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Exhibit 10.24
CREDIT AGREEMENT
by and between
THE ANTIGUA GROUP, INC.
SOUTHHAMPTON ENTERPRISES, INC.
SOUTHHAMPTON ENTERPRISES CORP.
and
IMPERIAL BANK
Dated as of
May 7, 1997
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TABLE OF CONTENTS
Page
RECITALS..........................................................................................................1
ARTICLE 1 DEFINITION OF TERMS.............................................................................1
1.1 Definitions.....................................................................................1
1.2 References.....................................................................................10
1.3 Accounting Terms...............................................................................10
ARTICLE 2 THE TERM LOAN..................................................................................10
2.1 Term Loan Commitment...........................................................................10
2.2 Term Loan......................................................................................10
2.3 Interest Rate..................................................................................10
2.4 Principal Payments.............................................................................11
2.5 Principal Prepayments..........................................................................13
2.6 Method of Payment..............................................................................13
2.7 Conditions.....................................................................................13
2.8 Assignment.....................................................................................13
2.9 Lender's Right to Extend Originally Scheduled Term Maturity Date ..............................14
ARTICLE 3 SECURITY; RELEASE; GUARANTEE...................................................................14
3.1 Security.......................................................................................14
3.2 Security Documents.............................................................................15
3.3 Guarantee......................................................................................15
3.4 Subordination..................................................................................15
3.5 Intercreditor Agreement........................................................................15
ARTICLE 4 CONDITIONS PRECEDENT...........................................................................15
4.1 Term Loan Advance..............................................................................15
4.2 No Event of Default or Default.................................................................18
4.3 No Material Adverse Change.....................................................................18
4.4 Representations and Warranties.................................................................18
4.5 Deferral or Waiver of Conditions Precedent.....................................................19
ARTICLE 5 REPRESENTATIONS AND WARRANTIES.................................................................19
5.1 Recitals.......................................................................................19
5.2 Organization and Good Standing.................................................................19
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5.3 Authorization and Power........................................................................19
5.4 Security Documents.............................................................................19
5.5 No Conflicts or Consents.......................................................................19
5.6 No Litigation..................................................................................20
5.7 Financial Condition............................................................................20
5.8 Taxes..........................................................................................20
5.9 No Stock Purchase..............................................................................20
5.10 Advances.......................................................................................20
5.11 Enforceable Obligations........................................................................20
5.12 No Default.....................................................................................21
5.13 Significant Debt Agreements and other Material Agreements......................................21
5.14 ERISA..........................................................................................21
5.15 Compliance with Law............................................................................21
5.16 Solvent........................................................................................21
5.17 Investment Company Act.........................................................................21
5.18 Title..........................................................................................21
5.19 Permits and Licenses...........................................................................22
5.20 Transactions with Affiliates...................................................................22
5.21 Indebtedness...................................................................................22
5.22 Subsidiaries; Capital Structure................................................................22
5.23 Employee Controversies.........................................................................22
5.24 Proprietary Rights.............................................................................22
5.25 Business.......................................................................................23
ARTICLE 6 AFFIRMATIVE COVENANTS..........................................................................23
6.1 Financial Statements, Reports and Documents....................................................23
6.2 Maintenance of Existence and Rights; Conduct of Business; Management...........................24
6.3 Operations and Properties......................................................................25
6.4 Authorizations and Approvals...................................................................25
6.5 Compliance with Law............................................................................25
6.6 Payment of Taxes and Other Indebtedness........................................................25
6.7 Compliance with Significant Debt Agreements and Other Material
Agreements.....................................................................................25
6.8 Compliance with Credit Documents...............................................................25
6.9 Notice of Default..............................................................................25
6.10 Other Notices..................................................................................26
6.11 Books and Records; Access......................................................................26
6.12 ERISA Compliance...............................................................................26
6.13 Further Assurances.............................................................................26
6.14 Insurance......................................................................................26
6.15 Proprietary Rights.............................................................................27
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ARTICLE 7 NEGATIVE COVENANTS.............................................................................27
7.1 Existence; Issuance of Stock; Change of Control; Sales of
Substantially All of Assets....................................................................28
7.2 Amendments to Organizational Documents.........................................................28
7.3 Margin Stock...................................................................................28
7.4 Fiscal Year....................................................................................28
7.5 Liens..........................................................................................28
7.6 Transfer Collateral............................................................................28
7.7 Financial Covenants............................................................................28
7.8 Other Indebtedness.............................................................................29
7.9 Investments....................................................................................29
7.10 Dividends and Distributions....................................................................30
7.11 Compensation...................................................................................30
7.12 Capital Expenditures...........................................................................30
7.13 Transactions with Affiliates...................................................................30
7.14 Changes in Business............................................................................30
7.15 Other Creditors' Documents.....................................................................30
ARTICLE 8 EVENTS OF DEFAULT..............................................................................31
8.1 Events of Default..............................................................................31
8.2 Remedies Upon Event of Default.................................................................34
8.3 Performance by Lender..........................................................................35
8.4 Receiver.......................................................................................35
ARTICLE 9 MISCELLANEOUS..................................................................................36
9.1 Modification...................................................................................36
9.2 Waiver.........................................................................................36
9.3 Payment of Expenses............................................................................36
9.4 Notices........................................................................................37
9.5 Governing Law; Jurisdiction, Venue; Waiver of Jury Trial.......................................38
9.6 Reference Provision............................................................................38
9.7 Invalid Provisions.............................................................................39
9.8 Binding Effect.................................................................................40
9.9 Entirety.......................................................................................40
9.10 Headings.......................................................................................40
9.11 Survival.......................................................................................40
9.12 No Third Party Beneficiary.....................................................................40
9.13 Time...........................................................................................40
9.14 Indemnity......................................................................................40
9.15 Schedules and Exhibits Incorporated............................................................40
9.16 Counterparts...................................................................................41
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Schedule 1.1 (Permitted Liens)
Schedule 4.1 (Closing List)
Schedule 5.21 (Existing Indebtedness)
Schedule 5.22 (Subsidiaries and Divisions)
Schedule 5.25 (Description of Business)
Schedule 7.8 (Permitted Indebtedness)
Schedule 7.11 (Compensation)
Exhibit 6.1(e) (Compliance Certificate)
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CREDIT AGREEMENT
BY THIS CREDIT AGREEMENT (together with any amendments or
modifications, the "Credit Agreement"), entered into as of this 7th day of May,
1997 by and between THE ANTIGUA GROUP, INC., a Nevada corporation ("Borrower"),
SOUTHHAMPTON ENTERPRISES INC., a Texas corporation ("SEI"), SOUTHHAMPTON
ENTERPRISES CORP., a British Columbia (Canada) corporation ("SE Corp"), and
IMPERIAL BANK, a California banking corporation ("Lender"), in consideration of
the mutual promises herein contained and for other valuable consideration, the
parties hereto do hereby agree as follows:
RECITALS
A. Borrower has applied to Lender for a term loan ("Term Loan") in the
principal amount of TWO MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS
($2,500,000.00) to be used to pay dividends to SEI, which SEI will use to
acquire Borrower's stock. SEI is a wholly-owned subsidiary of SE Corp.
B. As a condition for extending such financial accommodations, Lender
has required that Borrower, SEI and SE Corp enter into this Credit Agreement
establishing the terms and conditions thereof.
ARTICLE 1
DEFINITION OF TERMS
1.1 Definitions. For the purposes of this Credit Agreement, unless the
context otherwise requires, the following terms will have the respective
meanings assigned to them in this Article 1 or in the Section hereof referred to
below:
"Acquisition" means the acquisition by SEI of all of the
issued and outstanding stock in Borrower pursuant to terms and conditions
acceptable to Lender.
"Advance" means a disbursement of a Loan.
"Affiliate" of any Person means any Person which, directly or
indirectly, controls, is controlled by, or is under common control with, such
Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlled by" and "under common control
with"), as used with respect to any Person, will mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such Person, whether by contract or otherwise.
"Articles of Organization" of any Person means the charter,
articles, operating agreement, joint venture agreement, partnership agreement,
trust agreement, by-laws and any other written documents evidencing the
formation, organization, governance and continuing existence of such Person.
"Authorized Officer" of any Person means one or more of the
officers, partners, members, managers, trustees or other representatives of such
Person duly authorized (and so certified to Lender by the corporate secretary,
general partners, members, managers, trustees or other Person or Persons having
the authority to do so, as the case may be) of such Person pursuant to a
certificate of authority and incumbency from time to time satisfactory to Lender
in the exercise of Lender's reasonable discretion), acting alone, to execute and
deliver documents, instruments, agreements, reports, statements and certificates
in connection herewith on behalf of such Person and, in the case of Borrower, to
request the Term Loan Advance.
"Banking Day" means a day of the year on which banks are not
required or authorized to close in Inglewood, California.
"Borrower": See the Preamble hereto.
"Capital Expenditures" of any Person means, with respect to
any period, the aggregate of all expenditures (whether paid in cash or accrued
as liabilities and including expenditures for capitalized lease obligations) by
such Person during such period that are required by GAAP to be included in or
reflected by the property, plant or equipment or similar fixed asset accounts
(or in intangible accounts subject to amortization) in the balance sheet of such
Person.
"Cash Flow" of any Person means, with respect to any period,
its net income after taxes for such period [excluding any after-tax gains or
losses on the sale of assets (other than the sale of inventory in the ordinary
course of business) and excluding other after-tax extraordinary gains or
losses], plus its deferred taxes, plus its depreciation and amortization
deducted in determining net income for such period, minus Capital Expenditures
for such period not financed, minus its cash dividends paid or accrued and cash
withdrawals paid or accrued to its shareholders or other Affiliates for such
period which were not calculated in determining net income after taxes, and plus
the after tax increase in its LIFO reserves or minus the after tax decrease in
its LIFO reserves.
"Change in Control" means the occurrence or existence of
either of the following events or conditions without the prior written consent
of Lender, if different than the state of affairs as of the Closing Date (after
giving effect to the Acquisition):
(a) the acquisition by any Person or two or more
Persons acting in concert of "beneficial ownership" (within
the meaning of Rule 13d-3 promulgated by the SEC under the
Exchange Act or as otherwise specified under the provisions of
this Credit Agreement) of securities of Borrower or SEI having
more than 50% of the ordinary voting power for the election of
directors; or
(b) the acquisition by any Person or two or more
Persons acting in concert of Control of Borrower or SEI.
"Closing Date" means the date the Term Loan Advance is
disbursed, whether
directly or into an escrow in which proceeds of the Term Loan will be held and
not delivered to Borrower until the conditions established in such escrow are
satisfied (or if those conditions are not satisfied, the proceeds of the Term
Loan will be returned to Lender).
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means all property of any Person subject to the
Security Documents.
"Control" when used with respect to any Person means the
power, directly or indirectly, to direct the management policies of such Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Controlled Group" means, severally and collectively, the
members of the group controlling, controlled by and/or in common control of
Borrower, within the meaning of Section 4001(b) of ERISA.
"Credit Agreement": See the Preamble hereto.
"Credit Documents" means this Credit Agreement, the Term Note
(including any renewals, extensions and refundings thereof), the Security
Agreements, the Pledge Agreements, any other Security Documents, the
Subordination Agreements, the Intercreditor Agreement, the Warrant and any
written agreements, certificates or documents (and with respect to this Credit
Agreement and such other written agreements and documents, any amendments or
supplements thereto or modifications thereof) executed or delivered pursuant to
the terms of this Credit Agreement.
"Cruttenden" means The Cruttenden ▇▇▇▇ Bridge Fund, LLC, a
California limited liability company.
"Cruttenden Loan" means a loan or note purchase in the
principal amount of One Million Twenty Thousand Dollars ($1,020,000.00) from
Cruttenden to Borrower pursuant to terms acceptable to Lender.
"Debt Service" of any Person means, with respect to any
period, current principal maturities of its long term debt and capitalized
leases paid or scheduled to be paid during such period, plus any prepayments on
indebtedness owed by it to any other Person (except trade payables and revolving
loans) and paid during such period.
"Debt Service Coverage Ratio" of a Person means, with respect
to any period, the ratio of (a) its Cash Flow to (b) its Debt Service.
"Default" will mean any event, condition or default which with
the giving of notice, the lapse of time or both would be an Event of Default.
"Default Rate" means at any time five percent (5%) in excess
of the per annum
interest rate otherwise applicable pursuant to Section 2.3(a).
"Dollars" and the sign "$" mean lawful currency of the United
States of America.
"EBITDA" of a Person will mean, with respect to any period,
its net income after taxes for such period (excluding any after-tax gains or
losses on the sale of assets and excluding other after-tax extraordinary gains
or losses) plus its interest expense, income tax expense, depreciation and
amortization for such period, less its gains and losses attributable to any
fixed asset sales made during such period, minus any distributions or dividends
permitted to be paid by it pursuant to the terms hereof, plus or minus any other
of its non-cash charges or gains which have been subtracted or added in
calculating net income after taxes for such period.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, together with all final and permanent regulations issued
pursuant thereto. References herein to sections and subsections of ERISA are
deemed to refer to any successor or substitute provisions therefor.
"ESOP" means any Employee Stock Ownership Plan, as it may be
amended from time to time, adopted by Borrower.
"Event of Default": See Article 8.
"Exchange Act" means the Securities Exchange Act of 1934.
"Financial Covenants": See Section 7.7.
"GAAP" means those generally accepted accounting principles
and practices which are recognized as such by the American Institute of
Certified Public Accountants acting through its Accounting Principles Board or
by the Financial Accounting Standards Board or through other appropriate boards
or committees thereof and which are consistently applied for all periods after
the date hereof so as to properly reflect the financial condition, and the
results of operations and changes in the financial position, of Obligors,
including without limitation accounting rules promulgated pursuant to
Regulations SX and SK, except that any accounting principle or practice required
to be changed by such Accounting Principles Board or Financial Accounting
Standards Board (or other appropriate board or committee of such Boards) in
order to continue as a generally accepted accounting principle or practice may
be so changed.
"Governmental Authority" means, with respect to any Person,
any government (or any political subdivision or jurisdiction thereof), court,
bureau, agency or other governmental authority having jurisdiction over such
Person or any of its business, operations or properties.
"Guarantors" means SEI and SE Corp.
"Indebtedness" of any Person means all of its monetary
obligations and liabilities.
Interest Coverage Ratios" of any person means, for any Period,
the ratio of (a)
its EBITDA for such period to (b) interest expense for such period.
"Intercreditor Agreement": See Section 3.5.
"LaSalle" means LaSalle Business Credit, Inc., a Delaware
corporation.
"LaSalle Loans" means collectively the following loans from
LaSalle to Borrower: (A) a revolving line of credit loan in the maximum
principal amount of Twelve Million Dollars ($12,000,000.00) made pursuant to
that Loan and Security Agreement between LaSalle and Borrower, dated as of
January 21, 1997, and modified by that Modification Agreement dated as of May 7,
1997 ("1/97 LaSalle Agreement"); (b) a term loan in the principal amount of
Seven Hundred Seventy-Five Thousand Dollars ($775,000.00) made pursuant to the
1/97 LaSalle Agreement; and (c) a term loan in the principal amount of Three
Million Five Hundred Thousand Dollars ($3,500,000.00) made pursuant to that Loan
and Security Agreement between LaSalle and Borrower and dated as of May 7, 1997.
"Lender": See the Preamble hereto.
"Liabilities" of a Person means at any date all liabilities
required under GAAP to be recorded on a balance sheet of such Person as of such
date.
"Liabilities to TNW Ratio" of a Person means the ratio of (a)
its Liabilities (other than the Seller Debt) to (b) its Tangible Net Worth.
"Lien" means any lien, mortgage, security interest, tax lien,
pledge, encumbrance, conditional sale or title retention arrangement, or any
other encumbrance on property whether arising by agreement or under any statute
or law, or otherwise.
"Loan" or "Loans" means the Term Loan.
"Material Adverse Effect" means any circumstance or event
which (i) has any material adverse effect upon the validity or enforceability of
any Credit Document, (ii) materially impairs the ability of any Obligor to
fulfill its obligations under the Credit Documents, or (iii) causes an Event of
Default or any event which, with notice or lapse of time or both, would become
an Event of Default.
"Net Worth" of a Person means its shareholders' equity as
determined in accordance with GAAP, consistently applied.
"Note" or "Notes" means the Term Note.
"Obligation" means all present and future indebtedness,
obligations and liabilities of Borrower to Lender, and all renewals and
extensions thereof, or any part thereof, arising pursuant to this Credit
Agreement or represented by the Notes, including without limitation the Loans
and all interest accruing thereon, and attorneys' fees incurred in the
enforcement or collection thereof, regardless of whether such indebtedness,
obligations and liabilities are direct,
indirect, fixed, contingent, joint, several or joint and several; together with
all indebtedness, obligations and liabilities of Borrower evidenced or arising
pursuant to any of the other Credit Documents, and all renewals and extensions
thereof, or part thereof.
"Obligor" means Borrower and Guarantors.
"Originally Scheduled Term Maturity Date" means the date 364
days after the Closing Date.
"Other Creditors' Documents" means the documents now or
hereafter executed in connection with the LaSalle Loans and/or any portion of
the Subordinated Debt.
"Payment Date" with respect to the Term Loan means the first
day of each month, commencing the first day of the first month after the Term
Advance will have been made, provided that if any such day is not a Banking Day,
then such Payment Date will be the next successive Banking Day.
"PBGC" means the Pension Benefit Guaranty Corporation, and any
successor to all or substantially all of the Pension Benefit Guaranty
Corporation's functions under ERISA.
"Permitted Liens" with respect to the property of any Person
means: (a) statutory Liens of landlords, carriers, warehousemen, mechanics,
materialmen or suppliers incurred in the ordinary course of business and
securing amounts not yet due or declared to be due by the claimant thereunder;
(b) Liens in favor of Lender; (c) zoning restrictions and easements, rights of
way, licenses, covenants and other restrictions affecting the use of real
property that do not individually or in the aggregate have a Material Adverse
Effect on such Person's ability to use such real property for its intended
purpose in connection with such Person's business; (d) Liens securing the
payment of taxes or other governmental charges not yet delinquent or being
contested in good faith and by appropriate proceedings, in accordance with the
terms of the Credit Documents; (e) Liens incurred or deposits made in the
ordinary course of such Person's business in connection with capitalized leases
or purchase money security interests for purchase of, and applying only to,
equipment included in the permitted borrowings under Section 7.8 or permitted as
Capital Expenditures under Section 7.12, the documents relating to such liens to
be in form and substance acceptable to Lender; (f) Liens securing Indebtedness
owing by any Subsidiary to such Person or to any other Subsidiary of such
Person, to the extent such Indebtedness is permitted under Section 7.8; (g)
deposits to secure performance of bids, trade contracts, leases and statutory
obligations (to the extent not excepted elsewhere herein); (h) Liens
specifically set forth on Schedule 1.1; (i) any Lien securing a Permitted
Refinancing of Indebtedness secured by a Lien permitted by any of the foregoing
subsections (a) through (h) inclusive provided that the Permitted Refinancing is
not secured by a Lien on any additional property; (j) pledges or deposits in
connection with worker's compensation, unemployment insurance and other social
security legislation; (k) grants of security and rights of setoff in deposit
accounts, securities and other properties held at banks or financial
institutions to secure the payment or reimbursement under overdraft, acceptance
and other facilities; and (l) rights of setoff, banker's lien and other similar
rights arising solely by operation of law.
"Permitted Refinancing" with respect to any Indebtedness
("Refinanced Indebtedness") means Indebtedness ("Refinancing") resulting from or
remaining after an immediate or subsequent refinancing, extension, renewal or
refunding of the Refinanced Indebtedness so long as: (a) the amount of the
Refinancing is not greater than the unpaid balance of the Refinanced
Indebtedness and, if no Event of Default exists and the Refinanced Indebtedness
is a revolver loan, the committed and undisbursed portion of a revolver loan;
(b) the interest rate applicable to the Permitted Refinancing does not exceed
the greater of (i) the interest rate applicable to the Refinanced Indebtedness
or (ii) an interest rate approved by Lender in its sole and absolute discretion;
(c) the amortization schedule of the Refinancing is not shorter than the
amortization schedule of the Refinanced Indebtedness; (d) circumstances
(including notice and cure periods) permitting or causing acceleration of the
Refinancing to a date earlier than the maturity of the Refinanced Indebtedness
are identical in all material respects to those applicable to the Refinanced
Indebtedness; (e) in connection with a Refinancing of the LaSalle Loans or the
Subordinated Debt, the holder of the Refinancing has entered into subordination
and intercreditor agreements with Lender identical in all material respects to
the Subordination Agreement and Intercreditor Agreement entered into with
respect to the Refinanced Indebtedness with the holder thereof; and (f) in
connection with a Refinancing of the LaSalle Loans, any Refinancing of a
revolver loan shall not increase loan-to-value ratios limiting borrowings
against Collateral.
"Person" includes an individual, a corporation, a joint
venture, a partnership, a trust, a limited liability company, an unincorporated
organization or a government or any agency or political subdivision thereof.
"Plan" means, with respect to any Person, an employee defined
benefit plan or other plan maintained by such Person for employees of such
Person and covered by Title IV of ERISA, or subject to the minimum funding
standards under Section 412 of the Code.
"Pledge Agreement": See Section 3.1.
"Purchase Agreement" means the Stock Purchase Agreement dated
April 21, 1997 among Guarantors, Borrower and Seller, as amended, pursuant to
which the Guarantors have agreed to acquire all of the issued and outstanding
stock of Borrower.
"Regulation U" means Regulation U promulgated by the Board of
Governors of the Federal Reserve System, 12 C.F.R. Part 221, or any other
regulation hereafter promulgated by such Board to replace the prior Regulation U
and having substantially the same function.
"Regulatory Change" means any change effective after the date
of this Credit Agreement in United States federal, state, or foreign law,
regulations, or rules or the adoption or making after such date of any
interpretation, directive, or request applying to a class of banks including
Lender, of or under any United States federal, state, or foreign law, regulation
or rule (whether or not having the force of law) by any court or governmental or
monetary authority charged with the interpretation or administration thereof.
"Reportable Event" means any "reportable event" as described
in Section 4043(b)
of ERISA with respect to which the thirty (30) day notice requirement has not
been waived by the PBGC.
"Resolution" means a duly adopted resolution of a corporation
certified as true and correct by an authorized officer of such corporation, a
partnership certificate signed by all of the general partners of such
partnership and such other partners whose approval is required with respect to
the matters set forth therein, or a certificate signed by the manager (if any)
of a limited liability company and such members whose approval is required with
respect to the matters set forth therein.
"SEC" means the Securities and Exchange Commission.
"SE Corp": See the Preamble hereto.
"SEI": See the Preamble hereto.
"Securities Offering" will mean any equity securities offering
of the stock of SE Corp.
"Security Agreement": See Section 3.1.
"Security Documents": See Section 3.2.
"Seller" means collectively: (a) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. and
▇▇▇▇ ▇. ▇▇▇▇▇▇, Trustees under the ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇ Revocable
Trust of 1988, dated 10/4/88; (b) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as Custodian Under the
Uniform Gifts to Minors Act fbo ▇▇▇ ▇. ▇▇▇▇▇▇; (c) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as Custodian
Under the Uniform Gifts to Minors Act fbo ▇▇▇▇▇ ▇. ▇▇▇▇▇▇; (d) E. ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇., Trustee, E. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇., Revocable Intervivos Trust dated December
31, 1982; and (e) ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Trustee under the 1989 Trust Agreement
established separate irrevocable Gift Trusts f/b/o the children of ▇▇▇▇▇▇ and
▇▇▇▇ ▇▇▇▇▇▇ dated March 7, 1989.
"Seller Debt" means the indebtedness of SE Corp to Seller in a
maximum amount of Six Million Three Hundred Seventy-Eight Thousand Dollars
($6,378,000.00) which is incurred in connection with the Acquisition.
"Significant Debt Agreement" means the Other Creditors'
Documents and all documents, instruments and agreements executed by an Obligor,
evidencing, securing or ensuring any Indebtedness of such Obligor or any
guaranty in excess of $50,000 in outstanding principal (or principal equivalent)
amount.
"Subordinated Debt" means collectively: (a) the Seller Debt;
(b) the Cruttenden Loan; (c) the indebtedness under the Second Amended And
Restated NonNegotiable Note dated January 1, 1993 in the principal amount of
Three Hundred Thirty-Four Thousand Six Hundred Nineteen Dollars ($334,619.00)
from the Borrower to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, as amended; and (d) the indebtedness
under the Second Amended And Restated NonNegotiable Note dated
January 1, 1993 in the principal amount of Three Hundred Thirty-Four Thousand
Six Hundred Nineteen Dollars ($334,619.00) from the Borrower to ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, as amended.
"Subordination Agreement": See Section 4.1.
"Subsidiary" of a Person means any business association
directly or indirectly controlled by such Person.
"Tangible Net Worth" of a Person means its shareholders,
equity (including retained earnings) less the book value of all intangible
assets including but not limited to advances to Affiliates, determined by Lender
on a consistent basis, plus the amount of any of its debt subordinated to Lender
on terms and conditions acceptable to Lender in its sole judgment, plus its
pre-tax LIFO reserves, all as determined in accordance with GAAP, consistently
applied.
"Term Advance" means the disbursement of the proceeds of the
Term Loan.
"Term Amortization Payment" means an amount of principal to be
paid each month equal to the outstanding principal balance of the Term Loan on
the Original Term Maturity Date, divided by thirty-six (36).
"Term Loan" means that Term Loan made available by Lender to
Borrower pursuant to Article 2 hereof.
"Term Loan Commitment" means Two Million Five Hundred Thousand
and No/100 Dollars ($2,500,000.00).
"Term Maturity Date" means the Originally Scheduled Term
Maturity Date or such later date to which the maturity of the Term Loan may be
extended pursuant to Section 2.9.
"Term Note" means that Promissory Note of even date herewith
in the amount of the Term Loan executed by Borrower and delivered pursuant to
the terms of this Credit Agreement, together with any renewals, extensions,
modifications or replacements thereof.
"Warrant" means a warrant granting Imperial Bancorp a right to
acquire ten percent (10.0%) of the common stock of SE Corp, on a fully diluted
basis containing usual and customary provisions to the satisfaction of Lender,
as well as a mandatory redemption right.
1.2 References. Capitalized terms will be equally applicable to both
the singular and the plural forms of the terms therein defined. References to
"Credit Agreement," "this Agreement," "herein," "hereof," "hereunder," or other
like words mean this Credit Agreement as amended, supplemented, restated or
otherwise modified and in effect from time to time.
1.3 Accounting Terms. Except as expressly provided to the contrary
herein, all accounting terms will be interpreted and all accounting
determinations will be made in accordance with GAAP, except as otherwise
specifically provided for herein. To the extent any
change in GAAP affects any computation or determination required to be made
pursuant to this Credit Agreement, such computation or determination will be
made as if such change in GAAP had not occurred unless Borrower and Lender agree
in writing on an adjustment to such computation or determination to account for
such change in GAAP.
ARTICLE 2
THE TERM LOAN
2.1 Term Loan Commitment. Lender agrees to loan to or at the direction
of Borrower, and Borrower agrees to draw upon and borrow, in the manner and upon
the terms and conditions contained in this Credit Agreement, amounts that in the
aggregate at any time outstanding will not exceed the Term Loan Commitment.
2.2 Term Loan.
(a) Subject to the terms and conditions set forth in this
Credit Agreement, Lender will advance the proceeds of the Term Loan to Borrower
in a single advance upon full satisfaction of the conditions precedent set forth
below.
(b) The Term Loan will be evidenced by the Term Note.
(c) A Term Advance will be made by Lender to Borrower upon
written notice from an Authorized Officer.
(d) The Term Advance will be made by Lender to Borrower only
for the purpose of paying dividends to SEI, which SEI will use to acquire
Borrower's stock.
2.3 Interest Rate.
(a) Subject to the provisions of Section 2.3(d), interest
shall accrue on the Term Loan at thirteen percent (13%) per annum until Lender
has received the Required Cash Pledge [as defined in Section 2.4(c)] and at
eleven percent (11%) per annum thereafter.
(b) All interest accrued on the Term Loan shall be due and
payable on the Payment Date.
(c) If any payment of interest and/or principal is not
received by Lender when such payment is due, then in addition to the remedies
conferred upon Lender under the Credit Documents, a late charge of five percent
(5%) of the amount of the installment due and unpaid shall be added to the
delinquent amount to compensate Lender for the expense of handling the
delinquency for any payment past due in excess of ten (10) days, regardless of
any notice and cure period.
(d) Upon the occurrence of an Event of Default and after
maturity, including maturity upon acceleration, the unpaid principal balance,
all accrued and unpaid interest and all
other amounts payable hereunder shall bear interest at the Default Rate.
(e) All interest payable under the Credit Documents shall be
calculated on a daily basis (based upon a 360-day year).
(f) If the proceeds of the Term Loan are disbursed into an
escrow, interest shall accrue on such proceeds from the date of such
disbursement whether or not Borrower has use of the proceeds of the Term Loan
held in the escrow or the Borrower's use of those proceeds is subject to the
satisfaction of conditions precedent.
2.4 Principal Payments.
(a) If the maturity of the Term Loan is extended pursuant to
Section 2.9, principal payments with respect to the Term Loan shall be due and
payable on the first Payment Date after the Originally Scheduled Term Maturity
Date in an amount equal to the Term Amortization Payment.
(b) If the maturity of the Term Loan is extended pursuant to
Section 2.9, Borrower will also make annual mandatory prepayments on the Term
Loan during the first one hundred twenty (120) days of each fiscal year, each
such payment in an amount equal to twelve and fifty-hundredths percent (12.50%)
of the sum which is equal to: (i) Borrower's Cash Flow for the preceding fiscal
year minus (ii) one hundred percent (100%) of the amount of Borrower's Cash Flow
which the Borrower needed to have for such fiscal year in order to satisfy (but
not exceed) the Borrower's Debt Service Coverage Ratio covenant for such fiscal
year as set forth in Section 7.7.
(c) In the event of one or more Securities Offerings
("Securities Offering Prepayment Event") raising in the aggregate more than Five
Million Dollars net of expenses, Borrower will make to Lender, within ten (10)
days after a demand made by Lender within two (2) years after the occurrence of
the Securities Offering Prepayment Event, which Lender may (but will have no
obligation to) exercise in its sole and absolute discretion, make a payment in
the amount demanded by Lender (not to exceed the unpaid principal balance of the
Term Loan Note, all accrued and unpaid interest and all other amounts payable
under the Credit Documents); and any such additional partial principal
prepayment will be applied in the inverse order of scheduled maturities. If a
Securities Offering Prepayment Event has occurred and Lender has not demanded
payment of the full amount for which it is entitled to make demand pursuant to
the preceding sentence, Borrower shall upon demand by Lender deliver and pledge
to Lender, as security for the Obligation, cash in an amount equal to the
maximum amount for which Lender could have made a prepayment demand but did not
("Required Cash Pledge"). The Required Cash Pledge shall be held by Bank and may
be commingled with its general funds. The Required Cash Pledge (or such much
thereof as is held by Lender from time to time) shall accrue interest for the
benefit of Borrower initially at the per annum rate at which interest is
publicly quoted to accrue on twelve (12) month certificates of deposit issued by
Lender in the amount of the Required Stock Pledge on the date the pledge is
made, and such interest rate shall be adjusted annually on each anniversary of
the date the Required Stock Pledge was made to that per annum rate at which
interest is publicly quoted to accrue on twelve (12) month certificates
of deposit issued by Lender in the amount of the Required Cash Deposit (or as
much thereof as is held by Lender) on such anniversary date. Interest on the
Required Stock Pledge shall be calculated on the basis of a 365/366 day year and
the actual number of days elapsed. If no Event of Default exists, Lender will
remit to Borrower not later than the 10th day of each January interest accrued
on the Required Cash Deposit during the preceding calendar year and not
previously remitted to Borrower or applied to the Obligation. Notwithstanding
this Section 2.4(c) to the contrary, Borrower may substitute from time to time
for any deposits then held by Lender as part of the Required Stock Pledge or
other property previously substituted pursuant to this sentence, investments of
the type which Borrower is permitted to make pursuant to subsection 7.9(iii)-(v)
and such other property which Lender approves in writing in its sole and
absolute discretion. Borrower hereby acknowledges that pursuant to the Security
Agreement executed by Borrower, Lender has a security interest in the Required
Cash Pledge and the proceeds (including interest) thereof; provided, however,
that Borrower will execute such additional documents and take such further
actions as Lender may deem necessary or desirable in its sole and absolute
discretion to perfect such security interest. Lender may at any time apply the
Required Cash Pledge (and interest accrued thereon) to the Obligation, whether
or not then due; and shall apply any cash then being held by Lender as part of
the Required Cash Pledge to payments of principal on the Term Note as and when
they become due.
(d) If Lender has determined that the adoption of any law,
rule or regulation regarding capital adequacy, or any change therein or in the
interpretation or application thereof, or compliance by Lender with any request
or directive regarding capital adequacy (whether or not having the force of law)
from any central bank or governmental authority enacted after the Closing Date,
does or will have the effect of reducing the rate of return on Lender's capital
as a consequence of its obligations hereunder to a level below that which Lender
could have achieved but for such adoption, change or compliance (taking into
consideration Lender's policies with respect to capital adequacy) by a material
amount, then from time to time, after submission by Lender to Borrower of a
written demand therefor ("Capital Adequacy Demand") together with the
certificate described below, Borrower will pay to Lender such additional amount
or amounts ("Capital Adequacy Charge") as will compensate Lender for such
reduction, such Capital Adequacy Demand to be made with reasonable promptness
following such determination. A certificate of Lender claiming entitlement to
payment as set forth above will be conclusive in the absence of manifest error.
Such certificate will set forth the nature of the occurrence giving rise to such
reduction, the amount of the Capital Adequacy Charge to be paid to Lender, and
the method by which such amount was determined. In determining such amount,
Lender may use any reasonable averaging and attribution method, applied on a
nondiscriminatory basis.
(e) The unpaid principal balance, all accrued and unpaid
interest and all other amounts payable hereunder with respect to the Term Loan
will be due and payable in full on the Term Maturity Date.
2.5 Principal Prepayments. Borrower may not prepay the Term Loan in
whole or in part except as expressly permitted pursuant to the Credit Agreement.
2.6 Method of Payment. All payments of principal of, and interest on,
the Term Note
will be made to Lender before 2:00 p.m. (Inglewood, California local time), in
immediately available funds. All payments made on the Term Note will be
credited, to the extent of the amount thereof, in the following manner: (i)
first, to the payment of costs, fees or other charges incurred in connection
with the Term Loan; (ii) second, to the payment of accrued interest on the Term
Loan; and (iii) third, to the reduction of the principal balance of the Term
Loan, in the inverse order of maturity.
2.7 Conditions. Lender shall have no obligation to make any Advance
unless and until all of the conditions and requirements of this Credit Agreement
are fully satisfied. However, Lender in its sole and absolute discretion may
elect to make an Advance prior to full satisfaction of one or more such
conditions and/or requirements. Notwithstanding that an Advance is made, such
unsatisfied conditions and/or requirements will not be waived or released
thereby. Borrower will be and continue to be obligated to fully satisfy such
conditions and requirements.
2.8 Assignment. Borrower shall have no right to any Advance other than
to have the same disbursed by Lender in accordance with the disbursement
provisions contained in this Credit Agreement. Any assignment or transfer,
voluntary or involuntary, of this Credit Agreement or any right hereunder will
not be binding upon or in any way affect Lender without its written consent; and
Lender may make Advances under the disbursement provisions herein,
notwithstanding any such assignment or transfer.
2.9 Lender's Right to Extend Originally Scheduled Term Maturity Date.
Lender may at its option (but without obligation to do so and exercisable in its
sole and absolute discretion) extend the Term Maturity Date from the Originally
Scheduled Term Maturity Date to the date thirty-six (36) months after the
Originally Scheduled Term Maturity Date.
ARTICLE 3
SECURITY; RELEASE; GUARANTEE
3.1 Security.
(a) So long as any Loan is outstanding: (i) Borrower will
cause such Loan and Borrower's obligations under the Credit Documents to be
secured at all times by a valid and effective security agreement ("Borrower
Security Agreement"), duly executed and delivered by or on behalf of Borrower,
granting Lender a valid and enforceable lien and security interest in all assets
of Borrower, subject to no Liens other than the Permitted Liens; (ii) SEI will
cause such Loan and the Obligor's obligations under the Credit Documents to be
secured at all times by a valid and effective security agreement ("SEI Security
Agreement"), duly executed and delivered by or on behalf of SEI granting to
Lender a valid and enforceable lien and security interest in all assets of SEI,
subject to no Liens other than the Permitted Liens; and (iii) SE Corp will cause
such Loan and Obligor's obligations under the Credit Documents to be secured at
all times by a valid and effective security agreement ("SE Corp Security
Agreement"), duly executed and delivered by or on behalf of SE Corp, granting
Lender a valid and enforceable lien and security interest in all assets of SE
Corp, subject to no liens other than the Permitted Liens.
The Borrower Security Agreement, the SEI Security Agreement and the SE Corp
Security Agreement are each herein referred to as a "Security Agreement." Each
Security Agreement may consist of one or more security documents (including
mortgages and assignments).
(b) So long as any Loan is outstanding, Borrower will cause
such Loan and Borrower's obligations under this Credit Agreement to be secured
at all times by a valid and effective pledge and irrevocable proxy security
agreement ("SEI Pledge Agreement"), duly executed and delivered by or on behalf
of SEI, granting Lender a valid and enforceable security interest in all issued
and outstanding stock of Borrower now owned or hereafter acquired by SEI; and a
valid and effective pledge and irrevocable proxy security agreement ("SE Corp
Pledge Agreement"), duly executed and delivered by or on behalf of SE Corp,
granting Lender a valid and enforceable security interest in all issued and
outstanding stock of SEI now owned or hereafter acquired by SE Corp. The SEI
Pledge Agreement and the SE Corp Pledge Agreement are each herein referred to as
a "Pledge Agreement."
3.2 Security Documents. All of the documents required by this Article 3
will be in form satisfactory to Lender and Lender's counsel, and, together with
any Financing Statements for filing and/or recording, and any other items
required by Lender to fully perfect and effectuate the liens and security
interests of Lender contemplated by the Security Agreements, the Pledge
Agreements and this Credit Agreement, may heretofore or herein be referred to as
the "Security Documents." There is no intention to delay the time of attachment
of any lien or security created by a Security Document (including, without
limitation, any Security Agreement or Pledge Agreement). Obligor acknowledges
that value has been given for the Security Documents required to be delivered to
Lender pursuant to the terms of this Credit Agreement, and each such lien and
security interest shall attach at the earliest time permissible under the laws
governing such Security Document.
3.3 Guarantee. So long as any Loan is outstanding, Borrower will cause
such Loan and Borrower's obligations under this Credit Agreement to be
guaranteed under a Continuing Guarantee and Subordination Agreement from the
Guarantors. Each such Continuing Guarantee and Subordination Agreement is herein
referred to as a "Guarantee." Guarantors will subordinate all Indebtedness owed
to them by Borrower to the Obligation of Borrower to Lender upon terms
satisfactory to Lender.
3.4 Subordination. Borrower will cause the Subordinated Debt, and the
Liens securing the Subordinated Debt to be subordinate at all times to the
Obligation and to the Security Documents pursuant to a written agreement or
agreements satisfactory to Lender in its sole and absolute discretion. Each such
agreement is referred to herein as a "Subordination Agreement."
3.5 Intercreditor Agreement. Borrower will cause LaSalle, Cruttenden
and Seller to enter into a written intercreditor agreement ("Intercreditor
Agreement") satisfactory to Lender in its sole and absolute discretion
prioritizing their Liens with respect to the Security Documents as contemplated
by Schedule 1.1.
ARTICLE 4
CONDITIONS PRECEDENT
The obligation of Lender to make any Loan and to make any Advance
hereunder is subject to the full prior satisfaction at each such time of each of
the following conditions precedent:
4.1 Term Loan Advance. Lender will have received the following, each in
form and substance satisfactory to Lender:
(a) The Credit Documents. The Credit Documents set forth on
the closing list attached hereto as Schedule 4.1 (including, without limitation,
this Credit Agreement, the Term Note, the Security Agreements, the Pledge
Agreements, the Guaranties, the Subordination Agreement, the Intercreditor
Agreement and the Warrant).
(b) Opinions of Counsel. Opinions from counsel to Borrower,
Guarantors and Seller, which counsel must be satisfactory to Lender, with
respect to such matters as Lender may require.
(c) Organizational Documents. A copy of the current Articles
of Organization of Borrower and each Guarantor required to be filed in the state
of such Person's organization, including all amendments thereto, certified as
current and complete by the appropriate authority of the state of such Person's
organization; a copy of the other Articles of Organization for each such Person,
certified by the corporate secretary, the general partners, the members, the
managers, the trustees or other authorized Person or Persons as true and
complete evidence of such Person's good standing in such Person's state of
organization and in every other state in which it is doing business or the
conduct of such Person's business requires such standing for the enforcement of
material contracts.
(d) Resolutions. The Resolutions and incumbency certificates
listed in Schedule 4.1 authorizing the Acquisition, the Term Loan, the
execution, delivery, and performance of the Credit Documents, and all advances
of credit hereunder, and setting forth therein the names, current official
titles, and signatures of the Authorized Officers.
(e) Financial Statements. Audited financial statements of
Borrower and Guarantors for their most recently ended fiscal years and unaudited
financial statements (certified by the chief financial officer of such Person)
for their recently ended fiscal quarter, together with pro-forma financial
statements of Borrower and projections of Borrower indicating that after the
Closing Date and after giving effect to the Acquisition, Borrower will remain
solvent and retain sufficient capital to carry on its business.
(f) Title. Evidence that Obligors have good, marketable and
legal title to their assets and that Obligors will be entitled at all times to
the use and quiet enjoyment of their respective assets.
(g) Searches. Results of UCC, lien, litigation, judgment and
bankruptcy searches for Borrower and Guarantors.
(h) Releases and Lien Waivers. All documents necessary to
release or (in the case of landlord's liens) waive any and all Liens, other than
the Permitted Liens, on the Collateral.
(i) Licenses, Leases and Contracts. Copies of all existing
material licenses, leases and other contracts, certified as true and complete by
an Authorized Officer of Borrower.
(j) Third-Party Consents. Copies of consents to the
Acquisition from the Vancouver Stock Exchange, licensors under material licenses
(including, without limitation, Major League Baseball, National Basketball
Association, National Football League and National Hockey League), lessors under
material leases and Obligors under other material contracts, to the extent
required under the terms of such licenses, leases and other contracts, certified
as true and complete by an Authorized Officer of each Obligor.
(k) Insurance. Evidence that all insurance coverage required
pursuant to Section 6.14 is in place.
(l) Employment Agreements. A copy of all material agreements
between Borrower and its key employees.
(m) Share Certificates. Certificates evidencing all of the
issued and outstanding stock of Borrower and SEI.
(n) Acquisition Documents. A copy of the Purchase Agreement,
the consulting agreement for ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., and of all other documents
related to SEI's acquisition of the stock of Borrower, certified by an
Authorized Officer of SEI.
(o) LaSalle Loan Documents. A copy of all documents executed
in connection with the LaSalle Loans, certified by an Authorized Officer of
Borrower.
(p) Subordinated Debt Documents. A copy of all documents
executed or to be executed in connection with the Subordinated Debt and not part
of the documents delivered pursuant to Section 4.1(n).
(q) SE Corp Acquisition Capital Documents. A copy of all
documents executed or to be executed in connection with investments (whether
Indebtedness or equity) made in Obligors (other than the Term Loan, the LaSalle
Loans or the Subordinated Debt) in connection with the Acquisition, certified by
an Authorized Officer of SE Corp.
(r) Subordinate Financing. Evidence that financing which is
subordinate to the Term Loan and is in an amount not less than Seventeen Million
Six Hundred Thousand Dollars ($17,600,000.00) has been used to consummate the
Acquisition, to which there may be applied the Seller Debt up to a maximum of
Six Million Three Hundred Seventy-Eight Thousand Dollars ($6,378,000.00) and the
Cruttenden Loan.
(s) Funding of LaSalle Loans. Evidence satisfactory to Lender
that the
LaSalle Loan which is a Term Loan in the amount of Three Million Five Hundred
Thousand Dollars ($3,500,000.00) has been funded to Borrower and that no default
exists under the LaSalle Loans.
(t) Acquisition. Evidence satisfactory to Lender that the
Acquisition has closed in accordance with the terms of the Purchase Agreement.
(u) Lender's Fees and Costs. Payment of a Term Loan fee in the
amount of One Hundred Twenty-Five Thousand and No/100 Dollars ($125,000.00) plus
Lender's other fees and costs, against which Lender will apply the deposit of
Twenty-Five Thousand and No/100 Dollars ($25,000.00) previously paid by Borrower
to Lender; and payment of Lender's expenses (including, without limitation,
attorneys' fees and costs and any brokers' fees payable in connection with the
Term Loan pursuant to Section 9.3).
(v) Equipment Appraisal. A copy of the June 1996 appraisal
prepared by ▇▇▇▇▇ ▇▇▇▇▇▇▇ with respect to Borrower's equipment, certified by an
Authorized Officer of Borrower.
(w) Shareholder Agreements. A copy of any and all shareholder
agreements affecting the stock of SE Corp issuable pursuant to the Warrant,
certified by an Authorized Officer of SE Corp.
(x) ▇▇▇▇▇▇▇ Bros. Claim. Unless waived in writing, evidence
that claims made by ▇▇▇▇▇▇▇ Bros. for fees have been settled in a manner
satisfactory to Lender in its sole and absolute discretion.
(y) Additional Information. Such other information and
documents as may reasonably be required by Lender or Lender's counsel.
4.2 No Event of Default or Default. No Event of Default or Default will
have occurred and be continuing, or result from Lender's making of any Loan.
4.3 No Material Adverse Change. Since the date of the most recent
financial statements provided to Lender by an Obligor, no change will have
occurred in the business or financial condition of Obligor that could have a
Material Adverse Effect.
4.4 Representations and Warranties. The representations and warranties
contained in Article 5 hereof will be true and correct in all material respects,
with the same force and effect as though made on and as of the Closing Date
(other than those of such representations which by their express terms speak to
a date prior to that date, which representations will, in all material respects,
be true and correct as of such respective date).
4.5 Deferral or Waiver of Conditions Precedent. The conditions
precedent to the making of the Loans set forth in this Agreement are solely for
the benefit of Lender. Although Lender shall have no obligation to do so, Lender
may make an Advance even though all conditions precedent thereto have not been
satisfied, without waiving (unless expressly agreed
otherwise in writing by Lender) Borrower's obligation to satisfy conditions
precedent which were not satisfied at the time of the Advance.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
To induce Lender to make the Loans, each Obligor represents and
warrants to Lender that:
5.1 Recitals. The recitals and statements of intent appearing in this
Credit Agreement are true and correct.
5.2 Organization and Good Standing. It is duly organized, validly
existing and in good standing in the state of its organization and in all states
in which the nature of its business and property makes such qualifications
necessary or appropriate. It has the legal power and authority to own its
properties and assets and to transact the business in which it is engaged and is
or will be qualified in those states wherein the nature of its proposed business
and property will make such qualifications necessary or appropriate in the
future.
5.3 Authorization and Power. It has the power and requisite authority
to execute, deliver and perform the Credit Documents to be executed by it; it is
duly authorized to, and has taken all action, corporate or otherwise, necessary
to authorize it to, execute, deliver and perform the Credit Documents to be
executed by it and is and will continue to be duly authorized to perform its
obligations under the Credit Documents.
5.4 Security Documents. The liens, security interests and assignments
created by the Security Documents will, when granted, be valid, effective and
enforceable liens, security interests and assignments, except to the extent (if
any) otherwise agreed in writing by Lender.
5.5 No Conflicts or Consents. Neither the execution and delivery of any
Credit Document to which it is a party, nor the consummation of the Acquisition
or of any of the transactions in the Credit Documents, nor its compliance with
the terms and provisions of the Credit Documents (a) will materially contravene
or conflict with: (i) any provision of law, statute or regulation to which it is
subject, (ii) any judgment, license, order or permit applicable to it, (iii) any
indenture, credit agreement, mortgage, deed of trust, or other agreement or
instrument to which it is a party or by which it may be bound, or to which it
may be subject, or (b) will violate any provision of its Articles of
Organization. No consent, approval, authorization or order of any court or
Governmental Authority or other Person is required in connection with the
execution and delivery by it of the Credit Documents or to consummate the
Acquisition or the transactions contemplated by the Credit Documents, or if
required, such consent, approval, authorization or order will have been
obtained.
5.6 No Litigation. There are no actions, suits or legal, equitable,
arbitration or administrative proceedings pending, or to its actual knowledge
overtly threatened, against such Obligor that would, if adversely determined,
have a Material Adverse Effect.
5.7 Financial Condition. It has delivered to Lender copies of its most
recent financial statements. Such financial statements, in all material
respects, fairly and accurately present its financial position of as of such
date, have been prepared in accordance with GAAP and neither contain any untrue
statement of a material fact nor fail to state a material fact required in order
to make such financial statement not misleading. Since the date thereof, it has
not discovered any obligations, liabilities or indebtedness (including
contingent and indirect liabilities and obligations or unusual forward or
long-term commitments) which in the aggregate are material and adverse to its
financial position or business that should have been but were not reflected in
such financial statements. No changes having a Material Adverse Effect have
occurred in its financial condition or business since the date of such financial
statements.
5.8 Taxes. It has filed or caused to be filed all returns and reports
which are required to be filed by any jurisdiction, and has paid or made
provision for the payment of all taxes, assessments, fees or other governmental
charges imposed upon its properties, income or franchises, as to which the
failure to file or pay would have a Material Adverse Effect, except such
assessments or taxes, if any, which are being contested in good faith by
appropriate proceedings.
5.9 No Stock Purchase. No part of the proceeds of any financial
accommodation made by Lender in connection with this Credit Agreement will be
used to purchase or carry "margin stock," as that term is defined in Regulation
U, or to extend credit to others for the purpose of purchasing or carrying such
margin stock.
5.10 Advances. The request for an Advance or for the extension of any
financial accommodation by Lender whatsoever will constitute an affirmation that
the representations and warranties contained herein are, true and correct as of
the time of such request. All representations and warranties made herein will
survive the execution of this Credit Agreement, all advances of proceeds of the
Loans and the execution and delivery of all other documents and instruments in
connection with the Loans and/or this Credit Agreement, so long as Lender has
any commitment to lend hereunder and until the Loans have been paid in full and
all of Borrower's obligations under this Credit Agreement, the Notes and all
Security Documents have been fully discharged.
5.11 Enforceable Obligations. This Credit Agreement, the Notes and the
other Credit Documents are its legal, valid and binding obligations, enforceable
against it in accordance with their respective terms, except as limited by
bankruptcy, insolvency or other laws or equitable principles of general
application relating to the enforcement of creditors' rights.
5.12 No Default. No event or condition has occurred and is continuing
that constitutes an Event of Default.
5.13 Significant Debt Agreements and other Material Agreements. All
licenses, leases and other contracts which are necessary to conduct its business
in materially the same manner as now conducted and to prevent the occurrence of
a Material Adverse Effect are in full force and effect. Neither it nor any of
its Subsidiaries is in default under any Significant Debt Agreement or any
material license, lease or other contract to which it is a party or by which it
is bound, nor does it know of any dispute regarding any material license, lease
or other contract.
5.14 ERISA. (a) No Reportable Event has occurred and is continuing with
respect to any Plan; (b) PBGC has not instituted proceedings to terminate any
Plan; (c) neither it, any member of the Controlled Group, nor any duly-appointed
administrator of a Plan (i) has incurred any liability to PBGC with respect to
any Plan other than for premiums not yet due or payable or (ii) has instituted
or intends to institute proceedings to terminate any Plan under Section 4041 or
4041A of ERISA; and (d) each of its Plans has been maintained and funded in all
material respects in accordance with its terms and in all material respects in
accordance with all provisions of ERISA applicable thereto. Neither it nor any
of its Subsidiaries participates in, or is required to make contributions to,
any Multi-employer Plan (as that term is defined in Section 3(37) of ERISA).
5.15 Compliance with Law. It and its Subsidiaries are in substantial
compliance with all laws, rules, regulations, orders and decrees that are
applicable to them, or their respective properties, except for such
noncompliance which would not have a Material Adverse Effect.
5.16 Solvent. It (both before and after giving effect to the Loans
contemplated hereby) and its Subsidiaries are solvent, have assets having a fair
value in excess of the amount required to pay its probable liabilities on its
existing debts as they become absolute and matured, and have, and will have,
access to adequate capital for the conduct of their respective businesses and
the ability to pay their respective debts from time to time incurred in
connection therewith as such debts mature. The Acquisition and the transactions
contemplated hereby will not constitute a fraudulent transfer or a fraudulent
conveyance.
5.17 Investment Company Act. It is not, and is not directly or
indirectly controlled by, or acting on behalf of, any person which is, an
"Investment Company" within the meaning of the Investment Company Act of 1940,
as amended.
5.18 Title. It and its Subsidiaries have their respective good and
marketable fee title to their respective real property, and good and marketable
title to and rights in their respective other property and assets. None of the
assets or property the value of which is reflected in the latest balance sheets
received by Lender is held by it or any of its Subsidiaries as lessee under any
lease (excluding capitalized lease obligations) or as conditional vendee under
any conditional sales contract or other title retention agreement. It and its
Subsidiaries enjoy peaceful and undisturbed possession under all of the leases
under which they are operating, none of which contains any unusual or burdensome
provisions that will materially impair or adversely affect the operations of it
or its Subsidiaries. All of such leases are valid, subsisting and in full force
and effect.
5.19 Permits and Licenses. To the best of the Obligor's knowledge, it
and its Subsidiaries have obtained all licenses, authorizations, approvals and
permits, the lack of which would have a material adverse effect on the operation
of their respective businesses, and to the best of Obligor's knowledge, it and
its Subsidiaries will remain in compliance in all material respects with all
applicable federal, state, local and foreign statutes, orders, regulations,
rules and ordinances (including, without limitation, statutes, orders,
regulations, rules and ordinances
relating to taxes, employer and employee contributions and similar items,
securities, employee retirement and welfare benefits, employee health and safety
or environmental matters), the failure to comply with which would have a
Material Adverse Effect;
5.20 Transactions with Affiliates. It is not conducting or permitting
to be conducted any activities pursuant to or in connection with which any of
the Collateral is now, or will (while the Obligations remain outstanding), be
owned by an Affiliate;
5.21 Indebtedness. Neither it nor any of its Subsidiaries is now
obligated, whether directly or indirectly, for any Indebtedness for borrowed
money other than (a) the Obligation, (b) Indebtedness disclosed on Schedule 5.21
hereto, (c) unsecured Indebtedness to trade creditors arising in the ordinary
course of its business, (d) the LaSalle Loans, (e) the Subordinated Debt, and
(f) unsecured Indebtedness arising from the endorsement of drafts and other
instruments for collection, in the ordinary course of its business;
5.22 Subsidiaries; Capital Structure. Except as otherwise disclosed in
this Section or on Schedule 5.22 (Subsidiaries and Divisions), it has no
Subsidiaries or divisions, nor is it engaged in any joint venture or partnership
with any other Person. SEI is a wholly-owned Subsidiary of SE Corp. Following
the Acquisition, Borrower will be a wholly-owned subsidiary of SEI. Schedule
5.22 (Capitalization) sets forth a complete description of its capitalization.
All of its stock is validly issued, fully paid and non-assessable, and has been
issued in compliance with all applicable federal and state securities laws,
rules and regulations. All of the shares of its stock are owned beneficially and
of record by its shareholders, free and clear of all Liens.
5.23 Employee Controversies. There are no controversies pending or, to
the best of the its knowledge, threatened between it and any of its employees,
other than employee grievances arising in the ordinary course of business which
are not, in the aggregate, material to the continued financial success and
well-being, and to the best of the its knowledge, it is in compliance in all
material respects with all federal and state laws respecting employment and
employment terms, conditions and practices, except where the failure to so
comply would not have a Material Adverse Effect.
5.24 Proprietary Rights. It possesses adequate licenses, patents,
patent applications, copyrights, service marks, trademarks, trademark
applications, tradestyles and tradenames to continue to conduct its business as
heretofore conducted by it.
5.25 Business. A description of its business as currently conducted and
intended to be conducted is set forth in Schedule 5.25.
ARTICLE 6
AFFIRMATIVE COVENANTS
Until payment in full of the Loans and the complete performance of the
Obligation, each Obligor agrees that:
6.1 Financial Statements, Reports and Documents. It will deliver, or
cause to be delivered, to Lender each of the following:
(a) Annual Statements. As soon as available and in any event
within ninety (90) days after the close of each of its fiscal years, audited
financial statements of such Obligor (consolidated in the case of SE Corp),
including its balance sheet as of the close of such fiscal year, statements of
income of such Obligor for such fiscal year and statements of cash flow for such
fiscal year, in each case setting forth in comparative form the figures for the
preceding fiscal year, all in reasonable detail, and accompanied by an
unqualified opinion thereon of independent public accountants of recognized
national standing selected by such Obligor and acceptable to Lender, to the
effect that such financial statements have been prepared in accordance with
GAAP.
(b) Quarterly Statements. As soon as available, and in any
event within thirty (30) days after the end of each calendar quarter, copies of
the balance sheet of such Obligor (consolidated in the case of SE Corp) as of
the end of such quarter, statements of income and of cash flow of such Obligor
for that quarter and for the portion of the fiscal year ending with such
quarter, in each case setting forth in comparative form the figures for the
corresponding period of the preceding fiscal year, all in reasonable detail, and
prepared by such Obligor in accordance with GAAP.
(c) Monthly Statements. As soon as available, and in any event
within twenty-five (25) days after the end of each calendar month, copies of the
balance sheet of such Obligor (consolidated in the case of SE Corp) as of the
end of such month, and statements of income and of cash flow of such Obligor for
that month and for the portion of the fiscal year ending with such month, in
each case setting forth in comparative form the figures for the corresponding
period of the preceding fiscal year, all in reasonable detail, and prepared by
such Obligor in accordance with GAAP.
(d) Advance Bookings and Sales Reports. Within twenty-five
(25) days after the end of each calendar month, a report showing advance sales
for such month and for the portion of the fiscal year ending with such month,
together with comparisons for the same periods during the preceding year, and
such other sales reports as may be reasonably requested by Lender.
(e) Compliance Certificate of Borrower. At the same time
financial statements for a fiscal period or calendar month of such Obligor are
required to be submitted pursuant to Sections 6.1(a)-6.1(c), a certificate
signed by the chief financial officer of such Obligor, substantially in the form
of Exhibit 6.1(e) attached hereto, certifying that after a review of the
activities of such Obligor during such period made under his supervision: (i)
such Obligor has observed, performed and fulfilled each and every obligation and
covenant contained herein and no Event of Default exists under any of the same
or, if any Event of Default will have occurred, specifying the nature and status
thereof; (ii) all representations and warranties set forth in the Credit
Documents remain true and complete in all material respects as if made on and as
of the date of the compliance certificate, except for changes as may have
resulted from any circumstance or event which has not had a Material Adverse
Effect; and (iii) all financial
statements of such Obligor delivered to Lender during the respective period
pursuant to Sections 6.1(a) and 6.1(c) hereof, to his/her knowledge, fairly
present in all material respects the financial position of such Obligor and the
results of its operations at the dates and for the periods indicated, and have
been prepared in accordance with GAAP, together with a calculation of the
Financial Covenants.
(e) Reports to Security Holders, SEC and Other Creditors.
Within seven (7) days after becoming available, copies of (i) all financial
statements, reports, notice and proxy statements, sent or made available
generally to its security holders, (ii) all regular and period reports and
registration statements and prospectuses filed by it with any securities
exchange, to SEC or any similar governmental agencies, and (iii) all reports and
information required to be given to the holder of the LaSalle Loans or the
Cruttenden Loan.
(f) Other Information. Such other information concerning the
business, properties or financial condition of such Obligor as Lender will
reasonably request, including, without limitation, the information required
pursuant to Section 6.10.
6.2 Maintenance of Existence and Rights; Conduct of Business;
Management. It will preserve and maintain, and will cause each Subsidiary to
preserve and maintain, its existence and all of its rights, privileges,
licenses, permits, franchises and other rights necessary or desirable in the
normal conduct of its business, conduct its business in an orderly and efficient
manner consistent with good business practices and maintain professional
management of its business.
6.3 Operations and Properties. It will keep, and will cause each
Subsidiary to keep, in good working order and condition, ordinary wear and tear
excepted, all of their respective assets and properties which are necessary to
the conduct of its business.
6.4 Authorizations and Approvals. It will promptly obtain, and will
cause each Subsidiary to promptly obtain, from time to time at its own expense,
all such governmental licenses, authorizations, consents, permits and approvals
as may be required to enable such Obligor to comply with its obligations
hereunder and under the other Credit Documents and such Obligor and its
Subsidiaries to operate their respective businesses as presently or hereafter
duly conducted.
6.5 Compliance with Law. It will comply, and will cause each Subsidiary
to comply, with all applicable laws, rules, regulations, and all final,
nonappealable orders of any Governmental Authority applicable to them or any of
their respective property, business operations or transactions, including
without limitation, any environmental laws applicable to them, a breach of which
could result in a Material Adverse Effect.
6.6 Payment of Taxes and Other Indebtedness. It will pay and discharge,
and will cause each Subsidiary to pay and discharge, (a) all income taxes and
payroll taxes, (b) all taxes, assessments, fees and other governmental charges
imposed upon them or upon their respective income or profits, or upon any of
their respective property, before delinquent, which become due and payable, (c)
all lawful claims (including claims for labor, materials and supplies),
which, if unpaid, might become a Lien upon any of their respective property and
(d) all of their respective Indebtedness as it becomes due and payable, except
as prohibited hereunder; provided, however, that they will not be required to
pay any such tax, assessment, charge, levy, claims or Indebtedness if and so
long as the amount, applicability or validity thereof will currently be
contested in good faith by appropriate actions and appropriate accruals and
reserves therefor have been established in accordance with GAAP.
6.7 Compliance with Significant Debt Agreements and Other Material
Agreements. It will maintain, and will cause each Subsidiary to maintain, all
licenses, leases and other contracts which are necessary to conduct its business
in materially the same manner as now conducted and to prevent the occurrence of
a Material Adverse Effect are in full force and effect. It will comply, and will
cause each Subsidiary to comply, in all material respects with (a) all
Significant Debt Agreements, and (b) all licenses, leases and other contracts to
which they are a party and a breach of which could result in a Material Adverse
Effect.
6.8 Compliance with Credit Documents. It will comply, and will cause
each Subsidiary to comply, with any and all covenants and provisions of the
Credit Documents.
6.9. Notice of Default. It will furnish to Lender immediately upon
becoming actually aware of the existence of any event or condition that
constitutes an Event of Default, a written notice specifying the nature and
period of existence thereof and the action which it is taking or proposes to
take with respect thereto.
6.10 Other Notices. It will promptly notify Lender of (a) any Material
Adverse Effect, (b) any waiver, release or default under any Significant Debt
Agreement or other licenses, leases and other contracts to which it or a
Subsidiary is a party and a breach of which could result in a Material Adverse
Effect, (c) any modification of a Significant Debt Agreement, (d) any claim not
covered by insurance against it or any its properties, and (e) the commencement
of, and any material determination in, any litigation with any third party or
any proceeding before any Governmental Authority affecting it or any Subsidiary,
except litigation or proceedings which, if adversely determined, would not have
a Material Adverse Effect. As promptly as possible, but not less fourteen (14)
days prior to the acquisition of such property, it will notify Lender of its
intention to acquire any property with respect to which Lender must take some
additional action in order to perfect its lien thereon and the intended date of
acquisition. SE Corp will notify Lender of each Securities Offering not later
than ten (10) days prior to the closing of such Securities Offering.
6.11 Books and Records; Access. It will give, and will cause each
Subsidiary to give, any authorized representative of Lender access during normal
business hours to, and permit such representative to examine, copy or make
excerpts from, any and all books, records and documents in its possession of and
relating to the Loans, and to inspect any of their respective properties. It
will maintain, and will cause each Subsidiary to maintain, complete and accurate
books and records of their respective transactions in accordance with good
accounting practices.
6.12 ERISA Compliance. With respect to its Plans, it will (a) at all
times comply with the minimum funding standards set forth in Section 302 of
ERISA and Section 412 of the Code
or will have duly obtained a formal waiver of such compliance from the proper
authority; (b) at Lender's request, within thirty (30) days after the filing
thereof, furnish to Lender copies of each annual report/return (Form 5500
Series), as well as all schedules and attachments required to be filed with the
Department of Labor and/or the Internal Revenue Service pursuant to ERISA, in
connection with each of its Plans for each year of the plan; (c) notify Lender
within a reasonable time of any fact, including, but not limited to, any
Reportable Event arising in connection with any of its Plans, which constitutes
grounds for termination thereof by the PBGC or for the appointment by the
appropriate United States District Court of a trustee to administer such Plan,
together with a statement, if requested by Lender, as to the reason therefor and
the action, if any, proposed to be taken with respect thereto; and (d) furnish
to Lender within a reasonable time, upon Lender's request, such additional
information concerning any of its Plans as may be reasonably requested.
6.13 Further Assurances. It will make, execute or endorse, and
acknowledge and deliver or file or cause the same to be done, all such notices,
certifications and additional agreements, undertakings or other assurances, and
take any and all such other action, as Lender may, from time to time, deem
reasonably necessary or proper to fully evidence the Loan.
6.14 Insurance. It will maintain, and will cause each Subsidiary to
maintain, in full force and effect at all times all insurance coverages required
under the terms of the Credit Documents to which it or such Subsidiary is a
party. In addition, it will maintain, and will cause each Subsidiary to
maintain, in full force and effect at all times:
(a) Policies of all risk coverage insurance covering all
tangible property of such Person in which Lender has been granted or obtained a
security interest to secure the Obligation, in coverage amounts not less than,
from time to time, the fair market value thereof.
(b) Policies of insurance evidencing personal liability and
property damage liability coverages in amounts (combined single limit for bodily
injury and property damage) not less than $2,000,000.00 for Borrower and
$1,000,000.00 for each of the other Obligors, and an umbrella excess liability
coverage in an amount not less than $4,000,000.00 for Borrower and $2,000,000.00
for each of the other Obligors.
(c) Policies of workers' compensation insurance in amounts and
with coverages as legally required.
Without limitation of the foregoing, it will at all times maintain insurance
coverages (including, without limitation, business interruption coverage) in
scope and amount not less than, and not less extensive than, the scope and
amount of insurance coverages customary in the trades or businesses in which it
is from time to time engaged. All of the aforesaid insurance coverages will be
issued by insurers reasonably acceptable to Lender. Copies of all policies of
insurance evidencing such coverages in effect from time to time will be
delivered to Lender prior to the Term Loan Advance and upon reasonable notice
upon issuance of new policies thereafter. From time to time, promptly upon
Lender's request, it will provide evidence satisfactory to Lender (i) that
required coverage in required amounts is in effect, and (ii) that Lender is
shown as an additional loss payee with respect to all such coverages, as
Lender's interest may appear, by
standard (non-attribution) loss payable endorsement, additional insured
endorsement, insurer's certificate or other means acceptable to Lender in its
reasonable discretion. At Lender's option, it will deliver to Lender certified
copies of all such policies of insurance in effect from time to time, to be
retained by Lender so long as Lender will have any commitment to lend hereunder
and/or any portion of the Obligation will be outstanding or unsatisfied. All
such insurance policies will provide for at least thirty (30) days prior written
notice of the cancellation or modification thereof to Lender.
6.15 Proprietary Rights. It will possess, and cause each of its
Subsidiaries to possess, adequate licenses, patents, patent applications,
copyrights, service marks, trademarks, trademark applications, tradestyles and
tradenames to continue to conduct its business as heretofore conducted by it.
ARTICLE 7
NEGATIVE COVENANTS
Until payment in full of the Loans and the performance of the
Obligation without receiving the prior express written consent of Lender:
7.1 Existence; Issuance of Stock; Change of Control; Sales of
Substantially All of Assets. Obligors will not, and will not permit any of their
respective Subsidiaries: (a) to dissolve or liquidate, or merge or consolidate
with or into any other Person, or turn over the management or operation of their
respective property, assets or business to any other Person; (b) except pursuant
to public offerings of its stock by SE Corp registered under the Securities Act
of 1933 and in connection with which SE Corp has performed its obligations under
the Warrant, issue any shares of, or warrants or other rights to receive or
purchase any shares of, any class of their stock, redeem or repurchase any of
their stock; (c) have more than the percentage of their issued and outstanding
stock sold or transferred which would result in a Change of Control; (d) acquire
directly or indirectly all or substantially all of the capital stock of another
Person or create any new Subsidiary or Affiliate, except as resulting from the
Acquisition; or (e) sell, lease or otherwise dispose of all or substantially all
of its assets.
7.2 Amendments to Organizational Documents. Obligors will not, and will
not permit any of their respective Subsidiaries, to amend their organizational
documents if the result thereof could result in the occurrence directly or
indirectly of a Material Adverse Effect.
7.3 Margin Stock. Borrower will not, and will not permit any of its
Subsidiaries, to use any proceeds of the Loans, or any proceeds of any other or
future financial accommodation from Lender for the purpose, whether immediate,
incidental or ultimate, of purchasing or carrying any "margin stock" as that
term is defined in Regulation U or to reduce or retire any indebtedness
undertaken for such purposes within the meaning of said Regulation U, and will
not use such proceeds in a manner that would involve Borrower in a violation of
Regulation U or of any other Regulation of the Board of Governors of its Federal
Reserve System, nor use such proceeds for any purpose not permitted by Section 7
of the Exchange Act, or any of the rules or regulations respecting the
extensions of credit promulgated thereunder.
7.4 Fiscal Year. Obligor will not, and will not permit any of their
respective Subsidiaries, to change the times of commencement or termination of
their fiscal year or other accounting periods; or change its methods of
accounting other than to conform to GAAP applied on a consistent basis. After
any such changes, its method of accounting will conform to GAAP.
7.5 Liens. Obligors will not, and on and after the date hereof, to
create or suffer to exist Liens upon any of their respective property except
Liens, if any, for the benefit of Lender and Permitted Liens.
7.6 Transfer Collateral. Obligors will not assign, transfer or convey
any of its right, title and interest in the Collateral (whether real or
personal), except in connection with sales of inventory in the ordinary course
of business.
7.7 Financial Covenants. Borrower will not permit:
(a) Its Interest Coverage Ratio to be less than 1.50 to 1.0 as
of the dates, and calculated in the manner, specified below;
(b) Its Debt Service Coverage Ratio to be less than 1.25 to
1.0 as of the dates, and calculated in the manner, specified below;
(c) Its Liabilities to TNW Ratio to be more than 3.0 to 1.0 as
of the dates, and calculated in the manner, specified below; and
(d) Its Tangible Net Worth to be at any time less than the sum
of Three Million Seven Hundred Fifty Thousand Dollars ($3,750,000) plus an
amount equal to fifty percent (50%) the net income of such Person between May 1,
1997 and the date of determination, as determined in accordance with GAAP.
The Interest Coverage Ratio, the Debt Service Coverage Ratio or the Liabilities
to TNW Ratio for SEI and Borrower will be calculated quarterly as of the last
day of each fiscal quarter of such Person, for the fiscal periods of such Person
beginning January 1, 1997 and ending June 30, 1997, September 30, 1997, and
December 31, 1997; and beginning January 31, 1998, thereafter calculated as of
the end of each month on a twelve-month rolling basis.
7.8 Other Indebtedness. SEI and Borrower will not, and will not permit
any of their respective Subsidiaries to do the following: (a) incur, create,
assume or suffer to exist any indebtedness other than (i) Indebtedness arising
under this Credit Agreement, (ii) unsecured Indebtedness owing in the ordinary
course of business to trade suppliers, (iii) the LaSalle Loans, (iv) the
Subordinated Debt, (v) Indebtedness described on Schedule 7.8 attached hereto,
and (vi) Permitted Refinancings of the Indebtedness described in subsections
(a)(iii)-(a)(v); or (b) assume, guarantee or endorse, or otherwise become liable
in connection with, the obligations of any Person, except by endorsement of
instruments for deposit or collection or similar transactions in the ordinary
course of business and for guaranties by SE Corp and SEI of the LaSalle Loans,
the Subordinated Debt and Permitted Refinancings of the LaSalle Loans or the
Subordinated Debt;
7.9 Investments. Obligors will not, and will not permit any of their
respective Subsidiaries to, make any advance, loan, investment or material
acquisition of assets (other than Capital Expenditures permitted pursuant to
Section 7.12) other than (i) advances made to employees in the ordinary course
of business so long as the aggregate amount of such advances do not exceed Fifty
Thousand Dollars ($50,000.00) in the aggregate outstanding at any time; (ii)
investments in marketable securities so long as the aggregate amount of such
investments do not exceed One Hundred Thousand Dollars ($100,000.00) at any
time; (iii) investments in short-term direct obligations of the United States
government; (iv) investments in negotiable certificates of deposit issued by a
bank satisfactory to Lender, payable to the order of such Person or to bearer;
(v) investments in commercial paper rated A-l or P-1; provided, that with
respect to clauses (ii), (iii), (iv), and (v), Obligors will assign all such
investments to Lender in form acceptable to Lender;
7.10 Dividends and Distributions. Obligors will not, and will not
permit any of its Subsidiaries, to (i) except as permitted pursuant to the
following sentence, declare or pay any dividend or other distribution (whether
in cash or in kind) on, purchase, redeem or retire any shares of any class of
its stock, or make any payment on account of, or set apart assets for the
repurchase, redemption, defeasance or retirement of, any class of their
respective stock; or (ii) except for required prepayments on the LaSalle Loans
or payments on the Subordinated Debt permitted by the Subordination Agreements
or pursuant to the following sentence, make any optional payment or prepayment
on or redemption (including without limitation by making payments to a sinking
fund or analogous fund) or repurchase of any Indebtedness for borrowed money
other than Indebtedness incurred pursuant to this Credit Agreement. Following
the Acquisition, dividends may be made quarterly by Borrower when no Event of
Default exists in an amount equal to the regularly scheduled payments due under
the Seller Debt but not to exceed One Hundred Thousand Dollars ($100,000.00)
quarterly, provided such payments are permitted then to be made pursuant to the
terms of the Subordination Agreement between the Seller, LaSalle, Cruttenden and
Lender and such dividends are used to make such payments.
7.11 Compensation. Antigua will not, and will not permit any of its
Subsidiaries to, pay compensation during any fiscal year of such Person,
including, without limitation, salaries, bonuses and consulting fees to its five
(5) most highly compensated employees in excess of the base compensation and
other compensation permitted pursuant to Schedule 7.11; and except as provided
in the preceding sentence, Obligors will not, and will not permit any of their
Subsidiaries to pay any compensation to their employees, officers and directors
which is not reasonable under the circumstances.
7.12 Capital Expenditures. Borrower will not make: (A) Capital
Expenditures of an aggregate amount of more than Five Hundred Thousand Dollars
($500,000.00) during any fiscal year (pro-rated for the fiscal year ending
December 31, 1997); or (B) Capital Expenditures in the form of expenditures for
capital lease obligations of an aggregate amount of more than Five Hundred
Thousand Dollars ($500,000.00) during any fiscal year (pro-rated for the fiscal
year ending December 31, 1997).
7.13 Transactions with Affiliates. Obligors will not do, and will not
permit any of its Subsidiaries to do any of the following: conduct any
activities pursuant to or in connection with
which any of the Collateral is now, or will (while the Obligation remains
outstanding), be owned by any Affiliate; or engage in any transaction with any
Affiliate except for fair consideration and upon terms at least as favorable as
would be obtained as the result of an "arms length" transaction with a Person
not an Affiliate.
7.14 Changes in Business. Obligors will not, and will not permit their
Subsidiaries to, engage in any business other than their respective business as
currently conducted or materially change the nature of such business.
7.15 Other Creditors' Documents. Obligors will not amend or waive any
provision of the Other Creditors' Documents which would:
(a) Increase the interest rate or charges (including
prepayment premiums) applicable to the Indebtedness arising thereunder;
(b) Change the amortization schedule (including maturity date)
of the Indebtedness arising thereunder;
(c) Shorten cure periods, eliminate notices required to be
given prior to an event of default, or add additional circumstances which would
cause an event of default with respect to the Indebtedness arising thereunder;
or
(d) Increase loan-to-value ratios limiting borrowings against
Collateral.
ARTICLE 8
EVENTS OF DEFAULT
8.1 Events of Default. An "Event of Default" shall exist if any one or
more of the following events (herein collectively called "Events of Default")
shall occur and be continuing:
(a) Any failure by Borrower to pay any principal of, or
interest on, any Note when the same will become due or payable; or any failure
of any Obligor to pay any other amount owed by it to Lender under the Credit
Documents when due, declared due or demanded by Lender in accordance with the
terms of the Credit Documents and the failure to make such payment is not cured
within five (5) days after notice from Lender to the defaulting Obligor.
(b) Any failure or neglect to perform or observe any of the
covenants, conditions, provisions or agreements of Obligor contained herein, or
in any of the other Credit Documents, which failure continues for five (5)
calendar days after notice to the defaulting Obligor, provided that a failure by
Borrower to perform any obligation under any of the following Sections of the
Credit Documents shall constitute an immediate Event of Default without any
Obligor having any notice or cure rights: Sections 6.1, 6.11, 6.14 and 7.1-7.15
of this Credit Agreement; and each covenant or agreement of an Obligor set forth
in the Security Documents.
(c) Any warranty, representation or statement contained in
this Credit Agreement or any of the other Credit Documents, or which is
contained in any certificate or statement furnished or made to Lender pursuant
hereto or in connection herewith or with the Loans, which is false when made or
furnished.
(d) The occurrence of any material "event of default" or
"default" by an Obligor under any other Credit Document, or any agreement, now
or hereafter existing and relating to the Obligation, to which such Obligor is a
party.
(e) (i) An Obligor fails to pay any of its Indebtedness (other
than the Notes) due under any Significant Debt Agreement, or any interest or
premium thereon, when due (whether by scheduled maturity, required prepayment,
acceleration, demand, or otherwise) or within any applicable grace period; (ii)
an Obligor fails to perform or observe any term, covenant, or condition on its
part to be performed or observed under any agreement or instrument relating to
Indebtedness under any Significant Debt Agreement, within any applicable grace
period when required to be performed or observed, if the effect of such failure
to perform or observe is to accelerate the maturity of such Indebtedness, (iii)
any Indebtedness under any Significant Debt Agreements is declared to be due and
payable, or is required to be prepaid (other than by a regularly scheduled
prepayment), prior to the stated maturity thereof, (iv) an Obligor allows the
occurrence of any material event of default with respect to Indebtedness, or (v)
an Obligor fails to perform, keep or observe any of its covenants, conditions,
promises or agreements under any other agreement with such person if such
failure has or is reasonably likely to have a Material Adverse Effect.
(f) Any one or more of the Credit Documents is determined to
be invalid or unenforceable against an Obligor executing the same in accordance
with the respective terms thereof, or is in any way terminated or becomes or is
declared ineffective or inoperative, so as to deny Lender the substantial
benefits contemplated by such Credit Document or Credit Documents.
(g) Borrower or a Guarantor (i) applies for or consents to the
appointment of a receiver, custodian, trustee, intervenor or liquidator of
itself or of all or a substantial part of its assets, (ii) files a voluntary
petition in bankruptcy or admits in writing that it is unable to pay its debts
as they become due, (iii) makes a general assignment for the benefit of
creditors, (iv) files a petition or answer seeking reorganization of an
arrangement with creditors or to take advantage of any bankruptcy or insolvency
laws, (v) files an answer admitting the material allegations of, or consent to,
or default in answering, a petition filed against it in any bankruptcy,
reorganization or insolvency proceeding, or (vi) takes corporate action for the
purpose of effecting any of the foregoing.
(h) An involuntary petition or complaint is filed against
Borrower or a Guarantor, seeking bankruptcy or reorganization of Borrower or
such Guarantor, or the appointment of a receiver, custodian, trustee, intervenor
or liquidator of Borrower or a Guarantor, or all or substantially all of its
assets, and such petition or complaint is not dismissed within sixty (60) days
of the filing thereof; or an order, order for relief, judgment or decree is
entered by any court of competent jurisdiction or other competent authority
approving a petition
or complaint seeking reorganization of Borrower or a Guarantor, appointing a
receiver, custodian, trustee, intervenor or liquidator of Borrower or a
Guarantor, or all or substantially all of its assets, and such order, judgment
or decree will continue unstayed and in effect for a period of ninety (90) days.
(i) Any final judgment(s) (excluding those the enforcement of
which is suspended pending appeal) for the payment of money in excess of the sum
of $50,000.00 in the aggregate (other than any judgment covered by insurance
where coverage has been acknowledged by the insurer) is rendered against
Borrower or a Guarantor, and such judgment or judgments is not satisfied,
settled, bonded or discharged at least ten (10) days prior to the date on which
any of its assets could be lawfully sold to satisfy such judgment.
(j) Either (i) proceedings are instituted to terminate, or a
notice of termination is filed with respect to, any Plans (other than a
Multi-Employer Pension Plan as that term is defined in Section 4001(a)(3) of
ERISA) by Borrower or a Guarantor, any member of the Controlled Group, PBGC or
any representative of any thereof, or any such Plan will be terminated, in each
case under Section 4041 or 4042 of ERISA, and such termination will give rise to
a liability of such Person or the Controlled Group to the PBGC or the Plan under
ERISA having an effect in excess of $50,000.00 or (ii) a Reportable Event, the
occurrence of which would cause the imposition of a lien in excess of $50,000.00
under Section 4062 of ERISA, occurs with respect to any Plan (other than a
Multi-Employer Pension Plan as that term is defined in Section 4001(a)(3) of
ERISA) of Borrower or a Guarantor and be continuing for a period of sixty (60)
days.
(k) Any of the following events occurs with respect to any
Multi- Employer Pension Plan (as that term is defined in Section 4001(a)(3) of
ERISA) to which Borrower contributes or contributed on behalf of its employees
and Lender determines in good faith that the aggregate liability likely to be
incurred by Borrower, as a result of any of the events specified in Subsections
(i), (ii) and (iii) below, will have an effect in excess of $50,000.00; (i)
Borrower or a Guarantor incurs a withdrawal liability under Section 4201 of
ERISA; (ii) any such plan is "in reorganization" as that term is defined in
Section 4241 of ERISA; or (iii) any such Plan is terminated under Section 4041A
of ERISA.
(l) If the same is not bonded or released within fifteen (15)
days after the occurrence of such event, any levy or execution upon, or
attachment, garnishment or judicial seizure of, or the existence or filing of
any Lien against (i) any property of an Obligor that has a fair market value in
excess of $50,000.00 or (ii) any Collateral.
(m) Any abandonment of any portion of the Collateral.
(n) The loss, theft or destruction of, or any substantial
damage to, any portion of the Collateral, that is not adequately covered by
insurance.
(o) The death of a Guarantor.
(p) The occurrence of any event or condition which has or is
reasonably likely
to have a Material Adverse Effect.
8.2 Remedies Upon Event of Default. If an Event of Default will have
occurred and be continuing, then Lender may, at its sole option, exercise any
one or more of the following rights and remedies, and any other remedies
provided in any of the Credit Documents, as Lender in its sole discretion may
deem necessary or appropriate, all of which remedies will be deemed cumulative,
and not alternative:
(i) cease making the Term Loan Advance and any other
Advances or extensions of financial accommodations in any form to or for the
benefit of Borrower and declare the principal of, and all interest then accrued
on, the Notes and any other liabilities hereunder to be forthwith due and
payable, whereupon the same will become immediately due and payable without
presentment, demand, protest, notice of default, notice of acceleration or of
intention to accelerate or other notice of any kind all of which Borrower hereby
expressly waives, anything contained herein or in the Notes to the contrary
notwithstanding;
(ii) reduce any claim to judgment;
(iii) immediately cause to be recorded on all
certificates of title held by Lender evidence of Lender's lien with the proper
Governmental Authority;
(iv) appoint by instrument; and or have appointed by
a court of competent jurisdiction a receiver, receiver and manager, or
receiver-manager ("Receiver") of the Collateral, with or without bond, as the
Lender may determine, and from time to time in its sole and absolute discretion,
remove such Receiver and appoint another in its stead; and/or
(v) without notice of default or demand, pursue and
enforce any of Lender' rights and remedies under the Credit Documents, or
otherwise provided under or pursuant to any applicable law or agreement;
provided, however, that if any Event of Default specified in Sections 8.1(g) and
8.1(h) will occur, the principal of, and all interest on, the Notes and other
liabilities hereunder will thereupon become due and payable concurrently
therewith, without any further action by Lender and without presentment, demand,
protest, notice of default, notice of acceleration or of intention to accelerate
or other notice of any kind, all of which each Obligor hereby expressly waives.
Upon the occurrence and during the continuance of any Event of Default,
Lender is hereby authorized at any time and from time to time, without notice to
any Obligor (any such notice being expressly waived by each Obligor), to set off
and apply any and all moneys, securities or other property of Obligors and the
proceeds therefrom, now or hereafter held or received by or in transit to Lender
or its agents, from or for the account of Obligor, whether for safe keeping,
custody, pledge, transmission, collection or otherwise, and also upon any and
all deposits (general or special) and credits of Obligors, and any and all
claims of Obligors against Lender at any time existing. Lender agrees promptly
to notify the Obligors whose property is affected by a set-off and/or
application after any such setoff and application, provided that the failure to
give such notice will not affect the validity of such setoff and application.
The rights of Lender under this Section 8.2 are in addition to other rights and
remedies (including,
without limitation, other rights of setoff) which Lender may have.
8.3 Performance by Lender. Should an Obligor fail to perform any
covenant, duty or agreement with respect to the payment of taxes, obtaining
licenses or permits, or any other requirement contained in any of the Credit
Documents within the period provided therein, if any, for correction of such
failure, Lender may, at its option, perform or attempt to perform such covenant,
duty or agreement on behalf of such Obligor. Should there occur any default in
any payment or performance of any obligation under the Other Creditors'
Documents, then Lender, without notice to or demand upon any Obligor and without
releasing any Obligor from any obligation, may pay or perform such obligation in
such manner and to such extent as it may deem necessary; and Lender is hereby
authorized to enter upon Obligors' property for such purposes. In addition, upon
the occurrence of any Event of Default and at any time while such Event of
Default is continuing, Lender, at any time and from time to time, may prepay the
obligations under the Other Creditors' Documents in whole or in part together
with all premiums, penalties or other payments required in connection with any
such prepayment. The exercise of any right or authority herein granted shall not
cure or waive any Event of Default nor invalidate any act done hereunder because
of any Event of Default. In such event, Obligors will, at the request of Lender,
promptly pay any amount expended by Lender in such performance or attempted
performance to Lender at its office in Inglewood, California, together with
interest thereon at the Default Rate, from the date of such expenditure until
paid. Notwithstanding the foregoing, it is expressly understood that Lender does
not assume any liability or responsibility for the performance of any duties of
any Obligor hereunder or under any of the Credit Documents or other control over
the management and affairs of any Obligor.
8.4 Receiver. A Receiver appointed under this Credit Agreement and
having powers over any Collateral shall be the agent of the Obligor who has
rights in such Collateral and not of the Lender, and Lender shall not be in any
way responsible for any misconduct, negligence or nonfeasance on the part of any
Receiver, its servants, agents, or employees. A Receiver having powers over any
Collateral shall, to the extent permitted by law or to such lesser extent
permitted by its appointment, have all the powers of Lender under the Security
Documents, and in addition shall have power to carry on the business of the
Obligor who has rights in such Collateral and for such purpose to enter upon,
use, and occupy all premises owned or occupied by such Obligor in which such
Collateral may be situate, maintain such Collateral upon such premises, use
Collateral directly or indirectly in carrying on such Obligor's business, and
from time to time borrow money either unsecured or secured by a security
interest in any of such Collateral. All costs incident to the appointment of a
Receiver or the exercise by the Receiver of its powers and sums borrowed by the
Receiver shall be deemed expenses of the disposition of the Collateral for which
the Receiver has been appointed and payable from the proceeds of the disposition
of the Collateral in such order and manner as Lender may determine.
ARTICLE 9
MISCELLANEOUS
9.1 Modification. All modifications, consents, amendments or waivers of
any provision of any Credit Document, or consent to any departure by an Obligor
therefrom, will
be effective only if the same will be in writing and accepted by Lender.
9.2 Waiver. No failure to exercise, and no delay in exercising, on the
part of Lender, any right hereunder will operate as a waiver thereof, nor will
any single or partial exercise thereof preclude any other further exercise
thereof or the exercise of any other right. The rights of Lender hereunder and
under the Credit Documents will be in addition to all other rights provided by
law. No modification or waiver of any provision of any Credit Document, nor
consent to departure therefrom, will be effective unless in writing and no such
consent or waiver will extend beyond the particular case and purpose involved.
No notice or demand given in any case will constitute a waiver of the right to
take other action in the same, similar or other instances without such notice or
demand.
9.3 Payment of Expenses. Obligors will pay all costs and expenses of
Lender (including, without limitation, the attorneys' fees of Lender's legal
counsel and brokers' fees) incurred by Lender in connection with the
documentation of the Loans, and the preservation and enforcement of Lender's
rights under the Credit Documents; provided, however, that notwithstanding the
aforesaid, with respect to any legal action between the parties hereto that is
pursued to judgment the prevailing party only will be reimbursed by the other
party for all costs and expenses (including, without limitation, brokers' fees
and reasonable attorneys' fees and costs) incurred in connection with the
preservation and enforcement of its rights under the Credit Documents. Without
limiting the generality of the foregoing, Lender will, to the extent not already
provided for herein, be entitled to recover, and Obligors will be obligated to
pay, Lender's attorneys' fees and costs incurred in connection with: (i) any
determination of the applicability of the bankruptcy laws to the terms of the
Credit Documents or Lender's rights thereunder; (ii) any attempt by Lender to
enforce or preserve its rights under the bankruptcy laws, or to prevent Obligors
from seeking to deny Lender its rights thereunder; (iii) any effort by Lender to
protect, preserve or enforce its rights against any collateral for the Credit
Documents, or seeking authority to modify the automatic stay of 11 USC Section
362 or otherwise seeking to engage in such protection, preservation or
enforcement; or (iv) any proceeding(s) arising under the bankruptcy laws, or
arising in or related to a case under the bankruptcy laws. In addition, Obligors
will pay all costs and expenses of Lender in connection with the negotiation,
preparation, execution and delivery of any and all amendments, modifications and
supplements of or to the Credit Documents.
9.4 Notices. Except for telephonic notices (if any) permitted herein or
as may be expressly required by the terms of any other Credit Document, any
notices or other communications required or permitted to be given by this Credit
Agreement or any other documents and instruments referred to herein must be (i)
given in writing and personally delivered or mailed by prepaid certified or
registered mail, or (ii) made by telefacsimile delivered or transmitted, (but
confirmed on the date the telefacsimile is transmitted by one of the other
methods of giving of notice provided in this Section) to the party to whom such
notice or communication is directed, to the address of such party as follows:
Borrower: The Antigua Group, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: L. ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
SEI: Southhampton Enterprises Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: L. ▇▇▇▇▇▇ ▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
SE Corp: Southhampton Enterprises Corp.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: L. ▇▇▇▇▇▇ ▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Lender: Imperial Bank
▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy (which will not constitute notice) to:
Imperial Bank
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Any notice to be personally delivered may be delivered to the principal offices
(determined as of the date of such delivery) of the party to whom such notice is
directed. Any such notice or other communication will be deemed to have been
given (whether actually received or not) on the day it is personally delivered
as aforesaid; or, if mailed, on the third day after it is mailed as aforesaid;
or, if transmitted by telefacsimile, on the day that such notice is transmitted
and confirmed as aforesaid; provided that notice to Lender will be deemed given
only if given to Lender at both notice addresses. Any party may change its
address for purposes of this Credit Agreement by giving notice of such change to
the other parties pursuant to this Section.
9.5 Governing Law; Jurisdiction, Venue; Waiver of Jury Trial. The
Credit Documents will be governed by and construed in accordance with the
substantive laws (other than conflict laws) of the State of California, except
to the extent Lender has greater rights or remedies under Federal law, whether
as a national bank or otherwise, in which case such choice of California law
will not be deemed to deprive Lender of any such rights and remedies as may be
available under Federal law. Subject to the provisions of Section 9.6, each
party consents to the personal jurisdiction and venue of the state courts
located in Los Angeles, State of
California in connection with any controversy related to any Loan or any of the
Credit Documents, waives any argument that venue in any such forum is not
convenient and agrees that any litigation initiated by any of them in connection
with any of the Credit Documents will be venued in the Superior Court of Los
Angeles County, California. The parties waive any right to trial by jury in any
action or proceeding based on or pertaining to the Credit Documents.
9.6 Reference Provision.
(a) Each controversy, dispute or claim ("Claim") between the
parties arising out of or relating to this Credit Agreement and/or any of the
Credit Documents, which is not settled in writing within ten days after the
"Claim Date" (defined as the date on which a party gives written notice to all
other parties that a controversy, dispute or claim exists), will be settled by a
reference proceeding in Los Angeles, California, in accordance with the
provisions of Section 638, et seq., of the California Code of Civil Procedure,
or their successor section ("CCP"), which will constitute the exclusive remedy
for the settlement of any Claim, including whether such Claim is subject to the
reference proceeding and the parties waive their rights to initiate any legal
proceedings against each other in any court or jurisdiction other than the
Superior Court of Los Angeles (the "Court"). The referee will be a retired Judge
selected by mutual agreement of the parties, and if they cannot so agree with in
thirty days (30) after the Claim Date, the referee will be selected by the
Presiding Judge of the Court. The referee will be appointed to sit as a
temporary judge, as authorized by law. The referee will (a) be requested to set
the matter for hearing within sixty (60) days after the Claim Date and (b) try
any and all issues of law or fact and report a statement of decision upon them,
if possible, within ninety (90) days of the Claim Date. Any decision rendered by
the referee will be final, binding and conclusive and judgment will be entered
pursuant to CCP 644 in the Court. All discovery permitted by the Credit
Documents will be completed no later than fifteen (15) days before the first
hearing date established by the referee. The referee may extend such period in
the event of a party's refusal to provide requested discovery for any reason
whatsoever, including, without limitation, legal objections raised to such
discovery or unavailability of a witness due to absence or illness. No party
will be entitled to "priority" in conducing discovery. Depositions may be taken
by either party upon seven (7) days written notice, and, request for production
of inspection of documents will be responded to within ten (10) days after
service. All disputes relating to discovery which cannot be resolved by the
parties will be submitted to the referee whose decision will be final and
binding upon the parties.
(b) The referee will be required to determine all issues in
accordance with existing case law and the statutory laws of the State of
California. The rules of evidence applicable to proceedings at law in the State
of California will be applicable to the reference proceeding. The referee will
be empowered to enter equitable as well as legal relief, to provide all
temporary and/or provisional remedies and to enter equitable orders that will be
binding upon the parties. The referee will issue a single judgment at the close
of the reference proceeding which will dispose of all of the claims of the
parties that are the subject to the reference. The parties hereto expressly
reserve the right to contest or appeal from the final judgment or any appealable
order or appealable judgment entered by the referee. The parties expressly
reserve the right to findings of fact, conclusions of law, a written statement
of decision, and the right to move for a new trial or a different judgment,
which new trial, if granted, is also to be a
reference proceeding under this provision.
(c) No provision of Paragraphs (a) or (b) of this Section 9.6,
however, will limit the right of Lender to bring action for possession of any
collateral in any jurisdiction, wherever located, in accordance with the
provisions of the Security Documents.
9.7 Invalid Provisions. If any provision of any Credit Document is held
to be illegal, invalid or unenforceable under present or future laws during the
term of this Credit Agreement, such provision will be fully severable; such
Credit Document will be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part of such Credit Document; and
the remaining provisions of such Credit Document will remain in full force and
effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance from such Credit Document. Furthermore, in lieu of
each such illegal, invalid or unenforceable provision there will be added as
part of such Credit Document a provision mutually agreeable to Obligors and
Lender as similar in terms to such illegal, invalid or unenforceable provision
as may be possible and be legal, valid and enforceable.
9.8 Binding Effect. The Credit Documents will be binding upon and inure
to the benefit of Obligors and Lender and their respective successors, assigns
and legal representatives; provided, however, that Obligors may not, without the
prior written consent of Lender, assign any rights, powers, duties or
obligations thereunder.
9.9 Entirety. The Credit Documents embody the entire agreement between
the parties and supersede all prior agreements and understandings, if any,
relating to the subject matter hereof and thereof.
9.10 Headings. Section headings are for convenience of reference only
and will in no way affect the interpretation of this Credit Agreement.
9.11 Survival. All representations and warranties made by Obligors
herein will survive delivery of the Notes and the making of the Loans.
9.12 No Third Party Beneficiary. The parties do not intend the benefits
of this Credit Agreement to inure to any third party, nor will this Credit
Agreement be construed to make or render Lender liable to any materialman,
supplier, contractor, subcontractor, purchaser or lessee of any property owned
by an Obligor, or for debts or claims accruing to any such persons against an
Obligor. Notwithstanding anything contained herein or in the Notes, or in any
other Credit Document, or any conduct or course of conduct by any or all of the
parties hereto, before or after signing this Credit Agreement or any of the
other Credit Documents, neither this Credit Agreement nor any other Credit
Document will be construed as creating any right, claim or cause of action
against Lender, or any of its officers, directors, agents or employees, in favor
of any materialman, supplier, contractor, subcontractor, purchaser or lessee of
any property owned by an Obligor, nor to any other person or entity other than
Borrower.
9.13 Time. Time is of the essence hereof.
9.14 Indemnity. Borrower agrees to and will indemnify, hold harmless
and defend Lender from any liability, claims or losses resulting from the
disbursement of the proceeds of the Loans or which may be asserted against
Lender in connection with the Loans or the administration thereof, the
Collateral or Lender's status under the Credit Documents, except when resulting
from Lender's gross negligence or willful misconduct as determined by a final,
non-appealable judgment issued by a court of competent jurisdiction or, if
applicable, the reference proceedings set forth in Section 9.6. This provision
will survive repayment of the Loans and will continue in full force and effect
so long as the possibility of such liability, claims or losses exists.
9.15 Schedules and Exhibits Incorporated. All schedules and exhibits
attached hereto, if any, are hereby incorporated into this Credit Agreement by
each reference thereto as if fully set forth at each such reference.
9.16 Counterparts. This Credit Agreement may be executed in multiple
counterparts, each of which, when so executed, will be deemed an original but
all such counterparts will constitute but one and the same agreement.
IN WITNESS WHEREOF, the undersigned have executed this Credit Agreement
as of the day and year first above written.
THE ANTIGUA GROUP, INC., a Nevada
corporation
Witness as to Borrower:
By:
Print Name: Type/Print Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President-Finance
Federal Tax Id No. ▇▇-▇▇▇▇▇▇▇
SOUTHHAMPTON ENTERPRISES INC., a Texas
corporation
Witness as to SEI:
By:
Print Name: Type/Print Name: L. ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Secretary
Federal Tax Id No. ▇▇-▇▇▇▇▇▇▇
SOUTHHAMPTON ENTERPRISES CORP., a
British Columbia (Canada) corporation
Witness as to SE Corp:
By:
Print Name: Type/Print Name: L. ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
Federal Tax Id No. ▇▇▇▇▇▇▇▇▇
IMPERIAL BANK, a California banking corporation
By:
Type/Print Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
STATE OF ARIZONA )
) ss.
County of Maricopa )
The foregoing instrument was acknowledged before me this _____ day of
May, 1997, by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the Vice President-Finance of THE ANTIGUA
GROUP, INC., a Nevada corporation on behalf of such corporation.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
Notary Public
My commission expires:
----------------------
STATE OF ARIZONA )
) ss.
County of Maricopa )
The foregoing instrument was acknowledged before me this _____ day of
May, 1997, by L. ▇▇▇▇▇▇ ▇▇▇▇▇▇, the Secretary of SOUTHHAMPTON ENTERPRISES INC.,
a Texas corporation, on behalf of such corporation.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
Notary Public
My commission expires:
----------------------
STATE OF ARIZONA )
) ss.
County of Maricopa )
The foregoing instrument was acknowledged before me this _____ day of
May, 1997, by L. ▇▇▇▇▇▇ ▇▇▇▇▇▇, the President of SOUTHHAMPTON ENTERPRISES CORP.,
a British Columbia (Canada) corporation, on behalf of such corporation.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
Notary Public
My commission expires:
----------------------
SCHEDULE 1.1
(PERMITTED LIENS)
1. A senior security interest in favor of LaSalle and securing: (a) the
LaSalle Loans and (b) payment and performance of obligations incidental to such
loans.
2. A junior security interest in favor of Cruttenden and securing (a)
the Cruttenden Loan and (b) payment and performance of obligations incidental to
the Cruttenden Loan.
3. A junior security interest in favor of Seller and securing (a)
repayment of the Seller Debt and (b) payment and performance of obligations
incidental to such indebtedness.
4. Liens encumbering the property of Borrower only and evidenced by the
following financing statements filed with the Arizona Secretary of State:
(a) File No. 84251 (Secured Party - IBM Corporation);
(b) File No. 839610 (Secured Party - American Business Credit
Corp.); and
(c) File No. 836137 (Secured Party - El Camino Resources,
Inc.).
5. Judgment Lien in favor of Texas Commerce Bank against property of
SEI having an approximate balance of $10,000.
6. Judgment Lien in favor of ▇▇▇▇▇▇ Sporting Goods, Inc. against
property of SEI having an approximate balance of $1,178.63.
7. Tax Lien in favor of State of Texas against property of SEI having
an approximate balance of $32,416.61.
8. Lien in favor of St. Clair Group against property of SE Corp
securing indebtedness having an approximate balance of $189,000 (CDN).
SCHEDULE 4.1
(CLOSING LIST)
A. CREDIT DOCUMENTS
1. Credit Agreement by and between The Antigua Group, Inc. and Imperial
Bank.
2. Promissory Note to be executed by The Antigua Group, Inc.
3. Continuing Guarantee and Subordination Agreement (SEC) to be executed
by Southhampton Enterprises Corp.
4. Continuing Guarantee and Subordination Agreement (SEI) to be executed
by Southhampton Enterprises, Inc.
5. Security Agreement to be executed by The Antigua Group, Inc.
6. Security Agreement to be executed by Southhampton Enterprises, Inc.
7. Security Agreement to be executed by Southhampton Enterprises Corp.
8. Trademark Security Agreement to be executed by The Antigua Group, Inc.
9. Pledge and Irrevocable Proxy Security Agreement (SEI) to be executed by
Southhampton Enterprises, Inc.
10. Pledge and Irrevocable Proxy Security Agreement (SEC) to be executed by
Southhampton Enterprises Corp.
11. Assignment Separate from Certificate to be executed by Southhampton
Enterprises Corp.
12. Assignment Separate from Certificate to be executed by SEI.
13. Uniform Commercial Code Financing Statement (UCC-1) to be executed by
The Antigua Group, Inc. and Imperial Bank.
a. Arizona
b. Maricopa County, Arizona
c. Nevada
14. Uniform Commercial Code Financing Statement (UCC-1) to be executed by
Southhampton Enterprises Corp. and Imperial Bank.
a. Texas
b. Dallas County, Texas
c. Ontario
d. British Columbia
15. Uniform Commercial Code Financing Statement (UCC-1) to be executed by
Southhampton Enterprises, Inc. and Imperial Bank.
a. Texas
b. Dallas County, Texas
c. Ontario
d. British Columbia
16. Waiver/Release of Lien Rights - Borrower Leases.
17. Waiver/Release of Lien Rights - SEI Leases.
18. Waiver/Release of Lien Rights - Southhampton Enterprises Corp., Leases
(Unless waived by Lender).
19. Warrant executed by Southhampton Enterprises Corp.
20. Corporate Borrowing Resolution to be executed by officers of The
Antigua Group, Inc.
21. Corporate Resolution (Guarantee and Pledge) to be executed by the
officers of Southhampton Enterprises, Inc.
22. Corporate Resolution (Guarantee and Pledge) to be executed by the
officers of Southhampton Enterprises Corp.
23. Intercreditor Agreement.
24. Subordination Agreements.
a. Seller
▇. ▇▇▇▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇
25. Escrow Agreement.
SCHEDULE 5.21
(EXISTING INDEBTEDNESS)
A. BORROWER INDEBTEDNESS
1. Promissory Note in the original principal amount of $334,619 dated
January 1, 1993 payable to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇. Current outstanding balance is
$250,964.25.
2. Promissory Note in the original principal amount of $334,619 dated
January 1, 1993 payable to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇. Current outstanding balance is
$250,964.25.
3. Various loans to employees, current or prior, with various maturity
dates with outstanding principal balances not in excess of $19,565.32 in the
aggregate.
4. Loan relating to one auto show van with an outstanding principal
balance totaling $14,889.00.
5. Note payable to IBM related to an AS400 upgrade. Current outstanding
balance is $68,393.00.
B. SEI INDEBTEDNESS
Creditor Approximate Balance
1. Note Payable--Texas Commerce Bank $ 23,616.00
2. Note Payable--▇▇▇▇▇ Tests $100,000.00
3. Note Payable--▇▇▇▇▇▇▇ ▇▇▇▇▇▇ $ 25,000.00
4. Judgment in No. 94-02989-M $ 10,000.00
5. ▇▇▇▇▇▇ Sporting Goods, Inc. $ 1,178.63
6. State of Texas Tax Lien $ 32,416.61
C. SE CORP INDEBTEDNESS
Creditor Approximate Balance
1. Note--▇▇▇▇▇ ▇▇▇▇▇ $ 28,000 USD
2. Note--St. Claire Group (Secured by inventory) $189,000 CDN
3. Note Payable to Director--▇. ▇▇▇▇▇ $327,108 USD
4. Notes Payable to Director--▇. ▇. ▇▇▇▇▇▇ $113,723 USD
5. Notes Payable to Director--▇.▇. ▇▇▇▇ $ 85,500 USD
SCHEDULE 5.22
(SUBSIDIARIES AND DIVISIONS)
A. BORROWER - None
B. SEI - None
C. SE CORP - None
SCHEDULE 5.22
(CAPITALIZATION)
A. BORROWER Five Million (5,000,000) shares of common stock authorized;
and 2,074,600 shares of common stock issued and outstanding.
B. SEI 10,000 shares of common stock authorized; and 1,000 shares of
common stock issued and outstanding.
C. SE CORP See page 2 of this Schedule.
D. Except as set forth on page 2 of this Schedule with respect to SE
Corp., each Obligor represents and warrants that: it has no unissued stock
reserved for any purpose other than for issuance upon exercise of the Warrant,
and it has not issued or agreed to issue any stock purchase rights or
convertible securities other than the Warrant. Furthermore, each Obligor
represents and warrants that there are no preemptive rights in effect with
respect to the issuance of any shares of stock.
SCHEDULE 5.25
(BUSINESS OF OBLIGORS)
A. BORROWER: Designs, sources and contracts for the manufacture of
sportswear and casual wear.
B. SEI: Screen printing and embroidery of casual wear.
C. SE CORP: Holding company for SEI.
SCHEDULE 7.8
(PERMITTED INDEBTEDNESS)
BORROWER
1. Promissory Note in the original principal amount of $334,619 dated
January 1, 1993 payable to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇. Current outstanding balance is
$250,964.25.
2. Promissory Note in the original principal amount of $334,619 dated
January 1, 1993 payable to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇. Current outstanding balance is
$250,964.25.
3. Various loans to employees, current or prior, with various maturity
dates with outstanding principal balances not in excess of $19,565.32 in the
aggregate.
4. Loan relating to one auto show van with an outstanding principal
balance totaling $14,889.00.
5. Note payable to IBM related to an AS400 upgrade. Current outstanding
balance is $68,393.00.
B. SEI
1. Promissory Note in the original principal amount of $334,619 dated
January 1, 1993 payable to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇. Current outstanding balance is
$250,964.25.
2. Promissory Note in the original principal amount of $334,619 dated
January 1, 1993 payable to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇. Current outstanding balance is
$250,964.25.
3. Various loans to employees, current or prior, with various maturity
dates with outstanding principal balances not in excess of $19,565.32 in the
aggregate.
4. Loan relating to one auto show van with an outstanding principal
balance totaling $14,889.00.
5. Note payable to IBM related to an AS400 upgrade. Current outstanding
balance is $68,393.00.
6. The indebtedness listed below.
Creditor Approximate Balance
1. Note Payable--Texas Commerce Bank $ 23,616.00
2. Note Payable--▇▇▇▇▇ ▇▇▇▇▇ $100,000.00
3. Note Payable--▇▇▇▇▇▇▇ ▇▇▇▇▇▇ $ 25,000.00
4. Judgment in No. 94-02989-M $ 10,000.00
5. ▇▇▇▇▇▇ Sporting Goods, Inc. $ 1,178.63
6. State of Texas Tax Lien $ 32,416.61
C. SE CORP
Creditor Approximate Balance
1. Note--▇▇▇▇▇ ▇▇▇▇▇ $ 28,000 USD
2. Note--St. Claire Group (Secured by inventory) $189,000 CDN
3. Note Payable to Director--▇. ▇▇▇▇▇ $327,108 USD
4. Notes Payable to Director--▇. ▇. ▇▇▇▇▇▇ $113,723 USD
5. Notes Payable to Director--▇.▇. ▇▇▇▇ $ 85,500 USD
In addition to the above-listed Indebtedness, convertible promissory notes in a
principal amount not to exceed U.S. $4,650,000.
SCHEDULE 7.11
(COMPENSATION)
A. BASE COMPENSATION.
The current base annual compensation of the five (5) highest paid
employees, officers and/or directors of Borrower:
Employee Amount
L. ▇▇▇▇▇▇ ▇▇▇▇▇▇ $175,000
▇▇▇ ▇▇▇▇▇▇▇▇▇ $114,000
▇▇▇▇▇ ▇▇▇▇▇ $100,000
▇▇▇▇▇ ▇'▇▇▇▇ $100,000
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ $89,440
Such compensation shall be subject to periods adjustments as are
reasonable under the circumstances.
B. ADDITIONAL COMPENSATION.
The five (5) highest paid employees of Borrower shall be entitled to
participate in bonuses and incentive plans as currently adopted by the board of
directors and are administered in good faith.
EXHIBIT "6.1(e)"
COMPLIANCE CERTIFICATE
FOR FISCAL QUARTER ENDING
------------------
("Reporting Period")
Imperial Bank
▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Lending Services
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Imperial Bank
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇ Date: _____________(1)
Dear Ladies and Gentlemen:
This Compliance Certificate refers to the Credit Agreement dated as of
_______________, 1997 (as it may hereafter be amended, modified, extended or
restated from time to time, the "Credit Agreement"), between The Antigua Group,
Inc., a Nevada corporation, Southhampton Enterprises, Inc., a Texas corporation,
and Southhampton Enterprises Corp., a British Columbia (Canada) corporation and
Imperial Bank. Capitalized terms used and not otherwise defined herein will have
the meanings assigned to such terms in the Credit Agreement.
Pursuant to Section 6.1 of the Credit Agreement, the undersigned,
hereby certifies that:
1. To the best of the undersigned's knowledge, [name of Obligor]
("Obligor") has observed, performed and fulfilled each and every obligation and
covenant contained in the Credit Agreement and no Event of Default exists [or if
so, specifying the nature and extent thereof and any corrective actions taken or
to be taken].
2. All representations and warranties set forth in the Credit Documents
remain true and complete in all material respects as if made on and as of the
date of the compliance certificate, except for changes as may have resulted from
any circumstance or event which has not had a Material Adverse Effect.
3. All financial statements of Obligor delivered to Lender during the
Reporting Period, to the undersigned's knowledge fairly present in all material
respect the financial position of the Obligor and the results of its operations
at the dates and for the periods indicated and have been prepared in accordance
with GAAP.
4. As of the last day of the Reporting Period, the computations
attached hereto with respect to compliance contained in the covenants set forth
in Section 7.7 of the Credit Agreement are true and correct.
[Appropriate Signature
Block for Obligor]
--------
(1) To be submitted within the time period specified in Section 6.1 of the
Credit Agreement.