EXHIBIT 10.4
CREDIT AGREEMENT
BY AND AMONG
OCEAN BIO-CHEM, INC.,
STAR-BRITE
DISTRIBUTING, INC.,
STAR BRITE AUTOMOTIVE, INC.,
STAR BRITE DISTRIBUTING (CANADA), INC.,
KINPAK INC.
And
REGIONS BANK
DATED AS OF JULY 1, 2002
THIS INSTRUMENT PREPARED BY:
JOHN F. ANDREWS
CAPELL & Howard, P.C.
P. O. Box 2069
Montgomery, Alabama 36102-2069
(334) 241-8000
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TABLE OF CONTENTS
Parties
......................................................1
Recitals
......................................................1
ARTICLE 1
DEFINITIONS AND OTHER
PROVISIONS OF GENERAL APPLICATION
Section 1.01
Definitions...........................................2
Section 1.02
Effect of Headings and Table of Contents.............14
Section 1.03
Date
of Credit Agreement.............................14
Section 1.04
Separability Clause..................................14
Section 1.05
Counterparts.........................................14
ARTICLE 2
ISSUANCE OF LETTERS OF
CREDIT; REIMBURSEMENT AND FEES
Section 2.01
Issuance of the Letters of Credit....................14
Section 2.02
Reimbursement........................................14
Section 2.03
Fees.................................................15
Section 2.04
Increased Costs......................................16
Section 2.05
Pledged Bonds........................................17
ARTICLE 3
REVOLVING LINE OF CREDIT
Section 3.01
Revolving Line of Credit ............................18
Section 3.02
Revolving Line of Credit Note........................19
Section 3.03
Prepayment of Revolving Line of Credit...............20
Section 3.04
Acceptance Fee.......................................20
(i)
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ARTICLE 4
PAYMENTS, FEES, SECURITY
Section 4.01
Place and Time of Payments...........................20
Section 4.02
Late
Payments........................................21
Section 4.03
Computation of Charges...............................21
Section 4.04
Statements of Account................................21
Section 4.05
Obligations of Borrowers Absolute....................21
Section 4.06
Security.............................................22
ARTICLE 5
CONDITIONS PRECEDENT TO
FUNDING OF CREDIT FACILITIES
Section 5.01
Conditions Precedent to Funding of Credit Facilities.22
Section 5.02
Additional Conditions for Disbursement
of 2002 Bond Proceeds..............................24
Section 5.03
Additional Conditions to Making Advances
under the Revolving Line of Credit.................24
ARTICLE 6
REPRESENTATIONS AND COVENANTS
Section 6.01
General Representations of the Borrowers ............25
Section 6.02
Corporate Existence..................................28
Section 6.03
Accounting Records...................................28
Section 6.04
Reports to Bank......................................28
Section 6.05
Notice of Default....................................29
Section 6.06
Litigation Notice....................................29
Section 6.07
Covenants Regarding Financial Condition..............29
Section 6.08
Amendments to Financing Documents....................31
Section 6.09
Incorporation of Covenants by Reference..............31
Section 6.10
Payment of Taxes.....................................31
Section 6.11
Maintenance of Properties............................31
Section 6.12
Operation of Collateral..............................32
Section 6.13
Other Agreements.....................................32
Section 6.14
Encumbrances.........................................32
Section 6.15
Maintenance of Insurance.............................32
Section 6.16
Compliance with Environmental Laws...................32
Section 6.17
Damage and Destruction...............................33
(ii)
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Section 6.18
Condemnation.........................................33
Section 6.19
Redemption of Bonds..................................34
Section 6.20
Banking Relationship.................................34
Section 6.21
Alabama River Dock Facility..........................34
ARTICLE 7
EVENTS OF DEFAULT AND REMEDIES
Section 7.01
Events of Default....................................35
Section 7.02
Remedies.............................................36
Section 7.03
Acceleration of Reimbursement........................37
Section 7.04
No
Remedy Exclusive..................................38
Section 7.05
Agreement to Pay Attorneys' Fees.....................38
Section 7.06
No Additional Waiver
Implied by One Waiver...........38
Section 7.07
Remedies Subject to Applicable Law...................38
Section 7.08
Waiver by Borrowers..................................38
Section 7.09
Set
Off..............................................39
ARTICLE 8
MISCELLANEOUS
Section 8.01
No
Waiver............................................39
Section 8.02
Entire Agreement.....................................39
Section 8.03
Review by Borrowers..................................39
Section 8.04
Waiver of Trial by Jury..............................39
Section 8.05
Notices..............................................40
Section 8.06
Indemnification......................................41
Section 8.07
Liability of the Bank................................41
Section 8.08
Continuing Obligation................................42
Section 8.09
Participation........................................42
Section 8.10
Governing Law........................................42
Section 8.11
Costs, Expenses and Taxes............................43
Testimonium
.....................................................44
Signatures of
Borrowers.................................................44
Signature of Bank
.....................................................46
(iii)
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LIST OF EXHIBITS
Exhibit A Borrowing Base
Certificate
Exhibit B Equipment
Exhibit C Legal
Description of Real Property
Exhibit D 2002 Letter of
Credit
Exhibit E
Mortgage, Assignment of Leases and Security Agreement
Exhibit F Request for a
Revolving Line of Credit Advance
Exhibit G Revolving Line
of Credit Note
Exhibit H Security
Agreement
Exhibit I Substitute
Letter of Credit
Exhibit J Extension
Agreement
(iv)
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT dated as of July 1, 2002, is entered into by
and
among OCEAN BIO-CHEM, INC. ("Ocean"),
STAR-BRITE DISTRIBUTING, INC.
("Distributing"), STAR BRITE AUTOMOTIVE,
INC. ("Automotive") and STAR BRITE
DISTRIBUTING (CANADA), INC. ("Canada"),
corporations organized and existing
under the laws of the State of Florida,
KINPAK INC., ("KINPAK") a corporation
organized and existing under the laws of
the State of Alabama and REGIONS BANK,
an Alabama banking corporation (the
"Bank"). Ocean, Distributing, Automotive,
Canada and KINPAK are herein sometimes
referred to as the "Borrowers."
R E C I T A L S:
The Borrowers have requested that the Bank provide to the Borrowers
the
following credit facilities (the "Credit
Facilities"): (i) a direct-pay
irrevocable letter of credit (the
"Substitute Letter") securing the payment of
$4,000,000 Industrial Refunding Revenue
Bonds (KINPAK INC. Project) Series 1997
currently outstanding in the principal
amount of $3,280,000 (the "1997 Bonds")
issued by The Industrial Development Board
of the City of Montgomery (the
"Board"), (ii) a direct-pay irrevocable
letter of credit (the "Letter of
Credit") securing the payment of $3,500,000
Industrial Development Revenue Bonds
(KINPAK INC. Project) Series 2002 (the
"2002 Bonds") to be issued by the Board,
and (iii) a revolving working capital line
of credit (the "Revolving Line of
Credit") in the maximum amount outstanding
at any time of $5,000,000.
The 1997 Bonds were issued pursuant to a Trust Indenture dated as
of
December 1, 1996, as amended and
supplemented by First Supplemental Trust
Indenture dated as of March 1, 1997
(collectively, the "1997 Indenture") between
the Board and Regions Bank as Trustee (in
such capacity the "1997 Trustee"). The
proceeds of the 1997 Bonds were used to
refund certain prior revenue bonds of
the Board, the proceeds of which were used
to renovate and improve a
manufacturing facility located in
Montgomery, Alabama (the "Existing Facility")
and currently leased by the Board to KINPAK
pursuant to Restated Lease Agreement
dated as of December 1, 1996, as amended
and supplemented by First Supplemental
Lease Agreement dated as of March 1, 1997
(collectively the "1997 Lease"). The
Borrowers have requested that the Bank
issue the Substitute Letter in
substitution for the existing letter of
credit heretofore issued by First Union
National Bank of Florida securing the 1997
Bonds.
The 2002 Bonds will be issued pursuant to a Trust Indenture dated
as of
July 1, 2002 (the "2002 Indenture") between
the Board and Regions Bank, as
Trustee (acting in such capacity, the "2002
Trustee"). The Board will use the
proceeds of the 2002 Bonds to finance (i)
the construction of an approximately
70,000 square foot addition to the Existing
Facility and the acquisition of
certain machinery and equipment for use
therein (collectively the "2002
Improvements") and (ii) the payment of a
portion of the expenses of issuing the
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2002 Bonds. KINPAK and the Board will enter
into a Second Supplemental Lease
Agreement dated as of July 1, 2002 pursuant
to which KINPAK will lease the 2002
Improvements from the Board and KINPAK will
agree to pay additional rent to the
Board sufficient to pay the debt service on
the 2002 Bonds. The Existing
Facility as improved by the 2002
Improvements is herein referred to as the
"Project." Regions Bank when acting in the
capacity as both the 1997 Trustee and
2002 Trustee is herein referred to as the
"Trustee."
As security for the payment of the 2002 Bonds, the Borrower will
cause
the Bank to issue the Letter of Credit in
favor of the 2002 Trustee in the
amount of (i) the aggregate principal
amount of the 2002 Bonds, to enable the
2002 Trustee to pay the principal amount of
the 2002 Bonds when due and to pay
the principal portion of the purchase price
of 2002 Bonds tendered (or deemed
tendered) for purchase, plus (ii) interest
on the 2002 Bonds for a period of 120
days at the rate of 12% per annum, to
enable the 2002 Trustee to pay interest on
the 2002 Bonds when due and to pay the
interest portion of the purchase price of
2002 Bonds tendered (or deemed tendered)
for purchase.
The Revolving Line of Credit will be made available by the Bank to
the
Borrowers pursuant to the terms hereof and
the Borrowers will use the moneys
drawn under the Revolving Line of Credit to
provide working capital for the
Borrowers' business operations. The
obligations of the Borrowers under the
Revolving Line of Credit will be evidenced
by a promissory note of the Borrowers
in favor of the Bank dated as of July 1,
2002.
As security for the Borrowers' obligations
under this Agreement with respect to
the Substitute Letter, the Letter of Credit
and the Revolving Line of Credit the
Borrowers are executing the Mortgage,
Assignment of Leases and Security
Agreement hereafter referred to. As
additional security for the Borrowers' Line
of Credit Obligations the Borrowers are
executing the Security Agreement
hereafter referred to.
ARTICLE 1
DEFINITIONS AND OTHER
PROVISIONS OF GENERAL APPLICATION
SECTION 1.01 DEFINITIONS
For all purposes of this Agreement, except as otherwise
expressly
provided or unless the context otherwise
requires:
(1) The terms defined in this Article have the meanings assigned
to
them in this Article. Singular terms shall
include the plural as well as the
singular and vice versa.
(2) All accounting terms not otherwise defined herein have the
meanings
assigned to them, and all computations
herein provided for shall be made in
accordance with generally accepted
accounting principles, consistently applied.
All references herein to "generally
accepted accounting principles" refer to
such principles as they exist at the date
of application thereof.
2
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(3) All references in this instrument to a designated
"Article,"
"Section" or other subdivision are to the
designated articles, sections, and
subdivisions of this instrument as
originally executed.
(4) The terms "herein," "hereof," and "hereunder" and other words
of
similar import refer to this Agreement as a
whole and not to any particular
article, section or other subdivision.
(5) The term "person" shall include any individual,
corporation,
partnership, limited liability company,
joint venture, association, trust,
unincorporated organization and any
government or any agency or political
subdivision thereof.
(6) Capitalized terms not otherwise defined in this Article shall
have
the meaning assigned in the 1997 Indenture
or the 2002 Indenture, as applicable.
(7) As used in this Agreement, the following terms shall have
the
following meanings unless the context
hereof shall otherwise indicate:
"A Drawing" shall mean a drawing under the Substitute Letter or
the Letter of Credit, as applicable, to pay the principal of the
1997
Bonds or the 2002 Bonds due to maturity, redemption, or
acceleration.
"Account Receivable" shall mean a right to payment for goods
sold
or leased or for services rendered by the Borrowers.
"Actual/360 Basis" shall mean a method of computing interest on
the basis of an assumed year of 360 days for the actual number of
days
elapsed, meaning that the interest accrued for each day will be
computed by multiplying the interest rate applicable on that day by
the
unpaid principal balance on that day and dividing the result by
360.
"Additional Project Equipment" shall mean all items of
furniture,
furnishings, fixtures, machinery, equipment or other personal
property
at any time installed in or about the Project and owned by the
Borrowers, or any thereof, the costs of which are not paid by the
Board
from the proceeds of the Bonds, or are not otherwise Project
Equipment.
"Advance" shall mean any amount advanced by the Bank to the
Borrowers
under the Revolving Line of Credit.
"Affiliate" shall mean any corporation, limited liability
company, partnership or business association of which the
Borrowers, or
any thereof, directly or indirectly controls, or is controlled by
or is
under common control with the Borrowers, or any thereof, or a
Subsidiary.
3
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"Automotive" shall mean Star Brite Automotive, Inc., a
corporation organized and existing under the laws of the State
of
Florida, its successors and assigns as permitted herein.
"B Drawing" shall mean a drawing under the Substitute Letter or
the Letter of Credit, as applicable, to pay interest on the 1997
Bonds
or the 2002 Bonds.
"Bank" shall mean Regions Bank, an Alabama banking corporation
with a principal place of business in Montgomery, Alabama, and
its
successors and assigns.
"Base Rate" shall mean the variable rate of interest designated
by the Bank periodically as the Bank's Commercial Base Rate. The
Base
Rate is not necessarily the lowest rate charged by the Bank. The
Base
Rate on the date of this Agreement is 4.75%.
"Board" shall mean The Industrial Development Board of the City
of Montgomery, its successors and permitted assigns.
"Bonds" shall mean both the 1997 Bonds and the 2002 Bonds
unless
the context
indicates that reference is made to only one or the other
of such series of bonds.
"Borrowers" shall mean Ocean, Distributing, Automotive, Canada
and KINPAK, or any one or more thereof, jointly and severally,
unless
the context clearly indicates to the contrary.
"Borrowing Base Certificate" shall mean the Borrowing Base
Certificate in the form of Exhibit A hereto signed by Ed Anchel, or
any
other officer of Distributing or Ocean authorized by Ocean in
writing
to sign such instrument.
"Business Day" shall mean any day other than (i) a Saturday or
Sunday; (ii) a day on which banking institutions are required
or
authorized to remain closed in (A) the city in which the
principal
office of the Trustee is located, (B) the city in which the
principal
office of the Remarketing Agent is located, or (C) the city in
which
the office of the Bank where drawings under the Letter of Credit
are to
be made is located; or (iii) a day on which the payment system of
the
Federal Reserve System is not operational.
"C Drawing" shall mean a drawing under the Substitute Letter or
the Letter of Credit, as applicable, to pay the purchase price
of
Tendered Bonds.
4
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"Canada" shall mean Star Brite Distributing (Canada), Inc., a
corporation organized and existing under the laws of the State
of
Florida, its successors and assigns as permitted herein.
"Capital Expenditures" shall mean any expenditure for fixed
assets or which is properly chargeable to capital account in
accordance
with generally accepted accounting principles.
"Closing Date" shall mean the date on which the initial Letter
of
Credit is issued by the Bank.
"Collateral" shall mean all property and rights mortgaged,
assigned, pledged, or otherwise subject to the lien of the Mortgage
or
the Security Agreement and all other collateral from time to
time
securing the Obligations.
"Credit Agreement" or "Agreement" shall mean this instrument as
originally executed or as it may from time to time be
supplemented,
modified or amended by one or more instruments entered into
pursuant to
the applicable provisions hereof.
"Credit Amount" shall mean the maximum amount available to be
drawn under the Substitute Letter or the Letter of Credit, as
applicable, as reduced from time to time and reinstated from time
to
time pursuant to the terms and conditions thereof.
"Credit Facilities" shall mean, collectively, the Substitute
Letter, the Letter of Credit and the Revolving Line of Credit.
"Debt" of any person shall mean (i) all indebtedness, whether
or
not represented by bonds, debentures, notes or other securities,
for
the repayment of borrowed money, (ii) all deferred indebtedness for
the
payment of the purchase price of property or assets purchased,
(iii)
all capitalized lease obligations, and (iv) all indebtedness
secured by
any mortgage or pledge of, or lien on, property of such person,
whether
or not indebtedness secured thereby shall have been assumed, and
(v)
the aggregate amount available under any letter of credit issued
for
the account of the Borrowers, to the extent proceeds from such
letter
of credit are not required to be applied against any other
Debt.
"Distributing" shall mean Star-Brite Distributing, Inc., a
corporation organized and existing under the laws of the State
of
Florida, its successors and assigns as permitted herein.
5
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"Eligible Account" shall mean and include only the net amount
(after eliminating from the aggregate face amount thereof all
payments,
adjustments, discounts, credits and allowances applied thereto) of
such
Accounts Receivable which have been outstanding not more than 90
days
from the date of invoice thereof, as the Bank shall deem eligible
based
on the following considerations. The Bank may exclude any
Account
Receivable from Eligible Accounts if:
(i) The subject goods have been shipped or delivered to a
Purchaser on a bill-and-hold, guaranteed sale, consignment,
approval or sale-or-return basis or subject to any other
repurchase or return agreement; or
(ii) Any material part of the subject goods has been
returned, rejected, lost or damaged; or
(iii) The Purchaser is located outside the United States,
and the subject goods have not been shipped on the security of
a
banker's acceptance or letter of credit acceptable to the Bank
and pledged to the Bank, or the Account Receivable is not
payable
in United States dollars; provided, however, Canadian Accounts
Receivable totaling less than 20% of the Borrowers total
outstanding Accounts Receivable may be used without compliance
with this subsection (iii) so long as they meet the 90 day
aging
requirement; or
(iv) The Purchaser is also the Company's supplier or
creditor; or
(v) The Account Receivable is not evidenced by an invoice
in form acceptable to Bank; or
(vi) More than 75% in amount of the other Accounts
Receivable of the Purchaser have been outstanding more than 90
days from the date of invoice thereof; or
(vii) The Account Receivable arises out of transactions
with an employee, officer, agent, director, stockholder,
affiliate or subsidiary of the Borrowers; or
(viii) The general credit worthiness and financial
condition of the Purchaser are not reasonably acceptable to the
Bank; or
(ix) Any of the representations and warranties set
forth in the Security Agreement are not true and correct with
respect to such Account Receivable.
6
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"Eligible Inventory" shall mean and include only such Inventory
of finished goods (not including supplies, parts or
work-in-process)
that is located at one of the locations specified in the
Security
Agreement as the place or place at which such goods are to be
maintained, that is in good and saleable condition, that meets
all
standards imposed by any governmental agency, or department or
subdivision thereof, having regulatory authority over such goods
or
over their use or sale, that is currently usable or saleable in
the
normal course of the Borrowers' business and that is not obsolete
or
unmerchantable, as the Bank, in the reasonable exercise of its
judgment, shall deem eligible, based on such credit and
collateral
considerations as the Bank shall deem appropriate. Without limiting
the
generality of the foregoing, the Bank may exclude any Inventory
from
Eligible
Inventory if any of the representations and warranties set
forth in the Security Agreement are not true and correct with
respect
to such Inventory. The collateral value of Eligible Inventory shall
be
computed at the lower of cost (on a first-in, first-out basis)
or
market. Bulk raw materials, such as those stored in tanks and
drums
with a marketable resale value as determined by the Bank may be
considered in determining inventory values.
"Equipment" shall mean the Project Equipment and the Additional
Project Equipment. As of the delivery of the Lease Agreement,
the
Equipment is expected to consist of those items (whether or not
fixtures) of furniture, furnishings, fixtures, machinery, equipment
or
other personal property that are generally described in Exhibit
B
hereto.
"Eurodollar Reserve Percentage" shall mean the percentage which
is in effect from time to time under Regulation D of the Board
of
Governors of the Federal Reserve System, as such regulation may
be
amended from time to time, as the actual reserve requirement
applicable
to the Bank with respect to Eurocurrency Liabilities (as that term
is
defined in Regulation D), whether or not the Bank has any
Eurocurrency
Liabilities subject to such reserve requirement at that time.
The
Revolving Line of Credit Note Rate shall be adjusted automatically
on
and as of
the effective date of any change in the Eurodollar Reserve
Percentage.
"Event of Default" shall have the meanings stated in Section
7.01
hereof. An Event of Default shall "exist" if an Event of Default
shall
have occurred and be continuing.
"Existing Facility" shall mean the manufacturing facilities
(land, buildings, other improvements, equipment, machinery,
personal
property and fixtures) owned by the Board and leased to KINPAK
and
located on the real property described in Exhibit C.
7
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"Financing Documents" shall mean this Agreement, the
Indentures,
the Lease Agreement, the Mortgage, the Security Agreement and
the
Revolving Line of Credit Note.
"Financing Participants" shall mean the Borrowers, the Bank,
the
Trustee, the Board, the Remarketing Agent and the holders of the
Bonds.
"Governmental Approvals" shall mean any authorization, consent,
order, approval, license, lease, ruling, permit, tariff, rate,
certification, validation, exemption, filing or registration by
or
with, or notice to, any Governmental Authority.
"Governmental Authority" shall mean any federal, state,
municipal
or other governmental department (including, without limitation,
any
department of buildings, fire, labor or health), commission,
central
bank, board, bureau, agency, court, tribunal or other
instrumentality,
domestic or foreign, and any arbitrator.
"Guaranteed Obligations" shall mean all guaranties,
endorsements,
assumptions and other contingent obligations in respect of, or
to
purchase or to otherwise acquire, Debt of others.
"Indentures" shall mean, collectively, the 1997 Indenture and
the
2002 Indenture.
"Interest Expense" shall mean interest payable on Debt during
the
period in question.
"Inventory" shall mean goods, merchandise and other personal
property wherever located now or hereafter held by the Borrowers
for
sale or lease or furnished or to be furnished under contracts
of
service or otherwise, raw materials, parts, finished goods,
work-in-process and supplies and materials used or consumed, or to
be
used or consumed, in the Borrowers' present or any future business,
and
all such property the sale, lease or other disposition of which
has
given rise to accounts receivable and which has been returned to
or
repossessed or stopped in transit by the Borrowers.
"KINPAK" shall mean KINPAK INC., a corporation organized and
existing under the laws of the State of Alabama, and its successors
and
assigns as permitted herein.
"Laws" shall mean all laws, statutes, codes, ordinances,
orders,
awards, judgments, decrees, injunctions, approvals, permits,
franchises, requirements, regulations and licenses of any
Governmental
Authority.
8
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"Lease Agreement" shall mean the Restated Lease Agreement dated
as of December 1, 1996, as amended and supplemented by First
Supplemental Lease Agreement dated as of March 1, 1997, and by
Second
Supplemental Lease Agreement dated as of July 1, 2002, between
KINPAK
and the Board relating to the Project, including any amendments
or
supplements to such instrument from time to time entered into
pursuant
to the applicable provisions thereof.
"Letter of Credit" shall mean the letter of credit with respect
to the 2002 Bonds issued by the Bank in favor of the Trustee
substantially in the form of Exhibit D hereto.
"Letters of Credit" shall mean, collectively, the Letter of
Credit and the Substitute Letter.
"Liabilities" shall mean all Debt and all other items
(including
taxes accrued as estimated) which, in accordance with generally
accepted accounting principles applied on a consistent basis, would
be
included in determining total liabilities as shown on the
liabilities
side of a balance sheet.
"LIBOR Base Rate" shall mean the simple per annum interest rate
determined by the Bank as follows: On the LIBOR Interest
Determination
Date relating to each LIBOR Interest Period, the Bank shall obtain
such
number of offered quotations as the Bank deems appropriate and as
are
reasonably available in the London Interbank Borrowing Market
at
approximately 11:00 a.m. Montgomery, Alabama, time on the LIBOR
Interest Determination Date relating to such LIBOR Interest Period,
for
deposits in Dollars in an amount approximately equal (to the
nearest
$50,000) to the principal amount of the Revolving Line of Credit
that
will be outstanding on the first day of such LIBOR Interest Period
and
for a length of time of approximately one month. The LIBOR Base
Rate
shall be the arithmetic average (rounded to the nearest
one-sixteenth
of one percent (1/16%)) of such offered quotations, as determined
by
the Bank.
"LIBOR Interest Determination Date" shall mean the date which
is
the second Business Day immediately preceding the first day of a
LIBOR
Interest Period.
"LIBOR Interest Period" shall mean a period of one month
commencing on July 1, 2002 and each successive one month period
thereafter, commencing on the first day of each calendar month
thereafter.
Notwithstanding the foregoing, however, any applicable
LIBOR Interest Period which would otherwise end on a day which is
not a
Business Day shall end on the next succeeding Business Day unless
such
Business Day falls in another calendar month, in which case such
LIBOR
Interest Period shall end on the next preceding Business Day.
9
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"Line of Credit Obligations" shall mean all indebtedness or
obligations of the Borrowers to the Bank under or related to
the
Revolving Line of Credit.
"Lien" shall mean any mortgage, pledge, encumbrance, security
interest, assignment or other charge of any kind, including,
without
limitation, any conditional sale agreement or other title
retention
agreement.
"Mortgage" shall mean the Mortgage, Assignment of Leases and
Security Agreement from the Board and KINPAK to the Bank dated as
of
July 1, 2002, granting a lien on that portion of the Collateral
constituting real property securing all of the extensions of
credit
under this Agreement, substantially in the form of Exhibit E
hereto.
"Mortgaged Site" means the land described in Exhibit C hereto
together with all buildings, structures, plants, and other
facilities
located thereon constituting real property and any additional land
or
other real property which under the terms hereof is or becomes part
of
the Collateral.
"Obligations" shall mean all indebtedness or obligations of the
Borrowers to the Bank under this Agreement or secured by the
Mortgage
or the Security Agreement, including without limitation (i) the
Borrowers' obligation to reimburse the Bank for draws made under
the
Letters of Credit and (ii) the Borrowers' obligation to pay fees
and
charges to the Bank for the issuance and continuation of the
Letters of
Credit and (iii) the Borrowers' obligations under the Revolving
Line of
Credit Note.
"Ocean" shall mean Ocean Bio-Chem, Inc., a corporation
organized
and existing under the laws of the State of Florida, and its
successors
and assigns as permitted herein.
"Opinion of Counsel" shall mean an opinion from an attorney or
firm of attorneys with experience in the matter to be covered in
the
opinion.
"Pledged Bonds" shall mean the Bonds purchased pursuant to the
optional or mandatory tender provisions of the Indentures with
moneys
drawn under the Letters of Credit.
"Project" shall mean, collectively, the Existing Facility, the
2002 Improvements, the Project Equipment and the Additional
Project
Equipment.
"Project Equipment" shall mean (i) all items (whether or not
fixtures) of furniture, furnishings, fixtures, machinery, equipment
or
other personal property the costs of which, in whole or in part,
are
paid by the Board out of the proceeds of the Bonds and (ii) all
items
(whether or not fixtures) of furniture, fixtures, machinery,
equipment
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or other personal property at any time installed in or about
the
Project that are acquired by the Board or the Borrowers in
substitution
for or replacement of property theretofore constituting part of
the
Project Equipment and that, under the provisions of the Lease
Agreement
and the Indentures, are to constitute part of the Project
Equipment.
"Purchaser" shall include any buyer or lessee of Inventory from
the
Borrowers, any customer for whom services have been rendered or
goods sold or leased by the Borrowers and any other person who is
now
or may hereafter become obligated to the Borrowers on an
Account
Receivable.
"Receivables" shall mean and includes all Accounts Receivable
and
any and all other rights of the Borrowers to the payment of money
or
other forms of consideration of any kind (whether classified under
the
Uniform Commercial Code as accounts, contract rights, chattel
paper,
general intangibles, or otherwise) including, but not limited
to,
accounts receivable, letters of credit and the right to receive
payment
thereunder, chattel paper, tax refunds, insurance proceeds,
contract
rights, notes, drafts, instruments, documents, acceptances, and
all
other debts, obligations and liabilities due the Borrowers in
whatever
form and from whatever person or entity, whether or not related to
the
Borrowers' business operations wherever located, and further
including
all cash and noncash proceeds of any of the foregoing.
"Remarketing Agent" shall mean Merchant Capital, L.L.C. or its
successor or successors as remarketing agent for the Bonds.
"Remarketing Agreement" shall mean the Remarketing Agreement
dated as of July 1, 2002 among the Remarketing Agent, the Trustee,
the
Board and KINPAK relating to the Bonds.
"Request for an Advance" shall mean a Request for a Revolving
Line of Credit Advance in the form of Exhibit F hereto signed by
Ed
Anchel or any other officer of the Borrowers authorized by the
Borrowers in writing to sign such instrument.
"Revolving Line of Credit" shall mean the revolving line of
credit provided to the Borrowers by the Bank as more fully
described in
Section 3.01.
"Revolving Line of Credit Note" shall mean the Revolving Line
of
Credit Note of the Borrowers in favor of the Bank substantially in
the
form of Revolving Line of Credit Note attached hereto as Exhibit
G.
"Revolving Line of Credit Note Rate" shall mean a simple per
annum interest rate equal to the sum of (a) the quotient (rounded
to
the nearest one-sixteenth of one percent (1/16%)) of (i) the LIBOR
Base
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Rate divided by (ii) one minus the Eurodollar Reserve
Percentage,
stated as a decimal, plus 275 basis points. In the event of an
Event of
Default by the Company under the Revolving Line of Credit Note
as
defined in Section 7.01 hereof, the Revolving Line of Credit Note
Rate
shall be increased by 2% per annum above the rate otherwise
applicable.
"Security Agreement" shall mean that certain Security Agreement
dated as of July 1, 2002 between the Borrowers and the Bank
substantially in the form of Security Agreement attached hereto
as
Exhibit H.
"Shareholders" shall mean any persons or entities that, as of
the
time in question, hold beneficial or legal title to any of the
capital
stock of the
Borrowers.
"Subordinated Debt" shall mean Debt as to which payment of the
principal thereof and interest (and premium, if any) thereon shall
be
(i) subordinated and subject in right of payment to the prior
payment
in full of the Obligations of the Borrowers and (ii) deferred in
any
event (including without limitation bankruptcy, reorganization
or
similar proceedings with respect to the Borrowers) until payment
in
full of all Obligations hereunder has been made.
"Subsidiary" shall mean any corporation, limited liability
company, partnership, or other business association of which
the
Borrowers and/or one or more subsidiaries owns directly or
indirectly,
50% or more of capital stock or equity interest.
"Substitute Letter" shall mean the letter of credit with
respect
to the 1997 Bonds issued by the Bank in favor of the 2002
Trustee
substantially in the form of Exhibit I hereto.
"Tangible Net Worth" shall mean the sum of the amounts set
forth
on the balance sheet of Ocean as shareholders' equity
(including
without limitation the par or stated value of all outstanding
capital
stock, retained earnings, additional paid-in capital, capital
surplus
and earned surplus), plus (x) the outstanding amount of any
Subordinated Debt, less the sum of (i) any surplus resulting from
any
write-up of assets, (ii) goodwill, (iii) patents, trademarks,
copyrights, leasehold improvements not recoverable at the
expiration of
a lease, and deferred charges (including, but not limited to,
unamortized debt, discount and expense, organization expenses,
experimental and developmental expenses, but excluding prepaid
expenses), (iv) any amounts at which shares of capital stock of
such
person appear on the asset side of the balance sheet and (v)
any
amounts due from or owed by any shareholder or Affiliate (other
than
amounts included under clause (x) above).
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"Tendered Bonds" shall mean Bonds tendered (or deemed tendered)
for purchase pursuant to the optional or mandatory tender
provisions of
the Indentures.
"Termination Date" shall mean the date on which the Substitute
Letter or the Letter of Credit, as applicable, will by its
terms
expire, unless the Substitute Letter or the Letter of Credit is
terminated on an earlier date in accordance with its terms.
"Trustee" shall mean Regions Bank, an Alabama banking
corporation
with a principal place of business in Montgomery, Alabama, in
its
capacity as trustee under the Indentures, and its successors
and
assigns.
"1997 Bonds" shall mean the $4,000,000 aggregate principal
amount
of Industrial Refunding Revenue Bonds (KINPAK INC. Project) Series
1997
issued by the Board pursuant to the 1997 Indenture.
"1997 Indenture" shall mean that certain Trust Indenture dated
as
of December 1, 1996, as amended and supplemented by First
Supplemental
Trust Indenture dated as of March 1, 1997, between the Board and
the
Trustee relating to the 1997 Bonds, including any amendments or
supplements to such instrument from time to time entered into
pursuant
to the applicable provisions thereof.
"1997 Trustee" shall mean Regions Bank as trustee under the
1997
Indenture.
"2002 Bonds" shall mean the $3,500,000 aggregate principal
amount
of Industrial Development Revenue Bonds (KINPAK INC. Project)
Series
2002 issued by the Board pursuant to the 2002 Indenture.
"2002 Improvements" shall mean the approximately 70,000 square
foot addition to the Existing Facility and the additional machinery
and
equipment
for use therein to be purchased by the Board and financed by
the proceeds of the 2002 Bonds.
"2002 Indenture" shall mean that certain Trust Indenture dated
as
of July 1, 2002, between the Board and the Trustee relating to the
2002
Bonds, including any amendments or supplements to such instrument
from
time to time entered into pursuant to the applicable provisions
thereof.
"2002 Trustee" shall mean Regions Bank as trustee under the
2002
Indenture.
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SECTION 1.02 EFFECT OF HEADINGS AND TABLE OF CONTENTS
The article and section headings herein and in the Table of
Contents
are for convenience only and shall not
affect the construction hereof.
SECTION 1.03 DATE OF CREDIT AGREEMENT
The date of this Agreement is intended as and for a date for
the
convenient identification of this Credit
Agreement and is not intended to
indicate that this Agreement was executed
and delivered on said date.
SECTION 1.04 SEPARABILITY CLAUSE
If any provision in this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and
enforceability of the remaining
provisions shall not in any way be affected
or impaired thereby.
SECTION 1.05 COUNTERPARTS
This instrument may be executed in any number of counterparts, each
of
which so executed shall be deemed an
original, but all such counterparts shall
together constitute but one and the same
instrument.
ARTICLE 2
ISSUANCE OF LETTERS OF
CREDIT; REIMBURSEMENT AND FEES
SECTION 2.01 ISSUANCE OF THE LETTERS OF CREDIT
(a) The Borrowers hereby request and instruct the Bank to issue
the
Letters of Credit substantially in the
respective forms of Exhibits D and I
hereto and the Letters of Credit are
subject to the terms and conditions of this
Agreement.
(b) The Letters of Credit shall be issued on the date of delivery
of
the 2002 Bonds to the original purchaser
thereof from the Board.
SECTION 2.02 REIMBURSEMENT
(a) On each date that the Bank honors any A Drawing, B Drawing or
C
Drawing under the Letters of Credit, the
Borrowers shall immediately reimburse
the Bank for the amount of such draw.
(b) In the event that the Borrowers shall fail to reimburse the
Bank on
the day of each drawing under the Letters
of Credit, the Borrowers shall pay to
the Bank interest on the unreimbursed
amount of each drawing at a variable per
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<PAGE>
annum rate equal to the Base Rate plus 2%
from the date such drawing is paid by
the Bank until the amount of such drawing
is reimbursed in full to the Bank.
Such interest shall be payable in arrears
on the first day of each month
following such drawing and on the date that
such drawing is reimbursed in full
to the Bank. Failure by the Borrowers to
reimburse any such drawing shall
nevertheless be a default hereunder,
regardless of the payment of interest, and
the Bank shall be entitled to immediately
exercise all rights and remedies for a
default of the Borrowers herein
contained.
(c) No interest shall be payable with respect to any drawing if
the
Bank is reimbursed in full for such drawing
by 12:00 noon (Montgomery, Alabama
time) on the same date that such drawing is
paid by the Bank.
(d) All amounts received by the Bank in respect of principal,
premium
or interest on Pledged Bonds shall be
credited first against interest payable on
the unreimbursed amount of the C Drawing
with respect to such Pledged Bonds and
the balance, if any, shall be credited
against the amount of such C Drawing.
(e) Anything herein to the contrary notwithstanding, the Borrowers
will
not reimburse the Bank for any A Drawing, B
Drawing or C Drawing until the same
has been honored in full by the Bank, and
no such reimbursement shall be
prepaid.
SECTION 2.03 FEES
(a) The Borrowers agree to pay to the Bank an annual fee, payable
in
four installments, calculated at the rate
of 1.12% per annum on the Credit
Amount available to be drawn under the
Letters of Credit (computed on the date
each such installment is payable). Such
fees shall be payable in advance on the
date of issuance of the Letters of Credit
for the period beginning on such date,
and ending on September 1, 2002, and
quarterly thereafter on each March 1, June
1, September 1 and December 1. Fees payable
for the last quarterly payment shall
be prorated based on the number of days
during which the Letters of Credit are
outstanding during such period.
(b) The Borrowers shall continue to pay the 1997 Trustee its annual
fee
of $2,500 in connection with the 1997 Bond
issue. In addition, the Borrowers
shall pay the 2002 Trustee a $2,500
acceptance fee on the date of closing and a
$2,500 annual fee payable on the date of
closing for the first year, and
annually thereafter.
(c) In addition to the fees payable under subsection (a) above,
the
Borrowers shall pay to the Bank such amount
as shall at the time of a transfer
of the Letters of Credit then be the charge
which the Bank is customarily making
for transfers of similar letters of credit.
Such charges shall be paid within
ten days of receipt by the Borrowers of a
written statement therefor.
(d) For each draw on the Letters of Credit the Borrowers shall pay
a
processing fee in the amount then
customarily charged by the Trustee for draws
under letters of credit similar to the
Letters of Credit (currently $65) and the
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<PAGE>
customary drawing fee of the Bank's
International Department for each drawing
under the Letters of Credit (currently
$100). The processing fee and the drawing
fee shall be due on the date such draw is
made.
(e) At closing, the Borrowers shall pay the Bank an acceptance fee
of
$17,699.60.
Section 2.04 Increased Costs
(a) If, after the date of delivery of this Agreement, any change in
any
Law or regulation or in the interpretation,
administration or enforcement
thereof by any court or Governmental
Authority charged with the administration
thereof or any action by any Governmental
Authority (whether or not constituting
or resulting from such change) shall
either
(1) impose, modify or deem applicable any reserve, assessment,
special deposit or similar requirement against letters of credit
issued
by the Bank, or
(2) impose on the Bank any other condition regarding this
Agreement or the Letters of Credit,
and the result of any such event shall be
to increase the cost to the Bank of
issuing or maintaining the Letters of
Credit (which increase in cost shall be
the result of the Bank's reasonable
allocation of the aggregate of such cost
increases resulting from such events and
shall be calculated without giving
effect to any participation granted in the
Letters of Credit), then, upon demand
by the Bank, the Borrowers shall pay to the
Bank from time to time, within 30
days of the Borrowers' receipt of the
certificate referred to in paragraph
2.04(b) below, as specified by the Bank in
writing, such additional amounts
which shall be sufficient to compensate the
Bank for the portion of such
increased costs that are allocable to the
Letters of Credit.
(b) The Bank shall deliver to the Borrowers a certificate as to
such
increased costs incurred by the Bank as a
result of any event referred to in
subsection (a) of this Section, and such
certificate shall be conclusive, absent
manifest error, as to the amount thereof.
In making the determination
contemplated by such certificate, the Bank
may make such reasonable estimates,
assumptions, allocations, and the like that
the Bank deems to be appropriate.
(c) The Bank shall make a good faith effort to notify the
Borrowers
when the Bank becomes aware of
circumstances that may in the future require the
imposition of increased costs pursuant to
this Section, but the failure to give
such notice shall not preclude the
imposition of such increased costs.
(d) If, after the date of this Agreement, the Bank shall have
determined that the adoption or
implementation of any applicable law, rule or
regulation regarding capital adequacy, or
any change therein, or any change in
the interpretation or administration
thereof by any governmental authority,
central bank or comparable agency charged
with the interpretation or
16
<PAGE>
administration thereof, or compliance by
the Bank with any request or directive
regarding capital adequacy (whether or not
having the force of law) of any such
authority, central bank or comparable
agency, has or would have the effect of
reducing the rate of return on the Bank's
capital, on this credit facility or
otherwise, as a consequence of its
obligations hereunder and under the Letters
of Credit to a level below that which the
Bank could have achieved but for such
adoption, change or compliance (taking into
consideration the Bank's policies
with respect to capital adequacy) by an
amount deemed by the Bank to be
material, then from time to time, promptly
upon demand by the Bank, the
Borrowers hereby agree to pay the Bank such
additional amount or amounts as will
compensate the Bank for such reduction. A
certificate of the Bank claiming
compensation under this subsection and
setting forth the additional amount or
amounts to be paid to it hereunder shall be
conclusive absent manifest error. In
determining any such amount, the Bank may
use any reasonable averaging and
attribution methods.
(e) Upon the occurrence of any of the events described in
paragraphs
2.04(a) or (d) above, the Borrowers may, at
their option, provide a substitute
letter or letters of credit for the Letters
of Credit, in which event the Bank
will refund any prepaid letter of credit
fees provided all Obligations relating
to the Letters of Credit have been paid in
full.
Section 2.05 Pledged Bonds
(a) As additional security for the performance of its obligations
under
this Agreement, KINPAK hereby pledges,
assigns, hypothecates and transfers to
the Bank all of its right, title and
interest in and to the Pledged Bonds, and
does hereby grant to the Bank a security
interest in the Pledged Bonds and all
amounts payable thereon and the proceeds
thereof.
(b) If the Bank is reimbursed for the purchase price of Pledged
Bonds
with respect to which a C Drawing has been
made, such Pledged Bonds shall be
released from the pledge and assignment
made hereby and shall be delivered to or
upon the order of KINPAK.
(c) All payments of principal and interest on Pledged Bonds shall
be
made directly to the Bank. If, while the
Bank or its designated agent holds
Pledged Bonds, KINPAK shall receive any
interest or principal payment in respect
of such Pledged Bonds, KINPAK agrees to
accept the same as agent for the Bank
and to hold the same in trust on behalf of
the Bank and to deliver the same
forthwith to the Bank. All sums of money so
paid in respect of principal,
premium or interest on such Pledged Bonds
which are received by KINPAK and paid
to the Bank, or which shall be received
directly by the Bank from the Trustee,
shall be credited against the reimbursement
obligation of the Borrowers as
provided in Section 2.02(d).
(d) If an Event of Default exists, the Bank may, without
notice,
exercise all rights, privileges or options
pertaining to any Pledged Bonds as if
it were the absolute owner thereof, upon
such terms and conditions as it may
determine, all without liability except to
account to the Borrowers for property
actu
