower in compliance with all requirements
of the Fair Labor Standards Act; and (iii) none of the goods stated thereon are
defective, of second quality, used, or goods returned after shipment, except
where described as such; and (iv) all Inventory not included on such schedule
has been previously scheduled.
4.15 CONTROL OF COLLATERAL; LEASE OF PROPERTY. The Borrower is not now
conducting, or permitting or suffering to be conducted, any activities pursuant
to or in conjunction with which any of the Collateral is now, or will be (while
any Obligations exist or this Agreement is in effect), in the possession or
control of, any Subsidiary, Obligor (other than the Borrower) or
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Related Party. Except as listed on Schedule 4.15, none of the machinery,
equipment or real property used by the Borrower or any Subsidiary is subject to
a lease (excluding only Capitalized Leases included on Schedule 6.12) under
which the Borrower or such Subsidiary is the lessee.
4.16 PATENTS, TRADEMARKS, ETC. The Borrower and each of the
Subsidiaries possesses or has the right to use all of the patents, trademarks,
trade names, service marks and copyrights, and applications therefor, and all
technology, know-how, processes, methods and designs used in or necessary for
the conduct of its business, without known conflict with the rights of others.
All such licenses, patents, trademarks, trade names, service marks and
copyrights, and applications therefor existing on the date hereof are listed on
Schedule 4.16.
4.17 SOLVENCY. The Borrower and each of the Subsidiaries now has
capital sufficient to carry on its respective business and transactions and all
business and transactions in which it is about to engage and is now solvent and
able to pay its respective debts as they mature, and the Borrower and each of
the Subsidiaries now owns property having a value, greater than the amount
required to pay the Borrower's or such Subsidiary's debts.
4.18 CONTRACTS; LABOR MATTERS. Except as disclosed on Schedule 4.18:
(a) neither the Borrower nor any Subsidiary is a party to any contract or
agreement, or subject to any charge, corporate restriction, judgment, decree or
order, the performance of which constitutes an Adverse Event; (b) no labor
contract to which the Borrower or any Subsidiary is subject is scheduled to
expire during the original term of this Agreement; and (c) on the date of this
Agreement (i) neither the Borrower nor any Subsidiary is a party to any labor
dispute and (ii) there are no strikes or walkouts relating to any labor
contracts to which the Borrower or any Subsidiary is subject.
4.19 ERISA. Each Plan complies with all material applicable
requirements of ERISA and the Code and with all material applicable rulings and
regulations issued under the provisions of ERISA and the Code setting forth
those requirements. No Reportable Event, other than a Reportable Event for
which the reporting requirements have been waived by regulations of the PBGC,
has occurred and is continuing with respect to any Plan. All of the minimum
funding standards applicable to such Plans have been satisfied and there exists
no event or condition which would permit the institution of proceedings to
terminate any Plan under Section 4042 of ERISA. The Current value of the Plans'
benefits guaranteed under Title IV of ERISA does not exceed the current value
of the Plans' assets allocable to such benefits. Except as listed on Schedule
4.8, neither the Borrower nor any Subsidiary has any contingent liability with
respect to any "employee welfare benefit plans," as such term is defined in
Section 3(1) of ERISA, which covers retired or terminated employees and their
beneficiaries.
4.20 REGULATION U. The Borrower is not engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock (as
defined in Regulation U of the Federal Reserve Board), and no part of the
proceeds of any Loan will be used to purchase or carry margin stock or for any
other purpose which would violate any of the margin requirements of the Federal
Reserve Board.
4.21 COMPLIANCE. The Borrower and each of the Subsidiaries are in
material compliance with all statutes and governmental rules and regulations
applicable to them. All
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Inventory of the Borrower has been produced in compliance with all requirements
of the Fair Labor Standards Act.
4.22 TAXES. The Borrower and each of the Subsidiaries has filed all
federal, state and local tax returns required to be filed and has paid, or made
adequate provisions for the payment of, all Taxes due and payable pursuant to
such returns and pursuant to any assessments made against it or any of its
property (other than Taxes the amount or validity of which is currently being
contested in good faith by appropriate proceedings and with respect to which
reserves in accordance with GAAP have been provided on the books of the
Borrower). No tax Liens have been filed and no material claims are being
asserted with respect to any such Taxes. The charges, accruals and reserves on
the books of the Borrower in respect of Taxes are adequate. The Borrower is not
aware of any proposed assessment against the Borrower or any Subsidiary for
additional Taxes (or any basis for any such assessment) which might be material
to the Borrower and the Subsidiaries taken as a whole.
4.23 INVESTMENT COMPANY ACT. Neither the Borrower nor any Subsidiary
is an "investment company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
4.24 PUBLIC UTILITY HOLDING COMPANY ACT. Neither the Borrower nor any
Subsidiary is a "holding company" or a "subsidiary company" of a "holding
company" or an "affiliate" of a "holding company" within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
4.25 ENVIRONMENTAL AND SAFETY AND HEALTH MATTERS. Except as disclosed
on Schedule 4.25: (a) the operations of the Borrower and each of the
Subsidiaries complies in all respects with (i) all applicable Environmental
Laws, and (ii) all applicable Occupational Safety and Health Laws; (b) none of
the operations of the Borrower or any Subsidiary are subject to any judicial or
administrative proceeding alleging the violation of any Environmental Law or
Occupational Safety and Health Law; (c) none of the operations of the Borrower
or any Subsidiary is the subject of federal or state investigation evaluating
whether any remedial action is needed to respond to (i) a spillage, disposal or
release into the environment of any Hazardous Material or other hazardous,
toxic or dangerous waste, substance or constituent, or other substance, or (ii)
any unsafe or unhealthful condition at any premises of the Borrower or any
Subsidiary; (d) neither the Borrower nor any Subsidiary has filed any notice
under any Environmental Law or Occupation Safety and Health Law indicating or
reporting (i) any past or present spillage, disposal or release into the
environment of, or treatment, storage or disposal of, any Hazardous Material or
other hazardous, toxic or dangerous waste, substance or constituent, or other
substance or (ii) any unsafe or unhealthful condition at any premises of the
Borrower or any Subsidiary; and (e) neither the Borrower nor any Subsidiary has
any known contingent liability in connection with (i) any spillage, disposal or
release into the environment of, or otherwise with respect to, any Hazardous
Material or other hazardous, toxic or dangerous waste, substance or
constituent, or other substance, or (ii) any unsafe or unhealthful condition at
any premises of the Borrower or any Subsidiary.
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ARTICLE V AFFIRMATIVE COVENANTS
From the date of this Agreement and thereafter until all Obligations of the
Borrower hereunder are paid in full, the Borrower agrees that unless the Lender
shall otherwise consent in writing, it will:
5.1 FINANCIAL STATEMENTS AND OTHER REPORTS.
5.1.1 FINANCIAL REPORTS. Furnish to the Lender in form satisfactory
to the Lender:
(a) ANNUAL AUDIT REPORT. As soon as available and in any
event within 90 days after the end of each fiscal year of the
Borrower, the annual audit report of the Borrower and the Subsidiaries
prepared on a consolidating and consolidated basis in conformity with
GAAP, consisting of at least statements of income, cash flow, changes
in financial position and stockholders' equity, and a consolidated and
consolidating balance sheet as at the end of such year, setting forth
in each case in comparative form corresponding figures from the
previous annual audit, certified, without qualification, by
independent certified public accountants of recognized standing
selected by the Borrower and acceptable to the Lender, together with
any management letters, management reports or other supplementary
comments or reports to the Borrower of its board of directors
furnished by such accountants.
(b) ACCOUNTANT'S CERTIFICATE. Together with the audited
financial statements required under Section 5.1.1(a), a certificate
from the accounting firm performing such audit (i) acknowledging its
understanding that the Lender and any Participant is relying on such
audit report and (ii) stating that it has reviewed this Agreement and
that in performing its examination, nothing came to its attention that
caused it to believe that any Event of Default or Unmatured Event of
Default exists, or, if such Unmatured Event of Default or Event of
Default exists, describing its nature.
(c) MONTHLY FINANCIAL STATEMENT. As soon as available and in
any event within 20 days after the end of each month of each fiscal
year of the Borrower, a copy of the unaudited financial statement of
the Borrower and the Subsidiaries prepared in the same manner as the
audit report referred to in Section 5.1.1(a), signed by the Borrower's
chief financial officer and consisting of at least consolidated and
consolidating statements of income, cash flow, changes in financial
position and stockholders' equity for the Borrower and the
Subsidiaries for such month and for the period from the beginning of
such fiscal year to the end of such month, and a consolidated and
consolidating balance sheet of the Borrower as at the end of such
month.
(d) PROJECTIONS. As soon as available and in any event not
later than 30 days following the last day of each fiscal year of the
Borrower, a projected financial statement of the Borrower and the
Subsidiaries prepared in the same manner as the audit report referred
to in Section 5.1.1(a), signed by the Borrower's chief financial
officer and presenting fairly the Borrower's best good faith
projections of the financial position and results of operations of the
Borrower and the Subsidiaries for each month of the following fiscal
year.
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(e) OFFICER'S CERTIFICATE. Together with the financial statements
furnished by the Borrower under Section 5.1.1(a) and (c), a certificate
of the Borrower's chief financial officer, dated the date of such
annual audit report or such monthly financial statement, as the case
may be, to the effect that no Event of Default or Unmatured Event of
Default has occurred and is continuing, or, if there is any such
event, describing it and the steps, if any, being taken to cure it,
and containing a computation of, and showing compliance with, each of
the financial ratios and restrictions contained in Articles V and VI
and Supplement A.
(f) GUARANTOR'S FINANCIAL STATEMENTS. As soon as available, and
in any event within 90 days following the last day of each fiscal year
of the Borrower, a sworn statement of the Guarantor, substantially in
the form set forth as Exhibit F, and including, without limitation, a
copy of the Guarantor's personal financial statement and a list of the
Guarantor's contingent liabilities.
(g) GAAP Changes. In the event that a material change occurs, in
the Lender's judgment, in GAAP, either the Lender and the Borrower
shall amend, in writing, the covenants in this Agreement, Supplement
A, and the other Loan Documents which are calculated on the basis of
GAAP to reflect such change, or, if the Lender and the Borrower fail
to agree on and enter into such an amendment, the Lender shall have
the right to deem such change in GAAP to be an Event of Default.
5.1.2 AGINGS; INELIGIBLE ACCOUNTS RECEIVABLE CERTIFICATION. Within 15
days after the end of each month, (a) a detailed aging of all Accounts
Receivable by invoice, including, without limitation, a reconciliation to the
aging report delivered to the Lender for the preceding month, (b) a
certification of ineligible Accounts Receivable and (c) an aging of all
accounts payable as of the end of the preceding month, each in form and content
acceptable to the Lender.
5.1.3 INVENTORY CERTIFICATION. Within two days after the end of each
week, an Inventory certification report as of the end of the preceding week for
all Inventory locations, in form and content acceptable to the Lender.
5.1.4 SALES AND COLLECTION REPORTS. Not later than 5:00 p.m.,
Minneapolis time, on each Business Day, a report of the Borrower's sales and
collections for such day for the immediately preceding Business Day, in form
and content acceptable to the Lender.
5.1.5 OTHER REPORTS.
(a) SEC AND OTHER REPORTS. Promptly upon the making or filing
thereof, copies of all financial statements, reports and proxy
statements mailed to the Borrower's shareholders, and copies of all
registration statements, periodic reports and other documents filed
with the Securities and Exchange Commission (or any successor thereto)
or any national securities exchange.
(b) REPORT OF CHANGE IN SUBSIDIARIES OR PARTNERSHIPS. Promptly
from time to time, a written report of any change in the list of the Borrower's
Subsidiaries set forth on Schedule 4.10 or in the list of partnerships and
joint ventures set forth on Schedule 4.11.
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(c) PATENTS, ETC. Promptly from time to time, a written report
of any change to the list of patents, trademarks, copyrights and other
information set forth in Schedule 4.16.
(D) OTHER REPORTS. The information required to be provided
pursuant to other provisions of this Agreement, and such other reports
from time to time requested by the Lender.
5.2 NOTICES. Notify the Lender in writing of any of the following
immediately upon learning of the occurrence thereof, describing the same and,
if applicable, the steps being taken by the Person(s) affected with respect
thereto:
(a) DEFAULT. The occurrence of (i) any Event of Default or
Unmatured Event of Default, and (ii) to the extent not included in
clause (i) above, the default by the Borrower, any other Obligor or
any Subsidiary under any note, indenture, loan agreement, mortgage,
lease, deed or other material similar agreement to which the Borrower,
any other Obligor or any Subsidiary, as appropriate, is a party or by
which it is bound.
(b) LITIGATION. The institution of any litigation, arbitration
proceeding or governmental proceeding affecting the Borrower, any
other Obligor, any Subsidiary, any Collateral or any Third Party
Collateral, whether or not considered to be covered by insurance.
(c) JUDGMENT. The entry of any judgment or decree against the
Borrower, any other Obligor or any Subsidiary, if the amount of such
judgment exceeds $50,000.
(d) ERISA. With respect to any Plan, the occurrence of a
Reportable Event (other than a Reportable Event for which the
reporting requirements have been waived by PBGC regulations) or any
"prohibited transaction" (as defined in Section 4975 of the Code), a
notice specifying the nature thereof and what action the Borrower
proposes to take with respect thereto, and, when received, copies of
any notice from PBGC of intention to terminate or have a trustee
appointed for any Plan; or the incurrence of any material increase in
the contingent liability of the Borrower, any other Obligor or any
Subsidiary with respect to any "employee welfare benefit plan" as
defined in Section 3(1) of ERISA which covers retired employees and
their beneficiaries.
(e) CHANGE IN COLLATERAL LOCATIONS. If any of the Borrower's
Inventory or Equipment is placed in locations other than those
identified in this Agreement or in Schedule 4.13.
(f) CHANGE IN PLACE(S) OF BUSINESS. Any proposed opening,
closing or other change in the list of offices and other places of
business of the Borrower and each Subsidiary set forth in Schedule
4.12, and any opening, closing or other change in the offices and
other places of business of each other Obligor.
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(g) CHANGE OF NAME. Any change in the name of the Borrower, any
other Obligor or any Subsidiary, and any change in the list of trade
names and trade styles set forth in Schedule 4.1.
(h) ENVIRONMENTAL AND SAFETY AND HEALTH MATTERS. Receipt of any
notice that the operations of the Borrower, any other Obligor or any
Subsidiary are not in full compliance with requirements of any
applicable Environmental Law or any Occupational Safety and Health
Law; receipt of notice that the Borrower, any other Obligor or any
Subsidiary is subject to federal, state or local investigation
evaluating whether any remedial action is needed to respond to (i) any
spillage, disposal or release into the environment of any Hazardous
Material or other hazardous, toxic or dangerous waste, substance or
constituent, or other substance, or (ii) any unsafe or unhealthful
condition at any premises of the Borrower, any other Obligor or any
Subsidiary; or receipt of notice that any properties or assets of the
Borrower any other Obligor or any Subsidiary are subject to an
Environmental Lien.
(i) ADVERSE EVENT. The occurrence of an Adverse Event.
(j) DEFAULT BY OTHERS. Any material default by any Account
Debtor or other Person obligated to the Borrower, any other Obligor,
or any Subsidiary, under any contract, chattel paper, note or other
evidence of amounts payable or due or to become due to the Borrower,
such Obligor or Subsidiary if the amount payable under such contract,
chattel paper, note or other evidence of amounts payable or due or to
become due is material.
(k) MOVEABLE COLLATERAL. If any of the Collateral or Third Party
Collateral shall consist of goods of a type normally used in more than
one state, whether or not actually so used, any use of any such goods
in any state other than a state in which the Borrower shall have
previously advised the Lender such goods will be used. The Borrower
agrees that such goods will not, unless the Lender shall otherwise
consent in writing, be used outside the continental United States or
in Louisiana.
(l) OTHER EVENTS. The occurrence of such other events as the
Lender may from time to time specify.
5.3 EXISTENCE. Maintain and preserve, and cause each Subsidiary to
maintain and preserve, its respective existence as a corporation or other form
of business organization, as the case may be, and all rights, privileges,
licenses, patents, patent rights, copyrights, trademarks, trade names,
franchises and other authority to the extent material and necessary for the
conduct of its respective business in the ordinary course as conducted from
time to time.
5.4 NATURE OF BUSINESS. Engage, and cause each Subsidiary to
engage, in substantially the same fields of business as it is engaged in on the
date hereof.
5.5 BOOKS, RECORDS AND ACCESS. Maintain, and cause each Subsidiary to
maintain, complete and accurate books and records (including, without
limitation, records relating to Accounts Receivable, Inventory, Equipment and
other Collateral), in which full and correct entries in conformity with GAAP
shall be made of all dealings and transactions in
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relation to its respective business and activities. Cause its books and records
as at the end of any calendar month to be posted and closed not more than 15
days after the last business day of such month. Permit, and cause each
Subsidiary to permit, access by the Lender and its agents or employees to the
books and records of the Borrower and such Subsidiary at the Borrower's or such
Subsidiary's place or places of business at intervals to be determined by the
Lender and without hindrance or delay, and permit, and cause each Subsidiary to
permit, the Lender or its agents and employees to inspect the Borrower's
Inventory and Equipment and such Subsidiary's inventory and equipment, and to
inspect, audit, check and make copies and/or extracts from the books, records,
journals, orders, receipts, correspondence and other data relating to
Inventory, Accounts Receivable, chattel paper, General Intangibles, Equipment
and any other Collateral or Third Party Collateral, or to any other
transactions between the parties hereto. Any and all such inspections and/or
audits shall be at the Borrower's expense.
5.6 INSURANCE. Maintain, and cause each Subsidiary to maintain,
insurance to such extent and against such hazards and liabilities as is
commonly maintained by companies similarly situated or as the Lender may
reasonably request from time to time. Keep the Collateral properly housed and
insured for its full insurable value against loss or damage by fire, theft,
explosion, sprinklers, collision (in the case of motor vehicles) and such other
risks as are customarily insured against by persons engaged in business similar
to that of the Borrower, with such companies, in such amounts and under
policies in such form as shall be satisfactory to the Lender. Certificates of
such policies of insurance have been delivered to the Lender prior to the date
hereof together with evidence of payment of all premiums therefor. The Borrower
shall cause each issuer of an insurance policy to provide the Lender, within 15
days after the date hereof, with an endorsement or an independent instrument
(a) substantially in the form of Exhibit G or such other form and containing
such other terms as shall be acceptable to the Lender and (b) showing loss
payable to the Lender and, if required by the Lender, naming the Lender as an
additional insured. The Borrower hereby directs all insurers under such
policies of insurance to pay all proceeds payable thereunder directly to the
Lender. The Borrower irrevocably makes, constitutes and appoints the Lender and
any Person whom the Lender may from time to time designate (and all officers,
employees or agents designated by the Lender or such Person) as the Borrower's
true and lawful attorney (and agent-in-fact) for the purpose of making,
settling and adjusting claims under such policies of insurance, endorsing the
name of the Borrower on any check, draft, instrument or other item of payment
for the proceeds of such policies of insurance and for making all
determinations and decisions with respect to such policies of insurance. In the
event the Borrower at any time or times hereafter shall fail to obtain or
maintain any of the policies of insurance required herein or to pay any premium
in whole or in part relating thereto, the Lender, without waiving or releasing
any obligations or default by the Borrower hereunder, may at any time or times
thereafter (but shall be under no obligation to do so) obtain and maintain such
policies of insurance and pay such premiums and take any other action with
respect thereto which the Lender deems advisable. All sums so disbursed by the
Lender, including reasonable Attorneys' Fees, court costs, expenses and other
charges relating thereto, shall be payable on demand by the Borrower to the
Lender.
5.7 INSURANCE SURVEY. Provide to the Lender at least annually within
90 days of the end of the Borrower's fiscal year, a certificate signed by its
chief financial officer that attests to and summarizes the property and
casualty insurance program carried by the Borrower and the Subsidiaries. This
summary shall include the insurer's(s') name, policy number(s), expiration
date(s), amount(s) of coverage, type(s) of coverage, the annual
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premium(s), Best's policyholder's and financial size ratings of the insurers,
exclusions, deductibles and self-insured retention and shall describe in detail
any retrospective rating plan, fronting arrangement or any other self-insurance
or risk assumption agreed to by the Borrower or any Subsidiary or imposed upon
the Borrower or any Subsidiary by any such insurer, as well as any
self-insurance program that is in effect. The Borrower shall (a) notify the
Lender in writing at least 30 days prior to any cancellation or material change
of any such insurance by the Borrower or any Subsidiary and (b) within five
business days after receipt of any notice (whether formal or informal) thereof,
of any cancellation or change in any of its insurance by any of its insurers or
any material change in the cost thereof or which reduces the policyholder's or
financial size ratings of the insurance carriers of the Borrower or any
Subsidiary, as established by Best's Insurance Reports. Annually, the Lender
shall have the right to request the Borrower to have a risk management survey
completed by a recognized independent risk management consultant acceptable to
it and the Lender which will identify, quantify and assess any catastrophic
uninsured, underinsured or self-insured exposures faced by the Borrower and the
Subsidiaries. The cost of such survey shall be borne solely by the Borrower. A
copy of the results of each such a survey shall be promptly delivered by the
Borrower to the Lender.
5.8 REPAIR. Maintain, preserve and keep, and cause each Subsidiary to
maintain, preserve and keep, its properties in good repair, working order and
condition, and from time to time make, and cause each Subsidiary to make, all
necessary and proper repairs, renewals, replacements, additions, betterments
and improvements thereto so that at all times the efficiency thereof shall be
fully preserved and maintained.
5.9 TAXES. Pay, and cause each Subsidiary to pay, when due, all of its
Taxes, unless and only to the extent that the Borrower or such Subsidiary, as
the case may be, is contesting such Taxes in good faith and by appropriate
proceedings and the Borrower or such Subsidiary has set aside on its books such
reserves or other appropriate provisions therefor as may be required by GAAP.
5.10 COMPLIANCE. Comply, and cause each Subsidiary to comply, with all
statutes and governmental rules and regulations applicable to it, including,
without limitation, the Fair Labor Standards Act.
5.11 COLLATERAL MONITORING. Permit the Lender to (a) use the Borrower's
stationery and sign the name of the Borrower to request verification of
Accounts Receivable or other Collateral from Account Debtors, and (b) use the
information recorded on or contained in any data processing equipment and
computer hardware and software to which the Borrower has access relating to
Accounts Receivable, Inventory, Equipment and/or other Collateral.
5.12 KEY MAN LIFE INSURANCE. Maintain insurance on the life of ▇▇▇▇ ▇.
▇▇▇▇▇▇ in an amount not less than $1,250,000, properly assigned to the Lender.
ARTICLE VI NEGATIVE COVENANTS
From the date of this Agreement and thereafter until all Obligations
of the Borrower hereunder are paid in full, the Borrower agrees that, unless
the Lender shall otherwise consent in writing, it will not, and will not permit
any Subsidiary to, do any of the following:
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6.1 MERGER. Merge or consolidate or enter into any analogous
reorganization or transaction with any Person.
6.2 SALE OF ASSETS. Sell, transfer, convey, lease, assign or otherwise
dispose (with or without recourse) of any of its assets (including, without
limitation, any Accounts Receivable, instruments or chattel paper) except for
sales and leases of Inventory in the ordinary course of business.
6.3 PURCHASE OF ASSETS. Purchase or lease or otherwise acquire all or
substantially all the assets of any Person.
6.4 ERISA. Permit any condition to exist in connection with any Plan
which might constitute grounds for the PBGC to institute proceedings to have
such Plan terminated or a trustee appointed to administer such Plan; permit any
Plan to terminate under any circumstances which would cause the lien provided
for in Section 4068 of ERISA to attach to any property, revenue or asset of the
Borrower or any Subsidiary; or permit the underfunded amount of Plan benefits
guaranteed under Title IV of ERISA to exceed $100,000.
6.5 CHANGES IN COLLATERAL OR BUSINESS LOCATIONS. Change (a) the
location of its chief executive office or chief place of business; (b) its
name; or (c) the locations where it stores or maintains Inventory or Equipment
without, in each case, at least 30 days' prior written notice to the Lender.
6.6 SUBSIDIARIES, PARTNERSHIPS AND JOINT VENTURES. Either: (a) form or
acquire any corporation which would thereby become a Subsidiary; or (b) form or
enter into any partnership as a limited or general partner or into any joint
venture.
6.7 OTHER AGREEMENTS. Enter into any agreement, bond, note or other
instrument with or for the benefit of any Person other than the Lender which
would (a) prohibit the Borrower or such Subsidiary from granting, or otherwise
limit the ability of the Borrower or such Subsidiary to grant, to the Lender
any Lien on any assets or properties of the Borrower or such Subsidiary, or (b)
be violated or breached by the Borrower's performance of its obligations under
the Loan Documents.
6.8 RESTRICTED PAYMENTS. Purchase or redeem any shares of its stock,
declare or pay any dividends thereon (other than stock dividends and dividends
payable to the Borrower), make any distribution to stockholders as such (other
than the Borrower) or set aside any funds for any such purpose, and not prepay,
purchase or redeem any subordinated Indebtedness of the Borrower or any
Subsidiary.
6.9 BORROWER'S AND SUBSIDIARIES' STOCK. Purchase or otherwise acquire
any shares of the stock of the Borrower, and not take any action which will
result in a decrease in the Borrower's or any Subsidiary's ownership interest in
any Subsidiary.
6.10 LEASES. Enter into or permit to exist any arrangements for the
leasing by the Borrower or any Subsidiary, as lessee, of any real or personal
property (or any interest therein) under leases (other than Capitalized Leases)
or otherwise which require the payment by the Borrower and the Subsidiaries on
a consolidated basis of rental amounts in the aggregate in excess of $100,000
in any one fiscal year; provided, however, that if the Borrower shall cease
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to operate the Stockton, Illinois facility, such amount shall be reduced to
$30,000 in any one fiscal year.
6.11 INVESTMENTS. Acquire for value, make, have or hold any Investments,
except: (a) advances to Related Parties (excluding Cham Foods) not to exceed in
$650,000 in the aggregate, including any Investments listed on Schedule 6.11;
(b) advances to Cham Foods not to exceed $200,000 in the aggregate, including
any Investments listed on Schedule 6.11; (c) advances to employees of the
Borrower or any Subsidiary for travel or other ordinary business expenses,
provided that the aggregate amount outstanding at any one time shall not exceed
$10,000 for any single employee and $50,000 in the aggregate for all employees;
(d) advances to subcontractors and suppliers in maximum aggregate amounts
reasonably acceptable to the Lender; (e) extensions of credit in the nature of
Accounts Receivable or notes receivable arising from the sale of goods and
services in the ordinary course of business; (f) shares of stock, obligations
or other securities received in settlement of claims arising in the ordinary
course of business; (g) Investments (other than Investments in the nature of
loans or advances) outstanding on the date hereof in subsidiaries by the
Borrower and other Subsidiaries; (h) other Investments outstanding on the date
hereof and listed on Schedule 6.11; and (i) other Investments consented to by
the Lender in writing.
6.12 INDEBTEDNESS. Incur, create, issue, assume or suffer to exist any
Indebtedness, including, without limitation, Indebtedness as lessee under any
Capitalized Lease, except: (a) Indebtedness under the terms of this Agreement;
(b) Subordinated Debt; (c) Indebtedness hereafter incurred in connection with
Liens permitted under Section 6.13(d); (d) other Indebtedness outstanding on
the date hereof and listed on Schedule 6.12; and (e) other Indebtedness
approved in writing by the Lender.
6.13 LIENS. Create, incur, assume or suffer to exist any Lien with
respect to any property, revenues or assets now owned or hereafter arising or
acquired, except: (a) Liens for current Taxes not delinquent or Taxes being
contested in good faith and by appropriate proceedings and as to which such
reserves or other appropriate provisions as may be required by GAAP are being
maintained; (b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's, and other like statutory Liens arising in the ordinary course of
business securing obligations which are not overdue or which are being
contested in good faith and by appropriate proceedings and as to which such
reserves or other appropriate provisions as may be required by GAAP are being
maintained; (c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation; (d) Liens in
connection with Capital Expenditures attaching only to the property being
acquired if the Indebtedness secured thereby does not exceed 100% of the fair
market value of such property at the time of acquisition thereof; (e) Liens in
favor of the Lender; (f) Liens referred to in Section 4.9; and (g) Liens
consented to by the Lender in writing.
6.14 CONTINGENT LIABILITIES. Either: (a) endorse, guarantee,
contingently agree to purchase or to provide funds for the payment of, or
otherwise become contingently liable upon, any obligation of any other Person,
except by the endorsement of negotiable instruments for deposit or collection
(or similar transactions) in the ordinary course of business, or (b) agree to
maintain the net worth or working capital of, or provide funds to satisfy any
other financial test applicable to, any other Person.
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6.15 CHANGE IN ACCOUNTS RECEIVABLE. After the occurrence of an Event of
Default or receipt of notice from the Lender that the Lender intends to
commence direct collection of Accounts Receivable, permit or agree to any
extension, compromise or settlement or make any change or modification of any
kind or nature with respect to any Account Receivable, including any of the
terms relating thereto.
6.16 UNCONDITIONAL PURCHASE OBLIGATIONS. Enter into or be a party to any
contract for the purchase of materials, supplies or other property or services,
if such contract requires that payment be made by it regardless of whether or
not delivery is ever made of such materials, supplies or other property or
services.
6.17 USE OF PROCEEDS. Use or permit any proceeds of the Loans to be used,
either directly or indirectly, for the purpose, whether immediate, incidental
or ultimate, of "purchasing or carrying any margin stock" within the meaning of
Regulation U of the Federal Reserve Board, as amended from time to time, and
furnish to the Lender upon request, a statement in conformity with the
requirements of Federal Reserve Form U-1 referred to in Regulation U of the
Federal Reserve Board.
6.18 TRANSACTIONS WITH RELATED PARTIES. Enter into or be a party to any
transaction or arrangement, including, without limitation, the purchase, sale,
lease or exchange of property or the rendering of any service, with any Related
Party, except in the ordinary, course of and pursuant to the reasonable
requirements of the Borrower's or such Subsidiary's business and upon fair and
reasonable terms no less favorable to the Borrower or such Subsidiary than
would obtain in a comparable arm's-length transaction with a Person not a
Related Party.
6.19 CHANGE IN MANAGEMENT OR LINE(S) OF BUSINESS. Make any substantial
change in the senior management of the Borrower or any Subsidiary, including,
without limitation, any failure of the Guarantor to continue as president of
the Borrower, or any change in the Borrower's or any Subsidiary's line(s) of
business.
ARTICLE VII EVENTS OF DEFAULT AND REMEDIES
7.1 EVENTS OF DEFAULT. The occurrence of any one or more of the
following events shall constitute an Event of Default:
(a) NON PAYMENT. The Borrower shall fail to pay, when due or
declared due, any of the Obligations;
(b) NON-PAYMENT OF OTHER INDEBTEDNESS. The Borrower, any other
Obligor or any Subsidiary shall fail to pay, when due, whether by
acceleration or otherwise (subject to any applicable grace period), any
Indebtedness of, or guaranteed by, the Borrower, such other Obligor
or such Subsidiary;
(c) ACCELERATION OF OTHER INDEBTEDNESS. Any event or condition
shall occur which results in the acceleration of the maturity of any
Indebtedness of, or guaranteed by, the Borrower, any other Obligor or any
Subsidiary or enables the holder or holders of such other Indebtedness or
any trustee or agent for such holders (any required notice of default
having been given and any applicable grace period having expired) to
accelerate the maturity of such other Indebtedness;
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(d) OTHER OBLIGATIONS. The Borrower, any other Obligor or any
Subsidiary shall fail to pay, when due, whether by acceleration or
otherwise, or perform or observe (subject to any applicable grace period
or waiver of such default) (i) any obligation or agreement of the
Borrower, such other Obligor or such Subsidiary to or with the Lender
(other than any obligation or agreement of the Borrower hereunder and
under any Notes) or (ii) any material obligation or agreement of the
Borrower, such other Obligor or such Subsidiary to or with any other
Person (other than (A) any such material obligation or agreement
constituting or related to Indebtedness, (B) accounts payable arising in
the ordinary course of business, and (C) any material obligation or
agreement of any Subsidiary to the Borrower or to any other Subsidiary),
except only to the extent that the occurrence of any such failure is being
contested by the Borrower, such other Obligor or such Subsidiary, as the
case may be, in good faith and by appropriate proceedings and the
Borrower, such other Obligor or such Subsidiary, as applicable, shall have
set aside on its books such reserves or other appropriate provisions
therefor as may be required by GAAP;
(e) INSOLVENCY. The Borrower, any other Obligor or any Subsidiary
becomes insolvent, or generally fails to pay, or admits in writing its
inability to pay, its debts as they mature, or applies for, consents to,
or acquiesces in, the appointment of a trustee, receiver or other
custodian for the Borrower, such other Obligor or such Subsidiary, or for
a substantial part of the property of the Borrower, such other Obligor or
such Subsidiary, or makes a general assignment for the benefit of
creditors; or, in the absence of such application, consent or
acquiescence, a trustee, receiver or other custodian is appointed for the
Borrower, any other Obligor or any Subsidiary or for a substantial part of
the property of the Borrower, any other Obligor or any Subsidiary and is
not discharged or dismissed within 30 days; or any bankruptcy,
reorganization, debt arrangement or other proceeding under any bankruptcy
or insolvency law, or any dissolution or liquidation proceeding, is
instituted by or against the Borrower, any other Obligor or any
Subsidiary; or any warrant of attachment or similar legal process is
issued against any substantial part of the property of the Borrower, any
other Obligor or any Subsidiary;
(f) ERISA. The institution by the Borrower or any ERISA Affiliate
of steps to terminate any Plan if, in order to effectuate such
termination, the Borrower or any ERISA Affiliate would be required to make
a contribution to such Plan or would incur a liability or obligation to
such Plan, in excess of $100,000; or the institution by the PBGC of steps
to terminate any Plan;
(g) NON-COMPLIANCE WITH THIS AGREEMENT.
(i) The Borrower shall fail to comply with any of the
Borrower's agreements set forth in Section 3.5 of this Agreement
and Section 5 of Supplement A); or
(ii) The Borrower shall fail to comply with any of the
Borrower's agreements set forth in this Agreement (and not
constituting an Event of Default under any of the other
subsections of this Section 7.1, including,
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without limitation, Section 7.1(g)(i)), and such failure to comply shall
continue for ten days;
(h) NON-COMPLIANCE WITH LOAN DOCUMENTS. Failure by the Borrower, any other
Obligor or any Subsidiary to comply with any of its respective agreements set
forth in any Loan Documents other than this Agreement (and not constituting an
Event of Default under any of the other subsections of this Section 7.1), and
such failure to comply shall continue after the grace period (if any) set forth
therein;
(i) WARRANTY. Any warranty made by the Borrower or any other Obligor in
any of the Loan Documents is untrue or misleading in any material respect when
made or deemed made; or any schedule, statement, report, notice, certificate or
other writing furnished by the Borrower or any other Obligor to the Lender is
untrue or misleading in any material respect on the date as of which the facts
set forth therein are stated or certified; or any certification made or deemed
made by the Borrower or any other Obligor to the Lender is untrue or misleading
in any material respect on or as of the date made or deemed made;
(j) LITIGATION. There shall be entered against any one of the Borrower, any
other Obligor or any Subsidiary one or more judgments or decrees in excess of
$100,000 in the aggregate at any one time outstanding, excluding those
judgments or decrees (i) that shall have been outstanding less than 30 calendar
days from the entry thereof or (ii) for and to the extent which the Borrower,
such Obligor or such Subsidiary, as applicable, is insured and with respect to
which the insurer has assumed responsibility in writing or for and to the
extent which the Borrower, such Obligor or such Subsidiary, as applicable, is
otherwise indemnified if the terms of such indemnification are satisfactory to
the Lender;
(k) DEATH OF OBLIGOR. If any natural person who is an Obligor, partner in
a partnership which is an Obligor, or owner of a material interest in a
corporate Obligor, shall die or be declared legally incompetent;
(l) VALIDITY. If the validity or enforceability of any of the Loan
Documents shall be challenged by the Borrower, any other Obligor or any other
Person, or shall fail to remain in full force and effect;
(m) CONDUCT OF BUSINESS. If the Borrower, any other Obligor or any
Subsidiary is enjoined, restrained or in any way prevented by court order,
which has not been dissolved or stayed within five Business Days, from
conducting all or any material part of its business affairs;
(n) ADVERSE EVENT. The Lender shall have determined in good faith (which
determination shall be conclusive) that (i) an Adverse Event has occurred or
(ii) the Lender's interest in any material Collateral or Third Party Collateral
has been adversely affected or impaired, or the value thereof to the Lender has
been diminished to a material extent, or (iii) the prospect of payment or
performance of any obligation or agreement of the Borrower or any other Obligor
under any of the Loan Documents is materially impaired, and the condition
giving rise to such determination does not
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constitute an Event of Default under any of the other subsections of this
Section 7.1; and
(o) OWNERSHIP. The Guarantor shall cease to own at least 20% of the shares
of all voting stock of the Borrower.
7.2 EFFECT OF EVENT OF DEFAULT; REMEDIES.
(a) In the event that one or more Events of Default described in Section
7.1(e) shall occur, then the Credit extended under this Agreement shall
terminate and all Obligations hereunder and under any Notes shall be
immediately due and payable without demand, notice or declaration of any kind
whatsoever.
(b) In the event an Event of Default other than one described in Section
7.1(e) shall occur, then the Lender may declare all Obligations hereunder and
under any Notes immediately due and payable without demand or notice of any
kind whatsoever, whereupon the Credit extended under this Agreement shall
terminate and all Obligations hereunder and under any Notes shall be
immediately due and payable. The Lender shall promptly advise the Borrower of
any such declaration, but failure to do so shall not impair the effect of such
declaration.
(c) In the event of the occurrence of any Event of Default the Lender may
exercise any one or more or all of the following remedies, all of which are
cumulative and non-exclusive:
(i) any remedy contained in the Loan Documents or any Supplemental
Documentation;
(ii) any rights and remedies available to the Lender under the
Uniform Commercial Code as enacted in Minnesota as of the date of this
Agreement, and any other applicable law;
(iii) without notice, demand or legal process of any kind, the
Lender may take possession of any or all of the Collateral (in addition to
Collateral which it might already have in its possession), wherever it
might be found, and for that purpose may pursue the same wherever it may
be found, and may enter into any premises where any of the Collateral may
be or is supposed to be, and search for, take possession of, remove, keep
and store any of the Collateral until the same shall be sold or otherwise
disposed of, and the Lender shall have the right to store the same in any
of the Borrower's premises without cost to the Lender;
(iv) at the Lender's request, the Borrower will, at the Borrower's
expense, assemble the Collateral and make it available to the Lender at a
place or places to be designated by the Lender which is reasonably
convenient to the Lender and the Borrower; and
(v) the Lender at its option, and pursuant to notification given
to the Borrower as provided for below, may sell any Collateral actually
or constructively
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in its possession at public or private sale and apply the proceeds
thereof as provided below.
(d) In the event of the occurrence of any Event of Default or
Unmatured Event of Default the Lender may, without notice, demand or legal
process of any kind, draw on the Collateral Letter of Credit in a manner
consistent with its terms.
7.3 SETOFF. In addition to and not in limitation of all rights of offset
that the Lender or any other holder of a Note may have under applicable law,
the Lender or such other holder of a Note shall, upon the occurrence of any
Event of Default, or any Unmatured Event of Default described in Section 7.1(e)
hereof, have the right to appropriate and apply to the payment of the
Obligations any and all balances, credits, deposits, accounts or moneys of the
Borrower then or thereafter with the Lender, or any Affiliate, or other holder.
ARTICLE VIII COLLATERAL AND THE LENDER'S RIGHTS
8.1 NOTICE OF DISPOSITION OF COLLATERAL. Any notification of intended
disposition of any of the Collateral required by law shall be deemed reasonably
and properly given if given at least ten calendar days before such disposition.
8.2 APPLICATION OF PROCEEDS OF COLLATERAL. Any proceeds of any
disposition by the Lender of any of the Collateral may be applied by the Lender
to the payment of expenses in connection with the taking possession of,
storing, preparing for sale, and disposition of Collateral, including
Attorneys' Fees and legal expenses, and any balance of such proceeds may be
applied by the Lender toward the payment of such of the Obligations, and in
such order of application, as the Lender may from time to time elect.
8.3 CARE OF COLLATERAL. The Lender shall be deemed to have exercised
reasonable care in the custody and preservation of any Collateral in its
possession if it takes such action for that purpose as the Borrower requests in
writing, but failure of the Lender to comply with such request shall not, of
itself, be deemed a failure to exercise reasonable care, and no failure of the
Lender to preserve or protect any rights with respect to such Collateral
against prior parties, or to do any act with respect to the preservation of
such Collateral not so requested by the Borrower, shall be deemed a failure to
exercise reasonable care in the custody or preservation of such Collateral.
8.4 PERFORMANCE OF BORROWER'S OBLIGATIONS. The Lender shall have the
right, but shall not be obligated, to discharge any claims against or Liens,
and any Taxes at any time levied or placed upon any or all Collateral
including, without limitation, those arising under statute or in favor of
landlords, taxing authorities, government, public and/or private warehousemen,
common and/or private carriers, processors, finishers, draymen, coopers,
dryers, mechanics, artisans, laborers, attorneys, courts, or others. The Lender
may also pay for maintenance and preservation of Collateral. The Lender may,
but is not obligated to, perform or fulfill any of the Borrower's
responsibilities under this Agreement which the Borrower has failed to perform
or fulfill.
8.5 LENDER'S RIGHTS. None of the following shall affect the obligations
of the Borrower to the Lender under this Agreement or the Lender's rights with
respect to the remaining Collateral or any Third Party Collateral (any or all
of which actions may be taken by
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the Lender at any time, whether before or after an Event of Default, at its
sole and absolute discretion and without notice to the Borrower):
(a) acceptance or retention by the Lender of other property or
interests in property as security for the Obligations, or acceptance or
retention of any obligor(s), in addition to the Borrower, with respect to
any of the Obligations;
(b) release of its security interest in, or surrender or release
of, or the substitution or exchange of or for, all or any part of the
Collateral or any Third Party Collateral or any other property securing
any of the Obligations (including, without limitation, any property of any
Obligor other than the Borrower), or any extension or renewal for one or
more periods (whether or not longer than the original period), or
release, compromise, alteration or exchange, of any obligations of any
guarantor or other Obligor with respect to any Collateral or any such
property;
(c) extension or renewal for one or more periods (whether or not
longer than the original period), or release, compromise, alteration or
exchange of any of the Obligations, or release or compromise of any
obligation of any Obligor with respect to any of the Obligations; or
(d) failure by the Lender to resort to other security or pursue
any Person liable for any of the Obligations before resorting to the
Collateral.
ARTICLE IX CONDITIONS PRECEDENT
9.1 CONDITIONS PRECEDENT TO INITIAL LOANS. The obligation of the
Lender to make the initial Loans shall be subject to the satisfaction of the
following conditions precedent, in addition to the applicable conditions
precedent set forth in Section 9.2:
9.1.1 NO CHANGE IN CONDITION. No change in the condition or
operations, financial or otherwise, of the Borrower, any other Obligor or
any Subsidiary, shall have occurred which change, in the sole credit
judgment of the Lender, may constitute an Adverse Event or have a material
adverse effect on any Collateral or Third Party Collateral or the Lender's
interest therein.
9.1.2 ACCOUNTING METHODS. The Borrower shall not have made any
material, as determined by the Lender, change in its accounting methods or
principles.
9.1.3 SURVEY. The Lender shall have completed its updated survey
of the business, operations and assets of the Borrower, each Subsidiary
and each other Obligor, and such survey shall provide the Lender with
results and information which, in the Lender's determination, are
satisfactory to the Lender.
9.1.4 NO MATERIAL TRANSACTION. None of the Borrower, any other
Obligor or any Subsidiary shall have entered into any material, as
determined by the Lender, commitment or transaction, including, without
limitation, transactions for borrowings and capital expenditures, which
are not in the ordinary course of their respective businesses.
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9.1.5 LITIGATION. No litigation shall be outstanding or have been
instituted or threatened which the Lender determines to be material against the
Borrower, any other Obligor or any Subsidiary.
9.1.6 FILING OF DOCUMENTS. All financing statements, mortgages
and other documents relating to the Collateral and Third Party Collateral shall
have been filed or recorded, as appropriate.
9.1.7 DELIVERY OF DOCUMENTS. The Borrower shall have delivered to
the Lender with each of the following, each duly executed and dated the date of
the initial Loans or such earlier date as shall be acceptable to the Lender:
(a) RESOLUTIONS. A copy, duly certified by the secretary or
an assistant secretary of the Borrower, of (i) the resolutions
of the Board of Directors of the Borrower authorizing (1) the
borrowings by the Borrower hereunder, (2) the execution, delivery
and performance by the Borrower of the Loan Documents to which
the Borrower is a party or by which it is bound and (3) certain
officers or employees of the Borrower to request borrowings by
telephone and to execute Borrowing Base Certificates; (ii) all
documents evidencing other necessary corporate action; and (iii)
all approvals or consents, if any, with respect to the Loan
Documents;
(b) INCUMBENCY CERTIFICATE. A certificate of the secretary
or an assistant secretary of the Borrower, certifying the names
of the officers of the Borrower authorized to sign the Loan
Documents to which it is a party and any Supplemental
Documentation, together with the true signatures of such
officers;
(c) COLLATERAL LETTER OF CREDIT. The duly executed
Collateral Letter of Credit;
(d) GUARANTY. The duly executed Guaranty;
(e) ASSIGNMENT OF LIFE INSURANCE. The duly executed
Assignment of Life Insurance;
(f) SUBORDINATION AGREEMENTS. A duly executed Subordination
Agreement from each Subordinated Lender;
(g) OPINION. A legal opinion of Brennan, Steil, Basting &
▇▇▇▇▇▇▇▇▇, S.C., counsel to the Borrower, substantially in the
form set forth as Exhibit H;
(h) BORROWER'S CERTIFICATE. The certificate of the
President of the Borrower certifying, to the best of his/her
knowledge after diligent inquiry, to the fulfillment of all
conditions precedent to closing and funding the secured financing
transaction contemplated by this Agreement and to the truth and
accuracy, as of such date, of the representations and warranties
of the Borrower contained in the Loan Documents to which the
Borrower is a party;
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(i) INSURANCE. Evidence satisfactory to the Lender of the
existence of insurance on the Collateral and Third Party
Collateral in amounts and with insurers acceptable to the
Lender, together with evidence establishing that the Lender is
named as a loss payee on all related insurance policies;
(j) BYLAWS. A copy, duly certified by the secretary or an
assistant secretary of the Borrower, of the Borrower's Bylaws;
(k) ARTICLES OF INCORPORATION. A copy, duly certified by
the secretary or an assistant secretary of the Borrower, of the
Borrower's Articles of Incorporation;
(l) GOOD STANDING CERTIFICATES. Certificates of good
standing as to the Borrower and each of other corporate or
partnership Obligor issued by the Secretary of State of the state
in which the Borrower or such other Obligor, as applicable, is
organized, and each other state in which the failure of the
Borrower or such other Obligor, as applicable, to be in good
standing would constitute an Adverse Event or have a material
adverse effect on the Lender's rights in any Collateral or Third
Party Collateral;
(m) DISBURSEMENT LETTER. Written authorization and
instructions from the Borrower, in form satisfactory to the
Lender, for disbursement of the proceeds of the initial Loans;
(n) PAYOFF LETTER. Evidence satisfactory to the Lender
that all obligations of the Borrower to (a) Norwest Business
Credit, Inc., (b) Norwest Equipment Finance, Inc., (c) Bank of Sun
Prairie, (d) West Central Minnesota Initiative Fund, and (e) Bank
Leumi Le-Israel have been paid in full and that each has
terminated, or agreed to terminate, all of its Liens, if any, on
the property of the Borrower and all public record filings
evidencing such Liens;
(o) LANDLORDS; MORTGAGEES AND WAREHOUSEMEN WAIVERS. If
required by the Lender, (i) from each lessor or landlord
identified on Schedule 4.12 or Schedule 4.13, a landlord waiver,
(ii) from each mortgagee identified on Schedule 4.12 or Schedule
4.13, a mortgagee waiver, and (iii) from each operator of a public
warehouse where Inventory is stored, a letter from such operator,
in each case in form acceptable to the Lender; and
(p) OTHER. Such other documents, instruments or agreements
as the Lender shall determine to be necessary or desirable.
9.1.8 SECURITY INTEREST. The Lien in the Collateral and Third Party
Collateral granted to the Lender to secure the Obligations shall be
senior, perfected Liens except as otherwise agreed by the Lender.
9.1.9 RESTRICTED ACCESS LOCKBOX; COLLATERAL ACCOUNT AND
DISBURSEMENT ACCOUNT AGREEMENT. The Borrower shall have entered into a
Restricted Access Lockbox; Collateral Account and Disbursement Account
Agreement, substantially in the
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form of Exhibit I, with the Lender and FBNA, for, among other things,
the collection and remittance to the Lender of cash proceeds of the
Collateral.
9.1.10 EFFECT OF LAW. No law or regulation affecting the Lender's
entering into the secured financing transaction contemplated by this
Agreement shall impose upon the Lender any material obligation, fee,
liability, loss, cost, expense or damage.
9.1.11 EXHIBITS; SCHEDULES. All Exhibits and Schedules to the Loan
Documents shall have been completed in form and substance satisfactory
to the Lender and shall contain no facts or information which the
Lender, in its sole judgment, determines to be unacceptable.
9.2 CONDITIONS PRECEDENT TO ALL LOANS. The obligation of the Lender to
make any Loan or issue, or cause to be issued, any Letter of Credit
(including the initial Loans) shall be subject to the satisfaction of the
following conditions precedent:
(a) REPRESENTATIONS AND WARRANTIES. All of the representations and
warranties of the Borrower and each other Obligor set forth in the Loan
Documents to which the Borrower or such other Obligor, as applicable, is
a party shall be true and correct.
(b) EVENT OF DEFAULT. Immediately before and after making such Loan or
issuing, or causing to be issued such Letter of Credit, no Event of
Default or Unmatured Event of Default shall exist or be continuing.
ARTICLE X INDEMNITY
10.1 ENVIRONMENTAL AND SAFETY AND HEALTH INDEMNITY. The Borrower hereby
indemnifies the Lender and agrees to hold the Lender harmless from and
against any and all losses, liabilities, damages, injuries, costs, expenses
and claims of any and every kind whatsoever (including, without limitation,
court costs and Attorneys' Fees) which at any time or from time to time may
be paid, incurred or suffered by, or asserted against, the Lender for, with
respect to, or as a direct or indirect result of the violation by the
Borrower or any Subsidiary, of any Environmental Law or Occupational Safety
and Health Law; or with respect to, or as a direct or indirect result of (a)
the presence on or under, or the escape, seepage, leakage, spillage,
disposal, discharge, emission or release from, properties utilized by the
Borrower and/or any Subsidiary in the conduct of its business into or upon
any land, the atmosphere, or any watercourse, body of water or wetland, of
any Hazardous Material or other hazardous, toxic or dangerous waste,
substance or constituent, or other substance (including, without limitation,
any losses, liabilities, damages, injuries, costs, expenses or claims
asserted or arising under the Environmental Laws) or (b) the existence of
any unsafe or unhealthful condition on or at any premises utilized by the
Borrower and/or any Subsidiary in the conduct of its business. The
provisions of and undertakings and indemnification set out in this Section
10.1 shall survive satisfaction and payment of the Obligations and
termination of this Agreement.
10.2 GENERAL INDEMNITY. In addition to the payment of expenses pursuant
to Section 12.3, whether or not the transactions contemplated hereby shall
be consummated, the Borrower agrees to indemnify, pay and hold the Lender
and any holder of any Notes, and the officers, directors, employees, agents,
and affiliates of the Lender and such holders
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(collectively called the "Indemnitees") harmless from and against, any and
all other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, expenses and disbursements of any kind or
nature whatsoever (including, without limitation, the reasonable fees and
disbursements of counsel for any of such Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced or
threatened, whether or not any of such Indemnitees shall be designated a
party thereto), that may be imposed on, incurred by, or asserted against the
Indemnitees, in any manner relating to or arising out of the Loan Documents,
the statements contained in any commitment letters delivered by the Lender,
the Lender's agreement to make the Loans or to issue Letters of Credit
hereunder, or the use or intended use of any Letters of Credit, or the use
or intended use of the proceeds of any of the Loans (the "Indemnified
Liabilities"); provided, however, that the Borrower shall have no obligation
to an Indemnitee hereunder with respect to indemnified liabilities arising
from the gross negligence or willful misconduct of an Indemnitee. To the
extent that the undertaking to indemnify, pay and hold harmless set forth in
the preceding sentence may be unenforceable because it is violative of any
law or public policy, the Borrower shall contribute the maximum portion that
it is permitted to pay and satisfy under applicable law, to the payment and
satisfaction of all indemnified liabilities incurred by the Indemnitees or
any of them. The provisions of the undertakings and indemnification set out
in this Section 10.2 shall survive satisfaction and payment of the
Obligations and termination of this Agreement.
10.3 CAPITAL ADEQUACY. If the Lender shall reasonably determine that
the application or adoption of any law, rule, regulation, directive,
interpretation, treaty or guideline regarding capital adequacy, or any
change therein or in the interpretation or administration thereof, whether
or not having the force or law (including, without limitation, application
of changes to Regulation H and Regulation Y of the Federal Reserve Board
issued by the Federal Reserve Board on January 19, 1989 and regulations of
the Comptroller of the Currency, Department of the Treasury, 12 CFR Part 3,
Appendix A, issued by the Comptroller of the Currency on January 27, 1989)
increases the amount of capital required or expected to be maintained by the
Lender or any Person controlling the Lender, and such increase is based upon
the existence of the Lender's obligations hereunder and other commitments of
this type, then from time to time, within 10 days after demand from the
Lender, the Borrower shall pay to the Lender such amount or amounts as will
compensate the Lender or such controlling Person, as the case may be, for
such increased capital requirement. The determination of any amount to be
paid by the Borrower under this Section 10 shall take into consideration the
policies of the Lender or any Person controlling the Lender with respect to
capital adequacy and shall be based upon any reasonable averaging,
attribution and allocation methods. A certificate of the Lender setting
forth the amount or amounts as shall be necessary to compensate the Lender
as specified in this Section 10.3 shall be delivered to the Borrower and
shall be conclusive in the absence of manifest error.
ARTICLE XI ADDITIONAL PROVISIONS
Additional provisions are set forth in Supplement A.
ARTICLE XII GENERAL
12.1 BORROWER'S WAIVER. Except as otherwise provided for in this
Agreement, the Borrower waives (a) presentment, demand and protest and
notice of presentment, protest, default, non-payment, maturity, release,
compromise, settlement, one or more extensions or
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renewals of any or all commercial paper, accounts, documents, instruments,
chattel paper and guaranties at any time held by the Lender on which the
Borrower may in any way be liable and hereby ratifies and confirms whatever
the Lender may do in this regard; (b) all rights to notice and a hearing
prior to the Lender's taking possession or control of, or the Lender's
relevy, attachment or levy on or of, the Collateral or any bond or security
which might be required by any court prior to allowing the Lender to
exercise any of the Lender's remedies; and (c) the benefit of all
valuation, appraisement and exemption laws. The Borrower acknowledges that
it has been advised by counsel of its choice with respect to this Agreement
and the transactions evidenced by this Agreement.
12.2 EXPENSES; ATTORNEY'S FEES. The Borrower agrees, whether or not any
Loan is made hereunder, to pay the Lender upon demand for all expenses and
Attorneys' Fees, including, without limitation, those incurred by the
Lender in connection with (a) the preparation, negotiation and execution of
the Loan Documents, (b) the preparation of any and all amendments to the
Loan Documents and all other instruments or documents provided for therein
or delivered or to be delivered thereunder or in connection therewith, (c)
the collection or enforcement of the Borrower's or any other Obligor's
obligations under any of the Loan Documents and (d) the collection or
enforcement of any of the Lender's rights in or to any Collateral or Third
Party Collateral. The Borrower also agrees (y) to indemnify and hold the
Lender harmless from any loss or expense which may arise or be created by
the acceptance of telephonic or other instructions for making Loans and (z)
to pay, and save the Lender harmless from all liability for, any stamp or
other taxes which may be payable with respect to the execution or delivery
of this Agreement or the issuance of any Note or of any other instruments
or documents provided for herein or to be delivered hereunder or in
connection herewith. The Borrower's foregoing obligations shall survive any
termination of this Agreement.
12.3 LENDER FEES AND CHARGES. The Borrower agrees to pay the Lender, or
any Affiliate, on demand the customary fees and charges of the Lender, or
such Affiliate, for maintenance of accounts with the Lender, or such
Affiliate, or for providing other services to the Borrower. The Lender may,
in its sole and absolute discretion, provide for such payment by charging
the Disbursment Account or any other account of the Borrower with FBNA or
advancing the amount thereof to the Borrower as a Loan.
12.4 NO WAIVER BY LENDER; AMENDMENTS. No failure or delay on the part
of the Lender in the exercise of any power or right, and no course of
dealing between the Borrower and the Lender shall operate as a waiver of
such power or right, nor shall any single or partial exercise of any power
or right preclude other or further exercise thereof or the exercise of any
other power or right. The remedies provided for herein are cumulative and
not exclusive of any remedies which may be available to the Lender at law or
in equity. No notice to or demand on the Borrower not required hereunder
shall in any event entitle the Borrower to any other or further notice or
demand in similar or other circumstances or constitute a waiver of the right
of the Lender to any other or further action in any circumstances without
notice or demand. No amendment, modification or waiver of, or consent with
respect to, any provision of this Agreement shall in any event be effective
unless the same shall be in writing and signed and delivered by the Lender.
Any waiver of any provision of this Agreement, and any consent to any
departure by the Borrower from the terms of any provision of this Agreement,
shall be effective only in the specific instance and for the specific
purpose for which given.
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50
12.5 NOTICE. Except as otherwise expressly provided herein, any notice
hereunder to the Borrower or the Lender shall be in writing (including
telegraphic, telex, or telecopy communication) and shall be given to the
Borrower or the Lender at its address, telex number or fax number set forth
on the signature pages hereof or at such other address, telex number or
telecopier number as the Borrower or the Lender may, by written notice,
designate as its address, telex number or fax number for purposes of notice
hereunder. All such notices shall be deemed to be given when transmitted by
telex and the appropriate answer back is received, transmitted by fax,
delivered to the telegraph office, delivered by courier, personally
delivered or, in the case of notice by mail, three days following deposit in
the United States mails, properly addressed as herein provided, with proper
postage prepaid.
12.6 PARTICIPATIONS; INFORMATION. The Borrower hereby consents to the
Lender's grant of participations in or sale, assignment, transfer or other
disposition, at any time and from time to time hereafter, of the Loan
Documents, or of any portion of any thereof, including without limitation
lender's rights, titles, interests, remedies, powers and/or duties. The
Lender may furnish any information concerning the Borrower in the possession
of the Lender from time to time to assignees of the rights and/or
obligations of the Lender hereunder and to participants in any Loan
(including prospective assignees and participants) and may furnish
information in response to credit inquiries consistent with general banking
practice.
12.7 SEVERABILITY. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
12.8 SUCCESSORS. This Agreement shall be binding upon the Borrower and
the Lender and their respective successors and assigns, and shall inure to
the benefit of the Borrower and the Lender and the successors and assigns of
the Lender. The Borrower shall not assign its rights or duties hereunder
without the consent of the Lender.
12.9 ENTIRE AGREEMENT. This Agreement and the other Loan Documents
embody the entire agreement and understanding between the Borrower and the
Lender with respect to the subject matter hereof and thereof. This Agreement
supersedes all prior agreements and understandings relating to the subject
matter hereof.
12.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and either of the parties hereto may execute this Agreement by
signing any such counterpart.
12.11 CONSTRUCTION. The Borrower acknowledges that this Agreement shall
not be binding upon the Lender or become effective until and unless accepted
by the Lender, in writing. If so accepted by the Lender, THE LOAN DOCUMENTS
AND ANY SUPPLEMENTAL DOCUMENTATION SHALL, UNLESS OTHERWISE EXPRESSLY
PROVIDED THEREIN, BE DEEMED TO HAVE BEEN NEGOTIATED AND ENTERED INTO IN, AND
SHALL BE GOVERNED AND CONTROLLED BY THE LAWS OF, THE STATE OF MINNESOTA AS
TO INTERPRETATION, ENFORCEMENT, VALIDITY, CONSTRUCTION, EFFECT, CHOICE OF
LAW, AND IN ALL OTHER RESPECTS, INCLUDING, BUT NOT LIMITED TO, THE LEGALITY
OF THE INTEREST RATE AND OTHER CHARGES, BUT EXCLUDING PERFECTION OF
50
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SECURITY INTERESTS AND LIENS WHICH SHALL BE GOVERNED AND CONTROLLED BY THE
LAWS OF THE RELEVANT JURISDICTION.
12.12 CONSENT TO JURISDICTION. To induce the Lender to accept this
Agreement, the Borrower, irrevocably, agrees that, subject to the Lender's
sole and absolute election, ALL ACTIONS OR PROCEEDINGS IN ANY WAY, MANNER OR
RESPECT, ARISING OUT OF OR FROM OR RELATED TO THE LOAN DOCUMENTS OR ANY
SUPPLEMENTAL DOCUMENTATION OR THE COLLATERAL SHALL BE LITIGATED IN COURTS
HAVING SITUS WITHIN THE CITY OF MINNEAPOLIS, STATE OF MINNESOTA. THE
BORROWER HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY LOCAL,
STATE OR FEDERAL COURTS LOCATED WITHIN SAID CITY AND STATE AND WAIVES
PERSONAL SERVICE OF ANY AND ALL PROCESS UPON THE BORROWER, AND CONSENTS THAT
ALL SUCH SERVICE OF PROCESS BE MADE BY REGISTERED MAIL DIRECTED TO THE
BORROWER AT THE ADDRESS STATED ON THE SIGNATURE PAGE HEREOF AND SERVICE SO
MADE SHALL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT THEREOF.
12.13 SUBSIDIARY REFERENCE. Any reference herein to a Subsidiary or
Subsidiaries of the Borrower, and any financial definition, ratio,
restriction or other provision of this Agreement which is stated to be
applicable to "the Borrower" and the Subsidiaries or which is to be
determined on a "consolidated" or "consolidating" basis, shall apply only to
the extent the Borrower has any Subsidiaries and, where applicable, to the
extent any such Subsidiaries are consolidated with the Borrower for
financial reporting purposes.
12.14 WAIVER OF JURY TRIAL. THE BORROWER AND THE LENDER EACH WAIVES ANY
RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND
ANY RIGHTS (a) UNDER THE LOAN DOCUMENTS OR UNDER ANY AMENDMENT, INSTRUMENT,
DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN
CONNECTION THEREWITH OR (b) ARISING FROM ANY RELATIONSHIP EXISTING IN
CONNECTION WITH THIS AGREEMENT, AND AGREES THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the
date first written above.
PRIMEGG, LTD.
By: ▇▇▇▇ ▇▇▇▇▇▇
--------------------------------
Title: President
-----------------------------
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
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FBS BUSINESS FINANCE CORPORATION
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------
Title: Vice President
-----------------------
Address: First Bank Place MPFP0804
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Business Credit Division
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
52
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SUPPLEMENT A
TO
CREDIT AND SECURITY AGREEMENT
DATED AS OF APRIL 8, 1994 BETWEEN
FBS BUSINESS FINANCE CORPORATION (THE "LENDER")
AND
PRIMEGG, LTD. (THE "BORROWER")
1 . CREDIT AGREEMENT REFERENCE. This Supplement A, as it may be amended
or modified from time to time, is a part of the Credit and Security
Agreement, dated as of April 8, 1994, between the Borrower and the Lender
(together with all amendments, modifications and supplements thereto, the
"Credit Agreement"). Terms used herein which are defined in the Credit
Agreement shall have the meanings given such terms in the Credit Agreement
unless the context otherwise requires.
2. DEFINITIONS.
2.1 REVOLVING CREDIT AMOUNT. The term "Revolving Credit Amount"
shall mean the maximum amount of Revolving Loans which the Lender will
make available to the Borrower which amount shall not exceed NINE
MILLION AND NO/100 DOLLARS ($9,000,000) (unless such amount is
increased by the Lender in its sole and absolute discretion); provided,
however, that the aggregate outstanding principal balance of the
Revolving Loans plus the Letter of Credit Obligations shall not exceed
the Revolving Credit Amount.
2.2 BORROWING BASE. The term "Borrowing Base" shall mean:
(a) an amount of up to 85% of the net amount (as determined by
the Lender after deduction of such reserves and allowances as the
Lender deems proper and necessary) of the Borrower's Eligible
Accounts Receivable; plus
(b) an amount of up to the lesser of (1) the sum of (A) 65% of
the net value (the lower of the cost, determined on a first in
first out basis, or market value of such Inventory, as determined
by the Lender after deduction of such reserves and allowances as
the Lender deems proper and necessary) of the Borrower's Eligible
Inventory which does not constitute Eligible Committed Inventory,
plus (B) 75% of the net value (the cost, determined on a first in
first out basis, of such Committed Inventory, as determined by the
Lender after deduction of such reserves and allowances as the
Lender deems proper and necessary) of the Borrower's Eligible
Committed Inventory; or (2) $5,000,000; plus
(c). during the period commencing March 31, 1994 through and
including March 30, 1995, an amount equal to 100% of the face
amount of the Collateral Letter of Credit.
2.3 LETTER OF CREDIT SUBLIMIT. The term "Letter of Credit
Sublimit" shall mean $500,000.
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2.4 TERMINATION DATE. The term "Termination Date" shall mean March
31, 1997.
3. INTEREST; FEES.
3.1 LOANS.
(a) REVOLVING LOANS. The unpaid principal balance of the Revolving
Loans (other than Overdraft Loans and Over Advances) shall bear
interest to maturity at the Reference Rate in effect from time to time
plus .75% per annum.
(b) TERM LOAN A. The unpaid principal balance of Term Loan A shall
bear interest to maturity at the Reference Rate in effect from time to
time plus 1% per annum; provided, however, the Borrower may, upon five
Business Days' prior written notice to the Lender, request that Term
Loan A be converted from a Variable Rate Loan to a Fixed Rate Loan
whereupon the unpaid principal balance of Term Loan A shall bear
interest to the date of such conversion at the Reference Rate in effect
from time to time plus 1% per annum and thereafter to maturity at the
Fixed Rate plus 3.60% per annum.
(c) TERM LOAN B. The unpaid principal balance of Term Loan B shall
bear interest to maturity at the Reference Rate in effect from time to
time plus 1.50% per annum.
(d) DEFAULT RATE. If any amount of the Loans is not paid when due,
whether by acceleration or otherwise, the entire unpaid principal
balance of the Loans (other than Overdraft Loans and Over Advances)
shall bear interest until paid at a rate per annum equal to the greater
of (i) the Reference Rate from time to time in effect plus 4% or (ii)
4% above the Reference Rate in effect at the time such amount became
due.
3.2 OVERDRAFT LOANS; OVER ADVANCES. Overdraft Loans and Over Advances
shall bear interest at the rate(s) determined pursuant to Section 2.7 or
Section 2.8 of the Credit Agreement, as applicable.
3.3 COMMITMENT FEE. The Borrower shall pay to the Lender a commitment
fee for the period from the date hereof to the date the Credit terminates in
an amount equal to three-eighths of one percent (3/8%) per annum on the
average daily Unused Credit Amount.
3.4 LETTER OF CREDIT FEES. The Borrower shall pay the Lender, or any
Affiliate, a commission on the undrawn amount of each Letter of Credit and
on each L/C Draft accepted by the Lender, or such Affiliate, in an amount
equal to two percent (2%) per annum.
3.5 CREDIT TERMINATION FEE. Upon termination or cancellation of the
Credit by the Borrower prior to the Termination Date, the Borrower shall pay
to the Lender a termination fee in an amount equal to $100,000.
2
55
4. ELIGIBLE ACCOUNT RECEIVABLE REQUIREMENTS. The Account Receivable
must not be unpaid on the date that is 61 days after the date of the invoice
envidencing such Account Receivable. If invoices representing 10% or more of
the unpaid amount of all Accounts Receivable from any one Account Debtor are
unpaid more than 60 days after the dates of such invoices, then all Accounts
Receivable relating to such Account Debtor shall cease to be Eligible
Accounts Receivable.
5. ADDITIONAL COVENANTS. From the date of the Credit Agreement and
thereafter until all of the Borrowers Obligations under the Credit Agreement
are paid in full, the Borrower agrees that, unless the Lender shall
otherwise consent in writing, it will not, and will not permit any
Subsidiary to, do any of the following:
5.1 CAPITAL BASE. During each of the periods set forth below, not
permit the Borrower's Capital Base to be less than the amount set forth
opposite such period at any time:
PERIOD CAPITAL BASE
March 31, 1994 through and
including June 29, 1994 $4,300,000
June 30, 1994 through and
including September 29, 1994 $4,350,000
September 30, 1994 through
and including December
30, 1994 $4,400,000
December 31, 1994 through
and including March 30, 1995 $4,600,000
March 31, 1995 through and
including September 29, 1995 $4,700,000
September 30, 1995 through
and including March 30, 1996 $4,800,000
March 31, 1996 through and
including September 29, 1996 $5,100,000
September 30, 1996 and
thereafter $5,400,000
3
56
5.2 LEVERAGE RATIO. During each of the periods set forth below, not
permit the ratio of (a) the sum of (i) the Borrower's consolidated total
liabilities, minus (ii) Subordinated Debt, to (b) the Borrower's Capital
Base to be greater than the ratio set forth below opposite such period at
any time:
PERIOD LEVERAGE RATIO
March 31, 1994 through and
including September 29, 1994 3.3 to 1.0
September 30, 1994 through and
including September 29, 1995 3.1 to 1.0
September 30, 1995 through and
including September 29, 1996 3.0 to 1.0
September 30, 1996 and thereafter 2.5 to 1.0
5.3 CAPITAL EXPENDITURES. Make Capital Expenditures in an amount
exceeding $500,000 on a consolidated basis in any fiscal year.
5.4 CASH FLOW COVERAGE RATIO. During each of the periods set forth
below, as of the last day of each month for the period commencing on the
first day of the Borrower's fiscal year and ending on such date, permit the
Borrower's Cash Flow Coverage Ratio to be less than the ratio set forth
below opposite such period:
PERIOD CASH FLOW COVERAGE RATIO
March 31, 1994 through and
including September 30, 1994 1.00 to 1.0
October 1, 1994 through and
including September 30, 1995 1.10 to 1.0
October 1, 1995 through and
including September 30, 1996 1.20 to 1.0
October 1, 1996 and thereafter 1.50 to 1.0
Borrower's Initials MK
-----
Lender's Initials WP
-------
Dated: as of April 8, 1994
4
57
FIRST AMENDMENT TO CREDIT AND SECURITY AGREEMENT
------------------------------------------------
THE FIRST AMENDMENT TO CREDIT AND SECURITY AGREEMENT (this "Amendment")
made and entered into as of July 18, 1994 is by and between PRIMEGG, LTD., a
Delaware corporation (the "Borrower"), and FBS BUSINESS FINANCE CORPORATION, a
Delaware corporation (the "Lender").
RECITALS
1. The Lender and the Borrower entered into a Credit and Security
Agreement dated as of April 8, 1994 (the "Credit Agreement"); and
2. The Borrower desires to amend certain provisions of the Credit
Agreement, and the Lender has agreed to make such amendments, subject to the
terms and conditions set forth in this Amendment.
AGREEMENT
---------
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto hereby covenant
and agree to be bound as follows:
Section 1. Capitalized Terms. Capitalized terms used herein and
not otherwise defined herein shall have the meanings assigned to them in the
Credit Agreement, unless the context shall otherwise require.
Section 2. Amendments. The Credit Agreement is hereby amended as
follows:
2.1 Definition of Capital Base. The definition of "Capital
Base" in Article I of the Credit Agreement is amended in its entirety as
follows:
"Capital Base": At any determination date, the total
of (a) the sum of (i) all assets appearing on a consolidated
balance sheet of the Borrower at such date, prepared in
accordance with GAAP, after deducting all proper reserves
(including reserves for depreciation, obsolescence and
amortization), plus (ii) Subordinated Debt; minus (b) all
liabilities which in accordance with GAAP would be included on
the liability side of a consolidated balance sheet; provided,
that adjustments to assets or liabilities made since the last
date of determination shall be taken into account only to the
extent that the
58
Lender determines, in its sole discretion, that such adjustments
reflect actual, current operating results of the Borrower.
2.2 Investments. Section 6.11 of the Credit Agreement is amended in
its entirety as follows:
6.11 Investments. Acquire for value, make, have or hold any
investments, except (a) advances to Related Parties (excluding Cham
Foods) not to exceed (i) $650,000 in the aggregate for the period from
and after April 8, 1994, to and including ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇▇)
$801,000, plus accrued and unpaid interest in the amount of
$68,000.00, in the aggregate for the period from and after May 1, 1994
to and including October 30, 1994, subject to adjustments by the
Borrower following review by the Borrower, its accountants or other
consultants of the Borrower's books and records for periods prior to or
ending on May 31, 1994, or (iii) $650,000 in the aggregate from and
after October 31, 1994, including, in each case, any Investments listed
on Schedule 6.11, provided that, during the period from June 1, 1994 to
and including October 30, 1994, no additional advances to Related
Parties in any amount shall be made; (b) advances to Cham Foods not to
exceed $200,000 in the aggregate, including any Investments listed on
Schedule 6.11; (c) advances to employees of the Borrower or any
Subsidiary for travel or other ordinary business expenses, provided
that the aggregate amount outstanding at any one time shall not exceed
$10,000 for any single employee and $50,000 in the aggregate for all
employees; (d) advances to subcontractors and suppliers in maximum
aggregate amounts reasonably acceptable to the Lender; (e) extensions
of credit in the nature of Accounts Receivable or notes receivable
arising from the sale of goods and services in the ordinary course of
business; (f) shares of stock, obligations or other securities received
in settlement of claims arising in the ordinary course of business; (g)
Investments (other than investments in the nature of loans or advances)
outstanding on the date hereof in subsidiaries by the Borrower and
other Subsidiaries; (h) other Investments outstanding on the date
hereof and listed on Schedule 6.11; and (i) other investments consented
to by the Lender in writing.
2.3 Management Change. Section 6.19 of the Credit Agreement is
amended in its entirety as follows:
6.19 Change in Management or Line(s) of Business. Make any
substantial change in the senior management of the Borrower or any
Subsidiary, including, without limitation, any failure of the Guarantor
to continue as president of the Borrower from April 8, 1994 to and
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59
including May 12, 1994 or ▇▇▇▇▇▇▇ Shevi to continue as Chief Operating
Officer of the Borrower from and after May 12, 1994, or any change in
the Borrower's or any Subsidiary's line(s) of business.
2.4 Capital Base. Section 5.1 of Supplement A to the Credit Agreement
is amended in its entirety as follows:
5.1 Capital Base. During each of the periods set forth below,
not permit the Borrower's Capital Base to be less than the amount set forth
opposite such period at any time:
Period Capital Base
------ ------------
March 31, 1994 through and
including June 29, 1994 $4,300,000
June 30, 1994 through and
including July 30, 1994 $3,400,000
July 31, 1994 through and
including August 30, 1994 $3,900,000
August 31, 1994 to and
including September 29, 1994 $4,000,000
September 30, 1994 to and
including December 30, 1994 $4,400,000
December 31, 1994 through and
including March 30, 1995 $4,600,000
March 31, 1995 through and
including September 29, 1995 $4,700,000
September 30, 1995 to and
including March 30, 1996 $4,800,000
March 31, 1996 through and
including September 29, 1996 $5,100,000
September 30, 1996 and
thereafter $5,400,000
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60
2.5 Leverage Ratio. Section 5.2 of Supplement A to the
Credit Agreement is amended in its entirety as follows:
5.2 Leverage Ratio. During each of the periods set
forth below, not permit the ratio of (a) the sum of (i) the
Borrower's consolidated total liabilities, less (ii)
Subordinated Debt, to (b) the Borrower's Capital Base to be
greater than the ratio set forth below opposite such period at
any time:
Period Leverage Ratio
------ --------------
March 31, 1994 through and
including June 29, 1994 3.3 to 1.0
June 30, 1994 through and
including July 30, 1994 4.0 to 1.0
July 31, 1994 through and
including October 30, 1994 3.5 to 1.0
October 31, 1994 through and
including September 29, 1995 3.1 to 1.0
September 30, 1995 through and
including September 29, 1996 3.0 to 1.0
September 30, 1996 and
thereafter 2.5 to 1.0
2.6 Cash Flow Coverage Ratio. Section 5.4 of Supplement A
to the Credit Agreement is amended in its entirety as follows:
5.4 Cash Flow Coverage Ratio. During each of the
periods set forth below, as of the last day of each month for
the period commencing on the first day of the Borrower's fiscal
year and ending on such date, permit the Borrower's Cash Flow
Coverage Ratio to be less than the ratio set forth below
opposite such period:
Period Cash Flow Coverage Ratio
------ ------------------------
March 31, 1994 through and
including May 31, 1994 1.00 to 1.0
October 31, 1994 through and
-4-
61
including September 30, 1995 1.10 to 1.0
October 1, 1995 through and
including September 30, 1996 1.20 to 1.0
October 1, 1996 and thereafter 1.50 to 1.0
Section 3. Effectiveness of Amendments. The amendments contained
in this Amendment shall become effective upon delivery of the following to the
Lender.
3.1 This Amendment, duly executed by the Borrower and the
Lender.
3.2 A copy of the resolutions of the Board of Directors of the
Borrower showing the most recent election or appointment, as the case
may be, of the Chairman of the Board and President of the Borrower, and
resolutions of the Board of Directors of the Borrower authorizing the
execution, delivery and performance of this Amendment certified as true
and accurate by its Secretary or Assistant Secretary, along with a
certification by such Secretary or Assistant Secretary (i) certifying
that there has been no amendment to the Certificate of Incorporation or
Bylaws of the Borrower since true and accurate copies of the same were
delivered to the Lender with a certificate of the Secretary of the
Borrower dated April 21, 1994; and (ii) identifying each officer of the
Borrower authorized to execute this Amendment and any other instrument
or agreement executed by the Borrower in connection with this Amendment
(collectively, the "Amendment Documents"), and certifying as to
specimens of such officer's signature and such officer's incumbency in
such offices as such officer holds.
3.3 The Borrower shall have paid to the Lender $2,000.00 of the
$8,000.00 amendment fee for this Amendment.
3.4 The Borrower shall have received proceeds of not less than
$600,000 from new Subordinated Debt owed to the [Subordinated Lenders],
which Subordinated Debt shall be on terms acceptable to the Lender
including, without limitation, the requirement that no such new
Subordinated Debt shall be paid prior to February 1, 1995 or at any time
an Event of Default or Unmatured Event of Default has occurred and is
continuing, and such proceeds shall be deposited to the Lender
immediately upon receipt by the Borrower.
3.5 The Borrower shall have satisfied such other conditions as
reasonably specified by the Lender or counsel to the Lender, including
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62
payment of all unpaid legal fees and expenses incurred by the Lender through
the date of this Amendment in connection with the Credit Agreement or the
Amendment Documents.
Section 4. Defaults and Waivers.
4.1 Events of Default and Unmatured Events of Default.
(a) Financial Statement. Under Section 5.1.1(c) of the
Credit Agreement, the Borrower agreed to deliver monthly
financial statements within 20 days after the end of each
month. The Borrower failed to deliver its monthly financial
statement for the monthly period ending April 30, 1994 on or
before May 20, 1994.
(b) Investments. Under Section 6.11 of the Credit
Agreement, the Borrower is limited in the advances it makes to
Related Parties (excluding Cham Foods) to an amount not to
exceed $650,000 in the aggregate. The Borrower has advised
the Lender that, as of May 31, 1994 and through the date of
this Amendment, such advances exceeded $650,000 in the
aggregate.
(c) Transactions with Related Parties. Under Section
6.18 of the Credit Agreement, the Borrower has agreed
not to enter into or be a party to any transaction with any
Related Party except in the ordinary course of business and on
terms no less favorable than in a comparable arms-length
transaction with a Person which is not a Related Party. The
Borrower has advised the Lender that certain of its
transactions occurring on or before May 31, 1994 with a Related
Party occurred on terms more favorable than it would obtain in a
comparable arms-length transaction.
(d) Management Change. Under Section 6.19 of the Credit
Agreement, the Borrower agreed not to make any substantial
change in the senior management of the Borrower including,
without limitation, any failure of the Guarantor to continue
as president of the Borrower. The Borrower has advised the
Lender that the Guarantor, as of May 18, 1994 and through the
date of this Amendment, is no longer the president of the
Borrower.
(e) Capital Base. Under Section 5.1 of Supplement A to
the Credit Agreement, the Borrower agreed not to permit its
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63
Capital Base to be less than $4,300,000 as of May 31, 1994.
The Borrower had advised the Lender that its Capital Base,
as of May 31, 1994 and through the date of this Amendment,
was less than $4,300,000.
(f) Leverage Ratio. Under Section 5.2 of Supplement A
to the Credit Agreement, the Borrower agreed not to permit
the ratio of (a) the sum of (i) the Borrower's consolidated
liabilities, less (ii) Subordinated Debt, to (b) the
Borrower's Capital Base, to be greater than 3.3 to 1.0 as
of May 31, 1994. The Borrower has advised the Lender that,
as of May 31, 1994 and through the date of this Amendment,
such ratio was greater than 3.3 to 1.0.
(g) Cash Flow Coverage. Under Section 5.4 of
Supplement A to the Credit Agreement, the Borrower agreed
that its Cash Flow Coverage Ratio would not be less than 1.0
to 1.0 as of May 31, 1994. The Borrower has advised the
Lender that its Cash Flow Coverage Ratio, as May 31, 1994
and through the date of this Amendment, was less than 1.0 to
1.0.
4.2 Waiver. Upon the date on which this Amendment becomes
effective, the Lender hereby waives the Borrower's Unmatured Events of
Default and Events of Default described in the preceding Sections 4.1
(a) through 4.1(g). The waivers set forth herein shall not constitute
a waiver by the Lender of any other Unmatured Event of Default or
Event of Default, if any, under the Credit Agreement, and shall not
be, and shall not be deemed to be, a course of action with respect
thereto upon which the Borrower may rely in the future and the
Borrower hereby expressly waives any claim to such effect.
Section 5. Representations; No Default. The Borrower hereby
represents that on and as of the date hereof and after giving effect to this
Amendment (a) all of the representations and warranties contained in the Credit
Agreement are true, correct and complete in all respects as of the date hereof
as though made on and as of such date, except to the extent such
representations and warranties specifically relate to an earlier date, in which
case they are true and correct as of such earlier date, and (b) there will
exist no Unmatured Event of Default or Event of Default on such date which has
not been waived by the Lender. The Borrower represents and warrants that the
Borrower has the power and legal right and authority to enter into the
Amendment Documents and has duly authorized as appropriate the execution and
delivery of the Amendment Document and other agreements and documents executed
and delivered by the Borrower in connection herewith or therewith by proper
corporate action, and none of the Amendment Documents nor the agreements
contained therein contravene or constitute a default under any
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64
agreement, instrument or indenture to which the Borrower is a party or a
signatory or a provision of the Borrower's Certificate of Incorporation, Bylaws
or, to the best of the Borrower's knowledge, any other agreement or requirement
of law. The Borrower represents and warrants that no consent, approval or
authorization of or registration or declaration with any Person, including but
not limited to any governmental authority, is required in connection with the
execution and delivery by the Borrower of the Amendment Documents or other
agreements and documents executed and delivered by the Borrower in connection
therewith or the performance of obligations of the Borrower therein described.
Section 6. Affirmation, Further References. The Lender and the
-------------------------------
Borrower each acknowledge and affirm that the Credit Agreement, as hereby
amended, is hereby ratified and confirmed in all respects and all terms,
conditions and provisions of the Credit Agreement, except as amended by this
Amendment, shall remain unmodified and in full force and effect. All
references in any document or instrument to the Credit Agreement are hereby
amended and shall refer to the Credit Agreement as amended by this Amendment.
Section 7. Merger and Integration, Superseding Effect. This
------------------------------------------
Amendment, from and after the date hereof, embodies the entire agreement and
understanding between the parties hereto and supersede and have merged into
them all prior oral and written agreements on the same subjects by and between
the parties hereto with the effect that this Amendment, shall control with
respect to the specific subjects hereof and thereof.
Section 8. Amendment Fee; Legal Expenses. The Borrower agrees to pay
-----------------------------
installments of $2,000 of the amendment fee owed to the Lender in connection
with this Amendment on October 1, 1994, January 1, 1995 and March 1, 1995. As
provided in Section 12.2 of the Credit Agreement, the Borrower agrees to
reimburse the Lender, upon execution of this Amendment, for all reasonable
out-of-pocket expenses (including attorneys' fees and legal expenses of ▇▇▇▇▇▇
& Whitney, counsel for the Lender) incurred in connection with the Credit
Agreement, including in connection with the negotiation or preparation of this
Amendment and all other documents negotiated and prepared in connection with
this Amendment.
Section 9. Headings. The headings of various sections of this
--------
Amendment have been inserted for reference only and shall not be deemed to be a
part of this Amendment.
Section 10. Counterpart. This Amendment may be executed in several
-----------
counterparts, all or any of which shall be regarded as one and the same
document and either party to such agreements may execute any such agreement by
executing a counterpart of such agreement.
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Section 11. Governing Law. This Amendment shall be governed by the
internal laws of the State of Minnesota, without giving effect to conflict of
law principles thereof, but giving effect to federal laws applicable to
national banks.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the date and year first above written.
BORROWER: PRIMEGG, LTD.
By: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
Title: Member--Board of Directors
------------------------------
LENDER: FBS BUSINESS FINANCE CORPORATION
By: ???
---------------------------------
Title: Vice President
------------------------------
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SECOND AMENDMENT TO CREDIT AND SECURITY AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AND SECURITY AGREEMENT (this "Amendment")
made and entered into as of March 30, 1995 is by and between PRIMEGG, LTD., a
Delaware corporation (the "Borrower"), and FBS BUSINESS FINANCE CORPORATION, a
Delaware corporation (the "Lender").
RECITALS
1. The Lender and the Borrower entered into a Credit and Security
Agreement dated as of April 8, 1994, as amended by a First Amendment to Credit
and Security Agreement dated as of July 18, 1994 (the "Credit Agreement"); and
2. The Borrower and the Lender desire to amend certain provisions
of the Credit Agreement, subject to the terms and conditions set forth in this
Amendment.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto hereby covenant
and agree to be bound as follows:
Section 1. Capitalized Terms. Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to them in the Credit
Agreement, unless the context shall otherwise require.
Section 2. Amendments. The Credit Agreement is hereby amended as follows:
2.1 Definitions of Adjusted Subordinated Debt and of
Collateral Letter of Credit Subordinated Debt. Article I of the Credit
Agreement is amended to add the definitions "Adjusted Subordinated Debt" and
"Collateral Letter of Credit Subordinated Debt" as follows:
"Adjusted Subordinated Debt": Subordinated Debt less Collateral
Letter of Credit Subordinated Debt.
"Collateral Letter of Credit Subordinated Debt": Subordinated
Debt in the principal amount of $1,250,000 owed by the Borrower
to Egis Holdings Limited as a result of payment by Egis Holdings
Limited to Bank Leumi Le-Israel as reimbursement for the draw
made on the Collateral Letter of Credit plus such additional
Subordinated Debt as the Borrower may incur subsequent to April
30, 1995.
67
2.2 Definition of Capital Base. The definition of "Capital
Base" in Article I of the Credit Agreement is amended in its entirety as
follows:
"Capital Base": At any determination date, the total of
(a) the sum of (i) all assets appearing on a consolidated
balance sheet of the Borrower at such date, prepared in
accordance with GAAP, after deducting all proper reserves
(including reserves for depreciation, obsolescence and
amortization), plus (ii) Adjusted Subordinated Debt;
minus (b) all liabilities which in accordance with GAAP
would be included on the liability side of a consolidated
balance sheet.
2.3 Definition of Cash Flow Coverage Ratio. The definition
of "Cash Flow Coverage Ratio" in Article I of the Credit Agreement is amended
in its entirety as follows:
"Cash Flow Coverage Ratio": For any period, the ratio
of (a) the Borrower's EBITDA to (b) the sum of (i)
consolidated interest expense (including, without
limitation, imputed interest expense on Capitalized
Leases), plus (ii) mandatory principal payments on
Long-Term Debt (exclusive of Subordinated Debt) minus
(iii) increases in Long Term Debt plus (iv) Capital
Expenditures.
2.4 Term Loan B. Section 2.1.3(b) of the Credit Agreement is
amended in its entirety as follows:
(b) Principal of Term Loan B in the amount of $400,000
shall be due and payable in eight equal monthly
installments of $44,445 each, commencing April 15, 1995
and on the fifteenth day of each month thereafter until
December 15, 1995, upon which date the remaining
principal balance shall be due and payable in full.
2.5 Restricted Payments. Section 6.8 of the Credit Agreement
is hereby amended in its entirety as follows:
6.8 RESTRICTED PAYMENTS. Purchase or redeem any shares
of its stock, declare or pay any dividends thereon
(other than stock dividends and dividends payable to the
Borrower), make any distribution to stockholders as such
(other than the Borrower) or set aside any funds for any
such purpose, and not prepay, purchase or redeem any
subordinated Indebtedness of the Borrower or any
Subsidiary; provided that, subordinated
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Indebtedness in the amount of $200,000 loaned by M.
Shevi Family Asset Ltd. to the Borrower on or about
February 27, 1995 may be repaid by the Borrower after
September 30, 1995, so long as no Unmatured Event of
Default or Event of Default is outstanding at the time
of repayment or would occur upon such repayment.
2.6 Leases. Section 6.10 of the Credit Agreement is
amended by deleting the amount "$100,000" that appears therein and substituting
therefor the amount "$250,000" and is further amended by deleting the amount
"$30,000" that appears therein and substituting therefor the amount
"$210,000".
2.7 Investments. Clause (a) of Section 6.11 of the Credit
Agreement is amended in its entirety as follows:
...(a) advances to Related Parties (excluding Cham
Foods) not to exceed $125,000 in the aggregate,
including any Investments listed on Schedule 6.11; ...
2.8 Supplement A. Supplement A to the Credit Agreement is
amended and restated in its entirety in the form of Exhibit A hereto.
Section 3. Effectiveness of Amendments. The amendments contained in this
Amendment shall become effective as of March 30, 1995 upon delivery of the
following to the Lender:
3.1 This Amendment, duly executed by the Borrower and the
Lender and Supplement A, duly initialed by Borrower and Lender.
3.2 A copy of the resolutions of the Board of Directors of
the Borrower authorizing the execution, delivery and performance of this
Amendment certified as true and accurate by its Secretary or Assistant
Secretary, along with a certification by such Secretary or Assistant Secretary
(i) certifying that there has been no amendment to the Certificate of
Incorporation or Bylaws of the Borrower since true and accurate copies of the
same were delivered to the Lender with a certificate of the Secretary of the
Borrower dated April 21, 1994; and (ii) identifying each officer of the
Borrower authorized to execute this Amendment and any other instrument or
agreement executed by the Borrower in connection with this Amendment
(collectively, the "Amendment Documents"), and certifying as to specimens of
such officer's signature and such officer's incumbency in such offices as such
officer holds.
3.3 A certificate of the Secretary or Assistant Secretary
of the Borrower certifying that ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇ is and has been the Treasurer
of the Borrower since May 12, 1994, and executed the First Amendment to Credit
and
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69
Security Agreement dated as of July 18, 1994 between the Borrower and the
Lender (the "First Amendment") in such capacity.
3.4 Copies of all instruments and documents (which
instruments and documents shall be in form and substance satisfactory to the
Lender) evidencing new Subordinated Debt of the Borrower in the amount of
$600,000 in the aggregate ("New Subordinated Debt") that was loaned to the
Borrower by one or more Subordinated Lenders in connection with the First
Amendment, certified by the Secretary or Assistant Secretary of the Borrower as
being true, correct and complete copies of such instruments and documents and
as embodying all the terms and conditions governing the New Subordinated Debt.
3.5 Evidence satisfactory to the Lender that M. Shevi Family
Asset Ltd. has advanced to the Borrower additional subordinated Indebtedness in
the principal amount of $200,000, payable after September 30, 1995 and subject
to the restriction that repayment may be made only if permitted by the terms of
the Credit Agreement, together with copies of all instruments and documents
(which instruments and documents shall be in form and substance satisfactory to
the Lender) evidencing such subordinated Indebtedness, certified by the
Secretary or Assistant Secretary of the Borrower as being true, correct and
complete copies of such instruments and documents and as embodying all the
terms and conditions governing such Indebtedness.
3.6 An affirmation, substantially in the form of Exhibit B
hereto, duly executed by each Subordinated Lender.
3.7 A Subordination Agreement, substantially in the form of
Exhibit C hereto, duly executed by M. Shevi Family Asset Ltd. and acknowledged
by the Borrower.
3.8 A copy of the resolutions of the Board of Directors of
M. Shevi Family Asset Ltd. authorizing the execution, delivery and performance
of the Subordination Agreement required to be delivered pursuant to Section
3.7, certified as true and accurate by its Secretary or Assistant Secretary,
along with a certificate by such Secretary or Assistant Secretary identifying
each officer of M. Shevi Family Asset Ltd. authorized to execute such
Subordination Agreement and certifying as to specimens of such officer's
signature and such officer's incumbency in such offices as such officer holds.
3.9 Evidence satisfactory to the Lender that ▇▇▇▇▇▇ State
Bank and Bank of Sun Prairie, respectively, have waived breaches by the
Borrower of the terms of the respective mortgage loans made to it by ▇▇▇▇▇▇
State Bank and Bank of Sun Prairie.
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70
3.10 Evidence satisfactory to the Lender that all the holders of
Subordinated Debt have agreed that accrued and unpaid interest on Subordinated
Debt through February 28, 1995 shall be paid only to the extent that such
interest exceeds $100,000 and shall be paid in no fewer than three
installments, subject to no Unmatured Event of Default or Event of Default
being outstanding at the time of any payment or likely to occur as a result of
such payment.
3.11 A copy of the settlement agreement entered into with ▇▇▇▇
▇▇▇▇▇▇, certified by the Secretary or Assistant Secretary of the Borrower as
being a true, correct and complete copy and embodying all the terms and
conditions of such settlement and a Mutual Release in the form heretofore
furnished to the Borrower by the Lender, duly executed by ▇▇▇▇ ▇▇▇▇▇▇.
3.12 A letter from the Borrower identifying the officers of the
Borrower authorized to make requests for loans, including telephonic requests.
3.13 Certificates duly executed by ▇▇▇▇▇▇▇ Shevi and ▇▇▇▇ ▇▇▇▇▇▇▇, as
trustee for ▇▇▇▇▇▇▇ Shevi, substantially in the forms of Exhibits D and E
hereto, respectively.
3.14 Payment of principal on Term Loan B in the aggregate amount of
$88,890 as payment of the installments due on April 15, 1995 and on May 15,
1995.
3.15 The Borrower shall have satisfied such other conditions as
reasonably specified by the Lender or counsel to the Lender, including payment
of all unpaid legal fees and expenses incurred by the Lender through the date
of this Amendment in connection with the Credit Agreement or the Amendment
Documents.
Section 4. Defaults and Waivers. Upon the date upon which this Amendment
becomes effective, the Lender hereby waives any Unmatured Events of Default or
Events of Default arising prior to March 30, 1995 under Section 6.10 (Leases)
of the Credit Agreement and under any of Sections 5.1 (Capital Base), 5.2
(Leverage Ratio) or 5.4 (Cash Flow Coverage Ratio) of Supplement A to the
Credit Agreement and waives any Unmatured Event of Default or Event of Default
arising from the Borrower's settlement with ▇▇▇▇ ▇▇▇▇▇▇. The Lender further
waives any Unmatured Event of Default or Event of Default relating to the
failure of Mr. Michael Shevi to disclose to the Lender that at the time that he
executed and delivered to the Lender the Guaranty and Pledge Agreement dated
April 4, 1995, the shares of common stock subject thereto were in the name of
▇▇▇▇ ▇▇▇▇▇▇▇, as trustee for ▇▇▇▇▇▇▇ Shevi. The waivers set forth herein shall
not constitute a waiver by the Lender of any other Unmatured Event of Default
or Event of Default, if any, under the Credit Agreement, and shall not be, and
shall not be deemed to be, a course of action with respect thereto upon which
the Borrower may rely in the future and the Borrower hereby expressly waives
any claim to such effect.
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Section 5. Additional Covenants.
(a) The Borrower will deliver to the Lender on or before June
15, 1995 duly executed collateral assignments of life insurance
policies, in form and substance satisfactory to the Lender, on
the lives of ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, respectively, in the aggregate amount of
$1,100,000, together with the original life insurance policies
being so assigned.
(b) At the request of the Lender, the Borrower will promptly
reissue in the name of ▇▇▇▇▇▇▇ Shevi and deliver to the Lender,
with blank stock powers relating thereto duly executed by ▇▇▇▇▇▇▇
Shevi, share certificates numbered 5 and 15, representing 244
shares of common stock and 172.68 shares of common stock,
respectively, of the Borrower, which shares have been pledged to
the Lender by ▇▇▇▇▇▇▇ Shevi and were transferred to ▇▇▇▇▇▇▇ Shevi
by ▇▇▇▇ ▇▇▇▇▇▇▇, as trustee for ▇▇▇▇▇▇▇ Shevi.
Section 6. Representations; No Default. The Borrower hereby represents that
on and as of the date hereof and after giving effect to this Amendment (a) all
of the representations and warranties contained in the Credit Agreement are
true, correct and complete in all respects as of the date hereof as though made
on and as of such date, except to the extent such representations and
warranties specifically relate to an earlier date, in which case they are true
and correct as of such earlier date, and (b) there will exist no Unmatured
Event of Default or Event of Default on such date which has not been waived by
the Lender. The Borrower represents and warrants that the Borrower has the
power and legal right and authority to enter into the Amendment Documents and
has duly authorized as appropriate the execution and delivery of the Amendment
Document and other agreements and documents executed and delivered by the
Borrower in connection herewith or therewith by proper corporate action, and
none of the Amendment Documents nor the agreements contained therein contravene
or constitute a default under any agreement, instrument or indenture to which
the Borrower is a party or a signatory or a provision of the Borrower's
Certificate of Incorporation, Bylaws or, to the best of the Borrower's
knowledge, any other agreement or requirement of law. The Borrower represents
and warrants that no consent, approval or authorization of or registration or
declaration with any Person, including but not limited to any governmental
authority, is required in connection with the execution and delivery by the
Borrower of the Amendment Documents or other agreements and documents executed
and delivered by the Borrower in connection therewith or the performance of
obligations of the Borrower therein described.
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Section 7. Affirmation, Acknowledgement, Further References. The
Lender and the Borrower each acknowledge and affirm that the Credit
Agreement, as hereby amended, is hereby ratified and confirmed in all
respects and all terms, conditions and provisions of the Credit Agreement,
except as amended by this Amendment, shall remain unmodified and in full
force and effect. The Borrower acknowledges that this Amendment and all
amendments to the Credit Agreement are Loan Documents. All references in any
document or instrument to the Credit Agreement are hereby amended and shall
refer to the Credit Agreement as amended by this Amendment.
Section 8. Acknowledgement of Lender. The Lender acknowledges that
since the date of the First Amendment to Credit and Security Agreement, ▇▇▇
▇▇▇▇▇▇▇ has become President of the Borrower.
Section 9. Merger and Integration, Superseding Effect. This
Amendment, from and after the date hereof, embodies the entire agreement and
understanding between the parties hereto and supersede and have merged into
them all prior oral and written agreements on the same subjects by and
between the parties hereto with the effect that this Amendment, shall
control with respect to the specific subjects hereof and thereof.
Section 10. Legal Expenses. As provided in Section 12.2 of the
Credit Agreement, the Borrower agrees to reimburse the Lender, upon
execution of this Amendment, for all reasonable out-of-pocket expenses
(including attorneys' fees and legal expenses of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ P.L.L.P,
counsel for the Lender) incurred in connection with the Credit Agreement,
including in connection with the negotiation or preparation of this
Amendment and all other documents negotiated and prepared in connection with
this Amendment.
Section 11. Headings. The headings of various sections of this
Amendment have been inserted for reference only and shall not be deemed to
be a part of this Amendment.
Section 12. Counterpart. This Amendment may be executed in several
counterparts, all or any of which shall be regarded as one and the same
document and either party to such agreements may execute any such agreement
by executing a counterpart of such agreement.
Section 13. Governing Law. This Amendment shall be governed by the
internal laws of the State of Minnesota, without giving effect to conflict
of law principles thereof, but giving effect to federal laws applicable to
national banks.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the date and year first above written.
BORROWER: PRIMEGG, LTD.
By: [SIG]
----------------------------------
Title: Chairman of the Board
-------------------------------
LENDER: FBS BUSINESS FINANCE CORPORATION
By: ▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
----------------------------------
Title: Vice President
-------------------------------
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EXHIBIT A TO
SECOND AMENDMENT
SUPPLEMENT A
TO
CREDIT AND SECURITY AGREEMENT
DATED AS OF APRIL 8, 1994 BETWEEN
FBS BUSINESS FINANCE CORPORATION (THE "LENDER")
AND
PRIMEGG, LTD. (THE "BORROWER")
1. CREDIT AGREEMENT REFERENCE. This Supplement A, as amended and
restated as of March 30, 1995, and as it may be further amended or modified
from time to time, is a part of the Credit and Security Agreement, dated as of
April 8, 1994, between the Borrower and the Lender (together with all
amendments, modifications and supplements thereto, the "Credit Agreement").
Capitalized terms used herein which are defined in the Credit Agreement shall
have the meanings given such terms in the Credit Agreement unless the context
otherwise requires.
2. DEFINITIONS.
2.1 REVOLVING CREDIT AMOUNT. The term "Revolving Credit
Amount" shall mean the maximum amount of Revolving Loans which the Lender will
make available to the Borrower which amount shall not exceed SEVEN MILLION FIVE
HUNDRED THOUSAND AND No/100 DOLLARS ($7,500,000) (unless such amount is
increased by the Lender in its sole and absolute discretion); provided,
however, that the aggregate outstanding principal balance of the
Revolving Loans plus the Letter of Credit Obligations shall not exceed the
Revolving Credit Amount.
2.2 BORROWING BASE. The term "Borrowing Base" shall mean:
(a) an amount of up to 85% of the net amount (as determined by
the Lender after deduction of such reserves and allowances as
the Lender deems proper and necessary) of the Borrower's
Eligible Accounts Receivable; plus
(b) an amount of up to the lesser of (1) the sum
of (A) 65% of the net value (the lower of the cost, determined
on a first in first out basis, or market value of such
Inventory, as determined by the Lender after deduction of such
reserves and allowances as the Lender deems proper and
necessary) of the Borrower's Eligible Inventory which does not
constitute Eligible Committed Inventory, plus (B) 70% of the net
value (the cost, determined on a first in first out basis, of
such Committed Inventory, as determined by the Lender after
deduction of such reserves and
75
allowances as the Lender deems proper and necessary) of the
Borrower's Eligible Committed Inventory, as determined by the
Lender after deduction of such reserves and allowances as the
Lender deems proper and necessary of the Borrower's Eligible
Committed Inventory; or (2) $5,000,000.
(c) during the period commencing March 31, 1995 through and
including March 31, 1996, an amount equal to 100% of the face
amount of the Collateral Letter of Credit.
2.3 LETTER OF CREDIT SUBLIMIT. The term "Letter of Credit
Sublimit" shall mean $500,000.
2.4 TERMINATION DATE. The term "Termination Date" shall mean
March 31, 1997.
3. INTEREST; FEES.
3.1 LOANS.
(a) REVOLVING LOANS. The unpaid principal balance of the
Revolving Loans (other than Overdraft Loans and Over
Advances) shall bear interest to maturity at the Reference Rate
in effect from time to time plus 1.50% per annum.
(b) TERM LOAN A. The unpaid principal balance of Term
Loan A shall bear interest to maturity at the Reference Rate in
effect from time to time plus 1.50% per annum; provided,
however, the Borrower may, upon five Business Days' prior written
notice to the Lender, request that Term Loan A be converted from
a Variable Rate Loan to a Fixed Rate Loan whereupon the unpaid
principal balance of Term Loan A shall bear interest to the date
of such conversion at the Reference Rate in effect from time to
time plus 1.50% per annum and thereafter to maturity at the
Fixed Rate plus 4.10% per annum.
(c) TERM LOAN B. The unpaid principal balance of Term
Loan B shall bear interest to maturity at the Reference Rate in
effect from time to time plus 1.50% per annum.
(d) DEFAULT RATE. If any amount of the Loans is not paid when
due, whether by acceleration or otherwise, the entire unpaid
principal balance of the Loans (other than Overdraft Loans and
Over Advances) shall bear interest until paid at a rate per
annum equal to the greater of (i) the Reference Rate from time
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to time in effect plus 4% or (ii) 4% above the Reference Rate
in effect at the time such amount became due.
3.2 OVERDRAFT LOANS; OVER ADVANCES. Overdraft Loans and Over Advances
shall bear interest at the rate(s) determined pursuant to Section 2.7 or
Section 2.8 of the Credit Agreement, as applicable.
3.3 COMMITMENT FEE. The Borrower shall pay to the Lender a commitment
fee for the period from the date hereof to the date the Credit terminates in
an amount equal to three-eighths of one percent (3/8%) per annum on the
average daily Unused Credit Amount.
3.4 LETTER OF CREDIT FEES. The Borrower shall pay the Lender, or
any Affiliate, a commission on the undrawn amount of each Letter of Credit and
on each L/C Draft accepted by the Lender, or such Affiliate, in an amount
equal to two percent (2%) per annum.
3.5 CREDIT TERMINATION FEE. Upon termination or cancellation of the
Credit by the Borrower prior to the Termination Date, the Borrower shall pay
to the Lender a termination fee in an amount equal to $100,000.
4. ELIGIBLE ACCOUNT RECEIVABLE REQUIREMENTS. The Account Receivable
must not be unpaid on the date that is 61 days after the date of the invoice
evidencing such Account Receivable. If invoices representing 10% or more of
the unpaid amount of all Accounts Receivable from any one Account Debtor are
unpaid more than 60 days after the dates of such invoices, then all Accounts
Receivable relating to such Account Debtor shall cease to be Eligible
Accounts Receivable.
5. ADDITIONAL COVENANTS. From the date of the Credit Agreement and
thereafter until all of the Borrower's Obligations under the Credit Agreement
are paid in full, the Borrower agrees that, unless the Lender shall otherwise
consent in writing, it will not, and will not permit any Subsidiary to, do any
of the following:
5.1 CAPITAL BASE. During each of the periods set forth below, not
permit the Borrower's Capital Base to be less than the amount set forth
opposite such period at any time:
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PERIOD CAPITAL BASE
March 31, 1995 through and
including October 30, 1995 $3,200,000
October 31, 1995 through and
including March 30, 1996 $3,300,000
March 31, 1996 to and
including October 30, 1996 $3,400,000
October 31, 1996 and thereafter $3,500,000
5.2 LEVERAGE RATIO. During each of the periods set forth below, not
permit the ratio of (a) the sum of (i) the Borrower's consolidated total
liabilities, less (ii) Adjusted Subordinated Debt, to (b) the Borrower's
Capital Base to be greater than the ratio set forth below opposite such period
at any time:
PERIOD LEVERAGE RATIO
March 31, 1995 through and
including October 30, 1995 4.2 to 1.0
October 31, 1995 through and
and including March 30, 1996 4.0 to 1.0
March 31, 1996 through and
including October 30, 1996 3.5 to 1.0
October 31, 1996 and thereafter 3.3 to 1.0
5.3 CAPITAL EXPENDITURES. Make Capital Expenditures in an amount
that on a consolidated basis exceeds $500,000 in fiscal year 1995 and $700,000
in each of fiscal years 1996 and 1997.
5.4 CASH FLOW COVERAGE RATIO. For the period commencing March 31,
1995 through and including the Termination Date, as of the last day of each
month for the period commencing on the first day of the Borrower's fiscal year
and ending on such date, permit the Borrower's Cash Flow Coverage Ratio to be
less than 1.0 to 1.0.
Borrower's Initials
-------------------------
Lender's Initials
-------------------------
Date: As of March 30, 1995
-------------------------
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THIRD AMENDMENT TO CREDIT AND SECURITY AGREEMENT
THIS THIRD AMENDMENT TO CREDIT AND SECURITY AGREEMENT (this
"Amendment") made and entered into as of September 12, 1995 is by and between
PRIMEGG, LTD., a Delaware corporation (the "Borrower"), and FBS BUSINESS
FINANCE CORPORATION, a Delaware corporation (the "Lender").
RECITALS
1. The Lender and the Borrower entered into a Credit and Security
Agreement dated as of April 8, 1994, as amended by a First Amendment to Credit
and Security Agreement dated as of July 18, 1994 and a Second Amendment to
Credit and Security Agreement dated as of March 30, 1995 (as so amended, the
"Credit Agreement"); and
2. The Borrower and the Lender desire to amend certain provisions of
the Credit Agreement, subject to the terms and conditions set forth in this
Amendment.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto hereby covenant
and agree to be bound as follows:
Section 1. Capitalized Terms. Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to them in the
Credit Agreement, unless the context shall otherwise require.
Section 2. Amendments. The Credit Agreement is hereby amended as follows:
2.1 Definition of Reconstituted Inventory. Article I of the Credit
Agreement is amended to add the definition "Reconstituted Inventory" as
follows:
"Reconstituted Inventory": Inventory which consists of dried
egg powder (a) which is (i) salable in the ordinary course of
business or (ii) suitable for blending with other powder blends
to create salable product and (b) (i) is excess production, or
(ii) is a powder blend cleaned out of the dryer prior to drying
another powder blend, or (iii) did not meet specifications.
2.2 Supplement A. Supplement A to the Credit Agreement is
amended and restated in its entirety in the form of Exhibit A hereto.
79
Section 3. Effectiveness of Amendments. The amendments contained in this
Amendment shall become effective upon delivery of the following to the Lender:
3.1 This Amendment, duly executed by the Borrower and the Lender and
Supplement A, duly initialed by Borrower and Lender.
3.2 The Reaffirmation of Guaranty, substantially in the form of
Exhibit B attached hereto, duly executed by ▇▇▇▇▇▇▇ ▇▇▇▇▇.
3.3 The Borrower shall have satisfied such other conditions as
reasonably specified by the Lender or counsel to the Lender, including payment
of all unpaid legal fees and expenses incurred by the Lender through the date
of this Amendment in connection with the Credit Agreement or this Amendment.
Section 4. Representations; No Default. The Borrower hereby represents
that on and as of the date hereof and after giving effect to this
Amendment (a) all of the representations and warranties contained in the Credit
Agreement are true, correct and complete in all respects as of the date hereof
as though made on and as of such date, except to the extent such
representations and warranties specifically relate to an earlier date, in which
case they are true and correct as of such earlier date, and (b) there will
exist no Unmatured Event of Default or Event of Default on such date which has
not been waived by the Lender. The Borrower represents and warrants that the
Borrower has the power and legal right and authority to enter into this
Amendment and has duly authorized as appropriate the execution and delivery of
the Amendment and other agreements and documents executed and delivered by the
Borrower in connection herewith by proper corporate action, and neither the
Amendment nor the agreements contained herein contravene or constitute a
default under any agreement, instrument or indenture to which the Borrower is a
party or a signatory or any provision of the Borrower's Certificate of
Incorporation, Bylaws or, to the best of the Borrower's knowledge, any other
agreement or requirement of law. The Borrower represents and warrants that no
consent, approval or authorization of or registration or declaration with any
Person, including but not limited to any governmental authority, is required in
connection with the execution and delivery by the Borrower of the Amendment or
other agreements and documents executed and delivered by the Borrower in
connection therewith or the performance of obligations of the Borrower therein
described.
Section 5. Affirmation, Acknowledgement, Further References. The Lender
and the Borrower each acknowledge and affirm that the Credit Agreement,
as hereby amended, is hereby ratified and confirmed in all respects and all
terms, conditions and provisions of the Credit Agreement, except as amended by
this Amendment, shall remain unmodified and in full force and effect. The
Borrower acknowledges that this Amendment and all amendments to the Credit
Agreement are Loan Documents. All references in any document or instrument to
the Credit
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Agreement are hereby amended and shall refer to the Credit Agreement as amended
by this Amendment.
Section 6. Merger and Integration, Superseding Effect. The Credit
Agreement, as amended by this Amendment, from and after the date hereof,
embodies the entire agreement and understanding between the parties hereto and
supersede and have merged into them all prior oral and written agreements on the
same subjects by and between the parties hereto with the effect that the Credit
Agreement, as amended by this Amendment, shall control with respect to the
specific subjects hereof and thereof.
Section 7. Legal Expenses. As provided in Section 12.2 of the Credit
Agreement, the Borrower agrees to reimburse the Lender, upon execution
of this Amendment, for all reasonable out-of-pocket expenses (including
attorneys' fees and legal expenses of ▇▇▇▇▇▇ & Whitney P.L.L.P, counsel for the
Lender) incurred in connection with the Credit Agreement, including in
connection with the negotiation or preparation of this Amendment and all other
documents negotiated and prepared in connection with this Amendment.
Section 8. Headings. The headings of various sections of this Amendment
have been inserted for reference only and shall not be deemed to be a
part of this Amendment.
Section 9. Counterpart. This Amendment may be executed in several
counterparts, all or any of which shall be regarded as one and the same
document and either party to such agreements may execute any such agreement by
executing a counterpart of such agreement.
Section 10. Governing Law. This Amendment shall be governed by the
internal laws of the State of Minnesota, without giving effect to
conflict of law principles thereof, but giving effect to federal laws applicable
to national banks.
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81
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the date and year first above written.
BORROWER: PRIMEGG, LTD.
By: [SIG]
---------------------------------------
Title: CHAIRMAN OF THE BOARD
------------------------------------
LENDER: FBS BUSINESS FINANCE CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Title: Vice President
------------------------------------
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EXHIBIT A TO
THIRD AMENDMENT
SUPPLEMENT A
TO
CREDIT AND SECURITY AGREEMENT
DATED AS OF APRIL 8, 1994 BETWEEN
FBS BUSINESS FINANCE CORPORATION (THE "LENDER")
AND
PRIMEGG, LTD. (THE "BORROWER")
1. CREDIT AGREEMENT REFERENCE. This Supplement A, as amended and
restated as of September 12, 1995, and as it may be further amended or modified
from time to time, is a part of the Credit and Security Agreement, dated as of
April 8, 1994, between the Borrower and the Lender (together with all
amendments, modifications and supplements thereto, the "Credit Agreement").
Capitalized terms used herein which are defined in the Credit Agreement shall
have the meanings given such terms in the Credit Agreement unless the context
otherwise requires.
2. DEFINITIONS.
2.1 REVOLVING CREDIT AMOUNT. The term "Revolving Credit Amount"
shall mean the maximum amount of Revolving Loans which the Lender will
make available to the Borrower which amount shall not exceed SEVEN MILLION FIVE
HUNDRED THOUSAND AND NO/100 DOLLARS ($7,500,000) (unless such amount is
increased by the Lender in its sole and absolute discretion); provided,
however, that the aggregate outstanding principal balance of the
Revolving Loans plus the Letter of Credit Obligations shall not exceed the
Revolving Credit Amount.
2.2 BORROWING BASE. The term "Borrowing Base" shall mean:
(a) an amount of up to 85% of the net amount (as determined
by the Lender after deduction of such reserves and allowances
as the Lender deems proper and necessary) of the Borrower's
Eligible Accounts Receivable; plus
(b) an amount of up to the lesser of (1) the sum of (A) 65% of
the net value (the lower of the cost, determined on a first in
first out basis, or market value of such Inventory, as
determined by the Lender after deduction of such reserves and
allowances as the Lender deems proper and necessary) of the
Borrower's Eligible Inventory which does not constitute
Eligible Committed Inventory, plus (B) 70% of the net value
(the cost, determined on a first in first out basis, of such
Committed Inventory, as determined by the Lender after
deduction of such reserves and
83
allowances as the Lender deems proper and necessary) of the
Borrower's Eligible Committed Inventory, as determined by
the Lender after deduction of such reserves and allowances as the
Lender deems proper and necessary of the Borrower's Eligible
Committed Inventory, plus (C) 35% of the net value (as determined
by the Lender) of the Borrower's Reconstituted Inventory; or
(2) $5,000,000.
2.3 LETTER OF CREDIT SUBLIMIT. The term "Letter of Credit Sublimit"
shall mean $500,000.
2.4 TERMINATION DATE. The term "Termination Date" shall mean March
31, 1997.
3. INTEREST; FEES.
3.1 LOANS.
(a) REVOLVING LOANS. The unpaid principal balance of the
Revolving Loans (other than Overdraft Loans and Over
Advances) shall bear interest to maturity at the Reference Rate
in effect from time to time plus 1.50% per annum.
(b) TERM LOAN A. The unpaid principal balance of Term
Loan A shall bear interest to maturity at the Reference Rate in
effect from time to time plus 1.50% per annum; provided,
however, the Borrower may, upon five Business Days' prior
written notice to the Lender, request that Term Loan A be
converted from a Variable Rate Loan to a Fixed Rate Loan
whereupon the unpaid principal balance of Term Loan A shall
bear interest to the date of such conversion at the Reference
Rate in effect from time to time plus 1.50% per annum and
thereafter to maturity at the Fixed Rate plus 4.10% per annum.
(c) TERM LOAN B. The unpaid principal balance of Term
Loan B shall bear interest to maturity at the Reference Rate in
effect from time to time plus 1.50% per annum.
(d) DEFAULT RATE. If any amount of the Loans is not paid when
due, whether by acceleration or otherwise, the entire unpaid
principal balance of the Loans (other than Overdraft Loans and
Over Advances) shall bear interest until paid at a rate per
annum equal to the greater of (i) the Reference Rate from time
to time in effect plus 4% or (ii) 4% above the Reference Rate in
effect at the time such amount became due.
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3.2 OVERDRAFT LOANS; OVER ADVANCES. Overdraft Loans and Over Advances
shall bear interest at the rate(s) determined pursuant to Section 2.7 or
Section 2.8 of the Credit Agreement, as applicable.
3.3 COMMITMENT FEE. The Borrower shall pay to the Lender a commitment
fee for the period from the date hereof to the date the Credit terminates
in an amount equal to three-eighths of one percent (3/8%) per annum on the
average daily Unused Credit Amount.
3.4 LETTER OF CREDIT FEES. The Borrower shall pay the Lender, or any
Affiliate, a commission on the undrawn amount of each Letter of Credit and on
each L/C Draft accepted by the Lender, or such Affiliate, in an amount equal
to two percent (2%) per annum.
3.5 CREDIT TERMINATION FEE. Upon termination or cancellation of the
Credit by the Borrower prior to the Termination Date, the Borrower shall pay
to the Lender a termination fee in an amount equal to $100,000.
4. ELIGIBLE ACCOUNT RECEIVABLE REQUIREMENTS. The Account Receivable
must not be unpaid on the date that is 61 days after the date of the invoice
evidencing such Account Receivable. If invoices representing 10% or more of
the unpaid amount of all Accounts Receivable from any one Account Debtor are
unpaid more than 60 days after the dates of such invoices, then all Accounts
Receivable relating to such Account Debtor shall cease to be Eligible Accounts
Receivable.
5. ADDITIONAL COVENANTS. From the date of the Credit Agreement and
thereafter until all of the Borrower's Obligations under the Credit Agreement
are paid in full, the Borrower agrees that, unless the Lender shall otherwise
consent in writing, it will not, and will not permit any Subsidiary to, do any
of the following:
5.1 CAPITAL BASE. During each of the periods set forth below, not
permit the Borrower's Capital Base to be less than the amount set forth
opposite such period at any time:
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PERIOD CAPITAL BASE
March 31, 1995 through and
including October 30, 1995 $3,200,000
October 31, 1995 through and
including March 30, 1996 $3,300,000
March 31, 1996 to and
including October 30, 1996 $3,400,000
October 31, 1996 and thereafter $3,500,000
5.2 LEVERAGE RATIO. During each of the periods set forth below, not
permit the ratio of (a) the sum of (i) the Borrower's consolidated total
liabilities, less (ii) Adjusted Subordinated Debt, to (b) the Borrower's
Capital Base to be greater than the ratio set forth below opposite such period
at any time:
PERIOD LEVERAGE RATIO
March 31, 1995 through and
including October 30, 1995 4.2 to 1.0
October 31, 1995 through and
and including March 30, 1996 4.0 to 1.0
March 31, 1996 through and
including October 30, 1996 3.5 to 1.0
October 31, 1996 and thereafter 3.3 to 1.0
5.3 CAPITAL EXPENDITURES. Make Capital Expenditures in an amount
that on a consolidated basis exceeds $700,000 in any of fiscal years 1995,
1996 or 1997.
5.4 CASH FLOW COVERAGE RATIO. For the period commencing March 31,
1995 through and including the Termination Date, as of the last day of each
month for the period commencing on the first day of the Borrower's fiscal year
and ending on such date, permit the Borrower's Cash Flow Coverage Ratio to be
less than 1.0 to 1.0.
Borrower's Initials
---------------------------------
Lender's Initials
---------------------------------
Date: As of September 12, 1995
---------------------------------
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FOURTH AMENDMENT TO CREDIT AND SECURITY AGREEMENT
THIS FOURTH AMENDMENT TO CREDIT AND SECURITY AGREEMENT (this
"Amendment") made and entered into as of November 17, 1995 is by and between
PRIMEGG, LTD., a Delaware corporation (the "Borrower"), and FBS BUSINESS
FINANCE CORPORATION, a Delaware corporation (the "Lender").
RECITALS
1. The Lender and the Borrower entered into a Credit and Security
Agreement dated as of April 8, 1994, as amended by a First Amendment to
Credit and Security Agreement dated as of July 18, 1994, a Second Amendment
to Credit and Security Agreement dated as of March 30, 1995 (the "Second
Amendment") and a Third Amendment to Credit and Security Agreement dated as
of September 12, 1995 (as so amended, the "Credit Agreement"); and
2. The Borrower and the Lender desire to amend certain provisions of
the Credit Agreement, subject to the terms and conditions set forth in this
Amendment.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto hereby
covenant and agree to be bound as follows:
Section 1. Capitalized Terms. Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to them in the
Credit Agreement, unless the context shall otherwise require.
Section 2. Amendments. The Credit Agreement is hereby amended as
follows:
2.1 Restricted Payments. Section 6.8 of the Credit Agreement is
hereby amended in its entirety as follows:
6.8 RESTRICTED PAYMENTS. Purchase or redeem any shares of its
stock, declare or pay any dividends thereon (other than stock
dividends and dividends payable to the Borrower), make any
distribution to stockholders as such (other than the
Borrower) or set aside any funds for any such purpose, and
not prepay, purchase or redeem any subordinated Indebtedness
of the Borrower or any Subsidiary; provided, that,
subordinated Indebtedness in the amount of $200,000 loaned by
M. Shevi Family Asset Ltd. to the Borrower on or about
February 27, 1995
87
may be repaid by the Borrower after December 31, 1995, so long
as no Unmatured Event of Default or Event of Default is
outstanding at the time of repayment or would occur upon such
repayment.
2.2 Additional Covenants. Section 5(a) of the Second Amendment
is deleted in its entirety.
2.3 Supplement A. Supplement A to the Credit Agreement is
amended and restated in its entirety in the form of Exhibit A hereto.
Section 3. Effectiveness of Amendments. The amendments contained in
this Amendment shall become effective upon delivery of the following to the
Lender:
3.1 This Amendment, duly executed by the Borrower and the
Lender and Supplement A, duly initialed by Borrower and Lender.
3.2 The Reaffirmation of Guaranty, substantially in the form
of Exhibit B attached hereto, duly executed by ▇▇▇▇▇▇▇ Shevi.
3.3 The Borrower shall have satisfied such other conditions as
reasonably specified by the Lender or counsel to the Lender, including
payment of all unpaid legal fees and expenses incurred by the Lender through
the date of this Amendment in connection with the Credit Agreement or this
Amendment.
Section 4. Defaults and Waivers. Upon the date on which this Amendment
becomes effective, the Lender hereby waives any Unmatured Events of Default
or Events of Default arising as a result of the failure of the Borrower to
comply with Section 5.4 (Cash Flow Coverage Ratio) of Supplement A to the
Credit Agreement as of August 31, 1995 and September 30, 1995 and waives any
Unmatured Event of Default or Event of Default arising as a result of the
failure of the Borrower to comply with Section 5(a) of the Second Amendment
with respect to ▇▇▇▇▇▇ ▇▇▇▇▇ to the extent of $300,000. The waivers set
forth herein shall not constitute a waiver by the Lender of any other
Unmatured Event of Default or Event of Default, if any, under the Credit
Agreement, and shall not be, and shall not be deemed to be, a course of
action with respect thereto upon which the Borrower may rely in the future
and the Borrower hereby expressly waives any claim to such effect.
Section 5. Representations; No Default. The Borrower hereby represents
that on and as of the date hereof and after giving effect to this Amendment
(a) all of the representations and warranties contained in the Credit
Agreement are true, correct and complete in all respects as of the date
hereof as though made on and as of such date, except to the extent such
representations and warranties specifically
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88
relate to an earlier date, in which case they are true and correct as of
such earlier date, and (b) there will exist no Unmatured Event of Default or
Event of Default on such date which has not been waived by the Lender. The
Borrower represents and warrants that the Borrower has the power and legal
right and authority to enter into this Amendment and has duly authorized as
appropriate the execution and delivery of the Amendment and other agreements
and documents executed and delivered by the Borrower in connection herewith
by proper corporate action, and neither the Amendment nor the agreements
contained herein contravene or constitute a default under any agreement,
instrument or indenture to which the Borrower is a party or a signatory or
any provision of the Borrower's Certificate of Incorporation, Bylaws or, to
the best of the Borrower's knowledge, any other agreement or requirement of
law. The Borrower represents and warrants that no consent, approval or
authorization of or registration or declaration with any Person, including
but not limited to any governmental authority, is required in connection
with the execution and delivery by the Borrower of the Amendment or other
agreements and documents executed and delivered by the Borrower in
connection therewith or the performance of obligations of the Borrower
therein described.
Section 6. Affirmation, Acknowledgement, Further References. The Lender
and the Borrower each acknowledge and affirm that the Credit Agreement, as
hereby amended, is hereby ratified and confirmed in all respects and all
terms, conditions and provisions of the Credit Agreement, except as amended
by this Amendment, shall remain unmodified and in full force and effect. The
Borrower acknowledges that this Amendment and all amendments to the Credit
Agreement are Loan Documents. All references in any document or instrument
to the Credit Agreement are hereby amended and shall refer to the Credit
Agreement as amended by this Amendment.
Section 7. Merger and Integration, Superseding Effect. The Credit
Agreement, as amended by this Amendment, from and after the date hereof,
embodies the entire agreement and understanding between the parties hereto
and supersede and have merged into them all prior oral and written
agreements on the same subjects by and between the parties hereto with the
effect that the Credit Agreement, as amended by this Amendment, shall
control with respect to the specific subjects hereof and thereof.
Section 8. Legal Expenses. As provided in Section 12.2 of the Credit
Agreement, the Borrower agrees to reimburse the Lender, upon execution of
this Amendment, for all reasonable out-of-pocket expenses (including
attorneys' fees and legal expenses of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ P.L.L.P, counsel for
the Lender) incurred in connection with the Credit Agreement, including in
connection with the negotiation or preparation of this Amendment and all
other documents negotiated and prepared in connection with this Amendment.
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89
Section 9. Headings. The headings of various sections of this Amendment
have been inserted for reference only and shall not be deemed to be a part
of this Amendment.
Section 10. Counterpart. This Amendment may be executed in several
counterparts, all or any of which shall be regarded as one and the same
document and either party to such agreements may execute any such agreement
by executing a counterpart of such agreement.
Section 11. Governing Law. This Amendment shall be governed by the
internal laws of the State of Minnesota, without giving effect to conflict
of law principles thereof, but giving effect to federal laws applicable to
national banks.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the date and year first above written.
BORROWER: PRIMEGG, LTD.
By: [SIG]
------------------------------
Title: Chairman
---------------------------
LENDER: FBS BUSINESS FINANCE CORPORATION
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Title: Vice President
---------------------------
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EXHIBIT A TO
FOURTH AMENDMENT
SUPPLEMENT A
to
CREDIT AND SECURITY AGREEMENT
Dated as of April 8,1994 Between
FBS BUSINESS FINANCE CORPORATION (the "Lender")
and
PRIMEGG, LTD. (the "Borrower")
1. Credit Agreement Reference. This Supplement A, as amended and
restated as of November 17, 1995, and as it may be further amended or
modified from time to time, is a part of the Credit and Security Agreement,
dated as of April 8, 1994, between the Borrower and the Lender (together
with all amendments, modifications and supplements thereto, the "Credit
Agreement"). Capitalized terms used herein which are defined in the Credit
Agreement shall have the meanings given such terms in the Credit Agreement
unless the context otherwise requires.
2. Definitions.
2.1 Revolving Credit Amount. The term "Revolving Credit
Amount" shall mean the maximum amount of Revolving Loans which the Lender
will make available to the Borrower which amount shall not exceed SEVEN
MILLION FIVE HUNDRED THOUSAND AND N01100 DOLLARS ($7,500,000) (unless such
amount is increased by the Lender in its sole and absolute discretion);
provided however that the aggregate outstanding principal balance of the
Revolving Loans plus the Letter of Credit Obligations shall not exceed the
Revolving Credit Amount.
2.2 Borrowing Base. The term "Borrowing Base" shall mean:
(a) an amount of up to 85% of the net amount (as determined by
the Lender after deduction of such reserves and allowances as
the Lender deems proper and necessary) of the Borrower's
Eligible Accounts Receivable; plus
(b) an amount of up to the lesser of (1) the sum of (A) 65% of
the net value (the lower of the cost, determined on a first in
first out basis, or market value of such Inventory, as
determined by the Lender after deduction of such reserves and
allowances as the Lender deems proper and necessary) of the
Borrower's Eligible Inventory which does not constitute
Eligible Committed Inventory, plus (B) 70% of the net value
(the cost, determined on a first in first out basis, of such
Committed Inventory, as determined by the Lender after
deduction of such reserves and
92
allowances as the Lender deems proper and necessary) of the
Borrower's Eligible Committed Inventory, as determined by the
Lender after deduction of such reserves and allowances as the
Lender deems proper and necessary of the Borrower's Eligible
Committed Inventory, plus (C) 35% of the net value (as
determined by the Lender) of the Borrower's Reconstituted
Inventory; or (2) $5,000,000.
2.3 LETTER OF CREDIT SUBLIMIT. The term "Letter of Credit Sublimit"
shall mean $500,000.
2.4 TERMINATION DATE. The term "Termination Date" shall mean
March 31, 1997.
2.5 FOURTH AMENDMENT. The term "Fourth Amendment" shall mean that
certain Fourth Amendment to Credit and Security Agreement dated as of
November 17, 1995, by and between the Lender and the Borrower.
2.6 FOURTH AMENDMENT EFFECTIVE DATE. The term "Fourth Amendment
Effective Date" shall mean the date on which the conditions to the effectiveness
of the Fourth Amendment set forth in Section 3 thereof shall have been
satisfied.
3. INTEREST; FEES.
3.1 LOANS.
(a) REVOLVING LOANS. The unpaid principal balance of the
Revolving Loans (other than Overdraft Loans and Over Advances)
shall bear interest to maturity at the Reference Rate in effect
from time to time plus 1.50% per annum.
(b) TERM LOAN A. The unpaid principal balance of Term Loan A
shall bear interest to maturity at the Reference Rate in effect
from time to time plus 1.50% per annum; provided, however, the
Borrower may, upon five Business Days' prior written notice to
the Lender, request that Term Loan A be converted from a
Variable Rate Loan to a Fixed Rate Loan whereupon the unpaid
principal balance of Term Loan A shall bear interest to the
date of such conversion at the Reference Rate in effect from
time to time plus 1.50% per annum and thereafter to maturity at
the Fixed Rate plus 4.10% per annum.
(c) TERM LOAN B. The unpaid principal balance of Term Loan B
shall bear interest to maturity at the Reference Rate in
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93
effect from time to time plus 1.50% per annum.
(d) DEFAULT RATE. If any amount of the Loans is not paid when
due, whether by acceleration or otherwise, the entire unpaid
principal balance of the Loans (other than Overdraft Loans and
Over Advances) shall bear interest until paid at a rate per
annum equal to the greater of (i) the Reference Rate from time
to time in effect plus 4% or (ii) 4% above the Reference Rate
in effect at the time such amount became due.
3.2 OVERDRAFT LOANS; OVER ADVANCES. Overdraft Loans and Over
Advances shall bear interest at the rate(s) determined pursuant to Section
2.7 or Section 2.8 of the Credit Agreement, as applicable.
3.3 COMMITMENT FEE. The Borrower shall pay to the Lender a
commitment fee for the period from the date hereof to the date the Credit
terminates in an amount equal to three-eighths of one percent (3/8%) per
annum on the average daily Unused Credit Amount.
3.4 LETTER OF CREDIT FEES. The Borrower shall pay the Lender, or
any Affiliate, a commission on the undrawn amount of each Letter of Credit
and on each L/C Draft accepted by the Lender, or such Affiliate, in an
amount equal to two percent (2%) per annum.
3.5 CREDIT TERMINATION FEE. Upon termination or cancellation of
the Credit by the Borrower prior to the Termination Date, the Borrower shall
pay to the Lender a termination fee in an amount equal to $100,000.
4. ELIGIBLE ACCOUNT RECEIVABLE REQUIREMENTS. tHE aCCOUnt Receivable
must not be unpaid on the date that is 61 days after the date of the invoice
evidencing such Account Receivable. If invoices representing 10% or more of
the unpaid amount of all Accounts Receivable from any one Account Debtor are
unpaid more than 60 days after the dates of such invoices, then all Accounts
Receivable relating to such Account Debtor shall cease to be Eligible
Accounts Receivable.
5. ADDITIONAL NEGATIVE COVENANTS. From the date of the Credit
Agreement and thereafter until all of the Borrower's Obligations under the
Credit Agreement are paid in full, the Borrower agrees that, unless the
Lender shall otherwise consent in writing, it will not, and will not permit
any Subsidiary to, do any of the following:
5.1 CAPITAL BASE. During each of the periods set forth below, not
permit the Borrower's Capital Base to be less than the amount set forth
opposite such period at any time:
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94
PERIOD CAPITAL BASE
March 31, 1995 through and
including October 30, 1995 $3,200,000
October 31, 1995 through and
including March 30, 1996 $3,300,000
March 31, 1996 to and including
October 30, 1996 $3,400,000
October 31, 1996 and thereafter $3,500,000
5.2 LEVERAGE RATIO. During each of the periods set forth below,
not permit the ratio of (a) the sum of (i) the Borrower's consolidated total
liabilities, less (ii) Adjusted Subordinated Debt, to (b) the Borrower's
Capital Base to be greater than the ratio set forth below opposite such
period at any time:
PERIOD LEVERAGE RATIO
March 31, 1995 through and
including October 30, 1995 4.2 to 1.0
October 31, 1995 through and
and including March 30, 1996 4.0 to 1.0
March 31, 1996 through and
including October 30, 1996 3.5 to 1.0
October 31, 1996 and thereafter 3.3 to 1.0
5.3 CAPITAL EXPENDITURES. Make Capital Expenditures in an amount
that on a consolidated basis exceeds $700,000 in any of fiscal years 1995,
1996 or 1997.
5.4 CASH Flow COVERAGE RATIO. For the period commencing October 1,
1995 through and including December 31, 1995, as of the last day of each
month for the period commencing on the first day of the Borrower's fiscal
year and ending on such date, permit the Borrower's Cash Flow Coverage Ratio
to be less than 0.90 to 1.0. For the period commencing January 1, 1996
through and including the Termination Date, as of the last day of each month
for the period commencing on the first day of the Borrower's fiscal year and
ending on such date, permit the Borrower's Cash Flow Coverage Ratio to be
less than 1.0 to 1.0.
6. ADDITIONAL AFFIRMATIVE COVENANTS.
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6.1 LIFE INSURANCE. The Borrower will deliver to the Lender
on or before the Fourth Amendment Effective Date duly executed collateral
assignments of life insurance policies, in form and substance satisfactory
to the Lender, on the lives of ▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
respectively, in the aggregate amount of $800,000, together with the
original life insurance policies being so assigned.
Borrower's Initials
---------------------
Lender's Initials
-----------------------
Date: As of November 17, 1995
-----------------------
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FIFTH AMENDMENT TO CREDIT AND SECURITY AGREEMENT
THIS FIFTH AMENDMENT TO CREDIT AND SECURITY AGREEMENT (this
"Amendment") made and entered into as of June 1, 1996 is by and between
PRIMEGG, LTD., a Delaware corporation (the "Borrower"), and FBS BUSINESS
FINANCE CORPORATION, a Delaware corporation (the "Lender").
RECITALS
1. The Lender and the Borrower entered into a Credit and Security
Agreement dated as of April 8, 1994, as amended by a First Amendment to
Credit and Security Agreement dated as of July 18, 1994, a Second Amendment
to Credit and Security Agreement dated as of March 30, 1995 (the "Second
Amendment"), a Third Amendment to Credit and Security Agreement dated as of
September 12, 1995 and a Fourth Amendment to Credit and Security Agreement
dated as of November 17, 1995 (as so amended, the "Credit Agreement"); and
2. The Borrower and the Lender desire to amend certain provisions of
the Credit Agreement, subject to the terms and conditions set forth in this
Amendment.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto hereby
covenant and agree to be bound as follows:
Section 1. Capitalized Terms. Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to them in the
Credit Agreement, unless the context shall otherwise require.
Section 2. Amendments. The Credit Agreement is hereby amended as
follows:
2.1 Additional Definitions. Section 1.1 of the Credit Agreement is
hereby amended by inserting the following definitions in appropriate
alphabetical order:
"Equipment Credit Amount": The term "Equipment Credit
Agreement" shall have the meaning given such term in
Supplement A.
"Equipment Loan": The term "Equipment Loan" shall have
the meaning given such term in Section 2.1.3.
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"Equipment Loan Amortization Schedule": A schedule
substantially in the form of Exhibit B hereto delivered in
connection with an Equipment Loan and setting forth the
amortization schedule applicable to such Equipment Loan.
"Equipment Loan Availability": The term "Equipment Loan
Availability" shall mean, with respect to any given Equipment
Loan, the lesser of (a) the Equipment Credit Amount, minus
the aggregate amount of all Equipment Loans previously made
by the Lender and (b) 80% of the cost of the equipment
acquired with such Equipment Loan.
2.2 Amended Definitions. Section 1.1 of the Credit Agreement is
hereby further amended by deleting the definitions of "Capital Base",
"Loan", and "Term Loan(s)" in their entirety and substituting the following
therefor:
"Capital Base": At any determination date, the total of
(a) the sum of (i) all assets appearing on a consolidated
balance sheet of the Borrower at such date, prepared in
accordance with GAAP, after deducting all proper reserves
(including reserves for depreciation, obsolescence
and amortization), plus (ii) Subordinated Debt; minus (b)
all liabilities which in accordance with GAAP would be
included on the liability side of a consolidated balance
sheet.
"Loan": Any Revolving Loan made by the Lender to the
Borrower pursuant to Section 2.1.1 Term Loan A made by the
Lender to the Borrower pursuant to Section 2.1.2, any
Equipment Loan made by the Lender to the Borrower pursuant
to Section 2.1.3, and any other loan or advance made by the
Lender to the Borrower under or pursuant to this Agreement.
"Term Loan(s)": Individually or collectively, Term Loan
A and the Equipment Loans.
2.3 Deleted Definitions. Section 1.1 of the Credit Agreement is
hereby further amended by deleting the definitions of the terms "Adjusted
Subordinated Debt", "Collateral Letter of Credit Subordinated Debt", and
"Term Loan B".
2.4 Equipment Loans. Section 2.1.3 of the Credit Agreement is
deleted in its entirety and the following is substituted therefor:
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2.1.3 Equipment Loans
(a) Subject to the terms and conditions of the Loan
Documents, and in reliance upon the warranties of the Borrower set
forth herein and in the other Loan Documents, the Lender agrees to
make such loans or advances (individually, an "Equipment Loan",
and collectively, the "Equipment Loans") to the Borrower as the
Borrower may from time to time request, up to but not in excess of
the Equipment Loan Availability.
(b) Unless otherwise required to be sooner paid pursuant to
this Agreement, the principal of each Equipment Loan shall mature
and be payable in accordance with the Equipment Loan Amortization
Schedule delivered by the Lender in connection with such Equipment
Loan, and a final installment in the outstanding principal balance
of such Equipment Loan on the Termination Date.
(c) During any period in which an Equipment Loan is a
Variable Rate Loan, the Borrower may, upon three Business Days.'
notice to the Lender, prepay the principal of such Equipment Loan
in whole or in part without premium. Any partial prepayment of
principal of an Equipment Loan shall be in a minimum amount of the
lesser of (i) the outstanding principal balance of such Equipment
Loan and (ii) $10,000 or an integral multiple thereof, and shall
be applied to the unpaid installments of such Equipment Loan in
the inverse order of their maturities. Any principal of an
Equipment Loan which is repaid may not be reborrowed.
(d) During any period in which an Equipment Loan is a Fixed
Rate Loan, the Borrower may, upon five Business Days' prior
written notice to the Lender, prepay the principal of such
Equipment Loan in whole or in part. Any partial prepayment of
principal of an Equipment Loan shall be in a minimum amount of the
lesser of (i) the outstanding principal balance of such Equipment
Loan and (ii) $10,000 or an integral multiple thereof, and shall
be applied to the unpaid installments of such Equipment Loan in
the inverse order of their maturities. If at the time of any
prepayment (whether voluntary or involuntary, including, without
limitation, any payment prior to the scheduled maturity following
acceleration of an Equipment Loan), the Interest Differential is
greater than zero, the Borrower shall pay to the Lender a
prepayment premium equal to the present value (determined in
accordance with standard financial
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99
practice) of the product of (1) the Interest Differential, (2) the
amount prepaid, and (3) the Average Maturity Period. The amount of
the prepayment premium shall be calculated as follows: The amount
prepaid shall be multiplied by the product of (A) the Interest
Differential, and (B) a fraction, the numerator of which is the
number of days in the Average Maturity Period and the denominator
of which is 360. The resulting product shall then be divided by
the number of whole months (using a thirty day month) in the
Average Maturity Period, yielding a quotient (the "Quotient"). The
amount of the prepayment premium shall be the present value
(determined in accordance with standard financial practice) on the
date of prepayment (using Government Yield as of the date of such
prepayment as the discount factor) of a stream of equal monthly
payments in number equal to the number of whole months (using a
thirty day month) in the Average Maturity Period, with the amount
of each hypothetical monthly payment being equal to the Quotient
and with the first payment payable thirty days after the date of
prepayment.
(e) Any payment of an Equipment Loan may be made with the
proceeds of a Revolving Loan only if, immediately before and after
giving effect to such payment, no Event of Default or Unmatured
Event of Default then exists or would result therefrom.
2.5 Ownership. Section 7.1(o) of the Credit Agreement is deleted in
its entirety and the following is substituted therefor:
(o) OWNERSHIP. (i) The Guarantor shall cease to own at least
20% of the shares of all voting stock of the Borrower, except in
connection with the sale of such voting stock to Cham Foods in
connection with the acquisition by Cham Foods on or after July 1,
1996, of all of the shares of all voting stock of the Borrower,
and (ii) after the acquisition by Cham Foods of all of the shares
of all voting stock of the Borrower, Cham Foods shall cease to own
all of the shares of all voting stock of the Borrower.
2.6 Supplement A. Supplement A to the Credit Agreement is amended
and restated in its entirety in the form of Exhibit A hereto.
Section 3. Effectiveness of Amendments. The amendments contained in this
Amendment shall become effective as of June 1, 1996 upon delivery of the
following to the Lender:
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100
3.1 This Amendment, duly executed by the Borrower and the Lender and
Supplement A, duly initialed by Borrower and Lender.
3.2 A copy of the resolutions of the Board of Directors of the
Borrower authorizing the execution, delivery and performance of this Amendment,
certified as true and accurate by its Secretary or Assistant Secretary, along
with a certification by such Secretary or Assistant Secretary (i) certifying
that there has been no amendment to the Certificate of Incorporation or Bylaws
of the Borrower since true and accurate copies of the same were delivered to the
Lender with a certificate of the Secretary of the Borrower dated April 21, 1994;
and (ii) identifying each officer of the Borrower authorized to execute this
Amendment and any other instrument or agreement executed by the Borrower in
connection with this Amendment (collectively, the "Amendment Documents"), and
certifying as to specimens of such officer's signature and such officer's
incumbency in such offices as such officer holds.
3.3 The Borrower shall have satisfied such other conditions as
reasonably specified by the Lender or counsel to the Lender, including payment
of all unpaid legal fees and expenses incurred by the Lender through the date of
this Amendment in connection with the Credit Agreement or this Amendment.
Section 4. Defaults and Waivers. Upon the date on which this Amendment becomes
effective, the Lender hereby waives any Unmatured Events of Default or Events of
Default arising as a result of the failure of the Borrower to comply with
Section 5.4 (Cash Flow Coverage Ratio) of Supplement A to the Credit Agreement
as of the end of each reporting period beginning December 31, 1995 and through
and including May 31, 1996. The waiver set forth herein shall not constitute a
waiver by the Lender of any other Unmatured Event of Default or Event of
Default, if any, under the Credit Agreement, and shall not be, and shall not be
deemed to be, a course of action with respect thereto upon which the Borrower
may rely in the future and the Borrower hereby expressly waives any claim to
such effect.
Section 5. Release. Upon receipt by the Lender of a certificate, duly executed
by each of ▇▇▇▇▇▇▇ Shevi and Cham Foods, certifying as to the sale of the
Pledged Shares (as defined in the Guaranty and Pledge Agreement dated as of
April 10, 1995 (the "Guaranty") issued by ▇▇▇▇▇▇▇ Shevi for the benefit of the
Lender) to Cham Foods, the Lender shall execute and deliver a Release,
substantially in the form of Exhibit C hereto, to ▇▇▇▇▇▇▇ Shevi, together with
the Pledged Shares.
Section 6. Subordinated Debt. Upon the earlier of consummation of the sale of
Pledged Shares to Cham Foods or July 31, 1996, each existing Subordinated
Lender shall deliver to the Lender an executed affirmation in the form of
Exhibit D hereto, unless Cham Foods has acquired or replaced in full the
Subordinated Debt owed to such Subordinated Lenders. In the event that Cham
Foods acquires or replaces in whole or in part existing Subordinated Debt, Cham
Foods shall execute
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and deliver to the Lender a subordination agreement in form and substance
acceptable to the Lender.
Section 7. Representations; No Default. The Borrower hereby represents that on
and as of the date hereof and after giving effect to this Amendment (a) all of
the representations and warranties contained in the Credit Agreement are true,
correct and complete in all respects as of the date hereof as though made on and
as of such date, except to the extent such representations and warranties
specifically relate to an earlier date, in which case they are true and correct
as of such earlier date, and (b) there will exist no Unmatured Event of Default
or Event of Default on such date which has not been waived by the Lender. The
Borrower represents and warrants that the Borrower has the power and legal right
and authority to enter into this Amendment and has duly authorized as
appropriate the execution and delivery of the Amendment and other agreements and
documents executed and delivered by the Borrower in connection herewith by
proper corporate action, and neither the Amendment nor the agreements contained
herein contravene or constitute a default under any agreement, instrument or
indenture to which the Borrower is a party or a signatory or any provision of
the Borrower's Certificate of Incorporation, Bylaws or, to the best of the
Borrower's knowledge, any other agreement or requirement of law. The Borrower
represents and warrants that no consent, approval or authorization of or
registration or declaration with any Person, including but not limited to any
governmental authority, is required in connection with the execution and
delivery by the Borrower of the Amendment or other agreements and documents
executed and delivered by the Borrower in connection therewith or the
performance of obligations of the Borrower therein described.
Section 8. Affirmation, Acknowledgement, Further References. The Lender and
the Borrower each acknowledge and affirm that the Credit Agreement, as hereby
amended, is hereby ratified and confirmed in all respects and all terms,
conditions and provisions of the Credit Agreement, except as amended by this
Amendment, shall remain unmodified and in full force and effect. The Borrower
acknowledges that this Amendment and all amendments to the Credit Agreement are
Loan Documents. All references in any document or instrument to the Credit
Agreement are hereby amended and shall refer to the Credit Agreement as amended
by this Amendment.
Section 9. Merger and Integration, Superseding Effect. The Credit Agreement,
as amended by this Amendment, and the other Loan Documents from and after the
date hereof, embody the entire agreement and understanding between the parties
hereto and supersede and have merged into them all prior oral and written
agreements on the same subjects by and between the parties hereto with the
effect that the Credit Agreement, as amended by this Amendment, shall control
with respect to the specific subjects hereof and thereof.
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Section 10. Legal Expenses. As provided in Section 12.2 of the Credit
Agreement, the Borrower agrees to reimburse the Lender, upon execution of this
Amendment, for all reasonable out-of-pocket expenses (including attorneys' fees
and legal expenses of ▇▇▇▇▇▇ & Whitney P.L.L.P, counsel for the Lender) incurred
in connection with the Credit Agreement, including in connection with the
negotiation or preparation of this Amendment and all other documents negotiated
and prepared in connection with this Amendment.
Section 11. Headings. The headings of various sections of this Amendment have
been inserted for reference only and shall not be deemed to be a part of this
Amendment.
Section 12. Counterpart. This Amendment may be executed in several
counterparts, all or any of which shall be regarded as one and the same document
and either party to such agreements may execute any such agreement by executing
a counterpart of such agreement.
Section 13. Governing Law. This Amendment shall be governed by the internal
laws of the State of Minnesota, without giving effect to conflict of law
principles thereof, but giving effect to federal laws applicable to national
banks.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the date and year first above written.
BORROWER: PRIMEGG, LTD.
By: ▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Title: President
----------------------------
LENDER: FBS BUSINESS FINANCE CORPORATION
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Title: Vice President
----------------------------
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SUPPLEMENT A
TO
CREDIT AND SECURITY AGREEMENT
DATED AS OF APRIL 8, 1994 BETWEEN
FBS BUSINESS FINANCE CORPORATION (THE "LENDER")
AND
PRIMEGG, LTD. (THE "BORROWER")
1. CREDIT AGREEMENT REFERENCE. This Supplement A, as amended and
restated as of June 1, 1996, and as it may be further amended or modified
from time to time, is a part of the Credit and Security Agreement, dated as
of April 8, 1994, between the Borrower and the Lender (together with all
amendments, modifications and supplements thereto, the "Credit Agreement").
Capitalized terms used herein which are defined in the Credit Agreement
shall have the meanings given such terms in the Credit Agreement unless the
context otherwise requires.
2. DEFINITIONS.
2.1 REVOLVING CREDIT AMOUNT. The term "Revolving Credit Amount"
shall mean the maximum amount of Revolving Loans which the Lender will make
available to the Borrower which amount shall not exceed SEVEN MILLION FIVE
HUNDRED THOUSAND AND NO/100 DOLLARS ($7,500,000)(unless such amount is
increased by the Lender in its sole and absolute discretion); provided,
however, that the aggregate outstanding principal balance of the Revolving
Loans plus the Letter of Credit Obligations shall not exceed the Revolving
Credit Amount.
2.2 BORROWING BASE. The term "Borrowing Base" shall mean:
(a) an amount of up to 85% of the net amount (as determined by
the Lender after deduction of such reserves and allowances as
the Lender deems proper and necessary) of the Borrower's
Eligible Accounts Receivable; plus
(b) an amount of up to the lesser of (1) the sum of (A) 65% of
the net value (the lower of the cost, determined on a first in
first out basis, or market value of such Inventory, as
determined by the Lender after deduction of such reserves and
allowances as the Lender deems proper and necessary) of the
Borrower's Eligible Inventory which does not constitute
Eligible Committed Inventory, plus (B) 70% of the net value
(the cost, determined on a first in first out basis, of such
Committed Inventory, as determined by the Lender after
deduction of such reserves and allowances as the Lender deems
proper and necessary) of the Borrower's Eligible Committed
Inventory, as determined by the
105
Lender after deduction of such reserves and allowances as the
Lender deems proper and necessary of the Borrower's Eligible
Committed Inventory, plus (C) 35% of the net value (as
determined by the Lender) of the Borrower's Reconstituted
Inventory; or (2) $5,000,000.
2.3 LETTER OF CREDIT SUBLIMIT. The term "Letter of Credit
Sublimit" shall mean $500,000.
2.4 TERMINATION DATE. The term "Termination Date" shall mean
June 30, 1998.
2.5 EQUIPMENT CREDIT AMOUNT. The term "Equipment Credit Amount"
shall mean the maximum amount of Equipment Loans which the Lender will make
available to the Borrower which amount shall not exceed ONE MILLION AND NO/100
DOLLARS ($1,000,000) (unless such amount is increased by the Lender in its sole
and absolute discretion).
3. INTEREST; FEES.
3.1 LOANS.
(a) REVOLVING LOANS. The unpaid principal balance of the
Revolving Loans (other than Overdraft Loans and Over
Advances) shall bear interest to maturity at the Reference
Rate in effect from time to time plus 0.75% per annum.
(b) TERM LOANS. The unpaid principal balance of each Term
Loan shall bear interest to maturity at the Reference Rate in
effect from time to time plus 0.75% per annum; provided,
however, the Borrower may, upon five Business Days' prior
written notice to the Lender, request that a Term Loan be
converted from a Variable Rate Loan to a Fixed Rate Loan
whereupon the unpaid principal balance of such Term Loan
shall bear interest to the date of such conversion at the
Reference Rate in effect from time to time plus 0.75% per
annum and thereafter to maturity at the Fixed Rate plus 3.35%
per annum.
(c) DEFAULT RATE. If any amount of the Loans is not paid when
due, whether by acceleration or otherwise, the entire unpaid
principal balance of the Loans (other than Overdraft Loans
and Over Advances) shall bear interest until paid at a rate
per annum equal to the greater of (i) the Reference Rate from
time to time in effect plus 4% or (ii) 4% above the Reference
Rate in effect at the time such amount became due.
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3.2 OVERDRAFT LOANS; OVER ADVANCES. Overdraft Loans and Over
Advances shall bear interest at the rate(s) determined pursuant to Section 2.7
or Section 2.8 of the Credit Agreement, as applicable.
3.3 COMMITMENT FEE. The Borrower shall pay to the Lender a
commitment fee for the period from the date hereof to the date the Credit
terminates in an amount equal to three-eighths of one percent (3/8%) per annum
on the average daily Unused Credit Amount.
3.4 LETTER OF CREDIT FEES. The Borrower shall pay the Lender, or
any Affiliate, a commission on the undrawn amount of each Letter of Credit and
on each L/C Draft accepted by the Lender, or such Affiliate, in an amount equal
to two percent (2%) per annum.
3.5 CREDIT TERMINATION FEE. Upon termination or cancellation of
the Credit by the Borrower prior to the Termination Date, the Borrower shall pay
to the Lender a termination fee in an amount equal to (a) $100,000, if such
termination occurs at any time prior to March 31, 1997, or (b) $75,000 at any
time thereafter.
4. ELIGIBLE ACCOUNT RECEIVABLE REQUIREMENTS. The Account Receivable
must not be unpaid on the date that is 61 days after the date of the invoice
evidencing such Account Receivable. If invoices representing 10% or more of the
unpaid amount of all Accounts Receivable from any one Account Debtor are unpaid
more than 60 days after the dates of such invoices, then all Accounts Receivable
relating to such Account Debtor shall cease to be Eligible Accounts Receivable.
5. ADDITIONAL NEGATIVE COVENANTS. From the date of the Credit
Agreement and thereafter until all of the Borrower's Obligations under the
Credit Agreement are paid in full, the Borrower agrees that, unless the Lender
shall otherwise consent in writing, it will not, and will not permit any
Subsidiary to, do any of the following:
5.1 CAPITAL BASE. During each of the periods set forth below, not
permit the Borrower's Capital Base to be less than the amount set forth opposite
such period at any time:
PERIOD CAPITAL BASE
June 1, 1996 through and
including June 30, 1996 $4,600,000
July 1, 1996 through and
including December 31, 1996 $4,700,000
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January 1, 1997 to and
including December 31, 1997 $4,900,000
January 1, 1998 and thereafter $5,100,000
5.2 LEVERAGE RATIO. During each of the periods set forth below,
not permit the ratio of (a) the sum of (i) the Borrower's consolidated total
liabilities, less (ii) Subordinated Debt, to (b) the Borrower's Capital Base
to be greater than the ratio set forth below opposite such period at any
time:
PERIOD LEVERAGE RATIO
June 1, 1996 through and
including December 31, 1996 3.0 to 1.0
January 1, 1997 through and
including December 31, 1997 2.7 to 1.0
January 1, 1998 and thereafter 2.5 to 1.0
5.3 CAPITAL EXPENDITURES. During the calendar year set forth
below, make Capital Expenditures in such calendar year in an amount that on
a consolidated basis exceeds the amount set forth below opposite such
calendar year:
CALENDAR YEAR CAPITAL EXPENDITURES
1996 $1,300,000
1997 $ 500,000
1998 $ 600,000
5.4 CASH FLOW COVERAGE RATIO. During each of the periods set forth
below, as of the last day of each month occurring in such period for the
period commencing on January 1st of the year in which such month occurs and
ending on such date, permit the Borrower's Cash Flow Coverage Ratio to be
less than the ratio set forth below opposite such period:
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CASH FLOW
PERIOD COVERAGE RATIO
June 1, 1996 through and
including August 31, 1996 .50 to 1.0
September 1, 1996 through and
including November 30, 1996 .65 to 1.0
December 1, 1996 through and
including December 31, 1996 .75 to 1.0
January 1, 1997 and thereafter 1.05 to 1.0
Borrower's Initials JL
----------------
Lender's Initials WP
----------------
Date: as of 6/1/96
----------------
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SIXTH AMENDMENT TO CREDIT AND SECURITY AGREEMENT
THIS SIXTH AMENDMENT TO CREDIT AND SECURITY AGREEMENT
(this "Amendment") made and entered into as of January 6, 1997 is by and
between PRIMEGG, LTD., a Delaware corporation (the "Borrower"), and FBS
BUSINESS FINANCE CORPORATION, a Delaware corporation (the "Lender").
RECITALS
1. The Lender and the Borrower entered into a Credit and Security
Agreement dated as of April 8, 1994, as amended by a First Amendment to
Credit and Security Agreement dated as of July 18, 1994, a Second Amendment
to Credit and Security Agreement dated as of March 30, 1995, a Third
Amendment to Credit and Security Agreement dated as of September 12, 1995, a
Fourth Amendment to Credit and Security Agreement dated as of November 17,
1995 and a Fifth Amendment to Credit and Security Agreement dated as of June
1, 1996 (as so amended, the "Credit Agreement"); and
2. The Borrower and the Lender desire to amend certain provisions of
the Credit Agreement, subject to the terms and conditions set forth in this
Amendment.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto hereby
covenant and agree to be bound as follows:
Section 1. Capitalized Terms. Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to them in the
Credit Agreement, unless the context shall otherwise require.
Section 2. Amendments. The Credit Agreement is hereby amended as
follows:
2.1 Restricted Payments. Section 6.8 of the Credit Agreement is hereby
amended in its entirety as follows:
6.8 RESTRICTED PAYMENTS. Purchase or redeem any shares of its
stock, declare or pay any dividends thereon (other than stock
dividends and dividends payable to the Borrower), make any
distribution to stockholders as such (other than the
Borrower) or set aside any funds for any such purpose, and
not prepay, purchase or redeem any Subordinated Debt of the
Borrower or any Subsidiary; provided, that, an aggregate
amount of $800,000
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of Subordinated Debt may be repaid by the Borrower after
December 31, 1996, so long as no Unmatured Event of Default
or Event of Default is outstanding at the time of repayment
or would occur upon such repayment.
Section 3. Effectiveness of Amendments. The amendments contained in
this Amendment shall become effective as of January 6, 1997, upon delivery
of the following to the Lender:
3.1 This Amendment, duly executed by the Borrower and the Lender.
3.2 The Borrower shall have satisfied such other conditions as
reasonably specified by the Lender or counsel to the Lender, including
payment of all unpaid legal fees and expenses incurred by the Lender through
the date of this Amendment in connection with the Credit Agreement or this
Amendment.
Section 4. Representations; No Default. The Borrower hereby represents that
on and as of the date hereof and after giving effect to this Amendment (a) all
of the representations and warranties contained in the Credit Agreement are
true, correct and complete in all respects as of the date hereof as though made
on and as of such date, except to the extent such representations and warranties
specifically relate to an earlier date, in which case they are true and correct
as of such earlier date, and (b) there will exist no Unmatured Event of Default
or Event of Default on such date which has not been waived by the Lender. The
Borrower represents and warrants that the Borrower has the power and legal right
and authority to enter into this Amendment and has duly authorized as
appropriate the execution and delivery of the Amendment and other agreements and
documents executed and delivered by the Borrower in connection herewith by
proper corporate action, and neither the Amendment nor the agreements contained
herein contravene or constitute a default under any agreement, instrument or
indenture to which the Borrower is a party or a signatory or any provision of
the Borrower's Certificate of Incorporation, Bylaws or, to the best of the
Borrower's knowledge, any other agreement or requirement of law. The Borrower
represents and warrants that no consent, approval or authorization of or
registration or declaration with any Person, including but not limited to any
governmental authority, is required in connection with the execution and
delivery by the Borrower of the Amendment or other agreements and documents
executed and delivered by the Borrower in connection therewith or the
performance of obligations of the Borrower therein described.
Section 5. Affirmation, Acknowledgement, Further References. The Lender and
the Borrower each acknowledge and affirm that the Credit Agreement, as hereby
amended, is hereby ratified and confirmed in all respects and all terms,
conditions and provisions of the Credit Agreement, except as amended by this
Amendment, shall remain unmodified and in full force and effect. The Borrower
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acknowledges that this Amendment and all amendments to the Credit Agreement
are Loan Documents. All references in any document or instrument to the
Credit Agreement are hereby amended and shall refer to the Credit Agreement
as amended by this Amendment.
Section 6. Merger and Integration, Superseding Effect. The Credit
Agreement, as amended by this Amendment, and the other Loan Documents from
and after the date hereof, embody the entire agreement and understanding
between the parties hereto and supersede and have merged into them all prior
oral and written agreements on the same subjects by and between the parties
hereto with the effect that the Credit Agreement, as amended by this
Amendment, shall control with respect to the specific subjects hereof and
thereof.
Section 7. Legal Expenses. As provided in Section 12.2 of the Credit
Agreement, the Borrower agrees to reimburse the Lender, upon execution of
this Amendment, for all reasonable out-of-pocket expenses (including
attorneys' fees and legal expenses of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ P.L.L.P, counsel for
the Lender) incurred in connection with the Credit Agreement, including in
connection with the negotiation or preparation of this Amendment and all
other documents negotiated and prepared in connection with this Amendment.
Section 8. Headings. The headings of various sections of this Amendment
have been inserted for reference only and shall not be deemed to be a part
of this Amendment.
Section 9. Counterpart. This Amendment may be executed in several
counterparts, all or any of which shall be regarded as one and the same
document and either party to such agreements may execute any such agreement
by executing a counterpart of such agreement.
Section 10. Governing Law. This Amendment shall be governed by the
internal laws of the State of Minnesota, without giving effect to conflict
of law principles thereof, but giving effect to federal laws applicable to
national banks.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the date and year first above written.
BORROWER: PRIMEGG, LTD.
By: ▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Title: President
----------------------------
LENDER: FBS BUSINESS FINANCE CORPORATION
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Title: Vice President
----------------------------
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SEVENTH AMENDMENT TO CREDIT AND SECURITY AGREEMENT
THIS SEVENTH AMENDMENT TO CREDIT AND SECURITY AGREEMENT (this
"Amendment") made and entered into as of May 30, 1997 is by and between
PRIMEGG, LTD., a Delaware corporation (the "Borrower"), and FBS BUSINESS
FINANCE CORPORATION, a Delaware corporation (the "Lender").
RECITALS
1. The Lender and the Borrower entered into a Credit and Security
Agreement dated as of April 8, 1994, as amended by a First Amendment to
Credit and Security Agreement dated as of July 18, 1994, a Second Amendment
to Credit and Security Agreement dated as of March 30, 1995, a Third
Amendment to Credit and Security Agreement dated as of September 12, 1995, a
Fourth Amendment to Credit and Security Agreement dated as of November 17,
1995, a Fifth Amendment to Credit and Security Agreement dated as of June 1,
1996 and a Sixth Amendment to Credit and Security Agreement dated as of
January 6, 1997 (as so amended, the "Credit Agreement"); and
2. The Borrower and the Lender desire to amend certain provisions of
the Credit Agreement, subject to the terms and conditions set forth in this
Amendment.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto hereby
covenant and agree to be bound as follows:
Section 1. Capitalized Terms. Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to them in the
Credit Agreement, unless the context shall otherwise require.
Section 2. Amendments. The Credit Agreement is hereby amended as
follows:
2.1 Additional Definitions. Section 1.1 of the Credit
Agreement is hereby amended by inserting the following definitions in
appropriate alphabetical order:
"Adjusted Eurodollar Rate:" With respect to each Interest
Period applicable to a Eurodollar Rate Loan, the rate (rounded
upward, if necessary, to the next one sixteenth of one percent)
determined by dividing the Eurodollar Rate for such Interest Period
by 1.00 minus the Eurodollar Reserve Percentage.
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"Applicable Margin: With respect to:
(a) Variable Rate Loans -- 0.25%
(b) Eurodollar Rate Loans -- 2.50%
(c) Term Rate Loans -- 2.60%
"Eurodollar Business Day": A Business Day which is also a day
for trading by and between banks in United States dollar deposits in
the interbank Eurodollar market and a day on which banks are open
for business in New York, New York.
"Eurodollar Rate": With respect to each Interest Period
applicable to a Eurodollar Rate Loan, the average offered rate for
deposits in United States dollars (rounded upward, if necessary, to
the nearest one sixteenth of one percent) for delivery of such
deposits on the first day of such Interest Period, for the number of
months in such Interest Period, which appears on the Reuters Screen
LIBO pages as of 11:00 a.m., London time (or such other time as of
which such rate appears) two Eurodollar Business Days prior to the
first day of such Interest Period, or the rate for such deposits
determined by the Lender at such time based on such other published
service of general application as shall be selected by the Lender
for such purpose; provided, that in lieu of determining the rate in
the foregoing manner, the Lender may determine the rate based on
rates at which United States dollar deposits are offered to the
Lender in the interbank Eurodollar market at such time for delivery
in Immediately Available Funds on the first day of such Interest
Period in an amount approximately equal to the Loan to which such
Interest Period is to apply (rounded upward, if necessary, to the
nearest one sixteenth of one percent). "Reuters Screen LIBO page"
means the display designated as page "LIBO" on the Reuters Monitor
Money Rate Screen (or such other page as may replace the LIBO page
on such service for the purpose of displaying London interbank
offered rates of major banks for United States dollar deposits).
"Eurodollar Rate Loan": A Loan with respect to which the
interest rate is determined by reference to the Adjusted Eurodollar
Rate.
"Eurodollar Reserve Percentage": As of any day, that
percentage (expressed as a decimal) which is in effect on such day,
as prescribed by the Board for determining the maximum reserve
requirement (including any basic, supplemental or emergency
reserves) for a member bank of the Federal Reserve System, with
deposits comparable in amount to those held by the Lender and its
corporate parent, in respect of "Eurocurrency Liabilities" as such
term is defined in Regulation D of the Board. The rate of interest
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applicable to any outstanding Eurodollar Rate Loans shall be adjusted
automatically on and as of the effective date of any change in the
Eurodollar Reserve Percentage.
"Interest Period": With respect to each Eurodollar Rate Loan, the
period commencing on the date of such Loan or on the last day of the
immediately preceding Interest Period and ending one, two, three, six or
twelve months thereafter, as the Borrower may elect in the applicable notice
of borrowing, continuation or conversion; provided, that:
(a) Any Interest Period applicable to a Eurodollar Rate Loan that
would otherwise end on a day which is not a Eurodollar Business Day shall be
extended to the next succeeding Eurodollar Business Day unless such
Eurodollar Business Day falls in another calendar month, in which case such
Interest Period shall end on the next preceding Eurodollar Business Day;
(b) Any Interest Period applicable to a Eurodollar Rate Loan that
begin on the last Eurodollar Business Day of a calendar month (or a day for
which there is no numerically corresponding day in the calendar month at the
end of such Interest Period) shall end on the last Eurodollar Business Day
of a calendar month;
(c) No Interest Period may end after the Termination Date, and no
Interest Period applicable to a Term Loan may end after the scheduled
maturity of such Term Loan; and
(d) Interest Periods shall be selected so that the installment
payments on the Term Loans can be paid without having to pay a Eurodollar
Rate Loan prior to the last day of the Interest Period applicable thereto.
"Loan Date": The Business Day on which a Loan is to be made, and
which, in the case of a Loan to be made as in a Eurodollar Rate Loan, shall
be a Eurodollar Business Day.
"Make-Whole Amount": In connection with any prepayment of or failure
to borrow any Eurodollar Rate Loan, the excess, if any, of (i) the aggregate
present value as of the date of such prepayment or failure to borrow of each
dollar of principal of such Eurodollar Rate Loan being prepaid or not being
borrowed and the amount of interest (exclusive of interest accrued to the
date of prepayment) that would have been payable in respect of such
Eurodollar Rate Loan if such prepayment had not been made or if such Loan
had been borrowed, determined by discounting such amounts at the
Reinvestment Rate from the respective dates on which they would have been
payable, over (ii) 100% of the principal amount of the Eurodollar Rate Loan
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being prepaid or not being borrowed. For purposes of any determination of
the Make-Whole Amount:
"Reinvestment Rate" shall mean with respect to any Loan
prepaid or not borrowed, the sum of (i) the Adjusted Eurodollar Rate
that would apply to a new Loan made on the date of prepayment or
failure to borrow in an amount equal to the amount prepaid or not
borrowed and having an Interest Period equal to the Weighted Average
Life to Maturity of the Loan prepaid or not borrowed, and (ii) the
Applicable Margin applicable to the Loan prepaid or not borrowed. If
no quote of the Eurodollar Rate, as applicable, is available for the
exact Weighted Average Life to Maturity, the applicable rate for the
two available maturities most closely corresponding to such Weighted
Average Life to Maturity shall be calculated pursuant to the
immediately preceding sentence and the Reinvestment Rate shall be
interpolated or extrapolated from such yields on a straight line
basis.
"Weighted Average Life to Maturity: of the principal amount of
the Loan being prepaid or not being borrowed shall mean, as of the
time of any determination thereof, the number of years obtained by
dividing the then Remaining Dollar-Years of such Loan by the aggregate
amount of such principal.
"Remaining Dollar-Years" of any Loan shall mean the amount
obtained by (i) multiplying (x) the remainder of (1) the amount of
such Loan that would have become due, or which respect to which the
Interest Period would have ended, on each scheduled date therefor if
such prepayment had not been made or if such amount had been borrowed,
less (2) the amount of such Loan scheduled to become due, or with
respect to which the Interest Period was scheduled to end, on each
such date after giving effect to such prepayment and the application
thereof in accordance with the provisions of Section 2.10, by (y) the
number of years (calculated to the nearest one-twelfth) which will
elapse between the date of determination and each such scheduled date,
and (ii) totalling the products obtained in (i).
"Regulatory Change": Any change after May 31, 1997, in federal, state
or foreign laws or regulations or the adoption or making after such date of
any interpretations, directives or requests applying to a class of banks
including the Lender's corporate parent under any federal, state or foreign
laws or regulations (whether or not having the force of law) by any court or
governmental or monetary authority charged with the interpretation or
administration thereof.
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2.2 Amended Definitions. Section 1.1 of the Credit Agreement is
hereby further amended by deleting the definition of "Equipment Credit Amount"
in its entirety and substituting the following therefor:
"Equipment Credit Amount": The term "Equipment Credit Amount" shall
have the meaning given such term in Supplement A.
2.3 Revolving Loans. Section 2.1.1(a) of the Credit Agreement is
hereby amended in its entirety as follows:
(a) Subject to the terms and conditions of the Loan
Documents, and in reliance upon the warranties of the Borrower set
forth herein and in the other Loan Documents, the Lender agrees to
make such loans or advances (individually, a "Revolving Loan" and
collectively, the "Revolving Loans") to the Borrower as the Borrower
may from time to time request up to but not in excess of the Revolving
Loan Availability. Subject to Section 2.16, Revolving Loans made by
the Lender may be repaid and, subject to the terms and conditions
hereof, reborrowed to the Termination Date unless the Credit extended
under this Agreement is otherwise terminated as provided in this
Agreement.
2.4 Term Loan A - Eurodollar Loans. Section 2.1.2 of the Credit
Agreement is hereby amended by adding the following new section (f) to the end
thereof:
(f) During any period in which Term Loan A is a Eurodollar
Rate Loan, the Borrower may, subject to Section 2.16, upon three
Business Days' prior written notice to the Lender, prepay the
principal of Term Loan A in whole or in part. Any partial prepayment
of principal of Term Loan A shall be in a minimum amount of the lesser
of (i) the outstanding principal balance of Term Loan A and (ii)
$10,000 or an integral multiple thereof, and shall be applied to the
unpaid installments of Term Loan A in the inverse order of their
maturities. Any principal of Term Loan A which is repaid may not be
reborrowed.
2.5 Equipment Loans - Variable Rate Loans. Section 2.1.3(c) is
hereby amended in its entirety as follows:
(c) During any period in which an Equipment Loan is a
Variable Rate Loan, the Borrower may, upon three Business Days' notice
to the Lender, prepay the principal of such Equipment Loan in whole or
in part without premium. Any partial prepayment of principal of an
Equipment Loan shall be in a minimum amount of the lesser of (i) the
outstanding principal balance of such Equipment Loan
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and (ii) $10,000 or an integral multiple thereof, and shall be applied
to the unpaid installments of such Equipment Loan in the inverse order
of their maturities. Any principal of an Equipment Loan which is
repaid may not be reborrowed.
2.6 Equipment Loans - Eurodollar Rate Loans; Requests. Section
2.1.3 is hereby further amended by adding the following new section to the end
thereof:
(f) During any period in which an Equipment Loan is a
Eurodollar Rate Loan, the Borrower may, subject to Section 2.16
hereof, upon five Business Days' notice to the Lender, prepay the
principal of such Equipment Loan in whole or in part. Any partial
prepayment of principal of an Equipment Loan shall be in a minimum
amount of the lesser of (i) the outstanding principal balance of such
Equipment Loan and (ii) $10,000 or an integral multiple thereof, and
shall be applied to the unpaid installments of such Equipment Loan in
the inverse order of their maturities. Any principal of an Equipment
Loan which is repaid may not be reborrowed.
(g) Any request by the Borrower for an Equipment Loan
hereunder shall be in writing, or by telephone promptly confirmed in
writing and must be given so as to be received by the Lender not later
than 2:00 p.m. (Minneapolis time) two Eurodollar Business Days prior
to the requested Loan Date if an Equipment Loan is requested as a
Eurodollar Rate Loan, not later than 11:00 a.m. (Minneapolis time) on
the requested Loan Date if an Equipment Loan is requested as a
Variable Rate Loan and not later than 11:00 a.m. (Minneapolis time)
two Business Days prior to the requested Loan Date, if an Equipment
Loan is requested as a Fixed Rate Loan. Each request for an Equipment
Loan hereunder shall be irrevocable and shall be deemed a
representation by the Borrower that on the requested Loan Date and
after giving effect to the requested Equipment Loan, the applicable
conditions specified in Article IX have been and will be satisfied.
Each request for an Equipment Loan hereunder shall specify (i) the
requested Loan Date, (ii) the amount of the Equipment Loan to be made
on such date which, in the case of an Equipment Loan made as a
Eurodollar Rate Loan, shall be in a minimum amount of $100,000, (iii)
whether such Equipment Loan is to be funded as a Variable Rate Loan, a
Eurodollar Rate Loan or a Fixed Rate Loan and (iv) in the case of a
Eurodollar Rate Loan, the initial Interest Period applicable thereto.
Without in any way limiting the Borrower's obligation to confirm in
writing any telephone request for an Equipment Loan hereunder, the
Lender may rely on any such request which it believes in good faith to
be genuine; and the Borrower hereby waives the right to dispute the
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Lender's record of the terms of such telephone request. The Borrower's
failure to confirm any telephonic notice or otherwise comply with the
provisions of this Section 2.1.3(g) shall not in any manner affect the
obligation of the Borrower to repay such Equipment Loan in accordance
with the terms of this Agreement.
2.7 Requests for Revolving Loans. Section 2.5(a) of the Credit
Agreement is hereby amended in its entirety as follows:
(a) Procedure for Revolving Loans. Any request by the Borrower for a
Revolving Loan hereunder shall be in writing, or by telephone promptly
confirmed in writing and must be given so as to be received by the Lender
not later than 2:00 p.m. (Minneapolis time) two Eurodollar Business Days
prior to the requested Loan Date if a Revolving Loan is requested as a
Eurodollar Rate Loan, and not later than 11:00 a.m. (Minneapolis time) on
the requested Loan Date if a Revolving Loan is requested as a Variable Rate
Loan. Each request for a Revolving Loan hereunder shall be irrevocable and
shall be deemed a representation by the Borrower that on the requested Loan
Date and after giving effect to the requested Revolving Loan, the
applicable conditions specified in Article IX have been and will be
satisfied. Each request for a Revolving Loan hereunder shall specify (i)
the requested Loan Date, (ii) the aggregate amount of the Revolving Loan to
be made on such date which, in the case of a Revolving Loan made as a
Eurodollar Rate Loan, shall be in a minimum amount of $100,000, (iii)
whether such Revolving Loan is to be funded as a Variable Rate Loan or
Eurodollar Rate Loan and (iv) in the case of a Revolving Loan to be funded
as a Eurodollar Rate Loan, the initial Interest Period applicable thereto.
Without in any way limiting the Borrowers' obligation to confirm in writing
any telephone request for a Revolving Loan hereunder, the Lender may rely
on any such request which it believes in good faith to be genuine; and the
Borrower hereby waives the right to dispute the Lender's record of the
terms of such telephone request. The Borrower's failure to confirm any such
telephonic notice or otherwise comply with the provisions of this Section
2.5(a) shall not in any manner affect the obligation of the Borrower to
repay such Revolving Loan in accordance with the terms of this Agreement.
2.8 Additional Eurodollar Provisions. Article II of the Credit
Agreement is hereby further amended by adding the following sections to the end
thereof:
2.12 INTEREST RATE NOT ASCERTAINABLE, ETC. If, on or prior to the
date for determining the Adjusted Eurodollar Rate in respect of the
Interest Period for any Eurodollar Rate Loan, the Lender determines (which
determination shall be conclusive and binding, absent manifest error) that:
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(a) deposits in dollars (in the applicable amount) are not being
made available to the Lender or to its corporate parent in the
relevant market for such Interest Period, or
(b) the Adjusted Eurodollar Rate will not adequately and
fairly reflect the cost to the Lender or to its corporate parent of
funding or maintaining Eurodollar Rate Loans for such Interest Period,
the Lender shall forthwith give notice to the Borrower of such determination,
whereupon the obligation of the Lender to make or continue, or to convert any
Loans to Eurodollar Rate Loans shall be suspended until the Lender notifies the
Borrower that the circumstances giving rise to such suspension no longer exist.
While any such suspension continues, all further Loans by the Lender requested
as Eurodollar Rate Loans shall be made as Variable Rate Loans. No such
suspension shall affect the interest rate then in effect during the applicable
Interest Period for any Eurodollar Rate Loan outstanding at the time such
suspension is imposed.
2.13 INCREASED COST. If any Regulatory Change:
(a) shall subject the Lender or its corporate parent to any
tax, duty or other charge with respect to its Eurodollar Rate Loans,
its Notes, or its obligation to make Eurodollar Rate Loans, or shall
change the basis of taxation of payment to the Lender of the principal
of or interest on its Eurodollar Rate Loans, or any other amounts due
under this Agreement in respect of its Eurodollar Rate Loans, or its
obligation to make Eurodollar Rate Loans (except for changes in the
rate of tax on the overall net income of the Lender imposed by the
jurisdiction in which the Lender is located); or
(b) shall impose, modify or deem applicable any reserve,
special deposit, capital requirement or similar requirement
(including, without limitation, any such requirement imposed by the
Board, but excluding with respect to any Eurodollar Rate Loan any such
requirement to the extent included in calculating the applicable
Adjusted Eurodollar Rate) against assets of, deposits with or for the
account of, or credit extended by, or shall impose on or on the
interbank eurodollar market, any other condition affecting its
Eurodollar Rate Loans, the Notes or its obligation to make Eurodollar
Rate Loans; and the result of any of the foregoing is to increase the
cost to the Lender or its corporate parent of making or maintaining
any Eurodollar Rate Loan, or to reduce the amount of any sum received
or receivable by the Lender under this Agreement or under the Notes,
then, within 30 days after demand by the Lender, the Borrower shall
pay to the Lender such additional amount or amounts as will
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compensate the Lender for such increased cost or reduction. The Lender
will promptly notify the Borrower of any event of which it has
knowledge, occurring after the date hereof, which will entitle the
Lender to compensation pursuant to this Section 2.13; provided, that
the failure by the Lender to provide such notice shall not in any way
limit the Lender's right to receive compensation under this Section
2.13. A certificate of the Lender claiming compensation under this
Section 2.13, setting forth the additional amount or amounts to be
paid to it hereunder and stating in reasonable detail the basis for
the charge and the method of computation, shall be conclusive in the
absence of manifest error. In determining such amount, the Lender may
use any reasonable averaging and attribution methods. Failure on the
part of the Lender to demand compensation for any increased costs or
reduction in amounts received or receivable with respect to any
Interest Period shall not constitute a waiver of such Bank's rights to
demand compensation for any increased costs or reduction in amounts
received or receivable in any subsequent Interest Period.
2.14 ILLEGALITY. If any Regulatory Change shall make it unlawful or
impossible for the Lender to make, maintain or fund any Eurodollar Rate
Loans, the Lender shall notify the Borrower, whereupon the obligation of
the Lender to make or continue, or to convert any Loans to, Eurodollar Rate
Loans shall be suspended until the Lender notifies the Borrower that the
circumstances giving rise to such suspension no longer exist. If the Lender
determines that it may not lawfully continue to maintain any Eurodollar
Rate Loans to the end of the applicable Interest Periods, all of the
affected Loans shall be automatically converted to Variable Rate Loans as
of the date of the Lender's notice, and upon such conversion the Borrower
shall indemnify the Lender in accordance with Section 2.16.
2.15 CAPITAL ADEQUACY. In the event that any Regulatory Change reduces
or shall have the effect of reducing the rate of return on the Lender's
capital or the capital of its corporate parent (by an amount the Lender
deems material) as a consequence of Commitments and/or the Loans to a level
below that which the Lender or its corporate parent could have achieved but
for such Regulatory Change (taking into account the Lender's policies and
the policies of its corporate parent with respect to capital adequacy),
then the Borrower shall, within ten days after written notice and demand
from the Lender, pay to the Lender additional amounts sufficient to
compensate the Lender and its corporate parent for such reduction. Any
determination by the Lender under this Section and any certificate as to
the amount of such reduction given to the Borrower by the Lender shall be
final, conclusive and binding for all purposes, absent manifest error.
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2.16 FUNDING LOSSES. The Borrower shall pay the Lender the
Make-Whole Amount with respect to any Eurodollar Rate Loan: (i) if for any
reason, other than a default by the Lender, a funding of a Eurodollar
Rate Loan does not occur on the date specified therefor in the Borrower's
request or notice as to such Loan under Section 2.1.3(g) or 2.5(a), or
(ii) if, for whatever reason (including, but not limited to, acceleration
of the maturity of the Obligations following an Event of Default), any
repayment of a Eurodollar Rate Loan, or a conversion pursuant to Section
2.14, occurs on any day other than the last day of the Interest Period
applicable thereto. The Lender's request for compensation shall set forth
the calculation of the Make-Whole Amount and shall be final, conclusive and
binding, absent manifest error.
2.17 DISCRETION OF LENDERS AS TO MANNER OF FUNDING. The Lender shall
be entitled to fund and maintain its funding of Eurodollar Rate Loans in
any manner it may elect, it being understood, however, that for the
purposes of this Agreement all determinations hereunder (including, but not
limited to, determinations under Section 2.16) shall be made as if the
Lender had actually funded and maintained each Eurodollar Rate Loan during
the Interest Period for such Loan through the purchase of deposits having a
maturity corresponding to the last day of the Interest Period and bearing
an interest rate equal to the Eurodollar Rate for such Interest Period.
2.9 Supplement A. Supplement A to the Credit Agreement is amended
and restated in its entirety in the form of Exhibit A hereto.
Section 3. Effectiveness of Amendments. The amendments contained in this
Amendment shall become effective upon delivery of the following to the Lender:
3.1 This Amendment, duly executed by the Borrower and the Lender
and Supplement A, duly initialed by Borrower and Lender.
3.2 A copy of the resolutions of the Board of Directors of the
Borrower authorizing the execution, delivery and performance of this Amendment,
certified as true and accurate by its Secretary or Assistant Secretary, along
with a certification by such Secretary or Assistant Secretary (i) certifying
that there has been no amendment to the Certificate of Incorporation or Bylaws
of the Borrower since true and accurate copies of the same were delivered to the
Lender with a certificate of the Secretary of the Borrower dated April 21, 1994;
and (ii) identifying each officer of the Borrower authorized to execute this
Amendment and any other instrument or agreement executed by the Borrower in
connection with this Amendment (collectively, the "Amendment Documents"), and
certifying as to specimens of such officer's signature and such officer's
incumbency in such offices as such officer holds.
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3.3 The Borrower shall have satisfied such other conditions as
reasonably specified by the Lender or counsel to the Lender, including payment
of all unpaid legal fees and expenses incurred by the Lender through the date of
this Amendment in connection with the Credit Agreement or this Amendment.
Section 4. Defaults and Waivers. Upon the date on which this Amendment
becomes effective, the Lender hereby waives any Unmatured Events of Default or
Events of Default arising as a result of the failure of the Borrower to comply
with Section 5.4 (Cash Flow Coverage Ratio) of Supplement A to the Credit
Agreement as of the end of the reporting period ending January 31, 1997. The
waiver set forth herein shall not constitute a waiver by the Lender of any other
Unmatured Event of Default or Event of Default, if any, under the Credit
Agreement, and shall not be, and shall not be deemed to be, a course of action
with respect thereto upon which the Borrower may rely in the future and the
Borrower hereby expressly waives any claim to such effect.
Section 5. Representations; No Default. The Borrower hereby represents
that on and as of the date hereof and after giving effect to this Amendment (a)
all of the representations and warranties contained in the Credit Agreement are
true, correct and complete in all respects as of the date hereof as though made
on and as of such date, except to the extent such representations and warranties
specifically relate to an earlier date, in which case they are true and correct
as of such earlier date, and (b) there will exist no Unmatured Event of Default
or Event of Default on such date which has not been waived by the Lender. The
Borrower represents and warrants that the Borrower has the power and legal right
and authority to enter into this Amendment and has duly authorized as
appropriate the execution and delivery of the Amendment and other agreements and
documents executed and delivered by the Borrower in connection herewith by
proper corporate action, and neither the Amendment nor the agreements contained
herein contravene or constitute a default under any agreement, instrument or
indenture to which the Borrower is a party or a signatory or any provision of
the Borrower's Certificate of Incorporation, Bylaws or, to the best of the
Borrower's knowledge, any other agreement or requirement of law. The Borrower
represents and warrants that no consent, approval or authorization of or
registration or declaration with any Person, including but not limited to any
governmental authority, is required in connection with the execution and
delivery by the Borrower of the Amendment or other agreements and documents
executed and delivered by the Borrower in connection therewith or the
performance of obligations of the Borrower therein described.
Section 6. Affirmation, Acknowledgement, Further References. The Lender
and the Borrower each acknowledge and affirm that the Credit Agreement, as
hereby amended, is hereby ratified and confirmed in all respects and all terms,
conditions and provisions of the Credit Agreement, except as amended by this
Amendment, shall remain unmodified and in full force and effect. The Borrower
acknowledges that this Amendment and all amendments to the Credit Agreement
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are Loan Documents. All references in any document or instrument to the Credit
Agreement are hereby amended and shall refer to the Credit Agreement as amended
by this Amendment.
Section 7. Merger and Integration, Superseding Effect. The Credit
Agreement, as amended by this Amendment, and the other Loan Documents from and
after the date hereof, embody the entire agreement and understanding between the
parties hereto and supersede and have merged into them all prior oral and
written agreements on the same subjects by and between the parties hereto with
the effect that the Credit Agreement, as amended by this Amendment, shall
control with respect to the specific subjects hereof and thereof.
Section 8. Legal Expenses. As provided in Section 12.2 of the Credit
Agreement, the Borrower agrees to reimburse the Lender, upon execution of this
Amendment, for all reasonable out-of-pocket expenses (including attorneys' fees
and legal expenses of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, counsel for the Lender) incurred in
connection with the Credit Agreement, including in connection with the
negotiation or preparation of this Amendment and all other documents negotiated
and prepared in connection with this Amendment.
Section 9. Headings. The headings of various sections of this Amendment
have been inserted for reference only and shall not be deemed to be a part of
this Amendment.
Section 10. Counterpart. This Amendment may be executed in several
counterparts, all or any of which shall be regarded as one and the same document
and either party to such agreements may execute any such agreement by executing
a counterpart of such agreement.
Section 11. Governing Law. This Amendment shall be governed by the
internal laws of the State of Minnesota, without giving effect to conflict of
law principles thereof, but giving effect to federal laws applicable to national
banks.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the date and year first above written.
BORROWER: PRIMEGG, LTD.
By: ▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title: President
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LENDER: FBS BUSINESS FINANCE CORPORATION
By: ▇▇▇ ▇▇▇▇▇▇▇▇
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Title: Assistant Vice President
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EXHIBIT A TO
SEVENTH AMENDMENT
SUPPLEMENT A
TO
CREDIT AND SECURITY AGREEMENT
DATED AS OF APRIL 8,1994 BETWEEN
FBS BUSINESS FINANCE CORPORATION (THE "LENDER")
AND
PRIMEGG, LTD. (THE "BORROWER")
1. CREDIT AGREEMENT REFERENCE. This Supplement A, as amended and restated
as of May 30, 1997, and as it may be further amended or modified from time to
time, is a part of the Credit and Security Agreement, dated as of April 8, 1994,
between the Borrower and the Lender (together with all amendments, modifications
and supplements thereto, the "Credit Agreement"). Capitalized terms used herein
which are defined in the Credit Agreement shall have the meanings given such
terms in the Credit Agreement unless the context otherwise requires.
2. DEFINITIONS.
2.1 REVOLVING CREDIT AMOUNT. The term "Revolving Credit Amount"
shall mean the maximum amount of Revolving Loans which the Lender will make
available to the Borrower which amount shall not exceed FIVE MILLION FIVE
HUNDRED THOUSAND AND NO/100 DOLLARS ($5,500,000) (unless such amount is
increased by the Lender in its sole and absolute discretion); provided, however,
that the aggregate outstanding principal balance of the Revolving Loans plus the
Letter of Credit Obligations shall not exceed the Revolving Credit Amount.
2.2 BORROWING BASE. The term "Borrowing Base" shall mean:
(a) an amount of up to 85% of the net amount (as determined by
the Lender after deduction of such reserves and allowances as
the Lender deems proper and necessary) of the Borrower's
Eligible Accounts Receivable; plus
(b) an amount of up to the lesser of (1) the sum of (A) 65% of
the net value (the lower of the cost, determined on a first in
first out basis, or market value of such Inventory, as
determined by the Lender after deduction of such reserves and
allowances as the Lender deems proper and necessary) of the
Borrower's Eligible Inventory which does not constitute Eligible
Committed Inventory, plus (B) 70% of the net value (the cost,
determined on a first in first out basis, of such Committed
Inventory, as determined by the Lender after deduction of such
reserves and
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allowances as the Lender deems proper and necessary) of the
Borrower's Eligible Committed Inventory, as determined by the
Lender after deduction of such reserves and allowances as the
Lender deems proper and necessary of the Borrower's Eligible
Committed Inventory, plus (C) 35% of the net value (as determined
by the Lender) of the Borrower's Reconstituted Inventory; or (2)
$4,000,000.
2.3 LETTER OF CREDIT SUBLIMIT. The term "Letter of Credit Sublimit"
shall mean $500,000.
2.4 TERMINATION DATE. The term "Termination Date" shall mean June
30, 2000.
2.5 EQUIPMENT CREDIT AMOUNT. The term "Equipment Credit Amount"
shall mean the maximum amount of Equipment Loans which the Lender will make
available to the Borrower which amount shall not exceed ONE MILLION AND NO/100
DOLLARS ($1,000,000) (unless such amount is increased by the Lender in its sole
and absolute discretion).
3. INTEREST; FEES.
3.1 LOANS.
(a) VARIABLE RATE LOANS. The unpaid principal balance of the
Variable Rate Loans (other than Overdraft Loans and Over
Advances) shall bear interest to maturity at the Reference Rate
in effect from time to time plus the Applicable Margin.
(b) EURODOLLAR RATE LOANS. The unpaid principal balance of each
Eurodollar Rate Loan shall bear interest during the Interest
Period applicable to such Eurodollar Rate Loan at the Adjusted
Eurodollar Rate applicable to such Interest Period plus the
Applicable Margin.
(c) FIXED RATE LOANS. The unpaid principal balance of each Term
Loan converted to a Fixed Rate Loan pursuant to Section 3.2 of
this Supplement A shall bear interest to maturity at the Fixed
Rate applicable as of the date of such conversion, plus the
Applicable Margin.
(d) DEFAULT RATE. If any amount of the Loans is not paid when
due, whether by acceleration or otherwise, the entire unpaid
principal balance of the Loans (other than Overdraft Loans and
Over Advances) shall bear interest until paid at a rate per
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annum equal to the greater of (i) the Reference Rate from time to time
in effect plus 4% or (ii) 4% above the Reference Rate in effect at the
time such amount became due.
3.2 CONVERSIONS AND CONTINUATIONS.
(a) REVOLVING LOANS. On the terms and subject to the limitations
hereof, the Borrower shall have the option at any time and from time
to time to convert all or any portion of the Revolving Loans into a
Variable Rate Loan or Eurodollar Rate Loan, or to continue a
Eurodollar Rate Loan as such; provided, however, that a Eurodollar
Rate Loan may be converted or continued only on the last day of the
Interest Period applicable thereto and no Revolving Loan may be
converted to or continued as a Eurodollar Rate Loan if an Unmatured
Event of Default or Event of Default has occurred and is continuing on
the proposed date of continuation or conversion. Revolving Loans may
be converted to, or continued as, a Eurodollar Rate Loan only in an
amount equal to or greater than $100,000. The Borrower shall give the
Lender written notice of any continuation or conversion of any
Revolving Loans and such notice must be given so as to be received by
the Lender not later than 11:00 A.M. (Minneapolis time) on the date of
the requested conversion to a Variable Rate Loan, and not later than
2:00 P.M. (Minneapolis time) two Eurodollar Business Days prior to the
date of the requested continuation of or conversion to a Eurodollar
Rate Loan. Each such notice shall specify (i) the amount to be
continued or converted, (ii) the date for the continuation or
conversion (which must be (A) the last day of the preceding Interest
Period for any continuation of a Eurodollar Rate Loan, and (B) a
Business Day in the case of conversions to a Variable Rate Loan, and a
Eurodollar Business Day in the case of a continuation as or conversion
to a Eurodollar Rate Loan), and (iii) in the case of a conversion to
or continuation as a Eurodollar Rate Loan, the Interest Period
applicable thereto. Any notice given by the Borrower under this
Section shall be irrevocable. If the Borrower shall fail to notify the
Lender within the time required by this Section of the continuation of
a Eurodollar Rate Loan, such Loan shall, on the last day of the
Interest Period applicable thereto, automatically be converted into a
Variable Rate Loan of the same principal amount.
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(b) TERM LOANS. On the terms and subject to the limitations hereof,
the Borrower shall have the option at any time and from time to time
to convert any Term Loan into a Variable Rate Loan, a Eurodollar Rate
Loan or a Fixed Rate Loan, or to continue a Eurodollar Rate Loan as
such; provided, however, that (i) a Eurodollar Rate Loan may be
converted or continued only on the last day of the Interest Period
applicable thereto, (ii) a Term Loan may not be converted to a Fixed
Rate Loan or a Eurodollar Rate Loan or continued as a Eurodollar Rate
Loan if an Unmatured Event of Default or Event of Default has occurred
and is continuing on the proposed date of continuation or conversion,
and (iii) any Term Loan converted to a Fixed Rate Loan shall remain a
Fixed Rate Loan until the maturity of such Term Loan. A Term Loan may
be converted to, or continued as a Eurodollar Rate Loan only to the
extent the outstanding principal amount of such Term Loan is greater
than or equal to $100,000. The Borrower shall give the Lender written
notice of any continuation or conversion of any Term Loan and such
notice must be given so as to be received by the Lender not later than
11:00 a.m. (Minneapolis time) on the date of requested conversion to a
Variable Rate Loan, not later than 2:00 p.m. (Minneapolis time) two
Eurodollar Business Days prior to the date of a requested continuation
of or conversion to a Eurodollar Rate Loan, and not later than 2:00
p.m. (Minneapolis time) five Business Days prior to the date of a
requested conversion to a Fixed Rate Loan. Each such notice shall
specify (A) the Term Loan to be continued or converted, (B) the date
for the continuation or conversion which must be (I) the last day of
the preceding Interest Period for any continuation of or conversion
from a Eurodollar Rate Loan, and (II) a Business Day in the case of
conversions to a Variable Rate Loan or Fixed Rate Loan and a
Eurodollar Business Day in the case of a continuation as or conversion
to a Eurodollar Rate Loan), and (C) in the case of a conversion to or
continuation as a Eurodollar Rate Loan, the Interest Period applicable
thereto. Any notice given by the Borrower under this Section shall be
irrevocable. If the Borrower shall fail to notify the Lender within
the time required by this Section of the continuation of any
Eurodollar Rate Loan, such Term Loan shall, on the last day of the
Interest Period applicable thereto, automatically be converted into a
Variable Rate Loan of the same principal amount.
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3.3 OVERDRAFT LOANS; OVER ADVANCES. Overdraft Loans and Over
Advances shall bear interest at the rate(s) determined pursuant to Section 2.7
or Section 2.8 of the Credit Agreement, as applicable.
3.4 COMMITMENT FEE. The Borrower shall pay to the Lender a
commitment fee for the period from the date hereof to the date the Credit
terminates in an amount equal to three-eighths of one percent (3/8%) per annum
on the average daily Unused Credit Amount.
3.5 LETTER OF CREDIT FEES. The Borrower shall pay the Lender, or
any Affiliate, a commission on the undrawn amount of each Letter of Credit and
on each L/C Draft accepted by the Lender, or such Affiliate, in an amount equal
to two percent (2%) per annum.
3.6 CREDIT TERMINATION FEE. Upon termination or cancellation of
the Credit by the Borrower prior to the Termination Date, the Borrower shall pay
to the Lender a termination fee in an amount equal to one percentage (1%) of the
Revolving Credit Amount.
4. ELIGIBLE ACCOUNT RECEIVABLE REQUIREMENTS. The Account Receivable
must not be unpaid on the date that is 61 days after the date of the invoice
evidencing such Account Receivable. If invoices representing 10% or more of the
unpaid amount of all Accounts Receivable from any one Account Debtor are unpaid
more than 60 days after the dates of such invoices, then all Accounts Receivable
relating to such Account Debtor shall cease to be Eligible Accounts Receivable.
5. ADDITIONAL NEGATIVE COVENANTS. From the date of the Credit
Agreement and thereafter until all of the Borrower's Obligations under the
Credit Agreement are paid in full, the Borrower agrees that, unless the Lender
shall otherwise consent in writing, it will not, and will not permit any
Subsidiary to, do any of the following:
5.1 CAPITAL BASE. During each of the periods set forth below, not
permit the Borrower's Capital Base to be less than the amount set forth opposite
such period at any time:
PERIOD CAPITAL BASE
January 1, 1997 to and
including December 31, 1997 $4,900,000
January 1, 1998 to and
including December 31, 1998 $5,400,000
January 1, 1999 and thereafter $5,900,000
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5.2 LEVERAGE RATIO. During each of the periods set forth below, not
permit the ratio of (a) the sum of (i) the Borrower's consolidated total
liabilities, less (ii) Subordinated Debt, to (b) the Borrower's Capital Base to
be greater than the ratio set forth below opposite such period at any time:
PERIOD LEVERAGE RATIO
January 1, 1997 through and
including December 31, 1997 2.7 to 1.0
January 1, 1998 to and
including December 31, 1998 2.5 to 1.0
January 1, 1999 and thereafter 2.3 to 1.0
5.3 CAPITAL EXPENDITURES. During the calendar year set forth
below, make Capital Expenditures in such calendar year in an amount that on a
consolidated basis exceeds the amount set forth below opposite such calendar
year:
CALENDAR YEAR CAPITAL EXPENDITURES
1997 $2,000,000
1998 $1,500,000
1999 $1,500,000
2000 $1,500,000
5.4 CASH FLOW COVERAGE RATIO. As of the last day of each month for
the period commencing on January 1st of the calendar year in which such month
occurs and ending on such date, permit the Borrower's Cash Flow Coverage Ratio
to be less than 1.05 to 1.0.
Borrower's Initials JEL
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Lender's Initials KAL
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Date: 5-30-97
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