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EXHIBIT 10.1
FINANCING AGREEMENT
THE CIT GROUP/BUSINESS CREDIT, INC.
AS ADMINISTRATIVE AGENT AND LENDER
PLASTICS MANUFACTURING COMPANY
SUN COAST CLOSURES, INC.
AND
SUN COAST HOLDINGS, INC.
AS CO-BORROWERS
AND
SUN COAST INDUSTRIES, INC.
AS PARENT AND A GUARANTOR
DATED AS OF JANUARY 31, 1997
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TABLE OF CONTENTS
Page
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SECTION 1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2. Conditions Precedent . . . . . . . . . . . . . . . . . . . . 16
SECTION 3. Revolving Loans . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 4. Term Loans . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 5. Letters of Credit . . . . . . . . . . . . . . . . . . . . . 27
SECTION 6. Collateral . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 7. Representations, Warranties and Covenants . . . . . . . . . 33
SECTION 8. Interest, Fees and Expenses; Terms of Conversion Option
and Eurodollar Loans . . . . . . . . . . . . . . . . . . . . 44
SECTION 9. Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 10. Events of Default and Remedies . . . . . . . . . . . . . . . 51
SECTION 11. Termination . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 12. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 13. Agreement between the Lenders . . . . . . . . . . . . . . . 58
SECTION 14. Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
EXHIBITS AND SCHEDULES
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Exhibit A - Form of Promissory Note (Term Loan I)
Exhibit B - Form of Promissory Note (Term Loan II)
Exhibit C - Form of Promissory Note (Revolving Loan)
Exhibit D - Form of Guaranty
Exhibit E - Form of Co-Borrower Pledge Agreement
Exhibit F - Form of Affiliate Pledge Agreement
Exhibit G - Form of Co-Borrower Security Agreement
Exhibit H - Form of Affiliate Security Agreement
Exhibit I - Assignment and Transfer Agreement
Schedule 1 - List of Inventory Locations and Chief Executive Office
Schedule 2 - Patents, Trademarks and Copyrights
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FINANCING AGREEMENT
THIS FINANCING AGREEMENT (this "Agreement"), dated as of January 31,
1997, is among PLASTICS MANUFACTURING COMPANY, a Nevada corporation ("PMC"),
with a principal place of business at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇, ▇▇▇▇▇-▇▇▇▇, SUN COAST CLOSURES, INC., a Florida corporation ("SCC"),
with a principal place of business at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇, each as joint and several co-borrowers (as joint and several
co-borrowers each individually fully liable with respect to the Revolving Loans
under the Revolving Line of Credit, the "Revolving Borrowers" and as joint and
several co-borrowers individually fully liable with respect to Term Loan I, the
"Term Loan I Borrowers," and as joint and several co-borrowers individually
fully liable with respect to Term Loan II), and SUN COAST HOLDINGS, INC., a
Nevada corporation ("SCH"), with a principal place of business at Bank of
America Plaza, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, as
a joint and several co-borrower with PMC and SCC and individually fully liable
with respect to Term Loan II, the "Term Loan II Borrowers" (collectively, each
of PMC, SCC and SCH, whether as Revolving Borrowers, and/or Term Loan I
Borrowers and/or the Term Loan II Borrowers, are individually sometimes
referred to as a "Company" and collectively the "Companies," and each is
individually and fully liable on the Obligations), SUN COAST INDUSTRIES, INC.,
a Delaware corporation (the "Parent"), with a principal place of business at
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇-▇▇▇▇, as a Guarantor, each
of the lenders which is identified on the signature pages to this Agreement
pursuant hereto (individually, a "Lender" and, collectively, the "Lenders"),
and THE CIT GROUP/BUSINESS CREDIT, INC., a New York corporation ("CITBC"), with
offices located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, as
the agent for itself and the other Lenders (in such capacity, together with its
successors in such capacity, "the Agent") and as a Lender.
RECITALS
WHEREAS, the Companies and the Parent have requested that the Lenders
provide a credit facility to the Companies in the aggregate maximum principal
amount of up to $30,000,000 comprised of (a) a revolving line of credit to the
Revolving Borrowers in the aggregate maximum principal amount of up to
$15,000,000, with documentary and standby letter of credit sublimits thereunder
in the principal amount of $500,000 each, and (b) two (2) term loans in the
aggregate principal amount of $15,000,000, consisting of a $10,000,000 term
loan to the Term Loan I Borrowers and a $5,000,000 term loan to the Term Loan
II Borrowers;
WHEREAS, the Parent has agreed to guaranty the obligations of the
Companies evidenced by this Agreement, to pledge certain assets in support
thereof, to issue common stock to the Agent for the benefit of the Lenders, and
to cause other Affiliates within the corporate group of Companies to guaranty
and/or pledge certain assets in support of the obligations of the Companies
under this Agreement;
WHEREAS, the Lenders are willing to provide such a credit facility on
the terms and conditions hereafter set forth;
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NOW, THEREFORE, in consideration of the promises and the mutual
covenants herein contained, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
ACCOUNTS shall mean any and all of the Companies' now existing and future: (a)
accounts (as defined in the UCC) and any and all other receivables, (whether or
not specifically listed on schedules furnished to the Agent), including,
without limitation, all accounts created by or arising from all of the
Revolving Borrowers' sales of goods or rendition of services to their customers
(including without limitation from the lease or rental of goods), all accounts
arising from sales or rendition of services made under any of the Revolving
Borrowers' trade names or styles, or through any of the Revolving Borrowers'
divisions; (b) instruments, documents, contract rights and chattel paper (all
as defined in the UCC) relative to the foregoing, (c) unpaid seller's or
lessor's rights (including rescission, replevin, reclamation and stoppage in
transit) relating to the foregoing or arising therefrom; (d) rights to any
goods represented by any of the foregoing, including rights to returned or
repossessed goods; (e) reserves and credit balances arising hereunder; (f)
guarantees or collateral for any of the foregoing; (g) insurance policies or
rights relating to any of the foregoing; (h) general intangibles pertaining to
any and all of the foregoing; and (i) cash and non-cash proceeds of any and all
the foregoing.
AFFILIATE shall mean, with respect to a specific Person, a Person that directly
or indirectly through one or more intermediaries, controls or is controlled by,
or is under common control with, the Person specified.
ANNIVERSARY DATE shall mean the date occurring one (1) year from the date
hereof and the same date in every year thereafter.
APPLICABLE LENDING OFFICE shall mean, for each Lender and for each Type of Loan
(the "Type of Loan" refers to whether such Loan is a Chase Rate Loan or
Eurodollar Loan), the "Lending Office" of such Lender (or of an Affiliate of
such Lender) designated for such Type of Loan on the signature pages hereof or
such other office of such Lender (or of an Affiliate of such Lender) as such
Lender may from time to time specify to the Agent and the Companies as the
office by which their Loans of such Type are to be made and maintained.
AVAILABILITY shall mean at any time the positive difference between: (a) the
Borrowing Base less (b) the sum of (i) the outstanding aggregate amount of all
Obligations (other than the Term Loans and Letters of Credit) of the Revolving
Borrowers, (ii) the Availability Reserve, and (iii) at the Agent's reasonable
elections all payments of the Revolving Borrowers to the Agent coming due
within sixty (60) days from the date of computation.
AVAILABILITY RESERVE shall mean (a) a two (2) month reserve for unpaid rental
or similar charges for any facility for which the Companies fails to obtain a
landlord's waiver, warehouseman's, processors or mortgagee's waiver, as
applicable in form and substance satisfactory to the Agent (as described in
Section 2.1(x)), and (b) any reserve which the
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Agent may require from time to time pursuant to the explicit terms of this
Agreement, including without limitation for Letters of Credit pursuant to
paragraph 5.1 of Section 5 hereof.
BORROWING BASE shall have the meaning and shall be calculated in accordance
with paragraph 3.1 of Section 3 of this Agreement.
BUSINESS DAY shall mean a day on which the Agent is open for business in New
York, New York, and which is not a Saturday, Sunday or other day on which
commercial banks or lending institutions in New York, New York are authorized
or required by law to close.
CAPITAL EXPENDITURES for any period shall mean the aggregate of all
expenditures of the Parent and its direct or indirect Subsidiaries on a
consolidated basis during such period, that in conformity with GAAP, are
required to be included in or reflected by the property, plant or equipment or
similar fixed asset account reflected in the balance sheet of the Parent on a
consolidated basis, provided that SCC's purchase of the Florida property
referred to in Section 7.12 I shall not be deemed a Capital Expenditure.
CAPITAL LEASE shall mean any lease of property (whether real, personal or
mixed) which, in conformity with GAAP, is accounted for as a capital lease or a
Capital Expenditure on the balance sheet of the Parent on a consolidated basis.
CHASE RATE LOANS shall mean loans made pursuant to this Agreement at such time
as they are made and/or being maintained at a rate of interest based upon the
Chase Bank Rate.
CHASE BANK RATE shall mean the rate of interest per annum announced by The
Chase Manhattan Bank, N.A. or any successor thereof from time to time as its
prime rate in effect at its principal office in the City of New York. (The
prime rate is not intended to be the lowest rate of interest charged by The
Chase Manhattan Bank, N.A. to its borrowers).
CLI shall mean Custom Laminates, Inc., a Nevada corporation with a principal
place of business at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇-▇▇▇▇,
and a direct wholly owned Subsidiary of SCH.
CLOSING DATE shall mean the date that this Agreement, the Loan Documents, and
all related documentation has been duly executed by the parties hereto and
delivered to the Agent.
COLLATERAL shall mean all present and future Accounts, Equipment, Inventory,
Documents of Title, General Intangibles, the pledged stock of SCA, CLI, SCM,
PMC, SCC, and SCH, Other Collateral and Real Estate of the Companies and the
proceeds of any and all of the foregoing.
COLLATERAL MANAGEMENT FEE shall mean the sum of $30,000.00 per annum which
shall be paid to the Agent in accordance with paragraph 8.8 of Section 8 hereof
to offset the expenses and costs of the Agent in connection with record
keeping, periodic examinations, analyzing and evaluating the Collateral.
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COMMITMENT FEE shall mean a non-refundable commitment fee in the amount of
$100,000.00 paid to induce the Agent to issue a commitment letter, which amount
shall be credited to the Loan Facility Fee upon consummation of this financing
on the Closing Date.
CONSOLIDATED BALANCE SHEET shall mean a consolidated balance sheet for the
Parent, the Companies and the consolidated Subsidiaries of each, eliminating
all inter-company transactions and prepared in accordance with GAAP.
CONSOLIDATING BALANCE SHEET shall mean a Consolidated Balance Sheet plus
individual balance sheets presented in a spreadsheet format for the Parent, the
Companies, and the Subsidiaries of each (except for the Mexican operations
which are presented on a consolidated basis with respect to SCA, SCM and NP),
showing all eliminations of inter-company transactions and prepared in
accordance with GAAP and including a balance sheet for each of the Companies
exclusively.
CONTRACT RATE shall mean the rates of interest computed as applicable and as
set forth in paragraphs 8.1, 8.2 and 8.3 of Section 8 of this Agreement.
CURRENT ASSETS shall mean, wherever used throughout this Agreement, those
assets of the Parent and its Subsidiaries on a consolidated basis which, in
accordance with GAAP, are classified as "current".
CURRENT LIABILITIES shall mean, wherever used throughout this Agreement, those
liabilities of the Parent and its Subsidiaries on a consolidated basis which,
in accordance with GAAP, are classified as "current", provided, however, that
notwithstanding GAAP, (a) the Revolving Loans and the current portion of
Permitted Indebtedness shall be considered "current liabilities," and (b) all
special non-recurring charges pursuant to FAS 121 or relating to plant
closures and discontinued operations through September 30, 1997 shall be
excluded from current liabilities.
CUSTOMARILY PERMITTED LIENs shall mean
(a) liens of local or state authorities for franchise or other like
taxes provided the aggregate amounts of such liens shall not exceed $100,000.00
in the aggregate at any one time;
(b) statutory liens of landlords and liens of carriers, warehousemen,
mechanics, materialmen and other like liens imposed by law, created in the
ordinary course of business and for amounts not yet due (or which are being
contested in good faith by appropriate proceedings or other appropriate actions
which are sufficient to prevent imminent foreclosure of such liens) and with
respect to which adequate reserves or other appropriate provisions are being
maintained in accordance with GAAP;
(c) deposits made (and the liens thereon) in the ordinary course of
business (including, without limitation, security deposits for leases,
indemnity bonds, surety bonds and appeal bonds) in connection with workers'
compensation, unemployment insurance and
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other types of social security benefits or to secure the performance of
tenders, bids, contracts (other than for the repayment or guarantee of borrowed
money or purchase money obligations), statutory obligations, surety bonds,
appeal bonds and other similar obligations arising as a result of progress
payments under government contracts; and
(d) easements (including, without limitation, reciprocal easement
agreements and utility agreements), encroachments, minor defects or
irregularities in title, variation and other restrictions, charges or
encumbrances (whether or not recorded) affecting the Real Estate and which are
listed as exceptions in the title insurance policy delivered to the Agent
herewith.
DEFAULT shall mean any event specified in Section 10 hereof, whether or not any
requirement for the giving of notice, the lapse of time, or both, or any other
condition, event or act, has been satisfied.
DEFAULT RATE OF INTEREST shall mean a rate of interest per annum equal to the
lesser of (a) the Maximum Legal Rate and (b) the sum of: (i) four percent (4%)
and (ii) the Chase Bank Rate.
DOCUMENTATION FEE shall mean, subsequent to the Closing Date, the Agent's
standard fees relating to any and all modifications, waivers, releases,
amendments or additional collateral with respect to this Agreement, the
Collateral and/or the Obligations.
DOCUMENTS OF TITLE shall mean all present and future documents (as defined in
the UCC) and any and all warehouse receipts, bills of lading, shipping
documents, chattel paper, instruments and similar documents, all whether
negotiable or not and all goods and Inventory relating thereto and all cash and
non-cash proceeds of the foregoing.
EARLY TERMINATION DATE shall mean the date on which any Company or Companies
terminates this Agreement or the Line of Credit and which date is prior to the
Maturity Date.
EARLY TERMINATION FEE shall: (a) mean the fee the Agent is entitled to charge
the Revolving Borrowers in the event the Revolving Borrowers or either of them
terminate the Line of Credit or this Agreement on a date prior to the Maturity
Date; and (b) be determined by calculating the average daily loan balance of
the Revolving Loans and Letters of Credit outstanding for the period from the
date of this Agreement to the Early Termination Date and multiplying that
number by: (i) three percent (3%) per annum if the Early Termination Date is
prior to the First Anniversary Date; (ii) two percent (2%) per annum if the
Early Termination Date is on or after the First Anniversary Date but prior to
the Second Anniversary Date; and (iii) one percent (1%) per annum if the Early
Termination Date is on or after the Second Anniversary Date, all for the number
of days from the Early Termination Date to the next succeeding Anniversary
Date.
EBIT shall mean, in any period, all earnings of the Parent on a consolidated
basis before all interest and tax expenses and all non-recurring charges
pursuant to FAS 121 or relating
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to plant closures and discontinued operations through September 30, 1997, of
the Parent on a consolidated basis for said period, determined in accordance
with GAAP.
ELIGIBLE ACCOUNTS RECEIVABLE shall mean the gross amount of the Revolving
Borrowers' Accounts that are subject to a valid, exclusive, first priority and
fully perfected security interest in favor of the Agent and which conform to
the warranties contained herein and at all times continue to be acceptable to
the Agent in the exercise of its reasonable business judgment, less, without
duplication, the sum of (a) any returns, discounts, claims, credits and
allowances of any nature (whether issued, owing, granted or outstanding) and
(b) reserves for: (i) sales, services or leases to the United States of
America or to any agency, department or division thereof, except for any such
sales as to which the Revolving Borrowers have complied with the Assignment of
Claims Act of 1940, to the Agent's reasonable satisfaction; (ii) foreign sales,
services or leases, other than sales, services or leases (x) secured by standby
letters of credit (in form and substance satisfactory to the Agent) issued or
confirmed by, and payable at, banks having a place of business in the United
States of America and payable in United States currency, or (y) to customers
residing in Canada provided such sales or transactions otherwise comply with
all of the other criteria for eligibility hereunder, are payable in United
States currency and such sales or transactions do not exceed $200,000.00 in the
aggregate at any one time; (iii) accounts that remain unpaid more than ninety
(90) days from invoice date for SCC, or, as to PMC, more than sixty (60) days
from the due date or more than one hundred twenty (120) days from invoice date;
(iv) contra accounts; (v) sales, services or leases to the Parent, any
subsidiary, or to any companies affiliated with the Revolving Borrowers or
Parent in any way; (vi) ▇▇▇▇ and hold (deferred shipment) or consignment sales;
(vii) sales, services or leases to any customer which is (A) insolvent, (B) the
debtor in any bankruptcy, insolvency, arrangement, reorganization, receivership
or similar proceedings under any federal or state law, (C) negotiating, or have
called a meeting of its or their creditors for purposes of negotiating, a
compromise of its debts or (D) financially unacceptable to the Agent or has a
credit rating unacceptable to the Agent; (viii) all sales, services or leases
to any customer if fifty percent (50%) or more of either (X) all outstanding
invoices to such customer or (Y) the aggregate dollar amount of all outstanding
invoices to such customer, are unpaid more than ninety (90) days from invoice
date for SCC, or, as to PMC, sixty (60) days from the due date; (ix) any other
reasons deemed necessary by the Agent in its reasonable business judgment and
which are customary either in the commercial finance industry or in the lending
practices of the Agent; (x) any Accounts arising from the sale, lease or rental
of goods for which a customer shall have objected to the quality or quantity of
goods or services of the Revolving Borrowers, or where such customer shall have
rejected, returned or refused to accept such goods or services; (xi) pre-billed
receivables and receivables arising from progress billing; and (xii) an amount
representing, historically, returns, discounts, claims, credits and allowances.
ELIGIBLE INVENTORY shall mean the gross amount of the Revolving Borrowers'
Inventory that is subject to a valid, exclusive, first priority and fully
perfected security interest in favor of the Agent and which conforms to the
warranties contained herein and which at all times continues to be acceptable
to the Agent in the exercise of its reasonable business judgment, less any (a)
work-in-process inventory that cannot be resold in its current form, (b)
supplies
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(other than raw material), (c) goods not present in the United States of
America, (d) goods returned or rejected by the Revolving Borrowers' customers
other than goods that are undamaged and resalable in the normal course of
business or goods to be returned to the Revolving Borrowers' suppliers, (e)
goods in transit to third parties (other than the Revolving Borrowers' agents
or warehouses); and (f) reserves required by the Agent in its reasonable
discretion, including, but not limited to, for special order goods, market
value declines discontinued, slow-moving and obsolete inventory, ▇▇▇▇ and hold
(deferred shipment) or consignment sales, and shrinkage.
EQUIPMENT shall mean all of the Companies' present and hereafter acquired
equipment (as defined in the UCC) and any and all machinery, motor vehicles,
furnishings and fixtures, and all additions, substitutions and replacements
thereof, wherever located, together with all attachments, components, parts,
equipment and accessories installed thereon or affixed thereto and all proceeds
of whatever sort.
ERISA shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time and the rules and regulations promulgated thereunder
from time to time.
EUROCURRENCY RESERVE REQUIREMENTS for any day as applied to a Eurodollar Loan,
shall mean the aggregate (without duplication) of the rates (expressed as a
decimal fraction) of reserve requirements in effect with respect to any Lender
(and/or any present or future participant) on such day (including, without
limitation, basic, supplemental, marginal and emergency reserves under any
regulations of the Board of Governors of the Federal Reserve System or other
governmental authority having jurisdiction with respect thereto, as now and
from time to time in effect), dealing with reserve requirements prescribed for
Eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of such Board) maintained by the Agent and/or any such
participants (such rate to be adjusted to the nearest one sixteenth of one
percent (1/16 of 1%) or, if there is not a nearest one sixteenth of one percent
(1/16 of 1%), to the next higher one sixteenth of one percent (1/16 of 1%)).
EURODOLLAR LENDING OFFICE with respect to the Agent, shall mean the office of
Chase Bank or any successor thereof maintained at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇.
EURODOLLAR LOAN shall mean any Revolving Loan or Term Loan made pursuant to
this Agreement at such time as it is made and/or are being maintained at a rate
of interest based upon the LIBOR rate (herein sometime "LIBOR Rate"), provided
that no Eurodollar Loan shall be made after the date that is three months prior
to the Anniversary Date or any other applicable date of termination of this
Agreement and upon notice thereof in accordance with Section 10 hereof.
EVENT(S) OF DEFAULT shall have the meaning provided for in Section 10 of this
Agreement.
EXECUTIVE OFFICERS shall mean the Chairman, President and Chief Executive
Officer, Executive Vice President, Secretary, Treasurer and Chief Financial
Officer, and Executive Vice President and Assistant Secretary of the Parent and
the Companies.
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FIRST ANNIVERSARY DATE shall mean the date occurring one year from the date
hereof.
FIXED CHARGE COVERAGE RATIO shall mean the ratio determined by dividing (a)
EBIT plus depreciation and amortization less Capital Expenditures (net of any
Purchase Money Lien Financing and, to the extent permitted herein, net of any
proceeds used for replacement of capital items), and cash taxes, by (b)
Interest Expense and scheduled principal payments (excluding the SCA Notes) for
the applicable period, determined in accordance with GAAP.
GAAP shall mean generally accepted accounting principles in the United States
of America as in effect from time to time, consistently applied, and for the
period as to which such accounting principles are to apply, provided further
that in the event the Companies and/or the Parent modify their accounting
procedures as applied as of the Closing Date, then, unless the Agent and the
Companies otherwise agree upon appropriate amendments hereto, all financial
calculations hereunder shall be made without regard to such modified accounting
procedures and the Companies and the Parent shall provide such statements of
reconciliation as shall be in form and substance acceptable to the Agent.
GENERAL INTANGIBLES shall have the meaning set forth in the UCC and shall
include, without limitation, any and all of the Companies' present and future
right, title and interest in and to all tradenames, trademarks, corporate
names, business names, fictitious business names, trade styles, service marks,
logos and any other designs or sources of business identities, indicative of
origin or similar devices, copyrights, patents, together with improvements on
said patents, utility models, industrial models, designs and any other forms of
industrial intellectual property, licenses, all applications with respect to
the foregoing, all right, title and interest in any and all extensions and
renewals and all goodwill with respect to any of the foregoing, and all
customer lists, distribution agreements, supply agreements and tax refunds,
together with all monies and claims for monies now or hereafter due and payable
in connection with any of the foregoing or otherwise, and all cash and non-cash
proceeds thereof, including without limitation the proceeds or royalties of any
licensing agreements between the Companies and any licensee of any of the
Companies' General Intangibles, as the case may be.
GUARANTIES shall mean the guaranties executed in the form attached hereto as
Exhibit D by the Guarantors securing the Obligations of the Companies under
this Agreement.
GUARANTORS shall mean, collectively, the Parent, PMC, SCC, SCH, SCA, and CLI.
INDEBTEDNESS shall mean, without duplication, all liabilities, contingent or
otherwise, which are any of the following: (a) obligations in respect of money
(borrowed or otherwise due or owing to third parties; provided, however,
regular trade payables and accounts occurring in the ordinary course of
business shall be excluded) or for the deferred purchase price of property,
services or assets, other than Inventory, or (b) lease obligations which, in
accordance with GAAP, have been, or which should be capitalized.
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INDUSTRIAL REVENUE BONDS shall mean the Industrial Development Revenue Bonds,
1985 series, issued by Manatee County, Florida on behalf of SCC, formerly known
as Sun Coast Plastics, Inc.
INTEREST EXPENSE shall mean total interest obligations (paid or accrued) of the
Parent on a consolidated basis, determined in accordance with GAAP on a basis
consistent with the latest audited consolidated statements of the Parent.
INTEREST PERIOD shall mean:
(a) initially (but subsequent to seven days from the Closing Date),
as the case may be, a one month, two month, three month or six month period
commencing on the borrowing or conversion date with respect to a Eurodollar
Loan and ending one, two, three or six months thereafter, as applicable; and
(b) thereafter, at the option of the Companies, any one month, two
month, three month or six month period commencing on the last day of the
immediately preceding Interest Period applicable to such Eurodollar Loan and
ending one, two, three or six months thereafter, as applicable;
Provided that, the foregoing provisions relating to Interest Periods are
subject to the following:
(i) if any Interest Period would otherwise end on a day which is not
a Working Day, that Interest Period shall be extended to the next
succeeding Working Day unless the result of such extension would be to
extend such payment into another calendar month in which event such
Interest Period shall end on the immediately preceding Working Day;
(ii) any Interest Period that begins on the last Working Day of a
calendar month (or on 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 Working Day of a calendar month;
(iii) for purposes of determining the availability of Interest Periods,
such Interest Periods shall be deemed available if (1) Chase Bank quotes
an applicable rate to the Agent or the Agent determines the LIBOR Rate,
as provided in the definition of LIBOR and (2) any Lender shall not have
advised the Agent that the LIBOR Rate determined by Chase Bank or the
Agent on the basis of such quote will not adequately and fairly reflect
the cost to any Lender of maintaining or funding its loans bearing
interest at the LIBOR Rate, for such Interest Period. If a requested
Interest Period shall be unavailable in accordance with the foregoing
sentence, the Companies shall continue to pay interest on the
Obligations at the applicable per annum rate based upon the Chase Bank
Rate.
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INVENTORY shall mean all of the Revolving Borrowers' present and hereafter
acquired inventory as defined in the UCC and any and all merchandise and goods,
and all additions, substitutions and replacements thereof, wherever located,
together with all goods wherever located, and materials used or usable in
manufacturing, processing, packaging or shipping same; in all stages of
production - from raw materials through work-in-process to finished goods - and
all proceeds thereof of whatever sort.
ISSUING BANK shall mean the bank issuing Letters of Credit for the Revolving
Borrowers or either of them.
LETTERS OF CREDIT shall mean all Letters of Credit issued with the assistance
of the Agent by the Issuing Bank for or on behalf of the Revolving Borrowers.
LETTER OF CREDIT GUARANTY shall mean the guaranty delivered by the Agent to the
Issuing Bank of the Revolving Borrowers' reimbursement obligation under the
Issuing Bank's reimbursement agreement, application for a documentary or
standby Letter of Credit or other like document.
LETTER OF CREDIT GUARANTY FEE shall mean the fee the Agent may charge the
Revolving Borrowers under paragraph 8.3 of Section 8 of this Agreement for: i)
issuing the Letter of Credit Guaranty and/or ii) otherwise aiding the Revolving
Borrowers in obtaining Letters of Credit pursuant to Section 5 hereof.
LIBOR shall mean at any time of determination, and subject to Availability, for
each applicable Interest Period, a variable rate of interest equal to: (a)
either (i) the London Interbank Offered Rate paid in London on one month, two
month, three or six month dollar deposits from other banks as quoted by The
Chase Manhattan Bank, N.A., or (ii) the rate of interest determined by the
Agent at which deposits in U.S. Dollars are offered for the relevant interest
period based on information presented on Telerate Systems at Page 3750 as of
11:00 A.M. (London time) on the day which is two (2) Business Days prior to the
first day of such interest period; provided that if at least two such offered
rates appear on the Telerate System at Page 3750 in respect of such interest
period, the arithmetic mean of all such rates (as determined by the Agent) will
be the rate used; provided further that if Telerate Systems ceases to provide
LIBOR quotations, such LIBOR shall be the average rate of interest determined
by the Agent at which deposits in U.S. Dollars are offered for the relevant
interest period by Bankers Trust Company, The Chase Manhattan Bank, N.A. (or
their respective successors) to banks with combined capital and surplus in
excess of $500,000,000 in the London interbank market as of 11:00 A.M. (London
time) on the applicable interest rate determination date, divided by (b) a
number equal to 1.0 minus the aggregate (but without duplication) of the rates
(expressed as decimal fraction) of Eurocurrency Reserve Requirements in effect
on the day which is two (2) Business Days prior to the beginning of such
Interest Period.
LINE OF CREDIT shall mean the aggregate commitment of the Agent to make loans
and advances pursuant to Sections 3, 4 and 5 of this Agreement, to the
Companies in the aggregate amount of $30,000,000.00.
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LINE OF CREDIT FEE shall mean the fee due the Agent at the end of each month
for the Line of Credit and shall be calculated by: multiplying (a) the
difference between (i) the Revolving Line of Credit and (ii) the sum of (A)
average daily Revolving Loans for said month plus (B) the average daily balance
of outstanding Letters of Credit of the Revolving Borrowers for said month; by
(b) one-half of one percent (1/2 of 1%) per annum for the number of days in
said month based on a 360 day year.
LOAN DOCUMENTS shall mean this Agreement, the Promissory Notes, the Guaranties,
the Co-Borrower and Affiliate Pledge Agreements, the Co-Borrower and Affiliate
Security Agreements, the mortgages and/or deeds of trust, any other documents
and the ancillary loan and security agreements executed from time to time in
connection with this Agreement, as the same may be renewed, amended, extended,
increased or supplemented from time to time.
LOAN FACILITY FEE shall mean the fee payable to the Agent in accordance with,
and pursuant to, the provisions of paragraph 8.7 of Section 8 of this
Agreement.
MANDATORY PREPAYMENT shall: (i) mean the amount by which the Term Loan I
Borrowers must prepay Term Loan I and the amount by which the Term Loan II
Borrowers must prepay Term Loan II on or before the 90th day after the end of
the Parents' fiscal year; and (ii) be determined as set forth in Section 4,
paragraph 4.6 of this Agreement.
MATURITY DATE shall mean the date occurring three (3) years from the date
hereof and, subject to Section 11, the same date in each year thereafter.
NET WORTH shall mean, at any date of determination, an amount equal to (a) the
Total Assets of the Parent on a consolidated basis minus (b) Total Liabilities
of the Parent on a consolidated basis.
NP shall mean Nova Plast S.A. de C.V., a Mexican corporation with a principal
place of business at ▇▇▇▇▇ ▇▇. ▇▇, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇.▇.▇.▇.
▇▇▇▇▇, and a direct wholly owned Subsidiary of SCM.
OBLIGATIONS shall mean (a) all loans and advances made or to be made by the
Agent to the Companies pursuant to this Agreement or any of the Loan Documents;
(b) any and all indebtedness and obligations which may at any time be owing by
the Companies to the Agent howsoever arising, whether now in existence or
incurred by the Companies from time to time hereafter (whether secured by
pledge, lien upon or security interest in any of the Companies' assets or
property or the assets or property of any other person, firm, entity or
corporation; whether such indebtedness is absolute or contingent, joint or
several, matured or unmatured, direct or indirect and whether the Companies are
liable to the Agent for such indebtedness as principal, surety, endorser,
guarantor or otherwise); (c) all indebtedness owing to the Agent by the
Companies under this Agreement, any other Loan Documents or under any other
agreement or arrangement now or hereafter entered into between the Companies
and the Agent; (d) all indebtedness or obligations incurred by, or imposed on,
the Agent as a result of environmental claims (other than as a result of
actions of the
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Agent) arising out of the Companies' operation, premises or waste disposal
practices or sites; (e) the Companies' liability to the Agent as maker or
endorser on any promissory note or other instrument for the payment of money;
and (f) the Companies' liability to the Agent under any instrument of guaranty
or indemnity, or arising under any guaranty, endorsement or undertaking which
the Agent may make or issue to others for the Companies' account, including any
accommodation extended with respect to applications for Letters of Credit, the
Agent's acceptance of drafts or the Agent's endorsement of notes or other
instruments for the Companies' account and benefit.
OPERATING LEASES shall mean all leases of property by the Parent and its direct
or indirect Subsidiaries (whether real, personal or mixed) other than Capital
Leases.
OTHER COLLATERAL shall mean all now owned and hereafter acquired deposit
accounts maintained with any bank or financial institutions; all cash and other
monies and property in the possession or control of the Agent; all books,
records, ledger cards, disks and related data processing software at any time
evidencing or containing information relating to any of the Collateral
described herein or otherwise necessary or helpful in the collection thereof or
realization thereon, and all cash and non-cash proceeds of the foregoing.
OUT-OF-POCKET EXPENSES shall mean all of the Agent's reasonable present and
future expenses incurred relative to this Agreement or any other Loan
Documents, whether incurred heretofore or hereafter, which expenses shall
include, without being limited to, the cost of record searches, all costs and
expenses incurred by the Agent in opening bank accounts, depositing checks,
receiving and transferring funds, and any charges imposed on the Agent due to
"insufficient funds" of deposited checks and the Agent's standard fee relating
thereto, any amounts paid by the Agent, incurred by or charged to the Agent by
the Issuing Bank under the Letter of Credit Guaranty or the Revolving
Borrowers' reimbursement agreement, application for Letter of Credit or other
like document which pertain either directly or indirectly to such Letters of
Credit, and the Agent's standard fees relating to the Letters of Credit and any
drafts thereunder, any applicable counsel fees and disbursements, title
insurance premiums, real estate survey costs, the Tennessee and Florida General
Intangible Tax, fees and taxes relative to the filing of financing statements,
costs of preparing and recording mortgages/deeds of trust against the Real
Estate and all expenses, costs and fees set forth in paragraph 10.3 of Section
10 of this Agreement.
PARENT shall mean Sun Coast Industries, Inc., a Delaware corporation with a
principal place of business at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇,
▇▇▇▇▇-▇▇▇▇.
PERFECTION CERTIFICATE shall mean the Perfection Certificate signed by the
Companies and delivered to the Agent, in form and substance satisfactory to the
Agent in connection with this Agreement.
PERMITTED ENCUMBRANCES shall mean: (i) liens expressly permitted, or consented
to in writing, by the Agent; (ii) Purchase Money Liens; (iii) Customarily
Permitted Liens; (iv) liens granted the Agent by the Companies; (v) liens of
judgment creditors provided such liens do not exceed, in the aggregate, at any
time, $100,000.00 (other than liens which have
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been discharged, bonded or insured to the reasonable satisfaction of the
Agent); (vi) a first lien in an original principal amount not to exceed
$2,000,000 in connection with the purchase and financing of real property
located in Sarasota, Florida, and (vii) liens for taxes not yet due and payable
or which are being diligently contested in good faith by the Companies by
appropriate proceedings and which liens are not (x) other than with respect to
Real Estate, senior to the liens of the Agent or (y) for taxes due the United
States of America or any state thereof having similar priority statutes.
PERMITTED INDEBTEDNESS shall mean: (i) current Indebtedness maturing in less
than one year and incurred in the ordinary course of business for raw
materials, supplies, equipment, services, taxes or labor; (ii) the indebtedness
secured by the Purchase Money Liens; (iii) Indebtedness of the Parent and any
direct or indirect Subsidiary which is subordinated to the prior payment and
satisfaction of the Companies' Obligations to the Agent by means of a
subordination agreement in form and substance satisfactory to the Agent; (iv)
Indebtedness arising under the Letters of Credit and this Agreement; (v)
deferred taxes and other expenses incurred in the ordinary course of business;
(vi) the indebtedness in the original principal amount not to exceed
$2,000,000, the proceeds of which are used to finance the acquisition of real
property and a building located at Sarasota, Florida; (vii) other indebtedness
existing on the date of execution of this Agreement and listed in the most
recent financial statement delivered to the Agent or otherwise disclosed to the
Agent in writing prior to the Closing Date.
PERSON shall mean an individual, entity or tribunal.
PLEDGE AGREEMENT shall have the meaning ascribed to it in Section 2(j).
PREPAYMENT PREMIUM shall mean the amount due the Agent by the Companies upon a
voluntary prepayment, in whole or in part, of the Term Loans, determined by
multiplying the amount so prepaid by (i) three percent (3%) if the prepayment
is prior to the First Anniversary Date; (ii) two percent (2%) if the prepayment
is on or after the First Anniversary Date but prior to the Second Anniversary
Date; and (iii) one percent (1%) if the prepayment is on or after the Second
Anniversary Date
PROMISSORY NOTE shall mean the notes, in the forms of Exhibits A, B and C
attached hereto, delivered by the Companies to the Agent to evidence the Term
Loans pursuant to, and repayable in accordance with, the provisions of Section
4 and the Revolving Loans pursuant to Section 3 of this Agreement.
PURCHASE MONEY LIENS shall mean liens on any item of equipment acquired after
the date of this Agreement provided that (i) each such lien shall attach only
to the property to be acquired and any accessions thereto, (ii) a description
of the property so acquired is furnished to the Agent, and (iii) the debt
incurred in connection with such acquisitions shall not exceed in the aggregate
$1,000,000 in any fiscal year.
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REAL ESTATE shall mean the Companies' fee and/or leasehold interests in the
real property which have been, or will be, encumbered, mortgaged, pledged or
assigned to the Agent or its designee.
REQUIRED LENDERS shall mean Lenders holding more than fifty percent (50%) of
the outstanding loans, advances, extensions of credit and commitments to the
Companies hereunder.
REVOLVING LINE OF CREDIT shall mean the aggregate commitment of the Agent to
make loans and advances pursuant to Section 3 of this Agreement and issue
Letters of Credit Guaranties pursuant to Section 5 hereof to the Revolving
Borrowers, in the aggregate amount of $15,000,000.00.
REVOLVING LOANS shall mean the loans and advances made, from time to time, to
or for the account of the Revolving Borrowers by the Agent pursuant to Section
3 and Section 5 of this Agreement.
ROYALTY AGREEMENTS shall mean any and all agreements between SCH, the Parent,
the Companies or any other direct or indirect Subsidiary or Affiliate providing
for the use, rental, or license of intellectual property, including, without
limitation, patents, patent applications, trademark applications and
registrations, service marks, copyright applications and registrations, trade
secrets, and trade names.
SCA shall mean Sun Coast Acquisitions, Inc., a Nevada corporation with a
principal place of business at Bank of America Plaza, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇, and a direct wholly owned Subsidiary by
SCH.
SCA NOTES shall mean the promissory notes issued by SCA in the original
principal amount of $940,397.06 payable to the order of CORAZA Corporacion
Azteca, S.A. de C.V. and $59,602.94 payable to the order of ▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, each dated May, 1995.
SCM shall mean Sun Coast de Mexico S.A. de C.V., a Mexican corporation with a
principal place of business at ▇▇▇▇▇ ▇▇. ▇▇, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇.▇.▇.▇. ▇▇▇▇▇, and a direct wholly owned Subsidiary of SCA.
SECOND ANNIVERSARY DATE shall mean the date occurring two years from the date
hereof.
SECURITY AGREEMENT shall have the meaning ascribed to it in Section 2(k).
SETTLEMENT DATE shall mean the date occurring weekly, and more frequently at
the discretion of the Agent, upon the occurrence of an Event of Default or a
continuing decline or increase of the Revolving Loans that the Agent and each
of the Lenders shall settle amongst themselves so that (a) the Agent shall not
have, as agent, any money at risk, and (b) on such Settlement Date, each of the
Lenders shall have a pro rata amount of all outstanding Revolving Loans and any
draws under Letters of Credit issued pursuant to this Agreement.
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SUBORDINATED GUARANTY shall mean the guaranty of SCI dated as of May 17, 1995
pursuant to which SCI has guaranteed the obligations of SCA to the
Subordinating Creditors with respect to the SCA Notes.
SUBORDINATING CREDITORS shall mean CORAZA Corporacion Azteca, S.A. de C.V., a
Mexican corporation, and ▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
SUBSIDIARY of any Person shall mean any entity of which an aggregate of more
than 50% (in number of votes) of the stock (or equivalent interests) is owned
of record or beneficially, directly or indirectly, by such person; when no
Person is specified, Subsidiary and Subsidiaries shall mean those of the
Parent, SCH and SCA.
SUN COAST STOCK shall mean the 100,000 shares of common stock of the Parent
issued upon the Closing Date to the Agent, such common stock to be validly
issued, fully paid and non-assessable.
SURPLUS CASH shall mean for any fiscal year the sum of (i) EBIT, (ii)
depreciation, (iii) amortization and (iv) other non-cash charges less the sum
of (a) all interest obligations paid or due the Agent by the Companies, (b) the
amount of principal repaid the Agent on the Term Loan, (c) capital expenditures
by the Parent on a consolidated basis, and (d) all cash federal, state and
local tax obligations of the Parent on a consolidated basis.
TERM LOAN I shall mean the term loan in the principal amount of $10,000,000.00
made by the Agent pursuant to, and repayable in accordance with, the provisions
of Section 4 of this Agreement.
TERM LOAN II shall mean the Term Loan in the original principal amount of
$5,000,000.00 made by the Agent pursuant to, and repayable in accordance with,
the provisions of Section 4 of this Agreement.
TERM LOANS shall mean the term loans in the aggregate principal amount of
$15,000,000.00, consisting of Term Loan I in the original principal amount of
the $10,000,000.00 and Term Loan II in the original principal amount of
$5,000,000.00, each made by the Agent pursuant to, and repayable in accordance
with, the provisions of Section 4 of this Agreement.
TOTAL ASSETS shall mean the total assets of the Parent on a consolidated basis
determined in accordance with GAAP, on a basis consistent with the latest
audited statements of the Parent.
TOTAL LIABILITIES shall mean total liabilities of the Parent on a consolidated
basis determined in accordance with GAAP, on a basis consistent with the latest
audited consolidated statements of the Parent.
UCC shall mean the Uniform Commercial Code as in effect in the State of New
York and as the same maybe amended from time to time.
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WORKING CAPITAL shall mean an amount equal to Current Assets minus Current
Liabilities, determined in accordance with GAAP on a basis consistent with the
latest audited statements.
WORKING DAY shall mean a Business Day on which banks take deposits in London in
the interbank market for dollar deposits.
SECTION 2. CONDITIONS PRECEDENT
2.1. The obligation of the Agent to make loans hereunder is subject to
the satisfaction of, or waiver of, immediately prior to or concurrently with
the making of such loans, the following conditions precedent:
(a) LIEN SEARCHES - The Agent shall have received tax, judgment and
Uniform Commercial Code searches satisfactory to the Agent for all locations
presently occupied or used by the Parent, the Companies, CLI and SCA.
(b) CASUALTY INSURANCE - The Companies shall have delivered to the
Agent evidence satisfactory to the Agent that casualty insurance policies
listing the Agent as loss payee or mortgagee, as the case may be, are in full
force and effect, all as set forth in Section 7, paragraph 7.7 of this
Agreement.
(c) MORTGAGES/DEEDS OF TRUST - The Companies shall have executed and
delivered to either the Agent or an agent of the Agent or of a title insurance
company acceptable to the Agent such mortgages and/or deeds of trust and/or
leasehold mortgages as the Agent may reasonably require to obtain first liens
on the Real Estate fee interests located in Texas.
(d) UCC FILINGS - Any documents (including without limitation,
financing statements) required to be filed in order to create, in favor of the
Agent, a first and exclusive perfected security interest in the Collateral with
respect to which a security interest may be perfected by a filing under the
Uniform Commercial Code shall have been properly filed in each office in each
jurisdiction required in order to create in favor of the Agent a perfected lien
on the Collateral. The Agent shall have received acknowledgement copies of all
such filings (or, in lieu thereof, the Agent shall have received other evidence
satisfactory to the Agent that all such filings have been made); and the Agent
shall have received evidence that all necessary filing fees and all taxes or
other expenses related to such filings have been paid in full.
(e) TITLE INSURANCE POLICIES - The Agent shall have received, in
respect of each mortgage or deed of trust, a mortgagee's title policy or
marked-up unconditional binder for such insurance. Each such policy shall (i)
be in an amount satisfactory to the Agent; (ii) insure that the mortgage or
deed of trust insured thereby creates a valid first lien on the property
covered by such mortgage or deed of trust, free and clear of all defects and
encumbrances except those acceptable to the Agent; (iii) name the Agent as the
insured
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thereunder; and (iv) contain such endorsements and effective coverage as the
Agent may reasonably request, including without limitation the revolving line
of credit endorsement to the extent available in each jurisdiction. The Agent
shall also have received evidence that all premiums in respect of such policies
have been paid and that all charges for mortgage recording taxes, if any, shall
have been paid.
(f) SURVEYS - The Agent and the title insurance companies issuing
each policy referred to in the immediately preceding paragraph (each, a "Title
Insurance Company") shall have received maps or plats of a perimeter or
boundary of the site of each of the properties covered by the mortgages or
deeds of trust, dated a date satisfactory to the Agent and the relevant Title
Insurance Companies prepared by an independent professional licensed land
surveyor satisfactory to the Agent and the relevant Title Insurance Companies,
which maps or plats and the surveys on which they are based shall be made in
accordance with the Minimum Standard Detail Requirements for Land Title Surveys
jointly established and adopted by the American Land Title Association and the
American Congress on Surveying and Mapping; and, without limiting the
generality of the foregoing, there shall be surveyed and shown on the maps or
plats or surveys the following: (i) the locations on such sites of all the
buildings, structures and other improvements and the established building
setback lines insofar as the foregoing affect the perimeter or boundary of such
property; (ii) the lines of streets abutting the sites and width thereof; (iii)
all access and other easements appurtenant to the sites or necessary or
desirable to use the sites; (iv) all roadways, paths, driveways, easements,
encroachments and overhanging projections and similar encumbrances affecting
the sites, whether recorded, apparent from a physical inspection of the sites
or otherwise known to the surveyor; (v) any encroachments on any adjoining
property by the building structures and improvements on the sites; and (vi) if
the site is designated as being on a filed map, a legend relating the survey to
said map. Further, the survey shall (x) be certified to the Agent and the
Title Insurance Companies and (y) contain a legend reciting as to whether or
not the site is located in a flood zone.
(g) EXAMINATION AND VERIFICATION - The Agent shall have completed to
the satisfaction of the Lenders an examination and verification of the
Accounts, Inventory, Equipment, books and records of the Companies.
(h) GUARANTIES - The Guarantors shall have executed and delivered to
the Agent the Guaranties, guarantying the Obligations of the Companies in the
form attached hereto as Exhibit D.
(i) OPINIONS - Counsel for the Parent, the Companies and the
Guarantors shall have delivered to the Agent opinions satisfactory to the Agent
opining, inter alia, that, subject to the (i) filing, priority and remedies
provisions of the Uniform Commercial Code, (ii) the provisions of the
Bankruptcy Code, insolvency statutes or other like laws, (iii) the equity
powers of a court of law and (iv) such other matters as may be agreed upon with
the Agent: (a) the Guaranty of the Guarantors is valid, binding and
enforceable according to its terms; (b) the Loan Documents including without
limitation this Agreement are (x) valid, binding and enforceable according to
their terms, (y) are duly authorized executed and delivered and (z) do not
violate any terms, provisions, representations or covenants in the
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charter or by-laws of the Parent, the Companies and the Guarantors or, to the
best knowledge of such counsel, of any loan agreement, mortgage, deed of trust,
note, security or pledge agreement or indenture to which the Parent, the
Companies and the Guarantors are a signatory or by which the Parent, the
Companies and the Guarantors or their assets are bound; and (c) the provisions
of the Bulk Sales Law have been fully complied with or that compliance is not
legally appropriate and the reasons supporting such non-compliance.
(j) PLEDGE AGREEMENT - The Parent, SCH, and SCA shall cause the
appropriate person to (a) execute and deliver to the Agent a Co-Borrower Pledge
Agreement or Affiliate Pledge Agreement, as applicable, in the form attached
hereto as Exhibit E or F, respectively, and stock powers pledging to the Agent
as additional collateral for the Obligations of the Companies not less than
100% of the stock of any Subsidiary (other than SCM as to which 65% of the
stock shall be pledged, with approximately 45% of the shares to be delivered to
the Agent on behalf of the Lenders at closing and approximately 20% of the
shares to be held by ▇▇▇▇▇▇ ▇▇▇▇▇ M. of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇.
and to be delivered to the Agent on behalf of the Lenders no later than June 6,
1997, and NP as to which no stock shall be pledged) of the Parent, SCH, and SCA
(b) deliver to the Agent the applicable certificates, if any, of the Parent,
SCH, and SCA with respect to the stock of SCN, PMC, SCC, CLI, SCA and SCM or
take such other actions as the Agent may reasonably request in connection
therewith.
(k) SECURITY AGREEMENT - The Companies and CLI shall cause the
appropriate person to execute and deliver to the Agent a Co-Borrower Security
Agreement, or Affiliate Security Agreement, as applicable, in the form attached
hereto as Exhibit G or H, respectively.
(l) ADDITIONAL DOCUMENTS - The Companies shall have executed and
delivered to the Agent all Loan Documents necessary to consummate the lending
arrangement contemplated between the Companies and the Agent.
(m) THE AGENT COMMITMENT LETTER - The Parent and the Companies shall
have fully complied, to the satisfaction of the Agent, with all of the terms
and conditions of the Commitment Letter, dated December 9, 1996, issued by the
Agent to, and accepted by, the Parent.
(n) ENVIRONMENTAL REPORT - The Agent shall have received,
environmental audit reports on (i) all of the Parent's and the Companies'
leasehold and fee interests, and (ii) the Parent's and the Companies' waste
disposal practices. The reports must (x) be satisfactory to the Agent and (y)
not disclose or indicate any material liability (real or potential) stemming
from the Parent's and the Companies' premises, their operations, their waste
disposal practices or waste disposal sites used by Companies or the Parent.
(o) BOARD RESOLUTION - The Agent shall have received a copy of the
resolutions of the Board of Directors of each of the Companies, the Parent, and
each of the Guarantors authorizing the execution, delivery and performance of
(i) this Agreement, (ii) the Guaranties, (iii) the Co-Borrower and Affiliate
Pledge Agreements, (iv) the Co-Borrower
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and Affiliate Security Agreements, and (v) any related agreements, each as
applicable, in each case certified by the Secretary or Assistant Secretary of
the Companies, the Parent and the Guarantors as of the date hereof, together
with a certificate of the Secretary or Assistant Secretary of each the
Companies, the Parent and the Guarantors as to the incumbency and signature of
the officers of each of the Companies, the Parent and the Guarantors executing
this Agreement or any Loan Documents and any certificate or other documents to
be delivered by it pursuant hereto, together with evidence of the incumbency of
such Secretary or Assistant Secretary.
(p) CORPORATE ORGANIZATION - The Agent shall have received (i) a copy
of the Certificate of Incorporation of the Parent, the Companies and the
Guarantors certified by the Secretary of State of their incorporation, and (ii)
a copy of the By-Laws (as amended through the date hereof) of each of the
Parent, the Companies and the Guarantors and certified by the Secretary or
Assistant Secretary of the Parent, the Companies and the Guarantors.
(q) OFFICER'S CERTIFICATE - The Agent shall have received an executed
Officer's Certificate of the Companies, and the Parent, satisfactory in form
and substance to the Agent, certifying that (i) the representations and
warranties contained herein are true and correct in all material respects on
and as of the date hereof; (ii) the Companies and the Parent are in compliance
with all of the terms and provisions set forth herein; and (iii) no Default or
Event of Default has occurred.
(r) ABSENCE OF DEFAULT AND MATERIAL ADVERSE CHANGE - No Default,
Event of Default or material adverse change shall have occurred in the
financial condition, business, profits, operations or assets of the Companies,
the Parent, the Guarantors and the Subsidiaries, taken as a whole.
(s) APPRAISALS - The Agent shall have received appraisals on the
Companies' fixed assets which appraisals shall be by an appraiser acceptable to
the Agent and to its satisfaction and shall indicate (i) a fair market value of
real estate owned in Texas by PMC of at least $4,500,000.00 and (ii) an orderly
liquidation value of (x) owned equipment of not less than $8,200,000.00
(excluding equipment which secures the Industrial Revenue Bonds) and (y) owned
molds of at least $6,000,000 owned by PMC and SCC (based upon an in place
approach), excluding molds which are leased and molds which secure the
Industrial Revenue Bonds.
(t) LEGAL RESTRAINTS/LITIGATION - At the date of execution of this
Agreement, there shall be no (x) litigation, investigation or proceeding
(judicial or administrative) pending or threatened against the Parent, the
Companies or the Guarantors, or their assets, by any agency, division or
department of any county, city, state or federal government (y) injunction,
writ or restraining order restraining or prohibiting the consummation of the
financing arrangements contemplated under this Agreement or (z) to the best
knowledge of the Companies and the Parent, suit, action, investigation or
proceeding (judicial or administrative) pending or threatened against the
Parent, the Companies or the Guarantors, or their assets, which, in the opinion
of the Agent, if adversely determined, could have a
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material adverse effect on the business, operation, assets, financial condition
or Collateral of the Parent, the Companies and/or the Guarantors.
(u) DISBURSEMENT AUTHORIZATION - The Companies shall have delivered
to the Agent all information necessary for the Agent to issue wire transfer
instructions on behalf of the Companies for the initial and subsequent loans
and/or advances to be made under this Agreement including, but not limited to,
disbursement authorizations in form acceptable to the Agent.
(v) LOCK BOX AGREEMENTS - As of the Closing Date, the Revolving
Borrowers shall enter into lock box agreements for each of their collection
accounts in form and substance satisfactory to the Agent.
(w) COLLECTION ACCOUNT - The collection account shall have been
established in form and substance satisfactory to the Agent.
(x) THIRD PARTY WAIVERS - The Companies shall provide applicable
third party documents to the Agent so that the Agent has a first and exclusive
lien on Accounts Receivable, Inventory, Chattel Paper and any Equipment at
locations which the Companies use, lease or occupy, all in form and substance
satisfactory to the Agent and subject only to Permitted Encumbrances. In the
event Inventory is located in any facility which is not owned by the Companies,
including at any leased premises, third party processor or warehouse, for which
the Agent has not received a waiver, in form and substance satisfactory to the
Agent as of the Closing Date, the Agent may take either of the following two
options, whichever results in the least diminution in value for the Companies,
(a) deem such Inventory to be ineligible or (b) within ninety (90) days of the
Closing Date, establish an Availability Reserve for up to two months rent or
processing charges for any such premises or for the value of any applicable
Inventory. Notwithstanding anything to the contrary herein, for purposes of
Section 3 and 6 hereof, this condition precedent shall not terminate as of the
Closing Date.
(y) MINIMUM CLOSING AVAILABILITY - Based upon the Agent's completion
of an updated examination of the Revolving Borrowers' Accounts and Inventory,
after giving effect to any Revolving Loans made by the Agent on the Closing
Date, the Revolving Borrowers' shall have a minimum additional aggregate
Availability for further Revolving Loans of at least $2,000,000.00 as evidenced
by the borrowing base certificate delivered by the Revolving Borrowers to the
Agent on the Closing Date. It is understood that such requirement contemplates
that all of the Revolving Borrowers' debts and obligations are current and that
all payables are being handled as in the normal course of the Revolving
Borrowers' business and consistent with their past practice.
(z) FINANCIAL INFORMATION - Prior to the Closing Date, the Companies
and the Parent shall have prepared and delivered to the Agent (i) cash budget
projections for the Companies and the Parent for the next consecutive twelve
month period commencing on such date, and (ii) a five year pro-forma budget,
all of which shall be in form and substance satisfactory to the Agent.
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(aa) INSURANCE - The Companies and the Parent shall have delivered to
the Agent a certificate from each of their insurance carriers in form and
substance satisfactory to the Agent evidencing that the coverage required by
paragraph 7.6(a) of Section 7 hereof; and the endorsements thereof, in form and
substance satisfactory to the Agent, listing the Agent, as loss payee or
mortgagee, as the case may be, are in full force and effect, all as set forth
in Section 7 of this Agreement.
(bb) FEES AND EXPENSES - On the Closing Date, the Companies shall have
reimbursed the Agent for all Out-of-Pocket Expenses for which a request for
payment shall have been made at or prior to the Closing Date and shall have
paid the Collateral Management Fee due on the Closing Date and the Loan
Facility Fee.
(cc) PERFECTION CERTIFICATE - The Agent shall have received a
Perfection Certificate from the Companies in a form acceptable to the Agent.
(dd) ROYALTY AGREEMENTS - The Agent shall have received true, correct
and complete copies of all Royalty Agreements.
(ee) INTERCOMPANY INDEBTEDNESS - After giving effect to the payment in
full of Indebtedness of SCH to Comerica Bank-Texas, there shall be no
intercompany Indebtedness or, if any intercompany Indebtedness remains, it
shall be evidenced by promissory notes that are pledged and endorsed to Agent
and any such intercompany Indebtedness shall be fully subordinated to the
Obligations to the complete satisfaction of Agent and the Lenders.
(ff) RELEASES FROM COMERICA BANK-TEXAS - Prior to or simultaneous with
funding hereunder on the Closing Date, Comerica Bank-Texas shall have agreed to
release its liens on the Collateral upon payment in full of all amounts owed to
it by SCH and in connection with such payment, shall release SCH, the Parent
and any other Subsidiaries or Affiliates from all liability under the Loan
Agreement dated as of December 20, 1995, as may have been amended form time to
time, and any documents executed in connection therewith or pursuant thereto.
(gg) EXECUTION AND DELIVERY OF LOAN DOCUMENTS - The Agent shall have
received signed Promissory Notes and the other Loan Documents.
Upon the execution of this Agreement and the initial disbursement of loans
hereunder, all of the above conditions precedent shall have been deemed
satisfied except as the Companies, the Parent and the Agent shall otherwise
agree herein or in a separate writing.
2.2. CONDITIONS TO EACH EXTENSION OF CREDIT
Except to the extent expressly set forth in this Agreement, the
agreement of the Agent to make any extension of credit requested to be made by
it to the Companies on any date (including without limitation, the initial
extension of credit) is subject to the satisfaction of the following conditions
precedent:
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(a) REPRESENTATIONS AND WARRANTIES - Each of the representations and
warranties made by the Parent and the Companies in or pursuant to this
Agreement shall be true and correct in all material respects on and as of such
date as if made on and as of such date.
(b) NO DEFAULT - No Default or Event of Default shall have occurred
and be continuing on such date or after giving effect to the extension of
credit requested to be made on such date.
(c) BORROWING BASE - Except as may be otherwise agreed to from time
to time by the Agent, the Parent and the Revolving Borrowers in writing, after
giving effect to the extension of credit requested to be made by the Revolving
Borrowers on such date, the aggregate outstanding the Revolving Loans and
outstanding Letters of Credit owing by the Revolving Borrowers will not exceed
the lesser of (i) the Revolving Line of Credit or (ii) the Borrowing Base then
applicable to the Revolving Borrowers.
(d) ADDITIONAL MATTERS - All corporate and other proceedings, and all
documents, instruments and other legal matters in connection with the
transactions contemplated by this Agreement and the other Loan Documents shall
be reasonably satisfactory in form and substance to the Agent and (to the
extent that such proceedings documents, instruments and other matters relate to
the Collateral or the Agent), the Agent shall have received such other
documents and legal opinions in respect of any aspect or consequence of the
transactions contemplated hereby or thereby, as the Agent shall reasonably
request.
Each borrowing by the Companies hereunder shall constitute a
representation and warranty by the Companies and the Parent as of the date of
such loan or advance that each of the representations, warranties and covenants
contained in the Agreement have been satisfied and are true and correct, except
as the Companies, the Parent and the Agent shall otherwise agree herein or in a
separate writing.
SECTION 3. REVOLVING LOANS
3.1. The Agent agrees, subject to the terms and conditions of this
Agreement from time to time, and within x) the Availability and y) the
Revolving Line of Credit, but subject to the Agent's right to make
"Overadvances", to make loans and advances to the Revolving Borrowers on a
revolving basis (i.e. subject to the limitations set forth herein, the
Revolving Borrowers may borrow, repay and re-borrow Revolving Loans). Such
loans and advances shall be in amounts up to the lesser of (a) $15,000,000.00
collectively to all the Revolving Borrowers or (b) the sum of (i) ninety
percent (90%) of Eligible Accounts Receivable of the Revolving Borrowers (less
a dilution reserve of approximately 4% for PMC and approximately 2% for SCC at
Closing), which dilution reserve may be increased or decreased during the term
of this Agreement by the Agent and the Lenders in their sole discretion, plus
(ii) the lesser of (x) sixty-five percent (65%) of Eligible Inventory of the
Revolving Borrowers as determined at the lower of cost or market, or (y)
$6,000,000.00 from the date of execution of this Agreement up to and including
June 30, 1997, and $5,000,000.00 at all times thereafter. All requests for
loans and advances must be received
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by an officer of the Agent no later than 1:00 p.m. New York time of the day on
which such loans and advances are required. Should the Agent for any reason
honor requests for advances in excess of the limitations set forth herein, such
advances shall be considered "Overadvances" and shall be made in the Agent's
sole discretion, subject to any additional terms the Agent deems necessary. No
single advance or Overadvance hereunder may be outstanding past the Maturity
Date.
3.2. (a) In furtherance of the continuing assignment and security
interest in the Revolving Borrowers' Accounts, the Revolving Borrowers will,
upon the creation of Accounts, execute and deliver to the Agent in such form
and manner as the Agent may reasonably require, solely for the Agent's
convenience in maintaining records of collateral, such confirmatory schedules
of Accounts as the Agent may reasonably request, and such other appropriate
reports designating, identifying and describing the Accounts as the Agent may
reasonably require. In addition, upon the Agent's request, the Revolving
Borrowers shall provide the Agent with copies of agreements with, or purchase
orders from, the Revolving Borrowers' customers, and copies of invoices to
customers, proof of shipment or delivery and such other documentation and
information relating to said Accounts and other collateral as the Agent may
reasonably require. Failure to provide the Agent with any of the foregoing
shall in no way affect, diminish, modify or otherwise limit the security
interests granted herein. The Revolving Borrowers hereby authorize the Agent
to regard the Revolving Borrowers' printed name or rubber stamp signature on
assignment schedules or invoices as the equivalent of a manual signature by one
of the Revolving Borrowers' authorized officers or agents.
(b) The obligation of the Revolving Borrowers to repay the principal
amount of the Revolving Loans made pursuant to this Section 3 and pursuant to
any Letter of Credit Guaranty issued pursuant to Section 5 by the Agent and to
pay interest thereon shall be evidenced in part by the Promissory Note in the
form of Exhibit C attached hereto. The Revolving Borrowers' outstanding
Obligations applicable thereto may be set forth in the balance column on the
grid page attached to said note or on the separate ledgers maintained by the
Agent. All such advances, whether or not so recorded, shall be due as part of
said note. The executed Promissory Note shall be delivered to the Agent on the
Closing Date.
3.3. Each of the Revolving Borrowers and the Parent hereby represent
and warrant that: each Account is based on an actual and bona fide sale and
delivery of goods or rendition of services to customers, made by the Revolving
Borrowers in the ordinary course of their business; the goods and Inventory
being sold and the Accounts created are the exclusive property of the Revolving
Borrowers and are not and shall not be subject to any lien, consignment
arrangement, encumbrance, security interest or financing statement whatsoever,
other than the Permitted Encumbrances; the invoices evidencing such Accounts
are in the name of the Revolving Borrowers; and the customers of the Revolving
Borrowers have accepted the goods or services, owe and are obligated to pay the
full amounts stated in the invoices according to their terms, without dispute,
offset, defense, counterclaim or contra, except for disputes and other matters
arising in the ordinary course of business with respect to which the Revolving
Borrowers have complied with the notification requirements
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pursuant to paragraph 3.5 of this Section 3. Each of the Revolving Borrowers
confirm to the Agent that any and all taxes or fees relating to their business,
their sales, the Accounts or goods relating thereto, are their sole
responsibility and that same will be paid by the Revolving Borrowers when due
and that none of said taxes or fees represent a lien on or claim against the
Accounts. Each of the Revolving Borrowers and the Parent also warrant and
represent that they are a duly and validly existing corporations and are
qualified in all states where the failure to so qualify would have a material
adverse effect on the business of the Revolving Borrowers or the ability of the
Revolving Borrowers to enforce collection of Accounts due from customers
residing in that state. Each of the Revolving Borrowers and the Parent agree
to maintain such books and records regarding Accounts as the Agent may
reasonably require and agree that the books and records of the Revolving
Borrowers will reflect the Agent's interest in the Accounts. All of the books
and records of the Revolving Borrowers will be available to the Agent at normal
business hours, including any records handled or maintained for the Revolving
Borrowers by any other company or entity.
3.4. Until the Agent has advised the Revolving Borrowers to the
contrary after the occurrence of an Event of Default, the Revolving Borrowers
may and will enforce, collect and receive all amounts owing on the Accounts for
the Agent's benefit and on the Agent's behalf, but at the Revolving Borrowers'
expense; such privilege shall terminate automatically upon the institution by
or against the Revolving Borrowers of any proceeding under any bankruptcy or
insolvency law or, at the election of the Agent, upon the occurrence of any
other Event of Default and until such Event of Default is waived or cured to
the Agent's satisfaction. The Revolving Borrowers shall direct all of their
account debtors to deposit any and all proceeds of Collateral into the Deposit
Account (as defined below), and any checks, cash, notes, chattel paper or other
instruments or property received by the Revolving Borrowers with respect to any
Accounts shall be held by the Revolving Borrowers in trust for the Agent,
separate from the Revolving Borrowers' own property and funds, and immediately
turned over to the Agent with proper assignments or endorsements by deposit to
the special depository accounts in the Agent's name designated by the Agent for
such purposes (the "Depository Accounts"). All amounts received by the Agent
in payment of Accounts will be credited to the Revolving Borrowers' Revolving
Loan Accounts upon the Agent's receipt of "collected funds" at the Agent's bank
account in New York, New York on the business day of receipt if received no
later than 2:00 pm EST or on the next succeeding business day if received after
2:00 pm EST. No checks, drafts or other instrument received by the Agent shall
constitute final payment to the Agent unless and until such instruments have
actually been collected.
3.5. The Revolving Borrowers agree to notify the Agent promptly of any
matters materially affecting the value, enforceability or collectibility of the
Accounts and of all material customer disputes, offsets, defenses,
counterclaims, returns, rejections and all reclaimed or repossessed merchandise
or goods. The Revolving Borrowers agree to issue credit memoranda promptly
(with duplicates to the Agent upon request after the occurrence of an Event of
Default) upon accepting returns or granting allowances, and may continue to do
so until the Agent has notified the Revolving Borrowers that an Event of
Default has occurred and that all future credits or allowances are to be made
only after the Agent's prior written approval. Upon the occurrence of an Event
of Default and until such time as
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such Event of Default is waived or cured to the Agent's satisfaction, and on
notice from the Agent, the Revolving Borrowers agree that all returned,
reclaimed or repossessed merchandise or goods shall be set aside by the
Revolving Borrowers, marked with the Agent's name (as secured party) and held
by the Revolving Borrowers for the Agent's account; provided, however, that
prior to notice from the Agent that the aforementioned goods shall be set
aside, the Revolving Borrowers may repair and/or resell returned, reclaimed or
repossessed merchandise or goods.
3.6. The Agent shall maintain a separate account on its books in the
Revolving Borrowers' name (herein the "Revolving Loan Account") in which the
Companies will be charged with loans and advances made by the Agent to it or
for their account, and with any other Obligations, including any and all costs,
expenses and reasonable attorney's fees which the Agent may incur in connection
with the exercise by or for the Agent of any of the rights or powers herein
conferred upon the Agent, or in the prosecution or defense of any action or
proceeding to enforce or protect any rights of the Agent in connection with
this Agreement, the other Loan Documents or the Collateral assigned hereunder,
or any Obligations owing to the Agent by the Revolving Borrowers. The
Revolving Borrowers will be credited with all amounts received by the Agent
from the Companies or from others for the Revolving Borrowers' account,
including, as above set forth, all amounts received by the Agent in payment of
assigned Accounts and such amounts will be applied to payment of the
Obligations. In no event shall prior recourse to any Accounts or other security
granted to or by the Revolving Borrowers be a prerequisite to the Agent's right
to demand payment of any Obligation. Further, it is understood that the Agent
shall have no obligation whatsoever to perform in any respect any of the
Revolving Borrowers' contracts, lease agreements or obligations relating to the
Accounts.
3.7. After the end of each month, the Agent shall promptly send the
Revolving Borrowers a statement showing the accounting for the charges, loans,
advances and other transactions occurring between the Agent and the Revolving
Borrowers during that month. The monthly statements shall be deemed correct
and binding upon the Revolving Borrowers and shall constitute an account stated
between the Revolving Borrowers and the Agent unless the Agent receives a
written statement of the exceptions within thirty (30) days of the date of the
monthly statement.
3.8. In the event the total balance of Revolving Loans (after giving
effect to all amounts which may be charged to the Revolving Borrowers'
Revolving Loan Account hereunder) plus outstanding Letters of Credit exceed
the applicable Borrowing Base or the Revolving Line of Credit (herein the
amount of any such excess shall be referred to as the "Excess"), such Excess
shall be due immediately upon the Agent's demand therefor.
SECTION 4. TERM LOANS
4.1. The Term Loan I Borrowers and the Term Loan II Borrowers hereby
agree to execute and deliver to the Agent the Promissory Notes, in the form of
Exhibits A and B
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attached hereto, to evidence Term Loan I and Term Loan II, respectively, to be
extended by the Agent.
4.2. Upon receipt of such Promissory Notes, the Agent hereby agrees to
extend Term Loan I to the Term Loan I Borrowers in the principal amount of
$10,000,000.00 and Term Loan II to the Term Loan II Borrowers in the principal
amount of $5,000,000.00.
4.3. The principal amount of Term Loan I shall be repaid to the Agent
by the Term Loan I Borrowers by (i) 35 equal monthly principal installments of
$100,000.00 each, followed by (ii) one (1) payment of the outstanding balance
on January 31, 2000, whereof the first installment shall be due and payable on
March 1, 1997, and subsequent installments shall be due and payable on the
first business day of each month thereafter until paid in full. The principal
amount of Term Loan II shall be repaid to the Agent by the Term Loan II
Borrowers by (i) 23 equal monthly principal installments of $140,000.00 each,
followed by (ii) one (1) payment of the outstanding principal balance on the
24th month, whereof the first installment shall be due and payable on January
1, 1998 and the subsequent installments shall be due and payable on the first
business day of each month thereafter until paid in full.
4.4. In the event this Agreement or the Line of Credit is terminated
by either the Agent or the Term Loan I Borrowers and/or the Term Loan II
Borrowers for any reason whatsoever, the Term Loans shall become due and
payable on the effective date of such termination notwithstanding any provision
to the contrary in the Promissory Notes or this Agreement.
4.5. The Term Loan I Borrowers and the Term Loan II Borrowers may
prepay at any time, at their option, in whole or in part, the Term Loans,
provided that on each such prepayment, the Term Loan I Borrowers and Term Loan
II Borrowers shall pay: (i) accrued interest on the principal so prepaid to
the date of such prepayment and (ii) the Prepayment Premium, if any.
4.6. In the event the Parent on a consolidated basis has Surplus Cash
in any fiscal year beginning June 30, 1997, the Companies must make a Mandatory
Prepayment of the Term Loans by an amount equal to fifty percent (50%) of said
Surplus Cash.
4.7. Each Mandatory Prepayment and any other prepayment shall be
applied to the Term Loans in the inverse order of maturity thereof, with such
amounts initially applied to Term Loan II, and upon repayment in full thereof
to Term Loan I.
4.8. The Companies shall make all payments of principal and interest
on the Term Loans by means of wire transfer of immediately available funds to
the Agent for the benefit of the Lenders; provided, however, in the event the
Agent fails to receive any such payment of principal or interest on the
scheduled payment date, then each of the Companies hereby authorizes the Agent
to charge the Revolving Loan Accounts of the Revolving Borrowers with the
amount of all amounts due under this Section 4 as such amounts become due. The
Companies confirm that any charges which the Agent may so make to the Revolving
Loan
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Accounts of the Revolving Borrowers as herein provided will be made as an
accommodation to the Companies and solely at the Agent's discretion.
SECTION 5. LETTERS OF CREDIT
In order to assist the Revolving Borrowers in establishing or opening
documentary or standby Letters of Credit with an Issuing Bank to cover the
purchase of inventory, equipment or otherwise, the Revolving Borrowers have
requested the Agent to join in the applications for such Letters of Credit,
and/or guarantee payment or performance of such Letters of Credit and any
drafts or acceptances thereunder through the issuance of the Letters of Credit
Guaranty, thereby lending the Agent's credit to the Revolving Borrowers and the
Agent has agreed to do so. These arrangements shall be handled by the Agent
subject to the terms and conditions set forth below.
5.1. The amount, purpose and extent of the documentary and standby
Letters of Credit and changes or modifications thereof by the Revolving
Borrowers and/or the Issuing Bank of the terms and conditions thereof shall in
all respects be subject to the prior approval of the Agent in the exercise of
its reasonable discretion provided however, that: (a) in no event may the
aggregate amount of all such outstanding documentary and standby Letters of
Credit exceed, in the aggregate, at any one time (i) $500,000.00 for
documentary letters of credit for the importation of inventory and (ii)
$500,000.00 for standby letters of credit for business purposes unrelated to
the purchase of Inventory; (b) the Letters of Credit and all documentation in
connection therewith shall be in form and substance satisfactory to the
Revolving Borrowers, the Agent and the Issuing Bank; (c) the Letters of Credit
Line of Credit shall be deemed to be a subline within the Revolving Line of
Credit and all Letters of Credit shall be (i) within the Revolving Line of
Credit, (ii) within Availability and (iii) reserved dollar for dollar from
Availability at 100% of face amount as an Availability Reserve; and (d) such
Letters of Credit shall expire on or before the Maturity Date (as it may be
extended).
5.2. The Agent shall have the right, without notice to the Revolving
Borrowers, to charge the Revolving Borrowers' Revolving Loan Account on the
Agent's books with the amount of any and all indebtedness, liability or
obligation of any kind incurred by the Agent under the Letters of Credit
Guaranty at the earlier of (a) payment by the Agent under the Letters of Credit
Guaranty, or (b) the occurrence of an Event of Default. Any payment by the
Agent pursuant to any Letter of Credit Guaranty or any fees, charges or
amounts charged to Revolving Borrowers' Revolving Loan Account pursuant to this
Section 5 or paragraphs 8.3 and 8.4 hereof shall be deemed a Revolving Loan
hereunder and shall incur interest at the rate provided in Section 8, paragraph
8.1 of this Agreement.
5.3. Each of the Companies unconditionally agrees to indemnify the
Agent and the Lenders and hold the Agent and the Lenders harmless from any and
all loss, claim or liability incurred by the Agent or the Lenders arising from
any transactions or occurrences relating to Letters of Credit established or
opened for the Revolving Borrowers' account, the collateral relating thereto
and any drafts or acceptances thereunder, and all Obligations
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thereunder, including any such loss or claim due to any action taken by any
Issuing Bank, other than for any such loss, claim or liability arising out of
the gross negligence or willful misconduct by the Agent under the Letters of
Credit Guaranty. Each of the Companies further agrees to hold the Agent and
the Lenders harmless from any errors or omission, negligence or misconduct by
the Issuing Bank. The Companies' unconditional obligation to the Agent
hereunder shall not be modified or diminished for any reason or in any manner
whatsoever, other than as a result of the Agent's gross negligence or willful
misconduct. Each of the Companies agrees that any charges incurred by the
Agent for the Companies account by the Issuing Bank shall be conclusive on the
Agent and may be charged to the Revolving Loan Account of the Revolving
Borrowers.
5.4. The Agent shall not be responsible for: the existence,
character, quality, quantity, condition, packing, value or delivery of the
goods purporting to be represented by any documents; any difference or
variation in the character, quality, quantity, condition, packing, value or
delivery of the goods from that expressed in the documents; the validity,
sufficiency or genuineness of any documents or of any endorsements thereon,
even if such documents should in fact prove to be in any or all respects
invalid, insufficient, fraudulent or forged; the time, place, manner or order
in which shipment is made; partial or incomplete shipment, or failure or
omission to ship any or all of the goods referred to in the Letters of Credit
or documents; any deviation from instructions; delay, default, or fraud by the
shipper and/or anyone else in connection with the Collateral or the shipping
thereof; or any breach of contract between the shipper or vendors and the
Revolving Borrowers. Furthermore, without being limited by the foregoing, the
Agent shall not be responsible for any act or omission with respect to or in
connection with any Collateral.
5.5. Each of the Revolving Borrowers agrees that any action taken by
the Agent, if taken in good faith, or any action taken by any Issuing Bank,
under or in connection with the Letters of Credit, the guarantees, the drafts
or acceptances, or the Collateral, shall be binding on the Revolving Borrowers
and shall not put the Agent in any resulting liability to the Revolving
Borrowers. In furtherance thereof, the Agent shall have the full right and
authority to clear and resolve any questions of non-compliance of documents; to
give any instructions as to acceptance or rejection of any documents or goods;
to execute any and all steamship or airways guaranties (and applications
therefore), indemnities or delivery orders; to grant any extensions of the
maturity of, time of payment for, or time of presentation of, any drafts,
acceptances, or documents; and to agree to any amendments, renewals,
extensions, modifications, changes or cancellations of any of the terms or
conditions of any of the applications, Letters of Credit, drafts or
acceptances; all in the Agent's sole name, and the Issuing Bank shall be
entitled to comply with and honor any and all such documents or instruments
executed by or received solely from the Agent, all without any notice to or any
consent from the Revolving Borrowers.
5.6. Without the Agent's express consent and endorsement in writing,
each of the Revolving Borrowers agree (a) not to execute any and all
applications for steamship or airway guaranties, indemnities or delivery
orders; to grant any extensions of the maturity of, time of payment for, or
time of presentation of, any drafts, acceptances or documents; or to agree to
any amendments, renewals, extensions, modifications, changes or cancellations
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of any of the terms or conditions of any of the applications, Letters of
Credit, drafts or acceptances; and (b) after the occurrence of an Event of
Default which is not cured within any applicable grace period, if any, or
waived by the Agent, not to (i) clear and resolve any questions of
non-compliance of documents, or (ii) give any instructions as to acceptance or
rejection of any documents or goods.
5.7. Each of the Revolving Borrowers agrees that any necessary import,
export or other licenses or certificates for the import or handling of the
Collateral will have been promptly procured; all foreign and domestic
governmental laws and regulations in regard to the shipment and importation of
the Collateral, or the financing thereof will have been promptly and fully
complied with; and any certificates in that regard that the Agent may at any
time request will be promptly furnished. In this connection, each of the
Revolving Borrowers and the Parent warrant and represent that all shipments
made under any such Letters of Credit are in accordance with the laws and
regulations of the countries in which the shipments originate and terminate,
and are not prohibited by any such laws and regulations. The Revolving
Borrowers assume all risk, liability and responsibility for, and agrees to pay
and discharge, all present and future local, state, federal or foreign taxes,
duties, or levies. Any embargo, restriction, laws, customs or regulations of
any country, state, city, or other political subdivision, where the Collateral
is or may be located, or wherein payments are to be made, or wherein drafts may
be drawn, negotiated, accepted, or paid, shall be solely the Revolving
Borrowers' risk, liability and responsibility.
5.8. Upon any payments made to the Issuing Bank under the Letter of
Credit Guaranty, the Agent shall acquire by subrogation, any rights, remedies,
duties or obligations granted or undertaken by the Revolving Borrowers to the
Issuing Bank in any application for Letters of Credit, any standing agreement
relating to Letters of Credit or otherwise, all of which shall be deemed to
have been granted to the Agent and apply in all respects to the Agent and shall
be in addition to any rights, remedies, duties or obligations contained herein.
SECTION 6. COLLATERAL
6.1. As security for the prompt payment in full of all loans and
advances made and to be made to the Companies from time to time by the Agent
pursuant hereto, as well as to secure the payment in full of the other
Obligations, the Companies hereby and pursuant to the Security Agreements,
mortgages/deeds of trust and other collateral documents provided for herein,
pledge and grant to the Agent a continuing general lien upon and security
interest in all of their:
(a) present and hereafter acquired Inventory;
(b) present and hereafter acquired Equipment, except for the
Equipment on SCC's premises at Sarasota, Florida securing the
Industrial Revenue Bonds;
(c) present and future Accounts;
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(d) present and future Documents of Title;
(e) present and future General Intangibles;
(f) Real Estate (except that the Agent, for the benefit of Lenders,
shall within sixty (60) days after the Closing Date be granted a
second lien upon the property located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, subject to the Industrial
Revenue Bonds mortgage and, once it is purchased, the property
located at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
subject to a Purchase Money Lien pursuant to the Agreement of
Purchase and Sale dated as of September 6, 1996 between SCC and
Olympus Properties, Inc.;
(g) now or hereafter issued capital stock of SCH, SCA, PMC, CLI, SCC,
and SCM (as to 65%);
(h) Other Collateral; and
(i) the proceeds of any and all of the foregoing.
provided, however, that the Collateral shall not include any license or
lessee's interest in leased equipment to the extent the same may not be
assigned without the consent of the licensor, licensee or lessor.
6.2. The security interests granted hereunder shall extend and attach
to:
(a) All Collateral which is presently in existence and which is owned
by the Companies or in which the Companies have any interest, whether held by
the Companies or others for their account, and, if any Collateral is Equipment,
whether the Companies' interest in such Equipment is as owner or lessee or
conditional vendee;
(b) All Equipment whether the same constitutes personal property or
fixtures, including, but without limiting the generality of the foregoing, all
dies, jigs, tools, benches, molds, tables, accretions, component parts thereof
and additions thereto, as well as all accessories, motors, engines and
auxiliary parts used in connection with or attached to the Equipment; and
(c) All Inventory and any portion thereof which may be returned,
rejected, reclaimed or repossessed by either the Agent or the Companies from
the Companies' customers, as well as to all supplies, goods, incidentals,
packaging materials, labels and any other items which contribute to the
finished goods or products manufactured or processed by the Companies, or to
the sale, promotion or shipment thereof.
6.3. The Companies agree to safeguard, protect and hold all Inventory
for the Agent's account and make no disposition thereof, provided that the
Companies may sell and/or lease their Inventory in the ordinary course of the
business of the Companies and
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as further provided herein. Absent the occurrence of an Event of Default and
notice from the Agent to the Companies to the contrary, as provided for below,
any Inventory may be sold and shipped by the Companies to their customers in
the ordinary course of the Companies' business, on open account and on terms
currently being extended by the Companies to their customers, provided that all
proceeds of all sales (including cash, accounts receivable, checks, notes,
instruments for the payment of money and similar proceeds) are forthwith
transferred, endorsed, and turned over and delivered to the Agent in accordance
with paragraph 3.4 of Section 3 of this Agreement. The Agent shall have the
right to withdraw this permission at any time upon the occurrence of an Event
of Default and until such time as such Event of Default is waived or cured to
the Agent's satisfaction, in which event no further disposition shall be made
of the Inventory by the Companies without the Agent's prior written approval.
Cash sales or sales of inventory in which a lien upon, or security interest in,
Inventory is retained by the Companies shall be made by the Companies only with
the approval of the Agent; provided that the Companies may make cash and credit
card sales in the ordinary course of their business in the aggregate amount of
$100,000 in any fiscal year; provided, further, that the proceeds of any sales
or sales of inventory for cash and credit cards in excess of $100,000 shall not
be commingled with the Companies' other property, but shall be segregated, held
by the Companies in trust for the Agent as the Agent's exclusive property, and
shall be delivered immediately by the Companies to the Agent in the identical
form received by the Companies by deposit to the Depository Accounts. Upon the
sale, exchange, or other disposition of Inventory, as herein provided, the
security interest in the Companies' Inventory provided for herein shall,
without break in continuity and without further formality or act, continue in,
and attach to, all proceeds, including any instruments for the payment of
money, accounts receivable, contract rights, documents of title, shipping
documents, chattel paper and all other cash and non-cash proceeds of such sale,
exchange or disposition. As to any such sale, exchange or other disposition,
the Agent shall have all of the rights of an unpaid seller, including stoppage
in transit, replevin, rescission and reclamation.
6.4. The Companies agree at their own cost and expense to keep the
Equipment in as good and substantial repair and condition as the same is now or
at the time the lien and security interest granted herein shall attach thereto,
reasonable wear and tear excepted, making any and all repairs and replacements
when and where necessary. The Companies also agree to safeguard, protect and
hold all Equipment for the Agent's account and make no disposition thereof
unless the Companies first obtain the prior written approval of the Agent. Any
sale, exchange or other disposition of any Equipment shall only be made by the
Companies with the prior written approval of the Agent, and the proceeds of any
such sales shall not be commingled with the Companies' other property, but
shall be segregated, held by the Companies in trust for the Agent as the
Agent's exclusive property, and shall be delivered immediately by the Companies
to the Agent in the identical form received by the Companies by deposit to the
Depository Accounts. Upon the sale, exchange, or other disposition of the
Equipment, as herein provided, the security interest provided for herein shall,
without break in continuity and without further formality or act, continue in,
and attach to, all proceeds, including any instruments for the payment of
money, accounts receivable, contract rights, documents of title, shipping
documents, chattel paper and all other cash and non-cash proceeds of such
sales, exchange or disposition. As to any such
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sale, exchange or other disposition, the Agent shall have all of the rights of
an unpaid seller, including stoppage in transit, replevin, rescission and
reclamation. Notwithstanding anything hereinabove contained to the contrary,
the Companies may sell, exchange or otherwise dispose of obsolete Equipment or
Equipment no longer needed in the Companies' operations, provided, however,
that (a) the then book value of the Equipment so disposed of does not exceed
$750,000 in the aggregate in any fiscal year and (b) the proceeds of such sales
or dispositions are delivered to the Agent for application first to Term Loan
II and then to Term Loan I, without premium, penalty, or termination fee,
except that the Companies may retain and use such proceeds to purchase
forthwith replacement Equipment which the Companies determine in their
reasonable business judgment to have a collateral value at least equal to the
Equipment so disposed of or sold, provided, however, that the aforesaid right
shall automatically cease upon the occurrence of an Event of Default which is
not cured within any applicable grace period or waived.
6.5. The rights and security interests granted to the Agent hereunder
are to continue in full force and effect, notwithstanding the termination of
this Agreement or the fact that the Revolving Loan Account maintained in the
Companies' name on the books of the Agent may from time to time be temporarily
in a credit position, until the final payment in full to the Agent of all
Obligations and the termination of this Agreement. Any delay, or omission by
the Agent to exercise any right hereunder, shall not be deemed a waiver
thereof, or be deemed a waiver of any other right, unless such waiver shall be
in writing and signed by the Agent. A waiver on any one occasion shall not be
construed as a bar to or waiver of any right or remedy on any future occasion.
6.6. To the extent that the Obligations are now or hereafter secured
by any assets or property other than the Collateral or by the guarantee,
endorsement, assets or property of any other person, then the Agent shall have
the right in its sole discretion to determine which rights, security, liens,
security interests or remedies the Agent shall at any time pursue, foreclose
upon, relinquish, subordinate, modify or take any other action with respect to,
without in any way modifying or affecting any of them, or any of the Agent's
rights hereunder.
6.7. Any reserves or balances to the credit of the Companies and any
other property or assets of the Companies in the possession of the Agent may be
held by the Agent as security for any Obligations and applied in whole or
partial satisfaction of such Obligations when due. The liens and security
interests granted herein and any other lien or security interest the Agent may
have in any other assets of the Companies, shall secure payment and performance
of all now existing and future Obligations. the Agent may in its discretion
charge any or all of the Obligations to the Revolving Loan Account of the
Companies when due.
6.8. This Agreement and the obligation of the Companies to perform all
of their covenants and obligations hereunder are further secured by a mortgage,
deed of trust or assignment on the Real Estate.
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6.9. The Companies shall give to the Agent from time to time such
mortgage, deed of trust or assignment on the Real Estate or real estate
acquired after the date hereof as the Agent shall require to obtain a valid
first lien thereon or second lien, as contemplated in paragraph 6.1(f) subject
only to those exceptions of title as set forth in future title insurance
policies that are satisfactory to the Agent.
6.10. The Parent and the Companies shall give to the Agent, and/or
shall cause the appropriate party to give to the Agent, from time to time such
pledge or security agreements with respect to General Intangibles (now or
hereafter acquired), including without limitation, the patents, trademarks and
copyrights owned by the Companies as set forth on Schedule 2 hereto, and
capital stock (now or hereafter issued) of the Companies, SCA, CLI, SCM (as to
65%) as the Agent shall require to obtain valid first liens thereon. In
furtherance of the foregoing, the Parent and the Companies shall provide timely
notice to the Agent of any additional United States patents, trademarks,
tradenames, service marks, copyrights, brand names, trade names, logos and
other trade designations acquired or applied for subsequent to the Closing Date
and the Companies shall execute such documentation as the Agent may reasonably
require to obtain and perfect its lien thereon. Additionally, the Companies
and the Parent shall maintain the status and value of their patents,
trademarks, tradenames, service marks, copyrights, brand names, trade names,
logos and other trade designations at all times and in all material respects,
including without limitation, those patents, trademarks and copyrights of the
Companies identified on Schedule 2 hereto; provided, however, the Companies and
the Parent need not maintain any of the foregoing which have ceased to have any
material value.
SECTION 7. REPRESENTATIONS, WARRANTIES AND COVENANTS
7.1. Each of the Companies and the Parent hereby warrant and represent
and/or covenant that: (i) the fair value of the Companies' assets exceeds the
book value of the Companies' liabilities; (ii) the Companies are generally able
to pay their debts as they become due and payable; and (iii) the Companies do
not have unreasonably small capital to carry on their business as it is
currently conducted absent extraordinary and unforeseen circumstances. The
Companies and the Parent further warrant and represent that: (a) except for the
Permitted Encumbrances, the security interests granted herein constitute and
shall at all times constitute the first and only liens on the Collateral; (b)
Schedule 1 hereto correctly and completely sets forth the Companies' and the
Parent's chief executive offices and all of the Companies' Collateral locations
and after filing of financing statements in the applicable filing clerks office
in the states listed on the Perfection Certificate, this Agreement creates a
valid, perfected, first priority security interest on the Collateral subject to
the UCC, except for the Permitted Encumbrances; (c) except for the Permitted
Encumbrances, the Companies are or will be at the time additional Collateral is
acquired by it, the absolute owner of the Collateral with full right to pledge,
sell, consign, transfer and create a security interest therein, free and clear
of any and all claims or liens in favor of others; (d) the Companies will, at
their expense, forever warrant and, at the Agent's request, defend the same
from any and all claims and demands of any other person other than the
Permitted Encumbrances; (e) the Companies will not grant, create or permit to
exist, any
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lien upon or security interest in the Collateral, or any proceeds thereof, in
favor of any other person other than the holders of the Permitted Encumbrances;
(f) the representations and warranties in the Perfection Certificate are true
and correct; (g) the Equipment does not comprise a part of the Inventory of the
Companies and that the Equipment is and will only be used by the Companies in
their business and will not be held for sale or lease, or removed from their
premises, or otherwise disposed of by the Companies without the prior written
approval of Agent except as otherwise permitted in paragraph 6.4 of Section 6
of this Agreement; and (h) except as may be specified in writing by a Company
to the Agent, the appraisals referenced in paragraph 2.1(s) of Section 2 of
this Agreement do not include any leased molds, equipment or machinery, or any
molds, equipment or machinery securing the Industrial Revenue Bonds.
7.2. The Parent hereby warrants and represents and/or covenants that:
(a) the Parent owns all the issued and outstanding stock of SCH, (b) SCH owns
all the issued and outstanding stock of SCA, PMC, CLI, and SCC, (c) SCA owns
all the issued and outstanding shares of SCM (except for one share held by
SCH), (d) SCM owns all the issued and outstanding shares of NP (except for one
share held by SCA), (e) CLI will guaranty the Obligations of the Companies by
executing a Guaranty in the form attached hereto as Exhibit D and will secure
its obligations under its Guaranty by executing an Affiliate Security Agreement
in the form attached hereto as Exhibit H, and (f) upon a Default or Event of
Default, at the Agent's request, a consultant will be retained or a responsible
officer satisfactory to the Agent will be appointed within sixty (60) days of
any uncured Default or Event of Default, to assist in the sale of certain
assets, business and subsidiaries such that net proceeds from these
transactions will be used to reduce the Obligations (i) under the Revolving
Line of Credit with respect to any assets sold which secure the Revolving Line
of Credit; and, ii) any excess proceeds from the sale of any other assets will
be applied to the Term Loans in inverse order of maturity.
7.3. The Parent hereby represents and warrants and/or covenants that
it has filed all reports, schedules, forms, statements and other documents with
the Securities and Exchange Commission ("SEC") and New York Stock Exchange
("NYSE") since November 1993. As of their respective dates, the Parent's SEC
documents complied in all respects with the requirements of the Securities Act
of 1933, as amended, and the Securities Exchange Act of 1934, as amended, and
as applicable, and the rules and regulations of the SEC and NYSE promulgated
thereunder, and none of the Parent's SEC documents, when filed, contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
7.4. Each of the Companies and the Parent agree to maintain books and
records pertaining to the Collateral in such detail, form and scope as the
Agent shall reasonably require. Each of the Companies and the Parent agree
that the Agent or its agents may enter upon the Companies' or the Parent's
premises at any time during normal business hours, and from time to time, for
the purpose of inspecting the Collateral, and any and all records pertaining
thereto. Each of the Companies and the Parent agree to afford the Agent thirty
(30) days prior written notice of any change in the location of any Collateral,
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other than to locations, that as of the date hereof, are known to the Agent and
at which the Agent has filed financing statements and otherwise fully perfected
its liens thereon. Each of the Companies and the Parent are also to advise the
Agent promptly, in sufficient detail, of any material adverse change relating
to the type, quantity or quality of the Collateral or on the security interests
granted to the Agent therein.
7.5. Each of the Companies and the Parent agree to: execute and
deliver to the Agent, from time to time, solely for the Agent's convenience in
maintaining a record of the Collateral, such written statements, and schedules
as the Agent may reasonably require, designating, identifying or describing the
Collateral pledged to the Agent hereunder. The failure of any of the
Companies' or the Parent, however, to promptly give the Agent such statements,
or schedules shall not affect, diminish, modify or otherwise limit the Agent's
security interests in the Collateral.
7.6. Each of the Companies and the Parent agree to comply with the
requirements of all state and federal laws in order to grant to the Agent valid
and perfected first security interests in the Collateral, subject only to the
Permitted Encumbrances. The Agent is hereby authorized by each of the
Companies and the Parent to file any financing statements covering the
Collateral whether or not each of the Companies' or the Parent's signature
appears thereon. Each of the Companies and the Parent agree to do whatever the
Agent may reasonably request, from time to time, by way of: searching records,
filing notices of liens, financing statements, amendments, renewals and
continuations thereof; cooperating with the Agent's custodians; keeping stock
records; transferring proceeds of Collateral to the Agent's possession; and
performing such further acts as the Agent may reasonably require in order to
effect the purposes of this Agreement.
7.7. (a) Each of the Companies and the Parent agree to maintain
insurance on the Real Estate, Equipment and Inventory (wherever located) under
such policies of insurance, with such insurance companies, in such reasonable
amounts and covering such insurable risks as are at all times reasonably
satisfactory to the Agent. All policies covering the Real Estate, Equipment
and Inventory are, subject to the rights of any holders of Permitted
Encumbrances holding claims senior to the Agent, to be made payable to the
Agent, in case of loss, under a standard non-contributory "mortgagee", "lender"
or "secured party" clause and are to contain such other provisions as the Agent
may require to fully protect the Agent's interest in the Real Estate, Inventory
and Equipment and to any payments to be made under such policies. All original
policies or true copies thereof are to be delivered to the Agent, with the loss
payable endorsement in the Agent's favor, and shall provide for not less than
thirty (30) days prior written notice to the Agent of the exercise of any right
of cancellation. At the Companies' or the Parent's request, or if the
Companies or the Parent fail to maintain such insurance, the Agent may arrange
for such insurance, but at the Companies' or the Parent's expense and without
any responsibility on the Agent's part for: obtaining the insurance, the
solvency of the insurance companies, the adequacy of the coverage, or the
collection of claims. Upon the occurrence of an Event of Default which is not
waived or cured to the Agent's satisfaction, the Agent shall, subject to the
rights of any holders of Permitted Encumbrances holding claims senior to the
Agent, have the sole right, in the name of the Agent or the Companies or the
Parent, to file claims
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under any insurance policies, to receive, receipt and give acquittance for any
payments that may be payable thereunder, and to execute any and all
endorsements, receipts, releases, assignments, reassignments or other documents
that may be necessary to effect the collection, compromise or settlement of any
claims under any such insurance policies.
(b)(i) In the event of any loss or damage by fire or other casualty,
insurance proceeds relating to Inventory shall first reduce the Companies'
Revolving Loan and then the Term Loans;
(ii) In the event any part of the Companies's Real Estate or Equipment
is damaged by fire or other casualty and the insurance proceeds for such damage
or other casualty (the "Proceeds") are less than or equal to $100,000.00, the
Agent shall promptly apply such Proceeds to reduce the Companies's outstanding
balances under the Revolving Loan Account.
(iii) As long as an Event of Default has not occurred (which is not
cured to the Agent's satisfaction), the Companies have sufficient business
interruption insurance to replace the lost profits of any of the Companies'
facilities, and the Proceeds are in excess of $100,000.00, the Companies may
elect (by delivering written notice to the Agent) to replace, repair or restore
such Real Estate or Equipment to substantially the equivalent condition prior
to such fire or other casualty as set forth herein. If the Companies do not,
or cannot, elect to use the Proceeds as set forth above, the Agent may, subject
to the rights of any holders of Permitted Encumbrances holding claims senior to
the Agent, apply the Proceeds to the payment of the Obligations in such manner
and in such order as the Agent may reasonably elect.
(iv) If the Companies elects to use the Proceeds for the repair,
replacement or restoration of any Real Estate or Equipment, and there is then
no Event of Default, i) proceeds of insurance on Equipment and Real Estate in
excess of $100,000.00 will be applied to the reduction of the Revolving Loans
of the Companies and ii) the Agent may set up a reserve against Availability
for an amount equal to the proceeds referred to in clause i) hereof. The
reserve will be reduced dollar-for-dollar upon receipt of non-cancelable
executed purchase orders, delivery receipts or contracts for the replacement,
repair or restoration of Equipment or the Real Estate and disbursements in
connection therewith. Prior to the commencement of any restoration, repair or
replacement of Real Estate, the Companies shall provide the Agent with a
restoration plan and a total budget certified by an independent third party
experienced in construction costing. If there are insufficient Proceeds to
cover the cost of restoration as so determined, the Companies shall be
responsible for the amount of any such insufficiency, prior to the commencement
of restoration and shall demonstrate evidence of such before the reserve will
be reduced. Completion of restoration shall be evidenced by a final,
unqualified certification of the design architect employed, if any; an
unconditional Certificate of Occupancy, if applicable; such other certification
as may be required by law; or if none of the above is applicable, a written
good faith determination of completion by the Companies (herein collectively
the "Completion"). Upon Completion, any remaining reserve as established
hereunder will be automatically released.
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(v) Each of the Companies and the Parent agree to pay any reasonable
costs, fees or expenses which the Agent may reasonably incur in connection
herewith.
7.8. Each of the Companies and the Parent agree to pay, when due, all
taxes, assessments, claims and other charges (herein "taxes") lawfully levied
or assessed upon the Companies or the Collateral, and if such taxes remain
unpaid after the date fixed for the payment thereof, the Agent may, on the
Companies' behalf, pay such taxes, and the amount thereof shall be an
Obligation secured hereby and due to the Agent on demand unless: (i) such taxes
are being diligently contested in good faith by the Companies by appropriate
proceedings and (ii) the Companies establish such reserves as may be required
by GAAP or, in the alternative or in addition thereto, the Agent establishes an
Availability Reserve in such amount as the Agent may determined in its
reasonable discretion, or (iii) if any lien shall be claimed thereunder (x) for
taxes due the United States of America or any state thereof having similar tax
priority status, or (y) which in the Agent's opinion might create a valid
obligation having priority over the rights granted to the Agent herein,
excluding inchoate property tax liens.
7.9. Each of the Companies and the Parent: (a) agree to comply with
all acts, rules, regulations and orders of any legislative, administrative or
judicial body or official, which the failure to comply with would have a
material and adverse impact on the Collateral, or any material part thereof, or
on the operation of the Companies' business; provided that the Companies may
contest any acts, rules, regulations, orders and directions of such bodies or
officials in any reasonable manner which will not, in the Agent's reasonable
opinion, materially and adversely affect the Agent's rights or priority in the
Collateral; (b) shall qualify to do business or shall provide the Agent with
reasonable evidence that they are exempt from any such qualifications and/or
filing requirement for any state requiring the filing of a business activity
report or similar document in order for the Companies to file a claim or other
judicial remedy with respect to any of their account debtors in such state,
provided that the aggregate amount of such sales at any time outstanding in any
such state exceed $100,000, provided, however, in the event the Company or
Companies are unable to provide the Agent with reasonable evidence of exemption
from such qualification and/or filing requirement, then such Company or
Companies shall qualify to do business or file a business activity report or
similar document within 30 days in such state unless otherwise waived by the
Agent or Required Lenders; (c) agree to comply with all environmental statutes,
acts, rules, regulations or orders as presently existing or as adopted or
amended in the future applicable to the ownership and/or use of their real
property and operation of their business which the failure to comply with would
have a material and adverse impact on the Collateral, or any material part
thereof, or on the operation of the business of the Companies. The Companies
and the Parent hereby agree to indemnify the Agent and each Lender and agree to
defend and hold the Agent and each Lender harmless from and against any and all
loss, damage, claim, liability, injury or expense which the Agent and each
Lender may sustain or incur (other than solely as a result of the physical
actions of the Agent on the Companies' premises) in connection with: any claim
or expense asserted against the Agent or any Lender as a result of any
environmental pollution, hazardous material or environmental clean-up of the
Companies' real property; or any claim or expense which results from the
Companies' operations (including, but not
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limited to, the Companies' off-site disposal practices); any claim or expense
relating to the Revolving Borrowers' Inventory and/or Equipment and the
Companies and the Parent further agree that this indemnification shall survive
termination of this Agreement as well as the payment of all Obligations or
amounts payable hereunder; and (d) shall not be deemed to have breached any
provision of this paragraph 7.9 if (i) the failure to comply with the
requirements of this paragraph 7.9 resulted from good faith error or innocent
omission, (ii) the Companies promptly commence and diligently pursue a cure of
such breach, (iii) such failure is cured within fifteen (15) business days
following the Companies' receipt of notice of such failure, and (iv) such
failure has not resulted in a material adverse effect on the business,
financial condition or operations of the Companies or on the Collateral. Upon
receipt by the Parent or any of the Companies of any notice of non-compliance
with any applicable environmental rules or regulation, of any required
expenditures for compliance, any spill or omission or other regulated "event",
or any claim resulting from the Companies' business or practices or relating to
the Collateral, the Companies shall establish such reserves as may be required
by GAAP or, in the alternative or in addition thereto, the Agent may establish
an Availability Reserve in such amount as the Agent may require in its
reasonable discretion.
7.10. Until termination of this Agreement and payment and satisfaction
of all Obligations due hereunder, each of the Companies and the Parent agree
that, unless the Agent shall have otherwise consented in writing, the Companies
and the Parent will furnish to the Agent: (a) within ninety (90) days after the
end of each fiscal year of the Parent, an audited Consolidated Balance Sheet
and unaudited Consolidating Balance Sheet as at the close of such year, and
consolidated statements of profit and loss, cash flow and changes in
stockholders' equity of the Parent, the Companies and all Subsidiaries for such
year, audited by independent public accountants selected by the Parent and
satisfactory to the Agent; (b) within sixty (60) days after the end of each
fiscal quarter a Consolidated Balance Sheet and Consolidating Balance Sheet as
at the end of such period and consolidated statements of profit and loss, cash
flow and changes in stockholders' equity of the Parent and the Companies and
all Subsidiaries, certified by an authorized financial or accounting officer of
the Companies and the Parent; (c) within forty-five (45) days after the end of
each month a Consolidated Balance Sheet and Consolidating Balance Sheet as at
the end of such period and statements of profit and loss, and cash flows of the
Companies and the Parent and all Subsidiaries for such period, certified by an
authorized financial or accounting officer of the Parent together with
comparisons of such financial information to (i) the financial projections
provided to the Agent for the corresponding fiscal period and (ii) the prior
year's financial statements as herein described for the corresponding fiscal
period in such prior year (herein collective, "The Comparative Financial
Reports"); (d) promptly, any copies of other financial statements or reports
prepared for the Subordinated Creditors; (e) within thirty (30) days after the
end of each fiscal year, board approved monthly projections for the succeeding
fiscal year including a Consolidated Balance Sheet and Consolidating Balance
Sheets, statements of profit and loss and cash flows of the Company; and (f)
from time to time, such further information regarding the business affairs and
financial condition of the Companies, the Parent and their Subsidiaries and
Affiliates as the Agent may reasonably request, including without limitation
annual cash flow projections in form satisfactory to the Agent. Each financial
statement which the Parent and the Companies are required to
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submit hereunder must be accompanied by an officer's certificate, signed by the
President, Chief Financial Officer, Vice President, Controller, or Treasurer of
the Parent, pursuant to which any one such officer must certify that: (i) the
financial statement(s) fairly represent the Companies' and the Parent's
consolidated financial condition at the end of the particular accounting
period, as well as the Companies' and the Parent's consolidated operating
results during such accounting period, subject to year-end audit adjustments;
(ii) during the particular accounting period (y) there has been no Default or
Event of Default under this Agreement or any agreements with the Subordinated
Creditors, provided however that, if any such officer has knowledge that any
such Default or Event of Default has occurred during such period, the existence
of and a detailed description of same shall be set forth in such officer's
certificate and (z) the Companies and the Parent have not received any notice
of cancellation with respect to their property insurance policies; and (iii)
the exhibits attached to such financial statement(s) constitute detailed
calculations showing compliance with all financial covenants contained in this
Agreement. Any Consolidating Balance Sheet called for above may present SCA,
SCM and NP as one entity.
7.11. The Parent shall maintain, on a quarterly basis at the end of
each quarter, a Net Worth of not less than $12,500,000.00 prior to giving
effect to any FAS 121 write-downs and $9,500,000 after giving effect to any
special non-recurring charges pursuant to FAS 121 or relating to plant
closures and discontinued operations through September 30, 1997.
7.12. Until termination of this Agreement and payment and satisfaction
of all Obligations due hereunder, each of the Companies and the Parent agree
that, without the prior written consent of the Agent, except as otherwise
herein provided, each of the Companies and the Parent will not:
A. Mortgage, assign, pledge, transfer or otherwise permit any lien,
charge, security interest, encumbrance or judgment, (whether as a
result of a purchase money or title retention transaction, or
other security interest, or otherwise) to exist on any of their
assets or goods, whether real, personal or mixed, whether now
owned or hereafter acquired, except for the Permitted
Encumbrances;
B. Incur or create any Indebtedness other than the Permitted
Indebtedness;
C. Borrow any money on the security of the Companies' Collateral or
the assets or stock of SCM or NP from sources other than the
Agent;
D. Sell, lease, assign, transfer or otherwise dispose of (i)
Collateral, except as otherwise specifically permitted by this
Agreement, or (ii) either all or substantially all of the
Companies' assets, which do not constitute Collateral;
E. Merge, consolidate or otherwise alter or modify their corporate
name, principal place of business, structure, status or
existence, or enter into or engage in any operation or activity
materially different from that presently being conducted by the
Companies;
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F. Assume, guarantee, endorse, or otherwise become liable upon the
obligations of any person, firm, entity or corporation, except by
the endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of
business, except for the Subordinated Guaranty as in effect on
the date hereof, provided that no cash payment may be made
thereunder without the prior written consent of the Required
Lenders, and except for the guaranty of the leased premises in
Tennessee;
G. Declare or pay any dividend of any kind on or purchase, acquire,
redeem or retire, any of the capital stock or equity interest, of
any class whatsoever, whether now or hereafter outstanding
(except that (a) PMC, SCC, CLI and SCA shall be (i) allowed to
declare and pay dividends to SCH in an amount sufficient to
enable SCH to make the required payments on Term Loan II pursuant
to Section 4.3 and (ii) allowed to pay to SCH costs (in no event
to exceed $2 million in any fiscal year) related to management
fees, legal fees, salaries and additional administrative
obligations associated with the operation and management of SCH
and its Subsidiaries, (b) SCH shall be allowed to declare and pay
dividends to SCI for costs related to management fees, legal
fees, salaries, and additional administrative obligations
associated with the operations and management of SCI and its
Subsidiaries and Affiliates, and (c) SCH, PMC, SCC, CLI and SCA
shall be allowed to pay income or franchise taxes of the Parent
and its Subsidiaries due as a result of the filing of a
consolidated, combined or unitary tax return in which their
operations are included; provided that, in any instance under
this subparagraph G, (x) the Companies are not then in breach or
violation of this Agreement, (y) either prior to or after giving
effect to such payment, no Default or Event of Default has
occurred hereunder, and (z) the Companies have sufficient working
capital to pay their debts as they come due, provided further,
however, the Companies specifically represent and warrant that
they will not declare or pay any dividend for the purpose of
directly or indirectly providing funds to the Parent, SCA, SCM or
NP or any Affiliate of SCA, SCM or NP for the purpose of repaying
the SCA Notes to the Subordinated Creditors without the prior
written consent of the Required Lenders or unless otherwise
specifically permitted herein);
H. Make any advance or loan to, or any investment in, any firm,
entity, person or corporation, and the Companies and the Parent
specifically represent and warrant that they will not make any
advance or loan to or any investment for the purpose of directly
or indirectly providing funds to SCA or any of its Affiliates for
the purpose of repaying the Subordinated Creditors without the
prior written consent of the Required Lenders or unless otherwise
specifically permitted herein; or
I. Exceed Capital Expenditures of $3,000,000.00 per calendar year,
with unused residual amounts allowed to be used in subsequent
years without the written consent of the Agent, and excluding the
purchase of the Florida property
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subject to the Agreement of Purchase and Sale dated as of September 6,
1996 between SCC and Olympus Properties, Inc.
7.13. The Parent, the Companies, SCA, SCM and NP hereby agree to use
their reasonable best efforts to arrange for the amendment of the Subordinated
Guaranty to assure that the Subordinated Guaranty is subordinated to the prior
payment and satisfaction of the Companies' Obligations to the Agent and the
Lenders in form and substance satisfactory to the Agent and the Lenders,
provided, however, the failure to provide such an amendment to the Subordinated
Guaranty shall not constitute a Default or Event of Default hereunder.
7.14. The Parent, on a consolidated basis, shall maintain, at the end
of each fiscal quarter indicated below, Working Capital of not less than:
FISCAL QUARTER ENDING WORKING CAPITAL
------------------------------------------------------------------------
March 31, 1997 $(4,500,000.00)
June 30, 1997 $(3,400,000.00)
Sept. 30, 1997 $(3,000,000.00)
Dec. 31, 1997 $(1,700,000.00)
March 31, 1998 $(2,150,000.00)
June 30, 1998 $(2,150,000.00)
September 30, 1998 and at the end $(2,000,000.00)
of each of each fiscal quarter thereafter.
7.15. The Parent, on a consolidated basis, shall maintain at the end of
each fiscal quarter, a Fixed Charge Coverage Ratio of at least:
Fiscal Quarter Ending Ratio
--------------------- -----
March 31, 1997 .14 to 1
June 30, 1997 .79 to 1
Sept. 30, 1997 1.25 to 1
Dec. 31, 1997 1.25 to 1
March 31, 1998 .75 to 1
June 30, 1998 .75 to 1
Sept. 30, 1998 .85 to 1
Dec. 31, 1998 1.00 to 1
March 31, 1999 1.00 to 1
June 30, 1999 and at the end of each 1.20 to 1
fiscal quarter thereafter.
7.16. The Parent and each of the Companies agree to advise the Agent in
writing of: (a) all expenditures (actual or anticipated) in excess of
$150,000.00 per fiscal year for (x) environmental clean-up, (y) environmental
compliance or (z) environmental testing and the impact of said expenses on the
Companies' Working Capital; and (b) any notices the
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Companies receive from any local, state or federal authority advising the
Companies of any environmental liability (real or potential) stemming from the
Companies' operations, their premises, their waste disposal practices, or waste
disposal sites used by the Companies and to provide the Agent with copies of
all such notices if so required.
7.17. Without the prior written consent of the Agent, the Parent and
each of the Companies agree that they will not enter into any transaction,
including, without limitation, any purchase, sale, lease, loan or exchange of
property between the Parent or any Subsidiary or Affiliate of either the
Companies or Parent; provided, however, (i) PMC and SCC shall be allowed to
engage in transactions in their regular course of dealings among themselves,
provided that the net cash transferred from one to the other in any fiscal year
shall not exceed $1.5 million, (ii) CLI and any of Companies shall be allowed
to engage in transactions in their regular course of dealings among themselves,
provided that the net cash transferred to CLI in any fiscal year shall not
exceed $100,000, (iii) PMC shall be allowed to make payments to NP for products
manufactured by NP for PMC, (iv) NP and SCM may make payments of any kind to
the Companies or SCA, and (v) except as otherwise permitted herein.
7.18. PMC may continue to make payments to SCH (i) for use of
intellectual property pursuant to the Royalty Agreements. SCI and its
Subsidiaries and Affiliates shall not amend, modify, restate or alter any of
the Royalty Agreements with SCH without the prior written consent of the
Required Lenders.
7.19. If after giving effect to the payment in full of Indebtedness of
SCH to Comerica Bank-Texas, there shall be no intercompany Indebtedness or, if
any intercompany Indebtedness remains, it shall be evidenced by promissory
notes that are pledged and endorsed to the Agent and any such intercompany
Indebtedness shall be fully subordinated to the Obligations to the complete
satisfaction of Agent and the Lenders. The loan agreements, promissory notes
or other documents of any such intercompany Indebtedness shall not be amended,
modified, restated or altered without the prior written consent of the Required
Lenders. All promissory notes now owned or hereafter acquired payable to SCI
or any of its Subsidiaries from third parties shall be endorsed over, pledged
to and physical possession of such promissory notes delivered to the Agent for
the benefit of the Lenders, including without limitation those two (2)
promissory notes in the original principal amounts of $200,000 payable to the
order of PMC issued by WEST-PAK, INC. and $615,000 payable to the order of PMC
issued by ▇▇▇ ▇. Story.
7.20. The Parent and the Companies shall prepare and deliver to the
Agent a plan for environmental testing (the "Environmental Testing Plan") no
later than thirty (30) days after the Closing Date, such Environmental Testing
Plan (a) to provide a description of and schedule for environmental tests to be
conducted and completed on the Real Estate, (b) to be acceptable to the Agent
and the Lenders. Upon completion of the environmental tests on the Real
Estate, the Parent and the Companies shall prepare and deliver to the Agent a
plan for environmental remediation (the "Environmental Remediation Plan") no
later than one hundred eighty (180) days after the Closing Date, such
Environmental Remediation Plan (a) to provide a description of any material
environmental concerns based on findings
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resulting from the Environmental Testing Plan, (b) to set forth a remediation
program, including planned expenditures and scheduled completions for
addressing any material environmental concerns, and (c) to be acceptable to the
Agent and the Lenders.
7.21. The Companies shall have executed and delivered to either the
Agent or an agent of the Agent or of a title insurance company acceptable to
the Agent, no later than sixty (60) days after the Closing Date, such mortgages
and/or deeds of trust and/or leasehold mortgages (including all consents of
landlords for such leasehold mortgages, and specifically including the consent
of Alliance Manufacturing Company and the master landlord with respect to the
Tennessee leasehold) as the Agent may reasonably require to obtain second liens
on the Real Estate fee interests located in Florida (including, upon SCC's
purchase of such property, the property located at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇ and, to the extent reasonably obtainable, including intercreditor agreements
for all second lien mortgages as and if requested by Agent) and first liens on
the Real Estate leasehold interests in Tennessee.
7.22. The Companies shall have delivered to the Agent or the agent of
the Agent landlord lien waivers satisfactory to the Agent pertaining to the
leasehold interests in Florida and Tennessee no later than sixty (60) days
after the Closing Date.
7.23. The Companies shall have delivered title insurance policies and
surveys (in the form described in paragraphs 2.1(e) and (f) of Section 2
herein) for all Florida properties specified in paragraph 7.21 of Section 7
herein no later than sixty (60) days after the Closing Date.
7.24. Counsel for the Companies shall have delivered legal opinions to
the Agent no later than sixty (60) days after the Closing Date, which opinions
are satisfactory to the Agent, and which cover the items specified in paragraph
2.1(i) of Section 2 herein as to interests covered by paragraphs 7.21 and 7.22
of Section 7 herein.
7.25. The Companies shall have delivered an appraisal satisfactory to
the Agent concerning the Real Property located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, no later than 30 days after the Closing Date.
7.26. The Companies and the Parent agree, in their reasonable business
judgment, to obtain a security interest in all molds, equipment and machinery
owned by the Companies but leased to NP and located in Mexico.
7.27. The Companies and the Parent agree that the value of inventory
and equipment owned by the Companies and located in Mexico for use in NP's
operations shall not exceed $500,000 at any time.
7.28. The Companies and the Parent agree that they will cause SCA, SCM
and NP to refrain from encumbering any of their respective assets and from
allowing any liens to be placed upon any of their respective assets and
property, other than as contemplated herein.
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7.29. The Companies and the Parent agree that, upon the occurrence of a
Default or an Event of Default, at the Agent's request, the Companies and the
Parent will retain a consultant or responsible officer (satisfactory to the
Agent), within sixty (60) days of the Agent's request, to assist in the sale of
certain assets, businesses, Subsidiaries or Affiliates, as may be specified by
the Agent.
7.30. SCA shall not make the interest payment due in March 1997 or pay
the outstanding amount due in May 1997 upon maturity of the SCA Notes without
the prior written consent of CITBC.
7.31. Without the prior written consent of the Agent, the Parent will
not repurchase, or make any other cash payments in respect of, any warrants
from Prudential Insurance Company of America or any of its successors or
assigns.
7.32. ▇▇▇▇▇▇ ▇▇▇▇▇ M. of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇. shall
deliver approximately 20% of the stock of SCM (so that a total of 65% of the
stock of SCM has been delivered) to the Agent on behalf of the Lender no later
than June 6, 1997.
7.33. The Parent and the Companies hereby confirm that the $13.1
million in Senior Notes due September 30, 2002 payable by Sun Coast Plastics,
Inc. have been paid in full and are no longer outstanding.
7.34. Parent and the Companies shall prepare and deliver, and Parent
shall cause each of its Subsidiaries (other than SCM and NP) to prepare and
deliver, no later than ninety (90) days after Closing, to the Agent for the
benefit of the Lenders documentation, in form and substance reasonably
satisfactory to Agent and its legal counsel, whereby an assignment of all
trademarks, copyrights and patents of SCI, SCH, PMC, SCC, CLI and SCA is made
to the Agent for the benefit of the Lenders, such assignment to be in
recordable form for application, filing and registration with the United States
Patent and Trademark Office, the Registrar of Copyrights, or any similar office
or agency of the United States, or any country or any political subdivision
thereof. As part of such process, SCI, SCH, PMC, SCC, CLI and SCA shall
release any encumbrances on such trademarks, patents and copyrights and ensure
that all such trademarks, patents and copyrights are properly titled and
registered in the name of SCI, SCH, PMC, SCC, CLI or SCA, as the case may be,
prior to such assignment to the Agent for the benefit of the Lenders. After
such assignment to the Agent, post-closing searches shall be performed and
furnished to Agent to ensure that all such assignments have been properly
registered and recorded in the name of the Agent for the benefit of the
Lenders, such searches to be satisfactory to the Agent and performed at the
expense of the Parent and the Companies.
SECTION 8. INTEREST, FEES AND EXPENSES;
TERMS OF CONVERSION OPTION AND EURODOLLAR LOANS
8.1. Interest on the Revolving Loans shall be payable monthly as of
the end of each month and with respect to Chase Bank Rate Loans shall be an
amount equal to the
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Lesser of (a) the Maximum Legal Rate or (b) the Chase Bank Rate plus one-half
percent (1/2%) per annum on the average of the net balances owing by the
Revolving Borrowers to the Agent in the Revolving Borrowers' Revolving Loan
Account at the close of each day during such month, or (c) at the Revolving
Borrowers' option, Libor plus three percent (3%) per annum on the average net
balances owing by the Revolving Borrowers to the Agent in the Revolving
Borrowers' Revolving Loan Account at the close of each day during such month.
In the event of any change in said Chase Bank Rate, the rate hereunder shall
change, as of the first of the month following any change, so as to remain
one-half percent (1/2%) above the Chase Bank Rate. The rate hereunder shall be
calculated based on a 360-day year. The Agent shall be entitled to charge the
Revolving Borrowers' Revolving Loan Account at the rate provided for herein
when due until all Obligations have been paid in full.
8.2. (a) Interest on Term Loan I shall be payable monthly as of the
end of each month on the unpaid balance or on payment in full prior to maturity
and with respect to Chase Rate Loans shall be in an amount equal to the Lesser
of (a) the Maximum Legal Rate or (b) the Chase Bank Rate plus one and one
quarter percent (1 1/4%) per annum, or (c) at the Term Loan I Borrowers'
option, Libor plus three and three quarters (3 3/4%) per annum. In the event
of any change in said Chase Bank Rate the rate hereunder shall change, as of
the first of the month following any change, so as to remain one and one
quarter percent (1 1/4%) above the Chase Bank Rate. The rate hereunder shall
be calculated based on a 360 day year. The Agent shall be entitled to charge
the Revolving Borrowers' Revolving Loan Account at the rate provided for herein
when due until all Obligations have been paid in full.
(b) Interest on Term Loan II shall be payable monthly as of the end
of each month on the unpaid balance or on payment in full prior to maturity and
with respect to Chase Rate Loans shall be in an amount equal to the lesser of
(a) the Maximum Legal Rate or (b) the Chase Bank Rate plus two percent (2%) per
annum, or (c) at the Term Loan II Borrowers' option, Libor plus four and one
half percent (4 1/2%) per annum. In the event of any change in said Chase Bank
Rate the rate hereunder shall change, as of the first of the month following
any change, so as to remain two percent (2%) above the Chase Bank Rate. The
rate hereunder shall be calculated based on a 360 day year. The Agent shall be
entitled to charge the Revolving Borrowers' Revolving Loan Account at the rate
provided for herein when due until all Obligations have been paid in full.
8.3. In consideration of the Letter of Credit Guaranty of the Agent,
the Revolving Borrowers shall pay the Agent the Letter of Credit Guaranty Fee
which shall be an amount equal to one and one quarter percent (1 1/4%) of the
face amount of each documentary Letter of Credit, payable on the date of
issuance, and two and one half percent (2 1/2%) per annum, payable monthly, on
the face amount of each standby Letter of Credit.
8.4. Any charges, fees, commissions, costs and expenses charged to the
Agent for the Revolving Borrowers' account by any Issuing Bank in connection
with or arising out of Letters of Credit issued pursuant to this Agreement or
out of transactions relating thereto will be charged to the Revolving
Borrowers' Revolving Loan Account in full when charged
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to or paid by the Agent and when made by any such Issuing Bank shall be
conclusive on the Agent.
8.5. The Companies shall reimburse or pay the Agent, as the case may
be for: (a) all Out-of-Pocket Expenses of the Agent and (b) any applicable
Documentation Fee.
8.6. Upon the last business day of each month, commencing with January
31, 1997, the Companies shall pay the Agent the Line of Credit Fee.
8.7. To induce the Agent to enter into this Agreement and to extend to
the Companies the Revolving Loan, Letters of Credit Guaranties and the Term
Loans, the Companies shall pay to the Agent a Loan Facility Fee in the amount
of $300,000.00 payable upon execution of this Agreement. The Commitment Fee
shall be credited toward the Loan Facility Fee upon consummation of this
financing transaction on the Closing Date.
8.8. On the Closing Date and each anniversary of the Closing Date
thereafter, the Companies shall pay to the Agent the Collateral Management Fee.
8.9. The Companies shall pay the Agent's standard charges for, and the
fees and expenses of, the Agent's personnel used by the Agent for reviewing the
books and records of the Companies and for verifying, testing protecting,
safeguarding, preserving or disposing of all or any part of the Collateral
provided, however, that the foregoing shall not be payable until the occurrence
of an Event of Default if the Companies are paying a Collateral Management Fee.
8.10. The Companies hereby authorize the Agent to charge the Revolving
Borrowers' Revolving Loan Account with the Agent with the amount of all
payments due hereunder as such payments become due. The Companies confirm that
any charges which the Agent may so make to the Revolving Borrowers' Revolving
Loan Account as herein provided will be made as an accommodation to the
Companies and solely at the Agent's discretion.
8.11. In the event that the Agent shall have determined in the exercise
of its reasonable business judgement that subsequent to the Closing Date any
change in applicable law, rule, regulation or guideline regarding capital
adequacy or any change in the interpretation or administration thereof, or
compliance by the Agent or any financial institution which may become a Lender
hereunder (for purposes of this Section 8, the term "Lender" shall include the
Agent or any such Lender and any corporation or bank controlling the Agent or
such Lender) with any new request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on the Agent's or any such Lender's capital as a consequence of its obligations
hereunder to a level below that which such Lender could have achieved but for
such adoption, change or compliance (taking into consideration the Agent's or
any such Lender's policies with respect to capital adequacy) by an amount
reasonably deemed by the Lender to be material, then, from time to time, the
Companies shall pay no later than five (5) days following demand to
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the Agent such additional amount or amounts as will compensate the Agent's or
any such Lender for such reduction. In determining such amount or amounts,
such Lender may use any reasonable averaging or attribution methods. The
protection of this paragraph 8 shall be available to such Lenders regardless of
any possible contention of invalidity or inapplicability with respect to the
applicable law, regulation or condition. A certificate of the Agent or any
Lender setting forth such amount or amounts as shall be necessary to compensate
the Agent or any such Lender with respect to this Section 8 and the calculation
thereof when delivered to the Companies shall be conclusive on the Companies
absent manifest error. Notwithstanding anything in this paragraph to the
contrary, in the event any Lender has exercised its rights pursuant to this
paragraph, and subsequent thereto determines that the additional amounts paid
by the Companies in whole or in part exceed the amount which the Agent or any
Lender actually required pursuant hereto, the excess, if any, shall be returned
to the Companies by such Lender.
8.12. In the event that any applicable law, treaty or governmental
regulation, or any change therein or in the interpretation or application
thereof, or compliance by the Agent or any Lender with any request or directive
(whether or not having the force of law) from any central bank or other
financial, monetary or other authority, shall:
(a) subject the Agent or any Lender to any tax of any kind whatsoever
with respect to this Agreement or change the basis of taxation of payments to
the Agent or such Lender of principal, fees, interest or any other amount
payable hereunder or under any other documents (except for changes in the rate
of tax on the overall net income of such Lender by the federal government or
the jurisdiction in which it maintains its principal office);
(b) impose, modify or hold applicable any reserve, special deposit,
assessment or similar requirement against assets held by, or deposits in or for
the account of, advances or loans by, or other credit extended by, any office
the Agent or of such Lender by reason of or in respect to this Agreement and
the Loan Documents, including (without limitation) pursuant to Regulation D of
the Board of Governors of the Federal Reserve System; or
(c) impose on the Agent or such Lender any other condition with
respect to this Agreement or any other document, and the result of any of the
foregoing is to increase the cost to the Lender of making, renewing or
maintaining its loans hereunder by an amount that such Lender deems to be
material in the exercise of its reasonable business judgement or to reduce the
amount of any payment (whether of principal, interest or otherwise) in respect
of any of the loans by an amount that the Agent or such Lender deems to be
material in the exercise of its reasonable business judgement, then, in any
case the Companies shall pay the Agent or such Lender, within five (5) days
following its demand, such additional cost or such reduction, as the case may
be. The Agent or such Lender shall certify the amount of such additional cost
or reduced amount to the Companies and the calculation thereof and such
certification shall be conclusive upon the Companies absent manifest error.
Notwithstanding anything in this paragraph to the contrary, in the event the
Agent or any Lender has exercised its rights pursuant to this paragraph, and
subsequent thereto determine that the additional amounts paid by the Companies
in whole or in part
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exceed the amount which the Agent or the Lender actually required pursuant
hereto, the excess, if any, shall be returned to the Companies by the Agent or
such Lender.
8.13. Conversion Options
(a) The Companies may elect, subsequent to seven days from the
Closing Date and from time to time thereafter, (i) to request any loan made
hereunder to be a Eurodollar Loan as of the date of such loan or (ii) to
convert Chase Rate Loans to Eurodollar Loans, and may elect from time to time
to convert Eurodollar Loans to Chase Rate Loans by giving the Agent at least
three (3) Business Days' prior irrevocable notice of such election, provided
that any such conversion of Eurodollar Loans to Chase Rate Loans shall only be
made, subject to the second following sentence, on the last day of an Interest
Period with respect thereto. Should the Companies elect to convert Chase Rate
Loans to Eurodollar Loans, it shall give the Agent at least four Working Days'
prior irrevocable notice of such election. If the last day of an Interest
Period with respect to a loan that is to be converted to a Eurodollar Loan is
not a Working Day, then such conversion shall be made on the next succeeding
Business Day or Working Day, as the case may be, and during the period from
such last day of an Interest Period to such succeeding Business Day or Working
Day, as the case may be, such loan shall bear interest as if it were an Chase
Rate Loan. All or any part of outstanding Chase Rate Loans then outstanding
with respect to Revolving Loans and Term Loans may be converted to Eurodollar
Loans as provided herein, provided that partial conversions shall be in an
aggregate principal amount of $1,000,000 or more. Upon the Companies' election
of conversion to a Eurodollar Loan, the Companies shall specify a one, two,
three or six month LIBOR period and shall pay the Agent a $500.00 processing
fee upon the date of each such election.
(b) Any Eurodollar Loans may be continued as such upon the expiration
of an Interest Period, provided the Companies so notify the Agent, at least
three (3) Business Days' prior to the expiration of said Interest Period, and
provided further that no Eurodollar Loan may be continued as such upon the
occurrence of any Default or Event of Default under this Agreement, but shall
be automatically converted to an Chase Rate Loan on the last day of the
Interest Period during which occurred such Default or Event of Default. Each
notice of election, conversion or continuation furnished by the Companies
pursuant hereto shall specify whether such election, conversion or continuation
is for a one, two, three or six month period.
8.14. Interest Rate.
(a) The Eurodollar Loans shall bear interest for each Interest Period
with respect thereto on the unpaid principal amount thereof at a rate per annum
equal to the lesser of the Maximum Legal Rate or the LIBOR determined for each
Interest Period in accordance with the terms hereof plus:
(i) 3% with respect to Revolving Loans;
(ii) 3 3/4% with respect to Term Loan I; and
(iii) 4 1/2% with respect to Term Loan II.
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(b) If all or a portion of the outstanding principal amount of the
Obligations shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), such outstanding amount, to the extent it is a
Eurodollar Loan, shall be converted to a Chase Rate Loan at the end of the last
Interest Period therefor for which the Agent on or prior to the date such
unpaid principal amount became due, shall have determined a LIBOR Rate.
(c) The Companies may not have more than two (2) elections which are
Eurodollar Loans outstanding under each of Term Loan I, Term Loan II and the
Revolving Loans at any given time.
8.15. Computation of Interest and Fees.
(a) Interest in respect of both the Chase Rate Loans and the
Eurodollar Loans shall be calculated on the basis of a 360 day year.
(b) The Agent shall, at the request of the Companies, deliver to the
Companies a statement showing the quotations given by Chase and the
computations used by the Agent in determining any interest rate pursuant to
paragraph 8.14 of Section 8 hereof.
8.16. Inability to Determine Interest Rate.
As further set forth in paragraph 8.10 above, in the event that the
Agent or any Lender shall have determined in the exercise of its or their
reasonable business judgement (which determination shall be conclusive and
binding upon the Companies) that by reason of circumstances affecting the
interbank Eurodollar market, adequate and reasonable means do not exist for
ascertaining the LIBOR Rate applicable, for any Interest Period with respect
to (a) a proposed loan that the Companies have requested be made as a
Eurodollar Loan, (b) a Eurodollar Loan that will result from the requested
conversion of a Chase Rate Loan into a Eurodollar Loan or (c) the continuation
of Eurodollar Loans beyond the expiration of the then current Interest Period
with respect thereto, the Lender(s) shall forthwith give written notice of such
determination to the Companies at least one day prior to, as the case may be,
the requested borrowing date for such Eurodollar Loan, the conversion date of
such Chase Rate Loan or the last day of such Interest Period. If such notice
is given (i) any requested Eurodollar Loan shall be made as a Chase Rate Loan,
(ii) any Chase Rate Loan that was to have been converted to a Eurodollar Loan
shall be continued as a Chase Rate Loan, and (iii) any outstanding Eurodollar
Loan shall be converted, on the last day of then current Interest Period with
respect thereto, to a Chase Rate Loan. Until such notice has been withdrawn by
the Agent or the Lender(s), no further Eurodollar Loan shall be made nor shall
the Companies have the right to convert a Chase Rate Loan to a Eurodollar Loan.
8.17. Payments.
If any payment on a Eurodollar Loan becomes due and payable on a day
other than a Working Day, the maturity thereof shall be extended to the next
succeeding Working Day
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unless the result of such extension would be to extend such payment into
another calendar month in which event such payment shall be made on the
immediately preceding Working Day.
8.18. Illegality.
Notwithstanding any other provisions herein, if any law, regulation,
treaty or directive or any change therein or in the interpretation or
application thereof, shall make it unlawful for the Agent and the Lenders to
make or maintain Eurodollar Loans as contemplated herein, the then outstanding
Eurodollar Loans, if any, shall be converted automatically to Chase Rate Loans
on the next succeeding Interest Payment Date or within such earlier period as
required by law. The Companies hereby agree promptly to pay the Agent, upon
its demand, any additional amounts necessary to compensate the Agent and the
Lenders for any costs incurred by the Agent and the Lenders in making any
conversion in accordance with this Section 8 including, but not limited to, any
interest or fees payable by the Agent or Chase to lenders of funds obtained by
either of them in order to make or maintain Eurodollar Loans hereunder.
8.19. Indemnity.
Each of the Companies agrees to indemnify and to hold the Agent and the
Lenders harmless from any loss or expense which the Agent and/or the Lenders
may sustain or incur as a consequence of (a) default by the Companies in
payment of the principal amount of or interest on the Eurodollar Loans, as and
when the same shall be due and payable in accordance with the terms of this
Agreement, including, but not limited to, any such loss or expense arising from
interest or fees payable by the Agent to lenders of funds obtained by either of
them in order to maintain the Lenders' Eurodollar Loans hereunder, (b) default
by the Companies in making a borrowing or conversion after the Companies have
given a notice in accordance with paragraph 8.13 hereof, (c) any prepayment of
Eurodollar Loans on a day which is not the last day of the Interest Period
applicable thereto, including without limitation prepayments arising as a
result of the application of the collection of Accounts to the Revolving Loans
and (d) default by the Companies in making any prepayment after the Companies
had given notice to the Agent thereof. This covenant shall survive termination
of this Agreement and payment of the outstanding Obligations.
8.20. LIBOR Provisions.
Notwithstanding anything to the contrary in this Agreement, in the event
that, by reason of any Regulatory Change (for purposes hereof "Regulatory
Change" shall mean, with respect to the Agent or any Lender, any change after
the date of this Agreement in United States Federal, state or foreign law or
regulations (including, without limitation, Regulation D) or the adoption or
making after such date of any interpretation, directive or request applying to
a class of banks including any Lender of or under any United States Federal,
state or foreign law or regulations (whether or not having the force of law and
whether or not failure to comply therewith would be unlawful)), any Lender
either (i) incurs any material additional costs based on or measured by the
excess above a specified level of the
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amount of a category of deposits or other liabilities of such bank which
includes deposits by reference to which the interest rate on Eurodollar Loans
is determined as provided in this Agreement or a category of extensions of
credit or other assets of any Lender which includes Eurodollar Loans or (ii)
becomes subject to any material restrictions on the amount of such a category
of liabilities or assets which it may hold, then, if such Lender so elects by
notice to the Companies and SCH (with a copy to the Agent), the obligation of
such Lender to make or continue, or to convert Chase Rate Loans into,
Eurodollar Loans hereunder shall be suspended until such Regulatory Change
ceases to be in effect.
SECTION 9. POWERS
The Companies hereby constitute the Agent or any person or agent the
Agent may designate as their attorney-in-fact, at the Companies' cost and
expense, to exercise all of the following powers, which being coupled with an
interest, shall be irrevocable until all of the Companies' Obligations to the
Agent have been paid in full:
(a) To receive, take, endorse, sign, assign and deliver, all in the
name of the Agent or the Companies, any and all checks, notes, drafts, and
other documents or instruments relating to the Collateral;
(b) To receive, open and dispose of all mail addressed to the
Companies and to notify postal authorities to change the address for delivery
thereof to such address as the Agent may designate;
(c) To request from customers indebted on Accounts at any time, in
the name of the Agent or the Companies or that of the Agent's designee,
information concerning the amounts owing on the Accounts;
(d) To transmit to customers indebted on Accounts notice of the
Agent's interest therein and to notify customers indebted on Accounts to make
payment directly to the Agent for the Companies' account; and
(e) To take or bring, in the name of the Agent or the Companies, all
steps, actions, suits or proceedings deemed by the Agent necessary or desirable
to enforce or effect collection of the Accounts.
Notwithstanding anything hereinabove contained to the contrary, the
powers set forth in (b), (d) and (e) above may only be exercised after the
occurrence of an Event of Default and until such time as such Event of Default
is waived or cured to the Agent's satisfaction.
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SECTION 10. EVENTS OF DEFAULT AND REMEDIES
10.1. Notwithstanding anything hereinabove to the contrary, the Agent
may terminate this Agreement immediately upon the occurrence of any of the
following (herein "Events of Default"):
(a) cessation of the business of any of the Companies or the Parent
or the calling of a meeting of the creditors of any of the
Companies or the Parent for purposes of compromising the debts
and obligations of any of the Companies;
(b) the failure of any of the Companies or the Parent to generally
meet debts as they mature;
(c) (i) the commencement by the Parent or any of the Companies of any
bankruptcy, insolvency, arrangement, reorganization, receivership
or similar proceeding under any federal or state law; (ii) the
commencement against the Parent or any of the Companies of any
bankruptcy, insolvency, arrangement, reorganization, receivership
or similar proceeding under any federal or state law by creditors
of the Parent or any of the Companies, which proceeding shall not
have been controverted within ten (10) days or shall not have
been dismissed and vacated within sixty (60) days of
commencement, or any of the actions sought in any such proceeding
shall occur or the Parent or any of the Companies shall take
action to authorize or effect any of the actions in any such
proceeding, or (iii) the commencement by any other Subsidiaries,
or any one of them of any bankruptcy, insolvency, arrangement,
reorganization, receivership or similar proceeding under any
applicable federal or state law, or the commencement against any
other Subsidiaries, or any of them, of any involuntary
bankruptcy, insolvency, arrangement, reorganization, receivership
or similar proceeding under any applicable federal or state law,
which proceeding shall not have been controverted within ten (10)
days or shall not have been dismissed and vacated within sixty
(60) days of commencement, or any of the actions sought in any
such proceeding shall occur or the other Subsidiaries, or any of
them, shall take action to authorize or effect any of the actions
in any such proceeding;
(d) breach by any of the Companies or the Parent of any warranty,
representation or covenant contained herein (other than those
referred to in sub-paragraph e below), the Loan Documents or in
any other written agreement between the Companies, the Parent or
the Agent, provided that such breach by the Companies, or the
Parent of any of the warranties, representations or covenants
referred in this clause shall not be deemed to be an Event of
Default unless and until such breach shall remain unremedied to
the Agent's satisfaction for a period of thirty (30) days from
the date of such breach;
(e) breach by any of the Companies or the Parent, as applicable, of
any warranty, representation or covenant of Section 3, Paragraphs
3.3 (other than the third
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sentence of paragraph 3.3) and 3.4; Section 6, Paragraphs 6.3 and
6.4 (other than the first sentence of paragraph 6.4); Section 7,
Paragraphs 7.1, 7.7, 7.8, 7.11, 7.12, 7.14 and 7.15.
(f) failure of any of the Companies to pay any of the Obligations
within five (5) business days of the due date thereof, provided
that nothing contained herein shall prohibit the Agent from
charging such amounts to the Revolving Borrowers' Revolving Loan
Account on the due date thereof;
(g) any of the Companies or the Parent shall (i) engage in any
"prohibited transaction" as defined in ERISA, (ii) have any
"accumulated funding deficiency" as defined in ERISA of more that
$25,000, (iii) have any "reportable event" as defined in ERISA,
(iv) terminate any "plan," as defined in ERISA other than the Sun
Coast Industries, Inc. Employees' Pension Plan which is in the
process of being terminated and for which there are no unfunded
liabilities or (v) be engaged in any proceeding in which the
Pension Benefit Guaranty Corporation shall seek appointment, or
is appointed, as trustee or administrator of any "plan" as
defined in ERISA, and with respect to this sub-paragraph (g) such
event or condition (x) remains uncured for a period of thirty
(30) days from date of occurrence and (y) could, in the
reasonable opinion of the Agent, subject any of the Companies or
the Parent to any tax, penalty or other liability material to the
business, operations or financial condition of any of the
Companies or the Parent;
(h) without the prior written consent of the Agent, the Companies or
the Parent or any of their Subsidiaries or Affiliates shall (x)
amend or modify the SCA Notes, (y) make any payment on account of
the SCA Notes or the Subordinated Guaranty, or (z) fail to
deliver or cause to be delivered any now or hereafter issued
capital stock of SCH, the Companies, CLI, SCA, or SCM (65% for
SCM).
(i) the occurrence of an event of default pursuant to (i) the
Companies' first mortgage on the Sarasota, Florida real estate,
or (ii) any document or agreement of the Companies or SCH
evidencing Indebtedness of the Companies in excess of the amount
of $100,000 (other than the SCA Notes and the Subordinated
Guaranty); or
10.2. Upon the occurrence of a Default and/or an Event of Default, at
the option of the Agent, all loans, advances and extensions of credit provided
for in paragraph 3.1 of Section 3 of this Agreement shall be thereafter in the
Agent's sole discretion and the obligation of the Agent to make Revolving Loans
and/or open Letters of Credit shall cease unless such Default or Event of
Default is waived in writing by the Agent and the Required Lenders, and at the
option of the Agent upon the occurrence of an Event of Default: (i) all
Obligations shall become immediately due and payable; (ii) the Agent may charge
the Companies the Default Rate of Interest on all then outstanding or
thereafter incurred Obligations in lieu of the interest provided for in
paragraphs one and two of Section 8 of
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this Agreement provided (a) the Agent has given the Companies written notice of
the Event of Default, provided, however, that no notice is required if the
Event of Default is the Event listed in paragraph 10.1(a), (b) or (c) of this
Section 10 and (b) the Companies have failed to cure the Event of Default
within ten (10) days after (x) notice has been given by the Agent in accordance
with paragraph 12.6 or (y) immediately upon the occurrence of the Event of
Default listed in paragraph 10.1(a), (b) or (c) of this Section 10; and (iii)
the Agent may immediately terminate this Agreement upon notice to the
Companies, provided, however, that no notice of termination is required if the
Event of Default is the Event listed in paragraph 10.1(a), (b) or (c) of this
Section 10. The exercise of any option is not exclusive of any other option
which may be exercised at any time by the Agent.
10.3. Immediately upon the occurrence of any Event of Default, the
Agent may to the extent permitted by law: (a) remove from any premises where
same may be located any and all documents, instruments, files and records, and
any receptacles or cabinets containing same, relating to the Accounts, or the
Agent may use, at the Companies' expense, such of the Companies' and the
Parent's personnel, supplies or space at the Companies' and the Parent's places
of business or otherwise, as may be necessary to properly administer and
control the Accounts or the handling of collections and realizations thereon;
(b) bring suit, in the name of the Companies or the Agent, and generally shall
have all other rights respecting said Accounts, including without limitation
the right to: accelerate or extend the time of payment, settle, compromise,
release in whole or in part any amounts owing on any Accounts and issue credits
in the name of the Companies or the Agent; (c) sell, assign and deliver the
Collateral and any returned, reclaimed or repossessed merchandise, with or
without advertisement, at public or private sale, for cash, on credit or
otherwise, at the Agent's sole option and discretion, and the Agent may bid or
become a purchaser at any such sale, free from any right of redemption, which
right is hereby expressly waived by the Companies; (d) foreclose the security
interests created herein by any available judicial procedure, or to take
possession of any or all of the Inventory and Equipment without judicial
process, and to enter any premises where any Inventory and Equipment may be
located for the purpose of taking possession of or removing the same and (e)
exercise any other rights and remedies provided in law, in equity, by contract
or otherwise. The Agent shall have the right, without notice or advertisement,
to sell, lease, or otherwise dispose of all or any part of the Collateral
whether in its then condition or after further preparation or processing, in
the name of the Companies or the Agent, or in the name of such other party as
the Agent may designate, either at public or private sale or at any broker's
board, in lots or in bulk, for cash or for credit, with or without warranties
or representations, and upon such other terms and conditions as the Agent in
its sole discretion may deem advisable, and the Agent shall have the right to
purchase at any such sale. If any Inventory and Equipment shall require
rebuilding, repairing, maintenance or preparation, the Agent shall have the
right, at its option, to do such of the aforesaid as is necessary, for the
purpose of putting the Inventory and Equipment in such saleable form as the
Agent shall deem appropriate. The Companies and the Parent agree, at the
request of the Agent, to assemble the Inventory and Equipment and to make it
available to the Agent at premises of the Companies or elsewhere and to make
available to the Agent the premises and facilities of the Companies and the
Parent for the purpose of the Agent's taking possession of, removing or putting
the Inventory and Equipment in saleable form. However, if notice of intended
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disposition of any Collateral is required by law, it is agreed that ten (10)
days notice shall constitute reasonable notification and full compliance with
the law. The net cash proceeds resulting from the Agent's exercise of any of
the foregoing rights, (after deducting all charges, costs and expenses,
including reasonable attorneys' fees) shall be applied by the Agent to the
payment of the Companies' Obligations, whether due or to become due, in such
order as the Agent may elect, and the Companies shall remain liable to the
Agent for any deficiencies, and the Agent in turn agrees to remit to the
Companies or their successors or assigns, any surplus resulting therefrom. The
enumeration of the foregoing rights is not intended to be exhaustive and the
exercise of any right shall not preclude the exercise of any other rights, all
of which shall be cumulative. The mortgage, deed of trust or assignment on the
Real Estate shall govern the rights and remedies of the Agent with respect
thereto.
SECTION 11. TERMINATION
Except as otherwise permitted herein, the Companies, the Parent or the
Agent, on behalf of the Lenders, may terminate this Agreement and the Line of
Credit only as of the Maturity Date or any subsequent Anniversary Date and then
only by giving the other at least sixty (60) days prior written notice of
termination. Notwithstanding the foregoing the Agent may terminate the
Agreement in accordance with paragraph 10.2 of Section 10 upon the occurrence
of an Event of Default, provided, however, that if the Event of Default is an
event listed in paragraph 1(c) of Section 10 of this Agreement, the Agent may
regard this Agreement as terminated and notice to that effect is not required.
This Agreement, unless terminated as herein provided, shall automatically
continue to the Maturity Date and from Anniversary Date to Anniversary Date
thereafter until terminated in accordance with this Agreement. Notwithstanding
the foregoing, the Companies and the Parent may terminate this Agreement and
the Line of Credit prior to any applicable Maturity Date upon sixty (60) days'
prior written notice to the Agent, provided that the Companies and the Parent
pay to the Agent, on behalf of the Lenders, immediately on demand, an Early
Termination Fee and the Prepayment Premium, if applicable. All Obligations
shall become due and payable as of any termination hereunder or under Section
10 hereof and, pending a final accounting, the Agent may withhold any balances
in the Revolving Borrowers' Revolving Loan Account (unless supplied with an
indemnity satisfactory to the Agent) to cover all of the Companies'
Obligations, whether absolute or contingent. All of the Agent's rights, liens
and security interests shall continue after any termination until all
Obligations have been paid and satisfied in full.
SECTION 12. MISCELLANEOUS
12.1. The Companies hereby waive diligence, demand, presentment and
protest and any notices thereof as well as notice of nonpayment. No delay or
omission of the Agent or the Companies to exercise any right or remedy
hereunder, whether before or after the happening of any Event of Default, shall
impair any such right or shall operate as a waiver thereof or as a waiver of
any such Event of Default. No single or partial exercise by the
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Agent of any right or remedy precludes any other or further exercise thereof,
or precludes any other right or remedy.
12.2. THIS WRITTEN AGREEMENT AND THE OTHER DOCUMENTS REFERENCED HEREIN
OR CONTEMPLATED HEREBY REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES HERETO, CAN ONLY BE MODIFIED IN WRITING SIGNED BY THE
PARTIES HERETO, AND SHALL BIND THE RESPECTIVE PARTIES HERETO AND THEIR
RESPECTIVE SUCCESSORS AND ASSIGNS. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
AMONG THE PARTIES.
12.3. In no event shall the Companies, upon demand by the Agent for
payment of any indebtedness relating hereto, by acceleration of the maturity
thereof, or otherwise, be obligated to pay interest and fees in excess of the
amount permitted by law. Regardless of any provision herein or in any
agreement made in connection herewith, the Agent and the Lenders shall never be
entitled to receive, charge or apply, as interest on any indebtedness relating
hereto, any amount in excess of the maximum amount of interest permissible
under applicable law. It is the intent of the Companies and the Agent and the
Lenders to conform strictly to all applicable state and federal usury laws.
All agreements between the Companies, the Parent and the Agent whether now
existing or hereafter arising and whether written or oral, are hereby expressly
limited so that in no contingency or event whatsoever, whether by reason of
acceleration of the maturity hereof or otherwise, shall the amount contracted
for, charged or received by the Agent or the Lenders for the use, forbearance,
or detention of the money loaned hereunder or otherwise, or for the payment or
performance of any covenants or obligation contained herein or in any other
document evidencing, securing or pertaining to the Obligations evidenced hereby
which may be legally deemed to be for the use, forbearance or detention of
money, exceed the maximum amount which the Agent and the Lenders are legally
entitled to contract for, charge or collect under applicable state or federal
law. If from any circumstance whatsoever fulfillment of any provision hereof
or of such other documents, at the time performance of such provision shall be
due, shall involve transcending the limit of validity prescribed by law, then
the obligation to be fulfilled shall be automatically reduced to the limit of
such validity, and if from any such circumstance the Agent and the Lenders
shall ever receive as interest or otherwise an amount in excess of the maximum
that can be legally collected, then such amount which would be excessive
interest shall be applied to the reduction of the principal indebtedness hereof
and any other amounts due with respect to the Obligations evidenced hereby, but
not to the payment of interest and if such amount which would be excessive
interest exceeds the Obligations and all other non interest indebtedness
described above, then such additional amount shall be refunded to the
Companies. This paragraph shall control every other provision hereof and of
any other agreement made in connection herewith.
12.4. If any provision hereof or of any other agreement made in
connection herewith is held to be illegal or unenforceable, such provision
shall be fully severable, and the remaining provisions of the applicable
agreement shall remain in full force and effect and shall not be affected by
such provision's severance. Furthermore, in lieu of any such
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provision, there shall be added automatically as a part of the applicable
agreement a legal and enforceable provision as similar in terms to the severed
provision as may be possible.
12.5. THE COMPANIES, THE PARENT, THE AGENT AND THE LENDERS EACH HEREBY
WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF
THIS AGREEMENT. THE COMPANIES, THE PARENT AND THE AGENT HEREBY IRREVOCABLY
WAIVE PERSONAL SERVICE OF PROCESS AND CONSENT TO SERVICE OF PROCESS BY
CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED.
12.6. Except as otherwise herein provided, any notice or other
communication required hereunder shall be in writing, and shall be deemed to
have been validly served, given or delivered when hand delivered or sent by
telegram or telex, or three days after deposit in the United States mails, with
proper first class postage prepaid and addressed to the party to be notified as
follows:
(A) if to the Agent, at:
The CIT Group/Business Credit, Inc.
Two Lincoln Centre Suite 200 - ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Regional Manager
with a copy of any material notice to:
The CIT Group/Business Credit, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: General Counsel
(B) if to the Companies and/or the Parent at:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Ms. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
or to such other address as any party may designate for itself by like notice.
12.7. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK, EXCEPT TO THE EXTENT THAT ANY OTHER LOAN DOCUMENT INCLUDES AN EXPRESS
ELECTION TO BE GOVERNED BY THE LAWS OF ANOTHER JURISDICTION.
12.8. The Parent and each of the Companies hereby agree and acknowledge
for purpose of Section 35.51 of the Texas Business and Commerce Code, to the
extent applicable, that
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the Parent and each of the Companies specifically intend for this Agreement and
the transaction evidenced hereby to be governed by the laws of the State of New
York, that New York law is a proper choice of law, and that the transaction
bears a reasonable relationship to New York based, among other things, on the
following: (a) the Agent and CITBC are based and resident in New York, (b) the
Agent and CITBC have their chief executive office in New York and the credit
analysis and part of the negotiations took place in New York, (c) the Accounts
will be remitted to a lockbox bank located in New York, (d) funding of the
Loans will come from New York, (e) the principal and interest will be paid to
the Agent on behalf of the Lenders in New York.
12.9. NOTWITHSTANDING THE FACT THAT PMC AND SCC HAVE EXECUTED EXHIBIT
A, THE TERM LOAN I PROMISSORY NOTE AND EXHIBIT C, THE REVOLVING CREDIT NOTE,
AND THAT SCH HAS EXECUTED EXHIBIT B, THE TERM LOAN II NOTE, EACH OF PMC, SCC
AND SCH HEREBY AGREES, CONFIRMS AND RATIFIES THAT IT IS JOINTLY AND SEVERALLY
LIABLE ON ANY AND ALL OF THE REVOLVING NOTE, TERM LOAN I NOTE AND TERM LOAN II
NOTE, AS WELL AS ALL OF THE OBLIGATIONS HEREUNDER.
SECTION 13. AGREEMENT BETWEEN THE LENDERS
13.1. (a) The Agent, for the account of the Lenders, shall disburse
all loans and advances to the Companies and shall handle all collections of
Collateral and repayment of Obligations. It is understood that for purposes of
advances to the Companies and for purposes of this Section 13 the Agent is
using the funds of the Agent.
(b) Unless the Agent shall have been notified in writing by
any Lender prior to any advance to the Companies that such Lender will not make
the amount which would constitute its share of the borrowing on such date
available to the Agent, the Agent may assume that such Lender shall make such
amount available to the Agent on a Settlement Date, and the Agent may, in
reliance upon such assumption, make available to the Companies a corresponding
amount. A certificate of the Agent submitted to any Lender with respect to any
amount owing under this subsection shall be conclusive, absent manifest error.
If such Lender's share of such borrowing is not in fact made available to the
Agent by such Lender on the Settlement Date, the Agent shall be entitled to
recover such amount with interest thereon at the rate per annum applicable to
Revolving Loans hereunder, on demand, from the Companies without prejudice to
any rights which the Agent may have against such Lender hereunder. Nothing
contained in this subsection shall relieve any Lender which has failed to make
available its ratable portion of any borrowing hereunder from its obligation to
do so in accordance with the terms hereof. Nothing contained herein shall be
deemed to obligate the Agent to make available to the Companies the full amount
of a requested advance when the Agent has any notice (written or otherwise)
that any of the Lenders will not advance its ratable portion thereof.
13.2. On the Settlement Date, the Agent and the Lenders shall each
remit to the other, in immediately available funds, all amounts necessary so as
to ensure that, as of the
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Settlement Date, the Lenders shall have their proportionate share of all
outstanding Obligations.
13.3. The Agent shall forward to each Lender, at the end of each month,
a copy of the account statement rendered by the Agent to the Companies.
13.4. The Agent shall, after receipt of any interest and fees earned
under this Agreement, promptly remit to the Lenders: (a) their pro rata
portion of all fees, provided, however, that the Lenders (other than CITBC in
its role as the Agent) shall (x) not share in the Collateral Management Fee or
the fees provided for in Section 8; and (y) receive their share of the Loan
Facility Fee in accordance with their respective agreements with the Agent; (b)
interest computed at the rate and as provided for in Section 8 of this
Agreement on all outstanding amounts advanced by the Lenders on each Settlement
Date, prior to adjustment, that are subsequent to the last remittance by the
Agent to the Lenders of the Companies' interest; (c) its pro rata portion of
all principal repaid on the Term Loans; and (d) interest on the Term Loans
computed at the rate and as provided for in Section 8 of this Agreement.
13.5. (a) The Companies and the Parent acknowledge that the Lenders
may sell participation in the loans and extensions of credit made and to be
made to the Companies hereunder. The Companies further acknowledge that in
doing so, the Lenders may grant to such participants certain rights which would
require the participant's consent to certain waivers, amendments and other
actions with respect to the provisions of this Agreement, provided that the
consent of any such participant shall not be required except for matters
requiring the consent of all Lenders hereunder as set forth in Section 14.10
hereof.
(b) The Companies and the Parent authorize each Lender to
disclose to any participant or purchasing lender (each, a "Transferee") and any
prospective Transferee any and all financial information in such Lender's
possession concerning the Companies, the Parent, and their Subsidiaries and
Affiliates which has been delivered to such Lender by or on behalf of the
Companies pursuant to this Agreement or which has been delivered to such Lender
by or on behalf of the Companies and the Parent in connection with such
Lender's credit evaluation of the Companies and the Parent and their affiliates
prior to entering into this Agreement.
13.6. The Companies and the Parent hereby agree that each Lender is
solely responsible for its portion of the Line of Credit and that neither the
Agent nor any Lender shall be responsible for, nor assume any obligations for
the failure of any Lender to make available its portion of the Line of Credit.
Further, should any Lender refuse to make available its portion of the Line of
Credit, then the other Lender may, but without obligation to do so, increase,
unilaterally, its portion of the Line of Credit in which event the Companies
are so obligated to that other Lender.
13.7. In the event that the Agent, the Lenders or any one of them is
sued or threatened with suit by the Companies, the Parent or any Subsidiary or
Affiliate or by any receiver, trustee, creditor or any committee of creditors
on account of any preference,
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voidable transfer or lender liability issue, alleged to have occurred or been
received as a result of, or during the transactions contemplated under this
Agreement, then in such event any money paid in satisfaction or compromise of
such suit, action, claim or demand and any expenses, costs and attorneys' fees
paid or incurred in connection therewith, whether by the Agent, the Lenders or
any one of them, shall be shared proportionately by the Lenders. In addition,
any costs, expenses, fees or disbursements incurred by outside agencies or
attorneys retained by the Agent to effect collection or enforcement of any
rights in the Collateral, including enforcing, preserving or maintaining rights
under this Agreement shall be shared proportionately between and among the
Lenders to the extent not reimbursed by the Companies or from the proceeds of
Collateral. The provisions of this paragraph shall not apply to any suits,
actions, proceedings or claims that (x) predate the date of this Financing
Agreement or (y) are based on transactions, actions or omissions that predate
the date of this Financing Agreement.
13.8. Each of the Lenders agrees with each other Lender that any money
or assets of the Companies held or received by such Lender, no matter how or
when received, shall be applied to the reduction of the Obligations (to the
extent permitted hereunder) after (x) the occurrence of an Event of Default and
(y) the election by the Required Lenders to accelerate the Obligations. In
addition, the Companies and the Parent authorize, and the Lenders shall have
the right, without notice, upon any amount becoming due and payable hereunder,
to set-off and apply against any and all property held by, or in the possession
of such Lender the Obligations due such Lenders.
13.9. CITBC shall have the right at any time to assign to one or more
commercial banks, commercial finance lenders or other financial institutions
all or a portion of its rights and obligations under this Agreement (including,
without limitation, its obligations under the Line of Credit, Term Loans, the
Revolving Loans and its rights and obligations with respect to Letters of
Credit). Upon execution of an Assignment and Transfer Agreement, (i) the
assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such assignment,
have the rights and obligations of CITBC as the case may be hereunder and (ii)
CITBC shall, to the extent that rights and obligations hereunder have been
assigned by it pursuant to such assignment, relinquish its rights and be
released from its obligations under this Agreement. The Companies and the
Parent shall, if necessary, execute any documents reasonably required to
effectuate the assignments. No other Lender may assign its interest in the
loans and advances and extensions of credit hereunder without the prior written
consent of the Agent.
SECTION 14. AGENCY
14.1. Each Lender hereby irrevocably designates and appoints CITBC as
the Agent for the Lenders under this Agreement and any ancillary loan documents
and irrevocably authorizes CITBC as the Agent for such Lender, to take such
action on its behalf under the provisions of this Agreement and all ancillary
documents and to exercise such powers and perform such duties as are expressly
delegated to the Agent by the terms of this Agreement and all ancillary
documents together with such other powers as are reasonably incidental
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thereto. Notwithstanding any provision to the contrary elsewhere in this
Agreement, the Agent shall not have any duties or responsibilities, except
those expressly set forth herein, or any fiduciary relationship with any Lender
and no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into Agreement and the ancillary documents or
otherwise exist against the Agent.
14.2. The Agent may execute any of its duties under this Agreement and
all ancillary documents by or through agents or attorneys-in-fact and shall be
entitled to the advice of counsel concerning all matters pertaining to such
duties.
14.3. Neither the Agent nor any of its officers, directors, employees,
agents, or attorneys-in-fact shall be (i) liable to any Lender for any action
lawfully taken or omitted to be taken by it or such person under or in
connection with this Agreement and all ancillary documents (except for its or
such person's own gross negligence or willful misconduct), or (ii) responsible
in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by the Companies or the Parent or any
officer thereof contained in this Agreement and all ancillary documents or in
any certificate, report, statement or other document referred to or provided
for in, or received by the Agent under or in connection with, this Agreement
and all ancillary documents or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement and all ancillary
documents or for any failure of the Companies or the Parent to perform their
obligations thereunder. The Agent shall not be under any obligation to any
Lender to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement and all ancillary
documents or to inspect the properties, books or records of the Companies or
the Parent.
14.4. The Agent shall be entitled to rely, and shall be fully protected
in relying, upon any note, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper person or
persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Companies and the Parent), independent accountants
and other experts selected by the Agent. The Agent shall be fully justified in
failing or refusing to take any action under this Agreement and all ancillary
documents unless it shall first receive such advice or concurrence of the
Lenders, or the Required Lenders, as the case may be, as it deems appropriate
or it shall first be indemnified to its satisfaction by the Lenders against any
and all liability and expense which may be incurred by it by reason of taking
or continuing to take any such action. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement and all
ancillary documents in accordance with a request of the Lenders, or the
Required Lenders, as the case may be, and such request and any action taken or
failure to act pursuant thereto shall be binding upon all the Lenders.
14.5. The Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default hereunder unless the Agent has
received notice from a Lender or the Companies or the Parent describing such
Default or Event of Default. In the
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event that the Agent receives such a notice, the Agent shall promptly give
notice thereof to the Lenders. The Agent shall take such action with respect
to such Default or Event of Default as shall be reasonably directed by the
Lenders, or Required Lenders, as the case may be; provided that unless and
until the Agent shall have received such direction, the Agent may in the
interim (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it
shall deem advisable and in the best interests of the Lenders.
14.6. Each Lender expressly acknowledges that neither the Agent nor any
of its officers, directors, employees, agents or attorneys-in-fact has made
any representations or warranties to it and that no act by the Agent
hereinafter taken, including any review of the affairs of the Companies and/or
the Parent shall be deemed to constitute any representation or warranty by the
Agent to any Lender. Each Lender represents to the Agent that it has,
independently and without reliance upon the Agent or any other Lender and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Companies and/or the
Parent and made its own decision to enter into this Agreement. Each Lender
also represents that it will, independently and without reliance upon the Agent
or any other Lender and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under the Agreement and
to make such investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition or
creditworthiness of the Companies and/or the Parent. The Agent, however, shall
provide the Lenders with copies of all financial statements, projections and
business plans which come into the possession of the Agent or any of its
officers, employees, agents or attorneys-in-fact.
14.7. The Lenders agree to indemnify the Agent in its capacity as such
(to the extent not reimbursed by the Companies and/or the Parent and without
limiting the obligation of the Companies and/or the Parent to do so), from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind
whatsoever (including negligence on the part of the Agent) which may at any
time be imposed on, incurred by or asserted against the Agent in anyway
relating to or arising out of this Agreement or any ancillary documents or any
documents contemplated by or referred to herein or the transactions
contemplated hereby or any action taken or omitted by the Agent under or in
connection with any of the foregoing; provided that no Lender shall be liable
for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting solely from the Agent's gross negligence or willful misconduct. The
agreements in this paragraph shall survive the payment of the obligations.
14.8. The Agent may make loans to, and generally engage in any kind of
business with the Companies as though the Agent were not the Agent hereunder.
With respect to its loans made or renewed by it or loan obligations hereunder
as Lender, the Agent shall have the same rights and powers, duties and
liabilities under this Agreement as any Lender
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and may exercise the same as though it was not the Agent and the terms "Lender"
and "Lenders" shall include the Agent in its individual capacities.
14.9. The Agent may resign as the Agent upon 30 days' notice to the
Lenders and the Companies and such resignation shall be effective upon the
appointment of a successor Agent. If the Agent shall resign as Agent, then the
Required Lenders, with the consent of the Companies, shall appoint a successor
Agent for the Lenders. In the event the Required Lenders and the Companies
cannot agree on and do not appoint a successor Agent within 30 days, then the
Required Lenders shall appoint a new successor Agent. Once a successor Agent
has been appointed, such successor Agent shall succeed to the rights, powers
and duties of the Agent and the term "the Agent" shall mean such successor
Agent effective upon its appointment, and the former Agent's rights, powers and
duties as the Agent shall be terminated, without any other or further act or
deed on the part of such former Agent or any of the parties to this Agreement.
After any retiring Agent's resignation hereunder as the Agent the provisions of
this Section 14 shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was the Agent.
14.10. Notwithstanding anything contained in this Agreement to the
contrary, the Agent will not, without the prior written consent of all Lenders:
(a) amend this Agreement to (v) increase the Line of Credit; (w) reduce the
interest rates; (x) reduce or waive (i) any fees in which the Lenders share
hereunder; or (ii) the repayment of any Obligations due the Lenders; (y) extend
the maturity of the Obligations; or (z) alter or amend (1) this Paragraph 10 or
(2) the definitions of Eligible Accounts Receivable, Eligible Inventory,
accounts receivable advance percentage, inventory advance percentage,
Collateral or Required Lenders; (b) release Collateral in bulk without a
corresponding reduction in the Obligations to the Lenders, or (c) intentionally
make any Revolving Loan or assist in opening any Letter of Credit hereunder if
after giving effect thereto the total of Revolving Loans and Letters of Credit
hereunder for the Companies would exceed one hundred and ten percent (110%) of
the maximum amount available under Sections 3 and 5 hereof. In all other
respects the Agent is authorized to take such actions or fail to take such
actions if the Agent, in its reasonable discretion, deems such to be advisable
and in the best interest of the Lenders, including, but not limited to, the
making of an overadvance or the termination of the Agreement upon the
occurrence of an Event of Default unless it is specifically instructed to the
contrary by the Required Lenders.
14.11. In the event any Lender's consent is required pursuant to the
provisions of this Agreement and such Lender does not respond to any request by
the Agent for such consent within 10 days after such request is made to such
Lender, such failure to respond shall be deemed a consent. In addition, in the
event that any Lender declines to give its consent to any such request, it is
hereby mutually agreed that the Agent and/or any other Lender shall have the
right (but not the obligation) to purchase such Lender's share of the Loans for
the full amount thereof together with accrued interest thereon to the date of
such purchase.
14.12. Each Lender agrees that notwithstanding the provisions of Section
11 of this Agreement any Lender may terminate this Agreement and the Line of
Credit only as of the Maturity Date or any subsequent Anniversary Date and then
only by giving the Agent 90
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days prior written notice thereof. Within 30 days after receipt of any such
termination notice, the Agent shall, at its option, either (i) give notice of
termination to the Companies hereunder or (ii) purchase the Lender's share of
the Obligations hereunder for the full amount thereof plus accrued interest
thereon. Unless so terminated this Agreement and the Line of Credit shall be
automatically extended from Anniversary Date to Anniversary Date.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their proper and duly authorized officers as of the
date set forth above. This Agreement shall take effect as of the date set
forth above after being accepted below by an officer of the Agent after which,
the Agent shall forward to the Companies and the Parent a fully executed
original for its files.
CO-BORROWERS
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SUN COAST HOLDINGS, INC.
By:
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice Chairman
PLASTICS MANUFACTURING COMPANY
By:
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Executive Vice President
SUN COAST CLOSURES, INC.
By:
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Secretary and Treasurer
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PARENT
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SUN COAST INDUSTRIES, INC.
By:
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Executive Vice President
THE CIT GROUP/BUSINESS CREDIT, INC.
By:
---------------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
ACCEPTED:
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THE CIT GROUP/BUSINESS CREDIT, INC.
NEW YORK, NEW YORK
By:
---------------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
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