Exhibit 10.22
SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
THIS SECOND AMENDED AND RESTATED REVOLVING CREDIT
AGREEMENT (this "Agreement") is made and entered into this 18th day of June,
1997, by and between PM RESOURCES, INC., a Missouri corporation ("PM Resources")
and ZEMA CORPORATION, a Delaware corporation ("Zema," and collectively with PM
Resources referred to herein as the "Borrowers"), and FIRST BANK, a Missouri
state banking corporation ("Bank").
WITNESSETH:
WHEREAS, Borrowers presently have a joint and several
revolving credit loan from Bank in a present aggregate maximum principal amount
of up to Five Million Seven Hundred Thousand Dollars ($5,700,000.00), for a
period of time up to and including March 31, 1998, as extended thereafter in
Bank's discretion for subsequent one year periods, One Million Six Hundred
Thousand Dollars ($1,600,000.00) of which is subject to a Borrowing Base and the
remaining Four Million One Hundred Thousand Dollars ($4,100,000.00) of which is
a reducing revolving credit line from Bank; and
WHEREAS, Borrowers have requested an increase and extension of
such joint and several revolving credit loan facility from Bank in an aggregate
principal amount of up to Six Million Three Hundred Fifty Thousand Dollars
($6,350,000.00) for a period of time up to and including March 31, 1999, Three
Million Dollars ($3,000,000.00) of which shall be subject to a Borrowing Base
(as set forth herein) ("Facility A"), and the remaining Three Million Three
Hundred Fifty Thousand Dollars ($3,350,000.00) of which shall be a reducing
revolving credit line from Bank ("Facility B"); and
WHEREAS, Bank is willing to make said revolving credit loans
to Borrowers upon, and subject to, the terms, provisions and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby mutually promise and agree as follows:
SECTION 1. TERM.
The "Term" of this Agreement shall commence on the date hereof
and shall end on March 31, 1999, unless earlier terminated upon the occurrence
of an Event of Default under this Agreement, or unless subsequently extended by
Bank, in its sole discretion and without obligation to do so, pursuant to the
terms of Section 3.9 herein.
SECTION 2. DEFINITIONS.
In addition to the terms defined elsewhere in this Agreement
or in any Exhibit or Schedule hereto, when used in this Agreement, the following
terms shall have the following
meanings (such meanings shall be equally applicable to the singular and plural
forms of the terms used, as the context requires):
Account Debtor shall mean any Person who is and/or may become
obligated to either of the Borrowers under or on account of Accounts.
Accounts shall mean all trade accounts receivable of either of
the Borrowers which have been invoiced by such Borrower.
Amendment shall mean that certain Amendment to Deed of Trust
and Security Agreement dated as of the date hereof executed by PM Resources and
delivered to Bank pursuant to Section 4.1(c), as the same may be from time to
time amended.
Attorneys' Fees shall mean the reasonable value of the
services (and costs, charges and expenses related thereto) of the attorneys (and
all paralegals, secretaries, accountants and other staff employed by such
attorneys) employed by Bank (including, without limitation, attorneys and
paralegals who are employees of Bank) from time to time (i) in connection with
the negotiation, preparation, execution, delivery, administration and
enforcement of this Agreement and/or any of the other Transaction Documents,
(ii) to represent Bank in any litigation, contest, dispute, suit or proceeding,
or to commence, defend or intervene in any litigation, contest, dispute, suit or
proceeding, or to file any petition, complaint, answer, motion or other pleading
or to take any other action in or with respect to any litigation, contest,
dispute, suit or proceeding (whether instituted by Bank, either of the Borrowers
or any other Person and whether in bankruptcy or otherwise) in any way or
respect relating to any of the Collateral, any Third Party Collateral, this
Agreement or any of the other Transaction Documents, either of the Borrowers,
any Subsidiary of either of the Borrowers or any other Obligor, (iii) to
protect, collect, lease, sell, take possession of or liquidate any of the
Collateral or any Third Party Collateral, (iv) to attempt to enforce any
security interest in or other Lien upon any of the Collateral or any Third Party
Collateral or to give any advice with respect to such enforcement and (v) to
enforce any of Bank's rights to collect any of Borrowers' Obligations.
Bank's Commitment shall mean the sum of Bank's Facility A
Commitment plus Bank's Facility B Commitment.
Bank's Facility A Commitment shall have the meaning ascribed
thereto in Section 3.1(a).
Bank's Facility B Commitment shall have the meaning ascribed
thereto in Section 3.1(b).
Borrowers' Obligations shall mean any and all indebtedness
(principal, interest, fees and other amounts), liabilities and obligations of
either of the Borrowers to Bank evidenced by or arising under the Note, this
Agreement, the Security Agreements, any of the other Transaction Documents or
any other agreement, document or instrument heretofore, now or hereafter
executed and delivered by either of the Borrowers to Bank, in each case whether
now existing or hereafter arising, absolute or contingent, joint and/or several,
secured or unsecured, direct or indirect, expressed or implied in law,
contractual or tortious, liquidated or unliquidated, at law or in equity, or
otherwise, and whether created directly or acquired by Bank by
assignment or otherwise, and any and all costs of collection and/or Attorneys'
Fees incurred or to be incurred in connection therewith.
Borrowing Base shall have the meaning ascribed thereto in
Section 3.1(c).
Borrowing Base Certificate shall have the meaning ascribed
thereto in Section 3.1(d).
Borrowing Notice shall have the meaning ascribed thereto in
Section 3.2.
Business Day shall mean any day except a Saturday, Sunday or
legal holiday observed by Bank.
Capitalized Lease shall mean any lease which, in accordance
with Generally Accepted Accounting Principles consistently applied, is or should
be capitalized on the balance sheet of the lessee.
Code shall mean the Internal Revenue Code of 1986, as amended,
and any successor statute of similar import, together with the regulations
thereunder, in each case as in effect from time to time. References to sections
of the Code shall be construed to also refer to any successor sections.
Collateral shall mean any Property or assets of either of the
Borrowers which now or at any time hereafter secure the payment or performance
of any of Borrowers' Obligations.
Consolidated Current Assets shall mean all assets which, in
accordance with Generally Accepted Accounting Principles consistently applied,
should be classified as current assets on the consolidated balance sheet of
Guarantor and its Consolidated Subsidiaries, minus any intangible current
assets.
Consolidated Current Liabilities shall mean all liabilities
which, in accordance with Generally Accepted Accounting Principles consistently
applied, should be classified as current liabilities on the consolidated balance
sheet of Guarantor and its Consolidated Subsidiaries, including without
limitation, any current maturities of long term Indebtedness, but excluding the
balloon principal payment owed by Borrowers to Bank at maturity under Facility A
during the last year of the Term hereof, the balloon principal payment owed by
Borrowers to Bank at maturity under Facility B during the last year of the Term
hereof and the balloon principal payment owed by St. XXX Laboratories, Inc. to
Bank at maturity during the last year of the term thereof under its Amended and
Restated Revolving Credit Agreement dated of even date herewith. For the purpose
of this definition, $500,000.00 shall be deemed to be the current portion of
principal payable under Facility B at all times, whether or not such principal
balance is then outstanding.
Consolidated Funded Debt shall mean the sum of all borrowed
money Indebtedness of the Guarantor and its Consolidated Subsidiaries whether
classified as long term or short term on Guarantor's consolidated financial
statements prepared in accordance with Generally Accepted Accounting Principles
consistently applied but excluding at all times any Subordinated Debt.
Consolidated Subsidiary shall mean with respect to any Person
at any date, any Subsidiary or other entity the assets and liabilities of which
are or should be consolidated with those of such Person in its consolidated
financial statements as of such date in accordance with Generally Accepted
Accounting Principles consistently applied.
Consolidated Tangible Net Worth shall mean, at any date, the
sum of the consolidated stockholders' equities of Guarantor and its Consolidated
Subsidiaries plus all Subordinated Debt then outstanding, determined in
accordance with Generally Accepted Accounting Principles consistently applied,
less Guarantor's and such Subsidiaries' Intangible Assets as of such date. For
purposes of this definition, "Intangible Assets" shall mean the amount (to the
extent reflected in determining such stockholders' equity) of (i) all write-ups
in the book value of any asset owned by Guarantor or a Consolidated Subsidiary
of Guarantor resulting from a revaluation thereof subsequent to the date of this
Agreement and (ii) goodwill, unamortized debt discount and expense, unamortized
deferred charges, patents, trademarks, service marks, trade names, copyrights,
organizational and developmental expenses and other similar intangible items and
assets, all determined in accordance with Generally Accepted Accounting
Principles consistently applied.
Debt Service Coverage Ratio shall mean the sum of Guarantor's
and its Consolidated Subsidiaries net income, plus depreciation and
amortization, plus interest expense, all determined in accordance with Generally
Accepted Accounting Principles consistently applied for the twelve-month period
preceding the date of such calculation, divided by Guarantor's and its
Consolidated Subsidiaries' total required current maturities of long term
Indebtedness, determined upon the anticipated amount of such current maturities
of long term indebtedness to be paid by Guarantor and its Consolidated
Subsidiaries for the twelve-month period following the date of any such
calculation, and including, without limitation, an amount equal to $500,000.00,
which at all times for purposes of this definition shall be deemed to be the
current portion of principal payable on Facility B (but excluding the balloon
principal payment owed by Borrowers to Bank at maturity under Facility B during
the last year of the Term hereof, any principal amount outstanding under
Facility A and the balloon principal payment owed by St. XXX Laboratories, Inc.
to Bank at maturity during the last year of the term thereof under its Amended
and Restated Revolving Credit Agreement dated of even date herewith), plus
Guarantor's and its Consolidated Subsidiaries' interest expense, determined
based upon the actual amount of interest expense incurred by Guarantor and its
Consolidated Subsidiaries during the twelve-month period preceding the date of
any such calculation, and all determined in accordance with Generally Accepted
Accounting Principles consistently applied.
Deed of Trust shall mean that certain Deed of Trust and
Security Agreement dated September 9, 1993 made by PM Resources in favor of
Xxxxxxxxx X. Xxxxxx as trustee for Bank pursuant to Section 6, as amended by a
First Amendment to Deed of Trust and Security Agreement dated as of December 21,
1994, by a Second Amendment to Deed of Trust and Security Agreement dated as of
July 14, 1995 and by the Amendment, and as the same may from time to time be
further amended.
Default shall mean any event or condition the occurrence of
which would, with the lapse of time or the giving of notice or both, become an
Event of Default as defined in Section 8 hereof.
Distribution in respect of any corporation shall mean:
(a) dividends or other distributions on capital stock of the corporation;
and
(b) the redemption, repurchase or other acquisition of such stock or of
warrants, rights or other options to purchase such stock (except when solely in
exchange for such stock).
Eligible Accounts shall mean all Accounts other than: (a)
Accounts which remain unpaid for more than ninety (90) days after their invoice
dates and Accounts which are not due and payable within ninety (90) days after
their invoice dates; (b) Accounts owing by a single Account Debtor, including a
currently scheduled Account, if ten percent (10%) or more of the balance owing
by said Account Debtor upon said Accounts is ineligible pursuant to clause (a)
above; (c) Accounts with respect to which the Account Debtor is a shareholder or
partner of either of the Borrowers or a Related Party of either of the
Borrowers; (d) Accounts with respect to which payment by the Account Debtor is
or may be conditional; (e) Accounts with respect to which the Account Debtor is
not a resident or citizen of or otherwise located in the continental United
States of America; (f) Accounts with respect to which the Account Debtor is the
United States of America or any department, agency or instrumentality thereof
unless such Accounts are duly assigned to Bank in accordance with all applicable
governmental and regulatory rules and regulations (including, without
limitation, the Federal Assignment of Claims Act of 1940, as amended, if
applicable) so that Bank is recognized by the Account Debtor to have all of the
rights of an assignee of such Accounts; (g) Accounts with respect to which
either of the Borrowers is or may become liable to the Account Debtor for goods
sold or services rendered by such Account Debtor to either such Borrower; (h)
Accounts with respect to which the goods giving rise thereto have not been
shipped and delivered to and accepted as satisfactory by the Account Debtor
thereof or with respect to which the services performed giving rise thereto have
not been completed and accepted as satisfactory by the Account Debtor thereof;
(i) Accounts which are not invoiced (and dated as of such date) and sent to the
Account Debtor thereof concurrently with or not later than five (5) days after
the shipment and delivery to and acceptance by said Account Debtor of the goods
giving rise thereto or the performance of the services giving rise thereto; (j)
Accounts arising from a "sale on approval" or a "sale or return;" (k) Accounts
as to which Bank, at any time or times hereafter, determines, in good faith,
that the prospects of payment or performance by the Account Debtor is or will be
impaired; (l) Accounts of an Account Debtor to the extent, but only to the
extent, that the same exceed a credit limit determined by Bank in its
discretion, at any time or times hereafter; (m) Accounts with respect to which
the Account Debtor is located in the State of New Jersey or the State of
Minnesota; provided, however, that such restriction shall not apply if such
Borrower (i) has filed and has effective (A) in respect of Account Debtors
located in the State of New Jersey, a Notice of Business Activities Report with
the New Jersey Division of Taxation for the then current year or (B) in respect
of Account Debtors located in the State of Minnesota, a Minnesota Business
Activity Report with the Minnesota Department of Revenue for the then current
year, as applicable, or (ii) is otherwise exempt from such reporting
requirements under the laws of such State(s); and (n) Accounts which are not
subject to a first priority perfected security interest in favor of Bank.
Eligible Chow Inventory shall mean all Inventory of PM
Resources, valued at the lower of cost or current market value on an average
cost basis, which consists of prepackaged chow ingredient with respect to which
no further processing is necessary for the sale thereof, other than (a) any such
Inventory which is obsolete, (b) Inventory which is not in good condition or
does not comply with all standards imposed by any governmental authority having
regulatory authority over such goods or their manufacture, use or sale, or
Inventory which Bank has in good faith determined, in accordance with Bank's
customary business practices, is otherwise unacceptable due to age, type,
category and/or quantity, (c) Inventory which is held on consignment or consists
of experimental products or products not yet proven commercially viable by
reason of a significant number of purchase orders, or Inventory held for
promotional purposes and as samples, or Inventory returned due to defects or
product warranty problems, (d) Inventory which is not maintained at one of the
places of business and/or locations provided in the Security Agreement executed
by PM Resources, (e) Inventory not either usable or saleable, at prices not less
than the standard cost, in the ordinary course of PM Resources' business, or (f)
Inventory which is not subject to a first priority perfected security interest
in favor of Bank.
Eligible Non-Chow Inventory shall mean all Inventory of PM
Resources, valued at the lower of cost or current market value on an average
cost basis, which consists of unprocessed raw materials, other than (a)
Inventory which is Eligible Chow Inventory, (b) Inventory which is obsolete, (c)
Inventory which is not in good condition or does not comply with all standards
imposed by any governmental authority having regulatory authority over such
goods or their manufacture, use or sale, or Inventory which Bank has in good
faith determined, in accordance with Bank's customary business practices, is
otherwise unacceptable due to age, type, category and/or quantity, (d) Inventory
which is held on consignment or consists of experimental products or products
not yet proven commercially viable by reason of a significant number of purchase
orders, or Inventory held for promotional purposes and as samples, or Inventory
returned due to defects or product warranty problems, (e) Inventory which is not
maintained at one of the places of business and/or locations provided in the
Security Agreement executed by PM Resources, (f) Inventory not either usable or
saleable, at prices not less than the standard cost, in the ordinary course of
PM Resources' business, or (g) Inventory which is not subject to a first
priority perfected security interest in favor of Bank.
Eligible Zema Inventory shall mean all Inventory of Zema,
valued at the lower of cost or current market value on an average cost basis,
which consists of unprocessed raw materials, packaging materials and finished
goods with respect to which no further processing is necessary for the sale
thereof, other than (a) any such Inventory which is obsolete, (b) Inventory
which is not in good condition or does not comply with all standards imposed by
any governmental authority having regulatory authority over such goods or their
manufacture, use or sale, or Inventory which Bank has in good faith determined,
in accordance with Bank's customary business practices, is otherwise
unacceptable due to age, type, category and/or quantity, (c) Inventory which is
held on consignment or consists of experimental products or products not yet
proven commercially viable by reason of a significant number of purchase orders,
or Inventory held for promotional purposes and as samples, or Inventory returned
due to defects or product warranty problems, (d) Inventory which is not
maintained at one of the places of business and/or locations provided in the
Security Agreement executed by Zema, (e) Inventory not either useable or
saleable, at prices not less than the standard cost, in the ordinary
course of Zema's business, or (f) Inventory which is not subject to a first
priority perfected security interest in favor of Bank.
Environmental Laws shall mean the Resource Conservation and
Recovery Act of 1987, the Comprehensive Environmental Response, Compensation and
Liability Act, any so-called "Superfund" or "Superlien" law, the Toxic
Substances Control Act and any other Federal, state or local statute, law,
ordinance, code, rule, regulation, order or decree regulating, relating to or
imposing liability or standards of conduct concerning any Hazardous Materials or
any other hazardous, toxic or dangerous waste, substance or constituent or other
substance, whether solid, liquid or gas, as now or at any time hereafter in
effect.
Environmental Lien shall have the meaning ascribed thereto in
Section 7.1(k)(vii).
ERISA shall mean the Employee Retirement Income Security Act
of 1974, as amended, and any successor statute of similar import, together with
the regulations thereunder, in each case as in effect from time to time.
References to sections of ERISA shall be construed to also refer to any
successor sections.
ERISA Affiliate shall mean any corporation, trade or business
that is, along with either of the Borrowers, a member of a controlled group of
corporations or a controlled group of trades or businesses, as described in
Sections 414(b) and 414(c), respectively, of the Code.
Event of Default shall have the meaning ascribed thereto in
Section 8.
Facility A shall have the meaning ascribed thereto in the
recitals to this Agreement.
Facility A Loan shall have the meaning ascribed thereto in
Section 3.1(a).
Facility B shall have the meaning ascribed thereto in the
recitals to this Agreement.
Facility B Loan shall have the meaning ascribed thereto in
Section 3.1(b).
Facility Fee shall have the meaning ascribed thereto in
Section 3.8.
Floating Rate Margin shall mean One Fourth of One Percent
(0.25%) up to and including August 31, 1997, and thereafter, commencing on the
first day of the second month following each fiscal quarter-end or fiscal
year-end, the "Floating Rate Margin" shall (based upon the Guarantor's ratio of
consolidated Indebtedness to Consolidated Tangible Net Worth as of the end of
the immediately preceding quarter (or fiscal year) determined by reference to
the Guarantor's quarter-end (or fiscal year-end) financial statements for such
preceding fiscal quarter-end (or fiscal year-end)), (i.e., for the period
beginning September 1, 1997 by referencing the Guarantor's July 31, 1997 fiscal
quarter-end financial statements), mean the following:
(i) One-Half of One Percent (0.50%), if the
Guarantor's ratio of consolidated Indebtedness to Consolidated
Tangible Net Worth shall be greater than or equal to 2.0 to 1.0 as
determined pursuant to Section 5.1(I) of the Guaranty by reference to
the Guarantor's most recent quarter-end (or fiscal year-end) financial
statements,
(ii) One-Fourth of One Percent (0.25%), if the
Guarantor's ratio of consolidated Indebtedness to Consolidated Tangible
Net Worth shall be less than 2.0 to 1.0 but greater than or equal to
1.5 to 1.0 as determined pursuant to Section 5.1(I) of the Guaranty by
reference to the Guarantor's most recent quarter-end (or fiscal
year-end) financial statements,
(iii) Zero Percent (0.00%), if the Guarantor's ratio
of consolidated Indebtedness to Consolidated Tangible Net Worth shall
be less than 1.5 to 1.0 but greater than or equal to 1.0 to 1.0 as
determined pursuant to Section 5.1(I) of the Guaranty by reference to
the Guarantor's most recent quarter-end (or fiscal year-end) financial
statements, and
(iv) Negative One-Fourth of One Percent (-0.25%), if
the Guarantor's ratio of consolidated Indebtedness to Consolidated
Tangible Net Worth shall be less than 1.0 to 1.0 as determined pursuant
to Section 5.1(I) of the Guaranty by reference to the Guarantor's most
recent quarter-end (or fiscal year-end) financial statements,
The interest rate on any Prime Loan shall be adjusted automatically on and as of
the effective date of any change in the Floating Rate Margin pursuant to this
definition.
Generally Accepted Accounting Principles shall mean such
accounting principles as, in the opinion of the "big six" accounting firm
regularly retained by Guarantor and Borrowers, conform at the time to generally
accepted accounting principles consistently applied, except that with respect to
the financial statements and reports of each of the Borrowers, such financial
statements and reports shall not be required to separately report the accrual of
income taxes on each such Borrower's financial statements and shall not include
footnotes, and with respect to the interim financial statements only of
Guarantor, may not include footnotes.
Guarantee by any Person shall mean any obligation, contingent
or otherwise, of such Person guaranteeing any Indebtedness of any other Person
or in any manner providing for the payment of any Indebtedness of any other
Person or otherwise protecting the holder of such Indebtedness against loss
(whether by agreement to keep-well, to purchase assets, goods, securities or
services, or to take-or-pay or otherwise); provided that the term Guarantee
shall not include endorsements for collection or deposit in the ordinary course
of business. The term "guarantee" used as a verb shall have a correlative
meaning.
Guarantor shall mean Agri-Nutrition Group Limited, a Delaware
corporation, and its successors and assigns.
Guaranty shall mean that certain Unlimited Continuing Guaranty
dated the date hereof and executed by Agri-Nutrition Group Limited, a Delaware
corporation, in favor of Bank, as the same may from time to time be amended.
Hazardous Materials shall mean any hazardous substance or
pollutant or contaminant defined as such in (or for the purposes of) any
Environmental Law and shall include, without limitation, petroleum, including
crude oil or any fraction thereof which is liquid at standard conditions of
temperature or pressure (60 degrees fahrenheit and 14.7 pounds per square inch
absolute), any radioactive material, including, without limitation, any source,
special nuclear or byproduct material as defined in 42 U.S.C. Section 2011 et
seq., as amended or hereafter amended, and asbestos in any form or condition.
Indebtedness of any Person shall mean and include, without
duplication, any and all indebtedness, liabilities and obligations of such
Person which in accordance with Generally Accepted Accounting Principles
consistently applied are or should be classified upon a balance sheet of such
Person as liabilities of such Person, and in any event shall include all (i)
obligations of such Person for borrowed money or which have been incurred in
connection with the acquisition of Property, (ii) obligations secured by any
Lien or other charge upon any Property owned by such Person, provided that if
such Person has not assumed or become liable for the payment of such
obligations, such obligations shall still be included in Indebtedness but the
determination of the amount of Indebtedness evidenced by such obligations shall
be limited to the book value of such Property, (iii) obligations created or
arising under any conditional sale or other title retention agreement with
respect to any Property acquired by such Person, provided that if the rights and
remedies of the seller, lender or lessor in the event of default under such
agreement are limited solely to repossession or sale of such Property, such
obligations shall still be included in Indebtedness but the determination of the
amount of Indebtedness evidenced by such obligations shall be limited to the
book value of such Property, (iv) all Guarantees and other contingent
indebtedness, liabilities and obligations of such Person, but only to the extent
any such contingent indebtedness, liabilities and obligations are, in accordance
with Generally Accepted Accounting Principles consistently applied, required to
be accrued as a liability on the balance sheet of such Person and (v) all
obligations of such Person as lessee under any Capitalized Lease.
For the purpose of computing the "Indebtedness" of any Person,
there shall be excluded any particular Indebtedness to the extent that, upon or
prior to the maturity thereof, there shall have been deposited with the proper
depositary in trust the necessary funds (or evidences of such Indebtedness) for
the payment, redemption or satisfaction of such Indebtedness; and thereafter
such funds and evidences of Indebtedness so deposited shall not be included in
any computation of the assets of such Person.
Interest Period shall mean with respect to each Treasury Rate
Loan:
(i) Initially, the period commencing on the date of
such Treasury Rate Loan and ending 1 or 2 years thereafter as Borrowers
may elect in the applicable Borrowing Notice; and
(ii) Thereafter, each period commencing on the last
day of the next preceding Interest Period applicable to such Treasury
Rate Loan and ending 1 or 2 years thereafter as Borrowers may elect
pursuant to Section 3.2(iv);
provided that:
(iii) Subject to clause (iv) below, if any Interest
Period would otherwise end on a day which is not a Business Day, such
Interest Period shall end on the immediately succeeding Business Day;
(iv) No Interest Period with respect to any Treasury
Rate Loan shall extend beyond the last day of the Term hereof.
Inventory shall mean all inventory of each of the Borrowers
valued at the lower of cost or market.
Lien shall mean any interest in Property securing an
obligation owed to, or a claim by, a Person other than the owner of the
Property, whether such interest is based on common law, statute or contract,
including, without limitation, any security interest, mortgage, deed of trust,
pledge, hypothecation, judgment lien or other lien or encumbrance of any kind or
nature whatsoever, any conditional sale or trust receipt and any lease,
consignment or bailment for security purposes. The term "Lien" shall include
reservations, exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases and other title exceptions and encumbrances
affecting Property.
Loan shall mean each Facility A Loan and Facility B Loan, and
Loans shall mean any or all of the foregoing, whether made as a Prime Loan or a
Treasury Rate Loan.
Multiemployer Plan shall mean a "multi-employer plan" as
defined in Section 4001(a)(3) of ERISA which is maintained for employees of
either of the Borrowers, any ERISA Affiliate or any Subsidiary of either of the
Borrowers.
Note shall mean the Revolving Credit Note of Borrowers to be
executed and delivered to Bank pursuant to Section 3.2, as the same may from
time to time be amended, modified, extended or renewed.
Obligor shall mean each of the Borrowers, the Guarantor and
each other Person who is or shall at any time hereafter become primarily or
secondarily liable on any of Borrowers' Obligations or who grants Bank a Lien
upon any of the Property or assets of such Person as security for any of
Borrowers' Obligations.
Occupational Safety and Health Laws shall mean the
Occupational Safety and Health Act of 1970, as amended, and any other Federal,
state or local statute, law, ordinance, code, rule, regulation, order or decree
regulating, relating to or imposing liability or standards of conduct concerning
employee health and/or safety, as now or at any time hereafter in effect.
PBGC shall mean the Pension Benefit Guaranty Corporation and
any entity succeeding to any or all of its functions under ERISA.
Pension Plan shall mean a "pension plan," as such term is
defined in Section 3(2) of ERISA, which is established or maintained by either
of the Borrowers, any ERISA Affiliate or any Subsidiary of either of the
Borrowers, other than a Multiemployer Plan.
Person shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, institution, entity or government (whether national, Federal,
state, county, city, municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof).
Pledge Agreement shall mean that certain Agreement of Pledge
(Third Party) executed by Agri-Nutrition Group Limited, a Delaware corporation,
and delivered to Bank pursuant to Section 5.3, as the same may from time to time
be amended, pursuant to which Agri-Nutrition Group Limited has pledged to Bank
all of the issued and outstanding shares of capital stock in each of the
Borrowers.
Prime Loan shall mean any Loan bearing interest at the Prime
Rate plus Floating Rate Margin in effect on any day.
Prime Rate shall mean the interest rate announced from time to
time by Bank as its "prime rate" on commercial loans (which rate shall fluctuate
as and when said prime rate shall change).
Property shall mean any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible. Properties
shall mean the plural of Property. For purposes of this Agreement, each of the
Borrowers and each Subsidiary of either of the Borrowers shall be deemed to be
the owner of any Property which it has acquired or holds subject to a
conditional sale agreement, financing lease or other arrangement pursuant to
which title to the Property has been retained by or vested in some other Person
for security purposes.
Related Party shall mean any Person (i) which directly or
indirectly through one or more intermediaries controls, or is controlled by or
is under common control with, either of the Borrowers or any Subsidiary of
either of the Borrowers, (ii) which beneficially owns or holds ten percent (10%)
or more of the equity interest of either of the Borrowers, (iii) ten percent
(10%) or more of the equity interest of which is beneficially owned or held by
either of the Borrowers or a Subsidiary of either of the Borrowers, or (iv) who
is a director, officer or employee of either of the Borrowers or a Subsidiary of
either of the Borrowers, but the term "Related Party" shall specifically exclude
Durvet/PMR, L.P. and its general partner, Durvet, Inc. The term "control" shall
mean the possession, directly or indirectly, of the power to vote ten percent
(10%) or more of the capital stock of any Person or the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
Reportable Event shall have the meaning given to such term in
ERISA.
Security Agreements shall mean the Security Agreement executed
by PM Resources and the Security Agreement executed by Zema, each delivered to
Bank pursuant to Section 5.1, as the same may from time to time be amended, and
Security Agreement shall mean either of them.
Subordinated Debt shall mean all borrowed money Indebtedness
of either of the Borrowers which has been duly subordinated by the lender
thereof to Borrowers' Indebtedness and obligations to Bank hereunder and under
the other Transaction Documents pursuant to a subordination agreement acceptable
to Bank.
Subordination Agreement shall mean that certain Subordination
and Standby Agreement dated as of July 14, 1995 and executed by Agri-Nutrition
Group Limited, a Delaware corporation, in favor of Bank, subordinating any and
all present and future indebtedness of either of the Borrowers to Agri-Nutrition
Group Limited to any and all present and future indebtedness of Borrowers to
Bank, as the same may from time to time be amended.
Subsidiary shall mean, with respect to any Person, any
corporation of which fifty percent (50%) or more of the issued and outstanding
capital stock entitled to vote for the election of directors (other than by
reason of default in the payment of dividends) is at the time owned directly or
indirectly by such Person.
Term shall have the meaning ascribed thereto in Section 1.
Third Party Collateral shall mean any Property or assets of
any Obligor other than a Borrower which now or at any time hereafter secure the
payment or performance of any of Borrowers' Obligations.
Transaction Documents shall mean this Agreement, the Note, the
Security Agreements, the Deed of Trust, the Pledge Agreement and all other
agreements, documents and instruments heretofore, now or hereafter delivered to
Bank with respect to or in connection with or pursuant to this Agreement, any
Loans made hereunder or any other of Borrowers' Obligations, and executed by or
on behalf of either of the Borrowers, all as the same may from time to time be
amended, modified, extended or renewed.
Treasury Margin shall mean Two and One-Fourth Percent (2.25%)
up to and including August 31, 1997, and thereafter, commencing on the first day
of the second month following each fiscal quarter-end or fiscal year-end, the
"Treasury Margin" shall, based upon the Guarantor's ratio of consolidated
Indebtedness to Consolidated Tangible Net Worth as of the end of the immediately
preceding quarter (or fiscal year) determined by reference to the Guarantor's
quarter-end (or fiscal year-end) financial statements for such preceding fiscal
quarter-end or fiscal year-end, (i.e., for the period beginning September 1,
1997 by referencing the Guarantor's July 31, 1997 fiscal quarter-end financial
statements), mean the following:
(i) Two and Three-Fourths Percent (2.75%) if the
Guarantor's ratio of consolidated Indebtedness to Consolidated Tangible
Net Worth shall be greater than or equal to 2.0 to 1.0 as determined
pursuant to Section 5.1(I) of the Guaranty by reference to the
Guarantor's most recent quarter-end (or fiscal year-end) financial
statements,
(ii) Two and One-Half Percent (2.50%), if the
Guarantor's ratio of consolidated Indebtedness to Consolidated Tangible
Net Worth shall be less than 2.0 to 1.0 but greater than or
equal to 1.5 to 1.0 as determined pursuant to Section 5.1(I) of the
Guaranty by reference to the Guarantor's most recent quarter-end (or
fiscal year-end) financial statements,
(iii) Two and One-Fourth Percent (2.25%), if the
Guarantor's ratio of consolidated Indebtedness to Consolidated Tangible
Net Worth shall be less than 1.5 to 1.0 but greater than or equal to
1.0 to 1.0 as determined pursuant to Section 5.1(I) of the Guaranty by
reference to the Guarantor's most recent quarter-end (or fiscal
year-end) financial statements, and
(iv) Two Percent (2.00%), if the Guarantor's ratio of
consolidated Indebtedness to Consolidated Tangible Net Worth shall be
less than 1.0 to 1.0 as determined pursuant to Section 5.1(I) of the
Guaranty by reference to the Guarantor's most recent quarter-end (or
fiscal year-end) financial statements,
The Treasury Margin shall be determined for each Treasury Rate Loan for its
Interest Period as of the date two (2) Business Days after the receipt by Bank
of the Borrowing Notice required by Section 3.2. All changes in the Treasury
Margin shall be effective from the date of determination pursuant to this
definition for any new Treasury Rate Loan or new Interest Period commencing on
or after such date and shall not be retroactively applied.
Treasury Rate shall mean the interest rate per annum equal to
the Treasury Yield for an Interest Period selected by Borrowers in the
applicable Borrowing Notice, plus the Treasury Margin applicable from time to
time during such Interest Period.
Treasury Rate Loan shall mean a Facility B Loan in an original
principal amount of not less than $500,000.00 which bears interest at the
applicable Treasury Rate for an Interest Period applicable to such Facility B
Loan as selected by Borrowers in a Borrowing Notice.
Treasury Yield shall mean the prevailing U.S. Treasury Note
yield-to-maturity for actively traded U.S. Treasury Notes having maturities most
closely equal to the Interest Period selected by Borrowers in the applicable
Borrowing Notice for a Treasury Rate Loan, determined by Bank, in its sole
discretion, by reference to the most recent Federal Reserve Statistical Release
H.15 (519) that has become publicly available prior to such date of
determination (or if such Release is unavailable, by any other publicly
available source of similar market data selected by Bank in its sole
discretion). The Treasury Yield shall be computed to the fifth decimal place
(one one-thousandth of a percentage point) and then rounded to the fourth
decimal place (one one-hundredth of a percentage point).
SECTION 3. THE LOANS.
3.1 Commitment of Bank.
(a) Facility A. Subject to the terms and conditions hereof, during the
Term of this Agreement, Bank hereby agrees to make such loans (individually, a
"Facility A Loan" and collectively, the "Facility A Loans") to Borrowers,
jointly and severally, as either
of the Borrowers may from time to time request pursuant to Section 3.2. The
maximum aggregate principal amount which Bank, cumulatively, may be required to
have outstanding under this Facility A at any one time shall not exceed the
lesser of (i) Three Million Dollars ($3,000,000.00), or (ii) the Borrowing Base
(as hereinafter defined). This commitment of Bank is herein sometimes referred
to as the "Bank's Facility A Commitment." Subject to the terms and conditions
hereof, Borrowers may jointly and severally borrow, repay and reborrow such sums
from Bank, provided, however, that the aggregate principal amount of all
Facility A Loans outstanding hereunder at any one time shall not exceed Bank's
Facility A Commitment.
(b) Facility B. Subject to the terms and conditions hereof, during the
Term of this Agreement, Bank hereby agrees to make such loans (individually, a
"Facility B Loan" and collectively, the "Facility B Loans") to Borrowers,
jointly and severally, as either of the Borrowers may from time to time request
pursuant to Section 3.2. The aggregate principal amount of Facility B Loans
which Bank, cumulatively, shall be required to have outstanding hereunder at any
one time shall not exceed Three Million Three Hundred Fifty Thousand Dollars
($3,350,000.00) from the date hereof until August 31, 1997, which amount shall
thereafter be reduced by One Hundred Twenty-Five Thousand Dollars ($125,000.00)
on each February 28, May 31, August 31 and November 30, with the first such
reduction on August 31, 1997. This commitment of Bank is herein sometimes
referred to as the "Bank's Facility B Commitment." Subject to the terms and
conditions hereof, Borrowers may jointly and severally borrow, repay and
reborrow such sums from Bank, provided, however, that the aggregate principal
amount of all Facility B Loans outstanding under Bank's Facility B Commitment at
any one time shall not exceed Bank's Facility B Commitment then available
hereunder. Bank and Borrowers agree that all Loans outstanding under this
Agreement shall first be made under Facility B up to the Bank's Facility B
Commitment, and then shall be made under Facility A, and all principal payments
shall be applied, first to the outstanding principal under Facility A until paid
in full, and then to the outstanding principal under Facility B.
(c) Borrowing Base. For purposes of computing the amount of the
Bank's Facility A Commitment, the "Borrowing Base" shall mean the sum of:
(i) Seventy-Five Percent (75%) of the face amount
of Eligible Accounts of each of the Borrowers, plus
(ii) Fifty Percent (50%) of the Eligible Non-Chow
Inventory of PM Resources, plus
(iii) Sixty Percent (60%) of the Eligible Chow Inventory of PM
Resources, plus
(iv) Thirty-Five Percent (35%) of the Eligible Zema
Inventory
(d) Borrowing Base Certificate. Borrowers shall deliver to Bank on
the date of execution hereof (with respect to the month ended May 31, 1997) and
on the twenty-first (21st) day of each month thereafter, commencing in the month
of July, 1997, a borrowing base certificate in the form of Exhibit A attached
hereto and incorporated herein by reference (a "Borrowing Base Certificate")
setting forth:
(i) the Borrowing Base and its components as of the
end of the immediately preceding month;
(ii) the aggregate principal amount of all outstanding
Facility A Loans;
(iii) the difference, if any, between the Borrowing
Base and the aggregate principal amount of all outstanding Facility A
Loans; and
(iv) the maximum available principal amount and the
aggregate principal amount of all outstanding Facility B Loans.
The Borrowing Base shown in such Borrowing Base Certificate shall be and remain
the Borrowing Base hereunder until the next Borrowing Base Certificate is
delivered to Bank, at which time the Borrowing Base shall be the amount shown in
such subsequent Borrowing Base Certificate. Each Borrowing Base Certificate
shall be certified (subject to normal year-end adjustments) as to truth and
accuracy by the President, principal financial officer or controller of each of
the Borrowers.
(e) Mandatory Repayments - Facility A. If at any time the Borrowing
Base as shown on the most recent Borrowing Base Certificate should be less than
the aggregate principal amount of all outstanding Facility A Loans, Borrowers
shall be automatically required (without demand or notice of any kind by Bank,
all of which are hereby expressly waived by Borrowers) jointly and severally to
immediately repay the Facility A Loans in an amount sufficient to reduce such
aggregate principal amount of outstanding Facility A Loans to the amount of the
Borrowing Base.
(f) Mandatory Repayments - Facility B. Commencing with the first
such principal reduction on August 31, 1997, on each February 28, May 31, August
31 and November 30 during the Term of this Agreement, Borrowers shall jointly
and severally pay to Bank in immediately available funds an amount equal to the
difference between Bank's Facility B Commitment (as reduced on such date
pursuant to the terms of Section 3.1(b) above) and the aggregate principal
amount of all Facility B Loans then outstanding. In the event any such mandatory
repayment shall be due on a day which is not a Business Day, then such payment
shall be due on the immediately preceding Business Day. Such mandatory payments
shall be applied first to the outstanding Facility B Loans which are Prime
Loans, and second to Facility B Loans which are Treasury Rate Loans, provided,
however, that any such repayment of Treasury Rate Loans made on any date other
than the last day of the applicable Interest Period for such Treasury Rate Loan
shall be subject to payment jointly and severally by Borrowers of the amounts
due under Section 3.7 below.
3.2 Procedure for Borrowing. Subject to the terms and
conditions hereof, Bank shall cause the Loans to be made to Borrowers, and shall
convert outstanding Prime Loans under Facility B to Treasury Rate Loans or vice
versa, at any time and from time to time during the Term of this Agreement upon
timely prior oral or written notice ("Borrowing Notice") from either of the
Borrowers to Bank specifying:
(i) the desired amount of the Facility A Loan or
Facility B Loan, which in the case of a Treasury Rate Loan under
Facility B shall be in a principal amount of at least Five Hundred
Thousand Dollars ($500,000.00);
(ii) whether such Loan shall be a new Loan under
Facility A or Facility B, or a conversion of all or a portion of any
presently outstanding Facility B Loan from the Prime Rate to the
Treasury Rate, or vice versa;
(iii) if a new Loan under Facility B, whether such
Loan is to be a Prime Loan or a Treasury Rate Loan;
(iv) in the case of a Treasury Rate Loan, the
duration of the Interest Period applicable thereto, subject to the
provisions of the definition of Interest Period;
(v) the date on which the proceeds of any new Loan
are to be made available to either of the Borrowers or the date on
which the new interest rate is to take effect for any outstanding
Facility B Loan being converted by Borrowers, which shall be a Business
Day;
(vi) that on the date of, and after giving effect to,
such Loan, no Default or Event of Default under this Agreement has
occurred and is continuing; and
(vii) that on the date of, and after giving effect
to, such Loan, all of the representations and warranties of Borrowers
contained in this Agreement are true and correct in all material
respects as if made on the date of such Loan.
A Borrowing Notice shall not be required in connection with a Prime Loan made to
cover any overdraft in PM Resources' operating account on a day-to-day basis as
set forth herein. A Borrowing Notice, if in writing, shall be in the form of the
notice attached hereto as Exhibit B. Each Borrowing Notice must be received by
Bank not later than 10:00 a.m. (St. Louis time) on the Business Day on which a
Prime Loan is to be established, or not later than 10:00 a.m. (St. Louis time)
on the third (3rd) Business Day prior to the Business Day on which a Treasury
Rate Loan is to be established. A Borrowing Notice shall not be revocable by
Borrowers. Subject to the terms and conditions hereof, provided that Bank has
received the Borrowing Notice, Bank shall (unless Bank determines that any
applicable condition specified in Section 4 has not been satisfied) pay to
Borrowers, or either of them, the Loan proceeds of any new Loan in immediately
available funds not later than 2:00 p.m. (St. Louis time) on the Business Day
specified in said Borrowing Notice. In the event Borrowers shall fail to provide
a new Borrowing Notice with respect to any Treasury Rate Loan on or before the
third (3rd) Business Day prior to the end of any Interest Period pertaining
thereto, then Borrowers shall have deemed to elect to convert such Treasury Rate
Loan on the last day of its Interest Period then expiring to a Prime Loan. Each
of the Borrowers hereby authorizes Bank to reasonably rely on
telephonic, telegraphic, telecopy, telex or written instructions of any person
identifying himself as a person authorized to request a Loan or make a repayment
hereunder, and on any signature which Bank believes to be genuine, and Borrowers
shall be bound thereby in the same manner as if such person were actually
authorized or such signature were genuine. Borrowers further request and
authorize Bank, in Bank's sole and absolute discretion, to make a Prime Loan to
Borrowers hereunder at the end of each day in which Borrowers shall have an
overdraft (negative ledger balance) in PM Resources' operating account (Account
No. 9800802535) with Bank after crediting all deposits received in immediately
available funds and debiting all withdrawals made and checks presented against
such account and honored by Bank as of such date, which Prime Loan shall be in
the amount of such overdraft without any other request or authorization therefor
from Borrowers and without notice to Borrowers. Similarly, Borrowers request
that Bank apply any collected balances in excess of a mutually predetermined
amount remaining at the end of any day in PM Resources' operating account to the
repayment of the principal balance of Borrowers' Obligations outstanding as
Prime Loans under the Note. Borrowers also hereby agree jointly and severally to
indemnify Bank and hold Bank harmless from and against any and all claims,
demands, damages, liabilities, losses, costs and expenses (including, without
limitation, Attorneys' Fees) relating to or arising out of or in connection with
the acceptance of instructions for making Loans or repayments hereunder.
Contemporaneously with the execution of this Agreement, Borrowers shall execute
and deliver to Bank a Note of Borrowers dated the date hereof and payable
jointly and severally to the order of Bank in the original principal amount of
Six Million Three Hundred Fifty Thousand Dollars ($6,350,000.00) in the form
attached hereto as Exhibit C and incorporated herein by reference (as the same
may from time to time be amended, modified, extended or renewed, the "Note").
3.3 Interest Rates.
(a) Each Facility A Loan shall bear interest prior to maturity at a rate
per annum equal to the Prime Rate plus Floating Rate Margin, each in effect from
time to time during the period when such Loan is outstanding, with changes in
the interest rate taking effect on the date a change in the Floating Rate Margin
occurs pursuant to the definition thereof or the date a change in the Prime Rate
is made effective generally by Bank.
(b) Each Facility B Loan shall bear interest prior to
maturity at a rate per annum equal to such of the following as either of the
Borrowers shall select in the applicable Borrowing Notice to Bank:
(i) the Prime Rate plus Floating Rate Margin, each in
effect from time to time during the period when such Facility B Loan is
outstanding, with changes in the interest rate taking effect on the
date a change in the Floating Rate Margin occurs pursuant to the
definition thereof or the date a change in the Prime Rate is made
effective generally by Bank; or
(ii) the Treasury Rate applicable for an Interest
Period selected by either such Borrower for such Facility B Loan in the
Borrowing Notice applicable for such Facility B Loan.
(c) From and after the maturity of the Note, whether by reason of
acceleration or otherwise, the entire unpaid principal balance of each Loan
shall bear interest, payable upon demand, until paid at a rate per annum equal
to Three and One-Half Percent (3.50%) over and above the Prime Rate, fluctuating
as aforesaid.
(d) Interest shall be computed with respect to all Loans on an actual
day, 360-day year.
3.4 Prepayment. Borrowers shall be privileged to prepay all at
any time or any portion from time to time of the unpaid principal of any Prime
Loan prior to maturity, without penalty or premium, provided that such repayment
is made on a Business Day. Borrowers shall be privileged to repay, without
penalty or premium, the principal of any Treasury Rate Loan, in whole or in
part, on the last day of the Interest Period applicable thereto, provided that
such repayment is made on a Business Day. Borrowers shall not make any optional
prepayment of the principal of any Treasury Rate Loan before the last day of its
applicable Interest Period, and any payments of principal of any Treasury Rate
Loan on any date other than the last day of the applicable Interest Period shall
be subject to payment of the amounts required under Section 3.7 below. All
prepayments shall be applied solely to the payment of principal.
3.5 Interest Payments. Borrowers shall jointly and severally
pay Bank all interest which accrued on all Prime Loans during any month on the
fifteenth (15th) day of the month following the month in which such interest
accrued, commencing with the fifteenth (15th) day of the month following the
month in which any Prime Loan is made. Borrowers shall jointly and severally pay
Bank with respect to each Treasury Rate Loan (a) on the fifteenth (15th) day of
the month following the month in which such interest accrued during the Interest
Period applicable to each such Treasury Rate Loan, all interest which accrued on
such Treasury Rate Loan during such month or portion thereof, and (b) on the
last day of each such Interest Period applicable to a Treasury Rate Loan, all
then accrued and unpaid interest on such Treasury Rate Loan. Notwithstanding any
provision contained herein to the contrary, all accrued and unpaid interest
shall also be paid at the maturity of each of the Note, whether by reason of
acceleration or otherwise, and any interest accruing after any such maturity
shall be payable upon demand. In case any installment of interest shall become
due on a day which is not a Business Day, interest shall be computed to, and
payable on, the next succeeding Business Day.
3.6 Place and Manner of Payment. Both principal and interest
on the Loans are payable to Bank in lawful currency of the United States in
Federal or other immediately available funds at Bank's banking office at 0000
Xxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx 00000, or at such other place as Bank shall
designate in writing to Borrowers.
3.7 Funding Losses. Notwithstanding any provision contained
herein to the contrary, if either of the Borrowers makes any payment of
principal with respect to any Treasury Rate Loan (pursuant to this Section 3,
Section 8 or otherwise) on any day other than the last day of an Interest Period
applicable thereto, or if either of the Borrowers fails to borrow or pay any
Treasury Rate Loan after notice has been given by Borrowers in accordance with
Section 3.1(f), 3.2 or 3.5, Borrowers shall jointly and severally reimburse Bank
on demand for any resulting losses and expenses incurred by Bank, including,
without limitation, any losses incurred in obtaining, liquidating or employing
deposits from third parties, and including loss of margin for
the period after any such payment is made. A certificate of Bank demanding
compensation under this paragraph and setting forth the amount or amounts to be
paid to it hereunder shall be conclusive in the absence of manifest error.
3.8 Facility Fee. Borrowers shall jointly and severally pay to
Bank on the fifteenth (15th) day following the end of each January, April, July
and October during the Term of this Agreement and on the last day of the Term
hereof, a facility fee (the "Facility Fee") in an amount equal to:
(a) Five-Sixteenths of One Percent (0.3125%) per annum, if the
Guarantor's ratio of consolidated Indebtedness to Consolidated Tangible Net
Worth shall be greater than or equal to 2.0 to 1.0 as determined pursuant to
Section 5.1(I) of the Guaranty by reference to the Guarantor's most recent
quarter-end (or fiscal year-end) financial statements,
(b) One-Fourth of One Percent (0.25%) per annum, if the Guarantor's
ratio of consolidated Indebtedness to Consolidated Tangible Net Worth shall be
less than 2.0 to 1.0 but greater than or equal to 1.0 to 1.0 as determined
pursuant to Section 5.1(I) of the Guaranty by reference to the Guarantor's most
recent quarter-end (or fiscal year-end) financial statements, and
(c) Three-Sixteenths of One Percent (0.1875%) per annum, if the Guarantor's
ratio of consolidated Indebtedness to Consolidated Tangible Net Worth shall be
less than 1.0 to 1.0 as determined pursuant to Section 5.1(I) of the Guaranty by
reference to the Guarantor's most recent quarter-end (or fiscal year-end)
financial statements, calculated on the basis of the unused Bank's Commitment
during the preceding fiscal quarter of Borrowers ending as of the last day of
each January, April, July and October, which unused Bank's Commitment shall be
arrived at by dividing the aggregate of the daily unused Bank's Commitment for
each day of that quarter as of the close of each day by ninety (90) (or by the
actual number of days for any partial quarter). Payment of the Facility Fee is a
condition precedent to Bank's obligations to make any new Loans hereunder.
3.9 Maturity. All Loans not paid prior to March 31, 1999,
together with all accrued and unpaid interest thereon, shall be due and payable
on March 31, 1999 (as from time to time extended, if any, pursuant to this
Section, the "Maturity Date"); provided, however, that in the event Bank, in its
sole and absolute discretion, shall deliver to Borrowers a written notice signed
by Bank on or before the date one year prior to the then current Maturity Date
(and prior to any subsequent Maturity Date thereafter if extended under this
Section 3.9) of Bank's intention to extend the term of this Agreement for an
additional year, then the Maturity Date of this Agreement shall be extended for
a period of one additional year following the then current Maturity Date.
Following any such extension of the Maturity Date by Bank, all of the
outstanding principal and all accrued and unpaid interest, fees and other
amounts due under this Agreement and the Note shall be due and payable on such
new Maturity Date, unless it is again extended by Bank, in its sole and absolute
discretion, under the foregoing sentence.
3.10 Renewal Fee. In consideration of Bank's agreement to
extend credit hereunder, Borrowers shall jointly and severally pay to Bank on
the date hereof a renewal fee in the amount of Three Thousand Five Hundred
Dollars ($3,500.00).
SECTION 4. PRECONDITIONS TO LOANS.
4.1 Initial Loan. Notwithstanding any provision contained
herein to the contrary, Bank shall have no obligation to make any Loan hereunder
unless Bank shall have first received:
(a) this Agreement and the Note, each executed by a duly authorized
officer of each of the Borrowers;
(b) the Amendments to the Security Agreements and such other
documents as Bank may reasonably require under Section 5.1, each duly executed
by an authorized officer of each of the Borrowers;
(c) the Amendment to the Deed of Trust, duly executed by the
authorized officer of PM Resources;
(d) a copy of resolutions of the Board of Directors of each of the
Borrowers, duly adopted, which authorize the execution, delivery and performance
of this Agreement and the Note, the Amendments to the Security Agreements, the
Amendment to the Deed of Trust and the other Transaction Documents, certified by
the Secretary of each such Borrower;
(e) a certificate of corporate good standing of PM Resources issued by
the Secretary of State of the State of Missouri;
(f) certificates of corporate good standing of Zema issued by the
Secretary of State of the State of Delaware and by the Secretary of State of the
State of North Carolina;
(g) the Consent of Agri-Nutrition Group Limited in the form attached
hereto, acknowledging the amendments contained herein and the continuing
effectiveness of the Pledge Agreement and the Subordination Agreement, duly
executed by Agri-Nutrition Group Limited;
(h) the Guaranty duly executed by Agri-Nutrition Group Limited;
(i) a copy of Resolutions of the Board of Directors of Guarantor, duly
adopted, which authorize the execution, delivery and performance of the
Guaranty, certified by the Secretary of Guarantor;
(j) a Certificate of Corporate Good Standing of Guarantor, issued by
the Secretary of State of the State of Delaware;
(k) an opinion of counsel of Xxxx, Xxxxx & Xxxxxx, independent counsel
to Borrowers and Guarantor, in the form of Exhibit D attached hereto and
incorporated herein by reference;
(l) the initial Borrowing Base Certificate required by Section 3.1(d);
(m) the Borrowing Notice required by Section 3.2; and
(n) such other agreements, documents, instruments and certificates as
Bank may reasonably request.
4.2 Subsequent Loans. Notwithstanding any provision contained
herein to the contrary, Bank shall have no obligation to make any subsequent
Loan hereunder or to convert any Prime Loan to a Treasury Rate Loan unless:
(a) Bank shall have received a current Borrowing Base Certificate as
required by Section 3.1(d);
(b) Bank shall have received a Borrowing Notice for such Loan as
required by Section 3.2;
(c) on the date of and immediately after such Loan, no Default or
Event of Default under this Agreement shall have occurred and be continuing;
(d) on the date of and immediately after such Loan, no material adverse
change in the business, financial position or results of operations of either of
the Borrowers, the Guarantor or any of their respective Subsidiaries shall have
occurred since the date of this Agreement and be continuing; and
(e) all of the representations and warranties of each of the Borrowers
contained in this Agreement shall be true and correct on and as of the date of
such Loan as if made on the date of such Loan.
Each request for a Loan by either of the Borrowers hereunder
shall be deemed to be a representation and warranty by each of the Borrowers on
the date of such Loan as to the facts specified in clauses (c), (d) and (e) of
this Section 4.2.
SECTION 5. SECURITY
5.1 Security Agreements. In order to secure the payment when
due of Borrowers' Obligations, each of the Borrowers has conveyed to Bank a
security interest in, among other things, all of such Borrower's accounts
receivable, inventory, machinery, equipment, fixtures and other tangible and
intangible personal property and all proceeds and products thereof, which
security interest is and shall be a first and prior interest in all such items
except for those Uniform Commercial Code security interests described on
Schedule 6.12 attached hereto. Said security interests are evidenced by a
Security Agreement dated as of July 14, 1995 and executed by PM Resources in
favor of Bank and by a Security Agreement dated July 14, 1995 and executed by
Zema in favor of Bank (as the same may from time to time be amended, the
"Security Agreements"). Each of the Borrowers further covenants and agrees to
execute and deliver to Bank any and all financing statements, continuation
statements and such other documentation as may be requested by Bank in order to
create, perfect and continue said security interests. Upon demand, Borrowers
shall jointly and severally pay all legal and filing fees and expenses incurred
by Bank in the preparation of the foregoing documents and perfection
of the security interest contemplated thereby. Bank shall have no obligation to
make any Loan hereunder unless and until Borrowers have fully satisfied these
requirements.
5.2 Deed of Trust. In order to further secure the payment when
due of Borrowers' Obligations, PM Resources has conveyed to Bank a security
interest in all of PM Resource's real property, fixtures and improvements as
more fully described in that certain Deed of Trust and Security Agreement made
by PM Resources to Xxxxxxxxx X. Xxxxxx as trustee for Bank dated as of September
9, 1993 (as the same has been or may be amended from time to time, the "Deed of
Trust"), which Deed of Trust shall be a first and prior interest in such real
property and improvements. PM Resources further covenants and agrees to execute
and deliver to Bank any and all amendments and other documentation as may be
requested by Bank from time to time in order to create, perfect and continue
said Deed of Trust as collateral security for all of Borrowers' Obligations.
Upon demand, Borrowers shall jointly and severally pay all legal and filing fees
and expenses, appraisal costs and title insurance premiums incurred by Bank in
connection with the Deed of Trust. Bank shall have no obligation to make any
Loan hereunder unless and until Borrowers have fully satisfied these
requirements.
5.3 Pledge Agreement. In order to further secure the payment
when due of Borrowers' Obligations, Agri-Nutrition Group Limited has pledged to
Bank and granted to Bank a first perfected security interest in all of the
issued and outstanding capital stock of each of the Borrowers, as more fully
described in that certain Agreement of Pledge (Third Party) made by
Agri-Nutrition Group Limited in favor of Bank dated as of July 14, 1995 (as the
has been or may be amended from time to time, the "Pledge Agreement"), which
Pledge Agreement shall be a first and prior interest in all such capital stock.
Borrowers further covenant and agree to cause Agri-Nutrition Group Limited to
execute and deliver to Bank any and all collateral schedules, stock powers, Reg.
U-1 affidavits and other documents as may be reasonably requested by Bank from
time to time, together with all original stock certificates evidencing any
shares of capital stock in either of the Borrowers. Upon demand, Borrowers shall
jointly and severally pay all legal and filing fees and other expenses incurred
by Bank in connection with the Pledge Agreement. Bank shall have no obligation
to make any Loan hereunder unless and until Borrowers and Agri-Nutrition Group
Limited have fully satisfied these requirements.
SECTION 6. REPRESENTATIONS AND WARRANTIES.
Borrowers represent and warrant to Bank that:
6.1 Corporate Existence and Power. Each of the Borrowers and
each Subsidiary of each of the Borrowers: (a) is duly incorporated, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation; (b) has all requisite corporate powers and all governmental and
regulatory licenses, authorizations, consents and approvals required to carry on
its business as now conducted; and (c) is duly qualified to do business in all
jurisdictions in which the nature of the business conducted by it makes such
qualification necessary and where failure to so qualify would have a material
adverse effect on its business, financial condition or operations.
6.2 Corporate Authorization. The execution, delivery and
performance by Borrowers of this Agreement, the Note, the Amendment and the
other Transaction Documents
are within the corporate powers of each of the Borrowers and have been duly
authorized by all necessary corporate action.
6.3 Binding Effect. This Agreement, the Note, the Security
Agreements, the Deed of Trust, the Amendment and the other Transaction Documents
have been duly executed and delivered by each of the Borrowers executing the
same and constitute the legal, valid and binding obligations of each such
Borrower enforceable in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency or other similar laws
affecting creditors' rights in general.
6.4 Financial Statements. Borrowers have furnished Bank with
the following financial statements, identified by the principal financial
officers of each of the Borrowers: (1) consolidated balance sheet and statements
of income, retained earnings and cash flows of Guarantor and its Consolidated
Subsidiaries as of October 31, 1996 and for the period then ended, all certified
by Guarantor's independent certified public accountants, which financial
statements have been prepared in accordance with Generally Accepted Accounting
Principles consistently applied; (2) unaudited consolidated balance sheet and
statements of income, retained earnings and cash flows of each of the Borrowers
and their respective Consolidated Subsidiaries as of April 30, 1997, certified
by the principal financial officers of each of the Borrowers as being true and
correct to the best of his knowledge and as being prepared in accordance with
Borrowers' normal accounting procedures. Borrowers further represent and warrant
to Bank that: (1) said balance sheets and their accompanying notes fairly
present the condition of Borrowers and their respective Consolidated
Subsidiaries as of the dates thereof; (2) there has been no material adverse
change in the condition or operation, financial or otherwise, of either of the
Borrowers, the Guarantor or any of their respective Consolidated Subsidiaries
since April 30, 1997; and (3) neither Borrower nor any of their respective
Consolidated Subsidiaries has any direct or contingent liabilities which are not
disclosed on said financial statements in accordance with Generally Accepted
Accounting Principles.
6.5 Litigation. Except as disclosed on Schedule 6.5 attached
hereto, there is no action or proceeding pending or, to the knowledge of
Borrowers, threatened against or affecting either of the Borrowers, the
Guarantor or any Subsidiary of either of the Borrowers or the Guarantor before
any court, arbitrator or any governmental, regulatory or administrative body,
agency or official which could result in any material adverse change in the
condition or operation, financial or otherwise, of either such Borrower, the
Guarantor or any Subsidiary of either of the Borrowers or the Guarantor, and
neither Borrower nor the Guarantor nor any Subsidiary of either Borrower or the
Guarantor is in default with respect to any order, writ, injunction, decision or
decree of any court, arbitrator or any governmental, regulatory or
administrative body, agency or official, a default under which could have a
material adverse effect on either of the Borrowers, the Guarantor or any
Subsidiary of either of the Borrowers or the Guarantor.
6.6 Pension and Welfare Plans. Each Pension Plan complies with
all applicable statutes and governmental rules and regulations; no Reportable
Event has occurred and is continuing with respect to any Pension Plan; neither
Borrower nor any ERISA Affiliate nor any Subsidiary of either of the Borrowers
has withdrawn from any Multiemployer Plan in a "complete withdrawal" or a
"partial withdrawal" as defined in Sections 4203 or 4205 of ERISA, respectively;
no steps have been instituted by either of the Borrowers, any ERISA
Affiliate or any Subsidiary of either of the Borrowers to terminate any Pension
Plan; no condition exists or event or transaction has occurred in connection
with any Pension Plan or Multiemployer Plan which could result in the incurrence
by either of the Borrowers, any ERISA Affiliate or any Subsidiary of either of
the Borrowers of any material liability, fine or penalty; and neither Borrower
nor any ERISA Affiliate nor any Subsidiary of either of the Borrowers is a
"contributing sponsor" as defined in Section 4001(a)(13) of ERISA of a
"single-employer plan" as defined in Section 4001(a)(15) of ERISA which has two
or more contributing sponsors at least two of whom are not under common control.
Except as disclosed on Schedule 6.6 attached hereto, neither Borrower nor any
Subsidiary of either of the Borrowers has any contingent liability with respect
to any "employee welfare benefit plan", as such term is defined in Section 3(a)
of ERISA, which covers retired employees and their beneficiaries.
6.7 Tax Returns and Payment. Each of the Borrowers and each
Subsidiary of each of the Borrowers has filed all Federal, state and local
income tax returns and all other tax returns which are required to be filed and
has paid all taxes due pursuant to such returns or pursuant to any assessment
received by either of the Borrowers or any Subsidiary of either of the
Borrowers, except for the filing of such returns, if any, in respect of which an
extension of time for filing is in effect and except for such taxes, if any, as
are being contested in good faith by appropriate proceedings being diligently
conducted and as to which adequate reserves in accordance with Generally
Accepted Accounting Principles consistently applied have been provided. The
charges, accruals and reserves on the books of each of the Borrowers and each
Subsidiary of either of the Borrowers in respect of any taxes or other
governmental charges are, in the opinion of Borrowers, adequate.
6.8 Subsidiaries. Neither of the Borrowers has any
Subsidiaries as of the date hereof.
6.9 Compliance With Other Instruments; None Burdensome.
Neither Borrower nor any Subsidiary of either Borrower is a party to any
contract or agreement or subject to any charter or other corporate restriction
which materially and adversely affects its business, Property or financial
condition and which is not disclosed on such Borrower's financial statements
heretofore submitted to Bank; none of the execution and delivery by Borrowers of
the Transaction Documents, the consummation of the transactions therein
contemplated or the compliance with the provisions thereof will violate any law,
rule, regulation, order, writ, judgment, injunction, decree or award binding on
either of the Borrowers, or any of the provisions of either Borrower's
Certificate or Articles of Incorporation or Bylaws or any of the provisions of
any indenture, agreement, document, instrument or undertaking to which either of
the Borrowers is a party or subject, or by which it or its Property is bound, or
conflict with or constitute a default thereunder or result in the creation or
imposition of any Lien pursuant to the terms of any such indenture, agreement,
document, instrument or undertaking (other than in favor of Bank pursuant to the
Transaction Documents). No order, consent, approval, license, authorization or
validation of, or filing, recording or registration with, or exemption by, any
governmental, regulatory, administrative or public body or authority, or any
subdivision thereof, is required to authorize, or is required in connection
with, the execution, delivery or performance of, or the legality, validity,
binding effect or enforceability of, any of the Transaction Documents.
6.10 Other Loans and Guarantees. Except as disclosed on
Schedule 6.10 attached hereto, neither Borrower nor any Subsidiary of either
Borrower is a party to any loan transaction or Guarantee.
6.11 Labor Matters. Except as disclosed on Schedule 6.11
attached hereto, (a) no labor contract to which either of the Borrowers or any
Subsidiary of either of the Borrowers is subject is scheduled to expire during
the Term of this Agreement and (b) on the date of this Agreement, (i) neither
Borrower nor any Subsidiary of either Borrower is a party to any labor dispute
and (ii) there are no strikes or walkouts relating to any labor contract to
which either of the Borrowers or any Subsidiary of either of the Borrowers is
subject.
6.12 Title to Property. Each of the Borrowers and each
Subsidiary of either of the Borrowers is the sole and absolute owner of, or has
the legal right to use and occupy, all Property it claims to own or which is
necessary for such Borrower or such Subsidiary of either Borrower to conduct its
business. Neither Borrower nor any Subsidiary of either Borrower has signed any
financing statements, security agreements or chattel mortgages with respect to
any of its Property, has granted or permitted any Liens with respect to any of
its Property or has any knowledge of any Liens with respect to any of its
Property, except as disclosed on Schedule 6.12 attached hereto.
6.13 Regulation U. Neither of the Borrowers is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying margin stock (within the
meaning of Regulation U of The Board of Governors of the Federal Reserve System,
as amended) and no part of the proceeds of any Loan will be used, whether
directly or indirectly, and whether immediately, incidentally or ultimately (i)
to purchase or carry margin stock or to extend credit to others for the purpose
of purchasing or carrying margin stock, or to refund or repay indebtedness
originally incurred for such purpose or (ii) for any purpose which entails a
violation of, or which is inconsistent with, the provisions of any of the
Regulations of The Board of Governors of the Federal Reserve System, including,
without limitation, Regulations G, U, T or X thereof, as amended. If requested
by Bank, Borrowers shall furnish to Bank a statement or statements in conformity
with the requirements of Federal Reserve Form U-1 referred to in Regulation U.
6.14 Multi-Employer Pension Plan Amendments Act of 1980.
Neither of the Borrowers nor any Subsidiary of either of the Borrowers has any
pension plan or any liability for pension contributions pursuant to any plan
subject to the Multi-Employer Pension Plan Amendments Act of 1980, as amended
("MEPPAA").
6.15 Investment Company Act of 1940; Public Utility Holding
Company Act of 1935. Neither Borrower is an "investment company" as that term is
defined in, or is otherwise subject to regulation under, the Investment Company
Act of 1940, as amended. Neither Borrower is a "holding company" as that term is
defined in, or is otherwise subject to regulation under, the Public Utility
Holding Company Act of 1935, as amended.
6.16 Patents, Licenses, Trademarks, Etc. Each Borrower and
each Subsidiary of either of the Borrowers possesses all necessary patents,
licenses, trademarks, trademark rights, trade names, trade name rights and
copyrights to conduct its business without conflict with any patent, license,
trademark, trade name or copyright of any other Person.
6.17 Environmental and Safety and Health Matters. Except as
disclosed on Schedule 6.17 attached hereto: (i) the operations of each of the
Borrowers and each Subsidiary of either of the Borrowers comply with (A) all
applicable Environmental Laws and (B) all applicable Occupational Safety and
Health Laws; (ii) none of the operations of either of the Borrowers or any
Subsidiary of either of the Borrowers are subject to any judicial, governmental,
regulatory or administrative proceeding alleging the violation of any
Environmental Law or Occupational Safety and Health Law; (iii) none of the
operations of either of the Borrowers or any Subsidiary of either of the
Borrowers is the subject of any Federal or state investigation evaluating
whether any remedial action is needed to respond to (A) any spillage, disposal
or release into the environment of any Hazardous Material or any other
hazardous, toxic or dangerous waste, substance or constituent or other
substance, or (B) any unsafe or unhealthful condition at any premises of either
of the Borrowers or such Subsidiary of either of the Borrowers; (iv) neither
Borrower nor any Subsidiary of either Borrower has filed any notice under any
Environmental Law or Occupational Safety and Health Law indicating or reporting
(A) any past or present spillage, disposal or release into the environment of,
or treatment, storage or disposal of, any Hazardous Material or any other
hazardous, toxic or dangerous waste, substance or constituent or other substance
or (B) any unsafe or unhealthful condition at any premises of either such
Borrower or such Subsidiary of either such Borrower; and (v) neither Borrower
nor any Subsidiary of either Borrower has any known contingent liability in
connection with (A) any spillage, disposal or release into the environment of,
or otherwise with respect to, any Hazardous Material or any other hazardous,
toxic or dangerous waste, substance or constituent or other substance or (B) any
unsafe or unhealthful condition at any premises of either such Borrower or such
Subsidiary of either such Borrower.
SECTION 7. COVENANTS.
7.1 Affirmative Covenants of Borrowers. Borrowers covenant and
agree that, so long as Bank has any obligation to make any Loan hereunder or any
of Borrowers' Obligations remain unpaid:
(a) Information. Borrowers will deliver to Bank:
(i) As soon as available and in any event within
ninety (90) days after the end of each fiscal year of Borrowers, the
consolidated balance sheet of Guarantor and its Consolidated
Subsidiaries as of the end of such fiscal year and the related
consolidated statements of income, retained earnings and cash flows for
such fiscal year, all with consolidating disclosures and setting forth
in each case, in comparative form, the figures for the previous fiscal
year, all such financial statements to be prepared in accordance with
Generally Accepted Accounting Principles consistently applied and
reported on by and accompanied by the unqualified opinion of
independent certified public accountants of nationally recognized
standing selected by Guarantor and reasonably acceptable to Bank
together with (i) a certificate from such accountants to the effect
that, in making the examination necessary for the signing of such
annual audit report, such accountants have not become aware of any
Default or Event of Default that has occurred and is continuing, or, if
such
accountants have become aware of any such event, describing it and the
steps, if any, being taken to cure it and (ii) the computations of such
accountants evidencing Borrowers' compliance with the financial
covenants contained in this Agreement;
(ii) As soon as available and in any event within
forty-five (45) days after the end of each of the first three (3)
fiscal quarters of each fiscal year of Borrowers, the consolidated
balance sheet of Guarantor and its Consolidated Subsidiaries as of the
end of such fiscal quarter and the related consolidated statements of
income, retained earnings and cash flows for such fiscal quarter and
for the portion of Guarantor's and Borrowers' fiscal year ended at the
end of such fiscal quarter, all with consolidating disclosures and
setting forth in each case in comparative form, the figures for the
corresponding fiscal quarter and the corresponding portion of
Guarantor's and Borrowers' previous fiscal year, all certified (subject
to normal year-end adjustments) as to fairness of presentation,
Generally Accepted Accounting Principles and consistency by the
principal financial officers of Guarantor and Borrowers;
(iii) As soon as available and in any event within
twenty-one (21) days after the end of each month, a certificate of the
principal financial officers or controllers of Borrowers and Guarantor
in the form attached hereto as Exhibit E and incorporated herein by
reference, accompanied by supporting financial work sheets where
appropriate;
(iv) As soon as available and in any event within
twenty-one (21) days after the end of each month, the consolidated
balance sheets of each of the Borrowers and its respective Consolidated
Subsidiaries as of the end of each such month and the related
consolidated statements of income, retained earnings and cash flows for
such month and for the portion of each such Borrower's fiscal year
ended at the end of such month, all with consolidating disclosures and
setting forth in each case in comparative form, the figures for the
corresponding month and the corresponding portion of each such
Borrower's previous fiscal year, all certified (subject to normal
year-end adjustments) as to fairness of presentation, Generally
Accepted Accounting Principles and consistency by the principal
financial officer or controller of each such Borrower;
(v) Within twenty-one (21) days after the end of each
month, the Borrowing Base Certificate dated as of the last day of such
preceding month-end, as required pursuant to Section 3.1(d) hereof,
together with an accounts receivable aging and inventory list of each
of the Borrowers if requested by Bank;
(vi) Promptly upon receipt thereof, any reports
submitted to either of the Borrowers or any Consolidated Subsidiary of
either of the Borrowers (other than reports previously delivered
pursuant to Sections 7.1(a)(i) and (ii) above) by independent
accountants in connection with any annual, interim or special audit
made by them of the books of Guarantor, either of the Borrowers or any
Consolidated Subsidiary of either of the Borrowers;
(vii) Promptly upon any filing thereof, and in any
event within ten (10) days after the filing thereof, copies of all
registration statements (other than the exhibits thereto and any
registration statements on Form S-8 or its equivalent) and annual,
quarterly or interim reports which Guarantor shall file with the
Securities and Exchange Commission;
(viii) Promptly upon the mailing thereof to the
shareholders of either of the Borrowers generally, and in any event
within ten (10) days after such mailing, copies of all financial
statements, reports, proxy statements and other material information so
mailed; and
(ix) With reasonable promptness, such further
information regarding the business, affairs and financial condition of
either of the Borrowers or any Subsidiary of either of the Borrowers as
Bank may from time to time reasonably request.
Bank is hereby authorized to deliver a copy of any financial
statement or other information made available by either of the Borrowers to any
regulatory authority having jurisdiction over Bank, pursuant to any request
therefor.
(b) Payment of Indebtedness. Each of the Borrowers and each
Subsidiary of either of the Borrowers will (i) pay any and all Indebtedness
payable or guaranteed by such Borrower or such Subsidiary of such Borrower, as
the case may be, and any interest or premium thereon, when due (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise) in
accordance with the agreement, document or instrument relating to such
Indebtedness or Guarantee and (ii) faithfully perform, observe and discharge all
covenants, conditions and obligations which are imposed upon such Borrower or
such Subsidiary of such Borrower, as the case may be, by any and all agreements,
documents and instruments evidencing, securing or otherwise relating to such
Indebtedness or Guarantee.
(c) Consultations and Inspections. Each of the Borrowers will permit,
and will cause each Subsidiary of either such Borrower to permit, Bank (and any
Person appointed by Bank to whom Borrowers do not reasonably object) to discuss
the affairs, finances and accounts of Borrowers and each Subsidiary of either of
the Borrowers with the officers of each such Borrower and each Subsidiary of
either Borrower, all at such reasonable times and as often as Bank may
reasonably request. Each of the Borrowers will also permit, and will cause each
Subsidiary of either such Borrower to permit, inspection of its Properties,
books and records by Bank during normal business hours or at other reasonable
times.
(d) Payment of Taxes; Corporate Existence; Maintenance of Properties;
Insurance. Each of the Borrowers and each Subsidiary of either of the Borrowers
will:
(i) Duly file all Federal, state and local income tax
returns and all other tax returns and reports of such Borrower and each
Subsidiary of either such Borrower which are required to be filed and
duly pay and discharge promptly all taxes, assessments and other
governmental charges imposed upon it or any of its income, Property or
assets; provided, however, that neither Borrower nor any Subsidiary of
either Borrower shall be required to pay any such tax, assessment or
other governmental charge the payment of which is being contested in
good faith and by appropriate proceedings diligently conducted and for
which adequate reserves in form and amount satisfactory to Bank have
been provided, except that Borrowers and each Subsidiary of either of
the Borrowers shall pay or cause to be paid all such taxes, assessments
and governmental charges forthwith upon the commencement of proceedings
to foreclose any Lien which is attached as security therefor, unless
such foreclosure is stayed by the filing of an appropriate bond in a
manner satisfactory to Bank;
(ii) Do all things necessary to preserve and keep in
full force and effect its corporate existence, rights and franchise and
to be duly qualified to do business in all jurisdictions where the
nature of its business requires such qualification;
(iii) Maintain and keep its Properties as a whole in
good repair, working order and condition; provided, however, that
nothing in this subsection (iii) shall prevent any abandonment of any
Property which is not disadvantageous in any material respect to Bank
and which, in the good faith opinion of the management of either
Borrower, is in the best interests of such Borrower or such Subsidiary
of either such Borrower, as the case may be; and
(iv) Insure with financially sound and reputable
insurers acceptable to Bank, all Property of Borrowers and each
Subsidiary of either of the Borrowers of the character usually insured
by corporations engaged in the same or similar businesses similarly
situated, against loss or damage of the kind customarily insured
against by such corporations, unless higher limits or coverage are
reasonably required in writing by Bank, and carry adequate liability
insurance and other insurance of a kind and in an amount generally
carried by corporations engaged in the same or similar businesses
similarly situated, unless higher limits or coverage are reasonably
required in writing by Bank. All such insurance may be subject to
reasonable deductible amounts. Promptly upon Bank's request therefor,
each of the Borrowers shall provide Bank with evidence that each such
Borrower maintains, and that each Subsidiary of either such
Borrower maintains, the insurance required under this Section
7.1(d)(iv), and evidence of the payment of all premiums therefor.
(e) Accountant. Borrowers shall give Bank prompt notice of any
change of Borrowers' independent certified public accountants and a statement of
the reasons for such change. Borrowers shall at all times utilize independent
certified public accountants of nationally recognized standing reasonably
acceptable to Bank.
(f) ERISA Compliance. If either of the Borrowers or any Subsidiary
of either of the Borrowers shall have any Pension Plan, such Borrower and/or
such Subsidiary or Subsidiaries of either of the Borrowers shall comply with all
requirements of ERISA relating to such plan. Without limiting the generality of
the foregoing, neither Borrower nor any Subsidiary of either of the Borrowers
shall:
(i) permit any Pension Plan maintained by it to
engage in any nonexempt "prohibited transaction," as such term is
defined in Section 4975 of the Code;
(ii) permit any Pension Plan maintained by it to
incur any "accumulated funding deficiency", as such term is defined in
Section 302 of ERISA, 29 U.S.C. ss. 1082, whether or not waived;
(iii) terminate any such Pension Plan in a manner
which could result in the imposition of a Lien on any Property of
either of the Borrowers or any Subsidiary of either of the Borrowers
pursuant to Section 4068 of ERISA, 29 U.S.C. ss.1368; or
(iv) take any action which would constitute a
complete or partial withdrawal from a Multiemployer Plan within the
meaning of Sections 4203 and 4205 of Title IV of ERISA.
Notwithstanding any provision contained in this Section 7.1(f)
to the contrary, an act by either of the Borrowers or any Subsidiary of either
of the Borrowers shall not be deemed to constitute a violation of subparagraphs
(i) through (iv) hereof unless Bank determines in good faith that said action,
individually or cumulatively with other acts of either of the Borrowers and the
Subsidiaries of either of the Borrowers, does have or is likely to cause a
significant adverse financial effect upon either of the Borrowers or any
Subsidiary of either of the Borrowers.
Borrowers shall have the affirmative obligation hereunder to
report to Bank any of those acts identified in subparagraphs (i) through (iv)
hereof, regardless of whether said act does or is likely to cause a significant
adverse financial effect upon either of the Borrowers or any Subsidiary of
either of the Borrowers, and failure by Borrowers to report such act promptly
upon either such Borrower's becoming aware of the existence thereof shall
constitute an Event of Default hereunder.
(g) Maintenance of Books and Records. Each of the Borrowers and
each Subsidiary of either of the Borrowers will maintain its books and records
in accordance
with Generally Accepted Accounting Principles consistently applied and in which
true, correct and complete entries will be made of all of its dealings and
transactions.
(h) Further Assurances. Each of the Borrowers will execute any and
all further agreements, documents and instruments, and take any and all further
actions which may be required under applicable law, or which Bank may from time
to time reasonably request, in order to effectuate the transactions contemplated
by this Agreement, the Note, the Security Agreements, the Deed of Trust and the
other Transaction Documents.
(i) Financial Covenants. Borrowers will:
(i) Maintain a ratio of Indebtedness (determined on a
consolidated basis for Guarantor and all of its Consolidated
Subsidiaries and in accordance with Generally Accepted Accounting
Principles consistently applied, but excluding Subordinated Debt) to
Consolidated Tangible Net Worth of not more than 2.50 to 1.0 at all
times during the Term hereof;
(ii) Maintain a ratio of Consolidated Current Assets
to Consolidated Current Liabilities, determined on a consolidated basis
for Guarantor and all of its Consolidated Subsidiaries in accordance
with Generally Accepted Accounting Principles consistently applied, of
at least 2.0 to 1.0 at all times during the Term hereof;
(iii) Maintain at all times a Consolidated Tangible
Net Worth of at least the sum of $6,500,000.00, plus Seventy-Five
Percent (75%) of the after-tax net income (with no deductions for
losses) shown on Guarantor's consolidated financial statements) for
each fiscal year, with the initial such increase commencing with the
fiscal year ending October 31, 1997, such required increases to be
cumulative for each fiscal year, plus any cash amounts invested in the
Guarantor, either of the Borrowers or any other Subsidiaries of
Guarantor at any time after the date of this Agreement;
(iv) Maintain at all times a ratio of Consolidated
Funded Debt to Consolidated Tangible Net Worth (determined on a
consolidated basis for Guarantor and all of its Consolidated
Subsidiaries and in accordance with Generally Accepted Accounting
Principles consistently applied) of not more than 1.50 to 1.0 at all
times during the Term hereof;
(v) Maintain a Debt Service Coverage Ratio as of the
end of each fiscal quarter ending on or before October 30, 1997 of at
least 0.85 to 1.0; maintain a Debt Service Coverage Ratio for the
fiscal quarter ending October 31, 1997 and for fiscal quarters ending
thereafter up to and including April 29, 1998 of at least 1.05 to 1.0;
and maintain a Debt Service Coverage Ratio for the fiscal
quarter ending April 30, 1998 and for fiscal quarters ending thereafter
during the Term hereof of at least 1.3 to 1.0;
(vi) Deliver a certificate of the principal financial
officers of each of the Borrowers containing the financial ratio
calculations required in clauses (i) through (v) above simultaneously
with the financial statements referred to in Sections 7.1(a)(i) and
(ii).
(j) Compliance with Law. Each of the Borrowers will, and will cause
each Subsidiary of either of the Borrowers to, comply with any and all laws,
ordinances and governmental and regulatory rules and regulations to which it is
subject and obtain any and all licenses, permits, franchises and other
governmental and regulatory authorizations necessary to the ownership of its
Properties or to the conduct of its business, which violation or failure to
obtain might materially adversely affect the condition or operation, financial
or otherwise, of either of the Borrowers or any Subsidiary of either of the
Borrowers.
(k) Notices. Each of the Borrowers will notify Bank in writing of any
of the following immediately upon learning of the occurrence thereof, describing
the same and, if applicable, the steps being taken by the Person(s) affected
with respect thereto:
(i) Default. The occurrence of any Default or Event
of Default under this Agreement or any default or event of default by
either of the Borrowers, any other Obligor or any Subsidiary of either
of the Borrowers under any note, indenture, loan agreement, mortgage,
deed of trust, security agreement, lease or other similar agreement,
document or instrument to which either of the Borrowers, any other
Obligor or any Subsidiary of either of the Borrowers, as the case may
be, is a party or by which it is bound or to which it is subject;
(ii) Litigation. The institution of any litigation,
arbitration proceeding or governmental or regulatory proceeding
affecting either of the Borrowers, any other Obligor, any Subsidiary of
either of the Borrowers, any Collateral or any Third Party Collateral,
whether or not considered to be covered by insurance, provided that, if
such proceeding seeks money damages, the damages sought are in excess
of $50,000.00;
(iii) Judgment. The entry of any judgment or decree
against either of the Borrowers, any other Obligor or any Subsidiary of
either of the Borrowers in an amount of $50,000.00 or more;
(iv) Pension Plans. The occurrence of a Reportable
Event with respect to any Pension Plan; the filing of a notice of
intent to terminate a Pension Plan by either of the Borrowers, any
ERISA Affiliate or any Subsidiary of either of the Borrowers; the
institution of proceedings to terminate a Pension Plan by the PBGC or
any other Person; the withdrawal in a "complete withdrawal" or a
"partial
withdrawal" as defined in Sections 4203 and 4205, respectively, of
ERISA by either of the Borrowers, any ERISA Affiliate or any Subsidiary
of either of the Borrowers from any Multiemployer Plan; or the
incurrence of any material increase in the contingent liability of
either of the Borrowers or any Subsidiary of either of the Borrowers
with respect to any "employee welfare benefit plan" as defined in
Section 3(1) of ERISA which covers retired employees and their
beneficiaries;
(v) Change of Name. Any change in the name of either
of the Borrowers, any other Obligor or any Subsidiary of either of the
Borrowers at least fifteen (15) days prior to the effective date
thereof;
(vi) Change in Place(s) of Business. Any proposed
opening, closing or other change of any place of business of either of
the Borrowers or any Subsidiary of either of the Borrowers;
(vii) Environmental Matters. Receipt of any notice
that the operations of either of the Borrowers, any other Obligor or
any Subsidiary of either of the Borrowers are not in full compliance
with any of the requirements of any applicable Environmental Law or
Occupational Safety and Health Law; receipt of notice that either of
the Borrowers, any other Obligor or any Subsidiary of either of the
Borrowers is subject to any Federal, state or local investigation
evaluating whether any remedial action is needed to respond to the
release of any Hazardous Materials or any other hazardous or toxic
waste, substance or constituent or other substance into the
environment; or receipt of notice that any of the Properties or assets
of either of the Borrowers, any other Obligor or any Subsidiary of
either of the Borrowers are subject to an "Environmental Lien." For
purposes of this Section 7.1(k)(vii), "Environmental Lien" shall mean a
Lien in favor of any governmental or regulatory agency, entity,
authority or official for (1) any liability under Environmental Laws or
(2) damages arising from or costs incurred by any such governmental or
regulatory agency, entity, authority or official in response to a
release of any Hazardous Materials or any other hazardous or toxic
waste, substance or constituent or other substance into the
environment;
(viii) Material Adverse Change. The occurrence of
any material adverse change in the business, operations or condition,
financial or otherwise, of either of the Borrowers, any other Obligor
or any Subsidiary of either of the Borrowers;
(ix) Change in Management or Line(s) of Business. Any
material change in the senior management of either of the Borrowers or
any Subsidiary of either of the Borrowers or any change
in either Borrower's or any Subsidiary of either of the Borrowers'
line(s) of business; and
(x) Other Notices. Any notices required to be
provided pursuant to other provisions of this Agreement and notice of
the occurrence of such other events as Bank may from time to time
reasonably specify.
(l) Borrowers' Bank Accounts. Each Borrower will, and will cause
each Subsidiary of either of the Borrowers to, maintain its primary checking,
lockbox and operating accounts with Bank and to use Bank's lockbox services for
purposes of facilitating the collection of each Borrower's or any such
Subsidiary's accounts receivable from its customers.
7.2 Negative Covenants of Borrowers. Borrowers covenant and
agree that, so long as Bank has any obligation to make any Loan hereunder or any
of Borrowers' Obligations remain unpaid, unless the prior written consent of
Bank is obtained:
(a) Limitation on Indebtedness. Neither Borrower nor any Subsidiary
of either of the Borrowers will incur or be obligated on any Indebtedness,
either directly or indirectly, by way of Guarantee, suretyship or otherwise,
other than:
(i) Indebtedness evidenced by the Note;
(ii) Unsecured trade accounts payable incurred in the
ordinary course of business;
(iii) Indebtedness listed on Schedule 6.10 attached
hereto;
(iv) Indebtedness for Capitalized Leases permitted
under Section 7.2(i) in an amount not to exceed $100,000.00 in the
aggregate (for Borrowers and all Subsidiaries of either of the
Borrowers) at any one time outstanding; and
(v) Indebtedness not otherwise permitted by this
Section 7.2(a) in an amount not to exceed $25,000.00 in the aggregate
at any one time outstanding for Borrowers and all Subsidiaries of
either of the Borrowers.
(b) Limitations on Liens. Neither Borrower will create, incur, assume
or suffer to exist, or will cause or permit any Subsidiary of either such
Borrower to create, incur, assume or suffer to exist, any Lien on any of its
Property, assets or revenues other than:
(i) Liens presently in existence which are described
on Schedule 6.12 attached hereto;
(ii) Pledges or deposits in connection with or to
secure workmen's compensation, unemployment insurance, pension or other
employee benefits;
(iii) Any Lien renewing, extending or refunding any
Lien permitted hereunder, provided that the principal amount of
Indebtedness secured by such Lien is not increased and such Lien is not
extended to cover any other Property or assets of either such Borrower
or any Subsidiary of either such Borrower; and
(iv) Subject to Section 7.1(d)(i), Liens for taxes,
assessments or governmental charges or levies on the income, Property
or assets of either of the Borrowers or any Subsidiary of either of the
Borrowers if the same are being contested in good faith and by
appropriate proceedings diligently conducted and for which adequate
reserves in form and amount satisfactory to Bank are provided.
(c) Sale of Property. Neither Borrower nor any Subsidiary of either
of the Borrowers will sell, lease, transfer or otherwise dispose of any Property
or assets of either such Borrower or such Subsidiary of either of the Borrowers,
as the case may be, except in the ordinary course of business; provided,
however, that the foregoing shall not preclude either of the Borrowers or any
Subsidiary of either of the Borrowers from selling, leasing, transferring or
otherwise disposing of less than substantially all of its Property or assets so
long as the purchase price for said Property or assets shall be equal to or
greater than the depreciated book value of said Property or assets.
(d) Mergers and Consolidations. Neither Borrower nor any Subsidiary
of either of the Borrowers will merge or consolidate with any other Person or
sell, transfer or convey all or a substantial part of its Property or assets to
any Person, except that Subsidiaries of either of the Borrowers may merge with
each other or into either of the Borrowers, and except that either of the
Borrowers or any Subsidiary of either of the Borrowers may merge with or
consolidate with any other Person provided that such Borrower or such Subsidiary
shall be the surviving entity and no Default or Event of Default shall exist
hereunder either prior to or immediately following any such merger or
consolidation, and provided further that Borrowers shall have given Bank prompt
written notice, but in no event less than twenty (20) days' prior written
notice, of any such merger or consolidation and such Borrower or such Subsidiary
shall execute UCC-1 financing statements or other documents reasonably deemed
necessary by Bank to perfect and continue Bank's security interests in the
Collateral acquired through any such merger or consolidation.
(e) Acquisitions. Neither of the Borrowers nor Guarantor nor any
Subsidiary of either of the Borrowers or Guarantor will acquire all or
substantially all of the stock or assets of any Person, except that any
Borrower, Guarantor or any such Subsidiary may acquire all or substantially all
of the stock or assets of any other Person upon thirty (30) days' prior written
notice to Bank provided that no Default or Event of Default then exists
hereunder, and provided further that all of the accounts receivable, Inventory,
equipment, general intangibles and other assets of such acquired Person shall be
pledged as collateral to Bank for
Borrowers' Obligations hereunder in a manner satisfactory to Bank. Borrowers
agree to execute and to cause any such Subsidiary or other acquired Person to
execute such security agreements, pledge agreements, collateral assignments,
UCC-1 financing statements and other agreements which Bank may reasonably
request in order to grant and perfect such security interests.
(f) Fiscal Year. Neither Borrower nor any Subsidiary of either
Borrower will change its fiscal year.
(g) Stock Redemptions and Distributions. Neither of the Borrowers
will make or declare or incur any liability to make any Distribution in respect
of the capital stock of such Borrower.
(h) Transactions with Related Parties. Neither Borrower nor any
Subsidiary of either of the Borrowers will, directly or indirectly, engage in
any material transaction, in the ordinary course of business or otherwise, with
any Related Party unless such transaction is upon fair market terms, is not
disadvantageous in any material respect to Bank and has been approved by a
majority of the disinterested directors of such Borrower or such Subsidiary of
either of the Borrowers, as the case may be (or, if none of such directors are
disinterested, by a majority of the directors), as being in the best interests
of such Borrower or such Subsidiary of either such Borrower, as the case may be.
In addition, neither Borrower nor any Subsidiary of either Borrower shall (i)
transfer any Property or assets to any Related Party for other than its fair
market value or (ii) purchase or sign any agreement to purchase any stock or
other securities of any Related Party (whether debt, equity or otherwise),
underwrite or Guarantee the same, or otherwise become obligated with respect
thereto. Nothing in this Section 7.2(h) shall prohibit either Borrower from
granting nonassignable, nonexclusive licenses of its patents and trademarks at
less than market value to St. XXX Laboratories, Inc., St. XXX VRx Products Ltd.,
Guarantor or the other Borrower hereunder.
(i) Loans and Investments. Neither Borrower nor any Subsidiary of
either Borrower will make any loans or advances or extensions of credit to
(other than extensions of credit in the ordinary course of business), purchase
any stocks, bonds, notes, debentures or other securities of, make any
expenditures on behalf of, or in any manner assume liability (direct, contingent
or otherwise) for the Indebtedness of any Person, including, but not limited to
the Guarantor, except that Borrowers and the Subsidiaries of either of the
Borrowers may:
(i) Permit to remain outstanding those loans to
employees of PM Resources as disclosed on Schedule 6.10 attached
hereto;
(ii) Acquire and own stock, obligations or securities
received in settlement of debts (created in the ordinary course of
business) owing to either such Borrower or any Subsidiary of either
such Borrower;
(iii) Own, purchase or acquire (A) prime commercial
paper and certificates of deposit in United States commercial banks
(having capital resources in excess of $20,000,000.00), in each case
due within one (1) year from the date of purchase and payable in the
United States in United States dollars, (B) obligations of the United
States government or any agency thereof, (C) obligations guaranteed
directly by the United States government or (D) repurchase agreements
of United States commercial banks (having capital resources in excess
of $20,000,000.00) for terms of less than one (1) year;
(iv) Make or permit to remain outstanding travel and
other like advances to officers and employees of either such Borrower
or any Subsidiary of either such Borrower in the ordinary course of
business; and
(v) Make loans from time to time to or advances on
behalf of Guarantor.
(j) Dissolution or Liquidation. Borrowers shall not seek or permit the
dissolution or liquidation of either of the Borrowers in whole or in part.
(k) Change in Nature of Business. Neither Borrower nor any
Subsidiary of either of the Borrowers will make any material change in the
nature of its business.
(l) Pension Plans. Neither Borrower nor any Subsidiary of either of
the Borrowers shall (a) permit any condition to exist in connection with any
Pension Plan which might constitute grounds for the PBGC to institute
proceedings to have such Pension Plan terminated or a trustee appointed to
administer such Pension Plan or (b) engage in, or permit to exist or occur, any
other condition, event or transaction with respect to any Pension Plan which
could result in the incurrence by either of the Borrowers or any Subsidiary of
either of the Borrowers of any material liability, fine or penalty. Neither
Borrower nor any Subsidiary of either of the Borrowers shall become obligated to
contribute to any Pension Plan or Multiemployer Plan other than any such plan or
plans in existence on the date hereof.
(m) Change in Ownership. At all times during the Term hereof,
ownership of all of each of the Borrowers' voting stock shall be maintained by
Guarantor, and Guarantor shall maintain voting control of all of the outstanding
voting stock of each of the Borrowers at all times during the Term hereof.
7.3 Use of Proceeds. Borrowers agree that (i) the proceeds of
the Facility A Loans will be used solely for Borrowers' working capital
requirements; ; (ii) the proceeds of the Facility B Loan will be used solely to
refinance existing indebtedness of Borrowers, including, but not limited to,
repaying certain existing indebtedness of Borrowers to Guarantor, to make an
additional loan advance to Guarantor as permitted under Section 7.2(i)(v) and
for Borrowers' general corporate purposes; (iii) none of such proceeds will be
used in violation of any applicable law or regulation; and (iv) neither Borrower
will engage principally, or as one of its important activities, in the business
of extending credit for the purpose of purchasing or carrying "margin stock"
within the meaning of Regulation U of The Board of Governors of the Federal
Reserve System, as amended.
SECTION 8. EVENTS OF DEFAULT.
If any of the following (each of the following herein
sometimes called an "Event of Default") shall occur and be continuing:
8.1 Either of the Borrowers shall fail to pay any of
Borrowers' Obligations as and when the same shall become due and payable,
whether by reason of demand, acceleration or otherwise;
8.2 Any representation or warranty of either of the Borrowers
made in this Agreement, in any other Transaction Document to which such Borrower
is a party or in any certificate, agreement, instrument or statement furnished
or made or delivered pursuant hereto or thereto or in connection herewith or
therewith, shall prove to have been untrue or incorrect in any material respect
when made or effected;
8.3 Either of the Borrowers shall fail to perform or observe
any term, covenant or provision contained in Section 7.1(a)(i), (ii), (vi),
(vii), (viii) or (ix), Section 7.1(i), Section 7.2 or Section 7.3;
8.4 Borrowers shall fail to timely deliver the Borrowing Base
Certificate required by Sections 3.1(d) and 7.1(a)(v) or the financial
statements or compliance certificate required by Section 7.1(a)(iii) or (iv),
unless prior to the date required for delivery of such financial statements,
compliance certificate or Borrowing Base Certificate, Borrowers shall notify the
Bank that they anticipate a delay in the delivery of such information, in which
case such default shall not constitute an Event of Default hereunder unless such
financial statement, compliance certificate or Borrowing Base Certificate is not
delivered within 10 days following such notice of delay;
8.5 Either of the Borrowers shall fail to perform or observe
any other term, covenant or provision contained in this Agreement and any such
failure shall remain unremedied for fifteen (15) days after written notice
thereof shall have been given to Borrowers by Bank;
8.6 This Agreement or any of the other Transaction Documents
shall at any time for any reason cease to be in full force and effect or shall
be declared to be null and void by a court of competent jurisdiction, or if the
validity or enforceability thereof shall be contested or denied by either of the
Borrowers, or if the transactions completed hereunder or thereunder shall be
contested by either of the Borrowers or if either of the Borrowers shall deny
that it has any or further liability or obligation hereunder or thereunder;
8.7 Either of the Borrowers, any Subsidiary of either of the
Borrowers or any other Obligor shall (i) voluntarily commence any proceeding or
file any petition seeking relief under Title 11 of the United States Code or any
other Federal, state or foreign bankruptcy, insolvency, receivership,
liquidation or similar law, (ii) consent to the institution of, or fail to
contravene in a timely and appropriate manner, any such proceeding or the filing
of any such petition, (iii) apply for or consent to the appointment of a
receiver, trustee, custodian, sequestrator or similar official of itself,
himself or herself or of a substantial part of its, his or her Property or
assets, (iv) file an answer admitting the material allegations of a petition
filed against itself, himself or herself in any such proceeding, (v) make a
general assignment for the
benefit of creditors, (vi) become unable, admit in writing its, his or her
inability or fail generally to pay its, his or her debts as they become due or
(vii) take any corporate or other action for the purpose of effecting any of the
foregoing;
8.8 An involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent jurisdiction seeking
(i) relief in respect of either of the Borrowers, any Subsidiary of either of
the Borrowers or any other Obligor, or of a substantial part of the Property or
assets of either of the Borrowers, any Subsidiary of either of the Borrowers or
any other Obligor, under Title 11 of the United States Code or any other
Federal, state or foreign bankruptcy, insolvency, receivership, liquidation or
similar law, (ii) the appointment of a receiver, trustee, custodian,
sequestrator or similar official of either of the Borrowers, any Subsidiary of
either of the Borrowers or any other Obligor or of a substantial part of the
Property or assets of either of the Borrowers, any Subsidiary of either of the
Borrowers or any other Obligor or (iii) the winding-up or liquidation of either
of the Borrowers, any Subsidiary of either of the Borrowers or any other
Obligor; and such proceeding or petition shall continue undismissed for thirty
(30) consecutive days or an order or decree approving or ordering any of the
foregoing shall continue unstayed and in effect for thirty (30) consecutive
days;
8.9 Any "Event of Default" (as defined therein) shall occur
under or within the meaning of either of the Security Agreements;
8.10 Any "Event of Default" (as defined therein) shall occur
under or within the meaning of the Deed of Trust;
8.11 Any "Default" or "Event of Default" (as defined therein)
shall occur under or within the meaning of the Pledge Agreement, or if the
Pledge Agreement shall at any time for any reason cease to be in full force and
effect or shall be declared to be null and void by a court of competent
jurisdiction, or if the validity or enforceability thereof shall be contested or
denied by Guarantor, or if Guarantor shall deny that it has any further
liability or obligation thereunder, or if Guarantor shall fail to comply with or
observe any of the terms, provisions or conditions contained in said Pledge
Agreement;
8.12 Any "Event of Default" (as defined therein) shall occur
under or within the meaning of the Guaranty, or if the Guaranty shall at any
time for any reason cease to be in full force and effect or shall be declared to
be null and void by a court of competent jurisdiction, or if the validity or
enforceability thereof shall be contested or denied by Guarantor, or if
Guarantor shall deny that it has any further liability or obligation thereunder
or if Guarantor shall fail to comply with or observe any of the terms,
provisions or conditions contained in said Guaranty;
8.13 The Subordination Agreement shall at any time for any
reason cease to be in full force and effect or shall be declared to be null and
void by a court of competent jurisdiction, or if the validity or enforceability
thereof shall be contested or denied by Guarantor, or if Guarantor shall deny
that it has any further liability or obligation thereunder or if Guarantor shall
fail to comply with or observe any of the terms, provisions or conditions
contained in said Subordination Agreement;
8.14 Either of the Borrowers, any Subsidiary of either of the
Borrowers or any other Obligor shall be declared by Bank to be in default on, or
pursuant to the terms of, (1) any other present or future obligation to Bank,
including, without limitation, any other loan, line of credit, revolving credit,
guaranty or letter of credit reimbursement obligation, or (2) any other present
or future agreement purporting to convey to Bank a Lien upon any Property or
assets of either of the Borrowers, such Subsidiary of either of the Borrowers or
such other Obligor, as the case may be;
8.15 St. XXX Laboratories, Inc. shall be declared by Bank to
be in default on, or pursuant to the terms of any of its present or future
obligations to Bank, including, without limitation, any other loan, line of
credit, revolving credit, guaranty or letter of credit reimbursement obligation,
or (2) any other present or future agreement purporting to convey to Bank a Lien
upon any Property or assets of St. XXX Laboratories, Inc.;
8.16 Either of the Borrowers, any Subsidiary of either of the
Borrowers or any other Obligor shall fail (and such failure shall not have been
cured or waived) to perform or observe any term, provision or condition of, or
any other default or event of default shall occur under, any agreement, document
or instrument evidencing, securing or otherwise relating to any outstanding
Indebtedness of either of the Borrowers, such Subsidiary of either of the
Borrowers or such other Obligor, as the case may be, for borrowed money (other
than Borrowers' Obligations) in a principal amount in excess of Five Hundred
Thousand Dollars ($500,000.00), if the effect of such failure or default is to
cause or permit such Indebtedness to be declared to be due and payable or
otherwise accelerated, or to be required to be prepaid (other than by a
regularly scheduled required prepayment) prior to the stated maturity thereof;
8.17 Either of the Borrowers, any Subsidiary of either of the
Borrowers or any other Obligor shall have a judgment entered against it, him or
her in an amount of $50,000.00 or more by a court having jurisdiction in the
premises and such judgment shall not be appealed in good faith or satisfied by
such Borrower, such Subsidiary of either of the Borrowers or such other Obligor,
as the case may be, within thirty (30) days after the entry of such judgment;
8.18 The occurrence of a Reportable Event with respect to any
Pension Plan; the filing of a notice of intent to terminate a Pension Plan by
either of the Borrowers, any ERISA Affiliate or any Subsidiary of either of the
Borrowers; the institution of proceedings to terminate a Pension Plan by the
PBGC or any other Person; the withdrawal in a "complete withdrawal" or a
"partial withdrawal" as defined in Sections 4203 and 4205, respectively, of
ERISA by either of the Borrowers, any ERISA Affiliate or any Subsidiary of
either of the Borrowers from any Multiemployer Plan; or the incurrence of any
material increase in the contingent liability of either of the Borrowers or any
Subsidiary of either of the Borrowers with respect to any "employee welfare
benefit plan" as defined in Section 3(1) of ERISA which covers retired employees
and their beneficiaries; or
8.19 The institution by either of the Borrowers, any ERISA
Affiliate or any Subsidiary of either of the Borrowers of steps to terminate any
Pension Plan if, in order to effectuate such termination, either such Borrower,
such ERISA Affiliate or such Subsidiary of either of the Borrowers, as the case
may be, would be required to make a contribution to such Pension Plan, or would
incur a liability or obligation to such Pension Plan, in excess of Fifty
Thousand Dollars ($50,000.00) or the institution by the PBGC of steps to
terminate any Pension Plan;
THEN, and in each such event (other than an event described in
Sections 8.7 or 8.8), Bank may declare that its obligation to make Loans under
this Agreement has terminated, whereupon such obligation of Bank shall be
immediately and forthwith terminated, and Bank may further declare the entire
outstanding principal balance of and all accrued and unpaid interest on the Note
and all of the other Borrowers' Obligations to be forthwith due and payable,
whereupon all of the unpaid principal balance of and all accrued and unpaid
interest on the Note and all such other Borrowers' Obligations shall become and
be immediately due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by each of the
Borrowers, and Bank may exercise any and all other rights and remedies which it
may have under any of the other Transaction Documents or under applicable law;
provided, however, that upon the occurrence of any event described in Sections
8.7 or 8.8, Bank's obligation to make Loans under this Agreement shall
automatically terminate and the entire outstanding principal balance of and all
accrued and unpaid interest on the Note and all of the other Borrowers'
Obligations shall automatically become immediately due and payable, without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by each of the Borrowers, and Bank may exercise any and
all other rights and remedies which it may have under any of the other
Transaction Documents or under applicable law.
SECTION 9. GENERAL.
9.1 No Waiver. No failure or delay by Bank in exercising any
right, remedy, power or privilege hereunder or under any other Transaction
Document shall operate as a waiver thereof; nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, remedy, power or privilege. The remedies provided herein and
in the other Transaction Documents are cumulative and not exclusive of any
remedies provided by law. Nothing herein contained shall in any way affect the
right of Bank to exercise any statutory or common law right of banker's lien or
setoff.
9.2 Right of Setoff. Upon the occurrence and during the
continuance of any Event of Default, Bank is hereby authorized at any time and
from time to time, without notice to Borrowers (any such notice being expressly
waived by each of the Borrowers) and to the fullest extent permitted by law, to
setoff and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held by Bank and any and all other
indebtedness at any time owing by Bank to or for the credit or account of either
of the Borrowers against any and all of Borrowers' Obligations irrespective of
whether or not Bank shall have made any demand hereunder or under any of the
other Transaction Documents and although such obligations may be contingent or
unmatured. Bank agrees to promptly notify Borrowers after any such setoff and
application made by Bank, provided, however, that the failure to give such
notice shall not affect the validity of such setoff and application. The rights
of Bank under this Section 9.2 are in addition to any other rights and remedies
(including, without limitation, other rights of setoff) which Bank may have.
Nothing contained in this Agreement or any other Transaction Document shall
impair the right of Bank to exercise any right of setoff or counterclaim it may
have against either of the Borrowers and to apply the amount subject to such
exercise to the payment of indebtedness of either of the Borrowers unrelated to
this Agreement or the other Transaction Documents.
9.3 Cost and Expenses. Borrowers jointly and severally agree,
whether or not any Loan is made hereunder, to pay Bank upon demand (i) all
out-of-pocket costs and expenses and all Attorneys' Fees of Bank in connection
with the preparation, documentation, negotiation, execution and administration
of this Agreement, the Note and the other Transaction Documents, (ii) all
recording, filing, title insurance, surveying and appraisal fees incurred in
connection with this Agreement and the other Transaction Documents, (iii) all
out-of-pocket costs and expenses and all Attorneys' Fees of Bank in connection
with the preparation of any waiver or consent hereunder or any amendment hereof
or any Event of Default or alleged Event of Default hereunder, (iv) if an Event
of Default occurs, all out-of-pocket costs and expenses and all Attorneys' Fees
incurred by Bank in connection with such Event of Default and collection and
other enforcement proceedings resulting therefrom and (v) all other Attorneys'
Fees incurred by Bank relating to or arising out of or in connection with this
Agreement or any of the other Transaction Documents. Borrowers further jointly
and severally agree to pay or reimburse Bank for any stamp or other taxes which
may be payable with respect to the execution, delivery, recording and/or filing
of this Agreement, the Note, the Security Agreements, the Deed of Trust or any
of the other Transaction Documents. All of the obligations of Borrowers under
this Section 9.3 shall survive the satisfaction and payment of Borrowers'
Obligations and the termination of this Agreement.
9.4 Environmental Indemnity. Borrowers hereby jointly and
severally agree to indemnify Bank and hold Bank harmless from and against any
and all losses, liabilities, damages, injuries, costs, expenses and claims of
any and every kind whatsoever (including, without limitation, court costs and
Attorneys' Fees) which at any time or from time to time may be paid, incurred or
suffered by, or asserted against, Bank for, with respect to or as a direct or
indirect result of the violation by either of the Borrowers or any Subsidiary of
either of the Borrowers of any Environmental Laws; or with respect to, or as a
direct or indirect result of the presence on or under, or the escape, seepage,
leakage, spillage, discharge, emission or release from, properties utilized by
either of the Borrowers and/or any Subsidiary of either of the Borrowers in the
conduct of their respective businesses into or upon any land, the atmosphere or
any watercourse, body of water or wetland, of any Hazardous Materials or any
other hazardous or toxic waste, substance or constituent or other substance
(including, without limitation, any losses, liabilities, damages, injuries,
costs, expenses or claims asserted or arising under the Environmental Laws); and
the provisions of and undertakings and indemnification set out in this Section
9.4 shall survive the satisfaction and payment of Borrowers' Obligations and the
termination of this Agreement.
9.5 General Indemnity. In addition to the payment of expenses
pursuant to Section 9.3, whether or not the transactions contemplated hereby
shall be consummated, Borrowers hereby jointly and severally agree to indemnify,
pay and hold Bank and any holder(s) of the Note, and the officers, directors,
employees, agents and affiliates of Bank and such holder(s) (collectively, the
"Indemnitees") harmless from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, expenses and disbursements of any kind or nature whatsoever (including,
without limitation, the reasonable fees and disbursements of counsel for such
Indemnitees in connection with any investigative, administrative or judicial
proceeding commenced or threatened, whether or not such Indemnitees
shall be designated a party thereto), that may be imposed on, incurred by or
asserted against the Indemnitees, in any manner relating to or arising out of
this Agreement, any of the other Transaction Documents or any other agreement,
document or instrument executed and delivered by either of the Borrowers or any
other Obligor in connection herewith or therewith, the statements contained in
any commitment letters delivered by Bank, Bank's agreement to make the Loans
hereunder or the use or intended use of the proceeds of any Loan hereunder
(collectively, the "indemnified liabilities"); provided that Borrowers shall
have no obligation to an Indemnitee hereunder with respect to indemnified
liabilities arising from the gross negligence or willful misconduct of that
Indemnitee as determined by a court of competent jurisdiction. To the extent
that the undertaking to indemnify, pay and hold harmless set forth in the
preceding sentence may be unenforceable because it is violative of any law or
public policy, each Borrower shall contribute the maximum portion that it is
permitted to pay and satisfy under applicable law to the payment and
satisfaction of all indemnified liabilities incurred by the Indemnitees or any
of them. The provisions of the undertakings and indemnification set out in this
Section 9.5 shall survive satisfaction and payment of Borrowers' Obligations and
the termination of this Agreement.
9.6 Authority to Act. Bank shall be entitled to act on any
notices and instructions (telephonic or written) reasonably believed by Bank to
have been delivered by any person authorized to act on behalf of either of the
Borrowers pursuant hereto, regardless of whether such notice or instruction was
in fact delivered by a person authorized to act on behalf of either such
Borrower, and Borrowers hereby jointly and severally agree to indemnify Bank and
hold Bank harmless from and against any and all losses and expenses, if any,
ensuing from any such action.
9.7 Notices. Any notice, request, demand, consent,
confirmation or other communication hereunder shall be in writing and delivered
in person or sent by telegram, telex, telecopy or registered or certified mail,
return receipt requested and postage prepaid, if to Borrowers in care of PM
Resources at Riverport Executive Center II, 00000 Xxxxxxxxx Xxxxx, Xxxxx 000,
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000, Attention: Xxxxxx X. Xxxxxxxxx, or if to Bank
at 000 Xxxxx Xxxxxxx, Xx. Xxxxx, Xxxxxxxx 00000, Attention: Xxxxxx Xxxx, or at
such other address as either party may designate as its address for
communications hereunder by notice so given. Such notices shall be deemed
effective on the day on which delivered or sent if delivered in person or sent
by telegram, telex or telecopy, or on the third (3rd) Business Day after the day
on which mailed, if sent by registered or certified mail.
9.8 CONSENT TO JURISDICTION; JURY TRIAL WAIVER. EACH OF
THE BORROWERS IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION
OF ANY MISSOURI STATE COURT OR ANY UNITED STATES OF AMERICA COURT
SITTING IN THE EASTERN DISTRICT OF MISSOURI, AS BANK MAY ELECT, IN ANY
SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT. EACH OF THE
BORROWERS HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT TO
SUCH SUIT, ACTION OR PROCEEDING MAY BE HELD AND DETERMINED IN ANY
OF SUCH COURTS. EACH OF THE BORROWERS IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH SUCH
BORROWER MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT, AND EACH
OF THE BORROWERS FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
EACH OF THE BORROWERS HEREBY EXPRESSLY WAIVES ALL RIGHTS OF ANY OTHER
JURISDICTION WHICH SUCH BORROWER MAY NOW OR HEREAFTER HAVE BY REASON OF ITS
PRESENT OR SUBSEQUENT DOMICILES. EACH OF THE BORROWERS AUTHORIZES THE SERVICE OF
PROCESS UPON SUCH BORROWER BY REGISTERED MAIL SENT TO BORROWERS AT THEIR ADDRESS
SET FORTH IN SECTION 9.7. EACH OF THE BORROWERS HEREBY WAIVES ANY RIGHT TO TRIAL
BY JURY OF ANY LITIGATION BROUGHT IN ACCORDANCE WITH THIS SECTION.
9.9 Bank's Books and Records. Bank's books and records showing
the account between Borrowers and Bank shall be admissible in evidence in any
action or proceeding and shall constitute prima facie proof thereof.
9.10 Governing Law; Amendments. This Agreement, the Note, the
Security Agreements and all of the other Transaction Documents shall be governed
by and construed in accordance with the internal laws of the State of Missouri,
and this Agreement and the other Transaction Documents may not be changed, nor
may any term, condition or Event of Default be waived, modified, or discharged
orally but only by an agreement in writing, signed by the party against whom
enforcement of any waiver, change, modification or discharge is sought.
9.11 References; Headings for Convenience. Unless otherwise
specified herein, all references herein to Section numbers refer to Section
numbers of this Agreement, all references herein to Exhibits A, B, C, D and E
refer to annexed Exhibits A, B, C, D and E which are hereby incorporated herein
by reference and all references herein to Schedules 6.5, 6.6, 6.10, 6.11, 6.12
and 6.17 refer to annexed Schedules 6.5, 6.6, 6.10, 6.11, 6.12 and 6.17 which
are hereby incorporated herein by reference. The Section headings are furnished
for the convenience of the parties and are not to be considered in the
construction or interpretation of this Agreement.
9.12 Subsidiary Reference. Any reference herein to a
Subsidiary or Consolidated Subsidiary of either of the Borrowers, and any
financial definition, ratio, restriction or other provision of this Agreement
which is stated to be applicable to either of the Borrowers and its Subsidiaries
or Consolidated Subsidiaries or which is to be determined on a "consolidated" or
"consolidating" basis, shall apply only to the extent either such Borrower has
any Subsidiaries or Consolidated Subsidiaries and, where applicable, to the
extent any such Subsidiaries are consolidated with such Borrower for financial
reporting purposes.
9.13 Binding Agreement. This Agreement shall be binding upon
and inure to the benefit of each of the Borrowers and its successors and Bank
and its successors and assigns. Neither of the Borrowers may assign or delegate
any of its rights or obligations under this Agreement.
9.14 NO ORAL AGREEMENTS; ENTIRE AGREEMENT. ORAL
AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO
FORBEAR FROM ENFORCING REPAYMENT OF A DEBT, INCLUDING PROMISES
TO EXTEND OR RENEW SUCH DEBT, ARE NOT ENFORCEABLE. TO PROTECT
BORROWERS AND BANK FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS
REACHED BY BORROWERS AND BANK COVERING SUCH MATTERS ARE CONTAINED IN THIS
AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS, WHICH AGREEMENT AND OTHER
TRANSACTION DOCUMENTS ARE A COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENTS
BETWEEN BORROWERS AND BANK, EXCEPT AS BORROWERS AND BANK MAY LATER AGREE IN
WRITING TO MODIFY THEM. THIS AGREEMENT EMBODIES THE ENTIRE AGREEMENT AND
UNDERSTANDING BETWEEN THE PARTIES HERETO AND SUPERSEDES ALL PRIOR AGREEMENTS AND
UNDERSTANDINGS (ORAL OR WRITTEN) RELATING TO THE SUBJECT MATTER HEREOF.
9.15 Severability. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby.
9.16 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
9.17 Resurrection of Borrowers' Obligations. To the extent
that Bank receives any payment on account of any of Borrowers' Obligations, and
any such payment(s) or any part thereof are subsequently invalidated, declared
to be fraudulent or preferential, set aside, subordinated and/or required to be
repaid to a trustee, receiver or any other Person under any bankruptcy act,
state or Federal law, common law or equitable cause, then, to the extent of such
payment(s) received, Borrowers' Obligations or part thereof intended to be
satisfied and any and all Liens upon or pertaining to any Property or assets of
either of the Borrowers and theretofore created and/or existing in favor of Bank
as security for the payment of such Borrowers' Obligations shall be revived and
continue in full force and effect, as if such payment(s) had not been received
by Bank and applied on account of Borrowers' Obligations.
IN WITNESS WHEREOF, the parties have executed this Amended and
Restated Revolving Credit Agreement this 18th day of June, 1997
PM RESOURCES, INC.
By:
Xxxxxx X. Xxxxxxxxx, Vice President
ZEMA CORPORATION
By:
Xxxxxx X. Xxxxxxxxx, Secretary
FIRST BANK
By:
Xxxxxx X. Xxxx, Senior Vice President
