1
EXHIBIT 10.48
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
among
KERR GROUP, INC.
as Borrower
and
THE FIRST NATIONAL BANK OF BOSTON
as Bank
January 5, 1996
2
INDEX OF SCHEDULES
Schedule A Borrower's Budget
Schedule 4(e) Schedule of Documents
Schedule 6(e) Permitted Indebtedness
2
3
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
This AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT ("Agreement") is
made as of January 5, 1996, between KERR GROUP, INC., a Delaware corporation,
having its principal place of business at 1840 Century Park East, Los Angeles,
California 90067 ("Borrower"), and THE FIRST NATIONAL BANK OF BOSTON, a
national banking association with its head office at 100 Federal Street,
Boston, Massachusetts 02110 ("Bank").
RECITALS
A. On or about February 9, 1995, Borrower and Bank executed a
letter agreement (the "Original Loan Agreement") pursuant to which Bank
extended to Borrower a line of credit originally evidenced by a Commercial
Promissory Note dated February 1, 1995 in the principal amount of $10,000,000
executed by Borrower to the order of Bank (the "Original Note"; the Original
Loan Agreement, Original Note and all documents executed in connection
therewith or pursuant thereto are referred to collectively as the "Original
Loan Documents").
B. On or about October 24, 1995, Bank notified Borrower that Bank
was terminating Borrower's availability under its line of credit with Bank due
to the deterioration in Borrower's financial performance and Borrower's
anticipated failure to comply with the financial performance covenants set
forth in the Noteholder Agreements (as defined in Section 1 of this Agreement).
C. Borrower has requested that Bank provide additional financing
and amend and restate the Original Loan Agreement, and Bank is willing to do so
subject to the terms and conditions set forth in this Agreement and the related
documents to be executed concurrently herewith or pursuant hereto
(collectively, the "Restated Loan Documents"). This Agreement shall replace
and supersede the Original Loan Agreement.
AGREEMENT
NOW THEREFORE, in consideration of the mutual promises,
covenants and other agreements hereinafter set forth, the parties hereto agree
as follows:
SECTION 1. DEFINITIONS AND CERTAIN MATTERS OF CONSTRUCTION.
Additional Obligations: Any Obligations other than the Original
Obligations.
Agreement: See preamble.
1
4
Bank: See preamble.
Bankruptcy Case: Any proceeding commenced by or against Borrower,
under any provision of the Bankruptcy Code or any other federal or state
bankruptcy or insolvency law, including assignments for the benefit of
creditors, formal or informal moratoria, compositions, extensions generally
with its creditors, or proceedings seeking reorganization, arrangement, or
other similar relief, and all converted or succeeding cases in respect thereof.
Bankruptcy Code: The United States Bankruptcy Code (11 U.S.C. Section
101, et seq.).
Base Rate: The higher of (a) the annual rate of interest announced
from time to time by Bank at its head office as Bank's "base rate" and (b)
one-half of one percent (1/2%) above the Federal Funds Effective Rate.
Borrower: See preamble.
Budget: Borrower's projected weekly cash flows and other financial
statements for the period through April 30, 1996, a copy of which is attached
hereto as SCHEDULE A.
Business Day: Any day on which banks in Boston, Massachusetts, are
open for business generally.
Change of Control: The merger or consolidation of Borrower with or
into another corporation and, after such merger or consolidation is
consummated, either (a) Borrower is not the surviving corporation, or (b) if
Borrower is the surviving corporation, then Borrower is a wholly-owned
subsidiary of another corporation and the stockholders of Borrower, immediately
before such merger or consolidation is consummated, do not own at least 80% of
the voting capital stock of Borrower's parent corporation, immediately after
such merger or consolidation is consummated.
Claims: See Section 2(b).
Closing Date: The Business Day on which the conditions precedent set
forth in Section 4 have been satisfied.
Collateral: All of the following described real and personal
property, whether now or hereafter owned by, owing to, or acquired by or
arising in favor of Borrower, and whether consigned by Borrower as consignor or
leased by Borrower as lessor, and located on the real property identified as
500 New Holland Avenue, Lancaster Pennsylvania or Johnny Mitchell Road,
Ahoskie, North Carolina:
2
5
(a) all Equipment, now or hereafter owned or acquired
by Borrower, in the form of injection molding machines and related
mold frames, lining machines and cut-and-fold machines, and any and
all appurtenances and additions thereto and substitutions or
replacements of any of the foregoing, together with all attachments,
components, parts, equipment, and accessories installed on or affixed
to any of the foregoing;
(b) all Fixtures, now or hereafter owned or acquired by
Borrower, in the form of injection molding machines and related mold
frames, lining machines and cut-and-fold machines, and any and all
appurtenances and additions thereto and substitutions or replacements
of any of the foregoing, now or hereafter attached or affixed to or
constituting a part of, or located in or upon, any of said real
property;
(c) all books and records (including computer programs,
printouts and other computer materials and records) pertaining to any
of the foregoing; and
(d) to the extent not otherwise included, all proceeds,
as such term is defined in the UCC, of the foregoing in any form, and,
in any event, including: (i) any and all proceeds of any insurance,
indemnity, warranty or guaranty payable to Borrower from time to time
with respect to any of the foregoing; (ii) any and all payments (in
any form whatsoever) made or due and payable to Borrower from time to
time in connection with any requisition, confiscation, condemnation,
seizure or forfeiture of all or any part of the foregoing by any
governmental authority (or any person acting under color of any
governmental authority); (iii) any claims of Borrower against third
parties for loss or damage to, or destruction of, or otherwise
relating to any of the foregoing; (iv) any recoveries by Borrower
against third parties with respect to any litigation or dispute
concerning any of the foregoing; (v) all accessions to, substitutions
and replacements for, and rents, profits and products of, each of the
foregoing; and (vi) any and all other amounts from time to time paid
or payable under or in connection with any of the foregoing, upon
disposition or otherwise.
Collateral to Loan Ratio: The ratio of (a) the value of Collateral to
(b) the outstanding amount of the Additional Obligations.
Consent: In respect of any person or entity, any permit, license or
exemption from, approval or consent of, or registration or filing with any
local, state or federal
3
6
governmental or regulatory agency or authority required under applicable law.
Default: An event or act that, with the lapse of time, would become an
Event of Default.
Default Rate: See Section 3(d).
Environmental Laws: All laws pertaining to environmental matters,
including the Resource Conservation and Recovery Act, the Comprehensive
Environmental Response Compensation and Liability Act of 1980, the Superfund
Amendments and Reauthorization Act of 1986, the Federal Clean Water Act, the
Federal Clean Air Act, the Federal Oil Pollution Act, the Toxic Substances
Control Act, and all rules, regulations, judgments, decrees, orders and
licenses arising under all such laws.
ERISA: The Employee Retirement Income Security Act of 1974, and all
rules, regulations, judgments, decrees and orders arising thereunder.
Event of Default: See Section 7.
Federal Funds Effective Rate: For any day, the rate per annum equal
to the weighted average of the rates on overnight federal funds transactions
with members of the Federal Reserve System arranged by federal funds brokers,
as published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average of the
quotations for such day on such transactions received by Bank from three funds
brokers of recognized standing selected by Bank.
Financial Covenants: The financial performance covenants set forth in
the Noteholder Agreements.
Financials: In respect of any period, the consolidated balance sheet
of Borrower and its Subsidiaries as at the end of such period and the related
consolidated statement of income and consolidated statement of cash flow for
such period, each setting forth in comparative form the figures for the
previous comparable fiscal period, all in reasonable detail and prepared in
accordance with GAAP.
GAAP: Generally accepted accounting principles consistent with those
adopted by the Financial Accounting Standards Board and its predecessor, as in
effect from time to time.
Guarantor: Santa Fe Plastics Corporation, a California corporation.
4
7
Indebtedness: In respect of any entity, all obligations, contingent
and otherwise, that in accordance with GAAP should be classified as
liabilities, including (a) all debt obligations, (b) all liabilities secured by
Liens, (c) all guaranties, and (d) all liabilities in respect of bankers'
acceptances or letters of credit.
Interest Reserve: The special reserve for interest payments to be
made by Borrower on or before April 15, 1996 in respect of the Loan, which
shall be calculated based on the Base Rate as of the Closing Date.
Lien: Any lien, encumbrance, mortgage, pledge, hypothecation, charge,
restriction or other security interest of any kind securing any obligation of
any entity or person.
Loan: Any loan made or to be made to Borrower pursuant to Section 3.
Loan Documents: The Original Loan Documents and the Restated Loan
Documents.
Material Adverse Effect: Any (i) adverse change in, or a material
adverse effect upon, the operations, business, Collateral, condition (financial
or otherwise) or prospects of Borrower, or (ii) impairment of the ability of
Borrower to perform under any material provision of any of the Loan Documents.
Maturity Date: The earlier of (a) April 15, 1996, and (b) the date on
which all or substantially all of Borrower's assets are sold or a Change of
Control has occurred.
Noteholders: The holders of Borrower's 9.45% Series A Senior Notes due
September 15, 2003 and the 8.99% Series B Senior Notes due September 15, 1999.
Noteholder Agreements: The Note Agreement dated as of September 15,
1993 between each of the Noteholders and Borrower and the related documents
executed concurrently therewith or pursuant thereto, each as in effect on the
Closing Date or as subsequently amended with the prior written consent of Bank.
Obligations: Any and all presently existing or hereafter arising
indebtedness, claims, debts, attorneys' fees and other professional fees, costs
of enforcement, liabilities, and obligations of Borrower owing to Bank under
any Bank Loan Documents, whether direct or indirect, whether contingent or of
any other nature, character, or description (including all interest and other
amounts accruing after commencement of any Bankruptcy Case, and all interest
and other amounts that, but for the provisions of the Bankruptcy Code, would
have accrued and
5
8
become due or otherwise would have been allowed), and any refinancings,
renewals, refundings, or extensions of any such amounts.
Original Obligations: The Original Principal Obligations and interest
thereon (including interest at the Default Rate).
Original Principal Obligations: See Section 2(a).
Permitted Liens: See Section 6(d).
PNC: PNC Bank, N.A.
PNC Agreements: The Receivables Purchase Agreement between Borrower
and PNC dated January 19, 1995, as amended by amendments dated February 24,
1995, April 18, 1995, and November 30, 1995, and the related documents executed
concurrently therewith or pursuant thereto, each as in effect on the Closing
Date or as subsequently amended with the prior written consent of Bank.
Requirement of Law: Any law, treaty, rule, regulation or determination
of an arbitrator, court, or other governmental authority, in each case
applicable to or binding upon Borrower or affecting any of its property.
Restated Loan Documents: See Recital C.
Restated Note: See Section 3(b).
Subsidiary: In respect of Borrower, any business entity of which
Borrower at any time owns or controls directly or indirectly more than fifty
percent (50%) of the outstanding shares of stock having voting power,
regardless of whether such right to vote depends upon the occurrence of a
contingency.
Any accounting term used in the Agreement or the other Restated Loan
Documents shall have, unless otherwise specifically provided therein, the
meaning customarily given such term in accordance with GAAP, and all financial
computations thereunder shall be computed, unless otherwise specifically
provided therein, in accordance with GAAP consistently applied. That certain
items or computations are explicitly modified by the phrase "in accordance with
GAAP" shall in no way be construed to limit the foregoing. All other undefined
terms contained in the Agreement or the other Restated Loan Documents shall,
unless the context indicates otherwise, have the meanings provided for them by
the Uniform Commercial Code as in effect in the Commonwealth of Massachusetts
to the extent the same are used or defined therein. When used in this
Agreement, the words "herein," "hereof" and "hereunder" or other words of
similar import refer to this Agreement as a whole, including the exhibits and
schedules thereto, as the same may from time to time be amended,
6
9
modified or supplemented, and not to any particular section, subsection or
clause contained in this Agreement.
For purposes of this Agreement and the other Loan Documents, the
following additional rules of construction shall apply, unless specifically
indicated to the contrary: (a) wherever from the context it appears
appropriate, each term stated in either the singular or plural, and pronouns
stated in the masculine, feminine or neuter gender shall include the masculine,
the feminine and the neuter; (b) the term "or" is not exclusive; (c) the term
"including" (or any form thereof) shall not be limiting or exclusive; (d) all
references to statutes and related regulations shall include any amendments of
same and any successor statutes and regulations; and (e) all references to any
instruments or agreements, including references to any of the Loan Documents,
Noteholder Agreements and PNC Agreements, shall include any and all
modifications or amendments thereto and any and all extensions or renewals
thereof.
SECTION 2. ACKNOWLEDGMENT OF DEBT.
(a) Borrower acknowledges and agrees that, as of the
Closing Date, Borrower was indebted to Bank under the Original Loan Agreement
in an aggregate outstanding principal amount of $6,500,000 (the "Original
Principal Obligations").
(b) Borrower acknowledges and agrees that it has no
offset, defense, counterclaim, dispute or disagreement of any kind or nature
whatsoever (collectively, "Claims") with respect to the amount of the Original
Principal Obligations. To the extent any such Claims exist, it is fully,
forever and irrevocably released as provided in Section 8.
SECTION 3. RESTATED LOAN.
(a) Bank shall make an amended and restated term loan
(the "Loan") on the Closing Date to Borrower in a maximum aggregate principal
amount of TEN MILLION DOLLARS ($10,000,000), the proceeds of which shall be
used for working capital purposes. Subject to the other terms and conditions
hereof, (i) the amount of the Loan equal to the Original Principal Obligations
shall remain outstanding and in full force and effect and (ii) the amount of
the Loan that is in excess of the Original Principal Obligations, less the
Interest Reserve, will be funded to Borrower by wire transfer to a bank account
designated by Borrower. Bank shall establish the Interest Reserve against the
amount of the Additional Obligations, that Borrower may otherwise borrow under
this Section 2.1(a).
7
10
(b) The obligation of Borrower to repay to Bank the
principal of the Loan, interest accrued thereon and costs and expenses related
thereto shall be evidenced by an amended and restated commercial promissory
note (the "Restated Note") in the maximum aggregate principal amount of
$10,000,000 executed and delivered by Borrower and payable to the order of
Bank, in form and substance satisfactory to Bank.
(c) If Borrower sells any of the Collateral, or if any of
the Collateral is taken by condemnation, Borrower shall pay to Bank, unless
otherwise agreed by Bank, as a mandatory prepayment of the Loan, a sum (not to
exceed the amount of the Additional Obligations) equal to the cash proceeds
received by Borrower from such sale or condemnation and shall assign to Bank
all of its right, title and interest in and to all non-cash proceeds from such
sale or condemnation.
(d) So long as no Default or Event of Default has
occurred and is continuing, Borrower shall pay interest (i) on the Original
Principal Obligations at a rate per annum which is equal to the Base Rate, such
interest to be payable quarterly in arrears on March 31, 1996 and on the last
Business Day of each subsequent fiscal quarter, and (ii) on the remainder of
the Loan at a rate per annum which is equal to the sum of (x) the Base Rate and
(y) two percent (2%), such interest to be payable monthly in arrears on January
31, 1996 and on the last Business Day of each subsequent calendar month.
Interest payments on the Loan (other than payments of the Default Rate of
interest) shall be made by applying amounts held in the Interest Reserve (to
the extent such amounts are available in the Interest Reserve) to the amount
then due and payable. So long as a Default or Event of Default has occurred
and is continuing, amounts payable under any of the Loan Documents shall bear
interest (compounded monthly and payable on demand in respect of overdue
amounts) at a rate per annum which is two percent (2%) per annum above the
rates otherwise applicable (the "Default Rate"). All computations of interest
payable hereunder shall be made by Bank on the basis of actual days elapsed and
on a 360-day year. In no contingency or event whatsoever, whether by reason of
advancement of the Loan or otherwise, shall the amount paid or agreed to be
paid to Bank for the use, forbearance or detention of money advanced hereunder
exceed the highest lawful rate permissible under any law which a court of
competent jurisdiction may deem applicable hereto. In the event that such a
court determines that Bank has charged or received interest hereunder in excess
of the highest applicable rate, such rate shall automatically be reduced to the
maximum rate permitted by law, and Bank shall promptly refund to Borrower any
interest received by it in excess of the maximum lawful rate. It is the intent
hereof that Borrower not pay or contract to pay, and that Bank not receive or
contract to receive, directly or indirectly in any manner whatsoever, interest
in excess of that which may be paid by Borrower under applicable law.
8
11
(e) If, after the date hereof, Bank determines that (i)
the adoption of or any change in any banking law, rule, regulation or guideline
or the administration thereof (whether or not having the force of law), or (ii)
compliance by Bank or its parent bank holding company with any guideline,
request or directive (whether or not having the force of law), has the effect
of reducing the return on Bank's or such holding company's capital as a
consequence of the Loans to a level below that which Bank or such holding
company could have achieved but for such adoption, change or compliance by any
amount deemed by Bank to be material, Bank may notify Borrower thereof.
Borrower agrees to pay Bank the amount of Borrower's allocable share of the
amount of such reduction in the return on capital as and when such allocable
share of the amount of such reduction is determined, upon presentation by Bank
of a statement in the amount and setting forth Bank's calculation thereof,
which statement shall be deemed true and correct absent manifest error. Bank
agrees to allocate shares of such reduction among Borrower and Bank's other
customers similarly situated on a fair and non-discriminatory basis.
SECTION 4. CONDITIONS PRECEDENT.
Bank's obligations hereunder shall be conditioned upon the
fulfillment of each of the following conditions precedent (which are for Bank's
sole benefit):
(a) this Agreement or counterparts thereof shall have
been duly executed by Bank and Borrower and delivered to Bank;
(b) Borrower shall be in good standing in its state of
incorporation and in any other state where such qualification is necessary or
desirable;
(c) Bank shall have received corporate resolutions of
Borrower authorizing Borrower's execution, delivery and performance of all of
its obligations under this Agreement and all of the other Restated Loan
Documents;
(d) Borrower's counsel shall have delivered to Bank its
written opinion in form and substance acceptable to Bank;
(e) Bank shall have received the Restated Note, duly
executed and delivered by Borrower, and such other documents, certificates and
agreements as Bank may reasonably request in connection with the transaction
contemplated by this Agreement, including all documents, certificates,
agreements and other items listed in the Schedule of Documents attached hereto
9
12
as SCHEDULE 4(E), each in form and substance reasonably satisfactory to Bank;
and
(f) Borrower shall have paid to Bank (i) an arrangement
fee in an amount equal to one-half of one percent (0.5%) of the maximum
aggregate amount of the Additional Obligations (i.e., $17,500), (ii) any
accrued and unpaid interest, and (iii) all other fees, costs and expenses of
the consummation of the transactions contemplated by this Agreement (including
reasonable fees and expenses of appraisers and counsel to Bank presented as of
the Closing Date).
SECTION 5. GRANT OF SECURITY INTEREST.
(a) To secure the payment and performance in full of all
Additional Obligations, Borrower hereby grants to Bank a continuing Lien upon,
and a right of setoff against, and Borrower hereby assigns and pledges to Bank,
all of the now owned and hereafter acquired right, title and interest in the
Collateral.
(b) If Bank determines that the Collateral to Loan Ratio
is not in excess of 1.7 to 1.0 at any time, then Borrower shall pledge
additional assets, as reasonably requested by Bank, as collateral for the
Additional Obligations as necessary to increase the Collateral to Loan Ratio,
in the reasonable determination of Bank, to 1.7 to 1.0.
(c) Upon the reduction of the aggregate outstanding
principal amount of the Loan to $6,500,000 and payment by Borrower to Bank of
any other amounts then due and payable in respect of the Additional
Obligations, Bank shall be deemed to have released its Lien on the Collateral.
At such time, upon the written request of Borrower and at the sole expense of
Borrower, Bank shall execute any and all instruments and documents prepared by
Borrower to evidence the release of its Lien.
(d) All amounts chargeable to Borrower (other than the
Original Obligations) under this Agreement hereof shall be Obligations secured
by all of the Collateral, shall be payable on demand and, with respect to any
advances made by Bank, shall bear interest from the date made until paid in
full at the rate applicable to the Loan from time to time.
SECTION 6. REPRESENTATIONS, WARRANTIES AND COVENANTS.
Borrower hereby represents, warrants and covenants to Bank the
following, the truth and accuracy of which, and compliance with which, shall be
continuing conditions of the funding of the Loan by Bank to Borrower:
10
13
(a) Borrower is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
Borrower is duly qualified and is authorized to do business and is in good
standing as a foreign corporation in each state or jurisdiction where the
character of its properties or the nature of its activities make such
qualification necessary, except where the failure of Borrower to be so
qualified would not have a material adverse effect on its financial condition,
business or properties.
(b) Borrower has the right and power and is duly
authorized and empowered to enter into, execute, deliver and perform this
Agreement and each of the other Loan Documents. The execution, delivery and
performance of this Agreement and each of the other Loan Documents have been
duly authorized by all necessary corporate action and do not and will not (i)
require any Consent or any consent or approval of the shareholders of Borrower;
(ii) contravene Borrower's charter, certificate of incorporation or by-laws;
(iii) violate, or cause Borrower to be in default under, any Requirement of Law
having applicability to Borrower; (iv) result in a breach of or constitute a
default under any indenture or loan or credit agreement or any other agreement,
lease or instrument to which Borrower is a party or by which it or its
properties may be bound or affected, including the Note Agreements or the PNC
Agreements; or (v) result in, or require, the creation or imposition of any
Lien upon or with respect to any of the properties now owned or hereafter
acquired by Borrower.
(c) This Agreement is, and each of the other Loan
Documents when delivered under this Agreement will be, a legal, valid and
binding obligation of Borrower enforceable against it in accordance with their
respective terms, except to the extent that such enforcement may be limited by
applicable bankruptcy, insolvency and other similar laws affecting creditors'
rights generally or by principles of equity pertaining to the availability of
equitable remedies.
(d) Borrower shall not mortgage, pledge, grant or permit
to exist a Lien upon, any of its assets of any kind, now owned or hereafter
acquired, except (i) any Lien in favor of Bank, (ii) any Lien existing on the
Closing Date created under or pursuant to the PNC Agreements, or (iii) any Lien
permitted under Section 10.2 of the Noteholders Agreement (collectively,
"Permitted Liens").
(e) Borrower shall not create, incur, assume or permit to
exist any Indebtedness resulting from borrowings, loans or advances, whether
secured on unsecured, matured or unmatured, liquidated or unliquidated, joint
or several, except (i) the Indebtedness of Borrower to Bank, (ii) the
Indebtedness of Borrower to the Noteholders, (iii) the Indebtedness, if any, of
11
14
Borrower to PNC, and (iv) any other Indebtedness of Borrower disclosed on
SCHEDULE 6(E).
(f) Borrower shall not sell, discount or otherwise
transfer its accounts receivable against current or deferred payment of the
purchase price thereof except pursuant to the PNC Agreements.
(g) Borrower shall not, without the prior written consent
of Bank, which consent shall not be unreasonably withheld, (i) merge, or permit
any Subsidiary to merge into or consolidate with any corporation or other
entity, (ii) make, or permit any Subsidiary to make any substantial change in
the nature of Borrower's or any such Subsidiary's business, (iii) acquire all
or substantially all of the assets of any corporation or other entity, or (iv)
sell, lease, transfer or otherwise dispose of all or a substantial or material
part of its assets.
(h) Borrower shall not guarantee, or permit any of the
Subsidiaries to guarantee or become liable, or become liable in any way as
surety, endorser (other than as endorser of negotiable instruments for deposit
or collection in the ordinary course of business), accommodation endorser or
otherwise for, nor pledge or hypothecate, or permit any of its Subsidiaries to
pledge or hypothecate, any assets of Borrower or such Subsidiary as security
for, any liabilities or obligations of any other person or entity other than
the guaranty of the Additional Obligations by Guarantor.
(i) Borrower shall not (i) declare or pay any dividend or
distribution either in cash, stock or any other property on Borrower's common
stock now or hereafter outstanding, or (ii) redeem, retire, repurchase or
otherwise acquire any shares of any class of Borrower's stock now or hereafter
outstanding.
(j) Borrower shall maintain adequate books and records in
accordance with GAAP consistently applied, and permit any representative of
Bank, at any reasonable time, to inspect, audit and examine such books and
records, to make copies of the same, and to inspect the properties of Borrower.
(k) Borrower shall provide to Bank all of the following,
in form and detail satisfactory to Bank:
(i) not later than 90 days after and as of the
end of each fiscal year, audited Financials, prepared by KPMG Peat
Marwick or another certified public accounting firm acceptable to
Bank, which acceptance shall not be unreasonably withheld;
12
15
(ii) not later than 18 days after and as of the
end of each month, Financials prepared by Borrower;
(iii) On or before Wednesday of each week, (A) a
report from the previous week comparing the amounts expended during
the most recent reporting period and the amounts projected to be
expended in the Budget, and (B) a report, in form reasonably
acceptable to Bank, detailing and updating the status (through Friday
of the previous week) of the investment bankers' efforts to sell
Borrower; and
(iv) from time to time, such other information as
Bank may reasonably request.
(l) Borrower shall pay and discharge when due any and all
indebtedness, obligations, assessments and taxes, both real or personal and
including federal and state income taxes, except such as Borrower may in good
faith contest or as to which a bona fide dispute may arise; provided, that
reasonable provision is made to the satisfaction of Bank for eventual payment
thereof in the event that it is found that the same is an obligation of
Borrower.
(m) Borrower possesses, and will hereafter possess, all
franchises and Consents required and all trademark rights, trade names, trade
name rights, patents, patent rights and fictitious name rights necessary to
enable it to conduct the business in which it is now engaged without conflict
with the rights of others.
(n) Borrower is and shall remain in compliance with all
Requirements of Law, including the Environmental Laws, having applicability to
Borrower except where such noncompliance is not reasonably likely to have a
Material Adverse Effect.
(o) Borrower is and shall remain in compliance in all
material respects with all applicable provisions of ERISA; Borrower has not
violated any provision of any defined employee pension benefit plan (as defined
in ERISA) maintained or contributed to by Borrower (each, a "Plan"); no
Reportable Event as defined in ERISA has occurred and is continuing with
respect to any Plan initiated by Borrower; Borrower has met its minimum funding
requirements under ERISA with respect to each Plan; and each Plan will be able
to fulfill its benefit obligations as they come due in accordance with the Plan
documents and under generally accepted accounting principles.
(p) After giving effect to the transactions contemplated
herein, Borrower (i) owns assets whose fair saleable value is greater than the
amount required to pay all of Borrower's Indebtedness (including contingent
debts), (ii) is
13
16
able to pay all its debts as they become due, and (iii) has capital sufficient
to carry on its business and transactions and all business and transactions in
which it is about to engage.
(q) The Equipment is in good operating condition and
repair, and all necessary replacements of and repairs thereto shall be made so
that the value and operating efficiency of the Equipment shall be maintained
and preserved, reasonable wear and tear excepted. Borrower maintains and shall
keep in force insurance with respect to the Equipment in customary amounts and
with companies reasonably satisfactory to Bank, and Borrower will deliver from
time to time at Bank's request schedules setting forth such insurance as then
in effect. Borrower will not permit any of the Equipment to become an
accession to any personal Property other than Equipment that is subject to
first priority (except for Permitted Liens) Liens in favor of Bank.
(r) Borrower shall keep accurate records itemizing and
describing the kind, type, quality, quantity and value of its Equipment and any
dispositions made in accordance with this Agreement. Promptly on request
therefor by Bank, Borrower shall deliver to Bank any and all evidence of
ownership, if any, of any of the Equipment.
SECTION 7. EVENTS OF DEFAULT AND REMEDIES.
(a) All Obligations shall be immediately due and payable,
without notice or demand, and any provisions of this Agreement as to the
funding of any portion of the Loan by Bank shall terminate automatically, upon
the termination or non-renewal of this Agreement or upon the occurrence or
existence of any one or more of the following "Events of Default":
(i) (a) Borrower fails to pay when due any of the
Obligations; or (b) Borrower fails to perform, keep or observe any
other term or provision of this Agreement or any of the other Loan
Documents and any such default shall remain unremedied for a period
ending on the first day to occur of (x) five days after the chief
executive officer, chief financial officer, treasurer, president, or
any executive vice president of Borrower shall receive written notice
of any such failure from Bank or (y) five days after any chief
executive officer, chief financial officer, treasurer, president or
executive vice president of Borrower shall or should have become aware
thereof;
(ii) Any representation, warranty or statement of
fact made by Borrower to Bank in this Agreement or any other Loan
Document shall prove to be false, inaccurate or misleading in any
material respect;
14
17
(iii) Any voluntary petition or application for any
relief under the bankruptcy laws of the United States now or hereafter
in effect or under any insolvency, reorganization, receivership,
readjustment of debt, assignment for the benefit of creditors,
dissolution or liquidation law or similar statute of any jurisdiction
now or hereafter in effect (whether at law or in equity) is filed by
or against Borrower;
(iv) The aggregate amount of actual total cash
outflows of Borrower exceeds by more than fifteen percent (15%) the
amounts projected for total cash outflows for any rolling four-week
period in the Budget;
(v) Any event shall occur or condition shall
exist that shall be or cause a Material Adverse Effect;
(vi) Any involuntary petition or application for
any relief under the bankruptcy laws of the United States now or
hereafter in effect is filed against Borrower, and the same shall not
have been dismissed within fifteen (15) days thereafter; provided,
that notwithstanding any provision of this Agreement to the contrary,
Bank shall have no obligation to fund any portion of the Loan during
the pendency of any such involuntary bankruptcy case; and
(vii) The occurrence of an "Event of Default" under
the Note Agreements or the PNC Agreements.
(b) Upon the occurrence of an Event of Default and at any
time thereafter, Bank shall have all rights and remedies provided in (i) this
Agreement, (ii) any of the other Loan Documents, including the Restated Note,
and (iii) the Uniform Commercial Code of the Commonwealth of Massachusetts or
other applicable law, all of which rights and remedies may be exercised without
notice to Borrower, all such notices being hereby waived, except such notice as
is expressly provided for hereunder or is not waivable under applicable law.
All rights and remedies of Bank are cumulative and not exclusive and are
enforceable, in Bank's discretion, alternatively, successively or concurrently
on any one or more occasions and in any order Bank may determine.
SECTION 8. RELEASE OF ALL CLAIMS.
(a) To the extent any Claims may exist as of the date
hereof, Borrower, on behalf of itself and its successors and assigns, hereby
forever and irrevocably release Bank and its respective officers,
representatives, agents, attorneys, employees, predecessors, successors and
assigns, from any and all Claims.
15
18
(b) Borrower hereby acknowledges that it is familiar with
the provisions of Section 1542 of the California Civil Code or any similar law
of any other jurisdiction, which provides as follows:
A general release does not extend to claims which the
creditor does not know or suspect to exist in his
favor at the time of executing the release, which if
known by him must have materially affected his
settlement with the debtor.
(c) Borrower has been advised by counsel with respect to
the release contained herein. Upon advice of such counsel, Borrower hereby
waives and relinquishes all of the rights and benefits which it has, or may
have, under Section 1542 of the Civil Code of the State of California or any
similar law of any other jurisdiction.
SECTION 9. WAIVERS AND CONSENTS.
(a) Borrower waives all rights to interpose any claims,
deductions, setoffs or counterclaims of any kind, nature or description in any
action or proceeding instituted by Bank with respect to this Agreement, the
Obligations, the Collateral or any matter arising therefrom or relating
thereto, except compulsory counterclaims.
(b) Bank shall not, by any act, delay, omission or
otherwise be deemed to have expressly or impliedly waived any of its rights or
remedies unless such waiver shall be in writing and signed by an authorized
officer of Bank. A waiver by Bank of any right or remedy on any one occasion
shall not be construed as a bar to or waiver of any such right or remedy which
Bank would otherwise have on any future occasion, whether similar in kind or
otherwise.
SECTION 10. MISCELLANEOUS.
(a) This Agreement shall continue in full force and
effect through the Maturity Date.
(b) Except as otherwise provided, any communications to
be made under this Agreement shall be made in writing to the address or
facsimile number of the party receiving notice which is identified with its
signature below, or to such other address as either party may designate by five
(5) days' prior written notice to the other and shall be deemed to have been
given or made: (i) if by hand, immediately upon delivery;
16
19
(ii) if by telex, telegram or telecopy (fax), immediately upon receipt; (iii)
if by overnight delivery service, one business day after dispatch; and (iv) if
by first class or certified mail, three (3) days after mailing; provided, that,
in all cases, if pursuant to the foregoing provisions the deemed date of any
such notice, request or demand is not a Business Day, then such notice, request
or demand shall be deemed to have been given or made on the first Business Day
thereafter.
(c) If any provision of this Agreement is held to be
invalid or unenforceable, such provision shall not affect this Agreement as a
whole, but this Agreement shall be construed as though it did not contain the
particular provision held to be invalid or unenforceable.
(d) This Agreement contains the entire agreement of the
parties as to the subject matter hereof, all prior commitments, proposals and
negotiations concerning the subject matter hereof being merged herein. Neither
this Agreement nor any provision hereof shall be amended, modified or
discharged orally or by course of conduct, but only by a written agreement
signed by an authorized officer of each of Bank, Borrower and Noteholders.
This Agreement shall be binding upon and inure to the benefit of each of the
parties hereto and their respective successors and assigns, except that any
obligation of Bank under this Agreement shall not be assignable or inure to the
successors and assigns of Borrower.
(e) Borrower shall pay on demand all reasonable costs and
expenses (including fees of counsel) incurred by Bank in connection with the
preparation, negotiation, execution, delivery, administration, modification,
amendment, waiver and enforcement (whether through negotiations, legal
proceedings or otherwise) of this Agreement, the other Restated Loan Documents
and the other documents to be delivered hereunder or thereunder and the
transactions contemplated hereby and thereby and the fulfillment or attempted
fulfillment of conditions precedent hereunder, and all reasonable costs and
expenses related to the following: (i) any amendment, modification or waiver
of, or consent with respect to, any of the Loan Documents or advice in
connection with the administration of the Loan or Bank's rights hereunder or
thereunder; (iii) any litigation, contest, dispute, suit, proceeding or action
(whether instituted by Bank or any other Person) in any way relating to the
Collateral, any of the Loan Documents or any other agreements to be executed or
delivered in connection herewith or therewith, whether as a party, witness, or
otherwise, including any litigation, contest, dispute, suit, case, proceeding
or action, and any appeal or review thereof, in connection with a case
commenced by or against Borrower or any other person or entity that may be
obligated to Bank by virtue of the Loan Documents, including any litigation,
contest, dispute, suit, case, proceeding or action (and any
17
20
appeal or review) in connection with a case under the Bankruptcy Code, or any
other applicable Federal, state or foreign bankruptcy or other similar
insolvency law; (iv) any attempt to enforce any rights of Bank against Borrower
or any other person or entity that may be obligated to Bank by virtue of any of
the Loan Documents; or (v) any effort (A) to monitor the Loan, (B) to evaluate,
observe, assess Borrower or its affairs, or (C) to verify, protect, assemble,
complete, evaluate, assess, appraise, collect, sell, liquidate or otherwise
dispose of the Collateral, including the attorneys' and other professional and
service providers' fees arising from such services (including those in
connection with any appellate proceedings). Borrower shall pay on demand all
costs and expenses (including fees of counsel) of Bank in connection with any
Default or Event of Default and any enforcement or collection proceedings
resulting therefrom or any amendment, modification or waiver of, or consent
with respect to any of the Loan Documents. Without limiting the generality of
the foregoing, such expenses, costs, charges and fees may include: fees, costs
and expenses of accountants, workout advisors, appraisers, investment bankers,
management and other consultants and paralegals; court costs and expenses;
photocopying and duplicating expenses; court reporter fees, costs and expenses;
long distance telephone charges; air express charges; facsimile charges;
secretarial overtime charges; and expenses for travel, lodging and food, and
all other out-of-pocket costs and expenses of every type and nature paid or
incurred in connection with the performance of such legal or other advisory
services.
(f) Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by
or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
(g) Except as otherwise provided in this Agreement or any
other Loan Document by specific reference to the applicable provisions of this
Agreement, if any provision contained in this Agreement is in conflict with, or
inconsistent with, any provision in any other Loan Document, the provision
contained in this Agreement shall govern and control.
(h) No provision of this Agreement or any of the other
Loan Documents shall be construed against or interpreted to the disadvantage of
any party hereto by any court or other governmental or judicial authority by
reason of such party's having or being deemed to have structured, drafted or
dictated such provision.
18
21
(i) No termination of this Agreement shall relieve or
discharge Borrower of its obligations, grants of Collateral, duties and
covenants hereunder or otherwise until such time as all Obligations to Bank
have been indefeasibly paid and satisfied in full in cash, including the
continuation and survival in full force and effect of all security interests
and liens of Bank in and upon all then existing and thereafter-arising or
acquired Collateral, all warranties and waivers of Borrower, and all proxies
and consents executed by Borrower.
(j) This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts, without regard
to its conflicts of law rules.
(k) BORROWER HEREBY IRREVOCABLY CONSENTS TO NON-EXCLUSIVE
PERSONAL JURISDICTION IN THE STATE AND FEDERAL COURTS LOCATED IN THE
COMMONWEALTH OF MASSACHUSETTS IN ANY ACTION OR PROCEEDING ARISING FROM OR
RELATING TO THIS AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS, THE COLLATERAL OR
THE OBLIGATIONS, AND WAIVES ANY OBJECTION AS TO JURISDICTION OR VENUE IN ANY
SUCH COURTS, AND AGREES NOT TO ASSERT AND HEREBY WAIVES ANY DEFENSE OR
OBJECTION BASED ON LACK OF JURISDICTION, IMPROPER VENUE, OR THE DOCTRINE OF
FORUM NON CONVENIENS IN ANY SUCH COURTS. IN ANY SUCH ACTION OR PROCEEDING,
BORROWER WAIVES PERSONAL SERVICE OF THE SUMMONS AND COMPLAINT OR OTHER PROCESS
AND PAPERS THEREIN AND AGREES THAT THE SERVICE THEREOF MAY BE MADE BY MAIL
DIRECTED TO BORROWER AT THE BUSINESS ADDRESS SET FORTH HEREIN OR OTHER ADDRESS
THEREOF OF WHICH BANK HAS RECEIVED NOTICE AS PROVIDED HEREIN, SERVICE TO BE
DEEMED COMPLETE FIVE (5) DAYS AFTER MAILING, OR AS PERMITTED UNDER THE RULES OF
EITHER OF SUCH COURTS.
(l) BORROWER AND BANK EACH WAIVE ALL RIGHTS TO TRIAL BY
JURY IN ANY ACTION OR PROCEEDING INSTITUTED BY EITHER OF THEM AGAINST THE OTHER
WHICH PERTAINS DIRECTLY OR INDIRECTLY TO THIS AGREEMENT, THE ORIGINAL LOAN
AGREEMENT, ANY OTHER LOAN DOCUMENT, THE OBLIGATIONS, THE COLLATERAL, OR ANY
ALLEGED TORTIOUS CONDUCT BY BORROWER OR BANK IN CONNECTION THEREWITH, OR WHICH
IN ANY WAY DIRECTLY OR INDIRECTLY ARISES OUT OF OR RELATES TO THE RELATIONSHIP
BETWEEN BORROWER AND BANK IN CONNECTION WITH ANY OF THE FOREGOING. IN NO EVENT
WILL BANK BE LIABLE FOR LOST PROFITS OR OTHER SPECIAL OR CONSEQUENTIAL DAMAGES.
19
22
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement
as a sealed instrument as of the date first above written.
KERR GROUP, INC.
a Delaware corporation
By: /s/ Geoffrey A. Whynot
-------------------------------------
Geoffrey A. Whynot
Treasurer
Address: 1840 Century Park East
Los Angeles, CA 90067
Attn: Geoffrey A. Whynot
Fax No.: (310) 201-5934
With a copy to:
WILLKIE FARR & GALLAGHER
One Citicorp Center
153 E. 53rd Street
New York, New York 10022
Attn: Harvey Sperry, Esq.
Fax No.: (212) 821-8111
THE FIRST NATIONAL BANK OF BOSTON
By:
-------------------------------------
W. Douglass Vannah
Vice President
Address: 100 Federal Street
Boston, Massachusetts 02110
Attn: W. Douglass Vannah
Fax No.: (617) 434-1508
With a copy to:
MURPHY, WEIR & BUTLER
2049 Century Park East, 21st Floor
Los Angeles, California 90067
Attn: Gregory A. Bray, Esq.
Fax No.: (310) 788-3777
20
23
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement
as a sealed instrument as of the date first above written.
KERR GROUP, INC.
a Delaware corporation
By:
----------------------------------
Geoffrey A. Whynot
Treasurer
Address: 1840 Century Park East
Los Angeles, CA 90067
Attn: Geoffrey A. Whynot
Fax No.: (310) 201-5934
With a copy to:
WILLKIE FARR & GALLAGHER
One Citicorp Center
153 E. 53rd Street
New York, New York 10022
Attn: Harvey Sperry, Esq.
Fax No.: (212) 821-8111
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ W. Douglass Vannah
----------------------------------
W. Douglass Vannah
Vice President
Address: 100 Federal Street
Boston, Massachusetts 02110
Attn: W. Douglass Vannah
Fax No.: (617) 434-1508
With a copy to:
MURPHY, WEIR & BUTLER
2049 Century Park East, 21st Floor
Los Angeles, California 90067
Attn: Gregory A. Bray, Esq.
Fax No.: (310) 788-3777
20