SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
Current Report
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 10, 1998
BLESSINGS CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
1-04684 13-5566477
(Commission File Number) (I.R.S. Employer Identification No.)
200 Enterprise Drive
Newport News, VA 23603
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (757) 887-2100
N.A.
(Former name of former address, if changed since last report)
<PAGE>
Item 2. Acquisition or Disposition of Assets
On February 9, 1998, Blessings Corporation (the "Company") acquired the
remaining 40% of the outstanding common stock of its Mexican subsidiary,
Nacional de Envases Plasticos, S.A. de C.V., and its associated companies
collectively known as NEPSA for $18,500,000. The Company entered into a Term
Loan agreement with a major lending institution to finance the purchase.
Item 7. Financial Statements and Exhibits
(a) Financial Statements
Pro forma Balance Sheet as of December 31, 1997 Pro forma
Statement of Earnings for year ended December 31, 1997 Notes
to Pro forma financial Statements NEPSA Financial Statement
for year ended December 31, 1997
(b) Exhibits
Loan Agreement Between Blessings Corporation and First Union
National Bank
Loan Agreement Between Aspen Industrial, S.A. de C.V. and
First Union National Bank
Unconditional Guaranty
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
BLESSINGS CORPORATION
Date: April 20, 1998 By: /s/Wayne A. Durboraw
Wayne A. Durboraw, Controller
Date: April 20, 1998 By: /s/James P. Luke
James P. Luke, Executive Vice President
(Principal Financial Officer)
HISTORICAL FINANCIAL INFORMATION AND PRO FORMA FINANCIAL INFORMATION
On February 9, 1998, Blessings Corporation (the "Company") acquired the
remaining 40% of the outstanding common stock of its Mexican subsidiary,
Nacional de Envases Plasticos, S.A. de C.v., and its associated companies
collectively known as NEPSA. The following unaudited pro forma consolidated
condensed balance sheet as of January 1, 1997 includes the acquisition of NEPSA.
The following unaudited pro forma consolidated condensed statement of earnings
for the year ended December 31, 1997 is presented as if the NEPSA acquisition
had occurred, and the operations of the Company and NEPSA had been consolidated,
as of December 1, 1997. These unaudited pro forma consolidated condensed
financial statements (the "Pro Forma Financial Statements") are not necessarily
indicative of the actual results that would have occurred had the NEPSA
acquisition been consummated as of the dates indicated above or of future
results of the consolidated companies. The Pro Forma Financial Statements should
be read in conjunction with the Company's previously issued year end and interim
financial statements.
<PAGE>
<TABLE>
<CAPTION>
BLESSINGS CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEETS
As of December 31, 1997
Blessings Pro Forma Pro Forma
ASSETS Historical Adjustments Consolidated
--------------------------------------------------------
Current Assets:
<S> <C> <C> <C>
Cash & cash equivalents $ 4,206,200 $ 4,206,200
Accounts receivable less allowance for
doubtful accounts of $1,603,200 21,632,600 21,632,600
Inventories 14,309,200 14,309,200
Prepaid deferred taxes 1,510,300 1,510,300
Prepaid expenses 1,039,900 1,039,900
-------------- --------------
Total Current Assets 42,698,200 42,698,200
-------------- --------------
Property, Plant and Equipment - Net 89,378,200 616,100 (a)
(75,000) (b) 89,919,300
Goodwill net of accumulated amortization 22,794,600 3,250,000 (a)
(130,000) (d) 25,914,600
Deferred Taxes 7,267,300 7,267,300
Other Assets 2,284,700 2,284,700
-------------- --------------
Total Assets $ 164,423,000 $ 3,661,100 $ 168,084,100
============== =========== ==============
LIABILITIES & SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses $ 20,962,400 (1,468,400)(f)
25,500 (c)
499,300 (g)
44,200 (e) $ 21,861,800
Taxes on income 1,765,400 1,765,400
Current installments on long-term debt 3,125,000 (1,156,000)(a) 4,281,000
Deferred taxes 1,397,000 1,397,000
-------------- --------------
Total Current Liabilities 27,249,800 29,305,200
-------------- --------------
Long-Term Debt 30,937,500 (17,344,000)(a) 48,281,500
Deferred Taxes 9,572,500 9,572,500
Deferred Supplemental Pension Liability 2,267,100 2,267,100
Minority Interest 14,633,900 14,633,900 (a) -
Commitments and Contingencies - -
Shareholders' Equity
4%Cumulative preferred stock, $10 par value
authorized 259 shares, none outstanding
Common stock, $.71 par value; authorized 25,000,000 shares,
issued 10,214,846 7,252,500 7,252,500
Additional paid-in capital 5,968,100 5,968,100
Translation loss (6,255,900) (6,255,900)
Retained earnings 73,823,200 (2,101,900) (i)
--------------
3,206,300 (h) 72,718,800
--------------
80,787,900 79,683,500
Common Stock in Treasury , at cost - 98,046 shares (1,025,700) (1,025,700)
-------------- --------------
Total Shareholders' Equity 79,762,200 78,657,800
-------------- --------------
Total Liabilities and Shareholders' Equity $164,423,000 $(3,661,100) $168,084,100
============== =========== ==============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1997
Blessings Pro Forma Pro Forma
Historical Adjustments Consolidated
--------------------------------------------------------------
<S> <C> <C> <C>
Net Sales $ 174,756,100 $ 174,756,100
Cost and expenses
Cost of sales 124,727,300 124,727,300
Selling, general and administrative expenses 28,810,700 130,000 (d)
75,000 (b) 29,015,700
Foreign exchange loss 383,600 383,600
Interest and other - net 2,575,900 1,468,400 (f) 4,044,300
Total cost and expenses 156,497,500 158,170,900
Earnings before income taxes and minority interest 18,258,600 16,585,200
Taxes on income 6,860,300 (25,500) (c) 6,291,300
(499,300) (g)
(44,200) (e)
Earnings before minority interest 11,398,300 10,293,900
Minority Interest 3,206,300 (3,206,300) (h)
-
-----------
Net earnings $ 8,192,000 $(2,101,900) (i) $ 10,293,900
=============== =========== =============
Per share $ 0.81 $ 1.01
=============== =============
Average number of shares outstanding 10,167,965 10,167,965
=============== =============
</TABLE>
<PAGE>
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
The Pro Forma Financial Statements reflect the following pro forma adjustments
giving effect to the acquisition of 40% of NEPSA as of January 1, 1997.
(a) Acquisition of the remaining 40% of NEPSA.
(b) Depreciation expense resulting from estimated fair value adjustments to
property plant and equipment.
(c) Tax effect of additional depreciation.
(d) Amortization over a period of 25 years of goodwill resulting from the
acquisition.
(e) Tax effect on additional goodwill amortization.
(f) Interest expense on additional debt incurred to finance the purchase.
(g) Tax effects of interest expense on additional debt.
(h) Elimination of 40% minority interest in after-tax earnings of NEPSA.
(i) Net effect of pro forma adjustments on net earnings.
<PAGE>
NACIONAL DE ENVASES PLASTICOS, S. A. DE C. V. AND RELATED
COMPANIES
Combined Financial Statements as of and for the Year Ended
December 31, 1997, and Independent Auditors' Report
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Boards of Directors and Stockholders of
Nacional de Envases Plasticos, S. A. de C. V.
Hermes Industrial, S. A. de C. V.
Mexicana de Tintas, S. A. de C. V.
Plastihul, S. A. de C. V.
Servicios Profesionales Vigo, S. C.
We have audited the accompanying combined balance sheet of Nacional de
Envases Plasticos, S. A. de C. V. and related companies as of December 31, 1997,
and the related combined statements of income, changes in stockholders' equity
and cash flows for the year then ended, both as expressed in Mexican pesos and
as remeasured into U.S. dollars. The combined financial statements include the
accounts of Nacional de Envases Plasticos, S. A. de C. V. and four related
companies, Hermes Industrial, S. A. de C. V., Mexicana de Tintas, S. A. de C.
V., Plastihul, S. A. de C. V. and Servicios Profesionales Vigo, S. C.
(collectively the "Company"). These companies are under common ownership and
common management. These combined financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
The accompanying combined financial statements that are expressed in Mexican
pesos, the currency of the country in which the Company is incorporated and in
which it operates, are intended for use by local management and others within
Mexico; the combined financial statements that are remeasured into U.S. dollars
(the functional currency of the Company) in accordance with the standards set
forth in Statements of Financial Accounting Standards No. 52 are intented for
inclusion in the consolidated financial statements of Aspen Industrial, S.
A. de C. V. (the "Parent Company").
The Mexican peso combined financial statements have been prepared on the
historical-cost basis of accounting and, therefore, do not show the effects of
changes in the purchasing power of the currency. We believe, however, that such
changes in the purchasing power of the Mexican peso (see Note 1) affect the
significance of the Mexican peso combined financial statements; consequently,
the Mexican peso combined financial statements should be considered in light of
these circumstances.
<PAGE>
In our opinion, such combined financial statements expressed in Mexican pesos
present fairly, in all material respects, the financial position of the Company
as of December 31, 1997 and the results of its operations and its cash flows for
the year then ended in conformity with accounting principles generally accepted
in the United States of America. Also, in our opinion, for the purpose of
inclusion in the consolidated financial statements of the Parent Company, the
remeasured combined financial statements expressed in U.S. dollars present
fairly, in all material respects, the financial position of the Company as of
December 31, 1997 and the results of its operations and its cash flows for the
year then ended in conformity with accounting principles generally accepted in
the United States of America.
As discussed in Note 2, the Mexican economy is considered to be highly
inflationary effective January 1, 1997. Consequently, the Company's functional
currency has changed from the Mexican peso to the U.S. dollar.
January 30, 1998
<PAGE>
NACIONAL DE ENVASES DE PLASTICOS, S. A. DE C. V. AND RELATED COMPANIES
COMBINED BALANCE SHEET
DECEMBER 31, 1997
(U.S. dollars and Mexican Pesos)
ASSET December 31, 1997
U.S. Dollars Pesos
CURRENT ASSETS:
Cash and cash equivalents $ 4,801,836 Ps 38,741,695
Accounts receivable - Net 8,109,880 65,431,324
Recoverable value added taxes 800,354 6,457,331
Inventories 3,180,172 25,657,946
Prepaid expenses 323,647 2,611,216
---------- -----------
Total current assets 17,215,889 138,899,512
EQUIPMENT AND LEASEHOLD
IMPROVEMENTS - Net 23,868,404 163,115,467
DEFERRED INCOME TAXES 2,902,162 22,840,029
OTHER ASSETS 1,041,234 8,400,768
---------- -----------
TOTAL $ 45,027,689 Ps 333,255,776
========== ===========
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued
expenses $ 5,669,530 Ps. 45,742,335
Employee statutory profit-sharing 1,048,190 8,456,912
Due to related parties 206,573 1,666,651
Deferred income taxes 1,057,252 8,530,017
Deferred employee statutory profit
-sharing 339,763 2,741,242
--------- -----------
Total current liabilities 8,321,308 67,137,157
--------- -----------
SENIORITY PREMIUMS 121,572 980,853
--------- -----------
Total liabilities 8,442,880 68,118,010
--------- -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock 9,049,048 22,825,300
Retained earnings 51,180,544 242,312,466
Cumulative translation adjustment (23,644,783) -
---------- -----------
Total stockholders' equity 36,584,809 265,137,766
---------- -----------
TOTAL $ 45,027,689 Ps 333,255,776
========== ===========
See accompanying notes to combined financial statements.
<PAGE>
NACIONAL DE ENVASES DE PLASTICOS, S. A. DE C. V. AND RELATED COMPANIES
COMBINED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1997
(U.S. dollars and Mexican Pesos)
For the Year ended
December 31, 1997
U.S. Dollars Pesos
REVENUES:
Net sales $ 54,045,342 Ps 427,213,451
Other, primarily scrap sales 550,599 4,366,604
---------- -----------
Total revenues 54,595,941 431,580,055
---------- -----------
COSTS AND EXPENSES:
Costs of sales 35,321,019 284,283,020
Selling, general and administrative
expenses 6,981,757 55,351,636
Employee statutory profit-sharing 1,174,694 9,288,913
---------- -----------
Total costs and expenses 43,477,470 348,923,569
---------- -----------
INCOME FROM OPERATIONS 11,118,471 82,656,486
OTHER (INCOME) EXPENSES:
Interest expense 105,764 764,894
Interest income (549,707) (4,274,023)
Foreign exchange gains - Net - (786,498)
Other 32,693 260,345
Remeasurement loss 301,705 -
---------- -----------
Total other income - Net (109,545) (4,035,282)
---------- -----------
INCOME BEFORE TAXES 11,228,016 86,691,768
INCOME TAX EXPENSE 3,212,428 25,381,691
---------- -----------
COMBINED NET EARNINGS $ 8,015,588 Ps 61,310,077
========== ===========
See accompanying notes to combined financial statements.
<PAGE>
NACIONAL DE ENVASES DE PLASTICOS, S. A. DE C. V. AND RELATED COMPANIES
<TABLE>
<CAPTION>
COMBINED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
YEAR ENDED DECEMBER 31, 1997
(U.S. dollars and Mexican Pesos except share information)
Cumulative Total
Number Common Retained Translation stockholders'
of Shares Stock Earnings Adjustment Equity
--------- ------ -------- ---------- -------------
U. S. Dollars
-------------
<S> <C> <C> <C> <C> <C>
BALANCE, JANUARY
1, 1997 22,825,300 $ 9,049,048 $ 43,164,956 $ (23,644,783) $ 28,569,221
Net earnings - - 8,015,588 - 8,015,588
---------- --------- ---------- ---------- -----------
BALANCE, DECEMBER
31, 1997 22,825,300 $ 9,049,048 $ 51,180,544 $ (23,644,783) $ 36,584,809
========== ========= ========== ========== ===========
P e s o s
---------
BALANCE, JANUARY
1, 1997 22,825,300 Ps 22,825,300 Ps 181,002,389 Ps - Ps 203,827,689
Net earnings - - 61,310,077 - 61,310,077
---------- ---------- ----------- ---------- -----------
BALANCE, DECEMBER
31, 1997 22,825,300 Ps 22,825,300 Ps 242,312,466 Ps - Ps 265,137,766
========== ========== =========== ========== ===========
See accompanying notes to combined financial statements.
</TABLE>
<PAGE>
NACIONAL DE ENVASES DE PLASTICOS, S. A. DE C. V. AND RELATED COMPANIES
COMBINED STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1997
(U.S. dollars and Mexican Pesos)
For the Year ended
December 31, 1997
U.S.Dollars Pesos
OPERATING ACTIVITIES:
Net earnings $ 8,015,588 Ps 61,310,077
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 1,994,401 19,696,319
Provision for losses on doubtful accounts 165,898 1,342,638
Deferred income taxes and employee
statutory profit-sharing 820,717 6,473,537
Loss on sale of equipment 111,458 880,186
Remesurement loss 301,705 -
Change in operating assets and liabilities:
Increase in accounts receivable
and recoverable taxes (619,639) (4,999,310)
Increase in inventories (695,522) (5,611,537)
Increase in prepaid expenses (270,835) (2,185,123)
Increase in other assets (265,953) (2,145,736)
Increase in account payable and
accrued expenses 52,434 423,027
Increase in employee statutory profit-sharing 178,777 1,442,394
Decrease due to related parties and seniority
premiums (658,951) (5,316,486)
--------- ----------
Net cash provided by operating activities 9,130,078 71,309,986
INVESTING ACTIVITIES:
Additions to equipment and leasehold
improvements (7,053,960) (55,807,925)
Proceeds from disposition of equipment 187,696 1,483,846
--------- ----------
Net cash used in investing activities (6,866,264) (54,324,079)
--------- ----------
FINANCING ACTIVITIES:
Payments of long-term debt (809,930) (6,374,403)
--------- ----------
Net cash used in financing activities (809,930) (6,374,403)
--------- ----------
EFFECT OF EXCHANGE RATE CHANGES
ON CASH (226,405) -
CASH AND CASH EQUIVALENTS:
INCREASE 1,227,479 10,611,504
BEGINNING OF YEAR 3,574,357 28,130,191
--------- ----------
END OF YEAR $ 4,801,836 Ps 38,741,695
========= ==========
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
Cash paid for interest $ 105,764 Ps 764,894
========= ==========
Cash paid for taxes $ 2,514,380 Ps 19,877,933
========= ==========
See accompanying notes to combined financial statements.
<PAGE>
NACIONAL DE ENVASES DE PLASTICOS, S. A. DE C. V. AND RELATED COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1997
(U.S. dollars and Mexican Pesos)
1. NATURE OF BUSINESS AND BASIS OF PRESENTATION
Nature of business - Nacional de Envases Plasticos, S. A. de C. V. and its
related companies (collectively the "Company") produce and distribute
polyethylene film primarily in Mexico for use in a variety of disposable
healthcare products, as well as in numerous industrial and packaging end uses.
Basis of presentation - The combined financial statements include the
accounts of Nacional de Envases Plasticos, S. A. de C. V. and four related
companies, Hermes Industrial, S. A. de C. V., Mexicana de Tintas, S. A. de C.
V., Plastihul, S. A. de C. V. and Servicios Profesionales Vigo, S. C. These
companies are under common ownership and common management, which consists of
Aspen Industrial, S. A. de C. V. ("Aspen") and members of a certain Mexican
family (the "Family"). As of December 31, 1997 and the year then ended, Aspen
owned 60% of each of the companies and the Family owned 40%. Intercompany
balances and transactions have been eliminated.
The Mexican peso combined financial statements have been prepared on the
historical-cost basis of accounting and, therefore, do not show the effects of
changes in the purchasing power of the currency. However, such changes in the
purchasing power of the Mexican peso affect the significance of the Mexican peso
combined financial statements and should be considered in light of these
circumstances.
Inflation in Mexico, as measured by the National Consumer Price Index
published by Banco de Mexico, was 15.7% for the year ended December 31, 1997.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Basis of currency remeasurement - Effective January 1, 1997,
the Mexican economy is considered to be highly inflationary
and the functional currency of the Company is the U.S. dollar.
The financial statements as of and for the year ended December
31, 1997 were remeasured using (i) current exchange rates for
monetary assets and liabilities, (ii) historical exchange
rates for nonmonetary assets and liabilities, (iii) historical
exchange rates for revenues and expenses associated with
nonmonetary assets and liabilities and (iv) the weighted
average exchange rate of the reporting period for all other
revenues and expenses. The resulting remeasurement loss was
recorded in operations currently.
Prior to January 1, 1997, the Mexican economy was not
considered to be highly inflationary and the Company's
functional currency was the Mexican peso. Financial statements
for periods prior to January 1, 1997 were translated from
Mexican pesos to U.S. dollars using current exchanges rates
for assets and liabilities and average exchange rates for
revenues and expenses. Resulting translation gains and losses
were recorded in stockholders' equity.
The financial statements should not be construed as
representations that Mexican peso amounts have been, could
have been or may in the future be converted into U.S. dollars.
<PAGE>
b. Cash equivalents - The Company considers all highly-liquid
debt instruments with a maturity of three months or less when
purchased to be cash equivalents.
c. Inventories - Inventories are stated at the lower of cost or
market, determined on a first-in, first-out basis.
d. Equipment and leasehold improvements - Equipment and leasehold
improvements are stated at cost. Depreciation is calculated on
the basis of the straight-line method as follows:
Years
Leasehold improvements 20
Machinery and equipment 10
Furniture and fixtures 10
Vehicles 5
Major improvements are capitalized and ordinary repairs and
maintenance are expensed in the year incurred.
e. Retirement obligations - Seniority premium benefits are
recognized as an expense over an employee's years of service
and are determined on the basis of actuarial calculations
using the projected unit credit method.
f. Income tax and employee statutory profit-sharing - The Company
recognizes deferred income tax and employee statutory
profit-sharing assets and liabilities for the future
consequences of temporary differences between the financial
statement carrying amount of assets and liabilities and their
respective income tax or employee statutory profit-sharing
bases, measured using enacted income tax and employee
statutory profit-sharing rates. Deferred income tax assets are
also recognized for the estimated future effects of tax loss
carryforwards. Deferred income tax and statutory
profit-sharing assets are reduced by any benefits that are not
expected to be realized.
g. Revenue recognition - Revenues and related costs are
recognized upon transfer of ownership which coincides with the
shipment of products to customers.
h. Foreign currency transactions - Foreign currency transactions
are recorded at the exchange rate in effect at the date of the
transaction. Foreign currency assets and liabilities at the
balance sheet date are recorded at the year-end exchange rate.
Transaction gains and losses are taken into income currently.
i. Fair value of financial instruments - The carrying amount of
the Company's cash equivalents and accounts receivable
approximate their fair values. Cash equivalents are carried at
cost which approximates market value and accounts receivable
are short-term in nature.
j. Derivative financial instruments - Derivative financial
instruments are utilized by the Company to reduce foreign
exchange risk. The Company has established a control
environment which includes policies and procedures for risk
assessment and the approval and monitoring of derivative
financial instrument activities. The Company does not hold or
issue derivative financial instruments for trading or
speculative purposes.
<PAGE>
Derivative financial instruments utilized by the Company
include foreign currency forward contracts and coberturas,
which are contractual obligations for a counterparty to pay a
variable exchange rate on a fixed notional amount at a future
date in exchange for a fixed exchange rate payment. The
Company utilizes foreign currency forward contracts and
coberturas to hedge known transactional exposures denominated
in currencies other than the Mexican peso.
At December 31, 1997, the Company did not have any derivative
financial instruments outstanding and derivative financial
instruments utilized by the Company during 1997 were not
material.
k. Use of estimates - The preparation of financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could
differ from those estimates.
3. CONCENTRATIONS OF CREDIT RISK
Financial instruments which potentially expose the Company to
concentrations of credit risk consist primarily of trade accounts
receivable. The Company primarily sells its products to manufacturers
in Mexico and the Company's two largest customers accounted for
approximately 71% of accounts receivable at December 31, 1997. The
Company generally does not require collateral and the majority of its
trade accounts receivable are unsecured. Although the Company is
directly affected by the strength of the Mexican economy and the
financial well-being of its two largest customers, management does not
believe significant credit risk exists at December 31, 1997.
4. ACCOUNTS RECEIVABLES
December 31,
1997
U.S. Dollars Pesos
Trade $ 8,314,090 Ps 67,078,914
Allowance for doubtful accounts (204,210) (1,647,590)
--------- ----------
$ 8,109,880 Ps 65,431,324
========= ==========
5. INVENTORIES
December 31,
1997
U.S. Dollars Pesos
Finished goods $ 1,819,402 Ps 14,679,120
Work in process 232,988 1,879,767
Raw materials 1,524,629 12,300,858
Goods in transit 22,507 181,591
Obsolete inventory reserve (419,354) (3,383,390)
--------- ----------
$ 3,180,172 Ps 25,657,946
========= ==========
<PAGE>
6. EQUIPMENT AND LEASEHOLD IMPROVEMENTS
December 31,
1997
U.S. Dollars Pesos
Machinery and equipment $ 26,972,048 Ps 195,897,643
Furniture and fixtures 2,227,229 15,979,737
Vehicles 779,132 5,811,824
Leasehold improvements 1,317,221 10,165,620
---------- -----------
31,295,630 227,854,824
Accumulated depreciation and
amortization (7,427,226) (64,739,357)
---------- -----------
$ 23,868,404 Ps 163,115,467
========== ===========
7. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
December 31,
1997
U.S. Dollars Pesos
Accounts payable - trade $ 4,118,564 Ps 33,228,984
Salaries, wages and commissions 1,046,479 8,443,098
Taxes, other than taxes on income 401,664 3,240,667
Other current liabilities 102,823 829,586
--------- ----------
Total $ 5,669,530 Ps 45,742,335
========= ==========
8. SENIORITY PREMIUMS
The Company provides seniority premium benefits, which are mandated by
Mexican law, to employees upon dismissal after 15 years of service or
to the employee's beneficiary upon death. Net periodic expense related
to these benefits was $11,895 for the year ended December 31, 1997.
Other disclosures related to seniority premiums including the
components of periodic expense, funded status and assumptions are not
material and consequently are not presented herein.
9. STOCKHOLDERS' EQUITY
Common stock is represented by common stock at par value of Ps1.00 per
share, and is as follows:
Number
of shares
1997
Fixed capital shares 138,500
Variable capital shares 22,686,800
----------
22,825,300
==========
<PAGE>
10. COMMITMENTS
Rent expense for the year ended December 31, 1997 amounted to
$1,296,660. At December 31, 1997, minimum lease commitments for
long-term operating leases, all of which are for land and buildings
owned by the Family, are as follows:
Year Amount
---- ------
U.S. Dollars Pesos
------------ -----
1998 $ 1,296,660 Ps. 10,457,563
1999 1,296,660 10,457,563
The related lease agreements allow the Company, at its sole discretion,
to extend the term of the leases up to an additional 15 years and also
provide for lease payments to be adjusted annually based on the "All
U.S. Consumer Price Index All Urban Consumers".
The Company has commited short-term lines of credit available through
two Mexican banks of approximately $5.4 million (Ps. 44 million).
11. MAJOR CUSTOMERS
Two customers of the Company accounted for 60% and 11% of sales in
1997.
12. INCOME TAXES AND EMPLOYEE STATUTORY PROFIT-SHARING
a. The provision for income taxes and employee statutory profit-sharing
consist of the following:
1997
U.S. Dollars Pesos
Income tax
Current $2,514,380 Ps.19,877,933
Deferred 698,048 5,503,758
---------- -------------
Income tax $3,212,428 Ps.25,381,691
========== =============
Employee statutory profit-sharing
Current $1,052,025 Ps. 8,319,130
Deferred 122,669 969,783
---------- -------------
Employee statutory profit-sharing $1,174,694 Ps. 9,288,913
========== =============
<PAGE>
b. A reconciliation between statutory and effective income tax
rates as a percentage of net income before taxes follows:
Tax Rate
--------
U.S.
Dollars Pesos
------- -----
Statutory rate 34.0% 34.0%
Inflationary loss recognized for tax purposes (3.4) (3.4)
Employee statutory profit-sharing expenses
not deducted for tax purposes 3.6 3.6
Effect of inflation on tax depreciation (5.0) (5.0)
Effect of remeasurement (0.7) -
Other 0.1 0.1
---- -----
28.6% 29.3%
===== =====
c. Temporary differences which give rise to deferred tax and
profit sharing assets and liabilities at December 31, 1997 are
as follows:
<TABLE>
<CAPTION>
Deferred
Deferred Tax Deferred Tax Profit-Sharing
Assets Liabilities Liabilities
------------ ------------ --------------
U.S. Dollars Pesos U.S. Dollars Pesos U.S. Dollars Pesos
------------ ----- ------------ ----- ------------ -----
<S> <C> <C> <C> <C> <C> <C>
Inventories $ - Ps - $ 1,346,384 Ps 10,862,761 $ 395,995 Ps 3,194,930
Allowance for doubtful
accounts - - (69,432) (560,181) (20,421) (164,759)
Reserves - - (219,700) (1,772,563) (62,607) (521,342)
Exchange losses - - - - 26,796 232,413
-------------- -------------- ----------- ------------- --------- ------------
Total current - - 1,057,252 8,530,017 339,763 2,741,242
-------------- -------------- ----------- ------------- --------- ------------
Noncurrent
Fixed assets 2,902,162 22,840,029 - - - -
-------------- -------------- ----------- ------------- --------- ------------
Total Noncurrent 2,902,162 22,840,029 - - - -
-------------- -------------- ----------- ------------- --------- ------------
Total $ 2,902,162 Ps 22,840,029 $ 1,057,252 Ps 8,530,017 $ 339,763 Ps 2,741,242
============== ============== =========== ============= ========= ============
</TABLE>
d. Distributions to shareholders in excess of the tax basis of
common stock and retained earnings (restated for inflation)
are subject to a 34% dividend tax payable by the Company.
e. Aspen, a 60% owner of the Company, files a consolidated tax
return which includes 60% of the Company.
<PAGE>
13. RELATED PARTIES
Transactions carried out with related parties were as follows:
1997
U.S. Dollars Pesos
Rent expense $ 1,296,660 Ps 10,251,719
Sale of inventory 938,293 7,412,515
Purchase of inventory 433,466 2,433,051
Professional fees 519,438 4,113,949
The Company leases land and buildings from the Family under various
operating leases.
The Company enters into various inventory purchase and sale transactions
with Blessings Corporation, the U.S. parent company of Aspen Industrial, S. A.
de C. V. The Company also pays professional fees to Blessings Corporation for
technical and administrative assistance.
* * * * * *
<PAGE>
LOAN AGREEMENT
By and Between
BLESSINGS CORPORATION
and
FIRST UNION NATIONAL BANK
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I - DEFINITIONS; ACCOUNTING TERMS....................................1
Section 1.1. Definitions.......................................1
Section 1.2. Other Terms......................................13
ARTICLE II - THE LOAN.......................................................13
Section 2.1. The Loan.........................................13
Section 2.2. The Note.........................................14
Section 2.3. Payments.........................................14
Section 2.4. Payment on Days Other Than Business Days.........14
ARTICLE III - PAYMENT OF INTEREST; FEES; LATE CHARGES.......................15
Section 3.1. Selection of Interest Rate Option ...............16
Section 3.2. Payments and Computations........................15
Section 3.3. Selection of Interest Period.....................16
Section 3.4. Number of Tranches...............................16
Section 3.5. Late Charge......................................16
Section 3.6. Facility Fee.....................................17
Section 3.7. LIBOR Provisions.................................17
(a) Increased Costs..................................17
(b) LIBOR Deposits Unavailable.......................17
(c) Changes in Law Rendering a LIBOR Loan Unlawful...18
(d) Certificate......................................19
Section 3.8. Increases and Decreases in Interest Rates........19
Section 3.9. Optional Prepayments.............................20
Section 3.10. Payment of Loss or Out-of-Pocket Expense;
Calculation Thereof............................20
Section 3.11. Application of Prepayments.......................21
Section 3.12. No Reborrowing...................................21
ARTICLE IV - REPRESENTATIONS................................................21
Section 4.1. Subsidiaries.....................................21
Section 4.2. Good Standing....................................22
Section 4.3. Corporate Authority..............................22
Section 4.4. Binding Agreements...............................22
Section 4.5. Litigation.......................................23
Section 4.6. No Conflicting Agreements........................23
Section 4.7. Financial Condition..............................23
Section 4.8. Disclosure.......................................24
Section 4.9. Employee Benefit Pension Plans...................24
ARTICLE V - CONDITIONS OF LENDING...25
Section 5.1. Approval of Bank's Counsel.......................24
Section 5.2. Compliance.......................................24
Section 5.3. Evidence of Corporate Action.....................25
Section 5.4. Certificate of Secretary of the Company..........26
Section 5.5. Opinion of Counsel...............................25
ARTICLE VI - AFFIRMATIVE COVENANTS..26
Section 6.1. Financial Statements.............................26
Section 6.2. Taxes............................................27
Section 6.3. Payment of Obligations...........................27
Section 6.4. Insurance........................................29
Section 6.5. Corporate Existence..............................29
Section 6.6. Properties.......................................39
Section 6.7. Employee Benefit Pension Plans...................28
Section 6.8. Compliance With Laws.............................29
Section 6.9. Notice of Environmental Matters..................29
Section 6.10. Year 2000 Compatibility..........................31
Section 6.11. Waived Conditions................................30
ARTICLE VII - NEGATIVE COVENANTS............................................30
Section 7.1. Mortgages and Pledges............................30
Section 7.2. Loans............................................33
Section 7.3. Merger, Acquisition or Sale of Assets............32
Section 7.4. Sale of Assets...................................32
Section 7.5. Use of Proceeds..................................32
Section 7.6. Ratio of Funded Debt to Total Capitalization.....32
Section 7.7. Ratio of Funded Debt to Cash Flow................35
ARTICLE VIII - EVENTS OF DEFAULT............................................35
ARTICLE IX - MISCELLANEOUS PROVISIONS.......................................36
Section 9.1. Costs and Expenses...............................36
Section 9.2. Cumulative Rights and No Waiver..................36
Section 9.3. Amendments, Etc..................................39
Section 9.4. Indemnification of Bank..........................37
Section 9.5. Arbitration......................................39
(a) General..........................................39
(b) Arbitration Rules................................39
(c) Exceptions.......................................40
(d) Limitation on Damages............................43
Section 9.6. Waiver of Jury Trial.............................43
Section 9.7. Notices..........................................41
Section 9.8. Applicable Law...................................42
Section 9.9. Survivorship.....................................42
Section 9.10. Headings.........................................42
<PAGE>
LOAN AGREEMENT
THIS LOAN AGREEMENT is made as of February 20, 1998, by and between
BLESSINGS CORPORATION (the "Company"), a Delaware corporation with its principal
office at 200 Enterprise Drive, Newport News, Virginia 23603, and FIRST UNION
NATIONAL BANK (the "Bank"), a national banking association with an office at 901
East Cary Street, Richmond, Virginia 23219.
The Company has applied to the Bank for a term loan in the amount of
Nine Million Two Hundred Fifty Thousand Dollars ($9,250,000), the proceeds of
which will be used together with other funds to finance the acquisition by the
Company of one share in each of Nacional de Envases Plasticos, S.A. de C.V.,
Hermes Industrial, S.A. de C.V., Mexicana D. Tintas, S.A., Plastihul, S.A. de
C.V., and Servicios Profesionales Vigo, S.C. (collectively, "NEPSA") and the
acquisition by ASPEN Industrial, S.A. de C.V., a wholly-owned Subsidiary of the
Company, of the remaining 40% ownership interest in NEPSA. The Bank is willing
to make a loan to the Company upon the terms and conditions hereinafter set
forth.
ACCORDINGLY, the Company and the Bank agree as follows:
ARTICLE I - DEFINITIONS; ACCOUNTING TERMS
Section 1.1.......Definitions. As used in this Agreement, the following
terms shall have the meanings herein specified and shall include in the singular
number the plural and in the plural number the singular:
"Affiliates" means, as to any Person, each other Person that directly
or indirectly (through one or more intermediaries or otherwise) controls, is
controlled by or is under common control with, such Person, provided that
Williamson-Dickie Manufacturing Company, a Texas corporation, shall not be an
"Affiliate" of the Company.
"Agreement" means this Loan Agreement, as it may be amended from time
to time by written agreement as herein provided.
"Applicable LIBOR Margin" means 0.60% through August 20, 1998.
Thereafter, Applicable LIBOR Margin for each fiscal quarter means the margin
amount expressed as a percentage shown by the following table using for the
purposes hereof the Ratio of Debt to Capitalization as of the last day of the
preceding fiscal quarter.
Ratio of Debt to Capitalization Applicable LIBOR Margin
Less than .25 to 1 0.60%
.25 - .40 to 1 0.70%
Greater than .40 to 1 0.80%
If an Event of Default shall have occurred and not been waived by the Bank, the
Applicable LIBOR Margin will be 3%.
"Applicable Prime Rate Margin" means -1.90% through August 20, 1998.
Thereafter, Applicable Prime Rate Margin for each fiscal quarter means the
margin amount expressed as a percentage shown by the following table using for
the purposes hereof the Ratio of Debt to Capitalization as of the last day of
the preceding fiscal quarter.
Ratio of Debt to Capitalization Applicable Prime Rate Margin
Less than .25 to 1 - 1.90%
.25 - .40 to 1 - 1.80%
Greater than .40 to 1 - 1.70%
If an Event of Default shall have occurred and not been waived by the Bank, the
Applicable Prime Rate Margin will be 0.5%.
"Bank" shall have the meaning ascribed thereto on the first page of
this Agreement.
"Business Day" means any day, other than a Saturday, Sunday or public
holiday or the equivalent, on which dealings are carried on in the London
interbank market and commercial banks are open for business and are not required
or authorized to close in New York, New York, or Richmond, Virginia.
"Capital Lease" means, at any time, a lease with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.
"Company" shall have the meaning ascribed thereto on the first page of
this Agreement.
"Consolidated Cash Flow" means, for any period, Consolidated Net Income
for such period, plus, to the extent deducted in calculating Consolidated Net
Income, (i) interest expense, including imputed interest in respect of Capital
Leases, amortization of debt discount and expense, fees and commissions for
letters of credit and bankers' acceptances and the net interest costs of
interest rate swaps and hedges, (ii) depreciation and amortization expense, and
(iii) taxes actually paid, in each case determined in accordance with GAAP.
"Consolidated Funded Debt" means Funded Debt of the Company and its
Subsidiaries determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, for any period, the Net Income of the
Company and its consolidated Subsidiaries for such period, determined on a
consolidated basis, but excluding (a) extraordinary items and (b) any Minority
Interest.
"Consolidated Net Worth" means total stockholders' equity of the
Company and its Subsidiaries, determined on a consolidated basis in accordance
with GAAP.
"Consolidated Total Capitalization" means the sum of Consolidated Net
Worth and Consolidated Funded Debt.
"Debt" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of
business, (iv) all obligations of such Person as lessee under capital leases,
(v) all obligations of such Person to reimburse any bank or other Person in
respect of amounts payable under a banker's acceptance, (vi) all Redeemable
Preferred Stock of such Person (in the event such Person is a corporation),
(vii) all obligations (absolute or contingent) of such Person to reimburse any
bank or other Person in respect of amounts paid under a letter of credit or
similar instrument (but excluding any letter of credit or similar instrument
with an expiration date or final maturity of less than one year from the date of
determination), (viii) all Debt of others secured by a Lien on any asset of such
Person, whether or not such Debt is assumed by such Person, and (ix) all Debt of
others Guaranteed by such Person.
"Default" means any event or condition which with the giving of notice
or passage of time, or both, would constitute an Event of Default.
"Environmental Laws" means all federal, state and local laws relating
to pollution or protection of the environment, including laws relating to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals or industrial, toxic or hazardous substances or wastes
(including, without limitation, all waste materials subject to regulation under
the Comprehensive Environmental Response, Compensation, and Liability Act, 42
U.S.C. ss.ss. 9601, et seq., the Resource Conservation and Recovery Act, 42
U.S.C. ss.ss. 6901, et seq., the Clean Water Act, 33 U.S.C. ss.ss. 1251, et
seq., the Clean Air Act, 42 U.S.C. ss.ss. 7401, et seq., or applicable state law
and any other applicable federal, state or local laws and the regulations now in
force or hereafter enacted relating to hazardous waste disposal) and any
materials present on any property owned or operated by the Company or any
Subsidiary which have been shown to have significant adverse effects on human
health or which are subject to regulation under the Toxic Substances Control
Act, 15 U.S.C. ss.ss. 2601, et seq., applicable state law or any other
applicable federal, state or local laws now in force or hereafter enacted
relating to toxic substances, which shall include, but not be limited to,
asbestos, polychlorinated biphenyls (PCBs), petroleum products, and lead-based
paints, in the environment (including, without limitation, ambient air, surface
water, ground water or land) or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transportation or
handling of pollutants, contaminants, chemicals or industrial, toxic or
hazardous substances or wastes, and any and all regulations, codes, plans,
orders, decrees, judgments, injunctions, notices or demand letters issued,
entered, promulgated or approved thereunder.
"ERISA" means the Employee Retirement Income Security Act of 1974,
together with the rules and regulations promulgated thereunder, as in effect
from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that is treated as a single employer together with the Company
under section 414 of the Code.
"Eurodollar Reserve Percentage" means, for any day, the percentage
(expressed as a decimal) that is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars in
respect of "Eurocurrency liabilities" (or in respect of any other category of
liabilities that includes deposits by reference to which the interest rate on a
loan bearing interest at a rate based on LIBOR is determined or any category of
extensions of credit or other assets that includes loans by a non-United States
office of any lender to United States residents).
"Event of Default" means any of the Events of Default provided in Section 8.
"Funded Debt" means at any date the Debt of the Company, determined on
an unconsolidated basis as of such date.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States of America.
"Governmental Authority" means the United States, any state or other
political subdivision thereof and any court, agency, department, commission,
board, bureau or instrumentality of any of the foregoing.
"Guaranty" means, with respect to any Person, any obligation (except
the endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
indebtedness, dividend or other obligation of any other Person in any manner,
whether directly or indirectly, including (without limitation) obligations
incurred through an agreement, contingent or otherwise, by such Person:
(a) to purchase such indebtedness or obligation or any property
constituting security therefor;
(b) to advance or supply funds (i) for the purchase or payment of such
indebtedness or obligation, or (ii) to maintain any working capital or other
balance sheet condition or any income statement condition of any other Person or
otherwise to advance or make available funds for the purchase or payment of such
indebtedness or obligation;
(c) to lease properties or to purchase properties or services primarily
for the purpose of assuring the owner of such indebtedness or obligation of the
ability of any other Person to make payment of the indebtedness or obligation;
or
(d) otherwise to assure the owner of such indebtedness or obligation
against loss in respect thereof.
In any computation of the indebtedness or other liabilities of the obligor under
any Guaranty, the indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor. The term
"Guarantee" used as a verb has a corresponding meaning.
"Hazardous Materials" shall mean all materials defined as hazardous
wastes or substances under any applicable state and federal Environmental Laws
and petroleum, petroleum products, oil and asbestos.
"Hedging Agreement" means any agreement with respect to an interest
rate swap, collar, cap, floor or a forward rate agreement or other agreement
regarding the hedging of interest rate risk exposure executed in connection with
hedging the interest rate exposure of the Company under this Agreement or any
other indebtedness, and any confirming letter executed pursuant to such hedging
agreement, all as amended or modified.
"Indebtedness" with respect to any Person means, at any time, without
duplication,
(a) its liabilities for borrowed money and its redemption
obligations in respect of mandatorily redeemable Preferred Stock;
(b) its liabilities for the deferred purchase price of property
acquired by such Person (excluding accounts payable arising in the ordinary
course of business but including all liabilities created or arising under any
conditional sale or other title retention agreement with respect to any such
property);
(c) all liabilities appearing on its balance sheet in accordance with
GAAP in respect of Capital Leases;
(d) all liabilities for borrowed money secured by any Lien with respect
to any property owned by such Person (whether or not it has assumed or otherwise
become liable for such liabilities);
(e) all its liabilities in respect of letters of credit or instruments
serving a similar function issued or accepted for its account by banks and other
financial institutions with a maturity greater than one (1) year (whether or not
representing obligations for borrowed money);
(f) Swaps of such Person; and
(g) any Guaranty of such Person with respect to liabilities of a type
described in any of clauses (a) through (f) hereof.
Indebtedness shall not be deemed to include unfunded benefit liabilities of the
Company or any Subsidiary under any Plan. Indebtedness of any Person shall
include all obligations of such Person of the character described in clauses (a)
through (g) to the extent such Person remains legally liable in respect thereof
notwithstanding that any such obligation is deemed to be extinguished under
GAAP.
"Interest Period" means the period beginning on the date the Loan is
made and ending one (1), three (3) or six (6) months thereafter, as the Company
may elect; provided that (a) each successive Interest Period shall commence on
the date on which the next preceding Interest Period expires; (b) any Interest
Period that begins on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month at the end
of such Interest Period) shall end on the last Business Day of the relevant
calendar month at the end of such Interest Period; (c) if any Interest Period
would otherwise expire on a day that is not a Business Day, such Interest Period
shall expire on the next succeeding Business Day, provided that if any Interest
Period would otherwise expire on a day that is not a Business Day but is a day
of the month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day; (d) no Interest
Period shall extend beyond the maturity date of the Loan; and (e) Interest
Periods with respect to the Loan shall be selected by the Company so as to
permit the Company to make the scheduled principal payments of the Loan under
Section 2.2 without the payment of any amounts pursuant to Section 3.10.
"Interest Rate Options" means (a) a rate based on the LIBOR Rate, (b) a
rate based on the LIBOR Market Index Rate, and (c) a rate based on the Prime
Rate.
"LIBOR" means, for the Interest Period applicable thereto, the rate for
deposits in United States dollars for a period equal to such Interest Period
which appears on the Telerate Page 3750 at approximately 11:00 a.m. (London
time), two (2) Business Days prior to the commencement of the applicable
Interest Period. If, for any reason, such rate is not available, then "LIBOR"
shall mean the rate per annum at which, as determined by the Bank, dollar
deposits in the amount of $5,000,000 are being offered to leading banks at
approximately 11:00 a.m. (London time), two (2) Business Days prior to the
commencement of the applicable Interest Period for settlement in immediately
available funds by leading banks in the London interbank market for a period
equal to the Interest Period applicable thereto.
"LIBOR Market Index Rate" means, for any day, the rate (rounded to the
next higher 1/100 of 1%) for one-month U.S. dollar deposits as reported on
Telerate Page 3750 as of 11:00 a.m. (London time) for such day, provided if such
day is not a Business Day, the immediately preceding Business Day (or if not so
reported, then as determined by the Bank from another recognized source or
interbank quotation).
"LIBOR Rate" means, with respect to any Interest Period, an interest
rate per annum (rounded upward, if necessary, to the next higher 1/100th of 1%)
determined by the Bank pursuant to the following formula:
LIBOR Rate = LIBOR
1.00 - Eurodollar Reserve Percentage
"Lien" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of any
vendor, lessor, lender or other secured party to or of such Person under any
conditional sale or other title retention agreement or Capital Lease, upon or
with respect to any property or asset of such Person (including in the case of
stock, stockholder agreements, voting trust agreements and all similar
arrangements).
"Loan" shall have the meaning set forth in Section 2.1.
"Loan Documents" means, collectively, this Agreement, the Note and each
other document, instrument or agreement now or hereafter executed by the Company
or any Subsidiary in connection with this Agreement or otherwise to secure the
payment of the Loan.
"Minority Interest" means the equity interest of the Company and its
Subsidiaries in the unremitted earnings of Persons not Subsidiaries.
"NEPSA" shall have the meaning ascribed thereto on the first page of
this Agreement.
"Note" shall have the meaning set forth in Section 2.2.
"Person" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
"Plan" means an "employee benefit plan" (as defined in section 3(3) of
ERISA) that is or within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five years,
have been made or required to be made, by the Company or any ERISA Affiliate or
with respect to which the Company or any ERISA Affiliate may have liability.
"Preferred Stock" means any class of capital stock of a corporation
that is preferred over any other class of capital stock of such corporation as
to the payment of dividends or the payment of any amount upon liquidation or
dissolution of such corporation.
"Prime Rate" shall be that rate announced by Bank from time to time as
its prime rate and is one of several interest rate bases used by the Bank. Bank
lends at rates both above and below Bank's Prime Rate, and Company acknowledges
that Prime Rate is not represented or intended to be the lowest or most
favorable rate of interest offered by Bank. Any change of interest resulting
from a change in the Prime Rate shall be effective on the effective date of each
change therein.
"Ratio of Debt to Capitalization" has the meaning set forth in Section 7.6.
"Redeemable Preferred Stock" of any Person means any preferred stock
issued by such Person which is at any time prior to July 15, 2006 either (i)
mandatorily redeemable (by sinking fund or similar payments or otherwise) or
(ii) redeemable at the option of the holder thereof.
"Reportable Event" has the meaning specified therefor in Title IV of ERISA.
"Subordinated Debt" means any unsecured indebtedness of the Company for
borrowed money, the repayment of which has been subordinated to all obligations
of the Company to the Bank in a manner satisfactory to the Bank and its counsel.
"Subsidiary" means, as to any Person, any corporation, association or
other business entity in which such Person or one or more of its Subsidiaries or
such Person and one or more of its Subsidiaries owns sufficient equity or voting
interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if more
than a 50% interest in the profits or capital thereof is owned by such Person or
one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries (unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one or more of its
Subsidiaries). Unless the context otherwise clearly requires, any reference to a
"Subsidiary" is a reference to a Subsidiary of the Company.
"Swaps" means, with respect to any Person, payment obligations with
respect to interest rate swaps, currency swaps and similar obligations
obligating such Person to make payments, whether periodically or upon the
happening of a contingency; provided, however, that "Swaps" shall not mean or
include any interest rate swap entered into solely for the purpose of hedging
such Person's exposure to interest rate risks on outstanding Indebtedness and
involving a notional amount not greater in principal amount than the outstanding
principal amount of the Indebtedness to which it relates, and provided further,
that the amount of any liability in respect of an interest rate swap that must
be included as a liability in such Person's balance sheet in accordance with
GAAP shall be deemed to be a Swap. For the purposes of this Agreement, the
amount of the obligation under any Swap shall be the amount determined in
respect thereof as of the end of the then most recently ended fiscal quarter of
such Person, based on the assumption that such Swap had terminated at the end of
such fiscal quarter, and in making such determination, if any agreement relating
to such Swap provides for the netting of amounts payable by and to such Person
thereunder or if any such agreement provides for the simultaneous payment of
amounts by and to such Person, then in each such case, the amount of such
obligation shall be the net amount so determined.
"Tranches" shall mean a portion of the Loan which bears interest at an
interest rate based on LIBOR fixed under the terms hereof for a specified
Interest Period.
Section 1.2. Other Terms. Each definition of a document in this Article
I shall include such document as modified, amended or supplemented from time to
time and, except where the context otherwise requires, definitions imparting the
singular shall include the plural and vice versa. Except where restricted, a
reference to a party to a document includes that party and its successors and
assigns. All accounting terms used in this Agreement which are not otherwise
defined herein shall be construed in accordance with GAAP.
ARTICLE II - THE LOAN
Section 2.1. The Loan. The Bank agrees subject to the terms and
conditions contained herein to make a loan (the "Loan") to the Company on or
before February 27, 1998, in the principal amount of Nine Million Two Hundred
Fifty Thousand Dollars ($9,250,000). The Bank shall make the Loan by crediting
the amount hereof to the general deposit account of the Company maintained with
the Bank.
Section 2.2. The Note. The obligation of the Company to repay the Loan
shall be evidenced by the Company's Term Loan Note (the "Note") payable to the
order of the Bank at its office at 901 East Cary Street, Richmond, Virginia, or
such other place as the noteholder may from time to time designate in writing,
in the principal amount of Nine Million Two Hundred Fifty Thousand Dollars
($9,250,000), in substantially the form of Exhibit A attached hereto with the
blanks therein appropriately completed, dated as of the date the Loan is made
and payable in quarterly installments as herein provided. On April 15, 1998, and
on July 15, 1998, interest only will be payable. On October 15, 1998, and on
each January 15, April 15, July 15, and October 15 thereafter to and including
April 15, 2006, the Company will pay a principal installment in the amount of
Two Hundred Eighty-Nine Thousand Sixty-Two and 51/100 Dollars ($289,062.51). On
July 15, 2006, the entire unpaid principal balance and all accrued interest will
be due and payable. On each date on which an installment of principal is due,
the Company will also pay accrued interest. The Note shall bear interest as
provided in Article III of this Agreement.
Section 2.3. Payments. The disbursement of the Loan hereunder and each
payment of the principal of and interest on the Note shall be made in federal or
other immediately available funds. For purposes of this provision, collected
funds on deposit with the Bank are immediately available funds.
Section 2.4. Payment on Days Other Than Business Days. Whenever any
payment to be made hereunder or under the Note shall be stated to be due on a
day other than a Business Day, except as provided in the definition of Interest
Period, such payment may be made on the next succeeding Business Day, and such
extension of time shall in such case be included in the computation of interest
to be paid on such date.
ARTICLE III - PAYMENT OF INTEREST; FEES; LATE CHARGES
Section 3.1. Selection of Interest Rate Option. At the option of the
Company, the Loan or any portion thereof shall bear interest (a) at a rate per
annum equal to the LIBOR Rate plus the Applicable LIBOR Margin, (b) at a rate
per annum equal to the LIBOR Market Index Rate plus the Applicable LIBOR Margin,
or (c) at a rate per annum equal to the Prime Rate plus or minus, as the case
may be, the Applicable Prime Rate Margin. The amount of the Loan bearing
interest at a rate based on the LIBOR Rate for any Interest Period will be not
less than Five Hundred Thousand Dollars ($500,000) or an integral multiple of
Five Hundred Thousand Dollars ($500,000) in excess thereof, or the aggregate
unpaid principal balance of the Loan. As of the date the Loan is funded, the
Company may select any of the Interest Rate Options. On any Business Day, upon
not less than three (3) Business Days' prior notice, the Company may elect to
have any portion of the Loan which is then bearing interest at a rate based on
the Prime Rate or the LIBOR Market Index Rate, bear interest at a rate based on
the LIBOR Rate. As of the last day of the applicable Interest Period, the
Company may elect to have any portion of the Loan then bearing interest at a
rate based on the LIBOR Rate, bear interest at a rate based on the LIBOR Market
Index Rate or the Prime Rate. If the Company does not select an Interest Rate
Option, the Loan will bear interest at a rate based on the LIBOR Market Index
Rate.
Section 3.2. Payments and Computations. Each payment on the Note shall
be made not later than 2:00 p.m. (Eastern Time) on the day when due, in lawful
money of the United States of America and in federal or other immediately
available funds, by payment of such funds to the Bank at its office at 901 East
Cary Street, Richmond, Virginia or such other place as the Bank may designate in
writing. Amounts received after 2:00 p.m. (Eastern Time) on any day shall be
deemed received on the next succeeding Business Day. If an Event of Default has
occurred and is continuing, the Company hereby authorizes the Bank to, and the
Bank may, charge from time to time against any account or accounts maintained by
the Company with the Bank any amount due in respect of principal of or interest
on the Note. Whenever any payment to be made on the Note shall be stated to be
due on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of interest. Interest on the Loan shall be computed
on the basis of the actual number of days elapsed over a year of 360 days.
Section 3.3. Selection of Interest Period. If all or any portion of the
Loan bears interest at a rate based on the LIBOR Rate, not later than three (3)
Business Days prior to the end of each Interest Period, the Company will notify
the Bank of the length of the succeeding Interest Period. Such notification
shall be in writing or by telephone promptly confirmed in writing. If the
Company fails to give such notice within such time, the succeeding Interest
Period shall be one month.
Section 3.4. Number of Tranches. There shall not be more than
three (3) tranches outstanding at any time.
Section 3.5. Late Charge. If any installment is not paid within
seven (7)days of its scheduled payment date the Company will pay the Bank a late
charge of three (3%) percent of the amount of the installment.
Section 3.6. Facility Fee. If the Loan is not prepaid in full within
seven (7) months of the date the Loan is funded, the Company will pay the Bank
on October 15, 1998 a facility fee of Twenty-Five Thousand Dollars ($25,000).
Section 3.7. LIBOR Provisions.
(a) Increased Costs. If either (i) the introduction of or any change by
any central bank or other Governmental Authority (whether or not having the
force of law) (including, without limitation, any change by way of imposition or
increase of reserve requirements other than those included in the computation of
LIBOR but excluding any income tax on the overall income of the Bank) in or in
the interpretation of any law or regulation by any central bank or other
Governmental Authority (whether or not having the force of law), or (ii) the
compliance by the Bank with any guideline or directive from any central bank or
other Governmental Authority (whether or not having the force of law), shall
result in any actual increase in the cost to the Bank of maintaining the Loan or
reduce the amount receivable by the Bank on the Loan, the Company shall from
time to time, upon demand by the Bank, pay to the Bank additional amounts
sufficient to indemnify the Bank against such increased cost actually incurred
or reduction in amount actually received. A certificate in reasonable detail as
to the amount of such increased cost or reduction in amount received and method
of calculation shall be submitted to the Company by the Bank and shall be
conclusive (absent manifest error).
(b) LIBOR Deposits Unavailable. If before the beginning of any Interest
Period, by reason of circumstances affecting the London interbank market
generally, deposits in dollars are not being offered to the Bank, the Bank shall
forthwith give notice thereof to the Company, whereupon (unless the Company and
the Bank shall have agreed on an alternative method of determining the interest
rate for the Loan) (a) the obligation of the Bank to have the Loan bear interest
at a rate based on LIBOR shall be suspended and (b) at the expiration of any
applicable Interest Period the Loan shall bear interest at a rate based on the
Prime Rate.
(c) Changes in Law Rendering a LIBOR Loan Unlawful. If, after the date
of this Agreement, the introduction of, or any change in, any applicable law,
rule or regulation or in the interpretation or administration thereof by any
Governmental Authority charged with the interpretation or administration
thereof, or compliance by the Bank with any guideline or directive (whether or
not having the force of law) of any such Governmental Authority, shall make it
unlawful or impossible for the Bank to maintain the Loan bearing interest at a
rate based on LIBOR, the Bank shall promptly notify the Company. Upon such
notice (i) if the Bank may lawfully continue to maintain the Loan while it bears
interest at a rate based on LIBOR to such day or days, on the last day of each
then current Interest Period, the portion of the Loan bearing interest at a rate
determined using such Interest Period shall immediately begin to bear interest
at a rate based on the Prime Rate, or as may be otherwise agreed to by the
Company and the Bank, and (ii) if the Bank may not lawfully continue to maintain
the Loan while it bears interest at a rate based on LIBOR to such day or days,
the Loan shall immediately begin to bear interest at a rate based on the Prime
Rate, or as may be otherwise agreed to by the Company and the Bank. If while the
Loan bears interest at a rate based on LIBOR, the interest rate is changed to a
rate based on the Prime Rate pursuant to clause (ii) of this Subsection 3.7 (c)
on a day other than the last day of such Interest Period, the Company will
reimburse the Bank, on demand, in an amount equal to the excess of (i) the
interest that would have been received by the Bank from the Company on the
amount which had been so bearing interest at a rate based on LIBOR during the
remaining portion of the Interest Period in question had it continued to bear
interest at a rate so based on LIBOR over (ii) the amount of interest which
would have accrued on such funds if the Bank had placed such funds on deposit
with a prime bank in the London interbank borrowing market from the date of such
prepayment until the end of such Interest Period, discounted in each case to the
present value using the interest rate then existing on U.S. Treasury obligations
maturing as of the end of such Interest Period, as reasonably determined by the
Bank. A certificate in reasonable detail setting forth the calculation of such
loss or expense, including the amount and method of calculation, shall be
submitted to the Company by the Bank and, in the absence of manifest error,
shall be conclusive.
(d) Certificate. The Bank shall furnish to the Company upon request a
certificate outlining in reasonable detail the computation of any amounts
claimed by it under this Section 3.7 giving rise to a change in LIBOR and the
assumptions underlying such computations.
Section 3.8. Increases and Decreases in Interest Rates. Interest shall
be computed by the Bank using any adjustment required to be made under the
definitions of Applicable LIBOR Margin or Applicable Prime Rate Margin, or both,
as applicable, based on the most recent financial statement the Company has
provided to the Bank and shall be paid by the Company based on such
computations. If it is thereafter determined that the interest rate or rates on
the Loan are to be adjusted upward or downward under the provisions of such
definitions, or either of them, the interest rate or rates on the Loan from and
after the first day of the calendar quarter beginning immediately after the Bank
has received such financial statement shall be increased or decreased based on
the most recent financial statement of the Company which the Bank had received
showing the Ratio of Debt to Capitalization.
Section 3.9. Optional Prepayments. On the last day of any Interest
Period, the Company shall have the right without premium or penalty to prepay
all or any portion of the Loan which bears interest at a rate based on the LIBOR
Rate determined using such Interest Period. At any time and from time to time
the Company shall have the right without premium or penalty to prepay all or any
portion of the Loan which bears interest at a rate based on the LIBOR Market
Index Rate or the Prime Rate. The Company may prepay all or any part of the Loan
which bears interest at a rate based on the LIBOR Rate at any time and from time
to time other than the last day of the Interest Period used in determining such
interest rate provided that at the time of such prepayment the Company
reimburses the Bank for any loss or out-of-pocket expense incurred by such
Lender in connection with such prepayment, computed in accordance with the
provisions of Section 3.10.
Section 3.10. Payment of Loss or Out-of-Pocket Expense; Calculation
Thereof. The Company will reimburse the Bank for any loss or out-of-pocket
expense incurred by the Bank as provided in Section 3.7(c) and Section 3.9 and
will reimburse the Bank for any loss or out-of-pocket expense resulting from the
payment of any installment on the Loan on a day other than the last day of an
Interest Period, to which the principal amount of such installment is
applicable, unless a portion of the Loan which is not less than the principal
amount of such installment is then bearing interest at a rate based on the LIBOR
Market Index Rate or the Prime Rate. The loss or out-of-pocket expense resulting
from a prepayment of the Loan or portion thereof while it bears interest at a
rate based on the LIBOR Rate on a day other than the last day of an Interest
Period to which the amount of such prepayment is applicable shall be an amount
equal to the excess of (i) the interest that would have been received from the
Company on the amount so reemployed during the remaining portion of the Interest
Period in question had the Company not prepaid the Loan or such portion without
giving effect to the provisions of Section 3.7 over (ii) the amount of interest
which would have accrued on such funds if the Bank had placed such funds on
deposit with a prime bank in the London interbank market from the date of such
prepayment until the end of such Interest Period plus the Applicable LIBOR
Margin then in effect for such period, determined as of the time of such
prepayment using an assumed Interest Period which commences on the date of
prepayment and ends on the last day of the originally scheduled Interest Period,
discounted in each case to the present value using the interest rate then
existing on U.S. Treasury obligations maturing as of the end of such Interest
Period, as reasonably determined by the Bank. A certificate in reasonable detail
setting forth the calculation of such loss or expense, including the amount and
method of calculation, shall be submitted to the Company by the Bank and, in the
absence of manifest error, shall be conclusive.
Section 3.11. Application of Prepayments. Each optional prepayment
shall be applied to the installments of principal payable on the Note in the
inverse order of their maturity.
Section 3.12. No Reborrowing. Amounts prepaid on the Loan may not
be reborrowed.
ARTICLE IV - REPRESENTATIONS
The Company represents and warrants to the Bank that:
Section 4.1. Subsidiaries. The Company has the following
subsidiaries and none others.
Edison Plastics International, Inc.
Edison Exports, Inc., FSC Limited
ASPEN Industrial, S.A. de C.V.
Nacional de Envases Plasticos, S.A. de C.V.
Mexicana de Tintas, S.A. de C.V.
Plastihul, S.A. de C.V.
Hermes Industrial, S.A. de C.V.
Servicios Profesionales Vigo, S.C.
Section 4.2. Good Standing. Each of the Company and its Subsidiaries is
a corporation organized and existing in good standing under the laws of the
jurisdiction of its incorporation and has the corporate power to own its
property and to carry on its business as now being conducted and is duly
qualified to do business and is in good standing in each jurisdiction in which
the character of the properties owned by it therein or in which the transaction
of its business makes such qualification necessary and in which the failure so
to qualify would have a material adverse effect on the financial condition or
operations of the Company or such Subsidiary.
Section 4.3. Corporate Authority. The Company has full corporate power
and authority to enter into this Agreement, to make the borrowings hereunder, to
execute and deliver the Note and to incur the obligations provided for herein
and therein, all of which have been duly authorized by all proper and necessary
corporate action. No consent or approval of shareholders or consent or approval
of, notice to or filing with any public authority is required as a condition to
the validity of this Agreement or the Note.
Section 4.4. Binding Agreements. This Agreement constitutes, and the
Note when issued and delivered pursuant hereto for value received will
constitute, the valid and binding obligations of the Company enforceable in
accordance with their respective terms, except to the extent such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization and
moratorium laws and similar laws relating to the enforcement of creditors'
rights generally and by equitable principles, regardless of whether such
enforcement is sought in equity or at law.
Section 4.5. Litigation. There are no proceedings pending or, so far as
the officers of the Company know, threatened before any court or administrative
agency that, in the opinion of the officers of the Company, will materially
adversely affect the financial condition or operations of the Company or any of
its Subsidiaries.
Section 4.6. No Conflicting Agreements. There is no provision of the
charter or bylaws of the Company, no provision of any existing mortgage or
indenture binding on the Company or affecting its properties and no provision of
any contract or agreement binding on the Company or affecting its properties
that would conflict with or in any way prevent the execution, delivery or
carrying out of the terms of this Agreement or the Note.
Section 4.7. Financial Condition. The consolidated balance sheet of the
Company and its Subsidiaries as of December 31, 1996, and the related
consolidated statements of earnings, shareholders' equity and cash flows for the
period then ended certified by Deloitte & Touche LLP, heretofore delivered to
the Bank, are complete and correct and fairly present the financial condition of
the Company and its Subsidiaries and the results of their operations and cash
flows as of the date and for the period referred to therein and have been
prepared in accordance with GAAP. There are no material liabilities, direct or
indirect, fixed or contingent, of the Company and its Subsidiaries as of the
date of such balance sheet that are not reflected therein or in the notes
thereto. There has been no material adverse change in the financial condition or
operations of the Company and its Subsidiaries since the date of said balance
sheet, and there has been no other material adverse change in the Company and
its Subsidiaries. The unaudited balance sheet of the Company and its
Subsidiaries as of September 30, 1997, and the related unaudited consolidated
statement of earnings for the nine-month period then ended previously delivered
to the Bank are complete and correct and fairly present the financial condition
of the Company and its Subsidiaries and the results of their operations as of
the date and for the periods referred to therein and have been prepared in
accordance with GAAP. There are no material liabilities, direct or indirect,
fixed or contingent, of the Company and its Subsidiaries as of the date of such
balance sheet that are not reflected therein or in the notes thereto. There has
been no material adverse change in the financial condition or operations of the
Company and its Subsidiaries since the date of said balance sheet, and there has
been no other material adverse change in the Company and its Subsidiaries.
Section 4.8. Disclosure. Neither this Agreement nor any other document,
certificate or statement furnished to the Bank in writing by or on behalf of the
Company in connection herewith contains any untrue statement of a material fact
or when taken together omits to state a material fact necessary in order to make
the statements contained herein and therein not misleading.
Section 4.9. Employee Benefit Pension Plans. No fact, including, but
not limited to, any Reportable Event, exists in connection with any employee
benefit plan of the Company or any of its subsidiaries covered by ERISA
(including any plan of any member of a controlled group of corporations and all
trades and businesses (whether or not incorporated) under common control which,
together with the Company or any of its subsidiaries, are treated as a single
employer under Section 414 of the Internal Revenue Code of 1986, as amended,
which might constitute grounds for the termination of any such plan by the
Pension Benefit Guaranty Corporation or for the appointment of any trustee to
administer any such plan by the appropriate United States district court.
ARTICLE V - CONDITIONS OF LENDING
The obligation of the Bank to make the Loan is subject to the following
conditions precedent:
Section 5.1. Approval of Bank's Counsel. All legal matters incident to
the Loan, including, without limitation, all documents and opinions, shall be
reasonably satisfactory to counsel for the Bank.
Section 5.2. Compliance. At the time the Loan is made, (i) the Company
shall have complied and shall then be in compliance with all the terms,
covenants and conditions of this Agreement that are applicable to it, (ii) there
shall exist no Default or Event of Default, and (iii) the representations and
warranties contained in Article IV of this Agreement shall, except to the extent
that they relate solely to an earlier date, be true with the same effect as
though such representations and warranties had been made at the time of the
making of the Loan and after giving effect to the Loan. The borrowing of the
Loan shall be deemed a representation that each of the conditions set forth in
this Section 5.2 has been satisfied.
Section 5.3. Evidence of Corporate Action. The Bank shall have received
certified copies of papers evidencing all corporate action taken by the Company
to authorize this Agreement and the Note, and the borrowings hereunder, and such
other papers as the Bank shall reasonably require.
Section 5.4. Certificate of Secretary of the Company. The Bank shall
have received a certificate of the secretary or assistant secretary of the
Company certifying that attached thereto is a true and complete copy of the
certificate of incorporation of the Company and all amendments thereto,
certified as of a recent date by the Secretary of State of Delaware; that
attached thereto is a true and complete copy of the bylaws of the Company as in
effect on the date of such certification; that attached thereto is a true and
complete copy of resolutions duly adopted by the Board of Directors of the
Company authorizing the borrowings contemplated hereunder and the execution,
delivery and performance of this Agreement and the Note; and as to the
incumbency and genuineness of the signature of each officer of the Company
executing this Agreement or the Note.
Section 5.5. Opinion of Counsel. The Bank shall have received a
favorable written opinion of counsel for the Company dated as of the date the
Loan is made, which opinion shall address all matters referred to in Article IV
of this Agreement, except Sections 4.7, 4.8 and 4.9.
ARTICLE VI - AFFIRMATIVE COVENANTS
So long as the Company may borrow hereunder and until payment in full
of the Note and performance of all other obligations of the Company hereunder,
other than those arising pursuant to Section 9.4, the Company will:
Section 6.1. Financial Statements. Furnish to the Bank (a) as soon as
available, but in any event not more than sixty (60) days after the end of each
calendar quarter, a consolidated balance sheet as of the end of such quarter and
a consolidated statement of earnings for such quarter and for the portion of the
fiscal year ending on the last day of such quarter in reasonable detail and in
conformity with GAAP, together with a schedule setting forth the calculations to
show compliance by the Company with the financial covenants contained herein,
reviewed by Deloitte & Touche LLP or other independent certified public
accountants satisfactory to the Bank and certified by a principal financial
officer of the Company, together with a certificate of that officer stating
whether any event has occurred or condition exists with respect to the Company
that constitutes a Default or an Event of Default hereunder, and, if so, stating
the facts with respect thereto; (b) as soon as available, but in any event not
more than one hundred twenty (120) days after the close of each fiscal year of
the Company, a copy of the annual audit report of the Company in reasonable
detail, prepared in accordance with GAAP applied on a basis consistent with that
of the preceding year and certified (except as to the consolidating provisions)
in a manner acceptable to the Bank by Deloitte & Touche LLP or other independent
certified public accountants satisfactory to the Bank, which report shall
include a consolidated and consolidating balance sheet of the Company as of the
end of such fiscal year, and related consolidated and consolidating statements
of earnings, shareholders' equity and cash flows for such fiscal year of the
Company and accompanied by a schedule setting forth the calculations to show
compliance with the financial covenants contained herein applicable to the
Company, certified in each case by a principal financial officer of the Company,
together with a certificate of that officer stating whether a Default or an
Event of Default has occurred, and, if so, stating the facts with respect
thereto; (c) promptly upon becoming available, copies of all financial
statements, reports, notices and proxy statements sent by the Company or any of
its Subsidiaries to stockholders, and of all regular and periodic reports filed
by the Company or any of its Subsidiaries with any securities exchange or with
the Securities and Exchange Commission or any Governmental Authority succeeding
to any or all of the functions of said Commission; (d) promptly upon their
receipt, copies of all management letters received by the Company and its
Subsidiaries from its accountants; and (e) such additional information, reports
and statements of the Company and its Subsidiaries as the Bank may from time to
time reasonably request but in no event more than thirty (30) days after receipt
by the Company of such request.
Section 6.2. Taxes. Pay and discharge and cause each of its
Subsidiaries to pay and discharge all taxes, assessments and governmental
charges upon them, their respective income and their respective properties prior
to the date on which penalties are attached thereto, unless and to the extent
only that such taxes, assessments and governmental charges shall be contested by
it or a Subsidiary in good faith and by appropriate proceedings, and the Company
or such Subsidiary shall have set aside on its books adequate reserves with
respect to any such tax, assessment or charge so contested.
Section 6.3. Payment of Obligations. Pay and discharge and cause each
of its Subsidiaries to pay and discharge at or before their maturity all their
respective indebtedness and other obligations and liabilities, except when the
same may be contested in good faith and by appropriate proceedings, and the
Company or such Subsidiary shall have set aside on its books adequate reserves
with respect to any such obligation or liability.
Section 6.4. Insurance. Maintain insurance with responsible companies
satisfactory to the Bank in such amounts and against such risks as is
customarily carried by owners of similar businesses and property and cause each
of its Subsidiaries so to do.
Section 6.5. Corporate Existence. Maintain its corporate existence in good
standing and cause each of its Subsidiaries so to do.
Section 6.6. Properties. Maintain, preserve and protect all material
franchises and trade names and preserve all the remainder of its property and
keep the same in good repair, working order and condition, and from time to time
make or cause to be made all needful and proper repairs, renewals, replacements,
betterments and improvements thereto so that the business carried on in
connection therewith may be properly and efficiently conducted at all times, and
permit the Bank and its agents to enter upon and inspect such properties during
normal business hours with prior reasonable notice and cause each Subsidiary so
to do, provided that nothing contained herein shall prevent the Company or a
Subsidiary from selling or otherwise disposing of any such property if such
property is no longer material to the business of the Company or such
Subsidiary.
Section 6.7. Employee Benefit Pension Plans. Promptly during each year
pay and cause each Subsidiary to pay contributions that in the judgment of the
chief executive and chief financial officers of the Company after reasonable
inquiry are believed adequate to meet at least all applicable minimum funding
standards set forth in Sections 302 through 305 of ERISA with respect to each
employee benefit plan of the Company or a Subsidiary covered by ERISA (including
any plan of any member of a controlled group of corporations and all trades and
businesses (whether or not incorporated) under common control which, together
with the Company, are treated as a single employer, under Section 414 of the
Internal Revenue Code of 1986, as amended); file or cause to be filed each
annual report required to be filed pursuant to Section 103 of ERISA in
connection with each such plan for each year; and notify the Bank within ten
(10) days of the occurrence of a Reportable Event that could constitute grounds
for termination of any such plan by PBGC or for the appointment by the
appropriate United States District Court of a trustee to administer any such
plan, provided that nothing contained herein shall prohibit the Company or a
Subsidiary from terminating any such plan if it has theretofore complied with
the provisions of this Section.
Section 6.8. Compliance With Laws. Comply and cause each Subsidiary to
comply in good faith in all material respects with all applicable laws, rules,
regulations and orders of any Governmental Authority having jurisdiction over
it, including, without limitation, the Americans with Disabilities Act of 1990
and those laws, rules, regulations and orders relating to the environment.
Section 6.9. Notice of Environmental Matters. Promptly, and in any
event within thirty (30) days, advise the Bank in writing of (a) any and all
enforcement, cleanup (other than cleanup occurring in the ordinary course of
business), remedial, removal or other governmental or regulatory actions
instituted, completed or, to the knowledge of the Company or any Subsidiary,
threatened pursuant to any applicable federal, state or local laws, ordinances
or regulations relating to any Hazardous Materials affecting the business
operations of the Company or any Subsidiary, and (b) all claims made or, to the
knowledge of the Company or any Subsidiary, threatened by any third party
against the Company or any Subsidiary relating to damages, contribution, cost
recovery compensation, loss or injury resulting from any Hazardous Materials and
immediately notify Bank of any remedial action taken by the Company or any
Subsidiary in response to any such action or claim or threatened action or claim
with respect to the business operations of the Company or any Subsidiary.
Section 6.10. Year 2000 Compatibility. Take all action necessary to
assure that Company's computer based systems are able to operate and effectively
process data including dates on and after January 1, 2000. At the request of
Bank, the Company shall provide the Bank assurance acceptable to Bank of
Company's Year 2000 compatibility.
Section 6.11. Waived Conditions. If the Bank waives any condition
hereunder, unless the Bank expressly agrees otherwise, promptly satisfy such
condition and provide the Bank with evidence of its satisfaction.
ARTICLE VII - NEGATIVE COVENANTS
So long as the Company may borrow hereunder and until payment in full
of the Note and performance of all other obligations of the Company hereunder,
other than those arising pursuant to Section 9.4, without the prior written
consent of the Bank, the Company will not:
Section 7.1. Mortgages and Pledges. Create, incur, assume or suffer to
exist any mortgage, pledge, lien or other encumbrance of any kind upon, or any
security interest in, any of its property or assets, whether now owned or
hereafter acquired or permit any Subsidiary so to do, except (i) liens for taxes
not yet delinquent or being contested in good faith and by appropriate
proceedings; (ii) liens in connection with worker's compensation, unemployment
insurance or other social security obligations; (iii) deposits or pledges to
secure bids, tenders, contracts (other than contracts for the payment of money),
leases, statutory obligations, surety or appeal bonds, and other obligations of
like nature arising in the ordinary course of business; (iv) mechanic's,
workman's, materialman's, landlord's, carrier's or other like liens arising in
the ordinary course of business with respect to obligations that are not due or
that are being contested in good faith; (v) mortgages, pledges, liens and
encumbrances in favor of the Bank; (vi) zoning restrictions, easements,
licenses, restrictions on the use of real property or minor irregularities in
the title thereto, which do not, in the opinion of the Company, materially
impair the use of such property in the operation of its business or the business
of the Subsidiary which owns such property, or the value of such property for
the purposes of such business; (vii) any mortgage, encumbrance or other lien
upon, or security interest in, any property hereafter acquired by the Company or
a Subsidiary created contemporaneously with such acquisition to secure or
provide for the payment or financing of any part of the purchase price thereof,
or the assumption of any mortgage, encumbrance or lien upon, or security
interest in, any such property hereafter acquired existing at the time of such
acquisition, or the acquisition of any such property subject to any mortgage,
encumbrance or other lien or security interest without the assumption thereof,
provided that each such mortgage, encumbrance, lien or security interest shall
attach only to the property so acquired and fixed improvements thereon; and
(viii) other liens and security interests which secure not more than Five
Million Dollars ($5,000,000) in the aggregate. Nothing contained in this Section
7.1 shall prohibit the Company or any Subsidiary from entering into any lease
required to be capitalized by GAAP in accordance with the Financial Accounting
Standards Board Statement No. 13 (Accounting for Leases) in effect on June 1,
1993, provided such lease is not otherwise prohibited by the terms of this
Agreement.
Section 7.2. Loans. Make loans or advances to any Person, except in the
normal course of business or permit any Subsidiary so to do, except that the
Company may lend the proceeds of the Loan to ASPEN Industrial, S.A. de C.V. to
use to acquire capital stock of NEPSA, provided that the Company may make loans
and advances to the joint venture it contemplates entering into for operations
in Brazil if the aggregate amount of its investment in such joint venture and
loans and advances to it does not exceed Ten Million Dollars ($10,000,000) at
any time outstanding.
Section 7.3. Merger, Acquisition or Sale of Assets. Enter into any
merger or consolidation with, acquire more than 50% of the voting stock or
voting power of, or acquire all or substantially all of the assets of, any
person, firm, joint venture or corporation, or permit any Subsidiary so to do,
but nothing contained herein shall prohibit the merger of any corporation or
entity into the Company, the sale, transfer or lease of assets of any Subsidiary
to the Company, or the merger of any Subsidiary into any wholly-owned Subsidiary
if in each case, after giving effect to each such transaction, no Default or
Event of Default shall have occurred and be continuing, the Company shall be in
compliance with all of the terms of this Agreement, and the management of the
Company shall be substantially unchanged, and nothing contained herein shall
prohibit the acquisition of the capital stock of NEPSA.
Section 7.4. Sale of Assets. Sell, transfer or otherwise dispose of five
(5%) percent or more of the assets of the Company and its Subsidiaries,
determined on a consolidated basis, in any fiscal year of the Company.
Section 7.5. Use of Proceeds. Use all or any part of the proceeds of
the Loan for the purpose of purchasing or carrying any margin stock, as that
term is defined in Regulation U of the Board of Governors of the Federal Reserve
System, or otherwise in violation of Regulations G, T, U, or X of the Board of
Governors of the Federal Reserve System.
Section 7.6. Ratio of Funded Debt to Total Capitalization. Permit the
ratio of Consolidated Funded Debt to Consolidated Total Capitalization to exceed
.55 to 1 at any time prior to December 31, 1998 or to exceed .50 to 1 at
December 31, 1998 or any time thereafter. This ratio of Consolidated Funded Debt
to Consolidated Total Capitalization is sometimes referred to herein as the
"Ratio of Debt to Capitalization."
Section 7.7. Ratio of Funded Debt to Cash Flow. Permit the ratio of
Consolidated Funded Debt as of the end of any fiscal quarter to Consolidated
Cash Flow for the 12 months ending as of the end of such quarter to exceed 3.0
to 1.
ARTICLE VIII - EVENTS OF DEFAULT
If one or more of the following events of default (each, an "Event of
Default" and collectively, the "Events of Default") shall occur:
Section 8.1. Default shall be made in the payment of any installment of
principal or of interest upon the Note or in the payment of any fee now or
hereafter owing from the Company to the Bank, when and as the same becomes due
and payable, whether at the stated maturity thereof or by acceleration or
otherwise and such default shall continue for a period of ten (10) days; or
Section 8.2. Default shall be made in the due observance or performance
of any other term, covenant or agreement contained in this Agreement and such
default shall continue unremedied for a period of thirty (30) days; or
Section 8.3. Default shall be made in the payment of any principal or
interest on any other indebtedness of the Company or any Subsidiary to the Bank,
whether now existing or hereafter arising, and such default shall continue for a
period of ten (10) days; or
Section 8.4. A trustee or receiver (other than a custodian described in
Section 8.6) shall be appointed for the Company or any Subsidiary or for a
substantial part of the properties of the Company or any Subsidiary without the
consent of the Company or such Subsidiary and not be discharged within
forty-five (45) days; or
Section 8.5. Any material representation or warranty made by the
Company herein or any statement or representation made in any certificate,
report or opinion delivered pursuant hereto shall prove to have been incorrect
in any material respect when made; or
Section 8.6. A custodian, other than a trustee, receiver or agent
appointed or authorized to take charge of less than substantially all of the
property of the Company or any Subsidiary for the purpose of enforcing a lien
against such property, is appointed for, or takes possession of any property or
assets of, the Company or any Subsidiary; or
Section 8.7. The Company or any Subsidiary shall be generally not
paying its debts as such debts become due, shall become insolvent or unable to
meet its obligations as they mature, shall make an assignment for the benefit of
creditors, shall consent to the appointment of a trustee or a receiver, or shall
admit in writing its inability to pay its debts as they mature; or
Section 8.8. Any case in bankruptcy shall be commenced, or any
reorganization, arrangement, insolvency or liquidation proceedings shall be
instituted, by or against the Company or any Subsidiary, and, if commenced or
instituted against it, be consented to by the Company or any Subsidiary or
remain undismissed for a period of forty-five (45) days; or
Section 8.9. Any default shall be made in the performance of any other
obligation or obligations incurred in connection with any indebtedness for
borrowed money of the Company or any Subsidiary aggregating Five Hundred
Thousand Dollars ($500,000) or more, if the effect of such default is to permit
the holder of such notes or indebtedness (or a trustee on behalf of such holder)
to cause them or it to become due prior to their or its stated maturity, or any
such note or indebtedness becomes due prior to its stated maturity or shall not
be paid when due; or
Section 8.10. One or more final judgments for the payment of money
aggregating in excess of Two Million Dollars ($2,000,000) which is or are not
adequately insured or indemnified against shall be rendered at any time against
the Company or any Subsidiary and the same shall remain undischarged for a
period of forty-five (45) days during which time execution shall not be
effectively stayed; or
Section 8.11. Any substantial part of the properties of the Company or
any Subsidiary shall be sequestered or attached and shall not have been returned
to the possession of the Company or such Subsidiary or released from such
attachment within forty-five (45) days; or
Section 8.12. The occurrence of a Reportable Event as defined in
Section 4043 of ERISA which could constitute grounds for termination of any
employee benefit plan of the Company or any Subsidiary covered by ERISA by the
Pension Benefit Guaranty Corporation or grounds for the appointment by the
appropriate United States district court of a trustee to administer any such
plan; or
Section 8.13. Any termination payment shall be due by the Company under
any Hedging Agreement and such amount shall not be paid within ten (10) Business
Days of the due date thereof; or
Section 8.14. Any material change shall occur in the management or
ownership of the Company that effectively changes the control of the Company; or
Section 8.15. The Company shall dissolve or be liquidated,
then, upon the commencement of a case in bankruptcy by the Company or the
consent to any such case by the Company, or the entry of any order for relief
against the Company in any such case, the Note shall be immediately due and
payable, and at any time during the continuance of any other Event of Default,
the Bank may, if it deems appropriate, by written notice to the Company declare
the Note to be forthwith due and payable, both as to principal and interest,
without presentment, demand, protest or any notice of any kind, all of which are
hereby expressly waived, anything contained herein or in the Note to the
contrary notwithstanding; and/or proceed to enforce payment of the Note and
exercise any and all of its rights hereunder, under the Note or otherwise
available to the Bank.
ARTICLE IX - MISCELLANEOUS PROVISIONS
Section 9.1. Costs and Expenses. The Company (a) will pay all
reasonable out-of-pocket expenses incurred by the Bank in connection with the
negotiation and preparation of this Agreement and the Note (whether or not the
transactions hereby contemplated shall be consummated), the making of the Loan,
any amendment to or modification or waiver of any of the terms hereof, including
the reasonable fees and disbursements of counsel for the Bank, and (b) will pay
all reasonable out-of-pocket expenses incurred by the Bank in the enforcement of
its rights in connection with this Agreement or with the Loan or the Note,
including, but not limited to, the reasonable fees and disbursements of counsel
for the Bank.
Section 9.2. Cumulative Rights and No Waiver. Each and every right
granted to the Bank hereunder or under any other document delivered hereunder or
in connection herewith, or allowed it by law or equity, shall be cumulative and
may be exercised from time to time. No failure on the part of the Bank to
exercise, and no delay in exercising, any right shall operate as a waiver
thereof, nor shall any single or partial exercise by the Bank of any right
preclude any other or future exercise thereof or the exercise of any other
right.
Section 9.3. Amendments, Etc. No amendment of any provision of this
Agreement or the Note shall be effective unless it is in writing and signed by
the Company and the Bank, and no waiver of any provision of this Agreement or
the Note, nor consent to any departure by the Company therefrom, shall be
effective unless it is in writing and signed by the Bank. In any event, any
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which it is given.
Section 9.4. Indemnification of Bank.
(a) The Company shall indemnify, defend and hold the Bank and its
successors and assigns harmless from and against any and all claims, demands,
suits, losses, damages, assessments, fines, penalties, costs or other expenses
(including attorneys' fees and court costs) arising from or in any way related
to actual or threatened damage to the environment, agency costs of
investigation, personal injury or death or property damage, due to a release or
alleged release of Hazardous Materials, arising from the business operations of
the Company or any Subsidiary or in the surface or ground water arising from the
business operations of the Company or any Subsidiary, or gaseous emissions
arising from the business operations of the Company or any Subsidiary or any
other condition existing or arising from the business operations of the Company
or any Subsidiary resulting from the use or existence of Hazardous Materials,
whether such claim proves to be true or false. The Company further agrees that
its indemnity obligations under this paragraph (a) shall include, but are not
limited to, liability for damages resulting from the personal injury or death of
an employee of the Company or any Subsidiary, regardless of whether the Company
or such Subsidiary has paid the employee under the workers' compensation laws of
any state or other similar federal or state legislation for the protection of
employees. The term "property damage" as used in this paragraph includes, but is
not limited to, damage to any real or personal property of the Company or any
Subsidiary, the Bank and any third parties. The obligations of the Company under
this Section shall survive the repayment of the Loan and any deed in lieu of
foreclosure or foreclosure under any deed of trust, deed to secure debt or
mortgage now or hereafter securing the Loan or any part thereof.
(b) From and at all times after the date of this Agreement, and in
addition to all of the Bank's other rights and remedies against the Company, the
Company agrees to hold the Bank harmless from, and to indemnify the Bank against
all losses, damages, costs and expenses (including, but not limited to,
reasonable attorneys' fees, costs and expenses) incurred by the Bank from and
after the date hereof, whether direct, indirect or consequential, as a result of
or arising from or relating to any suit, action or proceeding by any Person
other than the Company, whether threatened or initiated, asserting a claim for
any legal or equitable remedy against any Person under any federal or state
statute or regulation, including, but not limited to, any federal or state
securities laws, or under any common law or equitable cause or otherwise,
arising from or in connection with the negotiation, preparation, execution or
performance of, or the financing transactions contemplated by, this Agreement,
the Note and any other Loan Document, or the Bank's furnishing of funds to the
Company pursuant to this Agreement; provided, however, that the foregoing
indemnification shall not protect the Bank from loss, damage, cost or expense
directly attributable to the Bank's misconduct or negligence. All of the
foregoing losses, damages, costs and expenses of the Bank shall be payable by
the Company upon demand by Bank.
(c) The undertakings contained in this Section 9.4 are in addition to
any contained in any guaranty, security agreement, deed of trust, deed to secure
debt, mortgage or other collateral document now or hereafter delivered to or for
the benefit of the Bank.
Section 9.5. Arbitration.
(a) General. Upon demand of any party hereto, whether made before or
after institution of any judicial proceeding, any dispute, claim or controversy
arising out of, connected with or relating to this Loan Agreement, or the Note
(collectively, the "Disputes") between the parties to this Loan Agreement will
be resolved by binding arbitration as provided herein. Institution of a judicial
proceeding by a party does not waive the right of that party to demand
arbitration hereunder. Disputes may include, without limitation, tort claims,
counterclaims, disputes as to whether a matter is subject to arbitration, claims
brought as class actions, claims arising from Loan Documents executed in the
future, or claims arising out of or connected with the transactions contemplated
by this Loan Agreement.
(b) Arbitration Rules. Arbitration shall be conducted under and
governed by the Commercial Financial Disputes Arbitration Rules (the
"Arbitration Rules") of the American Arbitration Association (the "AAA") and
Title 9 of the U.S. Code. All arbitration hearings shall be conducted in
Richmond, Virginia. The expedited procedures set forth in Rule 51 et seq. of the
Arbitration Rules shall be applicable to claims of less than $1,000,000. All
applicable statutes of limitation shall apply to any Dispute. A judgment upon
the award may be entered in any court having jurisdiction. The panel from which
all arbitrators are selected shall be comprised of licensed attorneys. The
single arbitrator selected for expedited procedure shall be a retired judge from
the highest court of general jurisdiction, state or federal, in the Commonwealth
of Virginia, or if such a person is not available to serve, the single
arbitrator may be a licensed attorney. Notwithstanding the foregoing, this
arbitration provision does not apply to disputes under or related to swap
agreements.
(c) Exceptions. Notwithstanding the preceding binding arbitration
provisions, the parties hereto agree to preserve, without diminution, certain
remedies that any party hereto may employ or exercise freely, independently or
in connection with an arbitration proceeding or after an arbitration action is
brought. The parties shall have the right to proceed in any court of proper
jurisdiction or by self-help or other non-judicial means to exercise or
prosecute the following remedies, as applicable: all rights to foreclose against
or otherwise realize upon any real or personal property or other security by
exercising a power of sale or other rights granted under any of the Loan
Documents or under applicable law or by judicial foreclosure and sale, including
a proceeding to confirm the sale, all rights of self-help including peaceful
occupation of real property and collection of rents, set-off and peaceful
possession of personal property, obtaining provisional or ancillary remedies
including injunctive relief, sequestration, garnishment, attachment, appointment
of a receiver and filing an involuntary bankruptcy proceeding, and when
applicable, a judgment by confession of judgment. Preservation of these remedies
does not limit the power of an arbitrator to grant similar remedies that may be
requested by a party in a Dispute.
(d) Limitation on Damages. Each of the parties hereto agrees that it
shall not have a remedy of punitive or exemplary damages against any other party
hereto in any Dispute and hereby waives any right or claim to punitive or
exemplary damages it has now or which may arise in the future in connection with
any Dispute whether the Dispute is resolved by arbitration or judicially.
Section 9.6. Waiver of Jury Trial. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, THE COMPANY AND THE BANK HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHT THEY, OR EITHER OF THEM, MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION BASED ON THIS LOAN AGREEMENT, THE NOTE OR ANY
OF THE OTHER LOAN DOCUMENTS, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
LOAN AGREEMENT, THE NOTE OR ANY OF THE OTHER LOAN DOCUMENTS, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF
ANY PARTY WITH RESPECT HERETO AND THERETO. THIS WAIVER OF JURY TRIAL PROVISION
IS A MATERIAL INDUCEMENT TO THE BANK TO ENTER INTO THIS LOAN AGREEMENT AND TO
MAKE THE LOAN.
Section 9.7. Notices. Any notice shall be conclusively deemed to have
been received by either party hereto and be effective on the day on which
delivered to such party at the address or addresses set forth below (or at such
other address as such party shall specify to the other party in writing) or if
sent by registered or certified mail, on the third business day after the day on
which mailed, addressed to such party at said address:
If to the Company:
Blessings Corporation
200 Enterprise Drive
Newport News, Virginia 23603
Attn: Joseph Fernandes
Treasurer
If to the Bank:
First Union National Bank
901 East Cary Street, 2nd Floor
Post Office Box 26944
Richmond, Virginia 23261
Attn: Douglas T. Davis
Vice President
Section 9.8. Applicable Law. This Agreement and the Note shall be construed
in accordance with and governed by the laws of the Commonwealth of Virginia.
Section 9.9. Survivorship. All covenants, agreements, representations
and warranties made herein and in the certificates delivered pursuant hereto
shall survive the making by the Bank of the Loan herein contemplated and the
execution and delivery to the Bank of the Note and shall continue in full force
and effect so long as the Note is outstanding and unpaid. Whenever in this
Agreement either of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of the Company which are contained in
this Agreement shall bind and inure to the benefit of the successors and assigns
of the Bank.
Section 9.10. Headings. Article and Section headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.
IN WITNESS WHEREOF, Blessings Corporation has caused this Agreement to
be executed by its duly authorized officer and First Union National Bank has
caused it to be executed by its duly authorized officer all as of the date first
above written.
BLESSINGS CORPORATION
By: /s/Joe Fernandes
Joe Fernandes
Its: Treasurer
FIRST UNION NATIONAL BANK
By: /s/Joyce L. Barry
Joyce L. Barry
Its: Senior Vice President
<PAGE>
LOAN AGREEMENT
By and Between
ASPEN INDUSTRIAL, S.A. de C.V.
and
FIRST UNION NATIONAL BANK
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I - DEFINITIONS; ACCOUNTING TERMS....................................1
Section 1.1. Definitions.......................................1
Section 1.2. Other Terms.......................................8
ARTICLE II - THE LOAN........................................................8
Section 2.1. The Loan..........................................8
Section 2.2. The Note..........................................8
Section 2.3. Payments..........................................9
Section 2.4. Payment on Days Other Than Business Days..........9
ARTICLE III - PAYMENT OF INTEREST; FEES; LATE CHARGES........................9
Section 3.1. Rate..............................................9
Section 3.2. Payments and Computations........................10
Section 3.3. Selection of Interest Period.....................11
Section 3.4. Number of Tranches...............................11
Section 3.5. Late Charge......................................11
Section 3.6. Facility Fee.....................................11
Section 3.7. LIBOR Provisions.................................11
(a) Increased Costs..................................11
(b) LIBOR Deposits Unavailable.......................12
(c) Changes in Law Rendering a LIBOR Loan Unlawful...12
(d) Certificate......................................14
Section 3.8. Increases and Decreases in Interest Rates........14
Section 3.9. Optional Prepayments.............................14
Section 3.10. Payment of Loss or Out-of-Pocket Expense;
Calculation Thereof..............................15
Section 3.11. Application of Prepayments.......................16
Section 3.12. No Reborrowing...................................16
Section 3.13. Taxes............................................16
(a) Payments Fee and Clear...........................16
(b) Stamp and Other Taxes............................17
(c) Indemnity........................................17
(d) Evidence of Payment..............................17
(e) Survival.........................................17
ARTICLE IV - REPRESENTATIONS................................................17
Section 4.1. Subsidiaries.....................................18
Section 4.2. Good Standing....................................18
Section 4.3. Corporate Authority..............................18
Section 4.4. Binding Agreements...............................19
Section 4.5. Litigation.......................................19
Section 4.6. No Conflicting Agreements........................19
Section 4.7. Financial Condition..............................20
Section 4.8. Disclosure.......................................21
Section 4.9. Employee Benefit Pension Plans...................21
ARTICLE V - CONDITIONS OF LENDING...21
Section 5.1. Approval of Bank's Counsel.......................21
Section 5.2. Unconditional Guaranty...........................22
Section 5.3. Compliance.......................................22
Section 5.4. Certificate of Secretary of the Company..........22
Section 5.5. Certificate of Secretary of the Guarantor........23
Section 5.6. Opinion of Counsel...............................23
ARTICLE VI - AFFIRMATIVE COVENANTS..23
Section 6.1. Taxes............................................23
Section 6.2. Payment of Obligations...........................24
Section 6.3. Insurance........................................24
Section 6.4. Corporate Existence..............................24
Section 6.5. Properties.......................................24
Section 6.6. Compliance With Laws.............................25
Section 6.7. Notice of Environmental Matters..................25
Section 6.8. Year 2000 Compatibility..........................25
Section 6.9. Waived Conditions................................26
ARTICLE VII - NEGATIVE COVENANTS............................................26
Section 7.1. Mortgages and Pledges............................26
Section 7.2. Loans............................................27
Section 7.3. Merger, Acquisition or Sale of Assets............27
Section 7.4. Sale of Assets...................................28
Section 7.5. Use of Proceeds..................................28
ARTICLE VIII - EVENTS OF DEFAULT............................................28
ARTICLE IX - MISCELLANEOUS PROVISIONS.......................................32
Section 9.1. Costs and Expenses...............................32
Section 9.2. Cumulative Rights and No Waiver..................32
Section 9.3. Amendments, Etc..................................32
Section 9.4. Indemnification of Bank..........................33
Section 9.5. Arbitration......................................35
(a) General..........................................35
(b) Arbitration Rules................................35
(c) Exceptions.......................................36
(d) Limitation on Damages............................36
Section 9.6. Waiver of Jury Trial.............................36
Section 9.7. Notices..........................................37
Section 9.8. Applicable Law...................................38
Section 9.9. Survivorship.....................................38
Section 9.10. Headings.........................................38
<PAGE>
LOAN AGREEMENT
THIS LOAN AGREEMENT is made as of February 20, 1998, by and between
ASPEN INDUSTRIAL, S.A. de C.V. (the "Company"), a corporation organized and
existing under the laws of the Republic of Mexico, with its principal office at
Calzado de las Armas, Numbre 12, FRACC. Industrial las Armas, 54080 Tlalnepantla
Estado de Mexico, and FIRST UNION NATIONAL BANK (the "Bank"), a national banking
association with an office at 901 East Cary Street, Richmond, Virginia 23219.
The Company has applied to the Bank for a term loan in the amount of Nine
Million Two Hundred Fifty Thousand United States Dollars (US$9,250,000), the
proceeds of which will be used together with other funds to finance the
acquisition by the Company of the remaining 40% ownership interest in Nacional
de Envases Plasticos, S.A. de C.V., Hermes Industrial, S.A. de C.V., Mexicana D.
Tintas, S.A. de C.V., Plastihul, S.A. de C.V., and Servicios Profesionales Vigo,
S.C. (collectively, "NEPSA"). The Bank is willing to make a loan to the Company
upon the terms and conditions hereinafter set forth.
ACCORDINGLY, the Company and the Bank agree as follows:
ARTICLE X - DEFINITIONS; ACCOUNTING TERMS
Section 10.1......Definitions. As used in this Agreement, the following
terms shall have the meanings herein specified and shall include in the singular
number the plural and in the plural number the singular:
"Agreement" means this Loan Agreement, as it may be amended from time
to time by written agreement as herein provided.
"Applicable LIBOR Margin" means 0.60% through August 20, 1998.
Thereafter, Applicable LIBOR Margin for each fiscal quarter means the margin
amount expressed as a percentage shown by the following table using for the
purposes hereof the Ratio of Debt to Capitalization as of the last day of the
preceding fiscal quarter.
Ratio of Debt to Capitalization Applicable LIBOR Margin
Less than .25 to 1 0.60%
.25 - .40 to 1 0.70%
Greater than .40 to 1 0.80%
If an Event of Default shall have occurred and not been waived by the Bank, the
Applicable LIBOR Margin will be 3%.
"Applicable Prime Rate Margin" means -1.90% through August 20, 1998.
Thereafter, Applicable Prime Rate Margin for each fiscal quarter means the
margin amount expressed as a percentage shown by the following table using for
the purposes hereof the Ratio of Debt to Capitalization as of the last day of
the preceding fiscal quarter.
Ratio of Debt to Capitalization Applicable Prime Rate Margin
Less than .25 to 1 - 1.90%
.25 - .40 to 1 - 1.80%
Greater than .40 to 1 - 1.70%
If an Event of Default shall have occurred and not been waived by the Bank, the
Applicable Prime Rate Margin will be 0.5%.
"Bank" shall have the meaning ascribed thereto on the first page of
this Agreement.
"Blessings Agreement" means the Loan Agreement of even date herewith
between Blessings Corporation and the Bank.
"Business Day" means any day, other than a Saturday, Sunday or public
holiday or the equivalent, on which dealings are carried on in the London
interbank market and commercial banks are open for business and are not required
or authorized to close in New York, New York, or Richmond, Virginia.
"Company" shall have the meaning ascribed thereto on the first page of
this Agreement.
"Default" means any event or condition which with the giving of notice
or passage of time, or both, would constitute an Event of Default.
"Environmental Laws" means all federal, state and local laws relating
to pollution or protection of the environment, including laws relating to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals or industrial, toxic or hazardous substances or wastes
and any materials present on any property owned or operated by the Company or
any Subsidiary which have been shown to have significant adverse effects on
human health or which are subject to regulation under any applicable federal,
state or local laws now in force or hereafter enacted relating to toxic
substances, which shall include, but not be limited to, asbestos,
polychlorinated biphenyls (PCBs), petroleum products, and lead-based paints, in
the environment (including, without limitation, ambient air, surface water,
ground water or land) or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transportation or handling of
pollutants, contaminants, chemicals or industrial, toxic or hazardous substances
or wastes, and any and all regulations, codes, plans, orders, decrees,
judgments, injunctions, notices or demand letters issued, entered, promulgated
or approved thereunder.
"Eurodollar Reserve Percentage" means, for any day, the percentage
(expressed as a decimal) that is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars in
respect of "Eurocurrency liabilities" (or in respect of any other category of
liabilities that includes deposits by reference to which the interest rate on a
loan bearing interest at a rate based on LIBOR is determined or any category of
extensions of credit or other assets that includes loans by a non-United States
office of any lender to United States residents).
"Event of Default" means any of the Events of Default provided in Section 8.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States of America.
"Governmental Authority" means the United States, any state or other
political subdivision thereof and any court, agency, department, commission,
board, bureau or instrumentality of any of the foregoing.
"Guarantor" shall have the meaning set forth in Section 5.2.
"Hazardous Materials" shall mean all materials defined as hazardous
wastes or substances under any applicable state and federal Environmental Laws
and petroleum, petroleum products, oil and asbestos.
"Hedging Agreement" means any agreement with respect to an interest
rate swap, collar, cap, floor or a forward rate agreement or other agreement
regarding the hedging of interest rate risk exposure executed in connection with
hedging the interest rate exposure of the Company under this Agreement or any
other indebtedness, and any confirming letter executed pursuant to such hedging
agreement, all as amended or modified.
"Interest Period" means the period beginning on the date the Loan is
made and ending one (1), three (3) or six (6) months thereafter, as the Company
may elect; provided that (a) each successive Interest Period shall commence on
the date on which the next preceding Interest Period expires; (b) any Interest
Period that begins on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month at the end
of such Interest Period) shall end on the last Business Day of the relevant
calendar month at the end of such Interest Period; (c) if any Interest Period
would otherwise expire on a day that is not a Business Day, such Interest Period
shall expire on the next succeeding Business Day, provided that if any Interest
Period would otherwise expire on a day that is not a Business Day but is a day
of the month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day; (d) no Interest
Period shall extend beyond the maturity date of the Loan; and (e) Interest
Periods with respect to the Loan shall be selected by the Company so as to
permit the Company to make the scheduled principal payments of the Loan under
Section 2.2 without the payment of any amounts pursuant to Section 3.10.
"Interest Rate Options" means (a) a rate based on the LIBOR Rate, (b) a
rate based on the LIBOR Market Index Rate, and (c) a rate based on the Prime
Rate.
"LIBOR" means, for the Interest Period applicable thereto, the rate for
deposits in United States dollars for a period equal to such Interest Period
which appears on the Telerate Page 3750 at approximately 11:00 a.m. (London
time), two (2) Business Days prior to the commencement of the applicable
Interest Period. If, for any reason, such rate is not available, then "LIBOR"
shall mean the rate per annum at which, as determined by the Bank, dollar
deposits in the amount of $5,000,000 are being offered to leading banks at
approximately 11:00 a.m. (London time), two (2) Business Days prior to the
commencement of the applicable Interest Period for settlement in immediately
available funds by leading banks in the London interbank market for a period
equal to the Interest Period applicable thereto.
"LIBOR Market Index Rate" means, for any day, the rate (rounded to the
next higher 1/100 of 1%) for one-month U.S. dollar deposits as reported on
Telerate Page 3750 as of 11:00 a.m. (London time) for such day, provided if such
day is not a Business Day, the immediately preceding Business Day (or if not so
reported, then as determined by the Bank from another recognized source or
interbank quotation).
"LIBOR Rate" means, with respect to any Interest Period, an interest
rate per annum (rounded upward, if necessary, to the next higher 1/100th of 1%)
determined by the Bank pursuant to the following formula:
LIBOR Rate = LIBOR
1.00 - Eurodollar Reserve Percentage
"Loan" shall have the meaning set forth in Section 2.1.
"Loan Documents" means, collectively, this Agreement, the Note, the
Guaranty and each other document, instrument or agreement now or hereafter
executed by the Guarantor, the Company or any other Subsidiary of the Guarantor
in connection with this Agreement or otherwise to secure the payment of the
Loan.
"NEPSA" shall have the meaning ascribed thereto on the first page of
this Agreement.
"Note" shall have the meaning set forth in Section 2.2.
"Person" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
"Prime Rate" shall be that rate announced by Bank from time to time as
its prime rate and is one of several interest rate bases used by the Bank. Bank
lends at rates both above and below Bank's Prime Rate, and Company acknowledges
that Prime Rate is not represented or intended to be the lowest or most
favorable rate of interest offered by Bank. Any change of interest resulting
from a change in the Prime Rate shall be effective on the effective date of each
change therein.
"Ratio of Debt to Capitalization" has the meaning set forth in
Section 3.5 of the Unconditional Guaranty.
"Reportable Event" has the meaning specified therefor in Title IV of ERISA.
"Subsidiary" means, as to any Person, any corporation, association or
other business entity in which such Person or one or more of its Subsidiaries or
such Person and one or more of its Subsidiaries owns sufficient equity or voting
interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if more
than a 50% interest in the profits or capital thereof is owned by such Person or
one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries (unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one or more of its
Subsidiaries). Unless the context otherwise clearly requires, any reference to a
"Subsidiary" is a reference to a Subsidiary of the Company.
"Tranches" shall mean a portion of the Loan which bears interest at an
interest rate based on LIBOR fixed under the terms hereof for a specified
Interest Period.
"Unconditional Guaranty" has the meaning set forth in Section 5.2.
Section 10.2. Other Terms. Each definition of a document in this
Article I shall include such document as modified, amended or supplemented from
time to time and, except where the context otherwise requires, definitions
imparting the singular shall include the plural and vice versa. Except where
restricted, a reference to a party to a document includes that party and its
successors and assigns. All accounting terms used in this Agreement which are
not otherwise defined herein shall be construed in accordance with GAAP.
ARTICLE XI - THE LOAN
Section 11.1. The Loan. The Bank agrees subject to the terms and
conditions contained herein to make a loan (the "Loan") to the Company on or
before February 27, 1998, in the principal amount of Nine Million Two Hundred
Fifty Thousand United States Dollars (US$9,250,000). The Bank shall make the
Loan by crediting the amount hereof to the general deposit account of the
Company maintained with the Bank.
Section 11.2. The Note. The obligation of the Company to repay the Loan
shall be evidenced by the Company's Promissory Note (the "Note") payable to the
order of the Bank at its office at 901 East Cary Street, Richmond, Virginia, or
such other place as the noteholder may from time to time designate in writing,
in the principal amount of Nine Million Two Hundred Fifty Thousand United States
Dollars (US$9,250,000), in substantially the form of Exhibit A attached hereto
with the blanks therein appropriately completed, dated as of the date the Loan
is made and payable in quarterly installments as herein provided. On April 15,
1998, and on July 15, 1998, interest only will be payable. On October 15, 1998,
and on each January 15, April 15, July 15, and October 15 thereafter to and
including April 15, 2006, the Company will pay a principal installment in the
amount of Two Hundred Eighty-Nine Thousand Sixty-Two and 51/100 Dollars
($289,062.51). On July 15, 2006, the entire unpaid principal balance and all
accrued interest will be due and payable. On each date on which an installment
of principal is due, the Company will also pay accrued interest. The Note shall
bear interest as provided in Article III of this Agreement.
Section 11.3. Payments. The disbursement of the Loan hereunder and each
payment of the principal of and interest on the Note shall be made in United
States Dollars in federal or other immediately available funds. For purposes of
this provision, collected funds on deposit with the Bank are immediately
available funds.
Section 11.4. Payment on Days Other Than Business Days. Whenever any
payment to be made hereunder or under the Note shall be stated to be due on a
day other than a Business Day, except as provided in the definition of Interest
Period, such payment may be made on the next succeeding Business Day, and such
extension of time shall in such case be included in the computation of interest
to be paid on such date.
ARTICLE XII - PAYMENT OF INTEREST; FEES; LATE CHARGES
Section 12.1. Selection of Interest Rate Option. At the option of the
Company, the Loan or any portion thereof shall bear interest (a) at a rate per
annum equal to the LIBOR Rate plus the Applicable LIBOR Margin, (b) at a rate
per annum equal to the LIBOR Market Index Rate plus the Applicable LIBOR Margin,
or (c) at a rate per annum equal to the Prime Rate plus or minus, as the case
may be, the Applicable Prime Rate Margin. The amount of the Loan bearing
interest at a rate based on the LIBOR Rate for any Interest Period will be not
less than Five Hundred Thousand Dollars ($500,000) or an integral multiple of
Five Hundred Thousand Dollars ($500,000) in excess thereof, or the aggregate
unpaid principal balance of the Loan. As of the date the Loan is funded, the
Company may select any of the Interest Rate Options. On any Business Day, upon
not less than three (3) Business Days' prior notice, the Company may elect to
have any portion of the Loan which is then bearing interest at a rate based on
the Prime Rate or the LIBOR Market Index Rate, bear interest at a rate based on
the LIBOR Rate. As of the last day of the applicable Interest Period, the
Company may elect to have any portion of the Loan then bearing interest at a
rate based on the LIBOR Rate, bear interest at a rate based on the LIBOR Market
Index Rate or the Prime Rate. If the Company does not select an Interest Rate
Option, the Loan will bear interest at a rate based on the LIBOR Market Index
Rate.
Section 12.2. Payments and Computations. Each payment on the Note shall
be made not later than 2:00 p.m. (Eastern Time) on the day when due, in lawful
money of the United States of America and in federal or other immediately
available funds, by payment of such funds to the Bank at its office at 901 East
Cary Street, Richmond, Virginia or such other place as the Bank may designate in
writing. Amounts received after 2:00 p.m. (Eastern Time) on any day shall be
deemed received on the next succeeding Business Day. If an Event of Default has
occurred and is continuing, the Company hereby authorizes the Bank to, and the
Bank may, charge from time to time against any account or accounts maintained by
the Company with the Bank any amount due in respect of principal of or interest
on the Note. Whenever any payment to be made on the Note shall be stated to be
due on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of interest. Interest on the Loan shall be computed
on the basis of the actual number of days elapsed over a year of 360 days.
Section 12.3. Selection of Interest Period. If all or any portion of
the Loan bears interest at a rate based on the LIBOR Rate, not later than three
(3) Business Days prior to the end of each Interest Period, the Company will
notify the Bank of the length of the succeeding Interest Period. Such
notification shall be in writing or by telephone promptly confirmed in writing.
If the Company fails to give such notice within such time, the succeeding
Interest Period shall be one month.
Section 12.4. Number of Tranches. There shall not be more than
three (3) tranches outstanding at any time.
Section 12.5. Late Charge. If any installment is not paid
within seven (7) days of its scheduled payment date the Company will pay the
Bank a late charge of three percent (3%) of the amount of the installment.
Section 12.6. Facility Fee. If the Loan is not prepaid in full within
seven (7) months of the date the Loan is funded, the Company will pay the Bank
on October 15, 1998 a facility fee of Twenty-Three Thousand One Hundred
Twenty-Five United States Dollars (US$23,125).
Section 12.7. LIBOR Provisions.
(a) Increased Costs. If either (i) the introduction of or any change by
any central bank or other Governmental Authority (whether or not having the
force of law) (including, without limitation, any change by way of imposition or
increase of reserve requirements other than those included in the computation of
LIBOR but excluding any income tax on the overall income of the Bank) in or in
the interpretation of any law or regulation by any central bank or other
Governmental Authority (whether or not having the force of law), or (ii) the
compliance by the Bank with any guideline or directive from any central bank or
other Governmental Authority (whether or not having the force of law), shall
result in any actual increase in the cost to the Bank of maintaining the Loan or
reduce the amount receivable by the Bank on the Loan, the Company shall from
time to time, upon demand by the Bank, pay to the Bank additional amounts
sufficient to indemnify the Bank against such increased cost actually incurred
or reduction in amount actually received. A certificate in reasonable detail as
to the amount of such increased cost or reduction in amount received and method
of calculation shall be submitted to the Company by the Bank and shall be
conclusive (absent manifest error).
(b) LIBOR Deposits Unavailable. If before the beginning of any Interest
Period, by reason of circumstances affecting the London interbank market
generally, deposits in dollars are not being offered to the Bank, the Bank shall
forthwith give notice thereof to the Company, whereupon (unless the Company and
the Bank shall have agreed on an alternative method of determining the interest
rate for the Loan) (a) the obligation of the Bank to have the Loan bear interest
at a rate based on LIBOR shall be suspended and (b) at the expiration of any
applicable Interest Period the Loan shall bear interest at a rate based on the
Prime Rate.
(c) Changes in Law Rendering a LIBOR Loan Unlawful. If, after the date
of this Agreement, the introduction of, or any change in, any applicable law,
rule or regulation or in the interpretation or administration thereof by any
Governmental Authority charged with the interpretation or administration
thereof, or compliance by the Bank with any guideline or directive (whether or
not having the force of law) of any such Governmental Authority, shall make it
unlawful or impossible for the Bank to maintain the Loan bearing interest at a
rate based on LIBOR, the Bank shall promptly notify the Company. Upon such
notice (i) if the Bank may lawfully continue to maintain the Loan while it bears
interest at a rate based on LIBOR to such day or days, on the last day of each
then current Interest Period, the portion of the Loan bearing interest at a rate
determined using such Interest Period shall immediately begin to bear interest
at a rate based on the Prime Rate, or as may be otherwise agreed to by the
Company and the Bank, and (ii) if the Bank may not lawfully continue to maintain
the Loan while it bears interest at a rate based on LIBOR to such day or days,
the Loan shall immediately begin to bear interest at a rate based on the Prime
Rate or as may be otherwise agreed to by the Company and the Bank. If while the
Loan bears interest at a rate based on LIBOR, the interest rate is changed to a
rate based on the Prime Rate pursuant to clause (ii) of this Subsection 3.7 (c)
on a day other than the last day of such Interest Period, the Company will
reimburse the Bank, on demand, in an amount equal to the excess of (i) the
interest that would have been received by the Bank from the Company on the
amount which had been so bearing interest at a rate based on LIBOR during the
remaining portion of the Interest Period in question had it continued to bear
interest at a rate so based on LIBOR over (ii) the amount of interest which
would have accrued on such funds if the Bank had placed such funds on deposit
with a prime bank in the London interbank borrowing market from the date of such
prepayment until the end of such Interest Period, discounted in each case to the
present value using the interest rate then existing on U.S. Treasury obligations
maturing as of the end of such Interest Period, as reasonably determined by the
Bank. A certificate in reasonable detail setting forth the calculation of such
loss or expense, including the amount and method of calculation, shall be
submitted to the Company by the Bank and, in the absence of manifest error,
shall be conclusive.
(d) Certificate. The Bank shall furnish to the Company upon request a
certificate outlining in reasonable detail the computation of any amounts
claimed by it under this Section 3.7 giving rise to a change in LIBOR and the
assumptions underlying such computations.
Section 12.8. Increases and Decreases in Interest Rates. Interest shall
be computed by the Bank using any adjustment required to be made under the
definitions of Applicable LIBOR Margin or Applicable Prime Rate Margin, or both,
as applicable, based on the most recent financial statement the Guarantor has
provided to the Bank and shall be paid by the Company based on such
computations. If it is thereafter determined that the interest rate or rates on
the Loan are to be adjusted upward or downward under the provisions of such
definitions, or either of them, the interest rate or rates on the Loan from and
after the first day of the calendar quarter beginning immediately after the Bank
has received such financial statement shall be increased or decreased based on
the most recent financial statement of the Guarantor which the Bank had received
showing the Ratio of Debt to Capitalization.
Section 12.9. Optional Prepayments. On the last day of any Interest
Period, the Company shall have the right without premium or penalty to prepay
all or any portion of the Loan which bears interest at a rate based on LIBOR
determined using such Interest Period. At any time and from time to time the
Company shall have the right without premium or penalty to prepay all or any
portion of the Loan which bears interest at a rate based on the LIBOR Market
Index Rate or the Prime Rate. The Company may prepay all or any part of the Loan
which bears interest at a rate based on the LIBOR Rate at any time and from time
to time other than the last day of the Interest Period used in determining such
interest rate provided that at the time of such prepayment the Company
reimburses the Bank for any loss or out-of-pocket expense incurred by such
Lender in connection with such prepayment, computed in accordance with the
provisions of Section 3.10.
Section 12.10. Payment of Loss or Out-of-Pocket Expense; Calculation
Thereof. The Company will promptly reimburse the Bank for any loss or
out-of-pocket expense incurred by the Bank as provided in Section 3.7(c) and
Section 3.9 and will reimburse the Bank for any loss or out-of-pocket expense
resulting from the payment of any installment on the Loan on a day other than
the last day of an Interest Period, to which the principal amount of such
installment is applicable, unless a portion of the Loan which is not less than
the principal amount of such installment is then bearing interest at a rate
based on the LIBOR Market Index Rate or the Prime Rate. The loss or
out-of-pocket expense resulting from a payment or prepayment of the Loan or
portion thereof while it bears interest at a rate based on the LIBOR Rate on a
day other than the last day of an Interest Period to which the amount of such
prepayment is applicable shall be an amount equal to the excess of (i) the
interest that would have been received from the Company on the amount so
reemployed during the remaining portion of the Interest Period in question had
the Company not prepaid the Loan or such portion without giving effect to the
provisions of Section 3.7 over (ii) the amount of interest which would have
accrued on such funds if the Bank had placed such funds on deposit with a prime
bank in the London interbank market from the date of such prepayment until the
end of such Interest Period plus the Applicable LIBOR Margin then in effect for
such period, determined as of the time of such prepayment using an assumed
Interest Period which commences on the date of prepayment and ends on the last
day of the originally scheduled Interest Period, discounted in each case to the
present value using the interest rate then existing on U.S. Treasury obligations
maturing as of the end of such Interest Period, as reasonably determined by the
Bank. A certificate in reasonable detail setting forth the calculation of such
loss or expense, including the amount and method of calculation, shall be
submitted to the Company by the Bank and, in the absence of manifest error,
shall be conclusive.
Section 12.11. Application of Prepayments. Each optional prepayment shall
be applied to the installments of principal payable on the Note in the inverse
order of their maturity.
Section 12.12. No Reborrowing. Amounts prepaid on the Loan may not be
reborrowed.
Section 12.13. Taxes.
(a) Payments Free and Clear. Any and all payments by the Company
hereunder or under the Note shall be made free and clear of and without
deduction for any and all present or future taxes, levies, imposts, deductions,
charges or withholding, and all liabilities with respect thereto excluding (i)
income and franchise taxes imposed by the jurisdiction under the laws of which
the Bank is organized or is or should be qualified to do business or any
political subdivision thereof and (ii) income and franchise taxes imposed by the
jurisdiction in which the Loan is made or any political subdivision thereof (all
such non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If the Company shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under the Note, (A) the sum payable shall be increased as may be
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 3.13) the Bank receives
an amount equal to the amount it would have received had no such deductions been
made, (B) the Company shall make such deductions, (C) the Company shall pay the
full amount deducted to the relevant taxing authority or other authority in
accordance with applicable law, and (D) the Company shall deliver to the Bank
evidence of such payment to the relevant taxing authority or other authority in
the manner provided in Section 3.13(d).
(b) Stamp and Other Taxes. In addition, the Company shall pay any
present or future stamp, registration, recordation or documentary taxes or any
other similar fees or charges or excise or property taxes, levies of the United
States or any state or political subdivision thereof or any applicable foreign
jurisdiction which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement, the
Loan, the Note, the other Loan Documents, or the perfection of any rights or
security interest in respect thereto (hereinafter referred to as "Other Taxes").
(c) Indemnity. The Company shall indemnify Bank for the full amount of
Taxes and Other Taxes (including, without limitation, any Taxes and Other Taxes
imposed by any jurisdiction on amounts payable under this Section 3.13 paid by
the Bank and any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto, whether or not such Taxes or Other Taxes were
correctly or legally asserted. Such indemnification shall be made within thirty
(30) days from the date the Bank makes written demand therefor.
(d) Evidence of Payment. Within thirty (30) days after the date of any
payment of Taxes or Other Taxes, the Company shall furnish to the Bank, at its
address referred to in Section 9.7, the original or a certified copy of a
receipt evidencing payment thereof or other evidence of payment satisfactory to
the Bank.
(e) Survival. Without prejudice to the survival of any other agreement
of the Company hereunder, the agreements and obligations of the Company
contained in this Section 3.13 shall survive the payment in full of the Note.
ARTICLE XIII - REPRESENTATIONS
The Company represents and warrants to the Bank that:
Section 13.1. Subsidiaries. The Company has the following
subsidiaries and none others.
Nacional de Envases Plasticos, S.A. de C.V.
Mexicana de Tintas, S.A. de C.V.
Plastihul, S.A. de C.V.
Hermes Industrial, S.A. de C.V.
Servicios Profesionales Vigo, S.C.
Section 13.2. Good Standing. Each of the Company and its Subsidiaries
and the Guarantor is a corporation organized and existing in good standing under
the laws of the jurisdiction of its incorporation and has the corporate power to
own its property and to carry on its business as now being conducted and is duly
qualified to do business and is in good standing in each jurisdiction in which
the character of the properties owned by it therein or in which the transaction
of its business makes such qualification necessary and in which the failure so
to qualify would have a material adverse effect on the financial condition or
operations of the Company or such Subsidiary or the Guarantor, as the case may
be.
Section 13.3. Corporate Authority. The Company has full corporate power
and authority to enter into this Agreement, to make the borrowings hereunder, to
execute and deliver the Note and to incur the obligations provided for herein
and therein, all of which have been duly authorized by all proper and necessary
corporate action. Notwithstanding no consent or approval of shareholders or
consent of, notice to or filing with any public authority is required by the
Company as a condition to the validity of this Agreement or the Note, the
shareholders of the Company resolved to authorize the execution of said
documents as mentioned in Section 5.4 hereunder. The Guarantor has full
corporate power and authority to execute and deliver the Unconditional Guaranty
and to incur the obligations provided for therein, all of which have been duly
authorized by all proper and necessary corporate action. No consent or approval
of shareholders or consent or approval of, notice to or filing with any public
authority is required as a condition to the validity of this Agreement, the Note
or the Unconditional Guaranty.
Section 13.4. Binding Agreements. This Agreement constitutes, and the
Note when issued and delivered pursuant hereto for value received will
constitute, the valid and binding obligations of the Company enforceable in
accordance with their respective terms, except to the extent such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization and
moratorium laws and similar laws relating to the enforcement of creditors'
rights generally and by equitable principles, regardless of whether such
enforcement is sought in equity or at law. The Unconditional Guaranty when
executed and delivered will constitute the valid and binding obligation of the
Guarantor enforceable in accordance with its terms, except to the extent such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization and moratorium laws and similar laws relating to the enforcement
of creditors' rights generally and by equitable principles, regardless of
whether such enforcement is sought in equity or at law.
Section 13.5. Litigation. There are no proceedings pending or, so far
as the officers of the Company know, threatened before any court or
administrative agency that, in the opinion of the officers of the Company, will
materially adversely affect the financial condition or operations of the
Guarantor or any of its Subsidiaries.
Section 13.6. No Conflicting Agreements. There is no provision of the
charter or bylaws of the Company, no provision of any existing mortgage or
indenture binding on the Company or affecting its properties and no provision of
any contract or agreement binding on the Company or affecting its properties
that would conflict with or in any way prevent the execution, delivery or
carrying out of the terms of this Agreement or the Note. There is no provision
of the charter or bylaws of the Guarantor, no provision of any existing mortgage
or indenture binding on the Guarantor or affecting its properties and no
provision of any contract or agreement binding on the Guarantor or affecting its
properties that would conflict with or in any way prevent the execution,
delivery or carrying out of the terms of the Unconditional Guaranty.
Section 13.7. Financial Condition. The consolidated balance sheet of
the Guarantor and its Subsidiaries as of December 31, 1996, and the related
consolidated statements of earnings, shareholders' equity and cash flows for the
period then ended certified by Deloitte & Touche LLP, heretofore delivered to
the Bank, are complete and correct and fairly present the financial condition of
the Guarantor and its Subsidiaries and the results of their operations and cash
flows as of the date and for the period referred to therein and have been
prepared in accordance with GAAP. There are no material liabilities, direct or
indirect, fixed or contingent, of the Guarantor and its Subsidiaries as of the
date of such balance sheet that are not reflected therein or in the notes
thereto. There has been no material adverse change in the financial condition or
operations of the Guarantor and its Subsidiaries since the date of said balance
sheet, and there has been no other material adverse change in the Guarantor and
its Subsidiaries. The unaudited balance sheet of the Guarantor and its
Subsidiaries as of September 30, 1997, and the related unaudited consolidated
statement of earnings for the nine-month period then ended previously delivered
to the Bank are complete and correct and fairly present the financial condition
of the Guarantor and its Subsidiaries and the results of their operations as of
the date and for the periods referred to therein and have been prepared in
accordance with GAAP. There are no material liabilities, direct or indirect,
fixed or contingent, of the Guarantor and its Subsidiaries as of the date of
such balance sheet that are not reflected therein or in the notes thereto. There
has been no material adverse change in the financial condition or operations of
the Guarantor and its Subsidiaries since the date of said balance sheet, and
there has been no other material adverse change in the Guarantor and its
Subsidiaries.
Section 13.8. Disclosure. Neither this Agreement nor any other
document, certificate or statement furnished to the Bank in writing by or on
behalf of the Company in connection herewith contains any untrue statement of a
material fact or when taken together omits to state a material fact necessary in
order to make the statements contained herein and therein not misleading.
Section 13.9. Employee Benefit Pension Plans. No fact, including, but
not limited to, any Reportable Event, exists in connection with any employee
benefit plan of the Company or any of its subsidiaries covered by ERISA
(including any plan of any member of a controlled group of corporations and all
trades and businesses (whether or not incorporated) under common control which,
together with the Company or any of its subsidiaries, are treated as a single
employer under Section 414 of the Internal Revenue Code of 1986, as amended,
which might constitute grounds for the termination of any such plan by the
Pension Benefit Guaranty Corporation or for the appointment of any trustee to
administer any such plan by the appropriate United States district court.
ARTICLE XIV - CONDITIONS OF LENDING
The obligation of the Bank to make the Loan is subject to the following
conditions precedent:
Section 14.1. Approval of Bank's Counsel. All legal matters incident to
the Loan, including, without limitation, all documents and opinions, shall be
reasonably satisfactory to counsel for the Bank.
Section 14.2. Unconditional Guaranty. Blessings Corporation (the
"Guarantor") shall have executed and delivered to the Bank an Unconditional
Guaranty (the "Unconditional Guaranty") substantially in the form of Exhibit B
attached hereto.
Section 14.3. Compliance. At the time the Loan is made, (i) the Company
shall have complied and shall then be in compliance with all the terms,
covenants and conditions of this Agreement that are applicable to it, (ii) there
shall exist no Default or Event of Default, (iii) the representations and
warranties contained in Article IV of this Agreement shall, except to the extent
that they relate solely to an earlier date, be true with the same effect as
though such representations and warranties had been made at the time of the
making of the Loan and after giving effect to the Loan, and (iv) the Guarantor
shall have complied and shall then be in compliance with all the terms,
covenants and conditions of the Unconditional Guaranty that are applicable to
it. The borrowing of the Loan shall be deemed a representation that each of the
conditions set forth in this Section 5.3 has been satisfied.
Section 14.4. Certificate of Secretary of the Company. The Bank shall
have received a certificate of the secretary or assistant secretary of the
Company certifying that attached thereto is a true and complete copy of the
notarial instrument of incorporation of the Company, which evidences its bylaws
and all amendments thereto, as in effect on the date of such certification; and
the copy of the Certificate of Record issued by the Public Registry of Commerce
office of the corporate domicile of the Company, which evidences that said
notarial instrument is duly registered in said Registry; that attached thereto
is a true and complete copy of resolutions duly adopted by the General
Shareholders Meeting of the Company authorizing the borrowings contemplated
hereunder and the execution, delivery and performance of this Agreement and the
Note; and as to the incumbency and genuineness of the signature of each officer
of the Company executing this Agreement or the Note.
Section 14.5. Certificate of Secretary of the Guarantor. The Bank shall
have received a certificate of the secretary or assistant secretary of the
Guarantor certifying that attached thereto is a true and complete copy of the
certificate of incorporation of the Guarantor and all amendments thereto,
certified as of a recent date by the Secretary of State of Delaware; that
attached thereto is a true and complete copy of the bylaws of the Guarantor as
in effect on the date of such certification; that attached thereto is a true and
complete copy of resolutions duly adopted by the Board of Directors of the
Guarantor authorizing the execution, delivery and performance of the
Unconditional Guaranty; and as to the incumbency and genuineness of the
signature of the officer of the Guarantor executing the Unconditional Guaranty.
Section 14.6. Opinion of Counsel. The Bank shall have received a
favorable written opinion of counsel for the Guarantor and the Company dated as
of the date the Loan is made, which opinion shall address all matters referred
to in Article IV of this Agreement, except Sections 4.7, 4.8 and 4.9.
ARTICLE XV - AFFIRMATIVE COVENANTS
So long as the Company may borrow hereunder and until payment in full
of the Note and performance of all other obligations of the Company hereunder,
other than those arising pursuant to Section 9.4, the Company will:
Section 15.1. Taxes. Pay and discharge and cause each of its
Subsidiaries to pay and discharge all taxes, assessments and governmental
charges upon them, their respective income and their respective properties prior
to the date on which penalties are attached thereto, unless and to the extent
only that such taxes, assessments and governmental charges shall be contested by
it or a Subsidiary in good faith and by appropriate proceedings, and the Company
or such Subsidiary shall have set aside on its books adequate reserves with
respect to any such tax, assessment or charge so contested.
Section 15.2. Payment of Obligations. Pay and discharge and cause each
of its Subsidiaries to pay and discharge at or before their maturity all their
respective indebtedness and other obligations and liabilities, except when the
same may be contested in good faith and by appropriate proceedings, and the
Company or such Subsidiary shall have set aside on its books adequate reserves
with respect to any such obligation or liability.
Section 15.3. Insurance. Maintain insurance with responsible companies
satisfactory to the Bank in such amounts and against such risks as is
customarily carried by owners of similar businesses and property and cause each
of its Subsidiaries so to do.
Section 15.4. Corporate Existence. Maintain its corporate existence in good
standing and cause each of its Subsidiaries so to do.
Section 15.5. Properties. Maintain, preserve and protect all material
franchises and trade names and preserve all the remainder of its property and
keep the same in good repair, working order and condition, and from time to time
make or cause to be made all needful and proper repairs, renewals, replacements,
betterments and improvements thereto so that the business carried on in
connection therewith may be properly and efficiently conducted at all times, and
permit the Bank and its agents to enter upon and inspect such properties during
normal business hours with prior reasonable notice and cause each Subsidiary so
to do, provided that nothing contained herein shall prevent the Company or a
Subsidiary from selling or otherwise disposing of any such property if such
property is no longer material to the business of the Company or such
Subsidiary.
Section 15.6. Compliance With Laws. Comply and cause each Subsidiary to
comply in good faith in all material respects with all applicable laws, rules,
regulations and orders of any Governmental Authority having jurisdiction over
it, including, without limitation, those laws, rules, regulations and orders
relating to the environment.
Section 15.7. Notice of Environmental Matters. Immediately advise the
Bank in writing of (a) any and all enforcement, cleanup (other than cleanup
occurring in the ordinary course of business), remedial, removal or other
governmental or regulatory actions instituted, completed or, to the knowledge of
the Company or any Subsidiary, threatened pursuant to any applicable federal,
state or local laws, ordinances or regulations relating to any Hazardous
Materials affecting the business operations of the Company or any Subsidiary,
and (b) all claims made or, to the knowledge of the Company or any Subsidiary,
threatened by any third party against the Company or any Subsidiary relating to
damages, contribution, cost recovery compensation, loss or injury resulting from
any Hazardous Materials and immediately notify Bank of any remedial action taken
by the Company or any Subsidiary in response to any such action or claim or
threatened action or claim with respect to the business operations of the
Company or any Subsidiary.
Section 15.8. Year 2000 Compatibility. Take all action necessary to
assure that Company's computer based systems are able to operate and effectively
process data including dates on and after January 1, 2000. At the request of
Bank, the Company shall provide the Bank assurance acceptable to Bank of
Company's Year 2000 compatibility.
Section 15.9. Waived Conditions. If the Bank waives any condition
hereunder, unless the Bank expressly agrees otherwise, promptly satisfy such
condition and provide the Bank with evidence of its satisfaction.
ARTICLE XVI - NEGATIVE COVENANTS
So long as the Company may borrow hereunder and until payment in full
of the Note and performance of all other obligations of the Company hereunder,
other than those arising pursuant to Section 9.4, without the prior written
consent of the Bank, the Company will not:
Section 16.1. Mortgages and Pledges. Create, incur, assume or suffer to
exist any mortgage, pledge, lien or other encumbrance of any kind upon, or any
security interest in, any of its property or assets, whether now owned or
hereafter acquired or permit any Subsidiary so to do, except (i) liens for taxes
not yet delinquent or being contested in good faith and by appropriate
proceedings; (ii) liens in connection with worker's compensation, unemployment
insurance or other social security obligations; (iii) deposits or pledges to
secure bids, tenders, contracts (other than contracts for the payment of money),
leases, statutory obligations, surety or appeal bonds, and other obligations of
like nature arising in the ordinary course of business; (iv) mechanic's,
workman's, materialman's, landlord's, carrier's or other like liens arising in
the ordinary course of business with respect to obligations that are not due or
that are being contested in good faith; (v) mortgages, pledges, liens and
encumbrances in favor of the Bank; (vi) zoning restrictions, easements,
licenses, restrictions on the use of real property or minor irregularities in
the title thereto, which do not, in the opinion of the Company, materially
impair the use of such property in the operation of its business or the business
of the Subsidiary which owns such property, or the value of such property for
the purposes of such business; (vii) any mortgage, encumbrance or other lien
upon, or security interest in, any property hereafter acquired by the Company or
a Subsidiary created contemporaneously with such acquisition to secure or
provide for the payment or financing of any part of the purchase price thereof,
or the assumption of any mortgage, encumbrance or lien upon, or security
interest in, any such property hereafter acquired existing at the time of such
acquisition, or the acquisition of any such property subject to any mortgage,
encumbrance or other lien or security interest without the assumption thereof,
provided that each such mortgage, encumbrance, lien or security interest shall
attach only to the property so acquired and fixed improvements thereon; and
(viii) other liens and security interests provided the aggregate amount secured
by all such liens and security interests on assets of the Guarantor and its
Subsidiaries does not exceed Five Million Dollars ($5,000,000). Nothing
contained in this Section 7.1 shall prohibit the Company or any Subsidiary from
entering into any lease required to be capitalized by GAAP in accordance with
the Financial Accounting Standards Board Statement No. 13 (Accounting for
Leases) in effect on June 1, 1993, provided such lease is not otherwise
prohibited by the terms of this Agreement.
Section 16.2. Loans. Make loans or advances to any Person, except in the
normal course of business or permit any Subsidiary so to do.
Section 16.3. Merger, Acquisition or Sale of Assets. Enter into any
merger or consolidation with, acquire more than 50% of the voting stock or
voting power of, or acquire all or substantially all of the assets of, any
person, firm, joint venture or corporation, or permit any Subsidiary so to do,
but nothing contained herein shall prohibit the merger of any corporation or
entity into the Company, the sale, transfer or lease of assets of any Subsidiary
to the Company, or the merger of any Subsidiary into any wholly-owned Subsidiary
if in each case, after giving effect to each such transaction, no Default or
Event of Default shall have occurred and be continuing, the Company shall be in
compliance with all of the terms of this Agreement, and the management of the
Company shall be substantially unchanged, and nothing contained herein shall
prohibit the acquisition of the capital stock of NEPSA.
Section 16.4. Sale of Assets. Sell, transfer or otherwise dispose of five
percent (5%) or more of the assets of the Company and its Subsidiaries,
determined on a consolidated basis, in any fiscal year of the Company.
Section 16.5. Use of Proceeds. Use all or any part of the proceeds of
the Loan for the purpose of purchasing or carrying any margin stock, as that
term is defined in Regulation U of the Board of Governors of the Federal Reserve
System, or otherwise in violation of Regulations G, T, U, or X of the Board of
Governors of the Federal Reserve System.
ARTICLE XVII - EVENTS OF DEFAULT
If one or more of the following events of default (each, an "Event of
Default" and collectively, the "Events of Default") shall occur:
Section 17.1. Default shall be made in the payment of any installment
of principal or of interest upon the Note or in the payment of any fee now or
hereafter owing from the Company to the Bank, when and as the same becomes due
and payable, whether at the stated maturity thereof or by acceleration or
otherwise and such default shall continue for a period of ten (10) days; or
Section 17.2. Default shall be made in the due observance or
performance of any other term, covenant or agreement contained in this Agreement
and such default shall continue unremedied for a period of thirty (30) days; or
Section 17.3. Default shall be made in the payment of any principal or
interest on any other indebtedness of the Guarantor, the Company or any other
Subsidiary of the Guarantor to the Bank, whether now existing or hereafter
arising, and such default shall continue for a period of ten (10) days; or
Section 17.4. Default shall be made in the due observance or
performance of any term, covenant or agreement contained in the Blessings
Agreement and such default shall continue unremedied for a period of thirty (30)
days; or
Section 17.5. Default shall be made in the due observance or
performance of any term, covenant or agreement contained in the Unconditional
Guaranty and such default shall continue unremedied for a period of thirty (30)
days; or
Section 17.6. A trustee or receiver (other than a custodian described
in Section 8.8) shall be appointed for the Guarantor, the Company or any other
Subsidiary of the Guarantor or for a substantial part of the properties of the
Guarantor, the Company or any other Subsidiary of the Guarantor without the
consent of the Guarantor, the Company or such Subsidiary and not be discharged
within forty-five (45) days; or
Section 17.7. Any material representation or warranty made by the
Company herein or by the Guarantor in the Blessings Agreement or any statement
or representation made in any certificate, report or opinion delivered pursuant
hereto or thereto shall prove to have been incorrect in any material respect
when made; or
Section 17.8. A custodian, other than a trustee, receiver or agent
appointed or authorized to take charge of less than substantially all of the
property of the Guarantor, the Company or any other Subsidiary of the Guarantor
for the purpose of enforcing a lien against such property, is appointed for, or
takes possession of any property or assets of, the Guarantor, the Company or any
other Subsidiary of the Guarantor; or
Section 17.9. The Guarantor, the Company or any other Subsidiary of the
Guarantor shall be generally not paying its debts as such debts become due,
shall become insolvent or unable to meet its obligations as they mature, shall
make an assignment for the benefit of creditors, shall consent to the
appointment of a trustee or a receiver, or shall admit in writing its inability
to pay its debts as they mature; or
Section 17.10. Any case in bankruptcy shall be commenced, or any
reorganization, arrangement, insolvency or liquidation proceedings shall be
instituted, by or against the Guarantor, the Company or any other Subsidiary of
the Guarantor, and, if commenced or instituted against it, be consented to by
the Guarantor, the Company or such other Subsidiary or remain undismissed for a
period of forty-five (45) days; or
Section 17.11. Any default shall be made in the performance of any
other obligation or obligations incurred in connection with any indebtedness for
borrowed money of the Guarantor, the Company or any other Subsidiary of the
Guarantor aggregating Two Million Dollars ($2,000,000) or more, if the effect of
such default is to permit the holder of such notes or indebtedness (or a trustee
on behalf of such holder) to cause them or it to become due prior to their or
its stated maturity, or any such note or indebtedness becomes due prior to its
stated maturity or shall not be paid when due; or
Section 17.12. One or more final judgments for the payment of money
aggregating in excess of Five Hundred Thousand Dollars ($500,000) which is or
are not adequately insured or indemnified against shall be rendered at any time
against the Guarantor, the Company or any other Subsidiary of the Guarantor and
the same shall remain undischarged for a period of forty-five (45) days during
which time execution shall not be effectively stayed; or
Section 17.13. Any substantial part of the properties of the Guarantor,
the Company or any other Subsidiary of the Guarantor shall be sequestered or
attached and shall not have been returned to the possession of the Guarantor,
the Company or such other Subsidiary or released from such attachment within
forty-five (45) days; or
Section 17.14. The occurrence of a Reportable Event as defined in
Section 4043 of ERISA which could constitute grounds for termination of any
employee benefit plan of the Company or any Subsidiary covered by ERISA by the
Pension Benefit Guaranty Corporation or grounds for the appointment by the
appropriate United States district court of a trustee to administer any such
plan; or
Section 17.15. Any termination payment shall be due by the Company
under any Hedging Agreement and such amount shall not be paid within ten (10)
Business Days of the due date thereof; or
Section 17.16. Any material change shall occur in the management or
ownership of the Company that effectively changes the control of the Company; or
Section 17.17. Any other Event of Default (as defined in the Blessings
Agreement) shall occur and be continuing; or
Section 17.18. The Company shall dissolve or be liquidated,
then, upon the commencement of a case in bankruptcy by the Guarantor or the
Company or the consent to any such case by the Guarantor or the Company, or the
entry of any order for relief against the Guarantor or the Company in any such
case, the Note shall be immediately due and payable, and at any time during the
continuance of any other Event of Default, the Bank may, if it deems
appropriate, by written notice to the Company declare the Note to be forthwith
due and payable, both as to principal and interest, without presentment, demand,
protest or any notice of any kind, all of which are hereby expressly waived,
anything contained herein or in the Note to the contrary notwithstanding; and/or
proceed to enforce payment of the Note and exercise any and all of its rights
hereunder, under the Note or otherwise available to the Bank.
ARTICLE XVIII - MISCELLANEOUS PROVISIONS
Section 18.1. Costs and Expenses. The Company (a) will pay all
reasonable out-of-pocket expenses incurred by the Bank in connection with the
negotiation and preparation of this Agreement and the Note (whether or not the
transactions hereby contemplated shall be consummated), the making of the Loan,
any amendment to or modification or waiver of any of the terms hereof or the
Unconditional Guaranty, including the reasonable fees and disbursements of
counsel for the Bank, and (b) will pay all reasonable out-of-pocket expenses
incurred by the Bank in the enforcement of its rights in connection with this
Agreement or with the Loan or the Note, including, but not limited to, the
reasonable fees and disbursements of counsel for the Bank.
Section 18.2. Cumulative Rights and No Waiver. Each and every right
granted to the Bank hereunder or under any other document delivered hereunder or
in connection herewith, or allowed it by law or equity, shall be cumulative and
may be exercised from time to time. No failure on the part of the Bank to
exercise, and no delay in exercising, any right shall operate as a waiver
thereof, nor shall any single or partial exercise by the Bank of any right
preclude any other or future exercise thereof or the exercise of any other
right.
Section 18.3. Amendments, Etc. No amendment of any provision of this
Agreement or the Note shall be effective unless it is in writing and signed by
the Company and the Bank, and no waiver of any provision of this Agreement or
the Note, nor consent to any departure by the Company therefrom, shall be
effective unless it is in writing and signed by the Bank. In any event, any
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which it is given.
Section 18.4. Indemnification of Bank.
(a) The Company shall indemnify, defend and hold the Bank and its
successors and assigns harmless from and against any and all claims, demands,
suits, losses, damages, assessments, fines, penalties, costs or other expenses
(including attorneys' fees and court costs) arising from or in any way related
to actual or threatened damage to the environment, agency costs of
investigation, personal injury or death or property damage, due to a release or
alleged release of Hazardous Materials, arising from the business operations of
the Company or any Subsidiary or in the surface or ground water arising from the
business operations of the Company or any Subsidiary, or gaseous emissions
arising from the business operations of the Company or any Subsidiary or any
other condition existing or arising from the business operations of the Company
or any Subsidiary resulting from the use or existence of Hazardous Materials,
whether such claim proves to be true or false. The Company further agrees that
its indemnity obligations under this paragraph (a) shall include, but are not
limited to, liability for damages resulting from the personal injury or death of
an employee of the Company or any Subsidiary, regardless of whether the Company
or such Subsidiary has paid the employee under the workers' compensation laws of
any state or other similar federal or state legislation for the protection of
employees. The term "property damage" as used in this paragraph includes, but is
not limited to, damage to any real or personal property of the Company or any
Subsidiary, the Bank and any third parties. The obligations of the Company under
this Section shall survive the repayment of the Loan and any deed in lieu of
foreclosure or foreclosure under any deed of trust, deed to secure debt or
mortgage now or hereafter securing the Loan or any part thereof.
(b) From and at all times after the date of this Agreement, and in
addition to all of the Bank's other rights and remedies against the Company, the
Company agrees to hold the Bank harmless from, and to indemnify the Bank against
all losses, damages, costs and expenses (including, but not limited to,
reasonable attorneys' fees, costs and expenses) incurred by the Bank from and
after the date hereof, whether direct, indirect or consequential, as a result of
or arising from or relating to any suit, action or proceeding by any Person
other than the Company, whether threatened or initiated, asserting a claim for
any legal or equitable remedy against any Person under any federal or state
statute or regulation, including, but not limited to, any federal or state
securities laws, or under any common law or equitable cause or otherwise,
arising from or in connection with the negotiation, preparation, execution or
performance of, or the financing transactions contemplated by, this Agreement,
the Note and any other Loan Document, or the Bank's furnishing of funds to the
Company pursuant to this Agreement; provided, however, that the foregoing
indemnification shall not protect the Bank from loss, damage, cost or expense
directly attributable to the Bank's misconduct or negligence. All of the
foregoing losses, damages, costs and expenses of the Bank shall be payable by
the Company upon demand by Bank.
(c) The undertakings contained in this Section 9.4 are in addition to
any contained in any guaranty, security agreement, deed of trust, deed to secure
debt, mortgage or other collateral document now or hereafter delivered to or for
the benefit of the Bank.
Section 18.5. Arbitration.
(a) General. Upon demand of any party hereto, whether made before or
after institution of any judicial proceeding, any dispute, claim or controversy
arising out of, connected with or relating to this Loan Agreement, or the Note
(collectively, the "Disputes") between the parties to this Loan Agreement will
be resolved by binding arbitration as provided herein. Institution of a judicial
proceeding by a party does not waive the right of that party to demand
arbitration hereunder. Disputes may include, without limitation, tort claims,
counterclaims, disputes as to whether a matter is subject to arbitration, claims
brought as class actions, claims arising from Loan Documents executed in the
future, or claims arising out of or connected with the transactions contemplated
by this Loan Agreement.
(b) Arbitration Rules. Arbitration shall be conducted under and
governed by the Commercial Financial Disputes Arbitration Rules (the
"Arbitration Rules") of the American Arbitration Association (the "AAA") and
Title 9 of the U.S. Code. All arbitration hearings shall be conducted in
Richmond, Virginia. The expedited procedures set forth in Rule 51 et seq. of the
Arbitration Rules shall be applicable to claims of less than $1,000,000. All
applicable statutes of limitation shall apply to any Dispute. A judgment upon
the award may be entered in any court having jurisdiction. The panel from which
all arbitrators are selected shall be comprised of licensed attorneys. The
single arbitrator selected for expedited procedure shall be a retired judge from
the highest court of general jurisdiction, state or federal, in the Commonwealth
of Virginia, or if such a person is not available to serve, the single
arbitrator may be a licensed attorney. Notwithstanding the foregoing, this
arbitration provision does not apply to disputes under or related to swap
agreements.
(c) Exceptions. Notwithstanding the preceding binding arbitration
provisions, the parties hereto agree to preserve, without diminution, certain
remedies that any party hereto may employ or exercise freely, independently or
in connection with an arbitration proceeding or after an arbitration action is
brought. The parties shall have the right to proceed in any court of proper
jurisdiction or by self-help or other non-judicial means to exercise or
prosecute the following remedies, as applicable: all rights to foreclose against
or otherwise realize upon any real or personal property or other security by
exercising a power of sale or other rights granted under any of the Loan
Documents or under applicable law or by judicial foreclosure and sale, including
a proceeding to confirm the sale, all rights of self-help including peaceful
occupation of real property and collection of rents, set-off and peaceful
possession of personal property, obtaining provisional or ancillary remedies
including injunctive relief, sequestration, garnishment, attachment, appointment
of a receiver and filing an involuntary bankruptcy proceeding, and when
applicable, a judgment by confession of judgment. Preservation of these remedies
does not limit the power of an arbitrator to grant similar remedies that may be
requested by a party in a Dispute.
(d) Limitation on Damages. Each of the parties hereto agrees that it
shall not have a remedy of punitive or exemplary damages against any other party
hereto in any Dispute and hereby waives any right or claim to punitive or
exemplary damages it has now or which may arise in the future in connection with
any Dispute whether the Dispute is resolved by arbitration or judicially.
Section 18.6. Waiver of Jury Trial. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, THE COMPANY AND THE BANK HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHT THEY, OR EITHER OF THEM, MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION BASED ON THIS LOAN AGREEMENT, THE NOTE OR ANY
OF THE OTHER LOAN DOCUMENTS, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
LOAN AGREEMENT, THE NOTE OR ANY OF THE OTHER LOAN DOCUMENTS, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF
ANY PARTY WITH RESPECT HERETO AND THERETO. THIS WAIVER OF JURY TRIAL PROVISION
IS A MATERIAL INDUCEMENT TO THE BANK TO ENTER INTO THIS LOAN AGREEMENT AND TO
MAKE THE LOAN.
Section 18.7. Notices. Any notice shall be conclusively deemed to have
been received by either party hereto and be effective on the day on which
delivered to such party at the address or addresses set forth below (or at such
other address as such party shall specify to the other party in writing) or if
sent by registered or certified mail, on the third business day after the day on
which mailed, addressed to such party at said address:
If to the Company:
ASPEN Industrial, S.A. de C.V.
200 Enterprise Drive
Newport News, Virginia 23603
Attn: Joseph Fernandes
Treasurer
If to the Bank:
First Union National Bank
901 East Cary Street, 2nd Floor
Post Office Box 26944
Richmond, Virginia 23261
Attn: Douglas T. Davis
Vice President
Section 18.8. Applicable Law. This Agreement and the Note shall be
construed in accordance with and governed by the laws of the Commonwealth of
Virginia.
Section 18.9. Survivorship. All covenants, agreements, representations
and warranties made herein and in the certificates delivered pursuant hereto
shall survive the making by the Bank of the Loan herein contemplated and the
execution and delivery to the Bank of the Note and shall continue in full force
and effect so long as the Note is outstanding and unpaid. Whenever in this
Agreement either of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of the Company which are contained in
this Agreement shall bind and inure to the benefit of the successors and assigns
of the Bank.
Section 18.10. Headings. Article and Section headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.
IN WITNESS WHEREOF, ASPEN Industrial, S.A. de C.V. has caused this
Agreement to be executed by its duly authorized officer and First Union National
Bank has caused it to be executed by its duly authorized officer all as of the
date first above written.
ASPEN INDUSTRIAL, S.A. de C.V.
By: /s/Elwood M. Miller
Elwood M. Miller
Its: President/CEO
FIRST UNION NATIONAL BANK
By: /s/Joyce L. Barry
Joyce L. Barry
Its: Senior Vice President
<PAGE>
UNCONDITIONAL GUARANTY
February 20, 1998
PRIMARY
OBLIGOR: ASPEN Industrial, S.A. de C.V.
Calzado de las Armas, Numbre 12
FRACC. Industrial las Armas
54080 Tlalnepantla Estado de Mexico
GUARANTOR: Blessings Corporation
200 Enterprise Drive
Newport News, Virginia 23603
OBLIGEE: First Union National Bank, 901 East Cary Street,
Richmond, Virginia
WHEREAS, the above PRIMARY OBLIGOR (hereinafter termed "Customer")
desires to obtain extensions of credit and/or a continuation of credit
extensions and/or to engage in business transactions and enter into various
contractual relationships and otherwise to deal with First Union National Bank
(hereinafter termed "Bank"); and
WHEREAS, Bank is unwilling to extend or continue credit to and/or to
engage in business transactions and enter into various contractual relationships
with, and otherwise to deal with Customer, unless it receives an unconditional
and continuing, joint and several guaranty from the above identified,
undersigned GUARANTOR (hereinafter termed "Guarantor"), covering all
"Obligations of Customer," as hereinafter defined.
NOW, THEREFORE, in consideration of the premises and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and in order to induce Bank to make loans to the Customer under
the Loan Agreement of even date herewith between the Customer and the Bank (the
"Loan Agreement") executed by the Customer, Guarantor, jointly and severally, if
more than one, hereby absolutely and unconditionally guarantees to Bank and its
successors and assigns the due and punctual payment of all liabilities and
obligations of Customer owed to Bank, and its Affiliates, primary or secondary
(whether by way of endorsement or otherwise), whether now existing or hereafter
arising, whether arising out of contract(s), tort(s) or otherwise, which arise
or are incurred under the Loan Agreement and the Term Loan Note of even date
herewith (the "Note") executed by the Customer and payable to the order of the
Bank in the principal amount of Nine Million Two Hundred Fifty Thousand United
States Dollars (US$9,250,000), including all advances made thereunder whether
matured or unmatured; whether absolute or contingent; whether joint or several,
as and when the same become due and payable (whether by acceleration or
otherwise) in accordance with the terms of any such instruments and other
security agreements, and/or other contracts, evidencing any such indebtedness,
obligations or liabilities, including all renewals, extensions and/or
modifications thereof and Guarantor further guarantees to Bank the performance
of all obligations, liabilities and covenants of Customer to Bank contained in
the Loan Agreement and in each document or instrument evidencing or securing
such obligations of Customer to Bank (all such covenants, liabilities and
obligations of Customer to Bank, including all of the foregoing, being
hereinafter collectively termed "Obligations of Customer"), provided, however,
that if and only if an amount is here specified; to wit:
Nine Million Two Hundred Fifty Thousand United States Dollars (US$9,250,000)
- ------------------------------------------------------------------------------
(Leave blank, if liability hereunder is unlimited)
then, the maximum liability, of the undersigned Guarantor hereunder, at any one
time outstanding, with respect to the aggregate principal amount of the
Obligations of Customer, shall not exceed the sum of money above specified, plus
all interest or Finance Charges, Costs of Court and the reasonable attorneys'
fees of Bank.
This Unconditional Guaranty is intended to supplement and is in
addition to any other guarantees held by the Bank.
Further, whether or not suit is brought by Bank to acquire possession
of collateral or to enforce collection of any unpaid balance(s) hereunder,
Guarantor expressly hereby agrees to pay all legal expenses and the reasonable
attorneys' fees actually incurred by Bank.
In order to implement the foregoing and as additional inducements to
Bank, Guarantor further covenants and agrees:
ARTICLE XIX - DEFINITIONS; ACCOUNTING TERMS
Section 19.1. Definitions. As used in this Unconditional Guaranty, the
following terms shall have the meanings herein specified and shall include in
the singular number the plural and in the plural number the singular:
"Affiliates" means, as to any Person, each other Person that directly
or indirectly (through one or more intermediaries or otherwise) controls, is
controlled by or is under common control with, such Person, provided that
Williamson-Dickie Manufacturing Company, a Texas corporation, shall not be an
"Affiliate" of the Guarantor.
"Capital Lease" means, at any time, a lease with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.
"Consolidated Cash Flow" means, for any period, Consolidated Net Income
for such period, plus, to the extent deducted in calculating Consolidated Net
Income, (i) interest expense, including imputed interest in respect of Capital
Leases, amortization of debt discount and expense, fees and commissions for
letters of credit and bankers' acceptances and the net interest costs of
interest rate swaps and hedges, (ii) depreciation and amortization expense, and
(iii) taxes actually paid, in each case determined in accordance with GAAP.
"Consolidated Funded Debt" means Funded Debt of the Guarantor and its
Subsidiaries determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, for any period, the Net Income of the
Guarantor and its consolidated Subsidiaries for such period, determined on a
consolidated basis, but excluding (a) extraordinary items and (b) any Minority
Interest.
"Consolidated Net Worth" means total stockholders' equity of the
Guarantor and its Subsidiaries, determined on a consolidated basis in accordance
with GAAP.
"Consolidated Total Capitalization" means the sum of Consolidated Net
Worth and Consolidated Funded Debt.
"Debt" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of
business, (iv) all obligations of such Person as lessee under capital leases,
(v) all obligations of such Person to reimburse any bank or other Person in
respect of amounts payable under a banker's acceptance, (vi) all Redeemable
Preferred Stock of such Person (in the event such Person is a corporation),
(vii) all obligations (absolute or contingent) of such Person to reimburse any
bank or other Person in respect of amounts paid under a letter of credit or
similar instrument (but excluding any letter of credit or similar instrument
with an expiration date or final maturity of less than one year from the date of
determination), (viii) all Debt of others secured by a Lien on any asset of such
Person, whether or not such Debt is assumed by such Person, and (ix) all Debt of
others Guaranteed by such Person.
"Default" has the meaning ascribed thereto in the Loan Agreement.
"Environmental Laws" means all federal, state and local laws relating
to pollution or protection of the environment, including laws relating to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals or industrial, toxic or hazardous substances or wastes
(including, without limitation, all waste materials subject to regulation under
the Comprehensive Environmental Response, Compensation, and Liability Act, 42
U.S.C. ss.ss. 9601, et seq., the Resource Conservation and Recovery Act, 42
U.S.C. ss.ss. 6901, et seq., the Clean Water Act, 33 U.S.C. ss.ss. 1251, et
seq., the Clean Air Act, 42 U.S.C. ss.ss. 7401, et seq., or applicable state law
and any other applicable federal, state or local laws and the regulations now in
force or hereafter enacted relating to hazardous waste disposal) and any
materials present on any property owned or operated by the Guarantor or any
Subsidiary which have been shown to have significant adverse effects on human
health or which are subject to regulation under the Toxic Substances Control
Act, 15 U.S.C. ss.ss. 2601, et seq., applicable state law or any other
applicable federal, state or local laws now in force or hereafter enacted
relating to toxic substances, which shall include, but not be limited to,
asbestos, polychlorinated biphenyls (PCBs), petroleum products, and lead-based
paints, in the environment (including, without limitation, ambient air, surface
water, ground water or land) or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transportation or
handling of pollutants, contaminants, chemicals or industrial, toxic or
hazardous substances or wastes, and any and all regulations, codes, plans,
orders, decrees, judgments, injunctions, notices or demand letters issued,
entered, promulgated or approved thereunder.
"ERISA" means the Employee Retirement Income Security Act of 1974,
together with the rules and regulations promulgated thereunder, as in effect
from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that is treated as a single employer together with the Guarantor
under section 414 of the Code.
"Event of Default" means any of the Events of Default provided in
Section 8 of the Loan Agreement.
"Funded Debt" means at any date the Debt of the Guarantor, determined
on an unconsolidated basis as of such date.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States of America.
"Governmental Authority" means the United States, any state or other
political subdivision thereof and any court, agency, department, commission,
board, bureau or instrumentality of any of the foregoing.
"Guaranty" means, with respect to any Person, any obligation (except
the endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
indebtedness, dividend or other obligation of any other Person in any manner,
whether directly or indirectly, including (without limitation) obligations
incurred through an agreement, contingent or otherwise, by such Person:
(a) to purchase such indebtedness or obligation or any property
constituting security therefor;
(b) to advance or supply funds (i) for the purchase or payment
of such indebtedness or obligation, or (ii) to maintain any working capital or
other balance sheet condition or any income statement condition of any other
Person or otherwise to advance or make available funds for the purchase or
payment of such indebtedness or obligation;
(c) to lease properties or to purchase properties or services
primarily for the purpose of assuring the owner of such indebtedness or
obligation of the ability of any other Person to make payment of the
indebtedness or obligation; or
(d) otherwise to assure the owner of such indebtedness or
obligation against loss in respect thereof.
In any computation of the indebtedness or other liabilities of the obligor under
any Guaranty, the indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor. The term
"Guarantee" used as a verb has a corresponding meaning.
"Hazardous Materials" shall mean all materials defined as hazardous
wastes or substances under any applicable state and federal Environmental Laws
and petroleum, petroleum products, oil and asbestos.
"Indebtedness" with respect to any Person means, at any time, without
duplication,
(a) its liabilities for borrowed money and its redemption obligations in
respect of mandatorily redeemable Preferred Stock;
(b) its liabilities for the deferred purchase price of
property acquired by such Person (excluding accounts payable arising in the
ordinary course of business but including all liabilities created or arising
under any conditional sale or other title retention agreement with respect to
any such property);
(c) all liabilities appearing on its balance sheet in
accordance with GAAP in respect of Capital Leases;
(d) all liabilities for borrowed money secured by any Lien
with respect to any property owned by such Person (whether or not it has assumed
or otherwise become liable for such liabilities);
(e) all its liabilities in respect of letters of credit or
instruments serving a similar function issued or accepted for its account by
banks and other financial institutions with a maturity greater than one (1) year
(whether or not representing obligations for borrowed money);
(f) Swaps of such Person; and
(g) any Guaranty of such Person with respect to liabilities of
a type described in any of clauses (a) through (f) hereof.
Indebtedness shall not be deemed to include unfunded benefit
liabilities of the Guarantor or any Subsidiary under any Plan. Indebtedness of
any Person shall include all obligations of such Person of the character
described in clauses (a) through (g) to the extent such Person remains legally
liable in respect thereof notwithstanding that any such obligation is deemed to
be extinguished under GAAP.
"Lien" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of any
vendor, lessor, lender or other secured party to or of such Person under any
conditional sale or other title retention agreement or Capital Lease, upon or
with respect to any property or asset of such Person (including in the case of
stock, stockholder agreements, voting trust agreements and all similar
arrangements).
"Loan Agreement" has the meaning ascribed thereto on the first page of
this Unconditional Guaranty.
"Minority Interest" means the equity interest of the Guarantor and its
Subsidiaries in the unremitted earnings of Persons not Subsidiaries.
"NEPSA" shall mean Nacional de Envases Plasticos, S.A. de C.V., Hermes
Industrial, S.A. de C.V., Mexicana de Tintas, S.A. de C.V., Plastihul, S.A. de
C.V., and Servicios Profesionales Vigo, S.C.
"Note" has the meaning ascribed thereto on the first page of this
Unconditional Guaranty.
"Person" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
"Plan" means an "employee benefit plan" (as defined in section 3(3) of
ERISA) that is or within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five years,
have been made or required to be made, by the Guarantor or any ERISA Affiliate
or with respect to which the Guarantor or any ERISA Affiliate may have
liability.
"Preferred Stock" means any class of capital stock of a corporation
that is preferred over any other class of capital stock of such corporation as
to the payment of dividends or the payment of any amount upon liquidation or
dissolution of such corporation.
"Ratio of Debt to Capitalization" has the meaning set forth in Section 3.5.
"Redeemable Preferred Stock" of any Person means any preferred stock
issued by such Person which is at any time prior to July 15, 2006 either (i)
mandatorily redeemable (by sinking fund or similar payments or otherwise) or
(ii) redeemable at the option of the holder thereof.
"Reportable Event" has the meaning specified therefor in Title IV of
ERISA.
"Subordinated Debt" means any unsecured indebtedness of the Guarantor
for borrowed money, the repayment of which has been subordinated to all
obligations of the Guarantor to the Bank in a manner satisfactory to the Bank
and its counsel.
"Subsidiary" means, as to any Person, any corporation, association or
other business entity in which such Person or one or more of its Subsidiaries or
such Person and one or more of its Subsidiaries owns sufficient equity or voting
interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if more
than a 50% interest in the profits or capital thereof is owned by such Person or
one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries (unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one or more of its
Subsidiaries). Unless the context otherwise clearly requires, any reference to a
"Subsidiary" is a reference to a Subsidiary of the Guarantor.
"Swaps" means, with respect to any Person, payment obligations with
respect to interest rate swaps, currency swaps and similar obligations
obligating such Person to make payments, whether periodically or upon the
happening of a contingency; provided, however, that "Swaps" shall not mean or
include any interest rate swap entered into solely for the purpose of hedging
such Person's exposure to interest rate risks on outstanding Indebtedness and
involving a notional amount not greater in principal amount than the outstanding
principal amount of the Indebtedness to which it relates, and provided further,
that the amount of any liability in respect of an interest rate swap that must
be included as a liability in such Person's balance sheet in accordance with
GAAP shall be deemed to be a Swap. For the purposes of this Unconditional
Guaranty, the amount of the obligation under any Swap shall be the amount
determined in respect thereof as of the end of the then most recently ended
fiscal quarter of such Person, based on the assumption that such Swap had
terminated at the end of such fiscal quarter, and in making such determination,
if any agreement relating to such Swap provides for the netting of amounts
payable by and to such Person thereunder or if any such agreement provides for
the simultaneous payment of amounts by and to such Person, then in each such
case, the amount of such obligation shall be the net amount so determined.
Section 19.2. Other Terms. Each definition of a document in this
Article I shall include such document as modified, amended or supplemented from
time to time and, except where the context otherwise requires, definitions
imparting the singular shall include the plural and vice versa. Except where
restricted, a reference to a party to a document includes that party and its
successors and assigns. All accounting terms used in this Unconditional Guaranty
which are not otherwise defined herein shall be construed in accordance with
GAAP.
ARTICLE XX - AFFIRMATIVE COVENANTS
So long as the Primary Obligor may borrow under the Loan Agreement and
until payment in full of the Note and performance of all other obligations of
the Primary Obligor under the Loan Agreement, other than those arising pursuant
to Section 9.4, the Guarantor will:
Section 20.1. Financial Statements. Furnish to the Bank (a) as soon as
available, but in any event not more than sixty (60) days after the end of each
calendar quarter, a consolidated balance sheet as of the end of such quarter and
a consolidated statement of earnings for such quarter and for the portion of the
fiscal year ending on the last day of such quarter in reasonable detail and in
conformity with GAAP, together with a schedule setting forth the calculations to
show compliance by the Guarantor with the financial covenants contained herein,
reviewed by Deloitte & Touche LLP or other independent certified public
accountants satisfactory to the Bank and certified by a principal financial
officer of the Guarantor, together with a certificate of that officer stating
whether any event has occurred or condition exists with respect to the Guarantor
that constitutes a Default or an Event of Default, and, if so, stating the facts
with respect thereto; (b) as soon as available, but in any event not more than
one hundred twenty (120) days after the close of each fiscal year of the
Guarantor, a copy of the annual audit report of the Guarantor in reasonable
detail, prepared in accordance with GAAP applied on a basis consistent with that
of the preceding year and certified (except as to the consolidating provisions)
in a manner acceptable to the Bank by Deloitte & Touche LLP or other independent
certified public accountants satisfactory to the Bank, which report shall
include a consolidated and consolidating balance sheet of the Guarantor as of
the end of such fiscal year, and related consolidated and consolidating
statements of earnings, shareholders' equity and cash flows for such fiscal year
of the Guarantor and accompanied by a schedule setting forth the calculations to
show compliance with the financial covenants contained herein applicable to the
Guarantor, certified in each case by a principal financial officer of the
Guarantor, together with a certificate of that officer stating whether a Default
or an Event of Default has occurred, and, if so, stating the facts with respect
thereto; (c) promptly upon becoming available, copies of all financial
statements, reports, notices and proxy statements sent by the Guarantor or any
of its Subsidiaries to stockholders, and of all regular and periodic reports
filed by the Guarantor or any of its Subsidiaries with any securities exchange
or with the Securities and Exchange Commission or any Governmental Authority
succeeding to any or all of the functions of said Commission; (d) promptly upon
their receipt, copies of all management letters received by the Guarantor and
its Subsidiaries from its accountants; and (e) such additional information,
reports and statements of the Guarantor and its Subsidiaries as the Bank may
from time to time reasonably request but in no event more than thirty (30) days
after receipt by the Guarantor of such request.
Section 20.2. Taxes. Pay and discharge and cause each of its
Subsidiaries to pay and discharge all taxes, assessments and governmental
charges upon them, their respective income and their respective properties prior
to the date on which penalties are attached thereto, unless and to the extent
only that such taxes, assessments and governmental charges shall be contested by
it or a Subsidiary in good faith and by appropriate proceedings, and the
Guarantor or such Subsidiary shall have set aside on its books adequate reserves
with respect to any such tax, assessment or charge so contested.
Section 20.3. Payment of Obligations. Pay and discharge and cause each
of its Subsidiaries to pay and discharge at or before their maturity all their
respective indebtedness and other obligations and liabilities, except when the
same may be contested in good faith and by appropriate proceedings, and the
Guarantor or such Subsidiary shall have set aside on its books adequate reserves
with respect to any such obligation or liability.
Section 20.4. Insurance. Maintain insurance with responsible companies
satisfactory to the Bank in such amounts and against such risks as is
customarily carried by owners of similar businesses and property and cause each
of its Subsidiaries so to do.
Section 20.5. Corporate Existence. Maintain its corporate existence in good
standing and cause each of its Subsidiaries so to do.
Section 20.6. Properties. Maintain, preserve and protect all material
franchises and trade names and preserve all the remainder of its property and
keep the same in good repair, working order and condition, and from time to time
make or cause to be made all needful and proper repairs, renewals, replacements,
betterments and improvements thereto so that the business carried on in
connection therewith may be properly and efficiently conducted at all times, and
permit the Bank and its agents to enter upon and inspect such properties during
normal business hours with prior reasonable notice and cause each Subsidiary so
to do, provided that nothing contained herein shall prevent the Guarantor or a
Subsidiary from selling or otherwise disposing of any such property if such
property is no longer material to the business of the Guarantor or such
Subsidiary.
Section 20.7. Employee Benefit Pension Plans. Promptly during each year
pay and cause each Subsidiary to pay contributions that in the judgment of the
chief executive and chief financial officers of the Guarantor after reasonable
inquiry are believed adequate to meet at least all applicable minimum funding
standards set forth in Sections 302 through 305 of ERISA with respect to each
employee benefit plan of the Guarantor or a Subsidiary covered by ERISA
(including any plan of any member of a controlled group of corporations and all
trades and businesses (whether or not incorporated) under common control which,
together with the Guarantor, are treated as a single employer, under Section 414
of the Internal Revenue Code of 1986, as amended); file or cause to be filed
each annual report required to be filed pursuant to Section 103 of ERISA in
connection with each such plan for each year; and notify the Bank within ten
(10) days of the occurrence of a Reportable Event that could constitute grounds
for termination of any such plan by PBGC or for the appointment by the
appropriate United States District Court of a trustee to administer any such
plan, provided that nothing contained herein shall prohibit the Guarantor or a
Subsidiary from terminating any such plan if it has theretofore complied with
the provisions of this Section.
Section 20.8. Compliance With Laws. Comply and cause each Subsidiary to
comply in good faith in all material respects with all applicable laws, rules,
regulations and orders of any Governmental Authority having jurisdiction over
it, including, without limitation, the Americans with Disabilities Act of 1990
and those laws, rules, regulations and orders relating to the environment.
Section 20.9. Notice of Environmental Matters. Promptly, and in any
event within thirty (30) days, advise the Bank in writing of (a) any and all
enforcement, cleanup (other than cleanup occurring in the ordinary course of
business), remedial, removal or other governmental or regulatory actions
instituted, completed or, to the knowledge of the Guarantor or any Subsidiary,
threatened pursuant to any applicable federal, state or local laws, ordinances
or regulations relating to any Hazardous Materials affecting the business
operations of the Guarantor or any Subsidiary, and (b) all claims made or, to
the knowledge of the Guarantor or any Subsidiary, threatened by any third party
against the Guarantor or any Subsidiary relating to damages, contribution, cost
recovery compensation, loss or injury resulting from any Hazardous Materials and
immediately notify Bank of any remedial action taken by the Guarantor or any
Subsidiary in response to any such action or claim or threatened action or claim
with respect to the business operations of the Guarantor or any Subsidiary.
Section 20.10. Year 2000 Compatibility. Take all action necessary to
assure that Guarantor's computer based systems are able to operate and
effectively process data including dates on and after January 1, 2000. At the
request of Bank, the Guarantor shall provide the Bank assurance acceptable to
Bank of Guarantor's Year 2000 compatibility.
ARTICLE XXI - NEGATIVE COVENANTS
So long as the Primary Obligor may borrow under the Loan Agreement and
until payment in full of the Note and performance of all other obligations of
the Primary Obligor under the Loan Agreement, other than those arising pursuant
to Section 9.4, without the prior written consent of the Bank, the Guarantor
will not:
Section 21.1. Mortgages and Pledges. Create, incur, assume or suffer to
exist any mortgage, pledge, lien or other encumbrance of any kind upon, or any
security interest in, any of its property or assets, whether now owned or
hereafter acquired or permit any Subsidiary so to do, except (i) liens for taxes
not yet delinquent or being contested in good faith and by appropriate
proceedings; (ii) liens in connection with worker's compensation, unemployment
insurance or other social security obligations; (iii) deposits or pledges to
secure bids, tenders, contracts (other than contracts for the payment of money),
leases, statutory obligations, surety or appeal bonds, and other obligations of
like nature arising in the ordinary course of business; (iv) mechanic's,
workman's, materialman's, landlord's, carrier's or other like liens arising in
the ordinary course of business with respect to obligations that are not due or
that are being contested in good faith; (v) mortgages, pledges, liens and
encumbrances in favor of the Bank; (vi) zoning restrictions, easements,
licenses, restrictions on the use of real property or minor irregularities in
the title thereto, which do not, in the opinion of the Guarantor, materially
impair the use of such property in the operation of its business or the business
of the Subsidiary which owns such property, or the value of such property for
the purposes of such business; (vii) any mortgage, encumbrance or other lien
upon, or security interest in, any property hereafter acquired by the Guarantor
or a Subsidiary created contemporaneously with such acquisition to secure or
provide for the payment or financing of any part of the purchase price thereof,
or the assumption of any mortgage, encumbrance or lien upon, or security
interest in, any such property hereafter acquired existing at the time of such
acquisition, or the acquisition of any such property subject to any mortgage,
encumbrance or other lien or security interest without the assumption thereof,
provided that each such mortgage, encumbrance, lien or security interest shall
attach only to the property so acquired and fixed improvements thereon;and
(viii) other liens and security interests which secure not more than Five
Million Dollars ($5,000,000) in the aggregate. Nothing contained in this Section
3.1 shall prohibit the Guarantor or any Subsidiary from entering into any lease
required to be capitalized by GAAP in accordance with the Financial Accounting
Standards Board Statement No. 13 (Accounting for Leases) in effect on June 1,
1993, provided such lease is not otherwise prohibited by the terms of this
Unconditional Guaranty.
Section 21.2. Loans. Make loans or advances to any Person, except in
the normal course of business or permit any Subsidiary so to do, except that the
Guarantor may lend the proceeds of the loan made by the Bank to it to the
Customer to use to acquire capital stock of NEPSA, provided that the Guarantor
may make loans and advances to the joint venture it contemplates entering into
for operations in Brazil if the aggregate amount of its investment in such joint
venture and loans and advances to it does not exceed Ten Million Dollars
($10,000,000) at any time outstanding.
Section 21.3. Merger, Acquisition or Sale of Assets. Enter into any
merger or consolidation with, acquire more than 50% of the voting stock or
voting power of, or acquire all or substantially all of the assets of, any
person, firm, joint venture or corporation, or permit any Subsidiary so to do,
but nothing contained herein shall prohibit the merger of any corporation or
entity into the Guarantor, the sale, transfer or lease of assets of any
Subsidiary to the Guarantor, or the merger of any Subsidiary into any
wholly-owned Subsidiary if in each case, after giving effect to each such
transaction, no Default or Event of Default shall have occurred and be
continuing, the Guarantor shall be in compliance with all of the terms of this
Unconditional Guaranty, and the management of the Guarantor shall be
substantially unchanged, and nothing contained herein shall prohibit the
acquisition of the capital stock of NEPSA.
Section 21.4. Sale of Assets. Sell, transfer or otherwise dispose of five
percent (5%) or more of the assets of the Guarantor and its Subsidiaries,
determined on a consolidated basis in any fiscal year of the Guarantor.
Section 21.5. Ratio of Funded Debt to Total Capitalization. Permit the
ratio of Consolidated Funded Debt to Consolidated Total Capitalization to exceed
.55 to 1 at any time prior to December 31, 1998 or to exceed .50 to 1 at
December 31, 1998 or any time thereafter. This ratio of Consolidated Funded Debt
to Consolidated Total Capitalization is sometimes referred to herein as the
"Ratio of Debt to Capitalization."
Section 21.6. Ratio of Funded Debt to Cash Flow. Permit the ratio of
Consolidated Funded Debt as of the end of any fiscal quarter to Consolidated
Cash Flow for the 12 months ending as of the end of such quarter to exceed 3.0
to 1.
ARTICLE XXII - ABSOLUTE AGREEMENT; SUITS AND DEMAND
Section 22.1. Unconditional Agreement. This guaranty is and shall
remain an absolute, irrevocable, unconditional and continuing guaranty of
payment and not of collection, shall remain in full force and effective
irrespective of any interruption(s) in the business or other dealings and
relations of Customer with Bank and shall apply to and guarantee the due and
punctual payment of all Obligations of Customer owed by Customer to Bank (and
its Affiliates). To that end, Guarantor hereby expressly waives any right to
require Bank to bring any action against Customer or any other person(s) or to
require that resort be had to any security or to any balance(s) of any deposit
or other account(s) or debt(s) or credit(s) on the books of Bank in favor of
Customer or any other person(s). Guarantor acknowledges that its liabilities and
obligations hereunder are primary rather than secondary, recognizing that
Customer is first above identified as "PRIMARY OBLIGOR" and undersigned is
identified first above as "GUARANTOR" solely for convenience in identification
of the parties involved in this Unconditional Guaranty and in the obligation
being secured hereby. To that end and without limiting the generality of the
foregoing, undersigned Guarantor herewith expressly waives any rights it
otherwise might have had under provisions of Virginia law to require Bank to
attempt to recover against Customer and/or to realize upon any securities or
collateral security which Bank holds for the obligation evidenced or secured
hereby. Guarantor hereby waives all rights available to Guarantor under the
terms of the Virginia Code, Sections 49-25 and 49-26. However, Guarantor may, by
a written notice, delivered personally to or received by certified or registered
United States Mail by an Officer of Bank actually involved in the transaction
being guaranteed hereby, at the address first above given, terminate this
Unconditional Guaranty with respect to all Obligations of Customer incurred or
contracted by Customer, acquired by Bank or otherwise arising more than three
(3) banking days after the date of which such written notice is so delivered to
or received by said Bank Officer. However, nothing herein shall be construed to
allow Guarantor to terminate this Unconditional Guaranty as to any Obligations
of Customer then existing or arising subsequent to receipt by Bank of said
notice, if the Obligations of Customer are a result of Bank's obligation to make
advances subject to a commitment entered into before receiving the notice or are
a result of advances which are necessary for Bank to protect its collateral or
otherwise preserve its interests.
Section 22.2. Suits and Demands. Suit may be brought or demand may be
made against all parties who have signed this Unconditional Guaranty or any
other guaranty covering all or any part of the Obligations of Customer, or
against any one or more of them, separately or together, without impairing the
rights of Bank against any party hereto. Any time that Bank is entitled to
exercise its rights or remedies hereunder, it may in its discretion elect to
demand payment and/or performance. If Bank elects to demand performance, it
shall at all times thereafter have the right to demand payment until all of the
Obligations of Customer have been paid and performed in full. If Bank elects to
demand payment, it shall at all times thereafter have the right to demand
performance until all of the Obligations of Customer have been paid and
performed in full.
ARTICLE XXIII - MISCELLANEOUS MATTERS
Section 23.1. Time. Time is of the essence hereof. Any notice to Guarantor
shall be sufficiently given, if mailed to the first above stated address of
Guarantor.
Section 23.2. Entire Agreement. This Unconditional Guaranty constitutes
the entire agreement between the parties, and no waivers or modifications shall
be valid unless they are reduced to writing, duly executed by the party to be
charged thereby and expressly approved in writing by an Officer of Bank actually
involved in the transactions being guaranteed hereby.
Section 23.3. Automatic Set Off. If any process is issued or ordered to
be served upon Bank, seeking to seize Customer's and/or Guarantor's rights
and/or interests in any deposit or other account(s) maintained with Bank, the
balance(s) in any such account(s) shall immediately be deemed to have been and
shall be set off against any and all Obligations of Customer and/or all
obligations and liabilities of Guarantor hereunder, as of the time of the
issuance of any such writ or process, whether or not Customer, Guarantor and/or
Bank shall then have been served therewith.
Section 23.4. Application of Payments. All monies available to and/or
received by Bank for application toward payment of (or reduction of) the
Obligations of Customer may be applied by Bank to such individual debts in such
manner, and apportioned in such amount(s) and at such time(s), as Bank, in its
sole discretion, may deem suitable or desirable.
Section 23.5. Other Rights of Set Off. Where any money is due Bank
hereunder, Bank is herewith authorized to exercise its right of Setoff or "Bank
Lien" as to any monies deposited in demand, checking, time, savings or other
accounts of any nature maintained in and with it by any of the undersigned,
without advance notice. Said right of Setoff shall also be applicable and
exercised by Bank, in its sole discretion, where Bank is indebted to Guarantor
by reason of any Certificate(s) of Deposit, Bond(s), Note(s) or otherwise.
Section 23.6. Termination. Guarantor acknowledges that any termination
of liability hereunder, as provided for Section 4.1, supra, shall not release
Guarantor from full liability for Obligations of Customer hereby guaranteed and
then in existence or from any renewal(s) or extension(s) therein in whole or in
part, whether such renewals or extensions are made before or after the effective
date of such termination, and with or without notice to Guarantor.
Section 23.7. Failure of Security Interest. Guarantor agrees that its
liability hereunder shall not be diminished by any failure on the part of Bank
to perfect (by filing, recording or otherwise) any security interest(s) it may
have in any property securing this Unconditional Guaranty and/or the Obligations
of Customer secured hereby and hereunder.
Section 23.8. Consent to Actions by Bank; Continuing Liability of
Guarantor. Guarantor further hereby consents and agrees that Bank's rights or
remedies and Guarantor's obligations under the terms of this Guaranty shall not
be released, diminished, impaired, reduced or affected in the event the Bank
should decide, at any time, or from time to time, in its sole discretion: (i) to
extend or change the time of payment, and/or the manner, place or terms of
payment of any or all of the Obligations of Customer; (ii) to exchange, release
and/or surrender all or any of the collateral security, or any part(s) thereof
by whomsoever deposited, which is or may hereafter be held by it in connection
with all or any of the Obligations of Customer and/or any liabilities or
obligations of Guarantor hereunder; (iii) to sell or otherwise dispose of and/or
purchase all or any of any such collateral at public or private sale, or to or
through any securities broker, and after deducting all costs and expenses of
every kind for collection, preparation for sale, sale or delivery, the net
proceeds of any such sale(s) or other disposition may be applied by Bank upon
all or any of the Obligations of Customer; and (iv) to settle or compromise with
Customer, any insurance carrier and/or any other person(s) liable thereon, any
and all of the Obligations of Customer, and/or subordinate the payment of all or
any part of same to the payment of any other debts or claims, which may at any
time(s) be due or owing to Bank and/or any other person(s); all in such manner
and upon such terms as Bank may deem proper and/or desirable, and without notice
to or further assent from Guarantor, it being agreed that Guarantor shall be and
remain bound upon this Unconditional Guaranty, irrespective of the existence,
value or condition of any collateral, and notwithstanding any such change,
exchange, settlement, compromise, surrender, release, sale or other disposition,
application, renewal or extension and notwithstanding also that the Obligations
of Customer may at any time(s) exceed the aggregate principal sum hereinabove
prescribed (if any such limiting sum appears). Further, this Unconditional
Guaranty shall not be constructed to impose any obligation on Bank to extend or
continue to extend credit or otherwise to deal with Customer at any time.
Section 23.9. Scope of Guaranty. This Unconditional Guaranty covers all
Obligations of Customer purporting to be created or undertaken on behalf of
Customer by any officer, partner, manager or agent of Customer, without regard
to the actual authority of any such officer, partner, manager or agent, whether
or not corporate resolutions, property or otherwise, are given by any Customer
to Bank and/or whether or not such purposed organizations are legally chartered
or organized.
Section 23.10. Subordination. In consideration of Bank's extension of
credit to Customer, in Bank's sole discretion, Guarantor hereby agrees:
a. To subordinate, and by this Unconditional Guaranty does subordinate,
debts now or hereafter owed by Customer to Guarantor ("Subordinated Debt") to
any and all debts of Customer to Bank now or hereafter existing while this
Unconditional Guaranty is in effect.
b. Every note evidencing any part of the subordinated debt and every
ledger page relating thereto will bear a legend which will indicate this
subordination.
c. Following a Default or an Event of Default, Guarantor will not
request or accept payment of or any security for any part of the Subordinated
Debt, and if all or any part of it should be paid to Guarantor, through error or
otherwise, Guarantor will immediately forward every such payment to Bank in the
form received properly endorsed to the order of Bank, to apply on any debt then
owing to Bank by the Customer. This subordination shall continue in full force
and effect as long as this Unconditional Guaranty is in effect.
Section 23.11. Successor and Assigns; Governing Law. This Unconditional
Guaranty shall be binding upon Guarantor, and the successors and assigns of
Guarantor; and it shall inure to the benefit of, and be enforceable by, Bank and
its successors, transferees and assigns. It further shall be deemed to have been
made under and shall be governed by the laws of the Commonwealth of Virginia in
all respects, including matters of construction, validity and performance.
Further, all terms or expressions contained herein which are defined in Virginia
Uniform Commercial Code shall have the same meaning herein as in said Code.
Section 23.12. No Waiver. No waiver by Bank of any default(s) by
Guarantor or Customer shall operate as a waiver of any other default or of the
same default on a future occasion. The use of the masculine or neuter pronoun
herein shall include the masculine, feminine and neuter, and also the plural.
Section 23.13. Waiver by Guarantor. Guarantor hereby waives: (i) notice
of acceptance of this Unconditional Guaranty; (ii) notice(s) of extensions of
credit and/or continuations of credit extensions to Customer by Bank; (iii)
notice(s) of entering into and engaging in business transactions and/or
contractual relationships and any other dealings between Customer and Bank; (iv)
presentment and/or demand for payment of any of the Obligations of Customer; (v)
protest or notice of dishonor or default to Guarantor or to any other person
with respect to any of the Obligations of Customer; (vi) any demand for payment
under this Unconditional Guaranty; and (vii) the benefit of the Homestead or
other Exemptions.
Section 23.14. No Usury. Anything contained herein to the contrary
notwithstanding, if for any reason the effective rate of interest on any of the
Obligations of Customer should exceed the maximum lawful rate, the effective
rate of such obligation(s) shall be deemed reduced to and shall be such maximum
lawful rate, and any sums of interest which have been collected in excess of
such maximum lawful rate shall be applied as a credit against the unpaid
principal balance due hereunder.
Section 23.15. Reliance. Guarantor acknowledges and represents that it
has relied upon its own due diligence in making its own independent appraisal of
Customer and its business, affairs and financial condition, will continue to be
responsible for making its own independent appraisal of such matters and has not
relied upon and will not hereafter rely upon Bank for information for such
appraisal or other assessment or review and, further, will not rely upon any
such information which may now or hereafter be prepared by or for Bank for any
appraisals regarding the Customer.
Section 23.16. Bankruptcy, Insolvency. If Bank is required at any time
pursuant to any bankruptcy, insolvency, liquidation or reorganization law to
return any portion of the payments made by Customer or any other person or
entity with respect to the Obligations of Customer, Guarantor shall, on demand
of Bank, forthwith pay to Bank any such amounts.
Section 23.17. Representations of Guarantor. Guarantor hereby
represents, warrants, and covenants that (a) Guarantor will derive substantial
benefit, directly or indirectly, from the extension of credit and/or a
continuation of credit extensions to Customer and from the making of this
Unconditional Guaranty by Guarantor; (b) this Unconditional Guaranty is duly
authorized and valid, and is binding upon and enforceable against Guarantor; (c)
Guarantor is not, and the execution, delivery and performance by Guarantor of
this Unconditional Guaranty will not cause Guarantor to be, in violation of or
in default with respect to any law or in default (or at risk of acceleration of
indebtedness) under any agreement or restriction by which Guarantor is bound or
affected; (d) Guarantor is duly organized, validly existing, and in good
standing under the laws of the state of its organization, is lawfully doing
business in Virginia, and has full power and authority to enter into and perform
this Unconditional Guaranty; (e) there is no litigation pending or, to the
knowledge of Guarantor, threatened before or by any tribunal against or
affecting Guarantor; (f) after giving effect to this Unconditional Guaranty,
Guarantor is solvent, is not engaged or about to engage in business or a
transaction for which the property of Guarantor is an unreasonably small
capital, and does not intend to incur or believe that it will incur debts that
will be beyond its ability to pay as such debts mature; (g) Guarantor
acknowledges and agrees that Guarantor may be required to pay and perform the
Obligations of Customer in full without assistance or support from Customer or
any other person; and (h) Guarantor has read and fully understands the
provisions contained in the loan commitment, the Note, and the other Loan
Documents. Guarantor's representations, warranties and covenants are a material
inducement to Bank to enter into the other Loan Documents and shall survive the
execution hereof and any bankruptcy, foreclosure, transfer of security or other
event affecting Customer, Guarantor, any other party, or any security for all or
any part of the Obligations of Customer.
Section 23.18. Continuing Obligation. This Unconditional Guaranty shall
continue in effect until all the Obligations of Customer are fully and finally
paid (even if ownership of the property serving as collateral for the loan
changes or ownership and/or structure of Customer changes), performed, and
discharged, except that, and notwithstanding any return of this Unconditional
Guaranty to Guarantor, this Unconditional Guaranty shall continue in effect (a)
with respect to any of the Obligations of Customer that survive the discharge of
the Obligations of Customer, (b) with respect to all obligations and liabilities
of Guarantor to pay Bank's legal expenses as provided herein, and (c) as
provided in Section 5.16.
Section 23.19. No Subrogation. Guarantor waives all rights of
reimbursement, exoneration, indemnification and/or contribution from Customer
for any payment by Guarantor under this Unconditional Guaranty and waives all
right of subrogation to the claims of Bank which may otherwise arise from such
payment.
Section 23.20. Default. Guarantor shall be in default under this
Unconditional Guaranty upon the happening of an Event of Default.
Section 23.21. Obligations Due. Upon the occurrence of any of the
foregoing events, circumstances or conditions of default, all of the obligations
evidenced herein and secured or guaranteed hereby shall be due immediately and
payable without notice. Further, Bank shall then have all of the rights and
remedies granted hereunder, all of the rights and remedies of a Secured Party
and/or Holder-in-Due-Course under the Virginia Uniform Commercial Code and/or
under other laws of Virginia.
Section 23.22. Unenforceability. The invalidity or unenforceability of
any one or more phrases, sentences, clauses or sections contained in this
Unconditional Guaranty shall not affect the validity or enforceability of the
remaining portions of this Unconditional Guaranty, or any part thereof.
IN WITNESS WHEREOF Blessings Corporation has caused this Unconditional
Guaranty to be executed by its duly authorized officer as of the date first
above written.
BLESSINGS CORPORATION
By /s/ Joseph Fernandes
Joseph Fernandes
Its Treasurer
<PAGE>
COMMONWEALTH/STATE OF Virginia
CITY/COUNTY OF Newport News
The foregoing instrument was acknowledged before me, this 23 day of
February , 1998, by Joseph Fernandes , Treasurer of Blessings Corporation, a
Delaware corporation, on behalf of the corporation.
/s/Carol Inniss
Notary Public
[Notarial Seal]
My commission expires: April 30, 1999 .
