1
Exhibit 10.34
LOAN AGREEMENT
This Loan Agreement ("Agreement") is entered into as of April 3, 1998,
between The Delicious Frookie Company, a Delaware corporation ("Borrower"), and
American Pacific Financial Corporation, a California corporation ("Lender").
With reference to the following:
WHEREAS, Borrower desires to borrow from Lender the sum of Four Million
Six Hundred Thousand Dollars ($4,600,000) (the "Loan") for the purpose of
acquiring all of the business and assets of Xxxxxxx Foods, L.L.C., a Delaware
limited liability company ("Xxxxxxx").
WHEREAS, the terms of Borrower's acquisition of the assets of Xxxxxxx
provide for a purchase price of $5,000,000, comprised of $3,000,000 in cash,
$1,500,000 in the form of a promissory note (the "Purchase Note") of Borrower
plus the assumption of certain liabilities, at the close of such acquisition
(the "Closing").
WHEREAS, as a condition to the Closing, Xxxxxxx has required Lender to
unconditionally guarantee or become the primary obligor under the Purchase Note
of Borrower.
WHEREAS, Lender is willing to become the primary obligor under the
Purchase Note, provided, Borrower agrees to reimburse Lender on the terms
contained herein.
WHEREAS, Lender is willing to lend Borrower money on the terms stated in
this Agreement.
Now, therefore, Borrower and Lender agree as follows:
1. THE LOAN
a. Agreement to Lend. On Borrower's request for the funding (the
"Funding"), Lender will lend to Borrower the sum of Four Million Six Hundred
Thousand Dollars ($4,600,000) consisting of the net proceeds to Lender of a loan
from a third party to Lender in the principal amount of $3,000,000 to be funded
substantially concurrently with the Closing, delivered in cash or clear funds,
$1,500,000 in the form of assuming primary liability under the Purchase Note
(the "Assumption Amount"), evidenced by the Assignment and Assumption Agreement
of even date herewith, attached as Exhibit A and incorporated herein by this
reference and a further $100,000 as described in subparagraph d below. The Loan
shall be evidenced by a promissory note ("Note") attached as Exhibit B, and
incorporated herein by this reference. The Note shall be executed by Borrower at
the Funding, dated concurrently therewith. Concurrently with the Funding, Lender
and Borrower shall execute the Assignment and Assumption Agreement.
2
b. Interest. The term "Applicable Interest Rate" as used in this
Loan Agreement with respect to the Note shall mean an interest rate equal to
twelve percent (12%) per annum computed on the basis of a 360-day year and
actual days elapsed, payable monthly in advance.
Upon the occurrence of an Event of Default under the terms of this
Agreement, the Note or the Security Agreement, Lender shall be entitled to
receive and Borrower shall pay interest on the entire unpaid principal sum at a
rate (the "Default Rate") equal to (i) the greater of (a) the Applicable
Interest Rate plus three percent (3%) or (b) the Prime Rate (as hereinafter
defined) plus six percent (6%) or (ii) the maximum interest rate that Borrower
may by law pay, whichever is lower. The Default Rate shall be computed from the
occurrence of the Event of Default until the earlier of the date upon which the
Event of Default is cured or the date upon which the Debt is paid in full.
Interest calculated at the Default Rate shall be added to the Debt, and shall be
deemed secured by the Security Agreement. This clause, however, shall not be
construed as an agreement or privilege to extend the date of the payment of the
Debt, nor as a waiver of any other right or remedy accruing to Lender by reason
of the occurrence of any Event of Default.
The "Prime Rate" shall mean the annual rate of interest publicly
announced by The Wall Street Journal in its Western Edition, as such rate may
exist from time to time. If more than one Prime Rate is published in The Wall
Street Journal for a day, the average of the Prime Rates shall be used, and such
average shall be rounded up to the nearest one-quarter of one percent (.25%). If
The Wall Street Journal ceases to publish the "Prime Rate" the Lender shall
select an equivalent publication that publishes such "Prime Rate", and if such
prime rate is no longer generally published or is limited, regulated or
administered by a governmental or quasi-governmental body, then Lender shall
select a comparable interest rate index.
The interest provisions in this Agreement and the Note are subject
to the express condition that at no time shall Borrower be obligated or required
to pay interest on the principal balance at a rate which could subject Lender to
either civil or criminal liability as a result of being in excess of the maximum
interest rate which Borrower is permitted by applicable law to contract or agree
to pay. If by the terms of this Note, Borrower is at any time required or
obligated to pay interest on the principal balance at a rate in excess of such
maximum rate, the Applicable Interest Rate or the Default Rate, as the case may
be, shall be deemed to be immediately reduced to such maximum rate and all
previous payments in excess of the maximum rate shall be deemed to have been
payments in reduction of principal and not on account of the interest due. All
sums paid or agreed to be paid to Lender for the use, forbearance or detention
of the Debt, shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the full stated term of the Promissory
Note until payment in full so that the rate or amount of interest on account of
the Debt does not exceed the maximum lawful rate of interest from time to time
in effect and applicable to the Debt for so long as the Debt is outstanding.
c. Maturity. All principal and interest then unpaid under the Loan
is due and payable on the earlier of: (i) 120 days from date first written
above, or (ii) consummation of an initial public offering of shares of the
Borrower's common stock, $.01 par value per share, or other
2
3
recapitalization (whether through one transaction or a series of transactions)
of the Borrower (whether through a private placement or otherwise) from which
the Borrower receives (whether from such one transaction or on a cumulative
basis from such series of transactions) gross proceeds of at least $7,000,000,
or (iii) a sale or other transfer of all or substantially all of the assets or
equity interests in the Borrower.
d. Loan Fee. Borrower will pay to Lender a Loan Fee in the amount of
One Hundred Thousand Dollars ($100,000). Such Loan Fee shall be paid
concurrently with the Funding by deduction of such amount from the Loan proceeds
delivered to Borrower by Lender upon Funding. Such fee shall be fully earned and
non-refundable upon Funding.
e. Prepayment. Provided no Event of Default exists, the principal
balance of the Note may be prepaid, in whole but not in part, upon: (i) not less
than 15 days and not more than 30 days prior written notice (the "Prepayment
Notice") to Lender specifying the scheduled payment date on which prepayment is
to be made (the "Prepayment Date"); (ii) payment of all accrued and unpaid
interest on the outstanding principal balance of the Note to and including the
Prepayment Date together with a payment of all interest which would have accrued
on the principal balance of the Note to and including the first day of the
calendar month immediately following the Prepayment Date, if such prepayment
occurs on a date which is not the first day of a calendar month (the "Shortfall
Interest Payment"); (iii) payment of all other sums then due under the Note, and
the Security Agreement and (iv) payment of a prepayment consideration (the
"Prepayment Consideration") in an amount equal to one percent (1%) of the
principal amount of the Note being prepaid. If a Prepayment Notice is given by
Borrower to Lender, the principal balance of the Note and the other sums
required by the Note, Security Agreement or Loan Agreement shall be due and
payable on the Prepayment Date.
Lender shall not be obligated to accept any prepayment of the
principal balance of the Note unless it is accompanied by all sums due in
connection therewith. Notwithstanding anything contained herein to the contrary,
provided no Event of Default exists, no Prepayment Consideration shall be due in
connection with a complete or partial prepayment resulting from the application
of Proceeds as set forth in the Security Agreement and partial prepayments may
be made from such Proceeds.
If a Default Prepayment occurs, Borrower shall pay to Lender the
entire Debt, including, without limitation, the Prepayment Consideration. The
term "Default Prepayment" shall mean a prepayment of the principal amount of the
Note made during the continuance of any Event of Default or after an
acceleration of the Maturity Date under any circumstances, including, without
limitation, a prepayment occurring in connection with reinstatement of the
Security Agreement provided by statute or exercise of a power of sale, any
statutory right to redeem the Collateral or otherwise.
3
4
2. SECURITY AGREEMENT
The Loan shall be secured by a security agreement in the form attached as
Exhibit C executed by Borrower as debtor to Lender as secured party, granting
Lender a security interest in all equipment, accounts receivable, inventory,
real property, personal property, all assets acquired in its acquisition of the
business and assets of Xxxxxxx, proceeds of the foregoing, and all other assets
of Borrower, whether tangible or intangible, whether now owned or hereafter
acquired, and as set forth in the Security Agreement.
3. CONDITIONS PRECEDENT
Lender's obligation to make the Loan is subject to the condition that, on
or before the Funding (the "Closing Date"), there shall have been delivered to
Lender in form and substance satisfactory to Lender and its counsel:
a. Corporate Resolutions. A copy of a resolution or resolutions
passed by the Borrower's board of directors and certified by the Borrower's
secretary or assistant secretary as being in full force and effect on the
Closing Date, authorizing the borrowing provided for in this Agreement, and the
execution, delivery and performance of this Agreement, the Note, Security
Agreement and any other instrument or agreement required under this Agreement,
as set forth in Exhibit D attached.
b. Lack of Material Changes. Evidence satisfactory to Lender that
since the date of Borrower's last audited financial statement, there has been no
material adverse change in Borrower's financial condition or results of
operations.
c. Executed Loan Documents. Fully executed copies of the Note,
Security Agreement and Forms UCC-1 financing statements with respect to the
Collateral.
d. Certificate of Incumbency. A certificate, signed by the secretary
or an assistant secretary of Borrower and dated the Closing Date, certifying the
incumbency of the person or persons authorized to execute and deliver on behalf
of Borrower this agreement and any note or other instrument or agreement
required under this Agreement, as set forth in Exhibit E attached.
e. Officer's Certificate. An officer's certificate that the
representations and warranties contained in Section 4 hereof are true and
accurate, as set forth in Exhibit F.
f. Articles of Incorporation. A copy of Borrower's Articles of
Incorporation certified by the Secretary of Borrower.
g. Bylaws. A copy of the Borrower's Bylaws certified by the
Secretary of Borrower.
4
5
h. Certificate of Good Standing. A Certificate of good standing for
Borrower dated within fifteen (15) days of Funding from the State of Delaware.
i. Certificates of Authority. Certificates of authority from every
jurisdiction in which the lawful conduct of Borrower's business, either before
or anticipated after Closing requires such authority.
j. Opinion of Counsel. Lender shall have received an opinion of
Borrower's counsel in the form and substance of Exhibit G attached hereto and
incorporated herein by this reference.
4. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Lender that the following statements
are true, correct and complete as of the Closing Date:
a. Organization and Standing. Borrower is a corporation duly
organized and validly existing under the laws of the jurisdiction of its
incorporation with its chief executive office located at 0000 Xxxxx Xxxx, Xxxxx
000, Xxx Xxxxxxx, Xxxxxxxx 00000. It has the requisite power and authority to
own its property and to carry on its business as it is now being conducted.
Borrower has made all filings and is in good standing in the jurisdiction of its
incorporation and in each other jurisdiction in which the nature of the business
it transacts or the character of property it owns makes such filings necessary,
except where the failure to maintain good standing will not cause any adverse
material change in Borrower's business, operations, assets, properties or
conditions whether financial or otherwise (a "Borrower Material Adverse
Effect");
b. Affiliates. Borrower does not own or control, directly or
indirectly, any interest or investment (whether equity or debt) in any
corporation, association, partnership, business, trust or other entity, except
the business of Xxxxxxx, which will be so controlled following the Closing Date;
c. Authority. Borrower has the requisite power and authority to
borrow the sums provided for in this agreement, to execute and deliver this
Agreement and any note or other instrument or Agreement required under this
Agreement, and to perform and observe the terms and provisions of this Agreement
and of all such other notes, instruments and agreements;
d. Approval. All corporate action by Borrower, its directors or
stockholders, necessary for the authorization, execution, delivery and
performance of this Agreement and any note or other instrument or agreement
required under this Agreement, has been duly taken and no governmental approval
is required.
e. Officers. The officers of Borrower executing this Agreement and
any note or other instrument or agreement required under this Agreement are duly
and properly elected to or appointed to office and fully authorized to execute
them;
5
6
f. Binding Effect. This Agreement has been duly executed and
delivered by Borrower, and constitutes the legal, valid and binding obligation
of Borrower, enforceable against it in accordance with its terms and the Note,
Security Agreement and any other instrument or agreement required under this
Agreement, when executed and delivered by Borrower, will similarly constitute
the legal, valid and binding obligation of Borrower, enforceable against it in
accordance with their respective terms;
g. Contravention. There is no charter, bylaw or capital stock
provision of Borrower, and no provision of any indenture or agreement, written
or oral, to which Borrower is a party or under which Borrower is obligated, nor
is there any statute, rule or regulation, or any judgment, decree or order of
any court or agency binding on Borrower which would be contravened by the
execution and delivery of this Agreement, or the Note, Security Agreement or
other instrument or agreement required under this Agreement, or by the
performance of any provision, condition, covenant or other term of this
Agreement, the Note, Security Agreement or any other instrument or agreement;
h. Title to Property. All property owned by Borrower and all
property covered by the Security Agreement is owned by Borrower free and clear
of all liens, encumbrances and rights of others, except encumbrances existing as
of the Closing Date, the preexisting security interest of U.S. Bancorp Republic
Commercial Finance, Inc. f.k.a. Republic Acceptance Corporation and the security
interest of Xxxxxxx Foods, L.L.C., to be granted at Closing and permitted
encumbrances as set forth in Section 6(e) below;
i. Disputes. Except as set forth on Schedule 4(i), no litigation,
tax claim, proceeding or dispute is pending, or, to Borrower's knowledge,
threatened against or affecting Borrower or its property which could have a
Borrower Material Adverse Effect;
j. Default. No event has occurred and is continuing or would result
from the making of the Loan that constitutes an Event of Default as defined in
this Agreement, the Note or the Security Agreement or which, on the lapse of
time or notice or both, would become such an Event of Default;
k. Financial Information. All financial information and other data
furnished by Borrower to Lender are complete and correct. Borrower's financial
statements dated December 31, 1996 and 1997, respectively, have been prepared in
accordance with generally accepted accounting principles and practices
consistently applied, and fairly represent the financial condition and results
of operations of Borrower as of such dates. Since December 31, 1997, there has
been no material adverse change in Borrower's financial condition or results of
operations. Borrower has no contingent obligations, liabilities for taxes or
other outstanding financial obligations which (in the aggregate) are material,
except as: (i) disclosed in such statements, information and data or (ii)
incurred in the ordinary course of business;
6
7
l. Security Interest. Except for the due filing of any financing
statement regarding the Collateral and except for the delivery to Lender of any
of the Collateral for which a security interest may be perfected only by
possession, no further action is necessary to establish and perfect Lender's
security interest in the Collateral described in this Agreement, the Security
Agreement or the Note; and
m. Pension Liabilities. Borrower has not incurred any material
accumulated funding deficiency within the meaning of ERISA and has not incurred
any material liability to the Pension Benefit Guaranty Corporation ("PBGC") or
any successor thereto established under ERISA, in connection with any Plan or
other class of benefit that the PBGC has elected to insure. As used in this
Agreement, "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended. "Plan" means any employee benefit plan subject to the provisions of
ERISA.
5. AFFIRMATIVE COVENANTS
Borrower agrees until the full and final payment of the Loan and all other
obligations outstanding under this Agreement, it will, unless Lender waives
compliance in writing:
a. Use of Loan Proceeds. Use the proceeds of the Loan in the amount
of Four Million Five Hundred Thousand Dollars ($4,500,000) only to fund the
acquisition of all the business and assets of Xxxxxxx.
b. Information to Lender. Promptly give written notice to Lender of:
(1) all litigation affecting Borrower when the amount claimed
is One Hundred Thousand Dollars ($100,000) or more;
(2) any dispute which may exist between Borrower and any
governmental regulatory body or law enforcement authority which could have a
Borrower Material Adverse Effect;
(3) any labor controversy resulting in or threatening a strike
against Borrower;
(4) any proposal by any public authority to acquire Borrower's
assets or business or to engage in activities competitive with Borrower;
(5) any Event of Default or any event that, with the lapse of
time or notice or both, would become an Event of Default; and
(6) any other matter that has resulted or might result in a
Borrower Material Adverse Effect;
c. Reports to Lender. Deliver to Lender, in form and detail
reasonably satisfactory to Lender, and in the number of copies Lender may
reasonably request:
7
8
(1) as soon as available but no later than fifty (50) days
after the end of each of the first three quarters of each fiscal year of
Borrower, its balance sheet as of the end of such quarter, and its income
statement, reconciliation of capital accounts and statement of sources and uses
of funds for such quarter, and for the portion of the fiscal year ending with
such quarter, all certified by a responsible officer of Borrower as fairly
representing Borrower's financial condition and results of operations at the
times and for the periods therein stated;
(2) as soon as available but no later than one hundred twenty
(120) days after the close of each fiscal year of Borrower, a complete copy of
its financial statements, which shall include at least its balance sheet as of
the end of that year, and its income statement, reconciliation of capital
accounts and statement of sources and uses of funds for the year, certified by
an independent public accountant selected by Borrower and satisfactory to Lender
in its reasonable discretion. The certificate shall not be qualified or limited
because of restricted or limited examination by the accountant of any material
portion of Borrower's records, and shall include or be accompanied by a
statement that during the examination the accountant observed no Event of
Default or circumstance which, with the lapse of time or notice or both, would
constitute an Event of Default, or if an Event of Default or circumstance
exists, a statement specifying the nature and status thereof; and
(3) any or all other statement or statements, lists of
property and accounts, budgets, forecasts or reports regarding Borrower as
Lender may reasonably request.
d. Additional Acts. Perform such acts as may be necessary or
advisable to perfect any lien or security interest provided for in this
Agreement, the Note or Security Agreement or otherwise to carry out the intent
of such documents;
e. Operation of Business.
(1) Maintain and preserve its corporate existence and all
rights, privileges, licenses, trade names, franchises and other rights necessary
for the conduct of its business; conduct its business in an orderly manner,
without voluntary interruption; maintain its properties in good working order
and condition, ordinary wear and tear excepted; from time to time make all
needed repairs to, and renewals or replacements of, its properties so that the
efficiency of those properties shall be fully maintained and preserved, and
maintain its chief executive office in the State of Illinois where it is now
maintained.
(2) Pay and discharge, before they become delinquent and
before penalties accrue on them, all taxes, assessments and governmental charges
on or against Borrower or any of its properties, and all Borrower's other
liabilities at any time existing, except to the extent and as long as:
8
9
(i) The same are being contested in good faith and by
appropriate proceedings so as not to cause any materially adverse effect on
Borrower's financial condition or the loss of any right of redemption from any
sale thereunder; and
(ii) Borrower shall have set aside on its books reserves
(segregated to the extent required by generally accepted accounting principles)
adequate with respect thereto.
(3) Maintain fire (including use and occupancy), public
liability, property damage and workers' compensation insurance, which must be
reasonably satisfactory to Lender as to amount, nature and carrier.
(4) Maintain adequate books, accounts and records and prepare
all financial statements required under this Agreement according to generally
accepted accounting principles and practices consistently applied; and permit
employees or agents of Lender at any reasonable time to inspect Borrower's
properties, and, if an Event of Default has occurred and is continuing, to
examine or audit Borrower's books, accounts and records and make copies and
memoranda of them;
f. Sales of Capital Assets. Apply the proceeds of sales of its fixed
or capital assets at Lender's option to:
(1) the principal of the Loan;
(2) replacement of the assets sold;
(3) a reserve for future purchase of fixed or capital assets;
or
(4) working capital reserves.
6. NEGATIVE COVENANTS
Borrower covenants and agrees until full and final payment the Loan and
all other obligations outstanding under this Agreement it will not, without the
prior written consent of Lender:
a. Dividends. Declare or pay any dividends on any of its shares
except dividends payable in Borrower's capital stock or dividends payable only
on series of preferred stock that Borrower may issue in connection with the
exchange of Borrower's outstanding debentures;
b. Redemption. Purchase, redeem or otherwise acquire for value, any
of its shares, or create any sinking fund in relation to any of its shares;
c. Liquidation. Liquidate or dissolve, or begin any proceeding
therefor; or enter into any consolidation, merger, pool, joint venture,
syndicate or other combination where Borrower is not
9
10
the surviving entity; or sell, lease or dispose of its business or assets as a
whole or such part as in the opinion of Lender constitutes a substantial portion
of its business or assets;
d. Liabilities. Become liable as a surety, guarantor, accommodation
endorser or otherwise, for or on the obligation of any other person, firm or
corporation; create, incur, assume or permit to exist any liabilities resulting
from borrowings, loans, advances or the granting of credit, whether secured or
unsecured, except for: (1) the Loan provided for in this Agreement; (2)
indebtedness already in existence on the date of this Agreement; (3) the
endorsement of negotiable instruments received in the normal course of
Borrower's business; or the sale or transfer, either with or without recourse,
of any accounts or notes receivable or any monies due or to become due; (4)
trade debt incurred in the ordinary course of business whether or not for money
borrowed; (5) intercompany liabilities; (6) the Purchase Note and related
security agreements; (7) debt incurred pursuant to the First Amendment to the
Financing Agreement with U.S. Bancorp Republic Commercial Finance, Inc. f.k.a.
Republic Acceptance Corporation; and (8) any other debt incurred in the ordinary
course of business.
e. Borrowing. Create, incur, assume or permit to exist any mortgage,
deed of trust, encumbrance or other lien (including a lien of attachment,
judgment or execution), or security interest (including the interest of a
conditional seller of goods), securing a charge or obligation, of or on any of
its property, real or personal, whether now owned or hereafter acquired, except:
(1) any lien or charge for a tax, assessment or other
governmental charge that is not delinquent or remains payable without any
penalty, or the validity of which is contested in good faith by appropriate
proceedings on stay of execution of the enforcement of the lien or charge;
(2) deposits or pledges to secure (a) statutory obligations,
(b) surety or appeal bonds, (c) bonds for release of attachment, stay of
execution or injunction, or (d) performance of bids, tenders, contracts (other
than for the repayment of borrowed money) or leases, or for like purposes in the
ordinary course of Borrower's business;
(3) mechanic's, workers', materialmen's, landlords', carriers'
or other like liens arising in the ordinary and normal course of business for
obligations that are not due or that are being contested in good faith;
(4) minor encumbrances that do not, in the aggregate,
materially detract from the value of Borrower's property or assets or materially
impair their use in the operation of the business of Borrower;
(5) purchase-money security interests in personal property
acquired after the date of this Agreement when the obligation secured does not
exceed 50 percent of the cost of the property purchased and the security
interest does not extend beyond the property purchased;
10
11
(6) liens in favor of Lender, U.S. Bancorp Republic
Commercial Finance, Inc. f.k.a. Republic Acceptance Corporation or Xxxxxxx; and
(7) liens in existence as of the Closing Date.
f. Disposition. Dispose of any of its assets individually in an
amount in excess of $100,000 except in the ordinary course of its business and
for full, fair and reasonable consideration, or enter into any sale and
leaseback agreement covering any of its fixed or capital assets, or dispose of
its assets as a whole or such part of its assets as, in the opinion of Lender,
constitutes a substantial portion of its assets; and
7. EVENTS OF DEFAULT
The occurrence of any of the following events shall constitute an Event of
Default under this Agreement:
a. Failure to Pay. Borrower shall fail to pay, within five (5) days
after the date when due, any installment of interest or principal in accordance
with the terms of this Agreement or of the Note evidencing the Loan;
b. Misrepresentation. Any representation or warranty by Borrower in
this Agreement or in any agreement, instrument or certificate executed under
this Agreement or in connection with any transaction contemplated by this
Agreement shall be false or misleading in any material respect when made;
c. Judgment. Any money judgment, writ or warrant of attachment, or
similar process shall be entered or filed against Borrower or any of its
properties or other assets against Borrower, which exceeds individually or
together with xxx other such judgments entered against Borrower, $500,000 in
amount and such judgment shall continue for a period of thirty (30) days without
being stayed or dismissed through appropriate appellate proceedings;
d. Insolvency. Borrower (1) admits in writing its inability to pay
its debts when due; or (2) makes an assignment for the benefit of creditors; or
(3) applies for or consents to the appointment of any receiver, trustee,
custodian or similar officer for Borrower or for any substantial part of its
property; or (4) institutes (by petition, application or otherwise) or consents
to any bankruptcy, insolvency, reorganization, arrangement, readjustment of
debt, dissolution, liquidation or similar proceedings under the laws of any
jurisdiction against Borrower; or (5) approves or adopts any resolution or
otherwise authorizes action to approve any of the foregoing;
11
12
e. Receiver. Without Borrower's application or consent, (1) a
receiver, trustee, custodian or similar officer is appointed for Borrower or for
any substantial part of its property, or (2) any bankruptcy, insolvency,
reorganization, arrangement, readjustment of debt, dissolution, liquidation or
similar proceedings under the laws of any jurisdiction is instituted (by
petition, application or otherwise) against Borrower and the appointment or
proceedings remain unstayed or undismissed for a period of 60 days;
f. Existing Loan Default. Any default shall occur under any other
agreement pertaining to the borrowing of money or the advance of credit to which
Borrower may be a party as borrower or under any note executed by Borrower as
maker of the note, if that default gives to the holder of the obligation
concerned the right to accelerate the indebtedness and such default could have a
Borrower Material Adverse Effect;
g. Default Under Security Agreement. Borrower shall fail to observe
or perform any provision of the Security Agreement or Note or any other
agreement executed by Borrower in connection with this Agreement; and
h. ERISA. If (1) any Plan subject to Title IV of ERISA and
maintained for the employees of Borrower shall be terminated under Subtitle C of
Title IV of ERISA, or (2) a trustee shall be appointed by the appropriate United
States District Court to administer any Plan, or (3) the Pension Benefit
Guaranty Corporation (PBGC) shall institute proceedings to terminate any Plan,
or (4) any Plan fails to satisfy the minimum funding standard for the Plan for a
Plan year as established in Section 412 of the Internal Revenue Code, as
amended.
8. REMEDIES
On the occurrence and during the continuance of an Event of Default under
this Agreement, without further act, the unpaid principal amount of the Note
which is outstanding under the Loan, together with all accrued interest thereon
and any fees and other amounts owing under this Agreement, shall automatically
accelerate and become immediately due and payable, without presentment, demand,
protest or notice of any kind, all of which are hereby expressly waived,
anything herein or in the Note or other instrument or agreement to the contrary
notwithstanding.
9. NOTICES
All notices or other written communications hereunder shall be deemed to
have been properly given (i) upon delivery, if delivered in person or by
facsimile transmission with receipt acknowledged by the recipient thereof, (ii)
one (1) Business Day, as defined below, after having been deposited for
overnight delivery with any reputable overnight courier service, or (iii) three
(3) Business Days after having been deposited in any post office or mail
depository regularly maintained by the U.S. Postal Service and sent by
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
12
13
If to Borrower: The Delicious Frookie Company, Inc.
0000 Xxxxx Xxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxx
Facsimile No. (000) 000-0000
With a copy to: Xxxxxx Xxxxxxxx Frome & Xxxxxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxxxx
Facsimile No. (000) 000-0000
If to Lender: American Pacific Financial Corporation
000 X. Xxxxxxxxxxx Xxxx, Xxxxx 000
Xxx Xxxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx
Facsimile No. (000) 000-0000
With a copy to: Xxxxxx Xxxxxxx LLP
0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
Facsimile No. (000) 000-0000
or addressed as such party may from time to time designate by written notice to
the other parties. Either party by notice to the other may designate additional
or different addresses for subsequent notices or communications. "Business Day"
shall mean a day upon which commercial banks are not authorized or required by
law to close in Los Angeles, California.
10. SUCCESSORS AND ASSIGNS
The provisions of this Agreement shall bind and inure to the benefit of
the parties and their respective successors and assigns, provided that Borrower
shall not assign this Agreement or any of the rights, duties or obligations of
Borrower under this Agreement without Lender's prior written consent.
11. DELAY AND WAIVERS
No delay or omission to exercise any right, power or remedy accruing to
Lender on any breach or default of Borrower under this Agreement shall impair
any right, power or remedy of Lender, nor shall it be construed to be a waiver
of any such breach or default, or an acquiescence in breach or default, or
waiver of or acquiescence in any similar breach or default occurring later; nor
shall any waiver of any single breach or default be considered a waiver of any
other prior or
13
14
subsequent breach or default. Any waiver, permit, consent or approval of any
kind by Lender of any breach or default under this Agreement, or any waiver by
Lender of any provision or condition of this Agreement, must be in writing and
shall be effective only to the extent specifically set forth in that writing.
All remedies, either under this Agreement or by law or otherwise afforded to
Lender, shall be cumulative and not alternative.
12. EXPENSES
Borrower shall pay, immediately upon demand therefore, all out-of-pocket
expenses of Lender, including without limitation reasonable attorney fees, the
fees and costs of any audit by Lender, and those fees and costs incurred by
Lender's employees and agents, in connection with (1) the preparation,
administration and enforcement of this Agreement or the Note in equity or at
law, whether or not suit is filed, or (2) any workout, refinancing,
restructuring or reorganization (including a bankruptcy reorganization) of
Borrower. Borrower agrees to indemnify Lender from and hold it harmless against
any transfer taxes, documentary taxes, assessments or charges made by any
governmental authority by reason of the execution, delivery and performance of
this Agreement, the Note, the Loan and any security therefor. The obligations of
Borrower under this Section shall survive payment of the Note, or the Lender's
assignment of any rights under this Agreement.
13. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute a single
agreement.
14. FORM: VENUE, JURISDICTION AND PROCESS
The parties agree that any suit, action or proceeding arising out of or
relating to this Agreement, or the interpretation, performance or breach of this
Agreement, shall be instituted in the United States District Court for the
Southern District of California or any court of the State of California located
in San Diego County, and each party irrevocably submits to the jurisdiction of
those courts and waives all objections to jurisdiction or venue that it may have
under the laws of the State of California or otherwise in those courts in any
suit, action or proceeding. Each party agrees to accept service of process in
any action, suit or proceeding in the manner provided for in Section 9 of this
Agreement.
15. CHOICE OF LAW
This Agreement shall be governed by, and construed in accordance with the
laws of the state of California. In any action brought under or arising out of
this Agreement, Borrower hereby consents to the jurisdiction of any federal or
state court within California and to any lawful service of process in
California. Borrower hereby agrees that no other federal or state court may
entertain any suit, action or proceeding relating to or arising out of this
Agreement.
14
15
IN WITNESS WHEREOF, the parties to this agreement have executed this
Agreement by their duly authorized officers as of the day and year first above
written.
BORROWER:
The Delicious Frookie Company, Inc.
a Delaware corporation
/s/
By:----------------------------------
Xxxxxxx Xxxxx, President
LENDER:
American Pacific Financial Corporation
a California corporation
/s/
By:----------------------------------
Xxxxx X. Xxxxxxx, President
15
