SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended February 28, 1998
Commission File No. 1-13479
AGRIBRANDS INTERNATIONAL, INC.
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(Exact name of registrant as specified in its charter)
MISSOURI 43-1794250
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(State of Incorporation) (I.R.S. Employer Identification No.)
9811 SOUTH FORTY DRIVE, ST. LOUIS MISSOURI 63124
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(Address of principal executive offices) (Zip Code)
(314) 812-0500
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(Registrant's telephone number, including area code)
Registrant (1) has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months,
and (2) has been subject to such filing requirements for the past 90 days.
YES: X NO: _____
---
Number of shares of Agribrands common stock, $.10 par value, outstanding as of
the close of business on April 3, 1998:
10,668,571
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<PAGE>
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PART I - FINANCIAL INFORMATION
AGRIBRANDS INTERNATIONAL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL INFORMATION
----------------------------------------------------------------
The following discussion is a summary of the key factors management considers
necessary in reviewing Agribrands International, Inc. ("Agribrands") results
of operations, liquidity, capital resources, and operating segment results.
The unaudited Combined Financial Statements included herein may not
necessarily be indicative of the results of operations, financial position and
cash flows of Agribrands had it operated as a separate, independent company
during the periods presented or in the future. The unaudited Combined
Financial Statements included herein do not reflect any changes that occurred
in the financial position and operations of Agribrands as a result of the
April 1, 1998 distribution ("the Distribution") of the shares of Ralston
Purina Company's ("Ralston's") subsidiary, Agribrands, to the shareholders of
Ralston's common stock
BUSINESS OVERVIEW
Agribrands is one of the leading international producers and marketers of
animal feeds and other animal health and nutrition products. Agribrands'
business is currently conducted almost exclusively outside of the United
States. Agribrands primarily produces and sells its products in sixteen
foreign countries under varying local conditions. The markets in which
Agribrands operates are highly competitive and sensitive to both pricing and
promotion.
Agricultural products sales prices and percent of sales gross profit margins
are directly influenced by changes in the underlying commodity prices for the
raw materials used to formulate animal feeds. Typically, the industry
operates on a unit margin basis with frequent price changes based on the
underlying commodity price movements.
Agribrands, as a supplier of animal feeds and other animal health and
nutrition products, is subject to the risks and uncertainties associated with
the animal production industry which cause fluctuations in demand for
Agribrands' products. The animal production industry in a particular country
can be negatively affected by a number of factors, including macro economic
conditions, weather conditions, commodity prices, price controls, alternative
feed sources, the market price of livestock, poultry and other animals, animal
diseases, changes in consumer demand, real estate values, government farm
programs and other government regulations, restrictive quota and trade
policies and tariffs, production difficulties, including capacity and supply
constraints, labor disputes and general economic conditions.
Consolidation of the animal feed production and animal production industries
around the world will continue to bring about significant changes in the
product production and distribution pattern. Such changes will affect the
growth prospects and pricing practices of Agribrands. Future growth
opportunities for Agribrands are expected to depend on its ability to
implement strategies for expanding in growing, lesser-developed agricultural
markets, making strategic acquisitions and divestitures, particularly in more
mature markets, maintaining effective cost control programs, and developing
and implementing more efficient manufacturing and distribution methodologies,
while at the same time maintaining aggressive pricing and promotion of its
products.
OPERATING RESULTS
Net earnings for the quarter and six months ended February 28, 1998 were $2.0
million and $6.0 million, respectively. This compares to $1.2 million and
$8.2 million, respectively, for the same periods in the prior year. Operating
margins improved for both the quarter and the six months as gains in the
Americas and Asia Pacific regions were only partially offset by lower margins
in the European region. Despite the improvement in margins, net earnings were
only up $0.8 million for the quarter and down for the six months on higher
pretax foreign currency exchange and translation losses, principally in Korea
and Colombia. Foreign currency exchange and translation losses totaled $5.7
million and $11.2 million, respectively, for the current quarter and six month
period compared to only $2.0 million and $2.4 million during the same periods
last year. A $2.0 million restructuring charge in Europe also negatively
impacted the current quarter.
<TABLE>
<CAPTION>
AMERICAS (EXCLUDING UNITED STATES)
Quarter ended Six months ended
--------------- ------------------
February 28, February 28,
--------------- ------------------
<C> <C> <S> <C> <C>
1998 1997 1998 . 1997
--------- -------- --------- -------
$ 149.2 $ 137.4 Net sales $305.4 $284.6
6.4 3.2 Operating profit 14.4 8.3
4.3% 2.3% Operating profit as % of net sales 4.7% 2.9%
</TABLE>
The increase in net sales of the Americas operations for the both the quarter
and the six months ended February 28, 1998 is primarily attributable to
increased volume in Mexico. Agribrands' operations in Mexico experienced
increased demand resulting from improved economic conditions when compared to
the same periods last year.
Operating profit increased $3.2 million for the quarter and $6.1 million for
the six month period on increased volume and improved margins. The
improvement in operating margins was broad-based but most notable in Mexico
where increased shrimp feed sales, with their overall higher margins, helped
to increase profitability.
<TABLE>
<CAPTION>
EUROPE
Quarter ended Six months ended
--------------- ------------------
February 28, February 28,
--------------- -----------------
<C> <C> <S> <C> <C>
1998 1997 1998 1997
------- -------- -------- ------
$ 102.0 $ 111.3 Net sales $204.1 $237.7
1.1 2.1 Operating profit 3.2 5.8
1.1% 1.9% Operating profit as % of net sales 1.6% 2.4%
</TABLE>
Net sales of the European operations declined $9.3 million for the quarter and
$33.6 million for the six months. The declines are primarily attributable to
lower selling prices resulting from lower commodity prices and currency
devaluation.
European agricultural industries are mature and highly competitive.
Consolidation is accelerating in both the feed production and animal
production industries. As a result of these conditions, Agribrands' European
operating profits have lagged the other regions of the company. The
operations in Hungary continue to be the largest contributor to earnings in
the region. In the quarter ended February 28, 1998 the European operations
incurred $2.0 million of pre-tax restructuring charges associated with closure
of one facility and consolidation of its volume with that of another facility
in Italy and unrelated severance costs in Spain.
<TABLE>
<CAPTION>
ASIA PACIFIC
Quarter ended Six months ended
------------- ----------------
February 28, February 28,
------------- --------------
<C> <C> <S> <C> <C>
1998 1997 1998 1997
------ ------ ---- -----
$ 81.8 $ 114.4 Net sales $198.3 $230.8
8.0 6.2 Operating profit 18.0 16.0
9.8% 5.4% Operating profit as % of net sales 9.1% 6.9%
</TABLE>
Net sales of the Asia Pacific operations declined approximately $33 million
for both the quarter and six months as increased volume in units was offset by
currency devaluation against the dollar of approximately 46% and 25% in Korea
and the Philippines, respectively, during the six months ended February 28,
1998.
Operating profit remained strong as a result of the increased volume and
favorable product mix which more than offset the decline in operating profit
dollars resulting from currency devaluation. Operations in Korea remained
dominant in the Asia Pacific region accounting for approximately 75% of the
net sales and 60% of the region's operating profit during the most recent six
month period.
<PAGE>
OTHER INCOME/EXPENSE
Other income/expense, net, was unfavorable by $4.2 million and $9.4 million
for the quarter and six months ended February 28, 1998, respectively, compared
to the same periods last year. This is primarily attributable to higher
foreign currency exchange losses on dollar denominated debt in Korea and
Colombia and higher translation losses due to hyper-inflationary accounting in
Mexico. Exchange losses were greatest in Korea.
INCOME TAXES
Income taxes, which include United States and foreign taxes, were 57% of
pre-tax earnings for both the quarter and the six months ended February 28,
1998. This compares to 82% and 62% for the quarter and six months ended
February 28, 1997, respectively. The significantly higher effective rate for
the quarter ended February 28, 1997 resulted from changes in the earnings mix
including increased foreign expenses in countries for which no tax benefit
could be recognized.
FINANCIAL CONDITION
Cash flows from operations were ($16.6) million and $40.0 million for the six
months ended February 28, 1998 and 1997, respectively. The significant
decline in operating cash flows between the two periods is due primarily to
changes in inventory levels in the respective periods. Inventory levels
increased during the six months ended February 28, 1998 due to advance
purchases made to lock-in favorable terms. Conversely, inventory levels had
declined in the six month period ended February 28, 1997 due to lower
commodity prices.
Agribrands is continually evaluating new investment opportunities. In
December 1997, Agribrands invested $5.0 million in Agribrands Purina
(Langfang) Feedmill Company Ltd., a new wholly owned foreign subsidiary. The
new subsidiary utilized the funds along with $2 million in proceeds from the
issuance of debt to acquire a feed mill in Langfang, Peoples Republic of
China. In January 1998, Agribrands acquired a feed mill in Maracay, Venezuela
for $4.3 million. In January 1998, Agribrands also acquired a feed mill in
Spessa, Italy for $7.3 million. Agribrands had previously leased the feed
mills in both Maracay and Spessa. These acquisitions were funded through a
combination of net proceeds from Ralston and local country borrowings.
Assuming these acquisitions had occurred as of September 1, 1996, they would
not have had a material effect on net sales or net earnings during any of the
periods reported.
Capital expenditures, primarily to replace or enhance existing production
facilities and equipment, totaled $22.5 million and $13.8 million for the six
months ended February 28, 1998 and 1997, respectively.
Agribrands' capital investments and working capital needs have been partially
funded with investments by and advances from Ralston. During the six months
ended February 28, 1998 net cash flows provided by financing activities were
$62.1 million including $27.1 million in proceeds from Ralston. During the
six months ended February 28, 1997 net cash flows used by financing were $6.9
million net of $21.5 million in proceeds from Ralston.
As soon as practicable following the Distribution, Agribrands expects, subject
to satisfaction of closing conditions (primarily local regulatory approvals),
to have in place $110 million of secured revolving credit facilities with a
syndicate of international lenders (the "Credit Facilities"), the proceeds of
which will be used to provide working capital for general corporate purposes
and letters of credit to support Agribrands' international operations.
Ralston will continue to guarantee certain Agribrands' debt until such
approvals can be obtained or, at the latest, until May 31, 1998. The Credit
Facilities will include up to $40 million which will be available as advances
to Agribrands and certain of its subsidiaries (other than Purina Korea, Inc.,
its Korean subsidiary), or as letters of credit, and up to $70 million which
will be available for letters of credit for Agribrands subsidiaries or for
direct advances to its Korean subsidiary. $20 million of one facility will be
extended as a three year revolving credit, extendible, by mutual agreement,
for one additional year on each anniversary of the closing, and the remaining
$35 million of that facility will be extended as a 364-day revolving credit,
extendible quarterly by mutual agreement. The remaining $55 million facility
will be extended as a 364-day revolving credit, extendible quarterly by mutual
agreement for additional 364-day periods. Under the terms of the Credit
Facilities, Agribrands will be subject to a number of restrictions, including
(i) Agribrands and its subsidiaries may not invest by acquisition and/or
merger an amount exceeding $20 million (including assumed debt) per individual
transaction, or $80 million (including assumed debt) in the aggregate, during
the term of the Credit Facilities; (ii) Agribrands, at all times during the
term of the Credit Facilities, must maintain at least $25 million in a cash
collateral account for the benefit of the lenders; (iii) capital expenditures
by Agribrands and its subsidiaries may not exceed approximately $81 million
the first year, $40 million the second year, and $29 million the third year of
the term; and (iv) Agribrands must maintain certain debt and interest coverage
ratios and minimum net worth requirements.
Cash flow from operations and borrowings under various lines of credit are
Agribrands' primary sources of liquidity. Management has a strong orientation
on cash flows and the effective use of free cash flows. The combined
operating, cash and equity position of Agribrands should continue to provide
the capital flexibility necessary to fund future opportunities as well as to
meet existing obligations.
OUTLOOK
The Americas region experienced significant improvement in operating results
during the first half of this fiscal year compared to the same period last
year. The overall market conditions have improved in the region and
management anticipates the Americas will continue to contribute to the overall
profitability of Agribrands during 1998.
Consolidation of both the animal feed and animal production industries
continues throughout Europe. Agribrands has responded to this trend by
restructuring and streamlining its European operations over the last few
years. This has been especially prevalent in France, Spain, Portugal and
Italy where this trend is likely to continue. At the same time, the feed
industry in Turkey and Hungary have provided opportunities for growth. In
December, 1997, Agribrands completed construction of its second feed mill
plant in Hungary. With this increased capacity, the Hungarian operations
should continue to provide strong financial results during 1998.
In recent years, the Asia Pacific region has been Agribrands' most profitable
region. However, the current financial crises in the Asia Pacific region will
continue to have an adverse effect on Agribrands' near term results. It will
be especially prevalent with the Korean operations, which represent
approximately 75% of the Company's Asia Pacific net sales volume. Any further
devaluation of the Korean won will result in lower dollar profits for the
Korean operations and increased foreign exchange losses on its dollar
denominated debt. The Korean operations import approximately 70% of the
ingredients used in its manufacturing process. The local currency costs of
these imported ingredients increase as the Korean won devalues. At the same
time, the Korean operations generally request government cooperative approval
before increasing its selling prices. Although this restricts management's
ability to respond quickly to changing market conditions, the Korean
operations have been able to obtain price increases to partially offset
increased ingredient costs. In spite of these current conditions, Agribrands
remains committed to the Asia Pacific market and views the current financial
crises as an opportunity to strengthen its market position within the region.
FORWARD-LOOKING STATEMENTS
Certain statements in this report are "forward-looking statements" within the
meaning of the federal securities law. This includes statements concerning
plans and objectives of management relating to Agribrands' operations or
economic performance, and assumptions related thereto. Because such
forward-looking statements involve risks and uncertainties, there are
important factors that could cause actual events or results to differ
materially from those expressed or implied by such forward-looking statements.
Factors that could cause actual results to differ materially include, but are
not limited to, changes in general economic and business conditions (including
agricultural markets) in the various regions of the world in which Agribrands
operates, Agribrands' ability to recover its raw material costs in the pricing
of its products, the availability of capital on acceptable terms, actions of
competitors and government entities, political and economic instability in
countries or regions where the Agribrands business is conducted, the level of
demand for Agribrands' products and change in Agribrands' business strategies.
<PAGE>
<TABLE>
<CAPTION>
AGRIBRANDS INTERNATIONAL, INC.
COMBINED STATEMENT OF EARNINGS
(DOLLARS IN MILLIONS-UNAUDITED)
QUARTER ENDED SIX MONTHS ENDED
FEBRUARY 28, FEBRUARY 28,
1998 1997 1998 1997
------- --------- ------- ------
<S> <C> <C> <C> <C>
Net Sals. . . . . . . . . . . . . . . . . . . . . . . . $ 333.0 $ 363.1 $707.8 $753.1
Costs and Expenses
Cost of products sold. . . . . . . . . . . . . . .. . 286.6 312.4 605.3 648.3
Selling, general and administrative. . . . . . . . . . 31.9 40.6 71.4 77.9
Interest . . . . . . . . . . . . . . . . . . . . . . . 3.0 2.9 6.1 5.6
Provisions for restructuring . . . . . . . . . . . . . 2.0 - 2.0 -
Gain on sale of property . . . . . . . . . . . . . . . - - (0.4) -
Other (income)/expense, net. . . . . . . . . . . . . . 4.9 0.7 9.4 -
------- ------ ------ ------
328.4 356.6 693.8 731.8
------- ------ ------ ------
Earnings before Income Taxes . . . . . . . . . . . . . . 4.6 6.5 14.0 21.3
Income Taxes . . . . . . . . . . . . . . . . . . . . . . 2.6 5.3 8.0 13.1
------ ----- ------ ------
Net Earnings . . . . . . . . . . . . . . . . . . . . $ 2.0 $ 1.2 $ 6.0 $ 8.2
======== =========== ====== ======
See Accompanying Notes to Condensed Financial Statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AGRIBRANDS INTERNATIONAL, INC.
COMBINED BALANCE SHEET
(CONDENSED)
(DOLLARS IN MILLIONS-UNAUDITED)
FEBRUARY 28, AUGUST 31,
1998 1997
-------------- ------------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents. . . . . . . . . . . . . . . $ 24.9 $ 25.2
Marketable securities. . . . . . . . . . . . . . . . . 3.3 6.8
Receivables, less allowance for doubtful accounts. . . 95.5 114.4
Inventories. . . . . . . . . . . . . . . . . . . . . . 119.2 112.0
Other current assets . . . . . . . . . . . . . . . . . 12.3 11.7
-------------- ------------
Total Current Assets . . . . . . . . . . . . . . . . 255.2 270.1
-------------- ------------
Investments and Other Assets . . . . . . . . . . . . . . 53.2 54.2
Property at Cost . . . . . . . . . . . . . . . . . . . . 321.2 329.6
Accumulated Depreciation . . . . . . . . . . . . . . . . (159.5) (172.7)
-------------- ------------
161.7 156.9
-------------- ------------
Total. . . . . . . . . . . . . . . . . . . . . . . $ 470.1 $ 481.2
============== ============
LIABILITIES AND RALSTON EQUITY INVESTMENT
Current Liabilities
Current maturities of long-term debt . . . . . . . . . $ 12.8 $ 19.4
Notes payable. . . . . . . . . . . . . . . . . . . . . 70.5 33.8
Accounts payable and accrued liabilities . . . . . . . 127.6 162.7
Income taxes . . . . . . . . . . . . . . . . . . . . . 4.1 7.5
-------------- ------------
Total Current Liabilities. . . . . . . . . . . . . . 215.0 223.4
-------------- ------------
Long-Term Debt . . . . . . . . . . . . . . . . . . . . . 16.2 22.8
Deferred Income Taxes. . . . . . . . . . . . . . . . . . 11.9 9.6
Other Liabilities. . . . . . . . . . . . . . . . . . . . 22.4 27.3
Ralston Equity Investment. . . . . . . . . . . . . . . . 204.6 198.1
-------------- ------------
Total. . . . . . . . . . . . . . . . . . . . . . . $ 470.1 $ 481.2
============== ============
See Accompanying Notes to Condensed Financial Statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AGRIBRANDS INTERNATIONAL, INC.
COMBINED STATEMENT OF CASH FLOWS
(CONDENSED)
(DOLLARS IN MILLIONS-UNAUDITED)
SIX MONTHS ENDED
FEBRUAY 28,
------------------
1998 1997
-------- -------
<S> <C> <C>
CASH FLOW FROM OPERATIONS
Net earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6.0 $ 8.2
Non-cash items included in income. . . . . . . . . . . . . . . . . 23.4 10.5
Changes in operating assets and liabilities used in operations . . (43.9) 13.9
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2.1) 7.4
------------------ -------
Net cash (used by) provided by operations. . . . . . . . . . . . (16.6) 40.0
------------------ -------
CASH FLOW FROM INVESTING ACTIVITIES
Acquisitions of businesses . . . . . . . . . . . . . . . . . . . . (16.6)
Property additions . . . . . . . . . . . . . . . . . . . . . . . . (22.5) (13.8)
Proceeds from the sale of property . . . . . . . . . . . . . . . . 0.9 0.8
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1.0) (0.1)
------------------ -------
Net cash used by investing activities. . . . . . . . . . . . . . (39.2) (13.1)
------------------ -------
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from sale of long-term debt . . . . . . . . . . . . . . . 3.1 1.5
Principal payments on long-term debt, including current maturities (7.8) (1.0)
Net increase (decrease) in notes payable . . . . . . . . . . . . . 39.7 (28.9)
Net transactions with Ralston. . . . . . . . . . . . . . . . . . . 27.1 21.5
------------------ -------
Net cash provided by (used by) financing activities. . . . . . . 62.1 (6.9)
------------------ -------
Effect of Exchange Rate Changes on Cash and Cash Equivalents . . . . (6.6) (1.8)
------------------ -------
Net (Decrease) Increase in Cash and Cash Equivalents . . . . . . . . (0.3) 18.2
Cash and Cash Equivalents, Beginning of Period . . . . . . . . . . . 25.2 20.3
------------------ -------
Cash and Cash Equivalents, End of Period . . . . . . . . . . . . . . 24.9 38.5
================== =======
See Accompanying Notes to Condensed Financial Statements
</TABLE>
<PAGE>
AGRIBRANDS INTERNATIONAL, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
FEBRUARY 28, 1998
(DOLLARS IN MILLIONS)
NOTE 1 - The accompanying unaudited financial statements have been
prepared in accordance with the instructions for Form 10-Q and do not include
all of the information and footnotes required by generally accepted accounting
procedures for complete financial statements. In the opinion of management,
all adjustments, consisting only of normal recurring adjustments considered
necessary for a fair presentation, have been included. Operating results for
any quarter are not necessarily indicative of the results for any other
quarter or for the full year. These statements should be read in connection
with the financial statements of Agribrands International, Inc. and notes
thereto for the year ended August 31, 1997.
NOTE 2 - The accompanying financial statements of Agribrands reflect
periods during which its businesses operated primarily as wholly-owned
subsidiaries of Ralston Purina Company and its subsidiaries. As such,
earnings per share data does not provide meaningful information about the
results of operations of Agribrands.
NOTE 3 - Receivables consist of the following:
<TABLE>
<CAPTION>
FEBRUARY 28, 1998 AUGUST 31, 1997
------------------- -----------------
<S> <C> <C>
Gross receivables . . . . . . . $ 105.7 $ 124.2
Allowance for doubtful accounts (10.2) (9.8)
------------------- -----------------
$ 95.5 $ 114.4
=================== =================
</TABLE>
NOTE 4 - Inventories consist of the following:
<TABLE>
<CAPTION>
FEBRUARY 28, 1998 AUGUST 31, 1997
------------------ ----------------
<S> <C> <C>
Raw materials and supplies $ 96.0 $ 89.7
Finished products. . . . . 23.2 22.3
------------------ ----------------
$ 119.2 $ 112.0
================== ================
</TABLE>
<PAGE>
NOTE 5 - Investments and Other Assets consist of the following:
<TABLE>
<CAPTION>
FEBRUARY 28, 1998 AUGUST 31, 1997
------------------ ----------------
<S> <C> <C>
Goodwill, net of accumulated amortization of
$5.0 at February 28 and $4.1 at August 31. $ 33.3 $ 34.0
Investments in affiliated companies. . . . . 4.4 4.1
Deferred charges and other assets. . . . . . 15.5 16.1
------------------ ----------------
$ 53.2 $ 54.2
================== ================
</TABLE>
NOTE 6 - Accounts payable and accrued liabilities consist of the
following:
<TABLE>
<CAPTION>
FEBRUARY 28, 1998 AUGUST 31, 1997
------------------ ----------------
<S> <C> <C>
Trade accounts payable. . . . . . . . . . . . . $ 83.0 $ 107.2
Incentive compensation, salaries, and vacations 10.8 14.8
Restructuring reserves. . . . . . . . . . . . . 2.1 1.4
Other items . . . . . . . . . . . . . . . . . . 31.7 39.3
------------------ ----------------
$ 127.6 $ 162.7
================== ================
</TABLE>
NOTE 7 - SUBSEQUENT EVENT
-----------------
On April 1, 1998, Ralston Purina Company distributed the common stock of
its wholly owned subsidiary, Agribrands International, Inc., to the
shareholders of Ralston's common stock through a tax-free spin-off. The
international animal feeds and agricultural business have been beneficially
transferred to Agribrands as of April 1, 1998. Legal title shall be
transferred as foreign government approvals are obtained and share transfers
are registered in the respective foreign countries. Since the distribution,
Agribrands has conducted its business as a separate public company.
<PAGE>
AGRIBRANDS INTERNATIONAL, INC.
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
On April 1, 1998, Ralston Purina Company distributed the common stock of
its wholly owned subsidiary, Agribrands International, Inc., to the
shareholders of Ralston's common stock through a tax-free spin-off. The
international animal feeds and agricultural business have been beneficially
transferred to Agribrands as of April 1, 1998. Legal title shall be
transferred as foreign government approvals are obtained and share transfers
are registered in the respective foreign countries. The historical combined
financial statements of Agribrands reflect periods during which the various
spun-off businesses operated as divisions or subsidiaries of Ralston.
The pro forma combined statement of earnings for the six months ended
February 28, 1998 presents the combined results of Agribrands' operations
assuming that the Distribution had occurred as of September 1, 1997. Such
statement of earnings has been prepared by adjusting the historical statement
of earnings to indicate the effect of estimated costs and expenses and the
recapitalization associated with the Distribution as if the Distribution had
occurred as of September 1, 1997.
The pro forma combined balance sheet at February 28, 1998 presents the
combined financial position of Agribrands assuming the Distribution had
occurred at that date. Such balance sheet has been prepared by adjusting the
historical balance sheet for the effect of changes in assets, liabilities, and
capital structure associated with the Distribution as if the Distribution had
occurred on February 28, 1998.
The pro forma financial statements may not necessarily reflect the combined
results of operations or financial position that would have existed had the
Distribution been effected on the dates specified nor are they necessarily
indicative of future results or financial position.
<PAGE>
<TABLE>
<CAPTION>
<PAGE>
<PAGE>
AGRIBRANDS INTERNATIONAL, INC.
PRO FORMA COMBINED STATEMENT OF EARNINGS
(IN MILLIONS EXCEPT PER SHARE DATA)
SIX MONTHS ENDED FEBRUARY 28, 1998
(UNAUDITED)
ADJUSTMENTS
RELATED TO PRO
HISTORICAL DISTRIBUTION FORMA
<S> <C> <C> <C> <C>
Net Sales . . . . . . . . . . . . . . . . . $ 707.8 $ 707.8
Costs and Expenses
Cost of products sold . . . . . . . . . . 605.3 0.6 (b) 605.9
Selling, general and administrative . . . 71.4 0.5 (a) 72.2
0.3 (b)
Interest. . . . . . . . . . . . . . . . . 6.1 - (c) 7.6
1.5 (d)
Provisions for restructuring. . . . . . . 2.0 2.0
Gain on sale of property. . . . . . . . . (0.4) (0.4)
Other (income)/expense, net . . . . . . . 9.4 - (e) 9.4
------------- -------------- -------
693.8 2.9 696.7
------------- -------------- -------
Earnings before Income Taxes. . . . . . . . 14.0 (2.9) 11.1
Income Taxes. . . . . . . . . . . . . . . . 8.0 (1.6) (f) 6.4
------------ -------------- ------
Net Earnings. . . . . . . . . . . . . . . . $ 6.0 $ (1.3) $ 4.7
============= ============== =============
Earnings per share. . . . . . . . . . . . . $ 0.44
=============
Weighted average shares of common stock (g) 10.7
=============
<FN>
(a) To reflect the incremental costs associated with becoming a stand-alone public
company.
(b) To reflect the increase in net pension costs resulting from the transfer of
certain international retirement plan assets and obligations to Ralston as set out in the
Agreement and Plan of Reorganization.
(c) Reflecting an insignificant reduction in interest expense associated with debt
levels assumed at Distribution Date.
(d) To reflect annual credit facility fee and amortization of deferred financing
costs.
(e) No interest income has been imputed on excess cash and marketable securities
generated by the Distribution due to the number of alternative uses for such funds.
(f) To reflect tax effect of the above pro forma adjustments and to reflect taxes as
if Agribrands was a single, stand-alone U.S. taxpayer.
(g) Represents the number of shares of Agribrands common stock, $.10 par value,
outstanding as of the close of business on April 1, 1998.
<PAGE>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<PAGE>
<PAGE>
AGRIBRANDS INTERNATIONAL, INC.
PRO FORMA COMBINED BALANCE SHEET
(DOLLARS IN MILLIONS - UNAUDITED)
HISTORICAL PRO FORMA
FEBRUARY 28, PRO FORMA FEBRUARY 28,
1998 ADJUSTMENTS 1998
-------------- ----------- ------------
<S> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents . . . . . . . . . . . . $ 24.9 $ 63.4 (a) 88.3
Marketable securities . . . . . . . . . . . . . . 3.3 8.4 (a) 11.7
Receivables, less allowance for doubtful accounts 95.5 95.5
Inventories . . . . . . . . . . . . . . . . . . . 119.2 119.2
Other current assets. . . . . . . . . . . . . . . 12.3 12.3
Total Current Assets. . . . . . . . . . . . . . . 255.2 71.8 327.0
Investments and Other Assets . . . . . . . . . . . 53.2 (8.8) (a) 46.4
2.0 (c)
Property at Cost . . . . . . . . . . . . . . . . . 321.2 321.2
Accumulated Depreciation . . . . . . . . . . . . . (159.5) (159.5)
161.7 - 161.7
Total . . . . . . . . . . . . . . . . . . . . . . $ 470.1 $ 65.0 $ 535.1
============== =============== =========
LIABILITIES AND RALSTON EQUITY INVESTMENT
Current Liabilities
Current maturities of long-term debt. . . . . . . 12.8 12.8
Notes payable . . . . . . . . . . . . . . . . . . 70.5 (18.3) (b) 52.2
Accounts payable and accrued liabilities. . . . . 127.6 127.6
Income taxes. . . . . . . . . . . . . . . . . . . 4.1 4.1
Total Current Liabilities . . . . . . . . . . . . 215.0 (18.3) 196.7
Long-Term Debt . . . . . . . . . . . . . . . . . . 16.2 (6.2) (b) 10.0
Deferred Income Taxes. . . . . . . . . . . . . . . 11.9 11.9
Other Liabilities. . . . . . . . . . . . . . . . . 22.4 22.4
Ralston Equity Investment. . . . . . . . . . . . . 204.6 (204.6) (d) -
Shareholders Equity. . . . . . . . . . . . . . . . 294.1 (d) 294.1
Total . . . . . . . . . . . . . . . . . . . . . . $ 470.1 $ 65.0 $ 535.1
============== ============== ========
<FN>
(a) To reflect the increase in cash and marketable securities and the transfer of certain international retirement
plan assets and obligations to Ralston in accordance with the Agreement and Plan of Reorganization. Assumed the
increase in cash and marketable securities would be ratable.
(b) To reflect debt levels assumed by Agribrands at the Distribution Date.
(c) To reflect deferred financing costs associated with the debt assumed at the Distribution Date.
(d) To reflect the liquidation of the remaining investment by Ralston and the issuance of Agribrands Stock.
</TABLE>
<PAGE>
PART II - OTHER INFORMATION
------------------
There is no information required to be reported under any items except those
indicated below.
Item 6. Exhibits and Reports on Form 8-K
-------------------------------------
(a) Exhibits filed with this Report:
(10)(i) Agreement and Plan of Reorganization dated April 1, 1998
between Agribrands International, Inc. and Ralston
Purina Company
(10)(ii) Technology Transfer and License Agreement dated April 1,
1998 between Agribrands International, Inc. and
Ralston Purina Company
(10)(iii)Trademark Agreement dated April 1, 1998 between
Agribrands International, Inc. and Ralston Purina
Company
(10)(iv) Credit Agreements (Long and Short Term) dated March 31,
1998 Among Agribrands International, Inc. and Various
Banks with ABN-AMRO as agent
(27) Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter for
which this report is filed.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AGRIBRANDS INTERNATIONAL, INC.
- -----------------------------------------
Registrant
By: /s/ David R. Wenzel
- -----------------------------------------
David R. Wenzel
Chief Financial Officer
Date: April 13, 1998
<PAGE>
EXHIBIT INDEX
- -------------
Exhibits
- --------
EX-10 Agreement and Plan of Reorganization dated April 1, 1998 between
Agribrands International, Inc. and Ralston Purina Company
EX-10 Technology Transfer and License Agreement dated April 1, 1998
between Agribrands International, Inc. and Ralston Purina Company
EX-10 Trademark Agreement dated April 1, 1998 between Agribrands
International, Inc. and Ralston Purina Company
EX-10 Credit Agreements (Long and Short Term) dated March 31, 1998 Among
Agribrands International, Inc. and Various Banks with ABN-AMRO as agent
EX-27 Financial data schedule for 2nd Quarter 1998
(provided electronically)
Exhibit 27
(Document prepared on Edgar)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS LEGEND CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 11/30/97
AGRIBRANDS INTERNATIONAL INC. BALANCE SHEET AND STATEMENT OF EARNINGS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-END> FEB-28-1998
<CASH> 24,900
<SECURITIES> 3,300
<RECEIVABLES> 105,700
<ALLOWANCES> 10,200
<INVENTORY> 119,200
<CURRENT-ASSETS> 255,200
<PP&E> 321,200
<DEPRECIATION> 159,500
<TOTAL-ASSETS> 470,100
<CURRENT-LIABILITIES> 215,000
<BONDS> 16,200
0
0
<COMMON> 0
<OTHER-SE> 204,600
<TOTAL-LIABILITY-AND-EQUITY> 470,100
<SALES> 707,800
<TOTAL-REVENUES> 707,800
<CGS> 605,300
<TOTAL-COSTS> 605,300
<OTHER-EXPENSES> 82,400
<LOSS-PROVISION> 0<F1>
<INTEREST-EXPENSE> 6,100
<INCOME-PRETAX> 14,000
<INCOME-TAX> 8,000
<INCOME-CONTINUING> 6,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,000
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>LOSS-PROVISION INCLUDED IN OTHER-EXPENSES ABOVE
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 11/30/97
AGRIBRANDS INTERNATIONAL INC. BALANCE SHEEET AND STATEMENT OF EARNINGS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001047598
<NAME> FINANCIAL DATA SCHEDULE
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-END> NOV-30-1997
<CASH> 30,200
<SECURITIES> 6,100
<RECEIVABLES> 122,600
<ALLOWANCES> 10,400
<INVENTORY> 110,100
<CURRENT-ASSETS> 269,500
<PP&E> 319,700
<DEPRECIATION> 169,400
<TOTAL-ASSETS> 473,300
<CURRENT-LIABILITIES> 238,300
<BONDS> 19,300
0
0
<COMMON> 0
<OTHER-SE> 179,400
<TOTAL-LIABILITY-AND-EQUITY> 473,300
<SALES> 374,800
<TOTAL-REVENUES> 374,800
<CGS> 318,700
<TOTAL-COSTS> 318,700
<OTHER-EXPENSES> 43,600
<LOSS-PROVISION> 0<F1>
<INTEREST-EXPENSE> 3,100
<INCOME-PRETAX> 9,400
<INCOME-TAX> 5,400
<INCOME-CONTINUING> 4,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,000
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>LOSS-PROVISION INCLUDED IN OTHER-EXPENSES ABOVE
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 8/31/97
AGRIBRANDS INTERNATIONAL INC. BALANCE SHEET AND STATEMENT OF EARNINGS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-END> AUG-31-1997
<CASH> 25,200
<SECURITIES> 6,800
<RECEIVABLES> 124,200
<ALLOWANCES> 9,800
<INVENTORY> 112,000
<CURRENT-ASSETS> 270,100
<PP&E> 329,600
<DEPRECIATION> 172,700
<TOTAL-ASSETS> 481,200
<CURRENT-LIABILITIES> 223,400
<BONDS> 22,800
0
0
<COMMON> 0
<OTHER-SE> 198,100
<TOTAL-LIABILITY-AND-EQUITY> 481,200
<SALES> 1,527,600
<TOTAL-REVENUES> 1,527,600
<CGS> 1,322,000
<TOTAL-COSTS> 1,322,000
<OTHER-EXPENSES> 157,000
<LOSS-PROVISION> 4,600
<INTEREST-EXPENSE> 10,900
<INCOME-PRETAX> 33,100
<INCOME-TAX> 24,400
<INCOME-CONTINUING> 8,700
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,700
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
46
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement"), dated as of
April 1, 1998, by and among Ralston Purina Company, a Missouri corporation
("Ralston") and Agribrands International, Inc. ("Agribrands"), a Missouri
corporation and wholly owned subsidiary of Ralston.
WITNESSETH:
WHEREAS, Ralston's businesses consist of the manufacture, distribution
and sale of battery products and pet products domestically and
internationally, and the manufacture, distribution and sale of agricultural
formula animal feeds and other agricultural animal nutrition products
primarily outside the United States; and
WHEREAS, the Board of Directors of Ralston (the "Ralston Board") has
determined that it is in the best interests of the Ralston shareholders to
separate Ralston's international agribusiness from its core pet products and
battery businesses, and to consolidate such agribusiness, which is currently
conducted by various subsidiaries and affiliates, into Agribrands, and to
distribute the $.01 par value Agribrands Stock ("Agribrands Stock") to
shareholders of its $.10 par value Ralston Purina Common Stock ("Ralston
Stock"); and
WHEREAS, in order to effect such separation, the Ralston Board has
determined that it is necessary and advisable to consolidate the international
agribusiness through various restructurings and to transfer to Agribrands the
direct stock ownership of those subsidiaries and other assets of Ralston that
are engaged in the operation of the agribusiness, as well as certain
trademarks and technology used in the international agribusiness, as more
fully set forth below; and
WHEREAS, in connection with such consolidation, Ralston formed Agribrands
by causing Tradico, Inc., a Delaware corporation and wholly owned subsidiary
of Ralston, to be merged into Tradico Missouri, Inc., a Missouri corporation
and wholly owned subsidiary of Ralston, and the surviving Missouri corporation
to be renamed Agribrands International, Inc., effective November 18, 1997; and
WHEREAS, in order to effect such distribution of the ownership of
Agribrands to the holders of Ralston Stock, the Ralston Board has determined
that it is necessary and desirable to distribute all outstanding shares of
Agribrands Stock on a pro rata basis to the holders of Ralston Stock, such
distribution being hereinafter referred to as the "Distribution"; and
WHEREAS, the mergers and liquidations of certain affected subsidiaries
are intended to qualify under Sections 368(a)(1)(A) and 332 of the Internal
Revenue Code of 1986, as amended (the "Code"), the transfer of assets are
intended to qualify under Code Section 368(a)(1)(D), and the distribution of
Agribrands Stock is intended to qualify under Code Section 355; and
WHEREAS, the parties hereto have determined that it is necessary and
desirable to set forth the principal corporate transactions required to effect
the Distribution and to set forth other agreements that will govern certain
other matters prior to and following the Distribution;
NOW THEREFORE, in consideration of the premises and the mutual covenants
herein contained and intending to be legally bound thereby, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
1.01 General. As used in this Agreement, the following terms shall
-------
have the following meanings (such meanings to be equally applicable to both
the singular and plural forms of the terms defined):
AAFCO: the Association of American Feed Control Officials.
-----
Action: any action, claim, suit, arbitration, inquiry, proceeding or
------
investigation by or before any court, governmental or other regulatory or
administrative agency or commission or any arbitration or other tribunal.
Affiliate: with respect to any specified Person, an "affiliate" as
---------
defined in Rule 405 promulgated pursuant to the Securities Act; provided,
however, that for purposes of this Agreement (i) Affiliates of Agribrands
shall not be deemed to include Ralston or any corporation which will be a
subsidiary or affiliate of Ralston following the Distribution; and (ii)
Affiliates of Ralston shall not be deemed to include Affiliates of Agribrands.
Agribrands Asset Purchase Price: Cash contributed to Agribrands or one
---------------------------------
of its Affiliates by Ralston or its Affiliates in connection with the purchase
by an Affiliate of Agribrands, as set forth in Section 2.01, of the
Agribusiness in Brazil from Ralston Purina do Brasil, LTDA. The Agribrands
Asset Purchase Price shall be the U.S. dollar equivalent of the actual
purchase price paid to Ralston Purina do Brasil, based on the foreign exchange
rate, published in the Wall Street Journal, with respect to the closing date
of such sale.
Agribrands Board: the Board of Directors of Agribrands International,
-----------------
Inc. and their duly elected or appointed successors.
Agribrands Cash Holdings: the Cash to be held by Agribrands and its
--------------------------
Affiliates as of the Distribution, as determined in accordance with Section
2.04(a) and as adjusted pursuant to Section 2.04(g).
Agribrands Deferred Compensation Plan: as defined in Section 7.09 of
----------------------------------------
this Agreement.
Agribrands Notes: the promissory notes issued by Agribrands or Agri
-----------------
International Holding Company, Inc. to Ralston in connection with the
contribution by Ralston to Agribrands or Agri International Holding Company
Inc. of the stock of certain foreign subsidiaries.
Agribrands Stock: Agribrands common stock, par value $.01 per share.
-----------------
Agribusiness: Ralston's direct or indirect ownership of (i) the
------------
international business of the manufacture, distribution and sale of feeds for
horses, commercial livestock, commercial poultry, laboratory animals, zoo
animals, wild birds and game, rabbits, animals raised for fur, and fish,
reptiles and shellfish raised in commercial aquaculture facilities, and the
operation of hatcheries; (ii) pet food manufacturing operations in Korea and
the sale and distribution of such products; (iii) pet food manufacturing
operations in Canada at Strathroy, Ontario, and the sale and distribution of
such products; and (iv) all joint ventures involving or associated with the
businesses described in (i) through (iii) above.
Agribusiness Assets: except to the extent provided in, and subject to
--------------------
the provisions of, any of the Ancillary Agreements, (i) all of the Assets used
or held by or on behalf of any member of the Agribusiness Group or the Ralston
Group immediately prior to the Distribution which are used or held for use
exclusively in the Agribusiness rather than the Ralston Business, including,
but not limited to, the Assets set forth on Schedule 1.01(a); and (ii) any
office equipment and furniture used immediately prior to the Distribution
exclusively by Agribusiness Employees.
Agribusiness Employee: any individual who (i) is on the Distribution
----------------------
Date, or immediately following the Distribution will be, an officer or
employee of any member of the Agribusiness Group, (ii) is employed by a member
of the Ralston Group but, pending transfer of employment to a member of the
Agribusiness Group, performs duties primarily for the Agribusiness; or (iii)
is on leave (including but not limited to leave for disability) or layoff from
active employment on the Distribution Date but who, immediately prior to
commencement of such leave or layoff, was primarily employed in the
Agribusiness. Notwithstanding the foregoing, an Agribusiness Employee shall
not include any individual who, as of the Distribution Date, (A) has been
determined to be disabled under the Purina Benefit Association Long Term
Disability Plan ("LTD Plan"), the Ralston Purina Company Group Life Insurance
Plan or the Retirement Plan; (B) is on leave during a waiting period prior to,
and who has made application for, a determination of disability under the LTD
Plan; or (C) is employed by a member of the Agribusiness Group but performs
duties primarily for a Ralston Business, pending subsequent transfer of
employment to a member of the Ralston Group or termination of employment.
Agribusiness Group: Agribrands and its Affiliates at the Distribution.
-------------------
Agribusiness Individual: any individual who is an Agribusiness Employee,
-----------------------
a Former Agribusiness Employee, or a beneficiary of an Agribusiness Employee
or of a Former Agribusiness Employee.
Agribusiness Obligations: as defined in Article X of this Agreement.
-------------------------
Agricultural Channel: as defined in Section 5.01(a) of this Agreement.
---------------------
Ancillary Agreements: the Tax Sharing Agreement, the Bridging Services
---------------------
Agreement, the Trademark Agreement, and the Technology Transfer and License
Agreement.
Asset: any and all assets and properties, tangible or intangible,
-----
including, but not limited to, the following: (i) cash, notes and trade
receivable accounts (whether current or non-current and including all rights
with respect thereto); (ii) certificates of deposit, bankers' acceptances,
stock, debentures, evidences of indebtedness, certificates of interest or
participation in profit-sharing agreements, collateral-trust certificates,
preorganization certificates, investment contracts, voting-trust certificates;
(iii) trade secrets, confidential information, registered and unregistered
trademarks, service marks, service names, trade styles and trade names and
associated goodwill; statutory, common law and registered copyrights;
applications for any of the foregoing, rights to use any of the foregoing and
other rights in, to and under any of the foregoing; (iv) rights under leases,
contracts, licenses, permits, and sales and purchase agreements; (v) real
estate and buildings and other improvements thereon and timber and mineral
rights of every kind; (vi) leasehold improvements, fixtures, trade fixtures,
machinery, equipment (including transportation and office equipment), tools,
dies and furniture; (vii) office supplies, production supplies, spare parts,
other miscellaneous supplies and other tangible property of any kind; (viii)
raw materials, work-in-process, finished goods, consigned goods and other
inventories; (ix) prepayments or prepaid expenses; (x) claims, causes of
action, choses in action, rights of recovery and rights of set-off of any
kind; (xi) the right to receive mail and other communications; (xii) lists of
advertisers, records pertaining to advertisers and accounts, lists and records
pertaining to suppliers and agents, and books, ledgers, files and business
records of every kind; (xiii) advertising materials and other recorded,
printed or written materials; (xiv) goodwill as a going concern and other
intangible properties; (xv) personnel records and employee contracts,
including any rights thereunder to restrict an employee from competing in
certain respects; and (xvi) licenses and authorizations issued by any
governmental authority.
Bridging Services Agreement: as defined in Section 5.04 of this
-----------------------------
Agreement.
Business: the Agribusiness or the Ralston Business.
--------
Business Day: any day other than a Saturday, a Sunday or a day on which
-------------
banking institutions located in the State of Missouri are obligated by law or
executive order to close.
Cash: cash, marketable securities, compensating balances used to secure
----
debt financing, amounts held in margin accounts, and such other items as have
been or would be classified as cash consistent with accounting practices
historically employed by Ralston.
CME: calculated metabolizable energy.
---
Code: the Internal Revenue Code of 1986, as amended, or any successor
----
legislation.
Committee: the Nominating and Compensation Committee of the Board of
---------
Directors of Agribrands.
Current Plan Year: the plan year or fiscal year, to the extent
-------------------
applicable with respect to any Plan, during which the Distribution Date
occurs.
Distribution: as defined in the recitals to this Agreement.
------------
Distribution Date: April 1, 1998.
------------------
DuPont Agreement: the agreement as defined in Section 5.01(a) of this
-----------------
Agreement.
Enterprise Purchase Agreement: as defined in Section 5.04 of this
-------------------------------
Agreement.
ERISA: the Employee Retirement Income Security Act of 1974, as amended,
-----
or any successor legislation.
ESOP Stock: Ralston Purina Company Series A ESOP Convertible Preferred
-----------
Stock, $1.00 par value.
Exchange Act: the Securities Exchange Act of 1934, as amended, together
--------------
with the rules and regulations promulgated thereunder.
Executive Life Plan: the Ralston Purina Executive Life Plan.
---------------------
Executive SIP: the Ralston Purina Executive Savings Investment Plan.
--------------
Form 10: as defined in Section 2.06 of this Agreement.
--------
Former Agribusinesses: all of the following international businesses and
---------------------
operations heretofore, but not currently, owned and conducted directly or
indirectly by Ralston: (i) former international businesses of producing and
distributing feeds for horses, commercial livestock and poultry and rations
for laboratory animals, zoo animals, wild birds and game, rabbits, animals
raised for fur, and fish, reptiles and shellfish raised in commercial
aquaculture facilities, and operation of hatcheries; (ii) former pet food
manufacturing operations in Korea, and the sale and distribution in Korea of
such pet foods; (iii) poultry processing; (iv) finished poultry products; (v)
manufacture and sale of silos; (vi) manufacture and distribution of livestock
and poultry health products; (vii) commercial egg production (fertile and
infertile); (viii) raising of laboratory rats; (ix) fishmeal processing; (x)
oilseed processing; (xi) sale and lease of breeding hogs; (xii) other
businesses managed or directed by employees of the Agribusiness, other than
cereal, baked goods, tuna processing and soy protein businesses; and (xiii)
all joint ventures involving or associated with the businesses described in
(i) through (xii) above or the Agribusiness.
Former Agribusiness Employee: an individual who was employed by a member
----------------------------
of the Agribusiness Group or a Former Agribusiness at the time of his or her
termination or retirement on or prior to the Distribution Date.
Former Businesses: The Former Ralston Businesses and the Former
------------------
Agribusinesses.
Former Ralston Businesses: all of the businesses and operations
---------------------------
heretofore, but not currently, directly or indirectly owned and conducted by
Ralston, other than a Former Agribusiness.
Former Ralston Employee: an individual who was employed by a member of
-------------------------
the Ralston Group or a Former Ralston Business at the time of his or her
termination or retirement.
Group: the Ralston Group or the Agribusiness Group.
-----
Indebtedness of Agribrands: external obligations in the form of money
----------------------------
that is borrowed from third party banks and/or financial institutions, to the
extent that such indebtedness (i) is incurred in connection with, or arising
out of the operations of, the Agribusiness and (ii) is or should be reflected
and booked on the balance sheet statements of the Agribusiness in accordance
with accounting practices historically employed by Ralston; and in no event
shall intercompany or intracompany accounts between the Agribusiness and the
Ralston Business be deemed to be Indebtedness of Agribrands.
Indemnifiable Loss: with respect to any claim by an Indemnitee for
-------------------
indemnification hereunder, any and all losses, liabilities, claims, damages,
obligations, payments, costs and expenses (including, without limitation, the
costs and expenses of any and all Actions, demands, claims and assessments,
and any and all judgments, settlements and compromises related thereto and
reasonable attorney's fees and expenses in connection therewith) incurred or
suffered by such Indemnitee with respect to such claim except as may arise in
connection with the performance of any of the Ancillary Agreements, which
shall, in each such case, be governed by the terms of such Ancillary
Agreement.
Indemnitee: as defined in Section 4.02 of this Agreement.
----------
Indemnitor: as defined in Section 4.02 of this Agreement.
----------
Information: as defined in Section 6.02 of this Agreement.
-----------
Information Statement: the information statement sent to holders of
----------------------
Ralston Stock in connection with the Distribution, which sets forth
appropriate disclosures concerning the Agribusiness, Agribrands, the
Distribution and other related matters.
IRS: the Internal Revenue Service.
---
ISP: the Ralston Purina 1988 and 1996 Incentive Stock Plans.
---
Liabilities: all claims, debts, liabilities, royalties, license fees,
-----------
losses, costs, expenses, deficiencies, litigation proceedings, taxes, levies,
imposts, duties, deficiencies, assessments, attorneys' fees, charges,
allegations, demands, damages, judgments, guaranties, indemnities, or
obligations, whether absolute or contingent, matured or unmatured, liquidated
or unliquidated, accrued or unaccrued, known or unknown and whether or not the
same would properly be reflected on a balance sheet, including all costs and
expenses relating thereto.
LIBOR: London Interbank Offer Rate.
-----
Notice of Claim: as defined in Section 4.02 of this Agreement.
-----------------
NYSE: the New York Stock Exchange.
----
Operating Agreement: An agreement as described in Sections 2.04(f) and
--------------------
5.04 in effect during a period of beneficial ownership of the Agribusiness
Assets or the Ralston Assets.
Person: an individual, a partnership, a joint venture, a corporation, a
------
trust or other entity, an unincorporated organization or a government or any
department or agency thereof.
Plan: any plan, policy, arrangement, contract or agreement providing
----
benefits (including salary, bonuses, deferred compensation, incentive
compensation, savings, stock purchases, pensions, profit sharing, welfare
benefits or retirement or other retiree benefits, including retiree medical
benefits) for any group of employees or former employees or individual
employee or former employee, or the beneficiary or beneficiaries of any such
employee or former employee, whether formal or informal or written or
unwritten and whether or not legally binding, and including any means, whether
or not legally required, pursuant to which any benefit is provided by an
employer to any employee or former employee or the beneficiary or
beneficiaries of any such employee or former employee.
Protected Agribrands Business: the business described in Section 5.01(a)
-----------------------------
of this Agreement.
Protected Ralston Business: the business described in Section 5.01(a) of
--------------------------
this Agreement.
Qualified Plan: a Plan which is an employee pension benefit plan (within
--------------
the meaning of Section 3(2) of ERISA) and which constitutes or is intended in
good faith to constitute a qualified plan under Section 401(a) of the Code.
Ralston: as defined in the recitals to this Agreement.
-------
Ralston Assets: subject to the provisions of any of the other agreements
--------------
referred to in this Agreement, all of the Assets, other than the Agribusiness
Assets, used or held immediately prior to the Distribution Date by or on
behalf of any member of either Group, including, but not limited to, the
Assets set forth on Schedule 1.01(b).
Ralston Board: the Board of Directors of Ralston Purina Company and
--------------
their duly elected or appointed successors.
Ralston Business: all of the businesses owned, directly or indirectly,
-----------------
by Ralston and conducted immediately prior to the Distribution Date, other
than the Agribusiness.
Ralston Deferred Compensation Plan: the Ralston Purina Deferred
-------------------------------------
Compensation Plan for Key Employees.
Ralston Employee: any individual who at any time is or was an officer or
----------------
employee of any member of either Group, other than an Agribusiness Employee,
including, but not limited to, individuals set forth on Schedule 1.01(c).
Ralston Group: Ralston and its Subsidiaries and Affiliates, other than
--------------
members of the Agribusiness Group.
Ralston Individual: any individual who (i) is a Ralston Employee, (ii)
-------------------
at any time prior to the Distribution Date is or was an officer or employee of
any Former Ralston Business or (iii) is a beneficiary of any individual
specified in clause (i) or (ii).
Ralston Option: the option defined in Section 7.08(b) of this Agreement.
--------------
Ralston Stock: Ralston Purina Company common stock, $.10 par value.
--------------
Ralston Stock and Asset Purchase Prices: Cash paid after the
---------------------------------------------
Distribution to Agribrands or its Affiliates by Ralston or its Affiliates, to
the extent necessary, to close the purchase by Ralston or its Affiliates, as
set forth in Section 2.01, of the stock of Purina Pet Foods France or, as
applicable, certain assets and liabilities of Purina de Guatemala, S.A.,
Purina Colombiana, S.A., Purina de Venezuela, C.A., and Purina Peru, S.A.
Record Date: the date to be determined by the Board of Directors of
------------
Ralston, or the Executive Committee thereof, as the record date for
determining shareholders of Ralston Stock entitled to receive the
Distribution.
Retirement Plan: the Ralston Purina Retirement Plan.
----------------
Rights: the rights to be issued by Agribrands pursuant to the Agribrands
------
Rights Agreement.
RPIHCI: Ralston Purina International Holding Company, Inc.
------
SEC: the Securities and Exchange Commission.
---
Securities Act: the Securities Act of 1933, as amended, together with
---------------
the rules and regulations promulgated thereunder.
Shared Liability: a Liability arising out of, or associated with, the
-----------------
ownership of both the Agribusiness Assets and the Ralston Assets; or the
operation of the Agribusiness or a Former Agribusiness, on the one hand, and
the Ralston Business or a Former Ralston Business, on the other hand, prior to
the Distribution.
SIP: a Savings Investment Plan.
---
Subsidiary: with respect to any specified Person, any corporation or
----------
other legal entity of which such Person or any of its Subsidiaries controls or
owns, directly or indirectly, 50% or more of the stock or other equity
interest entitled to vote on the election of members to the board of directors
or similar governing body of such corporation or other legal entity.
Tax Sharing Agreement: as defined in Section 5.04 of this Agreement.
-----------------------
Technology Transfer and License Agreement: as defined in Section 5.04 of
-----------------------------------------
this Agreement.
Third-Party Claim: any Action or claim by a third party against or
------------------
otherwise involving an Indemnitee for which indemnification may be sought
pursuant to Article IV hereof.
Toll-Milling Agreements: as defined in Section 5.04 of this Agreement.
------------------------
Trademark Agreement: as defined in Section 5.04 of this Agreement.
--------------------
Welfare Plan: any Plan which is not a Qualified Plan and which provides
-------------
medical, health, disability, accident, life insurance, death, dental or other
welfare benefits, including any post-employment benefits or retiree medical
benefits.
1.02 References to Time. All references to times of the day in this
------------------
Agreement shall refer to St. Louis, Missouri time unless otherwise
specifically indicated.
ARTICLE II
CERTAIN RESTRUCTURING TRANSACTIONS
2.01 Restructuring Transactions. Prior to, or as soon as practicable
--------------------------
following, the Distribution Date, the following shall have been or shall be
effected:
(a) Italian Demerger. Pursuant to Italian law, Purina Italia S.p.A.,
----------------
an Italian corporation, shall be divided into two corporations by transferring
all assets and liabilities of Purina Italia associated with the Ralston
Business to Ralston Purina Italia S.p.A. and thereafter by issuing the stock
of Ralston Purina Italia to RPIHCI (99.98% owner) and Ralston (.02% owner), in
proportion to their ownership of shares of Purina Italia. A pro rata portion
of the shares of Purina Italia, representing the net book value of the assets
of the Ralston Business in proportion to the entire net book value of assets
of Purina Italia, shall be canceled and new share certificates in Purina
Italia shall be issued to reflect the reduction in the number of shares
outstanding as a result of the demerger.
(b) Canadian Restructuring. Agribrands shall form a new wholly owned
----------------------
subsidiary, Agribrands Canada Inc. ("Agri Canada"). Agribrands shall cause
Agri Canada to purchase, pursuant to an Enterprise Purchase Agreement, all of
the assets exclusively used in connection with, and liabilities associated
with, the portion of the Agribusiness owned and conducted by Ralston Purina
Canada Inc. The purchase price shall be equal to the appraised fair market
value of such Agribusiness in Canada, including working capital deficiencies
as of March 31, 1998.
(c) Brazilian Restructuring. Agribrands shall form a new wholly
-----------------------
owned subsidiary, Agribrands Purina do Brasil, Ltda, ("Agri do Brasil") a
Brazilian corporation. Agribrands shall cause Agri do Brasil to purchase,
pursuant to an Enterprise Purchase Agreement, the assets and liabilities
associated with the centers of business of the Agribusiness owned and
conducted by Ralston Purina do Brasil, Ltda, a Brazilian corporationThe
purchase price shall be equal to the fair market value of such Brazilian
Agribusiness, which is the statutory net book value of such Business as of
March 31, 1998, determined in a manner consistent with the preparation of the
balance sheet dated February 28, 1998 set forth on Schedule 2.01(c).
(d) French Restructuring. Ralston Purina France, a French
---------------------
corporation, shall form a new wholly owned subsidiary, Purina Pet Foods France
("PPF France"), and shall contribute all of the assets and liabilities
associated with its ownership and operation of the Ralston Business in France
to PPF France. Ralston shall then cause Checkerboard Holding Company, Inc.
("Checkerboard Holding"), a Delaware corporation, to purchase from Ralston
Purina France, pursuant to an Enterprise Purchase Agreement, all of the stock
of PPF France for 27 million French francs, which amount is equal to its
appraised fair market value.
(e) Mexican Restructuring/Merger. PPA Investments Inc., a Delaware
----------------------------
corporation, shall purchase from Ralston Purina Holdings Mexico S.A. de C.V.,
a Mexican corporation, all of the capital stock of Industrias Purina, S.A. de
C.V., a Mexican corporation, owned by Ralston Purina Holdings Mexico, for 209
million Mexican pesos, which is equal to its appraised fair market value. PPA
Investments Inc. shall then adopt a plan of complete liquidation and merge
into RPIHCI, as a result of which Industrias Purina shall become a direct
subsidiary of RPIHCI.
(f) Guatemalan Restructuring. Ralston shall cause Checkerboard
-------------------------
Holding to form a new company, Ralston Purina Guatemala, a Guatemalan
corporation, and to cause such company to purchase from Purina de Guatemala,
S.A., a Guatemalan corporation, pursuant to an Enterprise Purchase Agreement,
the assets and liabilities associated with the Ralston Business in Guatemala
for cash in an amount equal to the fair market value of such Ralston Business,
which shall be the statutory net book value of such Business as of March 31,
1998, determined in a manner consistent with the preparation of the balance
sheet dated February 28, 1998 set forth on Schedule 2.01(f), except that
intangible assets shall be valued at 645,000 Guatemalan pesos.
(g) Colombian Restructuring. Ralston shall cause Checkerboard
------------------------
Holding to form a new wholly owned subsidiary, Ralston Purina Colombiana, and
shall cause Ralston Purina Colombiana to purchase from Purina Colombiana S.A,
a Colombian corporation, pursuant to an Enterprise Purchase Agreement, the
assets and liabilities associated with the Ralston Business in Colombia for
cash in an amount equal to the fair market value of such Business, which shall
be the statutory net book value of such business as of March 31, 1998,
determined in a manner consistent with the preparation of the balance sheet
dated February 28, 1998 set forth on Schedule 2.01(g), except that intangible
assets shall be valued at 697,000,000 Colombian pesos and real property shall
be valued at 471,800,000 Colombian pesos.
(h) Venezuelan Restructuring. Ralston shall cause Checkerboard
-------------------------
Holding to form a new wholly owned subsidiary, Ralston Purina Venezuela ("RP
Venezuela") a Venezuelan corporation, and shall cause RP Venezuela to purchase
from Purina de Venezuela, C.A., a Venezuelan corporation, pursuant to an
Enterprise Purchase Agreement, the assets and liabilities associated with the
Ralston Business in Venezuela for cash in an amount equal to the fair market
value of such Business, which shall be the statutory net book value of such
Business as of March 31, 1998, determined in a manner consistent with the
preparation of the balance sheet dated February 28, 1998 set forth on Schedule
2.01(h).
(i) Peruvian Restructuring. Ralston shall cause Ralston Purina
-----------------------
Colombiana to purchase from Purina Peru, S.A., a Peruvian corporation,
pursuant to an Enterprise Purchase Agreement, the assets and liabilities
associated with the Ralston Business in Peru for cash in an amount equal to
the fair market value of such Business, which shall be the statutory net book
value of such business as of March 31, 1998, determined in a manner consistent
with the preparation of the balance sheet dated February 28, 1998 set forth on
Schedule 2.01(i).
(j) Korean Restructuring. Prior to the merger of RPIHCI into
---------------------
Ralston, Ralston and Agribrands shall each purchase from RPIHCI 1,000 shares
of Purina Korea, Inc., a Korean corporation, for 19,717 Korean won per share.
After the merger of RPIHCI into Ralston as described in subsection (l) below,
Ralston shall contribute all of its stock ownership in Purina Korea, Inc. to
Agri International Holding Company, Inc., a Delaware corporation, in exchange
for which Agri International Holding Company shall issue 135 million new
shares of its capital stock and transfer such stock to Ralston, and shall
execute and deliver the Agribrands Note described below.
(k) Philippines Restructuring. After the merger of RPIHCI into
--------------------------
Ralston, Ralston shall contribute all of its ownership in Purina Philippines,
Inc., a Philippines corporation, to Agribrands as described in subsection (m)
below, in exchange for which Agribrands shall issue to Ralston 1,413,150 new
shares of its capital stock and shall execute and deliver the Agribrands Note
described below.
(l) Merger of RPIHCI into Ralston. Ralston and RPIHCI shall enter
-----------------------------
into an Agreement and Plan of Merger and Complete Liquidation pursuant to
which RPIHCI shall be merged with and into Ralston pursuant to the General and
Business Corporation Law of Missouri and Delaware General Corporation Law, and
in accordance with the terms and conditions of such merger agreement.
Following such merger, RPIHCI will cease to exist, and Ralston shall become
the direct owner of Agribrands and all other stock interests owned by RPIHCI
at the time of the merger. Intercompany debt owed by RPIHCI to Ralston at the
time of the merger will be paid through the liquidating distribution of
RPIHCI's assets to Ralston at such time.
(m) Contribution to Agribrands; Issuance of Notes Prior to the
----------------------------------------------
Distribution, Ralston shall contribute to Agribrands, as contributions to
capital, all of its stock ownership in the following:
(i) Latin American Agribusiness Development Corporation, a Panamanian
corporation;
(ii) Purina Italia S.p.A., an Italian corporation;
(iii Purina de Guatemala, S.A., a Guatemalan corporation;
(iv) Purina Colombiana S.A., a Colombian corporation;
(v) Purina de Venezuela, C.A., a Venezuelan corporation;
(vi) Purina Peru S.A., a Peruvian corporation;
(vii) Agri International Holding Company Inc., a Delaware corporation;
(viii) Industrias Purina, S.A. de C.V, a Mexican corporation;
(ix) Purina Espana, S.A., a Spanish corporation;
(x) Ralston Purina France, a French corporation;
(xi) Purina Besin Maddeleri Sanayi VE Ticaret A.S., a Turkish corporation;
(xii) AGX Services, Inc., a Delaware corporation;
(xiii) Purina Nanjing Feedmill Company Limited, a Chinese corporation;
(xiv) Purina Yantai Feedmill Company Ltd, a Chinese corporation;
(xv) Purina Fushun Feedmill Company, Ltd., a Chinese corporation;
(xvi) Agribrands Purina (Langfang) Feedmill Company, Ltd., a Chinese
corporation;
(xvii) Purina Philippines, Inc., a Philippines corporation;
(xviii) Purina Hungaria Animal Feed and Trading Company Limited, a Hungarian
corporation;
(xix) Purina Portugal Alimentacao e Sanidade Animal Lda., a Portuguese
corporation.
In partial consideration for the contribution by Ralston to Agribrands or Agri
International Holding Company, Inc. of the stock of each majority-owned
foreign subsidiary as set forth in Sections 2.01 (j) and (m), Agribrands or,
as applicable, Agri International Holding Company, Inc. shall issue to Ralston
a separate Agribrands Note with respect to such subsidiary. Each Agribrands
Note shall be in the principal amount of US$100, bear interest at the rate of
6% per annum and be payable in a lump sum on September 30, 1998. Ralston shall
thereafter transfer the Agribrands Notes to one or more members of the Ralston
Group as payment against outstanding indebtedness which is owed to such member
or members by Ralston and is reflected in interest-bearing intercompany
accounts.
2.02 Issuance of Stock. Prior to the Distribution Date, the parties
-----------------
hereto shall take all steps necessary so that immediately prior to the
Distribution Date, the number of shares of Agribrands Stock outstanding and
held by Ralston shall equal the number of shares necessary to effect the
Distribution. The Distribution shall be effected by distributing, on a pro
rata basis to every holder of Ralston Stock, one share of Agribrands Stock for
every ten (10) shares of Ralston Stock held as of the Record Date.
2.03 Share Purchase Rights Agreement; Articles of Incorporation;
-----------------------------------------------------------
Bylaws. Prior to the Distribution Date, Agribrands shall adopt an Agribrands
Rights Agreement in substantially the form filed with the SEC as an exhibit to
the Form 10, and the Board of Directors of Agribrands shall authorize a
distribution of one Right to every share of outstanding Agribrands Stock, such
distribution to occur prior to the Distribution. Ralston and Agribrands shall
take all action necessary so that, at the Distribution Date, the Articles of
Incorporation and Bylaws of Agribrands shall be substantially in the forms
filed with the SEC as exhibits to the Form 10.
2.04 Transfer of Assets; Assumption of Liabilities.
--------------------------------------------------
(a) Prior to the Distribution Date, the parties hereto shall also take
all action necessary to convey, assign and transfer to Agribrands, effective
as of the Distribution Date, all of the right, title and interest of Ralston
or its Affiliates in the Agribusiness Assets and to convey, assign and
transfer to Ralston or its Affiliates all of the right, title and interest of
any member of the Agribusiness Group to the Ralston Assets. Effective as of
the Distribution, Ralston shall contribute to Agribrands the capital stock of
the Subsidiaries of Agribrands listed in Section 2.01(m), and Agribrands shall
become the beneficial owner of all of the Agribusiness Assets. Ralston and
Agribrands shall cooperate in estimating the appropriate amount of Cash to be
transferred to Agribrands on or before March 31, 1998 to cause Agribrands and
its Affiliates to hold, as of the Distribution Date, Cash in an amount equal
to the Agribrands Cash Holdings, which shall be defined as: the sum of (i)
Cash in an amount equal to the outstanding Indebtedness of Agribrands as of
the Distribution, (ii) US$25 million, and (iii) the Agribrands Asset Purchase
Price; less (iv) the Ralston Stock and Asset Purchase Prices, (v) US$125,000,
representing the first year administration costs for the Agribrands credit
facility paid by Ralston prior to the Distribution, and (vi) any amounts
(valued in US dollars at the time Ralston satisfies any such obligation)
Ralston becomes obligated, on or prior to May 31, 1998, to pay to third
parties in connection with its guarantee of certain third-party indebtedness,
letters of credit and other credit supports of Purina Korea, Inc. Ralston
shall transfer such estimate of Cash to Agribrands no later than March 31,
1998. To the extent it is determined that Agribrands has, as of the
Distribution Date, inventory valued in excess of (or less than) US$20 million,
the Agribrands Cash Holdings target shall be reduced by an amount equal to
such excess (or be increased by an amount equal to the shortfall).
Effective as of the Distribution Date, Ralston and its Affiliates shall become
the beneficial owners of all of the Ralston Assets. The parties acknowledge
that formal actions to effect fully such transfers of Assets may not be
completed by the Distribution Date, but that the entire beneficial title and
interest in and to each Asset shall pass to Agribrands or to Ralston, as the
case may be, as of the Distribution Date. The parties shall take such action
as is necessary in their reasonable discretion, whether before or after the
Distribution Date, to complete the transfer of the Agribusiness Assets to
Agribrands and the Ralston Assets to Ralston, as the case may be, and each
party shall cooperate fully with the other in such regard.
(b) As of the Distribution Date, Agribrands and Ralston and, as
appropriate, other members of their respective Groups, shall assume or retain
all of the Liabilities, with respect to Agribrands, of the Agribusiness and
Former Agribusinesses and, with respect to Ralston, of the Ralston Business
and Former Ralston Businesses, of whatsoever type or nature, arising
exclusively out of or associated exclusively with the ownership of the Assets
of such Businesses or Former Businesses or the operation of such Businesses or
Former Businesses prior to the Distribution, whether such Liabilities become
known prior to or after, or are asserted prior to or after, the Distribution.
Agribrands and its Affiliates and Ralston and its Affiliates shall assume a
share of any Shared Liability in proportion, as applicable, to their
respective ownership of the applicable assets, control of affected operations
or employment of affected individuals. Notwithstanding the foregoing,
effective as of the Distribution Date, Agribrands or another member of the
Agribusiness Group shall assume Liabilities specifically described in any
other provision of this Agreement or any Ancillary Agreement, and Liabilities
described on Schedule 2.04(b)(1) to this Agreement. Ralston and members of
the Ralston Group shall, except as qualified hereinabove, retain or assume (i)
the Liabilities specifically described in this Agreement or any Ancillary
Agreement, and (ii) the Liabilities specifically described on Schedule
2.04(b)(2) to this Agreement.
(c) The parties agree and acknowledge that the assumption by Agribrands
or other members of the Agribusiness Group or Ralston or other members of the
Ralston Group, as the case may be, of all such Liabilities described herein is
part of a single plan to transfer the Agribusiness and the Agribusiness Assets
to Agribrands as of the Distribution Date. With regard to that plan, the
parties further agree that (i) the entire beneficial title and interest in and
to each and all of the Agribusiness Assets shall, regardless of when legal
title to any such asset is in fact transferred to Agribrands or its
Subsidiaries, remain in Ralston until the Distribution Date at which time all
beneficial title and interest in all of the Agribusiness Assets will pass to
Agribrands, and all title and interest in and to each and all of the Ralston
Assets which is owned by a member of the Agribusiness Group prior to the
Distribution Date shall, regardless of when legal title to any such asset is
in fact transferred to Ralston or its Subsidiaries after the Distribution
Date, be beneficially owned by Ralston; (ii) the economic burden of the
assumption by the members of the Agribusiness Group or the Ralston Group, as
the case may be, of each and all of the Liabilities described herein shall
pass to the Agribusiness Group or the Ralston Group, as the case may be, as of
the Distribution Date, regardless of when Agribrands or any other member of
the Agribusiness Group or Ralston or any other member of the Ralston Group, as
the case may be, in fact assumes or becomes legally obligated to the obligee
of any one or more of such Liabilities; and (iii) all operations of the
Agribusiness shall be for the account of Ralston through 12:01 a.m. on the
Distribution Date and shall be for the account of Agribrands thereafter.
(d) Ralston and Agribrands shall, and shall cause their Affiliates to,
execute prior to, or as soon as practicable following, the Distribution Date,
such additional agreements and arrangements as may be necessary or appropriate
(i) to effect the restructuring transactions set forth in Section 2.01; (ii)
to transfer to the appropriate member of the Agribusiness Group or Ralston
Group such local product registrations, franchises, licenses, and any other
governmental authorizations or other rights owned or held by Ralston,
Agribrands or their respective Groups that are necessary to the conduct of
their Businesses in such jurisdiction; (iii) to make all such further
assignments and do all such other acts as are necessary or desirable to carry
out the intent of the parties that each of the Businesses, as a going concern,
be fully vested in the appropriate party as of the Distribution Date and
operated for its benefit and burden as of 12:01 a.m.; and (iv) to provide for,
and negotiate in good faith, such other agreements and arrangements relating
to the foregoing as the parties deem appropriate, including but not limited to
any such agreements or arrangements relating to the treatment of employees,
benefit plans and taxes.
(e) If any Agribusiness Asset or Ralston Asset is not owned,
respectively, by a member of the Agribusiness Group or Ralston Group or leased
from a third party or governmental entity by a member of the appropriate
Group, as of the Distribution Date, Ralston and Agribrands shall use their
reasonable best efforts to transfer, assign and deliver such assets or leases
to the appropriate member of the other Group as soon as practicable
thereafter. Prior to such transfer or assignment, Ralston or Agribrands, as
the case may be, shall use its reasonable best efforts to give the benefits of
ownership of such Assets to the appropriate member of the other Group. The
entire economic beneficial interest in and to, and the risk of loss with
respect to, such Assets shall, regardless of when legal title thereto shall be
transferred to the appropriate member of the Agribusiness or Ralston Group,
pass to those entities as of the Distribution. Ralston and Agribrands shall,
or shall cause their Affiliates to, hold such Assets for the benefit and risk
of the other and shall cooperate with the other in any lawful and reasonable
arrangements designed to provide the benefits of ownership of the Assets to
it, including but not limited to properly recording evidence of such
beneficial ownership and risk of loss with appropriate governmental entities
as required by applicable law. In the event that the legal interest in such
Assets or any claim, right or benefit arising thereunder or resulting
therefrom, is not capable of being sold, assigned, transferred or conveyed
hereunder as a result of the failure to receive any consents or approvals
required for such transfer, then the legal interest in such Assets shall not
be sold, assigned, transferred or conveyed unless and until approval, consent
or waiver thereof is obtained. Ralston and Agribrands shall, or shall cause
their Affiliates, at their expense, to use reasonable best efforts to
cooperate in obtaining such consents or approvals as may be necessary to
complete such transfers and to obtain satisfaction of conditions to transfer
as soon as practicable. Nothing in this Agreement shall be construed as an
attempt to assign to a member of the Agribusiness Group or the Ralston Group
any legal interest in such Assets which, as a matter of law or by the terms of
any legally binding contract, engagement or commitment to which the legal
owner is subject, is not assignable without the consent of any other Person,
unless such consent shall have been given.
(f) After the Distribution Date, Ralston and Agribrands shall cause
such Assets (including the capital stock of any Affiliates) which are
beneficially owned by the other party to be managed at the direction of the
beneficial owner pursuant to one or more Operating Agreements until such
Assets are actually legally transferred and conveyed. Without limiting the
foregoing, all revenues, earnings and cash flows associated with the Assets
following the Distribution Date shall be for the account of the beneficial
owner but shall be retained by the respective legal owner until the transfers
are legally effected. Following the Distribution Date, neither Ralston nor
Agribrands shall be required to lend, advance, contribute or use any of its
own funds in connection with the operations of such Assets except to the
extent contemplated by the Operating Agreements.
(g) Ralston and Agribrands shall cooperate after the Distribution
Date in determining the actual Indebtedness of Agribrands and Cash held by
Agribrands and its Affiliates as of the Distribution in order to calculate the
Agribrands Cash Holdings and to determine any further transfers of Cash
required between the parties. For purposes of this determination, foreign
currency shall be valued in US dollars based on foreign exchange rates for
March 31, 1998 as published in the Wall Street Journal. Ralston shall have
the opportunity to review, to its satisfaction, the books and records of
Agribrands and its Affiliates, bank records, loan documentation and other
relevant materials in order to enable Ralston to verify any amounts to be
transferred, and Agribrands shall cooperate in Ralston's review. A
preliminary determination of the actual Cash and Indebtedness of Agribrands as
of the Distribution shall be made no later than 60 days after the Distribution
Date in order to make a preliminary adjustment of Cash from Ralston to
Agribrands or vice versa, as the findings warrant. Payment of such
preliminary adjustment shall be made within two (2) Business Days of such
determination. To the extent that it is determined for such preliminary
adjustment that, at the Distribution Date, Agribrands and its Affiliates held
Cash in excess of the Agribrands Cash Holdings amount, Agribrands shall remit
such excess to Ralston in US dollars; or, if Agribrands and its Affiliates
held Cash less than the Agribrands Cash Holdings amount, Ralston shall pay
such difference to Agribrands in US dollars. Such amounts shall be increased
by an amount equal to interest accrued on such unpaid excess (or shortfall, as
applicable) at LIBOR plus 25 basis points for the period from the Distribution
Date until the date such preliminary adjustment is paid to the party to which
it is owed; provided that, amounts that may be owed by Ralston to Agribrands
shall not be increased by such interest factor to the extent they relate to
Indebtedness of Agribrands arising out of third-party borrowings by Purina
Korea, Inc. that have been guaranteed by Ralston for a period up to 60 days
after the Distribution Date.
No later than July 31, 1998, upon final review and audit of the books and
records of Agribrands and its Affiliates, Ralston and Agribrands shall make,
if necessary, a second and final adjustment to the Cash held by Agribrands.
The final adjustment payment shall be increased by an amount equal to interest
accrued on such adjustment at the transferring party's average cost of debt
plus 200 basis points for the period from the date of the initial adjustment
payment until the date such final payment is made.
(h) Ralston shall pay to Agribrands in US dollars, at the time of
payment of each of the Ralston Stock and Asset Purchase Prices to Agribrands,
an additional lump sum equal to interest on such purchase price, denominated
in US dollars at the time of payment to Agribrands, accrued at the rate of
6-1/2% per annum, for the period beginning on the Distribution Date to the
date such purchase price is paid to Agribrands.
2.05 Conduct of Business Pending the Distribution Date. Prior to the
-------------------------------------------------
Distribution Date, the Agribusiness shall be operated for the sole benefit of
Ralston.
2.06 Registration and Listing. Prior to the Distribution Date:
-------------------------
(a) Ralston and Agribrands shall prepare, and Agribrands shall file with
the SEC, a Registration Statement on Form 10 pursuant to Section 12(b) of the
Exchange Act with respect to the Agribrands Stock and associated Rights.
Ralston and Agribrands shall use reasonable efforts to cause the Form 10 to
become effective under the Exchange Act, and, following such effectiveness,
Ralston shall mail the Information Statement to the holders of record of
Ralston Stock as of the close of business on the Record Date.
(b) The parties hereto shall take all such actions as may be necessary or
appropriate under state securities and Blue Sky laws in connection with the
Distribution.
(c) Ralston and Agribrands shall prepare, and Agribrands shall file and
seek to make effective, an application for the listing of the Agribrands Stock
and associated Rights on the NYSE.
ARTICLE III
THE DISTRIBUTION
3.01 Record Date and Distribution Date. Subject to the satisfaction
---------------------------------
of the conditions set forth in Section 12.01, the Ralston Board shall
establish the Record Date and the Distribution Date and any appropriate
procedures in connection with the Distribution. The determination of record
holders of Ralston Stock on the Record Date shall be as of 12:01 a.m. on the
Distribution Date, and the Distribution shall also be effective as of 12:01
a.m. on the Distribution Date.
3.02 Distribution. Ralston shall distribute all of the outstanding
------------
shares of Agribrands Stock to holders of record of Ralston Stock on the Record
Date on the basis of one share of Agribrands Stock for each ten (10) shares of
Ralston Stock outstanding as of 12:01 a.m. on the Record Date, subject to the
treatment of fractional shares set forth in Section 3.03. All shares of
Agribrands Stock issued in the Distribution shall be duly authorized, validly
issued, fully paid and nonassessable.
3.03 Payment in Lieu of Fractional Shares. No fractional shares of
------------------------------------
Agribrands Stock shall be issued in the Distribution. In lieu thereof, a
distribution agent will aggregate fractional shares into whole shares and sell
them in the open market at then prevailing prices on behalf of holders who
otherwise would be entitled to receive fractional share interests, and such
distribution agent shall remit to each holder of Ralston Stock who would
otherwise be entitled to receive such fractional shares a cash payment equal
to such holder's pro rata share of the total gross sale proceeds (after making
appropriate deductions of the amount required for Federal tax withholding
purposes). Ralston shall bear the cost of commissions incurred in connection
with such sales.
ARTICLE IV
INDEMNIFICATION
4.01 Indemnification.
---------------
(a) From and after the Distribution Date, Ralston agrees to indemnify
and hold harmless Agribrands against and in respect of any and all Liabilities
assumed or retained by Ralston pursuant to Section 2.04(b) of this Agreement
or related to, arising from, or associated with:
(i) any breach or violation of any covenant made in this
Agreement or any Ancillary Agreement by Ralston or any of its Subsidiaries;
(ii) any Third-Party Claim relating to the actions of the
Ralston Board in authorizing the Distribution;
(iii) the ownership, use or possession of the Ralston Assets or
the operation of the Ralston Business or Former Ralston Businesses, whether
relating to or arising out of occurrences prior to or after the Distribution,
except to the extent liability therefor is assumed or retained by Agribrands
or another member of the Agribusiness Group pursuant to Section 2.04(b) of
this Agreement; and all operations conducted by Ralston, its successors and
their Affiliates following the Distribution.
(iv) with respect to employee benefit plans sponsored by
Ralston, Ralston's failure to comply with the provisions of ERISA or the Code;
(v) any violations of the Code, or of federal or state
securities laws, in connection with the Distribution, the Information
Statement and Form 10 or any filings made with governmental agencies with
respect thereto, except to the extent that such violations, or allegations of
violations, result from or are related to the disclosure to Ralston's
corporate staff of information, or failure to disclose information, by
officers, directors, employees, agents, consultants or representatives of the
Agribusiness.
Any indemnification provided for under this Section shall, to the extent
legally permissible, also be deemed to extend to other members of the
Agribusiness Group, Affiliates, Agribusiness Employees, directors, Plan
fiduciaries, shareholders, agents, consultants, representatives, successors,
transferees and assigns of Agribrands or members of the Agribusiness Group.
(b) From and after the Distribution Date, Agribrands agrees to indemnify
and hold harmless Ralston against and in respect of all Liabilities assumed or
retained by Agribrands or another member of the Agribusiness Group pursuant to
Section 2.04(b) of this Agreement or related to, arising from, or associated
with:
(i) any breach or violation of any covenant made in this
Agreement or any Ancillary Agreement by Agribrands or any of its Subsidiaries
or Affiliates;
(ii) the ownership, use or possession of the Agribusiness Assets
or the operation of the Agribusiness or Former Agribusinesses, whether
relating to or arising out of occurrences prior to or after the Distribution,
except to the extent liability therefor is assumed or retained by Ralston or
another member of the Ralston Group pursuant to Section 2.04(b) of this
Agreement; and all operations conducted by Agribrands, its successors and
their Affiliates following the Distribution.
(iii) with respect to employee benefit plans sponsored by
Agribrands, Agribrands' failure to comply with the provisions of the plan,
ERISA or the Code;
(iv) any violation or allegations of violations of federal or
state securities laws in connection with the Distribution, the Information
Statement and Form 10 or any filings made with governmental agencies with
respect thereto, to the extent that such violations, or allegations of
violations, result from or are related to, the disclosure to Ralston's
corporate staff of information, or failure to disclose information, by
officers, directors, employees, agents, consultants or representatives of the
Agribusiness; and
(v) any continuing guarantee by Ralston of any obligation of
Agribrands or its Affiliates.
Any indemnification provided for under this Section shall, to the extent
legally permissible, also be deemed to extend to other members of the Ralston
Group, Affiliates, Ralston Employees, directors, Plan fiduciaries,
shareholders, agents, consultants, representatives, successors, transferees
and assigns of Ralston or members of the Ralston Group.
Notwithstanding the foregoing, neither party shall have any obligation to
indemnify the other for a single Liability of less than US$10,000.
4.02 Actions and Claims Other Than Third-Party Claims; Notice and
------------------------------------------------------------
Payment. Upon obtaining knowledge of any Action, Liability or claim, other
than Third-Party Claims, which any Person entitled to indemnification (the
"Indemnitee") believes may give rise to any Indemnifiable Loss, the Indemnitee
shall promptly notify the party liable for such indemnification (the
"Indemnitor") in writing of such Action or claim (such written notice being
hereinafter referred to as a "Notice of Claim"); provided, however, that
failure of an Indemnitee timely to give a Notice of Claim to the Indemnitor
shall not release the Indemnitor from its indemnity obligations set forth in
this Article IV except to the extent that such failure increases the amount of
indemnification which the Indemnitor is obligated to pay hereunder, in which
event the amount of indemnification which the Indemnitee shall be entitled to
receive shall be reduced to an amount which the Indemnitee would have been
entitled to receive had such Notice of Claim been timely given. A Notice of
Claim shall specify in reasonable detail the nature and estimated amount of
any such Action, Liability or claim giving rise to a right of indemnification.
The Indemnitor shall have ninety (90) Business Days after receipt of a Notice
of Claim to notify the Indemnitee whether or not it disputes its liability to
the Indemnitee with respect to such Action, Liability or claim or the amount
thereof, and setting forth the basis for such objection. If the Indemnitor
fails to respond to the Indemnitee within such ninety (90) Business Day
period, the Indemnitor shall be deemed to have acknowledged its responsibility
for such Indemnifiable Loss. If such Indemnifiable Loss is not contested, the
Indemnitor shall pay and discharge any such Indemnifiable Loss within one
hundred twenty (120) Business Days after its receipt of a Notice of Claim.
4.03 Insurance and Third-Party Obligations. Any indemnification
-------------------------------------
otherwise payable pursuant to Section 4.01 shall be reduced by the amount of
any insurance or other amounts (net of deductibles and allocated paid loss
retro-premiums) that would be payable by any third party to the Indemnitee or
on the Indemnitee's behalf in the absence of this Agreement. It is expressly
agreed that no insurer or any other third party shall be (i) entitled to a
benefit it would not be entitled to receive in the absence of the foregoing
indemnification provisions, (ii) relieved of the responsibility to pay any
claims for which it is obligated, or (iii) entitled to any subrogation rights
with respect to any obligation hereunder.
4.04 Third-Party Claims; Notice, Defense and Payment. Promptly
------------------------------------------------
following the earlier of (i) receipt of notice of the commencement of a
Third-Party Claim or (ii) receipt of information from a third party alleging
the existence of a Third-Party Claim, any Indemnitee who believes that it is
or may be entitled to indemnification by any Indemnitor under Section 4.01
with respect to such Third-Party Claim shall deliver a Notice of Claim to the
Indemnitor. Failure of an Indemnitee timely to give a Notice of Claim to the
Indemnitor shall not release the Indemnitor from its indemnity obligations set
forth in this Section 4.04 except to the extent that such failure adversely
affects the ability of the Indemnitor to defend such Action, Liabilities or
claim or increases the amount of indemnification which the Indemnitor is
obligated to pay hereunder, in which event the amount of indemnification which
the Indemnitee shall be entitled to receive shall be reduced to an amount
which the Indemnitee would have been entitled to receive had such Notice of
Claim been timely given. Indemnitee shall not settle or compromise any
Third-Party Claim in an amount in excess of US$10,000 prior to giving a Notice
of Claim to Indemnitor at least twenty (20) Business Days in advance of such
settlement. In addition, if an Indemnitee settles or compromises any
Third-Party Claims prior to giving such Notice of Claim to an Indemnitor, the
Indemnitor shall be released from its indemnity obligations to the extent that
the Indemnitor can sustain the burden of proving that such settlement or
compromise was not made in good faith and was not commercially reasonable.
Within ninety (90) days after receipt of such Notice of Claim (or sooner if
the nature of such Third-Party Claim so requires), the Indemnitor may (A) by
giving written notice thereof to the Indemnitee, acknowledge liability for,
and at its option elect to assume, the defense of such Third-Party Claim at
its sole cost and expense or (B) object to the claim of indemnification set
forth in the Notice of Claim delivered by the Indemnitee; provided that if the
Indemnitor does not within the same ninety (90) day period give the Indemnitee
written notice either objecting to such claim and setting forth the grounds
therefor or electing to assume the defense, the Indemnitor shall be deemed to
have acknowledged its responsibility to accept the defense and its ultimate
liability, if any, for such Third-Party Claim. Any contest of a Third-Party
Claim as to which the Indemnitor has elected to assume the defense shall be
conducted by attorneys employed by the Indemnitor and reasonably satisfactory
to the Indemnitee; provided that the Indemnitee shall have the right to
participate in such proceedings and to be represented by attorneys of its own
choosing at the Indemnitee's sole cost and expense. If the Indemnitor assumes
the defense of a Third-Party Claim, the Indemnitor may settle or compromise
the Third-Party Claim without the prior written consent of Indemnitee;
provided that the Indemnitor may not agree to any such settlement pursuant to
which any such remedy or relief, other than monetary damages for which the
Indemnitor shall be responsible hereunder, shall be applied to or against the
Indemnitee, without the prior written consent of the Indemnitee, which consent
shall not be unreasonably withheld. If the Indemnitor does not assume the
defense of a Third-Party Claim for which it has acknowledged liability for
indemnification under Section 4.01, the Indemnitee may require the Indemnitor
to reimburse it on a current basis for its reasonable expenses of
investigation, reasonable attorney's fees and reasonable out-of-pocket
expenses incurred in defending against such Third-Party Claim and the
Indemnitor shall be bound by the result obtained with respect thereto by the
Indemnitee, provided that the Indemnitor shall not be liable for any
settlement effected without its consent, which consent shall not be
unreasonably withheld. The Indemnitor shall pay to the Indemnitee in cash the
amount for which the Indemnitee is entitled to be indemnified (if any) within
thirty (30) days after the final resolution of such Third-Party Claim (whether
by settlement, a final nonappealable judgment of a court of competent
jurisdiction or otherwise) or, in the case of any Third-Party Claim as to
which the Indemnitor has not acknowledged liability, within thirty (30) days
after such Indemnitor's objection has been resolved by settlement, compromise
or arbitration pursuant to the provisions of Article XI of this Agreement.
4.05 Remedies Cumulative; Survival of Indemnities. The remedies
--------------------------------------------
provided in this Article IV shall be cumulative and shall not preclude
assertion by any Indemnitee of any other rights or the seeking of any and all
other remedies against any Indemnitor. The obligations of each of the Ralston
Group and the Agribusiness Group under this Article IV shall survive the sale
or other transfer by it of any assets or businesses or the assignment by it of
any Liabilities, with respect to any claim of the other for any Indemnifiable
Losses related to such assets, businesses or Liabilities.
ARTICLE V
CERTAIN ADDITIONAL COVENANTS
5.01 Non-Competition. (a) In light of the extensive affiliation
---------------
among Ralston, Agribrands and their respective Affiliates, and in order to
secure the benefit of the good will previously associated with Ralston's
business, which is being transferred to Agribrands, and to maintain the good
will associated with those businesses being retained by Ralston, and to secure
the good will previously associated with that portion of Agribrands' business
which is being assumed by Ralston, all as provided in the terms of this
Agreement; and in light of the continuing relationship among the parties, as
provided in the Ancillary Agreements; the parties mutually agree that, except
as otherwise provided in this Section 5.01, for the period ending on the fifth
anniversary of the Distribution Date (except with respect to obligations under
the Agreement and Plan of Merger and Exchange dated as of December 2, 1997, by
and among E. I. du Pont de Nemours and Company, Ralston and certain of their
affiliates (the "DuPont Agreement"), which obligations shall continue for the
period specified in the DuPont Agreement):
(i) Neither Ralston, nor any of its Affiliates, nor any of their
successors or successive successors, shall, directly or indirectly, own,
operate, manage, participate as a partner or co-venturer in, or otherwise
engage in the business of the manufacture, distribution or sale of feeds for
horses, commercial livestock, commercial poultry, laboratory animals, zoo
animals, wild birds and game, rabbits, animals raised for fur, or fish,
reptiles and shellfish raised in commercial aquaculture facilities; or in the
business of providing services or facilities to the foregoing classes of
animals and fish (collectively, the foregoing are hereafter termed the
"Protected Agribrands Business").
(ii) Neither Agribrands, nor any of its Affiliates, nor any of
their successors or successive successors shall, directly or indirectly, own,
operate, manage, participate as a partner or co-venturer in, or otherwise
engage in the manufacture, distribution or sale of foods or feeds for pets,
pet products, pet supplies, pet accessories, litter or personal care products
for cats, dogs or other pets; provided that:
A. Agribrands and its Affiliates in Canada may manufacture and
sell, solely under trademarks authorized by the Trademark Agreement and solely
in Canada, those pet food products which they were manufacturing and selling
at the date of this Agreement (the commercial and nutritional characteristics
of which and their present composition being set forth on Schedule
5.01(a)(ii)(A) to this Agreement) and without the prior written consent of
Ralston, the commercial and nutritional characteristics of such products shall
not be changed, and the composition of such products shall not be changed
materially.
B. Agribrands and its Affiliates may distribute any pet food
purchased from Ralston, it being expressly agreed that Ralston may, in its
sole discretion, refuse to supply or limit the supply of such pet foods to
Agribrands or any of its Affiliates at any time and in any country; provided
that, should Ralston refuse to supply any of the following products to
Agribrands and its Affiliates in any country, then Agribrands and its
Affiliates may manufacture (and distribute only a product of its own
manufacture) in any such country--
1) not more than one (1) brand (which brand shall be owned solely
by Agribrands or its Affiliates) of dry dog food, which shall be formulated to
provide sufficient nutritional properties as are then deemed adequate to
maintain an adult dog under standards promulgated by AAFCO, which in no case
shall contain more than 18% protein and 8% fat (both as reflected in the
guaranteed analysis or average analysis), which shall be formulated so that
the top three (3) ingredients of the ration are not animal-, poultry-, or
fish-based protein ingredients, and which shall possess a CME of no more than
3500 kilocalories per kilogram ("KCal/Kg");
2) not more than one (1) brand (which brand shall be owned solely
by Agribrands or its Affiliates) of dry puppy food, which shall be formulated
to provide sufficient nutritional properties as are then deemed adequate for
the growth of puppies under standards promulgated by AAFCO, which shall in no
case contain more than 22% protein and 9% fat (as reflected on the same
basis), which shall be formulated so that the top three (3) ingredients of the
ration are not animal-, poultry-, or fish-based protein ingredients, and which
shall possess a CME of no more than 3700 KCal/Kg; and
3) not more than one (1) brand (which brand shall be owned solely by
Agribrands or its Affiliates) of dry cat food, which shall be formulated to
provide sufficient nutritional properties as are then deemed adequate to
maintain an adult cat under standards promulgated by AAFCO, which shall in no
case contain more than 28% protein and 10% fat (as reflected on the same
basis), which shall be formulated so that the top three ingredients of the
ration are not animal-, poultry- or fish-based protein ingredients, and which
shall possess a CME of no more than 3600 KCal/Kg.
C. With respect to all products described in sub-Section
5.01(ii)(B), Ralston shall be deemed to have "refused" to supply any such
products only if Ralston and Agribrands have failed, following good faith
negotiations which shall be conducted within sixty (60) days following written
notice from Agribrands to Ralston, to agree on mutually acceptable terms for
the supply of any such products to Agribrands or its Affiliates by Ralston.
D. Neither Agribrands, nor any of its Affiliates, nor any of
their successors nor successive successors, shall directly or indirectly
solicit, offer for sale, sell, distribute, encourage the sale, or be otherwise
involved in any distribution of any dog or cat food products to any Person
outside the "Agricultural Channel," which Channel shall consist exclusively
of:
1) Persons outside the United States principally (i.e., more than
one-half of the monthly gross sales of which are generated by) engaged in the
resale of formulated livestock and poultry feeds (exclusive of dog and cat
foods);
2) Persons outside the United States principally engaged in the
resale of farm supplies, farm equipment, and/or animal feeds other than dog or
cat foods, provided that no less than seventy-five per cent (75%) of the
monthly gross animal feed sales of any such Person consists of feeds for
animals other than dogs and/or cats; and
3) Persons outside the United States who are, at the date of this
Agreement, customers of Agribrands or any of its Affiliates (except that if
such customers purchase, prior to the Distribution Date, only products other
than dog or cat food from Agribrands or its Affiliates, then after the
Distribution Date, such customers shall not be considered customers of
Agribrands or its Affiliates under this subsection 3), provided that, should
any such Persons change either the location or the nature of their present
business activities, or experience a direct or indirect change of control by
any means, then in either case such Person shall be deemed removed from the
Agricultural Channel promptly upon written notice from Ralston to Agribrands.
E. Agribrands, its Affiliates, and their successors and
successive successors:
1) shall not solicit sales of any dog or cat food products in or
into the United States, or to any purchaser outside the Agricultural Channel;
2) shall not develop, encourage, assist or participate in any sales
of such products in or into the United States, or outside the Agricultural
Channel; and
3) shall use their best efforts, including but not limited to
ceasing to sell dog and cat foods to any Person, to deter any sales of such
products in or into the United States, or outside the Agricultural Channel, by
any such Person.
(iii) Neither Agribrands, nor any of its Affiliates, nor any or
their successors or successive successors, shall, directly or indirectly, own,
operate, manage, participate as a partner or co-venturer in, or otherwise
engage in:
A. the business of the manufacture, sale or distribution of
primary or rechargeable batteries, lighting products or devices; or
B. any activities which are proscribed as to Ralston or its
Affiliates under the terms of Section 6.10 of the DuPont Agreement, the terms
of which are hereby acknowledged as binding upon Agribrands and its
Affiliates, and their successors and successive successors.
The businesses defined in sub-paragraphs (ii) and (iii) of this Section 5.01
of this Reorganization Agreement, are hereafter termed the "Protected Ralston
Business."
(b) The proscriptions contained in sub-sections (i) and (ii) of
Section 5.01(a) of this Reorganization Agreement shall not be interpreted to
prevent:
(i) either Agribrands or Ralston, or any of their Affiliates, or
any of their successors or successive successors, respectively, from the
acquisition and ownership of no more than fifteen per cent (15%) of either a
voting or equity interest in a Person engaged in either the Protected Ralston
Business or the Protected Agribrands Business; or
(ii) either Agribrands or Ralston, or any of their Affiliates, or
any of their successors or successive successors, respectively, from the
acquisition or ownership of any interest in a Person engaged in either a
Protected Ralston Business or Protected Agribrands Business if no more than
ten per cent (10%) of such Person's gross sales (as reflected in its most
recent regularly prepared financial statements) are derived from either the
Protected Ralston Business or the Protected Agribrands Business, as the case
may be.
(c) If any Person who is not at the date of this Agreement an Affiliate
of Ralston or Agribrands, respectively, should acquire (by any means,
including but not limited to operation of law) a voting or equity interest of
twenty per cent (20%) or more in either Ralston or Agribrands, then the other
shall be relieved of its responsibilities under this Section 5.01, except that
Agribrands, its Affiliates, and their successors and successive successors
shall continue to observe and be bound by the terms of Section 6.10 of the
DuPont Agreement.
(d) Without limiting the remedies otherwise available to either party,
the parties expressly agree that (i) damages at law for breach of this
Agreement would be an inadequate remedy, and that either party would be
subjected to irreparable harm upon breach by the other, and is entitled to
injunctive or other equitable relief upon breach or threatened breach by the
other; and (ii) since equitable relief may not be available in the
jurisdiction in which such breach or threatened breach has occurred, the party
against whom such breach or threatened breach has occurred may cancel all or
any of the Ancillary Agreements upon such breach or threat thereof; provided,
however, that neither party shall be entitled to invoke any of the remedies
provided in this Section 5.01(d) unless it has given written notice of such
alleged breach or threat thereof to the other party, and the other party has
failed to cure such breach or threat thereof to the reasonable satisfaction of
the notifying party within sixty (60) days of its receipt of such notice.
(e) If any of the provisions of this Section 5.01 are held by a court or
governmental authority of competent jurisdiction to be unenforceable as
written, then any such provision shall be deemed automatically amended so that
it is enforceable to the maximum extent permissible under the laws and public
policy of the applicable jurisdiction or authority. The provisions of this
Section 5.01 are severable and this Section 5.01 shall be interpreted and
enforced as if all completely invalid or unenforceable provisions were not
contained in this Section 5.01, and partially valid or enforceable provisions
shall be enforceable to the extent they are valid or enforceable.
5.02 Further Assurances. Each party hereto shall cooperate with the
------------------
other parties, and execute and deliver, or use its best efforts to cause to be
executed and delivered, all instruments, including instruments of conveyance,
assignment and transfer, and to make all filings with, and to obtain all
consents, approvals or authorizations of, any governmental or regulatory
authority or any other Person under any permit, license, agreement, indenture
or other instrument, and take all such other actions as such party may
reasonably be requested to take by any other party hereto from time to time,
consistent with the terms of this Agreement, in order to effectuate the
provisions and purposes of this Agreement and the transfers of Assets and
Liabilities and the other transactions contemplated hereby or in any of the
Ancillary Agreements. If any such transfer of Assets or Liabilities is not
consummated prior to or on the Distribution Date, then the party hereto
retaining such Asset or Liability shall thereafter hold such Asset in trust
for the use and benefit of the party entitled thereto (at the expense of the
party entitled thereto), or shall retain such Liability for the account of the
party by whom such Liability is to be assumed pursuant hereto, as the case may
be, and shall take such other action as may be reasonably requested by the
party to whom such Asset is to be transferred, or by whom such Liability is to
be assumed, as the case may be, in order to place such party, insofar as
reasonably possible, in the same position as if such Asset or Liability had
been transferred as contemplated hereby. If and when any such Asset or
Liability becomes transferable, such transfer shall be effected forthwith.
The parties hereto agree that, as of the Distribution Date, each party hereto
shall be deemed to have acquired complete and sole beneficial ownership of all
of the Agribusiness Assets, or Ralston Assets, as the case may be, together
with all rights, powers and privileges incident thereto, and shall be deemed
to have assumed in accordance with the terms of this Agreement all of the
Liabilities, and all duties, obligations and responsibilities incident
thereto, that such party is entitled to acquire or required to assume pursuant
to the terms of this Agreement.
5.03 Agribrands Board. Prior to the Distribution Date, Agribrands
----------------
shall take such actions as are necessary so that its Board of Directors is
comprised of those individuals named as directors in the Form 10.
5.04 Contractual Arrangements.
-------------------------
(a) Effective as of the Distribution Date, Ralston and Agribrands
shall enter into a tax sharing agreement, substantially in the form attached
to this Agreement as Exhibit A ("Tax Sharing Agreement").
(b) Effective as of the Distribution Date, Ralston and Agribrands
shall enter into a bridging services agreement, substantially in the form
attached to this Agreement as Exhibit B ("Bridging Services Agreement").
(c) Effective as of the Distribution Date, Ralston and Agribrands
shall enter into a trademark agreement, substantially in the form attached to
this Agreement as Exhibit C ("Trademark Agreement").
(d) Effective as of the Distribution Date, Ralston and Agribrands
shall enter into a technology license agreement, substantially in the form
attached to this Agreement as Exhibit D ("Technology Transfer and License
Agreement").
(e) Effective as of the Distribution Date, Ralston and Agribrands
shall enter into certain toll-milling agreements, substantially in the forms
attached to this Agreement as Exhibit E-1 and E-2 ("Toll-Milling Agreement").
(f) Effective as of the Distribution Date, Ralston and Agribrands
shall enter into certain agreements for the purchase and sale of the assets
and liabilities or stock of an agribusiness or pet products enterprise,
substantially in the forms attached to this Agreement as Exhibits F-1 and F-2
("Enterprise Purchase Agreements").
(g) Effective as of the Distribution Date, Ralston and Agribrands
shall enter into certain operating agreements, substantially in the form
attached to this Agreement as Exhibit G ("Operating Agreement").
5.05 Cash Management and Intercompany Accounts.
----------------------------------------------
(a) Through and including 12:01 a.m. local time on the Distribution
Date, Ralston and Agribrands shall continue to employ cash management and
other business practices with respect to the Agribusiness that are consistent
with those practices historically employed.
(b) All bank accounts used exclusively in the Agribusiness, and the
balances therein existing as of 12:01 a.m. local time on the Distribution
Date, shall be transferred on the Distribution Date to Agribrands or its
Subsidiaries or Affiliates. All bank accounts used jointly by a member of the
Agribusiness Group and any member of the Ralston Group, and balances therein
existing as of the Distribution Date, shall remain with the Ralston Group.
Following the Distribution Date, each party shall promptly pay to the other
any amounts collected by it through any of its accounts to the extent any of
such amounts collected relate exclusively to the Business of the other party.
(c) All intercompany services provided by the Ralston Group to the
Agribusiness Group, and vice versa, shall terminate as of the Distribution
Date unless otherwise provided in the Bridging Agreement or any other
Ancillary Agreement. Effective as of the close of business on the
Distribution Date, all intercompany receivables or payables and loans then
existing between any member of one Group and any member of the other Group
shall be settled or forgiven as set forth on Schedule 5.05(c), except that,
unless otherwise provided on Schedule 5.05(c), trade receivables or payables
arising out of intercompany sales of inventories or other tangible goods shall
be settled in the normal course of business.
ARTICLE VI
ACCESS TO INFORMATION
6.01 Provision of Corporate Records. Subject to the terms of the
------------------------------
Ancillary Agreements, prior to, or as promptly as practicable after, the
Distribution Date, Ralston shall deliver to Agribrands all corporate books and
records of Agribrands and its Subsidiaries. Ralston shall also make available
for copying or, to the extent not detrimental, in Ralston's reasonable
opinion, to the interests of Ralston, originals of all books, records and data
reasonably related to the Agribusiness Assets, the Agribusiness, and the
Liabilities assumed or retained by Agribrands, including, but not limited to,
all books, records and data relating to the purchase of materials, supplies
and services, financial results, sale of products, records of the Agribusiness
Employees, commercial data, catalogues, brochures, training and other manuals,
sales literature, advertising and other sales and promotional materials,
maintenance records and drawings, all active agreements, active litigation
files and government filings. To the extent that originals of such books,
records and data are provided to Agribrands, Agribrands shall provide Ralston
copies thereof as reasonably requested in writing by Ralston. Notwithstanding
the above, Ralston shall provide copies of customer information, invoices and
credit information only to the extent reasonably requested in writing by
Agribrands, and Ralston shall provide such copies of all books, records and
data only to the extent that such action is not prohibited by the terms of any
agreements pertaining to such information or is not prohibited by law. From
and after the Distribution Date, all books, records and copies so delivered
shall be the property of Agribrands. Notwithstanding the above, Ralston shall
not be required to make copies, other than pursuant to Section 6.02 of this
Agreement, of any books, records and data which are more than seven years old
or which relate to events occurring more than seven (7) years prior to the
Distribution Date, or of any portion of any books, records or data to the
extent such portion relates exclusively to the Ralston Assets, the Ralston
Business or to Liabilities assumed or retained by Ralston.
6.02 Access to Information. From and after the Distribution Date,
---------------------
each of Ralston and Agribrands shall afford to the other and to the other's
agents, employees, accountants, counsel and other designated representatives,
reasonable access and duplicating rights during normal business hours to all
records, books, contracts, instruments, computer data and other data and
information ("Information") within such party's possession relating to such
other party's businesses, assets or liabilities, insofar as such access is
reasonably required by such other party. Without limiting the foregoing, such
Information may be requested under this Section 6.02 for audit, accounting,
claims, litigation and tax purposes, as well as for purposes of fulfilling
disclosure and reporting obligations.
6.03 Retention of Records. Except as otherwise required by law or
--------------------
agreed in writing, or as otherwise provided in the Tax Sharing Agreement, each
of Ralston and Agribrands shall retain, for a period of at least seven years
following the Distribution Date, all significant Information in such party's
possession or under its control relating to the business, assets or
liabilities of the other party and, after the expiration of such seven-year
period, prior to destroying or disposing of any of such Information, (i) the
party proposing to dispose of or destroy any such Information shall provide no
less than 30 days' prior written notice to the other party, specifying the
Information proposed to be destroyed or disposed of, and (ii) if, prior to the
scheduled date for such destruction or disposal, the other party requests in
writing that any of the Information proposed to be destroyed or disposed of be
delivered to such other party, the party proposing to dispose of or destroy
such Information promptly shall arrange for the delivery of the requested
Information to a location specified by, and at the expense of, the requesting
party.
6.04 Confidentiality. From and after the Distribution Date, each
---------------
Group shall hold, in strict confidence, all Information obtained from the
other Group prior to the Distribution Date or furnished to it pursuant to this
Agreement or any other agreement referred to herein which relates to or
concerns the business conducted by such other Group, and such Information
shall not be used by it to the detriment of the other Group, or disclosed by
it or its agents, officers, employees or directors without the prior written
consent of such other Group unless and to the extent that (i) disclosure is
compelled by judicial or administrative process or, in the opinion of such
Group's counsel, by other requirements of law, or (ii) such Group can show
that such Information was (A) available to such Group on a nonconfidential
basis prior to its disclosure by the other Group, (B) in the public domain
through no fault of such Group, (C) lawfully acquired by such Group from other
sources after the time that it was furnished to such Group pursuant to this
Agreement or any other agreement referred to herein, or (D) independently
developed by such Group. Notwithstanding the foregoing, each Group shall be
deemed to have satisfied its obligations of confidentiality under this Section
6.04 with respect to any Information concerning or supplied by the other Group
if it exercises substantially the same care with regard to such Information as
it takes to preserve confidentiality for its own similar Information.
6.05 Reimbursement. Each member of any Group providing Information
-------------
pursuant to Sections 6.02 or 6.03 to any member of the other Group shall be
entitled to receive from the recipient, upon presentation of an invoice
therefor, payment in U. S. dollars of all out-of-pocket costs and expenses as
may reasonably be incurred in providing such Information.
ARTICLE VII
EMPLOYEE MATTERS
7.01 Employee Liabilities; Continuation of Employment.
-----------------------------------------------------
After the Distribution Date, except as otherwise specifically provided
for in this Agreement and Plan of Reorganization, the Agribusiness Group shall
be responsible for all employment and benefit liabilities related to the
Agribusiness Individuals and the Ralston Group shall be responsible for all
employment and benefit liabilities related to the Ralston Individuals, whether
arising before, coincident with or after the Distribution. Ralston and
Agribrands shall cause each member of their respective Groups to cooperate
with the members of the other's Group to effect, as soon as practicable in a
cost-effective manner, the transfer of employment, where applicable, of
Agribusiness Employees and Ralston Employees to the appropriate Affiliate of
either Group.
7.02 Ralston Purina Retirement Plan.
---------------------------------
Effective as of the Distribution Date, all Agribusiness Employees who are
participants in the Retirement Plan shall cease to accrue benefits under such
Plan. Ralston shall retain all assets and liabilities under the Plan
associated with such Employees and Former Agribusiness Employees.
Ralston shall cause the Retirement Plan to be amended, effective as of
the Distribution Date, to provide that Agribusiness Employees who are
participants in the Plan as of such date who are between 50 and 54 years of
age, or who have a combination of age and years of service for vesting
purposes greater than or equal to 65, will have the number of years necessary
to attain age 55 added for purposes of calculating their age (but not credited
service) in determining their accrued benefit under such Plan. Commencement
of payment of retirement benefits under the Plan shall be subject to the terms
of the Plan, without taking into account the deemed addition of years for
purposes of calculation of age.
7.03 International Retirement Plans.
--------------------------------
(a) Canadian Pensions. Effective as of the Distribution Date, the
Agribusiness Employees participating in the defined benefit pension plan
sponsored by Ralston Purina Canada Inc. (the "Ralston Canadian Pension Plan")
shall cease to accrue benefits under such Plan, and all liabilities for
benefits accrued by such individuals as of such Distribution Date shall be
transferred to a new pension plan (the "Agribrands Canadian Pension Plan")
established by Newco Canada, an Affiliate of Agribrands, the terms of which
are substantially the same as those of the Ralston Canadian Pension Plan. The
Agribrands Canadian Pension Plan shall give the Agribusiness Employees credit,
for purposes of eligibility, vesting and benefit accrual, for service with the
Ralston Group on or prior to the Distribution Date, to the extent such service
was recognized under the Ralston Canadian Pension Plan. For purposes of this
Section 7.03(a), an individual (i) who has been determined to be disabled but
who is not as of the Distribution Date receiving benefits from the Ralston
Canadian Pension Plan, or (ii) who is in the waiting period prior to a
determination of disability shall be deemed to be an Agribusiness Employee and
liabilities for benefits accrued by such employees shall be included in the
transfer of liabilities with respect to other Agribusiness Employees.
Benefits accrued by Former Agribusiness Employees under the Ralston Canadian
Pension Plan shall remain liabilities of the Ralston Canadian Pension Plan.
Ralston shall, as soon as practicable after the Distribution Date, cause
Ralston Purina Canada Inc. to transfer from the Ralston Canadian Pension Plan
to the Agribrands Canadian Pension Plan an amount (the "Transfer Amount")
equal to (i) the present value of benefits accrued by the Agribusiness
Employees as of the Distribution Date (determined on the greater of an ongoing
concern or solvency basis in accordance with plan documents, plan
interpretations specified therein and actuarial assumptions as used in the
last filed actuarial report adjusted as necessary to comply with legislation
and regulatory authorities), plus (ii) a proportionate share of the defined
benefit assets held in the Ralston Canadian Pension Plan in excess of the
present value of defined benefit liabilities for all participants in the plan
as of that date, plus (iii) interest based on the Ralston Canadian Pension
Plan rate of return on the Transfer Amount as at the Distribution Date
calculated from the Distribution Date to the actual transfer date, less (iv)
any expenses, less (v) an adjustment for the value of benefits for
Agribusiness Employees who terminate, die or retire after the Distribution
Date and prior to the actual transfer date. Such transfer shall be
conditioned upon receipt of, and subject to, all requisite governmental and
other approvals and consents and if a different Transfer Amount is required by
applicable regulatory authorities, an adjustment to the Transfer Amount will
be made. Upon completion of the transfer of such assets and liabilities, the
Ralston Canadian Pension Plan and the Ralston Group shall have no further
liability for pension benefits for the Agribusiness Employees.
(b) Other Foreign Funded Retirement Plans. With respect to other
foreign funded retirement plans in which Agribusiness Employees, Former
Agribusiness Employees, Ralston Employees and Former Ralston Employees
participate, Agribrands and Ralston shall cooperate in taking such actions as
are necessary or desirable to ensure that the assets and liabilities related
to the current and former employees, respectively, of the Agribusiness Group
and the Ralston Group are transferred to (or retained in, as the case may be)
the retirement plan applicable to each such Group's employees or former
employees. The amount to be transferred from one defined contribution plan to
another shall be equal to the account balances accrued as of the date of
transfer. The amount to be transferred from one defined benefit plan to
another shall be equal to the present value of benefits accrued by the
transferred employees as of the Distribution Date (determined in accordance
with plan documents, plan interpretations, actuarial assumptions specified
therein, and applicable law), plus a proportionate share of the funds held in
the plan in excess of the amount required to satisfy the accumulated benefit
obligation for all participants in the plan as of that date. If such defined
benefit plan lacks sufficient funds to satisfy the accumulated benefit
obligations of all participants in the plan prior to the transfer, then such
transfer shall be equal to a share of total assets proportionate to the share
of total liabilities being transferred. The transfers of assets and
liabilities shall be conditioned upon receipt of, and subject to, all
requisite governmental and other approvals and consents. Upon completion of
the transfer of such assets and liabilities, the transferring plan and the
Group which sponsors the transferring plan shall have no further
responsibility for pension benefits for the employees for whom such assets and
liabilities were transferred.
7.04 Savings Investment Plan.
-------------------------
(a) Agribrands shall take, or cause to be taken, all necessary and
appropriate actions to establish, effective as of the Distribution Date, and
administer a defined contribution Plan which will be a Qualified Plan and
which will also be subject to Section 401(k) of the Code ("Agribrands SIP"),
and to provide benefits thereunder for all Agribusiness Employees who,
immediately prior to the Distribution Date, were participants in the Ralston
Purina Company SIP ("Ralston SIP"). Agribrands agrees that each such
Agribusiness Employee shall be, to the extent applicable, entitled, for all
purposes under the Agribrands SIP, to be credited with the term of service and
any account balance credited to such Agribusiness Employee as of the
Distribution Date under the terms of the Ralston SIP as if such service had
been rendered to the Agribusiness Group and as if such account balance had
originally been credited to such Agribusiness Employee under the Agribrands
SIP. Ralston agrees to provide Agribrands, as soon as practicable after the
Distribution Date (with the cooperation of Agribrands to the extent that
relevant information is in the possession of the Agribusiness Group), with a
list of the Agribusiness Employees who were, to the best knowledge of Ralston,
participants in the Ralston SIP immediately prior to the Distribution Date,
together with a listing, if requested by Agribrands, of each such Agribusiness
Employee's term of service for eligibility and vesting purposes under such
Plan and a listing of each such Agribusiness Employee's account balance
thereunder. Ralston shall, as soon as practicable after the Distribution
Date, provide Agribrands with such additional information (in the possession
of the Ralston Group and not already in the possession of the Agribusiness
Group) as may be reasonably requested by Agribrands and necessary in order for
Agribrands to establish and administer effectively the Agribrands SIP. The
Agribrands SIP receiving transfers of accounts from the Ralston SIP shall
contain an "Agribrands Stock Fund", and Agribusiness Employees for whom a
portion of the account balances are to be transferred to the Agribrands SIP
from the Ralston SIP in the form of Agribrands Stock, as described below,
shall be permitted to elect to retain their investment of that portion of
their account in the Agribrands Stock Fund.
(b) Ralston shall amend the Ralston SIP to cause the Agribrands
Employees to be fully vested, as of the Distribution, in amounts credited to
their accounts in the Ralston SIP as of such date. Ralston further agrees, as
soon as practicable following the Distribution Date, to direct the trustees of
the Ralston Purina Company Savings Investment Trust to transfer to the trustee
of the Agribrands SIP in cash, securities or other property or a combination
thereof, as reasonably determined by Ralston, an amount equal to the account
balances credited as of the date of transfer to the participants and
beneficiaries in the Ralston SIP who are Agribusiness Employees. Such
transfer shall be adjusted, if and to the extent necessary, to comply with
Section 414(l) of the Code and the regulations promulgated thereunder. At the
time determined by the appropriate fiduciaries of the Ralston SIP, such
fiduciaries shall cause shares of ESOP Stock allocated to accounts of
Agribusiness Employees under the Ralston SIP to be converted into or redeemed
for shares of Ralston Stock, as provided by the terms of the ESOP Stock.
Shares of Ralston Stock received by the Ralston SIP upon such redemption or
conversion, as well as shares of such Stock otherwise held in the Plan with
respect to Agribusiness Employee participant accounts in the Ralston Stock
Fund, will be transferred directly to the trustee of the Agribrands SIP for
attribution to respective participant accounts in that Plan. Shares of
Agribrands Stock distributed with respect to shares of Ralston Stock held in
the Ralston SIP as of the Distribution, to the extent allocated to accounts of
Agribusiness Employees, shall be transferred to respective participant
accounts in the Agribrands Stock Fund of the Agribrands SIP.
(c) In connection with the transfers described in Section 7.04(b),
Ralston and Agribrands shall cooperate in making any and all appropriate
filings required under the Code or ERISA, and the regulations thereunder, and
any applicable securities laws and take all such action as may be necessary
and appropriate to cause such transfers to take place as soon as practicable
after the Distribution Date; provided, however, that each such transfer shall
not take place until as soon as practicable after the earlier of (A) the
receipt of a favorable IRS determination letter with respect to the
qualification of the Agribrands SIP under Section 401(a) of the Code or (B)
the receipt by Ralston of an opinion of counsel retained by Agribrands and
reasonably satisfactory in form and substance to Ralston to the effect that
such counsel believes the Agribrands SIP will be found by the IRS to be
qualified under Section 401(a) of the Code and that each trust established
thereunder is exempt from federal income tax under Section 501(a) of the Code.
Ralston and Agribrands agree to provide to such counsel such information in
the possession of the Ralston Group and the Agribusiness Group, respectively,
as may be reasonably requested by such counsel in connection with the issuance
of such opinion. Ralston agrees, during the period beginning on the
Distribution Date and ending with the date of final transfer of assets and
liabilities to the Agribrands SIP, to administer the Ralston SIP in accordance
with plan provisions, and, insofar as it is practical, in the ordinary course
as it was operated prior to the Distribution, except as otherwise set forth in
this Agreement.
(d) Except as specifically set forth in this Section 7.04, from and
after the Distribution Date, Ralston shall cease to have any liability or
obligation whatsoever with respect to Agribusiness Employees under the Ralston
SIP (other than the obligation to complete the transfer of assets and
liabilities to the Agribrands SIP described in (c) above) and Agribrands shall
assume and shall be solely responsible for all liabilities and obligations
whatsoever of either Ralston or Agribrands with respect to Agribusiness
Employees under the Ralston SIP and shall be solely responsible for all
liabilities and obligations whatsoever under the Agribrands SIP; provided,
however, that Ralston shall, in respect of Agribusiness Employees
participating in the Ralston SIP prior to the Distribution, either be
responsible for or make all required contributions, no later than the date
such contributions are legally required to be made, for all prior Plan years
and for the portion of the Current Plan Year ending on the Distribution Date,
to the extent not previously made.
7.05 U.S. Welfare Plans
--------------------
(a) Agribrands shall take, or cause to be taken, all actions
necessary and appropriate on behalf of itself and the Agribusiness Group to
adopt such Welfare Plans as necessary to provide welfare benefits, effective
as of the Distribution Date, to the Agribusiness Individuals. In connection
with the foregoing, Ralston agrees to provide Agribrands or its designated
representative with such information (in the possession of the Ralston Group
and not already in the possession of the Agribusiness Group) as may be
reasonably requested by Agribrands and necessary for the Agribusiness Group to
establish any such Welfare Plan.
(b) Except as otherwise noted in this Section 7.05, Agribrands shall
assume, or cause one or more members of the Agribusiness Group to assume, and
shall be solely responsible for, or cause its insurance carriers or agents to
be responsible for, all welfare benefit claims incurred by Agribusiness
Individuals under the Agribusiness Welfare Plans described above in which such
Agribusiness Individuals are eligible to, and elect to, participate on or
after 12:01 a.m. on the Distribution Date. Ralston shall retain liability for
welfare benefit claims incurred by Agribusiness Individuals under the Purina
Comprehensive Health and Well-Med Plan or other Ralston Welfare Plans before
12:01 a.m. on the Distribution Date. For purposes of this Section 7.05,
medical and dental services are incurred when the Agribusiness Individual is
provided with medical or dental care; death benefit claims are incurred at the
time of death of the insured notwithstanding any other provision of any
welfare benefit plan to the contrary. As of 12:01 a.m. on the Distribution
Date, Agribusiness Employees will cease participating in Welfare Plans
maintained by any member of the Ralston Group, except to the extent they elect
continued coverage under Ralston's health benefit plans pursuant to the
Consolidated Omnibus Budget Reconciliation Act.
(c) Ralston and the Ralston Group shall be responsible for any
retiree medical and life insurance benefits payable under any Welfare Plans of
Ralston and the Ralston Group on or after the Distribution Date with respect
to any employees working in the Agribusiness who have retired from the
Agribusiness Group or the Ralston Group prior to the Distribution Date and who
have met the eligibility requirements for such benefits at that time.
Agribusiness Employees who retire from the Agribusiness Group on or after the
Distribution Date shall not be entitled to retiree medical and life insurance
benefits from such Welfare Plans of Ralston and the Ralston Group, except as
set forth in Sections 7.05(d) and (e) below. For purposes of this subsection,
the distribution of ownership of the Agribusiness Group to shareholders of
Ralston Stock shall not be deemed a termination of employment of Agribusiness
Employees.
(d) Effective as of the Distribution Date, Ralston shall cause the
Purina Comprehensive Plan to be amended to provide a delayed enrollment
opportunity for retiree medical benefits under the Comprehensive Health Plan
for Agribrands Employees who (i) were participants in the Purina Comprehensive
Health Plan but not the Executive Health Plan immediately prior to the
Distribution, (ii) had met the age and service requirements for retiree
medical coverage under the Purina Comprehensive Health Plan prior to the
Distribution Date, and who (iii) did not retire from the Agribusiness Group or
Ralston Group prior to the Distribution. Such delayed enrollment opportunity
shall be subject to satisfaction of certain eligibility conditions set forth
in the Plan (including, but not limited to, maintaining continuous coverage
under one or more group health plans sponsored by Agribrands or its successors
after the Distribution and applying for delayed enrollment in the Plan within
30 days after termination of coverage under such other group health plans),
and payment of applicable premiums for such retiree coverage.
Effective as of the Distribution Date, Ralston shall cause the Ralston Purina
Executive Health Plan to be amended to provide a similar delayed enrollment
opportunity for retiree medical benefits under the Executive Health Plan for
Agribrands Employees who (i) had met the age and service requirements for
retiree medical coverage under the Purina Comprehensive Health Plan prior to
the Distribution Date, (ii) were participants in the Executive Health Plan and
the Purina Comprehensive Health Plan immediately prior to the Distribution,
and who (iii) did not retire from the Agribusiness Group or Ralston Group
prior to the Distribution. Such delayed enrollment opportunity shall be
subject to satisfaction of certain eligibility conditions set forth in the
Executive Plan (including, but not limited to, maintaining continuous coverage
under one or more group health plans after the Distribution and applying for
delayed enrollment in the Executive Plan within 30 days after termination of
coverage under such other group health plans). The retiree medical coverage
offered to such Agribrands Employees under the Executive Health Plan shall be
equivalent to that offered to retirees under the Purina Comprehensive Health
Plan and the Executive Health Plan, and shall be contingent upon payment of
premiums equal to those charged for retiree coverage under the Purina
Comprehensive Health Plan.
(e) Ralston shall retain liabilities for retiree life benefits under
the Executive Life Plan for Former Agribusiness Employees who are eligible for
retiree life coverage under the Plan. Ralston shall amend the terms of the
Executive Life Plan to provide that Agribusiness Employees who are
participants in the Plan and who have satisfied the age and service
requirements for retiree life coverage as of the Distribution Date shall
retain retiree life coverage under the Plan after the Distribution in the
amount in effect as of the Distribution Date, and that such amount shall not
be increased thereafter.
7.06 International Welfare Plans
-----------------------------
Ralston and Agribrands shall each retain all liabilities related to
international welfare plans in which only Ralston Individuals or Agribusiness
Individuals, respectively, are enrolled. With respect to welfare plans in
which both Ralston Individuals and Agribusiness Individuals are participants,
Ralston and Agribrands shall cause each member of their respective Groups to
cooperate with members of the other Group to establish additional welfare
plans as soon as practicable after the Distribution Date in order to enroll
the Employees and Former Employees of the Agribusiness and Ralston in separate
plans. Ralston and Agribrands, or their respective welfare plans as
applicable, shall share proportionately in any refunds of contributions or
stabilization reserves payable on account of experience prior to the
Distribution; provided that, with respect to refunds from international
insurance pools, Ralston shall be obligated to share such refunds
proportionately with Agribrands only if Agribrands' share exceeds US$10,000.
7.07 Internationalist Retirement Plan.
----------------------------------
As of the Distribution Date, Agribusiness Employees who participate in
the Internationalist Retirement Plan shall cease to accrue benefits under such
Plan. Effective as of the Distribution Date, Agribrands shall assume or
retain all liabilities in connection with benefits accrued under such Plan
with respect to Agribusiness Individuals, and Ralston shall have no further
liability therefor. Agribrands agrees to cause such benefits to be paid to
the Agribusiness Individuals in a manner and amount consistent with the terms
of such plan.
7.08 Stock Options and Restricted Stock; Stock Purchase Plan.
----------------------------------------------------------
(a) The stock options held by Agribusiness Employees as of the
Distribution Date shall be administered in accordance with the terms of such
agreements. For purposes of restricted stock awards and stock options under
the ISPs, the Distribution shall be deemed to constitute an involuntary
termination of employment of Agribusiness Employees.
(b) Effective immediately after the Distribution Date, the number of
shares of Ralston Stock subject to, and the exercise price of, each
non-qualified option to acquire Ralston Stock granted pursuant to the terms of
an ISP ("Ralston Option") which immediately prior to the Record Date is
outstanding and not exercised shall be adjusted by the Human Resources
Committee of the Ralston Board in order to reflect the difference in the fair
market value of the Ralston Stock attributable to the Distribution, in
accordance with the requirements of Section 424 of the Code and the
regulations promulgated thereunder, based upon (i) the average of the closing
prices on the NYSE Composite Index for the Ralston Stock, trading regular way
with due bills for the Agribrands Stock, for the 10 trading day period prior
to the Distribution Date and (ii) the average of the closing prices on the
NYSE Composite Index for the Ralston Stock, trading regular way, for the 10
trading day period following the Distribution Date.
(c) Ralston and Agribrands agree that Ralston, as sole shareholder of
the outstanding capital stock of Agribrands, will approve the adoption by the
Board of Agribrands of an ISP prior to the Distribution, such plan to be
administered by the Nominating and Compensation Committee of the Agribrands
Board (the "Committee"). The Committee shall have authority under such plan
to grant stock options, restricted stock awards and other awards payable in
Agribrands Stock, to directors of Agribrands and eligible Agribusiness
Employees, including executive officers.
(d) Effective as of the Distribution Date, Agribusiness Employees
shall cease to be eligible to participate in Ralston's Purina Stock Purchase
Plan. All benefit obligations arising under the Plan prior to such date shall
be paid in accordance with the terms of the Plan.
7.09 Unfunded Deferred Compensation Plans.
---------------------------------------
(a) Ralston shall retain liability for all unpaid benefits,
obligations and liabilities with respect to account balances of Agribusiness
Employees and Former Agribusiness Employees in the Fixed Benefit Option of the
Ralston Purina Company Deferred Compensation Plan for Key Employees ("Ralston
Deferred Compensation Plan").
(b) Prior to the Distribution Date, Agribrands will establish a
Deferred Compensation Plan, which shall be a non-qualified unfunded deferred
compensation plan ("Agribrands Deferred Compensation Plan"). Effective as of
the Distribution, Ralston shall (i) amend the Ralston Deferred Compensation
Plan to permit the transfer to the Agribrands Deferred Compensation Plan of
that portion of the Ralston Deferred Compensation Plan relating to the
benefits accrued as of the Distribution Date by the Agribusiness Employees in
the Equity Option and Variable Interest Option of such Plan; and in connection
therewith, Ralston shall assign to Agribrands all its right, title and
obligations under the deferred compensation agreements associated with such
accrued benefits; and (ii) amend the Executive SIP to permit the transfer to
the Agribrands Deferred Compensation Plan of that portion of the Executive SIP
relating to the benefits accrued as of the Distribution Date by the
Agribusiness Employees.
(c) After the Distribution Date, Agribrands shall be solely
responsible for the payment of all liabilities and obligations for benefits
with respect to Agribusiness Employees under the Agribrands Deferred
Compensation Plan, which shall include all liabilities and obligations
transferred pursuant to 7.09(b) above, and Ralston shall have no liability
with respect thereto.
7.10 Partnership Life Insurance Plan.
----------------------------------
Agribusiness Individuals who, immediately prior to the Distribution Date,
were participants in or otherwise entitled to benefits under the Ralston
Partnership Life Insurance Plan, will, as of the Distribution Date, be treated
as terminated employees for purposes of such Ralston Partnership Life
Insurance Plan, and will be afforded all rights and benefits to which all
terminated employees are entitled under the terms of such Plan. Ralston will
retain ownership of any individual life insurance contracts then insuring the
life of any Agribusiness Employee in accordance with the terms of the
Partnership Life Insurance Plan.
7.11 Vacation Pay/Paid Time Off. Agribrands and the Agribusiness
--------------------------
Group will assume (or, as applicable, retain) all liability for unpaid
vacation pay and other paid time off accrued by Agribusiness Employees prior
to the Distribution Date. After the Distribution Date, Ralston and the
Ralston Group will have no liability for vacation pay or other paid time off
for Agribusiness Employees. Ralston and the Ralston Group will retain (or, as
applicable, assume) all liability for unpaid vacation pay and other paid time
off accrued by Ralston Employees prior to the Distribution Date. After the
Distribution Date, Agribrands and the Agribusiness Group will have no
liability for vacation pay or other paid time off for Ralston Employees.
7.12 U. S. Severance Pay.
----------------------
(a) Ralston and Agribrands agree that, with respect to individuals
who, in connection with the Distribution, cease to be employees of the Ralston
Group and become employees of the Agribusiness Group, such cessation shall not
be deemed a severance of employment from either Group for purposes of any Plan
that provides for the payment of severance, salary continuation or similar
benefits and shall, in connection with the Distribution, if and to the extent
appropriate obtain waivers from individuals against any such assertion.
(b) The Ralston Group shall assume and be solely responsible for all
liabilities and obligations whatsoever in connection with claims made by or on
behalf of Ralston Individuals and the Agribusiness Group shall assume and be
solely responsible for all liabilities and obligations whatsoever in
connection with claims made by or on behalf of Agribusiness Individuals in
respect of severance pay, salary continuation and similar obligations relating
to the termination or alleged termination of any such person's employment
either before, to the extent unpaid, or on or after the Distribution Date.
7.13 International Severance Pay.
-----------------------------
(a) Ralston and Agribrands agree that, with respect to individuals
who, in connection with the Distribution, cease to be employees of the Ralston
Group and become employees of the Agribusiness Group or vice versa, such
cessation shall not be deemed a severance of employment from either Group
except to the extent so required by the terms of any benefit plan, labor
agreement, applicable law or governmental regulation that provides for the
payment of severance pay, salary continuation, termination indemnity or
similar benefits. The parties agree, if and to the extent appropriate, to
obtain waivers from individuals against any such assertion.
(b) To the extent severance pay, salary continuation or termination
indemnity is payable with respect to an Agribusiness Individual or Ralston
Individual, the respective Group shall assume and be solely responsible for
all liabilities and obligations whatsoever in connection with claims for such
benefits made by or on behalf of such Individuals relating to the termination
or alleged termination of any such person's employment either before, to the
extent unpaid, or on or after the Distribution Date.
Notwithstanding the foregoing, after the Distribution Date, employees of
Purina Colombiana, S.A. whose principal duties after the Distribution Date are
in connection with the manufacture of pet food pursuant to a Toll-Milling
Agreement shall be considered Ralston Employees for purposes of this Section
7.13, and the Ralston Group shall be solely responsible for payment of any
claims for severance benefits by such employees; and employees of Purina de
Venezuela, C.A. whose principal duties after the Distribution Date are in
connection with the manufacture of agricultural formula animal feeds pursuant
to a Toll-Milling Agreement shall be considered Agribusiness Employees for
purposes of this Section 7.13, and the Agribusiness Group shall be solely
responsible for payment of any claims for severance benefits by such
employees.
In the event that the individual to whom the benefits are due was an employee
of both the Agribusiness and the Ralston Business, then the termination
expenses shall be shared pro rata on the basis of service with each Group.
7.14 Bonus Plans. Agribrands and its Affiliates shall be responsible
-----------
for all liabilities with respect to Agribusiness Employees arising under bonus
plans, programs or policies applicable to such Employees, including
liabilities related to service prior to the Distribution Date.
Notwithstanding the foregoing, Ralston shall retain liability for amounts
payable to Agribusiness Employees who are participants in the 1996 Leveraged
Incentive Plan.
7.15 Other Balance Sheet Adjustments. To the extent not otherwise
-------------------------------
provided in this Agreement, Ralston and Agribrands shall take such action as
is necessary to effect an adjustment to the books of the members of the
Ralston Group and the Agribusiness Group so that, as of the Distribution Date,
the prepaid expense balances and accrued employee liabilities with respect to
any employee liability or obligation assumed or retained as of the
Distribution Date by the Ralston Group or the Agribusiness Group are
appropriately reflected on the consolidated balance sheets as of the
Distribution Date of Ralston and Agribrands, respectively.
7.16 Preservation of Rights to Amend or Terminate Plans. Subject to
--------------------------------------------------
the provisions of this Article VII, no provision of this Agreement, including
the agreement of Ralston or Agribrands that it, or any member of the Ralston
Group or the Agribusiness Group, will make a contribution or payment to or
under any Plan herein referred to for any period, shall be construed as a
limitation on the right of Ralston or Agribrands or any member of the Ralston
Group or the Agribusiness Group to amend such Plan or terminate its
participation therein which Ralston or Agribrands or any member of the Ralston
Group or the Agribusiness Group would otherwise have under the terms of such
Plan or otherwise, and no provision of this Agreement shall be construed to
create a right in any Ralston Individual or Agribusiness Individual under a
Plan which such Individual would not otherwise have under the terms of the
Plan itself.
7.17 Reimbursement; Indemnification. Each of the parties hereto
------------------------------
acknowledges that the Ralston Group, on the one hand, and the Agribusiness
Group, on the other hand, may incur costs and expenses (including
contributions to Plans and the payment of insurance premiums) arising from or
related to any of the Plans which are, as set forth in this Agreement, the
responsibility of the other party hereto. Ralston and Agribrands agree that
they, or the appropriate members of their respective Groups, shall reimburse
the appropriate members of the other's Group, as soon as practicable but in
any event within 30 days of receipt from the other party of appropriate
verification, for all such costs and expenses.
7.18 Further Transfers. For a period of six months following the
-----------------
Distribution Date, no member of either Group shall, directly or indirectly,
without the prior written consent of a corporate officer of the other Group,
solicit or attempt to solicit any employee or officer of such other Group for
the purpose of obtaining his or her services for hire, or otherwise causing
such employee to leave employment with such other Group, and no member of
either Group, without the prior written consent of a corporate officer of the
other Group, will, for such period of six months, hire such employee or
officer; provided, however, if the employment of any officer or employee of
one Group is terminated by that Group at any time following the Distribution,
a member of the other Group may employ such person without the consent of the
other Group
7.19 Other Liabilities. As of the Distribution Date, Agribrands and
-----------------
Ralston shall each assume and be solely responsible for all Liabilities
whatsoever of the other's Group with respect to claims made by, in the case of
Agribrands, Agribusiness Individuals and, in the case of Ralston, Ralston
Individuals, relating to any Liability not otherwise expressly provided for in
this Agreement, including, but not limited to, earned salaries, wages,
severance payments, bonus accruals or other compensation, regardless of
whether such Liability was incurred before or after the Distribution Date.
7.20 Compliance. Notwithstanding anything to the contrary in this
----------
Article VII, to the extent any actions of the parties contemplated in this
Article are determined prior to the Distribution to violate law or result in
unintended tax liability for Ralston Individuals or Agribusiness Individuals,
such action may be modified to avoid such violation of law or unintended tax
liability.
7.21 Agreement of Parties. Notwithstanding anything herein to the
--------------------
contrary, the agreements contained in this Article VII shall be binding only
as between the parties to this Agreement, no Ralston Individual or
Agribusiness Individual or other Person shall have any right with respect to
any such agreement, and no Person other than the parties to this Agreement
shall have any rights to enforce any provision hereof.
ARTICLE VIII
POST-DISTRIBUTION OBLIGATIONS
8.01 Agribrands' Post-Distribution Obligations. Agribrands shall, and
-----------------------------------------
shall cause each member of the Agribusiness Group to, comply with each
representation and statement made, or to be made, to the Internal Revenue
Service (the "IRS") in connection with any ruling obtained, or to be obtained,
by Ralston, from the IRS with respect to any transaction contemplated by this
Agreement. Neither Agribrands nor any member of the Agribusiness Group shall
for a period of three years following the Distribution Date engage in any of
the following transactions, unless, in the sole discretion of Ralston, either
(a) an opinion in form and substance satisfactory to Ralston is obtained from
counsel to Agribrands, the selection of which counsel is agreed to by Ralston
or (b) a supplemental ruling is obtained from the IRS, in either case to the
effect that such transactions would not adversely affect the tax consequences
of the contributions, transfers, assumptions, Merger and Distribution
described in Articles II and III of this Agreement to (1) Ralston or any
member of the Ralston Group, (2) Agribrands or any member of the Agribusiness
Group, or (3) the Ralston shareholders. The transactions subject to this
provision are: (i) making a material disposition (including transfers from one
member of the Agribusiness Group to another member of the Agribusiness Group),
by means of a sale or exchange of assets or capital stock, a distribution to
shareholders, or otherwise, of any of its assets (other than the transactions
contemplated by this Agreement) except in the ordinary course of business;
(ii) repurchasing any Agribrands capital stock, unless such repurchase
satisfies the requirements of Section 4.05(1)(b) of Revenue Procedure 96-30 or
any successor Revenue Procedure; (iii) issuing any Agribrands capital stock
that in the aggregate exceeds twenty percent (20%) of the issued and
outstanding stock of Agribrands immediately following the Distribution; (iv)
liquidating or merging with any other corporation (including a member of the
Agribusiness Group); or (v) ceasing to engage in the active conduct of a trade
or business within the meaning of Section 355(b)(2) of the Code. Agribrands
hereby represents that neither Agribrands nor any member of the Agribusiness
Group has any present intention to undertake any of the transactions set forth
in (i), (ii), (iii), (iv) or (v) above.
8.02 Ralston's Post-Distribution Obligations. For a period of three
---------------------------------------
years after the date of the Distribution, Ralston shall, and shall cause each
member of the Ralston Group, to refrain from taking any action which would
adversely impact any ruling obtained, or to be obtained, by Ralston from the
IRS with respect to any transaction contemplated by this Agreement.
8.03 Indemnification of Shareholders. In the event that Ralston or
-------------------------------
Agribrands breaches or violates any covenant made in this Article VIII, the
breaching party shall indemnify and hold harmless (i) all shareholders of
Ralston, and (ii) if the breaching party is Agribrands, Ralston as of the
Record Date against and in respect of any and all costs, expenses,
deficiencies, litigation, proceedings, taxes, levies, assessments, attorneys'
fees, damages or judgments of any kind or nature whatsoever, related to,
arising from, or associated with such breach or violation.
ARTICLE IX
NO REPRESENTATIONS OR WARRANTIES; EXCEPTIONS
Agribrands understands and agrees that, except as set forth in Article
VIII, no member of the Ralston Group is, in this Agreement or in any Ancillary
Agreement or other agreement or document, implicitly or explicitly
representing or warranting to Agribrands in any way as to the Agribusiness
Assets, the Agribusiness or the Liabilities of the Agribusiness Group or as to
any consents or approvals required in connection with the consummation of the
transactions contemplated by this Agreement, it being agreed and understood
that the Agribusiness Group shall take all of the Agribusiness Assets "as is,
where is" and that, except as provided in Section 2.04, the Agribusiness Group
shall bear the economic and legal risk that conveyances of the Agribusiness
Assets shall prove to be insufficient or that the title of any member of the
Agribusiness Group to any Agribusiness Assets shall be other than good and
marketable and free from encumbrances.
ARTICLE X
GUARANTEES AND SURETY BONDS OF RALSTON
Agribrands agrees that as soon as practicable following the Distribution
Date, it will substitute surety bonds obtained by it for each of the surety
bonds of any member of the Ralston Group, if any, relating to any Agribusiness
Asset, the Agribusiness or any Liability assumed by Agribrands or its
Subsidiaries of Affiliates hereunder. Agribrands agrees that it shall enter
indemnification agreements in its name with each provider of a surety bond
obtained with respect to the Agribusiness Assets, the Agribusiness or any
Liability assumed by Agribrands. Except as set forth on Schedule 10,
Agribrands shall use its best efforts to obtain the complete release and
discharge of any member of the Ralston Group from all obligations (including
any obligations upon any renewal or extension) related to the Agribusiness
Assets, the Agribusiness or any Liability assumed by Agribrands on which any
member of the Ralston Group is directly or contingently obligated as a
guarantor or assignor or otherwise contingently liable (including, without
limitation, any letter of credit) (the " Agribusiness Obligations"). In the
event that Agribrands is unable to obtain any such release, Agribrands agrees
that (i) it shall not extend the term or otherwise modify any such
Agribusiness Obligation in a manner which would expand Ralston's financial
exposure under such Agribusiness Obligation, (ii) it shall use its best
efforts to substitute itself or another member of the Agribusiness Group as
primary guarantor of such Agribusiness Obligations, and (iii) Agribrands or
any member of the Agribusiness Group shall not assign any such Agribusiness
Obligation or directly or indirectly transfer, sell or assign any assets
securing such Agribusiness Obligation or comprising all or any substantial
portion of a project, the financing of which gave rise to such Agribusiness
Obligation, including, but not limited to, the transfer, sale or assignment of
the capital stock of any Affiliate holding title to such assets, unless
Ralston or the appropriate member of the Ralston Group, as the case may be, is
released and discharged of all liabilities with respect to such Agribusiness
Obligation. Without limiting any other obligation of indemnification under
this Agreement or any agreement described herein, Agribrands shall defend,
indemnify and hold harmless each member of the Ralston Group and their
respective Affiliates, Subsidiaries, directors, officers and employees against
any and all Liabilities whatsoever incurred or suffered by any of them as a
result of any Agribusiness Obligation.
ARTICLE XI
NEGOTIATION
If any question shall arise in regard to (i) the interpretation of any
provision of this Agreement or, except to the extent provided otherwise
therein, any Ancillary Agreement, or (ii) the rights or obligations of either
Group hereunder or thereunder, each Group shall designate a senior executive
within its organization who shall, within thirty days after such question
arises, meet with the designated executive of the other Group to negotiate and
attempt to resolve such question in good faith. Such senior executives may,
if they so desire, consult outside advisors for assistance in arriving at such
a resolution. In the event that a resolution is not achieved within sixty
days following such initial meeting, then the parties may seek other legal
means of resolving such question, including but not limited to mediation or
binding or non-binding arbitration.
ARTICLE XII
MISCELLANEOUS
12.01 Conditions to the Distribution.
---------------------------------
(a) The obligation of Ralston to make the Distribution is subject to
the satisfaction of each of the following conditions:
(i) The transactions contemplated by Article II shall have been
consummated in all material respects;
(ii) Ralston shall have received rulings from the IRS, in form and
substance satisfactory to Ralston's tax counsel and independent auditors, that
the contributions, transfers, assumptions, mergers and Distribution described
in Articles II and III of this Agreement will not be subject to federal income
taxation at the corporate or shareholder level;
(iii) The Agribrands Stock and associated Rights shall have been
approved for listing on the NYSE, subject to official notice of issuance;
(iv) The Form 10 shall have been filed with the SEC and shall have
become effective, and no stop order with respect thereto shall be in effect;
(v) All authorizations, consents, approvals and clearances of all
federal, state, local and foreign governmental agencies required to permit the
valid consummation by the parties hereto of the transactions contemplated by
this Agreement shall have been obtained; and no such authorization, consent,
approval or clearance shall contain any conditions which would have a material
adverse effect on (A) the Ralston Business or the Agribusiness, (B) the
Assets, results of operations or financial condition of the Ralston Group or
the Agribusiness Group, in each case taken as a whole, or (C) the ability of
Ralston or Agribrands to perform its obligations under this Agreement; and all
statutory requirements for such valid consummation shall have been fulfilled;
(vi) Ralston shall have provided the NYSE with the prior written
notice of the Record Date required by Rule 10b-17 of the Exchange Act and the
rules and regulations of the NYSE;
(vii) No preliminary or permanent injunction or other order, decree
or ruling issued by a court of competent jurisdiction or by a government,
regulatory or administrative agency or commission, and no statute, rule,
regulation or executive order promulgated or enacted by any governmental
authority, shall be in effect preventing the payment of the Distribution;
(viii) The Distribution shall be payable in accordance with
applicable law;
(ix) All necessary consents, waivers or amendments to each bank
credit agreement, debt security or other financing facility to which any
member of the Ralston Group or the Agribusiness Group is a party or by which
any such member is bound shall have been obtained, or each such agreement,
security or facility shall have been refinanced, in each case on terms
satisfactory to Ralston and Agribrands and to the extent necessary to permit
the Distribution to be consummated without any material breach of the terms of
such agreement, security or facility; and
(x) One or more members of the Agribusiness Group shall have been
substituted, as of the Distribution Date in respect of all Ralston Group debt
obligations assumed by Agribrands or another member of the Agribusiness Group
pursuant to this Agreement.
(b) Any determination made by the Ralston Board in good faith
concerning the satisfaction or waiver of any or all of the conditions set
forth in Section 12.01(a) shall be conclusive.
12.02 Survival of Agreements. All covenants and agreements of the
----------------------
parties hereto contained in this Agreement shall survive the Distribution
Date.
12.03 Entire Agreement. This Agreement, the Exhibits and Schedules
----------------
hereto and the Ancillary Agreements shall constitute the entire agreement
between the parties hereto with respect to the subject matter hereof
superseding all previous negotiations, commitments and writings with respect
to such subject matter. To the extent that the provisions of this Agreement
are inconsistent with the provisions of any Ancillary Agreement, the
provisions of such Ancillary Agreement shall prevail.
12.04 Expenses of the Distribution. Except as otherwise provided in
----------------------------
this Agreement and the other agreements referred to herein, Ralston shall pay
all of the costs and expenses (including attorneys' and accountants' fees,
legal costs and expenses) that were necessary to effect the Distribution and
to consummate the transactions contemplated by this Agreement. For purposes
of this Section 12.04, costs and expenses (including attorneys' and
accountants' fees, legal costs and expenses) incurred in connection with the
establishment of any credit facility or other financing arrangements by or on
behalf of Agribrands and its Affiliates shall not be deemed to be expenses
necessary to effect the Distribution. Notwithstanding the foregoing, Ralston
shall bear the cost of underwriting fees and expenses of ABN incurred in
connection with the closing of the syndicated financing agreement with
Agribrands, including legal expenses of Sidley & Austin as counsel to ABN
Amro, and legal fees of Bryan Cave in connection with such financing.
12.05 GOVERNING LAW; JURISDICTION AND VENUE. THIS AGREEMENT IS MADE
-------------------------------------
AND ENTERED INTO IN, AND SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF, THE STATE OF MISSOURI, UNITED STATES OF AMERICA,
WITHOUT REGARD TO ITS CONFLICTS OF LAW PRINCIPLES, AS TO ALL MATTERS,
INCLUDING MATTERS OF VALIDITY, CONSTRUCTION, EFFECT, PERFORMANCE AND REMEDIES
UNDER THIS AGREEMENT. ALL MATTERS RELATING TO THIS AGREEMENT SHALL, SUBJECT
TO THE PROVISIONS OF ARTICLE XI OF THIS AGREEMENT, BE ADJUDICATED EXCLUSIVELY
IN THE COURTS OF THE STATE OF MISSOURI LOCATED IN ST. LOUIS, MISSOURI, OR
WITHIN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF MISSOURI;
AND EACH PARTY HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION AND VENUE OF SUCH
COURTS FOR ALL SUCH MATTERS.
12.06 Notices. All notices, requests, claims, demands and other
-------
communications hereunder (collectively, "Notices") shall be in writing and
shall be given (and shall be deemed to have been duly given upon receipt) by
delivery in person, by cable, telegram, telex, facsimile or other standard
form of telecommunications, or by registered or certified mail, postage
prepaid, return receipt requested, addressed as follows:
If to a member of the Ralston Group:
Ralston Purina Company
Checkerboard Square
St. Louis, Missouri 63164
Attention: General Counsel
If to a member of the Agribusiness Group:
Agribrands International, Inc.
9811 South Forty Drive
St. Louis, Missouri 63124
Attention: General Counsel
or to such other address as either Group may have furnished to the other Group
by a notice in writing in accordance with this Section 12.06.
12.07 Amendment and Modification; Non-Waiver. This Agreement may be
--------------------------------------
amended, modified or supplemented, or rights, powers or options hereunder
waived or impaired, only by a written agreement signed by a corporate officer
of Ralston and Agribrands and attested by their respective corporate
secretaries. Neither party shall be deemed to have waived or impaired any
right, power or option created or reserved by this Agreement (including
without limitation, each party's right to demand compliance with every term
herein, or to declare any breach a default and exercise its rights in
accordance with the terms hereof) by virtue of: (i) any custom or practice of
the parties at variance with the terms hereof; (ii) any failure, refusal or
neglect to exercise any right hereunder, or to insist upon compliance with any
term; (iii) any waiver, forbearance, delay, failure or omission to exercise
any right or option, whether of the same, similar or different natures, under
this Agreement or in any other circumstances; or (iv) the acceptance by either
party of any payment or other consideration from the other following any
breach of this Agreement. The rights and remedies set forth in this Agreement
are in addition to any other rights or remedies which may be granted by law.
12.08 Successors and Assigns; No Third-Party Beneficiaries. This
- ----- --------------------------------------------------------
Agreement and all of the provisions hereof shall be binding upon and inure to
the benefit of each Group and their respective successors and permitted
assigns, but neither this Agreement nor any of the rights, interests and
obligations hereunder shall be assigned by either Group without the prior
written consent of the other Group (which consent shall not be unreasonably
withheld). Except for the provisions of Sections 4.02 and 4.03 relating to
Indemnities, which are also for the benefit of the Indemnitees, this Agreement
is solely for the benefit of each Group and is not intended to confer
upon any other Person any rights or remedies hereunder.
12.09 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12.10 Interpretation.
--------------
(a) The Article and Section headings contained in this Agreement are
solely for the purpose of reference, are not part of the agreement of the
parties hereto and shall not in any way affect the meaning or interpretation
of this Agreement.
(b) The parties hereto intend that, for federal income tax purposes,
the contributions, transfers, assumptions, Distribution and Merger
contemplated hereby shall qualify for non-recognition treatment under Sections
332, 336, 337, 355, 357(a), 361, 368(a)(1)(D) and 1032 of the Code.
12.11 Legal Enforceability. Any provision of this Agreement or any
--------------------
of the Ancillary Agreements which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof. Any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction. Each party acknowledges that money damages would be
an inadequate remedy for any breach of the provisions of this Agreement or any
of the Ancillary Agreements and agrees that the obligations of the parties
hereunder and thereunder shall be specifically enforceable.
12.12 References; Construction. References to any "Article",
-------------------------
"Exhibit", "Schedule" or "Section", without more, are to Articles, Exhibits,
Schedules and Sections to or of this Agreement. Unless otherwise expressly
stated, clauses beginning with the term "including" set forth examples only
and in no way limit the generality of the matters thus exemplified.
12.13 Termination. Notwithstanding any provision hereof, this
-----------
Agreement may be terminated and the Distribution abandoned at any time prior
to the Distribution Date by and in the sole discretion of the Ralston Board
without the approval of any other party hereto or of Ralston's shareholders.
In the event of such termination, no party hereto shall have any Liability to
any Person by reason of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
AGRIBRANDS INTERNATIONAL, INC. RALSTON PURINA COMPANY
By: /s/ David R. Wenzel By: /s/ James R. Elsesser
--------------------------------- -----------------------------
David R. Wenzel James R. Elsesser
Chief Financial Officer Chief Financial Officer
-20-
TECHNOLOGY TRANSFER AND LICENSE AGREEMENT
=========================================
This Technology Transfer and License Agreement (hereinafter
"Agreement") is effective as of April 1, 1998, and is by and between
Agribrands International, Inc., a Missouri corporation having its principal
place of business at 9811 South Forty Drive, St. Louis, Missouri 63124 and
Ralston Purina Company, a Missouri corporation having its principal place of
business at Checkerboard Square, St. Louis, Missouri 63164.
WITNESSETH THAT:
WHEREAS, Ralston and Agri have simultaneously with this Agreement
entered into a separate agreement and plan of reorganization ("Reorganization
Agreement" as defined in Section 1.18 below);
WHEREAS, this Agreement is entered into in conjunction with the
Reorganization Plan to achieve the goals of the Reorganization Agreement;
WHEREAS, Ralston is the owner and/or licensee of certain valuable
technical information and know how including, but not limited to,
confidential, proprietary and/or trade secret manufacturing, production,
marketing, distribution and sales information relating to Agricultural animal
feeds, Agricultural animal products and various other Agricultural related
products;
WHEREAS, Agri desires to license certain confidential, proprietary
and trade secret manufacturing, production, marketing, distribution and sales
information relating to Agricultural animal feeds, Agricultural animal
products and various other Agricultural related products from Ralston;
NOW, THEREFORE, in consideration of the foregoing recitals, the
mutual covenants, promises, agreements, representations and obligations set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally
bound, the parties hereto agree as follows:
<PAGE>
- ------
Article 1 - Definitions
- --------------------------
1.1 An Affiliate of Ralston or Agri shall mean any person and/or
entity that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with the person or
entity specified.
1.2 Agri shall mean Agribrands International, Inc., a Missouri
corporation having its principal place of business at 9811 South Forty Drive,
St. Louis, Missouri 63124.
1.3 Agri business shall mean the businesses transferred to Agri by
Ralston under and pursuant to the Reorganization Agreement as of the Effective
Date as defined in said Reorganization Agreement.
1.4 Agri Products shall mean all products formulated to provide
nourishment to or care of horses (whether or not agricultural), laboratory or
zoo animals (but not including PET PRODUCTS sold to such institutions) and
agricultural animals (whether terrestrial, aquatic, or aviary), including by
way of illustration, but not limitation, commercial livestock; commercial
poultry; fish, reptiles or shellfish raised in commercial aquaculture
facilities; rabbits raised for commercial purposes; animals raised for fur;
wild or game birds; and services for the care and feeding of such animals
(collectively "Agri Animals"). Except as provided elsewhere in this
Agreement, AGRI PRODUCTS shall also include accessories, health products and
services for the care and feeding of horses, zoo animals, laboratory animals
and AGRICULTURAL animals. Agri Products shall include, but not be limited to,
the following products and services only for Agri Animals:
(a) products and services for breeding, feeding, and health care
of Agricultural animals;
(b) extraction, collection, processing, packaging, and storage
of Agricultural animal products;
(c) Agricultural pharmaceuticals, antibiotics, wormers,
disinfectants , pesticides, herbicides, insecticides, rodenticides, and
fungicides;
(d) Agricultural feeders, embryos, live animals, larvae,
aquaculture, hydroponic and aeration equipment;
(e) Agricultural animal end-use products (e.g., hams, cheese,
eggs) other than products for pets; and
(f) products and services related to the provision of
methods, systems, and techniques for the development, production, application,
and utilization of the Agri Products described in sections (a) - (e) of this
Section 1.4 such as farm and Agricultural management services, farm and
Agricultural computer programs and software, farm and Agricultural financial
services, soil analysis, and non-pet related veterinary services.
The term Agri Products expressly excludes any and all Pet Products and any
and all other products other than AGRI PRODUCTS.
1.5 Agri Technical Information and Know-how shall mean any and all
information owned by Ralston, or licensed from third-parties by Ralston under
which Ralston has the right to sub-license and/or assign such license rights
(subject to Agri obtaining any required consent from any such third-parties),
including confidential, proprietary and/or trade secret know-how,
manufacturing, research, and other technical information, that is being
exclusively used, has been exclusively used, and/or which is being exclusively
developed, by the Agri Business and is not being used by the Ralston Business
as of the Effective Date. Agri Technical Information and Know-How shall only
include, and be limited to, trade secrets, know-how, research and other
technical information which are directly related to the development, research,
manufacturing, marketing, distribution, sale and/or production of Agri
Products.
1.6 Agricultural shall mean for a purpose primarily connected to: (i)
the raising of livestock or poultry for the production of meat, milk, eggs,
fur or skin; or as beasts of burden; (ii) the cultivation of soil; or (iii)
the harvesting of crops.
1.7 Assignment Agreement shall mean the Assignment Agreement having
an effective date of December 2, 1997 by and between Protein Technologies
International, Inc., and Ralston, attached hereto as Schedule A, as it may
have been amended and modified as of the Effective Date.
1.8 Effective Date shall mean the date set forth in the first
paragraph of this Agreement upon which this Agreement is to be effective.
1.9 Expressly Excluded Technology shall mean any and all
confidential, proprietary and/or trade secret information, formulations,
specifications, technology, know-how, development, research, manufacturing,
production, and other technical information identified on or referred to by
Schedule B attached hereto and incorporated herein by this reference.
1.10 Other Restrictions shall mean any and all restrictions,
prohibitions, non-compete provisions, and the like, contained in Article V of
the Reorganization Agreement.
1.11 Permitted Pet Foods shall mean:
(a) not more than one (1) brand of dry dog food, which shall be
formulated to provide sufficient nutritional properties as are then deemed
adequate to maintain an adult dog under standards promulgated by the
Association of American Feed Control Officials ("AAFCO"), which in no case
shall contain more than 18% protein and 8% fat (both as reflected in the
guaranteed analysis or average analysis), which shall be formulated so that
the top three (3) ingredients of the ration are not animal-, poultry-, or
fish-based protein ingredients, and which shall possess a calculated
metabolizable energy ("CME") of no more than 3500 kilocalories per kilogram
("KCal/Kg");
(b) not more than one (1) brand of dry puppy food, which shall
be formulated to provide sufficient nutritional properties as are then deemed
adequate for the growth of puppies under standards promulgated by AAFCO, which
shall in no case contain more than 22% protein 9% fat (both as reflected in
the guaranteed analysis or average analysis), which shall be formulated so
that the top three (3) ingredients of the ration are not animal-, poultry- or
fish-based protein ingredients, and which shall possess a CME of no more than
3700 KCal/Kg; and
(c) not more than one (1) brand of dry cat food, which shall be
formulated to provide sufficient nutritional properties as are then deemed
adequate to maintain an adult cat under standards promulgated by AAFCO, which
shall in no case contain more than 28% protein and 10% fat (both as reflected
in the guaranteed analysis or average analysis), which shall be formulated so
that the top three ingredients of the ration are not animal-, poultry-, or
fish-based protein ingredients, and which shall possess a CME of no more than
3600 KCal/Kg.
1.12 Pet Products shall mean products for and services related to the
nourishment or care of pets other than horses, including, by way of
illustration, but not limitation, dogs, cats and other small pet animals such
as birds, reptiles, guinea pigs, white mice, and ornamental fish. Pet
Products include, but are not limited to, pet and pet-related food, pet
snacks, nutritional products, accessories, care and/or health products and
services for the care and feeding of pets. Pet accessories, pet-care and/or
pet health products include, but are not limited to, pet and pet-related
litter, rawhides, bedding, vitamins/minerals, flea and tick-control products,
shampoos and grooming accessories, bird food (but not wild-bird or game-bird
food), leashes, collars, toys and other accessories (e.g. aquarium
accessories). Pet Products also include pet and pet-related products for
purchase or use by breeders, small-animal veterinarians, police, military or
guard-dog forces and zoos. Pet Products also include any food for dogs or
cats other than food formulated specifically for laboratory dogs or laboratory
cats. Any one of the Pet Products shall be referred to in this Agreement as
Pet Products.
1.13 Principal Competitor shall mean a person which has, or has an
Affiliate which has, ten percent (10%) or more of dollar sales volume or
dollar market share as measured by A.C. Nielsen, Euromonitor, or other
generally recognized data research company (or, in the event such data is not
available, then as reasonably determined by Ralston), in any country in any of
the following product categories: dog food, cat food, pet litter, pet snacks,
or any other product manufactured or sold by the Ralston business or one or
more of Ralston's Affiliates. Notwithstanding the foregoing, Principal
Competitor shall also include, but not be limited to, Nestle, Mars, Heinz,
Iams, Colgate-Palmolive and/or Hill's Pet Nutrition, Doanes, Nutro, Dalgety,
Cargill, Royal Canin, Greens, and any of its and/or their Affiliates.
1.14 Purina Mills Technology Agreement shall mean the Technology
Agreement having an effective date of October 3, 1986 by and between Purina
Mills, Inc. and Ralston, attached hereto as Schedule C, and incorporated
herein by this reference, as it may have been amended and modified as of the
Effective Date.
1.15 "Ralston" shall mean Ralston Purina Company, a Missouri
corporation having its principal place of business at Checkerboard Square, St.
Louis, Missouri 63164.
1.16 Ralston business shall mean the businesses of Ralston other than
the Agri business.
1.17 Ralston Designed shall mean all information which qualifies as
Proprietary Information hereunder and which relates to the research,
development, design, manufacture, processes, formulations, specifications,
methods, technology, and the like, created, developed, generated, or otherwise
produced by Ralston (including, but not limited to, Ralston's officers,
directors, employees, agents, representatives, and independent contractors)
prior to the Effective Date.
1.18 Reorganization Agreement shall mean the Agreement and Plan of
Reorganization dated as of April 1, 1998, by and among Ralston Purina Company,
Ralston Purina International Holding Company, Inc., and Agribrands
International, Inc.
1.19 Shared Technical Information and Know-How shall mean any and all
information owned by Ralston, or licensed from third parties by Ralston under
which Ralston has the right to sub-license and/or assign such license rights
(subject to Agri obtaining any required consent from any such third-parties),
including confidential, proprietary and/or trade secret know-how,
manufacturing, research, and other technical information, that, as of the
Effective Date: (i) has been used by and/or is being used by the Agri
Business for anything other than Pet Products; and which also (ii) has been
used by, is being used by, and/or is in the possession of the Ralston
business. The parties understand and agree that certain Ralston Designed dry
extrusion technology and Ralston Designed pellet milling technology fall
within the scope of Shared Technical Information and Know-How. However, with
respect to the Ralston X4 and Ralston X4X extrusion technology, Agri
acknowledges, understands and agrees that it may only use: (i) the one
Ralston X4X extruder which is in place in Buga, Colombia, as of the Effective
Date, in Buga, Colombia, and nowhere else; and (ii) the two Ralston X4
extruders which are in place in Songtan, Korea, and in Strathroy, Canada, as
of the Effective Date, in Songtan, Korea, and in Strathroy, Canada, and
nowhere else; and that Agri shall have no right to, and shall not, employ or
in any way use any other Ralston X4X and/or X4 extruders and/or Ralston X4X
and/or X4 extruder technology.
1.20 Territory shall mean the entire world excluding the United
States and its territories and possessions, except that the Territory shall
include Puerto Rico.
Article 2 - Grants and Licenses
- ------------------------------------
2.1 Ralston hereby transfers and assigns to Agri the entire right,
title and interest that it has, if any, in and to the patents identified on
Schedule D attached hereto, to be held and enjoyed by Agri, its successors,
and assigns, as fully and entirely as the same would have been held and
enjoyed by Ralston had this transfer and assignment not been made. Ralston
agrees to reasonably cooperate with Agri, at Agri's sole cost and expense,
including the execution of necessary recordation documents, in recording this
assignment in the appropriate patent offices.
2.2 Subject to Section 2.2(c), Ralston hereby grants to Agri, subject
to the terms, provisions and conditions of this Agreement, the following:
(a) a perpetual, royalty-free, exclusive license to utilize, for
any purpose whatsoever (expressly subject to the Other Restrictions), the Agri
Technical Information and Know-How only in the Territory. Agri shall have the
right to sub-license the Agri Technical Information and Know-How licensed to
it under this Section 2.2(a) only in and for use in the Territory, and nowhere
else, only so long as any such sub-licensees first expressly agree in writing
to be bound by and to comply with the Other Restrictions and the same
confidentiality and use restrictions as Agri has agreed to be bound by and to
comply with under Article 5 below;
(b) a perpetual, royalty-free, non-exclusive license to utilize
the Shared Technical Information and Know-How only in the Territory only to
develop, make, have made, use, and sell any products or services expressly
excluding Pet Products (expressly subject to the Other Restrictions). Agri
shall have the right to sub-license the Shared Technical Information and
Know-How licensed to it under this Section 2.2(b) only in and for use in the
Territory, and nowhere else, for any purpose except the production and sale of
Pet Products; only so long as any such sub-licensees first expressly agree in
writing to be bound by and to comply with the Other Restrictions and the same
confidentiality and use restrictions as Agri has agreed to be bound by and to
comply with under Article 5 below;
(c) The licenses and rights to sub-license granted in Sections
2.2(a) and 2.2(b) shall be subject in all cases to the following: (i) no such
license or right to sub-license shall be granted to the extent it is
inconsistent with or not permitted by the original license or other grant of
rights to RALSTON; (ii) no such license or right to sub-license (or
sub-license by AGRI) shall be granted to the extent consent thereto is
required under the original license or other grant of rights to RALSTON and
such consent has not been received; (iii) no such license or right to
sub-license shall be granted to the extent it is inconsistent with or not
permitted by, and any such license or right to sub-license shall be subject
to: (1) the rights granted to Purina Mills, Inc., under the Purina Mills
Technology Agreement; (2) the rights granted to Protein Technologies
International, Inc., under the Assignment Agreement; and/or (3) the Other
Restrictions under Article V of the Reorganization Agreement.
(d) It is understood, acknowledged and agreed that so long as
Agri and any permitted sub-licensees fully comply with the applicable terms,
conditions and provisions of this Agreement, and any authorized sub-license
agreements, including, but not limited to, the confidentiality and use
restrictions set forth in Article 5 below, Agri shall have the sole discretion
as to whether, to whom, and under what terms and conditions, it will
sub-license the rights granted it under Sections 2.2(a) and (b) herein.
2.3 Agri acknowledges and agrees that it will not grant any
sub-licenses as permitted under Section 2.2 above unless and until any such
proposed sub-licensee agrees in writing to the termination provisions set
forth in Section 9.2 of this Agreement and to the following:
(a) to be bound by and comply with the same confidentiality and
use restrictions as Agri has agreed to be bound by under Article 5 below;
(b) to be bound by and comply with the Other Restrictions;
(c) upon the termination and/or expiration of any sub-license
agreement, cease any and all use of the Agri Technical Information and
Know-How and Shared Technical Information and Know-How which constitutes
Proprietary Information as defined herein and return any and all documents and
things embodying or containing any such Proprietary Information to Agri.
2.4 Agri acknowledges and agrees that it presently has within its
custody, possession and/or control all of the Agri Technical Information and
Know-How and Shared Technical Information and Know-How licensed to it under
this Article 2, and Ralston acknowledges and agrees that Agri shall be
entitled to retain all such information in its possession subject to the
confidentiality and Other Restrictions set forth herein and in the
Reorganization Agreement. However, the parties acknowledge and agree that
Agri and/or the Agri Business shall, within one hundred eighty (180) days
after the Effective Date, conduct an audit and identify any and all of
Ralston's Proprietary Information not licensed to it under this Agreement
including, but not limited to, any Expressly Excluded Technology, that it has
within its possession and/or control, and shall: (i) return any and all such
documents, materials, media, or the like, to Ralston; and/or (ii) provide
Ralston with a written certification, signed by an officer of Agri,
representing and warranting that all such documents, materials, media, and the
like, embodying or reflecting any such information has been destroyed.
Subsequent to the Effective Date, in the event Agri and/or Ralston learn that
Agri possesses any of Ralston's Proprietary Information not licensed to it
under this Agreement including, but not limited to, any Expressly Excluded
Technology, Agri shall immediately return any and all such information,
documents and materials to Ralston.
2.5 Agri understands, acknowledges and agrees that it will fully
comply with and be bound by the terms, provisions and conditions of the
Assignment Agreement and the Purina Mills Technology Agreement including, but
not limited to, Ralston's obligations and duties thereunder and, further, that
Agri will not take any actions, or fail to take any actions, which would cause
Ralston to be in default and/or breach of any of the terms, provisions or
conditions of the Assignment Agreement and/or the Purina Mills Technology
Agreement.
Article 3 - Reservations & Exclusions
- ------------------------------------------
3.1 Agri understands, acknowledges and agrees that Ralston expressly
reserves, and does not grant to Agri, either expressly or implicitly, any
right, title or interest to utilize, employ, disclose, disseminate,
distribute, make, license, sell, or export any Expressly Excluded Technology.
3.2 Ralston understands, acknowledges and agrees that to the extent
Agri may have or obtain the ability to use Agri Technical Information and Know
How in conjunction with publicly available information or information
rightfully obtained from third-parties, without the use or benefit of any of
Ralston's Proprietary Information and/or any Expressly Excluded Technology, to
develop, market, distribute and sell Permitted Pet Foods in accordance with
the terms of Article 5 of the Reorganization Agreement, this Agreement shall
not prevent or preclude such conduct.
3.3 Ralston understands, acknowledges and agrees that it shall not
have any right to grant any new licenses to any other persons or entity, on or
after the Effective Date, of any of the Agri Technical Information and
Know-How anywhere for any purpose.
3.4 Ralston understands, acknowledges and agrees that it shall not
have any right to license to any other persons or entity in the Territory, on
and after the Effective Date, any of the Shared Technical Information and
Know-How for the development, use, production, manufacture, distribution,
marketing or sale of Agri Products.
3.5 Agri understands, acknowledges and agrees that Ralston has not
made any, makes no, and expressly disclaims any and all, representations or
warranties (and Agri expressly waives and releases Ralston from any and all
representations or warranties), express or implied, regarding Ralston's and/or
Agri's right to make, use, offer for sale, license, and/or sell any of the
rights transferred, granted and/or licensed to Agri under this Agreement,
and/or any goods and/or services employing any of the rights transferred,
granted and/or licensed to Agri under this Agreement, including, but not
limited to, any implied warranties of title, claims of superior rights,
infringement, right to use, or the like, in or to any of the technology or
information transferred or licensed under this Agreement including, but not
limited to: (i) the patents identified on Schedule D attached hereto; (ii)
the Agri Technical Information and Know-How; and/or (iii) the Shared Technical
Information and Know-How.
3.6 Agri understands, acknowledges and agrees that in no event shall
Ralston be liable to Agri, any permitted sub-licensee under this Agreement,
and/or any other persons or entities, regardless of the form of a cause of
action, whether in contract, tort or under a statute, including, but not
limited to, negligence, strict liability, product liability, environmental
liability, patent infringement, misappropriation of trade secrets, copyright
infringement, unfair competition, or the like, which in any way arises out of
and/or is related to Agri's, any permitted sub-licensee's, and/or any other
person's and/or entity's, manufacture, use, offer for sale, license, and/or
sale of any of the rights transferred, granted and/or licensed to Agri under
this Agreement, and/or any goods and/or services employing any of the rights
transferred, granted and/or licensed to Agri under this Agreement.
3.7 The terms and provisions of Sections 3.5 through 3.7 of this
Article 3 shall survive the termination and/or expiration of this Agreement
for any reason.
Article 4 - Assignment of Technology Agreements
- -----------------------------------------------------
4.1 (a) Ralston agrees, upon the receipt of a written request by
Agri, to use commercially reasonable efforts, at Agri's sole cost and expense,
to seek to secure any required consent of third-parties for Agri to obtain a
sub-license from Ralston to use any Agri Technical Information and Know-How
and Shared Technical Information and Know-How (which is licensed by Ralston
from a third-party) only for Agri's use, production, manufacture,
distribution, marketing, and sale of Agri Products in the Territory.
(b) Subject to and upon Ralston's receipt of the written consent
of any such third-parties, as contemplated under Section 4.1(a) above, Agri
hereby agrees to assume, assumes, agrees to be bound by, conform with, and
undertakes to be obligated to perform each and every term, covenant, and
condition contained in any such license agreements between Ralston and any
such third-party in which Agri is granted a sub-license to use any such Shared
Technical Information and Know-How.
(c) Upon effectuation of a sub-license agreement to Agri, as
contemplated under Sections 4.1(a) above, if any, Agri agrees to defend,
indemnify, and hold Ralston harmless from and against any and all claims,
actions, suits, demands, obligations, investigations, causes of action,
judgments, losses, damages, costs, and expenses (including, but not limited
to, attorneys' and expert witness fees), arising out of or relating to any
activities, omissions, and/or breaches which occur subsequent to the Effective
Date and which could have, may have, and/or which are brought against Ralston
and/or Agri for alleged or actual breaches of any of the obligations and
duties assumed and/or undertaken by Agri under any such sub-license
agreement(s).
Article 5 - Confidentiality
- ------------------------------
5.1 Subject to the provisions of Section 5.9 below, the term
"Proprietary Information" shall mean and include only: (i) the Agri Technical
Information and Know-How; (ii) the Shared Technical Information and Know-How;
(iii) the Expressly Excluded Technology; and (iv) any other information that
the parties hereto agree in writing to designate as "Proprietary Information"
under this Agreement.
5.2 Agri acknowledges, understands and agrees, and any permitted
sub-licensees shall agree, that: (i) Ralston has expended substantial time,
money and effort researching and developing its Proprietary Information; (ii)
the Proprietary Information provides it with a significant competitive
advantage in the marketplace; (iii) the Proprietary Information is
confidential, proprietary and trade secret information; (iv) if the
Proprietary Information was disclosed or misused, Ralston would suffer
substantial irreparable harm and likely lose its competitive advantage in the
marketplace; (v) as of the Effective Date, agri is not aware of any facts or
allegations which would, in any way or manner, compromise the confidentiality,
propriety and trade secret status of any of the Proprietary Information; and
(vi) Agri will not make any use of any portion of the Proprietary Information
in a manner inconsistent with the provisions of this Agreement.
5.3 Agri agrees, and any permitted sub-licensees shall agree, that
they will each use commercially reasonable security measures and efforts to
ensure that the Proprietary Information is kept and retained in confidence and
secret; however, in no event shall the degree of care exercised by Agri, or
any permitted sub-licensee, be any less than the degree of care it employs to
maintain and protect the confidentiality of its own confidential or
proprietary information.
5.4 Agri agrees, and any permitted sub-licensees shall agree, that it
will not disclose or reveal to any other person or entity (except as permitted
herein and to the extent required or permitted pursuant to the terms of the
Purina Mills Technology Agreement and/or the Assignment Agreement, the Agri
Technical Information and Know-How which qualifies as Proprietary Information
subject to the provisions of Section 5.9.
5.5 Agri agrees, and any permitted sub-licensees shall agree, that it
will not disclose or reveal to any other person or entity (except as expressly
permitted herein) the Shared Technical Information and Know-How and/or the
Expressly Excluded Technology, which qualifies as Proprietary Information
subject to the provisions of Section 5.9. Agri agrees, and any permitted
sub-licensee shall agree, that it will only disclose the Shared Technical
Information and Know-How which qualifies as Proprietary Information subject to
the provisions of Section 5.9 to its employees, agents, officers, and
directors which have a need to know such information in connection with the
purpose of any licenses granted Agri herein and, further, that prior to
disclosing any Proprietary Information to any such persons it will require any
such employees, agents, officers, and directors to agree in writing to be
bound by and comply with the confidentiality and use restrictions of this
Article 5 to the same extent Agri is obligated herein.
5.6 Agri agrees, and any permitted sub-licensees will agree, to
promptly notify Ralston of any unauthorized use of any Proprietary Information
to the extent Agri or a sub-licensee learns or otherwise becomes aware of any
unauthorized use and to reasonably cooperate with Ralston in pursuing and
protecting its legal rights in regard to such unauthorized use.
5.7 In the event of a breach or threatened breach of any of Agri's
and/or any permitted sub-licensee's confidentiality duties and obligations
under the terms and provisions of this Article 5, Ralston shall be entitled,
in addition to any other legal or equitable remedies that it may be entitled
to (including any rights to damages that it may suffer), to temporary,
preliminary and permanent injunctive relief restraining such breach or
threatened breach.
5.8 Prior to disposing of any documentation, media, software, or the
like, containing or reflecting any Proprietary Information, Agri agrees, and
any permitted sub-licensees shall agree, that it will first destroy,
obliterate, and/or otherwise remove any and all Proprietary Information from
such materials. Prior to disposing the X4X extruders, AGRI shall notify
RALSTON in writing and request what, if any, alterations need to be made to
said extruders to remove any PROPRIETARY INFORMATION prior to their disposal
and AGRI shall make such alterations prior to said disposal. RALSTON shall
respond to AGRI within thirty (30) days of the receipt of said notice.
5.9 Notwithstanding any other provision of this Agreement,
information shall not be considered to be Proprietary Information, and neither
party shall have any obligations respecting, nor be liable for, the use and
disclosure thereof, if the party alleging that such information is not
confidential, proprietary and/or a trade secret can prove that the
information: (a) was known to the trade or public at the time that the
information was disclosed to it; or (b) is or becomes generally known to the
trade or public through no fault on the recipient party's part; or (c) is
independently generated after the Effective Date by employees of a party, or
on its behalf by its agents, contractors, or consultants, without the use or
benefit of any Proprietary Information; or (d) is legally required to be
disclosed by Agri under non-confidential circumstances pursuant to legal
process only so long as Agri: (i) first provides Ralston with reasonable
advance written notice of any such impending disclosure and/or service of
legal process; and (ii) Agri takes all necessary steps to ensure that the
Proprietary Information retains its confidential status through the
implementation of, among other things, the use and/or entry of appropriate
confidentiality agreements and protective orders.
5.10 It is understood and agreed that nothing in this Agreement shall
preclude Ralston from licensing its Shared Technical Information and Know-How
and/or the Expressly Excluded Technology to any other persons or entities,
except that Ralston shall not license Shared Technical Information and
Know-How in connection with the manufacture or production of Agri Products in
the Territory.
5.11 All of the provisions of this Article 5 regarding
confidentiality shall survive the expiration and/or termination of this
Agreement.
Article 6 - Indemnification
- ------------------------------
6.1 Subject to Section 6.2, Agri agrees to defend, indemnify and hold
Ralston and its Affiliates and their respective officers, directors,
employees, agents, successors and assigns harmless from and against any and
all claims, demands, actions, causes of action, judgments, losses, damages,
costs, and expenses (including, but not limited to, attorneys' and expert
witness fees), arising out of or relating to: (i) the breach by Agri of any
material warranty, representation, covenant, commitment or undertaking made
hereunder; (ii) any act or omission of Agri; (iii) any allegation relating to
the production, manufacture, marketing, advertising, promotion, distribution,
use, offer for sale, or sale of any goods and/or services by Agri and/or on
Agri's behalf including, but not limited to, Agri Products; (iv) any and all
alleged negligent acts, fraud or omissions of or by Agri, its officers,
directors, employees, agents, independent contractors, and/or sub-licensees,
in connection with the production, manufacture, marketing, advertising,
promotion, distribution, use, offer for sale, or sale of any goods and/or
services including, but not limited to, Agri Products; (v) any and all
allegations relating in any way or manner to products liability, defective
goods, failure to warn, environmental law, or the like, as applied to goods
and/or services produced, manufactured, marketed, advertised, promoted,
distributed, used, offered for sale, or sold by or on behalf of Agri; or (vi)
Agri's alleged or actual failure to comply with any governmental and/or other
laws, statutes, ordinances, rules, and/or regulations.
6.2 Notwithstanding the foregoing, Agri shall not have any obligation
to indemnify Ralston for a single claim, action, suit, demand, cause of
action, judgment, loss, damage, cost, and/or expense (including, but not
limited to, attorneys' and expert witness fees), which has a total damage
value of less than Ten Thousand Dollars $10,000.
Article 7 - Assignability
- ----------------------------
7.1 Ralston shall have the right to transfer some or all of its
rights and obligations under this Agreement, either by affirmative act or by
operation of law, by share ownership or otherwise, without the consent of
Agri. Neither Agri nor any of its Affiliates or sub-licensees shall have the
right to transfer all or part of its or their rights or obligations under this
Agreement, either by affirmative act or by operation of law, by share
ownership, or otherwise, except with the prior written consent of Ralston,
which consent will not be unreasonably withheld. Ralston may withhold its
consent in situations where to do so would be reasonable. Such situations
include, but are not limited to, Ralston withholding consent to Agri's, and/or
any of its Affiliates' or sublicensees', proposed transfer of rights and
obligations under this Agreement to a transferee who would acquire rights for
a territory covering less than a continent (e.g., Africa, Europe, Asia), or a
proposed transfer of any of its rights hereunder to a Principal Competitor of
Ralston anywhere in the world. "Transfer" as used in this Section 7.1 shall
mean: (a) the transfer, assignment, or conveyance (by any means including, but
not limited to, operation of law) of all or part of Agri's interest in, to, or
under this Agreement or its rights or obligations hereunder; and/or (b) to one
or more third-party(ies) other than a Principal Competitor acquiring,
purchasing, and/or gaining (by any means including, but not limited to,
operation of law) a voting, profits or equity interest of twenty percent (20%)
or more in Agri; and/or (c) if to a Principal Competitor acquiring (by any
means including, but not limited to operation of law) any voting, profits or
equity interest of ten percent (10%) or more.
Article 8 - Notice
- ---------------------
8.1 All notices, requests, demands, and other communications under
this Agreement or in connection therewith shall be given to or made upon the
respective parties hereto as follows:
Ralston Agri
------- ----
Ralston Purina Company Agribrands International, Inc.
Checkerboard Square 9811 South Forty Drives
St. Louis, Missouri 63164 St. Louis, Missouri 63124
Attn: General Counsel Attn: General Counsel
or to such other address, and to the attention of such other officers or
persons as each of the parties hereto may specify by notice in writing to the
other.
8.2 All notices, requests, demands, and other communications given or
made in accordance with the provisions of this Agreement shall be in writing
and by certified or registered mail, and if received shall be deemed to have
been given when deposited in the United States mail, postage prepaid.
Article 9 - Termination
- --------------------------
9.1 In the event Agri shall commit a material breach of any material
term, provision or condition of this Agreement, this Technology Transfer and
License Agreement shall be terminable upon ninety (90) days written notice by
Ralston to Agri. Such termination shall become effective unless: (i) within
that ninety (90) day period Agri has initiated and is taking reasonable
measures to remedy such breach to the reasonable satisfaction of Ralston; and
(ii) such breach has been remedied to the reasonable satisfaction of Ralston
within one hundred eighty (180) days following such notice. This Technology
Transfer and License Agreement shall also be terminable by Ralston upon ninety
(90) days written notice by Ralston to Agri in the event Agri Products
attempts or seeks to assign, convey and/or transfer all or any part of this
Technology Transfer and License Agreement in any way or manner other than as
provided in Article 7 above. Any termination shall not prejudice any cause of
action or claims of Ralston accrued or to accrue on account of any material
breach or default by Agri.
9.2 Agri acknowledges and agrees that it will immediately terminate
any and all permitted sub-license agreements under this Agreement in the event
any such sub-licensee materially breaches any such sub-license agreement
including, but not limited to, the terms or provisions requiring that such
sub-licensee be bound by and comply with the terms and provisions of Article 5
herein, and fails to cure any such breach, if curable, within thirty (30) days
after said breach. Each sub-license agreement shall permit such termination.
Article 10 - Miscellaneous Provisions
- -----------------------------------------
10.1 Technical Services Agreements. Agri understands, acknowledges
------------------------------
and agrees that any and all licenses and/or technical service agreements
previously entered into between Ralston and/or Ralston International Service
Corporation, on the one hand, and the Agri Business, on the other, shall be,
at a minimum, amended to conform to be consistent with the terms, provisions
and conditions of this Agreement. In the event any of the terms, provisions
and conditions of any licenses and/or technical service agreements previously
entered into between Ralston and/or Ralston International Service Corporation,
on the one hand, and the Agri Business, on the other, differ in any manner
whatsoever, the terms, provisions and conditions of this Agreement shall
govern.
10.2 RALSTON and Ralston International Service Corporation "RISCO".
-------------------------------------------------------------
Agri understands, acknowledges and agrees that because Ralston International
Service Corporation ("RISCO") will become an Affiliate of Agri in accordance
with the terms and provisions of the Reorganization Agreement, any and all
license agreements, technical service agreements, and/or the like, which were
entered into between Ralston and RISCO prior to the Effective Date, which
granted RISCO any license rights to RISCO, or which otherwise permitted or
allowed RISCO, to use or in any way employ any Expressly Excluded Technology,
such rights, permissions and/or allowances are hereby terminated.
10.3 Legal Enforceability. Any provision of this Agreement which is
--------------------
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, deemed automatically amended so that it is enforceable to the
maximum extent permissible under the laws of that jurisdiction without
invalidating the remaining provisions hereof. Any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. Each party
acknowledges that money damages would be an inadequate remedy for any breach
of the provisions of this Agreement and agrees that the obligations of the
parties hereunder shall be specifically enforceable.
10.4 The waiver of any breach or non-enforcement of any provision of
this Agreement shall not be a waiver of future compliance or a waiver to the
provisions hereof.
10.5 Dispute Resolution.
-------------------
(a) If any question or dispute shall arise in regard to: (i) the
interpretation of any provision of this Agreement; or (ii) the rights or
obligations of either party hereunder; or (iii) in the event any dispute(s)
shall arise between the parties hereto which otherwise relate to or arise
under this Agreement, whether based on contract, tort, statute or otherwise,
(hereinafter collectively "Disputes"), such questions and disputes shall, in
the first instance, be exclusively governed by and settled in accordance with
the provisions of this Section 10.5; provided, that the foregoing shall not
preclude equitable or other judicial relief to enforce the provisions hereof
or to preserve the status quo pending resolution of Disputes hereunder.
Either party to this Agreement (each a "Party" and together the "Parties") may
commence proceedings hereunder by delivery of written notice providing a
reasonable description of the Dispute to the other, including a reference to
this Section 10.5 (the "Dispute Notice").
(b) Negotiations Between Executives. The Parties shall first attempt
-------------------------------
in good faith to resolve promptly any Dispute by negotiations between
executives who are not directly involved in the Dispute, and who have
authority to settle it (as to each Party, an "Executive"). Not later than
twenty (20) days after delivery of the Dispute Notice, each Party shall
designate an Executive to meet with the other Party's Executive at a
reasonably acceptable place within thirty (30) days after the Dispute Notice,
and thereafter as such Executives deem reasonably necessary. The Executives
shall exchange relevant information and endeavor to resolve the Dispute.
Prior to any such meeting, each Party's Executive shall advise the other as to
any other individuals who will attend such meeting. All negotiations pursuant
to this Section 10.5(b) shall be confidential and shall be treated as
settlement and compromise negotiations for purposes of Rule 408 of the Federal
Rules of Evidence and similarly under other federal and state rules of
evidence. Such Executives may, if they so desire, consult outside advisors
for assistance in arriving at such a resolution.
(c) In the event that a resolution is not achieved within sixty (60)
days following the initial meeting between the Executives, then the parties
may agree to seek other legal means of resolving such Dispute, including, but
not limited to, mediation and/or binding or non-binding arbitration, as the
parties may agree upon. If the parties cannot so agree, they shall be free to
seek and/or avail themselves of any other available remedies.
10.6 This Agreement is deemed to be entered into, executed and
delivered within the State of Missouri, and it is the intention of the parties
that it shall be construed, interpreted and applied in accordance with the
laws of the State of Missouri without regard to its conflict of laws
provisions.
10.7 Ralston and Agri hereby agree that any and all disputes, causes
of action, lawsuits, or the like, arising out of and/or under this Agreement,
except for the Dispute Resolution procedures set forth in Section 10.5 above,
shall be brought only in a state court located in St. Louis, Missouri, or the
United States District Court for the Eastern District of Missouri. Ralston
and Agri each hereby consent and submit to the exclusive jurisdiction of any
such court and waives any objection it may have to either jurisdiction or
venue in any such court.
10.8 To the extent that Agri determines that it requires replacement
parts for the X4X or X4 extruders referenced in Section 1.19 above, and only
to the extent that Ralston is then producing such replacement part, Ralston
agrees to supply such replacement parts to Agri on reasonable commercial
terms.
10.9 Ralston and Agri agree and understand that this Agreement does
not create an employment, partnership, joint venture or agency relationship,
of any kind or nature, between the parties. Neither party shall have any
right, power, or authority to act as a legal representative of the other, and
neither party shall have any power to obligate or bind the other, or to make
any representations, warranties, express or implied, on behalf of or in the
name of the other in any manner for any purpose whatsoever.
10.10 The headings used in this Agreement are for reference only and
shall not be relied upon or used in the interpretation of this Agreement.
10.11 Notwithstanding anything to the contrary in this Agreement,
neither the execution of this Agreement nor the disclosure of any Proprietary
Information hereunder shall be construed as granting to Ralston either a
license (expressly, or by implication, estoppel, or otherwise) under, or any
right of ownership in, any information, patent, or patent application now or
hereafter owned or controlled by Agri.
10.12 This Agreement may be amended, modified or supplemented, or
rights, powers or options hereunder waived or impaired, only by a written
agreement signed by a corporate officer of Ralston and Agri attested by their
respective corporate secretaries. Neither party shall be deemed to have
waived or impaired any right, power or option created or reserved by this
Agreement (including, without limitation, each party's right to demand
compliance with every term herein, or to declare any breach or default and
exercise its rights in accordance with the terms hereof) by virtue of: (i) any
custom or practice of the parties at variance with the terms hereof; (ii) any
failure, refusal or neglect to exercise any right hereunder, or to insist upon
compliance with any term; (iii) any waiver, forbearance, delay, failure or
omission to exercise any right or option, whether of the same, similar or
different natures, under this Agreement or in any other circumstances; or (iv)
the acceptance by either party of any payment or other consideration from the
other following any breach of this Agreement . The rights and remedies set
forth in this Agreement are in addition to any other rights or remedies which
may be granted by law.
10.13. The parties agree not to do indirectly through, for example,
their Affiliates, anything they are not allowed to do directly or indirectly
under this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed in duplicate by their respective duly authorized representatives
effective on the day and year set forth in this Agreement.
RALSTON PURINA COMPANY
By: /s/ James R. Elsesser
------------------------------
Printed Name: James R. Elsesser
-------------------------
Title: Vice President and Chief Financial Officer
------------------------------------------
Date: April 1, 1998
---------------------------
AGRIBRANDS INTERNATIONAL, INC.
By: /s/ Michael J. Costello
----------------------------------
Printed Name: Michael J. Costello
-----------------------------
Title: General Counsel
--------------------------------
Date: April 1, 1998
---------------------------------
51
TRADEMARK AGREEMENT
-------------------
THIS TRADEMARK AGREEMENT dated as of the first day of April, 1998 is by and
between RALSTON PURINA COMPANY, a corporation organized under the laws of the
state of Missouri, having its principal office at Checkerboard Square, St.
Louis, Missouri 63164 (hereinafter "RPCo.") and AGRIBRANDS INTERNATIONAL,
INC., a corporation organized under the laws of the state of Missouri having
its principal office at 9811 South Forty Drive, St. Louis, Missouri 63124
(hereinafter "Agribrands").
WITNESSETH:
-----------
WHEREAS, the parties have entered into an Agreement And Plan Of Reorganization
of even date herewith; and
WHEREAS, pursuant to said Agreement And Plan Of Reorganization, the parties
have agreed to transfer certain trademarks and other intellectual-property
assets to Agribrands or one or more of its subsidiaries and to license other
such assets to Agribrands, and/or one or more of such subsidiaries;
NOW, THEREFORE, in consideration of the mutual covenants herein contained and
for other good and valuable consideration, the parties agree as follows:
1. Definitions
-----------
(a.) Affiliates
----------
Hereunder, an "Affiliate" of, or person "Affiliated" with, a specified
person, is a person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with
the person specified.
<PAGE>
(b.) Agri Business
--------------
Hereunder, "Agri Business" shall mean a business or portion of a business
devoted directly and specifically to the care and nutrition of horses
(whether or not agricultural), laboratory or zoo animals (but not including
pet products sold to such institutions) and agricultural animals (whether
terrestrial, aquatic or aviary), including by way of illustration, but not
limitation, commercial livestock; commercial poultry; fish, reptiles or
shellfish raised in commercial aquaculture facilities; rabbits raised for
commercial purposes; animals raised for fur; wild or game birds; and services
for the care and feeding of such animals.
(c.) Closing
-------
Hereunder, "Closing" shall have the same meaning as Distribution Date in
the Agreement and Plan of Reorganization.
(c-1) Group
-----
Hereunder, "Group" shall mean Oldco or Newco.
(d.) Newco
-----
Hereunder, "Newco" shall mean Agribrands and any and all subsidiaries or
controlled affiliates of Agribrands . "Newco" shall not, however, include
Ralston Purina Company (hereinafter RPCo.) and any of its affiliates whose
shares will be owned, whether directly or indirectly, by RPCo. following
Closing.
<PAGE>
(e.) Newco Territory
----------------
Hereunder, "Newco Territory" shall mean all jurisdictions outside The
United States of America, its territories, possessions and facilities of its
armed forces. "Newco Territory" shall, however, include Puerto Rico.
(f.) Oldco
-----
Hereunder, "Oldco" shall mean RPCo. and any and all of its affiliates
whose shares it will directly or indirectly own following Closing.
(g.) Trademarks
----------
Hereunder, "Trademark" shall include trademarks, service marks, trade dress,
and copyrights; however, "trademark" shall mean only a word, symbol or device
registrable as a trademark or service mark.
(h.) Trade Names
------------
Hereunder, "trade name" shall mean corporate name and/or other business
name including, but not limited to, names of corporations, partnerships and
joint ventures.
(i.) Oldco Territory
----------------
Hereunder, "Oldco Territory" shall mean any and all jurisdictions and
geographical areas outside the Newco Territory.
<PAGE>
2. Trademarks
----------
(a.) Assignments
-----------
(i.) At Closing, or at such date or dates thereafter as Newco may elect,
Oldco will assign to Newco, all of Oldco's rights in the Newco Territory in
Trademarks which are exclusively associated with RPCo.'s and its Affiliates'
Agri Business. Registrations and applications to register trademarks to be so
assigned are listed on Schedule 2(a) (i). Oldco will also assign to Newco its
rights in certain other trademarks which are also listed on Schedule 2 (a)
(i).
(ii.) Except for marks listed on Schedule 2(a) (i), at Closing or at such
other date or dates as Oldco may elect, Newco will assign to Oldco all of
Newco's rights in Trademarks which are exclusively associated with businesses
other than Agri Businesses. Registrations and applications to register
trademarks to be so assigned are listed in Schedule 2(a)(ii).
(iii.) Anything in this Trademark Agreement to the contrary
notwithstanding, Oldco will not assign to Newco any Trademark consisting of or
containing the words PURINA, RALSTON, CHOW, CHECKERBOARD, DAMIER or other word
meaning "Checkerboard", the 9-Square or other Checkerboard designs, or any
Trademark consisting of or containing any Trademark now owned by any non-Agri
Business subsidiary or affiliate of RPCo or any Trademarks confusingly similar
to any of the Trademarks enumerated in this Subparagraph 2 (a) (iii). To the
extent any such Trademark is currently owned by Newco, it will be assigned to
Oldco or cancelled on or before Closing.
(iv.) All assignments contemplated by this Trademark Agreement will be on
a quitclaim basis. The assignee will assume all limitations, undertakings and
liabilities related to such assigned Trademarks, including, but not limited
to, limitations in contracts relating to such Trademarks entered into by the
assignor and binding upon its successors and/or assigns.
(v.) With respect to Trademarks to be assigned from RPCo. to Agribrands
hereunder, RPCo. will deliver to Agribrands at Closing, a beneficial,
multi-country assignment of such Trademarks. RPCo. shall promptly execute
and return to Agribrands one or more country-specific assignments of such
Trademarks prepared by Agribrands and delivered to RPCo. for such purpose.
(vi.) With respect to Trademarks to be assigned from an Affiliate of
Agribrands to RPCo. or to an Affiliate of RPCo., or from an Affiliate of RPCo.
to Agribrands or to an Affiliate of Agribrands pursuant to this Trademark
Agreement; the Assignor of any such Trademarks shall promptly execute and
return to the assignee one or more country-specific assignments of such
Trademarks, prepared by the assignee and delivered to the assignor for such
purpose.
(vii.) Trademarks which are obligated to be assigned hereunder, but which
are not assigned at Closing, will be maintained by their putative assignor for
the benefit of the person to whom they are obligated to be assigned as such
person shall direct; however, the putative assignee shall reimburse the
putative assignor for all out-of-pocket expenses incurred for such
maintenance.
(viii.) If for any reason a Trademark otherwise required to be assigned to
Newco in the Agri-Business field cannot be assigned without also assigning
rights used in or associated with Oldco-related businesses, such Trademark
shall not be assigned; however, to the extent feasible, Oldco shall add such
Trademarks to the License Agreement referred to in Subparagraph 2(b)
hereinbelow.
(b.) License Agreement
------------------
(i.) At Closing, the parties will execute the Trademark License Agreement
in Schedule 2(b) (i) attached hereto and incorporated by reference herein.
(ii) The parties agree to enter into or to cause to be entered into such
country-specific licenses or sublicenses, consistent with the Trademark
License Agreement, as may be reasonably required to record Newco's or its
sublicensees status as licensee or sublicensee.
(c.) Cost of Recordation
---------------------
Except as provided in Subparagraph 2(a) (vii) hereinabove, Oldco will pay
the first $200,000 of expenses incurred to prepare and record assignments and
licenses contemplated by this Trademark Agreement. All expenses incurred for
such purpose beyond the first $200,000 will be incurred by Newco. Such
expenses shall include, but not be limited to, taxes, attorneys' or agents'
fees, governmental filing fees and costs of notarizing and legalizing
documents.
3. RALSTON and PURINA Trademarks
--------------------------------
(a.) Anything in this Trademark Agreement to the contrary notwithstanding,
and without limitation as to duration or territory, Newco agrees not to use or
register the word RALSTON or word or phrase confusingly similar thereto as or
in a trademark or trade name, in connection with any product, service or
activity.
(b.) Anything in this Trademark Agreement to the contrary notwithstanding,
Newco agrees not to use the word PURINA or any Trademark licensed under the
License Agreement or word or phrase confusingly similar thereto, as or in the
trade name of any publicly traded company without limitation as to duration or
territory.
4. Third-Party Agreements
-----------------------
To the extent assignable without third-party consent and, if not, to the
extent such consents are obtained; at Closing, license agreements and other
contracts between RPCo. and unaffiliated third parties to the extent related
to the rights in Trademarks to be assigned to Newco hereunder will be assigned
from RPCo. to Newco. Newco agrees to assume RPCo's obligations under such
agreements. RPCo. will not, however, assign or cause to be assigned to any
Newco entity, any license or other contract to which an Oldco Affiliate of
RPCo. is a party or has an interest.
5. Newco Phase-Out of Retained Marks
-------------------------------------
Newco agrees to remove all Oldco Trademarks not assigned or licensed to Newco
from Newco's labels, packaging, advertising, signs and other materials within
six (6) months following Closing. Oldco agrees to remove all trademarks
assigned to Newco, and to the extent exclusively licensed to Newco, from
Oldco's labels, packaging, advertising, signs and other materials within the
same six-(6-) month period.
6. Heritage
--------
Oldco , and Newco subject to the rights of Purina Mills, Inc. and any of its
successors and assigns, as interpreted by Oldco, will each be allowed to
refer to its pre-spin-off heritage in good faith in truthful articles,
histories and the like to the extent such use does not express or imply a
continuing relationship between Oldco and Newco.
7. Protein Products
-----------------
For purposes of this Agreement, none of the business of Protein Technologies
International Holdings, Inc. and its subsidiaries as of December 1, 1997
shall be considered an Agri Business.
<PAGE>
8. Good Faith
-----------
The parties agree not to do indirectly, through subsidiaries, Affiliates or
otherwise, what they could not do directly under this Trademark Agreement.
9. Scope and Modification
------------------------
This Trademark Agreement, including its schedules, sets forth the entire
agreement between the parties and supersedes all prior agreements and
understandings between the parties relating to the subject matter hereof.
None of the terms of this Trademark Agreement may be waived or modified except
as expressly agreed to, in writing, by both parties.
10. "Country Roads" and French Equivalent Trademarks
----------------------------------------------------
Oldco agrees to file papers to cancel its Canadian registrations consisting of
or containing "Country Roads" or "Tradition Ralston" within fifteen (15)
working days following a request from Newco to do so.
11. Purina Mills Limitation
-------------------------
Anything in this Agreement or any of its schedules to the contrary not
- -withstanding, Newco shall enjoy no rights inconsistent with those licensed to
Purina Mills, Inc. in its agreement with RPCo. dated October 1, 1986.
12. Successors and Assigns
------------------------
This Trademark Agreement shall be binding upon and inure to the benefit of the
parties and each of their respective successors and assigns. Nothing in this
Paragraph 12 shall, however, affect transferability under the Trademark
License Agreement referred to in Subparagraph 2 (b) (i) which shall be
governed by the terms of such agreement.
13. Interpretation
--------------
The section headings contained in this Trademark Agreement are solely for the
purpose of reference, are not part of the agreement of the parties hereto, and
shall not in any way affect the meaning or interpretation of this Trademark
Agreement.
14. Counterparts
------------
This Trademark Agreement may be executed in two or more counterparts, each of
which may be deemed an original, but all of which together shall constitute
one and the same instrument.
15. Governing Law
--------------
This Agreement is made and entered into, and shall be governed by and
construed and interpreted in accordance with the laws of, the State of
Missouri, United States of America, without regard to its conflicts of laws
principles, as to all matters, including those relating to the validity,
construction, performance, effect and remedies under this Trademark Agreement.
All matters relating to this Agreement shall, subject to the provisions of
Paragraph 17 hereinbelow, be adjudicated exclusively in the courts of the
State of Missouri located in St. Louis, Missouri, or within the United States
District Court for the Eastern District of Missouri; and each party hereby
consents to the exclusive jurisdiction and venue of such courts for all such
matters.
16. Amendment and Modification; Non-Waiver
-----------------------------------------
This Trademark Agreement may be amended, modified or supplemented, or rights,
powers or options hereunder waived or impaired, only by a written agreement
signed by a corporate officer of RPCo. and Agribrands and attested by their
respective corporate secretaries. Neither party shall be deemed to have
waived or impaired any right, power or option created or reserved by this
Trademark Agreement (including without limitation, each party's right to
demand compliance with every term herein, or to declare any breach a default
and exercise its rights in accordance with the terms hereof) by virtue of:
(I) any custom or practice of the parties at variance with the terms hereof;
(ii) any failure, refusal or neglect to exercise any right hereunder, or to
insist upon compliance with any term; (iii) any waiver, forbearance, delay,
failure or omission to exercise any right or option, whether of the same,
similar or different natures, under this Trademark Agreement or in any other
circumstances; or (iv) the acceptance by either party of any payment or other
consideration from the other following any breach of this Trademark Agreement.
The rights and remedies set forth in this Trademark Agreement are in addition
to any other rights or remedies which may be granted by law.
17. Negotiation
-----------
If any question shall arise in regard to (a) the interpretation of any
provision of this Trademark Agreement or (b) the rights or obligations of
either Group hereunder or thereunder, each Group shall designate a senior
executive within its organization who shall, within thirty (30) days after
such question arises, meet with the designated executive of the other Group to
negotiate and attempt to resolve such question in good faith. Such senior
executives may, if they so desire, consult outside advisors for assistance in
arriving at such a resolution. In the event that a resolution is not achieved
within sixty (60) days following such initial meeting, then the parties may
seek other legal means of resolving such question, including but not limited
to binding or non-binding arbitration.
18. Additional Documents
---------------------
The parties agree to execute or cause to be executed such additional documents
as may be reasonably required to give effect to their undertakings in this
Trademark Agreement.
19. SITIOS E QUINTAIS
- --- -------------------
The trademark SITIOS E QUINTAIS will be assigned to NEWCO hereunder;
however, NEWCO undertakes not to use, license third parties to use,
otherwise transfer rights to use, or object to NEWCO's use, of such mark
on or in connection with any dog food and/or cat food, unless provided to
NEWCO by OLDCO, during the term of the non-competition provision in
Section 5.01(a) of the Agreement and Plan of Reorganization referred to
hereinabove.
IN WITNESS WHEREOF, the parties hereto have executed this Trademark Agreement
as of the date first above written.
RALSTON PURINA COMPANY AGRIBRANDS INTERNATIONAL, INC.
By: /s/ James R. Elsesser By: /s/ David R. Wenzel
------------------------------ -------------------------
Name: James R. Elsesser Name: David R. Wenzel
----------------------- -----------------
Title: Vice President and Chief Title: Chief Financial Officer
---------------------------
Financial Officer
--------------------
<PAGE>
TRADEMARK LICENSE AGREEMENT
---------------------------
This TRADEMARK LICENSE AGREEMENT is effective as of this first day of
April, 1998, by and between RALSTON PURINA COMPANY, a Missouri corporation
having an office at Checkerboard Square, St. Louis, Missouri 63164, U.S.A.
(hereinafter referred to as "LICENSOR"), and, AGRIBRANDS INTERNATIONAL, INC.,
a Missouri corporation having an office at 9811 South Forty Drive, St. Louis,
Missouri 63124, U.S.A. (hereinafter referred to as "LICENSEE").
WHEREAS, LICENSOR is record owner of many registrations and applications
to register various trademarks consisting of or containing the words "PURINA,"
"CHOW," "Checkerboard," Checkerboard designs, and variations on such marks,
including, but not limited to, the registrations shown on Schedule A, some or
all of which are used in connection with Licensed Products; and
WHEREAS, LICENSEE desires to use the trademarks listed in Schedule A in
connection with the manufacture, distribution, sale and advertising of
Licensed Products as hereinafter defined in the corresponding countries and
jurisdictions as listed in said Schedule A; and
WHEREAS, LICENSEE also desires to use the trademarks shown on Schedule A
in connection with Licensed Products in new jurisdictions into which LICENSEE
may expand its business beyond the Territory as hereinafter defined; and
WHEREAS, LICENSOR is willing to grant LICENSEE a license to use the
aforementioned trademarks on Licensed Products under the terms and conditions
of this Trademark License Agreement;
NOW, THEREFORE, in consideration of the mutual promises hereafter set
forth and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:
1. DEFINITIONS: The following terms shall have the following meanings:
-----------
(a) "Affiliates" shall mean a person that directly, or indirectly through
one or more intermediaries, controls or is controlled by, or is under common
control with the person specified.
(b) "Agricultural" shall mean for a purpose primarily connected to (i) the
raising of livestock or poultry for the production of meat, milk, eggs, fur or
skin; or as beasts of burden; (ii) the cultivation of soil; or (iii) the
harvesting of crops.
(c) "Effective Date" shall mean the date in lines 2 and 3 of this
Trademark License Agreement.
(d) "Licensed Marks" shall mean those trademarks or service marks shown in
Schedule A together with such trademarks as may be added from time to time as
provided for in this Trademark License Agreement or as agreed to in writing
between LICENSOR and LICENSEE and to which the terms and conditions of this
Trademark License Agreement shall thereafter apply. Any one of the Licensed
Marks shall be referred to in this Trademark License Agreement as a "Licensed
Mark."
(e) "Licensed Products" shall, except as limited elsewhere in this
Agreement, mean all products formulated to provide nourishment to or care of
horses (whether or not agricultural), laboratory or zoo animals (but not
including Pet Products sold to such institutions) and agricultural animals
(whether terrestrial, aquatic or aviary), including by way of illustration,
but not limitation, commercial livestock; commercial poultry; fish, reptiles
or shellfish raised in commercial aquaculture facilities; rabbits raised for
commercial purposes; animals raised for fur; wild or game birds; and services
for the care and feeding of such animals. Except as limited elsewhere in this
Trademark License Agreement, Licensed Products also include accessories,
health products and services for the care and feeding of horses, zoo animals,
laboratory animals and agricultural animals and by way of illustration, but
not limitation, the following equipment, products and services for use for
agricultural purposes:
(i) products and services for breeding, feeding, health care, shelter,
control and transportation of agricultural animals;
(ii) products and services for extraction, collection, processing,
packaging, storage of agricultural animal products and agricultural animal
wastes;
(iii) products and services for genetic research and development,
hybridization and seed production, soil analysis, planting, propagation,
cultivating, harvesting, treatment and storage of agricultural products;
(iv) agricultural genetic and chromosomal material and other products of
biotechnology, biology and other sciences, plant tissue cultures, pure line
seeds, planting seeds;
(v) agricultural pharmaceuticals, antibiotics, wormers, fertilizers,
pesticides, herbicides, insecticides, rodenticides, fungicides;
(vi) agricultural feeders, waterers, agricultural animal semen, embryos,
live agricultural animals, larvae, non-pet veterinary instruments, cleaners,
cultivation equipment, aquaculture, hydroponic and greenhouse equipment,
irrigators, heaters, harvesters, fruit pickers, driers, trailers, silos,
marking devices, bedding, tanks, paints, pens, fencing, groomers, cages,
saddles, tack, milk handling equipment, transporters, manure collecting and
processing equipment;
(vii) products and services related to the provision of methods, systems
and techniques for the development, production, application and utilization of
the products described above, such as farm and agricultural management
services, farm and agricultural computer programs and software, farm and
agricultural financial services, soil analysis, non-pet related veterinary
services; sale, leasing and brokerage services for agricultural land and
equipment; distributing, wholesaling and retailing Licensed Products;
(viii) publications directly related to agriculture or agricultural
animals;
(ix) agricultural animal end-use products (e.g., hams, cheese, eggs) other
than products for pets.;
(x) Licensed Products are not limited to products in existence at the date
hereof but will include products not yet invented or commercialized which fall
within the above definition; however, except for products and services for
horses, a product or service shall not be considered a Licensed Product if it
is not primarily related to agriculture or for agricultural animals,
laboratory or zoo animals. Licensed Products shall not include any "Pet
Products" or any other products or services not included in this definition of
Licensed Products. Licensed Products shall also exclude feed rations for the
purpose of fattening dogs for human consumption. Any one of the Licensed
Products shall be referred to in this Trademark License Agreement as a
"Licensed Product."
(f) "Other Products" shall mean products other than Licensed Products upon
which LICENSEE may use the Licensed Marks pursuant to this Trademark License
Agreement. Any one of the Other Products shall be referred to in this
Trademark License Agreement as an "Other Product."
(g) "Person" shall mean a juristic person as well as a natural person.
The term "juristic person" includes a firm, corporation, union, association,
joint venture, partnership or other organization capable of being sued.
(h) "Pet Products" shall mean products for and services related to the
nourishment or care of pets other than horses, including by way of
illustration, but not limitation, dogs, cats and other small pet animals such
as birds, reptiles, guinea pigs, white mice, and ornamental fish. Pet
Products include, but are not limited to, pet and pet-related food, pet
snacks, nutritional products, accessories, care and/or health products and
services for the care and feeding of pets. Pet accessories, pet-care and/or
pet health products include, but are not limited to, pet and pet-related
litter, rawhides, bedding, vitamins/minerals, flea and tick-control products,
shampoos and grooming accessories, bird food (but not wild-bird or game-bird
food), leashes, collars, toys and other accessories (e.g. aquarium
accessories). Pet Products also include pet and pet-related products for
purchase or use by breeders, small-animal veterinarians, police, military or
guard-dog forces and zoos. Pet Products also include any food for dogs or
cats other than food formulated specifically for laboratory dogs or laboratory
cats. Any one of the Pet Products shall be referred to in this Trademark
License Agreement as a "Pet Product."
(i) "Principal Competitor" shall mean a person which has, or has an
affiliate which has, ten percent (10%) or more of dollar sales volume or
dollar market share as measured by A. C. Nielsen, Euromonitor, or other
generally recognized data research company (or, in the event such data is not
available, then as reasonably determined by LICENSOR) in any country in any of
the following product categories: dog food, cat food, pet litter, pet
snacks, or any other product manufactured or sold by LICENSOR or one or more
of LICENSOR's Affiliates. Notwithstanding the foregoing, "Principal
Competitors" also shall include, but not be limited to, Nestle, Mars, Heinz,
Iams, Colgate-Palmolive and/or Hill's Pet Nutrition, Doanes, Nutro, Dalgety,
Cargill, Royal Canin, Greens, and any of their Affiliates.
(j) Except as limited by Subparagraph 2 (a) hereinbelow, the "Territory"
with respect to a given mark or marks shall be the jurisdiction indicated with
respect to such mark or marks on Schedule A. The Territory may be expanded to
include additional jurisdictions pursuant to Subparagraph 2(h) hereinbelow.
In no event shall the "Territory" include the United States of America, its
territories, possessions (other than Puerto Rico) and facilities of its armed
forces. Despite the foregoing, the "Territory" shall include Puerto Rico as a
jurisdiction which may be added to this Agreement pursuant to Paragraph 2(h)
hereinbelow.
(k) "Third-Party Licenses" shall mean licenses with persons which are not
LICENSOR's or LICENSEE's Affiliates.
(l) "Trade Name" shall mean corporate name and/or other business name
including, but not limited to, names of partnerships and joint ventures.
(m) "Licensed Trade Name" is a Trade Name consisting of or containing one
or more Licensed Marks.
(n) "Trademark" shall include trademarks, service marks, trade dress and
copyrights; however, "trademark" shall mean only a word, symbol or device
registrable as a trademark or service mark.
2. GRANT OF RIGHTS
-----------------
Except to the extent previously licensed to Purina Mills, Inc and except
as provided elsewhere in this Trademark License Agreement:
(a) LICENSOR hereby grants to LICENSEE the exclusive license to use in the
- --- ----------------------------------------------------------------------
Territory the Licensed Marks on or in connection with the Licensed Products
- ------------------------------------------------------------------------------
subject to the terms and conditions of this Agreement. Except as provided for
- ------------------------------------------------------------------------------
in Subparagraph 2(h), hereinbelow, the license granted hereunder shall be
- ------------------------------------------------------------------------------
limited to products manufactured or services rendered by LICENSEE or an
- ------------------------------------------------------------------------------
Affiliate of LICENSEE on the Effective Date and shall be further limited to
- ------------------------------------------------------------------------------
the jurisdictions in which such products were then sold or services then
- ------------------------------------------------------------------------------
rendered. LICENSOR shall not use nor permit any of LICENSOR's Affiliates to
- ------------------------------------------------------------------------------
use in the Territory any Licensed Mark or any mark confusingly similar thereto
- ------------------------------------------------------------------------------
on or in connection with any Licensed Product nor shall, except as
- -----------------------------------------------------------------------------
specifically provided for in agreements listed in Schedule B, LICENSOR license
- ------------------------------------------------------------------------------
any other Person to do so anywhere in the world. Such prohibition shall
- ------------------------------------------------------------------------------
extend to the use of the term "Purina" and other Licensed Marks as all or part
- ------------------------------------------------------------------------------
of the Trade Name of any business engaged in the manufacture, distribution or
- ------------------------------------------------------------------------------
sale of Licensed Products. LICENSEE agrees, however, without limitation as to
- ------------------------------------------------------------------------------
products, territory or duration, not to object to the inclusion of "Purina" in
- ------------------------------------------------------------------------------
LICENSOR's Trade Name in any good-faith reference to any business operated as
- ------------------------------------------------------------------------------
an Affiliate whose name does not include "Purina." Such undertaking also
- ------------------------------------------------------------------------------
extends to Affiliates LICENSOR may hereafter establish or acquire. LICENSOR
- ------------------------------------------------------------------------------
and LICENSEE shall each have the non-exclusive right to use the Licensed Marks
- ------------------------------------------------------------------------------
for publications such as educational, training, advertising and promotional
- ------------------------------------------------------------------------------
material, stock certificates and annual reports relating to the respective
- ------------------------------------------------------------------------------
businesses they are permitted to conduct under Licensed Marks. Except as
- ------------------------------------------------------------------------------
provided in Subparagraph 2 (b) hereinbelow, if LICENSOR or Affiliate of
- ------------------------------------------------------------------------------
LICENSOR manufactures or sells any Licensed Product in the Territory, it shall
- ------------------------------------------------------------------------------
conduct its business with respect to such Licensed Product under a Trade Name
- ------------------------------------------------------------------------------
which does not include the term "Purina" or any other Licensed Mark or any
- ------------------------------------------------------------------------------
other Trade Name or designation confusingly similar to "Purina" or other
- ------------------------------------------------------------------------------
Licensed Mark. LICENSOR shall, however, have the right to refer to its
- ------------------------------------------------------------------------------
ownership of such business in its annual reports and in other contexts in
- ------------------------------------------------------------------------------
which it is appropriate to impart information about such ownership. The
- ------------------------------------------------------------------------------
exclusivity of the license granted by this Trademark License Agreement shall
- ------------------------------------------------------------------------------
not, however, preclude LICENSOR's use (either by itself or through Affiliates
- ------------------------------------------------------------------------------
or other licensees) of any of the Licensed Marks in the Territory or elsewhere
- ------------------------------------------------------------------------------
with respect to products and/or services other than the Licensed Products.
- ------------------------------------------------------------------------------
Notwithstanding any other provision of this Trademark License Agreement,
- ------------------------------------------------------------------------------
LICENSEE shall be permitted to use in the Territory a Licensed Trade Name in
- ------------------------------------------------------------------------------
connection with the production, distribution and sale of those dog- and
- ------------------------------------------------------------------------------
cat-food products described in Section 5.01 of the Reorganization Agreement
- ------------------------------------------------------------------------------
between the parties, dated as of April 1, 1998, in the Agricultural Channel as
- ------------------------------------------------------------------------------
described therein, which description shall apply during the entire term of
- ------------------------------------------------------------------------------
this Trademark License Agreement; provided however, that such dog- and
- ------------------------------------------------------------------------------
cat-food products (i) shall not display, accompany or otherwise be connected
- ------------------------------------------------------------------------------
with any of the Licensed Marks; (ii) shall be sold only under and in
- ------------------------------------------------------------------------------
connection with trademarks wholly owned by LICENSEE; and (iii) shall be sold
- ------------------------------------------------------------------------------
only in jurisdictions where LICENSEE or LICENSEE's affiliates or sublicensees
- ------------------------------------------------------------------------------
are required by law to include the product manufacturer's full and true
- ------------------------------------------------------------------------------
corporate name on the package, and alternatives thereto (including, but not
- ------------------------------------------------------------------------------
limited to, the use of names of an Affiliate, a fictitious name or an
- ------------------------------------------------------------------------------
abbreviation) are not permitted. LICENSEE shall not be required to form a
- ------------------------------------------------------------------------------
separate subsidiary in order to comply with the provisions of this paragraph
- ------------------------------------------------------------------------------
if to do so would be unlawful or unduly burdensome. The use of Licensed Trade
- ------------------------------------------------------------------------------
Names as permitted by this Subparagraph 2 (a) shall not go beyond their
- ------------------------------------------------------------------------------
appearance on the side panel of packaging, and shall be set forth in the
- ------------------------------------------------------------------------------
smallest typeface legally permissible. The limitations contained in this
- ------------------------------------------------------------------------------
Subparagraph 2 (a) shall not be construed to prevent LICENSEE from selling the
- ------------------------------------------------------------------------------
dog- and cat-food products described in Section 5.01 of the Reorganization
- ------------------------------------------------------------------------------
Agreement through the Agricultural Channel as defined therein, which Channel
- ------------------------------------------------------------------------------
may involve the display of Licensed Marks on (for example) buildings,
- ------------------------------------------------------------------------------
vehicles, stationery and billing documents; provided however, that LICENSEE
- ------------------------------------------------------------------------------
shall at all times endeavor in good faith to prevent any association of
- ------------------------------------------------------------------------------
Licensee's products with those of LICENSOR, or any of LICENSOR's Affiliates,
- ------------------------------------------------------------------------------
distributors, customers or other licensees.
- -----------------------------------------------
(b) Where legally feasible, and subject to the terms and conditions of
this Trademark License Agreement, LICENSEE shall have the right to use
"Purina" in its Affiliates' Trade Names in the Territory provided such Trade
Names include wording reflecting the agricultural- or aquacultural-related
nature of the business of the entity concerned, namely "Agribrands Purina" or
such other wording as LICENSOR and LICENSEE shall agree upon, and provided the
use of such wording is not likely to cause confusion with a product, service
or business of LICENSOR, or any third party because such name is similar
(apart from the common inclusion of the word "Purina") to a name or mark owned
or used by LICENSOR or any third party at the time of the adoption of the name
by LICENSEE or its Affiliates.
(c) Except as specifically provided elsewhere in this Trademark License
Agreement, LICENSEE shall not use "Purina" or any other Licensed Mark, or term
confusingly similar thereto, as a trademark for, or Trade Name associated
with, any product or service other than a Licensed Product. If LICENSEE
manufactures or sells any other product or renders any other service, it shall
conduct its business with respect to such product or service not licensed to
it hereunder under a Trade Name which does not include the word "Purina" or
any other Licensed Mark, abbreviation thereof or term otherwise confusingly
similar thereto. LICENSEE shall, however, have the right to refer to its
ownership of such business in its annual reports and other contexts in which
it is appropriate to impart information about such ownership provided such
reference is not likely to cause confusion with a product, service or business
of LICENSOR, Purina Mills, Inc. or any of its/their Affiliates, or its/their
successors or assigns.
(d) LICENSEE shall not use the term "Checkerboard Square" or any term
including that term or any term confusingly similar thereto, as its business
address or otherwise. LICENSEE shall not use the term "Ralston" or any term
confusingly similar thereto in any manner. LICENSEE shall not hold itself
out as corporately related or otherwise related to LICENSOR except as a
licensee of the Licensed Marks. LICENSOR and LICENSEE may truthfully and in
good faith describe themselves as part of the same business which has sold the
Licensed Products for many years or, in the case of LICENSEE, as the successor
to LICENSOR's business in the Licensed Products, and refer to the history of
that business and its products as its own provided it does so in a manner
which, by LICENSOR's interpretation, is not likely to cause confusion with a
product, service or business of , or otherwise conflict with the rights of,
LICENSOR, Purina Mills, Inc. or other licensee of LICENSOR or any of its/their
Affiliates, or its/their successors or assigns.
(e) In order to avoid conflicts with third parties, LICENSEE shall not
have the right to coin new marks which are, in whole or in part, derived from,
incorporate or are similar to any of the Licensed Marks or names or elements
of those marks or names without LICENSOR's prior written consent, which may be
granted or withheld at LICENSOR's sole discretion. LICENSEE shall have the
right as provided in Subparagraph 2(h) hereinbelow to extend the use of
Licensed Marks to new Licensed Products provided such extension does not
conflict with the rights of LICENSOR or any third party.
(f) LICENSOR shall promptly, to the extent it is able, (i) assign all
licenses, if any, for marks of others used on Licensed Products in the
Territory to LICENSEE; or, if such assignment is not legally feasible, but a
sublicense is, (ii) grant sublicenses to LICENSEE for such marks of others as
LICENSOR is unable to assign. Anything in this Agreement to the contrary
notwithstanding, LICENSOR makes no representation concerning LICENSEE's
continued right to use marks owned by third parties. LICENSEE acknowledges
that the continued use of such marks as are sublicensed shall be governed by
such agreements as LICENSOR may have or hereafter obtain from the owners of
such marks. Continued use of marks covered by such sublicenses shall be
governed by their terms. All such sublicenses (if any) as are material to the
LICENSEE's business and cannot be assigned are listed on Schedule C hereto.
(g) Except as otherwise specifically provided for in this Agreement,
LICENSEE hereby agrees, for itself and its Affiliates and sublicensees, to
limit its and their use of the Licensed Marks and Trade Names to the Licensed
Products and to the Territory. LICENSOR and LICENSEE agree, upon receipt of
notice from the other party, reasonably to cooperate to resolve conflicts
resulting from sales of Licensed Products violating third-party rights or
jeopardizing trademark rights of the other party, or contractual obligations
of the other party to third parties. LICENSOR and LICENSEE agree to enter
into and to record such registered-user agreements, or country-specific
licenses or sublicenses, at the expense of the requesting party, as LICENSOR
or LICENSEE may reasonably request, to comply with local law.
(h) If LICENSEE wishes to expand its business to include use of Licensed
Marks on Licensed Products beyond those Licensed Products in use by LICENSEE
or its Affiliates on the Effective Date and/or if LICENSEE expands its
business outside the Territory, LICENSOR agrees, where legally feasible , at
LICENSEE's expense, and pursuant to LICENSEE's request therefor, to add to the
license granted LICENSEE under this Trademark License Agreement such Licensed
Marks as LICENSOR may then own for Licensed Products in such jurisdictions;
and to establish, at LICENSEE's request and expense, where necessary and where
legally feasible , new rights in Licensed Marks for such expanded Licensed
Products and/or in such jurisdictions thereby expanding the definition of
"Territory." LICENSEE acknowledges that LICENSOR is under no obligation to
maintain existing registrations for LICENSEE's future use under this
Subparagraph 2(h) prior to such request. Any Licensed Marks for Licensed
Products in such jurisdiction added to the Territory pursuant to this
subparagraph shall be subject to the maintenance and renewal provisions of
Paragraph 8 of this Trademark License Agreement. In no event shall this
Subparagraph 2(h) obligate LICENSOR to expand the Territory to include the
United States of America or any of its territories or possessions (other than
Puerto Rico) or facilities of its armed forces.
(i) Notwithstanding anything to the contrary in this Trademark License
Agreement, the license granted shall not extend to products or services beyond
those comprehended by the trademark rights Licensor has secured or may in the
future secure in those jurisdictions in which LICENSEE uses or seeks to use a
Licensed Mark. LICENSEE acknowledges that in certain jurisdictions LICENSOR
may not own rights it owns in other jurisdictions; and that in certain
jurisdictions LICENSOR may have non-exclusive rights in certain marks (e.g.
CHOW) for which LICENSOR possesses exclusive rights in other jurisdictions.
LICENSEE further acknowledges that in certain jurisdictions its rights to use
the Licensed Marks and Licensed Trade Names are limited by existing
Third-Party Licenses and undertakings to third parties in existence as of the
Effective Date. Such licenses and undertakings known to LICENSOR as of the
Effective Date are reflected on Schedule B attached hereto. LICENSEE therefore
undertakes not to use marks and names otherwise licensed hereunder to the
extent such use would be inconsistent with third-party rights under licenses
or undertakings reflected on Schedule B or which may come to light in the
future but were in existence as of the Effective Date.
(j) LICENSOR and LICENSEE shall both have the right to display Licensed
Marks consistent with the terms of this Trademark License Agreement in
connection with their participation in conferences and symposia anywhere in
the Territory. Participation in conferences and symposia in the United States,
but not in Puerto Rico, shall require reasonable notice that Licensed Products
bearing the Licensed Trademarks are not available from Licensee, its
affiliates, dealers, franchises or licensees in the United States. The display
of Licensed Marks at such events is subject to the rights, as interpreted by
LICENSOR, of Purina Mills, Inc., its successors and assigns.
(k) Except to the extent LICENSEE may be separately licensed by LICENSOR
in writing to use one or more of the Licensed Marks or Licensed Trade Names
outside the Territory, LICENSEE hereby agrees, for itself and for its
Affiliates and other sublicensees, to limit its use of the Licensed Marks and
Licensed Trade Names to the Territory; not to export from the Territory
products on or in connection with which Licensed Marks are used and not to
sell, deliver or otherwise convey such products to anyone LICENSEE
believes or has reason to believe will take the same outside the
Territory.
(l) To the extent LICENSEE makes an incidental use of a Licensed Mark in
the United States, in any of its territories or possessions (other than Puerto
Rico) or at any facility of its armed forces, by, for example, but not by way
of limitation, featuring a Licensed Product displaying a Licensed Mark in
LICENSEE's annual report, and such use results in a complaint from Purina
Mills, Inc., any of its successors, assigns or other person or persons
claiming rights pursuant to the License Agreement dated October 1, 1986 among
Ralston Purina Company, Purina Mills, Inc. and BP Nutrition Limited, LICENSOR
shall be the sole judge of whether, as between LICENSOR and LICENSEE, such use
may violate LICENSOR's obligation to Purina Mills, Inc., BP Nutrition Limited
and/or any of its/their successors and assigns or other person or persons
claiming rights pursuant to such License Agreement. In the exercise of its
judgment, LICENSOR may require LICENSEE to discontinue any such use unless and
until LICENSOR satisfies itself that such use does not place LICENSOR in
violation of any of its obligations to Purina Mills, Inc., BP Nutrition
Limited, its and/or their successors and assigns.
3. PRODUCT QUALITY
----------------
(a) LICENSEE may use the Licensed Marks and Licensed Trade Names only in
connection with Licensed Products and Other Products which are of a good and
merchantable quality (the "Product Standards"); and which are in compliance
with applicable laws and governmental regulations relating to the nature and
quality of the products (the "Legal Standards"). The Product Standards and
the Legal Standards shall be collectively referred to as the "Quality
Standards." The quality and product specifications of the Licensed Products
and Other Products heretofore manufactured and sold by LICENSOR or its
Affiliate(s) in a given jurisdiction under the Licensed Marks are hereby
adopted as acceptable Product Standards for the Licensed Products and Other
Products to be sold by LICENSEE under the Licensed Marks in such jurisdiction;
however, LICENSEE may change product formulations, specifications, or methods
of making Licensed Products and Other Products and create new such products,
provided such changes and creations are subject to the Quality Standards
required by this Paragraph 3 and LICENSEE's other undertakings in this
Trademark License Agreement. LICENSOR will not object under this Paragraph 3
to LICENSEE's use of the Licensed Marks in association with Licensed Products
and Other Products equal to or exceeding the Quality Standards. If a
Licensed Product or Other Product contains ingredients or is made by methods
which are not generally accepted as appropriate for the product by independent
experts, but which are accepted as appropriate for the product by at least
three independent experts, then any doubts as to the quality of the product
arising from such disagreement among experts shall be resolved in favor of
LICENSEE and shall not cause the product to be deemed of less than good and
merchantable quality. If a Licensed Product contains ingredients, or is made
by methods, which are new or proprietary, so that independent experts have
insufficient data for evaluating them, such Licensed Product shall be deemed
to have met the Product Standards until LICENSOR can reasonably establish the
contrary by substantial objective evidence; provided that LICENSEE submits to
LICENSOR a written statement by an expert reasonably acceptable to LICENSOR
to the effect that the product is of good and merchantable quality and in
compliance with all applicable laws and governmental regulations.
(b) Upon request of LICENSOR, at least two (2) samples of each new article
of Licensed Products or Other Products shall be furnished free of charge to
LICENSOR from LICENSEE for the purpose of LICENSOR's examination and approval
hereunder sufficiently in advance of any sale or distribution thereof.
LICENSEE shall give LICENSOR notice in advance of introduction of new article
of Licensed Products sufficiently in advance of sale or distribution to afford
LICENSOR an opportunity to request samples. The reformulation of an existing
Licensed Product or Other Product shall be deemed not to be a "new article" or
"variation" for purposes of this subparagraph. Thereafter, any reduction in
the quality or change in the style of any of the Licensed Products or Other
Products shall be submitted in like fashion for approval by LICENSOR in
advance. From time to time reasonable quantities of samples of Licensed
Products and Other Products shall be submitted at LICENSOR's request without
charge to LICENSOR for its examination and approval as to the maintenance of
the approved standards of quality and style. Any variation of a Licensed
Product or Other Product will be submitted to LICENSOR for LICENSOR's
approval. The absence of any objection by LICENSOR to submitted samples
within fifteen (15) days following submission thereof shall be deemed to be
acceptance; and any objections thereto shall be subject to the provisions at
Section 4 of this Trademark License Agreement.
(c) Anything in this Trademark License Agreement to the contrary
notwithstanding, if the laws of a particular jurisdiction require a product to
be of a higher quality than that imposed by this Paragraph 3 in order to
preserve the viability of the Licensed Marks and Licensed Trade Names, then
such higher requirement shall apply hereunder in such jurisdiction.
<PAGE>
4. QUALITY CONTROL
----------------
(a) Upon at least five (5) business days' advance written notice and
during normal business hours, LICENSOR shall have the right to inspect the
places of manufacture of Licensed Products or Other Products bearing a
Licensed Mark or Licensed Trade Name, and the places where services are
rendered under a Licensed Mark, to determine whether the Quality Standards of
Paragraph 3 of this Trademark License Agreement are being met. At such
inspections, LICENSOR's representative shall have the right to observe the
production of Licensed Products and Other Products and the delivery of the
services concerned. LICENSOR shall not have the right to inspect a particular
place of manufacture or observe particular services more than twice per year
unless a problem has occurred at such place which reasonably requires
additional visits, or to remove more samples or more volume of a product in
any given sample than is reasonably necessary to conduct quality analyses.
Such inspection visits shall be made by appointment at a time mutually
convenient for the parties. LICENSOR shall not have the right to request
samples in a manner which will interfere with production of a Licensed Product
or Other Product , such as by requiring a production line or machine to be
shut down. LICENSEE shall reimburse LICENSOR for its incremental costs
reasonably incurred by LICENSOR in connection with the inspections carried out
pursuant to this Paragraph 4(a).
(b) If LICENSOR is dissatisfied with the quality of a Licensed Product or
Other Product, LICENSOR shall not serve a notice of breach of this Trademark
License Agreement on LICENSEE until LICENSOR has sought to reconcile its view
of the quality of the Licensed Product or Other Product at issue with that of
LICENSEE by providing to LICENSEE written evidence which supports its view
that the quality of the product is deficient. If LICENSEE and LICENSOR are
unable to reconcile their views within forty-five (45) days following
LICENSOR's notification of its dissatisfaction to LICENSEE stating reasons
therefor, LICENSOR shall seek or shall have sought the opinion of an
independent expert on the product or service concerned. LICENSOR shall
provide that expert with a sample of the product or service that LICENSOR
finds unsatisfactory. LICENSOR shall cause the expert to discuss the points
of dissatisfaction fully with LICENSEE and to review any further samples of
the product or service which LICENSEE may provide from a regular production
run. LICENSOR shall serve a notice of breach only if the expert, in a written
report made after discussions with LICENSEE, concludes that the product or
service concerned has violated the requirement to maintain the quality in
Paragraph 3 of this Agreement. LICENSOR shall include a copy of that written
report with the notice of breach.
5. DISCLAIMER OF WARRANTIES BY LICENSOR
----------------------------------------
LICENSOR disclaims any warranty of validity, right to use or right exclusively
to use or register the Licensed Marks or any of them.
6. INDEMNITY BY LICENSEE
-----------------------
(a) From and after the Effective Date, LICENSEE agrees to defend,
indemnify and hold LICENSOR, its officers, agents, employees, successors and
assigns harmless from and against any and all liabilities, claims, demands,
actions, and causes of action and associated judgments, costs and expenses in
excess of ten thousand dollars $10,000.00 per event, including attorney's
fees, arising out of (i) LICENSEE's manufacture, distribution, shipment,
disposal, advertising, promotion or sale of Licensed Products or (ii) any act
or omission by LICENSEE, its agents or employees. LICENSOR shall promptly
notify LICENSEE in writing of such liability, claim, demand, action or cause
of action; provided, however, that failure of LICENSOR to give such prompt
notification shall not release LICENSEE from its indemnity obligation except
to the extent such failure materially increases the amount of indemnity which
LICENSEE is obligated to pay hereunder, in which event, the amount of
indemnity to which LICENSOR shall be entitled to receive shall be reduced to
an amount which LICENSOR would have been entitled to receive had such notice
been promptly given. LICENSEE shall be permitted to deal with such liability,
claim, demand, action, or cause of action in LICENSEE's sole discretion.
(b) At all times during which LICENSEE or an Affiliate or sublicensee of
- --- --------------------------------------------------------------------
LICENSEE uses any of the Licensed Marks, LICENSEE will maintain liability
- ------------------------------------------------------------------------------
insurance, protecting both LICENSOR and LICENSEE and which provides for at
- ------------------------------------------------------------------------------
least thirty- (30-)days advance written notice of termination, revocation or
- ------------------------------------------------------------------------------
diminution of coverage, in an amount not less than ten million dollars
- ------------------------------------------------------------------------------
($10,000,000). Such coverage shall also include broad-form contractual
- ------------------------------------------------------------------------------
coverage applicable to all indemnities given by LICENSEE under this Trademark
- ------------------------------------------------------------------------------
License Agreement. LICENSEE shall deliver to LICENSOR evidence of such
- ------------------------------------------------------------------------------
insurance within thirty (30) days following the execution of this Trademark
- ------------------------------------------------------------------------------
License Agreement. LICENSOR shall notify LICENSEE of any claim for which it
- ------------------------------------------------------------------------------
may seek indemnification from LICENSEE promptly upon its General Counsel's
- ------------------------------------------------------------------------------
becoming aware of such claim, but in any event in sufficient time so that
- ------------------------------------------------------------------------------
LICENSOR's or LICENSEE's rights are not prejudiced by any delay in
- ----------------------------------------------------------------------------
notification, and LICENSEE shall have the right to control the defense of
- --------------------------------------------------------------- ----------
such claim. LICENSEE may elect to defend against any claim without thereby
- ------------------------------------------------------------------------------
waiving any objection as to LICENSEE's obligation to defend LICENSOR
- -----------------------------------------------------------------------------
therefrom. LICENSOR shall have the right to participate in the defense of such
- ------------------------------------------------------------------------------
claim through counsel of its own selection at its own expense. If LICENSEE
- ------------------------------------------------------------------------------
does not defend against a claim for which it is obligated to indemnify
- ------------------------------------------------------------------------------
LICENSOR, LICENSOR may defend against all such claim at LICENSEE's expense,
- ------------------------------------------------------------------------------
provided LICENSEE shall have the right at all times, in its sole discretion
- ------------------------------------------------------------------------------
and at LICENSEE's expense, to retain or resume control of the conduct of the
- ------------------------------------------------------------------------------
defense.
- --------
6.1 SETTLEMENTS
-----------
(a) Neither party shall settle any claim affecting the other party's right
to use any of the Licensed Marks or Licensed Trade Names in the Territory
without such other party's prior written consent, which consent shall not be
unreasonably withheld or delayed
(b) The undertakings of Paragraphs 6 and 6.1 shall survive expiration
or termination of this Agreement.
7. LICENSOR'S RIGHTS
------------------
(a) LICENSEE hereby acknowledges that LICENSOR is and will forever remain
- --- ---------------------------------------------------------------------
the sole and rightful owner of the Licensed Marks and the Licensed Mark in any
- ------------------------------------------------------------------------------
Licensed Trade Names to the extent such Licensed Trade Name incorporates a
- ------------------------------------------------------------------------------
Licensed Mark; and that use of the Licensed Marks and Licensed Trade Names by
- ------------------------------------------------------------------------------
LICENSEE or any Affiliate or other sublicensee pursuant to this Trademark
- ------------------------------------------------------------------------------
License Agreement shall inure to the benefit of LICENSOR. LICENSEE agrees
- ------------------------------------------------------------------------------
that during the continuance and after a termination of this Trademark License
- ------------------------------------------------------------------------------
Agreement, LICENSEE will not claim any right in or to any of the Licensed
- ------------------------------------------------------------------------------
Marks and Licensed Trade Names other than the license to use the same as
- ------------------------------------------------------------------------------
specifically provided herein, nor will LICENSEE dispute or assist others to
- ------------------------------------------------------------------------------
dispute the ownership or validity of any of the Licensed Marks and Licensed
- ------------------------------------------------------------------------------
Trade Names. LICENSOR reserves the right to use, and license other parties to
- ------------------------------------------------------------------------------
use, the marks and names included in Schedule A to this Trademark License
- ------------------------------------------------------------------------------
Agreement anywhere in the world for all products and services other than
- ------------------------------------------------------------------------------
Licensed Products.
- -------------------
(b) LICENSEE agrees to make reasonable efforts to use the Licensed Marks
properly as trademarks or service marks, by, for example: (i) using , " ,"
"SM," "MD" or "MR" or other appropriate trademark registration symbols,
employing notices indicating LICENSOR's ownership of the Licensed Marks and
(ii) using Licensed Marks as adjectives followed by generic terms. The
parties recognize, however, that use of trademark registration symbols and
generic terms every time a mark is used on a particular item may be awkward
and is not necessary in order to make acceptable trademark or service-mark
usage. This Section 7(b) shall not be deemed to require LICENSEE to alter the
manner in which marks have been used immediately prior to the Effective Date.
Advertising, packaging and labeling shall be made available to LICENSOR at
LICENSOR'S request from time to time for the purposes of satisfying LICENSOR
of LICENSEE's compliance with this Trademark License Agreement.
8. REGISTRATION
------------
LICENSOR will, where legally feasible and where requested by LICENSEE, use
reasonable efforts to renew and maintain existing registrations of the
Licensed Marks and to obtain new registrations for the Licensed Marks. To that
end, LICENSOR will periodically notify LICENSEE of Licensed Marks for which
renewals, proofs of use and the like are required. If LICENSOR decides to
renew a particular registration for its own benefit, it will renew such
registration at its own cost. If LICENSOR decides it does not wish to renew
such registration of a Licensed Mark, it will so notify LICENSEE and afford
LICENSEE the opportunity to request that LICENSOR renew such registration at
LICENSEE's sole cost. LICENSEE shall then provide LICENSOR with a prompt
written request to renew or maintain such marks as it wishes to renew or
maintain along with evidence of use, specimens or other materials LICENSOR may
reasonably request to facilitate such renewal or maintenance. LICENSOR shall
not be required to renew or otherwise maintain any registration for which
LICENSOR does not receive a timely request to renew or to maintain or for
which LICENSOR does not timely receive adequate proofs of use and other
evidence which may be required under local law for renewal and/or maintenance
or such registration. In addition, LICENSEE shall pay LICENSOR an annual
trademark-administration fee of Seventy-five thousand U.S. dollars
($75,000.00) to cover LICENSOR's in-house costs of administering this
Trademark License Agreement. If LICENSEE avails itself of the benefits of
Subparagraph 2(h) hereinabove, the annual trademark-administration fee shall
be increased by five thousand dollars ($5,000) for each jurisdiction added to
the Territory. Such fees shall be increased by three percent (3%) annually.
If the consumer price index compiled by the U.S. government increases by an
amount equal to ten percent (10%) or more in a given year, then the amount of
increase in that year shall be substituted for the three percent (3%) figure
noted hereinabove.
9. TERM AND TERMINATION
----------------------
(a) This Trademark License Agreement shall commence on the Effective Date
and shall where legally feasible remain in effect perpetually; however,
LICENSOR shall have no further obligations to LICENSEE under this Trademark
License Agreement with respect to any Licensed Mark or Licensed Trade Name in
a given jurisdiction which has been or will be abandoned as determined by the
law of the applicable jurisdiction or to the extent a registration covering
the same is cancelled for any reason not caused by LICENSOR or is cancelled or
rendered cancellable for non-use by LICENSEE for Licensed Products in such
country or for which LICENSEE has not timely requested, provided supporting
evidence for and paid for renewal or maintenance. Abandonment or
cancellability for non-use shall be determined by applying the law of such
jurisdiction. If granting a perpetual license in a given jurisdiction is not
legally feasible (e.g. where a jurisdiction deems such license an
assignment), the term of license in such jurisdiction shall be the maximum
allowed under the law of such jurisdiction. The Parties will cooperate and
use all reasonable efforts and take all reasonable steps in any jurisdiction
to facilitate LICENSEE's continued use of the Licensed Marks and Licensed
Trade Names on Licensed Products in the Territory beyond what would otherwise
be the maximum term permitted in such jurisdiction.
(b) Omitted
(c) Omitted
(d) This Trademark License Agreement shall terminate for a breach thereof
effective one hundred and eighty (180) days following notice in writing from
LICENSOR to LICENSEE unless, (1) within ninety (90) days following such
notice LICENSEE has initiated and is taking reasonable measures to remedy
such breach to the reasonable satisfaction of LICENSOR and (2) such breach has
been remedied to the reasonable satisfaction of LICENSOR within one hundred
and eighty (180) days following such notice. This Trademark License Agreement
shall also be terminable upon the same notice in the event all or part of this
Trademark License Agreement is transferred in any manner other than as
provided in Paragraph 16 hereinbelow.
10. INFRINGEMENTS
-------------
(a) Upon becoming aware in the Territory of:
(i) any infringement or suspected infringement of a Licensed Mark, or of a
Licensed Trade Name which includes the word "Purina," or other Licensed Mark,
any application for the registration of a mark which LICENSEE or LICENSOR
believes should be opposed, or any registration for a mark which LICENSEE or
LICENSOR believes should be cancelled, or
(ii) any matter or circumstance which in the opinion of LICENSEE or
LICENSOR would likely adversely affect the interest of the other party, the
party believing the item in question to require action hereunder shall
forthwith notify the other thereof, and LICENSOR may, with respect to such
uses of marks on products or services other than Licensed Products then in use
by LICENSEE or its Affiliate or other sublicensee in the jurisdiction in
which such circumstance exists, assert such claim, file such action for
infringement, file such opposition or cancellation proceeding, enter into a
settlement or take such other steps for the protection of the Licensed Marks
or decline to take any action as LICENSOR considers advisable in the exercise
of its sole discretion. LICENSEE shall supply such assistance and information
as LICENSOR may reasonably require in support of such action as LICENSOR
elects to take. With respect to infringements involving a third-party use of
a mark on any Licensed Product then in use by LICENSEE in the jurisdiction in
which the infringement, matter or circumstance arises; LICENSOR and LICENSEE
shall consult with each other in a good-faith attempt to reach an agreed-upon
course of action. If LICENSOR and LICENSEE are unable to do so within ten
(10) working days following the commencement of such discussions, either party
shall be free to proceed to assert its rights at its own expense.
(b) The reasonable costs (including but not limited to fees and
disbursements paid to counsel of LICENSOR's choice) of claims, actions and
other proceedings brought by LICENSOR at LICENSEE's request shall be paid to
LICENSOR by LICENSEE . LICENSOR shall have the right, in consultation with
LICENSEE, reasonably to control the course of such litigation; however, any
settlement of such litigation shall, to the extent it may adversely impact the
rights of LICENSEE, be subject to LICENSEE's approval, which approval may not
be unreasonably withheld.
11. ROYALTY
-------
No royalty shall be payable by LICENSEE to LICENSOR in respect of any rights
granted under the terms of this Trademark License Agreement.
12. SUBLICENSING
------------
LICENSEE shall have the exclusive right where legally feasible to grant
sublicenses to Persons other than a Principal Competitor for use of the
Licensed Marks for the Licensed Products in the Territory, provided that the
sublicense shall be subject to all terms and conditions of this Trademark
License Agreement and LICENSEE shall be responsible for acts pursuant to or in
breach of this Trademark License Agreement by any sublicensee, and further
provided that LICENSEE gives LICENSOR at least thirty- (30-) days advance
written notice indicating the identity of any prospective sublicensee and the
Licensed Marks and Licensed Products to be sublicensed, accompanied by a
certification that the use of such marks with respect to such Licensed
Products will comply with all the terms and conditions of this Trademark
License Agreement. In the event any sublicense shall be determined to
impose franchising-compliance, or other obligations or costs on LICENSOR,
LICENSEE shall pay such costs and, to the extent feasible , discharge such
obligations. If LICENSOR is nevertheless required to discharge such
obligations, LICENSEE shall reimburse LICENSOR's total fees and costs
resulting from the reasonable discharge of any such obligation and/or growing
out of any such activity.
13. CONTRACT MANUFACTURING
-----------------------
LICENSEE shall have the right where legally feasible to use third-party
manufacturers to produce Licensed Products and Other Products bearing the
Licensed Marks and Licensed Trade Names in the Territory meeting the Quality
Standards of Paragraph 3 hereinabove solely for purchase by LICENSEE, its
sublicensed Affiliates or other sublicensees for distribution to or through
its or their customers under the terms and conditions of this Trademark
License Agreement.
14. PROMOTIONAL PRODUCTS
---------------------
Subject to the items listed on Schedule B, neither party shall object to the
other party's, its Affiliates', sublicensees', dealers', franchisees' or
other customers' sale or distribution in the Territory on a non-exclusive
basis of promotional products, such as caps, T-shirts, hats and agriculturally
oriented apparel (e.g. jackets, shirts, pants, boots, belts), pens, balloons,
mugs, keychains, calendars, pocket knives and the like bearing LICENSEE's, its
sublicensed Affiliate's or sublicensee's Licensed Trade Name and/or one or
more Licensed Marks or Licensed Trade Names for the purpose of developing
goodwill and promoting the products for which such party or its Affiliates and
sublicensees are allowed to use the Licensed Marks pursuant to this Trademark
Agreement provided such items do not infringe or otherwise violate third-party
rights. Neither party shall grant a license or sublicense that would undermine
the other's rights under this Paragraph 14. The fact that the sale of products
pursuant to this Paragraph 14 may be at a profit shall not remove such
products from the scope of product contemplated by this Paragraph 14.
15. OMITTED
-------
16. TRANSFERABILITY
---------------
LICENSOR shall have the right to transfer some or all its rights and
obligations under this Trademark License Agreement, either by affirmative act
or by operation of law, by share ownership or otherwise, without the consent
of LICENSEE. Neither LICENSEE nor any of its Affiliates or sublicensees shall
have the right to transfer all or part of its or their rights or obligations
under this Trademark License Agreement, either by affirmative act or by
operation of law, by share ownership, or otherwise, except with the consent
of LICENSOR, which consent will not be unreasonably withheld. LICENSOR may
withold its consent in situations where to do so would be reasonable. Such
situations include, but are not limited to, LICENSOR's withholding consent to
LICENSEE's, any of its sublicensed Affiliates' and/or any other sublicensee's
transfer of rights and obligations under this Trademark License Agreement to
a transferee who acquires rights to use less than all of the Licensed Marks or
to a transferee of such rights for a territory covering less than a continent
(e.g. Africa, Europe, Asia) or a transfer of any rights hereunder to a
Principal Competitor of LICENSOR anywhere in the world. A transfer of the
Trademark License shall be deemed to have occurred if (a.) LICENSEE transfers
(by any means including, but not limited to, operation of law), all or part of
its interest in the Trademark License; (b.) a third party other than a
Principal Competitor should acquire (by any means including, but not limited
to, operation of law) a voting, profits or equity interest of twenty percent
(20%) or more in LICENSEE or (c.) a Principal Competitor should acquire (by
any means including, but not limited to, operation of law) a voting, profits
or equity interest of ten percent (10%) or more in LICENSEE.
17. NOTICES
-------
All notices hereunder given by the parties hereto shall be in writing and
shall be hand delivered or sent by U.S. Registered or Certified U.S. Mail,
postage prepaid, return-receipt requested, or delivered by a courier company,
prepaid, to the addresses indicated below. The addresses of the parties until
further written notice to the contrary are:
LICENSOR RALSTON PURINA COMPANY
Checkerboard Square
St. Louis, Missouri 63164
Attn: Trademark Counsel
LICENSEE ABRIBRANDS INTERNATIONAL, INC.
9811 South Forty Drive
St. Louis, Missouri 63124
Attn: General Counsel
18. RELATIONSHIP OF THE PARTIES
------------------------------
This Trademark License Agreement does not make either party the agent of the
other, create a partnership or joint venture between the parties or any
relationship other than that of LICENSOR and LICENSEE, nor shall this
Trademark License Agreement give either party the power to obligate or bind
the other in any manner whatsoever. The manufacture, distribution, sale,
offering for sale, pricing, trade promotion and marketing of the Licensed
Products shall be accomplished by LICENSEE at LICENSEE's sole cost and expense
or that of its Affiliates or other sublicensees.
19. CAPTIONS
--------
The captions used in connection with the paragraphs and subparagraphs of this
Trademark License Agreement are inserted only for the purpose of reference.
Such captions shall not be deemed to govern, limit, modify, or in any other
manner affect the scope, meaning or intent of the provision of this Trademark
License Agreement or any part thereof; nor shall such captions otherwise be
given any legal effect.
20. GOVERNING LAW, JURISDICTION AND VENUE
-----------------------------------------
This Trademark License Agreement is made and entered into, and shall be
governed by and construed and interpreted in accordance with the laws of, the
State of Missouri, United States of America, without regard to its conflicts
of laws principles, as to all matters, including those relating to the
validity, construction, performance, effect and remedies under this Trademark
License Agreement. All matters relating to this Trademark License Agreement
shall, subject to the provisions of Paragraph 22 of this Trademark License
Agreement, be adjudicated exclusively in the courts of the State of Missouri
located in St. Louis, Missouri, or within the United States District Court for
the Eastern District of Missouri; and each party hereby consents to the
exclusive jurisdiction and venue of such courts for all such matters.
21. SEVERABILITY
------------
If any of the provisions of this Trademark License Agreement are held by a
court or governmental authority of competent jurisdiction to be unenforceable
as written, then any such provision shall be deemed automatically amended so
that it is enforceable to the maximum extent permissible under the laws and
public policy of the applicable jurisdiction or authority. The provisions of
this Trademark License Agreement are severable and each provision shall be
interpreted and enforced as if all completely invalid or unenforceable
provisions were not contained in this Trademark License Agreement and
partially valid or enforceable provisions shall be enforceable to the extent
they are valid or enforceable.
22. DISPUTE RESOLUTION
-------------------
If any question shall arise in regard to (a) the interpretation of any
provision of this Trademark License Agreement or (b) the rights or obligations
of either party hereunder or thereunder, each party shall designate a senior
executive within its organization who shall, within thirty (30) days after
such question arises, meet with the designated executive of the other party to
negotiate and attempt to resolve such question in good faith. Such senior
executives may, if they so desire, consult outside advisors for assistance in
arriving at such a resolution. In the event that a resolution is not achieved
within sixty (60) days following such initial meeting, then the parties may
agree to seek other legal means of resolving such question, including but not
limited to binding or non-binding arbitration. If the parties cannot so
agree, they shall be free to avail themselves of the remedies provided in
Paragraph 20 hereinabove.
23. MISCELLANEOUS
-------------
(a) This Trademark License Agreement may be amended, modified or
supplemented, or rights, powers or options hereunder waived or impaired, only
by a written agreement signed by a corporate officer of LICENSOR and LICENSEE
and attested by their respective corporate secretaries. Neither party shall
be deemed to have waived or impaired any right, power or option created or
reserved by this Trademark License Agreement (including without limitation,
each party's right to demand compliance with every term herein, or to declare
any breach a default and exercise its rights in accordance with the terms
hereof) by virtue of: (i) any custom or practice of the parties at variance
with the terms hereof; (ii) any failure, refusal or neglect to exercise any
right hereunder, or to insist upon compliance with any term; (iii) any waiver,
forbearance, delay, failure or omission to exercise any right or option,
whether of the same, similar or different natures, under this Trademark
License Agreement or in any other circumstances; or (iv) the acceptance by
either party of any payment or other consideration from the other following
any breach of this Trademark License Agreement. The rights and remedies set
forth in this Trademark License Agreement are in addition to any other rights
or remedies which may be granted by law.
(b) Neither LICENSOR nor LICENSEE nor any of its/their Affiliates, or, in
the case of LICENSEE, its Affiliates, sublicensees and contract manufacturers,
shall use a mark or name which is confusingly similar to any mark or name it
is precluded from using pursuant to this Trademark License Agreement.
(c) Anything in this Trademark License Agreement to the contrary
notwithstanding, LICENSEE's Affiliates shall have a license hereunder to use
the word "Ralston" in their Trade Names on stationary, business cards and
other physical materials to the extent now used, under the terms and
conditions of this License, for the sole purpose of exhausting existing
inventories of such materials, over a period not to extend beyond six (6)
months following the Effective Date.
(d) All payments required to be made pursuant to this Trademark License
Agreement shall be due and payable in United States currency thirty (30) days
following the event giving rise to the obligation to make such payment.
(e) The parties agree not to do indirectly through, for example, their
Affiliates, anything they are not allowed to do directly under this Trademark
License Agreement.
<PAGE>
RALSTON PURINA COMPANY AGRIBRANDS INTERNATIONAL, INC.
By: /s/ James R. Elsesser By: /s/ David R. Wenzel
------------------------------ -------------------------
Name: James R. Elsesser Name: David R. Wenzel
----------------------- -----------------
Title: Vice President and Chief Title: Chief Financial Officer
---------------------------
Financial Officer
--------------------
S-118
EXECUTION COPY
___________________________________________________________________________
LONG TERM CREDIT AGREEMENT
Dated as of March 31, 1998
among
AGRIBRANDS INTERNATIONAL, INC.
THE SUBSIDIARY BORROWERS AND SUBSIDIARY OBLIGORS
FROM TIME TO TIME PARTY HERETO,
THE FINANCIAL INSTITUTIONS FROM TIME TO TIME
PARTY HERETO AS LENDERS,
and
ABN AMRO BANK N.V.,
as Agent
and
CREDIT LYONNAIS CHICAGO BRANCH,
as Syndication Agent
and
THE BANK OF NOVA SCOTIA,
as Documentation Agent
<PAGE>
TABLE OF CONTENTS
-------------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I: DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Certain Defined Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Currency Equivalents.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE II: THE CREDITS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.1 Revolving Loans to the Company and the Subsidiary Borrowers. . . . . . . . . . . . . . . . 19
2.2 Prepayments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.3 Method of Borrowing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.4 Method of Selecting Types and Interest Periods for Advances; Determination of Applicable
Margins, Interest on Advances to Purina Korea, Inc. . . . . . . . . . . . . . . . . . . . . . . 21
(a) Method of Selecting Types and Interest Periods for Advances. . . . . . . . . . . . . . . . 21
(b) Determination of Applicable Margins, Applicable Letter of Credit Fee and
Applicable Facility Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.5 Minimum Amount of Each Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.6 Method of Selecting Types and Interest Periods for Conversion and Continuation of
Advances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(A) Right to Convert . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(B) Automatic Conversion and Continuation. . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(C) No Conversion Post-Default or Post-Unmatured Default . . . . . . . . . . . . . . . . . . . 25
(D) Conversion/Continuation Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.7 Default Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.8 Method of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.9 Evidence of Debt; Telephonic Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.10 Promise to Pay; Interest and Fees; Interest Payment Dates; Interest and Fee Basis; Taxes;
Loan and Control Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(A) Promise to Pay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(B) Interest Payment Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(C) Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(D) Interest and Fee Basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(E) Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(F) Loan Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(G) Entries Binding. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.11 Notification of Advances, Interest Rates, Prepayments and Aggregate Commitment
Reductions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.12 Lending Installations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.13 Non-Receipt of Funds by the Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.14 Termination Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.15 Replacement of Certain Lenders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.16 Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.17 Letter of Credit Participation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
2.18 Reimbursement Obligation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
2.19 Cash Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
2.20 Letter of Credit Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
2.21 Indemnification; Exoneration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
2.22 Judgment Currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
2.23 Currency Disruption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
2.24 Termination Date Extension. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE III: CHANGE IN CIRCUMSTANCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
3.1 Yield Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
3.2 Changes in Capital Adequacy Regulations. . . . . . . . . . . . . . . . . . . . . . . . . . 40
3.3 Availability of Types of Advances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
3.4 Funding Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
3.5 Lender Statements; Survival of Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE IV: CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.1 Initial Advances and Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.2 Each Advance and Letter of Credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE V: REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.1 Organization; Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.2 Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.3 No Conflict; Governmental Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.4 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.5 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.6 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
(A) Tax Examinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
(B) Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.7 Litigation; Loss Contingencies and Violations. . . . . . . . . . . . . . . . . . . . . . . 45
5.8 Subsidiaries; Capital Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
5.9 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
5.10 Accuracy of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.11 Securities Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.12 Material Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.13 Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.14 Assets and Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.15 Statutory Indebtedness Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.16 Post-Retirement Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.17 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.18 Contingent Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.19 Restricted Junior Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
5.20 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
5.21 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
5.22 Foreign Employee Benefit Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE VI: COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
6.1 Reporting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
(A) Financial Reporting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
(B) Notice of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
(C) Lawsuits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
(D) Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
(E) ERISA Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
(F) Labor Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
(G) Other Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
(H) Other Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
(I) Environmental Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
(J) Other Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
6.2 Affirmative Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
(A) Existence, Etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
(B) Corporate Powers; Conduct of Business. . . . . . . . . . . . . . . . . . . . . . . . . . . 54
(C) Compliance with Laws, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
(D) Payment of Taxes and Claims; Tax Consolidation . . . . . . . . . . . . . . . . . . . . . . 54
(E) Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
(F) Inspection of Property; Books and Records; Discussions . . . . . . . . . . . . . . . . . . 54
(G) ERISA Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
(H) Maintenance of Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
(I) Environmental Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
(J) Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
(K) Foreign Employee Benefit Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
6.3 Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
(A) Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
(B) Sales of Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
(C) Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
(D) Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
(E) Contingent Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
(F) Restricted Junior Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
(G) Conduct of Business; Subsidiaries; Acquisitions. . . . . . . . . . . . . . . . . . . . . . 59
(H) Transactions with Shareholders and Affiliates. . . . . . . . . . . . . . . . . . . . . . . 60
(I) Sales and Leasebacks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
(J) Margin Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
(K) ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
(L) Issuance of Equity Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
(M) Organizational Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
(N) Other Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
(O) Fiscal Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
(P) Hedging Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
(Q) Subsidiary Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
6.4 Financial Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
(A) Interest Coverage Ratio. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
(B) Maximum Leverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
(C) Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
(D) Minimum Consolidated Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
(E) Country Debt Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
ARTICLE VII: DEFAULTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
7.1 Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
ARTICLE VIII: ACCELERATION, DEFAULTING LENDERS; WAIVERS, AMENDMENTS
AND REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
8.1 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
(a) Termination of Commitments; Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . 67
(b) Rescission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
(c) Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
8.2 Defaulting Lender. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
8.3 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
8.4 Preservation of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
ARTICLE IX: GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
9.1 Survival of Representations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
9.2 Governmental Regulation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
9.3 Performance of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
9.5 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
9.7 Expenses; Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
(A) Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
(B) Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
(C) Waiver of Certain Claims; Settlement of Claims . . . . . . . . . . . . . . . . . . . . . . 73
(D) Survival of Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
9.8 Numbers of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
9.9 Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
9.10 Severability of Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
9.11 Nonliability of Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
9.12 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
9.13 CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL . . . . . . . . . . . . . . . . . 74
(A) JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
(B) OTHER JURISDICTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
(C) VENUE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
(D) WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
9.14 Subordination of Intercompany Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . 75
9.15 No Strict Construction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
ARTICLE X: THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
10.1 Appointment; Nature of Relationship . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
10.2 Powers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
10.3 General Immunity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
10.4 No Responsibility for Loans, Creditworthiness, Collateral, Recitals, Etc. . . . . . . . . 77
10.5 Action on Instructions of Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
10.6 Employment of Agents and Counsel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
10.7 Reliance on Documents; Counsel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
10.8 The Agent's Reimbursement and Indemnification . . . . . . . . . . . . . . . . . . . . . . 77
10.9 Rights as a Lender. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
10.10 Lender Credit Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
10.11 Successor Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
10.12 Collateral Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
ARTICLE XI: SETOFF; RATABLE PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
11.1 Setoff. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
11.2 Ratable Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
11.3 Application of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
11.4 Relations Among Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
ARTICLE XII: BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS . . . . . . . . . . . . . . . . 81
12.1 Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
12.2 Participations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
(A) Permitted Participants; Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
(B) Voting Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
(C) Benefit of Setoff. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
12.3 Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
(A) Permitted Assignments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
(B) Effect; Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
(C) The Register . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
12.4 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
12.5 Dissemination of Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
ARTICLE XIII: NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
13.1 Giving Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
13.2 Change of Address . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
ARTICLE XIV: COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
</TABLE>
EXHIBITS AND SCHEDULES
EXHIBITS
--------
EXHIBIT A -- Commitments
(Definitions)
EXHIBIT B -- [Reserved]
EXHIBIT C -- Form of Compliance Certificate
(Definitions, 4.2, 6.1(A)(iii))
EXHIBIT D -- Form of Assignment Agreement
(2.15, 12.3)
EXHIBIT E -- List of Closing Documents
(4.1)
EXHIBIT F -- Form of Officer's Certificate
(4.2, 6.1(A)(iii))
EXHIBIT G -- Financial Statements
(5.4(A), 5.18)
EXHIBIT H -- Form of Request for Letter of Credit
(2.16)
EXHIBIT I -- Form of Letter of Credit
(2.16)
SCHEDULES
---------
The information presented on each of the following Schedules is dated as of
February 28, 1998.
Schedule 1.1.1 -- Permitted Existing Contingent Obligations
(Definitions)
Schedule 1.1.2 -- Permitted Existing Indebtedness (Definitions)
Schedule 1.1.3 -- Permitted Existing Investments (Definitions)
Schedule 1.1.4 -- Permitted Existing Liens (Definitions)
Schedule 2.16(b) -- Existing Letters of Credit ( 2.16(b))
Schedule 5.3 -- Conflicts; Governmental Consents ( 5.3)
Schedule 5.7 -- Litigation; Loss Contingencies ( 5.7)
Schedule 5.8 -- Subsidiaries ( 5.8)
Schedule 5.17 -- Insurance ( 5.17, 6.1(D), 6.2(E))
Schedule 5.20 -- Labor Matters; Compensation Agreements ( 5.20)
Schedule 5.21 -- Environmental Matters ( 5.21)
Schedule 6.3(F) -- Restricted Junior Payments
Schedule 6.3(H) -- Transactions with Shareholders and Affiliates
LONG TERM CREDIT AGREEMENT
This Long Term Credit Agreement dated as of March 31, 1998 is entered
into among AGRIBRANDS INTERNATIONAL, INC., a Missouri corporation, any
SUBSIDIARY BORROWERS and any SUBSIDIARY OBLIGORS (as such terms are defined
herein) which are now or may hereafter become a party hereto from time to
time, the financial institutions from time to time a party hereto as LENDERS,
whether by execution of this Agreement or an assignment and acceptance
pursuant to Section 12.3, ABN AMRO BANK N.V., in its capacity as Agent for
-------------
itself and the other Lenders. The parties hereto agree as follows:
ARTICLE I: DEFINITIONS
- --------------------------
1.1 In addition to the terms defined in other sections of this
Agreement, the following terms used in this Agreement shall have the following
meanings, applicable both to the singular and the plural forms of the terms
defined:
As used in this Agreement:
"ACQUISITION" means any transaction, or any series of related
-----------
transactions, consummated on or after the date of this Agreement, by which the
-----
Company or any Subsidiary of the Company (i) acquires any going business or
all or substantially all of the assets of any firm, corporation or division
thereof, whether through purchase of assets, merger or otherwise, including,
without limitation, by surrender of or foreclosure on collateral provided by
customers or (ii) directly or indirectly acquires (in one transaction or as of
the most recent transaction in a series of transactions, including, without
limitation, by surrender of or foreclosure on collateral provided by
customers) at least a majority (in number of vote) of the securities of a
corporation which have ordinary voting power for the election of directors
(other than securities having such power only by reason of the happening of a
contingency) or a majority (by percentage of voting power) of the membership,
ownership or other equity interests in a limited liability company or of the
outstanding partnership interests of a partnership.
"ADVANCE" means a borrowing hereunder consisting of the aggregate amount
-------
of the several Loans made by the Lenders to a Borrower of the same Type and,
in the case of Eurodollar Advances and Korean Eurodollar Advances, for the
same Interest Period.
"AFFECTED LENDER" is defined in Section 2.15 hereof.
---------------- -------------
"AFFILIATE" of any Person means any other Person directly or indirectly
---------
controlling, controlled by or under common control with such Person. A Person
shall be deemed to control another Person if the controlling Person is the
"beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange
Act) of greater than ten percent (10%) or more of any class of voting Capital
Stock (or other voting interests) of the controlled Person or possesses,
directly or indirectly, the power to direct or cause the direction of the
management or policies of the controlled Person through ownership of Equity
Interests. In addition, each director of a Borrower or any Subsidiary of a
Borrower shall be deemed to be an Affiliate of each Borrower.
"AGENT" means ABN AMRO Bank N.V. in its capacity as contractual
-----
representative for itself and the Lenders pursuant to Article X hereof and any
--- ---------
successor Agent appointed pursuant to Article X hereof.
----------
"AGGREGATE COMMITMENT" means the aggregate of the Commitments of all the
---------------------
Lenders under this Agreement as adjusted from time to time pursuant to the
terms hereof. The initial Aggregate Commitment is Fifty-Five Million and
00/100 Dollars ($55,000,000.00).
"AGREEMENT" means this Long Term Credit Agreement, as it may be amended,
---------
restated or otherwise modified and in effect from time to time.
"AGREEMENT ACCOUNTING PRINCIPLES" means generally accepted accounting
---------------------------------
principles as in effect as of the date of this Agreement in the United States.
If any changes in generally accepted accounting principles are hereafter
required or permitted and are adopted by the Company with the agreement of its
independent certified public accountants and such changes result in a change
in the method of calculation of any of the financial covenants, restrictions
or standards herein or in the related definitions or terms used therein
("Covenant Accounting Changes"), the parties hereto agree to enter into
-------------------------
negotiations, in good faith, in order to amend such provisions in a credit
neutral manner so as to reflect equitably such changes with the desired result
that the criteria for evaluating the Company's consolidated financial
condition shall be the same after such changes as if such changes had not been
made; provided, however, that no Covenant Accounting Change shall be given
-------- -------
effect in such calculations until such provisions are amended in a manner
reasonably satisfactory to the Required Lenders. If such amendment is entered
into, all references in this Agreement to Agreement Accounting Principles
shall mean generally accepted accounting principles as of the date of such
amendment except as agreed in connection with the Covenant Accounting Changes
set forth in such an amendment and together with any changes in generally
accepted accounting principles after the date of such amendment which are not
Covenant Accounting Changes.
"ALTERNATE BASE RATE" means, for any day, a fluctuating rate of interest
--------------------
per annum equal to the higher of (i) the Prime Rate for such day and (ii) the
sum of (a) the Federal Funds Effective Rate for such day and (b) one-half of
one percent (0.5%) per annum.
"APPLICABLE FACILITY FEE" as at any date of determination, shall be the
-------------------------
rate per annum then applicable in the determination of the amount payable
under Section 2.10(C) with respect to the Aggregate Commitment determined in
----------------
accordance with the provisions of Section 2.4(b).
---------------
"APPLICABLE EURODOLLAR MARGIN" as at any date of determination, shall be
-----------------------------
the rate per annum then applicable to Eurodollars Rate Loans determined in
accordance with the provisions of Section 2.4(b).
---------------
"APPLICABLE BASE RATE MARGIN" as at any date of determination, shall be
-----------------------------
the rate per annum then applicable to Base Rate Loans determined in accordance
with the provisions of Section 2.4(b).
---------------
"APPLICABLE LETTER OF CREDIT FEE" as at any date of determination, shall
--------------------------------
be the rate per annum then applicable in the determination of the amount
payable under Section 2.20 with respect to Letters of Credit, determined in
-------------
accordance with the provisions of Section 2.4(b).
---------------
"APPLICABLE MARGIN(S)" is defined in Section 2.4(b).
--------------------- ---------------
"ARRANGER" means ABN AMRO Bank N.V. in its capacity as the arranger for
--------
the loan transaction evidenced by this Agreement.
"AUTHORIZED OFFICER" means any of the chief executive officer, chief
-------------------
operating officer, chief financial officer, controller and treasurer of a
Borrower, acting singly.
"BASE RATE" means, for any day for any Loan, a rate per annum equal to
----------
(i) the Alternate Base Rate for such day plus (ii) the Applicable Base Rate
Margin applicable to such Loan, changing when and as the Alternate Base Rate
changes.
"BASE RATE ADVANCE" means an Advance which bears interest at the Base
-------------------
Rate.
"BASE RATE LOAN" means a Loan, or portion thereof, which bears interest
----------------
at the Base Rate.
"BENEFIT PLAN" means a defined benefit plan as defined in Section 3(35)
-------------
of ERISA (other than a Multiemployer Plan) in respect of which the Company or
any other member of the Controlled Group is, or within the immediately
preceding six (6) years was, an "employer" as defined in Section 3(5) of
ERISA.
"BORROWER" shall mean the Company, Agribrands Canada, Inc., a company
--------
organized under the federal laws of Canada, Purina Italia, S.p.A., a company
organized under the laws of Italy, Purina Espana, S.A., a company organized
under the laws of Spain, Purina Hungaria Animal Feed Production & Trading
Company, Ltd., a company organized under the laws of Hungary, and Purina
Korea, Inc., a corporation organized under the laws of the Republic of Korea,
and each of their respective successors and assigns.
"BORROWING DATE" means a date on which an Advance, is made hereunder.
---------------
"BORROWING NOTICE" is defined in Section 2.4(a) hereof.
----------------- ---------------
"BUSINESS DAY" means (i) with respect to any borrowing, payment or rate
-------------
selection of Revolving Loans bearing interest at the Eurodollar Rate, a day
(other than a Saturday or Sunday) on which banks are open for business in New
York, New York and Chicago, Illinois and on which dealings in United States
Dollars and Korean Won are carried on in the relevant interbank market and
(ii) for all other purposes a day (other than a Saturday or Sunday) on which
banks are open for business in New York, New York and Chicago, Illinois.
"CALCULATION DATE" means (i) with respect to any Revolving Loan or Letter
----------------
of Credit in Korean Won, the Business Day of the making of such Revolving Loan
or the issuance of the Letter of Credit with respect to Korean Won; (ii) with
respect to outstanding Revolving Loans and Letters of Credit, (x) the Business
Day on which any subsequent Loan is made or Letter of Credit is issued, (y)
the twenty-fifth day of each calendar month (or, if such date is not a
Business Day, the next succeeding Business Day), and (z) any other Business
Day selected at the option of the Agent or at the direction of the Required
Lenders; provided, with respect to any option exercised pursuant to clause
-------- ------
(ii)(z) above, without the consent of the Agent required to calculate the
----
applicable Exchange Rate, the Calculation Date selected shall not be earlier
-
than the second (2nd) Business Day following exercise of such option.
"CAPITAL EXPENDITURES" means, for any period, the aggregate of all
---------------------
expenditures (whether paid in cash or accrued as liabilities and including
Capitalized Leases) by the Company and its Subsidiaries during that period
that, in conformity with Agreement Accounting Principles, are required to be
included in or reflected by the property, plant, equipment or similar fixed
asset accounts reflected in the consolidated balance sheet of the Company and
its Subsidiaries other than with respect to the acquisition of inventory in
the ordinary course of business.
"CAPITAL STOCK" means (i) in the case of a corporation, corporate stock,
--------------
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (howsoever designated)
of corporate stock, (iii) in the case of a partnership, partnership interests
(whether general or limited) and (iv) any other interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, the issuing person, in each such case
regardless of class or designation.
"CAPITALIZED LEASE" of a Person means any lease of property by such
------------------
Person as lessee which would be capitalized on a balance sheet of such Person
prepared in accordance with Agreement Accounting Principles.
"CAPITALIZED LEASE OBLIGATIONS" of a Person means the amount of the
-------------------------------
obligations of such Person under Capitalized Leases which would be capitalized
on a balance sheet of such Person prepared in accordance with Agreement
Accounting Principles.
"CASH COLLATERAL ACCOUNT" means that certain deposit account maintained
-------------------------
at all times by the Company at ABN AMRO Bank N.V. with a balance not less than
$25,000,000 at any time.
"CASH EQUIVALENTS" means (i) marketable direct obligations issued or
-----------------
unconditionally guaranteed by the government of the United States or the
government of any member of the European Union; (ii) domestic and Eurodollar
certificates of deposit and time deposits, bankers' acceptances issued by any
commercial bank organized under the laws of the United States, any state
thereof, the District of Columbia, or its branches or agencies or the laws of
any member of the European Union and having a rating of B or better by
Thompson BankWatch, or rated A or better by S&P and A2 or better by Moody's;
(iii) shares of money market, mutual or similar funds having net assets in
excess of $500,000,000 maturing or being due or payable in full not more than
one hundred eighty (180) days after any Borrower's acquisition thereof and the
investments of which are limited to investment grade securities (i.e.,
securities rated at least Baa by Moody's or at least BBB by S&P) and (iv)
commercial paper of United States and foreign banks and bank holding companies
and their subsidiaries and United States and foreign finance, commercial,
industrial or utility companies which, at the time of acquisition, are rated
A-1 (or better) by S&P or P-1 (or better) by Moody's, or are backed by letters
of credit from banks rated B or better by Thompson BankWatch or rated A or
better by S&P and A2 or better by Moody's; provided that the maturities of
--------
such Cash Equivalents shall not exceed 365 days.
"CASH INTEREST EXPENSE" will mean, for any period, the total Interest
-----------------------
Expense of the applicable entity actually paid in cash (including the interest
component of Capitalized Leases but excluding the arrangement fee set forth in
the letter agreement between the Agent, the Arranger and the Company dated
February 25, 1998) all as determined in conformity with Agreement Accounting
Principles.
"CHANGE" is defined in Section 3.2 hereof.
------ ------------
"CHANGE OF CONTROL" means any of the following:
-------------------
(i) any "person" or "group" (as such terms are used in Sections 13(d)
--------------
and 14(d) of the Exchange Act)is or becomes the "beneficial owner" (as defined
-----
in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person shall be
deemed to have "beneficial ownership" of all securities that such person has
the right to acquire, whether such right is exercisable immediately or only
after the passage of time), directly or indirectly, of 20% or more of the
combined voting power of the Company's Capital Stock ordinarily having the
right to vote at an election of directors;
(ii) during any period of 12 consecutive calendar months,
individuals:
(a) who were directors of the Company on the first day of such period, or
(b) whose election or nomination for election to the board of directors of
the Company was recommended or approved by at least a majority of the
directors then still in office who were directors of the Company on the first
day of such period, or whose election or nomination for election was so
approved,
shall cease to constitute a majority of the board of directors of the Company;
(iii) the Company consolidates with or merges into another
corporation or conveys, transfers or leases all or substantially all of its
property to any Person, or any corporation consolidates with or merges into
the Company, in either event pursuant to a transaction in which the
outstanding Capital Stock of the Company is reclassified or changed into or
exchanged for cash, securities or other property; and
(iv) except as provided by Section 6.3(B)(iv) with respect to the
------------------
sale, dissolution or liquidation of certain Subsidiaries of the Company, the
Company shall cease to own of record and beneficially, with sole voting and
dispositive power, at least 80% of the outstanding shares of Capital Stock of
each Subsidiary Borrower and each Subsidiary Obligor ordinarily having the
right to vote at an election of directors or shall cease to have the power,
directly or indirectly, to elect a majority of the board of directors of each
Subsidiary Borrower.
"CLOSING DATE" means the date on which the Agent notifies the Company in
-------------
writing that all of the conditions precedent under Sections 4.1 and 4.2 have
------------ ---
been satisfied and any of the Borrowers may request Loans, and any of the
Borrowers or the Subsidiary Obligors may request Letters of Credit, under this
Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended, reformed or
----
otherwise modified from time to time.
"COLLATERAL DOCUMENT" shall mean the Pledge Agreements, the Guaranties
--------------------
and all other security agreements, mortgages, loan agreements, notes,
guarantees, pledges, powers of attorney, consents, assignments, contracts, fee
letters, notices, leases, financing statements and all other written matter
whether heretofore, now, or hereafter executed by or on behalf of the Company
or any of its Subsidiaries and delivered to the Agent or any of the Lenders,
together with all agreements and documents referred to therein or contemplated
thereby.
"COLLATERAL" means all property and interest in property now owned or
----------
hereafter acquired by the Company which has been pledged to the Agent for the
benefit of the Holders of Secured Obligations under the Pledge Agreements.
"COMMISSION" means the Securities and Exchange Commission and any Person
----------
succeeding to the functions thereof.
----
"COMMITMENT" means, for each Lender, the obligation of such Lender to
----------
make Revolving Loans, and to purchase participations in Letters of Credit not
exceeding the Dollar Amount set forth on Exhibit A to this Agreement opposite
---------
its name thereon under the heading "Commitment" or in the assignment and
acceptance by which it became a Lender, as such amount may be modified from
time to time pursuant to the terms of this Agreement or to give effect to any
applicable assignment and acceptance.
"COMPANY" means Agribrands International, Inc., a Missouri corporation,
-------
together with its successors and assigns.
"COMPLIANCE CERTIFICATE" means a certificate substantially in the form of
----------------------
Exhibit C delivered to the Agent and each Lender by the Company pursuant to
- ----------
the provisions of this Agreement and covering, among other things, its
- --
calculation of the Applicable Margins, Applicable Facility Fee, Applicable
- --
Letter of Credit Fee, its compliance with the financial covenants contained in
- --
Section 6.4 and certain other provisions of this Agreement.
- ------------
"CONFIDENTIAL INFORMATION MEMORANDUM" means that certain Confidential
-------------------------------------
Information Memorandum dated February 1998 and delivered by the Agent and the
Company to prospective Lenders in connection with this Agreement.
"CONSOLIDATED EBITDA" means, for any period, EBITDA of the Company and
--------------------
its Subsidiaries on a consolidated basis.
"CONSOLIDATED NET WORTH" means, at a particular date, all amounts which
------------------------
would be included under shareholders' or members' equity for the Company and
its consolidated Subsidiaries deter-mined in accordance with Agreement
Accounting Principles.
"CONTAMINANT" means any waste, pollutant, hazardous substance, toxic
-----------
substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, asbestos, polychlorinated biphenyls ("PCBS"), or any
constituent of any such substance or waste, and includes but is not limited to
these terms as defined in Environmental, Health or Safety Requirements of Law.
"CONTINGENT OBLIGATION", as applied to any Person, means any Contractual
----------------------
Obligation, contingent or otherwise, of that Person with respect to any
Indebtedness of another or other obligation or liability of another,
including, without limitation, any such Indebtedness, obligation or liability
of another directly or indirectly guaranteed, endorsed (otherwise than for
collection or deposit in the ordinary course of business), co-made or
discounted or sold with recourse by that Person, or in respect of which that
Person is otherwise directly or indirectly liable, including Contractual
Obligations (contingent or otherwise) arising through any agreement to
purchase, repurchase, or otherwise acquire such Indebtedness, obligation or
liability or any security therefor, or to provide funds for the payment or
discharge thereof (whether in the form of loans, advances, stock purchases,
capital contributions or otherwise), or to maintain solvency, assets, level of
income, or other financial condition, or to make payment other than for value
received.
"CONTINGENT PURCHASE PRICE OBLIGATION", as applied to any Person, means
--------------------------------------
any Contractual Obligation of such Person incurred in connection with an
Acquisition pursuant to which such Person is obligated to pay additional
consideration to the applicable seller in the form of an earnout, milestone
payment, contingent purchase price payment, or other similar performance based
compensation relating to post-Acquisition financial or operating performance
of the business acquired.
"CONTRACTUAL OBLIGATION", as applied to any Person, means any provision
-----------------------
of any equity or debt securities issued by that Person or any indenture,
mortgage, deed of trust, security agreement, pledge agreement, guaranty,
contract, undertaking, agreement or instrument, in any case in writing, to
which that Person is a party or by which it or any of its properties is bound,
or to which it or any of its properties is subject.
"CONTROLLED GROUP" means the group consisting of (i) any corporation
-----------------
(other than Ralston Purina Company and any company that is a subsidiary of
such company as of the Closing Date) which is a member of the same controlled
group of corporations (within the meaning of Section 414(b) of the Code) as
the Company; (ii) a partnership or other trade or business (whether or not
incorporated (other than Ralston Purina Company and any company that is a
subsidiary of such company as of the Closing Date)) which is under common
control (within the meaning of Section 414(c) of the Code) with the Company;
and (iii) a member of the same affiliated service group (within the meaning of
Section 414(m) of the Code) as the Company, any corporation described in
clause (i) above or any partnership or trade or business described in clause
------ ------
(ii) above (in each case, other than Ralston Purina Company and any company
---
that is a subsidiary of such company as of the Closing Date).
-
"CONVERSION/CONTINUATION NOTICE" is defined in Section 2.6(D) hereof.
------------------------------- --------------
"CUSTOMARY PERMITTED LIENS" means:
---------------------------
(i) Liens (other than Environmental Liens and Liens in favor of the
IRS or the PBGC) with respect to the payment of taxes, assessments or
governmental charges in all cases which are not yet due or which are being
contested in good faith by appropriate proceedings and with respect to which
adequate reserves or other appropriate provisions are being maintained in
accordance with Agreement Accounting Principles;
(ii) statutory Liens of landlords and Liens of suppliers, mechanics,
carriers, materialmen, warehousemen or workmen and other similar Liens imposed
by law created in the ordinary course of business for amounts not yet due or
which are being contested in good faith by appropriate proceedings and with
respect to which adequate reserves or other appropriate provisions are being
maintained in accordance with Agreement Accounting Principles;
(iii) Liens (other than Environmental Liens and Liens in favor of the
IRS or the PBGC) incurred or deposits made in the ordinary course of business
in connection with worker's compensation, unemployment insurance or other
types of social security benefits or to secure the performance of bids,
tenders, sales, contracts (other than for the repayment of borrowed money),
surety, appeal and performance bonds; provided that (A) all such Liens do not
--------
in the aggregate materially detract from the value of assets or property of
any Borrower taken as a whole or materially impair the use thereof in the
operation of the businesses taken as a whole, and (B) all Liens securing bonds
to stay judgments or in connection with appeals that do not secure at any time
an aggregate amount exceeding $5,000,000;
(iv) Liens arising with respect to zoning restrictions, easements,
licenses, reservations, covenants, rights-of-way, utility easements, building
restrictions and other similar charges or encumbrances on the use of real
property which do not interfere with the ordinary conduct of the business of
any Borrower or any Subsidiary of any Borrower;
(v) Liens of attachment or judgment with respect to judgments, writs
or warrants of attachment, or similar process against any Borrower or any
Subsidiary of any Borrower which do not constitute a Default under Section
-------
7.1(h);
---
(vi) Liens arising from leases, subleases or licenses granted to
others which do not interfere in any material respect with the business of any
Borrower or any Subsidiary of any Borrower; and
(vii) any interest or title of the lessor in the property subject to
any operating lease entered into by any Borrower or any Subsidiary of any
Borrower in the ordinary course of business.
"DEFAULT" means an event described in Article VII hereof.
------- ------------
"DOL" means the United States Department of Labor and any Person
---
succeeding to the functions thereof.
--
"DOLLAR" or "$" means the lawful money of the United States of America.
------ -
"DOLLAR AMOUNT" of any currency at any date shall mean (i) the amount of
--------------
such currency if such currency is Dollars or (ii) the Equivalent Amount of
Dollars if such currency is any currency other than Dollars, calculated on the
basis of the then applicable Exchange Rate.
"EBITDA" will mean, for any period, on a consolidated basis for the
------
applicable Person, the sum of the amounts for such period, without
duplication, of (i) net sales minus (ii) cost of products sold minus (iii)
----- -----
selling, general and administrative expenses, plus (iv) depreciation expense
----
to the extent deducted in computing the amounts in clauses (ii) and (iii)
------------ -----
above, plus (v) amortization expense, including, without limitation,
----
amortization of goodwill and other intangible assets to the extent deducted in
--
computing the amounts in clauses (ii) and (iii) above, all as determined in
------------ -----
accordance with Agreement Accounting Principles. EBITDA for each Subsidiary
shall be calculated excluding the effect of any service fees paid by such
Subsidiary to the Company.
"EBITDA CONTRIBUTION RATIO" shall mean the ratio of (i) Total Debt of the
-------------------------
Company and its Subsidiaries to (ii) the sum of 100% of EBITDA contributed by
Subsidiaries in countries with a rating of equal to or better than BBB- from
S&P and Baa3 from Moody's and 50% of EBITDA contributed by Subsidiaries in
countries with a rating of lower than BBB- from S&P or lower than Baa3 from
Moody's.
"ENVIRONMENTAL, HEALTH OR SAFETY REQUIREMENTS OF LAW" means all
---------------------------------------------------------
Requirements of Law derived from or relating to foreign, federal, state and
---
local laws or regulations relating to or addressing pollution or protection of
the environment, or protection of worker health or safety, including, but not
limited to, the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. 9601 et seq., the Occupational Safety and Health
-- ---
Act of 1970, 29 U.S.C. 651 et seq., and the Resource Conservation and
-- ---
Recovery Act of 1976, 42 U.S.C. 6901 et seq., in each case including any
-- ---
amendments thereto, any successor statutes, and any regulations or guidance
promulgated thereunder, and any state or local equivalent thereof.
"ENVIRONMENTAL LIEN" means a lien in favor of any Governmental Authority
-------------------
for (a) any liability under Environmental, Health or Safety Requirements of
Law, or (b) damages arising from, or costs incurred by such Governmental
Authority in response to, a Release or threatened Release of a Contaminant
into the environment.
"ENVIRONMENTAL PROPERTY TRANSFER ACT" means any applicable requirement of
-----------------------------------
law that conditions, restricts, prohibits or requires any notification or
disclosure triggered by the closure of any property or the transfer, sale or
lease of any property or deed or title for any property for environmental
reasons, including, but not limited to, any so-called "Industrial Site
Recovery Act" or "Responsible Property Transfer Act."
"EQUIPMENT" means all of the present and future (i) equipment, including,
---------
without limitation, machinery, manufacturing, distribution, selling, data
processing and office equipment, assembly systems, tools, molds, dies,
fixtures, appliances, furniture, furnishings, vehicles, vessels, aircraft,
aircraft engines, and trade fixtures, (ii) other tangible personal property
(other than the Inventory), and (iii) any and all accessions, parts and
appurtenances attached to any of the foregoing or used in connection
therewith, and any substitutions therefor and replacements, products and
proceeds thereof owned by the Company or any of the other Borrowers.
"EQUITY INTERESTS" means Capital Stock and all warrants, options,
-----------------
purchase rights, conversion or exchange rights, other rights to acquire
-
Capital Stock and all voting rights, calls or claims of any character with
respect thereto (but excluding any debt security that is convertible into, or
exchangeable for, Capital Stock).
"EQUIVALENT AMOUNT" of any currency with respect to any amount of Dollars
-----------------
at any date means the equivalent in such currency of such amount of Dollars,
calculated on the basis of the then applicable Exchange Rate rounded up to the
nearest incremental amount of such currency as determined by the Agent from
time to time.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time including (unless the context otherwise requires)
any rules or regulations promulgated thereunder.
"EURODOLLAR ADVANCE" means an Advance (other than a Korean Eurodollar
-------------------
Advance) which bears interest at the Eurodollar Rate.
"EURODOLLAR BASE RATE" means, with respect to a Eurodollar Loan or Korean
--------------------
Eurodollar Loan for the relevant Interest Period, the rate at which deposits
in Dollars are offered by ABN AMRO Bank N.V. to first-class banks in the
London interbank market at approximately (x) in the case of a Eurodollar Loan,
11:00 a.m. (London time) two Business Days and (y) in the case of a Korean
Eurodollar Loan, 11:00 a.m. (London time) three Business Days, prior to the
first day of such Interest Period, in the approximate amount of the portions
of the relevant Eurodollar Loan of ABN AMRO Bank N.V., and having a maturity
approximately equal to such Interest Period.
"EURODOLLAR LOAN" means a Loan (other than a Korean Eurodollar Loan), or
----------------
portion thereof, which bears interest at the Eurodollar Rate.
"EURODOLLAR RATE" means, with respect to a Eurodollar Advance or Korean
----------------
Eurodollar Advance for the relevant Interest Period, the sum of (a) (i) the
-----
Eurodollar Base Rate divided by (ii) one minus the Reserve Requirement
- -----
(expressed as a decimal) applicable to such Interest Period plus (b) the
- ----
percentage determined in accordance with Section 2.4(b) to be the Applicable
- --------------
Eurodollar Margin in connection with Eurodollar Loans.
"EXCHANGE RATE" means with respect to Korean Won on a particular date,
--------------
the rate at which Korean Won may be exchanged into Dollars, calculated on the
basis of the arithmetical mean of the buy and sell spot rates of exchange of
the Agent in the London interbank market (or other market where the Agent's
foreign currency exchange operations in respect of Korean Won are then being
conducted) for Korean Won at or about 1:00 p.m. (local time), on such date for
the purchase of Dollars with Korean Won for delivery five (5) Business Days
later; provided, however, that if at the time of any such determination, for
-------- -------
any reason, no such spot rate is being quoted, the Agent may use any
reasonable method it deems appropriate to determine such rate, and such
determination shall be conclusive absent manifest error.
"EXISTING LETTERS OF CREDIT" is defined in Section 2.16(b).
----------------------------- ----------------
"FEDERAL FUNDS EFFECTIVE RATE" means, for any day, an interest rate per
------------------------------
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day
which is a Business Day, the average of the quotations at approximately 10:00
a.m. (New York time) on such day on such transactions received by the Agent
from three Federal funds brokers of recognized standing selected by the Agent
in its sole discretion.
"FEES" are described in Section 2.10(C) hereof.
---- ----------------
"FOREIGN EMPLOYEE BENEFIT PLAN" means any employee benefit plan as
--------------------------------
defined in Section 3(3) of ERISA which is maintained or contributed to for the
benefit of the employees of the Company, any of its Subsidiaries or any
members of its Controlled Group and is not covered by ERISA pursuant to ERISA
Section 4(b)(4).
"FOREIGN PENSION PLAN" means any employee benefit plan as described in
----------------------
Section 3(3) of ERISA which (i) is maintained or contributed to for the
benefit of employees of the Company, any of its Subsidiaries or any of its
ERISA Affiliates, (ii) is not covered by ERISA pursuant to Section 4(b)(4) of
ERISA, and (iii) under applicable local law, is required to be funded through
a trust or other funding vehicle.
"GOVERNMENTAL ACTS" is defined in Section 2.21(a) hereof.
------------------ ----------------
"GOVERNMENTAL AUTHORITY" means any nation or government, any federal,
-----------------------
state, local or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"GUARANTY" means each of (i) those certain Guaranties executed in favor
--------
of the Agent for the benefit of the Holders of Secured Obligations pursuant to
which each of the Subsidiary Borrowers and Subsidiary Obligors shall guaranty
all of the Obligations of the other Subsidiary Borrowers and Subsidiary
Obligors and (ii) that certain Guaranty executed by the Company in favor of
the Agent for the benefit of the Holders of Secured Obligations pursuant to
which the Company shall guaranty all of the Obligations of the Subsidiary
Borrowers and the Subsidiary Obligors, in each case, as the same may be
amended, restated, supplemented or otherwise modified from time to time.
"HEDGING AGREEMENTS" is defined in Section 6.3(P).
------------------- ---------------
"HEDGING OBLIGATIONS" of a Person means any and all obligations of such
--------------------
Person, whether absolute or contingent and howsoever and whensoever created,
arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (i) any and all
agreements, devices or arrangements designed to protect at least one of the
parties thereto from the fluctuations of interest rates, commodity prices,
exchange rates or forward rates applicable to such party's assets, liabilities
or exchange transactions, including, but not limited to, dollar-denominated or
cross-currency interest rate exchange agreements, forward currency exchange
agreements, interest rate cap or collar protection agreements, forward rate
currency or interest rate options, puts and warrants, and (ii) any and all
cancellations, buy backs, reversals, terminations or assignments of any of the
foregoing.
"HOLDERS OF SECURED OBLIGATIONS" means the holders of the Secured
---------------------------------
Obligations from time to time and shall refer to (i) each Lender in respect of
-
its Loans and the L/C Obligations owed directly or indirectly to such Lender
(including, if applicable, any agency or Affiliate of a Lender), (ii) the
Issuing Lenders in respect of Reimbursement Obligations and other Obligations
relating to its Letters of Credit, (iii) the Agent, the Arranger, and the
Issuing Lenders in respect of all other present and future obligations and
liabilities of any Borrower or any of their subsidiaries of every type and
description arising under or in connection with this Agreement or any other
Loan Document, (iv) each Indemnitee in respect of the obligations and
liabilities of any Borrower to such Person hereunder or under any of the Loan
Documents, (v) each Lender (or any agency or Affiliate thereof) in respect of
all Hedging Obligations of any Borrower or any of their Subsidiaries to such
lender (or agency or Affiliate thereof) and (vi) their respective successors,
transferees and assigns.
"INDEBTEDNESS" of any Person means (i) any indebtedness of such Person,
------------
contingent or otherwise, (a) in respect of borrowed money including all
principal, interest, fees and expenses with respect thereto (whether or not
the recourse of the lender is to the whole of the assets of such Person or
only to a portion thereof), or (b) evidenced by bonds, notes, acceptances,
debentures or other instruments or letters of credit (or reimbursement
obligations with respect thereto, including, in the case of the Borrowers,
Reimbursement Obligations with respect to amounts funded under the Letters of
Credit) or representing the balance deferred and unpaid of the purchase price
of any property (including pursuant to Capitalized Leases) or services, if and
to the extent any of the foregoing indebtedness would appear as a liability
upon a balance sheet of such Person prepared in accordance with Agreement
Accounting Principles (except that any such balance that constitutes a trade
payable and/or an accrued liability arising in the ordinary course of business
shall not be considered Indebtedness); (ii) to the extent not otherwise
included, (a) any Capitalized Lease Obligations, (b) obligations, whether or
not assumed, secured by Liens or payable out of the proceeds or production
from property now or hereafter owned or acquired by such Person, and (c)
Contingent Obligations in respect of Indebtedness of other Persons (exclusive
of whether such items would appear upon such balance sheet). The amount of
Indebtedness of any Person at any date shall be without duplication (i) the
outstanding balance at such date of all unconditional obligations as described
above and the maximum liability of any such Contingent Obligations at such
date and (ii) in the case of Indebtedness of others secured by a Lien to which
the property or assets owned or held by such Person is subject, the lesser of
(x) the fair market value at such date of any asset subject to a Lien securing
the Indebtedness of others and (y) the amount of the Indebtedness secured.
"INDEMNIFIED MATTERS" is defined in Section 9.7(B) hereof.
-------------------- ---------------
"INDEMNITEES" is defined in Section 9.7(B) hereof.
----------- ---------------
"INTEREST EXPENSE" means, for any period, the consolidated total interest
----------------
expense of the Company and its Subsidiaries, determined on a consolidated
basis, whether paid or accrued, but without duplication (including the
interest component of Capitalized Leases), but excluding interest expense not
payable in cash (including amortization of discount) and excluding the
arrangement fee set forth in the letter agreement between the Agent, the
Arranger and the Company dated February 25, 1998, all as determined in
conformity with Agreement Accounting Principles.
"INTEREST PERIOD" means, (x) with respect to a Eurodollar Loan, a period
----------------
of one (1), two (2), three (3) or six (6) months, and, to the extent available
to all of the Lenders, upon request of the applicable Borrower and only if the
Lenders, in their discretion, shall agree, nine (9) months or twelve (12)
months, and (y) with respect to a Korean Eurodollar Loan, a period of one
(1), two (2) or three (3) months, and, to the extent available to all of the
Lenders, upon request of Purina Korea, Inc. and only if the Lenders, in their
discretion, shall agree, six (6) months, in each case commencing on a Business
Day selected by the applicable Borrower pursuant to this Agreement. Such
Interest Period shall end on (but exclude) the day which corresponds
numerically to such date one, two, three or six months and, if applicable,
nine or twelve months, thereafter; provided, however, that if there is no such
-------- -------
numerically corresponding day in such next, second, third or sixth succeeding
month and, if applicable, ninth or twelfth succeeding month, such Interest
Period shall end on the last Business Day of such next, second, third or sixth
succeeding month and, if applicable, ninth or twelfth succeeding month. With
respect to a Korean Won Advance, Interest Period means a period designated by
the Agent of approximately ninety (90) days. If an Interest Period would
otherwise end on a day which is not a Business Day, such Interest Period shall
end on the next succeeding Business Day, provided, however, that if said next
-------- -------
succeeding Business Day falls in a new calendar month, such Interest Period
shall end on the immediately preceding Business Day.
"INVESTMENT" means, with respect to any Person, (i) any purchase or other
----------
acquisition by that Person of any Equity Interest, notes, debentures or other
securities, or of a beneficial interest in any Equity Interest, notes,
debentures or other securities, issued by any other Person, (ii) any purchase
by that Person of all or substantially all of the assets of a business
conducted by another Person, and (iii) any loan, advance (other than deposits
with financial institutions available for withdrawal on demand, prepaid
expenses, accounts receivable, advances to employees and similar items in each
case made or incurred in the ordinary course of business) or capital
contribution by that Person to any other Person, including all Indebtedness to
such Person arising from a sale of property by such Person other than in the
ordinary course of its business.
"IRS" means the Internal Revenue Service and any Person succeeding to the
---
functions thereof.
"ISSUING LENDER" means, as the context may require, ABN AMRO Bank N.V.,
---------------
with respect to Letters of Credit issued by it pursuant to this Agreement, and
any other Lender that becomes an Issuing Lender, pursuant to Section 2.16,
------------
with respect to Letters of Credit issued by such Lender.
"KNOWLEDGE" means, at any time in respect of any Person and relative to
---------
any matter, knowledge which the Authorized Officers of such Person would
reasonably be expected to have regarding such matter.
"KOREAN CD RATE" means with respect to any Korean Won Advance for any
----------------
specified Interest Period, the rate per annum, as determined by the Agent,
shown on page "KWCD 3M" screen of the Bloomberg L.P. service (or such other
page as may replace the "KWCD 3M" screen on that service) for the purpose of
displaying the rate offered in Seoul, Korea for 91-day certificates of deposit
issued in Seoul, Korea as of 11:00 a.m. (Seoul time) five (5) Business Days
prior to the first day of such Interest Period.
"KOREAN EURODOLLAR ADVANCE" means an Advance to Purina Korea, Inc., in
---------------------------
Dollars which bears interest at the Korean Eurodollar Rate.
"KOREAN EURODOLLAR LOAN" means a Loan, or portion thereof, which bears
------------------------
interest at the Korean Eurodollar Rate.
"KOREAN EURODOLLAR RATE" means a rate per annum equal to the Eurodollar
------------------------
Rate minus the Applicable Eurodollar Margin plus 3.50% per annum.
----- ----
"KOREAN WON ADVANCE" means an advance made pursuant to Section 2.1
-------------------- -----------
denominated in Korean Won to Purina Korea, Inc.
"KOREAN WON LOAN" means with respect to a Lender, such Lender's portion
-----------------
of any Korean Won Advance made pursuant to Section 2.1.
------------
"L/C DRAFT" means a draft drawn on an Issuing Lender pursuant to a Letter
---------
of Credit.
"L/C INTEREST" is defined in Section 2.17.
------------- -------------
"L/C OBLIGATIONS" means, without duplication, an amount equal to the sum
----------------
of (i) the aggregate of the amount then available for drawing under each of
the Letters of Credit, (ii) the face amount of all outstanding L/C Drafts
corresponding to the Letters of Credit, which L/C Drafts have been accepted by
the Issuing Lender, (iii) the aggregate outstanding amount of all
Reimbursement Obligations at such time and (iv) the aggregate face amount of
all Letters of Credit requested by any Borrower but not yet issued (unless the
request for an unissued Letter of Credit has been denied).
"LENDERS" means the lending institutions listed on the signature pages of
-------
this Agreement, including the Issuing Lenders and their respective successors
and assigns.
"LENDING INSTALLATION" means, with respect to a Lender or the Agent, any
---------------------
office, branch, subsidiary or affiliate of such Lender or the Agent.
"LETTER(S) OF CREDIT" means the letters of credit to be issued by one of
--------------------
the Issuing Lenders pursuant to Section 2.16 hereof.
-------------
"LIEN" means any lien (statutory or other), mortgage, pledge,
----
hypothecation, assignment, deposit arrangement, encumbrance or preference,
----
priority or security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, the interest of a vendor or
lessor under any conditional sale, Capitalized Lease or other title retention
agreement).
"LOAN(S)" means with respect to a Lender, such Lender's portion of any
-------
Advance made pursuant to Section 2.1.
------------
"LOAN ACCOUNT" is defined in Section 2.10(F) hereof.
------------- ----------------
"LOAN DOCUMENTS" means this Agreement and all other documents,
---------------
instruments and agreements executed in connection therewith or contemplated
----
thereby, including the letter agreements regarding fees among the Agent, the
Arranger, and the Company and between the Agent and the Borrower, in each case
as the same may be amended, restated or otherwise modified and in effect from
time to time.
"MARGIN STOCK" shall have the meaning ascribed to such term in Regulation
------------
U.
"MATERIAL ADVERSE EFFECT" means a material adverse effect upon (a) the
-------------------------
business, condition (financial or otherwise), operations, performance,
properties or prospects of the Company and its Subsidiaries taken as a whole,
(b) the ability of the Company and the other Borrowers and the Subsidiary
Obligors taken as a whole to perform their obligations under the Loan
Documents in any material respect, or (c) the ability of the Lenders or the
Agent to enforce in any material respect this Agreement, the Obligations or
their rights with respect to the Collateral other than any such inability
resulting form the gross negligence or willful misconduct of any Lender or the
Agent.
"MAXIMUM KOREAN COMMITMENT" shall mean the maximum amount which the
---------------------------
Lenders have agreed to provide as Loans or Letters of Credit to Purina Korea,
Inc. under this Agreement. The initial Maximum Korean Commitment is
$15,000,000.
"MAXIMUM KOREAN WON COMMITMENT" shall mean the maximum amount which the
-------------------------------
Lenders have agreed to provide as Loans or Letters of Credit to Purina Korea,
Inc. in Korean Won under this Agreement. The Dollar Amount of the initial
Maximum Korean Won Commitment is $7,500,000.
"MOODY'S" means Moody's Investors Service, Inc.
-------
"MULTIEMPLOYER PLAN" means a "Multiemployer Plan" as defined in Section
-------------------
4001(a)(3) of ERISA which is, or within the immediately preceding six (6)
years was, contributed to by either the Company or any member of the
Controlled Group.
"NOTICE OF ASSIGNMENT" is defined in Section 12.3(B) hereof.
---------------------- ----------------
"OBLIGATIONS" means all Loans, advances, debts, liabilities, obligations,
-----------
covenants and duties owing by any of the Borrowers or Subsidiary Obligors to
the Agent, the Arranger, or the Lenders, the Issuing Lenders, any Affiliate of
any of the foregoing or any Indemnitee, of any kind or nature, present or
future, arising under this Agreement or any other Loan Document, whether or
not evidenced by any note, guaranty or other instrument, whether or not for
the payment of money, whether arising by reason of an extension of credit,
loan, guaranty, indemnification, or in any other manner, whether direct or
indirect (including those acquired by assignment), absolute or contingent, due
or to become due, now existing or hereafter arising and however acquired. The
term includes, without limitation, all interest, charges, expenses, fees,
attorneys' fees and disbursements, paralegals' fees (in each case whether or
not allowed), and any other sum chargeable to any of the Borrowers or
Subsidiary Obligors under this Agreement or any other Loan Document.
"OTHER TAXES" is defined in Section 2.10(E)(ii) hereof.
------------ --------------------
"PARTICIPANTS" is defined in Section 12.2(A) hereof.
------------ ----------------
"PAYMENT DATE" means the last Business Day of each March, June, September
------------
and December.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
----
thereto.
"PERMITTED ACQUISITION" is defined in Section 6.3(G) hereof.
---------------------- ---------------
"PERMITTED EXISTING CONTINGENT OBLIGATIONS" means the Contingent
--------------------------------------------
Obligations of the Borrowers and all other Subsidiaries of the Company
--
identified as such on Schedule 1.1.1 to this Agreement.
- ---------------
"PERMITTED EXISTING INDEBTEDNESS" means the Indebtedness of the Borrowers
-------------------------------
and all other Subsidiaries of the Company identified as such on Schedule 1.1.2
--------------
to this Agreement.
"PERMITTED EXISTING INVESTMENTS" means the Investments of the Borrowers
--------------------------------
and all other Subsidiaries of the Company identified as such on Schedule 1.1.3
--------------
to this Agreement.
"PERMITTED EXISTING LIENS" means the Liens on assets of the Borrowers or
-------------------------
all other Subsidiaries of the Company identified as such on Schedule 1.1.4 to
--------------
this Agreement.
"PERSON" means any natural person, corporation, firm, company, joint
------
venture, partnership, association, enterprise, trust or other entity or
organization, or any government, domestic or foreign, or political subdivision
or any agency, department or instrumentality thereof.
"PLAN" means an employee benefit plan defined in Section 3(3) of ERISA in
----
respect of which the Company or any member of the Controlled Group is, or
within the immediately preceding six (6) years was, an "employer" as defined
in Section 3(5) of ERISA.
"PLEDGE AGREEMENTS" means those certain Pledge Agreements pursuant to
------------------
which the Company pledges to the Agent for the benefit of the Holders of
Secured Obligations all of the Capital Stock of each of the Subsidiary
Borrowers and Subsidiary Obligors.
"PRIME RATE" shall mean the rate of interest per annum announced from
-----------
time to time by the Agent as its prime lending rate in effect at its principal
office in New York, New York; each change in the Prime Rate shall be effective
on the date such change is announced. The Prime Rate is a reference rate and
does not necessarily represent the lowest or best rate charged to any
customers. ABN AMRO Bank N.V. and the other Lenders may make commercial loans
or other loans at rates of interest at, above or below the Prime Rate.
"PRO RATA SHARE" means, with respect to any Lender, the percentage
----------------
obtained by dividing (A) such Lender's Commitment at such time (as adjusted
from time to time in accordance with the provisions of this Agreement) by (B)
the Aggregate Commitments at such time; provided, however, if all of the
-------- -------
Commitments are terminated pursuant to the terms of this Agreement, then "Pro
Rata Share" means the percentage obtained by dividing (x) the sum of all of
such Lender's Loans and L/C Obligations by (y) the aggregate amount of all
Loans and L/C Obligations.
"PURCHASERS" is defined in Section 12.3(A) hereof.
---------- ----------------
"RATE OPTION" means the applicable Eurodollar Rate or Base Rate.
------------
"REGULATION G" means Regulation G of the Board of Governors of the
-------------
Federal Reserve System as from time to time in effect and any successor or
other regulation or official interpretation of said Board of Governors
relating to the extension of credit by nonbank, nonbroker lenders for the
purpose of purchasing or carrying margin stock (as defined therein).
"REGULATION T" means Regulation T of the Board of Governors of the
-------------
Federal Reserve System as from time to time in effect and any successor or
other regulation or official interpretation of said Board of Governors
relating to the extension of credit by and to brokers and dealers of
securities for the purpose of purchasing or carrying margin stock (as defined
therein).
"REGULATION U" means Regulation U of the Board of Governors of the
-------------
Federal Reserve System as from time to time in effect and any successor or
other regulation or official interpretation of said Board of Governors
relating to the extension of credit by banks for the purpose of purchasing or
carrying Margin Stock applicable to member banks of the Federal Reserve
System.
"REGULATION X" means Regulation X of the Board of Governors of the
-------------
Federal Reserve System as from time to time in effect and any successor or
other regulation or official interpretation of said Board of Governors
relating to the extension of credit by foreign lenders for the purpose of
purchasing or carrying margin stock (as defined therein).
"REIMBURSEMENT OBLIGATION" is defined in Section 2.18 hereof.
------------------------- -------------
"RELEASE" means any release, spill, emission, leaking, pumping,
-------
injection, deposit, disposal, discharge, dispersal, leaching or migration of
---
Contaminants into the indoor or outdoor environment, including the movement of
Contaminants through or in the air, soil, surface water or groundwater.
"REPLACEMENT LENDER" is defined in Section 2.15 hereof.
------------------- -------------
"REPORTABLE EVENT" means a reportable event as defined in Section 4043 of
----------------
ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation waived the
requirement of Section 4043(a) of ERISA that it be notified within 30 days
after such event occurs; provided, however, that a failure to meet the minimum
-------- -------
funding standards of Section 412 of the Code and of Section 302 of ERISA shall
be a Reportable Event regardless of the issuance of any such waiver of the
notice requirement in accordance with either Section 4043(a) of ERISA or
Section 412(d) of the Code.
"REQUIRED LENDERS" means Lenders whose Pro Rata Shares, in the aggregate,
----------------
are at least sixty-six and two-thirds percent (66-2/3%), provided, however,
-------- -------
that, if any of the Lenders shall have failed to fund its Revolving Credit
Share of any Loan requested by any Borrower which such Lenders are obligated
to fund under the terms of this Agreement and any such failure has not been
cured, then for so long as such failure continues, "REQUIRED LENDERS" means
Lenders (excluding all Lenders whose failure to fund such Loans have not been
so cured) whose Pro Rata Shares represent at least sixty-six and two-thirds
percent (66-2/3%) of the aggregate Pro Rata Shares of such non-defaulting
Lenders; provided, further, however, that, if the Commitments have been
-------- ------- -------
terminated pursuant to the terms of this Agreement, "REQUIRED LENDERS" means
Lenders (without regard to such Lenders' performance of their respective
obligations hereunder) whose aggregate ratable shares (stated as a percentage)
of the aggregate outstanding principal balance of all Loans and L/C
Obligations are at least sixty-six and two-thirds percent (66-2/3%).
"REQUIREMENTS OF LAW" means, as to any Person, the charter and by-laws or
-------------------
other organizational or governing documents of such Person, and any law, rule
or regulation, or determination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is
subject including, without limitation, the Securities Act, the Securities
Exchange Act, Regulations G, T, U and X, ERISA, the Fair Labor Standards Act,
the Worker Adjustment and Retraining Notification Act, Americans with
Disabilities Act of 1990, and any certificate of occupancy, zoning ordinance,
building, environmental or land use requirement or Permit or environmental,
labor, employment, occupational safety or health law, rule or regulation,
including Environmental, Health or Safety Requirements of Law.
"RESERVE REQUIREMENT" means the maximum reserve requirement, as
--------------------
prescribed by the Board of Governors of the Federal Reserve System (or any
---
successor) with respect to "Eurodollar liabilities" or in respect of any other
category of liabilities which includes deposits by reference to which the
interest rate on Eurodollar Loans is determined or category of extensions of
credit or other assets which includes loans by a non-United States office of
any Lender to United States residents.
"RESET DATE" is defined in Section 1.2.
----------- ------------
"RESTRICTED JUNIOR PAYMENT" means (i) any dividend or other distribution,
-------------------------
direct or indirect, on account of any ownership, membership or other Equity
Interest in the Company now or hereafter outstanding, except a dividend
payable solely in additional interests of the same type, (ii) any redemption,
retirement, sinking fund or similar payment, purchase or other acquisition for
value, direct or indirect, of any ownership, membership or other Equity
Interest in the Company or any such interests or shares of any class of
Capital Stock of the Company now or hereafter outstanding, (iii) any payment
made to redeem, purchase, repurchase or retire, or to obtain the surrender of,
any outstanding options or other rights to acquire any ownership, membership
or other Equity Interests in the Company and (iv) any payment of a claim for
the rescission of the purchase or sale of, or for material damages arising
from the purchase or sale of any ownership, membership or other Equity
Interests in the Company or of a claim for reimbursement, indemnification or
contribution arising out of or related to any such claim for damages or
rescission.
"REVOLVING ADVANCE" means a borrowing hereunder consisting of the
------------------
aggregate amount of the several ratable Revolving Loans made by the Lenders to
-
any Borrower having Commitments to such Borrower of the same Type and, in the
case of Eurodollar Advances, denominated in the same currency and for the same
Interest Period.
"REVOLVING CREDIT AVAILABILITY" means, at any particular time, the amount
-----------------------------
by which the Aggregate Commitment at such time exceeds the Dollar Amount of
the Revolving Credit Obligations at such time.
"REVOLVING CREDIT OBLIGATIONS" means, at any particular time, the sum of
-----------------------------
(i) the outstanding principal Dollar Amount of the Revolving Loans at such
time, plus (ii) the L/C Obligations at such time.
----
"REVOLVING CREDIT SHARE" means, with respect to any Lender, the
------------------------
percentage obtained by dividing (A) such Lender's Commitment at such time by
---
(B) the Aggregate Commitment at such time.
"REVOLVING LOAN" is defined in Section 2.1.
--------------- ------------
"RISK-BASED CAPITAL GUIDELINES" is defined in Section 3.2 hereof.
------------------------------- ------------
"SECURED OBLIGATIONS" means, collectively, (i) the Obligations and (ii)
--------------------
all Hedging Obligations owing to one or more of the Lenders (or any agency or
Affiliate thereof) by any of the Borrowers or Subsidiary Obligors.
"S&P" means Standard & Poor's Ratings Group.
---
"SINGLE EMPLOYER PLAN" means a Plan maintained by the Company or any
----------------------
member of the Controlled Group for employees of the Company or any member of
the Controlled Group.
"SUBSIDIARY" of a Person means (i) any corporation more than 50% of the
----------
outstanding Capital Stock having ordinary voting power of which shall at the
time be owned or controlled, directly or indirectly, by such Person or by one
or more of its Subsidiaries or by such Person and one or more of its
Subsidiaries, or (ii) any company, partnership, association, joint venture or
similar business organization more than 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned or controlled.
Unless otherwise expressly provided, all references herein to a "Subsidiary"
shall mean a direct or indirect Subsidiary of the Company.
"SUBSIDIARY BORROWERS" means those Borrowers which are Subsidiaries of
---------------------
the Company.
"SUBSIDIARY OBLIGORS" means Purina Korea, Inc., a corporation organized
--------------------
under the laws of Korea, Industrias Purina S.A. de C.V., a company organized
under the laws of Mexico, Purina Colombiana S.A., a company organized under
the laws of Colombia, Agribrands Purina do Brasil, Ltda., a company organized
under the laws of Brazil, Purina Philippines, Inc., a corporation organized
under the laws of the Philippines, and Purina de Venezuela, C.A., a company
organized under the laws of Venezuela.
"TAXES" is defined in Section 2.10(E)(i) hereof.
----- -------------------
"TERMINATION DATE" means the earlier of (a) March 31, 2001 or (b) the
-----------------
date of termination of the Commitments pursuant to Section 8.1.
------------
"TERMINATION EVENT" means (i) a Reportable Event with respect to any
------------------
Benefit Plan; (ii) the withdrawal of the Company or any member of the
Controlled Group from a Benefit Plan during a plan year in which the Company
or such Controlled Group member was a "substantial employer" as defined in
Section 4001(a)(2) of ERISA or the cessation of operations which results in
the termination of employment of twenty percent (20%) of Benefit Plan
participants who are employees of the Company or any member of the Controlled
Group; (iii) the imposition of an obligation on the Company or any member of
the Controlled Group under Section 4041 of ERISA to provide affected parties
written notice of intent to terminate a Benefit Plan in a distress termination
described in Section 4041(c) of ERISA; (iv) the institution by the PBGC of
proceedings to terminate a Benefit Plan; (v) any event or condition which
might constitute grounds under Section 4042 of ERISA for the termination of,
or the appointment of a trustee to administer, any Benefit Plan; or (vi) the
partial or complete withdrawal of the Company or any member of the Controlled
Group from a Multiemployer Plan.
"TOTAL DEBT" means the sum of all Indebtedness of the Company and its
-----------
Subsidiaries (including, without limitation and without duplication, standby
letters of credit (whether on or off-balance sheet)) minus ordinary course
-----
liability for trade indebtedness (including reimbursement under commercial
letters of credit).
"TRANCHE C OBLIGATIONS" means the Obligations of the Borrowers other than
---------------------
Purina Korea, Inc.
"TRANCHE D OBLIGATIONS" means the Obligations of the Subsidiary Obligors.
---------------------
"TRANSFEREE" is defined in Section 12.5 hereof.
---------- -------------
"TYPE" means, with respect to any Advance, its nature as a Base Rate
----
Advance or a Eurodollar Advance or a Korean Eurodollar Advance or a Korean Won
Advance.
"UNMATURED DEFAULT" means an event which, but for the lapse of time or
------------------
the giving of notice, or both, would constitute a Default.
The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms. Any accounting terms used in
this Agreement which are not specifically defined herein shall have the
meanings customarily given them in accordance with United States generally
accepted accounting principles in existence as of the date hereof.
1.2 Currency Equivalents. Not later than 1:00 p.m., New York time or
---------------------
Seoul, Korea time, as applicable, on each Calculation Date, the Agent shall
(i) determine the Exchange Rate as of such Calculation Date with respect to
Korean Won and (ii) give notice thereof to the Company and the Lenders. The
Exchange Rates so determined shall become effective immediately with respect
to any new Loans being made or Letters of Credit being issued on any
Calculation Date and otherwise on the fifth Business Day immediately following
the relevant Calculation Date (a "RESET DATE"), shall remain effective until
the next succeeding Reset Date and shall during the period of their
effectiveness be employed in making any computation of currency equivalents
required to be made under this Agreement.
ARTICLE II: THE CREDITS
- ----------------------------
2.1 Revolving Loans to the Company and the Subsidiary Borrowers. Upon
-----------------------------------------------------------
the satisfaction of the conditions precedent set forth in Sections 4.1 and 4.2
------------ ---
hereof, from and including the date of this Agreement and prior to the
Termination Date, each Lender with a Commitment severally and not jointly
agrees, on the terms and conditions set forth in this Agreement, to make
revolving loans to the Company and/or the Subsidiary Borrowers from time to
time, in Dollars or, with respect to Purina Korea, Inc., Korean Won, in a
Dollar Amount, not to exceed such Lender's Revolving Credit Share of the
Dollar Amount of the Revolving Credit Availability at such time (each
individually, a "REVOLVING LOAN" and, collectively, the "REVOLVING LOANS");
provided, however, at no time shall the Dollar Amount of the Revolving Credit
------ -------
Obligations in Korean Won exceed the Maximum Korean Won Commitment other than
as a result of currency fluctuations and then only to the extent permitted in
Section 2.2(B); provided, further, however, at no time shall the amount of the
- -------------- -------- ------- -------
Revolving Credit Obligations owed by any of the Borrowers pursuant to this
Agreement exceed the corresponding amounts listed below:
Agribrands International, Inc. $ 5,000,000
Agribrands Canada, Inc. $ 6,500,000
Purina Italia S.p.A. $ 4,000,000
Purina Espana, S.A. $ 2,500,000
Purina Hungaria Animal Feed
Production & Trading Company Ltd. $ 2,000,000
Purina Korea, Inc. $15,000,000
Each Revolving Advance under this Section 2.1 shall consist of Revolving Loans
-----------
made by each such Lender ratably in proportion to such Lender's respective
Revolving Credit Share. Subject to the terms of this Agreement, the Borrowers
may borrow, repay and reborrow at any time prior to the Termination Date.
Korean Won Advances and Korean Eurodollar Advances shall bear interest at the
rates prescribed in Section 2.4(c). On the Termination Date, the outstanding
--------------
principal balance of the Revolving Loans shall be paid in full by the
applicable Borrower and prior to the Termination Date prepayments of the
Revolving Loans shall be made if and to the extent required in Section 2.2(B).
--------------
2.2 Prepayments (A) Optional Payments. Upon prior notice to the Agent
----------- -----------------
which notice shall be given not later than 11:00 a.m. (New York time) on the
date of payment, the Borrowers may from time to time repay or prepay, without
penalty or premium all or any part of outstanding Base Rate Advances. Subject
to payment of all amounts payable pursuant to Section 3.4 upon not less than
-----------
(x) five (5) Business Days' prior notice with respect to Advances to Purina
Korea, Inc. and (y) two (2) Business Day's prior notice with respect to all
other Advances, in each case to the Agent which notice shall be given not
later than 11:00 a.m. (New York time or Seoul, Korea time, as applicable), the
Borrowers may from time to time repay or prepay all or any part of the Korean
Eurodollar Advances or Korean Won Advances, or Eurodollar Advances,
respectively. Unless the aggregate outstanding principal balance of the
applicable Loans is to be prepaid in full, voluntary prepayments of the Loans
shall be in the same aggregate minimum amounts and integral multiples in
excess of such amounts as are required for borrowings of Loans of the same
Type and in the same currency as set forth in Section 2.5.
------------
(B) Mandatory Prepayments. If at any time the Dollar Amount of the
----------------------
Revolving Credit Obligations is greater than 105% of the Aggregate Commitment,
the Borrowers shall within five (5) Business Days after receiving notice
thereof from the Agent make a mandatory prepayment (i) of the Obligations in
an amount equal to such excess and (ii) of the Korean Won Loans and/or L/C
Obligations denominated in Korean Won in an aggregate amount such that after
giving effect thereto the Dollar Amount of the sum of the Korean Won Loans and
L/C Obligations denominated in Korean Won is less than or equal to the Maximum
Korean Won Commitment.
2.3 Method of Borrowing. The Agent shall promptly notify each Lender
--------------------
having Commitments of each Revolving Advance on the Borrowing Date of each
Base Rate Advance, three (3) Business Days before the Borrowing Date of each
Eurodollar Advance, three (3) Business Days before the Borrowing Date of each
Korean Eurodollar Advance, and five (5) Business Days before the Borrowing
Date for each Korean Won Advance, and, not later than 2:00 p.m. (New York time
or Seoul, Korea time, as applicable) on each Borrowing Date, each Lender
having Revolving Credit Commitments shall make available its Revolving Loan or
Loans, in funds immediately available in New York, New York to the Agent at
its address specified pursuant to Article XIII hereof unless the Agent has
------------
notified the Lenders that such Loan is to be made available to Purina Korea,
Inc. at the Agent's office in Seoul, Korea, in which case each Lender shall
make available its Revolving Loan or Loans, in funds immediately available to
the Agent at its office in Seoul, Korea not later than 2:00 p.m. at the
Agent's office in Seoul, Korea in Korean Won or Dollars, as requested. The
Agent will promptly make the funds so received from the Lenders available to
the applicable Borrower.
2.4 Method of Selecting Types and Interest Periods for Advances;
------------------------------------------------------------------
Determination of Applicable Margins, Interest on Advances to Purina Korea,
-----------------------------------------------------------------------
Inc. The Advances (other than Korean Won Advances or Korean Eurodollar
Advances) may be Base Rate Advances or Eurodollar Advances, or a combination
thereof, selected by the applicable Borrower in accordance with this Article
-------
II. Advances to Purina Korea, Inc., shall bear interest as prescribed in
-
Section 2.4(c). The applicable Borrower may select, in accordance with this
-
Article II, Rate Options and Interest Periods applicable to portions of the
----------
Revolving Loans.
-
(a) Method of Selecting Types and Interest Periods for Advances The
-------------------------------------------------------------
applicable Borrower shall select the Type of Advance and, in the case of each
Eurodollar Advance or Korean Eurodollar Advance, the Interest Period
applicable to each Advance from time to time. The applicable Borrower shall
give the Agent irrevocable notice (a "BORROWING NOTICE") not later than 11:00
a.m., New York time (or Seoul time for Korean Won Advances or Korean
Eurodollar Advance) (i) on the Borrowing Date of each Base Rate Advance; (ii)
three (3) Business Days before the Borrowing Date for each Eurodollar Advance;
(iii) three (3) Business Days before the Borrowing Date for each Korean
Eurodollar Advance; and (iv) five (5) Business Days before the Borrowing Date
for each Korean Won Advance, specifying: (i) the Borrowing Date (which shall
be a Business Day) of such Advance; (ii) the aggregate amount of such Advance;
(iii) the Type of Advance selected, as applicable; and (iv) in the case of
each Eurodollar Advance or Korean Eurodollar Advance, the Interest Period.
There shall be (x) no more than twenty (20) Interest Periods in effect with
respect to all of the Revolving Loans at any time, and (y) with respect to any
Borrower individually, no more than four (4) Interest Periods in effect with
respect to all of the Revolving Loans made to such Borrower at any time, in
each case, with Interest Periods for the same term but in different currencies
or to different Borrowers being treated as separate Interest Periods. Each
Base Rate Advance shall bear interest from and including the date of the
making of such Advance to (but not including) the date of repayment thereof at
the Base Rate, changing when and as such Base Rate changes. Each Eurodollar
Advance, Korean Eurodollar Advance and Korean Won Advance shall bear interest
from and including the first day of the Interest Period applicable thereto to
(but not including) the last day of such Interest Period at the interest rate
determined as applicable to such Advance. All Obligations (other than
Advances) shall bear interest from and including the date such amount is
payable under the terms of this Agreement or the other Loan Documents to (but
not including) the date of repayment thereof at the Base Rate, changing when
and as such Base Rate changes. Changes in the rate of interest on that
portion of any Advance maintained as a Base Rate Loan or such other
Obligations will take effect simultaneously with each change in the applicable
Base Rate.
(b) Determination of Applicable Margins, Applicable Letter of Credit Fee
--------------------------------------------------------------------
and Applicable Facility Fee.
- ------------------------------
(i) Definitions. As used in this Section 2.4(b) and in this Agreement,
----------- --------------
the following terms shall have the following meanings:
"Applicable Margins", "Applicable Facility Fee" and "Applicable Letter of
------------------ ----------------------- --------------------
Credit Fee" shall mean the Applicable Base Rate Margins and/or Applicable
- -----------
Eurodollar Margins, with respect to Loans and the Applicable Facility Fee
- ----
and/or Applicable Letter of Credit Fee, with respect to fees payable as the
- ----
case may be. The Applicable Margins shall be determined, in accordance with
- --
the provisions of this Section 2.4(b), by reference to the following:
- - ---------------
<PAGE>
<TABLE>
<CAPTION>
EBITDA APPLICABLE APPLICABLE APPLICABLE LETTER OF APPLICABLE APPLICABLE
CONTRIBUTION BASE RATE EURODOLLAR MARGIN CREDIT FEE FOR FACILITY FEE FOR FACILITY FEE FOR
RATIO MARGIN FOR FOR TRANCHE A LETTERS OF CREDIT COMMITMENTS COMMITMENTS
TRANCHE A OBLIGATIONS AND ISSUED FOR THE WITH RESPECT TO WITH RESPECT TO
OBLIGATIONS APPLICABLE LETTER OF ACCOUNT OF TRANCHE A TRANCHE B
CREDIT FEE FOR LETTERS SUBSIDIARY OBLIGORS OBLIGATIONS OBLIGATIONS
OF CREDIT ISSUED FOR (OTHER THAN PURINA
THE ACCOUNT OF KOREA, INC.)
BORROWERS (OTHER
THAN PURINA KOREA,
INC.)
<S> <C> <C> <C> <C> <C> <C>
LEVEL I GREATER THAN
1.50 TO 1.00 0.25% 1.50% 1.75% 0.50% Z 1.75%
LEVEL II LESS THAN OR
EQUAL TO 1.50 TO
1.00 AND GREATER 0% 1.00% 1.25% 0.375% 1.25%
THAN OR EQUAL TO
1.00 TO 1.00
LEVEL III LESS THAN 1.00
TO 1.0
0% 0.75% 1.00% 0.25% 1.00%
LEVEL IV COMPANY'S
RATING EQUAL TO
OR BETTER THAN 0% 0.50% 0.75% 0.175% 0.75%
BBB- FROM S&P
OR BAA3 FROM
MOODY'S
</TABLE>
(ii) Determination of Applicable Margins, Applicable Letter of Credit Fee and
------------------------------------------------------------------------
Applicable Facility Fee.
- -------------------------
(A) The Applicable Margins in respect of any Loan, the Applicable Letter
of Credit Fee payable under Section 2.10(C) and the Applicable Facility Fee
---------------
payable under Section 2.10(c) shall be determined by reference to the table
----------------
set forth in clause (i) above, as applicable, on the basis of the EBITDA
-----------
Contribution Ratio determined by reference to the most recent financial
statements delivered pursuant to Section 6.1(A)(i) or 6.1(A)(ii); provided,
----------------- ---------- --------
however, for the period from the Closing Date until August 31, 1998, the
-----
Applicable Margins, Applicable Letter of Credit Fee, Applicable Facility Fee
---
shall be at Level II; provided, further that Level IV shall be applicable only
-------- -------
in the event that the Company shall have a rating of equal to or better than
BBB- from S&P or Baa3 from Moody's and, provided, further, however, that the
-------- ------- -------
Borrowers shall not be eligible for any reduction in the pricing prescribed in
this Section 2.4 in the event that as of the date of determination, the
------------
Company's Consolidated EBITDA for the most recently completed four fiscal
-
quarters (or, prior to March 31, 1999, the period from the Closing Date to the
end of the most recently completed quarter) shall be less than 80% of the
Company's forecasted Consolidated EBITDA for such period as set forth on
Exhibit G hereto.
-----
(B) Upon receipt of the financial statements delivered pursuant to
Section 6.1(A)(i) or Section 6.1(A)(ii), as applicable, the Applicable Margins
------------ ------------------
for all outstanding Loans, the Applicable Letter of Credit Fee and Applicable
Facility Fee shall be adjusted, such adjustment being effective on the first
(1st) Business Day after receipt of such financial statements and the
Compliance Certificate to be delivered in connection therewith; provided,
--------
however, if the Borrowers shall not have timely delivered such financial
---
statements in accordance with Section 6.1(A)(i) or Section 6.1(A)(ii), as
- ------------------ ------------------
applicable, beginning with the date upon which such financial statements
should have been delivered and continuing until such financial statements are
delivered, it shall be assumed for purposes of determining the Applicable
Margins, the Applicable Facility Fee and the Applicable Letter of Credit Fee
that the EBITDA Contribution Ratio was greater than 1.50 to 1.0.
(c) Interest on Advances to Purina Korea, Inc. Advances to Purina
----------------------------------------------
Korea, Inc. in Korean Won shall bear interest in the per annum rate equal to
the Korean CD Rate minus 6.00% per annum. Advances to Purina Korea, Inc. in
-----
Dollars shall bear interest at a rate per annum equal to the Korean Eurodollar
Rate.
2.5 Minimum Amount of Each Advance. Each Eurodollar Advance or Korean
------------------------------
Eurodollar Advance shall be in the minimum amount of $1,000,000 (and in
multiples of $100,000 if in excess thereof). Each Base Rate Advance shall be
in the minimum amount of $1,000,000 (and in multiples of $100,000 if in excess
thereof), provided, however, that any Base Rate Advance may be in the amount
-------- -------
of the unused Aggregate Commitment. Each Korean Won Advance shall be in the
minimum amount of 1,000,000,000 Won (and in multiples of 500,000,000 Won if in
excess thereof).
2.6 Method of Selecting Types and Interest Periods for Conversion and
------------------------------------------------------------------
Continuation of Advances.
------------------------
(A) Right to Convert. The Borrowers may elect from time to time,
------------------
subject to the provisions of Section 2.3, Section 2.4, and this Section 2.6 to
----------- ----------- -----------
convert all or any part of a Loan of any Type into any other Type or Types of
Loans; provided that any conversion of any Eurodollar Advance or Korean
--------
Eurodollar Advance shall be made on, and only on, the last day of the Interest
Period applicable thereto.
(B) Automatic Conversion and Continuation. Base Rate Loans shall
----------------------------------------
continue as Base Rate Loans unless and until such Base Rate Loans are
converted into Eurodollar Loans. Eurodollar Loans shall continue as
Eurodollar Loans until the end of the then applicable Interest Period
therefor, at which time such Eurodollar Loans shall be automatically converted
into Base Rate Loans unless the applicable Borrower shall have given the Agent
requesting that, at the end of such Interest Period, such Eurodollar Loans
continue as a Eurodollar Loan. Korean Eurodollar Advances shall continue as
Korean Eurodollar Advances until repaid and Korean Won Advances shall continue
as Korean Won Advances until repaid.
(C) No Conversion Post-Default or Post-Unmatured Default.
---------------------------------------------------------
Notwithstanding anything to the contrary contained in Section 2.6(A) or
--- --------------
Section 2.6(B), no Loan may be converted into or continued as a Eurodollar
---------
Loan except with the consent of the Required Lenders when any Default or
Unmatured Default has occurred and is continuing.
(D) Conversion/Continuation Notice. The Borrower shall give the Agent
------------------------------
irrevocable notice (a "CONVERSION/CONTINUATION NOTICE") of each conversion of
a Base Rate Loan into a Eurodollar Loan or continuation of a Eurodollar Loan
not later than 11:00 a.m. (New York time) three Business Days before the
proposed date of such conversion or continuation, specifying: (1) the
requested date (which shall be a Business Day) of such conversion or
continuation; (2) the amount and Type of the Loan to be converted or
continued; and (3) the amounts of Eurodollar Loan(s) into which such Loan is
to be converted or continued and the duration of the Interest Periods
applicable thereto.
2.7 Default Rate. After the occurrence and during the continuance of a
------------
Default, the interest rate(s) applicable to the Obligations and the letter of
credit fee payable under Section 2.20 with respect to Letters of Credit shall
------------
be increased by two percent (2.0%) per annum above the Base Rate, Eurodollar
Rate, Korean CD Rate, Korean Eurodollar Rate or Applicable Letter of Credit
Fee, as applicable.
2.8 Method of Payment. All payments of principal, interest, and fees
-------------------
hereunder shall be made, without setoff, deduction or counterclaim, to the
Agent (i) at the Agent's office in New York, New York (or, in the case of
Advances to Purina Korea, Inc., Seoul, Korea) in immediately available funds
or at any other Lending Installation of the Agent specified in writing by 9:00
a.m. (New York time) on the day before the date when due by the Agent to the
Company, by 12:00 noon (New York time) with respect to Advances to Borrowers
other than Purina Korea, Inc. and 12:00 noon (Seoul time) with respect to
Advances to Purina Korea, Inc. on the date when due and shall be made ratably
among the applicable Lenders with respect to Revolving Advances in proportion
to their Revolving Credit Shares (unless such amount is not to be shared
ratably in accordance with the other terms hereof). Each Advance shall be
repaid or prepaid in the currency in which it was made in the amount borrowed
and interest payable thereon shall be paid in such currency. Each payment
delivered to the Agent for the account of any Lender shall be delivered
promptly by the Agent to such Lender in the same type of funds which the Agent
received at its address specified pursuant to Article XIII or at any Lending
------------
Installation specified in a notice received by the Agent from such Lender by
9:00 a.m. (New York time) on the Business Day prior to the date such payment
is to be made. The Borrowers authorize the Agent to charge any account of any
Borrower maintained with the Agent, as applicable, for each payment of
principal, interest and fees as it becomes due hereunder if not paid when due.
Notwithstanding the foregoing provisions of this Section, if, after the making
of any Advance in Korean Won, currency control or exchange regulations are
imposed in the Republic of Korea with the result that different types of such
currency (the "NEW CURRENCY") are introduced and the type of currency in which
the Advance was made (the "ORIGINAL CURRENCY") no longer exists or Purina
Korea, Inc. is not able to make payment to the Agent for the account of the
applicable Lenders in such Original Currency, then all payments to be made by
Purina Korea, Inc. hereunder in such Original Currency shall be made in such
amount and such type of the New Currency or Dollars as shall be equivalent to
the amount of such payment otherwise due hereunder in the Original Currency as
determined as of the date of repayment, it being the intention of the parties
hereto that the Borrowers take all risks of the imposition of any such
currency control or exchange regulations.
2.9 Evidence of Debt; Telephonic Notices.
----------------------------------------
(a) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrowers to such
Lender resulting from each Loan made by such Lender, including the amounts of
principal and interest payable and paid to such Lender from time to time
hereunder.
(b) The Agent shall maintain accounts in which it shall record (i) the
amount of each Loan made hereunder, the Type thereof and the Interest Period,
if any, applicable thereto, (ii) the amount of any principal or interest due
and payable or to become due and payable from the Borrowers to each Lender
hereunder and (iii) the amount of any sum received by the Agent hereunder for
the account of the Lenders and each Lender's share thereof.
(c) The entries made in the accounts maintained pursuant to subsections
-----------
(a) or (b) of this Section shall be prima facie evidence of the existence and
- --- --- ----- -----
amounts of the obligations recorded therein; provided that the failure of any
--------
Lender or the Agent to maintain such accounts or any error therein shall not
in any manner affect the obligation of any Borrower to repay the Loans in
accordance with the terms of this Agreement.
(d) Any Lender may request that the Revolving Loans made by it each be
evidenced by a promissory note. In such event, each Borrower shall prepare,
execute and deliver to such Lender a promissory note for Revolving Loans
payable to the order of such Lender (or, if requested by such Lender, to such
Lender and its registered assigns) and in a form approved by the Agent and
consistent with the terms of this Agreement. Thereafter, the Loans evidenced
by such promissory notes and interest thereon shall at all times (including
after assignment pursuant to Section 12.3) be represented by one or more
-------------
promissory notes in such form payable to the order of the payee named therein
(or, if such promissory note is a registered note, to such payee and its
registered assigns).
(e) Each Borrower authorizes the Lenders and the Agent to extend,
convert or continue Advances, effect selections of Types of Advances and to
transfer funds based on telephonic notices made by any person or persons the
Agent or any Lender in good faith believes to be an Authorized Officer acting
on behalf of any Borrower. Each Borrower agrees to deliver promptly to the
Agent a written confirmation of each telephonic notice signed by an Authorized
Officer. If the written confirmation differs in any material respect from the
action taken by the Agent and the Lenders, the records of the Agent and the
Lenders shall govern absent manifest error. In case of disagreement
concerning such notices, if the Agent has recorded telephonic borrowing
notices, such recordings will be made available to the Company.
2.10 Promise to Pay; Interest and Fees; Interest Payment Dates; Interest
-------------------------------------------------------------------
and Fee Basis; Taxes; Loan and Control Accounts.
- ------------------------------------------------------
(A) Promise to Pay. Each of the Borrowers unconditionally promises to
--------------
pay when due without setoff, deduction or counterclaim the principal amount of
each Loan made to it and all other Obligations incurred by it, and to pay all
unpaid interest accrued thereon, in accordance with the terms of this
Agreement, it being understood and agreed that each Subsidiary Borrower and
Subsidiary Obligor shall be obligated to repay only the Loans made to it and
pay the other Obligations incurred by it and certain other Loans made and
Obligations incurred by other Subsidiary Borrowers and Subsidiary Obligors.
Subject to the foregoing, the Borrowers and Subsidiary Obligors agree that
they will pay the Tranche C Obligations on or before the Termination Date and
the Tranche D Obligations on or before the date on which the Aggregate
Commitment with respect to Tranche D Obligations shall expire.
(B) Interest Payment Dates. Interest accrued on each Base Rate Loan
------------------------
shall be payable on each Payment Date, commencing with the first such date to
occur after the date hereof, on any date on which the Base Rate Loan is
prepaid, whether due to acceleration or otherwise, and at maturity (whether by
acceleration or otherwise). Interest accrued on each Eurodollar Loan or
Korean Eurodollar Loan or Korean Won Loan shall be payable on the last day of
its applicable Interest Period, on any date on which the Eurodollar Loan or
Korean Eurodollar Loan is prepaid, whether by acceleration or otherwise, and
at maturity; provided, interest accrued on each Eurodollar Loan or Korean
--------
Eurodollar Loan having an Interest Period longer than three months shall also
be payable on the last day of each three-month interval during such Interest
Period. Interest accrued on the principal balance of all other Obligations
shall be payable in arrears (i) upon repayment thereof in full or in part,
(ii) if not theretofore paid in full, at the time such other Obligation
becomes due and payable (whether by acceleration or otherwise) and (iii) if
not theretofore paid in full, on demand, commencing on the first such day
following the date such Obligation became payable pursuant to the terms of
this Agreement or the other Loan Documents.
(C) Fees. (i) The Company shall pay or cause the appropriate
----
Subsidiary to pay to the Agent, for the account of the Lenders in accordance
with their Pro Rata Shares, a facility fee accruing at the rate of the
Applicable Facility Fee per annum from and after the Closing Date until the
Termination Date on the sum of the Aggregate Commitment in effect from time to
time minus the Maximum Korean Won Commitment. All such facility fees payable
under this clause (C) shall be payable quarterly in arrears on each Payment
-----------
Date commencing June 30, 1998 and on the Termination Date. In addition, the
Company shall pay to the Agent, for the account of the Lenders in accordance
with their Pro Rata Shares, a Korean facility fee accruing at the rate of
3.00% per annum payable on the Maximum Korean Won Commitment from and after
the Closing Date until the Termination Date, payable quarterly in arrears on
each Payment Date commencing June 30, 1998 and on the Termination Date.
(ii) The Company agrees to pay or cause the appropriate Subsidiary to
pay to the Agent the fees set forth in the letter agreement between the Agent
and the Company dated February 25, 1998.
(D) Interest and Fee Basis. Interest on Eurodollar Loans, Korean
-------------------------
Eurodollar Loans and Korean Won Loans and fees shall be calculated for actual
days elapsed on the basis of a 360-day year. Interest on Base Rate Loans
shall be calculated for actual days elapsed on the basis of a 365/366-day
year. Interest shall be payable for the day an Obligation is incurred but not
for the day of any payment on the amount paid if payment is received prior to
12:00 noon (New York time) with respect to Advances (other than Advances to
Purina Korea, Inc.) and 12:00 noon (Seoul time) with respect to Advances to
Purina Korea, Inc. If any payment of principal of or interest on a Loan or
any payment of any other Obligations shall become due on a day which is not a
Business Day, such payment shall be made on the next succeeding Business Day
and, in the case of a principal payment, such extension of time shall be
included in computing interest in connection with such payment; provided,
--------
however, if such extension of payment would cause payment of principal or
---
interest on any Eurodollar Loan or Korean Eurodollar Loan to be made in the
next following calendar month, such payment shall be made on the immediately
preceding Business Day.
For purposes of the Interest Act (Canada): (i) whenever any interest
under this Agreement is calculated using a rate based on a year of 360 days,
such rate determined pursuant to such calculation, when expressed as an annual
rate, is equivalent to (x) the applicable rate based on a year of 360 days,
(y) multiplied by the actual number of days in the calendar year in which the
period for which such interest is calculated ends, and (z) divided by 360;
(ii) the principle of deemed reinvestment of interest shall not apply to any
interest calculation under this Agreement; and (iii) the rates of interest
stipulated in this Agreement are intended to be nominal rates and not
effective rates or yields.
Notwithstanding any provision to the contrary contained in this
Agreement, in no event shall the aggregate "interest" (as defined in Section
347 of the Criminal Code (Canada), as the same may be amended, replaced or
re-enacted from time to time) payable under this Agreement exceed the maximum
amount of interest on the "credit advanced" (as defined in that section) under
this Agreement lawfully permitted under that section and, if any payment,
collection or demand pursuant to this Agreement in respect of "interest" (as
defined in that section) is determined to be contrary to the provisions of
that section, such payment, collection or demand shall be deemed to have been
made by mutual mistake of the relevant Borrower and the Agent and the Lenders
and the amount of such payment or collection shall be refunded to the relevant
Borrower. For purposes of this Agreement, the effective annual rate of
interest shall be determined in accordance with generally accepted actuarial
practices and principles over the term the Revolving Credit Loans are
outstanding on the basis of annual compounding of the lawfully permitted rate
of interest and, in the event of any dispute, a certificate of a Fellow of the
Canadian Institute of Actuaries appointed by the Agent will be conclusive for
the purposes of such determination.
(E) Taxes.
-----
(i) Any and all payments by any of the Borrowers or Subsidiary Obligors
hereunder shall be made free and clear of and without deduction for any and
all present or future taxes, levies, imposts, deductions, charges or
withholdings or any liabilities with respect thereto including those arising
after the date hereof as a result of the adoption of or any change in any law,
treaty, rule, regulation, guideline or determination of a Governmental
Authority or any change in the interpretation or application thereof by a
Governmental Authority but excluding, in the case of each Lender and the
Agent, such taxes (including income taxes, franchise taxes and branch profit
taxes) as are imposed on or measured by such Lender's or Agent's, as the case
may be, income by the United States of America or any Governmental Authority
of the jurisdiction under the laws of which such Lender or Agent, as the case
may be, is organized or incorporated (all such non-excluded taxes, levies,
imposts, deductions, charges, withholdings, and liabilities which the Agent or
a Lender determines to be applicable to this Agreement, the other Loan
Documents, the Commitments, the Loans or the Letters of Credit being
hereinafter referred to as "TAXES"). Subject to Section 2.10(E)(vii), if any
---------------------
of the Borrowers or Subsidiary Obligors shall be required by law to deduct any
Taxes from or in respect of any sum payable hereunder or under the other Loan
Documents to any Lender or the Agent, (i) the sum payable shall be increased
as may be necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 2.10(E))
---------------
such Lender or Agent (as the case may be) receives an amount equal to the sum
it would have received had no such deductions been made, (ii) such Borrower or
Subsidiary Obligor shall make such deductions, and (iii) such Borrower or
Subsidiary Obligor shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law. If a
withholding tax of the United States of America or any other Governmental
Authority shall be or become applicable (y) after the date of this Agreement,
to such payments by any of the Borrowers made to the Lending Installation or
any other office that a Lender may claim as its Lending Installation, or (z)
after such Lender's selection and designation of any other Lending
Installation, to such payments made to such other Lending Installation, such
Lender shall use reasonable efforts to make, fund and maintain its Loans and
issue Letters of Credit through another Lending Installation of such Lender in
another jurisdiction so as to reduce the Borrowers' liability hereunder, if
the making, funding or maintenance of such Loans and the issuance of such
Letters of Credit through such other Lending Installation of such Lender does
not, in the good faith judgment of such Lender, otherwise adversely affect
such Loans, or obligations under the Commitments or such Lender. With respect
to such deduction or withholding for or on account of any Taxes and to confirm
that all such Taxes have been paid to the appropriate Governmental
Authorities, the Company shall promptly (and in any event not later than
thirty (30) days after receipt) furnish to each Lender and the Agent such
certificates, receipts and other documents as may be required (in the judgment
of such Lender or the Agent) to establish any tax credit to which such Lender
or the Agent may be entitled. A payment may be made by the Company or by the
Subsidiary that is the Borrower with respect to the Loan that gives rise to
such payment.
(ii) In addition, the Company agrees to pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges, or
similar levies that arise from any payment made hereunder, from the issuance
of Letters of Credit hereunder, or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement, the other Loan
Documents, the Commitments, the Loans or the Letters of Credit (hereinafter
referred to as "OTHER TAXES").
(iii) Subject to Section 2.10(E)(vii), the Company indemnifies each
---------------------
Lender and the Agent for the full amount of Taxes and Other Taxes (including,
without limitation, any Taxes or Other Taxes imposed by any Governmental
Authority on amounts payable under this Section 2.10(E)) paid by such Lender
---------------
or the Agent (as the case may be) and any liability (including penalties,
interest, and expenses) arising therefrom or with respect thereto, whether or
not such Taxes or Other Taxes were correctly or legally asserted. This
indem-nification shall be made within thirty (30) days after the date such
Lender or the Agent (as the case may be) makes written demand therefor. A
certificate as to any additional amount payable to any Lender or the Agent
under this Section 2.10(E) submitted to the Company and the Agent by such
----------------
Lender or the Agent shall show in reasonable detail the amount payable and the
calculations used to determine such amount and shall, absent manifest error,
be final, conclusive and binding upon all parties hereto.
(iv) Within thirty (30) days after the date of any payment of Taxes or
Other Taxes by any Borrower or Subsidiary Obligor, such Borrower or Subsidiary
Obligor shall furnish to the Agent the original or a certified copy of a
receipt evidencing payment thereof.
(v) Without prejudice to the survival of any other agreement of any of
the Borrowers or Subsidiary Obligor hereunder, the agreements and obligations
of the Borrowers and Subsidiary Obligor contained in this Section 2.10(E)
---------------
shall survive the payment in full of principal and interest hereunder, the
termination of the Letters of Credit and the termination of this Agreement.
(vi) Without limiting the obligations of the Borrowers and Subsidiary
Obligor under this Section 2.10(E) (except as expressly provided by subsection
--------------- ----------
(vii) below), (A) each Lender that has a Commitment that is not created or
- -----
organized under the laws of the United States of America or a political
- ---
subdivision thereof shall deliver to the Company and the Agent on or before
- ---
the Closing Date, or, if later, the date on which such Lender becomes a Lender
- --
pursuant to Section 12.3 hereof, a true and accurate certificate executed in
------------
duplicate by a duly authorized officer of such Lender, in a form satisfactory
to the Company and the Agent, to the effect that such Lender is capable under
the provisions of an applicable tax treaty concluded by the United States of
America (in which case the certificate shall be accompanied by two executed
copies of Form 1001 of the IRS) or under Section 1442 of the Code (in which
case the certificate shall be accompanied by two copies of Form 4224 of the
IRS) of receiving payments of interest and fees hereunder without deduction or
withholding of United States federal income tax and (B) each Lender shall
deliver to the Company and the Agent on or before the Closing Date, or, if
later, the date on which such Lender becomes a Lender, a true and accurate
certificate executed in duplicate by a duly authorized officer of such Lender,
in a form satisfactory to the Company and the Agent, to the effect that such
Lender is capable under the provisions of an applicable tax treaty or under
the provisions of applicable law of receiving payments of interest with
respect to the Advances to Purina Korea, Inc. hereunder without deduction or
withholding of income tax. Each such Lender further agrees to deliver to the
Company and the Agent, from time to time a true and accurate certificate
executed in duplicate by a duly authorized officer of such Lender
substantially in a form satisfactory to the Company and the Agent, before or
promptly upon the occurrence of any event requiring a change in the most
recent certificate previously delivered by it pursuant to this Section
-------
2.10(E)(vi). Further, each Lender which delivers a certificate accompanied by
----
Form 1001 of the IRS covenants and agrees to deliver to the Company and the
Agent within fifteen (15) days prior to January 1, 1999, and every third (3rd)
anniversary of such date thereafter, on which this Agreement is still in
effect, another such certificate and two accurate and complete original signed
copies of Form 1001 (or any successor form or forms required under the Code or
the applicable regulations promulgated thereunder), and each Lender that
delivers a certificate accompanied by Form 4224 of the IRS covenants and
agrees to deliver to the Company and the Agent within fifteen (15) days prior
to the beginning of each subsequent taxable year of such Lender during which
this Agreement is still in effect, another such certificate and two accurate
and complete original signed copies of IRS Form 4224 (or any successor form or
forms required under the Code or the applicable regulations promulgated
thereunder).
Each such certificate shall certify pursuant to this Section 2.10(E)(vi)
-------------------
as to one of the following:
(a) that such Lender is capable of receiving payments of interest
hereunder without deduction or withholding of United States of America federal
income tax;
(b) that such Lender is not capable of receiving payments of interest
hereunder without deduction or withholding of the applicable income tax as
specified therein but is capable of recovering the full amount of any such
deduction or withholding from a source other than the Borrowers and the
Subsidiary Obligor and will not seek any such recovery from the Borrowers or
the Subsidiary Obligor; or
(c) that, as a result of the adoption of or any change in any law,
treaty, rule, regulation, guideline or determination of a Governmental
Authority or any change in the interpretation or application thereof by a
Governmental Authority after the date such Lender became a party hereto, such
Lender is not capable of receiving payments of interest hereunder without
deduction or withholding of applicable income tax as specified therein and
that it is not capable of recovering the full amount of the same from a source
other than the Borrowers and the Subsidiary Obligors.
Each Lender shall promptly furnish to the Company and the Agent such
additional documents as may be reasonably required by the Company or the Agent
to establish any exemption from or reduction of any Taxes or Other Taxes
required to be deducted or withheld and which may be obtained without undue
expense to such Lender.
A Borrower shall provide such information and take such action as a
Lender may reasonably request without undue expense to such Borrower to enable
the Lender to comply with the foregoing provisions of this subsection (vi).
---------------
(vii) None of the Borrowers shall be required to pay any additional
amounts under subsection (i) above or indemnification under subsection (iii)
-------------- ----------------
above to the extent that the obligation to pay such additional amounts or
indemnification would not have arisen but for: (a) a failure by the Lender or
Agent to comply with the provisions of subsection (vi) above; or (b) the
---------------
certifications referred to in subsection (vi) above not being true.
----------------
(viii) Each Lender and the Agent agree that if it shall become aware
that it is entitled to receive a refund or a tax credit in respect of Taxes or
Other Taxes as to which it has been indemnified by the Company or any other
Borrower pursuant to this Section 2.10(E), it shall promptly notify the
----------------
Company of the availability of such refund or tax credit and at the request of
the Company will apply for such refund or take the benefit of such tax credit;
provided, however the failure to provide such notice shall not relieve the
Company or any other Borrower of any of their Obligations hereunder. Upon
receipt of such refund or the benefit of such tax credit , the Lender or Agent
agrees to pay such refund or an amount equal to the benefit of such tax credit
to the applicable Borrower along with any interest actually received from the
taxing authority, net of all out-of-pocket expenses of such Lender or Agent
incurred with respect to such refund or tax credit.
(F) Loan Account. Each Lender shall maintain in accordance with its
-------------
usual practice an account or accounts (a "LOAN ACCOUNT") evidencing the
Obligations of each of the Borrowers to such Lender owing to such Lender from
time to time, including the amount of principal and interest payable paid to
such Lender from time to time hereunder.
(G) Entries Binding. The entries made in each Loan Account shall be
----------------
conclusive and binding for all purposes, absent manifest error, unless the
Company objects to information contained in the Loan Account within thirty
(30) days of the Company's receipt of such information.
2.11 Notification of Advances, Interest Rates, Prepayments and Aggregate
-------------------------------------------------------------------
Commitment Reductions. Promptly after receipt thereof, the Agent will notify
- ----------------------
each applicable Lender of the contents of each Aggregate Commitment reduction
notice, Borrowing Notice for Revolving Loans, Conversion/Continuation Notice
with respect to Revolving Loans, and repayment notice received by it
hereunder. The Agent will notify each applicable Lender of the interest rate
applicable to each Eurodollar Loan, Korean Eurodollar Loan and Korean Won Loan
promptly upon determination of such interest rate, and the Agent will give
each applicable Lender prompt notice of each change in the Alternate Base
Rate.
2.12 Lending Installations. Each Lender may book its Loans at any
----------------------
Lending Installation selected by such Lender and may change its Lending
Installation from time to time. All terms of this Agreement shall apply to
any such Lending Installation. Each Lender may, by written or facsimile
notice to the Agent and the Borrowers, designate a Lending Installation
through which Loans will be made by it and for whose account Loan payments are
to be made.
2.13 Non-Receipt of Funds by the Agent. Unless the applicable Borrower
---------------------------------
or a Lender, as the case may be, notifies the Agent prior to the date on which
it is scheduled to make payment to the Agent of (i) in the case of a Lender,
the proceeds of a Loan or (ii) in the case of a Borrower, a payment of
principal, interest or fees to the Agent for the account of the Lenders for
the account of the applicable Lenders, that it does not intend to make such
payment, the Agent may assume that such payment has been made. The Agent may,
but shall not be obligated to, make the amount of such payment available to
the intended recipient in reliance upon such assumption. If such Lender or
Borrower, as the case may be, has not in fact made such payment to the Agent
the recipient of such payment shall, on demand by the Agent, repay to the
Agent the amount so made available together with interest thereon in respect
of each day during the period commencing on the date such amount was so made
available by the Agent until the date the Agent recovers such amount at a rate
per annum equal to (i) in the case of payment by a Lender, the Federal Funds
Effective Rate for such day or (ii) in the case of payment by a Borrower, the
interest rate applicable to the relevant Loan.
2.14 Termination Date. This Agreement shall be effective until the
-----------------
Termination Date. Notwithstanding the termination of this Agreement on the
Termination Date, until all of the Obligations (other than contingent
indemnity and reimbursement obligations) shall have been fully and
indefeasibly paid and satisfied, all financing arrangements among the
Borrowers and the Lenders shall have been terminated (other than under Hedging
Agreements) and all of the Letters of Credit shall have expired, been canceled
or terminated, all of the rights and remedies under this Agreement and the
other Loan Documents shall survive and the Agent shall be entitled to retain
its security interest in and to all existing and future Collateral for the
benefit of itself and the Holders of Secured Obligations.
2.15 Replacement of Certain Lenders. In the event a Lender ("AFFECTED
------------------------------
LENDER") shall have: (i) failed to fund its Revolving Credit Share of any
Advance requested by any Borrower which such Lender is obligated to fund under
the terms of this Agreement and which failure has not been cured, (ii)
requested compensation from any Borrower under Sections 2.10(E), 3.1 or 3.2 to
---------------- --- ---
recover Taxes, Other Taxes or other additional costs incurred by such Lender
which are not being incurred generally by the other Lenders, (iii) delivered a
notice pursuant to Section 3.3 claiming that such Lender is unable to extend
-----------
Eurodollar Loans to any Borrower for reasons not generally applicable to the
other Lenders, (iv) declined to extend the Termination Date or the expiry date
of the Aggregate Commitment with respect to the Tranche D Obligations pursuant
to Section 2.24, or (v) has invoked Section 9.2, then, in any such case, any
------------- -----------
Borrower or the Agent may make written demand on such Affected Lender (with a
copy to the Agent in the case of a demand by any Borrower and a copy to the
Borrowers in the case of a demand by the Agent) for the Affected Lender to
assign, and such Affected Lender shall use its best efforts to assign pursuant
to one or more duly executed assignment and acceptance agreements in
substantially the form of Exhibit D five (5) Business Days after the date of
---------
such demand, to one or more financial institutions that comply with the
provisions of Section 12.3(A) (and, if selected by the Borrowers is reasonably
---------------
acceptable to the Agent, and, so long as no Default shall have occurred and is
continuing, if selected by the Agent is reasonably acceptable to the Company)
which any Borrower or the Agent, as the case may be, shall have engaged for
such purpose ("REPLACEMENT LENDER"), all of such Affected Lender's rights and
obligations under this Agreement and the other Loan Documents (including,
without limitation, its Commitment, all Loans owing to it, all of its
participation interests in existing Letters of Credit and its obligation to
participate in Letters of Credit hereunder) in accordance with Section 12.3.
------------
The Agent agrees, upon the occurrence of such events with respect to an
Affected Lender and upon the written request of any Borrower, to use its
reasonable efforts to obtain the commitments from one or more financial
institutions qualified to act as a Replacement Lender. Further, with respect
to such assignment the Affected Lender shall have concurrently received, in
cash, all amounts due and owing to the Affected Lender hereunder or under any
other Loan Document, including, without limitation, the aggregate outstanding
principal amount of the Loans owed to such Lender, together with accrued
interest thereon through the date of such assignment, amounts payable under
Sections 2.10(E), 3.1, and 3.2 with respect to such Affected Lender and
--------------- --- ---
compensation payable under Section 2.10(C) in the event of any replacement of
---- ---------------
any Affected Lender under clause (ii) or clause (iii) of this Section 2.15;
----------- ------------ ------------
provided that upon such Affected Lender's replacement, such Affected Lender
------
shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 2.10(E), 3.1, 3.2, 3.4, and 9.7, as well as to any fees
---------------- --- --- --- ---
accrued for its account hereunder and not yet paid, and shall continue to be
obligated under Section 10.8. Upon the replacement of any Affected Lender
-------------
pursuant to this Section 2.15, the provisions of Section 8.2 shall continue to
------------ -----------
apply with respect to Advances which are then outstanding with respect to
which the Affected Lender failed to fund its Revolving Credit Share and which
failure has not been cured.
2.16 Letters of Credit. (a) Upon receipt of duly executed applications
-----------------
therefor in substantially the form of Exhibit H, and such other documents,
---------
instructions and agreements as such Issuing Lender may reasonably require, and
subject to the provisions of Article IV, the Agent shall, or any other Lender
----------
in its sole discretion may, issue standby or commercial letters of credit
denominated in Dollars for the account of the Company or one of the Subsidiary
Borrowers or Subsidiary Obligors or standby letters of credit denominated in
Korean Won for the account of Purina Korea, Inc., on terms as are satisfactory
to such Issuing Lender in substantially the form of Exhibit I; provided,
--------- --------
however, that no Letter of Credit will be issued hereunder by an Issuing
--
Lender if on the date of issuance, before or after taking such Letter of
Credit into account, (i) the Dollar Amount of the Revolving Credit Obligations
at such time would exceed the Aggregate Commitments at such time or (ii) the
amount (or with respect to standby Letters of Credit denominated in Korean
Won, the Dollar Amount) of the Revolving Credit Obligations owed by any of the
Borrowers or Subsidiary Obligors pursuant to this Agreement would exceed the
corresponding amounts listed below:
Agribrands International, Inc. $ 5,000,000
Agribrands Canada, Inc. $ 6,500,000
Purina Italia S.p.A. $ 4,000,000
Purina Espana, S.A. $ 2,500,000
Purina Hungaria Animal Feed
Production & Trading Company Ltd. $ 2,000,000
Purina Korea, Inc. $15,000,000
Industrias Purina S.A. de C.V. $ 5,000,000
Purina Colombiana S.A. $ 5,000,000
Agribrands Purina do Brasil, Ltda. $ 5,000,000
Purina Philippines, Inc. $ 2,500,000
Purina de Venezuela, C.A. $ 2,500,000
and provided, further, that no Letter of Credit shall be issued which has an
-------- -------
expiration date more than one year after the date of issuance of such Letter
of Credit or an expiration date later than the date which is five (5) Business
Days immediately preceding (x) the Termination Date with respect to Letters of
Credit issued for the account of any Borrower (other than Purina Korea, Inc.)
and (y) the then effective expiry date of the Aggregate Commitment for the
Tranche D Obligations with respect to any Letter of Credit issued for the
account of any Subsidiary Obligor; and provided, further, that all commercial
-------- -------
Letters of Credit requested hereunder shall be denominated only in Dollars.
Each Letter of Credit issued for the account of any Borrower (other than
Purina Korea, Inc.) may, upon the request of the applicable Borrower, include
a provision whereby such Letter of Credit shall be renewed automatically for
additional consecutive periods of 12 months or less (but not beyond the date
that is five Business Days prior to the Termination Date) unless the Issuing
Lender notifies the beneficiary thereof at least 30 days prior to the
then-applicable expiry date that such Letter of Credit will not be renewed.
Each Letter of Credit issued for the account of any Subsidiary Obligor shall
be renewed or extended beyond the then effective expiry date of the Aggregate
Commitment for the Tranche D Obligations at the request of the applicable
Subsidiary Obligor only with the consent of all of the Lenders. Prior to
issuing any Letter of Credit, the applicable Issuing Lender shall request and
the Agent shall provide confirmation that the request for such Letter of
Credit complies with the provisions of this Section 2.16(a). If the Agent
---------------
notifies the applicable Issuing Lender that it is authorized to issue such
Letter of Credit, and the conditions described in Article IV have been
----------
satisfied, then such Issuing Lender shall issue such Letter of Credit as
requested. The applicable Issuing Lender shall give the Agent and each Lender
prompt notice of the issuance of any such Letter of Credit by it. Each
Issuing Lender shall furnish to the Agent and each Lender on the first
Business Day of each month a written report, with respect to each outstanding
Letter of Credit issued by such Issuing Lender, summarizing whether such
Letter of Credit is a standby or commercial Letter of Credit, the maximum
amount available to be drawn thereon, and the beneficiary and the issuance and
expiration dates thereof. Together with each such monthly report each
Issuing Lender shall provide the Agent a copy of each Letter of Credit issued
by such Issuing Bank during the previous month.
(b) Schedule 2.16(b), which the Company may amend at any time prior
----------------
to the Closing Date contains a schedule of certain letters of credit issued
for the account of certain Borrowers and Subsidiary Obligors prior to the
Closing Date by certain Lenders (the "EXISTING LETTERS OF CREDIT"). Subject
to the satisfaction of the conditions contained in Sections 4.1 and 4.2, from
------------ ---
and after the Closing Date the Existing Letters of Credit shall be deemed to
be Letters of Credit issued pursuant to Section 2.16(a).
----------------
2.17 Letter of Credit Participation. On the Closing Date with respect
------------------------------
to the Existing Letters of Credit, and immediately upon the issuance of each
Letter of Credit by any Issuing Lender hereunder, each Lender that has a
Commitment shall be deemed to have automatically, irrevocably and
unconditionally purchased and received from the applicable Issuing Lender an
undivided interest and participation in and to such Letter of Credit, the
obligations of the applicable Borrower or Subsidiary Obligor in respect
thereof, and the liability of the applicable Issuing Lender thereunder
(collectively, an "L/C INTEREST") in an amount equal to the amount available
for drawing under such Letter of Credit multiplied by such Lender's Revolving
Credit Share.
The applicable Issuing Lender will notify the Agent promptly upon
presentation to it of an L/C Draft or upon any other draw under a Letter of
Credit and the Agent will promptly notify each Lender that has a Commitment.
On or before the Business Day on which the applicable Issuing Lender makes
payment of each such L/C Draft or any other draw on a Letter of Credit, on
demand of the Agent received by each Lender that has a Commitment not later
than 12:00 noon (Seoul, Korea time) on the fifth (5th) Business Day after the
date of such demand with respect to Letters of Credit issued for the account
of Purina Korea, Inc., and 12:00 noon (New York time) on the third (3rd)
Business Day after the date of such demand with respect to all other Letters
of Credit, each Lender (other than the Issuing Lender) shall make payment on
such Business Day to the Agent for the account of the applicable Issuing
Lender, in immediately available funds in the applicable currency in an amount
equal to such Lender's Revolving Credit Share of the amount of such payment or
draw.
Upon the Agent's receipt of funds as a result of an Issuing Lender's
payment on an L/C Draft or any other draw on a Letter of Credit issued by an
Issuing Lender, the Agent shall promptly pay such funds to the Issuing Lender.
The obligation of each Lender that has a Commitment to pay the Agent for the
account of the applicable Issuing Lender under this Section 2.17 shall be
------------
unconditional, continuing, irrevocable and absolute. In the event that any
such Lender fails to make payment to the Agent of any amount due under this
Section 2.17, the Agent shall be entitled to receive, retain and apply against
----------
such obligation the principal and interest otherwise payable to such Lender
hereunder until the Agent on behalf of the applicable Issuing Lender receives
such payment from such Lender or such obligation is otherwise fully satisfied;
provided, however, that nothing contained in this sentence shall relieve such
- -------- -------
Lender of its obligation to reimburse the Agent for such amount in accordance
with this Section 2.17.
-------------
2.18 Reimbursement Obligation. Each of the Borrowers and Subsidiary
-------------------------
Obligors agrees unconditionally, irrevocably and absolutely upon receipt of
notice from the Agent or the applicable Issuing Lender to pay immediately to
the Agent, for the account of the applicable Issuing Lender or the account of
the Lenders, as the case may be, the amount of each advance which may be drawn
under or pursuant to a Letter of Credit issued for its account or an L/C Draft
related thereto (such obligation of each of the Borrowers and Subsidiary
Obligors to reimburse the Issuing Lender or the Agent for an advance made
under a Letter of Credit or L/C Draft being hereinafter referred to as a
"REIMBURSEMENT OBLIGATION" with respect to such Letter of Credit or L/C
Draft), each such payment to be made by the applicable Borrower or Subsidiary
Obligor to the Agent no later than 1:00 p.m. (New York time) or with respect
to Reimbursement Obligations owed by Purina Korea, Inc. 1:00 p.m. (Seoul time)
on the Business Day on which the applicable Issuing Lender makes payment of
each such L/C Draft or, in the case of any other draw on a Letter of Credit,
1:00 p.m. (New York time) or with respect to Reimbursement Obligations owed by
Purina Korea, Inc. 1:00 p.m. (Seoul time) on the date specified in a demand by
the Agent and such payment shall be made in the applicable currency in which
such Letter of Credit was issued. Any Issuing Lender may direct the Agent to
make such demand with respect to Letters of Credit issued by such Issuing
Lender. If any Borrower at any time fails to repay a Reimbursement Obligation
pursuant to this Section 2.18, such Borrower shall be deemed to have elected
------------
to borrow a Revolving Loan from the applicable Lenders, as of the date of the
Advance giving rise to the Reimbursement Obligation equal in amount to the
amount of the unpaid Reimbursement Obligation. Such Revolving Loan shall be
made as of the date of the payment giving rise to such Reimbursement
Obligation, automatically, without notice and without any requirement to
satisfy the conditions precedent otherwise applicable to an Advance of
Revolving Loans if such Borrower shall have failed to make such payment to the
Agent for the account of the applicable Issuing Lender prior to such time.
Such Revolving Loans shall constitute a Base Rate Advance, or, in the case of
standby Letters of Credit denominated in Korean Won, a Korean Won Advance, the
proceeds of which Advance shall be used to repay such Reimbursement
Obligation. If, for any reason, any Borrower or Subsidiary Obligor fails to
repay a Reimbursement Obligation on the day such Reimbursement Obligation
arises and, for any reason, the Lenders are unable to make or have no
obligation to make a Revolving Loan, then such Reimbursement Obligation shall
bear interest from and after such day, until paid in full, at the interest
rate applicable to a Base Rate Advance, or in the case of standby Letters of
Credit denominated in Korean Won, at the Korean CD Rate.
2.19 Cash Collateral. Notwithstanding anything to the contrary herein
---------------
or in any application for a Letter of Credit, after the occurrence and during
the continuance of Default, each Borrower and Subsidiary Obligor shall, upon
the Agent's demand, deliver to the Agent for the benefit of the Lenders, cash
collateral, having a value, as determined by such Lenders, equal to the
aggregate outstanding L/C Obligations of such Borrower or Subsidiary Obligor
in addition to amounts on deposit in the Cash Collateral Account. Any such
additional collateral shall be held by the Agent in a separate account
appropriately designated as a cash collateral account in relation to this
Agreement and the Letters of Credit and retained by the Agent for the benefit
of the Lenders as collateral security for the Borrowers' and Subsidiary
Obligors' obligations in respect of this Agreement and each of the Letters of
Credit and L/C Drafts. Such amounts shall be applied to reimburse the Agent
or each Issuing Lender, as applicable, for drawings or payments under or
pursuant to Letters of Credit or L/C Drafts, or if no such reimbursement is
required, to payment of such of the other Obligations as the Agent shall
determine. If no Default shall be continuing, amounts remaining in any cash
collateral account (other than the Cash Collateral Account) established
pursuant to this Section 2.19 which are not to be applied to reimburse the
-------------
Agent for amounts actually paid or to be paid by the Agent in respect of a
Letter of Credit or L/C Draft, shall be promptly returned to the applicable
Borrower (after deduction of the Agent's expenses incurred in connection with
such cash collateral account).
2.20 Letter of Credit Fees. The Company agrees to pay (i) quarterly, in
---------------------
arrears, on each Payment Date to the Agent for the ratable benefit of the
Lenders having Commitments, except as set forth in Section 8.2, a letter of
-----------
credit fee ("LETTER OF CREDIT FEE") in the amount of:
(w) with respect to Letters of Credit issued for the account of the
Borrowers (other than Purina Korea, Inc.) and the Subsidiary Obligors (other
than Purina Korea, Inc.), a rate per annum equal to the Applicable Letter of
Credit Fee on the aggregate average daily outstanding amount available for
drawing under all of the Letters of Credit issued for its account;
(x) with respect to standby Letters of Credit issued for the account of
Purina Korea, Inc. and denominated in Dollars, a per annum rate equal to 3.50%
on the aggregate average daily outstanding amount available for drawing under
all standby Letters of Credit denominated in Dollars and issued for its
account;
(y) with respect to standby Letters of Credit issued for the account of
Purina Korea, Inc. and denominated in Korean Won, a per annum rate equal to
1.75% on the aggregate average daily outstanding amount available for drawing
under all of the standby Letters of Credit denominated in Korean Won and
issued for its account; and
(z) with respect to commercial Letters of Credit issued for the account of
Purina Korea, Inc. and denominated in Dollars, a per annum rate equal to 1.50%
on the aggregate average daily outstanding amount available for drawing under
all of the commercial Letters of Credit denominated in Dollars and issued for
its account; plus
----
(ii) to the Agent for the benefit of the Issuing Lenders, a fronting fee of
one-eighth of one percent (0.125%) per annum on the aggregate average daily
outstanding Dollar Amount available for drawing under all of the Letters of
Credit issued for the account of any Borrower or Subsidiary Obligor payable
quarterly, in arrears, on each Payment Date; plus
----
(iii) in each case, all customary fees and other issuance, amendment, document
examination, negotiation and presentment expenses and related charges in
connection with the issuance, amendment, presentation of L/C Drafts, and the
like customarily charged by the Issuing Lender with respect to standby and
commercial Letters of Credit, including, without limitation, standard
commissions with respect to commercial Letters of Credit, payable at the time
of invoice of such amounts.
2.21 Indemnification; Exoneration. (a) In addition to amounts payable
----------------------------
as elsewhere provided in this Agreement, each Borrower and Subsidiary Obligor
with respect to Letters of Credit issued for its account agrees to protect,
indemnify, pay and save harmless the Agent, each Issuing Lender and each
Lender from and against any and all liabilities and costs which the Agent, any
Issuing Lender or any Lender may incur or be subject to as a consequence,
direct or indirect, of (i) the issuance of any Letter of Credit other than, in
the case of the Issuing Lender, as a result of its gross negligence or willful
misconduct, as determined by the final judgment of a court of competent
jurisdiction, or (ii) the failure of the Issuing Lender of a Letter of Credit
to honor a drawing under such Letter of Credit as a result of any act or
omission, whether rightful or wrongful, of any present or future de jure or de
facto Governmental Authority (all such acts or omissions herein called
"GOVERNMENTAL ACTS").
(b) As among the Borrowers, the Subsidiary Obligors, the Lenders, the
Issuing Lenders and the Agent, the Borrowers and Subsidiary Obligors assume
all risks of the acts and omissions of, or misuse of such Letter of Credit by,
the beneficiary of any Letter of Credit. In furtherance and not in limitation
of the foregoing, subject to the provisions of the Letter of Credit
applications and Letter of Credit reimbursement agreements executed by the
applicable Borrower or Subsidiary Obligor at the time of request for any
Letter of Credit, the Issuing Lender of a Letter of Credit, the Agent and the
Lenders shall not be responsible (in the absence of gross negligence or
willful misconduct in connection therewith, as determined by the final
judgment of a court of competent jurisdiction): (i) for the form, validity,
sufficiency, accuracy, genuineness or legal effect of any document submitted
by any party in connection with the application for and issuance of the
Letters of Credit, even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) for the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (iii) for failure of the beneficiary of
a Letter of Credit to comply duly with conditions required in order to draw
upon such Letter of Credit; (iv) for errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable, telegraph,
telex, or other similar form of teletransmission or otherwise; (v) for errors
in interpretation of technical trade terms; (vi) for any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any Letter of Credit or of the proceeds thereof; (vii) for the
misapplication by the beneficiary of a Letter of Credit of the proceeds of any
drawing under such Letter of Credit; and (viii) for any consequences arising
from causes beyond the control of the Agent, the Issuing Lender and the
Lenders including, without limitation, any Governmental Acts. None of the
above shall affect, impair, or prevent the vesting of any of the Issuing
Lender's rights or powers under this Section 2.21.
-------------
(c) In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by an Issuing
Lender under or in connection with Letters of Credit issued on behalf of any
Borrower or Subsidiary Obligor or any related certificates shall not, in the
absence of gross negligence or willful misconduct, as determined by the final
judgment of a court of competent jurisdiction, put the Issuing Lender, the
Agent or any Lender under any resulting liability to any Borrower or
Subsidiary Obligor or relieve any Borrower or Subsidiary Obligor of any of its
obligations hereunder to any such Person.
(d) Without prejudice to the survival of any other agreement of the
Borrowers or the Subsidiary Obligors hereunder, the agreements and obligations
of the Borrowers contained in this Section 2.21 shall survive the payment in
------------
full of principal and interest hereunder, the termination of the Letters of
Credit and the termination of this Agreement.
2.22 Judgment Currency. If, for the purposes of obtaining judgment in
-----------------
any court, it is necessary to convert a sum due from a Borrower hereunder or
under any of the Notes in the currency expressed to be payable herein (the
"SPECIFIED CURRENCY") into another currency, the parties hereto agree, to the
fullest extent that they may effectively do so, that the rate of exchange used
shall be that at which in accordance with normal banking procedures the Agent
could purchase the specified currency with such other currency at the Agent's
main office in New York, New York or Seoul, Korea or any other applicable
local office on the Business Day preceding that on which the final,
non-appealable judgment is given. The obligations of the applicable Borrower
in respect of any sum due to any Lender or the Agent hereunder shall,
notwithstanding any judgment in a currency other than the specified currency,
be discharged only to the extent that on the Business Day following receipt by
such Lender or Agent (as the case may be) of any sum adjudged to be so due in
such other currency such Lender or Agent (as the case may be) may in
accordance with normal, reasonable banking procedures purchase the specified
currency with such other currency. If the amount of the specified currency so
purchased is less than the sum originally due to such Lender or Agent, as the
case may be, in the specified currency, the applicable Borrower agrees, to the
fullest extent that it may effectively do so, as a separate obligation and
notwithstanding any such judgment, to indemnify such Lender or Agent, as the
case may be, against such loss, and if the amount of the specified currency so
purchased exceeds (a) the sum originally due to any Lender or Agent, as the
case may be, in the specified currency and (b) any amounts shared with other
Lenders as a result of allocations of such excess as a disproportionate
payment to such Lender under Section 11.2, such Lender or Agent, as the case
------------
may be, agrees to remit such excess to the applicable Borrower. Without
prejudice to the survival of any of the other agreements of the Borrowers
hereunder, the agreements and obligations of the Borrowers in this Section
-------
2.22 shall survive the termination of this Agreement and the payment of all
-
other amounts owing hereunder.
2.23 Currency Disruption. Notwithstanding the satisfaction of all
--------------------
conditions referred to in Article II with respect to any Advance in Korean Won
----------
or in Dollars to Purina Korea, Inc., if, after the Closing Date, a material
adverse change in the banking market (including, without limitation, a
significant down-grading of the credit ratings of the major domestic banks in
the Republic of Korea or the sovereign debt of the Republic of Korea) occurs
or bank regulatory circumstances change or currency controls or restrictions
or other exchange regulations are imposed or other circumstances arise as a
result of which, in the reasonable opinion of the Agent or the Required
Lenders, Korean Won or Dollars in Korea are unavailable to the Lenders or are
no longer readily available or freely traded or other exchange regulations are
imposed in the Republic or Korea with the result that different types of
currency are introduced, then the Advances and standby Letters of Credit
denominated in Korean Won and the Advances in Dollars to Purina Korea, Inc.
and standby Letters of Credit denominated in Dollars for the account of Purina
Korea, Inc. shall no longer be available until such time as the Agent or the
Required Lenders determine that the disqualifying event or events no longer
exist; provided, that during the period that such Korean Won or Letters of
--------
Credit denominated in Dollars are unavailable pursuant to this Section 2.23,
------------
the Company's obligation to pay the Korean facility fee pursuant to Section
-------
2.10(C)(i) shall be suspended.
--------
2.24 Termination Date Extension. The Aggregate Commitment with respect
--------------------------
to Tranche C Obligations shall expire on the Termination Date. Within the
period beginning 120 days and ending 90 days before each anniversary of the
Closing Date, the Company may request in writing that the Termination Date be
extended for an additional year. Within the period beginning 45 days and
ending 30 days prior to such anniversary, each Lender may, in its sole
discretion, agree to such extension by giving written notice of such agreement
to the Company and the Agent (and the failure to provide such notice shall be
determined to be a decision not to extend). The Aggregate Commitment with
respect to Tranche D Obligations shall expire on the first anniversary of the
Closing Date. Within the period beginning 270 days and ending 30 days prior
to such first anniversary of the Closing Date, the Company may request in
writing that the expiry date for the Aggregate Commitment with respect to
Tranche D Obligations be extended to remain in effect for up to one year from
the then effective termination date; and thereafter within the period
beginning 270 days and ending 30 days prior to the then effective expiry date
for the Aggregate Commitment with respect to Tranche D Obligations, the
Company may request in writing that the expiry date for the Aggregate
Commitment with respect to Tranche D Obligations be extended to remain in
effect for up to one year from such then effective extension date. Within 30
days after such request, each Lender may, in its sole discretion, agree to
such extension by giving written notice of such extension to the Company and
the Agent (and the failure to provide such notice shall be deemed a decision
not to extend). The Commitment of each Lender that declines to extend with
respect to the Tranche C Obligations or the Tranche D Obligations may, at the
option of the Company, be replaced in accordance with Section 12.3 (but only
------------
to the extent a replacement Lender is then available) or the Aggregate
Commitment reduced. The Required Lenders must agree to any extension with
respect to the Termination Date or the expiry of the Aggregate Commitment with
respect to Tranche D Obligations for any such extension to become effective.
ARTICLE III: CHANGE IN CIRCUMSTANCES
- ------------------------------------------
3.1 Yield Protection. If any law or any governmental or
-----------------
quasi-governmental rule, regulation, policy, guideline or directive (whether
-----
or not having the force of law) adopted after the date of this Agreement and
having general applicability to all banks within the jurisdiction in which
such Lender operates (excluding, for the avoidance of doubt, the effect of and
phasing in of capital requirements or other regulations or guidelines passed
prior to the date of this Agreement), or any interpretation or application
thereof by any Governmental Authority charged with the interpretation or
application thereof, or the compliance of any Lender therewith,
(i) subjects any Lender (each reference in this Section 3.1 to a Lender
-----------
being in its capacity as a Lender or an Issuing Lender, or all of the
foregoing) or any applicable Lending Installation to any tax, duty, charge or
withholding on or from payments due from any of the Borrowers (excluding
taxation imposed by the United States of America or any Governmental Authority
of the jurisdiction under the laws of which such Lender is organized, on the
overall net income of any Lender or applicable Lending Installation), or
changes the basis of taxation of payments to any Lender in respect of its
Loans, its L/C Interests, the Letters of Credit or other amounts due it
hereunder, provided however that this clause (i) shall not apply with respect
----------
to any Taxes to which Section 2.10(E) applies, or
----------------
(ii) imposes or increases or deems applicable any reserve, assessment,
insurance charge, special deposit or similar requirement against assets of,
deposits with or for the account of, or credit extended by, any Lender or any
applicable Lending Installation with respect to its Eurodollar Loans, Korean
Eurodollar Loans, Korean Won Loans, L/C Interests or the Letters of Credit
(other than reserves and assessments taken into account in calculating the
Eurodollar Rate or Korean Eurodollar Rate), or
(iii) imposes any other condition the result of which is to increase the
cost to any Lender or any applicable Lending Installation of making, funding
or maintaining the Eurodollar Loans, Korean Eurodollar Loans, Korean Won
Loans, the L/C Interests or the Letters of Credit or reduces any amount
received by any Lender or any applicable Lending Installation in connection
with Eurodollar Loans, Korean Eurodollar Loans, Korean Won Loans or Letters of
Credit, or requires any Lender or any applicable Lending Installation to make
any payment calculated by reference to the amount of Loans or L/C Interests
held or interest received by it or by reference to the Letters of Credit, by
an amount deemed material by such Lender;
and the result of any of the foregoing is to increase the cost to that Lender
of making, renewing or maintaining its Loans, L/C Interests or Letters of
Credit or to reduce any amount received under this Agreement, then, within 15
days after receipt by the Company of written demand by such Lender pursuant to
Section 3.5, the Company shall pay or cause the appropriate Subsidiary to pay
- ------------
such Lender that portion of such increased expense incurred or reduction in an
amount received which such Lender determines is attributable to making,
funding and maintaining its Loans, L/C Interests, Letters of Credit and its
Commitment.
3.2 Changes in Capital Adequacy Regulations. If a Lender (each
-------------------------------------------
reference in this Section 3.2 to a Lender being in its capacity as a Lender or
-----------
an Issuing Lender, or all of the foregoing) determines (i) the amount of
capital required or expected to be maintained by such Lender, any Lending
Installation of such Lender or any corporation controlling such Lender is
increased as a result of a "Change" (as defined below), and (ii) such increase
in capital will result in an increase in the cost to such Lender of
maintaining its Loans, L/C Interests, the Letters of Credit or its obligation
to make Loans hereunder, then, within 15 days after receipt by the Company of
written demand by such Lender pursuant to Section 3.5, the Company shall pay
-----------
or cause the appropriate Subsidiary to pay such Lender the amount necessary to
compensate for any shortfall in the rate of return on the portion of such
increased capital which such Lender determines is attributable to this
Agreement, its Loans, its L/C Interests, the Letters of Credit or its
obligation to make Loans hereunder (after taking into account such Lender's
policies as to capital adequacy). "CHANGE" means (i) any change after the
date of this Agreement in the "Risk-Based Capital Guidelines" (as defined
below) excluding, for the avoidance of doubt, the effect of any phasing in of
such Risk-Based Capital Guidelines or any other capital requirements passed
prior to the date hereof, or (ii) any adoption of or change in any other law,
governmental or quasi-governmental rule, regulation, policy, guideline,
interpretation, or directive (whether or not having the force of law) after
the date of this Agreement and having general applicability to all banks and
financial institutions within the jurisdiction in which such Lender operates
which affects the amount of capital required or expected to be maintained by
any Lender or any Lending Installation or any corporation controlling any
Lender. "RISK-BASED CAPITAL GUIDELINES" means (i) the risk-based capital
guidelines in effect in the United States on the date of this Agreement,
including transition rules, and (ii) the corresponding capital regulations
promulgated by regulatory authorities outside the United States implementing
the July 1988 report of the Basle Committee on Banking Regulation and
Supervisory Practices Entitled "International Convergence of Capital
Measurements and Capital Standards," including transition rules, and any
amendments to such regulations adopted prior to the date of this Agreement.
3.3 Availability of Types of Advances. If (i) any Lender determines
-----------------------------------
that maintenance of its Eurodollar Loans, Korean Eurodollar Loans or Korean
Won Loans at a suitable Lending Installation would violate any applicable law,
rule, regulation, policy, guideline, interpretation or directive, whether or
not having the force of law, or (ii) the Agent or the Required Lenders
determine that (x) deposits of a type, currency and maturity appropriate to
match fund Eurodollar Advances, Korean Eurodollar Advances or Korean Won
Advances are not available or (y) the interest rate applicable to a Eurodollar
Advance, Korean Eurodollar Advances or Korean Won Advance is unavailable or
does not accurately reflect the cost of making or maintaining such a
Eurodollar Advance, Korean Eurodollar Advances or Korean Won Advance, then the
Agent shall suspend the availability of Eurodollar Advances, Korean Eurodollar
Advances or Korean Won Advances and, in the case of any occurrence set forth
in clause (i), require any Eurodollar Advances, Korean Eurodollar Advances or
----------
Korean Won Advances to be repaid or, at the option of the Company, converted
to Base Rate Advances denominated in Dollars or repaid at the end of the
current Interest Period or at such other time, as may be required by the
applicable law, rule, regulation, policy, guideline, interpretation or
directive.
3.4 Funding Indemnification. If (i) any payment of a Eurodollar Advance
-----------------------
or Korean Eurodollar Advance or Korean Won Advance occurs on a date which is
not the last day of the applicable Interest Period, (ii) any Loan in any
currency is converted to a Loan in any other currency on a date which is not
the last day of the applicable Interest Period, whether because of
acceleration, prepayment, illegality or otherwise, or if a Eurodollar Advance,
a Korean Eurodollar Advance or Korean Won Advance is not made or continued or
prepaid on the date specified by the applicable Borrower for any reason other
than default by the Lenders, the applicable Borrower agrees to compensate and
indemnify each Lender, on demand, for any loss or cost incurred by it
resulting therefrom, including, without limitation, any loss or cost in
liquidating or employing deposits acquired to fund or maintain the Eurodollar
Advance, the Korean Eurodollar Advance or Korean Won Advance.
3.5 Lender Statements; Survival of Indemnity. If reasonably possible,
----------------------------------------
each Lender shall designate an alternate Lending Installation with respect to
its Eurodollar Loans, Korean Eurodollar Loans or Korean Won Loans to reduce
any liability of the Borrowers to such Lender under Sections 3.1 and 3.2 or to
------------ ---
avoid the unavailability of a Type of Advance under Section 3.3, so long as
-----------
such designation is not disadvantageous to such Lender in its sole
determination. Each Lender requiring compensation pursuant to Section 2.10(E)
---------------
or to this Article III shall use its reasonable efforts to notify the Company
-----------
and the Agent in writing of any Change, law, policy, rule, guideline or
directive giving rise to such demand for compensation not later than sixty
(60) days following the date upon which the responsible account officer of
such Lender knows or should have known of such Change, law, policy, rule,
guideline or directive; provided, that failure to give such notice shall not
--------
affect any obligations of the Borrowers hereunder with respect thereto;
provided, further that for each such Change, law policy, rule, guideline or
-- -------
directive giving rise to such demand, such reimbursement obligations shall be
limited to an amount equal to costs incurred sixty (60) days prior to such
notice and thereafter. Any demand for compensation pursuant to this Article
-------
III shall be in writing and shall state the amount due, if any, under Section
-- -------
3.1, 3.2 or 3.4 and shall set forth in reasonable detail the calculations upon
- --- --- ---
which such Lender determined such amount. Such written demand shall be
rebuttably presumed correct for all purposes. Determination of amounts
payable under such Sections in connection with a Eurodollar Loan, Korean
Eurodollar Loan or Korean Won Loan shall be calculated as though each Lender
funded its Eurodollar Loan, Korean Eurodollar Loan or Korean Won Loan, as
applicable through the purchase of a deposit of the type, currency and
maturity corresponding to the deposit used as a reference in determining the
Eurodollar Rate, Korean Eurodollar Rate or Korean CD Rate, as applicable to
such Loan, whether in fact that is the case or not. The obligations of the
Borrowers under Sections 3.1, 3.2 and 3.4 shall survive payment of the
------------- --- ---
Obligations and termination of this Agreement.
ARTICLE IV: CONDITIONS PRECEDENT
- -------------------------------------
4.1 Initial Advances and Letters of Credit. The Lenders shall not be
---------------------------------------
required to make the initial Loans or issue any Letters of Credit unless (i)
such initial Loans are made not later than May 29, 1998 and (ii) the Company's
Subsidiaries shall be capitalized (with contributions to capital, or, in the
Company's discretion, loans) as described in the Consolidating Financial
Forecasts for Subsidiaries dated February 25, 1998 and delivered to the Agent
on February 26, 1998 and (iii) the Borrowers and Subsidiary Obligors have
furnished to the Agent, with sufficient copies for the Lenders, all of the
documents reflected on the List of Closing Documents attached as Exhibit E to
---------
this Agreement; it being understood and agreed that the Agent will notify the
Company in writing promptly when all of the conditions precedent have been
satisfied, provided, that it is further understood and agreed that if all of
--------
the conditions precedent described in clauses (i), (ii) and (iii) above shall
----------- ---- -----
not have been satisfied on or before May 29, 1998, the Aggregate Commitment
hereunder shall be terminated as of such date (unless otherwise agreed by the
Company and all of the Lenders) and all fees otherwise payable hereunder shall
cease to accrue.
4.2 Each Advance and Letter of Credit. Except as expressly provided in
---------------------------------
Sections 2.17 with respect to the purchase of participations in Letters of
- --------------
Credit, the Lenders shall not be required to make any Advance and the Issuing
- ---
Lender shall not be required to issue any Letter of Credit, unless on the
applicable Borrowing Date, or in the case of a Letter of Credit, the date on
which the Letter of Credit is to be issued:
(i) There exists no Default or Unmatured Default; and
(ii) The representations and warranties contained in Article V are true
---------
and correct in all material respects as of such Borrowing Date, except for
representations and warranties made with reference to a specific date which
representations and warranties shall be true and correct in all material
respects as of such date.
Each Borrowing Notice with respect to each such Advance and the letter of
credit application with respect to a Letter of Credit shall constitute a
representation and warranty by the Borrower requesting such Advance that the
conditions contained in Sections 4.2(i) and (ii) will have been satisfied as
--------------- ----
of the date of such Advance or the issuance of such Letter of Credit. Any
Lender may require a duly completed officer's certificate in substantially the
form of Exhibit F hereto and/or a duly completed compliance certificate in
----------
substantially the form of Exhibit C hereto as a condition to making an
----------
Advance.
ARTICLE V: REPRESENTATIONS AND WARRANTIES
- -----------------------------------------------
In order to induce the Agent and the Lenders to enter into this
Agreement and to make the Loans and the other financial accommodations to the
Borrowers and in order to induce the Issuing Lender to issue the Letters of
Credit for the account of the Borrowers and Subsidiary Obligors, each of the
Borrowers and the Subsidiary Obligors represents and warrants as follows to
each Lender and each Agent as of the date of this Agreement and thereafter on
each date as required by Section 4.2:
------------
5.1 Organization; Powers. Each of the Borrowers and Subsidiary Obligors
--------------------
(i) is a duly organized corporation validly existing and in good standing
under the laws of the jurisdiction of its organization, (ii) is duly qualified
to do business as a foreign company or corporation and is in good standing
under the laws of each jurisdiction in which failure to be so qualified and in
good standing could have a Material Adverse Effect, and (iii) has all
requisite power and authority to own, operate and encumber its property and to
conduct its business as presently conducted and as proposed to be conducted in
connection with and following the consummation of the transactions
contemplated by this Agreement.
5.2 Authority.
---------
(A) Each of the Borrowers and each of the Subsidiary Obligors has the
requisite power and authority (i) to execute, deliver and perform each of the
Loan Documents which have been executed by it as required by this Agreement
and (ii) to file the Loan Documents which must be filed by it with any
Governmental Authority.
(B) The execution, delivery, performance and filing, as the case may be,
of each of the Loan Documents which must be executed or filed by any of the
Borrowers or any Subsidiary Obligor which have been executed or filed as
required by this Agreement and to which any of the Borrowers or any Subsidiary
Obligor is party, and the consummation of the transactions contemplated
thereby, have been duly approved, to the extent required, by the respective
boards of managers or directors, as applicable, and, if necessary, the members
or shareholders or workers' councils of the applicable Borrower or Subsidiary
Obligor, as applicable, and such approvals have not been rescinded. No other
action or proceedings on the part of any Borrower or any Subsidiary Obligor or
other Person are necessary to consummate such transactions.
(C) Each of the Loan Documents to which any of the Borrowers or any
Subsidiary Obligor is a party has been duly executed, delivered or filed, as
the case may be, by it and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms (except as
enforceability may be limited by bankruptcy, insolvency, or similar laws
affecting the enforcement of creditors' rights generally), is in full force
and effect and no material term or condition thereof has been amended,
modified or waived from the terms and conditions contained in the Loan
Documents delivered to the Agent pursuant to Section 4.1 without the prior
-----------
written consent of the Required Lenders, and each of the Borrowers or each
Subsidiary Obligor has, and, to the best of such Borrower's or Subsidiary
Obligor's Knowledge, all other parties thereto have performed and complied
with all the terms, provisions, agreements and conditions set forth therein
and required to be performed or complied with by such parties, and no
unmatured default, default or breach of any covenant by any such party exists
thereunder.
5.3 No Conflict; Governmental Consents. The execution, delivery and
------------------------------------
performance of each of the Loan Documents to which any of the Borrowers or any
Subsidiary Obligor is a party do not and will not (i) conflict with the
documents of organization or governance of such Borrower or Subsidiary
Obligor, (ii) constitute tortious interference with any Contractual Obligation
of any Person or conflict with, result in a breach of or constitute (with or
without notice or lapse of time or both) a default under any Requirement of
Law (including, without limitation, any Environmental Property Transfer Act)
or Contractual Obligation of any Borrower or any Subsidiary Obligor, or
require termination of any Contractual Obligation, except such interference,
breach, default or termination which individually or in the aggregate would
not reasonably be expected to have a Material Adverse Effect or to subject the
Agent, the Arranger, any of the Lenders or any Issuing Lender to any
liability, (iii) with respect to the Loan Documents, result in or require the
creation or imposition of any Lien whatsoever upon any of the property or
assets of any Borrower or any Subsidiary Obligor, other than Liens permitted
by the Loan Documents, or (iv) require any approval of the Borrower's or any
Subsidiary Obligor's members, shareholders, workers' council or other similar
constituent group except such as have been obtained. The execution, delivery
and performance of each of the Loan Documents to which any Borrower or any
Subsidiary Obligor is a party do not and will not require any registration
with, consent or approval of, or notice to, or other action to, with or by any
Governmental Authority, including under any Environmental Property Transfer
Act, except (i) filings, consents or notices which have been or, in the case
of any of the foregoing, not required prior to the Closing Date, will be made,
obtained or given, and (ii) filings, registrations and deliveries necessary to
create or perfect security interests in the Collateral.
5.4 Financial Statements. The historical and forecasted financial
---------------------
statements, including, without limitation, the Consolidating Financial
Forecasts for Subsidiaries dated February 25, 1998 and delivered to the Agent
on February 26, 1998 (the "Statements") of the Company and its Subsidiaries,
copies of which are attached hereto as Exhibit G, (i) with respect to the
---------
historical Statements, (a) were prepared in accordance with generally accepted
accounting principles consistently applied throughout the period covered
thereby, except as otherwise expressly noted therein, (b) fairly present on a
pro forma basis the consolidated financial position of the Company and its
Subsidiaries as of the date thereof and consolidated results of operations for
the period covered thereby; and (c) show all material indebtedness and other
liabilities, direct or contingent, of the Company and its consolidated
Subsidiaries as of the date thereof, including liabilities for taxes, material
commitments and material Contingent Obligations; and (ii) with respect to the
forecasted Statements, the projections and assumptions expressed therein were
prepared in good faith and represent management's opinion based on the
information available to the Company at the time so furnished.
5.5 No Material Adverse Change. (a) Since November 30, 1997 up to the
--------------------------
Closing Date, except as disclosed in the Company's Form 10 filed on March 19,
1998 with the Commission (a copy of which has been delivered to the Agent),
there has occurred no change in the business, properties, condition (financial
or otherwise), results of operations or prospects of the Company and its
Subsidiaries taken as a whole or any other event which has had or is
reasonably likely to have a Material Adverse Effect.
(b) Since the Closing Date, there has occurred no change in the
business, properties, condition (financial or otherwise), results of
operations or prospects of the Company and its Subsidiaries taken as a whole
or any other event which has had or is reasonably likely to have a Material
Adverse Effect.
5.6 Taxes.
-----
(A) Tax Examinations. All deficiencies which have been asserted against
----------------
the Company or any of the Company's Subsidiaries as a result of any federal,
state, local or foreign tax examination for each taxable year in respect of
which an examination has been conducted have been fully paid or finally
settled or are being contested in good faith, and as of the Closing Date no
issue has been raised by any taxing authority in any such examination which,
by application of similar principles, reasonably can be expected to result in
assertion by such taxing authority of a material deficiency for any other year
not so examined which has not been reserved for in the Company's consolidated
financial statements to the extent, if any, required by Agreement Accounting
Principles. Except as permitted pursuant to Section 6.2(D) and except as
--------------
reserved for in the Company's consolidated financial statements to the extent,
if any, required by Agreement Accounting Principles, neither the Company nor
any of the Company's Subsidiaries anticipates any material tax liability with
respect to the years which have not been closed pursuant to applicable law.
(B) Payment of Taxes. All tax returns and reports of each of the
------------------
Company and its Subsidiaries required to be filed have been timely filed, and
all taxes, assessments, fees and other governmental charges thereupon and upon
their respective property, assets, income and franchises which are shown in
such returns or reports to be due and payable have been paid except those
items which are being contested in good faith and have been reserved for in
accordance with Agreement Accounting Principles. The Company has no Knowledge
of any proposed tax assessment against the Company, or any of the Company's
other Subsidiaries that will have or is reasonably likely to have a Material
Adverse Effect.
5.7 Litigation; Loss Contingencies and Violations. Except for Permitted
---------------------------------------------
Existing Contingent Obligations and as set forth in Schedule 5.7 to this
------------
Agreement, there is no action, suit, proceeding or investigation of which the
Company has Knowledge or arbitration before or by any Governmental Authority
or private arbitrator pending or, to the Knowledge of the Company or any of
its Subsidiaries, threatened against the Company or any of its Subsidiaries or
any property of any of them (i) challenging the validity or the enforceability
of any material provision of the Loan Documents or (ii) which will have or is
reasonably likely to have a Material Adverse Effect. There is no material
loss contingency within the meaning of Agreement Accounting Principles which
has not been reflected in the consolidated financial statements of the Company
prepared and delivered pursuant to Section 6.1(A) for the fiscal period during
--------------
which such material loss contingency was incurred. Neither the Company nor
any of its Subsidiaries is (A) in violation of any applicable Requirements of
Law which violation will have or is reasonably likely to have a Material
Adverse Effect, or (B) subject to or in default with respect to any final
judgment, writ, injunction, restraining order or order of any nature, decree,
rule or regulation of any court or Governmental Authority which will have or
is reasonably likely to have a Material Adverse Effect.
5.8 Subsidiaries; Capital Stock. Schedule 5.8 to this Agreement (i)
----------------------------- ------------
contains a description as of the Closing Date of the corporate structure of
the Company, the Company's Subsidiaries and any other Person in which the
Company or any of its Subsidiaries holds an equity interest; and (ii)
accurately sets forth (A) the correct legal name, the jurisdiction of
organization or incorporation and the jurisdictions in which each Borrower and
the direct and indirect Subsidiaries of the Company is qualified to transact
business as a foreign company or corporation, (B) the authorized, issued and
outstanding shares of each class of Capital Stock of each entity referred to
above that is a corporation and the owners of such shares (both as of the
Closing Date and on a fully-diluted basis), and (C) a summary of the direct
and indirect ownership, membership, partnership, joint venture, or other
equity interests, if any, of the Company and each Subsidiary of the Company in
any Person that is not a corporation. Except as disclosed on Schedule 5.8,
------------
none of the issued and outstanding Capital Stock of the Company or any of its
Subsidiaries is subject to any vesting, redemption, or repurchase agreement,
and there are no warrants or options outstanding with respect to such Capital
Stock. As of the Closing Date, the outstanding Capital Stock of the Company
and each of its Subsidiaries will be duly authorized, validly issued, fully
paid and nonassessable and, with the exception of the Company, will not be
Margin Stock.
5.9 ERISA. No Benefit Plan has incurred any accumulated funding
-----
deficiency (as defined in Sections 302(a)(2) of ERISA and 412(a) of the Code)
whether or not waived. Neither the Company nor any member of the Controlled
Group has incurred any liability to the PBGC which remains outstanding other
than the payment of premiums, and there are no premium payments which have
become due which are unpaid. Schedule B to the most recent annual report
filed with the IRS with respect to each Benefit Plan and furnished to the
lenders is complete and accurate. Since the date of each such Schedule B,
there has been no material adverse change in the funding status or financial
condition of the Benefit Plan relating to such Schedule B. Neither the
Company nor any member of the Controlled Group has (i) failed to make a
required contribution or payment to a Multiemployer Plan or (ii) made a
complete or partial withdrawal under Sections 4203 or 4205 of ERISA from a
Multiemployer Plan. Neither the Company nor any member of the Controlled
Group has failed to make a required installment or any other required payment
under Section 412 of the Code on or before the due date for such installment
or other payment. Neither the Company nor any member of the Controlled Group
is required to provide security to a Benefit Plan under Section 401(a)(29) of
the Code due to a Plan amendment that results in an increase in current
liability for the plan year. Neither the Company nor any of its Subsidiaries
maintains or contributes to any employee welfare benefit plan within the
meaning of Section 3(1) of ERISA which provides benefits to employees after
termination of employment other than as required by Section 601 of ERISA.
Each Plan which is intended to be qualified under Section 401(a) of the Code
as currently in effect is so qualified, and each trust related to any such
Plan is exempt from federal income tax under Section 501(a) of the Code as
currently in effect. The Company and all Subsidiaries are in compliance in
all material respects with the responsibilities, obligations and duties
imposed on them by ERISA and the Code with respect to all Plans (other than
Foreign Employee Benefit Plans and Foreign Pension Plans). Neither the
Company nor any of its Subsidiaries nor any fiduciary of any Plan has engaged
in a nonexempt prohibited transaction described in Sections 406 of ERISA or
4975 of the Code which could reasonably be expected to subject the Company to
liability individually or in the aggregate in excess of $2,500,000. Neither
the Company nor any member of the Controlled Group has taken or failed to take
any action which would constitute or result in a Termination Event, which
action or inaction could reasonably be expected to subject the Company nor any
of its Subsidiaries to liability in excess of $2,500,000. Neither the Company
nor any Subsidiary is subject to any liability under Sections 4063, 4064,
4069, 4204 or 4212(c) of ERISA and no other member of the Controlled Group is
subject to any liability under Sections 4063, 4064, 4069, 4204 or 4212(c) of
ERISA which could reasonably be expected to subject the Company to or any of
its Subsidiaries liability individually or in the aggregate in excess of
$2,500,000. Neither the Company nor any of its Subsidiaries has, by reason of
the transactions contemplated hereby, any obligation to make any payment to
any employee pursuant to any Plan or existing contract or arrangement.
5.10 Accuracy of Information. Each of (i) the Company's Form 10 filed
-----------------------
on March 19, 1998 with the Commission (a copy of which has been delivered to
the Agent), as of the date of filing of such Form 10, (ii) any registration
statement or report on Form 10-K, 10-Q and 8-K (or their equivalents) which
the Company shall have filed with the Commission as at the time of filing of
such registration or report, as applicable, and (iii) all written reports,
certificates and documents of the Company furnished by or on behalf of the
Company and any of its Subsidiaries to the Agent or to any Lender in
connection with the negotiation of, or compliance with, the Loan Documents,
including, without limitation, the Confidential Information Memorandum
reviewed by the Company (provided that except as set forth in Section 5.4, no
-----------
representation or warranty is made with respect to the forward looking
information contained therein), in each case, as of the date furnished, do not
contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements contained herein or therein, in
light of the circumstances under which they were made, not misleading.
5.11 Securities Activities. Neither the Company nor any of its
----------------------
Subsidiaries is engaged in the business of extending credit for the purpose of
purchasing or carrying Margin Stock.
5.12 Material Agreements. Neither the Company nor any Subsidiary is a
-------------------
party to any agreement or instrument or subject to any charter or other
contractual or corporate restriction which will have or is reasonably likely
to have a Material Adverse Effect. Neither the Company nor any of its
Subsidiaries has received notice or has Knowledge that (i) it is in default in
the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any Contractual Obligation applicable to
it, or (ii) any condition exists which, with the giving of notice or the lapse
of time or both, would constitute a default with respect to any such
Contractual Obligation, in each case, except where such default or defaults,
if any, will not have or are not reasonably likely to have a Material Adverse
Effect.
5.13 Compliance with Laws. The Company and its Subsidiaries are in
----------------------
compliance with all Requirements of Law applicable to them and their
respective businesses, in each case where the failure to so comply
individually or in the aggregate will have or is reasonably likely to have a
Material Adverse Effect.
5.14 Assets and Properties. The Company and each of its Subsidiaries
----------------------
has good and marketable title to all of its assets and properties (tangible
and intangible, real or personal) owned by it or a valid leasehold interest in
all of its leased assets (except insofar as marketability may be limited by
any laws or regulations of any Governmental Authority affecting such assets),
and all such assets and property are free and clear of all Liens, except Liens
securing the Obligations and Liens permitted under Section 6.3(C).
---------------
Substantially all of the assets and properties owned by, leased to or used by
the Company and/or each such Subsidiary of the Company are in adequate
operating condition and repair, ordinary wear and tear excepted. Except for
Liens granted to the Agent for the benefit of the Agent and the Holders of
Secured Obligations, neither this Agreement nor any other Loan Document, nor
any transaction contemplated under any such agreement, will affect any right,
title or interest of the Company or such Subsidiary in and to any of such
assets in a manner that will have or is reasonably likely to have a Material
Adverse Effect.
5.15 Statutory Indebtedness Restrictions. Neither the Company, nor any
-----------------------------------
of its Subsidiaries is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, the Interstate Commerce Act, or
the Investment Company Act of 1940, or any other federal, state, local or
foreign statute or regulation which limits its ability to consummate the
transactions contemplated hereby.
5.16 Post-Retirement Benefits. As of the Closing Date, the Company and
------------------------
its Subsidiaries have no expected cost of post-retirement medical and
insurance benefits payable by the Company or its Subsidiaries to its employees
and former employees, as estimated by the Company in accordance with Financial
Accounting Standards Board Statement No. 106.
5.17 Insurance. Schedule 5.17 to this Agreement accurately sets forth
--------- -------------
as of the Closing Date all insurance policies and programs currently in effect
with respect to the respective properties and assets and business of the
Company and its Subsidiaries, specifying for each such policy and program, (i)
the amount thereof, (ii) the risks insured against thereby, (iii) the name of
the insurer and each insured party thereunder, (iv) the policy or other
identification number thereof, (v) the expiration date thereof, (vi) the
annual premium with respect thereto and (vii) describes any reserves, relating
to any self-insurance program that is in effect. Such insurance policies and
programs reflect coverage that is reasonably consistent with prudent industry
practice.
5.18 Contingent Obligations. Except for Permitted Existing Contingent
----------------------
Obligations, neither the Company nor any of its Subsidiaries has any
Contingent Obligation, contingent liability, long-term lease, or synthetic
lease, not reflected in the financial statements attached hereto as Exhibit G
---------
or otherwise disclosed to the Agent and the Lenders in the other Schedules to
this Agreement, which could reasonably be expected to subject the Company nor
any of its Subsidiaries to liability individually or in the aggregate in
excess of (a) $2,500,000 with respect to payments for Contingent Purchase
Price Obligations, (b) $30,000,000 with respect to guarantees issued for the
benefit of third-parties as support for loans and advances made by such
third-parties to Subsidiaries (other than Subsidiary Borrowers and Subsidiary
Obligors) of the Company or (c) $2,500,000 for other amounts.
5.19 Restricted Junior Payments. Neither the Company nor any of its
----------------------------
Subsidiaries has directly or indirectly declared, ordered, paid or made or set
apart any sum or properties for any Restricted Junior Payment or agreed to do
so, except to the extent permitted pursuant to Section 6.3(F) of this
---------------
Agreement.
5.20 Labor Matters.
--------------
(A) There are on the Closing Date no material collective bargaining
agreements, other labor agreements or Multiemployer Plans covering any of the
employees of the Company or any of its Subsidiaries. As of the Closing Date,
no material labor disputes, strikes or walkouts affecting the operations of
the Company or any of its Subsidiaries, is pending, or, to the Company's
Knowledge, threatened, planned or contemplated.
(B) Set forth in Schedule 5.20 to this Agreement is a list, as of the
-------------
Closing Date, of all material consulting agreements, executive compensation
plans, deferred compensation agreements, employee pension plans or retirement
plans, employee profit sharing plans, employee stock purchase and stock option
plans, severance plans, group life insurance, hospitalization insurance or
other plans or arrangements of the Company and its Subsidiaries providing for
benefits for employees of the Company or its Subsidiaries.
5.21 Environmental Matters. (a) Except as disclosed on Schedule 5.21:
--------------------- -------------
(i) the operations of the Company and its Subsidiaries comply in all
material respects with all applicable Environmental, Health or Safety
Requirements of Law;
(ii) the Company and its Subsidiaries have all material permits,
licenses or other authorizations required under all applicable Environmental,
Health or Safety Requirements of Law and are in material compliance with such
permits;
(iii) neither the Company, any of its Subsidiaries nor any of their
respective present property or operations, or, to the best of, the Company's
or any of its Subsidiaries' Knowledge, any of their respective past property
or operations, are subject to or are the subject of, any investigation known
to the Company or any of its Subsidiaries, any judicial or administrative
proceeding, order, judgment, decree, settlement or other agreement respecting:
(A) any material violation of Environmental, Health or Safety Requirements of
Law; (B) any material remedial action; or (C) any material claims or
liabilities arising from the Release or threatened Release of a Contaminant
into the environment;
(iv) there is not now, nor to the best of the Company's or any of its
Subsidiaries' Knowledge has there ever been on or in the property of the
Company or any of its Subsidiaries any material landfill, waste pile,
underground storage tanks, aboveground storage tanks, surface impoundment or
hazardous waste storage facility of any kind, polychlorinated biphenyls (PCBs)
used in hydraulic oils, electric transformers or other equipment, or
asbestos-containing material; and
(v) neither the Company nor any of its Subsidiaries has any material
Contingent Obligation or material contingent liability in connection with any
Release or threatened Release of a Contaminant into the environment.
(b) For purposes of this Section 5.21 "material" means any noncompliance
------------
or basis for liability which could reasonably be likely to subject the Company
to liability individually in excess of $2,500,000 or in the aggregate in
excess of $5,000,000.
5.22 Foreign Employee Benefit Matters. (a) Each Foreign Employee
-----------------------------------
Benefit Plan is in compliance in all respects with all laws, regulations and
rules applicable thereto and the respective requirements of the governing
documents for such Plan, except for any non-compliance the consequences of
which, in the aggregate, would not result in a material obligation to pay
money; (b) the aggregate of the accumulated benefit obligations under all
Foreign Pension Plans does not exceed to any material extent the current fair
market value of the assets held in the trusts or similar funding vehicles for
such Plans or reasonable reserves have been established in accordance with
prudent business practices or as required by Agreement Accounting Principles
with respect to any shortfall; (c) with respect to any Foreign Employee
Benefit Plan maintained or contributed to by the Company or any Subsidiary or
any member of its Controlled Group (other than a Foreign Pension Plan),
reasonable reserves have been established in accordance with prudent business
practice or where required by ordinary accounting practices in the
jurisdiction in which such Plan is maintained; and (d) there are no actions,
suits or claims (other than routine claims for benefits) pending or, to the
Knowledge of the Company and its Subsidiaries, threatened against the Company
or any Subsidiary of it or any ERISA Affiliate with respect to any Foreign
Employee Benefit Plan, except to the extent the consequences of which, in the
aggregate, would not result in a material obligation to pay money.
ARTICLE VI: COVENANTS
- -------------------------
Each of the Borrowers covenants and agrees that so long as any
Commitments are outstanding and thereafter until payment in full of all of the
Obligations (other than contingent indemnity and reimbursement obligations),
unless the Required Lenders shall otherwise give prior written consent:
6.1 Reporting. The Borrowers shall:
---------
(A) Financial Reporting. Furnish to the Agent (which will promptly
--------------------
furnish copies of the following to the Lenders):
(i) Quarterly Reports. As soon as practicable, and in any event within
-----------------
forty-five (45) days after the end of the first three fiscal quarters in each
fiscal year beginning with the fiscal quarter ending February 28, 1998, the
consolidated and consolidating balance sheets of the Company and its
Subsidiaries as at the end of such period, the related consolidated and
consolidating statements of income and the related consolidated statement of
stockholders' equity and cash flow of the Company and its Subsidiaries for
such fiscal quarter and for the period from the beginning of the then current
fiscal year to the end of such fiscal quarter, certified by the chief
financial officer of the Company on behalf of the Company as fairly presenting
in all material respects the consolidated and, as applicable, consolidating
financial position of the Company and its Subsidiaries as at the dates
indicated and the results of their operations and cash flow for the periods
indicated in accordance with Agreement Accounting Principles, subject to
normal year end adjustments.
(ii) Annual Reports. As soon as practicable, and in any event within
---------------
ninety (90) days after the end of each fiscal year, (a) the consolidated and
consolidating balance sheet of the Company and its Subsidiaries as at the end
of such fiscal year and the related consolidated and consolidating statements
of income and the related consolidated statement of stockholders' equity and
cash flow of the Company and its Subsidiaries for such fiscal year, and, in
comparative form the corresponding figures for the previous fiscal year, (b) a
schedule from the Company setting forth for each item in clause (a) hereof,
----------
the corresponding figures from the consoli-dated financial budget for the
current fiscal year delivered pursuant to Section 6.1(A)(iv), and (c) an audit
------------------
report on the items (other than the consolidating financial statements) listed
in clause (a) hereof of independent certified public accountants of recognized
----------
national standing, which audit report shall be unqualified and shall state
that such financial statements fairly present in all material respects the
consolidated financial position of the Company and its Subsidiaries as at the
dates indicated and the results of their operations and cash flow for the
periods indicated in conformity with Agreement Accounting Principles and that
the examination by such accountants in connection with such consolidated
financial statements has been made in accordance with generally accepted
auditing standards. The deliveries made pursuant to this clause (ii) shall be
-----------
accompanied by a certificate of such accountants that, in the course of their
examination necessary for their certification of the foregoing (such
examination utilizing only their customary audit procedures without any
necessity of conducting extra procedures for purposes of this certificates),
they have obtained no knowledge of such Default or Unmatured Default under
Section 6.4, or if, in the opinion of such accountants, any Default or
---------
Unmatured Default shall exist, stating the nature and status thereof. Such
----
deliveries shall also, not later than one hundred twenty days after the end of
such fiscal year, be accompanied by the management recommendation letter from
such accountants delivered in connection with such financial statements (x)
confirming that although no separate internal controls audit was conducted, in
the process of their regular audit, the internal systems and controls were
reviewed on a limited basis, and (y) listing any recommendations made to the
Company with respect to its internal systems and controls. If the Required
Lenders are not satisfied with the management recommendation letter's
treatment of the Company's internal systems and controls, they shall have the
right to require the Company to direct independent certified public
accountants of recognized national standing to prepare an audit report on the
internal systems and controls of the Company and its Subsidiaries.
(iii) Officer's Certificate. Together with each delivery of any
----------------------
financial statement pursuant to clauses (i) and (ii) of this Section 6.1(A),
----------- ---- --------------
(a) an Officer's Certificate of the Company, substantially in the form of
Exhibit F attached hereto and made a part hereof, stating that no Default or
------
Unmatured Default exists, or if any Default or Unmatured Default exists,
stating the nature and status thereof and (b) a Compliance Certificate,
substantially in the form of Exhibit C attached hereto and made a part hereof,
---------
signed by the Company's chief financial officer, setting forth the Company's
calculations for the period then ended for Section 2.2(B) and for Section
-------------- -------
2.4(b) and which demonstrate compliance, when applicable, with the provisions
--
of Section 6.4, and which calculate the EBITDA Contribution Ratio for purposes
-----------
of determining the Applicable Eurodollar Margins, the Applicable Base Rate
Margins, the Applicable Letter of Credit Fee, and the Applicable Facility Fee.
(iv) Budgets. As soon as practicable and in any event not later than
-------
thirty (30) days following the beginning of each fiscal year beginning with
the fiscal year beginning September 1, 1998, a copy of the budget (including a
budgeted balance sheet and income statement) of the Company for the upcoming
fiscal year prepared in such detail as shall be reasonably satisfactory to the
Agent.
(B) Notice of Default. Promptly upon any of the chief executive
-------------------
officer, chief operating officer, or chief financial officer of the Company
obtaining Knowledge (i) of any condition or event which constitutes a Default
or Unmatured Default, or becoming aware that any Lender or Agent has given any
written notice with respect to a claimed Default or Unmatured Default under
this Agreement, or (ii) that any Person has given any written notice to the
Company or any Subsidiary of the Company or taken any other action with
respect to a claimed default or event or condition of the type referred to in
Section 7.1(e), deliver to the Agent and the Lenders an Officer's Certificate
- ---------------
specifying (a) the nature and period of existence of any such claimed default,
Default, Unmatured Default, condition or event, (b) the notice given or action
taken by such Person in connection therewith, and (c) what action the Company
has taken, is taking and proposes to take with respect thereto.
(C) Lawsuits. (i) Promptly upon the Company obtaining Knowledge of the
--------
institution of, or written threat of, any action, suit, proceeding,
governmental investigation or arbitration against or affecting the Company or
any of its Subsidiaries or any property of the Company or any of its
Subsidiaries not previously disclosed pursuant to Section 5.7, which action,
-----------
suit, proceeding, governmental investigation or arbitration exposes, or in the
case of multiple actions, suits, proceedings, governmental investigations or
arbitrations arising out of the same general allegations or circumstances
which expose, in the Company's reasonable judgment, the Company or any of its
Subsidiaries to liability in an amount aggregating $2,500,000 or more, give
written notice thereof to the Agent and the Lenders and provide such other
information as may be reasonably available to enable each Lender and the Agent
and its counsel to evaluate such matters; and (ii) in addition to the
requirements set forth in clause (i) of this Section 6.1(C), upon request of
---------- --------------
the Agent or the Required Lenders, promptly give written notice of the status
of any action, suit, proceeding, governmental investigation or arbitration
disclosed on Schedule 5.7 or covered by a report delivered pursuant to clause
------------ ------
(i) above and provide such other information as may be reasonably available to
- ---
it that would not result in loss of any attorney-client privilege by
disclosure to the Lenders to enable each Lender and the Agent and its counsel
to evaluate such matters.
(D) Insurance. As soon as practicable and in any event within one
---------
hundred twenty (120) days of the end of each fiscal year commencing with the
fiscal year ending August 31, 1998 deliver to the Agent and the Lenders (i) a
report in form as attached as Schedule 5.17 or otherwise in form and substance
-------------
reasonably satisfactory to the Agent outlining all material insurance coverage
maintained as of the date of such report by the Company and its Subsidiaries
and the duration of such coverage and (ii) an insurance broker's statement
that all premiums with respect to such coverage have been paid when due.
(E) ERISA Notices. Deliver or cause to be delivered to the Agent and
--------------
the Lenders, at the Company's expense, the following information and notices
as soon as reasonably possible, and in any event:
(i) (a) within ten (10) Business Days after the Company obtains
Knowledge that a Termination Event has occurred which could reasonably be
expected to subject the Company to or any of its Subsidiaries liability
individually or in the aggregate in excess of $2,500,000, a written statement
of the chief financial officer of the Company describing such Termination
Event and the action, if any, which the Company has taken, is taking or
proposes to take with respect thereto, and when known, any action taken or
threatened by the IRS, DOL or PBGC with respect thereto and (b) within ten
(10) Business Days after any member of the Controlled Group obtains Knowledge
that a Termination Event has occurred which could reasonably be expected to
subject the Company to or any of its Subsidiaries liability individually or in
the aggregate in excess of $2,500,000, a written statement of the chief
financial officer of the Company describing such Termination Event and the
action, if any, which the member of the Controlled Group has taken, is taking
or proposes to take with respect thereto, and when known, any action taken or
threatened by the IRS, DOL or PBGC with respect thereto;
(ii) within ten (10) Business Days after the Company or any of its
Subsidiaries obtains Knowledge that a prohibited transaction (defined in
Sections 406 of ERISA and Section 4975 of the Code) has occurred, a statement
of the chief financial officer of the Company describing such transaction and
the action which the Company or such Subsidiary has taken, is taking or
proposes to take with respect thereto;
(iii) within ten (10) Business Days after any material increase in the
benefits of any existing Plan or the establishment of any new Benefit Plan or
the commencement of, or obligation to commence, contributions to any Benefit
Plan or Multiemployer Plan to which the Company or any member of the
Controlled Group was not previously contributing, notification of such
increase, establishment, commencement or obligation to commence and the amount
of such contributions;
(iv) within ten (10) Business Days after the Company or any of its
Subsidiaries receives notice of any unfavorable determination letter from the
IRS regarding the qualification of a Plan under Section 401(a) of the Code,
copies of each such letter;
(v) within thirty (30) Business Days after the establishment of any
Foreign Employee Benefit Plan or the commencement of, or obligation to
commence, contributions to any Foreign Employee Benefit Plan to which the
Company or any Subsidiary was not previously contributing which, in any case,
would materially increase the Company's employment costs, notification of such
establishment, commencement or obligation to commence and the amount of such
contributions;
(vi) within ten (10) Business Days after the filing thereof with the
IRS, a copy of each funding waiver request filed with respect to any Benefit
Plan and all communications received by the Company or a member of the
Controlled Group with respect to such request;
(vii) within ten (10) Business Days after receipt by the Company or any
member of the Controlled Group of the PBGC's intention to terminate a Benefit
Plan or to have a trustee appointed to administer a Benefit Plan, copies of
each such notice;
(viii) within ten (10) Business Days after receipt by the Company or any
member of the Controlled Group of a notice from a Multiemployer Plan regarding
the imposition of withdrawal liability, copies of each such notice;
(ix) within ten (10) Business Days after the Company or any member of
the Controlled Group fails to make a required installment or any other
required payment under Section 412 of the Internal Revenue Code on or before
the due date for such installment or payment, a notification of such failure;
and
(x) within ten (10) Business Days after the Company or any member of the
Controlled Group knows or has reason to know that (a) a Multiemployer Plan has
been terminated, (b) the administrator or plan sponsor of a Multiemployer Plan
intends to terminate a Multiemployer Plan, or (c) the PBGC has instituted or
will institute proceedings under Section 4042 of ERISA to terminate a
Multiemployer Plan.
For purposes of this Section 6.1(E), the Company, any of its Subsidiaries and
--------------
any member of the Controlled Group shall be deemed to know all facts known by
the Administrator of any Plan of which the Borrower or any member of the
Controlled Group or such Subsidiary is the plan sponsor.
(F) Labor Matters. Notify the Agent and the Lenders in writing,
--------------
promptly upon the Company's or any of its Subsidiaries' learning thereof, of
(i) any labor dispute to which the Company or any of its Subsidiaries may
become a party, including, without limitation, any strikes, lockouts or other
disputes relating to such Persons' plants and other facilities and (ii) any
Worker Adjustment and Retraining Notification Act liability incurred with
respect to the closing of any plant or other facility of the Company or any of
its Subsidiaries where, in the case of (i) or (ii), such is reasonably likely
to have a Material Adverse Effect.
(G) Other Indebtedness. Deliver to the Agent and the Lenders (i) a copy
------------------
of each regular report, notice or communication regarding potential or actual
defaults (including any accompanying officers' certificate) delivered by or on
behalf of the Company or any of its Subsidiaries to the holders of
Indebtedness for money borrowed with respect to Indebtedness the outstanding
principal balance of which is at least $2,500,000 pursuant to the terms of the
agreements governing such Indebtedness, such delivery to be made at the same
time and by the same means as such notice or other communication is delivered
to such holders, and (ii) a copy of each notice or other communication
received by the Company or any of its Subsidiaries from the holders of
Indebtedness for money borrowed with respect to Indebtedness the outstanding
principal balance of which is at least $2,500,000 pursuant to the terms of
such Indebtedness, such delivery to be made promptly after such notice or
other communication is received by the Company or the applicable Subsidiary.
(H) Other Reports. Deliver or cause to be delivered to the Agent and
--------------
the Lenders copies of all 10-Ks, 10-Qs and 8-Ks filed with the Commission by
the Company.
(I) Environmental Notices. Deliver to the Agent and the Lenders as soon
---------------------
as possible and in any event within ten (10) days after receipt by the Company
or any of its Subsidiaries, a copy of (i) any notice or claim to the effect
that the Company or any of its Subsidiaries is or may be liable to any Person
as a result of the Release by the Company, any of its Subsidiaries, or any
other Person of any Contaminant into the environment, and (ii) any notice
alleging any violation of any Environmental, Health or Safety Requirements of
Law by the Company or any of its Subsidiaries if, in either case, such notice
or claim relates to an event which could reasonably be expected to subject the
Company or any of its Subsidiaries to liability individually or in the
aggregate in excess of $2,500,000.
(J) Other Information. Within a reasonable period of time following
------------------
receipt of a request therefor from the Agent, prepare and deliver to the Agent
and the Lenders such other information with respect to the Company, any of its
Subsidiaries, or the Collateral, including, without limitation, schedules
identifying and describing the Collateral and any dispositions thereof, as
from time to time may be reasonably requested by the Agent or any Lender.
6.2 Affirmative Covenants.
----------------------
(A) Existence, Etc. Except as provided by Section 6.3(B)(iv) with
---------------- ------------------
respect to the sale, dissolution or liquidation of certain Subsidiaries of the
Company, the Company shall, and shall cause each of its Subsidiaries to, at
all times maintain its existence and preserve and keep, or cause to be
preserved and kept, in full force and effect its rights and franchises
material to its businesses except that any Subsidiary of the Company may merge
with or liquidate into the Company or any other Subsidiary of the Company;
provided that the surviving entity expressly assumes any liabilities, if any,
-----
of either of such Subsidiaries with respect to the Obligations pursuant to an
assumption agreement reasonably satisfactory to the Agent; provided further
-------- -------
that the Consolidated Net Worth of the surviving corporation is not less than
the Consolidated Net Worth of the Subsidiary with any liability with respect
to the Obligations immediately prior to such merger; and provided further, if
-------- -------
the corporation being merged out of existence or liquidated is a party to a
Pledge Agreement the surviving entity shall execute and deliver such
documents, instruments, agreements and opinions in connection therewith as
shall be required by the Agent in connection with any such Pledge Agreement
(and all accrued interest in connection therewith) of such entity shall be
repaid in full as of the date of such liquidation or merger.
(B) Corporate Powers; Conduct of Business. Except as provided by
-----------------------------------------
Section 6.3(B)(iv) with respect to the sale, dissolution or liquidation of
-------------
certain Subsidiaries of the Company, the Company (x) shall, and shall cause
each of its Subsidiaries to qualify and remain qualified to do business in
each jurisdiction in which the nature of its business requires it to be so
qualified and where the failure to be so qualified will have or is reasonably
likely to have a Material Adverse Effect and (y) will, and will cause each
Subsidiary to, carry on and conduct its business in substantially the same
manner and in substantially the same fields of enterprise as it is presently
conducted.
(C) Compliance with Laws, Etc. The Company shall, and shall cause its
--------------------------
Subsidiaries to, (a) comply with all Requirements of Law and all restrictive
covenants affecting such Person or the business, properties, assets or
operations of such Person, and (b) obtain as needed all permits necessary for
its operations and maintain such permits in good standing unless failure to
comply or obtain is not reasonably anticipated to have a Material Adverse
Effect.
(D) Payment of Taxes and Claims; Tax Consolidation. The Company shall
----------------------------------------------
pay, and cause each of its Subsidiaries to pay, (i) all taxes, assessments and
other governmental charges imposed upon it or on any of its properties or
assets or in respect of any of its franchises, business, income or property
before any penalty or interest accrues thereon, and (ii) all claims
(including, without limitation, claims for labor, services, materials and
supplies) for sums which have become due and payable and which by law have or
may become a Lien (other than a Lien permitted by Section 6.3(C)) upon any of
--------------
the Company's or such Subsidiary's property or assets, prior to the time when
any penalty or fine shall be incurred with respect thereto; provided, however,
-------- -------
that no such taxes, assessments and governmental charges referred to in clause
------
(i) above or claims referred to in clause (ii) above (and interest, penalties
- --- -----------
or fines relating thereto) need be paid if being contested in good faith by
appropriate proceedings diligently instituted and conducted and if such
reserve or other appropriate provision, if any, as shall be required in
conformity with Agreement Accounting Principles shall have been made therefor.
The Company will not permit any of its Subsidiaries to file or consent to the
filing of any consolidated income tax return with any Person other than the
Company or any of its Subsidiaries.
(E) Insurance. The Company shall maintain for itself and its
---------
Subsidiaries, or shall cause each of its Subsidiaries to maintain in full
force and effect the insurance policies and programs listed on Schedule 5.17
-------------
to this Agreement or substantially similar policies and programs or other
policies and programs as reflect coverage that is reasonably consistent with
prudent industry practice.
(F) Inspection of Property; Books and Records; Discussions. The Company
------------------------------------------------------
shall permit, and cause each of the Subsidiary Borrowers and Subsidiary
Obligors to permit, any authorized representative(s) designated by the Agent
(together with an authorized representative of any Lender that may request to
accompany such authorized representative of the Agent) to visit and inspect
any of the properties of the Company or any of the Subsidiary Borrowers and
Subsidiary Obligors, to examine, audit, check and make copies of their
respective financial and accounting records, books, journals, orders, receipts
and any non-privileged correspondence and other data relating to their
respective businesses or the transactions contemplated hereby (including,
without limitation, in connection with environmental compliance, hazard or
liability), and to discuss their affairs, finances and accounts with their
officers and independent certified public accountants, all upon reasonable
notice and at such reasonable times during normal business hours, as often as
may be reasonably requested; provided, however, that the Borrowers' and
-------- -------
Subsidiary Obligors' obligation to reimburse the Agent for reasonable costs
and expenses incurred in connection with such inspections shall be limited to
no more than one (1) inspection during any twelve-month period if such
inspections are conducted at a time when no Default or Unmatured Default shall
have occurred and is continuing. So long as no Default or Unmatured Default
shall have occurred and is continuing, and to the extent reasonably
practicable, any such inspection with respect to a Borrower or Subsidiary
Obligor will be coordinated with an Authorized Officer of the Company. The
Company shall keep and maintain, and cause each of the Company's Subsidiaries
to keep and maintain, in all material respects, proper books of record and
account in which entries in conformity with Agreement Accounting Principles
shall be made of all dealings and transactions in relation to their respective
businesses and activities, including, without limitation, transactions and
other dealings with respect to the Collateral. If a Default has occurred and
is continuing, the Company, upon the Agent's request, shall turn over copies
of any such records to the Agent or its representatives.
(G) ERISA Compliance. The Company shall, and shall cause each of its
-----------------
domestic Subsidiaries to, establish, maintain and operate all Plans (other
than Foreign Employee Benefit Plans and Foreign Pension Plans) to comply in
all material respects with the provisions of ERISA, the Code, all other
applicable laws, and the regulations and interpretations thereunder and the
respective requirements of the governing documents for such Plans.
(H) Maintenance of Property. The Company shall cause all property used
-----------------------
or useful in the conduct of its business or the business of any Subsidiary to
be maintained and kept in adequate condition, repair and working order and
supplied with all necessary equipment and shall cause to be made all necessary
repairs, renewals, replacements, betterments and improvements thereof, all as
in the judgment of the Company may be necessary so that the business carried
on in connection therewith may be properly conducted at all times; provided,
--------
however, that nothing in this Section 6.2(H) shall prevent the Company from
------ --------------
discontinuing the operation or maintenance of any of such property if such
-
discontinuance is, in the judgment of the Company, desirable in the conduct of
-
its business or the business of any Subsidiary and not disadvantageous in any
respect to the Agent or the Lenders.
(I) Environmental Compliance. The Company and its Subsidiaries shall
-------------------------
comply with all Environmental, Health or Safety Requirements of Law, except
where noncompliance will not have or is not reasonably likely to subject the
Company and its Subsidiaries to liability, individually in excess of
$2,500,000, or in the aggregate in excess of $5,000,000.
(J) Use of Proceeds. The Borrower shall use the proceeds of the Loans
---------------
to pay transaction costs in connection with the transactions evidenced by the
Loan Documents, to refinance existing indebtedness of the Company and its
Subsidiaries and to provide funds for the working capital needs and other
general corporate purposes of the Borrowers and their Subsidiaries. The
Company will not, nor will it permit any Subsidiary to, use any of the
proceeds of the Loans to purchase or carry any "Margin Stock" or to make any
Acquisition, other than any Permitted Acquisition pursuant to Section 6.3(G).
--------------
(K) Foreign Employee Benefit Compliance. The Company shall, and shall
-----------------------------------
cause each of its Subsidiaries and ERISA Affiliates to, establish, maintain
and operate all Foreign Employee Benefit Plans to comply in all material
respects with all laws, regulations and rules applicable thereto and the
respective requirements of the governing documents for such Plans, except for
failures to comply which, in the aggregate, would not result in a material
obligation to pay money.
6.3 Negative Covenants.
-------------------
(A) Indebtedness. Neither the Company nor any of its Subsidiaries shall
------------
directly or indirectly create, incur, assume or otherwise become or remain
directly or indirectly liable with respect to any Indebtedness, except:
(a) the Obligations;
(b) Permitted Existing Indebtedness, and any extension, renewal,
refunding or refinancing thereof, provided that any such extension, renewal,
--------
refunding or refinancing is in an aggregate principal amount not greater than
the principal amount of and interest, fees and expenses accrued on, such
Permitted Existing Indebtedness outstanding at the time thereof and is on
terms (including, without limitation, maturity, amortization, interest rate,
premiums, fees, covenants, subordination, events of default, and remedies) not
materially less favorable to the obligor or adverse to the Lenders than the
terms of such Permitted Existing Indebtedness;
(c) Indebtedness permitted pursuant to Section 6.3(H) arising from
--------------
intercompany loans from (1) the Company, or any other Subsidiary of the
Company to any Borrower, (2) any Subsidiary that is not a Borrower to any
other Subsidiary or (3) any Borrower to any Subsidiary of the Company which is
not a Borrower; provided, that all such Indebtedness is subordinated to the
--------
Obligations on terms provided in this Agreement;
(d) Indebtedness in respect of Hedging Agreements permitted under
Section 6.3(P);
---------
(e) Indebtedness permitted by Sections 6.4(B) and 6.4(E)(2);
---------------- ---------
(f) Indebtedness constituting Contingent Obligations permitted by
Section 6.3(E);
---------
(g) unsecured Indebtedness and other liabilities incurred in the
ordinary course of business and consistent with past practice, but not
incurred through the borrowing of money or the obtaining of credit (other than
customary trade terms).
(B) Sales of Assets. Neither the Company nor any of its Subsidiaries
----------------
shall sell, assign, transfer, lease, convey or otherwise dispose of any
property, whether now owned or hereafter acquired, or any income or profits
therefrom, or enter into any agreement to do so, except:
(i) sales of Inventory in the ordinary course of business;
(ii) sales of certain assets of Purina Colombiana S.A., Purina de Venezuela,
C.A., Purina de Guatemala, S.A., and Purina Peru S.A., in each case as
described in that certain Agreement and Plan of Reorganization, dated as of
April 1, 1998, by and among the Company, Ralston Purina Company, and Ralston
Purina International Holding Company, Inc., as in effect on the Closing Date
and without giving effect to any amendment or modification thereto;
(iii) sales, assignments, transfers, leases, conveyances or other
dispositions of other assets (other than the Capital Stock of any Subsidiary
of the Company) if such transaction (a) is of assets no longer required in the
ordinary course of business, (b) is for not less than fair market value, and
(c) when combined with all such other sales, assignments, transfers,
conveyances or other dispositions (i) during any fiscal year represents the
disposition of not greater than ten percent (10%) of the Company's
Consolidated Net Worth calculated as of the date of such sale, assignment,
transfer, conveyance or other disposition and after giving effect to such
transaction; and
(iv) (x) disposition of assets, dissolution, liquidation or sales of
shares of Subsidiaries (other than stock or assets of Subsidiary Borrowers or
Subsidiary Obligors) resulting from a determination by the Company to
discontinue its operations in a particular jurisdiction and (y) with the prior
written consent of all of the Lenders, the dissolution, liquidation or sale of
shares of any Subsidiary Borrower or Subsidiary Obligor and only so long as
any such sale or other disposition is for all cash consideration.
(C) Liens. Neither the Company nor any of its Subsidiaries shall
-----
directly or indirectly create, incur, assume, permit or suffer to exist any
Lien on or with respect to any of their respective property or assets except:
(i) Liens created by the Loan Documents;
(ii) Permitted Existing Liens;
(iii) Customary Permitted Liens;
(iv) Liens securing financing under governmental or other special programs
which are more advantageous to the Company than the financing available under
this Agreement, to the extent such Liens are required in order to participate
in such programs, and any renewals or extensions of any such Liens;
(v) other Liens securing indebtedness not exceeding, in the aggregate, ten
percent (10%) of the Company's Consolidated Net Worth at the time of
incurrence thereof; and
(vi) pledges of assets of entities other than Borrowers and Subsidiary
Obligors to secure Indebtedness of Subsidiaries which are neither Borrowers
nor Subsidiary Obligors.
(D) Investments. Except for Permitted Existing Investments in an amount
-----------
not greater than the amount thereof on the Closing Date, neither the Company
nor any of its Subsidiaries shall directly or indirectly make or own any
Investment except:
(i) Investments constituting Permitted Acquisitions permitted by
Section 6.3(G);
-----------
(ii) Investments in Cash Equivalents;
(iii) Investments consisting of Indebtedness of employees to the
extent such Indebtedness does not exceed in the aggregate $1,000,000 in any
fiscal year;
(iv) Investments in a particular jurisdiction other than the United
States of locally generated funds;
(v) Investments in Affiliates permitted by Section 6.3(H);
---------------
(vi) Investments received in connection with the bankruptcy or
reorganization of suppliers and customers and in settlement of delinquent
obligations of, and other disputes with, customers and suppliers arising in
the ordinary course of business;
(vii) Investments consisting of deposit accounts maintained by the
Company and its Subsidiaries in connection with its cash management system in
the ordinary course of business and consistent with past practice;
(viii) Investments consisting of compensating balances maintained by
Purina Korea, Inc. in Korea as required by domestic financial institutions as
support for loans and advances made by such financial institutions to Purina
Korea, Inc.; provided, such amounts do not in the aggregate exceed $8,000,000
--------
at any time; and
(ix) Investments constituting Contingent Obligations permitted by
Section 6.3(E) or Restricted Junior Payments permitted by Section 6.3(F); and
------------ --------------
(x) Investments with any other Persons which do not exceed in the
aggregate ten percent (10%) of the Consolidated Net Worth of the Company
(calculated as of the date of each such Investment).
(E) Contingent Obligations. Neither the Company nor any of its
-----------------------
Subsidiaries shall directly or indirectly create or become or be liable with
respect to any Contingent Obligation, material contingent liability, long-term
lease, synthetic lease or Contractual Obligation, not reflected in the
financial statements attached hereto as Exhibit G, except: (i) as set forth on
---------
Schedule 1.1.1, (ii) recourse obligations issued for the benefit of
- ---------------
customers, employees, vendors or other trading partners in the ordinary course
- ---------
of its business, (iii) guarantees to officers of the Company and its
subsidiaries of obligations of such officers with respect to the business of
the Company and its subsidiaries, (iv) guarantees incurred in connection with
or resulting from Permitted Acquisitions or other Investments not otherwise
prohibited under this Agreement; provided, that to the extent specified in
--------
this Agreement, such guarantees referred to in this clause (iv) shall be
-----------
treated as Indebtedness for purposes of this Agreement, and (v) guarantees
issued by the Company for the benefit of third-parties as support for loans
and advances made by such third-parties to (x) Subsidiary Borrowers or
Subsidiary Obligors and (y) Subsidiaries of the Company (other than Subsidiary
Borrowers and Subsidiary Obligors) in an amount, contingent or otherwise, not
to exceed $30,000,000 at any time.
(F) Restricted Junior Payments. Neither the Company nor any of its
----------------------------
Subsidiaries shall declare or make any Restricted Junior Payment, except:
(i) dividends payable by the Company in compliance with the corporation
law of the State of Missouri; and
(ii) Restricted Junior Payments made by any Subsidiary of the Company to
the Company or any other Subsidiary of the Company except that no Subsidiary
shall make any Investment in (x) any Affiliate (other than the Company) if as
a result thereof such Investments would at any time exceed in the aggregate
forty percent (40%) of Consolidated Net Worth of the Company or (y) any
Affiliate (other than a Borrower or Subsidiary Obligor) if as a result thereof
such Investments would at any time exceed in the aggregate fifteen percent
(15%) of the Consolidated Net Worth of the Company;
provided, however, that the Restricted Junior Payments described in clause (i)
- -------- ------- ----------
and clause (ii) shall not be permitted if either a Default or an Unmatured
------------
Default shall have occurred and be continuing at the date of declaration or
payment thereof or would result therefrom.
(G) Conduct of Business; Subsidiaries; Acquisitions. Neither the
---------------------------------------------------
Company nor any of its Subsidiaries shall engage in any business, or acquire
any other business, other than the businesses in, or reasonably related to,
the lines of business carried on by them on the date hereof. The Company
shall not and shall not permit any of its Subsidiaries to create, capitalize
or acquire any Subsidiary after the date hereof or enter into any transaction
or series of transactions in which it acquires all or any significant portion
of the assets of another Person, or such Person merges with or liquidates into
the Company or any of its Subsidiaries, unless (x) such transaction is in
connection with the Company's acquisition from Ralston Purina Company and/or
Ralston Purina International Holding Company of the Capital Stock of each of
the Company's Subsidiaries on or about the Closing Date or (y) such
transaction meets the following requirements (each such transaction
constituting a "PERMITTED ACQUISITION"):
(1) no Default or Unmatured Default shall have occurred and be
continuing or would result from such transaction or transactions or the
incurrence of any Indebtedness in connection therewith;
(2) to the extent any such transaction, together with all such other
transactions, exceeds in the aggregate $5,000,000 during any fiscal year,
prior to each such transaction, the Company shall deliver to the Agent and the
Lenders a certificate from one of the Company's Authorized Officers
demonstrating to the satisfaction of the Agent and the Required Lenders that
after giving effect to such transaction or transactions and the incurrence of
any Indebtedness permitted by Section 6.3(A) in connection therewith on a pro
--------------
forma basis as if such acquisition, merger or liquidation and such incurrence
of Indebtedness had occurred on the first day of the twelve-month period
ending on the last day of the Company's most recently completed fiscal
quarter, the Company would have been in compliance with all provisions of
Section 6.4 at all times during such twelve-month period and not otherwise in
--------
Default;
(3) the transaction is consummated pursuant to a negotiated agreement on
a non-hostile basis and involves the purchase of, or entering into of, a
business line similar, or reasonably related, to that of the Company's and its
Subsidiaries as of the Closing Date;
(4) in the case of any merger permitted under this Agreement, the
surviving entity expressly assumes any liabilities, if any, either of the
Company or Subsidiary party thereto, as applicable, with respect to the
Obligations pursuant to an assumption agreement reasonably satisfactory to the
Agent; and
(5) the aggregate amount of Investments (including assumed liabilities)
in connection with all such transactions during the term of this Agreement
shall not exceed:
(A) for any single transaction or series of related transactions,
$20,000,000; and
(B) for all transactions, $80,000,000 (excluding Investments actually
made up to $4,000,000 in the aggregate in connection with the Company's
development of production facilities in Shanggao, China).
(H) Transactions with Shareholders and Affiliates. Except as set forth
---------------------------------------------
on Schedule 6.3(H), neither the Company nor any of its Subsidiaries shall
----------------
directly or indirectly (i) enter into or permit to exist any transaction
-
(including, without limitation, the purchase, sale, lease or exchange of any
-
property or the rendering of any service) with any holder or holders of any
Capital Stock or other Equity Interests in the Company, or with any Affiliate
of the Company, on terms that are less favorable to the Company or its
Subsidiaries, as applicable, than those that might be obtained in an arm's
length transaction at the time from Persons who are not such a holder or
Affiliate; or (ii) enter into or permit to exist any such non-arm's length
transaction, including without limitation loans and advances to or other
Investments in (x) any Affiliate (other than the Company) if as a result
thereof such Investments would at any time exceed in the aggregate forty
percent (40%) of Consolidated Net Worth of the Company or (y) any Affiliate
(other than a Borrower or Subsidiary Obligor) if as a result thereof such
Investments would at any time exceed in the aggregate fifteen percent (15%) of
the Consolidated Net Worth of the Company.
(I) Sales and Leasebacks. Neither the Company nor any of its
----------------------
Subsidiaries shall become liable, directly, by assumption or by Contingent
Obligation, with respect to any lease, whether an Operating Lease, a synthetic
lease or a Capitalized Lease, of any property (whether real or personal or
mixed) (i) which it or one of its Subsidiaries sold or transferred or is to
sell or transfer to any other Person, or (ii) which it or one of its
Subsidiaries intends to use for substantially the same purposes as any other
property which has been or is to be sold or transferred by it or one of its
Subsidiaries to any other Person in connection with such lease, unless in
either case the sale involved is not prohibited under Section 6.3(B) and the
--------------
lease involved is not prohibited under Section 6.3(A).
---------------
(J) Margin Regulations. Neither the Borrower nor any of its
-------------------
Subsidiaries, shall use all or any portion of the proceeds of any credit
-
extended under this Agreement to purchase or carry Margin Stock.
(K) ERISA. The Company shall not (i) engage, or permit any of its
-----
Subsidiaries to engage, in any prohibited transaction described in Sections
406 of ERISA or 4975 of the Code for which a statutory or class exemption is
not available or a private exemption has not been previously obtained from the
DOL;
(ii) permit to exist any accumulated funding deficiency (as defined in
Sections 302 of ERISA and 412 of the Internal Revenue Code), with respect to
any Benefit Plan, whether or not waived;
(iii) fail, or permit any Controlled Group member to fail, to pay timely
required contributions or annual installments due with respect to any waived
funding deficiency to any Benefit Plan;
(iv) terminate, or permit any Controlled Group member to terminate, any
Benefit Plan which would result in any liability of the Company or any
Controlled Group member under Title IV of ERISA;
(v) fail to make any contribution or payment to any Multiemployer Plan
which the Company or any Controlled Group member may be required to make under
any agreement relating to such Multiemployer Plan, or any law pertaining
thereto;
(vi) fail, or permit any Controlled Group member to fail, to pay any
required installment or any other payment required under Section 412 of the
Internal Revenue Code on or before the due date for such installment or other
payment; or
(vii) amend, or permit any Controlled Group member to amend, a Plan
resulting in an increase in current liability for the plan year such that the
Company or any Controlled group member is required to provide security to such
Plan under Section 401(a)(29) of the Code.
(L) Issuance of Equity Interests. Neither the Company nor any of its
-----------------------------
Subsidiaries shall issue any ownership, membership or other equity interests
after the date of this Agreement if such issuance causes a Change of Control
to occur.
(M) Organizational Documents. Neither the Company nor any of its
-------------------------
Subsidiaries shall amend, modify or otherwise change any of the terms or
provisions in any of their respective organizational documents as in effect on
the date hereof in any manner adverse to the interests of the Lenders without
the prior written consent of the Required Lenders.
(N) Other Indebtedness. Neither the Company nor any of its Subsidiaries
------------------
shall amend, supplement or otherwise modify the terms of any Indebtedness owed
by a Borrower or Subsidiary of the Company that would be materially adverse to
the Lenders, including, without limitation, with respect to subordination.
(O) Fiscal Year. The Company shall not change its fiscal year for
------------
accounting or tax purposes from a period consisting of the 12-month period
ending on August 31 of each calendar year.
(P) Hedging Obligations. The Company shall not and shall not permit any
-------------------
of its Subsidiaries to enter into any interest rate, commodity or foreign
currency exchange, swap, collar, cap or similar agreements other than hedging
or other derivative transactions (i) relating to the acquisition of raw
materials or the sale of products of the Company which are intended to protect
the Company against the risks of changes in market prices or (ii) relating to
currencies in which the Company receives revenues or incurs expenses which are
intended to protect the Company against the risks of changes in the exchange
rates relating to such currencies or (iii) relating to the interest rates on
its outstanding or proposed Indebtedness which are intended to protect the
Company against the risks of changes in the interest rates relating to such
borrowing (such hedging agreements collectively are sometimes referred to
herein as "HEDGING AGREEMENTS"). In the event a Lender elects to enter into
any Hedging Agreements with the Company or any of its Subsidiaries, the
obligations of the Company or such Subsidiary with respect to such Hedging
Agreements shall be Secured Obligations secured by the Collateral.
(Q) Subsidiary Covenants. The Company will not, and will not permit any
--------------------
Subsidiary Borrower or Subsidiary Obligor to, create or otherwise cause to
become effective any consensual encumbrance or restriction of any kind on the
ability of any Subsidiary Borrower or Subsidiary Obligor to (i) pay dividends
or make any other distribution on its stock, or make any other Restricted
Junior Payment, (ii) pay any Indebtedness or other Obligation owed to the
Company or any other Subsidiary, (iii) make loans or advances or other
Investments in the Company or any other Subsidiary, or (iv) sell, transfer or
otherwise convey any of its property to the Company or any other Subsidiary.
6.4 Financial Covenants. The Company shall comply with the following:
-------------------
(A) Interest Coverage Ratio. The Company shall maintain a ratio
-------------------------
("INTEREST COVERAGE RATIO") of (i) EBITDA to (ii) Cash Interest Expense of at
least 2.50 to 1.00 as of the end of each fiscal quarter commencing with the
fiscal quarter ending August 31, 1998 through the Termination Date.
In each case the Interest Coverage Ratio shall be determined as of the last
day of each fiscal quarter for the four-quarter period ending on such day
(provided; however, (a) for the fiscal quarter ending August 31, 1998, the
----- -------
Interest Coverage Ratio shall be calculated using EBITDA and Cash Interest
Expense for the period commencing on April 1, 1998 through August 31, 1998,
(b) for the fiscal quarter ending November 30, 1998, the Interest Coverage
Ratio shall be calculated using EBITDA and Cash Interest Expense for the
period commencing on April 1, 1998 through November 30, 1998, and (c) for the
fiscal quarter ending February 28, 1999, the Interest Coverage Ratio shall be
calculated using EBITDA and Cash Interest Expense for the period commencing on
April 1, 1998 through February 28, 1999).
(B) Maximum Leverage Ratio. The Company shall not permit the ratio
------------------------
("LEVERAGE RATIO") of (i) Total Debt to (ii) EBITDA to be greater than 3.00 to
1.00 as of the end of each fiscal quarter commencing with the fiscal quarter
ending August 31, 1998 through the Termination Date.
The Leverage Ratio shall be calculated, in each case, as of the last day of
each fiscal quarter based upon (A) for purposes of calculating Total Debt,
Indebtedness as of the last day of each such fiscal quarter; and (B) for
EBITDA, the actual amount for the four-quarter period ending on such day
(provided; however, (a) for the fiscal quarter ending August 31, 1998, the
---- -------
Leverage Ratio shall be calculated using EBITDA for such fiscal quarter
multiplied by four, (b) for the fiscal quarter ending November 30, 1998, the
Leverage Ratio shall be calculated using EBITDA for the two fiscal quarters
ending November 30, 1998 multiplied by two (2), and (c) for the fiscal quarter
ending February 28, 1999, the Leverage Ratio shall be calculated using EBITDA
for the three fiscal quarters ending February 28, 1999 multiplied by
four-thirds (4/3)).
(C) Capital Expenditures. The Company will not, nor will it permit any
--------------------
Subsidiary to, expend, or be committed to expend, for Capital Expenditures
during any one fiscal year in the aggregate for the Company and its
Subsidiaries in excess of (a) $81,250,000 for the fiscal year ending August
31, 1998, (b) $40,000,000 for the fiscal year ending August 31, 1999 plus any
amount permitted to be expended in the previous fiscal year but not expended
and (c) $28,750,000 in the aggregate for the fiscal years ending August 31,
2000 and August 31, 2001 plus any amount permitted to be expended in the
previous fiscal year (pursuant to the absolute dollar limitation for such
fiscal year and not pursuant to any carryover provision from a prior fiscal
year) but not expended.
(D) Minimum Consolidated Net Worth. The Company shall not permit its
---------------------------------
Consolidated Net Worth at any time to be less than the amount set forth below
--
during the period set forth opposite such amount:
Minimum Consolidated Net Worth Applicable Period
- --------------------------------- ------------------
$230,000,000 April 1, 1998 through and including
August 31, 1998
$240,000,000 September 1, 1998 through and
including August 31, 1999
$250,000,000 At all times thereafter.
For purposes of determining Consolidated Net Worth of the Company and its
Subsidiaries as required by this Section 6.4(D) only, Consolidated Net Worth
--------------
of the Company and its Subsidiaries shall be calculated excluding (i) the
effect of translation account adjustments for the fiscal year ending on August
31, 1998 of up to $10,000,000 and (ii) the effect of further translation
account adjustments of up to an additional $20,000,000.
(E) Country Debt Limitations. Indebtedness (whether under this
--------------------------
Agreement or otherwise) incurred by the Subsidiaries in any particular country
shall be subject to each of the following limitations:
(1) The applicable Borrower or Subsidiary Obligor shall not have
Indebtedness under this Agreement outstanding at any time in excess of the
maximum Dollar Amount set forth below:
<TABLE>
<CAPTION>
Borrower's or Subsidiary Obligor's
- ----------------------------------
Jurisdiction of Incorporation Maximum Dollar Amount
- ---------------------------------- ----------------------
<S> <C>
Canada . . . . . . . . . . . . . . $ 6,500,000
- ---------------------------------- ----------------------
United States. . . . . . . . . . . $ 5,000,000
- ---------------------------------- ----------------------
Italy. . . . . . . . . . . . . . . $ 4,000,000
----------------------
Spain. . . . . . . . . . . . . . . $ 2,500,000
----------------------
Hungary. . . . . . . . . . . . . . $ 2,000,000
----------------------
Korea. . . . . . . . . . . . . . . $ 15,000,000
- ---------------------------------- ----------------------
Mexico . . . . . . . . . . . . . . $ 5,000,000
----------------------
Colombia . . . . . . . . . . . . . $ 5,000,000
----------------------
Brazil . . . . . . . . . . . . . . $ 5,000,000
----------------------
Philippines. . . . . . . . . . . . $ 2,500,000
----------------------
Venezuela. . . . . . . . . . . . . $ 2,500,000
- ---------------------------------- ----------------------
</TABLE>
(2) The ratio of (i) Total Debt for each of the Subsidiary Borrowers and
Subsidiary Obligors (including Indebtedness owed to Affiliates but excluding
Contingent Obligations in the form of standby Letters of Credit issued under
this Agreement for the account of such Subsidiary Borrower or Subsidiary
Obligor for the benefit of domestic financial institutions as support for
loans and advances made by such financial institutions to the applicable
Subsidiary Borrower or Subsidiary Obligor to the extent any such loans or
advances are outstanding) to (ii) EBITDA for each of the Subsidiary Borrowers
and Subsidiary Obligors (other than Purina Korea, Inc.) shall not at any time
exceed 3.00 to 1.00. The ratio of (i) Total Debt (including Indebtedness owed
to Affiliates but excluding Contingent Obligations in the form of standby
Letters of Credit issued under this Agreement for the account of Purina Korea,
Inc. for the benefit of domestic financial institutions as support for loans
and advances made by such financial institutions to Purina Korea, Inc. to the
extent any such loans or advances are outstanding) to (ii) EBITDA for Purina
Korea, Inc. shall not at any time exceed 2.25 to 1.00.
The foregoing ratios shall be calculated, in each case, as of the last day of
each fiscal quarter based upon (A) for purposes of calculating Total Debt and
Indebtedness as of the last day of each such fiscal quarter, and (B) for
EBITDA, the actual amount for the four-quarter period ending on such day
(provided; however, (a) for the fiscal quarter ending August 31, 1998, the
---- -------
foregoing ratios shall be calculated using EBITDA for such fiscal quarter
multiplied by four, (b) for the fiscal quarter ending November 30, 1998, the
foregoing ratios shall be calculated using EBITDA for the two fiscal quarters
ending November 30, 1998 multiplied by two (2), and (c) for the fiscal quarter
ending February 28, 1999, the foregoing ratios shall be calculated using
EBITDA for the three fiscal quarters ending February 28, 1999 multiplied by
four-thirds (4/3)).
ARTICLE VII: DEFAULTS
- -------------------------
7.1 Defaults. Each of the following occurrences shall constitute a
--------
Default under this Agreement:
(a) Failure to Make Payments When Due. Any Borrower or Subsidiary
-------------------------------------
Obligor shall (i) fail to pay when due any of the Obligations consisting of
principal with respect to the Loans or Letters of Credit or (ii) shall fail to
pay within three (3) days of the date when due any of the other Obligations
under this Agreement or the other Loan Documents.
(b) Breach of Certain Covenants. Any Borrower or Subsidiary Obligor
-----------------------------
shall fail duly and punctually to perform or observe any agreement, covenant
or obligation binding on such Borrower under (i) Sections 6.1 or Sections
------------ --------
6.2(A), (B), (D), (E), (G), or (H), and such failure shall continue unremedied
-- --- --- --- --- ---
for ten (10) Business Days after the earlier to occur of (x) notice from the
Agent or any Lender to the Company of such Default and (y) the Company or any
of its Subsidiaries knew or should have known of such Default exercising
reasonable diligence, or (ii) Sections 6.2(C), (F), (I), (J), or (K), Section
--------------- --- --- --- --- -------
6.3 or Section 6.4.
- --- ------------
(c) Breach of Representation or Warranty. Any representation or
----------------------------------------
warranty made or deemed made by any Borrower or Subsidiary Obligor to the
Agent or any Lender herein or by the Company or any of its Subsidiaries in any
of the other Loan Documents or in any statement or certificate at any time
given by any such Person pursuant to any of the Loan Documents shall be false
or misleading in any material respect on the date as of which made (or deemed
made).
(d) Other Defaults. Any Borrower or Subsidiary Obligor shall default in
--------------
the performance of or compliance with any term contained in this Agreement
(other than as covered by paragraphs (a), (b) or (c) of this Section 7.1), or
-------------- --- --- -----------
the Company or any of its Subsidiaries shall default in the performance of or
compliance with any term contained in any of the other Loan Documents, and
such default shall continue for thirty (30) days after the earlier to occur of
(i) notice from the Agent or any Lender to the Company of such Default and
(ii) the Company or any of its Subsidiaries knew or should have known of such
default exercising reasonable diligence.
(e) Default as to Other Indebtedness. Any of the Company or any of its
--------------------------------
Subsidiaries shall fail to make any payment when due (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise) with respect
to any Indebtedness (other than the Obligations) the outstanding principal
amount of which Indebtedness is in excess of $5,000,000; or any breach,
default or event of default shall occur, or any other condition shall exist
under any instrument, agreement or indenture pertaining to any such
Indebtedness, if the effect thereof is to cause an acceleration, mandatory
redemption, a requirement that the Company or any such Subsidiary offer to
purchase such Indebtedness or other required repurchase of such Indebtedness,
or permit the holder(s) of such Indebtedness to accelerate the maturity of any
such Indebtedness or require a redemption or other repurchase of such
Indebtedness; or any such Indebtedness shall be otherwise declared to be due
and payable (by acceleration or otherwise) or required to be prepaid, redeemed
or otherwise repurchased by the Company or any of its Subsidiaries (other than
by a regularly scheduled required prepayment) prior to the stated maturity
thereof.
(f) Involuntary Bankruptcy; Appointment of Receiver, Etc.
----------------------------------------------------------
(i) An involuntary case shall be commenced against the Company, or its
Subsidiaries with an aggregate net worth equal to or greater than ten percent
(10%) of the Company's Consolidated Net Worth, and the petition shall not be
dismissed, stayed, bonded or discharged within sixty (60) days after
commencement of the case; or a court having jurisdiction in the premises shall
enter a decree or order for relief in respect of the Company or such
Subsidiaries in an involuntary case, under any applicable bankruptcy,
insolvency or other similar law now or hereinafter in effect; or any other
similar relief shall be granted under any applicable federal, state, local or
foreign law.
(ii) A decree or order of a court having jurisdiction in the premises
for the appointment of a receiver, liquidator, sequestrator, trustee,
custodian or other officer having similar powers over the Company, or its
Subsidiaries with an aggregate net worth equal to or greater than ten percent
(10%) of the Company's Consolidated Net Worth, or over all or a substantial
part of the property of the Company, or such Subsidiaries shall be entered; or
an interim receiver, trustee or other custodian of the Company or such
Subsidiaries or of all or a substantial part of the property of the Company or
such Subsidiaries shall be appointed or a warrant of attachment, execution or
similar process against any substantial part of the property of the Company or
such Subsidiaries shall be issued and any such event shall not be stayed,
dismissed, bonded or discharged within sixty (60) days after entry,
appointment or issuance.
(g) Voluntary Bankruptcy; Appointment of Receiver, Etc. The Company or
---------------------------------------------------
its Subsidiaries with an aggregate net worth equal to or greater than ten
percent (10%) of the Company's Consolidated Net Worth, shall (i) commence a
voluntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, (ii) consent to the entry of an order for
relief in an involuntary case, or to the conversion of an involuntary case to
a voluntary case, under any such law, (iii) commence a voluntary case seeking,
or consent to, the appointment of or taking possession by a receiver, trustee
or other custodian for all or a substantial part of its property, (iv) make
any assignment for the benefit of creditors or fail generally to pay debts as
they become due or (v) take any corporate action to authorize any of the
foregoing.
(h) Judgments and Attachments. Any money judgment(s), writ or warrant
-------------------------
of attachment, or similar process against any of the Company or any of its
Subsidiaries or any of their respective assets involving in any single case or
in the aggregate an amount in excess of $5,000,000 is (are) entered and shall
remain undischarged, unvacated, unbonded or unstayed for a period of sixty
(60) days or in any event later than fifteen (15) days prior to the date of
any proposed sale thereunder.
(i) Dissolution. Any order, judgment or decree shall be entered against
-----------
the Company, or its Subsidiaries with an aggregate net worth equal to or
greater than ten percent (10%) of the Company's Consolidated Net Worth,
decreeing its involuntary dissolution or split up and such order shall remain
undischarged and unstayed for a period in excess of sixty (60) days; or the
Company or such Subsidiaries shall otherwise dissolve or cease to exist except
as specifically permitted by this Agreement unless the dissolving entity is a
limited liability company which elects to continue its existence.
(j) Loan Documents; Failure of Security. At any time, for any reason,
-----------------------------------
(i) any Loan Document as a whole that materially affects the ability of the
Agent, or any of the Lenders to enforce the Obligations or enforce their
rights against the Collateral, ceases to be in full force and effect or any of
the Company or any of its Subsidiaries party thereto seeks to repudiate its
obligations thereunder and the Liens intended to be created thereby are, or
any of the Company or any such Subsidiary seeks to render such Liens, invalid
and unperfected, or (ii) any action shall be taken to discontinue or to assert
the invalidity or unenforceability of any Loan Document, or (iii) Liens on
Collateral with a fair market value in excess of $2,500,000 in favor of the
Agent contemplated by the Loan Documents shall, at any time, for any reason,
be invalidated or otherwise cease to be in full force and effect, or such
Liens shall not have the priority contemplated by this Agreement or the Loan
Documents.
(k) Termination Event. Any Termination Event occurs which the Required
-----------------
Lenders believe is reasonably likely to subject the Company or any of its
Subsidiaries to liability individually or in the aggregate in excess of
$2,500,000.
(l) Waiver of Minimum Funding Standard. If the plan administrator of
-----------------------------------
any Plan applies under Section 412(d) of the Code for a waiver of the minimum
funding standards of Section 412(a) of the Code and any Lender believes the
substantial business hardship upon which the application for the waiver is
based could reasonably be expected to subject either the Company or any
Controlled Group member to liability individually or in the aggregate in
excess of $2,500,000.
(m) Change of Control. A Change of Control shall occur.
-------------------
(n) Environmental Matters. The Company or any of its Subsidiaries shall
---------------------
be the subject of any proceeding or investigation pertaining to (i) the
Release by the Company or any of its Subsidiaries of any Contaminant into the
environment, (ii) the liability of any of the Company or any of its
Subsidiaries arising from the Release by any other Person of any Contaminant
into the environment, or (iii) any violation of any Environmental, Health or
Safety Requirements of Law by the Company or any of its Subsidiaries, which,
in any case, has or is reasonably likely to subject the Company or any of its
Subsidiaries to liability individually in excess of $2,500,000 or in the
aggregate in excess of $5,000,000.
(o) Guarantor Revocation. Except as provided by Section 6.3(B)(iv) with
-------------------- ------------------
respect to the sale, dissolution or liquidation of certain Subsidiaries of the
Company, any guarantor of the Obligations shall terminate or revoke or refuse
to perform or assert invalidity of any of its payment obligations under the
applicable guarantee agreement or breach any of the other terms of such
guarantee agreement which breach remains unremedied for five (5) days.
A Default shall be deemed "continuing" until waived in writing in
accordance with Section 8.3.
------------
ARTICLE VIII: ACCELERATION, DEFAULTING LENDERS; WAIVERS, AMENDMENTS AND
- ------------------------------------------------------------------------------
REMEDIES
- --------
8.1 Remedies
(a) Termination of Commitments; Acceleration. If any Default described
----------------------------------------
in Section 7.1(f) or 7.1(g) occurs with respect to any of the Borrowers, the
--------------- ------
obligations of the Lenders to make Loans hereunder and the obligation of the
Agent or any Issuing Lender to issue Letters of Credit hereunder shall
automatically terminate and the Obligations shall immediately become due and
payable without any election or action on the part of the Agent, any Lender or
any Issuing Lender. If any other Default occurs, the Required Lenders may (i)
terminate or suspend the obligations of the Lenders to make Loans hereunder
and the obligation of the Issuing Lenders to issue Letters of Credit
hereunder, or (ii) declare the Obligations to be due and payable, or both, and
upon any declaration under clause (ii), the Obligations shall become
------------
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which the Borrowers expressly waive.
(b) Rescission. If at any time after termination of the Lenders'
----------
obligations to make Loans or acceleration of the maturity of the Loans,
Borrowers shall pay all arrears of interest and all payments on account of
principal of the Loans and Reimbursement Obligations which shall have become
due otherwise than by acceleration (with interest on principal and, to the
extent permitted by law, on overdue interest, at the rates specified in this
Agreement) and all Defaults and Unmatured Defaults (other than nonpayment of
principal of and accrued interest on the Loans due and payable solely by
virtue of acceleration) shall be waived pursuant to Section 8.3, then upon the
-----------
written consent of the Required Lenders and written notice to Borrowers, the
termination of Lenders' respective obligations to make Loans and the
respective Lenders' and the Issuing Lenders' obligations to participate in or
issue Letters of Credit or the aforesaid acceleration and its consequences may
be rescinded and annulled; but such action shall not affect any subsequent
Default or Unmatured Default or impair any right or remedy consequent thereon.
The provisions of the preceding sentence are intended merely to bind the
Lenders and the Issuing Lenders to a decision which may be made at the
election of the Required Lenders; they are not intended to benefit Borrowers
and do not give Borrowers the right to require the Lenders to rescind or annul
any termination of the aforesaid obligations of the Lenders or Issuing Lenders
or any acceleration hereunder, even if the conditions set forth herein are
met.
(c) Enforcement. The Borrowers acknowledge that in the event the
-----------
Borrowers fail to perform, observe or discharge any of their respective
obligations or liabilities under this Agreement or any other Loan Document,
any remedy of law may prove to be inadequate relief to the Agent, the Issuing
Lenders and the Lenders; therefore, Borrowers agree that the Agent, the
Issuing Lenders and the Lenders shall be entitled to temporary and permanent
injunctive relief in any such case without the necessity of proving actual
damages.
8.2 Defaulting Lender. In the event that any Lender fails to fund its
-----------------
Revolving Credit Share of any Advance requested or deemed requested by any
Borrower which such Lender is obligated to fund under the terms of this
Agreement (the funded portion of such Advance being hereinafter referred to as
a "NON PRO RATA LOAN"), until the earlier of such Lender's cure of such
failure and the termination of the Commitments, the proceeds of all amounts
thereafter repaid to the Agent by the Borrowers and otherwise required to be
applied to such Lender's share of all other Obligations pursuant to the terms
of this Agreement shall be advanced to the Borrowers by the Agent ("CURE
LOANS") on behalf of such Lender to cure, in full or in part, such failure by
such Lender, but shall nevertheless be deemed to have been paid to such Lender
in satisfaction of such other Obligations. Notwithstanding anything in this
Agreement to the contrary:
(i) the foregoing provisions of this Section 8.2 shall apply only with
-----------
respect to the proceeds of payments of Obligations and shall not affect the
conversion or continuation of Loans pursuant to Section 2.6;
------------
(ii) any such Lender shall be deemed to have cured its failure to fund
its Revolving Credit Share of any Advance at such time as an amount equal to
such Lender's original Revolving Credit Share of the requested principal
portion of such Advance is fully funded to the applicable Borrower, whether
made by such Lender itself or by operation of the terms of this Section 8.2,
-----------
and whether or not the Non Pro Rata Loan with respect thereto has been repaid,
converted or continued;
(iii) regardless of whether or not a Default has occurred or is continuing,
and notwithstanding the instructions of the applicable Borrower as to its
desired application, all repayments of principal which, in accordance with the
other terms of this Agreement, would be applied to the outstanding Base Rate
Loans shall be applied first, ratably to all Base Rate Loans constituting Non
-----
Pro Rata Loans, second, ratably to Base Rate Loans other than those
------
constituting Non Pro Rata Loans or Cure Loans and, third, ratably to Base Rate
-----
Loans constituting Cure Loans;
(iv) for so long as and until the earlier of any such Lender's cure of
the failure to fund its Revolving Credit Share of any Advance and the
termination of the Commitments, the term "Required Lenders" for purposes of
this Agreement shall mean Lenders (excluding all Lenders whose failure to fund
their respective Revolving Credit Shares of such Advance have not been so
cured) whose Pro Rata Shares represent at least sixty-six and two-thirds
(66-2/3%) of the aggregate Pro Rata Shares of such Lenders; and
(v) for so long as and until any such Lender's failure to fund its
Revolving Credit Share of any Advance is cured in accordance with Section
-------
8.2(ii), (A) such Lender shall not be entitled to any facility fees with
---
respect to its Commitments and (B) such Lender shall not be entitled to any
-
letter of credit fees, which facility fees and letter of credit fees shall
accrue in favor of the performing Lenders, shall be allocated among such
performing Lenders ratably based upon their relative Commitments.
8.3 Amendments. Subject to the provisions of this Article VIII, the
---------- ------------
Required Lenders (or the Agent with the consent in writing of the Required
Lenders) and the Borrowers and Subsidiary Obligors may enter into agreements
supplemental hereto for the purpose of adding or modifying any provisions to
the Loan Documents or changing in any manner the rights of the Lenders or the
Borrowers or the Subsidiary Obligors hereunder or waiving any Default
hereunder; provided, however, that no such supplemental agreement shall,
-------- -------
without the consent of each Lender affected thereby:
(i) Postpone or extend the Termination Date or any other date fixed for
any payment of principal of, or interest on, the Loans, the Reimbursement
Obligations or any fees or other amounts payable to such Lender (except with
respect to (a) any modifications of the provisions relating to prepayments of
Loans and other Obligations and (b) a waiver of the application of the default
rate of interest pursuant to Section 2.7 hereof).
------------
(ii) Reduce the principal amount of any Loans or L/C Obligations, or
reduce the rate or extend the time of payment of interest or fees thereon.
(iii) Reduce the percentage specified in the definition of Required
Lenders or any other percentage of Lenders specified to be the applicable
percentage in this Agreement to act on specified matters.
(iv) Increase the amount of the Commitment of any Lender hereunder
(except with respect to an increase in any sublimits for any Types of Loans
within the Commitments).
(v) Permit any Borrower to assign its rights under this Agreement.
(vi) Amend Section 2.24 or this Section 8.3.
------------- ------------
(vii) Except as provided by Section 6.3(B)(iv) with respect to the sale,
------------------
dissolution or liquidation of certain Subsidiaries of the Company, release any
guarantor of all or any part of the Obligations or release all or
substantially all of the Collateral.
No amendment of any provision of this Agreement relating to the Agent shall be
effective without the written consent of the Agent. No amendment of any
provision of this Agreement relating to any Issuing Lender shall be effective
without the written consent of the Agent and each of the Issuing Lenders. The
Agent may waive payment of the fee required under Section 12.3(B) without
---------------
obtaining the consent of any of the Lenders.
8.4 Preservation of Rights. No delay or omission of the Lenders, the
-----------------------
Issuing Lenders or the Agent to exercise any right under the Loan Documents
shall impair such right or be construed to be a waiver of any Default or an
acquiescence therein, and the making of a Loan or the issuance of a Letter of
Credit notwithstanding the existence of a Default or the inability of the
Borrowers to satisfy the conditions precedent to such Loan or issuance of such
Letter of Credit shall not constitute any waiver or acquiescence. Any single
or partial exercise of any such right shall not preclude other or further
exercise thereof or the exercise of any other right, and no waiver, amendment
or other variation of the terms, conditions or provisions of the Loan
Documents whatsoever shall be valid unless in writing signed by the Lenders
required pursuant to Section 8.3, and then only to the extent in such writing
-----------
specifically set forth. All remedies contained in the Loan Documents or by
law afforded shall be cumulative and all shall be available to the Agent, the
Issuing Lenders and the Lenders until the Obligations have been paid in full.
ARTICLE IX: GENERAL PROVISIONS
- -----------------------------------
9.1 Survival of Representations. All representations and warranties of
---------------------------
the Borrowers and Subsidiary Obligors contained in this Agreement shall
survive delivery of this Agreement and the making of the Loans herein
contemplated.
9.2 Governmental Regulation. Anything contained in this Agreement to
------------------------
the contrary notwithstanding, no Lender shall be obligated to extend credit to
the Borrowers and neither the Agent nor any Issuing Lender shall be obligated
to issue any Letter of Credit for the account of any Borrower or Subsidiary
Obligor in violation of any limitation or prohibition provided by any
applicable statute or regulation.
9.3 Performance of Obligations. Each of the Borrowers and the
----------------------------
Subsidiary Obligors agrees that the Agent may, but shall have no obligation to
(i) at any time, pay or discharge taxes, liens, security interests or other
encumbrances levied or placed on or threatened against any Collateral and (ii)
after the occurrence and during the continuance of a Default make any other
payment or perform any act required of any Borrower or Subsidiary Obligor
under any Loan Document or take any other action which the Agent in its
discretion deems necessary or desirable to protect or preserve the Collateral.
The Agent shall use its best efforts to give the applicable Borrower or
Subsidiary Obligor notice of any action taken under this Section 9.3 prior to
-----------
the taking of such action or promptly thereafter provided the failure to give
such notice shall not affect the applicable Borrower's or Subsidiary Obligor
obligations in respect thereof. Each of the Borrowers and the Subsidiary
Obligors agrees to pay the Agent, upon demand, the principal amount of all
funds advanced by the Agent under this Section 9.3, together with interest
-----------
thereon at the rate from time to time applicable to Base Rate Loans from the
date of such advance until the outstanding principal balance thereof is paid
in full. If any Borrower or Subsidiary Obligor fails to make payment in
respect of any such advance under this Section 9.3 within one (1) Business Day
-----------
after the date such Borrower or Subsidiary Obligor receives written demand
therefor from the Agent, the Agent shall promptly notify each Lender and each
Lender agrees that it shall thereupon make available to the Agent, in Dollars
in immediately available funds, the amount equal to such Lender's Pro Rata
Share of such advance. If such funds are not made available to the Agent by
such Lender within one (1) Business Day after the Agent's demand therefor, the
Agent will be entitled to recover any such amount from such Lender together
with interest thereon at the Federal Funds Effective Rate for each day during
the period commencing on the date of such demand and ending on the date such
amount is received. The failure of any Lender to make available to the Agent
its Pro Rata Share of any such unreimbursed advance under this Section 9.3
-----------
shall neither relieve any other Lender of its obligation hereunder to make
available to the Agent such other Lender's Pro Rata Share of such advance on
the date such payment is to be made nor increase the obligation of any other
Lender to make such payment to the Agent. All outstanding principal of, and
interest on, advances made under this Section 9.3 shall constitute Obligations
-----------
secured by the Collateral until paid in full by the Borrowers and the
Subsidiary Obligors.
9.4 Headings. Section headings in the Loan Documents are for
--------
convenience of reference only, and shall not govern the interpretation of any
of the provisions of the Loan Documents.
9.5 Entire Agreement. The Loan Documents embody the entire agreement
-----------------
and understanding among the Borrowers, the Subsidiary Obligors, the Agent, and
the Lenders and supersede all prior agreements and understandings relating to
the subject matter thereof.
9.6 Several Obligations; Benefits of this Agreement. The respective
-------------------------------------------------
obligations of the Lenders hereunder are several and not joint and no Lender
shall be the partner or agent of any other. The failure of any Lender to
perform any of its obligations hereunder shall not relieve any other Lender
from any of its obligations hereunder. This Agreement shall not be construed
so as to confer any right or benefit upon any Person other than the parties to
this Agreement and their respective successors and assigns.
9.7 Expenses; Indemnification.
--------------------------
(A) Expenses. Subject to the letter agreements dated February 25, 1998
--------
and November 3, 1997 among the Company, the Agent and the Arranger with
respect to costs and expenses incurred on or prior to the Closing Date, the
Borrowers and Subsidiary Obligors shall reimburse the Agent and the Arranger
for any reasonable costs, internal charges and out-of-pocket expenses
(including attorneys' and paralegals' fees and time charges of attorneys and
paralegals for the Agent or the Arranger, which attorneys and paralegals may
be employees of the Agent or the Arranger) paid or incurred by the Agent or
Arranger in connection with the preparation, negotiation, execution, delivery,
syndication, review, amendment, modification, and administration of the Loan
Documents. Each of the Borrowers and Subsidiary Obligors also agrees to
reimburse the Agent, the Lenders and the Issuing Lenders for any costs,
internal charges and out-of-pocket expenses (including attorneys' and
paralegals' fees and time charges of attorneys and paralegals for the Agent,
the Lenders and the Issuing Lenders, which attorneys and paralegals may be
employees of the Agent, the Lenders or the Issuing Lenders) paid or incurred
by the Agent, any Lender or any Issuing Lender in connection with the
collection of the Obligations and enforcement of the Loan Documents. In
addition to expenses set forth above, each of the Borrowers and Subsidiary
Obligors agrees to reimburse the Agent, promptly after the request therefor,
for each audit, collateral analysis or other business analysis performed by
the Agent (or its authorized representative) for the benefit of the Lenders in
connection with this Agreement or the other Loan Documents in an amount equal
to the Agent's then customary charges for each person employed to perform such
audit or analysis, plus all reasonable costs and expenses (including without
limitation, travel expenses) incurred by the Agent in the performance of such
audit or analysis; provided, that each Borrower and Subsidiary Obligor shall
--------
only be responsible for expenses in connection with one (1) such audit or
business analysis performed with respect to such Borrower or Subsidiary
Obligor, as applicable, in any twelve-month period at a time when no Default
had occurred or was continuing. The Agent shall provide the Borrowers with a
detailed statement of all reimbursements requested under this Section 9.7(A).
--------------
(B) Indemnity. Each of the Borrowers and Subsidiary Obligors further
---------
agrees to defend, protect, indemnify, and hold harmless the Agent, the
Arranger, each and all of the Lenders, each and all of the Issuing Lenders,
and each of their respective Affiliates, and each of such Agent's, Arranger's,
Lender's, Issuing Lender's or Affiliate's respective officers, directors,
employees, attorneys and agents (including, without limitation, those retained
in connection with the satisfaction or attempted satisfaction of any of the
conditions set forth in Article IV) (collectively, the "INDEMNITEES") from and
----------
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses of any kind or nature
whatsoever (including, without limitation, the fees and disbursements of
counsel for such Indemnitees in connection with any investigative,
administrative or judicial proceeding, whether or not such Indemnitees shall
be designated a party thereto), imposed on, incurred by, or asserted against
such Indemnitees in any manner relating to or arising out of:
(i) this Agreement, the other Loan Documents, or any act, event or
transaction related or attendant thereto, the making of the Loans, and the
issuance of and participation in Letters of Credit hereunder, the management
of such Loans or Letters of Credit, the use or intended use of the proceeds of
the Loans or Letters of Credit hereunder, or any of the other transactions
contemplated by the Loan Documents; or
(ii) any liabilities, obligations, responsibilities, losses, damages,
personal injury, death, punitive damages, economic damages, consequential
damages, treble damages, intentional, willful or wanton injury, damage or
threat to the environment, natural resources or public health or welfare,
costs and expenses (including, without limitation, attorney, expert and
consulting fees and costs of investigation, feasibility or remedial action
studies), fines, penalties and monetary sanctions, interest, direct or
indirect, known or unknown, absolute or contingent, past, present or future
relating to violation of any Environmental, Health or Safety Requirements of
Law arising from or in connection with the past, present or future operations
of the Company, its Subsidiaries or any of their respective predecessors in
interest, or, the past, present or future environmental, health or safety
condition of any respective property of the Company or its Subsidiaries, the
presence of asbestos-containing materials at any respective property of the
Company or its Subsidiaries or the Release or threatened Release of any
Contaminant into the environment (collectively, the "INDEMNIFIED MATTERS");
provided, however, the Borrowers and Subsidiary Obligors shall have no
- -------- -------
obligation to an Indemnitee hereunder with respect to (i) Indemnified Matters
- -------
to the extent any such Indemnified Matter is found in a final non-appealable
judgment by a court of competent jurisdiction to have arisen from such
Indemnitee's gross negligence or wilful misconduct or (ii) Indemnified Matters
arising solely out of a dispute between the Agent or a dispute between any
Lender and the Agent. If the undertaking to indemnify, pay and hold harmless
set forth in the preceding sentence may be unenforceable because it is
violative of any law or public policy, the Borrowers and Subsidiary Obligors
shall contribute the maximum portion which it is permitted to pay and satisfy
under applicable law, to the payment and satisfaction of all Indemnified
Matters incurred by the Indemnitees.
(C) Waiver of Certain Claims; Settlement of Claims. Each of the
----------------------------------------------------
Borrowers and each of the Subsidiary Obligors agrees to assert no claim
against any of the Indemnitees on any theory of liability for consequential
damages, indirect damages, exemplary damages, punitive damages or any other
similar theory of damages howsoever categorized. No settlement shall be
entered into by the Company or any if its Subsidiaries with respect to any
claim, litigation, arbitration or other proceeding relating to or arising out
of the transaction evidenced by this Agreement or the other Loan
Documents(whether or not the Agent, any Lender, any Issuing Lender or any
Indemnitee is a party thereto) unless such settlement releases all Indemnitees
from any and all liability with respect thereto.
(D) Survival of Agreements. The obligations and agreements of the
------------------------
Borrowers and Subsidiary Obligors under this Section 9.7 shall survive the
-----------
termination of this Agreement.
9.8 Numbers of Documents. All statements, notices, closing documents,
--------------------
and requests hereunder shall be furnished to the Agent with sufficient
counterparts so that the Agent may furnish one to each of the Lenders.
9.9 Accounting. Except as provided to the contrary herein, all
----------
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with Agreement Accounting
Principles.
9.10 Severability of Provisions. Any provision in any Loan Document
----------------------------
that is held to be inoperative, unenforceable, or invalid in any jurisdiction
shall, as to that jurisdiction, be inoperative, unenforceable, or invalid
without affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan Documents are
declared to be severable.
9.11 Nonliability of Lenders. The relationship among the Borrowers, the
-----------------------
Subsidiary Obligors and the Lenders, Issuing Lenders and the Agent shall be
solely that of borrower and lender. Neither the Agent nor any Lender nor any
Issuing Lender shall have any fiduciary responsibilities to the Borrowers or
to the Subsidiary Obligors. Neither the Agent, nor any Lender, nor any
Issuing Lender undertakes any responsibility to the Borrowers or the
Subsidiary Obligors to review or inform the Borrowers or Subsidiary Obligors
of any matter in connection with any phase of the Borrowers' or Subsidiary
Obligors' business or operations.
9.12 GOVERNING LAW. THE AGENT ACCEPTS THIS AGREEMENT, ON BEHALF OF
--------------
ITSELF, THE OTHER AGENTS, THE LENDERS AND THE ISSUING LENDERS, AT CHICAGO,
ILLINOIS BY ACKNOWLEDGING AND AGREEING TO IT THERE. THIS AGREEMENT SHALL BE
GOVERNED BY AND INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS
OF THE STATE OF ILLINOIS. WITHOUT LIMITING THE FOREGOING, ANY DISPUTE BETWEEN
ANY BORROWER OR ANY SUBSIDIARY OBLIGOR AND THE AGENT, ANY LENDER, ANY ISSUING
LENDER OR ANY OTHER HOLDER OF SECURED OBLIGATIONS ARISING OUT OF, CONNECTED
WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM
IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, AND
WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF ILLINOIS.
9.13 CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL.
--------------------------------------------------------------
(A) JURISDICTION. EXCEPT AS PROVIDED IN SUBSECTION (B), EACH OF THE
------------ --------------
PARTIES HERETO AGREES THAT ALL DISPUTES AMONG THEM ARISING OUT OF, CONNECTED
WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN
CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS WHETHER
ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, MAY BE RESOLVED EXCLUSIVELY
BY STATE OR FEDERAL COURTS LOCATED IN CHICAGO, ILLINOIS, BUT THE PARTIES
HERETO ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY
A COURT LOCATED OUTSIDE OF CHICAGO, ILLINOIS. EACH OF THE PARTIES HERETO
WAIVES IN ALL DISPUTES BROUGHT PURSUANT TO THIS SUBSECTION (A) ANY OBJECTION
--------------
THAT IT MAY HAVE TO THE LOCATION OF THE COURT CONSIDERING THE DISPUTE.
(B) OTHER JURISDICTIONS. EACH OF THE BORROWERS AND SUBSIDIARY OBLIGORS
-------------------
AGREES THAT THE AGENT, ANY LENDER, ANY ISSUING LENDER OR ANY HOLDER OF SECURED
OBLIGATIONS SHALL HAVE THE RIGHT TO PROCEED AGAINST ANY BORROWER OR ANY
SUBSIDIARY OBLIGOR OR ANY BORROWER'S OR SUBSIDIARY OBLIGOR'S PROPERTY IN A
COURT IN ANY LOCATION TO ENABLE SUCH PERSON TO (1) OBTAIN PERSONAL
JURISDICTION OVER SUCH BORROWER OR SUBSIDIARY OBLIGOR OR (2) REALIZE ON THE
COLLATERAL OR ANY OTHER SECURITY FOR THE SECURED OBLIGATIONS OR TO ENFORCE A
JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF SUCH PERSON. EACH OF THE
BORROWERS AND SUBSIDIARY OBLIGORS AGREES THAT IT WILL NOT ASSERT ANY
PERMISSIVE COUNTERCLAIMS IN ANY PROCEEDING BROUGHT UNDER THIS CLAUSE (B) BY
----------
SUCH PERSON TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE
OBLIGATIONS OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF SUCH
PERSON ALL OF WHICH PERMISSIVE COUNTERCLAIMS MAY BE BROUGHT ONLY IN THE
JURISDICTION SET FORTH IN CLAUSE (A) ABOVE. EACH OF THE BORROWERS AND
-----------
SUBSIDIARY OBLIGORS WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF
THE COURT IN WHICH SUCH PERSON HAS COMMENCED A PROCEEDING DESCRIBED IN THIS
SUBSECTION (B).
-------------
(C) VENUE. EACH OF THE BORROWERS AND SUBSIDIARY OBLIGORS IRREVOCABLY
-------
WAIVES ANY OBJECTION (INCLUDING, WITHOUT LIMITATION, ANY OBJECTION OF THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS) WHICH IT MAY
----- --- ----------
NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH IN ANY JURISDICTION SET FORTH
ABOVE.
(D) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES
--------------------
ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE, ARISING OUT OF, CONNECTED WITH,
RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN
CONNECTION WITH THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH. EACH OF THE PARTIES HERETO
AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY HERETO MAY
FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY.
9.14 Subordination of Intercompany Indebtedness. Each of the Borrowers
------------------------------------------
and Subsidiary Obligors agrees that any and all claims of such Borrower or
Subsidiary Obligor against any other Borrower, any Subsidiary Obligor, any
endorser, obligor or any other guarantor of all or any part of the Secured
Obligations, or against any of its properties shall be subordinate and subject
in right of payment to the prior payment, in full and in cash, of all Secured
Obligations. Notwithstanding any right of any Borrower or Subsidiary Obligor
to ask, demand, sue for, take or receive any payment from any other Borrower
or any Subsidiary Obligor, all rights, liens and security interests of any
Borrower or Subsidiary Obligor, whether now or hereafter arising and howsoever
existing, in any assets of any other Borrower or any Subsidiary Obligor
(whether constituting part of Collateral given to any Holder of Secured
Obligations or the Agent to secure payment of all or any part of the Secured
Obligations or otherwise) shall be and are subordinated to the rights of the
Holders of Secured Obligations and the Agent in those assets. No Borrower or
Subsidiary Obligor shall have any right to possession of any such asset or to
foreclose upon any such asset, whether by judicial action or otherwise, unless
and until all of the Secured Obligations (other than contingent indemnity
obligations) shall have been fully paid and satisfied and all financing
arrangements among the Borrowers, Subsidiary Obligors and the Holders of
Secured Obligations have been terminated. So long as any Default shall have
occurred and is continuing, if all or any part of the assets of any Borrower
or Subsidiary Obligor, or the proceeds thereof, are subject to any
distribution, division or application to the creditors of such Borrower or
Subsidiary Obligor, whether partial or complete, voluntary or involuntary, and
whether by reason of liquidation, bankruptcy, arrangement, receivership,
assignment for the benefit of creditors or any other action or proceeding, or
if the business of any Borrower or Subsidiary Obligor is dissolved or if
substantially all of the assets of any Borrower or Subsidiary Obligor are
sold, then, and in any such event, any payment or distribution of any kind or
character, either in cash, securities or other property, which shall be
payable or deliverable upon or with respect to any indebtedness of any such
Borrower or Subsidiary Obligor to any other Borrower or Subsidiary Obligor
("INTERCOMPANY INDEBTEDNESS") shall be paid or delivered directly to the Agent
for application on any of the Secured Obligations, due or to become due, until
such Secured Obligations (other than contingent indemnity obligations) shall
have first been fully paid and satisfied. The Borrowers and the Subsidiary
Obligors irrevocably authorize and empower the Agent to demand, sue for,
collect and receive every such payment or distribution and give acquittance
therefor and to make and present for and on behalf of the applicable Borrower
or Subsidiary Obligor such proofs of claim and take such other action, in the
Agent's own name or in the name of the applicable Borrower or Subsidiary
Obligor or otherwise, as the Agent may deem necessary or advisable for the
enforcement of this Section 9.14; provided, that the Agent agrees not to
------------- --------
exercise such powers unless a Default shall have occurred and is continuing.
The Agent may vote such proofs of claim in any such proceeding, receive and
collect any and all dividends or other payments or disbursements made thereon
in whatever form the same may be paid or issued and apply the same on account
of any of the Secured Obligations. Should any payment, distribution, security
or instrument or proceeds thereof be received by any Borrower or Subsidiary
Obligor upon or with respect to the Intercompany Indebtedness at any time a
Default shall have occurred and be continuing and prior to the satisfaction of
all of the Secured Obligations (other than contingent indemnity obligations)
and the termination of all financing arrangements among the Borrowers, the
Subsidiary Obligors and the Holders of Secured Obligations, the applicable
Borrower or Subsidiary Obligor shall receive and hold the same in trust, as
trustee, for the benefit of the Holders of Secured Obligations and shall so
long as any Default shall have occurred and be continuing promptly deliver the
same to the Agent, for the benefit of the Holders of Secured Obligations, in
precisely the form received (except for the endorsement or assignment of the
Borrower where necessary), for application to any of the Secured Obligations,
due or not due, and, until so delivered, the same shall be held in trust by
the Borrower or Subsidiary Obligor, as applicable, as the property of the
Holders of Secured Obligations. If any Borrower or Subsidiary Obligor fails
to make any such endorsement or assignment to the Agent, the Agent or any of
its officers or employees are irrevocably authorized to make the same. So
long as any Default shall have occurred and is continuing, the Borrowers and
Subsidiary Obligors agree that until the Secured Obligations (other than the
contingent indemnity obligations) have been paid in full (in cash) and
satisfied and all financing arrangements among the Borrowers, Subsidiary
Obligors and the Holders of Secured Obligations have been terminated, the
Borrowers and Subsidiary Obligors will not assign or transfer to any Person
(other than the Agent) any claim such Borrower or Subsidiary Obligor has or
may have against any other Borrower or Subsidiary Obligor.
9.15 No Strict Construction. The parties hereto have participated
------------------------
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement.
ARTICLE X: THE AGENT
- -------------------------
10.1 Appointment; Nature of Relationship. ABN AMRO Bank N.V. is
--------------------------------------
appointed by the Lenders (each reference in this Article X to a Lender being
---------
in its capacity either as a Lender or an Issuing Lender, or any or all of the
foregoing) as the Agent hereunder and under each other Loan Document, and each
of the Lenders irrevocably authorizes the Agent to act as the contractual
representative of such Lender with the rights and duties expressly set forth
herein and in the other Loan Documents. The Agent agrees to act as such
contractual representative upon the express conditions contained in this
Article X. Notwithstanding the use of the defined term "Agent," it is
-----
expressly understood and agreed that the Agent shall not have any fiduciary
---
responsibilities to any Lender by reason of this Agreement and that the Agent
is merely acting as the representative of the Lenders with only those duties
as are expressly set forth in this Agreement and the other Loan Documents. In
its capacity as the Lenders' contractual representative, the Agent (i) does
not assume any fiduciary duties to any of the Lenders, (ii) is a
"representative" of the Lenders within the meaning of Section 9-105 of the
Uniform Commercial Code and (iii) is acting as an independent contractor, the
rights and duties of which are limited to those expressly set forth in this
Agreement and the other Loan Documents. Each of the Lenders agrees to assert
no claim against the Agent on any agency theory or any other theory of
liability for breach of fiduciary duty, all of which claims each Lender
waives.
10.2 Powers. The Agent shall have and may exercise such powers under
------
the Loan Documents as are specifically delegated to the Agent by the terms of
each thereof, together with such powers as are reasonably incidental thereto.
The Agent shall have no implied duties or fiduciary duties to the Lenders, or
any obligation to the Lenders to take any action hereunder or under any of the
other Loan Documents except any action specifically provided by the Loan
Documents required to be taken by the Agent.
10.3 General Immunity. Neither the Agent nor any of its respective
-----------------
directors, officers, agents or employees shall be liable to any of the
Borrowers, the Subsidiary Obligors, the Lenders or any Lender for any action
taken or omitted to be taken by it or them hereunder or under any other Loan
Document or in connection herewith or therewith except to the extent any such
action or inaction is found in a final non-appealable judgment by a court of
competent jurisdiction to have arisen from the gross negligence or willful
misconduct of such Person.
10.4 No Responsibility for Loans, Creditworthiness, Collateral,
---------------------------------------------------------------
Recitals, Etc. Neither the Agent nor any of its respective directors,
-------
officers, agents or employees shall be responsible for or have any duty to
ascertain, inquire into, or verify (i) any statement, warranty or
representation made in connection with any Loan Document or any borrowing
hereunder; (ii) the performance or observance of any of the covenants or
agreements of any obligor under any Loan Document; (iii) the satisfaction of
any condition specified in Article IV; (iv) the existence or possible
-----------
existence of any Default or (v) the validity, effectiveness or genuineness of
any Loan Document or any other instrument or writing furnished in connection
therewith. The Agent shall not be responsible to any Lender for any recitals,
statements, representations or warranties herein or in any of the other Loan
Documents, for the perfection or priority of any of the Liens on any of the
Collateral, or for the execution, effectiveness, genuineness, validity,
legality, enforceability, collectibility, or sufficiency of this Agreement or
any of the other Loan Documents or the transactions contemplated thereby, or
for the financial condition of any Subsidiary Obligor of any or all of the
Obligations, the Company or any of its Subsidiaries.
10.5 Action on Instructions of Lenders. The Agent shall in all cases be
---------------------------------
fully protected in acting, or in refraining from acting, hereunder and under
any other Loan Document in accordance with written instructions signed by the
Required Lenders (except with respect to actions that require the consent of
all of the Lenders as provided in Section 8.3), and such instructions and any
-----------
action taken or failure to act pursuant thereto shall be binding on all of the
Lenders and on all Holders of Secured Obligations. The Agent shall be fully
justified in failing or refusing to take any action hereunder and under any
other Loan Document unless it shall first be indemnified to its satisfaction
by the Lenders pro rata against any and all liability, cost and expense that
it may incur by reason of taking or continuing to take any such action.
10.6 Employment of Agents and Counse. The Agent may execute any of its
-------------------------------
duties hereunder and under any other Loan Document by or through employees,
agents, and attorneys-in-fact, and shall not be answerable to the Lenders,
except as to money or securities received by it or its authorized agents, for
the default or misconduct of any such agents or attorneys-in-fact selected by
it with reasonable care. The Agent shall be entitled to advice of counsel
concerning the contractual arrangement among the Agent and the Lenders, as the
case may be, and all matters pertaining to its duties hereunder and under any
other Loan Document.
10.7 Reliance on Documents; Counse. The Agent shall be entitled to rely
-----------------------------
upon any notice, consent, certificate, affidavit, letter, telegram, statement,
paper or document believed by it to be genuine and correct and to have been
signed or sent by the proper person or persons, and, in respect to legal
matters, upon the opinion of counsel selected by the Agent, which counsel may
be employees of the Agent.
10.8 The Agent's Reimbursement and Indemnification. The Lenders agree
---------------------------------------------
to reimburse and indemnify the Agent ratably in proportion to their respective
Pro Rata Shares (i) for any amounts not reimbursed by the Borrowers or
Subsidiary Obligors for which the Agent is entitled to reimbursement or
indemnification by the Borrowers or Subsidiary Obligors under the Loan
Documents, (ii) for any other expenses incurred by the Agent on behalf of the
Lenders, in connection with the preparation, execution, delivery,
administration and enforcement of the Loan Documents including as a result of
a dispute among the Lenders or between any Lender and the Agent, and (iii) for
any liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind and nature whatsoever
which may be imposed on, incurred by or asserted against the Agent in any way
relating to or arising out of the Loan Documents or any other document
delivered in connection therewith or the transactions contemplated thereby, or
the enforcement of any of the terms thereof or of any such other documents,
including as a result of a dispute among the Lenders or between any Lender and
the Agent, provided that no Lender shall be liable for any of the foregoing
to the extent any of the foregoing is found in a final non-appealable judgment
by a court of competent jurisdiction to have arisen from the gross negligence
or willful misconduct of the Agent.
10.9 Rights as a Lender. With respect to its Commitments, Loans made by
------------------
it and Letters of Credit issued by it as an Issuing Lender, the Agent shall
have the same rights and powers hereunder and under any other Loan Document as
any Lender and may exercise the same as through it were not the Agent, and the
term "Lender" or "Lenders" or "Issuing Lender" or "Issuing Lenders", as
applicable, shall, unless the context otherwise indicates, include the Agent
in its individual capacity. The Agent may accept deposits from, lend money
to, enter into Hedging Agreements and generally engage in any kind of trust,
debt, equity or other transaction, in addition to those contemplated by this
Agreement or any other Loan Document, with the Company or any of its
Subsidiaries in which such Person is not prohibited hereby from engaging with
any other Person.
10.10 Lender Credit Decision. Each Lender acknowledges that it has,
------------------------
independently and without reliance upon the Agent or any other Lender and
based on the financial statements prepared by the Company, the Borrowers and
the Subsidiary Obligors and such other documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into
this Agreement and the other Loan Documents. Each Lender also acknowledges
that it will, independently and without reliance upon the Agent or any other
Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking
or not taking action under this Agreement and the other Loan Documents.
10.11 Successor Agent. The Agent may resign at any time by giving
----------------
written notice thereof to the Lenders and the Borrowers. Upon any such
resignation, the Required Lenders shall have the right to appoint, on behalf
of the Borrowers and the Lenders, a successor Agent. If no successor Agent
shall have been so appointed by the Required Lenders and shall have accepted
such appointment within thirty days after the retiring Agent's giving notice
of resignation, then the retiring Agent may appoint, on behalf of the
Borrowers and the Lenders, a successor Agent. Notwithstanding anything herein
to the contrary, so long as no Default has occurred and is continuing, each
such successor Agent shall be subject to approval by the Company, which
approval shall not be unreasonably withheld. Such successor Agent shall be a
commercial bank having capital and retained earnings of at least $500,000,000.
Upon the acceptance of any appointment as the Agent hereunder by a successor
Agent, such successor Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations hereunder
and under the other Loan Documents. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Article X shall continue in effect
---------
for its benefit in respect of any actions taken or omitted to be taken by it
while it was acting as the Agent hereunder and under the other Loan Documents.
10.12 Collateral Documents. Each Lender authorizes the Agent to enter
--------------------
into each of the Collateral Documents to which it is a party and to take all
action contemplated by such documents. Each Lender agrees that no Lender
shall have the right individually to seek to realize upon the security granted
by any Collateral Document, it being understood and agreed that such rights
and remedies may be exercised solely by the Agent for the benefit of the
Holders of Secured Obligations upon the terms of the Collateral Documents.
10.13. No Duties Imposed Upon Syndication Agent, Documentation Agent or
----------------------------------------------------------------
Arranger. None of the Persons identified on the cover page to this Agreement,
- --------
the signature pages to this Agreement or otherwise in this Agreement as a
"Syndication Agent" or "Documentation Agent" or "Arranger" shall have any
right, power, obligation, liability, responsibility or duty under this
Agreement other than those applicable to all Lenders as such. Without
limiting the foregoing, none of the Lenders identified on the cover page to
this Agreement, the signature pages to this Agreement or otherwise in this
Agreements as a "Syndication Agent" or "Documentation Agent" or "Arranger"
shall have or be deemed to have any fiduciary duty to or fiduciary
relationship with any Lender. In addition to the agreements set forth in
Section 10.10, each of the Lenders acknowledges that it has not relied, and
----------
will not rely, on any of the Lenders so identified in deciding to enter into
this Agreement or in taking or not taking action hereunder.
ARTICLE XI: SETOFF; RATABLE PAYMENTS
- ------------------------------------------
11.1 Setoff. In addition to, and without limitation of, any rights of
------
the Lenders or Issuing Lenders under applicable law, if any Default occurs and
is continuing, any indebtedness from any Lender or Issuing Lender to any of
the Borrowers or Subsidiary Obligors (including all account balances, whether
provisional or final and whether or not collected or available) may be offset
and applied toward the payment of the Obligations owing to such Lender, such
Issuing Lender and the other Obligations, whether or not the Obligations, or
any part hereof, shall then be due.
11.2 Ratable Payments. If any Lender, whether by setoff or otherwise,
----------------
has payment made to it upon its Loans (other than payments received pursuant
to Sections 3.1, 3.2 or 3.4) in a greater proportion than that received by any
------------ --- ---
other Lender, such Lender agrees, promptly upon demand, to purchase a portion
of the Loans held by the other Lenders so that after such purchase each Lender
will hold its ratable proportion of Loans. If any Lender, whether in
connection with setoff or amounts which might be subject to setoff or
otherwise, receives collateral or other protection for its Obligation or such
amounts which may be subject to setoff, such Lender agrees, promptly upon
demand, to take such action necessary such that all Lenders share in the
benefits of such collateral ratably in proportion to the obligations owing to
them. In case any such payment is disturbed by legal process, or otherwise,
appropriate further adjustments shall be made.
11.3 Application of Payments. Subject to the provisions of Section 8.2,
----------------------- -----------
the Agent shall, unless otherwise specified at the direction of the Required
Lenders which direction shall be consistent with the last sentence of this
Section 11.3, apply all payments and prepayments in respect of any Obligations
---------
and all proceeds of Collateral in the following order:
(A) first, to pay interest on and then principal of any portion of the
Loans which the Agent may have advanced on behalf of any Lender for which the
Agent has not then been reimbursed by such Lender or the Borrower or
Subsidiary Obligor;
(B) second, to pay interest on and then principal of any advance made
under Section 9.3 for which the Agent has not then been paid by the Borrowers
-----------
or the Subsidiary Obligors or reimbursed by the Lenders;
(C) third, to pay Obligations in respect of any fees, expense
reimbursements or indemnities then due to the Agent;
(D) fourth, to pay Obligations in respect of any fees, expenses,
reimbursements or indemnities then due to the Lenders and Issuing Lender;
(E) fifth, to pay interest due in respect of Loans and L/C Obligations;
(F) sixth, to the ratable payment or prepayment of principal outstanding
on Loans and Reimbursement Obligations and Hedging Obligations in such order
as the Agent may determine in its sole discretion;
(G) seventh, to provide required cash collateral if any pursuant to
Section 2.19; and
---------
(H) eighth, to the ratable payment of all other Obligations.
Unless otherwise designated (which designation shall only be applicable prior
to the occurrence of a Default) by the Borrowers, all principal payments in
respect of Loans shall be applied first, to repay outstanding Base Rate Loans,
-----
and then to repay outstanding Eurodollar Loans and Korean Eurodollar Loans
----
with those Eurodollar Loans and Korean Eurodollar Loans, as applicable, which
have earlier expiring Interest Periods being repaid prior to those which have
later expiring Interest Periods. The order of priority set forth in this
Section 11.3 and the related provisions of this Agreement are set forth solely
--------
to determine the rights and priorities of the Agent, the Lenders, the Issuing
Lender and other Holders of Secured Obligations as among themselves. As long
as a Default shall have occurred and is continuing, the order of priority set
forth in clauses (D) through (H) of this Section 11.3 may at any time and from
----------- --- ------------
time to time be changed by the Required Lenders without necessity of notice to
or consent of or approval by the Borrowers, the Subsidiary Obligors, or any
other Person. The order of priority set forth in clauses (A) through (C) of
----------- ---
this Section 11.3 may be changed only with the prior written consent of the
-------------
Agent.
11.4 Relations Among Lenders
-------------------------
(a) Except with respect to the exercise of set-off rights of any Lender
in accordance with Section 11.1, the proceeds of which are applied in
-------------
accordance with this Agreement, and each Lender agrees that it will not take
any action, nor institute any actions or proceedings, against any Borrower,
any Subsidiary Obligor or any other obligor hereunder or with respect to any
Collateral or Loan Document, without the prior written consent of the Required
Lenders or, as may be provided in this Agreement or the other Loan Documents,
at the direction of the Agent.
(b) The Lenders are not partners or co-venturers, and no Lender shall be
liable for the acts or omissions of, or (except as otherwise set forth herein
in case of the Agent) authorized to act for, any other Lender.
ARTICLE XII: BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
- ----------------------------------------------------------------------
12.1 Successors and Assigns. The terms and provisions of the Loan
------------------------
Documents shall be binding upon and inure to the benefit of the Borrowers, the
Subsidiary Obligors and the Lenders and their respective successors and
assigns, except that (i) none of the Borrowers or Subsidiary Obligors shall
have the right to assign their rights or obligations under the Loan Documents
and (ii) any assignment by any Lender must be made in compliance with Section
-------
12.3 hereof. Notwithstanding clause (ii) of this Section 12.1, any Lender may
- ---- ----------- ------------
at any time, without the consent of any Borrower, any Subsidiary Obligor or
the Agent, assign all or any portion of its rights under this Agreement, if
any, issued to it to a Federal Reserve Bank; provided, however, that no such
-------- -------
assignment shall release the transferor Lender from its obligations hereunder.
The Agent may treat each Lender as the owner of the Loans made by such Lender
for all purposes hereof unless and until such Lender complies with Section
-------
12.3 hereof in the case of an assignment thereof or, in the case of any other
-
transfer, a written notice of the transfer is filed with the Agent. Any
assignee or transferee of a Loan agrees by acceptance thereof to be bound by
all the terms and provisions of the Loan Documents. Any request, authority or
consent of any Person, who at the time of making such request or giving such
authority or consent is the owner of any Loan, shall be conclusive and binding
on any subsequent holder, transferee or assignee of such Loan.
12.2 Participations.
--------------
(A) Permitted Participants; Effect. Subject to the terms set forth in
------------------------------
this Section 12.2, any Lender may, in the ordinary course of its business and
------------
in accordance with applicable law, at any time sell to one or more banks or
other entities ("PARTICIPANTS") participating interests in any Loan owing to
such Lender, any Commitment of such Lender, any L/C Interest of such Lender or
any other interest of such Lender under the Loan Documents on a pro-rata or
non-pro-rata basis; provided that without the prior written consent of the
--------
Agent, the amount of such participation shall not be for less than $5,000,000.
Notice of such participation to the Company and the Agent shall be required
prior to any participation becoming effective with respect to a Participant
which is not a Lender or an Affiliate thereof. In the event of any such sale
by a Lender of participating interests to a Participant, such Lender's
obligations under the Loan Documents shall remain unchanged, such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, such Lender shall remain the owner of all Loans made by it
for all purposes under the Loan Documents, all amounts payable by the
Borrowers and Subsidiary Obligors under this Agreement shall be determined as
if such Lender had not sold such participating interests, and the Borrowers,
Subsidiary Obligors and the Agent shall continue to deal solely and directly
with such Lender in connection with such Lender's rights and obligations under
the Loan Documents except that, for purposes of Article III hereof, the
-----------
Participants shall be entitled to the same rights as if they were Lenders;
provided however that no Participant shall be entitled to receive any greater
----- -------
payment under such Article III than the Lender would have been entitled to
------------
receive with respect to the rights participated.
(B) Voting Rights. Each Lender shall retain the sole right to approve,
-------------
without the consent of any Participant, any amendment, modification or waiver
of any provision of the Loan Documents other than any amendment, modification
or waiver with respect to any Loan or Commitment in which such Participant has
an interest which requires the consent of all of the Lenders under Section
-------
8.3.
(C) Benefit of Setoff. The Borrowers and the Subsidiary Obligors agree
-----------------
that each Participant shall be deemed to have the right of setoff provided in
Section 11.1 hereof in respect to its participating interest in amounts owing
- -------------
under the Loan Documents to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under the Loan
Documents, provided that each Lender shall retain the right of setoff provided
--------
in Section 11.1 hereof with respect to the amount of participating interests
-------------
sold to each Participant except to the extent such Participant exercises its
right of set off. The Lenders agree to share with each Participant, and each
Participant, by exercising the right of setoff provided in Section 11.1
------------
hereof, agrees to share with each Lender, any amount received pursuant to the
exercise of its right of setoff, such amounts to be shared in accordance with
Section 11.2 as if each Participant were a Lender.
- -------------
12.3 Assignments.
-----------
(A) Permitted Assignments. Any Lender may, in the ordinary course of
----------------------
its business and in accordance with applicable law, at any time assign to one
or more banks or other entities ("PURCHASERS") all or a portion of its rights
and obligations under this Agreement, including, without limitation, any
Commitments, any Loans owing to it, all of its interests as Issuing Lender
with respect to Letters of Credit, all of its participation interests in
existing Letters of Credit and its obligation to participate in additional
Letters of Credit in accordance with the provisions of this Section 12.3.
------------
Such assignment shall be substantially in the form of Exhibit D hereto and,
---------
without the prior consent of the Agent, shall not be permitted hereunder
unless (i) such assignment is either for all of such Lender's rights and
obligations under the Loan Documents or involves Loans and Commitments in an
aggregate amount of at least $5,000,000 and (ii) the Purchaser shall be able
to fund in Korean Won its share of any Advance requested or deemed requested
in Korean Won by Purina Korea, Inc. Notice to the Agent and the Company and
consent of the Company and the Agent (which consents will not be unreasonably
withheld) shall be required prior to an assignment becoming effective with
respect to a Purchaser which is not a Lender or an Affiliate thereof;
provided, however, no consent of the Company shall be required for any
-------
assignment to become effective at a time when a Default has occurred and is
continuing.
(B) Effect; Effective Date. Upon (i) delivery to the Agent of a notice
----------------------
of assignment, substantially in the form attached as Appendix I to Exhibit D
---------- ---------
hereto (a "NOTICE OF ASSIGNMENT"), together with any consent required by
Section 12.3(A) hereof, and (ii) payment of a $3,500 fee to the Agent for
-----------
processing such assignment, such assignment shall become effective on the
effective date specified in such Notice of Assignment. The Notice of
Assignment shall contain a representation by the Purchaser to the effect that
none of the consideration used to make the purchase of the Commitment, Loans
and L/C Obligations under the applicable assignment agreement are "plan
assets" as defined under ERISA and that the rights and interests of the
Purchaser in and under the Loan Documents will not be "plan assets" under
ERISA. On and after the effective date of such assignment, such Purchaser, if
not already a Lender, shall for all purposes be a Lender party to this
Agreement and any other Loan Documents executed by the Lenders and shall have
all the rights and obligations of a Lender under the Loan Documents, to the
same extent as if it were an original party hereto, and no consent or action
by any of the Borrowers, Subsidiary Obligors or the Lenders and no further
consent or action by the Agent shall be required to release the transferor
Lender with respect to the percentage of the Commitments, Loans and Letter of
Credit participations assigned to such Purchaser. Upon the consummation of
any assignment to a Purchaser pursuant to this Section 12.3(B), if requested
---------------
by the transferor Lender or Purchaser, the transferor Lender, the Agent and
the Borrowers shall make appropriate arrangements so that, to the extent notes
have been issued to evidence any of the transferred Loans, replacement notes
are issued to such transferor Lender and new notes or, as appropriate,
replacement notes, are issued to such Purchaser, in each case in principal
amounts reflecting their Commitments, as adjusted pursuant to such assignment.
(C) The Register. The Agent shall maintain at its address referred to
------------
in Section 13.1 a copy of each assignment delivered to and accepted by it
-------------
pursuant to this Section 12.3 and a register (the "REGISTER") for the
- -------------
recordation of the names and addresses of the Lenders and the Commitments of
-
and principal amount of the Loans owing to, each Lender from time to time and
whether such Lender is an original Lender or the assignee of another Lender
pursuant to an assignment under this Section 12.3. The entries in the
-------------
Register shall be conclusive and binding for all purposes, absent manifest
error, and the Company and each of its Subsidiaries, the Agent and the Lenders
may treat each Person whose name is recorded in the Register as a Lender
hereunder for all purposes of this Agreement. The Register shall be available
for inspection by the Borrowers or any Lender at any reasonable time and from
time to time upon reasonable prior notice.
12.4 Confidentiality. Subject to Section 12.5, the Agent and the
--------------- -------------
Lenders shall hold all nonpublic information obtained pursuant to the
requirements of this Agreement in accordance with such Person's customary
procedures for handling confidential information of this nature and in
accordance with safe and sound banking practices. Each of the Agent and the
Lenders agrees that it will not make use of any such confidential information
for personal gain or for transactions other than those contemplated by this
Agreement, except to the extent that such information (i) was or becomes
generally available to the public other than as a result of disclosure by
such Agent or such Lender, or (ii) was or becomes available on a
nonconfidential basis from a source other than the Company and its
Subsidiaries provided that such source is not bound by a confidentiality
agreement known to such Agent or such Lender; provided, however, that the
-------- -------
Agent and any Lender may disclose such information (A) at the request or
pursuant to any requirement of any Governmental Authority to which such Agent
or such Lender is subject or in connection with an examination of such Agent
or such Lender by any such Governmental Authority; (B) pursuant to subpoena or
other court process (and shall use its best efforts to provide advance notice
thereof to the extent foreseeable and permitted); (C) when required to do so
in accordance with the provisions of any applicable requirement of law (and
shall use its best efforts to provide advance notice thereof to the extent
foreseeable and permitted); (D) to the extent reasonably required in
connection with any litigation or proceeding to which the Agent, any Lender or
their respective affiliates may be party; (E) to the extent reasonably
required in connection with the exercise of any remedy hereunder or under any
other Loan Document; (F) to such Agent's or such Lender's independent
auditors, accountants, attorneys and other professional advisors; (G) to any
affiliate of the Agent or such Lender, or to any prospective Transferee,
provided that such affiliate or prospective Transferee agrees to keep such
information confidential to the same extent required of the Agent and the
Lenders hereunder (and, so long as no Default shall have occurred and is
continuing, shall use its best efforts to provide advance notice thereof); and
(H) as expressly permitted under the terms of any other document or agreement
regarding confidentiality to which the Company or any of its Subsidiaries is
party or is deemed party with such Agent or such Lender. In any event, the
Agent and the Lenders may make disclosure reasonably required by a prospective
Transferee in connection with the contemplated participation or assignment or
as required or requested by any Governmental Authority or representative
thereof or pursuant to legal process and shall require any such Transferee or
prospective Transferee to agree (and require any of its Transferees to agree)
to comply with this Section 12.4. In no event shall the Agent or any Lender
------------
be obligated or required to return any materials furnished by the Borrowers or
Subsidiary Obligors; provided, however, each prospective Transferee shall be
-------- -------
required to agree that if it does not become a participant or assignee it
shall return all materials furnished to it by or on behalf of the Borrowers or
Subsidiary Obligors in connection with this Agreement.
12.5 Dissemination of Information. Each of the Borrowers and Subsidiary
----------------------------
Obligors authorizes each Lender to disclose to any Participant or Purchaser or
any other Person acquiring an interest in the Loan Documents by operation of
law (each a "TRANSFEREE") and any prospective Transferee any and all
information in such Lender's possession concerning the Company and its
Subsidiaries and the Collateral; provided that prior to any such disclosure,
--------
such prospective Transferee shall agree to preserve in accordance with Section
-------
12.4 the confidentiality of any confidential information described therein.
- ----
ARTICLE XIII: NOTICES
- -------------------------
13.1 Giving Notice. Except as otherwise permitted by Section 2.11 with
------------- ------------
respect to borrowing notices, all notices and other communications provided to
any party hereto under this Agreement or any other Loan Documents shall be in
writing or by facsimile and addressed or delivered to such party, with respect
to any Borrower or any Subsidiary Obligor, in care of the Company at the
address set forth below, and for any other party at its address set forth
below its signature hereto or at such other address as may be designated by
such party in a notice to the other parties. Any notice, if mailed and
properly addressed with postage prepaid, shall be deemed given when received;
any notice, if transmitted by facsimile, shall be deemed given when
transmitted; or, if by courier, one (1) Business Day after deposit with a
reputable overnight carrier services, with all charges paid. Notices to any
Borrower or any Subsidiary Obligor shall be addressed as follows:
Agribrands International, Inc.
9811 South Forty Drive
St. Louis, Missouri 63124
Attention: Mr. David Wenzel
Chief Financial Officer
Phone: (314)812-0500
Facsimile: (314)812-0403
13.2 Change of Address. Any of the Borrowers, Subsidiary Obligors, the
-----------------
Agent and any Lender may each change the address for service of notice upon it
by a notice in writing to the other parties hereto.
ARTICLE XIV: COUNTERPARTS
- -----------------------------
This Agreement and any amendments, waivers, consents or supplements may
be executed in any number of counterparts, all of which taken together shall
constitute one agreement, and any of the parties hereto may execute this
Agreement by signing any such counterpart. Delivery of an executed signature
page hereof or thereof by facsimile transmission shall be effective as
delivery of a manually signed counterpart. This Agreement shall be effective
when it has been executed by the Borrowers, the Subsidiary Obligors, the Agent
and the Lenders and each party as notified the Agent by facsimile or
telephone, that it has taken such action.
IN WITNESS WHEREOF, the Borrowers, the Subsidiary Obligors, the Lenders and
the Agent have executed this Agreement as of the date first above written.
AGRIBRANDS INTERNATIONAL, INC.
as a Borrower
By: /s/ Robert W. Rickert
Name: Robert W. Rickert
Title: Treasurer
AGRIBRANDS CANADA, INC.
as a Borrower
By: /s/ Robert W. Rickert
Name: Robert W. Rickert
Title: Assistant Treasurer
PURINA ITALIA, S.P.A.
as a Borrower
By: /s/ Robert W. Rickert
Name: Robert W. Rickert
Title: Assistant Treasurer
PURINA ESPANA, S.A.
as a Borrower
By: /s/ Robert W. Rickert
Name: Robert W. Rickert
Title: Assistant Treasurer
PURINA HUNGARIA ANIMAL FEED PRODUCTION & TRADING COMPANY, LTD.
as a Borrower
By: /s/ Robert W. Rickert
Name: Robert W. Rickert
Title: Assistant Treasurer
PURINA KOREA, INC.
as a Borrower and Subsidiary Obligor
By: /s/ Robert W. Rickert, Jr.
Name: Robert W. Rickert, Jr.
Title: Assistant Treasurer
INDUSTRIAS PURINA S.A. DE C.V.
as a Subsidiary Obligor
By: /s/ Robert W. Rickert, Jr.
Name: Robert W. Rickert, Jr.
Title: Assistant Treasurer
PURINA COLOMBIANA S.A.
as a Subsidiary Obligor
By: /s/ Robert W. Rickert, Jr.
Name: Robert W. Rickert, Jr.
Title: Assistant Treasurer
AGRIBRANDS PURINA DO BRASIL, LTDA.
as a Subsidiary Obligor
By: /s/ Robert W. Rickert, Jr.
Name: Robert W. Rickert, Jr.
Title: Assistant Treasurer
PURINA PHILIPPINES, INC.
as a Subsidiary Obligor
By: /s/ Robert W. Rickert, Jr.
Name: Robert W. Rickert, Jr.
Title: Assistant Treasurer
PURINA VENEZUELA, C.A.
as a Subsidiary Obligor
By: /s/ Robert W. Rickert, Jr.
Name: Robert W. Rickert, Jr.
Title: Assistant Treasurer
ABN AMRO BANK N.V.
as the Agent, an Issuing Lender,
and as a Lender
By: /s/ Thomas Kramer
Name: Thomas Kramer
Title: Group Vice President
By: /s/ David Hannah
Name: David Hannah
Title: Group Vice President, Chicago Branch
Notice Address:
135 South LaSalle Street
Suite 600
Chicago, Illinois 60670
Attention: _________________
Telephone No.: 312/904-_____
Facsimile No.: 312/904-______
Payment Address for Dollars: Same as above.
THE FIRST NATIONAL BANK OF CHICAGO,
as a Lender
By: /s/ William J. Oleferchik
Name: William J. Oleferchik
Title: Authorized Agent
Notice Address:
The First National Bank of Chicago
One First National Plaza Suite 0173, 1-14
Chicago, IL 60670
Attention: William Oleferchik
Telephone No.: (312) 732-2947
Facsimile No.: (312) 732-1117
Payment Address for Dollars: Same as above.
THE BANK OF NOVA SCOTIA,
as Documentation Agent and as a Lender
By: /s/ F.C.H. Ashby
Name: F.C.H. Ashby
Title: Senior Manager - Loan Operations
Notice Address:
The Bank of Nova Scotia -- Atlanta Agency
600 Peachtree Street NE -- Suite 2700
Atlanta, GA 30308
Attention: Mr. George Wong
Telephone No.: 404-877-1556
Facsimile No.: 404-888-8998
Payment Address for Dollars: Same as above.
CREDIT LYONNAIS, CHICAGO BRANCH.
as Syndication Agent and as a Lender
By: /s/ Lee E. Greve
Name: Lee E. Greve
Title: First Vice President
Notice Address:
Credit Lyonnais Chicago Branch
227 West Monroe Street 38th Floor
Chicago, IL 60606
Attention: Mr. Peter Kelly
Telephone No.: 312-220-7306
Facsimile No.: 312-641-0527
Payment Address for Dollars: Same as above.
BANQUE NATIONALE DE PARIS,
as a Lender
By: /s/ Arnaud Collin du Bocage
Name: Arnaud Collin du Bocage
Title: Executive Vice President and General Manager
Notice Address:
209 South LaSalle Street
5th Floor
Chicago, IL 60604
Attention: Cathleen F. Schaede
Telephone No.: (312) 977-1384
Facsimile No.: (312) 977-1380
Payment Address for Dollars: Same as above.
THE BANK OF NOVA SCOTIA, SEOUL BRANCH,
as a Lender
By: /s/ C. D. Morin
Name: C.D. Morin
Title: Vice President & Manager
Notice Address:
9th Fl. KCCI Bldg.
#45, 4-ka, Namdaemun-ro
Chung-ku, Seoul, Korea
Attention: C.D. Morin
Telephone No.: 02-757-7171
Facsimile No.: 02-752-7189
Payment Address for Dollars: Same as above.
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT A
TO
LONG TERM CREDIT AGREEMENT
COMMITMENTS
<S> <C> <C>
Lender . . . . . . . . . . . . . . Amount of Commitment % of Aggregate Commitment
- ---------------------------------- --------------------------- --------------------------
ABN AMRO Bank N.V. . . . . . . . . $ 15,000,000 27.272727273%
The Bank of Nova Scotia. . . . . . $ 13,750,000 25%
Credit Lyonnais. . . . . . . . . . $ 13,750,000 25%
The First National Bank of Chicago $ 7,500,000 13.636363636%
Banque Nationale de Paris. . . . . $ 5,000,000 9.09090909%
TOTAL. . . . . . . . . . . . . . . $ 55,000,000 100%
- ----------------------------------
</TABLE>
EXHIBIT B
TO
LONG TERM CREDIT AGREEMENT
[RESERVED]
----------
EXHIBIT C
TO
LONG TERM CREDIT AGREEMENT
FORM OF COMPLIANCE CERTIFICATE
---------------------------------
Pursuant to [Section 4.2] [Section 6.1(A)(iii)] of the Long Term Credit
----------- -------------------
Agreement (as amended, modified, restated or supplemented from time to time,
the "Credit Agreement"), dated as March 31, 1998, by and among Agribrands
International, Inc. (the "Company"), the Subsidiary Borrowers parties thereto,
the Subsidiary Obligors parties thereto, the financial institutions from time
to time party thereto (the "Lenders"), and ABN AMRO Bank N.V., as contractual
representative for itself and the other Lenders, the Company, through its
___________________________, hereby delivers to the Agent[, together with the
financial statements being delivered to the Agent pursuant to Section 6.1(A)
--------------
of the Credit Agreement,] this Compliance Certificate (the "Certificate") [for
the accounting period from ____________, 19__ to ___________, 19__].
Capitalized terms used herein shall have the meanings set forth in the Credit
Agreement. Subsection references herein relate to subsections of the Credit
Agreement.
I. MANDATORY PREPAYMENTS (Section 2.2(B))
---------------
A. Section 2.2(B)
---------------
(1) State whether the Dollar Amount of the Revolving Credit Obligations
exceeds 105% of the Aggregate Commitment. Yes/No
(2) If the answer to question (1) is yes, state the amount, if required,
of any mandatory prepayment on Schedule A.
-----------
II. FINANCIAL COVENANTS
A. MINIMUM INTEREST COVERAGE RATIO (Section 6.4(A))
---------------
1. EBITDA (net sales - cost of products sold -
selling, general and administrative expenses +
depreciation + amortization) for the period
from _______ to ________ $___________
2. Cash Interest Expense (as defined) for the period
from _______ to ________ $___________
3. "Interest Coverage" (Ratio of (1) to (2)) TO 1.0
B. MAXIMUM LEVERAGE RATIO (Section 6.4(B))
---------------
1. Total Debt (as defined) $___________
2. EBITDA (as determined under item II(A) above)
$___________
3. "Leverage Ratio" (Ratio of (1) to (2)) TO 1.0
C. CAPITAL EXPENDITURES (Section 6.4(C)).
---------------
State whether Capital Expenditures (as defined) was less than
or equal to [$_______] as at the end of the most recently
completed fiscal year. Yes/No
------
D. MINIMUM CONSOLIDATED NET WORTH
(Section 6.4(D)).
---------------
State whether Consolidated Net Worth (as defined)
was greater than [$________] at all times for the period
from __________ to __________ Yes/No
------
E. COUNTRY DEBT LIMITATIONS (Section 6.4(E))
---------------
1. State whether the Borrowers or Subsidiary Obligors
incurred Indebtedness under the Credit Agreement
in excess of the maximum Dollar Amount set forth
below:
<TABLE>
<CAPTION>
Borrower's or Subsidiary Obligor's
Jurisdiction of Incorporation Maximum Dollar Amount
- ---------------------------------- ----------------------
<S> <C>
Canada . . . . . . . . . . . . . . $ 6,500,000
- ---------------------------------- ----------------------
United States. . . . . . . . . . . $ 5,000,000
- ---------------------------------- ----------------------
Italy. . . . . . . . . . . . . . . $ 4,000,000
----------------------
Spain. . . . . . . . . . . . . . . $ 2,500,000
----------------------
Hungary. . . . . . . . . . . . . . $ 2,000,000
----------------------
Korea. . . . . . . . . . . . . . . $ 15,000,000
- ---------------------------------- ----------------------
Mexico . . . . . . . . . . . . . . $ 5,000,000
----------------------
Colombia . . . . . . . . . . . . . $ 5,000,000
----------------------
Brazil . . . . . . . . . . . . . . $ 5,000,000
----------------------
Philippines. . . . . . . . . . . . $ 2,500,000
----------------------
Venezuela. . . . . . . . . . . . . $ 2,500,000
- ---------------------------------- ----------------------
</TABLE>
Yes/No
2. State whether (x) the ratio of (i) Total Debt (as defined, including
Indebtedness owed to Affiliates but excluding Contingent Obligations in the
form of standby Letters of Credit issued under the Credit Agreement for the
account of such Subsidiary Borrower or Subsidiary Obligor for the benefit of
domestic financial institutions as support for loans and advances made by such
financial institutions to the applicable Subsidiary Borrower or Subsidiary
Obligor to the extent any such loans or advances are outstanding) to (ii)
EBITDA (as determined under item IIA above) for each of the Subsidiary
Borrowers and Subsidiary Obligors (other than Purina Korea, Inc.) at any time
exceeded 3.00 to 1.00 or (y) the ratio of (i) Total Debt (as defined,
including Indebtedness owed to Affiliates but excluding Contingent Obligations
in the form of standby Letters of Credit issued under the Credit Agreement for
the account of Purina Korea, Inc. for the benefit of domestic financial
institutions as support for loans and advances made by such financial
institutions to Purina Korea, Inc. to the extent any such loans and advances
are outstanding) to (ii) EBITDA (as determined under item IIA above) for
Purina Korea, Inc. at any time exceeded 2.25 to 1.00.
Yes/No
The Company hereby certifies, through its _________________, that the
information set forth above is accurate as of _______________, ____, to the
best of such officer's knowledge, after diligent inquiry, and that the
financial statements delivered herewith present fairly the financial position
of the Company and its Subsidiaries at the dates indicated and the results of
their operations and changes in their financial position for the periods
indicated in conformity with Agreement Accounting Principles, consistently
applied.
Dated: ______________, ____
AGRIBRANDS INTERNATIONAL, INC.
By:________________________________
Name:
Title:
EXHIBIT D
TO
LONG TERM CREDIT AGREEMENT
FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
------------------------------------------------
FORM OF ASSIGNMENT AGREEMENT
This Assignment Agreement (this "ASSIGNMENT AGREEMENT") between (the
ASSIGNOR) and (the "ASSIGNEE") is dated as of,. The parties hereto agree as
follows:
1. PRELIMINARY STATEMENT. The Assignor is a party to a Long Term Credit
---------------------
Agreement (which, as it may be amended, restated, supplemented, modified,
renewed or extended from time to time is herein called the "CREDIT AGREEMENT")
described in Item 1 of Schedule 1 attached hereto ("SCHEDULE 1"). Capitalized
terms used herein and not otherwise defined herein shall have the meanings
attributed to them in the Credit Agreement.
2. ASSIGNMENT AND ASSUMPTION. The Assignor hereby sells and assigns to
-------------------------
the Assignee, and the Assignee hereby purchases and assumes from the Assignor,
an interest in and to the Assignor's rights and obligations under the Credit
Agreement such that after giving effect to such assignment the Assignee shall
have purchased pursuant to this Assignment Agreement the percentage interest
specified in Item 3 of Schedule 1 of all outstanding rights and obligations
under the Credit Agreement relating to the facilities listed in Item 3 of
Schedule 1 and the other Loan Documents. The aggregate Commitment (or Loans,
if the applicable Commitment has been terminated) purchased by the Assignee
hereunder is set forth in Item 4 of Schedule 1.
3. EFFECTIVE DATE. The effective date of this Assignment Agreement
--------------
(the "EFFECTIVE DATE") shall be the later of the date specified in Item 5 of
Schedule 1 or two Business Days (or such shorter period agreed to by the
Agent) after a Notice of Assignment substantially in the form of Appendix I
----------
(attached hereto) has been delivered to the Agent. Such Notice of Assignment
must include the consents, if any, required to be delivered to the Agent by
Section 12.3(A) of the Credit Agreement. In no event will the Effective Date
--------------
occur if the payments required to be made by the Assignee to the Assignor on
the Effective Date under Sections 4 and 5 hereof are not made on the proposed
----------------
Effective Date. The Assignor will notify the Assignee of the proposed
Effective Date no later than the Business Day prior to the proposed Effective
Date. As of the Effective Date, (i) the Assignee shall have the rights and
obligations of a Lender under the Loan Documents with respect to the rights
and obligations assigned to the Assignee hereunder and (ii) the Assignor shall
relinquish its rights and be released from its corresponding obligations under
the Loan Documents with respect to the rights and obligations assigned to the
Assignee hereunder.
4. PAYMENTS OBLIGATIONS. On and after the Effective Date, the Assignee
--------------------
shall be entitled to receive from the Agent all payments of principal,
interest and fees with respect to the interest assigned hereby. The Assignee
shall advance funds directly to the Agent with respect to all Loans and
reimbursement payments made on or after the Effective Date with respect to the
interest assigned hereby. [In consideration for the sale and assignment of
Loans hereunder, (i) the Assignee shall pay the Assignor, on the Effective
Date, an amount equal to the principal amount of the portion of all Base Rate
Loans assigned to the Assignee hereunder and (ii) with respect to each
Eurodollar Loan and Korean Eurodollar Loan made by the Assignor and assigned
to the Assignee hereunder which is outstanding on the Effective Date, (a) on
the last day of the Interest Period therefor or (b) on such earlier date
agreed to by the Assignor and the Assignee or (c) on the date on which any
such Eurodollar Loan and Korean Eurodollar Loan either becomes due (by
acceleration or otherwise) or is prepaid (the date as described in the
foregoing clauses (a), (b) or (c) being hereinafter referred to as the
------------ --- ---
"PAYMENT DATE"), the Assignee shall pay the Assignor in Dollars an amount
equal to the principal amount of the portion of such Eurodollar Rate Loan or
Korean Eurodollar Loan, as applicable, assigned to the Assignee which is
outstanding on the Payment Date. If the Assignor and the Assignee agree that
the Payment Date for such Eurodollar Loan or Korean Eurodollar Loan shall be
the Effective Date, they shall agree to the interest rate applicable to the
portion of such Loan assigned hereunder for the period from the Effective Date
to the end of the existing Interest Period applicable to such Eurodollar Rate
Loan or Korean Eurodollar Loan (the "AGREED INTEREST RATE") and any interest
received by the Assignee in excess of the Agreed Interest Rate shall be
remitted to the Assignor. In the event interest for the period from the
Effective Date to but not including the Payment Date is not paid by the
applicable Borrower with respect to any Eurodollar Loan or Korean Eurodollar
Loan sold by the Assignor to the Assignee hereunder, the Assignee shall pay to
the Assignor interest for such period on the portion of such Eurodollar Loan
or Korean Eurodollar Loan sold by the Assignor to the Assignee hereunder at
the applicable rate provided by the Credit Agreement. In the event a
prepayment of any Eurodollar Loan or Korean Eurodollar Loan which is existing
on the Payment Date and assigned by the Assignor to the Assignee hereunder
occurs after the Payment Date but before the end of the Interest Period
applicable to such Eurodollar Loan or Korean Eurodollar Loan, the Assignee
shall remit to the Assignor the excess of the prepayment penalty paid with
respect to the portion of such Eurodollar Loan or Korean Eurodollar Loan
assigned to the Assignee hereunder over the amount which would have been paid
if such prepayment penalty was calculated based on the Agreed Interest Rate.
The Assignee will also promptly remit to the Assignor (i) any principal
payments received from the Agent with respect to Eurodollar Loans or Korean
Eurodollar Loan prior to the Payment Date and (ii) any amounts of interest on
Loans and fees received from the Agent which relate to the portion of the
Loans assigned to the Assignee hereunder for periods prior to the Effective
Date, in the case of Base Rate Loans or fees, or the Payment Date, in the case
of Eurodollar Loans or Korean Eurodollar Loan, and not previously paid by the
Assignee to the Assignor.] EACH ASSIGNOR MAY INSERT ITS STANDARD PAYMENT
PROVISIONS IN LIEU OF THE PAYMENT TERMS INCLUDED IN THIS EXHIBIT. In the
event that either party hereto receives any payment to which the other party
hereto is entitled under this Assignment Agreement, then the party receiving
such amount shall promptly remit it to the other party hereto.
5. FEES PAYABLE BY THE ASSIGNEE. The [Assignee shall pay to the
--------------------------------
Assignor a fee on each day on which a payment of interest or commitment fees
is made under the Credit Agreement with respect to the amounts assigned to the
Assignee hereunder (other than a payment of interest or commitment fees for
the period prior to the Effective Date or, in the case of Eurodollar Loans or
Korean Eurodollar Loan, the Payment Date, which the Assignee is obligated to
deliver to the Assignor pursuant to Section 4 hereof). The amount of such fee
shall be the difference between (i) the interest or fee, as applicable, paid
with respect to the amounts assigned to the Assignee hereunder and (ii) the
interest or fee, as applicable, which would have been paid with respect to the
amounts assigned to the Assignee hereunder if each interest rate was of 1%
less than the interest rate paid by the Borrowers or if the commitment fee was
___ of 1% less than the commitment fee paid by the Borrowers, as applicable.
In addition, the] [Assignee][Assignor] agrees to pay a $3,500 processing fee
required to be paid to the Agent in connection with this Assignment Agreement.
6. REPRESENTATIONS OF THE ASSIGNOR; LIMITATIONS ON THE ASSIGNOR'S
--------------------------------------------------------------
LIABILITY. The Assignor represents and warrants that it is the legal and
--------
beneficial owner of the interest being assigned by it hereunder and that such
---
interest is free and clear of any adverse claim created by the Assignor. It
is understood and agreed that the assignment and assumption hereunder are made
without recourse to the Assignor and that the Assignor makes no other
representation or warranty of any kind to the Assignee. Neither the Assignor,
the Agent, nor any other Lender, nor any of its officers, directors,
employees, agents or attorneys shall be responsible for (i) the due execution,
legality, validity, enforceability, genuineness, sufficiency or collectability
of any Loan Document, including without limitation, documents granting the
Assignor, Agent and the other Lenders a security interest in assets of the
Company, any Subsidiary Borrower or any Subsidiary Obligor or any guarantor,
(ii) any representation, warranty or statement made in or in connection with
any of the Loan Documents, (iii) the financial condition or creditworthiness
of the Company, any Subsidiary Borrower or any Subsidiary Obligor or any
guarantor, (iv) the performance of or compliance with any of the terms or
provisions of any of the Loan Documents, (v) inspecting any of the property,
books or records of the Company, any Subsidiary Borrower or any Subsidiary
Obligor, (vi) the validity, enforceability, perfection, priority, condition,
value or sufficiency of any collateral securing or purporting to secure the
Loans or (vii) any mistake, error of judgment, or action taken or omitted to
be taken in connection with the Loans or the Loan Documents.
7. REPRESENTATIONS OF THE ASSIGNEE. The Assignee (i) confirms that
-------------------------------
it has received a copy of the Credit Agreement, together with copies of the
financial statements requested by the Assignee and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment Agreement, (ii) agrees that it will,
independently and without reliance upon the Agent, the Assignor or any other
Lender and based on such documents and information at it shall deem
appropriate at the time, continue to make its own credit decisions in taking
or not taking action under the Loan Documents, (iii) appoints and authorizes
the Agent to take such action as contractual representative on its behalf and
to exercise such powers under the Loan Documents as are delegated to the Agent
by the terms thereof, together with such powers as are reasonably incidental
thereto, (iv) agrees that it will perform in accordance with their terms all
of the obligations which by the terms of the Loan Documents are required to be
performed by it as a Lender, including, without limitation, making Loans to
Purina Korea, Inc. in Korean Won, (v) agrees that its payment instructions and
notice instructions are as set forth in the attachment to Schedule 1, (vi)
confirms that none of the funds, monies, assets or other consideration being
used to make the purchase and assumption hereunder are "plan assets" as
defined under ERISA and that its rights, benefits and interests in and under
the Loan Documents will not be "plan assets" under ERISA, [and (vii) attaches
the forms prescribed by the Internal Revenue Service of the United States
certifying that the Assignee is entitled to receive payments under the Loan
Documents without deduction or withholding of any United States federal income
taxes]. TO BE INSERTED IF THE ASSIGNEE IS NOT INCORPORATED UNDER THE LAWS OF
THE UNITED STATES, OR A STATE THEREOF.
8. INDEMNITY. The Assignee agrees to indemnify and hold the Assignor
---------
harmless against any and all losses, costs and expenses (including, without
limitation, reasonable attorneys' fees) and liabilities incurred by the
Assignor in connection with or arising in any manner from the Assignee's
non-performance of the obligations assumed under this Assignment Agreement.
9. SUBSEQUENT ASSIGNMENTS. After the Effective Date, the Assignee shall
----------------------
have the right pursuant to Section 12.3(A) of the Credit Agreement to assign
---------------
the rights which are assigned to the Assignee hereunder to any entity or
person, provided that (i) any such subsequent assignment does not violate any
of the terms and conditions of the Loan Documents or any law, rule,
regulation, order, writ, judgment, injunction or decree and that any consent
required under the terms of the Loan Documents has been obtained and (ii)
unless the prior written consent of the Assignor is obtained, the Assignee is
not thereby released from its obligations to the Assignor hereunder, if any
remain unsatisfied, including, without limitation, its obligations under
[Sections 4, 5 and 8] hereof.
-------------------
10. REDUCTIONS OF AGGREGATE COMMITMENT. If any reduction in the
-------------------------------------
Aggregate Commitment occurs between the date of this Assignment Agreement and
the Effective Date, the percentage interest specified in Item 3 of Schedule 1
shall remain the same, but the dollar amount purchased shall be recalculated
based on the reduced Aggregate Commitment.
11. ENTIRE AGREEMENT. This Assignment Agreement and the attached Notice
----------------
of Assignment embody the entire agreement and understanding between the
parties hereto and supersede all prior agreements and understandings between
the parties hereto relating to the subject matter hereof.
12. GOVERNING LAW. This Assignment Agreement shall be governed by and
-------------
interpreted and enforced in accordance with the internal laws of the State of
Illinois.
13. NOTICES. Notices shall be given under this Assignment Agreement in
-------
the manner set forth in the Credit Agreement. For the purpose hereof, the
addresses of the parties hereto (until notice of a change is delivered) shall
be the address set forth in the attachment to Schedule 1.
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
Agreement by their duly authorized officers as of the date first above
written.
[NAME OF ASSIGNOR]
By:
Name:
Title
[NAME OF ASSIGNEE]
By:
Name:
Title
<PAGE>
SCHEDULE 1
to Assignment Agreement
1. Description and Date of Credit Agreement:
LONG TERM CREDIT AGREEMENT DATED AS OF MARCH 31, 1998 AMONG AGRIBRANDS
INTERNATIONAL, INC. (THE "COMPANY"), THE SUBSIDIARY BORROWERS PARTIES THERETO,
THE SUBSIDIARY OBLIGORS PARTIES THERETO, THE INSTITUTIONS FROM TIME TO TIME
PARTY THERETO AS LENDERS (THE "LENDERS"), AND ABN AMRO BANK N.V., AS
CONTRACTUAL REPRESENTATIVE ON BEHALF OF THE LENDERS.
2. Date of Assignment Agreement:,
3. Amounts to be Assigned AMOUNTS TO BE DESCRIBED IN DOLLARS OR KOREAN
WON, AS APPLICABLE. (As of Date of Item 2 above):
<TABLE>
<CAPTION>
<S> <C>
REVOLVING LOAN
FACILITY
- -----------------------------------------------------
TOTAL OF COMMITMENTS (LOANS) UNDER THE CREDIT
AGREEMENT . . . . . . . . . . . . . . . . . . . . . . $
- ----------------------------------------------------- -
ASSIGNEES PERCENTAGE OF FACILITY PURCHASED UNDER THE
ASSIGNMENT AGREEMENT
___%
- -----------------------------------------------------
AMOUNT OF ASSIGNED SHARE OF FACILITY UNDER THE
ASSIGNMENT AGREEMENT. . . . . . . . . . . . . . . . . $
</TABLE>
4. Assignee's Aggregate (Loan
Amount)** Commitment Amount
Purchased Hereunder: $
5. Proposed Effective Date: _________ __, ____
Accepted and Agreed:
[NAME OF ASSIGNOR] [NAME OF ASSIGNEE]
By: By:
Name: Name:
Title: Title:
<PAGE>
Attachment to SCHEDULE 1 to ASSIGNMENT AGREEMENT
Attach Assignor's Administrative Information Sheet, which must
include notice address for the Assignor and the Assignee
APPENDIX I
to Assignment Agreement
NOTICE
OF ASSIGNMENT
--------------
APPENDIX I to Assignment Agreement NOTICE OF ASSIGNMENT
-------------
, 19
To: ABN AMRO Bank N.V.
135 South LaSalle Street
Chicago, Illinois 60674
Attention: [_______]
Telephone No.: 312/[________]
Facsimile No.: 312/[________]
AGRIBRANDS INTERNATIONAL, INC.
9811 South Forty Drive
St. Louis, Missouri 63124
Attention: [_____________________]
Telephone No.: ___-___-____
Facsimile No.: ___-___-____
From: [NAME OF ASSIGNOR] (the "Assignor")
[NAME OF ASSIGNEE] (the "Assignee")
1. We refer to that Long Term Credit Agreement (the "Credit
Agreement") described in Item 1 of Schedule 1 attached hereto ("Schedule 1").
Capitalized terms used herein and not otherwise defined herein shall have the
meanings attributed to them in the Credit Agreement.
2. This Notice of Assignment (this "Notice") is given and delivered
to the Agent pursuant to Section 12.3(B) of the Credit Agreement.
----------------
3. The Assignor and the Assignee have entered into an Assignment
Agreement, dated as of, 19 (the "Assignment"), pursuant to which, among other
things, the Assignor has sold, assigned, delegated and transferred to the
Assignee, and the Assignee has purchased, accepted and assumed from the
Assignor the percentage interest specified in Item 3 of Schedule 1 of all
outstandings, rights and obligations under the Credit Agreement relating to
the facilities listed in Item 3 of Schedule 1. The Effective Date of the
Assignment shall be the later of the date specified in Item 5 of Schedule 1 or
two Business Days (or such shorter period as agreed to by the Agent) after
this Notice of Assignment and any consents and fees required by Sections
--------
12.3(A) and 12.3(B) of the Credit Agreement have been delivered to the Agent,
-- -------
provided that the Effective Date shall not occur if any condition precedent
agreed to by the Assignor and the Assignee has not been satisfied.
4. The Assignor and the Assignee hereby give to each Borrower and the
Subsidiary Obligors and the Agent notice of the assignment and delegation
referred to herein. The Assignor will confer with the Agent before the date
specified in Item 5 of Schedule 1 to determine if the Assignment Agreement
will become effective on such date pursuant to Section 3 hereof, and will
confer with the Agent to determine the Effective Date pursuant to Section 3
hereof if it occurs thereafter. The Assignor shall notify the Agent if the
Assignment Agreement does not become effective on any proposed Effective Date
as a result of the failure to satisfy the conditions precedent agreed to by
the Assignor and the Assignee. At the request of the Agent, the Assignor
will give the Agent written confirmation of the satisfaction of the conditions
precedent.
5. The Assignor or the Assignee shall pay to the Agent on or before
the Effective Date the processing fee of $3,500 required by Section 12.3(B) of
---------------
the Credit Agreement.
6. If notes evidencing the Borrowers' Obligations to the Assignor are
outstanding on the Effective Date, the Assignor and the Assignee request and
direct that the Agent prepare and cause the Borrowers to execute and deliver
new notes or, as appropriate, replacements notes, to the Assignor and the
Assignee. The Assignor and, if applicable, the Assignee each agree to deliver
to the Agent the original notes received by it from the Borrowers upon its
receipt of new notes in the appropriate amount.
7. The Assignee advises the Agent that notice and payment
instructions are set forth in the attachment to Schedule 1.
8. The Assignee hereby represents and warrants that none of the
funds, monies, assets or other consideration being used to make the purchase
pursuant to the Assignment are "plan assets" as defined under ERISA and that
its rights, benefits, and interests in and under the Loan Documents will not
be "plan assets" under ERISA.
9. The Assignee authorizes the Agent to act as its contractual
representative under the Loan Documents in accordance with the terms thereof.
The Assignee acknowledges that the Agent has no duty to supply information
with respect to any Borrower, any Subsidiary Obligor or the Loan Documents to
the Assignee until the Assignee becomes a party to the Credit Agreement.
[NAME OF ASSIGNOR] [NAME OF ASSIGNEE]
By: By:
Name: Name:
Title: Title:
ACKNOWLEDGED AND CONSENTED TO:
ABN AMRO BANK N.V., as Agent
By:
Name:
Title:
[Attach photocopy of Schedule 1 to Assignment]
<PAGE>
EXHIBIT E
TO
LONG TERM CREDIT AGREEMENT
LIST OF CLOSING DOCUMENTS
----------------------------
[Attached]
$110,000,000
CREDIT FACILITIES
TO
AGRIBRANDS INTERNATIONAL, INC.
and certain Subsidiaries thereof
March 31, 1998
LIST OF CLOSING DOCUMENTS CAPITALIZED TERMS USED HEREIN AND NOT DEFINED
-------------------------
HEREIN SHALL HAVE THE MEANINGS ASSIGNED TO SUCH TERMS IN THE CREDIT AGREEMENT.
- -----
BOLD/ITALICIZED DOCUMENTS TO BE PREPARED AND/OR PROVIDED BY THE BORROWER
AND/OR BORROWER'S COUNSEL.
A. LOAN AND SECURITY DOCUMENTS
------------------------------
Credit Agreement ("Short Term Credit Agreement") among Agribrands
International, Inc., a Missouri corporation (the "Company"), the Subsidiary
Borrowers parties thereto, the Subsidiary Obligors parties thereto, the
financial institutions from time to time party thereto (collectively, the
"Lenders") and ABN AMRO Bank N.V., in its capacity as contractual
representative (the "Agent") for the Lenders, evidencing a 364-day $55,000,000
revolving credit facility to the Company, the Subsidiary Borrowers and the
Subsidiary Obligors from the Lenders.
Credit Agreement ("Long Term Credit Agreement", and, together with
the Short Term Credit Agreement, the "Credit Agreements") among the Company,
the Subsidiary Borrowers parties thereto, the Subsidiary Obligors parties
thereto, the Lenders and the Agent, evidencing a three-year $55,000,000
revolving credit facility to the Company, the Subsidiary Borrowers and the
Subsidiary Obligors from the Lenders.
Pledge Agreements from the Company to the Agent evidencing the
Borrower's pledge of (i) 65% of the Capital Stock of each of the Subsidiary
Borrowers and Subsidiary Obligors as security for the Obligations under each
of the Credit Agreements and (ii) 100% of the Capital Stock of each of the
Subsidiary Borrowers and Subsidiary Obligors as security for the Obligations
under each of the Credit Agreements of the other Subsidiary Borrowers and
Subsidiary Obligors and (iii) 100% of the Capital Stock of AgriInternational
Holdings, Inc., a Delaware corporation ("Holdings") as security for the
Obligations under each of the Credit Agreements, together with STOCK
CERTIFICATES and stock powers duly executed in blank.
Guarantee executed by the Company in favor of the Agent, guarantying
all of the Obligations of each of the Subsidiary Borrowers and Subsidiary
Obligors under the Credit Agreements.
Guarantee executed by Holdings in favor of the Agent, guarantying
all of the Obligations under the Credit Agreement.
Guarantee executed by each of the Subsidiaries of the Company listed
on Appendix A hereto in favor of the Agent, guarantying all of the Obligations
of each of the other Subsidiary Borrowers and Subsidiary Obligors under the
Credit Agreements.
Contribution Agreement executed by each of the Subsidiaries of the
Company listed on Appendix A hereto.
B. CORPORATE DOCUMENTS
--------------------
Certificate of the Secretary of the Company certifying (i)
resolutions of the Board of Directors of the Company approving and authorizing
the execution, delivery and performance of each document to which it is a
party, (ii) that there have been no changes in the Articles of Incorporation
of the Company since the date of the most recent certification thereof by the
Secretary of State of Missouri delivered to the Agent, (iii) the names and
true signatures of the incumbent officers of the Company authorized to sign
the documents to which it is a party, and (iv) the By-laws (attached thereto)
of the Company as in effect on the date of such certification.
Articles of Incorporation of the Company certified by the Secretary
of State of Missouri.
Good Standing Certificate for the Company from the offices of the
Secretary of State of Missouri.
Certificate of the Secretary of each of the Subsidiaries of the
Company listed on Appendix A hereto certifying (i) resolutions of the
governing board of each such Subsidiary approving and authorizing the
execution, delivery and performance of each document to which it is a party,
(ii) that there have been no changes in the constitutive agreements of such
Subsidiary since the date of the most recent certification thereof by the
appropriate Governmental Authority of its jurisdiction of incorporation
delivered to the Agent, (iii) the names and true signatures of the incumbent
officers of such Subsidiary authorized to sign the documents to which it is a
party, and (iv) the by-laws (attached thereto) of such Subsidiary as in effect
on the date of such certification.
Constitutive Agreements of each Subsidiary of the Company listed on
Appendix A hereto certified by the appropriate Governmental Authority of its
respective jurisdiction of incorporation.
C. LEGAL OPINIONS
---------------
Opinion of U.S. counsel to the Borrowers and Holdings in form and
substance satisfactory to the Agent: Bryan Cave L.L.P.
Opinion of foreign counsel to the Borrowers and Subsidiary Obligors
in form and substance satisfactory to the Agent in each of the jurisdictions
indicated below:
<TABLE>
<CAPTION>
<S> <C> <C>
a. Siskind Cromarty, Ivey & Dowler [CANADA]
b. Pavia E. Ansaldo [ITALY]
c. Price Waterhouse, Edifici Caga De Madrid [SPAIN]
d. Burai-Kovacs & Partners [HUNGARY]
e. Kim & Chang [KOREA]
f. Creel, Garcia-Cuellar Y Muggenburg [MEXICO]
g. Cardenas & Cardenas [COLUMBIA]
h. Demarest E. Almeida [BRAZIL]
i. Platon, Martinez, San Pedro & Leano [PHILLIPPINES]
j. Torres Plaz & Araujo [VENEZUELA]
</TABLE>
D. CLOSING CERTIFICATES AND MISCELLANEOUS
-----------------------------------------
Pledged Account Agreement in respect of the Company's cash
collateral account, executed by each of the Company, the Agent and ABN Amro
Bank N.V.
Notice of Borrowing.
Officer's No-Default Certificate.
E. POST- CLOSING ITEMS
---------------------
APPENDIX A
LIST OF SUBSIDIARIES
----------------------
AgriInternational Holdings, Inc., a Delaware corporation
Agribrands Canada, Inc., a company organized under the federal laws of Canada
Purina Italia, S.p.A., a company organized under the laws of Italy
Purina Espana, S.A., a company organized under the laws of Spain
Purina Hungaria Animal Feed Production & Trading Company, Ltd., a company
organized under the laws of Hungary
Purina Korea, Inc., a corporation organized under the laws of the Republic of
Korea
Industrias Purina S.A. de C.V., a company organized under the laws of Mexico
Purina Colombiana S.A., a company organized under the laws of Colombia
Agribrands Purina do Brasil, Ltda., a company organized under the laws of
Brazil
Purina Philippines, Inc., a corporation organized under the laws of the
Philippines
Purina de Venezuela, C.A., a company organized under the laws of Venezuela
<PAGE>
EXHIBIT F
TO
LONG TERM CREDIT AGREEMENT
Form of Officer's Certificate
--------------------------------
OFFICER'S CERTIFICATE
I, the undersigned, hereby certify that I am the of Agribrands
International, Inc., a corporation duly organized and existing under the laws
of the State of Delaware (the "Company"). Capitalized terms used herein and
not otherwise defined herein are as defined in that certain Long Term Credit
Agreement dated as of March 31, 1998, among the Company, the Subsidiary
Borrowers parties thereto, the Subsidiary Obligors parties thereto, the
financial institutions from time to time parties thereto as lenders (the
"Lenders"), ABN AMRO Bank N.V., in its capacity as contractual representative
for itself and the other Lenders (the "Agent") (as amended, restated,
supplemented or modified from time to time, the "Credit Agreement").
I further certify on behalf of the Company, that as of the date hereof,
to the best of my knowledge, after diligent inquiry of all relevant persons at
the Company and its Subsidiaries, (i) the representations and warranties of
the Borrowers and the Subsidiary Obligors contained in Article V of the Credit
---------
Agreement shall have been true and correct at all times during the period
commencing on __________, 19__ and ending on _____________, 19__ and as of the
date of this Officer's Certificate and (ii) as of the date of this Officer's
Certificate no Default or Unmatured Default exists [other than the following
(describe the nature of the Default or Unmatured Default and the status
thereof)].
IN WITNESS WHEREOF, I hereby subscribe my name on behalf of the Company
on this ____ day of ___________, ____.
____________________________
[Insert Name of Officer]
<PAGE>
EXHIBIT G
TO
LONG TERM CREDIT AGREEMENT
Financial Statements
[Attached].
EXHIBIT H
TO
CREDIT AGREEMENT
FORM OF REQUEST FOR LETTER OF CREDIT
------------------------------------------
TO: INSERT NAME OF ISSUING BANK., an Issuing Bank under that certain
Long Term Credit Agreement dated as of March 31, 1998 (the "Credit Agreement")
by and among Agribrands International, Inc. (the "Company"), the Subsidiary
Borrowers parties thereto, the Subsidiary Obligors parties thereto, the
financial institutions from time to time parties thereto (the "Lenders"), and
ABN AMRO Bank N.V., as contractual representative (the "Agent") for the
Lenders (such Credit Agreement, as the same may be amended, restated,
supplemented or otherwise modified from time to time, the "Credit Agreement")
and
ABN AMRO BANK N.V., as Agent
135 South LaSalle Street, Suite 425
Chicago, IL 60603
Attn: [________]
Telecopier: 312-[_______]
Confirmation: 312-[______]
Pursuant to Section 2.16 of the Credit Agreement, the undersigned hereby
gives to the Issuing Bank a request for issuance of a [standby] [commercial]
Letter of Credit on behalf of the undersigned for the benefit ofINSERT NAME OF
BENEFICIARY., in the amount of [US $] [_____________ Korean Won], with an
effective date of ___________________, ____ (the "Effective Date") and an
expiry date of ___________, ____. [Provide description of documents and terms
in connection with commercial Letter of Credit].
The undersigned hereby certifies that (i) the representations and
warranties of the undersigned contained in Article V of the Credit Agreement
are and shall be true and correct in all material respects on and as of the
date hereof and on and as of the Effective Date; (ii) no Default or Unmatured
Default has occurred and is continuing on the date hereof or on the Effective
Date or will result from the issuance of the proposed Letter of Credit; and
(iii) the conditions set forth in Sections 2.16 and 4.2 of the Credit
Agreement have been satisfied.
Unless otherwise defined herein, terms defined in the Credit Agreement
shall have the same meanings in this Request for Letter of Credit.
Dated:,
[______________________]
By:
Name:
Title:
<PAGE>
EXHIBIT I
TO
CREDIT AGREEMENT
FORM OF LETTER OF CREDIT
------------------------
[BENEFICIARY]
________________
________________
Re: Irrevocable Letter of Credit No., dated __________.
Dear [BENEFICIARY]:
[_______________________] (the "Issuer") hereby issues in favor of you,
[_______________], this irrevocable letter of credit ("Letter of Credit") for
an amount (the "Maximum Amount") of [U.S. $____________][______________ Korean
Won], effective immediately, which Maximum Amount will be reduced by the
amount of any payments made hereunder. Reference is hereby made to that
certain Long Term Credit Agreement, dated as of March 31, 1998, by and among
Agribrands International, Inc., a Missouri corporation (the "Company"), the
Subsidiary Borrowers parties thereto, the Subsidiary Obligors parties thereto,
the financial institutions from time to time parties thereto (the "Lenders"),
and ABN AMRO Bank N.V., as contractual representative (the "Agent") on behalf
of the Lenders (as amended, restated, supplemented or otherwise modified from
time to time, the "Credit Agreement"). Capitalized terms used herein without
definition shall have the meanings set forth in the Credit Agreement.
The Issuer will honor one or more of your drafts drawn on the Issuer in
accordance with the terms set forth herein in an amount not in excess of the
Maximum Amount upon presentation prior to the Termination Date (as defined
below) of [(a) a draft in the form of Exhibit I attached hereto and made a
---------
part hereof, executed by you and (b) the original of this Letter of Credit
[and (c) _______________________________________________]] [your tested telex
stating the drawing amount and certifying that the amount claimed represents
amounts past due and outstanding under the facility granted by you to
[________________]].
Multiple drafts may be drawn under this Letter of Credit but the Maximum
Amount of this Letter of Credit will be permanently reduced by the amount of
any such draft. Presentation of the documents required for payment under this
Letter of Credit may be made by you prior to the expiration hereof at any time
during the Issuer's business hours at [_____________________________].
Provided that such documents and your presentation thereof conform to the
terms and conditions hereof, payment shall be made to you of the amount
demanded, in immediately available funds, not later than 3:00 p.m. (New York
time) three (3) business days following the presentment of the required
documents. If a demand for payment made by you hereunder does not, in any
instance, conform to the terms and conditions of this Letter of Credit, the
Issuer shall give you prompt notice that the purported negotiation was not
effected in accordance with the terms and conditions of this Letter of Credit,
stating the reasons therefor and that the Issuer is holding any documents at
your disposal or is returning the same to you, as the Issuer may elect. Upon
being notified that the proposed negotiation was not effected in accordance
with this Letter of Credit, you may attempt to correct any such non-conforming
demand for payment, if, and to the extent that, you are able to do so,
provided that any re-submission of documents shall be made not less than two
(2) business days prior to the expiration hereof.
This Letter of Credit shall expire at 5:00 p.m. (New York time) on
[______________] the "Termination Date").
This Letter of Credit is subject to the terms and conditions of the
Uniform Customs and Practice for Documentary Credits (1993 Revision)
International Chamber of Commerce Publication No. 500, as amended or revised
from time to time ("Uniform Customs"), such amendments or revisions to be
controlling herein as of the official date of the effectiveness of such
amendments or revisions, as announced by the International Chamber of
Commerce. As to matters not governed by the Uniform Customs, the Letter of
Credit shall be deemed to be a contract made under the laws of the State of
New York and shall be governed and construed in accordance with the laws of
the State of New York. This Letter of Credit is not transferable in whole or
in part.
We undertake that your drafts drawn and presented on or before the time
of expiration of this Letter of Credit in conformity with the terms of this
Letter of Credit will be duly honored. Each draft must be marked "Drawn under
Irrevocable Letter of Credit No., dated [______________].
Very truly yours,
[______________________________]
By: ____________________
Name:
Title:
<PAGE>
EXHIBIT "I"
to
IRREVOCABLE LETTER OF CREDIT NO.
Dated as of [_____________]
SIGHT DRAFT
------------
[DATE]
To: [ISSUER and ISSUER's Address]
Attention:
From: [BENEFICIARY]
Upon sight hereof, pay to the order of [__________________], the amount
of [U.S. $_____________][___________ Korean Won] in immediately available
funds, by remitting said amount to his account number ___________ at
______________________________, which amount is now due and payable by [NAME
OF BORROWER OR SUBSIDIARY OBLIGOR] to the undersigned and has not been paid.
This draft is drawn under Irrevocable Letter of Credit No., dated
[______________________].
(Name)
e Borrowers'
Assignor and Assignee to insert applicable payment terms.
<PAGE>
S-105
EXECUTION COPY
SHORT TERM CREDIT AGREEMENT
Dated as of March 31, 1998
among
AGRIBRANDS INTERNATIONAL, INC.
THE SUBSIDIARY BORROWERS AND SUBSIDIARY OBLIGORS
FROM TIME TO TIME PARTY HERETO,
THE FINANCIAL INSTITUTIONS FROM TIME TO TIME
PARTY HERETO AS LENDERS,
and
ABN AMRO BANK N.V.,
as Agent
and
CREDIT LYONNAIS CHICAGO BRANCH,
as Syndication Agent
and
THE BANK OF NOVA SCOTIA,
as Documentation Agent
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-----------------
PAGE
- ----------------------------------------------------------------------------------------
<S> <C>
ARTICLE I: DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Certain Defined Terms.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Currency Equivalents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE II: THE CREDITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.1 Revolving Loans to the Company and the Subsidiary Borrowers . . . . . . . . . . . . 20
2.2 Prepayments.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.3 Method of Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.4 Method of Selecting Types and Interest Periods for Advances; Determination of
Applicable Margins, Interest on Advances to Purina Korea, Inc. . . . . . . . . . . . . . 22
(a) Method of Selecting Types and Interest Periods for Advances . . . . . . . . . . . . 22
(b) Determination of Applicable Margins, Applicable Letter of Credit Fee and
Applicable Facility Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.5 Minimum Amount of Each Advance. . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.6 Method of Selecting Types and Interest Periods for Conversion and Continuation
of Advances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(A) Right to Convert. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(B) Automatic Conversion and Continuation . . . . . . . . . . . . . . . . . . . . . . . 26
(C) No Conversion Post-Default or Post-Unmatured Default. . . . . . . . . . . . . . . . 26
(D) Conversion/Continuation Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.7 Default Rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.8 Method of Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.9 Evidence of Debt; Telephonic Notices. . . . . . . . . . . . . . . . . . . . . . . . 27
2.10 Promise to Pay; Interest and Fees; Interest Payment Dates; Interest and Fee Basis;
Taxes; Loan and Control Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(A) Promise to Pay. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(B) Interest Payment Dates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(C) Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(D) Interest and Fee Basis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(E) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(F) Loan Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(G) Entries Binding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.11 Notification of Advances, Interest Rates, Prepayments and Aggregate
Commitment Reductions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.12 Lending Installations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.13 Non-Receipt of Funds by the Agent. . . . . . . . . . . . . . . . . . . . . . . . . 32
2.14 Termination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.15 Replacement of Certain Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.16 Letters of Credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
2.17 Letter of Credit Participation . . . . . . . . . . . . . . . . . . . . . . . . . . 35
2.18 Reimbursement Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
2.19 Cash Collateral. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
2.20 Letter of Credit Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
2.21 Indemnification; Exoneration . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
2.22 Judgment Currency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
2.23 Currency Disruption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
2.24 Termination Date Extension . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE III: CHANGE IN CIRCUMSTANCES. . . . . . . . . . . . . . . . . . . . . . . . . . 39
3.1 Yield Protection. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
3.2 Changes in Capital Adequacy Regulations . . . . . . . . . . . . . . . . . . . . . . 40
3.3 Availability of Types of Advances . . . . . . . . . . . . . . . . . . . . . . . . . 41
3.4 Funding Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
3.5 Lender Statements; Survival of Indemnity. . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE IV: CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.1 Initial Advances and Letters of Credit. . . . . . . . . . . . . . . . . . . . . . . 42
4.2 Each Advance and Letter of Credit . . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE V: REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . 43
5.1 Organization; Powers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.2 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.3 No Conflict; Governmental Consents. . . . . . . . . . . . . . . . . . . . . . . . . 43
5.4 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.5 No Material Adverse Change. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.6 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
(A) Tax Examinations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
(B) Payment of Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
5.7 Litigation; Loss Contingencies and Violations . . . . . . . . . . . . . . . . . . . 45
5.8 Subsidiaries; Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
5.9 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
5.10 Accuracy of Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.11 Securities Activities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.12 Material Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.13 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.14 Assets and Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.15 Statutory Indebtedness Restrictions. . . . . . . . . . . . . . . . . . . . . . . . 47
5.16 Post-Retirement Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.17 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.18 Contingent Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.19 Restricted Junior Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
5.20 Labor Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
5.21 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
5.22 Foreign Employee Benefit Matters . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE VI: COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
6.1 Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
(A) Financial Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
(B) Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
(C) Lawsuits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
(D) Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
(E) ERISA Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
(F) Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
(G) Other Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
(H) Other Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
(I) Environmental Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
(J) Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
6.2 Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
(A) Existence, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
(B) Corporate Powers; Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . 53
(C) Compliance with Laws, Etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
(D) Payment of Taxes and Claims; Tax Consolidation. . . . . . . . . . . . . . . . . . . 54
(E) Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
(F) Inspection of Property; Books and Records; Discussions. . . . . . . . . . . . . . . 54
(G) ERISA Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
(H) Maintenance of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
(I) Environmental Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
(J) Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
(K) Foreign Employee Benefit Compliance . . . . . . . . . . . . . . . . . . . . . . . . 55
6.3 Negative Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
(A) Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
(B) Sales of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
(C) Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
(D) Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
(E) Contingent Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
(F) Restricted Junior Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
(G) Conduct of Business; Subsidiaries; Acquisitions . . . . . . . . . . . . . . . . . . 59
(H) Transactions with Shareholders and Affiliates . . . . . . . . . . . . . . . . . . . 59
(I) Sales and Leasebacks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
(J) Margin Regulations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
(K) ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
(L) Issuance of Equity Interests. . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
(M) Organizational Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
(N) Other Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
(O) Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
(P) Hedging Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
(Q) Subsidiary Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
6.4 Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
(A) Interest Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
(B) Maximum Leverage Ratio. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
(C) Capital Expenditures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
(D) Minimum Consolidated Net Worth. . . . . . . . . . . . . . . . . . . . . . . . . . . 62
(E) Country Debt Limitations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE VII: DEFAULTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
7.1 Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
ARTICLE VIII: ACCELERATION, DEFAULTING LENDERS; WAIVERS,
AMENDMENTS AND REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
8.1 Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
(a) Termination of Commitments; Acceleration. . . . . . . . . . . . . . . . . . . . . . 66
(b) Rescission. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
(c) Enforcement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
8.2 Defaulting Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
8.3 Amendments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
8.4 Preservation of Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
ARTICLE IX: GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
9.1 Survival of Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
9.2 Governmental Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
9.3 Performance of Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
9.5 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
9.7 Expenses; Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
(A) Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
(B) Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
(C) Waiver of Certain Claims; Settlement of Claims. . . . . . . . . . . . . . . . . . . 71
(D) Survival of Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
9.8 Numbers of Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
9.9 Accounting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
9.10 Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
9.11 Nonliability of Lenders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
9.12 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
9.13 CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL. . . . . . . . . . . . . . 72
(A) JURISDICTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
(B) OTHER JURISDICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
(C) VENUE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
(D) WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
9.14 Subordination of Intercompany Indebtedness . . . . . . . . . . . . . . . . . . . . 74
9.15 No Strict Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
ARTICLE X: THE AGENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
10.1 Appointment; Nature of Relationship. . . . . . . . . . . . . . . . . . . . . . . . 75
10.2 Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
10.3 General Immunity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
10.4 No Responsibility for Loans, Creditworthiness, Collateral, Recitals, Etc.. . . . . 75
10.5 Action on Instructions of Lenders. . . . . . . . . . . . . . . . . . . . . . . . . 76
10.6 Employment of Agents and Counsel . . . . . . . . . . . . . . . . . . . . . . . . . 76
10.7 Reliance on Documents; Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . 76
10.8 The Agent's Reimbursement and Indemnification. . . . . . . . . . . . . . . . . . . 76
10.9 Rights as a Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
10.10 Lender Credit Decision. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
10.11 Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
10.12 Collateral Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
ARTICLE XI: SETOFF; RATABLE PAYMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . 78
11.1 Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
11.2 Ratable Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
11.3 Application of Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
11.4 Relations Among Lenders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
ARTICLE XII: BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS. . . . . . . . . . . . . 79
12.1 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
12.2 Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
(A) Permitted Participants; Effect. . . . . . . . . . . . . . . . . . . . . . . . . . . 80
(B) Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
(C) Benefit of Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
12.3 Assignments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
(A) Permitted Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
(B) Effect; Effective Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
(C) The Register. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
12.4 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
12.5 Dissemination of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
ARTICLE XIII: NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
13.1 Giving Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
13.2 Change of Address. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
ARTICLE XIV: COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
</TABLE>
<PAGE>
EXHIBITS AND SCHEDULES
EXHIBITS
--------
EXHIBIT A -- Commitments
(Definitions)
EXHIBIT B -- [Reserved]
EXHIBIT C -- Form of Compliance Certificate
(Definitions, 4.2, 6.1(A)(iii))
EXHIBIT D -- Form of Assignment Agreement
( 2.15, 12.3)
EXHIBIT E -- List of Closing Documents
( 4.1)
EXHIBIT F -- Form of Officer's Certificate
( 4.2, 6.1(A)(iii))
EXHIBIT G -- Financial Statements
( 5.4(A), 5.18)
EXHIBIT H -- Form of Request for Letter of Credit
( 2.16)
EXHIBIT I -- Form of Letter of Credit
( 2.16)
SCHEDULES
---------
The information presented on each of the following Schedules is dated as of
February 28, 1998.
Schedule 1.1.1 -- Permitted Existing Contingent Obligations
(Definitions)
Schedule 1.1.2 -- Permitted Existing Indebtedness (Definitions)
Schedule 1.1.3 -- Permitted Existing Investments (Definitions)
Schedule 1.1.4 -- Permitted Existing Liens (Definitions)
Schedule 5.3 -- Conflicts; Governmental Consents ( 5.3)
Schedule 5.7 -- Litigation; Loss Contingencies ( 5.7)
Schedule 5.8 -- Subsidiaries ( 5.8)
Schedule 5.17 -- Insurance ( 5.17, 6.1(D), 6.2(E))
Schedule 5.20 -- Labor Matters; Compensation Agreements ( 5.20)
Schedule 5.21 -- Environmental Matters ( 5.21)
Schedule 6.3(F) -- Restricted Junior Payments
Schedule 6.3(H) -- Transactions with Shareholders and Affiliates
SHORT TERM CREDIT AGREEMENT
This Short Term Credit Agreement dated as of March 31, 1998 is entered
into among AGRIBRANDS INTERNATIONAL, INC., a Missouri corporation, any
SUBSIDIARY BORROWERS and any SUBSIDIARY OBLIGORS (as such terms are defined
herein) which are now or may hereafter become a party hereto from time to
time, the financial institutions from time to time a party hereto as LENDERS,
whether by execution of this Agreement or an assignment and acceptance
pursuant to Section 12.3, ABN AMRO BANK N.V., in its capacity as Agent for
-------------
itself and the other Lenders. The parties hereto agree as follows:
ARTICLE I: DEFINITIONS
- --------------------------
1.1 Certain Defined Terms. In addition to the terms defined in other
----------------------
sections of this Agreement, the following terms used in this Agreement shall
have the following meanings, applicable both to the singular and the plural
forms of the terms defined:
As used in this Agreement:
"ACQUISITION" means any transaction, or any series of related
-----------
transactions, consummated on or after the date of this Agreement, by which the
-----
Company or any Subsidiary of the Company (i) acquires any going business or
all or substantially all of the assets of any firm, corporation or division
thereof, whether through purchase of assets, merger or otherwise, including,
without limitation, by surrender of or foreclosure on collateral provided by
customers or (ii) directly or indirectly acquires (in one transaction or as of
the most recent transaction in a series of transactions, including, without
limitation, by surrender of or foreclosure on collateral provided by
customers) at least a majority (in number of vote) of the securities of a
corporation which have ordinary voting power for the election of directors
(other than securities having such power only by reason of the happening of a
contingency) or a majority (by percentage of voting power) of the membership,
ownership or other equity interests in a limited liability company or of the
outstanding partnership interests of a partnership.
"ADVANCE" means a borrowing hereunder consisting of the aggregate amount
-------
of the several Loans made by the Lenders to a Borrower of the same Type and,
in the case of Eurodollar Advances and Korean Eurodollar Advances, for the
same Interest Period.
"AFFECTED LENDER" is defined in Section 2.15 hereof.
---------------- -------------
"AFFILIATE" of any Person means any other Person directly or indirectly
---------
controlling, controlled by or under common control with such Person. A Person
shall be deemed to control another Person if the controlling Person is the
"beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange
Act) of greater than ten percent (10%) or more of any class of voting Capital
Stock (or other voting interests) of the controlled Person or possesses,
directly or indirectly, the power to direct or cause the direction of the
management or policies of the controlled Person through ownership of Equity
Interests. In addition, each director of a Borrower or any Subsidiary of a
Borrower shall be deemed to be an Affiliate of each Borrower.
"AGENT" means ABN AMRO Bank N.V. in its capacity as contractual
-----
representative for itself and the Lenders pursuant to Article X hereof and any
--- ---------
successor Agent appointed pursuant to Article X hereof.
----------
"AGGREGATE COMMITMENT" means the aggregate of the Commitments of all the
---------------------
Lenders under this Agreement as adjusted from time to time pursuant to the
terms hereof. The initial Aggregate Commitment is Fifty-Five Million and
00/100 Dollars ($55,000,000.00).
"AGREEMENT" means this Short Term Credit Agreement, as it may be amended,
---------
restated or otherwise modified and in effect from time to time.
"AGREEMENT ACCOUNTING PRINCIPLES" means generally accepted accounting
---------------------------------
principles as in effect as of the date of this Agreement in the United States.
If any changes in generally accepted accounting principles are hereafter
required or permitted and are adopted by the Company with the agreement of its
independent certified public accountants and such changes result in a change
in the method of calculation of any of the financial covenants, restrictions
or standards herein or in the related definitions or terms used therein
("Covenant Accounting Changes"), the parties hereto agree to enter into
-------------------------
negotiations, in good faith, in order to amend such provisions in a credit
neutral manner so as to reflect equitably such changes with the desired result
that the criteria for evaluating the Company's consolidated financial
condition shall be the same after such changes as if such changes had not been
made; provided, however, that no Covenant Accounting Change shall be given
-------- -------
effect in such calculations until such provisions are amended in a manner
reasonably satisfactory to the Required Lenders. If such amendment is entered
into, all references in this Agreement to Agreement Accounting Principles
shall mean generally accepted accounting principles as of the date of such
amendment except as agreed in connection with the Covenant Accounting Changes
set forth in such an amendment and together with any changes in generally
accepted accounting principles after the date of such amendment which are not
Covenant Accounting Changes.
"ALTERNATE BASE RATE" means, for any day, a fluctuating rate of interest
--------------------
per annum equal to the higher of (i) the Prime Rate for such day and (ii) the
sum of (a) the Federal Funds Effective Rate for such day and (b) one-half of
one percent (0.5%) per annum.
"APPLICABLE FACILITY FEE" as at any date of determination, shall be the
-------------------------
rate per annum then applicable in the determination of the amount payable
under Section 2.10(C) with respect to the Aggregate Commitment determined in
----------------
accordance with the provisions of Section 2.4(b).
---------------
"APPLICABLE EURODOLLAR MARGIN" as at any date of determination, shall be
-----------------------------
the rate per annum then applicable to Eurodollars Rate Loans determined in
accordance with the provisions of Section 2.4(b).
---------------
"APPLICABLE BASE RATE MARGIN" as at any date of determination, shall be
-----------------------------
the rate per annum then applicable to Base Rate Loans determined in accordance
with the provisions of Section 2.4(b).
---------------
"APPLICABLE LETTER OF CREDIT FEE" as at any date of determination, shall
--------------------------------
be the rate per annum then applicable in the determination of the amount
payable under Section 2.20 with respect to Letters of Credit, determined in
-------------
accordance with the provisions of Section 2.4(b).
---------------
"APPLICABLE MARGIN(S)" is defined in Section 2.4(b).
--------------------- ---------------
"ARRANGER" means ABN AMRO Bank N.V. in its capacity as the arranger for
--------
the loan transaction evidenced by this Agreement.
"AUTHORIZED OFFICER" means any of the chief executive officer, chief
-------------------
operating officer, chief financial officer, controller and treasurer of a
Borrower, acting singly.
"BASE RATE" means, for any day for any Loan, a rate per annum equal to
----------
(i) the Alternate Base Rate for such day plus (ii) the Applicable Base Rate
Margin applicable to such Loan, changing when and as the Alternate Base Rate
changes.
"BASE RATE ADVANCE" means an Advance which bears interest at the Base
-------------------
Rate.
"BASE RATE LOAN" means a Loan, or portion thereof, which bears interest
----------------
at the Base Rate.
"BENEFIT PLAN" means a defined benefit plan as defined in Section 3(35)
-------------
of ERISA (other than a Multiemployer Plan) in respect of which the Company or
any other member of the Controlled Group is, or within the immediately
preceding six (6) years was, an "employer" as defined in Section 3(5) of
ERISA.
"BORROWER" shall mean the Company, Agribrands Canada, Inc., a company
--------
organized under the federal laws of Canada, Purina Italia, S.p.A., a company
organized under the laws of Italy, Purina Espana, S.A., a company organized
under the laws of Spain, Purina Hungaria Animal Feed Production & Trading
Company, Ltd., a company organized under the laws of Hungary, and Purina
Korea, Inc., a corporation organized under the laws of the Republic of Korea,
and each of their respective successors and assigns.
"BORROWING DATE" means a date on which an Advance, is made hereunder.
---------------
"BORROWING NOTICE" is defined in Section 2.4(a) hereof.
----------------- ---------------
"BUSINESS DAY" means (i) with respect to any borrowing, payment or rate
-------------
selection of Revolving Loans bearing interest at the Eurodollar Rate, a day
(other than a Saturday or Sunday) on which banks are open for business in New
York, New York and Chicago, Illinois and on which dealings in United States
Dollars and Korean Won are carried on in the relevant interbank market and
(ii) for all other purposes a day (other than a Saturday or Sunday) on which
banks are open for business in New York, New York and Chicago, Illinois.
"CALCULATION DATE" means (i) with respect to any Revolving Loan or Letter
----------------
of Credit in Korean Won, the Business Day of the making of such Revolving Loan
or the issuance of the Letter of Credit with respect to Korean Won; (ii) with
respect to outstanding Revolving Loans and Letters of Credit, (x) the Business
Day on which any subsequent Loan is made or Letter of Credit is issued, (y)
the twenty-fifth day of each calendar month (or, if such date is not a
Business Day, the next succeeding Business Day), and (z) any other Business
Day selected at the option of the Agent or at the direction of the Required
Lenders; provided, with respect to any option exercised pursuant to clause
-------- ------
(ii)(z) above, without the consent of the Agent required to calculate the
----
applicable Exchange Rate, the Calculation Date selected shall not be earlier
-
than the second (2nd) Business Day following exercise of such option.
"CAPITAL EXPENDITURES" means, for any period, the aggregate of all
---------------------
expenditures (whether paid in cash or accrued as liabilities and including
Capitalized Leases) by the Company and its Subsidiaries during that period
that, in conformity with Agreement Accounting Principles, are required to be
included in or reflected by the property, plant, equipment or similar fixed
asset accounts reflected in the consolidated balance sheet of the Company and
its Subsidiaries other than with respect to the acquisition of inventory in
the ordinary course of business.
"CAPITAL STOCK" means (i) in the case of a corporation, corporate stock,
--------------
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (howsoever designated)
of corporate stock, (iii) in the case of a partnership, partnership interests
(whether general or limited) and (iv) any other interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, the issuing person, in each such case
regardless of class or designation.
"CAPITALIZED LEASE" of a Person means any lease of property by such
------------------
Person as lessee which would be capitalized on a balance sheet of such Person
prepared in accordance with Agreement Accounting Principles.
"CAPITALIZED LEASE OBLIGATIONS" of a Person means the amount of the
-------------------------------
obligations of such Person under Capitalized Leases which would be capitalized
on a balance sheet of such Person prepared in accordance with Agreement
Accounting Principles.
"CASH COLLATERAL ACCOUNT" means that certain deposit account maintained
-------------------------
at all times by the Company at ABN AMRO Bank N.V. with a balance not less than
$25,000,000 at any time.
"CASH EQUIVALENTS" means (i) marketable direct obligations issued or
-----------------
unconditionally guaranteed by the government of the United States or the
government of any member of the European Union; (ii) domestic and Eurodollar
certificates of deposit and time deposits, bankers' acceptances issued by any
commercial bank organized under the laws of the United States, any state
thereof, the District of Columbia, or its branches or agencies or the laws of
any member of the European Union and having a rating of B or better by
Thompson BankWatch, or rated A or better by S&P and A2 or better by Moody's;
(iii) shares of money market, mutual or similar funds having net assets in
excess of $500,000,000 maturing or being due or payable in full not more than
one hundred eighty (180) days after any Borrower's acquisition thereof and the
investments of which are limited to investment grade securities (i.e.,
securities rated at least Baa by Moody's or at least BBB by S&P) and (iv)
commercial paper of United States and foreign banks and bank holding companies
and their subsidiaries and United States and foreign finance, commercial,
industrial or utility companies which, at the time of acquisition, are rated
A-1 (or better) by S&P or P-1 (or better) by Moody's, or are backed by letters
of credit from banks rated B or better by Thompson BankWatch or rated A or
better by S&P and A2 or better by Moody's; provided that the maturities of
--------
such Cash Equivalents shall not exceed 365 days.
"CASH INTEREST EXPENSE" will mean, for any period, the total Interest
-----------------------
Expense of the applicable entity actually paid in cash (including the interest
component of Capitalized Leases but excluding the arrangement fee set forth in
the letter agreement between the Agent, the Arranger and the Company dated
February 25, 1998) all as determined in conformity with Agreement Accounting
Principles.
"CHANGE" is defined in Section 3.2 hereof.
------ ------------
"CHANGE OF CONTROL" means any of the following:
-------------------
(i) any "person" or "group" (as such terms are used in Sections 13(d)
--------------
and 14(d) of the Exchange Act)is or becomes the "beneficial owner" (as defined
-----
in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person shall be
deemed to have "beneficial ownership" of all securities that such person has
the right to acquire, whether such right is exercisable immediately or only
after the passage of time), directly or indirectly, of 20% or more of the
combined voting power of the Company's Capital Stock ordinarily having the
right to vote at an election of directors;
(ii) during any period of 12 consecutive calendar months,
individuals:
(a) who were directors of the Company on the first day of such period, or
(b) whose election or nomination for election to the board of directors of
the Company was recommended or approved by at least a majority of the
directors then still in office who were directors of the Company on the first
day of such period, or whose election or nomination for election was so
approved,
shall cease to constitute a majority of the board of directors of the Company;
(iii) the Company consolidates with or merges into another
corporation or conveys, transfers or leases all or substantially all of its
property to any Person, or any corporation consolidates with or merges into
the Company, in either event pursuant to a transaction in which the
outstanding Capital Stock of the Company is reclassified or changed into or
exchanged for cash, securities or other property; and
(iv) except as provided by Section 6.3(B)(iv) with respect to the
------------------
sale, dissolution or liquidation of certain Subsidiaries of the Company, the
Company shall cease to own of record and beneficially, with sole voting and
dispositive power, at least 80% of the outstanding shares of Capital Stock of
each Subsidiary Borrower and each Subsidiary Obligor ordinarily having the
right to vote at an election of directors or shall cease to have the power,
directly or indirectly, to elect a majority of the board of directors of each
Subsidiary Borrower.
"CLOSING DATE" means the date on which the Agent notifies the Company in
-------------
writing that all of the conditions precedent under Sections 4.1 and 4.2 have
------------ ---
been satisfied and any of the Borrowers may request Loans, and any of the
Borrowers or the Subsidiary Obligors may request Letters of Credit, under this
Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended, reformed or
----
otherwise modified from time to time.
"COLLATERAL DOCUMENT" shall mean the Pledge Agreements, the Guaranties
--------------------
and all other security agreements, mortgages, loan agreements, notes,
guarantees, pledges, powers of attorney, consents, assignments, contracts, fee
letters, notices, leases, financing statements and all other written matter
whether heretofore, now, or hereafter executed by or on behalf of the Company
or any of its Subsidiaries and delivered to the Agent or any of the Lenders,
together with all agreements and documents referred to therein or contemplated
thereby.
"COLLATERAL" means all property and interest in property now owned or
----------
hereafter acquired by the Company which has been pledged to the Agent for the
benefit of the Holders of Secured Obligations under the Pledge Agreements.
"COMMISSION" means the Securities and Exchange Commission and any Person
----------
succeeding to the functions thereof.
"COMMITMENT" means, for each Lender, the obligation of such Lender to
----------
make Revolving Loans, and to purchase participations in Letters of Credit not
exceeding the Dollar Amount set forth on Exhibit A to this Agreement opposite
---------
its name thereon under the heading "Commitment" or in the assignment and
acceptance by which it became a Lender, as such amount may be modified from
time to time pursuant to the terms of this Agreement or to give effect to any
applicable assignment and acceptance.
"COMPANY" means Agribrands International, Inc., a Missouri corporation,
-------
together with its successors and assigns.
"COMPLIANCE CERTIFICATE" means a certificate substantially in the form of
----------------------
Exhibit C delivered to the Agent and each Lender by the Company pursuant to
- ----------
the provisions of this Agreement and covering, among other things, its
- --
calculation of the Applicable Margins, Applicable Facility Fee, Applicable
- --
Letter of Credit Fee, its compliance with the financial covenants contained in
- --
Section 6.4 and certain other provisions of this Agreement.
- ------------
"CONFIDENTIAL INFORMATION MEMORANDUM" means that certain Confidential
-------------------------------------
Information Memorandum dated February 1998 and delivered by the Agent and the
Company to prospective Lenders in connection with this Agreement.
"CONSOLIDATED EBITDA" means, for any period, EBITDA of the Company and
--------------------
its Subsidiaries on a consolidated basis.
"CONSOLIDATED NET WORTH" means, at a particular date, all amounts which
------------------------
would be included under shareholders' or members' equity for the Company and
its consolidated Subsidiaries deter-mined in accordance with Agreement
Accounting Principles.
"CONTAMINANT" means any waste, pollutant, hazardous substance, toxic
-----------
substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, asbestos, polychlorinated biphenyls ("PCBS"), or any
constituent of any such substance or waste, and includes but is not limited to
these terms as defined in Environmental, Health or Safety Requirements of Law.
"CONTINGENT OBLIGATION", as applied to any Person, means any Contractual
----------------------
Obligation, contingent or otherwise, of that Person with respect to any
Indebtedness of another or other obligation or liability of another,
including, without limitation, any such Indebtedness, obligation or liability
of another directly or indirectly guaranteed, endorsed (otherwise than for
collection or deposit in the ordinary course of business), co-made or
discounted or sold with recourse by that Person, or in respect of which that
Person is otherwise directly or indirectly liable, including Contractual
Obligations (contingent or otherwise) arising through any agreement to
purchase, repurchase, or otherwise acquire such Indebtedness, obligation or
liability or any security therefor, or to provide funds for the payment or
discharge thereof (whether in the form of loans, advances, stock purchases,
capital contributions or otherwise), or to maintain solvency, assets, level of
income, or other financial condition, or to make payment other than for value
received.
"CONTINGENT PURCHASE PRICE OBLIGATION", as applied to any Person, means
--------------------------------------
any Contractual Obligation of such Person incurred in connection with an
Acquisition pursuant to which such Person is obligated to pay additional
consideration to the applicable seller in the form of an earnout, milestone
payment, contingent purchase price payment, or other similar performance based
compensation relating to post-Acquisition financial or operating performance
of the business acquired.
"CONTRACTUAL OBLIGATION", as applied to any Person, means any provision
-----------------------
of any equity or debt securities issued by that Person or any indenture,
mortgage, deed of trust, security agreement, pledge agreement, guaranty,
contract, undertaking, agreement or instrument, in any case in writing, to
which that Person is a party or by which it or any of its properties is bound,
or to which it or any of its properties is subject.
"CONTROLLED GROUP" means the group consisting of (i) any corporation
-----------------
(other than Ralston Purina Company and any company that is a subsidiary of
such company as of the Closing Date) which is a member of the same controlled
group of corporations (within the meaning of Section 414(b) of the Code) as
the Company; (ii) a partnership or other trade or business (whether or not
incorporated (other than Ralston Purina Company and any company that is a
subsidiary of such company as of the Closing Date)) which is under common
control (within the meaning of Section 414(c) of the Code) with the Company;
and (iii) a member of the same affiliated service group (within the meaning of
Section 414(m) of the Code) as the Company, any corporation described in
clause (i) above or any partnership or trade or business described in clause
------ ------
(ii) above (in each case, other than Ralston Purina Company and any company
---
that is a subsidiary of such company as of the Closing Date).
-
"CONVERSION/CONTINUATION NOTICE" is defined in Section 2.6(D) hereof.
------------------------------- --------------
"CUSTOMARY PERMITTED LIENS" means:
---------------------------
(i) Liens (other than Environmental Liens and Liens in favor of the
IRS or the PBGC) with respect to the payment of taxes, assessments or
governmental charges in all cases which are not yet due or which are being
contested in good faith by appropriate proceedings and with respect to which
adequate reserves or other appropriate provisions are being maintained in
accordance with Agreement Accounting Principles;
(ii) statutory Liens of landlords and Liens of suppliers, mechanics,
carriers, materialmen, warehousemen or workmen and other similar Liens imposed
by law created in the ordinary course of business for amounts not yet due or
which are being contested in good faith by appropriate proceedings and with
respect to which adequate reserves or other appropriate provisions are being
maintained in accordance with Agreement Accounting Principles;
(iii) Liens (other than Environmental Liens and Liens in favor of the
IRS or the PBGC) incurred or deposits made in the ordinary course of business
in connection with worker's compensation, unemployment insurance or other
types of social security benefits or to secure the performance of bids,
tenders, sales, contracts (other than for the repayment of borrowed money),
surety, appeal and performance bonds; provided that (A) all such Liens do not
--------
in the aggregate materially detract from the value of assets or property of
any Borrower taken as a whole or materially impair the use thereof in the
operation of the businesses taken as a whole, and (B) all Liens securing bonds
to stay judgments or in connection with appeals that do not secure at any time
an aggregate amount exceeding $5,000,000;
(iv) Liens arising with respect to zoning restrictions, easements,
licenses, reservations, covenants, rights-of-way, utility easements, building
restrictions and other similar charges or encumbrances on the use of real
property which do not interfere with the ordinary conduct of the business of
any Borrower or any Subsidiary of any Borrower;
(v) Liens of attachment or judgment with respect to judgments, writs
or warrants of attachment, or similar process against any Borrower or any
Subsidiary of any Borrower which do not constitute a Default under Section
-------
7.1(h);
---
(vi) Liens arising from leases, subleases or licenses granted to
others which do not interfere in any material respect with the business of any
Borrower or any Subsidiary of any Borrower; and
(vii) any interest or title of the lessor in the property subject to
any operating lease entered into by any Borrower or any Subsidiary of any
Borrower in the ordinary course of business.
"DEFAULT" means an event described in Article VII hereof.
------- ------------
"DOL" means the United States Department of Labor and any Person
---
succeeding to the functions thereof.
--
"DOLLAR" or "$" means the lawful money of the United States of America.
------ -
"DOLLAR AMOUNT" of any currency at any date shall mean (i) the amount of
--------------
such currency if such currency is Dollars or (ii) the Equivalent Amount of
Dollars if such currency is any currency other than Dollars, calculated on the
basis of the then applicable Exchange Rate.
"EBITDA" will mean, for any period, on a consolidated basis for the
------
applicable Person, the sum of the amounts for such period, without
duplication, of (i) net sales minus (ii) cost of products sold minus (iii)
----- -----
selling, general and administrative expenses, plus (iv) depreciation expense
----
to the extent deducted in computing the amounts in clauses (ii) and (iii)
------------ -----
above, plus (v) amortization expense, including, without limitation,
----
amortization of goodwill and other intangible assets to the extent deducted in
--
computing the amounts in clauses (ii) and (iii) above, all as determined in
------------ -----
accordance with Agreement Accounting Principles. EBITDA for each Subsidiary
shall be calculated excluding the effect of any service fees paid by such
Subsidiary to the Company.
"EBITDA CONTRIBUTION RATIO" shall mean the ratio of (i) Total Debt of the
-------------------------
Company and its Subsidiaries to (ii) the sum of 100% of EBITDA contributed by
Subsidiaries in countries with a rating of equal to or better than BBB- from
S&P and Baa3 from Moody's and 50% of EBITDA contributed by Subsidiaries in
countries with a rating of lower than BBB- from S&P or lower than Baa3 from
Moody's.
"ENVIRONMENTAL, HEALTH OR SAFETY REQUIREMENTS OF LAW" means all
---------------------------------------------------------
Requirements of Law derived from or relating to foreign, federal, state and
---
local laws or regulations relating to or addressing pollution or protection of
the environment, or protection of worker health or safety, including, but not
limited to, the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. 9601 et seq., the Occupational Safety and Health
-- ---
Act of 1970, 29 U.S.C. 651 et seq., and the Resource Conservation and
-- ---
Recovery Act of 1976, 42 U.S.C. 6901 et seq., in each case including any
-- ---
amendments thereto, any successor statutes, and any regulations or guidance
promulgated thereunder, and any state or local equivalent thereof.
"ENVIRONMENTAL LIEN" means a lien in favor of any Governmental Authority
-------------------
for (a) any liability under Environmental, Health or Safety Requirements of
Law, or (b) damages arising from, or costs incurred by such Governmental
Authority in response to, a Release or threatened Release of a Contaminant
into the environment.
"ENVIRONMENTAL PROPERTY TRANSFER ACT" means any applicable requirement of
-----------------------------------
law that conditions, restricts, prohibits or requires any notification or
disclosure triggered by the closure of any property or the transfer, sale or
lease of any property or deed or title for any property for environmental
reasons, including, but not limited to, any so-called "Industrial Site
Recovery Act" or "Responsible Property Transfer Act."
"EQUIPMENT" means all of the present and future (i) equipment, including,
---------
without limitation, machinery, manufacturing, distribution, selling, data
processing and office equipment, assembly systems, tools, molds, dies,
fixtures, appliances, furniture, furnishings, vehicles, vessels, aircraft,
aircraft engines, and trade fixtures, (ii) other tangible personal property
(other than the Inventory), and (iii) any and all accessions, parts and
appurtenances attached to any of the foregoing or used in connection
therewith, and any substitutions therefor and replacements, products and
proceeds thereof owned by the Company or any of the other Borrowers.
"EQUITY INTERESTS" means Capital Stock and all warrants, options,
-----------------
purchase rights, conversion or exchange rights, other rights to acquire
-
Capital Stock and all voting rights, calls or claims of any character with
respect thereto (but excluding any debt security that is convertible into, or
exchangeable for, Capital Stock).
"EQUIVALENT AMOUNT" of any currency with respect to any amount of Dollars
-----------------
at any date means the equivalent in such currency of such amount of Dollars,
calculated on the basis of the then applicable Exchange Rate rounded up to the
nearest incremental amount of such currency as determined by the Agent from
time to time.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time including (unless the context otherwise requires)
any rules or regulations promulgated thereunder.
"EURODOLLAR ADVANCE" means an Advance (other than a Korean Eurodollar
-------------------
Advance) which bears interest at the Eurodollar Rate.
"EURODOLLAR BASE RATE" means, with respect to a Eurodollar Loan or Korean
--------------------
Eurodollar Loan for the relevant Interest Period, the rate at which deposits
in Dollars are offered by ABN AMRO Bank N.V. to first-class banks in the
London interbank market at approximately (x) in the case of a Eurodollar Loan,
11:00 a.m. (London time) two Business Days and (y) in the case of a Korean
Eurodollar Loan, 11:00 a.m. (London time) three Business Days, prior to the
first day of such Interest Period, in the approximate amount of the portions
of the relevant Eurodollar Loan of ABN AMRO Bank N.V., and having a maturity
approximately equal to such Interest Period.
"EURODOLLAR LOAN" means a Loan (other than a Korean Eurodollar Loan), or
----------------
portion thereof, which bears interest at the Eurodollar Rate.
"EURODOLLAR RATE" means, with respect to a Eurodollar Advance or Korean
----------------
Eurodollar Advance for the relevant Interest Period, the sum of (a) (i) the
-----
Eurodollar Base Rate divided by (ii) one minus the Reserve Requirement
- -----
(expressed as a decimal) applicable to such Interest Period plus (b) the
- ----
percentage determined in accordance with Section 2.4(b) to be the Applicable
- --------------
Eurodollar Margin in connection with Eurodollar Loans.
"EXCHANGE RATE" means with respect to Korean Won on a particular date,
--------------
the rate at which Korean Won may be exchanged into Dollars, calculated on the
basis of the arithmetical mean of the buy and sell spot rates of exchange of
the Agent in the London interbank market (or other market where the Agent's
foreign currency exchange operations in respect of Korean Won are then being
conducted) for Korean Won at or about 1:00 p.m. (local time), on such date for
the purchase of Dollars with Korean Won for delivery five (5) Business Days
later; provided, however, that if at the time of any such determination, for
-------- -------
any reason, no such spot rate is being quoted, the Agent may use any
reasonable method it deems appropriate to determine such rate, and such
determination shall be conclusive absent manifest error.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any day, an interest rate per
------------------------------
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day
which is a Business Day, the average of the quotations at approximately 10:00
a.m. (New York time) on such day on such transactions received by the Agent
from three Federal funds brokers of recognized standing selected by the Agent
in its sole discretion.
"FEES" are described in Section 2.10(C) hereof.
---- ----------------
"FOREIGN EMPLOYEE BENEFIT PLAN" means any employee benefit plan as
--------------------------------
defined in Section 3(3) of ERISA which is maintained or contributed to for the
benefit of the employees of the Company, any of its Subsidiaries or any
members of its Controlled Group and is not covered by ERISA pursuant to ERISA
Section 4(b)(4).
"FOREIGN PENSION PLAN" means any employee benefit plan as described in
----------------------
Section 3(3) of ERISA which (i) is maintained or contributed to for the
benefit of employees of the Company, any of its Subsidiaries or any of its
ERISA Affiliates, (ii) is not covered by ERISA pursuant to Section 4(b)(4) of
ERISA, and (iii) under applicable local law, is required to be funded through
a trust or other funding vehicle.
"GOVERNMENTAL ACTS" is defined in Section 2.21(a) hereof.
------------------ ----------------
"GOVERNMENTAL AUTHORITY" means any nation or government, any federal,
-----------------------
state, local or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"GUARANTY" means each of (i) those certain Guaranties executed in favor
--------
of the Agent for the benefit of the Holders of Secured Obligations pursuant to
which each of the Subsidiary Borrowers and Subsidiary Obligors shall guaranty
all of the Obligations of the other Subsidiary Borrowers and Subsidiary
Obligors and (ii) that certain Guaranty executed by the Company in favor of
the Agent for the benefit of the Holders of Secured Obligations pursuant to
which the Company shall guaranty all of the Obligations of the Subsidiary
Borrowers and the Subsidiary Obligors, in each case, as the same may be
amended, restated, supplemented or otherwise modified from time to time.
"HEDGING AGREEMENTS" is defined in Section 6.3(P).
------------------- ---------------
"HEDGING OBLIGATIONS" of a Person means any and all obligations of such
--------------------
Person, whether absolute or contingent and howsoever and whensoever created,
arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (i) any and all
agreements, devices or arrangements designed to protect at least one of the
parties thereto from the fluctuations of interest rates, commodity prices,
exchange rates or forward rates applicable to such party's assets, liabilities
or exchange transactions, including, but not limited to, dollar-denominated or
cross-currency interest rate exchange agreements, forward currency exchange
agreements, interest rate cap or collar protection agreements, forward rate
currency or interest rate options, puts and warrants, and (ii) any and all
cancellations, buy backs, reversals, terminations or assignments of any of the
foregoing.
"HOLDERS OF SECURED OBLIGATIONS" means the holders of the Secured
---------------------------------
Obligations from time to time and shall refer to (i) each Lender in respect of
-
its Loans and the L/C Obligations owed directly or indirectly to such Lender
(including, if applicable, any agency or Affiliate of a Lender), (ii) the
Issuing Lenders in respect of Reimbursement Obligations and other Obligations
relating to its Letters of Credit, (iii) the Agent, the Arranger, and the
Issuing Lenders in respect of all other present and future obligations and
liabilities of any Borrower or any of their subsidiaries of every type and
description arising under or in connection with this Agreement or any other
Loan Document, (iv) each Indemnitee in respect of the obligations and
liabilities of any Borrower to such Person hereunder or under any of the Loan
Documents, (v) each Lender (or any agency or Affiliate thereof) in respect of
all Hedging Obligations of any Borrower or any of their Subsidiaries to such
lender (or agency or Affiliate thereof) and (vi) their respective successors,
transferees and assigns.
"INDEBTEDNESS" of any Person means (i) any indebtedness of such Person,
------------
contingent or otherwise, (a) in respect of borrowed money including all
principal, interest, fees and expenses with respect thereto (whether or not
the recourse of the lender is to the whole of the assets of such Person or
only to a portion thereof), or (b) evidenced by bonds, notes, acceptances,
debentures or other instruments or letters of credit (or reimbursement
obligations with respect thereto, including, in the case of the Borrowers,
Reimbursement Obligations with respect to amounts funded under the Letters of
Credit) or representing the balance deferred and unpaid of the purchase price
of any property (including pursuant to Capitalized Leases) or services, if and
to the extent any of the foregoing indebtedness would appear as a liability
upon a balance sheet of such Person prepared in accordance with Agreement
Accounting Principles (except that any such balance that constitutes a trade
payable and/or an accrued liability arising in the ordinary course of business
shall not be considered Indebtedness); (ii) to the extent not otherwise
included, (a) any Capitalized Lease Obligations, (b) obligations, whether or
not assumed, secured by Liens or payable out of the proceeds or production
from property now or hereafter owned or acquired by such Person, and (c)
Contingent Obligations in respect of Indebtedness of other Persons (exclusive
of whether such items would appear upon such balance sheet). The amount of
Indebtedness of any Person at any date shall be without duplication (i) the
outstanding balance at such date of all unconditional obligations as described
above and the maximum liability of any such Contingent Obligations at such
date and (ii) in the case of Indebtedness of others secured by a Lien to which
the property or assets owned or held by such Person is subject, the lesser of
(x) the fair market value at such date of any asset subject to a Lien securing
the Indebtedness of others and (y) the amount of the Indebtedness secured.
"INDEMNIFIED MATTERS" is defined in Section 9.7(B) hereof.
-------------------- ---------------
"INDEMNITEES" is defined in Section 9.7(B) hereof.
----------- ---------------
"INTEREST EXPENSE" means, for any period, the consolidated total interest
-----------------
expense of the Company and its Subsidiaries, determined on a consolidated
---
basis, whether paid or accrued, but without duplication (including the
---
interest component of Capitalized Leases), but excluding interest expense not
---
payable in cash (including amortization of discount) and excluding the
arrangement fee set forth in the letter agreement between the Agent, the
Arranger and the Company dated February 25, 1998, all as determined in
conformity with Agreement Accounting Principles.
"INTEREST PERIOD" means, (x) with respect to a Eurodollar Loan, a period
----------------
of one (1), two (2), three (3) or six (6) months, and, to the extent available
to all of the Lenders, upon request of the applicable Borrower and only if the
Lenders, in their discretion, shall agree, nine (9) months or twelve (12)
months, and (y) with respect to a Korean Eurodollar Loan, a period of one
(1), two (2) or three (3) months, and, to the extent available to all of the
Lenders, upon request of Purina Korea, Inc. and only if the Lenders, in their
discretion, shall agree, six (6) months, in each case commencing on a Business
Day selected by the applicable Borrower pursuant to this Agreement. Such
Interest Period shall end on (but exclude) the day which corresponds
numerically to such date one, two, three or six months and, if applicable,
nine or twelve months, thereafter; provided, however, that if there is no such
-------- -------
numerically corresponding day in such next, second, third or sixth succeeding
month and, if applicable, ninth or twelfth succeeding month, such Interest
Period shall end on the last Business Day of such next, second, third or sixth
succeeding month and, if applicable, ninth or twelfth succeeding month. With
respect to a Korean Won Advance, Interest Period means a period designated by
the Agent of approximately ninety (90) days. If an Interest Period would
otherwise end on a day which is not a Business Day, such Interest Period shall
end on the next succeeding Business Day, provided, however, that if said next
-------- -------
succeeding Business Day falls in a new calendar month, such Interest Period
shall end on the immediately preceding Business Day.
"INVESTMENT" means, with respect to any Person, (i) any purchase or other
----------
acquisition by that Person of any Equity Interest, notes, debentures or other
securities, or of a beneficial interest in any Equity Interest, notes,
debentures or other securities, issued by any other Person, (ii) any purchase
by that Person of all or substantially all of the assets of a business
conducted by another Person, and (iii) any loan, advance (other than deposits
with financial institutions available for withdrawal on demand, prepaid
expenses, accounts receivable, advances to employees and similar items in each
case made or incurred in the ordinary course of business) or capital
contribution by that Person to any other Person, including all Indebtedness to
such Person arising from a sale of property by such Person other than in the
ordinary course of its business.
"IRS" means the Internal Revenue Service and any Person succeeding to the
---
functions thereof.
"ISSUING LENDER" means, as the context may require, ABN AMRO Bank N.V.,
---------------
with respect to Letters of Credit issued by it pursuant to this Agreement, and
any other Lender that becomes an Issuing Lender, pursuant to Section 2.16,
------------
with respect to Letters of Credit issued by such Lender.
"KNOWLEDGE" means, at any time in respect of any Person and relative to
---------
any matter, knowledge which the Authorized Officers of such Person would
reasonably be expected to have regarding such matter.
"KOREAN CD RATE" means with respect to any Korean Won Advance for any
----------------
specified Interest Period, the rate per annum, as determined by the Agent,
shown on page "KWCD 3M" screen of the Bloomberg L.P. service (or such other
page as may replace the "KWCD 3M" screen on that service) for the purpose of
displaying the rate offered in Seoul, Korea for 91-day certificates of deposit
issued in Seoul, Korea as of 11:00 a.m. (Seoul time) five (5) Business Days
prior to the first day of such Interest Period.
"KOREAN EURODOLLAR ADVANCE" means an Advance to Purina Korea, Inc., in Dollars
-------------------------
which bears interest at the Korean Eurodollar Rate.
"KOREAN EURODOLLAR LOAN" means a Loan, or portion thereof, which bears
------------------------
interest at the Korean Eurodollar Rate.
"KOREAN EURODOLLAR RATE" means a rate per annum equal to the Eurodollar
------------------------
Rate minus the Applicable Eurodollar Margin plus 3.50% per annum.
----- ----
"KOREAN WON ADVANCE" means an advance made pursuant to Section 2.1
-------------------- -----------
denominated in Korean Won to Purina Korea, Inc.
"KOREAN WON LOAN" means with respect to a Lender, such Lender's portion
-----------------
of any Korean Won Advance made pursuant to Section 2.1.
------------
"L/C DRAFT" means a draft drawn on an Issuing Lender pursuant to a Letter
---------
of Credit.
"L/C INTEREST" is defined in Section 2.17.
------------- -------------
"L/C OBLIGATIONS" means, without duplication, an amount equal to the sum
----------------
of (i) the aggregate of the amount then available for drawing under each of
the Letters of Credit, (ii) the face amount of all outstanding L/C Drafts
corresponding to the Letters of Credit, which L/C Drafts have been accepted by
the Issuing Lender, (iii) the aggregate outstanding amount of all
Reimbursement Obligations at such time and (iv) the aggregate face amount of
all Letters of Credit requested by any Borrower but not yet issued (unless the
request for an unissued Letter of Credit has been denied).
"LENDERS" means the lending institutions listed on the signature pages of
-------
this Agreement, including the Issuing Lenders and their respective successors
and assigns.
"LENDING INSTALLATION" means, with respect to a Lender or the Agent, any
---------------------
office, branch, subsidiary or affiliate of such Lender or the Agent.
"LETTER(S) OF CREDIT" means the letters of credit to be issued by one of
--------------------
the Issuing Lenders pursuant to Section 2.16 hereof.
-------------
"LIEN" means any lien (statutory or other), mortgage, pledge,
----
hypothecation, assignment, deposit arrangement, encumbrance or preference,
----
priority or security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, the interest of a vendor or
lessor under any conditional sale, Capitalized Lease or other title retention
agreement).
"LOAN(S)" means with respect to a Lender, such Lender's portion of any
-------
Advance made pursuant to Section 2.1.
------------
"LOAN ACCOUNT" is defined in Section 2.10(F) hereof.
------------- ----------------
"LOAN DOCUMENTS" means this Agreement and all other documents,
---------------
instruments and agreements executed in connection therewith or contemplated
----
thereby, including the letter agreements regarding fees among the Agent, the
Arranger, and the Company and between the Agent and the Borrower, in each case
as the same may be amended, restated or otherwise modified and in effect from
time to time.
"LONG TERM CREDIT AGREEMENT" means that certain Long Term Credit
-----------------------------
Agreement, dated as of March __, 1998, by and among the Company, the
--
Subsidiary Borrowers, the Subsidiary Obligors, the Lenders and the Agent, as
--
the same may be amended, restated, supplemented or otherwise modified from
time to time.
"MARGIN STOCK" shall have the meaning ascribed to such term in Regulation
------------
U.
"MATERIAL ADVERSE EFFECT" means a material adverse effect upon (a) the
-------------------------
business, condition (financial or otherwise), operations, performance,
properties or prospects of the Company and its Subsidiaries taken as a whole,
(b) the ability of the Company and the other Borrowers and the Subsidiary
Obligors taken as a whole to perform their obligations under the Loan
Documents in any material respect, or (c) the ability of the Lenders or the
Agent to enforce in any material respect this Agreement, the Obligations or
their rights with respect to the Collateral other than any such inability
resulting form the gross negligence or willful misconduct of any Lender or the
Agent.
"MAXIMUM KOREAN COMMITMENT" shall mean the maximum amount which the
---------------------------
Lenders have agreed to provide as Loans or Letters of Credit to Purina Korea,
Inc. under this Agreement. The initial Maximum Korean Commitment is
$15,000,000.
"MAXIMUM KOREAN WON COMMITMENT" shall mean the maximum amount which the
-------------------------------
Lenders have agreed to provide as Loans or Letters of Credit to Purina Korea,
Inc. in Korean Won under this Agreement. The Dollar Amount of the initial
Maximum Korean Won Commitment is $7,500,000.
"MOODY'S" means Moody's Investors Service, Inc.
-------
"MULTIEMPLOYER PLAN" means a "Multiemployer Plan" as defined in Section
-------------------
4001(a)(3) of ERISA which is, or within the immediately preceding six (6)
years was, contributed to by either the Company or any member of the
Controlled Group.
"NOTICE OF ASSIGNMENT" is defined in Section 12.3(B) hereof.
---------------------- ----------------
"OBLIGATIONS" means all Loans, advances, debts, liabilities, obligations,
-----------
covenants and duties owing by any of the Borrowers or Subsidiary Obligors to
the Agent, the Arranger, or the Lenders, the Issuing Lenders, any Affiliate of
any of the foregoing or any Indemnitee, of any kind or nature, present or
future, arising under this Agreement or any other Loan Document, whether or
not evidenced by any note, guaranty or other instrument, whether or not for
the payment of money, whether arising by reason of an extension of credit,
loan, guaranty, indemnification, or in any other manner, whether direct or
indirect (including those acquired by assignment), absolute or contingent, due
or to become due, now existing or hereafter arising and however acquired. The
term includes, without limitation, all interest, charges, expenses, fees,
attorneys' fees and disbursements, paralegals' fees (in each case whether or
not allowed), and any other sum chargeable to any of the Borrowers or
Subsidiary Obligors under this Agreement or any other Loan Document.
"OTHER TAXES" is defined in Section 2.10(E)(ii) hereof.
------------ --------------------
"PARTICIPANTS" is defined in Section 12.2(A) hereof.
------------ ----------------
"PAYMENT DATE" means the last Business Day of each March, June, September
------------
and December.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
----
thereto.
"PERMITTED ACQUISITION" is defined in Section 6.3(G) hereof.
---------------------- ---------------
"PERMITTED EXISTING CONTINGENT OBLIGATIONS" means the Contingent
--------------------------------------------
Obligations of the Borrowers and all other Subsidiaries of the Company
--
identified as such on Schedule 1.1.1 to this Agreement.
- ---------------
"PERMITTED EXISTING INDEBTEDNESS" means the Indebtedness of the Borrowers
-------------------------------
and all other Subsidiaries of the Company identified as such on Schedule 1.1.2
--------------
to this Agreement.
"PERMITTED EXISTING INVESTMENTS" means the Investments of the Borrowers
--------------------------------
and all other Subsidiaries of the Company identified as such on Schedule 1.1.3
--------------
to this Agreement.
"PERMITTED EXISTING LIENS" means the Liens on assets of the Borrowers or
-------------------------
all other Subsidiaries of the Company identified as such on Schedule 1.1.4 to
--------------
this Agreement.
"PERSON" means any natural person, corporation, firm, company, joint
------
venture, partnership, association, enterprise, trust or other entity or
organization, or any government, domestic or foreign, or political subdivision
or any agency, department or instrumentality thereof.
"PLAN" means an employee benefit plan defined in Section 3(3) of ERISA in
----
respect of which the Company or any member of the Controlled Group is, or
within the immediately preceding six (6) years was, an "employer" as defined
in Section 3(5) of ERISA.
"PLEDGE AGREEMENTS" means those certain Pledge Agreements pursuant to
------------------
which the Company pledges to the Agent for the benefit of the Holders of
Secured Obligations all of the Capital Stock of each of the Subsidiary
Borrowers and Subsidiary Obligors.
"PRIME RATE" shall mean the rate of interest per annum announced from
-----------
time to time by the Agent as its prime lending rate in effect at its principal
office in New York, New York; each change in the Prime Rate shall be effective
on the date such change is announced. The Prime Rate is a reference rate and
does not necessarily represent the lowest or best rate charged to any
customers. ABN AMRO Bank N.V. and the other Lenders may make commercial loans
or other loans at rates of interest at, above or below the Prime Rate.
"PRO RATA SHARE" means, with respect to any Lender, the percentage
----------------
obtained by dividing (A) such Lender's Commitment at such time (as adjusted
from time to time in accordance with the provisions of this Agreement) by (B)
the Aggregate Commitments at such time; provided, however, if all of the
-------- -------
Commitments are terminated pursuant to the terms of this Agreement, then "Pro
Rata Share" means the percentage obtained by dividing (x) the sum of all of
such Lender's Loans and L/C Obligations by (y) the aggregate amount of all
Loans and L/C Obligations.
"PURCHASERS" is defined in Section 12.3(A) hereof.
---------- ----------------
"RATE OPTION" means the applicable Eurodollar Rate or Base Rate.
------------
"REGULATION G" means Regulation G of the Board of Governors of the
-------------
Federal Reserve System as from time to time in effect and any successor or
other regulation or official interpretation of said Board of Governors
relating to the extension of credit by nonbank, nonbroker lenders for the
purpose of purchasing or carrying margin stock (as defined therein).
"REGULATION T" means Regulation T of the Board of Governors of the
-------------
Federal Reserve System as from time to time in effect and any successor or
other regulation or official interpretation of said Board of Governors
relating to the extension of credit by and to brokers and dealers of
securities for the purpose of purchasing or carrying margin stock (as defined
therein).
"REGULATION U" means Regulation U of the Board of Governors of the
-------------
Federal Reserve System as from time to time in effect and any successor or
other regulation or official interpretation of said Board of Governors
relating to the extension of credit by banks for the purpose of purchasing or
carrying Margin Stock applicable to member banks of the Federal Reserve
System.
"REGULATION X" means Regulation X of the Board of Governors of the
-------------
Federal Reserve System as from time to time in effect and any successor or
other regulation or official interpretation of said Board of Governors
relating to the extension of credit by foreign lenders for the purpose of
purchasing or carrying margin stock (as defined therein).
"REIMBURSEMENT OBLIGATION" is defined in Section 2.18 hereof.
------------------------- -------------
"RELEASE" means any release, spill, emission, leaking, pumping,
-------
injection, deposit, disposal, discharge, dispersal, leaching or migration of
---
Contaminants into the indoor or outdoor environment, including the movement of
Contaminants through or in the air, soil, surface water or groundwater.
"REPLACEMENT LENDER" is defined in Section 2.15 hereof.
------------------- -------------
"REPORTABLE EVENT" means a reportable event as defined in Section 4043 of
----------------
ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation waived the
requirement of Section 4043(a) of ERISA that it be notified within 30 days
after such event occurs; provided, however, that a failure to meet the minimum
-------- -------
funding standards of Section 412 of the Code and of Section 302 of ERISA shall
be a Reportable Event regardless of the issuance of any such waiver of the
notice requirement in accordance with either Section 4043(a) of ERISA or
Section 412(d) of the Code.
"REQUIRED LENDERS" means Lenders whose Pro Rata Shares, in the aggregate,
----------------
are at least sixty-six and two-thirds percent (66-2/3%), provided, however,
-------- -------
that, if any of the Lenders shall have failed to fund its Revolving Credit
Share of any Loan requested by any Borrower which such Lenders are obligated
to fund under the terms of this Agreement and any such failure has not been
cured, then for so long as such failure continues, "REQUIRED LENDERS" means
Lenders (excluding all Lenders whose failure to fund such Loans have not been
so cured) whose Pro Rata Shares represent at least sixty-six and two-thirds
percent (66-2/3%) of the aggregate Pro Rata Shares of such non-defaulting
Lenders; provided, further, however, that, if the Commitments have been
-------- ------- -------
terminated pursuant to the terms of this Agreement, "REQUIRED LENDERS" means
Lenders (without regard to such Lenders' performance of their respective
obligations hereunder) whose aggregate ratable shares (stated as a percentage)
of the aggregate outstanding principal balance of all Loans and L/C
Obligations are at least sixty-six and two-thirds percent (66-2/3%).
"REQUIREMENTS OF LAW" means, as to any Person, the charter and by-laws or
-------------------
other organizational or governing documents of such Person, and any law, rule
or regulation, or determination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is
subject including, without limitation, the Securities Act, the Securities
Exchange Act, Regulations G, T, U and X, ERISA, the Fair Labor Standards Act,
the Worker Adjustment and Retraining Notification Act, Americans with
Disabilities Act of 1990, and any certificate of occupancy, zoning ordinance,
building, environmental or land use requirement or Permit or environmental,
labor, employment, occupational safety or health law, rule or regulation,
including Environmental, Health or Safety Requirements of Law.
"RESERVE REQUIREMENT" means the maximum reserve requirement, as
--------------------
prescribed by the Board of Governors of the Federal Reserve System (or any
---
successor) with respect to "Eurodollar liabilities" or in respect of any other
category of liabilities which includes deposits by reference to which the
interest rate on Eurodollar Loans is determined or category of extensions of
credit or other assets which includes loans by a non-United States office of
any Lender to United States residents.
"RESET DATE" is defined in Section 1.2.
----------- ------------
"RESTRICTED JUNIOR PAYMENT" means (i) any dividend or other distribution,
-------------------------
direct or indirect, on account of any ownership, membership or other Equity
Interest in the Company now or hereafter outstanding, except a dividend
payable solely in additional interests of the same type, (ii) any redemption,
retirement, sinking fund or similar payment, purchase or other acquisition for
value, direct or indirect, of any ownership, membership or other Equity
Interest in the Company or any such interests or shares of any class of
Capital Stock of the Company now or hereafter outstanding, (iii) any payment
made to redeem, purchase, repurchase or retire, or to obtain the surrender of,
any outstanding options or other rights to acquire any ownership, membership
or other Equity Interests in the Company and (iv) any payment of a claim for
the rescission of the purchase or sale of, or for material damages arising
from the purchase or sale of any ownership, membership or other Equity
Interests in the Company or of a claim for reimbursement, indemnification or
contribution arising out of or related to any such claim for damages or
rescission.
"REVOLVING ADVANCE" means a borrowing hereunder consisting of the
------------------
aggregate amount of the several ratable Revolving Loans made by the Lenders to
-
any Borrower having Commitments to such Borrower of the same Type and, in the
case of Eurodollar Advances, denominated in the same currency and for the same
Interest Period.
"REVOLVING CREDIT AVAILABILITY" means, at any particular time, the amount
-----------------------------
by which the Aggregate Commitment at such time exceeds the Dollar Amount of
the Revolving Credit Obligations at such time.
"REVOLVING CREDIT OBLIGATIONS" means, at any particular time, the sum of
-----------------------------
(i) the outstanding principal Dollar Amount of the Revolving Loans at such
time, plus (ii) the L/C Obligations at such time.
----
"REVOLVING CREDIT SHARE" means, with respect to any Lender, the
------------------------
percentage obtained by dividing (A) such Lender's Commitment at such time by
---
(B) the Aggregate Commitment at such time.
"REVOLVING LOAN" is defined in Section 2.1.
--------------- ------------
"RISK-BASED CAPITAL GUIDELINES" is defined in Section 3.2 hereof.
------------------------------- ------------
"SECURED OBLIGATIONS" means, collectively, (i) the Obligations and (ii)
--------------------
all Hedging Obligations owing to one or more of the Lenders (or any agency or
Affiliate thereof) by any of the Borrowers or Subsidiary Obligors.
"S&P" means Standard & Poor's Ratings Group.
---
"SINGLE EMPLOYER PLAN" means a Plan maintained by the Company or any
----------------------
member of the Controlled Group for employees of the Company or any member of
the Controlled Group.
"SUBSIDIARY" of a Person means (i) any corporation more than 50% of the
----------
outstanding Capital Stock having ordinary voting power of which shall at the
time be owned or controlled, directly or indirectly, by such Person or by one
or more of its Subsidiaries or by such Person and one or more of its
Subsidiaries, or (ii) any company, partnership, association, joint venture or
similar business organization more than 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned or controlled.
Unless otherwise expressly provided, all references herein to a "Subsidiary"
shall mean a direct or indirect Subsidiary of the Company.
"SUBSIDIARY BORROWERS" means those Borrowers which are Subsidiaries of
---------------------
the Company.
"SUBSIDIARY OBLIGORS" means Purina Korea, Inc., a corporation organized
--------------------
under the laws of Korea, Industrias Purina S.A. de C.V., a company organized
under the laws of Mexico, Purina Colombiana S.A., a company organized under
the laws of Colombia, Agribrands Purina do Brasil, Ltda., a company organized
under the laws of Brazil, Purina Philippines, Inc., a corporation organized
under the laws of the Philippines, and Purina de Venezuela, C.A., a company
organized under the laws of Venezuela.
"TAXES" is defined in Section 2.10(E)(i) hereof.
----- -------------------
"TERMINATION DATE" means the earlier of (a) March 29, 1999, or any
-----------------
subsequent date to which the Termination Date may have been extended pursuant
to the terms of Section 2.24 or (b) the date of termination of the Commitments
------------
pursuant to Section 8.1.
------------
"TERMINATION EVENT" means (i) a Reportable Event with respect to any
------------------
Benefit Plan; (ii) the withdrawal of the Company or any member of the
Controlled Group from a Benefit Plan during a plan year in which the Company
or such Controlled Group member was a "substantial employer" as defined in
Section 4001(a)(2) of ERISA or the cessation of operations which results in
the termination of employment of twenty percent (20%) of Benefit Plan
participants who are employees of the Company or any member of the Controlled
Group; (iii) the imposition of an obligation on the Company or any member of
the Controlled Group under Section 4041 of ERISA to provide affected parties
written notice of intent to terminate a Benefit Plan in a distress termination
described in Section 4041(c) of ERISA; (iv) the institution by the PBGC of
proceedings to terminate a Benefit Plan; (v) any event or condition which
might constitute grounds under Section 4042 of ERISA for the termination of,
or the appointment of a trustee to administer, any Benefit Plan; or (vi) the
partial or complete withdrawal of the Company or any member of the Controlled
Group from a Multiemployer Plan.
"TOTAL DEBT" means the sum of all Indebtedness of the Company and its
-----------
Subsidiaries (including, without limitation and without duplication, standby
-------
letters of credit (whether on or off-balance sheet)) minus ordinary course
-----
liability for trade indebtedness (including reimbursement under commercial
letters of credit).
"TRANCHE A OBLIGATIONS" means the Obligations of the Borrowers other than
---------------------
Purina Korea, Inc.
"TRANCHE B OBLIGATIONS" means the Obligations of the Subsidiary Obligors.
---------------------
"TRANSFEREE" is defined in Section 12.5 hereof.
---------- -------------
"TYPE" means, with respect to any Advance, its nature as a Base Rate
----
Advance or a Eurodollar Advance or a Korean Eurodollar Advance or a Korean Won
Advance.
"UNMATURED DEFAULT" means an event which, but for the lapse of time or
------------------
the giving of notice, or both, would constitute a Default.
The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms. Any accounting terms used in
this Agreement which are not specifically defined herein shall have the
meanings customarily given them in accordance with United States generally
accepted accounting principles in existence as of the date hereof.
1.2 Currency Equivalents. Not later than 1:00 p.m., New York time or
---------------------
Seoul, Korea time, as applicable, on each Calculation Date, the Agent shall
(i) determine the Exchange Rate as of such Calculation Date with respect to
Korean Won and (ii) give notice thereof to the Company and the Lenders. The
Exchange Rates so determined shall become effective immediately with respect
to any new Loans being made or Letters of Credit being issued on any
Calculation Date and otherwise on the fifth Business Day immediately following
the relevant Calculation Date (a "RESET DATE"), shall remain effective until
the next succeeding Reset Date and shall during the period of their
effectiveness be employed in making any computation of currency equivalents
required to be made under this Agreement.
ARTICLE II: THE CREDITS
- ----------------------------
2.1 Revolving Loans to the Company and the Subsidiary Borrowers. Upon
-----------------------------------------------------------
the satisfaction of the conditions precedent set forth in Sections 4.1 and 4.2
------------ ---
hereof, from and including the date of this Agreement and prior to the
Termination Date, each Lender with a Commitment severally and not jointly
agrees, on the terms and conditions set forth in this Agreement, to make
revolving loans to the Company and/or the Subsidiary Borrowers from time to
time, in Dollars or, with respect to Purina Korea, Inc., Korean Won, in a
Dollar Amount, not to exceed such Lender's Revolving Credit Share of the
Dollar Amount of the Revolving Credit Availability at such time (each
individually, a "REVOLVING LOAN" and, collectively, the "REVOLVING LOANS");
provided, however, that no Lender shall be obligated to make any Revolving
------ -------
Loan hereunder to any Borrower unless the "Revolving Credit Obligations" owed
-
by such Borrower under and as defined under the Long Term Credit Agreement
shall be equal to the amounts set forth in the second proviso of the first
sentence of Section 2.1 of the Long Term Credit Agreement, provided that, with
--------
respect to Revolving Loans to Purina Korea, Inc. and denominated in Korean Won
and subject to the conditions precedent set forth in Sections 4.1 and 4.2
------------ ---
hereof, Purina Korea, Inc. may request Revolving Loans denominated in Korean
Won hereunder so long as the Dollar Amount of "Revolving Credit Obligations"
denominated in Korean Won under and as defined in the Long Term Credit
Agreement is equal to the "Maximum Korean Won Commitment" under and as defined
in the Long Term Credit Agreement; provided, further, however, at no time
-------- ------- -------
shall the Dollar Amount of the Revolving Credit Obligations in Korean Won
exceed the Maximum Korean Won Commitment other than as a result of currency
fluctuations and then only to the extent permitted in Section 2.2(B);
--------------
provided, further, however, at no time shall the amount of the Revolving
------- -------
Credit Obligations owed by any of the Borrowers pursuant to this Agreement
exceed the corresponding amounts listed below:
Agribrands International, Inc. $ 5,000,000
Agribrands Canada, Inc. $ 6,500,000
Purina Italia S.p.A. $ 4,000,000
Purina Espana, S.A. $ 2,500,000
Purina Hungaria Animal Feed
Production & Trading Company Ltd. $ 2,000,000
Purina Korea, Inc. $15,000,000
Each Revolving Advance under this Section 2.1 shall consist of Revolving Loans
-----------
made by each such Lender ratably in proportion to such Lender's respective
Revolving Credit Share. Subject to the terms of this Agreement, the Borrowers
may borrow, repay and reborrow at any time prior to the Termination Date.
Korean Won Advances and Korean Eurodollar Advances shall bear interest at the
rates prescribed in Section 2.4(c). On the Termination Date, the outstanding
--------------
principal balance of the Revolving Loans shall be paid in full by the
applicable Borrower and prior to the Termination Date prepayments of the
Revolving Loans shall be made if and to the extent required in Section 2.2(B).
--------------
2.2 Prepayments. (A) Optional Payments. Upon prior notice to the Agent
----------- -----------------
which notice shall be given not later than 11:00 a.m. (New York time) on the
date of payment, the Borrowers may from time to time repay or prepay, without
penalty or premium all or any part of outstanding Base Rate Advances. Subject
to payment of all amounts payable pursuant to Section 3.4 upon not less than
-----------
(x) five (5) Business Days' prior notice with respect to Advances to Purina
Korea, Inc. and (y) two (2) Business Day's prior notice with respect to all
other Advances, in each case to the Agent which notice shall be given not
later than 11:00 a.m. (New York time or Seoul, Korea time, as applicable), the
Borrowers may from time to time repay or prepay all or any part of the Korean
Eurodollar Advances or Korean Won Advances, or Eurodollar Advances,
respectively. Unless the aggregate outstanding principal balance of the
applicable Loans is to be prepaid in full, voluntary prepayments of the Loans
shall be in the same aggregate minimum amounts and integral multiples in
excess of such amounts as are required for borrowings of Loans of the same
Type and in the same currency as set forth in Section 2.5.
------------
(B) Mandatory Prepayments. (a) If at any time the Dollar Amount of the
---------------------
Revolving Credit Obligations is greater than 105% of the Aggregate Commitment,
the Borrowers shall within five (5) Business Days after receiving notice
thereof from the Agent make a mandatory prepayment (i) of the Obligations in
an amount equal to such excess and (ii) of the Korean Won Loans and/or L/C
Obligations denominated in Korean Won in an aggregate amount such that after
giving effect thereto the Dollar Amount of the sum of the Korean Won Loans and
L/C Obligations denominated in Korean Won is less than or equal to the Maximum
Korean Won Commitment.
(b) If at any time (x) the "Revolving Credit Obligations" owed by any
Borrower or Subsidiary Obligor under and as defined in the Long Term Credit
Agreement shall be less than the amounts set forth in either of (A) the second
proviso of the first sentence of Section 2.1 of the Long Term Credit Agreement
or (B) the first proviso of the first sentence of Section 2.16 of the Long
Term Credit Agreement, and (y) the Revolving Credit Obligations of such
Borrower or Subsidiary Obligor hereunder shall be greater than zero, the
applicable Borrower or Subsidiary Obligor shall not later than the last day of
the then current Interest Period with respect thereto make a mandatory
prepayment of the Obligations owed by it in an amount equal to the excess of
the amounts set forth in either of (A) the second proviso of the first
sentence of Section 2.1 of the Long Term Credit Agreement or (B) the first
proviso of the first sentence of Section 2.16 of the Long Term Credit
Agreement, as applicable, over the "Revolving Credit Obligations" of such
Borrower or Subsidiary Obligor under and as defined in the Long Term Credit
Agreement.
(c) If at any time (x) the "Maximum Korean Won Commitment" under and as
defined in the Long Term Credit Agreement is greater than the Dollar Amount of
"Revolving Credit Obligations" denominated in Korean Won under and as defined
in the Long Term Credit Agreement, and (y) the Revolving Credit Obligations
denominated in Korean Won hereunder shall be greater than zero, Purina Korea,
Inc. shall not later than the then current Interest Period with respect
thereto make a mandatory prepayment of the Obligations hereunder denominated
in Korean Won in an amount equal to the excess of the "Maximum Korea Won
Commitment" under and defined in the Long Term Credit Agreement over the
Dollar Amount of "Revolving Credit Obligations" denominated in Korean Won
under and as defined in the Long Term Credit Agreement.
2.3 Method of Borrowing. The Agent shall promptly notify each Lender
--------------------
having Commitments of each Revolving Advance on the Borrowing Date of each
Base Rate Advance, three (3) Business Days before the Borrowing Date of each
Eurodollar Advance, three (3) Business Days before the Borrowing Date of each
Korean Eurodollar Advance, and five (5) Business Days before the Borrowing
Date for each Korean Won Advance, and, not later than 2:00 p.m. (New York time
or Seoul, Korea time, as applicable) on each Borrowing Date, each Lender
having Revolving Credit Commitments shall make available its Revolving Loan or
Loans, in funds immediately available in New York, New York to the Agent at
its address specified pursuant to Article XIII hereof unless the Agent has
------------
notified the Lenders that such Loan is to be made available to Purina Korea,
Inc. at the Agent's office in Seoul, Korea, in which case each Lender shall
make available its Revolving Loan or Loans, in funds immediately available to
the Agent at its office in Seoul, Korea not later than 2:00 p.m. at the
Agent's office in Seoul, Korea in Korean Won or Dollars, as requested. The
Agent will promptly make the funds so received from the Lenders available to
the applicable Borrower.
2.4 Method of Selecting Types and Interest Periods for Advances;
------------------------------------------------------------------
Determination of Applicable Margins, Interest on Advances to Purina Korea,
-----------------------------------------------------------------------
Inc. The Advances (other than Korean Won Advances or Korean Eurodollar
Advances) may be Base Rate Advances or Eurodollar Advances, or a combination
thereof, selected by the applicable Borrower in accordance with this Article
-------
II. Advances to Purina Korea, Inc., shall bear interest as prescribed in
-
Section 2.4(c). The applicable Borrower may select, in accordance with this
-
Article II, Rate Options and Interest Periods applicable to portions of the
----------
Revolving Loans.
-
(a) Method of Selecting Types and Interest Periods for Advances. The
------------------------------------------------------------
applicable Borrower shall select the Type of Advance and, in the case of each
Eurodollar Advance or Korean Eurodollar Advance, the Interest Period
applicable to each Advance from time to time. The applicable Borrower shall
give the Agent irrevocable notice (a "BORROWING NOTICE") not later than 11:00
a.m., New York time (or Seoul time for Korean Won Advances or Korean
Eurodollar Advance) (i) on the Borrowing Date of each Base Rate Advance; (ii)
three (3) Business Days before the Borrowing Date for each Eurodollar Advance;
(iii) three (3) Business Days before the Borrowing Date for each Korean
Eurodollar Advance; and (iv) five (5) Business Days before the Borrowing Date
for each Korean Won Advance, specifying: (i) the Borrowing Date (which shall
be a Business Day) of such Advance; (ii) the aggregate amount of such Advance;
(iii) the Type of Advance selected, as applicable; and (iv) in the case of
each Eurodollar Advance or Korean Eurodollar Advance, the Interest Period.
There shall be (x) no more than twenty (20) Interest Periods in effect with
respect to all of the Revolving Loans at any time, and (y) with respect to any
Borrower individually, no more than four (4) Interest Periods in effect with
respect to all of the Revolving Loans made to such Borrower at any time, in
each case, with Interest Periods for the same term but in different currencies
or to different Borrowers being treated as separate Interest Periods. Each
Base Rate Advance shall bear interest from and including the date of the
making of such Advance to (but not including) the date of repayment thereof at
the Base Rate, changing when and as such Base Rate changes. Each Eurodollar
Advance, Korean Eurodollar Advance and Korean Won Advance shall bear interest
from and including the first day of the Interest Period applicable thereto to
(but not including) the last day of such Interest Period at the interest rate
determined as applicable to such Advance. All Obligations (other than
Advances) shall bear interest from and including the date such amount is
payable under the terms of this Agreement or the other Loan Documents to (but
not including) the date of repayment thereof at the Base Rate, changing when
and as such Base Rate changes. Changes in the rate of interest on that
portion of any Advance maintained as a Base Rate Loan or such other
Obligations will take effect simultaneously with each change in the applicable
Base Rate.
(b) Determination of Applicable Margins, Applicable Letter of Credit Fee
--------------------------------------------------------------------
and Applicable Facility Fee.
- ------------------------------
(i) Definitions. As used in this Section 2.4(b) and in this Agreement,
----------- --------------
the following terms shall have the following meanings:
"Applicable Margins", "Applicable Facility Fee" and "Applicable Letter of
------------------ ----------------------- --------------------
Credit Fee" shall mean the Applicable Base Rate Margins and/or Applicable
- -----------
Eurodollar Margins, with respect to Loans and the Applicable Facility Fee
- ----
and/or Applicable Letter of Credit Fee, with respect to fees payable as the
- ----
case may be. The Applicable Margins shall be determined, in accordance with
- --
the provisions of this Section 2.4(b), by reference to the following:
- - ---------------
<TABLE>
<CAPTION>
EBITDA APPLICABLE APPLICABLE APPLICABLE LETTER OF APPLICABLE APPLICABLE
CONTRIBUTION BASE RATE EURODOLLAR MARGIN CREDIT FEE FOR FACILITY FEE FOR FACILITY FEE FOR
RATIO MARGIN FOR FOR TRANCHE A LETTERS OF CREDIT COMMITMENTS COMMITMENTS
TRANCHE A OBLIGATIONS AND ISSUED FOR THE WITH RESPECT TO WITH RESPECT TO
OBLIGATIONS APPLICABLE LETTER OF ACCOUNT OF TRANCHE A TRANCHE B
CREDIT FEE FOR LETTERS SUBSIDIARY OBLIGORS OBLIGATIONS OBLIGATIONS
OF CREDIT ISSUED FOR (OTHER THAN PURINA
THE ACCOUNT OF KOREA, INC.)
BORROWERS (OTHER
THAN PURINA KOREA,
INC.)
<S> <C> <C> <C> <C> <C> <C>
LEVEL I GREATER THAN
1.50 TO 1.00 0.25% 1.50% 1.75% 0.50% Z 1.75%
LEVEL II LESS THAN OR
EQUAL TO 1.50 TO
1.00 AND GREATER 0% 1.00% 1.25% 0.375% 1.25%
THAN OR EQUAL TO
1.00 TO 1.00
LEVEL III LESS THAN 1.00
TO 1.0
0% 0.75% 1.00% 0.25% 1.00%
LEVEL IV COMPANY'S
RATING EQUAL TO
OR BETTER THAN 0% 0.50% 0.75% 0.175% 0.75%
BBB- FROM S&P
OR BAA3 FROM
MOODY'S
</TABLE>
(ii) Determination of Applicable Margins, Applicable Letter of Credit
-----------------------------------------------------------------
Fee and Applicable Facility Fee.
---------------------------------
(A) The Applicable Margins in respect of any Loan, the Applicable Letter
of Credit Fee payable under Section 2.10(C) and the Applicable Facility Fee
---------------
payable under Section 2.10(c) shall be determined by reference to the table
----------------
set forth in clause (i) above, as applicable, on the basis of the EBITDA
-----------
Contribution Ratio determined by reference to the most recent financial
statements delivered pursuant to Section 6.1(A)(i) or 6.1(A)(ii); provided,
----------------- ---------- --------
however, for the period from the Closing Date until August 31, 1998, the
-----
Applicable Margins, Applicable Letter of Credit Fee, Applicable Facility Fee
---
shall be at Level II; provided, further that Level IV shall be applicable only
-------- -------
in the event that the Company shall have a rating of equal to or better than
BBB- from S&P or Baa3 from Moody's and, provided, further, however, that the
-------- ------- -------
Borrowers shall not be eligible for any reduction in the pricing prescribed in
this Section 2.4 in the event that as of the date of determination, the
------------
Company's Consolidated EBITDA for the most recently completed four fiscal
-
quarters (or, prior to March 31, 1999, the period from the Closing Date to the
end of the most recently completed quarter) shall be less than 80% of the
Company's forecasted Consolidated EBITDA for such period as set forth on
Exhibit G hereto.
-----
(B) Upon receipt of the financial statements delivered pursuant to
Section 6.1(A)(i) or Section 6.1(A)(ii), as applicable, the Applicable Margins
------------ ------------------
for all outstanding Loans, the Applicable Letter of Credit Fee and Applicable
Facility Fee shall be adjusted, such adjustment being effective on the first
(1st) Business Day after receipt of such financial statements and the
Compliance Certificate to be delivered in connection therewith; provided,
--------
however, if the Borrowers shall not have timely delivered such financial
---
statements in accordance with Section 6.1(A)(i) or Section 6.1(A)(ii), as
- ------------------ ------------------
applicable, beginning with the date upon which such financial statements
should have been delivered and continuing until such financial statements are
delivered, it shall be assumed for purposes of determining the Applicable
Margins, the Applicable Facility Fee and the Applicable Letter of Credit Fee
that the EBITDA Contribution Ratio was greater than 1.50 to 1.0.
(c) Interest on Advances to Purina Korea, Inc. Advances to Purina
----------------------------------------------
Korea, Inc. in Korean Won shall bear interest in the per annum rate equal to
the Korean CD Rate minus 6.00% per annum. Advances to Purina Korea, Inc. in
-----
Dollars shall bear interest at a rate per annum equal to the Korean Eurodollar
Rate.
2.5 Minimum Amount of Each Advance. Each Eurodollar Advance or Korean
------------------------------
Eurodollar Advance shall be in the minimum amount of $1,000,000 (and in
multiples of $100,000 if in excess thereof). Each Base Rate Advance shall be
in the minimum amount of $1,000,000 (and in multiples of $100,000 if in excess
thereof), provided, however, that any Base Rate Advance may be in the amount
-------- -------
of the unused Aggregate Commitment. Each Korean Won Advance shall be in the
minimum amount of 1,000,000,000 Won (and in multiples of 500,000,000 Won if in
excess thereof).
2.6 Method of Selecting Types and Interest Periods for Conversion and
------------------------------------------------------------------
Continuation of Advances.
------------------------
(A) Right to Convert. The Borrowers may elect from time to time,
------------------
subject to the provisions of Section 2.3, Section 2.4, and this Section 2.6 to
----------- ----------- -----------
convert all or any part of a Loan of any Type into any other Type or Types of
Loans; provided that any conversion of any Eurodollar Advance or Korean
--------
Eurodollar Advance shall be made on, and only on, the last day of the Interest
Period applicable thereto.
(B) Automatic Conversion and Continuation. Base Rate Loans shall
----------------------------------------
continue as Base Rate Loans unless and until such Base Rate Loans are
converted into Eurodollar Loans. Eurodollar Loans shall continue as
Eurodollar Loans until the end of the then applicable Interest Period
therefor, at which time such Eurodollar Loans shall be automatically converted
into Base Rate Loans unless the applicable Borrower shall have given the Agent
requesting that, at the end of such Interest Period, such Eurodollar Loans
continue as a Eurodollar Loan. Korean Eurodollar Advances shall continue as
Korean Eurodollar Advances until repaid and Korean Won Advances shall continue
as Korean Won Advances until repaid.
(C) No Conversion Post-Default or Post-Unmatured Default.
---------------------------------------------------------
Notwithstanding anything to the contrary contained in Section 2.6(A) or
--- --------------
Section 2.6(B), no Loan may be converted into or continued as a Eurodollar
---------
Loan except with the consent of the Required Lenders when any Default or
Unmatured Default has occurred and is continuing.
(D) Conversion/Continuation Notice. The Borrower shall give the Agent
------------------------------
irrevocable notice (a "CONVERSION/CONTINUATION NOTICE") of each conversion of
a Base Rate Loan into a Eurodollar Loan or continuation of a Eurodollar Loan
not later than 11:00 a.m. (New York time) three Business Days before the
proposed date of such conversion or continuation, specifying: (1) the
requested date (which shall be a Business Day) of such conversion or
continuation; (2) the amount and Type of the Loan to be converted or
continued; and (3) the amounts of Eurodollar Loan(s) into which such Loan is
to be converted or continued and the duration of the Interest Periods
applicable thereto.
2.7 Default Rate. After the occurrence and during the continuance of a
------------
Default, the interest rate(s) applicable to the Obligations and the letter of
credit fee payable under Section 2.20 with respect to Letters of Credit shall
------------
be increased by two percent (2.0%) per annum above the Base Rate, Eurodollar
Rate, Korean CD Rate, Korean Eurodollar Rate or Applicable Letter of Credit
Fee, as applicable.
2.8 Method of Payment. All payments of principal, interest, and fees
-------------------
hereunder shall be made, without setoff, deduction or counterclaim, to the
Agent (i) at the Agent's office in New York, New York (or, in the case of
Advances to Purina Korea, Inc., Seoul, Korea) in immediately available funds
or at any other Lending Installation of the Agent specified in writing by 9:00
a.m. (New York time) on the day before the date when due by the Agent to the
Company, by 12:00 noon (New York time) with respect to Advances to Borrowers
other than Purina Korea, Inc. and 12:00 noon (Seoul time) with respect to
Advances to Purina Korea, Inc. on the date when due and shall be made ratably
among the applicable Lenders with respect to Revolving Advances in proportion
to their Revolving Credit Shares (unless such amount is not to be shared
ratably in accordance with the other terms hereof). Each Advance shall be
repaid or prepaid in the currency in which it was made in the amount borrowed
and interest payable thereon shall be paid in such currency. Each payment
delivered to the Agent for the account of any Lender shall be delivered
promptly by the Agent to such Lender in the same type of funds which the Agent
received at its address specified pursuant to Article XIII or at any Lending
------------
Installation specified in a notice received by the Agent from such Lender by
9:00 a.m. (New York time) on the Business Day prior to the date such payment
is to be made. The Borrowers authorize the Agent to charge any account of any
Borrower maintained with the Agent, as applicable, for each payment of
principal, interest and fees as it becomes due hereunder if not paid when due.
Notwithstanding the foregoing provisions of this Section, if, after the making
of any Advance in Korean Won, currency control or exchange regulations are
imposed in the Republic of Korea with the result that different types of such
currency (the "NEW CURRENCY") are introduced and the type of currency in which
the Advance was made (the "ORIGINAL CURRENCY") no longer exists or Purina
Korea, Inc. is not able to make payment to the Agent for the account of the
applicable Lenders in such Original Currency, then all payments to be made by
Purina Korea, Inc. hereunder in such Original Currency shall be made in such
amount and such type of the New Currency or Dollars as shall be equivalent to
the amount of such payment otherwise due hereunder in the Original Currency as
determined as of the date of repayment, it being the intention of the parties
hereto that the Borrowers take all risks of the imposition of any such
currency control or exchange regulations.
2.9 Evidence of Debt; Telephonic Notices.
----------------------------------------
(a) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrowers to such
Lender resulting from each Loan made by such Lender, including the amounts of
principal and interest payable and paid to such Lender from time to time
hereunder.
(b) The Agent shall maintain accounts in which it shall record (i) the
amount of each Loan made hereunder, the Type thereof and the Interest Period,
if any, applicable thereto, (ii) the amount of any principal or interest due
and payable or to become due and payable from the Borrowers to each Lender
hereunder and (iii) the amount of any sum received by the Agent hereunder for
the account of the Lenders and each Lender's share thereof.
(c) The entries made in the accounts maintained pursuant to subsections
-----------
(a) or (b) of this Section shall be prima facie evidence of the existence and
- --- --- ----- -----
amounts of the obligations recorded therein; provided that the failure of any
--------
Lender or the Agent to maintain such accounts or any error therein shall not
in any manner affect the obligation of any Borrower to repay the Loans in
accordance with the terms of this Agreement.
(d) Any Lender may request that the Revolving Loans made by it each be
evidenced by a promissory note. In such event, each Borrower shall prepare,
execute and deliver to such Lender a promissory note for Revolving Loans
payable to the order of such Lender (or, if requested by such Lender, to such
Lender and its registered assigns) and in a form approved by the Agent and
consistent with the terms of this Agreement. Thereafter, the Loans evidenced
by such promissory notes and interest thereon shall at all times (including
after assignment pursuant to Section 12.3) be represented by one or more
-------------
promissory notes in such form payable to the order of the payee named therein
(or, if such promissory note is a registered note, to such payee and its
registered assigns).
(e) Each Borrower authorizes the Lenders and the Agent to extend,
convert or continue Advances, effect selections of Types of Advances and to
transfer funds based on telephonic notices made by any person or persons the
Agent or any Lender in good faith believes to be an Authorized Officer acting
on behalf of any Borrower. Each Borrower agrees to deliver promptly to the
Agent a written confirmation of each telephonic notice signed by an Authorized
Officer. If the written confirmation differs in any material respect from the
action taken by the Agent and the Lenders, the records of the Agent and the
Lenders shall govern absent manifest error. In case of disagreement
concerning such notices, if the Agent has recorded telephonic borrowing
notices, such recordings will be made available to the Company.
2.10 Promise to Pay; Interest and Fees; Interest Payment Dates; Interest
-------------------------------------------------------------------
and Fee Basis; Taxes; Loan and Control Accounts.
- ------------------------------------------------------
(A) Promise to Pay. Each of the Borrowers unconditionally promises to
--------------
pay when due without setoff, deduction or counterclaim the principal amount of
each Loan made to it and all other Obligations incurred by it, and to pay all
unpaid interest accrued thereon, in accordance with the terms of this
Agreement, it being understood and agreed that each Subsidiary Borrower and
Subsidiary Obligor shall be obligated to repay only the Loans made to it and
pay the other Obligations incurred by it and certain other Loans made and
Obligations incurred by other Subsidiary Borrowers and Subsidiary Obligors.
Subject to the foregoing, the Borrowers and Subsidiary Obligors agree that
they will pay the Tranche A Obligations on or before the Termination Date and
the Tranche B Obligations on or before the date on which the Aggregate
Commitment with respect to Tranche B Obligations shall expire.
(B) Interest Payment Dates. Interest accrued on each Base Rate Loan
------------------------
shall be payable on each Payment Date, commencing with the first such date to
occur after the date hereof, on any date on which the Base Rate Loan is
prepaid, whether due to acceleration or otherwise, and at maturity (whether by
acceleration or otherwise). Interest accrued on each Eurodollar Loan or
Korean Eurodollar Loan or Korean Won Loan shall be payable on the last day of
its applicable Interest Period, on any date on which the Eurodollar Loan or
Korean Eurodollar Loan is prepaid, whether by acceleration or otherwise, and
at maturity; provided, interest accrued on each Eurodollar Loan or Korean
--------
Eurodollar Loan having an Interest Period longer than three months shall also
be payable on the last day of each three-month interval during such Interest
Period. Interest accrued on the principal balance of all other Obligations
shall be payable in arrears (i) upon repayment thereof in full or in part,
(ii) if not theretofore paid in full, at the time such other Obligation
becomes due and payable (whether by acceleration or otherwise) and (iii) if
not theretofore paid in full, on demand, commencing on the first such day
following the date such Obligation became payable pursuant to the terms of
this Agreement or the other Loan Documents.
(C) Fees. (i) The Company shall pay or cause the appropriate
----
Subsidiary to pay to the Agent, for the account of the Lenders in accordance
with their Pro Rata Shares, a facility fee accruing at the rate of the
Applicable Facility Fee per annum from and after the Closing Date until the
Termination Date on the sum of the Aggregate Commitment in effect from time to
time minus the Maximum Korean Won Commitment. All such facility fees payable
under this clause (C) shall be payable quarterly in arrears on each Payment
-----------
Date commencing June 30, 1998 and on the Termination Date. In addition, the
Company shall pay to the Agent, for the account of the Lenders in accordance
with their Pro Rata Shares, a Korean facility fee accruing at the rate of
3.00% per annum payable on the Maximum Korean Won Commitment from and after
the Closing Date until the Termination Date, payable quarterly in arrears on
each Payment Date commencing June 30, 1998 and on the Termination Date.
(ii) The Company agrees to pay or cause the appropriate Subsidiary to
pay to the Agent the fees set forth in the letter agreement between the Agent
and the Company dated February 25, 1998.
(D) Interest and Fee Basis. Interest on Eurodollar Loans, Korean
-------------------------
Eurodollar Loans and Korean Won Loans and fees shall be calculated for actual
days elapsed on the basis of a 360-day year. Interest on Base Rate Loans
shall be calculated for actual days elapsed on the basis of a 365/366-day
year. Interest shall be payable for the day an Obligation is incurred but not
for the day of any payment on the amount paid if payment is received prior to
12:00 noon (New York time) with respect to Advances (other than Advances to
Purina Korea, Inc.) and 12:00 noon (Seoul time) with respect to Advances to
Purina Korea, Inc. If any payment of principal of or interest on a Loan or
any payment of any other Obligations shall become due on a day which is not a
Business Day, such payment shall be made on the next succeeding Business Day
and, in the case of a principal payment, such extension of time shall be
included in computing interest in connection with such payment; provided,
--------
however, if such extension of payment would cause payment of principal or
---
interest on any Eurodollar Loan or Korean Eurodollar Loan to be made in the
next following calendar month, such payment shall be made on the immediately
preceding Business Day.
For purposes of the Interest Act (Canada): (i) whenever any interest
under this Agreement is calculated using a rate based on a year of 360 days,
such rate determined pursuant to such calculation, when expressed as an annual
rate, is equivalent to (x) the applicable rate based on a year of 360 days,
(y) multiplied by the actual number of days in the calendar year in which the
period for which such interest is calculated ends, and (z) divided by 360;
(ii) the principle of deemed reinvestment of interest shall not apply to any
interest calculation under this Agreement; and (iii) the rates of interest
stipulated in this Agreement are intended to be nominal rates and not
effective rates or yields.
Notwithstanding any provision to the contrary contained in this
Agreement, in no event shall the aggregate "interest" (as defined in Section
347 of the Criminal Code (Canada), as the same may be amended, replaced or
re-enacted from time to time) payable under this Agreement exceed the maximum
amount of interest on the "credit advanced" (as defined in that section) under
this Agreement lawfully permitted under that section and, if any payment,
collection or demand pursuant to this Agreement in respect of "interest" (as
defined in that section) is determined to be contrary to the provisions of
that section, such payment, collection or demand shall be deemed to have been
made by mutual mistake of the relevant Borrower and the Agent and the Lenders
and the amount of such payment or collection shall be refunded to the relevant
Borrower. For purposes of this Agreement, the effective annual rate of
interest shall be determined in accordance with generally accepted actuarial
practices and principles over the term the Revolving Credit Loans are
outstanding on the basis of annual compounding of the lawfully permitted rate
of interest and, in the event of any dispute, a certificate of a Fellow of the
Canadian Institute of Actuaries appointed by the Agent will be conclusive for
the purposes of such determination.
(E) Taxes.
-----
(i) Any and all payments by any of the Borrowers or Subsidiary Obligors
hereunder shall be made free and clear of and without deduction for any and
all present or future taxes, levies, imposts, deductions, charges or
withholdings or any liabilities with respect thereto including those arising
after the date hereof as a result of the adoption of or any change in any law,
treaty, rule, regulation, guideline or determination of a Governmental
Authority or any change in the interpretation or application thereof by a
Governmental Authority but excluding, in the case of each Lender and the
Agent, such taxes (including income taxes, franchise taxes and branch profit
taxes) as are imposed on or measured by such Lender's or Agent's, as the case
may be, income by the United States of America or any Governmental Authority
of the jurisdiction under the laws of which such Lender or Agent, as the case
may be, is organized or incorporated (all such non-excluded taxes, levies,
imposts, deductions, charges, withholdings, and liabilities which the Agent or
a Lender determines to be applicable to this Agreement, the other Loan
Documents, the Commitments, the Loans or the Letters of Credit being
hereinafter referred to as "TAXES"). Subject to Section 2.10(E)(vii), if any
---------------------
of the Borrowers or Subsidiary Obligors shall be required by law to deduct any
Taxes from or in respect of any sum payable hereunder or under the other Loan
Documents to any Lender or the Agent, (i) the sum payable shall be increased
as may be necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 2.10(E))
---------------
such Lender or Agent (as the case may be) receives an amount equal to the sum
it would have received had no such deductions been made, (ii) such Borrower or
Subsidiary Obligor shall make such deductions, and (iii) such Borrower or
Subsidiary Obligor shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law. If a
withholding tax of the United States of America or any other Governmental
Authority shall be or become applicable (y) after the date of this Agreement,
to such payments by any of the Borrowers made to the Lending Installation or
any other office that a Lender may claim as its Lending Installation, or (z)
after such Lender's selection and designation of any other Lending
Installation, to such payments made to such other Lending Installation, such
Lender shall use reasonable efforts to make, fund and maintain its Loans and
issue Letters of Credit through another Lending Installation of such Lender in
another jurisdiction so as to reduce the Borrowers' liability hereunder, if
the making, funding or maintenance of such Loans and the issuance of such
Letters of Credit through such other Lending Installation of such Lender does
not, in the good faith judgment of such Lender, otherwise adversely affect
such Loans, or obligations under the Commitments or such Lender. With respect
to such deduction or withholding for or on account of any Taxes and to confirm
that all such Taxes have been paid to the appropriate Governmental
Authorities, the Company shall promptly (and in any event not later than
thirty (30) days after receipt) furnish to each Lender and the Agent such
certificates, receipts and other documents as may be required (in the judgment
of such Lender or the Agent) to establish any tax credit to which such Lender
or the Agent may be entitled. A payment may be made by the Company or by the
Subsidiary that is the Borrower with respect to the Loan that gives rise to
such payment.
(ii) In addition, the Company agrees to pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges, or
similar levies that arise from any payment made hereunder, from the issuance
of Letters of Credit hereunder, or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement, the other Loan
Documents, the Commitments, the Loans or the Letters of Credit (hereinafter
referred to as "OTHER TAXES").
(iii) Subject to Section 2.10(E)(vii), the Company indemnifies each
---------------------
Lender and the Agent for the full amount of Taxes and Other Taxes (including,
without limitation, any Taxes or Other Taxes imposed by any Governmental
Authority on amounts payable under this Section 2.10(E)) paid by such Lender
---------------
or the Agent (as the case may be) and any liability (including penalties,
interest, and expenses) arising therefrom or with respect thereto, whether or
not such Taxes or Other Taxes were correctly or legally asserted. This
indem-nification shall be made within thirty (30) days after the date such
Lender or the Agent (as the case may be) makes written demand therefor. A
certificate as to any additional amount payable to any Lender or the Agent
under this Section 2.10(E) submitted to the Company and the Agent by such
----------------
Lender or the Agent shall show in reasonable detail the amount payable and the
calculations used to determine such amount and shall, absent manifest error,
be final, conclusive and binding upon all parties hereto.
(iv) Within thirty (30) days after the date of any payment of Taxes or
Other Taxes by any Borrower or Subsidiary Obligor, such Borrower or Subsidiary
Obligor shall furnish to the Agent the original or a certified copy of a
receipt evidencing payment thereof.
(v) Without prejudice to the survival of any other agreement of any of
the Borrowers or Subsidiary Obligor hereunder, the agreements and obligations
of the Borrowers and Subsidiary Obligor contained in this Section 2.10(E)
---------------
shall survive the payment in full of principal and interest hereunder, the
termination of the Letters of Credit and the termination of this Agreement.
(vi) Without limiting the obligations of the Borrowers and Subsidiary
Obligor under this Section 2.10(E) (except as expressly provided by subsection
--------------- ----------
(vii) below), (A) each Lender that has a Commitment that is not created or
- -----
organized under the laws of the United States of America or a political
- ---
subdivision thereof shall deliver to the Company and the Agent on or before
- ---
the Closing Date, or, if later, the date on which such Lender becomes a Lender
- --
pursuant to Section 12.3 hereof, a true and accurate certificate executed in
------------
duplicate by a duly authorized officer of such Lender, in a form satisfactory
to the Company and the Agent, to the effect that such Lender is capable under
the provisions of an applicable tax treaty concluded by the United States of
America (in which case the certificate shall be accompanied by two executed
copies of Form 1001 of the IRS) or under Section 1442 of the Code (in which
case the certificate shall be accompanied by two copies of Form 4224 of the
IRS) of receiving payments of interest and fees hereunder without deduction or
withholding of United States federal income tax and (B) each Lender shall
deliver to the Company and the Agent on or before the Closing Date, or, if
later, the date on which such Lender becomes a Lender, a true and accurate
certificate executed in duplicate by a duly authorized officer of such Lender,
in a form satisfactory to the Company and the Agent, to the effect that such
Lender is capable under the provisions of an applicable tax treaty or under
the provisions of applicable law of receiving payments of interest with
respect to the Advances to Purina Korea, Inc. hereunder without deduction or
withholding of income tax. Each such Lender further agrees to deliver to the
Company and the Agent, from time to time a true and accurate certificate
executed in duplicate by a duly authorized officer of such Lender
substantially in a form satisfactory to the Company and the Agent, before or
promptly upon the occurrence of any event requiring a change in the most
recent certificate previously delivered by it pursuant to this Section
-------
2.10(E)(vi). Further, each Lender which delivers a certificate accompanied by
----
Form 1001 of the IRS covenants and agrees to deliver to the Company and the
Agent within fifteen (15) days prior to January 1, 1999, and every third (3rd)
anniversary of such date thereafter, on which this Agreement is still in
effect, another such certificate and two accurate and complete original signed
copies of Form 1001 (or any successor form or forms required under the Code or
the applicable regulations promulgated thereunder), and each Lender that
delivers a certificate accompanied by Form 4224 of the IRS covenants and
agrees to deliver to the Company and the Agent within fifteen (15) days prior
to the beginning of each subsequent taxable year of such Lender during which
this Agreement is still in effect, another such certificate and two accurate
and complete original signed copies of IRS Form 4224 (or any successor form or
forms required under the Code or the applicable regulations promulgated
thereunder).
Each such certificate shall certify pursuant to this Section 2.10(E)(vi)
-------------------
as to one of the following:
(a) that such Lender is capable of receiving payments of interest
hereunder without deduction or withholding of United States of America federal
income tax;
(b) that such Lender is not capable of receiving payments of interest
hereunder without deduction or withholding of the applicable income tax as
specified therein but is capable of recovering the full amount of any such
deduction or withholding from a source other than the Borrowers and the
Subsidiary Obligor and will not seek any such recovery from the Borrowers or
the Subsidiary Obligor; or
(c) that, as a result of the adoption of or any change in any law,
treaty, rule, regulation, guideline or determination of a Governmental
Authority or any change in the interpretation or application thereof by a
Governmental Authority after the date such Lender became a party hereto, such
Lender is not capable of receiving payments of interest hereunder without
deduction or withholding of applicable income tax as specified therein and
that it is not capable of recovering the full amount of the same from a source
other than the Borrowers and the Subsidiary Obligors.
Each Lender shall promptly furnish to the Company and the Agent such
additional documents as may be reasonably required by the Company or the Agent
to establish any exemption from or reduction of any Taxes or Other Taxes
required to be deducted or withheld and which may be obtained without undue
expense to such Lender.
A Borrower shall provide such information and take such action as a
Lender may reasonably request without undue expense to such Borrower to enable
the Lender to comply with the foregoing provisions of this subsection (vi).
---------------
(vii) None of the Borrowers shall be required to pay any additional
amounts under subsection (i) above or indemnification under subsection (iii)
-------------- ----------------
above to the extent that the obligation to pay such additional amounts or
indemnification would not have arisen but for: (a) a failure by the Lender or
Agent to comply with the provisions of subsection (vi) above; or (b) the
---------------
certifications referred to in subsection (vi) above not being true.
----------------
(viii) Each Lender and the Agent agree that if it shall become aware
that it is entitled to receive a refund or a tax credit in respect of Taxes or
Other Taxes as to which it has been indemnified by the Company or any other
Borrower pursuant to this Section 2.10(E), it shall promptly notify the
----------------
Company of the availability of such refund or tax credit and at the request of
the Company will apply for such refund or take the benefit of such tax credit;
provided, however the failure to provide such notice shall not relieve the
Company or any other Borrower of any of their Obligations hereunder. Upon
receipt of such refund or the benefit of such tax credit, the Lender or Agent
agrees to pay such refund or an amount equal to the benefit of such tax credit
to the applicable Borrower along with any interest actually received from the
taxing authority, net of all out-of-pocket expenses of such Lender or Agent
incurred with respect to such refund or tax credit.
(F) Loan Account. Each Lender shall maintain in accordance with its
-------------
usual practice an account or accounts (a "LOAN ACCOUNT") evidencing the
Obligations of each of the Borrowers to such Lender owing to such Lender from
time to time, including the amount of principal and interest payable paid to
such Lender from time to time hereunder.
(G) Entries Binding. The entries made in each Loan Account shall be
----------------
conclusive and binding for all purposes, absent manifest error, unless the
Company objects to information contained in the Loan Account within thirty
(30) days of the Company's receipt of such information.
2.11 Notification of Advances, Interest Rates, Prepayments and Aggregate
-------------------------------------------------------------------
Commitment Reductions. Promptly after receipt thereof, the Agent will notify
- ----------------------
each applicable Lender of the contents of each Aggregate Commitment reduction
notice, Borrowing Notice for Revolving Loans, Conversion/Continuation Notice
with respect to Revolving Loans, and repayment notice received by it
hereunder. The Agent will notify each applicable Lender of the interest rate
applicable to each Eurodollar Loan, Korean Eurodollar Loan and Korean Won Loan
promptly upon determination of such interest rate, and the Agent will give
each applicable Lender prompt notice of each change in the Alternate Base
Rate.
2.12 Lending Installations. Each Lender may book its Loans at any
----------------------
Lending Installation selected by such Lender and may change its Lending
Installation from time to time. All terms of this Agreement shall apply to
any such Lending Installation. Each Lender may, by written or facsimile
notice to the Agent and the Borrowers, designate a Lending Installation
through which Loans will be made by it and for whose account Loan payments are
to be made.
2.13 Non-Receipt of Funds by the Agent. Unless the applicable Borrower
---------------------------------
or a Lender, as the case may be, notifies the Agent prior to the date on which
it is scheduled to make payment to the Agent of (i) in the case of a Lender,
the proceeds of a Loan or (ii) in the case of a Borrower, a payment of
principal, interest or fees to the Agent for the account of the Lenders for
the account of the applicable Lenders, that it does not intend to make such
payment, the Agent may assume that such payment has been made. The Agent may,
but shall not be obligated to, make the amount of such payment available to
the intended recipient in reliance upon such assumption. If such Lender or
Borrower, as the case may be, has not in fact made such payment to the Agent
the recipient of such payment shall, on demand by the Agent, repay to the
Agent the amount so made available together with interest thereon in respect
of each day during the period commencing on the date such amount was so made
available by the Agent until the date the Agent recovers such amount at a rate
per annum equal to (i) in the case of payment by a Lender, the Federal Funds
Effective Rate for such day or (ii) in the case of payment by a Borrower, the
interest rate applicable to the relevant Loan.
2.14 Termination Date. This Agreement shall be effective until the
-----------------
Termination Date. Notwithstanding the termination of this Agreement on the
Termination Date, until all of the Obligations (other than contingent
indemnity and reimbursement obligations) shall have been fully and
indefeasibly paid and satisfied, all financing arrangements among the
Borrowers and the Lenders shall have been terminated (other than under Hedging
Agreements) and all of the Letters of Credit shall have expired, been canceled
or terminated, all of the rights and remedies under this Agreement and the
other Loan Documents shall survive and the Agent shall be entitled to retain
its security interest in and to all existing and future Collateral for the
benefit of itself and the Holders of Secured Obligations.
2.15 Replacement of Certain Lenders. In the event a Lender ("AFFECTED
------------------------------
LENDER") shall have: (i) failed to fund its Revolving Credit Share of any
Advance requested by any Borrower which such Lender is obligated to fund under
the terms of this Agreement and which failure has not been cured, (ii)
requested compensation from any Borrower under Sections 2.10(E), 3.1 or 3.2 to
---------------- --- ---
recover Taxes, Other Taxes or other additional costs incurred by such Lender
which are not being incurred generally by the other Lenders, (iii) delivered a
notice pursuant to Section 3.3 claiming that such Lender is unable to extend
-----------
Eurodollar Loans to any Borrower for reasons not generally applicable to the
other Lenders, (iv) declined to extend the Termination Date or the expiry date
of the Aggregate Commitment with respect to the Tranche B Obligations pursuant
to Section 2.24, or (v) has invoked Section 9.2, then, in any such case, any
------------- -----------
Borrower or the Agent may make written demand on such Affected Lender (with a
copy to the Agent in the case of a demand by any Borrower and a copy to the
Borrowers in the case of a demand by the Agent) for the Affected Lender to
assign, and such Affected Lender shall use its best efforts to assign pursuant
to one or more duly executed assignment and acceptance agreements in
substantially the form of Exhibit D five (5) Business Days after the date of
---------
such demand, to one or more financial institutions that comply with the
provisions of Section 12.3(A) (and, if selected by the Borrowers is reasonably
---------------
acceptable to the Agent, and, so long as no Default shall have occurred and is
continuing, if selected by the Agent is reasonably acceptable to the Company)
which any Borrower or the Agent, as the case may be, shall have engaged for
such purpose ("REPLACEMENT LENDER"), all of such Affected Lender's rights and
obligations under this Agreement and the other Loan Documents (including,
without limitation, its Commitment, all Loans owing to it, all of its
participation interests in existing Letters of Credit and its obligation to
participate in Letters of Credit hereunder) in accordance with Section 12.3.
------------
The Agent agrees, upon the occurrence of such events with respect to an
Affected Lender and upon the written request of any Borrower, to use its
reasonable efforts to obtain the commitments from one or more financial
institutions qualified to act as a Replacement Lender. Further, with respect
to such assignment the Affected Lender shall have concurrently received, in
cash, all amounts due and owing to the Affected Lender hereunder or under any
other Loan Document, including, without limitation, the aggregate outstanding
principal amount of the Loans owed to such Lender, together with accrued
interest thereon through the date of such assignment, amounts payable under
Sections 2.10(E), 3.1, and 3.2 with respect to such Affected Lender and
--------------- --- ---
compensation payable under Section 2.10(C) in the event of any replacement of
---- ---------------
any Affected Lender under clause (ii) or clause (iii) of this Section 2.15;
----------- ------------ ------------
provided that upon such Affected Lender's replacement, such Affected Lender
------
shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 2.10(E), 3.1, 3.2, 3.4, and 9.7, as well as to any fees
---------------- --- --- --- ---
accrued for its account hereunder and not yet paid, and shall continue to be
obligated under Section 10.8. Upon the replacement of any Affected Lender
-------------
pursuant to this Section 2.15, the provisions of Section 8.2 shall continue to
------------ -----------
apply with respect to Advances which are then outstanding with respect to
which the Affected Lender failed to fund its Revolving Credit Share and which
failure has not been cured.
2.16 Letters of Credit. (a) Upon receipt of duly executed applications
-----------------
therefor in substantially the form of Exhibit H, and such other documents,
---------
instructions and agreements as such Issuing Lender may reasonably require, and
subject to the provisions of Article IV, the Agent shall, or any other Lender
----------
in its sole discretion may, issue standby or commercial letters of credit
denominated in Dollars for the account of the Company or one of the Subsidiary
Borrowers or Subsidiary Obligors or standby letters of credit denominated in
Korean Won for the account of Purina Korea, Inc., on terms as are satisfactory
to such Issuing Lender in substantially the form of Exhibit I; provided,
--------- --------
however, that no Letter of Credit will be issued hereunder by an Issuing
--
Lender if on the date of issuance, before or after taking such Letter of
Credit into account, (i) the Dollar Amount of the Revolving Credit Obligations
at such time would exceed the Aggregate Commitments at such time or (ii) the
amount (or with respect to standby Letters of Credit denominated in Korean
Won, the Dollar Amount) of the Revolving Credit Obligations owed by any of the
Borrowers or Subsidiary Obligors pursuant to this Agreement would exceed the
corresponding amounts listed below:
Agribrands International, Inc. $ 5,000,000
Agribrands Canada, Inc. $ 6,500,000
Purina Italia S.p.A. $ 4,000,000
Purina Espana, S.A. $ 2,500,000
Purina Hungaria Animal Feed
Production & Trading Company Ltd. $ 2,000,000
Purina Korea, Inc. $15,000,000
Industrias Purina S.A. de C.V. $ 5,000,000
Purina Colombiana S.A. $ 5,000,000
Agribrands Purina do Brasil, Ltda. $ 5,000,000
Purina Philippines, Inc. $ 2,500,000
Purina de Venezuela, C.A. $ 2,500,000
and provided, further, that no Letter of Credit shall be issued which has an
-------- -------
expiration date later than the date which is five (5) Business Days
immediately preceding the Termination Date; and provided, further, that all
-------- -------
commercial Letters of Credit requested hereunder shall be denominated only in
Dollars; and provided, however, that no Issuing Lender shall be obligated to
-------- -------
issue any Letter of Credit hereunder to any Borrower or Subsidiary Obligor
unless the "Revolving Credit Obligations" owed by such Borrower or Subsidiary
Obligor under and as defined under the Long Term Credit Agreement shall be
equal to the amounts set forth in the first proviso of the first sentence of
Section 2.16 of the Long Term Credit Agreement, provided that, with respect to
--------
standby Letters of Credit issued for the account of Purina Korea, Inc. and
denominated in Korean Won and subject to the conditions precedent set forth in
Sections 4.1 and 4.2 hereof, Purina Korea, Inc. may request standby Letters of
- ------------ ---
Credit denominated in Korean Won hereunder so long as the Dollar Amount of
"Revolving Credit Obligations" denominated in Korean Won under and as defined
in the Long Term Credit Agreement is equal to the "Maximum Korean Won
Commitment" under and as defined in the Long Term Credit Agreement. Each
Letter of Credit issued for the account of any Borrower may, upon the request
of the applicable Borrower, include a provision whereby such Letter of Credit
shall be renewed automatically for additional consecutive periods of 12 months
or less (but not beyond the date that is five Business Days prior to the
Termination Date) unless the Issuing Lender notifies the beneficiary thereof
at least 30 days prior to the then-applicable expiry date that such Letter of
Credit will not be renewed. Each Letter of Credit issued for the account of
any Subsidiary Obligor shall be renewed or extended beyond the then effective
expiry date of the Aggregate Commitment for the Tranche B Obligations at the
request of the applicable Subsidiary Obligor only with the consent of all of
the Lenders. Prior to issuing any Letter of Credit, the applicable Issuing
Lender shall request and the Agent shall provide confirmation that the request
for such Letter of Credit complies with the provisions of this Section
-------
2.16(a). If the Agent notifies the applicable Issuing Lender that it is
authorized to issue such Letter of Credit, and the conditions described in
Article IV have been satisfied, then such Issuing Lender shall issue such
--------
Letter of Credit as requested. The applicable Issuing Lender shall give the
-
Agent and each Lender prompt notice of the issuance of any such Letter of
Credit by it. Each Issuing Lender shall furnish to the Agent and each Lender
on the first Business Day of each month a written report, with respect to each
outstanding Letter of Credit issued by such Issuing Lender, summarizing
whether such Letter of Credit is a standby or commercial Letter of Credit, the
maximum amount available to be drawn thereon, and the beneficiary and the
issuance and expiration dates thereof. Together with each such monthly
report each Issuing Lender shall provide the Agent a copy of each Letter of
Credit issued by such Issuing Bank during the previous month.
(b) Reserved.
--------
2.17 Letter of Credit Participation. Immediately upon the issuance of
------------------------------
each Letter of Credit by any Issuing Lender hereunder, each Lender that has a
Commitment shall be deemed to have automatically, irrevocably and
unconditionally purchased and received from the applicable Issuing Lender an
undivided interest and participation in and to such Letter of Credit, the
obligations of the applicable Borrower or Subsidiary Obligor in respect
thereof, and the liability of the applicable Issuing Lender thereunder
(collectively, an "L/C INTEREST") in an amount equal to the amount available
for drawing under such Letter of Credit multiplied by such Lender's Revolving
Credit Share.
The applicable Issuing Lender will notify the Agent promptly upon
presentation to it of an L/C Draft or upon any other draw under a Letter of
Credit and the Agent will promptly notify each Lender that has a Commitment.
On or before the Business Day on which the applicable Issuing Lender makes
payment of each such L/C Draft or any other draw on a Letter of Credit, on
demand of the Agent received by each Lender that has a Commitment not later
than 12:00 noon (Seoul, Korea time) on the fifth (5th) Business Day after the
date of such demand with respect to Letters of Credit issued for the account
of Purina Korea, Inc., and 12:00 noon (New York time) on the third (3rd)
Business Day after the date of such demand with respect to all other Letters
of Credit, each Lender (other than the Issuing Lender) shall make payment on
such Business Day to the Agent for the account of the applicable Issuing
Lender, in immediately available funds in the applicable currency in an amount
equal to such Lender's Revolving Credit Share of the amount of such payment or
draw.
Upon the Agent's receipt of funds as a result of an Issuing Lender's
payment on an L/C Draft or any other draw on a Letter of Credit issued by an
Issuing Lender, the Agent shall promptly pay such funds to the Issuing Lender.
The obligation of each Lender that has a Commitment to pay the Agent for the
account of the applicable Issuing Lender under this Section 2.17 shall be
------------
unconditional, continuing, irrevocable and absolute. In the event that any
such Lender fails to make payment to the Agent of any amount due under this
Section 2.17, the Agent shall be entitled to receive, retain and apply against
----------
such obligation the principal and interest otherwise payable to such Lender
hereunder until the Agent on behalf of the applicable Issuing Lender receives
such payment from such Lender or such obligation is otherwise fully satisfied;
provided, however, that nothing contained in this sentence shall relieve such
- -------- -------
Lender of its obligation to reimburse the Agent for such amount in accordance
with this Section 2.17.
-------------
2.18 Reimbursement Obligation. Each of the Borrowers and Subsidiary
-------------------------
Obligors agrees unconditionally, irrevocably and absolutely upon receipt of
notice from the Agent or the applicable Issuing Lender to pay immediately to
the Agent, for the account of the applicable Issuing Lender or the account of
the Lenders, as the case may be, the amount of each advance which may be drawn
under or pursuant to a Letter of Credit issued for its account or an L/C Draft
related thereto (such obligation of each of the Borrowers and Subsidiary
Obligors to reimburse the Issuing Lender or the Agent for an advance made
under a Letter of Credit or L/C Draft being hereinafter referred to as a
"REIMBURSEMENT OBLIGATION" with respect to such Letter of Credit or L/C
Draft), each such payment to be made by the applicable Borrower or Subsidiary
Obligor to the Agent no later than 1:00 p.m. (New York time) or with respect
to Reimbursement Obligations owed by Purina Korea, Inc. 1:00 p.m. (Seoul time)
on the Business Day on which the applicable Issuing Lender makes payment of
each such L/C Draft or, in the case of any other draw on a Letter of Credit,
1:00 p.m. (New York time) or with respect to Reimbursement Obligations owed by
Purina Korea, Inc. 1:00 p.m. (Seoul time) on the date specified in a demand by
the Agent and such payment shall be made in the applicable currency in which
such Letter of Credit was issued. Any Issuing Lender may direct the Agent to
make such demand with respect to Letters of Credit issued by such Issuing
Lender. If any Borrower at any time fails to repay a Reimbursement Obligation
pursuant to this Section 2.18, such Borrower shall be deemed to have elected
------------
to borrow a Revolving Loan from the applicable Lenders, as of the date of the
Advance giving rise to the Reimbursement Obligation equal in amount to the
amount of the unpaid Reimbursement Obligation. Such Revolving Loan shall be
made as of the date of the payment giving rise to such Reimbursement
Obligation, automatically, without notice and without any requirement to
satisfy the conditions precedent otherwise applicable to an Advance of
Revolving Loans if such Borrower shall have failed to make such payment to the
Agent for the account of the applicable Issuing Lender prior to such time.
Such Revolving Loans shall constitute a Base Rate Advance, or, in the case of
standby Letters of Credit denominated in Korean Won, a Korean Won Advance, the
proceeds of which Advance shall be used to repay such Reimbursement
Obligation. If, for any reason, any Borrower or Subsidiary Obligor fails to
repay a Reimbursement Obligation on the day such Reimbursement Obligation
arises and, for any reason, the Lenders are unable to make or have no
obligation to make a Revolving Loan, then such Reimbursement Obligation shall
bear interest from and after such day, until paid in full, at the interest
rate applicable to a Base Rate Advance, or in the case of standby Letters of
Credit denominated in Korean Won, at the Korean CD Rate.
2.19 Cash Collateral. Notwithstanding anything to the contrary herein
---------------
or in any application for a Letter of Credit, after the occurrence and during
the continuance of Default, each Borrower and Subsidiary Obligor shall, upon
the Agent's demand, deliver to the Agent for the benefit of the Lenders, cash
collateral, having a value, as determined by such Lenders, equal to the
aggregate outstanding L/C Obligations of such Borrower or Subsidiary Obligor
in addition to amounts on deposit in the Cash Collateral Account. Any such
additional collateral shall be held by the Agent in a separate account
appropriately designated as a cash collateral account in relation to this
Agreement and the Letters of Credit and retained by the Agent for the benefit
of the Lenders as collateral security for the Borrowers' and Subsidiary
Obligors' obligations in respect of this Agreement and each of the Letters of
Credit and L/C Drafts. Such amounts shall be applied to reimburse the Agent
or each Issuing Lender, as applicable, for drawings or payments under or
pursuant to Letters of Credit or L/C Drafts, or if no such reimbursement is
required, to payment of such of the other Obligations as the Agent shall
determine. If no Default shall be continuing, amounts remaining in any cash
collateral account (other than the Cash Collateral Account) established
pursuant to this Section 2.19 which are not to be applied to reimburse the
-------------
Agent for amounts actually paid or to be paid by the Agent in respect of a
Letter of Credit or L/C Draft, shall be promptly returned to the applicable
Borrower (after deduction of the Agent's expenses incurred in connection with
such cash collateral account).
2.20 Letter of Credit Fees. The Company agrees to pay (i) quarterly, in
---------------------
arrears, on each Payment Date to the Agent for the ratable benefit of the
Lenders having Commitments, except as set forth in Section 8.2, a letter of
-----------
credit fee ("LETTER OF CREDIT FEE") in the amount of:
(w) with respect to Letters of Credit issued for the account of the
Borrowers (other than Purina Korea, Inc.) and the Subsidiary Obligors (other
than Purina Korea, Inc.), a rate per annum equal to the Applicable Letter of
Credit Fee on the aggregate average daily outstanding amount available for
drawing under all of the Letters of Credit issued for its account;
(x) with respect to standby Letters of Credit issued for the account of
Purina Korea, Inc. and denominated in Dollars, a per annum rate equal to 3.50%
on the aggregate average daily outstanding amount available for drawing under
all standby Letters of Credit denominated in Dollars and issued for its
account;
(y) with respect to standby Letters of Credit issued for the account of
Purina Korea, Inc. and denominated in Korean Won, a per annum rate equal to
1.75% on the aggregate average daily outstanding amount available for drawing
under all of the standby Letters of Credit denominated in Korean Won and
issued for its account; and
(z) with respect to commercial Letters of Credit issued for the account of
Purina Korea, Inc. and denominated in Dollars, a per annum rate equal to 1.50%
on the aggregate average daily outstanding amount available for drawing under
all of the commercial Letters of Credit denominated in Dollars and issued for
its account; plus
----
(ii) to the Agent for the benefit of the Issuing Lenders, a fronting fee of
one-eighth of one percent (0.125%) per annum on the aggregate average daily
outstanding Dollar Amount available for drawing under all of the Letters of
Credit issued for the account of any Borrower or Subsidiary Obligor payable
quarterly, in arrears, on each Payment Date; plus
----
(iii) in each case, all customary fees and other issuance, amendment, document
examination, negotiation and presentment expenses and related charges in
connection with the issuance, amendment, presentation of L/C Drafts, and the
like customarily charged by the Issuing Lender with respect to standby and
commercial Letters of Credit, including, without limitation, standard
commissions with respect to commercial Letters of Credit, payable at the time
of invoice of such amounts.
2.21 Indemnification; Exoneration. (a) In addition to amounts payable
----------------------------
as elsewhere provided in this Agreement, each Borrower and Subsidiary Obligor
with respect to Letters of Credit issued for its account agrees to protect,
indemnify, pay and save harmless the Agent, each Issuing Lender and each
Lender from and against any and all liabilities and costs which the Agent, any
Issuing Lender or any Lender may incur or be subject to as a consequence,
direct or indirect, of (i) the issuance of any Letter of Credit other than, in
the case of the Issuing Lender, as a result of its gross negligence or willful
misconduct, as determined by the final judgment of a court of competent
jurisdiction, or (ii) the failure of the Issuing Lender of a Letter of Credit
to honor a drawing under such Letter of Credit as a result of any act or
omission, whether rightful or wrongful, of any present or future de jure or de
facto Governmental Authority (all such acts or omissions herein called
"GOVERNMENTAL ACTS").
(b) As among the Borrowers, the Subsidiary Obligors, the Lenders, the
Issuing Lenders and the Agent, the Borrowers and Subsidiary Obligors assume
all risks of the acts and omissions of, or misuse of such Letter of Credit by,
the beneficiary of any Letter of Credit. In furtherance and not in limitation
of the foregoing, subject to the provisions of the Letter of Credit
applications and Letter of Credit reimbursement agreements executed by the
applicable Borrower or Subsidiary Obligor at the time of request for any
Letter of Credit, the Issuing Lender of a Letter of Credit, the Agent and the
Lenders shall not be responsible (in the absence of gross negligence or
willful misconduct in connection therewith, as determined by the final
judgment of a court of competent jurisdiction): (i) for the form, validity,
sufficiency, accuracy, genuineness or legal effect of any document submitted
by any party in connection with the application for and issuance of the
Letters of Credit, even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) for the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (iii) for failure of the beneficiary of
a Letter of Credit to comply duly with conditions required in order to draw
upon such Letter of Credit; (iv) for errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable, telegraph,
telex, or other similar form of teletransmission or otherwise; (v) for errors
in interpretation of technical trade terms; (vi) for any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any Letter of Credit or of the proceeds thereof; (vii) for the
misapplication by the beneficiary of a Letter of Credit of the proceeds of any
drawing under such Letter of Credit; and (viii) for any consequences arising
from causes beyond the control of the Agent, the Issuing Lender and the
Lenders including, without limitation, any Governmental Acts. None of the
above shall affect, impair, or prevent the vesting of any of the Issuing
Lender's rights or powers under this Section 2.21.
-------------
(c) In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by an Issuing
Lender under or in connection with Letters of Credit issued on behalf of any
Borrower or Subsidiary Obligor or any related certificates shall not, in the
absence of gross negligence or willful misconduct, as determined by the final
judgment of a court of competent jurisdiction, put the Issuing Lender, the
Agent or any Lender under any resulting liability to any Borrower or
Subsidiary Obligor or relieve any Borrower or Subsidiary Obligor of any of its
obligations hereunder to any such Person.
(d) Without prejudice to the survival of any other agreement of the
Borrowers or the Subsidiary Obligors hereunder, the agreements and obligations
of the Borrowers contained in this Section 2.21 shall survive the payment in
------------
full of principal and interest hereunder, the termination of the Letters of
Credit and the termination of this Agreement.
2.22 Judgment Currency. If, for the purposes of obtaining judgment in
-----------------
any court, it is necessary to convert a sum due from a Borrower hereunder or
under any of the Notes in the currency expressed to be payable herein (the
"SPECIFIED CURRENCY") into another currency, the parties hereto agree, to the
fullest extent that they may effectively do so, that the rate of exchange used
shall be that at which in accordance with normal banking procedures the Agent
could purchase the specified currency with such other currency at the Agent's
main office in New York, New York or Seoul, Korea or any other applicable
local office on the Business Day preceding that on which the final,
non-appealable judgment is given. The obligations of the applicable Borrower
in respect of any sum due to any Lender or the Agent hereunder shall,
notwithstanding any judgment in a currency other than the specified currency,
be discharged only to the extent that on the Business Day following receipt by
such Lender or Agent (as the case may be) of any sum adjudged to be so due in
such other currency such Lender or Agent (as the case may be) may in
accordance with normal, reasonable banking procedures purchase the specified
currency with such other currency. If the amount of the specified currency so
purchased is less than the sum originally due to such Lender or Agent, as the
case may be, in the specified currency, the applicable Borrower agrees, to the
fullest extent that it may effectively do so, as a separate obligation and
notwithstanding any such judgment, to indemnify such Lender or Agent, as the
case may be, against such loss, and if the amount of the specified currency so
purchased exceeds (a) the sum originally due to any Lender or Agent, as the
case may be, in the specified currency and (b) any amounts shared with other
Lenders as a result of allocations of such excess as a disproportionate
payment to such Lender under Section 11.2, such Lender or Agent, as the case
------------
may be, agrees to remit such excess to the applicable Borrower. Without
prejudice to the survival of any of the other agreements of the Borrowers
hereunder, the agreements and obligations of the Borrowers in this Section
-------
2.22 shall survive the termination of this Agreement and the payment of all
-
other amounts owing hereunder.
2.23 Currency Disruption. Notwithstanding the satisfaction of all
--------------------
conditions referred to in Article II with respect to any Advance in Korean Won
----------
or in Dollars to Purina Korea, Inc., if, after the Closing Date, a material
adverse change in the banking market (including, without limitation, a
significant down-grading of the credit ratings of the major domestic banks in
the Republic of Korea or the sovereign debt of the Republic of Korea) occurs
or bank regulatory circumstances change or currency controls or restrictions
or other exchange regulations are imposed or other circumstances arise as a
result of which, in the reasonable opinion of the Agent or the Required
Lenders, Korean Won or Dollars in Korea are unavailable to the Lenders or are
no longer readily available or freely traded or other exchange regulations are
imposed in the Republic or Korea with the result that different types of
currency are introduced, then the Advances and standby Letters of Credit
denominated in Korean Won and the Advances in Dollars to Purina Korea, Inc.
and standby Letters of Credit denominated in Dollars for the account of Purina
Korea, Inc. shall no longer be available until such time as the Agent or the
Required Lenders determine that the disqualifying event or events no longer
exist; provided, that during the period that such Korean Won or Letters of
--------
Credit denominated in Dollars are unavailable pursuant to this Section 2.23,
------------
the Company's obligation to pay the Korean facility fee pursuant to Section
-------
2.10(C)(i) shall be suspended.
--------
2.24 Termination Date Extension. The Aggregate Commitment shall expire
--------------------------
on the Termination Date. Within the period beginning 59 days and ending 30
days before the then effective Termination Date, the Company may request in
writing that the Termination Date be extended for an additional period of 364
days, including the then effective Termination Date as one of the days in the
calculation of days elapsed. Within 30 days after such request, each Lender
may, in its sole discretion, agree to such extension to a new Termination Date
not more than 364 days following the then effective Termination Date by giving
written notice of such agreement to the Company and the Agent (and the failure
to provide such notice shall be determined to be a decision not to extend).
The Commitment of each Lender that declines to extend with respect to the
Aggregate Commitment may, at the option of the Company, be replaced in
accordance with Section 12.3 (but only to the extent a replacement Lender is
------------
then available) or the Aggregate Commitment reduced. The Required Lenders
must agree to any extension with respect to the Termination Date for any such
extension to become effective.
ARTICLE III: CHANGE IN CIRCUMSTANCES
- ------------------------------------------
3.1 Yield Protection. If any law or any governmental or
-----------------
quasi-governmental rule, regulation, policy, guideline or directive (whether
-----
or not having the force of law) adopted after the date of this Agreement and
having general applicability to all banks within the jurisdiction in which
such Lender operates (excluding, for the avoidance of doubt, the effect of and
phasing in of capital requirements or other regulations or guidelines passed
prior to the date of this Agreement), or any interpretation or application
thereof by any Governmental Authority charged with the interpretation or
application thereof, or the compliance of any Lender therewith,
(i) subjects any Lender (each reference in this Section 3.1 to a Lender
-----------
being in its capacity as a Lender or an Issuing Lender, or all of the
foregoing) or any applicable Lending Installation to any tax, duty, charge or
withholding on or from payments due from any of the Borrowers (excluding
taxation imposed by the United States of America or any Governmental Authority
of the jurisdiction under the laws of which such Lender is organized, on the
overall net income of any Lender or applicable Lending Installation), or
changes the basis of taxation of payments to any Lender in respect of its
Loans, its L/C Interests, the Letters of Credit or other amounts due it
hereunder, provided however that this clause (i) shall not apply with respect
----------
to any Taxes to which Section 2.10(E) applies, or
----------------
(ii) imposes or increases or deems applicable any reserve, assessment,
insurance charge, special deposit or similar requirement against assets of,
deposits with or for the account of, or credit extended by, any Lender or any
applicable Lending Installation with respect to its Eurodollar Loans, Korean
Eurodollar Loans, Korean Won Loans, L/C Interests or the Letters of Credit
(other than reserves and assessments taken into account in calculating the
Eurodollar Rate or Korean Eurodollar Rate), or
(iii) imposes any other condition the result of which is to increase the
cost to any Lender or any applicable Lending Installation of making, funding
or maintaining the Eurodollar Loans, Korean Eurodollar Loans, Korean Won
Loans, the L/C Interests or the Letters of Credit or reduces any amount
received by any Lender or any applicable Lending Installation in connection
with Eurodollar Loans, Korean Eurodollar Loans, Korean Won Loans or Letters of
Credit, or requires any Lender or any applicable Lending Installation to make
any payment calculated by reference to the amount of Loans or L/C Interests
held or interest received by it or by reference to the Letters of Credit, by
an amount deemed material by such Lender;
and the result of any of the foregoing is to increase the cost to that Lender
of making, renewing or maintaining its Loans, L/C Interests or Letters of
Credit or to reduce any amount received under this Agreement, then, within 15
days after receipt by the Company of written demand by such Lender pursuant to
Section 3.5, the Company shall pay or cause the appropriate Subsidiary to pay
- ------------
such Lender that portion of such increased expense incurred or reduction in an
amount received which such Lender determines is attributable to making,
funding and maintaining its Loans, L/C Interests, Letters of Credit and its
Commitment.
3.2 Changes in Capital Adequacy Regulations. If a Lender (each
-------------------------------------------
reference in this Section 3.2 to a Lender being in its capacity as a Lender or
-----------
an Issuing Lender, or all of the foregoing) determines (i) the amount of
capital required or expected to be maintained by such Lender, any Lending
Installation of such Lender or any corporation controlling such Lender is
increased as a result of a "Change" (as defined below), and (ii) such increase
in capital will result in an increase in the cost to such Lender of
maintaining its Loans, L/C Interests, the Letters of Credit or its obligation
to make Loans hereunder, then, within 15 days after receipt by the Company of
written demand by such Lender pursuant to Section 3.5, the Company shall pay
-----------
or cause the appropriate Subsidiary to pay such Lender the amount necessary to
compensate for any shortfall in the rate of return on the portion of such
increased capital which such Lender determines is attributable to this
Agreement, its Loans, its L/C Interests, the Letters of Credit or its
obligation to make Loans hereunder (after taking into account such Lender's
policies as to capital adequacy). "CHANGE" means (i) any change after the
date of this Agreement in the "Risk-Based Capital Guidelines" (as defined
below) excluding, for the avoidance of doubt, the effect of any phasing in of
such Risk-Based Capital Guidelines or any other capital requirements passed
prior to the date hereof, or (ii) any adoption of or change in any other law,
governmental or quasi-governmental rule, regulation, policy, guideline,
interpretation, or directive (whether or not having the force of law) after
the date of this Agreement and having general applicability to all banks and
financial institutions within the jurisdiction in which such Lender operates
which affects the amount of capital required or expected to be maintained by
any Lender or any Lending Installation or any corporation controlling any
Lender. "RISK-BASED CAPITAL GUIDELINES" means (i) the risk-based capital
guidelines in effect in the United States on the date of this Agreement,
including transition rules, and (ii) the corresponding capital regulations
promulgated by regulatory authorities outside the United States implementing
the July 1988 report of the Basle Committee on Banking Regulation and
Supervisory Practices Entitled "International Convergence of Capital
Measurements and Capital Standards," including transition rules, and any
amendments to such regulations adopted prior to the date of this Agreement.
3.3 Availability of Types of Advances. If (i) any Lender determines
-----------------------------------
that maintenance of its Eurodollar Loans, Korean Eurodollar Loans or Korean
Won Loans at a suitable Lending Installation would violate any applicable law,
rule, regulation, policy, guideline, interpretation or directive, whether or
not having the force of law, or (ii) the Agent or the Required Lenders
determine that (x) deposits of a type, currency and maturity appropriate to
match fund Eurodollar Advances, Korean Eurodollar Advances or Korean Won
Advances are not available or (y) the interest rate applicable to a Eurodollar
Advance, Korean Eurodollar Advances or Korean Won Advance is unavailable or
does not accurately reflect the cost of making or maintaining such a
Eurodollar Advance, Korean Eurodollar Advances or Korean Won Advance, then the
Agent shall suspend the availability of Eurodollar Advances, Korean Eurodollar
Advances or Korean Won Advances and, in the case of any occurrence set forth
in clause (i), require any Eurodollar Advances, Korean Eurodollar Advances or
----------
Korean Won Advances to be repaid or, at the option of the Company, converted
to Base Rate Advances denominated in Dollars or repaid at the end of the
current Interest Period or at such other time, as may be required by the
applicable law, rule, regulation, policy, guideline, interpretation or
directive.
3.4 Funding Indemnification. If (i) any payment of a Eurodollar Advance
-----------------------
or Korean Eurodollar Advance or Korean Won Advance occurs on a date which is
not the last day of the applicable Interest Period, (ii) any Loan in any
currency is converted to a Loan in any other currency on a date which is not
the last day of the applicable Interest Period, whether because of
acceleration, prepayment, illegality or otherwise, or if a Eurodollar Advance,
a Korean Eurodollar Advance or Korean Won Advance is not made or continued or
prepaid on the date specified by the applicable Borrower for any reason other
than default by the Lenders, the applicable Borrower agrees to compensate and
indemnify each Lender, on demand, for any loss or cost incurred by it
resulting therefrom, including, without limitation, any loss or cost in
liquidating or employing deposits acquired to fund or maintain the Eurodollar
Advance, the Korean Eurodollar Advance or Korean Won Advance.
3.5 Lender Statements; Survival of Indemnity. If reasonably possible,
----------------------------------------
each Lender shall designate an alternate Lending Installation with respect to
its Eurodollar Loans, Korean Eurodollar Loans or Korean Won Loans to reduce
any liability of the Borrowers to such Lender under Sections 3.1 and 3.2 or to
------------ ---
avoid the unavailability of a Type of Advance under Section 3.3, so long as
-----------
such designation is not disadvantageous to such Lender in its sole
determination. Each Lender requiring compensation pursuant to Section 2.10(E)
---------------
or to this Article III shall use its reasonable efforts to notify the Company
-----------
and the Agent in writing of any Change, law, policy, rule, guideline or
directive giving rise to such demand for compensation not later than sixty
(60) days following the date upon which the responsible account officer of
such Lender knows or should have known of such Change, law, policy, rule,
guideline or directive; provided, that failure to give such notice shall not
--------
affect any obligations of the Borrowers hereunder with respect thereto;
provided, further that for each such Change, law policy, rule, guideline or
-- -------
directive giving rise to such demand, such reimbursement obligations shall be
limited to an amount equal to costs incurred sixty (60) days prior to such
notice and thereafter. Any demand for compensation pursuant to this Article
-------
III shall be in writing and shall state the amount due, if any, under Section
-- -------
3.1, 3.2 or 3.4 and shall set forth in reasonable detail the calculations upon
- --- --- ---
which such Lender determined such amount. Such written demand shall be
rebuttably presumed correct for all purposes. Determination of amounts
payable under such Sections in connection with a Eurodollar Loan, Korean
Eurodollar Loan or Korean Won Loan shall be calculated as though each Lender
funded its Eurodollar Loan, Korean Eurodollar Loan or Korean Won Loan, as
applicable through the purchase of a deposit of the type, currency and
maturity corresponding to the deposit used as a reference in determining the
Eurodollar Rate, Korean Eurodollar Rate or Korean CD Rate, as applicable to
such Loan, whether in fact that is the case or not. The obligations of the
Borrowers under Sections 3.1, 3.2 and 3.4 shall survive payment of the
------------- --- ---
Obligations and termination of this Agreement.
ARTICLE IV: CONDITIONS PRECEDENT
- -------------------------------------
4.1 Initial Advances and Letters of Credit. The Lenders shall not be
---------------------------------------
required to make the initial Loans or issue any Letters of Credit unless (i)
such initial Loans are made not later than May 29, 1998 and (ii) the Company's
Subsidiaries shall be capitalized (with contributions to capital, or, in the
Company's discretion, loans) as described in the Consolidating Financial
Forecasts for Subsidiaries dated February 25, 1998 and delivered to the Agent
on February 26, 1998 and (iii) the Borrowers and Subsidiary Obligors have
furnished to the Agent, with sufficient copies for the Lenders, all of the
documents reflected on the List of Closing Documents attached as Exhibit E to
---------
this Agreement; it being understood and agreed that the Agent will notify the
Company in writing promptly when all of the conditions precedent have been
satisfied, provided, that it is further understood and agreed that if all of
--------
the conditions precedent described in clauses (i), (ii) and (iii) above shall
----------- ---- -----
not have been satisfied on or before May 29, 1998, the Aggregate Commitment
hereunder shall be terminated as of such date (unless otherwise agreed by the
Company and all of the Lenders) and all fees otherwise payable hereunder shall
cease to accrue.
4.2 Each Advance and Letter of Credit. Except as expressly provided in
---------------------------------
Sections 2.17 with respect to the purchase of participations in Letters of
- --------------
Credit, the Lenders shall not be required to make any Advance and the Issuing
- ---
Lender shall not be required to issue any Letter of Credit, unless on the
applicable Borrowing Date, or in the case of a Letter of Credit, the date on
which the Letter of Credit is to be issued:
(i) The "Revolving Credit Obligations" owed by any Borrower or
Subsidiary Obligor under and as defined in the Long Term Credit Agreement
shall be equal to the amounts set forth in either of (A) the second proviso of
the first sentence of Section 2.1 of the Long Term Credit Agreement or (B) the
first proviso of the first sentence of Section 2.16 of the Long Term Credit
Agreement, as applicable, or, with respect to Advances and Letters of Credit
denominated in Korean Won, the Dollar Amount of "Revolving Credit Obligations"
denominated in Korean Won under and as defined in the Long Term Credit
Agreement is equal to the "Maximum Korean Won Commitment" under and as defined
in the Long Term Credit Agreement;
(ii) There exists no Default or Unmatured Default; and
(iii) The representations and warranties contained in Article V are true
---------
and correct in all material respects as of such Borrowing Date, except for
representations and warranties made with reference to a specific date which
representations and warranties shall be true and correct in all material
respects as of such date.
Each Borrowing Notice with respect to each such Advance and the letter of
credit application with respect to a Letter of Credit shall constitute a
representation and warranty by the Borrower requesting such Advance that the
conditions contained in Sections 4.2(i), (ii) and (iii) will have been
---------------- ---- -----
satisfied as of the date of such Advance or the issuance of such Letter of
Credit. Any Lender may require a duly completed officer's certificate in
substantially the form of Exhibit F hereto and/or a duly completed compliance
---------
certificate in substantially the form of Exhibit C hereto as a condition to
---------
making an Advance.
ARTICLE V: REPRESENTATIONS AND WARRANTIES
- -----------------------------------------------
In order to induce the Agent and the Lenders to enter into this
Agreement and to make the Loans and the other financial accommodations to the
Borrowers and in order to induce the Issuing Lender to issue the Letters of
Credit for the account of the Borrowers and Subsidiary Obligors, each of the
Borrowers and the Subsidiary Obligors represents and warrants as follows to
each Lender and each Agent as of the date of this Agreement and thereafter on
each date as required by Section 4.2:
------------
5.1 Organization; Powers. Each of the Borrowers and Subsidiary Obligors
--------------------
(i) is a duly organized corporation validly existing and in good standing
under the laws of the jurisdiction of its organization, (ii) is duly qualified
to do business as a foreign company or corporation and is in good standing
under the laws of each jurisdiction in which failure to be so qualified and in
good standing could have a Material Adverse Effect, and (iii) has all
requisite power and authority to own, operate and encumber its property and to
conduct its business as presently conducted and as proposed to be conducted in
connection with and following the consummation of the transactions
contemplated by this Agreement.
5.2 Authority.
---------
(A) Each of the Borrowers and each of the Subsidiary Obligors has the
requisite power and authority (i) to execute, deliver and perform each of the
Loan Documents which have been executed by it as required by this Agreement
and (ii) to file the Loan Documents which must be filed by it with any
Governmental Authority.
(B) The execution, delivery, performance and filing, as the case may be,
of each of the Loan Documents which must be executed or filed by any of the
Borrowers or any Subsidiary Obligor which have been executed or filed as
required by this Agreement and to which any of the Borrowers or any Subsidiary
Obligor is party, and the consummation of the transactions contemplated
thereby, have been duly approved, to the extent required, by the respective
boards of managers or directors, as applicable, and, if necessary, the members
or shareholders or workers' councils of the applicable Borrower or Subsidiary
Obligor, as applicable, and such approvals have not been rescinded. No other
action or proceedings on the part of any Borrower or any Subsidiary Obligor or
other Person are necessary to consummate such transactions.
(C) Each of the Loan Documents to which any of the Borrowers or any
Subsidiary Obligor is a party has been duly executed, delivered or filed, as
the case may be, by it and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms (except as
enforceability may be limited by bankruptcy, insolvency, or similar laws
affecting the enforcement of creditors' rights generally), is in full force
and effect and no material term or condition thereof has been amended,
modified or waived from the terms and conditions contained in the Loan
Documents delivered to the Agent pursuant to Section 4.1 without the prior
-----------
written consent of the Required Lenders, and each of the Borrowers or each
Subsidiary Obligor has, and, to the best of such Borrower's or Subsidiary
Obligor's Knowledge, all other parties thereto have performed and complied
with all the terms, provisions, agreements and conditions set forth therein
and required to be performed or complied with by such parties, and no
unmatured default, default or breach of any covenant by any such party exists
thereunder.
5.3 No Conflict; Governmental Consents. The execution, delivery and
------------------------------------
performance of each of the Loan Documents to which any of the Borrowers or any
Subsidiary Obligor is a party do not and will not (i) conflict with the
documents of organization or governance of such Borrower or Subsidiary
Obligor, (ii) constitute tortious interference with any Contractual Obligation
of any Person or conflict with, result in a breach of or constitute (with or
without notice or lapse of time or both) a default under any Requirement of
Law (including, without limitation, any Environmental Property Transfer Act)
or Contractual Obligation of any Borrower or any Subsidiary Obligor, or
require termination of any Contractual Obligation, except such interference,
breach, default or termination which individually or in the aggregate would
not reasonably be expected to have a Material Adverse Effect or to subject the
Agent, the Arranger, any of the Lenders or any Issuing Lender to any
liability, (iii) with respect to the Loan Documents, result in or require the
creation or imposition of any Lien whatsoever upon any of the property or
assets of any Borrower or any Subsidiary Obligor, other than Liens permitted
by the Loan Documents, or (iv) require any approval of the Borrower's or any
Subsidiary Obligor's members, shareholders, workers' council or other similar
constituent group except such as have been obtained. The execution, delivery
and performance of each of the Loan Documents to which any Borrower or any
Subsidiary Obligor is a party do not and will not require any registration
with, consent or approval of, or notice to, or other action to, with or by any
Governmental Authority, including under any Environmental Property Transfer
Act, except (i) filings, consents or notices which have been or, in the case
of any of the foregoing, not required prior to the Closing Date, will be made,
obtained or given, and (ii) filings, registrations and deliveries necessary to
create or perfect security interests in the Collateral.
5.4 Financial Statements. The historical and forecasted financial
---------------------
statements, including, without limitation, the Consolidating Financial
Forecasts for Subsidiaries dated February 25, 1998 and delivered to the Agent
on February 26, 1998 (the "Statements") of the Company and its Subsidiaries,
copies of which are attached hereto as Exhibit G, (i) with respect to the
---------
historical Statements, (a) were prepared in accordance with generally accepted
accounting principles consistently applied throughout the period covered
thereby, except as otherwise expressly noted therein, (b) fairly present on a
pro forma basis the consolidated financial position of the Company and its
Subsidiaries as of the date thereof and consolidated results of operations for
the period covered thereby; and (c) show all material indebtedness and other
liabilities, direct or contingent, of the Company and its consolidated
Subsidiaries as of the date thereof, including liabilities for taxes, material
commitments and material Contingent Obligations; and (ii) with respect to the
forecasted Statements, the projections and assumptions expressed therein were
prepared in good faith and represent management's opinion based on the
information available to the Company at the time so furnished.
5.5 No Material Adverse Change. (a) Since November 30, 1997 up to the
--------------------------
Closing Date, except as disclosed in the Company's Form 10 filed on March 19,
1998 with the Commission (a copy of which has been delivered to the Agent),
there has occurred no change in the business, properties, condition (financial
or otherwise), results of operations or prospects of the Company and its
Subsidiaries taken as a whole or any other event which has had or is
reasonably likely to have a Material Adverse Effect.
(b) Since the Closing Date, there has occurred no change in the
business, properties, condition (financial or otherwise), results of
operations or prospects of the Company and its Subsidiaries taken as a whole
or any other event which has had or is reasonably likely to have a Material
Adverse Effect.
5.6 Taxes.
-----
(A) Tax Examinations. All deficiencies which have been asserted against
----------------
the Company or any of the Company's Subsidiaries as a result of any federal,
state, local or foreign tax examination for each taxable year in respect of
which an examination has been conducted have been fully paid or finally
settled or are being contested in good faith, and as of the Closing Date no
issue has been raised by any taxing authority in any such examination which,
by application of similar principles, reasonably can be expected to result in
assertion by such taxing authority of a material deficiency for any other year
not so examined which has not been reserved for in the Company's consolidated
financial statements to the extent, if any, required by Agreement Accounting
Principles. Except as permitted pursuant to Section 6.2(D) and except as
--------------
reserved for in the Company's consolidated financial statements to the extent,
if any, required by Agreement Accounting Principles, neither the Company nor
any of the Company's Subsidiaries anticipates any material tax liability with
respect to the years which have not been closed pursuant to applicable law.
(B) Payment of Taxes. All tax returns and reports of each of the
------------------
Company and its Subsidiaries required to be filed have been timely filed, and
all taxes, assessments, fees and other governmental charges thereupon and upon
their respective property, assets, income and franchises which are shown in
such returns or reports to be due and payable have been paid except those
items which are being contested in good faith and have been reserved for in
accordance with Agreement Accounting Principles. The Company has no Knowledge
of any proposed tax assessment against the Company, or any of the Company's
other Subsidiaries that will have or is reasonably likely to have a Material
Adverse Effect.
5.7 Litigation; Loss Contingencies and Violations. Except for Permitted
---------------------------------------------
Existing Contingent Obligations and as set forth in Schedule 5.7 to this
------------
Agreement, there is no action, suit, proceeding or investigation of which the
Company has Knowledge or arbitration before or by any Governmental Authority
or private arbitrator pending or, to the Knowledge of the Company or any of
its Subsidiaries, threatened against the Company or any of its Subsidiaries or
any property of any of them (i) challenging the validity or the enforceability
of any material provision of the Loan Documents or (ii) which will have or is
reasonably likely to have a Material Adverse Effect. There is no material
loss contingency within the meaning of Agreement Accounting Principles which
has not been reflected in the consolidated financial statements of the Company
prepared and delivered pursuant to Section 6.1(A) for the fiscal period during
--------------
which such material loss contingency was incurred. Neither the Company nor
any of its Subsidiaries is (A) in violation of any applicable Requirements of
Law which violation will have or is reasonably likely to have a Material
Adverse Effect, or (B) subject to or in default with respect to any final
judgment, writ, injunction, restraining order or order of any nature, decree,
rule or regulation of any court or Governmental Authority which will have or
is reasonably likely to have a Material Adverse Effect.
5.8 Subsidiaries; Capital Stock. Schedule 5.8 to this Agreement (i)
----------------------------- ------------
contains a description as of the Closing Date of the corporate structure of
the Company, the Company's Subsidiaries and any other Person in which the
Company or any of its Subsidiaries holds an equity interest; and (ii)
accurately sets forth (A) the correct legal name, the jurisdiction of
organization or incorporation and the jurisdictions in which each Borrower and
the direct and indirect Subsidiaries of the Company is qualified to transact
business as a foreign company or corporation, (B) the authorized, issued and
outstanding shares of each class of Capital Stock of each entity referred to
above that is a corporation and the owners of such shares (both as of the
Closing Date and on a fully-diluted basis), and (C) a summary of the direct
and indirect ownership, membership, partnership, joint venture, or other
equity interests, if any, of the Company and each Subsidiary of the Company in
any Person that is not a corporation. Except as disclosed on Schedule 5.8,
------------
none of the issued and outstanding Capital Stock of the Company or any of its
Subsidiaries is subject to any vesting, redemption, or repurchase agreement,
and there are no warrants or options outstanding with respect to such Capital
Stock. As of the Closing Date, the outstanding Capital Stock of the Company
and each of its Subsidiaries will be duly authorized, validly issued, fully
paid and nonassessable and, with the exception of the Company, will not be
Margin Stock.
5.9 ERISA. No Benefit Plan has incurred any accumulated funding
-----
deficiency (as defined in Sections 302(a)(2) of ERISA and 412(a) of the Code)
whether or not waived. Neither the Company nor any member of the Controlled
Group has incurred any liability to the PBGC which remains outstanding other
than the payment of premiums, and there are no premium payments which have
become due which are unpaid. Schedule B to the most recent annual report
filed with the IRS with respect to each Benefit Plan and furnished to the
lenders is complete and accurate. Since the date of each such Schedule B,
there has been no material adverse change in the funding status or financial
condition of the Benefit Plan relating to such Schedule B. Neither the
Company nor any member of the Controlled Group has (i) failed to make a
required contribution or payment to a Multiemployer Plan or (ii) made a
complete or partial withdrawal under Sections 4203 or 4205 of ERISA from a
Multiemployer Plan. Neither the Company nor any member of the Controlled
Group has failed to make a required installment or any other required payment
under Section 412 of the Code on or before the due date for such installment
or other payment. Neither the Company nor any member of the Controlled Group
is required to provide security to a Benefit Plan under Section 401(a)(29) of
the Code due to a Plan amendment that results in an increase in current
liability for the plan year. Neither the Company nor any of its Subsidiaries
maintains or contributes to any employee welfare benefit plan within the
meaning of Section 3(1) of ERISA which provides benefits to employees after
termination of employment other than as required by Section 601 of ERISA.
Each Plan which is intended to be qualified under Section 401(a) of the Code
as currently in effect is so qualified, and each trust related to any such
Plan is exempt from federal income tax under Section 501(a) of the Code as
currently in effect. The Company and all Subsidiaries are in compliance in
all material respects with the responsibilities, obligations and duties
imposed on them by ERISA and the Code with respect to all Plans (other than
Foreign Employee Benefit Plans and Foreign Pension Plans). Neither the
Company nor any of its Subsidiaries nor any fiduciary of any Plan has engaged
in a nonexempt prohibited transaction described in Sections 406 of ERISA or
4975 of the Code which could reasonably be expected to subject the Company to
liability individually or in the aggregate in excess of $2,500,000. Neither
the Company nor any member of the Controlled Group has taken or failed to take
any action which would constitute or result in a Termination Event, which
action or inaction could reasonably be expected to subject the Company nor any
of its Subsidiaries to liability in excess of $2,500,000. Neither the Company
nor any Subsidiary is subject to any liability under Sections 4063, 4064,
4069, 4204 or 4212(c) of ERISA and no other member of the Controlled Group is
subject to any liability under Sections 4063, 4064, 4069, 4204 or 4212(c) of
ERISA which could reasonably be expected to subject the Company to or any of
its Subsidiaries liability individually or in the aggregate in excess of
$2,500,000. Neither the Company nor any of its Subsidiaries has, by reason of
the transactions contemplated hereby, any obligation to make any payment to
any employee pursuant to any Plan or existing contract or arrangement.
5.10 Accuracy of Information. Each of (i) the Company's Form 10 filed
-----------------------
on March 19, 1998 with the Commission (a copy of which has been delivered to
the Agent), as of the date of filing of such Form 10, (ii) any registration
statement or report on Form 10-K, 10-Q and 8-K (or their equivalents) which
the Company shall have filed with the Commission as at the time of filing of
such registration or report, as applicable, and (iii) all written reports,
certificates and documents of the Company furnished by or on behalf of the
Company and any of its Subsidiaries to the Agent or to any Lender in
connection with the negotiation of, or compliance with, the Loan Documents,
including, without limitation, the Confidential Information Memorandum
reviewed by the Company (provided that except as set forth in Section 5.4, no
-----------
representation or warranty is made with respect to the forward looking
information contained therein), in each case, as of the date furnished, do not
contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements contained herein or therein, in
light of the circumstances under which they were made, not misleading.
5.11 Securities Activities. Neither the Company nor any of its
----------------------
Subsidiaries is engaged in the business of extending credit for the purpose of
purchasing or carrying Margin Stock.
5.12 Material Agreements. Neither the Company nor any Subsidiary is a
-------------------
party to any agreement or instrument or subject to any charter or other
contractual or corporate restriction which will have or is reasonably likely
to have a Material Adverse Effect. Neither the Company nor any of its
Subsidiaries has received notice or has Knowledge that (i) it is in default in
the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any Contractual Obligation applicable to
it, or (ii) any condition exists which, with the giving of notice or the lapse
of time or both, would constitute a default with respect to any such
Contractual Obligation, in each case, except where such default or defaults,
if any, will not have or are not reasonably likely to have a Material Adverse
Effect.
5.13 Compliance with Laws. The Company and its Subsidiaries are in
----------------------
compliance with all Requirements of Law applicable to them and their
respective businesses, in each case where the failure to so comply
individually or in the aggregate will have or is reasonably likely to have a
Material Adverse Effect.
5.14 Assets and Properties. The Company and each of its Subsidiaries
----------------------
has good and marketable title to all of its assets and properties (tangible
and intangible, real or personal) owned by it or a valid leasehold interest in
all of its leased assets (except insofar as marketability may be limited by
any laws or regulations of any Governmental Authority affecting such assets),
and all such assets and property are free and clear of all Liens, except Liens
securing the Obligations and Liens permitted under Section 6.3(C).
---------------
Substantially all of the assets and properties owned by, leased to or used by
the Company and/or each such Subsidiary of the Company are in adequate
operating condition and repair, ordinary wear and tear excepted. Except for
Liens granted to the Agent for the benefit of the Agent and the Holders of
Secured Obligations, neither this Agreement nor any other Loan Document, nor
any transaction contemplated under any such agreement, will affect any right,
title or interest of the Company or such Subsidiary in and to any of such
assets in a manner that will have or is reasonably likely to have a Material
Adverse Effect.
5.15 Statutory Indebtedness Restrictions. Neither the Company, nor any
-----------------------------------
of its Subsidiaries is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, the Interstate Commerce Act, or
the Investment Company Act of 1940, or any other federal, state, local or
foreign statute or regulation which limits its ability to consummate the
transactions contemplated hereby.
5.16 Post-Retirement Benefits. As of the Closing Date, the Company and
------------------------
its Subsidiaries have no expected cost of post-retirement medical and
insurance benefits payable by the Company or its Subsidiaries to its employees
and former employees, as estimated by the Company in accordance with Financial
Accounting Standards Board Statement No. 106.
5.17 Insurance. Schedule 5.17 to this Agreement accurately sets forth
--------- -------------
as of the Closing Date all insurance policies and programs currently in effect
with respect to the respective properties and assets and business of the
Company and its Subsidiaries, specifying for each such policy and program, (i)
the amount thereof, (ii) the risks insured against thereby, (iii) the name of
the insurer and each insured party thereunder, (iv) the policy or other
identification number thereof, (v) the expiration date thereof, (vi) the
annual premium with respect thereto and (vii) describes any reserves, relating
to any self-insurance program that is in effect. Such insurance policies and
programs reflect coverage that is reasonably consistent with prudent industry
practice.
5.18 Contingent Obligations. Except for Permitted Existing Contingent
----------------------
Obligations, neither the Company nor any of its Subsidiaries has any
Contingent Obligation, contingent liability, long-term lease, or synthetic
lease, not reflected in the financial statements attached hereto as Exhibit G
---------
or otherwise disclosed to the Agent and the Lenders in the other Schedules to
this Agreement, which could reasonably be expected to subject the Company nor
any of its Subsidiaries to liability individually or in the aggregate in
excess of (a) $2,500,000 with respect to payments for Contingent Purchase
Price Obligations, (b) $30,000,000 with respect to guarantees issued for the
benefit of third-parties as support for loans and advances made by such
third-parties to Subsidiaries (other than Subsidiary Borrowers and Subsidiary
Obligors) of the Company or (c) $2,500,000 for other amounts.
5.19 Restricted Junior Payments. Neither the Company nor any of its
----------------------------
Subsidiaries has directly or indirectly declared, ordered, paid or made or set
apart any sum or properties for any Restricted Junior Payment or agreed to do
so, except to the extent permitted pursuant to Section 6.3(F) of this
---------------
Agreement.
5.20 Labor Matters.
--------------
(A) There are on the Closing Date no material collective bargaining
agreements, other labor agreements or Multiemployer Plans covering any of the
employees of the Company or any of its Subsidiaries. As of the Closing Date,
no material labor disputes, strikes or walkouts affecting the operations of
the Company or any of its Subsidiaries, is pending, or, to the Company's
Knowledge, threatened, planned or contemplated.
(B) Set forth in Schedule 5.20 to this Agreement is a list, as of the
-------------
Closing Date, of all material consulting agreements, executive compensation
plans, deferred compensation agreements, employee pension plans or retirement
plans, employee profit sharing plans, employee stock purchase and stock option
plans, severance plans, group life insurance, hospitalization insurance or
other plans or arrangements of the Company and its Subsidiaries providing for
benefits for employees of the Company or its Subsidiaries.
5.21 Environmental Matters. (a) Except as disclosed on Schedule 5.21:
--------------------- -------------
(i) the operations of the Company and its Subsidiaries comply in all
material respects with all applicable Environmental, Health or Safety
Requirements of Law;
(ii) the Company and its Subsidiaries have all material permits,
licenses or other authorizations required under all applicable Environmental,
Health or Safety Requirements of Law and are in material compliance with such
permits;
(iii) neither the Company, any of its Subsidiaries nor any of their
respective present property or operations, or, to the best of, the Company's
or any of its Subsidiaries' Knowledge, any of their respective past property
or operations, are subject to or are the subject of, any investigation known
to the Company or any of its Subsidiaries, any judicial or administrative
proceeding, order, judgment, decree, settlement or other agreement respecting:
(A) any material violation of Environmental, Health or Safety Requirements of
Law; (B) any material remedial action; or (C) any material claims or
liabilities arising from the Release or threatened Release of a Contaminant
into the environment;
(iv) there is not now, nor to the best of the Company's or any of its
Subsidiaries' Knowledge has there ever been on or in the property of the
Company or any of its Subsidiaries any material landfill, waste pile,
underground storage tanks, aboveground storage tanks, surface impoundment or
hazardous waste storage facility of any kind, polychlorinated biphenyls (PCBs)
used in hydraulic oils, electric transformers or other equipment, or
asbestos-containing material; and
(v) neither the Company nor any of its Subsidiaries has any material
Contingent Obligation or material contingent liability in connection with any
Release or threatened Release of a Contaminant into the environment.
(b) For purposes of this Section 5.21 "material" means any noncompliance
------------
or basis for liability which could reasonably be likely to subject the Company
to liability individually in excess of $2,500,000 or in the aggregate in
excess of $5,000,000.
5.22 Foreign Employee Benefit Matters. (a) Each Foreign Employee
-----------------------------------
Benefit Plan is in compliance in all respects with all laws, regulations and
rules applicable thereto and the respective requirements of the governing
documents for such Plan, except for any non-compliance the consequences of
which, in the aggregate, would not result in a material obligation to pay
money; (b) the aggregate of the accumulated benefit obligations under all
Foreign Pension Plans does not exceed to any material extent the current fair
market value of the assets held in the trusts or similar funding vehicles for
such Plans or reasonable reserves have been established in accordance with
prudent business practices or as required by Agreement Accounting Principles
with respect to any shortfall; (c) with respect to any Foreign Employee
Benefit Plan maintained or contributed to by the Company or any Subsidiary or
any member of its Controlled Group (other than a Foreign Pension Plan),
reasonable reserves have been established in accordance with prudent business
practice or where required by ordinary accounting practices in the
jurisdiction in which such Plan is maintained; and (d) there are no actions,
suits or claims (other than routine claims for benefits) pending or, to the
Knowledge of the Company and its Subsidiaries, threatened against the Company
or any Subsidiary of it or any ERISA Affiliate with respect to any Foreign
Employee Benefit Plan, except to the extent the consequences of which, in the
aggregate, would not result in a material obligation to pay money.
ARTICLE VI: COVENANTS
- -------------------------
Each of the Borrowers covenants and agrees that so long as any
Commitments are outstanding and thereafter until payment in full of all of the
Obligations (other than contingent indemnity and reimbursement obligations),
unless the Required Lenders shall otherwise give prior written consent:
6.1 Reporting. The Borrowers shall:
---------
(A) Financial Reporting. Furnish to the Agent (which will promptly
--------------------
furnish copies of the following to the Lenders):
(i) Quarterly Reports. As soon as practicable, and in any event within
-----------------
forty-five (45) days after the end of the first three fiscal quarters in each
fiscal year beginning with the fiscal quarter ending February 28, 1998, the
consolidated and consolidating balance sheets of the Company and its
Subsidiaries as at the end of such period, the related consolidated and
consolidating statements of income and the related consolidated statement of
stockholders' equity and cash flow of the Company and its Subsidiaries for
such fiscal quarter and for the period from the beginning of the then current
fiscal year to the end of such fiscal quarter, certified by the chief
financial officer of the Company on behalf of the Company as fairly presenting
in all material respects the consolidated and, as applicable, consolidating
financial position of the Company and its Subsidiaries as at the dates
indicated and the results of their operations and cash flow for the periods
indicated in accordance with Agreement Accounting Principles, subject to
normal year end adjustments.
(ii) Annual Reports. As soon as practicable, and in any event within
---------------
ninety (90) days after the end of each fiscal year, (a) the consolidated and
consolidating balance sheet of the Company and its Subsidiaries as at the end
of such fiscal year and the related consolidated and consolidating statements
of income and the related consolidated statement of stockholders' equity and
cash flow of the Company and its Subsidiaries for such fiscal year, and, in
comparative form the corresponding figures for the previous fiscal year, (b) a
schedule from the Company setting forth for each item in clause (a) hereof,
----------
the corresponding figures from the consoli-dated financial budget for the
current fiscal year delivered pursuant to Section 6.1(A)(iv), and (c) an audit
------------------
report on the items (other than the consolidating financial statements) listed
in clause (a) hereof of independent certified public accountants of recognized
----------
national standing, which audit report shall be unqualified and shall state
that such financial statements fairly present in all material respects the
consolidated financial position of the Company and its Subsidiaries as at the
dates indicated and the results of their operations and cash flow for the
periods indicated in conformity with Agreement Accounting Principles and that
the examination by such accountants in connection with such consolidated
financial statements has been made in accordance with generally accepted
auditing standards. The deliveries made pursuant to this clause (ii) shall be
-----------
accompanied by a certificate of such accountants that, in the course of their
examination necessary for their certification of the foregoing (such
examination utilizing only their customary audit procedures without any
necessity of conducting extra procedures for purposes of this certificates),
they have obtained no knowledge of such Default or Unmatured Default under
Section 6.4, or if, in the opinion of such accountants, any Default or
---------
Unmatured Default shall exist, stating the nature and status thereof. Such
----
deliveries shall also, not later than one hundred twenty days after the end of
such fiscal year, be accompanied by the management recommendation letter from
such accountants delivered in connection with such financial statements (x)
confirming that although no separate internal controls audit was conducted, in
the process of their regular audit, the internal systems and controls were
reviewed on a limited basis, and (y) listing any recommendations made to the
Company with respect to its internal systems and controls. If the Required
Lenders are not satisfied with the management recommendation letter's
treatment of the Company's internal systems and controls, they shall have the
right to require the Company to direct independent certified public
accountants of recognized national standing to prepare an audit report on the
internal systems and controls of the Company and its Subsidiaries.
(iii) Officer's Certificate. Together with each delivery of any
----------------------
financial statement pursuant to clauses (i) and (ii) of this Section 6.1(A),
----------- ---- --------------
(a) an Officer's Certificate of the Company, substantially in the form of
Exhibit F attached hereto and made a part hereof, stating that no Default or
------
Unmatured Default exists, or if any Default or Unmatured Default exists,
stating the nature and status thereof and (b) a Compliance Certificate,
substantially in the form of Exhibit C attached hereto and made a part hereof,
---------
signed by the Company's chief financial officer, setting forth the Company's
calculations for the period then ended for Section 2.2(B) and for Section
-------------- -------
2.4(b) and which demonstrate compliance, when applicable, with the provisions
--
of Section 6.4, and which calculate the EBITDA Contribution Ratio for purposes
-----------
of determining the Applicable Eurodollar Margins, the Applicable Base Rate
Margins, the Applicable Letter of Credit Fee, and the Applicable Facility Fee.
(iv) Budgets. As soon as practicable and in any event not later than
-------
thirty (30) days following the beginning of each fiscal year beginning with
the fiscal year beginning September 1, 1998, a copy of the budget (including a
budgeted balance sheet and income statement) of the Company for the upcoming
fiscal year prepared in such detail as shall be reasonably satisfactory to the
Agent.
(B) Notice of Default. Promptly upon any of the chief executive
-------------------
officer, chief operating officer, or chief financial officer of the Company
obtaining Knowledge (i) of any condition or event which constitutes a Default
or Unmatured Default, or becoming aware that any Lender or Agent has given any
written notice with respect to a claimed Default or Unmatured Default under
this Agreement, or (ii) that any Person has given any written notice to the
Company or any Subsidiary of the Company or taken any other action with
respect to a claimed default or event or condition of the type referred to in
Section 7.1(e), deliver to the Agent and the Lenders an Officer's Certificate
- ---------------
specifying (a) the nature and period of existence of any such claimed default,
Default, Unmatured Default, condition or event, (b) the notice given or action
taken by such Person in connection therewith, and (c) what action the Company
has taken, is taking and proposes to take with respect thereto.
(C) Lawsuits. (i) Promptly upon the Company obtaining Knowledge of the
--------
institution of, or written threat of, any action, suit, proceeding,
governmental investigation or arbitration against or affecting the Company or
any of its Subsidiaries or any property of the Company or any of its
Subsidiaries not previously disclosed pursuant to Section 5.7, which action,
-----------
suit, proceeding, governmental investigation or arbitration exposes, or in the
case of multiple actions, suits, proceedings, governmental investigations or
arbitrations arising out of the same general allegations or circumstances
which expose, in the Company's reasonable judgment, the Company or any of its
Subsidiaries to liability in an amount aggregating $2,500,000 or more, give
written notice thereof to the Agent and the Lenders and provide such other
information as may be reasonably available to enable each Lender and the Agent
and its counsel to evaluate such matters; and (ii) in addition to the
requirements set forth in clause (i) of this Section 6.1(C), upon request of
---------- --------------
the Agent or the Required Lenders, promptly give written notice of the status
of any action, suit, proceeding, governmental investigation or arbitration
disclosed on Schedule 5.7 or covered by a report delivered pursuant to clause
------------ ------
(i) above and provide such other information as may be reasonably available to
- ---
it that would not result in loss of any attorney-client privilege by
disclosure to the Lenders to enable each Lender and the Agent and its counsel
to evaluate such matters.
(D) Insurance. As soon as practicable and in any event within one
---------
hundred twenty (120) days of the end of each fiscal year commencing with the
fiscal year ending August 31, 1998 deliver to the Agent and the Lenders (i) a
report in form as attached as Schedule 5.17 or otherwise in form and substance
-------------
reasonably satisfactory to the Agent outlining all material insurance coverage
maintained as of the date of such report by the Company and its Subsidiaries
and the duration of such coverage and (ii) an insurance broker's statement
that all premiums with respect to such coverage have been paid when due.
(E) ERISA Notices. Deliver or cause to be delivered to the Agent and
--------------
the Lenders, at the Company's expense, the following information and notices
as soon as reasonably possible, and in any event:
(i) (a) within ten (10) Business Days after the Company obtains
Knowledge that a Termination Event has occurred which could reasonably be
expected to subject the Company to or any of its Subsidiaries liability
individually or in the aggregate in excess of $2,500,000, a written statement
of the chief financial officer of the Company describing such Termination
Event and the action, if any, which the Company has taken, is taking or
proposes to take with respect thereto, and when known, any action taken or
threatened by the IRS, DOL or PBGC with respect thereto and (b) within ten
(10) Business Days after any member of the Controlled Group obtains Knowledge
that a Termination Event has occurred which could reasonably be expected to
subject the Company to or any of its Subsidiaries liability individually or in
the aggregate in excess of $2,500,000, a written statement of the chief
financial officer of the Company describing such Termination Event and the
action, if any, which the member of the Controlled Group has taken, is taking
or proposes to take with respect thereto, and when known, any action taken or
threatened by the IRS, DOL or PBGC with respect thereto;
(ii) within ten (10) Business Days after the Company or any of its
Subsidiaries obtains Knowledge that a prohibited transaction (defined in
Sections 406 of ERISA and Section 4975 of the Code) has occurred, a statement
of the chief financial officer of the Company describing such transaction and
the action which the Company or such Subsidiary has taken, is taking or
proposes to take with respect thereto;
(iii) within ten (10) Business Days after any material increase in the
benefits of any existing Plan or the establishment of any new Benefit Plan or
the commencement of, or obligation to commence, contributions to any Benefit
Plan or Multiemployer Plan to which the Company or any member of the
Controlled Group was not previously contributing, notification of such
increase, establishment, commencement or obligation to commence and the amount
of such contributions;
(iv) within ten (10) Business Days after the Company or any of its
Subsidiaries receives notice of any unfavorable determination letter from the
IRS regarding the qualification of a Plan under Section 401(a) of the Code,
copies of each such letter;
(v) within thirty (30) Business Days after the establishment of any
Foreign Employee Benefit Plan or the commencement of, or obligation to
commence, contributions to any Foreign Employee Benefit Plan to which the
Company or any Subsidiary was not previously contributing which, in any case,
would materially increase the Company's employment costs, notification of such
establishment, commencement or obligation to commence and the amount of such
contributions;
(vi) within ten (10) Business Days after the filing thereof with the IRS, a
copy of each funding waiver request filed with respect to any Benefit Plan and
all communications received by the Company or a member of the Controlled Group
with respect to such request;
(vii) within ten (10) Business Days after receipt by the Company or any
member of the Controlled Group of the PBGC's intention to terminate a Benefit
Plan or to have a trustee appointed to administer a Benefit Plan, copies of
each such notice;
(viii) within ten (10) Business Days after receipt by the Company or any
member of the Controlled Group of a notice from a Multiemployer Plan regarding
the imposition of withdrawal liability, copies of each such notice;
(ix) within ten (10) Business Days after the Company or any member of
the Controlled Group fails to make a required installment or any other
required payment under Section 412 of the Internal Revenue Code on or before
the due date for such installment or payment, a notification of such failure;
and
(x) within ten (10) Business Days after the Company or any member of the
Controlled Group knows or has reason to know that (a) a Multiemployer Plan has
been terminated, (b) the administrator or plan sponsor of a Multiemployer Plan
intends to terminate a Multiemployer Plan, or (c) the PBGC has instituted or
will institute proceedings under Section 4042 of ERISA to terminate a
Multiemployer Plan.
For purposes of this Section 6.1(E), the Company, any of its Subsidiaries and
--------------
any member of the Controlled Group shall be deemed to know all facts known by
the Administrator of any Plan of which the Borrower or any member of the
Controlled Group or such Subsidiary is the plan sponsor.
(F) Labor Matters. Notify the Agent and the Lenders in writing,
--------------
promptly upon the Company's or any of its Subsidiaries' learning thereof, of
(i) any labor dispute to which the Company or any of its Subsidiaries may
become a party, including, without limitation, any strikes, lockouts or other
disputes relating to such Persons' plants and other facilities and (ii) any
Worker Adjustment and Retraining Notification Act liability incurred with
respect to the closing of any plant or other facility of the Company or any of
its Subsidiaries where, in the case of (i) or (ii), such is reasonably likely
to have a Material Adverse Effect.
(G) Other Indebtedness. Deliver to the Agent and the Lenders (i) a copy
------------------
of each regular report, notice or communication regarding potential or actual
defaults (including any accompanying officers' certificate) delivered by or on
behalf of the Company or any of its Subsidiaries to the holders of
Indebtedness for money borrowed with respect to Indebtedness the outstanding
principal balance of which is at least $2,500,000 pursuant to the terms of the
agreements governing such Indebtedness, such delivery to be made at the same
time and by the same means as such notice or other communication is delivered
to such holders, and (ii) a copy of each notice or other communication
received by the Company or any of its Subsidiaries from the holders of
Indebtedness for money borrowed with respect to Indebtedness the outstanding
principal balance of which is at least $2,500,000 pursuant to the terms of
such Indebtedness, such delivery to be made promptly after such notice or
other communication is received by the Company or the applicable Subsidiary.
(H) Other Reports. Deliver or cause to be delivered to the Agent and
--------------
the Lenders copies of all 10-Ks, 10-Qs and 8-Ks filed with the Commission by
the Company.
(I) Environmental Notices. Deliver to the Agent and the Lenders as soon as
---------------------
possible and in any event within ten (10) days after receipt by the Company or
any of its Subsidiaries, a copy of (i) any notice or claim to the effect that
the Company or any of its Subsidiaries is or may be liable to any Person as a
result of the Release by the Company, any of its Subsidiaries, or any other
Person of any Contaminant into the environment, and (ii) any notice alleging
any violation of any Environmental, Health or Safety Requirements of Law by
the Company or any of its Subsidiaries if, in either case, such notice or
claim relates to an event which could reasonably be expected to subject the
Company or any of its Subsidiaries to liability individually or in the
aggregate in excess of $2,500,000.
(J) Other Information. Within a reasonable period of time following
------------------
receipt of a request therefor from the Agent, prepare and deliver to the Agent
and the Lenders such other information with respect to the Company, any of its
Subsidiaries, or the Collateral, including, without limitation, schedules
identifying and describing the Collateral and any dispositions thereof, as
from time to time may be reasonably requested by the Agent or any Lender.
6.2 Affirmative Covenants.
----------------------
(A) Existence, Etc. Except as provided by Section 6.3(B)(iv) with
---------------- ------------------
respect to the sale, dissolution or liquidation of certain Subsidiaries of the
Company, the Company shall, and shall cause each of its Subsidiaries to, at
all times maintain its existence and preserve and keep, or cause to be
preserved and kept, in full force and effect its rights and franchises
material to its businesses except that any Subsidiary of the Company may merge
with or liquidate into the Company or any other Subsidiary of the Company;
provided that the surviving entity expressly assumes any liabilities, if any,
-----
of either of such Subsidiaries with respect to the Obligations pursuant to an
assumption agreement reasonably satisfactory to the Agent; provided further
-------- -------
that the Consolidated Net Worth of the surviving corporation is not less than
the Consolidated Net Worth of the Subsidiary with any liability with respect
to the Obligations immediately prior to such merger; and provided further, if
-------- -------
the corporation being merged out of existence or liquidated is a party to a
Pledge Agreement the surviving entity shall execute and deliver such
documents, instruments, agreements and opinions in connection therewith as
shall be required by the Agent in connection with any such Pledge Agreement
(and all accrued interest in connection therewith) of such entity shall be
repaid in full as of the date of such liquidation or merger.
(B) Corporate Powers; Conduct of Business. Except as provided by
-----------------------------------------
Section 6.3(B)(iv) with respect to the sale, dissolution or liquidation of
-------------
certain Subsidiaries of the Company, the Company (x) shall, and shall cause
each of its Subsidiaries to qualify and remain qualified to do business in
each jurisdiction in which the nature of its business requires it to be so
qualified and where the failure to be so qualified will have or is reasonably
likely to have a Material Adverse Effect and (y) will, and will cause each
Subsidiary to, carry on and conduct its business in substantially the same
manner and in substantially the same fields of enterprise as it is presently
conducted.
(C) Compliance with Laws, Etc. The Company shall, and shall cause its
--------------------------
Subsidiaries to, (a) comply with all Requirements of Law and all restrictive
covenants affecting such Person or the business, properties, assets or
operations of such Person, and (b) obtain as needed all permits necessary for
its operations and maintain such permits in good standing unless failure to
comply or obtain is not reasonably anticipated to have a Material Adverse
Effect.
(D) Payment of Taxes and Claims; Tax Consolidation. The Company shall
----------------------------------------------
pay, and cause each of its Subsidiaries to pay, (i) all taxes, assessments and
other governmental charges imposed upon it or on any of its properties or
assets or in respect of any of its franchises, business, income or property
before any penalty or interest accrues thereon, and (ii) all claims
(including, without limitation, claims for labor, services, materials and
supplies) for sums which have become due and payable and which by law have or
may become a Lien (other than a Lien permitted by Section 6.3(C)) upon any of
--------------
the Company's or such Subsidiary's property or assets, prior to the time when
any penalty or fine shall be incurred with respect thereto; provided, however,
-------- -------
that no such taxes, assessments and governmental charges referred to in clause
------
(i) above or claims referred to in clause (ii) above (and interest, penalties
- --- -----------
or fines relating thereto) need be paid if being contested in good faith by
appropriate proceedings diligently instituted and conducted and if such
reserve or other appropriate provision, if any, as shall be required in
conformity with Agreement Accounting Principles shall have been made therefor.
The Company will not permit any of its Subsidiaries to file or consent to the
filing of any consolidated income tax return with any Person other than the
Company or any of its Subsidiaries.
(E) Insurance. The Company shall maintain for itself and its
---------
Subsidiaries, or shall cause each of its Subsidiaries to maintain in full
force and effect the insurance policies and programs listed on Schedule 5.17
-------------
to this Agreement or substantially similar policies and programs or other
policies and programs as reflect coverage that is reasonably consistent with
prudent industry practice.
(F) Inspection of Property; Books and Records; Discussions. The Company
------------------------------------------------------
shall permit, and cause each of the Subsidiary Borrowers and Subsidiary
Obligors to permit, any authorized representative(s) designated by the Agent
(together with an authorized representative of any Lender that may request to
accompany such authorized representative of the Agent) to visit and inspect
any of the properties of the Company or any of the Subsidiary Borrowers and
Subsidiary Obligors, to examine, audit, check and make copies of their
respective financial and accounting records, books, journals, orders, receipts
and any non-privileged correspondence and other data relating to their
respective businesses or the transactions contemplated hereby (including,
without limitation, in connection with environmental compliance, hazard or
liability), and to discuss their affairs, finances and accounts with their
officers and independent certified public accountants, all upon reasonable
notice and at such reasonable times during normal business hours, as often as
may be reasonably requested; provided, however, that the Borrowers' and
-------- -------
Subsidiary Obligors' obligation to reimburse the Agent for reasonable costs
and expenses incurred in connection with such inspections shall be limited to
no more than one (1) inspection during any twelve-month period if such
inspections are conducted at a time when no Default or Unmatured Default shall
have occurred and is continuing. So long as no Default or Unmatured Default
shall have occurred and is continuing, and to the extent reasonably
practicable, any such inspection with respect to a Borrower or Subsidiary
Obligor will be coordinated with an Authorized Officer of the Company. The
Company shall keep and maintain, and cause each of the Company's Subsidiaries
to keep and maintain, in all material respects, proper books of record and
account in which entries in conformity with Agreement Accounting Principles
shall be made of all dealings and transactions in relation to their respective
businesses and activities, including, without limitation, transactions and
other dealings with respect to the Collateral. If a Default has occurred and
is continuing, the Company, upon the Agent's request, shall turn over copies
of any such records to the Agent or its representatives.
(G) ERISA Compliance. The Company shall, and shall cause each of its
-----------------
domestic Subsidiaries to, establish, maintain and operate all Plans (other
than Foreign Employee Benefit Plans and Foreign Pension Plans) to comply in
all material respects with the provisions of ERISA, the Code, all other
applicable laws, and the regulations and interpretations thereunder and the
respective requirements of the governing documents for such Plans.
(H) Maintenance of Property. The Company shall cause all property used
-----------------------
or useful in the conduct of its business or the business of any Subsidiary to
be maintained and kept in adequate condition, repair and working order and
supplied with all necessary equipment and shall cause to be made all necessary
repairs, renewals, replacements, betterments and improvements thereof, all as
in the judgment of the Company may be necessary so that the business carried
on in connection therewith may be properly conducted at all times; provided,
--------
however, that nothing in this Section 6.2(H) shall prevent the Company from
------ --------------
discontinuing the operation or maintenance of any of such property if such
-
discontinuance is, in the judgment of the Company, desirable in the conduct of
-
its business or the business of any Subsidiary and not disadvantageous in any
respect to the Agent or the Lenders.
(I) Environmental Compliance. The Company and its Subsidiaries shall
-------------------------
comply with all Environmental, Health or Safety Requirements of Law, except
where noncompliance will not have or is not reasonably likely to subject the
Company and its Subsidiaries to liability, individually in excess of
$2,500,000, or in the aggregate in excess of $5,000,000.
(J) Use of Proceeds. The Borrower shall use the proceeds of the Loans
---------------
to pay transaction costs in connection with the transactions evidenced by the
Loan Documents, to refinance existing indebtedness of the Company and its
Subsidiaries and to provide funds for the working capital needs and other
general corporate purposes of the Borrowers and their Subsidiaries. The
Company will not, nor will it permit any Subsidiary to, use any of the
proceeds of the Loans to purchase or carry any "Margin Stock" or to make any
Acquisition, other than any Permitted Acquisition pursuant to Section 6.3(G).
--------------
(K) Foreign Employee Benefit Compliance. The Company shall, and shall
-----------------------------------
cause each of its Subsidiaries and ERISA Affiliates to, establish, maintain
and operate all Foreign Employee Benefit Plans to comply in all material
respects with all laws, regulations and rules applicable thereto and the
respective requirements of the governing documents for such Plans, except for
failures to comply which, in the aggregate, would not result in a material
obligation to pay money.
6.3 Negative Covenants.
-------------------
(A) Indebtedness. Neither the Company nor any of its Subsidiaries shall
------------
directly or indirectly create, incur, assume or otherwise become or remain
directly or indirectly liable with respect to any Indebtedness, except:
(a) the Obligations;
(b) Permitted Existing Indebtedness, and any extension, renewal,
refunding or refinancing thereof, provided that any such extension, renewal,
--------
refunding or refinancing is in an aggregate principal amount not greater than
the principal amount of and interest, fees and expenses accrued on, such
Permitted Existing Indebtedness outstanding at the time thereof and is on
terms (including, without limitation, maturity, amortization, interest rate,
premiums, fees, covenants, subordination, events of default, and remedies) not
materially less favorable to the obligor or adverse to the Lenders than the
terms of such Permitted Existing Indebtedness;
(c) Indebtedness permitted pursuant to Section 6.3(H) arising from
--------------
intercompany loans from (1) the Company, or any other Subsidiary of the
Company to any Borrower, (2) any Subsidiary that is not a Borrower to any
other Subsidiary or (3) any Borrower to any Subsidiary of the Company which is
not a Borrower; provided, that all such Indebtedness is subordinated to the
--------
Obligations on terms provided in this Agreement;
(d) Indebtedness in respect of Hedging Agreements permitted under
Section 6.3(P);
---------
(e) Indebtedness permitted by Sections 6.4(B) and 6.4(E)(2);
---------------- ---------
(f) Indebtedness constituting Contingent Obligations permitted by
Section 6.3(E);
---------
(g) unsecured Indebtedness and other liabilities incurred in the
ordinary course of business and consistent with past practice, but not
incurred through the borrowing of money or the obtaining of credit (other than
customary trade terms).
(B) Sales of Assets. Neither the Company nor any of its Subsidiaries
----------------
shall sell, assign, transfer, lease, convey or otherwise dispose of any
property, whether now owned or hereafter acquired, or any income or profits
therefrom, or enter into any agreement to do so, except:
(i) sales of Inventory in the ordinary course of business;
(ii) sales of certain assets of Purina Colombiana S.A., Purina de
Venezuela, C.A., Purina de Guatemala, S.A., and Purina Peru S.A., in each case
as described in that certain Agreement and Plan of Reorganization, dated as of
April 1, 1998, by and among the Company, Ralston Purina Company, and Ralston
Purina International Holding Company, Inc., as in effect on the Closing Date
and without giving effect to any amendment or modification thereto;
(iii) sales, assignments, transfers, leases, conveyances or other
dispositions of other assets (other than the Capital Stock of any Subsidiary
of the Company) if such transaction (a) is of assets no longer required in the
ordinary course of business, (b) is for not less than fair market value, and
(c) when combined with all such other sales, assignments, transfers,
conveyances or other dispositions (i) during any fiscal year represents the
disposition of not greater than ten percent (10%) of the Company's
Consolidated Net Worth calculated as of the date of such sale, assignment,
transfer, conveyance or other disposition and after giving effect to such
transaction; and
(iv) (x) disposition of assets, dissolution, liquidation or sales of
shares of Subsidiaries (other than stock or assets of Subsidiary Borrowers or
Subsidiary Obligors) resulting from a determination by the Company to
discontinue its operations in a particular jurisdiction and (y) with the prior
written consent of all of the Lenders, the dissolution, liquidation or sale of
shares of any Subsidiary Borrower or Subsidiary Obligor and only so long as
any such sale or other disposition is for all cash consideration.
(C) Liens. Neither the Company nor any of its Subsidiaries shall
-----
directly or indirectly create, incur, assume, permit or suffer to exist any
Lien on or with respect to any of their respective property or assets except:
(i) Liens created by the Loan Documents;
(ii) Permitted Existing Liens;
(iii) Customary Permitted Liens;
(iv) Liens securing financing under governmental or other special programs
which are more advantageous to the Company than the financing available under
this Agreement, to the extent such Liens are required in order to participate
in such programs, and any renewals or extensions of any such Liens;
(v) other Liens securing indebtedness not exceeding, in the aggregate, ten
percent (10%) of the Company's Consolidated Net Worth at the time of
incurrence thereof; and
(vi) pledges of assets of entities other than Borrowers and Subsidiary
Obligors to secure Indebtedness of Subsidiaries which are neither Borrowers
nor Subsidiary Obligors.
(D) Investments. Except for Permitted Existing Investments in an amount
-----------
not greater than the amount thereof on the Closing Date, neither the Company
nor any of its Subsidiaries shall directly or indirectly make or own any
Investment except:
(i) Investments constituting Permitted Acquisitions permitted by
Section 6.3(G);
-----------
(ii) Investments in Cash Equivalents;
(iii) Investments consisting of Indebtedness of employees to the
extent such Indebtedness does not exceed in the aggregate $1,000,000 in any
fiscal year;
(iv) Investments in a particular jurisdiction other than the United
States of locally generated funds;
(v) Investments in Affiliates permitted by Section 6.3(H);
---------------
(vi) Investments received in connection with the bankruptcy or
reorganization of suppliers and customers and in settlement of delinquent
obligations of, and other disputes with, customers and suppliers arising in
the ordinary course of business;
(vii) Investments consisting of deposit accounts maintained by the
Company and its Subsidiaries in connection with its cash management system in
the ordinary course of business and consistent with past practice;
(viii) Investments consisting of compensating balances maintained by
Purina Korea, Inc. in Korea as required by domestic financial institutions as
support for loans and advances made by such financial institutions to Purina
Korea, Inc.; provided, such amounts do not in the aggregate exceed $8,000,000
--------
at any time; and
(ix) Investments constituting Contingent Obligations permitted by
Section 6.3(E) or Restricted Junior Payments permitted by Section 6.3(F); and
------------ --------------
(x) Investments with any other Persons which do not exceed in the
aggregate ten percent (10%) of the Consolidated Net Worth of the Company
(calculated as of the date of each such Investment).
(E) Contingent Obligations. Neither the Company nor any of its
-----------------------
Subsidiaries shall directly or indirectly create or become or be liable with
respect to any Contingent Obligation, material contingent liability, long-term
lease, synthetic lease or Contractual Obligation, not reflected in the
financial statements attached hereto as Exhibit G, except: (i) as set forth on
---------
Schedule 1.1.1, (ii) recourse obligations issued for the benefit of
- ---------------
customers, employees, vendors or other trading partners in the ordinary course
- ---------
of its business, (iii) guarantees to officers of the Company and its
subsidiaries of obligations of such officers with respect to the business of
the Company and its subsidiaries, (iv) guarantees incurred in connection with
or resulting from Permitted Acquisitions or other Investments not otherwise
prohibited under this Agreement; provided, that to the extent specified in
--------
this Agreement, such guarantees referred to in this clause (iv) shall be
-----------
treated as Indebtedness for purposes of this Agreement, and (v) guarantees
issued by the Company for the benefit of third-parties as support for loans
and advances made by such third-parties to (x) Subsidiary Borrowers or
Subsidiary Obligors and (y) Subsidiaries of the Company (other than Subsidiary
Borrowers and Subsidiary Obligors) in an amount, contingent or otherwise, not
to exceed $30,000,000 at any time.
(F) Restricted Junior Payments. Neither the Company nor any of its
----------------------------
Subsidiaries shall declare or make any Restricted Junior Payment, except:
(i) dividends payable by the Company in compliance with the corporation
law of the State of Missouri; and
(ii) Restricted Junior Payments made by any Subsidiary of the Company to
the Company or any other Subsidiary of the Company except that no Subsidiary
shall make any Investment in (x) any Affiliate (other than the Company) if as
a result thereof such Investments would at any time exceed in the aggregate
forty percent (40%) of Consolidated Net Worth of the Company or (y) any
Affiliate (other than a Borrower or Subsidiary Obligor) if as a result thereof
such Investments would at any time exceed in the aggregate fifteen percent
(15%) of the Consolidated Net Worth of the Company;
provided, however, that the Restricted Junior Payments described in clause (i)
- -------- ------- ----------
and clause (ii) shall not be permitted if either a Default or an Unmatured
------------
Default shall have occurred and be continuing at the date of declaration or
payment thereof or would result therefrom.
(G) Conduct of Business; Subsidiaries; Acquisitions. Neither the
---------------------------------------------------
Company nor any of its Subsidiaries shall engage in any business, or acquire
any other business, other than the businesses in, or reasonably related to,
the lines of business carried on by them on the date hereof. The Company
shall not and shall not permit any of its Subsidiaries to create, capitalize
or acquire any Subsidiary after the date hereof or enter into any transaction
or series of transactions in which it acquires all or any significant portion
of the assets of another Person, or such Person merges with or liquidates into
the Company or any of its Subsidiaries, unless (x) such transaction is in
connection with the Company's acquisition from Ralston Purina Company and/or
Ralston Purina International Holding Company of the Capital Stock of each of
the Company's Subsidiaries on or about the Closing Date or (y) such
transaction meets the following requirements (each such transaction
constituting a "PERMITTED ACQUISITION"):
(1) no Default or Unmatured Default shall have occurred and be
continuing or would result from such transaction or transactions or the
incurrence of any Indebtedness in connection therewith;
(2) to the extent any such transaction, together with all such other
transactions, exceeds in the aggregate $5,000,000 during any fiscal year,
prior to each such transaction, the Company shall deliver to the Agent and the
Lenders a certificate from one of the Company's Authorized Officers
demonstrating to the satisfaction of the Agent and the Required Lenders that
after giving effect to such transaction or transactions and the incurrence of
any Indebtedness permitted by Section 6.3(A) in connection therewith on a pro
--------------
forma basis as if such acquisition, merger or liquidation and such incurrence
of Indebtedness had occurred on the first day of the twelve-month period
ending on the last day of the Company's most recently completed fiscal
quarter, the Company would have been in compliance with all provisions of
Section 6.4 at all times during such twelve-month period and not otherwise in
--------
Default;
(3) the transaction is consummated pursuant to a negotiated agreement on
a non-hostile basis and involves the purchase of, or entering into of, a
business line similar, or reasonably related, to that of the Company's and its
Subsidiaries as of the Closing Date;
(4) in the case of any merger permitted under this Agreement, the
surviving entity expressly assumes any liabilities, if any, either of the
Company or Subsidiary party thereto, as applicable, with respect to the
Obligations pursuant to an assumption agreement reasonably satisfactory to the
Agent; and
(5) the aggregate amount of Investments (including assumed liabilities)
in connection with all such transactions during the term of this Agreement
shall not exceed:
(A) for any single transaction or series of related transactions,
$20,000,000; and
(B) for all transactions, $80,000,000 (excluding Investments actually
made up to $4,000,000 in the aggregate in connection with the Company's
development of production facilities in Shanggao, China).
(H) Transactions with Shareholders and Affiliates. Except as set forth
---------------------------------------------
on Schedule 6.3(H), neither the Company nor any of its Subsidiaries shall
----------------
directly or indirectly (i) enter into or permit to exist any transaction
-
(including, without limitation, the purchase, sale, lease or exchange of any
-
property or the rendering of any service) with any holder or holders of any
Capital Stock or other Equity Interests in the Company, or with any Affiliate
of the Company, on terms that are less favorable to the Company or its
Subsidiaries, as applicable, than those that might be obtained in an arm's
length transaction at the time from Persons who are not such a holder or
Affiliate; or (ii) enter into or permit to exist any such non-arm's length
transaction, including without limitation loans and advances to or other
Investments in (x) any Affiliate (other than the Company) if as a result
thereof such Investments would at any time exceed in the aggregate forty
percent (40%) of Consolidated Net Worth of the Company or (y) any Affiliate
(other than a Borrower or Subsidiary Obligor) if as a result thereof such
Investments would at any time exceed in the aggregate fifteen percent (15%) of
the Consolidated Net Worth of the Company.
(I) Sales and Leasebacks. Neither the Company nor any of its
----------------------
Subsidiaries shall become liable, directly, by assumption or by Contingent
Obligation, with respect to any lease, whether an Operating Lease, a synthetic
lease or a Capitalized Lease, of any property (whether real or personal or
mixed) (i) which it or one of its Subsidiaries sold or transferred or is to
sell or transfer to any other Person, or (ii) which it or one of its
Subsidiaries intends to use for substantially the same purposes as any other
property which has been or is to be sold or transferred by it or one of its
Subsidiaries to any other Person in connection with such lease, unless in
either case the sale involved is not prohibited under Section 6.3(B) and the
--------------
lease involved is not prohibited under Section 6.3(A).
---------------
(J) Margin Regulations. Neither the Borrower nor any of its
-------------------
Subsidiaries, shall use all or any portion of the proceeds of any credit
-
extended under this Agreement to purchase or carry Margin Stock.
(K) ERISA. The Company shall not (i) engage, or permit any of its
-----
Subsidiaries to engage, in any prohibited transaction described in Sections
406 of ERISA or 4975 of the Code for which a statutory or class exemption is
not available or a private exemption has not been previously obtained from the
DOL;
(ii) permit to exist any accumulated funding deficiency (as defined in
Sections 302 of ERISA and 412 of the Internal Revenue Code), with respect to
any Benefit Plan, whether or not waived;
(iii) fail, or permit any Controlled Group member to fail, to pay timely
required contributions or annual installments due with respect to any waived
funding deficiency to any Benefit Plan;
(iv) terminate, or permit any Controlled Group member to terminate, any
Benefit Plan which would result in any liability of the Company or any
Controlled Group member under Title IV of ERISA;
(v) fail to make any contribution or payment to any Multiemployer Plan
which the Company or any Controlled Group member may be required to make under
any agreement relating to such Multiemployer Plan, or any law pertaining
thereto;
(vi) fail, or permit any Controlled Group member to fail, to pay any
required installment or any other payment required under Section 412 of the
Internal Revenue Code on or before the due date for such installment or other
payment; or
(vii) amend, or permit any Controlled Group member to amend, a Plan
resulting in an increase in current liability for the plan year such that the
Company or any Controlled group member is required to provide security to such
Plan under Section 401(a)(29) of the Code.
(L) Issuance of Equity Interests. Neither the Company nor any of its
-----------------------------
Subsidiaries shall issue any ownership, membership or other equity interests
after the date of this Agreement if such issuance causes a Change of Control
to occur.
(M) Organizational Documents. Neither the Company nor any of its
-------------------------
Subsidiaries shall amend, modify or otherwise change any of the terms or
provisions in any of their respective organizational documents as in effect on
the date hereof in any manner adverse to the interests of the Lenders without
the prior written consent of the Required Lenders.
(N) Other Indebtedness. Neither the Company nor any of its Subsidiaries
------------------
shall amend, supplement or otherwise modify the terms of any Indebtedness owed
by a Borrower or Subsidiary of the Company that would be materially adverse to
the Lenders, including, without limitation, with respect to subordination.
(O) Fiscal Year. The Company shall not change its fiscal year for
------------
accounting or tax purposes from a period consisting of the 12-month period
ending on August 31 of each calendar year.
(P) Hedging Obligations. The Company shall not and shall not permit any
-------------------
of its Subsidiaries to enter into any interest rate, commodity or foreign
currency exchange, swap, collar, cap or similar agreements other than hedging
or other derivative transactions (i) relating to the acquisition of raw
materials or the sale of products of the Company which are intended to protect
the Company against the risks of changes in market prices or (ii) relating to
currencies in which the Company receives revenues or incurs expenses which are
intended to protect the Company against the risks of changes in the exchange
rates relating to such currencies or (iii) relating to the interest rates on
its outstanding or proposed Indebtedness which are intended to protect the
Company against the risks of changes in the interest rates relating to such
borrowing (such hedging agreements collectively are sometimes referred to
herein as "HEDGING AGREEMENTS"). In the event a Lender elects to enter into
any Hedging Agreements with the Company or any of its Subsidiaries, the
obligations of the Company or such Subsidiary with respect to such Hedging
Agreements shall be Secured Obligations secured by the Collateral.
(Q) Subsidiary Covenants. The Company will not, and will not permit any
--------------------
Subsidiary Borrower or Subsidiary Obligor to, create or otherwise cause to
become effective any consensual encumbrance or restriction of any kind on the
ability of any Subsidiary Borrower or Subsidiary Obligor to (i) pay dividends
or make any other distribution on its stock, or make any other Restricted
Junior Payment, (ii) pay any Indebtedness or other Obligation owed to the
Company or any other Subsidiary, (iii) make loans or advances or other
Investments in the Company or any other Subsidiary, or (iv) sell, transfer or
otherwise convey any of its property to the Company or any other Subsidiary.
6.4 Financial Covenants. The Company shall comply with the following:
-------------------
(A) Interest Coverage Ratio. The Company shall maintain a ratio
-------------------------
("INTEREST COVERAGE RATIO") of (i) EBITDA to (ii) Cash Interest Expense of at
least 2.50 to 1.00 as of the end of each fiscal quarter commencing with the
fiscal quarter ending August 31, 1998 through the Termination Date.
In each case the Interest Coverage Ratio shall be determined as of the last
day of each fiscal quarter for the four-quarter period ending on such day
(provided; however, (a) for the fiscal quarter ending August 31, 1998, the
----- -------
Interest Coverage Ratio shall be calculated using EBITDA and Cash Interest
Expense for the period commencing on April 1, 1998 through August 31, 1998,
(b) for the fiscal quarter ending November 30, 1998, the Interest Coverage
Ratio shall be calculated using EBITDA and Cash Interest Expense for the
period commencing on April 1, 1998 through November 30, 1998, and (c) for the
fiscal quarter ending February 28, 1999, the Interest Coverage Ratio shall be
calculated using EBITDA and Cash Interest Expense for the period commencing on
April 1, 1998 through February 28, 1999).
(B) Maximum Leverage Ratio. The Company shall not permit the ratio
------------------------
("LEVERAGE RATIO") of (i) Total Debt to (ii) EBITDA to be greater than 3.00 to
1.00 as of the end of each fiscal quarter commencing with the fiscal quarter
ending August 31, 1998 through the Termination Date.
The Leverage Ratio shall be calculated, in each case, as of the last day of
each fiscal quarter based upon (A) for purposes of calculating Total Debt,
Indebtedness as of the last day of each such fiscal quarter; and (B) for
EBITDA, the actual amount for the four-quarter period ending on such day
(provided; however, (a) for the fiscal quarter ending August 31, 1998, the
---- -------
Leverage Ratio shall be calculated using EBITDA for such fiscal quarter
multiplied by four, (b) for the fiscal quarter ending November 30, 1998, the
Leverage Ratio shall be calculated using EBITDA for the two fiscal quarters
ending November 30, 1998 multiplied by two (2), and (c) for the fiscal quarter
ending February 28, 1999, the Leverage Ratio shall be calculated using EBITDA
for the three fiscal quarters ending February 28, 1999 multiplied by
four-thirds (4/3)).
(C) Capital Expenditures. The Company will not, nor will it permit any
--------------------
Subsidiary to, expend, or be committed to expend, for Capital Expenditures
during any one fiscal year in the aggregate for the Company and its
Subsidiaries in excess of (a) $81,250,000 for the fiscal year ending August
31, 1998, (b) $40,000,000 for the fiscal year ending August 31, 1999 plus any
amount permitted to be expended in the previous fiscal year but not expended
and (c) $28,750,000 in the aggregate for the fiscal years ending August 31,
2000 and August 31, 2001 plus any amount permitted to be expended in the
previous fiscal year (pursuant to the absolute dollar limitation for such
fiscal year and not pursuant to any carryover provision from a prior fiscal
year) but not expended.
(D) Minimum Consolidated Net Worth. The Company shall not permit its
-------------------------------
Consolidated Net Worth at any time to be less than the amount set forth below
during the period set forth opposite such amount:
Minimum Consolidated Net Worth Applicable Period
- --------------------------------- ------------------
$230,000,000 April 1, 1998 through and including August 31,
1998
$240,000,000 September 1, 1998 through and including August
31, 1999
$250,000,000 At all times thereafter.
For purposes of determining Consolidated Net Worth of the Company and its
Subsidiaries as required by this Section 6.4(D) only, Consolidated Net Worth
--------------
of the Company and its Subsidiaries shall be calculated excluding (i) the
effect of translation account adjustments for the fiscal year ending on August
31, 1998 of up to $10,000,000 and (ii) the effect of further translation
account adjustments of up to an additional $20,000,000.
(E) Country Debt Limitations. Indebtedness (whether under this
--------------------------
Agreement or otherwise) incurred by the Subsidiaries in any particular country
shall be subject to each of the following limitations:
(1) The applicable Borrower or Subsidiary Obligor shall not have
Indebtedness under this Agreement outstanding at any time in excess of the
maximum Dollar Amount set forth below:
Borrower's or Subsidiary Obligor's
-------------------------------------
Jurisdiction of Incorporation Maximum Dollar Amount
- ------------------------------- ---------------------
Canada $6,500,000
------ ----------
United States $5,000,000
------------- ----------
Italy $4,000,000
----------
Spain $2,500,000
----------
Hungary $2,000,000
------- ----------
Korea $15,000,000
----- -----------
Mexico $5,000,000
------ ----------
Colombia $5,000,000
----------
Brazil $5,000,000
----------
Philippines $2,500,000
----------
Venezuela $2,500,000
--------- ----------
(2) The ratio of (i) Total Debt for each of the Subsidiary Borrowers and
Subsidiary Obligors (including Indebtedness owed to Affiliates but excluding
Contingent Obligations in the form of standby Letters of Credit issued under
this Agreement for the account of such Subsidiary Borrower or Subsidiary
Obligor for the benefit of domestic financial institutions as support for
loans and advances made by such financial institutions to the applicable
Subsidiary Borrower or Subsidiary Obligor to the extent any such loans or
advances are outstanding) to (ii) EBITDA for each of the Subsidiary Borrowers
and Subsidiary Obligors (other than Purina Korea, Inc.) shall not at any time
exceed 3.00 to 1.00. The ratio of (i) Total Debt (including Indebtedness owed
to Affiliates but excluding Contingent Obligations in the form of standby
Letters of Credit issued under this Agreement for the account of Purina Korea,
Inc. for the benefit of domestic financial institutions as support for loans
and advances made by such financial institutions to Purina Korea, Inc. to the
extent any such loans or advances are outstanding) to (ii) EBITDA for Purina
Korea, Inc. shall not at any time exceed 2.25 to 1.00.
The foregoing ratios shall be calculated, in each case, as of the last day of
each fiscal quarter based upon (A) for purposes of calculating Total Debt and
Indebtedness as of the last day of each such fiscal quarter, and (B) for
EBITDA, the actual amount for the four-quarter period ending on such day
(provided; however, (a) for the fiscal quarter ending August 31, 1998, the
---- -------
foregoing ratios shall be calculated using EBITDA for such fiscal quarter
multiplied by four, (b) for the fiscal quarter ending November 30, 1998, the
foregoing ratios shall be calculated using EBITDA for the two fiscal quarters
ending November 30, 1998 multiplied by two (2), and (c) for the fiscal quarter
ending February 28, 1999, the foregoing ratios shall be calculated using
EBITDA for the three fiscal quarters ending February 28, 1999 multiplied by
four-thirds (4/3)).
ARTICLE VII: DEFAULTS
- -------------------------
7.1 Defaults. Each of the following occurrences shall constitute a
--------
Default under this Agreement:
(a) Failure to Make Payments When Due. Any Borrower or Subsidiary
-------------------------------------
Obligor shall (i) fail to pay when due any of the Obligations consisting of
principal with respect to the Loans or Letters of Credit or (ii) shall fail to
pay within three (3) days of the date when due any of the other Obligations
under this Agreement or the other Loan Documents.
(b) Breach of Certain Covenants. Any Borrower or Subsidiary Obligor
-----------------------------
shall fail duly and punctually to perform or observe any agreement, covenant
or obligation binding on such Borrower under (i) Sections 6.1 or Sections
------------ --------
6.2(A), (B), (D), (E), (G), or (H), and such failure shall continue unremedied
-- --- --- --- --- ---
for ten (10) Business Days after the earlier to occur of (x) notice from the
Agent or any Lender to the Company of such Default and (y) the Company or any
of its Subsidiaries knew or should have known of such Default exercising
reasonable diligence, or (ii) Sections 6.2(C), (F), (I), (J), or (K), Section
--------------- --- --- --- --- -------
6.3 or Section 6.4.
- --- ------------
(c) Breach of Representation or Warranty. Any representation or
----------------------------------------
warranty made or deemed made by any Borrower or Subsidiary Obligor to the
Agent or any Lender herein or by the Company or any of its Subsidiaries in any
of the other Loan Documents or in any statement or certificate at any time
given by any such Person pursuant to any of the Loan Documents shall be false
or misleading in any material respect on the date as of which made (or deemed
made).
(d) Other Defaults. Any Borrower or Subsidiary Obligor shall default in
--------------
the performance of or compliance with any term contained in this Agreement
(other than as covered by paragraphs (a), (b) or (c) of this Section 7.1), or
-------------- --- --- -----------
the Company or any of its Subsidiaries shall default in the performance of or
compliance with any term contained in any of the other Loan Documents, and
such default shall continue for thirty (30) days after the earlier to occur of
(i) notice from the Agent or any Lender to the Company of such Default and
(ii) the Company or any of its Subsidiaries knew or should have known of such
default exercising reasonable diligence.
(e) Default as to Other Indebtedness. Any of the Company or any of its
--------------------------------
Subsidiaries shall fail to make any payment when due (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise) with respect
to any Indebtedness (other than the Obligations) the outstanding principal
amount of which Indebtedness is in excess of $5,000,000; or any breach,
default or event of default shall occur, or any other condition shall exist
under any instrument, agreement or indenture pertaining to any such
Indebtedness, if the effect thereof is to cause an acceleration, mandatory
redemption, a requirement that the Company or any such Subsidiary offer to
purchase such Indebtedness or other required repurchase of such Indebtedness,
or permit the holder(s) of such Indebtedness to accelerate the maturity of any
such Indebtedness or require a redemption or other repurchase of such
Indebtedness; or any such Indebtedness shall be otherwise declared to be due
and payable (by acceleration or otherwise) or required to be prepaid, redeemed
or otherwise repurchased by the Company or any of its Subsidiaries (other than
by a regularly scheduled required prepayment) prior to the stated maturity
thereof.
(f) Involuntary Bankruptcy; Appointment of Receiver, Etc.
----------------------------------------------------------
(i) An involuntary case shall be commenced against the Company, or its
Subsidiaries with an aggregate net worth equal to or greater than ten percent
(10%) of the Company's Consolidated Net Worth, and the petition shall not be
dismissed, stayed, bonded or discharged within sixty (60) days after
commencement of the case; or a court having jurisdiction in the premises shall
enter a decree or order for relief in respect of the Company or such
Subsidiaries in an involuntary case, under any applicable bankruptcy,
insolvency or other similar law now or hereinafter in effect; or any other
similar relief shall be granted under any applicable federal, state, local or
foreign law.
(ii) A decree or order of a court having jurisdiction in the premises
for the appointment of a receiver, liquidator, sequestrator, trustee,
custodian or other officer having similar powers over the Company, or its
Subsidiaries with an aggregate net worth equal to or greater than ten percent
(10%) of the Company's Consolidated Net Worth, or over all or a substantial
part of the property of the Company, or such Subsidiaries shall be entered; or
an interim receiver, trustee or other custodian of the Company or such
Subsidiaries or of all or a substantial part of the property of the Company or
such Subsidiaries shall be appointed or a warrant of attachment, execution or
similar process against any substantial part of the property of the Company or
such Subsidiaries shall be issued and any such event shall not be stayed,
dismissed, bonded or discharged within sixty (60) days after entry,
appointment or issuance.
(g) Voluntary Bankruptcy; Appointment of Receiver, Etc. The Company or
---------------------------------------------------
its Subsidiaries with an aggregate net worth equal to or greater than ten
percent (10%) of the Company's Consolidated Net Worth, shall (i) commence a
voluntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, (ii) consent to the entry of an order for
relief in an involuntary case, or to the conversion of an involuntary case to
a voluntary case, under any such law, (iii) commence a voluntary case seeking,
or consent to, the appointment of or taking possession by a receiver, trustee
or other custodian for all or a substantial part of its property, (iv) make
any assignment for the benefit of creditors or fail generally to pay debts as
they become due or (v) take any corporate action to authorize any of the
foregoing.
(h) Judgments and Attachments. Any money judgment(s), writ or warrant
-------------------------
of attachment, or similar process against any of the Company or any of its
Subsidiaries or any of their respective assets involving in any single case or
in the aggregate an amount in excess of $5,000,000 is (are) entered and shall
remain undischarged, unvacated, unbonded or unstayed for a period of sixty
(60) days or in any event later than fifteen (15) days prior to the date of
any proposed sale thereunder.
(i) Dissolution. Any order, judgment or decree shall be entered against
-----------
the Company, or its Subsidiaries with an aggregate net worth equal to or
greater than ten percent (10%) of the Company's Consolidated Net Worth,
decreeing its involuntary dissolution or split up and such order shall remain
undischarged and unstayed for a period in excess of sixty (60) days; or the
Company or such Subsidiaries shall otherwise dissolve or cease to exist except
as specifically permitted by this Agreement unless the dissolving entity is a
limited liability company which elects to continue its existence.
(j) Loan Documents; Failure of Security. At any time, for any reason,
-----------------------------------
(i) any Loan Document as a whole that materially affects the ability of the
Agent, or any of the Lenders to enforce the Obligations or enforce their
rights against the Collateral, ceases to be in full force and effect or any of
the Company or any of its Subsidiaries party thereto seeks to repudiate its
obligations thereunder and the Liens intended to be created thereby are, or
any of the Company or any such Subsidiary seeks to render such Liens, invalid
and unperfected, or (ii) any action shall be taken to discontinue or to assert
the invalidity or unenforceability of any Loan Document, or (iii) Liens on
Collateral with a fair market value in excess of $2,500,000 in favor of the
Agent contemplated by the Loan Documents shall, at any time, for any reason,
be invalidated or otherwise cease to be in full force and effect, or such
Liens shall not have the priority contemplated by this Agreement or the Loan
Documents.
(k) Termination Event. Any Termination Event occurs which the Required
-----------------
Lenders believe is reasonably likely to subject the Company or any of its
Subsidiaries to liability individually or in the aggregate in excess of
$2,500,000.
(l) Waiver of Minimum Funding Standard. If the plan administrator of
-----------------------------------
any Plan applies under Section 412(d) of the Code for a waiver of the minimum
funding standards of Section 412(a) of the Code and any Lender believes the
substantial business hardship upon which the application for the waiver is
based could reasonably be expected to subject either the Company or any
Controlled Group member to liability individually or in the aggregate in
excess of $2,500,000.
(m) Change of Control. A Change of Control shall occur.
-------------------
(n) Environmental Matters. The Company or any of its Subsidiaries shall
---------------------
be the subject of any proceeding or investigation pertaining to (i) the
Release by the Company or any of its Subsidiaries of any Contaminant into the
environment, (ii) the liability of any of the Company or any of its
Subsidiaries arising from the Release by any other Person of any Contaminant
into the environment, or (iii) any violation of any Environmental, Health or
Safety Requirements of Law by the Company or any of its Subsidiaries, which,
in any case, has or is reasonably likely to subject the Company or any of its
Subsidiaries to liability individually in excess of $2,500,000 or in the
aggregate in excess of $5,000,000.
(o) Guarantor Revocation. Except as provided by Section 6.3(B)(iv) with
-------------------- ------------------
respect to the sale, dissolution or liquidation of certain Subsidiaries of the
Company, any guarantor of the Obligations shall terminate or revoke or refuse
to perform or assert invalidity of any of its payment obligations under the
applicable guarantee agreement or breach any of the other terms of such
guarantee agreement which breach remains unremedied for five (5) days.
A Default shall be deemed "continuing" until waived in writing in
accordance with Section 8.3.
------------
ARTICLE VIII: ACCELERATION, DEFAULTING LENDERS; WAIVERS, AMENDMENTS AND
- ------------------------------------------------------------------------------
REMEDIES
- --------
8.1 Remedies.
(a) Termination of Commitments; Acceleration. If any Default described
----------------------------------------
in Section 7.1(f) or 7.1(g) occurs with respect to any of the Borrowers, the
--------------- ------
obligations of the Lenders to make Loans hereunder and the obligation of the
Agent or any Issuing Lender to issue Letters of Credit hereunder shall
automatically terminate and the Obligations shall immediately become due and
payable without any election or action on the part of the Agent, any Lender or
any Issuing Lender. If any other Default occurs, the Required Lenders may (i)
terminate or suspend the obligations of the Lenders to make Loans hereunder
and the obligation of the Issuing Lenders to issue Letters of Credit
hereunder, or (ii) declare the Obligations to be due and payable, or both, and
upon any declaration under clause (ii), the Obligations shall become
------------
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which the Borrowers expressly waive.
(b) Rescission. If at any time after termination of the Lenders'
----------
obligations to make Loans or acceleration of the maturity of the Loans,
Borrowers shall pay all arrears of interest and all payments on account of
principal of the Loans and Reimbursement Obligations which shall have become
due otherwise than by acceleration (with interest on principal and, to the
extent permitted by law, on overdue interest, at the rates specified in this
Agreement) and all Defaults and Unmatured Defaults (other than nonpayment of
principal of and accrued interest on the Loans due and payable solely by
virtue of acceleration) shall be waived pursuant to Section 8.3, then upon the
-----------
written consent of the Required Lenders and written notice to Borrowers, the
termination of Lenders' respective obligations to make Loans and the
respective Lenders' and the Issuing Lenders' obligations to participate in or
issue Letters of Credit or the aforesaid acceleration and its consequences may
be rescinded and annulled; but such action shall not affect any subsequent
Default or Unmatured Default or impair any right or remedy consequent thereon.
The provisions of the preceding sentence are intended merely to bind the
Lenders and the Issuing Lenders to a decision which may be made at the
election of the Required Lenders; they are not intended to benefit Borrowers
and do not give Borrowers the right to require the Lenders to rescind or annul
any termination of the aforesaid obligations of the Lenders or Issuing Lenders
or any acceleration hereunder, even if the conditions set forth herein are
met.
(c) Enforcement. The Borrowers acknowledge that in the event the
-----------
Borrowers fail to perform, observe or discharge any of their respective
obligations or liabilities under this Agreement or any other Loan Document,
any remedy of law may prove to be inadequate relief to the Agent, the Issuing
Lenders and the Lenders; therefore, Borrowers agree that the Agent, the
Issuing Lenders and the Lenders shall be entitled to temporary and permanent
injunctive relief in any such case without the necessity of proving actual
damages.
8.2 Defaulting Lender. In the event that any Lender fails to fund its
-----------------
Revolving Credit Share of any Advance requested or deemed requested by any
Borrower which such Lender is obligated to fund under the terms of this
Agreement (the funded portion of such Advance being hereinafter referred to as
a "NON PRO RATA LOAN"), until the earlier of such Lender's cure of such
failure and the termination of the Commitments, the proceeds of all amounts
thereafter repaid to the Agent by the Borrowers and otherwise required to be
applied to such Lender's share of all other Obligations pursuant to the terms
of this Agreement shall be advanced to the Borrowers by the Agent ("CURE
LOANS") on behalf of such Lender to cure, in full or in part, such failure by
such Lender, but shall nevertheless be deemed to have been paid to such Lender
in satisfaction of such other Obligations. Notwithstanding anything in this
Agreement to the contrary:
(i) the foregoing provisions of this Section 8.2 shall apply only with
-----------
respect to the proceeds of payments of Obligations and shall not affect the
conversion or continuation of Loans pursuant to Section 2.6;
------------
(ii) any such Lender shall be deemed to have cured its failure to fund
its Revolving Credit Share of any Advance at such time as an amount equal to
such Lender's original Revolving Credit Share of the requested principal
portion of such Advance is fully funded to the applicable Borrower, whether
made by such Lender itself or by operation of the terms of this Section 8.2,
-----------
and whether or not the Non Pro Rata Loan with respect thereto has been repaid,
converted or continued;
(iii) regardless of whether or not a Default has occurred or is
continuing, and notwithstanding the instructions of the applicable Borrower as
to its desired application, all repayments of principal which, in accordance
with the other terms of this Agreement, would be applied to the outstanding
Base Rate Loans shall be applied first, ratably to all Base Rate Loans
-----
constituting Non Pro Rata Loans, second, ratably to Base Rate Loans other than
------
those constituting Non Pro Rata Loans or Cure Loans and, third, ratably to
-----
Base Rate Loans constituting Cure Loans;
(iv) for so long as and until the earlier of any such Lender's cure of
the failure to fund its Revolving Credit Share of any Advance and the
termination of the Commitments, the term "Required Lenders" for purposes of
this Agreement shall mean Lenders (excluding all Lenders whose failure to fund
their respective Revolving Credit Shares of such Advance have not been so
cured) whose Pro Rata Shares represent at least sixty-six and two-thirds
(66-2/3%) of the aggregate Pro Rata Shares of such Lenders; and
(v) for so long as and until any such Lender's failure to fund its
Revolving Credit Share of any Advance is cured in accordance with Section
-------
8.2(ii), (A) such Lender shall not be entitled to any facility fees with
---
respect to its Commitments and (B) such Lender shall not be entitled to any
-
letter of credit fees, which facility fees and letter of credit fees shall
accrue in favor of the performing Lenders, shall be allocated among such
performing Lenders ratably based upon their relative Commitments.
8.3 Amendments. Subject to the provisions of this Article VIII, the
---------- ------------
Required Lenders (or the Agent with the consent in writing of the Required
Lenders) and the Borrowers and Subsidiary Obligors may enter into agreements
supplemental hereto for the purpose of adding or modifying any provisions to
the Loan Documents or changing in any manner the rights of the Lenders or the
Borrowers or the Subsidiary Obligors hereunder or waiving any Default
hereunder; provided, however, that no such supplemental agreement shall,
-------- -------
without the consent of each Lender affected thereby:
(i) Postpone or extend the Termination Date or any other date fixed for
any payment of principal of, or interest on, the Loans, the Reimbursement
Obligations or any fees or other amounts payable to such Lender (except with
respect to (a) any modifications of the provisions relating to prepayments of
Loans and other Obligations and (b) a waiver of the application of the default
rate of interest pursuant to Section 2.7 hereof and (c) as expressly provided
-----------
by the terms of Section 2.24).
-------------
(ii) Reduce the principal amount of any Loans or L/C Obligations, or
reduce the rate or extend the time of payment of interest or fees thereon.
(iii) Reduce the percentage specified in the definition of Required
Lenders or any other percentage of Lenders specified to be the applicable
percentage in this Agreement to act on specified matters.
(iv) Increase the amount of the Commitment of any Lender hereunder
(except with respect to an increase in any sublimits for any Types of Loans
within the Commitments).
(v) Permit any Borrower to assign its rights under this Agreement.
(vi) Amend Section 2.24 or this Section 8.3.
------------- ------------
(vii) Except as provided by Section 6.3(B)(iv) with respect to the sale,
------------------
dissolution or liquidation of certain Subsidiaries of the Company, release any
guarantor of all or any part of the Obligations or release all or
substantially all of the Collateral.
No amendment of any provision of this Agreement relating to the Agent shall be
effective without the written consent of the Agent. No amendment of any
provision of this Agreement relating to any Issuing Lender shall be effective
without the written consent of the Agent and each of the Issuing Lenders. The
Agent may waive payment of the fee required under Section 12.3(B) without
---------------
obtaining the consent of any of the Lenders.
8.4 Preservation of Rights. No delay or omission of the Lenders, the
-----------------------
Issuing Lenders or the Agent to exercise any right under the Loan Documents
shall impair such right or be construed to be a waiver of any Default or an
acquiescence therein, and the making of a Loan or the issuance of a Letter of
Credit notwithstanding the existence of a Default or the inability of the
Borrowers to satisfy the conditions precedent to such Loan or issuance of such
Letter of Credit shall not constitute any waiver or acquiescence. Any single
or partial exercise of any such right shall not preclude other or further
exercise thereof or the exercise of any other right, and no waiver, amendment
or other variation of the terms, conditions or provisions of the Loan
Documents whatsoever shall be valid unless in writing signed by the Lenders
required pursuant to Section 8.3, and then only to the extent in such writing
-----------
specifically set forth. All remedies contained in the Loan Documents or by
law afforded shall be cumulative and all shall be available to the Agent, the
Issuing Lenders and the Lenders until the Obligations have been paid in full.
ARTICLE IX: GENERAL PROVISIONS
- -----------------------------------
9.1 Survival of Representations. All representations and warranties of
---------------------------
the Borrowers and Subsidiary Obligors contained in this Agreement shall
survive delivery of this Agreement and the making of the Loans herein
contemplated.
9.2 Governmental Regulation. Anything contained in this Agreement to
------------------------
the contrary notwithstanding, no Lender shall be obligated to extend credit to
the Borrowers and neither the Agent nor any Issuing Lender shall be obligated
to issue any Letter of Credit for the account of any Borrower or Subsidiary
Obligor in violation of any limitation or prohibition provided by any
applicable statute or regulation.
9.3 Performance of Obligations. Each of the Borrowers and the
----------------------------
Subsidiary Obligors agrees that the Agent may, but shall have no obligation to
(i) at any time, pay or discharge taxes, liens, security interests or other
encumbrances levied or placed on or threatened against any Collateral and (ii)
after the occurrence and during the continuance of a Default make any other
payment or perform any act required of any Borrower or Subsidiary Obligor
under any Loan Document or take any other action which the Agent in its
discretion deems necessary or desirable to protect or preserve the Collateral.
The Agent shall use its best efforts to give the applicable Borrower or
Subsidiary Obligor notice of any action taken under this Section 9.3 prior to
-----------
the taking of such action or promptly thereafter provided the failure to give
such notice shall not affect the applicable Borrower's or Subsidiary Obligor
obligations in respect thereof. Each of the Borrowers and the Subsidiary
Obligors agrees to pay the Agent, upon demand, the principal amount of all
funds advanced by the Agent under this Section 9.3, together with interest
-----------
thereon at the rate from time to time applicable to Base Rate Loans from the
date of such advance until the outstanding principal balance thereof is paid
in full. If any Borrower or Subsidiary Obligor fails to make payment in
respect of any such advance under this Section 9.3 within one (1) Business Day
-----------
after the date such Borrower or Subsidiary Obligor receives written demand
therefor from the Agent, the Agent shall promptly notify each Lender and each
Lender agrees that it shall thereupon make available to the Agent, in Dollars
in immediately available funds, the amount equal to such Lender's Pro Rata
Share of such advance. If such funds are not made available to the Agent by
such Lender within one (1) Business Day after the Agent's demand therefor, the
Agent will be entitled to recover any such amount from such Lender together
with interest thereon at the Federal Funds Effective Rate for each day during
the period commencing on the date of such demand and ending on the date such
amount is received. The failure of any Lender to make available to the Agent
its Pro Rata Share of any such unreimbursed advance under this Section 9.3
-----------
shall neither relieve any other Lender of its obligation hereunder to make
available to the Agent such other Lender's Pro Rata Share of such advance on
the date such payment is to be made nor increase the obligation of any other
Lender to make such payment to the Agent. All outstanding principal of, and
interest on, advances made under this Section 9.3 shall constitute Obligations
-----------
secured by the Collateral until paid in full by the Borrowers and the
Subsidiary Obligors.
9.4 Headings. Section headings in the Loan Documents are for
--------
convenience of reference only, and shall not govern the interpretation of any
of the provisions of the Loan Documents.
9.5 Entire Agreement. The Loan Documents embody the entire agreement
-----------------
and understanding among the Borrowers, the Subsidiary Obligors, the Agent, and
the Lenders and supersede all prior agreements and understandings relating to
the subject matter thereof.
9.6 Several Obligations; Benefits of this Agreement. The respective
-------------------------------------------------
obligations of the Lenders hereunder are several and not joint and no Lender
shall be the partner or agent of any other. The failure of any Lender to
perform any of its obligations hereunder shall not relieve any other Lender
from any of its obligations hereunder. This Agreement shall not be construed
so as to confer any right or benefit upon any Person other than the parties to
this Agreement and their respective successors and assigns.
9.7 Expenses; Indemnification.
--------------------------
(A) Expenses. Subject to the letter agreements dated February 25, 1998
--------
and November 3, 1997 among the Company, the Agent and the Arranger with
respect to costs and expenses incurred on or prior to the Closing Date, the
Borrowers and Subsidiary Obligors shall reimburse the Agent and the Arranger
for any reasonable costs, internal charges and out-of-pocket expenses
(including attorneys' and paralegals' fees and time charges of attorneys and
paralegals for the Agent or the Arranger, which attorneys and paralegals may
be employees of the Agent or the Arranger) paid or incurred by the Agent or
Arranger in connection with the preparation, negotiation, execution, delivery,
syndication, review, amendment, modification, and administration of the Loan
Documents. Each of the Borrowers and Subsidiary Obligors also agrees to
reimburse the Agent, the Lenders and the Issuing Lenders for any costs,
internal charges and out-of-pocket expenses (including attorneys' and
paralegals' fees and time charges of attorneys and paralegals for the Agent,
the Lenders and the Issuing Lenders, which attorneys and paralegals may be
employees of the Agent, the Lenders or the Issuing Lenders) paid or incurred
by the Agent, any Lender or any Issuing Lender in connection with the
collection of the Obligations and enforcement of the Loan Documents. In
addition to expenses set forth above, each of the Borrowers and Subsidiary
Obligors agrees to reimburse the Agent, promptly after the request therefor,
for each audit, collateral analysis or other business analysis performed by
the Agent (or its authorized representative) for the benefit of the Lenders in
connection with this Agreement or the other Loan Documents in an amount equal
to the Agent's then customary charges for each person employed to perform such
audit or analysis, plus all reasonable costs and expenses (including without
limitation, travel expenses) incurred by the Agent in the performance of such
audit or analysis; provided, that each Borrower and Subsidiary Obligor shall
--------
only be responsible for expenses in connection with one (1) such audit or
business analysis performed with respect to such Borrower or Subsidiary
Obligor, as applicable, in any twelve-month period at a time when no Default
had occurred or was continuing. The Agent shall provide the Borrowers with a
detailed statement of all reimbursements requested under this Section 9.7(A).
--------------
(B) Indemnity. Each of the Borrowers and Subsidiary Obligors further
---------
agrees to defend, protect, indemnify, and hold harmless the Agent, the
Arranger, each and all of the Lenders, each and all of the Issuing Lenders,
and each of their respective Affiliates, and each of such Agent's, Arranger's,
Lender's, Issuing Lender's or Affiliate's respective officers, directors,
employees, attorneys and agents (including, without limitation, those retained
in connection with the satisfaction or attempted satisfaction of any of the
conditions set forth in Article IV) (collectively, the "INDEMNITEES") from and
----------
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses of any kind or nature
whatsoever (including, without limitation, the fees and disbursements of
counsel for such Indemnitees in connection with any investigative,
administrative or judicial proceeding, whether or not such Indemnitees shall
be designated a party thereto), imposed on, incurred by, or asserted against
such Indemnitees in any manner relating to or arising out of:
(i) this Agreement, the other Loan Documents, or any act, event or
transaction related or attendant thereto, the making of the Loans, and the
issuance of and participation in Letters of Credit hereunder, the management
of such Loans or Letters of Credit, the use or intended use of the proceeds of
the Loans or Letters of Credit hereunder, or any of the other transactions
contemplated by the Loan Documents; or
(ii) any liabilities, obligations, responsibilities, losses, damages,
personal injury, death, punitive damages, economic damages, consequential
damages, treble damages, intentional, willful or wanton injury, damage or
threat to the environment, natural resources or public health or welfare,
costs and expenses (including, without limitation, attorney, expert and
consulting fees and costs of investigation, feasibility or remedial action
studies), fines, penalties and monetary sanctions, interest, direct or
indirect, known or unknown, absolute or contingent, past, present or future
relating to violation of any Environmental, Health or Safety Requirements of
Law arising from or in connection with the past, present or future operations
of the Company, its Subsidiaries or any of their respective predecessors in
interest, or, the past, present or future environmental, health or safety
condition of any respective property of the Company or its Subsidiaries, the
presence of asbestos-containing materials at any respective property of the
Company or its Subsidiaries or the Release or threatened Release of any
Contaminant into the environment (collectively, the "INDEMNIFIED MATTERS");
provided, however, the Borrowers and Subsidiary Obligors shall have no
- -------- -------
obligation to an Indemnitee hereunder with respect to (i) Indemnified Matters
- -------
to the extent any such Indemnified Matter is found in a final non-appealable
judgment by a court of competent jurisdiction to have arisen from such
Indemnitee's gross negligence or wilful misconduct or (ii) Indemnified Matters
arising solely out of a dispute between the Agent or a dispute between any
Lender and the Agent. If the undertaking to indemnify, pay and hold harmless
set forth in the preceding sentence may be unenforceable because it is
violative of any law or public policy, the Borrowers and Subsidiary Obligors
shall contribute the maximum portion which it is permitted to pay and satisfy
under applicable law, to the payment and satisfaction of all Indemnified
Matters incurred by the Indemnitees.
(C) Waiver of Certain Claims; Settlement of Claims. Each of the
----------------------------------------------------
Borrowers and each of the Subsidiary Obligors agrees to assert no claim
against any of the Indemnitees on any theory of liability for consequential
damages, indirect damages, exemplary damages, punitive damages or any other
similar theory of damages howsoever categorized. No settlement shall be
entered into by the Company or any if its Subsidiaries with respect to any
claim, litigation, arbitration or other proceeding relating to or arising out
of the transaction evidenced by this Agreement or the other Loan
Documents(whether or not the Agent, any Lender, any Issuing Lender or any
Indemnitee is a party thereto) unless such settlement releases all Indemnitees
from any and all liability with respect thereto.
(D) Survival of Agreements. The obligations and agreements of the
------------------------
Borrowers and Subsidiary Obligors under this Section 9.7 shall survive the
-----------
termination of this Agreement.
9.8 Numbers of Documents. All statements, notices, closing documents,
--------------------
and requests hereunder shall be furnished to the Agent with sufficient
counterparts so that the Agent may furnish one to each of the Lenders.
9.9 Accounting. Except as provided to the contrary herein, all
----------
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with Agreement Accounting
Principles.
9.10 Severability of Provisions. Any provision in any Loan Document
----------------------------
that is held to be inoperative, unenforceable, or invalid in any jurisdiction
shall, as to that jurisdiction, be inoperative, unenforceable, or invalid
without affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan Documents are
declared to be severable.
9.11 Nonliability of Lenders. The relationship among the Borrowers, the
-----------------------
Subsidiary Obligors and the Lenders, Issuing Lenders and the Agent shall be
solely that of borrower and lender. Neither the Agent nor any Lender nor any
Issuing Lender shall have any fiduciary responsibilities to the Borrowers or
to the Subsidiary Obligors. Neither the Agent, nor any Lender, nor any
Issuing Lender undertakes any responsibility to the Borrowers or the
Subsidiary Obligors to review or inform the Borrowers or Subsidiary Obligors
of any matter in connection with any phase of the Borrowers' or Subsidiary
Obligors' business or operations.
9.12 GOVERNING LAW. THE AGENT ACCEPTS THIS AGREEMENT, ON BEHALF OF
--------------
ITSELF, THE OTHER AGENTS, THE LENDERS AND THE ISSUING LENDERS, AT CHICAGO,
ILLINOIS BY ACKNOWLEDGING AND AGREEING TO IT THERE. THIS AGREEMENT SHALL BE
GOVERNED BY AND INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS
OF THE STATE OF ILLINOIS. WITHOUT LIMITING THE FOREGOING, ANY DISPUTE BETWEEN
ANY BORROWER OR ANY SUBSIDIARY OBLIGOR AND THE AGENT, ANY LENDER, ANY ISSUING
LENDER OR ANY OTHER HOLDER OF SECURED OBLIGATIONS ARISING OUT OF, CONNECTED
WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM
IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, AND
WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF ILLINOIS.
9.13 CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL.
--------------------------------------------------------------
(A) JURISDICTION. EXCEPT AS PROVIDED IN SUBSECTION (B), EACH OF THE
------------ --------------
PARTIES HERETO AGREES THAT ALL DISPUTES AMONG THEM ARISING OUT OF, CONNECTED
WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN
CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS WHETHER
ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, MAY BE RESOLVED EXCLUSIVELY
BY STATE OR FEDERAL COURTS LOCATED IN CHICAGO, ILLINOIS, BUT THE PARTIES
HERETO ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY
A COURT LOCATED OUTSIDE OF CHICAGO, ILLINOIS. EACH OF THE PARTIES HERETO
WAIVES IN ALL DISPUTES BROUGHT PURSUANT TO THIS SUBSECTION (A) ANY OBJECTION
--------------
THAT IT MAY HAVE TO THE LOCATION OF THE COURT CONSIDERING THE DISPUTE.
(B) OTHER JURISDICTIONS. EACH OF THE BORROWERS AND SUBSIDIARY OBLIGORS
-------------------
AGREES THAT THE AGENT, ANY LENDER, ANY ISSUING LENDER OR ANY HOLDER OF SECURED
OBLIGATIONS SHALL HAVE THE RIGHT TO PROCEED AGAINST ANY BORROWER OR ANY
SUBSIDIARY OBLIGOR OR ANY BORROWER'S OR SUBSIDIARY OBLIGOR'S PROPERTY IN A
COURT IN ANY LOCATION TO ENABLE SUCH PERSON TO (1) OBTAIN PERSONAL
JURISDICTION OVER SUCH BORROWER OR SUBSIDIARY OBLIGOR OR (2) REALIZE ON THE
COLLATERAL OR ANY OTHER SECURITY FOR THE SECURED OBLIGATIONS OR TO ENFORCE A
JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF SUCH PERSON. EACH OF THE
BORROWERS AND SUBSIDIARY OBLIGORS AGREES THAT IT WILL NOT ASSERT ANY
PERMISSIVE COUNTERCLAIMS IN ANY PROCEEDING BROUGHT UNDER THIS CLAUSE (B) BY
----------
SUCH PERSON TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE
OBLIGATIONS OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF SUCH
PERSON ALL OF WHICH PERMISSIVE COUNTERCLAIMS MAY BE BROUGHT ONLY IN THE
JURISDICTION SET FORTH IN CLAUSE (A) ABOVE. EACH OF THE BORROWERS AND
-----------
SUBSIDIARY OBLIGORS WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF
THE COURT IN WHICH SUCH PERSON HAS COMMENCED A PROCEEDING DESCRIBED IN THIS
SUBSECTION (B).
-------------
(C) VENUE. EACH OF THE BORROWERS AND SUBSIDIARY OBLIGORS IRREVOCABLY
-------
WAIVES ANY OBJECTION (INCLUDING, WITHOUT LIMITATION, ANY OBJECTION OF THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS) WHICH IT MAY
----- --- ----------
NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH IN ANY JURISDICTION SET FORTH
ABOVE.
(D) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES
--------------------
ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE, ARISING OUT OF, CONNECTED WITH,
RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN
CONNECTION WITH THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH. EACH OF THE PARTIES HERETO
AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY HERETO MAY
FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY.
9.14 Subordination of Intercompany Indebtedness. Each of the Borrowers
------------------------------------------
and Subsidiary Obligors agrees that any and all claims of such Borrower or
Subsidiary Obligor against any other Borrower, any Subsidiary Obligor, any
endorser, obligor or any other guarantor of all or any part of the Secured
Obligations, or against any of its properties shall be subordinate and subject
in right of payment to the prior payment, in full and in cash, of all Secured
Obligations. Notwithstanding any right of any Borrower or Subsidiary Obligor
to ask, demand, sue for, take or receive any payment from any other Borrower
or any Subsidiary Obligor, all rights, liens and security interests of any
Borrower or Subsidiary Obligor, whether now or hereafter arising and howsoever
existing, in any assets of any other Borrower or any Subsidiary Obligor
(whether constituting part of Collateral given to any Holder of Secured
Obligations or the Agent to secure payment of all or any part of the Secured
Obligations or otherwise) shall be and are subordinated to the rights of the
Holders of Secured Obligations and the Agent in those assets. No Borrower or
Subsidiary Obligor shall have any right to possession of any such asset or to
foreclose upon any such asset, whether by judicial action or otherwise, unless
and until all of the Secured Obligations (other than contingent indemnity
obligations) shall have been fully paid and satisfied and all financing
arrangements among the Borrowers, Subsidiary Obligors and the Holders of
Secured Obligations have been terminated. So long as any Default shall have
occurred and is continuing, if all or any part of the assets of any Borrower
or Subsidiary Obligor, or the proceeds thereof, are subject to any
distribution, division or application to the creditors of such Borrower or
Subsidiary Obligor, whether partial or complete, voluntary or involuntary, and
whether by reason of liquidation, bankruptcy, arrangement, receivership,
assignment for the benefit of creditors or any other action or proceeding, or
if the business of any Borrower or Subsidiary Obligor is dissolved or if
substantially all of the assets of any Borrower or Subsidiary Obligor are
sold, then, and in any such event, any payment or distribution of any kind or
character, either in cash, securities or other property, which shall be
payable or deliverable upon or with respect to any indebtedness of any such
Borrower or Subsidiary Obligor to any other Borrower or Subsidiary Obligor
("INTERCOMPANY INDEBTEDNESS") shall be paid or delivered directly to the Agent
for application on any of the Secured Obligations, due or to become due, until
such Secured Obligations (other than contingent indemnity obligations) shall
have first been fully paid and satisfied. The Borrowers and the Subsidiary
Obligors irrevocably authorize and empower the Agent to demand, sue for,
collect and receive every such payment or distribution and give acquittance
therefor and to make and present for and on behalf of the applicable Borrower
or Subsidiary Obligor such proofs of claim and take such other action, in the
Agent's own name or in the name of the applicable Borrower or Subsidiary
Obligor or otherwise, as the Agent may deem necessary or advisable for the
enforcement of this Section 9.14; provided, that the Agent agrees not to
------------- --------
exercise such powers unless a Default shall have occurred and is continuing.
The Agent may vote such proofs of claim in any such proceeding, receive and
collect any and all dividends or other payments or disbursements made thereon
in whatever form the same may be paid or issued and apply the same on account
of any of the Secured Obligations. Should any payment, distribution, security
or instrument or proceeds thereof be received by any Borrower or Subsidiary
Obligor upon or with respect to the Intercompany Indebtedness at any time a
Default shall have occurred and be continuing and prior to the satisfaction of
all of the Secured Obligations (other than contingent indemnity obligations)
and the termination of all financing arrangements among the Borrowers, the
Subsidiary Obligors and the Holders of Secured Obligations, the applicable
Borrower or Subsidiary Obligor shall receive and hold the same in trust, as
trustee, for the benefit of the Holders of Secured Obligations and shall so
long as any Default shall have occurred and be continuing promptly deliver the
same to the Agent, for the benefit of the Holders of Secured Obligations, in
precisely the form received (except for the endorsement or assignment of the
Borrower where necessary), for application to any of the Secured Obligations,
due or not due, and, until so delivered, the same shall be held in trust by
the Borrower or Subsidiary Obligor, as applicable, as the property of the
Holders of Secured Obligations. If any Borrower or Subsidiary Obligor fails
to make any such endorsement or assignment to the Agent, the Agent or any of
its officers or employees are irrevocably authorized to make the same. So
long as any Default shall have occurred and is continuing, the Borrowers and
Subsidiary Obligors agree that until the Secured Obligations (other than the
contingent indemnity obligations) have been paid in full (in cash) and
satisfied and all financing arrangements among the Borrowers, Subsidiary
Obligors and the Holders of Secured Obligations have been terminated, the
Borrowers and Subsidiary Obligors will not assign or transfer to any Person
(other than the Agent) any claim such Borrower or Subsidiary Obligor has or
may have against any other Borrower or Subsidiary Obligor.
9.15 No Strict Construction. The parties hereto have participated
------------------------
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement.
ARTICLE X: THE AGENT
- -------------------------
10.1 Appointment; Nature of Relationship. ABN AMRO Bank N.V. is
--------------------------------------
appointed by the Lenders (each reference in this Article X to a Lender being
---------
in its capacity either as a Lender or an Issuing Lender, or any or all of the
foregoing) as the Agent hereunder and under each other Loan Document, and each
of the Lenders irrevocably authorizes the Agent to act as the contractual
representative of such Lender with the rights and duties expressly set forth
herein and in the other Loan Documents. The Agent agrees to act as such
contractual representative upon the express conditions contained in this
Article X. Notwithstanding the use of the defined term "Agent," it is
-----
expressly understood and agreed that the Agent shall not have any fiduciary
---
responsibilities to any Lender by reason of this Agreement and that the Agent
is merely acting as the representative of the Lenders with only those duties
as are expressly set forth in this Agreement and the other Loan Documents. In
its capacity as the Lenders' contractual representative, the Agent (i) does
not assume any fiduciary duties to any of the Lenders, (ii) is a
"representative" of the Lenders within the meaning of Section 9-105 of the
Uniform Commercial Code and (iii) is acting as an independent contractor, the
rights and duties of which are limited to those expressly set forth in this
Agreement and the other Loan Documents. Each of the Lenders agrees to assert
no claim against the Agent on any agency theory or any other theory of
liability for breach of fiduciary duty, all of which claims each Lender
waives.
10.2 Powers. The Agent shall have and may exercise such powers under
------
the Loan Documents as are specifically delegated to the Agent by the terms of
each thereof, together with such powers as are reasonably incidental thereto.
The Agent shall have no implied duties or fiduciary duties to the Lenders, or
any obligation to the Lenders to take any action hereunder or under any of the
other Loan Documents except any action specifically provided by the Loan
Documents required to be taken by the Agent.
10.3 General Immunity. Neither the Agent nor any of its respective
-----------------
directors, officers, agents or employees shall be liable to any of the
Borrowers, the Subsidiary Obligors, the Lenders or any Lender for any action
taken or omitted to be taken by it or them hereunder or under any other Loan
Document or in connection herewith or therewith except to the extent any such
action or inaction is found in a final non-appealable judgment by a court of
competent jurisdiction to have arisen from the gross negligence or willful
misconduct of such Person.
10.4 No Responsibility for Loans, Creditworthiness, Collateral,
---------------------------------------------------------------
Recitals, Etc. Neither the Agent nor any of its respective directors,
-------
officers, agents or employees shall be responsible for or have any duty to
ascertain, inquire into, or verify (i) any statement, warranty or
representation made in connection with any Loan Document or any borrowing
hereunder; (ii) the performance or observance of any of the covenants or
agreements of any obligor under any Loan Document; (iii) the satisfaction of
any condition specified in Article IV; (iv) the existence or possible
-----------
existence of any Default or (v) the validity, effectiveness or genuineness of
any Loan Document or any other instrument or writing furnished in connection
therewith. The Agent shall not be responsible to any Lender for any recitals,
statements, representations or warranties herein or in any of the other Loan
Documents, for the perfection or priority of any of the Liens on any of the
Collateral, or for the execution, effectiveness, genuineness, validity,
legality, enforceability, collectibility, or sufficiency of this Agreement or
any of the other Loan Documents or the transactions contemplated thereby, or
for the financial condition of any Subsidiary Obligor of any or all of the
Obligations, the Company or any of its Subsidiaries.
10.5 Action on Instructions of Lenders. The Agent shall in all cases be
---------------------------------
fully protected in acting, or in refraining from acting, hereunder and under
any other Loan Document in accordance with written instructions signed by the
Required Lenders (except with respect to actions that require the consent of
all of the Lenders as provided in Section 8.3), and such instructions and any
-----------
action taken or failure to act pursuant thereto shall be binding on all of the
Lenders and on all Holders of Secured Obligations. The Agent shall be fully
justified in failing or refusing to take any action hereunder and under any
other Loan Document unless it shall first be indemnified to its satisfaction
by the Lenders pro rata against any and all liability, cost and expense that
it may incur by reason of taking or continuing to take any such action.
10.6 Employment of Agents and Counsel. The Agent may execute any of its
--------------------------------
duties hereunder and under any other Loan Document by or through employees,
agents, and attorneys-in-fact, and shall not be answerable to the Lenders,
except as to money or securities received by it or its authorized agents, for
the default or misconduct of any such agents or attorneys-in-fact selected by
it with reasonable care. The Agent shall be entitled to advice of counsel
concerning the contractual arrangement among the Agent and the Lenders, as the
case may be, and all matters pertaining to its duties hereunder and under any
other Loan Document.
10.7 Reliance on Documents; Counsel. The Agent shall be entitled to
--------------------------------
rely upon any notice, consent, certificate, affidavit, letter, telegram,
statement, paper or document believed by it to be genuine and correct and to
have been signed or sent by the proper person or persons, and, in respect to
legal matters, upon the opinion of counsel selected by the Agent, which
counsel may be employees of the Agent.
10.8 The Agent's Reimbursement and Indemnification. The Lenders agree
---------------------------------------------
to reimburse and indemnify the Agent ratably in proportion to their respective
Pro Rata Shares (i) for any amounts not reimbursed by the Borrowers or
Subsidiary Obligors for which the Agent is entitled to reimbursement or
indemnification by the Borrowers or Subsidiary Obligors under the Loan
Documents, (ii) for any other expenses incurred by the Agent on behalf of the
Lenders, in connection with the preparation, execution, delivery,
administration and enforcement of the Loan Documents including as a result of
a dispute among the Lenders or between any Lender and the Agent, and (iii) for
any liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind and nature whatsoever
which may be imposed on, incurred by or asserted against the Agent in any way
relating to or arising out of the Loan Documents or any other document
delivered in connection therewith or the transactions contemplated thereby, or
the enforcement of any of the terms thereof or of any such other documents,
including as a result of a dispute among the Lenders or between any Lender and
the Agent, provided that no Lender shall be liable for any of the foregoing
to the extent any of the foregoing is found in a final non-appealable judgment
by a court of competent jurisdiction to have arisen from the gross negligence
or willful misconduct of the Agent.
10.9 Rights as a Lender. With respect to its Commitments, Loans made by
------------------
it and Letters of Credit issued by it as an Issuing Lender, the Agent shall
have the same rights and powers hereunder and under any other Loan Document as
any Lender and may exercise the same as through it were not the Agent, and the
term "Lender" or "Lenders" or "Issuing Lender" or "Issuing Lenders", as
applicable, shall, unless the context otherwise indicates, include the Agent
in its individual capacity. The Agent may accept deposits from, lend money
to, enter into Hedging Agreements and generally engage in any kind of trust,
debt, equity or other transaction, in addition to those contemplated by this
Agreement or any other Loan Document, with the Company or any of its
Subsidiaries in which such Person is not prohibited hereby from engaging with
any other Person.
10.10 Lender Credit Decision. Each Lender acknowledges that it has,
------------------------
independently and without reliance upon the Agent or any other Lender and
based on the financial statements prepared by the Company, the Borrowers and
the Subsidiary Obligors and such other documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into
this Agreement and the other Loan Documents. Each Lender also acknowledges
that it will, independently and without reliance upon the Agent or any other
Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking
or not taking action under this Agreement and the other Loan Documents.
10.11 Successor Agent. The Agent may resign at any time by giving
----------------
written notice thereof to the Lenders and the Borrowers. Upon any such
resignation, the Required Lenders shall have the right to appoint, on behalf
of the Borrowers and the Lenders, a successor Agent. If no successor Agent
shall have been so appointed by the Required Lenders and shall have accepted
such appointment within thirty days after the retiring Agent's giving notice
of resignation, then the retiring Agent may appoint, on behalf of the
Borrowers and the Lenders, a successor Agent. Notwithstanding anything herein
to the contrary, so long as no Default has occurred and is continuing, each
such successor Agent shall be subject to approval by the Company, which
approval shall not be unreasonably withheld. Such successor Agent shall be a
commercial bank having capital and retained earnings of at least $500,000,000.
Upon the acceptance of any appointment as the Agent hereunder by a successor
Agent, such successor Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations hereunder
and under the other Loan Documents. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Article X shall continue in effect
---------
for its benefit in respect of any actions taken or omitted to be taken by it
while it was acting as the Agent hereunder and under the other Loan Documents.
10.12 Collateral Documents. Each Lender authorizes the Agent to enter
--------------------
into each of the Collateral Documents to which it is a party and to take all
action contemplated by such documents. Each Lender agrees that no Lender
shall have the right individually to seek to realize upon the security granted
by any Collateral Document, it being understood and agreed that such rights
and remedies may be exercised solely by the Agent for the benefit of the
Holders of Secured Obligations upon the terms of the Collateral Documents.
10.13. No Duties Imposed Upon Syndication Agent, Documentation Agent or
----------------------------------------------------------------
Arranger. None of the Persons identified on the cover page to this Agreement,
- --------
the signature pages to this Agreement or otherwise in this Agreement as a
"Syndication Agent" or "Documentation Agent" or "Arranger" shall have any
right, power, obligation, liability, responsibility or duty under this
Agreement other than those applicable to all Lenders as such. Without
limiting the foregoing, none of the Lenders identified on the cover page to
this Agreement, the signature pages to this Agreement or otherwise in this
Agreements as a "Syndication Agent" or "Documentation Agent" or "Arranger"
shall have or be deemed to have any fiduciary duty to or fiduciary
relationship with any Lender. In addition to the agreements set forth in
Section 10.10, each of the Lenders acknowledges that it has not relied, and
----------
will not rely, on any of the Lenders so identified in deciding to enter into
this Agreement or in taking or not taking action hereunder.
ARTICLE XI: SETOFF; RATABLE PAYMENTS
- ------------------------------------------
11.1 Setoff. In addition to, and without limitation of, any rights of
------
the Lenders or Issuing Lenders under applicable law, if any Default occurs and
is continuing, any indebtedness from any Lender or Issuing Lender to any of
the Borrowers or Subsidiary Obligors (including all account balances, whether
provisional or final and whether or not collected or available) may be offset
and applied toward the payment of the Obligations owing to such Lender, such
Issuing Lender and the other Obligations, whether or not the Obligations, or
any part hereof, shall then be due.
11.2 Ratable Payments. If any Lender, whether by setoff or otherwise,
----------------
has payment made to it upon its Loans (other than payments received pursuant
to Sections 2.24, 3.1, 3.2 or 3.4) in a greater proportion than that received
------------- --- --- ---
by any other Lender, such Lender agrees, promptly upon demand, to purchase a
portion of the Loans held by the other Lenders so that after such purchase
each Lender will hold its ratable proportion of Loans. If any Lender, whether
in connection with setoff or amounts which might be subject to setoff or
otherwise, receives collateral or other protection for its Obligation or such
amounts which may be subject to setoff, such Lender agrees, promptly upon
demand, to take such action necessary such that all Lenders share in the
benefits of such collateral ratably in proportion to the obligations owing to
them. In case any such payment is disturbed by legal process, or otherwise,
appropriate further adjustments shall be made.
11.3 Application of Payments. Subject to the provisions of Section 8.2,
----------------------- -----------
the Agent shall, unless otherwise specified at the direction of the Required
Lenders which direction shall be consistent with the last sentence of this
Section 11.3, apply all payments and prepayments in respect of any Obligations
---------
and all proceeds of Collateral in the following order:
(A) first, to pay interest on and then principal of any portion of the
Loans which the Agent may have advanced on behalf of any Lender for which the
Agent has not then been reimbursed by such Lender or the Borrower or
Subsidiary Obligor;
(B) second, to pay interest on and then principal of any advance made
under Section 9.3 for which the Agent has not then been paid by the Borrowers
-----------
or the Subsidiary Obligors or reimbursed by the Lenders;
(C) third, to pay Obligations in respect of any fees, expense
reimbursements or indemnities then due to the Agent;
(D) fourth, to pay Obligations in respect of any fees, expenses,
reimbursements or indemnities then due to the Lenders and Issuing Lender;
(E) fifth, to pay interest due in respect of Loans and L/C Obligations;
(F) sixth, to the ratable payment or prepayment of principal outstanding
on Loans and Reimbursement Obligations and Hedging Obligations in such order
as the Agent may determine in its sole discretion;
(G) seventh, to provide required cash collateral if any pursuant to Section
-------
2.19; and
---
(H) eighth, to the ratable payment of all other Obligations.
Unless otherwise designated (which designation shall only be applicable prior
to the occurrence of a Default) by the Borrowers, all principal payments in
respect of Loans shall be applied first, to repay outstanding Base Rate Loans,
-----
and then to repay outstanding Eurodollar Loans and Korean Eurodollar Loans
----
with those Eurodollar Loans and Korean Eurodollar Loans, as applicable, which
have earlier expiring Interest Periods being repaid prior to those which have
later expiring Interest Periods. The order of priority set forth in this
Section 11.3 and the related provisions of this Agreement are set forth solely
--------
to determine the rights and priorities of the Agent, the Lenders, the Issuing
Lender and other Holders of Secured Obligations as among themselves. As long
as a Default shall have occurred and is continuing, the order of priority set
forth in clauses (D) through (H) of this Section 11.3 may at any time and from
----------- --- ------------
time to time be changed by the Required Lenders without necessity of notice to
or consent of or approval by the Borrowers, the Subsidiary Obligors, or any
other Person. The order of priority set forth in clauses (A) through (C) of
----------- ---
this Section 11.3 may be changed only with the prior written consent of the
-------------
Agent.
11.4 Relations Among Lenders.
-------------------------
(a) Except with respect to the exercise of set-off rights of any Lender
in accordance with Section 11.1, the proceeds of which are applied in
-------------
accordance with this Agreement, and each Lender agrees that it will not take
any action, nor institute any actions or proceedings, against any Borrower,
any Subsidiary Obligor or any other obligor hereunder or with respect to any
Collateral or Loan Document, without the prior written consent of the Required
Lenders or, as may be provided in this Agreement or the other Loan Documents,
at the direction of the Agent.
(b) The Lenders are not partners or co-venturers, and no Lender shall be
liable for the acts or omissions of, or (except as otherwise set forth herein
in case of the Agent) authorized to act for, any other Lender.
ARTICLE XII: BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
- ----------------------------------------------------------------------
12.1 Successors and Assigns. The terms and provisions of the Loan
------------------------
Documents shall be binding upon and inure to the benefit of the Borrowers, the
Subsidiary Obligors and the Lenders and their respective successors and
assigns, except that (i) none of the Borrowers or Subsidiary Obligors shall
have the right to assign their rights or obligations under the Loan Documents
and (ii) any assignment by any Lender must be made in compliance with Section
-------
12.3 hereof. Notwithstanding clause (ii) of this Section 12.1, any Lender may
- ---- ----------- ------------
at any time, without the consent of any Borrower, any Subsidiary Obligor or
the Agent, assign all or any portion of its rights under this Agreement, if
any, issued to it to a Federal Reserve Bank; provided, however, that no such
-------- -------
assignment shall release the transferor Lender from its obligations hereunder.
The Agent may treat each Lender as the owner of the Loans made by such Lender
for all purposes hereof unless and until such Lender complies with Section
-------
12.3 hereof in the case of an assignment thereof or, in the case of any other
-
transfer, a written notice of the transfer is filed with the Agent. Any
assignee or transferee of a Loan agrees by acceptance thereof to be bound by
all the terms and provisions of the Loan Documents. Any request, authority or
consent of any Person, who at the time of making such request or giving such
authority or consent is the owner of any Loan, shall be conclusive and binding
on any subsequent holder, transferee or assignee of such Loan.
12.2 Participations.
--------------
(A) Permitted Participants; Effect. Subject to the terms set forth in
------------------------------
this Section 12.2, any Lender may, in the ordinary course of its business and
------------
in accordance with applicable law, at any time sell to one or more banks or
other entities ("PARTICIPANTS") participating interests in any Loan owing to
such Lender, any Commitment of such Lender, any L/C Interest of such Lender or
any other interest of such Lender under the Loan Documents on a pro-rata or
non-pro-rata basis; provided that without the prior written consent of the
--------
Agent, the amount of such participation shall not be for less than $5,000,000.
Notice of such participation to the Company and the Agent shall be required
prior to any participation becoming effective with respect to a Participant
which is not a Lender or an Affiliate thereof. In the event of any such sale
by a Lender of participating interests to a Participant, such Lender's
obligations under the Loan Documents shall remain unchanged, such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, such Lender shall remain the owner of all Loans made by it
for all purposes under the Loan Documents, all amounts payable by the
Borrowers and Subsidiary Obligors under this Agreement shall be determined as
if such Lender had not sold such participating interests, and the Borrowers,
Subsidiary Obligors and the Agent shall continue to deal solely and directly
with such Lender in connection with such Lender's rights and obligations under
the Loan Documents except that, for purposes of Article III hereof, the
-----------
Participants shall be entitled to the same rights as if they were Lenders;
provided however that no Participant shall be entitled to receive any greater
----- -------
payment under such Article III than the Lender would have been entitled to
------------
receive with respect to the rights participated.
(B) Voting Rights. Each Lender shall retain the sole right to approve,
-------------
without the consent of any Participant, any amendment, modification or waiver
of any provision of the Loan Documents other than any amendment, modification
or waiver with respect to any Loan or Commitment in which such Participant has
an interest which requires the consent of all of the Lenders under Section
-------
8.3.
(C) Benefit of Setoff. The Borrowers and the Subsidiary Obligors agree
-----------------
that each Participant shall be deemed to have the right of setoff provided in
Section 11.1 hereof in respect to its participating interest in amounts owing
- -------------
under the Loan Documents to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under the Loan
Documents, provided that each Lender shall retain the right of setoff provided
--------
in Section 11.1 hereof with respect to the amount of participating interests
-------------
sold to each Participant except to the extent such Participant exercises its
right of set off. The Lenders agree to share with each Participant, and each
Participant, by exercising the right of setoff provided in Section 11.1
------------
hereof, agrees to share with each Lender, any amount received pursuant to the
exercise of its right of setoff, such amounts to be shared in accordance with
Section 11.2 as if each Participant were a Lender.
- -------------
12.3 Assignments.
-----------
(A) Permitted Assignments. Any Lender may, in the ordinary course of
----------------------
its business and in accordance with applicable law, at any time assign to one
or more banks or other entities ("PURCHASERS") all or a portion of its rights
and obligations under this Agreement, including, without limitation, any
Commitments, any Loans owing to it, all of its interests as Issuing Lender
with respect to Letters of Credit, all of its participation interests in
existing Letters of Credit and its obligation to participate in additional
Letters of Credit in accordance with the provisions of this Section 12.3.
------------
Such assignment shall be substantially in the form of Exhibit D hereto and,
---------
without the prior consent of the Agent, shall not be permitted hereunder
unless (i) such assignment is either for all of such Lender's rights and
obligations under the Loan Documents or involves Loans and Commitments in an
aggregate amount of at least $5,000,000 and (ii) the Purchaser shall be able
to fund in Korean Won its share of any Advance requested or deemed requested
in Korean Won by Purina Korea, Inc. Notice to the Agent and the Company and
consent of the Company and the Agent (which consents will not be unreasonably
withheld) shall be required prior to an assignment becoming effective with
respect to a Purchaser which is not a Lender or an Affiliate thereof;
provided, however, no consent of the Company shall be required for any
-------
assignment to become effective at a time when a Default has occurred and is
continuing.
(B) Effect; Effective Date. Upon (i) delivery to the Agent of a notice
----------------------
of assignment, substantially in the form attached as Appendix I to Exhibit D
---------- ---------
hereto (a "NOTICE OF ASSIGNMENT"), together with any consent required by
Section 12.3(A) hereof, and (ii) payment of a $3,500 fee to the Agent for
-----------
processing such assignment, such assignment shall become effective on the
effective date specified in such Notice of Assignment. The Notice of
Assignment shall contain a representation by the Purchaser to the effect that
none of the consideration used to make the purchase of the Commitment, Loans
and L/C Obligations under the applicable assignment agreement are "plan
assets" as defined under ERISA and that the rights and interests of the
Purchaser in and under the Loan Documents will not be "plan assets" under
ERISA. On and after the effective date of such assignment, such Purchaser, if
not already a Lender, shall for all purposes be a Lender party to this
Agreement and any other Loan Documents executed by the Lenders and shall have
all the rights and obligations of a Lender under the Loan Documents, to the
same extent as if it were an original party hereto, and no consent or action
by any of the Borrowers, Subsidiary Obligors or the Lenders and no further
consent or action by the Agent shall be required to release the transferor
Lender with respect to the percentage of the Commitments, Loans and Letter of
Credit participations assigned to such Purchaser. Upon the consummation of
any assignment to a Purchaser pursuant to this Section 12.3(B), if requested
---------------
by the transferor Lender or Purchaser, the transferor Lender, the Agent and
the Borrowers shall make appropriate arrangements so that, to the extent notes
have been issued to evidence any of the transferred Loans, replacement notes
are issued to such transferor Lender and new notes or, as appropriate,
replacement notes, are issued to such Purchaser, in each case in principal
amounts reflecting their Commitments, as adjusted pursuant to such assignment.
(C) The Register. The Agent shall maintain at its address referred to
------------
in Section 13.1 a copy of each assignment delivered to and accepted by it
-------------
pursuant to this Section 12.3 and a register (the "REGISTER") for the
- -------------
recordation of the names and addresses of the Lenders and the Commitments of
-
and principal amount of the Loans owing to, each Lender from time to time and
whether such Lender is an original Lender or the assignee of another Lender
pursuant to an assignment under this Section 12.3. The entries in the
-------------
Register shall be conclusive and binding for all purposes, absent manifest
error, and the Company and each of its Subsidiaries, the Agent and the Lenders
may treat each Person whose name is recorded in the Register as a Lender
hereunder for all purposes of this Agreement. The Register shall be available
for inspection by the Borrowers or any Lender at any reasonable time and from
time to time upon reasonable prior notice.
12.4 Confidentiality. Subject to Section 12.5, the Agent and the
--------------- -------------
Lenders shall hold all nonpublic information obtained pursuant to the
requirements of this Agreement in accordance with such Person's customary
procedures for handling confidential information of this nature and in
accordance with safe and sound banking practices. Each of the Agent and the
Lenders agrees that it will not make use of any such confidential information
for personal gain or for transactions other than those contemplated by this
Agreement, except to the extent that such information (i) was or becomes
generally available to the public other than as a result of disclosure by
such Agent or such Lender, or (ii) was or becomes available on a
nonconfidential basis from a source other than the Company and its
Subsidiaries provided that such source is not bound by a confidentiality
agreement known to such Agent or such Lender; provided, however, that the
-------- -------
Agent and any Lender may disclose such information (A) at the request or
pursuant to any requirement of any Governmental Authority to which such Agent
or such Lender is subject or in connection with an examination of such Agent
or such Lender by any such Governmental Authority; (B) pursuant to subpoena or
other court process (and shall use its best efforts to provide advance notice
thereof to the extent foreseeable and permitted); (C) when required to do so
in accordance with the provisions of any applicable requirement of law (and
shall use its best efforts to provide advance notice thereof to the extent
foreseeable and permitted); (D) to the extent reasonably required in
connection with any litigation or proceeding to which the Agent, any Lender or
their respective affiliates may be party; (E) to the extent reasonably
required in connection with the exercise of any remedy hereunder or under any
other Loan Document; (F) to such Agent's or such Lender's independent
auditors, accountants, attorneys and other professional advisors; (G) to any
affiliate of the Agent or such Lender, or to any prospective Transferee,
provided that such affiliate or prospective Transferee agrees to keep such
information confidential to the same extent required of the Agent and the
Lenders hereunder (and, so long as no Default shall have occurred and is
continuing, shall use its best efforts to provide advance notice thereof); and
(H) as expressly permitted under the terms of any other document or agreement
regarding confidentiality to which the Company or any of its Subsidiaries is
party or is deemed party with such Agent or such Lender. In any event, the
Agent and the Lenders may make disclosure reasonably required by a prospective
Transferee in connection with the contemplated participation or assignment or
as required or requested by any Governmental Authority or representative
thereof or pursuant to legal process and shall require any such Transferee or
prospective Transferee to agree (and require any of its Transferees to agree)
to comply with this Section 12.4. In no event shall the Agent or any Lender
------------
be obligated or required to return any materials furnished by the Borrowers or
Subsidiary Obligors; provided, however, each prospective Transferee shall be
-------- -------
required to agree that if it does not become a participant or assignee it
shall return all materials furnished to it by or on behalf of the Borrowers or
Subsidiary Obligors in connection with this Agreement.
12.5 Dissemination of Information1. Each of the Borrowers and
-------------------------------
Subsidiary Obligors authorizes each Lender to disclose to any Participant or
Purchaser or any other Person acquiring an interest in the Loan Documents by
operation of law (each a "TRANSFEREE") and any prospective Transferee any and
all information in such Lender's possession concerning the Company and its
Subsidiaries and the Collateral; provided that prior to any such disclosure,
--------
such prospective Transferee shall agree to preserve in accordance with Section
-------
12.4 the confidentiality of any confidential information described therein.
- ----
ARTICLE XIII: NOTICES
- -------------------------
13.1 Giving Notice. Except as otherwise permitted by Section 2.11 with
------------- ------------
respect to borrowing notices, all notices and other communications provided to
any party hereto under this Agreement or any other Loan Documents shall be in
writing or by facsimile and addressed or delivered to such party, with respect
to any Borrower or any Subsidiary Obligor, in care of the Company at the
address set forth below, and for any other party at its address set forth
below its signature hereto or at such other address as may be designated by
such party in a notice to the other parties. Any notice, if mailed and
properly addressed with postage prepaid, shall be deemed given when received;
any notice, if transmitted by facsimile, shall be deemed given when
transmitted; or, if by courier, one (1) Business Day after deposit with a
reputable overnight carrier services, with all charges paid. Notices to any
Borrower or any Subsidiary Obligor shall be addressed as follows:
Agribrands International, Inc.
9811 South Forty Drive
St. Louis, Missouri 63124
Attention: Mr. David Wenzel
Chief Financial Officer
Phone: (314)812-0500
Facsimile: (314)812-0403
13.2 Change of Address. Any of the Borrowers, Subsidiary Obligors, the
-----------------
Agent and any Lender may each change the address for service of notice upon it
by a notice in writing to the other parties hereto.
ARTICLE XIV: COUNTERPARTS
- -----------------------------
This Agreement and any amendments, waivers, consents or supplements may
be executed in any number of counterparts, all of which taken together shall
constitute one agreement, and any of the parties hereto may execute this
Agreement by signing any such counterpart. Delivery of an executed signature
page hereof or thereof by facsimile transmission shall be effective as
delivery of a manually signed counterpart. This Agreement shall be effective
when it has been executed by the Borrowers, the Subsidiary Obligors, the Agent
and the Lenders and each party as notified the Agent by facsimile or
telephone, that it has taken such action.
IN WITNESS WHEREOF, the Borrowers, the Subsidiary Obligors, the Lenders and
the Agent have executed this Agreement as of the date first above written.
AGRIBRANDS INTERNATIONAL, INC.
as a Borrower
By: /s/ Robert W. Rickert
Name: Robert W. Rickert
Title: Treasurer
AGRIBRANDS CANADA, INC.
as a Borrower
By: /s/ Robert W. Rickert
Name: Robert W. Rickert
Title: Assistant Treasurer
PURINA ITALIA, S.P.A.
as a Borrower
By: /s/ Robert W. Rickert
Name: Robert W. Rickert
Title: Assistant Treasurer
PURINA ESPANA, S.A.
as a Borrower
By: /s/ Robert W. Rickert
Name: Robert W. Rickert
Title: Assistant Treasurer
PURINA HUNGARIA ANIMAL FEED PRODUCTION & TRADING COMPANY, LTD.
as a Borrower
By: /s/ Robert W. Rickert
Name: Robert W. Rickert
Title: Assistant Treasurer
PURINA KOREA, INC.
as a Borrower and Subsidiary Obligor
By: /s/ Robert W. Rickert, Jr.
Name: Robert W. Rickert, Jr.
Title: Assistant Treasurer
INDUSTRIAS PURINA S.A. DE C.V.
as a Subsidiary Obligor
By: /s/ Robert W. Rickert, Jr.
Name: Robert W. Rickert, Jr.
Title: Assistant Treasurer
PURINA COLOMBIANA S.A.
as a Subsidiary Obligor
By: /s/ Robert W. Rickert, Jr.
Name: Robert W. Rickert, Jr.
Title: Assistant Treasurer
AGRIBRANDS PURINA DO BRASIL, LTDA.
as a Subsidiary Obligor
By: /s/ Robert W. Rickert, Jr.
Name: Robert W. Rickert, Jr.
Title: Assistant Treasurer
PURINA PHILIPPINES, INC.
as a Subsidiary Obligor
By: /s/ Robert W. Rickert, Jr.
Name: Robert W. Rickert, Jr.
Title: Assistant Treasurer
PURINA VENEZUELA, C.A.
as a Subsidiary Obligor
By: /s/ Robert W. Rickert, Jr.
Name: Robert W. Rickert, Jr.
Title: Assistant Treasurer
ABN AMRO BANK N.V.
as the Agent, an Issuing Lender,
and as a Lender
By:___________________________
Name:
Title:
By:___________________________
Name:
Title:
Notice Address:
135 South LaSalle Street
Suite 600
Chicago, Illinois 60670
Attention: ________________
Telephone No.: 312/904-____
Facsimile No.: 312/904-_____
Payment Address for Dollars: Same as above.
THE FIRST NATIONAL BANK OF CHICAGO,
as a Lender
By: /s/ William J. Oleferchik
Name: William J. Oleferchik
Title: Authorized Agent
Notice Address:
The First National Bank of Chicago
One First National Plaza Suite 0173, 1-14
Chicago, IL 60670
Attention: William Oleferchik
Telephone No.: (312) 732-2947
Facsimile No.: (312) 732-1117
Payment Address for Dollars: Same as above.
THE BANK OF NOVA SCOTIA,
as Documentation Agent and as a Lender
By: /s/ F.C.H. Ashby
Name: F.C.H. Ashby
Title: Senior Manager - Loan Operations
Notice Address:
The Bank of Nova Scotia - Atlanta Agency
600 Peachtree Street NE -- Suite 2700
Atlanta, GA 30308
Attention: Mr. George Wong
Telephone No.: 404-877-1556
Facsimile No.: 404-888-8998
Payment Address for Dollars: Same as above.
CREDIT LYONNAIS, CHICAGO BRANCH.
as Syndication Agent and as a Lender
By: /s/ Lee E. Greve
Name: Lee E. Greve
Title: First Vice President
Notice Address:
Credit Lyonnais Chicago Branch
227 West Monroe Street, 38th Floor
Chicago, IL 60606
Attention: Mr. Peter Kelly
Telephone No.: (312) 220-7306
Facsimile No.: (312) 641-0527
Payment Address for Dollars: Same as above.
BANQUE NATIONALE DE PARIS,
as a Lender
By: /s/ Arnaud Collin du Bocage
Name: Arnaud Collin du Bocage
Title: Executive Vice President and General Manager
Notice Address:
209 South LaSalle Street
5th Floor
Chicago, IL 60604
Attention: Cathleen F. Schaede
Telephone No.: (312) 977-1384
Facsimile No.: (312) 977-1380
Payment Address for Dollars: Same as above.
THE BANK OF NOVA SCOTIA, SEOUL BRANCH,
as a Lender
By: /s/ C.D. Morin
Name: C.D. Morin
Title: Vice President and Manager
Notice Address:
9th Fl., KCCI Bldg.,
#45, 4-ka, Namdaemun-ro
Chung-ku, Seoul, Korea
Attention: C.D. Morin
Telephone No.: 02-757-7171
Facsimile No.: 02-752-7189
Payment Address for Dollars: Same as above.
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT A
TO
SHORT TERM CREDIT AGREEMENT
COMMITMENTS
Lender Amount of Commitment % of Aggregate Commitment
- ---------------------------------- --------------------- --------------------------
<S> <C> <C>
ABN AMRO Bank N.V. . . . . . . . . $ 15,000,000 27.272727273%
The Bank of Nova Scotia. . . . . . $ 13,750,000 25%
Credit Lyonnais. . . . . . . . . . $ 13,750,000 25%
The First National Bank of Chicago $ 7,500,000 13.636363636%
Banque Nationale de Paris. . . . . $ 5,000,000 9.09090909%
TOTAL. . . . . . . . . . . . . . . $ 55,000,000 100%
- ----------------------------------
</TABLE>
EXHIBIT B
TO
SHORT TERM CREDIT AGREEMENT
[RESERVED].
EXHIBIT C
TO
SHORT TERM CREDIT AGREEMENT
FORM OF COMPLIANCE CERTIFICATE
---------------------------------
Pursuant to [Section 4.2] [Section 6.1(A)(iii)] of the Short Term Credit
----------- -------------------
Agreement (as amended, modified, restated or supplemented from time to time,
the "Credit Agreement"), dated as March 31, 1998, by and among Agribrands
International, Inc. (the "Company"), the Subsidiary Borrowers parties thereto,
the Subsidiary Obligors parties thereto, the financial institutions from time
to time party thereto (the "Lenders"), and ABN AMRO Bank N.V., as contractual
representative for itself and the other Lenders, the Company, through its
___________________________, hereby delivers to the Agent[, together with the
financial statements being delivered to the Agent pursuant to Section 6.1(A)
--------------
of the Credit Agreement,] this Compliance Certificate (the "Certificate") [for
the accounting period from ____________, 19__ to ___________, 19__].
Capitalized terms used herein shall have the meanings set forth in the Credit
Agreement. Subsection references herein relate to subsections of the Credit
Agreement.
I. MANDATORY PREPAYMENTS (Section 2.2(B))
---------------
A. Section 2.2(B)
---------------
(1) State whether the Dollar Amount of the Revolving Credit Obligations
exceeds 105% of the Aggregate Commitment. Yes/No
(2) If the answer to question (1) is yes, state the amount, if required,
of any mandatory prepayment on Schedule A.
-----------
II. FINANCIAL COVENANTS
A. MINIMUM INTEREST COVERAGE RATIO (Section 6.4(A))
---------------
1. EBITDA (net sales - cost of products sold -
selling, general and administrative expenses +
depreciation + amortization) for the period
from _______ to ________ $___________
2. Cash Interest Expense (as defined) for the period
from _______ to ________ $___________
3. "Interest Coverage" (Ratio of (1) to (2)) TO 1.0
B. MAXIMUM LEVERAGE RATIO (Section 6.4(B))
---------------
1. Total Debt (as defined) $___________
2. EBITDA (as determined under item II(A) above)
$___________
3. "Leverage Ratio" (Ratio of (1) to (2)) TO 1.0
C. CAPITAL EXPENDITURES (Section 6.4(C)).
---------------
State whether Capital Expenditures (as defined) was less than
or equal to [$_______] as at the end of the most recently
completed fiscal year. Yes/No
------
D. MINIMUM CONSOLIDATED NET WORTH
(Section 6.4(D)).
---------------
State whether Consolidated Net Worth (as defined)
was greater than [$________] at all times for the period
from __________ to __________ Yes/No
------
E. COUNTRY DEBT LIMITATIONS (Section 6.4(E))
---------------
<TABLE>
<CAPTION>
1. State whether the Borrowers or Subsidiary Obligors
incurred Indebtedness under the Credit Agreement
in excess of the maximum Dollar Amount set forth
below:
Borrower's or Subsidiary Obligor's
Jurisdiction of Incorporation Maximum Dollar Amount
----------------------------------------------------------------- ----------------------
<C> <S> <C>
Canada. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,500,000
----------------------------------------------------------------- ----------------------
United States . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,000,000
----------------------------------------------------------------- ----------------------
Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,000,000
----------------------
Spain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,500,000
----------------------
Hungary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,000,000
----------------------------------------------------------------- ----------------------
Korea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 15,000,000
----------------------------------------------------------------- ----------------------
Mexico. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,000,000
----------------------------------------------------------------- ----------------------
Colombia. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,000,000
----------------------
Brazil. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,000,000
----------------------
Philippines . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,500,000
----------------------
Venezuela . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,500,000
----------------------------------------------------------------- ----------------------
Yes/No
-----------------------------------------------------------------
2. State whether (x) the ratio of (i) Total Debt (as defined,
including Indebtedness owed to Affiliates but excluding
Contingent Obligations in the form of standby Letters of Credit
issued under the Credit Agreement for the account of such
Subsidiary Borrower or Subsidiary Obligor for the benefit of
domestic financial institutions as support for loans and advances
made by such financial institutions to the applicable Subsidiary
Borrower or Subsidiary Obligor to the extent any such loans or
advances are outstanding) to (ii) EBITDA (as determined under
item IIA above) for each of the Subsidiary Borrowers and
Subsidiary Obligors (other than Purina Korea, Inc.) at any time
exceeded 3.00 to 1.00 or (y) the ratio of (i) Total Debt (as
defined, including Indebtedness owed to Affiliates but excluding
Contingent Obligations in the form of standby Letters of Credit
issued under the Credit Agreement for the account of Purina
Korea, Inc. for the benefit of domestic financial institutions as
support for loans and advances made by such financial
institutions to Purina Korea, Inc. to the extent any such loans
and advances are outstanding) to (ii) EBITDA (as determined
under item IIA above) for Purina Korea, Inc. at any time
exceeded 2.25 to 1.00.
</TABLE>
Yes/No
------
The Company hereby certifies, through its _________________, that the
information set forth above is accurate as of _______________, ____, to the
best of such officer's knowledge, after diligent inquiry, and that the
financial statements delivered herewith present fairly the financial position
of the Company and its Subsidiaries at the dates indicated and the results of
their operations and changes in their financial position for the periods
indicated in conformity with Agreement Accounting Principles, consistently
applied.
Dated: ______________, ____
AGRIBRANDS INTERNATIONAL, INC.
By:________________________________
Name:
Title:
EXHIBIT D
TO
SHORT TERM CREDIT AGREEMENT
FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
------------------------------------------------
FORM OF ASSIGNMENT AGREEMENT
This Assignment Agreement (this "ASSIGNMENT AGREEMENT") between (the
ASSIGNOR) and (the "ASSIGNEE") is dated as of,. The parties hereto agree as
follows:
1. PRELIMINARY STATEMENT. The Assignor is a party to a Short Term
----------------------
Credit Agreement (which, as it may be amended, restated, supplemented,
modified, renewed or extended from time to time is herein called the "CREDIT
AGREEMENT") described in Item 1 of Schedule 1 attached hereto ("SCHEDULE 1").
Capitalized terms used herein and not otherwise defined herein shall have the
meanings attributed to them in the Credit Agreement.
2. ASSIGNMENT AND ASSUMPTION. The Assignor hereby sells and assigns to
-------------------------
the Assignee, and the Assignee hereby purchases and assumes from the Assignor,
an interest in and to the Assignor's rights and obligations under the Credit
Agreement such that after giving effect to such assignment the Assignee shall
have purchased pursuant to this Assignment Agreement the percentage interest
specified in Item 3 of Schedule 1 of all outstanding rights and obligations
under the Credit Agreement relating to the facilities listed in Item 3 of
Schedule 1 and the other Loan Documents. The aggregate Commitment (or Loans,
if the applicable Commitment has been terminated) purchased by the Assignee
hereunder is set forth in Item 4 of Schedule 1.
3. EFFECTIVE DATE. The effective date of this Assignment Agreement
--------------
(the "EFFECTIVE DATE") shall be the later of the date specified in Item 5 of
Schedule 1 or two Business Days (or such shorter period agreed to by the
Agent) after a Notice of Assignment substantially in the form of Appendix I
----------
(attached hereto) has been delivered to the Agent. Such Notice of Assignment
must include the consents, if any, required to be delivered to the Agent by
Section 12.3(A) of the Credit Agreement. In no event will the Effective Date
--------------
occur if the payments required to be made by the Assignee to the Assignor on
the Effective Date under Sections 4 and 5 hereof are not made on the proposed
----------------
Effective Date. The Assignor will notify the Assignee of the proposed
Effective Date no later than the Business Day prior to the proposed Effective
Date. As of the Effective Date, (i) the Assignee shall have the rights and
obligations of a Lender under the Loan Documents with respect to the rights
and obligations assigned to the Assignee hereunder and (ii) the Assignor shall
relinquish its rights and be released from its corresponding obligations under
the Loan Documents with respect to the rights and obligations assigned to the
Assignee hereunder.
4. PAYMENTS OBLIGATIONS. On and after the Effective Date, the Assignee
--------------------
shall be entitled to receive from the Agent all payments of principal,
interest and fees with respect to the interest assigned hereby. The Assignee
shall advance funds directly to the Agent with respect to all Loans and
reimbursement payments made on or after the Effective Date with respect to the
interest assigned hereby. [In consideration for the sale and assignment of
Loans hereunder, (i) the Assignee shall pay the Assignor, on the Effective
Date, an amount equal to the principal amount of the portion of all Base Rate
Loans assigned to the Assignee hereunder and (ii) with respect to each
Eurodollar Loan and Korean Eurodollar Loan made by the Assignor and assigned
to the Assignee hereunder which is outstanding on the Effective Date, (a) on
the last day of the Interest Period therefor or (b) on such earlier date
agreed to by the Assignor and the Assignee or (c) on the date on which any
such Eurodollar Loan and Korean Eurodollar Loan either becomes due (by
acceleration or otherwise) or is prepaid (the date as described in the
foregoing clauses (a), (b) or (c) being hereinafter referred to as the
------------ --- ---
"PAYMENT DATE"), the Assignee shall pay the Assignor in Dollars an amount
equal to the principal amount of the portion of such Eurodollar Rate Loan or
Korean Eurodollar Loan, as applicable, assigned to the Assignee which is
outstanding on the Payment Date. If the Assignor and the Assignee agree that
the Payment Date for such Eurodollar Loan or Korean Eurodollar Loan shall be
the Effective Date, they shall agree to the interest rate applicable to the
portion of such Loan assigned hereunder for the period from the Effective Date
to the end of the existing Interest Period applicable to such Eurodollar Rate
Loan or Korean Eurodollar Loan (the "AGREED INTEREST RATE") and any interest
received by the Assignee in excess of the Agreed Interest Rate shall be
remitted to the Assignor. In the event interest for the period from the
Effective Date to but not including the Payment Date is not paid by the
applicable Borrower with respect to any Eurodollar Loan or Korean Eurodollar
Loan sold by the Assignor to the Assignee hereunder, the Assignee shall pay to
the Assignor interest for such period on the portion of such Eurodollar Loan
or Korean Eurodollar Loan sold by the Assignor to the Assignee hereunder at
the applicable rate provided by the Credit Agreement. In the event a
prepayment of any Eurodollar Loan or Korean Eurodollar Loan which is existing
on the Payment Date and assigned by the Assignor to the Assignee hereunder
occurs after the Payment Date but before the end of the Interest Period
applicable to such Eurodollar Loan or Korean Eurodollar Loan, the Assignee
shall remit to the Assignor the excess of the prepayment penalty paid with
respect to the portion of such Eurodollar Loan or Korean Eurodollar Loan
assigned to the Assignee hereunder over the amount which would have been paid
if such prepayment penalty was calculated based on the Agreed Interest Rate.
The Assignee will also promptly remit to the Assignor (i) any principal
payments received from the Agent with respect to Eurodollar Loans or Korean
Eurodollar Loan prior to the Payment Date and (ii) any amounts of interest on
Loans and fees received from the Agent which relate to the portion of the
Loans assigned to the Assignee hereunder for periods prior to the Effective
Date, in the case of Base Rate Loans or fees, or the Payment Date, in the case
of Eurodollar Loans or Korean Eurodollar Loan, and not previously paid by the
Assignee to the Assignor.] In the event that either party hereto receives any
payment to which the other party hereto is entitled under this Assignment
Agreement, then the party receiving such amount shall promptly remit it to the
other party hereto.
5. FEES PAYABLE BY THE ASSIGNEE. The [Assignee shall pay to the
--------------------------------
Assignor a fee on each day on which a payment of interest or commitment fees
is made under the Credit Agreement with respect to the amounts assigned to the
Assignee hereunder (other than a payment of interest or commitment fees for
the period prior to the Effective Date or, in the case of Eurodollar Loans or
Korean Eurodollar Loan, the Payment Date, which the Assignee is obligated to
deliver to the Assignor pursuant to Section 4 hereof). The amount of such fee
shall be the difference between (i) the interest or fee, as applicable, paid
with respect to the amounts assigned to the Assignee hereunder and (ii) the
interest or fee, as applicable, which would have been paid with respect to the
amounts assigned to the Assignee hereunder if each interest rate was of 1%
less than the interest rate paid by the Borrowers or if the commitment fee was
___ of 1% less than the commitment fee paid by the Borrowers, as applicable.
In addition, the] [Assignee][Assignor] agrees to pay a $3,500 processing fee
required to be paid to the Agent in connection with this Assignment Agreement.
6. REPRESENTATIONS OF THE ASSIGNOR; LIMITATIONS ON THE ASSIGNOR'S
--------------------------------------------------------------
LIABILITY. The Assignor represents and warrants that it is the legal and
--------
beneficial owner of the interest being assigned by it hereunder and that such
---
interest is free and clear of any adverse claim created by the Assignor. It
is understood and agreed that the assignment and assumption hereunder are made
without recourse to the Assignor and that the Assignor makes no other
representation or warranty of any kind to the Assignee. Neither the Assignor,
the Agent, nor any other Lender, nor any of its officers, directors,
employees, agents or attorneys shall be responsible for (i) the due execution,
legality, validity, enforceability, genuineness, sufficiency or collectability
of any Loan Document, including without limitation, documents granting the
Assignor, Agent and the other Lenders a security interest in assets of the
Company, any Subsidiary Borrower or any Subsidiary Obligor or any guarantor,
(ii) any representation, warranty or statement made in or in connection with
any of the Loan Documents, (iii) the financial condition or creditworthiness
of the Company, any Subsidiary Borrower or any Subsidiary Obligor or any
guarantor, (iv) the performance of or compliance with any of the terms or
provisions of any of the Loan Documents, (v) inspecting any of the property,
books or records of the Company, any Subsidiary Borrower or any Subsidiary
Obligor, (vi) the validity, enforceability, perfection, priority, condition,
value or sufficiency of any collateral securing or purporting to secure the
Loans or (vii) any mistake, error of judgment, or action taken or omitted to
be taken in connection with the Loans or the Loan Documents.
7. REPRESENTATIONS OF THE ASSIGNEE. The Assignee (i) confirms that
-------------------------------
it has received a copy of the Credit Agreement, together with copies of the
financial statements requested by the Assignee and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment Agreement, (ii) agrees that it will,
independently and without reliance upon the Agent, the Assignor or any other
Lender and based on such documents and information at it shall deem
appropriate at the time, continue to make its own credit decisions in taking
or not taking action under the Loan Documents, (iii) appoints and authorizes
the Agent to take such action as contractual representative on its behalf and
to exercise such powers under the Loan Documents as are delegated to the Agent
by the terms thereof, together with such powers as are reasonably incidental
thereto, (iv) agrees that it will perform in accordance with their terms all
of the obligations which by the terms of the Loan Documents are required to be
performed by it as a Lender, including, without limitation, making Loans to
Purina Korea, Inc. in Korean Won, (v) agrees that its payment instructions and
notice instructions are as set forth in the attachment to Schedule 1, (vi)
confirms that none of the funds, monies, assets or other consideration being
used to make the purchase and assumption hereunder are "plan assets" as
defined under ERISA and that its rights, benefits and interests in and under
the Loan Documents will not be "plan assets" under ERISA, [and (vii) attaches
the forms prescribed by the Internal Revenue Service of the United States
certifying that the Assignee is entitled to receive payments under the Loan
Documents without deduction or withholding of any United States federal income
taxes].
8. INDEMNITY. The Assignee agrees to indemnify and hold the Assignor
---------
harmless against any and all losses, costs and expenses (including, without
limitation, reasonable attorneys' fees) and liabilities incurred by the
Assignor in connection with or arising in any manner from the Assignee's
non-performance of the obligations assumed under this Assignment Agreement.
9. SUBSEQUENT ASSIGNMENTS. After the Effective Date, the Assignee shall
----------------------
have the right pursuant to Section 12.3(A) of the Credit Agreement to assign
---------------
the rights which are assigned to the Assignee hereunder to any entity or
person, provided that (i) any such subsequent assignment does not violate any
of the terms and conditions of the Loan Documents or any law, rule,
regulation, order, writ, judgment, injunction or decree and that any consent
required under the terms of the Loan Documents has been obtained and (ii)
unless the prior written consent of the Assignor is obtained, the Assignee is
not thereby released from its obligations to the Assignor hereunder, if any
remain unsatisfied, including, without limitation, its obligations under
[Sections 4, 5 and 8] hereof.
-------------------
10. REDUCTIONS OF AGGREGATE COMMITMENT. If any reduction in the
-------------------------------------
Aggregate Commitment occurs between the date of this Assignment Agreement and
the Effective Date, the percentage interest specified in Item 3 of Schedule 1
shall remain the same, but the dollar amount purchased shall be recalculated
based on the reduced Aggregate Commitment.
11. ENTIRE AGREEMENT. This Assignment Agreement and the attached Notice
----------------
of Assignment embody the entire agreement and understanding between the
parties hereto and supersede all prior agreements and understandings between
the parties hereto relating to the subject matter hereof.
12. GOVERNING LAW. This Assignment Agreement shall be governed by and
-------------
interpreted and enforced in accordance with the internal laws of the State of
Illinois.
13. NOTICES. Notices shall be given under this Assignment Agreement in
-------
the manner set forth in the Credit Agreement. For the purpose hereof, the
addresses of the parties hereto (until notice of a change is delivered) shall
be the address set forth in the attachment to Schedule 1.
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
Agreement by their duly authorized officers as of the date first above
written.
[NAME OF ASSIGNOR]
By:
Name:
Title
[NAME OF ASSIGNEE]
By:
Name:
Title
SCHEDULE 1
to Assignment Agreement
1. Description and Date of Credit Agreement:
SHORT TERM CREDIT AGREEMENT DATED AS OF MARCH 31, 1998 AMONG AGRIBRANDS
INTERNATIONAL, INC. (THE "COMPANY"), THE SUBSIDIARY BORROWERS PARTIES THERETO,
THE SUBSIDIARY OBLIGORS PARTIES THERETO, THE INSTITUTIONS FROM TIME TO TIME
PARTY THERETO AS LENDERS (THE "LENDERS"), AND ABN AMRO BANK N.V., AS
CONTRACTUAL REPRESENTATIVE ON BEHALF OF THE LENDERS.
2. Date of Assignment Agreement:,
3. Amounts to be Assigned (As of Date of Item 2 above):
<TABLE>
<CAPTION>
<C> <S> <C>
- -- REVOLVING LOAN
FACILITY
-----------------------------------------------------
TOTAL OF COMMITMENTS (LOANS) UNDER THE CREDIT
AGREEMENT . . . . . . . . . . . . . . . . . . . . . . $
----------------------------------------------------- -
ASSIGNEES PERCENTAGE OF FACILITY PURCHASED UNDER THE
ASSIGNMENT AGREEMENT
___%
-----------------------------------------------------
AMOUNT OF ASSIGNED SHARE OF FACILITY UNDER THE
ASSIGNMENT AGREEMENT. . . . . . . . . . . . . . . . . $
</TABLE>
4. Assignee's Aggregate (Loan
Amount)** Commitment Amount
Purchased Hereunder: $
5. Proposed Effective Date: _________ __, ____
Accepted and Agreed:
[NAME OF ASSIGNOR] [NAME OF ASSIGNEE]
By: By:
Name: Name:
Title: Title:
Attachment to SCHEDULE 1 to ASSIGNMENT AGREEMENT
Attach Assignor's Administrative Information Sheet, which must
include notice address for the Assignor and the Assignee
APPENDIX I
to Assignment Agreement
NOTICE
OF ASSIGNMENT
--------------
APPENDIX I to Assignment Agreement NOTICE OF ASSIGNMENTAPPENDIX I
-------------
to Assignment Agreement NOTICE OF ASSIGNMENTI to Assignment
-------------
Agreement NOTICE OF ASSIGNMENT to Assignment Agreement NOTICE
-------------
OF ASSIGNMENT
- --------------
, 19
To: ABN AMRO Bank N.V.
135 South LaSalle Street
Chicago, Illinois 60674
Attention: [_______]
Telephone No.: 312/[________]
Facsimile No.: 312/[________]
AGRIBRANDS INTERNATIONAL, INC.
9811 South Forty Drive
St. Louis, Missouri 63124
Attention: [_____________________]
Telephone No.: ___-___-____
Facsimile No.: ___-___-____
From: [NAME OF ASSIGNOR] (the "Assignor")
[NAME OF ASSIGNEE] (the "Assignee")
1. We refer to that Short Term Credit Agreement (the "Credit
Agreement") described in Item 1 of Schedule 1 attached hereto ("Schedule 1").
Capitalized terms used herein and not otherwise defined herein shall have the
meanings attributed to them in the Credit Agreement.
2. This Notice of Assignment (this "Notice") is given and delivered
to the Agent pursuant to Section 12.3(B) of the Credit Agreement.
----------------
3. The Assignor and the Assignee have entered into an Assignment
Agreement, dated as of, 19 (the "Assignment"), pursuant to which, among other
things, the Assignor has sold, assigned, delegated and transferred to the
Assignee, and the Assignee has purchased, accepted and assumed from the
Assignor the percentage interest specified in Item 3 of Schedule 1 of all
outstandings, rights and obligations under the Credit Agreement relating to
the facilities listed in Item 3 of Schedule 1. The Effective Date of the
Assignment shall be the later of the date specified in Item 5 of Schedule 1 or
two Business Days (or such shorter period as agreed to by the Agent) after
this Notice of Assignment and any consents and fees required by Sections
--------
12.3(A) and 12.3(B) of the Credit Agreement have been delivered to the Agent,
-- -------
provided that the Effective Date shall not occur if any condition precedent
agreed to by the Assignor and the Assignee has not been satisfied.
4. The Assignor and the Assignee hereby give to each Borrower and the
Subsidiary Obligors and the Agent notice of the assignment and delegation
referred to herein. The Assignor will confer with the Agent before the date
specified in Item 5 of Schedule 1 to determine if the Assignment Agreement
will become effective on such date pursuant to Section 3 hereof, and will
confer with the Agent to determine the Effective Date pursuant to Section 3
hereof if it occurs thereafter. The Assignor shall notify the Agent if the
Assignment Agreement does not become effective on any proposed Effective Date
as a result of the failure to satisfy the conditions precedent agreed to by
the Assignor and the Assignee. At the request of the Agent, the Assignor
will give the Agent written confirmation of the satisfaction of the conditions
precedent.
5. The Assignor or the Assignee shall pay to the Agent on or before
the Effective Date the processing fee of $3,500 required by Section 12.3(B) of
---------------
the Credit Agreement.
6. If notes evidencing the Borrowers' Obligations to the Assignor are
outstanding on the Effective Date, the Assignor and the Assignee request and
direct that the Agent prepare and cause the Borrowers to execute and deliver
new notes or, as appropriate, replacements notes, to the Assignor and the
Assignee. The Assignor and, if applicable, the Assignee each agree to deliver
to the Agent the original notes received by it from the Borrowers upon its
receipt of new notes in the appropriate amount.
7. The Assignee advises the Agent that notice and payment
instructions are set forth in the attachment to Schedule 1.
8. The Assignee hereby represents and warrants that none of the
funds, monies, assets or other consideration being used to make the purchase
pursuant to the Assignment are "plan assets" as defined under ERISA and that
its rights, benefits, and interests in and under the Loan Documents will not
be "plan assets" under ERISA.
9. The Assignee authorizes the Agent to act as its contractual
representative under the Loan Documents in accordance with the terms thereof.
The Assignee acknowledges that the Agent has no duty to supply information
with respect to any Borrower, any Subsidiary Obligor or the Loan Documents to
the Assignee until the Assignee becomes a party to the Credit Agreement.
[NAME OF ASSIGNOR] [NAME OF ASSIGNEE]
By: By:
Name: Name:
Title: Title:
ACKNOWLEDGED AND CONSENTED TO:
ABN AMRO BANK N.V., as Agent
By:
Name:
Title:
[Attach photocopy of Schedule 1 to Assignment]
EXHIBIT E
TO
SHORT TERM CREDIT AGREEMENT
LIST OF CLOSING DOCUMENTS
----------------------------
[Attached]
$110,000,000
CREDIT FACILITIES
TO
AGRIBRANDS INTERNATIONAL, INC.
and certain Subsidiaries thereof
March 31, 1998
LIST OF CLOSING DOCUMENTS
-------------------------
A. LOAN AND SECURITY DOCUMENTS
------------------------------
Credit Agreement ("Short Term Credit Agreement") among Agribrands
International, Inc., a Missouri corporation (the "Company"), the Subsidiary
Borrowers parties thereto, the Subsidiary Obligors parties thereto, the
financial institutions from time to time party thereto (collectively, the
"Lenders") and ABN AMRO Bank N.V., in its capacity as contractual
representative (the "Agent") for the Lenders, evidencing a 364-day $55,000,000
revolving credit facility to the Company, the Subsidiary Borrowers and the
Subsidiary Obligors from the Lenders.
Credit Agreement ("Long Term Credit Agreement", and, together with
the Short Term Credit Agreement, the "Credit Agreements") among the Company,
the Subsidiary Borrowers parties thereto, the Subsidiary Obligors parties
thereto, the Lenders and the Agent, evidencing a three-year $55,000,000
revolving credit facility to the Company, the Subsidiary Borrowers and the
Subsidiary Obligors from the Lenders.
Pledge Agreements from the Company to the Agent evidencing the
Borrower's pledge of (i) 65% of the Capital Stock of each of the Subsidiary
Borrowers and Subsidiary Obligors as security for the Obligations under each
of the Credit Agreements and (ii) 100% of the Capital Stock of each of the
Subsidiary Borrowers and Subsidiary Obligors as security for the Obligations
under each of the Credit Agreements of the other Subsidiary Borrowers and
Subsidiary Obligors and (iii) 100% of the Capital Stock of AgriInternational
Holdings, Inc., a Delaware corporation ("Holdings") as security for the
Obligations under each of the Credit Agreements, together with STOCK
CERTIFICATES and stock powers duly executed in blank.
Guarantee executed by the Company in favor of the Agent, guarantying
all of the Obligations of each of the Subsidiary Borrowers and Subsidiary
Obligors under the Credit Agreements.
Guarantee executed by Holdings in favor of the Agent, guarantying
all of the Obligations under the Credit Agreement.
Guarantee executed by each of the Subsidiaries of the Company listed
on Appendix A hereto in favor of the Agent, guarantying all of the Obligations
of each of the other Subsidiary Borrowers and Subsidiary Obligors under the
Credit Agreements.
Contribution Agreement executed by each of the Subsidiaries of the
Company listed on Appendix A hereto.
B. CORPORATE DOCUMENTS
--------------------
Certificate of the Secretary of the Company certifying (i)
resolutions of the Board of Directors of the Company approving and authorizing
the execution, delivery and performance of each document to which it is a
party, (ii) that there have been no changes in the Articles of Incorporation
of the Company since the date of the most recent certification thereof by the
Secretary of State of Missouri delivered to the Agent, (iii) the names and
true signatures of the incumbent officers of the Company authorized to sign
the documents to which it is a party, and (iv) the By-laws (attached thereto)
of the Company as in effect on the date of such certification.
Articles of Incorporation of the Company certified by the Secretary
of State of Missouri.
Good Standing Certificate for the Company from the offices of the
Secretary of State of Missouri.
Certificate of the Secretary of each of the Subsidiaries of the
Company listed on Appendix A hereto certifying (i) resolutions of the
governing board of each such Subsidiary approving and authorizing the
execution, delivery and performance of each document to which it is a party,
(ii) that there have been no changes in the constitutive agreements of such
Subsidiary since the date of the most recent certification thereof by the
appropriate Governmental Authority of its jurisdiction of incorporation
delivered to the Agent, (iii) the names and true signatures of the incumbent
officers of such Subsidiary authorized to sign the documents to which it is a
party, and (iv) the by-laws (attached thereto) of such Subsidiary as in effect
on the date of such certification.
Constitutive Agreements of each Subsidiary of the Company listed on
Appendix A hereto certified by the appropriate Governmental Authority of its
respective jurisdiction of incorporation.
C. LEGAL OPINIONS
---------------
Opinion of U.S. counsel to the Borrowers and Holdings in form and
substance satisfactory to the Agent: Bryan Cave L.L.P.
Opinion of foreign counsel to the Borrowers and Subsidiary Obligors
in form and substance satisfactory to the Agent in each of the jurisdictions
indicated below:
a. Siskind Cromarty, Ivey & Dowler [CANADA]
b. Pavia E. Ansaldo [ITALY]
c. Price Waterhouse, Edifici Caga De Madrid [SPAIN]
d. Burai-Kovacs & Partners [HUNGARY]
e. Kim & Chang [KOREA]
f. Creel, Garcia-Cuellar Y Muggenburg [MEXICO]
g. Cardenas & Cardenas [COLUMBIA]
h. Demarest E. Almeida [BRAZIL]
i. Platon, Martinez, San Pedro & Leano [PHILLIPPINES]
j. Torres Plaz & Araujo [VENEZUELA]
D. CLOSING CERTIFICATES AND MISCELLANEOUS
-----------------------------------------
Pledged Account Agreement in respect of the Company's cash
collateral account, executed by each of the Company, the Agent and ABN Amro
Bank N.V.
Notice of Borrowing.
Officer's No-Default Certificate.
E. POST- CLOSING ITEMS
---------------------
APPENDIX A
LIST OF SUBSIDIARIES
----------------------
AgriInternational Holdings, Inc., a Delaware corporation
Agribrands Canada, Inc., a company organized under the federal laws of Canada
Purina Italia, S.p.A., a company organized under the laws of Italy
Purina Espana, S.A., a company organized under the laws of Spain
Purina Hungaria Animal Feed Production & Trading Company, Ltd., a company
organized under the laws of Hungary
Purina Korea, Inc., a corporation organized under the laws of the Republic of
Korea
Industrias Purina S.A. de C.V., a company organized under the laws of Mexico
Purina Colombiana S.A., a company organized under the laws of Colombia
Agribrands Purina do Brasil, Ltda., a company organized under the laws of
Brazil
Purina Philippines, Inc., a corporation organized under the laws of the
Philippines
Purina de Venezuela, C.A., a company organized under the laws of Venezuela
EXHIBIT F
TO
SHORT TERM CREDIT AGREEMENT
Form of Officer's Certificate
--------------------------------
OFFICER'S CERTIFICATE
I, the undersigned, hereby certify that I am the of Agribrands
International, Inc., a corporation duly organized and existing under the laws
of the State of Delaware (the "Company"). Capitalized terms used herein and
not otherwise defined herein are as defined in that certain Short Term Credit
Agreement dated as of March 31, 1998, among the Company, the Subsidiary
Borrowers parties thereto, the Subsidiary Obligors parties thereto, the
financial institutions from time to time parties thereto as lenders (the
"Lenders"), ABN AMRO Bank N.V., in its capacity as contractual representative
for itself and the other Lenders (the "Agent") (as amended, restated,
supplemented or modified from time to time, the "Credit Agreement").
I further certify on behalf of the Company, that as of the date hereof,
to the best of my knowledge, after diligent inquiry of all relevant persons at
the Company and its Subsidiaries, (i) the representations and warranties of
the Borrowers and the Subsidiary Obligors contained in Article V of the Credit
---------
Agreement shall have been true and correct at all times during the period
commencing on __________, 19__ and ending on _____________, 19__ and as of the
date of this Officer's Certificate and (ii) as of the date of this Officer's
Certificate no Default or Unmatured Default exists [other than the following
(describe the nature of the Default or Unmatured Default and the status
thereof)].
IN WITNESS WHEREOF, I hereby subscribe my name on behalf of the Company
on this ____ day of ___________, ____.
____________________________
[Insert Name of Officer]
EXHIBIT G
TO
SHORT TERM CREDIT AGREEMENT
Financial Statements
[Attached].
EXHIBIT H
TO
CREDIT AGREEMENT
FORM OF REQUEST FOR LETTER OF CREDIT
------------------------------------------
TO: INSERT NAME OF ISSUING BANK., an Issuing Bank under that certain
Short Term Credit Agreement dated as of March 31, 1998 (the "Credit
Agreement") by and among Agribrands International, Inc. (the "Company"), the
Subsidiary Borrowers parties thereto, the Subsidiary Obligors parties thereto,
the financial institutions from time to time parties thereto (the "Lenders"),
and ABN AMRO Bank N.V., as contractual representative (the "Agent") for the
Lenders (such Credit Agreement, as the same may be amended, restated,
supplemented or otherwise modified from time to time, the "Credit Agreement")
and
ABN AMRO BANK N.V., as Agent
135 South LaSalle Street, Suite 425
Chicago, IL 60603
Attn: [________]
Telecopier: 312-[_______]
Confirmation: 312-[______]
Pursuant to Section 2.16 of the Credit Agreement, the undersigned hereby
gives to the Issuing Bank a request for issuance of a [standby] [commercial]
Letter of Credit on behalf of the undersigned for the benefit ofINSERT NAME OF
BENEFICIARY., in the amount of [US $] [_____________ Korean Won], with an
effective date of ___________________, ____ (the "Effective Date") and an
expiry date of ___________, ____. [Provide description of documents and terms
in connection with commercial Letter of Credit].
The undersigned hereby certifies that (i) the representations and
warranties of the undersigned contained in Article V of the Credit Agreement
are and shall be true and correct in all material respects on and as of the
date hereof and on and as of the Effective Date; (ii) no Default or Unmatured
Default has occurred and is continuing on the date hereof or on the Effective
Date or will result from the issuance of the proposed Letter of Credit; and
(iii) the conditions set forth in Sections 2.16 and 4.2 of the Credit
Agreement have been satisfied.
Unless otherwise defined herein, terms defined in the Credit Agreement
shall have the same meanings in this Request for Letter of Credit.
Dated:,
[______________________]
By:
Name:
Title:
EXHIBIT I
TO
CREDIT AGREEMENT
FORM OF LETTER OF CREDIT
------------------------
[BENEFICIARY]
________________
________________
Re: Irrevocable Letter of Credit No., dated __________.
Dear [BENEFICIARY]:
[_______________________] (the "Issuer") hereby issues in favor of you,
[_______________], this irrevocable letter of credit ("Letter of Credit") for
an amount (the "Maximum Amount") of [U.S. $____________][______________ Korean
Won], effective immediately, which Maximum Amount will be reduced by the
amount of any payments made hereunder. Reference is hereby made to that
certain Short Term Credit Agreement, dated as of March 31, 1998, by and among
Agribrands International, Inc., a Missouri corporation (the "Company"), the
Subsidiary Borrowers parties thereto, the Subsidiary Obligors parties thereto,
the financial institutions from time to time parties thereto (the "Lenders"),
and ABN AMRO Bank N.V., as contractual representative (the "Agent") on behalf
of the Lenders (as amended, restated, supplemented or otherwise modified from
time to time, the "Credit Agreement"). Capitalized terms used herein without
definition shall have the meanings set forth in the Credit Agreement.
The Issuer will honor one or more of your drafts drawn on the Issuer in
accordance with the terms set forth herein in an amount not in excess of the
Maximum Amount upon presentation prior to the Termination Date (as defined
below) of [(a) a draft in the form of Exhibit I attached hereto and made a
---------
part hereof, executed by you and (b) the original of this Letter of Credit
[and (c) _______________________________________________]] [your tested telex
stating the drawing amount and certifying that the amount claimed represents
amounts past due and outstanding under the facility granted by you to
[________________]].
Multiple drafts may be drawn under this Letter of Credit but the Maximum
Amount of this Letter of Credit will be permanently reduced by the amount of
any such draft. Presentation of the documents required for payment under this
Letter of Credit may be made by you prior to the expiration hereof at any time
during the Issuer's business hours at [_____________________________].
Provided that such documents and your presentation thereof conform to the
terms and conditions hereof, payment shall be made to you of the amount
demanded, in immediately available funds, not later than 3:00 p.m. (New York
time) three (3) business days following the presentment of the required
documents. If a demand for payment made by you hereunder does not, in any
instance, conform to the terms and conditions of this Letter of Credit, the
Issuer shall give you prompt notice that the purported negotiation was not
effected in accordance with the terms and conditions of this Letter of Credit,
stating the reasons therefor and that the Issuer is holding any documents at
your disposal or is returning the same to you, as the Issuer may elect. Upon
being notified that the proposed negotiation was not effected in accordance
with this Letter of Credit, you may attempt to correct any such non-conforming
demand for payment, if, and to the extent that, you are able to do so,
provided that any re-submission of documents shall be made not less than two
(2) business days prior to the expiration hereof.
This Letter of Credit shall expire at 5:00 p.m. (New York time) on
[______________] the "Termination Date").
This Letter of Credit is subject to the terms and conditions of the
Uniform Customs and Practice for Documentary Credits (1993 Revision)
International Chamber of Commerce Publication No. 500, as amended or revised
from time to time ("Uniform Customs"), such amendments or revisions to be
controlling herein as of the official date of the effectiveness of such
amendments or revisions, as announced by the International Chamber of
Commerce. As to matters not governed by the Uniform Customs, the Letter of
Credit shall be deemed to be a contract made under the laws of the State of
New York and shall be governed and construed in accordance with the laws of
the State of New York. This Letter of Credit is not transferable in whole or
in part.
We undertake that your drafts drawn and presented on or before the time
of expiration of this Letter of Credit in conformity with the terms of this
Letter of Credit will be duly honored. Each draft must be marked "Drawn under
Irrevocable Letter of Credit No., dated [______________].
Very truly yours,
[______________________________]
By: ____________________
Name:
Title:
EXHIBIT "I"
to
IRREVOCABLE LETTER OF CREDIT NO.
Dated as of [_____________]
SIGHT DRAFT
------------
[DATE]
To: [ISSUER and ISSUER's Address]
Attention:
From: [BENEFICIARY]
Upon sight hereof, pay to the order of [__________________], the amount
of [U.S. $_____________][___________ Korean Won] in immediately available
funds, by remitting said amount to his account number ___________ at
______________________________, which amount is now due and payable by [NAME
OF BORROWER OR SUBSIDIARY OBLIGOR] to the undersigned and has not been paid.
This draft is drawn under Irrevocable Letter of Credit No., dated
[______________________].
(Name)
rset2Food
Each Assignor may insert its standard payment provisions in lieu of the
payment terms included in this Exhibit.
Assignor and Assignee to insert applicable payment terms.
To be inserted if the Assignee is not incorporated under the laws of the
United States, or a state thereof.
Amounts to be described in Dollars or Korean Won, as applicable.
Capitalized terms used herein and not defined herein shall have the meanings
assigned to such terms in the Credit Agreement. Bold/italicized documents to
be prepared and/or provided by the Borrower and/or Borrower's Counsel.
