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EXHIBIT 99.C
FINANCING AND SECURITY AGREEMENT
AGREEMENT made as of November 22, 1996, by and between
WSMP,INC., a corporation duly organized under the laws of the State of
North Carolina having a principal place of business at WSMP Drive, Claremont,
North Carolina (the "Borrower") and NATIONAL BANK OF CANADA, a Canadian
chartered bank (the "Lender").
Borrower desires to obtain loans from Lender from time to time on a
revolving basis on the security of, inter alia, the Collateral, as herein
defined, upon the following terms and conditions:
1. Lender agrees to extend credit and/or make loans to Borrower from
time to time in Lender's discretion up to (a) 85% of the outstanding amount of
"Eligible Receivables", as herein defined, in each case which have been
assigned, pledged or transferred to Lender or in which Lender holds a security
interest, plus (b) 45% of "Eligible Inventory", as herein defined, valued at the
lower of cost (determined on a first-in, first-out basis) or market value, less
such reserves as Lender in its reasonable discretion elects to establish;
provided, however, (i) in no event shall the aggregate principal balance of such
extensions of credit and/or loans at any time outstanding exceed $6,000,000.00
(the "Committed Amount") and (ii) in no event shall advances against Eligible
Inventory exceed an aggregate principal amount of $3,000,000.00. Lender may, in
its reasonable discretion, at and from time to time, increase or decrease the
advance percentages to be applied to Eligible Receivables and Eligible Inventory
which are contained herein and, in the event such percentages were decreased,
such decrease shall become effective immediately for the purpose of calculating
the amount which Lender may be willing to advance, or allow to remain
outstanding, against Eligible Receivables and Eligible Inventory. Lender may
make additional loans, in its sole discretion, based upon its own estimate of
the valuation of the total Collateral. All such loans shall bear interest at the
rate agreed on from time to time by the parties and at the option of Lender
shall be evidenced by notes in form satisfactory to Lender. All loans shall be
charged to a loan account in Borrower's name on Lender's books. Lender shall
render to Borrower each month a statement of the loan account which shall be
deemed to be correct and accepted
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by and binding upon Borrower unless Lender receives a written statement of
Borrower's exceptions within thirty (30) days after such statement has been
rendered to Borrower. At Lender's request, Borrower shall execute and deliver to
Lender, from time to time, promissory notes, in form satisfactory to Lender to
evidence the balances owing in the loan account, but unless and until such notes
are requested and delivered, the monthly statements shall be prima facie
evidence of the loans and other Obligations owing to Lender by Borrower. All
loans and all other amounts chargeable to the loan account under this Agreement
shall be payable by the Borrower to the Lender without the necessity of Lender's
resorting to or having recourse to any Collateral.
2. DEFINITIONS
2.A. "Collateral" means all Borrower's presently owned and
hereafter acquired: Receivables and Inventory and all reserves,
balances, deposits, property of the Borrower coming into the possession
of Lender, choses in action and general intangibles (except trademarks
and service marks) which are directly associated with the Borrower's
Receivables and Inventory, and all proceeds thereof. The term shall
also include all of Borrower's books and records relating to
Receivables, Inventory and all other Collateral.
2.B. "Current Assets" means all items which, according to
Generally Accepted Accounting Principles, would be classified as
current assets on a balance sheet of the Borrower.
2.C. "Current Liabilities" means all items which, according to
Generally Accepted Accounting Principles, would be classified as
current liabilities on a balance sheet of the Borrower.
2.D. "EBIT" means, for the applicable period, the Borrower's
net income before taxes and Interest Expense as determined in
accordance with Generally Accepted Accounting Principles.
2.E. "Eligible Inventory" means raw materials,
work-in-process, and finished goods Inventory in which Lender has a
perfected first priority security interest, reduced by the amount of
the obsolescence reserves against Inventory shown on the financial
statements of the Borrower, and excluding
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(a) Inventory that is subject to any assignment,
claim, lien, or security interest other than the lien in favor
of Lender;
(b) Inventory that is obsolete, damaged, unsalable or
otherwise unfit for use;
(c) Inventory that is on consignment or Inventory
that is packaging supplies, shipping supplies and other
similar types of goods, as determined by Lender in its sole
discretion;
(d) Inventory that the Lender in its reasonable
discretion deems to be slow moving inventory and the reserve
for slow moving inventory; and
(e) Inventory that is otherwise deemed unacceptable
by Lender in its reasonable discretion.
2.F. "Eligible Receivables" means Receivables in which Lender
has a perfected first priority security interest and which meet the
following requirements at the time the Receivable is created and
continues to meet such requirements until the Receivable is collected:
(a) The Receivable is not more than thirty (30) days
from the invoice date of such Receivable;
(b) The Receivable arose from the performance of
services or an outright sale of goods by the Borrower, such
goods have been shipped to the account debtor, and the
Borrower has possession of, or has delivered to Lender,
shipping and delivery receipts evidencing such shipment;
(c) The Receivable is not subject to any assignment,
claim, lien, or security interest other than the lien in favor
of Lender, and Borrower has not made and will not make any
further assignment thereof or create any further security
interest therein, nor permit Borrower's rights therein to be
reached by attachment, levy, garnishment or other judicial
process;
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(d) The Receivable is not subject to set-off, credit,
allowance or adjustment by the account debtor, except discount
allowed for prompt payment, and the account debtor has not
complained as to its liability thereon and has not returned
any of the goods from the sale of which the account arose;
provided, however, that all Receivables incurred by the Pierre
Frozen Foods Division of Xxxxxx Foods, Inc. (hereinafter
"Pierre") or by Xxxxxx X. Xxxxxx Co. (hereinafter "Hormel") or
by an entity involved in a co-packing agreement with Borrower
which is made known to Lender in advance (hereinafter a
"Co-Xxxxxx") shall be Eligible Receivables to the extent that
the Receivables exceeds the offset, credit allowance or
adjustment;
(e) The Receivable arose in the ordinary course of
Borrower's business and did not arise from the performance of
services or a sale of goods to a supplier or employee of the
Borrower or to a subsidiary or affiliate of the Borrower;
provided, however, that Receivables of Pierre, Hormel or a Co-
Packer which otherwise would be Eligible Receivables
hereunder, shall not be disqualified under this subsection as
either a supplier or an affiliate;
(f) No notice of bankruptcy, insolvency or
receivership of the account debtor has been received by or is
known to the Borrower;
(g) The Receivable did not arise out of a contract
with the United States or any department, agency or
instrumentality thereof;
(h) The Receivable is not owing from an account
debtor located outside of the United States or Canada; and
(i) Lender has not notified the Borrower that the
Receivable or account debtor is, in the reasonable judgment of
the Lender, unsatisfactory.
Eligible Receivables shall be further reduced by all finance
charges accrued against Receivables.
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2.G. "Generally Accepted Accounting Principles" means those
principles of accounting set forth in pronouncements of the Financial
Accounting Standards Board, the American Institute of Certified Public
Accountants, as such principles are from time to time supplemented and
amended, applied for the period on a basis comparable in all material
respects to those applied in the most recent preceding period.
2.H. "Interest Expense" means, for the applicable period,
interest expense incurred during such period by the Borrower,
determined in accordance with Generally Accepted Accounting Principles.
2.I. "Inventory" means all of Borrower's Bakery Division or
Ham Curing Division inventory, as defined in the Uniform Commercial
Code, and all forms of merchandise in which the Borrower may have an
interest, whether or not specifically pledged or consigned, including
but not limited to, all finished and unfinished merchandise, work in
process, materials and supplies of every nature used or usable in
connection with the manufacture, packing, shipping, advertising or sale
of such merchandise, all such items in transit or whether or not in the
Borrower's constructive, actual or exclusive possession or held by the
Borrower or others for the Borrower's account and wherever the same may
be located, including but not limited to, inventory which may be upon
the premises of any carriers, forwarding agents, warehousemen, vendors,
finishers or processors or other third parties who may have possession
of such items, and all documents of title relating to such items, the
cash and non-cash proceeds thereof, including but not limited to
proceeds realized from the sale of such items and insurance proceeds.
The parties acknowledge that inventory supplied by, and the property
of, Pierre, Hormel or a Co-Packer is not the subject of this Agreement.
2.J. "Obligations" shall mean all loans and advances from time
to time made by Lender to the Borrower and to others at the Borrower's
request or for the Borrower's account, and all other existing and
future indebtedness and liabilities which may be owing from time to
time by the Borrower to Lender under this Agreement or any other
agreement which may now or hereafter be entered into by the Borrower
with Lender, whether absolute or contingent, joint
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or several, matured or unmatured, direct or indirect, whether primary
or secondary, including, but not by way of limitation, (i) all
indebtedness and liabilities of the Borrower to Lender under any
applications for letters of credit now or hereafter executed by the
Borrower in favor of Lender and (ii) the Lender's charges in connection
herewith, all charges and fees Lender may incur in filing public
notices and any local taxes relating thereto, the charge of any
attorneys whom Lender may engage in preparing and filing documents,
making title searches and rendering opinion letters, all costs and
expenses (including reasonable attorney's fees) incurred by Lender to
enforce payment or to otherwise effect collection of any Receivables,
as well as all expenses incurred in protecting, maintaining,
preserving, enforcing or foreclosing the pledge, lien and security
interest in Collateral granted to Lender herein, whether through
judicial proceedings or otherwise, or in defending or prosecuting any
actions or proceedings arising out of or relating to Lender's
transactions with the Borrower.
2.K. "Person" means any individual, partnership, joint
venture, firm, corporation, limited liability company, association,
trust or other enterprise (whether or not incorporated) or any
governmental authority.
2.L. "Receivables" means, but is not limited to, all accounts,
contract rights, checks, notes, drafts, acceptances, instruments,
chattel paper, rental receivables, installment payment obligations,
general intangibles, and all other obligations for the payment of money
created by the Borrower or acquired by the Borrower from others
involving the purchase of ham or baked products from the Borrower's
Bakery Division or Ham Curing Division, all cash and non-cash proceeds
thereof, and contracts, documents, invoices and other instruments
evidencing the same, all security therefor, guarantees, and all of the
Borrower's rights to any property sold or leased which is represented
thereby, whether or not such Receivables are specifically assigned,
which Receivables are created or otherwise arise out of the sale of
merchandise or the rendering of services by the Borrower.
2.M. "Tangible Net Worth" means at any time, the Borrower's
net stockholders' equity, determined in
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accordance with Generally Accepted Accounting Principles, plus
indebtedness of the Borrower which is subordinated to indebtedness of
the Borrower to Lender on terms and conditions approved by Lender,
minus the book value of assets which would be treated as intangibles
under Generally Accepted Accounting Principles, including, but not
limited to, goodwill, trade names, trademarks, copyright, patents and
unamortized debt discount and expenses.
2.N. "Total Liabilities" means all obligations of Borrower
required by Generally Accepted Accounting Principles to be reported as
liabilities (including deferred taxes) on the balance sheet of the
Borrower.
2.O. "Working Capital" means Current Assets minus Current
Liabilities (with this revolving credit facility deemed to be
short-term debt).
2.P. The terms "account," "contract rights," "instruments,"
"chattel paper," "general intangibles," "inventory" and "proceeds" as
used herein, shall have the same meanings as they have in the Uniform
Commercial Code as in effect in North Carolina.
3. As security for the Obligations, including without limitation all
loans and advances made and to be made by Lender to Borrower hereunder, Borrower
does hereby grant to Lender a lien on and security interest in and to the
Collateral.
4. Borrower shall pay to the Lender an audit fee of $300.00, to be paid
upon the completion of each audit, such audit to be conducted every one hundred
twenty (120) days.
5. In consideration of Lender's commitment to make loans and advances
hereunder, Borrower agrees to pay to Lender on the date of this Agreement a
commitment fee of $10,000.00, $5,000.00 of which has been received by Lender.
6.A. In the event that Lender shall have determined that the adoption
of any applicable law, rule, regulation or guideline regarding capital adequacy,
or any change therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof or by any court, or compliance
by Lender (or any lending office of Lender)
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with any request or directive regarding capital adequacy (whether or not having
the force of law) of any such authority, central bank or comparable agency, has
or would have the effect of reducing the rate of return on 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, as the case may be, with respect to capital
adequacy) by an amount deemed by Lender to be material, then from time to time
Borrower shall pay to Lender such additional amount or amounts as will
compensate Lender for any such reduction suffered. Within a reasonable time
after making a request for such additional amount hereunder, Lender will furnish
to Borrower a statement certifying the amount of such reduction and describing
the event giving rise to such reduction, which determination shall be conclusive
absent manifest error.
6.B. Failure on the part of Lender to demand compensation for any
reduction in amounts received or receivable or reduction in return on capital
with respect to any period shall not constitute a waiver of Lender's rights to
demand compensation for any reduction in amounts received or receivable or
reduction in return on capital in such period or in any other period. The
protection of this Section 6 shall be available to Lender regardless of any
possible contention of invalidity or inapplicability of the law, regulation or
condition which shall have been imposed.
7. With respect to the collection of Receivables:
7.A. After the occurrence of an event of default as specified
in Section 16, Lender shall have the right to notify debtors and
account debtors, at any time in Lender's discretion, that certain
Collateral has been assigned to Lender and to collect the same directly
in Lender's own name, but unless and until Lender exercises that right
Borrower shall be privileged to collect Receivables for Lender.
Payments by debtors and account debtors by credit card shall be paid
directly to Borrower who will issue a check for that amount to the
blocked account described below. Borrower shall not commingle any of
the remittances received by it with any of the Borrower's other
property or monies, but shall segregate all such remittances and hold
them in trust in a lockbox controlled by Lender or in a blocked account
with electronic transfer at a local bank
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acceptable to Lender for Lender as Lender's exclusive property and
deliver to Lender in original form and on the day of receipt, all
checks, drafts, notes, instruments, acceptances, cash and other
evidences of payment, applicable to any Collateral. The Lender will
immediately credit all such payments to Borrower's account after
charging two banking days for collection of checks and other
instruments.
7.B. All records, ledger sheets, correspondence, invoices,
documents and instruments relating to or evidencing Receivables shall,
until delivered to Lender or removed by Lender from the Borrower's
premises, be kept on the Borrower's premises, at the address specified
in Section 14(xviii), without cost to Lender, in appropriate containers
in safe places. Lender shall at all reasonable times have full access
to and the right to audit Borrower's books and records, to confirm and
verify all Receivables and to do whatever else Lender deems necessary
to protect its interest. Borrower will immediately, upon learning
thereof, report to Lender all reclaimed, repossessed or returned
merchandise, claims of any customer and any other matter affecting the
value, enforceability and collectibility of Receivables. All claims and
disputes with any customer or obligor are to be promptly adjusted with
Lender's prior approval by Borrower at Borrower's own cost and expense.
8. With respect to all Collateral:
8.A. Borrower represents, warrants and agrees that Borrower
shall take any and all steps as Lender may request to create and
maintain in Lender's favor a valid and first priority perfected
security interest in and pledge of, all Collateral, whether now
existing or created from time to time hereafter, and, with respect to
all Receivables, (a) Borrower shall provide Lender with confirmatory
assignment schedules, in form satisfactory to Lender of all
Receivables, promptly upon the creation of same, copies of invoices
and/or other documents as Lender may require, evidences of shipment or
delivery, and all other additional information and documents concerning
same as Lender may require; (b) at the time pledged to Lender, absolute
title to the Collateral, free and clear of all liens, encumbrances and
security interests (except as to Lender and holders of purchase money
security interests) will be vested in Borrower and no previous
assignments, transfers or security
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interests will then be in effect (other than purchase money security
interests), nor will there be in effect any other agreements, notices,
financing statements, or otherwise which will in any way impair or
affect Lender's first lien upon, security interest in and pledge of
such Collateral; (c) each Receivable as of the date when pledged to
Lender, (i) will represent a valid and legally enforceable
indebtedness, according to its terms and as represented by the assigned
invoice; (ii) to the best of Borrower's knowledge, the account debtor
of an Eligible Receivable will be liable for and will make payment of
the amount expressed in such invoice and according to its terms; (iii)
to the best of Borrower's knowledge, will be subject to no dispute or
claim by the account debtor as to price, terms, quality, quantity,
delay in shipment, offsets, counterclaims, contra-accounts or any other
defense of any other kind and character except as may be the case in
Borrower's transactions with Pierre, Hormel or a Co-Packer; (iv) to the
best of Borrower's knowledge, will not be subject to discounts,
deductions, allowances, offsets, or special terms of payment which were
not shown on the face of the invoice; (v) will not represent a delivery
of goods upon "consignment", "guaranteed sale", "sale or return",
"payment on reorder" or similar terms except as may be the case in
Borrower's transactions with food brokers concerning the return of
products with expired expiration dates from retail outlets; and (vi)
will not be subject to any prohibition or limitation upon assignment or
pledge.
8.B. With respect to Inventory, Borrower warrants and
represents that (a) the same shall be free and clear of all
encumbrances (other than purchase money security interests) and the
Borrower shall be the absolute owner thereof; (b) such Inventory shall
be kept at the addresses specified in Section 21 and Borrower shall
promptly notify Lender of any change thereof; and (c) Borrower shall
defend Lender's security interest in the Inventory against any claims
or demands of third parties and will promptly pay, when due, all taxes
or assessments levied on account of the Inventory.
9. Borrower will furnish, as to all Receivables, such agings and other
financial information as Lender requests from time to time and all delivery
receipts relating to such Receivables. Borrower will at all times keep accurate
and complete records and accounts in accordance with Generally
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Accepted Accounting Principles. Borrower represents and warrants that financial
statements delivered by the Borrower to Lender at or prior to the execution of
this Agreement accurately reflect the financial condition and operations of the
times and for periods therein stated, that Borrower is solvent, and that there
is no tax lien notice presently filed or judgment entered against the Borrower
or levy or attachment upon the Borrower's property.
10. Borrower shall perform any and all steps requested by Lender to
perfect Lender's lien on and security interest in the Collateral, such as
leasing warehouses to Lender, placing and maintaining signs, appointing
custodians, filing notices of lien, maintaining stock records and transferring
Inventory to warehouses. If any Inventory remains in the possession or control
of Borrower's agents or processors, Borrower shall notify such agents or
processors of Lender's instructions. Borrower agrees to maintain books and
records pertaining to the Inventory in such detail, form and scope as Lender
shall require, and Borrower agrees to notify Lender promptly of any change in
Borrower's name, mailing address, principal place of business or locations of
the Inventory. Borrower will also advise Lender promptly, in sufficient detail,
of any substantial change relating to the type, quantity or quality of the
Inventory, or any event which would have a material effect on the value of the
Inventory or on the lien and security interest granted to Lender herein. A
physical listing of all Inventory, wherever located, shall be taken by Borrower
whenever requested by Lender, and a copy of each such physical listing shall be
supplied to Lender. Lender may examine and inspect the Inventory at any time.
Borrower will execute and deliver to Lender from time to time, upon demand, such
supplemental agreements or documents relating to Inventory, or instruments of
indebtedness, in order that the full intent and purpose of this Agreement may be
carried into effect.
11. Borrower shall have the Inventory insured in Lender's name against
loss or damage by fire, theft, burglary, pilferage, loss in transportation and
such other hazards as Lender shall specify, by insurers approved by Lender, in
amounts satisfactory to Lender and under policies containing loss payable
clauses to Lender as Lender's interest may appear. If Borrower fails to do so,
Lender may procure such insurance and the cost of such insurance shall be deemed
an Obligation and will be payable to Lender on demand with interest at the rate
then applicable to loans hereunder. Insurance policies or certificates will be
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deposited with Lender, if Lender so requires. Borrower agrees that the proceeds
of all such insurance, if any loss should occur, shall be applied to the
replacement of any of the Inventory damaged or destroyed if (i) there exists no
event of default as specified in Section 16 which has not been waived or cured
within applicable periods; (ii) the Borrower presents sufficient evidence to
Lender that there are sufficient funds from the insurance proceeds and from
equity funds, if needed, to completely restore or repair the damaged Inventory;
(iii) the Borrower presents sufficient evidence to Lender that the damaged
Inventory will be restored prior to the maturity of the Obligations; and (iv)
Lender will not incur any liability to any other person as a result of such use
of insurance proceeds. If the conditions set forth herein are not satisfied
within ninety (90) days of loss, then Lender, at its option, shall apply any
insurance proceeds to the payment of any or all of the Obligations. Lender shall
have the right, in Borrower's name or in Lender's name, to file claims under any
insurance policies, to receive, receipt and give acquittance for any payments
that may be made thereunder, and to execute any and all endorsements, receipts,
releases, assignments, reassignments, or other documents that may be necessary
to effect the collection, compromise or settlement of any claims under any such
insurance policies.
12. Borrower hereby constitutes and appoints Lender or such person as
Lender may name from time to time, as the Borrower's attorney-in-fact and at the
Borrower's costs and expenses such attorney-in-fact shall be empowered after the
occurrence of an event of default as specified in Section 16, which has not been
waived or cured within applicable periods, to exercise at any time all or any of
the following powers: to receive, take, endorse, assign and deliver in Lender's
name or the Borrower's any and all checks, notes, drafts and other instruments
relating to Collateral, including receiving, opening and properly disposing of
all mail addressed to the Borrower concerning Receivables and to notify postal
authorities to change the address for delivery of mail to such address as Lender
may designate; to sign the Borrower's name on any invoice or xxxx of lading
relating to any account, drafts against account debtors, on schedules and
assignments of Receivables, on notices of assignment, financing statements and
other public records, on verifications of accounts and on notices to account
debtors; to send requests for verification of Receivables to account debtors; to
transmit to account debtors notice of Lender's interest
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therein, and to request from such account debtors notice of Lender's interest
therein, and to request from such account debtors at any time in the Borrower's
name or Lender's or that of Lender's designee, any information concerning the
Receivables and the amounts owing thereon, and to notify account debtors that
payment be made directly to Lender; to take or bring at the Borrower's cost in
the Borrower's name or Lender's all steps, actions and suits deemed by Lender
necessary or desirable to effect collection of Receivables, including, to
enforce payment of any Receivable assigned to Lender; to settle, compromise, or
release in whole or in part, any amounts owing on Receivables; to prosecute any
action or proceeding with respect to Receivables; to extend the time of payment
of any and all Receivables; to make allowances and adjustments with respect
thereto; to issue credit in Lender's name or the Borrower's, and to do all other
things necessary to carry out this agreement. Borrower ratifies and approves all
acts of such attorney-in-fact. Neither Lender nor the attorney-in-fact will be
liable for any acts of commission or omission nor for any error of judgment or
mistake of fact or law except for gross negligence, recklessness, or intentional
conduct. This power, being coupled with an interest, is irrevocable so long as
any Obligation remains unpaid or this Agreement is in effect.
13. The Borrower represents and warrants that:
(i) (a) the Borrower is a corporation, duly organized,
validly existing and in good standing under the laws of the
state of its incorporation;
(b) the Borrower has the corporate power and
authority to own its properties and assets and to carry on its
business as now being conducted;
(c) the Borrower has the corporate power and
authority to execute and perform this Agreement, to borrow
hereunder and to execute and deliver this Agreement and all
other certificates, instruments and documents with respect to
the indebtedness of the Borrower hereunder; provided, however,
the parties acknowledge that this Agreement is part of a
comprehensive refinancing of indebtedness by the Borrower, the
result of which is to replace certain revolving debt held by
NationsBank, N.A. and certain term indebtedness held by Aetna
Life Insurance Company,
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et. al., with the indebtedness reflected in this Agreement and
certain term indebtedness to be provided by other lenders, all
of which will have similar debt covenants and all of which are
to be effective on or before December 31, 1996. As part of
this comprehensive refinancing, the parties further
acknowledge that in the course of replacing certain
indebtedness with other indebtedness, the Borrower may from
time to time be in temporary technical noncompliance with the
loan agreements of one or more of its existing lenders, which
may arise due to differing closing dates for the Borrower's
replacement indebtedness, or from differing timetables for
formal loan compliance waivers. The parties agree that these
temporary technical noncompliance issues do not and will not
constitute a violation of the representations and warranties
of this Paragraph 13;
(d) when executed and delivered, this Agreement, and
all collateral documents executed in connection therewith (the
"Loan Documents") will be valid and binding obligations of the
Borrower and will be, subject to applicable bankruptcy,
moratorium, insolvency, reorganization and other similar laws
affecting the enforcement of creditors' rights generally and
to the availability of equitable remedies, enforceable in
accordance with their respective terms;
(e) the Borrower has no subsidiaries except as set
forth on Exhibit A;
(f) the Borrower does not own an interest in any
Person except as set forth on Exhibit B;
(ii) the execution, delivery and performance of the Loan
Documents
(a) have been duly authorized by all requisite
corporate action of the Borrower required for the lawful
creation and issuance thereof;
(b) do not violate any provisions of law, any order
of any court or other agency of government, and do not violate
the charter documents or by-laws of the
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Borrower or any provisions of any material agreement or
instrument to which the Borrower is a party;
(c) will not be in conflict with, result in a breach
of or constitute an event of default nor an event which, upon
giving of notice or lapse of time, or both, would constitute
such an event of default under any material agreement or
instrument to which the Borrower is a party;
(d) will not result in the creation or imposition of
any lien, charge or encumbrance of any nature whatsoever upon
any of the properties or assets of the Borrower other than
liens in favor of Lender;
(iii) other than as previously disclosed to Lender, there
is no action, suit or proceeding at law or in equity or by or before
any governmental instrumentality or agency or arbitral body now
pending, or to the knowledge of the Borrower, threatened by or against
or affecting the Borrower or any properties or rights of the Borrower
which, if adversely determined, would materially be expected to impair
the right of the Borrower to carry on its business substantially as now
conducted or would have a material adverse effect on the financial
condition, business or result of operations of the Borrower;
(iv) the Borrower has filed or caused to be filed all
federal, state and local tax returns which are required to be filed and
have paid or caused to be paid all taxes as shown on said returns or on
any assessment received by it, to the extent that such taxes have
become due, except taxes being contested in good faith and against
which adequate reserves have been maintained under Generally Accepted
Accounting Principles;
(v) the Borrower is not
(a) a party to any judgment, order, decree or any
agreement or instrument or subject to corporate restrictions
which would have a material adverse effect on the financial
condition, business or results of operations of the Borrower;
- 15 -
16
(b) in material default in the performance,
observance or fulfillment of any of the material obligations,
covenants or conditions contained in any material agreement or
instrument to which it is a party;
(vi) neither the nature of the Borrower nor its business
or properties, nor any relationship between the Borrower, and any other
person, nor any circumstance in connection with the offer, issue, sale
or delivery of this Agreement is such as to require a consent, approval
or authorization of, or filing, registration or qualification with, any
governmental authority on the part of the Borrower as a condition to
the execution and delivery of this Agreement;
(vii) the Borrower has not incurred any accumulated
unfunded deficiency within the meaning of the Employee Retirement
Income Security Act of 1974 ("ERISA") or incurred any material
liability to the Pension Benefit Guaranty Corporation ("PBGC")
established under such Act (or any successor thereto under such Act) in
connection with any employee benefit plan established or maintained by
the Borrower;
(viii) the business of the Borrower has been operated in
compliance in all respects with all applicable federal, state and local
laws, regulations, orders, ordinances, judgments and decrees
(including, for example, matters relating to the environment,
discrimination, employment and health and safety), except for such
matters, if any, as may have been previously disclosed by the Borrower
to the Lender in writing and for violations which do not and will not
have a material adverse effect on the financial conditions, business or
results of operations of the Borrower. All material permits,
certificates, licenses, approvals, and other authorizations that are
required in connection with the operation of the respective businesses
of the Borrower has been issued, and, as of the date hereof and
immediately thereafter the Borrower will have all permits,
certificates, licenses, approvals and other authorizations required in
connection with the operation of its business;
- 16 -
17
(ix) the Borrower does not purchase livestock directly from
any party and is not subject to the Packers and Stockyards Act (7
U.S.C.A. Section 181 et. seq.); and
(x) as of the date of each extension of credit under this
Agreement, the representations and warranties made by the Borrower in
this Section 13 or which are contained in any certificate furnished at
any time under or in connection with this Agreement shall be true and
correct in all material respects on and as of the date of such
extensions of credit as if made on and as of such date.
14. The Borrower hereby covenants with Lender and warrant that, from
the date hereof until such later date as all of the Obligations are paid and
satisfied in full and this Agreement is terminated in accordance with its terms,
it will:
(i) as soon as practical and in any event not later than
ninety (90) days after the end of each fiscal year, deliver to Lender
audited financial reports of the Borrower, including a balance sheet of
the Borrower as at the end of such fiscal year, and the notes thereto,
and the related statements of income and retained earnings and the
notes thereto and statement of cash flow for such fiscal year, setting
forth in each case comparative financial statements for the
corresponding period in the preceding year, all prepared in accordance
with Generally Accepted Accounting Principles, and containing an
unqualified opinion of independent certified public accountants
selected by Borrower and acceptable to Lender;
(ii) as soon as practical and in any event not later than
within thirty (30) days after the end of each accounting period,
deliver to Lender financial reports, including a balance sheet of
Borrower as at the end of such accounting period and statements of
income and retained earnings of Borrower as at the end of such
accounting period, setting forth in each case comparative financial
statements for the corresponding accounting period in the preceding
year, in a form acceptable to Lender, and approved and signed by a duly
authorized officer of the Borrower as presenting fairly the financial
condition of the Borrower;
(iii) deliver with each financial statement required in (i)
and (ii) above a certificate from the
- 17 -
18
Borrower's duly authorized officer stating, on behalf of the Borrower,
that there exists no default under this Agreement;
(iv) as soon as practical and in any event not later than
within forty-five (45) days after the end of each quarter, deliver to
Lender a compliance certificate in the form attached hereto as Exhibit
C;
(v) deliver to Lender weekly borrowing base certificates
including a contra account update;
(vi) as soon as practicable and in no event later than the end
of each fiscal year, a forecast for the twelve (12) month period
commencing on the first day after the end of such fiscal year, of the
financial statements of Borrower, including balance sheets, income
statements, statements of cash flow, and cash flow projections, and an
annual capital expenditures budget of Borrower for such twelve (12)
month period, all in reasonable detail and form satisfactory to Lender;
(vii) promptly, from time to time, deliver to Lender such
other information regarding Borrower's operations, business affairs and
financial condition as Lender may reasonably request. Lender is hereby
authorized to deliver a copy of any such financial information
delivered hereunder to Lender to any regulatory authority having
jurisdiction over Lender;
(viii) maintain all personal property in good working order
and condition and make all needed repairs, replacements and renewals as
is necessary to conduct its business in accordance with prudent
business practices;
(ix) do or cause to be done all things necessary to preserve
and keep in full force and effect its corporate existence;
(x) comply with or contest in good faith all statutes and
governmental regulations (including all federal, state and local
requirements relating to protection of health or the environment) in
connection with the operation of Borrower's businesses;
- 18 -
19
(xi) pay all taxes, assessments, governmental charges, claims
for labor, supplies, rent and any other obligation which, if unpaid,
might become a lien against any of its properties except liabilities
being contested in good faith and against which, if requested, by
Lender, reserves in accordance with Generally Accepted Accounting
Principles will be established;
(xii) without limiting the specific requirements of Section 11
hereof, at all times keep its insurable properties insured, to such
extent and against such risks, including, without limitation, public
liability insurance, worker's compensation and other insurance required
by law, as is customary with companies of comparable size in the same
or similar business;
(xiii) without limiting the specific requirements of Section
11 hereof, maintain insurance covering real property and tangible
personal property subject to a lien or security interest in favor of
Lender that shall provide that, in case of each separate loss, the full
amount of insurance proceeds with respect thereto shall be payable to
the Lender as mortgagee, secured party, or otherwise as its interests
may appear;
(xiv) preserve, protect, retain and maintain free from
encumbrances, all patents, licenses trademarks, trademark rights,
tradenames, tradename rights and copyrights used or useful in the
conduct of its businesses and maintain all other properties and assets
used or useful in the conduct of its businesses in good repair, working
order and condition and from time to time cause to be made all proper
replacements, betterments and improvements thereto;
(xv) keep true books of records and accounts in accordance
with Generally Accepted Accounting Principles, and in which full, true
and correct entries will be made of all of Borrower's dealings and
transactions;
(xvi) permit any officer, employee or agent of Lender
designated in writing by Lender, to visit and inspect the Borrower's
properties and records, at such times as Lender may reasonably request
upon reasonable notice and during ordinary business hours;
- 19 -
20
(xvii) make prompt payment of all contributions required under
all employee benefit plans ("Plans") and required to meet the minimum
funding standard set forth in ERISA with respect to its Plans; (b) upon
the request of Lender 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, and the regulations
promulgated thereunder, in connection with each of its Plans for each
plan year; (c) notify Lender immediately of any fact, including, but
not limited to, any Reportable Event (as defined in ERISA) arising in
connection with any of its Plans, which might constitute 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, (d) provide Lender with a statement, if requested by Lender,
as to the reason therefor and the action, if any, proposed to be taken
with respect thereto, together with a copy of the notice of such
Reportable Event given to the PBGC or a statement that said notice will
be filed with the annual report to the United States Department of
Labor with respect to such Plan if such filing has been authorized, (e)
promptly after receipt thereof, provide Lender with a copy of any
material notice to Borrower or any of the Controlled Group may receive
from the United States Department of Labor, the Internal Revenue
Service or the PBGC with respect to such Plan; and (f) furnish to
Lender, upon its request, such additional information concerning any of
its Plans as may be reasonably requested;
(xviii) maintain its place of business, or if it has more than
one place of business, its chief executive xxxxxx xx XXXX Xxxxx,
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000;
(xix) maintain Tangible Net Worth of at least (a)
$15,000,000.00 on February 28, 1997 and (b) for each fiscal year
thereafter an amount equal to the prior fiscal year's Tangible Net
Worth requirement plus fifty percent (50%) of the Borrower's after-tax
profits for the fiscal year then ended;
(xx) maintain a ratio of Total Liabilities to Tangible Net
Worth of not more than 2.0 to 1.0 on February 28, 1997 and on each
fiscal quarter thereafter;
- 20 -
21
(xxi) maintain Working Capital of at least $400,000.00 on
February 28, 1997 and on each fiscal quarter thereafter; and
(xxii) maintain a ratio of EBIT to Interest Expense of at
least 1.35 to 1.0 for the twelve month period ending on February 28,
1997 and on each fiscal quarter thereafter.
15. Borrower hereby covenants with Lender and warrants that, from the
date hereof until such later date as all of the Obligations are paid and
satisfied in full and this Agreement is terminated in accordance with its terms,
it will not, without the prior consent of Lender:
(i) incur, create, assume or permit to exist any indebtedness
for borrowed money, howsoever evidenced, or its equivalent (including,
but not limited to, capitalized lease indebtedness) other than (a)
indebtedness incurred to Lender, (b) purchase money indebtedness, (c)
indebtedness in excess of $1,000,000.00 in any fiscal year and (d)
indebtedness set forth on Exhibit D;
(ii) incur, create or permit to exist any pledge, security
interest, lien, charge or other encumbrance of any nature whatsoever on
the Borrower's property (including the Collateral), whether now owned
or hereafter acquired, other than (a) the liens and security interests
in favor of Lender, (b) liens and security interests on property other
than the Collateral not in excess of $1,000,000.00 in any fiscal year
and (c) liens incurred in connection with the indebtedness set forth on
Exhibit D;
(iii) repurchase, redeem or retire any of its capital stock in
excess of $200,000.00 in any fiscal year;
(iv) guarantee, assume, sell with recourse, endorse,
contingently agree to purchase, become surety for, or otherwise become
liable upon the obligation of any other Person, firm or corporation in
excess of $500,000.00 in any fiscal year other than by endorsement of
negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business;
(v) make or permit any change in the (i) control of the
Borrower by HERTH Management, Inc. or (ii) control of
- 21 -
22
HERTH Management, Inc. by Xxxxx X. Xxxxxxxxxx, Xx., Xxxxxxx X. Xxxxxx
and Xxxxx X. Xxxxx; or
(vi) purchase livestock directly from any Person.
16. If Borrower fails to pay when due any balances owing in the loan
account or under any promissory note executed in connection herewith, or fails
to pay any other amounts owing to Lender under this or any other agreement
between Lender and Borrower or under any other promissory note or instrument
given to Lender, including without limitation the failure to pay any Obligation
when due and such default is not remedied within ten (10) business days after
receipt of written notice of the default from Lender to Borrower; or Borrower
breaches any of the provisions of this Agreement (including any of the covenants
set forth in Sections 14 and 15 hereof) or any other agreement between the
parties and such default is not remedied within thirty (30) days after receipt
of written notice of the default from Lender to Borrower; or Borrower fails to
furnish promptly any financial or Collateral reports requested by Lender from
time to time and such default is not remedied within thirty (30) days after
receipt of written notice of the default from Lender to Borrower; or any
statements furnished by Borrower relating to the Receivables, the operations and
financial condition of Borrower or any other representation or warranty made by
Borrower in this Agreement or any document, certificate, statement or report
heretofore or hereafter made by Borrower to Lender proves to be false in any
material respect; or if Borrower fails to give immediate notice to Lender of the
occurrence of any event of default described herein; or if the Borrower becomes
insolvent, or is unable to meet its debts as they mature, or suspend operations
or discontinue its businesses as a going concern; or make an assignment for the
benefit of creditors; or there is filed by or against the Borrower a petition
under the Bankruptcy Code and if filed against Borrower such petition is not set
aside within sixty (60) days after such filing or any proceeding is commenced by
or against the Borrower under any insolvency laws; or a receiver or trustee is
appointed to administer the assets or affairs of the Borrower; or a judgment is
entered or an attachment is levied against the assets of the Borrower which in
the sole opinion of Lender will adversely affect the Borrower's ability to
perform this Agreement or which in Lender's judgment will impair the
enforceability of Lender's lien upon and security interest in the Collateral and
such judgment or lien is not removed or satisfied or a bond posted in the amount
of such lien
- 22 -
23
within forty-five (45) days after such lien is filed or judgment is entered; or
any creditor of the Borrower forecloses upon or takes possession of any assets
of the Borrower under any claim of lien or security interest; or if any event
occurs which materially adversely affects the value of the Collateral; or if the
Borrower should default in the performance of any obligation with respect to any
money borrowed from another lender (including capitalized lease obligations); or
then upon any one of such events, Lender may declare this Agreement in default
and all amounts owing under this Agreement and all other Obligations owing by
the Borrower to Lender shall, without demand or notice, immediately become due
and payable (notwithstanding that the maturity date or dates expressed in any
evidence of such indebtedness may be otherwise) and Lender may foreclose
Lender's lien or security interest in the Collateral in any way permitted by
law, and Lender shall have, without limitation, the remedies of a secured party
under the Uniform Commercial Code. Lender may thereupon enter the Borrower's
premises without legal process and without incurring liability to the Borrower
and remove the same to such place as Lender may deem advisable, or Lender may
require the Borrower to make the Collateral available to Lender at a convenient
place and, with or without having the Collateral at the time or place of sale,
Lender may sell or otherwise dispose of all or any part of the Collateral
whether in its then condition or after further preparation or processing, either
at public or private sale or at any broker's board, with or without notice and
with or without advertisement, in lots or in bulk, for cash or for credit, at
any time or place, in one or more sales, and upon such terms and conditions as
Lender may elect. At any such sale Lender may be the purchaser. If any Inventory
shall require rebuilding, repairing, maintenance, preparation, or is in process
or other unfinished state, Lender shall have the right, at Lender's option, to
do such rebuilding, repairing, preparation, processing or completing of
manufacturing, for the purpose of putting the Inventory in such saleable form as
Lender shall deem appropriate subject to the concurrence of the Borrower and the
liability insurance provider, such concurrence not to be unreasonably withheld.
17. The proceeds from any sale shall first be applied to any costs and
expenses in securing possession of the Inventory, storing, repairing and
finishing for sale, and to any expenses in connection with the sale. The net
proceeds will be applied toward the payment of any and all Obligations to
Lender, including interest, reasonable attorneys' fees and all other
- 23 -
24
costs and expenses. Application of the net proceeds as,to particular Obligations
or as to principal or interest shall be in Lender's absolute discretion. Any
deficiency will be paid to Lender forthwith upon demand and any surplus will be
paid to Borrower if Borrower is not indebted to Lender under any other
Obligation. The enumeration of the foregoing rights is not intended to be
exhaustive and the exercise of any rights shall not preclude the exercise of any
other rights, all of which shall be cumulative.
18. To the extent that any of Borrower's Obligations to Lender are now
or hereafter secured by property other than the Collateral, or by a guarantee,
endorsement or property of any other person, firm or corporation, then Lender
shall have the right to proceed against such other property, guarantee, or
endorsement upon Borrower's default in the payment of any Obligation or in any
of the terms, covenants or conditions contained herein, and Lender shall have
the right in Lender's sole discretion to determine which rights, security,
liens, security interests or remedies Lender shall at any time pursue,
relinquish, subordinate, modify or take any other action with respect thereto,
without in any way modifying or affecting any of them or any of Lender's rights
or Borrower's Obligations hereunder.
19. The lien, rights and security interest granted to Lender herein are
to continue in full force and effect, notwithstanding the termination of this
Agreement or the fact that the principal account maintained in Borrower's name
on Lender's books may from time to time be temporarily in a credit position,
until the final payment to Lender in full of all Obligations and indebtedness
due Lender by Borrower, together with interest thereon. Lender's delay or
omission to exercise any right shall not be deemed to waiver thereof or of any
other right, unless such waiver be in writing. A waiver on one occasion shall
not be construed as a bar to or waiver of any rights or remedies on any future
occasion.
20. During the term of this Agreement, none of the Collateral will be
pledged, assigned or granted as security to any other person other than purchase
money security interests and none are now assigned, pledged or granted as
security other than to Lender and other than holders of purchase money security
interests. This Agreement shall govern all Receivables pledged by Borrower under
any trade styles used by it. With respect to
- 24 -
25
all present and future Collateral, Borrower will make appropriate entries in
their books, and execute and deliver all papers and instruments, and do all
things necessary to evidence and effectuate Lender's security interest therein.
Lender is hereby authorized to file financing statements without Borrower's
signatures in accordance with the terms of Section 13 hereof.
21. All Inventory of the Borrower shall be maintained at the following
location and none other:
XXXX Xxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
United Refrigerated Services
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
22. Borrower expressly waives presentment, demand, protest, and notice
of dishonor as to any instrument, as well as any other notice to which Borrower
might be entitled.
23. This Agreement shall be governed and interpreted according to the
laws of the State of North Carolina. Borrower and Lender hereby irrevocably
submit to the jurisdiction of any State of North Carolina or federal court
sitting in Mecklenburg County, State of North Carolina, for any action or
proceeding arising out of or relating to this Agreement or any other agreement
between Lender and the Borrower or extended by the Borrower to Lender, and
Borrower and Lender hereby irrevocably agree that all claims in respect of any
such action or proceeding may be heard and determined in such State of North
Carolina court or, to the extent permitted by law, in such federal court.
Borrower and Lender hereby irrevocably waive, to the fullest extent they may
effectively do so, the defense of an inconvenient forum to the maintenance of
any such action or proceeding. Borrower agrees to accept service of process out
of the before-mentioned courts in any such action or proceeding by registered or
certified mail addressed to Borrower at the addresses set forth in the
introductory paragraph of this Agreement. Borrower further agrees that the
foregoing provisions of this Section shall be in addition to, and not in
substitution for, any other rights available to Lender pursuant to applicable
law.
- 25 -
26
24. This Agreement shall have an initial term that shall end on
November 22, 1998 (the "Initial Term") and shall be automatically extended for
an additional one year period on each anniversary date of this Agreement unless
terminated as herein provided. Borrower may terminate this Agreement effective
on the last day of the Initial Term or any renewal term by giving Lender at
least ninety (90) days written notice of termination prior to the end of such
term. Lender may terminate this Agreement at any time a default exists hereunder
or if no default exists effective on the last day of the Initial Term or any
renewal term upon giving Borrower at least ninety (90) days written notice of
termination prior to the end of such term; provided, however, the terms and
conditions of this Agreement shall continue until all Obligations of Borrower to
Lender shall have been fully paid and satisfied, and until so paid and
satisfied, Borrower shall continue to assign accounts to Lender and turn over
all collections to Lender, as herein provided, and Lender shall be entitled to
retain its security interest in all existing and future accounts, inventory and
other Collateral. Any repayment of all or substantially all of the obligations
during the term of the Obligations then outstanding with funds advanced,
directly or indirectly, to the Borrower by another lender shall be deemed a
termination of this Agreement by Borrower and shall, effective upon receipt of
such repayment by Lender, relieve the Lender of any further obligations under
this Agreement.
26. This Agreement shall inure to the benefit of and be binding upon
the parties hereto, their heirs, personal representatives, successors and
assigns and shall not be modified or altered except in writing, signed by the
party to be charged.
27. This Agreement supersedes all prior commitments and commitment
letters heretofore made by Lender.
- 26 -
27
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed under seal as of the day and year first above written.
WSMP, INC.
ATTEST:
By /s/ Xxxxx X. Xxxxx By /s/ Xxxxx X. Xxxxxx
------------------ -------------------
Title Asst. Sec. Title CFO & Treasurer
---------- ---------------
(Corporate Seal)
NATIONAL BANK OF CANADA
By /s/ X. Xxxxxx
-------------
Title VP & Mgr.
---------
By /s/ Xxxx X. Council IV
----------------------
Title Vice President
--------------
- 27 -
28
EXHIBIT A
[List of Subsidiaries]
- 28 -
29
EXHIBIT B
[Interests in other Persons]
- 29 -
30
EXHIBIT C
COMPLIANCE CERTIFICATE
for the
period/year ending _________, ____
To: National Bank of Canada
Two First Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxx X. Council, Vice President
Ladies and Gentlemen:
This Compliance Certificate (the "Certificate") is being delivered
pursuant to Section 14(iv) of that certain Financing and Security Agreement (the
"Agreement") dated as of _________ __, 1996 between WSMP, Inc. (the "Borrower")
and NATIONAL BANK OF CANADA (the "Lender"). All capitalized terms, unless
otherwise defined herein, shall have the same meanings as in the Agreement. All
the calculations set forth below shall be made pursuant to the terms of the
Agreement.
The undersigned, the chief executive officer, chief financial officer
or chief accounting officer of the Borrower, does hereby certify to the Lender
that:
1. DEFAULT.
No default has occurred and is continuing or if a default has occurred
and is continuing, I have described on the attached Exhibit A the
nature thereof and the steps taken or proposed to remedy such default.
Actual Required Compliance
------ -------- ----------
2. SECTION 14(xix) - Tangible Net Worth. Yes No
The Borrower must maintain a Tangible
Net Worth of at least $_______1
--------
1 $15,000,000.00 on February 28, 1997 and for each fiscal year
thereafter an amount equal to the prior fiscal year's Tangible
Net Worth requirement plus fifty percent (50%) of the
Borrower's after-tax profits for the fisal year then ended.
- 30 -
31
Actual Required Compliance
------ -------- ----------
3. SECTION 14(xx)-Total Liabilities to Tangible Net Worth. __ to 1.0 2.0 to 1.0 Yes No
------------------------------------------------------
The Borrower must maintain a ratio of Total Liabilities
to Tangible Net Worth of not more than 2.0 to 1.0 on
February 28, 1997 and on each fiscal quarter thereafter.
4. SECTION 14(xxi)-Working Capital. The Borrower must $_____ $400,000.00 Yes No
-------------------------------
maintain Working Capital of at least $400,000.00 on
February 28, 1997 and on each fiscal quarter
thereafter.
5. SECTION 14(xxii)-EBIT to Interest Expense. The __ to 1.0 1.35 to 1.0 Yes No
-----------------------------------------
Borrower must maintain a ratio of EBIT to Interest
Expense of at least 1.35 to 1.0 for the twelve month
period ending on February 28, 1997 and on each fiscal
quarter thereafter.
6. ATTACHED SCHEDULE 1.
Attached hereto as Schedule 1 are the calculations supporting the
computation set forth in items 2-5 of this Certificate. All information
contained herein and on Schedule 1 is true and correct.
9. FINANCIAL STATEMENTS.
The audited/unaudited financial statements attached hereto were
prepared in accordance with GAAP and fairly and accurately represent,
on a consolidated and consolidating basis, the financial condition and
the results of the operations of the Borrower at the date and for the
periods indicated therein.
- 31 -
32
IN WITNESS WHEREOF, the undersigned has executed this Certificate
effective this ___ day of _______________, 19__.
By:
--------------------------
Name:
-------------------------
Title:
------------------------
- 32 -
33
Schedule 1
to Compliance Certificate
Calculations of Compliance with Financial Covenants
1. Tangible Net Worth.
A. Stockholders' equity plus $
----
B. Subordinated Debt minus $
-----
C. Goodwill minus <$ >
--------
D. Patents, trademarks, trade names and copyrights minus
E. Deferred expenses minus <$ >
--------
F. Other intangible assets minus <$ >
--------
G. Tangible Net Worth (1.A. + 1.B.) - (1.C. through 1.F.) $
----
2. Total Liabilities to Tangible Net Worth.
A. Total Liabilities $
----
B. Tangible Net Worth (from 1.H. above) $
----
C. Total Liabilities to Tangible Net Worth (2.A. / by 2.B.) to
------ -----
3. Working Capital.
A. Current Assets $
----
B. Current Liabilities $
----
C. Working Capital (3.A.-3.B.) $
----
4. EBIT to Interest Expense.
A. Net Income plus $
----
B. Taxes plus $
----
C. Interest Expense $
----
D. EBIT (4.A. + 4.B. + 4.C.) $
----
E. EBIT to Interest Expense (4.D. / 4.C.) to
------ ----
- 33 -
34
Exhibit A
Defaults or Events of Default
(if any)
- 34-
35
EXHIBIT D
[Permitted Indebtedness]
- 35-
