UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 5, 1998
UNITED SHIELDS CORPORATION
(Name of small business issuer in its charter)
Colorado
(State or other jurisdiction
of incorporation or
organization)
33-11062-D
(Commission file number)
84-1049047
(I.R.S. Employer
Identification No.)
655 Eden Park Drive, Cincinnati, Ohio 45202
(Address of principal executive offices)
Registrant's telephone number, including area code (513) 241-7470
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On January 5, 1998, United Shields Corporation (the "Company")
acquired (effective December 31, 1997) all of the outstanding common
stock of R.P. Industries, Inc. ("R.P.I.") through the merger of R.P.I.
into a wholly-owned subsidiary of the Company.
R.P.I. is engaged in the manufacture and sale of custom injection
molded plastic products. R.P.I.'s principal assets include two
manufacturing facilities (and related plant and equipment), accounts
receivable and inventory. The Company intends to continue to use the
assets of R.P.I. in the manufacture of custom injection molded plastic
products.
The total consideration for the acquisition consisted of (i)
$6,100,000.00 in cash and (ii) 993,384 shares of the Company's common
stock. This consideration was determined through arms-length
negotiations.
The cash portion of the purchase price was provided as follows:
(i) loans from NAVICAP Corporation (formerly Ramsay-Hughes, Inc.) to
the Company in the principal amount of $350,000.00, (ii) a loan from
First Union National Bank to R.P.I. in the principal amount of
$4,551,000.00, (iii) proceeds from a private placement of common stock
of the Company in the amount of $762,037.00 and (iv) proceeds from the
sale/leaseback of equipment between The HeaterMeals Company, a wholly-owned
subsidiary of the Company, and Information Leasing Corporation
in the amount of $500,000.00. In connection with the sale/leaseback
transaction, the Company issued to Information Leasing Corporation a
warrant to purchase 250,000 shares of the Company's common stock at a
purchase price of $4.00 per share exercisable at any time on or before
December 31, 2007. Copies of the principal agreements relating to the
foregoing loans and the sale/leaseback transaction are attached as
exhibits to this Current Report on Form 8-K.
The total indebtedness owed by the Company to NAVICAP Corporation
as of December 31, 1997 (including accrued interest as of December 31,
1997) was approximately $3,799,638.00.
In connection with the acquisition, R.P.I. entered into an
employment agreement with Granville G. Valentine, III under which Mr.
Valentine will serve as President and Chief Executive Officer of
R.P.I. Mr. Valentine was formerly President of R.P.I. On December
8, 1997, Mr. Valentine was elected Senior Vice President of Operations
of the Company.
ITEM 5. OTHER EVENTS.
As previously reported, the Company has entered into a definitive
agreement to acquire all of the stock of Master Molders, Inc., a South
Carolina-based manufacturer of plastic industrial parts, pursuant to a
merger with a wholly-owned subsidiary of the Company. The closing
date of the merger, which was to occur on or before December 12, 1997,
has been extended to January 31, 1998 by mutual agreement of the
parties. In exchange for this extension, the Company loaned Master
Molders, Inc. $65,000 on an interest-free basis, such amount to be
credited against the purchase price upon closing.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired
The following financial statements of R.P. Industries, Inc.
are filed with this Current Report on Form 8-K:
Independent Auditor's Report
Consolidated Balance Sheets as
of July 31, 1997 and 1996
Consolidated Statements of Operations
for the years ended July 31, 1997 and 1996
Consolidated Statements of Stockholder's Equity
for the years ended July 31, 1997 and 1996
Consolidated Statements of Cash Flows
for the years ended July 31, 1997 and 1996
Notes to Consolidated Financial Statements
Consolidated Balance Sheet as of October 31, 1997
Consolidated Statements of Operations for
the three months ended October 31, 1997 and 1996
(b) Pro Forma Financial Information
The following pro forma financial information relating to
the acquisition of R.P. Industries, Inc. by the registrant is filed
with this Current Report on Form 8-K:
Pro Forma Unaudited Consolidated Statement
of Operations for the year ended
December 31, 1996
Pro Forma Unaudited Consolidated Statement
of Operations for the nine
months ended September 30, 1997
Pro Forma Unaudited Consolidated Balance
Sheet as of September 30, 1997
(c) Exhibits
2.1 Merger Agreement by and among R.P. Industries, Inc.
and United Shields Corporation and its wholly-owned subsidiary dated
October 22, 1997 (incorporated by reference to Exhibit 2.3 to the
Company's Form 10-QSB for the quarter ended September 30, 1997)
99.1 Sale and Leaseback Agreement dated as of December
29, 1997 between The HeaterMeals Company and Information Leasing
Corporation
99.2 Lease Agreement dated as of December 29, 1997
between The HeaterMeals Company and Information Leasing Corporation
99.3 Unconditional Guaranty dated December 29, 1997 by
United Shields Corporation to Information Leasing Corporation
99.4 Subordination Agreement dated as of December 29,
1997 by and between The HeaterMeals Company, United Shields
Corporation, Information Leasing Corporation and Ramsay-Hughes, Inc.
99.5 Warrant to Purchase Common Stock of United Shields
Corporation dated December 29, 1997 issued to Information Leasing
Corporation
99.6 Registration Rights Agreement dated December 29,
1997 between United Shields Corporation and Information Leasing
Corporation
99.7 Revolving Credit and Security Agreement dated
December 30, 1997 by and among R.P. Industries of Ohio, Inc., United
Shields Corporation, Furniture Plastics of Forest City, Inc.,
Granville Plastics Company, Inc., R.P. Enterprises, Inc., Richmond
Plastics, Inc., R.P. Real Estate, Inc. and First Union National Bank
99.8 Environmental Liabilities Agreement dated December
30, 1997 by and among R.P. Industries of Ohio, Inc. and First Union
National Bank
99.9 Environmental Liabilities Agreement dated December
30, 1997 by and among Granville Plastics, Inc. and First Union
National Bank
99.10 Pledge Agreement dated December 30, 1997 by and
among R.P. Industries of Ohio, Inc., United Shields Corporation,
Furniture Plastics of Forest City, Inc., Granville Plastics Company,
Inc., R.P. Enterprises, Inc., Richmond Plastics, Inc., R.P. Real
Estate, Inc. and First Union National Bank
99.11 Revolving Promissory Note dated December 30, 1997
from R.P. Industries of Ohio, Inc. to First Union National Bank
99.12 Credit Line Deed of Trust and Assignment of Rents
by R.P. Industries of Ohio, Inc. to First Union National Bank
99.13 Deed of Trust and Assignment of Rents by Granville
Plastics Company, Inc. to First Union National Bank
99.14 Letter agreement dated December 11, 1997 between
United Shields Corporation and Master Molders, Inc.
99.15 Promissory Note dated December 18, 1997 from
Master Molders, Inc. to United Shields Corporation
99.16 Amended and Restated Promissory Note dated
December 29, 1997 from United Shields Corporation to NAVICAP
Corporation
99.17 Letter agreement dated January 6, 1998 between
United Shields Corporation and Donald T. Zimmerman
99.18 Press release issued January 5, 1998
99.19 Press release issued January 6, 1998
99.20 Press release issued January 7, 1998
SIGNATURE
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, thereunto duly authorized.
UNITED SHIELDS CORPORATION
BY:
T.J. Tully, Chairman of the Board and CEO
Dated: January 13, 1998
ITEM 7 (a)
R. P. Industries, Inc.
and Subsidiaries
Consolidated Financial Statements
Years Ended July 31, 1996 and 1995<PAGE>
R. P. Industries, Inc.
and Subsidiaries
Contents
Independent Auditors' Report
Consolidated Financial Statements
Balance Sheets
Statements of Operations
Statements of Stockholders' Equity
Statements of Cash Flows
Summary of Accounting Policies
Notes to Consolidated Financial Statements
<PAGE>
Independent Auditors' Report
R. P. Industries, Inc. and Subsidiaries
Richmond, Virginia
We have audited the consolidated balance sheets of R. P. Industries,
Inc. and subsidiaries as of July 31, 1996 and 1995, and the related
consolidated statements of operations, stockholders' equity, and cash
flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the consolidated
financial position of R. P. Industries, Inc. and subsidiaries at July
31, 1996 and 1995, and the consolidated results of its operations and
its cash flows for the years then ended in conformity with generally
accepted accounting principles.
September 26, 1996
July 31, 1996 1995
_____________________________________
Assets
Current
Cash and cash
equivalents $2,136,164 $ 747,829
Accounts receivable
Trade, net of allowance
For doubtful accounts
of approximately
$15,600 and $50,700 1,360,062 1,657,035
Other 6,270 17,103
Note receivable 19,000
Inventories
Finished goods 195,252 518,860
Raw materials and
supplies 677,561 816,108
Prepaid expenses and
deposits 12,964 116,622
Deferred income taxes
(Note 5) 84,500
- ------------------------------------------------------------------
Total current assets 4,472,773 3,892,557
- ------------------------------------------------------------------
Investments, available
for sale (Note 2) 256,150 1,803,950
- ------------------------------------------------------------------
Property and Equipment,
net (Notes 3 and 4) 2,292,134 2,980,934
- ------------------------------------------------------------------
Other Assets
Note receivable, less
current maturities 285,000
Cash value of life
insurance, net of loans
of approximately
$839,000 and
$758,000 869,314 763,325
Other assets 117,908 168,182
Deferred income taxes
(Note 5) 175,000
- ------------------------------------------------------------------
Total other assets 1,162,222 1,216,507
- ------------------------------------------------------------------
$8,183,279 $9,893,948
- ------------------------------------------------------------------
- ------------------------------------------------------------------
R. P. Industries, Inc.
and Subsidiaries
Consolidated Balance Sheets
July 31, 1996 1995
- ------------------------------------------------------------------
Liabilities and Stockholders' Equity
Current
Accounts payable $ 748,427 $ 989,101
Accrued expenses and
other liabilities (Note 8) 546,387 440,380
Current maturities of
long-term debt (Note 4) 543,869 686,727
- ------------------------------------------------------------------
Total current liabilities 1,838,68 2,116,208
Long-term debt, less
current maturities
(Note 4) 1,312,897 3,071,050
Deferred compensation
(Note 8) 645,440 54,345
Deferred income taxes
(Note 5) 10,000
- ------------------------------------------------------------------
Total liabilities 3,797,020 5,251,603
- ------------------------------------------------------------------
Commitments and
contingencies
(Notes 2, 4, 6, 7, and 8)
Stockholders' equity (Note 6)
Common stock, par value $.01;
authorized shares,
10,000,000; issued and
outstanding 1,044,080
shares 10,441 10,441
Additional paid-in capital 138,449 138,449
Retained earnings 4,237,369 4,770,567
Valuation allowance for
unrealized loss
on investments (Note 2) (277,112)
- ------------------------------------------------------------------
Total stockholders' equity 4,386,259 4,642,345
- ------------------------------------------------------------------
- ------------------------------------------------------------------
8,183,279 9,893,948
- ------------------------------------------------------------------
See accompanying summary of accounting policies and notes to
consolidated financial statements.<PAGE>
R. P. Industries, Inc.
and Subsidiaries
Consolidated Statements of Operations
Year Ended July 31, 1996 1995
Net sales (Note 1) $13,192,609 $13,446,019
Cost of sales (Note 1) 10,884,357 11,230,098
Gross profit 2,308,252 2,215,921
Operating expenses (Note 1)
Selling 264,038 340,877
Engineering 74,212 120,378
General and administrative 1,126,057 1,094,778
Total operating expenses 1,464,307 1,556,033
- ------------------------------------------------------------------
Operating income 843,945 659,888
- ------------------------------------------------------------------
Other income (expense)
Interest and dividend income 107,716 97,835
Interest expense (304,734) (422,150)
Salary continuation expense
(Note 8) (591,095) (31,118)
Gain on sale of property
and equipment 193,253 29,621
Undistributed loss in
partnership (Note 2) (62,700) (62,700)
Miscellaneous, net (65,411) (54,903)
Market value adjustment -
investments (227,480) (180,000)
Subsidiary liquidation
expenses (Note 1) (690,430)
Gain on sale of investments
(Note 2) 47,610
- ------------------------------------------------------------------
Total other income (expense) (1,593,271) (623,415)
- ------------------------------------------------------------------
Income (loss) before income
tax (expense) benefit (749,326) 36,473
Income tax (expense) benefit
(Note 5) 268,300 (800)
- ------------------------------------------------------------------ Net
income (loss) $ (481,026) $ 35,673
- ------------------------------------------------------------------ Net
income (loss) per share $ (.46) $ .03
- ------------------------------------------------------------------
See accompanying summary of accounting policies and notes to
consolidated financial statements.<PAGE>
R. P. Industries, Inc.
and Subsidiaries
Consolidated Statements of Stockholders' Equity
Years Ended July 31, 1996 and 1995
Valuation
Allowance
for
Additional Unrealized Total
Common Paid-In Retained Loss on Stockholders'
Stock Capital Earnings Investments Equity
- ------------------------------------------------------------------
Balance,
July 31,
1994 $10,441 $138,449 $4,787,089 $(499,095) $4,436,884
Net income 35,673 35,673
Dividends on common
stock (52,195) (52,195)
Net realized loss on
marketable
equity
securities 180,000 180,000
Net unrealized gain
on marketable
equity
securities 41,983 41,983
Balance,
July 31,
1995 10,441 138,449 4,770,567 (277,112) 4,642,345
Net loss (481,026) (481,026)
Dividends on common
stock (52,172) (52,172)
Net realized loss on
marketable equity
securities 277,112 277,112
Balance,
July 31,
1996 $10,441 $138,449 $4,237,369 $ $4,386,259
See accompanying summary of accounting policies and notes to
<PAGE>
R. P. Industries, Inc.
and Subsidiaries
Consolidated Statements of Cash Flows
Year Ended July 31, 1996 1995
Operating activities
Cash received from
customers $13,500,415 $13,598,549
Cash paid to suppliers
and employees (12,097,882) (12,176,258)
Interest paid (299,353) (416,657)
Interest and dividends
received 109,211 102,837
Income taxes refunded
(paid) (6,853) 2,979
- ------------------------------------------------------
Cash provided by operating
activities 1,205,538 1,111,450
- ------------------------------------------------------
Investing activities
Purchases of property
and equipment (311,320) (460,552)
Proceeds from sale of
property and equipment 498,255 72,622
Proceeds from sales of
investment securities 1,720,060 419,201
Purchases of investment
securities (75,000)
Payments received on
notes receivable 304,000 19,000
- ------------------------------------------------------
Cash provided by investing
activities 2,135,995 50,271
- ------------------------------------------------------
Financing activities
Principal payments
on borrowings (1,901,026) (736,729)
Dividends paid (52,172) (52,195)
- ------------------------------------------------------
Cash absorbed by financing
activities (1,953,198) (788,924)
- ------------------------------------------------------
Net increase in cash and
cash equivalets 1,388,335 372,797
Cash and cash equivalents,
beginning of the year 747,829 375,032
- ------------------------------------------------------
Cash and cash equivalents,
end of the year $ 2,136,164 $ 747,829
- ------------------------------------------------------
- ------------------------------------------------------
continued...<PAGE>
R. P. Industries, Inc.
and Subsidiaries
Consolidated Statements of Cash Flows
(continued)
Year Ended July 31, 1996 1995
- ------------------------------------------------------
Reconciliation of net
income (loss) to cash
provided by operating
activities
Net income (loss) $ (481,026) $ 35,673
Depreciation and
amortization 695,118 864,428
Market value
adjustment -
investments 227,480 180,000
Increase in cash
surrender value of
life insurance (105,989) (95,382)
Gain on sale of
investments (47,609)
Gain on sale of
property and equipment (193,253) (29,622)
Changes in assets and
liabilities
Decrease in accounts
receivable 307,806 152,530
Decrease in
inventories 462,155 22,926
Increase (decrease)
in accounts payable(240,674) 23,825
Increase (decrease)
in accrued expenses
and other
liabilities 697,102 (39,451)
Increase in deferred
tax asset (259,500)
Decrease in deferred
tax liability (10,000)
Other 153,928 (3,477)
- ------------------------------------------------------
Cash provided by operating
activities $ 1,205,538 $ 1,111,450
- ------------------------------------------------------
See accompanying summary of accounting policies and notes to
R. P. Industries, Inc.
and Subsidiaries
Summary of Accounting Policies
Nature of
Business
R. P. Industries, Inc. (the "Company") is engaged primarily in the
production of injection molded plastic components through its
wholly-owned subsidiaries.
Principles of
Consolidation
The accompanying consolidated financial statements include the
accounts and operations of the Company and all of its wholly-owned
subsidiaries. All intercompany accounts and transactions have been
eliminated in consolidation.
Statement of
Cash Flows
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three
months or less to be cash equivalents.
Investments
In May 1993, the Financial Accounting Standards Board issued its
Statement of Financial Accounting Standards No. 115 ("SFAS 115"),
"Accounting for Certain Investments in Debt and Equity Securities."
SFAS 115 addresses the accounting and reporting for investments in
equity securities that have readily determinable fair values and for
all investments in debt securities. SFAS 115 is effective for fiscal
years beginning after December 15, 1993.
If management has the intent and the Company has the ability at the
time of purchase to hold debt securities until maturity or on a
long-term basis, they are classified as held to maturity, and carried at
amortized historical cost. Investments in debt and equity securities
to be held for indefinite periods of time and not intended to be held
to maturity are classified as available for sale and carried at market
value with unrealized holding gains and losses excluded from earnings
and reported as a net amount (net of tax effect) in a separate
component of stockholders' equity until realized. Debt and equity
securities that are bought and held principally for the purpose of
selling them in the near term (thus held for only a short period of
time) shall be classified as trading securities, with unrealized
holding gains and losses included in earnings.
The Company implemented SFAS 115 during the year ended July 31, 1995.
The implementation of SFAS 115 did not have a material effect on the
consolidated financial statements of the Company.
Gains and losses on the sale of securities are determined using the
specific identification method.<PAGE>
R. P. Industries, Inc.
and Subsidiaries
Summary of Accounting Policies
(continued)
Inventories
Inventories of raw materials and supplies are stated at the lower of
FIFO cost (first-in, first-out method) or market. Finished goods
inventories are stated at cost (not in excess of market) which is
computed from the Company's current production costs.<PAGE>
Property and
Equipment
Property and equipment are recorded at cost. Depreciation is computed
principally on the straight-line method for financial statement
purposes based on the estimated useful lives of the assets. Buildings
are depreciated over thirty years and furniture and equipment are
depreciated over three to ten years. Leasehold improvements are
depreciated over the shorter of their estimated useful life or the
term of the lease.
Income Taxes
Deferred income taxes are recognized for the tax consequences of
"temporary differences" by applying enacted statutory tax rates
applicable to future years to differences between the financial
statement carrying amounts and the tax bases of existing assets and
liabilities. The effect on deferred taxes of a change in tax rates is
recognized in income in the period that includes the enactment date.
Net Income
Per Share
Net income per share has been computed by dividing income applicable
to common shareholders by the weighted average number of shares of
common stock outstanding (1,044,080 for the years ended July 31, 1996
and 1995).
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets at the date
of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ
from those estimates.
Fair Value of
Financial
Instruments
The Company's financial instruments' consist of cash, accounts
receivable, accounts payable, accrued expenses and long-term debt.
The carrying values of all of the financial instruments except
long-term debt approximate fair values because of the short-term nature of
those instruments. The carrying value of long-term debt also
approximates its fair value as the interest rate on the debt is
approximately equivalent to the current rate that could be obtained on
similar debt.
Reclassifications
Certain reclassifications have been made to the prior year
consolidated financial statements to conform to the 1996 presentation.
1. Plant
Closing
During the year ended July 31, 1996, the Company closed its Florida
plant operations ("Moldsaver" subsidiary) and liquidated substantially
all the assets. The operating results for the period through the date
production was halted are included in "Income from Operations" in the
Consolidated Statements of Operations. Expenses incurred subsequent
to the termination of operations are included in the heading
"Subsidiary Liquidation Expenses" in the Consolidated Statements of
Operations.
2. Investments
On August 12, 1988, the Company agreed to purchase a 99% limited
partnership interest in Sentry Woods Investment Associates, L.P.
Since July 31, 1989, the investment account had been reduced to zero,
as the Company's share of partnership losses had exceeded its
investment. In conjunction with its investment in the partnership,
the Company is committed to partnership contributions of $15,675 per
quarter through July, 1999; however, such contributions would cease
should the Company exercise its option to withdraw from the
partnership.
A summary of the cost and estimated market values of investments is as
follows:
July 31, 1996
Gross Gross Estimated
Unrealized Unrealized Market
Cost Gains Losses Value
Available for Sale
Mutual funds $160,550 $ $ $160,550
Preferred stock 95,600 95,600
- ------------------------------------------------------------------
$256,150 $ $ $256,150
- ------------------------------------------------------------------
<PAGE>
R. P. Industries, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
(continued)
2. Investments
(continued)
July 31, 1995
- ------------------------------------------------------------------
Gross Gross Estimated
Unrealized Unrealized Market
Cost Gains Losses Value
- ------------------------------------------------------------------
Available for Sale
Mutual funds $1,598,712 $75,747 $324,589 $1,349,870
Preferred stock 132,350 132,350
Obligations of
state and
political
subdivisions 350,000 28,270 321,730
- ------------------------------------------------------------------
$2,081,062 $75,747 $352,859 $1,803,950
- ------------------------------------------------------------------
Proceeds from sales of investment securities available for sale during
the year ended July 31, 1996, were $1,720,060. Gross gains and losses
on those sales were $165,475 and $117,865, respectively. Included in
shareholders' equity at July 31, 1995 is $277,112 of net unrealized
losses on investment securities available for sale.
3. Property and
Equipment
Property and equipment consist of the following:
July 31, 1996 1995
- ------------------------------------------------------------------
Land $ 122,301 $ 122,301
Machinery and equipment 4,175,161 6,004,495
Furniture and office equipment 222,842 384,371
Automobiles and trucks 97,622 111,393
Buildings and leasehold
improvements 1,191,869 1,384,242
- ------------------------------------------------------------------
Total cost 5,809,795 8,006,802
Accumulated depreciation (3,517,661) (5,025,868)
- ------------------------------------------------------------------
Net property and equipment $2,292,134 $2,980,934
- ------------------------------------------------------------------
4. Long-Term
Debt
Long-term debt consists of the following:
July 31, 1996 1995
- ------------------------------------------------------------------
Note payable to bank, payable $45,322 monthly,
bearing interest at the 30 day London
Interbank Offered Rate (LIBOR) plus 2%,
through November 15, 2000, secured by
certain machinery and equipment $1,856,766 $2,900,634
Note payable to bank, payable $11,905
monthly, bearing interest at prime,
through August 1, 2001, secured by
certain machinery and equpment. 857,143
- ------------------------------------------------------------------
Total 1,856,766 3,757,777
Less current maturities 543,869 686,727
- ------------------------------------------------------------------
Long-term debt $1,312,897 $3,071,050
- ------------------------------------------------------------------
During July 1995, the Company entered into an interest rate swap
agreement under which it pays to the counterparty interest at a fixed
rate of 8.2% based on the notional amount outstanding at the payment
date (notional amount at date of swap agreement was $1,000,000). The
counterparty pays the Company interest at LIBOR rate plus 2% on the
notional amount on the payment date. The notional amount amortizes
monthly through July 2000.
4. Long-Term
Debt
(continued)
Maturities of long-term debt are as follows:
Year Ending July 31, Amount
- ------------------------------------
1997 $ 543,869
1998 543,869
1999 543,869
2000 225,159
- ------------------------------------
Total $1,856,766
- ------------------------------------
- ------------------------------------
At July 31, 1996 and 1995, the Company had available unsecured,
short-term bank lines of credit totaling $1,000,000 and $2,500,000,
respectively, with interest at prime. As of July 31, 1996 and 1995,
no amounts were outstanding under these agreements.
5. Income Taxes
The provision for income taxes consists of the following:
Year Ended July 31, 1996 1995
- --------------------------------------------------
Current
Federal $ $14,700
State 1,200 5,400
1,200 20,100
- --------------------------------------------------
Deferred (269,500) (19,300)
- --------------------------------------------------
Income tax expense
(benefit) $(268,300) $ 800
- --------------------------------------------------
- --------------------------------------------------
5. Income Taxes
(continued)
The following summary reconciles taxes at the federal statutory rate
with the effective rate:
Year ended July 31, 1996 1995
- -------------------------------------------------------
Income taxes at statutory rate $(254,800) $12,400
Non-taxable dividends and
interest income (13,000) (24,834)
Increase in cash surrender value
of life insurance (36,000) (32,430)
State taxes, net of federal income
tax benefit 1,600 3,312
Other 33,900 42,352
- ---------------------------------------------------------
$(268,300) $ 800
- ---------------------------------------------------------
- ---------------------------------------------------------
Deferred income tax assets and liabilities represent the cumulative
tax effect from temporary differences in the recognition of taxable or
deductible amounts for income tax and financial reporting purposes
primarily related to depreciation and deferred compensation.
The Company incurred a net operating loss of approximately $96,000 for
income tax purposes for the year ended July 31, 1996. Substantially
all of the net operating loss will be carried forward for use in
subsequent years and expires in the year 2011.
6. Stock Options
In November, 1981, the stockholders approved an incentive stock option
plan under which key employees may, until December, 2001, be granted
options to purchase a maximum of 100,000 shares of the Company's
stock. At July 31, 1996 and 1995, options to purchase 80,000 and
85,000, shares, respectively, at per share prices ranging from $3.11
to $3.00, were outstanding. No charge has been made to income with
respect to the plan. During the year ended July 31, 1996, issued
options to buy 30,000 shares of $3.00 expired without being exercised.
No options were exercised during the year.
7. Profit Sharing
Plan
The Company has a profit-sharing plan covering eligible employees.
Employer contributions are based upon profits and participants'
respective annual salaries and wages. Contributions under the plan
may be discontinued at any time. Contributions for the years ended
July 31, 1996 and 1995 were approximately $136,300 and $89,700,
respectively.
8. Commitments
The Company has unfunded salary continuation agreements covering two
of its current and past executives. The present value of the expected
future benefits to be paid under the agreements are being accrued over
the executives' period of service to the Company. As of July 31,
1995, approximately $158,000 of retirement benefits related to the
agreements had been accrued and included in "accrued expenses and
other liabilities" in the accompanying consolidated financial
statements. During the year ended July 31, 1995, one of the Company's
executives took early retirement, however the executive entered into a
consulting arrangement with the Company and payments under the salary
continuation agreement were being recorded as consulting expenses,
rather than retirement benefits, which reduced the retirement
liability as long as the consulting arrangement was in effect. During
the year ended July 31, 1996, the consulting arrangement was
discontinued and therefore, the entire remaining present value of
future retirement benefits for that executive was accrued. At July
31, 1996, approximately $104,000 related to the agreements are
included in accrued expenses with the remaining balance of $645,440 in
long-term liabilities.
The Company leases certain facilities under operating leases expiring
at various dates. Future minimum lease payments under these operating
leases having initial or remaining noncancellable lease terms in
excess of one year at July 31, 1996, are as follows:
Year Ending July 31, Amount
- ---------------------------------------------------------
1997 $20,500
1998 21,100
1999 22,000
2000 1,800
- ---------------------------------------------------------
Total $65,400
- ---------------------------------------------------------
- ---------------------------------------------------------
Total rent expense was approximately $109,000 and $116,000 for the
years ended July 31, 1996 and 1995, respectively.
9. Consolidated
Financial
Information of
the Company
(excluding
Moldsaver
Subsidiary)
Consolidated Statement of Operations
(excluding Moldsaver Subsidiary)
(unaudited)
Year Ended July 31, 1996 1995
- ---------------------------------------------------------
Net sales $10,749,643 $9,520,633
Cost of sales 8,474,031 7,618,342
- ---------------------------------------------------------
Gross profit 2,275,612 1,902,291
- ---------------------------------------------------------
Operating expenses
Selling 177,486 191,474
Engineering 72,262 108,792
General and
administrative 817,768 723,288
- ---------------------------------------------------------
Total operating expenses 1,067,516 1,023,554
- --------------------------------------------------------- Operating
income 1,208,096 878,737
- ---------------------------------------------------------
Other income (expense)
Interest and dividend
income 143,908 97,800
Interest expense (302,746) (422,150)
Gain on sale of property
& equipment 73,149 12,051
Undistributed loss in
partnership (62,700) (62,700)
Miscellaneous, net (100,882) (63,858)
- ---------------------------------------------------------
Total other income
(expense) (249,271) (438,857)
- ---------------------------------------------------------
Income before other
unusual income (expense) 958,825 439,880
- ---------------------------------------------------------
9. Consolidated
Financial
Information of
the Company
(excluding
Moldsaver
Subsidiary)
(continued)
Consolidated Statement of Operations
(excluding Moldsaver Subsidiary)
(unaudited)
Year Ended July 31, 1996 1995
- ---------------------------------------------------------
Other unusual income
(expense)
Salary continuation
expense $ (591,095) $ (31,118)
Market value
adjustment -
investments (227,480) (180,000)
Gain on sale of
investments 47,610
- ---------------------------------------------------------
Total other unusual income
(expense) (770,965) (211,118)
Income before income taxes 187,860 228,762
Income tax expense
(estimated 38%
effective rate) 71,400 86,900
- ---------------------------------------------------------
Net income $ 116,460 $ 141,862
- ---------------------------------------------------------
Net income per share $ .11 $ .14
- ---------------------------------------------------------
- ---------------------------------------------------------<PAGE>
R. P. Industries, Inc.
and Subsidiaries
Consolidated Financial Statements
Years Ended July 31, 1997 and 1996<PAGE>
R. P. Industries, Inc.
and Subsidiaries
Contents
Independent Auditors' Report 3
Consolidated Financial Statements
Balance Sheets 4
Statements of Operations 5
Statements of Stockholders' Equity 6
Statements of Cash Flows 7 8
Summary of Accounting Policies 9 10
Notes to Consolidated Financial Statements 11 17
<PAGE>
Independent Auditors' Report
R. P. Industries, Inc. and Subsidiaries
Richmond, Virginia
We have audited the consolidated balance sheets of R. P. Industries,
Inc. and subsidiaries as of July 31, 1997 and 1996, and the related
consolidated statements of operations, stockholders' equity, and cash
flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the consolidated
financial position of R. P. Industries, Inc. and subsidiaries at July
31, 1997 and 1996, and the consolidated results of its operations and
its cash flows for the years then ended in conformity with generally
accepted accounting principles.
September 19, 1997
<PAGE>
July 31, 1997 1996
Assets
Current
Cash and cash equivalents $1,696,513 $2,136,164
Accounts receivable
Trade, net of allowance
for doubtful accounts
of approximately $18,400
and $15,600 1,395,635 1,360,062
Other 15,000 6,270
Inventories
Finished goods 213,719 195,252
Raw materials and supplies 446,368 677,561
Prepaid expenses and deposits 67,865 12,964
Deferred income taxes (Note 5) 58,000 84,500
Total current assets 3,893,100 4,472,773
Investments, available for sale
(Note 2) 228,004 256,150
Property and Equipment, net
(Notes 3 and 4) 2,366,769 2,292,134
Other Assets
Cash value of life insurance,
net of loans of
approximately $839,000 1,044,513 869,314
Other assets 2,208 117,908
Deferred income taxes (Note 5) 201,500 175,000
Total other assets 1,248,221 1,162,222
$7,736,094 $8,183,279
July 31, 1997 1996
Liabilities and Stockholders'
Equity
Current
Accounts payable $ 787,932 $ 748,427
Accrued expenses and other
liabilities (Note 8) 457,846 546,387
Current maturities of
long-term debt (Note 4) 527,477 543,869
Income taxes payable 234,402
Total current liabilities 2,007,657 1,838,683
Long-term debt, less current
maturities (Note 4) 1,312,897
Deferred compensation (Note 8) 625,357 645,440
Total liabilities 2,633,014 3,797,020
Commitments and contingencies
(Notes 2, 4, 6, 7, and 8)
Stockholders' equity (Note 6)
Common stock, par value $.01; authorized
shares, 10,000,000; issued and
outstanding 1,044,080 shares 10,441 10,441
Additional paid-in capital 138,449 138,449
Retained earnings 4,954,190 4,237,369
Total stockholders' equity 5,103,080 4,386,259
$7,736,094 $8,183,279
Year Ended July 31, 1997 1996
Net sales (Note 1) $10,607,960 $13,192,609
Cost of sales (Note 1) 8,438,802 10,884,357
Gross profit 2,169,158 2,308,252
Operating expenses (Note 1)
Selling 199,799 264,038
Engineering 58,865 74,212
General and administrative 778,481 1,126,057
Total operating expenses 1,037,145 1,464,307
Operating income 1,132,013 843,945
Other income (expense)
Interest and dividend income 94,560 107,716
Interest expense (186,807) (304,734)
Salary continuation expense
(Note 8) (84,167) (591,095)
Gain on sale of property and
equipment 33,548 193,253
Undistributed loss in partnership
(Note 2) (62,700) (62,700)
Miscellaneous, net 101,968 (65,411)
Market value adjustment -
investments (227,480)
Subsidiary liquidation expenses
(Note 1) (690,430)
Gain on sale of investments
(Note 2) 4,674 47,610
Total other income (expense) (98,924) (1,593,271)
Income (loss) before income tax
(expense) benefit 1,033,089 (749,326)
Income tax (expense) benefit
(Note 5) (237,987) 268,300
Net income (loss) $ 795,102 $ (481,026)
Net income (loss) per share $ .76 $ (.46)
Years Ended July 31, 1997 and 1996
Valuation
Allowance
for
Additional Unrealized Total
Common Paid-In Retained Loss on Stockholders'
Stock Capital Earnings Investments Equity
- ------------------------------------------------------------------
Balance,
July 31,
1995 $10,441 $138,449 $4,770,567 $(277,112) $4,642,345
Net loss (481,026) (481,026)
Dividends on
common
stock (52,172) (52,172)
Net realized
loss on
marketable
equity
securities 277,112 277,112
Balance,
July 31,
1996 10,441 138,449 4,237,369 4,386,259
Net income 795,102 795,102
Dividends on common
stock (78,281) (78,281)
Balance
July 31,
1997 $10,441 $138,449 $4,954,190 $ $5,103,080
Year Ended July 31, 1997 1996
Operating activities
Cash received from customers $10,572,387 $13,500,415
Cash paid to suppliers and
employees (9,024,216) (12,097,882)
Interest paid (183,258) (299,353)
Interest and dividends received 85,242 109,211
Income taxes paid (3,585) (6,853)
Cash provided by operating activities 1,446,570 1,205,538
Investing activities
Purchases of property and equipment (566,897) (311,320)
Proceeds from sale of property and
equipment 55,426 498,255
Proceeds from sales of investment
securities 917,219 1,720,060
Purchases of investment securities (884,399) (75,000)
Payments received on notes receivable 304,000
Cash provided (absorbed) by investing
activities (478,651) 2,135,995
Financing activities
Principal payments on borrowings (1,329,289) (1,901,026)
Dividends paid (78,281) (52,172)
Cash absorbed by financing activities (1,407,570) (1,953,198)
Net increase (decrease) in cash and
cash equivalents (439,651) 1,388,335
Cash and cash equivalents,
beginning of the year 2,136,164 747,829
Cash and cash equivalents, end of
the year $ 1,696,513 $ 2,136,164
Year Ended July 31, 1997 1996
Reconciliation of net income (loss)
to cash provided by operating
activities
Net income (loss) $ 795,102 $ (481,026)
Depreciation and amortization 470,384 695,118
Market value adjustment -
investments 227,480
Increase in cash surrender value
of life insurance (175,199) (105,988)
Gain on sale of investments (4,674) (47,610)
Gain on sale of property and
equipment (33,548) (193,253)
Changes in assets and liabilities
(Increase) decrease in accounts
receivable (44,303) 307,806
Decrease in inventories 212,726 462,155
Increase (decrease) in accounts
payable 39,505 (240,674)
Increase (decrease) in accrued
expenses and other
liabilities (108,624) 697,102
Increase in income taxes payable 234,402
Increase in deferred tax asset (259,500)
Decrease in deferred tax liability (10,000)
Other 60,799 153,928
Cash provided by operating activities $1,446,570 $1,205,538
Nature of
Business
R. P. Industries, Inc. (the "Company") is engaged primarily in the
production of injection molded plastic components through its
wholly-owned subsidiaries.
Principles of
Consolidation
The accompanying consolidated financial statements include the
accounts and operations of the Company and all of its wholly-owned
subsidiaries. All intercompany accounts and transactions have been
eliminated in consolidation.
Statement of
Cash Flows
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three
months or less to be cash equivalents.
Investments
Gains and losses on the sale of securities are determined using the
specific identification method. Unrealized holding gains and losses
on available for sale investments are reported net of tax effect in a
separate component of stockholders' equity until realized. Unrealized
holding gains and losses on trading securities are included in
earnings.
Inventories
Inventories of raw materials and supplies are stated at the lower of
FIFO cost (first-in, first-out method) or market. Finished goods
inventories are stated at cost (not in excess of market) which is
computed from the Company's current production costs.
Property and
Equipment
Property and equipment are recorded at cost. Depreciation is computed
principally on the straight-line method for financial statement
purposes based on the estimated useful lives of the assets. Buildings
are depreciated over thirty years and furniture and equipment are
depreciated over three to ten years.
Income Taxes
Deferred income taxes are recognized for the tax consequences of
"temporary differences" by applying enacted statutory tax rates
applicable to future years to differences between the financial
statement carrying amounts and the tax bases of existing assets and
liabilities. The effect on deferred taxes of a change in tax rates is
recognized in income in the period that includes the enactment date.
Stockholders'
Equity
In October 1995, the Financial Accounting Standards Board issued its
Statement of Financial Accounting Standards No. 123 ("SFAS 123"),
"Accounting for Stock-Based Compensation." This statement defines a
fair value method of accounting for stock-based employee compensation
and encourages all entities to adopt that method of accounting for all
of their employee stock compensation plans. However, it also allows
an entity to continue to measure compensation cost for those plans
using the intrinsic value based method of accounting prescribed by APB
Opinion No. 25, Accounting for Stock Issued to Employees. Entities
electing to remain with the accounting in Opinion 25 must make
proforma disclosures, if effect of adoption is material, of net income
and, if presented, earnings per share, as if the fair value method of
accounting had been applied. SFAS 123 is effective for fiscal years
beginning after December 15, 1995. If accounting under Opinion 25 is
used, SFAS 123 disclosures must include the effects of all awards
granted in fiscal years that begin after December 15, 1994.
The Company implemented SFAS 123 during the year ended July 31, 1997.
Under the provisions of SFAS 123, the Company continues to account for
stock-based employee compensation under the method prescribed by APB
Opinion No. 25. The implementation of SFAS 123 did not have a
material effect on the consolidated financial statements of the
Company.
Net Income
Per Share
Net income (loss) per share has been computed by dividing income
applicable to common shareholders by the weighted average number of
shares of common stock outstanding (1,044,080 for the years ended July
31, 1997 and 1996).
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets at the date
of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ
from those estimates.
Reclassifications
Certain reclassifications have been made to the prior year
consolidated financial statements to conform to the 1997 presentation.
1. Plant
Closing
During the year ended July 31, 1996, the Company closed its Florida
plant operations ("Moldsaver" subsidiary) and liquidated substantially
all the assets. The operating results for the period through the date
production was halted are included in "Income from Operations" in the
Consolidated Statements of Operations. Expenses incurred subsequent
to the termination of operations are included in the heading
"Subsidiary Liquidation Expenses" in the Consolidated Statements of
Operations.
2. Investments
On August 12, 1988, the Company agreed to purchase a 99% limited
partnership interest in Sentry Woods Investment Associates, L.P.
Since July 31, 1989, the investment account had been reduced to zero,
as the Company's share of partnership losses had exceeded its
investment. In conjunction with its investment in the partnership,
the Company is committed to partnership contributions of $15,675 per
quarter through July, 1999; however, such contributions would cease
should the Company exercise its option to withdraw from the
partnership.
A summary of the cost and estimated market values of investments is as
follows:
July 31, 1997
Gross Gross Estimated
Unrealized Unrealized Market
Cost Gains Losses Value
Available for Sale
Corporate debt
securities $207,404 $ $ $207,404
Preferred stock 20,600 20,600
$228,004 $ $ $228,004
2. Investments
(continued)
July 31, 1996
Gross Gross Estimated
Unrealized Unrealized Market
Cost Gains Losses Value
Available for Sale
Mutual funds $160,550 $ $ $160,550
Preferred stock 95,600 95,600
$256,150 $ $ $256,150
Proceeds from sales of investment securities available for sale during
the years ended July 31, 1997 and July 31, 1996, were $917,219 and
$1,720,060, respectively. Gross gains and losses on those sales were
$7,658 and $2,984, and $165,475 and $117,865, for the years ended July
31, 1997 and 1996, respectively.
3. Property and
Equipment
Property and equipment consist of the following:
July 31, 1997 1996
Land $ 122,301 $ 122,301
Machinery and equipment 4,748,057 4,175,161
Furniture and office equipment 220,155 222,842
Automobiles and trucks 61,922 97,622
Buildings and improvements 1,056,555 1,191,869
Total cost 6,208,990 5,809,795
Accumulated depreciation (3,842,221) (3,517,661)
Net property and equipment $2,366,769 $2,292,134
4. Long-Term
Debt
Long-term debt consists of the following:
July 31, 1997 1996
Note payable to bank, payable $45,322 monthly,
bearing interest at the 30 day London
Interbank Offered Rate (LIBOR) plus 2%,
through November 15, 2000, secured by
certain machinery and equipment $527,477 $1,856,766
Total 527,477 1,856,766
Less current maturities 527,477 543,869
Long-term debt $ $1,312,897
During July 1995, the Company entered into an interest rate swap
agreement under which it pays to the counterparty interest at a fixed
rate of 8.2% based on the notional amount outstanding at the payment
date (notional amount at date of swap agreement was $1,000,000). The
counterparty pays the Company interest at LIBOR rate plus 2% on the
notional amount on the payment date. The notional amount amortizes
monthly through July 2000.
At July 31, 1997 and 1996, the Company had available unsecured,
short-term bank lines of credit totaling $1,000,000, with interest at prime.
As of July 31, 1997 and 1996, no amounts were outstanding under these
agreements.
5. Income Taxes
The provision for income taxes consists of the following:
Year Ended July 31, 1997 1996
Current
Federal $204,734 $
State 33,253 1,200
237,987 1,200
Deferred (269,500)
Income tax expense
(benefit) $237,987 $(268,300)
The following summary reconciles taxes at the federal statutory rate
with the effective rate:
Year ended July 31, 1997 1996
Income taxes at statutory rate $351,250 $(254,800)
Non-taxable dividends and
interest income (9,900) (13,000)
Increase in cash surrender value
of life insurance (32,000) (36,000)
State taxes, net of federal income
tax benefit 33,200 1,600
Low income housing credit (76,793)
Other (27,770) 33,900
$237,987 $(268,300)
Deferred income tax assets relate primarily to deferred compensation
and accounts receivable and are net of deferred tax liabilities
attributable primarily to depreciation.
6. Stock Options
In November, 1981, the stockholders approved an incentive stock option
plan under which key employees may, until December, 2001, be granted
options to purchase a maximum of 150,000 shares of the Company's
stock. The following table represents options related to the plan:
Year Ending July 31, 1997 1996
Weighted- Weighted-
average average
exercise exercise
Shares price Shares price
Options outstanding at
beginning of year 80,000 $3.03 85,000 $3.04
Options granted 50,000 2.94 25,000 3.11
Options exercised
Options forfeited (20,000) 3.00 (30,000) 3.10
Options outstanding at
end of year 110,000 $3.00 80,000 $3.03
The options are exercisable over various dates. The weighted average
remaining contractual life of total options is approximately 4 years
at July 31, 1997.
The Company applies APB Opinion 25 and related interpretations in
accounting for its plan. Accordingly, no compensation cost has been
recognized. In accordance with the transition provisions of SFAS 123,
pro forma income was calculated reflecting options with grant dates
subsequent to August 1, 1995.
For purposes of computing the pro forma amounts, the fair value of
each option on the date of grant is estimated using the Black-Scholes
option pricing model with the following assumptions for the grant in
1997: expected volatility of zero, risk-free interest rate of
approximately 6% and an expected option life of less than 5 years.
The calculated pro forma amounts are immaterial to the Company and
therefore are not included in this disclosure.
7. Profit Sharing
Plan
The Company has a profit-sharing plan covering eligible employees.
Employer contributions are based upon profits and participants'
respective annual salaries and wages. Contributions under the plan
may be discontinued at any time. Contributions for the years ended
July 31, 1997 and 1996 were approximately $113,400 and $136,600,
respectively.
8. Commitments
The Company has unfunded salary continuation agreements covering two
of its current and past executives. The present value of the expected
future benefits to be paid under the agreements are being accrued over
the executives' period of service to the Company. During the year
ended July 31, 1995, one of the Company's executives took early
retirement, however, the executive entered into a consulting
arrangement with the Company and payments under the salary
continuation agreement were being recorded as consulting expenses
rather than retirement benefits, which reduced the retirement
liability as long as the consulting arrangement was in effect. During
the year ended July 31, 1996, the consulting arrangement was
discontinued and therefore, the entire remaining present value of
future retirement benefits for that executive was accrued. At July
31, 1997 and 1996, approximately $104,000 related to the agreements
are included in accrued expenses with the remaining balance of
$625,357 and $645,440 in long-term liabilities respectively.
The Company leases certain facilities under operating leases expiring
at various dates. Future minimum lease payments under these operating
leases having initial or remaining noncancellable lease terms in
excess of one year at July 31, 1997, are as follows:
Year Ending July 31, Amount
____________________________________
1998 $21,100
1999 22,000
2000 1,800
____________________________________
Total $44,900
Total rent expense was approximately $20,500 and $109,000 for the
years ended July 31, 1997 and 1996, respectively.
At July 31, 1997, approximately 34% or $473,000 of the Company's
accounts receivable were from two major customers. During the year
ended July 31, 1997, approximately 37% of the Company's sales were to
these particular customers. As with all of its customers, the Company
periodically reviews the customer's financial condition. There have
been no credit losses related to these customers during the year ended
July 31, 1997.
9. Subsequent
Events
Subsequent to July 31, 1997, the Company received a signed letter of
intent from an outside party interested in purchasing the Company
through the acquisition of all its outstanding shares of common stock.
ITEM 7(b)
<TABLE>
UNITED SHIELDS CORPORATION
Pro Forma Balance Sheet
(Dollars in thousands)
<CAPTION>
HISTORICAL
USC (2) RP Ind. Pro Forma Pro Forma
9/30/97 9/30/97 Adjustments Combined
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
CASH AND EQUIVALENTS $ 104 $2,124 $ 0 $ 2,228
MARKETABLE SECURITIES 0 0 0 0
TRADE RECEIVABLE 503 1,248 0 1,751
OTHER RECEIVABLES 7 12 0 19
INVENTORIES 437 800 0 1,237
DEFERRED INCOME TAXES 0 58 0 58
PREPAID EXPENSES 35 68 0 103
----- ----- ---- -----
TOTAL CURRENT ASSETS 1,086 4,310 0 5,396
PROPERTY & EQUIPMENT 1,321 6,413 2,000 (1) 9,734
LESS: ACCUMULATED DEPRECIATION 955 3,933 0 4,888
----- ----- ----- -----
NET PROPERTY AND EQUIPMENT 366 2,480 2,000 4,846
DEPOSITS 18 0 0 18
GOODWILL, net 1,658 0 3,690 (1) 5,348
INVESTMENTS 715 0 0 715
MARKETING AGREEMENT, net 67 0 0 67
CASH VALUE OF LIFE INSURANCE,NET 0 1,056 0 1,056
OTHER ASSETS 0 2 0 2
DEFERRED INCOME TAXES 156 202 0 358
----- ----- ----- ------
TOTAL ASSETS $4,066 $8,050 $5,690 $17,806
===== ===== ===== ======
LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES
NOTES PAYABLE - stockholder $ 710 0 0 $ 710
CURRENT LONG-TERM DEBT 0 437 0 437
ACCOUNTS PAYABLE 511 1,039 0 1,550
ACCRUED LIABILITIES 139 763 686 (1) 1,588
----- ----- ----- -----
TOTAL CURRENT LIABILITIES 1,360 2,239 686 4,285
LONG-TERM LIABILITIES
NOTES PAYABLE 2,562 0 5,401 (1) 7,963
CAPITAL LEASE OBLIGATIONS 6 0 0 6
DEFERRED COMPENSATION 0 626 0 626
SHAREHOLDER'S EQUITY
COMMON STOCK 1,031 10 4,778 (1) 5,819
ADDITIONAL PAID IN CAPITAL 0 138 (138) (1) 0
RETAINED EARNINGS (893) 5,037 (5,037) (1) (893)
------ ----- ------- ------
TOTAL SHAREHOLDER'S EQUITY 138 5,185 (397) 4,926
------ ----- ------- ------
TOTAL LIAB. & STOCKHOLDERS
EQUITY $4,066 $8,050 $5,690 $17,806
====== ===== ======= ======
<FN>
(1) Reflects the acquisition, issuance of debt to partially fund the acquisition, the resulting
goodwill from the acquisition and the issuance of common stock in a private placement
by USC and to the former owners of RP Ind. to fund the remainder of the acquisition.
(2) Includes USC and its' wholly owned subsidiary, The HeaterMeals Company as filed on Form 8-K dated
November 14, 1997.
</FN>
</TABLE>
<PAGE>
<TABLE>
UNITED SHIELDS CORPORATION
Pro Forma Statement of Operations
(Dollars in thousands, except per share data)
<CAPTION>
Historical
USC (1) RP Ind.
12 mos. Ended Pro Forma Pro Forma
12/31/96 1/31/97 Adjustments Combined
<S> <C> <C> <C> <C>
REVENUES
NET SALES $ 4,891 $12,293 $ 0 $ 17,184
COST OF SALES 3,698 9,832 0 13,530
----- ------ --- ------
GROSS PROFIT 1,193 2,461 0 3,654
OPERATING EXPENSES
SELLING, GENERAL
& ADMIN EXP 2,158 1,262 (3) 446 3,866
INCOME / (LOSS) FROM
OPERATIONS (965) 1,199 (446) (212)
OTHER INCOME / (EXPENSE)
INTEREST INCOME 2 75 0 77
INTEREST EXPENSE (281) (235) (2) (513) (1,029)
SUBSIDIARY LIQUIDATION
EXPENSE 0 (691) (4) 0 (691)
SALARY CONTINUATION
EXPENSE 0 (633) 0 (633)
OTHER 0 (58) 0 (58)
----- ------- ----- ------
(279) (1,542) (513) (2,334)
EARNINGS / (LOSS) BEFORE
INCOME TAXES (1,244) (343) (959) (2,546)
INCOME TAX EXPENSE
(BENEFIT) (229) (112) 0 (341)
-------- ------ ------ ------
NET EARNINGS / (LOSS) $ (1,015) $ (231) $ (959) $ (2,205)
========= ======== ====== =========
NET INCOME / (LOSS)
PER COMMON SHARE $ (0.11) $ (0.21)
========= =========
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES
OUTSTANDING 9,215,640 10,430,816
========== ===========
<FN>
Footnotes:
(1) Includes USC and its' wholly owned subsidiary, The HeaterMeals Company
as filed on Form 8-K dated November 14, 1997.
(2) Reflects the additional interest expense resulting from the purchase of RP Ind.
(3) Reflects the amortization of estimated goodwill over a 15 year period and additional
depreciation expense resulting from the increase in fair market value of fixed assets
acquired (spread over a 10 year life.)
(4) Subsidiary liquidation expenses result from the closing of RP Ind.'s Florida plant
operations. Related income tax benefit of these expenses is approximately $247,000.
</FN>
</TABLE>
<PAGE>
<TABLE>
UNITED SHIELDS CORPORATION
Pro Forma Statement of Operations
(Dollars in thousands, except per share data)
<CAPTION>
Historical
USC (1) RP Ind. (4)
9 mos. Ended Pro Forma Pro Forma
9/30/97 9/30/97 Adjustments Combined
<S> <C> <C> <C> <C>
REVENUES
NET SALES $ 3,578 $7,885 $ 0 $ 11,463
COST OF SALES 3,213 6,194 0 9,407
--------- ------ ------ -----------
GROSS PROFIT 365 1,691 0 2,056
OPERATING EXPENSES
SELLING, GENERAL
& ADMIN EXP 1,795 769 (3) 335 2,899
INCOME / (LOSS) FROM
OPERATIONS (1,430) 922 (335) (843)
OTHER INCOME / (EXPENSE)
INTEREST INCOME 1 92 0 93
INTEREST EXPENSE (255) (127) (2) (385) (767)
SALARY CONTINUATION
EXPENSE 0 (63) 0 (63)
OTHER (116) 34 0 (82)
-------- ------ ------- ---------
(370) (64) (385) (819)
EARNINGS / (LOSS) BEFORE
INCOME TAXES (1,800) 858 (720) (1,662)
INCOME TAX EXPENSE
(BENEFIT) (21) 172 0 151
-------- ----- ------- ---------
NET EARNINGS/(LOSS) $ (1,779) $ 686 $ (720) $ (1,813)
============ ====== ======== ============
NET INCOME / (LOSS)
PER COMMON SHARE $ (0.17) $ (0.15)
=========== ==============
WEIGHTED AVERAGE
NUMBER OF COMMON
SHARES OUTSTANDING 10,614,203 11,829,379
========== ==========
<FN>
Footnotes:
(1) Includes USC and its' wholly owned subsidiary, The HeaterMeals Company
as filed on Form 8-K dated November 14, 1997.
(2) Reflects the additional interest expense resulting from the purchase of RP Ind.
(3) Reflects the amortization of estimated goodwill over a 15 year period and additional
depreciation expense resulting from the increase in fair market value of fixed assets
acquired (spread over a 10 year life.)
(4) Net income for the month of January 1997 ($93) is included in the above pro forma statement
as well as the pro forma statement of operations for the 12 months ended 1-31-97.
</FN>
/TABLE
<PAGE>
EXHIBIT 99.1
SALE AND LEASEBACK AGREEMENT
This Sale and Leaseback Agreement ("Agreement") is dated and
effective as of the ___ day of December, 1997 by and between
HeaterMeals Company (f/k/a ZestoTherm, Inc.), 311 Northland Boulevard,
Cincinnati, Ohio 45246 ("Seller") and Information Leasing Corporation,
1023 W. Eighth Street, Cincinnati, Ohio 45203 ("Buyer").
WHEREAS, Buyer is purchasing equipment set forth on Schedule 1
hereto ("Equipment") from Seller and Seller desires to use the
Equipment under the terms and conditions of lease in the form attached
hereto as Exhibit A (the "Lease").
THEREFORE, in consideration of the mutual promises herein, Seller
and Buyer agree:
1. Sale and Leaseback. Buyer agrees to purchase, and Seller
agrees to sell, the Equipment and each Buyer agrees to lease the
Equipment to the Seller pursuant to the terms and conditions contained
therein. The purchase date and the date that title to the Equipment
shall pass from Seller to Buyer shall be the "Commencement Date" of
the Lease and such sales and assignment shall be evidenced by a Bill
of Sale in the form of Exhibit B hereto ("Bill of Sale").
2. Purchase Price. Buyer and Seller hereby agree that the
purchase price of the Equipment is Five Hundred Thousand Dollars
($500,000.00), which shall be payable to Seller by the Buyer in cash
or other immediately available funds on the Commencement Date.
3. Title. Seller agrees to deliver to Buyer, upon payment of
the purchase price, the Bill of Sale. Seller shall also provide Buyer
a copy of the Bill of Sale and other documentation it received or
executed upon its original acquisition of the Equipment and original
titles to any of the Equipment as to which certificates of title have
been issued, duly endorsed to Buyer.
4. Buyer's Purchase and Performance. Seller agrees that
Buyer's obligations hereunder are expressly conditional on Seller
executing and delivering the Lease, as well as all other documents
pursuant to such Lease.
5. Seller's Representations and Warranties. Seller
represents and warrants to Buyer that: (i) the execution and delivery
of this Agreement and the Bill of Sale are duly authorized on the part
of Seller, and upon due execution hereof by Seller and Buyer shall
constitute valid obligations binding upon and enforceable against
Seller in accordance with their terms; (ii) neither the execution and
delivery of this Agreement or the Bill of Sale, nor the due
performance hereof by Seller shall result in any breach of, or
constitute a default under, or violation of, Seller's Articles of
Incorporation, or Codes of Regulations, or any Agreement to which
Seller is a party or by which Seller is bound; (iii) Seller is in good
standing in its state of incorporation and in any jurisdiction where
the Equipment is located and is entitled to own properties and to
carry on business therein; and (iv) Seller has and is transferring to
Buyer good title to the Equipment free and clear of all liens and
encumbrances of any kind or description.
6. Financial Reporting Requirements. The Seller shall
furnish to Buyer as soon as available, but in any event within sixty
(60) days after the close of each fiscal year, a complete annual
review report of the Seller, which review report shall have been
prepared in accordance with GAAP and compiled by independent certified
public accountants acceptable to Buyer. Such reports shall include
the following reviewed financial statements of the Seller: balance
sheet as of the end of such fiscal year, and statements of income,
cash flow, shareholders' equity and changes in financial position for
the year then ended. In addition to the report required to be
furnished hereby, the Seller shall furnish to Buyer as soon as
received by the Seller copies of all other reports from its auditors
in connection with each annual review including management letters.
In addition, the Seller shall provide any internal annual financial
data as soon as it is available.
The Seller shall furnish to Buyer within thirty (30) days after
the end of each quarter of each fiscal year (including the last month)
a balance sheet of the Seller for such quarter, and statements of
income, cash flow and shareholders' equity of the Seller for such
quarter prepared on both a quarterly and year-to-date basis. Each
quarterly and year-to-date statement of income shall set forth in
comparative form the statement of income of the corresponding quarter
or year-to-date period, respectively, of the previous fiscal year.
Such financial statements may be unaudited, but shall be prepared in
accordance with GAAP and shall be certified to such effect, subject to
normal year-end adjustments, by the chief executive officer or the
chief financial officer of the Seller, who shall certify that such
financial statements fairly present in all material respects the
financial condition and the results of operations of the Seller as of
the date and for the periods set forth therein. In addition to the
foregoing financial information, the Seller shall provide to Buyer any
other information which is provided to the Seller's shareholders in
accordance with securities laws. All financial information requested
under Section 6 hereof shall be reported both as a separate statement
of Seller and a combined statement of Seller and United Shields
Corporation.
Upon request of Buyer, the Seller shall make available for
inspection to representatives of Buyer any of its books and records
and shall furnish to Buyer information regarding its business affairs
and financial condition within a reasonable time after receipt of
written request therefor.
7. Manufacturer's Warranties. Seller warrants that it shall
obtain, and hereby assigns to Buyer, all agreements, warranties and
indemnifications applicable to the Equipment which are normally
provided by the manufacturer to its customers. Seller further agrees
that this assignment will enable the Buyer to comply with its
warranties as Lessor under the Lease.
8. Successors. Buyer and Seller agree that this Agreement
shall inure to the benefit of and shall be binding upon Seller and
Buyer, their respective successors and assignees, except that any
assignee of Buyer shall not be required to perform any of the
obligations of Buyer, and any assignment by Buyer shall not relieve
Buyer of its obligations hereunder. Seller shall not assign any
interest in this Agreement without Buyer's written consent, which
consent shall not be unreasonably withheld.
9. Survival of Covenants. Buyer and Seller agree that the
warranties, covenants and agreements contained in this Agreement shall
survive the passing of title.
10. Limitations. Buyer shall not be liable for any indirect,
special or consequential damages, in connection with or arising by
reason of this Agreement; nor shall Buyer be liable for any event
beyond its control.
11. Miscellaneous. Section titles are not intended to, and
shall not, limit or otherwise affect the interpretation of this
Agreement. This Agreement shall not be deemed to constitute an offer
and shall not be binding upon Buyer until executed by Buyer's
authorized representative. If any provision of this Agreement shall
be held to be invalid or unenforceable, the validity and
enforceability of the remaining provisions hereof shall not be
affected or impaired in any way. Any modifications to this Agreement
shall be in writing and shall be signed by both parties and their last
known assignees, if any. This Agreement shall be construed in
accordance with, and governed by the laws of, the State of Ohio. Any
terms capitalized herein shall have the meanings set forth in the
Lease, which is incorporated herein by reference.
12. Entire Agreement. SELLER REPRESENTS THAT IT HAS READ,
RECEIVED, RETAINED A COPY OF AND UNDERSTANDS THIS AGREEMENT, AND
AGREES TO BE BOUND BY ITS TERMS AND CONDITIONS, SELLER AND BUYER AGREE
THAT THIS AGREEMENT, AND THE LEASE AGREEMENT SHALL CONSTITUTE THE
ENTIRE AGREEMENT AND SUPERSEDE ALL PROPOSALS, ORAL OR WRITTEN, ALL
PRIOR NEGOTIATIONS AND ALL OTHER COMMUNICATIONS BETWEEN THEM WITH
RESPECT TO THE EQUIPMENT.
IN WITNESS WHEREOF, the parties hereto have cause this Agreement
to be duly executed on the date set forth below by their authorized
representatives.
INFORMATION LEASING HEATERMEALS COMPANY CORPORATION
("BUYER") ("SELLER")
By: By:
Name: Name:
Title: Title:
Date: Date:
SALE AND LEASEBACK AGREEMENT
EXHIBIT B
BILL OF SALE
WITNESSETH, that for, and in consideration of, the sum of Five
Hundred Thousand Dollars ($500,000.00) and other good and valuable
consideration, to us in hand paid by INFORMATION LEASING CORPORATION
("Buyer"), the receipt of which is hereby acknowledged, the Seller
("Seller") hereby grants, bargains, sells, conveys, transfers and
sets over unto Buyer, its successors and assigns, all of the Seller's
right, title and interest in and to the property described on Schedule
1 of the Sale and Leaseback Agreement attached thereto ("Equipment"),
and made a part hereof, together with any and all leases described on
Schedule 1 rents, issues, profits, purchase options, renewal rights
and other monies due or to become due in connection therewith.
To have and to hold the same unto said Buyer, its successors and
assigns forever. And said Seller, its successors and assigns does
hereby covenant with said Buyer, its successors and assigns, that the
equipment is free of all liens and encumbrances arising by, through or
under Seller.
Seller hereby covenants to and with the Buyer that Seller has
good and marketable title to all Equipment to be sold, transferred,
assigned, and conveyed hereunder, free and clear of all liens, claims,
encumbrances or restrictions of any kind whatsoever, has the right,
power and authority to, and hereby does, sell, transfer, assign and
convey such title to all of the Equipment free and clear of such
liens, claims, encumbrances or restrictions. Each Seller covenants
that it shall warrant and defend Buyer's title against all lawful
claims whatsoever, and does further, as additional consideration
hereunder, make the following additional covenants, representations
and warranties to Buyer:
OTHER THAN THE ABOVE LIMITED WARRANTY OF TITLE, SAID EQUIPMENT IS
PURCHASED BY BUYER "AS IS" WITHOUT ANY EXPRESS OR IMPLIED WARRANTIES
OR REPRESENTATIONS OF ANY KIND, WITHOUT LIMITATION, SELLER DOES NOT
WARRANT THE EQUIPMENT IS OF MERCHANTABLE QUALITY NOR THAT IT CAN BE
USED FOR ANY PARTICULAR PURPOSE.
IN WITNESS WHEREOF, the undersigned has executed this instrument
this ___ day of December, 1997.
SELLER:
HEATERMEALS COMPANY
_____________________________
BY:__________________________
ITS:__________________________
<PAGE>
EXHIBIT 99.2
Lease No. Commitment Date Rental Commencement Date
1. Lessor hereby leases to Lessee, and Lessee hereby leases and rents
from Lessor, the personal property described below, or if separately
scheduled, in the Schedule hereto annexed, marked Schedule A and made
a part hereof, together with all replacement parts, repairs,
additions, accessories, and system incorporated therein and/or affixed
and pertaining thereto (said personal property and other items herein
collectively referred to as "Equipment") upon the following terms and
conditions:
NO WARRANTIES BY LESSOR OR ANY ASSIGNEE OF LESSOR, LESSEE ACKNOWLEDGES
THAT IT HAS SELECTED BOTH (A0 THE EQUIPMENT LISTED BELOW AND (B) THE
SUPPLIER NAMZZELOW FROM WHOM LESSOR IZZ PURCHASE SAID EQUIPMENT. IN
THIS RESPECT LESSEE ACKNOWLEDGES THAT LESSOR IS NOT THE MANUFACTURER
OF SAID EQUIPMENT NOR THE AGENT OF SAID MANUFACTURER. LESSEE FURTHER
ACKNOWLEDGES THAT LESSOR HAS NOT MADE AND DOES NOT MAKE ANY WARRANTY
OR REPRESENTATION, EITHER EXPRESSED OR IMPLIED, OF ANY KIND WHATSOEVER
WITH RESPECT TO THE EQUIPMENT INCLUDING BUT NOT LIMITED TO: (1) AS TO
THE FITNESS, DESIGN, OR CODITION OF THE EQUIPMENT, (2) AS TO THE
MERCHANTABILITY OF THE QUIPMENT OR ITS FITNESS FOR ANY PARTICULAR
PURPOSE, (3) AS TO THE QUALITY OR CAPACITY OF THE EQUIPMENT , THE
MATERIALS IN THE EQUIPMENT, OR WORKMANSHIP IN THE EQUIPMENT, (4) AS TO
ANY LATENT DEFECTS IN THE EQUIPMENT, (5) AS TO ANY PATENT
INFRINGEMENT, AND (6) AS TO THE COMPLIANCE OF THE EQUIPMENT WITH ANY
REQUIREMENTS OF ANY LAW, RULE, SPECIFICATION, OR CONTRACT PERTAINING
THERETO, LESSEE FURTHER ACKNOWLEDGES THAT IT IS LEASING SAID EQUIPMENT
FROM LESSOR IN AN "AS IS" CONDITION AND THAT NO DEFECT OR UNFITNESS OF
THE EQUIPZZ SHALL RELIEVE LESSEE OZZSSEE'S OBLICATION TO PAY RENT OR
ANY OTHER OBLIGATION TO PAY RENT OR ANY OTHER OBLICATION LESSEE MAY
HAVE TO LESSOR UNDER THE TERMS OF THIS LEASE. IT IS AGREED THAT
LESSOR SHALL HAVE NO OBLIGATION TO INSTALL, ERECT, TEST, ADJUST,
REPAIR, OR SERVICE THE AFORESAID EQUIPMENT. If the Equipment is not
properly installed, does not operate as represented or warranted by
the manufacturer or the supplier, or is unsatisfactory for any reason,
lessee shall make a claim on account thereof solely against the
supplier or manufacturer and shall, nevertheless, pay lessor all rent
payable hereunder. As between Lessee and Lessor and only in those
instances where the manufacturer of the Equipment has provided any
warranty or guarantee of any nature whatsoever applicable to the
Equipment. Lessor hereby assigns to Lessee whatever assignable
interest Lessor may have in such warranty or guarantee. The aforesaid
assignment shall not in any way be deemed to limit, negate, or
otherwise affect the disclaimer of warranties contained in this
paragraph, and Lessor shall not incur any duties arising out of any
manufacturer's warranties or guarantees. Further, lessor shall not
incur any liability whatsoever arising out of any breach of any
manufacturer's warranties or guarantees applicable to the Equipment.
SEE REVERSE SIDE FOR ADDITIONAL TERMS AND CONDITIONS WHICH ARE PART OF
THIS LEASE
Lessee request Lessor to purchase the below-described Equipment from
supplier and to lease said Equipment to Lessee upon the terms and
conditions of this Lease; and, upon written acceptance hereof signed
at the Lessor's office by an authorized employee of Lessor. Lessor
agrees t lease said Equipment to Lessee. The undersigned agree to all
the terms and conditions of this Lease as set forth above and on the
reverse side hereof.
INITIAL TERMS:
Amt. of Each Rental $30,600.60
Tax Rental $1,836.03
Total Rental $ 32,436.63
RENTAL TERMS:
Payments made in: Advance
Payment Period: Monthly
Initial Term (No. Months) 18
Initial Number of Rentals First and Security
Deposit
Initial Security Deposit $30,600.60
END OF LEASE OPTIONS: Lessee shall have the following option at the
end of the original term, provided the lease has not terminated early
and no event of default under the lease has occurred and is
continuing.
1. Purchase the equipment for the fair market value.
2. Renew the Lease
3. Return the equipment as provided in paragraph 14 of this lease
agreement
PRORATED RENTS WILL BE DUE FROM THE DATE OF INSTALLATION UNTIL THE
RENTAL COMMENCEMENT DATE.
Full Legal Name and Address of Lessee
Name The HeaterMeals Company
Address 311 Northland Boulevard
City Cincinnati State OH Zip 45246
Location of Equipment
HeaterMeals, Inc.
Address 311 Northland Boulevard
City Cincinnati County Hamilton
State OH Zip Code 45246
NAME OF LESSEE
The HeaterMeals Company
By: By:
Title Date
By:
Title Date
Title Date
This is a non-cancelable lease for the term indicated
<PAGE>
2. NO ORAL AGREEMENT, GUARANTEE, PROMISE, CONDITION, REPRESENTATION
OR WARRANTY, NOR ANY ORAL MODIFICATION HEREOF SHALL BE BINDING. ALL
PRIOR CONVERSATIONS, AGREEMENTS, OR REPRESENTATIONS RELATED TO THIS
LEASE OR TO THE EQUIPMENT HEREIN ABOVE REFERRED TO ARE INTEGRATED
HEREIN. NONE OF THE TERMS OF THIS LEASE SHALL BE CHANGED OR MODIFIED
EXCEPT IN WRITING EXECUTED BY THE LESSOR AND THE LESSEE.
3. SUPPLIER NOT AN AGENT. LESSEE UNDERSTANDS AND AGREES THAT
NEITHER SUPPLIER NOR ANY SALES MAN OR OTHER AGENT OF SUPPLIER IS AN
AGENT OF LESSOR, NO SALESMAN OR AGENT OF SUPPLIER IS AUTHORIZED TO
WAIVE OR ALTER ANY TERM OR CONDITION OF THIS LEASE AND NO
REPRESENTATION, AS TO EQUIPMENT OR ANY OTHER MATTER BY SUPPLER SHALL
IN ANY WAY AFFECT LESSEE'S DUTY TO PAY RENT AND PERFORM ITS OTHER
OBLIGATIONS AS SET FORTH IN THIS LEASE.
4. NON-CANCELLABLE LEASE. THIS LEASE CANNOT BE CANCELLED OR
TERMINATED EXCEPT AS EXPRESSLY PROVIDED HEREIN.
5. ORDER EQUIPMENT. Lessor agrees to order the Equipment from
supplier. Lessee agrees to arrange for delivery of Equipment so that
it can be accepted in accordance with Paragraph 6 hereof within 180
days after the date on which Lessor accepts Lessee's offer to enter
into this Lease (which date Lessor is authorized to fill in above as
"Commitment Date".) Lessee hereby authorizes Lessor to insert in this
Lease the serial numbers, and other identification data, of Equipment
when determined by Lessor.
6. DELIVERY AND INSPECTION. Lessee will inspect the Equipment within
five (5) business days after its delivery to Lessee. Unless within
such five (5) day period Lessee gives Lessor written notice specifying
any defect in or other proper objection to the Equipment. Lessee
agrees that it will be conclusively presumed, as between Lessor and
Lessee, that (a) Lessee has fully inspected the Equipment (b) the
Equipment is in full compliance with the terms of this Lease (c) the
Equipment is in good condition (operating and otherwise) and repair,
and (d) Lessee has accepted the Equipment from the supplier thereof.
If Lessor shall request, Lessee shall furnish Lessor a written
statement setting forth the matters stated in (a), (b) and (d) and
also approving the invoice of said Equipment or portion thereof.
Notwithstanding the aforesaid in the event the usual time of
installation of such Equipment exceeds the aforesaid five (5) business
day period, then so long as said Equipment is properly installed by
Lessee or supplier, as may be applicable, the aforesaid five (5)
business day period shall begin to run on the date following the
completion of said installment, provided further, however, that in no
event shall said five (5) business day period being to run later than
thirty (30) days after said equipment has been delivered to Lessee.
7. TERMINATION BY LESSOR. Lessor shall have the exclusive option to
terminate this lease and Lessor's obligations thereunder if within 60
days after "Commitment Date", Equipment has not been delivered to
Lessee, or Lessee has not accepted Equipment as provided in paragraph
6 above. Said option may be exercised by giving Lessee written notice
of termination pursuant to the paragraph any time within ten (10)
business days after the expiration of said 60 day period.
8. TERM. The term of this Lease commences upon the date on which the
equipment is delivered to Lessee (whether or not accepted) and ends
upon the expiration of the number of months specified above under
"Initial Term of Lease" after the "Rental Commencement Date" shown
above. Lessee hereby authorizes Lessor to insert n this Lease as said
"Rental Commencement Date" the date upon which Equipment is delivered
to Lessee or any later date selected by Lessor.
9. RENT. During the term of this Lease. Lessee agrees to pay rent
equal to the "Amount of Each Rent Payment" multiplied by the "Number
of Rental Payments" as indicated above. The first rental payment
shall be due on "Commitment Date" and shall be applicable to the
rental period commencing on "Rental Commencement Date." Subsequent
rental payments shall be due in advance on the same date each month
(or other calendar period as indicated above) thereafter. Rent shall
be due whether or not Lessee has received any notice that such
payments are due. All rent shall be paid to Lessor at its address set
forth above or as otherwise directed by Lessor in writing. No portion
of any rent payment shall be deemed to constitute payment for any
equity interest in the Equipment.
10. USE. LESSEE COVENANTS AND REPRESENTS TO LESSOR THAT THE
EQUIPMENT WILL BE USED EXCLUSIVELY FOR AGRICULTURAL, BUSINESS, OR
COMMERCIAL PURPOSES AND WILL NOT BE USED AT ANY TIME DURING THE TERM
OF THIS LEASE FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES.
11. RENEWAL. This Rental Agreement shall be automatically renewed
for an additional one 90 day renewal term at the expiration of the
initial term and at the expiration of any renewal term thereafter,
unless Lessee notifies Lessor in writing of its intention to terminate
the lease. The notice of intent to cancel must be in writing and
received from the customer at least ninety (90) days prior to the
expiration of the current term.
12. LOCATIONS: LESSOR'S INSPECTION; LABELS. Equipment shall be
delivered and thereafter kept at the location specified above, or, if
none is specified, at Lessee's address set forth above and shall not
be removed therefrom without Lessor's prior written consent. Lessor
shall have the right to inspect Equipment at any reasonable time. If
Lessor supplies Lessee with labels stating that Equipment is owned by
Lessor, Lessee shall affix and keep same in a prominent place on each
item of Equipment.
13. REPAIRS: USE; ALTERATIONS. Lessee, at its expense, shall keep
Equipment in good working condition and repair and furnish all labor,
parts, mechanisms, and devices required therefor. Lessee shall use
Equipment in a careful and lawful manner. Lessee shall not make any
alterations, additions, or improvements to Equipment without Lessor's
prior written consent. All additions, repairs, replacement parts,
accessories, or improvements made to Equipment shall become a
component part thereof and title thereto shall be immediately vested
in Lessor and shall be included under the terms hereof. Any such
additions, repairs, replacement parts, accessories, or improvements
made to Equipment shall not be removed without Lessor's prior written
consent.
14. SURRENDER. At the expiration or other termination of this Lease
or upon demand by Lessor made pursuant to Paragraph 22 hereof, Lessee,
at its expense shall immediately return Equipment in as good condition
as received less normal wear, tear, and depreciation by delivering it
packed and ready for shipment, to such place or on board such carrier
as Lessor may specify.
15. LOSS OR DAMAGE. Lessee shall bear the entire risk of loss,
theft, destruction, or damage of Equipment or any portion thereof from
any cause whatsoever. If any Equipment is totally destroyed the
liability of Lessee to pay rent therefore may be discharged by paying
the Lessor all the rent due and to become due thereon, less the net
amount of the recovery, if any, actually received by Lessor from
insurance of otherwise for such loss or damage. Except as provided in
the preceding sentence, the total or partial destruction of any
equipment, or total or partial loss of use or possession thereof by
Lessee, shall not release or relieve Lessee from the duty to pay the
rent herein provided. Lessor shall not be obligated to undertake, by
litigation or otherwise, the collection of any person for loss of
damage of the Equipment.
16. RISK OF LOSS AND INSURANCE. Until Lessee has returned the
Equipment to the designated location, Lessee bears the entire risk of
loss or damage to the Equipment, regardless how arising. Lessee
shall immediately notify Lessor of the occurrence of any Loss or other
occurrence affecting Lessor's interests and shall make repairs or
corrections at Lessee's expense. IN such event, Lessee agrees to
continue to meet all payment and other obligations under the Lease.
Lessee agrees to keep the Equipment insured at Lessee's expense
against risks of loss or damage from any cause whatsoever. Lessee
agrees that such insurance shall not be less than the unpaid balance
of the Lease plus the then-current fair market value of the Equipment.
Lessee also agrees that the insurance shall be in such additional
amount as is reasonable to cover Lessor for public liability and
property damage arising from the Equipment or Lessee's use of it.
Lessee agrees to name Lessor as a loss payee and an additional
insured. Each policy shall provide that the insurance cannot be
cancelled without thirty days prior written notice to Lessor. Upon
request by Lessor, Lessee agrees to furnish proof of each insurance
policy including a certificate of insurance and a copy of the policy.
The proceeds of such insurance shall be applied at Lessor's sole
election toward the replacement or repair of the Equipment or payment
towards Lessee's obligations. Lessee appoints Lessor as attorney-in-fact
to make any claim for, receive payment of, or execute or endorse
all documents, checks or drafts for loss or damage or return of
premium under such insurance. Because of increased credit risks to
Lessor when not insured by Lessee, Lessee agrees to pay to Lessor each
month a risk charge stipulated and liquidated at .25% of Lessor's
original Equipment cost until Lessee provides proof of compliance with
insurance requirements. In spite of the payment of such risk charge,
Lessee has no right or claim to any insurance benefits from Lessor,
Lessee is still liable for all losses, and such risk charge is not in
lieu of the insurance requirements of this Lease.
17. LIENS, TAXES. Lessee shall keep Equipment free and clear of all
levies, liens, and encumbrances. Lessee shall, in the manner directed
by Lessor, (a) make and file all declarations and returns in
connection with all charges and taxes (local, state and federal),
which may now or hereafter be imposed upon or measured by ownership,
leasing, rental, sale, purchase, possession, or use of Equipment,
excluding however all taxes on or measured by Lessor's net income and
(b) pay all such charges and taxes. In the event that Lessor shall
elect to make and file any or all declarations and returns in
connection with such charges and taxes to pay the same then the Lessee
shall reimburse the Lessor, upon demand of the Lessor, for any and all
such charges and taxes applicable to the equipment herein leased by
Lessor to Lessee.
18. TAXES AND CERTAIN FEES; LESSOR PERFORMANCE; WAIVER. Lessee shall
promptly pay all fees, assessments, taxes and charges
governmentally-imposed upon the purchase, ownership, possession,
leasing, renting, operations, control, use or maintenance of the Equipment,
whether assessed against Lessor, Lessee or the Equipment and relating to the
Term, whether due before or after the end of the Term, excluding taxes
on or measured by the income of Lessor. All personal property tax,
use tax or other tax returns will be filed by Lessor, and Lessee
agrees to pay Lessor a fee for processing such payments and filings.
Lessor does not have to contest any valuation or tax imposed on the
Equipment. If Lessee fails to perform any of its obligations under
this Lease, Lessor may perform any act or make any payment that Lessor
deems reasonably necessary for the maintenance and preservation of the
Equipment of Lessor's interests therein, provided, however, that
Lessor's performance of any act or payment shall not be deemed a
waiver of, or release lessee from, the obligation at issue. All sums
so paid by Lessor, together with expense (including legal fees and
costs) incurred by Lessor in connection therewith, shall be paid to
Lessor by Lessee immediately upon demand. Lessor's failure to require
performance in any instance or Lessor's written waiver of any
provision shall not waive any other breach of the same or any other
provision.
19. INDEMNITY. Lessee assumes the risk of liability arising from or
pertaining to the possession operation, or use of such leased
Equipment. Lessee does hereby agree to indemnify hold safe and
harmless against, defend Lessor from, any and all claims, costs,
expense, damages, and liabilities arising from or pertaining to the
uses, possession, or operation, of lease Equipment.
20. ASSIGNMENT; OFFSET. Without Lessor's prior written consent,
Lessee shall not (a) assign, transfer, pledge, hypothecate, or
otherwise dispose of this Lease, Equipment, or any interest therein,
or (b) sublet or lend Equipment or permit it to be used by anyone
other than Lessee or Lessee's employees. Lessor may assign this Lease
and/or mortgage Equipment, in whole or impart, without notice to
Lessee, however, if Lessee is given notice of such assignment, it
agrees to acknowledge receipt thereon in writing. Each such assignee
and/or mortgage shall have all of the rights, but none of the
obligations, of Lessor under this Lease. Lessee shall not assert
against assignee and/or mortgage any defense, counterclaim, or offset
and shall quietly enjoy use of the Equipment subject to the terms and
conditions of this Lease agreement. Subject to the foregoing, this
Lease inure to the benefit of and is binding upon the heirs, legates,
personal representatives, successors, and assigns of the parties
hereto.
21. COLLECTION CHARGES AND ATTORNEY'S FEES. If any part of any sum
is not paid when due, Lessee agrees to pay Lessor: a) a late charge to
compensate Lessor for collecting and processing the late sum, such
late charge is stipulated and liquidated at $.10 per dollar of each
delayed sum, or where less, the maximum allowed by Ohio or other
applicable law. Such late charge shall be assessed each month on all
outstanding sums: plus b) a collection call charge to compensate
Lessor for the time and expense in making any call, such collection
call charge is stipulated and liquidated at $15.50 per collection all;
plus c) a personal visit charge equal to actual out-of-pocket expense
to compensate Lessor for the time and expense of all collection
efforts; plus d) a returned check or non-sufficient funds ("NSF")
charge to reimburse Lessor for its time and expense incurred with
respect to a check that is returned for any reason; such NSF charge is
stipulated and liquidated at the greater of $50 or actual bank charges
of Lessor, plus other amounts allowed by law.
LESSEE AND ANY GUARANTOR AGREE TO PAY ALL COSTS OF COLLECTION,
INCLUDING COLLECTORS' CONTINGENCY FEES, AND TO PAY LESSOR'S REASONABLE
ATTORNEY FEES AS DAMAGES AND NOT COSTS in all proceedings arising
under this Lease, such proceedings include any arbitration, bankruptcy
proceeding, civil action, mediation, counter claim on which Lessor
prevails, or post-judgment action or appeal with respect to any of
the foregoing. A reasonable attorney fee is not less than the greater
of $300 or 30% of Lessor's total amount in collection.
22. DEFAULT. (a) if Lessee fails to pay when due any rent payment or
other amount required herein to be paid by Lessee, or if Lessee names
an assignment for the benefit of creditors, whether voluntary or
involuntary of a petition is filed by or against Lessee under the
Bankruptcy Code Lessor shall have the right to exercise any one or
more of the following remedies in order to protect the interest and
more of the following remedies in order to protect the interest and
reasonably expected profits and bargains of Lessor. (i) Lessor may
recover from Lessee all rent payments and other amount then due and as
they shall thereafter become due hereunder (ii) LESSOR MAY TAKE
POSSESSION OF ANY OR ALL ITEMS OR EQUIPMENT, WHEREVER THE SAME MAY BE
LOCATED, WITHOUT DEMAND OR NOTICE, WITHOUT ANY COURT ORDER OR OTHER
PROCESS OF LAW, AND WITHOUT LIABILITY TO LESSEE FOR ANY DAMAGES
OCCASIONED BY SUCH TAKING OF POSSESSION, AND, IN REMOVING ALL SUCH
EQUIPMENT, LESSOR MAY IF PERMITTED BY LAW, USE ANY OF LESSEE'S
LICENSES IN RESPECT TO ALL SUCH EQUIPMENT. ANY SUCH TAKING OF
POSSESSION SHALL NOT CONSTITUTE A TERMINATION OF THIS LEASE. -- (iii)
Lessor may recover from Lessee, with respect to any and all items of
equipment and with or without repossessing the equipment, the sum of
(1) all rent payments and other amounts due and to become due and (2)
the estimated market value that such equipment would have had at the
end of the Lease term if it had been used and maintained as provided
in this Lease, provided, however, that upon repossession or surrender
of equipment, Lessor shall sell, lease or otherwise dispose of
equipment in a commercially reasonable manner with or without notice
and on public or private bid and apply the net proceeds thereof (after
deducting all expenses, including attorney's fees, incurred in
connection therewith) to the sum of (1) and (2) above (iv) Lessor may
pursue any other remedy at law or in equity, (b) if Lessee fails to
perform any of the provisions under this Lease or any other agreement
with Lessor or Lessee makes a bulk transfer of furniture, furnishings,
fixtures, or other equipment or inventory. Lessor shall have the right
to exercise any remedy available at law or in equity, including but
not limited to seeking damages or specific performance and/or
obtaining an injunction. (c) No right or remedy herein conferred upon
or reserved to Lessor is exclusive of any right or remedy herein or by
law or equity provided or permitted, but each shall be cumulative of
every other right or remedy given hereunder or now or hereafter
existing at law or in equity or by statute or otherwise and may be
enforced concurrently therewith or from time to time, but Lessor shall
not be entitled to recover a greater amount in damages than Lessor
could have gained by receipt of Lessee's full , timely and complete
performance of its obligations pursuant to the terms of this Lease
plus accrued delinquent payments under Paragraph 21.
23. NOTICE OF BANKRUPTCY. Lessee shall delivery to Lessor written
notice (i) of Lessee's intention to file any voluntary petition
pursuant to the Bankruptcy Code or any Federal or State insolvency law
at least ten (10) days prior to the filing of such petition or (iii)
within five (5) days after Lessee shall receive notice or otherwise be
advised of the filing of any involuntary petition pertaining to Lessee
pursuant to the Bankruptcy Code or any other Federal or State
insolvency law.
24. OWNERSHIP; PERSONAL PROPERTY. Equipment is and shall at all
times remain the property of lessor, and Lessee shall have no right,
title or interest therein or thereto except as expressly set forth in
this Lease. Equipment is and shall at all times be and remain,
personal property notwithstanding that Equipment or any part thereof
may now be, or hereafter become, in any manner affixed or attached to
real property or any building thereon.
25. NOTICES. Service of all notices under this Lease shall be
sufficient if given personally or mailed to the party involved at its
respective address set forth above, or at such other addresses as said
party may provide in writing from time to time. Any such notice
mailed to said address shall be effective when deposited in the United
States mail, duly addressed and with postage prepaid.
26. SECURITY DEPOSIT. When the within Lease provides for security
deposit, Lessor may but shall not be obliged to, apply the security
deposit to cure any default of Lessee hereunder, in which event Lessee
shall promptly restore the security deposit to the full amount
specified above. Upon termination of this Lease and provided lessee
is not in default of any of the terms and conditions of this lease,
the lessor shall return the security deposit to the lessee.
27. SEVERABILITY. If any provision of this Lease or the application
thereof to any party or circumstance is held invalid or unenforceable,
the remainder of this Lease and the application of such provision to
other parties or circumstances will not be affected thereby and to
this end the provisions of this Lease are declared severable.
28. DOCUMENTATION REQUIREMENTS. Lessee will promptly execute and
deliver to lessor such further documents and take such further action
as Lessor may request in order to more effectively carry out the
intent and purpose of this Lease Agreement, including the execution
and delivery of appropriate financing statements to fully protect
Lessor's interest hereunder in accordance with the Uniform Commercial
Code or other applicable law. Lessee authorizes Lessor to file at
Lessor's option the informational financing statements without
Lessor's signature and, if a signature is required by law, Lessee
appoints Lessor as Lessee's attorney-in-fact to execute such financing
statements. Lessee further agrees to pay Lessor $59.50 on the date of
the first rental payment is due to cover the expense of originating
this Lease. Notwithstanding any other provision herein, the Lessee
shall reimburse the Lessor for all expenses incurred by Lessor on
account of the Lessor or Lessee protecting the Lessor's interest in
the Equipment by means of appropriate documentation and filing,
including fixture, searches and other procedures.
29. AMENTMENTS AND WAIVERS. The Lease and any Schedules thereto
executed by both Lessee and Lessor constitute the entire agreement
between Lessee and Lessor with respect to the Equipment which is the
subject matter of this Lease. No express of implied waiver by Lessor
of any event of default hereunder shall in any way be or be construed
to be a waiver of any future or subsequent event or default whether
similar in kind or otherwise.
30. MISCELLANEOUS. No provision of this Lease can be waived except
by the written consent of Lessor. Lessee shall provide Lessor with
such corporate resolutions, opinions of counsel, financial statements,
UCC-1 Financing Statements, and other documents as Lessor shall
request from time to time. If more than one Lessee is named in this
Lease, the liability of each shall be joint and several. Titles to
the paragraphs of this Lease are solely for convenience and are not
intended for interpretation of construction of this Lease. This Lease
shall be governed by and construed in accordance with the laws of
Ohio.
C:\ELINK\FILING\UNITED.WPD
<PAGE>
PROVIDENT BANK
TERMS AND CONDITIONS OF LEASE
ILC hereby to Lessee, and Lessee hereby leases and rents from Lessor,
the personal property described below, or if separately scheduled, in
the Schedule hereto annexed, marked Schedule "A" and made a part
hereof, together with all replacement parts, repairs, additions,
accessories, and systems incorporated therein and/or affixed and
pertaining thereto (said personal property and other items herein
collectively referred to as "Equipment") upon the following terms and
conditions:
1. NO WARRANTIES BY LESSOR OR ANY ASSIGNEE OF LESSOR. LESSEE
ACKNOWLEDGES THAT IT HAS SELECTED BOTH (A) THE EQUIPMENT LISTED BELOW
AND (B) THE SUPPLIER NAMED BELOW FROM WHOM LESSOR IS TO PURCHASE SAID
EQUIPMENT. IN THIS RESPECT, LESSEE ACKNOWLEDGES THAT LESSOR IS NOT
THE MANUFACTURER OF SAID EQUIPMENT NOR THE AGENT OF SAID MANUFACTURER.
LESSEE FURTHER ACKNOWLEDGES THAT LESSOR HAS NOT MADE AND DOES NOT MAKE
ANY WARRANTY OR REPRESENTATION, EITHER EXPRESSED OR IMPLIED, OF ANY
KIND WHATSOEVER WITH RESPECT TO THE EQUIPMENT INCLUDING BUT NOT
LIMITED TO: (1) AS TO THE FITNESS, DESIGN, OR CONDITION OF THE
EQUIPMENT, (2) AS TO THE MERCHANTABILITY OF THE EQUIPMENT OR ITS
FITNESS FOR ANY PARTICULAR PURPOSE, (3) AS TO THE QUALITY OR CAPACITY
OF THE EQUIPMENT, THE MATERIALS IN THE EQUIPMENT, OR WORKMANSHIP IN
THE EQUIPMENT, (4) AS TO ANY LATENT DEFECTS IN THE EQUIPMENT, (5) AS
TO ANY PATENT INFRINGEMENT, AND (6) AS TO THE COMPLIANCE OF THE
EQUIPMENT WITH ANY REQUIREMENTS OF ANY LAW, RULE, SPECIFICATION, OR
CONTRACT PERTAINING THERETO, LESSEE FURTHER ACKNOWLEDGES THAT IT IS
LEASING SAID EQUIPMENT FROM LESSOR IN AN 'AS IS" CONDITION AND THAT NO
DEFECT OR UNFITNESS OF THE EQUIPMENT SHALL RELIEVE LESSEE OF LESSEE'S
OBLIGATION TO PAY RENT OR ANY OTHER OBLIGATION LESSEE MAY HAVE TO
LESSOR UNDER THE TERMS OF THIS LEASE. IT IS AGREED THAT LESSOR SHALL
HAVE NO OBLIGATION TO INSTALL, ERECT, TEST, ADJUST, REPAIR, OR SERVICE
THE AFORESAID EQUIPMENT. If the Equipment is not properly installed,
does not operate as represented or warranted by the manufacturer or
the supplier, or is unsatisfactory for any reason, lessee shall make a
claim on account thereof solely against the supplier or manufacturer
and shall, nevertheless, pay lessor all rent payable hereunder. As
between Lessee and Lessor and only in those instances where the
manufacturer of the Equipment has provided any warranty or guarantee
of any nature whatsoever applicable to the Equipment. Lessor hereby
assigns to Lessee whatever assignable interest Lessor may have in such
warranty or guarantee. The aforesaid assignment shall not in any way
be deemed to limit, negate, or otherwise affect the disclaimer of
warranties contained in this paragraph, and Lessor shall not incur any
duties arising out of any manufacturer's warranties or guarantees.
Further, lessor shall not incur any liability whatsoever arising out
of any breach of any manufacturer's warranties or guarantees
applicable to the Equipment.
.Customer requests ILC to purchase the described Equipment from
supplier and to rent said Equipment to customer upon the terms and
conditions of this Rental Agreement; and upon written acceptance
signed at ILC's office by an authorized employee of ILC. ILC agrees
to rent said Equipment to customer. The undersigned agree to all the
terms and conditions of this Rental Agreement as set forth above and
attached.
2. NO ORAL AGREEMENT, GUARANTEE, PROMISE, CONDITION, REPRESENTATION
OR WARRANTY, NOR ANY ORAL MODIFICATION HEREOF SHALL BE BINDING. AL
PRIOR CONVERSATIONS, AGREEMENTS, OR REPRESENTATIONS RELATED TO THIS
LEASE OR TO THE EQUIPMENT HEREIN ABOVE REFERRED TO ARE INTEGRATED
HEREIN. NONE OF THE TERMS OF THIS LEASE SHALL BE CHANGED OR MODIFIED
EXCEPT IN WRITING EXECUTED BY THE LESSOR AND THE LESSEE.
3. SUPPLIER NOT AN AGENT. LESSEE UNDERSTANDS AND AGREES THAT NEITHER
SUPPLIER NOR ANY SALESMAN OR OTHER AGENT OF SUPPLIER IS AN AGENT OF
LESSOR, NO SALESMAN OR AGENT OF SUPPLIER IS AUTHORIZED TO WAIVE OR
ALTER ANY TERM OR CONDITION OF THIS LEASE, AND NO REPRESENTATION, AS
TO EQUIPMENT OR ANY OTHER MATTER BY SUPPLIER SHALL IN ANY WAY AFFECT
LESSEE'S DUTY TO PAY RENT AND PERFORM ITS OTHER OBLIGATIONS AS SET
FORTH IN THIS LEASE.
4. NON-CANCELLABLE LEASE. THIS LEASE CANNOT BE CANCELLED OR
TERMINATED EXCEPT AS EXPRESSLY PROVIDED HEREIN.
5. ORDERING EQUIPMENT. Lessor agrees to order the Equipment from
supplier. Lessee agrees to arrange for delivery of Equipment so that
it can be accepted in accordance with Paragraph 6 hereof within 180
days after the date on which Lessor accepts Lessee's offer to enter
into this Lease (which date Lessor is authorized to fill in above as
"Commitment Date".) Lessee hereby authorizes Lessor to insert in this
Lease the serial numbers, and other identification data, of Equipment
when determined by Lessor.
6. DELIVERY AND INSPECTION. Lessee will inspect the Equipment
within five (5) business days after its delivery to Lessee. Unless
within such five (5) day period Lessee gives Lessor written notice
specifying any defect in or other proper objection to the Equipment.
Lessee agrees that it will be conclusively presumed, as between Lessor
and Lessee, that (a) Lessee has fully inspected the Equipment (b) the
Equipment is in full compliance with the terms of this Lease (c) the
Equipment is in good condition (operating and otherwise) and repair,
and (d) Lessee has accepted the Equipment from the supplier thereof.
If Lessor shall request, Lessee shall furnish Lessor a written
statement setting forth the matters stated in (a), (b), and (d) and
also approving the invoice of said Equipment or portion thereof.
Notwithstanding the aforesaid in the event the usual time of
installation of such Equipment exceeds the aforesaid five (5) business
day period, then so long as said Equipment is properly installed by
Lessee or supplier, as may be applicable, the aforesaid five (5)
business day period shall begin to run on the date following the
completion of said installation, provided further, however, that in no
event shall said five (5) business day period begin to run later than
thirty (30) days after said equipment has been delivered to Lessee.
7. TERMINATION BY LESSOR. Lessor shall have the exclusive option to
terminate this lease and Lessor's obligations thereunder if within 180
days after "Commitment Date", Equipment has not been delivered to
Lessee, or Lessee has not accepted Equipment as provided in paragraph
6 above. Said option may be exercised by giving Lessee written notice
of termination pursuant to this paragraph any time within ten (10)
business days after the expiration of said 180 day period.
8. TERM. The term of this Lease commences upon the date on which the
equipment is delivered to Lessee (whether or not accepted) and ends
upon the expiration of the number of months specified above under
"Initial Term of Lease" after the "Rental Commencement Date" shown
above. Lessee hereby authorizes Lessor to insert in this Lease as
said "Rental Commencement Date" the date upon which Equipment is
delivered to Lessee or any later date selected by Lessor.
9. RENT. During the term of this Lease. Lessee agrees to pay rent
equal to the "Amount of Each Rent Payment" multiplied by the "Number
of Rental Payments" as indicated above. The first rental payment
shall be due on "Commitment Date" and shall be applicable to the
rental period commencing on "Rental Commencement Date." Subsequent
rental payments shall be due in advance on the same date each month
(or other calendar period as indicated above) thereafter. Rent shall
be due whether or not Lessee has received any notice that such
payments are due. All rent shall be paid to Lessor at its address set
forth above or as otherwise directed by Lessor in writing. No portion
of any rent payment shall be deemed to constitute payment for any
equity interest in the Equipment.
10. USE. LESSEE COVENANTS AND REPRESENTS TO LESSOR THAT THE
EQUIPMENT WILL BE USED EXCLUSIVELY FOR AGRICULTURAL, BUSINESS, OR
COMMERCIAL PURPOSES AND WILL NOT BE USED AT ANY TIME DURING THE TERM
OF THIS LEASE FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES.
11. RENEWAL. Lessee shall have the option to renew this Lease on the
terms and conditions hereof from year to year for a maximum period of
twelve (12) years including the "Initial Term of Lease" set forth
above if, and only if, an amount is specified in the space "Renewal
Rental" above. Lessee must give Lessor written notice of its
intention to exercise said option together with payment of the
"Renewal Rental" at lease one hundred twenty (120) days before
expiration of the Lease or any renewal term. Should Lessee fail to
notify Lessor as indicated above or fail to return Equipment in
accordance with paragraph 14 hereof, at Lessor's exclusive option this
Lease may be continued on a month to month basis until thirty (30)
days after Lessee returns Equipment to Lessor. In event this Lease is
continued on a month to month basis until (30) days after Lessee
returns Equipment to Lessor. Lessee shall pay Lessor rental in the
same periodic amounts as indicated under "Initial Term" above.
12. LOCATIONS: LESSOR'S INSPECTION; LABELS. Equipment shall be
delivered and thereafter kept at the location specified above, or, if
none is specified, at Lessee's address set forth above and shall not
be removed therefrom without Lessor's prior written consent. Lessor
shall have the right to inspect Equipment at any reasonable time. If
Lessor supplies Lessee with labels stating that Equipment is owned by
Lessor. Lessee shall affix and keep same in a prominent place on each
item of Equipment.
13. REPAIRS: USE; ALTERATIONS. Lessee, at its expense, shall keep
Equipment in good working condition and repair and furnish all labor,
parts, mechanisms, and devices required therefor. Lessee shall use
Equipment in a careful and lawful manner. Lessee shall not make any
alterations, additions, or improvements to Equipment without Lessor's
prior written consent. All additions, repairs, replacement parts,
accessories, or improvements made to Equipment shall become a
component part thereof and title thereto shall be immediately vested
in Lessor and shall be included under the terms hereof. Any such
additions, repairs, replacement parts, accessories, or improvements
made to Equipment shall not be removed without Lessor's prior written
consent.
14. SURRENDER. At the expiration or other termination of this Lease
or upon demand by Lessor made pursuant to Paragraph 22 hereof, Lessee,
at its expense shall immediately return Equipment in as good condition
as received less normal wear, tear, and depreciation by delivering it
packed and ready for shipment, to such place or on board such carrier
as Lessor may specify.
15. LOSS OR DAMAGE. Lessee shall bear the entire risk of loss, theft,
destruction, or damage of Equipment or any portion thereof from any
cause whatsoever. If any Equipment is totally destroyed the liability
of Lessee to pay rent therefor may be discharged by paying the Lessor
all the rent due and to become due thereon, less the net amount of the
recovery, if any, actually received by Lessor from insurance or
otherwise for such loss or damage. Except as provided in the
preceding sentence, the total or partial destruction of any equipment,
or total or partial loss of use or possession thereof by Lessee, shall
not release or relieve Lessee from the duty to pay the rent herein
provided. Lessor shall not be obligated to undertake, by litigation
or otherwise, the collection of any claim against any person for loss
of damage of the Equipment.
16. INSURANCE. Lessee shall, at its own expense insure the equipment
at all times against all hazards requested by Lessor including but not
limited to fire, theft, and extended coverage insurance, and such
policies shall be payable to Lessor as its interest may appear. Such
insurance shall be reasonably satisfactory to Lessor as to form,
amount,. and insurer and shall provide for at least ten (10) days
written notice of cancellation to Lessor. Such insurance policies or
certificates thereof shall be delivered by Lessee to Lessor. In
addition, Lessee shall, at its own expense carry public liability
insurance with respect to the Equipment and the use thereof in such
amounts and with such insurers as are reasonably satisfactory to
Lessor, and such insurance policies shall also name Lessor as an
insured thereunder.
17. LIENS, TAXES. Lessee shall keep Equipment free and clear of all
levies, liens, and encumbrances Lessee shall, in the manner directed
by Lessor, (a) make and file all declarations and returns in
connection with all charges and taxes (local, state and federal),
which may now or hereafter be imposed upon or measured by the
ownership, leasing, rental, sale, purchase, possession, or use of
Equipment, excluding however all taxes on or measured by Lessor's net
income and (b) pay all such charges and taxes. In the event that
Lessor shall elect to make and file any or all declarations and
returns in connection with such charges and taxes to pay the same then
the Lessee shall reimburse the Lessor, upon demand of the Lessor, for
any and all such charges and taxes applicable to the equipment herein
leased by Lessor to Lessee.
18. LESSOR'S PERFORMANCE OF LESSEE'S OBLIGATIONS. If Lessee fails to
duly and properly perform any of its obligations under this Lease with
respect to the Equipment, Lessor may (at its option) perform any act
or make any payment which Lessor deems necessary for the maintenance
and preservation of the Equipment and Lessor's title thereto,
including payments for satisfaction of liens, repairs, taxes, levies,
and insurance and all sums so paid of incurred by Lessor, together
with interest and any reasonable legal fees incurred by Lessor in
connection therewith, shall be additional rent under this Lease and
payable by Lessee to Lessor on demand. The performance of any act or
payment by Lessor as aforesaid shall not be deemed a waiver or release
of any obligation or default on the part of Lessee.
19. INDEMNITY. Lessee assumes the risk of liability arising from or
pertaining to the possession operation, or use of such leased
Equipment. Lessee does hereby agree to indemnity hold safe and
harmless against, defend Lessor from, any and all claims, costs,
expense, damages, and liabilities arising from or pertaining to the
uses, possession, or operation, of leased Equipment.
20. ASSIGNMENT; OFFSET. Without Lessor's prior written consent,
Lessee shall not (a) assign, transfer, pledge, hypotheticate, or
otherwise dispose of this Lease, Equipment, or any interest therein,
or (b) sublet or lend Equipment or permit it to be used by anyone
other than Lessee or Lessee's employees.
Lessor may assign this Lease and/or mortgage Equipment, in whole or in
part, without notice to Lessee, however, if Lessee is given notice of
such assignment, it agrees to acknowledge receipt thereof in writing.
Each such assignee and/or mortgage shall have all of the rights, but
none of the obligations, of Lessor under this Lease. Lessee shall not
assert against assignee and/or mortgage any defense, counterclaim, or
offset and shall quietly enjoy use of the Equipment subject to the
terms and conditions of this Lease agreement. Subject to the
foregoing, this Lease insures to the benefit of and is binding upon
the heirs, legates, personal representatives, successors, and assigns
of the parties hereto.
21. SERVICE CHARGE AND INTEREST. If Lessee fails to pay when due any
rent or other amount required herein to be paid to Lessor. Lessee
shall pay to Lessor a service charge of five per cent (5%) of each
installment or part thereof for which said rent or other amount shall
be delinquent, or $2.50, whichever is greater, plus interest on such
delinquent rent or other amount from the due date thereof until paid
at the maximum rate allowed by law.
22. DEFAULT. (a) if Lessee fails to pay when due any rent payment or
other amount required herein to be paid by Lessee, or it Lessee names
an assignment for the benefit of creditors, whether voluntary or
involuntary of if a petition is filed by or against Lessee under the
Bankruptcy Code Lessor shall have the right to exercise any one or
more of the following remedies in order to protect the interest and
reasonably expected profits and bargains of Lessor. (i) Lessor may
recover from Lessee all rent payments and other amounts then due and
as they shall thereafter become due hereunder (ii) LESSOR MAY TAKE
POSSESSION OF ANY OR ALL ITEMS OR EQUIPMENT, WHEREVER THE SAME MAY BE
LOCATED, WITHOUT DEMAND OR NOTICE, WITHOUT ANY COURT ORDER OR OTHER
PROCESS OF LAW, AND WITHOUT LIABILITY TO LESSEE FOR ANY DAMAGES
OCCASIONED BY SUCH TAKING OF POSSESSION, AND, IN REMOVING ALL SUCH
EQUIPMENT, LESSOR MAY IF PERMITTED BY LAW, USE ANY OF LESSEE'S
LICENSES IN RESPECT TO ALL SUCH EQUIPMENT. (ANY SUCH TAKING OF
POSSESSION SHALL NOT CONSTITUTE A TERMINATION OF THIS LEASE. -- (iii)
Lessor may recover from Lessee, with respect to any and all items of
equipment and with or without repossessing the equipment, the sum of
(1) all rent payments and other amounts due and to become due and (2)
the estimated market value that such equipment would have had at the
end of the Lease term if it had been used and maintained as provided
in this Lease, provided, however, that upon repossession or surrender
of equipment. Lessor shall sell, lease or otherwise dispose of
equipment in a commercially reasonable manner with or without notice
and on public or private bid and apply the net proceeds thereof (after
deducting all expenses, including attorney's fees, incurred in
connection therewith) to the sum of (1) and (2) above (iv) Lessor may
pursue any other remedy at law or in equity, (b) if Lessee fails to
perform any of the provisions under this Lease or any other agreement
with Lessor or Lessee makes a bulk transfer or furniture, furnishings,
fixtures, or other equipment or inventory. Lessor shall have the
right to exercise any remedy available at law or in equity, including
but not limited to seeking damages or specific performance and/or
obtaining an injunction. (c) No right or remedy herein conferred upon
or reserved to Lessor is exclusive of any right or remedy herein or by
law or equity provided or permitted, but each shall be cumulative of
every other right or remedy given hereunder or now or hereafter
existing at law or in equity or by statute or otherwise and may be
enforced concurrently therewith or from time to time, but Lessor shall
not be entitled to recover a greater amount in damages than Lessor
could have gained by receipt of Lessee's full, timely and complete
performance of its obligations pursuant to the terms of this Lease
plus accrued delinquent payments under Paragraph 21.
.23. NOTICE OF BANKRUPTCY. Lessee shall deliver to Lessor written
notice (i) of Lessee's intention to file any voluntary petition
pursuant to the Bankruptcy Code or any Federal or State insolvency law
at least ten (10) days prior to the filing of such petition or (iii)
within five (5) days after Lessee shall receive notice or otherwise be
advised of the filing of any involuntary petition pertaining to Lessee
pursuant to the Bankruptcy Code or any other Federal or State
insolvency law.
24. LESSOR'S EXPENSES. Lessee shall pay Lessor all costs and
expenses, including attorney's fees of twenty percent (20%) the fees
of collection agencies, and other expenses such as telephone and
telegraph charges incurred by Lessor in enforcing any of the terms,
conditions, or provisions hereof.
25. OWNERSHIP; PERSONAL PROPERTY. Equipment is and shall at all times
remain the property of Lessor, and Lessee shall have no right, title,
or interest therein or thereto except as expressly set forth in this
Lease. Equipment is and shall at all times be and remain, personal
property notwithstanding that Equipment or any part thereof may now
be, or hereafter become, in any manner affixed or attached to real
property or any building thereon.
26. NOTICES. Service of all notices under this Lease shall be
sufficient if given personally or mailed to the party involved at its
respective address set forth above, or at such other addresses as said
party may provide in writing from time to time. Any such notice
mailed to said address shall be effective when deposited in the United
States mail, duly addressed and with postage prepaid.
27. SECURITY DEPOSIT. When the within Lease provides for security
deposit, Lessor may but shall not be obliged to, apply the security
deposit to cure any default of Lessee hereunder, in which event Lessee
shall promptly restore the security deposit to the full amount
specified above. Upon termination of this Lease and all remaining
balance of the security deposit actually made by Lessee.
28. SEVERABILITY. If any provision of this Lease or the application
thereof to any party or circumstance is held invalid or unenforceable,
the remainder of this Lease and the application of such provision to
other parties or circumstances will not be affected thereby and to
this end the provisions of this Lease are declared severable.
29. AMENDMENTS AND WAIVERS. This Lease and any Schedules thereto
executed by both Lessee and Lessor constitute the entire agreement
between Lessee and Lessor with respect to the Equipment which is the
subject matter of this Lease. No express of implied waver by Lessor
of any event of default hereunder shall in any way be or be construed
to be a waiver of any future or subsequent event of default whether
similar in kind or otherwise.
30. MISCELLANEOUS. No provision of this Lease can be waived except by
the written consent of Lessor. Lessee shall provide Lessor with such
corporate resolutions, opinions of counsel, financial statements, UCC-1
Financing Statements, and other documents as Lessor shall request
from time to time. If more than one Lessee is named in this Lease,
the liability of each shall be joint and several. Titles to the
paragraphs of this Lease are solely for convenience and are not
intended for interpretation of construction of this Lease. This Lease
shall be governed by and construed in accordance with the laws of
Ohio.<PAGE>
PROVIDENT BANK
TERMS AND CONDITIONS OF LEASE
ILC hereby to Lessee, and Lessee hereby leases and rents from Lessor,
the personal property described below, or if separately scheduled, in
the Schedule hereto annexed, marked Schedule "A" and made a part
hereof, together with all replacement parts, repairs, additions,
accessories, and systems incorporated therein and/or affixed and
pertaining thereto (said personal property and other items herein
collectively referred to as "Equipment") upon the following terms and
conditions:
1. NO WARRANTIES BY LESSOR OR ANY ASSIGNEE OF LESSOR. LESSEE
ACKNOWLEDGES THAT IT HAS SELECTED BOTH (A) THE EQUIPMENT LISTED BELOW
AND (B) THE SUPPLIER NAMED BELOW FROM WHOM LESSOR IS TO PURCHASE SAID
EQUIPMENT. IN THIS RESPECT, LESSEE ACKNOWLEDGES THAT LESSOR IS NOT
THE MANUFACTURER OF SAID EQUIPMENT NOR THE AGENT OF SAID MANUFACTURER.
LESSEE FURTHER ACKNOWLEDGES THAT LESSOR HAS NOT MADE AND DOES NOT MAKE
ANY WARRANTY OR REPRESENTATION, EITHER EXPRESSED OR IMPLIED, OF ANY
KIND WHATSOEVER WITH RESPECT TO THE EQUIPMENT INCLUDING BUT NOT
LIMITED TO: (1) AS TO THE FITNESS, DESIGN, OR CONDITION OF THE
EQUIPMENT, (2) AS TO THE MERCHANTABILITY OF THE EQUIPMENT OR ITS
FITNESS FOR ANY PARTICULAR PURPOSE, (3) AS TO THE QUALITY OR CAPACITY
OF THE EQUIPMENT, THE MATERIALS IN THE EQUIPMENT, OR WORKMANSHIP IN
THE EQUIPMENT, (4) AS TO ANY LATENT DEFECTS IN THE EQUIPMENT, (5) AS
TO ANY PATENT INFRINGEMENT, AND (6) AS TO THE COMPLIANCE OF THE
EQUIPMENT WITH ANY REQUIREMENTS OF ANY LAW, RULE, SPECIFICATION, OR
CONTRACT PERTAINING THERETO, LESSEE FURTHER ACKNOWLEDGES THAT IT IS
LEASING SAID EQUIPMENT FROM LESSOR IN AN 'AS IS" CONDITION AND THAT NO
DEFECT OR UNFITNESS OF THE EQUIPMENT SHALL RELIEVE LESSEE OF LESSEE'S
OBLIGATION TO PAY RENT OR ANY OTHER OBLIGATION LESSEE MAY HAVE TO
LESSOR UNDER THE TERMS OF THIS LEASE. IT IS AGREED THAT LESSOR SHALL
HAVE NO OBLIGATION TO INSTALL, ERECT, TEST, ADJUST, REPAIR, OR SERVICE
THE AFORESAID EQUIPMENT. If the Equipment is not properly installed,
does not operate as represented or warranted by the manufacturer or
the supplier, or is unsatisfactory for any reason, lessee shall make a
claim on account thereof solely against the supplier or manufacturer
and shall, nevertheless, pay lessor all rent payable hereunder. As
between Lessee and Lessor and only in those instances where the
manufacturer of the Equipment has provided any warranty or guarantee
of any nature whatsoever applicable to the Equipment. Lessor hereby
assigns to Lessee whatever assignable interest Lessor may have in such
warranty or guarantee. The aforesaid assignment shall not in any way
be deemed to limit, negate, or otherwise affect the disclaimer of
warranties contained in this paragraph, and Lessor shall not incur any
duties arising out of any manufacturer's warranties or guarantees.
Further, lessor shall not incur any liability whatsoever arising out
of any breach of any manufacturer's warranties or guarantees
applicable to the Equipment.
.Customer requests ILC to purchase the described Equipment from
supplier and to rent said Equipment to customer upon the terms and
conditions of this Rental Agreement; and upon written acceptance
signed at ILC's office by an authorized employee of ILC. ILC agrees
to rent said Equipment to customer. The undersigned agree to all the
terms and conditions of this Rental Agreement as set forth above and
attached.
2. NO ORAL AGREEMENT, GUARANTEE, PROMISE, CONDITION, REPRESENTATION
OR WARRANTY, NOR ANY ORAL MODIFICATION HEREOF SHALL BE BINDING. AL
PRIOR CONVERSATIONS, AGREEMENTS, OR REPRESENTATIONS RELATED TO THIS
LEASE OR TO THE EQUIPMENT HEREIN ABOVE REFERRED TO ARE INTEGRATED
HEREIN. NONE OF THE TERMS OF THIS LEASE SHALL BE CHANGED OR MODIFIED
EXCEPT IN WRITING EXECUTED BY THE LESSOR AND THE LESSEE.
3. SUPPLIER NOT AN AGENT. LESSEE UNDERSTANDS AND AGREES THAT NEITHER
SUPPLIER NOR ANY SALESMAN OR OTHER AGENT OF SUPPLIER IS AN AGENT OF
LESSOR, NO SALESMAN OR AGENT OF SUPPLIER IS AUTHORIZED TO WAIVE OR
ALTER ANY TERM OR CONDITION OF THIS LEASE, AND NO REPRESENTATION, AS
TO EQUIPMENT OR ANY OTHER MATTER BY SUPPLIER SHALL IN ANY WAY AFFECT
LESSEE'S DUTY TO PAY RENT AND PERFORM ITS OTHER OBLIGATIONS AS SET
FORTH IN THIS LEASE.
4. NON-CANCELLABLE LEASE. THIS LEASE CANNOT BE CANCELLED OR
TERMINATED EXCEPT AS EXPRESSLY PROVIDED HEREIN.
5. ORDERING EQUIPMENT. Lessor agrees to order the Equipment from
supplier. Lessee agrees to arrange for delivery of Equipment so that
it can be accepted in accordance with Paragraph 6 hereof within 180
days after the date on which Lessor accepts Lessee's offer to enter
into this Lease (which date Lessor is authorized to fill in above as
"Commitment Date".) Lessee hereby authorizes Lessor to insert in this
Lease the serial numbers, and other identification data, of Equipment
when determined by Lessor.
6. DELIVERY AND INSPECTION. Lessee will inspect the Equipment
within five (5) business days after its delivery to Lessee. Unless
within such five (5) day period Lessee gives Lessor written notice
specifying any defect in or other proper objection to the Equipment.
Lessee agrees that it will be conclusively presumed, as between Lessor
and Lessee, that (a) Lessee has fully inspected the Equipment (b) the
Equipment is in full compliance with the terms of this Lease (c) the
Equipment is in good condition (operating and otherwise) and repair,
and (d) Lessee has accepted the Equipment from the supplier thereof.
If Lessor shall request, Lessee shall furnish Lessor a written
statement setting forth the matters stated in (a), (b), and (d) and
also approving the invoice of said Equipment or portion thereof.
Notwithstanding the aforesaid in the event the usual time of
installation of such Equipment exceeds the aforesaid five (5) business
day period, then so long as said Equipment is properly installed by
Lessee or supplier, as may be applicable, the aforesaid five (5)
business day period shall begin to run on the date following the
completion of said installation, provided further, however, that in no
event shall said five (5) business day period begin to run later than
thirty (30) days after said equipment has been delivered to Lessee.
7. TERMINATION BY LESSOR. Lessor shall have the exclusive option to
terminate this lease and Lessor's obligations thereunder if within 180
days after "Commitment Date", Equipment has not been delivered to
Lessee, or Lessee has not accepted Equipment as provided in paragraph
6 above. Said option may be exercised by giving Lessee written notice
of termination pursuant to this paragraph any time within ten (10)
business days after the expiration of said 180 day period.
8. TERM. The term of this Lease commences upon the date on which the
equipment is delivered to Lessee (whether or not accepted) and ends
upon the expiration of the number of months specified above under
"Initial Term of Lease" after the "Rental Commencement Date" shown
above. Lessee hereby authorizes Lessor to insert in this Lease as
said "Rental Commencement Date" the date upon which Equipment is
delivered to Lessee or any later date selected by Lessor.
9. RENT. During the term of this Lease. Lessee agrees to pay rent
equal to the "Amount of Each Rent Payment" multiplied by the "Number
of Rental Payments" as indicated above. The first rental payment
shall be due on "Commitment Date" and shall be applicable to the
rental period commencing on "Rental Commencement Date." Subsequent
rental payments shall be due in advance on the same date each month
(or other calendar period as indicated above) thereafter. Rent shall
be due whether or not Lessee has received any notice that such
payments are due. All rent shall be paid to Lessor at its address set
forth above or as otherwise directed by Lessor in writing. No portion
of any rent payment shall be deemed to constitute payment for any
equity interest in the Equipment.
10. USE. LESSEE COVENANTS AND REPRESENTS TO LESSOR THAT THE
EQUIPMENT WILL BE USED EXCLUSIVELY FOR AGRICULTURAL, BUSINESS, OR
COMMERCIAL PURPOSES AND WILL NOT BE USED AT ANY TIME DURING THE TERM
OF THIS LEASE FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES.
11. RENEWAL. Lessee shall have the option to renew this Lease on the
terms and conditions hereof from year to year for a maximum period of
twelve (12) years including the "Initial Term of Lease" set forth
above if, and only if, an amount is specified in the space "Renewal
Rental" above. Lessee must give Lessor written notice of its
intention to exercise said option together with payment of the
"Renewal Rental" at lease one hundred twenty (120) days before
expiration of the Lease or any renewal term. Should Lessee fail to
notify Lessor as indicated above or fail to return Equipment in
accordance with paragraph 14 hereof, at Lessor's exclusive option this
Lease may be continued on a month to month basis until thirty (30)
days after Lessee returns Equipment to Lessor. In event this Lease is
continued on a month to month basis until (30) days after Lessee
returns Equipment to Lessor. Lessee shall pay Lessor rental in the
same periodic amounts as indicated under "Initial Term" above.
12. LOCATIONS: LESSOR'S INSPECTION; LABELS. Equipment shall be
delivered and thereafter kept at the location specified above, or, if
none is specified, at Lessee's address set forth above and shall not
be removed therefrom without Lessor's prior written consent. Lessor
shall have the right to inspect Equipment at any reasonable time. If
Lessor supplies Lessee with labels stating that Equipment is owned by
Lessor. Lessee shall affix and keep same in a prominent place on each
item of Equipment.
13. REPAIRS: USE; ALTERATIONS. Lessee, at its expense, shall keep
Equipment in good working condition and repair and furnish all labor,
parts, mechanisms, and devices required therefor. Lessee shall use
Equipment in a careful and lawful manner. Lessee shall not make any
alterations, additions, or improvements to Equipment without Lessor's
prior written consent. All additions, repairs, replacement parts,
accessories, or improvements made to Equipment shall become a
component part thereof and title thereto shall be immediately vested
in Lessor and shall be included under the terms hereof. Any such
additions, repairs, replacement parts, accessories, or improvements
made to Equipment shall not be removed without Lessor's prior written
consent.
14. SURRENDER. At the expiration or other termination of this Lease
or upon demand by Lessor made pursuant to Paragraph 22 hereof, Lessee,
at its expense shall immediately return Equipment in as good condition
as received less normal wear, tear, and depreciation by delivering it
packed and ready for shipment, to such place or on board such carrier
as Lessor may specify.
15. LOSS OR DAMAGE. Lessee shall bear the entire risk of loss, theft,
destruction, or damage of Equipment or any portion thereof from any
cause whatsoever. If any Equipment is totally destroyed the liability
of Lessee to pay rent therefor may be discharged by paying the Lessor
all the rent due and to become due thereon, less the net amount of the
recovery, if any, actually received by Lessor from insurance or
otherwise for such loss or damage. Except as provided in the
preceding sentence, the total or partial destruction of any equipment,
or total or partial loss of use or possession thereof by Lessee, shall
not release or relieve Lessee from the duty to pay the rent herein
provided. Lessor shall not be obligated to undertake, by litigation
or otherwise, the collection of any claim against any person for loss
of damage of the Equipment.
16. INSURANCE. Lessee shall, at its own expense insure the equipment
at all times against all hazards requested by Lessor including but not
limited to fire, theft, and extended coverage insurance, and such
policies shall be payable to Lessor as its interest may appear. Such
insurance shall be reasonably satisfactory to Lessor as to form,
amount,. and insurer and shall provide for at least ten (10) days
written notice of cancellation to Lessor. Such insurance policies or
certificates thereof shall be delivered by Lessee to Lessor. In
addition, Lessee shall, at its own expense carry public liability
insurance with respect to the Equipment and the use thereof in such
amounts and with such insurers as are reasonably satisfactory to
Lessor, and such insurance policies shall also name Lessor as an
insured thereunder.
17. LIENS, TAXES. Lessee shall keep Equipment free and clear of all
levies, liens, and encumbrances Lessee shall, in the manner directed
by Lessor, (a) make and file all declarations and returns in
connection with all charges and taxes (local, state and federal),
which may now or hereafter be imposed upon or measured by the
ownership, leasing, rental, sale, purchase, possession, or use of
Equipment, excluding however all taxes on or measured by Lessor's net
income and (b) pay all such charges and taxes. In the event that
Lessor shall elect to make and file any or all declarations and
returns in connection with such charges and taxes to pay the same then
the Lessee shall reimburse the Lessor, upon demand of the Lessor, for
any and all such charges and taxes applicable to the equipment herein
leased by Lessor to Lessee.
18. LESSOR'S PERFORMANCE OF LESSEE'S OBLIGATIONS. If Lessee fails to
duly and properly perform any of its obligations under this Lease with
respect to the Equipment, Lessor may (at its option) perform any act
or make any payment which Lessor deems necessary for the maintenance
and preservation of the Equipment and Lessor's title thereto,
including payments for satisfaction of liens, repairs, taxes, levies,
and insurance and all sums so paid of incurred by Lessor, together
with interest and any reasonable legal fees incurred by Lessor in
connection therewith, shall be additional rent under this Lease and
payable by Lessee to Lessor on demand. The performance of any act or
payment by Lessor as aforesaid shall not be deemed a waiver or release
of any obligation or default on the part of Lessee.
19. INDEMNITY. Lessee assumes the risk of liability arising from or
pertaining to the possession operation, or use of such leased
Equipment. Lessee does hereby agree to indemnity hold safe and
harmless against, defend Lessor from, any and all claims, costs,
expense, damages, and liabilities arising from or pertaining to the
uses, possession, or operation, of leased Equipment.
20. ASSIGNMENT; OFFSET. Without Lessor's prior written consent,
Lessee shall not (a) assign, transfer, pledge, hypotheticate, or
otherwise dispose of this Lease, Equipment, or any interest therein,
or (b) sublet or lend Equipment or permit it to be used by anyone
other than Lessee or Lessee's employees.
Lessor may assign this Lease and/or mortgage Equipment, in whole or in
part, without notice to Lessee, however, if Lessee is given notice of
such assignment, it agrees to acknowledge receipt thereof in writing.
Each such assignee and/or mortgage shall have all of the rights, but
none of the obligations, of Lessor under this Lease. Lessee shall not
assert against assignee and/or mortgage any defense, counterclaim, or
offset and shall quietly enjoy use of the Equipment subject to the
terms and conditions of this Lease agreement. Subject to the
foregoing, this Lease insures to the benefit of and is binding upon
the heirs, legates, personal representatives, successors, and assigns
of the parties hereto.
21. SERVICE CHARGE AND INTEREST. If Lessee fails to pay when due any
rent or other amount required herein to be paid to Lessor. Lessee
shall pay to Lessor a service charge of five per cent (5%) of each
installment or part thereof for which said rent or other amount shall
be delinquent, or $2.50, whichever is greater, plus interest on such
delinquent rent or other amount from the due date thereof until paid
at the maximum rate allowed by law.
22. DEFAULT. (a) if Lessee fails to pay when due any rent payment or
other amount required herein to be paid by Lessee, or it Lessee names
an assignment for the benefit of creditors, whether voluntary or
involuntary of if a petition is filed by or against Lessee under the
Bankruptcy Code Lessor shall have the right to exercise any one or
more of the following remedies in order to protect the interest and
reasonably expected profits and bargains of Lessor. (i) Lessor may
recover from Lessee all rent payments and other amounts then due and
as they shall thereafter become due hereunder (ii) LESSOR MAY TAKE
POSSESSION OF ANY OR ALL ITEMS OR EQUIPMENT, WHEREVER THE SAME MAY BE
LOCATED, WITHOUT DEMAND OR NOTICE, WITHOUT ANY COURT ORDER OR OTHER
PROCESS OF LAW, AND WITHOUT LIABILITY TO LESSEE FOR ANY DAMAGES
OCCASIONED BY SUCH TAKING OF POSSESSION, AND, IN REMOVING ALL SUCH
EQUIPMENT, LESSOR MAY IF PERMITTED BY LAW, USE ANY OF LESSEE'S
LICENSES IN RESPECT TO ALL SUCH EQUIPMENT. (ANY SUCH TAKING OF
POSSESSION SHALL NOT CONSTITUTE A TERMINATION OF THIS LEASE. -- (iii)
Lessor may recover from Lessee, with respect to any and all items of
equipment and with or without repossessing the equipment, the sum of
(1) all rent payments and other amounts due and to become due and (2)
the estimated market value that such equipment would have had at the
end of the Lease term if it had been used and maintained as provided
in this Lease, provided, however, that upon repossession or surrender
of equipment. Lessor shall sell, lease or otherwise dispose of
equipment in a commercially reasonable manner with or without notice
and on public or private bid and apply the net proceeds thereof (after
deducting all expenses, including attorney's fees, incurred in
connection therewith) to the sum of (1) and (2) above (iv) Lessor may
pursue any other remedy at law or in equity, (b) if Lessee fails to
perform any of the provisions under this Lease or any other agreement
with Lessor or Lessee makes a bulk transfer or furniture, furnishings,
fixtures, or other equipment or inventory. Lessor shall have the
right to exercise any remedy available at law or in equity, including
but not limited to seeking damages or specific performance and/or
obtaining an injunction. (c) No right or remedy herein conferred upon
or reserved to Lessor is exclusive of any right or remedy herein or by
law or equity provided or permitted, but each shall be cumulative of
every other right or remedy given hereunder or now or hereafter
existing at law or in equity or by statute or otherwise and may be
enforced concurrently therewith or from time to time, but Lessor shall
not be entitled to recover a greater amount in damages than Lessor
could have gained by receipt of Lessee's full, timely and complete
performance of its obligations pursuant to the terms of this Lease
plus accrued delinquent payments under Paragraph 21.
.23. NOTICE OF BANKRUPTCY. Lessee shall deliver to Lessor written
notice (i) of Lessee's intention to file any voluntary petition
pursuant to the Bankruptcy Code or any Federal or State insolvency law
at least ten (10) days prior to the filing of such petition or (iii)
within five (5) days after Lessee shall receive notice or otherwise be
advised of the filing of any involuntary petition pertaining to Lessee
pursuant to the Bankruptcy Code or any other Federal or State
insolvency law.
24. LESSOR'S EXPENSES. Lessee shall pay Lessor all costs and
expenses, including attorney's fees of twenty percent (20%) the fees
of collection agencies, and other expenses such as telephone and
telegraph charges incurred by Lessor in enforcing any of the terms,
conditions, or provisions hereof.
25. OWNERSHIP; PERSONAL PROPERTY. Equipment is and shall at all times
remain the property of Lessor, and Lessee shall have no right, title,
or interest therein or thereto except as expressly set forth in this
Lease. Equipment is and shall at all times be and remain, personal
property notwithstanding that Equipment or any part thereof may now
be, or hereafter become, in any manner affixed or attached to real
property or any building thereon.
26. NOTICES. Service of all notices under this Lease shall be
sufficient if given personally or mailed to the party involved at its
respective address set forth above, or at such other addresses as said
party may provide in writing from time to time. Any such notice
mailed to said address shall be effective when deposited in the United
States mail, duly addressed and with postage prepaid.
27. SECURITY DEPOSIT. When the within Lease provides for security
deposit, Lessor may but shall not be obliged to, apply the security
deposit to cure any default of Lessee hereunder, in which event Lessee
shall promptly restore the security deposit to the full amount
specified above. Upon termination of this Lease and all remaining
balance of the security deposit actually made by Lessee.
28. SEVERABILITY. If any provision of this Lease or the application
thereof to any party or circumstance is held invalid or unenforceable,
the remainder of this Lease and the application of such provision to
other parties or circumstances will not be affected thereby and to
this end the provisions of this Lease are declared severable.
29. AMENDMENTS AND WAIVERS. This Lease and any Schedules thereto
executed by both Lessee and Lessor constitute the entire agreement
between Lessee and Lessor with respect to the Equipment which is the
subject matter of this Lease. No express of implied waver by Lessor
of any event of default hereunder shall in any way be or be construed
to be a waiver of any future or subsequent event of default whether
similar in kind or otherwise.
30. MISCELLANEOUS. No provision of this Lease can be waived except by
the written consent of Lessor. Lessee shall provide Lessor with such
corporate resolutions, opinions of counsel, financial statements, UCC-1
Financing Statements, and other documents as Lessor shall request
from time to time. If more than one Lessee is named in this Lease,
the liability of each shall be joint and several. Titles to the
paragraphs of this Lease are solely for convenience and are not
intended for interpretation of construction of this Lease. This Lease
shall be governed by and construed in accordance with the laws of
Ohio.
<PAGE>
PROVIDENT BANK
Quantity Description Serial Number
2 Not Melt Unit
5 Scale
2 Air Compressor
1 Stretch Wrapper
1 Strapping Machine
2 Shrink Wrapper
2 Paddle Mixer
3 Material Feeder
2 Material conveyor
1 EDI Software
1 Hot Stamp Printers
3 Meter
1 Heat Sealer
1 Hammermill
1 Forklift
1 Envelope Sealer
5 Electric Oven
1 Electric Chain Hoist
1 Checkweigher
1 Catalytic Gas Heater
1 Box Dumper
5 Blister Sealer
5 Bagging Machine
1 Hydraulic Drum Carrier
3 Powder Loading System
1 Electric Power Jack
1 Box Taper
1 Langden Cartoner
2 Bag Making System
1 Vertical Mill
6 Alloying Mills
3 Bag Printing System
7 Heater Pick-Up System
8 Vibratory Motor
9 Heater Forming System
1 Explosion Proof Meter
14 Personal Computer
2 Copy Machine
1 Accoustical Panels
3 Thermocouple Monitor
1 Balance
1 PH/IS Meter
1 Conductivity Meter
1 Steve Shaker
1 Stereo Microscope
1 Non-Contact Thermometer
1 Load Cells
20 Baking System
Location of Equipment: 311 Northland Boulevard
Cincinnati, OH 45246
<PAGE>
PROVIDENT BANK
MASTER CERTIFICATE OF INCUMBENCY
The undersigned being duly elected and acting as
of
The HeaterMeals Company (the "Lessee") does hereby certify that the
person or persons listed below are authorized representatives of the
Lessee in the capacity set forth opposite their names and that their
signatures are true and correct and, as of the date hereof, have
proper corporate power and authority to execute and deliver any Lease
Agreement between Lessee and Information Leasing Corporation, any
Lease Schedules pursuant thereto and the documents required
thereunder.
Name (print) Title
Sample Signature
I hereby attest that this information is true and correct as of this
day
of , 1997.
The HeaterMeals Company
Signature
Title
PROVIDENT BANK
CERTIFICATE OF ACCEPTANCE
LEASE #73539700
In compliance with the terms, conditions and provisions of the Lease
Agreement dated, 12/26/97 ("Lease") by and between the undersigned
The HeaterMeals Company ("Lessee") and Information Leasing
Corporation ("Lessor"), Lessee hereby:
(a) certifies and warrants that all Equipment described in
the lease agreement referenced above (the "Equipment") is delivered,
inspected and fully installed, and operational as of the Acceptance
Date as indicated below.
(b) accepts all the Equipment for all purposes under the Lease and
all attendant documents as of this _______ day of __________________,
1997 ("Acceptance Date").
(c) restates and reaffirms, as of such Acceptance Date, each of
the representations, warranties and covenants heretofore given to
Lessor in the Lease.
Lessor is hereby authorized to insert serial numbers on the lease
agreement.
Lessee: The HeaterMeals Company
By:
Title:
Date:
<PAGE>
PROVIDENT BANK
The HeaterMeals Company
311 Northland Boulevard
Cincinnati, OH 45246
RE: Lease # 73539700
Dear :
This letter will serve as a formal addendum to the above referenced
lease between Information Leasing Corporation (Lessor) and The
HeaterMeals Company (Lessee).
Lessor hereby acknowledges Lessee shall purchase the equipment
described in Lease # 73539700 for one dollar ($1.00) at lease
expiration. In order to exercise the purchase option of $1.00, Lessee
must give 90 day written notice and not be in default under any of the
provisions of the lease.
Regards,
Robert Rinaldi AGREED & ACKNOWLEDGED
Vice President The HeaterMeals Company
BY: _______________________
TITLE: _____________________
DATE: _____________________
<PAGE>
PROVIDENT BANK
To: Information Leasing Corporation
In compliance with the terms and conditions of the Lease Agreement, we
acknowledge the following with respect to insurance coverage:
1. It is Lessee's responsibility to provide insurance
coverage on the equipment and to provide Information Leasing with a
Certificate of Insurance. Minimum requirements are:
A.) Coverage in an amount equal to the unpaid balance of the
lease plus the then-current fair market value of the equipment.
B.) Public liability and property damage naming Information
Leasing as loss payee and additional insured.
C.) A provision that the insurance cannot be canceled without
thirty days prior written notice to Information Leasing.
2.) If Information Leasing has not received a Certificate of
Insurance outlining appropriate coverages within thirty (30) day of
lease commencement date, Information Leasing will assess a risk charge
equal to .25% of original equipment cost, this risk charge will be
billed monthly until a current Certificate of Insurance is received by
Information Leasing.
3.) Certificate of Insurance should be forwarded to:
Information Leasing Corporation
1023 W. Eighth Street
Cincinnati, OH 45203
Attn: Angela Rucker
AGREED & ACKNOWLEDGED:
The HeaterMeals Company
By: ____________________________
Title: ___________________________
Date: __________________________
<PAGE>
EHXIBIT 99.3
UNCONDITIONAL GUARANTY
To induce INFORMATION LEASING CORPORATION ("ILC") to give and
continue to give credit to HEATERMEALS COMPANY ("Borrower"), whether
to Borrower alone or to Borrower and others, the undersigned, jointly
and severally if more than one, hereby absolutely and unconditionally
guarantees prompt payment when due of any and all existing and future
indebtedness or liability of every kind, nature or character
(including, without limitation, principal, interest, all costs of
collection, and attorneys' fees) owing to ILC by Borrower, all whether
direct or indirect, absolute or contingent and whether incurred as
primary debtor, co-maker or guarantor (hereinafter the
"Indebtedness"). The undersigned further absolutely and
unconditionally guarantees the prompt performance when due of all the
terms, covenants, and conditions of any agreement between the Borrower
and ILC that relates to the Indebtedness. This guaranty is made and
shall continue as to any and all such Indebtedness incurred or arising
prior to receipt by the undersigned of written notice of termination
of this guaranty from ILC. The undersigned undertakes this
continuing, absolute, and unconditional guaranty of the aforementioned
payment and performance by Borrower notwithstanding that any portion
of the Indebtedness shall be void or voidable as between the Borrower
and any of its creditors, including, without limitation, any
bankruptcy trustee of the Borrower. It is understood that while the
amount of credit that may be extended to, and the amount of the
indebtedness or liability that may be incurred by, Borrower is not
limited, the liability of each of the undersigned to ILC hereunder is
(check one of the following):
__ Unlimited in amount.
__ Limited to a principal amount of $______, plus
interest thereon and all expenses reimbursable pursuant
to the following paragraph.
__ Limited to _____% of the Indebtedness.
This absolute, continuing, unconditional, and unrestricted
guaranty is a guaranty of payment and not a guaranty of collection.
Upon Borrower's failure to pay the indebtedness promptly when due,
ILC, at its sole option, may proceed against the undersigned, (or any
one or more of them if more than one) to collect the Indebtedness,
with or without proceeding against the Borrower, any co-maker or co-surety
or co-guarantor, any Indorser or any collateral held as
security for the Indebtedness. Any and all payments upon the
Indebtedness made by the Borrower, the undersigned, or any other
person, and the proceeds of any and all collateral securing the
payment of the Indebtedness and this guaranty, may be applied by ILC
in whatever manner it may determine in its sole discretion. The
undersigned agrees to reimburse ILC for all expenses of any nature
whatsoever, including, without limitation, attorneys' fees, incurred
or paid by ILC in exercising any right, power, or remedy conferred by
this guaranty.
The obligations of the undersigned set forth in this guaranty
shall extend to all amendments, supplements, modifications, renewals,
replacements or extensions of the Indebtedness at any rate of
interest. The liability of the undersigned and the rights of ILC
under this guaranty shall not be impaired or affected in any manner
by, and the undersigned hereby consents in advance to and waives any
requirement of notice for, any (1) disposition, impairment, release,
surrender, substitution, or modification of any collateral securing
the Indebtedness or the obligations created by this guaranty or any
failure to perfect a security interest in any collateral; (2) release
(including adjudication or discharge in bankruptcy) or settlement with
any person primarily or secondarily liable for the Indebtedness
(including, without limitation, any maker, indorser, guarantor or
surety); (3) delay in enforcement of payment of the Indebtedness or
delay in enforcement of this guaranty; (4) delay, omission, waiver, or
forbearance in exercising any right or power with respect to the
Indebtedness or this guaranty; (5) defense arising from the
enforceability or validity of the Indebtedness or any part thereof or
the genuineness, enforceability or validity of any agreement relating
thereto; or (6) other act or omission which might constitute a legal
or equitable discharge of the undersigned. The undersigned waives
presentment, protest, demand for payment, any right of set-off, notice
of dishonor or default, notice of acceptance of this guaranty, notice
of the incurring of any of the Indebtedness and notice of any other
kind in connection with the Indebtedness or this guaranty. The
undersigned also waives any right to require a commercially reasonable
disposition of any collateral securing the Indebtedness.
The undersigned hereby waives any claim, right or remedy which
the undersigned may now have or hereafter acquire against Borrower
that arises hereunder and/or from the performance by the undersigned
hereunder including, without limitation, any claim, remedy or right of
subrogation, reimbursement, exoneration, contribution,
indemnification, or participation in any claim, right or remedy of
Lender or Agent against Borrower or any security which Lender or Agent
now has or hereafter acquires, whether or not such claim, right or
remedy arises in equity, under contract, by statute, under common law
or otherwise.
The undersigned agrees that in the event of (i) the dissolution
or insolvency of Borrower, (ii) the inability of Borrower to pay its
debts as they become due, (iii) an assignment by Borrower for the
benefit of its creditors, or (iv) the institution of any bankruptcy or
other proceeding by or against Borrower alleging that Borrower is
insolvent or unable to pay its debts as they become due, and whether
or not such event shall occur at a time when the Indebtedness is not
then due and payable, the undersigned shall pay the Indebtedness to
ILC promptly upon demand as if the Indebtedness was then due and
payable.
The undersigned agrees that this guaranty shall continue to be
effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of principal, interest or any other
amount with respect to the Indebtedness is rescinded or must otherwise
be restored by ILC upon the bankruptcy or reorganization of Borrower,
any other person or otherwise. The undersigned agrees that this
guaranty shall continue to be effective or be reinstated, as the case
may be, if at any time payment, or any part thereof, of principal,
interest or any other amount with respect to the Indebtedness is
rescinded or must otherwise be restored by Agent or any Lender upon
the bankruptcy or reorganization of Borrower, any other person or
otherwise.
The undersigned hereby agrees that ILC shall be granted a right
of first refusal to future equipment leases with Borrower, the
undersigned or any subsidiaries thereof. The Borrower, the
undersigned and any subsidiaries thereof shall not enter any other
leasing or equipment financing transaction unless first offering ILC
the opportunity to finance such transaction, except to the extent (i)
the transaction is inconsistent with existing financing relationships,
or (ii) the amount of cumulative fundings from ILC to the Borrower,
the undersigned and any subsidiaries thereof exceeds One Million Five
Hundred Thousand Dollars ($1,500,000.00).
The undersigned shall furnish to ILC as soon as available, but
in any event within sixty (60) days after the close of each fiscal
year, a complete annual audit report of the undersigned, which audit
report shall have been prepared in accordance with GAAP and certified
without qualification by independent certified public accountants
acceptable to ILC. Such reports shall include the following audited
financial statements of the undersigned: balance sheet as of the end
of such fiscal year, and statements of income, cash flow,
shareholders' equity and changes in financial position for the year
then ended. In addition to the report required to be furnished
hereby, the undersigned shall furnish to ILC as soon as received by
the undersigned copies of all other reports from its auditors in
connection with each annual audit including management letters. In
addition, the undersigned shall provide any internal annual financial
data as soon as it is available.
The undersigned shall furnish to ILC within thirty (30) days
after the end of each quarter of each fiscal year (including the last
month) a balance sheet of the undersigned for such quarter, and
statements of income, cash flow and shareholders' equity of the
undersigned for such quarter prepared on both a quarterly and
year-to-date basis. Each quarterly and year-to-date statement of
income shall set forth in comparative form the statement of income of
the corresponding quarter or year-to-date period, respectively, of the
previous fiscal year. Such financial statements may be unaudited, but
shall be prepared in accordance with GAAP and shall be certified to
such effect, subject to normal year-end adjustments, by the chief
executive officer or the chief financial officer of the undersigned,
who shall certify that such financial statements fairly present in all
material respects the financial condition and the results of
operations of the undersigned as of the date and for the periods set
forth therein. In addition to the foregoing financial information,
the undersigned shall provide to ILC any other information which is
provided to the undersigned's shareholders in accordance with
securities laws.
Upon request of ILC, the undersigned shall make available for
inspection to representatives of ILC any of its books and records and
shall furnish to ILC information regarding its business affairs and
financial condition within a reasonable time after receipt of written
request therefor.
In order to secure the payment of the Indebtedness and the
obligations created by this guaranty, the undersigned hereby grants to
ILC a security interest in the accounts, securities, and properties in
which the undersigned has any interest, and that are now, or are at
any time hereafter in the possession of ILC. Upon any portion of the
Indebtedness becoming due and not being fully paid and satisfied, the
total sum then due hereunder may immediately be charged against any
account or accounts maintained by the undersigned with ILC, without
notice to or further consent from the undersigned. The undersigned
shall promptly provide such financial information as the holder shall
reasonably request from time to time.
ILC shall not be compelled to resort first to any collateral for
payment of any of the Indebtedness or the obligations created by this
guaranty, but may at its election require the obligation to be paid by
the undersigned, with or without suit. The provisions of this
guaranty shall apply to any new or additional collateral given by the
undersigned to further secure the Indebtedness and the obligations
created by this guaranty.
As a specifically bargained inducement for ILC to extend credit
to Borrower: (i) THE UNDERSIGNED HEREBY EXPRESSLY WAIVES THE RIGHT TO
TRIAL BY JURY IN ANY LAWSUIT OR PROCEEDING RELATED TO THIS GUARANTY OR
ARISING IN ANY WAY FROM THE INDEBTEDNESS OR TRANSACTIONS INVOLVING ILC
AND THE BORROWER AND (ii) THE UNDERSIGNED HEREBY DESIGNATE(S) ALL
COURTS OF RECORD SITTING IN CINCINNATI, OHIO AND HAVING JURISDICTION
OVER THE SUBJECT MATTER, STATE AND FEDERAL, AS FORUMS WHERE ANY
ACTION, SUIT OR PROCEEDING IN RESPECT OF OR ARISING FROM OR OUT OF
THIS GUARANTY, ITS MAKING, VALIDITY OR PERFORMANCE, MAY BE PROSECUTED
AS TO ALL PARTIES, THEIR SUCCESSORS AND ASSIGNS, AND BY THE FOREGOING
DESIGNATION THE UNDERSIGNED CONSENT(S) TO THE JURISDICTION AND VENUE
OF SUCH COURTS.
This guaranty shall inure to the benefit of and bind the parties
hereto, their successors and assigns, and their legal representatives
or heirs. ILC may, at its option, assign this guaranty to any other
party who is or becomes the indorsee or assignee of any part of the
Indebtedness, or who is in possession of or the bearer of any part of
the Indebtedness that is payable to the bearer, and the undersigned
shall continue to be liable under this guaranty to such other party to
the extent of such indorsed, assigned, or possessed Indebtedness.
Each of the undersigned that is a corporation warrants that it
has the corporate power to execute this guaranty, that all the
necessary corporate actions have been taken to permit the undersigned
to give this guaranty, and that the person(s) executing this guaranty
is (are) duly empowered to do so on behalf of the undersigned. Each
of the undersigned that is a partnership warrants that it has the
power to execute this guaranty, that all necessary partnership actions
have been taken to permit the undersigned to give this guaranty, and
that the person(s) executing this guaranty is (are) duly empowered to
do so on behalf of the undersigned.
The undersigned and all endorsers authorize any attorney-at-law,
including an attorney engaged by ILC or any holder of this Note, to
appear in any court of record in Hamilton County, Ohio, or in any
court of record in the jurisdiction in which the undersigned or any
endorser against which or whom a judgment is then sought may then
reside, or in any court of record in the jurisdiction in which the
property described in the Mortgage for which this Guaranty is
additional security is located, after the indebtedness evidenced
hereby, or any part thereof, becomes due, and waive the issuance and
service of process and confess judgment against the undersigned or any
endorser in favor of ILC for the amount then appearing due, together
with costs of suit and thereupon to release all errors and waive all
rights of appeal and stay of execution, but no such judgment or
judgments against any one of the undersigned shall be a bar to a
subsequent judgment or judgments against any one or more than one of
such persons or entities against whom judgment has not been obtained
thereon. This warrant of attorney to confess judgment is a joint and
several warrant of attorney. The foregoing warrant of attorney shall
survive any judgment; and if any judgment be vacated for any reason,
ILC or any holder hereof nevertheless may hereafter use the foregoing
warrant of attorney to obtain an additional judgment or judgments
against the Borrower and all endorsers or any one or more of them.
The Borrower hereby expressly waives any conflict of interest that the
holder's attorney may have in confessing such judgment against
Borrower and expressly consents to the confessing attorney receiving a
legal fee from the holder for confessing such judgment against
Borrower.
WARNING - BY SIGNING THIS PAPER, YOU GIVE UP YOUR RIGHT TO NOTICE
AND COURT TRIAL. IF YOU DO NOT PAY ON TIME, A COURT JUDGMENT MAY BE
TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE, AND THE POWERS OF A
COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY
HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS,
FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT OR ANY OTHER CAUSE.
Signed and delivered by the undersigned at Cincinnati, Ohio on
December ___, 1997.
Witness: GUARANTOR(S)
UNITED SHIELDS CORPORATION
Printed: BY:
ITS:
Printed:
<PAGE>
UNCONDITIONAL GUARANTY
To induce INFORMATION LEASING CORPORATION ("ILC") to give and
continue to give credit to HEATERMEALS COMPANY ("Borrower"), whether
to Borrower alone or to Borrower and others, the undersigned, jointly
and severally if more than one, hereby absolutely and unconditionally
guarantees prompt payment when due of any and all existing and future
indebtedness or liability of every kind, nature or character
(including, without limitation, principal, interest, all costs of
collection, and attorneys' fees) owing to ILC by Borrower, all whether
direct or indirect, absolute or contingent and whether incurred as
primary debtor, co-maker or guarantor (hereinafter the
"Indebtedness"). The undersigned further absolutely and
unconditionally guarantees the prompt performance when due of all the
terms, covenants, and conditions of any agreement between the Borrower
and ILC that relates to the Indebtedness. This guaranty is made and
shall continue as to any and all such Indebtedness incurred or arising
prior to receipt by the undersigned of written notice of termination
of this guaranty from ILC. The undersigned undertakes this
continuing, absolute, and unconditional guaranty of the aforementioned
payment and performance by Borrower notwithstanding that any portion
of the Indebtedness shall be void or voidable as between the Borrower
and any of its creditors, including, without limitation, any
bankruptcy trustee of the Borrower. It is understood that while the
amount of credit that may be extended to, and the amount of the
indebtedness or liability that may be incurred by, Borrower is not
limited, the liability of each of the undersigned to ILC hereunder is
(check one of the following):
__ Unlimited in amount.
__ Limited to a principal amount of $______, plus
interest thereon and all expenses reimbursable pursuant
to the following paragraph.
__ Limited to _____% of the Indebtedness.
This absolute, continuing, unconditional, and unrestricted
guaranty is a guaranty of payment and not a guaranty of collection.
Upon Borrower's failure to pay the indebtedness promptly when due,
ILC, at its sole option, may proceed against the undersigned, (or any
one or more of them if more than one) to collect the Indebtedness,
with or without proceeding against the Borrower, any co-maker or co-surety
or co-guarantor, any Indorser or any collateral held as
security for the Indebtedness. Any and all payments upon the
Indebtedness made by the Borrower, the undersigned, or any other
person, and the proceeds of any and all collateral securing the
payment of the Indebtedness and this guaranty, may be applied by ILC
in whatever manner it may determine in its sole discretion. The
undersigned agrees to reimburse ILC for all expenses of any nature
whatsoever, including, without limitation, attorneys' fees, incurred
or paid by ILC in exercising any right, power, or remedy conferred by
this guaranty.
The obligations of the undersigned set forth in this guaranty
shall extend to all amendments, supplements, modifications, renewals,
replacements or extensions of the Indebtedness at any rate of
interest. The liability of the undersigned and the rights of ILC
under this guaranty shall not be impaired or affected in any manner
by, and the undersigned hereby consents in advance to and waives any
requirement of notice for, any (1) disposition, impairment, release,
surrender, substitution, or modification of any collateral securing
the Indebtedness or the obligations created by this guaranty or any
failure to perfect a security interest in any collateral; (2) release
(including adjudication or discharge in bankruptcy) or settlement with
any person primarily or secondarily liable for the Indebtedness
(including, without limitation, any maker, indorser, guarantor or
surety); (3) delay in enforcement of payment of the Indebtedness or
delay in enforcement of this guaranty; (4) delay, omission, waiver, or
forbearance in exercising any right or power with respect to the
Indebtedness or this guaranty; (5) defense arising from the
enforceability or validity of the Indebtedness or any part thereof or
the genuineness, enforceability or validity of any agreement relating
thereto; or (6) other act or omission which might constitute a legal
or equitable discharge of the undersigned. The undersigned waives
presentment, protest, demand for payment, any right of set-off, notice
of dishonor or default, notice of acceptance of this guaranty, notice
of the incurring of any of the Indebtedness and notice of any other
kind in connection with the Indebtedness or this guaranty. The
undersigned also waives any right to require a commercially reasonable
disposition of any collateral securing the Indebtedness.
The undersigned hereby waives any claim, right or remedy which
the undersigned may now have or hereafter acquire against Borrower
that arises hereunder and/or from the performance by the undersigned
hereunder including, without limitation, any claim, remedy or right of
subrogation, reimbursement, exoneration, contribution,
indemnification, or participation in any claim, right or remedy of
Lender or Agent against Borrower or any security which Lender or Agent
now has or hereafter acquires, whether or not such claim, right or
remedy arises in equity, under contract, by statute, under common law
or otherwise.
The undersigned agrees that in the event of (i) the dissolution
or insolvency of Borrower, (ii) the inability of Borrower to pay its
debts as they become due, (iii) an assignment by Borrower for the
benefit of its creditors, or (iv) the institution of any bankruptcy or
other proceeding by or against Borrower alleging that Borrower is
insolvent or unable to pay its debts as they become due, and whether
or not such event shall occur at a time when the Indebtedness is not
then due and payable, the undersigned shall pay the Indebtedness to
ILC promptly upon demand as if the Indebtedness was then due and
payable.
The undersigned agrees that this guaranty shall continue to be
effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of principal, interest or any other
amount with respect to the Indebtedness is rescinded or must otherwise
be restored by ILC upon the bankruptcy or reorganization of Borrower,
any other person or otherwise. The undersigned agrees that this
guaranty shall continue to be effective or be reinstated, as the case
may be, if at any time payment, or any part thereof, of principal,
interest or any other amount with respect to the Indebtedness is
rescinded or must otherwise be restored by Agent or any Lender upon
the bankruptcy or reorganization of Borrower, any other person or
otherwise.
The undersigned shall furnish to ILC as soon as available, but
in any event within sixty (60) days after the close of each fiscal
year, a complete annual review report of the undersigned, which review
report shall have been prepared in accordance with GAAP and compiled
by independent certified public accountants acceptable to ILC. Such
reports shall include the following reviewed financial statements of
the undersigned: balance sheet as of the end of such fiscal year, and
statements of income, cash flow, shareholders' equity and changes in
financial position for the year then ended. In addition to the report
required to be furnished hereby, the undersigned shall furnish to ILC
as soon as received by the undersigned copies of all other reports
from its auditors in connection with each annual review including
management letters. In addition, the undersigned shall provide any
internal annual financial data as soon as it is available.
The undersigned shall furnish to ILC within thirty (30) days
after the end of each quarter of each fiscal year (including the last
month) a balance sheet of the undersigned for such quarter, and
statements of income, cash flow and shareholders' equity of the
undersigned for such quarter prepared on both a quarterly and
year-to-date basis. Each quarterly and year-to-date statement of
income shall set forth in comparative form the statement of income of
the corresponding quarter or year-to-date period, respectively, of the
previous fiscal year. Such financial statements may be unaudited, but
shall be prepared in accordance with GAAP and shall be certified to
such effect, subject to normal year-end adjustments, by the chief
executive officer or the chief financial officer of the undersigned,
who shall certify that such financial statements fairly present in all
material respects the financial condition and the results of
operations of the undersigned as of the date and for the periods set
forth therein. In addition to the foregoing financial information,
the undersigned shall provide to ILC any other information which is
provided to the undersigned's shareholders in accordance with
securities laws.
Upon request of ILC, the undersigned shall make available for
inspection to representatives of ILC any of its books and records and
shall furnish to ILC information regarding its business affairs and
financial condition within a reasonable time after receipt of written
request therefor.
In order to secure the payment of the Indebtedness and the
obligations created by this guaranty, the undersigned hereby grants to
ILC a security interest in the accounts, securities, and properties in
which the undersigned has any interest, and that are now, or are at
any time hereafter in the possession of ILC. Upon any portion of the
Indebtedness becoming due and not being fully paid and satisfied, the
total sum then due hereunder may immediately be charged against any
account or accounts maintained by the undersigned with ILC, without
notice to or further consent from the undersigned. The undersigned
shall promptly provide such financial information as the holder shall
reasonably request from time to time.
ILC shall not be compelled to resort first to any collateral for
payment of any of the Indebtedness or the obligations created by this
guaranty, but may at its election require the obligation to be paid by
the undersigned, with or without suit. The provisions of this
guaranty shall apply to any new or additional collateral given by the
undersigned to further secure the Indebtedness and the obligations
created by this guaranty.
As a specifically bargained inducement for ILC to extend credit
to Borrower: (i) THE UNDERSIGNED HEREBY EXPRESSLY WAIVES THE RIGHT TO
TRIAL BY JURY IN ANY LAWSUIT OR PROCEEDING RELATED TO THIS GUARANTY OR
ARISING IN ANY WAY FROM THE INDEBTEDNESS OR TRANSACTIONS INVOLVING ILC
AND THE BORROWER AND (ii) THE UNDERSIGNED HEREBY DESIGNATE(S) ALL
COURTS OF RECORD SITTING IN CINCINNATI, OHIO AND HAVING JURISDICTION
OVER THE SUBJECT MATTER, STATE AND FEDERAL, AS FORUMS WHERE ANY
ACTION, SUIT OR PROCEEDING IN RESPECT OF OR ARISING FROM OR OUT OF
THIS GUARANTY, ITS MAKING, VALIDITY OR PERFORMANCE, MAY BE PROSECUTED
AS TO ALL PARTIES, THEIR SUCCESSORS AND ASSIGNS, AND BY THE FOREGOING
DESIGNATION THE UNDERSIGNED CONSENT(S) TO THE JURISDICTION AND VENUE
OF SUCH COURTS.
This guaranty shall inure to the benefit of and bind the parties
hereto, their successors and assigns, and their legal representatives
or heirs. ILC may, at its option, assign this guaranty to any other
party who is or becomes the indorsee or assignee of any part of the
Indebtedness, or who is in possession of or the bearer of any part of
the Indebtedness that is payable to the bearer, and the undersigned
shall continue to be liable under this guaranty to such other party to
the extent of such indorsed, assigned, or possessed Indebtedness.
Each of the undersigned that is a corporation warrants that it
has the corporate power to execute this guaranty, that all the
necessary corporate actions have been taken to permit the undersigned
to give this guaranty, and that the person(s) executing this guaranty
is (are) duly empowered to do so on behalf of the undersigned. Each
of the undersigned that is a partnership warrants that it has the
power to execute this guaranty, that all necessary partnership actions
have been taken to permit the undersigned to give this guaranty, and
that the person(s) executing this guaranty is (are) duly empowered to
do so on behalf of the undersigned.
The undersigned and all endorsers authorize any attorney-at-law,
including an attorney engaged by ILC or any holder of this Note, to
appear in any court of record in Hamilton County, Ohio, or in any
court of record in the jurisdiction in which the undersigned or any
endorser against which or whom a judgment is then sought may then
reside, or in any court of record in the jurisdiction in which the
property described in the Mortgage for which this Guaranty is
additional security is located, after the indebtedness evidenced
hereby, or any part thereof, becomes due, and waive the issuance and
service of process and confess judgment against the undersigned or any
endorser in favor of ILC for the amount then appearing due, together
with costs of suit and thereupon to release all errors and waive all
rights of appeal and stay of execution, but no such judgment or
judgments against any one of the undersigned shall be a bar to a
subsequent judgment or judgments against any one or more than one of
such persons or entities against whom judgment has not been obtained
thereon. This warrant of attorney to confess judgment is a joint and
several warrant of attorney. The foregoing warrant of attorney shall
survive any judgment; and if any judgment be vacated for any reason,
ILC or any holder hereof nevertheless may hereafter use the foregoing
warrant of attorney to obtain an additional judgment or judgments
against the Borrower and all endorsers or any one or more of them.
The Borrower hereby expressly waives any conflict of interest that the
holder's attorney may have in confessing such judgment against
Borrower and expressly consents to the confessing attorney receiving a
legal fee from the holder for confessing such judgment against
Borrower.
The foregoing guaranty shall continue in full force and effect
until the all of the following Release Events occur:
1. Cash and Cash Equivalents of United Shields Corporation
have an aggregate Asset balance exceeding One Million Dollars
($1,000,000.00) for a period of at least three consecutive quarters;
2. the Tangible Net Worth of United Shields Corporation
exceeds Two Million Dollars ($2,000,000.00) for a period of at least
three consecutive quarters; and
3. United Shields Corporation maintains a ratio of Cash Flow
coverage to contractual debt service of at least 1.20 to 1.00 for the
three consecutive trailing quarters.
The capitalized terms in the foregoing Release Events shall have
the following meanings.
"Assets" means at any time, all assets that, in accordance with
GAAP should be classified as assets on Borrower's Consolidated balance
sheet.
"Cash Equivalents" means: (i) marketable direct obligations
issued or unconditionally guaranteed by the United States Government
or issued by any agency thereof and backed by the full faith and
credit of the United States, in each case maturing within one year
from the date of acquisition thereof; (ii) investments in certificates
of deposit, bankers' acceptances or time deposits maturing within one
year from the date of acquisition issued by any Lender or any other
commercial bank organized under the laws of the United States or any
state thereof having capital surplus and undivided profits aggregating
at least One Hundred Million Dollars ($100,000,000); (iii) investments
in commercial paper of any Lender or of any other Person which, at the
time of issuance, have a rating of at least A-1 from Standard & Poor's
Corporation or at least P-1 from Moody's Investors Service, Inc. and
maturing not more than one year from the date of acquisition thereof;
(iv) obligations of the type described in (i), (ii) or (iii) above
purchased pursuant to a repurchase agreement obligating the
counterpart to repurchase such obligations not later than thirty (30)
days after the purchase thereof, secured by a fully perfected security
interest in any such obligation, and having a market value at the time
such repurchase agreement is entered into of not less than 100% of the
repurchase obligation of the issuing bank; and (v) securities of any
investment company registered under the Investment Company Act of 1940
which is a no-load "money market fund" within the meaning of
regulations of the Securities and Exchange Commission, or an interest
in a pooled fund maintained by a commercial bank having comparable
investment restrictions.
"Cash Flow" means, for any period, the following, each calculated
for such period, without duplication: (i) EBITDA, less (ii) income and
franchise taxes actually paid by Borrower (including decreases in
deferred income taxes resulting from tax payments actually made), less
(iii) tax refunds received by Borrower, less (iv) Capital Expenditures
(to the extent actually made in cash by Borrower).
"EBITDA" for any period shall mean, without duplication, (i) Net
Income; plus (ii) for such period any Interest Expense deducted in the
determination of Net Income; plus (iii) any income and franchise taxes
paid in cash and included in the determination of Net Income; plus
(iv) amortization and depreciation deducted in determining Net Income
for such period; minus (ii) the sum for such period of interest
income, extraordinary gains, gains from sales of assets (other than
sales of inventory in the ordinary course of business) and unrealized
losses from changes in currency.
"Tangible Net Worth" means, from time to time, the total amount
of consolidated capital accounts of Borrower at such time determined
in accordance with GAAP, except that there shall be deducted therefrom
all deferred charges and the book value of all assets which would be
treated as intangible in accordance with GAAP, which shall in any
event include unamortized debt discount and expenses, unamortized
organization and reorganization expenses, customer lists,
non-competition agreements, costs in excess of the net asset value of
acquired companies, intellectual property, franchises, and goodwill in
the amount of any write-up in the book value of any assets resulting
from any revaluation (other than revaluations arising out of foreign
currency evaluations in accordance with GAAP) thereof after December,
__ 1997.
WARNING - BY SIGNING THIS PAPER, YOU GIVE UP YOUR RIGHT TO NOTICE
AND COURT TRIAL. IF YOU DO NOT PAY ON TIME, A COURT JUDGMENT MAY BE
TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE, AND THE POWERS OF A
COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY
HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS,
FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT OR ANY OTHER CAUSE.
[Remainder of this page intentionally left blank. Signatures to
follow.]<PAGE>
Signed and delivered by the undersigned at Cincinnati, Ohio on
December ___, 1997.
Witness: GUARANTOR(S)
RAMSAY-HUGHES, INC.
(d/b/a Navicap Corporation)
Printed: BY:
ITS:
Printed:
<PAGE>
EXHIBIT 99.4
SUBORDINATION AGREEMENT
This Subordination Agreement is made this ___ day of December, by
and between HEATERMEALS COMPANY (f/k/a ZestoTherm, Inc.), an Ohio
corporation (the "Subsidiary") and UNITED SHIELDS CORPORATION (f/k/a
Capital 2000, Inc.), a Colorado corporation (the "Company"),
INFORMATION LEASING CORPORATION, an Ohio corporation ("Senior
Creditor") and RAMSAY-HUGHES, INC. (d/b/a NAVICAP Corporation), an
Ohio corporation (the "Subordinated Investor").
W I T N E S S E T H:
WHEREAS, HeaterMeals Company, a subsidiary of the Company and the
Senior Creditor propose to enter into a certain Sale and Leaseback
Agreement of even date herewith ("S&L Agreement"), pursuant to which
the Senior Creditor will agree to purchase certain equipment from the
Subsidiary and lease such equipment back to Subsidiary for use in its
business;
WHEREAS, in order to induce the Senior Creditor to extend credit
and make the Leases for the benefit of its Subsidiary, and for and in
consideration of such credit and Leases the Company has agreed to
execute a guaranty of Lessee's obligations under the lease and in
favor of its Subsidiary;
WHEREAS, in order to induce the Senior Creditor to extend credit
and make the Leases for the benefit of the Subsidiary, and for and in
consideration of such credit and Leases the Subordinated Investor has
agreed to execute a guaranty of Lessee's obligations under the Lease
and in favor of the Subsidiary and the Subordinated Investor has
agreed that the various promissory notes owed by the Company to the
Subordinated Investor described on Schedule 1 hereto ("Subordinated
Notes") shall be subordinated to the obligations of the Lessee under
the Lease ("Obligations") in the manner and to the extent set forth in
this Agreement; and
WHEREAS, a condition to the Senior Creditor's execution of the
S&L Agreement is the execution and delivery of this Subordination
Agreement;
NOW, THEREFORE, in consideration of the premises and for other
good and valuable consideration, the parties agree as follows:
ARTICLE 1
DEFINITIONS
In addition to other words and terms defined elsewhere in this
Agreement, capitalized terms used herein and not otherwise defined
shall have the meanings given in the Loan Agreement.
ARTICLE 2
SUBORDINATION
Section 2.1 Agreement to Subordinate. The Company and
Subordinated Investors, for themselves and their successors and
assigns, hereby agree that the payment of the indebtedness and other
obligations evidenced by the Subordinated Notes is subordinated to the
Obligations and subject in right of payment to the prior payment in
full of the Obligations.
Any holder of the Subordinated Notes, whether upon original issue
or upon transfer or assignment, by accepting such Subordinated Notes
further agrees that the Senior Creditor has advanced funds and may
from time to time advance additional funds in reliance upon the
subordination of the Subordinated Notes to the Obligations and that
the provisions of this Agreement are for the benefit of the Senior
Creditor.
Section 2.2 Endorsement on Instruments. The Subordinated
Notes, and any instrument issued by the Company in replacement,
renewal, exchange for or substitution thereof, or evidencing the
transfer thereof, shall be endorsed with a legend in the following
form:
"The payment of this instrument, both principal and
interest, and all other indebtedness evidenced hereby, is subordinate,
subject and made junior in right of payment to the prior rights of the
Senior Creditor, Information Leasing Corporation, its successors and
assigns, in the manner and to the extent set forth in a certain
Subordination Agreement dated as of December ___, 1997 which Agreement
is incorporated herein by reference."
Section 2.3 Payment Upon Maturity, Liquidation, Dissolution
or Reorganization.
(a) All such Obligations shall first be paid in full,
before any payment is made on account of principal of or interest on
the Subordinated Notes or to acquire or redeem the Subordinated Notes.
(b) In the event of any insolvency, bankruptcy,
receivership, liquidation, reorganization, readjustment, composition
or other similar proceeding relating to the Subsidiary or the Company
or its property, or any proceeding for the liquidation, dissolution or
other winding up of the Subsidiary or the Company, voluntary or
involuntary, whether or not involving insolvency or bankruptcy
proceedings, or any assignment by the Company for the benefit of
creditors, or any other marshaling of the assets of the Company, then
and in any such event:
(i) all Obligations shall first be paid in full, or
provision made for such payment, together with, to the extent provided
for by law, interest thereon from the date such Obligations were due
as provided in the Loan Agreement, if payment in full is not received,
before any payment or distribution of any character, whether in cash,
securities or other property, shall be made on account of or applied
on the Subordinated Notes;
(ii) any payment or distribution of any character,
whether in cash, securities or other property, which would otherwise
(but for this clause) be payable and deliverable in respect of the
Subordinated Notes shall be paid or delivered directly to the Senior
Creditor, or the holder of such Notes shall pay to the Senior Creditor
such amounts promptly upon receipt, until all Obligations shall have
been paid in full, together with, to the extent provided for by law,
interest as provided herein from the date such Obligations were due if
payment in full is not received, to the Senior Creditor; and
(iii) the holder of the Subordinated Notes
irrevocably authorizes and empowers the Senior Creditor to demand, sue
for, collect and receive all such payments and distributions and to
receipt therefor, and to file and prove all such claims and take all
such other actions in the name of the Senior Creditor as it may
determine to be necessary or appropriate.
(c) The holder of the Subordinated Notes will not
exercise or attempt to exercise any right of setoff or counterclaim in
respect of any obligations of such holder to the Company against the
obligations of the Company under such securities if the effect thereof
shall be to reduce the amount of any such payment or distribution to
which the Senior Creditor would be entitled in the absence of such
setoff or counterclaim.
Section 2.4 Borrower Not to Make Payments with Respect to
Subordinated Notes in Certain Circumstances.
(a) Except for the restrictions set forth in Section
hereof, nothing contained in this Agreement shall limit the right of
the holder of the Subordinated Notes to take any action to accelerate
its maturity; provided, however, that any amounts received by such
holder to any such action from any source whatsoever will be received
by it in trust for the Senior Creditor, and it will pay over such
amounts to the Senior Creditor until the payment of the entire
principal of and premium, if any, and interest on all the Obligations
then owing to the Senior Creditor.
(b) Without limiting the effect of Section with
respect to any default in payment on Obligations, if any default shall
occur and be continuing with respect to any Obligations permitting the
Senior Creditor to accelerate the maturity thereof, the holder of the
Subordinated Notes shall not be entitled to receive any payment on
account of principal thereof or interest thereon (including any such
payment which would cause such a default) while judicial proceedings
shall be pending in respect of such default with respect to which
written notice of the commencement of such proceedings shall have been
given to the holder by the Senior Creditor or by the Company or in
the absence of such proceedings, if written notice of such default
shall have been given to the Subordinated Investor or the then holder
of the Subordinated Notes.
Section 2.5 Standstill. If any default shall occur and be
continuing with respect to the Subordinated Notes, the holder thereof
may not elect to accelerate the maturity thereof until the Obligations
have been paid in full or the Senior Creditor otherwise consents,
including the taking of any of the following actions:
(a) the commencement or continuation of any action or
proceeding against the Company, whether to reduce the claims of the
holder to judgment or to enforce the terms of the Subordinated Notes
or otherwise;
(b) any act to obtain possession of property of the
Company or to exercise control over property of the Company; or
(c) any act to create, perfect or enforce any lien
against property of the Company.
Section 2.6 Relative Rights. This Article is intended solely
to define the relative rights of the holder of the Subordinated Notes,
on the one hand, and the Senior Creditor, on the other hand. Nothing
in this Article shall:
(a) impair, as between the Company and the holder of the
Subordinated Notes, the obligation of the Company, which is absolute
and unconditional, to pay the principal of and interest on the
Subordinated Notes in accordance with its terms; or
(b) affect the relative rights of the holder of the
Subordinated Notes and creditors of the Company other than the Senior
Creditor; or
(c) prevent any holder of the Subordinated Notes from
exercising all its available remedies hereunder or under applicable
law upon an Event of Default, subject to the rights of the Senior
Creditor under this Article to receive payments or distributions
otherwise payable or distributable to the holder of such securities.
Upon any distribution of assets of the Company referred to in
this Article , the holder of the Subordinated Notes shall be entitled
to rely upon any order or decree made by any court of competent
jurisdiction in which such dissolution, winding up, liquidation or
reorganization proceedings are pending, or a certificate of the
liquidating trustee or agent or other person making any distribution
to the holder of such securities, for the purpose of ascertaining the
persons entitled to participate in such distribution, the Senior
Creditor and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and
all other facts pertinent thereto or to this Article .
If the Company fails because of this Article to pay principal of
or interest on the Subordinated Notes on the due date, the failure is
still an Event of Default with respect to the Subordinated Notes.
Section 2.7 Subordination May Not Be Impaired By the Company.
No right of the Senior Creditor to enforce the subordination of the
indebtedness evidenced by the Preferred Stock or the Subordinated
Notes shall be impaired by any act or failure to act by the Company or
the Senior Creditor or by the failure by the Company to comply with
this Agreement, regardless of any knowledge which the Senior Creditor
may have or be otherwise charged with.
Section 2.8 Moneys Held in Trust for Senior Creditor. In the
event that any holder of the Subordinated Notes shall receive any
payment or distribution with respect to such Notes from any source
whatsoever which such holder is not at the time entitled to receive
under the provisions of this Article , such holder will hold any
amount so received in trust for the Senior Creditor and will pay over
such payment to the Senior Creditor on account of the principal of and
premium, if any, and interest on such Obligations, until all such
Obligations are paid in full.
No payments of dividends on, or principal of (if permitted by the
Senior Creditor) and interest on, the Subordinated Notes may be
retained by such holder until the Senior Creditor has been paid in
full.
Section 2.9 Grant of Security Interests. The Company shall
not grant to the holder of the Subordinated Notes any lien, mortgage,
assignment or other security interest, or enter into any transaction
having the effect of securing the repayment of the Subordinated Notes
with any property owned or used by the Company.
ARTICLE 3
MISCELLANEOUS
Section 3.1 Amendments and Waivers. No amendment or waiver
of any provision of this Agreement shall be effective unless in a
written instrument executed by the Senior Creditor and all parties
affected by such amendment or waiver.
Section 3.2 No Wavier; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the Senior
Creditor, any right, remedy, power or privilege hereunder, or under
the Loan Agreement, shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right, remedy, power or
privilege preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges provided in this Agreement and the
Loan Agreement are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by law.
Section 3.3 Notices. All notices, consents, requests and
demands to or upon the respective parties hereto shall be in writing
and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered by hand, or when deposited
in the mail, postage prepaid, or, in the case of telex, telegraphic or
telecopy notice, when sent, addressed as follows:
If to the Senior Creditor:
Information Leasing Corporation
1023 West Eighth Street
Cincinnati, Ohio 45202
Phone: (513) 421-9191
Facsimiles: (513) 977-8746
Attn: Charles Kindig
With a copy to:
Keating, Muething & Klekamp, P.L.L.
1800 Provident Tower
Cincinnati, Ohio 45202
Phone: (513) 579-6424
Facsimiles: (513) 579-6546
Attn: Michael F. Bigler
If to the Company:
United Shields Corporation
655 Eden Park Drive
Suite 260
Cincinnati, Ohio 45202
Attn:
Phone: (513) 241-7470
Facsimile: (513) 412-3632
If to the Subsidiary:
HeaterMeals Company
311 Northland Boulevard
Cincinnati, Ohio 45240
Attn:
Phone:
Facsimile:
If to the Subordinated Investor:
Ramsay-Hughes, Inc. (d/b/a Navicap Corporation)
312 Elm Street
Suite 2550
Cincinnati, Ohio 45202
Attn: Rick Hughes
Phone: (513) 357-8540
Facsimile: (513) 357-4200
Notices of changes of address shall be given in the same manner.
Section 3.4 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns.
Section 3.5 Counterparts. This Agreement may be executed by
one or more of the parties to this Agreement on any number of separate
counterparts and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
Section 3.6 Consent to Jurisdiction. The parties hereto
absolutely and irrevocably consent and submit to the jurisdiction of
the Courts of the State of Ohio and of any federal court located in
the said state in connection with any actions or proceedings arising
out of or relating to this Agreement. Each of the parties hereto
waives and shall not assert in any such action or proceeding, in each
case, to the fullest extent permitted by applicable law, any claim
that (a) such party is not personally subject to the jurisdiction of
any such court, (b) such party is immune from any legal process
(whether through service or notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise), (c) any such
suit, action or proceeding is brought in an inconvenient forum, (d)
the venue of any such suit, action or proceeding is improper, or (e)
this Agreement may not be enforced in or by any such court. In any
such action or proceeding, each party hereby absolutely and
irrevocably waives personal service of any summons, complaint,
declaration or other process and hereby absolutely and irrevocably
agrees that the service thereof may be made by certified, registered
or recorded first-class mail directed to him or it at the address
stated above. Each party hereby agrees that he or it will appear or
answer any such summons, complaint, declaration or other process so
served upon it within thirty (30) days after receipt thereof. Any
action brought by any party (other than the Senior Creditor) in
connection with this Agreement or the transactions contemplated hereby
shall be brought in a court of general jurisdiction sitting in
Hamilton County, Ohio. Anything hereinbefore to the contrary
notwithstanding, the Senior Creditor hereof may sue any other party in
the courts of any other country, State of the United States or place
where such party or any of his or its property or assets may be found
or in any other appropriate jurisdictions.
Section 3.7 WAIVER OF JURY TRIAL. AS A SPECIFICALLY BARGAINED
INDUCEMENT FOR THE SENIOR CREDITOR TO EXTEND CREDIT TO THE BORROWER,
AND AFTER HAVING THE OPPORTUNITY TO CONSULT COUNSEL, EACH PARTY HEREBY
EXPRESSLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY LAWSUIT OR
PROCEEDING RELATING TO THIS AGREEMENT OR ARISING IN ANY WAY FROM THE
OBLIGATIONS.
IN WITNESS WHEREOF, the parties have duly executed this Agreement
by their duly authorized officers as of the date first above written.
UNITED SHIELDS, INC.
By:
Name:
Title:
INFORMATION LEASING COMPANY
By:
Name:
Title:
RAMSAY-HUGHES, INC.
d/b/a NAVICAP CORPORATION
By:
Name:
Title:
HEATERMEALS COMPANY
By:
Name:
Title:
<PAGE>
SCHEDULE 1
1. Promissory Note dated May 22, 1997 between Capital 2000, Inc.
(d/b/a United Shields Corporation), as Borrower, and Ramsay-Hughes,
Inc., as Lender, in the amount of Three Million Dollars
($3,000,000.00).
2. Promissory Note dated December 1, 1997 between United Shields
Corporation, as Borrower, and NAVICAP Corporation (f/k/a Ramsay-Hughes, Inc.)
as Lender, in the amount of Three Million Five Hundred
Thousand Dollars ($3,500,000.00).
EXHIBIT 99.5
The shares represented by this certificate have not been registered
under the Securities Act of 1933 or the securities laws of any state.
A transfer of the shares represented by this certificate shall not be
valid or effective until such conditions have been fulfilled,
including receipt by the Company of an opinion of counsel in form and
substance satisfactory to it that any such transfer will not violate
federal or state securities laws.
Warrant Certificate No. ___ Warrants for 250,000 Shares
Original Issue Date: December ___, 1997
WARRANT TO PURCHASE COMMON STOCK
OF
UNITED SHIELDS, INC.
This certifies that INFORMATION LEASING CORPORATION, an Ohio
corporation, or its registered assigns ("Holder"), is entitled,
subject to the terms set forth below, at any time on or after the date
hereof until December 31, 2007 to purchase from UNITED SHIELDS, INC.
(the "Company"), a Colorado corporation, up to Two Hundred Fifty
Thousand (250,000) fully paid and non-assessable shares of the
Company's common stock ("Common Stock") upon surrender hereof, at the
principal office of the Company, with the subscription form annexed
hereto duly executed, and simultaneous payment therefor, at the
purchase price of Four Dollars ($4.00) per share (the "Exercise
Price"). The number and character of such shares of Common Stock are
subject to adjustment as provided below.
1. Exercise.
1.1 Full Exercise. Subject to compliance with the
provisions hereof, this Warrant may be exercised by the Holder, in
whole or in part, during the period of exercise specified above, at
any time or from time to time, on any business day, by surrendering
the Warrant at the principal office of the Company, with the form of
Election to Exercise in substantially the form of Exhibit A fully
executed, together with payment in cash or immediately available funds
of the sum obtained by multiplying: (a) the number of shares of Common
Stock for which the Warrant is being exercised; by (b) the Exercise
Price, provided, however, that all or part of such payment may be made
by the surrender by such Holder to the Company, at the aforesaid
office or agency, of any instrument evidencing indebtedness of the
Company, or any other corporation of which the Company owns at least
fifty percent (50%) of the voting stock. All indebtedness so
surrendered shall be credited against such Exercise Price in an amount
equal to the outstanding principal amount thereof plus accrued but
unpaid interest to the date of surrender.
1.2 Partial Exercise. This Warrant may be exercised for
less than the full number of shares of Common Stock or any fraction
thereof called for hereby, during the period of exercise specified
above, at any time or from time to time, in the manner set forth in
Section 1.1. Upon any partial exercise, the number of shares
receivable upon the exercise of this Warrant as a whole, and the sum
payable upon the exercise of this Warrant as a whole, shall be
proportionately reduced. Upon such partial exercise, this Warrant
shall be surrendered and a new Warrant of the same tenor and for the
purchase of the number of such shares not purchased upon such exercise
shall be issued by the Company to the registered Holder hereof within
five (5) days after such exercise. A Warrant shall be deemed to have
been exercised immediately prior to the close of business on the date
of its surrender for exercise as provided above, and the person
entitled to receive the shares of Common Stock issuable upon such
exercise shall be treated for all purposes as the Holder of such
shares of record as of the close of business on such date. As soon as
practicable on or after such date, but in any event within five (5)
days after payment of the Exercise Price pursuant to this Section ,
the Company shall issue and deliver to the person or persons entitled
to receive the same a certificate or certificates for the number of
shares of Common Stock issuable upon such exercise.
1.3 Net Issue Exercise. Notwithstanding any provisions
herein to the contrary, if the Market Price (as defined below) for one
share of Common Stock is greater than the Exercise Price (on the date
of exercise of all or a part of this Warrant), in lieu of exercising
this Warrant for cash, the Holder may elect to receive Warrant Stock
equal to the value (as determined below) of this Warrant (or the
portion thereof being exercised) by surrender of this Warrant at the
principal office of the Company, together with the form of Election to
Exercise attached hereto fully executed, in which event the Company
shall issue to the Holder that number of Shares of Warrant Stock
computed using the following formula:
X = Y (A-B) / A
Where Y = the aggregate number of Shares of Warrant Stock
purchasable under this Warrant or, if only a portion of this Warrant
is being exercised, the number of Shares of Warrant Stock for which
this Warrant is being exercised (at the date of such calculation)
A = Market Price of one Share of Common Stock (at
the date of such calculation)
B = Exercise Price.
For the purposes of this Section 1.3, "Market Price" shall mean,
if the Warrant Stock is traded on a national securities exchange, the
NASDAQ National Market System or the over-the-counter market, the last
reported price on the date of valuation at which the Warrant Stock has
traded on the NASDAQ National Market System or the average of the bid
and asked prices on the over-the-counter market on the date of
valuation or, if no sale took place on such date, the last date on
which a sale took place. If the Warrant Stock is not so traded,
"Market Price" shall be the value of one share of Warrant Stock as
determined by agreement of the parties hereto, or if the parties
hereto cannot reach agreement, then such value shall be determined by
appraisal by an independent investment banking firm selected by the
Company and acceptable to the Holder; provided, however, that if the
Holder and the Company cannot agree on such investment banking firm,
such appraised value shall be determined by averaging the appraised
values calculated by (1) an independent investment banking firm
selected by the Company; an independent investment banking firm
selected by the Holder; and an independent investment banking firm
selected by the investment banking firms selected by the Company and
the Holder. Each such appraisal shall be at the Company's expense.
2. Payment of Taxes. All shares of Common Stock issued upon
the exercise of a Warrant shall be validly issued, fully paid and
non-assessable and free of any security interest or other adverse claims
or encumbrances and free of claims of pre-emptive rights. The Company
shall pay all issuance taxes and similar governmental charges that may
be imposed in respect of the issue or delivery thereof, but in no
event shall the Company pay a tax on or measured by the net income or
gain attributed to such exercise. The Company shall not be required,
however, to pay any tax or other charge imposed in connection with any
transfer of a Warrant or any transfer involved in the issue of any
certificate for shares of Common Stock in any name other than that of
the registered Holder of the Warrant surrendered in connection with
the purchase of such shares, and in such case the Company shall not be
required to issue or deliver any stock certificate until such tax or
other charge has been paid or it has been established to the Company's
reasonable satisfaction that no tax or other charge is due.
3. Unregistered Securities. The Holder acknowledges that, in
taking unregistered Warrants, it must continue to bear the economic
risk of its investment for an indefinite period of time because of the
fact that such Warrants have not been registered under the Securities
Act of 1933 and further realizes that such Warrants cannot be sold
unless they are subsequently registered under the Securities Act or
1933 or an exception or exemption from such registration is available.
The Holder also acknowledges that appropriate legends reflecting the
status of the Warrants under the Securities Act of 1933 may be placed
on the face of the Warrant certificates at the time of their transfer
and delivery to the Holder hereof. The transfer of this Warrant and
the shares issuable upon exercise of this Warrant is subject to the
terms of this Warrant and the terms and provisions of the Warrant
Agreement.
4. Exchanges. This Warrant is exchangeable, upon the
surrender hereof by the Holder at the principal office of the Company
together with the form of transfer authorization attached hereto as
Exhibit B duly executed, for new Warrants for the same aggregate
number of shares of Warrant Stock, each new Warrant to represent the
right to purchase such number of shares as the Holder shall designate
at the time of such exchange.
5. Adjustments.
5.1 Adjustments for Issue or Sale of Common Stock at
Less Than Purchase Price. If the Company shall issue or sell shares
of its Common Stock (other than those excepted by Section) for a
consideration per share less than the lesser of the Exercise Price or
the Market Price at the time of such issuance (the "Anti-Dilution
Price") (or, if an Adjusted Anti-Dilution Price shall be in effect by
reason of a previous adjustment under this Section as provided below
then less than such Adjusted Anti-Dilution Price), then and in each
such case the holder of this Warrant, upon the exercise hereof as
provided in Section , shall be entitled to receive, in lieu of the
shares of Common Stock theretofore receivable upon the exercise of
this Warrant, a number of shares of Common Stock determined by (a)
dividing the Anti-Dilution Price by an Adjusted Anti-Dilution Price to
be computed as provided below in this Section, and (b) multiplying the
resulting quotient by the number of shares of Common Stock called for
on the face of this Warrant. Such "Adjusted Anti-Dilution Price"
shall be computed (to the nearest cent, a half cent or more being
considered a full cent) by dividing:
(a) the sum of (x) the result obtained by
multiplying the number of shares of Common Stock of the Company
outstanding immediately prior to such issue or sale by the Anti-Dilution Price
(or, if an Adjusted Anti-Dilution Price shall be in
effect by reason of a previous adjustment under this Section, by such
Adjusted Anti-Dilution Price), and (y) the consideration, if any
received by the Company upon such issue or sale; by
(b) the number of shares of Common Stock of the
Company outstanding immediately after such issue or sale.
No adjustment of the Anti-Dilution Price, or Adjusted Anti-Dilution
Price if in effect, however, shall be made in an amount less than $.01
per share, but any such lesser adjustment shall be carried forward and
shall be made at the time and together with the next subsequent
adjustment which together with any adjustments as so carried forward
shall amount to $.01 per share or more. For the purpose of this
Section, the following paragraphs to shall be applicable;
(a) Dividends in Common Stock or Convertible Securities.
If the Company shall declare any dividend or order any other
distribution, upon any stock of the Company of any class payable in
Common Stock, or in any stock or other securities directly or
indirectly convertible into or exchangeable for Common Stock (any such
stock or other securities being hereinafter called "Convertible
Securities"), such declaration or distribution shall be deemed to be
an issue and sale (as of the record date), without consideration, of
such Common Stock or the Common Stock covered by such Convertible
Securities, as the case may be.
(i) Dividends in Other Stock, Securities or
Property. If the Company shall declare any dividend or order any
other distribution, upon any class of stock of the Company payable in
stock of the Company of a different class (other than Common Stock or
Convertible Securities covered by Section), other securities of the
Company or other property of the Company (other than cash), such
declaration or distribution shall be deemed an issue and sale, without
consideration, of shares of Common Stock in an amount determined as
follows:
(a) the value of such distribution stock,
securities, or property shall be determined in good faith by the Board
of Directors of the Company as of the record date of the dividend or
distribution;
(b) the value of a share of the Common Stock
shall be determined in good faith by the Board of Directors of the
Company as of the record date of the aforesaid dividend or
distribution;
(c) the amount determined under clause (i)
shall be divided by the amount determined under clause (ii) and the
quotient to the next higher full number shall be deemed the number of
shares of Common Stock of the Company issued, without consideration,
by reason of said dividend or distribution.
Provided, however, that in the event of a distribution
to shareholders of stock of a subsidiary or securities convertible
into or exercisable for such stock, the holder of this Warrant, upon
the exercise hereof as provided in Section , at any time after such
distribution, shall be entitled to receive the stock or other
securities to which such holder would have been entitled if such
holder had exercised this Warrant immediately prior thereto all
subject to further adjustment as provided in Section and no Common
Stock shall have been deemed to have been issued.
(ii) Dividends in Cash Out of Capital or Surplus.
If the Company shall declare any dividend or order any other
distribution upon any stock of the Company, in cash paid or payable
out of stated capital or paid-in surplus or surplus created as a
result of a re-evaluation of property (determined in each case on a
consolidated basis) then to the extent that the amount so paid or
payable shall exceed the earned surplus on a consolidated basis, such
excess shall be deemed an issue and sale (as of the record date),
without consideration, of shares of Common Stock in an amount
determined as follows:
(a) the value of a share of Common Stock, as
of the record date, shall be determined in good faith by the Board of
Directors of the Company;
(b) amount of said excess shall be divided by
the value determined under clause (i) and the quotient so determined
to the next higher whole number shall be deemed the number of shares
of Common Stock issued and sold without consideration.
(iii) Reclassification. If the Company shall order
any distribution of any stock of the Company (including Common Stock)
or other securities (including Convertible Securities) or property
(including cash) by way of stock split, spin-off, split-up,
reclassification, reverse stock split, combination of shares or
similar corporate rearrangement, such distribution shall be deemed an
issue and sale, without consideration, of shares of Common Stock as
follows:
(a) in the case of a distribution in shares of
the Common Stock in the amount of said distribution;
(b) in the case of a distribution of
Convertible Securities as provided in Section;
(c) in the case of a distribution of other
stock, securities or property (including cash) as provided in Section
(for this purpose treating cash as other property).
Issuance or Sale of Convertible Securities. If the
Company shall issue or sell any Convertible Securities, there shall be
determined the price per share for which Common Stock is issuable upon
the conversion or exchange thereof, such determination to be made by
dividing the total amount received or receivable by the Company as
consideration for the issue or sale of such Convertible Securities,
plus the minimum aggregate amount of additional consideration, if any,
payable to the Company upon the conversion or exchange thereof by the
maximum number of shares of Common Stock of the Company issuable upon
conversion or exchange of all of such Convertible Securities; and such
issue or sale shall be deemed to be an issue or sale for cash (as of
the date of issue or sale of such Convertible Securities) of such
maximum number of shares of Common Stock at the price per share so
determined.
(b) If such Convertible Securities shall by their terms
provide for an increase or increases, with the passage of time, in the
amount of additional consideration, if any, payable to the Company, or
in the rate of exchange, upon the conversion or exchange thereof, the
Adjusted Anti-Dilution Price shall, forthwith upon any such increase
becoming effective, be readjusted (but to no greater extent than
originally adjusted) to reflect the same.
If any rights of conversion or exchange evidenced by such
Convertible Securities shall expire without having been exercised, the
Adjusted Anti-Dilution Price shall forthwith be readjusted to be the
Adjusted Anti-Dilution Price which would have been in effect had an
adjustment been made on the basis that the only shares of Common Stock
actually issued or sold were those issued upon the conversion or
exchange of such Convertible Securities, and that they were issued or
sold for the consideration actually received by the Company upon such
conversion or exchange, plus the consideration, if any, actually
received by the Company for the issue or sale of each of the
Convertible Securities as were actually converted or exchanged.
(c) Grant of Rights, Warrants or Options for Common
Stock. If the Company shall grant any rights, warrants or options to
subscribe for, purchase or otherwise acquire Common Stock (other than
those excepted by Section), there shall be determined the minimum
price per share for which Common Stock is issuable upon the exercise
of such rights, warrant or options, such determination to be made by
dividing the total amount, if any, received or receivable by the
Company as consideration for the granting of such rights, warrants or
options, plus the minimum aggregate amount of additional consideration
payable to the Company upon the exercise of such rights, warrants or
options, by the maximum number of shares of Common Stock of the
Company issuable upon the exercise of such rights, warrant or options;
and such grant shall be deemed to be an issue or sale for cash (as of
the date of the granting of such rights, warrants or options) of such
maximum number of shares of Common Stock at the price per share so
determined.
If such rights, warrants or options shall by their terms
provide for an increase or increases, with the passage of time, in the
amount of additional consideration payable to the Company upon the
exercise thereof, the Adjusted Anti-Dilution Price shall, forthwith
upon any such increase becoming effective, be readjusted (but to no
greater extent than originally adjusted) to reflect the same.
If any such rights, warrants or options shall expire without
having been exercised, the Adjusted Anti-Dilution Price shall
forthwith be readjusted to the Adjusted Anti-Dilution Price which
would have been in effect had an adjustment been made on the basis
that the only shares of Common Stock so issued or sold were those
actually issued or sold upon the exercise of such rights, warrants or
options and that they were issued or sold for the consideration
actually received by the Company upon such exercise, plus the
consideration, if any, actually received by the Company for the
granting of all such rights, warrants or options.
(d) Grant of Rights, Warrants or Options for Convertible
Securities. If the Company shall grant any rights, warrants or
options to subscribe for, purchase or otherwise acquire Convertible
Securities, such Convertible Securities shall be deemed, for the
purpose of Section, to have been issued and sold (as of the actual
date of issue or sale of such Convertible Securities) for the total
amount received or receivable by the Company as consideration for the
granting of such rights, warrants or options plus the minimum
aggregate amount of additional consideration, if any, payable to the
Company upon the exercise of such rights, warrants or options.
If such rights, warrants or options shall by their terms
provide for an increase or increases, with the passage of time, in the
amount of additional consideration payable to the Company upon the
exercise thereof, the Adjusted Anti-Dilution Price shall, forthwith
upon any such increase becoming effective, be readjusted (but to no
greater extent than originally adjusted) to reflect the same.
If any such rights, warrants or options shall expire without
having been exercised, the Adjusted Anti-Dilution Price shall
forthwith be readjusted to be the Adjusted Anti-Dilution Price which
would have been in effect had an adjustment been made upon the basis
that the only Convertible Securities so issued or sold were those
issued or sold upon the exercise of such rights, warrants or options
and that they were issued or sold for the consideration actually
received by the Company for the granting of such rights, warrants or
options actually exercised.
(e) Dilution in Case of Other Stock or Securities. In
case any shares of stock or other securities, other than Common Stock
of the Company, shall at the time be receivable upon the exercise of
this Warrant, and in case any additional shares of such stock or any
additional such securities (or any stock or other securities
convertible into or exchangeable for any such stock or securities)
shall be issued or sold for a consideration per share such as to
dilute the purchase rights evidenced by this Warrant, then and in each
such case the Adjusted Anti-Dilution Price and the number of shares of
Warrant Stock shall forthwith be adjusted, substantially in the manner
provided for above in this Section, so as to protect the holders of
the Warrants against the effect of such dilution.
(f) Expenses Deducted. Upon any issuance or sale for
cash of any shares of Common stock or Convertible Securities or any
rights or options to subscribe for, purchase or otherwise acquire any
Common Stock or Convertible Securities, the consideration received
therefor shall be deemed to be the net amount received by the Company
thereof, after deducting all expenses, underwriting commissions or
similar fees paid by the Company in connection with such issue or
sale.
(g) Determination of Consideration. Upon any issuance
or sale for a consideration other than cash, or a consideration part
of which is other than cash, of any shares of Common Stock or
Convertible Securities or any rights or options to subscribe for,
purchase or otherwise acquire any Common Stock or Convertible
Securities, the amount of the consideration other than cash received
by the Company shall be deemed to be the fair value of such
consideration as determined in good faith by the Board of Directors of
the Company. In case any Common Stock or Convertible Securities or
any rights or options to subscribe for, purchase or otherwise acquire
any Common Stock or Convertible Securities shall be issued or sold
together with other stock or securities or other assets of the Company
for a consideration which covers both, the consideration for the issue
or sale of such Common Stock or Convertible Securities or such rights
or options shall be deemed to be the portion of such consideration
allocated thereto in good faith by the Board of Directors of the
Company.
(h) Record Date Deemed Issue Date. In case the Company
shall take a record of the holders of shares of its stock of any class
for the purpose of entitling them to receive a dividend or a
distribution payable in Common Stock or in Convertible Securities, or
to subscribe for, purchase or otherwise acquire Common Stock of
Convertible Securities, then such record date shall be deemed to be
the date of the issue or sale of the Common Stock issued or sold or
deemed to have been issued or sold upon the declaration of such
dividend or the making of such other distribution, or the date of the
granting of such rights or subscription, purchase of other
acquisition, as the case may be.
(i) Shares Considered Outstanding. The number of shares
of Common Stock outstanding at any given time shall include shares
issuable in respect to scrip certificates issued in lieu of fractions
of shares of Common Stock, but shall exclude shares held in the
treasury of the Company or by subsidiaries of the Company.
(j) Duration of Adjustment Anti-Dilution Price.
Following each computation or readjustment of an Adjusted Anti-Dilution Price
as provided in this Section, the new Adjusted Anti-Dilution Price shall remain
in effect until a further computation or
readjustment thereof is required by this Section.
(k) Excepted Issues and Sales. No adjustments pursuant
to this Section shall be made in respect of the issuance of shares of
Common Stock upon exercise of Warrants issued pursuant to the
Agreement. The number of shares of Common Stock referred to in this
subparagraph shall be proportionately adjusted to reflect any
reclassification, subdivision or combination of Common Stock or any
distribution or dividends on the Common Stock, payable in Common
Stock.
5.2 Reorganization, Consolidation, Merger. In the event
of any reorganization of the Company (or any other corporation the
stock or other securities of which are at the time receivable on the
exercise of this Warrant), or the Company (or any such other
corporation) shall consolidate with or merge into another corporation
or convey all or substantially all of its assets to another
corporation, then and in each such case the Holder of this Warrant,
upon the exercise hereof as provided in Section , at any time after
the consummation of such reorganization, consolidation, merger or
conveyance, shall be entitled to receive, in lieu of the stock or
other securities and property receivable upon the exercise of this
Warrant prior to such consummation, the stock or other securities or
property to which such Holder would have been entitled upon such
consummation if such Holder had exercised this Warrant immediately
prior thereto, all subject to further adjustment as provided in this
Section . In each such case the terms of this Warrant shall be
applicable to the shares of stock or other securities or property
receivable upon the exercise of this Warrant after such consummation;
provided, however, that if such reorganization, consolidation or
merger is with any entity affiliated with the Company or any of its
officers or directors, and would result in the elimination of all or
substantially all of the rights to voting interests of the Holder in
the surviving corporation, such Holder upon exercise hereof after such
reorganization, consolidation, or merger shall be entitled to receive,
at the Holder's option, in lieu of the stock or other securities or
property to which such Holder would have been entitled upon such
consummation if such Holder had exercised this Warrant immediately
prior thereto, cash or voting securities in the proportions that the
Holder may elect in the surviving corporation in an amount equivalent
to the fair market value of the voting interest in the Company that
such Holder would have received had the Warrant been exercised prior
to such consummation.
5.3 Other Adjustments. In case at any time conditions
arise by reason of action taken by the Company which, in the opinion
of its Board of Directors (recognizing the fiduciary duty, hereby
assumed and acknowledged, of the Board of Directors to the Holders of
the Warrants) or in the opinion of the Holders of Warrants
representing a majority of the shares of Warrant Stock issuable upon
exercise of such Warrants, are not adequately covered by the other
provisions of this Section and which might materially and adversely
affect the exercise rights of the Holders of the Warrants, then the
Board of Directors of the Company shall appoint a firm of independent
certified public accountants of recognized national standing (other
than the accountants then auditing the books of the Company) to
determine the adjustment, if any, on a basis consistent with the
standards established in the other provisions of this Section ,
necessary with respect to the purchase price or adjusted purchase
price, as so to preserve, without dilution, the exercise rights of the
Holders of the Warrants. Upon receipt of such opinion, the Board of
Directors of the Company shall forthwith make the adjustments
described in such report.
5.4 No Dilution or Impairment. The Company will not, by
amendment or restatement of its certificate of incorporation or by-laws
or through reorganization, consolidation, merger, dissolution,
issue or sale of securities, sale of assets or any other voluntary
action, avoid or seek to avoid the observance or performance of any of
the terms of the Warrants, but will at all times in good faith assist
in the carrying out of all such terms and in the taking of all such
actions as may be necessary or appropriate in order to protect the
rights of the Holders of the Warrants against dilution or other
impairment. Without limiting the generality of the foregoing, the
Company: shall take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue
fully paid and non-assessable shares upon the exercise of all Warrants
at the time outstanding; and shall take no action to amend or restate
its certificate of incorporation or by-laws which would change to the
detriment of the Holders of Warrant Stock (whether or not any Warrant
Stock be at the time outstanding) the dividend or voting rights of the
Company's Warrant Stock.
5.5 Accountants' Certificate as to Adjustments. In each
case of an issuance by the Company of shares or warrants, options,
convertible securities or other agreement of any nature and at any
other time requested by the Holder, the Company at its expense shall
cause a firm of independent certified public accountants of recognized
standing selected by the Company (who may be the accountants then
auditing the books of the Company except in the circumstances set
forth in Section above) to compute such adjustment in accordance with
the terms of the Warrants and prepare a certificate setting forth the
adjustment, if any, necessary as a result of such issuance and showing
in detail the facts upon which such adjustment is based, including a
statement of: the consideration received or to be received by the
Company for any additional shares of Warrant Stock issued or sold or
deemed to have been sold; and the number of shares of Warrant Stock
outstanding or deemed to be outstanding. The Company will forthwith
mail a copy of each certificate to each Holder of a Warrant at the
time outstanding.
5.6 Notices of Record Date. If and when the Company
shall establish a record date for the Holders of its Stock (or such
other securities at the time receivable upon the exercise of the
Warrants) for the purpose:
(a) of determining the Holders entitled to receive
any dividend or other distribution, or any right to subscribe for or
purchase any shares of stock of any class or any securities, or to
receive any other right; or
(b) of any capital reorganization of the Company,
any reclassification of the capital stock of the Company, any
consolidation or merger of the Company with or into another
corporation, except for mergers into the Company of subsidiaries whose
assets are less than ten percent (10%) of the total assets of the
Company and its consolidated subsidiaries, or any conveyance of all or
substantially all of the assets of the Company to another corporation;
or
(c) of any voluntary dissolution, liquidation or
winding-up of the Company;
then, and in each such case, the Company will mail or cause to be
mailed, to each Holder of a Warrant at the time outstanding a notice
specifying, as the case may be, the record date established with
respect to such dividend, distribution, voting or other right, and
stating the amount and character of such dividend, distribution,
voting or other right, or the date on which such reorganization,
reclassification, consolidation, merger, conveyance, dissolution,
liquidation or winding-up is to take place, and the time, if any, to
be fixed as of which the Holders of record of Stock (or such other
securities at the time receivable upon the exercise of the Warrants)
shall be entitled to vote upon or exchange their shares of Stock (or
such other securities) for securities or other property deliverable
upon such reorganization, reclassification, consolidation, merger,
conveyance, dissolution, liquidation or winding-up. Such notice shall
be mailed at least thirty (30) days prior to the dates therein
specified. The rights to notice provided in this Section are in
addition to the rights provided elsewhere herein or in the Warrant
Agreement.
6. Loss or Mutilation. Upon receipt by the Company of
evidence satisfactory to it in the exercise of reasonable discretion,
of the ownership of and the loss, theft, destruction or mutilation of
any Warrant and, in the case of loss, theft or destruction, of
indemnity satisfactory to it in the exercise of reasonable discretion,
and, in the case of mutilation, upon surrender and cancellation
thereof, the Company will execute and deliver in lieu thereof a new
Warrant of like tenor.
7. Reservation of Common Stock. The Company shall at all
times reserve and keep available for issue upon the exercise of
Warrants such number of its authorized but unissued shares of Common
Stock as will be sufficient to permit the exercise in full of all
outstanding Warrants and the issuance of all shares of Warrant Stock.
8. Transfers. This Warrant and all rights hereunder are
transferable on the books of the Company by any Holder hereof in
person or by duly authorized attorney upon surrender of this Warrant
at the principal office of the Company, together with the form of
transfer authorization attached hereto as Exhibit B duly executed,
provided that all conditions set forth below have been met. Absent
any such transfer, the Company may deem and treat the Holder of this
Warrant at any time as the absolute owner hereof for all purposes and
shall not be affected by any notice to the contrary.
8.1 Notice of Proposed Transfers. The Holder of this
Warrant, by acceptance hereof, agrees prior to any transfer of
Warrants or Warrant Stock issued or issuable upon exercise hereof to
give written notice to the Company expressing such Holder's intention
to effect such transfer and describing briefly the manner of the
proposed transfer of such Warrants or Warrant Stock and designating
the counsel for the Holder giving such notice.
8.2 Opinion of Counsel. If in the opinion of counsel to
the Company, the proposed transfer of the Warrants or Warrant Stock
issued or issuable upon the exercise hereof may be effected without
registration under the Securities Act of 1933, as amended, as then in
force (or any similar Federal statute then in force) or applicable
state securities laws, the Company, as promptly as practicable, shall
notify the Holder of such Warrants or Warrant Stock of such opinion,
whereupon such Holder shall be entitled, but only in accordance with
the terms of the notice delivered by such Holder to the Company, to
transfer such Warrants or Warrant Stock.
9. Definitions. For purposes of this Warrant the terms
capitalized herein have the meanings set forth below.
"Generally Accepted Accounting Principles" shall mean
accounting principles which are (i) consistent with the principles
promulgated or adopted for the United States by the Financial
Accounting Standards Board and its predecessors in effect from time to
time, (ii) applied on a basis consistent with prior periods, and
(c)such that a certified public account would, insofar as the use of
accounting principles is pertinent, be in a position to deliver an
unqualified opinion as to financial statements in which such
principles have been properly applied.
"Outstanding Common Stock" shall be deemed to be that
number of shares of Common Stock then outstanding on a fully diluted
basis taking into account all shares convertible into common shares
and the common share equivalent of all other securities, plus all
shares of Common Stock that the Company is obligated to issue at the
time or in the future by any outstanding warrant, option, convertible
security or other agreement of any nature on a fully diluted basis
taking into account all shares convertible into common shares and the
common share equivalent of all other securities.
"Securities Act" shall mean the Securities Act of 1933,
as amended, or any successor federal statute, and the rules and
regulations of the Commission thereunder, all as the same shall be in
effect at the time.
"Warrant Stock" shall mean Common Stock issuable upon
exercise of this Warrant in accordance with its terms and any capital
stock or other securities into which or for which such Common Stock
shall have been converted or exchanged pursuant to any
recapitalization, reorganization or merger of the Company.
10. Information. The Company shall furnish each Holder of
Warrants with copies of all reports, proxy statements, and similar
materials that it furnishes to Holders of its Stock. In addition, it
shall furnish to each such Holder of Warrants copies of all reports
filed by it with the Securities and Exchange Commission.
11. Notices. All notices and other communications under this
Warrant shall be in writing and shall be mailed by first-class
registered or certified mail, postage prepaid, addressed (a) if to the
Holder, at the registered address furnished to the Company in writing
by the Holder of this Warrant, or (b) if to the Company, to the
attention of its Chief Executive Officer at its principal office
located at 655 Eden Park Drive, Cincinnati, Ohio 45202, or such other
location of its principal office as shall be furnished to the Holder
in writing by the Company.
12. Change, Waiver. Neither this Warrant nor any term hereof
may be changed, waived, discharged or terminated orally but only by an
instrument in writing signed by the party against which enforcement by
the change, waiver, discharge or termination is sought.
13. Headings. The headings in this Warrant are for purposes
of convenience of reference only and shall not be deemed to constitute
a part hereof.
14. Law Governing. This Warrant is delivered in the State of
Ohio and shall be construed and enforced in accordance with and
governed by the internal substantive laws of such State.
December __, 1997. UNITED SHIELDS CORPORATION
BY:_________________________________
ITS:_________________________________
<PAGE>
EXHIBIT A
[Subscription Form to Be Executed Upon Exercise of Warrant]
The undersigned registered Holder or assignee of such registered
Holder of the within Warrant, hereby (1) subscribes for
_______________ shares which the undersigned is entitled to purchase
under the terms of the within Warrant, (2) makes payment of the
Exercise Price called for by the within Warrant, and (3) directs that
the shares issuable upon exercise of said Warrant be issued as
follows:
_______________________________________
(Name)
_______________________________________
(Address)
Signature:
Dated: , 199_
<PAGE>
EXHIBIT B
[ASSIGNMENT]
(To be executed by the registered Holder
to enact a transfer of the within Warrant)
FOR VALUE RECEIVED, ______________________________ hereby sells,
assigns, and transfers unto ______________________________ of
______________________________, the right to purchase shares evidenced
by the within Warrant, and does hereby irrevocably constitute and
appoint ______________________________ to transfer such right on the
books of Company, with full power of substitution.
Dated: , 199_
_______________________________________
Signature
WITNESS:
<PAGE>
EXHIBIT 99.6
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("Agreement") is made and
entered into as of December ___, 1997, among INFORMATION LEASING
CORPORATION, an Ohio corporation (the "Holder") and UNITED SHIELDS
CORPORATION, an Ohio corporation (the "Company").
WHEREAS, the Company issued to the Holder a warrant dated as of
the date hereof June 20, 1997 (the "Warrant") to purchase an
aggregate of 250,000 shares of Common Stock of the Company.; and
WHEREAS, the Company desires to grant certain demand registration
rights and piggy-back registration rights to the Holder (the
"Registration Rights") in connection with the Warrant.
NOW, THEREFORE, the parties hereto agree as follows:
1. CERTAIN DEFINITIONS.
In addition to terms defined elsewhere in this Agreement,
the following terms shall have the following respective meanings:
"Certificate of Holder" shall mean a resolution signed by the
Holder of the Equity and certified by an officer of the Holder.
"Equity" shall mean all classes of membership interests in the
Company, however denominated.
"Holder" and "Holders" shall mean the Initial Holder and his
registered successors and assigns of the Registrable Securities.
"Law" means any law (including common law), constitution,
statute, treaty, regulation, rule, ordinances, order, injunction,
writ, decree or award of any Official Body.
"Person" shall include an individual, a corporation, an
association, a partnership, a trust or estate, a joint stock company,
a limited liability company, an unincorporated organization, a joint
venture, a government (foreign or domestic), and any agency or
political subdivision or instrumentality thereof, or any other entity.
"Public Offering" shall mean any underwritten public offering of
the Equity.
"Registrable Securities" means (x) the shares of Common Stock, no
par value per share ("Common Stock"), of the Company issuable to the
Investor pursuant to the Warrants; and (y) any other securities of the
Company issued in exchange for, or in a distribution with respect to,
the securities referred to in (x) above.
The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement
in compliance with the Securities Act of 1933, as amended (the
"Securities Act"), and the declaration or ordering of the
effectiveness of such registration statement.
"Request" shall mean a request to register at least Fifty-One
percent (51%) of the Registrable Securities then held by the Holder
(assuming full conversion of all outstanding Warrants for the purpose
of this calculation) pursuant to Sections 2 or 3 hereof and signed by
the Holder of such Registrable Securities and containing any and all
information required by Sections 2 or 3 hereof; provided, however,
that in no case may more than one Request be made under this
Agreement.
2. DEMAND REGISTRATION RIGHTS.
2.1 Upon receiving a Request on or before December 31,
2007 (the "Expiration Date"), the Company will prepare and file,
promptly after such Request and in no case more than sixty (60) days
after receipt of such Request, and thereafter will cause to become
effective a registration statement ("Registration Statement") on Form
S-3 or any equivalent form effecting a short form registration. If,
for any reason other than the Holder's failure to perform their
obligations hereunder, the Registration Statement does not become
effective, the Request shall be withdrawn and shall not count as a
"Request" made pursuant to this Section.
2.2 If the Request so states, the offering or
distribution of Equity under this Section shall be pursuant to a firm
commitment underwriting. The managing underwriter shall be a
nationally recognized investment banking firm selected by the Company,
but the selection shall be subject to the Holder's approval, which
approval shall not be unreasonably withheld. The Company will enter
into an underwriting agreement containing representations, warranties
and agreements not substantially different from those customarily
included by an issuer in underwriting agreements with respect to
secondary distributions; provided, however, that the Holder shall be
entitled to negotiate the underwriting discounts and commission and
other fees of such underwriter.
2.3 Any Request shall specify the number of Registrable
Securities as to which such Request relates, express the Holder's
present intention to offer such Registrable Securities for
distribution and contain an undertaking to provide all such
information and materials and take all such actions and execute all
such documents as may be required in order to permit the Company to
comply with all applicable requirements of the Commission, to obtain
acceleration of the effective date of the Registration Statement and
to enter into satisfactory underwriting arrangements, if the
distribution of the Registrable Securities is to be underwritten. Any
Request shall designate an address for the purpose of delivering
notices under the Agreement to the Holder. The Request shall also
contain any other information required to be set forth under Section6.
2.4 No securities to be sold by the Company or any
security holder (other than the Registrable Securities) of the Company
shall be included in any Registration Statement filed pursuant to this
Section, unless the Company shall have received a Certificate of
Holder consenting to the inclusion of such other securities; in the
case of a firm underwriting, the managing or principal underwriter
shall have consented to the inclusion of such other securities and
the Registrable Securities requested to be included in the Request in
accordance with this Section or such Registrable Securities that has
been included on a pro-rata basis as permitted pursuant to Section2.3
hereof.
2.5 The Company shall be entitled to postpone the filing
of any Registration Statement otherwise required to be prepared and
filed by it pursuant to this Section if, at the time it receives a
Request, counsel for the Company is reasonably of the opinion (which
opinion shall be expressed in writing) that (i) such registration will
require preparation of audited financial information for the Company
as of a date or for a period which preparation will not otherwise be
required or (ii) any material pending transaction of the Company or
any of its subsidiaries renders the effecting of such Registration
Statement inappropriate at the time; provided, that in the case of an
event referred to in clause (ii) above, the duration of such delay
shall not exceed 90 days from the date the Company became aware of
such material business information; provided, further, that the
Company shall promptly make such filing as soon as the conditions
which permit it to delay such filing no longer exist; and provided,
further that in the event of any such deferral, the Holder shall have
the right to withdraw the Request by way of a Certificate of Holder
and such withdrawn Request shall not be considered as a Request.
3. PIGGYBACK REGISTRATIONS.
If at any time prior to the Expiration Date, the Company
shall propose to file a Registration Statement for the purpose of a
primary or secondary offering for itself or any security holder of the
Company (the "Initiating Security Holder") under the Act, including
the Company's Initial Public Offering or any other Company offering,
on Form S-1, S-2 or S-3 or any equivalent general form for
registration of its Equity under the Act with respect to a public
offering of such Equity (except with respect to a registration
statement on Forms S-4, S-8 or such other form which is not available
for registering securities for sale to the public), the Company shall
as promptly as practicable, but in no event later than thirty (30)
days prior to the proposed filing date, give notice of such intention
to the Holder and upon the written Request of such Holder within
fifteen (15) days after receipt of any such notice (which Request
shall specify the Registrable Securities intended to be sold or
disposed of by such Holder), the Company will use all reasonable
efforts to include in such Registration Statement such Registrable
Securities specified in such Request to be so registered.
4. OTHER REGISTRATIONS.
If the Registrable Securities requires registration or
qualification with or approval of any United States or governmental
official or authority in addition to registration under the Securities
Act before such Registrable Securities may be sold, the Company will
take all requisite action in connection with such registration and
will use its best efforts to cause any such Registrable Securities to
be duly registered or approved as may be required; provided, however,
that it shall not be required to give a general consent to service of
process or to qualify as a foreign corporation or subject itself to
taxation as doing business in any such state.
5. COVENANTS OF THE COMPANY.
So long as the Company is under an obligation pursuant to the
provisions of Section 2, the Company shall:
5.1 Prepare and file with the Securities and Exchange
Commission such amendments and supplements to such Registration
Statements and the prospectus used in connection therewith as may be
necessary to keep such Registration Statement effective for such
period as shall be necessary to complete the marketing of the Shares
included therein, but in no event 120 days after the date the shares
may first be sold;
5.2 Furnish to the Holder such number of copies of a
prospectus, including, without limitation, a preliminary prospectus,
in conformity with the requirements of the Act, and such other
documents as the Holder may reasonably request in order to facilitate
the public sale or other disposition of such Shares;
5.3 Use its best efforts to register or qualify, not
later than the effective date of any Registration Statement filed
pursuant to this Agreement, the Shares covered by such Registration
Statement under the securities or Blue Sky laws of such jurisdictions
within the United States as the Holder may reasonably request and do
any and all other acts or things which may be necessary or advisable
to enable the Holder to consummate the public sale or other
disposition in such jurisdiction of such shares;
5.4 Promptly notify the Holder, at any time when a
prospectus relating to the Shares being distributed is required to be
delivered under the Act, of the happening of any event as a result of
which the prospectus included in such Registration Statement, as then
in effect, includes an untrue statement of material fact or omits to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the
circumstances then existing and, at the request of the Holder,
promptly prepare, file with the Securities and Exchange Commission and
furnish to the Holder a reasonable number of copies of a supplement
to, or an amendment of, such prospectus as may be necessary so that,
as thereafter delivered to the purchasers of such Shares, such
prospectus shall not include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of
the circumstances then existing;
5.5 Use its best efforts to furnish, at the request of the
Holder or any underwriter of any distribution of the Shares, an
opinion of legal counsel to the Company, covering such matters as are
typically covered by opinions of issuer's counsel in underwritten
offerings under the Act;
5.6 Use its best efforts to cause all of the Shares as
to which the Holder shall have requested registration to be listed on
any recognized securities exchange, including, without limitation, the
National Association of Securities Dealers Automated Quotation System,
on which the Common Stock is then listed and to maintain the currency
and effectiveness of any such listings; and
5.7 Enter into an agreement with the underwriters for
such offering in which the Company shall provide indemnities similar
to those described in Section 8 hereof to the underwriters and in
which the Company shall make the usual representations and warranties
made by issues of equity securities to underwriters.
6. COVENANTS OF THE HOLDER.
Pursuant to Sections 2 and 3, any request for registration made
by the Holder shall specify the number of Shares as to which such
request relates, express the Holder's present intention to offer such
shares for distribution and contain an undertaking to provide all such
information and materials and take all such actions and execute all
such documents as may be required in order to permit the Company to
comply with all applicable requirements of the Commission and to
obtain acceleration of the effective date of the Registration
Statement.
7. COSTS AND EXPENSES OF REGISTRATION.
The Company shall bear the entire cost and expense of any
registration made pursuant to Sections 2 through 4 of this Agreement,
including, without limitation, all registration and filing fees,
printing expenses, the fees and expenses of the Company's counsel and
its independent accountants and all other out-of-pocket expenses of
the Company incident to the preparation, printing and filing under the
Act of the Registration Statement and all amendments and supplements
thereto, the cost of furnishing copies of each preliminary prospectus,
each final prospectus and each amendment or supplement thereto to
underwriters, brokers and dealers and other purchasers of the
securities so registered, and the costs and expenses incurred in
connection with the qualification of the securities so registered
under "blue sky" or other state securities laws (all such expenses are
herein called "Registration Expenses").
8. INDEMNIFICATION.
8.1 Indemnity to the Holders. The Company shall
indemnify the Holder, each underwriter of the Registrable Securities
and their respective officers, directors, employees, agents,
affiliates and persons deemed to be in control of such persons within
the meaning of either Section 15 of the Securities Act or Section 20
of the Securities Exchange Act of 1934, as amended, against all
claims, losses, damages, liabilities and expenses resulting from any
untrue statement or alleged untrue statement of a material fact
contained in a prospectus or in any related Registration Statement,
notification or similar filing under securities laws of any
jurisdiction or from any omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as the same may have
been based upon information furnished in writing to the Company by any
Holder or such underwriter expressly for use therein and used in
accordance with such writing.
8.2 Indemnity to the Company. The Holder (i) by
requesting any such registration pursuant to Section 2, or (ii) having
its Registrable Securities included in a registration pursuant to
Section 3 hereof, agrees to furnish to the Company such information
concerning it as may be requested by the Company and which is
necessary in connection with any registration or qualification of the
Registrable Securities, as the case may be, and to indemnify the
Company, its officers, directors, employees, agents, affiliates and
persons deemed to be in control of the Company within the meaning of
either Section 15 of the Securities Act or Section 20 of the
Securities Exchange Act of 1934, as amended, against all claims,
losses, damages, liabilities and expenses resulting from the
utilization of any such information furnished in writing to the
Company expressly for use therein and used in accordance with such
writing.
8.3 Indemnification Procedures. If any action is
brought or any claim is made against any party indemnified pursuant to
this Section 8 in respect of which indemnity may be sought against the
indemnitor pursuant to this Section 8 such party shall promptly notify
the indemnitor in writing of the institution of such action or the
making of such claim and the indemnitor shall assume the defense of
such action or claim, including the employment of counsel and payment
of expenses. Such party shall have the right to employ its or their
own counsel in any such case, but the fees and expenses of such
counsel shall be at the expense of such party unless the employment of
such counsel shall have been authorized in writing by the indemnitor
by a resolution of the Board of Directors of the Company or by a
Certificate of Holder, whichever the case may be, in connection with
the defense of such action or claim or such indemnified party or the
parties shall have reasonably concluded that there are defenses
available to it or them which are in conflict with those available to
the indemnitor (in which case the indemnitor shall not have the right
to interpose such conflicting defenses but otherwise shall retain
control of such action or claim on behalf of the indemnified party or
parties), in any of which events such fees and expenses of not more
than one additional counsel for the indemnified parties shall be borne
by the indemnitor. Except as expressly provided above, in the event
that the indemnitor shall not previously have assumed the defense of
any such action or claim, at such time as the indemnitor does not
assume the defense of such action or claim, the indemnitor shall
thereafter be liable to any person indemnified pursuant to this
Agreement for any reasonable legal or other expenses subsequently
incurred by such person in investigating, preparing or defending
against such action or claim. Anything in this paragraph to the
contrary notwithstanding, the indemnitor shall not be liable for any
settlement of any such claim or action effected without its written
consent.
9. RULE 144.
At all times the Company shall take such action as any
holder of the Registrable Securities may reasonably request, all to
the extent required from time to time to enable such Holder to sell
its Registrable Securities without registration under the Securities
Act pursuant to and in accordance with (x) Rule 144 under the
Securities Act, as such Rule may be amended from time to time, or (y)
any similar rule or regulation hereafter adopted by the Commission.
Upon the request of any Holder, the Company will deliver to such
Holder a written statement as to whether it has complied with such
requirements.
10. AMENDMENTS AND WAIVERS.
This Agreement may be amended, and the Company may take any
action herein prohibited or omit to perform any act herein required to
be performed by it, only if Company shall have obtained the advance
written consent of the Holder of the Registrable Securities (assuming
full exercise of all outstanding Warrants for the purposes of this
calculation).
11. NOTICES.
Notices and other communications under this Agreement shall
be in writing and shall be sent by registered mail, postage prepaid,
addressed: to the Holder at 1023 West Eighth Street, Cincinnati, Ohio
45203 unless such Holder has advised the Company in writing of a
different address as to which notices shall be sent under this
Agreement; and if to Company, 655 Eden Park Drive, Suite 260,
Cincinnati, Ohio 45202, or to such other address as Company shall have
furnished to the Holder at the time outstanding.
The Company shall at all times be entitled to rely on the
addresses shown on the Equity books of the Company in complying with
its obligations to provide notice under this Agreement.
12. TRANSFER OF REGISTRATION RIGHTS.
In connection with any transfer of the Registrable
Securities to any other Person, the Initial Holder or any subsequent
Holder, as the case may be, may assign any registration rights to
which they are entitled hereunder, provided that such Person agrees to
be bound by all the terms and conditions of the Agreement.
13. SUCCEEDING SECURITIES.
If the Common Stock of the Company covered by this Agreement is
converted into any other security of the Company or any other
corporation, the terms of this Agreement shall apply with full force
and effect to any such other security and the obligations of the
Company to effect registration shall include such other filings,
qualifications, notices and similar acts as may be necessary to enable
the Holder to realize the benefits of registration provided by this
Agreement.
14. MISCELLANEOUS.
This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the respective successors and assigns
of the parties hereto, whether so expressed or not, and, in
particular, shall inure to the benefit of and be enforceable by the
Holder. This Agreement and the Warrant embody the entire agreement
and understanding between the Company and the Holder with respect to
the subject matter hereof and supersede all prior agreements and
understandings relating to the subject matter hereof. THIS AGREEMENT
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF OHIO. The headings in this Agreement are for
purposes of reference only and shall not limit or otherwise affect the
meaning hereof. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which
together shall constitute one instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
INFORMATION LEASING CORPORATION, an
Ohio corporation
By:__________________________________
Title:________________________________
UNITED SHIELDS CORPORATION,
an Ohio corporation
By:________________________________
Title:_______________________________<PAGE>
EHXIBIT 99.7
Revolving Credit and Security Agreement
among
R. P. Industries Of Ohio, Inc.
"Borrower"
and
United Shields Corporation
Furniture Plastics of Forest City, Inc.
Granville Plastics Company, Inc.
R. P. Enterprises, Inc.
Richmond Plastics, Inc.
R. P. Real Estate, Inc.
"Guarantors"
and
First Union National Bank
"Bank"
December 30, 1997
<PAGE>
Revolving Credit and Security Agreement
THIS AGREEMENT (the "Agreement"), dated as of December 30, 1997,
among R. P. INDUSTRIES OF OHIO, INC., an Ohio corporation
("Borrower"), UNITED SHIELDS CORPORATION, a Colorado corporation,
FURNITURE PLASTICS OF FOREST CITY, INC., a North Carolina corporation,
GRANVILLE PLASTICS COMPANY, INC., a North Carolina corporation, R. P.
ENTERPRISES, INC., a Virginia corporation, RICHMOND PLASTICS, INC., a
Virginia corporation, and R. P. REAL ESTATE, INC., a Virginia
corporation ("Guarantors"), and FIRST UNION NATIONAL BANK, a national
banking association ("Bank");
W I T N E S S E T H :
In consideration of the premises and of the mutual covenants
herein contained and to induce Bank to extend credit to Borrower, the
parties agree as follows:
1. Definitions In addition to terms defined elsewhere in
this Agreement, the following terms have the meanings indicated:
1.1 Defined Terms
"Account" shall mean any account receivable, including
any rights of payment for goods sold or leased or for services
rendered, which is not evidenced by an instrument or chattel paper,
whether or not it has been earned by performance, and in addition
includes all property included in the definition of "accounts" as used
in the Code, together with any guaranties, letters of credit and other
security therefor.
"Account Debtor" shall mean a Person who is obligated
under any Account, Chattel Paper, General Intangible or instrument (as
defined in the Code).
"Accounts Payable Report" shall mean a report listing
all accounts payable of each of Borrower and Guarantors as of the last
day of any month in reasonable detail and in form acceptable to Bank.
"Accounts Receivable Report" shall mean a report
listing all Accounts of each of Borrower and Guarantors as of the last
Business Day of any month, which report shall include the amount and
age of each Account, the name and mailing address of each Account
Debtor and such other information as Bank may require, all in
reasonable detail and in form acceptable to Bank.
"Advance" shall mean an advance of proceeds of the Loan
to Borrower pursuant to this Agreement.
"Advance Date" shall mean the date on which an Advance
is made.
"Advance Request" shall mean the written request for an
Advance under the Loan as identified in Subsection 3.4(b) hereof and
shall also include presentments triggering an automatic Advance, as
described in Subsection 3.4(a).
"Affiliate" of a Person shall mean (a) any Person
directly or indirectly owning 5% or more of the voting stock or rights
of such named Person or of which the named Person owns 5% or more of
such voting stock or rights; (b) any Person controlling, controlled by
or under common control with such named Person; (c) any employee,
officer or director of such named Person or any Affiliate of the named
Person; and (d) any family member of the named Person or any Affiliate
of such named Person.
"Available Balance" shall mean at any time (i) without
duplication, all funds on deposit in the Special Loan Account at such
time which Bank, in accordance with its standard practices for posting
of debits and credits to demand deposit accounts of a type similar to
the Special Loan Account, deems to be collected funds, including,
without limitation, all wire transfers credited to the Special Loan
Account at such time and all other Federal or other immediately
available funds on deposit in or deposited into the Special Loan
Account at such time less (ii) the sum of all interest, fees and other
Indebtedness related to the Loan due and payable at such time.
"Borrowing Base" shall mean at any time (i) the sum of
(a) 75% of the fair market value of the Virginia Property and the
North Carolina Property as determined by an appraisal satisfactory to
Bank, (b) 80% of the liquidation value of Borrower's primary
manufacturing equipment determined by an appraisal satisfactory to
Bank, (c) 80% of the total amount of Eligible Accounts, and (d)
$1,000,000, (ii) reduced by the Reduction Amount on the first day of
each calendar quarter beginning April 1, 1998. The "Reduction Amount"
shall be:
Date of Reduction Reduction Amount
April 1, 1998 $175,000
July 1, 1998 175,000
October 1, 1998 175,000
January 1, 1999 175,000
April 1, 1999 175,000
July 1, 1999 175,000
October 1, 1999 87,500
January 1, 2000 87,500
April 1, 2000 87,500
The Reduction Amount shall be applied to reduce permanently the
components of the Borrowing Base set forth in clauses (d), (b) and (a)
above in this definition, first to clause (d) and then to clauses (b)
and (a) together, pro rata. To the extent net proceeds from a public
offering of securities by Parent exceed $7,000,000, such excess shall,
immediately upon receipt by Parent, permanently reduce the component
of the Borrowing Base set forth in clause (d) above, if any such
clause (d) component remains. In other words, absent a public
offering of securities by Parent in excess of $7,000,000, the clause
(d) component would be completely eliminated after the application of
$125,000 of the Reduction Amount on July 1, 1999. But if, for
example, Parent receives net proceeds of $7,500,000 from a public
offering of securities on April 15, 1998, the clause (d) component
shall immediately be reduced to $325,000 and would be completely
eliminated after the application of the $175,000 Reduction Amount on
July 1, 1998 and $150,000 of the Reduction Amount on October 1, 1998.
The remaining $25,000 of the Reduction Amount would be applied to
reduce pro rata the clause (b) and clause (a) components of the
Borrowing Base on October 1, 1998 and thereafter the clause (b) and
clause (a) components of the Borrowing Base would be reduced, pro
rata, by application of the Reduction Amount of $87,500 on the first
day of each calendar quarter. The Reduction Amounts for October 1,
1999 and thereafter (to be applied pro rata to the clause (b) and
clause (a) components of the Borrowing Base) are an amount equal to
the sum of (i) 75% of the appraised market value of the North Carolina
Property and Virginia Property divided by 54, plus (ii) 80% of the
appraised liquidation value of the manufacturing equipment divided by
30. If the clause (d) component of the Borrowing Base is eliminated
earlier than scheduled because of the application of excess proceeds
from a public offering of securities, the amount of the Reduction
Amount to be applied to the clause (b) and clause (a) components of
the Borrowing Base shall be adjusted by increasing the number (54 and
30, respectively) in the denominators of the formula set forth above
by the number of quarters between the time of adjustment and July 1,
1999.
"Borrowing Base Certificate" shall mean a certificate
executed by the chief financial officer or president of Borrower, in
form satisfactory to Bank, certifying the accuracy and completeness of
an Inventory Report, showing the Borrowing Base at any particular
time.
"Business Day" shall mean a weekday on which commercial
banks are open for business in Richmond, Virginia.
"Change of Control" shall mean the occurrence of any of
the following events: (i) Granville G. Valentine, III or Gene G.
Bright shall cease to perform substantially the same management
functions for Borrower as each of them perform as of the date of this
Agreement (provided, however, that if within 30 days after Granville
G. Valentine, III or Gene G. Bright cease to perform such functions,
another Person of Persons satisfactory to Bank shall be performing
such functions, such will not constitute a Change of Control), or (ii)
United Shields Corporation shall cease to be beneficial owner of 100%
of the Voting Stock of Borrower. "Voting Stock" means capital stock
issued by Borrower, the holders of which are ordinarily, in the
absence of contingencies, entitled to vote for the election of
directors of Borrower, even though the right to vote has been
suspended by the happening of such a contingency. As used herein,
"beneficial ownership" shall have the meaning provided in Rule 13d-3
of the Securities and Exchange Commission under the Securities
Exchange Act of 1934.
"Chattel Paper" shall mean all writing or writings
which evidence both a monetary obligation and a security interest in
or lease of specific goods and in addition includes all property
included in the definition of "chattel paper" as used in the Code,
together with any guaranties, letters of credit and other security
therefor.
"Code" shall mean the Uniform Commercial Code, as in
effect in Virginia from time to time.
"Collateral" shall mean the following property of each
of Borrower and Guarantors, wherever located and whether now owned by
each of Borrower and Guarantors or hereafter acquired: all Inventory;
all General Intangibles; all Accounts and Chattel Paper and any other
instrument (as defined in the Code) or intangible representing payment
for goods or services; all Equipment; all investment property (as
defined in the Code); all funds in the Special Loan Account or
otherwise on deposit with or under the control of Bank or its agents
or correspondents; and all parts, replacements, substitutions,
profits, products and cash and non-cash proceeds of any of the
foregoing (including insurance proceeds payable by reason of loss or
damage thereto) in any form and wherever located. Collateral shall
include all written or electronically recorded books and records
relating to any such Collateral and other rights relating thereto.
"Debt" shall mean all liabilities of a Person as
determined under GAAP (as defined in Section 1.2) and all obligations
which such Person has guaranteed or endorsed or is otherwise
secondarily or jointly liable for, and shall include, without
limitation, all obligations for borrowed money or purchased assets,
obligations secured by assets whether or not any personal liability
exists, the capitalized amount of any capital or finance lease
obligations, the unfunded portion of pension or benefit plans or other
similar liabilities, obligations as a general partner, contingent
obligations pursuant to guaranties, endorsements, letters of credit
and other secondary liabilities, and obligations for deposits.
"Deed of Trust" means each of the deeds of trust
securing the Indebtedness with respect to the North Carolina Property
and Virginia Property, respectively.
"Default Rate" shall mean the highest lawful rate of
interest per annum specified in any Note to apply after a default
under such Note or, if no such rate is specified, a rate equal to the
lesser of five (5) percentage points above the rate on the Loan
otherwise in effect from time to time, or the highest rate of interest
allowed by law.
"Eligible Accounts" shall mean all Accounts evidenced
by an invoice (valued at the face amount of such invoice, less maximum
discounts, credits and allowances which may be taken by Account
Debtors on such Accounts, and net of any sales tax, finance charges or
late payment charges included in the invoiced amount) created or
acquired by Granville Plastics Company, Inc. or Richmond Plastics,
Inc. (each an "Account Creditor") arising from the sale of Inventory
and/or the provision of certain services in either Account Creditor's
ordinary course of business (as approved by Bank) in which Bank has a
first priority, perfected security interest (subject only to Permitted
Liens), but excluding (a) Accounts outstanding for longer than ninety
(90) days from the date of original invoice; (b) all Accounts owed by
an Account Debtor if more than twenty-five percent (25%) of the
Accounts owed by such Account Debtor to either or both Account
Creditors are deemed ineligible hereunder; (c) Accounts owing from any
Affiliate of Borrower or any Guarantor; (d) Accounts owed by a
creditor of either Account Creditor to the extent of the amount of the
indebtedness of such Account Creditor to such creditor; (e) Accounts
which are in dispute or subject to any counterclaim, contra-account or
offset; (f) Accounts owing by any Account Debtor which is not Solvent;
(g) Accounts arising from a sale on a bill-and-hold, guaranteed sale,
sale-or-return, sale-on-approval, consignment or similar basis or
which is subject to repurchase, return, rejection, repossession, loss
or damage; (h) Accounts owed by an Account Debtor located outside of
the continental United States of America, unless in Bank's sole and
absolute discretion, such Account is supported by a letter of credit
or credit insurance assigned to Bank and which is issued by a
financial institution and in an amount which is acceptable to Bank in
its sole and absolute discretion; (i) Accounts owed by the United
States of America or other governmental or quasi-governmental unit,
agency or subdivision unless the appropriate Account Creditor shall
have complied with all applicable federal and state assignment of
claims laws; (j) Accounts as to which the goods giving rise to the
Account have not been delivered to and accepted by the Account Debtor
or the service giving rise to the Account has not been completely
performed or which do not represent a final sale; (k) Accounts for
which the total amounts owed thereunder by an Account Debtor (together
with its Affiliates) exceeds a credit limit established by Bank in its
sole and absolute discretion (to the extent of such excess); (l)
Accounts evidenced by a note or other instrument or chattel paper or
reduced to judgment; (m) Accounts for which the total of all Accounts
from an Account Debtor (together with the Affiliates of the Account
Debtor) exceed twenty percent (20%) of the total Accounts of either or
both Account Creditors (to the extent of such excess); (n) Accounts
which, by contract, subrogation, mechanics' lien laws or otherwise,
are subject to claims by either Account Creditor's creditors or other
third parties or which are owed by Account Debtors as to whom any
creditor of either Account Creditor (including any bonding company)
has lien or retainage rights; (o) any and all other Accounts the
validity, collectibility, or amount of which is determined in good
faith by either Account Creditor or Bank to be doubtful; (p) Accounts
owed by an Account Debtor which is located in a jurisdiction where
either Account Creditor, as the case may be, is required to qualify to
transact business or to file reports, unless such Account Creditor has
so qualified or filed; (q) Accounts owed by an Account Debtor who
disputes the liability therefor; and (r) Accounts owed by an Account
Debtor that shall be the subject of any proceeding of the type
described in Section 9.1(f) or (g). No Account shall be an Eligible
Account if any representation, warranty or covenant herein relating
thereto shall be untrue, misleading or in default. Bank may
determine, on a daily basis, whether any Account constitutes an
Eligible Account, and if an Eligible Account subsequently becomes
ineligible its ineligibility shall be immediate.
"Environmental Laws" means, collectively the following
acts and laws, as amended: the Comprehensive Environmental Response,
Compensation and Liability Act of 1980; the Superfund Amendments and
Reauthorization act of 1986; the Resource Conservation and Recovery
Act; the Toxic Substances Act; the Clean Water Act; the Clear Air Act;
the Oil Pollution and Hazardous Substances Control Act of 1978; and
any other "Superfund" or "Superlien" law or any other federal, state
or local stature, law, ordinance, code, rule, regulation, order or
decree relating to, or imposing liability or standards of conduct
concerning, any hazardous, toxic or dangerous waste, substance or
material, as now or at any time hereafter in effect.
"Equipment" shall mean all furniture, fixtures,
equipment, motor vehicles, rolling stock and other tangible property
of every description, except Inventory, and in addition includes all
property included in the definition of "equipment" as used in the
Code.
"Event of Default" shall mean any event specified as
such in Section 9.1 hereof "Events of Default", provided that there
shall have been satisfied any requirement in connection with such
event for the giving of notice or the lapse of time, or both;
"Default" or "default" shall mean any of such events, whether or not
any such requirement for the giving of notice or the lapse of time or
the happening of any further condition, event or act shall have been
satisfied.
"General Intangibles" shall mean all intangible
personal property (including things in action) except Accounts,
Chattel Paper and instruments (as defined in the Code), including all
contract rights, copyrights, registrations and applications for
registrations of copyrights, trademarks, trademark applications, trade
names, service marks, service mark applications, patents, patent
applications, patent drawings, designs, inventions, formulas, trade
secrets, goodwill, rights to a Person's name itself, customer lists,
franchise rights, rights to all prepaid expenses, marketing expenses,
rights to receive future contracts, fees, commissions and orders
relating in any respect to any business of a Person, all licenses and
permits, all computer programs and other software owned by a Person
and source codes and object codes related thereto, or which any Person
has the right to use, and all rights for breach of warranty or other
claims for funds to which any Person may be entitled, and in addition
includes all property included in the definition of "general
intangibles" as used in the Code.
"Guarantor" shall mean each of the Guarantors
identified in the preamble to this Agreement.
"Indebtedness" shall mean all obligations now or
hereafter owed to Bank by Borrower or any Guarantor, whether related
or unrelated to the Loan, including, without limitation, amounts owed
or to be owed under the terms of the Loan Documents, or arising out of
the transactions described therein, including, without limitation, the
Loan, sums advanced to pay overdrafts on any account maintained by
Borrower or any Guarantor with Bank, reimbursement obligations for
outstanding letters of credit or banker's acceptances issued for the
account of Borrower or any Guarantor, or amounts paid by Bank under
letters of credit or drafts accepted by Bank for the account of
Borrower or any Guarantor, together with all interest accruing
thereon, all fees, all costs of collection, attorneys' fees and
expenses of or advances by Bank which Bank pays or incurs in discharge
of obligations of Borrower or any Guarantor or to repossess, protect,
preserve, store or dispose of any Collateral, whether such amounts are
now due or hereafter become due, direct or indirect and whether such
amounts due are from time to time reduced or entirely extinguished and
thereafter re-incurred.
"Inventory" shall mean all goods, merchandise and other
personal property which is held for sale or lease or furnished or to
be furnished under a contract for services or raw materials, and all
work in process and materials used or consumed or to be used or
consumed in a Person's business, and in addition, includes all
property included in the definition of "inventory" as used in the
Code.
"Inventory Report" shall mean a report listing all
Inventory and all Eligible Inventory of each of Borrower and
Guarantors as of the last Business Day of any month, the cost thereof,
and such other information as Bank may require relating thereto, all
in reasonable detail and in form acceptable to Bank.
"Item" shall mean any "item" as defined in Section 4-104
of the Code, and shall also mean and include checks, drafts, money
orders or other media of payment.
"Lien" shall mean any mortgage, pledge, statutory lien
or other lien arising by operation of law, security interest, trust
arrangement, security deed, financing lease, collateral assignment or
other encumbrance, conditional sale or title retention agreement, or
any other interest in property designed to secure the repayment of
Indebtedness, whether arising by agreement or under any statute or law
or otherwise.
"Loan" shall mean the revolving loan identified in
Section 3.1 hereof.
"Loan Documents" shall mean this Agreement, any other
Security Agreement, any Note, the Deeds of Trust, environmental
liabilities agreements with respect to the North Carolina Property and
Virginia Property, the Advance Requests, Borrowing Base Certificates,
UCC-1 financing statements and all other documents and instruments now
or hereafter evidencing, describing, guaranteeing or securing the
Indebtedness contemplated hereby or delivered in connection herewith,
as they may be modified.
"Material Adverse Effect" shall mean any (i) material
adverse effect upon the validity, performance or enforceability of any
of the Loan Documents or any of the transactions contemplated hereby
or thereby, (ii) material adverse effect upon the properties,
business, prospects or condition (financial or otherwise) of Borrower
and/or any other Person obligated under any of the Loan Documents, or
(iii) material adverse effect upon the ability of Borrower or any
other Person to fulfill any obligation under any of the Loan
Documents.
"Maximum Loan Amount" shall mean $6,000,000.
"Merger Agreement" shall mean that certain Merger
Agreement among R. P. Industries, Inc., United Shields Corporation and
Borrower, including all schedules and exhibits thereto and all
collateral agreements referred to in such Merger Agreement.
"North Carolina Property" shall mean the property known
as 115 Corporation Drive, Oxford (Granville County), North Carolina,
including 5.995 acres of land and the improvements thereon, owned by
Granville Plastics Company, Inc.
"Note" shall mean the Revolving Note, as defined in
Section 3.2 and any other promissory note now or hereafter evidencing
any Indebtedness, and all modifications, extensions and renewals
thereof.
"Parent" shall mean United Shields Corporation, a
Colorado corporation.
"Perfection Certificate" shall mean the certificate
substantially in the form of Exhibit 2.17.
"Permitted Debt" shall mean the Indebtedness; and any
other Debt listed on Exhibit 1.1B hereto (if any) and any extensions,
renewals, replacements, modifications and refundings of any such Debt
if, and to the extent, permitted by Exhibit 1.1B; provided, however,
that the principal amount of such Debt may not be increased from the
amount shown as outstanding on such exhibit.
"Permitted Liens" shall mean Liens securing the
Indebtedness; Liens for taxes and other statutory Liens, landlord's
Liens and similar Liens arising out of operation of law (provided they
are subordinate to Bank's Liens on the Collateral) so long as the
obligations secured thereby are not past due or are being contested
and the proceedings contesting such obligations have the effect of
preventing the forfeiture or sale of the property subject to such
Lien; and Liens described on Exhibit 1.1C hereto (if any), provided,
however, that no debt not now secured by such Liens shall become
secured by such Liens hereafter and such Liens shall not encumber any
other assets.
"Person" shall mean any natural person, corporation,
unincorporated organization, trust, joint-stock company, joint
venture, association, company, limited or general partnership, any
government or any agency or political subdivision of any government,
or any other entity or organization.
"Prime Rate" shall mean the rate of interest announced
by Bank (or its successor) from time to time as its "prime rate" or
"prime lending rate" and which rate is one of several interest rate
bases used by Bank. Bank lends at rates both above and below Bank's
Prime Rate, and Borrower acknowledges that Bank's Prime Rate is not
represented or intended to be the lowest or most favorable rate of
interest offered by Bank. A change in the Prime Rate shall become
effective from the beginning of the day on which such change is
announced by Bank.
"Regulated Materials" shall mean any hazardous, toxic
or dangerous waste, substance or material, the generation, handling,
storage, disposal, treatment or emission of which is subject to any
Environmental Laws.
"Revolving Credit Period" shall mean the period from
and including the date of this Agreement to but not including the
Termination Date.
"Security Agreement" shall mean this Agreement as it
relates to a security interest in the Collateral, and any other
mortgage, security agreement or similar instrument now or hereafter
executed by Borrower, any Guarantor or any other Person granting Bank
a security interest in any collateral to secure the Indebtedness.
"Solvent" shall mean, as to any Person, that such
Person has capital sufficient to carry on its business and
transactions in which it is currently engaged and all business and
transactions in which it is about to engage, is able to pay its debts
as they mature, and has assets having a fair valuation greater than
its liabilities, at fair valuation.
"Special Loan Account" shall mean the demand deposit
account established pursuant to Section 3.3 hereof.
"Subsidiary" shall mean, as to any Person, any
corporation, partnership or other entity in which such Person,
directly or indirectly, owns more than fifty percent (50%) of the
stock, capital or income interests, or other beneficial interests, or
which is effectively controlled by such Person.
"Termination Date" shall mean April 30, 2000.
"Virginia Property" shall mean the property known as
1351 West Hundred Road, Chester (Chesterfield County), Virginia,
including six acres of land and the improvements thereon, owned by R.
P. Industries of Ohio, Inc.
1.2 Financial Terms. Unless otherwise specified herein,
all accounting terms used herein shall be interpreted, all accounting
determinations hereunder shall be made and all financial statements
required to be delivered hereunder shall be prepared, in accordance
with generally accepted accounting principles in the United States
("GAAP").
2. Representations and Warranties. In order to induce Bank
to enter into this Agreement and to make the Loan provided for herein,
each of Borrower and Guarantors makes the following representations
and warranties, all of which shall survive the execution and delivery
of the Loan Documents. Unless otherwise specified, such
representations and warranties shall be deemed made as of the date
hereof and as of the Advance Date of any Advance by Bank to Borrower:
2.1 Valid Existence and Power. Each of Borrower
and Guarantors is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its
organization and is duly qualified or licensed to transact business in
all places where the failure to be so qualified would have a Material
Adverse Effect. Each of Borrower and Guarantors and each other Person
which is a party to any Loan Document (other than Bank) has the power
to make and perform the Loan Documents executed by it and all such
instruments will constitute the legal, valid and binding obligations
of such Person, enforceable in accordance with their respective terms,
subject only to bankruptcy and similar laws affecting creditors'
rights generally.
2.2 Authority. The execution, delivery and
performance thereof by Borrower, Guarantors and each other Person
(other than Bank) executing any Loan Document have been duly
authorized by all necessary action of such Person, and do not and will
not violate any provision of law or regulation, or any writ, order or
decree of any court or governmental or regulatory authority or agency
or any provision of the governing instruments of such Person, and do
not and will not, with the passage of time or the giving of notice,
result in a breach of, or constitute a default or require any consent
under, or result in the creation of any Lien upon any property or
assets of such Person pursuant to, any law, regulation, instrument or
agreement to which any such Person is a party or by which any such
Person or its respective properties may be subject, bound or affected.
2 .3 Financial Condition. Other than as disclosed in
financial statements delivered on or prior to the date hereof to Bank,
neither Borrower nor any Guarantor has any direct or contingent
obligations or liabilities (including any guarantees or leases) or any
material unrealized or anticipated losses from any commitments of such
Person except as described on Exhibit 2.3 (if any). All such
financial statements have been prepared in accordance with GAAP and
fairly present the financial condition of Borrower or Guarantors, as
the case may be, as of the date thereof. Neither Borrower nor any
Guarantor is aware of any material adverse fact (other than facts
which are generally available to the public and not particular to
Borrower and Guarantors, such as general economic or industry trends)
concerning the conditions or future prospects of Borrower or
Guarantors which has not been fully disclosed to Bank, including any
adverse change in the operations or financial condition of such Person
since the date of the most recent financial statements delivered to
Bank. Each of Borrower and Guarantors is Solvent, and after
consummation of the transactions set forth in this Agreement and the
other Loan documents, each of Borrower and Guarantors will be Solvent.
2.4 Litigation. Except as disclosed on Exhibit 2.4 (if
any), there are no suits or proceedings pending, or to the knowledge
of Borrower or any Guarantor threatened, before any court or by or
before any governmental or regulatory authority, commission, bureau or
agency or public regulatory body against or affecting Borrower or any
Guarantor or their assets, which if adversely determined would have a
Material Adverse Effect.
2.5 Agreements, Etc. Neither Borrower nor any Guarantor
is a party to any agreement or instrument or subject to any court
order, governmental decree or any charter or other corporate
restriction, adversely affecting its business, assets, operations or
condition (financial or otherwise), nor is any such Person in default
in the performance, observance or fulfillment of any of the material
obligations, covenants or conditions contained in any agreement or
instrument to which it is a party, or any law, regulation, decree,
order or the like.
2.6 Authorizations. All authorizations, consents,
approvals and licenses required under applicable law or regulation for
the ownership or operation of the property owned or operated by
Borrower or any Guarantor or for the conduct of any business in which
it is engaged have been duly issued and are in full force and effect,
and it is not in default, nor has any event occurred which with the
passage of time or the giving of notice, or both, would constitute a
default, under any of the terms or provisions of any part thereof, or
under any order, decree, ruling, regulation, closing agreement or
other decision or instrument of any governmental commission, bureau or
other administrative agency or public regulatory body having
jurisdiction over such Person, which default would have a Material
Adverse Effect. Except as noted herein, no approval, consent or
authorization of, or filing or registration with, any governmental
commission, bureau or other regulatory authority or agency is required
with respect to the execution, delivery or performance of any Loan
Document.
2.7 Title. Each of Borrower and Guarantors has good
title to all of the assets shown in its financial statements free and
clear of all Liens, except Permitted Liens.
2.8 Collateral. The security interests granted to Bank
herein and pursuant to any other Security Agreement constitute and, as
to subsequently acquired property included in the Collateral covered
by the Security Agreement, will constitute, security interests under
the Code entitled to all of the rights, benefits and priorities
provided by the Code and are, and as to such subsequently acquired
Collateral will be, fully perfected, superior and prior to the rights
of all third persons, now existing or hereafter arising, subject only
to Permitted Liens. All of the Collateral is intended for use solely
in Borrower's and Guarantors' business.
2.9 Taxes. Each of Borrower and Guarantors has filed
all federal and state income and other tax returns which are required
to be filed, and has paid all taxes as shown on said returns and all
taxes, including withholding, FICA and ad valorem taxes, shown on all
assessments received by it to the extent that such taxes have become
due. Neither Borrower nor any Guarantor is subject to any federal,
state or local tax Liens nor has such Person received any notice of
deficiency or other official notice to pay any taxes. Each of
Borrower and Guarantors has paid all sales and excise taxes payable by
it.
2.10 Labor Law Matters. No goods or services have been
or will be produced by Borrower or any Guarantor in violation of any
applicable labor laws or regulations or any collective bargaining
agreement or other labor agreements or in violation of any minimum
wage, wage-and-hour or other similar laws or regulations.
2.11 Accounts. Each Account, instrument, Chattel
Paper and other writing constituting any portion of the Collateral is
genuine and enforceable in accordance with its terms except for such
limits thereon arising from bankruptcy and similar laws relating to
creditors' rights; is not subject to any defense, set off, claim or
counterclaim of a material nature against Borrower or any Guarantor
except as to which Borrower or any Guarantor has notified Bank in
writing; is not subject to any other circumstances that would impair
the validity, enforceability or amount of such Collateral except as to
which Borrower or any Guarantor has notified Bank in writing; (d)
arises from a bona fide sale of goods or delivery of services in the
ordinary course and in accordance with the terms and conditions of any
applicable purchase order, contract or agreement; and (e) is for a
liquidated amount maturing as stated in the invoice therefor. Each
Account included in any Advance Request, Borrowing Base Certificate,
report or other document as an Eligible Account meets all the
requirements of an Eligible Account set forth herein.
2.12 Judgment Liens. Neither Borrower nor any
Guarantor, nor any of its assets, are subject to any unpaid judgments
(whether or not stayed) or any judgment liens in any jurisdiction.
2.13 Subsidiaries. If Borrower or any Guarantor has any
Subsidiaries, they are listed on Exhibit 2.13.
2.14 Environmental. Except as disclosed on Exhibit
2.14, and except for ordinary and customary amounts of solvents,
cleaners and similar materials used in the ordinary course of
Borrower's or any Guarantor's business and in strict compliance with
all Environmental Laws, neither Borrower nor any Guarantor, nor to
Borrower's or any Guarantor's best knowledge any other previous owner
or operator of any real property currently owned or operated by
Borrower or any Guarantor has generated, stored or disposed of any
Regulated Material on any portion of such property, or transferred any
Regulated Material from such property to any other location in
violation of any applicable Environmental Laws. Except as disclosed
on Exhibit 2.14, no Regulated Material has been generated, stored or
disposed of on any portion of the real property currently owned or
operated by Borrower or any Guarantor, or is now located on such
property. Except as disclosed on Exhibit 2.14, each of Borrower and
Guarantors is in full compliance with all applicable Environmental
Laws and neither Borrower nor any Guarantor has been notified of any
action, suit, proceeding or investigation which calls into question
compliance by Borrower or any Guarantor with any Environmental Laws or
which seeks to suspend, revoke or terminate any license, permit or
approval necessary for the generation, handling, storage, treatment or
disposal of any Regulated Material.
3.1 ERISA. Each of Borrower and Granville Plastics
Company, Inc. has furnished to Bank true and complete copies of the
latest annual report required to be filed pursuant to Section 104 of
the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), with respect to each employee benefit plan or other plan
maintained for employees of Borrower or Granville Plastics Company,
Inc. and covered by Title IV of ERISA (a "Plan"), and no Termination
Event (as hereinafter defined) with respect to any Plan has occurred
and is continuing. For the purposes of this Agreement, a "Termination
Event" shall mean a "reportable event" as defined in Section 4043(b)
of ERISA, or the filing of a notice of intent to terminate under
Section 4041 of ERISA. Neither Borrower nor Granville Plastics
Company, Inc. has any unfunded liability with respect to any such
Plan. None of the Guarantors (other than Granville Plastics Company,
Inc.) has any pension, profit-sharing or other benefit plan subject to
ERISA.
3.2 Investment Company Act. Neither Borrower nor any
Guarantor is an "investment company" as defined in the Investment
Company Act of 1940, as amended.
3.3 Perfection Certificate. All representations,
warranties and statements made by Borrower and United Shields
Corporation in the Perfection Certificates executed and delivered by
Borrower and United Shields Corporation to Bank in connection with
the Loan are true and correct as of the date hereof.
4. The Loan.
4.1 Revolving Loan. Bank agrees, on the terms and
conditions set forth in this Agreement, to make Advances to Borrower
from time to time during the Revolving Credit Period in amounts such
that the aggregate principal amount of Advances at any one time
outstanding will not exceed the lesser of (i) the Maximum Loan Amount
and (ii) the Borrowing Base. Within the foregoing limit, Borrower may
borrow, prepay and reborrow Advances at any time during the Revolving
Credit Period.
4.2 Revolving Note. The Loan shall be evidenced by and
payable in accordance with the terms of a promissory note in the face
amount of the Maximum Loan Amount (the "Revolving Note").
4.3 Special Loan Account. Borrower and Guarantors shall
instruct all Account Debtors and other Persons obligated in respect of
Accounts and other Collateral to make all payments in respect of the
Accounts or other Collateral directly to Bank (by instructing that
such payments be remitted to a post office box which shall be in the
name and under the control of Bank). Except as provided in Section
10.2 of this Agreement, all such payments made to Bank shall be
deposited in the Special Loan Account. Borrower shall pay Bank's
standard fees and charges in connection with such lock-box
arrangement, as such fees and charges may change from time to time.
Each of Borrower and Guarantors further agrees that if the proceeds of
any Collateral (including the payments made in respect of Accounts)
shall be received by it, it shall, unless Section 10.2 of this
Agreement shall require otherwise, as promptly as possible deposit
such proceeds in the Special Loan Account. Until so deposited, all
such proceeds shall be held in trust by Borrower and Guarantors for
and as the property of Bank and shall not be commingled with any other
funds or property of Borrower and Guarantors. Each of Borrower and
Guarantors hereby irrevocably authorizes and empowers Bank, its
officers, employees and authorized agents to endorse and sign its name
on all checks, drafts, money orders or other media of payment so
delivered, and such endorsements or assignments shall, for all
purposes, be deemed to have been made by Borrower and Guarantors prior
to any endorsement or assignment thereof by Bank.
4.4 Advances.
(a) If on any Business Day Items are presented to
Bank for payment against the Special Loan Account, which Items, in the
aggregate, would, if paid in full, cause the Available Balance in the
Special Loan Account on such day to be less than $0, such presentment
shall be deemed to be a request by Borrower for an Advance on the date
of such presentment in an amount equal to the amount (rounded upward
to the nearest multiple of $1,000) required to cause such Available
Balance to equal $0. Bank shall make an Advance by depositing such
amount deemed requested to the Special Loan Account.
(b) Bank, in its discretion, may accept from
Borrower a signed written request for an Advance in form satisfactory
to Bank, which request shall be delivered to Bank no later than 12:00
noon (local time in Richmond, Virginia) on the date of the requested
Advance, and shall set forth the calculation of the Borrowing Base and
a reconciliation to the previous request or Borrowing Base
Certificate, specify the date (which shall be a Business Day) and the
amount of the proposed Advance and provide such other information as
Bank may require. Bank's acceptance of such a request shall be
indicated by its making the Advance requested. Such an Advance shall
be made available to Borrower in immediately available funds at Bank's
address referred to in Section 11.4.
4.5 Fees.
(a) Borrower shall pay to Bank a non-refundable
facility fee in the amount of $30,000, $15,000 of which has been paid
by Borrower and the balance of which is payable on the date of this
Agreement.
(b) Borrower shall pay to Bank an availability fee
for each day calculated by applying a rate of 2.0% per annum to the
amount, on such day, of the component of the Borrowing Base set forth
in clause (d) of the definition of Borrowing Base in Section 1.1
hereof. The first such fee, for the period from the date of this
Agreement through March 31, 1998, shall be payable in advance on the
date of this Agreement. Each subsequent fee shall be payable in
arrears on the first day of each calendar quarter, beginning July 1,
1998. On any day on which the Reduction Amount is applied to reduce
the clause (d) component of the Borrowing Base, the availability fee
for that day will be calculated after such Reduction Amount is
applied.
(c) Borrower shall pay to Bank an annual servicing
fee of $12,000, payable in arrears on each anniversary of the date of
this Agreement.
4.6 Repayment of Loan.
(a) If on any Business Day, after the payment of
Items presented to Bank for payment against the Special Loan Account,
the Available Balance is greater than $0, Bank shall apply such excess
against the outstanding principal balance of the Note.
(b) Borrower may, upon at least one Business Day's
notice to Bank, prepay the principal amount of the Loan, in whole at
any time, or from time to time in part, by paying the principal amount
to be prepaid together with accrued interest thereon to the date of
prepayment.
(c) The Loan shall mature, and the principal amount
thereof and all interest, fees, expenses and other amounts payable
under the Loan Documents shall be due and payable, on the Termination
Date.
(d) Bank may debit the Special Loan Account and/or
make Advances to Borrower (whether or not in excess of the lesser of
the Maximum Loan Amount and the Borrowing Base) and apply such amounts
to the payment of interest, fees, expenses and other amounts to which
Bank may be entitled from time to time and Bank is hereby irrevocably
authorized to do so without the consent of Borrower.
(e) Borrower shall make each payment of principal
of and interest on the Loan and fees hereunder not later than 12:00
noon (local time Richmond, Virginia) on the date when due, without set
off, counterclaim or other deduction, in immediately available funds
to Bank at its address referred to in Section 11.4. Whenever any
payment of principal of, or interest on, the Loan or of fees shall be
due on a day which is not a Business Day, the date for payment thereof
shall be extended to the next succeeding Business Day. If the date
for any payment of principal is extended by operation of law or
otherwise, interest thereon shall be payable for such extended time.
(f) If at any time the aggregate amount of
outstanding Advances shall exceed the lesser of (i) the Maximum Loan
Amount and (ii) the Borrowing Base, Borrower promises to repay
immediately the amount of such excess.
4.7 Overdue Amounts. Any payments not made as and when
due shall bear interest from the date due until paid at the Default
Rate.
4.8 Calculation of Interest. All interest under the
Note or hereunder shall be calculated on the basis of the Actual/360
Computation, as defined in the Note.
5. The Guaranty.
5.1 Guaranty. Each of Guarantors hereby jointly and
severally guaranties to Bank the prompt payment of Borrower's
obligations with respect to the Indebtedness ("Borrower's
Obligations") in full when due (whether at stated maturity, as a
mandatory prepayment, by acceleration, a mandatory cash
collateralization or otherwise) strictly in accordance with the terms
thereof. Guarantors hereby further agree that if any of Borrower's
Obligations are not paid in full when due (whether at stated maturity,
as a mandatory prepayment, by acceleration, as mandatory cash
collateralization or otherwise), Guarantors will, jointly and
severally, promptly pay the same, without any demand or notice
whatsoever, and that in the case of any extension of time of payment
or renewal of any of Borrower's Obligations, the same will be promptly
paid in full when due (whether at extended maturity, as a mandatory
prepayment, by acceleration or otherwise) in accordance with the terms
of such extension or renewal.
5.2 Obligations Unconditional. The obligations of
Guarantors under Section 4.1 hereof are joint and several, absolute
and unconditional, irrespective of the value, genuineness, validity,
regularity or enforceability of any of the Loan Documents, or any
other agreement or instrument referred to therein, or any
substitution, release or exchange of any other guaranty of or security
for any of Borrower's Obligations, and, to the fullest extent
permitted by applicable law, irrespective of any other circumstance
whatsoever which might otherwise constitute a legal or equitable
discharge or defense of a surety or guarantor, it being the intent of
this Section 4.2 that the obligations of Guarantors hereunder shall be
absolute and unconditional under any and all circumstances. Each
Guarantor agrees that such Guarantor shall have no right of
subrogation, indemnity, reimbursement or contribution against Borrower
or the other Guarantors of Borrower's Obligations for amounts paid
under this guaranty until such time as Bank has been paid in full, all
commitments under this Agreement have been terminated and no Person
shall have any right to request any return or reimbursement of funds
from Bank in connection with monies received under the Loan Documents.
Without limiting the generality of the foregoing, it is agreed that,
to the fullest extent permitted by law, the occurrence of any one or
more of the following shall not alter or impair the liability of any
Guarantor hereunder which shall remain absolute and unconditional as
described above:
(i) at any time or from time to time, without
notice to any Guarantor, the time for any performance of or compliance
with any of Borrower's Obligations shall be extended, or such
performance or compliance shall be waived;
(ii) any of the acts mentioned in any of the
provisions of any of the Loan Documents or any other agreement or
instrument referred to therein shall be done or omitted;
(iii) the maturity of any of Borrower's
Obligations shall be accelerated, or any of Borrower's Obligations
shall be modified, supplemented or amended in any respect, or any
right under any of the Loan Documents or any other agreement or
instrument referred to therein shall be waived or any other guaranty
of any of Borrower's Obligations or any security therefor shall be
released or exchanged in whole or in part or otherwise dealt with;
(iv) any Lien granted to, or in favor of, Bank as
security for any of Borrower's Obligations shall fail to attach or be
perfected; or
(v) any of Borrower's Obligations shall be
determined to be void or voidable (including, without limitation, for
the benefit of any creditor of any Guarantor) or shall be subordinated
to the claims of any Person (including, without limitation, any
creditor of any Guarantor).
With respect to its obligations hereunder, each Guarantor hereby
expressly waives diligence, presentment, demand of payment, protest
and all notices whatsoever, and any requirement that Bank exhaust any
right, power or remedy or proceed against any Person under any of the
Loan Documents or any other agreement or instrument referred to
therein, or against any other Person under any other guaranty of, or
security for, any of Borrower's Obligations.
5.3 Reinstatement. The obligations of Guarantors under
this Section 4 shall be automatically reinstated if and to the extent
that for any reason any payment by or on behalf of any Person in
respect of Borrower's Obligations is rescinded or must be otherwise
restored by any holder of any of Borrower's Obligations, whether as a
result of any proceedings in bankruptcy or reorganization or
otherwise, and each Guarantor agrees that it will indemnify Bank on
demand for all reasonable costs and expenses (including, without
limitation, reasonable fees and expenses of counsel) incurred by Bank
in connection with such rescission or restoration, including any such
costs and expenses incurred in defending against any claim alleging
that such payment constituted a preference, fraudulent transfer or
similar payment under any bankruptcy, insolvency or similar law.
5.4 Certain Additional Waivers. Without limiting the
generality of the provisions of this Section 4, each Guarantor hereby
agrees that such Guarantor shall have no right of recourse to security
for the Borrower's Obligations.
5.5 Remedies. Guarantors agree that, to the fullest
extent permitted by law, as between Guarantors, on the one hand, and
Bank, on the other hand, Borrower's Obligations may be declared to be
forthwith due and payable as provided in Section 9.2 hereof for
purposes of Section 4.1 hereof notwithstanding any stay, injunction or
other prohibition preventing such declaration as against any other
Person and that, in the event of such declaration, Borrower's
Obligations (whether or not due and payable by any other Person) shall
forthwith become due and payable by Guarantors for purposes of said
Section 4.1.
5.6 Rights of Contribution. Guarantors (other than
Parent) hereby agree, as among themselves, that if any Guarantor shall
become an Excess Funding Guarantor (as defined below), each other
Guarantor (other than Parent) shall, on demand of such Excess Funding
Guarantor (but subject to the succeeding provisions of this Section
4.6), pay to such Excess Funding Guarantor an amount equal to such
Guarantor's Pro Rata Share (as defined below and determined, for this
purpose, without reference to the properties, assets, liabilities and
debts of such Excess Funding Guarantor) of the Excess Payment (as
defined below). The payment obligation of any Guarantor to the Excess
Funding Guarantor under this Section 4.6 shall be subordinate and
subject in right of payment to the prior payment in full of the
obligations of such Guarantor under the other provisions of this
Section 4, and such Excess Funding Guarantor shall not exercise any
right or remedy with respect to such excess until payment and
satisfaction in full of all of such obligations. For purposes hereof,
(i) "Excess Funding Guarantor" shall mean, in respect of any
obligations arising under the other provisions of this Section 4
(hereafter, the "Guarantied Obligations"), a Guarantor (other than
Parent) that has paid an amount in excess of its Pro Rata Share of the
Guarantied Obligations; (ii) "Excess Payment" shall mean, in respect
of any Guarantied Obligations, the amount paid by an Excess Funding
Guarantor in excess of its Pro Rata Share of such Guarantied
Obligations; and (iii) "Pro Rata Share", for the purposes of this
Section 4.6, shall mean, for any Guarantor (other than Parent), the
ratio (expressed as a percentage) of (a) the amount by which the
aggregate present fair saleable value of all of its assets and
properties exceeds the amount of all debts and liabilities of such
Guarantor (including contingent, subordinated, unmatured and
unliquidated liabilities, but excluding the obligations of such
Guarantor hereunder) to (b) the amount by which the aggregate present
fair saleable value of all assets and other properties of Borrower and
all Guarantors (other than Parent) exceeds the amount of all of the
debts and liabilities (including contingent, subordinated, unmatured
and unliquidated liabilities, but excluding the obligations of
Borrower and Guarantors (other than Parent) hereunder) of Borrower
and all Guarantors (other than Parent), all as of the date of this
Agreement. Parent agrees, on demand of any Excess Funding Guarantor,
to pay to such Excess Funding Guarantor the full amount of the Excess
Payment of such Excess Funding Guarantor.
5.7 Continuing Guaranty. The guaranty in this Section 4
is a continuing guaranty, and shall apply to all Borrower's
Obligations whenever arising.
5.8 Nature of Business of Borrower and Subsidiaries.
Borrower and all of its Subsidiaries are, and will be, as to financing
and capital raising activities, operated as part of one consolidated
business entity and each such Subsidiary is directly or indirectly
dependent upon each other such Subsidiary and Borrower for and in
connection with its business activities and its financial resources.
Borrower and its Subsidiaries have sought and obtained the Loan and
the related transactions based on their consolidated financial
position and Borrower and its Subsidiaries understand that Bank is
relying on the consolidated financial condition of Borrower and its
Subsidiaries in making the Loan.
5.9 Solvency. The fair value of the business and assets
of each of Borrower and its Subsidiaries will be in excess of the
amount that will be required to pay its liabilities (including,
without limitation, contingent, subordinated, unmatured and
unliquidated liabilities on existing debts, as such liabilities may
become absolute and matured), in each case after giving effect to the
transactions contemplated by this Agreement and the other Loan
Documents. Neither Borrower nor any of its Subsidiaries, after giving
effect to the transactions contemplated by the Loan Documents, will be
engaged in any business or transaction, or about to engage in any
business or transaction, for which such Person has unreasonably small
assets or capital (within the meaning of applicable law, including,
without limitation, Section 548 of the United States Bankruptcy Code),
and neither Borrower nor any of its Subsidiaries has any intent to
(a) hinder, delay or defraud any entity to which it is,
or will become, on or after the date of this Agreement, indebted, or
(b) incur debts that would be beyond its ability to pay
as they mature.
5.10 General Limitation on Guaranty Obligations. In any
action or proceeding involving any state corporate law, or any state
or Federal bankruptcy, insolvency, reorganization or other law
affecting the rights of creditors generally, if the obligations of any
Guarantor under Section 4.1 would otherwise, taking into account the
provisions of Section 4.6, be held or determined to be void, invalid
or unenforceable, or subordinated to the claims of any other
creditors, on account of the amount of its liability under said
Section 4.1, then, notwithstanding any other provision hereof to the
contrary, the amount of such liability shall, without any further
action by such Guarantor, Bank or any other Person, be automatically
limited and reduced to the highest amount that is valid and
enforceable and not subordinated to the claims of other creditors as
determined in such action or proceeding.
6. Conditions Precedent to Borrowing. Conditions
Precedent to Borrowing Prior to any Advance, the following conditions
shall have been satisfied, in the sole opinion of Bank and its
counsel:
6.1 Conditions Precedent to Initial Advance In addition
to any other requirement set forth in this Agreement, Bank will not
make the initial Advance under the Loan unless and until the following
conditions shall have been satisfied:
(a) Loan Documents Borrower, Guarantors and each
other party to any Loan Document, as applicable, shall have executed
and delivered this Agreement, the Note, and other required Loan
Documents, all in form and substance satisfactory to Bank.
(b) Supporting Documents Borrower shall cause to
be delivered to Bank the following documents:
(i) A copy of the governing instruments
of Borrower and each Guarantor, and a good standing certificate of
Borrower and each Guarantor, certified by the appropriate official of
its state of incorporation and any other state in which it is required
to qualify;
(ii) Incumbency certificate and
certified resolutions of the board of directors (or other appropriate
Persons) of Borrower, Guarantors and each other Person executing any
Loan Documents, signed by the secretary or another authorized officer
of Borrower, Guarantors or such other Person, authorizing the
execution, delivery and performance of the Loan Documents;
(iii) The legal opinion of Borrower's and
Guarantors' legal counsel addressed to Bank regarding such matters as
Bank and its counsel may request;
(iv) A satisfactory Borrowing Base
Certificate duly completed by Borrower;
(v) Satisfactory evidence of payment of
all fees due and reimbursement of all costs incurred by Bank, and
evidence of payment to other parties of all fees or costs which
Borrower is required under this Agreement to pay by the date of the
initial Advance;
(vi) UCC-11 searches and other Lien
searches showing no existing security interests in or Liens on the
Collateral other than the security interests of Bank; and
(vii) A satisfactory Perfection
Certificate duly completed by Borrower.
(c) Insurance Borrower shall have delivered to
Bank satisfactory evidence of insurance meeting the requirements of
Section 6.3.
(d) Perfection of Liens UCC-1 financing statements
and, if applicable, certificates of title covering the Collateral
executed by Borrower and Guarantors shall duly have been recorded or
filed in the manner and places required by law to establish, preserve,
protect and perfect the interests and rights created or intended to be
created by the Security Agreement; and all taxes, fees and other
charges in connection with the execution, delivery and filing of the
Security Agreement and the financing statements shall duly have been
paid.
(e) Subordinations Bank shall have received
subordinations satisfactory to it from (i)all lessors that might have
landlord's Liens on any Collateral and (ii)all Affiliates as required
by Section 6.9.
(f) Cash Management Accounts. The Special Loan
Account and the Cash Proceeds Account shall have been established.
(g) Merger Agreement. Bank shall have received
evidence satisfactory to it that the Merger Agreement shall have been
consummated in compliance with applicable law and regulatory approvals
and in accordance with the terms thereof.
(h) Copies of Documents. Bank shall have received
a copy of the Merger Agreement and of each other document or
instrument executed by Borrower in connection therewith, in each case
as originally executed and delivered and in form and substance
satisfactory to Bank.
(i) Title Insurance Commitment. Bank shall have
received commitments to issue policies of title insurance with respect
to the North Carolina Property and Virginia Property (A) issued by a
title insurance company satisfactory to Bank; (B) in the amount of the
Loan; (C) containing no exceptions (including exceptions as to unfiled
mechanics' and materialmen's Liens and matters of survey) unacceptable
to Bank; and (D) insuring Bank that each of the Deeds of Trust is a
valid and first Lien on the parcels of real estate referred to in each
such Deed of Trust;
(j) Flood Plain. Bank shall have received written
evidence that the North Carolina Property and Virginia Property will
not be located in a flood plain, as shown upon the appropriate Flood
Area Map prepared by the Federal Insurance Administration of the
United States Department of Housing and Urban Development;
(k) Surveys. Bank shall have received current
plats of survey of the parcels comprising the North Carolina Property
and Virginia Property prepared and certified by a certified land
surveyor approved by Bank, showing (A) all recorded easements
encumbering the parcels and identifying the same by book and page
number, (B) the location of any existing improvements constructed on
such parcels, (C) any recorded building setback lines and (D) the
means of ingress thereto and egress therefrom, together with the
certificate from such surveyor to Bank relating to such matters as
Bank may require;
(l) Appraisals. Bank shall have received
appraisals, satisfactory to Bank, of the North Carolina Property, the
Virginia Property and the primary manufacturing equipment of Borrower
and Guarantors;
(m) Phase I Report. Bank shall have received Phase
I environmental reports with respect to the North Carolina Property
and the Virginia Property satisfactory to Bank.
(n) Life Insurance. Bank shall have received an
assignment of a life insurance policy insuring the life of Granville
G. Valentine, III in an amount of at least $1,500,000. The policy
shall be on terms, and issued by a life insurance company,
satisfactory to Bank. The assignment shall be in form and content
satisfactory to Bank.
(o) Additional Documents. Borrower shall have
delivered to Bank all additional opinions, documents, certificates and
other assurances that Bank or its counsel may require.
6.2 Conditions Precedent to Each Advance The following
conditions, in addition to any other requirements set forth in this
Agreement, shall have been met or performed by the Advance Date with
respect to any Advance Request and each Advance Request (whether or
not a written Advance Request is required) shall be deemed to be a
representation that all such conditions have been satisfied:
(a) Advance Request Borrower shall have delivered
to Bank an Advance Request and other information, as required in
Section 3.4(b), unless the procedures described in Section 3.4(a) are
in effect.
(b) No Default No Default shall have occurred and
be continuing or will occur upon the making of the Advance in question
and, if Borrower is required to deliver a written Advance Request,
Borrower shall have delivered to Bank an officer's certificate to such
effect, which may be incorporated in the Advance Request.
(c) Correctness of Representations All
representations and warranties made by Borrower and each Guarantor
herein or otherwise in writing in connection herewith shall be true
and correct with the same effect as though the representations and
warranties had been made on and as of the proposed Advance Date, and,
if Borrower is required to deliver a written Advance Request, Borrower
shall have delivered to Bank an officer's certificate to such effect,
which may be incorporated in the Advance Request.
(d) No Adverse Change There shall have been no
material adverse change in the condition, financial or otherwise, of
Borrower or any Guarantor from such condition as it existed on the
date of the most recent financial statements of such Person delivered
prior to date hereof.
(e) Limitations Not Exceeded The proposed Advance
shall not cause the outstanding principal balance of the Loan to
exceed the lesser of the Maximum Loan Amount and the Borrowing Base.
If Borrower is required to deliver a written Advance Request, Bank
shall have received a current Accounts Receivable Report (as required
by Section 6.6) sufficient in form and substance to calculate and
verify the Borrowing Base.
(f) Further Assurances Borrower shall have
delivered such further documentation or assurances as Bank may
reasonably require.
7. Affirmative Covenants. Each of Borrower and Guarantors
covenants and agrees that from the date hereof and until payment in
full of the Indebtedness and the formal termination of this Agreement,
Borrower and each Guarantor:
7.1 Use of Loan Proceeds. Shall (i) use the proceeds of
the Loan only to make payments of cash pursuant to the Merger
Agreement and for working capital to be used in the operation of
Borrower's and each Guarantor's business and (ii) furnish Bank all
evidence that it may reasonably require with respect to such use.
7.2 Maintenance of Business and Properties. Shall at
all times maintain, preserve and protect all Collateral and all the
remainder of its material property used or useful in the conduct of
its business, and keep the same in good repair, working order and
condition, and from time to time make, or cause to be made, all
material needful and proper repairs, renewals, replacements,
betterments and improvements thereto so that the business carried on
in connection therewith may be conducted properly and in accordance
with standards generally accepted in businesses of a similar type and
size at all times, and maintain and keep in full force and effect all
licenses and permits necessary to the proper conduct of its business.
7.3 Insurance. Shall maintain such liability insurance,
workers' compensation insurance, business interruption insurance and
casualty insurance as may be required by law, customary and usual for
prudent businesses in its industry or as may be reasonably required by
Bank and shall insure and keep insured all Collateral and other
properties in good and responsible insurance companies satisfactory to
Bank. All hazard insurance covering Collateral shall be in amounts
and shall contain co-insurance and deductible provisions approved by
Bank, shall name and directly insure Bank as secured party and loss
payee under a long-form New York standard loss payee clause, or its
equivalent, and shall not be terminable except upon 30 days' written
notice to Bank.
7.4 Notice of Default. Shall provide to Bank immediate
notice of (a) the occurrence of a Default, (b) any material litigation
or material changes in existing litigation or any judgment against it
or its assets, (c) any material damage or loss to property, (d) any
notice from taxing authorities as to claimed deficiencies or any tax
lien or any notice relating to alleged ERISA violations, (e) any
Reportable Event, as defined in ERISA, (f) any rejection, return,
offset, dispute, loss or other circumstance having a material adverse
effect on any Collateral, and (g) any loss or threatened loss of
material licenses or permits.
7.5 Inspections. Shall permit inspections of the
Collateral and the records of such Person pertaining thereto and
verification of the Accounts, at such times and in such manner as may
be reasonably required by Bank and shall further permit such
inspection, review and audits of its other records and its properties
(with such reasonable frequency and at such reasonable times as Bank
may desire) by Bank as Bank may deem necessary or desirable from time
to time. The cost of such field audits, reviews, verifications and
inspections shall be borne by Borrower.
7.6 Financial Information. Shall maintain books and
records in accordance with GAAP and shall furnish to Bank the
following periodic financial information:
(a) Periodic Borrowing Base Reports. Within
fifteen days of the end of each month (or more frequently if required
by Bank), (i) an Accounts Receivable Report, (ii) an Inventory Report,
(iii) a Borrowing Base Certificate, and (iv) an Accounts Payable
Report;
(b) Monthly Reports. Within 30 days after the end
of each calendar month, an income statement, statement of cash flows
and a balance sheet of Borrower and its Subsidiaries in consolidated
and consolidating form, as at the end of any such month and year-to-date,
each certified by the chief financial officer or president of
Borrower as being true and complete;
(c) Quarterly Reports. Within 30 days after the
end of each fiscal quarter, an income statement, statement of cash
flows and balance sheet of Parent and its Subsidiaries in consolidated
form, as at the end of any such quarter and year-to-date, each
certified by the chief financial officer or president of Parent as
being true and complete;
(d) Annual Reports. Within 90 days after the end
of each fiscal year, an income statement, a statement of cash flows
and a reconciliation of surplus statement of Parent and its
Subsidiaries for such year, and a balance sheet as of the end of such
year, in consolidated and consolidating form, certified by independent
certified public accountants of recognized standing selected by Parent
and satisfactory to Bank;
(e) No Default Certificates. Together with each
report required by Subsection (b), (c) and (d), a certificate of
Borrower's president or chief financial officer that no Default then
exists or if a Default exists, the nature and duration thereof and
Borrower's intention with respect thereto, and in addition, shall
cause Parent's independent auditors (if applicable) to submit to Bank,
together with its audit report, a statement that, in the course of
such audit, it discovered no circumstances which it believes would
result in a Default or if it discovered any such circumstances, the
nature and duration thereof; and
(f) Auditor's Management Letters. Promptly upon
receipt thereof, copies of each report submitted to Parent and its
Subsidiaries by independent public accountants in connection with any
annual, interim or special audit made by them of the books of Parent
and its Subsidiaries including, without limitation, each report
submitted to Parent and its Subsidiaries concerning its accounting
practices and systems and any final comment letter submitted by such
accountants to management in connection with the annual audit of
Parent and its Subsidiaries.
In addition to the financial statements required herein, Bank
reserves the right to require other or additional financial or other
information concerning Parent, its Subsidiaries and/or the Collateral.
7.7 Maintenance of Existence and Rights. Shall preserve
and maintain its corporate existence, authorities to transact
business, rights and franchises, trade names, patents, trademarks and
permits necessary to the conduct of its business and shall at all
times maintain its business, operations and the Collateral in
accordance with general industry standards.
7.8 Payment of Taxes, Etc. Shall pay before delinquent
all of its debts and taxes, except that Bank shall not unreasonably
withhold its consent to nonpayment of taxes being actively contested
in accordance with law (provided that Bank may require bonding or
other assurances).
7.9 Subordination. Shall cause all debt and other
obligations now or hereafter owed to any Affiliate to be subordinated
in right of payment and security to the Indebtedness in accordance
with subordination agreements satisfactory to Bank.
7.10 Compliance; Hazardous Materials. Shall strictly
comply with all laws, regulations, ordinances and other legal
requirements, specifically including, without limitation, ERISA, all
securities laws and all laws relating to hazardous materials and the
environment. Unless approved in writing by Bank, neither Borrower nor
any Guarantor or other Subsidiary of Borrower or Parent shall engage
in the storage, manufacture, disposition, processing, handling, use or
transportation of any hazardous or toxic materials, whether or not in
compliance with applicable laws and regulations.
7.11 Compliance with Assignment Laws. Shall if required
by Bank comply with the Federal Assignment of Claims Act and any other
applicable law relating to assignment of government contracts.
7.12 Covenants Regarding Collateral.
(a) Shall use the Collateral only in the ordinary
course of its business and will not permit the Collateral to be used
in violation of any applicable law or policy of insurance.
(b) As agent for Bank, shall defend the Collateral
against all claims and demands of all Persons, except for Permitted
Liens.
(c) Shall, at Bank's request, obtain and deliver to
Bank such waivers as Bank may require waiving the landlord's,
mortgagee's or other lienholder's enforcement rights against the
Collateral and assuring Bank's access to the Collateral in exercise of
its rights hereunder.
(d) Shall promptly deliver to Bank all promissory
notes, drafts, trade acceptances, chattel paper, instruments or
documents of title which are Collateral, appropriately endorsed to
Bank's order.
(e) Except as permitted in this Agreement and sales
of Inventory in the ordinary course of business, shall not sell,
assign, lease, transfer, pledge, hypothecate or otherwise dispose of
or encumber any Collateral or any interest herein.
(f) Shall maintain a life insurance policy insuring
the life of Granville G. Valentine, III in an amount of at least
$1,500,000. The policy shall be on terms, and issued by a life
insurance company, satisfactory to Bank. The policy shall be assigned
to Bank by assignment in form and content satisfactory to Bank.
Borrower shall provide Bank evidence of payment of the premium on the
policy. The terms of the policy shall not be changed without Bank's
prior written consent. Borrower shall send Bank copies of any notice
received by Borrower with respect to the policy within ten days of
receipt by Borrower.
7.13 Further Assurances. Shall take such further action
and provide to Bank such further assurances as may be reasonably
requested to ensure compliance with the intent of this Agreement and
the other Loan Documents.
8. Negative Covenants. Each of Borrower and Guarantors
covenants and agrees that from the date hereof and until payment in
full of the Indebtedness and the formal termination of this Agreement,
each of Borrower and Guarantors:
8.1 Debt. Shall not create or permit to exist any Debt,
including any guaranties or other contingent obligations, except
Permitted Debt.
8.2 Liens. Shall not create or permit any Liens on any
of its property, except Permitted Liens.
8.3 Dividends. Except as contemplated by the Merger
Agreement, shall not pay or declare any dividends (other than stock
dividends) or other distribution or purchase, redeem or otherwise
acquire any stock or other equity interests or pay or acquire any debt
subordinate to the Indebtedness unless, after giving effect thereto,
there shall be no Default hereunder and such payment or acquisition is
specifically permitted by Exhibit 7.3 hereto (if any); provided,
however, that any Subsidiary of Borrower may pay dividends to Borrower
or another Subsidiary wholly-owned by Borrower.
8.4 Loans and Other Investments. Shall not make or
permit to exist any advances or loans to, or guaranty or become
contingently liable, directly or indirectly, in connection with the
obligations, leases, stock or dividends of, or own, purchase or make
any commitment to purchase any stock, bonds, notes, debentures or
other securities of, or any interest in, or make any capital
contributions to (all of which are sometimes collectively referred to
herein as "Investments") any Person except for (a) purchases of direct
obligations of the federal government, (b) deposits in commercial
banks, (c) commercial paper of any U.S. corporation having the highest
ratings then given by the Moody's Investors Services, Inc. or Standard
& Poor's Corporation, (d) existing investments in Subsidiaries of
Parent, Borrower and Guarantors, (e) endorsement of negotiable
instruments for collection in the ordinary course of business, and (f)
advances to employees for business travel and other expenses incurred
in the ordinary course of business which do not at any time exceed
$5,000 in the aggregate.
8.5 Change in Business. Shall not enter into any
business which is substantially different from the business in which
it is presently engaged.
8.6 Accounts. (a) Shall not sell, assign or discount
any of its Accounts, Chattel Paper or any promissory notes held by it
other than the discount of such notes in the ordinary course of
business for collection; and (b) shall notify Bank promptly in writing
of any discount, offset or other deductions not shown on the face of
an Account invoice and any dispute over an Account, and any
information relating to an adverse change in any Account Debtor's
financial condition or ability to pay its obligations.
8.7 Transactions with Affiliates. Shall not directly or
indirectly purchase, acquire or lease any property from, or sell,
transfer or lease any property to, or otherwise deal with, in the
ordinary course of business or otherwise, any Affiliate (other than a
Subsidiary of Borrower); provided, however, that any acts or
transactions prohibited by this Section may be performed or engaged in
if upon terms not less favorable to Borrower or such Guarantor than if
no such relationship existed.
8.8 No Change in Name, Offices; Removal of Collateral.
Except for the expected change of Borrower's name to R. P. Industries,
Inc. immediately after the closing of this Agreement, shall not,
unless it shall have given 30 days' advance written notice thereof to
Bank, (a) change its name or the location of its chief executive
office or other office where books or records are kept or (b) permit
any Inventory or other tangible Collateral to be located at any
location other than as specified in the Perfection Certificate.
8.9 No Sale, Leaseback. Shall not enter into any
sale-and-leaseback or similar transaction.
8.10 Margin Stock. Shall not use any proceeds of the
Loan to purchase or carry any margin stock (within the meaning of
Regulation U of the Board of Governors of Federal Reserve System) or
extend credit to others for the purpose of purchasing or carrying any
margin stock.
8.11 Tangible Collateral. Except as otherwise provided
herein, no Inventory or other tangible Collateral shall be commingled
with, or become an accession to or part of, any property of any other
Person so long as such property is Collateral. No tangible Collateral
shall be allowed to become a fixture unless Bank shall have given its
prior written authorization, which shall not be unreasonably withheld.
8.12 Subsidiaries. Shall not acquire, form or dispose
of any Subsidiaries or permit any Subsidiary to issue capital stock
except to its parent.
8.13 Liquidation, Mergers, Consolidations and
Dispositions of Substantial Assets. Except as contemplated by the
Merger Agreement, shall not (a) dissolve or liquidate, or become a
party to any merger or consolidation, (b) acquire by purchase, lease
or otherwise the assets of any Person (c) sell, transfer, lease or
otherwise dispose of its property or assets, except for the sale of
Inventory in the ordinary course of business and the sale or
disposition of machinery and equipment no longer used or useful in the
conduct of Borrower's or Guarantors' business, or (d) sell or dispose
of any equity ownership interests in any Subsidiary.
9. Other Covenants of Borrower. Borrower covenants and
agrees that from the date hereof and until payment in full of the
Indebtedness and the formal termination of this Agreement, Borrower
and each of its Subsidiaries shall comply with such additional
covenants as may be set forth in Exhibit 8 hereto (if any).
10. Default.
10.1 Events of Default. Each of the following shall
constitute an Event of Default:
(a) There shall occur any default by Borrower in the
payment, when due, of any principal of or interest on the Note, any
amounts due hereunder or under any other Loan Document, or any other
Indebtedness; or
(b) Borrower or any Guarantor shall fail to observe or
perform any covenant contained in Section 7.1, 7.2, 7.3, 7.4, 7.9,
7.10, 7.12 or 7.13 or in Section 8; or
(c) There shall occur any default by Borrower, any
Guarantor or any other party to any Loan Document (other than Bank) in
the performance of any agreement, covenant or obligation contained in
this Agreement or such Loan Document not provided for elsewhere in
this Section 9 for 30 days after written notice thereof has been given
to Borrower and Guarantors by Bank; or
(d) Any representation or warranty made by Borrower, any
Guarantor or any other party to any Loan Document (other than Bank)
herein or therein or in any certificate or report furnished in
connection herewith or therewith shall prove to have been untrue or
incorrect in any material respect when made; or
(e) Any other obligation now or hereafter owed by
Borrower, any Guarantor or any Subsidiary to Bank shall be in default
and not cured within the grace period, if any, provided therein or any
such Person shall be in default under any obligation in excess of
$25,000 owed to any other obligee, which default entitles the obligee
to accelerate any such obligations or exercise other remedies with
respect thereto; or
(f) Borrower, any Guarantor or any Subsidiary of any of
them shall (i) voluntarily liquidate or terminate operations or apply
for or consent to the appointment of, or the taking of possession by,
a receiver, custodian, trustee or liquidator of such Person or of all
or of a substantial part of its assets, (ii) admit in writing its
inability, or be generally unable, to pay its debts as the debts
become due, (iii) make a general assignment for the benefit of its
creditors, (iv) commence a voluntary case under the United States
Bankruptcy Code (as now or hereafter in effect), (v) file a petition
seeking to take advantage of any other law relating to bankruptcy,
insolvency, reorganization, winding-up, or composition or adjustment
of debts, (vi)fail to controvert in a timely and appropriate manner,
or acquiesce in writing to, any petition filed against it in an
involuntary case under the United States Bankruptcy Code, or (vii)take
any corporate action for the purpose of effecting any of the
foregoing; or
(g) An involuntary petition or complaint shall be filed
against Borrower, any Guarantor or any Subsidiary of any of them
seeking bankruptcy relief or reorganization or the appointment of a
receiver, custodian, trustee, intervenor or liquidator of Borrower,
any Guarantor or any Subsidiary of any of them, or all or
substantially all of its assets, and such petition or complaint shall
not have been dismissed within sixty (60) days of the filing thereof;
or an order, order for relief, judgment or decree shall be entered by
any court of competent jurisdiction or other competent authority
approving or ordering any of the foregoing actions; or
(h) There shall occur any material loss, theft, damage
or destruction of any of the Collateral, which loss is not fully
insured; or
(i) A judgment in excess of $25,000 shall be rendered
against the Borrower, any Guarantor or any Subsidiary of any of them
and shall remain undischarged, undismissed and unstayed for more than
ten days (except judgments validly covered by insurance with a
deductible of not more than $25,000) or there shall occur any levy
upon, or attachment, garnishment or other seizure of, any material
portion of the Collateral or other assets of Borrower, any Guarantor
or any Subsidiary of any of them by reason of the issuance of any tax
levy, judicial attachment or garnishment or levy of execution; or
(j) There shall occur a Change of Control; or
(k) Any Guarantor shall repudiate or revoke its guaranty
obligations under this Agreement; or
(l) There shall occur any change in the condition
(financial or otherwise) of Borrower or any Guarantor which, in the
reasonable opinion of Bank, could have a Material Adverse Effect.
10.2 Remedies. If any Default shall occur, Bank may,
without notice to Borrower, at its option, withhold further Advances
to Borrower. If an Event of Default shall have occurred and be
continuing, Bank may at its option take any or all of the following
actions:
(a) Bank may declare any or all Indebtedness to be
immediately due and payable (if not earlier demanded), terminate its
obligation to make Advances to Borrower, bring suit against Borrower
to collect the Indebtedness, exercise any remedy available to Bank
hereunder or at law and take any action or exercise any remedy
provided herein or in any other Loan Document or under applicable law.
No remedy shall be exclusive of other remedies or impair the right of
Bank to exercise any other remedies.
(b) Without waiving any of its other rights hereunder or
under any other Loan Document, Bank shall have all rights and remedies
of a secured party under the Code (and the Uniform Commercial Code of
any other applicable jurisdiction) and such other rights and remedies
as may be available hereunder, under other applicable law or pursuant
to contract. If requested by Bank, Borrower and Guarantors will
promptly assemble the Collateral and make it available to Bank at a
place to be designated by Bank. Borrower and Guarantors agree that
any notice by Bank of the sale or disposition of the Collateral or any
other intended action hereunder, whether required by the Code or
otherwise, shall constitute reasonable notice to Borrower and
Guarantors if the notice is mailed to Borrower and Guarantors by
regular or certified mail, postage prepaid, at least five days before
the action to be taken. Borrower and Guarantors shall be liable for
any deficiencies in the event the proceeds of the disposition of the
Collateral do not satisfy the Indebtedness in full.
(c) Bank may demand, collect and sue for all amounts
owed pursuant to Accounts, General Intangibles, Chattel Paper or for
proceeds of any Collateral (either in Borrower's or any Guarantor's
name or Bank's name at the latter's option), with the right to
enforce, compromise, settle or discharge any such amounts.
10.3 Receiver. In addition to any other remedy
available to it, Bank shall have the absolute right, upon the
occurrence of an Event of Default, to seek and obtain the appointment
of a receiver to take possession of and operate and/or dispose of the
business and assets of Borrower and Guarantors and any costs and
expenses incurred by Bank in connection with such receivership shall
bear interest at the Default Rate and shall be secured by all
Collateral.
10.4 Deposits; Insurance. Upon the occurrence and
continuance of an Event of Default, Borrower authorizes Bank to
collect and apply against the Indebtedness when due any cash or
deposit accounts in its possession, and any refund of insurance
premiums or any insurance proceeds payable on account of the loss or
damage to any of the Collateral and irrevocably appoints Bank as its
attorney-in-fact to endorse any check or draft or take other action
necessary to obtain such funds.
11. Security Agreement.
11.1 Security Interest.
(a) As security for the payment and performance of any
and all of the Indebtedness and the performance of all other
obligations and covenants of Borrower and Guarantors hereunder and
under the other Loan Documents, certain or contingent, now existing or
hereafter arising, which are now, or may at any time or times
hereafter be owing by Borrower and Guarantors to Bank, each of
Borrower and Guarantors hereby pledges to Bank and gives Bank a
continuing security interest in and general Lien upon and right of
set-off against, all right, title and interest of Borrower and
Guarantors in and to the Collateral, whether now owned or hereafter
acquired.
(b) Except as herein or by applicable law otherwise
expressly provided, Bank shall not be obligated to exercise any degree
of care in connection with any Collateral in its possession, to take
any steps necessary to preserve any rights in any of the Collateral or
to preserve any rights therein against prior parties, and Borrower and
Guarantors agree to take such steps. In any case Bank shall be deemed
to have exercised reasonable care if it shall have taken such steps
for the care and preservation of the Collateral or rights therein as
Borrower and Guarantors may have reasonably requested Bank to take and
Bank's omission to take any action not requested by Borrower and
Guarantors shall not be deemed a failure to exercise reasonable care.
No segregation or specific allocation by Bank of specified items of
Collateral against any liability of Borrower and Guarantors shall
waive or affect any security interest in or Lien against other items
of Collateral or any of Bank's options, powers or rights under this
Agreement or otherwise arising.
(c) Bank may at any time and from time to time, with or
without notice to Borrower and Guarantors, transfer into the name of
Bank or the name of Bank's nominee any of the Collateral, notify any
Account Debtor or other obligor of any Collateral to make payment
thereon direct to Bank of any amounts due or to become due thereon and
receive and after a Default direct the disposition of any proceeds of
any Collateral.
11.2 Cash Proceeds Account.
(a) There is hereby established with Bank a cash
collateral account (the "Cash Proceeds Account") in the name of "R. P.
INDUSTRIES OF OHIO, INC.- FIRST UNION NATIONAL BANK" and under the
exclusive control of Bank into which there shall be deposited from
time to time the cash proceeds of the Collateral required to be
delivered to Bank pursuant to paragraph (b) of this Section or any
other provision of the Loan Documents. Any income received by Bank
with respect to the balance from time to time standing to the credit
of the Cash Proceeds Account, including any interest, shall remain, or
be deposited, in the Cash Proceeds Account. All right, title and
interest in and to the cash amounts on deposit from time to time in
the Cash Proceeds Account shall vest in Bank, shall constitute part of
the Collateral and shall not constitute payment of the Indebtedness
until applied thereto as hereinafter provided.
(b) Upon the earlier of (i) notification by Bank to
Borrower and Guarantors and (ii) the occurrence of a Default, all
payments made to Bank which would otherwise be deposited in the
Special Loan Account shall be deposited in the Cash Proceeds Account.
In addition to the foregoing, each of Borrower and Guarantors agrees
that if the proceeds of any Collateral (including the payments made in
respect of Accounts) shall be received by it, it shall as promptly as
possible deposit such proceeds to the Cash Proceeds Account. Until so
deposited, all such proceeds shall be held in trust by Borrower and
Guarantors for and as the property of Bank and shall not be commingled
with any other funds or property of Borrower and Guarantors. Each of
Borrower and Guarantors hereby irrevocably authorizes and empowers
Bank, its officers, employees and authorized agents to endorse and
sign its name on all checks, drafts, money orders or other media of
payment so delivered, and such endorsements or assignments shall, for
all purposes, be deemed to have been made by Borrower and Guarantors,
as the case may be, prior to any endorsement or assignment thereof by
Bank.
(c) Collected funds on deposit in the Cash Proceeds
Account shall be withdrawn by Bank on the Business Day following the
day on which Bank considers the funds deposited therein to be
collected funds and applied to repay the Indebtedness which is then
due and payable. Until a Default shall occur, all collected funds
remaining on deposit in the Cash Proceeds Account after the
application required by the preceding sentence shall then be deposited
in the Special Loan Account.
11.3 Power of Attorney. Each of Borrower and Guarantors
authorizes Bank at Borrower's expense to file any financing statements
relating to the Collateral (without Borrower's or Guarantors'
signature thereon) which Bank deems appropriate and each of Borrower
and Guarantors irrevocably appoints Bank as its attorney-in-fact to
execute any such financing statements in Borrower's and Guarantors
name and to perform all other acts which Bank deems appropriate to
perfect and to continue perfection of the security interest of Bank.
Each of Borrower and Guarantors hereby appoints Bank as its
attorney-in-fact to endorse, present and collect on its behalf and in
its name any drafts, checks or other documents necessary or desirable
to collect any amounts which Borrower and Guarantors may be owed.
Bank is hereby granted a license or other right to use, without
charge, each of Borrower's and Guarantors' labels, patents,
copyrights, rights of use of any name, trade secrets, trade names,
trademarks and advertising matter, or any property of a similar
nature, as it pertains to the Collateral, in advertising for sale and
selling any Collateral, and each of Borrower's and Guarantors' rights
under all licenses and all franchise agreements shall inure to Bank's
benefit. The proceeds realized from the sale or other disposition of
any Collateral may be applied, after allowing two (2) Business Days
for collection, first to the reasonable costs, expenses and attorneys'
fees and expenses incurred by Bank for collection and for acquisition,
completion, protection, removal, storage, sale and delivering of the
Collateral; secondly, to interest due upon any of the Indebtedness;
and thirdly, to the principal amount of the Indebtedness. If any
deficiency shall arise, Borrower and Guarantors shall remain liable to
Bank therefor.
11.4 Entry. Each of Borrower and Guarantors hereby
irrevocably consents to any act by Bank or its agents in entering upon
any premises for the purposes of either (i)inspecting the Collateral
or (ii)taking possession of the Collateral and each of Borrower and
Guarantors hereby waives its right to assert against Bank or its
agents any claim based upon trespass or any similar cause of action
for entering upon any premises where the Collateral may be located.
11.5 Other Rights. Each of Borrower and Guarantors
authorizes Bank without affecting Borrower's and Guarantors'
obligations hereunder or under any other Loan Document from time to
time (a)to take from any party and hold additional Collateral or
guaranties for the payment of the Indebtedness or any part thereof,
and to exchange, enforce or release such collateral or guaranty of
payment of the Indebtedness or any part thereof and to release or
substitute any endorser or guarantor or any party who has given any
security interest in any collateral as security for the payment of the
Indebtedness or any part thereof or any party in any way obligated to
pay the Indebtedness or any part thereof; and (b)upon the occurrence
of any Event of Default to direct the manner of the disposition of the
Collateral and the enforcement of any endorsements, guaranties,
letters of credit or other security relating to the Indebtedness or
any part thereof as Bank in its sole discretion may determine.
11.6 Accounts. Before or after any Event of Default,
Bank may notify any Account Debtor of Bank's security interest and may
direct such Account Debtor to make payment directly to Bank for
application against the Indebtedness. Any such payments received by
or on behalf of Borrower or any Guarantor at any time, whether before
or after Default, shall be the property of Bank, shall be held in
trust for Bank and not commingled with any other assets of any Person
(except to the extent they may be commingled with other assets of
Borrower and Guarantors in an account with Bank) and shall be
immediately delivered to Bank in the form received. Bank shall have
the right to apply any proceeds of Collateral to such of the
Indebtedness as it may determine.
11.7 Waiver of Marshaling. Each of Borrower and
Guarantors hereby waives any right it may have to require marshaling
of its assets.
12. Miscellaneous.
12.1 No Waiver, Remedies Cumulative. No failure on the
part of Bank to exercise, and no delay in exercising, any right
hereunder or under any other Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any right
hereunder preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are
cumulative and are in addition to any other remedies provided by law,
any Loan Document or otherwise.
12.2 Survival of Representations. All representations
and warranties made herein shall survive the making of the Loan
hereunder and the delivery of the Note, and shall continue in full
force and effect so long as any Indebtedness is outstanding, there
exists any commitment by Bank to Borrower, and until this Agreement is
formally terminated in writing.
12.3 Expenses. Whether or not the Loan herein provided
for shall be made, Borrower shall pay all reasonable costs and
expenses in connection with the preparation, execution, delivery,
amendment and enforcement of this Agreement and any Loan Document,
including the reasonable fees and disbursements of counsel for Bank in
connection therewith, whether suit be brought or not and whether
incurred at trial or on appeal, and all costs of repossession,
storage, disposition, protection and collection of Collateral. If
Borrower or any Guarantor should fail to pay any tax or other amount
required by this Agreement to be paid or which may be reasonably
necessary to protect or preserve any Collateral or Borrower's,
Guarantors' or Bank's interests therein, Bank may make such payment
and the amount thereof shall be payable on demand, shall bear interest
at the Default Rate from the date of demand until paid and shall be
deemed to be Indebtedness entitled to the benefit and security of the
Loan Documents. In addition, Borrower agrees to pay and save Bank
harmless against any liability for payment of any state documentary
stamp taxes, intangible taxes or similar taxes (including interest or
penalties, if any) which may now or hereafter be determined to be
payable in respect to the execution, delivery or recording of any Loan
Document or the making of any Advance, whether originally thought to
be due or not, and regardless of any mistake of fact or law on the
part of Bank or Borrower with respect to the applicability of such
tax. The provisions of this section shall survive payment in full of
the Loan and termination of this Agreement.
12.4 Notices. Any notice or other communication
hereunder or under the Note to any party hereto or thereto shall be by
hand delivery, overnight delivery, facsimile, telegram, telex or
registered or certified mail and unless otherwise provided herein
shall be deemed to have been given or made when delivered,
telegraphed, telexed, faxed or three (3) Business Days after having
been deposited in the mails, postage prepaid, addressed to the party
at its address specified below (or at any other address that the party
may hereafter specify to the other parties in writing):
Bank: First Union National Bank
2810 Parham Road VA-3246
Richmond, VA 23294
Attention: Portfolio Management
Borrower and
Guarantors: R. P. Industries of Ohio, Inc.
United Shields Corporation
Furniture Plastics of Forest City, Inc.
Granville Plastics Company, Inc.
R. P. Enterprises, Inc.
Richmond Plastics, Inc.
R. P. Real Estate, Inc.
7400 Beaufont Springs Drive
Suite 325
Richmond, VA 23225
12.5 Governing Law. This Agreement and the Loan
Documents (other than the Deed of Trust relating to the North Carolina
Property) shall be deemed contracts made under the laws of the State
of Virginia and shall be governed by and construed in accordance with
the laws of said state except insofar as the laws of another
jurisdiction may, by reason of mandatory provisions of law, govern the
perfection, priority and enforcement of security interests in the
Collateral.
12.6 Successors and Assigns. This Agreement shall be
binding upon and shall inure to the benefit of Borrower, Guarantors
and Bank, and their respective successors and assigns; provided, that
neither Borrower nor Guarantors may assign any of its rights hereunder
without the prior written consent of Bank, and any such assignment
made without such consent will be void.
12.7 Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be
deemed an original and all of which when taken together shall
constitute but one and the same instrument.
12.8 No Usury. Notwithstanding anything contained in
this Agreement, the Note, or in any other Loan Document to the
contrary, in no event will interest or other charges deemed to be
interest be chargeable against Borrower if such amount (combined with
any other amounts considered to be in the nature of interest) would
exceed the maximum amount permitted by law from time to time while any
of the Indebtedness is outstanding, and in the event any amount in
excess of the lawful maximum is charged or collected by Bank or paid
by Borrower, Borrower shall be entitled to the reimbursement of such
excess together with interest thereon at the Prime Rate.
12.9 Powers. All powers of attorney granted to Bank are
coupled with an interest and are irrevocable.
12.10 Approvals. If this Agreement calls for the
approval or consent of Bank, such approval or consent may be given or
withheld in the discretion of Bank unless otherwise specified herein.
12.11 Binding Arbitration; Preservation of Remedies.
(a) Binding Arbitration. Upon demand of any party
hereto, whether made before or after institution of any judicial
proceeding, any claim or controversy arising out of, or relating to
the Loan Documents ("Disputes") between the parties shall be resolved
by binding arbitration conducted under and governed by the Commercial
Financial Disputes Arbitration Rules (the "Arbitration Rules") of the
American Arbitration Association (the "AAA") and the Federal
Arbitration Act. Disputes may include, without limitation, tort
claims, counterclaims, disputes as to whether a matter is subject to
arbitration, claims brought as class actions, and claims arising from
documents executed in the future. A judgment upon the award may be
entered in any court having jurisdiction. Notwithstanding the
foregoing, this arbitration provision does not apply to disputes under
or related to an interest rate swap.
(b) Special Rules. All arbitration hearings shall
be conducted in Richmond, Virginia. A hearing shall begin within 90
days of demand for arbitration and all hearings shall conclude within
120 days of demand for arbitration. These time limitations may not be
extended unless a party shows cause for extension and then for no more
than a total extension of 60 days. The expedited procedures set forth
in Rule 51 et seq. of the Arbitration Rules shall be applicable to
claims of less than $1,000,000. Arbitrators shall be licensed
attorneys selected from the Commercial Financial Dispute Arbitration
Panel of the AAA. The parties do not waive applicable Federal or
state substantive law except as provided herein.
(c) Preservation and Limitation of Remedies.
Notwithstanding the preceding binding arbitration provisions, the
parties agree to preserve, without diminution, certain remedies that
any party may exercise before or after an arbitration proceeding is
brought. The parties shall have the right to proceed in any court of
proper jurisdiction or by self-help to exercise or prosecute the
following remedies, as applicable; (i) all rights to foreclose against
any real or personal property or other security by exercising a power
of sale or under applicable law by judicial foreclosure including a
proceeding to confirm the sale; (ii) all rights of self-help including
peaceful occupation of real property and collection of rents, set-off,
and peaceful possession of personal property; (iii) obtaining
provisional or ancillary remedies including injunctive relief,
sequestration, garnishment, attachment, appointment of receiver and
filing an involuntary bankruptcy proceeding; and (iv) when applicable,
a judgment by confession of judgment. Any claim or controversy with
regard to the parties' entitlement to such remedies is a Dispute.
(d) No Punitive Damages. The parties agree that
they shall not have a remedy of punitive or exemplary damages against
each other in any Dispute and hereby waive any right or claim to
punitive or exemplary damages they have now or which may arise in the
future in connection with any Dispute, whether the Dispute is resolved
by arbitration or judicially.
(e) Waiver of Jury Trial. The parties acknowledge
that by agreeing to binding arbitration they have irrevocably waived
any right they may have to a jury trial with regard to a Dispute.
12.12 Participations. Bank shall have the right to
enter into one or more participation with other lenders with respect
to the Indebtedness. Upon prior notice to Borrower and Guarantors of
such participation, Borrower and Guarantors shall thereafter furnish
to such participant any information furnished by Borrower and
Guarantors to Bank pursuant to the terms of the Loan Documents.
Nothing in this Agreement or any other Loan Document shall prohibit
the Bank from pledging or assigning this Agreement and Bank's rights
under any of the other Loan Documents, including collateral therefor,
to any Federal Reserve Bank in accordance with applicable law.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed under seal as of the day and year first above
written.
FIRST UNION NATIONAL BANK
By_________________________________________(SEAL)
Name: ____________________________________
Title: ___________________________________
R. P. INDUSTRIES OF OHIO, INC.
By_________________________________________(SEAL)
Name: _____________________________________
Title: ____________________________________
UNITED SHIELDS CORPORATION
By_________________________________________(SEAL)
Name: _____________________________________
Title: ____________________________________
FURNITURE PLASTICS OF FOREST CITY, INC.
By_________________________________________(SEAL)
Name: __________________________________
Title: _________________________________
GRANVILLE PLASTICS COMPANY, INC.
By_________________________________________(SEAL)
Name: ____________________________________
Title: ___________________________________
R. P. ENTERPRISES, INC.
By_________________________________________(SEAL)
Name: ____________________________________
Title: ___________________________________
RICHMOND PLASTICS, INC.
By_________________________________________(SEAL)
Name: ____________________________________
Title: ___________________________________
R. P. REAL ESTATE, INC.
By_________________________________________(SEAL)
Name: ____________________________________
Title: ___________________________________
<PAGE>
SCHEDULE OF EXHIBITS
(If any exhibit is omitted, the information called for therein
shall be considered "None" or "Not Applicable")
Exhibit Section Reference Title
1.1A 1.1 ("Collateral") Additional Collateral
1.1B 1.1 ("Permitted Debt") Permitted Debt
1.1C 1.1 ("Permitted Liens") Permitted Liens
2.3 2.3 ("Financial Condition") Contingent Liabilities
2.4 2.4 ("Litigation") Litigation
2.13 2.13 ("Subsidiaries") List of Subsidiaries
2.14 2.14 ("Environmental") Environmental Disclosures
2.17 2.17 ("Perfection
Certificate") Perfection Certificate
7.3 7.3 ("Dividends") Permitted Dividends and
Distributions
8 8 ("Other Covenants") Other Additional Covenants
<PAGE>
EXHIBIT 1.1A
Collateral
None.<PAGE>
EXHIBIT 1.1B
Permitted Debt
The following shall be additional Permitted Debt:
Debt payable to suppliers and other trade creditors in the
ordinary course of business on ordinary and customary trade terms and
which is not past due.
Debt of any Subsidiary of Borrower to Borrower or another
such Subsidiary.
Endorsement of checks for collection in the ordinary course
of business.
The obligation of Parent as guarantor of the obligations of
The HeaterMeals Co. pursuant to a sale-leaseback between The
HeaterMeals Co. and Information Leasing Corporation in the amount of
$500,000.<PAGE>
EXHIBIT 1.1C
Permitted Liens
The following shall be additional Permitted Liens:
Deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance, social
security and similar laws.
Attachment, judgment and other similar non-tax Liens arising
in connection with court proceedings but only if and for so long as
(a)the execution or enforcement of such Liens is and continues to be
effectively stayed and bonded on appeal, (b)the validity and/or amount
of the claims secured thereby are being actively contested in good
faith by appropriate legal proceedings and (c)such Liens do not, in
the aggregate, materially detract from the value of the assets of the
Person whose assets are subject to such Lien or materially impair the
use thereof in the operation of such Person's business.
<PAGE>
EXHIBIT 2.3
Financial Condition
None.<PAGE>
EXHIBIT 2.4
Litigation
On May 5, 1997, Dorothy J. Perkinson, a former employee of Granville
Plastics, filed an administrative charge with the U.S. Equal
Employment Opportunity Commission ("EEOC") claiming discrimination on
the basis of sex and in violation of Title VII and of the Equal Pay
Act. Granville Plastics, the Respondent, categorically denies the
charges and, on June 30, 1997, filed a position statement with the
EEOC responding to Ms. Perkinson's claims. Currently, the charge is
pending before the EEOC. No determination has been made.
EXHIBIT 2.13
Subsidiaries
Name Jurisdiction of Incorporation Ownership Interest
R.P. Industries
of Ohio, Inc. Ohio 100% United
Shields Corporation
The HeaterMeals Company Colorado 100% United Shields
Corporation
Furniture Plastics
of Forest City, Inc. North Carolina 100% Borrower
R. P. Enterprises, Inc. Virginia 100% Borrower
Richmond Plastics, Inc. Virginia 100% Borrower
R. P. Real Estate, Inc. Virginia 100% Borrower
Granville Plastics
Company, Inc. North Carolina 100% Furniture
Plastics of Forest
City, Inc.
<PAGE>
EXHIBIT 2.14
Environmental Disclosures
Phase I Environmental Site Assessment dated August 18, 1997 and Phase
II Environmental Site Assessment dated November 11, 1997, both
prepared by Schnabel Engineering, with respect to the Virginia
Property, are incorporated herein by reference.
EXHIBIT 2.17
Perfection Certificate
EXHIBIT 7.3
Permitted Dividends and Distributions
None.
<PAGE>
EXHIBIT 8
Financial Covenants
1. The Borrower and its Subsidiaries will not make any
expenditures in respect of the purchase or other acquisition
(including a Capital Lease) of fixed or capital assets (excluding
normal replacements and maintenance which are properly charged to
current operations), except for expenditures in the ordinary course of
business not exceeding $500,000 in the aggregate during any fiscal
year.
2. The ratio of total liabilities to Net Worth of Borrower
and its Subsidiaries will at no time exceed 1.35 to 1.0.
3. As of the last day of each fiscal quarter beginning with
the last quarter of the fiscal year ending in 1998 until the last
quarter of the fiscal year ending in 1999, the ratio of Senior Funded
Debt to Cash Flow for the previous four quarters, including the
quarter as of which the ratio is calculated, will not exceed 6.0 to
1.0. As of the last day of each fiscal quarter beginning with the
first quarter of the fiscal year ending in 2000 and thereafter, the
ratio of Senior Funded Debt to Cash Flow for the previous four
quarters, including the quarter as of which the ratio is calculated,
will not exceed 4.0 to 1.0.
4. The Cash Flow of Borrower and its Subsidiaries for the
first quarter of the fiscal year ending in 1998 will be no less than
$175,000. The Cash Flow of Borrower and its Subsidiaries for the
first two quarters of the fiscal year ending in 1998 will be no less
than $350,000. The Cash Flow of Borrower and its Subsidiaries for the
first three quarters of the fiscal year ending in 1998 will be no less
than $525,000.
5. The Net Worth of Borrower and its Subsidiaries will, as of
December 31, 1997, not be less than $4,600,000.
6. Borrower and its Subsidiaries will not incur or assume any
liability for the payment of rent under any lease or rental
arrangement (excluding Capital Leases) if, after giving effect
thereto, the aggregate amount of lease payments that Borrower and its
Subsidiaries have so incurred or assumed will exceed $30,000 for any
fiscal year under all such leases.
"Capital Lease" shall mean a lease that should be
capitalized on the balance sheet of the lessee prepared in accordance
with GAAP.
"Cash Flow" shall mean, for any period, the after-tax net
income of Borrower and its Subsidiaries for such period, plus interest
expense, taxes, depreciation and amortization for such period.
"Net Worth" shall mean at any date total assets of Borrower
and its Subsidiaries minus total liabilities.
"Senior Funded Debt" shall mean at any date the Debt of
Borrower and its Subsidiaries, excluding Debt of Borrower and its
Subsidiaries subordinated in right of payment and security to the
Indebtedness in accordance with a subordination agreement satisfactory
to Bank.
<PAGE>
EXHIBIT 99.8
ENVIRONMENTAL LIABILITIES AGREEMENT
THIS ENVIRONMENTAL LIABILITIES AGREEMENT (this "Agreement") is made as
of December ___, 1997 by R.P. INDUSTRIES OF OHIO, INC., an Ohio
corporation (collectively, the "Borrower") to and for the benefit of
FIRST UNION NATIONAL BANK, a national banking association (the
"Lender").
DEFINITIONS
Definitions. As used herein, the following terms shall have the
following meanings:
Asbestos: Asbestos or any substance containng asbestos.
Environmental Law: Any federal, state or local law, statute,
ordinance, code, rule, regulation, license, authorization, decision,
order, injunction or decree which pertains to health, safety or the
environment (including but not limited to, ground or air or water or
noise pollution or contamination, and underground or aboveground
tanks) and shall include, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended ("CERCLA"), the Resource Conservation and Recovery Act of
1976, as amended ("RCRA"), and any state or federal lien or superlien
or environmental clean-up statutes, and regulations, rules,
guidelines, or standards promulgated pursuant thereto all as amended
from time to time.
Hazardous Substance: Any substance, whether solid liquid or
gaseous: i)which is listed, defined or regulated as a "hazardous
substance," "hazardous waste" or "solid waste," or otherwise
classified as hazardous or toxic, in or pursuant to any Environmental
Law; or ii)which is or contains Asbestos, radon, any polychlorinated
biphenyl, urea formaldehyde foam insulation, explosive or radioactive
material, lead paint, or motor fuel or other petroleum hydrocarbons;
or iii)which causes or poses a threat to cause a contamination or
nuisance on the Mortgaged Property or any adjacent property or a
hazard to the environment or to the health or safety of persons on or
about the Mortgaged Property.
Mortgage: Those Deeds of Trust, dated of even date herewith,
executed by Borrower for the benefit of Lender, covering the Mortgaged
Property more particularly described therein, including the real
property or interest therein described in Exhibit A attached hereto
and incorporated herein by this reference.
Remediation: Any investigation, site monitoring, containment,
cleanup, removal, restoration, or other activities of any kind which
are reasonably necessary or desirable under an applicable
Environmental Law.
Storage Tanks: Any underground or aboveground storage tanks,
whether filled, empty, or partially filled with any substance.
Other Defined Terms. Any capitalized term utilized herein shall
have the meaning as specified in the Mortgage, unless such term is
otherwise specifically defined herein.
WARRANTIES AND REPRESENTATIONS
Borrower hereby represents and warrants to Lender that, to the
best of Borrower's knowledge after due inquiry and investigation as
follows:
Mortgaged Property Compliance. The Mortgaged Property and the
operations conducted thereon do not violate any applicable law,
statute, ordinance, rule, regulation, order, or determination of any
governmental authority or any restrictive covenant or deed restriction
(recorded or otherwise), including without limitation all applicable
zoning ordinances and building codes, flood disaster laws and
Environmental Laws.
No Violations. Without limitation to Section 2.1 above, except
as previously disclosed in writing to Lender, the Mortgaged Property
and operations conducted thereon by the current owner or operator of
such Mortgaged Property, are not the subject of any existing, pending,
or threatened action, suit, investigation, inquiry, or proceeding by
any governmental or nongovernmental entity or person or to any
Remediation under any Environmental Law.
Authorizations. All notices, permits, licenses, registrations,
or similar authorizations, if any, required to be obtained or filed in
connection with the ownership, operation, or use of the Mortgaged
Property, including, without limitation, the existence of any Storage
Tanks at the Mortgaged Property or the past or present generation,
treatment, storage, disposal, or release of a Hazardous Substance into
the environment, have been duly obtained or filed and have been duly
renewed or maintained.
Hazardous Substance. Except as previously disclosed in writing
to Lender, the Mortgaged Property does not contain any Hazardous
Substance in violation of applicable Environmental Laws. Except as
disclosed in writing to Lender the Mortgaged Property does not contain
any Storage Tanks or Asbestos.
Borrower Investigation. Borrower has taken all steps necessary
to determine, and has determined, that no Hazardous Substances are or
have been generated, treated, stored, used, disposed of or released
on, under, from, or about the Mortgaged Property except in compliance
with applicable Environmental Laws.
Borrower Compliance. Borrower has not undertaken, permitted,
authorized, or suffered and will not undertake, permit, authorize, or
suffer the presence, use, manufacture, handling, generation,
transportation, storage, treatment, discharge, release, burial, or
disposal on, under, from or about the Mortgaged Property of any
Hazardous Substance or the transportation to or from the Mortgaged
Property of any Hazardous Substance except in compliance with
applicable Environmental Laws.
No Pending Litigation. Except as otherwise previously disclosed
to Lender in writing, there is no pending or threatened litigation,
proceedings, or investigations before or by any administrative agency
in which any person or entity alleges or is investigating any alleged
presence, release, threat of release, placement on, under, from or
about the Mortgaged Property, or the manufacture, handling,
generation, transportation, storage, treatment, discharge, burial, or
disposal on, under, from or about the Mortgaged Property, or the
transportation to or from the Mortgaged Property, of any Hazardous
Substance.
No Notices. Except as otherwise previously disclosed to Lender
in writing, Borrower has not received any notice, and has no actual or
constructive knowledge, that any governmental authority or any
employee or agent thereof has determined, or threatens to determine,
or is investigating any allegation that there is a presence, release,
threat of release, placement on, under, from or about the Mortgaged
Property, or the use, manufacture, handling, generation,
transportation, storage, treatment, discharge, burial, or disposal on,
under, from or about the Mortgaged Property, or the transportation to
or from the Mortgaged Property, of any Hazardous Substance.
No Communications. Except as otherwise previously disclosed to
Lender in writing, there have been no communications or agreements
with any governmental authority thereof or any private entity,
including, but not limited to, any prior owners or operators of the
Mortgaged Property, relating in any way to the presence, release,
threat of release, placement on, under or about the Mortgaged
Property, or the use, manufacture, handling, generation,
transportation, storage, treatment, discharge, burial, or disposal on,
under or about the Mortgaged Property, or the transportation to or
from the Mortgaged Property, of any Hazardous Substance, except for
communications made in the ordinary course of business in connection
with permits, reports, and routine inspections issued, prepared or
conducted by government agencies or authorities having jurisdiction
over the Mortgaged Property.
Other Properties. Neither Borrower, nor, to the best knowledge
of Borrower, any other person, including, but not limited to, any
predecessor owner, tenant, licensee, occupant, user, or operator of
all or any portion of the Mortgaged Property, has ever caused,
permitted, authorized or suffered, and Borrower will not cause,
permit, authorize, or suffer, any Hazardous Substance to be placed,
held, located, or disposed of, on, under or about any other real
property, all or any portion of which is legally or beneficially owned
(or any interest or estate therein which is owned) by Borrower in any
jurisdiction now or hereafter having in effect a so-called "superlien"
law or ordinance or any part thereof, the effect of which law or
ordinance would be to create a lien on the Mortgaged Property to
secure any obligation in connection with the "superlien" law of such
other jurisdiction.
Permits. Borrower has been issued all required federal, state,
and local licenses, certificates, or permits relating to, and Borrower
and the Mortgaged Property are in compliance in all respects with, all
applicable Environmental Laws, including but not limited to, federal,
state, and local laws, rules, and regulations relating to, air
emissions, water discharge, noise emissions, solid or liquid waste
disposal, hazardous waste or materials, or other environmental,
health, or safety matters.
AFFIRMATIVE COVENANTS
Borrower hereby unconditionally covenants and agrees with Lender,
until the entire Indebtedness (as defined in the Credit Agreement)
shall have been paid in full and all of the obligations of Borrower
under the Loan Documents shall have been fully performed and
discharged, as follows:
Operations. Borrower shall not use, generate, manufacture,
produce, store, release, discharge, treat, or dispose of on, under,
from or about the Mortgaged Property or transport to or from the
Mortgaged Property any Hazardous Substance or allow any other person
or entity to do so except in compliance with Environmental Laws.
Borrower shall not install or permit to be installed any Asbestos or
Storage Tanks at the Mortgaged Property and shall remedy all
violations of Environmental Laws with respect thereto including, but
not limited to, removal of Asbestos and/or Storage Tanks in the manner
and as required by applicable Environmental Laws.
Compliance. Borrower shall keep and maintain the Mortgaged
Property in compliance with, and shall not cause or permit the
Mortgaged Property to be in violation of, any Environmental Law and
upon discovery of any noncompliance shall promptly take corrective
action to remedy such noncompliance.
Monitoring. Borrower shall establish and maintain, at Borrower's
sole expense, a system to assure and monitor continued compliance with
Environmental Laws, the existence of any Storage Tank on the Mortgaged
Property and the presence of Hazardous Substances on the Mortgaged
Property, by any and all owners or operators of the Mortgaged
Property, which system shall include at a minimum annual reviews of
such compliance by employees or agents of Borrower who are familiar
with the requirements of the Environmental Laws and, at the request of
Lender no more than once each year, a detailed review of such
compliance of the environmental condition of the Mortgaged Property
("Environmental Compliance Report") in scope satisfactory to Lender by
an environmental consulting firm approved in advance by Lender;
provided, however, that if any Environmental Compliance Report
indicates a violation of any Environmental Law or a need for
Remediation, such system shall include at the request of Lender a
detailed review ("Environmental Remediation Report") of the status of
such violation by such environmental consultant. Borrower shall
furnish each Environmental Compliance Report or Environmental
Remediation Report to the Lender within sixty (60) days after Lender
so requests, together with such additional information as Lender may
reasonably request. If Borrower fails to contract for such an
Environmental Compliance Report or Environmental Remediation Report
after ten (10) days notice, or fails to provide either such report
within sixty (60) days, Lender may order same, and Borrower grants to
Lender and its employees, agents, contractors and consultants access
to the Mortgaged Property and a license (which is coupled with an
interest and irrevocable while the Mortgage is in effect) to perform
inspections and tests, including (but not limited to) the taking of
soil borings and air and groundwater samples. All costs of such
reports, inspections and tests shall be an obligation of Borrower
which Borrower promises to pay to Lender pursuant to this Agreement.
All such costs shall constitute a portion of the Indebtedness, secured
by the Mortgage and the other Loan Documents.
Notices. Borrower shall give prompt written notices to Lender
of: (i) any proceeding or inquiry by any governmental or
nongovernmental entity or person with respect to the presence of any
Hazardous Substance on, under, from or about the Mortgaged Property,
the migration thereof from or to other property, the disposal,
storage, or treatment of any Hazardous Substance generated or used on,
under or about the Mortgaged Property, (ii) all claims made or
threatened by any third party against Borrower or the Mortgaged
Property or any other owner or operator of the Mortgaged Property
relating to any release reportable under any applicable Environmental
Law, loss or injury resulting from any Storage Tank or Hazardous
Substance, and (iii) Borrower's discovery of any occurrence or
condition on any real property adjoining or in the vicinity of the
Mortgaged Property that could cause the Mortgaged Property or any part
thereof to be subject to any investigation or cleanup of the Mortgaged
Property pursuant to any Environmental Law or that could result in
Borrower becoming liable for any cost related to any investigation or
cleanup of such Mortgaged Property.
Legal Proceedings. Borrower shall permit Lender to join and
participate in, as a party if it so elects, any legal proceedings or
actions initiated with respect to the Mortgaged Property in connection
with any Environmental Law, Hazardous Substance or Storage Tank and
Borrower shall pay all attorneys' fees incurred by Lender in
connection therewith.
Remediation. In the event that the Mortgaged Property (or any
portion thereof) becomes the subject of any Remediation, Borrower
shall commence such Remediation no later than the earlier of (i)
thirty (30) days after written demand by Lender for performance
thereof, or (ii) such shorter period of time as may be required under
applicable law, and thereafter shall diligently prosecute the same to
completion in accordance with applicable law. All Remediation shall
be performed by contractors approved in advance by Lender, and under
the supervision of a consulting engineer approved by Lender. All
costs and expenses of such Remediation shall be paid by Borrower
including, without limitation, Lender's reasonable attorneys' fees and
costs incurred in connection with monitoring or review of such
Remediation. In the event Borrower shall fail to timely commence, or
cause to be commenced, or fail to diligently prosecute to completion,
such Remediation, Lender may, but shall not be required to, cause such
Remediation to be performed, and all costs and expenses thereof, or
incurred in connection therewith, shall become part of the
Indebtedness.
INDEMNIFICATION
BORROWER SHALL PROTECT, INDEMNIFY, AND HOLD HARMLESS LENDER AND
TRUSTEE, THEIR PARENTS, SUBSIDIARIES, TRUSTEES, SHAREHOLDERS,
DIRECTORS, OFFICERS, EMPLOYEES, REPRESENTATIVES, AGENTS, SUCCESSORS
AND ASSIGNS FROM AND AGAINST ALL LIABILITIES, OBLIGATIONS, CLAIMS,
DEMANDS, DAMAGES, PENALTIES, CAUSES OF ACTION, LOSSES, FINES, COSTS
AND EXPENSES (INCLUDING WITHOUT LIMITATION CONSEQUENTIAL DAMAGES AND
REASONABLE ATTORNEYS' FEES AND EXPENSES), DIRECTLY OR INDIRECTLY
ARISING FROM OR RELATED TO ANY RELEASE OF OR EXPOSURE TO ANY HAZARDOUS
SUBSTANCE (INCLUDING PERSONAL INJURY OR DAMAGE TO PROPERTY),
NONCOMPLIANCE WITH ANY ENVIRONMENTAL LAW, REMEDIATION, OR ARISING
UNDER ANY ENVIRONMENTAL LAW. THE INDEMNIFICATION OBLIGATIONS OF
BORROWER HEREUNDER SHALL BE DEEMED TO CONSTITUTE A PART OF THE DEBT
SECURED BY THE MORTGAGE AND THE OTHER LOAN DOCUMENTS.
MISCELLANEOUS
Survival of Obligations. Each and all of the representations,
covenants and agreements and indemnities contained herein shall
survive any termination, satisfaction or assignment of the Loan
Documents or the entry of a judgment of foreclosure, sale of the
Mortgaged Property by nonjudicial foreclosure sale, delivery of a deed
in lieu of foreclosure or the exercise by Lender of any of its other
rights and remedies under the Loan Documents.
Notices. All notices or other communications required or
permitted to be given hereunder shall be given to the parties and
become effective as provided in the Mortgage.
Binding Effect. This Agreement shall be binding on the parties
hereto, their successors, assigns, heirs and legal representatives and
all other persons claiming by, through or under them.
Counterparts. This Agreement may be executed in any number of
counterparts each of which shall be deemed to be an original but all
of which when taken together shall constitute one agreement.
GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE IN WHICH THE MORTGAGED
PROPERTY IS LOCATED AND THE APPLICABLE LAWS OF THE UNITED STATES OF
AMERICA.
Reliance. Borrower recognizes and acknowledges that in entering
into the loan transaction evidenced by the Loan Documents and
accepting the Mortgage, Lender is expressly and primarily relying on
the truth and accuracy of the warranties and representations set forth
in this Agreement without any obligation to investigate the Mortgaged
Property and notwithstanding any investigation of the Mortgaged
Property by Lender; that such reliance exists on the part of Lender
prior hereto; that such warranties and representations are a material
inducement to Lender in making the loan evidenced by the Loan
Documents and accepting the Mortgage; and that Lender would not be
willing to make the loan evidenced by the Loan Documents and accept
the Mortgage in the absence of such warranties and representations.
Headings. The article, section and subsection entitlements
hereof are inserted for convenience of reference only and shall in no
way alter, modify, or define, or be used in construing the text of
such articles, sections or subsections.
No Oral Change. This Agreement may not be waived, extended,
changed, discharged or terminated orally, or by any act or failure to
act on the part of Borrower or Lender, but only by an agreement in
writing signed by the party against whom the enforcement of any
modification, amendment, waiver, extension, change, discharge or
termination is sought.
EXECUTED under seal as of the date first above written.
BORROWER:
R.P. INDUSTRIES OF OHIO, an Ohio Corporation
By:
Name:
Title:
EXHIBIT A
Legal Descriptions
<PAGE>
EXHIBIT 99.9
ENVIRONMENTAL LIABILITIES AGREEMENT
THIS ENVIRONMENTAL LIABILITIES AGREEMENT (this "Agreement") is
made as of December ___, 1997 by GRANVILLE PLASTICS COMPANY, INC., a
North Carolina corporation and R.P. INDUSTRIES OF OHIO, INC., an Ohio
corporation (collectively, the "Borrower") to and for the benefit of
FIRST UNION NATIONAL BANK, a national banking association (the
"Lender").
DEFINITIONS
Definitions. As used herein, the following terms shall have
the following meanings:
Asbestos: Asbestos or any substance containing asbestos.
Environmental Law: Any federal, state or local law, statute,
ordinance, code, rule, regulation, license, authorization, decision,
order, injunction or decree which pertains to health, safety or the
environment (including but not limited to, ground or air or water or
noise pollution or contamination, and underground or aboveground
tanks) and shall include, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended ("CERCLA"), the Resource Conservation and Recovery Act of
1976, as amended ("RCRA"), and any state or federal lien or superlien
or environmental clean-up statutes, and regulations, rules,
guidelines, or standards promulgated pursuant thereto all as amended
from time to time.
Hazardous Substance: Any substance, whether solid liquid or
gaseous: i)which is listed, defined or regulated as a "hazardous
substance," "hazardous waste" or "solid waste," or otherwise
classified as hazardous or toxic, in or pursuant to any Environmental
Law; or ii)which is or contains Asbestos, radon, any polychlorinated
biphenyl, urea formaldehyde foam insulation, explosive or radioactive
material, lead paint, or motor fuel or other petroleum hydrocarbons;
or iii)which causes or poses a threat to cause a contamination or
nuisance on the Mortgaged Property or any adjacent property or a
hazard to the environment or to the health or safety of persons on or
about the Mortgaged Property.
Mortgage: Those Deeds of Trust, dated of even date herewith,
executed by Borrower for the benefit of Lender, covering the Mortgaged
Property more particularly described therein, including the real
property or interest therein described in ExhibitA attached hereto and
incorporated herein by this reference.
Remediation: Any investigation, site monitoring, containment,
cleanup, removal, restoration, or other activities of any kind which
are reasonably necessary or desirable under an applicable
Environmental Law.
Storage Tanks: Any underground or aboveground storage tanks,
whether filled, empty, or partially filled with any substance.
Other Defined Terms. Any capitalized term utilized herein
shall have the meaning as specified in the Mortgage, unless such term
is otherwise specifically defined herein.
WARRANTIES AND REPRESENTATIONS
Borrower hereby represents and warrants to Lender that, to the
best of Borrower's knowledge after due inquiry and investigation as
follows:
Mortgaged Property Compliance. The Mortgaged Property and
the operations conducted thereon do not violate any applicable law,
statute, ordinance, rule, regulation, order, or determination of any
governmental authority or any restrictive covenant or deed restriction
(recorded or otherwise), including without limitation all applicable
zoning ordinances and building codes, flood disaster laws and
Environmental Laws.
No Violations. Without limitation to Section 2.1 above,
except as previously disclosed in writing to Lender, the Mortgaged
Property and operations conducted thereon by the current owner or
operator of such Mortgaged Property, are not the subject of any
existing, pending, or threatened action, suit, investigation, inquiry,
or proceeding by any governmental or nongovernmental entity or person
or to any Remediation under any Environmental Law.
Authorizations. All notices, permits, licenses,
registrations, or similar authorizations, if any, required to be
obtained or filed in connection with the ownership, operation, or use
of the Mortgaged Property, including, without limitation, the
existence of any Storage Tanks at the Mortgaged Property or the past
or present generation, treatment, storage, disposal, or release of a
Hazardous Substance into the environment, have been duly obtained or
filed and have been duly renewed or maintained.
Hazardous Substance. Except as previously disclosed in
writing to Lender, the Mortgaged Property does not contain any
Hazardous Substance in violation of applicable Environmental Laws.
Except as disclosed in writing to Lender the Mortgaged Property does
not contain any Storage Tanks or Asbestos.
Borrower Investigation. Borrower has taken all steps
necessary to determine, and has determined, that no Hazardous
Substances are or have been generated, treated, stored, used, disposed
of or released on, under, from, or about the Mortgaged Property except
in compliance with applicable Environmental Laws.
Borrower Compliance. Borrower has not undertaken,
permitted, authorized, or suffered and will not undertake, permit,
authorize, or suffer the presence, use, manufacture, handling,
generation, transportation, storage, treatment, discharge, release,
burial, or disposal on, under, from or about the Mortgaged Property of
any Hazardous Substance or the transportation to or from the Mortgaged
Property of any Hazardous Substance except in compliance with
applicable Environmental Laws.
No Pending Litigation. Except as otherwise previously
disclosed to Lender in writing, there is no pending or threatened
litigation, proceedings, or investigations before or by any
administrative agency in which any person or entity alleges or is
investigating any alleged presence, release, threat of release,
placement on, under, from or about the Mortgaged Property, or the
manufacture, handling, generation, transportation, storage, treatment,
discharge, burial, or disposal on, under, from or about the Mortgaged
Property, or the transportation to or from the Mortgaged Property, of
any Hazardous Substance.
No Notices. Except as otherwise previously disclosed to
Lender in writing, Borrower has not received any notice, and has no
actual or constructive knowledge, that any governmental authority or
any employee or agent thereof has determined, or threatens to
determine, or is investigating any allegation that there is a
presence, release, threat of release, placement on, under, from or
about the Mortgaged Property, or the use, manufacture, handling,
generation, transportation, storage, treatment, discharge, burial, or
disposal on, under, from or about the Mortgaged Property, or the
transportation to or from the Mortgaged Property, of any Hazardous
Substance.
No Communications. Except as otherwise previously disclosed
to Lender in writing, there have been no communications or agreements
with any governmental authority thereof or any private entity,
including, but not limited to, any prior owners or operators of the
Mortgaged Property, relating in any way to the presence, release,
threat of release, placement on, under or about the Mortgaged
Property, or the use, manufacture, handling, generation,
transportation, storage, treatment, discharge, burial, or disposal on,
under or about the Mortgaged Property, or the transportation to or
from the Mortgaged Property, of any Hazardous Substance, except for
communications made in the ordinary course of business in connection
with permits, reports, and routine inspections issued, prepared or
conducted by government agencies or authorities having jurisdiction
over the Mortgaged Property.
Other Properties. Neither Borrower, nor, to the best
knowledge of Borrower, any other person, including, but not limited
to, any predecessor owner, tenant, licensee, occupant, user, or
operator of all or any portion of the Mortgaged Property, has ever
caused, permitted, authorized or suffered, and Borrower will not
cause, permit, authorize, or suffer, any Hazardous Substance to be
placed, held, located, or disposed of, on, under or about any other
real property, all or any portion of which is legally or beneficially
owned (or any interest or estate therein which is owned) by Borrower
in any jurisdiction now or hereafter having in effect a so-called
"superlien" law or ordinance or any part thereof, the effect of which
law or ordinance would be to create a lien on the Mortgaged Property
to secure any obligation in connection with the "superlien" law of
such other jurisdiction.
Permits. Borrower has been issued all required federal,
state, and local licenses, certificates, or permits relating to, and
Borrower and the Mortgaged Property are in compliance in all respects
with, all applicable Environmental Laws, including but not limited to,
federal, state, and local laws, rules, and regulations relating to,
air emissions, water discharge, noise emissions, solid or liquid waste
disposal, hazardous waste or materials, or other environmental,
health, or safety matters.
AFFIRMATIVE COVENANTS
Borrower hereby unconditionally covenants and agrees with Lender,
until the entire Indebtedness (as defined in the Credit Agreement)
shall have been paid in full and all of the obligations of Borrower
under the Loan Documents shall have been fully performed and dis-
charged, as follows:
Operations. Borrower shall not use, generate, manufacture,
produce, store, release, discharge, treat, or dispose of on, under,
from or about the Mortgaged Property or transport to or from the
Mortgaged Property any Hazardous Substance or allow any other person
or entity to do so except in compliance with Environmental Laws.
Borrower shall not install or permit to be installed any Asbestos or
Storage Tanks at the Mortgaged Property and shall remedy all
violations of Environmental Laws with respect thereto including, but
not limited to, removal of Asbestos and/or Storage Tanks in the manner
and as required by applicable Environmental Laws.
Compliance. Borrower shall keep and maintain the Mortgaged
Property in compliance with, and shall not cause or permit the
Mortgaged Property to be in violation of, any Environmental Law and
upon discovery of any noncompliance shall promptly take corrective
action to remedy such noncompliance.
Monitoring. Borrower shall establish and maintain, at
Borrower's sole expense, a system to assure and monitor continued
compliance with Environmental Laws, the existence of any Storage Tank
on the Mortgaged Property and the presence of Hazardous Substances on
the Mortgaged Property, by any and all owners or operators of the
Mortgaged Property, which system shall include at a minimum annual
reviews of such compliance by employees or agents of Borrower who are
familiar with the requirements of the Environmental Laws and, at the
request of Lender no more than once each year, a detailed review of
such compliance of the environmental condition of the Mortgaged
Property ("Environmental Compliance Report") in scope satisfactory to
Lender by an environmental consulting firm approved in advance by
Lender; provided, however, that if any Environmental Compliance Report
indicates a violation of any Environmental Law or a need for
Remediation, such system shall include at the request of Lender a
detailed review ("Environmental Remediation Report") of the status of
such violation by such environmental consultant. Borrower shall
furnish each Environmental Compliance Report or Environmental
Remediation Report to the Lender within sixty (60) days after Lender
so requests, together with such additional information as Lender may
reasonably request. If Borrower fails to contract for such an
Environmental Compliance Report or Environmental Remediation Report
after ten (10) days notice, or fails to provide either such report
within sixty (60) days, Lender may order same, and Borrower grants to
Lender and its employees, agents, contractors and consultants access
to the Mortgaged Property and a license (which is coupled with an
interest and irrevocable while the Mortgage is in effect) to perform
inspections and tests, including (but not limited to) the taking of
soil borings and air and groundwater samples. All costs of such
reports, inspections and tests shall be an obligation of Borrower
which Borrower promises to pay to Lender pursuant to this Agreement.
All such costs shall constitute a portion of the Indebtedness, secured
by the Mortgage and the other Loan Documents.
Notices. Borrower shall give prompt written notices to
Lender of: (i) any proceeding or inquiry by any governmental or
nongovernmental entity or person with respect to the presence of any
Hazardous Substance on, under, from or about the Mortgaged Property,
the migration thereof from or to other property, the disposal,
storage, or treatment of any Hazardous Substance generated or used on,
under or about the Mortgaged Property, (ii) all claims made or
threatened by any third party against Borrower or the Mortgaged
Property or any other owner or operator of the Mortgaged Property
relating to any release reportable under any applicable Environmental
Law, loss or injury resulting from any Storage Tank or Hazardous
Substance, and (iii) Borrower's discovery of any occurrence or
condition on any real property adjoining or in the vicinity of the
Mortgaged Property that could cause the Mortgaged Property or any part
thereof to be subject to any investigation or cleanup of the Mortgaged
Property pursuant to any Environmental Law or that could result in
Borrower becoming liable for any cost related to any investigation or
cleanup of such Mortgaged Property.
Legal Proceedings. Borrower shall permit Lender to join and
participate in, as a party if it so elects, any legal proceedings or
actions initiated with respect to the Mortgaged Property in connection
with any Environmental Law, Hazardous Substance or Storage Tank and
Borrower shall pay all attorneys' fees incurred by Lender in
connection therewith.
Remediation. In the event that the Mortgaged Property (or
any portion thereof) becomes the subject of any Remediation, Borrower
shall commence such Remediation no later than the earlier of (i)
thirty (30) days after written demand by Lender for performance
thereof, or (ii) such shorter period of time as may be required under
applicable law, and thereafter shall diligently prosecute the same to
completion in accordance with applicable law. All Remediation shall
be performed by contractors approved in advance by Lender, and under
the supervision of a consulting engineer approved by Lender. All
costs and expenses of such Remediation shall be paid by Borrower
including, without limitation, Lender's reasonable attorneys' fees and
costs incurred in connection with monitoring or review of such
Remediation. In the event Borrower shall fail to timely commence, or
cause to be commenced, or fail to diligently prosecute to completion,
such Remediation, Lender may, but shall not be required to, cause such
Remediation to be performed, and all costs and expenses thereof, or
incurred in connection therewith, shall become part of the
Indebtedness.
<PAGE>
INDEMNIFICATION
BORROWER SHALL PROTECT, INDEMNIFY, AND HOLD HARMLESS LENDER AND
TRUSTEE, THEIR PARENTS, SUBSIDIARIES, TRUSTEES, SHAREHOLDERS,
DIRECTORS, OFFICERS, EMPLOYEES, REPRESENTATIVES, AGENTS, SUCCESSORS
AND ASSIGNS FROM AND AGAINST ALL LIABILITIES, OBLIGATIONS, CLAIMS,
DEMANDS, DAMAGES, PENALTIES, CAUSES OF ACTION, LOSSES, FINES, COSTS
AND EXPENSES (INCLUDING WITHOUT LIMITATION CONSEQUENTIAL DAMAGES AND
REASONABLE ATTORNEYS' FEES AND EXPENSES), DIRECTLY OR INDIRECTLY
ARISING FROM OR RELATED TO ANY RELEASE OF OR EXPOSURE TO ANY HAZARDOUS
SUBSTANCE (INCLUDING PERSONAL INJURY OR DAMAGE TO PROPERTY),
NONCOMPLIANCE WITH ANY ENVIRONMENTAL LAW, REMEDIATION, OR ARISING
UNDER ANY ENVIRONMENTAL LAW. THE INDEMNIFICATION OBLIGATIONS OF
BORROWER HEREUNDER SHALL BE DEEMED TO CONSTITUTE A PART OF THE DEBT
SECURED BY THE MORTGAGE AND THE OTHER LOAN DOCUMENTS.
MISCELLANEOUS
Survival of Obligations. Each and all of the
representations, covenants and agreements and indemnities contained
herein shall survive any termination, satisfaction or assignment of
the Loan Documents or the entry of a judgment of foreclosure, sale of
the Mortgaged Property by nonjudicial foreclosure sale, delivery of a
deed in lieu of foreclosure or the exercise by Lender of any of its
other rights and remedies under the Loan Documents.
Notices. All notices or other communications required or
permitted to be given hereunder shall be given to the parties and
become effective as provided in the Mortgage.
Binding Effect. This Agreement shall be binding on the
parties hereto, their successors, assigns, heirs and legal
representatives and all other persons claiming by, through or under
them.
Counterparts. This Agreement may be executed in any number
of counterparts each of which shall be deemed to be an original but
all of which when taken together shall constitute one agreement.
GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE IN WHICH THE
MORTGAGED PROPERTY IS LOCATED AND THE APPLICABLE LAWS OF THE UNITED
STATES OF AMERICA.
Reliance. Borrower recognizes and acknowledges that in
entering into the loan transaction evidenced by the Loan Documents and
accepting the Mortgage, Lender is expressly and primarily relying on
the truth and accuracy of the warranties and representations set forth
in this Agreement without any obligation to investigate the Mortgaged
Property and notwithstanding any investigation of the Mortgaged
Property by Lender; that such reliance exists on the part of Lender
prior hereto; that such warranties and representations are a material
inducement to Lender in making the loan evidenced by the Loan
Documents and accepting the Mortgage; and that Lender would not be
willing to make the loan evidenced by the Loan Documents and accept
the Mortgage in the absence of such warranties and representations.
Headings. The article, section and subsection entitlements
hereof are inserted for convenience of reference only and shall in no
way alter, modify, or define, or be used in construing the text of
such articles, sections or subsections.
No Oral Change. This Agreement may not be waived, extended,
changed, discharged or terminated orally, or by any act or failure to
act on the part of Borrower or Lender, but only by an agreement in
writing signed by the party against whom the enforcement of any
modification, amendment, waiver, extension, change, discharge or
termination is sought.
EXECUTED under seal as of the date first above written.
BORROWER:
GRANVILLE PLASTICS COMPANY, INC., a North Carolina Corporation
By:
Name:
Title:
R.P. INDUSTRIES OF OHIO, INC., an Ohio Corporation
By:
Name:
Title:
<PAGE>
EXHIBIT A
Legal Descriptions
<PAGE>
EXHIBIT 99.10
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "Pledge Agreement"), dated as of
December 30, 1997, made by R. P. INDUSTRIES OF OHIO, INC., an Ohio
corporation (the "Borrower"), UNITED SHIELDS CORPORATION, a Colorado
corporation, FURNITURE PLASTICS OF FOREST CITY, INC., a North Carolina
corporation, GRANVILLE PLASTICS COMPANY, INC., a North Carolina
corporation, R. P. ENTERPRISES, INC., a Virginia corporation, RICHMOND
PLASTICS, INC., a Virginia corporation, and R. P. REAL ESTATE, INC., a
Virginia corporation, (each a "Guarantor," and collectively the
"Guarantors," and together with the Borrower, each a "Pledgor," and
collectively the "Pledgors") and First Union National Bank, a national
banking association (the "Bank").
RECITALS
WHEREAS, pursuant to the Revolving Credit and Security Agreement
dated as of the date hereof (as amended, modified, extended, renewed
or replaced from time to time, the "Credit Agreement") among the
Borrower, the Guarantors and the Bank, the Bank has agreed to provide
the Borrower with a credit facility; and
WHEREAS, the Bank has required, as a condition precedent to its
entering into the Credit Agreement and making extensions of credit to
or for the account of the Borrower thereunder, that the Pledgors
secure their respective obligations under the Credit Agreement and the
other Loan Documents in accordance with the terms of this Pledge
Agreement.
NOW, THEREFORE, in consideration of these premises and other good
and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:
l. Definitions. Capitalized terms used herein but not
otherwise defined shall have the meanings ascribed to such terms in
the Credit Agreement.
2. Pledge and Grant of Security Interest. To secure the
prompt payment and performance in full when due, whether by lapse of
time or otherwise, of the Secured Obligations (as defined in Section 3
hereof), each Pledgor hereby pledges and assigns to the Bank, and
grants to the Bank, a continuing security interest in any and all
right, title and interest of such Pledgor in and to the following,
whether now owned or existing or owned, acquired, or arising hereafter
(collectively, the "Pledged Collateral"):
(a) Pledged Shares. All of the issued and outstanding
shares of capital stock of the Subsidiaries of such Pledgor set forth
on Schedule 1 attached hereto (all certificates representing such
shares and all options and other rights, contractual or otherwise,
with respect thereto, collectively the "Pledged Shares").
(b) Additional Shares. All of the issued and
outstanding shares of capital stock of any Subsidiary which is
hereafter formed or acquired by such Pledgor, including without
limitation, the certificates representing such shares.
(c) Other Equity Interests. Any and all other equity
interests of such Pledgor in any direct or indirect Subsidiary of the
Borrower.
(d) Proceeds. All proceeds and products of the
foregoing, however and whenever acquired and in whatever form.
Without limiting the generality of the foregoing, it is hereby
specifically understood and agreed that a Pledgor may from time to
time hereafter deliver additional shares of stock to the Bank as
collateral security for the Secured Obligations. Upon delivery to the
Bank, such additional shares of stock shall be deemed to be part of
the Pledged Collateral of such Pledgor and shall be subject to the
terms of this Pledge Agreement whether or not Schedule l is amended to
refer to such additional shares.
3. Security for Secured Obligations. The security interest
created hereby in the Pledged Collateral of each Pledgor constitutes
continuing collateral security for all of the following, whether now
existing or hereafter incurred (the "Secured Obligations"):
(a) (i) In the case of the Borrower, the prompt
performance and observance by the Borrower of all obligations of the
Borrower under the Credit Agreement, the Note, this Pledge Agreement
and the other Loan Documents to which the Borrower is a party; or
(ii) In the case of any Pledgor which is a
Guarantor, the prompt performance and observance by such Guarantor of
all obligations of such Guarantor under the Credit Agreement, this
Pledge Agreement and the other Loan Documents to which such Guarantor
is a party, including, without limitation, its guaranty obligations
arising under Section 4 of the Credit Agreement; and
(b) All other indebtedness, liabilities and obligations
of any kind or nature, now existing or hereafter arising, owing from
the Borrower or any Guarantor to the Bank, arising under the Loan
Documents, whether primary, secondary, direct, contingent, or joint
and several.
4. Delivery of the Pledged Collateral. Each Pledgor hereby
agrees that:
(a) Certificates. Such Pledgor shall deliver to the
Bank (i) simultaneously with or prior to the execution and delivery of
this Pledge Agreement, all certificates representing the Pledged
Shares of such Pledgor and (ii) promptly upon the receipt thereof by
or on behalf of such Pledgor, all other certificates and instruments
constituting Pledged Collateral of such Pledgor. Prior to delivery to
the Bank, all such certificates and instruments constituting Pledged
Collateral of such Pledgor shall be held in trust by such Pledgor for
the benefit of the Bank pursuant hereto. All such certificates shall
be delivered in suitable form for transfer by delivery or shall be
accompanied by duly executed instruments of transfer or assignment in
blank, in form provided in Schedule 2 attached hereto.
(b) Additional Securities. If such Pledgor shall
receive by virtue of its being or having been the owner of any Pledged
Collateral, any (i) stock certificate, including without limitation,
any certificate representing a stock dividend or distribution in
connection with any increase or reduction of capital,
reclassification, merger, consolidation, sale of assets, combination
of shares, stock splits, spin-off or split-off, promissory notes or
other instrument; (ii) option or right, whether as an addition to,
substitution for, or an exchange for, any Pledged Collateral or
otherwise; (iii) dividends payable in securities; or (iv)
distributions of securities in connection with a partial or total
liquidation, dissolution or reduction of capital, capital surplus or
paid-in surplus, then such Pledgor shall receive such stock
certificate, instrument, option, right or distribution in trust for
the benefit of the Bank, shall segregate it from such Pledgor's other
property and shall deliver it forthwith to the Bank in the exact form
received together with any necessary endorsement and/or appropriate
stock power duly executed in blank in the form provided in Schedule 2,
to be held by the Bank as Pledged Collateral and as further collateral
security for the Secured Obligations.
(c) Financing Statements. Such Pledgor shall execute
and deliver to the Bank such UCC financing statements as may be
reasonably requested by the Bank in order to perfect and protect the
security interest created hereby in the Pledged Collateral of such
Pledgor.
5. Representations and Warranties. Each Pledgor hereby
represents and warrants to the Bank, that so long as the Credit
Agreement is in effect or any amounts payable thereunder or under any
other Loan Document shall remain outstanding, and until all of the
commitments thereunder shall have terminated:
(a) Authorization of Pledged Shares. Tie Pledged Shares
of such Pledgor are duly authorized and validly issued, are fully paid
and nonassessable and are not subject to the preemptive rights of any
Person. All other shares of stock constituting Pledged Collateral
will be duly authorized and validly issued, fully paid and
nonassessable and not subject to the preemptive rights of any Person.
(b) Title. Such Pledgor has good and indefeasible title
to the Pledged Collateral of such Pledgor and will at all times be the
legal and beneficial owner of such Pledged Collateral free and clear
of any Lien, except for the security interest created by this Pledge
Agreement and other Permitted Liens. There exists no "adverse claim"
within the meaning of Section 8.8A-102 of the Code with respect to the
Pledged Shares of such Pledgor.
(c) Exercising of Rights. The exercise by the Bank of
its rights and remedies hereunder will not violate any law or
governmental regulation or any material contractual restriction
binding on or affecting such Pledgor or any of its property.
(d) Pledgor's Authority. No authorization, approval or
action by, and no notice or filing with any governmental authority or
with the issuer of any Pledged Stock of such Pledgor is required
either (i) for the pledge made by such Pledgor or for the granting of
the security interest by such Pledgor pursuant to this Pledge
Agreement; or (ii) for the exercise by the Bank of its rights and
remedies hereunder (except as may be required by laws affecting the
offering and sale of securities).
(e) Security Interest/Priority. This Pledge Agreement
creates a valid security interest in favor of the Bank in the Pledged
Collateral of such Pledgor. The taking possession by the Bank of the
certificates representing the Pledged Shares of such Pledgor and all
other certificates and instruments constituting Pledged Collateral of
such Pledgor will perfect and establish the first priority of the
Bank's security interest in the Pledged Shares of such Pledgor and in
all other Pledged Collateral of such Pledgor represented by such
Pledged Shares and instruments securing the Secured Obligations.
Except as set forth in this Section 5 (e), no action is necessary to
perfect or otherwise protect such security interest.
6. Covenants. Each Pledgor hereby covenants, that so long as
the Credit Agreement is in effect or any amounts payable thereunder or
under any other Loan Document shall remain outstanding, and until the
commitment thereunder shall have terminated, such Pledgor shall:
(a) Books and Records. Mark its books and records (and
shall cause the issuer of the Pledged Shares of such Pledgor to mark
its books and records) to reflect the security interest granted to the
Bank pursuant to this Pledge Agreement.
(b) Defense of Title. Warrant and defend title to and
ownership of the Pledged Collateral of such Pledgor at its own expense
against the claims and demands of all other parties claiming an
interest therein, keep the Pledged Collateral of such Pledgor free
from all Liens, except for those created hereunder and the security
interest created hereby and except for Permitted Liens, and not sell,
exchange, transfer, assign, lease or otherwise dispose of Pledged
Collateral of such Pledgor or any interest therein, except as
permitted under the Credit Agreement.
(c) Further Assurances. Promptly execute and deliver at
its expense all further instruments and documents and take all further
action that may be necessary and desirable or that the Bank may
reasonably request in order to (i) perfect and protect the security
interest created hereby in the Pledged Collateral of such Pledgor;
(ii) enable the Bank to exercise and enforce its rights and remedies
hereunder in respect of the Pledged Collateral of such Pledgor; and
(iii) otherwise effect the purposes of this Pledge Agreement,
including, without limitation and if requested by the Bank, delivering
to the Bank irrevocable proxies in respect of the Pledged Collateral
of such Pledgor.
(d) Amendments. Not make or consent to any amendment or
other modification or waiver with respect to any of the Pledged
Collateral of such Pledgor or enter into any agreement or allow to
exist any restriction with respect to any of the Pledged Collateral of
such Pledgor other than pursuant hereto or as may be permitted under
the Credit Agreement.
(e) Compliance with Securities Laws. File all reports
and other information now or hereafter required to be filed by such
Pledgor with the United States Securities and Exchange Commission and
any other state, federal or foreign agency in connection with the
ownership of the Pledged Collateral of such Pledgor.
7. Rights of the Bank.
(a) Power of Attorney. In addition to other powers of
attorney contained herein, each Pledgor hereby designates and appoints
the Bank and each of its designees or agents as attorney-in-fact of
such Pledgor, irrevocably and with power of substitution, with
authority to take any or all of the following actions upon the
occurrence and during the continuance of an Event of Default:
(i) to demand, collect, settle, compromise, adjust,
give discharges and releases, all as the Bank may reasonably
determine;
(ii) to commence and prosecute any actions at any
court for the purposes of collecting any of the Pledged Collateral of
such Pledgor and enforcing any other right in respect thereof;
(iii) to defend, settle or compromise any action
brought and, in connection therewith, give such discharge or release
as the Bank may deem reasonably appropriate;
(iv) to pay or discharge taxes, liens, security
interests, or other encumbrances levied or placed on or threatened
against the Pledged Collateral of such Pledgor;
(v) to direct any parties liable for any payment
under any of the Pledged Collateral of such Pledgor to make payment of
any and all monies due and to become due thereunder directly to the
Bank or as the Bank shall direct;
(vi) to receive payment of and receipt for any and
all monies, claims, and other amounts due and to become due at any
time in respect of or arising out of any Pledged Collateral of such
Pledgor;
(vii) to sign and endorse any drafts, assignments,
proxies, stock powers, verifications, notices and other documents
relating to the Pledged Collateral of such Pledgor;
(viii) to settle, compromise or adjust any suit,
action or proceeding described above and, in connection therewith, to
give such discharges or releases as the Bank may deem reasonably
appropriate; and
(ix) to exchange any of the Pledged Collateral of
such Pledgor or other property upon any merger, consolidation,
reorganization, recapitalization or other readjustment of the issuer
thereof and in connection therewith, deposit any of the Pledged
Collateral of such Pledgor with any depository, transfer Bank,
registrar or other designated agency upon such terms as the Bank may
determine.
(x) to do and perform all such other acts and
things as the Bank may reasonably deem to be necessary, proper or
convenient in connection with the Pledged Collateral of such Pledgor.
This power of attorney is a power coupled with an interest and shall
be irrevocable. The Bank shall be under no duty to exercise or
withhold the exercise of any of the rights, powers, privileges and
options expressly or implicitly granted to the Bank in this Pledge
Agreement, and shall not be liable for any failure to do so or any
delay in doing so. The Bank shall not be liable for any act or
omission or for any error of judgment or any mistake of fact or law in
its individual capacity or its capacity as attorney-in-fact except
acts or omissions resulting from its gross negligence or willful
misconduct. This power of attorney is conferred on the Bank solely to
protect, preserve and realize upon its security interest in Pledged
Collateral.
(b) Performance by the Bank of Pledgor's Obligations. If
any Pledgor fails to perform any agreement or obligation contained
herein, after the occurrence and during the continuance of an Event of
Default, the Bank itself may perform, or cause performance of, such
agreement or obligation, and the expenses of the Bank incurred in
connection therewith shall be payable by the Pledgors on a joint and
several basis pursuant to Section 11 hereof.
(c) Assignment by the Bank. To the extent permitted
under the Credit Agreement, the Bank may from time to time assign the
Pledged Collateral and any portion thereof, and the assignee shall be
entitled to all of the rights and remedies of the Bank under this
Pledge Agreement in relation thereto.
(d) The Bank's Duty of Care. Other than the exercise of
reasonable care to assure the safe custody of the Pledged Collateral
while being held by the Bank hereunder, the Bank shall have no duty or
liability to preserve rights pertaining thereto, it being understood
and agreed that each Pledgor shall be responsible for preservation of
all rights in the Pledged Collateral of such Pledgor, and the Bank
shall be relieved of all responsibility for Pledged Collateral upon
surrendering it or tendering the surrender of it to such Pledgor. The
Bank shall be deemed to have exercised reasonable care in the custody
and preservation of the Pledged Collateral in its possession if such
Pledged Collateral is accorded treatment substantially equal to that
which the Bank accords its own property, it being understood that the
Bank shall not have responsibility for (i) ascertaining or taking
action with respect to calls, conversions, exchanges, maturities,
tenders or other matters relating to any Pledged Collateral, whether
or not the Bank has or is deemed to have knowledge of such matters; or
(ii) taking any necessary steps to preserve rights against any parties
with respect to any Pledged Collateral.
(e) Voting Rights in Respect of the Pledged Collateral.
(i) So long as no Event of Default (as defined
herein) shall have occurred and be continuing, to the extent permitted
by law, each Pledgor may exercise any and all voting and other
consensual rights pertaining to the Pledged Collateral of such Pledgor
or any part thereof for any purpose not inconsistent with the terms of
this Pledge Agreement or the Credit Agreement;
(ii) Upon the occurrence and during the continuance of
an Event of Default, upon written notice from the Bank, all rights of
a Pledgor to exercise the voting and other consensual rights which it
would otherwise be entitled to exercise pursuant to paragraph (i) of
this Section shall cease and all such rights shall thereupon become
vested in the Bank which shall thereupon have the sole right to
exercise such voting and other consensual rights.
(f) Dividend Rights in Respect of the Pledged
Collateral.
(i) So long as no Event of Default shall have
occurred and be continuing and subject to Section 4(b) hereof, each
Pledgor may receive and retain any and all dividends (other than stock
dividends and other dividends constituting Pledged Collateral of such
Pledgor which are addressed hereinabove) or interest paid in respect
of the Pledged Collateral of such Pledgor to the extent they are
allowed under the Credit Agreement.
(ii) Upon the occurrence and during the continuance
of an Event of Default:
(A) all rights of a Pledgor to receive the
dividends and interest payments which it would otherwise be authorized
to receive and retain pursuant to paragraph (i) of this Section shall
cease and all such rights shall thereupon be vested in the Bank which
shall thereupon have the sole right to receive and hold as Pledged
Collateral such dividends and interest payments; and
(B) all dividends and interest payments which are
received by such Pledgor contrary to the provisions of paragraph (A)
of this Section shall be received in trust for the benefit of the
Bank, shall be segregated from other property or funds of such
Pledgor, and shall be forthwith paid over to the Bank as Pledged
Collateral in the exact form received, to be held by the Bank as
Pledged Collateral and as further collateral security for the Secured
Obligations.
(g) Release of Pledged Collateral. The Bank may release
any of the Pledged Collateral from this Pledge Agreement or may
substitute any of the Pledged Collateral for other Pledged Collateral
without altering, varying or diminishing in any way the force, effect,
lien, pledge or security interest of this Pledge Agreement as to any
Pledged Collateral not expressly released or substituted, and this
Pledge Agreement shall continue as a first priority lien, security
interest, pledge and charge on all Pledged Collateral not expressly
released or substituted when any of the Secured Obligations remain
outstanding with respect to the Bank.
8. Advances by Bank. On failure of any Pledgor to perform
any of the covenants and agreements contained herein, the Bank may, at
its sole option and in its sole discretion, perform the same and in so
doing may expend such sums as the Bank may reasonably deem advisable
in the performance thereof, including, without limitation, the payment
of any taxes, a payment to obtain a release of a Lien or potential
Lien, expenditures made in defending against any adverse claim and all
other expenditures which the Bank may make for the protection of the
security hereof or which may be compelled to make by operation of law.
All such sums and amounts so expended shall be repayable by the
Pledgors on a joint and several basis promptly upon notice thereof and
demand therefor, shall constitute additional Secured Obligations and
shall bear interest from the date said amounts are expended at the
Default Rate. No such performance of any covenant or agreement by the
Bank on behalf of any Pledgor, and no such advance or expenditure
therefor, shall relieve the Pledgors of any default under the terms of
this Pledge Agreement or the other Loan Documents. The Bank may make
any payment hereby authorized in accordance with any bill, statement
or estimate procured from the appropriate public office or holder of
the claim to be discharged without inquiry into the accuracy of such
bill, statement or estimate or into the validity of any tax
assessment, sale, forfeiture, tax lien, title or claim except to the
extent such payment is being contested in good faith by a Pledgor in
appropriate proceedings and against which adequate reserves are being
maintained in accordance with GAAP.
9. Events of Default. The occurrence of an Event of Default
under and as defined in the Credit Agreement shall be an Event of
Default hereunder ("Event of Default").
10. Remedies Upon Default. If any Event of Default shall have
occurred and be continuing:
(a) Rights and Remedies. The Bank may exercise in
respect of the Pledged Collateral of any Pledgor, in addition to other
rights and remedies provided for herein or otherwise available to it,
all rights and remedies of a secured party on default under the Code
or any other applicable law.
(b) Sale of Pledged Collateral. Without limiting the
generality of this Section and without notice (except as provided
below), the Bank may, in its sole discretion, sell or otherwise
dispose of or realize upon the Pledged Collateral, or any part
thereof, in one or more parcels, at public or private sale, at any
exchange or broker's board or elsewhere, at such price or prices and
on such other terms as the Bank may deem commercially reasonable, for
cash, credit or for future delivery or otherwise in accordance with
applicable law. To the extent permitted by law, the Bank may in such
event, bid for the purchase of such securities. Each Pledgor agrees
that any requirement of reasonable notice shall be met if notice,
specifying the place of any public sale or the time after which any
private sale is to be made, shall be personally served on or mailed,
postage prepaid, to such Pledgor in accordance with the notice
provisions of Section 11.4 of the Credit Agreement at least 10 days
before time of such sale. The Bank shall not be obligated to make any
sale of Pledged Collateral of such Pledgor regardless of notice of
sale having been given. The Bank may adjourn any public or private
sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned.
(c) Private Sale. The Pledgors recognize that the Bank
may deem it impracticable to effect a public sale of all or any part
of the Pledged Shares or any of the securities constituting Pledged
Collateral and that the Bank may, therefore, determine to make one or
more private sales of any such securities to a restricted group of
purchasers who will be obligated to agree, among other things, to
acquire such securities for their own account, for investment and not
with a view to the distribution or resale thereof. Each Pledgor
acknowledges that any such private sale may be at prices and on terms
less favorable to the seller than the prices and other terms which
might have been obtained at a public sale and, notwithstanding the
foregoing, agrees that such private sale per se shall not be deemed to
have been made in a commercially unreasonable manner and that the Bank
shall have no obligation to delay sale of any such securities for the
period of time necessary to permit the issuer of such securities to
register such securities for public sale under the Securities Act of
1933. Each Pledgor further acknowledges and agrees that any offer to
sell such securities which has been publicly advertised on a bona fide
basis in a newspaper or other publication of general circulation in
the financial community of New York, New York (to the extent that such
offer may be advertised without prior registration under the
Securities Act of 1933) shall be deemed to involve a "public sale"
under the Code, notwithstanding that such sale may not constitute a
"public offering" under the Securities Act of 1933, and the Bank may,
in such event, bid for the purchase of such securities.
(d) Retention of Pledged Collateral. The Bank may,
after providing the notices required by Section 9-505 (2) of the Code
or otherwise complying with the requirements of applicable law of the
relevant jurisdiction, retain all or any portion of the Pledged
Collateral in satisfaction of the Secured Obligations. Unless and
until the Bank shall have provided such notices, however, the Bank
shall not be deemed to have retained any Pledged Collateral in
satisfaction of any Secured Obligations for any reason.
(e) Application of Proceeds. Upon the occurrence and
during the continuance of an Event of Default, any payments in respect
of the Secured Obligations and any proceeds of any Pledged Collateral,
when received by the Bank in cash or its equivalent, will be applied
in reduction of the Secured Obligations in such order and manner as
the Bank shall determine, and each Pledgor irrevocably waives the
right to direct the application of such payments and proceeds and
acknowledges and agrees that the Bank shall have the continuing and
exclusive right to apply and reapply any and all such payments and
proceeds notwithstanding any entry to the contrary upon any of its
books and records. The Pledgors shall remain liable to the Bank for
any deficiency.
(f) Deficiency. In the event that the proceeds of any
sale, collection or realization are insufficient to pay all amounts to
which the Bank is legally entitled, the Pledgors shall be jointly and
severally liable for the deficiency, together with interest thereon at
the default rate, together with the costs of collection and the
reasonable fees of any attorneys employed by the Bank to collect such
deficiency. Any surplus remaining after the full payment and
satisfaction of the Secured Obligations shall be returned to the
appropriate Pledgors or to whomsoever a court of competent
jurisdiction shall determine to be entitled thereto.
11. Costs of Counsel. If at any time hereafter, after the
occurrence and during the continuance of an Event of Default or not,
the Bank employs counsel to prepare or consider amendments, waivers or
consents with respect to this Pledge Agreement, or to take action or
make a response in or with respect to any legal or arbitral proceeding
relating to this Pledge Agreement or relating to the Pledged
Collateral, or to protect the Pledged Collateral of any Pledgor or
exercise any rights or remedies under this Pledge Agreement or with
respect to any Pledged Collateral, then the Pledgors agree to promptly
pay upon demand any and all such reasonable costs and expenses of the
Bank, all of which costs and expenses shall constitute Secured
Obligations hereunder.
12. Continuing Agreement. This Pledge Agreement shall be a
continuing agreement in every respect and shall remain in full force
and effect so long as the Credit Agreement is in effect or any amounts
payable thereunder or under any other Loan Document shall remain
outstanding, and until the commitment thereunder shall have
terminated. Upon such termination of this Pledge Agreement, the Bank
shall, upon the request and at the expense of the Pledgors, forthwith
release all of its liens and security interests hereunder.
Notwithstanding the foregoing all releases and indemnities provided
hereunder shall survive termination of this Pledge Agreement.
13. Successors in Interest. This Pledge Agreement shall
create a continuing security interest in the Pledged Collateral and
shall be binding upon each Pledgor, its successors and assigns and
shall inure, together with the rights and remedies of the Bank
hereunder, to the benefit of the Bank and its successors and assigns;
provided, however, that none of the Pledgors may assign its rights or
delegate its duties hereunder without the prior written consent of the
Bank. To the fullest extent permitted by law, each Pledgor hereby
releases the Bank and its successors and assigns, from any liability
for any act or omission relating to this Pledge Agreement or the
Pledged Collateral, except for any liability arising from the gross
negligence or willful misconduct of the Bank or its officers,
employees or agents.
14. Notices. All notices required or permitted to be given
under this Pledge Agreement shall be in conformance with Section 11.4
of the Credit Agreement.
15. Counterparts. This Pledge Agreement may be executed in
any number of counterparts, each of which where so executed and
delivered shall be an original, but all of which shall constitute one
and the same instrument. It shall not be necessary in making proof of
this Pledge Agreement to produce or account for more than one such
counterpart.
16. Headings. The headings of the sections and subsections
hereof are provided for convenience only and shall not in any way
affect the meaning or construction of any provision of this Pledge
Agreement.
17. Governing Law. This Pledge Agreement and the rights and
obligations of the parties hereunder shall be governed by and
construed and interpreted in accordance with the laws of the
Commonwealth of Virginia.
18. Severability. If any provision of this Pledge Agreement
is determined to be illegal, invalid or unenforceable, such provision
shall be fully severable and the remaining provisions shall remain in
full force and effect and shall be construed without giving effect to
the illegal, invalid or unenforceable provisions.
19. Entirety. This Pledge Agreement and the other Loan
Documents represent the entire agreement of the parties hereto and
thereto, and supersede all prior agreements and understandings, oral
or written, if any, including any commitment letters or correspondence
relating to the Loan Documents or the transactions contemplated herein
and therein.
20. Survival. All representations and warranties of the
Pledgors hereunder shall survive the execution and delivery of this
Pledge Agreement and the other Loan Documents, the delivery of the
Note and the making of the Loan under the Credit Agreement.
21. Other Security. To the extent that any of the Secured
Obligations are now or hereafter secured by property other than the
Pledged Collateral (including, without limitation, real property and
securities owned by an Pledgor), or by a guarantee, endorsement or
property of any other Person, then the Bank shall have the right to
proceed against such other property, guarantee or endorsement upon the
occurrence of any Event of Default, and the Bank has the right, in its
sole discretion, to determine which rights, security, liens, security
interests or remedies the Bank shall at any time pursue, relinquish,
subordinate, modify or take with respect thereto, without in any way
modifying or affecting any of them or any of the Bank's rights or the
Secured Obligations under this Pledge Agreement or under any other of
the Loan Documents.
22. Joint and Several Obligations of Pledgors. All payment
obligations of the Pledgors hereunder shall be joint and several.
Each of the Pledgors has caused a counterpart of this Pledge
Agreement to be duly executed under seal and delivered as of the date
first above written.
BORROWER:
R. P. INDUSTRIES OF OHIO, INC.
By___________________________ (SEAL)
Title__________________________
GUARANTORS:
UNITED SHIELDS CORPORATION
By__________________________ (SEAL)
Title ________________________
FURNITURE PLASTICS OF FOREST CITY, INC.
By__________________________ (SEAL)
Title__________________________
GRANVILLE PLASTICS COMPANY, INC.
By__________________________ (SEAL)
Title__________________________
R. P. ENTERPRISES, INC.
By__________________________ (SEAL)
Title__________________________
RICHMOND PLASTICS, INC.
By__________________________ (SEAL)
Title__________________________
R. P. REAL ESTATE, INC.
By__________________________ (SEAL)
Title__________________________
Accepted and agreed to as of the date first above written.
FIRST UNION NATIONAL BANK
By __________________________ (SEAL)
Title:_________________________
<PAGE>
Schedule 1
to Pledge Agreement
Name of Pledgor:
United Shield Corporation
Name of Subsidiary Number of Shares Certificate Number
R. P. Industries of Ohio, Inc. 100 1
Name of Pledgor:
R. P. Industries of Ohio, Inc.
Name of Subsidiary Number of Shares Certificate Number
Furniture Plastics of
Forest City, Inc. 100 3
R. P. Enterprises, Inc. 1,000 1
Richmond Plastics, Inc. 1 3
R. P. Real Estate, Inc. 1 2
Name of Pledgor: Furniture Plastics of Forest City, Inc.
Name of Subsidiary Number of Shares Certificate Number
Granville Plastics Company, Inc. 300 3
<PAGE>
EXHIBIT 99.11
REVOLVING PROMISSORY NOTE
$6,000,000 December 30, 1997
R. P. Industries of Ohio, Inc.
7400 Beaufort Springs Drive
Richmond, VA 23225
(hereinafter referred to as "Borrower")
First Union National Bank
One James Center
901 East Cary Street
Richmond, VA 23219
(hereinafter referred to as "Bank")
Borrower promises to pay to the order of Bank, in lawful money of the
United States of America, at its office indicated above or wherever
else Bank may specify, the sum of up to Six Million and No/100 Dollars
($6,000,000.00) or such sum as may be advanced and
outstanding from time to time, with interest on the unpaid principal
balance at the rate and on the terms provided in this Promissory Note
(including all renewals, extensions or modifications hereof, this
"Note").
INTEREST RATE DEFINITIONS.
"Prime - Based Rate" shall be the rate per annum equal to Bank's Prime
Rate plus three-fourths of one percent (0.75%) as that rate may change
from day to day. Bank's "Prime Rate" is that rate announced by Bank
from time to time as its "prime rate" and is one of several interest
rate bases used by Bank. Bank lends at rates both above and below
Bank's Prime Rate, and Borrower acknowledges that Bank's Prime Rate is
not represented or intended to be the lowest or most favorable rate of
interest offered by Bank. A change in the Prime Rate shall become
effective from the beginning of the day on which such change is
announced by Bank.
"LIBOR Market Index - Based Rate" shall be the rate per annum equal to
the LIBOR Market Index Rate plus three and one-half percent (3.5%) as
that rate may change from day to day. "LIBOR Market Index Rate", for
any day, is the rate for 1 month U.S. dollar deposits as reported on
Telerate page 3750 as of 11:00 a.m., London time, on such day, or if
such day is not a London business day, then the immediately preceding
London business day (or if not so reported, then as determined by Bank
from another recognized source or interbank quotation).
INTEREST RATE TO BE APPLIED. The unpaid principal balance of this
Note shall bear interest from the date hereof at the lower of either
the Prime-Based Rate or the LIBOR Market Index-Based Rate (each, an
"Interest Rate") as determined by Bank for each day during the term of
the Note.
Default Rate. In addition to all other rights contained in this Note,
if a Default (defined herein) occurs and as long as a Default
continues, all outstanding Obligations in Bank's discretion shall bear
interest at the Prime Rate plus 3% ("Default Rate"). The Default Rate
shall also apply from acceleration until the Obligations or any
judgment thereon is paid in full, except as otherwise required by law.
INTEREST COMPUTATION. (Actual/360). Interest shall be computed on
the basis of a 360-day year for the actual number of days in the
interest period ("Actual/360 Computation"). The Actual/360
Computation determines the annual effective interest yield by taking
the stated (nominal) interest rate for a year's period and then
dividing said rate by 360 to determine the daily periodic rate to be
applied for each day in the interest period. Application of the
Actual/360 Computation produces an annualized effective interest rate
exceeding that of the nominal rate.
REPAYMENT TERMS. This Note shall be due and payable in consecutive
monthly payments of accrued interest only on the first Business Day of
each month, until fully paid. All outstanding principal will be
repaid in accordance with the Loan Agreement, as hereinafter defined.
In any event, all principal and accrued interest shall be due and
payable on April 30, 2000, or at such other time at which all of the
outstanding Obligations hereunder shall be due and payable (whether by
acceleration or otherwise).
RESClSSlON OF PAYMENTS. If any payment received by Bank under this
Note or the other Loan Documents is rescinded, avoided or for any
reason returned by Bank because of any adverse claim or threatened
action, the returned payment shall remain payable as an obligation of
all Persons liable under this Note or the other Loan Documents as
though such payment had not been made.
LOAN AGREEMENT; LOAN DOCUMENTS; OBLIGATIONS. This Note is subject to
the terms and conditions of that certain Revolving Credit and Security
Agreement between Bank and Borrower dated as of the date hereof, as
the same may be modified and amended from time to time (the "Loan
Agreement"). All capitalized terms not otherwise defined herein shall
have such meaning as assigned to them in the Loan Agreement. The term
"Obligations" used in this Note refers to any and all indebtedness and
other obligations under this Note and all other obligations as defined
in the respective Loan Documents.
LATE CHARGE. If any payments are not timely made, Borrower shall also
pay to Bank a late charge equal to 5% of each payment past due for 8
or more days. The Borrower acknowledges that the late charge imposed
herein represents a reasonable estimate of the expenses of Bank
incurred because of such lateness.
Acceptance by Bank of any late payment without an accompanying late
charge shall not be deemed a waiver of Bank's right to collect such
late charge or to collect a late charge for any subsequent late
payment received.
ATTORNEYS' FEES AND OTHER COLLECTION COSTS. Borrower shall pay all of
Bank's reasonable expenses incurred to enforce or collect any of the
Obligations, including, without limitation, reasonable arbitration,
paralegals', attorneys' and experts' fees and expenses, whether
incurred without the commencement of a suit, in any trial,
arbitration, or administrative proceeding, or in any appellate or
bankruptcy proceeding.
USURY. Regardless of any other provision of this Note or other Loan
Documents, if for any reason the effective interest should exceed the
maximum lawful interest, the effective interest shall be deemed
reduced to, and shall be, such maximum lawful interest, and (i) the
amount which would be excessive interest shall be deemed applied to
the reduction of the principal balance of this Note and not to the
payment of interest, and (ii) if the loan evidenced by this Note has
been or is thereby paid in full, the excess shall be returned to the
party paying same, such application to the principal balance of this
Note or the refunding of excess to be a complete settlement and
acquittance thereof.
BORROWER'S ACCOUNTS. Except as prohibited by law, Borrower grants Bank
a security interest in all of Borrower's existing or future deposit
accounts with Bank and any of its affiliates to secure the
Obligations.
EVENTS OF DEFAULT. An "Event of Default" shall exist if any one or
more of the following events shall occur (individually, an "Event of
Default," and collectively, "Events of Default"): Nonpayment;
Nonperformance. The failure of timely payment or performance of the
Obligations under this Note. Event of Default Under Other Loan
Documents. The occurrence of any Event of Default under any of the
other Loan Documents.
REMEDIES UPON EVENT OF DEFAULT. Upon the occurrence of an Event of
Default, Bank may at any time thereafter, take the following actions:
Bank Lien and Set-off. Exercise its right of set-off or to foreclose
its security interest or lien against any deposit account of any
nature or maturity of Borrower with Bank without notice. Acceleration
Upon Default. Accelerate the maturity of this Note and all other
Obligations, and all of the Obligations shall be immediately due and
payable. Cumulative. Exercise any rights and remedies as provided
under the Note and other Loan Documents, or as provided by law or
equity.
REVOLVING CREDIT ADVANCES. This is a revolving credit note. Borrower
may borrow, repay and reborrow, and Bank may advance and readvance
under this Note respectively from time to time (each an "Advance" and
together the "Advances"), so long as the total indebtedness
outstanding at any one time does not exceed the lesser of (i) the
principal amount stated on the face of this Note or (ii) the Borrowing
Base. Bank's obligation to advance or readvance under this Note shall
terminate if a Default exists.
WAIVERS AND AMENDMENTS. No waivers, amendments or modifications of
this Note and other Loan Documents shall be valid unless in writing
and signed by an officer of Bank. No waiver by Bank of any Event of
Default shall operate as a waiver of any other Event of Default or the
same Event of Default on a future occasion. Neither the failure nor
any delay on the part of Bank in exercising any right, power, or
remedy under this Note and other Loan Documents shall operate as a
waiver thereof, nor shall a single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any
other right, power or remedy.
Borrower or any other Person liable under this Note waives
presentment, protest, notice of dishonor, demand for payment, notice
of intention to accelerate maturity, notice of acceleration of
maturity, notice of sale and all other notices of any kind. Further,
each agrees that Bank may extend, modify or renew this Note or make a
novation of the loan evidenced by this Note for any period and grant
any releases, compromises or indulgences with respect to any
collateral securing this Note, or with respect to Borrower or any
Person liable under this Note or other Loan Documents, all without
notice to or consent of Borrower or any Person who may be liable under
this Note or other Loan Documents and without affecting the liability
of Borrower or any Person who may be liable under this Note or other
Loan Documents.
MISCELLANEOUS PROVISIONS. Assignment. This Note and other Loan
Documents shall inure to the benefit of and be binding upon the
parties and their respective heirs, legal representatives, successors
and assigns. Bank's interests in and rights under this Note and other
Loan Documents are freely assignable, in whole or in part, by Bank.
Borrower shall not assign its rights and interest hereunder without
the prior written consent of Bank, and any attempt by Borrower to
assign without Bank's prior written consent is null and void. Any
assignment shall not release Borrower from the Obligations. Applicable
Law; Conflict Between Documents. This Note and other Loan Documents
shall be governed by and construed under the laws of the state where
Bank first shown above is located as shown in the heading of this Note
without regard to that state's conflict of laws principles.
Severability. If any provision of this Note or of the other Loan
Documents shall be prohibited or invalid under applicable law, such
provision shall be ineffective but only to the extent of such
prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Note or other such
document. Plural; Captions. All references in the Loan Documents to
Borrower, Person, document or other nouns of reference mean both the
singular and plural form, as the case may be. The captions contained
in the Loan Documents are inserted for convenience only and shall not
affect the meaning or interpretation of the Loan Documents. Binding
Contract. Borrower by execution of and Bank by acceptance of this Note
agree that each party is bound to all terms and provisions of this
Note. Entirety. This Note and the other Loan Documents delivered in
connection herewith and therewith embody the entire agreement between
the parties and supersede all prior agreements and understandings
relating to the subject matter hereof and thereof. Advances. Bank in
its sole discretion may make other advances and readvances under this
Note pursuant hereto. Posting of Payments. All payments received
during normal banking hours after 2:00 p.m. local time at the office
of Bank first shown above shall be deemed received at the opening of
the next banking day. Unless otherwise permitted by Bank, any
repayments of this Note, other than immediately available U.S.
currency, will not be credited to the outstanding loan balance until
Bank receives collected funds. Fees and Taxes. Borrower shall promptly
pay all documentary, intangible recordation and/or similar taxes on
this transaction whether assessed at closing or arising from time to
time, together with any interest and/or penalties relating thereto.
Business Purpose. Borrower represents that the loan evidenced hereby
is being obtained for business purposes.
ARBITRATION. Any disputes hereunder shall be resolved pursuant to the
provisions for arbitration and dispute resolution set forth in the
Loan Agreement.
IN WITNESS WHEREOF, Borrower, as of the day and year first above
written, has caused this Note to be executed under seal.
R. P. INDUSTRIES OF OHIO, INC.
Taxpayer Identification Number: 31-1578473
CORPORATE By:______________________________
Name: _______________________SEAL
Title: ________________________
<PAGE>
EXHIBIT 99.12
Prepared by: McGuire, Woods, Battle & Boothe, L.L.P.
RETURN TO: 8280 Greensboro Drive, Suite 900, McLean, Virginia 22102
THIS IS A CREDIT LINE DEED OF TRUST WITHIN THE MEANING OF SECTION 55-58.2
OF THE CODE OF VIRGINIA (1950), AS AMENDED. FOR THE PURPOSES OF
AND TO THE EXTENT REQUIRED BY SUCH SECTION, (i) THE NAME OF THE
NOTEHOLDER SECURED BY THIS CREDIT LINE DEED OF TRUST IS FIRST UNION
NATIONAL BANK, (ii) THE ADDRESS TO WHICH COMMUNICATIONS MAY BE MAILED
OR DELIVERED TO SUCH NOTEHOLDER IS SET FORTH IN THIS AGREEMENT, AND
(iii) THE MAXIMUM AGGREGATE AMOUNT OF PRINCIPAL TO BE SECURED AT ANY
ONE TIME IS $1,000,000.00.
CREDIT LINE DEED OF TRUST
AND ASSIGNMENT OF RENTS
This CREDIT LINE DEED OF TRUST AND ASSIGNMENT OF RENTS (the "Deed
of Trust") is made as of December ___, 1997 by and among R. P.
INDUSTRIES OF OHIO, INC., an Ohio corporation, successor by merger to
R. P. Industries, Inc., a Virginia corporation, successor by name
change to Richmond Plastics, Inc., a Virginia corporation ("Grantor")
whose address is 7400 Beaufont Springs Drive, Richmond, Virginia
23225; FIRST UNION NATIONAL BANK, a national banking association, its
successors and assigns and any other person who may at any time be the
holder of the Note, as hereafter defined ("Bank"), as beneficiary,
noteholder and grantee, whose address is 901 East Cary Street,
Richmond, Virginia 23219; and TRSTE, INC., a Virginia corporation
("Trustee") whose address is 1 First Union Center, Charlotte, North
Carolina 28288.
Bank and Grantor are parties to that certain Revolving Credit and
Security Agreement dated as of the date hereof (as amended,
supplemented or otherwise modified from time to time, the "Loan
Agreement") pursuant to which Bank agreed to make revolving credit
loans to Grantor from time to time on the terms and conditions set
forth therein. The revolving credit loans are evidenced by a certain
revolving promissory note dated as of the date hereof in the maximum
original principal amount of $6,000,000 made by Grantor payable to
Bank (the "Note"). Capitalized terms used in this Deed of Trust and
not otherwise defined shall have the meaning assigned in the Loan
Agreement.
To secure payment and performance of obligations (collectively
the "Obligations") under the Loan Agreement, this Deed of Trust, other
Loan Documents and any renewals, extensions, novations, or
modifications of the foregoing, and in consideration of these premises
and for other consideration, Grantor does grant and convey unto
Trustee, in fee simple, that certain tract of land in the County of
Chesterfield, Commonwealth of Virginia described in EXHIBIT A attached
hereto and made a part hereof; TOGETHER WITH: (i) all leasehold
estate, and all right, title and interest of Grantor in and to all
leases or subleases covering such land now or hereafter existing
including, without limitation, all cash or security deposits or
advance rentals; (ii) all right, title and interest of Grantor in and
to all options to purchase or lease such land or any interest therein,
and any greater estate in such land owned or hereafter acquired by
Grantor; (iii) all easements, streets, alleys, rights-of-way and
rights used in connection therewith or as a means of access thereto,
and all tenements, hereditaments, and all water rights and
appurtenances thereof and thereto; (iv) all buildings, structures and
improvements now or hereafter erected thereon; (v) all fixtures now or
hereafter affixed to such land, even though they may be detached or
detachable, and all building improvement and construction materials,
supplies and equipment hereafter delivered to such land contemplating
affixation thereon; (vi) all awards and proceeds of condemnation for
such land and any improvements thereon or any part thereof to which
the Grantor is entitled, and all proceeds, including return premiums
and choses in action arising under any insurance policies maintained
with respect to all or any part of the foregoing; (vii) all rents,
issues and profits of such land and improvements, and all the estate,
right, title and interest of every nature whatsoever of the Grantor in
and to the same; and (viii) all proceeds, products, replacements,
additions, substitutions, renewals, accessions and reversions of any
of the foregoing items.
All of the real and personal property and property rights hereby
conveyed are referred to individually and collectively as the
"Property."
TO HAVE AND TO HOLD the Property and all the estate, right, title
and interest, in law and in equity, of Grantor in and to the Property
unto Trustee and its successors and assigns, in fee simple, forever.
IN TRUST, HOWEVER that if all Obligations are timely paid and
performed and each and every representation, warranty, agreement, and
condition of this Deed of Trust and any other Loan Document is
complied with and abided by, this Deed of Trust and the estate hereby
created shall cease and be null, void, and canceled of record at the
request and expense of Grantor, and if an Event of Default occurs,
Trustee is authorized to foreclose and sell the Property under power
of sale or by judicial proceeding according to applicable law and as
provided herein.
Grantor warrants and represents that Grantor is lawfully seized
of the Property, in fee simple, absolute, that Grantor has the legal
right to convey and encumber the same, and that the Property is free
and clear of all liens and encumbrances. Grantor further warrants and
will forever defend all and singular the Property and title thereto to
Trustee, Bank, and their respective successors and assigns, against
the lawful claims of all persons whomsoever.
To protect the security of this Deed of Trust, Grantor further
represents and agrees with Trustee and Bank as follows:
Payment of Obligations. That the Obligations shall be timely paid
and performed.
Future Advances. This Deed of Trust is given to secure not only
existing Obligations, but also future advances made within fifteen
(15) years of the date of this Deed of Trust to the same extent as if
such future advances are made on the date of the execution of this
Deed of Trust. The principal amount (including future advances) that
may be so secured may decrease or increase from time to time, but the
total amount so secured at any one time shall not exceed the maximum
principal amount of $1,000,000.00, plus all interest, costs,
reimbursements, fees and expenses due under this Deed of Trust and
secured hereby. Grantor shall not execute any document that impairs or
otherwise impacts the priority of any future advances secured by this
Deed of Trust.
Leases, Subleases and Easements. Grantor shall maintain, enforce
and cause to be performed all of the terms and conditions under any
lease, sublease or easement which may constitute a portion of the
Property. Grantor shall not, without the consent of Bank, agree to the
cancellation or surrender under any lease or sublease now or hereafter
covering the Property or any part thereof, or prepayment of rents,
issues or profits, other than rent paid at the signing of a lease or
sublease, nor modify any such lease or sublease so as to shorten the
term, decrease the rent, accelerate the payment of rent, or change the
terms of any renewal option; and any such purported cancellation,
surrender, prepayment or modification made without the consent of Bank
shall be void as against Bank.
Required Insurance. Grantor shall maintain with respect to the
Property: (i) insurance against loss or damage by fire and other
casualties and hazards by insurance written on an "all risks" basis,
including specifically windstorm and/or hail damage (and flood and
earthquake coverage, where available), in an amount not less than the
replacement cost thereof, naming Bank as loss payee and mortgagee;
(ii) liability insurance providing coverage in such amount as Bank may
require but in no event less than $1,000,000.00 combined single limit,
naming Bank as an additional insured; and (iii) such other insurance
as Bank may require from time to time.
All casualty insurance policies shall contain an endorsement or
agreement by the insurer in form satisfactory to Bank that any loss
shall be payable in accordance with the terms of such policy
notwithstanding any act or negligence of Grantor and the further
agreement of the insurer waiving rights of subrogation against Bank,
and rights of set-off, counterclaim or deductions against Grantor.
All insurance policies shall be in form, provide coverages, be
issued by companies and be in amounts in each company, satisfactory to
Bank, and Grantor shall furnish Bank with an original of all policies.
At least thirty (30) days prior to the expiration of each such policy,
Grantor shall furnish Bank with evidence satisfactory to Bank of the
payment of premium and the reissuance of a policy continuing insurance
in force as required by this Deed of Trust. All such policies shall
provide that the policy will not be canceled or materially amended
without at least thirty (30) days prior written notice to Bank. In the
event Grantor fails to provide, maintain, keep in force, and furnish
to Bank the policies of insurance required by this paragraph, Bank may
procure such insurance or single-interest insurance in such amounts,
at such premium, for such risks and by such means as Bank chooses, at
Grantor's expense; provided however, Bank shall have no responsibility
to obtain any insurance, but if Bank does obtain insurance, Bank shall
have no responsibility to Grantor or other persons that insurance
obtained shall be adequate or provide any protection to Grantor.
Insurance Proceeds. After occurrence of any loss to any of the
Property, Grantor shall give prompt written notice thereof to Bank.
In the event of such loss all insurance proceeds shall be payable
to Bank, and Grantor hereby authorizes and directs any affected
insurance company to make payment of such proceeds directly to Bank.
Bank is hereby authorized by Grantor to settle, adjust or compromise
any claims for loss or damage under any policy or policies of
insurance and Grantor appoints Bank its attorney-in-fact to receive
and endorse any insurance proceeds to Bank, which appointment is
coupled with an interest and shall be irrevocable as long as any
Obligations remain unsatisfied.
In the event of any damage to or destruction of the Property,
Bank shall have the option of applying or paying all or part of the
insurance proceeds to (i) the Obligations in such order as Bank may
determine, (ii) restoration of the Property, or (iii) Grantor. Nothing
herein shall be deemed to excuse Grantor from restoring, repairing and
maintaining the Property as required herein.
Impositions; Escrow Deposit. Grantor will pay before they are due
all taxes, levies, assessments and other fees and charges imposed upon
or which may become a lien upon the Property under any law or
ordinance (all of the foregoing collectively "Impositions").
Upon request of Bank, Grantor shall add to each periodic payment
required under the Note or otherwise pay to Bank, the amount estimated
by Bank to be sufficient to enable Bank to pay as they come due, all
Impositions and insurance premiums which Grantor is required to pay
hereunder. Payments requested under this provision shall be
supplemented or adjusted as required by Bank from time to time. Such
funds may be commingled with the general funds of Bank and shall not
earn interest. Upon the occurrence of a Default, Bank may apply such
funds to pay any of the Obligations.
Use of Property. Grantor shall use and operate, and require its
lessees or licensees to use and operate, the Property in compliance
with all applicable laws and ordinances, covenants, and restrictions,
and with all applicable requirements of any lease or sublease now or
hereafter affecting the Property. Grantor shall not permit any
unlawful use of the Property or any use that may give rise to a claim
of forfeiture of any of the Property. Grantor shall not allow changes
in the stated use of Property from that disclosed to Bank at the time
of execution hereof. Grantor shall not initiate or acquiesce to a
zoning change of the Property without prior notice to, and written
consent of, Bank.
Maintenance, Repairs and Alterations. Grantor shall keep and
maintain the Property in good condition and repair and fully protected
from the elements to the satisfaction of Bank. Grantor will not
remove, demolish or structurally alter any of the buildings or other
improvements on the Property (except such alterations as may be
required by laws, ordinances or regulations) without the prior written
consent of Bank. Grantor shall promptly notify Bank in writing of any
material loss, damage or adverse condition affecting the Property.
Eminent Domain. Should the Property or any interest therein be
taken or damaged by reason of any public use or improvement or
condemnation proceeding ("Condemnation"), or should Grantor receive
any notice or other information regarding such Condemnation, Grantor
shall give prompt written notice thereof to Bank. Bank shall be
entitled to all compensation, awards and other payments or relief
granted in connection with such Condemnation and, at its option, may
commence, appear in and prosecute in its own name any action or
proceedings relating thereto. Bank shall be entitled to make any
compromise or settlement in connection with such taking or damage. All
compensation, awards, and damages awarded to Grantor related to any
Condemnation (the "Proceeds") are hereby assigned to Bank and Grantor
agrees to execute such further assignments of the Proceeds as Bank may
require. Bank shall have the option of applying or paying the Proceeds
in the same manner as insurance proceeds as provided herein. Grantor
appoints Bank as its attorney-in-fact to receive and endorse the
Proceeds to Bank, which appointment is coupled with an interest and
shall be irrevocable as long as any Obligations remain unsatisfied.
Environmental Condition of Property and Indemnity. Grantor
warrants and represents to Bank, except as reported by Grantor to Bank
in writing, that: (i) Grantor has inspected and is familiar with the
environmental condition of the Property; (ii) the Property and
Grantor, and any occupants of the Property, are in compliance with and
shall continue to be in compliance with all applicable federal, state
and local laws and regulations intended to protect the environment and
public health and safety as the same may be amended from time to time
("Environmental Laws"); (iii) the Property is not and has never been
used to handle, treat, store or dispose of oil, petroleum products,
hazardous substances in any quantity, hazardous waste, toxic
substances, regulated substances or hazardous air pollutants
("Hazardous Materials") in violation of any Environmental Laws; and
(iv) no Hazardous Materials (including asbestos or lead paint in any
form) are located on, in or under the Property or emanate from the
Property. Further, Grantor represents to Bank that no portion of the
Property is a protected wetland. Grantor agrees to notify Bank
immediately upon receipt of any citations, warnings, orders, notices,
consent agreements, process or claims alleging or relating to
violations of any Environmental Laws or to the environmental condition
of the Property.
Grantor shall indemnify, hold harmless, and defend Bank and
Trustee from and against any and all damages, penalties, fines,
claims, suits, liabilities, costs, judgments and expenses, including
attorneys', consultants' or experts' fees of every kind and nature
incurred, suffered by or asserted against Bank or Trustee as a direct
or indirect result of: (i) representations made by Grantor in this
section being or becoming untrue in any material respect; or (ii)
Grantor's violation of or failure to meet the requirements of any
Environmental Laws; or (iii) Hazardous Materials which, while the
Property is subject to this Deed of Trust, exist on the Property. Bank
shall have the right to arrange for or conduct environmental
inspections of the Property from time to time (including the taking of
soil, water, air or material samples). The cost of such inspections
made after Default or which are required by laws or regulations
applicable to Bank shall be borne by Grantor. Grantor's obligations
under this paragraph shall continue, survive and remain in full force
and effect notwithstanding foreclosure, satisfaction of this Deed of
Trust or full satisfaction of the Obligations. However, Grantor's
indemnity shall not apply to any negligent or intentional act of Bank
which takes place after foreclosure or satisfaction of this Deed of
Trust.
Appraisals. Grantor agrees that Bank may obtain an appraisal of
the Property when required by the regulations of the Federal Reserve
Board or the Office of the Comptroller of the Currency or at such
other times as Bank may reasonably require. Such appraisals shall be
performed by an independent third party appraiser selected by Bank.
The cost of such appraisals shall be borne by Grantor. If requested by
Bank, Grantor shall execute an engagement letter addressed to the
appraiser selected by Bank. Grantor's failure or refusal to sign such
an engagement letter, however, shall not impair Bank's right to obtain
such an appraisal. Grantor agrees to pay the cost of such appraisal
within ten (10) days after receiving an invoice for such appraisal.
Inspections. Bank, or its representatives or agents, are
authorized to enter at any reasonable time upon any part of the
Property for the purpose of inspecting the Property and for the
purpose of performing any of the acts it is authorized to perform
under the terms of this Deed of Trust.
Liens and Subrogation. Grantor shall pay and promptly discharge
all liens, claims and encumbrances upon the Property. Grantor shall
have the right to contest in good faith the validity of any such lien,
claim or encumbrance, provided: (i) such contest suspends the
collection thereof or there is no danger of the Property being sold or
forfeited while such contest is pending; (ii) Grantor first deposits
with Bank a bond or other security satisfactory to Bank in such
amounts as Bank shall reasonably require; and (iii) Grantor thereafter
diligently proceeds to cause such lien, claim or encumbrance to be
removed and discharged.
Bank shall be subrogated to any liens, claims and encumbrances
against Grantor or the Property that are paid or discharged through
payment by Bank or with loan proceeds, notwithstanding the record
cancellation or satisfaction thereof.
Waiver of Grantor's Rights. Grantor waives any: (i) rights of
homestead or other exemption with regard to any of the Property; (ii)
rights or claims of equitable or statutory redemption; (iii) rights of
appraisal; and (iv) rights to require marshaling of assets.
Payments by Bank; Indemnification. In the event of default in the
timely payment or performance of any of the Obligations, Bank, at its
option and without any duty on its part to determine the validity or
necessity thereof, may pay the sums for which Grantor is obligated.
Further, Bank may pay such sums as Bank deems appropriate for the
protection and maintenance of the Property including, without
limitation, sums to pay Impositions and other levies, assessments or
liens, maintain insurance, make repairs, secure the Property, maintain
utility service, intervene in any Condemnation, and pay attorneys'
fees and other fees and costs to enforce this Deed of Trust or protect
the lien hereof (including foreclosure) or collect the Obligations,
including without limitation, those incurred in any proceeding
including bankruptcy or arbitration. Any amounts so paid shall bear
interest at the default rate stated in the Note and shall be secured
by this Deed of Trust.
In the event either Bank or Trustee shall become party to any
suit or legal proceeding by reason of its status as beneficiary of
this Deed of Trust or trustee hereunder, Grantor shall indemnify and
hold harmless Bank and Trustee and reimburse Bank and Trustee for any
amounts paid or incurred by Bank or Trustee, including all reasonable
costs, charges and attorneys' fees in any such suit or proceeding.
Assignment of Rents. Grantor hereby absolutely assigns and
transfers to Bank all the leases, rents, issues and profits of the
Property (collectively "Rents"). So long as no Default exists, Bank
gives to and confers upon Grantor the license and authority to collect
Rents and to demand, receive and enforce payment, give receipts,
releases and satisfactions, and sue in the name of Grantor for all
Rents. Grantor represents there has been no prior assignment of leases
or Rents, and agrees not to further assign such leases or Rents. Upon
the occurrence of a Default, Bank may, without notice, by agent or by
a receiver appointed by a court, and without regard to the adequacy of
any security for the Obligations, revoke and cancel the license and
authority of Grantor to collect Rents, and (i) enter upon and take
possession of the Property, (ii) notify tenants, subtenants and any
property manager to pay Rents to Bank or its designee, and upon
receipt of such notice such persons are authorized and directed to
make payment as specified in the notice and disregard any contrary
direction or instruction by Grantor, and (iii) in its own name, sue
for or otherwise collect Rents, including those past due, and apply
Rents, less costs and expenses of operation and collection, including
attorneys' fees, to the Obligations in such order and manner as Bank
may determine. Banks exercise of any one or more of the forgoing
rights shall not cure or waive any Event of Default or notice thereof
hereunder.
Due on Sale or Further Encumbrance. The direct or indirect sale,
assignment, or conveyance of the Property, or any interest therein, or
the further encumbrance of the Property, without Bank's written
consent shall, at Bank's option, constitute an Event of Default under
this Deed of Trust.
Event of Default; Remedies of Bank Upon Event of Default. An
"Event of Default" shall exist if any one or more of the following
events shall occur (individually, an "Event of Default" , and
collectively, "Events of Default"): (i) failure of Grantor or any
other person liable to timely pay or perform any of the Obligations;
or (ii) the occurrence of any Event of Default under any of the other
Loan Documents. Upon the occurrence of any Event of Default, the
following remedies are available to Bank, without limitation. (i)
Bank may exercise any or all of Bank's remedies under this Deed of
Trust or other Loan Documents including, without limitation,
acceleration of maturity of all payments and Obligations. (ii) Bank
may take immediate possession of the Property or any part thereof
(which Grantor agrees to surrender to Bank) and manage, control or
lease the same to such persons and at such rental as it may deem
proper and collect and apply Rents as provided herein. The taking of
possession shall not prevent concurrent or later proceedings for the
foreclosure sale of the Property. (iii) Bank may apply to any court of
competent jurisdiction for the appointment of a receiver for all
purposes including, without limitation, to manage and operate the
Property or any part thereof, and to apply the net Rents therefrom to
the payment of any of the Obligations. In event of such application,
Grantor consents to the appointment of a receiver, and agrees that a
receiver may be appointed without notice to Grantor, without regard to
the adequacy of any security for the Obligations, and without regard
to the solvency of Grantor or any other person, firm or corporation
who or which may be liable for the payment of the Obligations. (iv)
Upon application of Bank, Trustee shall sell the Property and pay the
proceeds of sale according to the following terms and conditions: (a)
Trustee shall foreclose upon this Deed of Trust and sell the Property,
or any part of the Property, at public sale (referred to as "Trustee's
Sale") at such time and place and upon such terms and conditions as
may be required or permitted by applicable law, after having first
given notice of such sale as may be required by applicable law, and
having advertised the time, place and terms of sale in such public
advertisement as Trustee shall deem advantageous and proper and at
such times and containing such information as required by applicable
laws and rules, which advertisement shall be in a newspaper having a
general circulation in the city or county wherein the Property is
located and which advertisement shall be inserted weekly, not less
than once a week for two weeks, or daily, not less than once a day for
three days, at the option of Trustee. Except as may be required by
Section 58-1.3340 of the Code of Virginia (1950), as amended, no
purchaser of the Property shall be required to see to the proper
application of the proceeds of any such sale. Payment of the purchase
price to Trustee shall satisfy the obligation of purchase at such sale
therefor. Trustee or its successor or substitute may appoint or
delegate any one or more persons as agent to perform any act or acts
necessary or incident to any sale held by Trustee, including the
posting of notices and the conduct of sale, but in the name and on
behalf of Trustee, his successor or substitute. (b) Trustee shall
provide such notice and shall advertise a Trustee's Sale in the manner
required by applicable law. (c) Trustee shall conduct additional
Trustee's Sales as may be required until all of the Property is sold
or the Obligations are satisfied. (d) Trustee may receive bids at
Trustee's Sale from the Bank and may accept from Bank as successful
bidder, credit against the Obligations as payment of any portion of
the purchase price. (e) Trustee may receive a reasonable fee for
Trustee's services hereunder, not to exceed the maximum fee allowed by
applicable law. (f) Trustee shall apply the proceeds of Trustee's
Sale, first to any permitted Trustee's fee, second to expenses of
foreclosure and sale, third to the Obligations, and any remaining
proceeds as required by law.
Substitute Trustee. Bank may, at any time and from time to time,
without notice, at the Bank's discretion, remove Trustee and appoint a
substitute trustee or trustees ("Substitute Trustee") by filing in the
records where this Deed of Trust is recorded an instrument affecting
such removal and appointment. A Substitute Trustee shall be vested
with title to the Property and with all rights, powers, and duties of
the original Trustee herein and all provisions hereof pertaining to
the Trustee shall similarly affect any Substitute Trustee. Any oath or
bond by the Trustee is hereby waived. If more than one Person is
Trustee hereunder, the powers of Trustee may be exercised by any
Person who is Trustee, or by any successor Trustee with the same
powers as if jointly exercised by all of them.
Miscellaneous Provisions. Grantor agrees to the following: (i)
All remedies available to Bank with respect to this Deed of Trust or
available at law or in equity shall be cumulative and may be pursued
concurrently or successively. No delay by Bank in exercising any
remedy shall operate as a waiver of that remedy or of any Default. Any
payment by Bank or acceptance by Bank of any partial payment shall not
constitute a waiver by Bank of any Default. (ii) The provisions
hereof shall be binding upon and inure to the benefit of Grantor, its
heirs, personal representatives, successors and assigns including,
without limitation, subsequent owners of the Property or any part
thereof, and shall be binding upon and inure to the benefit of Bank,
its successors and assigns and any future holder of the Note or other
Obligations. (iii) Any notices, demands or requests shall be
sufficiently given if given as provided for in the Loan Agreement.
(iv) This Deed of Trust may be terminated or modified only by an
instrument in writing signed by the Bank and Grantor and may be
modified without the Trustee joining or signing such instrument. (v)
The captions or headings at the beginning of each paragraph hereof are
for the convenience of the parties and are not a part of this Deed of
Trust. (vi) If the lien of this Deed of Trust is invalid or
unenforceable as to any part of the Obligations, the unsecured portion
of the Obligations shall be completely paid (and all payments made
shall be deemed to have first been applied to payment of the unsecured
portion of the Obligations) prior to payment of the secured portion of
the Obligations and if any clause, provision or obligation hereunder
is determined invalid or unenforceable the remainder of this Deed of
Trust shall be construed and enforced as if such clause, provision or
obligation had not been contained herein. (vii) This Deed of Trust
shall be governed by and construed under the laws of the jurisdiction
where this Deed of Trust is recorded. (viii) Grantor by execution and
Bank by acceptance of this Deed of Trust agree to be bound by the
terms and provisions hereof.
IN WITNESS WHEREOF, Grantor has signed and sealed this instrument
as of the day and year first above written.
GRANTOR
R. P. Industries of Ohio, Inc., an
Ohio corporation
By:_______________________________________
Name:
President
State of _______________________
City/County of _________________
Corporate Acknowledgment
I certify that before me appeared this day _______________, a
person known to me, who after being sworn said he/she is President of
R. P. Industries of Ohio, Inc., an Ohio corporation, and is duly
authorized to act on behalf of said Corporation, that the seal affixed
to the foregoing instrument is the seal of said Corporation and that
said instrument was signed and sealed by him/her on behalf of said
Corporation, and being informed of the contents thereof, acknowledged
execution of the foregoing instrument on behalf of said Corporation.
Witness my hand and official seal, this _____ day of December, 1997.
___________________________________________,
Notary Public
Notary Seal
____________________________________________
(Printed Name of Notary)
My Commission expires: ________________________________
<PAGE>
EXHIBIT A
Legal Description
<PAGE>
EXHIBIT 99.13
Prepared by: McGuire, Woods, Battle & Boothe, L.L.P.
RETURN TO: 8280 Greensboro Drive, Suite 900, McLean, Virginia 22102
DEED OF TRUST
AND ASSIGNMENT OF RENTS
This DEED OF TRUST AND ASSIGNMENT OF RENTS (the "Deed of Trust")
is made as of December ___, 1997 by and among GRANVILLE PLASTICS
COMPANY, INC., a North Carolina Corporation ("Grantor") whose address
is __________________________; FIRST UNION NATIONAL BANK, a national
banking association, its successors and assigns and any other person
who may at any time be the holder of the Note, as hereafter defined
("Bank"), as beneficiary, noteholder and grantee, whose address is 901
East Cary Street, Richmond, Virginia 23219; and TRSTE, INC., a
Virginia corporation qualified to do business in North Carolina
("Trustee") whose address is 1 First Union Center, Charlotte, North
Carolina 28288.
Bank and Grantor are parties to that certain Revolving Credit and
Security Agreement dated as of the date hereof (as amended,
supplemented or otherwise modified from time to time, the "Loan
Agreement") pursuant to which Bank agreed to make revolving credit
loans to R.P. Industries of Ohio, Inc., an Ohio corporation (the
"Borrower") from time to time on the terms and conditions set forth
therein. The revolving credit loans are evidenced by a certain
revolving promissory note dated as of the date hereof in the maximum
original principal amount of $6,000,000 made by Borrower payable to
Bank (the "Note"). Capitalized terms used in this Deed of Trust and
not otherwise defined shall have the same meaning assigned in the Loan
Agreement.
To secure payment and performance of obligations (collectively
the "Obligations") under the Loan Agreement, this Deed of Trust, other
Loan Documents and any renewals, extensions, novations, or
modifications of the foregoing, and in consideration of these premises
and for other consideration, Grantor does grant and convey unto
Trustee, in fee simple, that certain tract of land in the County of
Granville, Town of Fishing Creek, State of North Carolina described in
EXHIBIT A attached hereto and made a part hereof; TOGETHER WITH: (i)
all leasehold estate, and all right, title and interest of Grantor in
and to all leases or subleases covering such land now or hereafter
existing including, without limitation, all cash or security deposits
or advance rentals; (ii) all right, title and interest of Grantor in
and to all options to purchase or lease such land or any interest
therein, and any greater estate in such land owned or hereafter
acquired by Grantor; (iii) all easements, streets, alleys,
rights-of-way and rights used in connection therewith or as a means of
access thereto, and all tenements, hereditaments, and all water rights
and appurtenances thereof and thereto; (iv) all buildings, structures
and improvements now or hereafter erected thereon; (v) all fixtures
now or hereafter affixed to such land, even though they may be
detached or detachable, and all building improvement and construction
materials, supplies and equipment hereafter delivered to such land
contemplating affixation thereon; (vi) all awards and proceeds of
condemnation for such land and any improvements thereon or any part
thereof to which the Grantor is entitled, and all proceeds, including
return premiums and choses in action arising under any insurance
policies maintained with respect to all or any part of the foregoing;
(vii) all rents, issues and profits of such land and improvements, and
all the estate, right, title and interest of every nature whatsoever
of the Grantor in and to the same; and (viii) all proceeds, products,
replacements, additions, substitutions, renewals, accessions and
reversions of any of the foregoing items.
All of the real and personal property and property rights hereby
conveyed are referred to individually and collectively as the
"Property."
TO HAVE AND TO HOLD the Property and all the estate, right, title
and interest, in law and in equity, of Grantor in and to the Property
unto Trustee and its successors and assigns, in fee simple, forever.
IN TRUST, HOWEVER that if all Obligations are timely paid and
performed and each and every representation, warranty, agreement, and
condition of this Deed of Trust and any other Loan Documents is
complied with and abided by, this Deed of Trust and the estate hereby
created shall cease and be null, void, and canceled of record at the
request and expense of Grantor, and if an Event of Default occurs,
Trustee is authorized to foreclose and sell the Property under power
of sale or by judicial proceeding according to applicable law and as
provided herein.
Grantor warrants and represents that Grantor is lawfully seized
of the Property, in fee simple, absolute, that Grantor has the legal
right to convey and encumber the same, and that the Property is free
and clear of all liens and encumbrances. Grantor further warrants and
will forever defend all and singular the Property and title thereto to
Trustee, Bank, and their respective successors and assigns, against
the lawful claims of all persons whomsoever.
To protect the security of this Deed of Trust, Grantor further
represents and agrees with Trustee and Bank as follows:
Payment of Obligations. That the Obligations shall be timely paid
and performed.
Future Advances. This Deed of Trust is given to secure not only
existing Obligations, but also future advances made within fifteen
(15) years of the date of this Deed of Trust to the same extent as if
such future advances are made on the date of the execution of this
Deed of Trust. The principal amount (including future advances) that
may be so secured may decrease or increase from time to time, but the
total amount so secured at any one time shall not exceed the maximum
principal amount of $1,000,000.00, plus all interest, costs,
reimbursements, fees and expenses due under this Deed of Trust and
secured hereby. Grantor shall not execute any document that impairs or
otherwise impacts the priority of any future advances secured by this
Deed of Trust.
Leases, Subleases and Easements. Grantor shall maintain, enforce
and cause to be performed all of the terms and conditions under any
lease, sublease or easement which may constitute a portion of the
Property. Grantor shall not, without the consent of Bank, agree to the
cancellation or surrender under any lease or sublease now or hereafter
covering the Property or any part thereof, or prepayment of rents,
issues or profits, other than rent paid at the signing of a lease or
sublease, nor modify any such lease or sublease so as to shorten the
term, decrease the rent, accelerate the payment of rent, or change the
terms of any renewal option; and any such purported cancellation,
surrender, prepayment or modification made without the consent of Bank
shall be void as against Bank.
Required Insurance. Grantor shall maintain with respect to the
Property: (i) insurance against loss or damage by fire and other
casualties and hazards by insurance written on an "all risks" basis,
including specifically windstorm and/or hail damage (and flood and
earthquake coverage, where available), in an amount not less than the
replacement cost thereof, naming Bank as loss payee and mortgagee;
(ii) liability insurance providing coverage in such amount as Bank may
require but in no event less than $1,000,000.00 combined single limit,
naming Bank as an additional insured; and (iii) such other insurance
as Bank may require from time to time.
All casualty insurance policies shall contain an endorsement or
agreement by the insurer in form satisfactory to Bank that any loss
shall be payable in accordance with the terms of such policy
notwithstanding any act or negligence of Grantor and the further
agreement of the insurer waiving rights of subrogation against Bank,
and rights of set-off, counterclaim or deductions against Grantor.
All insurance policies shall be in form, provide coverages, be
issued by companies and be in amounts in each company, satisfactory to
Bank, and Grantor shall furnish Bank with an original of all policies.
At least thirty (30) days prior to the expiration of each such policy,
Grantor shall furnish Bank with evidence satisfactory to Bank of the
payment of premium and the reissuance of a policy continuing insurance
in force as required by this Deed of Trust. All such policies shall
provide that the policy will not be canceled or materially amended
without at least thirty (30) days prior written notice to Bank. In the
event Grantor fails to provide, maintain, keep in force, and furnish
to Bank the policies of insurance required by this paragraph, Bank may
procure such insurance or single-interest insurance in such amounts,
at such premium, for such risks and by such means as Bank chooses, at
Grantor's expense; provided however, Bank shall have no responsibility
to obtain any insurance, but if Bank does obtain insurance, Bank shall
have no responsibility to Grantor or other persons that insurance
obtained shall be adequate or provide any protection to Grantor.
Insurance Proceeds. After occurrence of any loss to any of the
Property, Grantor shall give prompt written notice thereof to Bank.
In the event of such loss all insurance proceeds shall be payable
to Bank, and Grantor hereby authorizes and directs any affected
insurance company to make payment of such proceeds directly to Bank.
Bank is hereby authorized by Grantor to settle, adjust or compromise
any claims for loss or damage under any policy or policies of
insurance and Grantor appoints Bank its attorney-in-fact to receive
and endorse any insurance proceeds to Bank, which appointment is
coupled with an interest and shall be irrevocable as long as any
Obligations remain unsatisfied.
In the event of any damage to or destruction of the Property,
Bank shall have the option of applying or paying all or part of the
insurance proceeds to (i) the Obligations in such order as Bank may
determine, (ii) restoration of the Property, or (iii) Grantor. Nothing
herein shall be deemed to excuse Grantor from restoring, repairing and
maintaining the Property as required herein.
Impositions; Escrow Deposit. Grantor will pay before they are due
all taxes, levies, assessments and other fees and charges imposed upon
or which may become a lien upon the Property under any law or
ordinance (all of the foregoing collectively "Impositions").
Upon request of Bank, Grantor shall add to each periodic payment
required under the Note or otherwise pay to Bank, the amount estimated
by Bank to be sufficient to enable Bank to pay as they come due, all
Impositions and insurance premiums which Grantor is required to pay
hereunder. Payments requested under this provision shall be
supplemented or adjusted as required by Bank from time to time. Such
funds may be commingled with the general funds of Bank and shall not
earn interest. Upon the occurrence of a Default, Bank may apply such
funds to pay any of the Obligations.
Use of Property. Grantor shall use and operate, and require its
lessees or licensees to use and operate, the Property in compliance
with all applicable laws and ordinances, covenants, and restrictions,
and with all applicable requirements of any lease or sublease now or
hereafter affecting the Property. Grantor shall not permit any
unlawful use of the Property or any use that may give rise to a claim
of forfeiture of any of the Property. Grantor shall not allow changes
in the stated use of Property from that disclosed to Bank at the time
of execution hereof. Grantor shall not initiate or acquiesce to a
zoning change of the Property without prior notice to, and written
consent of, Bank.
Maintenance, Repairs and Alterations. Grantor shall keep and
maintain the Property in good condition and repair and fully protected
from the elements to the satisfaction of Bank. Grantor will not
remove, demolish or structurally alter any of the buildings or other
improvements on the Property (except such alterations as may be
required by laws, ordinances or regulations) without the prior written
consent of Bank. Grantor shall promptly notify Bank in writing of any
material loss, damage or adverse condition affecting the Property.
Eminent Domain. Should the Property or any interest therein be
taken or damaged by reason of any public use or improvement or
condemnation proceeding ("Condemnation"), or should Grantor receive
any notice or other information regarding such Condemnation, Grantor
shall give prompt written notice thereof to Bank. Bank shall be
entitled to all compensation, awards and other payments or relief
granted in connection with such Condemnation and, at its option, may
commence, appear in and prosecute in its own name any action or
proceedings relating thereto. Bank shall be entitled to make any
compromise or settlement in connection with such taking or damage. All
compensation, awards, and damages awarded to Grantor related to any
Condemnation (the "Proceeds") are hereby assigned to Bank and Grantor
agrees to execute such further assignments of the Proceeds as Bank may
require. Bank shall have the option of applying or paying the Proceeds
in the same manner as insurance proceeds as provided herein. Grantor
appoints Bank as its attorney-in-fact to receive and endorse the
Proceeds to Bank, which appointment is coupled with an interest and
shall be irrevocable as long as any Obligations remain unsatisfied.
Environmental Condition of Property and Indemnity. Grantor
warrants and represents to Bank, except as reported by Grantor to Bank
in writing, that: (i) Grantor has inspected and is familiar with the
environmental condition of the Property; (ii) the Property and
Grantor, and any occupants of the Property, are in compliance with and
shall continue to be in compliance with all applicable federal, state
and local laws and regulations intended to protect the environment and
public health and safety as the same may be amended from time to time
("Environmental Laws"); (iii) the Property is not and has never been
used to handle, treat, store or dispose of oil, petroleum products,
hazardous substances in any quantity, hazardous waste, toxic
substances, regulated substances or hazardous air pollutants
("Hazardous Materials") in violation of any Environmental Laws; and
(iv) no Hazardous Materials (including asbestos or lead paint in any
form) are located on, in or under the Property or emanate from the
Property. Further, Grantor represents to Bank that no portion of the
Property is a protected wetland. Grantor agrees to notify Bank
immediately upon receipt of any citations, warnings, orders, notices,
consent agreements, process or claims alleging or relating to
violations of any Environmental Laws or to the environmental condition
of the Property.
Grantor shall indemnify, hold harmless, and defend Bank and
Trustee from and against any and all damages, penalties, fines,
claims, suits, liabilities, costs, judgments and expenses, including
attorneys', consultants' or experts' fees of every kind and nature
incurred, suffered by or asserted against Bank or Trustee as a direct
or indirect result of: (i) representations made by Grantor in this
section being or becoming untrue in any material respect; or (ii)
Grantor's violation of or failure to meet the requirements of any
Environmental Laws; or (iii) Hazardous Materials which, while the
Property is subject to this Deed of Trust, exist on the Property. Bank
shall have the right to arrange for or conduct environmental
inspections of the Property from time to time (including the taking of
soil, water, air or material samples). The cost of such inspections
made after Default or which are required by laws or regulations
applicable to Bank shall be borne by Grantor. Grantor's obligations
under this paragraph shall continue, survive and remain in full force
and effect notwithstanding foreclosure, satisfaction of this Deed of
Trust or full satisfaction of the Obligations. However, Grantor's
indemnity shall not apply to any negligent or intentional act of Bank
which takes place after foreclosure or satisfaction of this Deed of
Trust.
Appraisals. Grantor agrees that Bank may obtain an appraisal of
the Property when required by the regulations of the Federal Reserve
Board or the Office of the Comptroller of the Currency or at such
other times as Bank may reasonably require. Such appraisals shall be
performed by an independent third party appraiser selected by Bank.
The cost of such appraisals shall be borne by Grantor. If requested by
Bank, Grantor shall execute an engagement letter addressed to the
appraiser selected by Bank. Grantor's failure or refusal to sign such
an engagement letter, however, shall not impair Bank's right to obtain
such an appraisal. Grantor agrees to pay the cost of such appraisal
within ten (10) days after receiving an invoice for such appraisal.
Inspections. Bank, or its representatives or agents, are
authorized to enter at any reasonable time upon any part of the
Property for the purpose of inspecting the Property and for the
purpose of performing any of the acts it is authorized to perform
under the terms of this Deed of Trust.
Liens and Subrogation. Grantor shall pay and promptly discharge
all liens, claims and encumbrances upon the Property. Grantor shall
have the right to contest in good faith the validity of any such lien,
claim or encumbrance, provided: (i) such contest suspends the
collection thereof or there is no danger of the Property being sold or
forfeited while such contest is pending; (ii) Grantor first deposits
with Bank a bond or other security satisfactory to Bank in such
amounts as Bank shall reasonably require; and (iii) Grantor thereafter
diligently proceeds to cause such lien, claim or encumbrance to be
removed and discharged.
Bank shall be subrogated to any liens, claims and encumbrances
against Grantor or the Property that are paid or discharged through
payment by Bank or with loan proceeds, notwithstanding the record
cancellation or satisfaction thereof.
Waiver of Grantor's Rights. Grantor waives any: (i) rights of
homestead or other exemption with regard to any of the Property; (ii)
rights or claims of equitable or statutory redemption; (iii) rights of
appraisal; and (iv) rights to require marshaling of assets.
Payments by Bank; Indemnification. In the event of default in the
timely payment or performance of any of the Obligations, Bank, at its
option and without any duty on its part to determine the validity or
necessity thereof, may pay the sums for which Grantor is obligated.
Further, Bank may pay such sums as Bank deems appropriate for the
protection and maintenance of the Property including, without
limitation, sums to pay Impositions and other levies, assessments or
liens, maintain insurance, make repairs, secure the Property, maintain
utility service, intervene in any Condemnation, and pay attorneys'
fees and other fees and costs to enforce this Deed of Trust or protect
the lien hereof (including foreclosure) or collect the Obligations,
including without limitation, those incurred in any proceeding
including bankruptcy or arbitration. Any amounts so paid shall bear
interest at the default rate stated in the Note and shall be secured
by this Deed of Trust.
In the event either Bank or Trustee shall become party to any
suit or legal proceeding by reason of its status as beneficiary of
this Deed of Trust or trustee hereunder, Grantor shall indemnify and
hold harmless Bank and Trustee and reimburse Bank and Trustee for any
amounts paid or incurred by Bank or Trustee, including all reasonable
costs, charges and attorneys' fees in any such suit or proceeding.
Assignment of Rents. Grantor hereby absolutely assigns and
transfers to Bank all the leases, rents, issues and profits of the
Property (collectively "Rents"). So long as no Default exists, Bank
gives to and confers upon Grantor the license and authority to collect
Rents and to demand, receive and enforce payment, give receipts,
releases and satisfactions, and sue in the name of Grantor for all
Rents. Grantor represents there has been no prior assignment of leases
or Rents, and agrees not to further assign such leases or Rents. Upon
the occurrence of a Default, Bank may, without notice, by agent or by
a receiver appointed by a court, and without regard to the adequacy of
any security for the Obligations, revoke and cancel the license and
authority of Grantor to collect Rents, and (i) enter upon and take
possession of the Property, (ii) notify tenants, subtenants and any
property manager to pay Rents to Bank or its designee, and upon
receipt of such notice such persons are authorized and directed to
make payment as specified in the notice and disregard any contrary
direction or instruction by Grantor, and (iii) in its own name, sue
for or otherwise collect Rents, including those past due, and apply
Rents, less costs and expenses of operation and collection, including
attorneys' fees, to the Obligations in such order and manner as Bank
may determine. Banks exercise of any one or more of the forgoing
rights shall not cure or waive any Event of Default or notice thereof
hereunder.
Due on Sale or Further Encumbrance. The direct or indirect sale,
assignment, or conveyance of the Property, or any interest therein, or
the further encumbrance of the Property, without Bank's written
consent shall, at Bank's option, constitute an Event of Default under
this Deed of Trust.
Event of Default; Remedies of Bank Upon Event of Default. An
"Event of Default" shall exist if any one or more of the following
events shall occur (individually, an "Event of Default" , and
collectively, "Events of Default"): (i) failure of Grantor or any
other person liable to timely pay or perform any of the Obligations;
or (ii) the occurrence of any Event of Default under any of the other
Loan Documents. Upon the occurrence of any Event of Default, the
following remedies are available to Bank, without limitation. (i)
Bank may exercise any or all of Bank's remedies under this Deed of
Trust or other Loan Documents including, without limitation,
acceleration of maturity of all payments and Obligations. (ii) Bank
may take immediate possession of the Property or any part thereof
(which Grantor agrees to surrender to Bank) and manage, control or
lease the same to such persons and at such rental as it may deem
proper and collect and apply Rents as provided herein. The taking of
possession shall not prevent concurrent or later proceedings for the
foreclosure sale of the Property. (iii) Bank may apply to any court of
competent jurisdiction for the appointment of a receiver for all
purposes including, without limitation, to manage and operate the
Property or any part thereof, and to apply the net Rents therefrom to
the payment of any of the Obligations. In event of such application,
Grantor consents to the appointment of a receiver, and agrees that a
receiver may be appointed without notice to Grantor, without regard to
the adequacy of any security for the Obligations, and without regard
to the solvency of Grantor or any other person, firm or corporation
who or which may be liable for the payment of the Obligations. (iv)
Upon application of Bank, Trustee shall sell the Property and pay the
proceeds of sale according to the following terms and conditions: (a)
Trustee shall foreclose upon this Deed of Trust and sell the Property,
or any part of the Property, at public sale conducted according to
applicable law (referred to as "Trustee's Sale"); (b) Trustee shall
provide such notice and shall advertise a Trustee's Sale in the manner
required by applicable law; (c) Trustee shall conduct additional
Trustee's Sales as may be required until all of the Property is sold
or the Obligations are satisfied; (d) Trustee, may receive bids at
Trustee's Sale from the Bank and may accept from Bank as successful
bidder, credit against the Obligations as payment of any portion of
the purchase price; (e) Trustee may receive a reasonable fee for
Trustee's services hereunder, not to exceed the maximum fee allowed by
applicable law; and (f) Trustee shall apply the proceeds of Trustee's
Sale, first to any permitted Trustee's fee, second to expenses of
foreclosure and sale, third to the Obligations, and any remaining
proceeds as required by law.
Substitute Trustee. Bank may, at any time and from time to time,
without notice, at the Bank's discretion, remove Trustee and appoint a
substitute trustee or trustees ("Substitute Trustee") by filing in the
records where this Deed of Trust is recorded an instrument affecting
such removal and appointment. A Substitute Trustee shall be vested
with title to the Property and with all rights, powers, and duties of
the original Trustee herein and all provisions hereof pertaining to
the Trustee shall similarly affect any Substitute Trustee. Any oath or
bond by the Trustee is hereby waived. If more than one Person is
Trustee hereunder, the powers of Trustee may be exercised by any
Person who is Trustee, or by any successor Trustee with the same
powers as if jointly exercised by all of them.
Miscellaneous Provisions. Grantor agrees to the following: (i)
All remedies available to Bank with respect to this Deed of Trust or
available at law or in equity shall be cumulative and may be pursued
concurrently or successively. No delay by Bank in exercising any
remedy shall operate as a waiver of that remedy or of any Default. Any
payment by Bank or acceptance by Bank of any partial payment shall not
constitute a waiver by Bank of any Default. (ii) The provisions
hereof shall be binding upon and inure to the benefit of Grantor, its
heirs, personal representatives, successors and assigns including,
without limitation, subsequent owners of the Property or any part
thereof, and shall be binding upon and inure to the benefit of Bank,
its successors and assigns and any future holder of the Note or other
Obligations. (iii) Any notices, demands or requests shall be
sufficiently given if given as provided for in the Loan Agreement.
(iv) This Deed of Trust may be terminated or modified only by an
instrument in writing signed by the Bank and Grantor and may be
modified without the Trustee joining or signing such instrument. (v)
The captions or headings at the beginning of each paragraph hereof are
for the convenience of the parties and are not a part of this Deed of
Trust. (vi) If the lien of this Deed of Trust is invalid or
unenforceable as to any part of the Obligations, the unsecured portion
of the Obligations shall be completely paid (and all payments made
shall be deemed to have first been applied to payment of the unsecured
portion of the Obligations) prior to payment of the secured portion of
the Obligations and if any clause, provision or obligation hereunder
is determined invalid or unenforceable the remainder of this Deed of
Trust shall be construed and enforced as if such clause, provision or
obligation had not been contained herein. (vii) This Deed of Trust
shall be governed by and construed under the laws of the jurisdiction
where this Deed of Trust is recorded. (viii) Grantor by execution and
Bank by acceptance of this Deed of Trust agree to be bound by the
terms and provisions hereof.
IN WITNESS WHEREOF, Grantor has signed and sealed this instrument
as of the day and year first above written.
GRANTOR
GRANVILLE PLASTICS COMPANY, INC., a
North Carolina Corporation
By:_________________________________
Name:_______________________________
President
(CORPORATE SEAL)
Attest:_______________________________
Name:
Secretary
<PAGE>
State of _______________________
City/County of _________________
Corporate Acknowledgment
I certify that __________________ personally came before me this
day and acknowledged that he/she is Secretary of Granville Plastics
Company, Inc., a North Carolina Corporation, and that by authority
duly given and as the act of the corporation, the foregoing instrument
was signed in its name by its President, _________________, sealed
with its corporate seal, and attested by himself/herself as its
Secretary.
Witness my hand and official seal, this _____ day of December, 1997.
___________________________________________,
Notary Public
Notary Seal
____________________________________________
(Printed Name of Notary)
My Commission expires: ____________________
Clerk's Certificate
The forgoing certificate(s) of
__________________________________________________________ is
certified to be correct. This instrument and this certificate are duly
registered at the date and time and in the book and page shown on the
first page hereof.
___________________________ REGISTER OF DEEDS FOR GRANVILLE COUNTY
By _______________________________________
Deputy/Assistant-Register of Deeds
EXHIBIT A
LEGAL DESCRIPTION<PAGE>
EXHIBIT 99.14
December 11, 1997
Mr. Will Smetana
Mr. Ed Bonin
Master Molders, Inc.
P.O. Box 2409
Route 301 South
Orangeburg, SC 29116
Dear Will and Ed,
Thank you very much for your cooperation in granting an extension to
the closing date of the Merger of Master Molders, Inc. into a
subsidiary of United Shields Corporation.
My understanding is that we will loan Master Molders $65,000.00 no
later than December 18 on the terms of the attached promissory note
and that the $65,000.00 will be deducted from the balance due of
$815,000.00 at closing. Closing and payment will take place no later
than January 31, 1998.
If this reflects our agreement, please sign below.
Sincerely, Agreed:
Master Molders, Inc.
T.J. Tully By: /s/ Willard Smetana
C.E.O.
TJT/ab
EXHIBIT 99.15
PROMISSORY NOTE
$65,000.00 December
18, 1997
For value received, the undersigned, Master Molders, Inc. ("Payor"),
promises to pay to the order of United Shields Corporation the
principal amount of sixty-five thousand Dollars ($65,000.00) payable
on June 18, 1998.
No interest shall accrue on the principal amount of this Promissory
Note, provided that any amounts not paid when due shall bear interest
on the overdue amount until paid at a rate of 12% per annum. Such
interest shall be calculated on the basis of a 360-day year composed
of 30-day months.
All payments under this Promissory Note shall be made to the holder of
this Promissory Note at 655 Eden Park Drive, Suite 260, Cincinnati,
Ohio 45202 or at such other place as the holder shall designate.
All payments on account of the indebtedness represented by this
Promissory Note shall be applied first to accrued and unpaid interest
and then to unpaid principal.
Payor shall have the right to prepay all or any part of the principal
of this Promissory Note, without premium or penalty.
If any of the following events occur, the principal amount of this
Promissory Note shall become immediately due and payable without
notice: bankruptcy or insolvency of Payor; default by Payor under any
other indebtedness for borrowed money; change of control of Payor or
sale of substantially all of its assets.
In the event of default under this Promissory Note, the holder of this
Promissory Note shall be entitled to reasonable costs of collection,
including reasonable attorney's fees.
To secure the payment of this Promissory Note, Payor irrevocably
authorizes any attorney of any court of record to appear for Payor in
such court, at any time after maturity of any amount due hereunder,
and confess a judgement, without process, in favor of the holder of
this Promissory Note, for such amount as may appear to be unpaid
thereon, together with reasonable costs of collection, including
reasonable attorney's fees, and to waive and release all errors which
may intervene in any such proceedings, and consent to immediate
execution upon such judgement and Payor ratifies and confirms all that
such attorney may do by virtue of this paragraph.
Payor waives diligence, presentment, demand, protest, notice of any
kind and any and all other conditions precedent of any kind to the
obligations of Payor under this Promissory Note.
This Promissory Note shall be governed by and construed in accordance
with the laws of the State of Ohio.
Master Molders, Inc.
By: /s/ Will Smetana
EXHIBIT 99.16
AMENDED AND RESTATED
PROMISSORY NOTE
$4,000,000.00 December 29, 1997
Cincinnati, Ohio
For value received, United Shields Corporation, a Colorado corporation
("Maker"), promises to pay to the order of NAVICAP Corporation, f/k/a
Ramsay-Hughes, Inc., up to the principal sum of $4,000,000 on demand
with interest at the rate of 12% per annum on the principal amount of
this Note from time to time outstanding.
NAVICAP Corporation shall disburse the principal sum to Maker in whole
or in part at its discretion as will be memorialized in letters of
transmittal to be sent to Maker with each discretionary disbursement.
Such letters shall be incorporated into this Note by reference.
Maker may prepay this Note from time to time in whole or in part
without premium or penalty. All prepayments shall be applied first to
accrued interest and then to principal.
The principal amount shall be collateralized by 3,000,000 shares of
stock of Maker pledged by T.J. Tully, Gay N. Tully and James F. Tully
by and through those certain Stock Pledge Agreements of May 29, 1997.
This Note amends and restates the terms of that certain Promissory
Note of May, 22, 1997 as amended by that certain Promissory Note of
December 1, 1997.
Upon default under the terms of this Note, NAVICAP Corporation shall
have the option of offsetting the proceeds of the sale of the pledged
shares in partial or full satisfaction of the defaulted obligation at
its discretion. Maker agrees that in any action on this Note or any
instrument which provides security for this Note, it waives to the
fullest extent allowed by law all requirements of diligence and
collection, presentment, notice of nonpayment, protest, notice of
protest, suit and all other conditions precedent in connection with
the collection and enforcement of this Note or any security for this
Note.
This Note shall be governed and interpreted in accordance with Ohio
law.
UNITED SHIELDS CORPORATION
By:____________________________
T.J. Tully
CEO and Chairman of the Board
<PAGE>
EXHIBIT 99.17
January 6, 1998
Mr. Donald T. Zimmerman
2564 Handasyde Avenue
Cincinnati, OH 45208
Dear Tim,
This will confirm our agreement to amend your Employment Agreement
dated September 30, 1997 by deleting the second and third sentences of
paragraph 1.
Sincerely,
United Shields Corporation
By __/s/ T.J. Tully____________________
T.J. Tully, C.E.O.
Agreed:
/s/ Donald T. Zimmerman
Donald T. Zimmerman
JWP/ab
<PAGE>
EXHIBIT 99.18
NEWS RELEASE
Contacts:
T. J. Tully Deb Freitag or Dino Pelle
United Shields Martiny Public Relations
(513) 241-7470 (513) 489-4600
FOR IMMEDIATE RELEASE
UNITED SHIELDS COMPLETES SECOND ACQUISITION
CINCINNATI, Ohio, Jan. 5, 1998 United Shields Corporation (OTCBB:UNSC)
today announces the completion of its second acquisition: R.P.
Industries, a holding company for two plastic injection molding
manufacturing companies. United Shields purchased R.P. Industries for
$6.1 million in cash plus 993,384 shares of restricted common stock on
Jan. 5, 1998. Navicap Corporation (fka Ramsay-Hughes, Inc.) served as
merchant banker to United Shields in this transaction.
United Shields CEO T.J. Tully stated, We re really on track with R.P.
Industries as they re a key element to our long-term growth plan in
plastic manufacturing. R.P. Industries reported revenue of
approximately $10,600,000 for its fiscal year ending July 31, 1997.
RP Industries wholly owned subsidiaries, Richmond Plastics and
Granville Plastics, are injection molders and manufacturers of a broad
range of plastic parts using thermoplastic resins to service a various
industries including housewares, lawn and garden, power tools,
furniture, toys, recreational equipment, industrial equipment, lab
ware, cosmetic packaging, and building products.
- -more-
page 2
United Shields Acquires R.P. Industries
January 5, 1998
Richmond Plastics was originally incorporated as Virginia Plastics,
Inc. in 1952, one of the first plastics manufacturing companies in
Virginia, and began operating under its current name in 1961. The
manufacturing company moved into its present 35,000 square feet
facility in Chester, Virginia, outside of Richmond, in 1972. In 1989,
R.P. Industries acquired Granville Plastics, located near Durham,
North Carolina, and in 1993 that plant was expanded to its current
30,750 square feet facility.
R.P. Industries employs approximately 150 persons. Management of the
two plants is weighted with high-level manufacturing and plastics
industry experience.
This is the second acquisition United Shields has made in 51 days. On
Nov. 14, 1997, United Shields acquired The HeaterMeals Company, the
maker of HeaterMeals , self-heating entrees that are heated by a
patented, self-contained non-toxic chemical reaction. HeaterMeals
entrees offer an assortment of completely self-contained, shelf-stable
packages (no refrigeration needed) with a ZT Energy Pad, utensil pack
and water pouch to provide consumers a hot meal, any time, any place.
The product self-heats in approximately 15 minutes. The HeaterMeals
Company reported revenues of approximately $4.8 million for its fiscal
year ending Dec. 31, 1996.
Located at 655 Eden Park Drive, United Shields Corp. is a holding
company targeting the plastic manufacturing and food and beverage
packaging industries.
# # #
<PAGE>
EXHIBIT 99.19
NEWS RELEASE
Contacts:
T. J. Tully Deb Freitag or Dino Pelle
United Shields Martiny Public Relations
(513) 241-7470 (513) 489-4600
FOR IMMEDIATE RELEASE
UNITED SHIELDS SECURES SIX MILLION DOLLAR
CREDIT FACILITY FROM FIRST UNION NATIONAL BANK
CINCINNATI, Ohio, Jan.6, 1998 United Shields Corporation (OTCBB:UNSC)
is pleased to announce the securing of a credit facility from First
Union National Bank for up to $6 million. Approximately $4.5 million
of this facility was applied to the purchase price of the Company s
acquisition of R.P. Industries, a holding company for two plastic
injection molding manufacturing companies.
United Shields CEO T.J. Tully stated, It s encouraging for United
Shields to have obtained financing from one of the nation s largest
banks to help us complete this acquisition which is such a big part of
our growth plan.
Located at 655 Eden Park Drive, United Shields Corp. is a holding
company targeting the plastic manufacturing and food and beverage
packaging industries.
# # #
<PAGE>
EXHIBIT 99.20
NEWS RELEASE
Contacts:
T. J. Tully Deb Freitag or Dino Pelle
United Shields Martiny Public Relations
(513) 241-7470 (513) 489-4600
FOR IMMEDIATE RELEASE
UNITED SHIELDS COMPLETES $10 MILLION ACQUISITION
OF R.P. INDUSTRIES
CINCINNATI, Ohio, Jan. 7, 1998 United Shields Corporation (OTCBB:UNSC)
announces the completion of its second acquisition: R.P. Industries,
a holding company for two plastic injection molding manufacturing
companies. United Shields purchased R.P. Industries for $6.1 million
in cash plus 993,384 shares of restricted common stock bringing the
total transaction value to approximately $10.1 million. R.P.
Industries reported revenue of approximately $10,600,000 for its
fiscal year ending July 31, 1997. Navicap Corporation
(fka Ramsay-Hughes, Inc.) served as merchant banker to United Shields
in this transaction.
Located at 655 Eden Park Drive, United Shields Corp. is a holding
company targeting the plastic manufacturing and food and beverage
packaging industries.
# # #
