<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
MARK (ONE)
[X] Quarterly Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 For the quarterly period
ended September 30, 1997
or
[ ] Transition Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 For the transition period
from _________________ to ____________________
Commission file number 0-26096
THE UNIMARK GROUP, INC.
(Exact name of registrant as specified in its charter)
TEXAS 75-2436543
(State of incorporation or organization) (I.R.S. Employer Identification No.)
UNIMARK HOUSE
124 MCMAKIN ROAD
BARTONVILLE, TEXAS 76226
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (817) 491-2992
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X . No .
--- ---
As of November 12, 1997, the number of shares outstanding of each
class of common stock was:
Common Stock, $.01 par value: 8,598,833 shares
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I N D E X
<TABLE>
<CAPTION>
PAGE
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets,
December 31, 1996 and September 30, 1997........................................ 3
Condensed Consolidated Statements of Operations for the Three Months
and Nine Months Ended September 30, 1996 and 1997................................ 4
Condensed Consolidated Statements of Cash Flows
for the Nine Months Ended September 30, 1996 and 1997............................ 5
Notes to Condensed Consolidated Financial Statements - September 30, 1997.......... 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................................... 8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.................................................. 15
SIGNATURES.................................................................................. 16
</TABLE>
2
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THE UNIMARK GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1996 1997
-------- ---------
(NOTE 2) (UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents..................................... $ 4,268 $ 4,051
Accounts receivable -- trade, net of allowance of $142 in
1996 and $285 in 1997...................................... 9,244 11,596
Accounts receivable -- other.................................. 703 642
Receivable from related parties............................... 687 832
Inventories................................................... 19,411 32,138
Income and value added taxes receivable....................... 1,418 2,098
Deferred income taxes......................................... 196 196
Prepaid expenses.............................................. 771 1,377
-------- --------
Total current assets 36,698 52,930
Property, plant and equipment, net of accumulated depreciation
of $2,712 in 1996 and $4,503 in 1997.......................... 29,177 36,385
Deferred income taxes............................................ 373 373
Goodwill......................................................... 6,787 6,651
Identifiable intangible assets................................... 2,320 2,088
Other assets..................................................... 1,328 2,459
-------- --------
Total assets............................................ $ 76,683 $100,886
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings......................................... $12,604 $32,743
Current portion of long-term debt............................. 1,114 1,087
Accounts payable.............................................. 4,572 2,939
Accrued expenses.............................................. 2,108 3,987
Deferred income taxes......................................... 3,915 4,242
-------- --------
Total current liabilities............................... 24,313 44,998
Long-term debt, less current portion............................. 4,332 9,114
Deferred income taxes............................................ 238 238
Shareholders' equity:
Common stock, $0.01 par value:
Authorized shares - 20,000,000
Issued and outstanding shares - 8,561,333 in 1996
and 8,598,833 in 1997.................................... 86 86
Additional paid-in capital.................................... 45,287 45,419
Retained earnings............................................. 2,427 1,031
-------- --------
Total shareholders' equity.............................. 47,800 46,536
======== ========
Total liabilities and shareholders' equity.............. $76,683 $100,886
======== ========
</TABLE>
See accompanying notes.
3
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THE UNIMARK GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------- ----------------------
1996 1997 1996 1997
-------- -------- -------- --------
(In thousands, except per share data)
<S> <C> <C> <C> <C>
Net sales......................................... $ 14,970 $ 21,982 $ 44,921 $ 59,041
Cost of products sold............................. 11,345 14,859 30,866 39,405
-------- -------- -------- --------
3,625 7,123 14,055 19,636
Selling, general and administrative expenses...... 4,406 6,532 11,788 18,943
-------- -------- -------- --------
Income (loss) from operations..................... (781) 591 2,267 693
Other income (expense):
Interest expense.............................. (344) (964) (999) (2,256)
Interest income............................... 177 48 475 202
Foreign currency transaction loss............. (71) (270) (192) (347)
Other......................................... 8 20 1 32
-------- -------- -------- --------
(230) (1,166) (715) (2,369)
-------- -------- -------- --------
Income (loss) before income taxes and
extraordinary item............................ (1,011) (575) 1,552 (1,676)
Income tax expense (benefit)...................... (333) (70) 88 (141)
-------- -------- -------- --------
Income (loss) before extraordinary gain........... (678) (505) 1,464 (1,535)
Extraordinary gain on forgiveness of debt,
net of applicable income taxes.................. 330 -- 330 139
-------- -------- -------- --------
Net income (loss)................................. $ (348) $ (505) $ 1,794 $ (1,396)
======== ======== ======== ========
Earnings (loss) per share:
Income (loss) before extraordinary item:
Primary................................... $ (0.08) $ (0.06) $ 0.20 $ (0.16)
======== ======== ======== ========
Fully diluted............................. $ (0.08) $ (0.06) $ 0.20 $ (0.16)
======== ======== ======== ========
Net income (loss):
Primary................................... $ (0.04) $ (0.06) $ 0.24 $ (0.16)
======== ======== ======== ========
Fully diluted............................. $ (0.04) $ (0.06) $ 0.24 $ (0.16)
======== ======== ======== ========
</TABLE>
See accompanying notes.
4
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THE UNIMARK GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
----------------------
1996 1997
-------- --------
(IN THOUSANDS)
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) ......................................................... $ 1,794 $ (1,396)
Adjustments to reconcile net income (loss) to net cash used in operating
activities:
Depreciation and amortization.......................................... 1,231 2,436
Deferred income taxes.................................................. 1,059 327
Extraordinary gain..................................................... (589) (248)
Changes in operating assets and liabilities:
Receivables......................................................... (3,220) (3,116)
Inventories......................................................... (7,189) (12,727)
Prepaid expenses.................................................... (240) (606)
Payables and accrued expenses....................................... (2,578) 246
-------- --------
Net cash used in operating activities...................................... (9,732) (15,084)
INVESTING ACTIVITIES
Acquisition of Deli-Bon, GISE and Simply Fresh shares...................... (2,919) --
Purchases of property, plant and equipment................................. (8,154) (8,999)
Intangibles and other assets............................................... (1,473) (1,408)
-------- --------
Net cash used in investing activities...................................... (12,546) (10,407)
FINANCING ACTIVITIES
Net proceeds from sale of common stock..................................... 22,788 132
Net increase (decrease) in short-term borrowings........................... (531) 24,139
Proceeds from long-term debt............................................... 324 2,549
Payments of long-term debt................................................. (591) (1,546)
-------- --------
Net cash provided by financing activities.................................. 21,990 25,274
-------- --------
Net decrease in cash and cash equivalents.................................. (288) (217)
Cash and cash equivalents at beginning of period........................... 6,286 4,268
======== ========
Cash and cash equivalents at end of period................................. $ 5,998 $ 4,051
======== ========
</TABLE>
See accompanying notes.
5
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THE UNIMARK GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - INTERIM FINANCIAL STATEMENTS
The condensed consolidated financial statements at September 30, 1997, and for
the three month and nine month periods ended September 30, 1996 and 1997 are
unaudited and reflect all adjustments (consisting only of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
presentation of the financial position and operating results for the interim
period. These condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes thereto,
together with Management's Discussion and Analysis of Financial Condition and
Results of Operations, contained in the Company's Annual Report on Form 10-K as
filed with the Securities and Exchange Commission. The results of operations for
the nine months ended September 30, 1997 are not necessarily indicative of
future financial results.
NOTE 2 - YEAR END FINANCIAL STATEMENT
The condensed consolidated balance sheet at December 31, 1996 has been derived
from the audited financial statements at that date but does not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements.
NOTE 3 - EARNINGS PER SHARE
Earnings per share calculations are based on the weighted average number of
common and common equivalent (when dilutive) shares outstanding.
In February 1997, the Financial Accounting Standards Board issued Statement No.
128, Earnings per Share, which is required to be adopted on December 31, 1997.
At that time, the Company will be required to change the method currently used
to compute earnings per share and to restate all prior periods. Under the new
requirements for calculating basic earnings per share, the dilutive effect of
stock options will be excluded. This is not expected to impact the primary net
loss per share calculations for the quarterly periods ended September 30, 1996
and 1997. The Company has not yet determined what the impact of Statement No.
128 will be on the calculation of fully diluted earnings per share.
NOTE 4 - INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1996 1997
------------ -------------
(In thousands)
<S> <C> <C>
Finished goods:
Cut fruits ...................... $10,536 $17,050
Juice and oils .................. 1,796 4,478
------- -------
12,332 21,528
Advances to suppliers and orchards .. 4,134 6,166
Raw materials and supplies .......... 2,945 4,444
------- -------
$19,411 $32,138
======= =======
</TABLE>
6
<PAGE> 7
NOTE 5 - GAIN ON FORGIVENESS OF DEBT
In May, 1997, ICMOSA retired certain outstanding long-term debt with Union de
Credito Allende, a Mexican credit union, at a discount of 50%. The discount was
granted pursuant to a Mexican government program, Acuerdo de Apoyo Financiero y
Fomento a la Micro, Pequena y Mediana Empresa ("FOPIME") and through the
participation of Nacional Financiera ("NAFINSA"), a Mexican development bank, to
help provide liquidity to the Mexican credit unions. The debt reduction amounted
to $2.0 million pesos or approximately US $248,000. Provisions for Mexican
income taxes and statutory employee profit sharing of 34% and 10%, respectively,
have been provided on this gain from debt forgiveness.
NOTE 6 - RELATED PARTY TRANSACTIONS
Effective January 1, 1995, UniMark entered into a five year operating agreement
with Industrias Horticolas de Montemorelos, S.A. de C.V. ("IHMSA") to operate a
freezing plant located in Montemorelos, Nuevo Leon, Mexico. Pursuant to the
terms of the operating agreement, UniMark is obligated to pay IHMSA an operating
fee sufficient to cover the interest payments on IHMSA's existing outstanding
debt. Since, under the terms of the operating agreement, UniMark would benefit
from the reduction of IHMSA's debt, the Company elected to advance funds to
IHMSA to retire certain of its outstanding debt. In May, 1997, IHMSA retired its
outstanding debt with Union de Credito Allende at a discount of 50% through
programs available in Mexico for debt reduction. At September 30, 1997, advances
to IHMSA of $915,000 are included in other assets.
NOTE 7 - SHORT-TERM BORROWINGS
In April, 1997, the Company entered into two new revolving line-of-credit
agreements with a bank for short-term dollar denominated debt in Mexico of up to
$16.0 million collateralized by accounts receivable from export sales and
finished goods inventories. The agreements are guaranteed by the Company and its
Mexico subsidiaries and require the Company to maintain certain financial
performance levels relative to tangible net worth, working capital and total
debt. In addition, the agreements contain restrictions on the issuance of
additional shares of stock and the payment of dividends, among other things,
without the prior written consent of the bank. At September 30, 1997, the
Company had outstanding loan balances aggregating $13.8 million under these
agreements which have no scheduled maturity but are reviewed annually for
renewal. In October, 1997 the aggregate amount available under these agreements
was reduced by $1.0 million to facilitate a $1.0 million increase in the amount
available under the Company's US line-of-credit with the same bank.
In May, 1997, the Company entered into a loan agreement with a bank for
short-term dollar denominated debt in Mexico of up to $10.0 million to partially
finance investments in plants, expansion and upgrading of facilities and
agricultural operations. This loan is collateralized by land and improvements
and equipment in Mexico. The agreement is guaranteed by the Company and its
Mexico subsidiaries and requires the Company to maintain certain financial
performance levels relative to tangible net worth, working capital, total debt
and debt service. In addition, the agreement contains restrictions on the
issuance of additional shares of stock and the payment of dividends, among other
things, without the prior written consent of the bank. At September 30, 1997,
the Company had an outstanding loan balance of $10.0 million under this
agreement. This agreement, which originally was to mature on September 30, 1997,
has been extended to December 31, 1997.
NOTE 8 - SUBSEQUENT EVENTS
The Mexican peso exchange rate with the U.S. dollar was Ps 7.807 at
September 30, 1997. Subsequent to September 30, 1997, the Mexican peso
suffered a significant devaluation compared to that quarter-end rate.
7
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Statements contained in herein that are not historical facts are
forward-looking statements ("forward-looking statements") within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, which are intended to be covered by
the safe harbors created by those sections. In addition, such forward-looking
statements may be contained in filings made by the Company with the Securities
and Exchange Commission, or press releases or oral statements made from time to
time by or with the approval of an authorized executive officer of the Company.
Such forward-looking statements are necessarily estimates reflecting the best
judgment of the Company's management based upon current information and involve
known and unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements of the Company, or industry results,
to be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such risks,
uncertainties and other factors include, but are not limited to, growth and
integration of new businesses; uncertainty of new product development and market
acceptance of new products; dependence upon availability and price of fresh
fruit; competition; dependence upon significant customers; seasonality and
quarterly fluctuations; risk related to product liability and recall; limited
intellectual property protection; government regulation; dependence on key
management; economic, political and social conditions in Mexico; exchange rate
fluctuations and inflation; and labor relations and costs. These factors are
listed under "Risk Factors" in the Company's Registration Statement on Form S-1,
Registration No. 333-3539, as filed with the Securities and Exchange Commission
on June 14, 1996. These risks, uncertainties and other factors should not be
construed as exhaustive and the Company does not undertake, and specifically
disclaims any obligation, to update any forward-looking statements to reflect
occurrences or unanticipated events or circumstances after the date of such
statements.
CONVERSION TO U.S. GAAP
The Company conducts substantially all of its operations through its wholly
owned operating subsidiaries: UniMark Foods, Inc., UniMark International, Inc.,
Industrias Citricolas de Montemorelos, S.A. de C.V. ("ICMOSA"), Grupo Industrial
Santa Engracia, S.A. de C.V. ("GISE"), Agromark, S.A. de C.V. ("Agromark"),
Simply Fresh Fruit, Inc. ("Simply Fresh") and Les Produits Deli-Bon, Inc
("Deli-Bon"). ICMOSA is a Mexican corporation with its headquarters located in
Montemorelos, Nuevo Leon, Mexico, whose principal activities consist of
operating seven citrus processing plants and various citrus groves throughout
Mexico. GISE is a Mexican corporation with its headquarters located in Victoria,
Tamaulipas, Mexico, whose principal activities consist of operating three citrus
juice and oil processing plants. Agromark is a Mexican corporate entity under
which the Company's agricultural projects are reported. ICMOSA, GISE and
Agromark maintain their accounting records in Mexican pesos and in accordance
with Mexican generally accepted accounting principles and are subject to Mexican
income tax laws. ICMOSA's, GISE's and Agromark's financial statements have been
converted to United States generally accepted accounting principles ("U.S.
GAAP") and U.S. dollars. Deli-Bon maintains its accounting records in Canadian
dollars and in accordance with Canadian generally accepted accounting principles
and is subject to Canadian income tax laws.
Unless otherwise indicated, all dollar amounts included herein are set
forth in U.S. dollars in accordance with U.S. GAAP. The functional currency of
UniMark and its subsidiaries is the U.S. dollar.
8
<PAGE> 9
RESULTS OF OPERATIONS
The following table sets forth certain consolidated financial data expressed
as a percentage of net sales for the periods indicated:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1997 1996 1997
------ ------ ------ ------
<S> <C> <C> <C> <C>
Net sales 100.0 % 100.0 % 100.0% 100.0 %
Cost of products sold 75.8 67.6 68.7 66.7
----- ----- ----- -----
Gross profit 24.2 32.4 31.3 33.3
Selling, general and administrative expenses 29.4 29.7 26.3 32.1
----- ----- ----- -----
Income (loss) from operations (5.2) 2.7 5.0 1.2
Other income (expense):
Interest expense (2.3) (4.4) (2.2) (3.8)
Interest income 1.2 0.2 1.1 0.3
Foreign currency transaction loss (0.5) (1.2) (0.4) (0.6)
Other 0.1 0.1 -- 0.1
----- ----- ----- -----
(1.5) (5.3) (1.5) (4.0)
----- ----- ----- -----
Income (loss) before income taxes and
extraordinary item (6.7) (2.6) 3.5 (2.8)
Income tax expense (benefit) (2.2) (0.3) 0.2 (0.2)
----- ----- ----- -----
Income (loss) before extraordinary item (4.5) (2.3) 3.3 (2.6)
Extraordinary item, net of applicable income taxes 2.2 -- 0.7 0.2
----- ----- ----- -----
Net income (loss) (2.3)% (2.3)% 4.0% (2.4)%
===== ===== ===== =====
</TABLE>
THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997
Net sales increased 46.8% from $15.0 million in 1996 to $22.0 million in
1997. This increase was primarily due to increases in retail sales, foodservice
sales, club sales and citrus juice and oil sales. Retail sales increased 61.5%
from $3.8 million in 1996 to $6.2 million in 1997. Foodservice sales increased
21.1% from $5.2 million in 1996 to $6.4 million in 1997 while warehouse club
sales increased 60.8% from $1.8 million in 1996 to $2.9 million in 1997. These
increases are primarily the result of increased distribution and demand for the
Company's chilled fruit product line as well as the expansion of the Company's
product line including canned fruit, frozen fruit and fresh pineapple.
The increase in net sales was also positively impacted by a 121.2% increase
in citrus juice and oil sales from $2.5 million in 1996 to $5.6 million in 1997.
This increase is primarily the result of significant customers in Florida taking
delivery of product under existing contracts.
Gross profit as a percentage of net sales increased from 24.2% in 1996 to
32.4% in 1997. Gross profit on cut fruit sales increased from 26.0% in 1996 to
37.4% in 1997 while gross profit on citrus juice and oil sales increased from
15.6% in 1996 to 17.8% in 1997. The increase in gross profit on cut fruit sales
resulted from the product sales mix and decreased processing costs. The increase
in gross profit on citrus juice and oil sales resulted from decreased processing
costs in excess of declining market sales prices.
The Company has implemented significant changes in the operations of its
United States production facilities to reduce costs and improve profitability
and continues to evaluate and assess further changes to improve operational
efficiency. Effective the first week of September, 1997, the Company ceased all
production activity at its Lawrence, Massachusetts plant transferring this
production volume to its more efficient Mexican facilities.
9
<PAGE> 10
Gross profit on citrus juice and oil sales were adversely affected by lower
than expected market prices but benefited from improved raw material costs.
Frozen concentrate orange juice futures prices have remained depressed and the
Company does not expect favorable improvement over the remainder of 1997.
Selling, general and administrative expenses ("SG&A") as a percentage of net
sales increased from 29.4% in 1996 to 29.7% in 1997. This increase is primarily
the result of increased selling expenses associated with the increased sales
volume.
Interest expense increased from 2.3% of net sales in 1996 to 4.4% in 1997.
Actual interest expense increased from $344,000 in 1996 to $964,000 in 1997.
This increase was primarily the result of increased levels of debt necessary to
support increased levels of inventory and trade receivables associated with the
increase in sales volume and distribution centers.
Interest income of $177,000 was earned in 1996 and $48,000 in 1997 primarily
from the temporary cash investment of excess cash balances.
A foreign currency transaction net loss of $71,000 in 1996 and $270,000 in
1997 resulted primarily from the conversion of the Company's foreign
subsidiaries' financial statements to U.S. GAAP.
Income taxes. A consolidated income tax benefit of $333,000 in 1996 and
$70,000 in 1997 resulted from the recognition of future benefits from tax
losses generated.
Extraordinary gain. In 1996, the Company reported a net gain of $330,000
from the forgiveness of certain existing debt obligations with Mexican banks
pursuant to Mexican government programs to stimulate the economy and support the
banking system. No such gain was reported in 1997.
As a result of the foregoing, the Company reported a net loss of $505,000 in
1997 and $348,000 in 1996.
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997
Net sales increased 31.4% from $44.9 million in 1996 to $59.0 million in
1997. This increase was primarily due to increases in foodservice sales, retail
sales, club sales and citrus juice and oil sales. Foodservice sales increased
83.5% from $10.0 million in 1996 to $18.3 million in 1997. Retail sales
increased 70.9% from $11.4 million in 1996 to $19.5 million in 1997 and
warehouse club sales increased 54.0% from $5.6 million in 1996 to $8.6 million
in 1997. These increases were positively impacted primarily by the Company's
acquisition of Simply Fresh effective March 31, 1996 and the addition of new
customers, particularly in the Northeast U.S. in August, 1996.
The increase in net sales was adversely impacted by a decline in sales of
the Company's specialty food ingredient products in the Japanese market. Sales
to Japan decreased from $7.0 million in 1996 to $1.7 million in 1997 primarily
as a result of decreased demand in Japan for the Company's specialty food
ingredient products. The Company believes that this decrease in demand is due to
a decline in sales of the Japanese products containing the Company's specialty
food ingredients and resulting higher than anticipated inventory levels of the
Company's specialty food ingredients held by distributors in Japan. Present
indications are that inventory levels in Japan have been reduced. Based upon
present indications from Japan, the Company anticipates selling approximately
$5.0 million of specialty food ingredient products to Japan during the 1997-98
citrus processing season. Shipments to Japan are expected to resume in the
fourth quarter of this year. In addition, the Company has delivered IQF product
to Japan and the United Kingdom for evaluation. The Company believes there are
significant opportunities in the Japanese and United Kingdom markets for frozen
citrus and tropical fruit products.
The increase in net sales was also positively impacted by a 27.3% increase
in citrus juice and oil sales from $7.5 million in 1996 to $9.5 million in 1997.
The Company acquired GISE, a citrus juice and oil processor in Mexico effective
March 31, 1996, therefore the 1996 sales amount represents only six months of
operations compared with nine months of operations in 1997.
10
<PAGE> 11
Gross profit as a percentage of net sales increased from 31.3% in 1996 to
33.3% in 1997. Gross profit on cut fruit sales increased from 32.4% in 1996 to
35.2% in 1997 while gross profit on citrus juice and oil sales decreased from
25.7% in 1996 to 23.0% in 1997. The increase in gross profit on cut fruit sales
resulted primarily from the sales mix and improved production efficiencies.
Gross profit on cut fruit sales was adversely affected from the decline in
Japanese sales. Although the loss of Japanese production volume adversely
impacted the Company's 1997 operating results, the Company is taking affirmative
steps to replace the lost production volume. In addition, the Company has
implemented significant operational changes to reduce costs, increase efficiency
and improve profitability and continues to evaluate and assess further changes
to improve operational efficiency. Although no assurances can be given,
management believes that gross profit as a percentage of sales should improve
because of such efforts.
Gross profit on citrus juice and oil sales were adversely affected by lower
than expected market prices but benefited from improved raw material costs.
Frozen concentrate orange juice futures prices have remained depressed and the
Company does not expect favorable improvement over the remainder of 1997.
Selling, general and administrative expenses ("SG&A") as a percentage of net
sales increased from 26.3% in 1996 to 32.1% in 1997. This increase is primarily
the result of lower than anticipated sales to Japan and increased general and
administrative expenses associated with recent acquisitions.
Sales of the Company's specialty food ingredient products are facilitated
through independent Japanese trading companies primarily on an FOB ICMOSA plant
basis. Therefore, the Company does not typically incur delivery costs and sales
commissions with respect to these sales. Consequently, the decrease in sales to
Japan adversely impacted SG&A as a percentage of sales during 1997. SG&A as a
percentage of sales was also adversely impacted by increases in general and
administrative costs associated with the Company's recent acquisitions. During
the second quarter of 1997, the Company completed consolidating and integrating
the administrative and accounting functions associated with its recent United
States acquisitions. Although no assurances can be given, this restructuring is
expected to positively impact SG&A as a percentage of sales during the remainder
of 1997.
Interest expense increased from 2.2% of net sales in 1996 to 3.8% in 1997.
Actual interest expense increased from $1.0 million in 1996 to $2.3 million in
1997. This increase was primarily the result of increased levels of debt
necessary to support increased levels of inventory and trade receivables
associated with the increase in sales volume and distribution centers.
Interest income of $475,000 was earned in 1996 and $202,000 in 1997
primarily from the temporary cash investment of excess cash balances.
A foreign currency transaction net loss of $192,000 in 1996 and $347,000 in
1997 resulted primarily from the conversion of Company's foreign subsidiaries'
financial statements to U.S. GAAP.
Income taxes. The consolidated provision for income taxes was an expense of
$88,000 in 1996 and a benefit of $141,000 in 1997. The tax benefit resulted from
the recognition of future benefits from tax losses generated.
Extraordinary gains of $330,000 and $139,000 were realized in 1996 and 1997,
respectively. In 1996, the Company reported a net gain from the forgiveness of
certain existing debt obligations with Mexican banks pursuant to Mexican
government programs to stimulate the economy and support the banking system.
In May, 1997, ICMOSA retired certain outstanding long-term debt with Union
de Credito Allende, a Mexican Federal credit union, at a discount of 50%. The
discount was granted pursuant to a Mexican government program, Acuerdo de Apoyo
Financiero y Fomento a la Micro, Pequena y Mediana Empresa ("FOPIME") and
through the participation of Nacional Financiera ("NAFINSA"), a Mexican
development bank, to help provide liquidity to the Mexican credit unions. The
debt reduction amounted to approximately $2.0 million pesos or approximately US
$248,000. Provisions for Mexican income taxes and statutory employee profit
sharing of 34% and 10%, respectively, have been provided on this gain from debt
forgiveness.
11
<PAGE> 12
As a result of the foregoing, the Company reported net income of $1.8
million in 1996 while reporting a net loss of $1.4 million in 1997.
STATUTORY EMPLOYEE PROFIT SHARING
All Mexican companies are required to pay their employees, in addition to
their agreed compensation benefits, profit sharing in an aggregate amount equal
to 10% of net income, calculated for employee profit sharing purposes, of the
individual corporation employing such employees. All of UniMark's Mexican
employees are employed by its subsidiaries, each of which pays profit sharing in
accordance with its respective net income for profit sharing purposes. Tax
losses do not affect employee profit sharing. Statutory employee profit sharing
expense is reflected in the Company's cost of goods sold and selling, general
and administrative expenses, depending upon the function of the employees to
whom profit sharing payments are made. The Company's net income on a
consolidated basis as shown in the Consolidated Financial Statements is not a
meaningful indication of net income of the Company's subsidiaries for profit
sharing purposes or of the amount of employee profit sharing.
EXCHANGE RATE FLUCTUATIONS
The Company procures and processes substantially all of its products in
Mexico, through its wholly owned subsidiaries ICMOSA, GISE and Agromark, for
export to the United States, Canada, Europe and Japan. Generally, the cost of
citrus procured in Mexico reflects the spot market price for citrus in the
United States. All of UniMark's sales are denominated in U.S. dollars. As such,
UniMark does not anticipate sales revenues and raw material expenses to be
materially affected by changes in the valuation of the peso. Labor and certain
other production costs are peso denominated. Consequently, these costs are
impacted by fluctuations in the value of the peso relative to the U.S. dollar.
The Company's consolidated results of operations are affected by changes in
the valuation of the Mexican peso to the extent that its Mexican subsidiaries
have peso denominated net monetary assets or net monetary liabilities. In
periods where the peso has been devalued in relation to the U.S. dollar, a gain
will be recognized to the extent there are peso denominated net monetary
liabilities while a loss will be recognized to the extent there are peso
denominated net monetary assets. In periods where the peso has gained value, the
converse would be recognized.
The Company's consolidated results of operations are also subject to
fluctuations in the value of the peso as they affect the translation to U.S.
dollars of its Mexican subsidiaries net deferred tax assets or net deferred tax
liabilities. Since these assets and liabilities are peso denominated, a falling
peso results in a transaction loss to the extent there are net deferred tax
assets or a transaction gain to the extent there are net deferred tax
liabilities.
SEASONALITY
Demand for UniMark's citrus and tropical fruit products is strongest during
the fall, winter and spring when seasonal fresh products such as mangos,
peaches, plums, and nectarines are not readily available for sales in
supermarkets in North America. Management believes UniMark's quarterly net sales
will continue to be impacted by this pattern of seasonality.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1997, cash and cash equivalents totaled $4.1 million, a
decrease of $217,000 from year end 1996. During 1997, operating activities
utilized cash of $15.1 million primarily to finance a $12.7 million increase in
inventories and a $2.4 million increase in trade receivables. The increase in
inventories is the result of increased seasonal fruit processing in Mexico
necessary to support increased sales volume.
At September 30, 1997, the Company had approximately 7 million pounds solid
of FCOJ in finished goods inventory which will be used for blending with the
early orange season crop when production commences in November. In addition, the
Company has just completed its mango and melon processing season in Mexico and
has processed and stored sufficient quantities to supply its growing sales
demand until the next processing season.
12
<PAGE> 13
During 1997, UniMark utilized cash of $10.4 million in investing activities.
Of this amount, $9.0 million was expended on property, plant and equipment and
$1.4 million was expended on other assets. In March, 1997, the Company purchased
a warehouse and distribution facility located in McAllen, Texas for a total cash
consideration of approximately $1.2 million. In connection therewith, the
Company entered into a construction loan agreement with Texas State Bank for
approximately $2.1 million collateralized by the property and improvements and
guaranteed by the Company. The Company expended approximately $1.6 million on
capital improvements to the property and commenced operations from the property
in August, 1997. Also during 1997, the Company expended $5.1 million on plant
facilities and improvements, equipment and land in Mexico.
Effective January 1, 1995, UniMark entered into a five year operating
agreement with Industrias Horticolas de Montemorelos, S.A. de C.V. ("IHMSA") to
operate a freezing plant located in Montemorelos, Nuevo Leon, Mexico. Pursuant
to the terms of the operating agreement, UniMark is obligated to pay IHMSA an
operating fee sufficient to cover the interest payments on IHMSA's existing
outstanding debt. Since, under the terms of the operating agreement, UniMark
would benefit from the reduction of IHMSA's debt, the Company elected to advance
funds to IHMSA to retire certain of its outstanding debt. In May, 1997, IHMSA
retired its outstanding debt with Union de Credito Allende at a discount of 50%
through programs available in Mexico for debt reduction. At September 30, 1997,
advances to IHMSA of $915,000 are included in other assets.
The Company's financing activities provided net cash of $24.1 million from
additional short-term borrowings and $2.1 million from borrowings under the
McAllen warehouse mortgage loan, while cash was utilized to reduce long-term
debt by $1.5 million in 1997.
The Company received cash proceeds of $1.0 million from additional unsecured
short-term borrowings from Bancrecer in Mexico. In connection therewith, the
Company renegotiated the renewal term of its outstanding $4.0 million of
unsecured debt with Bancrecer from three months to eighteen months.
In February, 1997, the Company entered into a revolving line-of-credit
agreement with Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A. ("Rabobank
Nederland") to provide up to $8.5 million in short-term financing in the United
States collateralized by finished goods inventories and accounts receivable. The
agreement is guaranteed by the Company and its U.S. subsidiaries and requires
the Company to maintain certain financial performance levels relative to
tangible net worth, working capital and total debt. In addition, the agreement
contains restrictions on the issuance of additional shares of stock and the
payment of dividends, among other things, without the prior written consent of
the bank. At September 30, 1997, the Company had an outstanding loan balance of
$8.5 million under this agreement which originally was to mature on December 1,
1997 but has been extended to April 30, 1998 and increased to $9.5 million.
In April, 1997, the Company entered into two new revolving line-of-credit
agreements with Rabobank Nederland for short-term dollar denominated debt in
Mexico of up to $16.0 million collateralized by accounts receivable from export
sales and finished goods inventories. The agreements are guaranteed by the
Company and its Mexico subsidiaries and require the Company to maintain certain
financial performance levels relative to tangible net worth, working capital and
total debt. In addition, the agreements contain restrictions on the issuance of
additional shares of stock and the payment of dividends, among other things,
without the prior written consent of the bank. At September 30, 1997, the
Company had outstanding loan balances aggregating $13.8 million under these
agreements which have no scheduled maturity but are reviewed annually for
renewal. In order to increase the amount available under the above US
line-of-credit to $9.5 million, the aggregate amount available under the Mexico
lines-of-credit was reduced to $15.0 million.
Presently, the Company is relying upon bank financing to finance its working
capital needs. Although its working capital facilities with Rabobank Nederland
have been extended until April 30, 1998, no assurances can be given that
Rabobank Nederland will continue to renew such working capital facilities.
Presently, the Company is in discussions with Rabobank Nederland and other
financial institutions to extend or replace existing working capital facilities.
Although no assurances can be given, the Company believes it will be able to
obtain such working capital
13
<PAGE> 14
facilities on terms acceptable to the Company. The failure to obtain such
working capital facilities would have a material adverse affect on the Company.
In May, 1997, the Company entered into a loan agreement with Rabobank
Nederland for short-term dollar denominated debt in Mexico of up to $10.0
million to partially finance investments in plants, expansion and upgrading of
facilities and agricultural operations. This loan is collateralized by land and
improvements and equipment in Mexico. The agreement is guaranteed by the Company
and its Mexico subsidiaries and requires the Company to maintain certain
financial performance levels relative to tangible net worth, working capital,
total debt and debt service. In addition, the agreement contains restrictions on
the issuance of additional shares of stock and the payment of dividends, among
other things, without the prior written consent of the bank. At September 30,
1997, the Company had an outstanding loan balance of $10.0 million under this
agreement. This agreement, which originally was to mature on September 30, 1997,
has been extended to December 31, 1997. Although no assurances can be given, the
Company anticipates extending the term of this bridge loan when it matures until
the terms and conditions of permanent long-term financing can be arranged.
Presently, the Company is in discussions with Rabobank Nederland and other
financial institutions regarding a permanent long-term debt facility to replace
this bridge loan. Although no assurances can be given, the Company believes that
it will be able to obtain such debt facility on terms acceptable to the Company.
The failure to obtain such debt facility would have a material adverse affect on
the Company.
In May, 1997, ICMOSA retired approximately $500,000 of outstanding long-term
debt with Union de Credito Allende, a Mexican credit union, at a discount of
50%. The discount was granted pursuant to a Mexican government program, Acuerdo
de Apoyo Financiero y Fomento a la Micro, Pequena y Mediana Empresa ("FOPIME")
and through the participation of Nacional Financiera ("NAFINSA"), a Mexican
development bank, to help provide liquidity to the Mexican credit unions.
In October, 1996, GISE and The Coca-Cola Export Corporation ("Coca-Cola"),
an affiliate of The Coca-Cola Company, entered into a ten year Supply Contract,
with a ten year renewal option, for the production of Italian lemons. Pursuant
to the terms of this Supply Contract, GISE will plant and grow approximately
12,000 acres of Italian lemons for sale to Coca-Cola at pre-determined prices.
The Supply Contract requires Coca-Cola to provide, free of charge, 750,000 lemon
trees, enough to plant approximately 7,200 acres. In addition, the Supply
Contract requires Coca-Cola to purchase all the production from the project. The
planting program began in November, 1996 and is scheduled to be completed in
February, 2000 with harvesting of the first crops to begin in late 1998. The
Company estimates that this project will require capital expenditures of $4.7
million in 1997. The total capital requirements for the project is estimated to
be approximately $27.0 million over the next four years. Presently, the Company
is exploring various financing alternatives for this project. There can be no
assurances that financing for this project can be obtained on acceptable terms,
or at all. The inability to obtain third party financing for the project could
have a material adverse effect on the Company.
The Company's future cash requirements for 1997 and beyond will depend
primarily upon the level of sales, expenditures for capital equipment and
improvements, investments in agricultural projects, the timing of inventory
purchases and the success of newly introduced products. Presently, the Company
is in discussions with Rabobank Nederland and other financial institutions
regarding extending or replacing its existing debt facilities. Although no
assurances can be given, the Company believes it will be able to obtain such
debt facilities on terms acceptable to the Company. The failure to obtain such
debt facilities would have a material adverse affect on the Company. UniMark
believes that anticipated revenue from operations and existing and future debt
facilities will be adequate for its working capital requirements for at least
the next twelve months.
14
<PAGE> 15
EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
10.24 Loan Agreement made between Industrias Citricolas de
Montemorelos, S.A. de C.V., Grupo Industrial Santa Engracia, S.A.
de C.V., Agromark, S.A. de C.V., as borrowers; The UniMark Group,
Inc., as guarantor, and Cooperatieve Centrale
Raiffeisen-Boerenleenbank B.A. "Rabobank Nederland", as lender,
dated May 29, 1997.
10.25 Revolving Loan Agreement with Security Interest by and between
Industrias Citricolas de Montemorelos, S.A. de C.V., as borrower,
Grupo Industrial Santa Engracia, S.A. de C.V. "Gise", Agromark,
S.A. de C.V. "Agromark", and Cooperatieve Centrale
Raiffeisen-Boerenleenbank B.A. "Rabobank Nederland" New York
Branch dated April 10, 1997.
10.26 Revolving Loan Agreement with Security Interest by and between
Grupo Industrial Santa Engracia, S.A. de C.V. "Gise", as
borrower, Industrias Citricolas de Montemorelos, S.A. de C.V.
"Icmosa", Agromark, S.A. de C.V. "Agromark", and Cooperatieve
Centrale Raiffeisen-Boerenleenbank B.A. "Rabobank Nederland" New
York Branch dated April 10, 1997.
10.27 First Amendment to Revolving Credit Agreement by and among
UniMark Foods, Inc., the borrower, and The UniMark Group, Inc.,
UniMark International, Inc., Simply Fresh Fruit, Inc., the
guarantors, and Cooperatieve Centrale Raiffeisen-Boerenleenbank
B.A., "Rabobank Nederland", New York Branch dated October 7,
1997.
10.28 Second Amendment to Revolving Credit Agreement by and among
UniMark Foods, Inc., the borrower, and The UniMark Group, Inc.,
UniMark International, Inc., Simply Fresh Fruit, Inc., the
guarantors, and Cooperatieve Centrale Raiffeisen-Boerenleenbank
B.A., "Rabobank Nederland", New York Branch dated November 12,
1997.
27 Financial Data Schedule
B. Reports on Form 8-K
None
15
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE UNIMARK GROUP, INC.
--------------------------
Registrant
Date: November 12, 1997 /s/ Jorn Budde
-------------------------- --------------------------
Jorn Budde, President
(Principal Executive Officer)
Date: November 12, 1997 /s/ Keith Ford
--------------------------- --------------------------
Keith Ford, Vice President
(Principal Accounting Officer)
16
<PAGE> 17
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------------- ----------------------------------------------------------------
10.24 Loan Agreement made between Industrias Citricolas de
Montemorelos, S.A. de C.V., Grupo Industrial Santa Engracia, S.A.
de C.V., AgroMark, S.A. de C.V., as borrowers; The UniMark Group,
Inc., as guarantor, and Cooperatieve Centrale
Raiffeisen-Boerenleenbank B.A. "Rabobank Nederland", as lender,
dated May 29, 1997.
10.25 Revolving Loan Agreement with Security Interest by and between
Industrias Citricolas de Montemorelos, S.A. de C.V. "Icmosa", as
borrower, Grupo Industrial Santa Engracia, S.A. de C.V. "Gise",
AgroMark, S.A. de C.V. "AgroMark", and Cooperatieve Centrale
Raiffeisen-Boerenleenbank B.A."Rabobank Nederland" New York
Branch dated April 10, 1997.
10.26 Revolving Loan Agreement with Security Interest by and between
Grupo Industrial Santa Engracia, S.A. de C.V. "Gise", as
borrower, Industrias Citricolas de Montemorelos, S.A. de C.V.
"Icmosa", AgroMark, S.A. de C.V. "AgroMark", and Cooperatieve
Centrale Raiffeisen-Boerenleenbank B.A. "Rabobank Nederland" New
York Branch dated April 10, 1997.
10.27 First Amendment to Revolving Credit Agreement by and among
UniMark Foods, Inc., the borrower, and The UniMark Group, Inc.,
UniMark International, Inc., Simply Fresh Fruit, Inc., the
guarantors, and Cooperatieve Centrale Raiffeisen-Boerenleenbank
B.A., "Rabobank Nederland", New York Branch dated October 7,
1997.
10.28 Second Amendment to Revolving Credit Agreement by and among
UniMark Foods, Inc., the borrower, and The UniMark Group, Inc.,
UniMark International, Inc., Simply Fresh Fruit, Inc., the
guarantors, and Cooperatieve Centrale Raiffeisen-Boerenleenbank
B.A., "Rabobank Nederland", New York Branch dated November 12,
1997.
27 Financial data schedule
<PAGE> 1
LOAN AGREEMENT
made between
INDUSTRIAS CITRICOLAS DE MONTEMORELOS, S.A. DE C.V.
GRUPO INDUSTRIAL SANTA ENGRACIA, S.A. DE C.V.
AGROMARK, S.A. DE C.V.
as Borrowers
THE UNIMARK GROUP, INC.
as Guarantor
and
COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A.
"RABOBANK NEDERLAND"
as Lender
<PAGE> 2
TABLE OF CONTENTS
Page
SECTION HEADING
SECTION 1. DEFINITIONS 2
SECTION 2. THE ADVANCE
2.01 Agreement to Lend 12
2.02 Purpose 12
2.03 Drawing 12
2.04 Interest 14
2.05 Default Interest 14
2.06 Repayment of Loan 15
2.07 Promissory Notes 15
2.08 Prepayment of Loan 16
2.09 Payments 16
2.10 Evidential Force 17
SECTION 3. YIELD PROTECTION
3.1 Taxes 17
3.2 Compliance Costs 18
3.3 Illegality 19
3.4 Adversity Prepayment 19
3.5 Currency and Place of Payment 20
SECTION 4. FEES AND CHARGES
4.1 Arrangement Fee 20
4.2 Commitment Fee 20
4.3 Expenses and Stamp Duties 21
SECTION 5. REPRESENTATIONS AND WARRANTIES
5.01 Power and Authority 21
5.02 Authorization of Borrowing 22
5.03 Governmental Approvals 22
5.04 Agreement Binding 22
5.05 No Default in Other Agreements 23
5.06 Litigation 23
5.07 Withholding and Other Taxes 23
5.08 Residence 23
5.09 Sovereign Immunity 24
5.10 Financial Statements 24
5.11 Title to Properties and Assets 24
5.12 Compliance with Law 25
5.13 Compliance with Environmental
Requirements 25
5.14 Material Adverse Financial
Performance 25
<PAGE> 3
Page
5.15 Survival / Repeat of
Representation and Warranties 25
SECTION 6. COVENANTS OF BORROWERS
6.01 Performance of Obligations 26
6.02 Financial Statements:
Other Reports 26
6.03 Performance and Notice 27
6.04 Maintenance and Continuity of
Business/Insurance 28
6.05 Other Obligations 30
6.06 Taxes 30
6.07 Dividend Payments 31
6.08 Compliance with Law and
Governmental Approvals 31
6.09 Merger, Sale of Assets 31
6.10 Potential Event of Default 31
6.11 Further Documents 32
6.12 Liens 32
6.13 Sale of Assets. Leases. 32
6.14 Other Covenants 32
SECTION 7. CONDITIONS OF DRAWING
7.1 Initial Conditions Precedent 33
7.2 Additional Conditions Precedent 36
SECTION 8. FINANCIAL COVENANTS
8.1 Minimum Tangible Net Worth 37
8.2 Current Ratio 37
8.3 Maximum Leverage 37
8.4 Debt Service 37
SECTION 9. EVENTS OF DEFAULT
9.1 Events of Default 37
9.2 Consequence of Default 41
SECTION 10. CHANGES IN CIRCUMSTANCES 42
SECTION 11. MISCELLANEOUS
11.01 Term 44
11.02 Entire Agreement 44
11.03 Waiver: Cumulative Rights 44
11.04 Assignment and Participation 45
11.05 Modifications 45
11.06 Governing Law 45
<PAGE> 4
Page
11.07 Submission to Jurisdiction 45
11.08 Set-off 46
11.09 Notices 46
11.10 Counterparts 47
11.11 Costs and Expenses 47
<PAGE> 5
ANNEXES
A. Promissory Note
B. Draw Requests
C. Total Project Cost Statement
D. Guaranty
E. Permitted Liens
F. Form of Promise to Mortgage Agreement
<PAGE> 6
LOAN AGREEMENT
THIS LOAN AGREEMENT is made as of the 29th day of May,
1997 by and among
I. Industrias Citricolas de Montemorelos, S.A. de C.V. ("Icmosa"), Grupo
Industrial Santa Engracia, S.A. de C.V. ("Gise") and AgroMark, S.A. de C.V.
("AgroMark"), companies incorporated in and under the laws of Mexico (as
defined herein), established at Montemorelos, Nuevo Leon, Ciudad
Victoria, Tamaulipas and Municipio Jose Azueta, Veracruz, respectively,
hereinafter referred to as:"Icmosa","Gise"and"AgroMark"respectively and
collectively referred to as: the "BORROWERS"
II. The UniMark Group, Inc., a company incorporated in and under the laws of
the United States (as defined herein), established at Argyle, Texas,
hereinafter referred to as: "GROUP"
III. Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A. ("Rabobank
Nederland"), a financial institution incorporated in and under the laws of
The Netherlands, established at Amsterdam, The Netherlands, hereinafter
referred to as: the "BANK"
WHEREAS:
- - the Borrowers are engaged, among others, in the business of growing,
processing, marketing and distribution of citrus and tropical fruit in
Mexico;
- - the Borrowers have requested the Bank to partially finance investments in
plants, expansion and upgrading of facilities and agricultural operations
by granting to the Borrowers a loan up to a maximum amount of USD
$10,000,000;
- - subject to the terms and conditions set forth below the Bank has agreed to
make such a loan available to the Borrowers;
NOW, THEREFORE, in consideration of the premises and the mutual covenants set
forth herein the parties hereby agree as follows:
<PAGE> 7
2
SECTION 1. DEFINITIONS
The following terms will have the meanings set forth below:
1.01 "Advance" will mean an advance to the Borrowers by the Bank pursuant to
section 2.03 or, where the context so requires, the amount of such advance
from time to time outstanding, including the Initial Advances.
1.02 "Affiliate" will mean any intermediary, affiliate, subsidiary or agent of
the Bank.
1.03 "Amended Mexican Pledge Agreement" will mean the Amended Pledge Agreement
executed the date hereof between the Pledgors and the Bank, to create a
pledge on all of the stock issued by the Borrowers to secure the
obligations of the Borrowers under this Agreement.
1.04 "Agreement" will mean this loan agreement.
1.05 "AgroMark" will mean AgroMark, S.A. de C.V. established at Carretera Villa
Azueta-Lindavista, Municipio de Jos, Azueta, Estado de Veracruz.
1.06 "AgroMark Project" will mean the AgroMark investment program to, among
other, the engineering, construction, expansion and operation of the plants
and agricultural operations, specified in the Total Project Cost Statement.
1.07 "Availability Period" will mean the period commencing on the signing date
of this Agreement and expiring (i) on September 15, 1997 or (ii) on the
date the Loan has been fully drawn, whichever date occurs earlier.
1.08 "Bank" will mean Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A.
"Rabobank Nederland", established at Amsterdam, The Netherlands.
1.09 "Business Day" will mean any day other than a Saturday, Sunday, any day on
which banking institutions are permitted or required by law, executive
order or governmental decree to remain closed in the City of New York or in
Amsterdam and, with respect to any Interest Period or any information
relating to LIBOR, any day on which dealings in United States Dollars
deposits occur in the London interbank market and banks are open for
business in London.
1.10 "Certificates of Non Encumbrance" will mean the certificates of non
encumbrance issued by the Montemorelos Public Registry and by the Puebla
Public
<PAGE> 8
3
Registry evidencing that the Icmosa Property and the Horticolas Property
are free of any Lien, except for existing Liens identified in Annex "E"
hereto.
1.11 "Commitment" will mean the commitment of the Bank to make Advances up to
the maximum amount of USD$10,000,000 (as the same may be reduced pursuant
to Section 2.03(f) hereof.
1.12 "Current Assets" will mean those assets which would be reflected on a
balance sheet prepared in accordance with GAAP as "current assets" but
excluding Intangible Assets and deferred taxes which have been classified
as "current assets".
1.13 "Current Liabilities" will mean (i) all Debt due on demand or within one
year from the date of determination thereof and (ii) all other items which
in accordance with GAAP may be properly classified as "current
liabilities", but excluding deferred tax liabilities which, although not
due within one year from the date of determination thereof, may be
classified as "current liabilities".
1.14 "Current Ratio" will mean the ratio of the sum of Current Assets to the sum
of Current Liabilities.
1.15 "Debt" will mean at any date, (i) all indebtedness for borrowed money and
all obligations to pay the deferred purchase price of fixed assets, (ii)
all obligations evidenced by bonds, debentures, notes or similar
investments, (iii) all obligations as lessee under leases which shall have
been or should be, in accordance with GAAP, recorded as capital leases,
(iv) all obligations of the Borrowers to make payments under noncompete or
royalty agreements, (v) all obligations to reimburse any bank, or other
Person, in respect to amounts paid under a letter of credit and (vi) all
items of indebtedness or liability which in accordance with GAAP, would be
included in determining total liabilities as shown on the liabilities side
of a balance sheet as of the date as of which Debt is to be determined, but
excluding deferred tax liabilities which, although uncertain if and when
due in the future, according to GAAP are classified as Debt.
1.16 "Debt Service Coverage Ratio" will mean for any fiscal year, the net income
plus depreciation plus the deferred tax provision, plus the provision for
Mexico employee profit sharing, plus other non-cash operational expenses
<PAGE> 9
4
plus net interest expenses, plus (minus) long term portion of foreign
currency translation losses (gains), minus monetary gains, divided by
interest expenses plus scheduled repayments of term loans.
1.17 "Debt to Tangible Net Worth Ratio" will mean the ratio of the sum of Debt
to the sum of Tangible Net Worth.
1.18 "Drawing" will mean a drawdown of an Advance by the Borrowers pursuant to
Section 2.03.
1.19 "Draw Request" will mean an irrevocable notice from the Borrowers to the
Bank to provide an Advance, which notice will be in form and substance
equal to Annex "B" hereto.
1.20 "Event of Default" will have the meaning set forth in Section 9 hereof.
1.21 "Final Maturity Date" will mean September 30, 1997.
1.22 "Financial Statements" will mean the balance sheet, income statement and
such other supplementary statements (including the notes thereto) as may be
prepared in conjunction therewith.
1.23 "Funding Losses" will mean the costs and expenses incurred by the Bank
arising from or relating to (a) the payment by the Borrowers of all or any
portion of the Loan prior to the due date therefore (or prior to the end of
any period for which the Loan has been funded after default), or (b) the
failure of the Borrowers to draw down funds which have been obtained for
the Borrowers by the Bank pursuant to the terms of this Agreement, in each
case including without limitation (i) any costs or fees relating to such
funding transactions and (ii) any loss or charge from the prepayment of any
loan obtained by the Bank to fund an Advance prior to its maturity.
1.24 "GAAP" will mean those accounting principles applied on a consistent basis
generally accepted from time to time in the certified public accounting
profession of the United States (including those set forth in the Opinions
of the Accounting Principles Board of the American Institute of Certified
Public Accountants or statements of the Financial Accounting Standards
Board which may be applicable at the time in question); and "applied on a
consistent basis" means that the accounting principles observed in the
period covered by any report required
<PAGE> 10
5
under the terms of this Agreement are compatible in all material respects
with those applied in any preceding period and report.
1.25 "Gise" will mean Grupo Industrial Santa Engracia, S.A. de C.V. established
at Carretera Torres No. 226 Pte., Cd. Victoria, Tamaulipas, C.P. 87000,
Mexico.
1.26 "Gise Project" will mean the Gise investment program to, among others, the
engineering, construction, expansion and operation of the plants and
agricultural operations, specified in the Total Project Cost Statement.
1.27 "Governmental Agency" will mean any ministry, directorate, department,
authority, corporation, or other juridical entity of Mexico, whether
autonomous or not.
1.28 "Governmental Approval" will mean any authorization, approval, consent,
license or opinion of or filing for registration with any ministry,
directorate, department, agency, instrumentality or other juridical entity
of any jurisdiction.
1.29 "Group" will mean The UniMark Group, Inc., established at Argyle, State of
Texas.
1.30 "Guaranty" will mean the guaranty substantially in the form of Annex "D"
hereto, dated as of the date hereof; executed and delivered by Group, as it
may be amended from time to time.
1.31 "Horticolas Power of Attorney" will mean the power of attorney to be
granted by Horticolas as provided in the Horticolas Promise to Mortgage
Agreement.
1.32 "Horticolas Promise to Mortgage Agreement" will mean the promise to
mortgage agreement substantially in the form of Annex "F", to be executed
by Horticolas and the Bank.
1.33 "Horticolas" will mean Industrias Horticolas de Montemorelos, S.A. de C.V.
1.34 "Horticolas Property" will mean a piece of land located in the city of
Montemorelos, Nuevo Leon, marked with number II, of the Subdivision Plan,
registered under number 65, Volume 1, Book XVII, Section I PROPERTY, dated
February 20th, 1986, of "Unidad MONTEMORELOS, NUEVO LEON".
<PAGE> 11
6
1.35 "Icmosa" will mean Industrias Citricolas de Montemorelos, S.A. de C.V.
established at Carretera General Teran Km.1, C.P. 67500, Montemorelos,
Nuevo Leon, Mexico.
1.36 "Icmosa Power of Attorney" will mean the power of attorney granted the date
hereof by Icmosa as provided in the Icmosa Promise to Mortgage Agreement.
1.37 "Icmosa Project" will mean the Icmosa investment program to, among others,
the engineering, construction, expansion and operation of the plants
specified in the Total Project Cost Statement.
1.38 "Icmosa Promise to Mortgage Agreement" will mean the promise to mortgage
agreement substantially in the form of Annex "F", dated as of the date
hereof executed by Icmosa and the Bank.
1.39 "Icmosa Property" will mean a piece of urban land located in Montemorelos,
Nuevo Leon, with a total area of 64,745.23 square meters and registered
under number 437 of Volume V, Book V, Section 1 of Property in the Public
Registry of Property of the city of Montemorelos, State of Nuevo Leon; and
a piece of land called "Pezmatlan" located in the Pezmatlan neighborhood of
Tlatlauqui, Puebla, as stated in public deed number 48,450 dated November
30th, 1995 granted before Public Notary number 17 of the city of Puebla,
State of Puebla, and registered in the Public Registry of Property of the
City of Tlatlauqui, State of Puebla, under Volume 46 of Book first under
number 5, folio one hundred and eighty-two.
1.40 "Indebtedness" will mean in regard to any Person all indebtedness
(including guarantees and other contingent obligations) with respect to
borrowed money or for the deferred purchase price of property or services
and all indebtedness of others secured by or benefiting from any Lien or
property or revenues of such Person, whether or not a claim has arisen
under such Indebtedness.
1.41 "Initial Advances" will mean the sums disbursed by the Bank to the
Borrowers pursuant to Section 2.03 hereof, up to the maximum amount of
USD$8,500,000.
1.42 "Intangible Assets" will mean those assets which are (i) deferred assets,
other than prepaid insurance and prepaid taxes; (ii) patents, copyrights,
trademarks, trade names, licenses, permits, franchises, goodwill,
<PAGE> 12
7
experimental and research and development expenses, and other similar
intangibles; and (iii) unamortized debt discount and expense.
1.43 "Interest Payment Date" will mean the last day of each calendar quarter,
provided, however, that if any such day is not a Business Day, the relevant
Interest Payment Date will be the next succeeding Business Day, in which
case interest will be calculated accordingly, unless such day would fall in
the next calendar month, in which case such Business Day will be the
immediately preceding Business Day and in which case interest will be
calculated accordingly.
1.44 "Interest Period" will mean the period between the date a Drawing is made
and September 30, 1997. Any Interest Period which would extend beyond the
Final Maturity Date shall instead expire on the Final Maturity Date.
1.45 "Law" will mean any convention or treaty, law, ordinance, decree, rule,
directive, regulation, judicial or arbitral decision, or any voluntary
restraint, policy or guideline not having the force of law but compulsory
in character, and any of the provisions of such Laws binding on or
affecting the party referred to in the context in which the term is used.
1.46 "LIBOR" will mean the rate mentioned at the display of the London Interbank
Offered Rates of major banks for Eurodollar Deposits designated as page
"LIBO" on the Reuters Monitor Money Rates Services (or such other page as
may replace the LIBO page for the purpose of displaying such London
Interbank Offered Rates for Eurodollar Deposits) at or about 11.00 a.m. 2
(two) Business Days prior to the date on which the Borrowers proposes to
make the Drawing to which such rate is to be applicable, or prior to the
commencement of the relevant Interest Period for a period of time equal or
comparable to the Interest Period and in an amount equal or comparable to
the Advance to be disbursed or outstanding during such Interest Period.
1.47 "Lien" will mean any mortgage, charge, pledge, lien, attachment,
encumbrance or other security interest or any segregation of assets or
revenues or other preferential arrangement (whether or not constituting a
security interest and whether or not enforceable in law) with respect to
any present or future assets, revenues or rights to the receipt of income
of the party referred to in the context in which the term is used.
<PAGE> 13
8
1.48 "Loan" will mean the aggregate principal amount of the Advances drawn under
this Agreement, not to exceed USD$10,000,000 or the amount actually
outstanding at the time referred to in the context in which the term is
used.
1.49 "Loans" will mean the aggregate principal amount of the Advances or the
amounts actually outstanding under this Agreement and/or any other loan
agreement with the Bank.
1.50 "Loan Documents" will mean this Agreement, the Promissory Notes, the
Mexican Pledge Agreement, the U.S. Pledge Agreement, the Guaranty, each
Draw Request, the Icmosa Promise to Mortgage Agreement, the Horticolas
Promise to Mortgage Agreement, the Mortgages, each Notary Public Notices,
the Powers of Attorney and all other agreements between the Borrowers or
Group, and the Bank, executed pursuant to or in connection with the
transaction contemplated hereby, and all other documents specified in,
required by, and executed pursuant to the terms hereof and all
modifications, renewals, amendments and supplements of any of the
foregoing.
1.51 "Mexico" will mean the United Mexican States.
1.52 "Montemorelos Public Registry" will mean the Public Registry of Property
and Commerce located at Montemorelos, Nuevo Leon, Mexico.
1.53 "Mortgages" will mean the mortgages to be created by Icmosa and by
Horticolas on the Property in accordance with the terms and conditions of
the Icmosa Promise to Mortgage Agreement and of the Horticolas Promise to
Mortgage Agreement, to secure the obligations of the Borrowers under this
Agreement.
1.54 "Notary Public Notices" will mean the notices which the notary public
mentioned in the Icmosa Promise to Mortgage Agreement and in the Horticolas
Promise to Mortgage Agreement will provide to the Montemorelos Public
Registry and to the Puebla Public Registry for the purposes provided in
articles 2910 and 3004 of the Civil Codes of the States of Nuevo Leon
and Puebla, respectively.
1.55 "Person" will mean any individual, corporation, association, limited
liability corporation, trust, joint stock company, unincorporated
association, joint
<PAGE> 14
9
venture, or any other entity and any Governmental Agency.
1.56 "Pledgors" will mean Group, Messrs Rafael Vaquero Bazan and Jose Maria
Martinez Brohez.
1.57 "Potential Event of Default" will mean an event, known to the Borrowers or
which should have been known to the Borrowers pursuant to the circumstances
prevailing at the time, which, if it continued, would constitute an Event
of Default, only with the giving of notice and/or lapse of time and/or the
making of any determination.
1.58 "Progress Report(s)" will mean the monthly issued reports from the
Borrowers, which will express the exact state of the Projects, in
compliance with Section 2.03 (a).
1.59 "Projects" will mean the Gise Project, the AgroMark Project and the Icmosa
Project as specified in the Total Project Cost Statement.
1.60 "Promissory Note" will mean the promissory notes signed and delivered by
the Borrowers to the Bank and guaranteed "por aval" by Group evidencing the
obligation of the Borrowers to pay to the Bank the principal amount of an
Advance and the corresponding interest, in the form attached hereto as
Annex "A" hereto.
1.61 "Property" will mean collectively the Icmosa Property and the Horticolas
Property.
1.62 "Puebla Public Registry" will mean the Public Registry of Property and
Commerce located at Tlatlauqui, Puebla.
1.63 "Subsidiary" will mean any corporation or other business entity of which
Group or the Borrowers own or control directly or indirectly fifty percent
(50%) or more of the outstanding capital stock or other ownership interest
having ordinary voting power to elect directors, managers or trustees of
such corporation or other business entity (whether or not capital stock or
other ownership interest of any other class or classes will or might have
voting power upon the occurrence of any contingency) or any corporation or
other business entity otherwise controlled directly or indirectly by Group
or by the Borrowers.
1.64 "Rabobank/UniMark Loan Agreements" will mean the Revolving Loan Agreements
with Security Interest between
<PAGE> 15
10
the Borrowers and the Bank dated April 10th, 1997 and the Revolving Credit
Agreement between UniMark Foods, Inc., Simply Fresh Fruit, Inc., UniMark
International, Inc. and Group and the Bank, dated February 12, 1997.
1.65 "Tangible Net Worth" will mean the aggregate of capital and surplus of the
Borrowers minus the sum of the aggregate book value of Intangible Assets as
determined in accordance with GAAP.
1.66 "Total Project Cost Statement" will mean the statement of the Borrowers, in
a form acceptable to the Bank, in which the Borrowers certify to the Bank
that the Borrowers" estimate in USD of the total of costs necessary to
complete the construction and equipping of the Gise Project, the AgroMark
Project and of the Icmosa Project, which statement is attached hereto as
Annex "C".
1.67 "USD", "United States Dollars" and the sign "$" will mean the lawful
currency of the United States of America.
1.68 "United States" will mean the United States of America.
1.69 "U.S. Pledge Agreement" will mean the Pledge Agreement executed the date
hereof between Group and the Bank, to create a pledge on all of the stock
issued by UniMark Foods, Inc. to secure the obligations of the Borrowers
under this Agreement and under the promissory Notes.
SECTION 2. THE ADVANCES
2.01 AGREEMENT TO LEND
Subject to the terms and conditions of this Agreement, the Bank hereby agrees to
make the Advances available, and the Borrowers agree to take up the Advances.
2.02 PURPOSE
The Advances will be used by the Borrowers exclusively to contribute in the
financing of the Projects.
2.03 DRAWING
<PAGE> 16
11
(a) During the Availability Period and subject to the terms and conditions
hereof, the Borrowers have the right to borrow Advances for amounts of
USD$500,000 (FIVE HUNDRED THOUSAND DOLLARS, UNITED STATES CURRENCY) or
USD$100,000 (ONE HUNDRED THOUSAND DOLLARS UNITED STATES CURRENCY)
increments thereof. This right depends on (i) the progress of the Projects
as stated in the Progress Reports (ii) their compliance with the Total
Project Cost Statement.
(b) A Drawing will be made provided that:
- the Bank, not less than 4 (four) Business Days before 11.00 hours
(London time) before the proposed date on which the Drawing is to be
made, has received a Draw Request from the Borrowers, indicating the
proposed date of Drawing and the amount of the Advance, which notice,
once given, shall be irrevocable;
- the Drawing will be limited to amounts of costs of the Projects
actually incurred and paid or owing by the Borrowers to the date of such
Drawing, less prior Advances made under this Agreement.
After the Availability Period has ended, the Bank shall at no time be
obliged to honor any request for disbursement under the Agreement.
(c) Unless otherwise provided herein, the Initial Advances and each subsequent
Advances may be made upon the Borrowers' request provided that:
- the Bank will have received, in form and substance satisfactory to it,
the documents listed in Section 7.01 hereof at least 4 (four) Business
Days prior to the requested date of Drawing;
- the proposed date of Drawing is a Business Day;
- the Borrowers and Group are in compliance with covenants and Group is
also in compliance with its obligations under the Guaranty;
- the Borrowers' representations and warranties as per Section 5
hereafter are and remain true and valid; and
- no Event of Default has occurred.
<PAGE> 17
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(d) Each subsequent Advance in excess of the sum of the Initial Advances may be
made upon the Borrowers" request provided that the Bank will have received,
in form and substance satisfactory to it, the documents listed in Section
7.02 hereof at least 4 (four) Business Days prior to the requested date of
Drawing.
(e) An Advance will be made available to the Borrowers by transferring the
amount of the Advance in accordance with the Borrowers" disbursement
instructions provided in the Draw Request.
(f) The Commitment shall be automatically reduced if on or prior to June 30,
1997, the additional condition precedents provided in Section 7.02 hereof
have not been fulfilled. The Commitment shall be reduced by an amount equal
to the difference between the aggregate principal amount of the Initial
Advances and the total Commitments.
2.04 INTEREST
(a) The Borrowers, jointly and severally, agree to pay to the Bank on each
Interest Payment Date on the principal outstanding amount of each Advance
during each Interest Period at an annual rate equal to LIBOR plus a margin
of 3.5% per annum.
(b) Interest will accrue on the basis of a year of 360 days and the actual days
elapsed.
(c) If, for whatever reason, the rate of interest of the Loan cannot be
determined by reference to the Reuter's Screen LIBO Page, the Bank shall
notify the Borrowers in writing forthwith and shall determinate the rate of
interest of the Loan, using offered rates advised to the Bank by any two
(2) of the banks (or by the bank) whose rate(s) was/were last quoted on the
Reuter's Screen LIBO Page, or if quotations of such banks are not
available, the offered rates advised to the Bank for United States Dollar
deposits by any two major banks in the Amsterdam or New York Interbank
Market. If the services of the Reuter Screen LIBO Page cease to be
available as a result of discontinuations of such services, the Bank shall
notify the Borrowers in writing forthwith and shall determinate the rate of
interest of the Loan, using offered rates advised to the Bank by three (3)
major banks active in the Eurodollar Interbank Market in
<PAGE> 18
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London selected by the Bank after consultation with the Borrowers.
2.05 DEFAULT INTEREST
(a) If the Borrowers fail to make payment when due of any sum hereunder or
under any document provided for hereunder (whether at its stated maturity,
by acceleration or otherwise) the Borrowers will pay to the Bank default
interest on the unpaid amount during the period from and including the date
immediately following such due date to and including the date of the
payment of said sum in full (after as well as before judgment) at the rate
per annum (calculated on the basis of a year of 360 days and actual days
elapsed) equal to the rate as defined in Section 2.04 under (a) plus a
margin of 3% per annum. Such interest will be payable upon demand of the
Bank.
(b) In addition to payment of the interest, referred to in paragraph 2.05 (a),
the Borrowers will indemnify the Bank against any costs and losses
resulting from the failure of the Borrowers to pay when due any amounts due
hereunder.
2.06 REPAYMENT OF LOAN
The Borrowers, jointly and severally, agree to repay the Bank the total
amount of the Loan on the Final Maturity Date.
2.07 PROMISSORY NOTES
(a) The obligations of the Borrowers to pay to the Bank the principal amount of
any Advance and the corresponding interest shall be evidenced by Promissory
Notes duly signed by an authorized officer of the Borrowers in favor of the
bank and guaranteed"por aval"by Group, which shall be dated the date of
each Advance, shall be payable to the order of the Bank at the offices of
the Bank specified in signature page hereof and shall bear interest in
accordance with the terms thereof.
(b) The execution and delivery by the Borrowers of each Promissory Note shall
not limit, reduce or otherwise affect the obligations of the Borrowers
under this Agreement, and the rights and claims of the Bank under each
Promissory Note shall not replace or supersede the rights and claims of
said parties hereunder.
<PAGE> 19
14
(c) Payment by the Borrowers of any amount owing under the Promissory Note or
this Agreement shall discharge the liability of the Borrowers in respect of
a corresponding amount owing under this Agreement or the Promissory Notes
respectively.
(d) The Promissory Note shall not be endorsed, negotiated, assigned or
transferred in whole or in part by the Bank otherwise than in connection
with an assignment or transfer to such party of all or part of its rights
arising from this Agreement, which assignment is authorized by the
Borrowers hereby as provided in Article 299 of the General Law of
Negotiable Instruments and Credit Transactions in Mexico.
(e) The creation of the Promissory Note shall in no way constitute a novation
under the laws of The Netherlands of the rights and obligations of the
Borrowers arising from this Agreement.
2.08 PREPAYMENT OF LOAN
(a) The Borrowers are entitled to prepay the outstanding balance of the Loan or
a part of it, in an amount of at least USD$1,000,000 (ONE MILLION DOLLARS,
CURRENCY OF THE UNITED STATES) or multiples thereof, at the end of an
Interest Period, provided however, that the Borrowers have given the Bank 5
(five) days prior written notice, indicating the amount of the prepayment
and the proposed date on which such prepayment is to be made, which notice,
once given, will be irrevocable.
(b) Any amounts prepaid are no longer available to the Borrowers. The Borrowers
will reimburse the Bank the Funding Losses, if any.
2.09 PAYMENTS
(a) All sums payable to the Bank hereunder or under any other Loan Document
will be payable in United States Dollars and in immediately available funds
not later than 11.00 a.m., New York time, on the day in question to the
Bank to its account with the Morgan Guaranty Trust Company of New York, New
York, ABA number 021-000- 238, account number 658.30.747.
(b) Any payments made to the Bank hereunder or under any other Loan Document
will be applied first against costs,
<PAGE> 20
15
losses, expenses and indemnities due hereunder; then against fees due; then
against default interest, if any; then against interest due on the Loan;
and thereafter against the principal amount of the Loan.
(c) If any date on which a payment is due hereunder or under any Loan Document
would otherwise fall on a day which is not a Business Day, such due date
will instead fall on the next succeeding Business Day, unless such date
would fall in the next calendar month, in which case such Business Day will
be the immediately preceding Business Day.
2.10 EVIDENTIAL FORCE
The accounts of the Bank shall be prima facie evidence of any amount which the
Borrowers may owe from time to time to the Bank pursuant to this Agreement,
except in case of manifest error.
SECTION 3. YIELD PROTECTION
3.1 TAXES
(a) All sums payable by the Borrowers hereunder or under any document or
instrument provided for hereunder, whether of principal, interest, fees,
expenses or otherwise, will be paid in full and without set-off or
counterclaim, free of any deductions or withholdings. In the event that the
Borrowers are prohibited by Law from making such payments free of such
deductions or withholdings, the Borrowers will pay such additional amounts
to the Bank as may be necessary to ensure that the actual amount received
by the Bank after all deductions or withholdings (and after payment of such
additional amounts) will equal the amount that would have been received by
the Bank if no deduction or withholding were required.
(b) The Borrowers will promptly pay directly to the appropriate taxing
authority any and all present and future taxes, levies, imposts,
deductions, stamp or other duties, filing and other fees or charges and all
liabilities of the Bank or any Affiliate with respect thereto imposed by
Law or by any taxing authority on or with regard to any aspect of the
transactions contemplated by this Agreement or any other Loan Document or
the execution and delivery of this Agreement
<PAGE> 21
16
or any other Loan Document, except taxes imposed on the overall net income
of the Bank by the jurisdiction of its incorporation.
The Borrowers will hold the Bank and its respective Affiliates harmless
from any liability with respect to the delay or failure by the Borrowers to
pay any such taxes or charges and will reimburse each of them upon demand
for any such taxes or charges paid by any of them in connection herewith,
whether or not such taxes will be correctly or legally asserted or
otherwise contested or contestable, together with any interest, penalties
and expenses asserted in connection therewith.
(c) Should the Borrowers pay any tax or charge as provided herein or make any
deductions or withholdings from amounts paid hereunder or under any
document or instrument provided for hereunder, the Borrowers will promptly
forward to the Bank official receipts or other evidence acceptable to the
Bank establishing payment of such amounts.
(d) Should the Borrowers be required under this Section 3.01 to pay, or to
reimburse the Bank for any tax or charge by virtue of any change after the
date hereof in any applicable Law, then the Borrowers may prepay the amount
outstanding under the Loan at any time within 5 (five) days after notice of
such change to the Borrowers subject to giving not less than ten Business
Days' irrevocable notice to the Bank.
(e) The Borrowers will furnish the Bank with the receipts for the withholding
taxes paid with regard to the Loan, if any.
3.2 COMPLIANCE COSTS
In the event that under any Law imposed, instituted, amended or given a new
interpretation after the date of this Agreement, the Bank incurs costs for
maintaining any reserves or special deposits against its Advance or any other
costs in connection with this Agreement of complying with such Law, it will
promptly notify the Borrowers thereof and the Borrowers will pay on demand to
the Bank the amount of such costs, in the currency in which such costs were
incurred. The Borrowers may prepay the amount outstanding under the Loan within
5 (five) days after notice of such new costs to the Borrowers subject to giving
not less than ten Business Days' irrevocable notice to the Bank.
<PAGE> 22
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3.3 ILLEGALITY
(a) In the event that it will become unlawful for the Bank to make Advances or
to maintain Advances, then the Commitment will forthwith terminate and the
Borrowers will prepay the amount outstanding under the Loan as provided in
Section 3.04. Upon the occurrence of any such event, the Bank will promptly
notify the Borrowers thereof and will furnish the Borrowers with certified
evidence as to such unlawfulness. The termination of the Commitment will be
effective and the outstanding amount will be due and payable upon the
giving of such notice to the Borrowers.
(b) The Borrowers will hold the Bank harmless from any liability with respect
to any penalty accrued against it due to such unlawfulness and will
reimburse the Bank upon demand for any such penalty paid by the Bank to the
relevant authorities in connection herewith together with any interest and
expenses asserted in connection therewith.
3.4 ADVERSITY PREPAYMENT
If the Borrowers exercise their right to prepay the amount outstanding under the
Loan pursuant to Section 3.01 or 3.02, or if the Borrowers will be required to
prepay the Loan pursuant to Section 3.03, the Borrowers will pay such amounts,
together with interest accrued thereon to and including the date of prepayment
and together with costs and losses (including without limitation any Funding
Losses) of the Bank resulting from such prepayment. Any such prepayment will not
relieve the Borrowers from paying all other amounts payable under this Section
3.
3.5 CURRENCY AND PLACE OF PAYMENT
This is an international loan transaction in which the specification of USD and
payment in USD are of the essence, and except as expressly provided herein USD
will be the currency of account and of payment in all events. The payment
obligations under this Agreement and other Loan Document will not be discharged
by an amount paid in any currency other than the currency specified or in
another place, whether pursuant to a judgment or otherwise.
<PAGE> 23
18
In the event that any payment, whether pursuant to a judgment or otherwise, will
be made in a currency other than USD or in a place other than in New York, such
amount will be promptly converted to USD (or such other specified currency) and
transferred to New York under normal banking procedures. In the event that such
payment does not satisfy the obligations of the Borrowers under this Agreement
and each document provided for hereunder, the Bank will be entitled to immediate
payment of, and will have a separate cause of action for, the USD (or such other
specified currency) deficiency in respect of the payments due. In the event that
the transfer and/or conversion of such payment results in receipt by the Bank of
an amount in excess of all amounts then due from the Borrowers hereunder the
Bank will refund the amount of such excess to the Borrowers.
SECTION 4. FEES AND CHARGES
4.1 ARRANGEMENT FEE
The Borrowers will pay the Bank an arrangement fee in an amount equal to 1% (one
percent) over the Commitment, of which fee, 50% (fifty percent) has been paid by
the Borrowers on acceptance by the Borrowers of the commitment letter dated May
12, 1997.
4.2 COMMITMENT FEE
During the Availability Period, the Borrowers, jointly and severally, shall pay
the Bank a commitment fee of 0.5% (half of one percent) per annum over the
average undisbursed amount of the Commitment, which will be due and payable
quarterly, commencing to accrue on the date of signing of this Agreement.
4.3 EXPENSES AND STAMP DUTIES
(a) The Borrowers, jointly and severally, will pay or, as the case may be,
reimburse the Bank promptly upon demand for its respective costs and
expenses (including, without limitation, legal fees) incurred in connection
with (i) the negotiation, preparation and execution of any waiver, consent
or amendment required hereunder, (ii) the determination whether there has
occurred an Event of Default or, (iii) the administration and enforcement
of this Agreement from and after the occurrence of such an Event of
Default. Such fees and expenses will be paid or reimbursed whether or not
they
<PAGE> 24
19
arise during the term of this Agreement or whether or not the Bank gives
notice of such Event of Default or demands acceleration of the Loan or
takes other action to enforce the provisions of this Agreement or any
document provided for hereunder.
(b) The Borrowers, jointly and severally, will pay any stamp or documentary
taxes or any similar duties or levies imposed in connection with the
execution, delivery, registration, performance or enforcement of this
Agreement or any other Loan Document.
SECTION 5. REPRESENTATIONS AND WARRANTIES
The Borrowers and Group, jointly and severally, represent, warrant and covenant
to the Bank as follows:
5.01 POWER AND AUTHORITY
The Borrowers are companies incorporated and existing under the laws of Mexico.
Group is a company incorporated and existing under the laws of the United
States. The Borrowers and Group have full power and authority to enter into this
Agreement and other obligations provided for in this Agreement and all other
Loan Document, to execute and deliver this Agreement and all other Loan
Documents, and to perform its obligations hereunder and thereunder.
5.02 AUTHORIZATION OF BORROWING
The Borrowers and Group have taken all necessary action to authorize the
execution and delivery of this Agreement, the Promissory Notes and all other
Loan Document to be executed by the Borrowers and by Group to authorize the
performance and observance of the terms and conditions hereof and thereof.
5.03 GOVERNMENTAL APPROVALS
Any necessary governmental approvals required for the Borrowers with respect to
the Projects, this Agreement, the Promissory Notes or any other Loan Document
provided for hereunder or any payment to be made hereunder or thereunder or for
the performance or enforceability hereof or thereof have been obtained.
<PAGE> 25
20
5.04 AGREEMENT BINDING
This Agreement, the Promissory Notes and the other Loan Documents constitute,
when executed and delivered will constitute legal, valid and binding obligations
of the Borrowers and of Group enforceable in accordance with their respective
terms and will constitute direct obligations of the Borrowers and of Group.
The execution, delivery and performance of this Agreement, the Promissory Notes
and the other Loan Documents to be executed by the Borrowers and Group hereunder
and the payment by the Borrowers of all amounts due on the dates and in the
currency provided for herein and therein (a) do not and will not violate or
contravene any provision of Law, (b) will not conflict with the "Estatutos
Sociales" of the Borrowers or with the Articles of Incorporation and By-laws
of the Group, (c) do not and will not conflict with or result in the breach of
any provision of, or in the imposition of any Lien under, any agreement to which
the Borrowers or Group or any of its Subsidiaries is a party or by which it or
any of its properties or assets is bound, and (d) do not and will not constitute
an Event of Default under any such agreement.
5.05 NO DEFAULT IN OTHER AGREEMENTS
The Borrowers and Group are not in default (a) in respect of any Indebtedness or
(b) in respect of any obligation which might affect the validity or
enforceability of this Agreement or any other Loan Document or (c) under any
agreement, obligation or duty to which it is a party or by which it or any of
its properties or assets is bound, which default might have a material adverse
effect on its financial position or results of operations or its ability to
perform its obligations under this Agreement or any other Loan Document.
5.06 LITIGATION
There are no pending or threatened legal actions or arbitration or other
proceedings which may materially adversely affect the financial condition of the
Borrowers or Group or the validity, effectiveness or enforceability of this
Agreement or any other Loan Document.
5.07 WITHHOLDING AND OTHER TAXES
Other than the currently applicable "retencion del impuesto sobre la
renta" there is no withholding, income or other tax or charge of Mexico or
any political subdivision or taxing authority thereof or therein or of any
taxing authority,
<PAGE> 26
21
federation or association of which Mexico is member, applicable to any payment
to be made by the Borrowers pursuant to the terms of this Agreement or any other
Loan Document provided for hereunder or to be imposed on or by virtue of the
execution, delivery, performance or enforcement of this Agreement or any other
Loan Document.
5.08 RESIDENCE
The Bank is not or will not be deemed, for taxation or other purposes, to be
resident or domiciled, to have established a place of business or to be carrying
on any business in Mexico by reason only of the execution, delivery, performance
or enforcement of this Agreement or any other Loan Document.
5.09 SOVEREIGN IMMUNITY
The execution, delivery, performance and observance of this Agreement and any
other Loan Document to be executed by the Borrowers hereunder constitute private
and commercial acts and no governmental or public acts and neither the Borrowers
nor any of their assets have any right of immunity on the grounds of sovereignty
or otherwise from any legal action, suit or proceeding, from set-off or
counterclaim, from attachment or from execution or any other legal process in
respect of any of their obligations under or relating to this Agreement or any
other Loan Document, and to the extent they have or may have any such immunity
the consent contained in Section 11.06 hereof is effective and irrevocably
binding on them and their successors and assigns.
5.10 FINANCIAL STATEMENTS
The audited consolidated Financial Statements of the Borrowers and Group for the
period ending 1996 which have been delivered to the Bank are complete and
correct and present the consolidated financial position and the results of
operations of the Borrowers and Group at the date thereof and for the period
then ended in conformity with GAAP, consistently applied. There are no
liabilities (whether direct or indirect, fixed or contingent) of the Borrowers
or Group or any of its Subsidiaries as of the dates of such Financial Statements
that are not reflected therein except as heretofore disclosed in writing to the
Bank. Since the date of such Financial Statements there has been no material
adverse change in the consolidated financial position or
<PAGE> 27
22
operations of the Borrowers or Group or any of its Subsidiaries.
5.11 TITLE TO PROPERTIES AND ASSETS
The Borrowers and Group have good and marketable title to all the properties and
assets of which ownership is reflected in the audited balance sheet contained in
the Financial Statements referred to in Section 5.10, except for properties or
assets that have been disposed of in the ordinary course of business. All such
properties and assets are insured against such risks and in such amounts as are
customary for businesses of a like nature in the jurisdiction in which such
properties and assets are located.
5.12 COMPLIANCE WITH LAW
The Borrowers and Group are conducting their business and operations in
compliance with all applicable Laws and are qualified or registered to do
business in every jurisdiction where such qualification or registration is
necessary. The Borrowers and Group have paid all taxes due in respect of the
ownership of its properties and assets or the conduct of its operations except
to the extent that the payment of such taxes is being contested in good faith,
adequate reserves having been provided for the payment thereof.
5.13 COMPLIANCE WITH ENVIRONMENTAL REQUIREMENTS
The Borrowers and Group will take all necessary actions to obtain and maintain
all authorizations, approvals and consents of and/or registrations with all
governmental and regulatory authorities in Mexico or any political subdivision
thereof as shall be necessary or appropriate under the laws of Mexico in
connection with all environmental requirements, in any material aspect, in
connection with the business the Borrowers and Group are engaged in and
especially the development and operation of the Projects.
5.14 MATERIAL ADVERSE FINANCIAL PERFORMANCE
The Borrowers and Group are not aware of any circumstances which may materially
adversely affect the financial condition of the Borrowers or Group or the
validity, effectiveness or enforceability of this Agreement or any other Loan
Document.
<PAGE> 28
23
5.15 SURVIVAL / REPEAT OF REPRESENTATION AND WARRANTIES
The representations and warranties set out in this Section 5 will survive the
execution of this Agreement and will be deemed to be repeated at the time of
each Drawing and on each Interest Payment Date.
SECTION 6. COVENANTS OF BORROWERS
In addition to the other undertakings herein contained the Borrowers and Group,
jointly and severally, hereby covenants with the Bank that during the term of
this Agreement, the Borrowers and Group will comply or cause compliance with
each of the following obligations:
6.01 PERFORMANCE OF OBLIGATIONS
The Borrowers will punctually pay all Indebtedness and all amounts due under
this Agreement and each of the other Loan Documents to be executed by the
Borrowers hereunder at the times and on the dates specified herein and therein.
The Borrowers will perform all of their other obligations, undertakings and
covenants under this Agreement and each of the other Loan Documents.
6.02 FINANCIAL STATEMENTS: OTHER REPORTS
(a) The Borrowers and Group will maintain an accounting system to permit
preparation of consolidated and consolidating Financial Statements in
accordance with GAAP, and each of the Financial Statements described below
shall be prepared from such system and records.
(b) As soon as available but not later than 45 (forty five) days after the end
of each calendar quarter, the Borrowers and Group will deliver to the Bank
the unaudited Financial Statements of the Borrowers and Group and
consolidating balance sheet and income statement of the Borrowers and Group
with regard to such preceding quarter, in format prepared in accordance
with GAAP, as referred to under (a) above.
(c) Not withstanding Section 6.02 (b), as soon as available but not later than
10 (ten) days after the end of the Availability Period, the Borrowers will
deliver to the Bank copies of comprehensive and accurate operational and
financial information with regard to the progress and performance of the
Projects, in format prepared in accordance with GAAP, as referred to under
(a) above.
<PAGE> 29
24
(d) The Borrowers will permit the Bank and its representatives at all
reasonable times to inspect their respective facilities, activities, books
of account and records, and will cause its employees and accountants to
give their full cooperation and assistance in connection with any such
visits of inspection or any financial conferences called by the Bank. The
Borrowers will also make available such further information concerning
their businesses and affairs as the Bank may from time to time reasonably
request.
(e) The Borrowers will not change their auditors, unless such new auditors are
an independent, publicly accredited and reputable international auditors,
satisfactory to the Bank.
(f) The Borrowers will not change its accounting principles, unless legally
prescribed, in which event the consequences of such change with regard to
the annual results and/or the balance sheet of the Borrowers will be, to
the satisfaction of the Bank, explained.
(g) At the same time as each Financial Statement described in paragraph (b) of
this section is delivered, a certificate signed by the chief financial
officer of the Borrowers and Group stating that a review of the
consolidated activities of the Borrowers and Group for such period has been
made under the supervision of such officer and that the Borrowers and Group
have fulfilled every obligation herein and is not in Default hereunder or,
if the Borrowers or Group are in Default, a description of the nature,
duration, and status of such Default. Also, the certificate shall set forth
the calculations in reasonable detail establishing compliance with the
covenants contained in Section Eight hereof.
6.03 PERFORMANCE AND NOTICE
Borrowers and Group will promptly give notice to the Bank of (a) any substantial
dispute between Group or any of its Subsidiaries and between Group and/or the
Borrowers and any Governmental Agency with respect to taxes or any other matter;
(b) any change in taxes, levies, stamp or other duties, filing or other fees,
imposed by withholding or otherwise, applicable to any aspect of the
transactions contemplated by this Agreement; (c) the occurrence of any Event of
Default; (d) any circumstances which would materially affect the fulfillment by
the Borrowers or by Group of their obligations hereunder or under the Guaranty.
<PAGE> 30
25
6.04 MAINTENANCE AND CONTINUITY OF BUSINESS/INSURANCE
(a) The Borrowers and Group will maintain their corporate existence in good
standing and in compliance, in every material aspect, with all applicable
Laws and regulations, will maintain and will cause its Subsidiaries to
maintain their respective corporate rights, privileges and franchises, and
will conduct and will cause its Subsidiaries to conduct their respective
business substantially as such businesses are now conducted and in
compliance with all applicable Laws.
(b) The Borrowers will maintain their properties and assets in good repair,
working order and condition, with insurance coverage of such properties of
assets and insurance against operational risks and liabilities and all
other calamities with coverage and in amounts as are customary for
businesses of a like nature in the jurisdiction in which such properties
and assets are located or in which such businesses are conducted, but in
any event in amounts that exceed the Loan.
(c) The relevant policy or policies as meant in Section 6.04 (b) shall have to
be satisfactory to the Bank. Icmosa and Horticolas shall endorse these
policies in an amount at least equal to the outstanding balance of the Loan
with a clause noting the Bank's interest under this Agreement, a loss payee
clause in favor of the Bank, a notice of cancellation clause in favor of
the Bank and an acknowledgment that the Property will be subject to a Lien
as provided in the Mortgages in favor of the Bank for all legal effects
including, without limitation articles 109 and 110 of the Law Regarding
Insurance Contracts of Mexico (Ley sobre el Contrato de Seguro). The Bank
is hereby irrevocably authorized by Icmosa and by Horticolas to have these
clauses inserted on the insurance policies. At the discretion of the Bank,
the proceeds from such policies will be applied to prepay the Loan or
deposited in an escrow account with the Bank for the purpose of rebuilding,
restoring or replacement of the Property.
(d) The Borrowers shall furnish the Bank with:
- certified copies of the policies as mentioned in Section 6.04 (c);
<PAGE> 31
26
- evidence of payment of current insurance-premiums within 10 (ten) days
of their becoming due and payable;
- a certificate from the Borrowers' insurance or insurance brokers,
indicating the properties insured, the amounts and risks covered, the
names of the beneficiaries, the names of the insurers and any special
features of the insurance policies in effect on the date of the
relevant certificate, such certificate to be furnished only once per
calendar year (or, in case of any substantial amendment with respect
to any of the aforementioned items, an additional certificate to be
furnished within 15 (fifteen) days after the occurrence of such
amendment).
(e) Should the Borrowers fail to keep their properties, rights or other
interest insured as aforesaid, the Bank may at the Borrowers' expense
effect or renew such insurance which the Bank considers to be in accordance
with good management practice.
(f) The Borrowers can not enter into any transactions with any Person, other
than on ordinary commercial terms and on an arm's length basis; or enter
into any agreement whereby the Borrowers' income is shared with any Person
which is not a related party; or enter into transactions whereby the
Borrowers might receive less than the ordinary commercial price for any
goods sold or services rendered or might pay more than the ordinary
commercial price for any goods purchased or services procured.
6.05 OTHER OBLIGATIONS
(a) The Borrowers will not guarantee the Indebtedness of third parties or
provide "avales", Liens or other sureties for the obligations of third
parties, except in relation to its normal course of business.
(b) So long as any part of the Loan remains unpaid, the Borrowers will not,
without the prior written approval from the Bank, incur additional
indebtedness, on a consolidated basis, in excess of USD$1,500,000 or the
countervalue thereof in other currency, except for trade accounts payable
and other accrued liabilities in the normal course of business or
indebtedness incurred for financial of seasonal purchase of raw materials.
<PAGE> 32
27
(c) Apart from the implementation of the Projects, with capital expenditures as
specified in the Total Project Cost Statement, so long as any part of the
Loan remains unpaid, the Borrowers, on a consolidated basis, will not,
without the prior written approval from the Bank, make capital expenditures
in excess of USD$1,500,000 or the countervalue thereof in other currency,
unless such investments are financed through additional equity
contributions.
6.06 TAXES
The Borrowers and Group will pay and discharge all their taxes and governmental
charges, including without limitation any taxes or governmental charges assessed
against any of their properties or assets, prior to the date after which
penalties attach for failure to pay, except to the extent that such taxes and
governmental charges are being contested in good faith, adequate reserves having
been set aside for the payment thereof. The Borrowers and Group will make timely
filings of all tax returns and governmental reports required to be filed or
submitted under any applicable Laws. The Borrowers will furnish the Bank the
receipts and evidence of the compliance and payment of mandatory deposit
requirements, if any, established by Central Bank of Mexico, the stamp tax and
the withholding taxes paid with regard to the Loan.
6.07 DIVIDEND PAYMENTS
The Borrowers and Group will pay no dividend, and will not make any other
distribution of cash or of other assets to its shareholders or affiliates, in
whatever form, in excess of USD$1,000,000 or in excess of 30% of the annual net
profit on a consolidated basis, which ever is less, or if, after such payment of
dividend, (i) the Borrowers are in default to pay any Indebtedness towards any
creditor at its stated maturity or within any applicable period of grace, (ii)
the covenants of Section 8 of this Agreement are not met and maintained.
6.08 COMPLIANCE WITH LAW AND GOVERNMENTAL APPROVALS
The Borrowers will do and cause to be done all things necessary to comply with
all applicable Law and will obtain all Governmental Approvals which may at any
time be required with respect to the obligations of the Borrowers under this
Agreement or any document provided for hereunder or any amendment or supplement
hereto or thereto and will take all necessary and appropriate action to ensure
the continuance of all Governmental Approvals so obtained to the extent
<PAGE> 33
28
necessary for the performance by the Borrowers of such obligations.
6.09 MERGER, SALE OF ASSETS
Neither the Borrowers nor Group, nor any of their Subsidiaries will, without the
prior written consent of the Bank, merge with any other corporation, in any way,
or purchase or otherwise acquire all or substantially all of the properties and
assets of any other corporation, partnership or sole proprietorship or sell,
lease, transfer or otherwise dispose of any non-current asset with a total
bookvalue exceeding USD $750,000 on a consolidated basis.
6.10 POTENTIAL EVENT OF DEFAULT
The Borrowers and Group will promptly notify the Bank of the occurrence of an
Event of Default or a Potential Event of Default, and provide the Bank with full
details of any steps which it is taking, or is considering taking, in order to
remedy or mitigate the effect of the Event of Default or otherwise in connection
therewith but without limitation to the provisions of Section 9 hereof.
6.11 FURTHER DOCUMENTS
The Borrowers and Group will execute all such other documents and instruments
and do all such others acts and things as the Bank may reasonably require to
carry out the transactions contemplated herein or in any other Loan Document
required to be delivered.
6.12 LIENS
The Borrowers will not create or permit to exist any Lien with respect to any of
their properties except for existing Liens identified on Annex "E"
hereto and renewals and extensions thereof permitted by the Bank (ii) Liens for
taxes, assessments or similar charges incurred in the ordinary course of
business.
6.13 SALE OF ASSETS. LEASES.
(a) The Borrowers will not convey, sell, lease, or otherwise dispose of (or
agree to do any of the foregoing at any future time) all or substantially
all or a substantial part of its property or assets or any part of its
property or assets essential to the conduct of its business as presently
conducted. The Borrowers will not
<PAGE> 34
29
enter into any lease agreement (other than leases considered as Debt) in
excess of an aggregate amount equal at any time to USD$200,000 per year.
(b) The Borrowers will not convey, sell, lease, or otherwise dispose of any
other assets except for sales of such assets in the ordinary course of
business for a fair and adequate consideration.
6.14 OTHER COVENANTS
(a) The Borrowers will not redeem, amortize or purchase any of its outstanding
shares nor reduce its share capital or refund any part thereof.
(b) The Borrowers will do and cause to be done all things necessary to comply
with all applicable local and World Bank environmental guidelines. The
Borrowers will promptly give notice to the Bank of any substantial change
in the compliance with such guidelines, which change shall be cured within
a period of 90 (ninety) days.
SECTION 7. CONDITIONS OF DRAWING
7.1 INITIAL CONDITIONS PRECEDENT
The obligation of the Bank to make available the Initial Advances is subject to
the fulfillment, as determined by the Bank, of the following conditions
precedent on or prior to the date hereof (except as otherwise indicated below)
and the continued fulfillment of such conditions on the date of each Drawing:
a) AUTHORIZATIONS. The Bank will have received:
i a copy, certified by an appropriate officer of the Borrowers to
be true and correct and in full force and effect, of any
provision of Law and any Governmental Approval relating to the
authority of the Borrowers to enter into this Agreement, the
Promissory Notes and all other Loan Document to be executed by
the Borrowers hereunder and to incur the Indebtedness to be
created hereunder and under any Loan Document to be executed by
the Borrowers;
<PAGE> 35
30
ii such evidence as is valid under the laws of Mexico to verify the
authority of the person(s) signing this Agreement and the
Promissory Notes, the Guaranty and any other Loan Document
legally to bind the Borrowers and Group and the authority of each
person who will sign the other statements, reports, certificates
and documents called for by the terms of this Agreement and will
otherwise act under this Agreement or any other Loan Document,
for and on behalf of the Borrowers and of Group;
iii the specimen signature of each person named pursuant to Section
7.01(a) (ii), certified by an appropriate official of the
Borrowers and of Group to be a true specimen thereof; and
(b) DRAW REQUEST. The Bank will have received from the Borrowers in connection
with each Initial Advance a Draw Request, duly executed by the Borrowers.
(c) MORTGAGE. The Bank will have received from Icmosa the Icmosa Promise to
Mortgage Agreement duly executed by it.
(d) PLEDGE AGREEMENT. The Bank will have received the Amended Mexican Pledge
Agreement and the U.S. Pledge Agreement duly executed by the Pledgors and
by Group.
(e) OPINION. The Bank will have received the favorable opinion of the legal
counsel to Group addressed to the Bank and dated the date of the Agreement.
(f) PROMISSORY NOTE. The Bank shall have received in connection with each
Initial Advance the relevant Promissory Note.
(g) POWERS OF ATTORNEY. The Bank will have received a copy of the notarized
instrument evidencing the Icmosa Power of Attorney.
(h) POTENTIAL EVENT OF DEFAULT. The Bank will have received a written
confirmation by the Borrowers that no Event of Default nor Potential Event
of Default has occurred and is continuing.
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(i) AUTHORIZATIONS. The Bank will have received a written confirmation by the
Borrowers that, to the best of their knowledge, the Projects qualify for
all authorizations, approvals and consents and/or registrations with all
governmental and regulatory authorities in Mexico of any political
subdivision thereof as shall be necessary or appropriate under the laws of
Mexico.
(j) GUARANTY. The Bank will have received from Group the Guaranty duly executed
in favor of the Bank in form and substance satisfactory to the Bank.
(k) NOTICE TO PUBLIC REGISTRY. The Bank will have received copy of the Notary
Public Notice, as provided in the Icmosa Promise to Mortgage Agreement duly
filed for recordation before the Montemorelos Public Registry and the
Puebla Public Registry.
(l) CERTIFICATE OF NON ENCUMBRANCE. The Bank will have received copy of the
Certificates of Non Encumbrance related with the Icmosa Property and the
Horticolas Property.
(m) FINANCIAL STATEMENTS. The Bank will have received copy of the Financial
Statements referred to in Section 5.10 of this Agreement.
(n) FURTHER CONDITIONS PRECEDENT. Upon each Drawing by the Borrowers of the
Loan, the Borrowers will be deemed to represent and warrant to the Bank
that:
- as of the date of the Drawing no Event of Default has occurred;
- all the representations and warranties of the Borrower contained in
this Agreement are true and correct as of the date of the Drawing;
- all the covenants of the Borrowers set forth in this Agreement will
have been fully met and performed to the extent required as of the
date of the Drawing;
- all of the conditions of the Drawing required under this Section 7
have been met as of the date of the Drawing and all documents
delivered to the date of the Drawing as conditions precedent will
continue to be in full force and effect.
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7.2 ADDITIONAL CONDITIONS PRECEDENT
The Bank will not be obligated to make any subsequent Advance (other than the
Initial Advances) until the following additional conditions precedent have been
satisfied prior to June 30, 1997, and as of the date of making the corresponding
subsequent Advance (other than any Initial Advance) and after giving effect
thereto:
(a) AUTHORIZATIONS. The Bank will have received certified copy of the public
deed which will protocolize the minutes of the General Shareholders
Meeting of Horticolas authorizing (i) the amendment of the "Estatutos
Sociales"of Horticolas, in order to provide in its corporate purpose that
the company may guaranty obligation of third parties, (ii) the execution
of the Horticolas Promise to Mortgage Agreement and the corresponding
Mortgage, and (iii) the granting of the Horticolas Power of Attorney.
(b) MORTGAGE. The Bank will have received from Horticolas the Horticolas
Promise to Mortgage Agreement duly executed by it. (c) Powers of Attorney.
The Bank will have received a copy of the notarized instrument evidencing
the Horticolas Power of Attorney.
(d) NOTICE TO PUBLIC REGISTRY. The Bank will have received copy of the Notary
Public Notices, as provided in the Horticolas Promise to Mortgage
Agreement, duly filed for recordation before the Montemorelos Public
Registry.
(e) CERTIFICATE OF NON ENCUMBRANCE. The Bank will have received copy of the
Certificate of Non Encumbrance related with the Horticolas Property.
(f) PROMISSORY NOTE. The Bank shall have received in connection with each
subsequent Advance the relevant Promissory Note.
(g) DRAW REQUEST. The Bank will have received from the Borrowers a Draw
Request, duly executed by the Borrowers.
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(h) FURTHER CONDITIONS PRECEDENT. All the conditions precedent provided in
Section 7.01 paragraph (o), have been satisfied.
SECTION 8. FINANCIAL COVENANTS
So long as any Commitment is outstanding, any part of the Loan remains unpaid,
or any contingent part of the Loan continues to exist, or until the Bank agrees
to the contrary and the Borrowers receive prior written consent to the contrary
from the Bank, the Borrowers and Group will comply or cause compliance with each
of the following covenants, each of which shall be tested at fiscal year-end
using the audited consolidated Financial Statements required to be delivered
hereby:
8.1 MINIMUM TANGIBLE NET WORTH
Group and its Subsidiaries will maintain a Minimum Tangible Net Worth on a
consolidated basis of at least $34,000,000.
8.2 CURRENT RATIO
Group and its Subsidiaries will maintain a Current Ratio on a consolidated basis
of at least of 1.5
8.3 MAXIMUM LEVERAGE
Group and its Subsidiaries on a consolidated basis, will maintain a Debt to
Tangible Net Worth Ratio which shall not exceed 1.0
8.4 DEBT SERVICE
The Group and its Subsidiaries on a consolidated basis will maintain a Debt
Service Coverage Ratio, of at least 1.5
SECTION 9. EVENTS OF DEFAULT
9.1 EVENTS OF DEFAULT
Each of the following events and occurrences will constitute an Event of Default
under this Agreement:
(a) The Borrowers fails to pay any principal of the Loan or any interest on the
Loan or any other amount payable under this Agreement and such failure
is not remediable
<PAGE> 39
34
or, if remediable, continues unremedied and such failure for a period of 2
(two) days after notice from the Bank to the Borrowers with respect
thereto.
(b) Any representation or warranty made or deemed to be made by the Borrowers
herein will have been incorrect or misleading in any material respect when
made or confirmed, or any certificate or opinion furnished under this
Agreement proves to have been false or misleading as of its date in any
material respect.
(c) The Borrowers fail to perform or violate any provision of this Agreement
(other than a default or violation referred to elsewhere in this Section
9) and such failure or violation is not remediable or, if remediable,
continues unremedied for a period of 30 (thirty) days after notice from
the Bank to the Borrowers with respect thereto.
(d) Any other Indebtedness in excess of USD$500,000 (FIVE HUNDRED THOUSAND
DOLLARS, UNITED STATES CURRENCY) of the Borrowers/Group and/or
Subsidiaries, towards any creditor will not be paid at its stated maturity
or within any applicable period of grace, whichever is later, or by reason
of its default which will have continued for more than any applicable
period of grace, will become due or be declared due prior to its stated
maturity and remains unremedied for a period of 30 days thereafter.
(e) Any registration, license, authorization, consent or approval necessary in
relation to the purchase, development and operation of Borrowers' land and
facilities in Montemorelos, Nuevo Leon, and Ciudad Victoria,
Tamaulipas and in Jose Azueta, Veracruz and/or to enable the Borrowers to
comply with its obligations hereunder is revoked, withdrawn, modified or
withheld or will otherwise fail to remain in force and effect.
(f) The Borrowers or Group changes, or threatens to change, ceases or
threatens to cease business as presently conducted other than in the
normal course of business or if the assets comprising the cease to be used
in the normal operation of the Borrowers, without the prior written
consent of the Bank;
(g) The Borrowers or Group will be unable, or admit in writing its inability
to pay its debts as they mature, make an assignment for the benefit of
creditors, or commit any act of bankruptcy, or any encumbrance takes
<PAGE> 40
35
possession or any order relating to dissolution, liquidation, bankruptcy
or insolvency or for the appointment of a liquidator or receiver or
juridical administrator or trustee or the levy of any execution will be
passed, commenced or made with respect to it or any of its assets.
(h) A distress or execution or writ of seizure and sale or attachment is
levied upon or issued against any of the property or assets of a certain
substantial amount of the Borrowers or Group which is not discharged
within 30 days thereof.
(i) This Agreement, the Promissory Notes and/or the Guaranty, or any other
Loan Document, or any provision thereof is or becomes or is claimed to be,
for any reason, invalid or unenforceable or at any time it is unlawful or
impossible for the Borrowers or for Group to perform any of their
obligations hereunder or under the Guaranty or it is unlawful or
impossible for the Bank to exercise any of its rights hereunder or
thereunder.
(j) Group fails - for any reason - to duly perform any of its obligations
hereunder and under the Guaranty.
(k) Any arbitration award, judgment or decree for money damages or for a fine
or penalty is entered against the Borrowers or by the Borrowers, which in
the sole opinion of the Bank may or will substantially affect the Bank's
rights under this Agreement.
(l) Any competent Governmental Agency takes (i) any action to condemn, seize,
requisition or otherwise appropriate any substantial portion of the
properties or assets of the Borrowers or any of their Subsidiaries (either
with or without payment of compensation) or (ii) any action which, in the
opinion of the Bank, adversely affects the Borrowers' ability to pay its
Indebtedness hereunder.
(m) Mexico or any competent authority thereof declares any moratorium on the
payment of Indebtedness by it, by any Government Agency or by any
juridical entity domiciled or resident in Mexico; Mexico commence
negotiations generally with its creditors with a view to a general
readjustment or rescheduling of its Indebtedness; Mexico cease to be a
member in good standing of the International Monetary Fund fully eligible
to purchase USD and other currencies in exchange for the currency of such
country or such country ceases to be a member of the International Bank of
Reconstruction and
<PAGE> 41
36
Development; the international monetary reserves of Mexico become subject
to any Lien; or such country segregates all or a portion of its foreign
exchange assets or earnings for the benefit of any creditor or class of
creditors, only to the extent that such situation affects the Borrowers'
capacity to meet their debt obligations under the Loan.
(n) The Borrowers' amount of its authorized share capital is decreased without
the Bank's prior written approval.
(o) All or any of the Borrowers'/Group's properties or rights are nationalized
or expropriated.
(p) If, without the prior written approval of the Bank, the shareholdings'
structure of the Borrowers have been changed or a change has occurred in
the ownership of the Borrowers or in the controlling ownership of the
shareholders of the Borrowers or in the controlling ownership of their
major Subsidiaries.
(q) The Bank is of the reasonable and justifiable opinion that any of its
claims or rights under this Agreement, and/or the Guaranty and/or any
other Loan Document is in jeopardy. Group and/or UniMark Foods, Inc.Group
and/or UniMark Foods, Inc. (r) The Mortgages on the Property are not
created within the term and in the form as provided in the Icmosa Promise
to Mortgage Agreement and on the Horticolas Promise to Mortgage Agreement.
(s) Any Lien against the Property or any other property of the Borrowers is
filed or attached and is not discharged, or suitable bond is not made to
prevent the enforcement thereof to the Bank"s satisfaction.
(t) The Borrowers shall fail to deliver to the Bank within 5 (five) Business
Days of the date hereof, notarized, certified copy of the notice to the
Montemorelos Public Registry, duly signed by an authorized officer of
Union de Credito Allende, S.A. de C.V. Organizacion Auxiliar de
Credito requesting the cancellation of the Lien on the Horticolas Property
and the Icmosa Property located in Montemorelos registered in favor of
Union de Credito Allende, S.A. de C.V. Organizacion Auxiliar de
Credito.
(u) The occurrence of a Default or Event of Default (as defined in each of the
Rabobank/UniMark Loan Agreements) under any instrument or document
evidencing, securing or
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guaranteeing a debt owed by the Borrowers and/or Group and/or UniMark
Foods, Inc. to the Bank.
9.2 CONSEQUENCE OF DEFAULT
If an Event of Default will occur and be continuing the Bank will:
(a) by written notice to the Borrowers declare the entire Loan together with
accrued interest, costs and losses (including without limitation any
Funding Losses) of the Bank resulting from such Event of Default and any
other sum payable hereunder or under any document provided for hereunder
to be immediately due and payable and the Loan will thereupon become due
and payable without presentment, demand, protest or notice of any kind,
other than the notice specifically required by this Section, all of which
are expressly waived by the Borrowers; or
(b) by written notice to the Borrowers terminate any undrawn portion of the
Commitment, such termination to be effective upon the giving of such
notice; or
(c) by written notice to the Borrowers take the actions specified in both (a)
and (b) of this Section 9.02.
No waiver of any Event of Default will constitute a waiver of any other or any
succeeding Event of Default except to the extent provided in such waiver.
SECTION 10. CHANGES IN CIRCUMSTANCES
(a) If the Bank shall determine that by reason of circumstances affecting
generally the London Interbank Market and the alternative Interbank
Markets in Amsterdam and New York, adequate and reasonable means do not or
will not exist for ascertaining the interest rate applicable to any
Interest Period, the Bank shall give written notice to the Borrowers of
such determination (hereinafter called the "Determination Notice").
In such event the obligation of the Bank under this Agreement shall
forthwith cease until further notice by the Bank. The Bank and the
Borrowers shall, after giving by the Bank of the Determination Notice,
negotiate in good faith in order to agree upon a mutually satisfactory
interest rate and interest period to be
<PAGE> 43
38
substituted for those which would otherwise have applied pursuant to this
Agreement.
If the Bank and the Borrowers are unable to agree upon such substitute
interest rate and interest period within a period of 30 (thirty) days from
the date of the Determination Notice, the Bank shall promptly and
reasonably set a substitute interest rate and interest period, all to take
effect from the commencement of the Interest Period in respect of which
the Bank gave the Determination Notice, which rate shall be the aggregate
of the margin indicated in Section 2.4 (a) plus the Bank's cost of funding
the Loan during the interest period so set. In the event that the state of
affairs referred to above in this Section shall extend beyond the end of
any Interest Period so agreed or set, the foregoing procedure shall be
repeated as often as may be necessary. The Borrowers shall pay to the Bank
interest on the Loan at the interest rate so agreed or set. The Borrowers
shall be at liberty at any time after the Bank shall have set an interest
rate as aforesaid and such interest rate continues to be applicable,
subject to its giving to the Bank of not less than 30 (thirty) Business
Days' prior written notice, to prepay to the Bank, at the Borrowers'
option, the whole or part of the Loan at the expiration of such notice and
otherwise in accordance with and subject to the provisions of Section 10
(c).
(b) If the Bank shall determine that by reason of circumstances affecting
generally the London Interbank Market and the alternative Interbank
Markets in Amsterdam and New York, the Bank is unable to obtain deposits
of United States Dollars in any of such markets in sufficient amount for
any Interest Period, the Bank shall give written notice to the Borrowers
of such determination. In such event the obligations of the Bank under
this Agreement shall forthwith cease until further written notice by the
Bank and the Borrowers shall prepay to the Bank, at the Borrowers' option
the whole or part of the Loan on the next following Interest Payment Date
and such prepayment shall be made in accordance with and subject to the
provisions of Section 10 (c.)
After giving of the aforesaid written notice the Bank and the Borrowers
shall negotiate in good faith in order to agree terms for converting the
Loan into facilities expressed in an Eurocurrency other than United States
Dollars, or to agree terms for another mutually
<PAGE> 44
39
satisfactory arrangement, provided that the Bank shall be under no
obligation to continue such negotiations if terms have not been agreed
within 10 (ten) days after the giving of the aforesaid notice.
(c) In the case of prepayment of the Loan by the Borrowers pursuant to Sections
10 (a) or 10 (b) the Borrowers shall pay at the same time:
(i) all accrued interest on the Loan to be prepaid; and
(ii) the Funding Losses and the prepayment fee as mentioned in Section 2.05
(b) and 2.07 (b).
SECTION 11. MISCELLANEOUS
11.01 TERM
The term of this Agreement will commence on the date first set forth above and
will end on the Final Maturity Date hereunder.
Notwithstanding the foregoing, this Agreement will remain in full force and
effect until payment in full of all principal, interest and other sums payable
by the Borrowers hereunder and any other document provided for hereunder. The
indemnities of the Borrowers will survive the term of this Agreement and the
repayment of the Loan.
11.02 ENTIRE AGREEMENT
This Agreement and the documents provided for hereunder constitute the entire
obligation of the parties hereto with respect to the subject matter hereof and
will supersede any prior expressions of intent or understandings with respect to
this transaction. The written consent of the Bank will be required for an
amendment to this Agreement or any waiver of the terms hereof.
11.03 WAIVER: CUMULATIVE RIGHTS
The failure or delay of the Bank to require performance by the Borrowers of any
provision of this Agreement will not affect its right to require performance of
such provision unless and until such performance has been waived by the Bank in
writing in accordance with the terms hereof. Each and every right granted to the
Bank hereunder or under any other document delivered hereunder or in connection
herewith, or
<PAGE> 45
40
allowed to any of them, will be cumulative and may be exercised in part or in
whole from time to time.
11.04 ASSIGNMENT AND PARTICIPATION
This Agreement will be binding upon and will be enforceable by the Borrowers,
the Bank, their respective successors and assignees.
The Borrowers will have no right to assign its rights or obligations hereunder.
The Bank is entitled to assign all or a part of its rights and obligations
hereunder without prior written notice to the Borrowers. Upon an assignment by
the Bank, the Bank as used herein will be deemed to refer to such assignee to
the extent of its interest thereunder and it will be entitled to the benefit of
all indemnities and tax reimbursements of the Bank pursuant to this Agreement as
fully as if a party hereto.
11.05 MODIFICATIONS
No modification of any provision of this Agreement, or consent to any departure
from or supplement, amendment or termination of the terms hereof, the other Loan
Documents or any other document, shall be effective unless such is in writing
and signed by the Bank which may be given in its sole discretion, and any such
waiver shall be effective only for the specific instance given.
11.06 GOVERNING LAW
This Agreement will be governed by and interpreted in accordance with the Laws
of the Netherlands, except for the provisions related with the Promissory Notes
which will be governed by and interpreted in accordance with the laws of New
York and Mexico.
11.07 SUBMISSION TO JURISDICTION
The Borrowers and Group (except for the Guaranty) hereby irrevocably consent
that any legal action or proceedings against it or any of its property with
respect to this Agreement or any document provided for hereunder may be brought
in courts in Mexico or courts in any jurisdiction where assets of the Borrowers
may be found, or all of them, as the Bank may elect, and by execution and
delivery of this
<PAGE> 46
41
Agreement the Borrowers hereby submit to and accept with regard to any such
action or proceeding for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. The Borrowers
expressly waive any other jurisdiction.
11.08 SET-OFF
The Bank will have the right to set-off or to apply amounts on deposit or
account with the Bank in reduction of amounts past due hereunder to the extent
permitted by Law, regardless of the currency of such amounts. The Borrowers
hereby authorize the Bank in the name of the Borrowers to do all such acts and
to execute all such documents and instruments as may be necessary or expedient
to effect any such set-off or application.
11.09 NOTICES
Unless otherwise specifically provided for herein, any notice required or
permitted to be given hereunder will be in writing and will be (a) personally
delivered, (b) delivered by internationally recognized courier service, or (c)
transmitted by telex or cable to the parties as follows (as elected by the party
giving such notice):
To the Borrowers:
INDUSTRIAS CITRICOLAS DE MONTEMORELOS, S.A. DE C.V.
Carretera General Teran Kilometro 1
Apartado 87
Montemorelos, Nuevo Leon
Mexico
To Group:
THE UNIMARK GROUP, INC.
UniMark House, P.O. Box 229
Argyle, Texas 76226
U.S.A.
for the attention of
Fax No.
-------------------
To the Bank:
Rabobank Nederland
P.O. Box 17100
<PAGE> 47
42
3500 HG Utrecht
The Netherlands
for the attention of Mr. Gerard Mulder /APFT (UC - B43928)
Fax: (31 30) 216 19 20
with a copy of such notice to
Rabobank Nederland Representative Office:
Bosques de Alisos No. 47-B, Piso 2
Fracc. Bosques de las Lomas
CP 05120 Mexico D.F.
for the attention of Mr. Ad Gerritsen
Fax: (52 5) 261-0061
Except as otherwise specified herein, all notices and other communications will
be deemed to have been duly given on (i) the date of receipt if delivered
personally or by courier, (ii) the date of transmission with confirmed
answerback of transmitted by telex or cable, whichever will first occur;
provided that any notice to be given to one of the parties will be effective
only when actually received by such party.
All notices hereunder and all documents delivered in connection with this
transaction will be in the English language.
11.10 COUNTERPARTS
This Agreement may be signed in any number of counterparts. Any single
counterpart or a set of counterparts signed, in either case, by all the parties
hereto will constitute a full and original agreement for all purposes.
11.11 COSTS AND EXPENSES
The Borrowers shall pay all costs and expenses derived from the negotiation,
execution and preparation of this Agreement, including the costs and expenses
regarding its drafting, negotiation, translation, formalization and recordation
in the Montemorelos Public Registry and in the Puebla Public Registry of any
document or agreement established herewith. The Borrowers shall pay to the Bank
any cost or expense incurred by the Bank in connection with the enforcement of
this Agreement and/or any document or agreement established herewith.
<PAGE> 48
43
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective duly authorized representatives as of the day and year first
written above.
The Borrowers
- ---------------------------- ----------------------------
Industrias Citricolas de Grupo Industrial Santa
Montemorelos, S.A. de C.V. Engracia, S.A. de C.V:
By: By
------------------------- -------------------------
Title: Title:
---------------------- ---------------------
------------------------------
AgroMark, S.A. de C.V.
By:
----------------------
Title:
-------------------
Group The Bank
---------------------------- ----------------------------
The UniMark Group, Inc. Cooperatieve Centrale
Raiffeisen-Boerenleenbank
B.A. ("Rabobank Nederland")
By: By:
------------------------- -------------------------
Title: Title:
---------------------- ----------------------
<PAGE> 1
EXHIBIT 10.25
================================================================================
REVOLVING LOAN AGREEMENT WITH
SECURITY INTEREST
("CONTRATO DE APERTURA DE CREDITO REVOLVENTE DE
HABILITACION O AVIO")
BY AND BETWEEN
INDUSTRIAS CITRICOLAS DE MONTEMORELOS, S.A. DE C.V.
"BORROWER"
GRUPO INDUSTRIAL SANTA ENGRACIA, S.A. DE C.V.
"GISE"
AGROMARK, S.A. DE C.V.
"AGROMARK"
AND
COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A.
"RABOBANK NEDERLAND" NEW YORK BRANCH
"BANK"
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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ARTICLE ONE
DEFINITIONS 2
ARTICLE TWO
TERMS AND CONDITIONS OF THE LOANS
SECTION 2.01 THE COMMITMENT . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.02 USE OF THE ADVANCES. . . . . . . . . . . . . . . . . . . . 15
SECTION 2.03 ADVANCES . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 2.04 INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.05 DEFAULT INTEREST . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.06 COMPUTATION OF INTEREST. . . . . . . . . . . . . . . . . . 17
SECTION 2.07 REPAYMENT OF ICMOSA LOANS. . . . . . . . . . . . . . . . . 17
SECTION 2.08 PROMISSORY NOTES . . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.09 PLACE AND FORM OF PAYMENT. . . . . . . . . . . . . . . . . 17
SECTION 2.10 PAYMENTS DUE ON A DAY WHICH IS NOT
A BUSINESS DAY . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 2.11 PREPAYMENTS OF ICMOSA LOANS. . . . . . . . . . . . . . . . 18
SECTION 2.12 AMOUNTS EXCEEDING LIMITS . . . . . . . . . . . . . . . . . 19
SECTION 2.13 TERMINATION OF THE RIGHT TO MAKE
ADVANCES. REDUCTION IN THE COMMITMENT. . . . . . . . . . . 19
SECTION 2.14 CALCULATION AND PAYMENT OF FEES. . . . . . . . . . . . . . 19
SECTION 2.15 PAYMENT OF FUNDING LOSSES. . . . . . . . . . . . . . . . . 20
SECTION 2.16 INCREASED COSTS. . . . . . . . . . . . . . . . . . . . . . 20
SECTION 2.17 CHANGE IN CIRCUMSTANCES. . . . . . . . . . . . . . . . . . 22
SECTION 2.18 LENDING OFFICE . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.19 TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE THREE
CONDITIONS PRECEDENT
SECTION 3.1 INITIAL CONDITIONS PRECEDENT . . . . . . . . . . . . . . . 24
SECTION 3.2 ADDITIONAL CONDITIONS. . . . . . . . . . . . . . . . . . . 26
</TABLE>
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TABLE OF CONTENTS (CONT'D)
<TABLE>
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ARTICLE FOUR
REPRESENTATIONS AND WARRANTIES
SECTION 4.01 ORGANIZATION AND AUTHORITY . . . . . . . . . . . . . . . . 27
SECTION 4.02 VALIDITY, AUTHORIZATION, AND
NO CONFLICT . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 4.03 NO PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 4.04 NO APPROVALS . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 4.05 NO DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 4.06 ADVERSE CIRCUMSTANCES. . . . . . . . . . . . . . . . . . . 28
SECTION 4.07 TAX RETURNS AND PAYMENTS . . . . . . . . . . . . . . . . . 29
SECTION 4.08 FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . 29
SECTION 4.09 ACCURACY OF DISCLOSURES. . . . . . . . . . . . . . . . . . 29
SECTION 4.10 PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 4.11 EXISTING INDEBTEDNESS . . . . . . . . . . . . . . . . . . 30
SECTION 4.12 REAL ESTATE. . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 4.13 INVENTORY LOCATION . . . . . . . . . . . . . . . . . . . . 30
SECTION 4.14 INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 4.15 ENVIRONMENTAL REQUIREMENTS . . . . . . . . . . . . . . . . 31
SECTION 4.16 LABOR MATTERS. . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 4.17 SOLVENCY . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 4.18 TRADEMARKS, COPYRIGHTS, PATENTS
AND LOGOS . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE FIVE
AFFIRMATIVE COVENANTS
SECTION 5.01 PAYMENT OF THE ICMOSA OBLIGATIONS. . . . . . . . . . . . . 32
SECTION 5.02 AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 5.03 USE OF THE ADVANCES. . . . . . . . . . . . . . . . . . . . 32
SECTION 5.04 BOOKS AND RECORDS; INSPECTION. . . . . . . . . . . . . . . 33
SECTION 5.05 NOTICE OF DEFAULT. . . . . . . . . . . . . . . . . . . . . 33
SECTION 5.06 MAINTENANCE OF EXISTENCE, APPROVALS
AND LICENSES . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 5.07 COMPLIANCE WITH LAWS, MATERIAL
AGREEMENTS, AND LICENSES . . . . . . . . . . . . . . . . . 33
SECTION 5.08 MAINTENANCE OF ASSETS AND INSURANCE. . . . . . . . . . . . 34
</TABLE>
<PAGE> 4
TABLE OF CONTENTS (CONT'D)
<TABLE>
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SECTION 5.09 FINANCIAL STATEMENTS, BORROWING BASE
CERTIFICATE AND OTHER INFORMATION . . . . . . . . . . . . 34
SECTION 5.10 PAYMENT OF DEBTS. . . . . . . . . . . . . . . . . . . . . 36
SECTION 5.11 PAYMENT OF TAXES AND LIABILITIES. . . . . . . . . . . . . 36
SECTION 5.12 CLAIMS AND ACTIONS. . . . . . . . . . . . . . . . . . . . 37
SECTION 5.13 MAINTENANCE OF CHIEF EXECUTIVE
OFFICE . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 5.14 OTHER NOTICES . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 5.15 ENVIRONMENTAL REQUIREMENTS. . . . . . . . . . . . . . . . 38
SECTION 5.16 ADDITIONAL DOCUMENTS. . . . . . . . . . . . . . . . . . . 38
ARTICLE SIX
NEGATIVE COVENANTS
SECTION 6.01 LIENS . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 6.02 LIQUIDATION, MERGER, CONSOLIDATION,
ACQUISITION . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 6.03 ISSUANCE OF SHARES. . . . . . . . . . . . . . . . . . . . 39
SECTION 6.04 DISCOUNT OF RECEIVABLES . . . . . . . . . . . . . . . . . 39
SECTION 6.05 SALE OF ASSETS. . . . . . . . . . . . . . . . . . . . . . 39
SECTION 6.06 TRANSACTIONS ON FAVORABLE TERMS . . . . . . . . . . . . . 39
SECTION 6.07 CONFLICTING AGREEMENTS. . . . . . . . . . . . . . . . . . 39
SECTION 6.08 CHANGE IN BUSINESS. . . . . . . . . . . . . . . . . . . . 40
SECTION 6.09 ACCOUNTING PRACTICES. . . . . . . . . . . . . . . . . . . 40
SECTION 6.10 MANAGEMENT CHANGES. . . . . . . . . . . . . . . . . . . . 40
ARTICLE SEVEN
EVENTS OF DEFAULT
SECTION 7.1 EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . 40
SECTION 7.2 MATURITY OF ICMOSA OBLIGATIONS AND OTHER
RIGHTS. . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 7.3 ENFORCEMENT OF RIGHTS . . . . . . . . . . . . . . . . . . 43
</TABLE>
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<TABLE>
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ARTICLE EIGHT
SECURITY INTEREST. GUARANTEE
SECTION 8.1 SECURITY INTEREST . . . . . . . . . . . . . . . . . . . . 44
SECTION 8.2 GUARANTEE . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE NINE
MISCELLANEOUS
SECTION 9.01 WAIVERS AND MODIFICATIONS . . . . . . . . . . . . . . . . 47
SECTION 9.02 CUMULATIVE RIGHTS . . . . . . . . . . . . . . . . . . . . 47
SECTION 9.03 CONFLICTING PROVISIONS. . . . . . . . . . . . . . . . . . 58
SECTION 9.04 SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 9.05 INDEPENDENT COVENANTS . . . . . . . . . . . . . . . . . . 58
SECTION 9.06 CONSTRUCTION. . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 9.07 SURVIVAL. . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 9.08 FORM OF DOCUMENTS . . . . . . . . . . . . . . . . . . . . 49
SECTION 9.09 PARTIES BOUND AND ASSIGNMENT OF THE
BORROWER'S INTEREST . . . . . . . . . . . . . . . . . . . 49
SECTION 9.10 EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 9.11 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 9.12 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 9.13 JURISDICTION. . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 9.14 DOCUMENTATION . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 9.15 COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 9.16 REGISTRATION. . . . . . . . . . . . . . . . . . . . . . . 51
</TABLE>
<PAGE> 6
TABLE OF CONTENTS (CONT'D)
EXHIBITS
EXHIBIT "A" AUTHORIZED OFFICERS LIST
EXHIBIT "B" BORROWING BASE CERTIFICATE
EXHIBIT "C" PROMISSORY NOTES
EXHIBIT "D" ADVANCE NOTICE
EXHIBIT "E" EXISTING INDEBTEDNESS/CLAIMS,
LAWSUITS
EXHIBIT "F" REAL ESTATE LIST/PLANTS AND
WAREHOUSES/TRADEMARKS LIST
EXHIBIT "G" COLLECTIVE BARGAINING AGREEMENTS
EXHIBIT "H" PLEDGE AGREEMENT
EXHIBIT "I" INVENTORY CERTIFICATE
EXHIBIT "J" LIST OF ACCOUNT DEBTORS
EXHIBIT "K" NOTICE TO ACCOUNT DEBTORS
EXHIBIT "L" APPLICABLE MARGIN CERTIFICATE
EXHIBIT "M" GROUP GUARANTY
<PAGE> 7
1
REVOLVING LOAN AGREEMENT WITH SECURITY INTEREST ("CONTRATO DE APERTURA DE
CREDITO REVOLVENTE DE HABILITACION O AVIO") ENTERED INTO THIS 10 DAY OF APRIL,
1997, BY AND BETWEEN INDUSTRIAS CITRICOLAS DE MONTEMORELOS, S.A. DE C.V., A
MEXICAN CORPORATION (THE "BORROWER"), AND GRUPO INDUSTRIAL SANTA ENGRACIA, S.A.
DE C.V., A MEXICAN CORPORATION ("GISE"), AGROMARK, S.A. DE C.V., A MEXICAN
CORPORATION ("AGROMARK"), AND COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK
B.A., "RABOBANK NEDERLAND" NEW YORK BRANCH, A BANKING INSTITUTION ORGANIZED AND
EXISTING UNDER THE LAWS OF THE KINGDOM OF THE NETHERLANDS ("BANK").
W I T N E S S E T H:
WHEREAS, the Borrower is a commercial corporation, duly organized and existing
under the laws of the United Mexican States ("Mexico"), with legal capacity to
enter into this Agreement, to execute the Promissory Notes (as defined herein)
and to perform and observe the terms and conditions hereof and thereof.
WHEREAS, Gise is a commercial corporation, duly organized and existing under
the laws of Mexico, with legal capacity to enter into this Agreement, to
guarantee ("por aval") the Promissory Notes and to perform and observe the
terms and conditions hereof and thereof.
WHEREAS, AgroMark is a commercial corporation, duly organized and existing
under the laws of Mexico, with legal capacity to enter into this Agreement, to
guarantee ("por aval") the Promissory Notes and to perform and observe the
terms and conditions hereof and thereof.
WHEREAS, the Borrower, Gise and AgroMark are engaged in the business of
growing, processing, marketing and distribution of citrus and tropical fruit in
Mexico.
WHEREAS, The UniMark Group, Inc. ("Group"), a holding corporation organized and
existing under the laws of the State of Texas, United States of America
("United States"), is the parent of and owns, in the case, of UniMark Foods,
Inc. ("UniMark"), a corporation organized and existing under the laws of the
State of Texas, United States, 100% of its issued and outstanding capital stock
and, in the case of Borrower, Gise and AgroMark the majority of their
respective issued and outstanding capital stock.
WHEREAS, UniMark and Gise are currently indebted to Bank for separate amounts
of working capital needed for their respective operations in United States and
in Mexico and the separate
<PAGE> 8
2
indebtedness of each company is secured by respective assets of each.
WHEREAS, the Borrower has requested that the Bank make credit available to it
in an aggregate principal amount not exceeding U.S. $7,500,000, in order to
finance its working capital needs and the purchase by the Borrower of
unprocessed material related to its operations.
WHEREAS, the Bank is prepared to grant the Borrower such loan upon the terms
and conditions set forth below.
NOW, THEREFORE, in consideration of the foregoing and of the terms, conditions,
representations and warranties set forth herein, the parties hereby agree as
follows:
ARTICLE ONE
DEFINITIONS
The following terms (except as otherwise expressly provided) for all purposes
of this Agreement shall have the respective meanings hereinafter specified:
"Borrower" means Industrias Citricolas de Montemorelos, S.A. de C.V.
"Current Assets" means those assets which would be reflected on a
balance sheet prepared in accordance with GAAP as "current assets" but
excluding (i) all accounts receivable with respect to goods or services which
were delivered or performed at least 90 (ninety) days prior to the date of
determination unless appropriate reserves have been made for such "over 90 day"
accounts receivable in the bad debt reserve; and (ii) Intangible Assets which
have been classified as current assets.
"Intangible Assets" means those assets of a Person which are (i)
deferred assets, other than prepaid insurance and prepaid taxes; (ii) patents,
copyrights, trademarks, trade names, licenses, permits, franchises, goodwill,
experimental and research and development expenses, and other similar
intangibles; (iii) unamortized debt discount and expense; and (iv) notes and
receivables due from Affiliates of such Person or officers, directors or
employees of such Person or Affiliates of such Person.
"Affiliate", of any specified Person, means any other Person which directly
or indirectly through one or more intermediaries controls, or is controlled by,
or is under common control with, such specified Person. "Control" means the
power to direct the management and policies of such Person directly or
indirectly,
<PAGE> 9
3
whether through the ownership of equity, by contract or otherwise; and the
terms "controls", "controlling", and "controlled" have meanings correlative to
the foregoing.
"AgroMark" means AgroMark, S.A. de C.V.
"Capital Lease" means any lease of real or personal property which would be
capitalized on a balance sheet prepared in accordance with GAAP and, in any
event, includes any lease which is in substance a financing lease.
"Governmental Authority" means any nation or government, any federal,
state, local, or other political subdivision thereof, any department,
commission, board, bureau, agency, public authority, instrumentality, court, or
other entity exercising executive, legislative, judicial, regulatory, or
administrative functions of government.
"Advance Notice" means a notice given by the Borrower to the Bank,
signed by an Authorized Officer, pursuant to section 2.03 hereof.
"Bank" means Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A. "Rabobank
Nederland", New York Branch, a federally licensed branch of a Netherlands
cooperative banking organization, its successors and assigns.
"Borrowing Base" as of any date of determination, means an amount
equal to the sum of (i) 85% (eighty five percent) of the face amount expressed
in Dollars of Eligible Accounts (net of maximum discounts, offsets, credits,
retainings and any other amounts deferred with respect thereto), plus (ii) 60%
(sixty percent) of the value expressed in Dollars of Eligible Inventory
(determined in accordance with GAAP), plus (iii) the balance of the Cash
Collateral, minus (iv) any outstanding amount owed to Japanese suppliers of
packaging materials and minus (v) the Icmosa Loans.
"Event of Default" means any event specified in section 7.1 hereof.
"Working Capital" means the amount by which Current Assets exceed
Current Liabilities.
"Borrowing Base Certificate" means a certificate substantially in
the form of Exhibit "B" of this Agreement.
"Applicable Margin Certificate" means a certificate substantially in
the form of Exhibit "L" of this Agreement, evidencing the agreement of the
Borrower and the Bank on the Applicable Margin for any particular Advance,
other than the Initial Advance.
<PAGE> 10
4
"Inventory Certificate" means a certificate signed by an Authorized
Officer of the Borrower certifying (i) that the corresponding Advance has been
used to finance the purchase of Inventory described therein and (ii) that such
Inventory has been stored in the Plants and/or Warehouses, substantially in the
form of Exhibit "I" of this Agreement.
"Commitment" means the obligation of the Bank to make Advances pursuant to
the terms and conditions of this Agreement in an aggregate principal amount up
to but not exceeding U.S. $7,500,000.00 Dollars (SEVEN MILLION FIVE HUNDRED
THOUSAND DOLLARS CURRENCY OF THE UNITED STATES OF AMERICA), or such lesser
amount as may be determined at all times pursuant to the provisions hereof.
"Condition Precedent" means any of the conditions specified in sections 3.1
and 3.2 hereof.
"Agreement" means this Revolving Loan Agreement with Security Interest
("Contrato de Apertura de Credito Revolvente de Habilitacion o Avio") and any
modification, renewal or amendment hereof.
"Gise Revolving Loan Agreement" means the Revolving Loan Agreement with
Security Interest ("Contrato de Apertura de Credito Revolvente de Habilitacion
o Avio") dated April 10, 1997, executed by Gise, the Bank and the other parties
named therein.
"UniMark Revolving Credit Agreement" means the Revolving Credit Agreement
dated February 12, 1997, executed by UniMark, Group, the Bank and the other
parties named therein.
"Pledge Agreement" means the Pledge Agreement of even date
herewith executed by the Pledgors and the Bank, substantially in the form of
Exhibit "H" attached hereto, as it may be amended from time to time.
"Icmosa Loan" means the aggregate unpaid principal amount of all Advances
made pursuant to the terms hereof.
"Eligible Accounts" means each account owed to the Borrower other
than the following types of accounts which:
(i) are due or unpaid more than 60 (sixty) days after the shipment
date;
(ii) arise out of a sale not made in the ordinary course of the
business of the Borrower;
(iii) arise out of a sale to a Person which is an Affiliate of the
Borrower or controlled by an Affiliate of the Borrower;
<PAGE> 11
5
(iv) fail to meet or violates any warranty, representation, or
covenant contained in this Agreement or in any other Icmosa Loan Document;
(v) are subject to any claim, defense, or setoff by the Account
Debtor;
(vi) are to the United States or any department, agency or
instrumentality thereof, unless the Borrower assigns its right to payment of
such account to the Bank;
(vii) are to an Account Debtor (A) which has filed a petition for
bankruptcy or any other petition for relief under the "Ley de Quiebras y de
Suspension de Pagos" of Mexico or any similar statute in any other country, or
made an assignment for the benefit of creditors, or (B) against which any
petition or other application for relief under the "Ley de Quiebras y de
Suspension de Pagos" of Mexico or any similar statute in any other country has
been filed, or (C) which has failed, suspended its business operations, become
insolvent, suffered a receiver or a trustee to be appointed for any of its
assets of affairs, or is generally failing to pay its debts as they become due;
(viii) are on a bill-and hold, guaranteed sale, sale-and-return, sale
on approval, consignment, or any other repurchase or return basis;
(ix) are ones for which the Bank believes, in the exercise of its
reasonable credit judgment, collection is insecure or that such accounts may
not be paid by reason of the Account Debtor's financial inability to pay;
(x) are for goods which have not been shipped and delivered to and
accepted by the Account Debtor, or are for services which have not been
performed by the Borrower and accepted by the Account Debtor;
(xi) exceed a credit limit determined by the Bank in the exercise
of its reasonable credit judgment or determined by the Bank at any time or
times hereinafter, in which case such account(s) shall be ineligible to the
extent such account(s) exceed(s) such limit;
(xii) are ones with respect to which the Bank does not have a senior,
perfected security interest or is subject to a Lien;
(xiii) are not payable in Dollars;
(xiv) are to an Account Debtor to whom 50% (fifty percent) or more
of the outstanding invoices issued to such Account Debtor are ineligible
hereunder;
<PAGE> 12
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(xv) are contra accounts payable to an Account Debtor of the
Borrower;
(xvi) are accounts which are ineligible in the sole opinion of the
Bank; or
(xvii) are to an Account Debtor located within the Mexican Republic.
"Accounts Receivable" means any and all instruments, chattel paper,
accounts receivable or letters of credit evidencing, representing, arising out
of or existing with respect to, relating to, securing or otherwise supporting
the payment of the Inventory Processed Products.
"Account Debtor" means any and all obligors under the Accounts
Receivable.
"Business Day" means any day other than a Saturday, Sunday, any day
on which banking institutions are permitted or required by law, executive order
or governmental decree to remain closed in the City of New York or in Mexico
and, with respect to any Interest Period or any information relating to the
Libor Base Rate, any day on which dealings in Dollar deposits occur in the
London interbank market and banks are open for business in London.
"Advance" means each sum disbursed by the Bank to the Borrower
pursuant to section 2.03 of this Agreement, including the Initial Advance.
"Initial Advance" means the sum disbursed by the Bank to the Borrower
pursuant to section 2.03 a) of this Agreement
"Icmosa Loan Documents" means this Agreement, the Promissory Notes, the
Pledge Agreement, the Group Guaranty, each Notice of Advance, each Borrowing
Base Certificate, each Inventory Certificate, each Applicable Margin
Certificate and all other agreements between the Borrower or other Obligated
Party and the Bank (other than the Gise Revolving Loan Agreement), executed
pursuant to or in connection with the transaction contemplated hereby, and all
other documents specified in, required by, and executed pursuant to the terms
hereof and all modifications, renewals, amendments and supplements of any of
the foregoing.
"Dollars" and "U.S.$" mean the lawful currency of the United States.
"Indebtedness" as applied to any Person means all liabilities,
obligations, and indebtedness of such Person, including, without limitation,
(i) all indebtedness for borrowed money of such Person or for the deferred
purchase price of property acquired by, or services rendered to, such Person;
(ii) all indebtedness of such Person created or arising under any
<PAGE> 13
7
conditional sale or other title retention agreement with respect to any
property acquired by such Person; (iii) any obligation under any Capital Lease
of such Person; (iv) all indebtedness for borrowed money or for the deferred
purchase price of property or services secured by any Lien upon or in any
property owned by such Person whether or not such Person has assumed or become
liable for the payment of such indebtedness for borrowed money; (v)
indebtedness of such Person arising in connection with surety or other similar
bonds; (vi) obligations of such Person in respect of banker's acceptances;
(vii) the undrawn maximum face amount of all outstanding letters of credit
issued for the account of such Person and, without duplication, the outstanding
amount of all drafts drawn thereunder; (viii) obligations of such Person in
respect of interest rate protection agreements, foreign currency exchange
agreements, or other interest or exchange rate hedging agreements; (ix) all
liabilities of such Person in respect of unfounded vested benefits under any
employee benefit plan; (x) all indebtedness of such Person under profit payment
agreements or in respect of agreements to redeem, repurchase, or exchange
securities or to pay any dividends; (xi) all obligations of such Person to
purchase debt (or any security therefor) of another, or to maintain net worth
or Working Capital or other balance sheet conditions; (xii) all liabilities of
such Person evidenced by debentures, bonds, and similar instruments; (xii) and
guaranties and similar arrangements by such Person of indebtedness described in
clauses (i) through (xi) and in clause (xiii) of this definition of any other
person other than endorsements in the ordinary course of business of negotiable
instruments for deposits or collection; and (xiv) the obligations arising under
non-cancelable operating leases, but limited to an amount equal at any time to
the total amount of payments made on such leases in the immediately previous
accounting month multiplied by 12 (twelve) and the product thereof then
multiplied by 5 (five).
"Financial Statements" means the balance sheet, income statement and such
other supplementary statements (including the notes thereto) as may be prepared
in conjunction therewith.
"United States" or "U.S." means the United States of America.
"Effective Date" means the date upon which the Conditions Precedent
set forth in section 3.1 of this Agreement shall have been satisfied.
"Interest Payment Date" means, with respect to each Advance, the Principal
Payment Date of such Advance.
"Principal Payment Date" means, with respect to each Advance, 150 (one
hundred and fifty) calendar days after the date such Advance is made.
"Guarantee" means the guarantee provided in section 8.2 of this Agreement.
<PAGE> 14
8
"Authorized Officer" means any officer of the Borrower or of the
Guarantors or of Group who is empowered to act on behalf of the Borrower or the
Guarantors or Group in accordance with their corresponding corporate documents
and applicable law provisions. A list of the names and titles and specimen
signatures of the Authorized Officers is attached hereto as Exhibit "A".
"GAAP" means those accounting principles applied on a consistent basis
generally accepted from time to time in the certified public accounting
profession of the United States (including those set forth in the Opinions of
the Accounting Principles Board of the American Institute of Certified Public
Accountants or statements of the Financial Accounting Standards Board which may
be applicable at the time in question); and "applied on a consistent basis"
means that the accounting principles observed in the period covered by any
report required under the terms of this Agreement are compatible in all
material respects with those applied in any preceding period and report.
"Guarantor" means each of Gise and AgroMark (collectively, the
"Guarantors").
"Pledgors" means Group, Rafael Vaquero Bazan and Jose Maria Martinez
Brohez.
"Collateral" means all property and rights which are subject to any
security interest granted under any Icmosa Loan Documents or any other security
agreement, deed of trust, mortgage, hypothecation, financing statement or any
other document, agreement or instrument delivered to the Bank by any Person to
secure payment of the Icmosa Obligations, and including, without limitation:
(i) accounts, including, without limitation, any right of each Obligated Party
to payment for goods sold or leased or for services rendered, which right is
not evidenced by an instrument or chattel paper, whether or not it has been
earned by performance; (ii) the Inventory, Inventory of Products in Process and
Inventory Processed Products, including, without limitation, all goods,
merchandise, and other personal property of each Obligated Party furnished
under any contract of service or intended for sale or lease, including all raw
materials, work in process, finished goods and materials and supplies of any
kind, nature, or description, that are used or consumed by such Obligated
Party's business, or are or might be used in connection with the manufacture,
packing, shipping, advertising, selling, or finishing of such goods,
merchandise, and other personal property, all goods consigned by or to such
Obligated Party, and all returned or repossessed goods now or at any time or
times hereafter in the possession or under the control of each Obligated Party;
(iii) Accounts Receivable, including, without limitation, all invoices, billing
statements and similar documents evidencing or relating to the Accounts
Receivable; (iv) the stock certificates representing 100% of the issued and
outstanding capital stock of each Obligated Party; (v) all of the
<PAGE> 15
9
books and records of each Obligated Party relating to the foregoing; (vi) all
proceeds, products, additions to, substitutions and replacements for, models,
conversions, and accessions of, any and all Collateral; and (vii) all of the
foregoing, whether now existing or hereafter acquired or arising, or in which
any Obligated Party now has or may have or hereafter acquire any rights.
"Group Guaranty" means the Guaranty in the form of Exhibit "M" hereto,
dated as of the date hereof, executed and delivered by Group, as it may be
amended from time to time.
"Cash Collateral" means, at any time, the Dollar amount held by the
Bank as security for the Icmosa Loans and all other obligations of Borrower
hereunder.
"Gise" means Grupo Industrial Santa Engracia, S.A. de C.V.
"Lien" means any mortgage, deed of trust, pledge, security interest,
hypothecation, assignment, lien (statutory or otherwise), conditional sale, or
other title retention arrangement, Capital Lease, writ of attachment, writ of
sequestration, or like or similar writ or any other encumbrance of any nature
whatsoever, whether voluntary or arising by agreement, under any statute or
law, or otherwise.
"Group" means The UniMark Group, Inc.
"Taxes" shall have the meaning given thereto in section 2.19 of this
Agreement.
"Default" means an Event of Default, without regard to whether
any requirement for notice or lapse of time, or both, or any other condition
has been satisfied.
"Inventory" means all the unprocessed material mentioned in section 2.02
of this Agreement, purchased by the Borrower in the usual course of business
with any Advance made pursuant to the terms and conditions of this Agreement.
"Eligible Inventory" means all Inventory Processed Products of the
Borrower stored at the Plants and/or Warehouses, with respect to which the Bank
has a senior, perfected security interest.
"Inventory of Products in Process" means the work in process
Inventory, produced by the Borrower within its ordinary course of business.
"Inventory Processed Products" means the Inventory processed by the Borrower
within its ordinary course of business, to be sold to any Account Debtor.
<PAGE> 16
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"Applicable Margin" means, with respect to any particular
Advance, other than the Initial Advance, the number set forth in the Applicable
Margin Certificate with respect to such Advance.
"Applicable Margin of the Initial Advance" means 2.25% (two and one
quarter percent) per annum.
"Mexico" means the United Mexican States.
"Icmosa Obligations" means, without limitation, the sum of the
Icmosa Loans and all other Indebtedness, loans, advances, including any future
advances, interest, indebtedness, notes, liabilities, and amounts, liquidated
or unliquidated, direct or indirect, matured or unmatured, joint or several,
fixed or contingent, owing by the Borrower or any other Obligated Party
pursuant to or arising under the terms of any of the Icmosa Loan Documents to
the Bank at any time of every kind, nature, and description, whether secured or
unsecured, including any extensions, modifications, renewals thereof, and
substitutions therefor, and includes any obligation of the Borrower due to
third persons, firms, or corporations which have been endorsed, assigned, or
otherwise acquired by the Bank, whether now existing or hereafter contracted,
all sums owed under the Icmosa Loan Documents, and all expenses required to be
paid by the Borrower or any other Obligated Party pursuant to the terms hereof
or any of the other Icmosa Loan Documents (including without limitation,
expenses incurred in any proceeding brought or threatened to enforce payment of
any of the obligations referred to herein, and to maintain, preserve, and
collect upon any Collateral and taxes, assessments, insurance premiums, rents,
repairs, other charges, reasonable attorney's fees and legal expenses, and any
other costs of protection, repossession, enforcement, or sale of any of any
Collateral).
"Lending Office" means the office of the Bank (or its Affiliate)
designated for such type of Advance from time to time in accordance with the
terms hereof.
"Promissory Note" means each of the promissory notes signed and
delivered by the Borrower to the Bank and guaranteed "por aval" by the
Guarantors and by Group evidencing the obligation of the Borrower to pay to the
Bank the principal amount of an Advance and the corresponding interest, in the
form attached hereto as Exhibit "C".
"Obligated Party" means each of the Borrower and the Guarantors.
"Current Liabilities" means those liabilities which would be reflected on a
balance sheet prepared in accordance with GAAP as "current liabilities".
<PAGE> 17
11
"Interest Period" means each period used for the calculation of
interest on the principal outstanding amount of each Advance, provided, that:
(i) the first Interest Period for each Advance shall commence from
and including the date on which the Advance is made and shall
end five months later;
(ii) the subsequent Interest Periods shall begin on the last day of
the previous Interest Period and shall end five months later;
(iii) any Interest Period in force during any Principal Payment Date
shall end on such Principal Payment Date; and
(iv) if an Interest Period would end on a day that is not a
Business Day, the Interest Period shall be extended to the
next succeeding Business Day unless, such next succeeding
Business Day would be in the next calendar month, in which
case such Interest Period shall end on the next preceding
Business Day.
"Consequential Loss" means any loss, cost, or expense incurred by the Bank
because the Borrower pays any Advance prior to the last day of its Interest
Period and includes, without limitation, the amount (if any) by which (i) the
interest which would have been payable on the prepaid amount had it not been
paid prior to the last day of the Interest Period exceeds; and (ii) the
interest earned to the extent the Bank is able to redeposit the prepaid amount
for the balance of such Interest Period and also includes all expenses and
penalties incurred by the Bank in so redepositing such sum.
"Person" means any individual, corporation, association, limited
liability corporation, trust, joint stock company, unincorporated association,
joint venture, or any other entity and any Governmental Authority.
"Plants and/or Warehouses" means any of the processing facilities and
warehouses owned or leased by the Borrower set forth with respect to the
Borrower in Exhibit "F" hereto, as it may be amended from time to time.
"Solvency" means as of any time of determination with respect to a Person
(i) the fair market value of its assets exceeds the amount of its liabilities
(including contingent liabilities), (ii) the present fair saleable value of its
assets exceeds the probable liability on existing debts as they become due,
(iii) such Person is then able and expects to be able to pay its debts
(including contingent liabilities) as they become due, and (iv) such Person has
and expects to have sufficient capital (having due regard for the prevailing
practice in the industry in which
<PAGE> 18
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it is engaged) to carry on its business as conducted or proposed to be
conducted.
"LIBOR Base Rate" means for the relevant Interest Period the rate of
interest mentioned at the display of the London Interbank Offered Rates of
major banks for Eurodollar Deposits designated as page "LIBO" on the Reuters
Monitor Money Rates Services (or such other page as may replace the LIBO page
for the purpose of displaying such London Interbank Offered Rates for
Eurodollar Deposits) at 11:00 a.m. London, England) time (two) Business Days
prior to the commencement of the relevant Interest Period for a period of time
equal or comparable to and commencing on such Interest Period and in an amount
equal or comparable to the Advance to be disbursed or outstanding during such
Interest Period.
"Default Rate" means a rate per annum equal to 3% (three percent)
per annum plus the LIBOR Base Rate plus (i), for the Initial Advance and for
any fee and other amounts specified in this Agreement due and not paid to the
Bank, the Applicable Margin of the Initial Advance or (ii), for any other
Advance, the Applicable Margin.
"UniMark" means UniMark Foods, Inc.
ARTICLE TWO
TERMS AND CONDITIONS OF THE ICMOSA LOANS
2.01 The Commitment. Subject to the terms and conditions of this
Agreement, the Bank agrees to open in favor of the Borrower a revolving credit
to be disbursed in one or more Advances, from time to time, up to but not
exceeding the amount of U.S.$7,500,000.00 Dollars (SEVEN MILLION FIVE HUNDRED
THOUSAND DOLLARS CURRENCY OF THE UNITED STATES OF AMERICA), in the
understanding that such amount does not include interest or any other amount
than the principal, which the Borrower is bound to pay to the Bank pursuant to
the terms of this Agreement.
Subject to the terms and conditions of this Agreement, the Borrower may
re-borrow amounts repaid or prepaid, in the understanding that, the aggregate
amount of the Advances outstanding at any time shall not exceed the amount
specified in the above mentioned paragraph. No Icmosa Loan or any part of any
Icmosa Loan shall be prepaid except at the times and in the manner expressly
provided herein.
2.02 Use of the Advances. The Borrower shall use all the
Advances made pursuant to this Agreement to finance, in the usual
<PAGE> 19
13
course of business, the purchase of the following products: (i) orange, white
and pink grapefruit for its processing and canned fruit line, (ii) mango,
grapefruit, pineapple, papaya, orange for its processing and chilled fruit
line, (iii) melon, mango, orange and grapefruit for its processing cryogenic
individual quick freeze line, (iv) avocado, tomato, parsley, onion and hot
pepper for its processing and refrigeration line and in general, all citrus and
tropical fruits, which would be processed within the above mentioned lines
(collectively, the "Inventory"). The Borrower shall furnish the Bank the
Inventory Certificate, as evidence for such use.
2.03 Advances. The Borrower may, from the Effective
Date and from time to time, request an Advance by delivering to the Bank an
Advance Notice, prepared substantially in the form of Exhibit "D" hereto.
Subject to the terms and conditions of this Agreement, the Bank will disburse
the Advances during any Business Day, provided that:
(a) the Initial Advance will be disbursed 4 (four) Business Days
after the date on which the Bank receives from the Borrower
the first Advance Notice, stating that all the Conditions
Precedent have been fulfilled;
(b) each of the subsequent Advances will be disbursed 4 (four)
Business Days after the date on which the Bank receives from
the Borrower an Advance Notice;
(c) the Bank has received a Promissory Note;
(d) the Bank has received an Applicable Margin Certificate;
(e) each Notice of Advance shall specify (i) the amount of the
Advance; (ii) the description of the Inventory to be purchased
by the corresponding Advance; (iii) the location of the
corresponding Plant and/or Warehouses where such Inventory
will be stored; (iv) the Borrower's disbursement instructions;
and (v) the Applicable Margin for the corresponding Advance;
(f) the total amount of the Advances, at any time shall not exceed
the lesser of the Commitment or Borrowing Base;
(g) each Advance shall be in a minimum amount of U.S. $100,000
Dollars (ONE HUNDRED THOUSAND DOLLARS CURRENCY OF THE UNITED
STATES OF AMERICA) or in integral multiples thereof.
The Advance Notices delivered to and received by the Bank will be irrevocable
and binding to the Borrower. The Borrower therefore, hereby agrees to indemnify
the Bank for any expenses or losses incurred by the Bank if for any cause not
attributable to the
<PAGE> 20
14
Bank any Advance requested in an Advance Notice is not made within the 4 (four)
days following the date of said Advance Notice.
2.04 Interest.
(a) The Borrower shall pay to the Bank on each Interest Payment Date
interest on the principal outstanding amount of the Initial Advance during each
Interest Period at an annual rate equal to the LIBOR Base Rate plus the
Applicable Margin to the Initial Advance and
(b) The Borrower shall pay to the Bank on each Interest Payment Date,
interest on the principal outstanding amount of each Advance other than the
Initial Advance, during each Interest Period at an annual rate equal to the
LIBOR Base Rate plus the Applicable Margin.
2.05 Default Interest. If any Advance under this Agreement
or any principal amount hereunder or under any Icmosa Loan Document is not paid
in full when due (whether at stated maturity, by acceleration, by mandatory
prepayment or otherwise), the Borrower shall pay to the Bank default interest
on the unpaid amount, during the period from and including the date immediately
following such due date to and including the date of payment of said amount in
full, at the applicable Default Rate.
2.06 Computation of Interest. Interest shall be calculated
on the exact number of calendar days elapsed on the basis of a 360 day year,
including the first day, but excluding the last. Interest on each Advance
shall accrue under this Agreement from and including the date of disbursement
of each Advance until such Advance is paid in full.
2.07 Repayment of Icmosa Loans. The Borrower shall
repay to the Bank the full principal amount of each Advance on each Principal
Payment Date or such earlier date on which the Icmosa Obligations have been
declared due and payable in accordance with the terms hereof.
2.08 Promissory Notes. The obligations of the Borrower to
pay to the Bank the principal amount of any Advance and the corresponding
interest shall be evidenced by Promissory Notes duly signed by an Authorized
Officer of the Borrower in favor of the Bank and guaranteed "por aval" by the
Guarantors and by Group, which shall be dated the date of each Advance, shall
be payable to the order of the Bank at the offices of the Bank specified in
signature page hereof and shall bear interest in accordance with the terms
thereof.
<PAGE> 21
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2.09 Place and Form of Payment.
(a) All payments to be made to the Bank hereunder shall be made at the
principal offices of the Bank at New York City, New York, United States, in
U.S. Dollars in immediately available funds not later than 11.00 a.m., New York
time, the day the payment is due, and any payment made after such time shall be
deemed made on the next Business Day.
(b) Any payments made to the Bank hereunder or in any Icmosa Loan Document
will be applied first against costs, losses, expenses and indemnities due
hereunder; then against fees due, if any; then against default interest due, if
any; then against interest due on the Icmosa Loan; and thereafter against the
principal amount of the Icmosa Loan.
(c) All payments to be made hereunder (whether of principal, interest,
fees, reimbursements, or otherwise) by the Borrower under this Agreement shall
be made without adjustment, set-off or counterclaim and shall be made free and
clear of any present or future income, stamp and other taxes, levies, imposts,
deductions, charges, compulsory loans and withholdings whatsoever imposed,
assessed, levied or collected by any country of incorporation of the Borrower,
or through which the Borrower is acting in connection herewith, or any
political subdivision or Governmental Authority thereof or therein, on or in
respect of this Agreement or the registration, notarization or other
formalization thereof or the enforcement thereof. All of the aforementioned
charges and taxes shall be for the account of and paid in full by the Borrower
when due.
(d) Any prepayment made as provided hereunder shall be accompanied by the
payment of the interest accrued on the principal amount so prepaid.
2.10 Payments due on a day which is not a Business Day. If any
payment which shall be made in accordance to this Agreement or to a Promissory
Note is due on a day which is not a Business Day, such payment shall be made on
the next succeeding Business Day, and the corresponding extention shall be
considered for the calculation of interest, unless the result of such extension
would be to extend such payment into another calendar month in which event such
payment shall be made on the immediately preceding Business Day.
2.11 Prepayment of Icmosa Loans. The Borrower may, after
having given written notice of its intention to make a prepayment to the Bank 5
(five) Business Days in advance of such prepayment, without premium or penalty,
prepay the outstanding principal amount of each Advance in whole, on any
Interest Payment Date
<PAGE> 22
16
with accrued interest up to the date of such prepayment on the principal amount
prepaid. Any notice of prepayment shall state the proposed date (which shall
be a Business Day) and aggregate principal amount of the prepayment. Once the
Borrower has notified the Bank of its intention to make a prepayment, if the
Borrower does not make the prepayment mentioned in such notice, then the
Borrower shall be responsible for paying all expenses and costs incurred by the
Bank by virtue of its failure to make such prepayment. Such costs and expenses
of the Bank shall be conclusive and binding on the Borrower, and in the absence
of manifest error, and shall immediately be paid by the Borrower. The Borrower
shall pay to the Bank the applicable fees then in effect for any prepayment.
On the date of this Agreement the applicable fee is $250 Dollars (TWO HUNDRED
AND FIFTY DOLLARS, CURRENCY OF THE UNITED SATES OF AMERICA).
2.12 Amounts Exceeding Limits. If the sum of the Icmosa
Loans at any time exceeds the lesser of the Borrowing Base or the Commitment,
the Borrower shall within 5 (five) Business Days of any such determination (i)
pay in cash to the Bank at its office in New York City, New York, United
States, the amount of such excess, such payment to be applied to the Icmosa
Loan, and the balance, if any to be held by the Bank as Cash Collateral; or
(ii) deliver to the Bank, at its office in New York City, New York, United
States additional collateral, which shall be in form and content and value
satisfactory to the Bank to equal in aggregate value the amount of such excess,
in the Bank's sole discretion; or (iii) deliver to Bank, at its office in New
York City, New York, United States a combination of cash and such additional
collateral which in aggregate value shall equal the amount of such excess, in
the Bank's sole opinion.
2.13 Termination of the right to make Advances. Reduction in the
Commitment. In terms of article 294 of the "Ley General de Titulos y
Operaciones de Credito", the Borrower and the Bank agree that the Bank has at
all times the right (i) to terminate or to limit the right to make Advances, or
(ii) to reduce the amount of the Commitment, or (iii) both (i) and (ii), or
(iv) to terminate this Agreement, provided that the Bank provides a written
notice addressed to the Borrower in accordance with section 9.11 of this
Agreement. Immediately upon the receipt of such notice, the right to make
Advances or the amount of the Commitment or both shall be abridged or
extinguished, as applicable.
2.14 Calculation and Payment of Fees. The fees required to be paid
shall be payable in addition to, and not in lieu of, principal, interest,
expense reimbursements, indemnification and other obligations. Fees shall be
payable in accordance with section 2.09 of this Agreement. All fees shall be
fully earned and non-refundable when paid. All fees specified or referred to
<PAGE> 23
17
in this Agreement due to the Bank shall bear interest, if not paid when due, at
the Default Rate.
2.15 Payment of Funding Losses.
(a) The Borrower shall indemnify the Bank against any loss or
expense incurred by it as a result of any failure by the Borrower to fulfill,
on or before the date specified for any Advance, the conditions thereof,
including, without limitation, any loss (including loss of anticipated profits)
or expense incurred by reason of the liquidation or re-employment of deposits
or other funds when such Advance is not made on such date as a result of such
failure. A certificate in reasonable detail as to the amount of any such loss
or expense submitted to the Borrower shall be conclusive as to the amount
thereof except in cases of manifest error.
(b) If for any reason, including without limitation because any
prepayment is required by reason of a reduction in the Commitment or because
the Icmosa Loans exceed at any time the lesser of the Borrowing Base or the
Commitment, the Bank receives all or part of its portion of the principal
amount of an Advance prior to the last day of the Interest Period applicable
thereto, the Borrower shall pay the Bank the amount (if any) of the
Consequential Loss occasioned by such payment. A certificate of the Bank
submitted to the Borrower shall be conclusive absent manifest error.
2.16 Increased Costs.
(a) If after the date hereof (i) the adoption or implementation,
change, or phasing in of any law or regulation or in the interpretation thereof
by any domestic or foreign Governmental Authority charged with the
administration thereof or (ii) compliance with any directive, guideline or
request from any central bank or domestic or foreign Governmental Authority
(whether or not having the force of law) promulgated or made after the date
hereof affects or would affect the amount of capital required or expected to be
maintained by the Bank or any corporation directly or indirectly controlling
the Bank has or would have the effect of reducing the rate of return on such
capital or the asset value of any Advance made hereunder to a level below that
which the Bank or such controlling corporation could have achieved but for such
adoption, implementation, change, phasing in, or compliance (after taking into
account the Bank's or such corporation's policies regarding capital adequacy)
by an amount deemed by the Bank to be material to the Bank or such corporation,
then, within 10 (ten) calendar days after written demand by the Bank
(accompanied by a statement of the type referred to below), the Borrower shall
pay to the Bank such additional amount or amounts as shall be sufficient to
compensate the Bank or such controlling corporation for any such reduction.
<PAGE> 24
18
(b) If any law, regulation, treaty, or directive hereafter
enacted, promulgated, approved, or issued or any change in any presently
existing law, regulation, treaty, or directive therein or in the interpretation
or application thereof by any Governmental Authority charged with the
administration thereof (whether or not having the force of law) or compliance
by the Bank or any corporation directly or indirectly owning or controlling the
Bank (in each case, the "Affected Person") with any request or directive from
any central bank or other Governmental Authority, agency, or instrumentality
(i) subjects such Affected Person to any tax, duty, or other charge of any kind
whatsoever with respect to its Commitment, any Advance, or its obligations
under this Agreement to make Advances, or any amounts payable to it hereunder
(and any additional income or franchise taxes resulting therefrom), or changes
the basis of taxation of payments to such Affected Person of principal,
interest, or any other amount payable hereunder in respect of the Icmosa Loan
(except for imposition of, or change in the rate of, any tax (A) on the overall
net income of such Affected Person or direct substitute for such tax, or (B)
which would not have been imposed if such Affected Person complied with any
certification, information, documentation or other reporting requirement); or
(ii) imposes, modifies, or makes applicable any reserve, special deposit,
compulsory loan, assessment, increased cost, or similar requirement against
assets held by, or deposits of, or advances or loans, or other credit extended
by, or any other acquisition of funds by, any office of such Affected Person in
respect of the Icmosa Loan which is not otherwise expressly included in the
determination of the applicable rate or rates of interest hereunder, and the
result of any of the foregoing is to increase the cost of making, renewing, or
maintaining the Icmosa Loan or the commitment to make Advances or to reduce any
amount receivable by the Lender hereunder in respect of any of the foregoing
then, in any such case, the Borrower shall promptly pay the Bank upon demand
any additional amounts necessary to compensate the Bank for such additional
cost (including any penalties, interest, and out-of-pocket expenses paid to
third parties, but excluding any late payment penalties which resulted solely
from the Bank's inaction in seeking indemnification hereunder) or reduction in
such amount receivable.
(c) The Bank will, if possible, designate a different Lending
Office if such will avoid the need for, or reduce the amount of, any
compensation hereunder and is not otherwise disadvantageous to the Bank. This
section shall apply and the Bank is entitled to payment hereunder,
notwithstanding any possible invalidity or inapplicability of any event or
provision which may require payment hereunder. A statement setting forth the
calculation of any additional amounts payable submitted by the Bank to the
Borrower shall be conclusive absent manifest error. No delay by the Bank in
demanding the payment of any additional amounts pursuant to this section shall
constitute a waiver of its right to demand payment of such amounts at any
<PAGE> 25
19
subsequent time. In determining the additional amount payable pursuant to this
section, the Bank shall take into account any transitional adjustment or
phase-in provisions of such reserve requirements which would reduce the reserve
requirement otherwise applicable; provided, however, the Bank, in its sole
discretion, may determine the allocation of reserve requirements. Each such
determination made by the Bank, and each notification to the Borrower under
this section, shall be presumptive as to the matters therein set forth in the
absence of manifest error in calculation. The Bank agrees to provide on
request by the Borrower such certificates as are reasonably required, and take
such other actions as are reasonably necessary to claim such exemptions as the
Bank may be entitled to claim in respect of all or a portion of any sums which
are otherwise required to be paid or deducted or withheld pursuant to this
section. This section shall not be construed, nor shall it operate, to require
the Borrower to pay any sums not permitted or in excess of the limits imposed
by applicable law.
2.17 Change in Circumstances. If the Bank determines
(which determination shall be made in good faith and shall be conclusive and
binding upon the Borrower) that (i) adequate and reasonable means do not or
will not exist for ascertaining the interest rate applicable to any Advance,
(ii) Dollar deposits in the relevant amounts and for the relevant Interest
Period are not available to the Bank in the London interbank market for Dollar
deposits, or (iii) the LIBOR Base Rate does not accurately reflect the cost of
funds to the Bank, then the Bank shall forthwith give notice of such
determination to the Borrower, whereupon, until the Bank notifies the Borrower
that the circumstances giving rise to such suspension no longer exist, (x) the
obligations of the Bank to make Advances shall be suspended and (y) Borrower
shall repay in full, without premium or penalty, the then outstanding principal
amount of the Icmosa Loan, together with accrued interest thereon, on the last
day of the then current Interest Period.
2.18 Lending Office. The Bank may without notice to or consent
from the Borrower (a) designate its principal office or a foreign branch, an
Affiliate of the Bank as its office (and the office to whose accounts payments
are to be credited) for any Advance and (b) change its offices from time to
time by notice to the Borrower. In such event, the Bank shall continue to hold
the Promissory Notes evidencing each Advance for the benefit and account of
such foreign branch, or Affiliate. The Bank is entitled to fund all or any
portion of the Icmosa Loan in any manner which it may determine in its sole
discretion, but all calculations and transactions hereunder shall be conducted
as though the Bank has actually funded each Advance at its office regardless of
the actual means of funding.
<PAGE> 26
20
2.19 Taxes. All payments to be made by the Borrower hereunder or
under the Promissory Notes, shall be free and clear of and without any
deduction for any and all present or future tax, levy, impost, duty, deduction,
charge or withholding whatsoever together with interest, penalties or charges
derived therein (the "Taxes") imposed, assessed, levied, charged or collected
by the country of incorporation of the Borrower, or through which the Borrower
is acting in connection herewith, or any political subdivision or taxing
authority thereof or therein on or in respect of this Agreement, the Promissory
Note or the Advances or any payment in relation to the same, all of which shall
be for the account of and paid in full by the Borrower when due.
The Borrower will indemnify the Bank against, and reimburse the Bank upon
demand for any Taxes and any loss, liability, claim or expense including
interest, penalties and legal fees which the Bank may incur at any time arising
out of or in connection with any failure of the Borrower to make any payments
of Taxes when due. If the Borrower is required by applicable law, decree or
regulation to deduct or withhold Taxes from any amounts payable hereunder, the
Borrower will pay such additional amounts as may be required, after the
deduction or withholding of Taxes, to enable the Bank to receive from the
Borrower an amount equal to the amount stated to be payable hereunder. The
Borrower will furnish the Bank with original tax receipts in respect of any
withholding of the Taxes required hereunder within 30 (thirty) days after each
date of payment of interest hereunder and will promptly furnish the Bank with
such other information and documents as the Bank may require to establish to
its satisfaction that full and timely payment has been made of all Taxes
required to be paid under this section. The agreements of the Borrower under
this section shall survive the termination of this Agreement and the payment of
all amounts otherwise due hereunder.
In the event that any Taxes are imposed on or any payments must be made by the
Bank, then the amounts payable to the Bank under this Agreement and the
Promissory Notes issued hereunder shall be increased to such amounts which,
after provision for such Taxes, shall be necessary to yield and remit to the
Bank payments of the amounts that would have been required to be paid hereunder
if no such Taxes had been paid.
ARTICLE THREE
CONDITIONS PRECEDENT
3.1 Initial Conditions Precedent. The obligation of the Bank
to make the Initial Advance is subject to the condition that there shall have
been delivered to the Bank the following
<PAGE> 27
21
documents, certificates, evidence, opinions, and other instruments in such
number and counterparts as the Bank may require, each of which shall be in form
and substance satisfactory to the Bank in its sole discretion:
(i) A Promissory Note, duly executed by the Borrower and
guaranteed "por aval" by the Guarantors and by Group, evidencing the
obligation of the Borrower to pay to the Bank the principal amount of
the Initial Advance and the corresponding interests;
(ii) the Pledge Agreement, duly executed by the Pledgors;
(iii) the Guaranty, duly executed by Group;
(iv) an Advance Notice, duly executed by the Borrower;
(v) an Inventory Certificate, duly executed by the
Borrower;
(vi) a Borrowing Base Certificate, duly executed by the
Borrower;
(vii) certified copies of the "Estatutos" of each Obligated
Party, as amended, and certified copies of the documents evidencing
the full power and authority of the Authorized Officers of the
Borrower and each Guarantor to act on behalf of the Borrower and on
behalf of each of the Guarantors in the execution of this Agreement,
the Promissory Notes and other Icmosa Loan Documents;
(viii) copies of the resolutions of each Obligated Party
approving the execution, and performance of each Icmosa Loan Document
to which it is a party and authorizing all transactions contemplated in
or in connection with this Agreement and the other Icmosa Loan
Documents duly adopted by its Board of Directors, accompanied by a
certificate signed by the Secretary of the Board of Directors of the
approving entity certifying that such copies are true and correct
copies of resolutions duly adopted at a meeting of the Board of
Directors and that such resolutions have not been amended, modified, or
revoked in any respect and are in full force and effect on the date
hereof;
(ix) copies of the Financial Statements referred to in
section 4.08 of this Agreement;
(x) original of the certificate issued by the Public
Registry of Commerce of the domicile of the Borrower evidencing that
the corresponding liens created in favor of the Bank, pursuant to this
Agreement have been duly perfected and all other documentation
relating to the
<PAGE> 28
22
Collateral is in form and substance satisfactory to the Bank;
(xi) a certificate signed by the Secretary of the Board of
Directors of each Obligated Party certifying that the pledges created
under the Pledge Agreement have been duly perfected and registered in
the stock registry books of the Borrower and each of the Guarantors;
(xii) such other documents, opinions, certifications,
consents, waivers, agreements, and evidence as the Bank may reasonably
request.
3.2 Additional Conditions. The Bank will not be obligated to
make any Advance (including the Initial Advance) until the following additional
conditions precedent have been satisfied as of the date of making the Advance
and after giving effect thereto (a) no Default or Event of Default has occurred
and is continuing; (b) the representations and warranties contained herein are
true and correct in all material respects as of such date, as if then made
(except to the extent that such representations and warranties relate solely to
an earlier date); (c) the Borrower has paid all expenses then due and payable;
(d) no change in the condition (financial or otherwise), business, assets,
operations, or affairs of any of the Borrower or the Guarantors or Group taken
as a whole has occurred which has had or is likely to have a material adverse
effect; (e) the Bank has received an Advance Notice in accordance with the
terms hereof signed by a duly Authorized Officer of the Borrower which
certificate shall set forth information as the Bank may reasonably request; (f)
the Bank has received a Promissory Note, duly executed by the Borrower and
guaranteed "por aval" by the Guarantors and by Group, evidencing the obligation
of the Borrower to pay to the Bank the principal amount of the corresponding
Advance and the corresponding interests; (g) the Bank has received a Borrowing
Base Certificate signed by a duly Authorized Officer of the Borrower; (h) the
Bank has received an Inventory Certificate, signed by an Authorized Officer of
the Borrower; (i) the Bank and the Borrower have agreed on the Applicable
Margin for the Advance requested in the corresponding Advance Notice; (j) the
Bank and the Borrower have executed the Applicable Margin Certificate; and (k)
all other conditions to obtaining the Advance requested have been satisfied.
The submission by the Borrower of an Advance Notice shall constitute a
representation and warranty by the Borrower as of the disbursement date of an
Advance that all of the foregoing conditions have been satisfied.
<PAGE> 29
23
ARTICLE FOUR
REPRESENTATIONS AND WARRANTIES
To induce the Bank to enter into this Agreement and to perform its agreements
hereunder, each of the Obligated Parties, jointly and severally, represents and
warrants that each of the following statements is correct:
4.01 Organization and Authority. Each Obligated Party is duly
organized, validly existing, and in good standing under the laws of Mexico.
All of the outstanding capital stock of each Obligated Party is duly
authorized, validly issued, fully paid, and non-assessable. Each Obligated
Party has all requisite power and authority to conduct its business, to own,
lease, operate, or maintain its properties. Each Obligated Party has all
requisite power and authority to execute and deliver and perform all of its
obligations under the Icmosa Loan Documents.
4.02 Validity, Authorization, and No Conflict. The execution,
delivery, and performance by each Obligated Party of the Icmosa Loan Documents
to which it is a party and the consummation of the transactions contemplated in
connection therewith (a) have been duly authorized by such Obligated Party, (b)
do not violate any provision of the "Estatutos" of such Obligated Party, and
(c) are not prohibited by and do not violate nor constitute a default under any
law, or any presently existing requirement or restriction imposed by any
judgment, order, writ, Governmental Authority, or any agreement, instrument, or
indenture by which any Obligated Party is bound, or result in the creation of
any Lien upon any of the assets of any Obligated Party. The Icmosa Loan
Documents have been duly executed and delivered by each Obligated Party
thereto, and such Icmosa Loan Documents are legal, valid, and binding
obligations of such Obligated Party enforceable in accordance with their
respective terms, except as the enforcement thereof may be limited by
applicable bankruptcy or debtor relief laws affecting the rights of creditors
generally.
4.03 No Proceedings.
(a) All actions, suits, claims, or proceedings pending or
threatened against any Obligated Party or its properties or assets, before any
Governmental Authority or private arbitrator are listed on Exhibit "E" hereto.
(b) There are no actions, suits, claims, or proceedings pending or
threatened against any Obligated Party or its properties or assets before any
Governmental Authority, or private arbitrator which has, or if adversely
determined would have, a material adverse effect on any Obligated Party or
which
<PAGE> 30
24
challenge the validity of any of the Icmosa Loan Documents or any of the
transactions contemplated therein or thereby.
4.04 No Approvals. Neither the making, execution,
delivery or performance of any of the Icmosa Loan Documents nor the
consummation of the transactions contemplated in connection therewith requires
the consent or approval of any Person or if any such approval is required, such
approval has been obtained.
4.05 No Default. No Default has occurred and is continuing or
will result from the making of any requested Advance. No Obligated Party is in
default under, and no event has occurred which with the lapse of time or giving
of notice, or both, could result in a default under, any indenture, agreement,
lease, or other instrument or in a violation of any statute, regulation,
judgment, injunction, decree, determination, or award the result of which would
be a material adverse effect.
4.06 Adverse Circumstances. Neither the business nor any
property of any Obligated Party is presently affected by any fire, explosion,
accident, strike, lockout, or other dispute, embargo, act of god, act of public
enemy, or similar event or circumstances nor has any other event or
circumstance relating to its business or affairs occurred which has had or may
reasonably be expected to have a material adverse effect.
4.07 Tax Returns and Payments All foreign, federal, state,
and other tax returns of each Obligated Party required to be filed have been
filed, and all foreign federal, state, and other taxes, assessments, fees, and
other governmental charges (domestic and foreign) imposed on each Obligated
Party which are due and payable have been paid except for any such tax,
assessment, fee, or charge which is being contested in good faith and for which
adequate reserves satisfactory to the Bank have been established on the books
of such Obligated Party. There is no material deficiency or assessment which
may be asserted in connection with any of said taxes, assessments, fees, or
charges.
4.08 Financial Statements. Each Obligated Party and Group has
delivered to the Bank its audited consolidated Financial Statements for the
fiscal year ended December 31, 1995, and the unaudited consolidated Financial
Statements for the fiscal year ended December 31, 1996; such Financial
Statements are complete and correct in all material respects (subject, in the
case of interim statements, to changes resulting from audits and year end
adjustments) and fairly present, in accordance with GAAP, the consolidated
financial condition of the Obligated Party and Group as of the dates thereof
and for the periods then ended. The
<PAGE> 31
25
statements of income and cash flow fairly present the results of the
consolidated operations of the Obligated Party and Group for the periods
indicated. Since said dates there has been no material adverse change in such
financial condition, and except as reflected or referred to in any said
Financial Statements, there are no contingent or disputed liabilities or
unrealized or anticipated losses which in the aggregate are material.
4.09 Accuracy of Disclosures. All writings prepared by or
on behalf of any Obligated Party furnished to the Bank for the benefit of, for
the purposes or, or in connection with, the Icmosa Loan Documents or any
transaction contemplated hereby or thereby, were true and accurate in all
material respects on the date such writings were furnished and do not contain
any untrue statement of any material fact or omit to state a material fact
necessary in order to make the statements contained therein not misleading, and
all other such writings hereafter furnished to the Bank for the benefit of, by,
or on behalf of any Obligated Party shall be true and accurate in all material
respects on the date such writings are so furnished. There is not to the
knowledge of any Obligated Party any fact which materially and adversely
affects or in the future may (so far as any Obligated Party can foresee)
materially and adversely affect the operations, business, assets, prospects, or
condition of such Obligated Party or any Affiliate of an Oligated Party or
Group taken as a whole which has not been specified herein or otherwise in
writing furnished to the Bank.
4.10 Property. Each Obligated Party has good and
marketable title to its properties and the properties of the Obligated Parties
are free and clear of all Liens. Each Lien securing any part of the Icmosa
Loans and obligations under the Icmosa Loan Documents (whether granted by any
Obligated Party or by any other Person) is first and prior to any other Lien in
such property. All property owned by or leased to any Obligated Party is in
adequate operating condition and repair and free from any known defects which
substantially interfere with the use thereof. Each Obligated Party has
obtained and maintains in full force and effect all rights, franchises,
easements, patents, licenses, permits, governmental approvals, and consents
necessary to the conduct of its business and affairs except where the failure
to do so does not and is not reasonably expected to have a material adverse
effect.
4.11 Existing Indebtedness. Except as listed on Exhibit "E"
hereto, no Obligated Party is liable for, owes or is obligated for any
indebtedness (direct, indirect or contingent).
<PAGE> 32
26
4.12 Real Estate. Except as listed on Exhibit "F" hereto, no
Obligated Party owns, leases or has any interest in (directly or indirectly)
any real estate or leasehold.
4.13 Inventory Location. No Obligated Party keeps, or
maintains its Inventory and Inventory Process Products in any location (owned,
leased or rented, or provided gratuitously or as a part of a supply agreement
or arrangement) other than such locations listed on Exhibit "F" hereto.
4.14 Insurance. The Obligated Party will maintain with
responsible insurance companies, insurance policies in such amounts and against
such risks as is customarily carried by owners of similar businesses and
property.
4.15 Environmental Requirements. The Obligated Party would
take all necessary actions to obtain and maintain all authorizations, approvals
and consents of and/or registrations with all Governmental Authority in Mexico
or any political subdivision thereof as shall be necessary or appropriate under
the laws of Mexico in connection with all environmental requirements related to
its operations.
4.16 Labor Matters. There is no collective bargaining
agreement covering any of the employees of any Obligated Party except as set
forth on Exhibit "G" hereto.
4.17 Solvency. After giving effect to the
transactions contemplated in the Icmosa Loan Documents and the Advances
requested hereunder are made and the disbursement of the proceeds of such
Advances pursuant to the Borrower's instructions, and after giving effect to
the existing transactions directly between the Bank and UniMark which
transactions are separate and apart from the transactions contemplated in the
Icmosa Loan Documents, and possible future direct indebtedness between the Bank
and UniMark, or any affiliate of UniMark and considering that Group and all of
its Affiliates operate as a single consolidated entity and enterprise and as
such have capital sufficient to carry on their businesses and transactions as
they now exist and are planned in the future, each Obligated Party and Group
and UniMark taken as a whole is Solvent. Further, the Obligated Parties have
previously represented to the Bank, and the Obligated Parties do hereby jointly
and severally, represent and warrant to the Bank that Group and all of its
Affiliates operate as a consolidated enterprise and acknowledge and agree that
the Bank did rely upon the consolidated assets of Group and all of its
Affiliates taken as a whole in determining whether to enter into this
Agreement.
<PAGE> 33
27
4.18 Trademarks, Copyrights, Patents and Logos. Exhibit "F"
hereto contains a list of (i) all trademarks, service marks, tradenames, trade
dress and logos, used by the Obligated Parties, specifically identifying each
registration, if any, of each trademark, service mark, tradename, trade dress
and logo by registration number, and date and the entity issuing the
registration; (ii) all copyrights, whether registered or unregistered, owned,
licensed, or leased by an Obligated Party, including, without limitation, any
copyrights registered in Mexico or in the United States, identified by
registration number, and all applications for registration thereof; and (iii)
all foreign and Mexican letters patent and applications for letters patent,
identified by patent or application number, owned, licensed to or from or
otherwise acquired by an Obligated Party.
ARTICLE FIVE
AFFIRMATIVE COVENANTS
So long as any Commitment is outstanding, any part of the Icmosa Obligations
remains unpaid, or any contingent part of the Icmosa Obligations continues to
exist, or until the Bank consents to the contrary and the Borrower receives
prior written approval to the contrary from the Bank, each Obligated Party, as
applicable, will comply, or cause compliance, with each of the following
covenants:
5.01 Payment of the Icmosa Obligations. The Borrower will pay (i)
any principal portion of the Icmosa Obligations when due whether at maturity or
otherwise or (ii) any interest portion of the Icmosa Obligations or (iii) any
and all costs and expenses incurred by the Bank in connection with the
negotiation and preparation of the Icmosa Loan Documents.
5.02 Agreements. Each Obligated Party will comply with and
duly and punctually perform and observe all agreements, covenants, and
obligations contained in the Icmosa Loan Documents and any other agreement
between it and the Bank.
5.03 Use of the Advances. The proceeds of each Advance will be
used pursuant to the provisions of section 2.02 of this Agreement.
5.04 Books and Records; Inspection. Each Obligated Party will
maintain in a secure place on their premises, complete proper and accurate
books, records, ledgers, correspondence, and
<PAGE> 34
28
other papers relating to its business and affairs. The Bank will at all
reasonable times have the right to examine, inspect, audit, verify, and copy
such items, and to remove copies thereof and to discuss any of same with
appropriate officers, accountants, and auditors or such Obligated Party. The
Bank may at reasonable times inspect any property of any Obligated Party
(including the taking of physical samples therefrom).
5.05 Notice of Default. Within 24 (twenty four) hours of the
discovery by any Obligated Party of the occurrence of a Default or Event of
Default hereunder or under any of the other Icmosa Loan Documents or an event
which could reasonably be expected to result in a Default or Event of Default
hereunder or under any other Icmosa Loan Document, the Borrower will notify the
Bank and will deliver a certificate signed by the chief executive officer or
the chief financial officer of the Borrower concerning the nature and period of
existence thereof and the steps, if any, being taken to cure such Default or
Event of Default.
5.06 Maintenance of Existence, Approvals, and Licenses. Each
Obligated Party will preserve and maintain its existence, rights, privileges,
and franchises in its jurisdiction in which, under then applicable law, the
nature of its business or the ownership of its properties requires such
qualifications and the failure so to qualify would have a material adverse
effect and conduct its business in an orderly, efficient, prudent, and regular
manner, obtain and maintain in full force all approvals, patents, licenses
(governmental and private), permits, and authorizations necessary to conduct
its business and comply with its obligations under the Icmosa Loan Documents.
5.07 Compliance with Laws, Material Agreements, and Licenses.
Each Obligated Party will comply with all foreign and domestic laws, rules,
regulations, ordinances, orders, judgments, and decrees applicable to it or any
of its property, a breach of which (when considered alone or when aggregated
with the effect of other breaches) could have a material adverse effect, will
comply in all respects with all material agreements, indentures, mortgages,
leases, and other documents to which it is a party or by which it or any of its
property is bound and will keep in full force and effect all material licenses,
permits, and franchises necessary or useful for the conduct of its business.
5.08 Maintenance of Assets and Insurance. Each Obligated
Party will keep all assets which are useful and necessary in the business in
good working order and condition, make all necessary replacements and maintain,
or cause to be maintained, such insurance as is customarily maintained by other
businesses of comparable type and size with such financially sound and
<PAGE> 35
29
reputable insurers, in such amounts and covering such risks as shall be
satisfactory and acceptable to the Bank. Each insurance policy covering the
Inventory and any other Collateral shall name the Bank for the benefit of the
Bank as an insured or loss payee as its interest may appear and shall provide
that no act, whether willful or negligent, or default by such Obligated Party
shall affect the right of the Bank to recover on the policy in case of loss or
damage. Insurance policies maintained with respect to any Inventory and other
Collateral pursuant to the terms hereof shall be delivered to the Bank and
shall prohibit cancellation thereof without 30 (thirty) calendar days prior
written notice to the Bank. All renewal and substitute policies of such
insurance shall be delivered to the Bank at least 15 (fifteen) calendar days
before termination of any existing policies. If requested by the Bank, each
Obligated Party will deliver a report in form and substance satisfactory to the
Bank describing all material insurance then being maintained.
5.09 Financial Statements, Borrowing Base Certificate and Other
Information.
(a) Each Obligated Party will maintain a standard, modern system
of accounting established and administered in accordance with sound business
practices to permit preparation of consolidated and consolidating financial
statements in conformity with GAAP, and each of the Financial Statements
described below shall be prepared from such system and records. The Borrower
and Group will deliver or cause to be delivered to the Bank each of the
following:
(i) as soon as practicable, and in any event within 45
(forty-five) days after the end of each of the first 3 (three) fiscal
quarters in each fiscal year, the unaudited consolidated Financial
Statements of the Group and each Affiliate and consolidating balance
sheet and income statement of Group and each Affiliate as at the end
of such period and for the period from the beginning of the then
current fiscal year to the end of such fiscal quarter, and a
comparison of the statement of year-to-date income and cash flow to
the annual financial budget or financial projection and to the
corresponding period of the preceding fiscal year, all in reasonable
detail and certified by the chief financial officer of Group as fairly
presenting the consolidated financial position of Group and each
Affiliate as at the dates indicated and the results of their
consolidated operations and cash flow for the periods indicated in
accordance with GAAP, subject to normal year end adjustments;
(ii) at the same time as each Financial Statement
described in paragraphs (i) and (iii) of this section is delivered, a
certificate signed by the chief financial
<PAGE> 36
30
officer of Borrower and Group stating that a review of the
consolidated activities of Group and each Affiliate for such period
has been made under the supervision of such officer and that the
Borrower and each other Obligated Party has fulfilled every obligation
herein and is not in Default hereunder or, if the Borrower or any
other Obligated Party is in Default, a description of the nature,
duration, and status of such Default; and
(iii) as soon as practicable, and in any event within 120 (one
hundred and twenty) days after the end of each fiscal year, audited
consolidated Financial Statements of Group and each Affiliate and
unaudited annual consolidating balance sheet and income statement of
Group and each Affiliate, each as of the close of such fiscal year and
setting forth in comparative form the figures for the preceding fiscal
year, all in reasonable detail and with the audited consolidated
Financial Statements being reported on by independent certified public
accountants acceptable to the Bank, which report shall be unqualified
and shall state that such Financial Statements fairly present the
consolidated financial position of Group and each Affiliate as at the
dates indicated and the results of their consolidated operations and
cash flow for the periods indicated in conformity with GAAP applied on
a basis consistent with prior years (except for changes with which
such independent certified public accountants shall concur and which
shall have been disclosed in the notes to the Financial Statements)
and that the examination by such accountants in connection with such
Financial Statements has been made in accordance with generally
accepting auditing standards, accompanied by a copy of the management
letter or any similar report delivered to the Group or any other
Obligated Party or to any officer or employee thereof by such
accountants in connection with such Financial Statements.
(b) The Borrower will deliver or cause to be delivered to the Bank
as soon as available and in any event within 15 (fifteen) days after the last
day of each accounting month in each fiscal year, a Borrowing Base Certificate
executed by the chief financial officer of Borrower including information as at
the end of such month.
(c) The Borrower will deliver or cause to be delivered to the Bank
a copy of each report or form, including, without limitation, the annual
report, any prospectus, and any Form 10-K, filed with the Securities and
Exchange Commission and any report or communication sent by Group to its
stockholders as soon as available and in any event within 30 (thirty) days of
filing such item or, if not filed, of transmitting it to its shareholders.
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5.10 Payment of Debts. Each Obligated Party will pay its
indebtedness and obligations as the same become due in accordance with the
terms of the instruments or documents evidencing the same and will pay all
trade bills when due in accordance with the customary practice in the trade and
in any event so that the credit standing of such Obligated Party will not be
materially and adversely affected.
5.11 Payment of Taxes and Liabilities. Each Obligated
Party will pay prior to the time same become past due all taxes, assessments,
and other liabilities (including claims of laborers, suppliers, and
materialmen) imposed or which may give rise to a Lien upon it or its
franchises, income, profits, properties, or assets, except and so long as
contested in good faith and provided adequate reserves satisfactory to the Bank
have been established, and no Lien has attached to any property of an Obligated
Party.
5.12 Claims and Actions. If any Obligated Party
becomes the subject of or a party to any suit, action, investigation, or
proceeding (governmental or private) in which a claim is asserted against it in
excess of $10,000 (TEN THOUSAND DOLLARS CURRENCY OF THE UNITED STATES OF
AMERICA), the Borrower will within 3 (three) Business Days thereafter notify
the Bank of such suit, action, or proceeding and the particulars thereof and
upon request of the Bank, from time to time, report to the Bank with respect to
the status and particulars.
5.13 Maintenance of Chief Executive Office. The Borrower will
maintain its chief executive offices and books and records at Carretera a
General Teran Km. 1, 67500 Montemorelos, Nuevo Leon, Mexico.
5.14 Other Notices. Each Obligated Party will promptly
notify the Bank in writing of (a) any material adverse change in its financial
condition, business, or affairs (b) any failure by it or UniMark to comply with
the material terms of any material agreement, contract, or other instrument to
which it or Group or UniMark is a party or by which any of its properties or
those of UniMark are bound, or any acceleration of the maturity of any
indebtedness owing by it or UniMark; (c) any material adverse claim against or
affecting it or Group or UniMark or any damage to or material adverse change
concerning the Collateral or its properties or those of UniMark, (d) the
commencement of any proceeding which if adversely determined could have a
material adverse effect; and (e) any other event which has or can reasonably be
expected to have a material adverse effect (including, without limitation, the
termination of any material labor contract, any material labor dispute, or any
strike,
<PAGE> 38
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lockout, walkout, or other dispute to which it or UniMark is a party or which
affects or may affect any of its properties or those of UniMark).
5.15 Environmental Requirements. Each Obligated Party will
comply in all material respects with all environmental, health and safety laws
and regulations applicable to it.
5.16 Additional Documents. From time to time and upon request
by the Bank, each Obligated Party will, and will cause the Affiliates to,
execute, endorse, acknowledge, and deliver to the Bank and file or cause same
to be done any and all other documents and do all other acts or things as Bank
may reasonably request in order more fully to effect this Agreement.
ARTICLE SIX
NEGATIVE COVENANTS
So long as any Commitment is outstanding, any part of the Icmosa Obligations
remains unpaid, any contingent part of the Icmosa Obligations continues to
exist, or until the Bank consents to the contrary and the Borrower receives the
prior written approval to the contrary from the Bank, each Obligated Party, as
applicable, will comply or cause compliance with each of the following
covenants.
6.01 Liens. No Obligated Party will create or permit to exist any
Lien with respect to the Collateral.
6.02 Liquidation, Merger, Consolidation, Acquisition. No
Obligated Party will (i) wind up, liquidate, or dissolve or be a party to any
merger or consolidation or any partnership, nor purchase or otherwise acquire
all or substantially all of the assets of any Person or any shares of stock of,
or similar interest in, any Person or change or modify its existing structure
EXCEPT that (a) any Obligated Party may merge into or consolidate with any of
its Affiliates so long as the Obligated Party is the survivor and (b) any
Obligated Party may accomplish an acquisition so long as (1) the Obligated
Party is the survivor, (2) in the opinion of the Bank the survivor is not
materially less creditworthy immediately after such transaction, (3) such
transaction would not have a material adverse effect, and (4) immediately prior
thereto no Default exists and after giving effect to the transaction no Default
would exist, or (ii)
<PAGE> 39
33
form or organize any Affiliate unless subparagraphs (3) and (4) immediately
above are each true.
6.03 Issuance of Shares. None of the Obligated
Parties may issue, sell or dispose of any shares of its capital stock or other
securities or rights, warrants or options to purchase or acquire any such
shares or securities or otherwise change its capital structure or change the
relative rights or preferences or limitations relating to its capital stock.
6.04 Discount of Receivables. No Obligated Party will
discount or sell with or without recourse, or sell for less than the face value
thereof, any of its accounts, instruments, chattel paper, or general
intangibles.
6.05 Sale of Assets.
(a) No Obligated Party will convey, sell, lease, or otherwise
dispose of (or agree to do any of the foregoing at any future time) all or
substantially all or a substantial part of its property or assets or any part
of its property or assets essential to the conduct of its business as presently
conducted.
(b) No Obligated Party will convey, sell, lease, or otherwise
dispose of any other assets except for sales of such assets in the ordinary
course of business for a fair and adequate consideration.
6.06 Transactions on Favorable Terms. No Obligated Party will
lease or sell property to, lease or purchase property from, pay any fees to, or
enter into or consummate any material transaction, whether with an Affiliate or
otherwise, on terms less favorable to it than would be obtainable at the time
in comparable transactions with arm's length dealings.
6.07 Conflicting Agreements. No Obligated Party will
enter into any agreement containing any provision which would be violated or
breached by its performance hereunder.
6.08 Change in Business. No Obligated Party will make
any material change in the nature of, or conduct any business other than, its
business as presently conducted nor use any name other than its corporate name
nor change its corporate name.
6.09 Accounting Practices. No Obligated Party will make any
material change in accounting treatment or reporting practices except for any
such change required by GAAP.
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34
6.10 Management Changes. Group will not fail for any reason
to have Jorn Budde as Chief Executive Officer of Group or Rafael Vaquero Bazan
as Chief Operating Officer of Group.
ARTICLE SEVEN
EVENT OF DEFAULT
7.1 Events of Default. The occurrence of any of the
following events is an Event of Default:
(a) any Obligated Party fails or refuses to pay (i) any principal
portion of the Icmosa Obligations when due whether at maturity or otherwise, or
(ii) any interest portion of the Icmosa Obligations when due whether at
maturity or otherwise;
(b) any Person makes any representation or warranty in any
certificate or statement (including, without limitation, any Financial
Statement) furnished to the Bank pursuant hereto or in connection herewith, any
other Icmosa Loan Document or in any document given by any Obligated Party to
the Bank which is inaccurate in any material respect as of the date on which
such representations or warranty is made or deemed made;
(c) any Obligated Party fails or refuses to comply with any
covenant contained in sections 5.1, 5.3, 5.5, 5.6, 5.12 or 5.14 or Article Six
hereof;
(d) the Borrower fails or refuses to comply with the covenant in
section 5.9(b) hereof and such failure or refusal is not cured within 5 (five)
Business Days;
(e) any Obligated Party fails or refuses to perform punctually and
properly any covenant or agreement or otherwise breaches any covenant or
agreement contained herein (other than in 5.01, 5.03, 5.05, 5.06, 5.12 or 5.14
or Article Six hereof as to each of which there is no grace period or other
than in section 5.9 (b) hereof as to which there is a 5 (five) Business Days
grace period), or any Obligated Party fails or refuses to perform punctually
and properly any covenant or agreement or otherwise breaches any covenant or
agreement contained in any other Icmosa Loan Document, or in any document
executed by any Obligated Party in connection herewith and such failure,
refusal, or breach is not cured within 10 (ten) calendar days (or such other
time period specified in this section or in such Icmosa Loan Document) after it
becomes known to such Obligated Party;
<PAGE> 41
35
(f) any of the Icmosa Loan Documents ceases to be or any Obligated
Party contends that any Icmosa Loan Document is not, a legal, valid and binding
obligation of the parties thereto, enforceable in accordance with the terms
thereof or in any way cease, to provide to the Bank the rights, privileges,
benefits, power, and remedies intended to be conferred thereby, or any
Obligated Party repudiates its obligations under any Icmosa Loan Document or
invalidates or renders unperfected or unenforceable any Lien in any Collateral
or any such Lien becomes invalid, unperfected or unenforceable;
(g) an involuntary case under the "Ley de Quiebras y Suspension de
Pagos" is commenced against any Obligated Party and is not dismissed, or stayed
within 60 (sixty) calendar days of the commencement thereof, or a court having
jurisdiction enters a decree or order for relief in respect of any Obligated
Party in an involuntary case under the "Ley de Quiebras y Suspension de Pagos",
or any other applicable law, appoints a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of any such Obligated
Party or of any substantial part of the property of any Obligated Party, or
orders the dissolution, winding up, or liquidation of the affairs of any
Obligated Party or any substantial part of the property of any Obligated Party
is placed in the custody of any court and such decree, order, appointment, or
placing is unstayed and in effect for a period of 60 (sixty) consecutive days;
(h) any Obligated Party commences a voluntary case, or consents to
or fails to contest an involuntary case, under the "Ley de Quiebras y
Suspension de Pagos", or any other applicable law, or applies for, consents to,
fails to contest, or files an answer admitting the material allegations of a
petition seeking the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator (or other similar
official) of any Obligated Party, or for any substantial part of the property
of any Obligated Party, or any Obligated Party makes any assignment for the
benefit of creditors, or fails generally to pay its debts as such debts become
due, or takes any action in furtherance of any of the foregoing;
(i) a money judgment in the case of any single judgment in the
amount of $1,000,000 Dollars or more in the case of all such judgments at any
time existing in the aggregate amount of $1,000,000 Dollars or more is entered
against any Obligated Party which is not satisfied or enforcement thereof
stayed by the first to occur of the 30th (thirtieth) day after the date of the
judgment or the 10th (tenth) day before the date on which assets of such
Obligated Party may be lawfully sold to satisfy such judgment;
(j) a default or event of default under any instrument evidencing
an Indebtedness (other than the Icmosa Obligations) of any Obligated Party
occurs, the effect of which is to permit the holder of such instrument to
accelerate the maturity thereof or
<PAGE> 42
36
require the prepayment, purchase, or redemption thereof, or any Obligated Party
fails to pay any Indebtedness when due or the holder accelerates the maturity
of or exercises any right to require purchase or redemption of any promissory
note or other obligation or evidence of such Indebtedness;
(k) any Lien against any property of any Obligated Party is filed
or attaches and is not discharged, or suitable bond is not made to prevent the
enforcement thereof to the Bank's satisfaction, within 10 (ten) calendar days
of the date any Obligated Party learns of the existence thereof; and
(l) the occurrence of a Default or Event of Default (as defined in
the Gise Revolving Loan Agreement or in the UniMark Revolving Loan Agreement)
under any instrument or document evidencing, securing or guaranteeing a debt
owed by Gise and/or by UniMark or other Group Affiliate to the Bank.
7.2 Maturity of Icmosa Obligations and Other Rights.
(a) Upon the occurrence of an Event of Default specified in
sections 7.1 (h) or (i) this Agreement, and without the necessity of any
action, notice, or demand by the Bank, the Commitment shall automatically
terminate and the unpaid principal and accrued interest and fees constituting
part of the Icmosa Obligations, together with all other outstanding Icmosa
Obligations, shall be immediately due and payable. Upon the occurrence of any
Event of Default other than one specified in sections 7.1 (h) or (i) of this
Agreement, the Bank by written notice to the Borrower may do any one or more of
the following: (i) terminate all or any portion of the Commitment, whereupon
the Commitment (or the terminated portion thereof) and obligation of the Bank
to make Advances shall terminate; (ii) declare the unpaid principal and accrued
interest and fees constituting part of the Icmosa Obligations, together with
all other outstanding Icmosa Obligations, immediately due and payable; (iii)
reduce any claim to judgment; or (iv) enforce any of the rights of the Bank
under any of the Icmosa Loan Documents or as otherwise provided by applicable
law or agreement.
(b) Demand, presentment for payment, protest and notice of
nonpayment, or protest or dishonor, and all demands and notices of any action
taken by the Bank under this Agreement and the other Icmosa Loan Documents and
notice of intent to accelerate, and notice of acceleration of, the Icmosa
Obligations and any part thereof are hereby expressly waived.
7.3 Enforcement of Rights. Each Obligated Party agrees it is
commercially reasonable for the Bank to exercise its rights in or with respect
to the Collateral in such manner and in such order as the Bank determines. The
Bank may, without foreclosing
<PAGE> 43
37
thereon, collect and otherwise enforce all amounts owing on the Collateral or
any proceeds thereof or otherwise enforce any of the rights of such Obligated
Party or the Bank therein or in any of the Collateral and apply such
collections as provided herein or may foreclose on the Collateral.
ARTICLE EIGHT
SECURITY INTEREST. GUARANTEE
8.1 Security Interest.
(a) The Borrower and the Bank hereby agree that the punctual
payment of (i) any principal portion of the Icmosa Obligations when due whether
at maturity or otherwise, or (ii) any interest portion of the Icmosa Obligations
or (iii) any and all costs and expenses incurred by the Bank in connection with
the negotiation and preparation of this Agreement, and the other Icmosa Loan
Documents and the collection of the Icmosa Obligations, or enforcement of this
Agreement is secured, pursuant to articles 322, 326, 328, 330 and 334 paragraph
VII of the "Ley General de Titulos y Operaciones de Credito", and Borrower
hereby grants to Bank a first priority security interest upon (i) all of the
Inventory purchased with each of the Advances, (ii) all of the Inventory of
Products in Process, (iii) all of the Inventory Processed Products, (iv) all
instrument, chattel paper, account receivable or letters of credit evidencing,
representing, arising from or existing with respect of, relating to, securing or
otherwise supporting the payment of the Inventory Processed Products
(collectively, the "Accounts Receivable") and (v) upon all proceeds, products
accessions, rents, profits, income, benefits, substitutions and replacements of
and to any of the Inventory, Inventory of Products in Process, Inventory
Processed Products and Accounts Receivable.
(b) The Borrower shall be the depository of the Inventory, the
Inventory of Products in Process, the Inventory Processed Products and Accounts
Receivable, in the terms of article 329 of the "Ley General de Titulos y
Operaciones de Credito".
(c) Until payment in full of all Icmosa Obligations, collection of
Accounts Receivable shall be subject to the following:
(i) Until the Bank notifies the Borrower to the contrary,
the Borrower shall instruct the Account Debtors upon all invoices,
billing statements and similar documents evidencing or relating to the
Accounts Receivable to make
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38
all payments on the Accounts Receivable payable to Bank of New York;
Account: 8026002533 for credit: Rabobank New York, in favor of:
Industrias Citricolas de Montemorelos, S.A. de C.V. Ref.: 80647 ABA:
021000018. The Borrower shall not give any Account Debtor at any time
by any means any instructions for payment contrary to the foregoing.
(ii) The Borrower shall, within 30 (thirty) Business Days
of execution of this Agreement, send by registered mail to all the
Account Debtors listed in Exhibit "J" hereto, a notice substantially
in the form attached hereto as Exhibit "K" hereto.
(iii) The Borrower shall promptly notify the Bank of any
sales of Inventory Processed Products purported to be made to any
Account Debtors other than those to whom notices were sent pursuant to
the preceding paragraph.
8.2 Guarantee.
(a) The Guarantors, jointly and severally, hereby guarantee to the
Bank the punctual payment of any (i) principal portion of the Icmosa
Obligations when due whether at maturity or otherwise, or (ii) any interest
portion of the Icmosa Obligations or (iii) any and all costs and expenses
incurred by the Bank in connection with the negotiation and preparation of this
Agreement, and the other Icmosa Loan Documents and the collection of the Icmosa
Obligations, or enforcement of this Agreement. The Guarantors hereby further
agree that if the Borrower shall fail to pay in full when due (whether at
stated maturity, by acceleration or otherwise) any of the Icmosa Obligations,
the Guarantors will 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 the Icmosa Obligations, the same will be promptly paid in full when
due (whether at extended maturity, by acceleration or otherwise) in accordance
with the terms of such extension or renewal.
(b) The obligations of the Guarantors under section 8.2 (a) hereof
are absolute and unconditional irrespective of the value, genuineness,
validity, regularity or enforceability of the Icmosa Loan Documents, or any
substitution, release or exchange of any other guarantee of or security for any
of the Icmosa Obligations, and, to the fullest extent permitted by applicable
law, irrespective of any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor,
it being the intent of this section 8.2 (b) that the obligations of the
Guarantors hereunder shall be absolute and unconditional under any and all
circumstances. Without limiting the generality of the foregoing, it is agreed
that the occurrence of any one or more of the following shall not alter or
impair the unconditional liability of the Guarantors as described above;
<PAGE> 45
39
(i) at any time or from time to time, without notice to
the Guarantors, the time for any performance of or compliance with any
of the Icmosa Obligations shall be extended, or such performance or
compliance shall be waived;
(ii) any of the acts mentioned in any of the provisions of
the Icmosa Loan Documents or instrument referred to herein or therein
shall be done or omitted;
(iii) the interest rate on the Icmosa Loans shall change as
provided herein;
(iv) the maturity of any of the Icmosa Obligations shall
be accelerated, or any of the Icmosa Obligations shall be modified,
supplemented or amended in any respect, or any right under the Icmosa
Loan Documents shall be waived or any other guarantee of any of the
Icmosa Obligations or any security therefor shall be released or
exchanged in whole or in part or otherwise dealt with; or
(v) any lien or security interest granted to, or in favor
of, the Bank as security for any of the Icmosa Obligations shall fail
to be perfected.
The Guarantor hereby expressly waives (i) diligence, presentment, demand of
payment, protest and all notices whatsoever, and any requirement that the Bank
exhaust any right, power or remedy or proceed against the Borrower under the
Icmosa Loan Documents, or against any other Person under any other guarantee
of, or security for, any of the Icmosa Obligations and (ii) the provisions
contained in articles 2845, 2846, 2847, and 2849 of the Civil Code for the
Federal District and in the correlative articles of the Civil Codes of the
States of the Federation. The Guarantors obligations hereunder and the
obligations of all other Persons providing guarantees for the Icmosa
Obligations are joint and several.
ARTICLE NINE
MISCELLANEOUS
9.01 Waivers and Modifications.
(a) From time to time, without notice to or further consent by any
Obligated Party, the performance or observance by any Obligated Party of any
term or provision hereof may be waived or the time of performance thereof
extended. In addition, any Collateral therefor may be substituted, exchanged,
released, surrendered, waived, subordinated or otherwise dealt with, or
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additional Collateral obtained, all without affecting the liability of any
Obligated Party.
(b) No waiver or modification of any provision of this Agreement,
or consent to any departure from or supplement, amendment or termination of the
terms hereof, the other Icmosa Loan Documents or any other document, shall be
effective unless such is in writing and signed by the Bank which may be given
in its sole discretion, and any such waiver shall be effective only for the
specific instance given. No waiver of any Event of Default shall be deemed to
be a waiver of any other or subsequent Event of Default, nor shall any waiver
be deemed to be a continuing waiver. The acceptance at any time and from time
to time of a partial payment of the Icmosa Obligations shall not be deemed to
be a waiver of any Event of Default then existing. No failure, delay, or
omission by the Bank in exercising any right or power hereunder, or under any
other document executed by any Obligated Party as security for or in
conjunction with the Icmosa Obligations shall impair any such right or power or
be construed as a waiver thereof or any acquiescence therein.
9.02 Cumulative Rights. All rights and remedies
available to the Bank under this Agreement are cumulative of and in addition to
all other rights and remedies available to the Bank at law, or otherwise, and
may be exercised from time to time, and as often as may be deemed expedient,
whether or not the Icmosa Obligations are due and payable and whether or not
any suit for collection, foreclosure, or other action in connection with this
Agreement has been instituted, and the exercise of one or more rights or
remedies shall not impair or prejudice the concurrent or subsequent exercise of
the rights or remedies.
9.03 Conflicting Provisions. The provisions of this
Agreement are in addition to those of any other Icmosa Loan Document or other
evidence of liability held by the Bank and all documents shall be construed as
complementary to each other and may be enforced in accordance with their
respective terms except as hereafter provided. Should any provision contained
in any other agreement between the Bank and Obligated Party conflict with this
Agreement, the provisions contained in this Agreement shall control.
9.04 Severability. If any provision of this Agreement
or any other Icmosa Loan Document is held to be illegal, invalid, or
unenforceable, such provision shall be fully severable; the remaining
provisions of this Agreement or such other Icmosa Loan Document, as
appropriate, shall remain in full force and effect and shall not be affected by
such provision or by its severance.
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41
9.05 Independent Covenants. If any action or failure to act by
any Obligated Party violates any covenant or obligation of any Obligated Party
herein, such violation shall not be excused by the fact that such action or
failure to act would otherwise be permitted by or fall within the limitations
of any covenant (or exception to any covenant) herein contained other than the
covenant violated.
9.06 Construction. Article and Section captions and the
Table of Contents are for convenience only and shall not affect the
construction hereof nor shall any provision of this Agreement be construed
against any Person solely because that Person or a representative of that
Person drafted such provision.
9.07 Survival. This Agreement shall terminate when
(a) the principal of and interest accrued to such date on the Icmosa Loans and
any outstanding Icmosa Obligations have been paid in full in cash; (b) all
fees, expenses, and other amounts then due and payable which constitute Icmosa
Obligations have been paid in full in cash; and (c) the Commitment has expired
or been terminated. The termination of this Agreement shall not affect any
rights of or obligations arising prior to the effective date of such
termination nor shall it reduce or otherwise affect any release or indemnity
made herein. Notwithstanding the foregoing, if payment hereunder must be
returned for any reason, this Agreement and the other Icmosa Loan Documents
shall continue in full force. The provisions of the foregoing sentence shall
be and remain effective notwithstanding any contrary action so taken which
shall be without prejudice to the Bank's rights under this Agreement and shall
be deemed to have been conditioned upon such payment having become final and
irrevocable. All covenants, agreements, undertaking, indemnities,
representations, and warranties made herein shall survive all closings
hereunder, the making of each Advance, the repayment of the Icmosa Loan and the
termination and discharge of all other provisions of this Agreement or any of
the other Icmosa Loan Documents and shall not be affected by any investigation
made by any party, and all indemnifications shall survive the repayment of the
Icmosa Obligations, the termination of the Commitment, and release and
termination of this Agreement.
9.08 Form of Documents. Each agreement, document,
instrument, or other writing to be furnished to the Bank under any provision of
this Agreement must be in form and substance satisfactory to the Bank and its
counsel.
9.09 Parties Bound and Assignment of the Borrower's Interest.
This Agreement shall be binding upon, inure to the benefit of, and be deemed to
include the successors and assigns
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42
of the parties hereto; provided, however, that no Obligated Party may, without
the prior written consent of the Bank, assign any rights, powers, duties, or
obligations hereunder.
9.10 Expenses. The Obligated Parties, jointly and severally,
agree to pay all costs and expenses (such expenses to include all
investigation, audit, legal (which shall be reasonable), appraisal, valuation,
formalization, filing, printing, insurance, and environmental adviser,
accountant, auditor, and other consultant or adviser expenses and all document
duplication, reproduction, and other out-of-pocket expenses) incurred by the
Bank in connection with the negotiation and preparation of this Agreement, the
other Icmosa Loan Documents, any documents executed or filed in connection
herewith; the creation, perfection, protection, and insurance of Liens in and
the maintenance of the Collateral and the filing, recording, of any financing
statement and all amendments or modifications thereto and any and all other
documents or instruments to be filed by the terms hereof; the negotiation or
preparation of any and all amendments, modifications, supplements, assignments,
consents, waivers, or other documents or instruments related hereto; and the
collection of the Icmosa Obligations, or enforcement of this Agreement.
9.11 Notices. Except as otherwise specifically provided
herein, whenever this Agreement requires or permits any consent, approval,
notice, request, or demand from one party to another, the same must be in
writing (including telecopy, telegram, telex, or cable) to be effective and
shall be deemed commercially reasonable and to have been given (a) in the case
of notice from the Bank to any Obligated Party on the earlier of (i) if by
courier, the 3rd (third) Business Day after it is duly delivered, addressed to
the party to be notified or, (ii) in the case of notice given by any other
means, the Business Day on which it is received or, (b) in the case of notice
from any Obligated Party to the Bank on the Business Day it is received. The
address of each party hereto is set forth below each party's name on the
signature pages hereof. Any Person may change its address of notice by giving
notice to all other parties hereto.
9.12 Governing Law. The execution and fulfillment of this
Agreement, the Promissory Notes and the other Icmosa Loan Documents (other than
the Guaranty) shall be governed and construed in accordance to the laws of
Mexico, including any action or proceeding in connection with the execution and
fulfillment of this Agreement or the Promissory Notes or the other Icmosa Loan
Documents (other than the Guaranty) before the competent courts of Mexico or
any of its political subdivisions and it contains the entire understanding of
the parties.
<PAGE> 49
43
9.13 Jurisdiction. The parties hereto agree that any legal
action or proceeding arising out of or relating to this Agreement, the
Promissory Notes and the other Icmosa Loan Documents (other than the Guaranty)
shall be brought in the courts of Mexico City, Federal District or courts in
any jurisdiction where assets of the Borrower and/or the Guarantors may be
found, or all of them, as the Bank may elect, and by execution and delivery of
this Agreement, the Borrower and the Guarantors hereby submit to and accept
with regard to any such action or proceeding against them and in respect of
their property, generally and unconditionally, the jurisdiction of the
aforesaid courts. The Borrower and the Guarantors expressly waive any other
jurisdiction.
9.14 Documentation. Each party hereto acknowledges that it is
solely responsible for reviewing and approving this Agreement and any other
documents to be entered into by it in connection with this transaction, and
that it has or will enter into this Agreement and any such other documents
solely upon the advice of its own counsel.
9.15 Counterparts. This Agreement may be executed in any number
of counterparts all of which taken together shall constitute one and the same
instrument. This Agreement has been executed in both the English and Spanish
languages, both of which shall bind the parties hereto and constitute but one
agreement and instrument; provided, however, that in case of doubt as to the
proper interpretation or construction of this Agreement, the Spanish text shall
be controlling in all cases, except in connection with any legal action or
proceeding brought in respect of this Agreement in the competent courts of the
United States or any political subdivision thereof, in which case the English
text shall be controlling. All certificates, reports, notices and other
documents and communications given or delivered pursuant to this Agreement
(including, without limitation, any modifications or supplements hereto) shall
be in the English language, or accompanied by a certified Spanish translation
thereof.
9.16 Registration. This Agreement will be registered in the Public
Registry of Commerce of corporate domicile of the Borrower, as required by
article 326 of the "Ley General de Titulos y Operaciones de Credito", for which
purpose the Borrower will ratify its execution in the presence of a notary
public in Mexico.
IN WITNESS WHEREOF, the parties hereto have caused this Revolving Icmosa Loan
Agreement with Security Interest ("Contrato de Apertura de Credito Revolvente
de Habilitacion o Avio") to be
<PAGE> 50
44
duly executed by their respective officers or agents thereunto duly authorized
as of the date first above written.
The Bank The Borrower
- ------------------------------- ----------------------------------
Cooperatieve Centrale Grupo Industrial Santa
Raiffeisen-Boerenleenbank B.A., Engracia, S.A. de C.V.
"Rabobank Nederland",
New York Branch
BY: BY:
---------------------------- -------------------------------
TITLE: TITLE:
------------------------- ----------------------------
ADDRESS: ADDRESS:
----------------------- --------------------------
- ------------------------------- ----------------------------------
TELEFAX: TELEFAX:
----------------------- --------------------------
AgroMark Icmosa
- ------------------------------- ---------------------------------
AgroMarK, S.A. de C.V. Industrias Citricolas de
BY: Montemorelos, S.A. de C.V.
----------------------------
TITLE: BY:
------------------------- -------------------------------
TELEFAX: TITLE:
----------------------- ----------------------------
ADDRESS: TELEFAX:
----------------------- --------------------------
ADDRESS:
--------------------------
Witnesses
- ------------------------------- -------------------------------
Name Name
<PAGE> 1
EXHIBIT 10.26
================================================================================
REVOLVING LOAN AGREEMENT WITH
SECURITY INTEREST
("CONTRATO DE APERTURA DE CREDITO REVOLVENTE DE
HABILITACION O AVIO")
BY AND BETWEEN
GRUPO INDUSTRIAL SANTA ENGRACIA, S.A. DE C.V.
"GISE"
INDUSTRIAS CITRICOLAS DE MONTEMORELOS, S.A. DE C.V.
"ICMOSA"
AGROMARK, S.A. DE C.V.
"AGROMARK"
AND
COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A.
"RABOBANK NEDERLAND" NEW YORK BRANCH
"BANK"
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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ARTICLE ONE
DEFINITIONS 2
ARTICLE TWO
TERMS AND CONDITIONS OF THE LOANS
SECTION 2.01 THE COMMITMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.02 USE OF THE ADVANCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 2.03 ADVANCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 2.04 INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.05 DEFAULT INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.06 COMPUTATION OF INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.07 REPAYMENT OF GISE LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.08 PROMISSORY NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.09 PLACE AND FORM OF PAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.10 PAYMENTS DUE ON A DAY WHICH IS NOT A BUSINESS DAY . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 2.11 PREPAYMENTS OF GISE LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 2.12 AMOUNTS EXCEEDING LIMITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 2.13 TERMINATION OF THE RIGHT TO MAKE ADVANCES. REDUCTION IN THE COMMITMENT . . . . . . . . . . . . . . . 19
SECTION 2.14 CALCULATION AND PAYMENT OF FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 2.15 PAYMENT OF FUNDING LOSSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 2.16 INCREASED COSTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 2.17 CHANGE IN CIRCUMSTANCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 2.18 LENDING OFFICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.19 TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE THREE
CONDITIONS PRECEDENT
SECTION 3.1 INITIAL CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.2 ADDITIONAL CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
</TABLE>
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ARTICLE FOUR
REPRESENTATIONS AND WARRANTIES
SECTION 4.01 ORGANIZATION AND AUTHORITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 4.02 VALIDITY, AUTHORIZATION, AND NO CONFLICT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 4.03 NO PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 4.04 NO APPROVALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 4.05 NO DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 4.06 ADVERSE CIRCUMSTANCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 4.07 TAX RETURNS AND PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 4.08 FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 4.09 ACCURACY OF DISCLOSURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 4.10 PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 4.11 EXISTING INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 4.12 REAL ESTATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 4.13 INVENTORY LOCATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 4.14 INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 4.15 ENVIRONMENTAL REQUIREMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 4.16 LABOR MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 4.17 SOLVENCY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 4.18 TRADEMARKS, COPYRIGHTS, PATENTS AND LOGOS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE FIVE
AFFIRMATIVE COVENANTS
SECTION 5.01 PAYMENT OF THE GISE OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 5.02 AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 5.03 USE OF THE ADVANCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 5.04 BOOKS AND RECORDS; INSPECTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 5.05 NOTICE OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 5.06 MAINTENANCE OF EXISTENCE, APPROVAL AND LICENSES . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 5.07 COMPLIANCE WITH LAWS, MATERIAL AGREEMENTS, AND LICENSES . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 5.08 MAINTENANCE OF ASSETS AND INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
</TABLE>
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SECTION 5.09 FINANCIAL STATEMENTS, BORROWING BASE CERTIFICATE AND OTHER INFORMATION . . . . . . . . . . . . . . . 34
SECTION 5.10 PAYMENT OF DEBTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 5.11 PAYMENT OF TAXES AND LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 5.12 CLAIMS AND ACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 5.13 MAINTENANCE OF CHIEF EXECUTIVE OFFICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 5.14 OTHER NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 5.15 ENVIRONMENTAL REQUIREMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 5.16 ADDITIONAL DOCUMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE SIX
NEGATIVE COVENANTS
SECTION 6.01 LIENS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 6.02 LIQUIDATION, MERGER, CONSOLIDATION, ACQUISITION . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 6.03 ISSUANCE OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 6.04 DISCOUNT OF RECEIVABLES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 6.05 SALE OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 6.06 TRANSACTIONS ON FAVORABLE TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 6.07 CONFLICTING AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 6.08 CHANGE IN BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 6.09 ACCOUNTING PRACTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 6.10 MANAGEMENT CHANGES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE SEVEN
EVENTS OF DEFAULT
SECTION 7.1 EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 7.2 MATURITY OF ICMOSA OBLIGATIONS AND OTHER RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 7.3 ENFORCEMENT OF RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
</TABLE>
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TABLE OF CONTENTS (CONT'D)
<TABLE>
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ARTICLE EIGHT
SECURITY INTEREST. GUARANTEE
SECTION 8.1 SECURITY INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 8.2 GUARANTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE NINE
MISCELLANEOUS
SECTION 9.01 WAIVERS AND MODIFICATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 9.02 CUMULATIVE RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 9.03 CONFLICTING PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 9.04 SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 9.05 INDEPENDENT COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 9.06 CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 9.07 SURVIVAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 9.08 FORM OF DOCUMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 9.09 PARTIES BOUND AND ASSIGNMENT OF THE BORROWER'S INTEREST . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 9.10 EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 9.11 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 9.12 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 9.13 JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 9.14 DOCUMENTATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 9.15 COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 9.16 REGISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
</TABLE>
<PAGE> 6
TABLE OF CONTENTS (CONT'D)
EXHIBITS
EXHIBIT "A" AUTHORIZED OFFICERS LIST
EXHIBIT "B" BORROWING BASE CERTIFICATE
EXHIBIT "C" PROMISSORY NOTES
EXHIBIT "D" ADVANCE NOTICE
EXHIBIT "E" EXISTING INDEBTEDNESS/CLAIMS, LAWSUITS
EXHIBIT "F" REAL ESTATE LIST/PLANTS AND WAREHOUSES/TRADEMARKS
LIST
EXHIBIT "G" COLLECTIVE BARGAINING AGREEMENTS
EXHIBIT "H" PLEDGE AGREEMENT
EXHIBIT "I" INVENTORY CERTIFICATE
EXHIBIT "J" LIST OF ACCOUNT DEBTORS
EXHIBIT "K" NOTICE TO ACCOUNT DEBTORS
EXHIBIT "L" APPLICABLE MARGIN CERTIFICATE
EXHIBIT "M" GROUP GUARANTY
<PAGE> 7
1
REVOLVING LOAN AGREEMENT WITH SECURITY INTEREST ("CONTRATO DE APERTURA DE
CREDITO REVOLVENTE DE HABILITACION O AVIO") ENTERED INTO THIS 10 DAY OF APRIL,
1997, BY AND BETWEEN GRUPO INDUSTRIAL SANTA ENGRACIA, S.A. DE C.V., A MEXICAN
CORPORATION (THE "GISE"), AND INDUSTRIAS CITRICOLAS DE MONTEMORELOS, S.A. DE
C.V., A MEXICAN CORPORATION ("ICMOSA"), AGROMARK, S.A. DE C.V., A MEXICAN
CORPORATION ("AGROMARK"), AND COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK
B.A., "RABOBANK NEDERLAND" NEW YORK BRANCH, A BANKING INSTITUTION ORGANIZED AND
EXISTING UNDER THE LAWS OF THE KINGDOM OF THE NETHERLANDS ("BANK").
W I T N E S S E T H:
WHEREAS, the Borrower is a commercial corporation, duly organized and existing
under the laws of the United Mexican States ("Mexico"), with legal capacity to
enter into this Agreement, to execute the Promissory Notes (as defined herein)
and to perform and observe the terms and conditions hereof and thereof.
WHEREAS, Icmosa is a commercial corporation, duly organized and existing under
the laws of Mexico, with legal capacity to enter into this Agreement, to
guarantee ("por aval") the Promissory Notes and to perform and observe the
terms and conditions hereof and thereof.
WHEREAS, AgroMark is a commercial corporation, duly organized and existing
under the laws of Mexico, with legal capacity to enter into this Agreement, to
guarantee ("por aval") the Promissory Notes and to perform and observe the
terms and conditions hereof and thereof.
WHEREAS, the Borrower, Icmosa and AgroMark are engaged in the business of
growing, processing, marketing and distribution of citrus and tropical fruit in
Mexico.
WHEREAS, The UniMark Group, Inc. ("Group"), a holding corporation organized and
existing under the laws of the State of Texas, United States of America
("United States"), is the parent of and owns, in the case, of UniMark Foods,
Inc. ("UniMark"), a corporation organized and existing under the laws of the
State of Texas, United States, 100% of its issued and outstanding capital stock
and, in the case of Borrower, Icmosa and AgroMark the majority of their
respective issued and outstanding capital stock.
<PAGE> 8
2
WHEREAS, UniMark and Gise are currently indebted to Bank for separate amounts
of working capital needed for their respective operations in United States and
in Mexico and the separate indebtedness of each company is secured by
respective assets of each.
WHEREAS, the Borrower has requested that the Bank make credit available to it
in an aggregate principal amount not exceeding U.S. $8,500,000, in order to
finance its working capital needs and the purchase by the Borrower of
unprocessed material related to its operations.
WHEREAS, the Bank is prepared to grant the Borrower such loan upon the terms
and conditions set forth below.
NOW, THEREFORE, in consideration of the foregoing and of the terms, conditions,
representations and warranties set forth herein, the parties hereby agree as
follows:
ARTICLE ONE
DEFINITIONS
The following terms (except as otherwise expressly provided) for all purposes
of this Agreement shall have the respective meanings hereinafter specified:
"Borrower" means Grupo Industrial Santa Engracia, S.A. de C.V.
"Current Assets" means those assets which would be reflected on a
balance sheet prepared in accordance with GAAP as "current assets" but
excluding (i) all accounts receivable with respect to goods or services which
were delivered or performed at least 90 (ninety) days prior to the date of
determination unless appropriate reserves have been made for such "over 90 day"
accounts receivable in the bad debt reserve; and (ii) Intangible Assets which
have been classified as current assets.
"Intangible Assets" means those assets of a Person which are (i)
deferred assets, other than prepaid insurance and prepaid taxes; (ii) patents,
copyrights, trademarks, trade names, licenses, permits, franchises, goodwill,
experimental and research and development expenses, and other similar
intangibles; (iii) unamortized debt discount and expense; and (iv) notes and
receivables due from Affiliates of such Person or officers,
<PAGE> 9
3
directors or employees of such Person or Affiliates of such Person.
"Affiliate", of any specified Person, means any other Person which directly
or indirectly through one or more intermediaries controls, or is controlled by,
or is under common control with, such specified Person. "Control" means the
power to direct the management and policies of such Person directly or
indirectly, whether through the ownership of equity, by contract or otherwise;
and the terms "controls", "controlling", and "controlled" have meanings
correlative to the foregoing.
"AgroMark" means AgroMark, S.A. de C.V.
"Capital Lease" means any lease of real or personal property which would be
capitalized on a balance sheet prepared in accordance with GAAP and, in any
event, includes any lease which is in substance a financing lease.
"Governmental Authority" means any nation or government, any federal,
state, local, or other political subdivision thereof, any department,
commission, board, bureau, agency, public authority, instrumentality, court, or
other entity exercising executive, legislative, judicial, regulatory, or
administrative functions of government.
"Advance Notice" means a notice given by the Borrower to the Bank,
signed by an Authorized Officer, pursuant to section 2.03 hereof.
"Bank" means Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A. "Rabobank
Nederland", New York Branch, a federally licensed branch of a Netherlands
cooperative banking organization, its successors and assigns.
"Borrowing Base", as of any date of determination, means an amount
equal to the sum of (i) 85% (eighty five percent) of the face amount expressed
in Dollars of Eligible Accounts (net of maximum discounts, offsets, credits,
retainings and any other amounts deferred with respect thereto), plus (ii) 80%
(eighty percent) of the value expressed in Dollars of the Inventory of
Concentrated Orange Juice (determined in accordance with GAAP), plus (iii) 60%
(sixty percent) of the value expressed in Dollars of Eligible Inventory
(determined in accordance with GAAP), excluding the Inventory of Concentrated
Orange Juice plus (iv) the balance of the Cash Collateral and minus (v) the
Gise Loans.
"Event of Default" means any event specified in section 7.1 hereof.
<PAGE> 10
4
"Working Capital" means the amount by which Current Assets exceed
Current Liabilities.
"Borrowing Base Certificate" means a certificate substantially in the form
of Exhibit "B" of this Agreement.
"Applicable Margin Certificate" means a certificate substantially in the form
of Exhibit "L" of this Agreement, evidencing the agreement of the Borrower and
the Bank on the Applicable Margin for any particular Advance, other than the
Initial Advance.
"Inventory Certificate" means a certificate signed by an Authorized Officer
of the Borrower certifying (i) that the corresponding Advance has been used to
finance the purchase of Inventory described therein and (ii) that such
Inventory has been stored in the Plants and/or Warehouses, substantially in the
form of Exhibit "I" of this Agreement.
"Commitment" means the obligation of the Bank to make Advances pursuant to
the terms and conditions of this Agreement in an aggregate principal amount up
to but not exceeding U.S. $8,500,000.00 Dollars (EIGHT MILLION FIVE HUNDRED
THOUSAND DOLLARS CURRENCY OF THE UNITED STATES OF AMERICA), or such lesser
amount as may be determined at all times pursuant to the provisions hereof.
"Condition Precedent" means any of the conditions specified in sections 3.1
and 3.2 hereof.
"Agreement" means this Revolving Loan Agreement with Security Interest
("Contrato de Apertura de Credito Revolvente de Habilitacion o Avio") and any
modification, renewal or amendment hereof.
"Gise Revolving Loan Agreement" means the Revolving Loan Agreement with
Security Interest ("Contrato de Apertura de Credito Revolvente de Habilitacion
o Avio") dated April 10, 1997, executed by Gise, the Bank and the other parties
named therein.
"UniMark Revolving Credit Agreement" means the Revolving Credit Agreement
dated February 12, 1997, executed by UniMark, Group, the Bank and the other
parties named therein.
"Pledge Agreement" means the Pledge Agreement of even date herewith
executed by the Pledgors and the Bank, substantially in the form of Exhibit "H"
attached hereto, as it may be amended from time to time.
<PAGE> 11
5
"Icmosa Loan" means the aggregate unpaid principal amount of all Advances
made pursuant to the terms hereof.
"Eligible Accounts" means each account owed to the Borrower other than
the following types of accounts which:
(i) are due or unpaid more than 60 (sixty) days after the shipment
date;
(ii) arise out of a sale not made in the ordinary course of the
business of the Borrower;
(iii) arise out of a sale to a Person which is an Affiliate of the
Borrower or controlled by an Affiliate of the Borrower;
(iv) fail to meet or violates any warranty, representation, or
covenant contained in this Agreement or in any other Gise Loan Document;
(v) are subject to any claim, defense, or setoff by the Account
Debtor;
(vi) are to the United States or any department, agency or
instrumentality thereof, unless the Borrower assigns its right to payment of
such account to the Bank;
(vii) are to an Account Debtor (A) which has filed a petition for
bankruptcy or any other petition for relief under the "Ley de Quiebras y de
Suspension de Pagos" of Mexico or any similar statute in any other country, or
made an assignment for the benefit of creditors, or (B) against which any
petition or other application for relief under the "Ley de Quiebras y de
Suspension de Pagos" of Mexico or any similar statute in any other country has
been filed, or (C) which has failed, suspended its business operations, become
insolvent, suffered a receiver or a trustee to be appointed for any of its
assets of affairs, or is generally failing to pay its debts as they become due;
(viii) are on a bill-and hold, guaranteed sale, sale-and-return, sale
on approval, consignment, or any other repurchase or return basis;
(ix) are ones for which the Bank believes, in the exercise of its
reasonable credit judgment, collection is insecure or that such accounts may
not be paid by reason of the Account Debtor's financial inability to pay;
(x) are for goods which have not been shipped and delivered to and
accepted by the Account Debtor, or are for
<PAGE> 12
6
services which have not been performed by the Borrower and accepted by the
Account Debtor;
(xi) exceed a credit limit determined by the Bank in the exercise
of its reasonable credit judgment or determined by the Bank at any time or
times hereinafter, in which case such account(s) shall be ineligible to the
extent such account(s) exceed(s) such limit;
(xii) are ones with respect to which the Bank does not have a
senior, perfected security interest or is subject to a Lien;
(xiii) are not payable in Dollars;
(xiv) are to an Account Debtor to whom 50% (fifty percent) or more
of the outstanding invoices issued to such Account Debtor are ineligible
hereunder;
(xv) are contra accounts payable to an Account Debtor of the
Borrower;
(xvi) are accounts which are ineligible in the sole opinion of the
Bank; or
(xvii) are to an Account Debtor located within the Mexican Republic.
"Accounts Receivable" means any and all instruments, chattel paper,
accounts receivable or letters of credit evidencing, representing, arising out
of or existing with respect to, relating to, securing or otherwise supporting
the payment of the Inventory Processed Products.
"Account Debtor" means any and all obligors under the Accounts
Receivable.
"Business Day" means any day other than a Saturday, Sunday, any day on which
banking institutions are permitted or required by law, executive order or
governmental decree to remain closed in the City of New York or in Mexico and,
with respect to any Interest Period or any information relating to the Libor
Base Rate, any day on which dealings in Dollar deposits occur in the London
interbank market and banks are open for business in London.
"Advance" means each sum disbursed by the Bank to the Borrower pursuant
to section 2.03 of this Agreement, including the Initial Advance.
<PAGE> 13
7
"Initial Advance" means the sum disbursed by the Bank to the Borrower
pursuant to section 2.03 a) of this Agreement
"Gise Loan Documents" means this Agreement, the Promissory Notes, the
Pledge Agreement, the Group Guaranty, each Notice of Advance, each Borrowing
Base Certificate, each Inventory Certificate, each Applicable Margin
Certificate and all other agreements between the Borrower or other Obligated
Party and the Bank (other than the Icmosa Revolving Loan Agreement), executed
pursuant to or in connection with the transaction contemplated hereby, and all
other documents specified in, required by, and executed pursuant to the terms
hereof and all modifications, renewals, amendments and supplements of any of
the foregoing.
"Dollars" and "U.S.$" mean the lawful currency of the United States.
"Indebtedness" as applied to any Person means all liabilities, obligations,
and indebtedness of such Person, including, without limitation, (i) all
indebtedness for borrowed money of such Person or for the deferred purchase
price of property acquired by, or services rendered to, such Person; (ii) all
indebtedness of such Person created or arising under any conditional sale or
other title retention agreement with respect to any property acquired by such
Person; (iii) any obligation under any Capital Lease of such Person; (iv) all
indebtedness for borrowed money or for the deferred purchase price of property
or services secured by any Lien upon or in any property owned by such Person
whether or not such Person has assumed or become liable for the payment of such
indebtedness for borrowed money; (v) indebtedness of such Person arising in
connection with surety or other similar bonds; (vi) obligations of such Person
in respect of banker's acceptances; (vii) the undrawn maximum face amount of
all outstanding letters of credit issued for the account of such Person and,
without duplication, the outstanding amount of all drafts drawn thereunder;
(viii) obligations of such Person in respect of interest rate protection
agreements, foreign currency exchange agreements, or other interest or exchange
rate hedging agreements; (ix) all liabilities of such Person in respect of
unfounded vested benefits under any employee benefit plan; (x) all indebtedness
of such Person under profit payment agreements or in respect of agreements to
redeem, repurchase, or exchange securities or to pay any dividends; (xi) all
obligations of such Person to purchase debt (or any security therefor) of
another, or to maintain net worth or Working Capital or other balance sheet
conditions; (xii) all liabilities of such Person evidenced by debentures,
bonds, and similar instruments; (xii) and guaranties and similar arrangements
by such Person of indebtedness described in clauses (i) through (xi) and in
clause (xiii) of this definition of any other person other than
<PAGE> 14
8
endorsements in the ordinary course of business of negotiable instruments for
deposits or collection; and (xiv) the obligations arising under non-cancelable
operating leases, but limited to an amount equal at any time to the total
amount of payments made on such leases in the immediately previous accounting
month multiplied by 12 (twelve) and the product thereof then multiplied by 5
(five).
"Financial Statements" means the balance sheet, income statement and such
other supplementary statements (including the notes thereto) as may be prepared
in conjunction therewith.
"United States" or "U.S." means the United States of America.
"Effective Date" means the date upon which the Conditions Precedent
set forth in section 3.1 of this Agreement shall have been satisfied.
"Interest Payment Date" means, with respect to each Advance, the Principal
Payment Date of such Advance.
"Principal Payment Date" means, with respect to each Advance, 210 (two
hundred and ten) calendar days after the date such Advance is made.
"Guarantee" means the guarantee provided in section 8.2 of this Agreement.
"Authorized Officer" means any officer of the Borrower or of the
Guarantors or of Group who is empowered to act on behalf of the Borrower or the
Guarantors or Group in accordance with their corresponding corporate documents
and applicable law provisions. A list of the names and titles and specimen
signatures of the Authorized Officers is attached hereto as Exhibit "A".
"GAAP" means those accounting principles applied on a consistent basis
generally accepted from time to time in the certified public accounting
profession of the United States (including those set forth in the Opinions of
the Accounting Principles Board of the American Institute of Certified Public
Accountants or statements of the Financial Accounting Standards Board which may
be applicable at the time in question); and "applied on a consistent basis"
means that the accounting principles observed in the period covered by any
report required under the terms of this Agreement are compatible in all
material respects with those applied in any preceding period and report.
"Guarantor" means each of Gise and AgroMark (collectively, the
"Guarantors").
<PAGE> 15
9
"Pledgors" means Group, Rafael Vaquero Bazan and Jose Maria Martinez
Brohez.
"Collateral" means all property and rights which are subject to any
security interest granted under any Gise Loan Documents or any other security
agreement, deed of trust, mortgage, hypothecation, financing statement or any
other document, agreement or instrument delivered to the Bank by any Person to
secure payment of the Gise Obligations, and including, without limitation: (i)
accounts, including, without limitation, any right of each Obligated Party to
payment for goods sold or leased or for services rendered, which right is not
evidenced by an instrument or chattel paper, whether or not it has been earned
by performance; (ii) the Inventory, Inventory of Products in Process and
Inventory Processed Products, including, without limitation, all goods,
merchandise, and other personal property of each Obligated Party furnished
under any contract of service or intended for sale or lease, including all raw
materials, work in process, finished goods and materials and supplies of any
kind, nature, or description, that are used or consumed by such Obligated
Party's business, or are or might be used in connection with the manufacture,
packing, shipping, advertising, selling, or finishing of such goods,
merchandise, and other personal property, all goods consigned by or to such
Obligated Party, and all returned or repossessed goods now or at any time or
times hereafter in the possession or under the control of each Obligated Party;
(iii) Accounts Receivable, including, without limitation, all invoices, billing
statements and similar documents evidencing or relating to the Accounts
Receivable; (iv) the stock certificates representing 100% of the issued and
outstanding capital stock of each Obligated Party; (v) all of the books and
records of each Obligated Party relating to the foregoing; (vi) all proceeds,
products, additions to, substitutions and replacements for, models,
conversions, and accessions of, any and all Collateral; and (vii) all of the
foregoing, whether now existing or hereafter acquired or arising, or in which
any Obligated Party now has or may have or hereafter acquire any rights.
"Group Guaranty" means the Guaranty in the form of Exhibit "M" hereto,
dated as of the date hereof, executed and delivered by Group, as it may be
amended from time to time.
"Cash Collateral" means, at any time, the Dollar amount held by the
Bank as security for the Gise Loans and all other obligations of Borrower
hereunder.
"Gise" means Grupo Industrial Santa Engracia, S.A. de C.V.
<PAGE> 16
10
"Lien" means any mortgage, deed of trust, pledge, security interest,
hypothecation, assignment, lien (statutory or otherwise), conditional sale, or
other title retention arrangement, Capital Lease, writ of attachment, writ of
sequestration, or like or similar writ or any other encumbrance of any nature
whatsoever, whether voluntary or arising by agreement, under any statute or
law, or otherwise.
"Group" means The UniMark Group, Inc.
"Taxes" shall have the meaning given thereto in section 2.19 of this
Agreement.
"Default" means an Event of Default, without regard to whether any
requirement for notice or lapse of time, or both, or any other condition has
been satisfied.
"Inventory" means all the unprocessed material mentioned in section 2.02
of this Agreement, purchased by the Borrower in the usual course of business
with any Advance made pursuant to the terms and conditions of this Agreement.
"Inventory of Concentrated Orange Juice" means the inventory of concentrated
and chilled orange juice, processed by the Borrower within its ordinary course
of business, to be sold to any Account Debtor, which is stored at the Plants
and/or Warehouses, and with respect to which the Bank has a senior, perfected
security interest.
"Eligible Inventory" means all Inventory Processed Products of the
Borrower stored at the Plants and/or Warehouses, with respect to which the Bank
has a senior, perfected security interest.
"Inventory of Products in Process" means the work in process Inventory,
produced by the Borrower within its ordinary course of business.
"Inventory Processed Products" means the Inventory processed by the Borrower
within its ordinary course of business, to be sold to any Account Debtor.
"Applicable Margin" means, with respect to any particular Advance, other
than the Initial Advance, the number set forth in the Applicable Margin
Certificate with respect to such Advance.
"Applicable Margin of the Initial Advance" means 2.25% (two and one
quarter percent) per annum.
"Mexico" means the United Mexican States.
<PAGE> 17
11
"Gise Obligations" means, without limitation, the sum of the Gise Loans
and all other Indebtedness, loans, advances, including any future advances,
interest, indebtedness, notes, liabilities, and amounts, liquidated or
unliquidated, direct or indirect, matured or unmatured, joint or several, fixed
or contingent, owing by the Borrower or any other Obligated Party pursuant to
or arising under the terms of any of the Gise Loan Documents to the Bank at any
time of every kind, nature, and description, whether secured or unsecured,
including any extensions, modifications, renewals thereof, and substitutions
therefor, and includes any obligation of the Borrower due to third persons,
firms, or corporations which have been endorsed, assigned, or otherwise
acquired by the Bank, whether now existing or hereafter contracted, all sums
owed under the Gise Loan Documents, and all expenses required to be paid by the
Borrower or any other Obligated Party pursuant to the terms hereof or any of
the other Gise Loan Documents (including without limitation, expenses incurred
in any proceeding brought or threatened to enforce payment of any of the
obligations referred to herein, and to maintain, preserve, and collect upon any
Collateral and taxes, assessments, insurance premiums, rents, repairs, other
charges, reasonable attorney's fees and legal expenses, and any other costs of
protection, repossession, enforcement, or sale of any of any Collateral).
"Lending Office" means the office of the Bank (or its Affiliate)
designated for such type of Advance from time to time in accordance with the
terms hereof.
"Promissory Note" means each of the promissory notes signed and
delivered by the Borrower to the Bank and guaranteed "por aval" by the
Guarantors and by Group evidencing the obligation of the Borrower to pay to the
Bank the principal amount of an Advance and the corresponding interest, in the
form attached hereto as Exhibit "C".
"Obligated Party" means each of the Borrower and the Guarantors.
"Current Liabilities" means those liabilities which would be reflected on a
balance sheet prepared in accordance with GAAP as "current liabilities".
"Interest Period" means each period used for the calculation of
interest on the principal outstanding amount of each Advance, provided, that:
<PAGE> 18
12
(i) the first Interest Period for each Advance shall
commence from and including the date on which the
Advance is made and shall end seven months later;
(ii) the subsequent Interest Periods shall begin on the
last day of the previous Interest Period and shall
end seven months later;
(iii) any Interest Period in force during any Principal
Payment Date shall end on such Principal Payment
Date; and
(iv) if an Interest Period would end on a day that is not
a Business Day, the Interest Period shall be extended
to the next succeeding Business Day unless, such next
succeeding Business Day would be in the next calendar
month, in which case such Interest Period shall end
on the next preceding Business Day.
"Consequential Loss" means any loss, cost, or expense incurred by the Bank
because the Borrower pays any Advance prior to the last day of its Interest
Period and includes, without limitation, the amount (if any) by which (i) the
interest which would have been payable on the prepaid amount had it not been
paid prior to the last day of the Interest Period exceeds; and (ii) the
interest earned to the extent the Bank is able to redeposit the prepaid amount
for the balance of such Interest Period and also includes all expenses and
penalties incurred by the Bank in so redepositing such sum.
"Person" means any individual, corporation, association, limited
liability corporation, trust, joint stock company, unincorporated association,
joint venture, or any other entity and any Governmental Authority.
"Plants and/or Warehouses" means any of the processing facilities and
warehouses owned or leased by the Borrower set forth with respect to the
Borrower in Exhibit "F" hereto, as it may be amended from time to time.
"Solvency" means as of any time of determination with respect to a Person
(i) the fair market value of its assets exceeds the amount of its liabilities
(including contingent liabilities), (ii) the present fair saleable value of its
assets exceeds the probable liability on existing debts as they become due,
(iii) such Person is then able and expects to be able to pay its debts
(including contingent liabilities) as they become due, and (iv) such Person has
and expects to have sufficient capital (having due regard for the prevailing
practice in the industry in which
<PAGE> 19
13
it is engaged) to carry on its business as conducted or proposed to be
conducted.
"LIBOR Base Rate" means for the relevant Interest Period the rate of
interest mentioned at the display of the London Interbank Offered Rates of
major banks for Eurodollar Deposits designated as page "LIBO" on the Reuters
Monitor Money Rates Services (or such other page as may replace the LIBO page
for the purpose of displaying such London Interbank Offered Rates for
Eurodollar Deposits) at 11:00 a.m. London, England) time (two) Business Days
prior to the commencement of the relevant Interest Period for a period of time
equal or comparable to and commencing on such Interest Period and in an amount
equal or comparable to the Advance to be disbursed or outstanding during such
Interest Period.
"Default Rate" means a rate per annum equal to 3% (three percent) per annum
plus the LIBOR Base Rate plus (i), for the Initial Advance and for any fee and
other amounts specified in this Agreement due and not paid to the Bank, the
Applicable Margin OF the Initial Advance or (ii), for any other Advance, the
Applicable Margin.
"UniMark" means UniMark Foods, Inc.
ARTICLE TWO
TERMS AND CONDITIONS OF THE GISE LOANS
2.01 The Commitment. Subject to the terms and conditions of this
Agreement, the Bank agrees to open in favor of the Borrower a revolving credit
to be disbursed in one or more Advances, from time to time, up to but not
exceeding the amount of U.S. $8,500,000.00 Dollars (EIGHT MILLION FIVE HUNDRED
THOUSAND DOLLARS CURRENCY OF THE UNITED STATES OF AMERICA), in the
understanding that such amount does not include interest or any other amount
than the principal, which the Borrower is bound to pay to the Bank pursuant to
the terms of this Agreement.
Subject to the terms and conditions of this Agreement, the Borrower may
re-borrow amounts repaid or prepaid, in the understanding that, the aggregate
amount of the Advances outstanding at any time shall not exceed the amount
specified in the above mentioned paragraph. No Gise Loan or any part of any
Gise Loan shall be prepaid except at the times and in the manner expressly
provided herein.
<PAGE> 20
14
2.02 Use of the Advances. The Borrower shall use all the Advances made
pursuant to this Agreement to finance, in the usual course of business, the
purchase of the following products: orange, white and pink grapefruit,
tangerine, lemon and lime, which would be processed within the oil, essences
and concentrated orange juice production lines (collectively, the "Inventory").
The Borrower shall furnish the Bank the Inventory Certificate, as evidence for
such use.
2.03 Advances. The Borrower may, from the Effective Date and from
time to time, request an Advance by delivering to the Bank an Advance Notice,
prepared substantially in the form of Exhibit "D" hereto. Subject to the terms
and conditions of this Agreement, the Bank will disburse the Advances during
any Business Day, provided that:
(a) the Initial Advance will be disbursed 4 (four) Business Days
after the date on which the Bank receives from the Borrower
the first Advance Notice, stating that all the Conditions
Precedent have been fulfilled;
(b) each of the subsequent Advances will be disbursed 4 (four)
Business Days after the date on which the Bank receives from
the Borrower an Advance Notice;
(c) the Bank has received a Promissory Note;
(d) the Bank has received an Applicable Margin Certificate;
(e) each Notice of Advance shall specify (i) the amount of the
Advance; (ii) the description of the Inventory to be purchased
by the corresponding Advance; (iii) the location of the
corresponding Plant and/or Warehouses where such Inventory
will be stored; (iv) the Borrower's disbursement instructions;
and (v) the Applicable Margin for the corresponding Advance;
(f) the total amount of the Advances, at any time shall not exceed
the lesser of the Commitment or Borrowing Base;
(g) each Advance shall be in a minimum amount of U.S. $100,000
Dollars (ONE HUNDRED THOUSAND DOLLARS CURRENCY OF THE UNITED
STATES OF AMERICA) or in integral multiples thereof.
The Advance Notices delivered to and received by the Bank will be irrevocable
and binding to the Borrower. The Borrower therefore,
<PAGE> 21
15
hereby agrees to indemnify the Bank for any expenses or losses incurred by the
Bank if for any cause not attributable to the Bank any Advance requested in an
Advance Notice is not made within the 4 (four) days following the date of said
Advance Notice.
2.04 Interest.
(a) The Borrower shall pay to the Bank on each Interest Payment Date
interest on the principal outstanding amount of the Initial Advance during each
Interest Period at an annual rate equal to the LIBOR Base Rate plus the
Applicable Margin to the Initial Advance and
(b) The Borrower shall pay to the Bank on each Interest Payment Date,
interest on the principal outstanding amount of each Advance other than the
Initial Advance, during each Interest Period at an annual rate equal to the
LIBOR Base Rate plus the Applicable Margin.
2.05 Default Interest. If any Advance under this Agreement or any
principal amount hereunder or under any Gise Loan Document is not paid in full
when due (whether at stated maturity, by acceleration, by mandatory prepayment
or otherwise), the Borrower shall pay to the Bank default interest on the
unpaid amount, during the period from and including the date immediately
following such due date to and including the date of payment of said amount in
full, at the applicable Default Rate.
2.06 Computation of Interest. Interest shall be calculated on the exact
number of calendar days elapsed on the basis of a 360 day year, including the
first day, but excluding the last. Interest on each Advance shall accrue under
this Agreement from and including the date of disbursement of each Advance
until such Advance is paid in full.
2.07 Repayment of Gise Loans. The Borrower shall repay to the Bank the
full principal amount of each Advance on each Principal Payment Date or such
earlier date on which the Gise Obligations have been declared due and payable in
accordance with the terms hereof.
2.08 Promissory Notes. The obligations of the Borrower to pay to the
Bank the principal amount of any Advance and the corresponding interest shall
be evidenced by Promissory Notes
<PAGE> 22
16
duly signed by an Authorized Officer of the Borrower in favor of the Bank and
guaranteed "por aval" by the Guarantors and by Group, which shall be dated the
date of each Advance, shall be payable to the order of the Bank at the offices
of the Bank specified in signature page hereof and shall bear interest in
accordance with the terms thereof.
2.09 Place and Form of Payment.
(a) All payments to be made to the Bank hereunder shall be made at the
principal offices of the Bank at New York City, New York, United States, in
U.S. Dollars in immediately available funds not later than 11.00 a.m., New York
time, the day the payment is due, and any payment made after such time shall be
deemed made on the next Business Day.
(b) Any payments made to the Bank hereunder or in any Gise Loan Document
will be applied first against costs, losses, expenses and indemnities due
hereunder; then against fees due, if any; then against default interest due, if
any; then against interest due on the Gise Loan; and thereafter against the
principal amount of the Gise Loan.
(c) All payments to be made hereunder (whether of principal, interest,
fees, reimbursements, or otherwise) by the Borrower under this Agreement shall
be made without adjustment, set-off or counterclaim and shall be made free and
clear of any present or future income, stamp and other taxes, levies, imposts,
deductions, charges, compulsory loans and withholdings whatsoever imposed,
assessed, levied or collected by any country of incorporation of the Borrower,
or through which the Borrower is acting in connection herewith, or any
political subdivision or Governmental Authority thereof or therein, on or in
respect of this Agreement or the registration, notarization or other
formalization thereof or the enforcement thereof. All of the aforementioned
charges and taxes shall be for the account of and paid in full by the Borrower
when due.
(d) Any prepayment made as provided hereunder shall be accompanied by the
payment of the interest accrued on the principal amount so prepaid.
2.10 Payments due on a day which is not a Business Day. If any payment
which shall be made in accordance to this Agreement or to a Promissory Note is
due on a day which is not a Business Day, such payment shall be made on the
next succeeding Business Day, and the corresponding extention shall be
considered for the calculation of interest, unless the result of such
<PAGE> 23
17
extension would be to extend such payment into another calendar month in which
event such payment shall be made on the immediately preceding Business Day.
2.11 Prepayment of Gise Loans. The Borrower may, after having given
written notice of its intention to make a prepayment to the Bank 5 (five)
Business Days in advance of such prepayment, without premium or penalty, prepay
the outstanding principal amount of each Advance in whole, on any Interest
Payment Date with accrued interest up to the date of such prepayment on the
principal amount prepaid. Any notice of prepayment shall state the proposed
date (which shall be a Business Day) and aggregate principal amount of the
prepayment. Once the Borrower has notified the Bank of its intention to make a
prepayment, if the Borrower does not make the prepayment mentioned in such
notice, then the Borrower shall be responsible for paying all expenses and
costs incurred by the Bank by virtue of its failure to make such prepayment.
Such costs and expenses of the Bank shall be conclusive and binding on the
Borrower, and in the absence of manifest error, and shall immediately be paid
by the Borrower. The Borrower shall pay to the Bank the applicable fees then in
effect for any prepayment. On the date of this Agreement the applicable fee is
$250 Dollars (TWO HUNDRED AND FIFTY DOLLARS, CURRENCY OF THE UNITED SATES OF
AMERICA).
2.12 Amounts Exceeding Limits. If the sum of the Gise Loans at any
time exceeds the lesser of the Borrowing Base or the Commitment, the Borrower
shall within 5 (five) Business Days of any such determination (i) pay in cash
to the Bank at its office in New York City, New York, United States, the amount
of such excess, such payment to be applied to the Gise Loan, and the balance,
if any to be held by the Bank as Cash Collateral; or (ii) deliver to the Bank,
at its office in New York City, New York, United States additional collateral,
which shall be in form and content and value satisfactory to the Bank to equal
in aggregate value the amount of such excess, in the Bank's sole discretion; or
(iii) deliver to Bank, at its office in New York City, New York, United States
a combination of cash and such additional collateral which in aggregate value
shall equal the amount of such excess, in the Bank's sole opinion.
2.13 Termination of the right to make Advances. Reduction in the
Commitment. In terms of article 294 of the "Ley General de Titulos y
Operaciones de Credito", the Borrower and the Bank agree that the Bank has at
all times the right (i) to terminate or to limit the right to make Advances, or
(ii) to reduce the amount of the Commitment, or (iii) both (i) and (ii), or
(iv) to
<PAGE> 24
18
terminate this Agreement, provided that the Bank provides a written notice
addressed to the Borrower in accordance with section 9.11 of this Agreement.
Immediately upon the receipt of such notice, the right to make Advances or the
amount of the Commitment or both shall be abridged or extinguished, as
applicable.
2.14 Calculation and Payment of Fees. The fees required to be paid shall
be payable in addition to, and not in lieu of, principal, interest, expense
reimbursements, indemnification and other obligations. Fees shall be payable
in accordance with section 2.09 of this Agreement. All fees shall be fully
earned and non-refundable when paid. All fees specified or referred to in this
Agreement due to the Bank shall bear interest, if not paid when due, at the
Default Rate.
2.15 Payment of Funding Losses.
(a) The Borrower shall indemnify the Bank against any loss or
expense incurred by it as a result of any failure by the Borrower to fulfill,
on or before the date specified for any Advance, the conditions thereof,
including, without limitation, any loss (including loss of anticipated profits)
or expense incurred by reason of the liquidation or re-employment of deposits
or other funds when such Advance is not made on such date as a result of such
failure. A certificate in reasonable detail as to the amount of any such loss
or expense submitted to the Borrower shall be conclusive as to the amount
thereof except in cases of manifest error.
(b) If for any reason, including without limitation because any
prepayment is required by reason of a reduction in the Commitment or because
the Gise Loans exceed at any time the lesser of the Borrowing Base or the
Commitment, the Bank receives all or part of its portion of the principal
amount of an Advance prior to the last day of the Interest Period applicable
thereto, the Borrower shall pay the Bank the amount (if any) of the
Consequential Loss occasioned by such payment. A certificate of the Bank
submitted to the Borrower shall be conclusive absent manifest error.
2.16 Increased Costs.
(a) If after the date hereof (i) the adoption or implementation,
change, or phasing in of any law or regulation or in the interpretation thereof
by any domestic or foreign Governmental Authority charged with the
administration thereof or
<PAGE> 25
19
(ii) compliance with any directive, guideline or request from any central bank
or domestic or foreign Governmental Authority (whether or not having the force
of law) promulgated or made after the date hereof affects or would affect the
amount of capital required or expected to be maintained by the Bank or any
corporation directly or indirectly controlling the Bank has or would have the
effect of reducing the rate of return on such capital or the asset value of any
Advance made hereunder to a level below that which the Bank or such controlling
corporation could have achieved but for such adoption, implementation, change,
phasing in, or compliance (after taking into account the Bank's or such
corporation's policies regarding capital adequacy) by an amount deemed by the
Bank to be material to the Bank or such corporation, then, within 10 (ten)
calendar days after written demand by the Bank (accompanied by a statement of
the type referred to below), the Borrower shall pay to the Bank such additional
amount or amounts as shall be sufficient to compensate the Bank or such
controlling corporation for any such reduction.
(b) If any law, regulation, treaty, or directive hereafter
enacted, promulgated, approved, or issued or any change in any presently
existing law, regulation, treaty, or directive therein or in the interpretation
or application thereof by any Governmental Authority charged with the
administration thereof (whether or not having the force of law) or compliance
by the Bank or any corporation directly or indirectly owning or controlling the
Bank (in each case, the "Affected Person") with any request or directive from
any central bank or other Governmental Authority, agency, or instrumentality
(i) subjects such Affected Person to any tax, duty, or other charge of any kind
whatsoever with respect to its Commitment, any Advance, or its obligations
under this Agreement to make Advances, or any amounts payable to it hereunder
(and any additional income or franchise taxes resulting therefrom), or changes
the basis of taxation of payments to such Affected Person of principal,
interest, or any other amount payable hereunder in respect of the Gise Loan
(except for imposition of, or change in the rate of, any tax (A) on the overall
net income of such Affected Person or direct substitute for such tax, or (B)
which would not have been imposed if such Affected Person complied with any
certification, information, documentation or other reporting requirement); or
(ii) imposes, modifies, or makes applicable any reserve, special deposit,
compulsory loan, assessment, increased cost, or similar requirement against
assets held by, or deposits of, or advances or loans, or other credit extended
by, or any other acquisition of funds by, any office of such Affected Person in
respect of the Gise Loan which is not otherwise expressly included in the
determination of the applicable rate or rates of interest hereunder, and the
result of any of the foregoing is to increase the cost of making, renewing, or
maintaining the Gise Loan or the
<PAGE> 26
20
commitment to make Advances or to reduce any amount receivable by the Lender
hereunder in respect of any of the foregoing then, in any such case, the
Borrower shall promptly pay the Bank upon demand any additional amounts
necessary to compensate the Bank for such additional cost (including any
penalties, interest, and out-of-pocket expenses paid to third parties, but
excluding any late payment penalties which resulted solely from the Bank's
inaction in seeking indemnification hereunder) or reduction in such amount
receivable.
(c) The Bank will, if possible, designate a different Lending
Office if such will avoid the need for, or reduce the amount of, any
compensation hereunder and is not otherwise disadvantageous to the Bank. This
section shall apply and the Bank is entitled to payment hereunder,
notwithstanding any possible invalidity or inapplicability of any event or
provision which may require payment hereunder. A statement setting forth the
calculation of any additional amounts payable submitted by the Bank to the
Borrower shall be conclusive absent manifest error. No delay by the Bank in
demanding the payment of any additional amounts pursuant to this section shall
constitute a waiver of its right to demand payment of such amounts at any
subsequent time. In determining the additional amount payable pursuant to this
section, the Bank shall take into account any transitional adjustment or
phase-in provisions of such reserve requirements which would reduce the reserve
requirement otherwise applicable; provided, however, the Bank, in its sole
discretion, may determine the allocation of reserve requirements. Each such
determination made by the Bank, and each notification to the Borrower under
this section, shall be presumptive as to the matters therein set forth in the
absence of manifest error in calculation. The Bank agrees to provide on
request by the Borrower such certificates as are reasonably required, and take
such other actions as are reasonably necessary to claim such exemptions as the
Bank may be entitled to claim in respect of all or a portion of any sums which
are otherwise required to be paid or deducted or withheld pursuant to this
section. This section shall not be construed, nor shall it operate, to require
the Borrower to pay any sums not permitted or in excess of the limits imposed
by applicable law.
2.17 Change in Circumstances. If the Bank determines (which determination
shall be made in good faith and shall be conclusive and binding upon the
Borrower) that (i) adequate and reasonable means do not or will not exist for
ascertaining the interest rate applicable to any Advance, (ii) Dollar deposits
in the relevant amounts and for the relevant Interest Period are not available
to the Bank in the London interbank market for Dollar deposits, or (iii) the
LIBOR Base Rate does not accurately
<PAGE> 27
21
reflect the cost of funds to the Bank, then the Bank shall forthwith give
notice of such determination to the Borrower, whereupon, until the Bank
notifies the Borrower that the circumstances giving rise to such suspension no
longer exist, (x) the obligations of the Bank to make Advances shall be
suspended and (y) Borrower shall repay in full, without premium or penalty, the
then outstanding principal amount of the Gise Loan, together with accrued
interest thereon, on the last day of the then current Interest Period.
2.18 Lending Office. The Bank may without notice to or consent from the
Borrower (a) designate its principal office or a foreign branch, an Affiliate
of the Bank as its office (and the office to whose accounts payments are to be
credited) for any Advance and (b) change its offices from time to time by
notice to the Borrower. In such event, the Bank shall continue to hold the
Promissory Notes evidencing each Advance for the benefit and account of such
foreign branch, or Affiliate. The Bank is entitled to fund all or any portion
of the Gise Loan in any manner which it may determine in its sole discretion,
but all calculations and transactions hereunder shall be conducted as though
the Bank has actually funded each Advance at its office regardless of the
actual means of funding.
2.19 Taxes. All payments to be made by the Borrower hereunder or under the
Promissory Notes, shall be free and clear of and without any deduction for any
and all present or future tax, levy, impost, duty, deduction, charge or
withholding whatsoever together with interest, penalties or charges derived
therein (the "Taxes") imposed, assessed, levied, charged or collected by the
country of incorporation of the Borrower, or through which the Borrower is
acting in connection herewith, or any political subdivision or taxing authority
thereof or therein on or in respect of this Agreement, the Promissory Note or
the Advances or any payment in relation to the same, all of which shall be for
the account of and paid in full by the Borrower when due.
The Borrower will indemnify the Bank against, and reimburse the Bank upon
demand for any Taxes and any loss, liability, claim or expense including
interest, penalties and legal fees which the Bank may incur at any time arising
out of or in connection with any failure of the Borrower to make any payments
of Taxes when due. If the Borrower is required by applicable law, decree or
regulation to deduct or withhold Taxes from any amounts payable hereunder, the
Borrower will pay such additional amounts as may be required, after the
deduction or withholding of Taxes, to enable the Bank to receive from the
Borrower an amount equal to
<PAGE> 28
22
the amount stated to be payable hereunder. The Borrower will furnish the Bank
with original tax receipts in respect of any withholding of the Taxes required
hereunder within 30 (thirty) days after each date of payment of interest
hereunder and will promptly furnish the Bank with such other information and
documents as the Bank may require to establish to its satisfaction that full
and timely payment has been made of all Taxes required to be paid under this
section. The agreements of the Borrower under this section shall survive the
termination of this Agreement and the payment of all amounts otherwise due
hereunder.
In the event that any Taxes are imposed on or any payments must be made by the
Bank, then the amounts payable to the Bank under this Agreement and the
Promissory Notes issued hereunder shall be increased to such amounts which,
after provision for such Taxes, shall be necessary to yield and remit to the
Bank payments of the amounts that would have been required to be paid hereunder
if no such Taxes had been paid.
ARTICLE THREE
CONDITIONS PRECEDENT
3.1 Initial Conditions Precedent. The obligation of the Bank to make
the Initial Advance is subject to the condition that there shall have been
delivered to the Bank the following documents, certificates, evidence,
opinions, and other instruments in such number and counterparts as the Bank may
require, each of which shall be in form and substance satisfactory to the Bank
in its sole discretion:
(i) A Promissory Note, duly executed by the Borrower and
guaranteed "por aval" by the Guarantors and by Group, evidencing the
obligation of the Borrower to pay to the Bank the principal amount of
the Initial Advance and the corresponding interests;
(ii) the Pledge Agreement, duly executed by the Pledgors;
(iii) the Guaranty, duly executed by Group;
(iv) an Advance Notice, duly executed by the Borrower;
(v) an Inventory Certificate, duly executed by the Borrower;
<PAGE> 29
23
(vi) a Borrowing Base Certificate, duly executed by the Borrower;
(vii) certified copies of the "Estatutos" of each Obligated Party,
as amended, and certified copies of the documents evidencing the full
power and authority of the Authorized Officers of the Borrower and each
Guarantor to act on behalf of the Borrower and on behalf of each of the
Guarantors in the execution of this Agreement, the Promissory Notes and
other Gise Loan Documents;
(viii) copies of the resolutions of each Obligated Party approving
the execution, and performance of each Gise Loan Document to which it
is a party and authorizing all transactions contemplated in or in
connection with this Agreement and the other Gise Loan Documents duly
adopted by its Board of Directors, accompanied by a certificate signed
by the Secretary of the Board of Directors of the approving entity
certifying that such copies are true and correct copies of resolutions
duly adopted at a meeting of the Board of Directors and that such
resolutions have not been amended, modified, or revoked in any respect
and are in full force and effect on the date hereof;
(ix) copies of the Financial Statements referred to in section 4.08
of this Agreement;
(x) original of the certificate issued by the Public Registry of
Commerce of the domicile of the Borrower evidencing that the
corresponding liens created in favor of the Bank, pursuant to this
Agreement have been duly perfected and all other documentation relating
to the Collateral is in form and substance satisfactory to the Bank;
(xi) a certificate signed by the Secretary of the Board of
Directors of each Obligated Party certifying that the pledges created
under the Pledge Agreement have been duly perfected and registered in
the stock registry books of the Borrower and each of the Guarantors;
(xii) such other documents, opinions, certifications, consents,
waivers, agreements, and evidence as the Bank may reasonably request.
3.2 Additional Conditions. The Bank will not be obligated to make any
Advance (including the Initial Advance) until the following additional
conditions precedent have been satisfied as
<PAGE> 30
24
of the date of making the Advance and after giving effect thereto (a) no
Default or Event of Default has occurred and is continuing; (b) the
representations and warranties contained herein are true and correct in all
material respects as of such date, as if then made (except to the extent that
such representations and warranties relate solely to an earlier date); (c) the
Borrower has paid all expenses then due and payable; (d) no change in the
condition (financial or otherwise), business, assets, operations, or affairs of
any of the Borrower or the Guarantors or Group taken as a whole has occurred
which has had or is likely to have a material adverse effect; (e) the Bank has
received an Advance Notice in accordance with the terms hereof signed by a duly
Authorized Officer of the Borrower which certificate shall set forth
information as the Bank may reasonably request; (f) the Bank has received a
Promissory Note, duly executed by the Borrower and guaranteed "por aval" by the
Guarantors and by Group, evidencing the obligation of the Borrower to pay to
the Bank the principal amount of the corresponding Advance and the
corresponding interests; (g) the Bank has received a Borrowing Base Certificate
signed by a duly Authorized Officer of the Borrower; (h) the Bank has received
an Inventory Certificate, signed by an Authorized Officer of the Borrower; (i)
the Bank and the Borrower have agreed on the Applicable Margin for the Advance
requested in the corresponding Advance Notice; (j) the Bank and the Borrower
have executed the Applicable Margin Certificate; and (k) all other conditions
to obtaining the Advance requested have been satisfied. The submission by the
Borrower of an Advance Notice shall constitute a representation and warranty by
the Borrower as of the disbursement date of an Advance that all of the
foregoing conditions have been satisfied.
ARTICLE FOUR
REPRESENTATIONS AND WARRANTIES
To induce the Bank to enter into this Agreement and to perform its agreements
hereunder, each of the Obligated Parties, jointly and severally, represents and
warrants that each of the following statements is correct:
4.01 Organization and Authority. Each Obligated Party is duly
organized, validly existing, and in good standing under the laws of Mexico.
All of the outstanding capital stock of each Obligated Party is duly
authorized, validly issued, fully paid, and non-assessable. Each Obligated
Party has all requisite power
<PAGE> 31
25
and authority to conduct its business, to own, lease, operate, or maintain its
properties. Each Obligated Party has all requisite power and authority to
execute and deliver and perform all of its obligations under the Gise Loan
Documents.
4.02 Validity, Authorization, and No Conflict. The execution, delivery, and
performance by each Obligated Party of the Gise Loan Documents to which it is a
party and the consummation of the transactions contemplated in connection
therewith (a) have been duly authorized by such Obligated Party, (b) do not
violate any provision of the "Estatutos" of such Obligated Party, and (c) are
not prohibited by and do not violate nor constitute a default under any law, or
any presently existing requirement or restriction imposed by any judgment,
order, writ, Governmental Authority, or any agreement, instrument, or indenture
by which any Obligated Party is bound, or result in the creation of any Lien
upon any of the assets of any Obligated Party. The Gise Loan Documents have
been duly executed and delivered by each Obligated Party thereto, and such Gise
Loan Documents are legal, valid, and binding obligations of such Obligated
Party enforceable in accordance with their respective terms, except as the
enforcement thereof may be limited by applicable bankruptcy or debtor relief
laws affecting the rights of creditors generally.
4.03 No Proceedings.
(a) All actions, suits, claims, or proceedings pending or
threatened against any Obligated Party or its properties or assets, before any
Governmental Authority or private arbitrator are listed on Exhibit "E" hereto.
(b) There are no actions, suits, claims, or proceedings pending or
threatened against any Obligated Party or its properties or assets before any
Governmental Authority, or private arbitrator which has, or if adversely
determined would have, a material adverse effect on any Obligated Party or
which challenge the validity of any of the Gise Loan Documents or any of the
transactions contemplated therein or thereby.
4.04 No Approvals. Neither the making, execution, delivery or
performance of any of the Gise Loan Documents nor the consummation of the
transactions contemplated in connection therewith requires the consent or
approval of any Person or if any such approval is required, such approval has
been obtained.
<PAGE> 32
26
4.05 No Default. No Default has occurred and is continuing or will
result from the making of any requested Advance. No Obligated Party is in
default under, and no event has occurred which with the lapse of time or giving
of notice, or both, could result in a default under, any indenture, agreement,
lease, or other instrument or in a violation of any statute, regulation,
judgment, injunction, decree, determination, or award the result of which would
be a material adverse effect.
4.06 Adverse Circumstances. Neither the business nor any property of any
Obligated Party is presently affected by any fire, explosion, accident, strike,
lockout, or other dispute, embargo, act of god, act of public enemy, or similar
event or circumstances nor has any other event or circumstance relating to its
business or affairs occurred which has had or may reasonably be expected to
have a material adverse effect.
4.07 Tax Returns and Payments. All foreign, federal, state, and other
tax returns of each Obligated Party required to be filed have been filed, and
all foreign federal, state, and other taxes, assessments, fees, and other
governmental charges (domestic and foreign) imposed on each Obligated Party
which are due and payable have been paid except for any such tax, assessment,
fee, or charge which is being contested in good faith and for which adequate
reserves satisfactory to the Bank have been established on the books of such
Obligated Party. There is no material deficiency or assessment which may be
asserted in connection with any of said taxes, assessments, fees, or charges.
4.08 Financial Statements. Each Obligated Party and Group has delivered
to the Bank its audited consolidated Financial Statements for the fiscal year
ended December 31, 1995, and the unaudited consolidated Financial Statements
for the fiscal year ended December 31, 1996; such Financial Statements are
complete and correct in all material respects (subject, in the case of interim
statements, to changes resulting from audits and year end adjustments) and
fairly present, in accordance with GAAP, the consolidated financial condition
of the Obligated Party and Group as of the dates thereof and for the periods
then ended. The statements of income and cash flow fairly present the results
of the consolidated operations of the Obligated Party and Group for the periods
indicated. Since said dates there has been no material adverse change in such
financial condition, and except as reflected or referred to in any said
Financial Statements, there are no contingent or disputed liabilities or
unrealized or anticipated losses which in the aggregate are material.
<PAGE> 33
27
4.09 Accuracy of Disclosures. All writings prepared by or on behalf of
any Obligated Party furnished to the Bank for the benefit of, for the purposes
or, or in connection with, the Gise Loan Documents or any transaction
contemplated hereby or thereby, were true and accurate in all material respects
on the date such writings were furnished and do not contain any untrue statement
of any material fact or omit to state a material fact necessary in order to make
the statements contained therein not misleading, and all other such writings
hereafter furnished to the Bank for the benefit of, by, or on behalf of any
Obligated Party shall be true and accurate in all material respects on the date
such writings are so furnished. There is not to the knowledge of any Obligated
Party any fact which materially and adversely affects or in the future may (so
far as any Obligated Party can foresee) materially and adversely affect the
operations, business, assets, prospects, or condition of such Obligated Party or
any Affiliate of an Oligated Party or Group taken as a whole which has not been
specified herein or otherwise in writing furnished to the Bank.
4.10 Property. Each Obligated Party has good and marketable title to
its properties and the properties of the Obligated Parties are free and clear
of all Liens. Each Lien securing any part of the Gise Loans and obligations
under the Gise Loan Documents (whether granted by any Obligated Party or by any
other Person) is first and prior to any other Lien in such property. All
property owned by or leased to any Obligated Party is in adequate operating
condition and repair and free from any known defects which substantially
interfere with the use thereof. Each Obligated Party has obtained and
maintains in full force and effect all rights, franchises, easements, patents,
licenses, permits, governmental approvals, and consents necessary to the
conduct of its business and affairs except where the failure to do so does not
and is not reasonably expected to have a material adverse effect.
4.11 Existing Indebtedness. Except as listed on Exhibit "E" hereto, no
Obligated Party is liable for, owes or is obligated for any indebtedness
(direct, indirect or contingent).
4.12 Real Estate. Except as listed on Exhibit "F" hereto, no Obligated
Party owns, leases or has any interest in (directly or indirectly) any real
estate or leasehold.
4.13 Inventory Location. No Obligated Party keeps, or maintains its
Inventory and Inventory Process Products in any
<PAGE> 34
28
location (owned, leased or rented, or provided gratuitously or as a part of a
supply agreement or arrangement) other than such locations listed on Exhibit
"F" hereto.
4.14 Insurance. The Obligated Party will maintain with responsible
insurance companies, insurance policies in such amounts and against such risks
as is customarily carried by owners of similar businesses and property.
4.15 Environmental Requirements. The Obligated Party would take all
necessary actions to obtain and maintain all authorizations, approvals and
consents of and/or registrations with all Governmental Authority in Mexico or
any political subdivision thereof as shall be necessary or appropriate under
the laws of Mexico in connection with all environmental requirements related to
its operations.
4.16 Labor Matters. There is no collective bargaining agreement covering
any of the employees of any Obligated Party except as set forth on Exhibit "G"
hereto.
4.17 Solvency. After giving effect to the transactions contemplated
in the Gise Loan Documents and the Advances requested hereunder are made and
the disbursement of the proceeds of such Advances pursuant to the Borrower's
instructions, and after giving effect to the existing transactions directly
between the Bank and UniMark which transactions are separate and apart from the
transactions contemplated in the Gise Loan Documents, and possible future
direct indebtedness between the Bank and UniMark, or any affiliate of UniMark
and considering that Group and all of its Affiliates operate as a single
consolidated entity and enterprise and as such have capital sufficient to carry
on their businesses and transactions as they now exist and are planned in the
future, each Obligated Party and Group and UniMark taken as a whole is Solvent.
Further, the Obligated Parties have previously represented to the Bank, and the
Obligated Parties do hereby jointly and severally, represent and warrant to the
Bank that Group and all of its Affiliates operate as a consolidated enterprise
and acknowledge and agree that the Bank did rely upon the consolidated assets
of Group and all of its Affiliates taken as a whole in determining whether to
enter into this Agreement.
4.18 Trademarks, Copyrights, Patents and Logos. Exhibit "F" hereto
contains a list of (i) all trademarks, service marks, tradenames, trade dress
and logos, used by the Obligated Parties,
<PAGE> 35
29
specifically identifying each registration, if any, of each trademark, service
mark, tradename, trade dress and logo by registration number, and date and the
entity issuing the registration; (ii) all copyrights, whether registered or
unregistered, owned, licensed, or leased by an Obligated Party, including,
without limitation, any copyrights registered in Mexico or in the United
States, identified by registration number, and all applications for
registration thereof; and (iii) all foreign and Mexican letters patent and
applications for letters patent, identified by patent or application number,
owned, licensed to or from or otherwise acquired by an Obligated Party.
ARTICLE FIVE
AFFIRMATIVE COVENANTS
So long as any Commitment is outstanding, any part of the Gise Obligations
remains unpaid, or any contingent part of the Gise Obligations continues to
exist, or until the Bank consents to the contrary and the Borrower receives
prior written approval to the contrary from the Bank, each Obligated Party, as
applicable, will comply, or cause compliance, with each of the following
covenants:
5.01 Payment of the Gise Obligations. The Borrower will pay (i) any
principal portion of the Gise Obligations when due whether at maturity or
otherwise or (ii) any interest portion of the Gise Obligations or (iii) any and
all costs and expenses incurred by the Bank in connection with the negotiation
and preparation of the Gise Loan Documents.
5.02 Agreements. Each Obligated Party will comply with and duly and
punctually perform and observe all agreements, covenants, and obligations
contained in the Gise Loan Documents and any other agreement between it and the
Bank.
5.03 Use of the Advances. The proceeds of each Advance will be used
pursuant to the provisions of section 2.02 of this Agreement.
5.04 Books and Records; Inspection. Each Obligated Party will maintain
in a secure place on their premises, complete
<PAGE> 36
30
proper and accurate books, records, ledgers, correspondence, and other papers
relating to its business and affairs. The Bank will at all reasonable times
have the right to examine, inspect, audit, verify, and copy such items, and to
remove copies thereof and to discuss any of same with appropriate officers,
accountants, and auditors or such Obligated Party. The Bank may at reasonable
times inspect any property of any Obligated Party (including the taking of
physical samples therefrom).
5.05 Notice of Default. Within 24 (twenty four) hours of the
discovery by any Obligated Party of the occurrence of a Default or Event of
Default hereunder or under any of the other Gise Loan Documents or an event
which could reasonably be expected to result in a Default or Event of Default
hereunder or under any other Gise Loan Document, the Borrower will notify the
Bank and will deliver a certificate signed by the chief executive officer or
the chief financial officer of the Borrower concerning the nature and period of
existence thereof and the steps, if any, being taken to cure such Default or
Event of Default.
5.06 Maintenance of Existence, Approvals, and Licenses. Each Obligated
Party will preserve and maintain its existence, rights, privileges, and
franchises in its jurisdiction in which, under then applicable law, the nature
of its business or the ownership of its properties requires such qualifications
and the failure so to qualify would have a material adverse effect and conduct
its business in an orderly, efficient, prudent, and regular manner, obtain and
maintain in full force all approvals, patents, licenses (governmental and
private), permits, and authorizations necessary to conduct its business and
comply with its obligations under the Gise Loan Documents.
5.07 Compliance with Laws, Material Agreements, and Licenses. Each
Obligated Party will comply with all foreign and domestic laws, rules,
regulations, ordinances, orders, judgments, and decrees applicable to it or any
of its property, a breach of which (when considered alone or when aggregated
with the effect of other breaches) could have a material adverse effect, will
comply in all respects with all material agreements, indentures, mortgages,
leases, and other documents to which it is a party or by which it or any of its
property is bound and will keep in full force and effect all material licenses,
permits, and franchises necessary or useful for the conduct of its business.
5.08 Maintenance of Assets and Insurance. Each Obligated Party will
keep all assets which are useful and necessary in the
<PAGE> 37
31
business in good working order and condition, make all necessary replacements
and maintain, or cause to be maintained, such insurance as is customarily
maintained by other businesses of comparable type and size with such
financially sound and reputable insurers, in such amounts and covering such
risks as shall be satisfactory and acceptable to the Bank. Each insurance
policy covering the Inventory and any other Collateral shall name the Bank for
the benefit of the Bank as an insured or loss payee as its interest may appear
and shall provide that no act, whether willful or negligent, or default by such
Obligated Party shall affect the right of the Bank to recover on the policy in
case of loss or damage. Insurance policies maintained with respect to any
Inventory and other Collateral pursuant to the terms hereof shall be delivered
to the Bank and shall prohibit cancellation thereof without 30 (thirty)
calendar days prior written notice to the Bank. All renewal and substitute
policies of such insurance shall be delivered to the Bank at least 15 (fifteen)
calendar days before termination of any existing policies. If requested by the
Bank, each Obligated Party will deliver a report in form and substance
satisfactory to the Bank describing all material insurance then being
maintained.
5.09 Financial Statements, Borrowing Base Certificate and Other
Information.
(a) Each Obligated Party will maintain a standard, modern system
of accounting established and administered in accordance with sound business
practices to permit preparation of consolidated and consolidating financial
statements in conformity with GAAP, and each of the Financial Statements
described below shall be prepared from such system and records. The Borrower
and Group will deliver or cause to be delivered to the Bank each of the
following:
(i) as soon as practicable, and in any event within 45
(forty-five) days after the end of each of the first 3 (three) fiscal
quarters in each fiscal year, the unaudited consolidated Financial
Statements of the Group and each Affiliate and consolidating balance
sheet and income statement of Group and each Affiliate as at the end of
such period and for the period from the beginning of the then current
fiscal year to the end of such fiscal quarter, and a comparison of the
statement of year-to-date income and cash flow to the annual financial
budget or financial projection and to the corresponding period of the
preceding fiscal year, all in reasonable detail and certified by the
chief financial officer of Group as fairly presenting the consolidated
financial position of Group and each Affiliate
<PAGE> 38
32
as at the dates indicated and the results of their consolidated
operations and cash flow for the periods indicated in accordance with
GAAP, subject to normal year end adjustments;
(ii) at the same time as each Financial Statement described in
paragraphs (i) and (iii) of this section is delivered, a certificate
signed by the chief financial officer of Borrower and Group stating
that a review of the consolidated activities of Group and each
Affiliate for such period has been made under the supervision of such
officer and that the Borrower and each other Obligated Party has
fulfilled every obligation herein and is not in Default hereunder or,
if the Borrower or any other Obligated Party is in Default, a
description of the nature, duration, and status of such Default; and
(iii) as soon as practicable, and in any event within 120 (one
hundred and twenty) days after the end of each fiscal year, audited
consolidated Financial Statements of Group and each Affiliate and
unaudited annual consolidating balance sheet and income statement of
Group and each Affiliate, each as of the close of such fiscal year and
setting forth in comparative form the figures for the preceding fiscal
year, all in reasonable detail and with the audited consolidated
Financial Statements being reported on by independent certified public
accountants acceptable to the Bank, which report shall be unqualified
and shall state that such Financial Statements fairly present the
consolidated financial position of Group and each Affiliate as at the
dates indicated and the results of their consolidated operations and
cash flow for the periods indicated in conformity with GAAP applied on
a basis consistent with prior years (except for changes with which such
independent certified public accountants shall concur and which shall
have been disclosed in the notes to the Financial Statements) and that
the examination by such accountants in connection with such Financial
Statements has been made in accordance with generally accepting
auditing standards, accompanied by a copy of the management letter or
any similar report delivered to the Group or any other Obligated Party
or to any officer or employee thereof by such accountants in connection
with such Financial Statements.
(b) The Borrower will deliver or cause to be delivered to the Bank
as soon as available and in any event within 15 (fifteen) days after the last
day of each accounting month in each fiscal year, a Borrowing Base Certificate
executed by the chief financial officer of Borrower including information as at
the end of such month.
<PAGE> 39
33
(c) The Borrower will deliver or cause to be delivered to the Bank
a copy of each report or form, including, without limitation, the annual
report, any prospectus, and any Form 10-K, filed with the Securities and
Exchange Commission and any report or communication sent by Group to its
stockholders as soon as available and in any event within 30 (thirty) days of
filing such item or, if not filed, of transmitting it to its shareholders.
5.10 Payment of Debts. Each Obligated Party will pay its
indebtedness and obligations as the same become due in accordance with the
terms of the instruments or documents evidencing the same and will pay all
trade bills when due in accordance with the customary practice in the trade and
in any event so that the credit standing of such Obligated Party will not be
materially and adversely affected.
5.11 Payment of Taxes and Liabilities. Each Obligated Party will
pay prior to the time same become past due all taxes, assessments, and other
liabilities (including claims of laborers, suppliers, and materialmen) imposed
or which may give rise to a Lien upon it or its franchises, income, profits,
properties, or assets, except and so long as contested in good faith and
provided adequate reserves satisfactory to the Bank have been established, and
no Lien has attached to any property of an Obligated Party.
5.12 Claims and Actions. If any Obligated Party becomes the subject of
or a party to any suit, action, investigation, or proceeding (governmental or
private) in which a claim is asserted against it in excess of $10,000 (TEN
THOUSAND DOLLARS CURRENCY OF THE UNITED STATES OF AMERICA), the Borrower will
within 3 (three) Business Days thereafter notify the Bank of such suit, action,
or proceeding and the particulars thereof and upon request of the Bank, from
time to time, report to the Bank with respect to the status and particulars.
5.13 Maintenance of Chief Executive Office. The Borrower will maintain
its chief executive offices and books and records at Carretera Torres No 226
Pte. Cd. Victoria Tamaulipas, C.P. 87,000, Mexico.
5.14 Other Notices. Each Obligated Party will promptly notify the Bank in
writing of (a) any material adverse change in its financial condition,
business, or affairs (b) any failure by
<PAGE> 40
34
it or UniMark to comply with the material terms of any material agreement,
contract, or other instrument to which it or Group or UniMark is a party or by
which any of its properties or those of UniMark are bound, or any acceleration
of the maturity of any indebtedness owing by it or UniMark; (c) any material
adverse claim against or affecting it or Group or UniMark or any damage to or
material adverse change concerning the Collateral or its properties or those of
UniMark, (d) the commencement of any proceeding which if adversely determined
could have a material adverse effect; and (e) any other event which has or can
reasonably be expected to have a material adverse effect (including, without
limitation, the termination of any material labor contract, any material labor
dispute, or any strike, lockout, walkout, or other dispute to which it or
UniMark is a party or which affects or may affect any of its properties or
those of UniMark).
5.15 Environmental Requirements. Each Obligated Party will comply in
all material respects with all environmental, health and safety laws and
regulations applicable to it.
5.16 Additional Documents. From time to time and upon request by the
Bank, each Obligated Party will, and will cause the Affiliates to, execute,
endorse, acknowledge, and deliver to the Bank and file or cause same to be done
any and all other documents and do all other acts or things as Bank may
reasonably request in order more fully to effect this Agreement.
ARTICLE SIX
NEGATIVE COVENANTS
So long as any Commitment is outstanding, any part of the Gise Obligations
remains unpaid, any contingent part of the Gise Obligations continues to exist,
or until the Bank consents to the contrary and the Borrower receives the prior
written approval to the contrary from the Bank, each Obligated Party, as
applicable, will comply or cause compliance with each of the following
covenants.
6.01 Liens. No Obligated Party will create or permit to exist any Lien
with respect to the Collateral.
<PAGE> 41
35
6.02 Liquidation, Merger, Consolidation, Acquisition. No Obligated Party
will (i) wind up, liquidate, or dissolve or be a party to any merger or
consolidation or any partnership, nor purchase or otherwise acquire all or
substantially all of the assets of any Person or any shares of stock of, or
similar interest in, any Person or change or modify its existing structure
EXCEPT that (a) any Obligated Party may merge into or consolidate with any of
its Affiliates so long as the Obligated Party is the survivor and (b) any
Obligated Party may accomplish an acquisition so long as (1) the Obligated
Party is the survivor, (2) in the opinion of the Bank the survivor is not
materially less creditworthy immediately after such transaction, (3) such
transaction would not have a material adverse effect, and (4) immediately prior
thereto no Default exists and after giving effect to the transaction no Default
would exist, or (ii) form or organize any Affiliate unless subparagraphs (3)
and (4) immediately above are each true.
6.03 Issuance of Shares. None of the Obligated Parties may issue, sell
or dispose of any shares of its capital stock or other securities or rights,
warrants or options to purchase or acquire any such shares or securities or
otherwise change its capital structure or change the relative rights or
preferences or limitations relating to its capital stock.
6.04 Discount of Receivables. No Obligated Party will discount or sell with
or without recourse, or sell for less than the face value thereof, any of its
accounts, instruments, chattel paper, or general intangibles.
6.05 Sale of Assets.
(a) No Obligated Party will convey, sell, lease, or otherwise
dispose of (or agree to do any of the foregoing at any future time) all or
substantially all or a substantial part of its property or assets or any part
of its property or assets essential to the conduct of its business as presently
conducted.
(b) No Obligated Party will convey, sell, lease, or otherwise
dispose of any other assets except for sales of such assets in the ordinary
course of business for a fair and adequate consideration.
6.06 Transactions on Favorable Terms. No Obligated Party will lease or
sell property to, lease or purchase property from,
<PAGE> 42
36
pay any fees to, or enter into or consummate any material transaction, whether
with an Affiliate or otherwise, on terms less favorable to it than would be
obtainable at the time in comparable transactions with arm's length dealings.
6.07 Conflicting Agreements. No Obligated Party will enter into any
agreement containing any provision which would be violated or breached by its
performance hereunder.
6.08 Change in Business. No Obligated Party will make any material
change in the nature of, or conduct any business other than, its business as
presently conducted nor use any name other than its corporate name nor change
its corporate name.
6.09 Accounting Practices. No Obligated Party will make any material
change in accounting treatment or reporting practices except for any such
change required by GAAP.
6.10 Management Changes. Group will not fail for any reason to have
Jorn Budde as Chief Executive Officer of Group or Rafael Vaquero Bazan as Chief
Operating Officer of Group.
ARTICLE SEVEN
EVENT OF DEFAULT
7.1 Events of Default. The occurrence of any of the following events
is an Event of Default:
(a) any Obligated Party fails or refuses to pay (i) any principal
portion of the Gise Obligations when due whether at maturity or otherwise, or
(ii) any interest portion of the Gise Obligations when due whether at maturity
or otherwise;
(b) any Person makes any representation or warranty in any
certificate or statement (including, without limitation, any Financial
Statement) furnished to the Bank pursuant hereto or in connection herewith, any
other Gise Loan Document or in any document given by any Obligated Party to the
Bank which is inaccurate in any material respect as of the date on which such
representations or warranty is made or deemed made;
<PAGE> 43
37
(c) any Obligated Party fails or refuses to comply with any
covenant contained in sections 5.1, 5.3, 5.5, 5.6, 5.12 or 5.14 or Article Six
hereof;
(d) the Borrower fails or refuses to comply with the covenant in
section 5.9(b) hereof and such failure or refusal is not cured within 5 (five)
Business Days;
(e) any Obligated Party fails or refuses to perform punctually and
properly any covenant or agreement or otherwise breaches any covenant or
agreement contained herein (other than in 5.01, 5.03, 5.05, 5.06, 5.12 or 5.14
or Article Six hereof as to each of which there is no grace period or other
than in section 5.9 (b) hereof as to which there is a 5 (five) Business Days
grace period), or any Obligated Party fails or refuses to perform punctually
and properly any covenant or agreement or otherwise breaches any covenant or
agreement contained in any other Gise Loan Document, or in any document
executed by any Obligated Party in connection herewith and such failure,
refusal, or breach is not cured within 10 (ten) calendar days (or such other
time period specified in this section or in such Gise Loan Document) after it
becomes known to such Obligated Party;
(f) any of the Gise Loan Documents ceases to be or any Obligated
Party contends that any Gise Loan Document is not, a legal, valid and binding
obligation of the parties thereto, enforceable in accordance with the terms
thereof or in any way cease, to provide to the Bank the rights, privileges,
benefits, power, and remedies intended to be conferred thereby, or any
Obligated Party repudiates its obligations under any Gise Loan Document or
invalidates or renders unperfected or unenforceable any Lien in any Collateral
or any such Lien becomes invalid, unperfected or unenforceable;
(g) an involuntary case under the "Ley de Quiebras y Suspension de
Pagos" is commenced against any Obligated Party and is not dismissed, or stayed
within 60 (sixty) calendar days of the commencement thereof, or a court having
jurisdiction enters a decree or order for relief in respect of any Obligated
Party in an involuntary case under the "Ley de Quiebras y Suspension de Pagos",
or any other applicable law, appoints a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of any such Obligated
Party or of any substantial part of the property of any Obligated Party, or
orders the dissolution, winding up, or liquidation of the affairs of any
Obligated Party or any substantial part of the property of any Obligated Party
is placed in the custody of any court and such decree, order, appointment, or
placing is unstayed and in effect for a period of 60 (sixty) consecutive days;
<PAGE> 44
38
(h) any Obligated Party commences a voluntary case, or consents to
or fails to contest an involuntary case, under the "Ley de Quiebras y
Suspension de Pagos", or any other applicable law, or applies for, consents to,
fails to contest, or files an answer admitting the material allegations of a
petition seeking the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator (or other similar
official) of any Obligated Party, or for any substantial part of the property
of any Obligated Party, or any Obligated Party makes any assignment for the
benefit of creditors, or fails generally to pay its debts as such debts become
due, or takes any action in furtherance of any of the foregoing;
(i) a money judgment in the case of any single judgment in the
amount of $1,000,000 Dollars or more in the case of all such judgments at any
time existing in the aggregate amount of $1,000,000 Dollars or more is entered
against any Obligated Party which is not satisfied or enforcement thereof
stayed by the first to occur of the 30th (thirtieth) day after the date of the
judgment or the 10th (tenth) day before the date on which assets of such
Obligated Party may be lawfully sold to satisfy such judgment;
(j) a default or event of default under any instrument evidencing
an Indebtedness (other than the Gise Obligations) of any Obligated Party
occurs, the effect of which is to permit the holder of such instrument to
accelerate the maturity thereof or require the prepayment, purchase, or
redemption thereof, or any Obligated Party fails to pay any Indebtedness when
due or the holder accelerates the maturity of or exercises any right to require
purchase or redemption of any promissory note or other obligation or evidence
of such Indebtedness;
(k) any Lien against any property of any Obligated Party is filed
or attaches and is not discharged, or suitable bond is not made to prevent the
enforcement thereof to the Bank's satisfaction, within 10 (ten) calendar days
of the date any Obligated Party learns of the existence thereof; and
(l) the occurrence of a Default or Event of Default (as defined in
the Gise Revolving Loan Agreement or in the UniMark Revolving Loan Agreement)
under any instrument or document evidencing, securing or guaranteeing a debt
owed by Gise and/or by UniMark or other Group Affiliate to the Bank.
7.2 Maturity of Gise Obligations and Other Rights.
<PAGE> 45
39
(a) Upon the occurrence of an Event of Default specified in
sections 7.1 (h) or (i) this Agreement, and without the necessity of any
action, notice, or demand by the Bank, the Commitment shall automatically
terminate and the unpaid principal and accrued interest and fees constituting
part of the Gise Obligations, together with all other outstanding Gise
Obligations, shall be immediately due and payable. Upon the occurrence of any
Event of Default other than one specified in sections 7.1 (h) or (i) of this
Agreement, the Bank by written notice to the Borrower may do any one or more of
the following: (i) terminate all or any portion of the Commitment, whereupon
the Commitment (or the terminated portion thereof) and obligation of the Bank
to make Advances shall terminate; (ii) declare the unpaid principal and accrued
interest and fees constituting part of the Gise Obligations, together with all
other outstanding Gise Obligations, immediately due and payable; (iii) reduce
any claim to judgment; or (iv) enforce any of the rights of the Bank under any
of the Gise Loan Documents or as otherwise provided by applicable law or
agreement.
(b) Demand, presentment for payment, protest and notice of
nonpayment, or protest or dishonor, and all demands and notices of any action
taken by the Bank under this Agreement and the other Gise Loan Documents and
notice of intent to accelerate, and notice of acceleration of, the Gise
Obligations and any part thereof are hereby expressly waived.
7.3 Enforcement of Rights. Each Obligated Party agrees it is
commercially reasonable for the Bank to exercise its rights in or with respect
to the Collateral in such manner and in such order as the Bank determines. The
Bank may, without foreclosing thereon, collect and otherwise enforce all
amounts owing on the Collateral or any proceeds thereof or otherwise enforce
any of the rights of such Obligated Party or the Bank therein or in any of the
Collateral and apply such collections as provided herein or may foreclose on
the Collateral.
ARTICLE EIGHT
SECURITY INTEREST. GUARANTEE
8.1 Security Interest.
(a) The Borrower and the Bank hereby agree that the punctual
payment of (i) any principal portion of the Gise Obligations when due whether
at maturity or otherwise, or (ii)
<PAGE> 46
40
any interest portion of the Gise Obligations or (iii) any and all costs and
expenses incurred by the Bank in connection with the negotiation and
preparation of this Agreement, and the other Gise Loan Documents and the
collection of the Gise Obligations, or enforcement of this Agreement is
secured, pursuant to articles 322, 326, 328, 330 and 334 paragraph VII of the
"Ley General de Titulos y Operaciones de Credito", and Borrower hereby grants
to Bank a first priority security interest upon (i) all of the Inventory
purchased with each of the Advances, (ii) all of the Inventory of Products in
Process (iii) all of the Inventory Processed Products, (iv) all instrument,
chattel paper, account receivable or letters of credit evidencing,
representing, arising from or existing with respect of, relating to, securing
or otherwise supporting the payment of the Inventory Processed Products
(collectively, the "Accounts Receivable") and (v) upon all proceeds, products
accessions, rents, profits, income, benefits, substitutions and replacements of
and to any of the Inventory, the Inventory of Products in Process, the
Inventory Processed Products and Accounts Receivable.
(b) The Borrower shall be the depository of the Inventory, the
Inventory of Products in Process, the Inventory Processed Products and the
Accounts Receivable, in the terms of article 329 of the "Ley General de Titulos
y Operaciones de Credito".
(c) Until payment in full of all Gise Obligations, collection of
Accounts Receivable shall be subject to the following:
(i) Until the Bank notifies the Borrower to the contrary, the
Borrower shall instruct the Account Debtors upon all invoices, billing
statements and similar documents evidencing or relating to the Accounts
Receivable to make all payments on the Accounts Receivable payable to
Bank of New York; Account: 8026002533 for credit: Rabobank New York, in
favor of: Grupo Industrial Santa Engracia, S.A. de C.V. Ref.: 80648
ABA: 021000018. The Borrower shall not give any Account Debtor at any
time by any means any instructions for payment contrary to the
foregoing.
(ii) The Borrower shall, within 30 (thirty) Business Days of
execution of this Agreement, send by registered mail to all the Account
Debtors listed in Exhibit "J" hereto, a notice substantially in the
form attached hereto as Exhibit "K" hereto.
(iii) The Borrower shall promptly notify the Bank of any sales of
Inventory Processed Products purported to be made to any Account
Debtors other than those to whom notices were sent pursuant to the
preceding paragraph.
<PAGE> 47
41
8.2 Guarantee.
(a) The Guarantors, jointly and severally, hereby guarantee to the
Bank the punctual payment of any (i) principal portion of the Gise Obligations
when due whether at maturity or otherwise, or (ii) any interest portion of the
Gise Obligations or (iii) any and all costs and expenses incurred by the Bank
in connection with the negotiation and preparation of this Agreement, and the
other Gise Loan Documents and the collection of the Gise Obligations, or
enforcement of this Agreement. The Guarantors hereby further agree that if the
Borrower shall fail to pay in full when due (whether at stated maturity, by
acceleration or otherwise) any of the Gise Obligations, the Guarantors will
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 the Gise
Obligations, the same will be promptly paid in full when due (whether at
extended maturity, by acceleration or otherwise) in accordance with the terms
of such extension or renewal.
(b) The obligations of the Guarantors under section 8.2 (a) hereof
are absolute and unconditional irrespective of the value, genuineness,
validity, regularity or enforceability of the Gise Loan Documents, or any
substitution, release or exchange of any other guarantee of or security for any
of the Gise Obligations, and, to the fullest extent permitted by applicable
law, irrespective of any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor,
it being the intent of this section 8.2 (b) that the obligations of the
Guarantors hereunder shall be absolute and unconditional under any and all
circumstances. Without limiting the generality of the foregoing, it is agreed
that the occurrence of any one or more of the following shall not alter or
impair the unconditional liability of the Guarantors as described above;
(i) at any time or from time to time, without notice to the
Guarantors, the time for any performance of or compliance with any of
the Gise Obligations shall be extended, or such performance or
compliance shall be waived;
(ii) any of the acts mentioned in any of the provisions of the Gise
Loan Documents or instrument referred to herein or therein shall be
done or omitted;
(iii) the interest rate on the Gise Loans shall change as provided
herein;
<PAGE> 48
42
(iv) the maturity of any of the Gise Obligations shall be
accelerated, or any of the Gise Obligations shall be modified,
supplemented or amended in any respect, or any right under the Gise
Loan Documents shall be waived or any other guarantee of any of the
Gise Obligations or any security therefor shall be released or
exchanged in whole or in part or otherwise dealt with; or
(v) any lien or security interest granted to, or in favor of, the
Bank as security for any of the Gise Obligations shall fail to be
perfected.
The Guarantor hereby expressly waives (i) diligence, presentment, demand of
payment, protest and all notices whatsoever, and any requirement that the Bank
exhaust any right, power or remedy or proceed against the Borrower under the
Gise Loan Documents, or against any other Person under any other guarantee of,
or security for, any of the Gise Obligations and (ii) the provisions contained
in articles 2845, 2846, 2847, and 2849 of the Civil Code for the Federal
District and in the correlative articles of the Civil Codes of the States of
the Federation. The Guarantors_ obligations hereunder and the obligations of
all other Persons providing guarantees for the Gise Obligations are joint and
several.
ARTICLE NINE
MISCELLANEOUS
9.01 Waivers and Modifications.
(a) From time to time, without notice to or further consent by any
Obligated Party, the performance or observance by any Obligated Party of any
term or provision hereof may be waived or the time of performance thereof
extended. In addition, any Collateral therefor may be substituted, exchanged,
released, surrendered, waived, subordinated or otherwise dealt with, or
additional Collateral obtained, all without affecting the liability of any
Obligated Party.
(b) No waiver or modification of any provision of this Agreement,
or consent to any departure from or supplement, amendment or termination of the
terms hereof, the other Gise Loan Documents or any other document, shall be
effective unless such is in writing and signed by the Bank which may be given
in its sole discretion, and any such waiver shall be effective only for the
specific instance given. No waiver of any Event of Default shall be deemed to
be a waiver of any other or subsequent Event
<PAGE> 49
43
of Default, nor shall any waiver be deemed to be a continuing waiver. The
acceptance at any time and from time to time of a partial payment of the Gise
Obligations shall not be deemed to be a waiver of any Event of Default then
existing. No failure, delay, or omission by the Bank in exercising any right
or power hereunder, or under any other document executed by any Obligated Party
as security for or in conjunction with the Gise Obligations shall impair any
such right or power or be construed as a waiver thereof or any acquiescence
therein.
9.02 Cumulative Rights. All rights and remedies available to the Bank
under this Agreement are cumulative of and in addition to all other rights and
remedies available to the Bank at law, or otherwise, and may be exercised from
time to time, and as often as may be deemed expedient, whether or not the Gise
Obligations are due and payable and whether or not any suit for collection,
foreclosure, or other action in connection with this Agreement has been
instituted, and the exercise of one or more rights or remedies shall not impair
or prejudice the concurrent or subsequent exercise of the rights or remedies.
9.03 Conflicting Provisions. The provisions of this Agreement are in
addition to those of any other Gise Loan Document or other evidence of
liability held by the Bank and all documents shall be construed as
complementary to each other and may be enforced in accordance with their
respective terms except as hereafter provided. Should any provision contained
in any other agreement between the Bank and Obligated Party conflict with this
Agreement, the provisions contained in this Agreement shall control.
9.04 Severability. If any provision of this Agreement or any other Gise
Loan Document is held to be illegal, invalid, or unenforceable, such provision
shall be fully severable; the remaining provisions of this Agreement or such
other Gise Loan Document, as appropriate, shall remain in full force and effect
and shall not be affected by such provision or by its severance.
9.05 Independent Covenants. If any action or failure to act by any
Obligated Party violates any covenant or obligation of any Obligated Party
herein, such violation shall not be excused by the fact that such action or
failure to act would otherwise be permitted by or fall within the limitations
of any covenant (or exception to any covenant) herein contained other than the
covenant violated.
<PAGE> 50
44
9.06 Construction. Article and Section captions and the Table of
Contents are for convenience only and shall not affect the construction hereof
nor shall any provision of this Agreement be construed against any Person
solely because that Person or a representative of that Person drafted such
provision.
9.07 Survival. This Agreement shall terminate when (a) the principal
of and interest accrued to such date on the Gise Loans and any outstanding Gise
Obligations have been paid in full in cash; (b) all fees, expenses, and other
amounts then due and payable which constitute Gise Obligations have been paid
in full in cash; and (c) the Commitment has expired or been terminated. The
termination of this Agreement shall not affect any rights of or obligations
arising prior to the effective date of such termination nor shall it reduce or
otherwise affect any release or indemnity made herein. Notwithstanding the
foregoing, if payment hereunder must be returned for any reason, this Agreement
and the other Gise Loan Documents shall continue in full force. The provisions
of the foregoing sentence shall be and remain effective notwithstanding any
contrary action so taken which shall be without prejudice to the Bank's rights
under this Agreement and shall be deemed to have been conditioned upon such
payment having become final and irrevocable. All covenants, agreements,
undertaking, indemnities, representations, and warranties made herein shall
survive all closings hereunder, the making of each Advance, the repayment of
the Gise Loan and the termination and discharge of all other provisions of this
Agreement or any of the other Gise Loan Documents and shall not be affected by
any investigation made by any party, and all indemnifications shall survive the
repayment of the Gise Obligations, the termination of the Commitment, and
release and termination of this Agreement.
9.08 Form of Documents. Each agreement, document, instrument, or
other writing to be furnished to the Bank under any provision of this Agreement
must be in form and substance satisfactory to the Bank and its counsel.
9.09 Parties Bound and Assignment of the Borrower's Interest. This
Agreement shall be binding upon, inure to the benefit of, and be deemed to
include the successors and assigns of the parties hereto; provided, however,
that no Obligated Party may, without the prior written consent of the Bank,
assign any rights, powers, duties, or obligations hereunder.
<PAGE> 51
45
9.10 Expenses. The Obligated Parties, jointly and severally, agree
to pay all costs and expenses (such expenses to include all investigation,
audit, legal (which shall be reasonable), appraisal, valuation, formalization,
filing, printing, insurance, and environmental adviser, accountant, auditor,
and other consultant or adviser expenses and all document duplication,
reproduction, and other out-of-pocket expenses) incurred by the Bank in
connection with the negotiation and preparation of this Agreement, the other
Gise Loan Documents, any documents executed or filed in connection herewith;
the creation, perfection, protection, and insurance of Liens in and the
maintenance of the Collateral and the filing, recording, of any financing
statement and all amendments or modifications thereto and any and all other
documents or instruments to be filed by the terms hereof; the negotiation or
preparation of any and all amendments, modifications, supplements, assignments,
consents, waivers, or other documents or instruments related hereto; and the
collection of the Gise Obligations, or enforcement of this Agreement.
9.11 Notices. Except as otherwise specifically provided herein,
whenever this Agreement requires or permits any consent, approval, notice,
request, or demand from one party to another, the same must be in writing
(including telecopy, telegram, telex, or cable) to be effective and shall be
deemed commercially reasonable and to have been given (a) in the case of notice
from the Bank to any Obligated Party on the earlier of (i) if by courier, the
3rd (third) Business Day after it is duly delivered, addressed to the party to
be notified or, (ii) in the case of notice given by any other means, the
Business Day on which it is received or, (b) in the case of notice from any
Obligated Party to the Bank on the Business Day it is received. The address of
each party hereto is set forth below each party's name on the signature pages
hereof. Any Person may change its address of notice by giving notice to all
other parties hereto.
9.12 Governing Law. The execution and fulfillment of this Agreement, the
Promissory Notes and the other Gise Loan Documents (other than the Guaranty)
shall be governed and construed in accordance to the laws of Mexico, including
any action or proceeding in connection with the execution and fulfillment of
this Agreement or the Promissory Notes or the other Gise Loan Documents (other
than the Guaranty) before the competent courts of Mexico or any of its
political subdivisions and it contains the entire understanding of the parties.
9.13 Jurisdiction. The parties hereto agree that any legal action or
proceeding arising out of or relating to this Agreement, the Promissory Notes
and the other Gise Loan Documents
<PAGE> 52
46
(other than the Guaranty) shall be brought in the courts of Mexico City,
Federal District or courts in any jurisdiction where assets of the Borrower
and/or the Guarantors may be found, or all of them, as the Bank may elect, and
by execution and delivery of this Agreement, the Borrower and the Guarantors
hereby submit to and accept with regard to any such action or proceeding
against them and in respect of their property, generally and unconditionally,
the jurisdiction of the aforesaid courts. The Borrower and the Guarantors
expressly waive any other jurisdiction.
9.14 Documentation. Each party hereto acknowledges that it is solely
responsible for reviewing and approving this Agreement and any other documents
to be entered into by it in connection with this transaction, and that it has
or will enter into this Agreement and any such other documents solely upon the
advice of its own counsel.
9.15 Counterparts. This Agreement may be executed in any number of
counterparts all of which taken together shall constitute one and the same
instrument. This Agreement has been executed in both the English and Spanish
languages, both of which shall bind the parties hereto and constitute but one
agreement and instrument; provided, however, that in case of doubt as to the
proper interpretation or construction of this Agreement, the Spanish text shall
be controlling in all cases, except in connection with any legal action or
proceeding brought in respect of this Agreement in the competent courts of the
United States or any political subdivision thereof, in which case the English
text shall be controlling. All certificates, reports, notices and other
documents and communications given or delivered pursuant to this Agreement
(including, without limitation, any modifications or supplements hereto) shall
be in the English language, or accompanied by a certified Spanish translation
thereof.
9.16 Registration. This Agreement will be registered in the Public
Registry of Commerce of the corporate domicile of the Borrower, as required by
article 326 of the "Ley General de Titulos y Operaciones de Credito", for which
purpose the Borrower will ratify its execution in the presence of a notary
public in Mexico.
IN WITNESS WHEREOF, the parties hereto have caused this Revolving Gise Loan
Agreement with Security Interest ("Contrato de Apertura de Credito Revolvente
de Habilitacion o Avio") to be duly executed by their respective officers or
agents thereunto duly authorized as of the date first above written.
<PAGE> 53
47
The Bank The Borrower
- ------------------------------- ----------------------------------
Cooperatieve Centrale Grupo Industrial Santa
Raiffeisen-Boerenleenbank B.A., Engracia, S.A. de C.V.
"Rabobank Nederland",
New York Branch
BY: BY:
---------------------------- -------------------------------
TITLE: TITLE:
------------------------- ----------------------------
ADDRESS: ADDRESS:
----------------------- --------------------------
- ------------------------------- ----------------------------------
TELEFAX: TELEFAX:
----------------------- --------------------------
AgroMark Icmosa
- ------------------------------- ----------------------------------
AgroMarK, S.A. de C.V. Industrias Citricolas de
Montemorelos, S.A., de C.V.
BY: BY:
---------------------------- -------------------------------
TITLE: TITLE:
------------------------- ----------------------------
TELEFAX: TELEFAX:
----------------------- --------------------------
ADDRESS: ADDRESS:
----------------------- --------------------------
Witnesses
- ------------------------------- ----------------------------------
Name Name
<PAGE> 1
FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT
THIS FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT made as of October
___, 1997, by and among UNIMARK FOODS, INC., a Texas corporation which is the
Borrower, and THE UNIMARK GROUP, INC., a Texas corporation ("GROUP"), UNIMARK
INTERNATIONAL, INC., a Texas corporation and a wholly-owned subsidiary of
Group, and SIMPLY FRESH FRUIT, INC., a California corporation and a
wholly-owned subsidiary of Borrower (each of which shall be a "GUARANTOR"
hereunder and which collectively shall be "GUARANTORS"); and COOPERATIEVE
CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK NEDERLAND," NEW YORK BRANCH,
a New York Branch of a Netherlands Cooperative Banking Organization which is
the Lender.
R E C I T A L S:
A. The Borrower, the Guarantors and the Lender are parties to a
Revolving Credit Agreement dated as of February 12, 1997 (the "Original Credit
Agreement").
B. The Borrower has asked the Lender to reduce the credit
available to Borrower's Mexican subsidiaries and to increase the maximum amount
of credit available to Borrower in the United States.
C. The parties desire to amend the Original Credit Agreement to
reflect such increase in the maximum amount available for the Borrower to
borrow from $8,500,000 to $9,500,000, subject to the terms and conditions
hereinafter provided.
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. SAME TERMS. All terms used herein which are defined in the
Original Credit Agreement shall have the same meanings when used herein, unless
the context hereof otherwise requires or provides. In addition, all references
in the Loan Documents to the "Agreement" shall mean the Original Credit
Agreement, as amended by this First Amendment to Revolving Credit Agreement,
and as the same shall hereafter be amended from time to time.
2. AMENDMENTS TO ORIGINAL CREDIT AGREEMENT. Effective as of the
date above, the following changes shall be made to the Original Credit
Agreement.
a. In Section 2.1(ii), $8,500,000 shall be changed to
$9,500,000.
b. In the Definitions contained in the Appendix, under
the definition of "Revolving Note", Exhibit 2.2 shall be changed to
Exhibit 2.2A.
FIRST AMENDED REVOLVING CREDIT AGREEMENT - PAGE 1
<PAGE> 2
c. In Section 2.2, in the first sentence, the words "is
dated the date hereof" shall be deleted, and, therefore, the first
sentence of Section 2.2 shall now read in its entirety the following:
The Advances made by the Lender shall be evidenced by
a Revolving Note executed by the Borrower which is in
the amount of the Commitment, is payable to the order
of Lender at the office of the Lender, and bears
interest in accordance with the terms thereof.
d. Exhibit 2.2, Form of Revolving Note, shall be wholly
replaced by Exhibit 2.2A, Form of Restated Revolving Note, which is
attached hereto as Exhibit 2.2A and incorporated herein by reference.
e. Exhibit 5.9(b), Borrowing Base Certificate, shall be
wholly replaced by Exhibit 5.9(b)A, Restated Borrowing Base
Certificate, which is attached hereto as Exhibit 5.9(b)A and
incorporated herein by reference.
3. CERTAIN REPRESENTATIONS. Each Obligated Party, jointly and
severally, represents and warrants that, as of the date hereof:
(a) the representations and warranties contained in the
Original Credit Agreement are true and correct on and as of the date
hereof as made on and as of such date;
(b) no event has occurred and is continuing which
constitutes a Default or an Event of Default;
(c) the Borrower and each of the Guarantors have full
power and authority to execute this First Amendment to Revolving
Credit Agreement, and this First Amendment to Revolving Credit
Agreement constitutes the legal, valid and binding obligation of the
Borrower and each of the Guarantors enforceable in accordance with its
terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, and other similar
laws affecting the enforcement of creditors' rights generally; and
(d) no authorization, approval, consent or other action
by, notice to, or filing with, any governmental authority or other
person is required for the execution, delivery and performance by the
Borrower or any of the Guarantors of this First Amendment to Revolving
Credit Agreement.
4. GUARANTORS' ACKNOWLEDGMENT. By signing below, each of the
Guarantors (i) acknowledges and consents to the execution, delivery and
performance of this First Amendment to Revolving Credit Agreement, (ii) agrees
that its obligations in respect of its Guaranty are not released, modified,
impaired or affected in any manner by this First Amendment to Revolving
FIRST AMENDED REVOLVING CREDIT AGREEMENT - PAGE 2
<PAGE> 3
Credit Agreement or any of the provisions contemplated herein, and (iii)
acknowledges that it has no claims or offsets against, or defenses or
counterclaims to, its Guaranty.
5. CONDITIONS OF EFFECTIVENESS. This First Amendment to
Revolving Credit Agreement shall be effective as of the date and year first
above written, subject to the following:
(a) The Lender shall have received this First Amendment
to Revolving Credit Agreement executed by Borrower and each Guarantor;
and
(b) The Lender shall have received the Restated Revolving
Note and the Restated Borrowing Base Certificate executed by Borrower,
such Restated Revolving Note to be in substitution for, in lieu of,
and in replacement of that certain Revolving Note executed by Borrower
on February 12, 1997.
6. LIMITATION ON AGREEMENTS. The modifications set forth herein
are limited precisely as written and shall not be deemed (a) to be a consent
under or a waiver of or an amendment to any other term or condition in the
Original Credit Agreement or any of the Loan Documents, or (b) to prejudice any
right or rights which the Lender now has or may have in the future under or in
connection with the Original Credit Agreement and the Loan Documents, each as
amended hereby, or any of the other documents referred to herein or therein.
This First Amendment to Revolving Credit Agreement shall constitute a Loan
Document for all purposes. The Original Credit Agreement, as amended by this
First Amendment to Revolving Credit Agreement, and all other Loan Documents
executed in connection therewith shall remain in full force and effect and are
hereby ratified and confirmed.
7. COSTS, EXPENSES AND TAXES. Borrower agrees to pay on demand
all costs and expenses of the Lender in connection with the preparation,
reproduction, execution and delivery of this First Amendment to Revolving
Credit Agreement and the other instruments and documents to be delivered
hereunder (including the reasonable fees and out-of- pocket expenses of counsel
for the Lender with respect thereto and with respect to advising the Lender as
to its rights and responsibilities under the Revolving Credit Agreement, as
amended by this First Amendment to Revolving Credit Agreement).
8. EXECUTION IN COUNTERPARTS. This First Amendment to Revolving
Credit Agreement may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each which when so executed and
delivered shall be deemed to be an original and all of which taken together
shall constitute but one and the same instrument.
9. ENTIRETY, ETC. This instrument together with all of the other
Loan Documents embodies the entire agreement between the parties. THIS
AGREEMENT AND ALL OF THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
FIRST AMENDED REVOLVING CREDIT AGREEMENT - PAGE 3
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have executed this
First Amendment to Revolving Credit Agreement to be effective as of the date
and year first above written.
BORROWER AND OBLIGATED PARTY:
UNIMARK FOODS, INC.
By:
------------------------------------
Name:
--------------------------------
Title:
-------------------------------
Notice Address:
124 McMakin Road
Bartonville, Texas 76226
(817) 491-2992
OTHER OBLIGATED PARTIES:
THE UNIMARK GROUP, INC.
By:
------------------------------------
Name:
-----------------------------
Title:
----------------------------
UNIMARK INTERNATIONAL, INC.
By:
------------------------------------
Name:
-----------------------------
Title:
----------------------------
FIRST AMENDED REVOLVING CREDIT AGREEMENT - PAGE 4
<PAGE> 5
SIMPLY FRESH FRUIT, INC.
By:
------------------------------------
Name:
-----------------------------
Title:
----------------------------
LENDER:
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A., "RABOBANK
NEDERLAND, NEW YORK BRANCH,
a New York Branch of a Netherlands
Cooperative Banking Organization
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
NOTICE ADDRESS:
245 Park Avenue
New York, New York 10167
Attention: Corporate Services
cc: Rabobank Nederland
13355 Noel Road
One Galleria Tower, Suite 1000
Dallas, Texas 75240
Attention: Gordon E. Arnold
FIRST AMENDED REVOLVING CREDIT AGREEMENT - PAGE 5
<PAGE> 1
SECOND AMENDMENT TO REVOLVING CREDIT AGREEMENT
AND GUARANTOR CONSENT
THIS SECOND AMENDMENT TO REVOLVING CREDIT AGREEMENT AND GUARANTOR
CONSENT (the "SECOND AMENDMENT") is made as of November __, 1997, by and among
UNIMARK FOODS, INC., a Texas corporation which is the Borrower, and THE UNIMARK
GROUP, INC., a Texas corporation ("GROUP"), UNIMARK INTERNATIONAL, INC., a
Texas corporation and a wholly-owned subsidiary of Group, and SIMPLY FRESH
FRUIT, INC., a California corporation and a wholly-owned subsidiary of Borrower
(each of which shall be a "GUARANTOR" hereunder and which collectively shall be
"GUARANTORS"); and COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A.,
"RABOBANK NEDERLAND," NEW YORK BRANCH, a New York Branch of a Netherlands
Cooperative Banking Organization which is the Lender.
R E C I T A L S:
A. The Borrower, the Guarantors and the Lender are parties to a
Revolving Credit Agreement dated as of February 12, 1997 (the "ORIGINAL CREDIT
AGREEMENT").
B. Each Guarantor executed a Guaranty Agreement in favor of the
Lender pursuant to the Original Credit Agreement.
C. The Original Credit Agreement has been amended pursuant to
that certain First Amendment to Revolving Credit Agreement (the "FIRST
AMENDMENT") dated as of October 7, 1997, among the Borrower, the Guarantors,
and the Lender (the Original Revolving Credit Agreement, as amended by the
First Amendment, is hereinafter called the "CREDIT AGREEMENT").
D. The parties desire to amend the Credit Agreement to extend the
Expiration Date of the Credit Agreement, and to change various covenants and
terms of the Credit Agreement, subject to the terms and conditions hereinafter
provided, and the Guarantors desire to consent to such amendment.
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. SAME TERMS. All terms used herein which are defined in the
Credit Agreement have the same meanings when used herein unless the context
hereof otherwise requires or provides. In addition, all references in the Loan
Documents to the "Agreement" mean the Original Credit Agreement, as amended by
the First Amendment and as amended by this Second Amendment, as the same are
hereafter amended from time to time.
SECOND AMENDMENT TO REVOLVING CREDIT AGREEMENT AND GUARANTOR CONSENT - PAGE 1
<PAGE> 2
2. AMENDMENTS TO CREDIT AGREEMENT. Effective as of the date
above, the Credit Agreement is hereby amended as follows:
(a) The definition of "Expiration Date" in the Appendix
to the Credit Agreement is amended by substituting the following
paragraph in place of the definition of "Expiration Date" in the
Appendix to the Credit Agreement:
"EXPIRATION DATE" means April 30, 1998 or any other
date on which the Commitment terminates pursuant to the terms
hereof.
(b) Section 7.3 of the Credit Agreement is hereby amended
by substituting the following paragraph in place of Section 7.3 in the
Credit Agreement:
"7.3 Maximum Leverage. The ratio of the Debt of
Group and its Subsidiaries on a consolidated basis to Tangible
Net Worth of Group and its Subsidiaries on a consolidated
basis shall not be greater than 1.50 to 1 at any time."
(c) The definition of "Current Assets" in the Appendix to
the Credit Agreement is amended by substituting the following
paragraph in place of the definition of "Current Assets" in the
Appendix to the Credit Agreement:
"CURRENT ASSETS" means those assets which would be
reflected on a balance sheet prepared in accordance with GAAP
as "current assets" but excluding (i) all accounts receivable
in respect of goods or services which were delivered or
performed at least ninety (90) days prior to the date of
determination unless appropriate reserves have been made for
such "over 90 day" accounts receivable in the bad debt
reserve, (ii) all deferred income tax assets, and (iii)
Intangible Assets which have been classified as current
assets.
(d) The definition of "Current Liabilities" in the
Appendix to the Credit Agreement is amended by substituting the
following paragraph in place of the definition of "Current
Liabilities" in the Appendix to the Credit Agreement:
"CURRENT LIABILITIES" means those liabilities which
would be reflected on a balance sheet prepared in accordance
with GAAP as "current liabilities" but excluding (i) all
deferred income tax liabilities and (ii) any and all
outstanding obligations under the "Promissory Notes" or other
"Loan Documents" as defined in that certain Loan Agreement
among Industrias Citricolas De Montemorelos, S.A. De C.V. and
Grupo Industrial Santa Engracia, S.A. De C.V., as Borrowers,
Agromark, S.A. De C.V., as Guarantor, and Cooperatieve
Centrale Raiffeisen-Boerenleenbank B.A. "Rabobank Nederland"
as Lender dated as of May 29, 1997.
SECOND AMENDMENT TO REVOLVING CREDIT AGREEMENT AND GUARANTOR CONSENT - PAGE 2
<PAGE> 3
3. CERTAIN REPRESENTATIONS.
(a) The Borrower represents and warrants that, as of the
date hereof: (i) the Borrower has full power and authority to execute this
Second Amendment, and this Second Amendment constitutes the legal, valid and
binding obligation of the Borrower enforceable in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, and other similar laws affecting the enforcement of
creditors' rights generally; and (ii) no authorization, approval, consent or
other action by, notice to, or filing with, any governmental authority or other
person is required for the execution, delivery and performance by the Borrower
of this Second Amendment.
(b) Each Guarantor represents and warrants that, as of
the date hereof: (i) such Guarantor has full power and authority to execute
this Second Amendment, and this Second Amendment constitutes the legal, valid
and binding obligation of such Guarantor enforceable in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, and other similar laws affecting the
enforcement of creditors' rights generally; and (ii) no authorization,
approval, consent or other action by, notice to, or filing with, any
governmental authority or other person is required for the execution, delivery
and performance by such Guarantor of this Second Amendment.
4. CONCERNING THE UNCONDITIONAL GUARANTIES. By its execution
below, each Guarantor reaffirms the obligations under the Unconditional
Guaranty executed and delivered by such Guarantor in connection with the Loan
Documents and acknowledges that the execution and delivery of this Second
Amendment shall not reduce or modify in any respect Guarantor's liability under
such Unconditional Guaranty.
5. CONCERNING THE SECURITY AGREEMENTS. By their execution below,
Borrower and each Guarantor reaffirms the security interests granted under each
Security Agreement executed and delivered by each of them in connection with
the Loan Documents and acknowledges that the execution and delivery of this
Second Amendment shall not reduce or modify in any respect Borrower's or each
Guarantor's liability or obligations under such Security Agreement.
6. LIMITATION ON AGREEMENTS. The modifications set forth herein
are limited precisely as written and shall not be deemed (a) to be a consent
under or a waiver of or an amendment to any other term or condition in the
Credit Agreement or any of the Loan Documents, or (b) to prejudice any right or
rights which the Lender now has or may have in the future under or in
connection with the Credit Agreement and the Loan Documents, each as amended
hereby, or any of the other documents referred to herein or therein. This
Second Amendment constitutes a Loan Document for all purposes.
7. ENTIRETY, ETC. This instrument together with all of the other
Loan Documents embodies the entire agreement between the parties. THIS
AGREEMENT AND ALL OF THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
SECOND AMENDMENT TO REVOLVING CREDIT AGREEMENT AND GUARANTOR CONSENT - PAGE 3
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have executed this Second
Amendment to be effective as of the date and year first above written.
BORROWER AND OBLIGATED PARTY:
UNIMARK FOODS, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
NOTICE ADDRESS:
124 McMakin Road
Bartonville, Texas 76226
(817) 491-2992
OTHER OBLIGATED PARTIES:
THE UNIMARK GROUP, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
UNIMARK INTERNATIONAL, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
SECOND AMENDMENT TO REVOLVING CREDIT AGREEMENT AND GUARANTOR CONSENT - PAGE 4
<PAGE> 5
SIMPLY FRESH FRUIT, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
LENDER:
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A., "RABOBANK
NEDERLAND," NEW YORK BRANCH, a
New York Branch of a
Netherlands Cooperative Banking
Organization
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
NOTICE ADDRESS:
245 Park Avenue
New York, New York 10167
Attention: Corporate Services
cc: Rabobank Nederland
13355 Noel Road
One Galleria Tower, Suite 1000
Dallas, Texas 75240
Attention: Gordon E. Arnold
SECOND AMENDMENT TO REVOLVING CREDIT AGREEMENT AND GUARANTOR CONSENT - PAGE 5
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1
<CASH> 4,051
<SECURITIES> 0
<RECEIVABLES> 11,881
<ALLOWANCES> 258
<INVENTORY> 32,138
<CURRENT-ASSETS> 52,930
<PP&E> 40,888
<DEPRECIATION> 4,503
<TOTAL-ASSETS> 100,886
<CURRENT-LIABILITIES> 44,998
<BONDS> 9,114
0
0
<COMMON> 86
<OTHER-SE> 46,450
<TOTAL-LIABILITY-AND-EQUITY> 100,886
<SALES> 59,041
<TOTAL-REVENUES> 59,041
<CGS> 39,405
<TOTAL-COSTS> 39,405
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 176
<INTEREST-EXPENSE> 2,256
<INCOME-PRETAX> (1,676)
<INCOME-TAX> (141)
<INCOME-CONTINUING> (1,535)
<DISCONTINUED> 0
<EXTRAORDINARY> 139
<CHANGES> 0
<NET-INCOME> (1,396)
<EPS-PRIMARY> (0.16)
<EPS-DILUTED> (0.16)
</TABLE>
