SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended May 30, 1997 Commission File Number 1-5197
Plymouth Rubber Company, Inc.
(Exact name of registrant as specified in its charter)
Massachusetts 04-1733970
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
104 Revere Street, Canton, Massachusetts 02021
(Address of principal executive offices) (Zip Code)
(617) 828-0220
Registrant's telephone number, including area code
Not Applicable
(Former name, former address, and former fiscal year, if changed since last
report).
Indicate by checkmark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports, and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the close of the period covered by this report.
Class A common stock, par value $1 - 810,586
Class B common stock, par value $1 -1,219,927
<PAGE> 1
PLYMOUTH RUBBER COMPANY, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Statement of Operations and Retained
Earnings (Deficit)
Consolidated Balance Sheet
Consolidated Statement of Cash Flows
Notes To Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II. OTHER INFORMATION
<PAGE> 2
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
[CAPTION]
PLYMOUTH RUBBER COMPANY, INC.
CONSOLIDATED STATEMENT OF OPERATIONS AND
RETAINED EARNINGS (DEFICIT)
(In Thousands Except Share and Per Share Amounts)
(Unaudited)
<TABLE>
Second Quarter Ended Six Months Ended
May 30, May 31, May 30, May 31,
1997 1996 1997 1996
<S> <C> <C> <C> <C> <C> <C>
Net sales $ 17,706 $ 14,566 $ 32,990 $ 27,878
Costs and expenses:
Cost of products sold 13,802 10,887 25,290 21,238
Selling, general and
administrative 3,315 2,504 6,454 4,730
17,117 13,391 31,744 25,968
Operating income 589 1,175 1,246 1,910
Interest expense (345) (327) (681) (629)
Other income (expense), net 25 (12) (51) (33)
Income before taxes 269 836 514 1,248
Provision for income taxes (99) (217) (203) (324)
Net income 170 619 311 924
Retained earnings (deficit)
at beginning of period (3,407) (4,272) (3,548) (4,577)
Less stock dividend -- (843) -- (843)
Retained earnings (deficit)
at end of period $ (3,237) $ (4,496) $ (3,237) $ (4,496)
Per Share Data:
Net income $ .08 $ .28 $ .14 $ .41
Weighted average number of
shares outstanding 2,175,475 2,230,952 2,188,390 2,233,967
</TABLE>
See Accompanying Notes To Consolidated Financial Statements
<PAGE> 3
[CAPTION]
PLYMOUTH RUBBER COMPANY, INC.
CONSOLIDATED BALANCE SHEET
(In Thousands)
<TABLE>
May 30, Nov. 29,
1997 1996
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 93 $ --
Accounts receivable 10,269 7,737
Allowance for doubtful accounts (300) (174)
Inventories:
Raw materials 4,030 3,730
Work in process 1,484 1,962
Finished goods 5,784 5,633
11,298 11,325
Deferred tax assets, net 1,972 1,972
Prepaid expenses and other current assets 731 744
Total current assets 24,063 21,604
PLANT ASSETS:
Plant assets 32,715 27,753
Less: Accumulated depreciation 20,208 17,937
Total plant assets, net 12,507 9,816
OTHER ASSETS:
Deferred tax assets, net 2,549 2,802
Other long-term assets 1,307 528
3,856 3,330
Total Assets $ 40,426 $ 34,750
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Revolving line of credit $ 5,855 $ 5,189
Trade accounts payable 5,344 5,626
Accrued expenses 3,845 3,664
Current portion of long-term obligations 1,714 1,538
Current portion of product warranties 100 106
Total current liabilities 16,858 16,123
LONG-TERM LIABILITIES:
Borrowings 10,579 5,430
Pension obligation 3,349 3,647
Product warranties 628 678
Other 1,541 1,684
Total long-term liabilities 16,097 11,439
STOCKHOLDERS' EQUITY:
Preferred stock $10 par value, authorized
500,000 shares; no shares issued and
outstanding -- --
Class A voting common stock 810 810
Class B non-voting common stock 1,220 1,192
Paid in capital 9,081 9,086
Retained earnings (deficit) (3,237) (3,548)
Cumulative translation adjustment (70) --
Pension liability adjustment, net of tax (162) (162)
Deferred compensation (171) (190)
Total stockholders' equity 7,471 7,188
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 40,426 $ 34,750
</TABLE>
See Accompanying Notes To Consolidated Financial Statements
<PAGE> 4
[CAPTION]
PLYMOUTH RUBBER COMPANY, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(In Thousands) (Unaudited)
<TABLE>
Six Months Ended
May 30, May 31,
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net Income $ 311 $ 924
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 734 568
Amortization of deferred compensation 19 19
Foreign currency exchange loss 79 --
Change in valuation allowance -- (175)
Changes in assets and liabilities:
Accounts receivable (1,375) (728)
Inventory 277 233
Prepaid expenses 18 725
Other assets 10 (42)
Accounts payable (42) (1,110)
Accrued expenses (34) 211
Pension obligation (298) (179)
Product warranties (56) (48)
Other liabilities (160) (113)
Net cash provided by (used in)
operating activities (517) 285
Cash flows from investing activities:
Capital expenditures (1,992) (1,156)
Sale/leaseback of plant assets -- 258
Cash paid in connection with the
purchase of Cintas Adhesivas Nunez, S.A.,
net of cash acquired of $90 (2,219) --
Purchase price adjustment - Brite-Line
Technologies, Inc. (584) --
Net cash used in investing activities (4,795) (898)
Cash flows from financing activities:
Net increase (decrease) in revolving
line of credit 441 (357)
Proceeds from term loan 5,771 3,657
Payments of term loan (626) (2,563)
Payments on capital leases (108) (62)
Payments on insurance financing (88) (107)
Proceeds from issuance of common stock 23 45
Net cash provided by financing activities 5,413 613
Effect of exchange rates on cash (8) --
Net change in cash 93 --
Cash at the beginning of the period -- --
Cash at the end of the period $ 93 $ --
Supplemental Disclosure of Cash Flow Information
Cash paid for interest $ 712 $ 513
Cash paid for income taxes $ 106 $ 97
Supplemental Disclosure of Non-Cash Activities:
Assets acquired under capital lease obligations $ -- $ 433
Charge to retained earnings for stock dividend $ -- $ 843
</TABLE>
See Accompanying Notes To Consolidated Financial Statements
<PAGE> 5
PLYMOUTH RUBBER COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS (Unaudited)
(1) The Company, in its opinion, has included all adjustments (consisting of
normal recurring accruals) necessary for a fair presentation of the
results for the interim periods. The interim financial information is not
necessarily indicative of the results that will occur for the full year.
The financial statements and notes thereto should be read in conjunction
with the financial statements and notes for the years ended November 29,
1996, December 1, 1995, and December 2, 1994, included in the Company's
1996 Annual Report to the Securities and Exchange Commission on Form
10-K/A.
(2) In connection with its former roofing materials business, the Company
issued extended warranties as to the workmanship and performance of its
products. Over 99% of these warranties had expired prior to the end of
1995, and the last of the ten year warranties expired in 1996. (A small
number of certain other, more restrictive, and limited warranties continue
thereafter.) The estimated costs of these warranties were accrued at the
time of sale, subject to subsequent adjustment to reflect actual
experience, which resulted in additional charges to operations during 1994
of $325,000. Some warranty holders have filed claims or brought suits
currently aggregating approximately $721,000 against the Company and
others relating to alleged roof failures. The Company believes, upon
advice of counsel, that its warranty obligation under such warranties is
limited to the cost of the roofing materials and that the amounts of the
claims are significantly in excess of its ultimate liability. The Company
is vigorously defending against these claims and believes that some are
without merit and that the damages claimed in others may not bear any
reasonable relationship to the merits of the claims or the real amount of
damage, if any, sustained by the various claimants. Management believes
that the $728,000 reserve included in liabilities recorded at May 30, 1997
is adequate provision for the Company's remaining warranty obligations.
In December 1996, the Company entered into a purchase commitment for a
significant piece of equipment to be financed with a new term loan.
In October 1996, LB Acquisition, Inc., which was renamed Brite-Line
Technologies, Inc., a new, wholly-owned subsidiary of the Company,
acquired certain assets of Brite-Line Industries, Inc. from senior secured
creditors. In connection with this transaction, the Company guaranteed
the collection of accounts receivable in the amount of $2,100,000. On or
about February 4, 1997, the Company paid $586,324.71 as the full and final
balance due under this guarantee.
The United States Environmental Protection Agency (EPA) has asserted three
(3) outstanding claims against the Company under the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"),
pursuant to which EPA is seeking to recover from the Company and other
"generators" the costs associated with the clean-up of certain sites used
by licensed disposal companies hired by the Company as independent
contractors for the disposal and/or reclamation of hazardous waste
materials. In one case, in respect to the Superfund site known as Re-Solve,
Inc., of Dartmouth, Massachusetts, the Company entered into a
Consent Decree, which required payment by the Company of $100,000 plus
interest over a period of five years in full settlement of the EPA claim.
The Company has paid $84,000 and owes one payment of $16,000 in 1997.
With respect to the second assertion against the Company under CERCLA, a
General Notice of Potential Liability was sent to 1,659 Potentially
Responsible Parties ("PRP") including the Company, in June, 1992, relative
to a Superfund Site known as Solvent Recovery System of New England
("SRS") at a location in Southington, Connecticut, concerning shipments
to the site which occurred between June 1, 1956, and January 25, 1974.
<PAGE> 6
PLYMOUTH RUBBER COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS (Unaudited)
The EPA has attributed a 1.74% share of the aggregate waste volume to the
Company. The Company believes that this attribution may be overstated by
failing to account for the portion of the gross waste volume actually
returned to the Company. The first phase of a remediation program is
estimated to cost $3.6 million. The Administrative Order on Consent for
Removal Action and Remedial Investigation/Feasibility ("RI/FS") study was
entered on or about February 6, 1997. Phase II of the clean-up and the
RI/FS, is projected to cost $2.1 million. The most currently available
estimate is that the cost of the clean up for the PRP's will range from
approximately $38 million to $48 million. Based on all available
information as well as its prior experience, management believes the
amount accrued of approximately $426,000, which is net of approximately
$200,000 in payments made by the Company, in the accompanying consolidated
financial statements as of May 30, 1997 is reasonable in relation to the
Company's attributed share of total estimated aggregate cost. This amount
is subject to adjustment for future developments that may arise from the
long-range nature of this EPA case, legislative changes, insurance
coverage, the uncertainties associated with the ultimate outcome of the
Record of Decision ("ROD"), the joint and several liability provisions of
CERCLA, and the Company's ability to successfully negotiate an outcome
similar to its previous experience in these matters. No actions have been
filed by the EPA against the Company. Therefore, while the Company is
participating in the PRP Group, it is impossible to determine the
Company's total ultimate liability and/or responsibility at this time.
On January 25, 1994, the Company received a notification of an additional
Superfund Site, Old Southington Landfill, (the "OSL Site") regarding which
the EPA asserts that the Company is a PRP. The OSL Site is related to the
SRS Site in that, the EPA alleges, after receipt and processing of various
hazardous substances from PRP's, the owners and/or operators of the SRS
Site shipped the resultant contaminated soil from the SRS Site to the OSL
Site. Since the Company is alleged to have shipped materials to the SRS
Site, the EPA alleges that the Company is also a PRP of the OSL Site. In
addition, there were three (3) direct shippers to the site, the Town of
Southington, General Electric, and Pratt & Whitney, as well as other
transporters and/or users. Based on EPA's asserted volume of shipments
to SRS during that time period, the EPA has attributed 4.89% of waste
volume of all SRS customers, to the Company; no attempt has been made by
EPA to adjust the waste volume for the distillation done by SRS
prior to shipment to OSL, or to allocate a percentage to the Company in
relation to direct users of the OSL Site, or in relation to a combination
of direct and indirect users of the site. An ROD was issued in September,
1994 for the first Phase of the clean-up, estimated to cost approximately
$16 million. A PRP Group was formed and the Company became a participant
in the Joint Defense Group of OSL/SRS "transshipper" PRP's and in the
Alternative Dispute Resolution process. This process resulted in a
mediated settlement for the first phase of the clean up, as well as
settlement of past costs and orphan shares. The Company will pay $165,000
to $190,000 in settlement of the first phase. The settlement of the
second phase is currently being mediated; total costs to the SRS
"transshipper" group are not expected to exceed approximately $15 million.
The Company has been notified that certain members of the "transshipper"
PRP's, including the Company, will likely be precluded from participating
in a mediated settlement on a "de minimis" basis at this time, pending a
final allocation. Based on all available information as well as its prior
experience management believes a reasonable estimate of its ultimate
liability for both phases is $365,000 and has accrued this amount in the
accompanying consolidated financial statements as of May 30, 1997. This
amount is subject to future developments that may arise from the long-range
nature of this EPA case, legislative changes, insurance coverage,
the uncertainties associated with the ultimate outcome of the ROD and the
joint and several liability provisions of CERCLA, and the Company's
ability to successfully negotiate an outcome similar to its previous
<PAGE> 7
PLYMOUTH RUBBER COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS (Unaudited) Continued
experience in these matters. No actions have been currently filed by the
EPA against the Company. Therefore, while the Company intends to
vigorously defend this matter, it is impossible to determine the Company's
total liability and/or responsibility at this time.
In addition, in the process of preparing to eliminate the use of certain
underground storage tanks located at the Company's manufacturing facility,
the Company determined that some soil contamination had occurred in a
small localized area near the tanks in question. According to the
preliminary information obtained by an independent Licensed Site
Professional, the contamination of the soil appears to be confined to a
small area and does not pose an environmental risk to the surrounding
property or community. In accord with Massachusetts requirements, the
Company notified the Massachusetts Department of Environmental Protection
("DEP") of the foregoing on or about August 24, 1994. Plymouth has
employed a licensed site professional as required by statute to
investigate the site. Remediation action is in process. It is expected
that such assessment and remediation will take several years to complete
and that the remaining costs for same will not exceed the additional sum
of approximately $185,000, which has been provided for in the accompanying
financial statements.
On or about January 21, 1997, the Company received a Notice of
Responsibility from the Massachusetts Department of Environmental
Protection, ("DEP") pursuant to M.G.L. ch. 21E concerning the certain sites
identified as The Ledge, 757-782 State Road, Dartmouth: RTN No. 4-0234;
and Ridge Hill Road, Freetown: RTN No. 4-0086. The letter indicates that
drums containing hazardous materials, some of which may have contained the
Company's wastes, were discovered at both sites in April 1979, and that
response actions were undertaken at both sites conducted between 1979 and
1981 by DEP. On information and belief, the company which disposed of
these drums is H&M Drum to whom the Company shipped wastes between 1977 to
1979. The Company has identified and management believes it may obtain a
cost sharing agreement with a group of other potentially responsible
parties, and is continuing to investigate and seek DEP enforcement with
respect to the site owners and other potentially responsible parties. In
compliance with DEP requests and statutory requirements, the Company has
hired a licensed site professional to perform certain technical service at
the sites. However, the Company has little information regarding these
sites and its potential involvement, including the identity and
contributions of other PRP's and the scope of the clean-up necessary, and
therefore has not recorded any liability as of May 30, 1997. A response
to the Notice of Responsibility has been made and cooperative efforts,
including an investigation of additional PRP's and the status of the
site, will be made.
(3) Checks outstanding in excess of certain cash balances totaling $811,000
and $623,000 at May 30, 1997 and November 29, 1996, respectively, have
been included in accounts payable.
(4) On June 11, 1996, the Company declared a 5% stock dividend on both Class
A (voting) and Class B (non-voting) common stock. The dividend was paid
in Class B shares on August 19, 1996 to shareholders of record as of June
24, 1996. Retained earnings was charged for $843,000 based on a dividend
value of $8.875 per share. Cash was paid in lieu of fractional shares
using the closing price of Class B common stock on June 10, 1996, and was
less than $2,000.
Earnings per share have been adjusted to reflect the stock dividend
declared. The common shares outstanding, and the common stock
equivalents, are shown below.
<PAGE> 8
PLYMOUTH RUBBER COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS (Unaudited) Continued
(4) (Continued)
Common and Common Equivalent Shares (Primary Basis):
Second Quarter Ended Six Months Ended
May 30, May 31, May 30, May 31,
1997 1996 1997 1996
Average shares outstanding 2,030,513 1,995,659 2,021,883 1,988,237
Adjustments thereto(1)(2) 144,962 235,293 166,921 245,730
Weighted average shares
outstanding 2,175,475 2,230,952 2,188,390 2,233,967
(1) Adjust for options and warrants under the treasury stock method
using average market value during the period.
(2) Same as (1) except using market value at the end of the period, if
greater than the average market value during the period.
(5) In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard No. 128 ("FAS 128"), Earnings
per Share. FAS 128, which is effective for both interim and annual
periods ending after December 15, 1997, requires the disclosure of basic
and diluted earnings per share as well as certain other disclosures.
Basic and diluted earnings per share, as computed under the new standard,
are not materially different from the Company's current presentation of
primary and fully diluted earnings per share, respectively, and
accordingly, pro forma disclosure is not presented herein.
(6) On January 3, 1997, Plymouth Rubber Europa, S.A. a newly formed, wholly-
owned subsidiary of the Company, acquired 100 percent of the outstanding
shares of Cintas Adhesivas Nunez, S.A ("CANSA"). The aggregate purchase
price of $3,100,000, which includes transaction costs, was allocated as
follows:
Working capital $ 320,000
Plant assets, net 1,660,000
Goodwill 1,020,000
Other 100,000
$ 3,100,000
The accompanying financial statements include the results of operations
and cash flows of CANSA for the five months ended May 30, 1997. The
impact of this acquisition was not significant.
(7) Financial instruments with off-balance sheet risks
During the current year, the Company began to selectively use foreign
currency forward contracts to offset the effects of exchange rate changes
on cash flow exposures denominated in foreign currencies. At May 30,
1997, the foreign currency forward contracts primarily comprise a buy
contract relating to a firm purchase commitment with a maturity prior to
November 28, 1997. The buy contract, which was denominated in
Deutschmarks, is on a notional amount of $3 million at May 30, 1997. The
fair value of the forward exchange contract is estimated based on quoted
market prices from the bank, and at May 30, 1997, the Company would have
paid approximately $179,000 to terminate the buy contract.
<PAGE> 9
PLYMOUTH RUBBER COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS (Unaudited) Continued
(8) On April 11, 1997, Plymouth Rubber Europa, S.A. a subsidiary of the
Company, entered a term loan arrangement with a Spanish Bank syndicate in
the original amount of 250,000,000 pesetas(approximately $1,721,000) due
April 2007, secured by a first interest in real property and supported by
a bank guarantee in the amount of $500,000. Semi-annual principal
payments of 12,500,000 pesetas (approximately $86,000), plus interest at
the one year Madrid inter-bank market rate (MIBOR) plus 1.25%. At May 30,
1997, the interest rate was 6.875%.
(9) As of May 30, 1997, the Company was in technical default with respect to
the minimum fixed charge coverage ratio of earnings before interest,
depreciation and taxes, compared to the current portion of long-term debt,
capital leases and interest covenant contained in its Loan and Security
Agreements with a major lender. This technical default was subsequently
waived by the lender.
<PAGE> 10
Item 2. Management's Discussion & Analysis of Financial Condition and Results
of Operations.
FIRST SIX MONTHS, 1997 COMPARED WITH FIRST SIX MONTHS, 1996
Net sales at $32,990,000 were up 18% compared with the first six months of 1996,
which was up 5% from same period in 1995. The sales increase reflects sales
from the October, 1996, and January, 1997, acquisitions now operating as Brite-
Line Technologies, Inc. and Plymouth Rubber Europa, S.A., respectively, and
reflects continued growth in sales of tapes to the domestic automotive wire
harnessing industry. Sales to the domestic automotive market increased 18%
over the prior year's first six months, and represented 46% of sales. Small
sales increases were attained in the other markets, with the exception of sales
to the non-automotive OEM market, which declined 30%, due primarily to capacity
restrictions. In February, 1997, the Company announced a two-year, $10 million
capital investment program to substantially increase the Company's manufacturing
capacity, reduce costs and improve productivity. The largest step in the
program, accounting for over half of the planned expenditure, is a new vinyl
calender and auxiliary equipment, scheduled to be installed in the last quarter
of the current year, and to begin production in the second quarter of 1998.
Operating income at $1,246,000 is down 35% from the corresponding period of
1996, reflecting a one point gross margin reduction and a 14% increase in
selling, general & administrative expenses, both pertaining to Plymouth's tradi-
tional business, and a moderate expected loss from operations of Brite-Line
Technologies, Inc. (acquired October 4, 1996), offset in part by a small
contribution from Plymouth Rubber Europa, S.A. (acquired January 3, 1997).
Moderate losses were expected from Brite-Line operations in the first several
months of 1997 because of the cost associated with the start-up of operations
and the highly seasonal nature of the pavement marking business. The
consolidated operating income reduction reflects a 16% increase in gross
profit, more than offset by a 36% increase in selling, general &
administrative expenses. The $1,060,000 gross profit increase is attributable to
the higher sales volume, 75% of which was contributed by the acquisitions. The
gross margin decreased one half point, reflecting the parent company's less
favorable product mix, higher raw material costs, higher plant maintenance
expenses, and production inefficiencies related to limitations on the Company's
production capacity. In addition, higher indirect labor and training costs were
incurred in preparation for the Company's planned increase of its manufacturing
capacity as discussed above.
Selling expenses increased 36%, reflecting higher costs and outgoing freight,
commissions, salesmen's salaries, and foreign warehouse operations, offset in
part by a decrease in travel expenses. General & Administrative expenses,
exclusive of the $147,000 recovery from the settlement of a lawsuit in last
year's first quarter, increased 27% over the corresponding period of the prior
year, due primarily to the addition of Brite-Line and Europa, S.A,
administrative personnel, and increased professional fees for legal, audit and
recruitment services for the parent company.
Income before taxes at $514,000 is down 59% from the first six months of 1996,
primarily related to the $147,000 lawsuit settlement and the $664,000 reduction
in operating income. In addition, the Company incurred increased interest
expense as a result of higher loan volume due primarily to the financing of two
acquisitions, offset in part by reduced interest rates attributable to the
replacement of the Company's primary lender on June 6, 1996.
Net income at $311,000 is down $613,000 from the first six months of the prior
year, which included a $175,000 reversal of Deferred Tax Valuation Allowance,
resulting in an effective income tax rate of approximately 26% in that period.
Changes in Financial Condition; Liquidity and Capital Resources
For the first six months of fiscal 1997, cash flows used in operations amounted
to $517,000, resulting primarily from net income of $311,000 and noncash charges
(depreciation and amortization) of $753,000, which were more than offset by a
$1,375,000 increase in accounts receivable, a net $298,000 contribution to the
Company's pension plan and a reduction in other current liabilities.
<PAGE> 11
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
(Continued)
During the first six months of 1997, the Company used $5,771,000 in proceeds
from additional term debt and $441,000 of its revolving line of credit to (1)
finance a $517,000 shortfall in cash provided by operations, (2) purchase Cintas
Adhesivas Nunez, S.A. (now operating as Plymouth Rubber Europa, S.A.) for
$2,219,000, (3) increase its investment in Brite-Line Technologies, Inc. by
$584,000, and (4) to purchase $1,992,000 of capital equipment.
As of May 30, 1997, because of collateral limitations and after consideration of
the letter of credit related to the purchase of a calender and auxiliary
equipment associated therewith, the Company had approximately $1,700,000 of
unused borrowing capacity, under its $15 million line of credit with its primary
lender. In addition, as of May 30, 1997, the Company was in technical default
with respect to the minimum fixed charge coverage ratio of earnings before
interest, depreciation and taxes, compared to the current portion of long-term
debt, capital leases and interest covenant contained in its Loan and Security
Agreements with a major lender. This technical default was subsequently waived
by the lender.
In the opinion of management, anticipated profits, as well as unused capacity
under existing borrowing arrangements with the Company's primary lender will
provide sufficient funds to meet expected needs during the remainder of 1997,
including necessary working capital expansion to support anticipated moderate
sales growth and finance the planned investment in improved technology and
capital equipment.
This quarterly report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities &
Exchange Act of 1934. The Company's actual results could differ materially from
those set forth in the forward-looking statements.
<PAGE> 12
SECOND QUARTER, 1997 COMPARED WITH SECOND QUARTER, 1996
Net sales at $17,706,000 were up 22% from the second quarter of 1996, which was
up 4% from the same period in 1995. The sales increase reflects (1) a 3%
increase in Plymouth's traditional business as sales continue to be restricted
by capacity limitations, and (2) sales by the October, 1996 and January, 1997
acquisitions now operating as Brite-Line Technologies, Inc. and Plymouth Rubber
Europa, S.A., respectively. Sales to the domestic automotive market increased
23% over the prior year's second quarter, and accounted for 46% of the quarterly
sales. Sales to the export and the non-automotive OEM markets declined 12% and
37%, respectively.
Operating income at $589,000 is down 50% from the prior year, as an $813,000
increase in selling, general & administrative expense more than offset the
$225,000 gross profit increase (up 6% from the corresponding quarter of the
prior year). The gross profit increase is the result of the higher sales
volume, 85% of which was contributed by the acquisitions, as consolidated
margins declined approximately three points, reflecting the parent company's
less favorable product mix, higher raw materials costs, higher plant maintenance
expenses, and production inefficiencies related to limitations on the Company's
production capacity. In addition, higher labor and training costs were incurred
in preparation for the Company's planned increase of its manufacturing capacity
as discussed above.
Selling expenses increased 42%, compared to the second quarter of 1996,
reflecting increases in outgoing freight, salesmen's salaries, travel expense,
and increased costs of foreign warehousing and distribution. General &
Administrative expenses increased 16% over the corresponding period of the prior
year, reflecting the addition of Brite-Line and Europa, S.A., administrative
personnel, and increased professional fees pertaining to audit, legal and
recruitment, offset in part by reduced accruals pertaining to incentive
compensation and profit sharing expenses.
Income before taxes at $269,000 is down 68% from the prior year's second
quarter, reflecting the reduced operating income and a 6% increase in interest
expense, offset in part a $37,000 increase in Other income.
Net income at $170,000 for the second quarter of 1997 is down $449,000 from the
second quarter of the prior year, which benefited from a $117,000 reversal of a
Deferred Tax Valuation Allowance, which resulted in an effective income tax rate
of approximately 26% in that quarter.
<PAGE> 13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Reference is made to the information contained in Item 3 of the
Company's Annual Report on Form 10-K/A for its fiscal year ended
November 29, 1996, and in Note 14 of the Notes To Financial
Statements, contained in said Annual Report.
Reference is made to those certain claims asserted by the United
States Environmental Protection Agency ("EPA") and the information
contained in Item 3 of the Company's Annual Report on Form 10-K/A
for its fiscal year ended November 29, 1996, and in Note 14 of the
Notes To Financial Statements contained in said Annual Report and as
further described in Item 1 of the Company's Quarterly Report for
the quarter ended February 28, 1997 and in Note 2 to the Financial
Statements contained in said Quarterly Report.
With respect to the second assertion against the Company under
CERCLA, concerning a General Notice of Potential Liability which was
sent to 1,659 Potentially Responsible Parties ("PRP") including the
Company, in June, 1992, relative to a Superfund Site known as
Solvent Recovery System of New England ("SRS") at a location in
Southington, Connecticut, the Administrative Order on Consent for
Removal Action and Remedial Investigation/Feasibility ("FI/FS") study
was executed by the EPA on or about February 6, 1997.
With respect to that certain environmental matter concerning the
Notice of Responsibility from the Massachusetts Department of
Environmental Protection, ("DEP") pursuant to M.G.L. ch.21E
concerning the certain sites identified as The Ledge, 757-782 State
Road, Dartmouth: RTN No. 4-0234; and Ridge Hill Road, Freetown: RTN
No. 4-0086 received by the Company on or about January 21, 1997, the
Company has identified and management believes it may obtain a cost
sharing agreement with a group of other potentially responsible
parties, and is continuing to investigate and seek DEP enforcement
with respect to the site owners and other potentially responsible
parties. However, the Company has little information regarding
these sites and its potential involvement, including the identity
and contributions of other PRP's and the scope of whatever clean-
up may be necessary, and therefore has not recorded any liability
as of May 31, 1997. A response to the Notice of Responsibility has
been made and cooperative efforts, including an investigation of
additional PRP's and limited sampling of wells at these sites, have
been undertaken by the Company.
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
The Company's Annual Meeting was held on April 25, 1997.
The following members were elected to the Company's Board of
Directors to hold office for the ensuing three year term:
Nominee In Favor Opposed
Maurice J. Hamilburg 709,457 3,200
Duane E. Wheeler
<PAGE> 14
PART II. OTHER INFORMATION
(Continued)
Item 4
(Cont.)
The results on the voting of the following additional items were as
follows:
The ratification of the appointment of Price Waterhouse LLP as
independent auditors of the Company for the next fiscal year:
In Favor Opposed Abstain No Vote
710,657 2,000 0 0
Item 5. Other Information
Not Applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits: See Index To Exhibits
(b) Not Applicable
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereto duly authorized.
Plymouth Rubber Company, Inc.
(Registrant)
D. E. Wheeler
D. E. Wheeler
Vice President - Finance
Date: July 18, 1997
PLYMOUTH RUBBER COMPANY, INC.
INDEX TO EXHIBITS
(a) Exhibits:
Exhibit No. Description
(2) Not Applicable.
(3)(i) Not Applicable.
(4)(i) Promissory Note between Plymouth Rubber Company, Inc.
and Thrift Institution Fund For Economic Development
dated June 14, 1989 -- incorporated by reference to
Exhibit (4)(iii) to report on Form 10-Q for the quarter
ended May 27, 1994.
(4)(ii) Loan and Security Agreement between Plymouth Rubber
Company, Inc., and Thrift Institution Fund For Economic
Development dated June 14, 1989 -- incorporated by
reference to Exhibit (4)(iv) to report on Form 10-Q for
the quarter ended May 27, 1994.
(4)(iii) Mortgage Note between Plymouth Rubber Company, Inc., and
the Board of Education of Charles County, Maryland,
dated November 1, 1991 -- incorporated by reference to
Exhibit (2)(xiii) to Report on Form 10-Q for the Quarter
ended May 30, 1992.
(4)(iv) Promissory Note between Plymouth Rubber Company, Inc.,
and Foothill Capital Corporation dated October 1, 1993
-- incorporated by reference to Exhibit (2)(I) to the
Report on Form 8-K with cover page dated October 1,
1993.
(4)(v) Loan and Security Agreement between Plymouth Rubber
Company, Inc., and Foothill Capital Corporation dated
October 1, 1993 -- incorporated by reference to Exhibit
(2)(ii) to the Report on Form 8-K with cover page dated
October 1, 1993.
(4)(vi) Amendment to Promissory Note between Plymouth Rubber
Company, Inc., and Thrift Institutions Fund For Economic
Development dated November 30, 1993 -- incorporated by
reference to Exhibit (4)(x) to Report on 10-K for the
year ended November 26, 1993.
(4)(vii) Promissory Note between Plymouth Rubber Company, Inc.
and General Electric Capital Corporation dated December
29, 1995.
(4)(viii)Master Security Agreement between Plymouth Rubber
Company, Inc. And General Electric Capital Corporation
dated December 29, 1995.
(4)(ix) Demand Note between Plymouth Rubber Company, Inc. and
LaSalle National Bank dated June 6, 1996 -- incorporated
by reference to Exhibit (2)(ii) to the report on Form 8-K
with cover page dated June 6, 1996.
(4)(x) Loan and Security Agreement between Plymouth Rubber
Company, Inc. and LaSalle National Bank dated June 6,
1996 -- incorporated by reference to Exhibit (2)(ii) to
the report on Form 8-K with cover page dated June 6,
1996.
(4)(xi) Amendment to Master Security Agreement between Plymouth
Rubber Company, Inc. and General Electric Capital
Corporation dated February 19, 1997.
PLYMOUTH RUBBER COMPANY, INC.
INDEX TO EXHIBITS
(a) Exhibits:
Exhibit No. Description
(4)(xii) Master Security Agreement between Plymouth Rubber
Company, Inc. and General Electric Capital Corporation
dated January 29, 1997 -- incorporated by reference to
Exhibit (4)(xii) to the Company's report on Form 10-Q
for the quarter ended February 28, 1997.
(4)(xiii)Demand Note between Brite-Line Technologies, Inc. and
LaSalle National Bank dated February 25, 1997.
(4)(xiv) Loan and Security Agreement between Brite-Line
Technologies, Inc. and LaSalle National Bank dated
February 25, 1997.
(4)(xv) Continuing Unconditional Guaranty between Brite-Line
Technologies, Inc. and LaSalle National Bank dated
February 25, 1997.
(4)(xvi) Amendment to Loan and Security Agreement between
Plymouth Rubber Company, Inc. and LaSalle National Bank
dated May 7, 1997.
(4)(xvii)Continuing Unconditional Guaranty between Plymouth
Rubber Company, Inc. and LaSalle National Bank dated
March 20, 1997.
(4)(xviii)Public Deed which contains the loan guaranteed by
mortgage and granted between Plymouth Rubber Europa,
S.A. and Caja de Ahorros Municipal de Vigo, Banco de
Bilbao, and Vizcaya y Banco de Comercio dated April 11,
1997.
(4)(xix) Corporate Guaranty between Plymouth Rubber Company, Inc.
and Caja de Ahorros Municipal de Vigo, Banco de Bilbao,
and Vizcaya y Banco de Comercio dated April 11, 1997.
(10)(i) 1982 Employee Incentive Stock Option Plan --
incorporated by reference to Exhibit (10)(I) of the
Company's Annual Report on Form 10-K for the year ended
November 26, 1993.
(10)(ii) General Form of Deferred Compensation Agreement entered
into between the Company and certain officers --
incorporated by reference to Exhibit (10)(ii) of the
Company's Annual Report on Form 10-K for the year ended
November 26, 1993.
(10)(iii) 1992 Employee Incentive Stock Option Plan -incorporated
by reference to Exhibit (10)(iv) of the Company's Annual
Report on Form 10-K for the year ended November 26,
1993.
(10)(iv) 1995 Non-Employee Director Stock Option Plan --
incorporated by reference to Exhibit (4.3) of the
Company's Registration Statement on Form S-8 dated May
4, 1995.
(10)(v) 1995 Employee Incentive Stock Option Plan --
incorporated by reference to Exhibit (4.4) of the
Company's Registration Statement on Form S-8 dated May
4, 1995.
PLYMOUTH RUBBER COMPANY, INC.
INDEX TO EXHIBITS
(Continued)
(a) Exhibits:
Exhibit No. Description
(10)(vi) Sales contract entered into between the Company and
Kleinewefers Kunststoffanlangen GmbH -- incorporated by
reference to Exhibit (10)(vi) of the Company's report on
Form 10-Q for the quarter ended February 28, 1997.
(11) Not applicable
(15) Not applicable
(18) Not applicable
(19) Not applicable
(22) Not applicable
(23) Not applicable
(24) Not applicable
(27) Financial data schedule six months ended May 30, 1997.
EXHIBIT (4)(xiii)
DEMAND NOTE
Executed as of the 25 day of February , 19 97 at
Chicago, Illinois. No. 1407980100
Amount $3,500,000.00
FOR VALUE RECEIVED, the Undersigned (jointly and
severally, if more than one) promises to pay to the order of LASALLE
NATIONAL BANK (hereinafter, together with any holder hereof, called
"Bank"), at the main office of the Bank, the principal sum of Three
Million five Hundred and No/100 Dollars ($3,500,000.00------) plus
the aggregate unpaid principal amount of all advances made by Bank to
the Undersigned (or any one of them, if more than one) pursuant to and
in accordance with Paragraph 2 of the Loan Agreement (as hereinafter
defined) in excess of such amount, or, if less, the aggregate unpaid
principal amount of all advances made by Bank to the Undersigned (or
any one of them, if more than one) pursuant to and in accordance with
Paragraph 2 of the Loan Agreement. The Undersigned (jointly and
severally, if more than one) further promises to pay interest on the
outstanding principal amount hereof on the dates and at the rates
provided in the Loan Agreement from the date hereof until payment in
full hereof.
This Demand Note is referred to in and was delivered
pursuant to that certain Loan and Security Agreement, as it may be
amended from time to time, together with all exhibits thereto, dated
February 25 , 19, 97 between Bank and the Undersigned (the
"Loan Agreement"). All terms which are capitalized and used herein
(which are not otherwise defined herein) shall have the meaning
ascribed to such term in the Loan Agreement.
THE OUTSTANDING PRINCIPAL BALANCE OF THE UNDERSIGNED'S
LIABILITIES TO BANK UNDER THIS DEMAND NOTE SHALL BE PAYABLE UPON
DEMAND. Prior to demand, principal hereunder shall be payable
pursuant to the terms of the Loan Agreement.
The Undersigned (and each one of them, if more than one)
hereby authorizes the Bank to charge any account of the Undersigned
(and each one of them, if more than one) for all sums due hereunder.
If payment hereunder becomes due and payable on a Saturday, Sunday or
legal holiday under the laws of the United States or the State of
Illinois, the due date thereof shall be extended to the next
succeeding business day, and interest shall be payable thereon at the
rate specified during such extension. Credit shall be given for
payments made in the manner and at the times provided in the Loan
Agreement. It is the intent of the parties that the rate of interest
and other charges to the Undersigned under this Demand Note shall be
lawful; therefore, if for any reason the interest or other charges
payable hereunder are found by a court of competent jurisdiction, in
a final determination, to exceed the limit which Bank may lawfully
charge the Undersigned, then the obligation to pay interest or other
charges shall automatically be reduced to such limit and, if any
amount in excess of such limit shall have been paid, then such amount
shall be refunded to the Undersigned.
The principal and all accrued interest hereunder may be
prepaid by the Undersigned, in part or in full, at any time; provided,
however, that if the Undersigned prepays all of the Liabilities prior
to the end of the Original Term or any Renewal Term, the Undersigned
shall pay a prepayment fee as provided in the Loan Agreement.
The Undersigned (and each one of them, if more than one)
waives the benefit of any law that would otherwise restrict or limit
Bank in the exercise of its right, which is hereby acknowledged, to
set-off against the Liabilities, without notice and at any time
hereafter, any indebtedness matured or unmatured owing from Bank to
the Undersigned (or any one of them). The Undersigned (and each one
of them, if more than one) waives every defense, counterclaim or
setoff which the Undersigned (or any one of them) may now have or
hereafter may have to any action by Bank in enforcing this Note and/or
any of the other Liabilities, or in enforcing Bank's rights in the
Collateral and ratifies and confirms whatever Bank may do pursuant to
the terms hereof and of the Loan Agreement and with respect to the
Collateral and agrees that Bank shall not be liable for any error in
judgment or mistakes of fact or law, except for acts of gross
negligenceor wilful misconduct.
The Undersigned, any other party liable with respect to
the Liabilities and any and all endorsers and accommodation parties,
and each one of them, if more than one, waive any and all presentment,
demand, notice of dishonor, protest, and all other notices and demands
in connection with the enforcement of Bank's rights hereunder.
The loan evidenced hereby has been made and this Note has
been delivered at Chicago, Illinois. THIS NOTE SHALL BE GOVERNED AND
CONTROLLED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS AS TO
INTERPRETATION, ENFORCEMENT, VALIDITY, CONSTRUCTION, EFFECT, AND IN
ALL OTHER RESPECTS, INCLUDING WITHOUT LIMITATION, THE LEGALITY OF THE
INTEREST RATE AND OTHER CHARGES, and shall be binding upon the
Undersigned (and each one of them, if more than one) and the
Undersigned's heirs, legal representatives, successors and assigns
(and each of them, if more than one). If this Note contains any
blanks when executed by the Undersigned (or any one of them, if more
than one), the Bank is hereby authorized, without notice to the
Undersigned (or any one of them, if more than one) to complete any
such blanks according to the terms upon which the loan or loans were
granted. Wherever possible, each provision of this Note shall be
interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Note shall be prohibited
by or be invalid under such law, such provision shall be severable,
and be ineffective to the extent of such prohibition or invalidity,
without invalidating the remaining provisions of this Note. If more
than one party shall execute this Note, the term "Undersigned" as used
herein shall mean all parties signing this Note, and each one of them,
and all such parties, their respective heirs, executors,
administrators, successors and assigns, shall be jointly and severally
obligated hereunder.
To induce the Bank to make the loan evidenced by this
Note, the Undersigned (and each one of them, if more than one) (i)
irrevocably agrees that, subject to Bank's sole and absolute election,
all actions arising directly or indirectly as a result or in
consequence of this Note or any other agreement with the Bank, or the
Collateral, shall be instituted and litigated only in courts having
situs in the City of Chicago, Illinois, (ii) hereby consents to the
exclusive jurisdiction and venue of any State or Federal Court located
and having its situs in said city, and (iii) waives any objection
based on forum non-conveniens. IN ADDITION, BANK AND THE UNDERSIGNED
(OR ANY ONE OF THEM, IF MORE THAN ONE) HEREBY WAIVE TRIAL BY JURY IN
ANY ACTION OR PROCEEDING WHICH PERTAINS DIRECTLY OR INDIRECTLY TO THIS
NOTE, THE LIABILITIES, THE COLLATERAL, ANY ALLEGED TORTIOUS CONDUCT BY
THE UNDERSIGNED OR BANK. In addition, the Undersigned agrees that
all service of process may be made as provided in the Loan Agreement.
As used herein, all provisions shall include the
masculine, feminine, neuter, singular and plural thereof, wherever the
context and facts require such construction and in particular the word
"Undersigned" shall be so construed.
IN WITNESS WHEREOF, each of the Undersigned, if more than
one, has executed this Note on the date above set forth.
(INDIVIDUAL(S) SIGN BELOW) (CORPORATION OR PARTNERSHIP SIGN
BELOW)
Brite-Line Technologies, Inc.
Name of Corporation or
Partnership
By Duane E. Wheeler, Vice
President-Finance
Name and Title
10660 East 51st Avenue
Denver, Colorado 80239
Address
By
Name Name and Title
Address Address
FOR BANK USE ONLY
Officer's Initials: __________
Approval: __________
(m:\dept\abl\fenton\std-1a\-02) 5/96
EXHIBIT (4)(xiv)
DEFINED TERMS ARE BOLDED -- DO NOT BOLD THE QUOTES.
DAYS, PERCENTS AND DOLLAR AMOUNTS ARE WRITTEN OUT AND IN PARENS.
DO NOT USE THE WORD "THE" BEFORE BANK AND BORROWER. PLEASE SEARCH THESE TERMS
AFTER REVISIONS TO MAKE SURE "THE" IS NOT THERE.
REFERENCES ARE TO "PARAGRAPH" NOT "SUBPARAGRAPH" OR "SECTION."
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement") made
this 25th day of February, 19 97 by and between LASALLE NATIONAL
BANK, a national banking association ("Bank"), 135 South LaSalle
Street, Chicago, Illinois 60674, and
Brite-Line Technologies, Inc.
10660 East 51st Avenue
Denver, Colorado 80239 ("Borrower")
[Insert entity designation(s) and address(es) of principal place of
business].
WITNESSETH:
WHEREAS, Borrower may, from time to time, request Loans
from Bank, and the parties wish to provide for the terms and
conditions upon which such Loans, if made by Bank, shall be made;
NOW, THEREFORE, in consideration of any Loan (including
any Loan by renewal or extension) hereafter made to Borrower by Bank,
and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by Borrower, the parties
agree as follows:
1. DEFINITIONS.
(a) "Account," "Account Debtor," "Chattel Paper," "Documents,"
"Equipment," "General Intangibles," "Goods," "Instruments," and
"Inventory," shall have the respective meanings assigned to such
terms, as of the date of this Agreement, in the Illinois Uniform
Commercial Code.
(b) "Affiliate" shall mean any Person directly or indirectly
controlling, controlled by or under common control with Borrower.
(c) "Collateral" shall mean all of the property of Borrower
described in paragraph 4 hereof, together with all other real or
personal property of any Obligor or any other Person now or hereafter
pledged to Bank to secure, either directly or indirectly, repayment of
any of the Liabilities.
(d) "Eligible Account" shall mean an Account owing to Borrower
which is acceptable to Bank in its sole discretion for lending
purposes. Without limiting Bank's discretion, Bank shall, in general,
consider an Account to be an Eligible Account if it meets, and so long
as it continues to meet, the following requirements:
(i) it is genuine and in all respects what it purports to
be;
(ii) it is owned by Borrower and Borrower has the right to
subject it to a security interest in favor of Bank or assign it to
Bank;
(iii) it arises from (A) the performance of services by
Borrower and such services have been fully performed and acknowledged
and accepted by the Account Debtor thereunder; or (B) the sale or
lease of Goods by Borrower, and such Goods have been completed in
accordance with the Account Debtor's specifications (if any) and
delivered to and accepted by the Account Debtor, such Account Debtor
has not refused to accept any of the Goods, returned or offered to
return any of the Goods, or refused to accept any of the services
which are the subject of such Account, and Borrower has possession of,
or Borrower has delivered to Bank (at Bank's request) shipping and
delivery receipts evidencing delivery of such Goods;
(iv) it is evidenced by an invoice rendered to the
Account Debtor thereunder, is due and payable within ninety (90)
days after the date of the invoice and does not remain unpaid ninety
(90) days past the invoice date thereof; provided, however, that if
more than twenty-five percent (25%) of the aggregate dollar amount of
invoices owing by a particular Account Debtor remain unpaid ninety
(90) days after the respective invoice dates thereof, then all
Accounts owing by that Account Debtor shall be deemed ineligible;
(v) it is not subject to any prior assignment, claim,
lien, security interest or encumbrance whatsoever, other than
Permitted Liens and the security interest granted to Bank hereunder;
(vi) it is a valid, legally enforceable and unconditional
obligation of the Account Debtor thereunder, and is not subject to
setoff, counterclaim, credit, allowance or adjustment by such Account
Debtor, or to any claim by such Account Debtor denying liability
thereunder in whole or in part;
(vii) it does not arise out of a contract or order which
fails in any material respect to comply with the requirements of
applicable law;
(viii) the Account Debtor thereunder is not a director,
officer, employee or agent of Borrower, or a Subsidiary, Parent or
Affiliate, unless the Account arises out of a transaction permitted by
paragraph 10(i) hereof and is otherwise an Eligible Account;
(ix) it is not an Account with respect to which the
Account Debtor is the United States of America or any department,
agency or instrumentality thereof, unless Borrower assigns its right
to payment of such Account to Bank pursuant to, and in full compliance
with, the Assignment of Claims Act of 1940, as amended;
(x) it is not an Account with respect to which the
Account Debtor is located in a state which requires Borrower, as a
precondition to commencing or maintaining an action in the courts of
that state, either to (A) receive a certificate of authority to do
business and be in good standing in such state, or (B) file a notice
of business activities report or similar report with such state's
taxing authority, unless (x) Borrower has taken one of the actions
described in clauses (A) or (B), (y) the failure to take one of the
actions described in either clause (A) or (B) may be cured
retroactively by Borrower at its election, or (z) Borrower has proven,
to Bank's satisfaction, that it is exempt from any such requirements
under any such state's laws;
(xi) it is an Account which arises out of a sale made in
the ordinary course of Borrower's business;
(xii) See Exhibit A
(xiii) it is not an Account with respect to which the
Account Debtor's obligation to pay is conditional upon the Account
Debtor's approval of the Goods or services or is otherwise subject to
any repurchase obligation or return right (except for the right of
Account Debtors to return goods for breach of warranty in accordance
with Borrower's usual and customary business practices), as with
sales made on a bill-and-hold, guaranteed sale, sale on approval, sale
or return or consignment basis;
(xiv) it is not an Account (A) with respect to which any
representation or warranty contained in this Agreement is untrue or
(B) which violates any of the covenants of Borrower contained in this
Agreement;
(xv) it is not an Account which, when added to a
particular Account Debtor's other indebtedness to Borrower, exceeds a
credit limit determined by Bank in its sole discretion for that
Account Debtor (except that Accounts excluded from Eligible Accounts
solely by reason of this subparagraph 1(d)(xv) shall be Eligible
Accounts to the extent of such credit limit); and
(xvi) it is not an Account with respect to which the
prospect of payment or performance by the Account Debtor is or will be
impaired, as determined by Bank in its sole discretion.
(e) "Eligible Inventory" shall mean Inventory of Borrower
which is acceptable to Bank in its sole discretion for lending
purposes. Without limiting Bank's discretion, Bank shall, in general,
consider Inventory to be Eligible Inventory if it meets, and so long
as it continues to meet, the following requirements:
(i) it is owned by Borrower and Borrower has the right to
subject it to a security interest in favor of Bank ;
(ii) it is located on the premises listed on Exhibit B
and is not in transit;
(iii) it is not subject to any prior assignment, claim,
lien, security interest or encumbrance whatsoever, other than
Permitted Liens and the security interest granted to Bank hereunder;
(iv) if held for sale or lease or furnishing under
contracts of service, it is (except as Bank may otherwise consent in
writing) new and unused and free from defects which would, in Bank's
sole determination, affect its market value;
(v) it is not stored with a bailee, consignee,
warehouseman, processor or similar party unless Bank has given its
prior written approval and Borrower has caused any such bailee,
consignee, warehouseman, processor or similar party to issue and
deliver to Bank, in form and substance acceptable to Bank, such UCC
financing statements, warehouse receipts, waivers and other documents
as Bank shall require;
(vi) Bank has determined in accordance with Bank's
customary business practices that it is not unacceptable due to age,
type, category or quantity; and
(vii) it is not Inventory (A) with respect to which any
of the representations and warranties contained in this Agreement are
untrue or (B) which violates any of the covenants of Borrower
contained in this Agreement.
(f) "Event of Default" shall have the meaning specified in
paragraph 12 hereof.
(g) "Exhibit A" shall mean the exhibit entitled Exhibit A -
Special Provisions which is attached hereto and made a part hereof.
(h) "Exhibit B" shall mean the exhibit entitled Exhibit B -
Business and Collateral Locations which is attached hereto and made a
part hereof.
(i) "Indemnified Party" shall have the meaning specified in
paragraph 14 hereof.
(j) "Liabilities" shall mean any and all obligations,
liabilities and indebtedness of Borrower to Bank or to any parent,
affiliate or subsidiary of Bank of any and every kind and nature,
howsoever created, arising or evidenced and howsoever owned, held or
acquired, whether now or hereafter existing, whether now due or to
become due, whether primary, secondary, direct, indirect, absolute,
contingent or otherwise (including, without limitation, obligations of
performance), whether several, joint or joint and several, and whether
arising or existing under written or oral agreement or by operation of
law.
(k) "Loan" or "Loans" shall mean all advances made by Bank to
Borrower pursuant to paragraph 2 hereof and all other loans, advances
and financial accommodations made by Bank to or on behalf of Borrower
hereunder.
(l) "Loan Limit" shall have the meaning specified in paragraph
1 of Exhibit A.
(m) "Lock Box" and "Lock Box Account" shall have the meanings
specified in paragraph 7 hereof.
(n) "Obligor" shall mean Borrower and each Person who is or
shall become primarily or secondarily liable for any of the
Liabilities.
(o) "Original Term" shall have the meaning specified in
paragraph 9 hereof.
(p) "Other Agreements" shall mean all agreements, instruments
and documents, including, without limitation, guaranties, mortgages,
trust deeds, pledges, powers of attorney, consents, assignments,
contracts, notices, security agreements, leases, financing statements
and all other writings heretofore, now or from time to time hereafter
executed by or on behalf of Borrower or any other Person and delivered
to Bank or to any parent, affiliate or subsidiary of Bank in
connection with the Liabilities or the transactions contemplated
hereby.
(q) "Parent" shall mean any Person now or at any time or times
hereafter owning or controlling (alone or with any other Person) at
least a majority of the issued and outstanding stock of Borrower or
any Subsidiary.
(r) "Permitted Liens" shall mean (i) statutory liens of
landlord's, carriers, warehousemen, mechanics, materialmen or
suppliers incurred in the ordinary course of business and securing
amounts not yet due or declared to be due by the claimant thereunder,
(ii) liens or security interests in favor of Bank, (iii) zoning
restrictions and easements, licenses, covenants and other restrictions
affecting the use of real property that do not individually or in the
aggregate have a material adverse effect on Borrower's ability to use
such real property for its intended purpose in connection with
Borrower's business, and (iv) liens specifically permitted by Bank in
writing.
(s) "Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization,
association, corporation, institution, entity, party or foreign or
United States government (whether federal, state, county, city,
municipal or otherwise), including, without limitation, any instru-
mentality, division, agency, body or department thereof.
(t) "Renewal Term" shall have the meaning specified in
paragraph 9 hereof.
(u) "Subsidiary" shall mean any corporation of which more than
fifty percent (50%) of the outstanding capital stock having ordinary
voting power to elect a majority of the board of directors of such
corporation (irrespective of whether at the time stock of any other
class of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time, directly
or indirectly, owned by Borrower or by any partnership or joint
venture of which more than fifty percent (50%) of the outstanding
equity interests are at the time, directly or indirectly, owned by
Borrower.
(v) "Tangible Net Worth" shall have the meaning specified in
subparagraph 11(o) hereof.
(w) "Business Day" shall mean any day other than a Saturday, a
Sunday or (i) with respect to all matters, determinations, fundings
and payments in connection with LIBOR Rate Loans, any day on which
banks in London, England or Chicago, Illinois are required or
permitted to close, and (ii) with respect to all other matters, any
day that banks in Chicago, Illinois are permitted or required to
close.
(x) "Interest Period" shall have the meaning specified in
Paragraph (3)(b) of Exhibit A of the Agreement hereto.
(y) "LIBOR Rate Loans" shall mean the Loans bearing interest
at the rate set forth in Paragraph (3)(b) of Exhibit A of the
Agreement.
(z) "Prime Rate Loans" shall mean the Loans bearing interest
at the rates set forth in Paragraph (3)(a) of Exhibit A of the
Agreement.
2. LOANS.
Subject to the terms and conditions of this Agreement (including
Exhibit A) and the Other Agreements, during the Original Term and any
Renewal Term, Bank may, in its sole discretion, make such Loans to
Borrower as Borrower shall from time to time request. The aggregate
unpaid principal of all Loans outstanding at any one time shall not
exceed the Loan Limit set forth in Exhibit A and shall bear interest
at the rates set forth in Exhibit A. ALL LOANS SHALL BE REPAID BY
BORROWER UPON DEMAND BY BANK. Prior to Bank making such demand, Loans
shall be repaid as provided elsewhere in this Agreement. If at any
time the outstanding principal balance of the Loans exceeds the Loan
Limit, or any portion of the Loans exceeds any applicable sublimit set
forth in Exhibit A, Borrower shall immediately, and without the
necessity of a demand by Bank, pay to Bank such amount as may be
necessary to eliminate such excess and Bank shall apply such payment
to the Liabilities in such order as Bank shall determine in its sole
discretion. Borrower hereby authorizes Bank, in its sole discretion,
to charge any of Borrower's accounts to make any payments of principal
or interest required by this Agreement. All Loans shall, in Bank's
sole discretion, be evidenced by one or more promissory notes in form
and substance satisfactory to Bank. However, if such Loans are not so
evidenced, such Loans may be evidenced solely by entries upon the
books and records maintained by Bank.
3. FEES AND CHARGES.
Borrower shall pay to Bank, in addition to all other amounts
payable hereunder, the fees and charges set forth in Exhibit A. It is
the intent of the parties that the rate of interest and the other
charges to Borrower under this Agreement shall be lawful; therefore,
if for any reason the interest or other charges payable under this
Agreement are found by a court of competent jurisdiction, in a final
determination, to exceed the limit which Bank may lawfully charge
Borrower, then the obligation to pay interest and other charges shall
automatically be reduced to such limit and, if any amount in excess of
such limit shall have been paid, then such amount shall be refunded to
Borrower.
4. GRANT OF SECURITY INTEREST TO BANK.
As security for the payment of all Loans now or in the future
made by Bank to Borrower hereunder and for the payment or other
satisfaction of all other Liabilities, excluding contingent
indemnities which survive termination or expiration of this Agreement,
Borrower hereby assigns to Bank and grants to Bank a continuing
security interest in the following property of Borrower, whether now
or hereafter owned, existing, acquired or arising and wherever now or
hereafter located: (a) all Accounts (whether or not Eligible
Accounts) and all Goods whose sale, lease or other disposition by
Borrower has given rise to Accounts and have been returned to, or
repossessed or stopped in transit by, Borrower; (b) all Chattel Paper,
Instruments, Documents and General Intangibles (including, without
limitation, all patents, patent applications, trademarks, trademark
applications, tradenames, trade secrets, goodwill, copyrights,
registrations, licenses, franchises, customer lists, tax refund
claims, claims against carriers and shippers, guarantee claims,
contracts rights, security interests, security deposits and any rights
to indemnification); (c) all Inventory (whether or not Eligible
Inventory); (d) all Goods (other than Inventory), including, without
limitation, Equipment, vehicles and fixtures; (e) all deposits and
cash, and any other property of Borrower now or hereafter in the
possession, custody or control of Bank or any agent or any parent,
affiliate or subsidiary of Bank or any participant with Bank in the
Loans for any purpose (whether for safekeeping, deposit, collection,
custody, pledge, transmission or otherwise); and (f) all additions and
accessions to, substitutions for, and replacements, products and
proceeds of the foregoing property, including, without limitation,
proceeds of all insurance policies insuring the foregoing property,
and all of Borrower's books and records relating to any of the
foregoing and to Borrower's business.
5. PRESERVATION OF COLLATERAL AND PERFECTION OF SECURITY INTERESTS THEREIN.
Borrower shall, at Bank's request, at any time and from time to
time, execute and deliver to Bank such financing statements, documents
and other agreements and instruments (and pay the cost of filing or
recording the same in all public offices deemed necessary or desirable
by Bank) and do such other acts and things as Bank may deem necessary
or desirable in order to establish and maintain a valid, attached and
perfected security interest in the Collateral in favor of Bank (free
and clear of all other liens, claims and rights of third parties
whatsoever, whether voluntarily or involuntarily created, except
Permitted Liens) to secure payment of the Liabilities, and in order to
facilitate the collection of the Collateral. Borrower irrevocably
hereby makes, constitutes and appoints Bank (and all Persons
designated by Bank for that purpose) as Borrower's true and lawful
attorney and agent-in-fact to execute such financing statements,
documents and other agreements and instruments and do such other acts
and things as may be necessary to preserve and perfect Bank's security
interest in the Collateral. Borrower further agrees that a carbon,
photographic, photostatic or other reproduction of this Agreement or
of a financing statement shall be sufficient as a financing statement.
6. POSSESSION OF COLLATERAL AND RELATED MATTERS.
Until the commencement of a foreclosure or liquidation to
realize upon the Collateral, Borrower shall have the right, except as
otherwise provided in this Agreement, in the ordinary course of
Borrower's business, to (a) sell, lease or furnish under contracts of
service any of Borrower's Inventory normally held by Borrower for any
such purpose, and (b) use and consume any raw materials, work in
process or other materials normally held by Borrower for such purpose;
provided, however, that a sale in the ordinary course of business
shall not include any transfer or sale in satisfaction, partial or
complete, of a debt owed by Borrower.
7. COLLECTIONS.
(a) Borrower shall direct all of its Account Debtors to make
all payments on the Accounts directly to a post office box (the "Lock
Box") designated by, and under the exclusive control of, Bank or
another financial institution acceptable to Bank. Borrower shall
establish an account (the "Lock Box Account") in Borrower's name with
Bank or such other financial institution acceptable to Bank, into
which all payments received in the Lock Box shall be deposited, and
into which Borrower will immediately deposit all payments made for
Inventory or services and received by Borrowerin the identical form in
which such payments were made, whether by cash or check. If Borrower,
any Affiliate or Subsidiary, or any shareholder, officer, director,
employee or agent of Borrower or any Affiliate or Subsidiary, or any
other Person acting for or in concert with Borrower shall receive any
monies, checks, notes, drafts or other payments relating to or as
proceeds of Accounts or other Collateral, Borrower and each such
Person shall receive all such items in trust for, and as the sole and
exclusive property of, Bank and, immediately upon receipt thereof,
shall remit the same (or cause the same to be remitted) in kind to the
Lock Box Account. If the Lock Box Account is not established with
Bank, the financial institution with which the Lock Box Account is
established shall acknowledge and agree, in a manner satisfactory to
Bank, that the amounts on deposit in such Lock Box Account are the
sole and exclusive property of Bank, that such financial institution
has no right to setoff against the Lock Box Account or against any
other account maintained by such financial institution into which the
contents of the Lock Box Account are transferred, and that such
financial institution shall wire, or otherwise transfer in immediately
available funds in a manner satisfactory to Bank, funds deposited in
the Lock Box Account on a daily basis as such funds are collected.
Borrower agrees that all payments made to such Lock Box Account or
otherwise received by Bank, whether in respect of the Accounts or as
proceeds of other Collateral or otherwise, will be applied on account
of the Liabilities in accordance with the terms of this Agreement;
provided, that so long as no Event of Default has occurred and is
continuing, payments received by Bank shall not be applied to the
unmatured portion of the LIBOR Rate Loans, but shall be held in an
interest bearing cash collateral account maintained by Bank until the
earlier of (i) the last day of the Interest Period applicable to such
LIBOR Rate Loan and (ii) the occurrence of an Event of Default;
provided further, that so long as no Event of Default has occurred,
the immediately available funds held in such interest bearing cash
collateral account may be disbursed, at Borrower's discretion, to
Borrower so long as after giving effect to such disbursement,
Borrower's availability under Paragraph 1 of Exhibit A of the
Agreement at such time equals or exceeds the outstanding Liabilities
at such time. If the Lock Box Account is established with Bank,
Borrower agrees to pay all fees, costs and expenses which Bank incurs
in connection with opening and maintaining the Lock Box Account and
depositing for collection by Bank any check or other item of payment
received by Bank on account of the Liabilities. All of such fees,
costs and expenses shall constitute Loans hereunder, shall be payable
to Bank by Borrower upon demand, and, until paid, shall bear interest
at the highest rate then applicable to Loans hereunder. All checks,
drafts, instruments and other items of payment or proceeds of
Collateral shall be endorsed by Borrower to Bank, and, if that
endorsement of any such item shall not be made for any reason, Bank is
hereby irrevocably authorized to endorse the same on Borrower's
behalf. For the purpose of this paragraph, Borrower irrevocably
hereby makes, constitutes and appoints Bank (and all Persons
designated by Bank for that purpose) as Borrower's true and lawful
attorney and agent-in-fact (i) to endorse Borrower's name upon said
items of payment and/or proceeds of Collateral and upon any Chattel
Paper, document, instrument, invoice or similar document or agreement
relating to any Account of Borrower or goods pertaining thereto; (ii)
to take control in any manner of any item of payment or proceeds
thereof; and (iii) to have access to any lock box or postal box into
which any of Borrower's mail is deposited, and open and process all
mail addressed to Borrower and deposited therein.
(b) Bank may, at any time and from time to time, after the
occurrence and continuance of an Event of Default, whether before or
after notification to any Account Debtor and whether before or after
the maturity of any of the Liabilities, (i) enforce collection of any
of Borrower's Accounts or contract rights by suit or otherwise; (ii)
exercise all of Borrower's rights and remedies with respect to
proceedings brought to collect any Accounts; (iii) surrender, release
or exchange all or any part of any Accounts, or compromise or extend
or renew for any period (whether or not longer than the original
period) any indebtedness thereunder; (iv) sell or assign any Account
of Borrower upon such terms, for such amount and at such time or times
as Bank deems advisable; (v) prepare, file and sign Borrower's name on
any proof of claim in bankruptcy or other similar document against any
Account Debtor; and (vi) do all other acts and things which are
necessary, in Bank's sole discretion, to fulfill Borrower's
obligations under this Agreement and to allow Bank to collect the
Accounts. In addition to any other provision hereof, Bank may at any
time, after the occurrence and continuance of an Event of Default, at
Borrower's expense, notify any parties obligated on any of the
Accounts to make payment directly to Bank of any amounts due or to
become due thereunder.
(c) Bank shall, within one ( 1 ) business days after receipt
by Bank at its office in Chicago, Illinois of cash or other
immediately available funds from collections of items of payment and
proceeds of any Collateral, apply the whole or any part of such
collections or proceeds against the Liabilities in such order as Bank
shall determine in its sole discretion.
(d) Bank, in its sole discretion, without waiving or releasing
any obligation, liability or duty of Borrower under this Agreement or
the Other Agreements or any Event of Default, may at any time or times
hereafter, but shall not be obligated to, pay, acquire or accept an
assignment of any security interest, lien, encumbrance or claim
asserted by any Person in, upon or against the Collateral. All sums
paid by Bank in respect thereof and all costs, fees and expenses
including, without limitation, reasonable attorney fees, all court
costs and all other charges relating thereto incurred by Bank shall
constitute Loans, payable by Borrower to Bank on demand and, until
paid, shall bear interest at the highest rate then applicable to Loans
hereunder.
(e) Immediately upon Borrower's receipt of any portion of the
Collateral evidenced by an agreement, Instrument or Document,
including, without limitation, any Chattel Paper, Borrower shall
deliver the original thereof to Bank together with an appropriate
endorsement or other specific evidence of assignment thereof to Bank
(in form and substance acceptable to Bank). If an endorsement or
assignment of any such items shall not be made for any reason, Bank is
hereby irrevocably authorized, as Borrower's attorney and agent-in-fact,
to endorse or assign the same on Borrower's behalf.
8. SCHEDULES AND REPORTS.
(a) Within ten (10) days after the close of each fiscal month,
and at such other times as may be requested by Bank from time to time
hereafter, Borrower shall deliver to Bank (i) a schedule identifying
each Eligible Account together with copies of the invoices when
requested by Bank (with evidence of shipment attached) pertaining to
each such Eligible Account, for the month (or other applicable period)
immediately preceding; (ii) such additional schedules, certificates,
reports and information with respect to the Collateral as Bank may
from time to time require; and (iii) a collateral assignment of any or
all items of Collateral to Bank. Bank, through its officers,
employees or agents, shall have the right, at any time and from time
to time in Bank's name, in the name of a nominee of Bank or in
Borrower's name, to verify the validity, amount or any other matter
relating to any of Borrower's Accounts, by mail, telephone, telegraph
or otherwise. Borrower shall reimburse Bank, on demand, for all
costs, fees and expenses incurred by Bank in this regard.
(b) Without limiting the generality of the foregoing, Borrower
shall deliver to Bank, at least once a month (or more frequently when
requested by Bank), a report with respect to Borrower's Inventory.
Borrower shall immediately notify Bank of any event causing loss or
depreciation in value of Borrower's Inventory (other than normal
depreciation occurring in the ordinary course of business).
(c) All schedules, certificates, reports, assignments and other
items delivered by Borrower to Bank hereunder shall be executed by an
authorized representative of Borrower and shall be in such form and
contain such information as Bank shall specify.
9. TERMINATION.
This Agreement shall be in effect from the date hereof until
June 6 , 19 99 (the "Original Term") and shall automatically renew
itself from year to year thereafter (each such one-year renewal being
referred to herein as a "Renewal Term") unless (a) Bank makes demand
for repayment prior to the end of the Original Term or the then
current Renewal Term; (b) the due date of the Liabilities is
accelerated pursuant to paragraph 13 hereof; or (c) Borrower elects to
terminate this Agreement at the end of the Original Term or at the end
of any Renewal Term by giving Bank written notice of such election at
least ninety (90) days prior to the end of the Original Term or the
then current Renewal Term and by paying all of the Liabilities in full
on the last day of such term. If one or more of the events specified
in clauses (a), (b) and (c) occurs, this Agreement shall terminate on
the date thereafter that the Liabilities are paid in full. At such
time as Borrower has repaid all of the Liabilities and this Agreement
has terminated, Borrower shall deliver to Bank a release, in form and
substance satisfactory to Bank, of all obligations and liabilities of
Bank and its officers, directors, employees, agents, parents,
subsidiaries and affiliates to Borrower, and if Borrower is obtaining
new financing from another lender, Borrower shall deliver such
lender's indemnification of Bank, in form and substance satisfactory
to Bank, for checks which Bank has credited to Borrower's account, but
which subsequently are dishonored for any reason.
10. REPRESENTATIONS, WARRANTIES AND COVENANTS.
Borrower hereby represents, warrants and covenants that:
(a) the financial statements delivered or to be delivered by
Borrower to Bank at or prior to the date of this Agreement and at all
times subsequent thereto accurately reflect, in all material respects,
the financial condition of Borrower, and there has been no material
adverse change in the financial condition, the operations or any other
status of Borrower since the date of the financial statements
delivered to Bank most recently prior to the date of this Agreement;
(b) the office where Borrower keeps its books, records and
accounts (or copies thereof) concerning the Collateral, Borrower's
principal place of business and all of Borrower's other places of
business, locations of Collateral and post office boxes are as set
forth in Exhibit B; Borrower shall promptly (but in no event less than
ten (10) days prior thereto) advise Bank in writing of the proposed
opening of any new place of business, the closing of any existing
place of business, any change in the location of Borrower's books,
records and accounts (or copies thereof) or the opening or closing of
any post office box of Borrower;
(c) the Collateral, including, without limitation, the
Equipment (except any part thereof which prior to the date of this
Agreement Borrower shall have advised Bank in writing consists of
Collateral normally used in more than one state) is and shall be kept,
or, in the case of vehicles, based, only at the addresses set forth on
Exhibit B, and at other locations within the continental United States
of which Bank has been advised by Borrower in writing;
(d) if any of the Collateral consists of Goods of a type
normally used in more than one state, whether or not actually so used,
Borrower shall immediately give written notice to Bank of any use of
any such Goods in any state other than a state in which Borrower has
previously advised Bank such Goods shall be used, and such Goods shall
not, unless Bank shall otherwise consent in writing, be used outside
of the continental United States;
(e) no security agreement, financing statement or analogous
instrument exists or shall exist with respect to any of the Collateral
other than any security agreement, financing statement or analogous
instrument evidencing security interests in favor of Bank or
evidencing Permitted Liens;
(f) each Account or item of Inventory which Borrower shall,
expressly or by implication, request Bank to classify as an Eligible
Account or as Eligible Inventory, respectively, shall, as of the time
when such request is made, conform in all respects to the requirements
of such classification as set forth in the respective definitions of
"Eligible Account" and "Eligible Inventory" as set forth herein and as
otherwise established by Bank from time to time, and Borrower shall
promptly notify Bank in writing if any such Eligible Account or
Eligible Inventory shall subsequently become ineligible;
(g) Borrower is and shall at all times during the Original Term
or any Renewal Term be the lawful owner of all Collateral now
purportedly owned or hereafter purportedly acquired by Borrower, free
from all liens, claims, security interests and encumbrances
whatsoever, whether voluntarily or involuntarily created and whether
or not perfected, other than the Permitted Liens;
(h) Borrower has the right and power and is duly authorized and
empowered to enter into, execute and deliver this Agreement and the
Other Agreements and perform its obligations hereunder and thereunder;
Borrower's execution, delivery and performance of this Agreement and
the Other Agreements does not and shall not conflict with the
provisions of any statute, regulation, ordinance or rule of law, or
any agreement, contract or other document which may now or hereafter
be binding on Borrower, where such conflict would have a material
adverse effect on its business, property, assets, operations or
condition, financial or otherwise, and Borrower's execution, delivery
and performance of this Agreement and the Other Agreements shall not
result in the imposition of any lien or other encumbrance upon any of
Borrower's property (other than Permitted Liens) under any existing
indenture, mortgage, deed of trust, loan or credit agreement or other
agreement or instrument by which Borrower or any of its property may
be bound or affected;
(i) Except as previously disclosed to Bank in writing, there
are no actions or proceedings which are pending, or to the best of
Borrower's knowledge, threatened against Borrower which might result
in any material adverse change in its financial condition or
materially adversely affect the Collateral and Borrower shall,
promptly upon becoming aware of any such pending or threatened action
or proceeding, give written notice thereof to Bank;
(j) Borrower has obtained all licenses, authorizations,
approvals and permits, the lack of which would have a material adverse
effect on the operation of its business, and Borrower is and shall
remain in compliance in all material respects with all applicable
federal, state, local and foreign statutes, orders, regulations, rules
and ordinances (including, without limitation, statutes, orders,
regulations, rules and ordinances relating to taxes, employer and
employee contributions and similar items, securities, employee
retirement and welfare benefits, employee health and safety or
environmental matters) the failure to comply with which would have a
material adverse effect on its business, property, assets, operations
or condition, financial or otherwise;
(k) all written information now, heretofore or hereafter
furnished by Borrower to Bank is and shall be true and correct in all
material respects as of the date with respect to which such
information was or is furnished;
(l) Borrower is not conducting, permitting or suffering to be
conducted, nor shall it conduct, permit or suffer to be conducted, any
activities pursuant to or in connection with which any of the
Collateral is now, or will (while any Liabilities remain outstanding)
be owned by any Affiliate; provided, however, that Borrower may enter
into transactions with Affiliates in the ordinary course of business
pursuant to terms that are no less favorable to Borrower than the
terms upon which such transfers or transactions would have been made
had they been made to or with a Person that is not an Affiliate and,
in connection therewith, may transfer cash or property to Affiliates
for fair value;
(m) Borrower's name has always been as set forth on the first
page of this Agreement and Borrower uses no tradenames or division
names in the operation of its business, except as otherwise disclosed
in writing to Bank; Borrower shall notify Bank in writing within ten
(10) days of the change of its name or the use of any tradenames or
division names not previously disclosed to Bank in writing;
(n) with respect to Borrower's Equipment: (i) other than
Equipment leased by Borrower on the date hereof, and Permitted Liens,
Borrower has good and indefeasible and merchantable title to and
ownership of all Equipment, including, without limitation, the
Equipment described or listed on the schedule of Equipment delivered
to Bank concurrently with this Agreement; (ii) Borrower shall keep and
maintain the Equipment in good operating condition and repair and
shall make all necessary replacements thereof and renewals thereto so
that the value and operating efficiency thereof shall at all times be
preserved and maintained in all material respects; (iii) Borrower
shall not permit any such items to become a fixture to real estate or
an accession to other personal property; and (iv) Borrower,
immediately on demand by Bank, shall deliver to Bank any and all
evidence of ownership of, including, without limitation, certificates
of title and applications of title to, any of the Equipment;
(o) this Agreement and the Other Agreements to which Borrower
is a party are the legal, valid and binding obligations of Borrower
and are enforceable against Borrower in accordance with their
respective terms;
(p) Borrower is solvent, is able to pay its debts as they
become due and has capital sufficient to carry on its business, now
owns property having a value both at fair valuation and at present
fair saleable value greater than the amount required to pay its debts,
and will not be rendered insolvent by the execution and delivery of
this Agreement or any of the Other Agreements or by completion of the
transactions contemplated hereunder or thereunder;
(q) Borrower is not now obligated, nor shall it create, incur,
assume or become obligated (directly or indirectly), for any loans or
other indebtedness for borrowed money other than the Loans, except
that Borrower may (i) borrow money from a Person other than Bank on an
unsecured and subordinated basis if a subordination agreement in favor
of Bank and in form and substance satisfactory to Bank is executed and
delivered to Bank relative thereto; (ii) maintain any present
indebtedness to any Person which has been disclosed to Bank in writing
and consented to in writing by Bank, and (iii) incur unsecured
indebtedness to trade creditors in the ordinary course of Borrower's
business;
(r) Borrower does not own any margin securities, and none of
the proceeds of the Loans hereunder shall be used for the purpose of
purchasing or carrying any margin securities or for the purpose of
reducing or retiring any indebtedness which was originally incurred to
purchase any margin securities or for any other purpose not permitted
by Regulation G or Regulation U of the Board of Governors of the
Federal Reserve System as in effect from time to time;
(s) except as otherwise disclosed in writing to Bank,
Borrower has no Parents, Subsidiaries or divisions, nor is Borrower
engaged in any joint venture or partnership with any other Person;
(t) if Borrower is a corporation or partnership, Borrower is
duly organized and in good standing in its state of organization and
Borrower is duly qualified and in good standing in all states where
the nature and extent of the business transacted by it or the
ownership of its assets makes such qualification necessary; or, if
Borrower is not so qualified, Borrower may cure any such failure
without losing any of its rights or affecting Bank's rights.
(u) Except as heretofore disclosed to Bank in writing, Borrower
is not in default under any material contract, lease or commitment to
which it is a party or by which it is bound, nor does Borrower know of
any dispute regarding any contract, lease or commitment which is
material to the continued financial success and well-being of
Borrower;
(v) there are no controversies pending or, to the best of
Borrower's knowledge, threatened between Borrower and any of its
employees, other than employee grievances arising in the ordinary
course of business which are not, in the aggregate, material to the
continued financial success and well-being of Borrower, and Borrower
is in compliance in all material respects with all federal and state
laws respecting employment and employment terms, conditions and
practices; and
(w) Borrower possesses, and shall continue to possess, adequate
licenses, patents, patent applications, copyrights, service marks,
trademarks, trademark applications, tradestyles and tradenames to
continue to conduct its business as heretofore conducted by it.
Borrower represents, warrants and covenants to Bank that all
representations and warranties of Borrower contained in this Agreement
(whether appearing in paragraphs 10 or 11 hereof or elsewhere) shall
be true at the time of Borrower's execution of this Agreement, shall
survive the execution, delivery and acceptance hereof by the parties
hereto and the closing of the transactions described herein or related
hereto, shall remain true until the repayment in full of all of the
Liabilities and termination of this Agreement, and shall be remade by
Borrower at the time each Loan is made pursuant to this Agreement.
11. ADDITIONAL COVENANTS OF BORROWER.
Until payment or satisfaction in full of all Liabilities and
termination of this Agreement, unless Borrower obtains Bank's prior
written consent waiving or modifying any of Borrower's covenants
hereunder in any specific instance, Borrower agrees as follows:
(a) Borrower shall at all times keep accurate and complete
books, records and accounts with respect to all of Borrower's business
activities, in accordance with sound accounting practices and
generally accepted accounting principles consistently applied, and
shall keep such books, records and accounts, and any copies thereof,
only at the addresses indicated for such purpose on Exhibit B;
(b) Borrower agrees to deliver to Bank the following financial
information, all of which shall be prepared in accordance with
generally accepted accounting principles consistently applied: (i) no
later than twenty-five (25) days after each fiscal month, copies of
internally prepared financial statements, including, without
limitation, balance sheets and statements of income, retained earnings
and cash flow of Borrower, certified by the Chief Financial Officer of
Borrower; (ii) no later than forty-five (45) days after the end of
each of the first three quarters of Borrower's fiscal year a balance
sheet, operating statement and reconciliation of surplus of Borrower,
which quarterly financial statements may be unaudited but shall be
certified by the Chief Financial Officer of Borrower; and (iii) no
later than ninety (90) days after the end of each of Borrower's fiscal
years, audited annual financial statements with an unqualified
certification by independent certified public accountants selected by
Borrower and reasonably satisfactory to Bank, which financial
statements shall be accompanied by a letter from such accountants
acknowledging that they are aware that a primary intent of Borrower in
obtaining such financial statements is to influence Bank and that Bank
is relying upon such financial statements in connection with the
exercise of its rights hereunder;
(c) Borrower shall promptly advise Bank in writing of any
material adverse change in the business, assets or condition,
financial or otherwise, of Borrower, the occurrence of any Event of
Default hereunder or the occurrence of any event which, if uncured,
will become an Event of Default hereunder after notice or lapse of
time (or both);
(d) Bank, or any Persons designated by it, shall have the
right, at any time, to call at Borrower's places of business at any
reasonable times, and, without hindrance or delay, to inspect the
Collateral and to inspect, audit, check and make extracts from
Borrower's books, records, journals, orders, receipts and any
correspondence and other data relating to Borrower's business, the
Collateral or any transactions between the parties hereto, and shall
have the right to make such verification concerning Borrower's
business as Bank may consider reasonable under the circumstances.
Borrower shall furnish to Bank such information relevant to Bank's
rights under this Agreement as Bank shall at any time and from time to
time request. Borrower authorizes Bank to discuss the affairs,
finances and business of Borrower with any officers, employees or
directors of Borrower or with any Affiliate or the officers, employees
or directors of any Affiliate, and to discuss the financial condition
of Borrower with Borrower's independent public accountants. Any such
discussions shall be without liability to Bank or to Borrower's
independent public accountants. Borrower shall pay to Bank all
customary fees and out-of-pocket expenses incurred by Bank in the
exercise of its rights hereunder, and all of such fees and expenses
shall constitute Loans hereunder, payable on demand and, until paid,
shall bear interest at the highest rate then applicable to Loans
hereunder;
(e) Borrower shall:
(i) keep the Collateral properly housed and shall keep
the Collateral insured for the full insurable value thereof against
loss or damage by fire, theft, explosion, sprinklers, collision (in
the case of motor vehicles) and such other risks as are customarily
insured against by Persons engaged in businesses similar to that of
Borrower, with such companies, in such amounts and under policies in
such form as shall be satisfactory to Bank. Original (or certified)
copies of such policies of insurance have been or shall be delivered
to Bank within thirty (30) days after the date hereof, together with
evidence of payment of all premiums therefor, and shall contain an
endorsement, in form and substance acceptable to Bank, showing loss
under such insurance policies payable to Bank. Such endorsement, or
an independent instrument furnished to Bank, shall provide that the
insurance company shall give Bank at least thirty (30) days written
notice before any such policy of insurance is altered or canceled and
that no act, whether willful or negligent, or default of Borrower or
any other Person shall affect the right of Bank to recover under such
policy of insurance in case of loss or damage. Borrower hereby
directs all insurers under such policies of insurance to pay all
proceeds payable thereunder directly to Bank. Borrower irrevocably,
makes, constitutes and appoints Bank (and all officers, employees or
agents designated by Bank) as Borrower's true and lawful attorney (and
agent-in-fact) for the purpose of making, settling and adjusting
claims under such policies of insurance, endorsing the name of
Borrower on any check, draft, instrument or other item of payment for
the proceeds of such policies of insurance and making all
determinations and decisions with respect to such policies of
insurance; provided, that no Event of Default shall have occurred and
is continuing, Borrower may make, settle and adjust claims involving
less that Two Hundred Fifty Thousand and No/100 Dollars ($250,000.00)
in the aggregate per fiscal year without Bank's consent; and
(ii) maintain, at its expense, such public liability and
third party property damage insurance as is customary for Persons
engaged in businesses similar to that of Borrower with such companies
and in such amounts, with such deductibles and under policies in such
form as shall be satisfactory to Bank and original (or certified)
copies of such policies have been or shall be delivered to Bank within
thirty (30) days after the date hereof, together with evidence of
payment of all premiums therefor; each such policy shall contain an
endorsement showing Bank as additional insured thereunder and
providing that the insurance company shall give Bank at least thirty
(30) days written notice before any such policy shall be altered or
canceled.
If Borrower at any time or times hereafter shall fail to obtain or
maintain any of the policies of insurance required above or to pay any
premium in whole or a part relating thereto, then Bank, without
waiving or releasing any obligation or default by Borrower hereunder,
may (but shall be under no obligation to) obtain and maintain such
policies of insurance and pay such premiums and take such other
actions with respect thereto as Bank deems advisable. All sums
disbursed by Bank in connection with any such actions, including,
without limitation, court costs, expenses, other charges relating
thereto and reasonable attorneys' fees, shall constitute Loans
hereunder, shall be payable on demand by Borrower to Bank and, until
paid, shall bear interest at the highest rate then applicable to Loans
hereunder;
(f) Borrower shall not use the Collateral, or any part thereof,
in any unlawful business or for any unlawful purpose or use or
maintain any of the Collateral in any manner that does or could result
in material damage to the environment or a violation of any applicable
environmental laws, rules or regulations; shall keep the Collateral in
good condition, repair and order; shall permit Bank to examine any of
the Collateral at any time and wherever the Collateral may be located;
shall not permit the Collateral, or any part thereof, to be levied
upon under execution, attachment, distraint or other legal process;
shall not sell, lease, grant a security interest in or otherwise
dispose of any of the Collateral except as expressly permitted by this
Agreement; and shall not secrete or abandon any of the Collateral, or
remove or permit removal of any of the Collateral from any of the
locations listed on Exhibit B or in any written notice to Bank
pursuant to paragraph 10(b) hereof, except for the removal of
Inventory sold in the ordinary course of Borrower's business as
permitted herein;
(g) all monies and other property obtained by Borrower from
Bank pursuant to this Agreement will be used solely for business
purposes of Borrower;
(h) Borrower shall, at the request of Bank, indicate on its
records concerning the Collateral a notation, in form satisfactory to
Bank, of the security interest of Bank hereunder; and Borrower shall
not maintain duplicates or copies of such records at any address other
than Borrower's principal place of business set forth on the first
page of this Agreement;
(i) Borrower shall file all required tax returns and pay all of
its taxes when due, subject to any extensions granted by the
applicable taxing authority, including, without limitation, taxes
imposed by federal, state or municipal agencies, and shall cause any
liens for taxes to be promptly released; provided, that Borrower shall
have the right to contest the payment of such taxes in good faith by
appropriate proceedings so long as (i) the amount so contested is
shown on Borrower's financial statements, (ii) the contesting of any
such payment does not give rise to a lien for taxes, (iii) Borrower
keeps on deposit with Bank (such deposit to be held without interest)
an amount of money which, in the sole judgment of Bank, is sufficient
to pay such taxes and any interest or penalties that may accrue
thereon, and (iv) if Borrower fails to prosecute such contest with
reasonable diligence, Bank may apply the money so deposited in payment
of such taxes. If Borrower fails to pay any such taxes and in the
absence of any such contest by Borrower, Bank may (but shall be under
no obligation to) advance and pay any sums required to pay any such
taxes and/or to secure the release of any lien therefor, and any sums
so advanced by Bank shall constitute Loans hereunder, shall be payable
by Borrower to Bank on demand, and, until paid, shall bear interest at
the highest rate then applicable to Loans hereunder;
(j) Borrower shall not assume, guarantee or endorse, or
otherwise become liable in connection with, the obligations of any
Person, except by endorsement of instruments for deposit or collection
or similar transactions in the ordinary course of business;
(k) Borrower shall not enter into any merger or consolidation,
or sell, lease or otherwise dispose of all or substantially all of its
assets, or enter into any transaction outside the ordinary course of
Borrower's business, including, without limitation, any purchase,
redemption or retirement of any shares of any class of its stock, and
any issuance of any shares of, or warrants or other rights to receive
or purchase any shares of, any class of its stock; provided, however,
that Borrower may (i) grant options to purchase;
(l) Borrower shall not declare or pay any dividend or other
distribution (whether in cash or in kind) on any class of its stock
(if Borrower is a corporation) or on account of any equity interest in
Borrower (if Borrower is a partnership or other type of entity);
(m) Borrower shall not purchase or otherwise acquire, or
contract to purchase or otherwise acquire, the obligations or stock of
any Person, other than direct obligations of the United States;
(n) Borrower shall not amend its organizational documents or
change its fiscal year; where such actions would have an adverse
effect on the Borrower's business, property, assets, operations or
condition, financial or otherwise, as determined by Bank in its sole
discretion, provided that Bank receives ten (10) days prior written
notice of such amendment or change;
(o) See Exhibit A
(p) Borrower shall reimburse Bank for all costs and expenses,
including, without limitation, legal expenses and reasonable
attorneys' fees, incurred by Bank in connection with documentation and
consummation of this transaction and any other transactions between
Borrower and Bank, including, without limitation, Uniform Commercial
Code and other public record searches, lien filings, Federal Express
or similar express or messenger delivery, appraisal costs, surveys,
title insurance and environmental audit or review costs, and in
seeking to collect, protect or enforce any rights in or to the
Collateral or incurred by Bank in seeking to collect any Liabilities
and to administer and enforce any of Bank's rights under this
Agreement. Borrower shall also pay all normal service charges with
respect to all accounts maintained by Borrower with Bank and any
additional services requested by Borrower from Bank. All such costs,
expenses and charges shall constitute Loans hereunder, shall be
payable by Borrower to Bank on demand, and, until paid, shall bear
interest at the highest rate then applicable to Loans hereunder.
12. DEFAULT.
The occurrence of any one or more of the following events shall
constitute an "Event of Default" by Borrower hereunder:
(a) the failure of any Obligor to pay when due, declared due,
or demanded by Bank, any of the Liabilities;
(b) the failure of any Obligor to perform, keep or observe any
of the covenants, conditions, promises, agreements or obligations of
such Obligor under this Agreement or any of the Other Agreements;
provided that any such failure by Borrower under this Agreement shall
not constitute an Event of Default and the continuance thereof
hereunder until the tenth (10th) day following written notice thereof.
Bank agrees to endeavor to provide a copy of such notice of default to
the law firm of Deborah A. Kream, Esq. by mail at the mailing address
of 104 Revere Street, Canton, Massachusetts 02021, or by facsimile
transmission at facsimile number (617) 828-3168. Failure of Bank to
provide such copy of notice of default shall not impair Bank's rights
hereunder;
(c) the failure of any Obligor to perform, keep or observe any
of the covenants, conditions, promises, agreements or obligations of
such Obligor under any other agreement with any Person if such failure
may have a material adverse effect on such Obligor's business,
property, assets, operations or condition, financial or otherwise;
(d) the making or furnishing by any Obligor to Bank of any
representation, warranty, certificate, schedule, report or other
communication within or in connection with this Agreement or the Other
Agreements or in connection with any other agreement between such
Obligor and Bank, which is untrue or misleading in any material
respect;
(e) the loss, theft, damage or destruction of any of the
Collateral in an amount in excess of One Hundred Thousand and No/100
Dollars ($100,000.00) in the aggregate for all such events during any
year of the Original Term or any Renewal Term as determined by Bank in
its sole discretion, or (except as permitted hereby) sale, lease or
furnishing under a contract of service of any of the Collateral;
(f) the creation (whether voluntary or involuntary) of, or any
attempt to create, any lien or other encumbrance upon any of the
Collateral, other than the Permitted Liens, and involuntary liens
securing amounts less than One Hundred Thousand and No/100 Dollars
($100,000.00) and which are released within ten (10) days of its
creation, or the making or any attempt to make any levy, seizure or
attachment thereof; provided that with respect to states in which
creditors may obtain a prejudgment attachment without notice, such
attachment shall be an Event of Default only if the attachment remains
in effect for ten (10) days;
(g) the commencement of any proceedings in bankruptcy by or
against any Obligor or for the liquidation or reorganization of any
Obligor, or alleging that such Obligor is insolvent or unable to pay
its debts as they mature, or for the readjustment or arrangement of
any Obligor's debts, whether under the United States Bankruptcy Code
or under any other law, whether state or federal, now or hereafter
existing for the relief of debtors, or the commencement of any
analogous statutory or non-statutory proceedings involving any
Obligor; provided, however, that if such commencement of proceedings
against such Obligor is involuntary, such action shall not constitute
an Event of Default unless such proceedings are not dismissed within
sixty (60) days after the commencement of such proceedings;
(h) the appointment of a receiver or trustee for any Obligor,
for any of the Collateral or for any substantial part of any Obligor's
assets or the institution of any proceedings for the dissolution, or
the full or partial liquidation, or the merger or consolidation, of
any Obligor which is a corporation or a partnership; provided,
however, that if such appointment or commencement of proceedings
against such Obligor is involuntary, such action shall not constitute
an Event of Default unless such appointment is not revoked or such
proceedings are not dismissed within sixty (60) days after the
commencement of such proceedings;
(i) the entry of any judgment or order against any Obligor
which remains unsatisfied or undischarged and in effect for thirty
(30) days after such entry without a stay of enforcement or execution,
to the extent such judgments exceed One Hundred Thousand and No/100
Dollars ($100,000.00) outstanding at any time;
(j) the death of any Obligor who is a natural Person, or of any
partner of any Obligor which is a partnership, or of any natural
person who owns a material interest in a corporate Obligor, or the
dissolution of any Obligor which is a partnership or corporation;
(k) the occurrence of an event of default under, or the
revocation or termination of, any agreement, instrument or document
executed and delivered by any Person to Bank pursuant to which such
Person has guaranteed to Bank the payment of all or any of the
Liabilities or has granted Bank a security interest in or lien upon
some or all of such Person's real and/or personal property to secure
the payment of all or any of the Liabilities;
(l) the institution in any court of a criminal proceeding
against any Obligor, or the indictment of any Obligor for any crime;
and
(m) Bank shall reasonably feel insecure for any material reason
whatsoever, including, without limitation, fear of removal or waste of
the Collateral, or any part thereof.
13. REMEDIES UPON AN EVENT OF DEFAULT.
(a) Upon the occurrence of an Event of Default described in
paragraph 12(g) hereof, all of Borrower's Liabilities shall
immediately and automatically become due and payable, without notice
of any kind. Upon the occurrence of any other Event of Default, all
Liabilities may, at the option of Bank, and without demand, notice or
legal process of any kind, be declared, and immediately shall become,
due and payable.
(b) Upon the occurrence of an Event of Default, Bank may
exercise from time to time any rights and remedies available to it
under the Uniform Commercial Code and any other applicable law in
addition to, and not in lieu of, any rights and remedies expressly
granted in this Agreement or in any of the Other Agreements and all of
Bank's rights and remedies shall be cumulative and non-exclusive to
the extent permitted by law. In particular, but not by way of
limitation of the foregoing, Bank may, without notice, demand or legal
process of any kind, take possession of any or all of the Collateral
(in addition to Collateral of which it already has possession),
wherever it may be found, and for that purpose may pursue the same
wherever it may be found, and may enter into any of Borrower's
premises where any of the Collateral may be, and search for, take
possession of, remove, keep and store any of the Collateral until the
same shall be sold or otherwise disposed of, and Bank shall have the
right to store the same at any of Borrower's premises without cost to
Bank. At Bank's request, Borrower shall, at Borrower's expense,
assemble the Collateral and make it available to Bank at one or more
places to be designated by Bank and reasonably convenient to Bank and
Borrower. Borrower recognizes that if Borrower fails to perform,
observe or discharge any of its Liabilities under this Agreement or
the Other Agreements, no remedy at law will provide adequate relief to
Bank, and agrees that Bank shall be entitled to temporary and
permanent injunctive relief in any such case without the necessity of
proving actual damages. Any notification of intended disposition of
any of the Collateral required by law will be deemed reasonably and
properly given if given at least five (5) calendar days before such
disposition. Any proceeds of any disposition by Bank of any of the
Collateral may be applied by Bank to the payment of expenses in
connection with the Collateral, including, without limitation, legal
expenses and reasonable attorneys' fees, and any balance of such
proceeds may be applied by Bank toward the payment of such of the
Liabilities, and in such order of application, as Bank may from time
to time elect.
14. INDEMNIFICATION.
Borrower agrees to defend (with counsel reasonably satisfactory
to Bank), protect, indemnify and hold harmless Bank, each affiliate or
subsidiary of Bank, and each of their respective officers, directors,
employees, attorneys and agents (each an "Indemnified Party") from and
against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, expenses and
disbursements of any kind or nature (including, without limitation,
the disbursements and the reasonable fees of counsel for each
Indemnified Party in connection with any investigative, administrative
or judicial proceeding, whether or not the Indemnified Party shall be
designated a party thereto), which may be imposed on, incurred by, or
asserted against, any Indemnified Party (whether direct, indirect or
consequential and whether based on any federal, state or local laws or
regulations, including, without limitation, securities, environmental
and commercial laws and regulations, under common law or in equity, or
based on contract or otherwise) in any manner relating to or arising
out of this Agreement or any Other Agreement, or any act, event or
transaction related or attendant thereto, the making and the
management of the Loans or any Letters of Credit or the use or
intended use of the proceeds of the Loans or any Letters of Credit;
provided, however, that Borrower shall not have any obligation
hereunder to any Indemnified Party with respect to matters caused by
or resulting from the willful misconduct or gross negligence of such
Indemnified Party. To the extent that the undertaking to indemnify
set forth in the preceding sentence may be unenforceable because it is
violative of any law or public policy, Borrower shall satisfy such
undertaking to the maximum extent permitted by applicable law. Any
liability, obligation, loss, damage, penalty, cost or expense covered
by this indemnity shall be paid to each Indemnified Party on demand,
and, failing prompt payment, shall, together with interest thereon at
the highest rate then applicable to Loans hereunder from the date
incurred by each Indemnified Party until paid by Borrower, be added to
the Liabilities of Borrower and be secured by the Collateral. The
provisions of this paragraph 14 shall survive the satisfaction and
payment of the other Liabilities and the termination of this
Agreement.
15. NOTICE.
All written notices and other written communications with
respect to this Agreement shall be sent by ordinary, certified or
overnight mail, by telecopy or delivered in person, and in the case of
Bank shall be sent to it at 135 South LaSalle Street, Chicago,
Illinois 06063-4105, Attention: Asset Based Lending Division, and in
the case of Borrower shall be sent to it at its principal place of
business set forth on the first page of this Agreement.
16. CHOICE OF GOVERNING LAW; CONSTRUCTION; FORUM SELECTION.
This Agreement and the Other Agreements are submitted by
Borrower to Bank for Bank's acceptance or rejection at Bank's
principal place of business as an offer by Borrower to borrow monies
from Bank now and from time to time hereafter, and shall not be
binding upon Bank or become effective until accepted by Bank, in
writing, at said place of business. If so accepted by Bank, this
Agreement and the Other Agreements shall be deemed to have been made
at said place of business. THIS AGREEMENT AND THE OTHER AGREEMENTS
SHALL BE GOVERNED AND CONTROLLED BY THE INTERNAL LAWS OF THE STATE OF
ILLINOIS AS TO INTERPRETATION, ENFORCEMENT, VALIDITY, CONSTRUCTION,
EFFECT AND IN ALL OTHER RESPECTS, INCLUDING, WITHOUT LIMITATION, THE
LEGALITY OF THE INTEREST RATE AND OTHER CHARGES, BUT EXCLUDING
PERFECTION OF THE SECURITY INTERESTS IN THE COLLATERAL, WHICH SHALL BE
GOVERNED AND CONTROLLED BY THE LAWS OF THE RELEVANT JURISDICTION. If
any provision of this Agreement shall be held to be prohibited by or
invalid under applicable law, such provision shall be ineffective only
to the extent of such prohibition or invalidity, without invalidating
the remainder of such provision or remaining provisions of this
Agreement.
To induce Bank to accept this Agreement, Borrower irrevocably agrees
that, subject to Bank's sole and absolute election, ALL ACTIONS OR
PROCEEDINGS IN ANY WAY, MANNER OR RESPECT, ARISING OUT OF OR FROM OR
RELATED TO THIS AGREEMENT, THE OTHER AGREEMENTS OR THE COLLATERAL
SHALL BE LITIGATED IN COURTS HAVING SITUS WITHIN THE CITY OF CHICAGO,
STATE OF ILLINOIS. BORROWER HEREBY CONSENTS AND SUBMITS TO THE
JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURTS LOCATED WITHIN SAID
CITY AND STATE. Borrower hereby irrevocably appoints and designates
the Secretary of State of Illinois, whose address is Springfield,
Illinois (or any other person having and maintaining a place of
business in such state whom Borrower may from time to time hereafter
designate upon ten (10) days written notice to Bank and who Bank has
agreed in its sole discretion in writing is satisfactory and who has
executed an agreement in form and substance satisfactory to Bank
agreeing to act as such attorney and agent), as Borrower's true and
lawful attorney and duly authorized agent for acceptance of service of
legal process. Borrower agrees that service of such process upon such
person shall constitute personal service of such process upon
Borrower. Bank agrees to endeavor to provide a copy of such process to
the law firm of Deborah A. Kream, Esq. by mail at the mailing address
of 104 Revere Street, Canton, Massachusetts 02021 or by facsimile
transmission at facsimile number (617) 828-3168. Failure of Bank to
provide a copy of such process shall not impair Bank's rights
hereunder. BORROWER HEREBY WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR
CHANGE THE VENUE OF ANY LITIGATION BROUGHT AGAINST BORROWER BY BANK IN
ACCORDANCE WITH THIS PARAGRAPH.
17. MODIFICATION AND BENEFIT OF AGREEMENT.
This Agreement and the Other Agreements may not be modified,
altered or amended except by an agreement in writing signed by
Borrower and Bank. Borrower may not sell, assign or transfer this
Agreement or the Other Agreements or any portion thereof, including,
without limitation, Borrower's rights, titles, interest, remedies,
powers or duties hereunder and thereunder. Borrower hereby consents
to Bank's sale, assignment, transfer or other disposition, at any time
and from time to time hereafter, of this Agreement or the Other
Agreements, or of any portion thereof, or participations therein,
including, without limitation, Bank's rights, titles, interest,
remedies, powers and/or duties and agrees that it shall execute and
deliver such documents as Bank may request in connection with any such
sale, assignment, transfer or other disposition.
18. HEADINGS OF SUBDIVISIONS.
The headings of subdivisions in this Agreement are for
convenience of reference only, and shall not govern the interpretation
of any of the provisions of this Agreement.
19. POWER OF ATTORNEY.
Borrower acknowledges and agrees that its appointment of Bank as
its attorney and agent-in-fact for the purposes specified in this
Agreement is an appointment coupled with an interest and shall be
irrevocable until all of the Liabilities are paid in full and this
Agreement is terminated.
20. WAIVER OF JURY TRIAL; OTHER WAIVERS.
(a) BORROWER AND BANK EACH HEREBY WAIVE ALL RIGHTS TO TRIAL BY
JURY IN ANY ACTION OR PROCEEDING WHICH PERTAINS DIRECTLY OR INDIRECTLY
TO THIS AGREEMENT, ANY OF THE OTHER AGREEMENTS, THE LIABILITIES, THE
COLLATERAL, ANY ALLEGED TORTIOUS CONDUCT BY BORROWER OR BANK OR WHICH,
IN ANY WAY, DIRECTLY OR INDIRECTLY, ARISES OUT OF OR RELATES TO THE
RELATIONSHIP BETWEEN BORROWER AND BANK. IN NO EVENT SHALL BANK BE
LIABLE FOR LOST PROFITS OR OTHER SPECIAL OR CONSEQUENTIAL DAMAGES.
(b) Borrower hereby waives demand, presentment, protest and
notice of nonpayment, and further waives the benefit of all valuation,
appraisal and exemption laws.
(c) BORROWER AND BANK EACH HEREBY WAIVE ALL RIGHTS TO NOTICE
(EXCEPT AS OTHERWISE PROVIDED HEREIN) AND HEARING OF ANY KIND PRIOR TO
THE EXERCISE BY BANK OF ITS RIGHTS TO REPOSSESS THE COLLATERAL OF
BORROWER WITHOUT JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON
SUCH COLLATERAL; provided that in the event that Bank seeks to enforce
its rights hereunder by judicial process, Bank shall provide Borrower
with such notices as are required by law.
(d) Bank's failure, at any time or times hereafter, to require
strict performance by Borrower of any provision of this Agreement or
any of the Other Agreements shall not waive, affect or diminish any
right of Bank thereafter to demand strict compliance and performance
therewith. Any suspension or waiver by Bank of an Event of Default
under this Agreement or any default under any of the Other Agreements
shall not suspend, waive or affect any other Event of Default under
this Agreement or any other default under any of the Other Agreements,
whether the same is prior or subsequent thereto and whether of the
same or of a different kind or character. No delay on the part of
Bank in the exercise of any right or remedy under this Agreement or
any Other Agreement shall preclude other or further exercise thereof
or the exercise of any right or remedy. None of the undertakings,
agreements, warranties, covenants and representations of Borrower
contained in this Agreement or any of the Other Agreements and no
Event of Default under this Agreement or default under any of the
Other Agreements shall be deemed to have been suspended or waived by
Bank unless such suspension or waiver is in writing, signed by a duly
authorized officer of Bank and directed to Borrower specifying such
suspension or waiver.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the 6th day of June , 19 96 .
Plymouth Rubber Company, Inc. LASALLE NATIONAL BANK
By Duane E. Wheeler By
Title Vice President - Finance Title
and
By
Title
EXHIBIT B - BUSINESS AND COLLATERAL LOCATIONS
Attached to and made a part of that certain Loan and Security
Agreement of even date herewith between
("Borrower") and LASALLE NATIONAL BANK ("Bank").
A. Borrower's Business Locations (please indicate which location is
the principal place of business and at which locations originals and
all copies of Borrower's books, records and accounts are kept).
1.
2.
3.
B. Other locations of Collateral (including, without limitation,
warehouse locations, processing locations, consignment locations) and
all post office boxes of Borrower. Please indicate the relationship
of such location to Borrower (i.e. public warehouse, processor, etc.).
1.
2.
3.
\rar (c:\docs\std-1\22) 12/95
EXHIBIT A-SPECIAL PROVISIONS
Attached to and made a part of that certain Loan and Security
Agreement of even date herewith between Brite-Line Technologies, Inc.
("Borrower") and LaSalle National Bank ("Bank").
CREDIT TERMS
(1) LOAN LIMIT: Bank may, in its sole discretion, advance an amount
up to the sum of the following sublimits (the "Loan Limit"):
(a) Subject to subparagraph (2) of this Exhibit A, up to
eighty-five percent (85%) of the face amount (less
maximum discounts, credits and allowances which may be
taken by or granted to Account Debtors in connection
therewith) of Borrower's Eligible Accounts; provided,
that with respect to Eligible Accounts which are payable
in currencies other than U.S. Dollars, the face amount
and all discounts, credits and allowances shall be
determined using the U.S. Dollar equivalent thereof at
such time, determined with such frequency as Bank shall
require, but not less than weekly, based on the exchange
rates published in the Wall Street Journal on the date of
determination; plus
(b) Up to fifty-five percent (55%) of the lower of the cost
or market value of Borrower's Eligible Inventory or One
Million Two Hundred Fifty Thousand and No/100 Dollars
($1,250,000.00), whichever is less; plus
(c) Such reserves as Bank elects, in its sole discretion, to
establish from time to time;
provided, that the aggregate amount of: (i) Loan made
pursuant to subparagraph (b) above and (ii) Loans, as
such term is defined in that certain Loan and Security
Agreement entered into by and between plymouth Rubber
Company, inc. ("Plymouth")and Bank dated June 6, 1996, as
it may be amended from time to time (the ("Plymouth
Agreement"), made pursuant to subparagraph 1(b) of Exhibit
A of the Plymouth Agreement shall in no event exceed
Seven Million Two Hundred Fifty Thousand No/100 Dollars
($7,250,000);
further provided, that the aggregate Loan Limit shall in
no event exceed Three Million Five Hundred Thousand and
No./100 Dollars ($3,500,000), except as such amount may
be increased or decreased by Bank, in its sole
discretion, from time to time; and
further provided that the aggregate amount of Loans to
(i) Borrower under this Agreement and (ii) the aggregate
amount of Loans to Plymouth under the Plymouth Agreement
shall in no event exceed Fifteen Million and No/100
Dollars ($15,000,000).
(2) ELIGIBLE ACCOUNTS CRITERIA REVISIONS:
Subparagraph 1(d)(xii) of the Agreement is hereby amended in its
entirety to read as follows:
The Account Debtor is a resident or citizen of and is located
within the United States of America or is a resident or citizen
of and is located within a foreign country and with respect to
EXHIBIT A - SPECIAL PROVISIONS - PAGE 2
Account Debtors who are residents or citizens of and are located
within a foreign country, the Account is supported by (i) a
Letter of Credit which is in form and substance satisfactory to
Bank, issued by a financial institution acceptable to Bank and
assigned to Bank in a manner acceptable to Bank or (ii) credit
insurance with an endorsement acceptable to Bank and assigned to
Bank in a manner acceptable to Bank.
(3) INTEREST RATE: Subject to the terms and conditions set forth
below, the Loans shall bear interest at the per annum rate of
interest set forth in subsection (a) or (b) below:
(a) One-fourth of one percent (1/4 of 1%) per annum in excess
of Bank's publicly announced prime rate (which is not
intended to be Bank's lowest or most favorable rate in
effect at any time) (the "Prime Rate") in effect from
time to time, payable on the last Business Day of each
month in arrears. Said rate of interest shall increase
or decrease by an amount equal to each increase or
decrease in the Prime Rate effective on the effective
date of each such change in the Prime Rate.
(b) Two and one-fourth percent (2-1/4%) per annum in excess
of the per annum rate of interest at which U.S. Dollar
deposits of an amount comparable to the amount of the
Loans and for a period equal to the relevant Interest
Period (as hereinafter defined) are offered generally to
Bank (rounded upward if necessary to the nearest 1/16 of
1.00%) in the London Interbank Eurodollar market at 11:00
a.m. (London time) two (2) Business Days prior to the
commencement of each Interest Period ("LIBOR"), such rate
to remain fixed for such Interest Period. "Interest
Period" shall mean any continuous period of ninety (90)
days, as selected from time to time by Borrower by
irrevocable notice (in writing, by telex, telegram or
cable) given to Bank not less than three (3) Business
Days prior to the first day of each respective Interest
Period) commencing on the date hereof; provided that:
(i) each such period occurring after such initial period
shall commence on the day on which the immediately
preceding period expires; (ii) the final Interest Period
shall be such that its expiration occurs on or before the
end of the Original Term or any Renewal Term; and (iii)
if for any reason Borrower shall fail to timely select a
period, then such Loans shall continue as, or revert to,
Prime Rate Loans. Interest shall be payable on the last
Business Day of each month, at maturity, and on the date
of any payment hereon by Borrower.
Upon the occurrence of an Event of Default and the
continuance thereof, the Loans shall bear interest at the
rate of two percent (2.0%) per annum in excess of the
interest rate otherwise payable thereon, which interest
shall be payable on demand. All interest shall be
calculated on the basis of a 360-day year.
(3).(1) OTHER LIBOR PROVISIONS:
(a) Subject to the provisions of this Agreement, Borrower
shall have the option (i) as of any date, to convert all
or any part of the Prime Rate Loans to, or request that
new Loans be made as, LIBOR Rate Loans of various
Interest Periods, (ii) as of the last day of any Interest
EXHIBIT A - SPECIAL PROVISIONS - PAGE 3
Period, to continue all or any portion of the relevant
LIBOR Rate Loans as LIBOR Rate Loans; (iii) as of the
last day of any Interest Period, to convert all or any
portion of the LIBOR Rate Loans to Prime Rate Loans; and
(iv) at any time, to request new Loans as Prime Rate
Loans; provided, that Loans may not be continued as or
converted to LIBOR Rate Loans, if the continuation or
conversion thereof would violate the provisions of
Paragraphs (3).(1)(b) and (3).(1)(c) of this Exhibit A or
if an Event of Default has occurred and is continuing.
(b) Bank's determination of LIBOR as provided above shall be
conclusive, absent manifest error. Furthermore, if Bank
determines, in good faith (which determination shall be
conclusive, absent manifest error), prior to the
commencement of any Interest Period that (i) U.S. Dollar
deposits of sufficient amount and maturity for funding
the Loans are not available to Bank in the London
Interbank Eurodollar market in the ordinary course of
business, or (ii) by reason of circumstances affecting
the London Interbank Eurodollar market, adequate and fair
means do not exist for ascertaining the rate of interest
to be applicable to the Loans requested by Borrower to be
LIBOR Rate Loans or the Loans bearing interest at the
rates set forth in Paragraph (3)(b) of this Exhibit A
shall not represent the effective pricing to Bank for
U.S. Dollar deposits of a comparable amount for the
relevant period (such as for example, but not limited to,
official reserve requirements required by Regulation D to
the extent not given effect in determining the rate),
Bank shall promptly notify Borrower and (x) all existing
LIBOR Rate Loans shall convert to Prime Rate Loans upon
the end of the applicable Interest Period, and (y) no
additional LIBOR Rate Loans shall be made until such
circumstances are cured.
(c) If, after the date hereof, the introduction of, or any
change in any applicable law, treaty, rule, regulation or
guideline or in the interpretation or administration
thereof by any governmental authority or any central bank
or other fiscal, monetary or other authority having
jurisdiction over Bank or its lending offices (a
"Regulatory Change"), shall, in the opinion of counsel to
Bank, make it unlawful for Bank to make or maintain LIBOR
Rate Loans, then Bank shall promptly notify Borrower and
(i) the LIBOR Rate Loans shall immediately convert to
Prime Rate Loans on the last Business Day of the then
existing Interest Period or on such earlier date as
required by law and (ii) no additional LIBOR Rate Loans
shall be made until such circumstance is cured.
(d) If, for any reason, a LIBOR Rate Loan is paid prior to
the last Business Day of any Interest Period or if a
LIBOR Rate Loan does not occur on a date specified by
Borrower in its request (other than as a result of a
default by Bank), Borrower agrees to indemnify Bank
against any loss (including any loss on redeployment of
the funds repaid), cost or expense incurred by Bank as a
result of such prepayment.
(e) If any Regulatory Change (whether or not having the force
of law) shall (i) impose, modify or deem applicable any
assessment, reserve, special deposit or similar
requirement against assets held by, or deposits in or for
the account of or loans by, or any other acquisition of
funds or disbursements by, Bank; (ii) subject Bank or the
LIBOR Rate Loans to any tax, duty, charge, stamp tax or
EXHIBIT A - SPECIAL PROVISIONS - PAGE 4
fee or change the basis of taxation of payments to Bank
of principal or interest due from Borrower to Bank
hereunder (other than a change in the taxation of the
overall net income of Bank); or (c) impose on Bank any
other condition regarding the LIBOR Rate Loans or Bank's
funding thereof, and Bank shall determine (which
determination shall be conclusive, absent any manifest
error) that the result of the foregoing is to increase
the cost to Bank of making or maintaining the LIBOR Rate
Loans or to reduce the amount of principal or interest
received by Bank hereunder, then Borrower shall pay to
Bank, on demand, such additional amounts as Bank shall,
from time to time, determine are sufficient to compensate
and indemnify Bank from such increased cost or reduced
amount.
(f) Each request for LIBOR Rate Loans shall be in an amount
not less than Five Hundred Thousand and No/100 Dollars
($500,000.00), and in integral multiples of One Hundred
Thousand and No/100 Dollars ($100,000.00).
(g) Unless otherwise specified by Borrower, all Loans shall
be Prime Rate Loans.
(h) No more than three (3) Interest Periods may be in effect
with respect to outstanding LIBOR Rate Loans at any one
time.
(i) The maximum amount of Libor Rate Loans outstanding at any
one time shall not exceed fifty percent (50%) of the
aggregate Loan Limit.
(4) FEES AND CHARGES:
(a) Facilities Fees: Borrower and Plymouth Shall jointly pay
to Bank an annual facilities fee equal to three-eighths
of one percent (3/8 of 1%) of the aggregate Loan Limit of
Borrower and Plymouth, which fee shall be fully earned by
Bank and payable on June 6, 1997 and on the date of same
day of each year thereafter during the Original Term and
any Renewal Term.
(b) Prepayment Fee: If Borrower elects to terminate this
Agreement prior to the termination date hereof, Borrower
shall pay to Bank a prepayment fee equal to (i) three
percent (3%) of the aggregate Loan Limit if this
Agreement is terminated on or before June 6, 1997 (ii)
two percent (2%) of the aggregate Loan Limit if this
Agreement is terminated after June 6, 1997 and prior to
June 6, 1998; and (iii) one percent (1%) of the aggregate
Loan Limit if this Agreement is terminated after June 6,
1998 but prior to the end of the Original Term or any
year of any Renewal Term; provided that if Borrower sells
all or substantially all of its assets or stock to a
Person other than an Affiliate and such sale is consented
to by Bank and the Liabilities are prepaid and the
Agreement is terminated as a result thereof, then
Borrower shall be required to pay a prepayment fee of one
percent (1%) of the aggregate Loan Limit of Borrower.
ADDITIONS AND CHANGES TO COVENANTS
(5) CHECKING ACCOUNT PROVISIONS: Borrower shall maintain its general
controlled disbursement account with Bank. Normal charges
shall be assessed thereon.
EXHIBIT A - SPECIAL PROVISIONS - PAGE 5
(6) TANGIBLE NET WORTH: Notwithstanding the provisions of
subparagraph 11(o) of the Agreement, Borrower shall at all times
maintain a tangible net worth of not less than the Minimum
Tangible Net Worth, as hereinafter defined. At all times from
March 1, 1997 through November 29, 1997, "Minimum Tangible Net
Worth" shall equal One Million Sixty-Nine Thousand and No/100
Dollars ($1,069,000.00). From November 30, 1997 through November
29, 1998, Minimum Tangible Net Worth shall equal One Million
Three Hundred Nineteen Thousand and No/100 dollars
($1,319,000.00) Thereafter, from November 30th of each year
through November 29th of the following year, Minimum Tangible
Net Worth shall be equal to Minimum Tangible Net Worth on the
last day of the immediately preceding fiscal year plus Two
Hundred Fifty Thousand and No/100 Dollars ($250,000.00).
"Tangible Net Worth" being defined for purposes of this
subparagraph as Borrower's shareholders' equity (including
retained earnings) less the book value of all intangible assets
as determined solely by Bank on a consistent basis plus the
amount of any LIFO reserve plus the amount of any debt
subordinated to Bank, all as determined under generally accepted
accounting principles applied on a basis consistent with the
financial statement dated March 1, 1996 except as set forth
herein. For purposes of this subparagraph, (a) intangible
assets are: (i) intangible asset-FAS #87, (ii) deferred tax
asset, net of the valuation reserve-FAS #109, and (iii) trade
names and (b) pension liability adjustments are excluded.
(7) LOANS TO EMPLOYEES: In addition to the restrictions contained
in subparagraph 11(l) of the Agreement, Borrower shall not make
any loan to any Person except loans to employees not exceeding
One Hundred Thousand and No/100 Dollars ($100,000.00) in the
aggregate outstanding at any one time.
(8) PERMITTED BORROWINGS: Notwithstanding the provisions of
subparagraph 10(q) of the Agreement, Borrower may finance or
refinance the acquisition of Equipment, whether by purchase
money financing, lease or otherwise.
ADDITIONS AND CHANGES TO DEFAULT PROVISIONS
(9)ADDITIONAL CROSS DEFAULTS: In addition to the Events of Default
specified in Paragraph 12 of the Agreement, it shall be an Event
of Default hereunder if Plymouth , subject to any applicable
cure period, shall fail to perform, keep or observe any of the
covenants, conditions promises, agreements or other obligations
or Plymouth to Bank under any agreement now ir hereafter
existing between plymouth and Bank, including, without
limitation, that certain Plymouth Agreement or in the event of
termination of said plymouth Agreement.
(10) Change of Control Default: In addition to the Events of Default
specified in Paragraph 12 of the Agreement, it shall be an Event
of Default hereunder if Plymouth shall cease to own at least
100% of the issued and outstanding stock of Borrower.
(11) CHANGE OF MANAGEMENT DEFAULT: In addition of the Events of
Default specified in Paragraph 12 of the Agreement, it shall be
an Event of Default hereunder if Maurice Hamilburg shall cease
to be the Chief Executive Officer and President of Borrower.
<PAGE>
EXHIBIT A - SPECIAL PROVISIONS - PAGE 6
OTHER PROVISIONS
(12) PERMITTED LIENS: Bank acknowledges that the liens evidenced by
the following filed financing statements and any amendments
thereto, as said financing statements exist as of February 3,
1997, shall constitute Permitted Liens:
9722005452; 9320012721; 932037852; 932073046;
932090200;952091599
CONDITIONS TO CLOSING
(13) ADDITIONAL CONDITIONS TO CLOSING: Bank shall be under no
obligation to consummate the transactions contemplated by this
Agreement until each of the conditions listed in this Paragraph
(13) has been satisfied. Whenever a condition contained herein
requires delivery of an agreement or other document to Bank,
each such agreement or other document shall be in form and
substance satisfactory to Bank in its sole discretion.
(a) Landlord's Agreement: Borrower shall Cause to be executed
in favor of Bank and delivered to Bank a Landlord's
Agreement from each lessor of property(ies) set forth on
Exhibit B, which landlord's Agreement shall include a
copy of the relevant lease.
(b) Guaranties: Borrower shall cause to be executed in favor
of Bank and delivered to Bank the Continuing Unconditional
Guaranty of Plymouth of any and all indebtedness of Borrower
to Bank.
(c) Warehouseman's Letters: Bank hereby acknowledges that
Eligible Inventory is and from time to time may be stored
with a bailee, warehouseman, or similar party at the
locations set forth in Exhibit B. Relative thereto,
Borrower shall cause each such party to execute and
deliver to Bank a Warehouseman's Letter.
(d) Patent, Trademark and License Mortgage: Borrower shall
execute and deliver to Bank a Patent, Trademark and
License Mortgage.
(e) Attorney's Opinion Letter: Borrower shall cause to be
executed and delivered to Bank an Attorney's Opinion
Letter.
\mam (m:\dept\abl\mercado\docs\plymth\exhibita)
07/02/96 3:15 PM
EXHIBIT B - BUSINESS AND COLLATERAL LOCATIONS
Attached to and made a part of that certain Loan and Security
Agreement of even date herewith between Brite-Line Technologies,
Inc. ("Borrower") and LASALLE NATIONAL BANK ("Bank").
A. Borrower's Business Locations (please indicate which lcoation
is the principal place of business and at which locations
originals and all copies of Borrower's books, records and
accounts are kept).
1. 10660 East 51st Avenue (chief place of business/
Denver, Colorado 80239 leased property)
2.
3.
B. Other locations of Collateral (including, without limitation,
warehouse locations, processing locations, consignment
locations) and all post office boxes of Borrower. Please
indicate the relationship of such location to Borrower (i.e.
public warehouse, processor, etc).
1. c/o Midstates Warehouse
601 West 143rd Street
Plainfield, Illinois 60544
2. c/o Hale Intermodal Warehouse
1801 South Clinton Street
Baltimore, Maryland 21224
3. c/o Robertson Johnson Warehouse
2600 Shader
Orland, Florida 32854
4. c/o Southern Warehouse Corporation
3500 East Crosstimbers
Houston, Texas 77093
5. c/o Weber Distribution
15301 Shoemaker Avenue
Norwalk, California 90650
Initialled by Borrower:
Initialled by Bank:
EXHIBIT (4)(xv)
CONTINUING UNCONDITIONAL GUARANTY
WHEREAS, Brite-Line Technologies, Inc. ("Borrower") has
entered into a Loan and Security Agreement dated February 25, 1997,
(the "Loan Agreement") with LaSalle National Bank ("Bank") pursuant
to which Bank has made or may, in its sole discretion, from time to
time hereafter, made loans and advances to or extend other financial
accommodations to Borrower;
WHEREAS, the undersigned is desirous of having Bank extend
and/or continue the extension of credit to Borrower and Bank has
required that Guarantor (as hereinafter defined) execute and deliver
this Guaranty to Bank as a condition to the extension and
continuation of credit by Bank; and
WHEREAS, the extension and/or continued extension of credit,
as aforesaid, by Bank is necessary and desirable to the conduct and
operation of the business of Borrower and will inure to the personal
and financial benefit of Guarantor;
NOW, THEREFORE, for value received and in consideration of any
loan, advance, or financial accommodation of any kind whatsoever
heretofore, now or hereafter made, given or granted to Borrower by
Bank (including, without limitation, the Loans as defined in, and
made or to be made by Bank to Borrower pursuant to, the Loan
Agreement), the undersigned, and each of them, if there be more than
one, (collectively, the "Guarantor") unconditionally guaranties (i)
the full and prompt payment when due, whether at maturity or
earlier, by reason of acceleration or otherwise, and at all times
thereafter, of all of the indebtedness, liabilities and obligations
of every kind and nature of Borrower to Bank or any parent,
affiliate or subsidiary of Bank (the term "Bank" as used hereafter
shall include such parents, affiliates and subsidiaries), howsoever
created, arising or evidenced, whether direct or indirect, absolute
or contingent, joint or several, now or hereafter existing, or due
or to become due, an howsoever owned, held or acquired by Bank,
whether through discount, overdraft, purchase, direct loan or as
collateral or otherwise, including without limitation all
obligations and liabilities of Borrower to Bank under the Loan
Agreement and (ii) the prompt, full and faithful discharge by
Borrower of each and every term, condition, agreement,
representation and warranty now or hereafter made by Borrower to
Bank (all such indebtedness, liabilities and obligations being
hereinafter referred to as the "Borrower's Liabilities"). Guarantor
further agrees to pay all costs and expenses, including, without
limitation, all court costs and reasonable attorneys' and
paralegals' fees paid or incurred by Bank in endeavoring to collect
all or any part of Borrowers's Liabilities from, or in prosecuting
any action against, Guarantor or any other guarantor of all or any
part of Borrower's Liabilities. All amounts payable by Guarantor
under this Guaranty shall be payable upon demand by Bank.
Notwithstanding any provision of this Guaranty to the
contrary, it is intended that this Guaranty, and any liens and
security interests granted by Guarantor to secure this Guaranty, not
constitute a "Fraudulent Conveyance" (as defined below).
Consequently, Guarantor agrees that if the Guaranty, or any liens or
security interests securing this Guaranty, would, but for the
application of this sentence, constitute a Fraudulent Conveyance,
this Guaranty and each such lien and security interest shall be
valid and enforceable only to the maximum extent that would not
cause this Guaranty or such lien or security interest to constitute
a Fraudulent Conveyance, and this Guaranty shall automatically be
deemed to have been amended accordingly at all relevant times. For
purposes hereof, "Fraudulent Conveyance" means a fraudulent
conveyance under Section 548 of the "Bankruptcy Code" (as hereinafter
defined) or a fraudulent conveyance or fraudulent transfer under the
provisions of any applicable fraudulent conveyance or fraudulent
transfer law or similar law of any state, nation or other
governmental unit, as in effect from time to time.
Guarantor hereby agrees that, except as hereinafter provided,
its obligations under this Guaranty shall be unconditional,
irrespective of (i) the validity or enforceability of Borrower's
Liabilities or any part thereof, or of any promissory note or other
document evidencing all or any part of Borrower's Liabilities, (ii)
the absence of any attempt to collect Borrower's Liabilities from
Borrower or any other guarantor or other action to enforce the same,
(iii) the waiver or consent by Bank with respect to any provision of
any instrument evidencing Borrower's Liabilities, or any part
thereof, or any other agreement heretofore, now or hereafter
executed by Borrower and delivered to Bank, (iv) failure by Bank to
take any steps to perfect and maintain its security interest in, or
to preserve its rights to, any security or collateral for Borrower's
Liabilities, (v) the institution of any proceeding under Chapter 11
of Title 11 of the United States Code (11 U.S.C. 101 et seq.), as
amended (The "Bankruptcy Code"), or any similar proceeding, by or
against Borrower, or Bank's election in any such proceeding of the
application of Section 1111(b)(2) of the Bankruptcy Code, (vi) any
borrowing or grant of a security interest by Borrower as debtor-in-
possession, under Section 364 of the Bankruptcy Code, (vii) the
disallowance, under Section 502 of the Bankruptcy Code, of all or
any portion of Bank's claim(s) for repayment of Borrower's
Liabilities, or (viii) any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of a guarantor.
Guarantor hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of receivership
or bankruptcy of Borrower, protest or notice with respect to
Borrower's Liabilities and all demands whatsoever, and covenants
that this Guaranty will not be discharged, except by complete
performance of the obligations and liabilities contained herein.
Upon any default by Borrower as provided in any instrument or
document evidencing all or any part of Borrower's Liabilities,
including without limitation the Loan Agreement, Bank may, at its
sole election, proceed directly and at once, without notice, against
Guarantor to collect and recover the full amount or any portion of
Borrower's Liabilities, without first proceeding against Borrower,
or any other person, firm, or corporation, or against any security
or collateral for Borrower's Liabilities.
Bank is hereby authorized, without notice or demand and
without affecting the liability of Guarantor hereunder, to at any
time and from time to time (i) renew, extend, accelerate or
otherwise change the time for payment of, or other terms relating
to, Borrower's Liabilities or otherwise modify, amend or change the
terms of any promissory note or other agreement, document or
instrument now or hereafter executed by Borrower and delivered to
Bank; (ii) accept partial payments on Borrower's Liabilities; (iii)
take and hold security or collateral for the payment of Borrower's
Liabilities guaranteed hereby, or for the payment of this Guaranty,
or for the payment of any other guaranties of Borrower's Liabilities
or other liabilities of Borrower, and exchange, enforce, waive and
release any such security or collateral; (iv) apply such security or
collateral and direct the order or manner of sale thereof as in its
sole discretion it may determine; and (v) settle, release,
compromise, collect or otherwise liquidate Borrower's Liabilities
and any security or collateral therefore in any manner, without
affecting or impairing the obligations of Guarantor hereunder. Bank
shall have the exclusive right to determine the time and manner of
application of any payments or credits, whether received from
Borrower or any other source, and such determination shall be
binding on Guarantor. All such payments and credits may be applied,
reversed and reapplied, in whole or in part, to any of Borrower's
Liabilities as Bank shall determine in its sole discretion without
affecting the validity or enforceability of this Guaranty.
To secure the payment and performance of Guarantor's
obligations and liabilities contained herein, Guarantor grants to
Bank a security interest in all property of Guarantor delivered
concurrently herewith or which is now, or at any time hereafter in
transit to, or in the possession, custody or control of Bank, and
all proceeds of all such property. Guarantor agrees that Bank shall
have the rights and remedies of a secured party under the Uniform
Commercial Code of Illinois, as now existing or hereafter amended,
with respect to all of the aforesaid property, including without
limitation thereof, the right to sell or otherwise dispose of any or
all of such property and apply the proceeds of such sale to the
payment of Borrower's Liabilities. In addition, at any time after
maturity of Borrower's Liabilities by reason of acceleration or
otherwise, Bank may, in its sole discretion, without notice to
Guarantor and regardless of the acceptance of any security or
collateral for the payment hereof, appropriate and apply toward the
payment of Borrower's Liabilities (i) any indebtedness due or to
become due from Bank to Guarantor, and (ii) any moneys, credits or
other property belonging to Guarantor, at any time held by or coming
into the possession of Bank whether for deposit or otherwise.
Guarantor hereby assumes responsibility for keeping itself
informed of the financial condition of Borrower, and any and all
endorsers and/or other guarantors of any instrument or document
evidencing all or any part of Borrower's Liabilities and of all
other circumstances bearing upon the risk of nonpayment of
Borrower's Liabilities or any part thereof that diligent inquiry
would reveal and Guarantor hereby agrees that Bank shall have no
duty to advise Guarantor of information known to Bank regarding such
condition or any such circumstances or to undertake any
investigation not a part of its regular business routine. If Bank,
in its sole discretion, undertakes at any time or from time to time
to provide any such information to any Guarantor, Bank shall be
under no obligation to update any such information or to provide any
such information to Guarantor on any subsequent occasion.
Guarantor consents and agrees that Bank shall be under no
obligation to marshall any assets in favor of Guarantor or against
or in payment of any or all of Borrower's Liabilities. Guarantor
further agrees that, to the extent that Borrower makes a payment or
payments to Bank, or Bank receives any proceeds of collateral, which
payment or payments or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to Borrower, its estate, trustee,
receiver or any other party, including, without limitation,
Guarantor, under any bankruptcy law, state or federal law, common
law or equitable theory, then to the extent of such payment or
repayment, Borrower's Liabilities or the part thereof which has been
paid, reduced or satisfied by such amount, and Guarantor's
obligations hereunder with respect to such portion of Borrower's
Liabilities, shall be reinstated and continued in full force and
effect as of the date such initial payment, reduction or
satisfaction occurred.
Guarantor agrees that any and all claims of Guarantor against
Borrower, any endorser or any other guarantor of all or any part of
Borrower's Liabilities, or against any of Borrower's properties,
whether arising by reason of any payment by Guarantor to Bank
pursuant to the provisions hereof, or otherwise, shall be
subordinate and subject in right of payment to the prior payment, in
full, of all of Borrower's Liabilities.
Bank may, without notice to anyone, sell or assign Borrower's
Liabilities or any part thereof, or grant participations therein,
and in any such event each and every immediate or remote assignee or
holder of, or participant in, all or any of Borrower's Liabilities
shall have the right to enforce this Guaranty, by suit or otherwise
for the benefit of such assignee, holder, or participant, as fully
as if herein by name specifically given such right, but Bank shall
have an unimpaired right, prior and superior to that of any such
assignee, holder or participant, to enforce this Guaranty for the
benefit of Bank, as to any part of Borrower's Liabilities retained
by Bank.
This Guaranty shall be binding upon Guarantor and upon the
successors (including without limitation, any receiver, trustee or
debtor in possession of or for Guarantor) of Guarantor and shall
inure to the benefit of Bank and its successors and assigns. If
there is more than one signatory hereto, all references to Guarantor
herein shall include each and every Guarantor and each and every
obligation of Guarantor hereunder shall be the joint and several
obligation of each Guarantor. Each Guarantor that is a corporation
or a partnership hereby represents and warrants that it has all
necessary corporate or partnership authority, as the case may be, to
execute and deliver this Guaranty and to perform its obligations
hereunder.
This Guaranty shall continue in full force and effect, and
Bank shall be entitled to make loans and advances and extend
financial accommodations to Borrower on the faith hereof until such
time as Bank has, in writing, notified Guarantor that all of
Borrower's Liabilities have been paid in full and discharged and the
Loan Agreement has been terminated or until Bank has actually
received written notice from any Guarantor of the discontinuance of
this Guaranty as to that Guarantor, or written notice of the death,
incompetency or dissolution of any Guarantor. In case of any
discontinuance by, or death, incompetency or dissolution of, any
Guarantor (collectively, a "Termination Event"), this Guaranty and
the obligations of such Guarantor and his or its heirs, legal
representatives, successors or assigns, as the case may be, shall
remain in full force and effect with respect to all of Borrower's
Liabilities incurred prior to the receipt by Bank of written notice
of the Terminating Event. The occurrence of a Terminating Event
with respect to one Guarantor shall not affect or impair the
obligations of any other Guarantor hereunder.
Wherever possible each provision of this Guaranty shall be
interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Guaranty shall be
prohibited by or invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or the remaining
provisions of this Guaranty.
THIS GUARANTY SHALL BE GOVERNED AND CONTROLLED BY THE INTERNAL
LAWS OF THE STATE OF ILLINOIS.
Guarantor irrevocably agrees that, subject to Bank's sold and
absolute election, ALL ACTIONS OR PROCEEDINGS IN ANY WAY, MANNER OR
RESPECT, ARISING OUT OF OR FROM OR RELATED TO THIS GUARANTY SHALL BE
LITIGATED IN COURTS HAVING SITUS WITHIN THE CITY OF CHICAGO, STATE
OF ILLINOIS. GUARANTOR HEREBY CONSENTS AND SUBMITS TO THE
JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURTS LOCATED WITHIN
SAID CITY AND STATE. Guarantor hereby irrevocably appoints and
designates the Secretary of State of Illinois, whose address is
Springfield, Illinois (or any other person having and maintaining a
place of business in such state whom Guarantor may from time to time
hereafter designate upon ten (10) days written notice to Bank and
who Bank has agreed in its sole discretion in writing is
satisfactory and who has executed an agreement in form and substance
satisfactory to Bank agreeing to act as such attorney and agent), as
Guarantor's true and lawful attorney and duly authorized agent for
acceptance of service of legal process. Guarantor agrees that
service of such process upon such person shall constitute personal
service of such process upon Guarantor. GUARANTOR HEREBY WAIVES ANY
RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION
BROUGHT AGAINST GUARANTOR BY BANK IN ACCORDANCE WITH THIS PARAGRAPH.
GUARANTOR HEREBY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY
ACTION OR PROCEEDING WHICH PERTAINS DIRECTLY OR INDIRECTLY TO THIS
GUARANTY.
If there is attached to this Guaranty a Rider A - Special
Provisions, such Rider is by this reference incorporated into and
made a part of this Guaranty.
IN WITNESS WHEREOF, this Guaranty has been duly executed by
the undersigned as of this 20 day of March , 19 97 .
FOR INDIVIDUAL GUARANTOR: FOR CORPORATE OR PARTNERSHIP
GUARANTOR:
Plymouth Rubber Company, Inc.
By
Its
Address:
By
Its
104 Revere Street
Canton, Massachusetts 02021
Address:
RIDER A - SPECIAL PROVISIONS
This Rider A - Special Provisions is attached to and made a
part of that certain Continuing Unconditional Guaranty (the
"Guaranty") of even date herewith executed by Plymouth Rubber
Company, Inc. ("Guarantor") in favor of LaSalle National Bank
("Bank").
1. Notwithstanding anything to the contrary contained in the
Guaranty, no payment made by or for the account of Guarantor
including, without limitation, (i) a payment made by Guarantor in
respect of Borrower's Liabilities or (ii) a payment made by any
other person under any other guaranty, shall entitle the Guarantor
by subrogation or otherwise, to any payment from Borrower or from or
out of any property of Borrower and Guarantor shall not exercise any
right or remedy against Borrower or any property of Borrower by
reason of any performance by Guarantor under the Guaranty.
PLYMOUTH RUBBER COMPANY,INC.
By
Its
Address: 104 Revere Street
Canton, Massachusetts 02021
EXHIBIT (4)(xvi)
April 23, 1997
Plymouth Rubber Company, Inc.
104 Revere Street
Canton, Massachusetts 02021
Gentlemen:
Plymouth Rubber Company, Inc., a Massachusetts corporation
("Borrower") and LaSalle National Bank, a national banking
association ("Bank") have entered into that certain Loan and Security
Agreement dated June 6, 1996 (the "Security Agreement"). From time
to time thereafter, Borrower and Bank may have executed various
amendments (each an "Amendment" and collectively the "Amendments") to
the Security Agreement (the Security Agreement and the Amendments
hereinafter are referred to, collectively, as the "Agreement").
Borrower and Bank now desire to further amend the Agreement as
provided herein, subject to the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the foregoing recitals,
the mutual covenants and agreements set forth herein and other good
and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
1. The Agreement hereby is amended as follows:
(a) Paragraph (8) of Exhibit A of the Agreement is deleted in its
entirety and the following is substituted in its place:
(8) TANGIBLE NET WORTH: Notwithstanding the provisions of
subparagraph 11(o) of the Agreement, Borrower and Brite-Line
shall at all times maintain an aggregate tangible
net worth of not less than the Minimum Tangible Net
Worth, as hereinafter defined. At all times from March
1, 1997 through November 29, 1997, "Minimum Tangible Net
Worth" shall equal One Million Sixty-Nine Thousand and
No/100 Dollars ($1,069,000.00). From November 30, 1997
through November 29, 1998, Minimum Tangible Net Worth
shall equal One Million Three Hundred Nineteen Thousand
and No/100 Dollars ($1,319,000.00). Thereafter, from
November 30th of each year through November 29th of the
following year, Minimum Tangible Net Worth shall be equal
to Minimum Tangible Net Worth on the last day of the
immediately preceding fiscal year plus Two Hundred Fifty
Thousand and No/100 Dollars ($250,000.00). "Tangible Net
Worth" being defined for purposes of this subparagraph as
Borrower's and Brite-Line's shareholders' equity
(including retained earnings) less the book value of all
intangible assets as determined solely by Bank on a
consistent basis plus the amount of any LIFO reserve plus
the amount of any debt subordinated to Bank, all as
determined under generally accepted accounting principles
applied on a basis consistent with the financial
statement dated March 1, 1996 except as set forth herein.
For purposes of this subparagraph, (a) intangible assets
are: (i) intangible asset-FAS #87,(ii) deferred tax
asset, net of the valuation reserve-FAS #109, and (iii)
trade names and (b) pension liability adjustments are
excluded.
Plymouth Rubber Company, Inc.
April 23, 1997
Page Two
2. This Amendment shall not become effective until fully
executed by all parties hereto.
3. Except as expressly amended hereby and by any other
supplemental documents or instruments executed by either
party hereto in order to effectuate the transactions
contemplated hereby, the Agreement and Exhibit A thereto
hereby are ratified and confirmed by the parties hereto
and remain in full force and effect in accordance with
the terms thereof.
LASALLE NATIONAL BANK,
a national banking association
By:
Title:
Accepted and agreed to this
7th day of May , 1997.
PLYMOUTH RUBBER COMPANY, INC.
By:
Title:
Consented and agreed to by the following
guarantor of the obligations of PLYMOUTH
RUBBER COMPANY, INC. to LASALLE NATIONAL BANK.
BRITE-LINE TECHNOLOGIES, INC.
By:
Title:
Date:
EXHIBIT (4)(xvii)
CONTINUING UNCONDITIONAL GUARANTY
WHEREAS, Plymouth Rubber Company, Inc. ("Borrower") has
entered into a Loan and Security Agreement dated June 6, 1996*, (the
"Loan Agreement") with LaSalle National Bank ("Bank") pursuant to
which Bank has made or may, in its sole discretion, from time to
time hereafter, made loans and advances to or extend other financial
accommodations to Borrower;
WHEREAS, the undersigned is desirous of having Bank extend
and/or continue the extension of credit to Borrower and Bank has
required that Guarantor (as hereinafter defined) execute and deliver
this Guaranty to Bank as a condition to the extension and
continuation of credit by Bank; and
WHEREAS, the extension and/or continued extension of credit,
as aforesaid, by Bank is necessary and desirable to the conduct and
operation of the business of Borrower and will inure to the personal
and financial benefit of Guarantor;
NOW, THEREFORE, for value received and in consideration of any
loan, advance, or financial accommodation of any kind whatsoever
heretofore, now or hereafter made, given or granted to Borrower by
Bank (including, without limitation, the Loans as defined in, and
made or to be made by Bank to Borrower pursuant to, the Loan
Agreement), the undersigned, and each of them, if there be more than
one, (collectively, the "Guarantor") unconditionally guaranties (i)
the full and prompt payment when due, whether at maturity or
earlier, by reason of acceleration or otherwise, and at all times
thereafter, of all of the indebtedness, liabilities and obligations
of every kind and nature of Borrower to Bank or any parent,
affiliate or subsidiary of Bank (the term "Bank" as used hereafter
shall include such parents, affiliates and subsidiaries), howsoever
created, arising or evidenced, whether direct or indirect, absolute
or contingent, joint or several, now or hereafter existing, or due
or to become due, an howsoever owned, held or acquired by Bank,
whether through discount, overdraft, purchase, direct loan or as
collateral or otherwise, including without limitation all
obligations and liabilities of Borrower to Bank under the Loan
Agreement and (ii) the prompt, full and faithful discharge by
Borrower of each and every term, condition, agreement,
representation and warranty now or hereafter made by Borrower to
Bank (all such indebtedness, liabilities and obligations being
hereinafter referred to as the "Borrower's Liabilities"). Guarantor
further agrees to pay all costs and expenses, including, without
limitation, all court costs and reasonable attorneys' and
paralegals' fees paid or incurred by Bank in endeavoring to collect
all or any part of Borrowers's Liabilities from, or in prosecuting
any action against, Guarantor or any other guarantor of all or any
part of Borrower's Liabilities. All amounts payable by Guarantor
under this Guaranty shall be payable upon demand by Bank.
Notwithstanding any provision of this Guaranty to the
contrary, it is intended that this Guaranty, and any liens and
security interests granted by Guarantor to secure this Guaranty, not
constitute a "Fraudulent Conveyance" (as defined below).
Consequently, Guarantor agrees that if the Guaranty, or any liens or
security interests securing this Guaranty, would, but for the
application of this sentence, constitute a Fraudulent Conveyance,
this Guaranty and each such lien and security interest shall be
valid and enforceable only to the maximum extent that would not
cause this Guaranty or such lien or security interest to constitute
a Fraudulent Conveyance, and this Guaranty shall automatically be
deemed to have been amended accordingly at all relevant times. For
purposes hereof, "Fraudulent Conveyance" means a fraudulent
conveyance under Section 548 of the "Bankruptcy Code" (as hereinafter
defined) or a fraudulent conveyance or fraudulent transfer under the
provisions of any applicable fraudulent conveyance or fraudulent
transfer law or similar law of any state, nation or other
governmental unit, as in effect from time to time.
Guarantor hereby agrees that, except as hereinafter provided,
its obligations under this Guaranty shall be unconditional,
irrespective of (i) the validity or enforceability of Borrower's
Liabilities or any part thereof, or of any promissory note or other
document evidencing all or any part of Borrower's Liabilities, (ii)
the absence of any attempt to collect Borrower's Liabilities from
Borrower or any other guarantor or other action to enforce the same,
(iii) the waiver or consent by Bank with respect to any provision of
any instrument evidencing Borrower's Liabilities, or any part
thereof, or any other agreement heretofore, now or hereafter
executed by Borrower and delivered to Bank, (iv) failure by Bank to
take any steps to perfect and maintain its security interest in, or
to preserve its rights to, any security or collateral for Borrower's
Liabilities, (v) the institution of any proceeding under Chapter 11
of Title 11 of the United States Code (11 U.S.C. 101 et seq.), as
amended (The "Bankruptcy Code"), or any similar proceeding, by or
against Borrower, or Bank's election in any such proceeding of the
application of Section 1111(b)(2) of the Bankruptcy Code, (vi) any
borrowing or grant of a security interest by Borrower as debtor-in-
possession, under Section 364 of the Bankruptcy Code, (vii) the
disallowance, under Section 502 of the Bankruptcy Code, of all or
any portion of Bank's claim(s) for repayment of Borrower's
Liabilities, or (viii) any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of a guarantor.
Guarantor hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of receivership
or bankruptcy of Borrower, protest or notice with respect to
Borrower's Liabilities and all demands whatsoever, and covenants
that this Guaranty will not be discharged, except by complete
performance of the obligations and liabilities contained herein.
Upon any default by Borrower as provided in any instrument or
document evidencing all or any part of Borrower's Liabilities,
including without limitation the Loan Agreement, Bank may, at its
sole election, proceed directly and at once, without notice, against
Guarantor to collect and recover the full amount or any portion of
Borrower's Liabilities, without first proceeding against Borrower,
or any other person, firm, or corporation, or against any security
or collateral for Borrower's Liabilities.
Bank is hereby authorized, without notice or demand and
without affecting the liability of Guarantor hereunder, to at any
time and from time to time (i) renew, extend, accelerate or
otherwise change the time for payment of, or other terms relating
to, Borrower's Liabilities or otherwise modify, amend or change the
terms of any promissory note or other agreement, document or
instrument now or hereafter executed by Borrower and delivered to
Bank; (ii) accept partial payments on Borrower's Liabilities; (iii)
take and hold security or collateral for the payment of Borrower's
Liabilities guaranteed hereby, or for the payment of this Guaranty,
or for the payment of any other guaranties of Borrower's Liabilities
or other liabilities of Borrower, and exchange, enforce, waive and
release any such security or collateral; (iv) apply such security or
collateral and direct the order or manner of sale thereof as in its
sole discretion it may determine; and (v) settle, release,
compromise, collect or otherwise liquidate Borrower's Liabilities
and any security or collateral therefore in any manner, without
affecting or impairing the obligations of Guarantor hereunder. Bank
shall have the exclusive right to determine the time and manner of
application of any payments or credits, whether received from
Borrower or any other source, and such determination shall be
binding on Guarantor. All such payments and credits may be applied,
reversed and reapplied, in whole or in part, to any of Borrower's
Liabilities as Bank shall determine in its sole discretion without
affecting the validity or enforceability of this Guaranty.
To secure the payment and performance of Guarantor's
obligations and liabilities contained herein, Guarantor grants to
Bank a security interest in all property of Guarantor delivered
concurrently herewith or which is now, or at any time hereafter in
transit to, or in the possession, custody or control of Bank, and
all proceeds of all such property. Guarantor agrees that Bank shall
have the rights and remedies of a secured party under the Uniform
Commercial Code of Illinois, as now existing or hereafter amended,
with respect to all of the aforesaid property, including without
limitation thereof, the right to sell or otherwise dispose of any or
all of such property and apply the proceeds of such sale to the
payment of Borrower's Liabilities. In addition, at any time after
maturity of Borrower's Liabilities by reason of acceleration or
otherwise, Bank may, in its sole discretion, without notice to
Guarantor and regardless of the acceptance of any security or
collateral for the payment hereof, appropriate and apply toward the
payment of Borrower's Liabilities (i) any indebtedness due or to
become due from Bank to Guarantor, and (ii) any moneys, credits or
other property belonging to Guarantor, at any time held by or coming
into the possession of Bank whether for deposit or otherwise.
Guarantor hereby assumes responsibility for keeping itself
informed of the financial condition of Borrower, and any and all
endorsers and/or other guarantors of any instrument or document
evidencing all or any part of Borrower's Liabilities and of all
other circumstances bearing upon the risk of nonpayment of
Borrower's Liabilities or any part thereof that diligent inquiry
would reveal and Guarantor hereby agrees that Bank shall have no
duty to advise Guarantor of information known to Bank regarding such
condition or any such circumstances or to undertake any
investigation not a part of its regular business routine. If Bank,
in its sole discretion, undertakes at any time or from time to time
to provide any such information to any Guarantor, Bank shall be
under no obligation to update any such information or to provide any
such information to Guarantor on any subsequent occasion.
Guarantor consents and agrees that Bank shall be under no
obligation to marshall any assets in favor of Guarantor or against
or in payment of any or all of Borrower's Liabilities. Guarantor
further agrees that, to the extent that Borrower makes a payment or
payments to Bank, or Bank receives any proceeds of collateral, which
payment or payments or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to Borrower, its estate, trustee,
receiver or any other party, including, without limitation,
Guarantor, under any bankruptcy law, state or federal law, common
law or equitable theory, then to the extent of such payment or
repayment, Borrower's Liabilities or the part thereof which has been
paid, reduced or satisfied by such amount, and Guarantor's
obligations hereunder with respect to such portion of Borrower's
Liabilities, shall be reinstated and continued in full force and
effect as of the date such initial payment, reduction or
satisfaction occurred.
Guarantor agrees that any and all claims of Guarantor against
Borrower, any endorser or any other guarantor of all or any part of
Borrower's Liabilities, or against any of Borrower's properties,
whether arising by reason of any payment by Guarantor to Bank
pursuant to the provisions hereof, or otherwise, shall be
subordinate and subject in right of payment to the prior payment, in
full, of all of Borrower's Liabilities.
Bank may, without notice to anyone, sell or assign Borrower's
Liabilities or any part thereof, or grant participations therein,
and in any such event each and every immediate or remote assignee or
holder of, or participant in, all or any of Borrower's Liabilities
shall have the right to enforce this Guaranty, by suit or otherwise
for the benefit of such assignee, holder, or participant, as fully
as if herein by name specifically given such right, but Bank shall
have an unimpaired right, prior and superior to that of any such
assignee, holder or participant, to enforce this Guaranty for the
benefit of Bank, as to any part of Borrower's Liabilities retained
by Bank.
This Guaranty shall be binding upon Guarantor and upon the
successors (including without limitation, any receiver, trustee or
debtor in possession of or for Guarantor) of Guarantor and shall
inure to the benefit of Bank and its successors and assigns. If
there is more than one signatory hereto, all references to Guarantor
herein shall include each and every Guarantor and each and every
obligation of Guarantor hereunder shall be the joint and several
obligation of each Guarantor. Each Guarantor that is a corporation
or a partnership hereby represents and warrants that it has all
necessary corporate or partnership authority, as the case may be, to
execute and deliver this Guaranty and to perform its obligations
hereunder.
This Guaranty shall continue in full force and effect, and
Bank shall be entitled to make loans and advances and extend
financial accommodations to Borrower on the faith hereof until such
time as Bank has, in writing, notified Guarantor that all of
Borrower's Liabilities have been paid in full and discharged and the
Loan Agreement has been terminated or until Bank has actually
received written notice from any Guarantor of the discontinuance of
this Guaranty as to that Guarantor, or written notice of the death,
incompetency or dissolution of any Guarantor. In case of any
discontinuance by, or death, incompetency or dissolution of, any
Guarantor (collectively, a "Termination Event"), this Guaranty and
the obligations of such Guarantor and his or its heirs, legal
representatives, successors or assigns, as the case may be, shall
remain in full force and effect with respect to all of Borrower's
Liabilities incurred prior to the receipt by Bank of written notice
of the Terminating Event. The occurrence of a Terminating Event
with respect to one Guarantor shall not affect or impair the
obligations of any other Guarantor hereunder.
Wherever possible each provision of this Guaranty shall be
interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Guaranty shall be
prohibited by or invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or the remaining
provisions of this Guaranty.
THIS GUARANTY SHALL BE GOVERNED AND CONTROLLED BY THE INTERNAL
LAWS OF THE STATE OF ILLINOIS.
Guarantor irrevocably agrees that, subject to Bank's sold and
absolute election, ALL ACTIONS OR PROCEEDINGS IN ANY WAY, MANNER OR
RESPECT, ARISING OUT OF OR FROM OR RELATED TO THIS GUARANTY SHALL BE
LITIGATED IN COURTS HAVING SITUS WITHIN THE CITY OF CHICAGO, STATE
OF ILLINOIS. GUARANTOR HEREBY CONSENTS AND SUBMITS TO THE
JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURTS LOCATED WITHIN
SAID CITY AND STATE. Guarantor hereby irrevocably appoints and
designates the Secretary of State of Illinois, whose address is
Springfield, Illinois (or any other person having and maintaining a
place of business in such state whom Guarantor may from time to time
hereafter designate upon ten (10) days written notice to Bank and
who Bank has agreed in its sole discretion in writing is
satisfactory and who has executed an agreement in form and substance
satisfactory to Bank agreeing to act as such attorney and agent), as
Guarantor's true and lawful attorney and duly authorized agent for
acceptance of service of legal process. Guarantor agrees that
service of such process upon such person shall constitute personal
service of such process upon Guarantor. GUARANTOR HEREBY WAIVES ANY
RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION
BROUGHT AGAINST GUARANTOR BY BANK IN ACCORDANCE WITH THIS PARAGRAPH.
GUARANTOR HEREBY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY
ACTION OR PROCEEDING WHICH PERTAINS DIRECTLY OR INDIRECTLY TO THIS
GUARANTY.
If there is attached to this Guaranty a Rider A - Special
Provisions, such Rider is by this reference incorporated into and
made a part of this Guaranty.
IN WITNESS WHEREOF, this Guaranty has been duly executed by
the undersigned as of this 20 day of March , 19 97 .
FOR INDIVIDUAL GUARANTOR: FOR CORPORATE OR PARTNERSHIP
GUARANTOR:
Brite-Line Technologies, Inc.
By
Its
Address:
By
Its
10660 East 51st Avenue
Denver, Colorado 80239
Address:
RIDER A - SPECIAL PROVISIONS
This Rider A - Special Provisions is attached to and made a
part of that certain Continuing Unconditional Guaranty (the
"Guaranty") of even date herewith executed by BRITE-LINE
TECHNOLOGIES, INC. ("Guarantor") in favor of LaSalle National Bank
("Bank").
1. Notwithstanding anything to the contrary contained in the
Guaranty, no payment made by or for the account of Guarantor
including, without limitation, (i) a payment made by Guarantor in
respect of Borrower's Liabilities or (ii) a payment made by any
other person under any other guaranty, shall entitle the Guarantor
by subrogation or otherwise, to any payment from Borrower or from or
out of any property of Borrower and Guarantor shall not exercise any
right or remedy against Borrower or any property of Borrower by
reason of any performance by Guarantor under the Guaranty.
BRITE-LINE TECHNOLOGIES, INC.
By
Its
EXHIBIT (4)(xviii)
DRAFT SUBJECT TO CHANGES
TRANSLATION OF THE PUBLIC DEED AND LOAN AGREEMENT
DOCUMENTING THE CONCESSION
OF A LOAN TO PLYMOUTH RUBBER EUROPA, S.A.
NOTARY PUBLIC: Mr. Ernesto Regueira Nunez, Notary of Porrino.
DATE: 11 April 1997
NUMBER: 479
"LOAN GUARANTEED BY MORTGAGE AND GUARANTEE
NUMBER: FOUR HUNDRED AND SEVENTY NINE
In Porrino, my residence, on the 11th day of April
nineteen hundred and ninety seven.
Before me, ERNESTO REGUEIRA NUNEZ, Notary Public of the
Association of La Coruna.
APPEAR
MR. PLACIDO OTERO ESTEVEZ, married, economist, residing at
Porrinno, domiciled at Calle Domingo el Bueno number 4,
holder of a National Identity Card, which he exhibits to
me, numbered 35.550.317.
MR. MANUEL ALCAIDE NUNEZ, manager of the office for company
banking, Vigo branch, of the Banco del Comercio, residing
at Vigo, domiciled at Plaza de Compostela number 27-28,
holder of a National Identity Card, which he exhibits to
me, numbered 34.867.925.
MR. JUAN JOSE LAGO ESCORCIA, duly empowered member of the
office for company banking, Vigo branch, of the Banco del
Comercio, residing at Vigo, domiciled at Plaza de
Compostela number 27-28, holder of a National Identity
Card, which he exhibits to me, numbered 32.590.099.
MR. ALBERTO ESTEVEZ RODRIGUEZ, legally separated, residing
at Porrino, manager of the Porrino branch of the Banco de
Bilbao Vizcaya, with domicile at Plaza del Ayuntamiento
number 5, holder of a National Identity Card, which he
exhibits to me, numbered 35.997.966.
MR. MANUEL DOMINGO DOMINGUEZ VARELA, married, employee of
the Banco de Bilbao Vizcaya, residing in Porrino, with
domicile at Plaza del Ayuntamiento number 5, holder of a
National Identity Card, which he exhibits to me, numbered
36.602.902.
MR. ALBERTO MIGUEZ LOURIDO, duly empowered person from the
Caja de Ahorros Municipal de Vigo, residing in Vigo,
domiciled at Calle Garcia Barbon number 1, holder of a
National Identity Card, which he exhibits to me, numbered
36.012.559.
All of them are of full legal age.
THEY INTERVENE:
a) Mr. Placido Otero Estevez, in the name and on behalf of
the mercantile entity "PLYMOUTH RUBBER EUROPA, S.A.",
Unipersonal Company, with corporate address at Porrino
(Pontevedra), Carretera Porrino-Salceda Km. 1,500;
constituted for indefinite time by Public Deed before the
Notary Public of Madrid, Mr. Jose Maria Alvarez Vega, on
August 26,1996, under number 3.241 of his official record
and registered in the Mercantile Registry of Pontevedra, in
Folio 49, Book 1.847 of Companies, PO-18.045.
Fiscal Identity Code number A-36269694.
Exercises this representation in virtue of the special
power, in the name of the represented, Ms. Beatriz
Satrustegui Menchaca, granted before me on the present day
under number __________ of my official record; in execution
of the agreement of the Board of Administration, held ond
April, 7, 1997. From said Public Deed I transcribe: "......
To grant powers to ... Mr. Placido Otero Estevez ..., so,
.... he may, by himself, subscribe in the name of the
company a loan, for the amount of 250,000,000 Pesetas which
shall be granted to the company by a syndicate of financial
credit entities formed by the Banco del Comercio, Banco
Bilbao Vizcaya and Caja Municipal de Ahorros de Vigo, as
well as: 1. To constitute on behalf of the above mentioned
credit entities mortgage on real states property of the
company, in the conditions established as convenient, apply
for the registration of said mortgage in the Property
Registry, grant the public deeds that may deem necessary
for clarification, amendment, and rectification to obtain
the final registration of the above mentioned mortgage in
the Property Registry. 2. To appear before the Notary
Public or the business agent of his choice to incorporate
the loan contract guaranteed by mortgage to a public deed
and to perform all acts that may deem necessary for the
conclusion and complete effectiveness of the same ... ".
Whatever is not established herein will not alter, vary,
condition or limit the preceding.
Mr. Otero assures that the faculties he invokes are dully
in force and that the entity he represents subsists.
b) Mr. Alcaide Nunez and Mr. Lago Escorcia in the name and
on behalf of the mercantile entity "BANCO DEL COMERCIO,
S.A.", with corporate address at Madrid, Paseo de la
Castellana, number 108, constituted for indefinite time
under the denomination of "Banco Hispano Suizo, S.A.", by
Public Deed on October, 12, 1920, before the Notary Public
of Madrid, Mr. Antonio Turon y Bosca; Afterwards said
mercantile entity adopted the denomination of "BANCO DE
FINANCIACION INDUSTRIAL, S.A.", by Public Deed, on March 7,
1964, under number 1.303 of his official record; registered
in the Mercantile Registry of Madrid, in Folio 131 of Book
402, page 4.315. The present denomination of "BANCO DE
COMERCIO, S.A.", is the result of the merger carried out by
"BANCO DE FINANCIACION INDUSTRIAL, S.A." absorbing the
"BANCO DE COMERCIO, S.A.", adopting notwithstanding the
preceding, this denomination, as results of the Public Deed
granted on January 1, 1989, before Notary Public of Madrid,
Mr. Juan Bolas Alfonso, under number 1 of his official
record, and registered in the Mercantile Registry of
Madrid, in folio 156, Book 1.063 general, 1.011 of section
3 of Companies Book, Page number 4.314-2, inscription
number 89.
Fiscal Identity Code number A-28000545.
They have faculties for this act by power of attorney
granted for them by Mr. Carlos Gorria Cortazar and Mr. Luis
Antonio Delso Heras, acting in the name and on behalf of
the "BANCO DE FINANCIACION INDUSTRIAL, S.A.", on November
30, 1988, before the Notary Public of Madrid, Mr. Jose
Antonio Escartin Ipiens, under number 4.590 of his official
record, from which among others, I transcribe: "... for in
the name and on behalf of the "BANCO DE FINANCIACION
INDUSTRIAL, S.A." (INDUBAN) may exercise ... the faculties
.. under numbers ... to be indicated ... jointly... B)
Jointly, this is, with any other empowered person from the
Bank, who may be empowered upon the present power or any
other power, within the same faculties: ... 6. Grant loans
or credits. a) Grant loans or credits, financial or
commercial discounts, overdrafts in current accounts,
exceeds in credit accounts, or under any other modality, in
national or foreign currency, both the empowering entity
individually or jointly with any other public or private
entity, national or foreign, simple or with any type of
guarantee, personal, real, ordinary pledge or pledge
without transmission, mortgage or chattel mortgage, or any
other guarantee, as well as renew, defer, amend, extend,
reduce, decline, transmit, dispose, cancel, extinguish the
granted loans or credits, or those which the Bank is holder
whether they are simple or with any of the above mentioned
personal or real guarantees. b) To open documentary
credits, request the confirmation of the opened
documentary credits by this entity, confirm the credits
opened by other entity, advise documentary credits and in
all cases, whether they are revocable or irrevocable,
simple or with any of the above mentioned guarantees. c) To
intervene in the syndicated loans and accept the
designation as Agent Bank, Director Bank or any other
directive designation, both individually or jointly with
other loan entities, accepting all kind of compromises and
carrying out all acts for the performing of those
designations... 10.- Guarantees. ... c) Acceptation of
guarantees. = To accept and retain all kind of guarantees
and counter-guarantees, on behalf of the Bank, both real
and personal, mortgage or chattel mortgage, ordinary pledge
or pledge without transmission, or any other guarantee. d)
Substitution and cancellation of guarantees. = To
substitute, amend, postpone, divide, reduce and cancel and
totally or partially extinguish all kind of personal and
real guarantees, bonds, securities, pledge without
transmission or ordinary pledge, mortgage or chattel
mortgage, constituted on behalf of the Bank.
Thus it results from authentic copy of said Power of
Attorney public deed that they show me (registered in the
Mercantile Registry of Madrid, folio number 134, volume
number 1.063 general, number 1.011 of section 3 of
Companies Book, Page number 4.314, inscription 893), and
whatever is omitted will not alter, vary or condition the
above established.
Mr. Alcaide Nunez and Mr. Lago Escorcia assure that the
faculties they invoke are duly in force and that the entity
they represent subsists.
c) Mr. Alberto Estvez Rodriguez and Mr. Manuel Domingo
Dominguez Varela, in the name and on behalf of the entity
"BANCO BILBAO VIZCAYA, S.A." (from now on, in this public
deed, "the Bank"), with Fiscal Identity Code number A-
48/265169, domiciled in Bilbao, Plaza San Nicolas 4, which
proceeds from merger, formalized in public deed authorized
by Notary Public of Bilbao, Mr. Jose Maria Arriola Arana,
on October 1, 1988, of the entities "Banco de Bilbao. S.A."
and "Banco de Vizcaya, S.A.", in which public deed was
adopted the present denomination. It is registered in the
Mercantile Registry of Vizcaya in the Volume 2.083, Book
1.545 of Section 3 of Companies, Folio 1, Page number
14.741, inscription 1.
They have faculties for this act:
From the public deed of power of attorney granted in the
name of said entity, by Mr. Emilio de Ybarra y Churruca, on
the 1st of October nineteen hundred and eighty-eight,
before the Notary Public of Bilbao, Mr. Jose Ignacio Uranga
Otaegui, under number 4.903 of his official records,
registered in the Mercantile Registry of Vizcaya in Volume
2.083 general, Book 1.545 of Section 3 of Companies, Folio
57, Page number 14.741, inscription 6, in use of the
faculties granted in public deed authorized by the same
Notary Public in the same date.
The contents of this public deed, insofar interests to
point out herein, is: "... for each one of them, in the
name and on behalf of the "Banco de Bilbao Vizcaya, S.A."
and as for this entity and all its offices, Branches and
urban Agencies, established or to be established in the
future, both in Spain and abroad ... and jointly, with any
other duly empowered person who, in his turn, holds, at
least, the same faculties that may be exercise in each
case." = " ... 6 ... a) To grant loans and credits,
commercial discounts, overdrafts in current accounts,
exceeds in credit accounts, or under any other modality, in
national or foreign currency, both the empowering entity
individually or jointly with any other public or private
entity, national or foreign, simple or with any type of
guarantee, personal, real, ordinary pledge or pledge
without transmission, mortgage or chattel mortgage, or any
other guarantee, as well as renew, defer, amend, extend,
reduce, decline, transmit, dispose, cancel, extinguish the
granted loans or credits, or those which the Bank is holder
whether they are simple or with any of the above mentioned
personal or real guarantees. b) To open documentary
credits, request the confirmation of the opened
documentary credits by this entity, confirm the credits
opened by other entity, advise documentary credits and in
all cases, whether they are revocable or irrevocable,
simple or with any of the above mentioned guarantees. c) To
intervene in the syndicated loans and accept the
designation as Agent Bank, Director Bank or any other
directive designation, both individually or jointly with
other loan entities, accepting all kind of compromises and
carrying out all acts for the performing of those
designations. 10.- Guarantees. ... c) Acceptation of
guarantees. = To accept and retain all kind of guarantees
and counter-guarantees, on behalf of the Bank, both real
and personal, mortgage or chattel mortgage, ordinary pledge
or pledge without transmission, or any other guarantee. d)
Substitution and cancellation of guarantees. = To
substitute, amend, postpone, divide, reduce and cancel and
totally or partially extinguish all kind of f personal and
real guarantees, bonds, securities, pledge without
transmission or ordinary pledge, mortgage or chattel
mortgage, constituted on behalf of the Bank ..."
Thus it results from the copies of said public deed, which
are shown to me, in which the non transcribed will not
alter, vary or condition the established herein.
Mr. Estevez Rodriguez and Dominguez Varela assure that the
faculties invoked are duly in force and that the entity
they represent subsists.
d) Mr. Alberto Miguez Lourido, in the name and on behalf of
the "CAJA DE AHORROS MUNICIPAL DE VIGO" - "CAIXAVIGO", with
corporate address in Vigo - Avenida de Garcia Barbon, 1 and
3 -, with Fiscal Identity Code number G-36600369;
Institution governed by the By-laws approved by General
Shareholders Meeting dated on the 18th June 1996, elevated
on to a public deed authorized by the Notary Public of
Vigo, Mr. Alvaro Moure Goyanes, the 19th of the same month
and year, under number 770 of his official records,
corrected by another public deed authorized by the same
Notary Public, the 21st of the same month and year, under
number 785 of his official records; registered in the
Mercantile Registry of Pontevedra in Folio 15 of the Book
1.134 of Companies, inscription 117 of Page number PO-
4.111. The first By-laws of the Company were approved by
Royal Order of August 7, 1880, created as "Caja de Ahorros
y Monte de Piedad Municipal de Vigo" and changed the
actual denomination by agreement of the General
Shareholders Meeting of the company on February 1, 1989,
which was elevated on to a public deed authorized by the
Notary Public of Vigo, Mr. Alfonso Zulueta de Haz, on the
10th of March of the same year, under number 833 of his
official records.
He supports said representation with copy, which is shown
to me, of the public deed granted by the General Manager of
the "Caja de Ahorros Municipal de Vigo", Mr. Julio
Fernandez Gayoso, the twenty-first of November of nineteen
hundred ninety-four, before Notary Public of Vigo, Mr.
Manuel Martinez Rebollido, under number 2.466 of his
official records, in his quality of General Manager of said
Savings Bank and in execution of the agreements of the
Administration Board dated 27th October 1994.
Resulting from said public deed (registered in the
Mercantile Registry of Pontevedra in Folio 99 of the Book
1.134 of Companies, inscription 127 of Page number PO-
4.111) Mr. Miguez Lourino holds the following faculties,
among others: "...II.- ORDINARY BANK OPERATIONS."-
Constitute, defer, amend, renew, cancel or extinguish, in
the name and on behalf of the Savings Bank, all acts and
contracts regarding the operations of the Entity and all
other operation due to the banking activity as listed
herein, formalizing and subscribing all public and private
documents that may deem necessary: ... 8. Credits and
loans of all kind, without guarantee or with any kind of
guarantee (mortgage or chattel mortgage, pledge, ordinary
or without transmission, etc.), subscribing public deed
policy, as well as accepting those guarantees, enclosed the
superposition of these ... 18. Totally or partially cancel
mortgages or chattel mortgages and ordinary pledges or
pledges without transmission, granting the corresponding
payment letters, as well as division, segregation,
aggregation and release of mortgages and other guarantees.-
19. Request, accept, constitute and cancel bonds or
securities of any kind, jointly or individually whether
they are personal, cash or title pledging, in the name of
the Savings Bank or on behalf of a third (Areitio dixit)
person and to be duly effective in the sphere of contract,
whether private, civil, mercantile or labor ... 38.- ...
4.- The managers... Mr. Alberto Miguez Lourido, may
exercise the following faculties: a) Jointly and severally,
anyone of them, those included in epigraphs ... 8 ... b)
... they will have to present certification granted by the
General Manager of the Entity by any of the Assistant
Manager, which supports that the operation has been
approved by the entity; and those included in sections 18
and 19 ..., they will have to present ... certification ...
when the amount exceeds 15,000,000 Pesetas.
Mr. Miguez Lourido for the incorporation to the present
certification issued by Mr. Angel Lopez-Corona Davila,
Assistanat Manager of "Caja de Ahorros Municipal de Vigo",
clearing that on the twenty-first of November of nineteen
hundred ninety-six the "Caja de Ahorros de Vigo" agreed the
participation in a syndicated loan operation of 250,000,000
Pesetas, with mortgage guarantee on behalf of "PLYMOUTH
RUBBER EUROPA, S.A.", for an amount of 83,400,000 Pesetas
and accept the bond of 26,666,666 Pesetas granted by ABN
AMRO, to answer to the payment of this loan operation, and
which issued in one sole sheet of common paper, I include
it to incorporate to the present deed.
Whatever is not established herein as not being necessary,
will not alter, vary, condition or limit the preceding.
Mr. Muiguez Lourido assures that the faculties invoked are
duly in force and that the entity he represents subsists.
THEY HAVE, IN MY JUDGMENT, the necessary legal capacity to
grant the present public deed of LOAN GUARANTEED BY MAXIMUM
MORTGAGE AND GUARANTEE, and to that effect, they
STATE
A.- Mr. Placido Otero Estevez, that the mercantile entity
"PLYMMOUTH RUBBER EUROPA, S.A." is legal title holder, by
the title which shall be explained afterwards, of the
following property located in:
PROVINCE OF PONTEVEDRA, "MUNICIPIO DE PORRINO,
PARROQUIA DE ATIOS":
"RIO A RIO", "COUTO VELLO", COUTO ANCHO, "COUTO VELLO
DEL REGATO" and "MARCO", mountain and furze with the
following buildings :
- - A SINGLE-STOREY INDUSTRIAL PLANT, destined for
storage, which takes up a surface area of nine hundred
and twenty square metres (920 m2).
- - INDUSTRIAL PLANT AND OFFICES, composed of ground floor
and first floor, in part. The ground floor destined for
industrial uses which takes up two thousand and forty
one square metres (2.041 m2) and a first floor for
office purposes which takes up three hundred and sixty
four square metres (264 m2).
- - A SINGLE-STOREY INDUSTRIAL PLANT, which takes up a
surface area of five hundred and sixty square metres
(560 m2), destined for production.
All this forms one sole land of one hectare, thirty
three areas and forty centiareas, which limits: to the
North property of "Sial, S.A."; South, the company
"Solfer" and pool; East, from the company "Solfer" and
road from Porrino to Salcedo de Caselas, and West, Juana
Davila Lago and "Sial S.A.".
TITLE: It belongs to them by virtue of universal and
patrimonial transmission due to spin-off of "PLYMOUTH
RUBBER EUROPA, S.A." and "CINTAS ADHESIVAS NUNEZ S.A."
as result of Public Deed granted by the Notary Public of
Bilbao, Mr Emilio Fernandez Valdes Cruzat, the 25th
February 1997, under number 406 of his official records.
The actual description of the property results from the
Public Deed of New York Declaration and Association,
granted by the preceding title holder "Cintas Adhesivas
Nunez, S.A." before the Notary Public of Porrino, Mr.
Ernesto Regueira Nunez, on the 27th of November of 1996,
under number 1.372 of his official records.
REGISTRATION: The property is registered at the Tuy Land
Registry, under book 171, volume 891, folio 177, estate
number 26.620.
CHARGES, LIENS AND REGISTRY INFORMATION: The property is
free of charges and limitations, and I, the Notary
Public, assert that the registry information obtained on
the tenth of April of the present year, consisting in a
simple note of the Tuy Land Registry, coincides with
the above exposed about the estate of charges.
Concerning the title holder the preceding title holder
is recorded, even though the spin-off Public Deed is
presented with estate number 1.509, of Diary 47, which
it has been taken away by the person who had presented
the public deed for the registration in the Mercantile
Registry; all this has been previously notified to the
granters and it is ratified in this moment by the
representatives of the borrower entity. Likewise I, the
Notary Public, expressly advise the appear that about
the obtained information the preceding Registry
situation will prevail before the presentation to the
Registry of the authorized copy of this Public Deed.
XXXX : Free of hirers and all kind of occupants, as
declared by D. Placido Otero Estevez.
URBAN SITUATION: There are no circumstances.
ADMINISTRATIVE REGISTRY: The urban contribution is
established with references E416071 0001B0 and E416072
0001YQ relating to the Property register. The invoices
corresponding the 1996 fix assets tax ("IBI") is
incorporated in this copy obtained in my bureau.
B.- Mr. Placido Otero Estevez, that the mercantile
entity "PLYMOUTH RUBBER EUROPA, S.A." (from now on the
BORROWER) has appoint the LENDER entities requesting a
loan of TWO HUNDRED AND FIFTY MILLION PESETAS
(250,000,000).
C.- That the LENDER entities agree to grant the BORROWER
the requested loan.
D.- That, in consequence, the parties agree in
formalizing a Syindicated Loan Contract with the
following,
CLAUSES
FIRST.- Amount of the Loan
1.1. Total compromise on the part of the Lenders
The banking entities listed under clause SECOND below
hereby jointly and separately make available to the
Borrower a loan up to a limit of 250,000,000 (Two
Hundred and Fifty million) pesetas, of which amount the
Borrower may dispose subject to the conditions
established in the present Agreement.
1.2. Compromise assumed by the Borrower
The Borrower hereby accepts the loan and obliges to
return to the Lenders the funds withdrawn, on each and
all of the scheduled dates established in clause
ELEVENTH, as well as to pay, on the dates and in
accordance with the conditions established in the
present Agreement, all interests and commissions
accrued by the loan as well as the expenses and taxes
that it may give rise to.
SECOND.- Distribution of the loans and nature of the rights
and obligations of the Lenders
2.1 Total amount of the loan
The Lenders shall make available the total amount of
the loan in accordance with the following distribution:
ENTITY
UNDERTAKING
CAJA DE AHORROS MUNICIPAL DE VIGO 83,400,000 Pesetas
BANCO DE BILBAO VIZCAYA, S.A. 83,300,000 Pesetas
BANCO DE COMERCIO, S.A. 83,300,000 Pesetas
2.2 Independent nature of the obligations of the Lenders.
The contractual obligations are assumed by The Lenders
in a joint but separate manner.
Each one of the Lenders may exercise its own rights in
an individual way, up to the limit of his participation,
without prejudice to the exercise of the
rights which may correspond to the rest of them, unless
expressly agreed otherwise. Each one of the Lenders may
also, individually, take any many extra-judicial
actions directed to the conservation and defense of the
rights of the rest of the Lenders, except for the Agent,
who, in the cases hereby established, may carry out actions
directed to the conservation and defense of the rights of
The rest of the Lenders. Each one of the Lenders shall
only be entitled to exercise its own individual rights.
In the event that any one of the Lenders does not make
the funds available to the Borrower, through the agent,
on the time and under the conditions hereby
established, this shall not affect the obligations of
the rest of the Lenders, who shall be exclusively
obliged to provide the funds up to the limit of their
respective undertakings, notwithstanding the legal
actions against the non-complying Lender which may
correspond to the Borrower.
2.3. Majority of Lenders
For the contractual situations upon which this may be
necessary, it shall be understood as "majority" of
Lenders the conjunction of those whose interests
represent, at a given time, more than 50% (Fifty per
cent) of the total amount of the loan or of the
outstanding amount of the loan, if applicable.
2.4.The Agent
CAJA MUNICIPAL DE AHORROS DE VIGO assumes the position
of Agent to the present loan Agreement, together with
all the rights and obligations which, in consideration
to said role, are conferred to it under the present
Agreement.
THIRD.- Special accounts for the loan
3.1. The Agent's accountancy
With regards to the present Agreement, the agent, as
such, shall open a special credit account in favor of
the Borrower. The agent shall debit on that account the
amount of the funds withdrawn by the Borrower, as well
as the accrued interests over the loan, the
commissions, the expenses, delay interests, additional
costs and all any amounts which, according to the
present agreement, are payable by the Borrower.
Equally, all amounts received by the Agent from the
Borrower shall be credited on the same account, so that
the balance of said account represents, at any given
time, the total amount owed by the Borrower to the
Lenders.
3.2. Accountancy of the Lenders
Each one of the Lenders shall open in its accountancy a
special account for the loan under the name of the
Borrower, in which it shall debit all amounts given to
the Borrower through the Agent, as well as the accrued
interests over the loan, the commissions, the expenses,
delay interests, additional costs and all any amounts
which, according to the present agreement, are payable
by the Borrower. Equally, all Lenders shall credit on
the same account all amounts received by the Borrower,
so that the balance of said account represents, at any
given time, the amount owed by the Borrower to each
said Lender.
3.3.Certification of the balance of the accounts.
With regards to the loan being or not judicially or
extra-judicially claimable the parties agree to
consider as the outstanding claimable amount the figure
resulting from the balance of the accounts referred to
in the present clause, unless the existence of an
error, falsehood or any other obstative circumstance is
proven by whoever invokes it. The liquidation of the
account shall be carried out by the Agent, or by each
one of the Lenders in accordance to whatever results of
their respective accounts, when reduced to their own
individual undertaking, thus considering as the
outstanding claimable amount the figure established in
the certification issued by the Lender in question, as
long as a Public Notary or Stock Broker confirms, in a
public document or by an official confirmation written
out on the certification, that the figure on said
certification agrees with the balance of the special
account, and that the latter has been liquidated in
accordance to the agreed rules.
FOURTH.- Withdrawals
4.1 Withdrawals of loan funds
The Borrower shall have available the total amount of
the loan on the eleventh of April of nineteen hundred
and ninety seven by means of a sole
withdrawal of 250,000,000 pesetas.
4.62. Funds to be made available to the Agent
Each of the Lenders shall, notifying it to the Agent by
fax or telex, make immediately available to the latter
the corresponding amount prior to 12 a.m. on the date
on which the funds are to be withdrawn, with
effectiveness on that same date, by crediting said
amount to the account 2080 which CAJA MUNICIPAL DE
AHORROS DE VIGO has at the Bank of Spain in Madrid,
using the Orders of Transfer of Funds System (O.M.F.)
or to whichever other account the agent may indicate in
the future.
4.73. Delivery of the funds to the Borrower
The Agent shall deliver to the Borrower the funds
requested on the date fixed, after twelve o'clock (12:00 a.m.)
with effectiveness on that same date, for the amount requested
or, failing that, for the amount credited by the Lenders on the
Agents account.
The delivery shall be effected by crediting said amount
in account number 2080/0054/004002314, which the
Borrower has opened in CaixaVigo's branch in Porrino.
FIFTH.- General rules concerning the interests
5.1.Interest accrual
The amounts withdrawn of the loan shall accrue daily
interest in favor of the Lenders at the annual nominal
rate which, for each period, is established in the
following clauses.
5.2.Interest payment
The accrued interests shall be paid in money by the
Borrower on the last day of each period of interest,
not being it necessary for the Lenders to request said
payments.
5.3.Liquidation and calculation of the interests.
The interest shall be calculated for the days
effectively consumed within each interest period. With
regards to the accrual and liquidation of said
interest, it shall be deemed as the first day of each
interest period as effectively not consumed, and the
last day of said period, as effectively consumed.
The calculation of the interests corresponding to each
liquidation period shall be carried out multiplying the
amount of the withdrawn and not re-paid funds times the
percentage of the nominal interest rate applicable to
said period and dividing it by One hundred.
The nominal interest rate applicable to any given
period shall be determined dividing the annual nominal
interest rate applicable by 360 and multiplying the
result by the number of days of the period of
liquidation.
5.4.Binding nature of the interest rates
The annual nominal interest rate corresponding to each
interest period, as calculated in accordance with the
rules herein established, and communicated equally
according to what is established in the present
contract, shall be deemed as accepted by the Borrower,
and shall be binding for the latter if the Agent does
not receive, for whichever cause, including "force
majeure", prior to 9 a.m. on the date on which the
interest period is to start, a communication from the
Borrower stating that it does not accept the applicable
interest rate. The Borrower hereby expressly renounces
any other term for communication to which it may be
legally entitled.
If the non acceptance of the interest by the borrower
were to be communicated within the period established
in the preceding paragraph the borrower will have to
reimburse all pending capital, as well as any other
amount due by virtue of the present agreement within
the thirty days following that date, an interest will
accrue, at which ever rate was applicable to the
preceding interest period.
5.5.Error in the calculation of the interests
Should there be a manifest error in the calculation of
the applicable interest rate, the Agent shall
immediately amend said error, the effects of said
amendment being effective as from the date on which the
erroneous interest rate was first applied.
SIXTH.- Interest periods
6.1. Division into interest periods
With regards to the present Agreement, it shall be
understood as Interest Periods: each one of the
three month periods following the date on which the
funds are withdrawn and until total repayment of the
loan in accordance with clause ELEVENTH hereafter, or,
should it be applicable, the interest period
established in the second paragraph of clause FIFTH,
point 5.4.
6.2.Maximum duration of the interest periods
Under no circumstances may the last date of the last
interest period may exceed the date of the loan final
repayment. If the interval between the first day of the
last interest period and the date of the loan's final
re-payment is less than three (3) months, the
duration of said interest period shall be that of the
period of time which goes from the first day of the
last interest period to the date of the loan's final re-
payment.
SEVENTH.- Annual nominal interest rate applicable to the
loan
7.1.Normal annual nominal interest rate. Determination.
The normal annual nominal interest rate applicable to
each interest period shall be determined by the Agent
by adding up the (a) MIBOR plus the (b) Margin.
(a) It is understood as MIBOR the interest rate applicable
by the Madrid inter-banking Market, for a one year period,
according to the quoting shown by REUTERS' MIBOR screen for
deposits in pesetas at 11 a.m. of the working day
immediately preceding the date on which each interest
period is to commence, for a period of twelve (12) months.
To said resulting MIBOR shall be added the usual
costs for obtaining funds at the Inter-Banking
Market, there including broker fees as well as any
other applicable tax, levies or charges, be them
nationally imposed or not, which are now applicable
or may become applicable in the future to the
obtaining of funds in the Inter-banking Market or for
the use of the services of a broker.
(b) To the result of the addition of the MIBOR plus the
expenses mentioned under (a) above, it shall be added an
additional Margin equal to 1.25% a year. Said margin will
remain invariable for the duration of the loan.
Should the addition of the MIBOR plus the Margin result
not to be a multiple of 1/8 % , said figure shall be
rounded up to become a multiple of 1/8 %.
If at the time and date fixed for the determination of
the interest rate there were to be no official quoting
for the twelve month interest, the interest rate shall
be immediately fixed at that established for the next
inferior period of six months, three months, one
month, fifteen days, seven days and one day, in this
order of preference, for which there is an
official quoting.
7.2.Substitute Interest rate
In case that, for whichever reasons affecting the
Madrid Inter-banking Market it becomes impossible to
determine the interest rate in the manner prescribed in
clause 7.1 above, a substitute interest rate shall be
calculated and applied as follows:
Once the Agent realizes the need to apply a substitute
interest rate, it shall so notify it, simultaneously,
to the Borrower and the rest of the Lenders, prior to
11:30 a.m. on the working day before the interest
period is due to start.
The substitute nominal interest rate is understood to
mean the addition of the substitute MIBOR plus the
usual costs for obtaining funds at the Inter-Banking
Market, plus the Margin. The substitute MIBOR shall be
the average of the interest rates offered for deposits
in pesetas to the Reference Entities of the Madrid
Inter-Banking Market at around 11 a.m. on the working
day immediately preceding to the date in which the
interest period is to commence, for terms of twelve,
six, three or one month (in that same order of
preference). To the substitute MIBOR shall be added the
usual costs for obtaining funds at the Inter-Banking
Market plus a 1.25% annual Margin. The result of this
addition shall be rounded up to the nearest multiple of
1/8 %, should it not be a multiple thereof.
With respect to the present clause and the present
Agreement, the Reference Entities shall be the
following:
Bank of America S.A.E.
Mitshubishi Bank, Sucursal en Espana.
Banco Central Hispano Americano, S.A.
It shall be understood as the "majority of the
Reference Entities", two of the above mentioned.
Should any of the Reference Entities merge with another
banking entity, or be absorbed by another banking
entity, the new resulting entity shall substitute with
respect to what is established in the present
Agreement.
7.3. Communication of the normal and substitute interest
rates
Once the normal or substitute interest rate, as
applicable, has been calculated, the Agent shall so
notify the Borrower and the rest of the Lenders before
2 p.m. on the working day prior to the date on which
each interest period is to commence.
Every time it may be necessary to apply a substitute
interest rate, the interest period shall be of 15
(fifteen) days duration.
EIGHT.- Delay interests
8.1.Delay interests. Accrual and calculation
Notwithstanding the termination right granted to the
Lenders, should the Borrower delay the fulfilment of
its payment obligation, for whichever cause, even if
this happens due to no fault of the Borrower, the
latter shall be obliged to satisfy, without need of a
prior request in that sense, a delay interest as
established under clause 8.2 below.
The delay interest shall accrue day on a daily basis,
being liquidated at the end of the corresponding month,
and will be drawn over the amounts whose re-payment has
not been made, taking as base a year of three hundred
and sixty (360) days.
The accrued and non satisfied interests will be
capitalized at the months' end, as if an increase of
the capital, thus accruing additional delay interests
at the corresponding rate.
8.2 Delay Interest Rate
The delay interest rate will be determined
by adding four percentage points (4%) to
the interest rate established in clause SEVENTH
hereafter ..
NINTH.- Commissions
9.1 Opening Commission
The Borrower will pay the Agent, only once, as from 30
days after the signature of the Agreement or, if this
were before, as from the first disposition, a
commission of the one percent (1%), as opening
commission over the total amount of the loan.
This commission will be distributed by the Agent among
the Lenders in the proportions agreed with the same.
9.2.Cancellation Commission
The Borrower will pay the Agent, whenever this occurs,
an early cancellation commission of one percent, over
the amount to cancel, should cancellation occur the
first three years of the life of the loan, or a
commission of point five percent (0.50%) over the
amount to cancel if the cancellation occurs during the
fourth or fifth year of life of the loan. As from the
fifth year no cancellation commission shall be due.
This commission will be distributed by the Agent among
the Lenders according to their undertakings in the
loan.
9.3.Agency Commission
The Borrower will pay the Agent, as Agency commission
upon the withdrawal of the loan 0.50% over the total
amount thereof, on the date of the first disposal in a
sole time.
TENTH.- Expenses, Taxes and costs Increases
10.1Expenses and Taxes
The Borrower assumes as his charge the expenses, taxes,
charges, fees and other pecuniary obligations, present
and future, which may arise or accrue as consequence of
the preparation, celebration and execution of the
present Agreement. Among those and merely for
informative purposes, are included:
a) The fees, brokerages and expenses of the public
Notaries or Stock Brokers.
b) The Local, Provincial, Autonomous and Estate levies
and taxes applicable to the constitution, modification,
execution, and extinction of the same.
c) The expenses accrued as consequence of the judicial
execution of the Agreement.
The Agent is hereby enable to pay the amounts owed by
the borrower, in case of lack of payment by the
borrower, and debit them in its account and claim those
from the borrower at any time. The debited amounts will
accrue, as from the date they are debited and without
the necessity of a prior requirement, delay interests
in accordance with what it is established in clause
EIGHT, and shall be guaranteed by the amount provided
for expenses in clause EIGHTEENTH .
10.2 Increase of costs for the Lenders
In case that due to legal or statutory disposition,
whatever their origin, additional obligations, such as
the respect of certain coefficients, reserves or
necessary deposits, are imposed on any or all of the
Lenders, thus producing an increase of the costs of the
funds that the Lenders are to employ in the financing
of the present loan, or in case limitations were
imposed, be them limitations over the amount of the
commissions or the interests, or be them of any other
different nature, which would imply a decrease of
amount of the payments to which the Lenders have right
by virtue of this Agreement, the Borrower, will be
obliged to compensate them in the amount of the
increase of the costs of the mentioned funds or the
decrease of the payments, as long as the Lenders
justify with documentary evidence that they have
incurred in a repeated increase of the costs and/or
determine by means of a detailed liquidation the
decrease of the amounts of the payments.
10.3Deductions and retentions.
All the amounts which the Borrower is to pay in
accordance with the present Agreement will be satisfied
clear of any deduction or withholding tax, being the
Borrower liable for payment of any taxes which may, now
or in a near future, be applicable to said payments,
there excluding, in any case, Corporation Tax payable
on the earnings obtained by the Lenders.
10.4. Reimbursements
In case the Borrower reimburses, for any cause, the
amount of any withdrawal of funds, on in a different
date to the one agreed, it will be obliged to
communicate the Lenders fifteen days in
advance.
ELEVENTH.- Duration of the Loan. Normal and advance
Repayment
11.1. Duration of the Loan.
The Loan will be definitively due on the eleventh of
April of the year 2007, date in which it
the balance in favor of the Lenders shown in the
accounts will have to be definitely satisfied.
11.2 Normal Repayment of the Loan.
The loan will be repaid through twenty (20)
six month installments, all equal and
consecutive, each for an amount of Twelve Million Five
Hundred Thousand (12,500,000) Pesetas each one, being
the first of them payable on the eleventh of October of
1997 and the last one on the eleventh of
April of the year 2007, date on which the
Loan will be definitively due.
11.3Advance Repayment of the Loan.
The Borrower will be able to partially or totally repay
the loan in advance at the date of termination of an
interest period.
Were early repayment to be partial, this will be made
for a minimum of Thirty Million Pesetas
(30,000,000) or for that amount plus one or several
times Twelve Million Pesetas (12,000,000).
Partial repayments of a lower amount will only admitted
when said repayment constitutes the total repayment of
outstanding amount of the loan.
For any advance repayment to take place it will be
necessary that the Borrower notifies it to the Agent
with a previous notice of fifteen (15) working days.
In the advance partial repayment notice the Borrower
will give details as to the amount and date (working
day) on which the same shall take place. If the advance
repayment were to be total, it will indicate the date
(working day) on which this will take place.
Each advance cancellation notice, total or partial
shall be irrevocable and its non fulfilment, concerning
the amount or the date of the repayment, shall
constitute a cause for the total termination of the
Agreement.
The Agent will communicate the receipt of the
notification to the Lenders within the next three (3)
working days.
The advance repaid amount will be applied by the
Lenders to reduce the amount of the rest of the
repayment installments, without causing any
modifications to the schedule of the normal repayment
contained in point 11.2 of this clause.
The commissions for advance cancellation are those
specified in point 9.2 of clause NINTH.
TWELFTH.- Termination of the Agreement
12.1 Causes of the resolution
The present Agreement may be terminated by the Lenders,
who may demand payment of whichever amount is due on
that date, prior to its normal termination date upon
the occurrence of the following:
a) If for whatever cause registration of the present
public deed in the Property Registry is denied.
b) If there were to be any charge, encumbrance or lien
over the mortgage property which has not been specified in
the present deed, even if those are of a posterior date.
c) By annulment or revocation, even if not final, of
the administrative resolutions which have authorized
the use of the land, the construction of the
buildings, or the exercise of the business at the
mortgage property except in case of correction of the
same in a period of 40 days.
d) When it has not been sufficiently proven that the
property is insured and that the Insurance Company is
aware of the existence of the loan within the thirty
day period counted as from the date on which the
Agent so requires.
e) Lack of payment by the Borrower at its corresponding
payment date of any of the amounts due by virtue of the
present Agreement, be those part of the capital, interests,
commissions, expenses or any other concept, once a maximum
period of ten days as from the said date, has elapsed.
f) In case the insurance premiums over the mortgage
property or the taxes and expenses related to those which
are preferential to the mortgage, are not paid on time.
g) Lack of payment on time by the borrower of any other
monetary amount arising from this agreement.
h) Non fulfilment of any of the obligations assumed by
the Borrower by virtue of the present contract and which
are indicated by the Agent and not remedied by the borrower
within fifteen days as from said indication.
i) Non fulfilment by the Borrower of any payment
obligation or compromise with respect to third parties for
an amount of over Twenty Five Million Pesetas
(25,000,000), or in case there is an attachment of over
that amount, over the borrower's property, unless it is
withdrawn within thirty calendar days; or in case the
borrower formally requests from its creditors a moratory in
the repayment of its monetary obligations, or when, in
whichever way their insolvency or lack of
liquidity.
j) When it is proven that the borrower has hidden
information, or supplied false and inaccurate information
of material relevance to the lenders, even if there has
been no malice on the part of the borrower; or in case the
borrower does not provide the Agent with the balance sheet
and the profit and loss account corresponding to the last
financial year within the fifteen day period following the
requirements to do so.
k) Upon the essential alteration of the corporate object
of the borrower, its cessation in its activity, its
transformation, liquidation, dissolution or merger save
express consent from the lenders.
l) If the borrower files for bankruptcy or suspension of
payments, or a request for those is filed by its creditors.
m) Upon the existence of any other cause which according
to Law gives way to the termination or advance expiration.
n) Upon the impossibility of establishing an interest
rate in accordance with the agreed rules, or upon non
acceptance by the borrower of the applicable interest rate.
o) Ruin, demolition, or deterioration of the mortgage
property if the damage to it is more than 1/4 of its value
and the owner or possessor of the same does not proceed to
its repair within two months.
p) In case the Borrower, three months before the
expiration of the guarantee mentioned in the clause 21,
does not provide the Borrowers a new bank guarantee in the
same conditions as the existent guarantee or sufficient
proves (as established by the Borrowers) that the
guarantee will be renewed in the right time and conditions,
the Borrowers may terminate the present agreement.
12.2 Termination proceedings
Upon the existence of any of the circumstances
mentioned in point 12.1, the Lenders as Majority will
be able to totally terminate the loan Agreement.
In any case, and upon the existence of any of the
circumstances established in point 12.1, each Lender is
unilaterally entitled to terminate the present
Agreement in the part that it may correspond to it.
12.3 Effects of termination
Once the Agreement is partially or totally terminated,
the Lender will be obliged to the reimburse part or the
whole of the amount of the loan, whichever applicable,
as well as its interests, commissions, expenses and any
other legitimate concept within the next twenty
(20) natural days as from the date of notification of
the termination, being it applicable to each interest
period in course during said period (which shall not be
extendible), the last interest rates notified by the
Agent and which will be understood as accepted by the
Lender to the sole and exclusive effect of practicing
final liquidation. The Borrower hereby accepts the
complementary liquidation of interests resulting from
the application of the above mentioned difference.
Once the period has elapsed without repayment by
Borrower of the pending amounts, the Lenders shall be
entitled to file the corresponding legal actions, and
the amount then due amount to the Lenders shall
commence to accrue delay interest as established in
clause EIGHTH.
12.4 Partial Resolution
The amounts repaid by the Borrower as a result of the
exercise of a partial termination action of the
Agreement as established in the last paragraph of point
12.2, shall not be subject the obligation of
proportional distribution established in points 13.3 of
clause THIRTEENTH.
THIRTEENTH.- Payments to be made by the Borrower.
13.1 Form of Payment
All payments to be made by the Borrower to the Lenders
or to the Agent according to the present Agreement,
shall be made without the necessity of a prior
requirement in that sense, before 10.00 a.m. on the day
on which said payment is due by crediting the
corresponding amount in the account number
2080/0054/004002314/1 in favor of the BORROWER that
keeps with the Agent at the branch of CAJA MUNICIPAL DE
AHORROS DE VIGO in Porrino, which, to all effects shall
be deemed as the payment address. If the day of payment
falls on a non working day, the date of payment shall
then be the next working day, unless the next working
day is part of another month of the Gregorian calendar,
in which case payment shall be due on the working day
immediately preceding.
All payments which, in the concept of capital or
interests, are made by the borrower in relation with
this contract, will be distributed by the Agent among
the lenders in such a way that all the lenders are paid
in proportion to their participation in the loan, at
any given time. The Agent shall credit the
corresponding amounts to the lenders by the transfer of
said amount to the account which each one of them has
at the Bank of Spain.
Any possible rights which may entitle the lenders to
obtain payments from the borrower based on any other
cause than those contained in the present agreement
will not be affected by what has been established
earlier on.
13.2 Allocation of Payments
The payments made by the Borrower in connection with
the present Agreement, will be charged to the longest
standing due amounts resulting from this Agreement in
the following order:
1.- Delay Interests
2.- Commissions
3.- Taxes
4.- Expenses
5.- Indemnities and additional costs
6.- Judicial Costs
7.- Ordinary interests
8.- Principal of the loan, withdrawn and pending
repayment.
13.3 Payments made to the Lenders
With prejudice of established in point 12.4 of clause
TWELFTH, if any of the Lenders were to
receive at any moment payment of any outstanding amount
in accordance to the present Agreement, they will
notify it to the Agent and to the rest of the Lenders,
and they shall then internally proceed to carry out the
necessary adjustment to ensure that each one of the
Lenders receives the sums paid by the Borrower in the
proportion which corresponds to its undertaking of the
total amount of the loan.
FOURTEENTH.- Declarations
14.1Declarations made by the Borrower
The Borrower makes the declarations listed hereinafter
to the Lenders. The Lenders, in consideration thereof,
grant the present Loan Agreement based on the accuracy
and veracity said declarations. The Borrowers
declarations are as follows:
a) The Borrower is a "Sociedad Anonima" (Stock Company)
of Spanish Nationality, validly incorporated and duly
registered at the Mercantile Registry, with independent
legal personality and sufficient legal capacity to enter
into the present Agreement, and to assume all obligations
herein established.
b) The Borrower is up to date with all its social,
mercantile, civil, labor and tax obligations.
c) No judicial or administrative measure/action which
could adversely influence (i) the Borrower's economical
situation or (ii) its ability/capacity to comply with all
the obligations assumed vis a vis third parties, there
including the Lenders, has been initiated or, to the best
of its faithful knowledge, is there a risk of it being
initiated.
d) All accountancy and financial reports and accounts
that the Borrower has facilitated to the Lenders are
correct and exact and they reflect, in accordance to the
accountancy principles generally accepted in Spain and
which have been uniformly applied by the Borrower for all
past years, the real economical and financial situation of
the Borrower.
e) On this date of the execution of the present
Agreement, there does not exist any circumstance or
omission, which could distort or leave without effect the
documents and information referred to in the preceding
point d), as for the loyal acknowledge and comprehension
of the Borrower.
The Borrower has obtained all necessary permits and
authorizations and has fulfilled all necessary
requisites for the execution of the present
Agreement, this credit operation not violating any
legal, statutory or contractual obligation binding to
the Borrower, being the obligations herein contained
thus valid and enforceable by the lenders. The
granting of the present Agreement does not and shall
not result in the constitution or enlargement or any
mortgage, pledge, or charge of any other kind on any
of the Borrower's assets, except for the one
established for the Borrowers.
14.2 Subsistence of the Borrower's declarations
The declarations herein made by the Borrower in favor
of the Lenders shall outlive the granting of the
present Agreement and shall be understood as repeated
by the Borrower for the duration of the Agreement.
FIFTEENTH.- Obligations
The Borrower, for the duration of the present Agreement,
hereby assumes the following obligations towards the
Lenders:
a) Not to alter its legal status or nature by
dissolution, transformation, merger or total assignment of
its assets and liabilities.
b) To immediately (and in any case within a period of no
more than three working days) inform the Agent about any
situation which constitutes or may constitute non
compliance or be a cause for early termination of the
present Agreement, or any other circumstance which has or
may have a substantial adverse effect on the ability to
fulfil the obligations herein contained.
c) To immediately, (and in any case within a period of no
more than three working days,) inform the Agent about any
action or suit/claim, arbitration, proceeding, judicial or
administrative investigation, or any other kind of
proceeding the result of which may have an adverse material
effect on its business, properties or assets.
d) To maintain all its assets insured with a well reputed
insurance company. The insured amounts shall correspond
with the real value of said assets and, in any case, the
insurance policy may not be lower than 170,000,000 pesetas.
The declaration herein made must be annually proven to the
Lenders through the Agent. The Borrower equally obliges
to keep up the premium payments and to fulfil all
obligations imposed by the insurance policies already in
force or which may be entered into in the future.
e) To keep and maintain all and any properties, rights,
faculties and authorizations necessary for the normal
conduction of its business and, in any case, not to
dispose, in whichever way it may be, of all or part of its
fixed assets without receiving its due worth.
f) Notwithstanding the preceeding, the Borrower obliges
not to spin off or segregate assets of a total value of
over 20% of its total overall assets to a third party,
without the prior written consent of the Lenders, unless
this does not imply a decrease of the Borrower's total net
worth.
g) To carry out as many acts, and grant as many public or
private documents as may be necessary to ensure that the
credit rights of the Lenders resulting from the present
Agreement enjoy, at all times of at least the same status
and privileges as those which may correspond, at present or
in the future, to any creditor with the exception of (i).
The credit rights corresponding to third party creditors
with a "real" guarantee granted prior to the present
Agreement, however said guarantee may not be extended,
increased or prolonged and (ii) Those rights of credit
evidenced on a public deed or a public policy issued by a
Stockbroker granted prior to this Agreement, and (iii)
those rights of credit which are privileged or singularly
privileged as listed in points 1,2 and 3 of article 913 of
the Code of Commerce as long as said privilege does not
result from a voluntary act on the part of the Borrower
directed to give way to such privilege as well as (iv) the
preferential rights granted to the workers by article 32 of
the Workers Statute.
As a consequence of the preceding, the Borrower, unless
authorized by the Lenders, shall not grant, do or favor
the granting by the third parties of any real or
personal guarantees in favor of other creditors, neither
shall it carry out any act or favour the carrying out of
any act by a third party which may grant another creditor
a pre-eminence or privilege in the repayment of its
credit superior to those which correspond or may
correspond to the Lenders by virtue of the present
Agreement, with the exception of those acts or guarantees
which result on a contingency for the Borrower of less
than 20% of the total value of its assets.
h) To apply for as many authorizations or permits as may
be necessary, at present or in the future, for the
conclusion and fulfilment of the present Agreement, should
any be necessary.
i) To take all necessary actions so that any Company in
which the borrower holds a majority or substantial
shareholding may also carry out or refrain from carrying
out all actions which the Borrower has obliged to carry out
or refrain from carrying out in accordance with whatever
is established in the preceding points e), f) and g). All
acts carried out by entities belonging to the same
corporate group - understanding as such those which in
accordance to article 42 of the Code of Commerce are to
consolidate its accounts with the Borrower - are hereby
excluded from the preceding obligation.
j) To hand over to the Agent the first copy of the
present Public Deed, once it is duly registered at the
Property Registry, and hand a copy thereof to each one of
the lenders.
k) To hand over a certification from the Property
Registry evidencing that the mortgage over the property is
duly registered in accordance with the clauses established
herein, and that there are no charges or limitations either
registered or recorded (nor documents presented to this
effect) which may be preferential to the present mortgage
or may diminish its effectivity, and that the registry has
no registration concerning any limit as to the owners
faculty to freely dispose of the property.
l) To hand over the policy and other documents which
evidence that the property is insured, and in which the
lenders rights are established.
The borrower undertakes to obtain complete and correct
compliance of the preceding obligations within the term of
One Hundred and Twenty (120) days as from today, after
which term the lenders may exercise their right to
terminate the contract in accordance with the provisions of
clause TWELVE.
SIXTEENTH.- Assignments.
The BORROWER will not be able to assign, transfer,
substitute or surrogate the obligations and rights
contracted in the present contract, except express consent
in writing of the Lenders.
During the life of the contract any of the LENDERS will be
able to partial or totally assign or transfer the loan
participation to other of the LENDERS or to a third party,
whatever is the assigned participation amount, whenever the
following requirements are fulfilled:
a) That the assignment is of its contractual position to
expiration.
b) That the assignment coincides with an interest period
of expiration date.
c) That the assignment does not imply a cost increase,
taxes or expenses for the BORROWER.
d) That the participation amount purpose of the
assignment is not inferior to one hundred millions of
pesetas, unless the total participation is assigned and
this is of an inferior amount to the above mentioned one.
e) That the assignor informs the Agent by written notice
and this to the BORROWER about the assignment project and
name, social address and telefax number of the assign
entity.
The assignments will only have effect with respect to the
BORROWER, the LENDERS and the Agent when all the
requirements expressed in the above points have been
fulfilled and are formalized in a public document.
SEVENTEENTH.- The Agent.
17.1 Appointment.
The LENDERS appoint Caja de Ahorros at Vigo as Agent,
who accepts the appointment.
17.2 Special Warrant.
Unimpaired the joint character of the LENDERS in the
operation with regard to the development and operative
of the same, the Agent acts, not only for himself but
as special agent with an irrevocably character of the
LENDERS, understanding that payments from any nature
derived from the contract will have to be made by the
BORROWER precisely to the Agent, providing liberator
effects to the BORROWER as if they had been received
in the corresponding proportion by the others who take
part in the loan.
Whereas, and whenever the contrary is not expressed,
any modification made or received by the Agent will
provide the same effects as if it had been formulated
by all the LENDERS.
17.34 LENDERS Representation. Liability limitation.
The representation faculties that the LENDERS give to
the Agent will be understood as limited to those
actions and measures that specially foreseen in this
contract, were necessary to procure the good end of
the same. In no case the Agent will have the LENDERS
or BORROWERS fiduciary character remaining their
duties and obligations limited to the ones expressly
determined in this contract.
According to these principles and as a matter of
information:
a) The agent will not be responsible with regard to the
other LENDERS for the celebration causes, validity and
contract exigency or other complementary document, or the
veracity or certainty of the declarations contained in the
same or the communications that he receives and neither for
the loan drawn.
b) The agent will not be obliged to take any decision or
to make any investigation regarding the fulfilment of the
contract. Only when he has real knowledge or had received a
communication from any of the LENDERS or BORROWER about the
non fulfilment of the contract or something that could
cause the resolution of the same, will notify it to the
other LENDERS.
c) The information duty of the Agent will be understood
as limited to the communications that have been expressly
entrusted in this contract for its normal fulfilment and
development or for its exigency in case of non fulfilment.
d) Each of the LENDERS declares to the Agent to have
achieved with regard to this loan his own and independent
investigation and valuation of the financial situation of
the BORROWER.
17.45 Expenses reimbursement.
The LENDERS will immediately reimburse the Agent
proportionally to its participation in the total of
the loan, all the amounts that being to the BORROWER's
charge, had not been paid by this in a voluntary way
and that represent for the Agent a disbursement due to
any concept and due to the contract he achieves in the
LENDERS common interest with independence of the
favorable or adverse result of the act or measure
that provoked the disbursement.
17.56 Rights of the Agent
The agent in his condition of LENDER, will have the
same rights and faculties of any other creditor entity
due to his participation in the loan.
With independence of the present contract, the Agent
will be able to accept deposits, lend money and, in
general, achieve any other bank operations with the
BORROWER.
17.67 Agent's renounce. Appointment of a new Agent.
The Agent will be able to renounce to said post, by
written notice to the other LENDERS and BORROWER. In
that case, the LENDERS will proceed to appoint, as
majority among them, a new Agent, with the previous
approval of the BORROWER who will not be able to deny
it without a justified cause.
The renounce and appointment will have effect from the
new Agent acceptance date, that will be formalized by
notarial act and will be notified by the same public
feudatory to the BORROWER and to the rest of the
LENDERS.
The new Agent will be invested with the same
obligations and rights of the ceased one in accordance
with the terms of the present contract.
The expenses and taxes derived from the change of
Agent will be on the entity that had renounced to said
post.
17.78 Assignment of its participation by the Agent.
In case the Agent would totally assign his
participation in the loan, he will be obliged to
renounce to said post, without prejudice of continuing
it till the appointment and acceptance of the new
Agent.
EIGHTEENTH.- Mortgage
18.1 Universal patrimonial liability
The BORROWER is responsible for the fulfilment of the
obligations derived from the present contract in the
terms of the article 1911 of the Civil Code.
18.2 Constitution of the Mortgage
In addition of the personal, unlimited and universal
responsibility of the borrower in respect of the
fulfilment of the present contract; a voluntary
mortgage is constituted to guarantee the repayment of
the loan for 42% of the capital, interests over three
years up to a maximum of 14% per year, as well as 15%
over the said capital for delay interests, and 20%
over said capital for expenses and legal fees and 5%
over said capital to cover the expenses incurred by
the lenders on behalf of the borrower with respect to
payments of insurance premiums over the mortgage
property. In this sense Mr. Placido Estevez
Otero in the name and on behalf of mercantile
entity "PLYMOUTH RUBBER EUROPA,
S.A.", constitutes a voluntary
mortgage in favor of CAJA DE AHORROS MUNICIPAL DE
VIGO (CAIXAVIGO), BANCO BILBAO VIZCAYA, S.A. and BANCO
DE COMERCIO, S.A. which they accept, the mortgage is
constituted over the property described herein below
and its extension is expressly agreed by the parties
to be that established in article 109, 110 and 111 of
the Mortgage Act in all its points.
(description of the property)
The mortgaged property guarantees a maximum of
375,000,000 Pesetas.:
The lenders have the following participation in each
of the responsibilities concerning the merger:
CAIXAVIGO 33,334%
BANCO DE BILBAO VIZCAYA 33,333%
BANCO DE COMERCIO 33,333%
NINETEENTH.- Procedure
19.1 Procedure
Notwithstanding the exercise of whichever other legal
action directed to obtain the acknowledgment or
effectiveness of their rights, the Lenders are entitled
to initiate the ordinary executive procedure, the
summary judicial procedure established in article 131 of
the Mortgage Act, the extrajudicial procedure
established in article 129 of the same Act, or any other
legal procedure which may be applicable. The use of any
one out of these procedures will not prevent the
initiation of any of the others as long as the loan is
not totally repaid.
The lenders are entitled to use these judicial actions
either on their own or through the Agent. In case they
decide to do it through the Agent, the lenders hereby
empower the Agent so that in the name and on their
behalf, as well as in its own name and behalf, the Agent
may initiate the General Executive Procedure established
in the Civil Procedures Act, or the summary judicial
procedure of the Mortgage Act, or the extrajudicial
procedure of the Mortgage Act and the Mortgage Ruling.
For the appropriate judicial effects, the parties here
establish the following determinations:
a) The amount for the eventual auction is fixed at
170,000,000 Pesetas.
b) The notifications' address for the borrower is
established at the address of the mortgaged properties.
c) For the effects of article 234 of the Mortgage Ruling
the borrower hereby appoints CAIXAVIGO as mandatory, who
may act through any of the persons it empowers.
d) The lenders may request, for themselves or for any
other person who represents them, the administration and
interim possession of the properties in all cases of
claims, judicial or extrajudicial execution, there
including the cases contemplated by article 117 of the
Mortgage Act, in this case the produce or rents of the
property will be applied to the interests and capital owed,
once the expenses of the Administration have been deducted.
The expense of the Administration shall be determined in
view of the type and produce of the properties and, under
no circumstance, will it be lower than that established in
the Civil Procedures Act for a Testamentary Administrator.
Notwithstanding the preceding the procedure in course shall
continue.
e) In case the lenders decide to initiate the ordinary
executive procedure, it is expressly agreed by the parties,
in respect of what it is established in articles 1.429 and
1.435 of the Civil Procedures Act, that the liquidation to
determine the amount of the claimable debt will be carried
out by the Agent or, in case of individual claims, by each
one of the lenders, who will issue the corresponding
certification showing the balance of the account at the
time of its closing. For the initiation of the executive
action it will suffice to present an authorized copy or a
second copy of the present deed, together with the
certification established in article 1429.6 of the Civil
Procedures Act, as well as providing another certificate
issued by the Agent or the lenders showing the balance
against the borrower. Said certificate will be incorporated
on to a public document in which the Intervening Notary
Public shall, at the request of the lenders, shall give
faith that the balance in the certificate agrees with that
shown in the borrower's account, and that the liquidation
of the debt has been carried out in the manner established
by the parties in the present document.
For the event contemplated by rule 12, of article 131
of the Mortgage Act, which refers to the event that
the third option is declared desert, the borrower
hereby gives his authorization for the auction to be
repeated as many times as the Agent or the lenders so
request. In accordance with what is established in article 234
and corresponding of the Notarial Ruling, the borrower
hereby expressly consents that any second copies of
the present deed requested by the Agent or the
lenders, have an executive character and hereby giving
the Notary Public their authorization to dispense of
any other requisite established to that end. The
parties hereby request the authorization notary that
this be so recorded at the end of the deed.
The borrower hereby undertakes to grant, on its own
expense, should the fault be attributable to the
BORROWER, as many public deeds as be necessary in
order to remedy all faults contained herein, or to
clarify the contents hereof, so that the present deed
may be registered at the Property Registry. The
Borrowers opposition to do this, once requested by the
Agent and within the period of time established by the
latter, will be cause for termination of the present
agreement.
19.2 Extrajudicial executive procedure
In order to comply with what is established in article
242.2 of the Mortgage Ruling, as amended by Royal
Decree 290/1992 of 27th March, the parties hereby
agree to the extrajudical execution of the mortgage,
notwithstanding the creditor right to elect whichever
procedure, out of those legally available, that it
may deem fit.
In order to establish the auction going out price, the
address for notification and the person who is to
grant the corresponding deed of sale of the property
on behalf of the borrower, the parties expressly refer
to what is established under clause 19.1 of the
present deed.
TWENTIETH.- Conservation of the guarantee
The Borrower is obligated to:
i. Maintain/Keep the mortgaged property, carrying out the
necessary acts for its upkeep and conservation so that its
value is not diminished and undertaking to inform the
Agent, within the period of one month, about any
deterioration it may suffer for whichever cause or whatever
may affect its value or of any act which may threaten or
forsake their property rights.
ii. Not to celebrate any lease agreement in which three
monthly rents are pre-paid or the annual rent is lower than
25% of the action price established in clause
19, without the prior consent of the Lenders, as well as to
give the Agent sufficient evidence, every six months, of
the communal expenses, insurance premiums payable with
respect of the mortgaged property as well as any other debt
related to credits which may be preferential to the present
mortgage. The Agent is hereby enabled to pay these debts to
the corresponding creditors and to debit them in the
Borrowers account and claim them from the borrower in
accordance with what is established in
the present Deed, notwithstanding the possibility of
termination as established hereinafter, and being all those
amounts guaranteed by the amounts of the mortgage reserved
for expenses and legal fees in clause 18.
iii. To provide the lenders, through the Agent, the
annual accountancy statements required by the legislation
in force and whichever data is necessary for them to
ascertain the financial state of the borrower and its
economic situation, for the duration of the present
contract and within the 15 days following their approval
and in any case no later than July 15, each year, they
will also provide the Agent, every six months, with their
financial statements.
iv. To maintain the property insured, evidencing it 120
days in advance, for the duration of the present contract
under the terms which the Agent may establish with regards
to the name of the Insurance Company as well as the
contents of the policy, hereby agreeing that the Lenders be
beneficiary of the insurance at the borrowers risk and
expense, the Borrower hereby irrevocably and formally
assigns to the Lenders the proceeds of any indemnity which,
in consideration of the insured capital or in any other
concept, the Insurance Company may be liable to pay. The
Agent may carry out, with respect of the Insurance Company,
the necessary acts, for which the Borrower hereby grants
the Agent the necessary powers and undertakes not to revoke
those as long as the loan herein granted is not totally
repaid.
In addition to the general terms of the above mentioned
insurance policy, and the appointment of the Lenders as
beneficiary to the same in proportion to their respective
participations in the loan, the following clauses must be
established in the corresponding policies:
1. The insured party may not rescind the insurance policy
or substitute, reduce or modify the essential terms thereof
without the prior consent of the majority of the Lenders.
2. If the resolution, substitution, modification,
reduction of the terms regulating the insurance be due to
the initiative of the Insurance Company, the latter shall
have to inform the Lenders by means of a certified letter,
as soon as possible, at least within one month, and in any
case prior in three months to the expiration of the policy.
3. The insured party, in case of accidents which gives
rise to insurance claim, is obliged to fulfil the
obligations the assurance policy establishes and specially
to justify its quantity, conceding the Lenders the right to
carry out , if they deem convenient, all the acts
concerning the accident, practicing any necessary
diligence.
The amount of these indemnities and of any other
indemnities which may be due upon expropriation of the
property may be applied, at the Agent's decision to the
payment of the debts arising from this contract, even is
they are not yet due.
In order to control the state of conservation of the
properties and the correct compliance of its obligations
by the borrower, the Agent shall be entitled to carry out
as many inspections as it may deem convenient, and the
Borrower undertakes to allow access to the mortgaged
property to the person whom the Agent may appoint.
TWENTY FIRST.- Bank Guarantee
The Borrower provides the Lender with three bank
guarantees (annexed to the present contract) for an
amount of twenty six million six hundred and sixty six
thousand six hundred and sixty six (Pesetas.- 26,666,666)
granted by ABN-AMROBANK, guaranteeing
to each of the lenders the amount of their participation
in the operation, for five years, renewable for a
period of other five years, being the non renew of this
period termination cause of this agreement, which are
included as Annex I of this agreement .
TWENTY SECOND.- Calculation of the dates and periods.
To all effects foreseen in this contract it will be
understood for:
"DAY" or "NATURAL DAY".- All of the days of the Gregorian
schedule.
"WORKING DAY".- Any day of the week in which transactions
at the Inter-Bank Market at Madrid can be made except
Saturdays as to the effect of this contract these are not
considered working days.
"WEEK" or "SEVEN DAYS".- The period comprized between a day
of a specific week and the same denomination of the next
week in the schedule, both inclusive.
"FORTHNIGHT" or "FIFTEEN DAYS".- The period comprized
between a day of a specific week and the one of the same
denomination of the second consecutive week that follows in
the schedule, both inclusive.
"MONTH, QUARTER (or THREE MONTHS), SEMESTER (or SIX MONTHS)
and YEAR (or TWELVE MONTHS)." - The period comprized between
any specific day and the day of the same number of the
first month, of the third month, of the sixth month or of
the twelfth consecutive month that follows as it is
appropriate, in the Gregorian schedule, both inclusive; if
this would not exist the period of time will be understood
as finished the last day of the month that corresponds.
TWENTY THIRD - Communications between the parties.
The communications between the BORROWER, the LENDERS and
the Agent that did not have foreseen in this contract a
special form will be made using any way that allows to
leave constancy of the deliver and reception.
The communications will be duly understood as made when
they are performed through the deliver, with the necessary
priority in each case, e.g. a telex or a telefax to the
numbers listed below. The telex or telefax emission receipt
in which appears its reception in said numbers will be an
irrefutable proof of the communications, without prejudice
of a later communication by a letter signed by powered
personal with regard to the communications made, or an
acknowledge of receipt is made in same way with regard to
the ones received.
The communications of general nature regarding this
contract and the ones referred to the same that may produce
the BORROWER will be managed in any case by the Agent who
will force the LENDERS to follow it.
For any communication or notification the social addresses
and telefax numbers of the contractor entities are the
following:
PLYMOUTH RUBBER EUROPA, S.A.
Ctra. Porrino-Salceda, km. 1,5
Porrino (Pontevedra)
Telephone: 986/ 330558 - 330562 - 330258.
Telefax: 986/ 331713.
CAJA DE AHORROS MUNICIPAL DE VIGO
Avda. Garcia Barbon, 1
36201 VIGO
Telephone: 986 - 431133.
Telefax: 986 - 430190.
BANCO BILBAO VIZCAYA, S.A.
Plaza del Ayuntamiento 5.
36400 Porrino (Pontevedra)
Telephone: 966 - 330804.
Telefax: 986 - 330616.
BANCO DE COMERCIO, S.A.
Plaza de Compostela 27-28.
36201 VIGO (Pontevedra)
Telephone: 986 - 435522 - 226305.
Telefax: 986 - 226306.
TWENTY FOURTH.- Compensation of balances
The Agent and the Lenders are hereby expressly and
irrevocably enabled by the Borrower to apply to the
payment of any amounts owed in relation with this contract,
the credits which may exist in favor of the Borrower in
the hands of the Agent and of the rest of the Lenders in
accounts, savings accounts, or accounts of any other kind
and consequently to carry out the appropriate credits and
debits, and whichever other sums or credits which may
belong to the borrower and be in the hands of the Agent or
the other Lenders; or any amounts which the Lenders may owe
the Borrower, and even by selling the shares or whichever
other deposit which the Borrower may have at the main
office or at any branch of the Agent or the Lenders.
If the currency of the deposits were to be Pesetas or any
other currency to which loan refers, the Agent shall
convert that to the currency in which the loan is
established at the official vendor rate of the date upon
which the operation is carried out, and charging for the
conversion the appropriate commissions.
TWENTY FIFTH.- Processal submission and legal regime
The contracting parties with express renounce to the law-
code could correspond, they submit for all incidence
concerning this document to the Courts and Tribunals that
exercise jurisdiction in Vigo.
TWENTY SIXTH.- Joint Guarantee
The Lenders, in the way they are represented, accept, by this
act, the joint guarantee, constituted, in compliance of the
obligations assumed by the Borrower in this Public Deed, by
PLYMOUTH RUBBER COMPANY, INC. a U.S. Corporation
incorporated under the Laws of the Commonwealth of
Massachusetts, domiciled in Canton, Massachusetts, 104
Revere Street MA 02021, and duly registered at the
Commonwealth of Massachusetts (USA).
The guarantee is extended to any and all the obligations of the borrower
contemplated in the present agreement.
The guarantee shall remain in force for as long as the obligations it
guarantees have not been totally canceled.
The guarantors hereby expressly accept, in all their effects, all the
extensions of the payment periods or all other payment facilities
which the lending institutions may grant to the borrower.
ANNEX I - Bank Guarantee
The Bank ABN AMRO BANK, N.V. Spanish branch, with
corporate address in Bilbao at Plaza de Espana 4, 6th floor
and holder of Fiscal Identity Code Number A-0031021-1
and in its name and on its behalf Mr.
Jose Maria Bilboa and Mrs. Lourdes Orio Gonzalez, with
sufficient powers to bind the bank to this act, as
evidenced in the Public Deed granting said powers, dated
26.9.90 and 27.9.95 and granted before the Notary Public
Mrs. Laurina Christina Klein of Amsterdam and Mr. Pedro Conde
Martin de Mijas of Madrid, declared sufficient by the Legal
Counsel of the State on in Vizcaya on Arpil 6, 1992 and May 28,
1996 registry numbers 182/92 and 422/96, declares that said
banking entity
GUARANTEES
In a manner as ample as legally possible, and hereby
renouncing all privileges of order, excuse and division,
the obligations of:
PLYMOUTH RUBBER EUROPA, S.A.
Before Caja Municipal de Ahorros de Vigo
For payments related to the loan for an amount of Ptas.- 250.000.000
(TWO HUNDRED AND FIFTY MILLION) granted to PLYMOUTH RUBBER
EUROPA, S.A. by Caja de Ahorros Municipal de Vigo, Banco de
Bilbao Vizcaya y Banco de Comercio, as Lenders, each for
one third of the total amount, as formalized on
11.04.97; and thus guarantees before Caja Municipal de
Ahorros de Vigo, and up the maximum limit, for all concepts
(capital, interests, delay interests and other expenses),
of Ptas.- 26.666.668 (TWENTY SIX MILLION SIX HUNDRED AND
SIXTY SIX THOUSAND SIX HUNDRED AND SIXTY EIGHT).
The present guarantee shall be in force for a period of
five years as from the present date, and should be renewed
in successive periods till the total expiration of the loan
on 11th April 2007, as in case it would not be renewed,
the beneficiary, could proceed to its execution within 30
following days to the valid period mentioned, and all in
case the loan is updated as far as its payment obligations
are concerned.
The Bank ABN AMRO BANK, N.V. Spanish branch declares that it
knows and assumes all general and particular conditions of
the loan policy herein referred to, being this document of
guarantee an annex and part thereof.
The Bank ABN AMRO BANK, N.V. Spanish branch shall effectively
pay, in one or several payments, the amount corresponding to
the present guarantee, up to its maximum amount, upon receipt
of a mere request to do so by the Caja de Ahorros Municipal
de Vigo, without no need for a prior notification or
consent by the guaranteed party.
The present guarantee has been registered at the Guarantee
Registry kept by this banking entity under number
00438/9704
In Bilbao, on 11th April 1.997.
The Bank ABN AMRO BANK, N.V. Spanish branch, with address in
Bilbao at Plaza de Espana number 4, 6th floor and holder
of Fiscal Identity Code Number A-0031021-I and in its name
and on its behalf Mr. Josed Maria Bilbao and Mrs. Lourdes Orio
Gonzalez, with sufficient powers to bind the bank to this act,
as evidenced in the Public Deed granting said powers, dated
26,9.90 ans 27.9.95 and granted before the Notary Public Mrs.
Laurina Christina Kein of Amsterdam and Mr. Pedro Conde Martin de
Mijas of Madrid, declared sufficient by the Legal Counsel of
the State on in Vizcaya on April 6, 1992 and May 28, 1996 registry
numbers 182/92 and 422/96, declares that said banking entity
GUARANTEES
In a manner as ample as legally possible, and hereby
renouncing all privileges of order, excuse and division,
the obligations of:
PLYMOUTH RUBBER EUROPA, S.A.,
Before Banco de Bilbao Vizcaya, S.A.
For payments related to the loan for an amount of Ptas.- 250.000.000
(TWO HUNDRED AND FIFTY MILLION) granted to PLYMOUTH RUBBER
EUROPA, S.A. by Caja de Ahorros Municipal de Vigo, Banco de
Bilbao Vizcaya y Banco de Comercio, as Lenders, each for
one third of the total amount, as formalized on
11.04.97; and thus guarantees before Banco de Bilbao, and up
the maximum limit, for all concepts (capital, interests,
delay interests and other expenses), of Ptas.- 26.666.666
(TWENTY SIX MILLION SIX HUNDRED AND SIXTY SIX THOUSAND
SIX HUNDRED AND SIXTY SIX).
The present guarantee shall be in force for a period of
five years as from the present date, and should be renewed
in successive periods till the total expiration of the loan
on 11th April 2007, as in case it would not be renewed,
the beneficiary, could proceed to its execution within 30
following days to the valid period mentioned, and all in
case the loan is updated as far as its payment obligations
are concerned.
The Bank ABN AMRO BANK, N.V. Spanish branch declares that it
knows and assumes all general and particular conditions of
the loan policy herein referred to, being this document of guarantee
an annex and part thereof.
The Bank ABN AMRO BANK, N.V. Spanish branch shall effectively
pay, in one or several payments, the amount corresponding to the
present guarantee, up to its maximum amount, upon receipt
of a mere request to do so by the Caja de Ahorros Municipal
de Vigo, without no need for a prior notification or
consent by the guaranteed party.
The present guarantee has been registered at the Guarantee
Registry kept by this banking entity under number
00436/9704
In Bilbao, on 11th April 1997.
The Bank ABN AMRO BANK, N.V. Spanish branch, with address in
Bilbao at Plaza de Espana number 4, 6th and holder of Fiscal
Identity Code Number A-0031021-I and in its name and on its
behalf Mr. Jose Maria Bilbao and Mrs. Lourdes Orio Gonzalez,
with sufficient powers to bind the bank to this act, as evidenced
in the Public Deed granting said powers, dated 26.9.90 and 27.9.95
and granted before the Notary Public Mrs. Laurina Christina Klein,
of Amsterdam and Mr. Pedro Conde Martin de Mijas of Madrid, declared
sufficient by the Legal Counsel of the State on in Vizcaya on April 6,
1992 and May 28, 1996 registry numbers 182/92 and 422/96, declares
that said banking entity
GUARANTEES
In a manner as ample as legally possible, and hereby
renouncing all privileges of order, excuse and division,
the obligations of:
PLYMOUTH RUBBER EUROPA, S.A.
Before Banco de Comercio, S.A.
For payments related to the loan for an amount of Ptas.-
250.000.000 (TWO HUNDRED AND FIFTY MILLION) granted to
PLYMOUTH RUBBER EUROPA, S.A. by Caja de Ahorros Municipal de Vigo,
Banco de Bilbao Vizcaya y Banco de Comercio, as Lenders, each for
one third of the total amount, as formalized on 11.04.97; and thus
guarantees before Banco de Comercio, S.A., and up the maximum limit, for
all concepts (capital, interests, delay interests and other
expenses), of Ptas.- 26.666.666 (TWENTY SIX MILLION SIX
HUNDRED AND SIXTY SIX THOUSAND SIX HUNDRED AND SIXTY
SIX).
The present guarantee shall be in force for a period of
five years as from the present date, and should be renewed
in successive periods till the total expiration of the loan
on 11th April 2007, as in case it would not be renewed,
the beneficiary, could proceed to its execution within 30
following days to the valid period mentioned, and all in
case the loan is updated as far as its payment obligations
are concerned.
The Bank ABN AMRO BANK, N.V. Spanish branch declares that it
knows and assumes all general and particular conditions of the loan
policy herein referred to, being this document of guarantee
an annex and part thereof.
The Bank ABN AMRO BANK, N.V. Spanish branch shall effectively
pay, in one or several payments, the amount corresponding to the
present guarantee, up to its maximum amount, upon receipt
of a mere request to do so by the Banco de Comercio, S.A.,
without no need for a prior notification or consent by the
guaranteed party.
The present guarantee has been registered at the Guarantee
Registry kept by this banking entity under number 00437/9704
In Bilbao, on 11th April 1997.
EXHIBIT (4)(xix)
TRANSLATION OF THE EXTRACT FROM THE PUBLIC DEED
PROVIDED BY THE BANK
PERSONAL GUARANTEE
PLYMOUTH RUBBER COMPANY, INC. a U.S.
Corporation incorporated under the Laws of the Commonwealth
of Massachusetts, domiciled in Canton, Massachusetts, 104
Revere Street MA 02021, and duly registered at the
Commonwealth of Massachusetts (USA) under number 482350
shall answer jointly with PLYMOUTH RUBBER EUROPA
(the "Borrower") of the obligations contained in the Loan Agreement
signed by the Borrower and CAJA MUNICIPAL DE AHORROS DE VIGO,
BANCO DE BILBAO VIZCAYA, S.A. y BANCO DEL COMERCIO, S.A.,
expressly renouncing to the privileges of order, "excusion" and division.
The present guarantee is also subject to the following
rules:
1. The guarantee is extended to any and all the
obligations of the borrower contemplated in the present
agreement.
2. The guarantee shall remain in force for as long as the
obligations it guarantees have not been totally cancelled.
3. The guarantors hereby expressly accept, in all their
effects, all the extensions of the payment periods or all
other payment facilities which the lending institutions may
grant to the borrower"
_______________________________
1 This "privilege" refers to the creditor's obligation to
demand payment first from the borrower and then, once this
has been done, from the guarantors. Renouncing this implies
that the creditor may demand payment from any of the
guarantors of the borrower without any pre-established
order of preference. This renouncing is standard in most
personal guarantees.
2 This refers to the obligation of the creditor to
demonstrate that the borrower has no resources with which
to pay the debt, before he proceeds against the guarantors.
This necessity is hereby renounced. This is standard
practice in guarantees such as this one.
3 The "privilege" of division granted to the guarantors
means that, if there were to be more than one guarantor,
the guaranteed debt shall be divided in as many parts as
guarantors are, and each of them shall only respond up to
his corresponding amount. This privilege is hereby
renounced being the creditor thus allowed to claim the
total amount of the debt from any of the guarantors.
4 This clause is included because, in accordance to Spanish
Law, if the lender and borrower extend the payment period
for longer than originally convened, the guarantors are not
obliged by this additional period, but their guarantee is
expires on the date initially convened. In order to avoid
the cancellation of the guarantees if additional time for
payment is granted by the banks, this clause normally is
inserted.
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0
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