EXHIBIT 10.24
AGREEMENT AND FOURTH AMENDMENT
TO CREDIT AGREEMENT
P A R T I E S:
This Agreement and Fourth Amendment to Credit Agreement (this "Agreement")
---------
is entered into effective as of the 31st day of December, 1996, by and among
XXXXXXX INTERNATIONAL, INC. (the "Borrower"), PMC LIQUIDATION, INC. and PRINTING
--------
AND PACKAGING EQUIPMENT FINANCE CORPORATION (individually a "Guarantor" and
---------
together, the "Guarantors"), and BANK OF AMERICA TEXAS, N.A. (the "Bank").
---------- ----
R E F E R E N C E S:
Reference is made to the following:
a. Credit Agreement (as amended, the "Credit Agreement") dated as of
----------------
May 16, 1995 by and between Bank and Borrower, as amended by that
certain- First Amendment to Credit Agreement entered into effective
as of August 15, 1995, by and between Bank and Borrower, as further
amended by that certain Second Amendment to Credit Agreement entered
into effective as of December 29, 1995, by and between Bank and
Borrower, and as further amended by that certain Third Amendment to
Credit Agreement entered into effective as of May 13, 1996;
b. Second Amended and Restated Master Note: Reference Rate Related
(the "Note") dated August 15, 1995, in the principal amount of
----
$27,000,000.00 made by Borrower and payable to Bank, as heretofore
amended and modified, which Note was in renewal and extension of that
Amended and Restated Master Note: Reference Rate Related, dated May
16, 1995 in the principal amount of $22,000,000.00, and that Revolving
Credit Note dated April 26, 1994, in the original principal sum of
$20,000,000.00, executed by Borrower, payable to the order of Bank
One, Milwaukee, National Association;
c. All other documents executed in connection with or as security for
the Credit Agreement and the Note (together, and including any and all
further renewals, extensions, amendments and modifications thereto,
the "Loan Documents").
--------------
Capitalized terms used in this Agreement and not defined in this Agreement
shall have the meanings given such terms in the Credit Agreement.
R E C I T A L S:
a. Defaults (the "Existing Defaults") have occurred under the Credit
-----------------
Agreement and the Loan Documents by reason of the following acts or
omissions:
1. Violation of Section 11.6 based upon judgments in an aggregate
amount not to exceed $600,000.00.
2. Violation of Section 11.8 of the Credit Agreement based upon
default under the Subordinated Debt.
3. Violation of Section 11.9 of the Credit Agreement based upon
non-compliance with Section 8.3 (Other Debts) (loan from Xxxx
Xxxxxxx).
4. Violation of Section 11.1 of the Credit Agreement based upon
non-compliance with Section 7.13 (ERISA Plans).
5. Violation of Section 11.12 of the Credit Agreement, based upon
non-compliance with Section 9.3 for periods ending June 30, 1996,
September 30, 1996 and December 31, 1996 (Debt Coverage Ratio).
6. Violation of Section 11.13 of the Credit Agreement based upon
non-compliance with Section 7.7 (Lawsuits), in an aggregate amount
sought not to exceed $1,900,000.00, Section 7.10 (Other Obligations)
and Section 8.20 (Payment of Debt).
b. As of the date hereof, the Existing Defaults remain uncured.
c. Borrower has requested that Bank forbear temporarily from
accelerating the maturity of principal of the Note and that Bank
forbear temporarily from exercising Bank's rights and remedies under
the Loan Documents.
d. Borrower has requested Bank's forbearance, as described above, in
order to permit Borrower the opportunity to consummate the sale of its
Xxxxxx Division to G. R. Investment Group, or assigns.
e. Bank is not willing to waive the Existing Defaults but has agreed to
forebear, as requested above by Borrower, subject to the terms and
conditions of this Agreement including, without limitation, the
amendments to the Credit Agreement set forth herein; provided, however,
Bank has exercised its rights under Section 2.2(c) of the Intercreditor
Agreement and initiated the initial standstill period specified
therein.
A G R E E M E N T S:
Now, therefore, in consideration of the premises stated above and other
good and valuable consideration, the receipt and adequacy of which are
acknowledged and confessed hereby, the parties agree as follows:
1. Forbearance. The Existing Defaults are not waived and shall continue
-----------
to exist; however, subject to the terms and conditions set forth in this
Agreement and expressly conditioned upon satisfaction and fulfillment of each of
the conditions precedent set forth in Section 2 below, Bank agrees to forbear
---------
from accelerating the maturity of and demanding immediate payment of the
principal of the Note and other than exercising its rights under the
Intercreditor Agreement to forbear from exercising Bank's rights under the Loan
Documents to the extent that such rights arise solely as a result of the
Existing Defaults for a period beginning on the date of this Agreement and
ending on the Expiration Date (as defined below).
2. Conditions Precedent. The following are conditions precedent to Bank's
--------------------
agreement as set forth in Section 1, above:
---------
a. Borrower and the Guarantors shall have executed and delivered this
Agreement to Bank not later than 5:00 p.m., January 20, 1997;
b. Borrower shall have delivered to Bank a payment of principal in an
amount of at least $2,000,000;
c. Borrower shall deliver to Bank appropriate officer certificates in
connection with the execution and delivery of this Agreement;
d. Borrower shall not have breached any of the terms, conditions,
representations, warranties, or agreements of Borrower under this Agreement; and
e. No default under the Loan Agreement other than the Existing
Defaults shall have occurred and be continuing.
If any of the terms of this Section 2 are not satisfied and fulfilled in a
---------
timely manner, then the forbearance referred to in Section 1 is void ab initio
--------- ---------
and shall be of no force or effect; and the parties shall be relegated to their
respective positions they occupied prior to the execution of this Agreement.
3. Amendments to Credit Agreement. The Credit Agreement is hereby amended
------------------------------
as follows:
a. Additional Definitions. Article 1 of the Credit Agreement is hereby
-----------------------
amended by the addition of the following definitions:
"Account" shall have the meaning stated in the Texas Uniform Commercial
-------
Code.
"Account Debtor" means a person who is obligated to Borrower under an
--------------
Account of Borrower.
"Xxxxxx Division" means that certain division of Borrower which was
---------------
acquired pursuant to Borrower's merger with Zerand-Xxxxxx Group, Inc., a
Delaware corporation, on December 21, 1995.
"Xxxxxx Sale Date" means that date on which Borrower sells its Xxxxxx
----------------
Division and the Bank releases its liens upon the associated Xxxxxx Division
assets.
"Borrowing Base Advance Cap" means at any time an amount equal to the
--------------------------
lesser of:
(i) $27,000,000.00; or
(ii) the sum of:
(A) 80% of the amount of Eligible Accounts; plus
(B) the lesser of (A) $4,500,000.00; or (B) 25% of the
amount of Eligible Inventory; plus
(C) $19,000,000.
"Borrowing Base Certificate" means a certificate detailing all Eligible
--------------------------
Accounts and Eligible Inventory which has been or is being used in determining
availability for an advance or letter of credit issuance under the Revolving
Line of Credit, such report to be in form acceptable to Bank.
"Collection Account" means account no. 2605900174 maintained with Bank into
------------------
which collections from Borrower's Accounts will be deposited pursuant to Section
5.11 of this Credit Agreement.
"Concentration Limit" means, for each Account Debtor, at the time of any
-------------------
determination thereof, an amount that is equal to 10% of all Borrower's Accounts
existing at such time; provided, however, that the Concentration Limit for each
of Riverwood International, Xxxxx River Corp. and Universal Packaging Corp.
shall be an amount that is
equal to 20% of Borrower's aggregate Accounts existing at such time.
"Eligible Accounts" means, at the time of any determination thereof, each
-----------------
of Borrower's Accounts as to which the following requirements have been
fulfilled to the satisfaction of Bank:
(a) Such Account is a valid, legally enforceable obligation of the
person who is obligated under such Account for goods sold and actually delivered
to, and accepted by, such Account Debtor and to which Borrower has relinquished
all possession and control, or for services actually performed by Borrower, each
in the ordinary course of Borrower's business;
(b) No significant or material conditions remain to be satisfied by
Borrower before Borrower is entitled to receive payment on the Account and such
Account does not arise from sales on consignment, guaranteed sale, sale and
return, sale on approval, or other terms under which payment by the Account
Debtor may be conditional or contingent;
(c) Such Account shall have excluded therefrom any portion that is
subject to any dispute, offset, counterclaim or other claim or defense on the
part of the Account Debtor or to any claim on the part of the Account Debtor
denying liability under such Account, and to the extent that any credit balance
exists in favor of such Account Debtor, the amount of such credit balance shall
be deducted from such Account;
(d) Such Account has been invoiced to the Account Debtor by Borrower as
reflected by an invoice in the amount of the Account;
(e) Borrower has lawful and absolute title to such Account, and such
Account is subject to a fully perfected first priority security interest in
favor of Bank pursuant to this Credit Agreement, prior to the rights of, and
enforceable as such against, any other person, and such Account is not subject
to any security interest or lien in favor of any person other than Permitted
Liens;
(f) No Account Debtor in respect of such Account is an employee,
affiliate, parent or subsidiary of Borrower, or an entity which has common
officers or directors with Borrower;
(g) No Account Debtor with respect to such Account is the United States
of America, or any political subdivision, department, agency or instrumentality
thereof unless Bank approves such Account in writing and the Federal Assignment
of Claims Act of 1940, as amended, has been complied with in a manner
satisfactory to Bank;
(h) No Account Debtor with respect to such Account is a foreign
government or is a person or entity located in a foreign jurisdiction or
organized under the laws of a foreign government, unless the Account is
supported by a letter of credit satisfactory to Bank in its sole discretion and
issued by a bank satisfactory to Bank in its sole discretion;
(i) No Account Debtor with respect to such Account is any state,
county, city, town or municipality or any political subdivision, department,
agency or instrumentality thereof;
(j) Such Account shall have excluded therefrom an amount equal to all
amounts owed to such Account Debtor by Borrower for goods purchased or services
performed for Borrower; to the extent the amount of the Account exceeds the
amounts owed such Account Debtor by Borrower, such excess shall not be excluded;
(k) Such Account is not in default. An Account shall be considered to
be in default for purposes of this definition if any of the following occur:
(i) Such Account has been due and payable for 90 days or more
from the date of invoice; provided, however, that if the Account
arises from a final billing for a purchase of machinery or equipment,
then such Account shall be eligible for up to 180 days from the date
of invoice; or
(ii) the Account Debtor in respect of such Account (A) has
suspended business, made a general assignment for the benefit of
creditors or is failing to pay its debts generally as they come due;
or (B) has filed, or had filed against it, a petition under any
bankruptcy law or any other law or laws for the relief of debtors;
(l) No Account Debtor in respect of such Account is in default (as
defined in subsection (k) above) on 20% or more of its Accounts with Borrower;
(m) Such Account is not evidenced by any chattel paper, promissory note
or other instrument;
(n) Such Account shall have excluded therefrom the amount of such
Account in excess of the Account Debtor's Concentration Limit; and
(o) Such Account is otherwise acceptable to Bank in its sole reasonable
discretion.
"Eligible Inventory" means, at the time of determination thereof, all of
------------------
Borrower's inventory, valued at the lowest of (a) Borrower's cost, (b) current
market (as determined by Borrower), or (c) Bank's independent determination of
the resale value of such inventory in such quantities and on such terms as Bank
deems appropriate in its sole discretion, and in all instances as to which the
following requirements have been fulfilled to the reasonable satisfaction of
Bank:
(i) The inventory is owned by Borrower free and clear of all liens in
favor of third parties except for Permitted Liens;
(ii) The inventory is permanently located at locations which Borrower
has disclosed to Bank and which are acceptable to Bank in its sole reasonable
discretion; provided, however, that inventory which is in transit in the U.S.
shall be eligible if it is covered by a commercial letter of credit issued by
Bank or a financial institution acceptable to Bank and the seller of such
inventory is required to present shipping or title documents to Bank as a
condition of obtaining payment;
(iii) If the inventory is covered by a negotiable document of title
(such as a warehouse receipt), such negotiable document has been delivered to
Bank;
(iv) The inventory is held for sale or use in the ordinary course of
Borrower's business;
(v) The inventory is of good and merchantable quality, and inventory
which is obsolete, unsalable, damaged, defective, discontinued or slow moving or
which has been returned by the buyer shall be excluded;
(vi) Inventory will not include finished goods, graphite, foreign
inventory, work-in-progress, demo's, cut stock or packaging and shipping
materials, but may include large, single, easily identified component parts
which are finished goods and are resellable or returnable at a nominal
restocking charge provided that such component parts have not been included in
any progress xxxxxxxx;
(vii) Inventory arising from trade-ins may be included in an amount no
greater than the discount allowance reflected on the invoice, for a period of
not more than 120 days from the date of invoice;
(viii) The inventory is not placed on consignment; and
(ix) The inventory is otherwise acceptable to Bank in its sole
discretion.
"Revolving Line of Credit" means the committed line of credit for
------------------------
advances in an amount outstanding at any time not to exceed $27,000,000.00.
"Revolving Line of Credit Rate" means a floating rate per annum equal
-----------------------------
to the Reference Rate plus 1.75%
b. The Loans. Article 2 of the Credit Agreement, Line of Credit and
--------- ------------------
Letter of Credit Facility Amount and Terms, is hereby deleted in its entirety
------------------------------------------
and replaced with the following:
2. LOANS AND TERMS.
--------------------
2.1 The Loans. The Loans are initially made to refinance and
---------
restructure amounts outstanding under the Credit Agreement as of the date of
this Amendment and are made upon the terms and conditions of the Credit
Agreement and the following terms and conditions. From and after December 31,
1996 the Offshore Rate will no longer be available to Borrower and the Loans
shall bear interest as specified below.
2.2 Revolving Line of Credit.
------------------------
(a) The term "Expiration Date" is amended to mean the earliest to
---------------
occur of (i) the Xxxxxx Sale Date (as defined below) or (ii) the date any holder
of any portion of the Subordinated Debt accelerates the maturity of any
principal of the Subordinated Debt or otherwise pursues any rights or remedies
it may have pursuant to the documents evidencing the Subordinated Debt, or (iii)
the date any Default or Potential Default other than the Existing Defaults
occurs under the Loan Documents, or (iv) 5:00 p.m., February 28, 1997. In the
event any of the following occur such event shall be a Default, not an Existing
Default: (i) the aggregate unpaid balance of all installment payments required
under Internal Revenue Code (S) 412(m), including interest, or any other
payments required under IRC (S) 412 or ERISA (S) 302, including interest, under
each of the Borrower's defined benefit pension plans at any time exceeds
$900,000.00, (ii) the aggregate amount of judgments against the Borrower at any
time exceeds $600,000.00 or any action shall be commenced to enforce any
judgment by execution, attachment, garnishment, levy or other process, or (iii)
the aggregate amount of damages sought in all lawsuits against the Borrower at
any time exceeds $1,900,000.00. The Loans shall be evidenced by the Note, and
the Loans shall be considered for all purposes to be debt and obligations
created and evidenced by the Credit Agreement. During the availability period
described below, the Bank will provide the Revolving Line of Credit to the
Borrower. The Borrower agrees that it will use the proceeds of each advance
under the Revolving Line of Credit only for working capital and other purposes
permitted by Section 9.4 of the Credit Agreement. The amount of the Revolving
Line of Credit (the "Commitment") is an amount of up to
----------
$27,000,000.00; provided, however, at no time shall the principal amount of the
Loans plus the face amount of all outstanding letters of credit
exceed the Borrowing Base Advance Cap.
(b) This is a revolving line of credit for advances with a within
line facility for letters of credit. During the availability period, Borrower
may repay principal amounts and re-borrow them.
(c) The Borrower agrees not to permit the outstanding principal
balance of the Revolving Line of Credit plus the outstanding amounts of all
letters of credit, including amounts drawn on letters of credit and not yet
reimbursed, to exceed the Borrowing Base Advance Cap. If such amounts
outstanding exceed the Borrowing Base Advance Cap, the Borrower will immediately
pay the excess to the Bank upon the Bank's demand. The Bank may apply payments
received from the Borrower under this Paragraph to the obligations of the
Borrower to the Bank in the order and the manner as the Bank, in its discretion,
may determine.
2.3 Availability Period. The Revolving Line of Credit is available
-------------------
between the date of this Amendment and the Expiration Date unless a Potential
Event of Default or an Event of Default, other than the Existing Defaults, has
occurred and is continuing. If a material Potential Event of Default (as
determined in the Bank's sole discretion) or an Event of Default occurs, other
than the Existing Defaults, then the Bank may terminate the availability period
and immediately cease making advances hereunder. If an Event of Default occurs,
other than the Existing Defaults, then in addition to the Bank's other remedies,
the Bank may require the Borrower to repay any amounts outstanding under the
Revolving Line of Credit immediately.
2.4 Revolving Line of Credit Interest Rate. Each advance under the
--------------------------------------
Revolving Line of Credit shall bear interest on the outstanding principal amount
thereof from the later to occur of December 31, 1996 or the date of such advance
at the lesser of (a) the Maximum Rate, or (b) the Revolving Line of Credit Rate.
Notwithstanding the foregoing, if at any time the Revolving Line of Credit Rate
shall exceed the Maximum Rate and thereafter the Revolving Line of Credit Rate
shall become less than the Maximum Rate, the rate of interest payable shall be
the Maximum Rate until the Bank shall have received the amount of interest it
otherwise would have received if the interest payable had not been limited by
the Maximum Rate during the period of time the Revolving Line of Credit Rate
exceeded the Maximum Rate.
2.5 Conditions to Each Advance Under Revolving Line of Credit. Before
---------------------------------------------------------
each extension of credit under the Revolving Line of Credit, including the
first advance made after December 31, 1996, Borrower will deliver the
following to Bank:
(a) A Borrowing Base and Compliance Certificate, in form and detail
satisfactory to the Bank;
(b) If requested by Bank, copies of the invoices or the record of
invoices from Borrower's sales journal for each Eligible Account and a listing
of the names and address of each Account Debtor obligated on such Eligible
Accounts; and
(c) If requested by Bank, copies of the delivery receipts, purchase
orders, shipping instructions, bills of lading or other documentation pertaining
to such Eligible Accounts.
2.6 Repayment Terms of Revolving Line of Credit.
------------------------------------------
(a) Except for advances made after the Expiration Date pursuant to
Letters of Credit which expire after the Expiration Date, Borrower will repay in
full all principal and any unpaid interest and other charges outstanding under
the Revolving Line of Credit no later than the Expiration Date, Borrower will
pay the amount of each advance made after the Expiration Date pursuant to any
Letter of Credit that expires after the Expiration Date, together with interest
thereon at the Revolving Line of Credit Rate, within 60 days after the Bank
makes such advance.
2.7 Letters of Credit. The Revolving Line of Credit may be used for
-----------------
financing standby letters of credit with a maximum maturity of 12 months unless
otherwise agreed to by Bank in its sole discretion on a case-by-case basis;
provided, however no letters of credit may have terms that extend beyond the
Expiration Date unless otherwise agreed to by Bank in its sole discretion on a
case-by-case basis.
The Borrower agrees:
(a) any sum drawn under a letter of credit may, at the option of
the Bank, be added to the principal amount outstanding under the Revolving Line
of Credit, which amount will bear interest and be due as described elsewhere in
this Agreement;
(b) the issuance of any letter of credit and any amendment to a
letter of credit is subject to the Bank's written approval and must be in form
and content reasonably satisfactory to the Bank;
(c) to sign the Bank's form Application and Agreement for Standby
Letter of Credit;
(d) to pay the Bank's standard amendment and negotiation fees, as
applicable, and the issuance fees set forth in Section 3.1 to the Credit
Agreement; and
(e) to allow the Bank to automatically charge the Operating
Account for applicable fees, discounts, and other charges.
2.8 Late Payments. In addition to the interest payments provided for
-------------
above, any amount which is not paid when due under this Agreement
(including payments of interest) shall bear interest as provided in Section
5.8 of the Credit Agreement.
c. Fees and Expenses. Article 3 of the Credit Agreement, Fees and
----------------- --------
Expenses, is hereby amended by the addition of the following provisions:
--------
3.5 Advance Fees. Subject to the provisions of Section 12.14 of the
------------
Credit Agreement, Borrower agrees to pay an advance fee in the amount of
$50.00 at the time of each advance under the Revolving Line of Credit.
3.6 Fee. Borrower agrees to pay Bank on the date of this Agreement,
---
a forbearance fee in the amount of $22,500.00.
d. Disbursements, Payments and Costs. Article 5 of the Credit Agreement,
---------------------------------
Disbursements, Payments and Costs, is hereby amended by the addition of the
---------------------------------
following provision:
5.11 Payments to Collection Account. Borrower shall notify all
------------------------------
Account Debtors to make all payments under its Accounts to the Collection
Account, and shall provide Bank with reasonable evidence of such
notification. In the event that any Account Debtor does make any payment
directly to Borrower, Borrower shall promptly deposit such amounts into the
Collection Account. Borrower and Bank each acknowledge and agree that the
Collection Account is under the exclusive dominion and control of Bank.
Withdrawals from the Collection Account by Borrower shall not be permitted.
Bank may from day to day apply the entire balance of the Collection Account
to the outstanding principal balance of the Revolving Line of Credit and
transfer any remaining amounts on deposit into the Operating Account;
however, Bank has absolutely no duty to make any such transfer and at any
time may refuse to transfer any funds until all obligations of Borrower
under this Credit Agreement have been satisfied. Any checks deposited into
the Collection Account which are returned unpaid will be charged against
the Operating Account.
e. Subsections 8.2(d)-(f) of the Credit Agreement are hereby deleted
in their entirety and replaced with the following:
(d) On January 30, 1997, February 20, 1997 and on the Xxxxxx Sale
Date, statements showing an aging and reconciliation of the Borrower's
receivables as of the end of the preceding month.
(e) On January 30, 1997, February 20, 1997 and on the Xxxxxx Sale
Date, a statement showing an aging of accounts payable as of the end of the
preceding month.
(f) On January 30, 1997, February 20, 1997 and on the Xxxxxx Sale
Date, an inventory listing and segment backlog schedules, by company as of
the end of the preceding month; the listing must include a description of
the inventory, its location and cost, and such other information as the
Bank may reasonably require.
f. Section 8.2 of the Credit Agreement, Financial Information, is
---------------------
hereby amended by the addition of the following subsections:
(j) Prior to the beginning of each fiscal quarter of Borrower,
Borrower's quarterly operating projections for such fiscal quarter, in
form, substance and detail reasonably satisfactory to the Bank.
(k) On January 30, 1997, February 20, 1997 and on the Xxxxxx Sale
Date, a statement showing a listing of all foreign Accounts and all
Accounts not secured by letters of credit as of the end of the preceding
month.
(l) On January 30, 1997, February 20, 1997 and on the Xxxxxx Sale
Date, a list of all deposits by Borrower's customers which are held by
Borrower as of the end of the preceding month.
(m) On January 30, 1997, February 20, 1997 and on the Xxxxxx Sale
Date, a report showing a listing of Borrower's contract receivables
including material terms and the expected payment due dates as of the end
of the preceding month.
(n) On January 30, 1997, February 20, 1997 and on the Xxxxxx Sale
Date, a report classifying Borrower's inventory balances, including a
reconciliation of Borrower's books and records with applicable tax
classifications and a list of Borrower's inventory which is currently
located in any foreign country as of the end of the preceding month.
(o) On January 30, 1997, February 20, 1997 and on the Xxxxxx Sale
Date, a list of any loaner equipment being used by Borrower as of the end
of the preceding month.
(p) On February 14, 1997, and three days after the Xxxxxx Sale
Date, a percentage of completion balance sheet and footnotes report as of
the end of the preceding month.
(q) On January 30, 1997, February 20, 1997 and on the Xxxxxx Sale
Date, a list all unbilled Accounts together with the expected delivery date
for the goods to be
delivered in connection with such Account as of the end of the preceding
month.
(r) On January 30, 1997, February 20, 1997 and on the Xxxxxx Sale
Date, a Borrower prepared and reasonably detailed balance sheet, profit and
loss statement and cash flow statement for the previous month.
(s) On Tuesday of each week, a weekly consolidated cash forecast
for the week of delivery.
4. Representations and Warranties. Borrower and each Guarantor hereby
------------------------------
represent and warrant to Bank as follows:
a. Borrower and each Guarantor has the power and authority to execute
and deliver this Agreement and each of the other documents and instruments to
which it is a party and to consummate the transactions and perform its
obligations contemplated hereby and thereby.
b. The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly authorized by all
necessary actions of Borrower and each Guarantor. This Agreement constitutes the
legal, valid and binding obligation of Borrower and each Guarantor, enforceable
against each of them in accordance with its terms.
c. The consummation of the transactions contemplated hereby will not
(i) violate any provision of the organizational documents or governing
instruments of Borrower or either Guarantor, (ii) violate any judgment, order,
ruling, injunction, degree or award of any court, administrative agency or
governmental body against, or binding upon, Borrower or either Guarantor, or
(iii) constitute a violation by Borrower or either Guarantor of any law or
regulation of any jurisdiction applicable to Borrower or either Guarantor.
d. This Agreement was reviewed by both Guarantors and by Borrower
and/or its authorized officer, each of whom acknowledges and agrees that he (i)
understands fully the terms of this Agreement and the consequences of the
execution hereof, (ii) has been afforded an opportunity to have this Agreement
reviewed by, and to discuss this Agreement with, such attorneys and other
persons as he may wish, and (iii) has entered into this Agreement of its own
free will and accord and without threat or duress.
e. This Agreement and all information furnished to Bank is made and
furnished in good faith, for value and valuable consideration, and has not been
made or induced by any fraud, duress or undue influence exercised by Bank or any
other person.
5. Miscellaneous.
--------------
a. Misrepresentation. Borrower and each Guarantor shall jointly and
-----------------
severally indemnify and hold Bank harmless from and against any losses, damages,
costs and expenses (including attorneys' fees) incurred by Bank as a direct or
indirect result of (i) breach of any representation or warranty contained in
this Agreement, or (ii) any breach or default under any of the covenants or
agreements contained in this Agreement.
b. Covenants and Agreements. Borrower hereby agrees and acknowledges
------------------------
that it is well and truly indebted to Bank pursuant to the terms of the Note and
the Credit Agreement and hereby agrees to observe, comply with and perform all
of the obligations, terms and conditions under or in connection with the Credit
Agreement.
c. Ratification of Liens and Security Interests. Borrower and each
--------------------------------------------
Guarantor hereby acknowledge and agree that the liens and security interests of
the Credit Agreement and the Loan Documents are valid and subsisting liens and
security interests and are superior to all other liens and security interests.
d. Full Force and Effect. Except as otherwise expressly modified
---------------------
hereby, all terms and provisions of the Credit Agreement, the Note, and the
other Loan Documents hereby are ratified and confirmed and shall be and shall
remain in full force and effect, enforceable in accordance with their terms.
e. Subordination and Waiver of Subrogation. Notwithstanding any
---------------------------------------
payment or payments made by either Guarantor on behalf of or for the account of
Borrower, neither Guarantor shall be subrogated to any rights of Bank. Any claim
of either Guarantor against the Borrower arising from any payment or payments
made by Guarantor by reason of this Agreement or otherwise shall be in all
respects subordinated to the full and complete payment and discharge of the
indebtedness of Borrower to Bank; and no payment by Guarantor by reason of this
Agreement or otherwise shall give rise to any claim of either Guarantor against
Bank. Neither Guarantor will assign or otherwise transfer any such claim against
Borrower to any other person or entity.
f. No Waiver. Borrower and each Guarantor agree that nothing
---------
contained in this Agreement shall affect or impair the validity or priority of
the liens and security interests under any of the Loan Documents.
g. RELEASES. BORROWER AND EACH GUARANTOR FULLY, COMPLETELY AND
--------
FOREVER RELEASES THE BANK AND ITS PRESENT AND FORMER AFFILIATES, SUBSIDIARIES,
AGENTS, ATTORNEYS, APPRAISERS, CONSULTANTS, EMPLOYEES, OFFICERS, DIRECTORS,
STOCKHOLDERS, SUCCESSORS AND ASSIGNS ("OTHER RELEASED PARTIES") FROM ANY
----------------------
DEMANDS, CLAIMS AND CAUSES OF ACTION EXISTING AS OF THE DATE HEREOF, WHETHER
KNOWN OR UNKNOWN, WHETHER FOR KNOWN OR UNKNOWN DAMAGES OR ANY OTHER RELIEF,
INCLUDING, BUT NOT LIMITED TO, DEMANDS, CLAIMS, CAUSES OF ACTION OR DAMAGES
DIRECTLY OR INDIRECTLY RELATING TO OR BASED ON:
(I) ANY AND ALL TRANSACTIONS RELATING TO THE CREDIT AGREEMENT OR
ANY OF THE OTHER LOAN DOCUMENTS AS AMENDED FROM TIME TO TIME, INCLUDING,
WITHOUT LIMITATION, ANY LOSS, EXPENSES AND/OR DETRIMENT OF ANY KIND OR
CHARACTER GROWING OUT OF OR IN ANY WAY RESULTING FROM THE ACTS OR OMISSIONS
OF BANK OR THE OTHER RELEASED PARTIES;
(II) ANY LOSS, COST OR DAMAGE IN CONNECTION WITH ANY BREACH OF
FIDUCIARY DUTY, FRAUD, BREACH OF A DUTY OF GOOD FAITH AND FAIR DEALING,
BREACH OF CONFIDENCE, BREACH OF FUNDING COMMITMENT, IMPAIRMENT OF
COLLATERAL, VIOLATIONS OF THE BANK TYING ACT (12 U.S.C. (S) 1971, ET SEQ.),
UNDUE INFLUENCE, DURESS, ECONOMIC COERCION, CONFLICT OF INTERESTS,
NEGLIGENCE, BAD FAITH, MALPRACTICE, INTENTIONAL OR NEGLIGENT INFLICTION OF
MENTAL DISTRESS, TORTIOUS INTERFERENCE WITH CONTRACTUAL RELATIONS, TORTIOUS
INTERFERENCE WITH CORPORATE GOVERNANCE OR PROSPECTIVE BUSINESS ADVANTAGE,
BREACH OF CONTRACT, DECEPTIVE TRADE PRACTICES, LIBEL, SLANDER, OR
CONSPIRACY; AND
(III) ANY OTHER CLAIM BASED ON CONTRACT, TORT, COMMON LAW, OR ANY
RIGHT CREATED BY A STATUTE OR REGULATION PROMULGATED BY ANY GOVERNMENT
AGENCY.
THE ABOVE LISTING OF DEMANDS, CLAIMS AND CAUSES OF ACTION RELEASED IS
NOT EXCLUSIVE OR EXHAUSTIVE. IT IS THE EXPRESS INTENTION OF THE BORROWER AND
GUARANTORS TO RELEASE AND FORGIVE THE BANK OF ALL DEMANDS, CLAIMS AND CAUSES OF
ACTION FROM THE PAST AND HAVE A FRESH START FROM THIS DAY FORWARD. BORROWER AND
EACH GUARANTOR, ON BEHALF OF THEMSELVES AND THEIR SUCCESSORS AND ASSIGNS,
COVENANT AND AGREE NOT TO XXX, INSTITUTE, OR COOPERATE IN THE INSTITUTION,
COMMENCEMENT, FILING, OR PROSECUTION OF ANY SUIT, ADMINISTRATIVE PROCEEDING,
DEMAND, CLAIM OR CAUSE OF ACTION ARISING FROM ANY ASPECT OF THE CREDIT AGREEMENT
OR ANY OTHER LOAN DOCUMENTS, AS AMENDED, WHETHER ASSERTED INDIVIDUALLY OR
DERIVATIVELY OR IN ANY CAPACITY AGAINST BANK OR THE OTHER RELEASED PARTIES.
FURTHERMORE, BORROWER AND EACH GUARANTOR REPRESENT AND WARRANT THAT THEY HAVE
NOT ASSIGNED, AND WILL NOT HEREAFTER ASSIGN, ANY OF THEIR ALLEGED CLAIMS OR
CAUSES OF ACTION, OF ANY KIND OR NATURE WHATSOEVER, AGAINST THE BANK OR THE
OTHER RELEASED PARTIES TO ANY PERSON OR ENTITY, SO THAT NO OTHER PARTY IS IN A
POSITION TO ASSERT ANY SUCH CLAIM OR CAUSE OF ACTION. BORROWER AND EACH
GUARANTOR DECLARES THAT NEITHER BORROWER NOR EITHER GUARANTOR HAS ANY SET-OFF,
COUNTERCLAIM, DEFENSE OR OTHER CAUSES OF ACTION (TOGETHER, THE "COUNTERCLAIMS")
---------------
AGAINST BANK ARISING OUT OF THE TRANSACTIONS EVIDENCED BY THE NOTE, THE CREDIT
AGREEMENT OR THE LOAN DOCUMENTS, ANY TRANSACTIONS THAT WERE RENEWED OR EXTENDED
BY THE LOAN DOCUMENTS, OR ANY OTHER TRANSACTION WITH BANK. TO THE EXTENT ANY
COUNTERCLAIMS MAY EXIST, WHETHER KNOWN OR UNKNOWN, SUCH ARE WAIVED AND RELEASED
HEREBY BY BORROWER AND EACH GUARANTOR.
h. Hold Harmless. Borrower and each Guarantor agree to indemnify and
-------------
hold Bank harmless from any and all Counterclaims that Borrower, or either
Guarantor or any other person or entity claiming by, through, or under Borrower
or either Guarantor may at any time assert against Bank.
i. Costs and Expenses. Borrower agrees to pay to Bank the reasonable
------------------
attorneys' fees and expenses of Bank's counsel, filing and recording fees and
other reasonable expenses incurred by Bank in connection with this Agreement and
the transactions contemplated hereby.
j. No Commitment. Borrower and each Guarantor agree that Bank has
-------------
made no commitment or other agreement regarding the Note, the Credit Agreement,
or the Loan Documents, except as expressly set forth in the Loan Documents and
this Agreement. Borrower and each Guarantor warrant and represent that neither
Borrower nor either Guarantor will rely on any commitment, further agreement to
forbear or other agreement on the part of Bank unless such commitment or
agreement is in writing and signed by Bank.
k. Survival. All representations, warranties, covenants and
--------
agreements of the parties made in this Agreement shall survive the execution and
delivery hereof, until such time as all of the obligations of the parties hereto
shall have lapsed in accordance with their respective terms or shall have been
discharged in full.
l. Successors and Assigns. This Agreement shall be binding upon and
----------------------
shall inure to the benefit of the parties hereto and their respective heirs,
successors and assigns.
m. Modifications and Waivers. No delay on the part of Bank in
-------------------------
exercising any
right, power or privilege hereunder, shall operate as a waiver thereof, nor
shall any waiver of any right, power or privilege hereunder operate as a waiver
of any other right, power or privilege hereunder, nor shall any single or
partial exercise of any right, power or privilege hereunder preclude any other
or further exercise thereof, or the exercise of any other right, power or
privilege hereunder. All rights and remedies herein provided are cumulative and
are not exclusive of any rights or remedies which the parties hereto may
otherwise have at law or in equity. No waiver or modification, discharge or
amendment of this Agreement will be valid in the absence of the written and
signed consent of the party against which enforcement of such is sought.
n. Entire Agreement. This Agreement, together with the other
----------------
documents and instruments referenced herein, contains the entire agreement
between the parties relating to the transaction contemplated hereby. All prior
or contemporaneous agreements, understandings, representations and statements,
whether written or oral, are merged herein.
o. Governing Law. This Agreement shall be construed in accordance
-------------
with the applicable laws of the State of Texas and applicable federal law. In
the event of a dispute involving this Agreement or any other instruments
executed in connection herewith, the undersigned irrevocably agrees that venue
for such dispute shall lie in any court of competent jurisdiction in Dallas
County, Texas.
p. Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which when taken together shall be deemed to be one
original.
q. Time of Essence. The parties to this Agreement have agreed
---------------
specifically with regard to the times for performance set forth in this
Agreement. Further, the parties to this Agreement acknowledge that the
agreements with regard to the times for performance are material to this
Agreement. Therefore, the parties agree and acknowledge that time is of the
essence to this Agreement.
r. Acknowledgment of Debt and Ratification of Security Documents.
-------------------------------------------------------------
Borrower and each Guarantor agree that (i) as of December 30, 1996
$23,136,000.00 in principal was outstanding and letters of credit with a
combined availability of $3,190,578.60 were outstanding and (ii) those certain
security documents (as heretofore amended, the "Security Documents"), which are
------------------
more fully described in Exhibit A attached to that certain Master Amendment to
Security Documents, dated May 16, 1995, executed by Guarantors and Borrower in
favor of the Bank, in addition to securing all other amounts presently secured
by the Security Documents, are hereby amended so that all references in the
Security Documents to the amount of the principal obligation secured under the
Note are hereby acknowledged and agreed to include, without limitation, all
amounts outstanding from time to time under the Revolving Credit Line as amended
hereby. Except as modified by the terms of this subsection r, the Security
Documents shall remain unchanged; and the same are in full force and effect as
of the date hereof. Borrower and each Guarantor hereby ratify the rights,
titles, liens and security interests under the Security Documents existing in
favor of Bank.
s. Ratification of Guaranties. The Guarantors agree that that certain
--------------------------
Business Loan Continuing Guaranty, dated May 16, 1995 (the "Guaranty"), executed
--------
by the Guarantors in favor of the Bank, shall remain in full force and effect
and shall continue to be the legal, valid and binding obligation of the
Guarantors enforceable against Guarantors in accordance with its terms.
Furthermore, the Guarantors hereby agree and acknowledge that (a) the
obligations, indebtedness and liabilities arising in connection with this
Agreement constitute "Debt," as such term is defined in the Guaranty, (b) as of
the date hereof, the Guaranty is not subject to any claims, defenses or offsets,
(c) nothing contained in this Agreement shall adversely affect any right or
remedy of Bank under the Guaranty, and (d) the execution and delivery of the
Agreement shall in no way reduce, impair or discharge any obligations of the
Guarantors pursuant to the Guaranty.
t. NO ORAL AGREEMENTS. THIS WRITTEN AGREEMENT REPRESENTS THE FINAL
----------------------------------------------------------------
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
-------------------------------------------------------------------------------
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
-------------------------------------------------------------
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
----------------------------------------------------------
Executed effective the 31st day of December, 1996.
BANK OF AMERICA TEXAS, X.X. XXXXXXX INTERNATIONAL, INC.,
formerly known as Xxxxxxx Graphics Corporation
By: /s/ Xxx X. Xxxxx By: /s/ Xxxxxx X. Xxxxxxxxxxxxx
----------------------- -----------------------------------
Name: Xxx X. Xxxxx Name: Xxxxxx X. Xxxxxxxxxxxxx
---------------------- ---------------------------------
Title: Vice President Title: Treasurer & Chief Accounting
--------------------- --------------------------------
Officer
--------------------------------
GUARANTORS:
-----------
PMC LIQUIDATION, INC.
By: /s/ Xxxxxx X. Xxxxxxxxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxxxxxxxx
-------------------------------
Title: Chief Accounting Officer
------------------------------
PRINTING & PACKAGING EQUIPMENT
FINANCE CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxxxxxxxx
-------------------------------
Title: Treasurer & Chief Accounting
------------------------------
Officer
------------------------------
