CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of July 3, 1996, is by and between THE
O'BOISIE CORPORATION, an Illinois corporation (the "Borrower"), and REPUBLIC
ACCEPTANCE CORPORATION, a Minnesota corporation (the "Lender").
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.1 DEFINED TERMS. As used in this Agreement the following
terms shall have the following respective meanings:
"ADVANCE": As defined in Section 2.1.
"BORROWING BASE": As defined in Section 2.5.
"BORROWING BASE CERTIFICATE": As defined in Section 2.5.
"BUSINESS DAY": Any day (other than a Saturday, Sunday or legal
holiday in the State where the Lender is located).
"CLOSING DATE": Any Business Day between the date of this Agreement
and July 3, 1996 selected by the Borrower for the making of the initial Advance
on the Revolving Loan hereunder; PROVIDED that all the conditions precedent to
the obligation of the Lender to make the initial Advance on the Revolving Loan,
as set forth in Article III, have been, or, on such Closing Date, will be,
satisfied. The Borrower shall give the Lender not less than one Business Day's
prior notice of the day selected as the Closing Date.
"COMMITMENTS": The Revolving Commitment and the Term Loan Commitment.
"CURRENT ASSETS": As of any date, the consolidated current assets of
the Borrower, determined in accordance with GAAP.
"CURRENT LIABILITIES": As of any date, the consolidated current
liabilities of the Borrower, determined in accordance with GAAP.
"DEFAULT": Any event which, with the giving of notice (whether such
notice is required under Section 7.1, or under some other provision of this
Agreement, or otherwise) or lapse of time, or both, would constitute an Event of
Default.
"EBITDA": For any period of determination, the net income of the
Borrower before
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deductions for income taxes, interest expense, depreciation and amortization,
all as determined in accordance with GAAP.
"ELIGIBLE INVENTORY": As defined on Schedule 1.1 annexed hereto.
"ELIGIBLE RECEIVABLES": As defined on Schedule 1.1 annexed hereto.
"EVENT OF DEFAULT": Any event described in Section 7.1.
"GAAP": Generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession, which are applicable to the circumstances as of any date of
determination.
"LEVERAGE RATIO": At the time of determination the ratio of a Total
Liabilities to (b) Tangible Capital Base
"LOAN DOCUMENTS": This Agreement, the Notes, and any documents
described in Section 3.1(a)(vii).
"LIEN": With respect to any Person, any security interest, mortgage,
pledge, lien, charge, encumbrance, title retention agreement or analogous
instrument or device (including the interest of each lessor under any
capitalized lease), in, of or on any assets or properties of such Person, now
owned or hereafter acquired, whether arising by agreement or operation of law.
"MEASUREMENT PERIOD": The period in which any financial covenant is
required to be maintained by Article VI as measured and reported during each
four week period through December 31, 1996 and quarterly thereafter.
"NOTES": The Revolving Note and the Term Note.
"PERSON": Any natural person, corporation, partnership, limited
partnership, joint venture, firm, association, trust, unincorporated
organization, government or governmental agency or political subdivision or any
other entity, whether acting in an individual, fiduciary or other capacity.
"REFERENCE RATE": The rate of interest from time to time publicly
announced by First Bank National Association, Minneapolis, Minnesota as its
"reference rate." For purposes of determining any interest rate hereunder or
under the Notes which is based on the Reference Rate, such interest rate shall
change as and when the Reference Rate changes.
"REVOLVING COMMITMENT": The obligation of the Lender to make Advances
to the Borrower on the Revolving Loan in an aggregate principal amount
outstanding at any time not to
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exceed the Revolving Commitment Amount upon the terms and subject to the
conditions and limitations of this Agreement.
"REVOLVING COMMITMENT AMOUNT": As defined in Section 2.1.
"REVOLVING COMMITMENT FEES": As defined in Section 2.8.
"REVOLVING LOAN": As defined in Section 2.1.
"REVOLVING MATURITY DATE": As defined in Section 2.1.
"REVOLVING NOTE": As defined in Section 2.3.
"TERM LOAN": As defined in Section 2.1.
"TANGIBLE CAPITAL BASE ": As of any date of determination, the sum of
the amounts set forth on the consolidated balance sheet of the Borrower as the
sum of the common stock, preferred stock, additional paid-in capital, plus
subordinated debt and retained earnings of the Borrower (excluding treasury
stock), less the book value of all intangible assets of the Borrower, including
all such items as goodwill, trademarks, trade names, service marks, copyrights,
patents, licenses, unamortized debt discount and expenses and the excess of the
purchase price of the assets of any business acquired by the Borrower over the
book value of such assets.
"TERM LOAN COMMITMENT": The obligation of the Lender to make a term
loan to the Borrower in the Term Loan Commitment Amount upon the terms and
subject to the conditions and limitations of this Agreement.
"TERM LOAN COMMITMENT AMOUNT": As defined in Section 2.1.
"TERM NOTE": As defined in Section 2.3.
"TOTAL COMMITMENT AMOUNT": The sum of the Revolving Commitment Amount
and the Term Loan Commitment Amount.
"TOTAL OUTSTANDINGS": At the time of any determination, the sum of
the unpaid balance of the Revolving Note and the unpaid balance of the Term
Note.
"TOTAL LIABILITIES": At the time of any determination, the amount of
all items of Indebtedness of the Borrower that would constitute "liabilities"
for balance sheet purposes in accordance with GAAP.
Section 1.2 ACCOUNTING TERMS AND CALCULATIONS. Except as may be
expressly provided to the contrary herein, all accounting terms used herein
shall be interpreted and all
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accounting determinations hereunder shall be made in accordance with GAAP.
Section 1.3 OTHER DEFINITIONAL TERMS,TERMS OF CONSTRUCTION. The words
"hereof", "herein" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. References to Sections, Exhibits, Schedules and
the like references are to Sections, Exhibits, Schedules and the like of this
Agreement unless otherwise expressly provided. The words "include", "includes"
and "including" shall be deemed to be followed by the phrase "without
limitation". Unless the context in which used herein otherwise clearly
requires, "or" has the inclusive meaning represented by the phrase "and/or".
All incorporations by reference of covenants, terms, definitions or other
provisions from other agreements are incorporated into this Agreement as if such
provisions were fully set forth herein, and include all necessary definitions
and related provisions from such other agreements. All covenants, terms,
definitions and other provisions from other agreements incorporated into this
Agreement by reference shall survive any termination of such other agreements
until the obligations of the Borrower under this Agreement and the Notes are
irrevocably paid in full and the Revolving Commitment is terminated.
ARTICLE II
TERMS OF LENDING
Section 2.1 THE COMMITMENTS. On the terms and subject to the
conditions hereof, the Lender agrees to make the following lending facilities
available to the Borrower:
2.1 (a) REVOLVING CREDIT. A revolving loan (the "Revolving
Loan") to the Borrower available as advances ("Advances") at any
time and from time to time from the Closing Date to June 1, 1999 (the
"Revolving Maturity Date"), during which period the Borrower may borrow,
repay and reborrow in accordance with the provisions hereof, PROVIDED,
that the unpaid principal amount of revolving Advances shall not at any
time exceed $5,000,000.00 (the "Revolving Commitment Amount"); and
PROVIDED, FURTHER, that no Advance will be made if, after giving effect
thereto, the Total Outstandings would exceed the Borrowing Base.
2.1 (b) TERM LOAN. A term loan to mature June 1, 1999 (the
"Term Loan") from the Lender to the Borrower on the Closing Date in the
amount of $5,000,000.00 (the "Term Loan Commitment Amount"); PROVIDED,
HOWEVER, that the Term Loan will not be made if, after giving effect
thereto, the Total Outstandings would exceed the Borrowing
Base.
Notwithstanding any provision hereof, this Agreement and the Revolving and
Term Commitments shall terminate and the Lender shall have no obligation
hereunder if the Term Loan hereunder has not been made by July 15, 1996,
provided, however, that the obligations of the Borrower under Section 8.2
shall survive any such termination.
Section 2.2 PROCEDURE FOR ADVANCES. Any request by the Borrower for
an Advance on the Revolving Loan shall be in writing or by telephone and must be
given so as to be received by the
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Lender not later than 10:30 a.m. (local time of the Lender) on the requested
Advance date. Each request for an Advance shall be irrevocable and shall be
deemed a representation by the Borrower that on the requested Advance date and
after giving effect to such Advance the applicable conditions specified in
Article III have been and will continue be satisfied. Each request for an
Advance shall specify the requested Advance date (which must be a Business Day)
and the amount of such Advance which shall be in a minimum amount of $50,000 or,
if more, an integral multiple thereof. Unless the Lender determines that any
applicable condition specified in Article III has not been satisfied, the Lender
will make available to the Borrower at the Lender's principal office in
immediately available funds not later than 3:00 p.m. (local time of the Lender)
on the requested Advance date the amount of the requested Advance.
Section 2.3 THE NOTES. The Advances on the Revolving Loan shall be
evidenced by a single promissory note (the "Revolving Note"), substantially in
the form of Exhibit 2.3 (a) hereto, in the amount of the Revolving Commitment
Amount originally in effect. The Term Loan shall be evidenced by a promissory
note (the "Term Note"), substantially in the form of Exhibit 2.3 (b) hereto, in
an amount equal to the Term Loan Commitment Amount. The Lender shall enter in
its ledgers and records the payments made on the Term Loan and Advances made and
the payments made thereon, and the Lender is authorized by the Borrower to enter
on schedules attached to the Notes a record of such Advances and repayments.
Section 2.4 INTEREST RATES, INTEREST PAYMENTS AND DEFAULT INTEREST.
Interest shall accrue and be payable on the unpaid balance of the Revolving Note
at a floating rate per annum equal to the sum of the Reference Rate plus 1.75%
(the latter being the "Applicable Revolving Margin"); PROVIDED, HOWEVER, that
any amount of principal of the Revolving Note not paid when due (whether at such
date or upon acceleration following an Event of Default) shall thereafter bear
interest at a floating rate equal to the sum of (a) the Reference Rate, plus (b)
the Applicable Revolving Margin, plus (c) 3 1/2%. Interest shall accrue and be
payable on the unpaid balance of the Term Note at a floating rate per annum
equal to the sum of the Reference Rate plus 1.75% (the latter being the
"Applicable Term Margin"); PROVIDED, HOWEVER, that any amount of principal of
the Term Note not paid when due after giving effect to any applicable grace
period, if any (whether at the date scheduled therefor or upon acceleration
following an Event of Default) shall thereafter bear interest at a floating rate
equal to the sum of (a) the Reference Rate, plus (b) the Applicable Term Margin,
plus (c) 3 1/2%. Interest shall be payable monthly in arrears and upon final
payment of the respective Notes.
Section 2.5 BORROWING BASE AND MANDATORY PREPAYMENT. The Borrowing
Base shall be equal to the sum of (1) 40% of the lower of cost (determined on a
first-in, first-out basis) or market value of Eligible Inventory not to exceed
$3,500,000. for total Eligible Inventory advances, PLUS (2) 85% of the face
value of Eligible Receivables on the Revolving Credit Line not to exceed
$5,000,000. "Eligible Inventory" and "Eligible Receivables" are defined on
Schedule 1 hereto and up to 75% of Eligible Equipment, as defined on Schedule 1
on the Term Loan Line not to exceed the sum of $5,000,000. The Borrower shall
deliver borrowing base certificates in the form attached hereto (a "Borrowing
Base Certificate") to the Lender (i) dated as of the last day of each
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week, by Friday of each week; (ii) dated as of the date the Lender requests such
a certificate within 10 days of the Lender's request for the certificate; and
(iii) upon each request for an Advance. Each such certificate shall state the
amount of Eligible Inventory, Eligible Receivables, Eligible Equipment and the
Borrowing Base as of the end of the previous month or the date of the Lender's
request, as appropriate. Any limitations on advances or required prepayments
relating to the Borrowing Base shall be based on the latest Borrowing Base
Certificate the Borrower shall have delivered to the Lender. If Total
Outstanding at any time exceed the Borrowing Base, the Borrower shall
immediately prepay the amount of that excess, to be applied first to the
Revolving Note.
Section 2.6 APPLY AND RESET. In connection with this Credit
Agreement, the Borrower shall enter into a lockbox agreement with the Lender,
inform and substance acceptable to the Lender ("Lockbox Agreement") no later
than January 1, 1997. The Borrower shall direct its account debtors to make all
payments on the Borrower's accounts receivable to the lockbox ("Lockbox") set up
pursuant to the Lockbox Agreement, and shall fulfill all other requirements set
forth in the Lockbox Agreement and any related documents or agreements. All
payments or other amounts sent to the Lockbox shall each day be placed into an
account with the Lender in the Company's name for such purposes (the "Collateral
Account"). The Company shall notify the Lender by 10:30 a.m. each Business Day,
as part of the Borrowing Base Certificate required under Section 2.5 of the
amount of funds deposited into the Collateral Account and collected since the
previous day's report, and shall transfer, or authorize the Lender to transfer,
at such time on each such day all such collected funds to be applied against
amounts outstanding under the Revolving Credit Note. In the event that the
Borrower fails to comply with this provision, the Lender is hereby authorized
and directed to determine the amount of collected funds so deposited into the
Collateral Account and to apply, on a daily basis, all such funds against the
amounts outstanding under the Revolving Credit Note. Further, if the Borrower
receives any payments on accounts receivable or chattel paper directly, the
Borrower shall immediately deliver all such payments to the Lender in the form
received (except for the Borrower's endorsement where necessary) to be applied
against amounts outstanding under the Revolving Credit Note. Until so delivered
to the Lender, the Borrower shall hold all such payments in trust for and as the
property of the Lender. The Borrower shall execute any further documents or
instruments or directives to give effect to this provision and shall pay to the
Lender upon demand all the Lender's costs and expenses associated with the
Lockbox, Lockbox Agreement or Collateral Account and related transactions.
Section 2.7 REPAYMENT AND PREPAYMENT.
2.7(a) REPAYMENT OF THE REVOLVING NOTE. Principal of the
Revolving Note shall be payable in full on the Revolving Maturity Date.
The Borrower may prepay the Revolving Note, in whole or in part, at any
time, without premium or penalty after twenty-four months usage from the
date of this Agreement and thirty days prior notice to Lender. Any such
prepayment must be accompanied by accrued and unpaid interest on the
amount prepaid. Each partial prepayment shall be in an amount of
$50,000 or an integral multiple thereof. Amounts prepaid on the
Revolving Note under this Section may be
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reborrowed upon the terms and subject to the conditions and limitations of
this Agreement.
2.7(b) REPAYMENT OF THE TERM NOTE. Principal of the Term Note
is payable as provided in the Term Note. The Borrower may prepay the Term
Note at any time without premium or penalty after twenty-four months usage
from the date of this Agreement and thirty days prior notice to Lender.
Any such prepayment must be accompanied by accrued and unpaid interest on
the amount prepaid. Each partial prepayment shall be in an amount of
$50,000 or an integral multiple thereof. Amounts so prepaid cannot be
reborrowed.
2.7(c) TERMINATION PENALTY. In the event that the Revolving
Credit or Term Loan Facility is prepaid in full prior to the twenty-four
month initial use period Borrower agrees to pay Lender a prepayment penalty
of
a) five (5)% of the Total Commitment if prepaid in months 1-6
following the initial Advance,
b) one-fifth (1/6) of 5% of the Total Commitment times the
number of months remaining until the end of year one but in no event
less than two (2) percent of the Total Commitment if prepaid in
months 7-12 following the initial Advance, and
c) one-twelfth (1/12) of 2% of the Total Commitment times the
number of months remaining in year two if prepaid in months 13-24
following the initial Advance.
Section 2.8 CLOSING FEE. The Borrower shall pay to the Lender fees
(the "Closing Fees") of three fourths ( 3/4) of the Total Commitment
amount($75,000.00), of which $20,000 constitutes due diligence fees and $15,000
constitutes a transaction fee, at the Closing Date from the initial Advance
request.
Section 2.9 REVOLVING COMMITMENT FEE. The Borrower shall pay to
Lender fees ( the "Revolving Commitment Fees") in an amount determined by
applying a rate of one-fourth (1/4) of 1% to the average daily unused Revolving
Commitment Amount for the period from the date of this Agreement to the
Revolving Maturity Date. Such Revolving Commitment Fees are payable in arrears
monthly on the last day of each month and on the Revolving Maturity Date.
Section 2.10 WIRE TRANSFER FEE. Borrower shall pay a wire transfer
charge of $15,00 per wire transfer of any Loan Advance.
Section 2.11 COLLECTION PROCEDURE. Collection of all Accounts and all
other amounts due Lender shall be subject to the provision of this Agreement and
the Security Agreement concerning lockbox and collateral accounts. Borrower
shall remit all collections to Lender immediately after receipt of good funds
(subject to final collection). Borrower will be charged interest on one
business day float.
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Section 2.12 COMPUTATION. Interest on the Notes shall be computed on
the basis of actual days elapsed and a year of 360 days.
Section 2.13 CAPITAL ADEQUACY. In the event that any Regulatory
Change reduces or shall have the effect of reducing the rate of return on the
Lender's capital or the capital of its parent corporation (by an amount the
Lender deems material) as a consequence of the Commitments and/or the Advances
to a level below that which the Lender or its parent corporation could have
achieved but for such Regulatory Change (taking into account the Lender's
policies and the policies of its parent corporation with respect to capital
adequacy), then the Borrower shall, within five days after written notice and
demand from the Lender, pay to the Lender additional amounts sufficient to
compensate the Lender or its parent corporation for such reduction. Any
determination by the Lender under this Section and any certificate as to the
amount of such reduction given to the Borrower by the Lender shall be final,
conclusive and binding for all purposes, absent error.
Section 2.14 USE OF PROCEEDS. The proceeds of the initial Revolving
Advances and Term Loan shall be used first for consolidation of existing working
capital loans, existing equipment loans and general working capital purposes.
Any remaining balance of the initial Advance and the proceeds of any subsequent
Advance shall be used for the Borrower's general business purposes in a manner
not in conflict with any of the Borrower's covenants in this Agreement.
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ARTICLE III
CONDITIONS PRECEDENT
Section 3.1 CONDITIONS OF INITIAL REVOLVING ADVANCE AND TERM LOAN.
The obligation of the Lender to make the initial Advance on the Revolving Loan
and the Term Loan hereunder shall be subject to the prior or simultaneous
fulfillment of each of the following conditions:
3.1 (a) DOCUMENTS. The Lender shall have received the
following:
(i) The Notes executed by a duly authorized officer (or
officers) of the Borrower and dated the Closing Date.
(ii) A copy of the corporate resolutions of the Borrower
authorizing the execution, delivery and performance of this Agreement
and the Notes and an incumbency certificate showing the names and
titles, and bearing the signatures of, the officers of the Borrower
authorized to execute this Agreement and the Notes, certified as of
the Closing Date by the Secretary or an Assistant Secretary of the
Borrower.
(iii) A copy of the Articles of Incorporation of the
Borrower with all amendments thereto, certified by the appropriate
governmental official of the jurisdiction of its incorporation as of a
date not more than ten days prior to the Closing Date.
(iv) A certificate of good standing for the Borrower in
the jurisdiction of its incorporation, certified by the appropriate
governmental officials as of a date not more than ten days prior to
the Closing Date.
(v) A copy of the bylaws of the Borrower, certified as
of the Closing Date by the Secretary or an Assistant Secretary of
the Borrower.
(vi) The opinion of counsel to the Borrower covering such
matters as the Lender may request.
(vii) A Security Agreement in form and substance
satisfactory to the Lender and duly executed by the Borrower.
(viii)First priority real estate mortgage on property owned
by Borrower in Xxxxx County, Indiana, together with a commitment from
a Title Insurance Company reasonably satisfactory to Lender insuring
the mortgage to be a first lien and free
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from all exceptions and securing the Total Term Loan Advances.
(ix) Guaranty of Xxxxxx Xxxxxxxxxx limited to $3,000,000
plus interest thereon and costs.
(x) The initial Borrowing Base Certificate required under
Section 2.5.
(xi) UCC searches evidencing perfection of Lender's
security interest as a first security lien security interest.
(xii) Full Subordination of United Biscuits Holdings (P.L.
C.) in form and substance satisfactory to Lender.
(xiii) A judgment bankruptcy and tax lien search on
Borrower.
(xiv) Certificate of Good Standing for the Borrower
issued by the Secretary of State of Illinois.
(xv) Such other documentation as Lender may request.
3.1(b) OTHER MATTERS. All organizational and legal
proceedings relating to the Borrower and all instruments and agreements in
connection with the transactions contemplated by this Agreement shall be
satisfactory in scope, form and substance to the Lender and its counsel, and the
Lender shall have received all information and copies of all documents,
including records of corporate proceedings, which it may reasonably have
requested in connection therewith, such documents where appropriate to be
certified by the Borrower or appropriate governmental authorities.
3.1(c) FEES AND EXPENSES. The Lender shall have received
all fees and other amounts due and payable by the Borrower on or prior to the
Closing Date, including the reasonable fees and expenses of counsel to the
Lender (not to exceed $40,000.) payable pursuant to Section 8.2.
3.1(d) PERFECTION. The Security Agreement (or financing
statements with respect thereto) shall have been appropriately filed to the
satisfaction of the Lender and the priority and perfection of the Lien created
thereby shall have been established to the satisfaction of the Lender. The
mortgage shall have been appropriately filed to the satisfaction of Lender and
perfection of the Lien shall have been established to the satisfaction of
Lender.
Section 3.2 CONDITIONS PRECEDENT TO ALL ADVANCES. The Lender shall
not have any obligation to make the Term Loan or any Advance on the Revolving
Loan (including Advances after the initial Advance) hereunder unless all
representations and warranties of the Borrower made in this Agreement remain
true and correct and no Default or Event of Default exists.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lender:
Section 4.1 ORGANIZATION, STANDING, ETC. The Borrower is a
corporation duly incorporated and validly existing and in good standing under
the laws of the jurisdiction of its incorporation and has all requisite
corporate power and authority to carry on its business as now conducted, to
enter into this Agreement and to issue the Notes and to perform its obligations
hereunder and thereunder. This Agreement and the Notes have been duly
authorized by all necessary corporate action and when executed and delivered
will be the legal and binding obligations of the Borrower. The execution and
delivery of this Agreement and the Notes will not violate the Borrower's
Articles of Incorporation or bylaws or any law applicable to the Borrower. No
governmental consent or exemption is required in connection with the Borrower's
execution and delivery of this Agreement and the Notes.
Section 4.2 FINANCIAL STATEMENTS AND NO MATERIAL ADVERSE CHANGE. The
Borrower's audited financial statements as at March 31, 1995 and its unaudited
financial statements as at March 31, 1996, as heretofore furnished to the
Lender, have been prepared in accordance with GAAP. The Borrower has no
material obligation or liability not disclosed in such financial statements, and
there has been no material adverse change in the condition of the Borrower since
the dates of such financial statements.
Section 4.3 LITIGATION. There are no actions, suits or proceedings
pending or, to the knowledge of the Borrower, threatened against or affecting
the Borrower which, if determined adversely to the Borrower, would have, a
material adverse effect on the condition of the Borrower. The Borrower is not
in violation of any law or regulation (including environmental laws and
regulations and laws relating to employee benefit plans) where such violation
could reasonably be expected to impose a material liability on the Borrower.
Section 4.4 TAXES. The Borrower has filed all federal, state and
local tax returns required to be filed and has paid or made provision for the
payment of all taxes due and payable pursuant to such returns and pursuant to
any assessments made against it or any of its property (other than taxes, fees
or charges the amount or validity of which is currently being contested in good
faith by appropriate proceedings and with respect to which reserves in
accordance with GAAP have been provided on the books of the Borrower).
Section 4.5 SUBSIDIARIES. The Borrower has no subsidiaries.
ARTICLE V
AFFIRMATIVE COVENANTS
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Until the Revolving Commitment shall have expired or been terminated
and the Notes and all of the Borrower's other obligations to the Lender under
this Agreement shall have been paid in full, unless the Lender shall otherwise
consent in writing:
Section 5.1 FINANCIAL STATEMENTS AND REPORTS. The Borrower will
furnish to the Lender:
5.1(a) As soon as available and in any event within 30 days
after the end of each fiscal year of the Borrower, financial statements of the
Borrower consisting of at least statements of income, cash flow and changes in
stockholders' equity, and a balance sheet as at the end of such year, setting
forth in each case in comparative form corresponding figures from the previous
annual audit, certified without qualification by independent certified public
accountants of recognized national standing selected by the Borrower and
acceptable to the Lender.
5.1(b) As soon as available and in any event within 30 days
after the end of each month, unaudited financial statements for the Borrower
for such month and for the period from the beginning of such fiscal year to the
end of such month, substantially similar to the annual audited statements.
5.1(c) As soon as practicable and in any event within 30 days
after the end of each quarter, a statement signed by the chief financial officer
of the Borrower stating that as at the end of such month there did not exist any
Default or Event of Default or, if such Default or Event of Default existed,
specifying the nature and period of existence thereof and what action the
Borrower proposes to take with respect thereto.
5.1(d) Immediately upon any officer of the Borrower becoming
aware of any Default or Event of Default, a notice describing the nature thereof
and what action the Borrower proposes to take with respect thereto.
5.1(e) Within five days after due date, proof of payment for
deposit of payroll taxes.
5.1(f) Borrowing Base Certificate weekly and upon the request
for any Advance.
5.1(g) From time to time, such other information regarding the
business, operation and financial condition of the Borrower as the Lender may
reasonably request.
Section 5.2 CORPORATE EXISTENCE. The Borrower will maintain its
corporate existence in good standing under the laws of its jurisdiction of
incorporation and its qualification to transact business in each jurisdiction
where failure so to qualify would permanently preclude the Borrower from
enforcing its rights with respect to any material asset or
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would expose the Borrower to any material liability.
Section 5.3 INSURANCE. The Borrower will maintain with financially
sound and reputable insurance companies such insurance as may be required by law
and such other insurance in such amounts and against such hazards as is
customary in the case of reputable corporations engaged in the same or similar
business and similarly situated.
Section 5.4 PAYMENT OF TAXES AND CLAIMS. The Borrower will file all
tax returns and reports which are required by law to be filed by it and will pay
before they become delinquent, all taxes, assessments and governmental charges
and levies imposed upon it or its property and all claims or demands of any kind
(including those of suppliers, mechanics, carriers, warehousemen, landlords and
other like Persons) which, if unpaid, might result in the creation of a Lien
upon its property, except for Liens for taxes, charges and assessments not yet
due or which are being contested in good faith, for which adequate reserves have
been established.
Section 5.5 INSPECTION. The Borrower will permit any Person
designated by the Lender to visit and inspect any of the properties, books and
financial records of the Borrower, to examine and to make copies of the books of
accounts and other financial records of the Borrower, and to discuss the
affairs, finances and accounts of the Borrower with its officers at such
reasonable times and intervals as the Lender may designate. The Borrower shall
also allow the Lender and its agents to conduct periodic collateral audits of
the Borrower's accounts and inventory at such intervals as the Lender may
choose, and the Borrower shall pay the Lender's costs of such audits (provided
that the Borrower, so long as there exists no Event of Default, shall not be
required to pay for more than two collateral audits in any calendar year at a
fee of $500.00 per each audit day plus out-of-pocket expenses).
Section 5.6 MAINTENANCE OF PROPERTIES. The Borrower will maintain
its properties in good condition, repair and working order, and supplied with
all necessary equipment, and make all necessary repairs, renewals, replacements,
betterments and improvements thereto, all as may be necessary so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times.
Section 5.7 BOOKS AND RECORDS. The Borrower will keep adequate and
proper records and books of account in which full and correct entries will be
made of its dealings, business and affairs and maintain an independent and
complete stand alone accounting system reasonably satisfactory to Lender by July
15, 1996.
Section 5.8 COMPLIANCE. The Borrower will comply in all material
respects with all laws, rules and regulations to which it may be subject.
Section 5.9 NOTICE OF LITIGATION. The Borrower will give prompt
written notice to the Lender of the commencement of any action, suit or
proceeding affecting the Borrower.
Section 5.10 PLANS. The Borrower will maintain any employee benefit
plans in
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compliance with all material requirements of applicable laws and regulations.
Section 5.11 REAFFIRMATION OF GUARANTIES. When so requested by the
Lender from time to time, the Borrower will promptly cause any Persons who have
guaranteed the obligations of the Borrower hereunder or any part thereof to
execute and deliver to the Lender reaffirmations of their respective guaranties
in such form as the Lender may require.
ARTICLE VI
NEGATIVE COVENANTS
Until the Revolving Commitment shall have expired or been terminated
and the Notes and all of the Borrower's other obligations to the Lender under
this Agreement shall have been paid in full, unless the Lender shall otherwise
consent in writing:
Section 6.1 MERGER. The Borrower will not merge or consolidate or
enter into any analogous reorganization or transaction with any Person or
liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution).
Section 6.2 SALE OF ASSETS. The Borrower will not sell, transfer,
lease or otherwise convey all or any substantial part of its assets except for
sales and leases of inventory in the ordinary course of business.
Section 6.3 DIVIDENDS. The Borrower will not pay any dividends or
otherwise make any distributions on, or redemptions of, any of its outstanding
stock.
Section 6.4 INDEBTEDNESS. The Borrower will not borrow any money or
issue any bonds, debentures or other debt securities or otherwise become
obligated on any interest-bearing indebtedness except for the Term Loan and
Advances under this Agreement, subordinated debt existing as of the date of this
Agreement and purchase money security interests.
Section 6.5 LIENS. The Borrower will not create, incur, assume or
suffer to exist any Lien, or enter into any arrangement for the acquisition of
any property through conditional sale, lease-purchase or other title retention
agreements in excess of the aggregate of $25,000 per year except:
6.5(a) Liens granted to the Lender.
6.5(b) Liens existing on the date of this Agreement and
disclosed on Exhibit 6.7 hereto.
6.5(c) Deposits or pledges to secure payment of workers'
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compensation, unemployment insurance, old age pensions or other social security
obligations arising in the ordinary course of business of the Borrower.
6.5(d) Liens for taxes, fees, assessments and governmental
charges not delinquent.
6.5(e) Liens of carriers, warehousemen, mechanics and
materialmen, and other like Liens arising in the ordinary course of business,
for sums not due.
6.5(f) Liens incurred or deposits or pledges made or given in
connection with, or to secure payment of, indemnity, performance or other
similar bonds.
6.5(g) Encumbrances in the nature of zoning restrictions,
easements and rights or restrictions of record on the use of real property and
landlord's Liens under leases on the premises rented, which do not materially
detract from the value of such property or impair the use thereof in the
business of the Borrower.
Section 6.6 TANGIBLE CAPITAL BASE. The Borrower will not permit the
Tangible Capital Base for any Measurement Period to be less than the following
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amounts for the period indicated:
AMOUNTPERIOD
$3,500,000 Closing
$3,750,000 9/30/96
$4,250,000 10/31/96
$7,000,000 Fiscal year 1997
$10,000,000 Fiscal year 1998
Section 6.7 LEVERAGE RATIO. The Borrower will not permit the
Leverage Ratio for any Measurement Period to be more than the following amounts
for the period indicated:
AMOUNTPERIOD
4.5 to 1 Closing
4.0 to 1 9/30/96
3.5 to 1 12/31/96
2.0 to 1 Fiscal year 1997
1.5 to 1 Fiscal year 1998
Section 6.8 CURRENT RATIO. The Borrower will not permit the Ratio of
Current Assets to Current Liabilities to be less than 1.5 for fiscal years 1996
and 1997 and 1.75 for fiscal year 1998.
Section 6.9 DEBT SERVICE COVERAGE RATIO. The Borrower will not
permit its Debt Service Coverage Ratio (earnings before interest and taxes plus
depreciation less cash taxes less capital expenditures divided by interest plus
mandatory debt retirement) for any Measurement Period to be less than the
following amount for the following period:
AMOUNTPERIOD
1.0 Closing
1.5 9/30/96
2.0 12/31/96
2.2 Fiscal year 1997
2.5 Fiscal year 1998
Section 6.10 MANAGEMENT COMPENSATION. The Borrower will not permit
executive compensation to its principal officers, by way of salary, bonus,
dividends, or compensation of any form to exceed the aggregate sum of $600,000
per calendar year.
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ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
SECTION 7.1 EVENTS OF DEFAULT. The occurrence of any one or more of
the following events shall constitute an Event of Default:
7.1(a) The Borrower shall fail to make when due, whether by
acceleration or otherwise, any payment of principal of or interest on the Notes
or any other obligations of the Borrower to the Lender pursuant to this
Agreement including failure to pay the Term Loan at maturity or anytime prior
thereto in the event Borrower refinances the Revolving Commitment with another
Lender prior to the scheduled Maturity Date.
7.1(b) Any representation or warranty made by or on behalf of
the Borrower in this Agreement or by or on behalf of the Borrower in any
certificate, statement, report or document herewith or hereafter furnished to
the Lender pursuant to this Agreement shall prove to have been false or
misleading in any material respect on the date as of which the facts set forth
are stated or certified.
7.1(c) The Borrower shall fail to comply with Sections 5.2 or
5.3 or any Section of Article VI.
7.1(d) The Borrower shall fail to comply with any other
agreement, covenant, condition, provision or term contained in this Agreement
(other than those hereinabove set forth in this Section 7.1) and such failure to
comply shall continue for 15 calendar days after whichever of the following
dates is the earliest: (i) the date the Borrower gives notice of such failure
to the Lender, (ii) the date the Borrower should have given notice of such
failure to the Lender pursuant to Section 5.1, or (iii) the date the Lender
gives notice of such failure to the Borrower.
7.1(e) The Borrower shall become insolvent or shall generally
not pay its debts as they mature or shall apply for, shall consent to, or shall
acquiesce in the appointment of a custodian, trustee or receiver of the Borrower
or for a substantial part of the property thereof or, in the absence of such
application, consent or acquiescence, a custodian, trustee or receiver shall be
appointed for the Borrower or for a substantial part of the property thereof and
shall not be discharged within 45 days, or the Borrower shall make an assignment
for the benefit of creditors.
7.1(f) Any bankruptcy, reorganization, debt arrangement or other
proceedings under any bankruptcy or insolvency law shall be instituted by or
against the Borrower and, if instituted against the Borrower, shall have been
consented to or acquiesced in by the
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Borrower or shall remain undismissed for 60 days, or an order for relief shall
have been entered against the Borrower.
7.1(g) Any dissolution or liquidation proceeding shall be
instituted by or against the Borrower and, if instituted against the Borrower,
shall be consented to or acquiesced in by the Borrower or shall remain for 45
days undismissed.
7.1(h) A judgment or judgments for the payment of money in
excess of the sum of $100,000 in the aggregate shall be rendered against the
Borrower and either (i) the judgment creditor executes on such judgment or (ii)
such judgment remains unpaid or undischarged for more than 60 days from the date
of entry thereof or such longer period during which execution of such judgment
shall be stayed during an appeal from such judgment.
7.1(i) The maturity of any material indebtedness of the Borrower
(other than indebtedness under this Agreement) shall be accelerated, or the
Borrower shall fail to pay any such material indebtedness when due (after the
lapse of any applicable grace period) or any event shall occur or condition
shall exist and shall continue for more than the period of grace, if any,
applicable thereto and shall have the effect of causing, or the holder of any
such indebtedness to causes, such material indebtedness to become due prior to
its stated maturity or to realize upon any collateral given as security
therefor. For purposes of this Section, indebtedness of the Borrower shall be
deemed "material" if it exceeds $100,000 as to any item of indebtedness or in
the aggregate for all items of indebtedness with respect to which any of the
events described in this Section has occurred.
7.1(j) Any execution or attachment shall be issued whereby any
substantial part of the property of the Borrower shall be taken or attempted to
be taken and the same shall not have been vacated or stayed within 30 days after
the issuance thereof.
7.1(k) Any guarantor of any of the obligations of the Borrower
under this Agreement shall seek to revoke its, his or her guaranty or any such
guaranty shall become unenforceable for any reason.
7.1(l) Any default shall occur under any other Loan Document.
Section 7.2 REMEDIES. If (a) any Event of Default described in
Sections 7.1 (e), (f) or (g) shall occur with respect to the Borrower, the
Revolving Commitment shall automatically terminate and the Notes and all other
obligations of the Borrower to the Lender under this Agreement shall
automatically become immediately due and payable, or (b) any other Event of
Default shall occur and be continuing, then the Lender may (i) declare the
Revolving Commitment terminated, whereupon the Commitment shall terminate, and
(ii) declare the Notes and all other obligations of the Borrower to the Lender
under this Agreement to be forthwith due and payable, whereupon the same shall
immediately become due and payable, in each case without presentment, demand,
protest or other notice of any kind, all of which are hereby expressly waived,
-18-
anything in this Agreement or in the Notes to the contrary notwithstanding.
Upon the occurrence of any of the events described in clauses (a) or (b) of the
preceding sentence the Lender may exercise all rights and remedies under this
Agreement, the Notes and any related agreements and under any applicable law.
Section 7.3 OFFSET. In addition to the remedies set forth in Section
7.2, upon the occurrence of any Event of Default and thereafter while the same
be continuing, the Borrower hereby irrevocably authorizes the Lender to set off
all sums owing by the Borrower to the Lender against all deposits and credits of
the Borrower with, and any and all claims of the Borrower against, the Lender.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 MODIFICATIONS. Notwithstanding any provisions to the
contrary herein, any term of this Agreement may be amended with the written
consent of the Borrower; PROVIDED that no amendment, modification or waiver of
any provision of this Agreement or consent to any departure by the Borrower
therefrom shall in any event be effective unless the same shall be in writing
and signed by the Lender, and then such amendment, modifications, waiver or
consent shall be effective only in the specific instance and for the purpose for
which given.
Section 8.2 COSTS AND EXPENSES. Whether or not the transactions
contemplated hereby are consummated, the Borrower agrees to reimburse the Lender
upon demand for all reasonable out-of-pocket expenses paid or incurred by the
Lender (including filing and recording costs and fees and expenses of Xxxxxx &
Xxxxxxx LLP, counsel to the Lender) in connection with the negotiation,
preparation, approval, review, execution, delivery, amendment, modification,
interpretation, collection and enforcement of this Agreement and the Notes
provided that such fees should not exceed the sum of $40,000. at closing. The
obligations of the Borrower under this Section shall survive any termination of
this Agreement.
Section 8.3 WAIVERS, ETC. No failure on the part of the Lender or
the holder of either Note to exercise and no delay in exercising any power or
right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any power or right preclude any other or further exercise
thereof or the exercise of any other power or right. The rights and remedies of
the Lender hereunder are cumulative and not exclusive of any right or remedy the
Lender otherwise has.
Section 8.4 NOTICES. Except when telephonic notice is expressly
authorized by this Agreement, any notice or other communication to any party in
connection with this Agreement shall be in writing and shall be sent by manual
delivery, telegram, telex, facsimile transmission, overnight courier or United
States mail (postage prepaid) addressed to such party at the address specified
on the signature page hereof, or at such other address as such party shall have
specified to the other party hereto in writing. All periods of notice shall be
measured from the date of
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delivery thereof if manually delivered, from the date of sending thereof if sent
by telegram, telex or facsimile transmission, from the first Business Day after
the date of sending if sent by overnight courier, or from four days after the
date of mailing if mailed; PROVIDED, HOWEVER, that any notice to the Lender
under Article II hereof shall be deemed to have been given only when received by
the Lender.
Section 8.5 SUCCESSORS AND ASSIGNS; DISPOSITION OF LOANS. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, except that the Borrower may not
assign its rights or delegate its obligations hereunder without the prior
written consent of the Lender. The Lender may at any time sell, assign,
transfer, grant participations in, or otherwise dispose of any portion of the
Revolving Commitment and the Term Loan and/or Advances to banks or other
financial institutions. The Lender may disclose any information regarding the
Borrower in the Lender's possession to any prospective buyer or participant.
SECTION 8.6 GOVERNING LAW AND CONSTRUCTION. THE VALIDITY,
CONSTRUCTION AND ENFORCEABILITY OF THIS AGREEMENT AND THE NOTES SHALL BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT
TO CONFLICT OF LAWS PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS OF THE
UNITED STATES APPLICABLE TO NATIONAL BANKS.
SECTION 8.7 CONSENT TO JURISDICTION. AT THE OPTION OF THE LENDER,
THIS AGREEMENT AND THE NOTE MAY BE ENFORCED IN ANY FEDERAL COURT OR MINNESOTA
STATE COURT SITTING IN HENNEPIN COUNTY; AND THE BORROWER CONSENTS TO THE
JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT VENUE IN
SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT THE BORROWER COMMENCES ANY ACTION
IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING
DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT, THE
LENDER AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF
THE JURISDICTIONS AND VENUES ABOVE-DESCRIBED AND BORROWER HEREWITH CONSENTS TO
SAME.
SECTION 8.8 WAIVER OF JURY TRIAL. EACH OF THE BORROWER AND THE
LENDER IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTE AND ANY OTHER
LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
SECTION 8.9 CAPTIONS. The captions or headings herein and any table
of contents hereto are for convenience only and in no way define, limit or
describe the scope or intent of any provision of this Agreement.
SECTION 8.10 ENTIRE AGREEMENT. This Agreement and the Other Loan
Documents embody the entire agreement and understanding between the Borrower and
the Lender with respect to the subject matter hereof and thereof. This Agreement
supersedes all prior agreements and understandings relating to the subject
matter hereof.
-20-
SECTION 8.11 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument, and either of the parties hereto may execute this agreement by
signing any such counterpart.
In witness whereof, the parties hereto have caused this Agreement to
be executed as of the date first above written.
THE O'BOISIE CORPORATION
BY
----------------------------------
PRINT NAME
--------------------------
TITLE
-------------------------------
BORROWER'S ADDRESS:
0000 XXXX 00XX XXXXXX
XXXXX 000
XXXXXXXX, XXXXXXXX 00000
REPUBLIC ACCEPTANCE CORPORATION
BY
----------------------------------
PRINT NAME
-------------------------
TITLE
------------------------------
LENDER'S ADDRESS:
0000 XXXXXXX XXXXXX X.X.
XXXXXXXXXXX, XXXXXXXXX 00000
FAX 000-000-0000
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EXHIBIT 2.3 (a) TO
CREDIT AGREEMENT
REVOLVING NOTE
$5,000,000.00
July ___, 0000
Xxxxxxxxxxx, Xxxxxxxxx
FOR VALUE RECEIVED, THE O'BOISIE CORPORATION, an Illinois corporation,
hereby promises to pay to the order of REPUBLIC ACCEPTANCE CORPORATION (the
"Lender") at its main office in Minneapolis, Minnesota, in lawful money of the
United States of America in Immediately Available Funds on the Maturity Date (as
such term and each other capitalized term used herein are defined in the Credit
Agreement hereinafter referred to) the principal amount of FIVE MILLION AND
NO/100 DOLLARS ($5,000,000.00) or, if less, the aggregate unpaid principal
amount of all advances made by the Lender under the Credit Agreement, and to pay
interest (computed on the basis of actual days elapsed and a year of 360 days)
in like funds on the unpaid principal amount hereof from time to time
outstanding at the rates and times set forth in the Credit Agreement.
This note is the Revolving Note Referred to in the Credit Agreement
dated as of July 3, 1996 (as the same may be hereafter from time to time
amended, restated or modified, the "Credit Agreement") between the undersigned
and the Lender. This note is secured, it is subject to certain permissive and
mandatory prepayments and its maturity is subject to acceleration, in each case
upon the terms provided in said Credit Agreement.
In the event of default hereunder, the undersigned agrees to pay all
costs and expenses of collection, including reasonable attorneys' fees. The
undersigned waives demand, presentment, notice of nonpayment, protest, notice of
protest and notice of dishonor.
THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS NOTE SHALL BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA WITHOUT GIVING EFFECT TO
THE CONFLICT OF LAWS PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS OF
THE UNITED STATES.
THE O'BOISIE CORPORATION
BY
----------------------------
TITLE
--------------------------
EXHIBIT 2.3 (b) TO
CREDIT AGREEMENT
TERM NOTE
$5,000,000.00
July ____, 0000
Xxxxxxxxxxx, Xxxxxxxxx
FOR VALUE RECEIVED, THE O'BOISIE CORPORATION, an Illinois corporation,
hereby promises to pay to the order of REPUBLIC ACCEPTANCE CORPORATION (the
"Lender") at its main office in Minneapolis, Minnesota, in lawful money of the
United States of America in Immediately Available Funds (as such term and each
other capitalized term used herein are defined in the Credit Agreement
hereinafter referred to), the principal amount of FIVE MILLION AND NO/100
DOLLARS ($5,000,000.00), and to pay interest (computed on the basis of actual
days elapsed and a year of 360 days) in like funds on the unpaid principal
amount hereof from time to time outstanding at the rates and times set forth in
the Credit Agreement.
The principal hereof is payable in consecutive monthly installments in
the amount of $59,524 per month, plus interest, commencing August 1, 1996 until
June 1, 1999 when all remaining principal and interest shall be due and payable
in full.
This note is the Term Note referred to in the Credit Agreement dated
as of July 3, 1996 (as the same may hereafter be from time to time amended,
restated or otherwise modified, the "Credit Agreement") between the undersigned
and the Lender. This note is secured, it is subject to certain mandatory
prepayments and its maturity is subject to acceleration, in each case upon the
terms provided in said Credit Agreement.
In the event of default hereunder, the undersigned agrees to pay all
costs and expenses of collection, including reasonable attorneys' fees. The
undersigned waives demand, presentment, notice of nonpayment, protest, notice of
protest and notice of dishonor.
THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS NOTE SHALL BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA WITHOUT GIVING EFFECT TO
THE CONFLICT OF LAWS PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS OF
THE UNITED STATES.
THE O'BOISIE CORPORATION
By
--------------------------
Title
-----------------------
SCHEDULE 1 TO
CREDIT AGREEMENT
BORROWING BASE DEFINITIONS
"AFFILIATE": When used with reference to any Person, (a) each Person
that, directly or indirectly, controls, is controlled by or is under common
control with, the Person referred to, (b) each Person which beneficially owns or
holds, directly or indirectly, five percent or more of any class of voting stock
of the Person referred to (or if the Person referred to is not a corporation,
five percent or more of the equity interest), (c) each Person, five percent of
more of the voting stock (or if such Person is not a corporation, five percent
or more of the equity interest) of which is beneficially owned or held, directly
or indirectly, by the Person referred to, and (d) each of such Person's
officers, directors, joint venturers and partners. The term control (including
the terms "controlled by" and "under common control with") means the possession,
directly, of the power to direct or cause the direction of the management and
policies of the Person in question.
"ELIGIBLE EQUIPMENT" means 75% of any eligible appraised Equipment and
goods bought for use in Borrower's business, not to exceed the sum of
$5,000,000.00.
"ELIGIBLE INVENTORY" means Inventory of the Borrower which meets the
following requirements: (a) it is owned by the Borrower, is subject to a first
priority perfected security interest in favor of the Lender, and is not subject
to any assignment, claim or Lien other than (i) a Lien in favor of the Lender
and (ii) Liens consented to by the Lender in writing; (b) the consists of raw
materials or finished products (not including work in process and supplies; (c)
if held for sale or lease or furnishing under contracts of service, it is
(except as the Lender may otherwise consent in writing) new and unused; (d)
except as the Lender may otherwise consent, it is not stored with a bailee,
warehouseman or similar party; if so stored with the Lender's consent, such
bailee, warehouseman or similar party has issued and delivered to the Lender, in
form and substance acceptable to the Lender, such documents and agreements as
the Lender may require, including, without limitation, warehouse receipts
therefor in the Lender's name; (e) the Lender has determined, in its sole and
absolute discretion, that it is not unacceptable due to age, type, category,
quality and/or quantity; (f) it is not held by the Borrower on consignment and
is not subject to any other repurchase or return agreement; (g) it is not held
by a customer of the Borrower or any other Person on consignment; (h) it
materially complies with all standards imposed by any governmental agency having
regulatory authority over such goods and/or their use, manufacture or sale; and
(i) the warranties, representations and covenants contained in any security
agreement or other agreement of the Borrower with or given to the Lender
relating directly or indirectly to the Borrower's Inventory are applicable to it
without exception. No Advance on Eligible Inventory will be made in excess of a
total of $3,500,000.
"ELIGIBLE RECEIVABLES" means the Receivables owned by the Borrower
which are subject to a first priority perfected security interest in favor of
the Lender and not subject to
any assignment, claim or Liens and other Liens consented to by the Lender in
writing, but excluding (a) Receivables which are not earned; (b) Receivables
which are unpaid more than ninety (90) days after the original invoice date;
(c) Receivables owed by debtors 10% or more of whose Receivables owed are
otherwise ineligible; (d) Receivables representing progress xxxxxxxx, or
retainages, or for work covered by any payment or performance bond;
(e) Receivables owed by any of the Borrower's Affiliates; (f) Receivables owed
by debtors not located in the United States, unless supported by a letter of
credit issued by a U.S. bank in favor of the Borrower which has been delivered
to the Lender; (g) Receivables as to which any warranty or representation
contained in any security agreement or other agreement of the Borrower with or
given to the Lender with respect to any such Receivable is untrue in any
material respect; (h) Receivables as to which the account debtor has disputed
liability, or made any claim with respect to any other Receivable due from such
account debtor to the Borrower; (i) Receivables subject to setoff;
(j) Receivables as to which the account debtor has filed a petition for
bankruptcy or any other petition for relief under the Bankruptcy Code, assigned
any assets for the benefit of creditors, or if any petition or other application
for relief under the Bankruptcy Code has been filed against the account debtor,
or if the account debtor has failed, suspended business, become insolvent, or
has had or suffered a receiver or a trustee to be appointed for all or a
significant portion of its assets or affairs; (k) Receivables owed by any
government or government agency; (l) Receivables evidenced by a promissory note
or other instrument; (m) Receivables as to which the Lender believes that
collection of any such Receivable is insecure or that any such Receivable may
not be paid by reason of the account debtor's financial inability to pay; and
(n) 50% of any receivable due from affiliate Xxxxx not to exceed $150,000.
"INVENTORY" means any and all of the Borrower's goods, including,
without limitation, goods in transit, wherever located which are or may at any
time be leased by the Borrower to a lessee, held for sale or lease, furnished
under any contract of service or held as raw materials, work in process, or
supplies or materials used or consumed in the Borrower's business, or which are
held for use in connection with the manufacture, packing, shipping, advertising,
selling or finishing of such goods, and all goods, the sale or other disposition
of which has given rise to a Receivable, which are returned to and/or
repossessed and/or stopped in transit by the Borrower or the Lender, or at any
time hereafter in the possession or under the control of the Borrower or the
Lender, or any agent or bailee of either thereof (excluding obsolete products or
product lines in excess of any expiration date and other inventory deemed
ineligible by Lender in its sole and reasonable discretion), and all documents
of title or other documents representing the same.
"PHYSICAL EQUIPMENT" means 75% of any and all of Borrower's equipment,
goods bought for use in its business, not to exceed the sum of $5,000,000.
"RECEIVABLES" means each and every right to payment of Borrower,
whether such right to payment arises out of a sale or lease of goods by
Borrower, or other disposition of goods or other property of Borrower, out of a
rendering of services by Borrower, out of a loan by Borrower, out of damage to
or loss of goods in the possession of a railroad or other carrier or any other
bailee, out of overpayment of taxes or other liabilities of Borrower, or which
otherwise arises
under any contract or agreement, or from any other cause, whether such right to
payment now exists or hereafter arises and whether such right to payment is or
is not yet earned by performance and howsoever such right to payment may be
evidenced, together with all other rights and interest (including all liens and
security interests) which Borrower may at any time have by law or agreement
against any account debtor (as defined in the Minnesota Uniform Commercial Code)
or other obligor obligated to make any such payment or against any of the
property of such account debtor or other obligor; specifically (but without
limitation), the term includes all present and future instruments, documents,
chattel papers, accounts and contract rights of Borrower.
* * *
BORROWING BASE CERTIFICATE
The O'Boisie Corporation
Borrowing Base Certificate for the period ended _______________ , 199___
This Borrowing Base Certificate is delivered in accordance with the Credit
Agreement dated as of June , 1996 between Republic Acceptance Corporation
(the "Lender") and O'Boisie Corporation ("the Borrower"). Capitalized terms
used herein which are defined in the Credit Agreement shall have the meanings
set forth for such terms therein. All amounts are as of the date shown above
except as otherwise stated herein.
I certify that the following amounts were correctly determined according to
the Credit Agreement:
Total Receivables $ (A)
Receivables 90 + Days $
--------------- $
Total Ineligible $
(B)
Eligible Receivables (A) -(B) $
(C)
Receivables Base ( 85% of (C)) $
(D)
Total value of inventory at lesser
of cost or replacement cost: $
(E)
Ineligible inventory $
Total cost of inventory deemed ineligible by the Lender: $ (F)
Total Eligible Inventory (E) minus (F): $ (G)
40% of (G) but not to exceed $3,500,000. $ (H)
Total Borrowing Base: (D) plus (H) $
(I)
Outstanding Advances and Term Loan $ (J)
Availability (I) -(J) $
(K)
I hereby certify that all payroll and unemployment taxes are current as of
this date.
For the purpose of inducing the Lender to extend credit to the Borrower
pursuant to the Credit Agreement, the Borrower hereby certifies that the
foregoing information is true and correct in all respects. The Borrower further
certifies that all amounts outstanding under the Notes were properly authorized
for the benefit of the Borrower and constitute obligations of the Borrower in
accordance with the terms of the Credit Agreement. The Borrower further
certifies that no circumstances or conditions exist at the date of the Borrowing
Base Certificate which constitute an Event of Default.
THE O'BOISIE CORPORATION
By ---------------------
Title --------------------
Dated , 19
---------------- ---
[SUGGESTED FORM OF CERTIFICATE OF
RESOLUTIONS AND INCUMBENCY CERTIFICATE]
CERTIFICATE OF SECRETARY OF
THE O'BOISIE CORPORATION
I, _________________________ , solely in my capacity as Secretary, hereby
certify to Republic Acceptance Corporation that I am the Secretary of O'Boisie
Corporation, an Illinois corporation (the "Company") and that the following
resolutions have been duly adopted by the Board of Directors of the Company in a
manner authorized by the laws of the State of Illinois:
"WHEREAS, THE COMPANY WISHES TO BORROW MONEY FROM REPUBLIC ACCEPTANCE
CORPORATION (THE "LENDER"), AND FOR THAT PURPOSE INTENDS TO ENTER INTO A
CREDIT AGREEMENT WITH THE LENDER.
RESOLVED, the Company shall enter into a Credit Agreement with the
Lender under which the Company may obtain revolving loans up to
$8,000,000.00 in aggregate amount and a Term Loan of $5,000,000.00; and the
President or any two officers of the Company is hereby authorized at any
time and from time to time to execute and deliver to the Lender such Credit
Agreement and any promissory notes, security agreements, mortgages,
subordination agreements, pledge agreements, assignments of life insurance,
reimbursement agreements, or amendments to any of the foregoing as may be
contemplated or required pursuant to such Credit Agreement or otherwise,
all in such form as such officer may determine and approve (such
determination and approval to be established conclusively by such officer's
execution and delivery of such Credit Agreement and any such related
documents and instruments).
FURTHER RESOLVED, that the President or any two officers of the
Company is hereby authorized at any time and from time to time to sell,
assign, transfer, mortgage, create security interests in and pledge to the
Lender the real property, goods, instruments, documents, securities,
chattel paper, accounts, contract rights and other intangibles and any
other property now owned or hereafter acquired by the Company, either
absolutely for such consideration as such officer may determine to be
appropriate or as security for the payment or performance of any or all
debts, liabilities and obligations of every type and description now or at
any time hereafter owed to the Lender by the Company, on such terms as such
officer may approve, and to do such other acts or things in connection
therewith or pursuant thereto as such officers may determine to be
appropriate (such determination and approval to be established conclusively
by the instrument executed or action taken by such officers).
FURTHER RESOLVED, it is hereby acknowledged that each and every note,
guaranty, security agreement and other instrument made pursuant to the
foregoing resolutions is and will be made and given for the corporate
purposes of this Company.
FURTHER RESOLVED, the Secretary or Assistant Secretary shall certify
to the Lender
the names and signatures of the persons who presently are duly elected,
qualified and acting as the officers authorized to act under the foregoing
resolutions, and the Secretary or Assistant Secretary shall from time to
time hereafter, upon a change in the facts so certified, immediately
certify to the Lender the names and signatures of the persons then
authorized to sign or to act; the Lender shall be fully protected in
relying on such certificates and on the obligation of the Secretary or an
Assistant Secretary immediately to certify to the Lender any change in any
fact certified, and the Lender shall be indemnified and saved harmless by
the Company from any and all claims, demands, expenses, costs and damages
resulting from or growing out of honoring or relying on the signature or
other authority (whether or not properly used) of any officer whose name
and signature was so certified, or refusing to honor any signature or
authority not so certified."
I further certify that the foregoing resolutions have not been amended or
revoked and are in full force and effect on the date hereof.
I further certify that the officers whose names appear below have been duly
elected to and now hold the offices in the Company set forth opposite their
respective names and that the signature appearing opposite the name of each of
such officer is authentic and official:
Name Title Specimen Signature
Xxxxxx Xxxxxxxxxx Chairman -CEO
----------------------- ------------------------- ------------------------
Xxxxx Xxxx President
----------------------- ------------------------- ------------------------
Xxxxx Xxxxx Vice President -Finance
----------------------- ------------------------- ------------------------
I further certify that shareholder approval of the foregoing resolutions is not
required and said resolutions are effective and binding on the Company without
approval by its shareholders.
Dated
---------------
-----------------------------
Secretary
---------------------
Attest by a Director
