1
LOAN AGREEMENT
between
HCH ACQUISITION CORP.
and
FIRST UNION NATIONAL BANK
Dated as of November 8, 2000
2
LOAN AGREEMENT
THIS LOAN AGREEMENT ("Agreement"), dated November 8, 2000 is by and
between HCH ACQUISITION CORP., a Delaware corporation ("Borrower"), and FIRST
UNION NATIONAL BANK, a national banking association (the "Bank").
BACKGROUND
Pursuant to the terms hereof, the Borrower has requested that the
Bank extend loans to the Borrower in an aggregate amount of up to the Maximum
Amount for the purpose of financing the Tender Offer Consideration, the Merger
Consideration, and expenses related thereto, as more fully described herein, and
the Bank is willing to do so on the terms and subject to the conditions set
forth herein. Accordingly, the Bank and the Borrower, each intending to be
legally bound hereby, agree as follows:
ARTICLE I
DEFINITIONS
Terms used herein without definition that are defined in the Uniform
Commercial Code shall have the meanings ascribed to them therein, unless the
context requires otherwise. The following terms shall have the following
meanings in this Agreement:
"Adjusted LIBOR Market Index Rate" shall mean the interest rate
equal to the sum of the LIBOR Market Index Rate on the second London business
day before the relevant interest period begins plus one hundred basis points
(1.00%) and shall be calculated on the basis of a 360-day year, counting the
actual number of days elapsed.
"Affiliate" shall mean any Subsidiary of any Borrower and any Person
or entity that, now or hereafter, directly or indirectly through one or more
intermediaries, controls, is controlled by or is under common ownership or
control with any Borrower. For purposes of this definition, the terms "control,"
"controls" and "controlled" shall refer to the power to determine the management
or policies of a Person, whether resulting from an official position or capacity
with such Person, direct or indirect beneficial ownership of at least twenty
percent (20%) of the voting securities or other equity interests of such Person,
or otherwise.
"Agreement" shall mean this agreement, together with all exhibits,
amendments, modifications and supplements hereto as may be in effect from time
to time.
"Applicable Law" shall mean all applicable provisions of (i)
constitutions, statutes, rules, regulations and orders of governmental
authorities of any kind having jurisdiction over the Bank or the Borrower, (ii)
authorizations, consents, approvals, and licenses of such governmental
authorities, (iii) judgments, and (iv) common law and equity.
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"Bank" shall have the meaning specified in the initial paragraph of
this Agreement, together with its successors and assigns.
"Borrower" shall have the meaning specified in the initial paragraph
of this Agreement, together with its successors and assigns, which shall include
the Surviving Corporation as successor by merger to the Borrower.
"Borrower Pledge Agreement" shall mean the agreement between the
Borrower as debtor and the Bank as secured party, dated the same date as this
Agreement, by which the Borrower shall pledge the Pledged Stock to the Bank,
together with all amendments, modifications, exhibits, and schedules thereto as
may be in effect from time to time.
"Borrowing Date" shall mean the Tender Offer Borrowing Date and the
Merger Borrowing Date, it being understood and agreed that the proceeds from any
Borrowing on any Borrowing Date shall only be for the purposes described in
Section 2.1(A).
"Business Day" shall mean any day other than a Saturday, Sunday, or
other day on which commercial banks in Philadelphia, Pennsylvania are authorized
or required to close under the laws of the Commonwealth of Pennsylvania and a
day on which dealings in United States dollar deposits are also carried on in
the London interbank market and banks are open for business in London.
"Capital Lease" shall mean any lease of property which, in
accordance with GAAP, should be capitalized on the lessee's balance sheet.
"Capital Lease Obligation" shall mean the amount of the liability
which, according to GAAP, should be capitalized or disclosed with respect to a
Capital Lease.
"Closing" shall mean the execution and delivery to the Bank of all
of the documents and instruments required by the terms of this Agreement and the
closing of the transactions contemplated by this Agreement.
"Closing Date" shall mean the date on which the Closing takes place.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collateral" shall have the meaning set forth in the Pledge
Agreement.
"Contributed Shares" shall mean the aggregate of approximately
4,329,692 shares of common stock of Xxxx'x Cigar owned by the Stockholders and
to be contributed to the Borrower, representing approximately 74.04% of the
issued and outstanding capital stock of Xxxx'x Cigar.
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"Default" shall mean the occurrence of any fact, condition or event
which with the giving of notice or lapse of time, or both, would be an Event of
Default.
"Default Rate" shall mean, with respect to any Loan, the highest
interest rate as set forth in Section 2.2 of this Agreement plus two percent
(2%), provided such interest rate shall not exceed the highest rate permitted by
law.
"Depositary" shall mean Continental Stock Transfer & Trust Company,
or such other Depositary as may be designated by the Borrower in the Tender
Offer Documents.
"Depositary Control Agreement" shall mean the Control Agreement by
and among the Depositary, the Borrower, and the Bank, executed and delivered to
the Bank pursuant to the terms of the Borrower Pledge Agreement.
"Encumbrance" shall mean, as to any Person, any mortgage, lien,
pledge, adverse claim, charge, security interest or other encumbrance in or on,
or any interest or title of any vendor, lessor, lender to, or other secured
party of such Person under any conditional sale or other title retention
agreement or Capital Lease with respect to, any property or asset of such
Person.
"Environmental Laws" shall mean the Federal Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. Sections 9601,
et. seq., the Federal Resource Conservation and Recovery Act, 42
U.S.C. Sections 6901 et. seq., the Hazardous Materials Transportation Act,
49 U.S.C. Sections 1801, et. seq., all other federal, state and local
environmental or health laws applicable to the Borrower or their business,
operations or assets now or hereafter enacted, and all rules, regulations,
orders and publications adopted or promulgated pursuant thereto from time to
time.
"ERISA" shall mean the federal Employee Retirement Income Security
Act of 1974, as amended.
"Event of Default" shall have the meaning set forth in Article VIII
of this Agreement.
"Expiration Date" shall have the meaning assigned to it in the
Tender Offer Documents.
"Federal Reserve Board" shall mean the Board of Governors of the
United States Federal Reserve System.
"Financial Statements" shall have the meaning set forth in Section
4.4 of this Agreement.
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"GAAP" shall mean generally accepted accounting principles, as in
effect at the time of application to the provisions hereof, and consistently
applied.
"Guarantor" shall mean Xxxxxx X. Xxxxx.
"Guaranty" shall mean any guaranty or agreement to be a surety or
other contingent liability (other than any endorsement for collection or deposit
in the ordinary course of business), direct or indirect, with respect to any
obligation of another Person.
"Guaranty Agreement" shall mean the agreement between the Guarantor
and the Bank, dated the same date as this Agreement, by which the Guarantor
agrees to guarantee and act as surety for the Obligations, together with all
amendments, modifications, exhibits, and schedules thereto as may be in effect
from time to time.
"Hazardous Materials" shall mean all materials of any kind which are
flammable, explosive, toxic, radioactive or otherwise hazardous to animal or
plant life or the environment, including, without limitation, "hazardous
wastes," "hazardous substances" and "contaminants," as such terms are defined by
Environmental Laws.
"Xxxx'x Cigar" shall mean Xxxx'x Cigar Holding, Inc., a Delaware
corporation.
"Indebtedness" shall mean any obligation for borrowed money,
including, without limitation: (a) any obligation owed for all or any part of
the purchase price of property or other assets or for the cost of property or
other assets constructed or of improvements thereto, other than accounts payable
and accrued expenses included in liabilities and incurred in respect of property
purchased in the ordinary course of business; (b) any Capital Lease Obligation;
(c) any reimbursement obligations and other obligations under any letter of
credit; and (d) any net obligations as a result of any currency swap agreement,
interest rate swap, cap, collar or floor agreement or other interest rate
management device, or any forward sale or purchase agreement for foreign
currencies.
"Judgment" shall have the meaning set forth in Section 8.6 of this
Agreement.
"LIBOR Market Index Rate" shall mean, for any day, the rate for one
(1) month U.S. dollar deposits as reported on Telerate page 3750 as of 11:00
a.m., London time, on such day, or if such day is not a London business day,
then the immediately preceding London business day (or if not so reported, then
as determined by the Bank from another recognized source or interbank
quotation).
"Loan Documents" shall mean this Agreement, the Note, the Pledge
Agreement, THE Guaranty Agreement, and all agreements, amendments, certificates,
financing statements, schedules, reports, notices, and exhibits now or hereafter
executed or delivered in connection with any of the foregoing, as may be in
effect from time to time.
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"Loan" or "Loans" shall have the meanings ascribed to them in
Section 2.1.
"Maximum Amount" shall mean the lesser of (a) the aggregate of (x)
the Tender Offer Consideration and the transaction fees and expenses related to
the Tender Offer Acquisition, plus (y) the Merger Consideration and the
transaction fees and expenses related to the Merger, or (b) 50% of the fair
market value of the Pledged Stock (or, if less, the maximum amount permitted
under Regulation U of the Federal Reserve Board (12 C.F.R. 221)), provided that
in no event shall the Maximum Amount exceed $13,000,000. For purposes of the
foregoing definition, the "fair market value" per share of the Pledged Stock for
all periods prior to the consummation of the Merger shall be deemed to be the
closing price per share on the last trading day prior to the announcement of the
execution of the Merger Agreement, as reported by the Nasdaq National Market.
"Merger" shall mean the merger of the Borrower with and into Xxxx'x
Cigar pursuant to and in accordance with the terms and conditions of the Merger
Agreement.
"Merger Agreement" shall mean the Agreement and Plan of Merger,
dated on or about November 8, 2000, by and among the Borrower, the Stockholders
and Xxxx'x Cigar.
"Merger Borrowing Date" shall mean the date on which (a) the Merger
is effective pursuant to the terms of the Merger Agreement, and (b) each
applicable condition precedent set forth in Article V is satisfied or waived by
the Bank.
"Merger Consideration"shall have the meaning assigned to it in the
Merger Agreement.
"Merger Documents" shall mean the Merger Agreement and all documents
related to the Merger.
"Note" shall have the meaning ascribed to it in Section 2.1(c).
"Notice of Borrowing" shall mean an irrevocable notice provided to
the Bank on a Business Day in the form of Exhibit "A" of this Agreement with
respect to the Loans and in accordance with the time requirements set forth in
Section 2.3 of this Agreement such Notice to include: (i) the Borrowing Date,
which shall be a Business Day and (ii) the aggregate amount of such borrowing.
"Obligations" shall mean the obligations of the Borrower: (a) to pay
the principal, interest, commitment fees and any other liabilities of the
Borrower under this Agreement and the other Loan Documents in accordance with
the terms thereof; (b) to satisfy all of the other direct or indirect
liabilities of the Borrower to the Bank, whether hereunder or otherwise, whether
now existing or hereafter incurred, whether or not evidenced by any note or
other instrument, matured or unmatured, direct, absolute or contingent, joint or
several, including any extensions,
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modifications, renewals thereof and substitutions therefor; (c) to repay the
Bank all amounts advanced by the Bank at its discretion hereunder or otherwise
on behalf of the Borrower; and (d) to reimburse the Bank, on demand, for all
reasonable out-of-pocket expenses and costs incurred by the Bank, including the
reasonable fees and expenses of its outside counsel, in connection with the
negotiation, preparation, amendment, modification, or enforcement of this
Agreement and the documents required hereunder, including all amounts payable
under Section 10.3 hereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Permitted Encumbrances" shall have the meaning set forth in Section
7.3 of this Agreement.
"Person" shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization, joint
venture, court or governmental or political subdivision or agency thereof.
"Pledged Stock" shall mean the Contributed Shares, plus the Public
Stock acquired by the Borrower pursuant to the Tender Offer Acquisition, plus
any other shares of the capital stock of Xxxx'x Cigar now or hereafter owned by
the Borrower.
"Public Stock" shall mean the issued and outstanding shares of
common stock of Xxxx'x Cigar which are not owned of record or beneficially by
the Stockholders or the Borrower.
"Regulatory Change" means (a) the enactment or effectuation after
the date of this Agreement of any new, or change in any existing, Applicable
Law, (b) the adoption after such date of any new, or the adoption or other
effectuation after such date of any change in any existing, interpretation,
directive or request (whether or not having the force of law), or (c) any change
after such date in the administration or enforcement of any Applicable Law to
which the Bank is subject. As used in this definition, the "effectuation" of a
change shall include, without limitation, that consisting of or resulting from a
determination of a court or regulatory authority.
"Security Agreement" shall mean the agreement between the Borrower
as debtor and the Bank as secured party, dated the same date as this Agreement,
by which the Borrower (and the Surviving Corporation as successor Borrower)
shall grant a security interest in all of its assets to the Bank, together with
all amendments, modifications, exhibits, and schedules thereto as may be in
effect from time to time.
"Solvent" shall mean, with respect to any Person on a particular
date, that on such date (a) the fair value of the property of such Person is
greater than the total amount of liabilities, including contingent liabilities,
of such Person; (b) the present fair salable value of the assets of such Person
is not less than the amount that will be required to pay the probable liability
of such Person on its debts as they become absolute and matured; (c) such Person
does not intend to, and
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does not believe that it will, incur debts or liabilities beyond such Person's
ability to pay as such debts and liabilities mature taking into account the
timing and the amounts of cash to be received by such Person from any source and
the timing of and amounts of cash to be payable in respect of or in connection
with the debt and liabilities of such Person; and (d) such Person is not engaged
in a business or transaction, and is not about to engage in a business or
transaction, for which such Person's property would constitute an unreasonably
small capital taking into account the particular capital requirements of such
Person and its projected capital requirements and availability. The amount of
contingent liabilities (such as litigation, guarantees and pension plan
liabilities) at any time shall be computed as the amount which, in light of all
the facts and circumstances existing at the time, represents the amount which
can be reasonably expected to become actual and matured liabilities.
"Stockholder Pledge Agreements" shall mean the agreements between
the Stockholders and the Bank, dated the same date as this Agreement, by which
the Stockholders shall pledge all of their respective shares of capital stock of
the Borrower (which will include all shares of the Successor Corporation into
which such pledged shares will be converted pursuant to the Merger) to the Bank,
together with all amendments, modifications, exhibits, and schedules thereto as
may be in effect from time to time.
"Stockholders" shall mean Xxxxxx X. Xxxxx, an individual, and the
Fuente Investment Partnership, a general partnership whose interests are
beneficially owned by Xxxxxx X. Xxxxxxx, Xx., Xxxxxx X. Xxxxxxx, Xx., and
Xxxxxxx Xxxxxxx Xxxxxx.
"Subsidiary" shall mean, as to any designated corporation, any other
corporation, the outstanding capital shares of which having sufficient voting
power (not depending on the happening of a contingency) to elect at least a
majority of the members of its board of directors, are at the time owned by such
designated corporation.
"Surviving Corporation" shall have the meaning assigned to it in the
Merger Agreement.
"Tax" means any federal, state or foreign tax, assessment or other
governmental levy or duty or other charge (including any withholding tax) upon a
person or entity or upon its assets, revenues, income or profits, other than
income and franchise taxes imposed upon the Bank by the jurisdictions (or any
political subdivision thereof) in which the Bank or any office of the Bank is
located.
"Telerate Page 3750" shall mean the display designated as "Page
3750" on the Dow Xxxxx Telerate Service (or such other page as may replace that
page on that service for the purpose of displaying London interbank offered
rates of major banks).
"Tender Offer" shall mean the offer of the Borrower to tender for
the outstanding shares of common stock of Xxxx'x Cigar for the Tender Price.
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"Tender Offer Acquisition" shall mean the acquisition by the
Borrower of shares of Public Stock pursuant to and in accordance with the terms
and conditions of the Tender Offer.
"Tender Offer Borrowing Date" shall mean the date on which (a) the
Borrower tenders payment for the Public Stock of Xxxx'x Cigar being acquired by
the Borrower pursuant to the Tender Offer Acquisition, and (b) each applicable
condition precedent set forth in Article VIII is satisfied or waived by the
Bank.
"Tender Offer Consideration" shall mean the aggregate price to be
paid by Borrower for all shares of Public Stock actually being purchased by
Borrower pursuant to the Tender Offer.
"Tender Offer Documents" shall mean all documentation related to the
Tender Offer, including all public filings made with the Securities and Exchange
Commission.
"Tender Offer Price" shall mean the price of $5.50 per share of
common stock of Xxxx'x Cigar offered pursuant to the Tender Offer.
"Uniform Commercial Code" shall mean the Uniform Commercial Code of
Pennsylvania as codified at 13 Pa. C.S.A. Section 101 et seq., as in effect on
the date of this Agreement.
ARTICLE II
CREDIT ACCOMMODATIONS
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1.1 Loan Availability.
(a) Generally. Subject to the terms and conditions hereof, the
Bank shall make available to the Borrower on each Borrowing Date a loan (the
"Loan" and collectively the "Loans") which Loans shall not exceed in the
aggregate the Maximum Amount. All proceeds of the Loans shall be used by the
Borrower solely (i) on the Tender Offer Borrowing Date (x) to pay the Tender
Offer Consideration and (y) to pay transaction fees and expenses related to the
Tender Offer Acquisition, and (ii) on the Merger Borrowing Date (x) to pay the
Merger Consideration, (y) to pay fees and expenses related to the Merger, and
(z) up to $2,670,839 to fund cancellation of the "Options" as provided in
Section 2.7 of the Merger Agreement. The Borrower shall repay the outstanding
principal of the Loans plus all accrued and unpaid interest on the earlier of
(i) sixty (60) days following the Expiration Date or (ii) three (3) Business
Days following the completion of the Merger. All proceeds of the Loans to fund
the Tender Offer Consideration and the Merger Consideration will be disbursed by
the Bank directly to the Depositary, and shall be paid by the Depositary to the
holders of the Public Stock in accordance with the applicable terms and
conditions of the Tender Offer and the Merger Agreement.
(b) Interest. Interest shall accrue on the outstanding
principal of the Loans and shall be payable as set forth in Section 2.2 of this
Agreement.
(c) Note. The obligations of the Borrower to repay the
aggregate outstanding principal under the Loans and to pay accrued interest
thereon shall be evidenced by a promissory note to be executed and delivered to
the Bank concurrently with the execution and delivery of this Agreement (the
"Note").
(d) Commitment Fee. In addition to the interest payable
by the Borrower to the Bank in respect of the Loans, the Borrower shall pay a
commitment fee to the Bank equal to $32,500.00 (.25% of $13,000,000), payable
on the date hereof.
(e) Termination of Commitment. The Bank's commitment to make
the Loans available to the Borrower shall terminate if the Tender Offer
Acquisition has not been consummated within three (3) days following the
Expiration Date, but in any event if the Tender Offer Acquisition has not been
consummated on or before December 31, 2000.
1.2 Interest. Interest shall accrue on the outstanding principal
amounts of the Loans in accordance with the following provisions:
(a) Interest Rate. The outstanding principal balance of the
Loans shall bear interest at the Adjusted LIBOR Market Index Rate in effect from
time to time during the term of the Loans, and shall be adjusted daily to
reflect changes in such rate.
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(b) Default Rate. Upon the occurrence of any Event of
Default, the Loans shall bear interest at the Default Rate.
(c) Payment of Interest. The Borrower shall pay interest in
arrears on the first day of each consecutive calendar month. All accrued but
unpaid interest under the Note shall also be payable, without demand, on the
maturity thereof (whether by its stated terms, or upon prepayment, acceleration
or otherwise).
1.3 2.3 Payments and Computations. All amounts payable by the
Borrower to the Bank under this Agreement or the Note shall be paid directly to
the Bank in immediately available funds at the address of the Bank set forth in
Section 10.2 hereof or at such other address of which the Bank shall give notice
to the Borrower pursuant to Section 10.2 hereof. The Bank is authorized to
charge any account of the Borrower at the Bank for any payment due by the
Borrower under this Agreement or the Note. All computations of interest
hereunder shall be made by the Bank on the basis of a year of 360 days for the
actual number of days elapsed. All payments under each of the Note shall be
applied first to the payment of interest due and payable thereunder and then to
the reduction of the outstanding principal balance thereof.
2.4 Notice of Borrowing. The Borrower shall notify the Bank of each proposed
borrowing under the Loans not later than 12:30 p.m., Philadelphia, Pennsylvania
time, at least three (3) Business Days prior to date of the requested advance,
by delivering to the Bank a Notice of Borrowing.
Prepayments. The Borrower may prepay in whole or in part, any portion
of any of Loans without premium or penalty. All prepayments of any Loan shall be
accompanied by the payment of accrued interest on the amount of such prepayment
to the date thereof.
Requirements of Law. In the event that after the date hereof, any
change in any law, regulation or treaty or in the interpretation or application
thereof or compliance by the Bank with any request or directive (whether or not
having the force of law) from any central bank or other governmental authority,
agency or instrumentality:
(a) subjects or shall subject the Bank to any tax of any kind
whatsoever with respect to this Agreement, the loans made hereunder, or changes
the basis of taxation of payments to the Bank of principal, commitment fees,
interest or any other amount payable hereunder (except for changes in the rate
of tax on the overall net income of the Bank);
(b) imposes, modifies or holds or shall impose, modify or hold
applicable any reserve, special deposit, compulsory loan or similar requirement
against assets held by, or deposits or other liabilities in or for the account
of, advances or loans by, or other credit extended by, or any other acquisition
of funds by, any office of the Bank, which reserve, special deposit, compulsory
loan or similar requirement is not otherwise included in determination of the
interest rate hereunder;
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(c) imposes or shall impose on the Bank any other condition;
and the result of any of the foregoing is to, directly or indirectly, increase
the cost to the Bank of making, renewing or maintaining advances or extensions
of credit or to reduce any amount receivable thereunder then, in any such case,
the Borrower shall promptly pay the Bank, upon its demand, any additional
amounts necessary to compensate the Bank for such additional cost or reduced
amount receivable. If the Bank becomes entitled to claim any additional amounts
pursuant to this subsection, it shall promptly notify the Borrower of the event
by reason of which it has become so entitled. The good faith determination as to
any additional amounts payable pursuant to the foregoing sentence by the Bank
shall be conclusive in the absence of manifest error.
ARTICLE III
SECURITY
Security Documents. As security for the prompt payment, performance,
satisfaction and discharge when due of all the Obligations, the Borrower shall
execute and deliver or shall cause to be executed and delivered to the Bank,
concurrently with the execution of this Agreement, the Security Agreement, the
Guaranty Agreement, the Borrower Pledge Agreement, the Depositary Control
Agreement, and the Stockholder Pledge Agreements.
Additional Documents. Effective as of the Effective Time (as that term
is defined in the Merger Agreement), the Surviving Corporation (as successor
Borrower) shall take all such action, including without limitation executing and
delivering or causing the execution and delivery to the Bank of such additional
security agreements, pledge agreements, control agreements or other documents as
the Bank may request, to give the Bank a first priority security interest in all
of the assets of the Surviving Corporation (including all cash, cash
equivalents, marketable securities and investments).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BORROWER
In order to induce the Bank to execute and deliver this Agreement and
to make the Loans available to the Borrower, the Borrower represents and
warrants to the Bank that:
Good Standing; Authorization. Each of the Borrower and Xxxx'x Cigar and
its Subsidiaries is duly incorporated, organized and existing and in good
standing in the state of its incorporation and is duly qualified as a foreign
corporation and authorized to do business in all other jurisdictions wherein the
nature of its business or property makes such qualification necessary and the
failure to be so qualified would have a material adverse effect on the Borrower.
Each of the Borrower and Xxxx'x Cigar and its Subsidiaries has the corporate
power
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to own its properties and to carry on its business as now conducted. The
execution, delivery and performance of this Agreement and the Loan Documents
have been duly authorized by all necessary corporate proceedings on the part of
the Borrower. The Stockholders are the sole shareholders of the Borrower.
Compliance with Laws and Other Agreements. Each of the Borrower and
Xxxx'x Cigar and its Subsidiaries is in compliance with all laws, rules,
regulations, judgments, decrees, orders, agreements and requirements which
affect it, its assets or the operation of its business in any material way and
has not received, and the Borrower has no knowledge of, any order or notice of
any governmental investigation or of any violation or claim of violation of any
law, regulation, judgment, decree, order, agreement, or other governmental
requirement.
No Conflict; Governmental Approvals. The execution, delivery, and
performance of this Agreement and each of the Loan Documents will not (i)
conflict with, violate, constitute a default under, or result in a breach of any
provision of any applicable law, rule, regulation, judgment, decree, order,
instrument or other material agreement, or (ii) conflict with or result in a
breach of any provision of the certificate of incorporation or by-laws of the
Borrower or Xxxx'x Cigar or any of its Subsidiaries. No authorization, permit,
consent or approval of or other action by, and no filing, registration or
declaration with, any governmental authority or regulatory body is required to
be obtained or made by the Borrower or Xxxx'x Cigar or any of its Subsidiaries
for the due execution, delivery and performance of this Agreement or any of the
Loan Documents, except such as have been duly obtained or made prior to the
Closing Date and are in full force and effect as of the Closing Date (copies of
which have been delivered to the Bank on or before the Closing Date).
Financial and Other Information Regarding the Borrower and Xxxx'x
Cigar; Solvency.
(a) Xxxx'x Cigar has filed all forms, reports and documents
required to be filed by it with the Securities and Exchange Commission (the
"SEC") since March 31, 1999 (collectively, the "Xxxx'x Cigar Reports"). As of
their respective dates, the Xxxx'x Cigar Reports, and any such reports, forms
and other documents filed by Xxxx'x Cigar with the SEC after the date of this
Agreement (i) complied, or will comply, as to form in all material respects with
the applicable requirements of the Securities Act, the Exchange Act, and the
rules and regulations thereunder and (ii) did not, or will not, contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements made therein, in the light
of the circumstances under which they were made, not misleading. The
representation in clause (ii) of the preceding sentence shall not apply to any
misstatement or omission in any Xxxx'x Cigar Report filed prior to the date of
this Agreement that was superseded by a subsequent Xxxx'x Cigar Report filed
prior to the date of this Agreement that specifically corrected such
misstatement or omission in the applicable Xxxx'x Cigar Report.
(b) Each of the consolidated balance sheets included in or
incorporated by reference into the Xxxx'x Cigar Reports (including the related
notes and schedules) fairly
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presents the consolidated financial position of Xxxx'x Cigar and its
Subsidiaries as of its date, and each of the consolidated statements of income,
retained earnings and cash flows included in or incorporated by reference into
the Xxxx'x Cigar Reports (including any related notes and schedules) fairly
presents the results of operations, retained earnings or cash flows, as the case
may be, of Xxxx'x Cigar and its Subsidiaries for the periods set forth therein
(subject, in the case of unaudited statements, to normal year-end audit
adjustments that would not be material in amount or effect), in each case in
accordance with GAAP, except as may be noted therein. Neither Xxxx'x Cigar nor
any of its Subsidiaries has any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) that would be required to
be reflected on, or reserved against in, a balance sheet of Xxxx'x Cigar or in
the notes thereto, prepared in accordance with GAAP, except for (i) liabilities
and obligations that were reserved on or reflected in (including the notes to),
the consolidated balance sheet of Xxxx'x Cigar as of June 30, 2000, (ii)
liabilities arising in the ordinary course of business since June 30, 2000, and
(iii) liabilities or obligations which would not, individually or in the
aggregate, have a material adverse effect on the business of Xxxx'x Cigar.
(c) As of the date hereof, neither the Borrower nor Xxxx'x Cigar
or any of its Subsidiaries has any Indebtedness other than the Indebtedness set
forth on Schedule 4.4(d) of this Agreement.
(d) As of the date hereof, neither the Borrower nor Xxxx'x Cigar
or any of its Subsidiaries has any "investment" (as such term is defined under
GAAP), whether by stock purchase, capital contribution, loan, advance, purchase
of property or otherwise, in any Person.
(e) After giving effect to the Loans and Encumbrances created by
the Borrower in connection therewith, each of the Borrower and Xxxx'x Cigar is
and will be Solvent; attached hereto as Schedule 4.4(e) is a true and correct
copy of the management prepared, pro forma Balance Sheet of the Borrower,
demonstrating the solvency of the Borrower after giving effect to the Loans and
the other transactions herein contemplated.
Taxes. Neither the Borrower nor Xxxx'x Cigar or any of its Subsidiaries
is delinquent in payment of any income, property or other tax, except for any
delinquency in the payment of a tax which is contested in good faith and for
which appropriate reserves have been established in accordance with GAAP.
Encumbrances and Guaranties.
(a) All properties and assets of the Borrower and Xxxx'x Cigar
and its Subsidiaries are owned by each of them free and clear of all
Encumbrances except (i) those for taxes or other government charges either not
yet delinquent or the nonpayment of which is permitted by Section 4.5 of this
Agreement; (ii) those not arising in connection with Indebtedness that do not
materially impair the use or value of the properties or assets of the Borrower
or Xxxx'x Cigar and its Subsidiaries in the conduct of its businesses; (iii)
Encumbrances
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whose release and termination is evidenced by appropriate documents on the
Closing Date; (iv) the Loan Documents and the Permitted Encumbrances; and (v)
Encumbrances disclosed on Schedule 4.6(a) of this Agreement.
(b) Neither the Borrower nor Xxxx'x Cigar or any of its
Subsidiaries is obligated under any Guaranty, except in favor of the Bank.
Material Adverse Changes. Since June 30, 2000, there has not been any
material adverse change in the business, operations, properties or financial
position of Xxxx'x Cigar and its Subsidiaries. The Borrower does not know of any
fact (other than matters of a general economic or political nature) which
materially adversely affects, or, so far as the Borrower can now reasonably
foresee, will materially adversely affect, the business, operations, properties
or financial position of the Borrower or Xxxx'x Cigar and its Subsidiaries or
the performance by the Borrower of its obligations under this Agreement and the
other Loan Documents.
Margin Regulations. Neither the Borrower nor Xxxx'x Cigar or any of its
Subsidiaries is engaged, nor will it engage, principally or as one of its
important activities, in the business of extending credit for the purpose of
"purchasing" or "carrying" any "margin security" within the meaning of
Regulations G or U of the Board of Governors of the Federal Reserve System (12
C.F.R. 207, 221) (such securities being referred to herein as ("Margin Stock").
No part of the proceeds of any Loan will be used to purchase or carry any Margin
Stock or to extend credit for the purpose of purchasing or carrying any Margin
Stock; provided that the Borrower may use the proceeds of the Loan made on the
Tender Offer Borrowing Date to purchase Margin Stock consisting of Public Stock
pursuant to the Tender Offer in compliance with Regulations T, U and X of the
Board of Governors of the Federal Reserve System. Neither the making of the
Loans nor the use of the proceeds thereof will violate or be inconsistent with
the provisions of Regulations T, U or X.
ERISA. The provisions of each employee benefit plan as defined in
Section 3(3) of ERISA ("Plan") maintained by the Borrower or Xxxx'x Cigar or any
of its Subsidiaries complies in all material respects with all applicable
requirements of ERISA and of the Code, and with all applicable rulings and
regulations issued under the provisions of ERISA and the Code setting forth
those requirements. No reportable event, as defined in Section 4043 of ERISA,
has occurred with respect to any Plan; no Plan to which Section 4021 of ERISA
applies has been terminated; no Plan has incurred any liability to PBGC as
provided in Section 4062, 4063 and 4064 of ERISA; no Plan has been involved in
any prohibited transaction within the meaning of Section 406 of ERISA or Section
4975 of the Code; and there are no unfunded liabilities with respect to any Plan
which are not disclosed in the Xxxx'x Cigar Reports.
Pending Litigation. There are no actions, suits, proceedings or
investigations pending, or, to the knowledge of the Borrower threatened against
or affecting the Borrower or Xxxx'x Cigar or any of its Subsidiaries before any
court, arbitrator or administrative or governmental body which, in the
aggregate, will adversely affect any action taken or to be taken by the
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Borrower or Xxxx'x Cigar or any of its Subsidiaries under this Agreement and the
other Loan Documents or which, in the aggregate, will materially adversely
affect the business, operations, properties or financial position of the
Borrower or Xxxx'x Cigar and its Subsidiaries, or the ability of the Borrower to
perform its obligations under this Agreement and the other Loan Documents.
Valid, Binding and Enforceable. This Agreement and the Loan Documents
have been duly and validly executed and delivered by the Borrower and constitute
the valid and legally binding obligations of the Borrower enforceable in
accordance with their respective terms, except as enforcement of this Agreement
and the other Loan Documents may be limited by bankruptcy, insolvency or other
laws of general application relating to or affecting the enforcement of
creditors' rights and except as enforcement is subject to general equitable
principles.
Priority of Security Interest. The Pledge Agreement will create a
valid first perfected security interest in the Pledged Stock.
Environmental Matters.
(a) Each of the Borrower and Xxxx'x Cigar and its Subsidiaries
has performed all of its obligations under, has obtained all necessary material
approvals, permits, authorizations and other consents required by, and is not in
material violation of any Environmental Laws;
(b) Except as set forth on Schedule 4.13 of this Agreement,
neither the Borrower nor Xxxx'x Cigar or any of its Subsidiaries has received
any notice, citation, summons, directive, order or other communication, written
or oral, from, and the Borrower have no knowledge of the filing or giving of any
such notice, citation, summons, directive, order or other communication by, any
governmental or quasi-governmental authority or agency or any other Person
concerning the presence, generation, treatment, storage, transportation,
transfer, disposal, release or other handling of any Hazardous Materials in
violation of any Environmental Law within, on, from, related to, or affecting
any real property owned or occupied by the Borrower or Xxxx'x Cigar or any of
its Subsidiaries;
(c) Except as set forth on Schedule 4.13 of this Agreement, to
the best of the Borrower's knowledge, no real property owned or occupied by the
Borrower or Xxxx'x Cigar or any of its Subsidiaries has ever been used, either
by the Borrower or Xxxx'x Cigar or any of its Subsidiaries or by any of their
respective predecessors in interest, to generate, treat, store, transport,
transfer, dispose of, release or otherwise handle any Hazardous Material in
violation of any Environmental Law;
(d) Except as set forth on Schedule 4.13 of this Agreement, to
the best of the Borrower's knowledge, there are no Hazardous Materials within,
on or under any real
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property owned or occupied by the Borrower or Xxxx'x Cigar or any of its
Subsidiaries in violation of any Environmental Law.
Common Stock of Xxxx'x Cigar. On or prior to the Tender Offer Closing
Date, the Stockholders have contributed the Contributed Shares to the Borrower,
free and clear of all Encumbrances, which represent all of the shares of such
common stock owned of record by them. The Contributed Shares constitute
approximately 74.04% of the aggregate issued and outstanding shares of capital
stock of Xxxx'x Cigar. The aggregate number of issued and outstanding shares of
Public Stock is approximately 1,516,786, which constitute approximately 25.96%
of the aggregate issued and outstanding shares of capital stock of Xxxx'x Cigar.
No Untrue Statements. Neither this Agreement, the Loan Documents nor
any other document, certificate or statement furnished or to be furnished by the
Borrower in connection herewith contains, or at the time of delivery will
contain, any untrue statement of a material fact or omits or will omit to state
a material fact necessary in order to make the statements contained herein and
therein not misleading.
ARTICLE V
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE BANK
The obligations of the Bank hereunder are conditioned upon the
satisfaction by the Borrower of the following conditions precedent:
Documents to be Delivered by the Borrower. The Borrower shall deliver
or cause to be delivered to the Bank at the Closing the following:
(a) This Agreement duly executed by the Borrower;
(b) The Note duly executed by the Borrower;
(c) The Security Agreement duly executed by the Borrower,
together with duly executed UCC-1 Financing Statements provided for therein;
(d) The Borrower Pledge Agreement duly executed by the Borrower,
together with the Depositary Control Agreement duly executed by the Borrower and
the Depositary and any share certificates (with stock transfers duly endorsed in
blank) evidencing the Pledged Stock required to be delivered thereunder;
(e) The Guaranty Agreement duly executed by the Guarantor;
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(f) The Stockholder Pledge Agreements, duly executed by the
Stockholders, together with share certificates (with stock transfers duly
endorsed in blank) evidencing the shares of capital stock of the Borrower being
pledged thereunder;
(g) Fully executed copies of the Tender Offer Documents and the
Merger Documents, each of which shall be in form and substance satisfactory to
the Bank;
(h) Evidence that the Stockholders have contributed the
Contributed Shares to the Borrower, free and clear of all Encumbrances;
(i) Evidence showing that, on a pro forma basis, after giving
effect to the Loans and to the completion of the Tender Offer Acquisition and
payment of the Tender Offer Consideration, the Borrower is and will remain
Solvent.
(j) A certificate of the Secretary or an Assistant Secretary of
Borrower dated the Closing Date including (i) resolutions duly adopted by the
Borrower authorizing the transactions under the Loan Documents; (ii) a copy of
the by-laws of the Borrower; (iii) evidence of the incumbency and signature of
the officers executing on its behalf any of the Loan Documents and any other
document to be delivered pursuant to any such documents, together with evidence
of the incumbency of such Secretary or Assistant Secretary; (iv) a copy of the
Borrower's Articles and Certificate of Incorporation, together with the
certification of the Secretary or Assistant Secretary of the Borrower as of the
Closing Date that such Articles and Certificate of Incorporation have not been
amended since the date of the aforesaid certification; and (v) certificates of
authority or good standing for the Borrower from its jurisdiction of
incorporation;
(k) A copy of each and every authorization, permit, consent, and
approval of and other action by, and notice to and filing with, every
governmental authority and regulatory body which is required to be obtained or
made by the Borrower for the due execution, delivery and performance of this
Agreement and the other Loan Documents and the consummation of the Tender Offer
and the Merger;
(l) The opinion of Fox Rothschild O'Brien & Xxxxxxx LLP dated as
of Closing Date, in form and substance reasonably satisfactory to the Bank and
its counsel; and
(m) Federal Reserve Form U-1 provided for in Regulation U of the
Board of Governors of the Federal Reserve System, the statements made in which
shall be such, in the opinion of the Bank, as to permit the transactions
contemplated hereby in accordance with Regulation U.
Conditions Precedent to Making the Loans. The Bank shall not be
obligated to make any Loan hereunder unless, as of the date of the proposed
advance:
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(a) No Event of Default or Default has occurred and is
continuing;
(b) The representations and warranties contained in Article
IV are true and correct;
(c) No material adverse change has occurred in the financial
condition of the Borrower or Xxxx'x Cigar;
(d) The Borrower has delivered to the Bank, upon its request, a
certificate executed by an authorized officer of the Borrower confirming the
statements made in paragraphs (a), (b) and (c) above;
(e) The Borrower has established a demand deposit account at the
Bank into which each advance of the Loans will be credited and from which
monthly payments shall be automatically deducted;
(f) The Borrower has delivered to the Bank evidence that (i) all
Encumbrances, tax liens or judgments against the assets of the Borrower and
Xxxx'x Cigar and its Subsidiaries have been terminated, released or satisfied,
as appropriate, including without limitation lien search results in form and
scope satisfactory to the Bank, and (ii), except for the Obligations, there is
no outstanding Indebtedness with respect to either the Borrower or Xxxx'x Cigar
or any of its Subsidiaries;
(g) The Borrower has delivered to the Bank evidence that there
exists no action, suit, investigation, litigation or proceeding affecting the
Borrower or Xxxx'x Cigar pending or threatened, including without limitation
evidence that there is no action, claim, lawsuit, demand, investigation or
proceeding pending or, to the knowledge of the Borrower, threatened against the
Borrower or Xxxx'x Cigar or any of its Subsidiaries before any governmental
authority which challenges the Borrower's right or power to enter into or
perform its obligations with regard to the Loans or the validity or
enforceability of this Agreement or any of the other Loan Documents;
(h) The Borrower has delivered to the Bank an accounting in form
and substance acceptable to the Bank ("Cash Accounting") showing that Xxxx'x
Cigar has cash, cash equivalents, marketable securities and investments at a
level of not less than $13,650,000 (i.e., 105% of the maximum commitment of the
Bank) (the "Cash Requirement");
(i) The Loan advance and the use of the proceeds thereof will
not, in the opinion of the Bank, violate or be inconsistent with the provisions
of Regulations T, U or X or any other regulation of the Federal Reserve Board;
(j) The Tender Offer Acquisition shall be consummated
contemporaneously with the Tender Offer Borrowing Date in accordance with the
terms of the
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Tender Offer and without waiver of any conditions (except as expressly permitted
thereunder) unless consented to by the Bank, and the Borrower shall have
acquired, through contribution of the Contributed Shares and the Tender Offer
Acquisition, not less than 87% of the issued and outstanding capital stock of
Xxxx'x Cigar;
(k) The Merger shall be consummated contemporaneously with the
Merger Borrowing Date in accordance with the terms of the Merger Agreement and
without waiver of any conditions (except as expressly permitted thereunder)
unless consented to by the Bank, and on or before the Merger Borrowing Date the
Borrower shall have caused all stock options, stock option plans and other
rights to acquire stock of Xxxx'x Cigar referenced in Section 2.7 of the Merger
Agreement to be cancelled or terminated; and
(l) The Borrower shall have paid in full to the Bank all costs,
fees (including the commitment fee) and expenses payable to the Bank to the
extent then due.
ARTICLE VI
AFFIRMATIVE COVENANTS OF THE BORROWER
Borrower hereby covenants and agrees that from the date hereof and
until satisfaction in full of the Obligations, unless the Bank shall otherwise
consent in writing, it shall do the following:
Use of Proceeds. Use the proceeds of the borrowings hereunder only
for the purposes specified in Section 2.1 of this Agreement.
Cash Requirement. Cause Xxxx'x Cigar to continue to comply on a current
basis with the Cash Requirement, and furnish to the Bank, at the Bank's request
but no less often than monthly, a Cash Accounting showing that Xxxx'x Cigar is
in compliance with the Cash Requirement.
Ordinary Course of Business; Records. Conduct its business and cause
Xxxx'x Cigar to conduct its business only in the ordinary course and keep
accurate and complete books and records of its assets, liabilities and
operations consistent with sound business practices and in accordance with GAAP.
Information for the Bank. Make available during normal business hours
for inspection by the Bank or its designated representatives, upon prior notice,
any of its or Xxxx'x Cigar's books and records when reasonably requested by the
Bank to do so, and furnish the Bank any information reasonably requested
regarding its or Xxxx'x Cigar's operations, business affairs and financial
condition within a reasonable time after the Bank gives notice of its request
therefor. In particular, and without limiting the foregoing, the Borrower shall
permit, during normal business hours, and upon prior notice, representatives of
the Bank's Audit Department to make such periodic inspections of books, records
and assets of the Borrower and Xxxx'x Cigar as such
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representatives deem necessary and proper. Prior notice hereunder need not be
given by the Bank to the Borrower if an Event of Default shall exist under this
Agreement.
Insurance. Carry and cause Xxxx'x Cigar to carry at all times in
financially sound and reputable insurers insurance against such hazards as are
usually insured against by business entities of established reputation engaged
in like businesses and similarly situated, and such other insurance as the Bank
may from time to time reasonably require, and pay all premiums on the policies
for all such insurance when and as they become due and take all other actions
necessary to maintain such policies in full force and effect at all times.
Maintenance. Maintain and cause Xxxx'x Cigar to maintain its equipment,
real property and other properties in good condition and repair (normal wear and
tear excepted) and pay and discharge the cost of repairs thereto or maintenance
thereof.
Taxes. Pay and cause Xxxx'x Cigar to pay all taxes, assessments,
charges and levies imposed upon it or on any of its property, or which it is
required to withhold and pay over, and provide to the Bank evidence of payment
thereof if the Bank so requests, except where contested in good faith by lawful
and appropriate proceedings and where adequate reserves therefor have been set
aside on its books; provided, however, that the Borrower shall pay all such
taxes, assessments, charges and levies forthwith whenever foreclosure on any
lien appears imminent.
Leases. Pay and cause Xxxx'x Cigar to pay all rent or other sums
required by every lease to which the Borrower or Xxxx'x Cigar is a party as the
same becomes due and payable, perform all its material obligations as tenant or
lessee thereunder except where contested in good faith by lawful and appropriate
proceedings and where adequate reserves therefor have been set aside; and keep
all such leases at all times in full force and effect during the terms thereof.
Corporate Existence; Certain Rights; Laws. Do all things necessary to
preserve and keep in full force and effect in each jurisdiction in which it or
Xxxx'x Cigar conducts business its and Xxxx'x Cigar's business existence,
licenses, permits, rights, patents, trademarks, copyrights, trade names and
franchises and comply with all present and future laws, ordinances, rules,
regulations, judgments, orders and decrees which affect in any material way the
Borrower or Xxxx'x Cigar, its or Xxxx'x Cigar's assets or the operation of its
or Xxxx'x Cigar's business.
Notice of Litigation or Other Proceedings. Give prompt notice to the
Bank of (i) the existence of any dispute, (ii) the institution of any
litigation, administrative proceeding or governmental investigation or (iii) the
entry of any judgment, decree or order against or involving the Borrower or
Xxxx'x Cigar if any of the matters described in the foregoing sections (i), (ii)
or (iii) would materially and adversely affect the operation, financial
condition, property or business of the Borrower or Xxxx'x Cigar or affect the
enforceability of this Agreement, any of the other Loan Documents, the Tender
Offer Documents or the Merger Documents.
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Indebtedness. Pay or cause to be paid when due (or within applicable
grace periods) all of its Indebtedness.
Notice of Events of Default. Give prompt notice to the Bank if the
Borrower becomes aware of the occurrence of any Default or Event of Default, or
of the failure of the Borrower to observe or perform any of the conditions or
covenants to be observed or performed by it under this Agreement or any of the
other Loan Documents.
ERISA. Maintain and cause Xxxx'x Cigar to maintain each Plan in
material compliance with all applicable requirements of ERISA and of the Code
and with all applicable rulings and regulations issued under the provisions of
ERISA and of the Code. As promptly as practicable (but in any event not later
than ten days) after the Borrower receives from the PBGC a notice of intent to
terminate any Plan or to appoint a trustee to administer any Plan, after the
Borrower has notified the PBGC that any reportable event, as defined in Section
4043 of ERISA, with respect to any Plan has occurred, or after the Borrower has
provided a notice of intent to terminate to each affected party, as defined for
purposes of Section 4041(a)(2) of ERISA, with respect to any Plan, a certificate
of the chief executive officer of the Borrower shall be furnished to the Bank
setting forth the details with respect to the events resulting in such
reportable event, as the case may be, and the action which the Borrower proposes
to take with respect thereto, together with a copy of the notice of intent to
terminate or to appoint a trustee from the PBGC, of the notice of such
reportable event or of the Borrower's notice of intent to terminate, as the case
may be.
Deposit Accounts. Use the Bank as its primary depository institution
unless otherwise agreed in writing by the Bank, and notify the Bank in writing
and on a continuing basis, of all deposit accounts and certificates of deposit
(including the numbers thereof) maintained with or purchased from other banks
and other financial institutions.
Compliance with Environmental Laws. Comply and cause Xxxx'x Cigar to
comply in all material respects with all Environmental Laws and not use any
property which it owns or occupies to generate, treat, store, transport,
transfer, dispose of, release or otherwise handle any Hazardous Material, except
in compliance with all Environmental Laws.
6.16 Consummation of Tender Offer. Perform, and cause Xxxx'x Cigar to
perform, all of its obligations with respect to the Tender Offer, and take all
action necessary to consummate the Tender Offer Acquisition promptly (but in any
event within three (3) days) following the Expiration Date.
6.17 Consummation of Merger. Perform, and cause Xxxx'x Cigar to
perform, all of its obligations required under the Merger Agreement and take all
action necessary to consummate the Merger, including without limitation causing
the Stockholders to approve the Merger and voting all shares of common stock of
Xxxx'x Cigar owned by it in favor of the
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Merger, as promptly as possible (under applicable Delaware law) following
consummation of the Tender Offer Acquisition.
Further Actions. Cooperate and join with the Bank at its own expense,
in taking all such further actions as the Bank, in its sole judgment, shall deem
necessary to effectuate the provisions of the Loan Documents and to perfect or
continue the perfected status of all Encumbrances granted to the Bank pursuant
to the Loan Documents, including, without limitation, the execution, delivery
and filing of financing statements, amendments thereto and continuation
statements.
ARTICLE VII
NEGATIVE COVENANTS
Borrower hereby covenants and agrees that from the Closing Date until
satisfaction in full of the Obligations, it shall not do any one or more of the
following without first obtaining the written approval of the Bank:
Fundamental Corporate Changes. Except as provided in the Merger
Agreement, change its name, enter into or effect any merger, consolidation,
share exchange, division, conversion, reclassification, recapitalization,
reorganization or other transaction of like effect, acquire the assets of or
securities in any other Person, sell, transfer, lease or otherwise dispose of
all or (except in the ordinary course of business) any material part of its
assets, or dissolve, or permit Xxxx'x Cigar to enter into or effect any of the
foregoing.
Indebtedness. Incur, create, assume or have any Indebtedness except the
Loans or other Indebtedness to the Bank, or permit Xxxx'x Cigar to incur,
create, assume or have any Indebtedness.
Encumbrances. Create or allow any Encumbrances to be on or
otherwise affect any of its or Xxxx'x Cigar's property or assets except the
following (collectively, "Permitted Encumbrances"):
(a) Encumbrances in favor of the Bank;
(b) Encumbrances for taxes, assessments and other governmental
charges incurred in the ordinary course of business which are not yet due and
payable;
(c) Pledges or deposits made in the ordinary course of business
to secure payment of worker's compensation or to participate in any fund in
connection with worker's compensation, unemployment insurance or other social
security obligations;
(d) Good faith pledges or deposits made in the ordinary course
of business to secure performance of tenders, contracts (other than for the
repayment of
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Indebtedness) or leases or to secure statutory obligations or surety, appeal,
indemnity, performance or other similar bonds required in the ordinary course of
business; or
(e) Liens of mechanics, materialmen, warehousemen, carriers or
other similar liens, securing obligations incurred in the ordinary course of
business that are not yet due and payable.
Guaranties. Directly or indirectly make or permit Xxxx'x Cigar to
make any Guaranty, except in favor of the Bank.
Loans and Investments. Purchase, invest in, or make any loan in the
nature of an investment in the stocks, bonds, notes or other securities or
evidence of Indebtedness of any Person, or make any loan or advance to or for
the benefit of any Person, or permit Xxxx'x Cigar to do any of the foregoing.
ERISA. (a) Terminate any Plan to which Section 4021 of ERISA applies;
(b) Allow the value of the benefits guaranteed under Title IV of ERISA to exceed
the value of assets allocable to such benefits; (c) Incur a withdrawal liability
within the meaning of Section 4201 of ERISA, or permit Xxxx'x Cigar to do any of
the foregoing.
Compliance with Federal Reserve Board Regulations. Take or permit to be
taken any other action which would result in the Loans or the consummation of
any of the other transactions contemplated hereby being violative of Regulations
G or U of the Board of Governors of the Federal Reserve System (12 C.F.R. 207,
221), Regulation X of such Board (12 C.F.R. 224), or any other regulation of
such Board.
Amendment to Merger Agreement or Tender Offer. Take any action to amend
or permit the amendment or modification of the Merger Agreement or any of the
terms or conditions of the Tender Offer, including without limitation to extend
the Expiration Date, or to elect to continue the Tender Offer through a
Subsequent Offering Period (as that term is defined in the Tender Offer
Documents).
ARTICLE VIII
EVENTS OF DEFAULT
An event of default ("Event of Default") under this Agreement shall be
deemed to exist if any one or more of the following events occurs and is
continuing, whatever the reason therefor:
Failure to Pay. The Borrower fails to pay any amount of principal,
interest, fees or other sums as and when due under this Agreement or any of the
Loan Documents, or any other Obligations, whether upon stated maturity,
acceleration, or otherwise.
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Breach of Covenants or Conditions. The Borrower fails to perform or
observe any other term, covenant agreement or condition in this Agreement or any
of the other Loan Documents or is in violation of or non-compliance with any
provision of this Agreement or any of the other Loan Documents, and has not
remedied and fully cured such non-performance, non-observance, violation of or
non-compliance within ten (10) Business Days after the earlier of (a) the date
that the Borrower has knowledge of such violation, or (b) the date that the
Borrower has written notice from the Bank; provided that such cure period shall
not apply to violations referred to in Section 8.1 above, and provided further,
that during such ten (10) day period under this clause the Banks' obligations to
make further Loans to the Borrower shall be suspended.
Defaults in Other Agreements. The Borrower or the Guarantor fails to
perform or observe any material term, covenant, agreement or condition contained
in, or there shall occur any default under or as defined in, any other agreement
applicable to the Borrower with the Bank (including the Guaranty Agreement), or
by which it is bound involving a material liability of the Borrower which shall
not be remedied within the period of time (if any) within which such other
agreement permits such default to be remedied, unless such default is waived by
the other party thereto or excused as a matter of law.
Agreements Invalid. The validity, binding nature of, or enforceability
of any material term or provision of any of the Loan Documents, the Tender Offer
Documents or the Merger Documents is disputed by, on behalf of, or in the right
or name of the Borrower or any material term or provision of any such document
is found or declared to be invalid, avoidable, or non-enforceable by any court
of competent jurisdiction.
False Warranties; Breach of Representations. Any warranty or
representation made by the Borrower in this Agreement or in any other Loan
Document or in any certificate or other writing delivered by the Borrower under
or pursuant to this Agreement or any other Loan Document, or in connection with
any provision of this Agreement, or related to the transactions contemplated
hereby shall prove to have been false or incorrect or breached in any material
consequential respect on the date as of which made.
Judgments. A final judgment or judgments is entered, or an order or
orders of any judicial authority or governmental entity is issued against the
Borrower or Xxxx'x Cigar (such judgment(s) and order(s) hereinafter collectively
referred to as "Judgments" and each a "Judgment") (i) for payment of money,
which Judgment or Judgments, in the aggregate, is in excess of the amount that
is covered by a valid insurance policy issued by an insurer that is solvent at
the time of such judgment; or (ii) for injunctive or declaratory relief which
would have a material adverse effect on the ability of the Borrower or Xxxx'x
Cigar to conduct its business, and such Judgment is not discharged or execution
thereon or enforcement thereof stayed pending appeal, within thirty days after
entry or issuance thereof, or, in the event of such a stay, such Judgment is not
discharged within thirty days after such stay expires.
Bankruptcy or Insolvency of the Borrower or Xxxx'x Cigar.
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(a) The Borrower or Xxxx'x Cigar becomes insolvent, or generally
fails to pay, or is generally unable to pay, or admits in writing its inability
to pay, its debts as they become due, or applies for, consents to, or acquiesces
in, the appointment of a trustee, receiver or other custodian for the Borrower
or a substantial part of its property, or makes a general assignment for the
benefit of creditors;
(b) The Borrower or Xxxx'x Cigar commences any bankruptcy,
reorganization, debt arrangement, or other case or proceeding under any state or
federal bankruptcy or insolvency law, or any dissolution or liquidation
proceeding;
(c) Any bankruptcy, reorganization, debt arrangement, or other
case or proceeding under any state or federal bankruptcy or insolvency law, or
any dissolution or liquidation proceeding, is involuntarily commenced against or
in respect of the Borrower or Xxxx'x Cigar or an order for relief is entered in
any such proceeding; and
(d) A trustee, receiver, or other custodian is appointed for the
Borrower or Xxxx'x Cigar or a substantial part of such Person's property.
Change of Control. The Stockholders shall together cease to own one
hundred percent (100%) of the issued and outstanding capital stock of the
Borrower (including the Surviving Corporation as successor Borrower following
the Merger).
ARTICLE IX
REMEDIES
Further Advances; Acceleration; Setoff.
(i) Upon the occurrence of any one or more Events of Default, the Bank may, in
its sole discretion, refuse to make any further advances or Loans to the
Borrower;
(ii) Automatically upon the occurrence of any Event of Default described in
Section 8.7 of this Agreement, and in the sole discretion of the Bank upon the
occurrence of any other Event of Default, the unpaid principal balance of all
Loans, all interest and fees accrued and unpaid thereon, and all other amounts
and Obligations payable by the Borrower under this Agreement and the other Loan
Documents shall immediately become due and payable in full, all without protest,
presentment, demand, or further notice of any kind to the Borrower, all of which
are expressly waived by the Borrower and the Loans shall immediately accrue
interest at the Default Rate;
(iii) If any of the Obligations shall be due and payable or any one or more
Events of Default shall have occurred, the Bank shall have the right, in
addition to all other rights and remedies available to it, without notice to the
Borrower, to set-off against and apply to the then unpaid balance of the Notes
and the other Obligations any items or funds held by the Bank, any and all
deposits (whether general or special, time or demand, matured or unmatured,
fixed or
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contingent, liquidated or unliquidated) now or hereafter maintained by the
Borrower for its own account with the Bank, and any other indebtedness at any
time held or owing by the Bank to or for the credit or the account of the
Borrower. For such purpose the Bank shall have, and Borrower hereby grants to
the Bank, a first lien on all such deposits. The Bank is hereby authorized to
charge any such account or indebtedness for any amounts due to the Bank. Such
right of set-off shall exist whether or not the Bank shall have made any demand
under this Agreement, the Notes or any other Loan Document and whether or not
the Notes and the other Obligations are matured or unmatured. The Borrower
hereby confirms the Bank's lien on such accounts and right of set-off, and
nothing in this Agreement shall be deemed to be a waiver or prohibition of such
lien and right of set-off.
Further Remedies. Upon the occurrence of any one or more Events of
Default, the Bank may proceed to protect and enforce its rights under this
Agreement and the other Loan Documents by exercising such remedies as are
available to the Bank in respect thereof under applicable law, either by suit in
equity or by action at law, or both, whether for specific performance of any
provision contained in this Agreement or any of the other Loan Documents or in
aid of the exercise of any power granted in this Agreement or any of the other
Loan Documents.
ARTICLE X
MISCELLANEOUS
Remedies Cumulative; No Waiver. The rights, powers and remedies of the
Bank provided in this Agreement and the other Loan Documents are cumulative and
not exclusive of any right, power or remedy provided by law or equity, and no
failure or delay on the part of the Bank in the exercise of any right, power, or
remedy shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power, or remedy preclude other or further exercise
thereof, or the exercise of any other right, power or remedy.
Notices. Every notice and communication under this Agreement or any of
the other Loan Documents shall be in writing and shall be given by either (i)
hand-delivery, (ii) certified mail return receipt requested (postage prepaid),
(iii) reliable overnight commercial courier (charges prepaid), or (iv) telecopy
or other means of electronic transmission, if confirmed promptly by any of the
methods specified in clauses (i), (ii) and (iii) of this sentence, to the
following addresses:
If to the Borrower:
HCH Acquisition Corp.
00000 Xxxxxxxx Xxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxx
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Fax: (000) 000-0000
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With a copy to:
Fox Rothschild O'Brien & Xxxxxxx LLP
000 Xxxxx Xxxxx, Xxxx. 0
Xxxxxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx, Esquire
Fax: (000) 000-0000
If to the Bank:
First Union National Bank
PA 1220
Underwriting Department
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxx,
Executive Vice President
Fax: (000) 000-0000
With a copy to:
Duane, Morris & Heckscher LLP
Xxx Xxxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx, Esquire
Fax: 000-000-0000
Notice given by telecopy or other means of electronic transmission
shall be deemed to have been given and received when sent. Notice by overnight
courier shall be deemed to have been given and received on the date scheduled
for delivery. Notice by mail shall be deemed to have been given and received
three (3) calendar days after the date first deposited in the United States
Mail. Notice by hand delivery shall be deemed to have been given and received
upon delivery. A party may change its address by giving written notice to the
other party as specified herein.
Costs, Expenses and Attorneys' Fees. Whether or not the transactions
contemplated by this Agreement and the other Loan Documents are fully
consummated, the Borrower shall promptly pay (or reimburse, as the Bank may
elect) all reasonable costs and expenses which the Bank has incurred or may
hereafter incur in connection with the negotiation, preparation, reproduction,
interpretation and enforcement of this Agreement and the other Loan Documents,
the collection of all amounts due hereunder and thereunder, and any amendment,
modification, consent or waiver which may be hereafter requested by the Borrower
or otherwise required. Such costs and expenses shall include, without
limitation, the reasonable fees and disbursements of counsel, the reasonable
costs of appraisal fees, searches of public records, costs
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of filing and recording documents with public offices, and similar costs and
expenses incurred by the Bank. Upon the occurrence of an Event of Default, such
costs shall also include the fees of any accountants, consultants or other
professionals retained by the Bank. The reimbursement obligations of the
Borrower under this section shall survive any termination of this Agreement.
Survival of Covenants. This Agreement and all covenants, agreements,
representations and warranties made herein and in any certificates delivered
pursuant hereto shall survive the making of the Loans and the execution and
delivery of the Notes and, subject to the provisions of Section 10.15 hereof,
shall continue in full force and effect until all of the Obligations have been
fully paid, performed, satisfied and discharged.
Counterparts; Effectiveness. This Agreement may be executed in any
number of counterparts and by the different parties on separate counterparts.
Each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement. This
Agreement shall be deemed to have been executed and delivered when the Bank has
received counterparts hereof executed by all parties listed on the signature
page(s) hereto.
Headings. The headings of sections have been included herein for
convenience only and shall not be considered in interpreting this Agreement.
Payment Due On A Day Other Than A Business Day. If any payment due
or action to be taken under this Agreement or any Loan Document falls due or is
required to be taken on a day which is not a Business Day, such payment or
action shall be made or taken on the next succeeding Business Day and such
extended time shall be included in the computation of interest.
Judicial Proceedings. Each party to this Agreement agrees that any
suit, action or proceeding, whether claim or counterclaim, brought or instituted
by any party hereto or any successor or assign of any party, on or with respect
to this Agreement or any of the other Loan Documents or the dealings of the
parties with respect hereto, or thereto, shall be tried only by a court and not
by a jury. EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES any
RIGHT TO A TRIAL BY JURY IN any SUCH SUIT, ACTION OR PROCEEDING. Further, each
party waives any right it may have to claim or recover, in any such suit, action
or proceeding, any special, exemplary, punitive or consequential damages or any
damages other than, or in addition to, actual damages. THE BORROWER ACKNOWLEDGES
AND AGREES THAT THIS SECTION IS A SPECIFIC AND MATERIAL ASPECT OF THIS AGREEMENT
AND THAT THE BANK WOULD NOT EXTEND CREDIT TO THE BORROWER IF THE WAIVERS SET
FORTH IN THIS SECTION WERE NOT A PART OF THIS AGREEMENT.
Governing Law. This Agreement shall be construed in accordance
with and governed by the internal laws of the Commonwealth of Pennsylvania.
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Integration. This Agreement and the other Loan Documents constitute
the sole agreement of the parties with respect to the subject matter hereof and
thereof and supersede all oral negotiations and prior writings with respect to
the subject matter hereof and thereof.
Amendment and Waiver. No amendment of this Agreement, and no waiver
of any one or more of the provisions hereof shall be effective unless set forth
in writing and signed by the parties hereto.
Successors and Assigns. This Agreement (i) shall be binding upon the
Borrower and upon the Bank, and the respective successors and assigns of each,
and (ii) shall inure to the benefit of the Borrower and the Bank, and the
respective successors and assigns of each, provided, however, that no Borrower
may assign its rights hereunder or any interest herein without the prior written
consent of the Bank, and any such assignment or attempted assignment by the
Borrower shall be void and of no effect with respect to the Bank.
Severability of Provisions. Any provision in this Agreement that is
held to be inoperative, unenforceable, voidable, or invalid in any jurisdiction
shall, as to that jurisdiction, be ineffective, unenforceable, void or invalid
without affecting the remaining provisions, and to this end, the provisions of
this Agreement are declared to be severable.
Consent to Jurisdiction and Service of Process. Borrower irrevocably
appoints each and every of its treasurer, secretary, vice president, senior vice
president or president, as its attorneys in fact upon whom may be served, in the
manner and at the address set forth in Section 10.2 hereof, any notice, process
or pleading in any action or proceeding against it arising out of or in
connection with this Agreement or any of the other Loan Documents; and the
Borrower hereby consents that any action or proceeding against it be commenced
and maintained in any court within the Commonwealth of Pennsylvania or in the
United States District Court for the Eastern District of Pennsylvania by service
of process on any such officer; and the Borrower agree that the courts of the
Commonwealth of Pennsylvania and the United States District Court for the
Eastern District of Pennsylvania shall have jurisdiction with respect to the
subject matter hereof and the person of the Borrower and the Collateral.
Notwithstanding the foregoing, the Bank, in its absolute discretion may also
initiate proceedings in the courts of any other jurisdiction in which the
Borrower may be found, or in which any of its properties or the Collateral may
be located.
Indemnification.
(a) If, after receipt of any payment of all or any part of the
Obligations, the Bank is compelled to surrender such payment to any Person or
entity for any reason (including, without limitation, a determination that such
payment is void or voidable as a preference or fraudulent conveyance, an
impermissible setoff, or a diversion of trust funds), then this Agreement and
the other Loan Documents shall continue in full force and effect, and the
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Borrower shall be liable for, and shall indemnify, defend and hold harmless the
Bank with respect to the full amount so surrendered.
(b) The Borrower shall indemnify, defend and hold harmless the
Bank with respect to any and all claims, damages, expenses, demands, losses,
costs, fines or liabilities of any kind (including, without limitation, those
involving death, personal injury or property damage and including reasonable
attorneys fees and costs) which may be instituted or asserted against or
incurred by the Bank, its officers, directors, employees, attorneys, agents and
representatives as a result of the credit being extended to the Borrower or
suspended or terminated by the Bank hereunder.
(c) The provisions of this section shall survive the
termination of this Agreement and the other Loan Documents and shall be and
remain effective, notwithstanding the payment of the Obligations, the
cancellation of the Note, the release of any Encumbrance securing the
Obligations or any other action which the Bank may have taken in reliance upon
its receipt of such payment. Any cancellation of the Note, release of any
Encumbrance or other such action shall be deemed to have been conditioned upon
any payment of the Obligations having become final and irrevocable.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the undersigned have caused this Loan Agreement
to be executed by their duly authorized officers on the date first above
written.
HCH ACQUISITION CORP.
By: /s/ Xxxxxx X. Xxxxx
---------------------------
Title: President
----------------------------
FIRST UNION NATIONAL BANK
By: /s/ Xxxxxx X. Xxxxxx
---------------------------
Title: Executive Vice President
----------------------------
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EXHIBIT "A"
NOTICE OF BORROWING
TO BE DELIVERED
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Schedule 4.4(d)
Indebtedness
None.
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Schedule 4.4(e)
Pro Forma Balance Sheet of the Borrower
TO BE DELIVERED
-36-
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Schedule 4.6(a)
Encumbrances
TO BE DELIVERED
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