1
Exhibit 10.24
FIRST AMENDMENT TO
LOAN AND SECURITY AGREEMENT
This First Amendment (the "First Amendment"), dated April 17, 2000, is
between U.S. Bank National Association (the "Bank") and Geographics, Inc. (the
"Borrower").
RECITALS
WHEREAS, Bank and Borrower are parties to a Loan and Security Agreement
dated December 22, 1999 (the "Loan Agreement"); and
WHEREAS, Bank and Borrower desire to amend the Loan Agreement as provided
herein.
AGREEMENT
NOW, THEREFORE, the Bank and Borrower hereby agree as follows:
1. Definitions.
(a) Capitalized terms used but not defined herein shall have the meanings
ascribed to such terms in the Loan Agreement.
(b) "Revolving Note" shall mean Borrower's promissory note, substantially
in the form attached hereto as Exhibit A.
2. Revolving Credit Facility. Section 2.1 of the Loan Agreement is amended
to delete "Seven Million Five Hundred Thousand and no/100 Dollars
($7,500,000.00)" and replace it with of "Nine Million Five Hundred Thousand and
no/100 Dollars ($9,500,000.00)."
3. Unused Line Fee. Section 2.23 of the Loan Agreement is amended to delete
"$7,500,000.00" and replace it with of "$9,500,000.00."
4. Collateral Obligation Ratio. Section 4 of the Loan Agreement is hereby
amended and restated in its entirety as follows:
4. COLLATERAL OBLIGATION RATIO
Without Bank's written consent, Borrower shall not at any time permit
the sum of the aggregate amount of those Obligations reflected by the loan
account ledger for The Revolving Credit Facility plus all Letter of Credit
Liabilities to exceed the lesser of $9,500,000.00 or the total sum of:
2
4.1 Seventy-five percent (75%) of the amount owing on Qualified
Accounts (after deducting payments on Qualified Accounts which are in the
process of collection by the Bank); plus
4.2 Fifty percent (50%) of Qualified Inventory at cost or wholesale
market value, whichever is lower, up to a maximum of $3,500,000.00; plus
4.3 Fifty percent (50%) of the face amount of outstanding import
letters of credit issued by the Bank, on behalf of Borrower, to secure the
purchase price of inventory purchased from Xxxxx Xxxx, or other vendors
approved by the Bank, for Borrower's "Geofile" product line, provided that
Borrower shall not include in Qualified Inventory any of the purchased
inventory relating to any letter of credit included in this Section 4.3;
plus
4.4 the Real Estate Sublimit; less
4.5 the Reserves for Returns; less
4.6 such reserves as Bank, in its sole discretion, deems necessary or
appropriate, taking into account the Borrower's and Borrower's Customers'
financial condition and prospects, the nature and condition of the
Collateral, applicable contingencies and any other factor deemed material
by Bank.
In addition to other required payments, Borrower shall pay Bank, in
reduction of the Obligations owing to Bank at any time, such sums as may be
necessary from time to time to maintain the foregoing ratios and to comply
with the foregoing advance limits. Such ratio is stated only for the
purpose of advances under this Agreement and not for valuation of the
Collateral.
The "Real Estate Sublimit" shall be $1,000,000. However, if Borrower
meets the Real Estate Sublimit Conditions, then the Real Estate Sublimit
shall increase to the lesser of (a) $2,400,000.00 or (b) 75% of the
appraised value of the Xxxxxx Property.
"Real Estate Sublimit Conditions" shall mean:
(a) as of March 31, 2000, Borrower's EBITDA for the fiscal hear ending
on such date is equal to or greater than $2,500,000;
(b) as of March 31, 2000, Borrower's ratio of total liabilities to Net
Worth is less than 2.25 to 1; and
2
3
(c) Borrower, at Borrower's expense, obtains and provides the Bank
with the following, each of which is in form and substance satisfactory to
the Bank:
(i) an ALTA survey from a surveyor licensed in Washington showing
the boundaries of the Xxxxxx Property, the legal description of the Xxxxxx
Property, the means of ingress to and egress from the Xxxxxx Property, all
improvements on the Xxxxxx Property, the flood plain status of the Xxxxxx
Property, and all easements and encroachments affecting the Xxxxxx
Property;
(ii) a flood plain certification for the Xxxxxx Property;
(iii) Environmental Assessments of the Borrower's Xxxxxx
Property, which Environmental Assessments shall meet ASTM E1527-97 Standard
Practice for Phase 1 Environmental Site Assessments, and Bank's
satisfaction with such assessments; and
(iv) a real estate appraisal of the Xxxxxx Property, established
from a written report prepared in accordance with the Uniform Standards of
Appraisal practice by an appraiser acceptable to Bank "
5. Net Worth. Section 7.26 of the Loan Agreement is hereby amended to
delete "$5,500,000" and replace it with "$8,500,000.00."
6. Locations of Collateral. Schedule 6.3 of the Loan Agreement is hereby
amended to add the following location of Collateral: Parchment Presentation
Products, Corp., 000 Xxxxxxxxxxx Xxxx, Xxxx 00, Xxxxxxxxxxx, Xxxxxxx, XxX 0X0;
Rediform Dallas, 000 Xxxxxxx Xxxxx, Xxxxxxx, XX 00000.
7. Purchase of Assets. Bank hereby consents to Borrower's acquisition of
substantially all of the assets of thc Consumer Products Group of the
Communication Papers Division of Domtar Inc. (the "Domtar Assets").
8. Conditions to Effectiveness of this Agreement. This First Amendment
shall not be effective until this First Amendment shall have been fully executed
and delivered to Bank and Bank shall have received the following in form and
substance satisfactory to Bank.
(a) Revolving Note:
(b) Amendment to Borrower's Deed of Trust in favor of Bank:
3
4
(c) An endorsement to the title insurance policy on thc Xxxxxx
Property which brings down the effective date of the policy and
acknowledges the Amendment to the Deed of Trust;
(d) Documents relating to the acquisition of the Domtar Assets,
in form and substance satisfactory to the Bank;
(e) Evidence of injection of equity into Borrower in the amount
of at least $3,000,000, including copies of all documents relating to
such investment, and Bank's satisfaction with the terms of such
documents;
(f) Corporate Resolutions of Borrower authorizing this First
Amendment accompanied by an Officer's Certificate signed by an officer
of Borrower;
(g) Documents necessary to perfect the Bank's security interest
in Borrower's Collateral located in Canada;
(h) Current list of all of Borrower's federally registered
patents, trademarks, copyrights and licenses; and
(i) Evidence of insurance.
9. Effect of First Amendment. Except as amended hereby, the Loan Agreement
shall remain in full force and effect.
10. Attorneys' Fees. The Borrower agrees to pay all reasonable attorneys'
fees of Bank relating to this Amendment and all amendments, modifications and
supplements hereto.
11. Law Governing. This Amendment shall be governed by the laws of the
State of Wisconsin.
12. Binding Effect. This Amendment shall be binding upon the parties hereto
and their respective successors and assigns.
4
5
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
BORROWER:
Geographics, Inc.
By: /s/ Xxxxx X. Xxxxxx
----------------------------------------
Xxxxx X. Xxxxxx, Chief Executive Officer
BANK:
U.S. Bank National Association
By: /s/ Xxxxxx X. Xxxxx
----------------------------------------
Xxxxxx X. Xxxxx, Vice President
5
6
EXHIBIT A
REVOLVING NOTE
Dated: as of April 17, 2000 Executed at Milwaukee, Wisconsin
Stated Principal: $9,500,000
FOR VALUE RECEIVED. Geographics, Inc., a Wyoming corporation ("Borrower"),
hereby promises to pay to the order of U.S. Bank National Association, its
successors and assigns (the "Lender") at its Milwaukee office at 000 Xxxx
Xxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx 00000, the principal sum of Nine Million
Five Hundred Thousand Dollars ($9,500,000.00) or the aggregate unpaid principal
amount of all advances made by the Lender hereunder pursuant to the Loan
Agreement hereinafter referred to, whichever is less, and to pay interest from
the date hereof on the unpaid balances hereof at the rate and at the times
provided in the Loan Agreement hereinafter referred to. All principal and
accrued but unpaid interest shall be due and payable on the Termination Date (as
defined in the Loan Agreement).
All payments received hereunder shall be applied first to interest accrued
and unpaid to date of receipt and then to repay principal.
No deferral of time of payment shall be valid unless the holder consents in
writing and if such deferral is granted, the deferred balance including interest
thereon at the rate applicable hereunder after default shall be an additional
obligation under this Note. The undersigned and each endorser and guarantor
hereby waives presentment, protest, and notice of dishonor and give consent to
the holder to extend time and to compound, release or delay enforcement of
rights against the undersigned or the security.
This Note is the Revolving Note referred to in the Loan and Security
Agreement dated as of the date hereof, between the undersigned and the Lender
(as the same may be amended, modified, supplemented or restated from time to
time, the "Loan Agreement"). This Note may be paid in full only upon payment of
the prepayment premium, if any, called for in the Loan Agreement. This Note is
secured by certain collateral referred to in the Loan Agreement.
This Note is given in substitution and replacement for that certain
Revolving Note in the original principal amount of Seven Million Five Hundred
Thousand Dollars ($7,500,000.00), dated as of December 22, 1999 (the "Prior
Note"), executed by the Borrower in favor of Lender. The Borrower hereby
acknowledges and agrees that the indebtedness evidenced by the Prior Note has
not been repaid or extinguished and that the execution hereof does not
constitute a novation of the Prior Note.
GEOGRAPHICS, INC.,
a Wyoming corporation
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------------
Xxxxx X. Xxxxxx
Chief Executive Officer
