EXHIBIT 10.08
BUSINESS LOAN AGREEMENT
Agreement made and entered into June 12 1997, by and between G-P PLASTICS,
INC., a Michigan corporation of 0000 Xxxxxxxxxx Xxxxx, Xxxxxxxxx Xxxxx, Xxxxxxxx
00000 ("Borrower"); and Horizon BIDCO Investment Co., a Michigan corporation
organized under the Michigan BIDCO Act, having its office and principal place of
business at 0000 Xxxxxx Xxxxx Xxxx, Xxxxxxx, Xxxxxxxx 00000 ("Lender").
1. LOAN AGREEMENT. The Borrower agrees to borrow from the Lender, and the
Lender agrees to lend to the Borrower on the date hereof, subject to the terms
and conditions set forth in this Business Loan Agreement ("Agreement") and the
promissory note, up to the sum of $500,000.00, hereinafter referred to as
"Loan".
2. EXECUTION OF NOTE. The obligation to repay the Loan shall be evidenced
by the Borrower's promissory note, hereinafter referred to as the "Note" and
substantially in the form set forth in Exhibit "A", attached and incorporated,
which Note shall be payable according to its terms in 60 monthly installments
("Loan Term"), nine initial monthly payments of interest only payable in arrears
and 51 monthly payments of principal and interest of approximately $ 11,505.00.
Monthly payments to commence June 30, 1997, and shall be due the last day
of each month thereafter, with the entire unpaid balance due and owing 60 months
from the date hereof. Interest shall be included on the unpaid portion of the
principal balance in the amount of the Prime rate as published from time to time
in the Wall Street Journal plus 4%, adjusted at the end of each calendar
quarter, but not less than 13.5% per annum, which shall be calculated on the
basis of a 360 day year with payments, as hereinabove set forth. A late fee in
the amount of 5.0% of the monthly installments due and owing will be assessed
against the Borrower in the event the monthly payments required hereunder are
received by the Lender after the due date. Prepayment ("Prepayment") shall not
be permitted during the first 24 months of the Loan Term. After month 24 of the
Loan Term the Borrower shall have the right to prepay the entire principal
balance of the Loan plus accrued interest at any time without a Prepayment
penalty. The provisions for continuing revenue participation payments pursuant
to paragraph 3 and redemption of options pursuant to paragraph 4 hereof shall
continue in event of Prepayment.
3. REVENUE PARTICIPATION. In addition to the payment of principal and
interest pursuant to the Loan as set forth in Section 2 above, the Borrower
shall pay to the Lender Revenue Participation Payments ("Payment" or
"Payments"), pursuant to a Revenue Participation. Agreement substantially in the
form set forth in Exhibit "B", as follows:
(a) Basis for Payment: The Payments shall be based upon the Revenue
Participation formula ("Formula") using the annual gross revenues ("Gross
Revenues") Generated
by the Borrower's existing company or companies and any successor or affiliate
companies formed during the Loan Term, and Payments shall continue throughout
the entire Loan Term, even if the principal balance plus accrued interest of the
Loan is prepaid. Gross Revenues from all sources shall be determined using
generally accepted accounting principles applied on a consistent basis as
prescribed by the American Institute of Certified Public Accountants, as set
forth in the Borrower's fiscal year-end reviewed financial statement. If the
Gross Revenues generated by Borrower or its affiliates for any fiscal year of
Borrower are between $12,000,000 and $15,500,000, the participation by the
Lender shall be an amount equal to .75% of the Gross Revenues generated by the
Borrower in excess of $12,000,000 up to and including $15,500,000. If the Gross
Revenues generated by the Borrower are in excess of $15,500,000, the Lender
shall receive additional revenue participation equal to 1.25% of Gross R evenues
generated by the Borrower in excess of $15,500,000. Payments for the period
commencing on the date of this Agreement and ending on June 11, 2002 shall be on
a proportionate basis according to the Formula. Payments for any short year at
the end of the Loan Term shall likewise be on a proportionate basis.
(b) Payments Due: Payments shall be made on a calendar quarter
basis during the Loan Term.
(c) Estimated Payments: The Payments for each calendar quarter shall
be estimated and paid as follows:
(i) For the initial period ("initial Period") commencing on the
date hereof and ending at the end of the first calendar quarter after the date
hereof the Borrower shall determine its Gross Revenues for the Initial Period
which shall be annualized for the purpose of applying the Formula as set forth
in Section 3(a) above and a proportionate quarterly Payment based upon the
number of days in th e Initial Period divided by 360 days shall be made by the
Borrower.
(ii) Gross Revenues for each calendar quarter thereafter during
the Loan Term shall be determined by the Borrower and annualized for the
purpose of applying the Formula and the amount so determined as the annual
Payment shall be divided by four and paid to the Lender as quarterly estimated
Payments.
(iii) The estimated Payments for the final period of the Loan
Term shall be determined in the same manner as said Payments were determined for
the Initial Period as set forth in Section 3(c)(i) above.
(iv) The estimated Payments shall be payable as follows: the
Payments shall be due and payable 30 days after the end of each calendar
quarter.
(d) Adjustment: Within 30 days of receipt of the Borrower's fiscal
year-end reviewed financial statement the Borrower shall determine the actual
Payments due pursuant to the Formula for the fiscal year to which such statement
relates and notify the Lender of the result of such
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determination. Within 30 days thereafter, Borrower, shall pay to Lender any
deficiency due, or the Leader shall refund to the Borrower any overpayment made.
(e) Accounting: Each Payment by the Borrower to the Lender,
whether estimated or otherwise, shall be accompanied by an accounting
substantially in the form set forth in Exhibit "C" setting forth the
calculation which was used to determine the amount of the payment.
(f) Review of Books and Records: The Borrower will permit Lender
or its representatives to examine and make copies of Borrower's books and
records related to the determination of the Payments during the normal business
hours and upon reasonable notice, for the purpose of verifying the calculation
of such Payments.
(g) Dispute Resolution: If the Lender believes that the Borrower's
calculation of any Payment hereunder is not accurate, then the Lender may select
an independent certified public accountant to conduct an examination of the
Borrower's books and records to review the calculation of the Payment. If after
such examination there exists a material dispute with respect to such
calculation, the matter shall be resolved by arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association in
Detroit, Michigan, the determination in such arbitration shall be binding upon
the parties, and judgment may be entered upon such arbitrator's decision by any
court having jurisdiction. The arbitrator shall be an audit partner of a
nationally recognized accounting firm not affiliated with the Lender or Borrower
and acceptable to both of them. If any such examination discloses an
underpayment of the amount due to the Lender, which Borrower agrees with or is
determined in a final judgment to be correct, Borrower shall reimburse Under for
the costs of any such examination and arbitration, including without limitation,
reasonable attorney fees. If any such examination discloses the Borrower's
initial calculation was correct or was overpaid, Lender shall pay for the costs
of any such examination and arbitration, including, without limitation,
reasonable attorney fees.
(h) Late Payment Fee: A late fee in the amount of 5.0% of the
amount of the Payment due and owing shall also be due and payable to Lender by
Borrower in the event any Payment required hereunder is received by the Lender
after the due date.
4. OPTIONS. As additional consideration for the granting of the Loan
the Borrower shall cause to be issued to the Lender at the time of the closing
("Closing") of the Loan, negotiable options ("Options") to acquire 75,000 shares
of the common stock of Inmold, Inc., an Indiana corporation authorized to do
business in Michigan ("Inmold"), at $.10 per share ("Exercise Price"). The
total exercise price shall be $7,500.00. In the event the Borrower's Gross
Revenues do not exceed $17,500,000 by Borrower's fiscal year ending in 2001,
then Inmold agrees to issue options to acquire an additional 10,000 shares of
the common stock of Inmold at the same Exercise Price.
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The Options issued shall be substantially in the form set forth in Exhibit "D"
attached and incorporated. The Lender may require Inmold to redeem the Options
during the first 60 days after the end of the Loan Term at a price equal to $2.
10 per share ("Put Price") or the Lender may retain the Options and convert them
to common stock in Inmold at any time during the Loan Term and for 24 months
thereafter.
If Prepayment occurs after month 24 of the Loan Term, the Lender may require
Imnold to redeem the Options during the 60 day period following the date of
Prepayment at the Put Price or the Lender may retain the Options and convert
them to common stock in Inmold.
5. CONDITIONS OF LOAN. The obligation of the Lender to perform its
obligations herein shall be subject to the following conditions precedent:
(a) Approval of Lender's Counsel: All legal matters incident to the
transactions set forth herein shall be satisfactory to all counsel for the
Lender.
(b) Compliance Certificate: The Lender shall have received a
certificate dated the date of the Loan and signed by an authorized
representative of the Borrower to the effect that: (1) the Borrower has
compiled, and is then in compliance, with all the terms and covenants of this
Agreement which are binding upon it; (2) there exists no Event of Default as
defined in Section 10 and no event which, with the giving of notice or the lapse
of time, or both, would constitute such an Event of Default; and (3) the
Representations and Warranties contained in Section 6 are true with the same
effect as though such Representations and Warranties have been made at the time
of the Loan.
(c) Evidence of Company Action: The Lender shall have received
certified copies of all corporate action taken by the Borrower and Inmold to
authorize this Agreement, the Note, the Options and the borrowing hereunder, and
such other documents as the Leader may reasonably require ("Loan Documents")
relating to the existence of the Borrower and Inmold, the corporate authority
for and the validity of this Agreement the Note, the Options and any other
matters relevant hereto, all in form and substance satisf actory to Lender's
counsel and indicating the name and title of the officer or officers of the
Borrower and Imnold authorized to sign this Agreement and the Loan Documents.
(d) Opinion of Borrower's Counsel: The Lender shall have received a
favorable written opinion of counsel for the Borrower, dated the date of the
Loan and satisfactory in form and substance to the Lender, as to the matters
referred to in Xxxxxxx 0, xxxxxx xxxxxxxxxxxxx (x), (x), (x), (1) and (o).
Lender may also request a favorable written opinion of counsel for Inmold, dated
the date of the Loan and satisfactory in favor and substance to the Lender.
(e) Payment of the Fees: The Lender shall have received from the
Borrower partial payment of the facility fee in the total amount of $ 12,500,
with the receipt of $3,000 of said fee being acknowledged and the balance of
$9,500, plus all out-of-pocket expenses of the Lender
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regarding this financing including but not limited to the reasonable fees and
expenses of its counsel, Hen searches, credit reviews and environmental reviews
to be paid at closing from the proceeds of the Loan. In the event the Borrower
decides to withdraw its request from the Lender for financing, the $3,000 of
the facility fee already deposited with the Lender shall be forfeited and an
additional $3,250 of the balance of the facility fee shall be due and payable in
addition to any out-of-pocket expenses incurred by the Borrower. In the event
the Lender, as a result of an adverse finding during its due diligence process
(unless such adverse finding was known and not disclosed by the Borrower to the
Lender) elects not to proceed with the Loan, the $3,000 fee less any
out-of-pocket expenses of the Lender will be refunded.
(f) Certificates: The Lender shall have received from the Borrower
and Imnold certificates of good standing and certified copies of the Articles of
Incorporation for the Borrower issued by the Director of the Michigan Department
of Consumer and Industry Services, Corporation, Securities and Land Development
Bureau, or such other appropriate authority of the State of incorporation.
(g) Bylaw : The Leader shall have received from the Borrower within
60 days of the date hereof copies of the Bylaws of the Borrower and Inmold and
all amendments thereto, certified by the Secretary of the Borrower and Inmold as
being true, correct and complete as of the date of such certification.
(h) Litigation: The Lender shall have received from the Borrower a
certificate signed by a duly authorized officer of the Borrower stating that no
litigation, investigation, or proceeding before or by an arbitrator, court or
governmental agency is continuing or threatened against either the Borrower or
any of its officers, directors or affiliates with respect to this Agreement, the
Note, the collateral documents, any other Loan Documents or any of the
transactions contemplated hereby or thereby.
(i) Insurance: Evidence satisfactory to the Lender that the
Borrower has obtained the policies required by the Lender including but
not limited to liability insurance and worker's compensation insurance with
limits and carriers satisfactory to the Lender.
(j) Due Diligence: The Lender has reached no adverse findings as a
result of its continued due diligence investigation of the Borrower, its
management, its future financing needs or the environmental review, if any, and
the Lender shall be satisfied regarding the Borrower's ability to achieve its
projected financial results and the Lender's comfort in the financial statements
and projections to be presented to the Lender.
(k) Arrangements with Senior Lenders: The Borrower has presented to
the Lender evidence of lending arrangements with its current senior lenders
("Senior Lenders") that are satisfactory to the Lender.
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(1) Subordination: Any stock redemption agreements between the Borrower
and any of its shareholders, excepting agreements with preferred shareholders,
shall be subordinate to the obligations created by the Loan and such
subordination shall be consented to by the shareholders of the Borrower.
Additionally, any debt owed by the Borrower to any of its shareholders or
officers shall be subordinated to the Loan pursuant to a Subordination Agreement
substantially in the form set forth in Exhibit "E", attached and incorporated.
Anything contained herein to the contrary notwithstanding, proceeds from life
insurance purchased by the Borrower for the purpose of funding any stock
redemption agreement, shall not be subordinate to the obligations created by the
Loan.
(m) Receipt of Executed Documents: The Lender shall have received
each of the following in form and substance satisfactory to the Lender and its
counsel:
(i) the Note duly executed by the Borrower;
(ii) the Security Agreement and UCC-1 forms duly executed by
the Borrower;
(iii) the Subordination Agreement as set forth in Exhibit "E"
duly executed by the Borrower and its appropriate officers and shareholders.
(iv) Consent Resolution of the Board of Directors of the
Borrower duly executed by all of the Directors of the Borrower, as set forth
in Exhibit "F";
(v) all Certifications pursuant to this Section 5 duly
executed by Borrower,
(vi) the Loan Agreement duly executed between the Borrower and
the Lender;
(vii) Certified copy of a resolution of the Board of Directors
of Inmold authorizing the issuance of the Options;
(viii) the Options duly executed by an authorized officer of
Inmold;
(ix) all other duly executed documents as may be reasonably
requested by the Lender.
(n) U. C. C. Searches: The Lender shall have received
appropriate UCC lien searches as it deems appropriate.
6. REPRESENTATIONS AND WARRANTIES. The Borrower represents and warrants
to the Lender as follows:
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(a) Existence and Power: The Borrower is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Michigan
and 88% of its common shares are owned by Inmold. The Borrower has corporate
powers and all material government licenses, authorizations, consents and
approvals required to carry on its business as now being conducted and is duly
qualified to do business and is in good standing in each jurisdiction in which
the character of the property owned by it therein or in which the transaction
of its business makes such qualification necessary in the judgment of the
Borrower. Inmold is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Indiana.
(b) Corporate Authority: The execution, delivery and performance by the
Borrower of the Agreement, the Note, the Revenue Participation Agreement, the
Security Agreement and the other Loan Documents are within the Borrower's
powers, have been duly authorized by all necessary action, require no action by
or in respect of, or filing with, any governmental body, agency or official and
do not contravene, or constitute a default under any provision of applicable law
or regulation or the Articles of Incorporation or the Bylaws of the Borrower or
any agreement, judgment, injunction, order, decree or other instrument binding
upon the Borrower or result in the creation or imposition of any lien on any
asset of the Borrower, result in a breach or constitute a default under any
indenture, loan or credit agreement or any other agreement or instrument to
which Borrower is a party or by which any of its properties may be bound or
affected. The consent and approval of the Borrower's Board of Directors is shown
by their duly adopted resolution attached hereto as Exhibit "F". The execution,
delivery and performance by Inmold of the Options have been duly authorized by
the Board of Directors of Inmold and does not contravene or constitute a default
under any provision of applicable law or regulation or the Articles of
Incorporation or the Bylaws of Inmold or any agreement, judgment, injunction,
order, decree or other instrument binding upon Inmold.
(c) Binding Agreement: The Agreement constitutes, and the Note and the
Revenue Participation Agreement when executed and delivered pursuant hereto for
value received shall constitute, the legal valid, and binding obligation of the
Borrower in accordance with its terms subject to bankruptcy and insolvency laws
and any other laws of general application affecting the rights and remedies of
creditors.
(d) Litigation : There is no action, suit or proceeding pending against, or
to the knowledge of the Borrower threatened against or affecting the Borrower,
before any court or arbitrator or any governmental body, agency or official in
which there is a reasonable possibility of an adverse decision which could
materially adversely affect the business, the financial condition or operations
of the Borrower or which in any manner draws into question the validity of the
Agreement, the Note, the Revenue Participation Agreement, the Options or the
Security Agreement.
(e) No Conflicting Agreement: There is no provision in the Articles of
Incorporation or Bylaws of the Borrower or Inmold and no provision of any
existing mortgage, indenture, contract, or agreement binding on the Borrower and
Inmold or affecting its property,
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which would conflict with or in any way prevent the execution, delivery, or
carrying out of the terms of the Agreement, the Note, the Revenue Participation
Agreement and the Options.
(f) Financial Statements: The compiled financial statements of the Borrower
which include the balance sheet and statement of earnings for the fiscal year
ending September 30, 1996, fairly present the financial position of the Borrower
and the results of its operations for such fiscal year and are in conformity
with generally accepted accounting principles consistently applied.
Additionally, any other financial statements, whether audited or unaudited
furnished to the Lender for any other period fairly represents the financial
condition of the Borrower and the results of its operations as of the date and
for the periods referred to therein, prepared according to generally accepted
accounting principles consistently applied.
(g) Business Operations: The Borrower represents and warrants that its
business involves the manufacture and sale of parts to the automobile and other
industries and that the proceeds of the Loan will be used only in connection
with said business and for equipment purchase, project development funding and
working capital only.
(h) Environmental Compliance: Except as disclosed in Schedule 6(h) to this
Agreement and to the best of Borrower's knowledge, there are no claims,
investigations, litigation, administrative proceedings, pending or threatened,
or judgments or orders, relating to any hazardous substances, hazardous wastes,
discharges, emissions, or other forms of polution relating in any way to any
real property owned or leased by the Borrower, or any of the sites where
hazardous materials are disposed of by the Borrower . To the best of Borrower's
knowledge, the Borrower does not have any ability for cleanup, compliance, or
required capital expenditures in connection with any environmental matter
arising before the date of this Agreement. No hazardous or toxic substances,
within the meaning of any applicable state or federal statute or regulations,
are presently stored or otherwise located on real estate owned or leased by the
Borrower, in violation of applicable state or federal statutes and regulations.
Furthermore, within the definition of the statutes, to the best of Borrower's
knowledge, no part of the Borrower's real estate, whether leased or owned,
including the ground water, is presently contaminated by any hazardous or toxic
substance.
(i) ERISA Compliance: The Borrower is in compliance in all material
respects with the Employee Retirement Income Security Act of 1974 (ERISA), as
amended, and has fulfilled its obligations under the minimum funding standards
of ERISA and the Internal Revenue Code of 1986, as amended, with respect to each
of its federally insured pension plans and is in compliance in all material
respects with the presently applicable provisions of ERISA and such Code. No
"Reportable Event" (as defined in ERISA) which could result in a material
accumulated deficiency under ERISA or material liability to the PBGC has
occurred or is continuing, and there exists no condition or set of circumstances
which could result in a "Reportable Event". The value of all accrued benefits
are fully funded by the assets of such plans. All contributions have been made
or accrued for each of the plans, including contributions that are payable for
the proceeding and current plan year. The Borrower does not participate in any
"multi-employer plan" as defined in ERISA.
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Borrower does not have any liability under ERISA on account of the prior
termination of any employee welfare or benefit plan.
(j) Officers, Directors and Shareholders: The names of the officers,
directors and shareholders of Borrower are set forth in Exhibit "G", attached
and incorporated. Exhibit "G" also sets forth all indebtedness of the officers,
directors and shareholders to the Borrower, and any of their respective close
relatives, to the Borrower, if any.
(k) Misstatements or Omissions: The Agreement, the proforma financial
statements applicable to Borrower's anticipated operations and all other
information pertaining to the Borrower delivered to the Lender hereunder when
taken together do not contain any untrue statement of a material fact and do not
omit any statement of material fact necessary in order to make the statements
contained herein not misleading in fight of the circumstances under which they
are made.
(l) Conflicts of Interest: To the best knowledge of Borrower:
(i) The Borrower is not a principal shareholder of the Lender;
controlled by a principal shareholder of Lender; or a director, officer,
partner, relative, controlling person or affiliate of a principal shareholder of
the Lender.
(ii) No member of the Lender, nor any director, officer, partner,
relative, controlling person, or affiliate of the Lender, or any person
controlled by a member of the Lender, currently provides or plans to provide any
financing assistance to Borrower contemporaneously with the Loan, and Borrower
has not had any discussions with any such person regarding the provision of
financing assistance Borrower.
(iii) Borrower does not have nor does it expect to have a substantial
business relationship with any other business firm which has a director, officer
or controlling person who is also a director, officer or controlling person of
the Lender, or who is the spouse of director, officer or controlling person of
the Lender.
(iv) Borrower nor any of its managers or members have loaned or will
loan money to an associate of the Lender.
(v) Borrower has not received financing assistance from any person
associated with the Lender.
(vi) No person associated with the Lender will receive, directly or
indirectly, from the Borrower (a) compensation in connection with providing the
Loan or (b) anything of value from procuring, influencing, or attempting to
procure or influence the Lender's actions with respect to the providing of the
Loan.
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(m) Ownership of Real Property: The Borrower does not own any real
property of any kind or nature whatsoever.
(n) Securities Law Compliance: Any securities issued by the Borrower or
Inmold to its shareholders have been in compliance with all state and federal
securities laws and regulations applicable to the respective securities issued.
(o) Taxes: Except as set forth in Schedule 6(o) to this Agreement, all real
and personal property taxes which have become a lien on any of the Borrower's
property have been paid in full, and all federal, state and local taxes
including, but not limited to FICA, withholding, MESC, use and SBT taxes have
been paid.
All Representations and Warranties by the Borrower shall survive delivery
of the Note, the other Loan Documents and the closing of the Loan, and any
investigation at any time made by or on behalf of the Lender shall not diminish
Lender's right to rely thereon.
7. SECURITY, ASSURANCE AND INSURANCE. To secure the faithful performance
of this Agreement and the repayment of the indebtedness created hereunder, the
Borrower shall do the following:
(a) Collateral: The Borrower gives, assigns, and conveys to the Lender as
collateral, the following: (1) the security interest pursuant to a Security
Agreement, substantially in the form set forth in Exhibit "H" attached hereto,
in the accounts receivable, inventory, equipment, furniture, fixtures and other
tangible assets and after-acquired property ("All Assets") of the Borrower
subject to a prior security interest of the Borrower's Senior Lenders pursuant
to a Subordination Agreement with the Senior Lenders satisfactory to the
Lender, and present and future money purchase security interests.
(b) Further Assurances: On reasonable demand of the Lender, the Borrower
shall furnish further assurances of title, execute any written agreement, or do
any other acts necessary to effectuate the intended purposes and provision of
this Agreement, execute any instrument or statement required by law or
otherwise, in order to perfect and continue the security interest of the Lender
in the collateral, and pay all costs of preparation and filing in connection
therewith.
(c) Insurance: The Borrower shall maintain, without expense to the Lender,
a policy or policies of insurance with respect to All Assets, in an amount which
is at least equal to the fair market value thereof, which policy or policies
contain a deductible provision acceptable to the Lender naming the Lender as an
insured party as its interest my appear and said policy shall contain a
provision requiring that the insurer provide at least 30 days notice to the
Lender prior to cancellation of said insurance. The Borrower shall deliver a
certificate of such insurance to the Lender.
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8. AFFIRMATIVE COVENANTS. Until the payment in full of the Note, the
Payments, the redemption of the Options and performance of all obligations of
the Borrower hereunder, the Borrower shall:
(a) Financial Statements: Furnish to the Leader: (1) monthly financial
statements containing at a minimum a balance sheet and income statement prepared
to the reasonable satisfaction of the Lender no later than 30 days after the end
of each month, certified as true and correct by an officer of the Borrower; (2)
if requested by the Lender, quarterly aging of accounts receivable and accounts
payable prepared to the reasonable satisfaction of the Lender no later than 30
days after the end of each quarter, certified as true and correct by an officer
of the Borrower; (3) reviewed annual financial statements containing balance
sheet, statement of earnings, statement of equity, statement of cash flows and
notes to financial statements within 90 days of the end of the Borrower's fiscal
year prepared by an accounting firm which is satisfactory to the Lender; (4)
such additional information, reports, budgets or statements as the Lender may
from time to time reasonably request in connection with this Agreement.
The Borrower shall also permit, upon reasonable notice, a
representative of the Leader to inspect the books, records, budgets and
documents received by the Members or properties of the Borrower at reasonable
times and to make copies and abstracts of such books and records and any
documents relating to such.
(b) Taxes: Pay and discharge all taxes, assessments, and governmental
charges upon it, its income, and its properties prior to the date on which
penalties are attached thereto, unless and to the extent only that such taxes
shall be contested in good faith and by appropriate proceedings by the Borrower.
(c) Insurance: Maintain insurance with responsible insurance companies
on such of its properties, in such amounts and against such risks as is
customarily maintained by similar businesses operating in the same vicinity, but
not less than the coverage currently maintained by the Borrower as of the date
of this Agreement, and furnish evidence and a detailed list thereof to the
Lender on an annual basis.
(d) Litigation : Promptly notify the Lender of any actions, suits,
proceedings or claims before any court, governmental department, commission,
board, bureau, agency or instrumentality, commenced or threatened against the
Borrower involving $10,000.00 or more or which could materially affect the
conduct of its business.
(e) Maintenance: Maintain preserve and keep its properties and
equipment, whether leased or owned, in good repair and working order and
condition, ordinary wear and tear excepted, and will from time to time make all
needed and proper repairs, renewals, replacements, additions and betterments
thereto so that at all times the efficiency thereof shall be fully preserved and
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maintained, and comply with all the federal, state and local laws and
regulations including environmental law.
(f) Board of Directors: Maintain a Board of Directors, with a minimum
of two directors, which shall hold meetings semi-annually, at a place and time
acceptable to the Lender, and shall forward to the Lender copies of all
documents given by the Borrower to its board of directors and shall allow a
representative of the Lender to observe the board meetings and to provide the
Lender with at least 14 days notice (unless Lender consents in writing to a
shorter notice period) prior to each and every meeting of the Board. Lender may
attend such meetings. Lender may call meetings with the management of the
Borrower on an as needed basis. Borrower shall also cause Inmold to similarly
notify the Lender of As Board meetings and allow a representative of the Lender
to observe same.
(g) Operating Budget : The Borrower's Board of Directors must approve
the Borrower's annual operating budget and the Borrower shall provide the Lender
with a copy of said annual operating budget at least 30 days prior to the
beginning of each fiscal year.
(h) Notice of Environmental Concerns: Notify the Lender of any
hazardous or toxic substance or any other contaminant found in any property
owned or leased by the Borrower other than in the ordinary course of its
business and to immediately advise the Lender of any notice received from a
public agency concerning environmental issues, including any notice regarding
any environmental issue at any of the sites where the Borrower disposes of
hazardous material, and provide the Lender if requested, with appropriate
certificates of compliance with the provisions of Section 6(h) on a quarterly
basis.
(i) Corporate Existence and Due Qualification: Borrower shall preserve
and maintain its corporate existence and good standing in the State of Michigan
and qualify and remain qualified to do business in each jurisdiction where such
qualification is required.
(j) Compliance with all Laws: Comply with all laws, rules and
regulations in effect or hereinafter promulgated by any federal, state or local
government.
(k) Information from Senior Lenders: Provide the Lender, within five
days of receipt thereof with copies of any or all notices or information of a
material nature received from the Borrower's Senior Lenders.
(l) Compliance Certificate: If requested by Lender, provide the
Lender with appropriate certification on a quarterly basis that the Borrower is
in compliance with all the terms and conditions of this Agreement and that an
Event of Default pursuant to Section 10 hereof has not occurred.
12
(m) Use of Proceeds: The Borrower shall use the proceeds of the Loan
for equipment purchase, project development funding and working capital, and
for no other purpose without the written consent of the Lender.
(n) Compliance with ERISA: Comply in all material respects with the
Employee Retirement Income Security Act of 1974, as amended and the Internal
Revenue Code of 1986, as amended, with respect to any federally insured pension
plans it maintains now or in the future.
(o) Changes in Management: Notify Lender in writing of any proposed
changes in Borrower's senior management including chief executive officer, chief
financial officer and general manager, which shall be subject to the approval of
the Lender and said approval shall not unreasonably be withheld.
(p) Management Fees: The Borrower shall limit management fees
("Management Fees") paid to Inmold to 2.5% of Gross Revenues without the written
consent of the Lender which shall not unreasonably be withheld.
(q) Wage Laws: Comply with all federal, state and local laws concerning
wage payments, minimum wages and payment of withholding taxes.
(r) Capital Expenditures: Obtain Lender's consent prior to any capital
expenditures which exceed $500,000 annually. Consent shall be unreasonably
withheld by Lender.
(s) Management Compensation : The Borrower shall develop a compensation
plan, including bonuses and retirement plans for senior management which shall
be subject to the written consent of the Leader, which consent shall not
unreasonably be withheld.
9. NEGATIVE COVENANTS. Until payment in full of the Note and the
performance of all other obligations of the Borrower hereunder, the Borrower and
shall not, except with the prior written consent of the Lender:
(a) Loans: Make loans or advances of money or products to any person,
firm, or corporation.
(b) Additional Borrowing and Guaranty. Issue, incur, assume, or have
outstanding any indebtedness for borrowed money, including as such all
indebtedness representing the deferred purchase price of property, any lease of
property required to be capitalized under generally accepted accounting
principles, any remaining balance of indebtedness, whether or not assumed,
secured by liens and property,acquired by the Borrower existing at the time of
acquisition, nor become liable, whether as an endorser, guarantor, surety, or
otherwise, for any debt or obligation of any other person, firm, or corporation
except the obligations of the Borrower currently owed to or authorized by its
Senior Lenders.
13
(c) Liens and Indebtedness: Pledge, mortgage or otherwise encumber, or
subject to or permit to exist upon or be subjected to any lien, security
interest or charge, any asset or any property of any kind or character at any
time owned by the Borrower, except: (1) liens for taxes not yet due which are
being contested; (2) purchase money security interest incidental to the conduct
of its business, and (3) liens and encumbrances granted to Borrower's Senior
Lenders.
(d) Dividends and Purchase of Stock: Declare any dividends on any
shares of its capital stock, whether common or preferred, hereinafter referred
to as "Dividend Payments" or apply any of its property or assets to purchase,
redeem or retire any of its shares of any class of its capital stock hereinafter
referred to as "Stock Purchase Payments". Anything contained herein to the
contrary notwithstanding, the payment of preferred stock dividends, or the
redemption of preferred stock pursuant to redemption agreements in effect as of
the date hereof, shall be allowed as along as (1) the Borrower is not in default
according to the terms of this Agreement or any loan agreement with its Senior
Lenders, or (2) any such dividend payment or redemption would not cause such a
default.
(e) Acquisitions and Investments: Make or have outstanding any
investments, whether through purchase of stock or obligations or otherwise, in
any other person, firm, or corporation; or acquire all or any substantial part
of the assets or business of any other person firm, or corporation excepting any
joint ventures existing as of the date hereof, without the consent of the Lender
which shall not unreasonably be withheld.
(f) Stock: Allow the issuance or sale of additional shares of capital
stock or rights effecting the capital stock of Inmold, whether common or
preferred, to other parties, except for the Options granted to the Lender
pursuant to the terms and conditions of this Agreement, except for shares issued
by Inmold for the purpose of acquiring other business entities and except for
shares issued pursuant to a public offering or market making activity.
(g) Changes in Business: Sell, assign, lease, transfer, or convey
assets other than in the usual or regular course of business; merge or
consolidate, except as contemplated previously herein, with any other
corporation; enter into a joint venture or similar business arrangement with any
third party; modify the nature and type of business presently engaged in.
(h) Leases: Acquire the use or possession of any real or personal
property under a lease or similar arrangement or to enter into any arrangement
with any lender or investor providing for the leasing by the Borrower of any
real or personal property theretofore owned by the Borrower, except in the
normal course of business not to exceed $5,000 per month.
(i) Environmental: The real property owned or leased by the Borrower or
any sublessor shall not be used to store, use, or otherwise handle any hazardous
or toxic substance or other contaminants, except in the ordinary course of
Borrower's business, nor shall the Borrower allow any oil or gas tanks to be
placed on any of its real property, whether owned or leased, or any other
similar activities which might result in the raising of environmental issues
regarding the
14
property, nor shall the Borrower handle, arrange for transport, deliver for
disposal or dispose of (directly or indirectly) any hazardous waste or
hazardous substances so as to contaminate any property or give rise to any
remediation, clean-up or damage obligation under any statute, rule, regulation,
ordinance or other common law.
(j) Transactions with Insiders or Related Companies: Make any material
transactions with insiders or related companies except as disclosed to Lender in
writing prior to closing. Moreover, Borrower shall not enter into any
transaction or contract including, without limitation, the purchase, sale,
exchange or rental of property or rendering of any service with any insider,
affiliate or related party except in the ordinary course of business and
pursuant to the reasonable requirements of the business of the Borrower and upon
fair and reasonable terms no less favorable to Borrower than Borrower would
obtain in a comparable arm's-length transaction at market rates with a person
not an insider, affiliate or related party, other than as previously disclosed.
(k) Management Fees. Pay to Inmold Management Fees if Borrower is
delinquent in any payments to Lender or in default of this Agreement as set
forth in Section 10 until such defaults are remedied.
(1) Securities Registration. Sell or transfer its stock unless
pursuant to a registration thereof under appropriate federal and/or state
securities laws or regulations or pursuant to an opinion of Borrower's counsel
reasonably acceptable to Lender indicating the sale or transfer is exempt from
registration.
10. EVENTS OF DEFAULT. Additional interest will be accrued upon any and
all payments of principal, interest or Revenue Participation from the Borrower,
which are made after they have become due and payable, whether at maturity or
otherwise; and the Note and all other obligations set forth in the Agreement, at
the option of the Lender, shall become immediately due and payable in full upon
the occurrence of any one or more of the following events of default:
(a) Payment of any installment of principal or interest on the Note or
the Payments from the Borrower more than 10 days after it shall have become due
and payable, whether at maturity or otherwise;
(b) Any representation or warranty made or deemed made by the Borrower
herein or which is contained in any certificate, document or financial or other
statement furnished at any time under or in connection with this Agreement
shall prove to have been incorrect in any material respect on or as of the date
made or deemed made; or
(c) The Borrower shall default in the observance or nonperformance of
any agreement contained in Section 8 or 9 (Affirmative Covenants or Negative
Covenants), or the Borrower shall default in the observance or performance of
any other agreement contained in the Agreement (other than as provided in (a)
through (b) above) or in any loan document, and such
15
default shall continue unremedied for a period of 30 days after receipt of
written notice from Lender; or
(d) Default by the Borrower in the payment when due of any other
indebtedness for borrowed money, taxes or the deferred purchase price of
property, or default on any indebtedness or obligation guaranteed by the
Borrower, or default by the Borrower under any loan agreement, mortgage, or
lease agreement under or pursuant to which the same is issued and such default
shall continue for a period of time as may be sufficient to permit the
acceleration of such indebtedness; or
(e) The dissolution termination of existence or business
failure of the Borrower; or
(f) The application for the appointment of a custodian
(including without limitation of a receiver or trustee) of any part of the
property of the Borrower; or
(g) Institution by or against the Borrower of any proceeding under
any bankruptcy, creditor arrangement, or reorganization, insolvency, or similar
law; or
(h) The Borrower's failure to pay its debts as they become due; or
(i) The bringing of formal foreclosure proceedings against Borrower;
(j) If any material event occurs which, in the reasonable judgment of
the Lender, will endanger the collateral or the prospect of payment of any of
the liabilities hereunder or performance of this Agreement is impaired, and such
material event continues for a period of 30 days after receipt of written notice
from Lender, or
(k) One or more judgments or decrees shall be entered against
Borrower involving in the aggregate a liability (not paid or fully covered by
insurance) of $ 10,000.00 or more and such judgments or decrees shall not
have been vacated, discharged, satisfied or stayed within 60 days from the entry
thereof, or as otherwise agreeable to the Lender; or
(l) Borrower or any sublessee handles, uses, stores, delivers for
disposal, disposes of, transport or arranges for the transportation of any
waste, whether hazardous or not, in any manner which is not in compliance with
applicable law, or which contaminates any property or gives rise to any
remediation or clean-up obligation under any law, rule, regulation ordinance or
the common law beyond that disclosed in Schedule 6(h); or Borrower contaminates
any real property owned or leased by it or any other property , or its real
property is used to handle, treat or store, or becomes contaminated (including
without limitation contamination of soil ground water and service water located
on, in or under the real property) with, pollutants or any other substances
which handling, treatment, storage or contamination may give rise to remediation
or clean-up obligations with respect to its real property or the property of
others under any law, rule, regulation ordinance or the common law; or their
real property or any property to which Borrower delivers for disposal, disposes
of,
16
transports or arranges for transport (directly or indirectly) any waste listed
on the National Priority List or any state listing which identifies sites for
remedial cleanup or investigatory action.
(m) (i) Any person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan,
(ii) any "accumulated funding deficiency" (as defined in Section 302 of ERISA),
whether or not waived, shall exist with respect to any plan, (iii) a Reportable
Event shall occur with respect to, or proceedings shall commence to have a
trustee appointed, or a trustee shall be appointed, to administer or to
terminate, any plan, which Reportable Event or institution of proceedings is,
in the reasonable opinion of Lender, likely to result in the termination of such
plan for purposes of Title IV of ERISA, and, in the case of a Reportable Event
the continuance of such Reportable Event unremedied for ten (10) days after
notice of such Reportable Event pursuant to Section 4043(a),(e) or (d) of ERISA
is given or the continuance of such proceedings for ten days after commencement
thereof, as the case may be, (iv) any plan shall terminate for purposes of Title
IV of ERISA, or (v) any other event or condition shall occur or exist; and in
each case in clauses (i) through (v) above, such event or condition, together
with all other such events or conditions, if any, could subject the Borrower to
any tax, penalty or other liabilities which in the aggregate is material in
relation to the business, operations, property or financial or other condition
of Borrower.
(n) Failure of Borrower to maintain appropriate insurance coverage as
provided in Section 7.
(o) Change of Borrower's senior management without prior Written
consent of Lender.
(p) Failure of Inmold to redeem lender's Options when requested to do
so by the Lender.
11. REMEDIES.
(a) Upon the occurrence of any Event of Default as set forth in Section
10 above, and at any time thereafter, at the election of the Lender and by
notice of default to Borrower, the Lender may declare the Loan (with accrued
interest thereon) and all other amounts owing to the Lender under the Agreement
and the Note (including without limited the Payments due to date) to be due and
payable forthwith, whereupon the same shall immediately become due and payable.
Further, additional interest will be accrued and payable upon any and all late
payments, at the Lender's option. In addition to any rights granted hereunder or
in any Loan Documents delivered in connection herewith and subject to the rights
of Senior Lenders, the Lender shall have all rights and remedies granted by any
applicable law, all of which shall be cumulative. Except as expressly provided
above in this Section 11, presentment, demand, protest and other notices of any
kind are hereby expressly waived.
17
(b) Further, upon the occurrence of any Event of Default, which remains
uncured for 30 days, the Lender is authorized, at the Borrower's expense to
hire a consultant or "work-out" specialist for the purpose of assisting Borrower
with its business operation.
12. EXPENSES. The Borrower agrees to pay all out-of-pocket expenses of the
Lender, including the fees and expenses of its counsel lien searches, credit
reviews and environmental review, in connection with the preparation of this
Agreement and the supporting documentation in connection with the Loan
expenses in connection with the attending of this Agreement or waiving any
provision contained herein or incidental to the enforcement of any provision
of this Agreement, the Note, the Security Agreement, the Options and the
Revenue Participation Agreement.
13. MISCELLANEOUS. The following miscellaneous provisions shall apply:
(a) Rights: This Agreement and all of the covenants, warranties, and
representations of the Borrower and all of the powers and rights of the Lender
hereunder shall be in addition to and cumulative of all other covenants,
representations, and warranties of the Borrower and all other rights and powers
of the Lender contained in, or provided for in, any other instrument or document
now or hereafter executed and delivered by the Borrower to or in favor of the
Lender. No delay or failure on the part of the Lender in the exercise of any
power or right shall operate as a waiver thereof, nor shall any single or
partial exercise of the same preclude any other or further exercise thereof or
the exercise of any other power or right; and the rights and remedies of the
Lender are cumulative to and not exclusive of any rights or remedies which it
would otherwise have. No waiver, consent or modification, or amendment shall be
effective as against the Lender unless the same is in writing and signed by an
officer of the Under. No such amendment, modification, waiver, or consent shall
extend to or affect any obligation or right except to the extent expressly
provided for therein. All computations and determinations of the assets and
liabilities of the Borrower for the purpose of this Agreement shall be made in
accordance with generally accepted principles of accounting consistently
applied, except as may be otherwise specifically provided herein.
(b) Notice : If to Lender, 0000 Xxxxxx Xxxxx Xxxx, Xxxxxxx, Xxxxxxxx
00000, or if to Borrower, at 0000 Xxxxxxxxxx Xxxxx, Xxxxxxxxx Xxxxx, Xxxxxxxx
00000, and to Inmold at 000 Xxxxxxxx Xx., Xxxxx 000, Xxxx, Xxxxxxxx 00000.
(c) Reimbursement for Expenses: The Borrower agrees to pay and
reimburse the Lender for all reasonable expenses and damages paid or incurred
by the Lender, including court costs and attorney fees, arising out of a
default hereunder or the collection of the Note, the Payments or any other
liability, or in preserving or protecting or exercising the right of the Lender
hereunder or with respect to any collateral or security for the Note or other
liabilities, including all of the foregoing, incurred in any bankruptcy,
arrangement, or reorganization proceeding involving the Borrower. Upon the
occurrence of an Event of Default, any or all indebtedness owing by the
18
Lender to the Borrower may at any time without notice or demand be offset and
applied to any indebtedness or liability of the Borrower to the Lender, whether
or not then due.
(d) Binding Effect: This Agreement shall be binding upon and shall
inure to the benefit of the Borrower and the Lender, their successors and
assigns, including any subsequent holder or holders of the Note or any interest
therein.
(e) Environmental Inspection: The Lender reserves the right at any time
with reasonable cause to have an environmental expert visit any of the
properties owned or leased by the Borrower and inspect same for any contaminants
at Borrower's expense.
(f) No Partnership or Joint Venture Established: Nothing contained in
the Agreement or any other Loan Document, and no action taken by the Lender
pursuant hereto or thereto shall be deemed to create a partnership, joint
venture or other entity or business relationship between the Lender and the
Borrower except that created in a conventional commercial loan transaction. It
is acknowledged by the Borrower that the Under assets no dominion or control
over the business operations of the Borrower other than for purposes of
monitoring its business operations to protect its interest in the Collateral as
a secured creditor of the Borrower.
14. GOVERNING LAW. The Agreement shall be governed by the laws of the
State of Michigan.
15. SURVIVAL OF TERMS REPRESENTATIONS AND WARRANTIES. The terms and
conditions of this Agreement and the Representations and Warranties contained
herein or incorporated by reference shall continue and survive the closing of
this transaction and shall continue and survive the Loan Term and shall continue
and survive thereafter and shall not terminate or expire until all of the
Options to purchase stock in Inmold or stock in Inmold held by the Leader has
been redeemed, notwithstanding payment of the Loan in full.
16. INDEMNIFICATION. The Borrower hereby agrees to indemnify and hold
harmless the Lender for any and all losses or damages suffered by the Lender
resulting from the Borrower's operation of its business.
17. JURY TRIAL WAIVER. The Borrower and the Lender hereby irrevocably and
unconditionally waive trial by jury in any legal action or proceeding relating
to this Agreement or the transaction contemplated hereby.
19
Executed at Farmington Hills, Michigan, on the day and year first above
written. This Agreement may be executed in any number of counterparts, each
counterpart constituting an original, but altogether one agreement.
LENDER:
Horizon BIDCO Investment Co.
By: [illegible]
----------------------------
Its: President
---------------------------
BORROWER:
G-P PLASTICS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------
Its: General Manager
20
EXHIBIT "A"
PROMISSORY NOTE
$500,000.00 Jackson, Michigan
June 12,1997
FOR VALUE RECEIVED, G-P PLASTICS, INC., a Michigan corporation, ("Maker"),
promises to pay to Horizon BIDCO Investment Co., ("Payee"), or order the sum of
$500,000.00 in lawful money of the United States of America, ("Loan"), at the
principal OFFICE of the Payee at 0000 Xxxxxx Xxxxx Xxxx, Xxxxxxx, Xxxxxxxx
00000, or at such other place as the holder hereof may designate by written
notice to the Maker, with the principal and interest being payable in the manner
and at the times hereinafter set forth.
Security
1. This Promissory Note ("Note") is issued pursuant to a Business Loan
Agreement ("Agreement") of even date herewith and is secured by a certain
Security Agreement on all of the assets of the Maker, ("Security Agreement"),
bearing the same date as this Note.
Payment of Principal and Interest
2. The obligation shall be paid over a 60 month period ("Loan Term") with
nine initial monthly payments of interest only, monthly payments of principal
and interest for 51 months of $11,505.00. Monthly payments to commence June 30,
1997, and shall be due the last day of each month thereafter, with the entire
unpaid balance due and owing 60 months from the date hereof Interest shall begin
to accrue as of the date hereof as hereinabove set forth. Interest shall be
included on the unpaid portion of the principal balance in the amount of the
Prime rate as published from time to time in the Wall Street Journal plus 4%,
adjusted at the end of each calendar quarter, but not less than 13.5% per
annum, which shall be calculated on the basis of a 360 day year with payments,
as hereinabove set forth.
Late Payment Fee
3. A late payment fee in the amount of 5% of the monthly installments due
and owing will be assessed against the Maker in the event the monthly payment
required hereunder is received by the Payee after the due date.
A-1
Event of Default
4. The following shall constitute Events of Default hereunder, upon the
happening of any one or more of which the entire unpaid balance of the
principal, the accrued interest and all other sums secured hereunder, at the
option of the Payee, shall become immediately due and payable without notice:
a) The failure of the Maker to pay any installment of principal
and/or interest according to the terms and conditions of this Note more
than 10 days after it shall become due and payable, whether at maturity,
by notice of intention to prepay, or otherwise.
b) The occurrence of any Event of Default as defined in the
Agreement or a default according to the terms and conditions of the
Security Agreement.
Waivers
5. The failure by the Payee to exercise the option provided for in
Paragraph 4 of this Note shall not constitute a waiver of the right to exercise
it in the event of any subsequent default. Presentment, notice of dishonor and
protest are hereby waived by Maker and this Note shall be binding upon the
Maker, its successors and assigns.
Construction and Assignment
6. The words "Maker" and "Payee" include singular or plural, individual
partnership or corporation, and the respective assigns of the Maker or the
Payee, as the case may be. The use of any gender applies to all genders. If more
than one party is named as the Maker, the obligation hereunder of each such
party is joint and several. The Maker shall not assign this Note or the
obligation created hereunder without the express written consent of the Payee.
The Payee may assign or negotiate the obligation created hereunder, subject to
applicable securities laws and/or exemptions therefrom.
Attorneys' Fees and Costs
7. The Maker agrees to pay to the holder of this Note, the reasonable cost
of collection, expenses and attorneys' fees paid or incurred in connection with
the collection or enforcement of this Note, whether or not suit is filed, and
the costs of any suit and any attorneys' fees adjudged by a court in any action
to enforce payment of this Note or any part of it.
A-2
Prepayment
8. Prepayment of the balance of the Loan shall not be permitted during the
first 24 months of the Loan Term After month 24 of the Loan Term, only
Prepayment of the entire principal balance plus accrued interest shall be
allowed and shall be without a Prepayment penalty.
Governing Law
9. This Note shall be governed by the laws of the State of Michigan.
G-P PLASTICS, INC.
By:________________________
Its:_______________________
A-3
EXHIBIT "B"
REVENUE PARTICIPATION AGREEMENT
AGREEMENT entered into this 12th day of June, 1997, by and between G-P
PLASTICS, INC., a Michigan corporation, of 0000 Xxxxxxxxxx Xxxxx, Xxxxxxxxx
Xxxxx, Xxxxxxxx 00000, hereinafter referred to as the "Borrower", and Horizon.
BIDCO Investment Co., a Michigan corporation organized under the Michigan BIDCO
Act of 0000 Xxxxxx Xxxxx Xxxx, Xxxxxxx, Xxxxxxxx, hereinafter referred to as
"Lender".
WITNESSETH:
WHEREAS, the parties hereto have entered into a Business Loan Agreement
("Agreement") of even date herewith whereby the Lender has agreed to loan to the
Borrower $500,000.00 ("Loan"); and
WHEREAS, in order to induce the Lender to loan funds to the Borrower, the
Borrower has agreed, as additional consideration, to allow the Lender to
participate in a portion of the revenue earned by the Borrower according to the
terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the Agreement and other good and
valuable consideration, the parties hereto agree as follows:
1. Term. The revenue participation ("Revenue Participation") shall
commence on the date hereof and shall continue throughout the 60 month loan
term even if the Loan is prepaid ("Loan Term").
2. Amount of Participation. The Lender shall participate in the
Borrower's gross revenues ("Gross Revenues") generated during the Loan Term by
the Borrower's existing company or companies and any successor or affiliate
companies formed during the Loan Terra, and such payments ("Payments") shall
continue throughout the entire Loan Term, even in the event of prepayment and
thereafter if the Loan remains unpaid at the end of the Loan Term. Gross
Revenues from all sources generated during the Loan Term shall be determined
using generally accepted accounting principles applied on a consistent basis as
prescribed by the American Institute of Certified Public Accountants, as set
forth in the Borrower's, fiscal year-end reviewed financial statement. If the
Gross Revenues generated by Borrower from all sources for any fiscal year of
Borrower are between
B-1
$12,000,000.00 and $15,500,000.00, the participation by the Lender shall be an
amount equal to .75% of the Gross Revenues generated by the Borrowe between $
12,000,000.00 and $15,500,000.00. If Gross Revenues generated by the Borrower
from all sources are in excess of $15,500,000, the Lender shall receive further
revenue participation, in addition to the .75% on the amount between
$12,000,000.00 and $15,500,000.00, equal to 1.25% of Gross Revenues generated by
the Borrower in excess of $15,500,000. Revenue Participation payments for the
period commencing on the date of this Agreement and ending September 30, 1997,
shall be on a proportionate basis according to the above-referenced formula.
Revenue Participation payments for any short year at the end of the Loan Term
shall likewise be on a proportionate basis.
3. Payment. Revenue Participation payments shall be made on a
calendar quarter basis during the Loan Term.
4. Estimated Payments. Estimated payments shall be made within 30
days after the end of the first calendar quarter during the Loan Term in which
Revenue Participation payments are due, and each calendar quarter thereafter
based upon the unaudited financial statements prepared by the Borrower or its
certified public accountant until the end of the Loan Term.
The Revenue Participation payments for each calendar quarter shall
be estimated and paid as follows:
(a) For the initial period ("Initial Period") commencing on
the date hereof and ending at the end of the first calendar quarter af ter said
date, the Borrower shall determine its Gross Revenues for the Initial Period on
an annualized basis for the purpose of apply ing the Revenue Participation
Formula (Formula) as set forth in Section 2 above. Borrower shall then make
proportionate quarterly Revenue Participation payment based upon the number of
days in the Initial Period divided by 360.
(b) Gross Revenues for each calendar quarter thereafter
during the Loan Term shall be determined by the Borrower and annualized for the
purpose of applying the Formula and the amount so determined as the annual
Revenue Participation payment shall be divided by fo ur and paid to the Lender
as the quarterly estimated Revenue Participation payments.
B-2
(c) The estimated Revenue Participation payment for the final
period of the Loan Term shall be determined in the same manner as said payment
was determined for the Initial Period.
5. Adjustment. Within 30 days of receipt of the Borrower's fiscal year-
end reviewed financial statement the Borrower shall determine the actual Revenue
Participation payments due pursuant to the Formula as set forth above for the
fiscal year to which such statement relates and notify the Lender of the result
of such determination. Within 30 days thereafter, Borrower, shall pay to Lender
any deficiency due, or the Lender shall refund to the Borrower any overpayment
made.
6. Accounting. Each Payment by the Borrower to the Lender, whether
estimated or otherwise, shall be accompanied by an accounting substantially in
the form set forth in Exhibit "A" setting forth the calculation which was used
to determine the amount of the payment.
7. Review of Books and Records. The Borrower will permit Lender or its
representatives to examine and make copies of Borrower's books and records
related to the determination of the Revenue Participation payments during the
normal business hours and upon reasonable notice, for the purpose of verifying
the calculations of such Revenue Participation payments.
8. Dispute Resolution. If the Lender believes that the Borrower's
calculation of any Revenue Participation payment hereunder is not accurate, then
the Lender may select an independent certified public accountant to conduct an
examination of the Borrower's and its subsidiaries'books and records to review
the calculation of the Revenue Participation payment If after such examination
there exists a material dispute with respect to such calculation, the matter
shall be resolved by arbitration in accorda nce with the Commercial Arbitration
Rules of the American Arbitration Association in Detroit Michigan, the
determination in such arbitration shall be binding upon the parties, and
judgment may be entered upon such arbitration decision by any court having
jurisdiction. The arbitrator shall be an audit partner of a nationally
recognized accounting firm not affiliated with the Lender or Borrower and
acceptable to both of them. If any examination discloses an underpayment of the
amount due to the Lender, which Borrower agrees with or is determined in a final
judgment to be correct Borrower shall reimburse Lender for the costs of any such
examination and arbitration, including without limitation, reasonable attorney
fees. If any
B-3
such examination discloses the Borrower's initial calculation was correct or
overstated, Lender shall pay for the costs of any such examination and
arbitration, including, without limitation, reasonable attorney fees.
9. Late Payment Fee. A late fee in the amount of 5.0% of the amount of
the Payment due and owing shall also be due and payable to Lender by Borrower in
the event any Payment required hereunder is received by the Lender after the due
date.
10. Binding Effect. This Revenue Participation Agreement shall be
binding upon the Borrower, and its successors and assigns, and shall inure to
the benefit of the Lender and its successors and assigns.
11. Governing Law. This Agreement shall be governed by the laws of the
State of Michigan.
IN WITNESS WHEREOF, this Agreement is signed on the day and year first above
written.
G-P PLASTICS, INC.
By:__________________________
Its:_________________________
Horizon BIDCO Investment Co.
By:__________________________
Its:_________________________
B-4
EXHIBIT "A"
(Revenue Participation Payment Accounting)
A-1
EXHIBIT "C"
(Revenue Participation Payment Accounting)
C-1
EXHIBIT "D"
STOCK OPTION
Grant of Option
1. FOR GOOD AND VALUABLE CONSIDERATION, the receipt of which is hereby
acknowledged, INMOLD, INC., an Indiana corporation, hereinafter referred to as
the "Corporation", grants to HORIZON BIDCO INVESTMENT CO., a Michigan
corporation organized under the Michigan BIDCO Act hereinafter referred to as
"BIDCO", the right to acquire up to 75,000 shares of common stock of the
Corporation at $. 10 per share ("Exercise Price"), at any time and from time to
time during the Loan Term as defined in a Business Loan Agreement ("Agreement")
of even date herewith between BIDCO and G-P Plastics, Inc. ("G-P"), a subsidiary
of the Corporation, and for 24 months after the expiration of the Loan Term
("Exercise Period") subject to the following provisions, terms and conditions.
Procedure for Exercise
2. The right to purchase granted under this option may be exercised by
BIDCO in whole or in part but not as to a fractional share, by surrender of this
option, properly endorsed if required, at the principal office of the
Corporation, and by delivering payment to the Corporation by certified check or
bank check of the aggregate Exercise Price for the number of shares purchased.
The shares purchased shall be deemed to be issued to BIDCO as the record owner
as of the close of business on the date on which this option is surrendered and
payment is made for the shares. Certificates representing the shares purchased
shall be delivered to BIDCO within 10 days after the rights represented by this
option have been properly exercised. Unless this option shall have expired or
shall have been fully exercised, a new option in the same form as this option,
representing any number of shares for which this option shall not have been
exercised, shall also be delivered to BIDCO within that time.
Shares to be Fully Paid and Reservation of Shares
3. The Corporation covenants and agrees that all shares that may be issued
on the exercise of the rights represented by this option shall, on issuance, be
fully paid and nonassessable and free from all taxes, hens and charges related
to the issuance of the shares. The Corporation further covenants and agrees
that during the period within which the rights represented by this option may be
exercised, the Corporation shall, at all times, have
D-1
authorized and reserved for the purpose of issuance or transfer on exercise of
this option a sufficient number of the shares subject to this option to provide
for its exercise.
Exercise Price Adjustment
4. If the Corporation shall, at any time, subdivide the outstanding shares
of the class of shares covered by this option into a greater number of shares,
the Exercise Price shall be proportionally reduced and the number of shares
covered by this option shall be proportionally increased. Conversely, if the
outstanding shares shall be combined into a smaller number of shares, the
Exercise Price shall be proportionally increased and the number of shares
covered by this option shall be proportionally reduced. In the event of any
reorganization, reclassification, consolidation, merger or sale of all or
substantially all of the assets of the Corporation, BIDCO shall subsequently
have the right to purchase and receive the securities or assets that BIDCO would
have received or been entitled to receive had BIDCO been a holder or an
aggregate number of outstanding shares at the effective time of the
reorganization, reclassification, consolidation, merger or sale. This right
shall be on the basis and on the terms and conditions specified in this option
and shall replace the right to purchase the shares specified in this option.
Right to Acquire Additional Shares
5. Pursuant to the terms of the Agreement in the event the Gross Revenues,
as defined in the Agreement, of G-P do not exceed $17,500,000 annually by its
fiscal year ending in 2001, the,Corporation shall grant to BIDCO the right to
acquire an additional 10,000 shares of the common stock of the Corporation at
the Exercise Price, subject to any adjustment pursuant to Section 4 above, at
any time during the Exercise Period. A new option in the same form as this
option shall be delivered to BIDCO within 10 days of receipt by G-P of its
reviewed financial statement for its fiscal year ending in 2001.
Absence of Rights of Holder
6. This option shall not entitle BIDCO to any rights as a shareholder of
this Corporation prior to the exercise of this option.
Redemption of Option
7. BIDCO, at its option, may require the Corporation to redeem the options
granted, hereunder, or hereafter granted pursuant to Section 5 hereof at a price
equal to $2.10 per share during the 60 day period ("Redemption Period")
commencing with the day the Loan Term expires. In the event of prepayment the 60
day Redemption Period shall commence on the date of prepayment. BIDCO shall
notify the Corporation in writing at any time during the Redemption Period of
its desire to have the options redeemed.
D-2
IN WITNESS WHEREOF, INMOLD, INC. has caused this option to be executed by
its duly authorized officers on_________________,1997.
INMOLD, INC.
By:_________________________
Its:________________________
D-3
EXHIBIT "E"
SUBORDINATION AGREEMENT
THE SUBORDINATION AGREEMENT is made and entered into by and among
___________, (the "Officer"), HORIZON BIDCO INVESTMENT CO., a Michigan Business
Industrial Development Corporation, ("BIDCO"), and G-P PLASTICS, INC., a
Michigan corporation, ("Company").
RECITALS
A. The Company wishes to obtain credit from BIDCO pursuant to a Business
Loan Agreement between the Company and BIDCO pursuant to a Promissory Note in
favor of BIDCO, all of which are dated June 12, 1997 (collectively the "BIDCO
Documents").
B. The Company is indebted to the Officer pursuant to a promissory note
dated________________,a copy of which is attached hereto (the "Officer Note").
C. As a condition to entering into the BIDCO Documents, BIDCO has required
the execution and delivery of this Agreement and the Officer desires to aid the
Company in obtaining credit from BIDCO.
NOW, THEREFORE, to induce BIDCO to extend credit to the Company and in
consideration of such extension of credit the parties hereby agree as follows:
1. Subordination of Principal and Interest Payments to Officer. The
obligations and liabilities of the Company to the Officer pursuant to the
Officer Note, including principal and interest, whether direct or indirect,
absolute or contingent secured or unsecured, due or to become due, now existing
or hereafter arising, and however evidenced, are subordinated in right of
payment in the manner set forth herein to the obligations of the Company to
BIDCO, including principal and interest and Revenue Participation Payments,
whether direct or indirect absolute or contingent secured or unsecured, due or
to become due, now existing or hereafter arising, and whether accrued before or
after the filing of a petition in bankruptcy or insolvency or similar
proceeding, and however evidenced (the "Senior Indebtedness").
2. Right of Officer to Payments . The Officer shall be entitled to
receive, and the Company shall be entitled to pay to the Officer, payment of
principal and interest pursuant to the terms of the Officer Note but subject to
the restrictions set forth in Section 5(i) of said
E-1
Business Loan Agreement; provided however that if an Event of Default has
occurred and is continuing under the BIDCO Documents, the Officer shall not be
entitled to receive, and the Company shall not be entitled to pay to the
Officer, any payment (whether of principal, interest or otherwise), pursuant to
the Officer Note, and the Officer shall not ask, demand, take or receive any
such payment until such time such an Event of Default is waived in writing by
BIDCO or cured.
3. Principal Payments Held in Trust. If the Officer receives any payment
which he is not permitted to receive pursuant to Section 2, the Officer shall
promptly deliver the same to BIDCO in the form received (except for endorsement
or assignment as may be required by BIDCO), for application to the Senior
Indebtedness, and until so delivered, the same shall be held in trust by the
Officer as the property of BIDCO. If the Officer fails to make any such
endorsement or assignment BIDCO is hereby irrevocably authorized to make the
same.
4. Notices Provided by Office . The Officer shall provide BIDCO with 30
days prior written notice before the Officer may xxx for the whole or any part
of the amounts owing by the Company to the Officer pursuant to the Officer Note
(the "Subordinated Indebtedness ").
5. Amendment of BIDCO Documents and Officer Note. At any time and from time
to time, BIDCO may enter in such agreement or agreements with the Company as
BIDCO may deem proper (i) extending the time of payment or otherwise amending or
modifying the terms of the BIDCO Documents, or (ii) affecting any security
underlying any or all of such obligations, or may exchange, sell or surrender or
otherwise deal with any such security without notice to the Officer and the
Officer and Company must obtain the prior written consent of BIDCO, which
consent shall not be unreasonably withheld, to any amendment of the Officer Note
(including without limitation the repayment schedule thereof).
6. Waivers. No waiver shall be deemed to be made by either party of any of
its rights hereunder unless the same shall be in writi ng signed on behalf of
the party making the waiver, and each such waiver, if any, shall be a waiver
only with respect to the specific matter or matters to which the waiver relates
and shall in no way impair the rights of such party in any other respect at any
time.
7. Acceptance. Notice of acceptance by each party of this Agreement is
hereby waived by the other parties, and this Agreement and all of the terms and
provisions hereof shall be immediately binding upon all of the parties from the
date of execution hereof
E-2
8. Assignees, Governing Law. This Agreement shall bind or inure to the
benefit of the parties and their respective successors and assigns, and shall
be construed according to the laws of the State of Michigan.
9. Successors. The term "Company" as used herein, includes any person,
corporation, partnership or business entity which succeeds to the interests or
business of the Company named above, and the terms "Senior Indebtedness" and
"Subordinated Indebtedness" include indebtedness of any such successor Company
to BIDCO and the Officer.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of June 12, 1997.
HORIZON BIDCO INVESTMENT CO.
By:
---------------------------
Its:
---------------------------
G-P PLASTICS, INC.
By:
---------------------------
Its:
---------------------------
OFFICER
--------------------------------
E-3
EXHIBIT "F"
G-P PLASTICS, INC.
CONSENT RESOLUTION OF THE BOARD OF DIRECTORS
The undersigned Directors of G-P Plastics, Inc., a Michigan corporation,
"Corporation", acting without a meeting and by unanimous consent pursuant to
Section 525 of the Michigan Business Corporation Act of 1989, hereby adopt the
following preambles and resolutions, the said preambles and resolutions to have
fall force and effect as if adopted at a duly called meeting of the Board of
Directors held on June 12, 1997.
WITNESSETH:
WHEREAS, the Corporation desires to borrow capital from Horizon BIDCO
Investment Co. in an amount of $500,000.00 for the purpose of providing working
capital, equipment purchase and project development in the normal course of
business.
WHEREAS, Horizon BIDCO Investment Co. has agreed to loan funds to the
Corporation.
THEREFORE, BE IT
RESOLVED, that the Corporation be authorized to borrow $500,000.00
from Horizon BIDCO Investment Co. and to enter into a Business Loan
Agreement, a Promissory Note, Revenue Participation Agreement Security
Agreement and any other related documents as Horizon BIDCO Investment Co.
may reasonably require relating to the existence of the Corporation, the
corporate authority for and the validity of said Agreement, and any other
matters relevant thereto.
FURTHER RESOLVED, that any of the officers of the Corporation are
authorized to execute the Business Loan Agreement the Promissory Note,
Revenue Participation Agreement and any and all other related documents as
may be required by Horizon BIDCO Investment Co. on behalf of the
Corporation.
----------------------------
----------------------------
F-1
E X H I B I T "G"
Officers, Directors and Shareholders
Directors Indebtedness
$
--------------------------- ------------
$
--------------------------- ------------
$
--------------------------- ------------
$
--------------------------- ------------
$
--------------------------- ------------
Officers
President $
--------------------------- ------------
Secretary $
--------------------------- ------------
Treasurer $
--------------------------- ------------
$
--------------------------- --------------- ------------
$
--------------------------- --------------- ------------
--------------------------- ------------
Shareholders
$
--------------------------- ------------
$
--------------------------- ------------
$
--------------------------- ------------
$
--------------------------- ------------
$
--------------------------- ------------
$
--------------------------- ------------
Relatives of Officers, Directors and Shareholders
$
--------------------------- ------------
$
--------------------------- ------------
$
--------------------------- ------------
G-1
EXHIBIT "H"
SECURITY AGREEMENT
This Security Agreement is entered into on _________, 1997, by and between
G-P PLASTICS, INC., the "Debtor", of 3910 Industri al Drive, Rochester Hills,
michigan 48-' )09, and Horizon BIDCO Investment Co., the "Secured Party".
For value received, the Debtor hereby grants to Secured Party a security
interest in and to all of the Debtor's tangible and intangible real and personal
property and fixtures, whether now owned or hereafter acquired, including, but
not limited to, goods, documents, inventory, instruments, equipment@ furniture,
fixtures, trade fixtures, contract rights, accounts receivable, licenses and
motor vehicles, together with the proceeds from the sale or other disposition
thereof and the products thereof (the "Collateral"). The Collateral shall be
considered to be all of the assets of the Debtor. Such security interest shall
be subject to the security interest of the Debtor's Senior Lenders or substitute
senior lender in the Collateral pursuant to consent given by Secured Party under
the terms and conditions of the Business Loan Agreement between Debtor and
Secured Party of even date herewith, and in pari passu with all other holders of
subordinated indebtedness. The Debtor hereby pledges, assigns, transfers and
gran ts to the Secured Party a security interest in the Collateral to secure (1)
the Debtor's Note of even date herewith in the amount of $500,000.00 to the
Secured Party, payable as to principal and interest as provided in the Note; (2)
future advances by the Secured Party to the Debtor, to be evidenced by similar
notes; (3) all expenditures by the Secured Party for taxes, insurance and
repairs to and maintenance of the Collateral incurred by the Secured Party in
the collection and enforcement of the Note an d other indebtedness of Debtor;
and (4) all liabilities of Debtor to Secured Party now existing or incurred in
the future, matured or unmatured, direct or contingent and any renewals,
extensions, and substitutions of those liabilities, and any other obligations of
the Debtor pursuant to a certain Business Loan Agreement of even date herewith,
including, but not limited to, revenue participation payments.
The Debtor warrants, covenants and agrees as follows:
Title
1. Except for the security interest granted to Debtor's Senior Lenders and
the security interest granted by this Agreement and t he security interest
granted to other holders of subordinated indebtedness from time to time as
permitted by the Business Loan
H-1
Agreement the Debtor has, or on acquisition will have, full title to the
Collateral free from lien, security interest encumbrance, or claim, and the
Debtor will, at the Debtor's cost and expense, defend any action that may affect
the Secured Party's security interest in, or the Debtor's title to, the
Collateral.
Financing Statement
2. No Financing Statement covering the Collateral or any part of it or any
proceeds of it is on file in any public office with the exception of a financing
statement filed by the Debtor's Senior Lenders and the security interest granted
to other holders of subordinated indebtedness from time to time as permitted by
the Business Loan Agreement and, at the Secured Party's request, the Debtor will
join in executing all necessary financing statements in forms satisfactory to
the Secured Party and win further execute all other instruments deemed necessary
by the Secured Party.
Sale, Lease or Disposition of Collateral
3. The Debtor will not without the written consent of the Secured Party,
except for the sale of inventory in the ordinary course of business, sell
contract to sell, lease, encumber, or dispose of the Collateral or any interest
in it until this Security Agreement and all debts secured by it have been fully
satisfied.
Insurance
4. The Debtor will insure the Collateral with companies acceptable to the
Secured Party against the casualties and in the amounts that the Secured Party
shall reasonably require with a loss payable clause in favor of the Debtor and
Secured Party as their interest may appear, and, subject to the interest of the
Debtor's Senior Lenders, the Xxxxxxx.Xxxxx is authorized to collect sums that
may become due under any of the insurance policies and apply them to the
obligation secured by this Agreement.
Protection of Collateral
5. The Debtor will keep the Collateral in good order and repair and will
not waste or destroy the Collateral or any part of it. The Debtor will not use
the Collateral
H-2
in violation of any statute or ordinance, and the Secured Party will have the
right to examine and inspect the Collateral at any reasonable time.
Taxes
6. The Debtor will pay promptly when due all taxes and assessments on the
Collateral or for its use and operation.
Security Interest in Proceeds and Accessions
7. The Debtor grants to the Secured Party a security interest in and to all
proceeds, increases, substitutions, replacements, additions and accessions to
the Collateral. This provision shall not be construed to mean that the Debtor is
authorized to sell lease or dispose of the Collateral without the consent of the
Secured Party.
Reimbursement of Expenses
8. At the option of the Secured Party, the Secured Party may discharge
taxes, liens, interest or perform or cause to be performed for and on behalf of
the Debtor any actions and conditions, obligations or covenants that the Debtor
has failed or refused to perform, and may gay for the repair, maintenance and
preservation of the Collateral. All sums so expended, including but not limited
to attorneys' fees, court costs, agents fees or commissions or any other costs
or expenses, shall bear interest from th e date of payment at the annual rate of
21.5% per annum calculated on the basis of a 360 day year and shall be payable
at the place designated in the Debtor's Note and shall be secured by this
Security Agreement.
Books of Account
9. The Debtor will, at reasonable times and from time to time, allow the
Secured Party or any of its officers, employees or representatives to examine
and inspect and make abstracts from Debtor's books and other records and, where
accounts or contract rights are part of the CollateraL to arrange for
verification of accounts, under reasonable procedures, directly with account
debtors or by other methods and permit the Secured Party to inspect inventory
and motor vehicles.
H-3
Payment
10. The Debtor will pay the Note secured by this Security Agreement and any
other indebtedness secured by this Agreement in accordance with the terms and
provisions of the indebtedness and will repay immediately all sums expended by
the Secured Party in accordance with the terms and conditions of this Security
Agreement.
Change of Place of Business
11. The Debtor will promptly notify the Secured Party of any change of
Debtor's chief place of business, or place where records concerning the
Collateral are kept.
Time of Performance and Waiver
12. In performing any act under this Security Agreement and the Note, time
shall be of the essence. The Secured Party's acceptance of partial or delinquent
payments, or the failure of the Secured Party to exercise any right or remedy,
shall not be a waiver of any obligation of the Debtor or right of the Secured
Party or constitute a waiver of any other similar default that occurs later.
Default
13. The Debtor shall be in default under this Security Agreement on the
occurrence of any event of default under the Business Loan Agreement the Note
or the Revenue Participation Agreement.
Remedies
14. On the occurrence of any event of default, and at any later time, the
Secured Party, at its option, may declare all obligations secured due and
payable immediately. The Secured Party may require the Debtor to assemble the
Collateral and make it available to the Secured Party at any place to be
designated by the Secured Party that is reasonably convenient to both parties.
Unless the Collateral is perishable or threatens to decline speedily in value or
is of a type customarily sold on a recognized mar ket the Secured Party will
give the Debtor reasonable notice of the time and place of any public sale or of
the time after which any private sale or any other intended disposition of the
H-4
Collateral is to be made. The requirements of reasonable notice shall be met if
the notice is mailed, postage prepaid, to the address of the Debtor shown at the
beginning of this Security Agreement at least five days before the time of the
sale or disposition. Expen ses of retaking, holdings, preparing for sale,
selling, or the like shall include the Secured Party's reasonable attorneys'
fees and legal expenses.
Miscellaneous Provisions
15. a. Michigan Law to Apply: This Security Agreement shall be construed
under and in accordance with the Uniform Commercial Code and other applicable
laws of the State of Michigan.
b. Parties Bound: This Security Agreement shall be binding on and inure
to the benefit of the parties and their respective successors and assigns as
permitted by this Security Agreement.
c. Legal Construction: In case any one or more of the provisions
contained in this Security Agreement shall for any reason be hel d invalid,
illegal, or unenforceable in any respect the invalidity, illegality or
unenforceability shall not affect any other provisi on of this Security
Agreement and this Security Agreement shall be construed as if the invalid,
illegal or unenforceable provision ha d never been contained in it.
d. Prior Agreement Superseded: This Security Agreement constitutes the
only agreement of the parties and supersedes a ny prior understandings or
written or oral agreements between the parties respecting the subject matter of
this Security Agreement.
e. Definitions: All terms used in this Security Agreement that are
defined in the Uniform Commercial Code of Michigan shall have the same meaning
in this Security Agreement as in the Code and all terms used herein shall have
the same assigned in the Business Loan Agreement between the parties hereto of
even date herewith.
f. Amendment: The Security Agreement may only be amended by written
notice signed by all the parties hereto.
H-5
g. Release of Lien: Upon payment of all of the obligations owed by the
Debtor to the Secured Party, the Secured Party shall execute any and all
instruments and documents reasonably necessary and proper to discharge and
release the lien on the Collateral arising pursuant to this Security Agreement.
DEBTOR:
G-P PLASTICS, INC.
By:
---------------------
Its: President
SECURED PARTY:
Horizon BIDCO Investment Co.
By:
---------------------
Its:
H-6
