Page 1 of 18 Pages
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
Form 10-Q
Quarterly Report under Section 13 or 15(d) of the Securities
Exchange Act of 1934
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 26, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Registration Statement (Form S-4) Number 33-56517
AGRILINK FOODS, INC.
(Exact Name of Registrant as Specified in its Charter)
New York 16-0845824
(State or other jurisdiction of (IRS Employer
incorporation or organization Identification Number)
90 Linden Oaks, PO Box 20670, Rochester, NY 14602-6070
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (716) 383-1850
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding twelve months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of October 31, 1998.
Common Stock: 10,000
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
Agrilink Foods, Inc.
Consolidated Statement of Operations
(Dollars in Thousands)
<TABLE>
Quarter Ended
September 26, September 27,
1998 1997
<S> <C> <C>
Net sales $ 182,579 $176,397
Cost of sales (135,882) (130,748)
--------- --------
Gross profit 46,697 45,649
Selling, administrative, and general expenses (34,867) (32,954)
Income from Great Lakes Kraut Company 636 164
Gain on sale of aseptic operations 64,202 0
--------- --------
Operating income before dividing with Pro-Fac 76,668 12,859
Interest expense (8,336) (7,638)
--------- --------
Pretax income before dividing with Pro-Fac and before extraordinary item 68,332 5,221
Pro-Fac share of income before extraordinary item (5,658) (2,611)
--------- --------
Income before taxes and before extraordinary item 62,674 2,610
Tax provision (24,334) (1,193)
--------- --------
Income before extraordinary item 38,340 1,417
Extraordinary item relating to the early extinguishment of debt (16,366) 0
(net of income taxes and after dividing with Pro-Fac) --------- --------
Net Income $ 21,974 $ 1,417
========= ========
<FN>
The accompanying notes are an integral part of these consolidated financial
statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
Agrilink Foods, Inc.
Consolidated Balance Sheet
<CAPTION>
(Dollars in Thousands)
September 26, June 27, September 27,
1998 1998 1997
ASSETS
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 9,057 $ 5,046 $ 3,995
Accounts receivable trade, net 98,911 55,046 65,053
Accounts receivable, other 11,053 3,575 3,863
Current deferred tax asset 13,129 4,642 8,198
Inventories -
Finished goods 349,451 111,153 140,056
Raw materials and supplies 45,829 30,433 25,413
---------- -------- --------
Total inventories 395,280 141,586 165,469
---------- -------- --------
Current investment in CoBank 1,330 1,994 631
Prepaid manufacturing expense 98 8,404 84
Prepaid expenses and other current assets 17,288 12,989 8,464
---------- -------- --------
Total current assets 546,146 233,282 255,757
Investment in CoBank 22,377 22,377 24,320
Investment in Great Lakes Kraut Company 7,223 6,584 6,585
Property, plant and equipment, net 317,025 194,615 209,216
Assets held for sale at net realizable value 2,711 2,662 3,259
Goodwill and other intangible assets, net 327,650 94,744 95,503
Other assets 24,418 12,175 7,507
Note receivable due from Pro-Fac 9,400 0 0
---------- -------- --------
Total assets $1,256,950 $566,439 $602,147
========== ======== ========
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Notes payable $ 94,000 $ 0 $ 64,000
Current portion of obligations under capital leases 256 256 558
Current portion of long-term debt 1,023 8,071 8,073
Accounts payable 84,493 70,125 38,931
Income taxes payable 12,420 3,943 4,234
Accrued interest 690 8,559 3,960
Accrued employee compensation 14,329 8,598 7,981
Other accrued expenses 89,746 19,013 21,681
Current liability due to Pro-Fac 27,254 6,642 9,659
---------- -------- --------
Total current liabilities 324,211 125,207 159,077
Obligations under capital leases 503 503 817
Long-term debt 463,700 69,937 70,528
Senior subordinated notes 15 160,000 160,000
Subordinated bridge facility 200,000 0 0
Subordinated promissory note 30,000 0 0
Deferred income tax liabilities 35,341 33,154 40,902
Other non-current liabilities 26,626 23,053 22,967
---------- -------- --------
Total liabilities 1,080,396 411,854 454,291
---------- -------- --------
Commitments and contingencies
Shareholder's Equity:
Common stock, par value $.01;
10,000 shares outstanding, owned by Pro-Fac 0 0 0
Accumulated other comprehensive income:
Minimum pension liability adjustment (608) (608) 0
Cumulative foreign currency adjustment (5) 0 0
Additional paid-in capital 167,071 167,071 158,317
Retained earnings (accumulated deficit) 10,096 (11,878) (10,461)
---------- -------- --------
Total shareholder's equity 176,554 154,585 147,856
---------- -------- --------
Total liabilities and shareholder's equity $1,256,950 $566,439 $602,147
========== ======== ========
<FN>
The accompanying notes are an integral part of these consolidated financial
statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
Agrilink Foods, Inc.
Consolidated Statement of Cash Flows
<CAPTION>
(Dollars in Thousands)
Quarter Ended
September 26, September 27,
1998 1997
------------- -------------
<S>
Cash Flows From Operating Activities: <C> <C>
Net income $ 21,974 $ 1,417
Adjustments to reconcile net income to net cash used in operating activities -
Gain on the sale of the aseptic operation (64,202) 0
Extraordinary item relating to the early extinguishment of debt 16,366 0
Amortization of goodwill and other intangibles 926 990
Amortization of debt issue costs 200 199
Depreciation 4,385 4,597
Equity in undistributed earnings of Great Lakes Kraut Company (636) (164)
Change in assets and liabilities:
Accounts receivable (22,222) (17,442)
Inventories (72,038) (52,739)
Income taxes payable 18,940 (918)
Accounts payable and other accrued expenses (23,305) (9,994)
Due to Pro-Fac 12,870 5,347
Other assets and liabilities (26) (2,291)
--------- ---------
Net cash used in operating activities (106,768) (70,998)
--------- ---------
Cash Flows From Investing Activities:
Purchase of property, plant and equipment (4,094) (3,231)
Proceeds from disposals 83,000 375
Proceeds from investment in CoBank 664 316
Cash paid for acquisitions (445,918) 0
--------- ---------
Net cash used in investing activities (366,348) (2,540)
--------- ---------
Cash Flows From Financing Activities:
Proceeds from issuance of short-term debt 177,000 64,000
Payments on short-term debt (83,000) 0
Proceeds from issuance of long-term debt 677,100 9,000
Proceeds from Great Lakes Kraut Company 0 3,000
Payments on long-term debt (276,450) (1,303)
Cash paid for debt issuance costs (17,523) 0
--------- ---------
Net cash provided by financing activities 477,127 74,697
--------- ---------
Net change in cash and cash equivalents 4,011 1,159
Cash and cash equivalents at beginning of period 5,046 2,836
--------- ---------
Cash and cash equivalents at end of period $ 9,057 $ 3,995
========= =========
</TABLE>
(Table continued on next page)
<PAGE>
<TABLE>
Agrilink Foods, Inc.
Consolidated Statement of Cash Flows
<CAPTION>
(Dollars in Thousands)
(Table continued from previous page)
Quarter Ended
September 26, September 27,
1998 1997
------------- ----------
<S> <C> <C>
Supplemental disclosure of cash flow information:
Acquisition of Dean Foods Vegetable Company
Accounts receivable $ 28,701
Inventories 191,619
Prepaid expenses and other current assets 2,871
Current deferred tax asset 6,300
Property, plant and equipment 131,648
Goodwill and other intangible assets 230,609
Accounts payable (37,802)
Accrued employee compensation (8,437)
Other accrued expenses (66,748)
Long-term debt (2,752)
Subordinated promissory note (30,000)
Other assets and liabilities, net (2,404)
---------
$ 443,605
=========
Acquisition of J.A. Hopay Distributing Co., Inc.
Accounts receivable $ 420
Inventories 153
Property, plant and equipment 51
Goodwill and other intangible assets 3,303
Other accrued expenses (251)
Obligation for covenant not to compete (1,363)
---------
$ 2,313
=========
Investment in Great Lakes Kraut Company
Inventories $ 2,175
Prepaid expenses and other current assets 409
Property, plant and equipment 6,966
Other accrued expenses (62)
-------
$ 9,488
=======
<FN>
The accompanying notes are an integral part of these consolidated financial
statements.
</FN>
</TABLE>
<PAGE>
AGRILINK FOODS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF ACCOUNTING POLICIES
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles, and in the opinion
of management, include all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation of the results of operations for
these periods. Agrilink Foods, Inc. ("Agrilink" or the "Company") is a wholly
owned subsidiary of Pro-Fac Cooperative, Inc. ("Pro-Fac" or the "Cooperative").
These financial statements should be read in conjunction with the financial
statements and accompanying notes contained in the Company's Form 10-K/A-1 for
the fiscal year ended June 27, 1998.
Consolidation: The consolidated financial statements include the Company and its
wholly owned subsidiaries after elimination of intercompany transactions and
balances. Investments in affiliates, owned more than 20 percent but not in
excess of 50 percent, are recorded under the equity method of accounting.
Reclassification: Certain items for fiscal 1998 have been reclassified to
conform with the current presentation.
Adoption of SFAS No. 130: Effective June 28, 1998, the Company adopted Statement
of Financial Accounting Standards (SFAS) No. 130, "Reporting Comprehensive
Income." Comprehensive income is defined as the change in equity of a business
during a period from transactions and other events and circumstances from
non-owner sources. Under SFAS No. 130, the term "comprehensive income" is used
to describe the total of net earnings plus other comprehensive income which for
the Company includes foreign currency translation adjustments and minimum
pension liability adjustments. The adoption of SFAS No. 130 did not have a
material effect on the Company's results of operations or financial position.
Adoption of SFAS No. 131: Effective June 28, 1998 the Company adopted SFAS No.
131, "Disclosures about Segments of an Enterprise and Related Information." SFAS
No. 131 supersedes SFAS No. 14, "Financial Reporting for Segments of a Business
Enterprise," replacing the "industry segment" approach with the "management"
approach. The management approach designates the internal organization that is
used by management for making operating decisions and assessing performance as
the source of the Company's reportable segments. SFAS No. 131 also requires
disclosures about products and services, geographic areas, and major customers.
The adoption of SFAS No. 131 did not affect the Company's results of operations
or financial position.
Derivative Financial Instruments: The Company does not engage in interest rate
speculation. Derivative financial instruments are utilized to hedge interest
rate risks and are not held for trading purposes.
The Company enters into interest rate swap agreements to limit exposure to
interest rate movements. Net payments or receipts are accrued into prepaid
expenses and other current assets and/or other accrued expenses and are recorded
as adjustments to interest expense. Interest rate instruments are entered into
for periods no greater than the life of the underlying transaction being hedged.
Management anticipates that all interest rate derivatives will be held to
maturity. Any gains or losses on prematurely terminated interest rate
derivatives will be recognized over the remaining life, if any, of the
underlying transaction as an adjustment to interest expense.
NOTE 2. ACQUISITION OF DEAN FOODS VEGETABLE COMPANY
On September 24, 1998, Agrilink acquired the Dean Foods Vegetable Company
("DFVC"), the frozen and canned vegetable business of Dean Foods Company ("Dean
Foods"), by acquiring all the outstanding capital stock of Dean Foods Vegetable
Company and Birds Eye de Mexico SA de CV (the "Acquisition"). In connection with
the Acquisition, Agrilink sold its aseptic business to Dean Foods. Agrilink paid
$360 million in cash, net of the sale of the Aseptic Business, and issued to
Dean Foods a $30 million unsecured subordinated promissory note due November 22,
2008 (the "Subordinated Promissory Note"), as consideration for the Acquisition.
The Company has the right, exercisable until July 15, 1999, to require Dean
Foods, jointly with the Company, to treat the Acquisition as an asset sale for
tax purposes under Section 338(h)(10) of the Internal Revenue Code. In order to
exercise that election, the Company will pay $13.2 million to Dean Foods. The
Company intends to exercise that election.
<PAGE>
After the Acquisition, DFVC was merged into the Company, and Dean Foods
Vegetable Company became a business unit of the Company known as Agrilink Foods
Vegetable Company ("AFVC"). DFVC has been one of the leading processors of
vegetables in the United States, selling its products under well-known brand
names, such as Birds Eye, Freshlike and Veg-All, and private labels. The Company
believes that the Acquisition strengthens its competitive position by: (i)
enhancing its brand recognition and market position, (ii) providing
opportunities for cost savings and operating efficiencies and (iii) increasing
its product and geographic diversification.
The Acquisition was accounted for under the purchase method of accounting. Under
purchase accounting, tangible and identifiable intangible assets acquired and
liabilities assumed will be recorded at their respective fair values. The
valuations and other studies which will provide the basis for such an allocation
have not progressed to a stage where there is sufficient information to make a
final allocation in the accompanying financial statements. Accordingly, the
purchase accounting adjustments made in the accompanying financial statements
are preliminary. Once an allocation is determined, in accordance with generally
accepted accounting principles, any remaining excess of purchase cost over net
assets acquired will be adjusted through goodwill.
Due to insignificance, the results of operations of AFVC for the period
September 24 through 26, 1998 have not been included in the Company's
Consolidated Statement of Operations for the three months ended September 26,
1998.
Concurrently with the Acquisition, Agrilink refinanced its existing indebtedness
(the "Refinancing"), including its 12.25 percent Senior Subordinated Notes due
2005 (the "Old Notes") and its then existing bank debt. On August 24, 1998,
Agrilink commenced a tender offer (the "Tender Offer") for all the Old Notes and
consent solicitation to certain amendments under the indenture governing the Old
Notes to eliminate substantially all the restrictive covenants and certain
events of default therein. Substantially all of the $160 million aggregate
principal amount of the Old Notes were tendered and purchased by Agrilink for
aggregate consideration of approximately $184 million, including accrued
interest of $2.9 million. Agrilink also terminated its existing bank facility
(including seasonal borrowings) and repaid the $176.5 million, excluding
interest owed and breakage fees outstanding thereunder.
In order to consummate the Acquisition and the Refinancing and to pay the
related fees and expenses, Agrilink: (i) entered into a new credit facility (the
"New Credit Facility") providing for $455 million of term loan borrowings (the
"Term Loan Facility") and up to $200 million of revolving credit borrowings (the
"Revolving Credit Facility"), (ii) entered into a $200 million bridge loan
facility (the "Bridge Facility") and (iii) issued a $30 million Subordinated
Promissory Note to Dean Foods. The Bridge Facility will be repaid principally
with the proceeds from a new long-term take-out financing. The Bridge Facility
was provided by Warburg Dillon Read LLC, as Arranger and Syndication Agent; and
UBS AG, Stamford Branch, as Administrative Agent; and the Bank of Montreal and
Harris Trust and Savings Bank as additional lenders.
NOTE 3. AGREEMENTS WITH PRO-FAC
The Company's contractual relationship with Pro-Fac is defined in the Pro-Fac
Marketing and Facilitation Agreement ("Agreement"). Under the Agreement, the
Company pays Pro-Fac the commercial market value ("CMV") for all crops supplied
by Pro-Fac. CMV is defined as the weighted average price paid by other
commercial processors for similar crops sold under preseason contracts and in
the open market in the same or competing market area. Although CMV is intended
to be no more than the fair market value of the crops purchased by Agrilink, it
may be more or less than the price Agrilink would pay in the open market in the
absence of the Agreement.
Under the Agreement, the Company is required to have on its board of directors
some persons who are neither members of nor affiliated with Pro-Fac
("Disinterested Directors"). The number of Disinterested Directors must at least
equal the number of directors who are members of Pro-Fac. The volume and type of
crops to be purchased by Agrilink under the Agreement are determined pursuant to
its annual profit plan, which requires the approval of a majority of the
Disinterested Directors. In addition, under the Agreement, in any year in which
the Company has earnings on products which were processed from crops supplied by
Pro-Fac ("Pro-Fac Products"), the Company pays to Pro-Fac, as additional
patronage income, 90 percent of such earnings, but in no case more than 50
percent of all pretax earnings (before dividing with Pro-Fac) of the Company. In
years in which the Company has losses on Pro-Fac Products, the Company reduces
the CMV it would otherwise pay to Pro-Fac by up to 90 percent of such losses,
but in no case by more than 50 percent of all pretax losses (before dividing
with Pro-Fac) of the Company. Additional patronage income is paid to Pro-Fac for
services provided to Agrilink, including the provision of a long term, stable
crop supply, favorable payment terms for crops, and the sharing of risks of
losses of certain operations of the business. Earnings and losses are determined
at the end of the fiscal year, but are accrued on an estimated basis during the
year. Under the Agreement, Pro-Fac is required to reinvest at least 70 percent
of the additional Patronage income in Agrilink.
<PAGE>
Amounts received by Pro-Fac from Agrilink for the quarters ended September 26,
1998 and September 27, 1997 include: commercial market value of crops delivered,
$44.3 and $40.6 million, respectively; and additional proceeds from
profit/(loss) sharing provisions, $4.0 million and $2.6 million, respectively.
In the first quarter of fiscal 1999, the Company reclassified a $9.4 million
demand receivable due from Pro-Fac reflecting the conversion of such receivable
to a non-interest bearing long-term obligation due from Pro-Fac having a 10-year
maturity.
NOTE 4. DEBT
New Credit Facility: In connection with the Acquisition, the Company has entered
into the New Credit Facility with Harris Bank as Administrative Agent and Bank
of Montreal as Syndication Agent, and the lenders thereunder. The Credit
Facility consists of the $200 million Revolving Credit Facility and the $455
million Term Loan Facility. The Term Loan Facility is comprised of the Term A
Facility, which has a maturity of five years, the Term B Facility, which has a
maturity of six years, and the Term C Facility, which has a maturity of seven
years. The Revolving Credit Facility has a maturity of five years.
The New Credit Facility bears interest, at the Company's option, at the
Administrative Agent's alternate base rate or the London Interbank Offered Rate
("LIBOR") plus, in each case, applicable margins of: (i) in the case of
alternate base rate loans, (x) 1.00 percent for loans under the Revolving Credit
Facility and the Term A Facility, (y) 2.25 percent for loans under the Term B
Facility and (z) 2.50 percent for loans under the Term C Facility and (ii) in
the case of LIBOR loans, (x) 2.75 percent for loans under the Revolving Credit
Facility and the Term A Facility, (y) 3.25 percent for loans under the Term B
Facility and (z) 3.50 percent for loans under the Term C Facility. The
Administrative Agent's "alternate base rate" is defined as the greater of: (i)
the prime commercial rate as announced by the Administrative Agent or (ii) the
Federal Funds rate plus 0.50 percent. In addition, the Company will pay a
commitment fee calculated at a rate of 0.50 percent per annum on the daily
average unused commitment under the Revolving Credit Facility.
Beginning with the reporting period ending March 31, 1999, the applicable
margins for the New Credit Facility will be subject to possible reductions based
on the ratio of consolidated debt to earnings before interest, taxes,
depreciation and amortization ("EBITDA") (each as defined in the New Credit
Facility).
Upon consummation of the Acquisition, the Company drew $455 million under the
Term Loan Facility, consisting of $100 million, $175 million and $180 million of
loans under the Term A Facility, Term B Facility and Term C Facility,
respectively. Additionally, the Company drew $93 million under the Revolving
Credit Facility for seasonal working capital needs and $14.3 million under the
Revolving Credit Facility was issued for letters of credit.
The Term Loan Facility will be subject to the following amortization schedule.
Fiscal Year Term Loan A Term Loan B Term Loan C Total
- ----------- ----------- ----------- ----------- -----
(Dollars in millions)
1999 $ 0.0 $ 0.2 $ 0.2 $ 0.4
2000 15.0 0.4 0.4 15.8
2001 20.0 0.4 0.4 20.8
2002 20.0 0.4 0.4 20.8
2003 20.0 0.4 0.4 20.8
2004 25.0 0.4 0.4 25.8
2005 0.0 172.8 0.4 173.2
2006 0.0 0.0 177.4 177.4
------- ------ ------- -------
$ 100.0 $175.0 $ 180.0 $ 455.0
======= ====== ======= =======
The Term Loan Facility is subject to mandatory prepayment under various
scenarios as defined in the New Credit Facility.
The Company's obligations under the New Credit Facility are secured by a
first-priority lien on: (i) substantially all existing or after-acquired assets,
tangible or intangible, (ii) the capital stock of certain of Pro-Fac's current
and future subsidiaries, and (iii) all of the
<PAGE>
Company's rights (principally indemnification rights) under the agreement to
acquire DFVC and the Pro-Fac Marketing and Facilitation Agreement. The Company's
obligations under the New Credit Facility are guaranteed by Pro-Fac and certain
of the Company's current and future subsidiaries, if any.
The New Credit Facility contains customary covenants and restrictions on the
Company's ability to engage in certain activities, including, but not limited
to: (i) limitations on the incurrence of indebtedness and liens, (ii)
limitations on sale-leaseback transactions, consolidations, mergers, sale of
assets, transactions with affiliates and investments and (iii) limitations on
dividend and other distributions. The New Credit Facility also contains
financial covenants requiring Pro-Fac to maintain a minimum level of EBITDA, a
minimum interest coverage ratio, a minimum fixed charge coverage ratio, a
maximum leverage ratio and a minimum level of net worth. The Company is in
compliance with all covenants, restrictions and requirements under the terms of
the New Credit Facility.
Interest Rate Protection Agreements: The Company has entered into a three-year
interest rate swap agreement with the Bank of Montreal in the notional amount of
$150 million. The swap agreement provides for an interest rate of 4.96 percent
over the term of the swap payable by the Company in exchange for payments at the
published three-month LIBOR. In addition, the Company entered into a separate
interest rate swap agreement with the Bank of Montreal in the notional amount of
$100 million for an initial period of three years, which may be extended, at the
Company's option, for an additional two-year period. This swap agreement
provides for an interest rate of 5.32 percent over the term of the swap,
including the two-year extension period if the Company elects to extend, payable
by the Company in exchange for payments at the published three-month LIBOR. The
Company entered into these agreements in order to manage its interest rate risk
by exchanging its floating rate interest payments for fixed rate interest
payments.
Subordinated Bridge Facility: To complete the Acquisition, the Company also
entered into a Subordinated Bridge Facility (the "Bridge Facility"). The Bridge
Facility was provided by Warburg Dillon Read LLC, as Arranger and Syndication
Agent; and UBS AG, Stamford Branch, as Administrative Agent; and the Bank of
Montreal and Harris Trust and Savings Bank as additional lenders. The interest
rate under the Bridge Facility resets monthly on the basis of LIBOR plus a
spread of 5 percent for the first 90 days, which spread increases by an
additional 1 percent each subsequent 90-day period. In no event will the
interest rate exceed 16 percent per annum. The Company anticipates that the
Bridge Facility will be repaid principally with the proceeds of a new long-term
take-out financing. Should the Company be unable to complete its long-term
take-out financing, the Bridge Facility, if not repaid within one year, may
thereafter be converted to permanent financing with consistent interest rates
and a maturity of September, 2006.
Subordinated Promissory Note: As partial consideration for the Acquisition, the
Company issued to Dean Foods a Subordinated Promissory Note for $30 million
aggregate principal amount due November 22, 2008. Interest on the Subordinated
Promissory Note is payable quarterly in arrears commencing December 31, 1998, at
a rate per annum of 5 percent until November 22, 2003, and at a rate of 10
percent thereafter. Interest accruing through November 22, 2003 is required to
be paid in kind through the issuance by the Company of additional subordinated
promissory notes identical to the Subordinated Promissory Note. Interest
accruing after November 22, 2003 is payable in cash. The Subordinated Promissory
Note may be prepaid at the Company's option without premium or penalty.
The Subordinated Promissory Note is expressly subordinate to the Subordinated
Bridge Facility, any long-term take-out financing, and the New Credit Facility
and contains no financial covenants. The Subordinated Promissory Note is
guaranteed by Pro-Fac.
12 1/4 Percent Senior Subordinated Notes (due 2005): In conjunction with the
Acquisition, the Company repurchased $159,985,000 principal amount of its Old
Notes, of which $160 million aggregate principal amount was previously
outstanding. The Company paid a total of approximately $184 million to
repurchase the Old Notes, including interest accrued thereon of $2.9 million.
Holders who tendered consented to certain amendments to the indenture relating
to the Old Notes, which eliminated or amended substantially all the restrictive
covenants and certain events of default contained in such indenture. The Company
may repurchase the remaining Old Notes in the future in open market
transactions, privately negotiated purchases or otherwise.
NOTE 5. OTHER MATTERS
J.A. Hopay Distributing Co, Inc.: Effective July 21, 1998, the Company acquired
J.A. Hopay Distributing Co., Inc. ("Hopay") of Pittsburgh, Pennsylvania. Hopay
distributes snack products for Snyder of Berlin, one of the Company's business
units within its Snack Foods Group. The acquisition was accounted for as a
purchase. The purchase price (net of liabilities assumed) was approximately $2.3
million. Intangibles of approximately $3.3 million were recorded in conjunction
with this transaction and are being amortized over 30 years.
<PAGE>
Formation of New Sauerkraut Company: Effective July 1, 1997, the Company and
Flanagan Brothers, Inc. of Bear Creek, Wisconsin, contributed all their
sauerkraut production related assets to form a new sauerkraut company. This new
company, Great Lakes Kraut Company, operates as a New York limited liability
company, with ownership split equally between the two companies. The joint
venture is accounted for using the equity method of accounting.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The purpose of this discussion is to outline the significant reasons for changes
in the Consolidated Statement of Operations in the first quarter of fiscal 1999
versus fiscal 1998.
Agrilink Foods, Inc. ("Agrilink" or the "Company") has four primary business
units: Curtice Burns Foods ("CBF"), Agrilink Foods Vegetable Company ("AFVC"),
Nalley Fine Foods ("Nalley"), and its Snack Foods group. Each business unit
offers different products and is managed separately. The majority of each of the
business units' net sales are within the United States. In addition, all of the
Company's operating facilities, except for one facility in Mexico, are within
the United States.
The CBF business unit produces products in several food categories, including
fruit fillings and toppings; canned and frozen fruits and vegetables, and
popcorn. The AFVC business unit was acquired on September 24, 1998 and produces
canned and frozen vegetables. The Nalley business unit produces canned meat
products (such as chilies and stews), pickles, salad dressings, peanut butter,
salsa, and syrup. The snack foods business unit consists of the Snyder of
Berlin, Husman Snack Foods, and Tim's Cascade Potato Chip businesses. This
business unit produces and markets potato chips and other snack items.
The following tables illustrate the Company's results of operations by business
unit for the quarters ended September 26, 1998 and September 27, 1997, and the
Company's total assets by business unit as of September 26, 1998 and September
27, 1997. As the acquisition of AFVC was completed on September 24, 1998, the
operating activities of AFVC for the period September 24 through September 26,
1998 have not been included in the results shown below due to insignificance.
Net Sales
(Dollars in Millions)
Quarter Ended
September 26, September 27,
1998 1997
% of % of
$ Total $ Total
------ ----- ------ ------
CBF $ 96.7 53.0% $ 87.7 49.7%
Nalley Fine Foods 42.8 23.4 46.9 26.6
Snack Foods Group 18.2 10.0 17.3 9.8
------ ----- ------ -----
Subtotal ongoing operations 157.7 86.4 151.9 86.1
Businesses sold(1) 24.9 13.6 24.5 13.9
------ ----- ------ -----
Total $182.6 100.0% $176.4 100.0%
====== ===== ====== =====
(1) Includes the net sales of the aseptic business. See NOTE 2 to the "Notes to
Consolidated Financial Statements."
<PAGE>
Operating Income1
(Dollars in Millions)
Quarter Ended
September 26, September 27,
1998 1997
% of % of
$ Total $ Total
------ ------- ----- -----
CBF $ 6.1 48.8% $ 6.1 47.3%
Nalley Fine Foods 2.2 17.6 3.7 28.7
Snack Foods Group 2.3 18.4 2.1 16.2
Corporate (1.3) (10.4) (1.9) (14.7)
----- ----- ----- -----
Subtotal ongoing operations 9.3 74.4 10.0 77.5
Businesses sold2 3.2 25.6 2.9 22.5
----- ----- ----- -----
Total3 $12.5 100.0% $12.9 100.0%
===== ===== ===== =====
1 Excludes the gain on the sale of the aseptic business.
2 Represents the operating earnings of the aseptic business.
3 Operating income less interest expense of $8.3 million and $7.6 million, for
the first quarter of fiscal 1999 and 1998, respectively, results in pretax
income before dividing with Pro-Fac and before extraordinary item. Interest
expense allocated to business units is not considered a critical component
by management when evaluating success.
EBITDA1,2
(Dollars in Millions)
Quarter Ended
September 26 September 27,
1998 1997
% of % of
$ Total $ Total
----- ----- ----- -----
CBF $ 8.9 50.0% $ 9.5 51.6%
Nalley Fine Foods 3.6 20.2 5.1 27.7
Snack Foods Group 2.8 15.7 2.6 14.1
Corporate (1.3) (7.2) (2.0) (10.8)
----- ----- ----- -----
Subtotal ongoing operations 14.0 78.7 15.2 82.6
Businesses sold3 3.8 21.3 3.2 17.4
----- ----- ----- -----
Total $17.8 100.0% $18.4 100.0%
===== ===== ===== =====
1 Earnings before interest, taxes, depreciation, and amortization ("EBITDA") is
defined as the sum of pretax income before dividing with Pro-Fac and before
extraordinary item, and interest expense, depreciation and amortization of
goodwill and other intangibles.
EBITDA should not be considered as an alternative to net income or cash flows
from operations or any other generally accepted accounting principles measure
of performance or as a measure of liquidity.
EBITDA is included herein because the Company believes EBITDA is a financial
indicator of a company's ability to service debt. EBITDA as calculated by
Agrilink may not be comparable to calculations as presented by other
companies.
2 Excludes the gain on the sale of the aseptic business.
3 Represents the operating earnings of the aseptic business.
<PAGE>
Total Assets
(Dollars in Millions)
Quarter Ended
September 26, September 27,
1998 1997
% of % of
$ Total $ Total
-------- ----- ------ ------
CBF $ 405.0 32.2% $346.7 57.6%
AFVC 592.0 47.1 0.0 0.0
Nalley Fine Foods 154.9 12.3 155.8 25.9
Snack Foods Group 32.1 2.6 26.5 4.4
Corporate 72.9 5.8 45.4 7.5
-------- ----- ------ -----
Subtotal ongoing operations 1,256.9 100.0 574.4 95.4
Businesses sold1 0.0 0.0 27.7 4.6
-------- ----- ------- ------
Total $1,256.9 100.0% $602.1 100.0%
======== ===== ====== =====
1 Includes the assets of the aseptic business. See NOTE 2 to the "Notes to
Consolidated Financial Statements."
CHANGES FROM FIRST QUARTER FISCAL 1998 TO FIRST QUARTER FISCAL 1999
Net income for the first quarter of fiscal 1999 of $22.0 million represented a
$20.6 million increase over the first quarter of fiscal 1998 net income of $1.4
million. Total EBITDA for the first quarter of fiscal 1999 before the
extraordinary charge relating to the early extinguishment of debt was $82.0
million as compared to $18.4 million in the first fiscal quarter of fiscal 1998.
Excluding the operating results and gain from businesses sold, EBITDA for the
continuing business decreased $1.2 million, or 7.9 percent, to $14.0 million in
the first quarter of the current fiscal year from $15.2 million in the first
quarter of the prior fiscal year. This decline was impacted by a decrease at CBF
of $0.6 million due to changes in product mix within the fruit category
(approximately $1.1 million); and increase in advertising associated with the
launch of Breakfast Toppers (approximately $0.5 million). These decreases were
offset by an increase within the vegetable category of $1.0 million attributable
to improvements in volume. The decline at Nalley of $1.5 million was due
primarily to the recognition of a favorably settled outstanding tax claim with
the state of Washington for $1.4 million in the first quarter of the prior
fiscal year. The EBITDA within the Snack Foods Group increased $0.2 million due
to increases in net sales.
Net Sales: Total net sales for the quarter increased $6.2 million, or 3.5
percent, to $182.6 million in the first fiscal quarter of fiscal 1999 from
$176.4 million in the first quarter of fiscal 1998. Excluding businesses sold,
net sales increased by $5.8 million, or 3.8 percent, to $157.7 million in the
first quarter of fiscal 1999 from $151.9 million in the first quarter of fiscal
1998.
The increase in net sales for ongoing operations came primarily from the CBF
business unit which reported an increase in net sales of $9.0 million. This
increase was attributable to improvements in volume primarily within frozen
vegetables. Net sales for the remaining categories at CBF were relatively
consistent with that of the first quarter of the prior fiscal year.
Net sales for Nalley decreased $4.1 million as compared with the first quarter
of the prior fiscal year as gains in the pickle category were offset by
reductions in the dressings and canned product lines. Within the pickle
category, net sales for the first quarter of fiscal 1999 increased $0.6 million
as a result of increased volume in the food service channel. Competitive
pressures on volume and price resulted in a $2.6 million decrease in net sales
for dressings and a $2.0 million decrease in the canned category. Net sales for
the peanut butter category were flat with that of the first quarter of the prior
fiscal year.
Net sales for the Snack Foods Group increased by $0.9 million, or 5.2 percent,
to $18.2 million in the first quarter of fiscal 1999 as a result of new business
in the Northwest and product line extensions, including Snyder of Berlin's
kettle chips.
Gross Profit: Gross profit of $46.7 million in the quarter ended September 26,
1998 increased approximately $1.1 million, or 2.4 percent, from $45.6 million in
the quarter ended September 27, 1997. Excluding the impact of businesses sold,
gross profit increased $0.7 million or 1.8 percent.
<PAGE>
The increase in gross profit at the CBF business unit (excluding the aseptic
business) was $1.0 million. The vegetable category showed improvements of $2.1
million resulting from increases in volume, while the fruit category showed a
decline of $0.7 million attributable to product mix and decreases within other
categories of $0.4 million due to changes in volume.
Overall, gross profit at Nalley decreased $0.8 million due primarily to the
reductions in net sales outlined above. The Nalley gross margin percentage has,
however, improved over the prior year to 35.9 percent from 34.4 percent in the
first quarter of fiscal 1998.
Increases in net sales within the Snack Foods Group resulted in margin
improvements of $0.5 million.
Selling, Administrative, and General Expenses: Selling, administrative, and
general expenses have increased $1.9 million as compared with the first quarter
of the prior fiscal year. As a percentage of net sales, selling, administrative,
and general expenses increased to 19.1 percent in the first quarter of fiscal
1999 from 18.7 percent in the first quarter of fiscal 1998. This increase is
primarily due to the impact of a favorably settled outstanding tax claim with
the state of Washington for $1.4 million recognized in the first quarter of
fiscal 1998. All remaining expenses were relatively flat with that of the prior
year.
Income from Great Lakes Kraut Company: This amount represents earnings received
from the investment in Great Lakes Kraut Company, a joint venture formed between
Agrilink and Flanagan Brothers, Inc. See NOTE 5 - "Other Matters - Formation of
New Sauerkraut Company" to the "Notes to Consolidated Financial Statements"
included herein.
Gain on Sale of Aseptic Operations: In conjunction with the Acquisition, the
Company sold its aseptic business to Dean Foods. A gain of approximately $64.2
million was recognized on this disposal reflecting a value for this business of
approximately $83 million (based upon an appraised value given to the Company by
an independent appraiser). This amount was used to offset borrowings necessary
to complete the Acquisition.
Interest Expense: Interest expense increased $0.7 million, or 9.1 percent, to
$8.3 million in the first quarter of fiscal 1999 from $7.6 million in the first
quarter of fiscal 1998. The increase is impacted by higher levels of seasonal
borrowings in the first quarter of fiscal 1999 due to the earlier intake of
crops in the current year and therefore the resultant increase in inventory
levels.
Provision for Taxes: The provision for taxes increased $23.2 million to $24.3
million in the first quarter of fiscal 1999 from $1.1 million in the first
quarter of fiscal 1998. Of this increase, $25.0 million is attributable to the
provision associated with the gain on the sale of the aseptic business. The
remaining variance is impacted by the change in earnings before tax. Agrilink's
effective tax rate is negatively impacted by the non-deductibility of certain
amounts of goodwill.
Extraordinary Item Relating to the Early Extinquishment of Debt: Concurrently
with the Acquisition, the Company refinanced its existing indebtedness,
including its 12.25 percent Senior Subordinated Notes due 2005 and its then
existing bank debt. Premiums and breakage fees associated with early redemptions
and other fees incurred amounted to $16.4 million (net of income taxes of $10.4
million and after allocation to Pro-Fac of $1.7 million).
LIQUIDITY AND CAPITAL RESOURCES
The following discussion highlights the major variances in the "Consolidated
Statement of Cash Flows" for the first quarter of fiscal 1999 compared to the
first quarter of fiscal 1998.
Net cash used in operating activities increased $35.8 million over the first
quarter of the prior fiscal year. This increase is primarily due to variances
within inventory including: (1) an increase of $1.5 million in inventory to
support additional business regarding the Sam's national club stores; (2) an
increase of $2.5 million associated with the acquisition of DelAgra; and changes
in growing areas, early harvesting of crops, the size of the crop intake, and
other changes in inventory necessary to support operations (approximately $15.3
million).
In addition, cash used in operating activities increased over the prior year due
to the timing of liquidation of outstanding accounts payable and accrued
expenses.
Net cash used in investing activities increased significantly due to the
acquisition of DFVC offset by the subsequent sale of the aseptic business. The
purchase of property, plant and equipment increased $0.9 million to $4.1 million
for the quarter ended September 26,
<PAGE>
1998 from $3.2 million for the quarter ended September 27, 1997 and was for
general operating purposes.
Net cash provided by financing activities also increased significantly due to
the acquisition of DFVC and the activities completed concurrent with the
Acquisition to refinance existing indebtedness. See further discussion at
"Liquidity and Capital Resources" below and at NOTE 4 - "Debt" to the "Notes to
Consolidated Financial Statements" included herein.
New Credit Facility: In connection with the Acquisition, the Company entered
into the New Credit Facility with Harris Bank as Administrative Agent and Bank
of Montreal as Syndication Agent, and the lenders thereunder. The Credit
Facility consists of the $200 million Revolving Credit Facility and the $455
million Term Loan Facility. The Term Loan Facility is comprised of the Term A
Facility, which has a maturity of five years, the Term B Facility, which has a
maturity of six years, and the Term C Facility, which has a maturity of seven
years. The Revolving Credit Facility has a maturity of five years.
The New Credit Facility bears interest, at the Company's option, at the
Administrative Agent's alternate base rate or LIBOR plus, in each case,
applicable margins of: (i) in the case of alternate base rate loans, (x) 1.00
percent for loans under the Revolving Credit Facility and the Term A Facility,
(y) 2.25 percent for loans under the Term B Facility and (z) 2.50 percent for
loans under the Term C Facility and (ii) in the case of LIBOR loans, (x) 2.75
percent for loans under the Revolving Credit Facility and the Term A Facility,
(y) 3.25 percent for loans under the Term B Facility and (z) 3.50 percent for
loans under the Term C Facility. The Administrative Agent's "alternate base
rate" is defined as the greater of: (i) the prime commercial rate as announced
by the Administrative Agent or (ii) the Federal Funds rate plus 0.50 percent. In
addition, the Company will pay a commitment fee calculated at a rate of 0.50
percent per annum on the daily average unused commitment under the Revolving
Credit Facility.
Upon consummation of the Acquisition, the Company drew $455 million under the
Term Loan Facility, consisting of $100 million, $175 million and $180 million of
loans under the Term A Facility, Term B Facility and Term C Facility,
respectively. Additionally, the Company drew $93 million under the Revolving
Credit Facility for seasonal working capital needs and $14.3 million under the
Revolving Credit Facility was issued for letters of credit.
Beginning with the reporting period ending March 31, 1999, the applicable
margins for the New Credit Facility will be subject to possible reductions based
on the ratio of consolidated debt to EBITDA (each as defined in the New Credit
Facility).
The Term Loan Facility will be subject to the following amortization schedule.
Fiscal Year Term Loan A Term Loan B Term Loan C Total
- ----------- ----------- ----------- ----------- -----
(Dollars in millions)
1999 $ 0.0 $ 0.2 $ 0.2 $ 0.4
2000 15.0 0.4 0.4 15.8
2001 20.0 0.4 0.4 20.8
2002 20.0 0.4 0.4 20.8
2003 20.0 0.4 0.4 20.8
2004 25.0 0.4 0.4 25.8
2005 0.0 172.8 0.4 173.2
2006 0.0 0.0 177.4 177.4
------ ------ ------ ------
$100.0 $175.0 $180.0 $455.0
====== ====== ====== ======
The Term Loan Facility is subject to mandatory prepayment under various
scenarios as defined in the New Credit Facility.
The Company's obligations under the New Credit Facility are secured by a
first-priority lien on: (i) substantially all existing or after-acquired assets,
tangible or intangible, (ii) the capital stock of certain of Pro-Fac's current
and future subsidiaries, and (iii) all of the Company's rights (principally
indemnification rights) under the agreement to acquire DFVC and the Pro-Fac
Marketing and Facilitation Agreement. The Company's obligations under the New
Credit Facility are guaranteed by Pro-Fac and certain of the Company's current
and future subsidiaries, if any.
The New Credit Facility contains customary covenants and restrictions on the
Company's ability to engage in certain activities, including, but not limited
to: (i) limitations on the incurrence of indebtedness and liens, (ii)
limitations on sale-leaseback transactions, consolidations, mergers, sale of
assets, transactions with affiliates and investments and (iii) limitations on
dividend and other distributions. The New Credit Facility also contains
financial covenants requiring Pro-Fac to maintain a minimum level of EBITDA,
<PAGE>
a minimum interest coverage ratio, a minimum fixed charge coverage ratio, a
maximum leverage ratio and a minimum level of net worth. The Company is in
compliance with all covenants, restrictions and requirements under the terms of
the New Credit Facility.
Subordinated Bridge Facility: To complete the Acquisition, the Company also
entered into a Subordinated Bridge Facility (the "Bridge Facility"). The Bridge
Facility was provided by Warburg Dillon Read LLC, as Arranger and Syndication
Agent; and UBS AG, Stamford Branch, as Administrative Agent; and the Bank of
Montreal and Harris Trust and Savings Bank as additional lenders. The interest
rate under the Bridge Facility resets monthly on the basis of LIBOR plus a
spread of 5 percent for the first 90 days, which spread increases by an
additional 1 percent each subsequent 90-day period. In no event will the
interest rate exceed 16 percent per annum. The Company anticipates that the
Bridge Facility will be repaid principally with the proceeds of a new long-term
take-out financing. Should the Company be unable to complete its long-term
take-out financing, the Bridge Facility, if not repaid within one year, may
thereafter be converted to permanent financing with consistent interest rates
and a maturity of September, 2006.
Subordinated Promissory Note: As partial consideration for the Acquisition, the
Company issued to Dean Foods a Subordinated Promissory Note for $30 million
aggregate principal amount due November 22, 2008. Interest on the Subordinated
Promissory Note is payable quarterly in arrears commencing December 31, 1998, at
a rate per annum of 5 percent until November 22, 2003, and at a rate of 10
percent thereafter. Interest accruing through November 22, 2003 is required to
be paid in kind through the issuance by the Company of additional subordinated
promissory notes identical to the Subordinated Promissory Note. Interest
accruing after November 22, 2003 is payable in cash. The Subordinated Promissory
Note may be prepaid at the Company's option without premium or penalty.
The Subordinated Promissory Note is expressly subordinate to the Subordinated
Bridge Facility, any long-term take-out financing, and the New Credit Facility
and contains no financial covenants. The Subordinated Promissory Note is
guaranteed by Pro-Fac.
12 1/4 Percent Senior Subordinated Notes (due 2005): In conjunction with the
Acquisition, the Company repurchased $159,985,000 principal amount of its Old
Notes, of which $160 million aggregate principal amount was previously
outstanding. The Company paid a total of approximately $184 million to
repurchase the Old Notes, including interest accrued thereon of $2.9 million.
Holders who tendered consented to certain amendments to the indenture relating
to the Old Notes, which eliminated or amended substantially all the restrictive
covenants and certain events of default contained in such indenture. The Company
may repurchase the remaining Old Notes in the future in open market
transactions, privately negotiated purchases or otherwise.
Interest Rate Risk Management:
The Company is subject to market risk from exposure to changes in interest rates
based on its financing activities. The Company has entered into certain
financial instrument transactions to maintain the desired level of exposure to
the risk of interest rate fluctuations and to minimize interest expense. More
specifically, the Company has entered into two interest rate swap agreements
with the Bank of Montreal. The agreements provide for fixed interest rate
payments by the Company in exchange for payments received at the three-month
LIBOR rate.
The following is a summary of the Company's interest rate swap agreements by
major type:
October 5, 1998 Maturities through
Interest Rate Swap:
Variable to Fixed - notional amount $250,000,000 2001
Average pay rate 4.96-5.32%
Average receive rate 5.3125%
The Company has the option of extending one of the interest rate swap
agreements, with a notional amount of $100,000,000 and expiration date of
October 5, 2001, for an additional two years through October 5, 2003.
While there is potential that interest rates will fall, and hence minimize the
benefits of the Company's hedge position, it is the Company's position that on a
long-term basis, the possibility of interest rates increasing exceeds the
likelihood of interest rates decreasing. The Company will, however, monitor
market conditions to adjust its position as it considers necessary.
<PAGE>
OTHER MATTERS
Short- and Long-Term Trends: The vegetable and fruit portions of the business
can be positively or negatively affected by weather conditions nationally and
the resulting impact on crop yields. Favorable weather conditions can produce
high crop yields and an oversupply situation. This results in depressed selling
prices and reduced profitability on the inventory produced from that year's
crops. Excessive rain or drought conditions can produce low crop yields and a
shortage situation. This typically results in higher selling prices and
increased profitability. While the national supply situation controls the
pricing, the supply can differ regionally because of variations in weather.
The effect of the 1998 growing season on fiscal 1999 financial results cannot be
estimated until late 1998 or early calendar 1999 when harvesting is complete and
when local and national supplies can be determined.
Year 2000 and Information Services Reorganization: A full inventory and analysis
of business applications and related software was performed and the Company
determined that it will be required to modify or replace certain portions of its
software so that its computer systems will be Year 2000 compliant. These
modifications and replacements are being and will continue to be made in
conjunction with the Company's overall information systems initiatives. No major
delay in these initiatives is anticipated.
In addition, the Company is contacting non-IT vendors to ensure that any of
their products that are currently in use can adequately deal with the change in
century. Areas being addressed include full reviews of manufacturing equipment,
telephone and voice mail systems, security systems, and other office/site
support systems. Based upon preliminary information, the costs of addressing
potential problems are not expected to have a material adverse impact on the
Company's financial position, results of operations, or cash flows in future
periods. Accordingly, the cost of the project is being funded through operating
cash flows.
The Company has initiated formal communications with significant suppliers and
customers to determine the extent to which the Company is vulnerable to those
third parties' failure to remediate their own Year 2000 issues. However, there
can be no guarantee that the systems of other companies on which the Company's
systems rely will be timely converted, or that a failure to convert by another
company, or a conversion that is incompatible with the Company's systems, would
not have material adverse effect on the Company. Accordingly, the Company plans
to devote the necessary resources to resolve all significant Year 2000 issues in
a timely manner.
The Company expects to complete the Year 2000 project during the fall of 1999.
Based on the progress made to date (which includes compliant systems in place
and in production), the Company does not believe any material exposure to
significant business interruption exists. In the event some of the remaining
elements of the Company's Year 2000 compliance project are delayed, procedures
have been addressed to ensure alternative workaround initiatives are completed.
On June 19, 1997, Systems & Computer Technology Corporation ("SCT") and the
Company announced a major outsourcing services and software agreement effective
June 30, 1997. The ten-year agreement, valued at approximately $50 million, is
for SCT's OnSite outsourcing services, ADAGE ERP software and implementation
services and assistance in solving the Year 2000 issue.
CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS
From time to time, the Company makes oral and written statements that may
constitute "forward-looking statements" as defined in the Private Securities
Litigation Reform Act of 1995 (the "Act") or by the Securities and Exchange
Commission ("SEC") in its rules, regulations, and releases. The Company desires
to take advantage of the "safe harbor" provisions in the Act for forward-looking
statements made from time to time, including, but not limited to, the
forward-looking information contained in the Management's Discussion and
Analysis (pages 10 to 15 and other statements made in this Form 10-Q) and in
other filings with the SEC.
The Company cautions readers that any such forward-looking statements made by or
on behalf of the Company are based on management's current expectations and
beliefs but are not guarantees of future performance. Actual results could
differ materially
<PAGE>
from those expressed or implied in the forward-looking statements. Among the
factors that could impact the Company's ability to achieve its goals are:
the impact of strong competition in the food industry;
the impact of weather on the volume and quality of raw product;
the inherent risks in the marketplace associated with new product
introductions, including uncertainties about trade and consumer acceptance;
the continuation of the Company's success in integrating operations and the
availability of acquisition and alliance opportunities;
the Company's ability to achieve gains in productivity and improvements in
capacity utilization; and
the ability to integrate DFVC into the business of the Company and the
extent to which anticipated cost savings in connection with the Acquisition
will be realized and the timing of any such realization.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit Number Description
10.1 Credit Agreement Among Agrilink Foods, Inc., Pro-Fac
Cooperative, Inc. and Harris Trust and Savings Bank, and
Bank of Montreal, Chicago Branch, and the Lender from
Time to Time To Parties Hereto, dated as of September
23, 1998
10.2 $200,000,000 Senior Subordinated Credit Agreement Among
Agrilink Foods, Inc., Pro- Fac Cooperative, Inc. and
Warburg Dillon Read LLC and UBS AG, Stamford Branch and
the Lenders From Time to Time Party Hereto, dated
September 23, 1998
10.3 Subordinated Promissory Note Among Agrilink Foods, Inc.
and Dean Foods Company, dated as of September 23, 1998
27 Financial Data Schedule
(b) The following reports on Form 8-K were filed during the period to which
this report relates:
Date Item
July 28, 1998 Item 5 - Other Events
October 5, 1998 Item 2 - Acquisition or Disposition of Assets
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
AGRILINK FOODS, INC.
Date: November 6, 1998 By:/s/ Earl L. Powers
EARL L. POWERS
VICE PRESIDENT FINANCE AND
CHIEF FINANCIAL OFFICER
(Principal Financial Officer and
Principal Accounting Officer)
CONFORMED COPY
CREDIT AGREEMENT
AMONG
AGRILINK FOODS, INC.,
as Borrower
PRO-FAC COOPERATIVE, INC.
and certain other entities as Guarantors
AND
HARRIS TRUST AND SAVINGS BANK,
Individually and as Administrative Agent
AND
BANK OF MONTREAL, CHICAGO BRANCH,
Individually and as Syndication Agent
AND
THE LENDERS FROM TIME TO TIME PARTIES HERETO
Dated as of September 23, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
SECTION DESCRIPTION PAGE
SECTION 1. DEFINITIONS; INTERPRETATION OF AGREEMENT..............................................................1
Section 1.1. Definitions.......................................................................................1
Section 1.2. Accounting Terms.................................................................................16
SECTION 2. THE CREDIT FACILITIES................................................................................16
Section 2.1. The Revolving Credit.............................................................................16
Section 2.2. The Term Credits.................................................................................22
Section 2.3. Manner of Borrowing..............................................................................23
SECTION 3. INTEREST.............................................................................................24
Section 3.1. Options..........................................................................................24
Section 3.2. Base Rate Portion................................................................................25
Section 3.3. LIBOR Portions...................................................................................25
Section 3.4. Interest on Swing Loans..........................................................................25
Section 3.5. Computation......................................................................................26
Section 3.6. Minimum Amounts..................................................................................26
Section 3.7. Manner of Rate Selection.........................................................................26
Section 3.8. Funding Indemnity................................................................................26
Section 3.9. Change of Law....................................................................................27
Section 3.10. Unavailability of Deposits or Inability to Ascertain, or Inadequacy
of, LIBOR Rate...................................................................................27
Section 3.11. Increased Cost and Reduced Return................................................................28
Section 3.12. Lending Offices..................................................................................28
Section 3.13. Discretion of Banks as to Manner of Funding......................................................28
SECTION 4. FEES, PAYMENTS, REDUCTIONS, APPLICATIONS AND NOTATIONS...............................................29
Section 4.1. Commitment Fee...................................................................................29
Section 4.2. Letter of Credit Fees............................................................................29
Section 4.3. Administrative Agent's Fees......................................................................29
Section 4.4. Prepayments......................................................................................30
Section 4.5. Terminations.....................................................................................31
Section 4.6. Place and Application............................................................................32
Section 4.7. Notations and Requests...........................................................................34
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Section 4.8. Capital Adequacy.................................................................................34
Section 4.10. Withholding Taxes................................................................................35
Section 4.11. Bank Replacement.................................................................................36
SECTION 5. THE COLLATERAL.......................................................................................37
Section 5.1. The Collateral...................................................................................37
Section 5.2. Further Assurances...............................................................................38
SECTION 6. REPRESENTATIONS AND WARRANTIES.......................................................................38
Section 6.1. Organization and Power...........................................................................38
Section 6.2. Subsidiaries.....................................................................................38
Section 6.3. Use of Proceeds; Regulation U....................................................................39
Section 6.4. Financial Reports................................................................................39
Section 6.5. Litigation and Taxes.............................................................................40
Section 6.6. Burdensome Contracts with Affiliates.............................................................40
Section 6.7. ERISA............................................................................................40
Section 6.8. Full Disclosure..................................................................................41
Section 6.9. Compliance with Law..............................................................................41
Section 6.10. Certain Contracts................................................................................41
Section 6.11. Stock Purchase Agreement Warranties..............................................................42
Section 6.12. Restrictive Agreements...........................................................................42
Section 6.13. No Default under Other Agreements................................................................42
Section 6.14. Status under Certain Laws........................................................................42
Section 6.15. Year 2000 Compliance.............................................................................42
Section 6.16. Solvency, Etc....................................................................................42
SECTION 7. CONDITIONS PRECEDENT.................................................................................43
Section 7.1. All Advances.....................................................................................43
Section 7.2. Initial Advance..................................................................................43
Section 7.3. Legal Matters....................................................................................46
SECTION 8. COVENANTS............................................................................................47
Section 8.1. Maintenance of Business..........................................................................47
Section 8.2. Maintenance......................................................................................47
Section 8.3. Taxes............................................................................................47
Section 8.4. Insurance........................................................................................47
Section 8.5. Financial Reports................................................................................48
Section 8.6. Compliance with Laws.............................................................................49
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Section 8.7. Nature of Business...............................................................................49
Section 8.8. Liens............................................................................................49
Section 8.9. Indebtedness.....................................................................................50
Section 8.10. Consolidated Net Worth...........................................................................51
Section 8.11. Leverage Ratio...................................................................................51
Section 8.12. Fixed Charge Coverage Ratio......................................................................51
Section 8.13. EBITDA...........................................................................................52
Section 8.14. Interest Coverage Ratio..........................................................................52
Section 8.15. Net Capital Expenditures.........................................................................53
Section 8.16. Rentals..........................................................................................53
Section 8.17. Acquisitions, Investments, Loans and Advances and Guarantees.....................................53
Section 8.18. Restricted Payments..............................................................................55
Section 8.19. Mergers..........................................................................................55
Section 8.20. Sales of Assets..................................................................................56
Section 8.21. Burdensome Contracts with Affiliates.............................................................56
Section 8.22. No Change in Fiscal Year.........................................................................56
Section 8.23. Formation of Subsidiaries........................................................................56
Section 8.24. No Restriction on Subsidiary Dividends...........................................................57
Section 8.25. Interest Rate Protection.........................................................................57
Section 8.26. Concerning the Subordinated Debt.................................................................57
Section 8.27. Concerning the Marketing Agreement...............................................................57
Section 8.28. Year 2000 Assessment.............................................................................57
Section 8.29. Preservation of Cooperative Status...............................................................58
SECTION 9. EVENTS OF DEFAULT AND REMEDIES.......................................................................58
SECTION 10. THE AGENT AND ISSUING BANK...........................................................................60
Section 10.1. Appointment and Authorization....................................................................60
Section 10.2. Rights as a Lender...............................................................................61
Section 10.3. Standard of Care.................................................................................61
Section 10.4. Costs and Expenses...............................................................................62
Section 10.5. Indemnity........................................................................................62
SECTION 11. THE GUARANTEES.......................................................................................63
Section 11.1. The Guarantees...................................................................................63
Section 11.2. Guarantee Unconditional..........................................................................63
Section 11.3. Discharge Only upon Payment in Full; Reinstatement in Certain
Circumstances....................................................................................64
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Section 11.4. Subrogation......................................................................................64
Section 11.5. Waivers..........................................................................................64
Section 11.6. Stay of Acceleration.............................................................................65
SECTION 12. MISCELLANEOUS........................................................................................65
Section 12.1. Waiver of Rights.................................................................................65
Section 12.2. Non-Business Day.................................................................................65
Section 12.3. Documentary Taxes................................................................................65
Section 12.4. Survival of Representations......................................................................65
Section 12.5. Set-off Sharing..................................................................................65
Section 12.6. Notices..........................................................................................66
Section 12.7. Counterparts.....................................................................................66
Section 12.8. Successors and Assigns...........................................................................66
Section 12.9. Participants.....................................................................................66
Section 12.10. Costs and Expenses...............................................................................67
Section 12.11. Construction.....................................................................................67
Section 12.12. Assignment Agreements............................................................................67
Section 12.13. Waivers, Modifications and Amendments............................................................68
Section 12.14. Entire Agreement.................................................................................69
Section 12.15. Headings.........................................................................................69
Section 12.16. Confidentiality..................................................................................69
Section 12.17. Jurisdiction.....................................................................................69
Section 12.18. Waiver of Jury Trial.............................................................................70
Section 12.19. Governing Law....................................................................................70
Exhibit A -- Revolving Credit Note
Exhibit B -- Swing Credit Note
Exhibit C -- A Credit Note
Exhibit D -- B Credit Note
Exhibit E -- C Credit Note
Exhibit F -- Compliance Certificate
Exhibit G -- Additional Guarantor Supplement
Exhibit H -- Subsidiaries
Exhibit I -- Existing Indebtedness
Exhibit J -- Existing Liens
Exhibit K -- Existing Investments, Loans and Advances
Exhibit L -- Scheduled Excluded Assets
Schedule 6.5 -- Disclosed Litigation
</TABLE>
<PAGE>
AGRILINK FOODS, INC.
CREDIT AGREEMENT
To the Agents and each of
the Lenders which are or
become Lenders under
this Agreement
Gentlemen:
The undersigned, Agrilink Foods, Inc., a New York corporation (the
"Company") applies to you for your several commitments, subject to all of the
terms and conditions hereof and on the basis of the representations and
warranties hereinafter set forth, to extend credit to the Company, all as more
fully hereinafter set forth.
SECTION 1. DEFINITIONS; INTERPRETATION OF AGREEMENT.
Section 1.1. Definitions. The following terms when used herein
shall have the following meanings, such terms to be equally applicable to both
the singular and the plural of the terms defined:
"A Credit Commitments" is defined is Section 2.2(a) hereof.
"A Credit Lenders" shall mean the Lenders which at the time have
unfunded A Credit Commitments or outstanding A Loans.
"A Credit Notes" defined in Section 2.2(a) hereof.
"Acquisition" shall mean the acquisition by the Company of all of the
outstanding capital stock of DFVC and BEMSA Holding, Inc., a Delaware
corporation ("BEMSA") and of the trademarks used in the businesses of DFVC and
BEMSA, the transfer by the Company to Dean Foods or a subsidiary thereof of the
asceptic business of the Company and the assets used in connection therewith and
the related transactions provided for in the Stock Purchase Agreement and the
Asset Transfer Agreement.
"Acquisition Closing Date" shall mean the date the Acquisition is
actually consummated.
<PAGE>
"Additional Guarantor Documentation" shall mean the following, each
which shall be satisfactory in form and substance to the Administrative Agent:
(i) stock certificates representing 100% of the issued and
outstanding capital stock of such Guarantor which is owned by the
Parent or another Subsidiary, together with blank stock powers
therefor;
(ii) good standing certificates for such Guarantor issued by
its state of organization, issued not more than 30 days before the date
of its Additional Guarantor Supplement;
(iii) copies of the Certificates of Incorporation, and all
amendments thereto, of such Guarantor, certified by the Secretary of
State of its state of incorporation not more than 30 days before the
date of its Additional Guarantor Supplement;
(iv) copies of the by-laws, and all amendments thereto, of
such Guarantor, certified as true, correct and complete on the
effective date of its Additional Guarantor Supplement by the Secretary
or Assistant Secretary of such Guarantor;
(v) copies, certified as true, correct and complete by the
Secretary or Assistant Secretary of such Guarantor, of resolutions
regarding the transactions contemplated by this Agreement, duly adopted
by the Board of Directors or other governing body of such Guarantor;
(vi) an incumbency and signature certificate for such Guarantor;
(vii) evidence satisfactory to the Administrative Agent that
the Administrative Agent's security interests in the Collateral to be
provided by such Guarantor is prior to all other liens, security
interests and encumbrances thereon not permitted hereby or approved by
the Administrative Agent; and
(viii) legal matters incident to the execution and delivery of
the Additional Guarantor Supplement shall be satisfactory to the
Administrative Agent and its counsel and the Administrative Agent shall
have received the favorable written opinion of counsel for such
Guarantor in form and substance satisfactory to the Administrative
Agent.
"Additional Guarantor Supplement" is defined in Section 8.23.
<PAGE>
"Adjusted LIBOR Rate" shall mean a rate per annum determined pursuant
to the following formula:
Adjusted LIBOR Rate = LIBOR Rate
100% - Reserve Percentage
"Administrative Agent" shall mean Harris and its successors as
administrative agent hereunder.
"Affiliate" shall mean, for any Person, any other Person (including all
directors and officers of such Person) that directly or indirectly controls, or
is under common control with, or is controlled by, such Person. As used in this
definition, "control" means the power, directly or indirectly, to direct or
cause the direction of the management or policies of a Person (through ownership
of voting securities, by contract or otherwise), provided that, in any event for
purposes of the definition any Person that owns directly or indirectly 10% or
more of the securities or other interests having ordinary voting power for the
election of directors of a corporation or 10% or more of the partnership or
other ownership interests of any other Person will be deemed to control such
corporation or other Person.
"Agents" shall mean the Administrative Agent and the Syndication Agent
and their successors hereunder.
"Aggregate Percentage" shall mean as to each Lender and as to each time
same is to be determined the percentage which the sum of its unutilized
Revolving Credit Commitment, outstanding balance of Revolving Credit Loans,
share of the risk incident to outstanding Letters of Credit, outstanding A
Loans, outstanding B Loans and outstanding C Loans bears to the aggregate of all
of the foregoing for all Lenders.
"Agreement" shall mean this Credit Agreement, as the same may be
amended, modified or restated from time to time.
"A Loans" is defined in Section 2.2(a) hereof.
"Applicable Margin" shall mean the rate per annum specified below for
the Leverage Ratio and type of Loan, Portion or fee for which the Applicable
Margin is being determined:
(a) with respect to the commitment fee, the Letter of Credit
fee called for by Section 4.2(a) hereof and each type of Portion of the
Revolving Credit Loans and the A
<PAGE>
Loans described below, the rate per annum shown below for the range of
Leverage Ratio specified below:
LEVEL I LEVEL II LEVEL III LEVEL IV
Leverage Ratio 3.5 to 1 3.5 to 1 but 4.0 to 1 but 4.5 to 1
4.0 to 1 4.5 to 1
Base Rate Portion 0.00% 0.25% 0.75% 1.00%
LIBOR Portion & L/C Fee 1.75% 2.00% 2.50% 2.75%
Commitment Fee 0.40% 0.45% 0.50% 0.50%
(b) with respect to the B Loans, the Applicable Margin for
LIBOR Portions shall be 3.25% and for the Base Rate Portion shall be
2.25%; and
(c) with respect to the C Loans, the Applicable Margin for
LIBOR Portions shall be 3.50% and for the Base Rate Portion shall be
2.50%;
provided, however that the foregoing are subject to the following:
(i) the Leverage Ratio shall be determined as of the last day
of each fiscal quarter of the Parent commencing with the third fiscal
quarter of fiscal 1999, with any adjustment in the Applicable Margins
resulting from a change in such Leverage Ratio to be effective 5
Business Days after receipt by the Administrative Agent of the
financial statements for such quarter called for by Section 8.5(a),
provided that the Applicable Margins shall be those specified for Level
IV above for each day from and after the last date when such financial
statements were required to be delivered pursuant to Section 8.5(a) to
and including the date when such financial statements are actually
delivered pursuant to such section;
(ii) if and so long as any Event of Default has occurred and
is continuing, the Applicable Margins other than the Applicable Margin
for the commitment fee as otherwise computed hereunder shall be
increased by adding the rate of 2% per annum thereto; and
(iii) anything contained hereinabove to the contrary
notwithstanding, the Applicable Margins for the period from the
Acquisition Closing Date to the effective date (determined pursuant to
clause (a) above) of an adjustment in the Applicable Margins resulting
from a determination of the Leverage Ratio as of the last day of the
third fiscal quarter of fiscal 1999 shall be those specified above for
Level IV.
"Applications" is defined in Section 2.1(c)(iii) hereof.
<PAGE>
"Asset Transfer Agreement" shall mean the Asset Transfer Agreement
dated as of July 24, 1998 by and between Dean Foods and the Company, as
amended as permitted hereby.
"Assignment Agreement" is defined in Section 12.12 hereof.
"Auditors" is defined in Section 8.5(b) hereof.
"Authorized Representative" shall mean those persons shown on the list of
officers provided by the Company pursuant to Section 7.2(a)(ii) hereof or on any
update of any such list provided by the Company to the Administrative Agent, or
any further or different officer of the Company so named by any Authorized
Representative of the Company in a written notice to the Administrative Agent.
"B Credit Commitments" is defined is Section 2.2(b) hereof.
"B Credit Lenders" shall mean the Lenders which at the time have unfunded B
Credit Commitments or outstanding B Loans.
"B Credit Notes" is defined in Section 2.2(b) hereof.
"Base Rate" shall mean for any day the rate of interest announced by Harris
from time to time as its prime commercial rate as in effect on such day, with
any change in the Base Rate resulting from a change in said prime commercial
rate to be effective as of the date of the relevant change in said prime
commercial rate (the "Harris Prime Rate"), provided that if the rate per annum
determined by adding 1/2 of 1% to the rate at which Harris would offer to sell
federal funds in the interbank market on or about 10:00 a.m. (Chicago time) on
any day (the "Fed Funds Rate") shall be higher than the Harris Prime Rate on
such day, then the Base Rate for such day and for any succeeding day which is
not a Business Day shall be such Fed Funds Rate. The determination of the Fed
Funds Rate by the Administrative Agent shall be final and conclusive provided it
has acted in good faith in connection therewith.
"Base Rate Portions" is defined in Section 3.1 hereof.
"B Loans" is defined in Section 2.2(b) hereof.
"Borrowing" shall mean the total of Loans of a single type made by all
the Lenders on a single date and, if such Loans are to be part of a LIBOR
Portion, for a single Interest Period.
"Business Day" shall mean any day (other than a Saturday or Sunday) on
which banks are open for business in Chicago, Illinois and, when used with
<PAGE>
reference to LIBOR Portions, a day on which banks are also open for business and
dealing in United States Dollar deposits in London, England and Nassau, Bahamas.
"C Credit Commitments" is defined is Section 2.2(c) hereof.
"C Credit Lenders" shall mean the Lenders which at the time have
unfunded C Credit Commitments or outstanding C Loans.
"C Credit Notes" is defined in Section 2.2(c) hereof.
"Capitalized Lease" shall mean any lease or other agreement for the use
or possession of real or personal property the obligation for Rentals with
respect to which is required to be capitalized on a balance sheet of the lessee
in accordance with GAAP.
"Capitalized Rentals" shall mean as of the date of any determination
the amount at which the aggregate Rentals due and to become due under
Capitalized Leases under which the Company or any Subsidiary is a lessee will be
reflected as a liability on a consolidated balance sheet of the Company and its
Subsidiaries prepared in accordance with GAAP.
"Change of Control" shall mean the occurrence of either of the
following events: (i) any of the capital stock of the Company shall be owned,
either legally or beneficially, by any Person other than the Parent; or (ii) the
number of the directors of the Company who are not employees, shareholders (at
the time of becoming directors) or otherwise Affiliates (other than by reason of
being a director of the Company) of the Company or the Parent ("Disinterested
Directors") shall not at least equal the number of directors of the Company who
are not Disinterested Directors or (iii) more than 20% of the capital stock of
the Parent entitled at the time to vote for the election of directors shall be
owned or controlled by a Person or group of Persons acting in concert.
"Class of Notes" shall mean the Revolving Credit Notes as a group, the
A Credit Notes as a group, the B Credit Notes as a group, the C Credit Notes as
a group or the Swing Credit Note.
"C Loans" is defined in Section 2.2(c) hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collateral" shall mean all properties, rights, interests and
privileges from time to time subject to the liens and security interests granted
to the Administrative Agent for the benefit of the Lenders by the Collateral
Documents.
<PAGE>
"Collateral Documents" shall mean all mortgages, deeds of trust,
security agreements, assignments and other instruments and documents as shall
from time to time be executed and delivered by the Parent, the Company and/or
the Pledging Guarantors as collateral security for obligations of the Company
and/or the Guarantors under the Loan Documents.
"Commitments" shall mean the Revolving Credit Commitments, the A Credit
Commitments, the B Credit Commitments and the C Credit Commitments.
"Company" is defined in the introductory paragraph of this Agreement.
"Consolidated Net Income" for any period shall mean the gross revenues
from any source of the Parent and its Subsidiaries for such period less all
expenses and other proper charges determined for the Parent and its Subsidiaries
on a consolidated basis in accordance with GAAP but computed prior to giving
effect to gains and losses on the disposition of capital assets and other
extraordinary gains and losses (including the write off of debt issuance costs,
the payment of premiums on the retirement of Indebtedness and gains resulting
from pension reversions) as determined in accordance with GAAP.
Consolidated Net Working Capital" shall mean as of any time the same is
to be determined, the excess for the Parent and its Subsidiaries on a
consolidated basis of current assets over current liabilities as determined and
computed in accordance with GAAP.
"Consolidated Net Worth" shall mean, as of any date, the common stock
and the total shareholders' and members' capitalization of the Parent and its
Subsidiaries each computed on a consolidated basis in a manner consistent with
that used in the preparation of the Parents' audited consolidated balance sheet
for the fiscal year ended June 27, 1998 and heretofore delivered to the Lenders.
"Consolidated Total Indebtedness" shall mean all Indebtedness of the
Parent and its Subsidiaries determined on a consolidated basis in accordance
with GAAP.
"Dean Foods" shall mean Dean Foods Company, a Delaware corporation.
"Default" shall mean any event or condition the occurrence of which
would, with the lapse of time or the giving of notice, or both, constitute an
Event of Default.
"DFVC" shall mean Dean Foods Vegetable Company, a Wisconsin
corporation.
"EBITDA" shall mean, with reference to any period, Consolidated Net
Income for such period plus all amounts deducted in arriving at such
Consolidated Net Income in respect of (i) Interest Expense, (ii) taxes imposed
<PAGE>
on or measured by income or excess profits, and (iii) all charges for
depreciation of fixed assets and amortization of intangibles, all determined in
accordance with GAAP.
"Equity Offering" shall mean a public offering, private placement or
other issuance or sale of the capital stock or other equity interests (or of
warrants, options or other rights therefor) of the Parent or any of its
Subsidiaries; provided that the issuance by the Parent of common stock to its
producer members in accord with past practice shall not constitute an Equity
Offering.
"ERISA" is defined in Section 6.7 hereof.
"Event of Default" shall mean any of the events specified in Section
9.1 hereof.
"Excess Cash Flow" shall mean for the Parent and its Subsidiaries on a
consolidated basis for any period for which the same is to be computed, EBITDA
for such period less the sum for such period of regularly scheduled principal
payments and voluntary prepayments made on Indebtedness (other than principal
payments made on Revolving Credit Loans and on any other loans if and to the
extent that the borrower has the contractual right to reborrow the funds so
paid) paid during such period, Interest Expense paid in cash during such period,
cash payments of income and similar taxes paid during such period, Net Capital
Expenditures funded during such period (other than such thereof as are funded
out of the proceeds of Indebtedness) and Restricted Payments paid during such
period and minus the amount of any increase and plus the amount of any decrease
in Consolidated Net Working Capital between the first day of such period and the
last day of such period.
"Excluded Assets" is defined in Section 5.1 hereof.
"Existing Subordinated Notes" shall mean the 12-1/4% Senior
Subordinated Notes due 2005 of the Company issued under an indenture dated as of
November 3, 1994 by and among PF Acquisition Corp. (a predecessor to the
Company) as Issuer, the Parent as Guarantor and IBJ Schroeder Bank & Trust
Company as Trustee (the "Existing Subordinated Notes Indenture").
"Fed Funds Rate" shall mean the fluctuating interest rate per annum
described in the proviso to the definition of the definition of Base Rate.
"Fixed Charge Coverage Ratio" shall mean as of any time the same is to
be determined the ratio for the period of four consecutive fiscal quarters then
ending of (a) EBITDA less Net Capital Expenditures (if positive) to (b) the sum
for such period of Interest Expense, regular payments of principal on
Consolidated Total Indebtedness which are scheduled to become due during the
period of four consecutive fiscal quarters commencing on the day after the date
of determination (provided that principal payments on the note payable to Duane
<PAGE>
Packer shown on Exhibit I shall be excluded) and dividends paid by the Parent
during such period, all computed on a consolidated basis for the Parent and its
Subsidiaries. The foregoing to the contrary notwithstanding, the computation of
the Fixed Charge Coverage Ratio as of the close of the second fiscal quarter of
fiscal 1999 shall be made for the fiscal quarter then ending, the computation
thereof as of the third fiscal quarter of fiscal 1999 shall be made for the
period of two consecutive fiscal quarters then ending and the computation
thereof as of the close of the fourth fiscal quarter of fiscal 1999 shall be
made for the period of three consecutive fiscal quarters then ending.
"Fixed Fed Funds Swing Loan" is defined in Section 3.4 hereof.
"Fixed Fed Funds Rate" shall mean with respect to each Fixed Fed Funds
Swing Loan, the rate of interest per annum as determined by the Swing Lender at
which term federal funds would be offered by the Swing Lender on the first day
of such Fixed Fed Funds Swing Loan to major banks in the interbank market upon
request by such major banks for a period equal to the term of such Fixed Fed
Funds Swing Loan and in an amount equal to the principal amount of such Fixed
Fed Funds Swing Loan. Each determination of the Fixed Fed Funds Rate made by the
Swing Lenders in accordance with this paragraph shall be conclusive and binding
on the Company except in the case of manifest error or willful misconduct.
"Foreign Subsidiaries" shall mean all Subsidiaries of the Parent
organized and existing under laws other than those of the United States of
America or a political subdivision thereof and conducting substantially all of
their business, and having substantially all of their assets, outside of the
United States of America.
"GAAP" shall mean generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board that are applicable
to the circumstances as of the date of determination and consistently applied.
"Governmental Body" shall mean the United States of America or any
state or political subdivision thereof, and any other nation or political
subdivision thereof or any agency, department, commission, board, bureau or
instrumentality of any of the foregoing which exercises jurisdiction over the
Parent or any of its Subsidiaries or any of their assets or the conduct of the
business of the Parent or any of its Subsidiaries or any of their assets in any
such jurisdiction.
<PAGE>
"Governmental Requirements" shall mean any law, ordinance, order, rule
or regulation of a Governmental Body.
"Guarantors" shall mean the Parent and all Subsidiaries of the Parent
in each instance whether now owned and existing or hereafter formed or acquired
other than (i) Subsidiaries of the Parent whose aggregate assets, revenues and
net income comprise less than 2% of the assets, revenues and net income of the
Parent and Subsidiaries taken as a whole and (ii) Foreign Subsidiaries.
"Harris" shall mean Harris Trust and Savings Bank, an Illinois banking
corporation.
"Hedging Liability" shall mean liabilities of the Company to the
Lenders or any of them or to any of their Affiliates arising in connection with
the interest rate hedging activities constituting part of the Hedging Program.
"Hedging Program" is defined in Section 8.25 hereof.
"Indebtedness" shall mean and include (but without duplication) all
obligations of the Person in question of the following types, determined in
accordance with GAAP: (i) obligations (whether recourse or non recourse) for
borrowed money or for the deferred purchase price of, or which have been
incurred in connection with the acquisition of, Property other than current
accounts payable, (ii) obligations of others of the type described in clause (i)
secured by any lien or other charge upon Property owned by the Person in
question, even though such Person has not assumed or become liable for the
payment of such obligations, (iii) obligations payable over a period in excess
of one year to acquire Property or to obtain the services of another Person if
the contract requires that payment for such Property or services be made
regardless of whether such Property is delivered or such services are performed,
(iv) Capitalized Rentals of such Person, (v) obligations in respect of letters
of credit and banker's acceptances and (vi), all liabilities of others of the
type referred to in clauses (i), (ii), (iii), (iv) and (v) above which are
directly or indirectly guaranteed by such Person, or as to which it has agreed
(contingently or otherwise) to purchase or otherwise acquire or in respect of
which it has otherwise assured a creditor against loss.
"Interest Coverage Ratio" shall mean, as of any date, the ratio of
EBITDA of the Parent and its Subsidiaries for the four fiscal quarters ended on
such date to Interest Expense for the same period except that, provided,
however, that the calculation of the close of the second fiscal quarter of
fiscal 1999 shall be made for the fiscal quarter ended on such date, the
calculation as of the close of the third fiscal quarter of fiscal 1999 shall be
made for the period of two fiscal quarters ended on such date and the
calculation as of the close of the fourth fiscal quarter of fiscal 1999 shall be
made for the period of three consecutive fiscal quarters ended on such date.
<PAGE>
"Interest Expense" shall mean with reference to any period all interest
charges (excluding amortization of debt discount and expense and debt issuance
expense and interest payable at the option of the obligor in securities of the
same ranking but including imputed interest on Capitalized Leases, except that
if and so long as imputed interest on Capitalized Leases is less than $250,000
per annum it may be excluded from Interest Expense) accrued for such period,
whether or not paid, all as computed on a consolidated basis for the Parent and
its Subsidiaries in accordance with GAAP except as expressly provided for above.
"Interest Period" shall mean with respect to any LIBOR Portion:
(a) initially, the period commencing on, as the case may be,
the creation or conversion date with respect to such LIBOR Portion and
ending one, two, three or six months thereafter as selected by the
Company in its notice as provided for herein; and
(b) thereafter, each period commencing on the last day of the
immediately preceding Interest Period applicable to such LIBOR Portion
and ending one, two, three or six months thereafter as selected by the
Company in its notice as provided for herein;
provided that, all of the foregoing provisions relating to Interest
Periods are subject to the following:
(i) if any Interest Period would otherwise end on a day which
is not a Business Day, that Interest Period shall be extended to the
next succeeding Business Day, unless the result of such extension would
be to carry such Interest Period into another calendar month in which
event such Interest Period shall end on the immediately preceding
Business Day;
(ii) no Interest Period may extend beyond the final maturity
date of the applicable Notes;
(iii) the interest rate to be applicable to each Portion for
each Interest Period shall apply from and including the first day of
such Interest Period to but excluding the last day thereof;
(iv) no Interest Period may be selected if after giving effect
thereto the Company will be unable to make a principal payment
scheduled to be made during such Interest Period without paying part of
a LIBOR Portion on a date other than the last day of the Interest
Period applicable thereto; and
<PAGE>
(v) unless and until the Syndication Agent has advised the
Company that its syndication of the credit facilities provided for
herein is complete or the Syndication Agent otherwise agrees, Interest
Periods may not be longer than one month and shall be co-terminus and
may be of any shorter duration which is acceptable to the Company and
the Lenders.
For purposes of determining an Interest Period, a month means a period
starting on one day in a calendar month and ending on the numerically
corresponding day in the next calendar month, provided, however, if an Interest
Period begins on the last day of a month or if there is no numerically
corresponding day in the month in which an Interest Period is to end, then such
Interest Period shall end on the last Business Day of such month.
"Issuing Bank" shall mean Harris and its successors as letter of credit
issuer hereunder.
"Lenders" shall mean the Revolving Credit Lenders, the A Credit
Lenders, the B Credit Lenders and the C Credit Lenders.
"Letters of Credit" is defined in Section 2.1(c)(i) hereof.
"Leverage Ratio" shall mean, as of any time the same is to be
determined, the ratio of (a) Consolidated Total Indebtedness (other than
Seasonal Debt and liabilities in respect of undrawn letters of credit supporting
insurance and self insurance obligations of the Company and its Subsidiaries and
supporting payment by the Company and its Subsidiaries for goods and services in
the ordinary course of business) as of such time to (b) EBITDA for the period of
twelve calendar months most recently concluded, with EBITDA for any period prior
to the Acquisition Closing Date computed as though DFVC were then a Subsidiary
and the Company had not owned its asceptic business.
"LIBOR Index Rate" shall mean, for any Interest Period applicable to a
LIBOR Portion, the rate per annum (rounded upwards, if necessary, to the next
higher one hundred-thousandth of a percentage point) for deposits in U.S.
Dollars for a period equal to such Interest Period, which appears on the
Telerate Page 3750 as of 11:00 a.m. (London, England time) on the day two
Business Days before the commencement of such Interest Period.
"LIBOR Portion" is defined in Section 3.1 hereof.
"LIBOR Rate" shall mean for each Interest Period applicable to a LIBOR
Portion, (a) the LIBOR Index Rate for such Interest Period, if such rate is
available, and (b) if the LIBOR Index Rate cannot be determined, the arithmetic
average of the rates of interest per annum (rounded upwards, if necessary, to
the nearest 1/100 of 1%) at which deposits in U.S. Dollars in immediately
<PAGE>
available funds are offered to the Administrative Agent at 11:00 a.m. (London,
England time) two (2) Business Days before the beginning of such Interest Period
by three (3) or more major banks in the interbank eurodollar market selected by
the Administrative Agent for a period equal to such Interest Period and in an
amount equal or comparable to the principal amount of the LIBOR Portion
scheduled to be made by the Administrative Agent during such Interest Period.
"Loan Documents" shall mean this Agreement, the Notes, the Applications,
the Collateral Documents, all documents under which the Hedging Liability
arises, and each of the other instruments and documents to be delivered
hereunder or thereunder or otherwise in connection therewith.
"Marketing Agreement" shall mean the Marketing and Facilitation Agreement
dated as of November 3, 1994 by and between Pro-Fac and the Company (then known
as Curtice-Burns Foods, Inc.) as amended by the Amendment to the Marketing and
Facilitation Agreement effective as of September 23, 1998 and as further amended
as permitted hereby.
"Material Adverse Effect" shall mean a material adverse effect on (i) the
business, property, condition (financial or otherwise), or results of operations
of the Parent and its Subsidiaries taken as a whole, (ii) the ability of the
Parent or any Subsidiary to perform its obligations under the Loan Documents, or
(iii) the validity or enforceability of any of the Loan Documents or the rights
or remedies of the Administrative Agent, Issuing Bank or of the Lenders
thereunder or of the Marketing Agreement, Stock Purchase Agreement or Asset
Transfer Agreement.
"Merger" shall mean the merger of DFVC with and into the Company, with the
Company being the surviving corporation.
"Net Capital Expenditures" shall mean for any period all sums paid by the
Parent and its Subsidiaries to acquire assets which payments are not to be
treated as expenses in accordance with GAAP less up to $10,000,000 of the net
cash proceeds received by the Parent and its Subsidiaries from the sale or other
disposition of capital assets during the same period, except that Permitted
Acquisitions shall be excluded from Net Capital Expenditures.
"Notes" shall mean the Revolving Credit Notes, the Swing Credit Note, the A
Credit Notes, the B Credit Notes and the C Credit Notes.
"Offered Rate Swing Loan" is defined in Section 3.4 hereof..
<PAGE>
"Parent" shall mean Pro-Fac Cooperative, Inc., a New York agricultural
cooperative corporation.
"Permitted Acquisition" shall mean an acquisition permitted by Section
8.17(g) hereof.
"Permitted Liens" is defined in Section 8.8 hereof.
"Person" shall mean any individual, trust, partnership, firm, corporation,
limited liability company, association, unincorporated organization or any other
entity or organization, including a government or agency or political
subdivision thereof.
"Pledging Guarantors" shall mean all Guarantors which are not Foreign
Subsidiaries or the Parent.
"Portion" is defined in Section 3.1 hereof.
"Property" shall mean all assets and properties of any nature whatsoever,
whether real or personal, tangible or intangible, including without limitation
intellectual property.
"Rentals" shall mean and include all rents (including such payments which
the lessee is obligated to make to the lessor on termination of the lease or
surrender of the Property) payable by the Parent or its Subsidiaries as lessee
or sub-lessee under a lease or other agreement for the use or possession of real
or personal property but shall be exclusive of any amounts required to be paid
by the Parent or any Subsidiary (whether or not designated as rents or
additional rents) on account of maintenance, repairs, insurance, taxes and
similar charges. Rentals shall be computed for the Parent and Subsidiaries on a
consolidated basis.
"Required Lenders" shall mean Lenders which, taken together, hold (i) 51%
or more in aggregate amount of the sum of (aa) the Revolving Credit Commitments
or, if the Revolving Credit Commitments have terminated or expired, of the
Revolving Credit Loans (treating the Swing Loans as though they had been ratably
refunded by Revolving Credit Loans) and the credit risk incident to the Letters
of Credit, and (ab) the A Loans and (ac) 51% or more in aggregate amount of the
sum of the B Loans and the C Loans.
"Required Revolving Credit Lenders" shall mean Revolving Credit Lenders
with Revolving Credit Percentages aggregating at least 51%.
"Reserve Percentage" shall mean the daily arithmetic average maximum rate
at which reserves (including, without limitation, any supplemental, marginal and
emergency reserves) are imposed on member banks of the Federal Reserve System
during the applicable Interest Period by the Board of Governors of the Federal
<PAGE>
Reserve System (or any successor) under Regulation D on "eurocurrency
liabilities" (as such term is defined in Regulation D), subject to any
amendments of such reserve requirement by such Board or its successor, taking
into account any transitional adjustments thereto. For purposes of this
definition, the LIBOR Portions shall be deemed to be eurocurrency liabilities as
defined in Regulation D without benefit or credit for any prorations, exemptions
or offsets under Regulation D. The Adjusted LIBOR Rate shall automatically be
adjusted as of the date of any change in the Eurodollar Reserve Percentage.
"Restricted Payments" is defined in Section 8.18.
"Revolving Credit" shall mean the credit facility established by Section
2.1 hereof.
"Revolving Credit Commitments" is defined in Section 2.1(a).
"Revolving Credit Lender" shall mean each Lender from time to time having a
Revolving Credit Commitment or outstanding Revolving Credit Loans or a risk
participation in the Letters of Credit.
"Revolving Credit Loans" is defined in Section 2.1(b).
"Revolving Credit Notes" is defined in Section 2.1(b).
"Revolving Credit Percentage" shall mean the percentage which a Revolving
Credit Lender's unused Revolving Credit Commitment, outstanding Revolving Credit
Loans and its participated share of the risk incident to outstanding Letters of
Credit bears to the aggregate of the foregoing for all Revolving Credit Lenders.
Solely for the purpose of computing the foregoing and the Aggregate Percentages,
outstanding Swing Loans shall be treated as though they were Revolving Credit
Loans made pro rata from the Revolving Credit Lenders in accordance with the
respective amounts of their Revolving Credit Commitments.
"Seasonal Debt" shall mean Indebtedness for money borrowed of the Parent
and its Subsidiaries (computed on a consolidated basis) incurred to meet their
seasonal working capital needs provided that (i) no Indebtedness shall be
treated as Seasonal Debt during the last fiscal quarter of each fiscal year and
(ii) the aggregate amount of Indebtedness included in Seasonal Debt as of the
last day of each first fiscal quarter of the Parent (ending on or about
September 30) shall not exceed $150,000,000, the aggregate amount of
Indebtedness included in Seasonal Debt as of the last day of the second fiscal
quarter of the Parent (ending on or about December 31 of each year) shall not
exceed $175,000,000 and the aggregate amount of Indebtedness included in
Seasonal Debt as of the last day of the third fiscal quarter of the Parent
(ending on or about March 31 of each year) shall not exceed $125,000,000.
<PAGE>
"Stock Purchase Agreement" shall mean the Stock Purchase Agreement dated as
of July 24, 1998 by and between Dean Foods and the Company as amended as
permitted hereby.
"Subordinated Bridge Loan" shall mean a loan in the amount of $200,000,000
maturing on September 23, 1999 made to the Company pursuant to the Senior
Subordinated Credit Agreement dated as of September 23, 1998 among the Company,
the Guarantors, Warburg Dillon Read LLC as Arranger and Syndication Agent, UBS
AG, Stanford Branch as Administrative Agent and the lenders named therein (the
"Bridge Credit Agreement").
"Subordinated Debt" shall mean (i) the Subordinated Bridge Loan and (ii)
any other Indebtedness of the Company and guaranties thereof by the Guarantors
which are subject to and subordinate in right of payment to the prior payment of
the Parents' and its Subsidiaries' indebtedness and obligations under the Loan
Documents pursuant to written subordination provisions acceptable to the
Required Lenders, having other terms and conditions acceptable to the Required
Lenders, maturing no earlier than September 30, 2006 and bearing interest at an
interest rate approved by the Required Lenders provided that, no such consent
shall be required if (y) the net proceeds of such Indebtedness will be used to
refinance, in whole or in part, the Subordinated Bridge Loan and (z) (A) such
indebtedness contains no covenants requiring the maintenance of particular
levels of financial or balance sheet condition or of financial performance or of
other financial ratios, (B) the subordination provisions and events of default
contained in such Indebtedness are not materially worse to the Borrower or the
Lenders than the terms contained in the Subordinated Bridge Loan, (C) the terms
of any limitation on Indebtedness will not restrict Revolving Credit Borrowings
under the terms of this Agreement as amended (but not amendments increasing any
of the Commitments), (D) such Indebtedness matures no earlier than September 30,
2006 and (E) bearing except for a conversion of the Subordinated Bridge Loan
into a term loan pursuant to the Bridge Credit Agreement (such term loan to bear
interest as provided for in the Bridge Credit Agreement as originally executed
and delivered) interest at a rate not in excess of 15% per annum, with not more
than interest at the rate of 13% per annum payable in cash, and with the
remainder of such interest being payable only through the issuance of
subordinated payment in kind securities satisfying the foregoing requirements.
"Subsidiary" shall mean, any corporation or other entity of which more
than fifty percent (50%) of the outstanding stock or comparable equity interests
having ordinary voting power for the election of the Board of Directors of such
corporation or similar governing body in the case of a non-corporation
(irrespective of whether or not, at the time, stock or other equity interests of
any other class or classes of such corporation or other entity shall have or
might have voting power by reason of the happening of any contingency which has
not occurred) is at the time directly or indirectly owned by the Person in
<PAGE>
question or by one or more of its Subsidiaries. Unless the context otherwise
requires, references herein to Subsidiaries shall be references to Subsidiaries
of the Parent.
"Swing Credit Note" is defined in Section 2.1(d) hereof.
"Swing Lender" shall mean Harris and any successor thereto as swing lender
hereunder.
"Swing Loans" is defined in Section 2.1(d).
"Syndication Agent" shall mean Bank of Montreal in its capacity as such.
"Telerate Page 3750" shall mean the display designated as "Page 3750" on
the Telerate Service (or such other page as may replace Page 3750 on that
service or such other service as may be nominated by the British Bankers'
Association as the information vendor for the purpose of displaying British
Bankers' Association Interest Settlement Rates for U.S. Dollar deposits).
"Term Loans" shall mean the A Loans, the B Loans and the C Loans.
"Termination Date" shall mean September 30, 2003, or such earlier date on
which the Commitments are terminated in whole pursuant to Section 4.5 or Section
9 hereof.
"Withholding Taxes" is defined in Section 4.9 hereof.
"Year 2000 Problem" shall mean any significant risk that computer hardware,
software, or equipment containing embedded microchips essential to the business
or operations of the Parent or any of its Subsidiaries will not, in the case of
dates or time periods occurring after December 31, 1999, function at least as
efficiently and reliably as in the case of times or time periods occurring
before January 1, 2000, including the making of accurate leap year calculations.
Capitalized terms defined in any provision of this Agreement shall have the
meanings so ascribed to them in all provisions of this Agreement.
Section 1.2. Accounting Terms. For purposes of this Agreement, all
accounting terms not otherwise defined herein shall have the meanings assigned
to such terms in conformity with GAAP. Financial statements and other
information furnished to the Administrative Agent pursuant to Section 8.5 shall
be prepared in accordance with GAAP (as in effect at the time of such
preparation) on a consistent basis. In the event any "Accounting Changes" (as
defined below) shall occur and such changes affect financial covenants,
standards or terms in this Agreement, then the Parent, the Company, the
Administrative Agent and the Lenders agree to enter into negotiations in order
<PAGE>
to amend such provisions of this Agreement so as to equitably reflect such
Accounting Changes with the desired result that the criteria for evaluating the
financial condition of the Parent and its Subsidiaries shall be the same after
such Accounting Changes as if such Accounting Changes had not been made, and
until such time as such an amendment shall have been executed and delivered by
the Company, the Guarantors and the Required Lenders, (A) all financial
covenants, standards and terms in this Agreement shall be calculated and/or
construed as if such Accounting Changes had not been made, and (B) the Company
shall prepare footnotes to each compliance certificate and the financial
statements required to be delivered hereunder that show the differences between
the financial statements delivered (which reflect such Accounting Changes) and
the basis for calculating financial covenant compliance (without reflecting such
Accounting Changes). "Accounting Changes" means: (a) changes in accounting
principles required by GAAP since the close of the Parent's 1998 fiscal year and
implemented by the Parent or any of its Subsidiaries; (b) changes in accounting
principles recommended by certified public accountants of the Parent or any of
its Subsidiaries; and (c) changes in carrying value of the Parents' (or any of
its Subsidiaries') assets, liabilities or equity accounts resulting from the
application of purchase accounting principles. All references herein to fiscal
years, fiscal quarters or fiscal periods shall, unless the context otherwise
requires, be references to fiscal years, fiscal quarters or fiscal periods of
the Parent.
SECTION 2. THE CREDIT FACILITIES.
Section 2.1. The Revolving Credit.
(a) General Terms. Subject to all of the terms and conditions hereof, the
Revolving Credit Lenders agree to extend a Revolving Credit to the Company which
may be availed of by the Company from time to time, be repaid and used again,
during the period from the date hereof to the Termination Date. The Revolving
Credit may be utilized by the Company in the form of Loans or Letters of Credit,
all as more fully hereinafter set forth, provided that (i) the aggregate amount
of Revolving Credit Loans, Swing Loans and Letters of Credit outstanding at any
one time shall not exceed the Revolving Credit Commitments (ii) the aggregate
amount of Letters of Credit outstanding at any one time shall not exceed
$40,000,000 through November 30, 1998 or $25,000,000 thereafter or, if less in
any instance, the aggregate Revolving Credit Commitments then in effect and
(iii) the aggregate amount of Swing Loans outstanding at any one time shall not
exceed $15,000,000 or, if less, the aggregate Revolving Credit Commitments then
in effect. The maximum amount of the Revolving Credit which each Revolving
Credit Lender agrees to extend hereunder shall be as set forth under the heading
"Revolving Credit Commitment" opposite its signature hereto or on an Assignment
Agreement to which it is a party and as the same is reduced from time to time
pursuant hereto (its "Revolving Credit Commitment"). The obligations of the
Revolving Credit Lenders hereunder are several and not joint and no Revolving
Credit Lender shall under any circumstance be obligated to extend credit under
<PAGE>
the Revolving Credit in excess of its Revolving Credit Commitment or its
Revolving Credit Percentage of the credit outstanding thereunder.
(b) Revolving Credit Loans. Subject to all of the terms and
conditions hereof, the Revolving Credit may be availed of by the Company in the
form of Loans made pursuant to this Section 2.1(b) (individually a "Revolving
Credit Loan" and collectively the "Revolving Credit Loans"). Each Borrowing of
Revolving Credit Loans shall be in a minimum amount of $15,000,000 and
thereafter in integral multiples of $1,000,000 and shall be made pro rata from
the Revolving Credit Lenders in accordance with the amounts of their Revolving
Credit Percentages. All Revolving Credit Loans made by each Revolving Credit
Lender shall be made against and evidenced by a Revolving Credit Note
(individually a "Revolving Credit Note" and collectively the "Revolving Credit
Notes") in the form (with appropriate insertions) annexed hereto as Exhibit A.
Each Revolving Credit Note shall mature on the Termination Date.
(c) Letters of Credit.
(i) General Terms. Subject to all of the terms and conditions hereof,
the Revolving Credit may be availed of by the Company in the form of
letters of credit issued to Persons other than Affiliates of the Company
(the "Letters of Credit"). The amount of any Letter of Credit for all
purposes of this Agreement shall be the maximum amount which could be drawn
thereunder under any circumstances and over any period of time plus all
unreimbursed drawings then outstanding with respect thereto. The Issuing
Bank shall issue the Letters of Credit for the account of the Revolving
Credit Lenders and, accordingly, each Letter of Credit shall be deemed to
utilize a pro rata share of the Revolving Credit Commitment of each
Revolving Credit Lender.
(ii) General Characteristics. Each Letter of Credit issued hereunder
shall expire or be terminable by the Issuing Bank within one year of the
date of issuance but not later than the Termination Date. Each Letter of
Credit issued hereunder shall conform to the general requirements of the
Issuing Bank for the issuance of letters of credit as to form and
substance, shall be a letter of credit which the Issuing Bank may lawfully
issue and shall be governed by the Uniform Customs and Practices for
Documentary Credits, 1993 Revision (International Chamber of Commerce
Publication 500) or any successor thereto acceptable to the Issuing Bank.
If the Issuing Bank issues any Letter of Credit with an expiration date
that is automatically extended unless such Issuing Bank gives notice that
the expiration date will not so extend beyond its then scheduled expiration
date, the Issuing Bank will give notice of such non-renewal before the time
necessary to prevent such automatic extension if before such required
notice date (aa) the expiration date of such Letter of Credit if so
<PAGE>
extended would be after the Termination Date then in effect, (ab) the
Revolving Credit Commitments have been terminated, or (ac) a Default or an
Event of Default exists and the Required Lenders have given the Issuing
Bank instructions not to so permit the extension of the expiration date of
such Letter of Credit.
(iii) Applications and Agreements. At the time the Company requests a
Letter of Credit to be issued (or prior to the first issuance of a Letter
of Credit, in the case of a continuing application), it shall execute and
deliver to the Issuing Bank an application for such Letter of Credit in the
form then prescribed by the Issuing Bank (the "Applications"). Anything
contained in the Applications to the contrary notwithstanding (aa) the
Company shall pay fees in connection with Letters of Credit only as set
forth in Section 4 hereof, (ab) in the event that the Issuing Bank is not
promptly reimbursed for the amount of any draft drawn under a Letter of
Credit issued hereunder after notice to the Company that such draft has
been received, the obligation of the Company to reimburse the Issuing Bank
for the amount of such draft shall bear interest (which the Company hereby
promises to pay) from and after the date the draft is paid at a fluctuating
rate per annum equal to the sum of the Base Rate from time to time in
effect plus the Applicable Margin for the Revolving Credit Base Rate
Portion as from time to time in effect, (ac) so long as no Event of Default
has occurred and is continuing, the Issuing Bank will not call for
additional collateral security for the obligations of the Company under the
Applications other than the collateral security contemplated by this
Agreement, and (ad) so long as no Event of Default has occurred and is
continuing, the Issuing Bank will not call for the funding of a Letter of
Credit prior to being presented with a draft or demand for payment
thereunder (or, in the event the draft is a time draft, prior to its due
date). Reimbursement of a drawing paid under a Letter of Credit shall be
made to the Issuing Bank (with notice to the Administrative Agent) by no
later than 1:00 p.m. (Chicago time) on the date when such drawing is paid
and any payment of a reimbursement obligation relating to a Letter of
Credit received after such time shall be deemed to have been received by
the Issuing Bank on the next Business Day.
(iv) Change in Laws. If the Issuing Bank or any Revolving Credit
Lender shall determine in good faith that any applicable law, regulation or
guideline (including, without limitation, Regulation D of the Board of
Governors of the Federal Reserve System) or any interpretation of any of
the foregoing by any governmental authority charged with the administration
thereof or any central bank or other fiscal, monetary or other authority
having jurisdiction over the Issuing Bank or such Revolving Credit Lender
(whether or not having the force of law) shall after the date hereof:
(aa) impose, modify or deem applicable any reserve, special
deposit or similar requirements against the Letters of Credit or the
Issuing Bank's or such Revolving Credit Lender's or the Company's
liability with respect thereto; or
<PAGE>
(bb) impose on the Issuing Bank or such Revolving Credit Lender
any penalty with respect to the foregoing or any other condition
regarding this Agreement, the Applications or the Letters of Credit;
and the Issuing Bank or such Revolving Credit Lender shall determine in
good faith that the result of any of the foregoing is to increase the
cost (whether by incurring a cost or adding to a cost) to the Issuing
Bank or such Revolving Credit Lender of issuing, maintaining or
participating in the Letters of Credit hereunder (without benefit of,
or credit for, any prorations, exemptions, credits or other offsets
available under any such laws, regulations, guidelines or
interpretations thereof), then the Company shall pay within fifteen
(15) days following demand by the Issuing Bank or such Revolving Credit
Lender from time to time as specified by the Issuing Bank or such
Revolving Credit Lender such additional amounts as the Issuing Bank or
such Revolving Credit Lender shall in good faith determine are
sufficient to compensate and indemnify it for such increased cost. If
the Issuing Bank or any Revolving Credit Lender makes such a claim for
compensation, it shall provide to the Company and the Administrative
Agent a written explanation of the circumstances giving rise to such
claim and a certificate setting forth such increased costs as a result
of any event mentioned herein in reasonable detail and such certificate
shall be deemed prima facie correct.
<PAGE>
(v) Participations in Letters of Credit. Each Revolving Credit
Lender shall participate on a pro rata basis based on its Revolving
Credit Percentage in the Letters of Credit issued by the Issuing Bank,
which participation shall automatically arise upon the issuance of
each such Letter of Credit (such participations to ratably (based on
the Revolving Credit Percentages) count against the Revolving Credit
Commitments of the Revolving Credit Lenders when the Letters of Credit
are issued). Each Revolving Credit Lender unconditionally agrees that
whether or not a Default or Event of Default has occurred and is
continuing, in the event the Issuing Bank is not immediately
reimbursed by the Company for the amount paid by the Issuing Bank on
any draft presented to it under a Letter of Credit issued by it, then
the Issuing Bank shall give prompt notice thereof to each Revolving
Credit Lender and in that event each Revolving Credit Lender shall
thereafter pay to the Issuing Bank an amount equal to such Revolving
Credit Lender's Revolving Credit Percentage of such unpaid
reimbursement obligation, such payment to be made in immediately
available funds at the Issuing Bank's lending office designated on its
signature page hereof (or on an Assignment Agreement delivered
pursuant to Section 12.12 hereof), together with interest on such
amount accrued from the date the related payment was made by the
Issuing Bank to the date of such payment by such participating
Revolving Credit Lender at a rate per annum equal to (x) from the date
the related payment was made by the Issuing Bank or, if later, the
date of the Issuing Bank's notice thereof to such Revolving Credit
Lender, to the date two (2) Business Days after payment by such Bank
is due hereunder, the Fed Funds Rate for each such day and (y) from
the date two (2) Business Days after the date such payment is due from
<PAGE>
such Bank to the date such payment is made by such Bank, the Base Rate
plus the Applicable Margin for the Revolving Credit Base Rate Portion
in effect for each such day. In the event that any Revolving Credit
Lender fails to honor its obligation to reimburse the Issuing Bank for
its pro rata share of the amount of any such draft, then in that event
the defaulting Revolving Credit Lender shall have no right to
participate in any recoveries from the Company in respect of such
draft, and (without limiting the other rights of the Issuing Bank
against such defaulting Revolving Credit Lender) all amounts to which
the defaulting Revolving Credit Lender would otherwise be entitled
under the terms of this Agreement shall first be applied to
reimbursing the Issuing Bank for the defaulting Revolving Credit
Lender's portion of the draft, together with interest thereon at the
rate provided for herein. Upon reimbursement to the Issuing Bank
(pursuant to the above or otherwise) of the amount due it in respect
of the defaulting Revolving Credit Lender's share of the draft,
together with interest thereon, the defaulting Revolving Credit Lender
shall thereupon be entitled to its participation in such Issuing
Bank's rights of recovery against the Company in respect of the draft
paid by the Issuing Bank.
(vi) Payment and Reimbursement. The responsibility of the Issuing
Bank to the Company and the Revolving Credit Lenders shall be only to
determine that the documents (including each draft) delivered under
each Letter of Credit in connection with each presentment thereunder
shall be in conformity in all material respects with such Letter of
Credit. The Company's obligation to reimburse the Issuing Bank for
drafts paid under Letters of Credit shall be absolute and
unconditional under any and all circumstances and irrespective of the
occurrence of any Default or Event of Default or any condition
precedent whatsoever or any setoff, counterclaim or defense to payment
which the Company may have or have had against the Administrative
Agent, any Lender or any beneficiary of a Letter of Credit. The
Company further agrees that the Issuing Bank and the Revolving Credit
Lenders shall not be responsible for, and the Company's reimbursement
obligations shall not be affected by, among other things, the validity
or genuineness of documents or of any endorsements thereon, even if
such documents should in fact prove to be in any or all respects
invalid, fraudulent or forged, or any dispute between or among any of
the Company, the beneficiary of any Letter of Credit or any financing
institution or other party to which any Letter of Credit may be
transferred or any claims or defenses whatsoever of the Company
against the beneficiary of any Letter of Credit or any such
transferee. The Issuing Bank and the Revolving Credit Lenders shall
not be liable for any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit.
<PAGE>
(d) Swing Loans. Subject to all of the terms and conditions hereof, the
Revolving Credit may be availed of by the Company in the form of Loans made
pursuant to this Section 2.1(d) ("Swing Loans") which shall be made available to
the Company by the Swing Lender. Each Swing Loan shall be in a minimum amount of
$250,000 unless the Swing Lender otherwise approves and the aggregate principal
balance of Swing Loans at any one time outstanding shall not exceed the lesser
of $15,000,000 or the amount of the Revolving Credit Commitments not utilized in
the form of Revolving Credit Loans or Letters of Credit. Swing Loans shall
mature and be due and payable on the date selected by the Company but (i) such
date shall not be beyond the Termination Date and (ii) shall not be more than
seven days from the date of funding of such Swing Loan unless consented to by
the Swing Lender. No more than five Swing Loans may be outstanding at any one
time. The Swing Loans shall be made against and evidenced by a Swing Credit Note
(the "Swing Credit Note") in the form (with appropriate insertions) annexed
hereto as Exhibit B. The Swing Lender may at any time on behalf of the Company
(which hereby irrevocably authorizes the Swing Lender so to do) request that
each Revolving Credit Lender make a Revolving Credit Loan in an amount equal to
such Revolving Credit Lender's Revolving Credit Percentage of the amount of the
Swing Loans outstanding on the date such notice is given, such Revolving Credit
Loans to be made without regard to the minimum amount restrictions otherwise
applicable to Revolving Credit Loans. Each Revolving Credit Lender shall make
the proceeds of its requested Revolving Credit Loan available to the Swing
Lender in immediately available funds at its office before noon Chicago time on
the Business Day following the date such notice is given and the Swing Lender
shall apply the proceeds of such Revolving Credit Loans to the repayment of the
outstanding Swing Loans. The Company authorizes the Swing Lender to charge its
accounts with the Swing Lender (up to the amount available in such accounts) to
pay the amount of any such outstanding Revolving Credit Loans to the extent
amounts received from the Revolving Credit Lenders are insufficient for that
purpose. If any Revolving Credit Lender fails or is unable to make a Revolving
Credit Loan to refund its Revolving Credit Percentage of the Swing Loans
pursuant to the foregoing, whether because the conditions precedent to Borrowing
have not been met or otherwise, such Revolving Credit Lender shall at the
request of the Swing Lender purchase from the Swing Lender an undivided
participating interest in the outstanding Swing Loans in an amount equal to its
Revolving Credit Percentage thereof promptly upon demand by the Swing Lender.
Each Revolving Credit Lender that so purchases a participation in the Swing
Loans shall thereafter be entitled to receive its Revolving Credit Percentage of
each payment of principal thereafter received by the Swing Lender in respect of
such Swing Loans and of each payment of interest so received which accrued from
and after the date such Revolving Credit Lender funded its participation. The
obligation of the Revolving Credit Lenders to the Swing Lender to fund refunding
Revolving Credit Loans and purchase participations in Swing Loans pursuant to
the foregoing shall be absolute and unconditional and shall not be effected or
impaired by any Default or Event of Default or any other circumstance.
<PAGE>
(e) Cleanup. Anything contained elsewhere in this Agreement to the contrary
notwithstanding, the Company shall for a period of not less than fifteen
consecutive days falling between May 1 and July 15 of each year have no
Revolving Credit Loans or Swing Loans outstanding (each such period of fifteen
consecutive days in each year being hereinafter referred to as a "Cleanup
Period") and unless the Company has selected and complied with an earlier
Cleanup Period then (i) on July 1st of each year the Company shall pay all
Revolving Credit Loans and Swing Loans then outstanding and (ii) the Company
shall not be permitted to borrow Revolving Credit Loans or Swing Loans prior to
July 16 of such year.
Section 2.2. The Term Credits.
(a) The A Credit. Subject to all of the terms and conditions hereof, each A
Credit Lender agrees to make a Loan to the Company (individually an "A Loan" and
collectively the "A Loans") in the amount set forth opposite its signature
hereto under the heading "A Credit Commitment" or on an Assignment Agreement to
which it is party (its "A Credit Commitment" and collectively the "A Credit
Commitments"). There shall be a single Borrowing of the A Loans and the
obligations of the A Credit Lenders to make the A Loans shall expire on
September 30, 1998 unless sooner terminated as herein provided. The obligations
of the A Credit Lenders hereunder are several and not joint and no A Credit
Lender shall under any circumstances be obligated to make an A Loan in excess of
its A Credit Commitment. The A Loan made by each A Credit Lender shall be
evidenced by an A Credit Note (individually an "A Credit Note" and collectively
the "A Credit Notes") in the form (with appropriate insertions) annexed hereto
as Exhibit C. Unless required to be sooner paid, the Company promises to pay the
A Loans in seventeen quarterly installments commencing on September 30, 1999 and
continuing on the last day of each calendar quarter thereafter to and including
September 30, 2003. The first sixteen of such installments shall each aggregate
the lesser of $5,000,000 or 5% of the Adjusted Initial Balance of the A Loans
and the seventeenth and final installment shall be in the amount necessary to
pay the A Loans in full. Each A Credit Lender shall be entitled to its pro rata
share of each such payment of principal. The Adjusted Initial Balance of the A
Loans shall equal the original aggregate principal amount thereof reduced by the
amount, if any, of A Loans converted into B Loans or C Loans pursuant to Section
2.2(d) hereof.
(b) The B Credit. Subject to all of the terms and conditions hereof, each B
Credit Lender agrees to make a Loan to the Company (individually a "B Loan" and
collectively the "B Loans") in the amount set forth opposite its signature
hereto under the heading "B Credit Commitment" or on an Assignment Agreement to
which it is party (its "B Credit Commitment" and collectively the "B Credit
Commitments"). There shall be a single Borrowing of the B Loans and the
obligations of the B Lenders to make the B Loans shall expire on September 30,
1998 unless sooner terminated as herein provided. The obligations of the B
Credit Lenders hereunder are several and not joint and no B Credit Lender shall
under any circumstances be obligated to make a B Loan in excess of its B Credit
<PAGE>
Commitment. The B Loans made by each B Credit Lender to the Company shall be
evidenced by a B Credit Note (individually a "B Credit Note" and collectively
the "B Credit Notes") in the form (with appropriate insertions) annexed hereto
as Exhibit D. Unless required to be sooner paid, the Company promises to pay the
B Loans in twenty-four quarterly installments commencing on December 31, 1998
and continuing on the last day of each calendar quarter thereafter to and
including September 30, 2004. The first twenty-three of such installments shall
each aggregate $100,000 and the twenty-fourth and final installment shall be in
the amount necessary to pay the B Loans in full. Each B Credit Lender shall be
entitled to its pro rata share of each such payment of principal.
(c) The C Credit. Subject to all of the terms and conditions hereof, each C
Credit Lender agrees to make a Loan to the Company (individually a "C Loan" and
collectively the "C Loans") in the amount set forth opposite its signature
hereto under the heading "C Credit Commitment" or on an Assignment Agreement to
which it is party (its "C Credit Commitment" and collectively the "C Credit
Commitments"). There shall be a single Borrowing of the C Loans and the
obligations of the C Credit Lenders to make the C Loans shall expire on
September 30, 1998 unless sooner terminated as herein provided. The obligations
of the C Credit Lenders hereunder are several and not joint and no C Credit
Lender shall under any circumstances be obligated to make a C Loan in excess of
its C Credit Commitment. The C Loan made by each C Credit Lender to the Company
shall be evidenced by a C Credit Note (individually a "C Credit Note" and
collectively the "C Credit Notes") in the form (with appropriate insertions)
annexed hereto as Exhibit E. Unless required to be sooner paid, the Company
promises to pay the C Loans in twenty-eight quarterly installments commencing on
December 31, 1998 and continuing on the last day of each calendar quarter
thereafter to and including September 30, 2005. The first twenty-seven of such
installments shall each aggregate $100,000 and the twenty-eighth and final
installment shall be in the amount necessary to pay the C Loans in full. Each C
Credit Lender shall be entitled to its pro rata share of each such payment of
principal.
(d) Conversion of Bank of Montreal A Loans into B Loans and/or C Loans.
Bank of Montreal may at any time on or before December 30, 1998, by notice to
the Company and the Administrative Agent, elect to convert up to $50,000,000 of
its A Loans into B Loans and/or C Loans, such conversion to be accomplished by
written notice from Bank of Montreal to the Company and the Administrative Agent
specifying the amount of the A Loans to be so converted (which shall not be in
excess of $50,000,000) and whether such A Loans are to be converted into B
Loans, C Loans or a combination of both. Such conversion shall become effective
fifteen days after the sending by Bank of Montreal of such notice (the
"Conversion Date") and each of Bank of Montreal, the Administrative Agent and
the Company shall mark their books and records to reflect the conversion.
Effective on the Conversion Date the portion of the A Loan of Bank of Montreal
converted into a B Loan and/or C Loan shall (ii) be deemed evidenced by the B
<PAGE>
Credit Note and/or C Credit Note of Bank of Montreal (as appropriate) and shall
thereafter bear interest and mature as in the case of all other B Loans and/or C
Loans, as appropriate, and the aggregate outstanding principal balances of the A
Loans, the B Loans and the C Loans shall be adjusted to reflect such conversion.
Section 2.3. Manner of Borrowing. The Company shall give written or
telephonic notice to the Administrative Agent (which notice shall be irrevocable
once given and, if given by telephone, shall be promptly confirmed in writing)
by no later than 11:00 a.m. (Chicago time) on the date the Company requests that
any Borrowing of Loans be made to it under the Commitments, and the
Administrative Agent shall promptly notify the relevant Lenders of the
Administrative Agent's receipt of each such notice. Each such notice shall
specify the date of the Borrowing of Loans requested (which must be a Business
Day and which date shall be at least three (3) Business Days subsequent to the
date of such notice in the case of any Borrowing of Loans constituting a LIBOR
Portion), the amount of such Borrowing and the Commitments being utilized.
Except in the case of Swing Loans, each Borrowing of Loans shall initially
constitute part of the applicable Base Rate Portion except to the extent the
Company has otherwise timely elected that such Borrowing constitute part of a
LIBOR Portion as provided in Section 3 hereof. The Company agrees that the
Administrative Agent may rely upon any written or telephonic notice given by any
person the Administrative Agent in good faith believes is an Authorized
Representative without the necessity of independent investigation and, in the
event any telephonic notice conflicts with the written confirmation, such
telephonic notice shall govern if the Administrative Agent and/or Lenders have
acted in reliance thereon. Not later than 1:00 p.m. (Chicago time) on the date
specified for any Borrowing of Loans to be made hereunder, each relevant Lender
shall make the proceeds of its Loan comprising part of such Borrowing available
to the Administrative Agent in Chicago, Illinois in immediately available funds.
Subject to the provisions of Section 7 hereof, the proceeds of each Loan shall
be made available to the Company at the principal office of the Administrative
Agent in Chicago, Illinois, in immediately available funds, upon receipt by the
Administrative Agent from each relevant Lender of its pro rata share of such
Borrowing. Unless the Administrative Agent shall have been notified by a Lender
prior to 1:00 p.m. (Chicago time) on the date a Borrowing is to be made
hereunder that such Lender does not intend to make its pro rata share of such
Borrowing available to the Administrative Agent, the Administrative Agent may
assume that such Lender has made such share available to the Administrative
Agent on such date and the Administrative Agent may (but shall not be obligated
to) in reliance upon such assumption make available to the Company a
corresponding amount. If such corresponding amount is not in fact made available
to the Administrative Agent by such Lender and the Administrative Agent has made
such amount available to the Company, the Administrative Agent shall be entitled
to receive such amount from such Lender forthwith upon its demand, together with
interest thereon in respect of each day during the period commencing on the date
such amount was made available to the Company and ending on but excluding the
date the Administrative Agent recovers such amount at a rate per annum equal to
(x) from the date the related payment was due to the Administrative Agent to the
date two (2) Business Days after the date such payment was due, the Fed Funds
<PAGE>
Rate for such day (or in the case of a day which is not a Business Day, then for
the preceding day) and (y) thereafter until payment of such amount is received
by the Administrative Agent from such Lender, the Base Rate plus the Applicable
Margin in effect for each such day for the Base Rate Portion of Revolving Credit
Loans.
SECTION 3. INTEREST.
Section 3.1. Options. Subject to all of the terms and conditions of this
Section 3, portions of the principal indebtedness evidenced by each Class of
Notes (all of the indebtedness evidenced by each Class of Notes bearing interest
at the same rate for the same period of time being hereinafter referred to as a
"Portion") shall, at the option of the Company, bear interest with reference to
the Base Rate (the "Base Rate Portions") or with reference to the Adjusted
LIBOR Rate ("LIBOR Portions"), and Portions shall be convertible from time to
time from one basis to the other. All of the indebtedness evidenced by each
Class of Notes which is not part of a LIBOR Portion shall constitute a single
Base Rate Portion. All of the indebtedness evidenced by each Class of Notes
which bears interest with reference to a particular Adjusted LIBOR Rate for a
particular Interest Period shall constitute a single LIBOR Portion. Anything
contained herein to the contrary notwithstanding, there shall not be more than
fifteen (15) LIBOR Portions outstanding at any one time and each Bank shall have
a ratable interest in each Portion based on its applicable Commitment. The
Company promises to pay interest on each Portion at the rates and times
specified in this Section 3.
Section 3.2. Base Rate Portion. Each Base Rate Portion shall bear interest
(which the Company promises to pay at the times herein provided) at the rate per
annum determined by adding the Applicable Margin to the Base Rate as in effect
from time to time. Interest on the Base Rate Portions shall be payable monthly
in arrears on the last day of month and at maturity of the applicable Notes, and
interest after maturity shall be due and payable upon demand.
Section 3.3. LIBOR Portions. Each LIBOR Portion shall bear interest (which
the Company promises to pay at the times herein provided) for each Interest
Period selected therefor at a rate per annum equal to the Adjusted LIBOR Rate
for such Interest Period plus the Applicable Margin. Interest on each LIBOR
Portion shall be due and payable on the last day of each Interest Period
applicable thereto and, if an Interest Period is longer than three (3) months,
then at the end of each three month period and at the end of such Interest
Period, and interest after maturity shall be due and payable upon demand. The
Company shall give written or telephonic notice to the Administrative Agent
(which notice shall be irrevocable once given and, if given by telephone, shall
be promptly confirmed in writing) on or before 11:00 a.m. (Chicago time) on the
third Business Day preceding the end of an Interest Period applicable to a LIBOR
<PAGE>
Portion whether such LIBOR Portion is to continue as a LIBOR Portion, in which
event the Company shall notify the Administrative Agent of the new Interest
Period selected therefor, and in the event the Company shall fail to so notify
the Administrative Agent, such LIBOR Portion shall automatically be converted
into and added to the applicable Base Rate Portion as of and on the last day of
such Interest Period. The Administrative Agent shall promptly notify each
relevant Lender of each notice received from the Company pursuant to the
foregoing provisions. Anything contained herein to the contrary notwithstanding,
the obligation of the Lenders to create or continue any LIBOR Portion or to
convert any part of the Base Rate Portion into a LIBOR Portion shall be
suspended if a Default or Event of Default shall have occurred and be
continuing.
Section 3.4. Interest on Swing Loans. Swing Loans shall not bear interest
as provided for in Sections 3.1 through 3.3 hereof but shall instead bear
interest (which the Company hereby promises to pay at the times herein provided)
at (i) the Fixed Fed Funds Rate for the maturity requested as in effect on the
date such Swing Loan is funded plus the Applicable Margin for Revolving Credit
Loans which are LIBOR Portions (a "Fixed Fed Funds Swing Loan"), or (ii) at the
fixed rate otherwise agreed to by the Swing Lender and the Company on the date
of funding (an "Offered Rate Swing Loan"). Swing Loans shall bear interest after
maturity (whether by lapse of time, acceleration or otherwise) and until payment
in full hereof at the rate per annum determined by adding 2% to the rate
otherwise applicable thereto through the express maturity date thereof and
thereafter at the interest rate from time to time applicable to the Base Rate
Portion for Revolving Credit Loans. All interest on Swing Loans shall be due and
payable monthly on the last day of each month and on the Termination Date (or on
the maturity date of each Swing Loan if the Swing Lender so requests) and
interest accruing thereafter shall be due and payable upon demand. The Swing
Lender shall note the amount, interest rate and maturity date of each Swing Loan
in its books and records and such books and records shall be deemed prima facie
correct. Swing Loans may not be prepaid prior to their express maturity date.
Section 3.5. Computation. All interest on the Notes and all fees, charges
and commissions due hereunder shall be computed on the basis of a year of 360
days for the actual number of days elapsed, except that interest on the Base
Rate Portions and on Fixed Fed Funds Swing Loans, the commitment fee and the
Letter of Credit fee shall be computed on the basis of a year of 365 or 366 days
(as the case may be) for the actual number of days elapsed.
Section 3.6. Minimum Amounts. Each LIBOR Portion shall be in a minimum
amount of $15,000,000 and thereafter in integral multiples of $1,000,000.
Section 3.7. Manner of Rate Selection. The Company shall notify the
Administrative Agent by 11:00 a.m. (Chicago time) at least three (3) Business
Days prior to the date upon which it requests that any LIBOR Portion be created
<PAGE>
or that any part of a Base Rate Portion be converted into a LIBOR Portion (such
notice to specify in each instance the amount thereof and the Interest Period
selected therefor) and the Administrative Agent shall promptly advise each
relevant Lender of each such notice. If any request is made to convert a LIBOR
Portion into the applicable Base Rate Portion, such conversion shall only be
made so as to become effective as of the last day of the Interest Period
applicable thereto. All requests for the creation, continuance or conversion of
Portions under this Agreement shall be irrevocable. Such requests may be written
or telephonic (provided that if such notice is given by telephone, the Company
shall promptly confirm such notice to the Administrative Agent in writing), and
the Administrative Agent is hereby authorized to honor telephonic requests for
creations, continuances and conversions received by it from any person the
Administrative Agent reasonably believes to be an Authorized Representative, the
Company hereby indemnifying the Administrative Agent and the Lenders from any
liability or loss ensuing from so acting.
Section 3.8. Funding Indemnity. In the event any Lender shall incur any
loss, cost or expense (including, without limitation, any loss, cost or expense
incurred by reason of the liquidation or re-employment of deposits or other
funds acquired by such Lender to fund or maintain any LIBOR Portion or the
relending or reinvesting of such deposits or amounts paid or prepaid to such
Lender, and any loss of profit) as a result of:
(a) any payment or prepayment of a LIBOR Portion on a date other than
the last day of its Interest Period for any reason, whether before or after
default, and whether or not such payment is required by any of the
provisions of this Agreement;
(b) any failure (because of a failure to meet the conditions of
Section 7 hereof or otherwise) by the Company to create, borrow, continue
or effect by conversion a LIBOR Portion on the date specified in a notice
given pursuant to this Agreement; or
(c) any failure by the Company to make any payment of principal on any
LIBOR Portion when due (whether by acceleration, mandatory prepayment or
otherwise),
then, upon the demand of such Lender, the Company shall pay to such Lender such
amount as will reimburse such Lender for such loss, cost or expense. If any
Lender makes such a claim for compensation, it shall provide to the Company a
certificate executed by an officer of such Lender setting forth the amount of
such loss, cost or expense in reasonable detail (including an explanation of the
basis for and the computation of such loss, cost or expense) and such
certificate shall be deemed prima facie correct.
Section 3.9. Change of Law. Notwithstanding any other provisions of this
Agreement or any Note, if at any time any change in applicable law or regulation
or in the official interpretation thereof makes it unlawful for any Lender to
make or continue to maintain LIBOR Portions or to give effect to its obligations
<PAGE>
to make LIBOR Portions available as contemplated hereby, such Lender shall
promptly give notice thereof to the Company and the Administrative Agent and
such Lender's obligations to make or maintain LIBOR Portions under this
Agreement shall terminate until it is no longer unlawful for such Lender to make
or maintain LIBOR Portions. To the extent required to comply with any such law
as changed, the Company shall prepay on demand the outstanding principal amount
of any such affected LIBOR Portions, together with all interest accrued thereon
and all other amounts then due and payable to such Lender under this Agreement;
provided, however, subject to all of the terms and conditions of this Agreement,
the Company may then elect to convert the principal amount of the affected LIBOR
Portion from such Lender into the Base Rate Portion from such Lender which shall
not be made ratably by the Lenders but only from such affected Lender. During
the period when it is unlawful for any Lender to make LIBOR Portions, Loans
shall continue to be made in such a manner so that the percentage of each
Lender's relevant Commitments in use is identical, but the Lenders affected by
such illegality shall make their share of each Borrowing which has been
requested in the form of a LIBOR Portion available in the form of a Base Rate
Portion. Each Lender agrees (to the extent consistent with internal policies) to
designate a different lending office if such designation would avoid the
illegality described in this Section 3.9; provided, however, that such
designation need not be made if it would result in any additional costs,
expenses or risks to such Lender that are not reimbursed by the Company pursuant
hereto or would, in the reasonable judgment of such Lender, be otherwise
disadvantageous to such Lender.
Section 3.10. Unavailability of Deposits or Inability to Ascertain, or
Inadequacy of, LIBOR Rate. If on or prior to the first day of any Interest
Period for any LIBOR Portion the Administrative Agent determines that deposits
in United States Dollars (in the applicable amounts) are not being offered to it
or to banks generally in the offshore eurodollar market for such Interest
Period, then the Administrative Agent shall forthwith give notice thereof to the
Company and the Lenders, whereupon until the Administrative Agent notifies the
Company that the circumstances giving rise to such suspension no longer exist,
the obligations of the Lenders to make any further LIBOR Portions available
shall be suspended.
Section 3.11. Increased Cost and Reduced Return. If, on or after the date
hereof, the adoption of any applicable law, rule or regulation, or any change
therein, or any change in the official interpretation or administration thereof
by any governmental authority, central bank or comparable agency charged with
the interpretation or administration thereof, or compliance by any Lender (or
its lending office) with any request or directive (whether or not having the
force of law) of any such authority, central bank or comparable agency:
(a) shall subject any Lender (or its lending office) to any charges of
any kind (other than Withholding Taxes covered by Section 4.9 hereof) with
respect to its interest in the LIBOR Portions, its Notes or its obligation
to make LIBOR Portions available, or shall change the basis of taxation of
<PAGE>
payments to any Lender (or its lending office) of the principal of or
interest on LIBOR Portions or any other amounts due under this Agreement in
respect of its LIBOR Portions or its obligation to make LIBOR Portions; or
(b) shall impose, modify or deem applicable any reserve, special
deposit or similar requirements (including, without limitation, any such
requirement imposed by the Board of Governors of the Federal Reserve
System, but excluding any such requirement included in an applicable
Eurodollar Reserve Percentage) against assets of, deposits with or for the
account of, or credit extended by, any Lender (or its lending office) or
shall impose on any Lender (or its lending office) or the offshore
interbank market any other condition affecting LIBOR Portions, its Notes or
its obligation to make LIBOR Portions available;
and the result of any of the foregoing is to increase the cost to such Lender
(or its lending office) of making or maintaining any LIBOR Portion, or to reduce
the amount of any sum received or receivable by such Lender (or its lending
office) under this Agreement or under its Notes with respect thereto, by an
amount deemed by such Lender to be material, then, within fifteen (15) days
after demand by such Lender (with a copy to the Administrative Agent), the
Company shall pay to such Lender such additional amount or amounts as will
compensate such Lender for such increased cost or reduction. A certificate of
any Lender claiming compensation under this Section 3.11 and setting forth the
additional amount or amounts in reasonable detail (including an explanation of
the basis therefor and the computation of such amount) to be paid to it
hereunder shall be deemed prima facie correct. In determining such amount, such
Lender may use reasonable averaging and attribution methods.
Section 3.12. Lending Offices. Each Lender may, at its option, elect to
make its Loans hereunder at the branch, office or affiliate specified on the
appropriate signature page hereof (each a "lending office") or at such other of
its branches, offices or affiliates as it may from time to time elect and
designate in a notice to the Company and the Administrative Agent (but such
funds shall in any event be made available to the Company at the office of the
Administrative Agent as herein provided for).
Section 3.13. Discretion of Banks as to Manner of Funding. Notwithstanding
any other provision of this Agreement, each Lender shall be entitled to fund and
maintain its funding of all or any part of its Loans in any manner it sees fit,
it being understood, however, that for the purposes of this Agreement all
determinations under this Agreement (including, without limitation, calculations
under Sections 3.8 and 3.11 hereof) shall be made as if each Lender had actually
funded and maintained its interest in each LIBOR Portion through the purchase of
deposits in the offshore interbank market having a maturity corresponding to
such LIBOR Portion's Interest Period and bearing an interest rate equal to LIBOR
for such Interest Period.
<PAGE>
SECTION 4. FEES, PAYMENTS, REDUCTIONS, APPLICATIONS AND NOTATIONS.
Section 4.1. Commitment Fee. For the period from the date hereof to and
including the Termination Date, the Company shall pay to the Administrative
Agent for the ratable account of the Revolving Credit Lenders a commitment fee
at the Applicable Margin on the average daily unused amount of the Revolving
Credit Commitments hereunder, such fee to be payable quarterly in arrears on the
last day of each March, June, September and December in each year to and
including, and on, the Termination Date. Swing Loans shall not be treated as a
utilization of the Revolving Credit Commitments for the foregoing purpose.
Section 4.2. Letter of Credit Fees.
(a) Shared Fees. The Company shall pay to the Administrative Agent for the
ratable account of the Revolving Credit Lenders a letter of credit fee computed
at the Applicable Margin on the maximum amount of the Letters of Credit from
time to time outstanding, such fee to be paid quarterly in arrears on the last
day of each December, March, June and September in each year to and including,
and on, the Termination Date.
(b) Issuing Bank Fronting Fees. On the date of issuance of each Letter of
Credit, and as a condition thereto, the Company shall pay to the Issuing Bank
for its own account a non-refundable letter of credit issuance fee in an amount
equal to 0.125% of the amount of the relevant Letter of Credit to be issued. In
addition, the Company further agrees to pay the Issuing Bank for its own account
such amendment, processing and transaction fees and charges as the Issuing Bank
from time to time customarily imposes in connection with any amendment,
cancellation, negotiation and/or payment of Letters of Credit issued by such
Issuing Bank and drafts drawn thereunder. The Company also agrees to reimburse
the Issuing Bank for the amount of any taxes, fees, charges or other costs and
expenses incurred by the Issuing Bank in connection with any payment made under
or with respect to a Letter of Credit.
Section 4.3. Administrative Agent's Fees. On the Acquisition Closing Date,
and on each anniversary date thereof when any credit or commitment to extend
credit is outstanding hereunder, the Company shall pay to the Administrative
Agent, for its own use and benefit, such fees as may be agreed upon in writing
by the Company and the Administrative Agent, as the same may be amended from
time to time.
Section 4.4. Prepayments.
(a) Optional Prepayments. The Company shall have the privilege (upon notice
to the Administrative Agent by 11:00 a.m. (Chicago Time) on the date of
prepayment, which must be a Business Day) of prepaying without premium or
penalty and in whole or in part (but, if in part, then in an amount not less
<PAGE>
than $10,000,000 and thereafter in integral multiples of $100,000) (or such
lesser amount as will prepay the relevant Class of Notes in full) a Class of
Notes at any time, each such prepayment to be made by the payment of the
principal amount to be prepaid, any amount due the Lenders under Section 3.8
hereof (any failure of the Administrative Agent or the Lenders to require
payment of any amount due under Section 3.8 not to preclude a later demand that
the amount so due be paid) and, in the case of a prepayment which prepays a
Class of Notes in full (after which the Revolving Credit Commitments are no
longer outstanding in the case of a prepayment of the Revolving Credit Notes),
accrued interest thereon to the date fixed for prepayment. The foregoing to the
contrary notwithstanding, Swing Loans may not be prepaid.
(b) Mandatory Prepayments.
(i) Fixed Asset Proceeds. An amount equal to any and all net cash
proceeds (i.e., gross cash proceeds net of out-of-pocket expenses and
property and transfer taxes incurred in effecting the sale or other
disposition and net of proceeds applied to the repayment of liens on the
assets sold or disposed of) received by the Parent or its Subsidiaries from
the sale or disposition (whether voluntary or involuntary) of fixed or
capital assets (including the proceeds of a sale as part of a
sale/leaseback transaction) shall be promptly paid over to the
Administrative Agent as and for a mandatory prepayment on the Term Loans;
provided, however, that (i) the foregoing provisions shall be inapplicable
to funds received by the Administrative Agent under the Collateral
Documents if and so long as, pursuant to the terms of the Collateral
Documents, the same are to be held by the Administrative Agent and
disbursed for (or to reimburse the Parent and its Subsidiaries for the cost
of) the restoration, repair or replacement of the property in respect of
which such proceeds were received, (ii) no prepayment shall be required
with respect to net cash proceeds received from the ordinary course of
business sale or other disposition of Property which is worn out, or
obsolete if and to the extent that such cash proceeds would not cause Net
Capital Expenditures for the fiscal year of receipt to be negative and
(iii) no prepayment shall be required out of the first $5,000,000 of net
cash proceeds received by the Parent and its Subsidiaries in any fiscal
year which are not otherwise excepted from prepayment hereunder. If and to
the extent that the purchase price for the sale or other disposition of an
asset is deferred (whether or not evidenced by a note), it shall be
included in net cash proceeds as and when paid in cash. Nothing herein
contained shall in any manner impair or otherwise affect the prohibitions
against the sale or other disposition of Collateral or assets contained
herein.
(ii) Excess Cash Flow. On the last day of each September of each year
(commencing September 30, 1999) the Company shall pay over to the
Administrative Agent as and for a mandatory prepayment on the Term Loans an
amount equal to 75% (66-2/3% if the Leverage Ratio computed as of the last
<PAGE>
day of the immediately preceding fiscal year was less than 4.5 to 1) of
Excess Cash Flow for the immediately preceding fiscal year, provided that
if subsequent to the close of the Parent's 1999 fiscal year, the Leverage
Ratio shall be less than 3.00 to 1 as of the last day of two consecutive
fiscal quarters, no prepayments shall thereafter be required under this
subpart.
(iii) Equity Offerings. Promptly upon receipt thereof, the Company
shall pay over to the Administrative Agent as and for a mandatory
prepayment on the Term Loans, an amount equal to fifty percent of all net
cash proceeds received by the Parent from Equity Offerings, provided that
(i) no such prepayment shall be required out of or in respect of the
portion of such net cash proceeds applied to the payment of the
Subordinated Bridge Loan and (ii) if subsequent to the close of the
Parent's 1999 fiscal year, the Leverage Ratio shall be less than 3.00 to 1
as of the last day of two consecutive fiscal quarters, no prepayments shall
thereafter be required under this subpart. If and to the extent that the
proceeds of the Equity Offering in question are applied to the prepayment
of indebtedness included in Consolidated Total Indebtedness which is not
revolving and is not Seasonal Debt, the Leverage Ratio may be computed,
solely for purposes of the foregoing requirement, by reducing Consolidated
Total Indebtedness as of the test date by the amount of the prepayment.
(iv) Pension Reversions. Promptly upon each receipt by the Parent or
any Subsidiary of any amounts from or out of any pension or other employee
benefit plan covering any officers or employees of the Parent or any
Subsidiary or of their predecessors, the Company shall pay over an amount
equal the amount so received (net of taxes (including excise taxes) payable
in respect of such reversion) as and for a mandatory prepayment on the Term
Loans.
(v) Debt Issuances. Promptly upon receipt by the Parent or any
Subsidiary of any amounts from or out of the issuance of Indebtedness
included in Consolidated Total Indebtedness, the Company shall pay over to
the Administrative Agent as and for a mandatory prepayment on the Term
Loans an amount equal to the net cash proceeds received by the Parent or
its Subsidiaries therefrom except that no such prepayment shall be required
to be made out of (i) the proceeds of Subordinated Debt to the extent that
the same is applied to the repayment or retirement of the Subordinated
Bridge Loan or other Subordinated Debt, (ii) the proceeds of indebtedness
consisting of a Capitalized Lease or incurred to finance the purchase of a
fixed or capital asset (iii) the proceeds of a Borrowing under the
Revolving Credit Commitments or (iv) out of the first $5,000,000 of
Indebtedness proceeds received in any fiscal year which is not otherwise
excepted pursuant to clauses (i) through (iii) hereof.
<PAGE>
Section 4.5. Terminations. The Company shall have the privilege at any time
and from time to time upon five Business Days' prior notice to the
Administrative Agent (which shall promptly notify the Revolving Credit Lenders)
to ratably terminate the Revolving Credit Commitments in whole or in part (but,
if in part, then in a minimum amount of $10,000,000) provided that the Revolving
Credit Commitments may not be reduced to an amount less than the aggregate
principal amount of Revolving Credit Loans, Swing Loans and Letters of Credit
then outstanding. No termination of the Revolving Credit Commitments may be
reinstated.
Section 4.6. Place and Application.
(a) General. Except as otherwise provided in Section 2.1(c) with respect to
Letters of Credit, all payments of principal, interest and fees shall be made to
the Administrative Agent at its office at 115 South LaSalle Street, Chicago,
Illinois (or at such other place as the Administrative Agent may specify) in
immediately available and freely transferable funds at the place of payment. All
payments due from the Company hereunder shall be made without set-off or
counterclaim and without reduction for, and free from, any and all present or
future taxes, levies, imposts, duties, fees, charges, deductions, withholdings,
restrictions or conditions of any nature imposed by any government or political
subdivision or taxing authority thereof. Except as otherwise provided in Section
2.1(c) with respect to Letters of Credit, payments received by the
Administrative Agent after 1:00 p.m. (Chicago time) shall be deemed received as
of the opening of business on the next Business Day. Except as otherwise
provided in this Agreement, all payments shall be received by the Administrative
Agent for the ratable account of the Lenders entitled to share in same, and
shall be promptly distributed by the Administrative Agent ratably to them except
that payments which pursuant to the terms hereof are for the use and benefit of
the Administrative Agent, the Swing Lender or the Issuing Bank shall be retained
by the intended recipient for its own account and payments received to reimburse
an Issuing Bank or a Lender for a fee or cost peculiar to that Issuing Bank or
Lender, as the case may be, shall be remitted to it. Unless the Company
otherwise directs, principal payments on the Notes shall be first applied to the
applicable Base Rate Portion and then to the applicable LIBOR Portions in the
order in which their Interest Periods expire. Prepayments on the Term Loans
shall be applied to the scheduled installment maturities thereof in the inverse
order of maturity. Reimbursements of drawings under Letters of Credit shall be
promptly remitted to the Issuing Bank for remittance to the Lenders to the
extent they have previously reimbursed the Issuing Bank therefor. Prepayments in
full of LIBOR Portions shall be accompanied by accrued interest thereon to the
date fixed for prepayment.
(b) Term Loan Prepayments. Except as otherwise herein provided, all
prepayments of the Term Loans shall be applied pro rata as among the Term Loans.
The foregoing to the contrary notwithstanding, each B Credit Lender and C Credit
<PAGE>
Lender shall have the right to waive receipt of any mandatory prepayment payable
hereunder in respect of its B Loan or C Loan in which event the amount of the
prepayment so waived shall be added pro rata to the amount to be prepaid on the
A Loans and those B Loans and C Loans as to which the holder thereof has not
waived receipt of the prepayment. In order to enable the B Credit Lenders and
the C Credit Lenders to avail themselves of the right to waive a prepayment
pursuant to this subsection (b), the Company shall notify the Administrative
Agent of each mandatory prepayment made or anticipated to be made pursuant to
Section 4.4(b) hereof (which notice may be given up to 30 days in advance of the
date of the prepayment) specifying its good faith estimate of the amount
thereof. The Administrative Agent shall within 5 Business Days of receipt of
each such notice notify the B Credit Lenders and C Credit Lenders thereof. Such
Lenders shall then each have 5 Business Days to make an election not to accept
such prepayment by a written notice to that effect to the Administrative Agent.
Unless and until the period in which the B Credit Lenders and the C Credit
Lenders may elect to waive a mandatory prepayment under this subsection (b) has
elapsed, the proceeds of any mandatory prepayment otherwise payable in respect
of the B Loans and the C Loans shall be held by the Administrative Agent.
(c) Applications of Payments after an Event of Default. Anything contained
herein to the contrary notwithstanding, all payments and collections received in
respect of the indebtedness evidenced by the Notes or the Applications and all
proceeds of the Collateral received, in each instance, by the Administrative
Agent or any of the Lenders after the occurrence of an Event of Default shall be
distributed as follows:
(a) first, to the payment of any outstanding costs and expenses
incurred by the Administrative Agent or Issuing Bank in monitoring,
verifying, protecting, preserving or enforcing the liens on the Collateral
or in protecting, preserving or enforcing rights under the Loan Documents
and in any event including all costs and expenses of a character which the
Company has agreed to pay under Section 12.10 hereof (such funds to be
retained by the Administrative Agent or Issuing Bank for its own account
unless it has previously been reimbursed for such costs and expenses by the
Lenders, in which event such amounts shall be remitted to the Lenders to
reimburse them for payments theretofore made to the Administrative Agent or
Issuing Bank);
(b) second, to the payment of any outstanding interest or other fees
or amounts due under the Loan Documents other than for principal or in
reimbursement of the principal amount of drafts presented and paid under
Letters of Credit or in respect of the Hedging Liability, ratably as among
the Lenders in accord with the amount of such interest and other fees or
amounts owing each;
(c) third, to the payment of the principal of the Notes, the amounts
of all drafts presented and paid under Letters of Credit, to be held by the
Administrative Agent to secure payment of any amount which could
<PAGE>
subsequently be drawn on Letters of Credit (up to the full amount thereof)
and to the Hedging Liability, ratably as among all of such; and
(d) fourth, to whoever may be lawfully entitled thereto.
The foregoing to the contrary notwithstanding, the proceeds received
through the enforcement of the Administrative Agent's lien on real property (but
not personal property or fixtures) located in the state of New York shall not be
applied to the payment of the principal of or interest on the Revolving Credit
Loans or in reimbursement of the principal amount of drafts presented and paid
under Letters of Credit. However, if as a result of the foregoing, any Lender
receives a disproportionately smaller allocation of the proceeds of Collateral
than would have been the case but for this paragraph and but for the fact that
the Revolving Credit Loans are not secured with real property located in the
State of New York, the Revolving Credit Lenders shall receive a disproportionate
share of the proceeds of the other Collateral to the extent necessary so that
after giving effect to such applications each Lender receives the same
percentage recovery out of the Collateral as would have been the case but for
this paragraph and had the Revolving Credit Loans been secured with the
Collateral consisting of real property located in the State of New York.
Section 4.7. Notations and Requests. All advances made against the Notes,
interest rates, Interest Periods and maturities shall be recorded by the Lenders
on their books or, at their option in any instance, endorsed on the reverse side
of the Notes and the unpaid principal balances so recorded or endorsed by the
Lenders shall be prima facie evidence in any court or other proceeding brought
to enforce the Notes as to such matters. Prior to any negotiation of any Note,
the Lender holding such Note shall endorse thereon the principal amount
remaining unpaid thereon. The Administrative Agent shall maintain at its address
referred to herein a copy of each Assignment Agreement delivered to and accepted
by it and a register for the recordation of the names and addresses of the
Lenders and of each Commitment, extended by each Lender from time to time (the
"Register"). The entries in the Register shall be conclusive and binding for all
purposes, absent manifest error, and the Company, the Agents 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 Company or any Lender at any reasonable time and from time to
time upon reasonable prior notice. Upon its receipt of an Assignment Agreement
executed by an assigning Lender and an assignee, the Administrative Agent shall,
if such Assignment Agreement acceptance has been completed and is acceptable to
the Administrative Agent in form and substance, (a) accept such assignment and
acceptance, (b) record the information contained therein in the Register and (c)
give prompt written notice thereof to the Company.
<PAGE>
Section 4.8. Capital Adequacy. If any Lender shall determine that any
change after the date hereof in any applicable law, rule or regulation regarding
capital adequacy, or any change in the interpretation or administration thereof
by any governmental authority, central bank or comparable agency charged with
the interpretation or administration thereof or compliance by such Lender (or
its lending office) with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on such Lender's capital as a consequence of its obligations hereunder or the
Letters of Credit or credit extended by it hereunder to a level below that which
such Lender could have achieved but for such law, rule, regulation, change or
compliance (taking into consideration such Lender's policies with respect to
capital adequacy) by an amount deemed by such Lender to be material, then from
time to time as specified by such Lender the Company shall pay such additional
amount or amounts as will compensate such Lender for such reduction in rate of
return. A certificate of any Lender claiming compensation under this Section and
setting forth the additional amount or amounts to be paid to it hereunder in
reasonable detail shall be deemed prima facie correct. In determining such
amount, such Lender may use any reasonable averaging and attribution methods.
Section 4.9. The Register. The Administrative Agent shall maintain at its
address referred to herein, a copy of each Assignment Agreement delivered to and
accepted by it and a register for the recordation of the names and addresses of
the Lenders and each Commitment of, and principal amount of the Loans owing to,
each Lender from time to time (the "Register"). The entries in the Register
shall be conclusive and binding for all purposes, absent manifest error, and the
Company, the Agents 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 Company or any Lender at any
reasonable time and from time to time upon reasonable prior notice. Upon its
receipt of an Assignment Agreement executed by an assigning Lender and an
assignee, the Administrative Agent shall, if such Assignment Agreement has been
completed and is acceptable to it in form and substance, (a) accept such
assignment and acceptance, and (b) record the information contained therein in
the Register and (c) give promptly written notice thereof to the Company.
Section 4.10. Withholding Taxes.
(a) Payments Free of Withholding. Except as otherwise required by law and
subject to Section 4.10(b) and (c) hereof, each payment by the Company and the
Guarantors under this Agreement or the other Loan Documents shall be made
without withholding for or on account of any present or future taxes (other than
overall net income taxes on the recipient) imposed by or within the jurisdiction
in which the Company or any Guarantor is domiciled, any jurisdiction from which
the Company or any Guarantor makes any payment, or (in each case) any political
subdivision or taxing authority thereof or therein (herein, "Withholding
Taxes"). If any such Withholding Tax is so required, the Company or relevant
Guarantor, as applicable shall make the withholding, pay the amount withheld to
<PAGE>
the appropriate governmental authority before penalties attach thereto or
interest accrues thereon, and forthwith pay such additional amount as may be
necessary to ensure that the net amount actually received by each Lender, the
Administrative Agent and the Issuing Bank free and clear of such Withholding
Taxes (including such taxes on such additional amount) is equal to the amount
which that Lender, the Issuing Bank or the Administrative Agent (as the case may
be) would have received had such withholding not been made. If the
Administrative Agent, the Issuing Bank or any Lender pays any amount in respect
of any such Withholding Taxes, penalties or interest, the Company shall
reimburse the Administrative Agent, the Issuing Bank or such Lender for that
payment on demand in the currency in which such payment was made. If the Company
or a Guarantor pays any such taxes, penalties or interest, it shall deliver
official tax receipts evidencing that payment or certified copies thereof to the
Lender, the Issuing Bank or Administrative Agent on whose account such
withholding was made (with a copy to the Administrative Agent if not the
recipient of the original) on or before the thirtieth day after payment.
(b) U.S. Withholding Tax Exemptions. Each Lender that is not a United
States person (as such term is defined in Section 7701(a)(30) of the Code) shall
submit to the Company and the Administrative Agent on or before the earlier of
the date of the initial Borrowing is made hereunder or thirty (30) days after it
becomes a Lender, two duly completed and signed copies of either Form 1001
(relating to such Lender and entitling it to a complete exemption from
withholding under the Code on all amounts to be received by such Lender,
including fees, pursuant to the Loan Documents and the Loans) or Form 4224
(relating to all amounts to be received by such Lender, including fees, pursuant
to the Loan Documents and the Loans) of the United States Internal Revenue
Service or, solely if such Lender is claiming exemption from United States
withholding tax under Section 871(h) or 881(c) of the Code with respect to
payments of "portfolio interest", a Form W-8, or any successor form prescribed
by the Internal Revenue Service, and a certificate representing that such Lender
is not a bank for purposes of Section 881(c) of the Code, is not a 10-percent
shareholder (within the meaning of Section 871(h)(3)(B) of the Code), of the
Parent or the Company and is not a controlled foreign corporation related to the
Parent or the Company (within the meaning of Section 864(d)(4) of the Code.
Thereafter and from time to time, each Lender shall submit to the Company and
the Administrative Agent such additional duly completed and signed copies of one
or the other of such forms (or such successor forms as shall be adopted from
time to time by the relevant United States taxing authorities) as may be (i)
requested by the Company in a written notice, directly or through the
Administrative Agent, to such Lender and (ii) required under then-current United
States law or regulations to avoid or reduce United States withholding taxes on
payments in respect of all amounts to be received by such Lender, including
fees, pursuant to the Loan Documents or the Loans.
<PAGE>
(c) Inability of Bank to Submit Forms. If any Lender determines, as a
result of any change in applicable law, regulation or treaty, or in any official
application or interpretation thereof, that it is unable to submit to the
Company or the Administrative Agent any form or certificate that such Lender is
obligated to submit pursuant to subsection (b) of this Section 4.10 or that such
Lender is required to withdraw or cancel any such form or certificate previously
submitted or any such form or certificate otherwise becomes ineffective or
inaccurate, such Lender shall promptly notify the Company and Administrative
Agent of such fact and the Lender shall to that extent not be obligated to
provide any such form or certificate and will be entitled to withdraw or cancel
any affected form or certificate, as applicable.
Section 4.11. Bank Replacement. If the Company is required to make any
reduction or withholding with respect to any payment due any Lender under
Section 4.10 hereof or is required to make any payment to a Lender under
Sections 2.1(c)(iv), 3.11 or 4.8 hereof or a Lender's obligation to make or
maintain LIBOR Portions is suspended pursuant to Section 3.9 hereof (in any such
case a "Replaceable Bank"), the Company may, with the consent of the
Administrative Agent and the Issuing Bank, propose that another lender (a
"Replacement Bank"), which lender may be an existing Lender, be substituted for
and replace the Replaceable Bank for purposes of this Agreement. If a
Replacement Bank is so substituted for the Replaceable Bank, the Replaceable
Bank shall enter into an Assignment Agreement with the Replacement Bank, the
Company and the Administrative Agent to assign and transfer to the Replacement
Bank the Replaceable Bank's Commitments and Loans and credit risk with respect
to Letters of Credit hereunder pursuant to and in accordance with the provisions
and requirements of Section 12.12 hereof (except that no processing or
recordation fee shall be payable to the Administrative Agent) and, as a
condition to its execution thereof, the Replaceable Bank shall concurrently
receive the full amount of its Loans, interest thereon, and all accrued fees and
other amounts to which it is entitled under this Agreement, including amounts
which would have been due it under Section 3.9 hereof if its Loans had been
prepaid rather than assigned.
SECTION 5. THE COLLATERAL.
Section 5.1. The Collateral. The Notes and the other obligations of the
Company and the Guarantors to the Administrative Agent, the Issuing Bank and the
Lenders under the Loan Documents shall be secured by (a) valid, perfected and
enforceable liens in all right, title and interest of the Parent and of each
Subsidiary in all capital stock or other equity interests in the Company and
each Subsidiary (except that only 65% of the capital stock of Foreign
Subsidiaries need be pledged and the capital stock of those Subsidiaries
designated as inactive on Exhibit H hereto need not be pledged so long as the
same are inactive and the capital stock of Birds Eye de Mexico SA de CV need not
be pledged), in each instance whether now owned or hereafter acquired, and all
proceeds thereof and (b) valid, perfected and enforceable liens in all right,
title and interest of the Company and of each Pledging Guarantor in all
accounts, chattel paper, general intangibles (including trademarks),
<PAGE>
instruments, securities, documents, contract rights, including rights under
the Marketing Agreement and payment rights under the Stock Purchase Agreement
and Asset Transfer Agreement, inventory, equipment and real property of every
kind and description whether now owned or hereafter acquired, and all proceeds
thereof; provided, however, that (i) until a Default or an Event of Default has
occurred and is continuing and thereafter until otherwise required by the
Required Lenders or the Administrative Agent, liens need not be perfected on
notes receivable having a fair market value of less than $1,000,000 in any
instance and $5,000,000 in the aggregate, (ii) liens on the plants located in
Montezuma, Georgia and Uvalde, Texas may be subject to prior liens thereon
securing indebtedness in the amounts of $195,000, and $431,221, respectively,
(iii) liens need not be perfected outside of the United States on trademarks and
patents unless and until the Administrative Agent or the Required Lenders so
request and (iv) the Revolving Credit Loans need not be secured with real
property located in the State of New York. The liens in the Collateral shall be
granted to the Administrative Agent for the ratable account of the Lenders and
shall be valid and perfected first liens subject, however, to the rights of
lessors under permitted leases and purchase money liens held by vendors
providing permitted purchase money financing. Notwithstanding anything to the
contrary contained herein, in no event will any of the Collateral described
above be deemed to include (aa) any interests in equipment owned by the Company
or any Subsidiary which is subject to a permitted purchase money lien in favor
of any third party (other than the Company or any of its Affiliates) to the
extent the granting of a security interest or lien therein is prohibited by the
agreement(s) pursuant to which such equipment is financed and such prohibition
has not been or is not waived or the consent of the applicable party has not
been or is not obtained, (ab) any interests in any leases or licenses to use
Property under which the Company or any Subsidiary is lessee or licensee and a
Person other than the Company or an Affiliate of the Company is lessor or
licensor to the extent the granting of a security interest or lien therein is
prohibited by the agreement(s) pursuant to which such property is leased as
licensed and such prohibition has not been or is not waived or the consent of
the applicable party has not been or is not obtained, (ac) any rights under
other contracts (other than contracts with Affiliates of the Company) to which
the Company or a Pledging Guarantor is a party (other than rights to receive
money due and to become due) to the extent the granting of a security interest
or lien thereon is prohibited by such contracts or applicable law and such
prohibition has not been or is not waived or the consent of the applicable party
has not been or is not obtained and (ad) the other assets shown on Exhibit L
hereto (collectively, the "Excluded Assets").
Section 5.2. Further Assurances. The Company covenants and agrees
that it shall, and shall cause each Subsidiary to, comply with all terms and
conditions of each of the Collateral Documents and that the Company shall, and
shall cause each Subsidiary to, at any time and from time to time at the request
of the Administrative Agent or the Required Lenders execute and deliver such
<PAGE>
instruments and documents and do such acts and things as the Administrative
Agent or the Required Lenders may reasonably request in order to provide for or
protect or perfect the lien of the Administrative Agent in the Collateral,
subject to the terms of Section 5.1 above.
SECTION 6. REPRESENTATIONS AND WARRANTIES.
The Company and the Parent represent and warrant to the Lenders as follows:
Section 6.1. Organization and Power. The Parent and the Company are duly
organized and existing under the laws of the state of their organization, and
after giving effect to the Acquisition and the Merger will be duly licensed or
qualified to do business in each state where the nature of the assets owned or
leased by them or business conducted by them requires such licensing or
qualification and in which the failure to be so licensed or qualified could
reasonably be expected to have a Material Adverse Effect and have all necessary
power to carry on their present and contemplated businesses. The Parent and the
Company have full right, power and authority to enter into this Agreement, to
make the borrowings herein provided for, to issue the Notes in evidence thereof,
to execute and deliver the Applications and the other Loan Documents executed
and delivered or to be executed and delivered by them, and to perform each and
all of the matters and things herein and therein provided for. Each Guarantor
has, or upon its acquisition or formation will have, full right, power and
authority to enter into the Loan Documents executed by it and to perform each
and all of the matters and things therein provided for. The Loan Documents do
not, and the performance or observance by the Parent or any Subsidiary of any of
the matters and things herein or therein provided for will not, contravene any
provision of law or any charter, by-law or similar agreement of the Parent or
any such Subsidiary or constitute a breach or default under any covenant,
indenture or agreement of or affecting the Parent or any such Subsidiary where
such breach or default could reasonably be expected to have a Material Adverse
Effect.
Section 6.2. Subsidiaries. Each Subsidiary is, or upon acquisition or
formation will be, duly organized and existing under the laws of the
jurisdiction of its organization, and duly licensed or qualified to do business
in each state or other jurisdiction where the nature of the assets owned or
leased by it or business conducted by it requires such licensing or
qualification and in which the failure to be so licensed or qualified could
reasonably be expected to have a Material Adverse Effect and has all necessary
corporate power to carry on its present business. Exhibit H hereto identifies
each Subsidiary, the jurisdiction of its organization, the percentage of issued
and outstanding shares of each class of its capital stock or other equity owned
by the Parent and the Subsidiaries and, if such percentage is not 100%
(excluding directors' qualifying shares as required by law), a description of
each class of its authorized capital stock or other equity interest and the
number of shares of each class issued and outstanding. All of the outstanding
shares of capital stock of or other equity interest in each Subsidiary are
validly issued and outstanding and fully paid and, subject to Section 630 of the
New York Business Corporation Law, nonassessable, and all shares or other equity
<PAGE>
interests in each Subsidiary indicated on Exhibit H as owned by the Parent or a
Subsidiary are owned, beneficially and of record, by the Parent or such
Subsidiary free and clear of all liens, security interests, charges and
encumbrances, other than the lien of the Administrative Agent required hereby.
There are no outstanding commitments or other obligations of any Subsidiary to
issue, and no options, warrants or other rights of any Person to acquire, any
shares of any class of capital stock of or other equity interest in any
Subsidiary. The Company is a wholly owned Subsidiary of the Parent.
Section 6.3. Use of Proceeds; Regulation U. The Company shall use proceeds
of the Loans and other extensions of credit made available hereunder solely for
the purpose of funding the Acquisition and for its working capital and other
general corporate purposes. Neither the Company nor any Subsidiary is engaged in
the business of extending credit for the purpose of purchasing or carrying
margin stocks (within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System), and no part of the proceeds of any loan or
extension of credit hereunder will be used to purchase or carry any margin stock
or extend credit to others for the purpose of purchasing or carrying any margin
stock if as a result thereof such loan or other extension of credit would
violate Regulation U or any interpretation thereof.
Section 6.4. Financial Reports. (a) The Parent and the Company have each
heretofore delivered to each Lender a copy of their annual audit reports for
their 1994, 1995, 1996, 1997, and 1998, fiscal years and the accompanying
consolidated financial statements of the Parent and its Subsidiaries and the
Company and its Subsidiaries, and their unaudited interim consolidated balance
sheets as at August 29, 1998, and the related consolidated statements of
operations, changes in members' and shareholder's capitalization (as to the
Parent and its Subsidiaries) and cash flows of each of them and of their
Subsidiaries for the two months then ended. Such financial statements have been
prepared in accordance with GAAP (except for the omission of footnotes from such
unaudited statements) and fairly reflect the consolidated financial position of
the Parent and its Subsidiaries and of the Company and its Subsidiaries as of
the dates thereof and the results of their operations for the periods covered
thereby. The Parent and its Subsidiaries have no material contingent liabilities
that are required to be disclosed on such financial statements other than as
indicated on said financial statements. Since the date of the fiscal 1998 audit
report, there has been no material adverse change in the financial condition or
results of operations, or with respect to the Properties, of the Parent or any
of its Subsidiaries, except those disclosed in writing to the Lenders prior to
the date of this Agreement.
(b) The Company has delivered to the Lenders the audited consolidated
balance sheets of DFVC and its Subsidiaries as of the close of their 1996, 1997,
and 1998 fiscal years, and the audited consolidated income statements and
<PAGE>
statements of cash flow of DFVC and its Subsidiaries for their 1996, 1997 and
1998 fiscal years, and the unaudited interim balance sheet of DFVC and its
Subsidiaries as of August 30, 1998 and unaudited interim income statement of
DFVC and its Subsidiaries for the three month period ended August 30, 1998
(collectively, the "DFVC Financial Statements"). Based on the Company's review
of the DFVC Financial Statements and other financial information obtained by the
Company in connection with the DFVC Acquisition, nothing has come to the
Company's attention that would cause it to believe that the DFVC Financial
Statements are inaccurate in any material respect or that the DFVC Financial
Statements do not present fairly, in all materials respects, the consolidated
financial position of DFVC and its Subsidiaries as the dates thereof and the
consolidated results of operations of DFVC and its Subsidiaries for the periods
covered thereby in conformity with GAAP or that DFVC has any material contingent
liabilities not disclosed in the DFVC Financial Statements, except (i) as
otherwise indicated in the DFVC Financial Statements, and (ii) for such matters
as would not individually or in the aggregate have a Material Adverse Effect.
Section 6.5. Litigation and Taxes. Except as is set forth on Schedule 6.5,
there is no litigation or governmental proceeding pending, nor to the knowledge
of the Parent or the Company threatened, against the Parent or any Subsidiary or
DFVC, BEMSA or their Subsidiaries or for which any of them is liable which if
adversely determined could reasonably be expected to result in a Material
Adverse Effect after giving effect to the Acquisition. No authorization,
consent, license, or exemption from, or filing or registration with, any court
or governmental department, agency or instrumentality, is or will be necessary
to the valid execution, delivery or performance by the Parent or any Subsidiary
of any Loan Document or the Stock Purchase Agreement, Asset Transfer Agreement
or Marketing Agreement or to the consummation of the Acquisition or the Merger,
except for such consents, exemptions and approvals with respect to the
Acquisition which will have been obtained and remain in full force and effect.
Section 6.6. Burdensome Contracts with Affiliates. All material contracts
and agreements between the Company and/or its Subsidiaries and their Affiliates
are on terms and conditions which are no less favorable to the Company or such
Subsidiary than would be usual and customary in similar contracts or agreements
between Persons not affiliated with each other.
Section 6.7. ERISA. The Parent and each Subsidiary is in compliance in all
material respects with the Employee Retirement Income Security Act of 1974
("ERISA") to the extent applicable to it and has received no notice to the
contrary from the Pension Benefit Guaranty Corporation ("PBGC"), and, in the
event of the Parent's or any Subsidiary's partial or total withdrawal from any
pension plans, multi-employer pension plans or non-payment by other employer
participants therein, the liability of the Parent and its Subsidiaries for any
unfunded vested benefits thereunder would not result in a Material Adverse
Effect.
<PAGE>
Section 6.8. Full Disclosure. The statements and information furnished to
either Agent or the Lenders in connection with the negotiation of this Agreement
and the commitments by the Lenders to provide all or part of the financing
contemplated hereby do not, taken as a whole, contain any untrue statement of a
material fact or omit a material fact necessary to make the material statements
contained therein or herein not misleading, except for such thereof as were
corrected in subsequent written statements furnished the Lenders prior to the
date hereof (the Lenders acknowledging that as to any projections furnished to
the Lenders, the Parent and the Company only represent that the same were
prepared on the basis of information and estimates they believe to be
reasonable). There is no fact peculiar to the Parent or any Subsidiary, DFVC or
BEMSA which the Company has not disclosed to the Lenders in writing which
materially adversely affects the Parent or its Subsidiaries nor, so far as the
Parent or the Company now can reasonably foresee, is reasonably likely to have a
Material Adverse Effect. The unaudited pro forma consolidated balance sheet for
the Parent and its Subsidiaries and for the Company and its Subsidiaries
heretofore delivered to the Lenders fairly presents the financial condition of
the Parent and its Subsidiaries immediately after giving effect to the
Acquisition and the Merger, based upon the best information currently available
to the Parent and the Company with respect to the Acquisition.
Section 6.9. Compliance with Law. (a) Neither the Parent nor any Subsidiary
is or will after giving effect to the Acquisition and the Merger be (i) in
default with respect to any order, writ, injunction or decree or (ii) in default
in any material respect under any Governmental Requirement (including ERISA, the
Occupational Safety and Health Act of 1970 and laws and regulations establishing
quality criteria and standards for air, water, land and toxic waste) of any
Governmental Body if, in the case of either clause (i) or (ii), such default is
reasonably likely to result in a Material Adverse Effect; and (b) without
limiting the generality of the foregoing, the Parent and each Subsidiary are and
after giving effect to the Acquisition and the Merger will each be, in
compliance with all applicable state and federal environmental, health and
safety statutes and regulations, including, without limitation, regulations
promulgated under the Resource Conservation and Recovery Act of 1976, 42 U.S.C.
ss.ss.6901 et seq., except where failure to be in compliance is reasonably
likely not to have a Material Adverse Effect, and, to the Company's and Parent's
knowledge, neither the Parent nor any Subsidiary will have acquired, incurred or
assumed, directly or indirectly, any contingent liability in connection with the
release of any toxic or hazardous waste or substance into the environment which
is reasonably likely to have a Material Adverse Effect. Insofar as known to the
responsible officers of the Company and the Parent, and after giving effect to
the Merger and the Acquisition neither the Parent nor any Subsidiary is liable,
in whole or in part, for, nor are any of the assets or property of the Parent or
any Subsidiary subject to a lien in favor of any Governmental Body for any
material liability arising from or in any way relating to, the costs of cleaning
up, remediating or responding to a release of hazardous substances (including,
without limitation, petroleum, its by-products or derivatives, or other
hydrocarbons).
<PAGE>
Section 6.10. Certain Contracts. The Company has delivered true copies of
the Stock Purchase Agreement, the Asset Transfer Agreement and the Marketing
Agreement and all amendments thereto to the Lenders.
Section 6.11. Stock Purchase Agreement Warranties. Nothing has come to the
attention of the Company or the Parent that would indicate that any
representation of Dean Foods contained in the Stock Purchase Agreement is untrue
in any respect which would have a Material Adverse Effect.
Section 6.12. Restrictive Agreements. Neither the Parent nor any Subsidiary
nor, to their knowledge, DFVC, is a party to any contract or agreement, or
subject to any charge or other corporate restriction, which affects its ability
to execute, deliver and perform the Loan Documents to which it is a party and
repay its indebtedness, obligations and liabilities under the Loan Documents or
which materially and adversely affects or, insofar as the Parent and the Company
can reasonably foresee, could reasonably be expected to have a Material Adverse
Effect.
Section 6.13. No Default under Other Agreements. Neither the Parent nor any
Subsidiary is in default with respect to any note, indenture, loan agreement,
mortgage, lease, deed, or other agreement to which it is a party or by which it
or its Property is bound, which default could reasonably be expected to have a
Material Adverse Effect.
Section 6.14. Status under Certain Laws. Neither the Parent nor any
Subsidiary is an "investment company" or a person directly or indirectly
controlled by or acting on behalf of an "investment company" within the meaning
of the Investment Company Act of 1940, as amended, or a "holding Company," or a
"subsidiary company" of a "holding company," or an "affiliate" of a "holding
company" or a "subsidiary company" of a "holding company," within the meaning of
the Public Utility Holding Company Act of 1935, as amended.
Section 6.15. Year 2000 Compliance. The Parent and the Company have
conducted a comprehensive review and assessment of the computer applications of
the Parent and its Subsidiaries and has made inquiry of their material
suppliers, vendors (including data processors) and customers, with respect to
any defect in computer software, data bases, hardware, controls and peripherals
related to the occurrence of the year 2000 or the use at any time of any date
which is before, on or after December 31, 1999, in connection therewith. Based
on the foregoing review, assessment and inquiry, the Parent and the Company
believe that no such defect could reasonably be expected to have a Material
Adverse Effect.
Section 6.16. Solvency, Etc. On the initial Borrowing date and after giving
effect to the Acquisition and the Merger and the financing thereof, (i) the
assets of the Parent and of each Subsidiary, at a fair valuation, will exceed
<PAGE>
its liabilities, including contingent liabilities, (ii) the remaining capital of
the Parent and of each Subsidiary will not be unreasonably small to conduct, or
in relation to, its business or any transaction in which it intends to engage,
and (iii) the Parent and each Subsidiary will not have incurred debts, and does
not intend to incur debts, beyond its ability to pay such debts as they mature.
For purposes of this Section, "debt" means any liability on a claim, and "claim"
means (i) right to payment, whether or not such right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured, or unsecured; or (ii) right to an
equitable remedy for breach of performance if such breach gives rise to a
payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured,
or unsecured.
SECTION 7. CONDITIONS PRECEDENT.
Section 7.1. All Advances. The obligation of the Lenders to make any
Borrowing available hereunder (including the first Borrowing) or of the Issuing
Bank to issue any Letter of Credit shall be subject to the provisions of
Sections 9.2 and 9.3 hereof and shall also be subject to the satisfaction of the
following conditions precedent at the time of the making of each Borrowing or
the issuance of a Letter of Credit under the Revolving Credit:
(a) each of the representations and warranties set forth herein and in
the other Loan Documents shall be true and correct as of the date of such
Borrowing or issuance (except the representations and warranties made in
Section 6.4 hereof shall be deemed to refer to the most recent financial
statements delivered to the Lenders pursuant to Section 8.5 hereof); and
(b) no Default or Event of Default shall have occurred and be
continuing.
Any request made by the Company for a Borrowing or a Letter of Credit hereunder
shall be deemed to constitute a representation and warranty that the foregoing
statements are true and correct. In addition, in the case of the issuance of a
Letter of Credit, the Issuing Bank shall have received a properly completed
Application therefor and its fee therefor.
Section 7.2. Initial Advance. At or prior to the time of the initial
Borrowing hereunder or the issuance of the initial Letter of Credit, the
following conditions precedent shall also have been satisfied:
(a) The Administrative Agent shall have received the following for the
account of the Lenders (each to be properly executed and completed) and the
same shall have been approved as to form and substance by the Agents:
<PAGE>
(i) this Agreement and the Notes;
(ii) copies (executed or certified as may be appropriate) for
each Lender of the articles of incorporation and by-laws of and good
standing certificates for the Parent and each Guarantor and of all
legal documents or proceedings taken in connection with the execution
and delivery of the Loan Documents to the extent the Administrative
Agent or its counsel may reasonably request, including, without
limitation, certificates as to the incumbency and authority of, and
setting forth a specimen signature of, each officer who is to sign any
Loan Document;
(iii) the Acquisition and the Merger shall have been consummated
without material deviation from the terms of the Stock Purchase
Agreement and Asset Transfer Agreement and without modification
thereto or waivers of the terms or conditions thereof (except for
modifications and waivers approved by the Administrative Agent) and
with the Company's asceptic business having been transferred to Dean
Foods or a Subsidiary thereof and (aa) with the amount of cash
expended by the Parent and its Subsidiaries in respect of such
Acquisition not being in excess of $360,000,000 plus amounts payable
pursuant to the working capital adjustment provisions of the Stock
Purchase Agreement, (ab) with the sum of such amounts plus amounts
required to refinance indebtedness of the Company and DFVC required to
be repaid pursuant to the terms of Section 7.2(a)(vii) hereof plus
financing costs and costs of retiring Indebtedness funded through
borrowings under this Agreement not to exceed $560,000,000, and (ac)
immediately after consummation of the Acquisition and Merger, the
Parent shall have Consolidated Net Worth of not less than
$160,000,000;
(iv) the Collateral Documents and any documentation necessary to
perfect the liens thereby created (including, without limitation, all
certificates of capital stock of the Company and the Pledging
Guarantors which are corporations together with executed blank stock
powers therefor, and with all financing statements requested by the
Administrative Agent in connection with the Collateral Documents) to
the extent required by Section 5.1 hereof;
(v) evidence of the maintenance of insurance as required hereby
or by the Collateral Documents;
(vi) a certificate from an authorized officer of the Company
stating (i) whether the pro forma consolidated balance sheet of the
Parent and its Subsidiaries delivered to the Lenders and referred to
in the last sentence of Section 6.8 hereof, is accurate in all
<PAGE>
material respects as of the date the other conditions precedent to the
initial advance under this Section 7.2 are satisfied or, if not,
setting forth the differences, and (ii) that the conditions set forth
in clause (iii) above have been satisfied;
(vii) a pay-off letter or letters from all lenders under loan
arrangements not permitted to exist after the initial Borrowing or
Letter of Credit hereunder in form and substance satisfactory to the
Administrative Agent and such other evidence that all of the Parent's
and its Subsidiaries' indebtedness thereunder has been fully paid and
that the liens securing same have been or will be released, as the
Administrative Agent may require;
(viii) with respect to the liens on real property (the "Mortgaged
Premises"), a commitment or commitments from Lawyers Title Insurance
Corporation (the "Title Company") stating that it is prepared to issue
its standard form of ALTA mortgagee's title policy or policies with
such endorsements as the Administrative Agent reasonably requests,
such policy showing title to the Mortgaged Premises in the Company or
Guarantors and insuring such Mortgages as a first lien (except as
otherwise permitted by Section 5.1 hereof), without unacceptable
encroachments or prior rights of others on the Mortgaged Premises,
subject only to current general taxes and assessments not yet
delinquent and other exceptions which are acceptable to the
Administrative Agent and with the amount of coverages under such
policies to be acceptable to the Administrative Agent;
(ix) such additional documents, opinions or undertakings as may
be required by the Title Company in order to provide the insurance to
be afforded to the Administrative Agent pursuant to this Section 7.2;
(x) a Phase I environmental assessment of the Mortgaged Premises
(other than properties of DFVC) prepared by environmental consultants
selected by the Company and acceptable to the Administrative Agent
showing no condition that is not acceptable to the Administrative
Agent; and
(xi) satisfactory appraisal reports with respect to the Mortgaged
Premises from appraisers satisfactory to the Administrative Agent
which meet or exceeds the requirements of FIRREA.
(b) The liens and security interests granted to the Administrative
Agent under the Collateral Documents shall have been perfected to the
<PAGE>
extent required by Section 5.1 hereof or such perfection shall have been
provided for in a manner satisfactory to the Administrative Agent;
(c) The Company and Dean Foods shall have received such approvals,
exemptions, consents or withholdings of objection from Governmental Bodies
as are necessary in order to lawfully consummate the Acquisition and the
Merger and same shall not have been stayed, revoked or overturned and no
petition or application shall be pending, seeking to modify, stay, revoke
or overturn the same except for such thereof as are acceptable to the
Agents;
(d) The Administrative Agent shall have received a solvency opinion as
to the Company and its Subsidiaries after giving effect to the Acquisition
and the Merger from Houlihan Lokey Howard & Zukin Financial Advisors, Inc.
satisfactory in form and substance to the Administrative Agent;
(e) The Company shall have delivered to the Administrative Agent (i) a
pro forma balance sheet of the Parent and its Subsidiaries after giving
effect to the Acquisition and the Merger; and (ii) projections for the
ensuing five years, and such pro forma consolidating balance sheet and such
projections shall be satisfactory to the Administrative Agent;
(f) No material litigation or administrative proceedings shall be
pending or threatened against the Parent or its Subsidiaries;
(g) The Agents shall have received for their own account the fees to
be received by them at such time by agreement with the Company;
(h) the Subordinated Bridge Loan shall have been funded;
(i) not less than $1,000,000 of the Existing Subordinated Notes shall
have been purchased by the Company or redeemed and the Existing
Subordinated Notes Indenture shall have been amended as provided in the
form of Third Supplemental Indenture heretofore delivered to the Agents;
and
(j) The Administrative Agent shall have received for the account of
the Lenders such other agreements, instruments, documents, certificates and
opinions as the Administrative Agent may reasonably request.
Section 7.3. Legal Matters. Legal matters incident to the execution and
delivery of the Loan Documents and the other instruments and documents
contemplated hereby and the Acquisition and the Merger shall be satisfactory to
<PAGE>
the Agents and their counsel, and the Lenders shall have received the favorable
written opinions of acceptable counsel for the Parent and each Subsidiary party
to the Loan Documents, in form and substance and with such limitations,
assumptions and qualifications as shall be satisfactory to the Administrative
Agent and its counsel, with respect to:
(a) the due organization and existence of the Parent and each such
Subsidiary and the due licensing or qualification of the Parent and each
such Subsidiary in all jurisdictions where a material part of the
Collateral is located or where the failure to be so qualified could have a
Material Adverse Effect;
(b) the power and authority of the Parent and each such Subsidiary to
enter into the Loan Documents (and of the Company to consummate the
Acquisition and the Merger) and to perform and observe all the matters and
things herein and therein provided for and the fact that the execution and
delivery of the Loan Documents and the consummation of the Acquisition and
the Merger will not, nor will the observance or performance of any of the
matters or things therein or herein provided for, contravene any provision
of law or of the charter or by-laws, operating agreement or management
agreement of the Parent or any such Subsidiary;
(c) the due authorization for and the validity and enforceability of
the Loan Documents (other than of mortgages);
(d) the fact that no governmental authorization, consent, exemption or
withholding of objection is required with respect to the lawful execution,
delivery and performance of the Loan Documents or consummation of the
Acquisition and Merger other than such thereof as have been obtained and
are in full force and effect;
(e) the fact that the Merger and Acquisition have been consummated;
(f) except to the extent set forth on Schedule 6.5, the lack, to the
knowledge of such counsel, of any legal or administrative proceedings
pending or threatened against DFVC (but without independent inquiry as to
matters affecting only DFVC), the Parent or any Subsidiary which seeks to
prevent the consummation of the Acquisition or the Merger or which, if
adversely determined, would result in a Material Adverse Effect after
giving effect to the Acquisition and Merger; and
(g) such other matters as the Administrative Agent or its counsel may
reasonably require.
<PAGE>
SECTION 8. COVENANTS.
The Parent and the Company agree that, so long as any credit is available
to or in use by the Company hereunder, except to the extent compliance in any
case or cases is waived in writing by the Required Lenders:
Section 8.1. Maintenance of Business. The Parent will, and will cause each
Subsidiary to, preserve and keep in force and effect all licenses and permits
necessary to the proper conduct of their respective businesses except where the
failure to do so could not reasonably be expected to result in a Material
Adverse Effect.
Section 8.2. Maintenance. The Parent will, and will cause each Subsidiary
to, maintain, preserve and keep their plant, properties and equipment (other
than obsolete or worn out equipment held for sale or disposition) in reasonably
good repair, working order and condition (ordinary wear and tear excepted) and
the Parent will, and will cause each Subsidiary to, from time to time make all
needful and proper repairs, renewals, replacements, additions and betterments
thereto so that at all times the efficiency thereof shall be substantially
preserved and maintained, in each case where the failure to do so is reasonably
likely to have a Material Adverse Effect.
Section 8.3. Taxes. The Parent will, and will cause each Subsidiary to,
duly pay and discharge all taxes, rates, assessments, fees and governmental
charges upon or against any of them or against their respective properties, in
each case before the same become delinquent and before penalties accrue thereon,
unless and to the extent that the same are being contested in good faith and by
appropriate proceedings, in each case where the failure to do so is reasonably
likely to have a Material Adverse Effect.
Section 8.4. Insurance. The Parent will, and will cause each Subsidiary to,
insure and keep insured, with good and responsible insurance companies, all
insurable property owned by them which is of a character usually insured by
companies similarly situated and operating like properties; and the Parent will,
and will cause each Subsidiary to, insure such other hazards and risks
(including employers', product liability and public liability risks) in good and
responsible insurance companies as and to the extent usually insured by
companies similarly situated and conducting similar businesses. The Parent will
upon request of the Administrative Agent furnish a certificate setting forth in
summary form the nature and extent of the insurance maintained pursuant to this
Section.
Section 8.5. Financial Reports. The Parent will, and will cause each
Subsidiary to, maintain a standard and modern system of accounting in accordance
with sound accounting practice and will furnish to the Lenders and their duly
authorized representatives such information respecting the business and
<PAGE>
financial condition of the Parent and its Subsidiaries as any Lender (acting
through the Administrative Agent) may reasonably request; and without any
request, will furnish to the Lenders:
(a) within 45 days after the close of each quarterly fiscal period of
the Parent and the Company, a copy of the balance sheets, statements of
operations and statements of cash flow of the Parent and its Subsidiaries
and of the Company and its Subsidiaries for such period, prepared on a
consolidated basis in accordance with GAAP, and the notes thereto, all
certified (subject to year end audit adjustments which are not expected to
be material) by the chief financial officers of the Company and the Parent;
(b) within 90 days after the close of each fiscal year of the Company
and the Parent, a copy of the audit report for such year and accompanying
financial statements, including balance sheets, statements of operations
and statements of cash flow on a consolidated basis for the Parent and its
Subsidiaries and the Company and its Subsidiaries in accordance with GAAP,
and the notes thereto, certified without qualification by independent
public accountants of recognized standing selected by the Parent and the
Company and satisfactory to the Required Lenders (the "Auditors");
(c) within the periods provided in paragraphs (a) and (b) above, a
certificate of an authorized financial officer of the Company stating that
such officer has reviewed the provisions of this Agreement and setting
forth: (aa) the information and computations (in sufficient detail)
required in order to compute the Leverage Ratio and (in the case of the
year end statements only) Excess Cash Flow and to establish whether the
Company was in compliance with the requirements of Sections 8.8, 8.9, 8.10,
8.11, 8.12, 8.13, 8.14, 8.15, 8.17 8.18 and 8.20 hereof at the end of the
period covered by the financial statements then being furnished, and (ab)
to the best of such officer's knowledge, whether there exists on the date
of the certificate or existed at any time during the period covered by such
financial statement any Default or Event of Default and, if any such
condition or event exists on the date of the certificate or existed during
such period, specifying the nature and period of existence thereof and the
action the Company is taking, has taken or proposes to take with respect
thereto; and
(d) within the period provided in paragraph (b) above, a business plan
for the Parent and its Subsidiaries for the ensuing fiscal year and
projections for the Parent and its Subsidiaries for the ensuing five fiscal
years, all in detail reasonably acceptable to the Administrative Agent.
The Parent will, and will cause each Subsidiary to, permit
representatives of any Lenders, upon reasonable notice and during normal
business hours, to examine and make extracts from the books and records of the
<PAGE>
Parent and its Subsidiaries and to examine their assets and access thereto shall
be permitted for such purpose.
Section 8.6. Compliance with Laws. The Parent will, and will cause each
Subsidiary to, comply with all Governmental Requirements to which they are
subject, including, without limitation, the Occupational Safety and Health Act
of 1970, as amended, ERISA, and all laws, ordinances, governmental rules and
regulations relating to environmental protection in all applicable
jurisdictions, the violation of which is reasonably likely to have a Material
Adverse Effect or would result in any lien or charge upon any property of the
Parent or any Subsidiary which is not a Permitted Lien.
Section 8.7. Nature of Business. The Parent will not, nor will it permit
any Subsidiary to, engage in any business or activity if, as a result, the
general nature of the business which would then be engaged in by the Parent and
its Subsidiaries taken as a whole would be substantially changed from the
business in which they are engaged after giving effect to the Acquisition.
Section 8.8. Liens. The Parent will not, nor will it permit any Subsidiary
to, pledge, mortgage or otherwise encumber or subject to, or permit to exist
upon or be subjected to, any lien, security interest or charge upon, any assets
of the Parent or any Subsidiary; provided, however, that nothing in this Section
contained shall operate to prevent any of the following (collectively,
"Permitted Liens"):
(a) liens, pledges or deposits in connection with workmen's
compensation, unemployment insurance, social security obligations, taxes,
assessments, statutory obligations or other similar charges, good faith
deposits in connection with tenders, contracts or leases to which the
Parent or any of its Subsidiaries is a party or other deposits required to
be made in the ordinary course of business and not in connection with
borrowing money or obtaining advances or credit; provided in each case that
the obligation or liability arises in the ordinary course of business and
is not overdue, or if overdue, is being contested in good faith by
appropriate proceedings which prevent enforcement of the matter under
contest and adequate reserves have been established therefor to the extent
required by GAAP;
(b) inchoate statutory, construction, common carrier's, materialmen's,
landlord's, warehousemen's, mechanics, producers' or operator's liens
securing obligations not overdue, or if overdue, being contested in good
faith by appropriate proceedings which prevent enforcement of the matter
under contest and adequate reserves have been established therefor to the
extent required by GAAP;
<PAGE>
(c) the liens created by the Loan Documents;
(d) attachment or judgment liens to the extent, but only to the
extent, the attachment or judgment in question is not an Event of Default
under Section 9.1(f);
(e) liens for taxes, assessments or other governmental charges not yet
due and payable or which are being diligently contested in good faith by
the Parent or its applicable Subsidiary by appropriate proceedings,
provided that in any such case an adequate reserve is being maintained by
the Parent or such Subsidiary for the payment of same;
(f) easements, licenses, permits, rights-of-way, rights of entry or
passage, rights of lessees, restrictions and other similar encumbrances
incurred in the ordinary course of business which do not secure debt for
money borrowed or its equivalent, and which do not materially detract from
the value of the Property subject thereto or materially interfere with the
ordinary conduct of the business of the Parent or any Subsidiary or use of
the assets in question for their intended purposes;
(g) liens described on Exhibit J attached hereto, encumbering the
assets noted thereon opposite the description of the indebtedness or
obligation secured thereby and extensions and renewals of the foregoing
Permitted Liens, provided that the aggregate amount of such liabilities
secured by such extended or renewed lien is not increased and such extended
or renewed liabilities secured by such lien are on terms and conditions no
more restrictive than the terms and conditions of the same being extended
or renewed;
(h) liens securing indebtedness which is paid in full at the time of
the initial Borrowing and which are promptly discharged; and
(i) liens not otherwise permitted hereby securing obligations
permitted by Section 8.9(g) hereof and not aggregating in excess of
$20,000,000 ($10,000,000 while the Subordinated Bridge Loan is outstanding)
at any one time outstanding.
Section 8.9. Indebtedness. The Parent will not, nor will it permit any
Subsidiary to, issue, incur, assume, create, or have outstanding any
Indebtedness; provided, however, that the foregoing provisions shall not
restrict nor operate to prevent:
(a) Indebtedness owing to the Administrative Agent, the Issuing Bank
and the Lenders under this Agreement or any of the other Loan Documents;
(b) Indebtedness described on Exhibit I attached hereto;
<PAGE>
(c) Subordinated Debt;
(d) Existing Subordinated Notes (and guarantees thereof by the
Guarantors) in an aggregate principal amount not in excess of $1,000,000;
(e) Indebtedness of the Parent and the Company to each other and to
the Guarantors and Indebtedness of the Guarantors to the Parent, the
Company and each other, provided that the Indebtedness of the Parent to the
Company shall not exceed $40,000,000 at any one time outstanding;
(f) Indebtedness which is paid in full concurrently with the initial
Borrowing; and
(g) Indebtedness in addition to that otherwise permitted by this
Section 8.9 aggregating not more than $25,000,000 ($10,000,000 while the
Subordinated Bridge Loan is outstanding) at any time outstanding.
Section 8.10. Consolidated Net Worth. The Parent will at all times maintain
Consolidated Net Worth of not less than the Minimum Required Amount. The Minimum
Required Amount shall be $150,000,000 provided that (i) on the last day of each
fiscal year of the Parent (commencing with the 1999 fiscal year) the Minimum
Required Amount as then in effect shall be increased by 50% of positive
Consolidated Net Income for such fiscal year and (ii) the Minimum Required
Amount shall be increased effective upon, and by, 90% of the amount of any
increase in Consolidated Net Worth resulting from the issuance and/or sale of
equity securities or interests by the Parent or any Subsidiary (other than
issuances by the Parent of common equity to producers of agricultural
commodities purchased by it which issuances are in accordance with its past
practices).
Section 8.11. Leverage Ratio. The Parent will as of the last day of each
fiscal quarter (commencing with the second fiscal quarter of fiscal 1999), have
a Leverage Ratio of not more than that specified for such fiscal quarter below:
MAXIMUM LEVERAGE RATIO
FOR FISCAL QUARTERS : SHALL BE
Second Fiscal Quarter of Fiscal 1999 6.00 to 1
Third Fiscal Quarter of Fiscal 1999 5.75 to 1
Fourth Fiscal Quarter of Fiscal 1999 5.5 to 1
All Fiscal Quarters of Fiscal 2000 5.0 to 1
All Fiscal Quarters of Fiscal 2001 4.5 to 1
All Fiscal Quarters of Fiscal 2002 4.0 to 1
All Fiscal Quarters Thereafter 3.5 to 1
<PAGE>
The foregoing to the contrary notwithstanding, if the Parent has a Leverage
Ratio of 3.0 to 1 or less computed as of the last day of two consecutive fiscal
quarters ending subsequent to the close of its 1999 fiscal year, then the Parent
shall have a Leverage Ratio as of the last day of each fiscal quarter ending
thereafter of not less than 3.5 to 1.
Section 8.12. Fixed Charge Coverage Ratio. The Parent will as of the last
day of each fiscal quarter (commencing with the second fiscal quarter of fiscal
1999) have a Fixed Charge Coverage Ratio of not less than that specified for
such fiscal quarter below:
<TABLE>
<S> <C>
As of the last day of the Fixed Charge Coverage Ratio
following fiscal quarters shall not be less than
Second through Fourth of fiscal 1999 1.05 to 1
First through Fourth of fiscal 2000 and First of fiscal 2001 1.15 to 1
Second through Fourth of fiscal 2001 and First of fiscal 2002 1.20 to 1
all fiscal quarters thereafter 1.25 to 1
</TABLE>
Section 8.13. EBITDA. The Parent will as of the last day of each
fiscal quarter have EBITDA for the period of four fiscal quarters then ended of
not less than that specified for such fiscal quarter below (with EBITDA for
periods prior to the Acquisition Closing Date computed as though DFVC were at
all times a Subsidiary of the Company and as though the Company had not owned
its asceptic business):
For fiscal quarters: EBITDA shall not be less than
First and second of fiscal 1999 $115,000,000
Third of fiscal 1999 $120,000,000
Fourth of fiscal 1999 $125,000,000
First and second of fiscal 2000 $130,000,000
Third and fourth of fiscal 2000 $135,000,000
First and second of fiscal 2001 $140,000,000
all fiscal quarters ended after the second fiscal $145,000,000
quarter of fiscal 2001
<PAGE>
Section 8.14. Interest Coverage Ratio. The Parent will as of the last day
of each fiscal quarter (commencing with the second fiscal quarter of fiscal
1999) have an Interest Coverage Ratio of not less than that specified for such
quarter below:
Interest Coverage Ratio
For fiscal quarters: shall not be less than
Second through fourth of fiscal 1999 and First of 1.90 to 1
fiscal 2000
Second of fiscal 2000 2.05 to 1
Third and fourth of fiscal 2000 and first of fiscal 2.20 to 1
2001
Second and Third of fiscal 2001 2.30 to 1
Fourth of fiscal 2001 2.40 to 1
First and Second of fiscal 2002 2.50 to 1
Third of fiscal 2002 2.60 to 1
Fourth of fiscal 2002 and First of fiscal 2003 2.70 to 1
Second and Third of fiscal 2003 2.80 to 1
all fiscal quarters thereafter 3.00 to 1
Section 8.15. Net Capital Expenditures. The Parent shall not and shall not
permit its Subsidiaries to expend for Net Capital Expenditures in any fiscal
year in excess of (a) $25,000,000 plus (b) (in the case of fiscal 1999 and all
subsequent fiscal years) the lesser of $10,000,000 or the amount by which Net
Capital Expenditures for the immediately preceding year were less than
$25,000,000.
Section 8.16. Rentals. The Parent will not, and will not permit any
Subsidiary to, enter into any lease or other agreement for the use or possession
of Property if after giving effect thereto the aggregate liability of the Parent
and its Subsidiaries for Rentals (other than Capitalized Rentals) in any fiscal
year would exceed $25,000,000.
Section 8.17. Acquisitions, Investments, Loans and Advances and Guarantees.
The Parent will not, nor will it permit any Subsidiary to, directly or
indirectly, make, retain or have outstanding any interest or investments
<PAGE>
(whether through purchase of stock or obligations or otherwise) in, or loans or
advances to, any other Person, or acquire all or any substantial part of the
assets or business of any other Person; provided, however, that the foregoing
provisions shall not apply to nor operate to prevent:
(a) investments by the Parent or any Subsidiary in direct obligations
of the United States of America or of any agency or instrumentality thereof
whose obligations constitute full faith and credit obligations of the
United States of America, provided that any such obligations shall mature
within twelve months from the date the same are acquired by the Parent or
such Subsidiary;
(b) investments by the Parent or any Subsidiary in certificates of
deposit or time deposits issued by any Lender, or by any United States
commercial bank having capital and surplus of not less than $100,000,000
and having a maturity of twelve months or less;
(c) investments by the Parent or any Subsidiary in commercial paper
maturing 270 days or less from the date of issuance which at the time of
acquisition is rated A-1 or better by Standard & Poor's Ratings Services
Group, a division of the McGraw-Hill Companies and P-1 or better by Moody's
Investors Service, Inc.;
(d) investments by the Parent or any Subsidiary in debt securities
issued by U.S. corporations or states of the United States maturing within
twelve months from the date of acquisition thereof if at the time of
acquisition the investment in question has a rating of not less than AA
from Standard & Poor's Ratings Services Group, a division of The
McGraw-Hill Companies, Inc. and/or Aa2 from Moody's Investors Services,
Inc.;
(e) investments by the Parent or any Subsidiary in preferred stock of
any corporation organized under the laws of any state of the United States
which is subject to a remarketing undertaking at intervals not exceeding
twelve months issued by any substantial broker and which is rated AA or
better by Standard & Poor's Ratings Services Group, a division of The
McGraw-Hill Companies, Inc. and/or Aa2 or better by Moody's Investors
Services, Inc.;
(f) the Acquisition;
(g) other acquisitions by the Parent or any Subsidiary of the capital
stock of or assets or business of any Person, including acquisitions
accomplished by a merger of the Parent or any Subsidiary with any other
Person which is permitted by Section 8.19 hereof, provided that (i)
immediately after giving effect thereto no Default or Event of Default has
<PAGE>
occurred and is continuing, (ii) immediately after giving effect thereto
the aggregate amount expended by the Parent and its Subsidiaries on account
of all such acquisitions (including in such amounts expended, the amount of
all indebtedness assumed by the Parent and its Subsidiaries in connection
therewith, all indebtedness secured by liens on the assets acquired and all
indebtedness of the Person in question, (in the event the acquisition is of
an equity interest in such Person)) during the period from the date hereof
to and including the last day of fiscal 1999 shall not exceed $10,000,000
and during each period of twelve consecutive months concluding thereafter
shall not exceed the greater (aa) $10,000,000 or, (ab) if but only if the
acquisition occurs subsequent to the first date after the date hereof when
the Leverage Ratio computed as of the last day of each of the four fiscal
quarters of the Parent most recently concluded prior to the consummation of
the Acquisition in question has been equal to or less than 3.5 to 1, (but
in the case of the last of such fiscal quarters, substituting Consolidated
Total Indebtedness as it exists on the date of and after giving effect to
the consummation of the acquisition in question for Consolidated Total
Indebtedness as it existed an the last day of such fiscal quarter)
$25,000,000, and (iii) the acquisition in question shall have been approved
by the board of directors or similar governing body of the Person being, or
whose assets are being, acquired;
(h) loans and advances by the Parent or any Subsidiary to the Parent,
the Company, and/or any Guarantor provided that the corresponding
Indebtedness is permitted by Section 8.9 hereof;
(i) existing investments, loans and advances identified on Exhibit K
hereto; and
(j) investments in, and loans and advances to Persons not
otherwise permitted by this Section at no time aggregating more than
$10,000,000.
In determining the amount of investments, loans and advances permitted under
this Section, investments shall always be taken at the original cost thereof,
regardless of any subsequent appreciation (including retained earnings) or
depreciation therein, loans and advances shall be taken at the principal amount
thereof.
Section 8.18. Restricted Payments. The Parent shall not during any fiscal
year (a) declare or pay any distributions in respect of any equity interest in
the Parent or (b) directly or indirectly purchase, redeem or otherwise acquire
or retire any equity interest in the Parent (collectively, "Restricted
Payments"); provided, however, that the Parent may, provided in each instance
that after giving effect thereto no Default or Event of Default has occurred and
is continuing (i) pay dividends on its non cumulative preferred stock at the
annual rate of $1.50 per share (ii) pay dividends on its Class A cumulative
<PAGE>
preferred stock of the annual rate of up to $2.00 per share (iii) pay dividends
on its Class B cumulative preferred stock at the annual rate of $1.00 per share
(iv) pay dividends on its common stock at a rate not in excess of 8% per annum
(v) make distributions to its members of up to 30% of each fiscal year's
"Earnings on Pro-Fac Products" as such term is defined in the Marketing
Agreement as in effect on the date hereof and computed consistent with past
practice and (vi) expend up to $2,000,000 in any fiscal year to repurchase,
redeem or otherwise acquire or retire its common and/or preferred stock or to
pay nonqualified retains.
Section 8.19. Mergers. The Parent will not, nor will it permit any
Subsidiary to, consolidate or be a party to a merger with any other Person,
except that so long as no Default or Event of Default has occurred and is
continuing or would arise as a result thereof (i) any Subsidiary of the Parent
may merge with and into the Parent or the Company if the Parent or the Company
is the surviving corporation, (ii) any Subsidiary may merge with and into any
other Subsidiary if and so long as if either of such Subsidiaries is a
Guarantor, the Guarantor is the survivor thereof, (iii) the Merger may be
consummated and (iv) the Parent or any Subsidiary may merge with any other
Person if the Parent or the relevant Subsidiary is the survivor and the merger
is permitted by and treated as an acquisition for purposes of Section 8.17(g)
hereof.
Section 8.20. Sales of Assets. The Parent will not, nor will it permit any
Subsidiary to, sell, lease or otherwise dispose of any of its Property
(including any disposition of Property as part of a sale and leaseback
transaction); provided, that nothing contained therein shall prohibit (i) sales
of inventory in the ordinary course of business; (ii) sales or dispositions of
obsolete or worn out Property disposed of in the ordinary course of business;
(iii) sales as part of sale and leaseback transactions provided that the fair
value of all Property subject to such transactions consummated in any fiscal
year of the Parent shall not exceed $10,000,000; (iv) transfers of assets of
Subsidiaries to the Company in connection with the liquidation and/or
dissolution of such Subsidiaries; (v) transfers of patents, trademarks,
copyrights and other intellectual property from the Company to Linden Oaks
Corporation provided that (aa) such steps are taken as the Administrative Agent
may reasonably require in order to assure that its liens thereon are not
impaired by such transfers and (ab) from and after the first such transfer and
continuously thereafter Linden Oaks Corporation remains a wholly owned
subsidiary of the Company and a Pledging Guarantor hereunder and (vi) sales,
leases and other dispositions of Property not otherwise permitted by this
Section 8.20 aggregating in any fiscal year not more than five percent of the
consolidated tangible assets of the Parent and its Subsidiaries as of the first
day of such fiscal year. Anything contained in this Agreement to the contrary
notwithstanding, the Parent will not nor will it permit the Company to, without
the consent of the Required Lenders, sell (or in the case of the Company, issue)
capital stock of the Company (other than to the Parent). At the request of the
Company, so long as no Default or Event of Default then exists or would arise as
<PAGE>
a result of such disposition, the Administrative Agent is hereby authorized to
release its lien on any Property sold pursuant to the foregoing provisions.
Section 8.21. Burdensome Contracts with Affiliates. The Parent will not,
nor will it permit any Subsidiary to, enter into or be a party to any contract
or agreement with an Affiliate on terms and conditions materially less favorable
to the Parent or such Subsidiary than would be usual and customary in similar
contracts or agreements between Persons not affiliated with each other.
Section 8.22. No Change in Fiscal Year. The Parent will not, nor will it
permit any Subsidiary to, have a fiscal year other than the present fiscal year
of the Parent (i.e., fiscal years ending on the last Saturday of June and fiscal
quarters of thirteen calendar weeks, provided that the Required Lenders shall
not unreasonably withhold their consent to such a change if in connection
therewith the provisions of this Agreement measuring covenant compliance or
payments with reference to fiscal periods are renegotiated in a manner
reasonably acceptable to them.
Section 8.23. Formation of Subsidiaries. In the event any Subsidiary is
formed or acquired after the date hereof which meets the definition of the term
"Guarantor" herein or any Subsidiary which did not formerly meet the criteria
for treatment as a Guarantor meets such requirements, the Parent shall within
thirty (30) Business Days thereof cause such Subsidiary to execute an Additional
Guarantor Supplement in the form annexed hereto as Exhibit G with such
modifications as may be approved by the Administrative Agent (an "Additional
Guarantor Supplement") and cause such Guarantor to execute and deliver to the
Administrative Agent Additional Guarantor Documentation with respect to it and,
if such Guarantor is a Pledging Guarantor, cause such Pledging Guarantor to take
such actions as the Administrative Agent may require to subject those of its
assets included within the term "Collateral" to liens in favor of the
Administrative Agent of the priority required by this Agreement.
Section 8.24. No Restriction on Subsidiary Dividends. Neither the Parent
nor any Subsidiary is a party to, nor will the Parent or any Subsidiary become a
party to, any agreement prohibiting or otherwise restricting the declaration or
payment of any dividends or equity distributions by any such Subsidiary provided
that the foregoing restrictions shall not apply to debt agreements in effect on
the date hereof which are terminated concurrently with the first extension of
credit hereunder.
Section 8.25. Interest Rate Protection. Within 90 days of the date hereof
the Company shall enter into and continuously maintain an interest rate hedging
program with parties and on terms reasonably acceptable to the Agents pursuant
to which the Company will be protected against increases in the LIBOR Rate above
a rate acceptable to the Administrative Agent for a period of four years and for
<PAGE>
an amount approximating 50% of the amount of the Term Loans scheduled to be
outstanding during such four year period (the "Hedging Program").
Section 8.26. Concerning the Subordinated Debt. The Parent and the Company
will not make (or give any notice for) any voluntary or optional payment or
prepayment on or redemption or acquisition for value of any Subordinated Debt or
make any payment of principal or interest thereon in violation of the
subordination provisions thereof or amend or modify in any material respect any
term, covenant or provision of any Subordinated Debt or set off any amounts
against any Subordinated Debt provided, however that the foregoing shall not
apply to or restrict the payment or retirement of Subordinated Debt out of the
net proceeds received from any concurrent issuance of additional Subordinated
Debt or the payment or retirement of the Subordinated Bridge Loan.
Section 8.27. Concerning the Marketing Agreement. The Parent and the
Company will comply in all material respects with their respective obligations
under the Marketing Agreement and will not amend or modify same in any material
respect or terminate the same.
Section 8.28. Year 2000 Assessment. The Parent shall take all actions
necessary and commit adequate resources to assure that its computer-based and
other systems (and those of all Subsidiaries) are able to effectively process
dates, including dates before, on and after January 1, 2000, without
experiencing any Year 2000 Problem that could cause a material adverse effect on
the business or financial affairs of the Parent and its Subsidiaries taken on a
consolidated basis. At the request of the Administrative Agent, the Parent and
the Company will provide the Administrative Agent with written assurances and
substantiations (including, but not limited to, the results of internal or
external audit reports prepared in the ordinary course of business) reasonably
acceptable to the Administrative Agent as to the capability of the Parent and
its Subsidiaries to conduct its and their businesses and operations before, on
and after January 1, 2000, without experiencing a Year 2000 Problem causing a
Material Adverse Effect.
Section 8.29. Preservation of Cooperative Status. The Parent will preserve,
renew and keep in full force and effect its corporate existence and status as a
cooperative association as defined in Section 1141j(a) of Title 12 of the United
States Code.
SECTION 9. EVENTS OF DEFAULT AND REMEDIES.
Section 9.1. Events of Default Any one or more of the following shall
constitute an "Event of Default" hereunder:
(a) default in the payment of any amount of the principal of any Note
or any amount due under an Application when due, whether at the stated
maturity thereof or at any other time provided for in this Agreement, or
<PAGE>
default in the payment when due of any interest, fee, charge or other
amount payable by the Company hereunder or under any other Loan Document
and the continuance of such default for three Business Days after notice
thereof to the Company from the Administrative Agent or any Lender;
(b) default in the observance or performance of any covenant set forth
in Sections 8.5, 8.9, 8.10, 8.11, 8.12, 8.13, 8.14, 8.15, 8.16, 8.17(g),
8.18, 8.19, 8.23, 8.24, 8.25, 8.26 or 8.27 hereof or of any Collateral
Document dealing with the use, disposition or remittance of the proceeds of
Collateral or the maintenance of insurance thereon;
(c) default in the observance or performance of any other provision
hereof or any of the other Loan Documents which is not remedied within 30
days after written notice thereof to the Company by any Lender or by the
holder of any Note;
(d) default shall occur in the payment when due (whether by lapse of
time, acceleration or otherwise) of any indebtedness (including as such all
obligations included in Consolidated Total Indebtedness) aggregating in
excess of $5,000,000 issued, assumed or guaranteed by the Parent or any
Subsidiary or any other event of default shall occur with respect to any
such indebtedness beyond any period of grace provided therefor (provided
that if the default in question can result in the acceleration of the
maturity of Subordinated Debt, then it shall in any event constitute an
Event of Default hereunder two Business Days prior to the date on which the
Subordinated Debt in question will become due by acceleration);
(e) any representation or warranty made herein or in any of the other
Loan Documents or in any statement or certificate furnished pursuant hereto
or thereto, or in connection with any advance or issuance made hereunder or
by any Person in connection with the transactions contemplated hereby,
proves untrue in any material respect as of the date of the issuance or
making thereof;
(f) any judgment or judgments, writ or writs or warrant or warrants of
attachment, or any similar process or processes in an aggregate amount in
excess of $5,000,000 shall be entered or filed against the Parent or any
Subsidiary or against any of the property or assets of any of them and
remains undischarged, unvacated, unbonded or unstayed for a period of 30
days;
(g) any event occurs or condition exists which is specified as an
event of default under any of the other Loan Documents after the expiration
of any applicable notice or grace periods;
<PAGE>
(h) any of the Loan Documents or the Marketing Agreement shall for any
reason not be or shall cease to be in full force and effect, or any of the
Loan Documents or the Marketing Agreement is declared to be null and void
as to any party, or the Parent or any Subsidiary takes any action for the
purpose of repudiating or rescinding any Loan Document executed by it or
the Marketing Agreement;
(i) a Change of Control occurs;
(j) the Parent or any Subsidiary becomes insolvent or bankrupt or
bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings or other proceedings for relief under any bankruptcy law or
laws for the relief of debtors are instituted against the Parent or any
Subsidiary and are not dismissed within 60 days after such institution or a
decree or order of a court having jurisdiction in the premises for the
appointment of a trustee or receiver or custodian for the Parent or any
Subsidiary or for the major part of any of their property is entered and
the trustee or receiver or custodian appointed pursuant to such decree or
order is not discharged within 60 days after such appointment; or
(k) the Parent or any Subsidiary shall institute bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or other
proceedings for relief under any bankruptcy law or laws for the relief of
debtors or shall consent to the institution of such proceedings against it
by others or to the entry of any decree or order adjudging it bankrupt or
insolvent or approving as filed any petition seeking reorganization under
any bankruptcy or similar law or shall apply for or shall consent to the
appointment of a receiver or trustee or custodian for it or for the major
part of any of their property or shall make an assignment for the benefit
of creditors or shall admit in writing its inability to pay its debts as
they mature or shall take any corporate action in contemplation or in
furtherance of any of the foregoing purposes.
Section 9.2. Non Bankruptcy Defaults. When any Event of Default described
in subsections 9.1(a) to 9.1(i), both inclusive, has occurred and is continuing,
the Administrative Agent may (and shall, upon request of the Required Lenders
or, in the case of clause (a) below, the Required Revolving Credit Lenders), by
notice to the Company, take any or all of the following actions:
(a) terminate the obligation of the Lenders to extend any further
credit hereunder on the date (which may be the date thereof) stated in such
notice (such termination shall be effective upon verbal notification, the
Administrative Agent hereby agreeing to provide written notification
thereof to the Company as soon as practical thereafter);
<PAGE>
(b) declare the principal of and the accrued interest on the Notes to
be forthwith due and payable and thereupon the Notes, including both
principal and interest, and all fees, charges and commissions payable
hereunder, shall be and become immediately due and payable without further
demand, presentment, protest or notice of any kind;
(c) demand that the Company immediately provide to the Administrative
Agent cash collateral for the full amount of each Letter of Credit and the
Company agrees to immediately provide such cash collateral and acknowledges
and agrees that the Revolving Credit Lenders would not have an adequate
remedy at law for failure by the Company to honor any such demand and that
the Lenders shall have the right to require the Company to specifically
perform such undertaking whether or not any draws have been made under the
Letters of Credit; and
(d) enforce any and all rights and remedies available under the Loan
Documents or applicable law.
Section 9.3. Bankruptcy Defaults. When any Event of Default described in
subsections 9.1(j) or (k) has occurred and is continuing, then (a) the then
unpaid balance of the Notes, including both principal and interest, and all
fees, charges and commissions payable hereunder or under the Applications, shall
immediately become due and payable without presentment, demand, protest or
notice of any kind, (b) the obligation of the Lenders to extend further credit
pursuant to any of the terms hereof shall immediately and automatically
terminate, (c) the Company shall immediately provide to the Administrative Agent
cash collateral for the full amount of all Letters of Credit, whether or not
draws have been made thereon, the Company acknowledging that the Revolving
Credit Lenders would not have an adequate remedy at law for failure by the
Company to honor any such demand, and the Revolving Credit Lenders shall have
the right to require the Company to specifically perform such undertaking
whether or not any draws have been made under the Letters of Credit, and (d) the
Administrative Agent may exercise all remedies available to it under the Loan
Documents or applicable law.
SECTION 10. THE AGENT AND ISSUING BANK.
Section 10.1. Appointment and Authorization. Each Lender hereby appoints
and authorizes the Administrative Agent to take such action as agent on its
behalf and to exercise such powers hereunder and under the Loan Documents as are
delegated to the Administrative Agent by the terms hereof and thereof together
with such powers as are reasonably incidental thereto. The Administrative Agent
may delegate or perform any of its responsibilities hereunder to or through its
affiliates. The Administrative Agent or Issuing Bank may resign at any time by
sending twenty (20) days prior written notice to the Company and the Lenders and
may be removed by the Required Lenders upon twenty (20) days prior written
<PAGE>
notice to the Company and the Lenders. In the event of any such resignation or
removal the Required Lenders may appoint a new Administrative Agent or Issuing
Bank as applicable, which shall succeed to all the rights, powers and duties of
the Administrative Agent or Issuing Bank hereunder and under the other Loan
Documents. If the Administrative Agent resigns or is removed, it shall also
cease to be the Swing Lender hereunder and its replacement as Administrative
Agent shall become the Swing Lender. Any resigning or removed Administrative
Agent or Issuing Bank or Swing Lender shall be entitled to the benefit of all
the protective provisions hereof with respect to its acts as an agent, issuer or
swing lender hereunder, but no successor shall in any event be liable or
responsible for any actions of its predecessor. If the Administrative Agent
resigns or is removed and no successor is appointed, the rights and obligations
of the Administrative Agent shall be automatically assumed by the Required
Lenders and (i) the Company shall be directed to make all payments due each
Lender hereunder directly to each Lender and (ii) the Administrative Agent's
rights in the Loan Documents shall be assigned without representation, recourse
or warranty to the Lenders as their interests may appear. The parties
acknowledge that the Syndication Agent has no continuing responsibilities under
the Loan Documents other than as a Lender.
Section 10.2. Rights as a Lender. The Agents and the Issuing Bank each have
and reserve all of the rights, powers and duties hereunder and under the other
Loan Documents as any Lender may have and may exercise the same as though they
were not an Agent or the Bank and the terms "Lender" or "Lenders" as used herein
and in all of such documents shall, unless the context otherwise expressly
indicates, include the Agents and Issuing Bank in their individual capacities as
Lenders. The Agents and Issuing Bank reserve the right to extend other credit to
or engage in other business transactions with the Parent, the Subsidiaries and
their Affiliates.
Section 10.3. Standard of Care. The Lenders acknowledge that they have
received and approved copies of the Loan Documents, the Stock Purchase
Agreement, the Asset Transfer Agreement, the Marketing Agreement and such other
information and documents concerning the transactions contemplated and financed
hereby as they have requested to receive and/or review. The Agents make no
representations or warranties of any kind or character to the Lenders with
respect to the validity, enforceability, genuineness, perfection, value, worth
or collectibility hereof or of the other Loan Documents or of the liens provided
for thereby or of any other documents called for hereby or thereby or of the
Collateral. The Agents need not verify the worth or existence of the Collateral.
The Lenders agree that neither the Agents nor the Issuing Bank nor any director,
officer, employee, agent or representative thereof (including any security
trustee therefor) shall in any event be liable for any clerical errors or errors
in judgment, inadvertence or oversight, or for action taken or omitted to be
taken by it or them hereunder or under the Loan Documents or in connection
herewith or therewith except for its or their own gross negligence or willful
misconduct. The Administrative Agent shall incur no liability under or in
<PAGE>
respect of this Agreement or the other Loan Documents by acting upon any notice,
certificate, warranty, instruction or statement (oral or written) of anyone
(including anyone in good faith believed by it to be authorized to act on behalf
of the Company or any other Person), unless it has actual knowledge of the
untruthfulness of same. The Administrative Agent shall be entitled to assume
that no Default or Event of Default exists unless notified to the contrary by a
Lender. The Lenders acknowledge that the Administrative Agent may limit its
right of recovery against particular items of Collateral in order to minimize
recording, mortgage, intangibles, documentary and similar taxes and that it
shall incur no liability to the Lenders in doing so. The Administrative Agent
shall in all events be fully protected in acting or failing to act in accord
with the instructions of the Required Lenders. Upon the occurrence of an Event
of Default hereunder, the Administrative Agent shall take such action with
respect to the enforcement of its liens on the Collateral and the preservation
and protection thereof as it shall be directed to take by the Required Lenders
(and shall consult with the Lenders as to actions to be taken) but unless and
until the Required Lenders have given such direction the Administrative Agent
shall take or refrain from taking such actions as it deems appropriate and in
the best interest of all Lenders. The Administrative Agent shall in all cases be
fully justified in failing or refusing to act hereunder unless it shall be
indemnified to its reasonable satisfaction by the Lenders against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Administrative Agent may treat the owner
of any Note as the holder thereof until written notice of transfer shall have
been filed with it as provided in Section 12.12 hereof signed by such owner in
form satisfactory to the Administrative Agent. Each Lender acknowledges that it
has independently and without reliance on the Agents or any other Lender and
based upon such information, investigations and inquiries as it deems
appropriate made its own credit analysis and decision to extend credit to the
Company. It shall be the responsibility of each Lender to keep itself informed
as to the creditworthiness of the Company, the Parent and each Subsidiary and
the Agents shall have no liability to any Lender with respect thereto.
Section 10.4. Costs and Expenses. Each Lender agrees to reimburse the
Administrative Agent and the Issuing Bank for all reasonable out of pocket costs
and expenses suffered or incurred by the Administrative Agent or the Issuing
Bank or any security trustee in performing its duties hereunder and under the
other Loan Documents or in the exercise of any right or power imposed or
conferred upon the Administrative Agent or the Issuing Bank hereby or thereby,
to the extent that the Administrative Agent or the Issuing Bank is not promptly
reimbursed for same by the Company or out of the Collateral, all such costs and
expenses to be borne by the Lenders ratably in accordance with the amounts of
their respective Aggregate Percentages.
Section 10.5. Indemnity. The Lenders shall ratably (in accord with
their Aggregate Percentages) indemnify and hold the Agents and Issuing Bank, and
each of their directors, officers, employees, agents or representatives
(including as such any security trustee therefor) harmless from and against any
<PAGE>
liabilities, losses, costs or expenses suffered or incurred by them in their
capacities as such under this Agreement or any of the other Loan Documents or in
connection with the transactions contemplated hereby or thereby, regardless of
when asserted or arising, except to the extent they are promptly reimbursed for
the same by the Company or out of the Collateral and except to the extent that
any event giving rise to a claim was caused by the gross negligence or willful
misconduct of the party seeking to be indemnified.
SECTION 11. THE GUARANTEES.
Section 11.1. The Guarantees. To induce the Lenders to provide the credits
described herein and in consideration of benefits expected to accrue to each
Guarantor by reason of the Commitments and for other good and valuable
consideration, receipt of which is hereby acknowledged, each Guarantor hereby
unconditionally and irrevocably guarantees jointly and severally to the Agents,
the Issuing Bank, the Lenders and each other holder of any of the Company's
obligations under the Loan Documents, the due and punctual payment of all
present and future indebtedness, obligations and liabilities of the Company
evidenced by or arising out of the Loan Documents, including, but not limited
to, the due and punctual payment of principal of and interest on the Notes and
amounts due on the Applications and in respect of the Hedging Liability and the
due and punctual payment of all other obligations now or hereafter owed by the
Company under the Loan Documents as and when the same shall become due and
payable, whether at stated maturity, by acceleration or otherwise, according to
the terms hereof and thereof. In case of failure by the Company punctually to
pay any indebtedness guaranteed hereby, each Guarantor hereby unconditionally
agrees jointly and severally to make such payment or to cause such payment to be
made punctually as and when the same shall become due and payable, whether at
stated maturity, by acceleration or otherwise, and as if such payment were made
by the Company.
Section 11.2. Guarantee Unconditional. The obligations of each Guarantor as
a guarantor under this Section 11 shall be unconditional and absolute and,
without limiting the generality of the foregoing, shall not be released,
discharged or otherwise affected by:
(a) any extension, renewal, settlement, compromise, waiver or release
in respect of any obligation of the Company or of any other Guarantor under
this Agreement or any other Loan Document whether by operation of law or
otherwise;
(b) any modification or amendment of or supplement to this Agreement
or any other Loan Document;
(c) any change in the corporate existence, structure or ownership of,
or any insolvency, bankruptcy, reorganization or other similar proceeding
affecting, the Company, any other Guarantor, or any of their respective
<PAGE>
assets, or any resulting release or discharge of any obligation of the
Company or of any other Guarantor contained in any Loan Document;
(d) the existence of any claim, set-off or other rights which the
Guarantor may have at any time against any Agent or Lender or the Issuing
Bank or any other Person, whether or not arising in connection herewith;
(e) any failure to assert, or any assertion of, any claim or demand or
any exercise of, or failure to exercise, any rights or remedies against the
Company, any other Guarantor or any Collateral;
(f) any application of any sums by whomsoever paid or howsoever
realized to any obligation of the Company, regardless of what obligations
of the Company remain unpaid,
(g) any invalidity or unenforceability relating to or against the
Company or any other Guarantor for any reason of this Agreement or of any
other Loan Document or any provision of applicable law or regulation
purporting to prohibit the payment by the Company of the principal of or
interest on any Note, or any other amount payable by it under the Loan
Documents; or
(h) any other act or omission to act or delay of any kind by any Agent
or Lender or the Issuing Bank or any other Person or any other circumstance
whatsoever that might, but for the provisions of this paragraph, constitute
a legal or equitable discharge of the obligations of the Guarantor under
this Section 11.
Section 11.3. Discharge Only upon Payment in Full; Reinstatement in Certain
Circumstances. Each Guarantor's obligations under this Section 11 shall remain
in full force and effect until the Commitments are terminated and the principal
of and interest on the Notes and all other amounts then due and payable by the
Company under this Agreement and all other Loan Documents shall have been paid
in full and all Letters of Credit have expired. If at any time any payment of
the principal of or interest on any Note or any other amount payable by the
Company under the Loan Documents is rescinded or must be otherwise restored or
returned upon the insolvency, bankruptcy or reorganization of the Company or of
a Guarantor, or otherwise, each Guarantor's obligations under this Section 11
with respect to such payment shall be reinstated at such time as though such
payment had become due but had not been made at such time.
Section 11.4. Subrogation. No Guarantor will exercise any rights which it
may acquire by way of subrogation as a result of any payment made hereunder, or
otherwise, until the Notes and all other amounts payable by the Company under
<PAGE>
the Loan Documents shall have been paid in full and after the termination of the
Commitments and expiration of the Letters of Credit. If any amount shall be paid
to a Guarantor on account of such subrogation rights at any time prior to the
later of (a) the payment in full of the Notes and all other amounts payable by
such Guarantor hereunder and (b) the termination of all the Commitments and the
expiration of all Letter of Credit, such amount shall be held in trust for the
benefit of the Administrative Agent and the Lenders and shall forthwith be paid
to the Administrative Agent and the Lenders or be credited and applied upon the
Company's' obligations under the Loan Documents, whether matured or unmatured,
in accordance with the terms of this Agreement. Notwithstanding any other
provision hereof, the right to recovery against each Guarantor under this
Section 11 shall not exceed $1.00 less than the amount which would render such
Guarantor's obligations under this Section 11 void or voidable under applicable
law.
Section 11.5. Waivers. Each Guarantor irrevocably waives acceptance hereof,
presentment, demand, protest and any notice not provided for herein, as well as
any requirement that at any time any action be taken by the Administrative Agent
the Issuing Bank any Lender or any other Person against the Company, another
Guarantor or any other Person.
Section 11.6. Stay of Acceleration. If acceleration of the time for payment
of any amount payable by the Company under this Agreement or any other Loan
Document is stayed upon the insolvency, bankruptcy or reorganization of the
Company or any other Guarantor, all such amounts otherwise subject to
acceleration under the terms of this Agreement or the other Loan Documents shall
nonetheless be payable jointly and severally by the Guarantors hereunder
forthwith on demand by the Administrative Agent.
SECTION 12. MISCELLANEOUS.
Section 12.1. Waiver of Rights. No delay or failure on the part of any
Lender or the holder or holders of any Note in the exercise of any power or
right shall operate as a waiver thereof or as an acquiescence in any default,
nor shall any single or partial exercise thereof, or the exercise of any other
power or right, preclude any other right or the further exercise of any other
rights. The rights and remedies hereunder of the Lenders, the Administrative
Agent, the Issuing Bank, the Syndication Agent, the Lenders and of the holder or
holders of any Note are cumulative to, and not exclusive of, any rights or
remedies which any of them would otherwise have.
Section 12.2. Non-Business Day. If any payment of principal shall fall due
on a day which is not a Business Day, interest at the rate such principal bears
for the period prior to maturity shall continue to accrue on such principal from
the stated due date thereof to and including the next succeeding Business Day on
which the same is payable.
<PAGE>
Section 12.3. Documentary Taxes. The Company agrees to pay any documentary,
stamp or similar taxes payable in respect to this Agreement or any other Loan
Document, including interest and penalties, in the event any such taxes are
assessed irrespective of when such assessment is made and whether or not any
credit is then in use or available hereunder.
Section 12.4. Survival of Representations. All representations and
warranties made in the Loan Documents or pursuant thereto or in certificates
given pursuant hereto or thereto shall survive the execution and delivery of
this Agreement and of the other Loan Documents, and shall continue in full force
and effect with respect to the date as of which they were made as long as any
credit is in use or available hereunder.
Section 12.5. Set-off Sharing. Each Lender agrees with each other
Lender a party hereto that in the event such Lender shall receive and retain any
payment, whether by set-off or application of deposit balances or otherwise
("Set-off"), on or in respect of any Note or other obligation outstanding under
the Loan Documents in excess of the amount to which it is entitled under this
Agreement, then such Lender shall purchase for cash at face value, but without
recourse, ratably from each of the other Lenders such amount of the Notes or
other obligations held by each such other Lender (or interest therein) as shall
be necessary to cause such payment to be shared in accord with Section 4.6
hereof; provided, however, that if any such purchase is made by any Lender, and
if such excess payment or part thereof is thereafter recovered from such
purchasing Lender, the related purchases from the other Lenders shall be
rescinded ratably and the purchase price restored as to the portion of such
excess payment so recovered, but without interest.
Section 12.6. Notices. All communications provided for herein shall be in
writing or by telecopy, except as otherwise specifically provided for
hereinabove, addressed, if to the Parent, the Company or the Guarantors at 90
Linden Oaks, Rochester, New York 14625, Attention: Chief Financial Officer or if
to the Administrative Agent, the Issuing Bank or Lenders at their respective
addresses set forth opposite their respective signatures hereto or an Assignment
Agreement to which they are a party, or at such other address as shall be
designated by any party hereto in a written notice to each other party pursuant
to this Section 12.6. Any notice in writing shall be deemed to have been given
or made when served personally or three (3) days after being mailed (properly
addressed) if sent by United States mail or upon receipt, if sent by telecopy;
provided that any notice to the Administrative Agent or any Lender under
Sections 2 and 3 hereof shall only be effective upon receipt.
Section 12.7. Counterparts. This Agreement may be executed in any number of
counterparts, and by the different parties on different counterparts, each of
which when executed shall be deemed an original, but all such counterparts taken
together shall constitute one and the same instrument.
<PAGE>
Section 12.8. Successors and Assigns. This Agreement shall be binding upon
the Company and the Guarantors and their successors and assigns, and shall be
binding upon and inure to the benefit of the Agents and the Lenders and their
respective successors and assigns, including any subsequent holder of any Note.
The Company and Guarantors may not assign their rights or obligations hereunder
without the prior written consent of the Banks.
Section 12.9. Participants. Each Lender shall have the right at its own
cost to grant participations (to be evidenced by one or more agreements or
certificates of participation) in the Loans made by such Lender and credit risks
in Letters of Credit held by such Lender at any time and from time to time to
one or more other Persons, provided that no such participant shall have any
rights under this Agreement or any other Loan Document (the participant's rights
against the Lender granting its participation to be those set forth in the
participation agreement between the participant and such Lender); provided,
further, that no Lender shall transfer or grant any participation under which
the participant shall have rights to approve any amendment to or waiver of this
Agreement or any other Loan Document except to the extent such amendment or
waiver would extend a scheduled maturity of any Loan, Note or Letter of Credit
(unless such Letter of Credit is not extended beyond the Termination Date) in
which such participant is participating, or reduce the rate or extend the time
of payment of interest or fees thereon (except in connection with a waiver of
applicability of any post-default increase in interest rates) or reduce the
principal amount thereof, or increase the amount of the participant's
participation over the amount thereof then in effect (it being understood that a
waiver of any Default or Event of Default or of a mandatory prepayment shall not
constitute a change in the terms of such participation, and that an increase in
any Commitment or Loan shall be permitted without the consent of any participant
if the participant's participation is not increased as a result thereof). Each
such Lender selling a participation shall be entitled to the benefits of
Sections 2.1(c)(iv), 3, 4.8 and 4.9 hereof to the extent such Lender would have
been so entitled had no such participation been sold.
Section 12.10. Costs and Expenses. The Company agrees to pay within 10 days
of demand therefor all reasonable out of pocket costs and out of pocket expenses
incurred by the Agents in connection with the preparation, execution, delivery,
recording and/or filing and/or release of the Loan Documents and the other
instruments and documents to be delivered hereunder or thereunder or in
connection with the transactions contemplated hereby or thereby or the
syndication of the credit facilities provided for herein or in connection with
any consents hereunder or thereunder or waivers or amendments hereto or thereto,
including the reasonable fees and out-of-pocket expenses of counsel for the
Agents with respect to all of the foregoing, and all recording, registration,
filing or other fees, costs and taxes incident to perfecting a lien upon the
collateral security for the Notes and other obligations of the Company, all
appraisal, environmental, title insurance and similar costs and charges incurred
by the Agents, all costs of the Administrative Agent in examining, monitoring or
auditing the Collateral, and all reasonable costs and expenses (including
<PAGE>
reasonable attorneys' fees), incurred by the Administrative Agent, any security
trustee for the Lenders, the Issuing Bank, the Lenders or any other holders of a
Note in connection with a default or the enforcement of any of the Loan
Documents and the other instruments and documents to be delivered hereunder or
thereunder or the preservation, protection or sale of Collateral, including
allocated costs of in-house counsel. The Company agrees to indemnify and save
the Lenders, the Agents, the Issuing Bank and any security trustee for the
Lenders harmless from any and all liabilities, losses, costs and expenses
incurred by any Lender, either Agent, the Issuing Bank or such security trustee
in connection with any action, suit or proceeding brought against either Agent,
a security trustee, the Issuing Bank or any Lender by any Person which arises
out of the transactions contemplated or financed hereby or by the other Loan
Documents or out of any action or inaction by an Agent, the Issuing Bank, any
security trustee or any Lender hereunder or thereunder, except for such thereof
as is caused by the gross negligence or willful misconduct of the party
indemnified. The provisions of this Section 12.10 and the protective provisions
of Section 3 and 4 hereof shall survive payment of the Notes and the other
obligations owing to the Lenders hereunder.
Section 12.11. Construction. The parties hereto acknowledge and agree that
the Loan Documents shall not be construed more favorably in favor of one than
the other based upon which party drafted the same, it being acknowledged that
all parties hereto contributed substantially to the negotiation of this
Agreement.
Section 12.12. Assignment Agreements. Each Lender may, from time to time,
with the consent of the Company (but no such Company consent shall be required
if a Default or Event of Default has occurred and is continuing), the
Administrative Agent and the Issuing Bank, which will not be unreasonably
withheld, assign to other Persons part of the indebtedness evidenced by any of
its Notes and credit risks with respect to Letters of Credit then owned by it
and/or any of its Commitments pursuant to an assignment agreement executed by
the assignor, the assignee, the Company (unless a Default or Event of Default
has occurred and is continuing), the Issuing Bank and the Administrative Agent
(an "Assignment Agreement"), specifying the portion of the indebtedness
evidenced by the Notes and Applications which is to be assigned to each such
assignee and the portion of the Commitments of the assignor to be assumed by it;
provided, however, that unless each of the Administrative Agent, the Issuing
Bank and the Company (unless a Default or Event of Default has occurred and is
continuing), otherwise consents, the aggregate amount of the unfunded
Commitments, Loans, and credit risk with respect to Letters of Credit retained
by the assigning Lender shall not be less than $10,000,000 and the assignee's
unfunded Commitments, Loans and risk participation in the Letters of Credit
shall not be less than $5,000,000, and the assigning Lender shall pay to the
Administrative Agent a processing and recordation fee of $3,500 ($2,500 in the
case of assignments to a Person who is a Lender prior to giving effect to the
assignment in question) for each assignment and any extraordinary out-of-pocket
attorney's fees and expenses incurred by the Administrative Agent in connection
<PAGE>
with each such Assignment Agreement and, notwithstanding Section 12.10, the
Company shall have no liability therefor. The foregoing amount limitations shall
not apply in the circumstance where a Lender is assigning its entire remaining
amount of a given Commitment and all of the extensions of credit which arose
under such Commitment to an assignee nor shall such minimum amount limitations
be applicable to Bank of Montreal. Upon the execution of each Assignment
Agreement by the assignor, the assignee, the Administrative Agent, the Issuing
Bank and the Company and satisfaction of the foregoing conditions and any
conditions set forth therein (i) such assignee shall thereupon become a "Lender"
for all purposes of this Agreement with Commitments in the amounts set forth in
such Assignment Agreement and with all the rights, powers and obligations
afforded a Lender hereunder, provided that the assigning Lender shall retain the
benefit of all indemnities of the Company with respect to matters arising prior
to the effective date of such Assignment Agreement, which shall survive and
inure to the benefit of the assigning Lender, (ii) such assigning Lender shall
have no further liability for funding the portion of its Commitments assumed by
such other Lender, and (iii) the address for notices to such assignee shall be
as specified in the Assignment Agreement executed by it. Concurrently with the
execution and delivery of such Assignment Agreement by the assignor, the
assignee, the Company, the Issuing Bank and the Administrative Agent, the
Company shall execute and deliver Notes to the assignee Lender all such notes to
constitute "Notes" for all purposes of the Loan Documents.
Section 12.13. Waivers, Modifications and Amendments. Any provision hereof
or of any of the other Loan Documents may be amended, modified, waived or
released and any Default or Event of Default and its consequences may be
rescinded and annulled upon the written consent of the Required Lenders;
provided, however, that without the consent of all Lenders no such amendment,
modification or waiver shall increase the amount or extend the terms of any
Lender's Commitment or reduce the interest rate applicable to or extend the
express maturity of any Loan, fee or other obligation owed to it or reduce the
amount of the fees to which it is entitled hereunder or release any Guarantor
from its obligations hereunder (except for releases in connection with the sale
or liquidation of a Subsidiary other than the Company) or release any
substantial (in value) part of the collateral security afforded by the
Collateral Documents (except in connection with a sale or other disposition
permitted by this Agreement) or change the definition of "Required Lenders" or
amend this Section 12.13; it being understood (i) that waivers or modifications
of covenants, Defaults or Events of Default (other than those set forth in
Section 9.1(j) and (k) hereof) or of a mandatory prepayment may be made at the
discretion of the Required Lenders and shall not constitute an increase of a
Commitment of any Lender, and (ii) any waiver of applicability of any
post-default increase in interest rates may be made at the discretion of the
Required Lenders. No amendment, modification or waiver of an Agent's or the
Issuing Bank's protective provisions shall be effective without the prior
written consent of the affected Agents or the Issuing Bank, as applicable. No
change may be made in the rights or obligations of the Swing Lender without its
<PAGE>
consent and no change may be made in the definition of the term "Required
Revolving Credit Lenders" without the consent of all Revolving Credit Lenders.
Section 12.14. Entire Agreement. The Loan Documents and any separate
agreement concerning fees constitutes the entire understanding of the parties
with respect to the subject matter hereof and any prior agreements, whether
written or oral, with respect thereto are superseded hereby. All provisions
hereof are severable.
Section 12.15. Headings. Section headings used in this Agreement are for
reference only and shall not affect the construction of this Agreement.
Section 12.16. Confidentiality. Any information disclosed by the Parent or
any of its Subsidiaries to the Administrative Agent or any of the Lenders shall
be used solely for purposes of this Agreement and for the purpose of determining
whether or not to extend other credit or financial accommodations to the Company
or its Subsidiaries and, if such information is not otherwise in the public
domain, shall not be disclosed by the Administrative Agent or such Lender to any
other Person except (i) to its independent accountants and legal counsel (it
being understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such information and instructed to keep
such information confidential), (ii) pursuant to statutory and regulatory
requirements, (iii) pursuant to any mandatory court order, subpoena or other
legal process, provided that such Lender or the Administrative Agent, as
applicable, shall give the Company prior written notice of any such disclosure
if lawful, (iv) to the Administrative Agent or any other Lender, (v) pursuant to
any agreement heretofore or hereafter made between such Lender and the Company
which permits such disclosure, (vi) in connection with the exercise of any right
or remedy under the Loan Documents, or (vii) subject to an agreement containing
provisions substantially similar in effect those of this Section, to any
participant in or assignee of, or prospective participant in or assignee of, any
obligation or Commitment.
SECTION 12.17. JURISDICTION. (A) EACH PARTY HERETO HEREBY SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF ILLINOIS (EASTERN DIVISION) AND OF ANY ILLINOIS STATE COURT SITTING
IN CHICAGO FOR THE PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING
TO THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY
SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAN ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
<PAGE>
(B) THE COMPANY AND THE GUARANTORS AGREE THAT THE ADMINISTRATIVE AGENT, THE
ISSUING BANK AND THE LENDERS SHALL EACH HAVE THE RIGHT TO PROCEED AGAINST THE
COMPANY AND THE GUARANTORS OR THEIR PROPERTY IN A COURT IN ANY OTHER LOCATION.
THE COMPANY AND THE GUARANTORS AGREE THAT THEY SHALL NOT ASSERT ANY PERMISSIVE
COUNTERCLAIMS IN ANY PROCEEDING BROUGHT IN ACCORDANCE WITH THIS PROVISION BY THE
ADMINISTRATIVE AGENT, THE ISSUING BANK OR ANY LENDER TO REALIZE ON SUCH
PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE
ADMINISTRATIVE AGENT, THE ISSUING BANK OR ANY LENDER. THE COMPANY AND THE
GUARANTORS WAIVE ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN
WHICH THE ADMINISTRATIVE AGENT OR ANY LENDER HAS COMMENCED A PROCEEDING
DESCRIBED IN THIS SUBSECTION.
SECTION 12.18. WAIVER OF JURY TRIAL. THE COMPANY, THE GUARANTORS, THE
AGENTS, THE ISSUING BANK AND THE LENDERS EACH WAIVE ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE, BETWEEN THE AGENTS OR EITHER OF THEM, THE ISSUING BANK OR ANY LENDER
AND THE COMPANY AND/OR ANY OF THE GUARANTORS 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 OR THE TRANSACTIONS RELATED
THERETO. THE COMPANY, THE GUARANTORS, THE AGENTS, THE ISSUING BANK AND THE
LENDERS EACH HEREBY AGREE AND CONSENT THAT ANY SUCH CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY OF
THEM 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.
SECTION 12.19. GOVERNING LAW. THIS AGREEMENT AND THE NOTES, AND THE RIGHTS
AND DUTIES OF THE PARTIES HERETO, SHALL BE CONSTRUED AND DETERMINED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS WITHOUT REGARD TO PRINCIPLES
OF CONFLICT OF LAWS.
[SIGNATURE PAGE TO FOLLOW]
<PAGE>
Upon your acceptance hereof in the manner hereinafter set forth, this
Agreement shall be a contract between us for the purposes hereinabove set forth.
Executed and delivered as of this 23rd day of September, 1998.
AGRILINK FOODS, INC.
By /s/ Earl L. Powers
Its Vice President Finance and
Chief Financial Officer
PRO-FAC COOPERATIVE, INC.
By /s/ Earl L. Powers
Its Vice President Finance and
Assistant Treasurer
LINDEN OAKS CORPORATION
By /s/ Timothy J. Benjamin
Its President
KENNEDY ENDEAVORS, INCORPORATED
By /s/ Earl L. Powers
Its Vice President and Secretary
<PAGE>
Accepted and Agreed to as of the day and year last above written.
Revolving Credit Commitment: HARRIS TRUST AND SAVINGS BANK,
$26,666,666.67 Individually and as Administrative Agent,
Issuing Bank and Swing Lender
A Credit Commitment:
$13,333,333.33
B Credit Commitment: By /s/ H. Glen Clarke
-0- Its Vice President
C Credit Commitment: Address: 111 West Monroe Street
-0- Chicago, Illinois 60690
Attention: Agribusiness Division
Eurodollar Lending Office:
Nassau Branch
111 West Monroe Street
Chicago, Illinois 60603
Revolving Credit Commitment: BANK OF MONTREAL,
$173,333,333.33 Individually and as Syndication Agent
A Credit Commitment:
$86,666,666.67
By /s/ Michael W. Hedrick
B Credit Commitment: Its Director
$175,000,000
Address: 115 South LaSalle Street
Chicago, Illinois 60603
C Credit Commitment: Attention: Global Distribution
$180,000,000
Eurodollar Lending Office:
115 South LaSalle Street
Chicago, Illinois 60603
<PAGE>
EXHIBIT A
AGRILINK FOODS, INC.
REVOLVING CREDIT NOTE
___________, 1998
FOR VALUE RECEIVED, the undersigned, AGRILINK FOODS, INC., a New York
corporation (the "Company"), hereby promises to pay to the order of
__________________ (the "Lender") on the Termination Date (as defined in the
Credit Agreement hereinafter referred to), at the principal office of Harris
Trust and Savings Bank in Chicago, Illinois, the aggregate unpaid principal
amount of all Revolving Credit Loans made by the Lender to the Company under the
Credit Agreement hereinafter mentioned and remaining unpaid on the Termination
Date, together with interest on the principal amount of each Revolving Credit
Loan from time to time outstanding hereunder at the rates, and payable in the
manner and on the dates, specified in said Credit Agreement.
The Lender shall record on its books or records or on the schedule to
this Note which is a part hereof the principal amount of each Revolving Credit
Loan made by it to the Company under the Credit Agreement, all payments of
principal and interest thereon and the principal balances from time to time
outstanding; provided that prior to the transfer of this Note all such amounts
shall be recorded on the schedule attached to this Note. The record thereof,
whether shown on such books or records or on the schedule to this Note, shall be
prima facie evidence as to all such amounts; provided, however, that the failure
of the Lender to record any of the foregoing shall not limit or otherwise affect
the obligation of the Company to repay all Revolving Credit Loans made to under
the Credit Agreement, together with accrued interest thereon.
This Note is one of the Revolving Credit Notes referred to in and
issued under that certain Credit Agreement dated as of September 23, 1998, among
the Company, Pro-Fac Cooperative, Inc. and certain other Guarantors, Harris
Trust and Savings Bank, as Administrative Agent and Issuing Bank, and Bank of
Montreal, as Syndication Agent and the Lenders from time to time as parties
thereto, as amended from time to time (the "Credit Agreement"). All defined
terms used in this Note, except terms otherwise defined herein, shall have the
same meaning as such terms have in said Credit Agreement.
Prepayments may be made, and are sometimes required to be made, on any
Loan evidenced hereby and this Note (and the Revolving Credit Loans evidenced
hereby) may be declared due prior to the expressed maturity thereof, all in the
events, on the terms and in the
<PAGE>
manner as provided for in said Credit Agreement. This Note is secured as
provided for in the Credit Agreement.
The undersigned hereby waive presentment for payment and demand.
This Note is governed by and shall be construed in accordance with the
internal laws of the State of Illinois.
AGRILINK FOODS, INC.
By
Its__________________________________
<PAGE>
EXHIBIT B
AGRILINK FOODS, INC.
SWING CREDIT NOTE
_____________, 1998
FOR VALUE RECEIVED, the undersigned, AGRILINK FOODS, INC., a New York
corporation (the "Company"), hereby promises to pay to the order of Harris Trust
and Savings Bank (the "Lender"), at the principal office of Harris Trust and
Savings Bank in Chicago, Illinois, the aggregate unpaid principal amount of each
Swing Loan made by the Lender to the Company under the Credit Agreement
hereinafter mentioned on the due date therefor as specified pursuant to the
Credit Agreement hereinafter identified, together with interest on the principal
amount of each Swing Loan from time to time outstanding hereunder at the rates,
and payable in the manner and on the dates, specified in said Credit Agreement.
The Lender shall record on its books or records or on the schedule to
this Note which is a part hereof the principal amount and due date of each Swing
Loan made by it to the Company under the Credit Agreement, all payments of
principal and interest thereon and the principal balances from time to time
outstanding; provided that prior to the transfer of this Note all of such
amounts shall be recorded on the schedule attached to this Note. The record
thereof, whether shown on such books or records or on the schedule to this Note,
shall be prima facie evidence as to all such amounts; provided, however, that
the failure of the Lender to record any of the foregoing shall not limit or
otherwise affect the obligation of the Company to repay all Swing Loans made to
it, under the Credit Agreement, together with accrued interest thereon.
This Note is the Swing Credit Note referred to in and issued under that
certain Credit Agreement dated as of September 23, 1998, among the Company,
Pro-Fac Cooperative, Inc. and certain other Guarantors, Harris Trust and Savings
Bank, as Administrative Agent and Issuing Bank, and Bank of Montreal, as
Syndication Agent and the Lenders named therein, as amended from time to time
(the "Credit Agreement"). All defined terms used in this Note, except terms
otherwise defined herein, shall have the same meaning as such terms have in said
Credit Agreement.
Prepayments may be made, and are sometimes required to be made, on any
Loan evidenced hereby and this Note (and the Swing Loans evidenced hereby) may
be declared due prior to the expressed maturity thereof, all in the events, on
the terms and in the manner as provided for in said Credit Agreement. This Note
is secured as provided for in the Credit Agreement.
<PAGE>
The undersigned hereby waive presentment for payment and demand.
This Note is governed by and shall be construed in accordance with the
internal laws of the State of Illinois.
AGRILINK FOODS, INC.
By
Its_______________________________
<PAGE>
EXHIBIT C
AGRILINK FOODS, INC.
A CREDIT NOTE
_____________, 1998
FOR VALUE RECEIVED, the undersigned, AGRILINK FOODS, INC., a New York
corporation (the "Company"), hereby promises to pay to the order of
__________________ (the "Lender"), at the principal office of Harris Trust and
Savings Bank in Chicago, Illinois, the aggregate principal amount of the A Loans
made by the Lender to the Company under the Credit Agreement referred to below
in seventeen (17) consecutive quarterly installments, commencing on September
30, 1999, and continuing on the last day of every September, December, March and
June thereafter to and including September 30, 2003, in the amounts specified in
the Credit Agreement hereinafter referred to, together with interest on the
amount of the principal indebtedness from time to time outstanding hereunder at
the rates, and payable in the manner and on the dates specified in said Credit
Agreement.
The Lender shall record on its books or records or on the schedule to
this Note which is a part hereof the principal amount of the A Loans made by it
to the Company under the Credit Agreement, all payments of principal and
interest thereon and the principal balances from time to time outstanding;
provided that prior to the transfer of this Note all such amounts shall be
recorded on a schedule attached to this Note. The record thereof, whether shown
on such books or records or on the schedule to this Note, shall be prima facie
evidence as to all such amounts; provided, however, that the failure of the
Lender to record any of the foregoing shall not limit or otherwise affect the
obligation of the Company to repay all A Loans made to it under the Credit
Agreement, together with accrued interest thereon.
This Note is one of the A Credit Notes referred to in and issued under
that certain Credit Agreement dated as of September 23, 1998, among the Company,
Pro-Fac Cooperative, Inc. and certain other Guarantors, Harris Trust and Savings
Bank, as Administrative Agent and Issuing Bank, Bank of Montreal, as Syndication
Agent, and the Lenders named therein, as amended from time to time (the "Credit
Agreement"). All defined terms used in this Note, except terms otherwise defined
herein, shall have the same meaning as such terms have in said Credit Agreement.
This Note is secured as provided for in the Credit Agreement.
Prepayments may be made, and are sometimes required to be made, on the
A Loans evidenced hereby and this Note (and the A Loans evidenced hereby) may be
declared due prior
<PAGE>
to the expressed maturity thereof, all in the events, on the terms and in the
manner as provided for in said Credit Agreement.
The undersigned hereby waive presentment for payment and demand.
This Note is governed by and shall be construed in accordance with the
internal laws of the State of Illinois.
AGRILINK FOODS, INC.
By
Its__________________________________
<PAGE>
EXHIBIT D
AGRILINK FOODS, INC.
B CREDIT NOTE
_____________, 1998
FOR VALUE RECEIVED, the undersigned, AGRILINK FOODS, INC., a New York
corporation (the "Company"), hereby promises to pay to the order of
__________________ (the "Lender"), at the principal office of Harris Trust and
Savings Bank in Chicago, Illinois, the aggregate principal amount of the B Loans
made by the Lender to the Company under the Credit Agreement referred to below
in twenty-four (24) consecutive quarterly installments, commencing on December
31, 1998, and continuing on the last day of every September, December, March and
June thereafter to and including September 30, 2004, in the amounts specified in
the Credit Agreement hereinafter referred to, together with interest on the
amount of the principal indebtedness from time to time outstanding hereunder at
the rates, and payable in the manner and on the dates specified in said Credit
Agreement.
The Lender shall record on its books or records or on the schedule to
this Note which is a part hereof the principal amount of the B Loans made by it
to the Company under the Credit Agreement, all payments of principal and
interest thereon and the principal balances from time to time outstanding;
provided that prior to the transfer of this Note all such amounts shall be
recorded on a schedule attached to this Note. The record thereof, whether shown
on such books or records or on the schedule to this Note, shall be prima facie
evidence as to all such amounts; provided, however, that the failure of the
Lender to record any of the foregoing shall not limit or otherwise affect the
obligation of the Company to repay all B Loans made to it under the Credit
Agreement, together with accrued interest thereon.
This Note is one of the B Credit Notes referred to in and issued under
that certain Credit Agreement dated as of September 23, 1998, among the Company,
Pro-Fac Cooperative, Inc. and certain other Guarantors, Harris Trust and Savings
Bank, as Administrative Agent and Issuing Bank, Bank of Montreal, as Syndication
Agent, and the Lenders named therein, as amended from time to time (the "Credit
Agreement"). All defined terms used in this Note, except terms otherwise defined
herein, shall have the same meaning as such terms have in said Credit Agreement.
This Note is secured as provided for in the Credit Agreement.
Prepayments may be made, and are sometimes required to be made, on the
B Loans evidenced hereby and this Note (and the B Loans evidenced hereby) may be
declared due prior
<PAGE>
to the expressed maturity thereof, all in the events, on the terms and in the
manner as provided for in said Credit Agreement.
The undersigned hereby waive presentment for payment and demand.
This Note is governed by and shall be construed in accordance with the
internal laws of the State of Illinois.
AGRILINK FOODS, INC.
By
Its______________________________
<PAGE>
EXHIBIT E
AGRILINK FOODS, INC.
C CREDIT NOTE
_____________, 1998
FOR VALUE RECEIVED, the undersigned, AGRILINK FOODS, INC., a New York
corporation (the "Company"), hereby promises to pay to the order of
__________________ (the "Lender"), at the principal office of Harris Trust and
Savings Bank in Chicago, Illinois, the aggregate principal amount of the C Loans
made by the Lender to the Company under the Credit Agreement referred to below
in twenty-eight (28) consecutive quarterly installments, commencing on December
31, 1998, and continuing on the last day of every September, December, March and
June thereafter to and including September 30, 2005, in the amounts specified in
the Credit Agreement hereinafter referred to, together with interest on the
principal amount of the principal indebtedness from time to time outstanding
hereunder at the rates, and payable in the manner and on the dates specified in
said Credit Agreement.
The Lender shall record on its books or records or on the schedule to
this Note which is a part hereof the principal amount of the C Loans made by it
to the Company under the Credit Agreement, all payments of principal and
interest thereon and the principal balances from time to time outstanding;
provided that prior to the transfer of this Note all such amounts shall be
recorded on a schedule attached to this Note. The record thereof, whether shown
on such books or records or on the schedule to this Note, shall be prima facie
evidence as to all such amounts; provided, however, that the failure of the
Lender to record any of the foregoing shall not limit or otherwise affect the
obligation of the Company to repay all C Loans made to it under the Credit
Agreement, together with accrued interest thereon.
This Note is one of the C Credit Notes referred to in and issued under
that certain Credit Agreement dated as of September 23, 1998, among the Company,
Pro-Fac Cooperative, Inc. and certain other Guarantors, Harris Trust and Savings
Bank, as Administrative Agent and Issuing Bank, Bank of Montreal, as Syndication
Agent, and the Lenders named therein, as amended from time to time (the "Credit
Agreement"). All defined terms used in this Note, except terms otherwise defined
herein, shall have the same meaning as such terms have in said Credit Agreement.
This Note is secured as provided for in the Credit Agreement.
Prepayments may be made, and are sometimes required to be made, on the
C Loans evidenced hereby and this Note (and the C Loans evidenced hereby) may be
declared due prior
<PAGE>
to the expressed maturity thereof, all in the events, on the terms and in the
manner as provided for in said Credit Agreement.
The undersigned hereby waive presentment for payment and demand.
This Note is governed by and shall be construed in accordance with the
internal laws of the State of Illinois.
AGRILINK FOODS, INC.
By
Its_______________________________
<PAGE>
EXHIBIT F
AGRILINK FOODS, INC.
COMPLIANCE CERTIFICATE
This Compliance Certificate is furnished to the lenders (collectively,
the "Lenders") and Harris Trust and Savings Bank as Administrative Agent (the
"Administrative Agent") for the Lenders, and the Bank of Montreal, as
Syndication Agent, pursuant to that certain Credit Agreement dated as of
September 23, 1998, by and among Agrilink Foods, Inc., a New York corporation
(the "Company"), Pro-Fac Cooperative, Inc. and certain other Guarantors and the
Lenders (the "Agreement"). Unless otherwise defined herein, the terms used in
this Compliance Certificate have the meanings ascribed thereto in the Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected chief financial officer of Pro-Fac
Cooperative, Inc.;
2. I have reviewed the terms of the Agreement and I have made, or
have caused to be made under my supervision, a detailed review of the
transactions and condition of the Parent and its Subsidiaries during the
accounting period covered by the attached financial statements sufficient for me
to provide this Certificate;
3. The examinations described in paragraph 2 did not disclose, and I
have no knowledge of, the existence of any condition or event which constitutes
a Default or Event of Default during or at the end of the accounting period
covered by the attached financial statements or as of the date of this
Certificate, except as set forth below; and
4. If attached financial statements are being furnished pursuant to
the Agreement, Schedule I attached hereto sets forth financial data and
computations evidencing the Parent's and the Company's compliance with certain
covenants of the Agreement, all of which data and computations are true,
complete and correct.
Described below are the exceptions, if any, to paragraph 3 by listing,
in detail, the nature of the condition or event, the period during which it has
existed and the action which the Parent and the Company have taken, are taking
or propose to take with respect to each such condition or event:
<PAGE>
The foregoing certifications, together with the computations set forth
in Schedule I hereto and the financial statements delivered with this
Certificate in support hereof, are made and delivered this _____ day of
_______________________, 19___.
<PAGE>
SCHEDULE 1
TO COMPLIANCE CERTIFICATE
AGRILINK FOODS, INC.
COMPLIANCE CALCULATIONS FOR
CREDIT AGREEMENT DATED AS OF SEPTEMBER 23, 1998
CALCULATIONS AS OF ____________________, 19__
<PAGE>
EXHIBIT G
ADDITIONAL GUARANTOR SUPPLEMENT
______________, 19___
HARRIS TRUST AND SAVINGS BANK, as
Administrative Agent for the Lenders
under the Credit Agreement dated as of
September 23, 1998, among Agrilink
Foods, Inc., Pro-Fac Cooperative, Inc.
and certain other Guarantors, Bank of
Montreal as Syndication Agent and such
Administrative Agent (the "Credit
Agreement")
Dear Sirs:
Reference is made to the Credit Agreement described above. Terms not
defined herein which are defined in the Credit Agreement shall have for the
purposes hereof the meaning provided therein.
The undersigned, [name of Subsidiary Guarantor], a [jurisdiction of
incorporation] corporation, hereby elects to be a "Guarantor" for all purposes
of the Credit Agreement, effective from the date hereof. The undersigned
confirms that the representations and warranties set forth in the Credit
Agreement are true and correct as to the undersigned as of the date hereof.
Without limiting the generality of the foregoing, the undersigned
hereby agrees to perform all the obligations of a Guarantor under, and to be
bound in all respects by the terms of, the Credit Agreement, including without
limitation Section 11 thereof, to the same extent and with the same force and
effect as if the undersigned were a signatory party thereto.
This Agreement shall be construed in accordance with and governed by
the internal laws of the State of Illinois.
Very truly yours,
[NAME OF SUBSIDIARY GUARANTOR]
By
Name
Title________________________________________
<PAGE>
EXHIBIT H
SUBSIDIARIES
Pro-Fac Cooperative, Inc., a New York cooperative corporation (P)
<TABLE>
<S> <C> <C> <C>
JURISDICTION OF
NAME ORGANIZATION PERCENTAGE OWNED STATUS
Agrilink Foods, Inc. (A) New York 100%(P) Active
Curtice-Burns Express, Inc. New York 100%(A) Active
Kennedy Endeavors, Inc. Washington 100%(A) Active
Seasonal Employers, Inc. New York 100%(A) Active
Linden Oaks Corporation Delaware 100%(A) Active
Curtice Burns Foods of Canada Limited Canada 100%(A) Active
Curtice Burns Export Corporation US Virgin Islands 100%(A) Active
Snyder Distributing, Inc. Pennsylvania 100%(A) Active
Quality Snax of Maryland, Inc. Pennsylvania 100%(A) Inactive (1)
LaRestaurant of Altoona, Inc. Pennsylvania 100%(A) Inactive (1)
Convenient Product Sales Corp. Pennsylvania 100%(A) Inactive (1)
BEMSA Holding, Inc. Delaware 100%(A) (2)
<FN>
1. In process of being dissolved and liquidated.
2. Upon consummation of the acquisition of all the outstanding capital stock
of Dean Foods Vegetable Company and all of the outstanding capital stock of
BEMSA Holding, Inc., as contemplated in the Stock Purchase Agreement
between Dean Foods Company and Agrilink Foods, Inc., dated as of July 24,
1998, Agrilink Foods, Inc., will own 100% of the issued and outstanding
capital stock of BEMSA Holding, Inc.
</FN>
</TABLE>
<PAGE>
EXHIBIT I
EXISTING INDEBTEDNESS
<TABLE>
<S> <C> <C> <C>
Balance as of
August 31, 1998
Current Long-Term Total
Note Payable -Duane Packer3 -- $5,400,000 $5,400,000
Note Payable - John A. Hopay, Sr., $250,000 $1,113,000 $1,363,000
John A. Hopay, Jr. and Joseph C. Hopay4
Note Payable - State of Georgia5 20,034 137,179 157,213
Note Payable - Des Moines Area 50,953 -- 50,953
Community College6
Note Payable - DelAgra Corp.7 425,000 -- 425,000
Note Payable - Fairwater, WI8 2,450,000 2,450,000
Various Capitalized Leases9 776,000
(current and long)
Note Payable - MN Dept. of 10,000
Transportation10
Albrecht Land11 44,876
John Hancock Insurance12 431,221
Guarantee of loans to Great Lakes Kraut Company up to $8,000,000
Subordinated Promissory Note due Dean Foods Company $30,000,000
<FN>
3. Packer Foods Acquisition.
4. Snyder Distributing, Inc. (formerly known as J. A. Hopay Distributing,
Inc.) Acquisition.
5. Development Authority of Macon County, Georgia obligation Revenue Bond
dated 12/01/84.
6. Agrilink Foods, Inc. guarantor of Des Moines Area Community College's bond
repayment obligations.
7. Del Agra Corp. Acquisition.
8. Acquired with Dean Foods Vegetable Company, balance as of May 31, 1998.
9. Agrilink capital leases as of June 27, 1998 total $759,000. Acquired with
Dean Foods Vegetable Company: IBM Leases of $17,000 as of May 31, 1998.
10. Acquired with Dean Foods Vegetable Company, balance as of May 31, 1998.
11. Acquired with Dean Foods Vegetable Company, balance as of May 31, 1998.
12. Acquired with Dean Foods Vegetable Company, balance as of May 31, 1998.
</FN>
</TABLE>
<PAGE>
EXHIBIT J
EXISTING LIENS
1. Industrial Revenue Bonds. Development Authority of Macon County, Georgia
Limited Obligation Revenue Bond, dated December 1984, secured by a deed
covering 321 Plant Street, Montezuma, Georgia (the "Montezuma Facility").
2. Pursuant to an Agreement for Sale of Stock and Assets dated July 21, 1995,
between Agrilink Foods, Inc. and Duane Packer, Agrilink Foods, Inc.
acquired Packer Foods. In connection with the transaction Agrilink Foods,
Inc. delivered a $5,400,000 promissory note, which is secured by a mortgage
on real property located at 73309 South M-40, Lawton, Michigan (the "Lawton
Facility") and a security interest in equipment and proceeds at the Lawton
Facility.
3. Assignment of leases and rents in favor of John Hancock Insurance Co.
($431,221 balance as of May 31, 1998) recorded against the Uvalde, Texas
facility acquired with Dean Foods Vegetable Company.
4. Capitalized leases referred to on Exhibit I.
5. Albrecht land contract with respect to Cambria, Wisconsin real property.
<PAGE>
EXHIBIT K
EXISTING INVESTMENTS, LOANS AND ADVANCES
<TABLE>
Balance as of
August 31, 1998
Current Long-Term Total
Investments:
<S> <C> <C> <C>
Co-Bank, ACB $1,329,513 $22,377,434 $23,706,947
Great Lakes Kraut Company LLC13 -- 6,732,000 6,732,000
Farmers Processing, Inc.14 -- -- --
Total Investments $1,329,513 $29,109,434 $30,438,947
========== =========== ===========
Loans:
Notes Receivable
Hoopeston15 125,587 1,427,919 1,553,506
Garden Gallery16 22,192 -- 22,192
Lucca17 10,000 -- 10,000
Total Notes Receivable $ 157,779 $ 1,427,919 $ 1,585,698
========== =========== ===========
<FN>
13 Represents a 50% membership interest (50 Units). Represents July, 1998
balance.
14 Represents one-half of the outstanding capital stock; nominal investment.
15 Pursuant to a Note and Security Agreement dated as of April 30, 1997,
between Hoopeston Foods, Inc. ("Hoopeston") and Agrilink Foods, Inc., in
the original principal amount of $1,700,000, Hoopeston is required to pay
Agrilink quarterly $62,150 until maturity on May 10, 2007. The promise to
pay is secured by a security interest in certain equipment.
16 Loan to Garden Galleries, Inc.
17 Sale of Lucca. In connection with the sale of the Lucca Mexican and Italian
Frozen Foods Business to Alex Foods Incorporated ("Alex"), the Company
entered into a Trademark and License and Option Agreement dated December 7,
1992, between the Company and Alex pursuant to which the Company agreed,
subject to the terms of such agreement, to sell after June 7, 1997 the
indicated trademarks to Alex ("Reds," "Mexican Holiday" and "Mexican
Classics").
</FN>
</TABLE>
<PAGE>
EXHIBIT L
SCHEDULED EXCLUDED ASSETS
1. Lawton Facility, 73309 South M-40, Lawton, Michigan, plant and equipment
located therein (encumbered by $5.4 million non prepayable mortgage which
forbids junior liens).
2. Wall Lake, Iowa popcorn coloring plant (insignificant plant).
3. Alton, New York, plant but not adjacent warehouse (held for sale).
4. Rushville, New York plant (closed and for sale).
5. Mount Summit, Indiana plant (closed and for sale).
6. Brillion, Wisconsin plant (closed).
7. Cedar Grove, Wisconsin plant (closed).
8. Bellinghham, Washington plant (under contract for sale).
9. McAllen, Texas plant (under contract for sale).
10. Fort Atkinson, Wisconsin plant (closed).
11. Rights as lessee under real property leases except for future ground leases
and other non-operating leases requested by the Administrative Agent.
12. Railroad rolling stock and vehicles subject to a certificate of title law.
13. Equity interest in Great Lakes Kraut Company, LLC.
14. Shares of capital stock of CoBank, ACB
<PAGE>
DISCLOSED LITIGATION
NONE
CONFORMED COPY
AGRILINK FOODS, INC.,
as Borrower,
and
PRO-FAC COOPERATIVE, INC.,
as Guarantor,
THE OTHER GUARANTORS PARTY HERETO
----------------------
$200,000,000
SENIOR SUBORDINATED CREDIT AGREEMENT
Dated as of September 23, 1998
----------------------
WARBURG DILLON READ LLC,
as Arranger and Syndication Agent,
and
UBS AG, STAMFORD BRANCH,
as Administrative Agent,
and
THE LENDERS FROM TIME TO TIME PARTY HERETO
<PAGE>
TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to which
it is attached but is inserted for convenience of reference only.
<TABLE>
<S> <C> <C>
Page
Section 1. Definitions, Accounting Matters and Rules of Construction.......................................1
1.01. Certain Defined Terms...........................................................................1
1.02. Accounting Terms...............................................................................20
1.03. Rules of Construction..........................................................................20
Section 2. Amount and Terms of Loan Commitment and Loans; Notes...........................................21
2.01. Initial Loan and Initial Note..................................................................21
2.02. Term Loan and Term Note........................................................................23
2.03. Interest on the Loans..........................................................................24
2.04. Fees...........................................................................................25
2.05. Prepayments....................................................................................25
2.06. Manner and Time of Payment.....................................................................30
2.07. Use of Proceeds................................................................................30
Section 3. Yield Protection, Etc..........................................................................31
3.01. Funding Indemnity..............................................................................31
3.02. Change of Law..................................................................................31
3.03. Unavailability of Deposits or Inability to Ascertain, or Inadequacy of, LIBOR Rate.............32
3.04. Increased Cost and Reduced Return..............................................................32
3.05. Capital Adequacy...............................................................................33
3.06. Withholding Taxes..............................................................................33
3.07. Lender Replacement.............................................................................35
Section 4. Guarantee......................................................................................35
4.01. The Guarantee..................................................................................35
4.02. Guarantee Unconditional........................................................................35
4.03. Discharge Only upon Payment in Full; Reinstatement in Certain Circumstances....................36
4.04. Subrogation....................................................................................37
4.05. Waivers........................................................................................37
4.06. Stay of Acceleration...........................................................................37
4.07. General Limitation on Guarantee Obligations....................................................37
4.08. Subordination..................................................................................37
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Page
Section 5. Conditions Precedent...........................................................................37
5.01. Conditions to Effectiveness of Loan Documents and Obligation to Make Initial Loan..............37
5.02. Conditions to Term Loan........................................................................41
5.03. Determinations Under Section 5.................................................................42
Section 6. Representations and Warranties.................................................................42
6.01. Organization and Power.........................................................................42
6.02. Subsidiaries...................................................................................42
6.03. [Reserved].....................................................................................43
6.04. Financial Reports..............................................................................43
6.05. Litigation and Taxes...........................................................................44
6.06. Burdensome Contracts with Affiliates...........................................................44
6.07. ERISA..........................................................................................44
6.08. Full Disclosure................................................................................44
6.09. Compliance with Law............................................................................45
6.10. Certain Contracts..............................................................................45
6.11. Stock Purchase Agreement Warranties............................................................45
6.12. Restrictive Agreements.........................................................................45
6.13. No Default Under Other Agreements..............................................................45
6.14. Status Under Certain Laws......................................................................46
6.15. Year 2000 Compliance...........................................................................46
6.16. Solvency, Etc..................................................................................46
Section 7. Covenants......................................................................................46
7.01. Maintenance of Business........................................................................46
7.02. Maintenance....................................................................................46
7.03. Taxes..........................................................................................47
7.04. Insurance......................................................................................47
7.05. Financial Reports..............................................................................47
7.06. Compliance with Laws...........................................................................48
7.07. Nature of Business.............................................................................48
7.08. Liens..........................................................................................49
7.09. Indebtedness...................................................................................50
7.10. Acquisitions, Investments, Loans and Advances and Guarantees...................................50
7.11. Restricted Payments............................................................................52
7.12. Mergers........................................................................................52
7.13. Sales of Assets................................................................................53
7.14. Burdensome Contracts with Affiliates...........................................................53
7.15. No Change in Fiscal Year.......................................................................53
7.16. Formation of Subsidiaries......................................................................53
7.17. No Restriction on Subsidiary Dividends.........................................................54
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Page
7.18. Concerning the Subordinated Debt...............................................................54
7.19. Limitation on Senior Subordinated Indebtedness.................................................54
7.20. Concerning the Marketing Agreement.............................................................54
7.21. Year 2000 Assessment...........................................................................54
7.22. Preservation of Cooperative Status.............................................................55
7.23. Take-Out Financing.............................................................................55
7.24. Exchange of Term Notes.........................................................................56
7.25. Register.......................................................................................56
7.26. Senior Subordinated Indenture; Etc.............................................................57
7.27. Amendments or Waivers of Certain Documents.....................................................57
7.28. Release of Covenants upon Conversion; Term Loan Covenants......................................57
Section 8. Events of Default..............................................................................58
8.01. Events of Default..............................................................................58
8.02. Non Bankruptcy Defaults........................................................................59
8.03. Bankruptcy Defaults............................................................................59
8.04. Willful Default................................................................................59
Section 9. Agents.........................................................................................60
9.01. General Provisions.............................................................................60
9.02. Indemnification................................................................................62
9.03. Consents Under Other Loan Documents............................................................62
Section 10. Miscellaneous..................................................................................63
10.01. Waiver of Rights...............................................................................63
10.02. [Reserved].....................................................................................63
10.03. Expenses, Indemnification, Etc.................................................................63
10.04. Documentary Taxes..............................................................................64
10.05. Amendments, Etc................................................................................64
10.06. Survival of Representations....................................................................65
10.07. Assignments and Participations.................................................................66
10.08. Right of Setoff; Sharing of Payments; Etc......................................................67
10.09. Lending Offices................................................................................68
10.10. Discretion of Banks as to Manner of Funding....................................................68
10.11. Notices........................................................................................69
10.12. [Reserved].....................................................................................69
10.13. [Reserved].....................................................................................69
10.14. [Reserved].....................................................................................69
10.15. Counterparts; Interpretation; Effectiveness....................................................69
10.16. Headings.......................................................................................69
10.17. Confidentiality................................................................................70
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Page
10.18. Waiver of Stay, Extension or Usury Laws........................................................70
10.19. Governing Law; Submission to Jurisdiction; Waivers; Etc........................................70
10.20. Waiver of Jury Trial...........................................................................71
10.21. Independence of Representations, Warranties and Covenants......................................71
10.22. Severability...................................................................................71
10.23. Acknowledgments................................................................................71
Section 11. Subordination..................................................................................72
11.01. Agreement to Subordinate.......................................................................72
11.02. Liquidation; Dissolution; Bankruptcy...........................................................72
11.03. No Payment on Loans and Notes in Certain Circumstances.........................................72
11.04. Acceleration of Notes..........................................................................73
11.05. When Distributions Must Be Paid Over...........................................................74
11.06. Notice.........................................................................................74
11.07. Subrogation....................................................................................75
11.08. Relative Rights................................................................................75
11.09. The Company, Guarantors and Lenders May Not Impair Subordination...............................75
11.10. Distribution or Notice to Representative.......................................................76
11.11. Rights of Administrative Agent.................................................................77
11.12. Authorization to Effect Subordination..........................................................77
Signatures..................................................................................................S-1
</TABLE>
<PAGE>
ANNEX A - Term Loan Covenants
ANNEX B - Definitions Applicable to Term Loan Covenants
SCHEDULE 6.02 - Subsidiaries
SCHEDULE 6.05 - Litigation and Taxes
SCHEDULE 7.08 - Existing Liens
SCHEDULE 7.09 - Existing Indebtedness
SCHEDULE 7.10 - Existing Investments
EXHIBIT A-1 - Form of Initial Note
EXHIBIT A-2 - Form of Term Note
EXHIBIT B - Form of Notice of Borrowing
EXHIBIT C - Form of Notice of Conversion
EXHIBIT D - Form of Additional Guarantor Supplement
EXHIBIT E - Form of Assignment Agreement
<PAGE>
SENIOR SUBORDINATED CREDIT AGREEMENT dated as of September 23, 1998,
among AGRILINK FOODS, INC., a New York corporation (the "Company"); PRO-FAC
COOPERATIVE, INC., as Guarantor; the other Guarantors party hereto; each of the
lenders that is a signatory hereto identified under the caption "LENDERS" on the
signature pages hereto or that, pursuant to Section 10.07(b), shall become a
"Lender" hereunder (individually, a "Lender" and, collectively, the "Lenders");
WARBURG DILLON READ LLC, as arranger and syndication agent (the "Arranger"); and
UBS AG, Stamford Branch, as administrative agent (the "Administrative Agent").
The parties hereto agree as follows:
Section 1. Definitions, Accounting Matters and Rules of Construction.
1.01. Certain Defined Terms. As used herein, the following terms shall
have the following meanings:
"Acquisition" shall mean the acquisition by the Company of all of the
outstanding capital stock of DFVC and BEMSA Holding, Inc., a Delaware
corporation ("BEMSA"), and of the trademarks used in the businesses of DFVC and
BEMSA, the transfer by the Company to Dean Foods or a subsidiary thereof of the
asceptic business of the Company and the assets used in connection therewith and
the related transactions provided for in the Stock Purchase Agreement and the
Asset Transfer Agreement.
"Acquisition Closing Date" shall mean the date the Acquisition is
actually consummated.
"Additional Guarantor Documentation" shall mean the following, each of
which shall be satisfactory in form and substance to the Administrative Agent:
(i) good standing certificates for such Guarantor issued by
its state of organization, issued not more than 30 days before the date
of its Additional Guarantor Supplement;
(ii) copies of the Certificates of Incorporation, and all
amendments thereto, of such Guarantor, certified by the Secretary of
State of its state of incorporation not more than 30 days before the
date of its Additional Guarantor Supplement;
(iii) copies of the by-laws, and all amendments thereto, of
such Guarantor, certified as true, correct and complete on the
effective date of its Additional Guarantor Supplement by the Secretary
or Assistant Secretary of such Guarantor;
(iv) copies, certified as true, correct and complete by the
Secretary or Assistant Secretary of such Guarantor, of resolutions
regarding the transactions contemplated by this Agreement, duly adopted
by the Board of Directors or other governing body of such Guarantor;
<PAGE>
(v) an incumbency and signature certificate for such
Guarantor; and
(vi) legal matters incident to the execution and delivery of
the Additional Guarantor Supplement shall be satisfactory to the
Administrative Agent and its counsel and the Administrative Agent shall
have received the favorable written opinion of counsel for such
Guarantor in form and substance satisfactory to the Administrative
Agent.
"Additional Guarantor Supplement" is defined in Section 7.16.
"Adjusted LIBOR Rate" shall mean a rate per annum determined pursuant
to the following formula:
Adjusted LIBOR Rate = LIBOR Rate
100% - Reserve Percentage
"Administrative Agent" shall have the meaning set forth in the
introduction hereto.
"Affiliate" shall mean, for any Person, any other Person (including all
directors and officers of such Person) that directly or indirectly controls, or
is under common control with, or is controlled by, such Person. As used in this
definition, "control" means the power, directly or indirectly, to direct or
cause the direction of the management or policies of a Person (through ownership
of voting securities, by contract or otherwise); provided that, in any event,
for purposes of this definition any Person that owns directly or indirectly 10%
or more of the securities or other interests having ordinary voting power for
the election of directors of a corporation or 10% or more of the partnership or
other ownership interests of any other Person will be deemed to control such
corporation or other Person.
"Agent" means either of the Administrative Agent or the Arranger.
"Agreement" shall mean this Credit Agreement, as the same may be
amended, modified or restated from time to time in accordance with its terms.
"Applicable Spread" means 5.00% for the period from and including the
Closing Date and to but excluding the 90th day following the Closing Date, and
for each subsequent 90-day period, the Applicable Spread in effect for the
immediately preceding 90-day period plus 1.00%.
"Approved Fund" shall mean, with respect to any Lender that is a fund
or commingled investment vehicle that invests in commercial loans, any other
fund that invests in commercial loans and is managed or advised by the same
investment advisor as such Lender or by an Affiliate of such investment advisor.
"Arranger" shall have the meaning set forth in the introduction hereto.
"Asset Transfer Agreement" shall mean the Asset Transfer Agreement
dated as of July 24, 1998 by and between Dean Foods and the Company, as amended
as permitted hereby.
<PAGE>
"Assignment Agreement" shall mean an agreement substantially in the
form of Exhibit F.
"Auditors" see Section 7.05(b).
"Bankruptcy Law" shall mean Title 11 of the United States Code entitled
"Bankruptcy", as now and hereafter in effect, or any successor statute or any
other United States federal, state or local law or the law of any other
jurisdiction relating to bankruptcy, insolvency, winding up, liquidation,
reorganization or relief of debtors, whether in effect on the date hereof or
hereafter.
"Bankruptcy Order" shall mean any court order made in a proceeding
pursuant to or within the meaning of any Bankruptcy Law, containing an
adjudication of bankruptcy or insolvency, or providing for liquidation, winding
up, dissolution or reorganization, or appointing a custodian of a debtor or of
all or any substantial part of a debtor's property, or providing for the
staying, arrangement, adjustment or composition of indebtedness or other relief
of a debtor.
"BEMSA" see the definition of Acquisition.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which banking institutions in the City of New York are authorized by law or
regulation or executive order to remain closed.
"Capital Stock" shall have the meaning set forth in Annex B.
"Capitalized Lease" shall mean any lease or other agreement for the use
or possession of real or personal property the obligation for Rentals with
respect to which is required to be capitalized on a balance sheet of the lessee
in accordance with GAAP.
"Capitalized Rentals" shall mean as of the date of any determination
the amount at which the aggregate Rentals due and to become due under
Capitalized Leases under which the Company or any Subsidiary is a lessee will be
reflected as a liability on a consolidated balance sheet of the Company and its
Subsidiaries prepared in accordance with GAAP.
"Cash Equivalents" shall have the meaning set forth in Annex B.
"Change of Control" shall mean prior to the Conversion Date, the
occurrence of any of the following events: (i) any of the capital stock of the
Company shall be owned, either legally or beneficially, by any Person other than
Parent; (ii) the number of the directors of the Company who are Disinterested
Directors shall not at least equal the number of directors of the Company who
are not Disinterested Directors; or (iii) more than 20% of the capital stock of
Parent entitled at the time to vote for the election of directors shall be owned
or controlled by a Person or group of Persons acting in concert.
"Change of Control Date" shall have the meaning set forth in Section
2.05(a)(iii) (3)(A).
<PAGE>
"Change of Control Offer" shall have the meaning set forth in Section
2.05(a)(iii)(3).
"Closing Date" shall mean the date on which the Initial Loans are made
hereunder.
"Code" shall mean the United States Internal Revenue Code of 1986, as
amended.
"Commission" shall mean the United States Securities and Exchange
Commission.
"Commitment Letter" shall mean the Commitment Letter among UBS AG,
Stamford Branch, Warburg Dillon Read LLC and Agrilink Foods, Inc., dated
September 14, 1998, together with all exhibits and schedules thereto and
incorporated therein, as such letter has been amended to the date hereof.
"Commitments" shall mean the Initial Loan Commitments and the Term Loan
Commitments.
"Company" shall have the meaning set forth in the introduction hereto.
"Consolidated Net Income" for any period shall mean the gross revenues
from any source of the Parent and its Subsidiaries for such period less all
expenses and other proper charges determined for the Parent and its Subsidiaries
on a consolidated basis in accordance with GAAP but computed prior to giving
effect to gains and losses on the disposition of capital assets and other
extraordinary gains and losses (including the write off of debt issuance costs,
the payment of premium on the retirement of Indebtedness and gains resulting
from pensions reversions) as determined in accordance with GAAP.
"Consolidated Net Worth" shall mean, as of any date, the common stock
and total shareholders' and members' capitalization of the Parent and its
Subsidiaries, each computed on a consolidated basis in a manner consistent with
that used in the preparation of the Parent's audited consolidated balance sheet
for the fiscal year ended June 27, 1998 and heretofore delivered to the Lenders.
"Consolidated Total Indebtedness" shall mean all Indebtedness of the
Parent and its Subsidiaries determined on a consolidated basis in accordance
with GAAP.
"Conversion Date" shall mean the one-year anniversary of the Closing
Date.
"Custodian" means any custodian, receiver, trustee, assignee,
liquidator or similar official under any Bankruptcy Law.
"Dean Foods" shall mean Dean Foods Company, a Delaware corporation.
"Debt Issuance" shall mean the incurrence by the Parent or any
Subsidiary of any Indebtedness after the Closing Date.
<PAGE>
"Default" shall mean any event or condition the occurrence of which
would, with the lapse of time or the giving of notice, or both, constitute an
Event of Default.
"Designated Senior Indebtedness" shall mean (i) Indebtedness under the
Senior Credit Facility and (ii) any other Indebtedness constituting Senior
Indebtedness that, at the date of determination, has an aggregate principal
amount outstanding of at least $25.0 million and that is specifically designated
by the Company, in the instrument creating or evidencing such Senior
Indebtedness or in an Officer's Certificate delivered to the Administrative
Agent, as "Designated Senior Indebtedness."
"DFVC" shall mean Dean Foods Vegetable Company, a Wisconsin
corporation.
"Disinterested Directors" means directors of the Company who are not
employees, shareholders (at the time of becoming directors) or otherwise
Affiliates (other than by reason of being a director of the Company) of either
the Parent or the Company.
"Disqualified Capital Stock" shall have the meaning set forth in Annex
B.
"Dollars" and "$" shall mean lawful money of the United States of
America.
"EBITDA" shall mean, with reference to any period, Consolidated Net
Income for such period plus all amounts deducted in arriving at such
Consolidated Net Income in respect of (i) Interest Expense, (ii) taxes imposed
on or measured by income or excess profits, and (iii) all charges for
depreciation of fixed assets and amortization of intangibles, all as determined
in accordance with GAAP.
"Eligible Person" shall mean (i) a commercial bank organized under the
laws of the United States, or any state thereof, and having a combined capital
and surplus of at least $100.0 million; (ii) a commercial bank organized under
the laws of any other country that is a member of the Organization for Economic
Cooperation and Development (the "OECD"), or a political subdivision of any such
country, and having a combined capital and surplus in a dollar equivalent amount
of at least $100.0 million; provided, however, that such bank is acting through
a branch or agency located in the country in which it is organized or another
country that is also a member of the OECD; (iii) an insurance company, mutual
fund entity which is regularly engaged in making, purchasing or investing in
loans or securities or other financial institution organized under the laws of
the United States, any state thereof, any other country that is a member of the
OECD or a political subdivision of any such country with assets, or assets under
management, in a dollar equivalent amount of at least $100.0 million; (iv) any
Affiliate of a Lender; and (v) any other entity (other than a natural person)
which is an "accredited investor" (as defined in Regulation D under the
Securities Act) which extends credit or buys loans as one of its businesses
including, but not limited to, insurance companies, mutual funds, and investment
funds. With respect to any Lender that is a fund that invests in loans, any
other fund that invests in loans and is managed or advised by the same
investment advisor of such Lender or by an Affiliate of such investment advisor
shall be treated as a single Eligible Person.
"Equity Issuance" means a public offering, private placement or other
issuance or sale of the capital stock or other equity interests (or of warrants,
options or other rights therefor) of the Parent or any of its
<PAGE>
Subsidiaries; provided that the issuance by the Parent of common stock to its
producer members in accord with past practice shall not constitute an Equity
Issuance.
"Equity Offering" shall mean an underwritten primary offering of
Capital Stock (other than Disqualified Capital Stock) of the Parent (to the
extent that the net cash proceeds thereof are contributed to the equity capital
of the Company (other than Disqualified Capital Stock (as defined in Annex B))
or the Company pursuant to a registration statement filed with the Commission in
accordance with the Securities Act or pursuant to a private placement pursuant
to an available exemption from registration under the Securities Act to the
extent, in the case of such private placement, such Capital Stock is not sold to
the Parent, the Company, any Subsidiary or any Affiliate (without giving effect
to clause (ii) in the definition thereof in Annex B) thereof.
"ERISA" shall have the meaning set forth in Section 6.07.
"Event of Default" shall have the meaning set forth in Section 8.01.
"Excess Proceeds" shall have the meaning set forth in Section
2.05(a)(iii)(4).
"Exchange Act" shall mean the United States Securities Exchange Act of
1934, as amended.
"Exchange Note Trustee" shall mean the trustee in connection with the
Senior Subordinated Indenture.
"Exchange Notes" shall have the meaning set forth in Section 7.24.
"Existing Notes" shall mean the Company's existing $160 million 12 1/4%
Senior Subordinated Notes due 2005.
"Fair Market Value" shall have the meaning set forth in Annex B.
"Federal Funds Rate" shall mean, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) 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 by the Federal Reserve Bank of New York on the Business Day
next succeeding such day; provided, however, that (a) if the day for which such
rate is to be determined is not a Business Day, the Federal Funds Rate for such
day shall be such rate on such transactions on the next preceding Business Day
as so published on the next succeeding Business Day and (b) if such rate is not
so published for any Business Day, the Federal Funds Rate for such Business Day
shall be the average rate quoted to Administrative Agent on such Business Day on
such transactions by three federal funds brokers of recognized standing, as
determined by Administrative Agent.
"Fee Letter" shall mean the Fee Letter dated as of September 14, 1998,
by and among UBS AG, Stamford Branch, Warburg Dillon Read LLC and Agrilink
Foods, Inc.
<PAGE>
"Fixed Rate" means a rate of interest per annum equal to the Ten Year
U.S. Treasury Rate (on the first date notice is given to the Administrative
Agent pursuant to Section 2.03(a)(ii) to convert any portion of a Floating Rate
Loan to a Fixed Rate Loan), plus 7.00%.
"Fixed Rate Loans" means Loans described in Section 2.03(a)(ii).
"Floating Rate Loans" means Loans described in Section 2.03(a)(i).
"GAAP" shall mean generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board that are applicable
to the circumstances as of the date of determination and consistently applied.
"Governmental Body" shall mean the United States of America or any
state or political subdivision thereof, and any other nation or political
subdivision thereof or any agency, department, commission, board, bureau or
instrumentality of any of the foregoing which exercises jurisdiction over the
Parent or any of its Subsidiaries or any of their assets or the conduct of the
business of the Parent or any of its Subsidiaries or any of their assets in any
such jurisdiction.
"Governmental Requirements" shall mean any law, ordinance, order, rule
or regulation of a Governmental Body.
"Guarantee" shall mean the guarantee of each Guarantor pursuant to
Section 4.
"Guarantors" shall mean the Parent and all Subsidiaries of the Parent
(other than the Company) in each instance whether now owned and existing or
hereafter formed or acquired other than (i) Subsidiaries of the Parent whose
aggregate assets, revenues and net income comprise less than 2.00% of the
assets, revenues and net income of the Parent and Subsidiaries taken as a whole
and (ii) Foreign Subsidiaries.
"Hedging Obligations" of any Person means the obligations of such
Person pursuant to (i) any interest rate swap agreement, interest rate collar
agreement or other similar agreement or arrangement designed to protect such
Person against fluctuations in interest rates, (ii) agreements or arrangements
designed to protect such Person against fluctuations in foreign currency
exchange rates in the conduct of its operations, or (iii) any forward contract,
commodity swap agreement, commodity option agreement or other similar agreement
or arrangement designed to protect such Person against fluctuations in commodity
prices, in each case, entered into in the ordinary course of business for bona
fide hedging purposes and not for the purpose of speculation.
"Indebtedness" shall mean and include (but without duplication) all
obligations of the Person in question of the following types, determined in
accordance with GAAP: (i) obligations (whether recourse or non recourse) for
<PAGE>
borrowed money or for the deferred purchase price of, or which have been
incurred in connection with the acquisition of, Property other than current
accounts payable, (ii) obligations of others of the type described in clause (i)
secured by any lien or other charge upon Property owned by the Person in
question, even though such Person has not assumed or become liable for the
payment of such obligations, (iii) obligations payable over a period in excess
of one year to acquire Property or to obtain the services of another Person if
the contract requires that payment for such Property or services be made
regardless of whether such Property is delivered or such services are performed,
(iv) Capitalized Rentals of such Person, (v) obligations in respect of letters
of credit and banker's acceptances and (vi) all liabilities of others of the
type referred to in clauses (i), (ii), (iii), (iv) and (v) above which are
directly or indirectly guaranteed by such Person, or as to which it has agreed
(contingently or otherwise) to purchase or otherwise acquire or in respect of
which it has otherwise assured a creditor against loss.
"Indemnitee" shall have the meaning set forth in Section 10.03(b).
"Initial Loan Commitment" and "Initial Loan Commitments" shall have the
meanings set forth in Section 2.01(a).
"Initial Loan" shall have the meaning set forth in Section 2.01(a).
"Initial Notes" shall have the meaning set forth in Section 2.01(d).
"Insolvency or Liquidation Proceeding" shall have the meaning set forth
in Section 11.02.
"Interest Expense" shall mean with reference to any period all interest
charges (excluding amortization of debt discount and debt issuance expense and
interest payable at the option of the obligor in securities of the same ranking
but including imputed interest on Capitalized Leases, except that if and so long
as imputed interest on Capitalized Leases is less than $250,000 per annum it may
be excluded from Interest Expense) accrued for such period, whether or not paid,
all as computed on a consolidated basis for the Parent and its Subsidiaries in
accordance with GAAP except as expressly provided for above.
"Interest Period" shall mean (i) with respect to the Initial Loan, each
period commencing on, in the case of the first Interest Period, the Closing
Date, and thereafter, on the expiry of the immediately preceding Interest
Period, and ending on the numerically corresponding day in the first calendar
month thereafter, and (ii) with respect to the Term Loan, each period commencing
on, in the case of the first Interest Period, the Conversion Date, and
thereafter, on the expiry of the immediately preceding Interest Period, and
ending on the numerically corresponding day in the third calendar month
thereafter; provided that (w) if any Interest Period would otherwise end on a
day which is not a Business Day, that Interest Period shall be extended to the
next succeeding Business Day, unless the result of such extension would be to
carry such Interest Period into another calendar month in which event such
Interest Period shall end on the immediately preceding Business Day; (x) no
Interest Period may extend beyond the final maturity date of the applicable
Loan; (y) the interest rate to be applicable for each Interest Period shall
apply from and including the first day of such Interest Period to but excluding
the last day thereof; and (z) if an Interest Period begins on the last day of a
month or if there is no numerically corresponding day in the month in which an
Interest Period is to end, then such Interest Period shall end on the last
Business Day of such month.
<PAGE>
"Investment" shall have the meaning set forth in Annex B.
"Lender" and "Lenders" shall have the meanings set forth in the
introduction to this Agreement.
"Leverage Ratio" shall mean, as of any time the same is to be
determined, the ratio of (a) Consolidated Total Indebtedness (other than
Seasonal Debt and liabilities in respect of undrawn letters of credit supporting
insurance and self insurance obligations of the Company and its Subsidiaries and
supporting payments by the Company and its Subsidiaries for goods and services
in the ordinary course of business) as of such time to (b) EBITDA for the period
of twelve calendar months most recently concluded, with EBITDA for any period
prior to the Acquisition Closing Date computed as though DFVC were then a
Subsidiary and the Company had not owned its asceptic business.
"LIBOR Index Rate" shall mean, for any Interest Period applicable to a
Loan, the rate per annum (rounded upwards, if necessary, to the next higher one
hundred-thousandth of a percentage point) for deposits in Dollars for a period
equal to such Interest Period, which appears on the Telerate Page 3750 as of
11:00 a.m. (London, England time) on the day two Business Days before the
commencement of such Interest Period.
"LIBOR Rate" shall mean for each Interest Period applicable to a Loan,
(a) the LIBOR Index Rate for such Interest Period, if such rate is available,
and (b) if the LIBOR Index Rate cannot be determined, the arithmetic average of
the rates of interest per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) at which deposits in Dollars in immediately available funds are
offered to the Administrative Agent at 11:00 a.m. (London, England time) two (2)
Business Days before the beginning of such Interest Period by three (3) or more
major banks in the interbank eurodollar market selected by the Administrative
Agent for a period equal to such Interest Period and in an amount equal or
comparable to the principal amount of the Loan scheduled to be made by the
Administrative Agent during such Interest Period.
"Loan Documents" shall mean this Agreement, the Notes and each of the
other documents, agreements, instruments, opinions and certificates now or
hereafter executed and delivered in connection herewith or therewith.
"Loan Indebtedness" shall have the meaning set forth in Section 11.01.
"Loan Obligations" shall mean all amounts, direct or indirect,
contingent or absolute, of every type or description, and at any time existing,
owing to any Lender or any of its Related Parties or their respective
successors, transferees or assignees pursuant to the terms of any Loan Document,
whether or not the right of such Person to payment in respect of such
obligations and liabilities is reduced to judgment, liquidated, unliquidated,
fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured and whether or not such claim is discharged, stayed or
otherwise affected by any bankruptcy case or insolvency or liquidation
proceeding.
"Loans" shall mean the Initial Loan and the Term Loan.
<PAGE>
"Losses" of any Person shall mean the losses, liabilities, claims
(including those based upon negligence, strict or absolute liability and
liability in tort), damages, reasonable expenses, obligations, penalties,
actions, judgments, encumbrances, liens, penalties, fines, suits, reasonable and
documented costs or disbursements of any kind or nature whatsoever (including
reasonable fees and expenses of counsel in connection with any Proceeding
commenced or threatened in writing, whether or not such Person shall be
designated a party thereto) at any time (including following the payment of the
Obligations) incurred by, imposed on or asserted against such Person.
"Majority Lenders" shall mean (i) at any time prior to the Closing
Date, Lenders holding at least a majority of the aggregate amount of the Initial
Loan Commitments, and (ii) at any time after the Closing Date, Lenders holding
at least a majority of the outstanding Loans.
"Marketing Agreement" shall mean the Marketing and Facilitation
Agreement dated as of November 3, 1994 by and between Parent and the Company
(then known as Curtice-Burns Foods, Inc.) as amended on September 23, 1998, and
as may be further amended as permitted hereby.
"Material Adverse Effect" shall mean a material adverse effect on (i)
the business, property, condition (financial or otherwise), or results of
operations of the Parent and its Subsidiaries taken as a whole, (ii) the ability
of the Parent or any Subsidiary to perform its obligations under the Loan
Documents, or (iii) the validity or enforceability of any of the Loan Documents
or the rights or remedies of the Administrative Agent or of the Lenders
thereunder or of the Marketing Agreement, Stock Purchase Agreement or Asset
Transfer Agreement.
"Maturity Date" shall have the meaning set forth in Section 2.02(d).
"Maximum Cash Interest Rate" means an interest rate of 13.00% per
annum; provided that in computing such interest rate, fees paid to the Lenders
or Agents shall not be deemed an interest payment.
"Merger" shall mean the merger of DFVC with and into the Company, with
the Company being the surviving corporation.
"Net Asset Sale Proceeds" means, with respect to any sale or disposal
of property described in the first sentence of Section 7.13 (an "Asset Sale")
(including the provisos thereto, except that the proviso to clause (vi) shall be
excluded), the proceeds thereof in the form of cash or Cash Equivalents
including payments in respect of deferred payment obligations when received in
the form of cash or Cash Equivalents (except to the extent that such obligations
are financed or sold with recourse to the Parent or any of its Subsidiaries),
net of (i) brokerage commissions and other fees and expenses (including fees and
expenses of legal counsel, accountants and investment banks) related to such
Asset Sale, (ii) provisions for all taxes payable as a result of such Asset Sale
(after taking into account any available tax credits or deductions and any tax
sharing arrangements), (iii) amounts required to be paid to any Person (other
than the Parent or any of its Subsidiaries) owning a beneficial interest in the
properties or assets subject to the Asset Sale or having a lien therein and (iv)
appropriate amounts to be provided by the Parent or any of its Subsidiaries, as
the case may be, as a reserve required in accordance with GAAP against any
liabilities associated with such Asset Sale and retained by the Parent or any of
its Subsidiaries, as the case may be, after such Asset Sale, including, without
<PAGE>
limitation, pensions and other postemployment benefit liabilities, liabilities
related to environmental matters and liabilities under any indemnification
obligations associated with such Asset Sale, all as reflected in an Officers'
Certificate delivered to the Administrative Agent; provided, however, that any
amounts remaining after adjustments, revaluations or liquidations of such
reserves shall constitute Net Asset Sale Proceeds.
"Net Available Proceeds" shall mean, in the case of any Equity Issuance
or any Debt Issuance, the aggregate amount of all cash received by Parent or any
Subsidiary in respect thereof net of all investment banking fees, discounts and
commissions, legal fees, consulting fees, accountants' fees, underwriting
discounts and commissions and other customary fees and expenses, actually
incurred and satisfactorily documented in connection therewith.
"Net Capital Expenditures" shall mean for any period all sums paid by
the Parent and its Subsidiaries to acquire assets which payments are not to be
treated as expenses in accordance with GAAP less up to $10,000,000 of the net
cash proceeds received by the Parent and its Subsidiaries from the sale or other
disposition of capital assets during the same period, except that Permitted
Acquisitions shall be excluded from Net Capital Expenditures.
"Net Proceeds Deficiency" shall have the meaning set forth in Section
2.05(a)(iii)(4).
"Net Proceeds Offer" shall have the meaning set forth in Section
2.05(a)(iii)(4).
"Non-payment Default" shall have the meaning set forth in Section
11.03(b).
"Note Amount" shall have the meaning set forth in Section
2.05(a)(iii)(4).
"Note Portion of Excess Proceeds" shall have the meaning set forth in
Section 2.05(a)(iii)(4).
"Notes" shall mean the Initial Notes and the Term Notes.
"Notice of Borrowing" shall mean a notice of borrowing substantially in
the form of Exhibit B.
"Notice of Conversion" shall mean a notice of conversion substantially
in the form of Exhibit C.
"Obligation" means any principal, interest (including, in the case of
Senior Indebtedness, interest accruing subsequent to the filing of a petition in
bankruptcy or insolvency at the rate specified in the document relating to such
Senior Indebtedness, whether or not such interest is an allowed claim permitted
to be enforced against the obligor under applicable law), penalties, fees,
indemnification, reimbursements, costs, expenses, damages and other liabilities
payable under the documentation governing any Indebtedness.
<PAGE>
"Offer to Purchase" shall mean a written offer (the "Offer") sent by or
on behalf of the Company by first-class mail, postage prepaid, to each Lender at
his notice for address pursuant to Section 10.11 on the date of the Offer
offering to purchase up to the principal amount of Notes specified in such Offer
at the purchase price specified in such Offer. Unless otherwise required by
applicable law, the Offer shall specify an expiration date (the "Expiration
Date") of the Offer to Purchase, which shall be not less than 20 Business Days
nor more than 60 days after the date of such Offer, and a settlement date (the
"Purchase Date") for purchase of Notes to occur no later than five Business Days
after the Expiration Date. The Company shall notify the Administrative Agent at
least 15 Business Days (or such shorter period as is acceptable to the
Administrative Agent) prior to the mailing of the Offer of the Company's
obligation to make an Offer to Purchase, and the Offer shall be mailed by the
Company or, at the Company's request, by the Administrative Agent in the name
and at the expense of the Company. The Offer shall contain information
concerning the business of Parent and its Subsidiaries which the Company in good
faith believes will enable such Lenders to make an informed decision with
respect to the Offer to Purchase (which at a minimum will include (i) the most
recent annual and quarterly consolidated financial statements of Parent and the
Company and a financial analysis substantially similar to a "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
contained in a Form S-1 registration statement filed by an issuer on its behalf
with the Commission (which requirements may be satisfied by delivery of such
documents together with the Offer), (ii) a description of material developments
in Parent's or the Company's business subsequent to the date of the latest of
such financial statements referred to in clause (i) (including a description of
the events requiring the Company to make the Offer to Purchase), (iii) if
applicable, appropriate pro forma financial information concerning the Offer to
Purchase and the events requiring the Company to make the Offer to Purchase and
(iv) any other information required by applicable law to be included therein).
The Offer shall contain all instructions and materials necessary to enable such
Lenders to tender Notes pursuant to the Offer to Purchase. The Offer shall also
state:
(1) the Section of this Agreement pursuant to which the Offer
to Purchase is being made;
(2) the Expiration Date and the Purchase Date;
(3) the aggregate principal amount of the outstanding Notes
offered to be purchased by the Company pursuant to the Offer to
Purchase (including, if less than 100%, the manner by which such amount
has been determined pursuant to the Section of this Agreement requiring
the Offer to Purchase) (the "Purchase Amount");
(4) the purchase price to be paid by the Company for each
$1,000 aggregate principal amount of Notes accepted for payment (the
"Purchase Price");
(5) the place or places where Notes are to be surrendered for
tender pursuant to the Offer to Purchase;
<PAGE>
(6) that interest on any Note not tendered or tendered but not
purchased by the Company pursuant to the Offer to Purchase will
continue to accrue;
(7) that on the Purchase Date the Purchase Price will become
due and payable upon each Note being accepted for payment pursuant to
the Offer to Purchase and that interest thereon shall cease to accrue
on and after the Purchase Date;
(8) that each holder electing to tender all or any portion of
a Note pursuant to the Offer to Purchase will be required to surrender
such Note at the place or places specified in the Offer prior to the
close of business on the Expiration Date (such Note being, if the
Company or the Administrative Agent so requires, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to
the Company and the Administrative Agent duly executed by, the holder
thereof or his attorney duly authorized in writing);
(9) that Lenders will be entitled to withdraw all or any
portion of Notes tendered if the Company receives, not later than the
close of business on the fifth Business Day next preceding the
Expiration Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the holder, the principal amount of the Note
the holder tendered, the certificate number of the Note the holder
tendered and a statement that such holder is withdrawing all or a
portion of his tender;
(10) that (a) if Notes in an aggregate principal amount at
maturity less than or equal to the Purchase Amount are duly tendered
and not withdrawn pursuant to the Offer to Purchase, the Company shall
purchase all such Notes and (b) if Notes in an aggregate principal
amount in excess of the Purchase Amount are tendered and not withdrawn
pursuant to the Offer to Purchase, the Company shall purchase Notes
having an aggregate principal amount equal to the Purchase Amount on a
pro rata basis (with such adjustments as may be deemed appropriate so
that only Notes in denominations of $1,000 principal amount at maturity
or integral multiples thereof shall be purchased); and
(11) that in the case of any holder whose Note is purchased
only in part, the Company shall execute and deliver to the holder of
such Note without service charge, a new Note or Notes, of any
authorized denomination as requested by such holder, in an aggregate
principal amount equal to and in exchange for the unpurchased portion
of the Note so tendered.
An Offer to Purchase shall be governed by and effected in accordance
with the provisions above pertaining to any Offer.
"Offered Price" shall have the meaning set forth in Section
2.05(a)(iii)(4).
<PAGE>
"Officer" shall mean any of the following of the Company: the Chairman
of the Board, the Chief Executive Officer, the Chief Financial Officer, the
President, any Vice President, the Treasurer or the Secretary.
"Officers' Certificate" shall mean a certificate signed by any two
Officers.
"Original Initial Notes" shall have the meaning set forth in Section
2.01(d).
"Original Term Notes" shall have the meaning set forth in Section
2.02(e).
"Other Indebtedness" shall have the meaning set forth in Section
2.05(a)(iii)(4).
"Parent" means Pro-Fac Cooperative, Inc., a New York agricultural
cooperative corporation.
"Participant" shall have the meaning set forth in Section 10.07(c).
"Payment Amount" shall have the meaning set forth in Section
2.05(a)(iii)(4).
"Payment Blockage Notice" shall have the meaning set forth in Section
11.03(b).
"Payment Blockage Period" shall have the meaning set forth in Section
11.03(b).
"Payment Default" shall have the meaning set forth in Section 11.03(a).
"PBGC" shall have the meaning set forth in Section 6.07.
"Permitted Acquisition" shall mean an acquisition permitted by Section
7.10(g).
"Permitted Junior Securities" shall mean any securities of the Company
or a Guarantor provided for by a plan of reorganization or readjustment that are
subordinated in right of payment to all Senior Indebtedness of the Company or
such Guarantor, as the case may be, that may at the time be outstanding to
substantially the same extent as, or to a greater extent than, the Notes or the
Guarantee of such Guarantor, as applicable, are subordinated to Senior
Indebtedness.
"Permitted Liens" prior to the Conversion Date shall have the meaning
set forth in Section 7.08 and on and after the Conversion Date shall have the
meaning set forth in Annex B.
"Person" shall mean any individual, corporation, company, voluntary
association, partnership, joint venture, trust, unincorporated organization or
government (or any agency, instrumentality or political subdivision thereof).
"PIK Interest Amount" shall have the meaning set forth in Section
2.03(b).
"Primary Lender" shall mean UBS AG, Stamford Branch.
<PAGE>
"Principal Office" shall mean the principal office of the
Administrative Agent, located on the date hereof at 677 Washington Boulevard,
Stamford, Connecticut 06912, or such other office as may be designated by the
Administrative Agent.
"Proceeding" shall mean any claim, counterclaim, action, judgment,
suit, hearing, arbitration or proceeding, including by or before any
Governmental Body and whether judicial or administrative.
"Property" shall mean all assets and properties of any nature
whatsoever, whether real or personal, tangible or intangible, including without
limitation intellectual property.
"Refinancing" shall mean the public offering or private placement and
sale by the Company of the Refinancing Securities contemplated by Section 7.23,
in order to refinance, as applicable, the Initial Notes, Term Notes, the
Exchange Notes and all Loan Obligations owing in respect of this Agreement and
the other Loan Documents and all obligations under the Senior Subordinated
Indenture.
"Refinancing Indebtedness" means Indebtedness of the Parent or any of
its Subsidiaries issued in exchange for, or the proceeds from the issuance and
sale or disbursement of which are used substantially concurrently to repay,
redeem, refund, refinance, discharge or otherwise retire for value, in whole or
in part (collectively, "repay"), or constituting an amendment, modification or
supplement to or a deferral or renewal of (collectively, an "amendment"), any
Indebtedness of the Parent or any of its Subsidiaries (the "Refinanced
Indebtedness") in a principal amount not in excess of the principal amount of
the Refinanced Indebtedness (or, if such Refinancing Indebtedness refinances
Indebtedness under a revolving credit facility or other agreement providing a
commitment for subsequent borrowings, with a maximum commitment not to exceed
the maximum commitment under such revolving credit facility or other agreement),
plus the amount of accrued but unpaid interest thereon and the amount of any
reasonably determined prepayment premium necessary to accomplish such
refinancing and such reasonable fees and expenses incurred in connection
therewith; provided that: (i) the Refinancing Indebtedness is the obligation of
the same Person as that of the Refinanced Indebtedness; (ii) if the Refinanced
Indebtedness was subordinated to or pari passu with the Loan Indebtedness, then
such Refinancing Indebtedness, by its terms, is expressly pari passu with (in
the case of Refinanced Indebtedness that was pari passu with) the Loan
Indebtedness, or subordinate in right of payment to (in the case of Refinanced
Indebtedness that was subordinated to) the Loan Indebtedness at least to the
same extent as the Refinanced Indebtedness; (iii) the portion, if any, of the
Refinancing Indebtedness that is scheduled to mature on or prior to the maturity
date of the Initial Loan or the Term Loan, as applicable, has a Weighted Average
Life to Maturity at the time such Refinancing Indebtedness is incurred that is
equal to or greater than the Weighted Average Life to Maturity of the portion of
the Refinanced Indebtedness being repaid that is scheduled to mature on or prior
to the maturity date of the Initial Loan or the Term Loan, as applicable; and
(iv) the Refinancing Indebtedness is secured only to the extent, if at all, and
by the assets (which may include after-acquired assets), that the Refinanced
Indebtedness is secured.
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"Refinancing Securities" shall mean the unsecured senior subordinated
notes of the Company or any of its Subsidiaries proposed to be sold in order to
consummate the Refinancing pursuant to Section 7.26.
"Refinancing Securities Demand" shall have the meaning set forth in
Section 7.23.
"Register" shall have the meaning set forth in Section 7.25.
"Registration Rights Agreement" shall mean a registration rights
agreement in the form of the Arrangers customary high yield registration rights
agreement.
"Regulation D" shall mean Regulation D (12 C.F.R. Part 204) of the
Board of Governors of the United States Federal Reserve System.
"Regulations T, U and X" shall mean, respectively, Regulation T (12
C.F.R. Part 220), Regulation U (12 C.F.R. Part 221) and Regulation X (12 C.F.R.
Part 224) of the Board of Governors of the United States Federal Reserve System
(or any successor), as the same may be modified and supplemented and in effect
from time to time.
"Related Business" means any business in which Parent and its
Subsidiaries operate on the Closing Date, or that is closely related to or
complements the business of Parent and its Subsidiaries, as such business exists
on the Closing Date.
"Related Business Investment" means any Investment directly by Parent
or its Subsidiaries in any Related Business.
"Related Parties" shall have the meaning set forth in Section 9.01.
"Rentals" shall mean and include all rents (including such payments
which the lessee is obligated to make to the lessor on termination of the lease
or surrender of the Property) payable by the Parent or its Subsidiaries as
lessee or sub-lessee under a lease or other agreement for the use or possession
of real or personal property but shall be exclusive of any amounts required to
be paid by the Parent or any Subsidiary (whether or not designated as rents or
additional rents) on account of maintenance, repairs, insurance, taxes and
similar charges. Rentals shall be computed for the Parent and Subsidiaries on a
consolidated basis.
"Replaceable Lender" shall have the meaning set forth in Section 3.07.
"Replacement Lender" shall have the meaning set forth in Section 3.07.
"Representative" means, with respect to any Senior Indebtedness, the
indenture trustee or other trustee, agent or other representative(s), if any, of
holders of such Senior Indebtedness.
"Reserve Percentage" shall mean the daily arithmetic average maximum
rate at which reserves (including, without limitation, any supplemental,
marginal and emergency reserves) are imposed on member banks of the Federal
Reserve System during the applicable Interest Period by the Board of Governors
<PAGE>
of the Federal Reserve System (or any successor) under Regulation D on
"eurocurrency liabilities" (as such term is defined in Regulation D), subject to
any amendments of such reserve requirement by such Board or its successor,
taking into account any transitional adjustments thereto. For purposes of this
definition, the Loans shall be deemed to be eurocurrency liabilities as defined
in Regulation D without benefit or credit for any prorations, exemptions or
offsets under Regulation D. The Adjusted LIBOR Rate shall automatically be
adjusted as of the date of any change in the Reserve Percentage.
"Revolving Loan Facility" means the revolving loan facility provided
under the Senior Credit Facility.
"Sale and Leaseback Transaction" shall have the meaning set forth in
Annex B.
"Seasonal Debt" shall mean Indebtedness for money borrowed of the
Parent and its Subsidiaries (computed on a consolidated basis) incurred to meet
their seasonal working capital needs; provided that (i) no Indebtedness shall be
treated as Seasonal Debt during the last fiscal quarter of each fiscal year and
(ii) the aggregate amount of Indebtedness included in Seasonal Debt as of the
last day of each first fiscal quarter of the Parent (ending on or about
September 30) shall not exceed $150,000,000, the aggregate amount of
Indebtedness included in Seasonal Debt as of the last day of the second fiscal
quarter of the Parent (ending on or about December 31 of each year) shall not
exceed $175,000,000 and the aggregate amount of Indebtedness included in
Seasonal Debt as of the last day of the third fiscal quarter of the Parent
(ending on or about March 31 of each year) shall not exceed $125,000,000.
"Securities Act" means the U.S. Securities Act of 1933, as amended.
"Senior Credit Facility" means the Credit Agreement, dated as of
September 23, 1998, by and among the Company, Parent, the other Guarantors,
Harris Trust and Savings Bank, individually and as Administrative Agent, Bank of
Montreal, Chicago Branch, individually and as Syndication Agent, and the other
lenders party thereto, together with any guarantees, security agreements or
other collateral documents and any other related documents, as any of the
foregoing may be subsequently amended, restated, refinanced, or replaced from
time to time, and shall include agreements in respect of Hedging Obligations
designed to protect against fluctuations in interest rates and entered into with
respect to loans thereunder.
"Senior Indebtedness" shall mean all Indebtedness and other Obligations
specified below payable directly or indirectly by the Company or any Guarantor,
as the case may be, whether outstanding on the Closing Date or thereafter
created, incurred or assumed by the Company or such Guarantor: (i) the principal
of and interest on and all other Indebtedness and Obligations related to the
Senior Credit Facility (including, without limitation, all loans, letters of
credit and unpaid drawings with respect thereto and other extensions of credit
under the Senior Credit Facility, and all expenses, fees, reimbursements,
indemnities and other amounts owing pursuant to the Senior Credit Facility),
(ii) amounts payable in respect of any Hedging Obligations, (iii) in addition to
<PAGE>
the amounts described in (i) and (ii), all Indebtedness not prohibited by, if
incurred prior to the Conversion Date, Section 7.09, and if incurred on or after
the Conversion Date, Section A-1 of Annex A, that is not expressly pari passu
with, or subordinated to, the Notes or the Guarantees, as the case may be, (iv)
all Capitalized Rentals outstanding on the Closing Date, and (v) all Refinancing
Indebtedness permitted under this Agreement of Indebtedness specified in clauses
(i) through (iv). Notwithstanding anything to the contrary, Senior Indebtedness
will not include (a) any Indebtedness which by the express terms of the
agreement or instrument creating, evidencing or governing the same is junior or
subordinate in right of payment to any item of Senior Indebtedness, (b) any
trade payable arising from the purchase of goods or materials or for services
obtained in the ordinary course of business, (c) Indebtedness incurred (but only
to the extent incurred) in violation of this Agreement as in effect at the time
of the respective incurrence, (d) any Indebtedness of the Company that, when
incurred, was without recourse to the Company, (e) any Indebtedness to any
employee of the Company or any of its respective Subsidiaries, (f) any liability
for taxes owned or owing by the Company, (g) any Indebtedness represented by the
Existing Notes and any guarantee thereof by any Guarantor or (h) any
Subordinated Debt. Indebtedness represented by the Existing Notes and any
guarantee thereof by any Guarantor shall be pari passu with the Loans and Notes
and the Guarantees, respectively.
"Senior Subordinated Indenture" shall mean an indenture between the
Company and a trustee substantially in the form of the Arranger's customary high
yield indenture (which shall include guarantees by the Guarantors of the
Exchange Notes), modified as appropriate for the Exchange Notes and having
principal negative covenants substantially identical to the covenants set forth
in Annex A, principal events of default substantially identical to Section 8 and
subordination provisions substantially identical to Section 11 (with such
changes therein as the Majority Lenders (which consent shall be conclusively
deemed given if a Lender does not object to the draft thereof within five
Business Days of receipt thereof) and the Company shall approve, and, at such
time as notes issued thereunder are sold in a public offering, with other
appropriate changes to reflect such public offering), as the same may at any
time be amended, modified and supplemented and in effect.
"Stock Purchase Agreement" shall mean the Stock Purchase Agreement
dated as of July 24, 1998 by and between Dean Foods and the Company as amended
as permitted hereby.
"Subordinated Debt" shall mean any Indebtedness of the Company and
guaranties thereof by the Guarantors which are subject to and subordinate in
right of payment to the prior payment of the Parent's and its Subsidiaries'
indebtedness and obligations under the Loan Documents pursuant to written
subordination provisions and having other terms and conditions acceptable to the
Majority Lenders, including without limitation the Subordinated Promissory Note
issued by the Company to Dean Foods in connection with the Acquisition in the
principal amount of $30,000,000, and additional notes issued in accordance with
the terms thereof.
"Subsequent Initial Note" shall have the meaning set forth in Section
2.01(d).
"Subsequent Term Note" shall have the meaning set forth in Section
2.02(e).
<PAGE>
"Subsidiary" shall mean, any corporation or other entity of which more
than fifty percent (50%) of the outstanding stock or comparable equity interests
having ordinary voting power for the election of the Board of Directors of such
corporation or similar governing body in the case of a non-corporation
(irrespective of whether or not, at the time, stock or other equity interests of
any other class or classes of such corporation or other entity shall have or
might have voting power by reason of the happening of any contingency which has
not occurred) is at the time directly or indirectly owned by the Person in
question or by one or more of its Subsidiaries. Unless the context otherwise
requires, references herein to Subsidiaries shall be references to Subsidiaries
of the Parent.
"Take-Out Bank" shall mean Warburg Dillon Read LLC.
"Telerate Page 3750" shall mean the display designated as "Page 3750"
on the Telerate Servce (or such other page as may replace Page 3750 on that
service or such other service as may be nominated by the British Bankers'
Association as the information vendor for the purpose of displaying British
Bankers' Association Interest Settlement Rates for Dollar deposits).
"Ten Year U.S. Treasury Rate" means the average of the annual yield
rate, on the date to which such Ten Year U.S. Treasury Rate relates, of the
three actively traded U.S. Treasury securities having a remaining duration to
maturity closest to ten years, as such rate is published under "Treasury
Constant Maturities" in Federal Reserve Statistical Release H.15(519).
"Term Loan Commitment" shall have the meaning set forth in Section
2.02(a).
"Term Notes" shall have the meaning set forth in Section 2.02(e).
"Term Loan" shall have the meaning set forth in Section 2.02(a).
"Term Loan Facilities" means the term loan facilities provided under
the Senior Credit Facility.
"Weighted Average Life to Maturity," when applied to any Indebtedness
at any date, means the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment by (ii) the then outstanding principal
amount of such Indebtedness.
"Withholding Taxes" shall have the meaning set forth in Section 3.06.
"Year 2000 Problem" shall mean any significant risk that computer
hardware, software, or equipment containing embedded microchips essential to the
business or operations of the Parent or any of its Subsidiaries will not, in the
case of dates or time periods occurring after December 31, 1999, function at
least as efficiently and reliably as in the case of times or time periods
occurring before January 1, 2000, including the making of accurate leap year
calculations.
1.02 Accounting Terms. For purposes of this Agreement, all accounting
terms not otherwise defined herein shall have the meanings assigned to such
terms in conformity with GAAP. Financial statements and other information
furnished to the Administrative Agent pursuant to Section 7.05 shall be prepared
in accordance with GAAP (as in effect at the time of such preparation) on a
consistent basis. In the event any Accounting Changes (as defined below) shall
occur and such changes affect financial covenants, standards or terms in this
Agreement, then the Parent, the Company, the Administrative Agent and the
Lenders agree to enter into negotiations in order to amend such provisions of
this Agreement so as to equitably reflect such Accounting Changes with the
desired result that the criteria for evaluating the financial condition of the
Parent and its Subsidiaries shall be the same after such Accounting Changes as
if such Accounting Changes had not been made, and until such time as such an
amendment shall have been executed and delivered by the Company, the Guarantors
and the Majority Lenders, (A) all financial covenants, standards and terms in
this Agreement shall be calculated and/or construed as if such Accounting
Changes had not been made, and (B) the Company shall prepare footnotes to each
compliance certificate and the financial statements required to be delivered
hereunder that show the differences between the financial statements delivered
(which reflect such Accounting Changes) and the basis for calculating financial
covenant compliance (without reflecting such Accounting Changes). "Accounting
Changes" means: (a) changes in accounting principles required by GAAP since the
close of the Parent's 1998 fiscal year and implemented by the Parent or any of
its Subsidiaries; (b) changes in accounting principles recommended by certified
public accountants of the Parent' or any of its Subsidiaries; and (c) changes in
carrying value of the Parent's (or any of its Subsidiaries') assets, liabilities
or equity accounts resulting from the application of purchase accounting
principles. All references herein to fiscal years, fiscal quarters or fiscal
periods shall, unless the context otherwise requires, be references to fiscal
years, fiscal quarters or fiscal periods of the Parent.
1.03. Rules of Construction.
(a) In this Agreement and each other Loan Document, unless the
context clearly requires otherwise (or such other Loan Document clearly
provides otherwise), references to (i) the plural include the singular,
the singular the plural and the part the whole; (ii) Persons include
their respective permitted successors and assigns or, in the case of
governmental Persons, Persons succeeding to the relevant functions of
such Persons; (iii) agreements (including this Agreement), promissory
notes and other contractual instruments include subsequent amendments,
assignments, and other modifications thereto, but only to the extent
such amendments, assignments or other modifications thereto are not
prohibited by their terms or the terms of any Loan Document; (iv)
statutes and related regulations include any amendments of same and any
successor statutes and regulations; and (v) time shall be a reference
to New York City time. Where any provision herein refers to action to
be taken by any Person, or which such Person is prohibited from taking,
such provision shall be applicable whether such action is taken
directly or indirectly by such Person.
(b) In this Agreement and each other Loan Document, unless the
context clearly requires otherwise (or such other Loan Document clearly
provides otherwise), (i) "amend" shall mean "amend, restate, amend and
restate, supplement or modify"; and "amended," "amending," and
"amendment" shall have meanings correlative to the foregoing; (ii) in
the computation of periods of time from a specified date to a later
specified date, "from" shall mean "from and including"; "to" and
"until" shall mean "to but excluding"; and "through" shall mean "to and
including"; (iii) "hereof," "herein" and "hereunder" (and
<PAGE>
similar terms) in this Agreement or any other Loan Document refer to
this Agreement or such other Loan Document, as the case may be, as a
whole and not to any particular provision of this Agreement or such
other Loan Document; (iv) "including" (and similar terms) shall mean
"including without limitation" (and similarly for similar terms); (v)
"or" has the inclusive meaning represented by the phrase "and/or"; (vi)
"satisfactory to" any Lender or Agent shall mean in form, scope and
substance and on terms and conditions satisfactory to such Lender or
Agent; (vii) references to "the date hereof" shall mean the date first
set forth above; and (viii) "asset" and "Property" shall have the same
meaning and effect and refer to all tangible and intangible assets and
property, whether real, personal or mixed and of every type and
description.
(c) In this Agreement unless the context clearly requires
otherwise, any reference to (i) an Annex, Exhibit or Schedule is to an
Annex, Exhibit or Schedule, as the case may be, attached to this
Agreement and constituting a part hereof, and (ii) a Section or other
subdivision is to a Section or such other subdivision of this
Agreement.
(d) No doctrine of construction of ambiguities in agreements
or instruments against the interests of the party controlling the
drafting thereof shall apply to any Loan Document.
Section 2. Amount and Terms of Loan Commitment and Loans; Notes.
2.01. Initial Loan and Initial Notes.
(a) Initial Loan Commitment. Subject to the terms and
conditions of this Agreement and in reliance upon the representations
and warranties of the Company and Parent herein set forth, the Lenders
hereby severally agree to lend to the Company on the Closing Date
$200,000,000 in the aggregate (the "Initial Loan"), each such Lender
committing to lend the amount set forth next to such Lender's name on
the signature pages hereto. The Lenders' commitments to make the
Initial Loan to the Company pursuant to this Section 2.01(a) are herein
called individually, the "Initial Loan Commitment" and collectively,
the "Initial Loan Commitments."
(b) Notice of Borrowing. When the Company desires to borrow
under this Section 2.01, it shall deliver to the Administrative Agent a
Notice of Borrowing no later than 11:00 A.M. (New York time), at least
three Business Days in advance of the Closing Date or such later date
as shall be agreed to by the Administrative Agent. The Notice of
Borrowing shall specify the applicable date of borrowing (which shall
be a Business Day). Upon receipt of such Notice of Borrowing, the
Administrative Agent shall promptly notify each Lender of its share of
the Initial Loan and the other matters covered by the Notice of
Borrowing.
(c) Disbursement of Funds. (i) No later than 12:00 Noon (New
York time) on the Closing Date, each Lender will make available its pro
rata share of the Initial Loan requested to be made on such date in the
manner provided below. All amounts shall be made available to the
Administrative Agent in Dollars and immediately available funds at the
Principal Office and the Administrative Agent promptly will make
available to the Company by depositing to its account at the Principal
Office the aggregate of the amounts so made available in the type of
funds received. Unless the Administrative Agent shall have been
notified by any Lender prior to the Closing Date that such Lender does
not intend to make available to the Administrative Agent its portion of
the
<PAGE>
Initial Loan to be made on such date, the Administrative Agent may
assume that such Lender has made such amount available to the
Administrative Agent on such date, and the Administrative Agent, in
reliance upon such assumption, may (in its sole discretion and without
any obligation to do so) make available to the Company a corresponding
amount. If such corresponding amount is not in fact made available to
the Administrative Agent by such Lender and the Administrative Agent
has made available the same to the Company, the Administrative Agent
shall be entitled to recover such corresponding amount from such
Lender. If such Lender does not pay such corresponding amount forthwith
upon the Administrative Agent's demand therefor, the Administrative
Agent shall promptly notify the Company, and the Company shall
immediately pay such corresponding amount to the Administrative Agent.
The Administrative Agent shall also be entitled to recover from the
Lender or the Company, as the case may be, interest on such
corresponding amount in respect of each day from the date such
corresponding amount was made available by the Administrative Agent to
the Company to the date such corresponding amount is recovered by the
Administrative Agent, at a rate per annum equal to (x) if paid by such
Lender, the overnight Federal Funds Rate or (y) if paid by the Company,
the then applicable rate of interest on the Loans.
(ii) Nothing herein shall be deemed to relieve any
Lender from its obligation to fulfill its Initial Loan
Commitment hereunder or to prejudice any rights which the
Company may have against any Lender as a result of any default
by such Lender hereunder.
(d) Initial Notes. The Company shall execute and deliver to
each Lender on the Closing Date an Initial Note dated the Closing Date
substantially in the form of Exhibit A-1 annexed hereto to evidence the
portion of the Initial Loan made on such date by such Lender and with
appropriate insertions ("Original Initial Notes"). On each interest
payment date prior to the Conversion Date on which the Company elects
to pay a PIK Interest Amount pursuant to Section 2.03(b), the Company
shall execute and deliver to each Lender on such interest payment date
an Initial Note dated such interest payment date substantially in the
form of Exhibit A-1 annexed hereto in a principal amount equal to such
Lender's pro rata portion of such PIK Interest Amount and with other
appropriate insertions (each a "Subsequent Initial Note" and, together
with the Original Initial Notes, the "Initial Notes"). A Subsequent
Initial Note shall bear interest from the date of its issuance at the
same rate borne by all Initial Notes.
(e) Scheduled Payment of Initial Loan. Subject to Section
2.02, the Company shall pay in full the outstanding amount of the
Initial Loan and all other Loan Obligations owing hereunder no later
than the Conversion Date unless the Initial Loan is converted into a
Term Loan.
(f) Termination of Initial Loan Commitment. The Initial Loan
Commitments hereunder shall terminate on the earlier of (i) the date on
which the Stock Purchase Agreement is terminated in accordance with its
terms or (ii) October 31, 1998, if the Initial Loan is not made on or
before such date. The Company shall have the right, without premium or
penalty, to reduce or terminate the Initial Loan Commitment of the
Lenders hereunder at any time.
<PAGE>
(g) Pro Rata Borrowings. The Initial Loan made under this
Agreement shall be made by the Lenders pro rata on the basis of their
respective Initial Loan Commitments. It is understood that no Lender
shall be responsible for any default by any other Lender of its
obligation to make its portion of the Initial Loan hereunder and that
each Lender shall be obligated to make its portion of the Initial Loan
hereunder, regardless of the failure of any other Lender to fulfill its
commitments hereunder.
2.02. Term Loan and Term Notes.
(a) Term Loan Commitment. Subject to the terms and conditions
of this Agreement and in reliance upon the representations and
warranties of the Company and Parent herein set forth, the Lenders
hereby severally agree, on the Conversion Date, upon the request of the
Company, to convert the then outstanding principal amount of the
Initial Notes into a term loan (the "Term Loan"), such Term Loan to be
in the aggregate principal amount of the then outstanding principal
amount of the Initial Notes. The Lenders' commitments under this
Section 2.02(a) are herein called collectively, the "Term Loan
Commitment."
(b) Notice of Conversion/Borrowing. If the Company has not
repaid the Initial Loan in full on or prior to the Conversion Date,
then the Company shall convert the then outstanding principal amount of
the Initial Notes into a Term Loan under this Section 2.02. The Company
shall deliver to the Lenders a Notice of Conversion no later than 11:00
A.M. (New York time), at least two Business Days in advance of the
Conversion Date. The Notice of Conversion shall specify the principal
amount of the Initial Notes outstanding on the Conversion Date to be
converted into a Term Loan.
(c) Making of Term Loan. Upon satisfaction or waiver of the
conditions precedent specified in Section 5.02 hereof, each Lender
shall extend to the Company the Term Loan to be issued on the
Conversion Date by such Lender by cancelling on its records a
corresponding principal amount of the Initial Notes held by such
Lender.
(d) Maturity of Term Loan. The Term Loan shall mature and the
Company shall pay in full the outstanding principal amount thereof and
accrued interest thereon on September 23, 2006 (the "Maturity Date").
(e) Term Notes. The Company shall execute and deliver to each
Lender on the Conversion Date a Term Note dated the Conversion Date
substantially in the form of Exhibit A-2 annexed hereto to evidence the
Term Loan made on such date, in the principal amount of the Initial
Notes held by such Lender on such date and with other appropriate
insertions (collectively the "Original Term Notes"). On or after the
Conversion Date, on each interest payment date on which the Company
elects to pay a PIK Interest Amount pursuant to Section 2.03(b), the
Company shall execute and deliver to each Lender on such interest
payment date a Term Note dated such interest payment date substantially
in the form of Exhibit A-2 annexed hereto in a principal amount equal
to such Lender's pro rata portion of such PIK Interest Amount and with
other appropriate insertions (each a "Subsequent Term Note" and,
together with the Original Term Notes, the "Term Notes"). A Subsequent
Term Note shall bear interest from the date of its issuance at the same
rate borne by all Term Notes.
<PAGE>
2.03. Interest on the Loans.
(a) Rate of Interest. The Loans shall bear interest on the
unpaid principal amount thereof from the date made through maturity
(whether by prepayment, acceleration or otherwise) at a rate determined
as set forth below.
(i) Floating Rate Loans. Subject to Section
2.03(a)(ii), the Loans shall bear interest for each Interest
Period at a rate per annum equal to the Adjusted LIBOR Rate
for such Interest Period, plus the Applicable Spread.
(ii) Fixed Rate Loans. At any time on or after the
Conversion Date, at the request of any Lender, all or any
portion of the Term Loan owing to such Lender shall bear
interest at a fixed rate per annum equal to the Fixed Rate,
effective as of the first interest payment date with respect
to such Term Loan after such notice so long as the 10 Business
Days' notice set forth below is given; provided that no such
conversion shall be permitted in respect of amounts to be
voluntarily prepaid following receipt of a notice of
prepayment pursuant to Section 2.05(a)(ii). In order to
request the conversion of a Floating Rate Loan to a Fixed Rate
Loan, the Lender shall notify the Administrative Agent in
writing of its intention to do so at least 10 Business Days
prior to an interest payment date indicating the amount of the
Term Loan for which it is requesting conversion to a Fixed
Rate Loan, which shall be not less than $5,000,000 and
increments of $500,000 in excess thereof (or, in the case any
Lender holds a Term Loan with an outstanding amount less than
$5,000,000, such remaining amount), and the Administrative
Agent shall so notify the Company in writing at least five
Business Days prior to such next succeeding interest payment
date. Upon the conversion of a portion of a Floating Rate Loan
to a Fixed Rate Loan an appropriate notation will be made on
the Term Note and, on and after the first interest payment
date following the receipt by the Company of the notice
referenced in the preceding sentence, such portion of the Term
Loan which is converted to a Fixed Rate Loan shall bear
interest at the Fixed Rate until repaid.
(iii) Notwithstanding clause (i) or (ii) of this
Section 2.03(a) or any other provision herein, in no event
will the combined sum of interest (cash or otherwise) on the
Loans exceed 16.00% per annum.
(b) Interest Payments. Interest shall be payable (i) with
respect to the Initial Loan, in arrears on the 23nd day of each
calendar month and upon any prepayment of the Initial Loan (to the
extent accrued on the amount being prepaid) and at maturity of the
Initial Loan in respect of any amounts paid on such date and not
converted to Term Loans and (ii) with respect to the Term Loan, in
arrears on each March 23, June 23, September 23 and December 23 of each
year, commencing on the first of such dates to follow the Conversion
Date, upon any prepayment of the Term Loan (to the extent accrued on
the amount being prepaid) and at maturity of the Term Loan; provided,
however, that if, on any interest payment date, the interest rate borne
by the Initial Loan or the Term Loan, as the case may be, exceeds the
Maximum Cash Interest Rate, the Company may pay all or a portion of the
interest payable (other than interest payable on the Maturity Date) in
excess of the amount of interest that would be payable on such date at
the Maximum Cash Interest Rate by issuance of Subsequent Initial
<PAGE>
Notes or Subsequent Term Notes, as the case may be, in an aggregate
principal amount equal to the amount of such excess (the "PIK Interest
Amount").
(c) Post-Maturity Interest. Any principal payments on the
Loans not paid when due and, to the extent permitted by applicable law,
any interest payment on the Loans not paid when due, in each case
whether at stated maturity, by notice of prepayment, by acceleration or
otherwise, shall thereafter bear interest payable upon demand at a rate
which is 2.00% per annum in excess of the rate of interest otherwise
payable under this Agreement for the Loans. Interest payable pursuant
to this Section 2.03(c) shall not be included for purposes of
determining whether the interest on the Loans exceeds the amount set
forth in Section 2.03(a)(iii) or the amount set forth in the proviso to
Section 2.03(b).
(d) Computation of Interest. Interest on the Loans shall be
computed on the basis of a 360-day year and, with respect to any amount
of the Loans which are Floating Rate Loans, the actual number of days
elapsed in the period during which it accrues or, with respect to any
amount of the Loans which are Fixed Rate Loans, twelve 30-day months.
In computing interest on the Loans, the date of the making of the Loans
shall be included and the date of payment shall be excluded; provided,
however, that if a Loan is repaid on the same day on which it is made,
one day's interest shall be paid on that Loan.
2.04. Fees.
(a) In the event that the Initial Loan is converted into the
Term Loan pursuant to Section 2.02, the Company shall pay to the
Lenders, pro rata in accordance with their respective principal amount
of the Initial Notes then outstanding, on the Conversion Date, a fee
equal to 6.00% of the initial principal amount of the Term Loan.
(b) On each anniversary of the Conversion Date, the Company
shall pay to the Lenders, pro rata in accordance with their respective
principal amount of the Term Notes then outstanding, a fee equal to
1.00% of the aggregate principal amount of the Term Notes then
outstanding.
(c) The Company agrees to pay to the Agents all fees and other
obligations in accordance with, and at the times specified by, the Fee
Letter.
2.05. Prepayments.
(a) Prepayments.
(i) Voluntary Prepayments of Initial Loan. The
Company may, upon not less than three Business Days' prior
written or telephonic notice confirmed in writing to the
Administrative Agent at any time and from time to time, prepay
the Initial Loan, in whole or in part, in an aggregate minimum
amount of $500,000 and integral multiples of $100,000 in
excess of such amount, at a prepayment price of 100% of the
principal amount thereof, plus accrued and unpaid interest
thereon to the date of prepayment.
<PAGE>
Notice of prepayment having been given as aforesaid, the principal
amount of the Loans to be prepaid shall become due and payable on the prepayment
date. Amounts of the Loans so prepaid may not be reborrowed.
(ii) Voluntary Prepayments of Term Loan.
(1) Optional Prepayment. Except as provided in this Section
2.05(a)(ii), the Company may not prepay the Term Loan prior to
September 23, 2003. The Company may, upon not less than 20 Business
Days' prior written or telephonic notice confirmed in writing to the
Administrative Agent at any time and from time to time on and after
September 23, 2003, prepay the Term Loan, in whole or in part, in an
aggregate minimum amount of $500,000 and integral multiples of $100,000
in excess of such amount, at a prepayment price of 100% of the
principal amount thereof, plus a premium equal to, for each Lender, the
interest rate in effect on such Lender's portion of the Term Loan on
the date notice of prepayment is given multiplied by the following
factor, plus accrued and unpaid interest thereon, if any, to the date
of prepayment, if prepaid during the twelve-month period commencing on
September 23 of the year set forth below:
Year Premium Factor
2003.......................... 1/2
2004.......................... 1/3
2005.......................... 1/6
2006 and thereafter........... 0
(2) Optional Prepayment upon Equity Offering. Notwithstanding
the foregoing, at any time on or before September 23, 2001, the Company
may prepay up to an aggregate principal amount of the Term Loan equal
to 35% of the aggregate principal amount of the Term Loan outstanding
on the Conversion Date at a prepayment price equal to the principal
amount of the Term Loan so prepaid, plus a premium equal to, for each
Lender, the rate of interest in effect on such Lender's portion of the
Term Loan on the date notice of prepayment is given, plus accrued and
unpaid interest thereon, if any, to the prepayment date with the net
cash proceeds of one or more Equity Offerings; provided, however, that
(a) at least an aggregate principal amount of the Term Loan equal to
65% of the aggregate principal amount of the Term Loan outstanding on
the Conversion Date would remain outstanding immediately after giving
effect to any such prepayment; and (b) such prepayment occurs within 60
days of the date of the closing of any such Equity Offering.
(3) Pro Rata Prepayment Under Senior Subordinated Indenture.
If any Exchange Notes are outstanding, any prepayment pursuant to
Section 2.05(a)(ii)(1) or (2) shall be made pro rata with an optional
redemption of Exchange Notes under the Senior Subordinated Indenture.
<PAGE>
Notice of prepayment having been given as aforesaid, the principal
amount of the Term Loan to be prepaid shall become due and payable on the
prepayment date. Amounts of the Term Loan so prepaid may not be reborrowed.
(iii) Mandatory Prepayments. The Company shall prepay the
Initial Loan or Term Loan as follows:
(1) Mandatory Prepayment of Initial Loan upon Equity
Issuance. Upon any Equity Issuance after the Closing Date, the
Initial Loan shall be prepaid in an aggregate principal amount
equal to 100% of the Net Available Proceeds of such Equity
Issuance.
(2) Mandatory Prepayment of Initial Loan upon Debt
Issuance. Upon any Debt Issuance (other than Revolving Credit
Loans under the Senior Credit Facility (without giving effect
to any increases thereof) and Indebtedness incurred pursuant
to Section 7.09(e) and 7.09(h)) after the Closing Date, the
Initial Loan shall be prepaid in an aggregate principal amount
equal to 100% of the Net Available Proceeds of such Debt
Issuance.
(3) Mandatory Offer to Purchase Term Notes on Change
of Control. (A) Following the occurrence of a Change of
Control on or after the Conversion Date (the date of such
occurrence being the "Change of Control Date"), the Company
shall notify the Administrative Agent and the Lenders of such
occurrence in the manner prescribed by this Agreement and
shall, within 30 days after the Change of Control Date, make
an Offer to Purchase (the "Change of Control Offer") for all
Term Notes then outstanding, at a purchase price in cash equal
to 101% of the aggregate principal amount thereof, plus
accrued and unpaid interest thereon, if any, to the Purchase
Date. Each Lender shall be entitled to tender all or any
portion of the Term Notes owned by such Lender pursuant to the
Change of Control Offer, subject to the requirement that any
portion of a Term Note tendered must be tendered in an
integral multiple of $1,000 principal amount.
(B) On or prior to the Purchase Date specified in the Change
of Control Offer, the Company shall (i) accept for payment all Term
Notes or portions thereof validly tendered pursuant to the Change of
Control Offer, (ii) deposit with the Administrative Agent money
sufficient to pay the Purchase Price of all Term Notes or portions
thereof so accepted and (iii) deliver or cause to be delivered to the
Administrative Agent an Officers' Certificate stating the Term Notes or
portions thereof accepted for payment by the Company. The
Administrative Agent shall promptly mail or deliver to Lenders whose
Term Notes are so accepted payment in an amount equal to the Purchase
Price for such Term Notes, and the Administrative Agent shall promptly
mail or deliver to each Lender a new Term Note equal in principal
amount to any unpurchased portion of the Term Note surrendered as
requested by the Lender. Any Term Note not accepted for payment shall
be promptly mailed or delivered by the Company to the Lender thereof.
(4) Mandatory Offer to Purchase Initial Notes and
Term Notes on Asset Sale. If Parent or any Subsidiary engages
in an Asset Sale (as
<PAGE>
defined in the definition of Net Asset Sale Proceeds), Parent
or any Subsidiary shall, no later than 270 days after such
Asset Sale (a) apply all or any of the Net Asset Sale Proceeds
therefrom to repay amounts outstanding under the Senior Credit
Facility or any other Senior Indebtedness; provided, in each
case, that the related loan commitment (if any) of any
Indebtedness constituting revolving credit debt is thereby
permanently reduced by the amount of such Indebtedness so
repaid; and/or (b) invest all or any part of the Net Asset
Sale Proceeds thereof in the purchase of fixed assets to be
used by the Parent and its Subsidiaries in a Related Business
(together with any short-term assets incidental thereto), or
the making of a Related Business Investment. The amount of
such Net Asset Sale Proceeds not applied or invested as
provided in this paragraph will constitute "Excess Proceeds."
When the aggregate amount of Excess Proceeds equals or exceed
$10.0 million, the Company will be required to make an Offer to
Purchase, from all holders of the Initial Notes or Term Notes then
outstanding, as the case may be, an aggregate principal amount of
Initial Notes or Term Notes, as applicable, equal to the amount of such
Excess Proceeds as follows:
(i) The Company will make an Offer to Purchase (a "Net
Proceeds Offer") from all holders of the Notes the maximum principal
amount (expressed as a multiple of $1,000) of Notes that may be
purchased out of the amount (the "Payment Amount") of such Excess
Proceeds.
(ii) The offer price for the Notes will be payable in cash in
an amount equal to 100% of the principal amount of the Notes tendered
pursuant to a Net Proceeds Offer, plus accrued and unpaid interest, if
any, to the Purchase Date. To the extent that the aggregate Purchase
Price of Notes tendered pursuant to a Net Proceeds Offer is less than
the Payment Amount relating thereto (such shortfall constituting a "Net
Proceeds Deficiency"), the Company may use such Net Proceeds
Deficiency, or a portion thereof, for general corporate purposes,
subject to the limitations herein.
(iii) If the aggregate Purchase Price of Notes validly tendered
and not withdrawn by holders thereof exceeds the Payment Amount, Notes
to be purchased will be selected on a pro rata basis.
(iv) Upon completion of such Net Proceeds Offer in accordance
with the foregoing provisions, the amount of Excess Proceeds in respect
of such Net Proceeds Offer shall be deemed to be zero.
(v) On or prior to the Purchase Date specified in the Net
Proceeds Offer, the Company shall (i) accept for payment all Notes or
portions thereof validly tendered pursuant to the Net Proceeds Offer,
(ii) deposit with the Administrative Agent money sufficient to pay the
Purchase Price of all Notes or portions thereof so accepted and (iii)
deliver or cause to be delivered to the Administrative Agent an
Officers' Certificate stating the Notes or portions thereof accepted
<PAGE>
for payment by the Company. The Administrative Agent shall promptly
mail or deliver to Lenders whose Notes are so accepted payment in an
amount equal to the Purchase Price for such Notes, and the
Administrative Agent shall promptly mail or deliver to each Lender a
new Note equal in principal amount to any unpurchased portion of the
Note surrendered as requested by the Lender. Any Note not accepted for
payment shall be promptly mailed or delivered by the Company to the
Lender thereof.
Notwithstanding the foregoing, in the event that any other
Indebtedness of the Company which ranks pari passu with the Notes (the
"Other Indebtedness") requires an offer to purchase to be made to
repurchase such Other Indebtedness upon the consummation of an Asset
Sale, the Company may apply the Excess Proceeds otherwise required to
be applied to a Net Proceeds Offer to offer to purchase such Other
Indebtedness and to a Net Proceeds Offer so long as the amount of such
Excess Proceeds applied to purchase the Notes is not less than the Note
Portion of Excess Proceeds. With respect to any Excess Proceeds, the
Company shall make the Net Proceeds Offer in respect thereof at the
same time as the analogous offer to purchase is made pursuant to any
Other Indebtedness and the purchase date in respect of the Net Proceeds
Offer shall be the same as the purchase date in respect of the offer to
purchase pursuant to such Other Indebtedness.
For purposes of this covenant, "Note Portion of Excess
Proceeds," in respect of a Net Proceeds Offer, means (1) if no Other
Indebtedness is concurrently being offered to be purchased, the amount
of the Excess Proceeds in respect of such Net Proceeds Offer and (2) if
Other Indebtedness is concurrently being offered to be purchased, an
amount equal to the product of (x) the Excess Proceeds in respect of
such Net Proceeds Offer and (y) a fraction the numerator of which is
the principal amount of all Notes tendered pursuant to such Net
Proceeds Offer (the "Note Amount") and the denominator of which is the
sum of the Note Amount and the lesser of the aggregate principal face
amount or accreted value as of the relevant purchase date of all Other
Indebtedness tendered pursuant to a concurrent offer to purchase such
Other Indebtedness made at the time of such Net Proceeds Offer.
(5) Prepayments from Issuances of Refinancing Securities.
Concurrently with the receipt by the Company of proceeds from the
issuance of Refinancing Securities, the Company shall prepay the Loans
in a principal amount equal to the lesser of the proceeds thereof (net
of expenses payable by the Company to any Person other than an
Affiliate of the Company in connection with the issuance thereof) or
the aggregate principal amount of the Notes then outstanding.
(b) Notice. The Company shall notify the Agent of any
prepayment to be made pursuant to Section 2.05(a)(i), (ii) or
(iii) at least two Business Days prior to such prepayment date
(unless shorter notice is satisfactory to the Majority
Lenders).
(c) Company's Mandatory Prepayment Obligation;
Application of Prepayments. All prepayments shall include
payment of accrued interest on the principal amount so prepaid
and shall be applied to payment of interest before application
to principal.
2.06. Manner and Time of Payment
(a) All payments of principal and interest hereunder and under
the Notes by the Company shall be made without defense, set-off or
counterclaim and in same-day funds and delivered to the Administrative
Agent, unless otherwise specified, not later than 12:00 Noon (New York
time) on the date due at the Principal Office for the account of the
Lenders; funds received by the Administrative Agent after that time
shall be deemed to have been paid by the Company on the next succeeding
Business Day. The Company hereby authorizes the Administrative Agent to
charge its account with the Administrative Agent in order to cause
timely payment to be made of all principal, interest and fees due
hereunder (subject to sufficient funds being available in its account
for that purpose).
(b) Payments on Non-Business Days. Whenever any payment to be
made hereunder or under the Notes shall be stated to be due on a day
which is not a Business Day, the payment shall be made on the next
succeeding Business Day and such extension of time shall be included in
the computation of the payment of interest hereunder or under the Notes
or of the commitment and other fees hereunder, as the case may be.
(c) Payments Pro Rata. The Administrative Agent agrees that
promptly after its receipt of each payment of any interest or premium
on or principal of the Notes from or on behalf of the Company or any
Guarantor, it shall, except as otherwise provided in this Agreement,
distribute such payment to the Lenders (other than any Lender that has
consented in writing to waive its pro rata share of such payment) pro
rata based upon their respective pro rata shares, if any, of such
payment.
(d) Notation of Payment. Each Lender agrees that before
disposing of any Note held by it, or any part thereof (other than by
granting participations therein), such Lender will make a notation
thereon of all principal payments previously made thereon and of the
date to which interest thereon has been paid and will notify the
Company of the name and address of the transferee of that Note;
provided, however, that the failure to make (or any error in the making
of) such a notation or to notify the Company of the name and address of
such transferee shall not limit or otherwise affect the obligation of
the Company hereunder or under such Notes with respect to the Loans and
payments of principal or interest on any such Note.
2.07. Use of Proceeds
(a) Initial Loan. The proceeds of the Initial Loan shall be
applied by the Company, together with borrowings under the Senior
Credit Facility, to pay the consideration for the Acquisition and to
repay certain indebtedness of the Company and its Subsidiaries and to
pay certain fees and expenses.
(b) Term Loan. The proceeds of the Term Loan shall be used to
cancel any outstanding amount of Initial Notes converted to Term Notes
on such date.
(c) Margin Regulations. No portion of the proceeds of any
borrowing under this Agreement shall be used by the Company in any
manner which might cause the borrowing or the application of such
proceeds to violate the
<PAGE>
applicable requirements of Regulations T, U and X or any other
regulation of the Board of Governors or to violate the Exchange Act, in
each case as in effect on the date or dates of such borrowing and such
use of proceeds.
Section 3. Yield Protection, Etc.
3.01. Funding Indemnity. In the event any Lender shall incur any loss,
cost or expense (including, without limitation, any loss, cost or expense
incurred by reason of the liquidation or re-employment of deposits or other
funds acquired by such Lender to fund or maintain any Loan or the relending or
reinvesting of such deposits or amounts paid or prepaid to such Lender, and any
loss of profit) as a result of:
(a) any payment or prepayment or purchase of a Loan or Note on
a date other than the last day of an Interest Period for any reason,
whether before or after default, and whether or not such payment is
required by any of the provisions of this Agreement;
(b) any failure (because of a failure to meet the conditions
of Section 5 hereof or otherwise) by the Company to create or borrow a
Loan on the date specified in a notice given pursuant to this
Agreement; or
(c) any failure by the Company to make any payment of
principal on any Loan when due (whether by acceleration, mandatory
prepayment or purchase or otherwise), then, upon the demand of such
Lender, the Company shall pay to such Lender such amount as will
reimburse such Lender for such loss, cost or expense. If any Lender
makes such a claim for compensation, it shall provide to the Company a
certificate executed by an officer of such Lender setting forth the
amount of such loss, cost or expense in reasonable detail (including an
explanation of the basis for and the computation of such loss, cost or
expense) and such certificate shall be deemed prima facie correct.
3.02. Change of Law. Notwithstanding any other provisions of this
Agreement or any Note, if at any time any change in applicable law or regulation
or in the official interpretation thereof makes it unlawful for any Lender to
make or continue to maintain the Loans or to give effect to its obligations to
make the Loans available as contemplated hereby, such Lender shall promptly give
notice thereof to the Company and the Administrative Agent and such Lender's
obligations to make or maintain the Loans under this Agreement shall terminate
until it is no longer unlawful for such Lender to make or maintain the Loans. To
the extent required to comply with any such law as changed, the Company shall
prepay on demand the outstanding principal amount of any such affected portion
of the Loans, together with all interest accrued thereon and all other amounts
then due and payable to such Lender under this Agreement and such Lender's
Commitment shall be canceled and the obligations of the Lender to the Company
hereunder shall cease. Each Lender agrees (to the extent consistent with
internal policies) to designate a different lending office if such designation
would avoid the illegality described in this Section 3.02; provided, however,
that such designation need not be made if it would result in any additional
costs, expenses or risks to such Lender that are not reimbursed by the Company
pursuant hereto or would, in the reasonable judgment of such Lender, be
otherwise disadvantageous to such Lender.
<PAGE>
3.03. Unavailability of Deposits or Inability to Ascertain, or
Inadequacy of, LIBOR Rate. (a) If on or prior to the first day of any Interest
Period the Administrative Agent determines that deposits in Dollars (in the
applicable amounts) are not being offered to it or to banks generally in the
offshore eurodollar market for such Interest Period, then the Administrative
Agent shall forthwith give notice thereof to the Company and the Lenders.
(b) After any notification under paragraph (a) above:
(i) if the Company so requires, within five Business
Days of receipt of any such notification, the Company and the
Administrative Agent (on behalf of the Lenders) shall, in good
faith, enter into negotiations for a period of not more than
30 days with a view to agreeing to a substitute basis (the
"Substitute Basis") for determining the rate of interest;
(ii) any Substitute Basis agreed under subparagraph
(i) above shall be, with the prior consent of all the Lenders,
binding on the parties; and
(iii) until and unless a Substitute Basis is so
agreed, each Lender's participation in the Loans shall bear
interest during the current Interest Period at the rate
certified by such Lender to be its cost of funds (from such
source as it may reasonably select) for such Interest Period
plus the Applicable Spread.
(c) The Administrative Agent, in consultation with the Company
shall, not less often than monthly, review whether or not the
circumstances referred to in paragraph (a) still prevail with a view to
returning to the normal interest provisions of this Agreement.
3.04. Increased Cost and Reduced Return. If, on or after the date
hereof, the adoption of any applicable law, rule or regulation, or any change
therein, or any change in the official interpretation or administration thereof
by any governmental authority, central bank or comparable agency charged with
the interpretation or administration thereof, or compliance by any Lender (or
its lending office) with any request or directive (whether or not having the
force of law) of any such authority, central bank or comparable agency:
(a) shall subject any Lender (or its lending office) to any
charges of any kind (other than Withholding Taxes covered by Section
3.06 hereof) with respect to the Loans, its Notes or its obligation to
make the Loans available, or shall change the basis of taxation of
payments to any Lender (or its lending office) of the principal of or
interest on the Loans or any other amounts due under this Agreement in
respect of the Loans or its obligation to make the Loans; or
(b) shall impose, modify or deem applicable any reserve,
special deposit or similar requirements (including, without limitation,
any such requirement imposed by the Board of Governors of the Federal
Reserve System, but excluding any such requirement included in an
applicable Reserve Percentage) against assets of, deposits with or for
the account of, or credit extended by, any Lender (or its lending
<PAGE>
office) or shall impose on any Lender (or its lending office) or the
offshore interbank market any other condition affecting the Loans, its
Notes or its obligation to make the Loans available; and the result of
any of the foregoing is to increase the cost to such Lender (or its
lending office) of making or maintaining the Loans, or to reduce the
amount of any sum received or receivable by such Lender (or its lending
office) under this Agreement or under its Notes with respect thereto,
by an amount deemed by such Lender to be material, then, within fifteen
(15) days after demand by such Lender (with a copy to the
Administrative Agent), the Company shall pay to such Lender such
additional amount or amounts as will compensate such Lender for such
increased cost or reduction. A certificate of any Lender claiming
compensation under this Section 3.04 and setting forth the additional
amount or amounts in reasonable detail (including an explanation of the
basis therefor and the computation of such amount) to be paid to it
hereunder shall be deemed prima facie correct. In determining such
amount, such Lender may use reasonable averaging and attribution
methods.
3.05. Capital Adequacy. If any Lender shall determine that any change
after the date hereof in any applicable law, rule or regulation regarding
capital adequacy, or any change in the interpretation or administration thereof
by any governmental authority, central bank or comparable agency charged with
the interpretation or administration thereof or compliance by such Lender (or
its lending office) with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on such Lender's capital as a consequence of its obligations hereunder or credit
extended by it hereunder to a level below that which such Lender could have
achieved but for such law, rule, regulation, change or compliance (taking into
consideration such Lender's policies with respect to capital adequacy) by an
amount deemed by such Lender to be material, then from time to time as specified
by such Lender the Company shall pay such additional amount or amounts as will
compensate such Lender for such reduction in rate of return. A certificate of
any Lender claiming compensation under this Section 3.05 and setting forth the
additional amount or amounts to be paid to it hereunder in reasonable detail
shall be deemed prima facie correct. In determining such amount, such Lender may
use any reasonable averaging and attribution methods.
3.06. Withholding Taxes.
(a) Payments Free of Withholding. Except as otherwise required
by law and subject to Section 3.06(b) and (c) hereof, each payment by
the Company and the Guarantors under this Agreement or the other Loan
Documents shall be made without withholding for or on account of any
present or future taxes (other than overall net income taxes on the
recipient) imposed by or within the jurisdiction in which the Company
or any Guarantor is domiciled, any jurisdiction from which the Company
or any Guarantor makes any payment, or (in each case) any political
subdivision or taxing authority thereof or therein (herein,
"Withholding Taxes"). If any such Withholding Tax is so required, the
Company or relevant Guarantor, as applicable, shall make the
withholding, pay the amount withheld to the appropriate governmental
authority before penalties attach thereto or interest accrues thereon,
and forthwith pay such additional amount as may be necessary to ensure
that the net amount actually received by each Lender and the
Administrative Agent free and clear of such Withholding Taxes
(including such taxes on such additional amount) is equal to the amount
which that Lender or the Administrative Agent (as the case may be)
would have
<PAGE>
received had such withholding not been made. If the Administrative
Agent or any Lender pays any amount in respect of any such Withholding
Taxes, penalties or interest, the Company shall reimburse the
Administrative Agent or such Lender for that payment on demand in the
currency in which such payment was made. If the Company or a Guarantor
pays any such taxes, penalties or interest, it shall deliver official
tax receipts evidencing that payment or certified copies thereof to the
Lender or the Administrative Agent on whose account such withholding
was made (with a copy to the Administrative Agent if not the recipient
of the original) on or before the thirtieth day after payment.
(b) U.S. Withholding Tax Exemptions. Each Lender that is not a
United States person (as such term is defined in Section 7701(a)(30) of
the Code) shall submit to the Company and the Administrative Agent on
or before the earlier of the Closing Date or thirty (30) days after it
becomes a Lender, two duly completed and signed copies of either Form
1001 (relating to such Lender and entitling it to a complete exemption
from withholding under the Code on all amounts to be received by such
Lender, including fees, pursuant to the Loan Documents and the Loans)
or Form 4224 (relating to all amounts to be received by such Lender,
including fees, pursuant to the Loan Documents and the Loans) of the
United States Internal Revenue Service or, solely if such Lender is
claiming exemption from United States withholding tax under Section
871(h) or 881(c) of the Code with respect to payments of "portfolio
interest", a Form W-8, or any successor form prescribed by the Internal
Revenue Service, and a certificate representing that such Lender is not
a bank for purposes of Section 881(c) of the Code, is not a 10-percent
shareholder (within the meaning of Section 871(h)(3)(B) of the Code),
of the Parent or the Company and is not a controlled foreign
corporation related to the Parent or the Company (within the meaning of
Section 864(d)(4) of the Code. Thereafter and from time to time, each
Lender shall submit to the Company and the Administrative Agent such
additional duly completed and signed copies of one or the other of such
forms (or such successor forms as shall be adopted from time to time by
the relevant United States taxing authorities) as may be (i) requested
by the Company in a written notice, directly or through the
Administrative Agent, to such Lender and (ii) required under
then-current United States law or regulations to avoid or reduce United
States withholding taxes on payments in respect of all amounts to be
received by such Lender, including fees, pursuant to the Loan Documents
or the Loans.
(c) Inability of Bank to Submit Forms. If any Lender
determines, as a result of any change in applicable law, regulation or
treaty, or in any official application or interpretation thereof, that
it is unable to submit to the Company or the Administrative Agent any
form or certificate that such Lender is obligated to submit pursuant to
subsection (b) of this Section 3.06 or that such Lender is required to
withdraw or cancel any such form or certificate previously submitted or
any such form or certificate otherwise becomes ineffective or
inaccurate, such Lender shall promptly notify the Company and
Administrative Agent of such fact and the Lender shall to that extent
not be obligated to provide any such form or certificate and will be
entitled to withdraw or cancel any affected form or certificate, as
applicable.
3.07. Lender Replacement. If the Company is required to make any
reduction or withholding with respect to any payment due any Lender under
Section 3.06 hereof or is required to make any payment to a Lenders under
<PAGE>
Sections 3.04 or 3.05 hereof or a Lender's obligation to make or maintain Loans
is suspended pursuant to Section 3.02 hereof (in any such case a "Replaceable
Lender"), the Company may, with the consent of the Administrative Agent, propose
that another lender (a "Replacement Lender"), which lender may be an existing
Lender, be substituted for and replace the Replaceable Lender for purposes of
this Agreement. If a Replacement Lender is so substituted for the Replaceable
Lender, the Replaceable Lender shall enter into an Assignment Agreement with the
Replacement Lender, the Company and the Administrative Agent to assign and
transfer to the Replacement Lender the Replaceable Lender's Commitments and
portion of the Loans pursuant to and in accordance with the provisions and
requirements of Section 10.07(a) hereof (except that no processing or
recordation fee shall be payable to the Administrative Agent) and, as a
condition to its execution thereof, the Replaceable Lender shall concurrently
receive the full amount of its portion of the Loans, interest thereon, and all
accrued fees and other amounts to which it is entitled under this Agreement,
including amounts which would have been due it under Section 3.02 hereof if its
portion of the Loans had been prepaid rather than assigned.
Section 4. Guarantee.
4.01. The Guarantee. To induce the Lenders to provide the credits
described herein and in consideration of benefits expected to accrue to each
Guarantor by reason of the Loans and for other good and valuable consideration,
receipt of which is hereby acknowledged, each Guarantor hereby unconditionally
and irrevocably guarantees jointly and severally to the Agents, the Lenders and
each other holder of any of the Company's Loan Obligations under the Loan
Documents, the due and punctual payment of all present and future indebtedness,
Loan Obligations and liabilities of the Company evidenced by or arising out of
the Loan Documents, including, but not limited to, the due and punctual payment
of principal of and interest on the Notes and the due and punctual payment of
all other Loan Obligations now or hereafter owed by the Company under the Loan
Documents as and when the same shall become due and payable, whether at stated
maturity, by acceleration or otherwise, according to the terms hereof and
thereof. In case of failure by the Company punctually to pay any indebtedness
guaranteed hereby, each Guarantor hereby unconditionally agrees jointly and
severally to make such payment or to cause such payment to be made punctually as
and when the same shall become due and payable, whether at stated maturity, by
acceleration or otherwise, and as if such payment were made by the Company.
4.02. Guarantee Unconditional. The obligations of each Guarantor as a
guarantor under this Section 4 shall be unconditional and absolute and, without
limiting the generality of the foregoing, shall not be released, discharged or
otherwise affected by:
(a) any extension, renewal, settlement, compromise, waiver or
release in respect of any Loan Obligation of the Company or of any
other Guarantor under this Agreement or any other Loan Document whether
by operation of law or otherwise;
(b) any modification or amendment of or supplement to this
Agreement or any other Loan Document;
<PAGE>
(c) any change in the corporate existence, structure or
ownership of, or any insolvency, bankruptcy, reorganization or other
similar proceeding affecting, the Company, any other Guarantor, or any
of their respective assets, or any resulting release or discharge of
any Loan Obligation of the Company or of any other Guarantor contained
in any Loan Document;
(d) the existence of any claim, set-off or other rights which
the Guarantor may have at any time against any Agent or Lender or any
other Person, whether or not arising in connection herewith;
(e) any failure to assert, or any assertion of, any claim or
demand or any exercise of, or failure to exercise, any rights or
remedies against the Company or any other Guarantor;
(f) any application of any sums by whomsoever paid or
howsoever realized to any obligation of the Company, regardless of what
obligations of the Company remain unpaid,
(g) any invalidity or unenforceability relating to or against
the Company or any other Guarantor for any reason of this Agreement or
of any other Loan Document or any provision of applicable law or
regulation purporting to prohibit the payment by the Company of the
principal of or interest on any Note, or any other amount payable by it
under the Loan Documents; or
(h) any other act or omission to act or delay of any kind by
any Agent or Lender or any other Person or any other circumstance
whatsoever that might, but for the provisions of this paragraph,
constitute a legal or equitable discharge of the obligations of the
Guarantor under this Section 4.
4.03. Discharge Only upon Payment in Full; Reinstatement in Certain
Circumstances. Each Guarantor's obligations under this Section 4 shall remain in
full force and effect until the Commitments are terminated and the principal of
and interest on the Notes and all other Loan Obligations then due and payable by
the Company under this Agreement and all other Loan Documents shall have been
paid in full. If at any time any payment of the principal of or interest on any
Note or any other amount payable by the Company under the Loan Documents is
rescinded or must be otherwise restored or returned upon the insolvency,
bankruptcy or reorganization of the Company or of a Guarantor, or otherwise,
each Guarantor's obligations under this Section 4 with respect to such payment
shall be reinstated at such time as though such payment had become due but had
not been made at such time.
4.04. Subrogation. No Guarantor will exercise any rights which it may
acquire by way of subrogation as a result of any payment made hereunder, or
otherwise, until the Notes and all other amounts payable by the Company under
the Loan Documents shall have been paid in full. If any amount shall be paid to
a Guarantor on account of such subrogation rights at any time prior to the
payment in full of the Notes and all other amounts payable by such Guarantor
hereunder, such amount shall be held in trust for the benefit of the
Administrative Agent and the Lenders and shall forthwith be paid to the
Administrative Agent and the Lenders or be credited and applied upon the
Company's Loan Obligations under the Loan Documents, whether matured or
unmatured, in accordance with the terms of this Agreement.
<PAGE>
4.05. Waivers. Each Guarantor irrevocably waives acceptance hereof,
presentment, demand, protest and any notice not provided for herein, as well as
any requirement that at any time any action be taken by any Agent, any Lender or
any other Person against the Company, another Guarantor or any other Person.
4.06. Stay of Acceleration. If acceleration of the time for payment of
any amount payable by the Company under this Agreement or any other Loan
Document is stayed upon the insolvency, bankruptcy or reorganization of the
Company or any other Guarantor, all such amounts otherwise subject to
acceleration under the terms of this Agreement or the other Loan Documents shall
nonetheless be payable jointly and severally by the Guarantors hereunder
forthwith on demand by the Administrative Agent.
4.07. General Limitation on Guarantee Obligations. Notwithstanding any
other provision of this Section 4, the right to recovery against each Guarantor
under this Section 4 shall not exceed $1.00 less than the amount which would
render such Guarantor's obligations under this Section 4 void or voidable under
applicable law.
4.08. Subordination. The Guarantee of each Guarantor is subordinated to
the prior payment in full in cash when due of all existing and future Senior
Indebtedness of such Guarantor to the extent and in the manner set forth in
Section 11.
Section 5. Conditions Precedent.
5.01. Conditions to Effectiveness of Loan Documents and Obligation to
Make Initial Loan. The effectiveness of the Loan Documents and the obligation of
the Lenders to make an Initial Loan hereunder is subject to the satisfaction of
the conditions precedent that:
(a) The Administrative Agent shall have received the following
for the account of the Lenders (each to be properly executed and
completed) and the same shall have been approved as to form and
substance by the Agents:
(i) this Agreement and the Initial Notes;
(ii) copies (executed or certified as may be
appropriate) for each Lender of the articles of incorporation
and by-laws of and good standing certificates for the Company
and each Guarantor and of all legal documents or proceedings
taken in connection with the execution and delivery of the
Loan Documents to the extent the Administrative Agent or its
counsel may reasonably request, including, without limitation,
certificates as to the incumbency and authority of, and
setting forth a specimen signature of, each officer who is to
sign any Loan Document;
<PAGE>
(iii) the Acquisition and the Merger shall have been
consummated without material deviation from the terms of the
Stock Purchase Agreement and Asset Transfer Agreement and
without modification thereto or waivers of the terms or
conditions thereof (except for modifications and waivers
approved by the Administrative Agent) and (i) with the
Company's asceptic business having been transferred to Dean
Foods or a Subsidiary thereof and with the amount of cash
expended by the Parent and its Subsidiaries in respect of such
Acquisition not being in excess of $360,000,000 plus amounts
payable pursuant to the working capital adjustment provisions
of the Stock Purchase Agreement, (ii) with the sum of such
amounts plus amounts required to refinance indebtedness of the
Company and DFVC required to be repaid pursuant to the terms
of Section 5.01(a)(vi) hereof plus financing costs and costs
of retiring Indebtedness funded through borrowings under the
Senior Credit Facility not to exceed $560,000,000, and (iii)
immediately after consummation of the Acquisition and Merger,
the Parent shall have Consolidated Net Worth of not less than
$160,000,000;
(iv) evidence of the maintenance of insurance as
required hereby;
(v) a certificate from an authorized officer of the
Company stating (i) whether the pro forma consolidated balance
sheet of the Parent and its Subsidiaries delivered to the
Lenders and referred to in the last sentence of Section 6.08
hereof, is accurate in all material respects as of the date
the other conditions precedent to the initial advance under
this Section 5.01 are satisfied or, if not, setting forth the
differences, and (ii) that the conditions set forth in clause
(iii) above have been satisfied;
(vi) a pay-off letter or letters from all lenders
under loan arrangements not permitted to exist after the
Closing Date in form and substance satisfactory to the
Administrative Agent and such other evidence that all of the
Parent's and its Subsidiaries' Indebtedness thereunder has
been fully paid and that the liens securing the same have been
or will be released, as the Administrative Agent may require;
(vii) (1) executed or conformed copies of the Senior
Credit Facility and any amendments thereto made on or prior to
the Closing Date, (2) an Officers' Certificate from the
Company stating that the Senior Credit Facility is in full
force and effect on the Closing Date and no material term or
condition thereof has been amended, modified or waived from
the form most recently provided to the Lenders and the Agents
a reasonable time prior to the Closing Date except with the
prior written consent of the Majority Lenders and the Agents,
(3) an Officers' Certificate from the Company stating that
Parent and each of its Subsidiaries party thereto has
performed or complied with all agreements and conditions
contained in the Senior Credit Facility and any agreements or
documents referred to therein required to be performed or
complied with by such party on or before the Closing Date, and
neither the Company nor any of its Subsidiaries is in default
in the performance or compliance with any of the terms or
provisions thereof, (4) an Officers' Certificate from the
Company stating that after giving effect to borrowings on the
Closing Date to effect the Acquisition and the Merger and the
refinancing of all indebtedness being refinanced as required
by Section 5.01(a)(vi) and to pay all related fees and
expenses, the Company shall have at least $60 million
<PAGE>
of borrowing availability under the Revolving Credit Facility
and (5) all closing documents relating to the Senior Credit
Facility and all such counterpart originals or certified
copies of such documents, instruments, certificates and
opinions as the Majority Lenders or the Agents may reasonably
request;
(viii) a completed year 2000 questionnaire in form
and substance satisfactory to the Agents; and
(ix) an amendment to the Marketing Agreement;
(b) The Company and Dean Foods shall have received such
approvals, exemptions, consents or withholdings of objection from
Governmental Bodies as are necessary in order to lawfully consummate
the Acquisition and the Merger and the same shall not have been stayed,
revoked or overturned and no petition or application shall be pending,
seeking to modify, stay, revoke or overturn the same except for such
thereof as are acceptable to the Agents;
(c) The Administrative Agent shall have received a solvency
opinion as to the Company and its Subsidiaries after giving effect to
the Acquisition and the Merger from Houlihan Lokey Howard & Zukin
Financial Advisors, Inc. satisfactory in form and substance to the
Administrative Agent;
(d) The Company shall have delivered to the Administrative
Agent (i) a pro forma balance sheet of the Parent and its Subsidiaries
after giving effect to the Acquisition and the Merger; and (ii)
projections for the ensuing five years, and such pro forma balance
sheet and such projections shall be satisfactory to the Administrative
Agent;
(e) No material litigation or administrative proceedings shall
be pending or threatened against the Parent or its Subsidiaries;
(f) The Agents shall have received for their own account the
fees to be received by them at such time under the Fee Letter;
(g) The Company shall have accepted for payment all Existing
Notes tendered by the holders thereof and consummated the tender offer
and consent solicitation for such Existing Notes (including, without
limitation, by paying all amounts due to the holders thereof) without
modification or waiver of the terms or conditions thereof, and not more
than $16.0 million in principal amount of Existing Notes shall remain
outstanding after giving effect to such consummation, and the Indenture
for the Existing Notes shall have been, amended in the form of the
Third Supplemental Indenture heretofore delivered to the Agents, and
the Company shall have provided an Officers' Certificate to the
foregoing effect;
(h) Each of the representations and warranties set forth
herein and in the other Loan Documents shall be true and correct as of
the date of the Initial Loan (except the representations and warranties
made in Section 6.04 hereof shall be deemed to refer to the most recent
financial statements delivered to the Lenders pursuant to Section 7.05
hereof);
<PAGE>
(i) No Default or Event of Default shall have occurred and be
continuing;
(j) Legal matters incident to the execution and delivery of
the Loan Documents and the other instruments and documents contemplated
hereby and the Acquisition and the Merger shall be satisfactory to the
Agents and their counsel, and the Lenders shall have received the
favorable written opinions of acceptable counsel for the Parent and
each Subsidiary party to the Loan Documents, in form and substance and
with such limitations, assumptions and qualifications as shall be
satisfactory to the Administrative Agent and its counsel, with respect
to:
(i) the due organization and existence of the Parent
and each such Subsidiary and the due licensing or
qualification of the Parent and each such Subsidiary in all
jurisdictions where the failure to be so qualified could have
a Material Adverse Effect;
(ii) the power and authority of the Parent and each
such Subsidiary to enter into the Loan Documents (and of the
Company to consummate the Acquisition and the Merger) and to
perform and observe all the matters and things herein and
therein provided for and the fact that the execution and
delivery of the Loan Documents and the consummation of the
Acquisition and the Merger will not, nor will the observance
or performance of any of the matters or things therein or
herein provided for, contravene any provision of law or of the
charter or by-laws, operating agreement or management
agreement of the Parent or any such Subsidiary;
(iii) the due authorization for and the validity and
enforceability of the Loan Documents;
(iv) the fact that no governmental authorization,
consent, exemption or withholding of objection is required
with respect to the lawful execution, delivery and performance
of the Loan Documents or consummation of the Acquisition and
Merger other than such thereof as have been obtained and are
in full force and effect;
(v) the fact that the Merger and Acquisition have
been consummated;
(vi) except to the extent set forth on Schedule 6.05,
the lack, to the knowledge of such counsel, of any legal or
administrative proceedings pending or threatened against DFVC
(but without independent inquiry as to matters affecting only
DFVC), the Parent or any Subsidiary which seeks to prevent the
consummation of the Acquisition or the Merger or which, if
adversely determined, would result in a Material Adverse
Effect after giving effect to the Acquisition and Merger; and
(vii) such other matters as the Administrative Agent
or its counsel may reasonably require; and
<PAGE>
(k) The Administrative Agent shall have received for the
account of the Lenders such other agreements, instruments, documents,
certificates and opinions as the Administrative Agent may reasonably
request.
5.02. Conditions to Term Loan. The obligation of the Lenders to make
the Term Loan on the Conversion Date is subject to the prior or concurrent
satisfaction or waiver of the following conditions precedent:
(a) The Agents shall have received in accordance with the
provisions of Section 2.02 an originally executed Notice of Conversion;
(b) None of the Company, Parent or any of its Significant
Subsidiaries shall be subject to a Bankruptcy Order or a bankruptcy or
other insolvency proceeding and no Default or Event of Default shall
have occurred under Section 8.01(j);
(c) No Event of Default or Default (whether matured or not)
under Section 8.01(a) or (b) shall have occurred;
(d) No Event of Default shall have occurred and be continuing
under Section 8.01(f);
(e) On or prior to the Conversion Date, the Agents shall have
received a form of Senior Subordinated Indenture and the Registration
Rights Agreement satisfactory in form and substance to the Agents;
(f) On the Conversion Date, the Agents shall have received an
Officers' Certificate from the Company dated the Conversion Date and
satisfactory in form and substance to the Agents, to the effect that
the conditions in this Section 5.03 are satisfied on and as of the
Conversion Date;
(g) The Company shall have executed and delivered to the
Administrative Agent on the Conversion Date for delivery to the Lenders
Term Notes dated the Conversion Date substantially in the form of
Exhibit A-2 to evidence the Term Loan, in the principal amount of
(which principal amount shall be the aggregate principal amount of the
Initial Notes outstanding on the Conversion Date) the Term Loan and
with other appropriate insertions;
(h) The Agents and the Lenders shall have received for their
respective accounts the fees to be received by them at such time under
the Fee Letter and hereunder; and
(i) The making of the Term Loan shall not violate Regulation
T, U or X or any other regulation of the Board of Governors.
5.03. Determinations Under Section 5. For purposes of determining
compliance with the conditions specified in Sections 5.01 and 5.02, each Lender
shall be deemed to have consented to, approved or accepted or to be satisfied
with each document or other matter required thereunder to be consented to or
approved by or acceptable or satisfactory to the Lenders unless an officer of
the Administrative Agent responsible for the transactions contemplated by this
<PAGE>
Agreement shall have received notice from such Lender prior to the date that the
Company, by notice to the Lenders, designates as the proposed date of the
extension of credit, specifying its objection thereto.
Section 6. Representations and Warranties. The Company and the Parent
represent and warrant to the Lenders as follows:
6.01. Organization and Power. The Parent and the Company are duly
organized and existing under the laws of the state of their organization, and
after giving effect to the Acquisition and the Merger will be duly licensed or
qualified to do business in each state where the nature of the assets owned or
leased by them or business conducted by them requires such licensing or
qualification and in which the failure to be so licensed or qualified could
reasonably be expected to have a Material Adverse Effect and have all necessary
power to carry on their present and contemplated businesses. The Parent and the
Company have full right, power and authority to enter into this Agreement, to
make the borrowings herein provided for, to issue the Notes in evidence thereof,
to execute and deliver the other Loan Documents executed and delivered or to be
executed and delivered by them, and to perform each and all of the matters and
things herein and therein provided for. Each Guarantor has, or upon its
acquisition or formation will have, full right, power and authority to enter
into the Loan Documents executed by it and to perform each and all of the
matters and things therein provided for. The Loan Documents do not, and the
performance or observance by the Parent or any Subsidiary of any of the matters
and things herein or therein provided for will not, contravene any provision of
law or any charter, by-law or similar agreement of the Parent or any such
Subsidiary or constitute a breach or default under any covenant, indenture or
agreement of or affecting the Parent or any such Subsidiary where such breach or
default could reasonably be expected to have a Material Adverse Effect.
6.02. Subsidiaries. Each Subsidiary is, or upon acquisition or
formation will be, duly organized and existing under the laws of the
jurisdiction of its organization, and duly licensed or qualified to do business
in each state or other jurisdiction where the nature of the assets owned or
leased by it or business conducted by it requires such licensing or
qualification and in which the failure to be so licensed or qualified could
reasonably be expected to have a Material Adverse Effect and has all necessary
corporate power to carry on its present business. Schedule 6.02 hereto
identifies each Subsidiary, the jurisdiction of its organization, the percentage
of issued and outstanding shares of each class of its capital stock or other
equity owned by the Parent and the Subsidiaries and, if such percentage is not
100% (excluding directors' qualifying shares as required by law), a description
of each class of its authorized capital stock or other equity interest and the
number of shares of each class issued and outstanding. All of the outstanding
shares of capital stock of or other equity interest in each Subsidiary are
validly issued and outstanding and fully paid and, subject to Section 630 of the
New York Business Corporation Law, nonassessable, and all shares or other equity
interests in each Subsidiary indicated on Schedule 6.02 as owned by the Parent
or a Subsidiary are owned, beneficially and of record, by the Parent or such
Subsidiary free and clear of all liens, security interests, charges and
encumbrances, other than the lien securing the Senior Credit Facility. There are
no outstanding commitments or other obligations of any Subsidiary to issue, and
no options, warrants or other rights of any Person to acquire, any shares of any
class of capital stock of or other equity interest in any Subsidiary. The
Company is a wholly owned Subsidiary of the Parent.
26
<PAGE>
6.03. [Reserved].
6.04. Financial Reports. (a) The Parent and the Company have each
heretofore delivered to each Lender a copy of their annual audit reports for
their 1994, 1995, 1996, 1997, and 1998, fiscal years and the accompanying
consolidated financial statements of the Parent and its Subsidiaries and the
Company and its Subsidiaries, and their unaudited interim consolidated balance
sheets as at August 29, 1998, and the related consolidated statements of
operations, changes in member's and shareholder's capitalization (as to the
Parent and its Subsidiaries) and cash flows of each of them and of their
Subsidiaries for the two months then ended. Such financial statements have been
prepared in accordance with GAAP (except for the omission of footnotes from such
unaudited statements) and fairly reflect the consolidated financial position of
the Parent and its Subsidiaries and of the Company and its Subsidiaries as of
the dates thereof and the results of their operations for the periods covered
thereby. The Parent and its Subsidiaries have no material contingent liabilities
that are required to be disclosed on such financial statements other than as
indicated on said financial statements. Since the date of the fiscal 1998 audit
report, there has been no material adverse change in the financial condition or
results of operations, or with respect to the Properties, of the Parent or any
of its Subsidiaries, except those disclosed in writing to the Lenders prior to
the date of this Agreement.
(b) The Company has delivered to the Lenders the audited
consolidated balance sheets of DFVC and its Subsidiaries as of the
close of their 1996, 1997 and 1998 fiscal years, and the audited
consolidated income statements and statements of cash flow of DFVC and
its Subsidiaries for their 1996, 1997 and 1998 fiscal years, and the
unaudited interim balance sheet of DFVC and its Subsidiaries as of
August 30, 1998 and unaudited interim income statement of DFVC and its
Subsidiaries for the three month period ended August 30, 1998
(collectively, the "DFVC Financial Statements"). Based on the Company's
review of the DFVC Financial Statements and other financial information
obtained by the Company in connection with the DFVC Acquisition,
nothing has come to the Company's attention that would cause it to
believe that the DFVC Financial Statements are inaccurate in any
material respect or that the DFVC Financial Statements do not present
fairly, in all materials respects, the consolidated financial position
of DFVC and its Subsidiaries as the dates thereof and the consolidated
results of operations of DFVC and its Subsidiaries for the periods
covered thereby in conformity with GAAP or that DFVC has any material
contingent liabilities not disclosed in the DFVC Financial Statements,
except (i) as otherwise indicated in the DFVC Financial Statements, and
(ii) for such matters as would not individually or in the aggregate
have a Material Adverse Effect.
6.05. Litigation and Taxes. Except as is set forth on Schedule 6.05,
there is no litigation or governmental proceeding pending, nor to the knowledge
of the Parent or the Company threatened, against the Parent or any Subsidiary or
DFVC, BEMSA or their Subsidiaries or for which any of them is liable which if
adversely determined could reasonably be expected to result in a Material
Adverse Effect after giving effect to the Acquisition. No authorization,
consent, license, or exemption from, or filing or registration with, any court
<PAGE>
or governmental department, agency or instrumentality, is or will be necessary
to the valid execution, delivery or performance by the Parent or any Subsidiary
of any Loan Document or the Stock Purchase Agreement, Asset Transfer Agreement
or Marketing Agreement or to the consummation of the Acquisition or the Merger,
except for such consents, exemptions and approvals with respect to the
Acquisition which will have been obtained and remain in full force and effect.
6.06. Burdensome Contracts with Affiliates. All material contracts and
agreements between the Company and/or its Subsidiaries and their Affiliates are
on terms and conditions which are no less favorable to the Company or such
Subsidiary than would be usual and customary in similar contracts or agreements
between Persons not affiliated with each other.
6.07. ERISA. The Parent and each Subsidiary are in compliance in all
material respects with the Employee Retirement Income Security Act of 1974
("ERISA") to the extent applicable to it and has received no notice to the
contrary from the Pension Benefit Guaranty Corporation ("PBGC"), and, in the
event of the Parent's or any Subsidiary's partial or total withdrawal from any
pension plans, multi-employer pension plans or non-payment by other employer
participants therein, the liability of the Parent and its Subsidiaries for any
unfunded vested benefits thereunder would not result in a Material Adverse
Effect.
6.08. Full Disclosure. The statements and information furnished to
either Agent or the Lenders in connection with the negotiation of this Agreement
and the commitments by the Lenders to provide all or part of the financing
contemplated hereby do not, taken as a whole, contain any untrue statement of a
material fact or omit a material fact necessary to make the statements contained
therein or herein not misleading, except for such thereof as were corrected in
subsequent written statements furnished the Lenders prior to the date hereof
(the Lenders acknowledging that as to any projections furnished to the Lenders,
the Parent and the Company only represent that the same were prepared on the
basis of information and estimates they believe to be reasonable). There is no
fact peculiar to the Parent or any Subsidiary, DFVC or BEMSA which the Company
has not disclosed to the Lenders in writing which materially adversely affects
the Parent or its Subsidiaries nor, so far as the Parent or the Company now can
reasonably foresee, is reasonably likely to have a Material Adverse Effect. The
unaudited pro forma consolidated balance sheet for the Parent and its
Subsidiaries and for the Company and its Subsidiaries heretofore delivered to
the Lenders fairly presents the financial condition of the Parent and its
Subsidiaries immediately after giving effect to the Acquisition and the Merger,
based upon the best information currently available to the Parent and the
Company with respect to the Acquisition.
6.09. Compliance with Law. (a) Neither the Parent nor any
Subsidiary is or will after giving effect to the Acquisition and the Merger be
(i) in default with respect to any order, writ, injunction or decree or (ii) in
default in any material respect under any Governmental Requirement (including
ERISA, the Occupational Safety and Health Act of 1970 and laws and regulations
establishing quality criteria and standards for air, water, land and toxic
waste) of any Governmental Body if, in the case of either clause (i) or (ii),
such default is reasonably likely to result in a Material Adverse Effect; and
(b) without limiting the generality of the foregoing, the Parent and each
Subsidiary are and after giving effect to the Acquisition and the Merger will
each be, in compliance with all applicable state and federal environmental,
health and safety statutes and regulations, including, without limitation,
regulations promulgated under the Resource Conservation and Recovery Act of
1976, 42 U.S.C. ss.ss. 6901 et seq., except where failure to be in compliance is
<PAGE>
reasonably likely not to have a Material Adverse Effect, and, to the Company's
and Parent's knowledge, neither the Parent nor any Subsidiary will have
acquired, incurred or assumed, directly or indirectly, any contingent liability
in connection with the release of any toxic or hazardous waste or substance into
the environment which is reasonably likely to have a Material Adverse Effect.
Insofar as known to the responsible officers of the Company and the Parent, and
after giving effect to the Merger and the Acquisition, neither the Parent nor
any Subsidiary is liable, in whole or in part, for, nor are any of the assets or
property of the Parent or any Subsidiary subject to a lien in favor of any
Governmental Body for any material liability arising from or in any way relating
to, the costs of cleaning up, remediating or responding to a release of
hazardous substances (including, without limitation, petroleum, its by-products
or derivatives, or other hydrocarbons).
6.10. Certain Contracts. The Company has delivered true copies
of the Stock Purchase Agreement, the Asset Transfer Agreement and the Marketing
Agreement and all amendments thereto to the Lenders.
6.11. Stock Purchase Agreement Warranties. Nothing has come to the
attention of the Company or the Parent that would indicate that any
representation of Dean Foods contained in the Stock Purchase Agreement is untrue
in any respect which would have a Material Adverse Effect.
6.12. Restrictive Agreements. Neither the Parent nor any Subsidiary
nor, to their knowledge, DFVC, is a party to any contract or agreement, or
subject to any charge or other corporate restriction, which affects its ability
to execute, deliver and perform the Loan Documents to which it is a party or
repay its indebtedness, obligations and liabilities under the Loan Documents or
which materially and adversely affects or, insofar as the Parent and the Company
can reasonably foresee, could reasonably be expected to have a Material Adverse
Effect.
6.13. No Default Under Other Agreements. Neither the Parent nor any
Subsidiary is in default with respect to any note, indenture, loan agreement,
mortgage, lease, deed, or other agreement to which it is a party or by which it
or its Property is bound, which default could reasonably be expected to have a
Material Adverse Effect.
6.14. Status Under Certain Laws. Neither the Parent nor any Subsidiary
is an "investment company" or a person directly or indirectly controlled by or
acting on behalf of an "investment company" within the meaning of the Investment
Company Act of 1940, as amended, or a "holding Company," or a "subsidiary
company" of a "holding company," or an "affiliate" of a "holding company" or a
"subsidiary company" of a "holding company," within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
6.15. Year 2000 Compliance. The Parent and the Company have conducted a
comprehensive review and assessment of the computer applications of the Parent
and its Subsidiaries and has made inquiry of their material suppliers, vendors
(including data processors) and customers, with respect to any defect in
computer software, data bases, hardware, controls and peripherals related to the
occurrence of the year 2000 or the use at any time of any date which is before,
on or after December 31, 1999, in connection therewith. Based on the foregoing
<PAGE>
review, assessment and inquiry, the Parent and the Company believe that no such
defect could reasonably be expected to have a Material Adverse Effect.
6.16. Solvency, Etc. On the Closing Date and after giving effect to the
Acquisition and the Merger and the financing thereof, (i) the assets of the
Parent and of each Subsidiary, at a fair valuation, will exceed its liabilities,
including contingent liabilities, (ii) the remaining capital of the Parent and
of each Subsidiary will not be unreasonably small to conduct, or in relation to,
its business or any transaction in which it intends to engage, and (iii) the
Parent and each Subsidiary will not have incurred debts, and does not intend to
incur debts, beyond its ability to pay such debts as they mature. For purposes
of this Section, "debt" means any liability on a claim, and "claim" means (i)
right to payment, whether or not such right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured, or unsecured; or (ii) right to an equitable remedy
for breach of performance if such breach gives rise to a payment, whether or not
such right to an equitable remedy is reduced to judgment, fixed, contingent,
matured, unmatured, disputed, undisputed, secured, or unsecured.
Section 7. Covenants. The Parent and the Company agree that, so long as
any credit is in use by the Company hereunder, except to the extent compliance
in any case or cases is waived in writing by the Majority Lenders:
7.01. Maintenance of Business. The Parent will, and will cause each
Subsidiary to, preserve and keep in force and effect all licenses and permits
necessary to the proper conduct of their respective businesses except where the
failure to do so could not reasonably be expected to result in a Material
Adverse Effect.
7.02. Maintenance. The Parent will, and will cause each Subsidiary to,
maintain, preserve and keep their plant, properties and equipment (other than
obsolete or worn out equipment held for sale or disposition) in reasonably good
repair, working order and condition (ordinary wear and tear excepted) and the
Parent will, and will cause each Subsidiary to, from time to time make all
needful and proper repairs, renewals, replacements, additions and betterments
thereto so that at all times the efficiency thereof shall be substantially
preserved and maintained, in each case where the failure to do so is reasonably
likely to have a Material Adverse Effect.
7.03. Taxes. The Parent will, and will cause each Subsidiary to, duly
pay and discharge all taxes, rates, assessments, fees and governmental charges
upon or against any of them or against their respective properties, in each case
before the same become delinquent and before penalties accrue thereon, unless
and to the extent that the same are being contested in good faith and by
appropriate proceedings, in each case where the failure to do so is reasonably
likely to have a Material Adverse Effect.
7.04. Insurance. The Parent will, and will cause each Subsidiary to,
insure and keep insured, with good and responsible insurance companies, all
insurable property owned by them which is of a character usually insured by
companies similarly situated and operating like properties; and the Parent will,
and will cause each Subsidiary to, insure such other hazards and risks
(including employers', product liability and public liability risks) with good
and responsible insurance companies as and to the extent usually insured by
<PAGE>
companies similarly situated and conducting similar businesses. The Parent will
upon request of the Administrative Agent furnish a certificate setting forth in
summary form the nature and extent of the insurance maintained pursuant to this
Section.
7.05. Financial Reports. The Parent will, and will cause each
Subsidiary to, maintain a standard and modern system of accounting in accordance
with sound accounting practice and will furnish to the Lenders and their duly
authorized representatives such information respecting the business and
financial condition of the Parent and its Subsidiaries as any Lender (acting
through the Administrative Agent) may reasonably request; and without any
request, will furnish to the Lenders:
(a) within 45 days after the close of each quarterly fiscal
period of the Parent and the Company, a copy of the balance sheets,
statements of operations and statements of cash flow of the Parent and
its Subsidiaries and of the Company and its Subsidiaries for such
period, prepared on a consolidated basis in accordance with GAAP, and
the notes thereto, all certified (subject to year end audit adjustments
which are not expected to be material) by the chief financial officers
of the Company and the Parent;
(b) within 90 days after the close of each fiscal year of the
Company and the Parent, a copy of the audit report for such year and
accompanying financial statements, including balance sheets, statements
of operations and statements of cash flow on a consolidated basis for
the Parent and its Subsidiaries and the Company and its Subsidiaries in
accordance with GAAP, and the notes thereto, certified without
qualification by independent public accountants of recognized standing
selected by the Parent and the Company and satisfactory to the Majority
Lenders (the "Auditors");
(c) within the periods provided in paragraphs (a) and (b)
above, a certificate of an authorized financial officer of the Company
stating that such officer has reviewed the provisions of this Agreement
and setting forth: (i) the information and computations (in sufficient
detail) required to establish whether the Company was in compliance
with the requirements of Sections 7.08, 7.09, 7.10, 7.11, 7.12 and 7.13
hereof at the end of the period covered by the financial statements
then being furnished, and (ii) to the best of such officer's knowledge,
whether there exists on the date of the certificate or existed at any
time during the period covered by such financial statements any Default
or Event of Default and, if any such condition or event exists on the
date of the certificate or existed during such period, specifying the
nature and period of existence thereof and the action the Company is
taking, has taken or proposes to take with respect thereto;
(d) no later than the date provided to any lender under the
Senior Credit Facility, any certificate in respect of compliance with
the covenants in the Senior Credit Facility (including computations
with respect thereto) or the existence of a default or event of default
thereunder; and
<PAGE>
(e) within the period provided in paragraph (b) above, a
business plan for the Parent and its Subsidiaries for the ensuing
fiscal year and projections for the Parent and its Subsidiaries for the
ensuing five fiscal years, all in detail reasonably acceptable to the
Administrative Agent.
The Parent will, and will cause each Subsidiary to, permit
representatives of any Lenders, upon reasonable notice and during normal
business hours, to examine and make extracts from the books and records of the
Parent and its Subsidiaries and to examine their assets and access thereto shall
be permitted for such purpose.
7.06. Compliance with Laws. The Parent will, and will cause each
Subsidiary to, comply with all Governmental Requirements to which they are
subject, including, without limitation, the Occupational Safety and Health Act
of 1970, as amended, ERISA, and all laws, ordinances, governmental rules and
regulations relating to environmental protection in all applicable
jurisdictions, the violation of which is reasonably likely to have a Material
Adverse Effect or would result in any lien or charge upon any property of the
Parent or any Subsidiary which is not a Permitted Lien.
7.07. Nature of Business. The Parent will not, nor will it permit any
Subsidiary to, engage in any business or activity if, as a result, the general
nature of the business which would then be engaged in by the Parent and its
Subsidiaries taken as a whole would be substantially changed from the business
in which they are engaged after giving effect to the Acquisition.
7.08. Liens. The Parent will not, nor will it permit any Subsidiary to,
pledge, mortgage or otherwise encumber or subject to, or permit to exist upon or
be subjected to, any lien, security interest or charge upon, any assets of the
Parent or any Subsidiary; provided, however, that nothing in this Section
contained shall operate to prevent any of the following (collectively,
"Permitted Liens"):
(a) liens, pledges or deposits in connection with workmen's
compensation, unemployment insurance, social security obligations,
taxes, assessments, statutory obligations or other similar charges,
good faith deposits in connection with tenders, contracts or leases to
which the Parent or any of its Subsidiaries is a party or other
deposits required to be made in the ordinary course of business and not
in connection with borrowing money or obtaining advances or credit;
provided, in each case, that the obligation or liability arises in the
ordinary course of business and is not overdue, or if overdue, is being
contested in good faith by appropriate proceedings which prevent
enforcement of the matter under contest and adequate reserves have been
established therefor to the extent required by GAAP;
(b) inchoate statutory, construction, common carrier's,
materialmen's, landlord's, warehousemen's, mechanics, producers' or
operator's liens securing obligations not overdue, or if overdue, being
contested in good faith by appropriate proceedings which prevent
enforcement of the matter under contest and adequate reserves have been
established therefor to the extent required by GAAP;
(c) liens securing Indebtedness permitted by Section 7.09(b);
<PAGE>
(d) attachment or judgment liens to the extent, but only to
the extent, the attachment or judgment in question is not an Event of
Default under Section 8.01(g);
(e) liens for taxes, assessments or other governmental charges
not yet due and payable or which are being diligently contested in good
faith by the Parent or its applicable Subsidiary by appropriate
proceedings; provided that in any such case an adequate reserve is
being maintained by the Parent or such Subsidiary for the payment of
same;
(f) easements, licenses, permits, rights-of-way, rights of
entry or passage, rights of lessees, restrictions and other similar
encumbrances incurred in the ordinary course of business which do not
secure debt for money borrowed or its equivalent, and which do not
materially detract from the value of the Property subject thereto or
materially interfere with the ordinary conduct of the business of the
Parent or any Subsidiary or use of the assets in question for their
intended purposes;
(g) liens described on Schedule 7.08 attached hereto,
encumbering the assets noted thereon opposite the description of the
indebtedness or obligation secured thereby and extensions and renewals
of the foregoing Permitted Liens; provided that the aggregate amount of
such liabilities secured by such extended or renewed lien is not
increased and such extended or renewed liabilities secured by such lien
are on terms and conditions no more restrictive than the terms and
conditions of the same being extended or renewed;
(h) liens securing indebtedness which is paid in full at the
time of the initial Borrowing and which are promptly discharged; and
(i) liens not otherwise permitted hereby securing obligations
permitted by Section 7.09(h) hereof and not aggregating in excess of
$10,000,000 at any one time outstanding.
7.09. Indebtedness. The Parent will not, nor will it permit any
Subsidiary to, issue, incur, assume, create, or have outstanding any
Indebtedness; provided, however, that the foregoing provisions shall not
restrict nor operate to prevent:
(a) Indebtedness owing to the Administrative Agent and the
Lenders under this Agreement or any of the other Loan Documents;
(b) Indebtedness of the Company and the related guarantees of
the Guarantors under the Senior Credit Facility in an aggregate
principal amount at any time outstanding not to exceed (a) under the
Term Loan Facilities, $455.0 million, less any required permanent
repayments thereunder (excluding any such repayment to the extent
refinanced and replaced at the time of payment), and (b) under the
Revolving Loan Facility, $200.0 million, reduced by any required
permanent repayments actually made (which are accompanied by a
corresponding permanent commitment reduction) in respect of the
Revolving Loan Facility (excluding any such repayment and commitment
reductions to the extent refinanced and replaced at the time of
payment);
(c) Indebtedness described on Schedule 7.09 attached hereto;
33
<PAGE>
(d) Subordinated Debt;
(e) Indebtedness of the Parent and the Company to each other
and to the Guarantors and Indebtedness of the Guarantors to the Parent,
the Company and each other; provided that the Indebtedness of the
Parent to the Company shall not exceed $40,000,000 at any one time
outstanding;
(f) Indebtedness which is paid in full on the Closing Date;
(g) Existing Notes (and guarantees thereof by the Guarantors)
in an aggregate principal amount not in excess of $16.0 million; and
(h) Capitalized Lease Indebtedness and purchase money
Indebtedness not exceeding $10,000,000 at any one time outstanding.
7.10. Acquisitions, Investments, Loans and Advances and Guarantees. The
Parent will not, nor will it permit any Subsidiary to, directly or indirectly,
make, retain or have outstanding any interest or investments (whether through
purchase of stock or obligations or otherwise) in, or loans or advances to, any
other Person, or acquire all or any substantial part of the assets or business
of any other Person; provided, however, that the foregoing provisions shall not
apply to nor operate to prevent:
(a) investments by the Parent or any Subsidiary in direct
obligations of the United States of America or of any agency or
instrumentality thereof whose obligations constitute full faith and
credit obligations of the United States of America; provided that any
such obligations shall mature within twelve months from the date the
same are acquired by the Parent or such Subsidiary;
(b) investments by the Parent or any Subsidiary in
certificates of deposit or time deposits issued by any Lender, or by
any United States commercial bank having capital and surplus of not
less than $100,000,000 and having a maturity of twelve months or less;
(c) investments by the Parent or any Subsidiary in commercial
paper maturing 270 days or less from the date of issuance which at the
time of acquisition is rated A-1 or better by Standard & Poor's Ratings
Services Group, a division of the McGraw-Hill Companies and P-1 or
better by Moody's Investors Service, Inc.;
(d) investments by the Parent or any Subsidiary in debt
securities issued by U.S. corporations or states of the United States
maturing within twelve months from the date of acquisition thereof if
at the time of acquisition the investment in question has a rating of
not less than AA from Standard & Poor's Ratings Services Group, a
division of The McGraw-Hill Companies, Inc.
and/or Aa2 from Moody's Investors Services, Inc.;
(e) investments by the Parent or any Subsidiary in preferred
stock of any corporation organized under the laws of any state of the
United States which is subject to a remarketing undertaking at
<PAGE>
intervals not exceeding twelve months issued by any substantial broker
and which is rated AA or better by Standard & Poor's Ratings Services
Group, a division of The McGraw-Hill Companies, Inc. and/or Aa2 or
better by Moody's Investors Services, Inc.;
(f) the Acquisition;
(g) other acquisitions by the Parent or any Subsidiary of the
capital stock of or assets or business of any Person, including
acquisitions accomplished by a merger of the Parent or any Subsidiary
with any other Person which is permitted by Section 7.12 hereof;
provided that (i) immediately after giving effect thereto no Default or
Event of Default has occurred and is continuing, (ii) immediately after
giving effect thereto the aggregate amount expended by the Parent and
its Subsidiaries on account of all such acquisitions (including in such
amounts expended, the amount of all indebtedness assumed by the Parent
and its Subsidiaries in connection therewith, all indebtedness secured
by liens on the assets acquired and all indebtedness of the Person in
question (in the event the acquisition is of an equity interest in such
Person)) during the period from the date hereof to and including the
last day of fiscal 1999 shall not exceed $10,000,000 and during each
period of twelve consecutive months concluding thereafter shall not
exceed the greater (i) $10,000,000 or, (ii) if but only if the
acquisition occurs subsequent to the first date after the date hereof
when the Leverage Ratio computed as of the last day of each of the four
fiscal quarters of the Parent most recently concluded prior to the
consummation of the Acquisition in question has been equal to or less
than 3.5 to 1 (but in the case of the last of such fiscal quarters,
substituting Consolidated Total Indebtedness as it exists on the date
of and after giving effect to the consummation of the acquisition in
question for Consolidated Total Indebtedness as it existed on the last
day of such fiscal quarter), $25,000,000, and (iii) the acquisition in
question shall have been approved by the board of directors or similar
governing body of the Person being, or whose assets are being,
acquired;
(h) loans and advances by the Parent or any Subsidiary to the
Parent, the Company, and/or any Guarantor, provided that the
corresponding Indebtedness is permitted by Section 7.09;
(i) existing investments, loans and advances identified on
Schedule 7.10 hereto; and
(j) investments in, and loans and advances to Persons not
otherwise permitted by this Section at no time aggregating more than
$10,000,000.
In determining the amount of investments, loans and advances permitted under
this Section, investments shall always be taken at the original cost thereof,
regardless of any subsequent appreciation (including retained earnings) or
depreciation therein, and loans and advances shall be taken at the principal
amount thereof.
7.11. Restricted Payments. The Parent shall not during any fiscal year
(a) declare or pay any distributions in respect of any equity interest in the
Parent or (b) directly or indirectly purchase, redeem or otherwise acquire or
retire any equity interest in the Parent (collectively, "Restricted Payments");
provided, however, that the Parent may, provided in each instance that after
giving effect thereto no Default or Event of Default has occurred and is
<PAGE>
continuing (i) pay dividends on its noncumulative preferred stock at the annual
rate of $1.50 per share, (ii) pay dividends on its Class A cumulative preferred
stock at the annual rate of up to $2.00 per share, (iii) pay dividends on its
Class B cumulative preferred stock at the annual rate of $1.00 per share, (iv)
pay dividends on its common stock at a rate not in excess of 8% per annum; (v)
make distributions to its members of up to 30% of each fiscal year's "Earning on
Pro-Fac Products," as such term is defined in the Marketing Agreement as in
effect on the date hereof and computed consistent with past practice; and (vi)
expend up to $2,000,000 in any fiscal year to repurchase, redeem or otherwise
acquire or retire its common and/or preferred stock or to pay nonqualified
retains.
7.12. Mergers. The Parent will not, nor will it permit any Subsidiary
to, consolidate or be a party to a merger with any other Person, except that so
long as no Default or Event of Default has occurred and is continuing or would
arise as a result thereof (i) any Subsidiary of the Parent may merge with and
into the Parent or the Company if the Parent or the Company is the surviving
corporation, (ii) any Subsidiary may merge with and into any other Subsidiary if
and so long as if either of such Subsidiaries is a Guarantor, the Guarantor is
the survivor thereof, (iii) the Merger may be consummated and (iv) the Parent or
any Subsidiary may merge with any other Person if the Parent or the relevant
Subsidiary is the survivor and the merger is permitted by and treated as an
acquisition for purposes of Section 7.10(g) hereof.
7.13. Sale of Assets. The Parent will not, nor will it permit any
Subsidiary to, sell, lease or otherwise dispose of any of its Property
(including any disposition of Property as part of a sale and leaseback
transaction); provided that nothing contained therein shall prohibit (i) sales
of inventory in the ordinary course of business; (ii) sales or dispositions of
obsolete or worn out Property disposed of in the ordinary course of business;
(iii) sales as part of sale and leaseback transactions provided that the fair
value of all Property subject to such transactions consummated in any fiscal
year of the Parent shall not exceed $1,000,000; (iv) transfers of assets of
Subsidiaries to the Company in connection with the liquidation and/or
dissolution of such Subsidiaries; (v) transfers of patents, trademarks,
copyrights and other intellectual property from the Company to Linden Oaks
Corporation, provided that from and after the first such transfer and
continuously thereafter Linden Oaks Corporation remains a wholly owned
Subsidiary of the Company and a Guarantor hereunder; and (vi) sales, leases and
other dispositions of Property not otherwise permitted by this Section 7.13
aggregating not more than $2,500,000 in any fiscal year; provided, however, that
there shall be excluded from such $2,500,000 limitation amounts reinvested in
other productive assets within 120 days of the receipt of the funds in question
if after giving effect thereto Net Capital Expenditures for the fiscal year in
question will not be negative and proceeds of sales or dispositions which are
used within 120 days of receipt to permanently retire Indebtedness of the Parent
and its Subsidiaries (other than Indebtedness owing to the Parent or any
Subsidiary and Subordinated Debt). Anything contained in this Agreement to the
contrary notwithstanding, the Parent will not, nor will it permit the Company
to, without the consent of the Majority Lenders, sell (or, in the case of the
Company, issue) capital stock of the Company (other than to the Parent).
7.14. Burdensome Contracts with Affiliates. The Parent will not, nor
will it permit any Subsidiary to, enter into or be a party to any contract or
agreement with an Affiliate on terms and conditions materially less favorable to
36
<PAGE>
the Parent or such Subsidiary than would be usual and customary in similar
contracts or agreements between Persons not affiliated with each other.
7.15. No Change in Fiscal Year. The Parent will not, nor will it permit
any Subsidiary to, have a fiscal year other than the present fiscal year of the
Parent (i.e., fiscal years ending on the last Saturday of June and fiscal
quarters of thirteen calendar weeks); provided that the Majority Lenders shall
not unreasonably withhold their consent to such a change if in connection
therewith the provisions of this Agreement measuring covenant compliance or
payments with reference to fiscal periods are renegotiated in a manner
reasonably acceptable to them.
7.16. Formation of Subsidiaries. In the event any Subsidiary is formed
or acquired after the date hereof which meets the definition of the term
"Guarantor" herein or any Subsidiary which did not formerly meet the criteria
for treatment of a Guarantor meets such requirements, the Parent shall within
thirty (30) Business Days thereof cause such Subsidiary to execute an Additional
Guarantor Supplement in the form annexed hereto as Exhibit D with such
modifications as may be approved by the Administrative Agent (an "Additional
Guarantor Supplement") and cause such Guarantor to execute and deliver to the
Administrative Agent Additional Guarantor Documentation with respect to it;
provided, however, that the foregoing shall not apply on and after the
Conversion Date to any Subsidiary designated as an Unrestricted Subsidiary
pursuant to and in accordance with the terms of this Agreement.
7.17. No Restriction on Subsidiary Dividends. Neither the Parent nor
any Subsidiary is a party to, nor will the Parent or any Subsidiary become a
party to, any agreement prohibiting or otherwise restricting the declaration or
payment of any dividends or equity distributions by any such Subsidiary;
provided that the foregoing restrictions shall not apply to debt agreements in
effect on the date hereof which are terminated concurrently with the first
extension of credit hereunder.
7.18. Concerning the Subordinated Debt. The Parent and the Company will
not make (or give any notice for) any voluntary or optional payment or
prepayment on or redemption or acquisition for value of any Subordinated Debt or
make any redemption (whether mandatory or optional) or prepayment of the
Subordinated Promissory Note issued to Dean Foods in connection with the
Acquisition (or any promissory notes issued thereunder as interest) or make any
payment of principal or interest thereon in violation of the subordination
provisions thereof or amend or modify in any material respect any term, covenant
or provision of any Subordinated Debt or set off any amounts against any
Subordinated Debt; provided, however, that the foregoing shall not apply to or
restrict the payment or retirement of Subordinated Debt out of the net proceeds
received from any concurrent issuance of additional Subordinated Debt.
7.19. Limitation on Senior Subordinated Indebtedness. The Company shall
not, directly or indirectly, incur any Indebtedness that by its terms would
expressly rank senior in right of payment to the Loans and expressly rank
subordinate in right of payment to any Senior Indebtedness of the Company.
<PAGE>
The Parent shall not, and shall not permit any other Guarantor to, and
no Guarantor shall, directly or indirectly, incur any Indebtedness that by its
terms would expressly rank senior in right of payment to the Guarantee of such
Guarantor and expressly rank subordinate in right of payment to any Senior
Indebtedness of such Guarantor.
7.20. Concerning the Marketing Agreement. The Parent and the Company
will comply in all material respects with their respective obligations under the
Marketing Agreement and will not amend or modify the same in any material
respect or terminate the same.
7.21. Year 2000 Assessment. The Parent shall take all actions necessary
and commit adequate resources to assure that its computer-based and other
systems (and those of all Subsidiaries) are able to effectively process dates,
including dates before, on and after January 1, 2000, without experiencing any
Year 2000 Problem that could cause a material adverse effect on the business or
financial affairs of the Parent and its Subsidiaries taken on a consolidated
basis. At the request of the Administrative Agent, the Parent and the Company
will provide the Administrative Agent with written assurances and
substantiations (including, but not limited to, the results of internal or
external audit reports prepared in the ordinary course of business) reasonably
acceptable to the Administrative Agent as to the capability of the Parent and
its Subsidiaries to conduct its and their businesses and operations before, on
and after January 1, 2000, without experiencing a Year 2000 Problem causing a
Material Adverse Effect.
7.22. Preservation of Cooperative Status. The Parent will preserve,
renew and keep in full force and effect its corporate existence and status as a
cooperative association as defined in Section 1141j(a) of Title 12 of the United
States Code.
7.23. Take-Out Financing. The Parent and the Company shall take any and
every action necessary or desirable, to the extent within the power of either of
them, so that the Take-Out Bank can, as soon as practicable after the Closing
Date, publicly sell or privately place the Refinancing Securities. Such action
shall include, without limitation, the preparation of an offering memorandum
relating to the sale of the Refinancing Securities in a form and with content
satisfying the requirements of a registration statement on Form S-1, including
audited and unaudited financial statements for the Company and DFVC and pro
forma financial statements reflecting the Acquisition and related transactions,
which offering memorandum shall be reasonably satisfactory to the Take-Out Bank,
and the full cooperation of senior management of each of the Company, Parent and
DFVC in marketing the Refinancing Securities pursuant to such offering
memorandum for such a period as is customary to complete the sale of securities
such as the Securities (which shall include the participation of members of the
senior management of each of the Company, Parent and DFVC designated by the
Take-Out Bank in "road-show" and other investor meetings, whether by telephone
or in person, in connection with the marketing of the Financing Securities). If
the Initial Loan shall not have been refinanced in full prior thereto, the
Company shall agree that upon notice by the Take-Out Bank (a "Refinancing
Securities Demand"), at any time and from time to time prior to the first
<PAGE>
anniversary of the Closing Date, the Parent and/or the Company will cause the
issuance and sale of Refinancing Securities upon such terms and conditions as
specified in the Refinancing Securities Demand; provided that (i) the interest
rates (whether floating or fixed) shall be determined by the Take-Out Bank in
light of the then prevailing market conditions; (ii) the maturity of any
Refinancing Securities shall not be earlier than the eighth anniversary of the
Closing Date; (iii) the Refinancing Securities will be issued pursuant to one or
more indentures substantially in the form of the Senior Subordinated Indenture
and which shall contain such other terms, conditions and covenants as are
customary for similar financings and as are reasonably satisfactory in all
respects to the Take-Out Bank and its counsel and the Company and its counsel;
and (iv) all other arrangements with respect to the Refinancing Securities shall
be reasonably satisfactory in all respects to the Take-Out Bank in light of the
then prevailing market conditions; provided, further, that in no event will the
Company or Parent be required to issue equity interests in connection with a
Refinancing Securities Demand. 7.24. Exchange of Term Notes. The Company and
Parent will, on the fifth Business Day following the written request (the
"Exchange Request") of the holder of any Term Note (or beneficial owner of a
portion thereof):
(i) Execute and deliver, cause each Guarantor to execute and
deliver, and cause a bank or trust company acting as trustee thereunder
to execute and deliver, the Senior Subordinated Indenture, if such
Senior Subordinated Indenture has not previously been executed and
delivered;
(ii) Execute and deliver to such holder or beneficial owner in
accordance with the Senior Subordinated Indenture a note in the form
attached to the Senior Subordinated Indenture (the "Exchange Notes")
bearing interest at the Fixed Rate in exchange for such Term Note dated
the date of the issuance of such Exchange Note, payable to the order of
such holder or owner, as the case may be, in the same principal amount
as such Term Note (or portion thereof) being exchanged, and cause each
Guarantor to endorse its guarantee thereon; and
(iii) Execute and deliver, and cause each Guarantor to execute
and deliver, to such holder or owner, as the case may be, the
Registration Rights Agreement, if the Registration Rights Agreement has
not previously been executed and delivered or, if the Registration
Rights Agreement has previously been executed and delivered and such
holder or owner is not already a party thereto, permit such holder or
owner to become a party thereto.
The Exchange Request shall specify the principal amount of the Term
Notes to be exchanged pursuant to this Section 7.24 which shall be at least
$5,000,000 and integral multiples of $500,000 in excess thereof. Term Notes
delivered to the Company under this Section 7.24 in exchange for Exchange Notes
shall be cancelled by the Company and the corresponding amount of the Term Loan
shall be deemed repaid and the Exchange Notes shall be governed by and construed
in accordance with the terms of the Senior Subordinated Indenture.
The bank or trust company acting as trustee under the Senior
Subordinated Indenture shall at all times be a corporation organized and doing
business under the laws of the United States of America or the State of New
York, in good standing and having its principal offices in the Borough of
Manhattan, in The City of New York, which is authorized under such laws to
<PAGE>
exercise corporate trust powers and is subject to supervision or examination by
Federal or State authority and which has a combined capital and surplus of not
less than $50,000,000.
7.25. Register. The Company hereby designates the Administrative Agent
to serve as the Company's agent, solely for purposes of this Section 7.25, to
maintain a register (the "Register") on which it will record the Loans made by
each of the Lenders and each repayment in respect of the principal amount of the
Loans of each Lender. Failure to make any such recordation, or any error in such
recordation shall not affect the Company's obligations in respect of such Loans.
With respect to any Lender, the transfer of the Commitments of such Lender and
the rights to the principal of, and interest on, any Loan made pursuant to such
Commitments shall not be effective until such transfer is recorded on the
Register maintained by the Administrative Agent with respect to ownership of
such Commitments and Loans and prior to such recordation all amounts owing to
the transferor with respect to such Commitments and Loans shall remain owing to
the transferor. The registration of assignment or transfer of all or part of any
Commitments and Loans shall be recorded by the Administrative Agent on the
Register only upon the receipt by the Administrative Agent of a properly
executed and delivered Assignment Agreement pursuant to Section 10.07(a).
Coincident with the delivery of such an Assignment Agreement to the
Administrative Agent for acceptance and registration of assignment or transfer
of all or part of a Loan, or as soon thereafter as practicable, the assigning or
transferor Lender shall surrender the Note evidencing such Loan, and thereupon
one or more new Notes of the same type and in the same aggregate principal
amount shall be issued to the assigning or transferor Lender and/or the new
Lender.
7.26. Senior Subordinated Indenture; Etc. Each of the Company and the
Guarantors shall, on the date it executes and delivers the Senior Subordinated
Indenture and the Exchange Notes and the Refinancing Securities and the
indenture governing the Refinancing Securities (or the guarantees related
thereto, as the case may be), have the full corporate power, authority and
capacity to do so and to perform all of its obligations to be performed
thereunder; all corporate and other acts, conditions and things required to be
done and performed or to have occurred prior to such execution and delivery to
constitute them as valid and legally binding obligations of the Company
enforceable against the Company and the Guarantors in accordance with their
respective terms except to the extent that the enforceability thereof may be
limited by applicable bankruptcy, insolvency, reorganization or similar laws
affecting the enforcement of creditors' rights generally or by general
principles of equity (regardless of whether such enforcement is considered in a
proceeding in equity or at law), shall have been done and performed and shall
have occurred in due compliance with all applicable laws; on the date of such
execution and delivery by the Company and the Guarantors, the Senior
Subordinated Indenture and the Exchange Notes and the Refinancing Securities
(and the guarantees) and the indenture governing the Refinancing Securities
shall constitute legal, valid, binding and unconditional obligations of the
Company and the Guarantors, as the case may be, enforceable against the Company
and the Guarantors, as the case may be, in accordance with their respective
terms, except to the extent that the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization or similar laws affecting the
enforcement of creditors' rights generally or by general principles of equity
(regardless of whether such enforcement is considered in a proceeding in equity
or at law).
40
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7.27. Amendments or Waivers of Certain Documents. The Company and
Parent shall not, nor shall it cause or permit any of its Subsidiaries to,
directly or indirectly, enter into any amendment, modification, supplement or
waiver with respect to the Senior Credit Facility as in effect on the Closing
Date that would modify any of the provisions thereof or any of the definitions
relating to the provisions thereof in respect of issuances of Refinancing
Securities, the Term Notes or the Exchange Notes in a manner adverse to the
Lenders.
7.28. Release of Covenants upon Conversion; Term Loan Covenants. Upon
any conversion of the Initial Loans into Term Loans pursuant to Section 2.02,
Sections 7.08-7.15 and 7.17-7.20 of this Agreement shall no longer apply to
Parent or any Subsidiary. On and after the conversion of Initial Loans into Term
Loans, Parent and Company agree that, so long as any credit is in use by the
Company hereunder, Parent will, and will cause each Subsidiary to, comply with
the covenants set forth in Annex A (which incorporates certain defined terms
listed in Annex B).
Section 8. Events of Default.
8.01. Events of Default. Each of the following constitutes an event of
default (an "Event of Default"):
(a) failure by the Company to pay interest on any Note when it
becomes due and payable and the continuance of such failure for, if
such failure occurs prior to the Conversion Date, three Business Days,
and, if such failure occurs on or after the Conversion Date, 30 days or
failure by the Company to pay any fee or any other amount payable by it
hereunder or under any other Loan Document when due and the continuance
of any such failure for 30 days (whether or not such payment shall be
prohibited by Section 11);
(b) failure by the Company to pay the principal or premium, if
any, on any Note when it becomes due and payable, whether at stated
maturity, upon redemption (including, without limitation, the failure
to make a payment to purchase or prepay Notes pursuant to Section
2.05(a)(iii)), upon acceleration or otherwise (whether or not such
payment shall be prohibited by Section 11);
(c) failure by Parent or any Subsidiary to comply with any of
its agreements or covenants described in Sections 2.5(a)(iii)(3) or
(4);
(d) failure by Parent or any Subsidiary to comply with any
other covenant herein or in another Loan Document and continuance of
such failure for 60 days after notice of such failure has been given to
the Company by the Administrative Agent or any Lender;
(e) any representation or warranty made herein or in any of
the other Loan Documents or in any statement or certificate furnished
pursuant hereto or thereto, or in connection with any advance or
issuance made hereunder or by any Person in connection with the
transactions contemplated hereby, proves untrue in any material respect
as of the date of the issuance or making thereof;
<PAGE>
(f) failure by Parent or any Subsidiary to make any principal
payment when due after the expiration of any applicable grace period in
respect of any Indebtedness of Parent or any Subsidiary, or the
acceleration of the maturity of such Indebtedness by the holders
thereof because of a default, with an aggregate outstanding principal
amount for all such Indebtedness under this clause (f) of $7.5 million
or more;
(g) one or more final, non-appealable judgments or orders that
exceed $7.5 million in the aggregate for the payment of money have been
entered by a court or courts of competent jurisdiction against Parent or
any Subsidiary and such judgment or judgments have not been satisfied,
stayed, annulled or rescinded within 60 days of being entered;
(h) any of the Loan Documents or the Marketing Agreement shall
for any reason not be or shall cease to be in full force and effect, or
any of the Loan Documents or the Marketing Agreement is declared to be
null and void as to any party, or the Parent or any Subsidiary takes any
action for the purpose of repudiating or rescinding any Loan Document
executed by it or the Marketing Agreement;
(i) a Change of Control occurs prior to the Conversion Date;
and
(j) if under any Bankruptcy Law, (A) the Company, Parent or
any Subsidiary commences a voluntary case, consents to the entry of an
order for relief against it in an involuntary case, consents to the
appointment of a Custodian of it or for all or substantially all of its
property, or makes a general assignment for the benefit of its
creditors, or (B) a court of competent jurisdiction enters an order or
decree, and such order or decree remains unstayed and in effect for 60
days, that is for relief against the Company, Parent or any Subsidiary
in an involuntary case, appoints a Custodian of the Company, Parent or
any Subsidiary or for all or substantially all of the property of the
Company, Parent or any Subsidiary, or orders the liquidation of the
Company, Parent or any Subsidiary.
8.02. Non-Bankruptcy Defaults. When any Event of Default described in
subsections 8.01(a) to 8.01(i), inclusive, or Section 8.01(j) (other than with
respect to the Company or the Parent) has occurred and is continuing, the
Administrative Agent may (and shall, upon request of the Majority Lenders), by
notice to the Company, take any or all of the following actions:
(a) declare the principal of and the accrued interest on the
Notes to be forthwith due and payable and thereupon the Notes,
including both principal and interest, and all fees, charges and
commissions payable hereunder, shall be and become immediately due and
payable without further demand, presentment, protest or notice of any
kind; and
(b) enforce any and all rights and remedies available under
the Loan Documents or applicable law.
8.03. Bankruptcy Defaults. When any Event of Default described in
subsection 8.01(j) (with respect to the Company or the Parent) has occurred and
is continuing, then (a) the then unpaid balance of the Notes, including both
principal and interest, and all fees, charges and commissions payable hereunder,
42
<PAGE>
shall immediately become due and payable without presentment, demand, protest or
notice of any kind and (b) the Administrative Agent may exercise all remedies
available to it under the Loan Documents or applicable law.
8.04. Willful Default. In the case of an Event of Default occurring
after the Conversion Date by reason of any willful action (or inaction) taken
(or not taken) by or on behalf of the Company with the intention of avoiding
payment of the premium that the Company would have had to pay if the Company
then had elected to prepay the Term Loan under the provisions of Section
2.05(a)(ii)(1), an equivalent premium shall also become and be immediately due
and payable, to the extent permitted by law, upon the acceleration of the Term
Loan. If an Event of Default occurs prior to September 23, 2003 by reason of any
willful action (or inaction) taken (or not taken) by or on behalf of the Company
with the intention of avoiding the prohibition on prepayment of the Term Loan
prior to September 23, 2003, then, upon acceleration of the Term Loan, an
additional premium shall also become and be immediately due and payable, to the
extent permitted by law, in an amount equal to 10.0%.
Section 9. Agents.
9.01. General Provisions. Each of the Lenders and Agents hereby
irrevocably appoints the Administrative Agent as its agent and authorizes the
Administrative Agent to take such actions on its behalf and to exercise such
powers as are delegated to the Administrative Agent by the terms hereof,
together with such actions and powers as are reasonably incidental thereto. The
Administrative Agent agrees to give promptly to each Lender a copy of each
notice or other document received by it pursuant to any Loan Document (other
than any that are required to be delivered to the Lenders by the Company or any
Guarantor).
The Lender or other financial institution serving as any Agent
hereunder shall have the same rights and powers in its capacity as a Lender as
any other Lender and may exercise the same as though it were not such Agent, and
such bank and its Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with any Company or other Affiliate
thereof as if it were not such Agent hereunder.
No Agent shall have any duties or obligations except those expressly
set forth herein. Without limiting the generality of the foregoing, (a) no Agent
shall be subject to any fiduciary or other implied duties, regardless of whether
a Default has occurred and is continuing, (b) no Agent shall have any duty to
take any discretionary action or exercise any discretionary powers, except
discretionary rights and powers expressly contemplated hereby that such Agent is
required to exercise in writing by the Majority Lenders (or such other number or
percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 10.05), and (c) except as expressly set forth herein, no
Agent shall have any duty to disclose, and shall not be liable for the failure
to disclose, any information relating to the Parent or any Subsidiary that is
communicated to or obtained by the financial institution serving as such Agent
or any of its Affiliates in any capacity. No Agent shall be liable for any
action taken or not taken by it with the consent or at the request of the
Majority Lenders (or such other number or percentage of the Lenders as shall be
necessary under the circumstances as provided in Section 10.05) or in the
<PAGE>
absence of its own gross negligence or willful misconduct. No Agent shall be
deemed to have knowledge of any Default unless and until written notice thereof
is given to Administrative Agent and such Agent by the Company or a Lender, and
no Agent shall be responsible for or have any duty to ascertain or inquire into
(i) any statement, warranty or representation made in or in connection with this
Agreement or any other Loan Document, (ii) the contents of any certificate,
report or other document delivered hereunder or under any other Loan Document or
in connection herewith, (iii) the performance or observance of any of the
covenants, agreements or other terms or conditions set forth herein, (iv) the
validity, enforceability, effectiveness or genuineness of this Agreement or any
other Loan Document or any other agreement, instrument or document, or (v) the
satisfaction of any condition set forth in Section 5 or elsewhere herein, other
than to confirm receipt of items expressly required to be delivered to such
Agent.
Each Agent shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing reasonably believed by it to be
genuine and to have been signed or sent by the proper Person. Each Agent also
may rely upon any statement made to it orally or by telephone and believed by it
to be made by the proper Person, and shall not incur any liability for relying
thereon. Each Agent may consult with legal counsel (who may be counsel for the
Company), independent accountants and other experts reasonably selected by it,
and shall not be liable for any action taken or not taken by it in accordance
with the advice of any such counsel, accountants or experts. Each Agent may deem
and treat the payee of any Note as the owner thereof for all purposes unless a
written notice of assignment, negotiation or transfer thereof shall have been
filed with such Agent. Each Agent shall be fully justified in failing or
refusing to take any action under this Agreement or any other Loan Document
unless it shall first receive such advice or concurrence of the Majority Lenders
(or, if so specified by this Agreement, all Lenders) as it deems appropriate or
it shall first be indemnified to its satisfaction by the Lenders against any and
all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. Each Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement and the
other Loan Documents in accordance with a request of the Majority Lenders (or,
if so specified by this Agreement, all Lenders), and such request and any action
taken or failure to act pursuant thereto shall be binding upon all the Lenders
and all future holders of the Loans.
Each Agent may perform any and all its duties and exercise its rights
and powers by or through any one or more sub-agents appointed by such Agent.
Each Agent and any such sub-agent may perform any and all its duties and
exercise its rights and powers through their respective Affiliates, directors,
officers, employees, agents and advisors ("Related Parties"). The exculpatory
provisions of the preceding paragraphs shall apply to any such sub-agent and to
the Related Parties of each Agent and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as such Agent.
Subject to the appointment and acceptance of a successor Agent as
provided in this paragraph, any Agent may resign at any time by notifying the
Lenders and the Company. Upon any such resignation, the Majority Lenders shall
have the right to appoint a successor which, so long as no Default is
continuing, shall be reasonably acceptable to the Company. If no successor shall
have been so appointed by the Majority Lenders and shall have accepted such
<PAGE>
appointment within 30 days after the retiring Agent gives notice of its
resignation, then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent which shall be a bank with an office in New York, New York, or
an Affiliate of any such bank. Upon the acceptance of its appointment as Agent
hereunder by a successor, such successor shall 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.
The fees payable by the Company to a successor Agent shall be the same as those
payable to its predecessor unless otherwise agreed between the Company and such
successor. After the Agent's resignation hereunder, the provisions of this
Section 9.01 shall continue in effect for the benefit of such retiring Agent,
its sub-agents and their respective Related Parties in respect of any actions
taken or omitted to be taken by any of them while it was acting as such Agent.
Each Lender acknowledges that it has, independently and without
reliance upon any Agent or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon any Agent or any other Lender and
based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement, any related agreement or any document
furnished hereunder or thereunder. No Agent shall be deemed a trustee or other
fiduciary on behalf of any party.
9.02. Indemnification. Each Lender agrees to indemnify and hold
harmless each Agent (to the extent not promptly reimbursed under Section 10.03,
but without limiting the obligations of the Company under Section 10.03),
ratably in accordance with the aggregate principal amount of the respective
Commitments of and/or Loans held by the Lenders, for any and all liabilities
(including pursuant to any environmental law), obligations, losses, damages,
penalties, actions, judgments, deficiencies, suits, costs, expenses (including
reasonable attorney's fees) or disbursements of any kind and nature whatsoever
that may be imposed on, incurred by or asserted against such Agent (including by
any Lender) arising out of or by reason of any investigation in or in any way
relating to or arising out of any Loan Document or any other documents
contemplated by or referred to therein for any action taken or omitted to be
taken by such Agent under or in respect of any of the Loan Documents or other
such documents or the transactions contemplated thereby (including the costs and
expenses that the Company is obligated to pay under Section 10.03, but
excluding, unless a Default has occurred and is continuing, normal
administrative costs and expenses incident to the performance of its agency
duties hereunder) or the enforcement of any of the terms hereof or thereof or of
any such other documents; provided, however, that no Lender shall be liable for
any of the foregoing to the extent they are determined by a court of competent
jurisdiction in a final and nonappealable judgment to have resulted from the
gross negligence or willful misconduct of the party to be indemnified. The
agreements set forth in this Section 9.02 shall survive the payment of all Loans
and other obligations hereunder and shall be in addition to and not in lieu of
any other indemnification agreements contained in any other Loan Document.
9.03. Consents Under Other Loan Documents. Except as otherwise provided
in this Agreement and the other Loan Documents, Administrative Agent may, with
<PAGE>
the prior consent of the Majority Lenders (but not otherwise), consent to any
modification, supplement or waiver under any of the other Loan Documents.
Section 10. Miscellaneous.
10.01. Waiver of Rights. No delay or failure on the part of any Lender
or the holder or holders of any Note in the exercise of any power or right shall
operate as a waiver thereof or as an acquiescence in any Default, nor shall any
single or partial exercise thereof, or the exercise of any other power or right,
preclude any other right or the further exercise of any other rights. The rights
and remedies hereunder of the Lenders, the Agents, the Lenders and of the holder
or holders of any Note are cumulative to, and not exclusive of, any rights or
remedies which any of them would otherwise have.
10.02. [Reserved].
10.03. Expenses, Indemnification, Etc. (a) The Company and each
Guarantor, jointly and severally, agree to pay or reimburse:
(i) the Arranger and Administrative Agent for all of their
reasonable out-of-pocket costs and expenses (including the reasonable
fees and expenses of legal counsel) in connection with (1) the
negotiation, preparation, execution and delivery of the Loan Documents
and the extension of credit hereunder, (2) the negotiation or
preparation of any modification, supplement or waiver of any of the
terms of any Loan Document (whether or not consummated or effective)
and (3) the primary syndication of the Loans and Commitments;
(ii) each of the Lenders and the Administrative Agent for all
reasonable out-of-pocket costs and expenses of the Lenders and the
Administrative Agent (including the reasonable fees and expenses of
legal counsel) in connection with (1) any Default and any enforcement
or collection proceedings resulting therefrom, including all manner of
participation in or other involvement with (x) bankruptcy, insolvency,
receivership, foreclosure, winding up or liquidation proceedings, (y)
judicial or regulatory proceedings and (z) workout, restructuring or
other negotiations or proceedings (whether or not the workout,
restructuring or transaction contemplated thereby is consummated), (2)
the enforcement of this Section 10.03 and (3) any documentary taxes;
and
(iii) each of the Lenders and the Administrative Agent for all
reasonable costs, expenses, taxes, assessments and other charges
incurred in connection with any filing, registration, recording or
perfection of any security interest contemplated by any Loan Document
or any other document referred to therein.
(b) The Company and each Guarantor, jointly and
severally, hereby agree to indemnify each Agent and each
Lender and their respective Affiliates, directors, trustees,
officers, employees and agents (each, an "Indemnitee") from,
<PAGE>
and hold each of them harmless against, and that no Indemnitee
will have any liability for, any and all Losses incurred by
any of them (including any and all Losses incurred by
Administrative Agent or Arranger to any Lender, whether or not
any Creditor is a party thereto) directly or indirectly
arising out of or by reason of or relating to the negotiation,
execution, delivery, performance, administration or
enforcement of any Loan Document, any of the transactions
contemplated by the Loan Documents, any breach by the Company
or any Guarantor of any representation, warranty, covenant or
other agreement contained in any of the Loan Documents or the
use or proposed use of any of the Loans, but excluding any
such Losses to the extent finally determined by a court of
competent jurisdiction in a final and nonappealable judgment
to have arisen from the gross negligence or bad faith of the
Indemnitee.
To the extent that the undertaking to indemnify and hold harmless set
forth in this Section 10.03 or any other provision of any Loan Document
providing for indemnification is unenforceable because it is violative of any
law or public policy or otherwise, the Company and each Guarantor, jointly and
severally, shall contribute the maximum portion that each of them is permitted
to pay and satisfy under applicable law to the payment and satisfaction of all
indemnified liabilities incurred by any of the Persons indemnified hereunder.
The Company and each Guarantor also agree that no Indemnitee shall have
any liability (whether direct or indirect, in contract or tort or otherwise) for
any Losses to the Company or any Guarantor or any Guarantor's security holders
or creditors resulting from, arising out of, in any way related to or by reason
of any matter referred to in any indemnification or expense reimbursement
provisions set forth in this Agreement or any other Loan Document, except to the
extent that any Loss is determined by a court of competent jurisdiction in a
final nonappealable judgment to have resulted from the gross negligence or bad
faith of such Indemnitee.
The Company and each Guarantor agree that, without the prior written
consent of the Administrative Agent, Arranger and the Majority Lenders, which
consent shall not be unreasonably withheld, neither the Company nor any
Guarantor will settle, compromise or consent to the entry of any judgment in any
pending or threatened Proceeding in respect of which indemnification is
reasonably likely to be sought under the indemnification provisions of this
Section 10.03 (whether or not any Indemnitee is an actual or potential party to
such Proceeding), unless such settlement, compromise or consent includes an
unconditional written release of each Indemnitee from all liability arising out
of such Proceeding and does not include any statement as to an admission of
fault, culpability or failure to act by or on behalf of any Indemnitee and does
not involve any payment of money or other value by any Indemnitee or any
injunctive relief or factual findings or stipulations binding on any Indemnitee.
10.04. Documentary Taxes. The Company agrees to pay any documentary,
stamp or similar taxes payable in respect of this Agreement or any other Loan
Document, including interest and penalties, in the event any such taxes are
assessed irrespective of when such assessment is made and whether or not any
credit is then in use or available hereunder.
10.05. Amendments, Etc. (i) Any provision of any Loan Document may be
amended, modified or supplemented by an instrument in writing signed by the
Company and the Guarantors party thereto and the Majority Lenders, or by the
Company and the Guarantors party thereto and Administrative Agent acting with
the written consent of the Majority Lenders, and any provision of any Loan
<PAGE>
Document may be waived by an instrument in writing signed by the Company and the
Guarantors party thereto and the Majority Lenders, or by the Company and the
Guarantors party thereto and Administrative Agent acting with the written
consent of the Majority Lenders; provided, however, that:
(a) no amendment or waiver shall, unless by an instrument
signed by all of the Lenders or by Administrative Agent acting with the
written consent of each Lender: (I) extend the scheduled final maturity
of any Loan or Note, or reduce the rate of interest or fees thereon, or
extend the time of payment of interest or fees thereon, or reduce the
principal amount thereof, or make any change to the definition of
Applicable Spread, (II) change the currency in which any Loan
Obligation is payable, (III) amend the terms of this Section 10.05 or
Section 3 or 10.07, (IV) reduce the percentages specified in the
definition of the term "Majority Lenders" or amend any provision of any
Loan Document requiring the consent of all the Lenders or reduce any
other percentage of the Lenders required to make any determinations or
waive any rights hereunder or to modify any provision hereof, (V)
release any Guarantor from its obligations under Section 4 (unless
permitted by this Agreement), (VI) consent to the assignment or
transfer by the Company or any Guarantor of any of its rights and
obligations under any Loan Document, (VII) amend Section 10.03 or any
other indemnification and expense reimbursement provision set forth in
any Credit Document, (VIII) modify the provisions of Section 11 or any
of the defined terms related thereto in any manner adverse to the
Lenders, (IX) waive performance by the Company or the Parent of its
obligations under, or consent to any departure from any of the terms
and provisions of, Section 2.05(a)(iii) (it being understood that any
prepayment required by Section 2.05(a)(iii)(1) or (2) may be waived or
amended by the Majority Lenders) or (X) so long as any Lender holds
more than 50% of the outstanding Loans, waive a Default hereunder; and
(b) any modification or supplement of or waiver with respect
to Section 9 which affects any Agent in their respective capacities as
such shall require the consent of such Agent.
(ii) If, in connection with any proposed change,
waiver, discharge or termination of any of the provisions of
this Agreement as contemplated by Section 10.05(i)(a) (other
than clause (I) of such section), the consent of the Majority
Lenders is obtained but the consent of one or more of such
other Lenders whose consent is required is not obtained, then
the Company shall have the right to replace each such
non-consenting Lender or Lenders (so long as all
non-consenting Lenders are so replaced) with one or more
Replacement Lenders in accordance with the provisions of
Section 3.07 so long as at the time of such replacement, each
such Replacement Lender consents to the proposed change,
waiver, discharge or termination; provided, however, that the
Company shall not have the right to replace a Lender solely as
a result of the exercise of such Lender's rights (and the
withholding of any required consent by such Lender) pursuant
to clause (I) of Section 10.05(i)(a).
10.06. Survival of Representations. All representations and warranties
made in the Loan Documents or pursuant thereto or in certificates given pursuant
hereto or thereto shall survive the execution and delivery of this Agreement and
of the other Loan Documents, and shall continue in full force and effect with
respect to the date as of which they were made as long as any credit is in use
or available hereunder.
<PAGE>
10.07. Assignments and Participations. (a) Neither the Company nor any
Guarantor may assign its respective rights or obligations hereunder or under the
Notes or any other Loan Document without the prior written consent of all of the
Lenders.
(b) Each Lender may assign to any Eligible Person any of its Loans, its
Notes and its Commitments (but only with the consent (which shall not be
unreasonably withheld, delayed or conditioned) of the Company and the Primary
Lender); provided, however, that (i) no such consent by the Company or the
Primary Lender shall be required in the case of any assignment to another Lender
or any Lender's Affiliate or an Approved Fund of any Lender (in which case, the
assignee and assignor Lenders shall give notice of the assignment to Arranger);
(ii) no consent of the Company need be obtained if any Default shall have
occurred and be continuing; (iii) each assignment, other than to a Lender or any
Lender's Affiliate or an Approved Fund of any Lender and other than any
assignment effected by the Primary Lender or any of its Affiliates in connection
with the syndication of the Commitments and/or Loans, shall be in an aggregate
amount at least equal to $5.0 million unless the assigning Lender's exposure is
reduced to $0 or unless the Company and Arranger otherwise agree and (iv) in no
event may any such assignment be made to the Company or any Guarantor or any of
its Affiliates without consent of all Lenders. Any assignment of a Loan shall be
effective only upon appropriate entries with respect thereto being made in the
Register (and each Note shall expressly so provide). Any assignment or transfer
of a Loan shall be registered on the Register only upon surrender for
registration of assignment or transfer of the Note evidencing such Loan,
accompanied by an instrument in writing substantially in the form of Exhibit E,
and upon consent thereto by the Company and Arranger to the extent required
above, one or more new Notes in the same aggregate principal amount shall be
issued to the designated assignee and the old Notes shall be returned by the
Administrative Agent to the Company marked "canceled". Upon execution and
delivery by the assignee to the Company and Arranger of an instrument in writing
substantially in the form of Exhibit E, and upon consent thereto by the Company
and Arranger to the extent required above, and in the case of a Loan, upon
appropriate entries being made in the Register, the assignee shall have, to the
extent of such assignment (unless otherwise provided in such assignment with the
consent of Administrative Agent), the obligations, rights and benefits of a
Lender hereunder holding the Commitment(s) and Loans (or portions thereof)
assigned to it (in addition to the Commitment(s) and Loans, if any, theretofore
held by such assignee) and the assigning Lender shall, to the extent of such
assignment, be released from the Commitment(s) (or portion(s) thereof) so
assigned. Upon any such assignment (other than to a Lender or any Affiliate of a
Lender or an Approved Fund of any Lender and other than any assignment by the
Primary Lender or any of its Affiliates) the assignee Lender shall pay a fee of
$3,500 to Administrative Agent. Upon any such assignment, certain rights and
obligations of the assigning Lender shall survive as set forth in Section 10.13.
(c) A Lender may sell or agree to sell to one or more other Persons a
participation in all or any part of any Loans held by it, or in its Commitments,
in which event each purchaser of a participation (a "Participant") shall be
entitled to the rights and benefits of the provisions of Section 3 (provided,
however, that no Participant shall be entitled to receive any greater amount
pursuant to Section 3 than the transferor Lender would have been entitled to
receive in respect of the participation effected by such transferor Lender had
no participation occurred) with respect to its participation in such Loans and
Commitments as if such Participant were a "Lender" for purposes of said Section,
<PAGE>
but, except as otherwise provided in Section 10.08(c), shall not have any other
rights or benefits under this Agreement or any Note or any other Loan Document
(the Participant's rights against such Lender in respect of such participation
to be those set forth in the agreements executed by such Lender in favor of the
Participant). All amounts payable by the Company to any Lender under Section 3
in respect of Loans and its Commitments shall be no greater than the amount that
would have applied if such Lender had not sold or agreed to sell any
participation in such Loans and Commitments, and as if such Lender were funding
each of such Loan and Commitments in the same way that it is funding the portion
of such Loan and Commitments in which no participations have been sold. In no
event shall a Lender that sells a participation agree with the Participant to
take or refrain from taking any action hereunder or under any other Loan
Document, except that such Lender may agree with the Participant that it will
not, without the consent of the Participant, agree to any modification or
amendment set forth in subclauses (I), (II), (III) or (VII) of clause (a) of the
proviso to Section 10.05.
(d) In addition to the assignments and participations permitted under
the foregoing provisions of this Section 10.07, any Lender may assign and pledge
all or any portion of its Loans and its Notes to any United States Federal
Reserve Bank as collateral security pursuant to Regulation A of the Board of
Governors of the Federal Reserve System and any Operating Circular issued by
such Federal Reserve Bank and, in the case of a Lender that is an investment
fund, any such Lender may assign or pledge all or any portion of its Loans and
its Notes to its trustee in support of its obligations to its trustee, without
notice to or consent of the Company, Administrative Agent or Arranger. No such
assignment shall release the assigning Lender from its obligations hereunder.
(e) A Lender may furnish any information concerning Parent or any
Subsidiary in the possession of such Lender from time to time to assignees and
participants (including prospective assignees and participants) subject,
however, to the provisions of Section 10.17. In addition, each of the
Administrative Agent and Arranger may furnish any information concerning the
Company or any Guarantor or any of its Affiliates in the Administrative Agent's
or Arranger's possession to any Affiliate of the Administrative Agent or
Arranger, subject, however, to the provisions of Section 10.17. The Company and
each Guarantor shall assist any Lender in effectuating any assignment or
participation pursuant to this Section 10.07 (including during syndication) in
whatever manner such Lender reasonably deems necessary, including participation
in meetings with prospective transferees.
(f) The Primary Lender shall receive a processing fee of $3,500 per
each assignment payable by the assignor and/or the assignee.
10.08. Right of Setoff; Sharing of Payments; Etc. (a) If any Event of
Default shall have occurred and be continuing, each of the Company and the
Guarantors agrees that, in addition to (and without limitation of) any right of
setoff, banker's lien or counterclaim a Lender may otherwise have, each Lender
<PAGE>
shall be entitled, at its option (to the fullest extent permitted by law), to
set off and apply any deposit (general or special, time or demand, provisional
or final), or other indebtedness, held by it for the credit or account of the
Company or such Guarantor at any of its offices, in Dollars or in any other
currency, against any principal of or interest on any of such Lender's Loans or
any other amount payable to such Lender hereunder that is not paid when due
(regardless of whether such deposit or other indebtedness is then due to the
Company or such Guarantor), in which case it shall promptly notify the Company
or such Guarantor and the Administrative Agent thereof; provided, however, that
such Lender's failure to give such notice shall not affect the validity thereof.
(b) Each of the Lenders agrees that, if it should receive (other than
pursuant to Section 3) any amount hereunder (whether by voluntary payment, by
the exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Loan Documents, or otherwise)
which is applicable to the payment of the principal of, or interest on, the
Loans or fees, of a sum which with respect to the related sum or sums received
by other Lenders is in a greater proportion than the total of such amounts then
owed and due to such Lender bears to the total of such amounts then owed and due
to all of the Lenders immediately prior to such receipt, then such Lender
receiving such excess payment shall purchase for cash without recourse or
warranty from the other Lenders an interest in the Loan Obligations of the
Company or such Guarantor to such Lenders in such amount as shall result in a
proportional participation by all of the Lenders in such amount; provided,
however, that if all or any portion of such excess amount is thereafter
recovered from such Lender, such purchase shall be rescinded and the purchase
price restored to the extent of such recovery, but without interest. The Company
consents to the foregoing arrangements.
(c) The Company agrees that any Lender so purchasing such a
participation may exercise all rights of setoff, banker's lien, counterclaim or
similar rights with respect to such participation as fully as if such Lender
were a direct holder of Loans or other amounts (as the case may be) owing to
such Lender in the amount of such participation.
(d) Nothing contained herein shall require any Lender to exercise any
such right or shall affect the right of any Lender to exercise, and retain the
benefits of exercising, any such right with respect to any other Indebtedness or
obligation of the Company or any Guarantor. If, under any applicable bankruptcy,
insolvency or other similar law, any Lender receives a secured claim in lieu of
a setoff to which this Section 10.08 applies, such Lender shall, to the extent
practicable, exercise its rights in respect of such secured claim in a manner
consistent with the rights of the Lenders entitled under this Section 10.08 to
share in the benefits of any recovery on such secured claim.
10.09. Lending Offices. Each Lender may, at its option, elect to make
its Loans hereunder at the branch, office or affiliate specified on the
appropriate signature page hereof (each a "lending office") or at such other of
its branches, offices or affiliates as it may from time to time elect and
designate in a notice to the Company and the Administrative Agent (but such
funds shall in any event be made available to the Company at the office of the
Administrative Agent as herein provided for).
10.10. Discretion of Banks as to Manner of Funding. Notwithstanding any
other provision of this Agreement, each Lender shall be entitled to fund and
maintain its funding of all or any part of its Loans in any manner it sees fit,
it being understood, however, that for the purposes of this Agreement all
determinations under this Agreement (including, without limitation, calculations
under Sections 3.01 and 3.04 hereof) shall be made as if each Lender had
actually funded and maintained its interest in each Loan through the purchase of
deposits in the offshore interbank market having a maturity corresponding to
such Loan's Interest Period and bearing an interest rate equal to LIBOR Rate for
such Interest Period.
<PAGE>
10.11. Notices. All communications provided for herein shall be in
writing or by telecopy, except as otherwise specifically provided for
hereinabove, addressed, if to the Parent, the Company or the Guarantors at 90
Linden Oaks, Rochester, New York 14625, Attention: Chief Financial Officer or if
to the Administrative Agent or Lenders at their respective addresses set forth
opposite their respective signatures hereto or an Assignment Agreement to which
they are a party, or at such other address as shall be designated by any party
hereto in a written notice to each other party pursuant to this Section 10.11.
Any notice in writing shall be deemed to have been given or made when served
personally or three (3) days after being mailed (properly addressed) if sent by
United States mail or upon receipt, if sent by telecopy; provided that any
notice to the Administrative Agent or any Lender under Section 2 hereof shall
only be effective upon receipt.
10.12. [Reserved].
10.13. [Reserved].
10.14. [Reserved].
10.15. Counterparts; Interpretation; Effectiveness. This Agreement may
be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement, any separate
letter agreements with respect to fees payable to Administrative Agent and those
certain assignment agreements each dated as of September 17, 1998 by and between
USB AG, Stamford Branch, and Harris Trust and Savings Bank and UBS AG, Stamford
Branch, and Bank of Montreal, Chicago Branch constitute the entire contract
among the parties relating to the subject matter hereof and supersede any and
all previous agreements and understandings, oral or written, relating to the
subject matter hereof, other than the indemnity, confidentiality, waiver of jury
trial and governing law provisions of the Commitment Letter, which are not
superseded and survive. Except as provided in Section 5.01, this Agreement shall
become effective when it shall have been executed by Administrative Agent and
when Administrative Agent shall have received counterparts hereof which, when
taken together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed counterpart
of a signature page of this Agreement by telecopy shall be effective as delivery
of a manually executed counterpart of this Agreement.
10.16. Headings. Section headings used in this Agreement are for
reference only and shall not affect the construction of this Agreement.
10.17. Confidentiality. Any information disclosed by the Parent or any
of its Subsidiaries to the Administrative Agent or any of the Lenders shall be
used solely for purposes of this Agreement and for the purpose of determining
whether or not to extend other credit or financial accommodations to the Company
or its Subsidiaries and, if such information is not otherwise in the public
domain, shall not be disclosed by the Administrative Agent or such Lender to any
other Person except (i) to its independent accountants and legal counsel (it
<PAGE>
being understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such information and instructed to keep
such information confidential), (ii) pursuant to statutory and regulatory
requirements, (iii) pursuant to any mandatory court order, subpoena or other
legal process, provided that such Lender or the Administrative Agent, as
applicable, shall give the Company prior written notice of any such disclosure
if lawful, (iv) to the Administrative Agent or any other Lender, (v) pursuant to
any agreement heretofore or hereafter made between such Lender and the Company
which permits such disclosure, (vi) in connection with the exercise of any right
or remedy under the Loan Documents, or (vii) subject to an agreement containing
provisions substantially similar in effect to those of this Section, to any
participant in or assignee of, or prospective participant in or assignee of, any
Obligation or Loan.
10.18. Waiver of Stay, Extension or Usury Laws. Each of the Company and
the Guarantors covenants (to the extent that it may lawfully do so) that it will
not at any time insist upon, plead, or in any manner whatsoever claim or take
the benefit or advantage of, any stay or extension law or any usury law or other
law that would prohibit or forgive the Company or such Guarantor from paying all
or any portion of the principal of or interest on the Loans as contemplated
herein, wherever enacted, now or at any time hereafter in force, or which may
affect the covenants or the performance of this Agreement; and (to the extent
that it may lawfully do so) each of the Company and the Guarantors hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Administrative Agent, but will suffer and permit the execution of every such
power as though no such law had been enacted. 10.19. Governing Law; Submission
to Jurisdiction; Waivers; Etc. Each Loan Document shall be governed by, and
construed in accordance with, the law of the State of New York, without regard
to the principles of conflicts of laws thereof (except in the case of the other
Loan Documents, to the extent otherwise expressly stated therein). The Company
and each Guarantor hereby irrevocably and unconditionally: (I) submits for
itself and its Property in any Proceeding relating to any Loan Document to which
it is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the Supreme Court of the
State of New York sitting in New York County, the courts of the United States of
America for the Southern District of New York, and appellate courts from any
thereof; (II) consents that any such Proceeding may be brought in any such court
and waives trial by jury and any objection that it may now or hereafter have to
the venue of any such Proceeding in any such court or that such Proceeding was
brought in an inconvenient court and agrees not to plead or claim the same;
(III) agrees that service of process in any such Proceeding may be effected by
mailing a copy thereof by registered or certified mail (or any substantially
similar form of mail), postage prepaid, to the Company at its address set forth
in Section 10.11 or at such other address of which Administrative Agent shall
have been notified pursuant thereto; and (IV) agrees that nothing herein shall
affect the right to effect service of process in any other manner permitted by
law or shall limit the right to sue in any other jurisdiction.
10.20. WAIVER OF JURY TRIAL. THE COMPANY, THE GUARANTORS, THE AGENTS
AND THE LENDERS EACH WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY
DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, BETWEEN THE AGENTS OR
<PAGE>
EITHER OF THEM, ANY LENDER AND THE COMPANY AND/OR ANY OF THE GUARANTORS 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 OR THE TRANSACTIONS
RELATED THERETO. THE COMPANY, THE GUARANTORS, THE AGENTS AND THE LENDERS EACH
HEREBY AGREE AND CONSENT THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY OF THEM 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.
10.21. Independence of Representations, Warranties and Covenants. The
representations, warranties and covenants contained herein shall be independent
of each other and no exception to any representation, warranty or covenant shall
be deemed to be an exception to any other representation, warranty or covenant
contained herein unless expressly provided, nor shall any such exception be
deemed to permit any action or omission that would be in contravention of
applicable law. Notwithstanding anything herein to the contrary, any matter
identified on a Schedule to this Agreement shall be deemed to be set forth on
all other Schedules to this Agreement for purposes of determining compliance
with any of the representations, warranties or covenants contained herein.
10.22. Severability. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provisions or the remaining provisions of this Agreement.
10.23. Acknowledgments. Each of the Company and the Guarantors hereby
acknowledge that: (a) each of them has been advised by counsel in connection
with the negotiation, execution and delivery of the Loan Documents; (b) no
Lender or Agent has any fiduciary or similar relationship to the Company or any
Guarantor and the relationship between the Lenders and Agent on the one hand,
and the Company and Guarantors, on the other hand, is solely that of debtor and
creditor; and (c) no joint venture exists among the Lenders and Agent or among
the Company and Guarantors and the Lenders and Agent.
Section 11. Subordination.
11.01. Agreement to Subordinate. The Company and each Guarantor agrees,
and each Lender by accepting a Note agrees, that the payment by the Company of
principal of, and premium, if any, and interest on the Loans and Notes, and by
each Guarantor of such amounts under its Guarantee (collectively, the "Loan
Indebtedness"), are subordinated to the prior payment in full in cash when due
of the principal of, and premium, if any, and accrued and unpaid interest on and
<PAGE>
all other amounts owing in respect of all existing and future Senior
Indebtedness of the Company and of such Guarantor, as the case may be.
11.02. Liquidation; Dissolution; Bankruptcy. Upon any payment or
distribution to creditors of the Company or any Guarantor of the assets of the
Company or such Guarantor, as the case may be, of any kind or character in a
total or partial liquidation or dissolution of the Company or such Guarantor, as
the case may be, or in a bankruptcy, reorganization, insolvency, receivership or
similar proceeding relating to the Company or such Guarantor, as the case may
be, whether voluntary or involuntary (including any assignment for the benefit
of creditors and proceedings for marshaling of assets and liabilities of the
Company or such Guarantor, as the case may be) (a "Insolvency or Liquidation
Proceeding"), the holders of all Senior Indebtedness of the Company or such
Guarantor, as the case may be, then outstanding will be entitled to payment in
full in cash (including interest accruing subsequent to the filing of petition
of bankruptcy or insolvency at the rate specified in the document relating to
the applicable Senior Indebtedness, whether or not such interest is an allowed
claim enforceable against the Company or such Guarantor, as the case may be,
under applicable law) before the Lenders are entitled to receive any payment on
or with respect to the Loan Indebtedness from the Company or such Guarantor, as
the case may be, and until all Senior Indebtedness of the Company or such
Guarantor, as the case may be, receives payment in full in cash, any
distribution to which the Lenders would be entitled will be made to holders of
Senior Indebtedness of the Company or such Guarantor, as the case may be.
11.03. No Payment on Loans and Notes in Certain Circumstances. (a) Upon
the occurrence of any default in the payment of any principal of or interest on
or other amounts due on any Designated Senior Indebtedness of the Company or any
Guarantor (a "Payment Default"), no payment of any kind or character shall be
made by the Company or such Guarantor, as the case may be (or by any other
Person on its or their behalf), with respect to the Loan Indebtedness unless and
until (i) such Payment Default shall have been cured or waived in accordance
with the instruments governing such Designated Senior Indebtedness or shall have
ceased to exist, (ii) such Designated Senior Indebtedness has been discharged or
paid in full in cash in accordance with the instruments governing such
Designated Senior Indebtedness or (iii) the benefits of this sentence have been
waived by the holders of such Designated Senior Indebtedness or their
representative immediately after which the Company or such Guarantor, as the
case may be, must resume making any and all required payments, including missed
payments, in respect of its obligations under the Loans and Notes.
(b) Upon (i) the occurrence and continuance of an event of default
(other than a Payment Default) relating to Designated Senior Indebtedness of the
Company or any Guarantor, as such event of default is defined therein or in the
instrument or agreement under which such Designated Senior Indebtedness is
outstanding, which event of default, pursuant to the instruments governing such
Designated Senior Indebtedness, entitles the holders (or a specified portion of
the holders) of such Designated Senior Indebtedness or their designated
representative to immediately accelerate without further notice (except such
notice as may be required to effect such acceleration) or the expiration of any
applicable grace period the maturity of such Designated Senior Indebtedness
(whether or not such acceleration has actually occurred) (a "Non-payment
Default") and (ii) the receipt by the Administrative Agent and the Company or
such Guarantor, as the case may be, from the trustee or other representative of
<PAGE>
holders of such Designated Senior Indebtedness of written notice (a "Payment
Blockage Notice") of such occurrence, no payment is permitted to be made by the
Company or such Guarantor, as the case may be (or by any other Person on its or
their behalf), in respect of the Loan Indebtedness for a period (a "Payment
Blockage Period") commencing on the date of receipt by the Administrative Agent
of such notice and ending on the earliest to occur of the following events
(subject to any blockage of payments that may then be in effect due to a Payment
Default on Designated Senior Indebtedness): (w) such Non-payment Default has
been cured or waived or has ceased to exist; (x) a 179-consecutive-day period
commencing on the date such written notice is received by the Administrative
Agent has elapsed; (y) such Payment Blockage Period has been terminated by
written notice to the Administrative Agent from the trustee or other
representative of holders of such Designated Senior Indebtedness, whether or not
such Non-payment Default has been cured or waived or has ceased to exist; and
(z) such Designated Senior Indebtedness has been discharged or paid in full in
cash, immediately after which, in the case of clause (w), (x), (y) or (z), the
Company or such Guarantor, as the case may be, must resume making any and all
required payments, including missed payments, in respect of its obligations
under the Loans and Notes. Notwithstanding the foregoing, (A) not more than one
Payment Blockage Period may be commenced in any period of 360 consecutive days
and (B) no default or event of default with respect to the Designated Senior
Indebtedness of the Company or such Guarantor, as the case may be, that was the
subject of a Payment Blockage Notice which existed or was continuing on the date
of the giving of any Payment Blockage Notice shall be or serve as the basis for
the giving of a subsequent Payment Blockage Notice whether or not within a
period of 360 consecutive days unless such default or event of default shall
have been cured or waived for a period of at least 90 consecutive days after
such date. Notwithstanding anything to the contrary, in no event may the total
number of days during which any Payment Blockage Period or Periods are in effect
exceed 179 days in the aggregate during any 360 day consecutive period.
(c) Notwithstanding the foregoing, the Lenders may receive and retain
Permitted Junior Securities, and no such receipt or retention will be
contractually subordinated in right of payment to any Senior Indebtedness or
subject to the restrictions described in this Section 11.
11.04. Acceleration of Notes. If payment of the Loans and Notes is
accelerated because of an Event of Default, the Company shall promptly notify
the administrative agent under the Senior Credit Facility and each holder (or
Representative thereof) of the Senior Indebtedness of the Company or any
Guarantor of the acceleration.
11.05. When Distributions Must Be Paid Over. In the event that any
payment or distribution of assets of the Company or any Guarantor, whether in
cash, property or securities, shall be received by the Administrative Agent or
the Lenders at a time when such payment or distribution is prohibited by this
Section 11, such payment or distribution shall be segregated from other funds or
assets and held in trust for the benefit of the holders of Senior Indebtedness
of the Company or such Guarantor, as the case may be, and shall be paid or
<PAGE>
delivered by the Administrative Agent or such Lenders, as the case may be, to
the holders of the Senior Indebtedness of the Company or such Guarantor, as the
case may be, remaining unpaid or unprovided for or their representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing any of such Senior Indebtedness of the Company
or such Guarantor, as the case may be, may have been issued, ratably according
to the aggregate amounts remaining unpaid on account of the Senior Indebtedness
of the Company or such Guarantor, as the case may be, held or represented by
each, for application to the payment of all Senior Indebtedness of the Company
or such Guarantor, as the case may be, remaining unpaid, to the extent necessary
to pay or to provide for the payment in full in cash of all such Senior
Indebtedness after giving effect to any concurrent payment or distribution to
the holders of such Senior Indebtedness.
With respect to the holders of Senior Indebtedness of the Company or
any Guarantor, the Administrative Agent undertakes to perform only such
obligations on its part as are specifically set forth in this Section 11, and no
implied covenants or obligations with respect to any holders of the Senior
Indebtedness of the Company or any Guarantor shall be read into this Agreement
against the Administrative Agent. The Administrative Agent shall not be deemed
to owe any fiduciary duty to the holders of the Senior Indebtedness of the
Company or any Guarantor and shall not be liable to any holders of such Senior
Indebtedness if the Administrative Agent shall pay over or distribute to, or on
behalf of, the Lenders or the Company or any other Person, money or assets to
which any holders of such Senior Indebtedness are entitled pursuant to this
Section 11, except if such payment is made at a time when the Administrative
Agent has knowledge that the terms of this Section 11 prohibit such payment.
11.06. Notice. The Administrative Agent shall not at any time be
charged with the knowledge of the existence of any facts that would prohibit the
making of any payment to or by the Administrative Agent under this Section 11,
unless and until the Administrative Agent shall have received written notice
thereof from the Company or such Guarantor or one or more holders of the Senior
Indebtedness of the Company or such Guarantor, as the case may be, or a
Representative of any holders of such Senior Indebtedness; and, prior to the
receipt of any such written notice, the Administrative Agent shall be entitled
to assume conclusively that no such facts exist. The Administrative Agent shall
be entitled to rely on the delivery to it of written notice by a Person
representing itself to be a holder of the Senior Indebtedness of the Company or
a Guarantor (or a Representative thereof) to establish that such notice has been
given.
The Company shall promptly notify the Administrative Agent in writing
of any facts it knows that would cause a payment of principal of, or premium, if
any, or interest on, the Loans and Notes to violate this Section 11, but failure
to give such notice shall not affect the subordination of the Loans and Notes to
the Senior Indebtedness of the Company or any Guarantor provided in this Section
11 or the rights of holders of such Senior Indebtedness under this Section 11.
11.07. Subrogation. After all Senior Indebtedness of the Company or any
Guarantor has been paid in full in cash and until the Loans and Notes are paid
in full, the Lenders shall be subrogated (equally and ratably with all other
Indebtedness pari passu with the Loans and Notes) to the rights of holders of
such Senior Indebtedness to receive distributions applicable to such Senior
Indebtedness to the extent that distributions otherwise payable to the Lenders
have been applied to the payment of such Senior Indebtedness. A distribution
<PAGE>
made under this Section 11 to holders of the Senior Indebtedness of the Company
or any Guarantor that otherwise would have been made to Lenders is not, as
between the Company or such Guarantor, as the case may be, and the Lenders, a
payment by the Company or such Guarantor, as the case may be, on its Senior
Indebtedness.
11.08. Relative Rights. This Section 11 defines the relative rights of
the Lenders and holders of the Senior Indebtedness of the Company or any
Guarantor. Nothing in this Agreement shall: (1) impair, as between the Company
or a Guarantor, as the case may be, and the Lenders, the obligations of the
Company or any Guarantor, which are absolute and unconditional, to pay principal
of, and premium, if any, and interest on the Loans and Notes in accordance with
their terms; (2) affect the relative rights of the Lenders and the creditors of
the Company or any Guarantor other than their rights in relation to holders of
the Senior Indebtedness of the Company or any Guarantor; or (3) prevent the
Administrative Agent or any Lender from exercising its available remedies upon a
Default or Event of Default, subject to the rights of holders of the Senior
Indebtedness of the Company or any Guarantor to receive distributions and
payments otherwise payable to the Lenders.
Nothing contained in this Section 11 or elsewhere herein or in any Note
is intended to or shall impair, as between the Company, any Guarantor and the
Lenders, the obligations of the Company and the Guarantors, which are absolute
and unconditional, to pay to the Lenders the principal of, and premium, if any,
and interest on the Loans and Notes as and when the same shall become due and
payable in accordance with their terms, or is intended to or shall affect the
relative rights of the Lenders and creditors of the Company and the Guarantors
other than the holders of the Senior Indebtedness of the Company or any
Guarantor, nor shall anything herein or therein prevent the Administrative Agent
or any Lender from exercising all remedies otherwise permitted by applicable law
upon Default hereunder, subject to the rights, if any, under this Section 11 of
the holders of such Senior Indebtedness.
The failure to make a payment on account of principal of, or interest
on the Loans and Notes by reason of any provision of this Section 11 shall not
be construed as preventing the occurrence of an Event of Default under Section
8.01.
11.09. The Company, Guarantors and Lenders May Not Impair
Subordination. (a) No right of any holder of the Senior Indebtedness of the
Company or any Guarantor to enforce the subordination as provided in this
Section 11 shall at any time or in any way be prejudiced or impaired by any act
or failure to act by the Company or any Guarantor or by any noncompliance by the
Company or any Guarantor with the terms, provisions and covenants of this
Agreement or the Notes or any other agreement regardless of any knowledge
thereof with which any such holder may have or be otherwise charged.
(b) Without in any way limiting Section 11.09(a), the holders of any
Senior Indebtedness of the Company or any Guarantor may, at any time and from
time to time to the extent not otherwise prohibited by this Agreement, without
the consent of or notice to any Lenders, without incurring any liabilities to
any Lender and without impairing or releasing the subordination and other
benefits provided in this Agreement or the Lenders' obligations to the holders
of such Senior Indebtedness, even if any Lender's right of reimbursement or
subrogation or other right or remedy is affected, impaired or extinguished
thereby, do any one or more of the following: (i) amend, renew, exchange,
<PAGE>
extend, modify, increase or supplement (to the extent permitted hereunder) in
any manner such Senior Indebtedness or any instrument evidencing or guaranteeing
or securing such Senior Indebtedness or any agreement under which such Senior
Indebtedness is outstanding (including, but not limited to, changing the manner,
place or terms of payment or changing or extending the time of payment of, or
renewing, exchanging, amending, increasing or altering (to the extent permitted
hereunder), (x) the terms of such Senior Indebtedness, (y) any security for, or
any guarantee of, such Senior Indebtedness, (z) any liability of any obligor on
such Senior Indebtedness (including any guarantor) or any liability incurred in
respect of such Senior Indebtedness) (ii) sell, exchange, release, surrender,
realize upon, enforce or otherwise deal with in any manner and in any order any
property pledged, mortgaged or otherwise securing such Senior Indebtedness or
any liability of any obligor thereon, to such holder, or any liability incurred
in respect thereof; (iii) settle or compromise any such Senior Indebtedness or
any other liability of any obligor of such Senior Indebtedness to such holder or
any security therefor or any liability incurred in respect thereof and apply any
sums by whomsoever paid and however realized to any liability (including,
without limitation, payment of any of the Senior Indebtedness) in any manner or
order; and (iv) fail to take or to record or otherwise perfect, for any reason
or for no reason, any lien or security interest securing such Senior
Indebtedness by whomsoever granted, exercise or delay in or refrain from
exercising any right or remedy against any obligor or any guarantor or any other
Person, elect any remedy and otherwise deal freely with any obligor and any
security for such Senior Indebtedness or any liability of any obligor to the
holders of such Senior Indebtedness or any liability incurred in respect of such
Senior Indebtedness.
11.10. Distribution or Notice to Representative. Whenever a
distribution is to be made, or a notice given, to holders of Senior Indebtedness
of the Company or any Guarantor, the distribution may be made and the notice
given to their Representative, if any. If any payment or distribution of the
Company's assets is required to be made to holders of any of the Senior
Indebtedness of the Company or any Guarantor pursuant to this Section 11, the
Administrative Agent and the Lenders shall be entitled to rely upon any order or
decree of any court of competent jurisdiction, or upon any certificate of a
Representative of such Senior Indebtedness or a custodian therefor, in
ascertaining the holders of such Senior Indebtedness entitled to participate in
any such payment or distribution, the amount to be paid or distributed to
holders of such Senior Indebtedness and all other facts pertinent to such
payment or distribution or to this Section 11.
11.11. Rights of Administrative Agent. The Administrative Agent may
continue to make payments on the Loans and Notes unless prior to any payment
date it has received written notice of facts that would cause a payment of
principal of, or premium, if any, or interest on the Loans and Notes to violate
this Section 11. Only the Company, a Guarantor, a Representative of Senior
Indebtedness, or a holder of Senior Indebtedness that has no Representative may
give such notice.
The Administrative Agent in its individual or any other capacity may
hold Indebtedness of the Company or any Guarantor (including Senior
Indebtedness) with the same rights it would have if it were not the
Administrative Agent.
11.12. Authorization to Effect Subordination. Each Lender by its
acceptance of a Note authorizes and directs the Administrative Agent on its
<PAGE>
behalf to take such action as may be necessary or appropriate to effectuate the
subordination as provided in this Section 11, and appoints the Administrative
Agent as such Lender's attorney-in-fact for any and all such purposes
(including, without limitation, the timely filing of a claim for the unpaid
balance of the Loan and Note of such Lender in the form required in any
Insolvency or Liquidation Proceeding and causing such claim to be approved).
If a proper claim or proof of debt in the form required in such
proceeding is not filed by or on behalf of all Lenders prior to 30 days before
the expiration of the time to file such claims or proofs, then the holders or a
Representative of any Senior Indebtedness of the Company or any Guarantor are
hereby authorized, and shall have the right (without any duty), to file an
appropriate claim for and on behalf of the Lenders.
[Signature Pages Follow]
<PAGE>
S-1
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
AGRILINK FOODS, INC., as the Company
By: /s/ Earl L. Powers
Name: Earl L. Power
Title: Chief Financial Officer
PRO-FAC COOPERATIVE, INC., as a Guarantor
By: /s/ Earl L. Powers
Name: Earl L. Powers
Title: Vice President Finance and
Assistant Treasurer
LINDEN OAKS CORPORATION
By: /s/ Timothy J. Benjamin
Name: Timothy J. Benjamin
Title: Pesident
KENNEDY ENDEAVORS, INCORPORATED
By: /s/ Earl L. Powers
Name: Earl L. Powers
Title: Vice President and Secretary
<PAGE>
UBS AG, Stamford Branch,
as Administrative Agent
By: /s/ James J. Diaz
Name: James J. Diaz
Title: Executive Director Loan
Portfolio Support, US
By: /s/ David C. Hemingway
Name: David C. Hemingway
Title: Director Global Project Finance
Address for Notices:
UBS AG, Stamford Branch
677 Washington Blvd.
Stamford, CT 06901
Attention:
<PAGE>
WARBURG DILLON READ LLC,
as Syndication Agent, and Arranger
By: /s/ Robert Parsons
Name: Robert Parsons
Title: Managing Director
Leveraged Finance
By: /s/ Marco Bizzozero
Name: Associate Director
Title: Leveraged Finance
Address for Notices:
Warburg Dillon Read LLC
535 Madison Avenue
New York, New York 10022
Attention:
<PAGE>
LENDER:
Initial Commitment Amount: $140,000,000 UBS AG, Stamford Branch
By: /s/ James J. Diaz
Name: James J. Diaz
Title: Executive Director Loan
Portfolio Support US
By: /s/ David C. Hemingway
Name: David C. Hemingway
Title: Director Global Project
Finance
Address for Notices:
UBS AG, Stamford Branch
677 Washington Blvd.
Stamford, CT 06901
Attention:
<PAGE>
LENDER:
Initial Commitment Amount: $20,000,000 HARRIS TRUST AND SAVINGS BANK
By: /s/ H. Glen Clarke
Name: H. Glen Clarke
Title: Vice President
Address for Notices:
111 West Monroe Street
Chicago, Illinois 60690
Attention: Agribusiness Division
<PAGE>
LENDER:
Initial Commitment Amount: $40,000,000 BANK OF MONTREAL, Chicago Branch
By: /s/ Leon H. Sinclair
Name: Leon H. Sinclair
Title: Director
Address for Notices:
115 South LaSalle Street
Chicago, Illinois 60603
Attention: Global Distribution
<PAGE>
A-7
Annex A
Term Loan Covenants
Section A-1. Limitations on Additional Indebtedness. (a) The Company
will not, and will not permit any of its Restricted Subsidiaries to, directly or
indirectly, incur any Indebtedness (including without limitation Acquired
Indebtedness); provided that (i) the Company and its Restricted Subsidiaries may
incur Permitted Indebtedness and (ii) if no Default or Event of Default shall
have occurred and be continuing at the time of or as a consequence of the
incurrence of any such Indebtedness, the Company may incur additional
Indebtedness if, after giving effect thereto, the Company's Consolidated
Interest Coverage Ratio on the date thereof would be at least 2.0 to 1.0,
determined on a pro forma basis as if the incurrence of such additional
Indebtedness, and the application of the net proceeds therefrom, had occurred at
the beginning of the four-quarter period used to calculate the Company's
Consolidated Interest Coverage Ratio.
(b) Anything contained in this Section A-1 notwithstanding, the Company
may make demand loans to the Parent for working capital purposes aggregating in
an amount not exceeding $40.0 million at any time outstanding, each such demand
loan bearing an interest rate equal to the interest rate in effect on the date
of such loan under the Revolving Loan Facility; provided, however, that the
aggregate loan balance of such demand loans must be reduced to zero for a period
of not less than 15 consecutive days in each fiscal year. Except for (i) the
demand loans described in the preceding sentence, (ii) the Parent's guarantee
under the Senior Credit Facility, and (iii) the Parent's Guarantee of the Loan
Obligations under this Agreement, as long as the Parent has the right to borrow
under the Marketing Agreement, the Parent shall not incur any Indebtedness (it
being understood that the Parent's obligations in respect of retained earnings
allocated to its members shall not be deemed to be Indebtedness).
Section A-2. Payments Pursuant to the Marketing Agreement;
Reinvestments by the Parent. As promptly as practicable, and in any event within
ten Business Days, after receipt from the Company of any payment made in excess
of the Commercial Market Value for crops and other services pursuant to the
Marketing Agreement, the Parent will invest in cash as common equity interests
(other than Disqualified Capital Stock) in the Company an amount equal to 70% of
such excess. Without the consent of the holders of at least 75% in principal
amount of the Term Notes then outstanding, the Company will not: (a) amend the
calculation of amounts payable to the Parent under the Marketing Agreement in a
manner which would increase the payments made to the Parent or (b) amend the
Marketing Agreement to require that Affiliate Transactions involving the Parent
be approved by less than a majority of the Disinterested Directors.
Section A-3. Limitation on the Issuance of Capital Stock of Restricted
Subsidiaries. The Company will not permit any Restricted Subsidiary, directly or
indirectly, to issue or sell any shares of its Capital Stock (including options,
warrants or other rights to purchase shares of such Capital Stock) except (i) to
the Company or a Wholly-Owned Restricted Subsidiary, (ii) if, immediately after
giving effect to such issuance or sale, such Restricted Subsidiary would no
longer constitute a Restricted Subsidiary or (iii) to the extent such shares
<PAGE>
represent directors' qualifying shares or shares required by applicable law to
be held by a Person other than the Company or a Wholly-Owned Restricted
Subsidiary. The proceeds of any sale of Capital Stock permitted hereunder and
referred to in clauses (ii) and (iii) above will be treated as Net Asset Sale
Proceeds and must be applied in a manner consistent with the provisions of the
Section 2.05 (a) (iii) (4).
Section A-4. Limitations on Layering Debt. Neither the Company nor any
Guarantor will incur any Indebtedness that is subordinate or junior in right of
payment to any Senior Indebtedness of the Company or such Guarantor, as the case
may be, unless such Indebtedness by its terms is pari passu with, or
subordinated to, the Term Loans and Term Notes or the Guarantee of such
Guarantor, as the case may be.
Section A-5. Limitations on Restricted Payments. (a) The Company will
not, and will not permit any of its Restricted Subsidiaries to, directly or
indirectly, make any Restricted Payment (except as permitted below) if at the
time of such Restricted Payment:
(1) a Default or Event of Default shall have occurred and be
continuing or shall occur as a consequence thereof;
(2) the Company would be unable to meet the Coverage Ratio
Incurrence Condition; or
(3) the amount of such Restricted Payment, when added to the
aggregate amount of all other Restricted Payments (except as expressly
provided in the second paragraph under paragraph (b) of this Section
A-5) made on or after the first day of the last completed fiscal
quarter of the Company, exceeds the sum of (A) 50% of the Company's
Consolidated Net Income (taken as one accounting period) from the first
day of the last completed fiscal quarter of the Company to the end of
the Company's most recently ended fiscal quarter for which financial
statements are available at the time of such Restricted Payment (or, if
such aggregate Consolidated Net Income shall be a deficit, minus 100%
of such aggregate deficit) plus (B) the net cash proceeds from the
issuance and sale (other than to a Subsidiary of the Company or the
Parent) after the Conversion Date of (1) the Company's Capital Stock
that is not Disqualified Capital Stock (excluding amounts contributed
to the Company pursuant to clause (E) of this paragraph and excluding
Capital Stock purchased with the proceeds of loans from the Company or
any of its Subsidiaries) or (2) debt securities of the Company that
have been converted into the Company's Capital Stock that is not
Disqualified Capital Stock and that is not then held by a Subsidiary of
the Company, plus (C) to the extent that any Restricted Investment that
was made after the Conversion Date is sold for cash or otherwise
liquidated or repaid for cash, the lesser of (x) the cash return of
capital with respect to such Restricted Investment (less the cost of
disposition, if any) and (y) the initial amount of such Restricted
Investment, plus (D) the amount of any Restricted Investment
outstanding in an Unrestricted Subsidiary at the time such Unrestricted
Subsidiary is designated a Restricted Subsidiary of the Company in
<PAGE>
accordance with the definition of "Unrestricted Subsidiary" in Annex B
plus (E) 40% of the aggregate contributions by the Parent to the
Company pursuant to Section A-2 subsequent to the Conversion Date, plus
(F) $7.5 million.
(b) The provisions of clauses (ii) and (iii) of paragraph (a) of this
Section A-5 will not prohibit (1) the payment of any dividend by the Company or
any Restricted Subsidiary within 60 days after the date of declaration thereof,
if at said date of declaration such payment would have complied with the
provisions of this Agreement; (2) the redemption, repurchase, retirement or
other acquisition of any Capital Stock of the Company in exchange for, or out of
the proceeds of, the substantially concurrent sale (other than to a Subsidiary
of the Company or the Parent) of other Capital Stock of the Company (other than
any Disqualified Capital Stock); (3) the defeasance, redemption, repurchase or
other retirement of Subordinated Indebtedness in exchange for, or out of the
proceeds of, the substantially concurrent issue and sale of Capital Stock of the
Company (other than (x) Disqualified Capital Stock, (y) Capital Stock sold to a
Subsidiary of the Company or the Parent and (z) Capital Stock purchased with the
proceeds of loans from the Company or any of its Subsidiaries); (4) the payment
of amounts required to fund the Parent's reasonable operating expenses, not in
excess of $250,000, as adjusted to reflect changes in the Consumer Price Index
between the Conversion Date and the date of any such payment, in any fiscal
year; (5) the payments of dividends or distributions to the Parent solely in
amounts and at the times necessary to permit the Parent to purchase, redeem,
acquire, cancel or otherwise retire for value Capital Stock of the Parent (i)
held by officers, directors or employees or former officers, directors or
employees (or their transferees, estates or beneficiaries under their estates),
or a trust established for the benefit of any of the foregoing, of the Parent,
the Company or its Subsidiaries, upon death, disability, retirement, severance
or termination of employment or service or pursuant to any agreement under which
such Capital Stock or related rights were issued or (ii) held by members or
former members of the Parent, upon the departure of such Persons as members of
the Parent or upon the discontinuance by any such Person of one or more crops;
provided that the amount of such payments under this clause (5) does not exceed
in the aggregate $2.0 million in any fiscal year; or (6) Restricted Investments
the amount of which, together with the amount of all other Restricted
Investments made pursuant to this clause (6) after the Conversion Date, does not
exceed $15.0 million.
Each Restricted Payment permitted pursuant to the preceding paragraph
(other than the Restricted Payments referred to in clauses (2) and (3) thereof,
and, to the extent deducted in determining Consolidated Net Income in any
period, the Restricted Payments referred to in clause (5) thereof) shall be
included once in calculating whether the conditions of clause (iii) of paragraph
(a) of this Section A-5 of have been met with respect to any subsequent
Restricted Payments. For purposes of determining compliance with this Section
<PAGE>
A-5, in the event that a transaction meets the criteria of more than one of the
types of Restricted Payments described in the clauses of the immediately
preceding paragraph or of the clauses of the definition of "Restricted Payment,"
the Company, in its sole discretion, shall classify such transaction and only be
required to include the amount and type of such transaction in one of such
clauses. If an issuance of Capital Stock of the Company is applied to make a
Restricted Payment pursuant to clause (2) or (3) above, then, in calculating
whether the conditions of clause (iii) of paragraph (a) of this Section A-5 have
been met with respect to any subsequent Restricted Payments, the proceeds of any
such issuance shall be included under such clause (iii) only to the extent such
proceeds are not applied as so described in this sentence.
(c) Not later than the date of making any Restricted Payment, the
Company shall deliver to the Administrative Agent an Officers' Certificate
stating that such Restricted Payment is permitted and setting forth the basis
upon which the calculations required by this Section A-5 were computed, which
calculations shall be based upon the Company's latest available financial
statements.
Section A-6. Limitations on Restrictions on Distributions from
Restricted Subsidiaries. The Company will not, and will not permit any of its
Restricted Subsidiaries to, create or otherwise cause or suffer to exist or
become effective any Payment Restriction with respect to any of its Restricted
Subsidiaries, except for (a) any such Payment Restriction in effect on the
Closing Date under the Senior Credit Facility or any similar Payment Restriction
under any similar credit facility, or any amendment, restatement, renewal,
replacement or refinancing of any of the foregoing, provided that such similar
Payment Restrictions are not, taken as a whole, materially more restrictive than
the Payment Restrictions in effect on the Closing Date under the Senior Credit
Facility; (b) any such Payment Restriction under any agreement evidencing any
Acquired Indebtedness that was permitted to be incurred pursuant to the
Agreement in effect at the time of such incurrence and not created in
contemplation of such event, provided that such Payment Restriction is not
extended to apply to any of the assets of the entities not previously subject
thereto; (c) any such Payment Restriction arising in connection with Refinancing
Indebtedness; provided that any such Payment Restrictions that arise under such
Refinancing Indebtedness are not, taken as a whole, materially more restrictive
than those under the agreement creating or evidencing the Indebtedness being
refunded or refinanced; (d) any such restriction by reason of customary
provisions restricting assignments, subletting or other transfers contained in
leases, licenses and similar agreements entered into in the ordinary course of
business; and (e) Payment Restrictions arising under applicable law.
Section A-7. Limitations on Transactions with Affiliates. The Company
will not, and will not permit any of its Restricted Subsidiaries to, directly or
indirectly, in one transaction or a series of related transactions, sell, lease,
transfer or otherwise dispose of any of its properties or assets to, or purchase
any property or assets from or enter into any contract, agreement,
understanding, loan, advance or guarantee with, or for the benefit of, any
Affiliate (each of the foregoing, an "Affiliate Transaction"), unless (i) such
Affiliate Transaction is on terms that are no less favorable to the Company or
the relevant Restricted Subsidiary than those that would have been obtained in a
comparable transaction by the Company or such Restricted Subsidiary with an
unrelated Person and (ii) the Company delivers to the Administrative Agent (a)
with respect to any Affiliate Transaction (or series of related transactions)
involving the Parent (including, without limitation, any amendment to or waiver
under the Marketing Agreement and any agreement for the purchase of crops
entered into pursuant to the Marketing Agreement) or involving aggregate
payments in excess of $1.0 million, an Officers' Certificate certifying that
such Affiliate Transaction complies with clause (i) above and which sets forth
and authenticates a resolution that has been adopted by a vote of a majority of
the Disinterested Directors approving such Affiliate Transaction and (b) with
respect to any Affiliate Transaction (or series of related transactions)
involving aggregate payments in excess of $5.0 million (other than relating to
the Marketing Agreement or any agreement for the purchase of crops entered into
<PAGE>
pursuant to the Marketing Agreement), the Officers' Certificate described in the
preceding clause (a) and an opinion as to the fairness to the Company or such
Subsidiary from a financial point of view of such Affiliate Transaction (or
series of related transactions) issued by an Independent Financial Advisor;
provided, however, that the following shall not be deemed to be Affiliate
Transactions: (i) transactions exclusively between or among (1) the Company and
one or more Restricted Subsidiaries or (2) Restricted Subsidiaries, provided, in
each case, that no Affiliate of the Company (other than another Restricted
Subsidiary) owns Capital Stock of any such Restricted Subsidiary; (ii)
transactions between the Company or any Restricted Subsidiary and any qualified
employee stock ownership plan established for the benefit of the Company's
employees, or the establishment or maintenance of any such plan; (iii)
reasonable director, officer and employee compensation and other benefit and
indemnification arrangements entered into in the ordinary course of business and
consistent with past practice; (iv) transactions permitted by Section A-5 or
excluded from the definition of "Restricted Payments;" (v) the pledge of Capital
Stock of Unrestricted Subsidiaries to support the Indebtedness thereof; (vi)
transactions between the Company or any Restricted Subsidiary and any Affiliate
of the Company or such Restricted Subsidiary that is a joint venture, provided
that no direct or indirect holder of an equity interest in such joint venture
(other than the Company or a Restricted Subsidiary) is an Affiliate of the
Company or such Restricted Subsidiary; and (vii) except as set forth in clause
(a) above, the Marketing Agreement and any transaction effected pursuant
thereto.
Section A-8. Limitations on Liens. (a) The Company will not, and will
not permit any of its Restricted Subsidiaries to, directly or indirectly, incur
or permit to exist any Lien of any nature whatsoever on any property of the
Company or any Restricted Subsidiary (including Capital Stock of a Restricted
Subsidiary), or any proceeds, income or profit therefrom, whether owned at the
Conversion Date or thereafter acquired, which secures Indebtedness that is not
Senior Indebtedness unless contemporaneously therewith effective provision is
made to secure the Term Loan and Term Notes equally and ratably with (or if such
Lien secures Indebtedness that is subordinated to the Term Loan and Term Notes,
prior to) such Indebtedness for so long as such Indebtedness is secured by a
Lien.
(b) The restrictions in paragraph (a) of this Section A-8 shall not
apply to (i) Liens existing on the Conversion Date securing Indebtedness
outstanding on the Conversion Date; (ii) Liens in favor of the Company; (iii)
Liens to secure Non-Recourse Purchase Money Indebtedness; (iv) Liens securing
Acquired Indebtedness permitted to be incurred under the Indenture, provided
that the Liens do not extend to property or assets not subject to such Lien at
the time of acquisition (other than improvements thereon); or (v) Liens on
property of a Person existing at the time such Person is acquired or merged with
or into or consolidated with the Company or any such Restricted Subsidiary (and
not created in anticipation or contemplation thereof); (vi) Liens to secure
Refinancing Indebtedness of Indebtedness secured by Liens referred to in the
foregoing clauses (iv) and (v), provided that in each case such Liens do not
extend to any additional property or assets (other than improvements thereon).
Section A-9. Limitations on Mergers and Certain Other Transactions. (a)
The Company will not, in a single transaction or a series of related
transactions, (i) consolidate or merge with or into (other than a merger with a
Wholly-Owned Restricted Subsidiary solely for the purpose of changing the
Company's jurisdiction of incorporation to another State of the United States;
<PAGE>
provided that clauses (a) and (d) below are complied with), or sell, lease,
transfer, convey or otherwise dispose of or assign all or substantially all of
the assets of the Company or the Company and its Subsidiaries (taken as a
whole), or permit any of its Restricted Subsidiaries to do so if such
transaction would result in the transfer of all or substantially all of the
assets of the Company and its Subsidiaries (taken as a whole), or assign any of
its obligations under the Term Loan and Term Notes and this Agreement, to any
Person or (ii) adopt a Plan of Liquidation unless, in either case: (a) the
Person formed by or surviving such consolidation or merger (if other than the
Company) or to which such sale, lease, conveyance or other disposition or
assignment shall be made (or, in the case of a Plan of Liquidation, any Person
to which assets are transferred) (collectively, the "Successor"), is a
corporation organized and existing under the laws of any State of the United
States of America or the District of Columbia, and the Successor assumes by
agreement Term Loan and Term Notes a form satisfactory to the Administrative
Agent all of the obligations of the Company under the Term Loan and Term Notes
and this Agreement; (b) immediately prior to and immediately after giving effect
to such transaction and the assumption of the obligations as set forth in clause
(a) above and the incurrence of any Indebtedness to be incurred in connection
therewith, no Default or Event of Default shall have occurred and be continuing;
and (c) immediately after and giving effect to such transaction and the
assumption of the obligations set forth in clause (a) above and the incurrence
of any Indebtedness to be incurred in connection therewith, and the use of any
net proceeds therefrom on a pro forma basis, the Company or the Successor, as
the case may be, could meet the Coverage Ratio Incurrence Condition; and (d)
each Guarantor, unless it is the other party to the transactions described
above, shall have by amendment to its Guarantee confirmed that its Guarantee
shall apply to the obligations of the Company or the Successor under the Term
Loan and Term Notes. For purposes of this covenant, any Indebtedness of the
Successor which was not Indebtedness of the Company immediately prior to the
transaction shall be deemed to have been incurred in connection with such
transaction.
(b) No Guarantor may consolidate with or merge with or into (whether or
not such Subsidiary Guarantor is the surviving Person) another Person whether or
not affiliated with such Guarantor unless (i) the Person formed by or surviving
any such consolidation or merger (if other than such Guarantor) assumes all of
the obligations of such Guarantor pursuant to an Additional Guarantor
Supplement, in form and substance satisfactory to the Administrative Agent,
under this Agreement, (ii) immediately after giving effect to such transaction,
no Default or Event of Default exists; and (iii) immediately after giving effect
to such transaction, the Coverage Ratio Incurrence Condition would be met.
Section A-10. Limitations on Asset Sales. The Company will not, and
will not permit any of its Restricted Subsidiaries to, consummate any Asset Sale
(as defined in the definition of "Net Asset Sale Proceeds") unless (i) the
Company or such Restricted Subsidiary receives consideration at the time of such
Asset Sale at least equal to the Fair Market Value of the assets included in
such Asset Sale (evidenced by the delivery by the Company to the Administrative
Agent of an Officers' Certificate certifying that such Asset Sale complies with
this clause (i), (ii) immediately after giving effect to such Asset Sale, no
Default or Event of Default shall have occurred and be continuing, and (iii) at
least 80% of the consideration received by the Company or such Restricted
Subsidiary therefor is in the form of cash paid at the closing thereof. The
amount (without duplication) of any (x) Indebtedness (other than Subordinated
Indebtedness) of the Company or such Restricted Subsidiary that is expressly
<PAGE>
assumed by the transferee in such Asset Sale and with respect to which the
Company or such Restricted Subsidiary, as the case may be, is unconditionally
released by the holder of such Indebtedness, and (y) any Cash Equivalents, or
other notes, securities or items of property received from such transferee that
are promptly (but in any event within 15 days) converted by the Company or such
Restricted Subsidiary to cash (to the extent of the cash actually so received),
shall be deemed to be cash for purposes of clause (iii) of the preceding
sentence and, in the case of clause (x) above, shall also be deemed to
constitute a repayment of, and a permanent reduction in, the amount of such
Indebtedness for purposes of Section 2.05(a)(iii)(4). If at any time any
non-cash consideration received by the Company or any Restricted Subsidiary of
the Company, as the case may be, in connection with any Asset Sale is converted
into or sold or otherwise disposed of for cash (other than interest received
with respect to any such non-cash consideration), then the date of such
conversion or disposition shall be deemed to constitute the date of an Asset
Sale hereunder and the Net Asset Sale Proceeds thereof shall be applied in
accordance with Section 2.05(a)(iii)(4). A transfer of assets by the Company to
a Restricted Subsidiary or by a Restricted Subsidiary to the Company or to a
Restricted Subsidiary will not be deemed to be an Asset Sale, and a transfer of
assets that is excluded from the definition of "Restricted Payments" or that
constitutes a Restricted Investment and that is permitted under Section A-5 will
not be deemed to be an Asset Sale. The Company shall comply with Section
2.05(a)(iii)(4) with respect to the Net Asset Sale Proceeds of any Asset Sale.
<PAGE>
Annex B
Definitions Applicable to Term Loan Covenants
Set forth below is certain of the defined terms used in Annex A. To the
extent that a term is defined in both Section 1.01 and this Annex B, for
purposes of the provisions of Annex A the term as defined in Annex B shall
govern.
"Acquired Indebtedness" means (a) with respect to any Person that
becomes a Restricted Subsidiary after the Conversion Date, Indebtedness of such
Person and its Subsidiaries existing at the time such Person becomes a
Restricted Subsidiary that was not incurred in connection with, or in
contemplation of, such Person becoming a Restricted Subsidiary and (b) with
respect to the Company or any of its Restricted Subsidiaries, any Indebtedness
of a Person (other than the Company or a Restricted Subsidiary) existing at the
time such Person is merged with or into the Company or a Restricted Subsidiary,
or Indebtedness assumed by the Company or any of its Restricted Subsidiaries in
connection with the acquisition of an asset or assets from another Person, which
Indebtedness was not, in any case, incurred by such other Person in connection
with, or in contemplation of, such merger or acquisition.
"Affiliate" of any specified Person means (i) any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person and (ii) with respect to the Parent and the
Company, any member of the Parent that is a director of the Parent or that has
beneficial ownership of more than 1% of the outstanding voting securities of the
Parent. For purposes of this definition, "control" (including, with correlative
meanings, the terms "controlling," "controlled by" and under "common control
with"), as used with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
or policies of such Person, whether through the ownership of voting securities,
by agreement or otherwise; provided, however, that beneficial ownership of 10%
or more of the voting securities of a Person shall be deemed to be control.
"Attributable Indebtedness," when used with respect to any Sale and
Leaseback Transaction, means, as at the time of determination, the present value
(discounted at a rate equivalent to the Company's then-current weighted average
cost of funds for borrowed money as at the time of determination, compounded on
a semi-annual basis) of the total obligations of the lessee for rental payments
during the remaining term of the lease included in any such Sale and Leaseback
Transaction.
"Board Resolution" means a duly adopted resolution of the Board of
Directors of the Company.
"Capital Stock" of any Person means (i) any and all shares or other
equity interests (including without limitation common stock, preferred stock and
partnership interests) in such Person and (ii) all rights to purchase, warrants
or options (whether or not currently exercisable), participations or other
<PAGE>
equivalents of or interests in (however designated) such shares or other
interests in such Person.
"Capitalized Lease Obligations" of any Person means the obligations of
such Person to pay rent or other amounts under a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP, and the
amount of such obligation shall be the capitalized amount thereof determined in
accordance with GAAP.
"Cash Equivalents" means (i) marketable obligations with a maturity of
360 days or less issued or directly and fully guaranteed or insured by the
United States of America or any agency or instrumentality thereof (provided that
the full faith and credit of the United States of America is pledged in support
thereof); (ii) U.S. dollar denominated time deposits and certificates of deposit
of any financial institution (a) that is a member of the Federal Reserve System
having combined capital and surplus and undivided profits of not less than $500
million or (b) whose short-term commercial paper rating or that of its parent
company is at least A-1 or the equivalent thereof from S&P or P-1 or the
equivalent thereof from Moody's (any such bank, an "Approved Bank"), in each
case with a maturity of 360 days or less from the date of acquisition; (iii)
commercial paper issued by any Approved Bank or by the parent company of any
Approved Bank and commercial paper issued by, or guaranteed by, any industrial
or financial company with a short-term commercial paper rating of at least A-1
or the equivalent thereof by S&P or at least P-1 or the equivalent thereof by
Moody's, or guaranteed by any industrial company with a long term unsecured debt
rating of at least A or A2, or the equivalent of each thereof, from S&P or
Moody's, as the case may be, and in each case maturing no more than 360 days
from the date of acquisition; (iv) repurchase obligations with a term of not
more than seven days for underlying securities of the types described in clause
(i) above entered into with any commercial bank meeting the specifications of
clause (ii)(a) above; and (v) investments in money market or other mutual funds
substantially all of whose assets comprise securities of the types described in
clauses (i) through (iv) above.
"Change of Control" means the occurrence of any of the following on or
after the Conversion Date: (i) the sale, lease or transfer, in one or a series
of related transactions, of all or substantially all of the Parent's or the
Company's assets to any Person or group (as such term is used in Section
13(d)(3) of the Exchange Act); (ii) the consummation of any transaction the
result of which is that any Person or group (as such term is used in Section
13(d)(3) of the Exchange Act) (other than the Parent in the case of clause (y))
owns, directly or indirectly, (A) more than 50% of the voting power of the
voting stock of either (x) the Parent or (y) the Company or (B) more than 30% of
the voting power of the voting stock of the Company if the Parent owns, directly
or indirectly, a lesser percentage than such Person or group of the voting power
of the voting stock of the Company; (iii) the first date on which any Person or
group (as defined above) shall have elected, or caused to be elected, a
sufficient number of its or their nominees to the Board of Directors of the
Parent or the Company such that the nominees so elected (regardless of when
elected) shall collectively constitute a majority of the Board of Directors of
the Parent or the Company, as the case may be; or (iv) for a period of 120
consecutive days, the number of Disinterested Directors on the Board of
Directors of the Company being less than the greater of (A) two and (B) the
number of directors of the Company who are the Parent Directors. For purposes of
this definition, any transfer of an equity interest of an entity that was formed
for the purpose of acquiring voting stock of the Parent or the Company shall be
<PAGE>
deemed to be a transfer of such portion of the voting stock owned by such entity
as corresponds to the portion of the equity of such entity that has been so
transferred.
"Commercial Market Value" means Commercial Market Value determined in
accordance with the Marketing Agreement.
"Consolidated Amortization Expense" for any period means the
amortization expense of the Company and its Restricted Subsidiaries for such
period (to the extent included in the computation of Consolidated Net Income),
determined on a consolidated basis in accordance with GAAP.
"Consolidated Depreciation Expense" for any period means the
depreciation expense of the Company and its Restricted Subsidiaries for such
period (to the extent included in the computation of Consolidated Net Income),
determined on a consolidated basis in accordance with GAAP.
"Consolidated Income Tax Expense" for any period means the provision
for taxes based on income and profits of the Company and its Restricted
Subsidiaries to the extent such income or profits were included in computing
Consolidated Net Income for such period.
"Consolidated Interest Coverage Ratio" means, with respect to any
determination date, the ratio of (a) EBITDA for the four full fiscal quarters
immediately preceding the determination date (for any determination, the
"Reference Period"), to (b) Consolidated Interest Expense for such Reference
Period. In making such computations, (i) EBITDA and Consolidated Interest
Expense shall be calculated on a pro forma basis assuming that (A) the
Indebtedness to be incurred or the Disqualified Capital Stock to be issued (and
all other Indebtedness incurred or Disqualified Capital Stock issued after the
first day of such Reference Period referred to in Section A-1 of Annex A through
and including the date of determination), and (if applicable) the application of
the net proceeds therefrom (and from any other such Indebtedness or Disqualified
Capital Stock), including the refinancing of other Indebtedness, had been
incurred on the first day of such Reference Period and, in the case of Acquired
Indebtedness, on the assumption that the related transaction (whether by means
of purchase, merger or otherwise) also had occurred on such date with EBITDA
(including any pro forma expense and cost reductions calculated on a basis
consistent with Regulation S-X under the Securities Act) attributable to the
assets which are the subject of such acquisition being included in such pro
forma calculation and (B) any acquisition or disposition by the Company or any
Restricted Subsidiary of any properties or assets outside the ordinary course of
business or any repayment of any principal amount of any Indebtedness of the
Company or any Restricted Subsidiary prior to the stated maturity thereof, in
either case since the first day of such Reference Period through and including
the date of determination, had been consummated on such first day of such
Reference Period; (ii) the Consolidated Interest Expense attributable to
interest on any Indebtedness required to be computed on a pro forma basis in
accordance with Section A-1 of Annex A and (A) bearing a floating interest rate
shall be computed as if the rate in effect on the date of computation had been
the applicable rate for the entire period and (B) which was not outstanding
during the period for which the computation is being made but which bears, at
the option of the Company, a fixed or floating rate of interest, shall be
computed by applying, at the option of the Company, either the fixed or floating
rate; (iii) the Consolidated Interest Expense attributable to interest on any
<PAGE>
Indebtedness under a revolving credit facility required to be computed on a pro
forma basis in accordance with Section A-1 of Annex A shall be computed based
upon the average daily balance of such Indebtedness during the applicable
period, provided that such average daily balance shall be reduced by the amount
of any repayment of Indebtedness under a revolving credit facility during the
applicable period, which repayment permanently reduced the commitments or
amounts available to be reborrowed under such facility; (iv) notwithstanding the
foregoing clauses (ii) and (iii), interest on Indebtedness determined on a
floating rate basis, to the extent such interest is covered by agreements
relating to Hedging Obligations, shall be deemed to have accrued at the rate per
annum resulting after giving effect to the operation of such agreements; and (v)
if after the first day of the applicable Reference Period and before the date of
determination, the Company has permanently retired any Indebtedness out of the
net proceeds of the issuance and sale of shares of Capital Stock (other than
Disqualified Capital Stock) of the Company within 60 days of such issuance and
sale, Consolidated Interest Expense shall be calculated on a pro forma basis as
if such Indebtedness had been retired on the first day of such period.
"Consolidated Interest Expense" for any period means the sum, without
duplication, of the total interest expense of the Company and its consolidated
Restricted Subsidiaries for such period, determined on a consolidated basis in
accordance with GAAP and including, without limitation (i) imputed interest on
Capitalized Lease Obligations and Attributable Indebtedness; (ii) commissions,
discounts and other fees and charges owed with respect to letters of credit
securing financial obligations and bankers' acceptance financing; (iii) the net
costs associated with Hedging Obligations; (iv) amortization of other financing
fees and expenses; (v) the interest portion of any deferred payment obligations;
(vi) amortization of debt discount or premium, if any; (vii) all other non-cash
interest expense; (viii) capitalized interest, (ix) all cash dividend payments
(and non-cash dividend payments in the case of a Restricted Subsidiary) on any
series of preferred stock of the Company or any Restricted Subsidiary; (x) all
interest payable with respect to discontinued operations; and (xi) all interest
on any Indebtedness of any other Person guaranteed by the Company or any
Restricted Subsidiary to the extent paid by the Company or such Restricted
Subsidiary.
"Consolidated Net Income" for any period means the net income (or loss)
of the Company and its consolidated Restricted Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP; provided that there
shall be excluded from such net income (to the extent otherwise included
therein), without duplication (i) the net income (or loss) of any Person (other
than a Restricted Subsidiary) in which any Person other than the Company and its
Restricted Subsidiaries has an ownership interest, except to the extent that any
such income has actually been received by the Company and its Restricted
Subsidiaries (unless and to the extent such Restricted Subsidiary is subject to
clause (iii) below) in the form of cash dividends or distributions during such
period; (ii) except to the extent includible in the consolidated net income of
the Company pursuant to the foregoing clause (i), the net income (or loss) of
any Person that accrued prior to the date that (a) such Person becomes a
Restricted Subsidiary or is merged into or consolidated with the Company or any
Restricted Subsidiary or (b) the assets of such Person are acquired by the
Company or any Restricted Subsidiary; (iii) the net income of any Restricted
Subsidiary during such period to the extent that the declaration or payment of
dividends or similar distributions by such Restricted Subsidiary of that income
(a) is not permitted by operation of the terms of its charter or any agreement,
<PAGE>
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to such Restricted Subsidiary during such period or (b) would be
subject to any taxes payable on such dividend or distribution; (iv) any gain
(or, only in the case of a determination of Consolidated Net Income as used in
EBITDA, any loss), together with any related provisions for taxes on any such
gain (or, if applicable, the tax effects of such loss), realized during such
period by the Company or any Restricted Subsidiary upon (a) the acquisition of
any securities, or the extinguishment of any Indebtedness, of the Company or any
Restricted Subsidiary or (b) any Asset Sale by the Company or any of its
Restricted Subsidiaries; provided, however, that there shall be excluded from
Consolidated Net Income for all purposes any loss realized by the Company or any
Restricted Subsidiary upon the acquisition of any securities, or the
extinguishment of any Indebtedness, of the Company or any Restricted Subsidiary,
or the write-off of deferred financing costs, in connection with the Acquisition
and all refinancings of Indebtedness consummated in connection therewith; (v)
any extraordinary gain (or, only in the case of a determination of Consolidated
Net Income as used in EBITDA, any extraordinary loss), together with any related
provision for taxes on any such extraordinary gain (or, if applicable, the tax
effects of such extraordinary loss), realized by the Company or any Restricted
Subsidiary during such period; and (vi) in the case of a successor to the
Company by consolidation, merger or transfer of its assets, any earnings of the
successor prior to such merger, consolidation or transfer of assets; and
provided, further, that any gain referred to in clauses (iv) and (v) above that
relates to a Restricted Investment and which is received in cash by the Company
or a Restricted Subsidiary during such period shall be included in the
Consolidated Net Income of the Company.
"Consolidated Net Worth" means, with respect to any Person as of any
date, the consolidated equity of the common stockholders of such Person and its
consolidated Subsidiaries as of such date, less all write-ups (other than
write-ups resulting from foreign currency translations and write-ups of tangible
assets of a going concern business made within twelve months after the
acquisition of such business) subsequent to the Conversion Date in the book
value of any asset owned by such Person or a Subsidiary of such Person.
"Coverage Ratio Incurrence Condition" would be met at any specified
time only if the Company (or its Successor, as the case may be) would be able to
incur $1.00 of additional Indebtedness at such specified time pursuant to the
Consolidated Interest Coverage Ratio test set forth Section A-1 of Annex A.
"Disqualified Capital Stock" means any Capital Stock of a Person or any
of its Subsidiaries that, by its terms, by the terms of any agreement related
thereto or by the terms of any security into which it is convertible, puttable
or exchangeable, is, or upon the happening of any event or the passage of time
would be, required to be redeemed or repurchased by such Person or any to its
Subsidiaries, whether or not at the option of the holder thereof, or matures or
is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise,
in whole or in part, on or prior to the Maturity Date.
"EBITDA" for any period means, without duplication, the sum of the
amounts for such period of (i) Consolidated Net Income, plus (ii) in each case
to the extent deducted in determining Consolidated Net Income for such period
(and without duplication), (A) Consolidated Income Tax Expense, (B) Consolidated
Amortization Expense (but only to the extent not included in Consolidated
<PAGE>
Interest Expense), (C) Consolidated Depreciation Expense, (D) Consolidated
Interest Expense, (E) all other non-cash items reducing the Consolidated Net
Income (excluding any such non-cash charge that results in an accrual of a
reserve for cash charges in any future period) for such period, in each case
determined on a consolidated basis in accordance with GAAP, plus (iii) in the
case of the Company, the Parent share of earnings (loss) as determined in
accordance with the Marketing Agreement, minus (iv) the aggregate amount of all
non-cash items, determined on a consolidated basis, to the extent such items
increased Consolidated Net Income for such period.
"Existing Indebtedness" means all of the Indebtedness of the Company
and its Restricted Subsidiaries that is outstanding on the Conversion Date, plus
additional promissory notes issued on the Subordinated Promissory Note issued to
Dean Foods in connection with the Acquisition.
"Fair Market Value" of any asset or items means the fair market value
of such asset or items as determined in good faith by the Board of Directors and
evidenced by a Board Resolution.
"incur" means, with respect to any Indebtedness or Obligation, incur,
create, issue, assume, guarantee or otherwise become directly or indirectly
liable, contingently or otherwise, with respect to such Indebtedness or
Obligation; provided that (i) the Indebtedness of a Person existing at the time
such Person became a Restricted Subsidiary shall be deemed to have been incurred
by such Restricted Subsidiary and (ii) neither the accrual of interest nor the
accretion of accreted value shall be deemed to be an incurrence of Indebtedness.
"Indebtedness" of any Person at any date means, without duplication:
(i) all liabilities, contingent or otherwise, of such Person for borrowed money
(whether or not the recourse of the lender is to the whole of the assets of such
person or only to a portion thereof); (ii) all obligations of such Person
evidenced by bonds, debentures, notes or other similar instruments; (iii) all
obligations of such Person in respect of letters of credit or other similar
instruments (or reimbursement obligations with respect thereto); (iv) all
obligations of such Person to pay the deferred and unpaid purchase price of
property or services, except trade payables and accrued expenses incurred by
such Person in the ordinary course of business in connection with obtaining
goods, materials or services, which payable is not overdue by more than 60 days
according to the original terms of sale unless such payable is being contested
in good faith; (v) the maximum fixed redemption or repurchase price of all
Disqualified Capital Stock of such Person; (vi) all Capitalized Lease
Obligations of such Person; (vii) all Indebtedness of others secured by a Lien
on any asset of such Person, whether or not such Indebtedness is assumed by such
Person; (viii) all Indebtedness of others guaranteed by such Person to the
extent of such guarantee; provided that Indebtedness of the Company or its
Restricted Subsidiaries that is guaranteed by the Company or the Company's
Restricted Subsidiaries shall only be counted once in the calculation of the
amount of Indebtedness of the Company and its Restricted Subsidiaries on a
consolidated basis; (ix) all Attributable Indebtedness; and (x) to the extent
not otherwise included in this definition, Hedging Obligations of such Person.
The amount of Indebtedness of any Person at any date shall be the outstanding
balance at such date of all unconditional obligations as described above, the
maximum liability of such Person for any such contingent obligations at such
date and, in the case of clause (vii), the lesser of (A) the Fair Market Value
of any asset subject to a Lien securing the Indebtedness of others on the date
<PAGE>
that the Lien attaches and (B) the amount of the Indebtedness secured. For
purposes of the preceding sentence, the "maximum fixed redemption or repurchase
price" of any Disqualified Capital Stock that does not have a fixed redemption
or repurchase price shall be calculated in accordance with the terms of such
Disqualified Capital Stock as if such Disqualified Capital Stock were purchased
or redeemed on any date on which Indebtedness shall be required to be determined
pursuant to this Agreement, and if such price is based upon, or measured by, the
fair market value of such Disqualified Capital Stock (or any equity security for
which it may be exchanged or converted), such fair market value shall be
determined in good faith by the Board of Directors of such Person, which
determination shall be evidenced by a Board Resolution.
"Independent Financial Advisor" means an accounting, appraisal
or investment banking firm of nationally recognized standing that is, in the
reasonable judgment of the Company's Board of Directors, qualified to perform
the task for which it has been engaged and disinterested and independent with
respect to the Company and its Affiliates.
"Investments" of any Person means (i) all investments by such Person in
any other Person in the form of loans, advances or capital contributions
(excluding commission, travel and similar advances to officers and employees
made in the ordinary course of business) or similar credit extensions
constituting Indebtedness of such Person, and any guarantee of Indebtedness of
any other Person, (ii) all purchases (or other acquisitions for consideration)
by such Person of Indebtedness, Capital Stock or other securities of any other
Person and (iii) all other items that would be classified as investments
(including without limitation purchases of assets outside the ordinary course of
business) on a balance sheet of such Person prepared in accordance with GAAP.
"Lien" means, with respect to any asset or property, any mortgage, deed
of trust, lien (statutory or other), pledge, lease, easement, restriction,
covenant, charge, security interest or other encumbrance of any kind or nature
in respect of such asset or property, whether or not filed, recorded or
otherwise perfected under applicable law, including without limitation any
conditional sale or other title retention agreement, and any lease in the nature
thereof, any option or other agreement to sell, and any filing of, or agreement
to give, any financing statement under the Uniform Commercial Code (or
equivalent statutes) of any jurisdiction (other than cautionary filings in
respect of operating leases).
"Moody's" means Moody's Investors Service, Inc., and its successors.
"Non-Recourse Purchase Money Indebtedness" means Indebtedness of the
Company or any of its Restricted Subsidiaries incurred (a) to finance the
purchase of any assets of the Company or any of its Restricted Subsidiaries
within 90 days of such purchase, (b) to the extent the amount of Indebtedness
thereunder does not exceed 100% of the purchase cost of such assets, (c) to the
extent the purchase cost of such assets is or should be included in "additions
to property, plant and equipment" in accordance with GAAP, and (d) to the extent
that such Indebtedness is non-recourse to the Company or any of its Restricted
Subsidiaries or any of their respective assets other than the assets so
purchased.
<PAGE>
"Opinion of Counsel" means a written opinion from legal counsel (such
counsel may be an employee of or counsel to the Company or the Administrative
Agent) that complies with the requirements of this Agreement.
"Parent Director" means any Person who, as a director, officer
or other designee of the Parent, serves as a director of the Company.
"Payment Restriction" with respect to a Subsidiary of any Person, means
any encumbrance, restriction of limitation, whether by operation of the terms of
its charter or by reason of any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation, on the ability of (i) such Subsidiary
to (a) pay dividends or make other distributions on its Capital Stock or make
payments on any obligation, liability or Indebtedness owed to such Person or any
other Subsidiary of such Person, (b) make loans or advances to such Person or
any other Subsidiary or such Person, (c) guarantee any Indebtedness of the
Company or any Restricted Subsidiary or (d) transfer any of its properties or
assets to such Person or any other Subsidiary of such Person (other than
customary restrictions on transfers of property subject to a Lien permitted
under the Indenture) or (ii) such Person or any other Subsidiary of such Person
to receive or retain any such dividends, distributions or payments, loans or
advances, guarantee, or transfer of properties or assets.
"Permitted Indebtedness" means any of the following:
(i) Indebtedness of the Company and the related guarantees of
the Subsidiary Guarantors under the Senior Credit Facility in an
aggregate principal amount at any time outstanding not to exceed (a)
under the Term Loan Facilities, $455.0 million, less any required
permanent repayments actually made thereunder (excluding any such
repayment to the extent refinanced and replaced at the time of
payment), and (b) under the Revolving Loan Facility, the greater of (x)
$200.0 million and (y) the sum of (A) 80% of the face amount of all
accounts receivable owned by the Company and its Restricted
Subsidiaries and (B) 50% of the book value of all inventory owned by
the Company and its Restricted Subsidiaries, in each case computed on a
consolidated basis in accordance with GAAP as of the end of the last
fiscal month of the Company, reduced by any required permanent
repayments actually made (which are accompanied by a corresponding
permanent commitment reduction) in respect of the Revolving Loan
Facility (excluding any such repayment and commitment reductions to the
extent refinanced and replaced at the time of payment);
(ii) Indebtedness owing to the Administrative Agent and the
Lenders under this Agreement or any of the other Loan Documents;
(iii) Existing Indebtedness;
(iv) Indebtedness under Hedging Obligations, provided that (1)
such Hedging Obligations are related to payment obligations on
Permitted Indebtedness or Indebtedness otherwise permitted by Section
A-1 of Annex A, and (2) the notional principal amount of such Hedging
Obligations at the time incurred does not exceed the principal amount
of such Indebtedness to which such Hedging Obligations relate;
<PAGE>
(v) Indebtedness of the Company to a Subsidiary Guarantor and
Indebtedness of any Subsidiary Guarantor to the Company or any other
Subsidiary Guarantor; provided, however, that upon either (1) the
subsequent issuance (other than directors' qualifying shares), sale,
transfer or other disposition of any Capital Stock or any other event
which results in any such Subsidiary Guarantor ceasing to be a
Subsidiary Guarantor or (2) the transfer or other disposition of any
such Indebtedness (except to the Company or a Subsidiary Guarantor),
the provisions of this clause (v) shall no longer be applicable to such
Indebtedness and such Indebtedness shall be deemed, in each case, to be
incurred and shall be treated as an incurrence for purposes of Section
A-1 of Annex A at the time the Subsidiary Guarantor in question ceased
to be a Subsidiary Guarantor or the time such transfer or other
disposition occurred;
(vi) Indebtedness in respect of bid, performance or surety
bonds or insurance of self-reinsurance obligations (including to secure
worker's compensation and other similar insurance coverage) issued for
the account of the Company in the ordinary course of business
consistent with past practice, including guarantees or obligations of
the Company with respect to letters of credit supporting such bid,
performance or surety obligations or such insurance or self-insurance
obligations (in each case other than for an obligation for money
borrowed);
(vii) Indebtedness in respect of Non-Recourse Purchase Money
Indebtedness incurred by the Company or any Restricted Subsidiary;
(viii) Refinancing Indebtedness; and
(ix) Indebtedness, in addition to Indebtedness incurred
pursuant to the foregoing clauses of this definition, with an aggregate
principal face or stated amount (as applicable) at any time outstanding
for all such Indebtedness incurred pursuant to this clause not in
excess of $25.0 million.
"Plan of Liquidation" with respect to any Person, means a plan that
provides for, contemplates or the effectuation of which is preceded or
accompanied by (whether or not substantially contemporaneously, in phases or
otherwise): (i) the sale, lease, conveyance or other disposition of all or
substantially all of the assets of such Person otherwise than as an entirety or
substantially as an entirety; and (ii) the distribution of all or substantially
all of the proceeds of such sale, lease, conveyance or other disposition and all
or substantially all of the remaining assets of such Person to holders of
Capital Stock of such Person.
"Refinancing Indebtedness" means Indebtedness of the Company or a
Restricted Subsidiary issued in exchange for, or the proceeds from the issuance
and sale or disbursement of which are used substantially concurrently to repay,
redeem, refund, refinance, discharge or otherwise retire for value, in whole or
in part (collectively, "repay"), or constituting an amendment, modification or
supplement to or a deferral or renewal of (collectively, an "amendment"), any
Indebtedness of the Company or any Restricted Subsidiary (the "Refinanced
Indebtedness") in a principal amount not in excess of the principal amount of
<PAGE>
the Refinanced Indebtedness (or, if such Refinancing Indebtedness refinances
Indebtedness under a revolving credit facility or other agreement providing a
commitment for subsequent borrowings, with a maximum commitment not to exceed
the maximum commitment under such revolving credit facility or other agreement),
plus the amount of accrued but unpaid interest thereon and the amount of any
reasonably determined prepayment premium necessary to accomplish such
refinancing and such reasonable fees and expenses incurred in connection
therewith; provided that: (i) the Refinancing Indebtedness is the obligation of
the same Person as that of the Refinanced Indebtedness; (ii) if the Refinanced
Indebtedness was subordinated to or pari passu with the Loan Indebtedness, then
such Refinancing Indebtedness, by its terms, is expressly pari passu with (in
the case of Refinanced Indebtedness that was pari passu with) the Loan
Indebtedness, or subordinate in right of payment to (in the case of Refinanced
Indebtedness that was subordinated to) the Loan Indebtedness at least to the
same extent as the Refinanced Indebtedness; (iii) the portion, if any, of the
Refinancing Indebtedness that is scheduled to mature on or prior to the Maturity
Date has a Weighted Average Life to Maturity at the time such Refinancing
Indebtedness is incurred that is equal to or greater than the Weighted Average
Life to Maturity of the portion of the Refinanced Indebtedness being repaid that
is scheduled to mature on or prior to the Maturity Date; and (iv) the
Refinancing Indebtedness is secured only to the extent, if at all, and by the
assets (which may include after-acquired assets), that the Refinanced
Indebtedness is secured.
"Restricted Debt Payment" means any purchase, redemption, defeasance
(including without limitation in substance or legal defeasance) or other
acquisition or retirement for value, directly or indirectly, by the Company or a
Restricted Subsidiary, prior to the scheduled maturity or prior to any scheduled
repayment of principal or sinking fund payment, as the case may be, in respect
of Subordinated Indebtedness.
"Restricted Investment" means any Investment by the Company or any
Restricted Subsidiary (other than investments in Cash Equivalents) in any Person
that is not the Company or a Restricted Subsidiary, including in any
Unrestricted Subsidiary, but shall not include (i) Investments by the Company or
any Restricted Subsidiary in a Person, if as a result of such Investment (a)
such Person becomes a Restricted Subsidiary of the Company that is engaged in a
Related Business or (b) such Person is merged, consolidated or amalgamated with
or into, or transfers or conveys substantially all of its assets to, or is
liquidated into, the Company or a Restricted Subsidiary of the Company that is
engaged in a Related Business; (ii) loans by the Company or any of its
Restricted Subsidiaries to employees of the Company or any of its Restricted
Subsidiaries the proceeds of which are applied to purchase Capital Stock of the
Parent in amount not to exceed $2.0 million at any time outstanding; or (iii)
demand loans for working capital purposes from the Company to the Parent, not
exceeding $40.0 million at any time outstanding, which will be reduced to zero
for a period of not less than 15 consecutive days in each fiscal year.
"Restricted Payment" means with respect to any Person: (i) the
declaration or payment of any dividend (other than a dividend declared and paid
(x) by a Wholly-Owned Restricted Subsidiary to holders of its Capital Stock, or
(y) by a Subsidiary (other than a Wholly-Owned Restricted Subsidiary) to its
shareholders on a pro rata basis, but only to the extent of the dividends
<PAGE>
actually received by the Company or a Restricted Subsidiary) or the making of
any other payment or distribution of cash, securities or other property or
assets in respect of such Person's Capital Stock (except that a dividend payable
solely in Capital Stock (other than Disqualified Capital Stock) of such Person
shall not constitute a Restricted Payment); (ii) any payment on account of the
purchase, redemption, retirement or other acquisition for value of (A) the
Capital Stock of the Company or (B) the Capital Stock of any Restricted
Subsidiary, or any other payment or distribution made in respect thereof, either
directly or indirectly (other than a payment solely in Capital Stock that is not
Disqualified Capital Stock, and excluding any such payment to the extent
actually received by the Company or a Restricted Subsidiary); (iii) any
Restricted Investment; or (iv) any Restricted Debt Payment.
"Restricted Subsidiary" means any Subsidiary of the Company other than
an Unrestricted Subsidiary.
"S&P" means Standard & Poor's Ratings Services, a division of the
McGraw-Hill Companies, Inc., and its successors.
"Sale and Leaseback Transactions" means with respect to any Person an
arrangement with any bank, insurance company or other lender or investor or to
which such lender or investor is a party, providing for the leasing by such
Person of any property or asset of such Person which has been or is being sold
or transferred by such Person to such lender or investor or to any Person to
whom funds have been or are to be advanced by such lender or investor on the
security of such property or asset.
"Senior Subordinated Indebtedness" of the Company means the Term Loan
and Term Notes and any other Indebtedness of the Company (including the Existing
Notes) that specifically provides that such Indebtedness is to rank pari passu
with the Term Loan and Term Notes in right of payment and is not subordinated by
its terms in right of payment to any Indebtedness or other obligation of the
Company which is not Senior Indebtedness. "Senior Subordinated Indebtedness" of
any Guarantor has a correlative meaning.
"Subsidiary" of any Person means (i) any corporation of which at least
a majority of the aggregate voting power of all classes of the Voting Stock is
owned by such Person directly or through one or more other Subsidiaries of such
Person and (ii) any entity other than a corporation in which such Person,
directly or indirectly, owns at least a majority of the Voting Stock of such
entity entitling the holder thereof to vote or otherwise participate in the
selection of the governing body, partners, managers or others that control the
management and policies of such entity. Unless otherwise specified, "Subsidiary"
means a Subsidiary of the Company.
"Subsidiary Guarantor" means each Restricted Subsidiary of the Company
and each other Restricted Subsidiary who is required to become pursuant to
Section 7.16 (or whom the Company otherwise causes to become) a Guarantor under
the Agreement.
"Unrestricted Subsidiary" means (i) any Subsidiary that at the time of
determination shall be designated an Unrestricted Subsidiary by the Board of
Directors of the Company in the manner provided below and (ii) any Subsidiary of
an Unrestricted Subsidiary. The Board of Directors of the Company may designate
<PAGE>
any Restricted Subsidiary to be an Unrestricted Subsidiary, and any such
designation shall be deemed to be a Restricted Investment at the time of and
immediately upon such designation by the Company and its Restricted Subsidiaries
in the amount of the Consolidated Net Worth of such designated Subsidiary and
its consolidated Subsidiaries at such time, provided that such designation shall
be permitted only if (A) the Company and its Restricted Subsidiaries would be
able to make the Restricted Investment deemed made pursuant to such designation
at such time, (B) no portion of the Indebtedness or any other obligation
(contingent or otherwise) of such Subsidiary (x) is Guaranteed by the Company or
any Restricted Subsidiary, (y) is recourse to the Company or any Restricted
Subsidiary or (z) subjects any property or asset of the Company or any
Restricted Subsidiary, directly or indirectly, contingently or otherwise, to the
satisfaction thereof and (C) no default or event of default with respect to any
Indebtedness of such Subsidiary would permit any holder of any Indebtedness of
the Company or any Restricted Subsidiary to declare such Indebtedness of the
Company or any Restricted Subsidiary due and payable prior to its maturity. The
Board of Directors of the Company may designate any Unrestricted Subsidiary to
be a Restricted Subsidiary, and any such designation shall be deemed to be an
incurrence by the Company and its Restricted Subsidiaries of the Indebtedness
(if any) of such Subsidiary so designated for purposes of Section A-1 of Annex A
as of the date of such designation, provided that such designation shall be
permitted only if immediately after giving effect to such designation and the
incurrence of any such additional Indebtedness deemed to have been incurred
thereby (x) the Company would meet the Coverage Ratio Incurrence Condition and
(y) no Default or Event of Default shall have occurred and be continuing. Any
such designation by the Board of Directors described in the two preceding
sentences shall be evidenced to the Administrative Agent by the filing with the
Administrative Agent of a certified copy of the Board Resolution giving effect
to such designation and an Officers' Certificate certifying that such
designation complied with the foregoing conditions and setting forth the
underlying calculations of such certificate.
"Voting Stock" with respect to any Person, means securities of any
class of Capital Stock of such Person entitling the holders thereof (whether at
all times or only so long as no senior class of stock or other relevant equity
interest has voting power by reason of any contingency) to vote in the election
of members of the board of directors of such Person.
"Wholly-Owned Restricted Subsidiary" means a Restricted Subsidiary of
which 100% of the Capital Stock (except for directors' qualifying shares or
certain minority interests owned by other Persons solely due to local law
requirements that there be more than one stockholder, but which interest is not
in excess of what is required for such purpose) is owned directly by the Company
or through one or more Wholly-Owned Restricted Subsidiaries.
<PAGE>
[Form of Initial Note]
AGRILINK FOODS, INC.
SENIOR SUBORDINATED PROMISSORY NOTE
New York, New York
$[ ] September 23, 1998
FOR VALUE RECEIVED, Agrilink Foods, Inc., a New York corporation (the
"Company"), promises to pay to the order of [ ] (the "Payee"), on the Conversion
Date (as defined in the Senior Subordinated Credit Agreement dated as of
September 23, 1998 as the same may at any time be amended, modified or
supplemented and in effect (the "Credit Agreement") between the Company, Pro-Fac
Cooperative, Inc., the other Guarantors named therein, the Lenders named
therein, Warburg Dillon Read LLC, as Arranger and Syndication Agent, and UBS AG,
Stamford Branch, as Administrative Agent), the principal amount of [ ] Dollars
($[ ]).
The Company also promises to pay interest on the unpaid principal
amount hereof from the date hereof until paid in full at the rates and at the
times which shall be determined in accordance with the provisions of the Credit
Agreement.
This Note is issued pursuant to and entitled to the benefits of the
Credit Agreement, to which reference is hereby made for a more complete
statement of the terms and conditions under which the Initial Loan evidenced
hereby was made and is to be repaid. Capitalized terms used herein without
definition shall have the meanings set forth in the Credit Agreement.
All payments of principal and interest (other than Subsequent Initial
Notes issued in payment of PIK Interest Amounts) in respect of this Note shall
be made in lawful money of the United States of America in same day funds to
Payee at the office of UBS AG, Stamford Branch located at 677 Washington Blvd.,
Stamford, CT 06901, or at such other place as shall be designated in writing for
such purpose in accordance with the terms of the Credit Agreement. Each of Payee
and any subsequent holder of this Note agrees, by its acceptance hereof, that
before disposing of this Note or any part hereof it will make a notation hereon
of all principal payments previously made hereunder and of the date to which
interest hereon has been paid; provided, however, that the failure to make a
notation of any payment made on this Note shall not limit or otherwise affect
<PAGE>
the obligation of the Company hereunder with respect to payments of principal or
interest on this Note.
Whenever any payment on this Note shall be stated to be due on a day
which is not a Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included in the computation of
the payment of interest on this Note.
This Note is subject to mandatory prepayment as provided in Section
2.05(a)(iii)(1), (2) and (5) of the Credit Agreement and prepayment at the
option of the Company as provided in subsection 2.05(a)(i) of the Credit
Agreement. The Company must make an offer to purchase this Note with certain of
the Net Asset Sale Proceeds of Asset Sales pursuant to Section 2.05(a)(iii)(4)
of the Credit Agreement. This Note may be repaid on the Conversion Date by
conversion of this Note into a Term Loan pursuant to Section 2.02 of the Credit
Agreement.
This Note is subordinated in right of payment to all Senior
Indebtedness of the Company as and to the extent provided in Section 11 of the
Credit Agreement.
The obligations of the Company under this Note are guaranteed, on a
senior subordinated basis, by the Guarantors as provided in Section 4 of the
Credit Agreement. Attached hereto are endorsements of the Guarantors evidencing
the Guarantees.
THE CREDIT AGREEMENT AND THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS.
Upon the occurrence of an Event of Default, the unpaid balance of the
principal amount of this Note, together with all accrued but unpaid interest
thereon, may become, or may be declared to be, due and payable in the manner,
upon the conditions and with the effect provided in the Credit Agreement.
The terms of this Note are subject to amendment only in the manner
provided in the Credit Agreement.
No reference herein to the Credit Agreement and no provision of this
Note or the Credit Agreement shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
interest on this Note at the place, at the respective times, and in the currency
herein prescribed.
The Company promises to pay all costs and expenses, including all
attorneys' fees, all as provided in Section 10.03 of the Credit Agreement,
incurred in the collection and enforcement of this Note. The Company and
endorsers of this Note hereby consent to renewals and extensions of time at or
after the maturity hereof, without notice, and hereby waive diligence,
presentment, protest, demand and notice of every kind and, to the full extent
permitted by law, the right to plead any statute of limitations as a defense to
any demand hereunder.
IN WITNESS WHEREOF, the Company has caused this Note to be executed and
delivered by its duly authorized officer, as of the day and year and at the
place first above written.
AGRILINK FOODS, INC.
By:
Name:
Title:
<PAGE>
TRANSACTIONS ON INITIAL NOTE
Amount of Outstanding
Principal Principal
Paid Balance Notation
Date This Date This Date Made By
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to elect to have this Initial Note purchased by the Company
pursuant to Section 2.05(a)(iii)(4) of the Credit Agreement, check the box: [__]
If you wish to elect to have only part of this Initial Note purchased
by the Company pursuant to Section 2.05(a)(iii)(4) of the Credit Agreement,
state the amount: $[ ]
Date: Your Signature:
(Sign exactly as
your name appears
on the other side
of this Initial Note)
Signature Guarantee:
<PAGE>
GUARANTEES
The Guarantors (as defined in the Senior Subordinated Credit Agreement
(the "Credit Agreement") referred to in the Note upon which this notation is
endorsed and each hereinafter referred to as a "Guarantor") have unconditionally
guaranteed on a senior subordinated basis (such guarantee by each Guarantor
being referred to herein as the "Guarantee") (i) the due and punctual payment of
the principal of, and the interest on, the Notes, subject to any applicable
grace period, whether at maturity, by acceleration or otherwise, the due and
punctual payment of interest on the overdue principal and interest, if any, on
the Notes, to the extent lawful, and the due and punctual performance of all
other Loan Obligations of the Company to the holders of the Notes all in
accordance with the terms set forth in the Credit Agreement and (ii) in case of
any extension of time of payment or renewal of any Notes or any of such other
Loan Obligations, that the same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, whether at
stated maturity, by acceleration or otherwise.
The obligations of each Guarantor to the holders of the Notes pursuant
to the Guarantee and the Credit Agreement are expressly set forth and are
expressly subordinated and subject in right of payment to the prior payment in
full of all Senior Indebtedness of such Guarantor, to the extent and in the
manner provided, in Section 11 of the Credit Agreement, and reference is hereby
made to such Credit Agreement for the precise terms of the Guarantee therein
made.
GUARANTORS:
PRO-FAC COOPERATIVE, INC.
By: /s/ Earl L. Powers
Name: Earl L. Powers
Title: Vice President and
Chief Financial Officer
LINDEN OAKS CORPORATION
By: /s/ Timothy J. Benjamin
Name: Timothy J. Benjamin
Title: President
KENNEDY ENDEAVORS INCORPORATED
By: /s/ Earl Powers
Name: Earl Powers
Title: Vice President and Secretary
<PAGE>
Exhibit A-2
[Form of Term Note]
AGRILINK FOODS, INC.
SENIOR SUBORDINATED PROMISSORY NOTE
New York, New York
[ ], 1999
$[ ]
FOR VALUE RECEIVED, AGRILINK FOODS, INC., a New York corporation (the
"Company"), promises to pay to the order of [ ] ("Payee"), on September [ ],
2006, [ ] Dollars ($[ ]).
The Company also promises to pay interest on the unpaid principal
amount hereof from the date hereof until paid in full at the rates and at the
times which shall be determined in accordance with the provisions of the Senior
Subordinated Credit Agreement dated as of September 23, 1998, as the same may at
any time be amended, modified or supplemented and in effect (the "Credit
Agreement") between the Company, Pro-Fac Cooperative, Inc., as Guarantor, the
other Guarantors named therein, the Lenders named therein, Warburg Dillon Read
LLC, as Arranger and Syndication Agent, and UBS AG, Stamford Branch, as
Administrative Agent.
This Note is issued pursuant to and entitled to the benefits of the
Credit Agreement to which reference is hereby made for a more complete statement
of the terms and conditions under which the Term Loan evidenced hereby was made
and is to be repaid. Capitalized terms used herein without definition shall have
the meanings set forth in the Credit Agreement.
All payments of principal and interest (other than Subsequent Term
Notes issued in payment of PIK Interest Amounts) in respect of this Note shall
be made in lawful money of the United States of America in same day funds to
Payee at the office of UBS AG, Stamford Branch, located at 677 Washington Blvd.,
Stamford, CT 06901, or at such other place as shall be designated in writing for
such purposes in accordance with the terms of the Credit Agreement. Each of
Payee and any subsequent holder of this Note agrees, by its acceptance hereof,
that before disposing of this Note or any part hereof it will make a notation
<PAGE>
hereon of all principal payments previously made hereunder and of the date to
which interest hereon has been paid; provided, however, that the failure to make
a notation of any payment made on this Note shall not limit or otherwise affect
the obligation of the Company hereunder with respect to payments of principal or
interest on this Note.
Whenever any payment on this Note shall be stated to be due on a day
which is not a Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included in the computation of
the payment of interest on this Note.
This Note is subject to mandatory prepayment as provided in Section
2.05(a)(iii)(5) of the Credit Agreement and prepayment at the option of the
Company as provided in Section 2.05(a)(ii) of the Credit Agreement. The Company
must make an offer to purchase this Note in the event of a Change of Control
pursuant to Section 2.05(a)(iii)(3) of the Credit Agreement and with certain of
the Net Asset Sale Proceeds of Asset Sales pursuant to Section 2.05(a)(iii)(4)
of the Credit Agreement.
This Note is subordinated in right of payment to all Senior
Indebtedness of the Company as and to the extent provided in Section 11 of the
Credit Agreement.
The obligations of the Company under this Note are guaranteed, on a
senior subordinated basis, by the Guarantors as provided in Section 4 of the
Credit Agreement. Attached hereto are confirmations of the Guarantors evidencing
the Guarantees.
THE CREDIT AGREEMENT AND THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW.
Upon the occurrence of an Event of Default, the unpaid balance of the
principal amount of this Note, together with all accrued but unpaid interest
thereon, may become, or may be declared to be, due and payable in the manner,
upon the conditions and with the effect provided in the Credit Agreement.
<PAGE>
The terms of this Note are subject to amendment only in the manner
provided in the Credit Agreement.
No reference herein to the Credit Agreement and no provision of this
Note or the Credit Agreement shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
interest on this Note at the place, at the respective times, and in the currency
herein prescribed.
The Company promises to pay all costs and expenses, including
reasonable attorneys' fees, as provided in Section 10.03 of the Credit
Agreement, incurred in the collection and enforcement of this Note. The Company
and endorsers of this Note hereby waive diligence, presentment, protest, demand
and notice of every kind and, to the full extent permitted by law, the right to
plead any statute of limitations as a defense to any demand hereunder.
IN WITNESS WHEREOF, the Company has caused this Note to be executed and
delivered by its duly authorized officer, as of the day and year and at the
place first above written.
AGRILINK FOODS, INC.
By: /s/
Name:
Title:
<PAGE>
TRANSACTIONS ON TERM NOTE
Amount of Outstanding
Principal Principal
Paid Balance Notation
Date This Date This Date Made By
<PAGE>
CONVERSION OF TERM LOAN TO
FIXED RATE LOAN PURSUANT TO SECTION 2.03(a)(ii)
Outstanding Outstanding
Amount of Converted Unconverted
Principal Principal Principal
Converted Balance Balance Notation
Date This Date This Date This Date Made By
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to elect to have this Term Note purchased by the Company
pursuant to Section 2.05(a)(iii)(3) or Section 2.05(a)(iii)(4) of the Credit
Agreement, check the appropriate box:
Section 2.05(a)(iii)(3)
Section 2.05(a)(iii)(4)
If you wish to elect to have only part of this Term Note purchased by
the Company pursuant to Section 2.05(a)(iii)(3) or Section 2.05(a)(iii)(4) of
the Credit Agreement, state the amount: $[ ].
Date: Your Signature:
(Sign exactly as
your name appears
on the other side
of this Term Note)
Signature Guarantee:
<PAGE>
GUARANTEES
The Guarantors (as defined in the Senior Subordinated Credit Agreement
(the "Credit Agreement") referred to in the Note upon which this notation is
endorsed and each hereinafter referred to as a "Guarantor") have unconditionally
guaranteed on a senior subordinated basis (such guarantee by each Guarantor
being referred to herein as the "Guarantee") (i) the due and punctual payment of
the principal of, and the interest on, the Notes, subject to any applicable
grace period, whether at maturity, by acceleration or otherwise, the due and
punctual payment of interest on the overdue principal and interest, if any, on
the Notes, to the extent lawful, and the due and punctual performance of all
other Loan Obligations of the Company to the holders of the Notes all in
accordance with the terms set forth in the Credit Agreement and (ii) in case of
any extension of time of payment or renewal of any Notes or any of such other
Loan Obligations, that the same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, whether at
stated maturity, by acceleration or otherwise.
The obligations of each Guarantor to the holders of the Notes pursuant
to the Guarantee and the Credit Agreement are expressly set forth and are
expressly subordinated and subject in right of payment to the prior payment in
full of all Senior Indebtedness of such Guarantor, to the extent and in the
manner provided, in Section 11 of the Credit Agreement, and reference is hereby
made to such Credit Agreement for the precise terms of the Guarantee therein
made.
GUARANTORS:
PRO-FAC COOPERATIVE, INC.
By:
Name:
Title:
LINDEN OAKS CORPORATION
By:
Name:
Title:
KENNEDY ENDEAVORS INCORPORATED
By:
Name:
Title:
<PAGE>
Exhibit B
[Form of Notice of Borrowing]
Warburg Dillon Read LLC,
as Arranger and Syndication Agent
535 Madison Avenue
New York, New York 10022
UBS AG, Stamford Branch,
as Administrative Agent
677 Washington Boulevard
Stamford, Connecticut 06901
Attention:
Ladies and Gentlemen:
The undersigned, Agrilink Foods, Inc. (the "Company"), refers to the
Senior Subordinated Credit Agreement dated as of September 23, 1998, as amended,
supplemented or restated from time to time (the "Credit Agreement", the terms
defined therein being used herein as therein defined) among the Company, Pro-Fac
Cooperative, Inc., as Guarantor, the other Guarantors named therein, the Lenders
named therein, Warburg Dillon Read LLC, as Arranger and Syndication Agent, and
UBS AG, Stamford Branch, as Administrative Agent, and hereby gives you notice
pursuant to Section 2.01(b) of the Credit Agreement that the Company wishes to
borrow under Section 2.01 of the Credit Agreement and, in that connection, sets
forth below the information relating to such borrowing (the "Proposed
Borrowing") as required by Section 2.01(b) of the Credit Agreement:
(i) The date of the Proposed Borrowing, being a Business Day, is September
23, 1998.
(ii) The aggregate amount of the Proposed Borrowing is $200,000,000.
Yours truly,
AGRILINK FOODS, INC.
By:
Name:
Title:
<PAGE>
Exhibit C
[Form of Notice of Conversion]
Pursuant to that certain Senior Subordinated Credit Agreement dated as
of September 23, 1998, as amended, supplemented or restated from time to time
(the "Credit Agreement", the terms defined therein being used herein as therein
defined) among Agrilink Foods, Inc. (the "Company"), Pro-Fac Cooperative, Inc.,
as Guarantor, the other Guarantors named therein, the Lenders named therein,
Warburg Dillon Read LLC, as Arranger and Syndication Agent and UBS AG, Stamford
Branch, as Administrative Agent, this represents the Company's request to
convert $[ ] in principal amount of presently outstanding Initial Notes to a
Term Loan on the Conversion Date.
DATED: __________________
AGRILINK FOODS, INC.
By:
Name:
Title:
<PAGE>
Exhibit D
ADDITIONAL GUARANTOR SUPPLEMENT
______________, 19___
UBS AG, Stamford Branch, as Administrative
Agent for the Lenders under the Credit
Agreement dated as of September 23, 1998,
among Agrilink Foods, Inc., Pro-Fac
Marketing Cooperative, Inc. and certain
other Guarantors, Warburg Dillon Read LLC,
as Arranger and Syndication Agent, and such
Administrative Agent (the "Credit
Agreement")
Dear Sirs:
Reference is made to the Credit Agreement described above. Terms not
defined herein which are defined in the Credit Agreement shall have for the
purposes hereof the meaning provided therein.
The undersigned, [name of Subsidiary], a [jurisdiction of
incorporation] corporation, hereby elects to be a "Guarantor" for all purposes
of the Credit Agreement, effective from the date hereof. The undersigned
confirms that the representations and warranties set forth in the Credit
Agreement are true and correct as to the undersigned as of the date hereof.
Without limiting the generality of the foregoing, the undersigned
hereby agrees to perform all the obligations of a Guarantor under, and to be
bound in all respects by the terms of, the Credit Agreement, including without
limitation Section 4 thereof, to the same extent and with the same force and
effect as if the undersigned were a signatory party thereto.
This Agreement shall be construed in accordance with and governed by
the internal laws of the State of New York.
Very truly yours,
[NAME OF SUBSIDIARY]
By:
Name:
Title:
<PAGE>
Exhibit E
[Form of Assignment Agreement]
ASSIGNMENT AGREEMENT
This ASSIGNMENT AGREEMENT, (this "Assignment Agreement") dated as of
[ ] is made between [ ] (the "Assignor") and [ ] (the "Assignee").
RECITALS
The Assignor is party to the Credit Agreement dated as of September 23,
1998 (as amended, modified, supplemented or renewed, the "Credit Agreement")
among Agrilink Foods, Inc. ("Borrower"), Pro-Fac Cooperative, Inc., as
Guarantor, the other Guarantors party thereto from time to time, the Lenders
party thereto from time to time, UBS AG, Stamford Branch, as Administrative
Agent, and Warburg Dillon Read LLC, as Arranger and Syndication Agent. Terms
defined in the Credit Agreement and not defined in this Assignment Agreement are
used herein as defined in the Credit Agreement.
The Assignor wishes to assign to Assignee rights and obligations of the
Assignor under the Credit Agreement in respect of the [Initial Loan and Term
Loan Commitment][Term Loan] and the other rights and obligations of the Assignor
thereunder, and the Assignee wishes to accept assignment of such rights and to
assume such obligations from the Assignor to be assigned to it and assumed by
it, in each case on the terms and subject to the conditions of this Assignment
Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
1. Assignment Agreement.
(a) Subject to the terms and conditions of this Assignment
Agreement, (i) the Assignor hereby sells, transfers and assigns, and
(ii) the Assignee hereby purchases, assumes and undertakes from the
Assignor, without recourse and without representation or warranty
(except as provided in this Assignment Agreement),
(i) Assignor's [Initial Loan and Term Loan
Commitment][Term Loan] set forth on Annex 1 hereto;
(ii) all related rights, benefits, obligations,
liabilities and indemnities of the Assignor with respect to
such [Initial Loan and Term Loan Commitment][Term Loan]
assigned to the Assignee under and in connection with the
Credit Agreement and the other Loan Documents;
(all of the foregoing being herein called the "Assigned Rights and
Obligations").
(b) With effect on and after the Effective Date (as defined in
Section 5 hereof), the Assignee shall be a party to the Credit
Agreement and succeed to all of the rights and be obligated to perform
all of the obligations of a Lender under the Credit Agreement,
including the requirements concerning confidentiality and the payment
of indemnification for claims arising following the Effective Date,
with a pro rata share as of the Effective Date of the [Initial Loan and
Term Loan Commitment][Term Loan] equal to the percentages set forth on
Annex 1 hereto. The Assignee agrees that it will perform in accordance
with their terms all of the obligations which by the terms of the
Credit Agreement are required to be performed by it as a Lender. It is
the intent of the parties hereto that (i) as of the Effective Date, the
pro rata share of the Assignor of the [Initial Loan and Term Loan
Commitment][Term Loan] shall be reduced by $[ ], as a result of the
assignment hereby to the Assignee and, after giving effect to all
assignments hereunder Assignor's pro rata share of the [Initial Loan
and Term Loan Commitment][Term Loan] shall be reduced to $[ ], and (ii)
the Assignor shall relinquish its rights and be released from its
obligations under the Credit Agreement to the extent such obligations
have been assumed by the Assignee; provided, however, that the Assignor
shall not relinquish its rights under Section 3 or Section 10.03 of the
Credit Agreement or be relieved of its obligations under Section 10.17
of the Credit Agreement in respect of the Assigned Rights and
Obligations to the extent such rights relate to the time prior to the
Effective Date.
<PAGE>
(c) After giving effect to the assignments and assumptions set
forth herein, on the Effective Date the Assignee's and the Assignor's
outstanding Commitment and Loans will be as set forth on Annex 2
hereto.
2. Payments.
As consideration for the sale, assignment and transfer contemplated in
Section 1 hereof, the Assignee shall pay to the Assignor on the Effective Date
in immediately available funds an amount in U.S. dollars equal to the amount set
forth on Annex 3 hereto, representing the principal amount of all outstanding
and funded Loans and participations included within the Assigned Rights and
Obligations.
3. Reallocation of Payments.
Any interest, fees and other payments accrued to the Effective Date
with respect to all of the Assigned Rights and Obligations of the Assignee shall
be for the account of the Assignor. Any interest, fees and other payments
accrued on and after the Effective Date with respect to the Assigned Rights and
Obligations of any Assignee shall be for the account of each Assignee. Each of
the Assignor and the Assignee, severally, agrees that it will hold in trust for
the other party any interest, fees and other amounts which it may receive to
which the other party is entitled pursuant to the preceding two sentences and
pay to the other party any such amounts which it may receive promptly upon
receipt.
4. Independent Credit Decision.
The Assignee (a) acknowledges that it has received a copy of the Credit
Agreement and the Schedules and Exhibits thereto, together with copies of the
most recent financial statements delivered on the Closing Date, and such other
documents and information as it has deemed appropriate to make its own credit
and legal analysis and decision to enter into this Assignment Agreement; and (b)
agrees that it will, independently and without reliance upon the Assignor, the
Arranger, the Administrative Agent or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
<PAGE>
make its own credit and legal decisions in taking or not taking action under the
Credit Agreement.
5. Effective Date; Notices.
(a) As between the Assignor and the Assignee, the effective
date for this Assignment Agreement shall be [ ] (the "Effective Date");
provided, however, that the following conditions precedent have been
satisfied on or before the Effective Date:
(i) this Assignment Agreement shall be executed and
delivered by the Assignor and the Assignee;
(ii) if required for an effective assignment of the
Assigned Rights and Obligations by the Assignor to the
Assignee under Section 10.07 of the Credit Agreement, the
consent of Borrower, and the Administrative Agent shall have
been duly obtained and shall be in full force and effect as of
the Effective Date; and
(iii) the Assignee shall pay to the Assignor all
amounts due to the Assignor from the Assignee under this
Assignment Agreement.
(iv) the information in this Assignment Agreement
shall be recorded in the Register pursuant to Section 10.07(b)
of the Credit Agreement.
(b) Promptly following the execution of this Assignment
Agreement, the Assignor shall deliver this Assignment Agreement to
Borrower and the Administrative Agent, for acknowledgment by the
Administrative Agent.
6. Representations and Warranties.
(a) The Assignor represents and warrants to the Assignee that
(i) it is the legal and beneficial owner of the interest being assigned
by it hereunder to the Assignee and that such interest is free and
clear of any lien or other adverse claim other than any lien or other
adverse claim created by the Assignee; (ii) it is duly organized and
existing and it has the full power and authority to take, and has
<PAGE>
taken, all action necessary to execute and deliver this Assignment
Agreement and any other documents required or permitted to be executed
or delivered by it in connection with this Assignment Agreement and to
fulfill its obligations hereunder; (iii) no notices to, or consents,
authorizations or approvals of, any Person are required (other than any
already given or obtained) for its due execution, delivery and
performance of this Assignment Agreement, and apart from any agreements
or undertakings or filings required by the Credit Agreement, no further
action by, or notice to, or filing with, any Person is required of it
for such execution, delivery or performance; and (iv) this Assignment
Agreement has been duly executed and delivered by it and constitutes
the legal, valid and binding obligation of the Assignor, enforceable
against the Assignor in accordance with the terms hereof, subject, as
to enforcement, to bankruptcy, insolvency, moratorium, reorganization
and other laws of general application relating to or affecting
creditors' rights and to general equitable principles.
(b) The Assignor makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit Agreement or
the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Credit Agreement or any other instrument or
document furnished pursuant thereto. The Assignor makes no
representation or warranty in connection with, and assumes no
responsibility with respect to, the solvency, financial condition or
statements of Borrower or any Guarantor, or the performance or
observance by Borrower or any Guarantor of any of their obligations
under the Credit Agreement or any other instrument or document
furnished in connection therewith.
(c) The Assignee represents and warrants to Assignor that (i)
it is duly organized and existing and it has full power and authority
to take, and has taken, all action necessary to execute and deliver
this Assignment Agreement and any other documents required or permitted
to be executed or delivered by it in connection with this Assignment
Agreement, and to fulfill its obligations hereunder; (ii) no notices
to, or consents, authorizations or approvals of, any Person are
required (other than any already given or obtained) for its due
execution, delivery and performance of this Assignment Agreement; and
85
<PAGE>
apart from any agreements or undertakings or filings required by the
Credit Agreement, no further action by, or notice to, or filing with,
any Person is required of it for such execution, delivery or
performance; (iii) this Assignment Agreement has been duly executed and
delivered by it and constitutes the legal, valid and binding obligation
of the Assignee, enforceable against the Assignee in accordance with
the terms hereof, subject, as to enforcement, to bankruptcy,
insolvency, moratorium, reorganization and other laws of general
application relating to or affecting creditors' rights and to general
equitable principles; and (iv) it is an Eligible Person.
7. Further Assurances.
The Assignor and the Assignee each hereby agree to execute and deliver
such other instruments, and take such other action, as either party may
reasonably request in connection with the transactions contemplated by this
Assignment Agreement, including the delivery of any notices or other documents
or instruments to Borrower or the Administrative Agent which may be required in
connection with the assignment and assumption contemplated hereby.
8. Miscellaneous.
(a) Any amendment or waiver of any provision of this
Assignment Agreement shall be in writing and signed by the parties
hereto to be affected thereby. No failure or delay by either party
hereto in exercising any right, power or privilege hereunder shall
operate as a waiver thereof, and any waiver of any breach of the
provisions of this Assignment Agreement shall be without prejudice to
any rights with respect to any other or further breach thereof.
(b) All payments made hereunder shall be made without any
set-off or counterclaim.
(c) The Assignor and the Assignee shall each pay its own costs
and expenses incurred in connection with the negotiation, preparation,
execution and performance of this Assignment Agreement.
86
<PAGE>
(d) This Assignment Agreement may be executed in any number of
counterparts and all of such counterparts taken together shall be
deemed to constitute one and the same instrument.
(e) THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. The
Assignor and the Assignee each irrevocably submit to the non-exclusive
jurisdiction of any State or Federal court sitting in New York, New
York over any suit, action or proceeding arising out of or relating to
this Assignment Agreement and irrevocably agree that all claims in
respect of such action or proceeding may be heard and determined in
such New York State or Federal court. Each party to this Assignment
Agreement hereby irrevocably waives, to the fullest extent it may
effectively do so, the defense of an inconvenient forum to the
maintenance of such action or proceeding.
(f) THE ASSIGNOR AND THE ASSIGNEE EACH HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH THIS ASSIGNMENT AGREEMENT, THE CREDIT
AGREEMENT, ANY RELATED DOCUMENT OR AGREEMENT OR ANY COURSE OF CONDUCT,
COURSE OF DEALING OR STATEMENT (WHETHER ORAL OR WRITTEN).
[Signature Page Follows]
<PAGE>
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Assignment Agreement to be executed and delivered by their duly authorized
officers as of the date first above written.
[ASSIGNOR]
By:
Name:
Title:
[ASSIGNEE]
By:
Name:
Title:
<PAGE>
ANNEX 1
Assigned Initial Loan and Term Loan $
Commitment:
Assigned Term Loan: $
<PAGE>
ANNEX 2
Immediately
Before [Initial Loan] [Term Loan
Effective Date: [Term Loan] Commitment]
Assignor: $ $
Assignee: $ $
On and After
Effective Date:
Assignor: $ $
Assignee: $ $
<PAGE>
ANNEX 3
AMOUNT (IN DOLLARS)
CONFORMED COPY
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") AND MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT (A) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES
IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A WHO IS
PURCHASING THIS NOTE FOR HIS/HER OR ITS OWN ACCOUNT OR FOR THE ACCOUNTS OF ONE
OR MORE QUALIFIED INSTITUTIONAL BUYERS IN A PRINCIPAL AMOUNT OF NOT LESS THAN
$100,000 FOR ANY SUCH ACCOUNT, OR (B) PURSUANT TO ANOTHER APPLICABLE EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
JURISDICTION.
SUBORDINATED PROMISSORY NOTE
September 23, 1998
FOR VALUE RECEIVED, the undersigned, Agrilink Foods, Inc., a Delaware
corporation (the "Company"), promises to pay, but subject nevertheless to all of
the provisions hereof, to the order of Dean Foods Company, a Delaware
corporation, at its offices at 3600 North River Road, Franklin Park, Illinois,
or at such other office within the United States of America as the holder hereof
may from time to time in writing appoint, the principal sum of $30,000,000 on
November 22, 2008. However, in the event that the aggregate amount of credit
available under the Bank Credit Agreement is increased above $700,000,000 to
finance directly or indirectly, or in contemplation of the financing of, an
acquisition by the Company of the assets, stock or business of another, then the
Company shall redeem this note if, or as soon as, this note may be redeemed
without breaching the terms of or creating a default under the terms of the
Senior Indebtedness described in clause (ii) of the definition of that term. The
Company promises to pay interest at such office on the balance of principal from
time to time outstanding and unpaid hereon (computed on the basis of a year of
365 or 366 days, as the case may be, and the actual number of days elapsed) (i)
for the period from the date hereof until November 22, 2003 at the rate of five
(5) percent per annum and (ii) for the period from and after November 23, 2003
and until payment in full thereof at the rate of ten (10) percent per annum,
such interest to be due and payable quarterly in arrears on the last day of each
calendar quarter in each year (commencing December 31, 1998) and on the final
maturity date of this note (the "Interest Payment Dates"). Interest accruing on
this note through the period ending November 22, 2003 shall be payable solely
and only through the issuance by the Company to the holder hereof on each
Interest Payment Date of a subordinated promissory note in the amount of the
interest then due and payable, each such subordinated promissory note to be
identical to this note except for the date thereof and the principal amount
thereof. Interest accruing thereafter shall be due and payable in
<PAGE>
cash on each Interest Payment Date. Interest shall continue to accrue hereon
notwithstanding the occurrence of any Event of Default (as hereinafter defined).
This note may be prepaid in whole or in part (but if in part, in a
minimum amount of $100,000) at any time without premium or penalty.
This note is subordinate and junior in right of payment to all Senior
Indebtedness of the Company, whether now existing or hereafter arising, on and
subject to the terms and conditions hereinafter set forth.
The term "Senior Indebtedness" shall mean and include all of the
following obligations of the Company, in each instance, whether now existing or
hereafter arising:
(i) all indebtedness, obligations and liabilities of the
Company under or with respect to that certain Credit Agreement dated as
of September 23, 1998 by and among the Company, certain guarantors,
Harris Trust and Savings Bank as Administrative Agent, Bank of Montreal
as Syndication Agent and the from time to time lenders party thereto,
all as the same may from time to time be amended, modified or restated
(the "Bank Credit Agreement") (including without limitation all
liabilities of the Company with respect to the principal of and
interest (including interest accruing subsequent to the filing of a
petition in bankruptcy or insolvency at the rate specified in the
documents relating to such Senior Indebtedness, whether or not such
interest is no longer permitted to be enforced against the obligor
under applicable law) on all loans made and letters of credit issued
thereunder) and all liabilities of the Company under any credit
facility replacing the credit facility provided for in such Credit
Agreement, provided that the aggregate principal amount of loans and
face amount of letter of credit liabilities constituting Senior
Indebtedness under this clause (i) shall not exceed $700,000,000 at any
one time outstanding; and
(ii) all indebtedness, obligations and liabilities of the
Company arising under or with respect to that certain Senior
Subordinated Credit Agreement dated as of September 23, 1998 by and
among the Company, certain guarantors, Warburg Dillon Read LLC as
Arranger and Syndication Agent, UBS Ag Stamford Branch as
Administrative Agent and the Lenders from time to time party thereto,
including without limitation all liabilities in respect of the
principal of and interest (including interest accruing subsequent to
the filing of a petition in bankruptcy or insolvency at the rate
specified in the documents relating to such Senior Indebtedness,
whether or not such interest is no longer permitted to be enforced
against the obligor under applicable law) on loans made thereunder and
all indebtedness issued to renew, refund, refinance or replace such
loans or consisting of so called "payment in kind" obligations issued
in payment of
<PAGE>
interest thereon, all as the same may from time to time be amended,
modified or restated, provided that the principal amount of loans
constituting Senior Indebtedness under this clause (ii) shall not
exceed $200,000,000 at any one time outstanding plus the amount of any
such "payment in kind" obligations issued in payment of interest on the
foregoing; and
(iii) all obligations of the Company pursuant to interest rate
swap agreements, interest rate cap agreements and other similar
agreements or arrangements designed to protect the Company against
fluctuations in interest rates, each computed net of amounts due the
Company from the same counterparty of contracts of the foregoing types
of a type which are permitted to be netted under the Bankruptcy Code.
In the event of any distribution, division or application, partial or
complete, voluntary or involuntary, by operation of law or otherwise, of all or
any part of the assets of the Company or the proceeds thereof to the creditors
of the Company or upon any indebtedness of the Company, occurring by reason of
liquidation, dissolution or other winding up of the Company or by reason of
execution sale, receivership, insolvency, bankruptcy, reorganization,
arrangement or other proceedings or the reorganization or readjustment of the
Company or its debts or properties then, and in such event, all Senior
Indebtedness shall be paid and satisfied in full before any payment or
distribution of any kind or character, whether in cash, property or securities,
shall be made on or in respect of the principal of or interest on this note and
in any such event, any such payment, dividend or distribution which shall be
made upon or in respect hereof shall be paid over to the holders of Senior
Indebtedness (but subject to any priorities between them, such that if any
Senior Indebtedness is subordinated in right of payment to any other Senior
Indebtedness, all amounts which shall otherwise be payable to the holder of the
subordinate claim shall instead be paid to the holders of the claims which are
superior thereto) for application on such Senior Indebtedness, until such Senior
Indebtedness has been fully paid and satisfied, and in the event that this note
is declared due and payable prior to its expressed maturity the holder of this
note shall be entitled to the payment of principal and interest only after there
shall first have been paid in full all Senior Indebtedness outstanding at the
time this note so became due and payable or which thereafter arises.
During the continuance of any default in the payment when due (whether
by lapse of time, acceleration or otherwise) in the payment of the principal of,
interest on or any other amount in respect of Senior Indebtedness, or in the
event an event of default occurs with respect to any Senior Indebtedness
permitting the holders thereof to accelerate the maturity thereof, then and in
any such event, and until such default in payment or event of default shall have
been cured or waived by the holders of the Senior Indebtedness in question or
shall have ceased to exist, no payment of principal and interest shall be made
hereon and no other payment (whether in respect of the redemption retirement,
purchase or other acquisition of the indebtedness
<PAGE>
evidenced by this note) shall be made; provided, however, that (i) the foregoing
shall not prohibit the holder hereof from receiving additional subordinated
notes in payment of interest hereon as and to the extent provided for by the
first paragraph of this note and (ii) the foregoing shall not require the holder
hereof to return any amount paid to it by the Company hereunder if, at the time
of receipt of such payment by the holder, it did not have actual knowledge of
the occurrence of one of the foregoing events prohibiting payment to it. Any
holder of Senior Indebtedness may notify the holder of the occurrence of any
event prohibiting payment hereunder by delivering such notice to the holder by
personal service or by telecopy, with such notice to be given to the holder
hereof at its address as shown herein directed to the attention of Eric
Blanchard, and if given by telecopy sent to the following number directed to the
attention of Mr. Blanchard: (847) 233-5501. The present and any successive
holder of this note may change the address to which such notice may be sent by
written notice to the agent and/or trustee for the holders of the Senior
Indebtedness described in clauses (i) and (ii) hereof and to any other holder of
Senior Indebtedness that has requested the holder in writing to receive such
notices.
Any one or more of the following shall constitute an "Event of Default"
hereunder:
(a) default in the payment of the principal of this note when
due on its scheduled maturity date or default in the payment when due
of interest payable by the Company hereunder and the continuance of
such default in the payment of interest for 30 days after notice
thereof to the Company from the holder hereof;
(b) the failure of the Company to issue a subordinated
promissory note to the holder hereof in payment of interest hereon as
and when required by the first paragraph of this note and the
continuance of such failure for 30 days after notice thereof to the
Company from the holder hereof;
(c) the acceleration of the maturity of any Senior
Indebtedness described in clauses (i) or (ii) of the definition of the
term "Senior Indebtedness" or the acceleration of the maturity of any
other Senior Indebtedness having an aggregate principal amount of
$10,000,000 or more;
(d) the Company becomes insolvent or bankrupt or bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or
other proceedings for relief under any bankruptcy law or laws for the
relief of debtors are instituted against the Company and are not
dismissed within 60 days after such institution or a decree or order of
a court having jurisdiction in the premises for the appointment of a
trustee or receiver or custodian for the Company or for the major party
of its property is entered and the trustee or receiver or custodian
appointed pursuant to such decree or order is not discharged within 60
days after such appointment; or
<PAGE>
(e) the Company shall institute bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings or other proceedings
for relief under any bankruptcy law or laws for the relief of debtors
or shall consent to the institution of such proceedings against it by
others or to the entry of any decree or order or adjudging it bankrupt
of insolvent or approving as filed any petition seeking reorganization
under any bankruptcy or similar law or shall apply for or shall consent
to the appointment of a receiver or trustee or custodian for the major
part of its property or shall make an assignment for the benefit of
creditors or shall admit in writing its inability to pay its debts as
they mature or shall take any corporate action in contemplation or in
furtherance of any of the foregoing purposes.
Upon the occurrence of and during the continuance of any Event of
Default described in clauses (a)-(c) of the foregoing paragraph, the holder
hereof may, by written notice to the Company, declare the principal of and
interest on this note to be immediately due and payable; provided, however, that
no payment may be made hereon, and the holder may take no steps to enforce or
compel payment hereof, unless and until all Senior Indebtedness has been fully
paid and satisfied. If any Event of Default described in clauses (d) or (e) of
the immediately preceding paragraph occurs, this note shall be and become
immediately due and payable without notice of any kind, but no payment may be
made hereon and no steps may be taken to compel payment hereof unless and until
all Senior Indebtedness has been fully paid and satisfied.
Senior Indebtedness shall not be deemed to have been paid in full
unless the holders thereof shall have received cash or cash equivalents equal to
the amount of such Senior Indebtedness then outstanding. However, if pursuant to
a bankruptcy or insolvency proceeding involving the Company, the holders of
Senior Indebtedness receive securities of the Company as reorganized and the
plan of reorganization provides for the issuance of securities to the holder of
this note, then such holder may receive and retain such securities if the same
are subordinated in right of payment to the prior payment in full of the
securities which the holders of Senior Indebtedness receive to substantially the
same extent as, or to a greater extent than, this note is subordinated to Senior
Indebtedness.
Nothing contained in this note is intended to or shall impair as
between the Company and its creditors, other than the holders of Senior
Indebtedness, the obligations of the Company, which are otherwise absolute and
unconditional, to pay to the holder hereof the principal of and interest on this
note as and when the same becomes due and payable in accordance with its terms
or otherwise affect the relative rights of the holder of this note and creditors
of the Company other than holders of Senior Indebtedness.
The holder of this note by its acceptance thereof agrees that it shall
have no right to offset the obligations of the Company under this note against
any obligation of such holder owing to
<PAGE>
the Company and the Company agrees that it shall have no right to offset any
obligation of the holder of this note to the Company against the obligations of
the Company under this note.
The Company promises to pay reasonable attorneys' fees and court costs
of the holder hereof in enforcing payment of this note; provided, however, that
such costs shall be subordinated in right of payment to the prior payment in
full of Senior Indebtedness on the terms hereinabove set forth.
This note shall be construed in accordance with and governed by the
laws of the State of Illinois.
AGRILINK FOODS, INC.
By /s/ Earl L. Powers
Its V.P.
For value received, the undersigned hereby absolutely and
unconditionally guarantees the payment of the within note when due and all
extensions and renewals thereof and all expenses (including reasonable
attorneys' fees and legal expenses) incurred in the collection thereof and
agrees that the holder of said note may from time to time extend or renew said
note for any period and grant any releases, compromises or indulgences with
respect to said note, all without notice to or consent of the undersigned and
without affecting the liability of the undersigned hereunder. The liability of
the undersigned hereunder shall, however, be subject and subordinate in right of
payment to the prior payment in full of all obligations of the undersigned under
any guarantee by it of any Senior Indebtedness to the same extent and with the
same force and effect as this note is subordinated to the prior payment of
Senior Indebtedness.
PRO-FAC COOPERATIVE, INC.
By /s/ Earl L. Powers
Its V.P.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Agrilink Foods, Inc. Form 10-Q for the period ended September 26, 1998 and
is qualified in its entirety by reference to such financial statement.
</LEGEND>
<CIK> 0000026285
<NAME> Agrilink Foods, Inc.
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-Mos
<FISCAL-YEAR-END> Jun-26-1999
<PERIOD-START> Jun-28-1998
<PERIOD-END> Sep-26-1998
<CASH> 9057
<SECURITIES> 0
<RECEIVABLES> 109,964
<ALLOWANCES> 0
<INVENTORY> 395,280
<CURRENT-ASSETS> 546,146
<PP&E> 383,200
<DEPRECIATION> 66,175
<TOTAL-ASSETS> 1,256,950
<CURRENT-LIABILITIES> 324,211
<BONDS> 15
0
0
<COMMON> 0
<OTHER-SE> 176,554
<TOTAL-LIABILITY-AND-EQUITY> 1,256,950
<SALES> 182,579
<TOTAL-REVENUES> 182,579
<CGS> 135,882
<TOTAL-COSTS> 135,882
<OTHER-EXPENSES> (24,313)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,336
<INCOME-PRETAX> 62,674
<INCOME-TAX> 24,334
<INCOME-CONTINUING> 38,340
<DISCONTINUED> 0
<EXTRAORDINARY> 16,366
<CHANGES> 0
<NET-INCOME> 21,974
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
