CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of October 3, 1999, is by and between XXXXX
BROTHERS, INC., a corporation organized under the laws of the State of Delaware,
("PBI"), XXXXX BROTHERS ARIZONA, INC., an Arizona corporation ("PBAI"), XXXXX
BROTHERS DISTRIBUTING, INC., an Arizona corporation ("PBDI"), TEJAS PB
DISTRIBUTING, INC., an Arizona corporation ("Tejas") and WABASH FOODS, LLC, a
Delaware limited liability company ("Wabash"), (PBI, PBAI, PBDI, Tejas and
Wabash each a Borrower and collectively the "Borrower" or the "Borrowers"), and
U.S. BANCORP REPUBLIC COMMERCIAL FINANCE, INC., a Minnesota corporation (the
"Lender").
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION I.1 DEFINED TERMS. As used in this Agreement the following terms
shall have the following respective meanings:
"ACCOUNTS": Each and every right to payment of Borrower, whether such
right to payment arises out of a sale or lease of goods by Borrower, or other
disposition of goods or other property of Borrower, out of a rendering of
services by Borrower, out of a loan by Borrower, out of damage to or loss of
goods in the possession of a railroad or other carrier or any other bailee, out
of overpayment of taxes or other liabilities of Borrower, or which otherwise
arises under any contract or agreement, or from any other cause, whether such
right to payment now exists or hereafter arises and whether such right to
payment is or is not yet earned by performance and howsoever such right to
payment may be evidenced, together with all other rights and interest (including
all liens and security interests) which Borrower may at any time have by law or
agreement against any account debtor (as defined in the Uniform Commercial Code
in effect in the State of Minnesota) or other obligor obligated to make any such
payment or against any of the property of such account debtor or other obligor;
specifically (but without limitation), the term includes all present and future
instruments, documents, chattel papers, accounts and contract rights of
Borrower.
"ADVANCE": As defined in Section 2.1.
"ANNIVERSARY DATE": shall mean October 3, 2000 and each October 3rd
thereafter.
"ANNUAL NET PROFIT": The after tax net income or net loss as
determined in accordance with GAAP.
"BORROWING BASE": As defined in Section 2.5.
"BORROWING BASE CERTIFICATE": As defined in Section 2.5.
"BUSINESS DAY": Any day (other than a Saturday, Sunday or legal
holiday in the State of Minnesota) on which banks are permitted to be open at
the location of the Lender.
"CAPITAL EXPENDITURES": For any period, the sum of all amounts that
would, in accordance with GAAP, be included as additions to property, plant and
equipment on a consolidated statement of cash flows for the Borrower during such
period, in respect of (a) the acquisition, construction, improvement,
replacement or betterment of land, buildings, machinery, equipment or of any
other fixed assets or leaseholds, (b) to the extent related to and not included
in (a) above, materials, contract labor (excluding expenditures properly
chargeable to repairs or maintenance in accordance with GAAP), and (c) other
capital expenditures and other uses recorded as capital expenditures or similar
terms having substantially the same effect.
"CASH FLOW COVERAGE RATIO": For the period of determination with
respect to the Borrowers the ratio of EBITDA to consolidated interest expense.
"CLOSING DATE": Any Business Day between the date of this Agreement
and October 15, 1999 selected by the Borrower for the making of the initial
Advance on the Revolving Loan hereunder; provided that all the conditions
precedent to the obligation of the Lender to make the initial Advance on the
Revolving Loan, as set forth in Article III, have been, or, on such Closing
Date, will be, satisfied. The Borrower shall give the Lender not less than one
Business Day's prior notice of the day selected as the Closing Date.
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"COMMITMENTS": The Revolving Commitment, the Term Loan A Commitment
and the Term Loan B Commitment.
"DEBT SERVICE COVERAGE RATIO": For any period of determination with
respect to the Borrowers, the ratio of
(a) EBITDA,
to
(b) all required principal payments with respect to total Indebtedness
(including all payments with respect to capitalized lease obligations
of the Borrower) plus interest payments,
in each case determined for said period in accordance with GAAP.
"DEFAULT": Any event which, with the giving of notice (whether such
notice is required under Section 7.1, or under some other provision of this
Agreement, or otherwise) or lapse of time, or both, would constitute an Event of
Default.
"EBITDA": For any period of determination, the consolidated Annual Net
Profit of the Borrower before deductions for income taxes, interest expense,
depreciation and amortization, all as determined in accordance with GAAP.
"ELIGIBLE ACCOUNTS": Accounts owned by the Borrower which the Lender,
in its sole and absolute discretion, deems eligible for Advances, but which, at
a minimum, are subject to a first priority perfected security interest in favor
of the Lender and not subject to any assignment, claim or Lien other than the
Lien in favor of the Lender and other Liens consented to by the Lender in
writing, but specifically excluding (a) Accounts which are not earned; (b)
Accounts which are unpaid more than ninety (90) days after the original invoice
date or 60 days past the due date, whichever is less; (c) Accounts owed by
debtors 15% or more of whose Accounts owed are otherwise ineligible; (d)
Accounts representing progress xxxxxxxx, or retainages, or for work covered by
any payment or performance bond; (e) Accounts owed by any of the Borrower's
Affiliates; (f) Accounts owed by debtors not located in the United States,
unless supported by a letter of credit issued by a U.S. bank in favor of the
Borrower which has been delivered to the Lender; (g) Accounts as to which any
warranty or representation contained in any security agreement or other
agreement of the Borrower with or given to the Lender with respect to any such
Account is untrue in any material respect; (h) Accounts as to which the account
debtor has disputed liability, or made any claim with respect to any other
Account due from such account debtor to the Borrower; (i) Accounts subject to
setoff; (j) Accounts as to which the account debtor has filed a petition for
bankruptcy or any other petition for relief under the Bankruptcy Code, assigned
any assets for the benefit of creditors, or if any petition or other application
for relief under the Bankruptcy Code has been filed against the account debtor,
or if the account debtor has failed, suspended business, become insolvent, or
has had or suffered a receiver or a trustee to be appointed for all or a
significant portion of its assets or affairs; (k) Accounts owed by any
government or government agency; (l) Accounts evidenced by a promissory note or
other instrument; and (m) Accounts as to which the Lender reasonably believes
that collection of any such Account is insecure or that any such Account may not
be paid by reason of the account debtor's financial inability to pay.
"ELIGIBLE INVENTORY": Inventory of the Borrower which the Lender, in
its sole and absolute discretion, deems eligible for Advances, but which meets
the following minimum requirements: (a) it is owned by the Borrower, is subject
to a first priority perfected security interest in favor of the Lender, and is
not subject to any assignment, claim or Lien other than (i) a Lien in favor of
the Lender and (ii) Liens consented to by the Lender in writing; (b) it consists
of raw materials or finished product (not including work in process and
supplies); (c) if held for sale or lease or furnishing under contracts of
service, it is (except as the Lender may otherwise consent in writing) new and
unused; (d) except as the Lender may otherwise consent, it is not stored with a
bailee, warehouseman or similar party; if so stored with the Lender's consent,
such bailee, warehouseman or similar party has issued and delivered to the
Lender, in form and substance acceptable to the Lender, such documents and
agreements as the Lender may require, including, without limitation, warehouse
receipts therefor in the Lender's name; (e) the Lender has determined, in its
reasonable discretion, that it is not unacceptable due to age, type, category,
quality and/or quantity; (f) it is not held by the Borrower on consignment and
is not subject to any other repurchase or return agreement; (g) it is not held
by a customer of the Borrower or any other Person on consignment; (h) it
materially complies with all standards imposed by any governmental agency having
regulatory authority over such goods and/or their use, manufacture or sale; (i)
it is not raw potatoes, seasonings, film bags, apparel or advertising displays;
and (j) the warranties, representations and covenants contained in any security
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agreement or other agreement of the Borrower with or given to the Lender
relating directly or indirectly to the Borrower's Inventory are applicable to it
without exception.
"EVENT OF DEFAULT": Any event described in Section 7.1.
"FIXED CHARGE COVERAGE RATIO": For any period of determination with
respect to the Borrower, the ratio of
(a) EBITDA,
to
(b) all required principal payments with respect to total Indebtedness
(including all payments with respect to capitalized lease obligations
of the Borrower) plus interest payments, plus unfinanced Capital
Expenditures,
in each case determined for said period in accordance with GAAP.
"GAAP": Generally accepted accounting principles set forth in the
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as may be approved by a significant
segment of the accounting profession, which are applicable to the circumstances
as of any date of determination.
"INDEBTEDNESS": Any indebtedness for borrowed money.
"INTANGIBLE ASSETS": All of Borrowers' right, title, and interest in
and to any bank deposit accounts, customer deposit accounts, deposits, rights
related to prepaid expenses, negotiable or nonnegotiable instruments or
securities, chattel paper, choses in action, causes of action and all other
intangible personal property of every kind and nature (other than Accounts),
including without limitation, corporate or other business records, inventions,
designs, patents, patent applications, trademarks, trade names, trade secrets,
goodwill, registrations, copyrights, licenses, franchises, customer lists, tax
refunds, tax refund claims, customs claims, guarantee claims, cooperative
memberships or patronage benefits, notes payable to Borrowers for capital stock,
leasehold interests in real and personal property and any security interests or
other security held by or granted to Borrowers to secure payment by any account
debtor of any of the Accounts, and any other "general intangibles" (as defined
in the Uniform Commercial Code).
"INVENTORY": Any and all of the Borrower's goods, including, without
limitation, goods in transit, wherever located which are or may at any time be
leased by the Borrower to a lessee, held for sale or lease, furnished under any
contract of service or held as raw materials, work in process, or supplies or
materials used or consumed in the Borrower's business, or which are held for use
in connection with the manufacture, packing, shipping, advertising, selling or
finishing of such goods, and all goods, the sale or other disposition of which
has given rise to an Account, which are returned to and/or repossessed and/or
stopped in transit by the Borrower or the Lender, or at any time hereafter in
the possession or under the control of the Borrower or the Lender, or any agent
or bailee of either thereof, and all documents of title or other documents
representing the same.
"LANDLORD WAIVERS": Those waivers to be executed by Xx Xxxxxx
Properties, Inc. and American Pacific Financial Corporation in form and
substance satisfactory to the Lender.
"LIEN": With respect to any Person, any security interest, mortgage,
pledge, lien, charge, encumbrance, title retention agreement or analogous
instrument or device (including the interest of each lessor under any
capitalized lease), in, of or on any assets or properties of such Person, now
owned or hereafter acquired, whether arising by agreement or operation of law.
"LOAN DOCUMENTS": This Agreement, the Notes, and any documents
described in Section 3.1(a)(vii), (a)(ix), (a)(x), (a)(xi) and (a)(xii).
"NOTES": The Revolving Note and the Term Notes.
"PERSON": Any natural person, corporation, partnership, limited
partnership, joint venture, firm, association, trust, unincorporated
organization, government or governmental agency or political subdivision or any
other entity, whether acting in an individual, fiduciary or other capacity.
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"PRODUCER PAYABLES": All amounts at any time payable by Borrower for
the purchase of Inventory or other products from producers of agricultural
products and which are subject to PACA laws.
"REFERENCE RATE": The rate of interest from time to time publicly
announced by U.S. Bank National Association as its "reference rate." The Lender
may lend to its customers at rates that are at, above or below the Reference
Rate. For purposes of determining any interest rate hereunder or under the Notes
which is based on the Reference Rate, such interest rate shall change as and
when the Reference Rate changes.
"REVOLVING COMMITMENT": The obligation of the Lender to make Advances
to the Borrower on the Revolving Loan in an aggregate principal amount
outstanding at any time not to exceed the Revolving Commitment Amount upon the
terms and subject to the conditions and limitations of this Agreement.
"REVOLVING COMMITMENT AMOUNT": As defined in Section 2.1.
"REVOLVING LOAN": As defined in Section 2.1(a).
"REVOLVING MATURITY DATE": As defined in Section 2.1(a).
"REVOLVING NOTE": As defined in Section 2.3.
"SECURITY AGREEMENT": That Security Agreement executed by each of the
Borrowers in form and substance satisfactory to the Lender.
"SUBORDINATION AGREEMENTS": Those Subordination Agreements to be
executed by Renaissance Capital Growth & Income Fund III, Inc. and the Borrowers
and by Xxxxx Fargo Small Business Investment Company, Inc. and the Borrowers in
form and substance satisfactory to the Lender.
"SUBSIDIARY": Any corporation or other entity of which securities or
other ownership interests having ordinary voting power for the election of a
majority of the board of directors or other Persons performing similar functions
are owned by the Borrower either directly or through one or more Subsidiaries.
"TANGIBLE CAPITAL BASE": As defined in Section 6.9.
"TERM LOAN A": As defined in Section 2.1(b).
"TERM LOAN B": As defined in Section 2.1(c).
"TERM LOAN A COMMITMENT": The obligation of the Lender to make a term
loan to the Borrower in the Term Loan A Commitment Amount upon the terms and
subject to the conditions and limitations of this Agreement.
"TERM LOAN B COMMITMENT": The obligation of the Lender to make a term
loan to the Borrower in the Term Loan B Commitment Amount upon the terms and
subject to the conditions and limitations of this Agreement.
"TERM LOAN A COMMITMENT AMOUNT": As defined in Section 2.1(b).
"TERM LOAN B COMMITMENT AMOUNT": As defined in Section 2.1(c).
"TERM NOTE A": As defined in Section 2.3.
"TERM NOTE B": As defined in Section 2.3.
"TERM NOTES": Term Note A and Term Note B.
SECTION I.2 ACCOUNTING TERMS AND CALCULATIONS. Except as may be expressly
provided to the contrary herein, all accounting terms used herein shall be
interpreted and all accounting determinations hereunder shall be made in
accordance with GAAP.
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SECTION I.3 OTHER DEFINITIONAL TERMS, TERMS OF CONSTRUCTION. The words
"hereof," "herein" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. References to Sections, Exhibits, Schedules and the
like references are to Sections, Exhibits, Schedules and the like of this
Agreement unless otherwise expressly provided. The words "include," "includes"
and "including" shall be deemed to be followed by the phrase "without
limitation." Unless the context in which used herein otherwise clearly requires,
"or" has the inclusive meaning represented by the phrase "and/or." All
incorporations by reference of covenants, terms, definitions or other provisions
from other agreements are incorporated into this Agreement as if such provisions
were fully set forth herein, and include all necessary definitions and related
provisions from such other agreements. All covenants, terms, definitions and
other provisions from other agreements incorporated into this Agreement by
reference shall survive any termination of such other agreements until the
obligations of the Borrower under this Agreement and the Notes are irrevocably
paid in full and the Revolving Commitment is terminated.
ARTICLE II
TERMS OF LENDING
SECTION II.1 THE COMMITMENTS. On the terms and subject to the conditions
hereof, the Lender agrees to make the following lending facilities available to
the Borrower:
II.1 (a) Revolving Credit. A revolving loan (the "Revolving
Loan") to the Borrower available as advances ("Advances") at any time and
from time to time from the Closing Date to October 3, 2002 (the "Revolving
Maturity Date"), during which period the Borrower may borrow, repay and
reborrow in accordance with the provisions hereof, provided, that the
unpaid principal amount of revolving Advances shall not at any time exceed
$3,000,000 (the "Revolving Commitment Amount"); and provided, further, that
no revolving Advance will be made if, after giving effect thereto, the
unpaid principal amount of the Revolving Note would exceed the Borrowing
Base.
II.1 (b) Term Loan A. A term loan ("Term Loan A") from the Lender
to the Borrower on the Closing Date in the amount of $5,800,000 (the "Term
Loan A Commitment Amount"). Term Loan A is a replacement of debt previously
owed to the Lender by Wabash. The membership interests of Wabash was
acquired by PBI.
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II.1 (c) Term Loan B. A term loan ("Term Loan B") from the Lender
to the Borrower on the Closing Date in the amount of $350,000 (the "Term
Loan B Commitment Amount").
The total amount available under the Revolving Loan and the Term Loans is
the "Facility Amount".
Notwithstanding any provision hereof, this Agreement and the Revolving
Commitment shall terminate and the Lender shall have no obligation hereunder if
the Term Loans hereunder have not been made by October 15, 1999, provided,
however, that the obligations of the Borrower under Section 8.2 shall survive
any such termination.
SECTION II.2 PROCEDURE FOR ADVANCES AND THE TERM LOAN. Any request by the
Borrower for an Advance on the Revolving Loan shall be in writing or by
telephone and must be given so as to be received by the Lender not later than
10:30 (local time of the Lender) on the requested Advance date. Each request for
an Advance shall be irrevocable and shall be deemed a representation by the
Borrower that on the requested Advance date and after giving effect to such
Advance the applicable conditions specified in Article III have been and will
continue to be satisfied. Each request for an Advance shall specify (i) the
requested Advance date (which must be a Business Day) and (ii) the amount of
such Advance. Unless the Lender determines that any applicable condition
specified in Article III has not been satisfied, the Lender will make available
to the Borrower at the Lender's principal office in immediately available funds
not later than 2:00 PM (local time of the Lender) on the requested Advance date
the amount of the requested Advance. Notice of intention to borrow the Term
Loans shall be subject to the same time limits and other requirements of this
Section.
SECTION II.3 THE NOTES. The Advances on the Revolving Loan shall be
evidenced by a single promissory note of the Borrower (the "Revolving Note"),
substantially in the form of Exhibit 2.3 (a) hereto, in the amount of the
Revolving Commitment Amount originally in effect. Term Loan A shall be evidenced
by a promissory note ("Term Note A"), substantially in the form of Exhibit 2.3
(b) hereto, in an amount equal to the Term Loan A Commitment Amount. Term Loan B
shall be evidenced by a promissory note ("Term Note B"), substantially in the
form of Exhibit 2.3 (c) hereto, in an amount equal to the Term Loan B Commitment
Amount. The Lender shall enter in its ledgers and records the payments made on
the Revolving Note, Term Loan A and Term Loan B and the amount of each Advance
made and the payments made thereon, and the Lender is authorized by the Borrower
to enter on a schedule attached to the Notes a record of such Advances and
payments.
SECTION II.4 INTEREST RATES, INTEREST PAYMENTS AND DEFAULT INTEREST.
Interest shall accrue and be payable on the unpaid balance of the Revolving Note
at a floating rate per annum equal to the sum of the Reference Rate plus 1% (the
latter being the "Applicable Revolving Margin"); provided, however, that upon
the happening of any Event of Default, then, at the option of the Lender, the
Revolving Note shall thereafter bear interest at a floating rate equal to the
sum of (a) the Reference Rate, plus (b) the Applicable Revolving Margin, plus
(c) 2%. Interest shall accrue and be payable on the unpaid balance of Term Note
A at a floating rate per annum equal to the Reference Rate; provided, however,
that upon the happening of any Event of Default, then, at the option of the
Lender, Term Note A shall thereafter bear interest at a floating rate equal to
the sum of (a) the Reference Rate, plus (b) 2%. Interest shall accrue and be
payable on the unpaid balance of Term Note B at a floating rate equal to the
Reference Rate plus 2.5% (the latter being the "Applicable Term B Margin");
provided, however, that upon the happening of any Event of Default, then, at the
option of the Lender, Term Note B shall thereafter bear interest at a floating
rate equal to the sum of (a) the Reference Rate, plus (b) the Applicable Term B
Margin, plus (c) 2%. Interest shall be payable monthly in arrears on the last
day of each month and upon final payment of the respective Notes.
SECTION II.5 BORROWING BASE AND MANDATORY PREPAYMENT. The Borrowing Base
shall be equal to the sum of (1) the lesser of (x) 60% of the lower of cost
(determined on a first-in, first-out basis) or market value of Eligible
Inventory that consists of finished goods and 50% of the lower of cost
(determined on a first-in, first-out basis) or market value of Eligible
Inventory that consists of raw materials, or (y) $1,500,000, plus (2) 80% of the
face value of Eligible Accounts, minus, 100% of all Producer Payables and the
total of all outstanding checks issued in full or partial payment of any
Producer Payables which have not been mailed or otherwise delivered, provided
however, that in the event that dilution of Accounts increases above 7.0% as
determined by the Lender in its absolute and sole discretion and/or turndays
decrease by greater than 25%, the Lender may, in its absolute and sole
discretion reduce the Accounts Advance Rate. The Borrower shall deliver
borrowing base certificates in the form attached hereto (a "Borrowing Base
Certificate") to the Lender. Each such certificate shall state the amount of
Eligible Inventory, Eligible Accounts. Any limitations on advances or required
prepayments relating to the Borrowing Base shall be based on the latest
borrowing base certificate the Borrower shall have delivered to the Lender.
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SECTION II.6 REPAYMENT AND PREPAYMENT.
II.6 (a) REPAYMENT OF THE REVOLVING NOTE. Principal of the
Revolving Note shall be payable in full on the Revolving Maturity Date. The
Borrower may repay the Revolving Note, in whole or in part, at any time,
without premium or penalty. Amounts prepaid on the Revolving Note under
this Section may be reborrowed upon the terms and subject to the conditions
and limitations of this Agreement.
II.6 (b) REPAYMENT OF TERM NOTE A. Principal of Term Note A is
payable as provided in Term Note A. Any prepayment must be accompanied by
accrued and unpaid interest on the amount prepaid. Amounts so prepaid
cannot be reborrowed.
II.6 (c) REPAYMENT OF TERM NOTE B. Principal of Term Note B is
payable as provided in Term Note B. Any prepayment must be accompanied by
accrued and unpaid interest on the amount prepaid. Amounts so prepaid
cannot be reborrowed.
SECTION II.7 ANNUAL FEE. The Borrower shall pay to the Lender an annual fee
in an amount equal to $15,000 (the "Annual Fee"). The Annual Fee shall be
payable in advance on the Closing Date and on each Anniversary Date of this
Agreement and all Annual Fees are fully earned when due and are non-refundable.
SECTION II.8 WABASH SALE FEE. The Borrowers shall pay to the Lender a
success fee in an amount equal to $715,000 (the "Wabash Sale Fee"). The Wabash
Sale Fee shall be payable on June 30, 2000. If payment of the Wabash Sale Fee is
not made on or before June 30, 2000, the amount of the Wabash Sale Fee shall
increase by $200 per day until such time as the Wabash Sale Fee is paid. The
Wabash Sale Fee is fully earned upon execution of this Agreement and is
non-refundable.
SECTION II.9 WIRE TRANSFER FEE. Borrower shall pay a wire transfer charge
of $20 per wire transfer of any Advance.
SECTION II.10 TERMINATION FEE. In the event that the Revolving Loan, Term
Loan A or Term Loan B is prepaid prior to the third Anniversary Date of this
Agreement, the Borrower will pay to the Lender a prepayment charge, as
additional compensation for the Lender's costs of entering into this Agreement,
in the amount of (i) 3% of the Facility Amount if the notice of termination
occurs prior to the first Anniversary Date of this Agreement; (ii) 2% of the
Facility Amount if the notice of termination occurs after the first Anniversary
Date, but prior to the second Anniversary Date of this Agreement; and (iii) 1%
of the maximum aggregate amount of the Facility Amount if the notice of
termination occurs after the second Anniversary Date, but before the third
Anniversary Date of this Agreement.
SECTION II.11 EQUIPMENT LOAN ASSUMPTION FEE. The Borrower shall pay to the
Lender an equipment loan assumption fee in the amount of $43,500 (the "Equipment
Loan Assumption Fee"). The Equipment Loan Assumption Fee shall be payable on the
Closing Date. The Equipment Loan Assumption Fee is fully earned when due and is
non-refundable.
SECTION II.12 COMPUTATION. Interest on the Notes shall be computed on the
basis of actual days elapsed and a year of 360 days.
ARTICLE III
CONDITIONS PRECEDENT
SECTION III.1 CONDITIONS OF INITIAL REVOLVING ADVANCE AND TERM LOAN. The
obligation of the Lender to make the initial Advance on the Revolving Loan and
the Term Loan hereunder shall be subject to the prior or simultaneous
fulfillment of each of the following conditions:
III.1 (a) DOCUMENTS. The Lender shall have received the
following:
(i) The Notes executed by duly authorized officers of each
of the Borrowers and dated the Closing Date.
(ii) A copy of the corporate resolutions of each of the
Borrowers authorizing the execution, delivery and performance of this
Agreement and the Notes and containing an incumbency certificate
showing the names and titles, and bearing the signatures of, the
officers of each Borrower authorized to execute this Agreement and the
Notes, certified as of the Closing Date by the Secretary or an
Assistant Secretary of each of the Borrower.
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(iii) A copy of the Articles of Incorporation of each of the
Borrowers or Articles of Organization in the case of Wabash with all
amendments thereto, certified by the appropriate governmental official
of the jurisdiction of its incorporation as of a recent date
acceptable to Lender and its counsel.
(iv) A certificate of good standing for each Borrower in the
jurisdiction of its incorporation, certified by the appropriate
governmental officials as of a recent date acceptable to Lender and
its counsel.
(v) A copy of the bylaws of the Borrowers, or the Operating
Agreement in the case of Wabash, certified as of the Closing Date by
the Secretary or an Assistant Secretary of the Borrower, or a Manager
in the case of Wabash.
(vi) The opinion of counsel to each of the Borrowers
covering such matters as the Lender may request.
(vii) The Security Agreement duly executed by each of the
Borrowers.
(viii) The initial Borrowing Base Certificate required under
Section 2.5.
(ix) A Warrant Agreement for 50,000 shares of PBI stock with
customary piggy-back registration rights exercisable on or before July
1, 2004.
(x) The Landlord's Waivers duly executed by Xx Xxxxxx
Properties, Inc. and American Pacific Financial Corporation and the
Borrower.
(xi) The Subordination Agreements duly executed by
Renaissance Capital Growth and Income Fund III, Inc. and Xxxxx Fargo
Small Business Investment Company, Inc.
(xii) Assignment of Accounts Agreements duly executed by
each of the Borrowers and U.S. Bank National Association.
(xiii) Evidence of insurance required to be maintained under
Section 5.3 naming the Lender as lender loss payee in form and
substance satisfactory to the Lender.
III.1 (b) OTHER MATTERS. All organizational and legal
proceedings relating to the Borrower and all instruments and agreements in
connection with the transactions contemplated by this Agreement shall be
satisfactory in scope, form and substance to the Lender and its counsel, and the
Lender shall have received all information and copies of all documents,
including records of corporate proceedings, which it may reasonably have
requested in connection therewith, such documents where appropriate to be
certified by proper Borrower or governmental authorities.
III.1 (c) FEES AND EXPENSES. The Lender shall have received
all fees and other amounts due and payable by the Borrower on or prior to the
Closing Date, including the reasonable fees and expenses of counsel to the
Lender payable pursuant to Section 8.2.
III.1 (d) PERFECTION. The Security Agreement (or financing
statements with respect thereto) shall have been appropriately filed to the
satisfaction of the Lender and the priority and perfection of the Lien created
thereby shall have been established to the satisfaction of the Lender.
SECTION III.2 CONDITIONS PRECEDENT TO ALL ADVANCES. The Lender shall not
have any obligation to make the Term Loans or any Advance on the Revolving Loan
(including Advances after the initial Advance) hereunder unless all
representations and warranties of the Borrower made in this Agreement remain
true and correct and no Default or Event of Default exists.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lender:
SECTION IV.1 ORGANIZATION, STANDING, ETC. The Borrowers are corporations
(except Wabash which is a limited liability company) duly incorporated and
validly existing and in good standing under the laws of the jurisdiction of
their incorporation and have all requisite corporate power and authority to
carry on their business as now conducted, to enter into this Agreement and to
issue the Notes and to perform their obligations hereunder and thereunder. This
Agreement and the Notes have been duly authorized by all necessary corporate
action and when executed and delivered will be the legal and binding obligations
of each of the Borrowers. The execution and delivery of this Agreement and the
Notes will not violate the Borrowers' Articles of Incorporation or bylaws or any
law applicable to the Borrower. No governmental consent or exemption is required
in connection with the Borrowers' execution and delivery of this Agreement and
the Notes.
SECTION IV.2 FINANCIAL STATEMENTS AND NO MATERIAL ADVERSE CHANGE. The
Borrowers' audited financial statements as at December 31, 1998 and its
unaudited financial statements as at June 30, 1999, as heretofore furnished to
the Lender, have been prepared in accordance with GAAP. The Borrower has no
material obligation or liability not disclosed in such financial statements, and
there has been no material adverse change in the condition of the Borrower since
the dates of such financial statements.
SECTION IV.3 LITIGATION. There are no actions, suits or proceedings pending
or, to the knowledge of the Borrower, threatened against or affecting the
Borrower which, if determined adversely to the Borrower, would have, a material
adverse effect on the condition of the Borrower. The Borrower is not in
violation of any law or regulation (including environmental laws and regulations
and laws relating to employee benefit plans) where such violation could
reasonably be expected to impose a material liability on the Borrower.
SECTION IV.4 TAXES. The Borrower has filed all federal, state and local tax
returns required to be filed and has paid or made provision for the payment of
all taxes due and payable pursuant to such returns and pursuant to any
assessments made against it or any of its property (other than taxes, fees or
charges the amount or validity of which is currently being contested in good
faith by appropriate proceedings and with respect to which reserves in
accordance with GAAP have been provided on the books of the Borrower).
SECTION IV.5 SUBSIDIARIES. All Borrowers except PBI are Subsidiaries of
PBI. No Borrower has any other subsidiary, except for Xxxxx Brothers Texas which
is being liquidated, no other Borrower has any subsidiary.
SECTION IV.6 YEAR 2000 The Borrower has reviewed and assessed its business
operations and computer systems and applications to address the "year 2000
problem" (that is, that computer applications and equipment used by the
Borrower, directly or indirectly through third parties, may be unable to
properly perform date-sensitive functions before, during and after January 1,
2000). The Borrower reasonably believes that the year 2000 problem will not
result in a material adverse change in the Borrower's business condition
(financial or otherwise), operations, properties or prospects or ability to
repay the Lender. The Borrower is in the process of implementing a plan to
remediate year 2000 problems and will complete implementation of such plan with
respect to any material year 2000 problems, and testing thereof, by September
30, 1999. The Borrower agrees that this representation will be true and correct
on and shall be deemed made by the Borrower on each date the Borrower requests
any Advance under this Agreement or the Notes or delivers any information to the
Lender. The Borrower will promptly deliver to the Lender such information
relating to this representation and covenant as the Lender requests from time to
time.
ARTICLE V
AFFIRMATIVE COVENANTS
Until the Revolving Commitment shall have expired or been terminated and
the Notes and all of the Borrower's other obligations to the Lender under this
Agreement shall have been paid in full, unless the Lender shall otherwise
consent in writing:
SECTION V.1 FINANCIAL STATEMENTS AND REPORTS. The Borrower will furnish to
the Lender:
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V.1 (a) As soon as available and in any event within 120
days after the end of each fiscal year of the Borrower, consolidated financial
statements of the Borrower, prepared in accordance with GAAP, consisting of at
least statements of income, cash flow and changes in stockholders' equity, and a
balance sheet as at the end of such year, setting forth in each case in
comparative form corresponding figures from the previous annual audit, certified
without qualification by independent certified public accountants selected by
the Borrower and acceptable to the Lender. The Lender acknowledges that any of
the "Big Five" certified public accounting firms are acceptable to it.
V.1 (b) As soon as available and in any event within 30 days
after the end of each month, unaudited consolidated financial statements for the
Borrower, prepared in accordance with GAAP, for such month and for the period
from the beginning of such fiscal year to the end of such month, substantially
similar to the annual audited statements.
V.1 (c) As soon as practicable and in any event within 30
days after the end of each fiscal quarter, a compliance certificate
substantially in the form of Exhibit 5.1(c) hereto and a statement signed by the
chief financial officer of the Borrower stating that as at the end of such
fiscal quarter there did not exist any Default or Event of Default or, if such
Default or Event of Default existed, specifying the nature and period of
existence thereof and what action the Borrower proposes to take with respect
thereto.
V.1 (d) Immediately upon any officer of the Borrower
becoming aware of any Default or Event of Default, a notice describing the
nature thereof and what action the Borrower proposes to take with respect
thereto.
V.1 (e) Concurrently with each request for an Advance, and
in any event not less than weekly, a Borrowing Base Certificate.
V.1 (f) As soon as practicable and in any event within
fifteen days of the end of each month, (i) a listing of all accounts, together
with an aging of all accounts and a reconciliation of such accounts against the
listing submitted pursuant hereto for the immediately preceding month, (ii) a
list of all inventory, setting forth the fair market value and cost of such
inventory and (iii) a listing of all accounts payable, together with an aging of
all accounts payable all in form and substance reasonably satisfactory to the
Lender; and (iv) a listing of all Producer Payables and a listing of all checks
outstanding in full or partial payment of any Producer Payable which have not
been mailed or otherwise delivered.
V.1 (g) As soon as practicable and in any event within
fifteen days of the end of each quarter, a customer listing including the
contact person, addresses and phone numbers of each account debtor.
V.1 (h) Within five days after the due date, proof of
payment or deposit, when due, of all withholding and F.I.C.A. taxes owing by the
Borrower from time to time, in form and substance reasonably satisfactory to the
Lender by a payroll service reasonably satisfactory to the Lender and whose
services the Borrower shall at all times retain.
V.1 (i) From time to time, such other information regarding
the business, operation and financial condition of the Borrower as the Lender
may reasonably request.
SECTION V.2 CORPORATE EXISTENCE. The Borrower will maintain its
corporate existence in good standing under the laws of its jurisdiction of
incorporation and its qualification to transact business in each jurisdiction
where failure so to qualify would permanently preclude the Borrower from
enforcing its rights with respect to any material asset or would expose the
Borrower to any material liability.
SECTION V.3 INSURANCE. The Borrower will maintain with financially
sound and reputable insurance companies such insurance as may be required by law
and such other insurance in such amounts and against such hazards as is
customary in the case of reputable corporations engaged in the same or similar
business and similarly situated.
SECTION V.4 PAYMENT OF TAXES AND CLAIMS. The Borrower will file all tax
returns and reports which are required by law to be filed by it and will pay
before they become delinquent, all taxes, assessments and governmental charges
and levies imposed upon it or its property and all claims or demands of any kind
(including those of suppliers, mechanics, carriers, warehousemen, landlords and
other like Persons) which, if unpaid, might result in the creation of a Lien
upon its property.
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SECTION V.5 INSPECTION. The Borrower will permit any Person designated
by the Lender to visit and inspect any of the properties, books and financial
records of the Borrower, to examine and to make copies of the books of accounts
and other financial records of the Borrower, and to discuss the affairs,
finances and accounts of the Borrower with its officers at such reasonable times
and intervals as the Lender may designate. The Borrower shall also allow the
Lender and its agents to conduct periodic collateral audits of the Borrower's
assets at such intervals as the Lender may choose, and the Borrower shall pay to
Lender a fee in the amount of $750 per day per collateral audit, plus
out-of-pocket costs and expenses incurred in connection with such collateral
audits, (provided that so long as no Event of Default has occurred and is
continuing, the Borrower shall not be required to pay for more than 4 collateral
audits in any calendar year).
SECTION V.6 MAINTENANCE OF PROPERTIES. The Borrower will maintain its
properties in good condition, repair and working order, and supplied with all
necessary equipment, and make all necessary repairs, renewals, replacements,
betterments and improvements thereto, all as may be necessary so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times.
SECTION V.7 BOOKS AND RECORDS. The Borrower will keep adequate and
proper records and books of account in which full and correct entries will be
made of its dealings, business and affairs.
SECTION V.8 COMPLIANCE. The Borrower will comply in all material
respects with all laws, rules and regulations to which it may be subject.
SECTION V.9 NOTICE OF LITIGATION. The Borrower will give prompt written
notice to the Lender of the commencement of any action, suit or proceeding
affecting the Borrower alleging a claim for damages in excess of $50,000.
SECTION V.10 PLANS. The Borrower will maintain any employee benefit
plans in compliance with all material requirements of applicable laws and
regulations.
SECTION V.11 SPECIAL AGREEMENTS REGARDING ACCOUNTS.
5.11(a) Collection of Accounts and all other amounts due to
the Borrower shall be subject to the provisions of sections 5 and 6 of the
Security Agreements concerning the Lockbox and Collateral Account (as those
terms are defined in the Security Agreements). The Borrower shall provide to the
Lender, not less than weekly, a Collection Report of all Accounts collected. All
collections received in the Collateral Account and reported to Lender on a
Collection Report on a form furnished by Lender before 10:00 a.m. (CST/CDT) on
any Business Day that is a Monday through Thursday and 2:00 p.m. Fridays
(CST/CDT), shall be applied to the payment of the Advances (in such order of
application as the Lender may determine) on the day so received; provided
however, that for purposes of determining the interest due and payable on the
unpaid balance of the Advances and Term Loans under Section 2.3, all collections
received in the Collateral Account shall be applied to the unpaid balance of the
Advances upon receipt of the daily Collection Report from Borrowers evidencing
deposits actually made and after allowing two (2) Business Days for collection.
5.11(b) Subject to the rights granted to the Lender in
section 5 of the Security Agreements, all ledger sheets or cards, invoices,
shipping records, correspondence, and other writings relating to accounts shall,
until delivered to the Lender or removed by the Lender from the Borrower's
premises, be kept on the Borrower's premises without cost to the Lender in
appropriate containers in safe places. Borrower has the right to be provided
with copies of all removed materials after a reasonable time.
5.11(c) Upon the Lender's demand for payment or the
occurrence of an Event of Default, the Lender may remove from the Borrower's
premises all books and records, correspondence, documents and files relating to
accounts; and the Lender may without cost or expense to the Lender use such of
the Borrower's personnel, supplies, space and equipment at the Borrowers' place
of business as the Lender may desire for the handling of collections. The
Borrowers will pay any and all out of pocket expenses and cost of collection
(including reasonable attorney fees) incurred by the Lender in the Lender's
handling of or effort to enforce collections.
5.11(d) The Borrower warrants that, except as may be
disclosed in the lists of Accounts furnished to the Lender: each customer
billing statement correctly states the subject matter and terms of sale; the
merchandise conforms thereto and is in all respects acceptable to the customer;
the date of the billing statement is not prior to the date of shipment; the
Account is not subject to any dispute, defense, offset or counterclaim; the
account debtor is not a subsidiary or affiliated company; and the Borrowers have
no reason to believe the Account will not be paid in the regular course of
business. The Borrowers will notify the Lender promptly of any event,
circumstance or communication with respect to any Account that is inconsistent
with the foregoing representation.
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ARTICLE VI
NEGATIVE COVENANTS
Until the Revolving Commitment shall have expired or been terminated and
the Notes and all of the Borrower's other obligations to the Lender under this
Agreement shall have been paid in full, unless the Lender shall otherwise
consent in writing:
SECTION VI.1 MERGER. Unless prior consent of the Lender is obtained, the
Borrower will not merge or consolidate or enter into any analogous
reorganization or transaction with any Person or liquidate, wind up or dissolve
itself (or suffer any liquidation or dissolution) or permit any Subsidiary to do
any of the foregoing; provided, however, any Subsidiary may be merged with or
liquidated into the Borrower or any wholly-owned Subsidiary (if the Borrower or
such wholly-owned Subsidiary is the surviving corporation).
SECTION VI.2 SALE OF ASSETS. The Borrower will not, and will not permit any
Subsidiary to, sell, transfer, lease or otherwise convey all or any substantial
part of its assets except for sales and leases of inventory in the ordinary
course of business, and except for sales of equipment having a fair market value
not to exceed $50,000 in the aggregate per calendar year where the proceeds of
such equipment are used to reduce the amount of the Advances.
SECTION VI.3 DIVIDENDS. The Borrower will not pay any dividends or
otherwise make any distributions on, or redemptions of, any of its outstanding
stock.
SECTION VI.4 CAPITAL EXPENDITURES. The Borrowers will not make expenditures
for fixed or capital assets in an amount exceeding $335,000 on a consolidated
basis in any fiscal year.
SECTION VI.5 INVESTMENTS. The Borrower will not, and will not permit any
Subsidiary to, make any loans, advances or extensions of credit to any other
Person (except for trade and customer accounts receivable for inventory sold or
services rendered in the ordinary course of business and payable in accordance
with customary trade terms) or purchase or acquire any stock or other debt or
equity securities of or any interest in any other Person or any integral part of
any business or the assets comprising such business or part thereof, except for:
VI.5 (a) Investments in readily marketable direct
obligations issued or unconditionally guaranteed by the United States government
or any agency thereof and supported by the full faith and credit of the United
States.
VI.5 (b) Certificates of deposit or bankers' acceptances
issued by any commercial Bank organized under the laws of the United States or
any State thereof which has (i) combined capital and surplus of at least
$100,000,000, and (ii) a credit rating with respect to its unsecured
indebtedness from a nationally recognized rating service that is satisfactory to
the Lender.
VI.5 (c) Commercial paper given the highest rating by a
nationally recognized rating service.
VI.5 (d) Repurchase agreements relating to securities of the
kind described in subsection (a) of this Section.
VI.5 (e) Other readily marketable investments in debt
securities which are reasonably acceptable to the Lender.
VI.5 (f) Advances to officers and employees or investments
by the Borrower at any time to any affiliated corporation or partnership who are
not a party to this Agreement, not in excess of $50,000 in the aggregate.
Any investments under clauses (a), (b), (c) or (d) above must mature within one
year of the acquisition thereof by the Borrower.
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SECTION VI.6 INDEBTEDNESS. The Borrower will not, and will not permit any
Subsidiary to, borrow any money or issue any bonds, debentures or other debt
securities or otherwise become obligated on any interest-bearing indebtedness
except for the Term Loan and Advances under this Agreement.
SECTION VI.7 LIENS. The Borrower will not, and will not permit any
Subsidiary to, create, incur, assume or suffer to exist any Lien, or enter into
any arrangement for the acquisition of any property through conditional sale,
lease-purchase or other title retention agreements except:
VI.7 (a) Liens granted to the Lender.
VI.7 (b) Liens existing on the date of this Agreement and
disclosed on Exhibit 6.7 hereto.
VI.7 (c) Deposits or pledges to secure payment of workers'
compensation, unemployment insurance, old age pensions or other social security
obligations arising in the ordinary course of business of the Borrower.
VI.7 (d) Liens for taxes, fees, assessments and governmental
charges not delinquent.
VI.7 (e) Liens of carriers, warehousemen, mechanics and
materialmen, and other like Liens arising in the ordinary course of business,
for sums not due.
VI.7 (f) Liens incurred or deposits or pledges made or given
in connection with, or to secure payment of, indemnity, performance or other
similar bonds.
VI.7 (g) Encumbrances in the nature of zoning restrictions,
easements and rights or restrictions of record on the use of real property and
landlord's Liens under leases on the premises rented, which do not materially
detract from the value of such property or impair the use thereof in the
business of the Borrower.
SECTION VI.8 CONTINGENT OBLIGATIONS. The Borrower will not, and will not
permit any Subsidiary to, guarantee or otherwise become liable on the
indebtedness of any other Person.
SECTION VI.9 TANGIBLE CAPITAL BASE. The Borrower will not permit its
Tangible Capital Base (the excess of its assets, excluding intangible assets
plus subordinated debt (including debt subordinated pursuant to the
Subordination Agreements), over its liabilities, on a consolidated basis) at any
time to be less than (i) $3,000,000 at fiscal year end 1999 and thereafter; (ii)
$3,500,000 at fiscal year end 2000 and (iii) $4,000,000 at fiscal year end 2001.
SECTION VI.10 CASH FLOW COVERAGE RATIO. The Borrower will not permit the
ratio of its EBITDA to its consolidated interest expense, as of (i) the fiscal
quarter ending March 31, 2000 to be less than 2.25 to 1 for fiscal quarter
ending on that date; (ii) the fiscal quarter ending June 30, 2000 to be less
than 2.25 to 1 for the two consecutive fiscal quarters ending on that date;
(iii) the fiscal quarter ending September 20, 2000 to be less than 2.25 to 1 for
the three consecutive fiscal quarters ending on that date; and (iv) the fiscal
quarter ending on December 31, 2000 and as of the last day of every fiscal
quarter thereafter to be less than 2.25 to 1.0 for the four consecutive fiscal
quarters ending on that date.
SECTION VI.11 FIXED CHARGE COVERAGE RATIO. The Borrower will not permit the
Fixed Charge Coverage Ratio, as of (i) the fiscal quarter ending March 31, 2000
to be less than 1.0 to 1.0 for the fiscal quarter ending on that date; (ii) the
fiscal quarter ending June 30, 2000 to be less than 1.0 to 1.0 for the two
consecutive fiscal quarters ending on that date; (iii) the fiscal quarter ending
September 30, 2000 to be less than 1.0 to 1.0 for the three consecutive fiscal
quarters ending on that date; and (iv) the fiscal quarter ending on December 31,
2000 and as of the last day of every fiscal quarter thereafter to be less than
1.0 to 1.0 for the four consecutive fiscal quarters ending on that date.
SECTION VI.12 DEBT SERVICE COVERAGE RATIO. The Borrower will not permit the
Debt Service Coverage Ratio, as of the (i) the fiscal quarter ending March 31,
2000 to be less than 1.0 to 1.0 for the fiscal quarter ending on that date; (ii)
the fiscal quarter ending June 30, 2000 to be less than 1.0 to 1.0 for the two
consecutive quarters ending on that date; (iii) the fiscal quarter ending
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September 30, 2000 to be less than 1.0 to 1.0 for the three consecutive fiscal
quarters ending on that date; and (iv) the fiscal quarter ending on December 31,
2000 and as of the last day of every fiscal quarter thereafter to be less than
1.0 to 1.0 for the four consecutive fiscal quarters ending on that date. This
ratio shall exclude the Wabash Sale Fee.
SECTION VI.13 ANNUAL NET PROFIT. The Borrower will not allow its net profit
to be less than $25,000 for the fourth quarter ending December 31, 1999; and
will not allow its Annual Net Profit to be less than $500,000 for each of fiscal
year end 2000 and 2001.
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
SECTION VII.1 EVENTS OF DEFAULT. The occurrence of any one or more of the
following events shall constitute an Event of Default:
VII.1 (a) The Borrower shall fail to make when due, whether
by acceleration or otherwise, any payment of principal of or interest on the
Notes or any other obligations of the Borrower to the Lender pursuant to this
Agreement.
VII.1 (b) The principal balance of the Revolving Note at any
time exceeds the Borrowing Base.
VII.1 (c) Any representation or warranty made by or on
behalf of the Borrower in this Agreement or by or on behalf of the Borrower in
any certificate, statement, report or document herewith or hereafter furnished
to the Lender pursuant to this Agreement shall prove to have been false or
misleading in any material respect on the date as of which the facts set forth
are stated or certified.
VII.1 (d) The Borrower shall fail to comply with Sections
5.2 or 5.3 or any Section of Article VI.
VII.1 (e) The Borrower shall fail to comply with any other
agreement, covenant, condition, provision or term contained in this Agreement
(other than those hereinabove set forth in this Section 7.1) and such failure to
comply shall continue for 5 calendar days after whichever of the following dates
is the earliest: (i) the date the Borrower gives notice of such failure to the
Lender, (ii) the date the Borrower should have given notice of such failure to
the Lender pursuant to Section 5.1, or (iii) the date the Lender gives notice of
such failure to the Borrower.
VII.1 (f) The Borrower or any Subsidiary shall become
insolvent or shall generally not pay its debts as they mature or shall apply
for, shall consent to, or shall acquiesce in the appointment of a custodian,
trustee or receiver of the Borrower or such Subsidiary or for a substantial part
of the property thereof or, in the absence of such application, consent or
acquiescence, a custodian, trustee or receiver shall be appointed for the
Borrower or such Subsidiary or for a substantial part of the property thereof
and shall not be discharged within 45 days, or the Borrower shall make an
assignment for the benefit of creditors.
VII.1 (g) Any bankruptcy, reorganization, debt arrangement
or other proceedings under any bankruptcy or insolvency law shall be instituted
by or against the Borrower or any Subsidiary and, if instituted against the
Borrower or any Subsidiary, shall have been consented to or acquiesced in by the
Borrower or such Subsidiary or shall remain undismissed for 60 days, or an order
for relief shall have been entered against the Borrower or such Subsidiary.
VII.1 (h) Any dissolution or liquidation proceeding shall be
instituted by or against the Borrower or any Subsidiary and, if instituted
against the Borrower or such Subsidiary, shall be consented to or acquiesced in
by the Borrower or such Subsidiary or shall remain for 45 days undismissed.
VII.1 (i) A judgment or judgments for the payment of the
uninsured portion of money in excess of the sum of $50,000 in the aggregate
shall be rendered against the Borrower or any Subsidiary and either (i) the
judgment creditor executes on such judgment or (ii) such judgment remains unpaid
or undischarged for more than 60 days from the date of entry thereof or such
longer period during which execution of such judgment shall be stayed during an
appeal from such judgment.
VII.1 (j) The maturity of any material Indebtedness of the
Borrower or any Subsidiary (other than indebtedness under this Agreement) shall
be accelerated, or the Borrower or any Subsidiary shall fail to pay any such
material indebtedness when due (after the lapse of any applicable grace period)
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or any event shall occur or condition shall exist and shall continue for more
than the period of grace, if any, applicable thereto and shall have the effect
of causing, or permitting the holder of any such indebtedness to cause, such
material indebtedness to become due prior to its stated maturity or to realize
upon any collateral given as security therefor. For purposes of this Section,
indebtedness of the Borrower shall be deemed "material" if it exceeds $50,000 as
to any item of indebtedness or in the aggregate for all items of indebtedness
with respect to which any of the events described in this Section has occurred.
VII.1 (k) Any execution or attachment shall be issued
whereby any substantial part of the property of the Borrower or any Subsidiary
shall be taken or attempted to be taken and the same shall not have been vacated
or stayed within 30 days after the issuance thereof.
VII.1 (l) Any default shall occur under any other Loan
Document.
SECTION VII.2 REMEDIES. If (a) any Event of Default described in Sections
7.1 (f), (g) or (h) shall occur with respect to the Borrower, the Revolving
Commitment shall automatically terminate and the Notes and all other obligations
of the Borrower to the Lender under this Agreement shall automatically become
immediately due and payable, or (b) any other Event of Default shall occur and
be continuing, then the Lender may (i) declare the Revolving Commitment
terminated, whereupon the Commitment shall terminate, and (ii) declare the Notes
and all other obligations of the Borrower to the Lender under this Agreement to
be forthwith due and payable, whereupon the same shall immediately become due
and payable, in each case without presentment, demand, protest or other notice
of any kind, all of which are hereby expressly waived, anything in this
Agreement or in the Notes to the contrary notwithstanding. Upon the occurrence
of any of the events described in clauses (a) or (b) of the preceding sentence
the Lender may exercise all rights and remedies under this Agreement, the Notes
and any related agreements and under any applicable law.
SECTION VII.3 OFFSET. In addition to the remedies set forth in Section 7.2,
upon the occurrence of any Event of Default and thereafter while the same be
continuing, the Borrower hereby irrevocably authorizes the Lender to set off all
sums owing by the Borrower to the Lender against all deposits and credits of the
Borrower with, and any and all claims of the Borrower against, the Lender.
ARTICLE VIII
MISCELLANEOUS
SECTION VIII.1 MODIFICATIONS. Notwithstanding any provisions to the
contrary herein, any term of this Agreement may be amended with the written
consent of the Borrower; provided that no amendment, modification or waiver of
any provision of this Agreement or consent to any departure by the Borrower
therefrom shall in any event be effective unless the same shall be in writing
and signed by the Lender, and then such amendment, modifications, waiver or
consent shall be effective only in the specific instance and for the purpose for
which given.
SECTION VIII.2 COSTS AND EXPENSES. Whether or not the transactions
contemplated hereby are consummated, the Borrower agrees to reimburse the Lender
upon demand for all reasonable out-of-pocket expenses paid or incurred by the
Lender (including filing and recording costs and fees and expenses of Xxxxxx &
Xxxxxxx LLP, counsel to the Lender) in connection with the negotiation,
preparation, approval, review, execution, delivery, amendment, modification,
interpretation, collection and enforcement of this Agreement and the Notes. The
obligations of the Borrower under this Section shall survive any termination of
this Agreement.
SECTION VIII.3 WAIVERS, ETC. No failure on the part of the Lender or the
holder of either Note to exercise and no delay in exercising any power or right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any power or right preclude any other or further exercise thereof or
the exercise of any other power or right. The rights and remedies of the Lender
hereunder are cumulative and not exclusive of any right or remedy the Lender
otherwise has.
SECTION VIII.4 NOTICES. Except when telephonic notice is expressly
authorized by this Agreement, any notice or other communication to any party in
connection with this Agreement shall be in writing and shall be sent by manual
delivery, telegram, telex, facsimile transmission, overnight courier or United
States mail (postage prepaid) addressed to such party at the address specified
on the signature page hereof, or at such other address as such party shall have
specified to the other party hereto in writing. All periods of notice shall be
measured from the date of delivery thereof if manually delivered, from the date
of sending thereof if sent by telegram, telex or facsimile transmission, from
the first Business Day after the date of sending if sent by overnight courier,
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or from four days after the date of mailing if mailed; provided, however, that
any notice to the Lender under Article II hereof shall be deemed to have been
given only when received by the Lender.
SECTION 8.5 CONFIDENTIALITY OF INFORMATION. The Lender shall use reasonable
efforts to assure that information about the Borrower and its operations,
affairs and financial condition, not generally disclosed to the public or to
trade and other creditors, which is furnished to the Lender pursuant to the
provisions hereof is used only for the purposes of this Agreement and any other
relationship between Lender and the Borrower and shall be divulged to any Person
other than the Affiliates of the Lender and their respective officers, directors
employees and agents, except: (a) to their attorneys and accountants, (b) in
connection with the enforcement of the rights of the Lender hereunder and under
the Loan Documents or otherwise in connection with applicable litigation, (c) in
connection with assignments and participations and the solicitation of
prospective assignees and participants referred to in Section 8.6, and (d) as
may otherwise be required or requested by any regulatory authority having
jurisdiction over Lender or by any applicable law, rule, regulation or judicial
process, the opinion of Lender's counsel concerning the making of such
disclosure to be binding on the parties hereto.
SECTION 8.6 SUCCESSORS AND ASSIGNS; DISPOSITION OF LOANS. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that the Borrower may not assign its
rights or delegate its obligations hereunder without the prior written consent
of the Lender. The Lender may at any time sell, assign, transfer, grant
participations in, or otherwise dispose of any portion of the Revolving
Commitment and the Term Loan and/or Advances to banks or other financial
institutions. The Lender may disclose any information regarding the Borrower in
the Lender's possession to any prospective buyer or participant.
SECTION 8.7 GOVERNING LAW AND CONSTRUCTION. THE VALIDITY, CONSTRUCTION AND
ENFORCEABILITY OF THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY THE INTERNAL
LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS
PRINCIPLES THEREOF.
SECTION 8.8 CONSENT TO JURISDICTION. AT THE OPTION OF THE LENDER, THIS
AGREEMENT AND THE NOTES MAY BE ENFORCED IN ANY FEDERAL COURT OR MINNESOTA STATE
COURT SITTING IN HENNEPIN COUNTY, MINNESOTA; AND THE BORROWER CONSENTS TO THE
JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT VENUE IN
SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT THE BORROWER COMMENCES ANY ACTION IN
ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY
OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT, THE LENDER AT ITS
OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE
JURISDICTIONS AND VENUES ABOVE-DESCRIBED, OR IF SUCH TRANSFER CANNOT BE
ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT
PREJUDICE.
SECTION 8.9 WAIVER OF JURY TRIAL. EACH OF THE BORROWER AND THE LENDER
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTE AND ANY OTHER LOAN
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
SECTION 8.10 CAPTIONS. The captions or headings herein and any table of
contents hereto are for convenience only and in no way define, limit or describe
the scope or intent of any provision of this Agreement.
SECTION 8.11 ENTIRE AGREEMENT. This Agreement and the other Loan Documents
embody the entire agreement and understanding between the Borrower and the
Lender with respect to the subject matter hereof and thereof. This Agreement
supersedes all prior agreements and understandings relating to the subject
matter hereof.
SECTION 8.12 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and either of the parties hereto may execute this Agreement by
signing any such counterpart.
[The remainder of this page is left intentionally blank]
16
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
XXXXX BROTHERS, INC.
By
------------------------------------
Print Name
Title
Borrower's Address:
0000 Xxxxx Xx Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
XXXXX BROTHERS ARIZONA, INC.
By
------------------------------------
Print Name
Title
Borrower's Address:
0000 Xxxxx Xx Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
XXXXX BROTHERS DISTRIBUTING, INC.
By
------------------------------------
Print Name
Title
Borrower's Address:
0000 Xxxxx Xx Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
TEJAS PB DISTRIBUTING, INC.
By
------------------------------------
Print Name
Title
Borrower's Address:
0000 Xxxxx Xx Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
WABASH FOODS, LLC
By
------------------------------------
Print Name
Title
Borrower's Address:
000 Xxxx Xxxxxxx Xxxx
Xxxxxxxx, XX 00000
U.S. BANCORP REPUBLIC COMMERCIAL
FINANCE, INC.
By
------------------------------------
Print Name
Title
Lender's Address:
U.S. Bancorp Republic Commercial Finance, Inc.
0000 Xxxxxxx Xxxxxx, X.X. Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Fax (000) 000-0000
17
EXHIBIT 2.3 (a) TO
CREDIT AGREEMENT
REVOLVING NOTE
$3,000,000 October 3, 0000
Xxxxxxxxxxx, Xxxxxxxxx
FOR VALUE RECEIVED, XXXXX BROTHERS, INC., a corporation organized under the
laws of the State of Delaware ("PBI"), XXXXX BROTHERS ARIZONA, INC., an Arizona
corporation ("PBAI"), XXXXX BROTHERS DISTRIBUTING, INC., an Arizona corporation
("PBDI"), TEJAS PB DISTRIBUTING, INC., an Arizona corporation ("Tejas") and
WABASH FOODS, LLC, a Delaware limited liability company ("Wabash"), (PBI, PBAI,
PBDI, Tejas and Wabash each a Borrower and collectively the "Borrower" or the
"Borrowers"), hereby jointly and severally promise to pay to the order of U.S.
BANCORP REPUBLIC COMMERCIAL FINANCE, INC. (the "Lender") at its main office in
Minneapolis, Minnesota, in lawful money of the United States of America in
immediately available funds on the Revolving Maturity Date (as such term and
each other capitalized term used herein are defined in the Credit Agreement
hereinafter referred to) the principal amount of THREE MILLION DOLLARS AND NO
CENTS ($3,000,000) or, if less, the aggregate unpaid principal amount of all
Revolving Advances made by the Lender under the Credit Agreement, and to pay
interest (computed on the basis of actual days elapsed and a year of 360 days)
in like funds on the unpaid principal amount hereof from time to time
outstanding at the rates and times set forth in the Credit Agreement.
This note is the Revolving Note referred to in the Credit Agreement dated
as of October 3, 1999 (as the same may be hereafter from time to time amended,
restated or modified, the "Credit Agreement") between the undersigned and the
Lender. This note is secured, it is subject to certain permissive and mandatory
prepayments and its maturity is subject to acceleration, in each case upon the
terms provided in said Credit Agreement.
In the event of default hereunder, the undersigned agrees to pay all costs
and expenses of collection, including reasonable attorneys' fees. The
undersigned waives demand, presentment, notice of nonpayment, protest, notice of
protest and notice of dishonor.
1
THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS NOTE SHALL BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA WITHOUT GIVING EFFECT TO
THE CONFLICT OF LAWS PRINCIPLES THEREOF.
XXXXX BROTHERS, INC.
By
------------------------------------
Title
XXXXX BROTHERS ARIZONA, INC.
By
------------------------------------
Title
XXXXX BROTHERS DISTRIBUTING, INC.
By
------------------------------------
Title
TEJAS PB DISTRIBUTING, INC.
By
------------------------------------
Title
WABASH FOODS, LLC
By
------------------------------------
Title
2
EXHIBIT 2.3 (b) TO
CREDIT AGREEMENT
TERM NOTE A
$5,800,000 October 3, 0000
Xxxxxxxxxxx, Xxxxxxxxx
FOR VALUE RECEIVED, XXXXX BROTHERS, INC., a corporation organized under the
laws of the State of Delaware ("PBI"), XXXXX BROTHERS ARIZONA, INC., an Arizona
corporation ("PBAI"), XXXXX BROTHERS DISTRIBUTING, INC., an Arizona corporation
("PBDI"), TEJAS PB DISTRIBUTING, INC., an Arizona corporation ("Tejas") and
WABASH FOODS, LLC, a Delaware limited liability company ("Wabash"), (PBI, PBAI,
PBDI, Tejas and Wabash each a Borrower and collectively the "Borrower" or the
"Borrowers"), hereby jointly and severally promise to pay to the order of U.S.
BANCORP REPUBLIC COMMERCIAL FINANCE, INC. (the "Lender") at its main office in
Minneapolis, Minnesota, in lawful money of the United States of America in
immediately available funds, the principal amount of FIVE MILLION EIGHT HUNDRED
THOUSAND DOLLARS AND NO CENTS ($5,800,000), and to pay interest (computed on the
basis of actual days elapsed and a year of 360 days) in like funds on the unpaid
principal amount hereof from time to time outstanding at the rates and times set
forth in the Credit Agreement.
The principal hereof is payable in seventy-eight monthly installments, each
payment in the amount of $74,359, commencing on February 1, 2000 and the first
day of each month thereafter until July 1, 2006 when the remaining principal
balance and all accrued interest shall be payable.
This note is the Term Note A referred to in the Credit Agreement dated as
of October 3, 1999 (as the same may hereafter be from time to time amended,
restated or otherwise modified, the "Credit Agreement") between the undersigned
and the Lender. This note is secured and its maturity is subject to
acceleration, in each case upon the terms provided in said Credit Agreement.
In the event of default hereunder, the undersigned agrees to pay all costs
and expenses of collection, including reasonable attorneys' fees. The
undersigned waives demand, presentment, notice of nonpayment, protest, notice of
protest and notice of dishonor.
1
THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS NOTE SHALL BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA WITHOUT GIVING EFFECT TO
THE CONFLICT OF LAWS PRINCIPLES THEREOF.
XXXXX BROTHERS, INC.
By
------------------------------------
Title
XXXXX BROTHERS ARIZONA, INC.
By
------------------------------------
Title
XXXXX BROTHERS DISTRIBUTING, INC.
By
------------------------------------
Title
TEJAS PB DISTRIBUTING, INC.
By
------------------------------------
Title
WABASH FOODS, LLC
By
------------------------------------
Title
EXHIBIT 2.3 (c) TO
CREDIT AGREEMENT
TERM NOTE B
$350,000 October 3, 0000
Xxxxxxxxxxx, Xxxxxxxxx
FOR VALUE RECEIVED, XXXXX BROTHERS, INC., a corporation organized under the
laws of the State of Delaware ("PBI"), XXXXX BROTHERS ARIZONA, INC., an Arizona
corporation ("PBAI"), XXXXX BROTHERS DISTRIBUTING, INC., an Arizona corporation
("PBDI"), TEJAS PB DISTRIBUTING, INC., an Arizona corporation ("Tejas") and
WABASH FOODS, LLC, a Delaware limited liability company ("Wabash"), (PBI, PBAI,
PBDI, Tejas and Wabash each a Borrower and collectively the "Borrower" or the
"Borrowers"), hereby jointly and severally promise to pay to the order of U.S.
BANCORP REPUBLIC COMMERCIAL FINANCE, INC. (the "Lender") at its main office in
Minneapolis, Minnesota, in lawful money of the United States of America in
immediately available funds, the principal amount of THREE HUNDRED FIFTY
THOUSAND DOLLARS AND NO CENTS ($350,000), and to pay interest (computed on the
basis of actual days elapsed and a year of 360 days) in like funds on the unpaid
principal amount hereof from time to time outstanding at the rates and times set
forth in the Credit Agreement.
The principal hereof is payable in twelve monthly installments, each
payment in the amount of $29,166.67, commencing on April 30, 2000 and the last
day of each month thereafter until March 31, 2001 when the remaining principal
balance and all accrued interest shall be payable.
This note is the Term Note B referred to in the Credit Agreement dated as
of October 3, 1999 (as the same may hereafter be from time to time amended,
restated or otherwise modified, the "Credit Agreement") between the undersigned
and the Lender. This note is secured and its maturity is subject to
acceleration, in each case upon the terms provided in said Credit Agreement.
In the event of default hereunder, the undersigned agrees to pay all costs
and expenses of collection, including reasonable attorneys' fees. The
undersigned waives demand, presentment, notice of nonpayment, protest, notice of
protest and notice of dishonor.
1
THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS NOTE SHALL BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA WITHOUT GIVING EFFECT TO
THE CONFLICT OF LAWS PRINCIPLES THEREOF.
XXXXX BROTHERS, INC.
By
------------------------------------
Title
XXXXX BROTHERS ARIZONA, INC.
By
------------------------------------
Title
XXXXX BROTHERS DISTRIBUTING, INC.
By
------------------------------------
Title
TEJAS PB DISTRIBUTING, INC.
By
------------------------------------
Title
WABASH FOODS, LLC
By
------------------------------------
Title
2
