<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X
- - ------- Quarterly report pursuant to Section 13 of 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended August 28, 1994 or
-------------------------
_______ Transition report pursuant to Section 13 of 15(d) of the
Securities Exchange Act of 1934
For the transition period from __________________ to __________________
Commission file number 0-1118
--------------
DEAN FOODS COMPANY
- - --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 36-0984820
- - ------------------------------------- --------------------
(State or other jurisdiction of (I.R.S Employer
incorporation or organization) Identification No.)
3600 North River Road, Franklin Park, Illinois 60131
- - --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (708) 678-1680
---------------------
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- _____
The number of shares of the Registrant's Common Stock, par value $1 per share,
outstanding as of the date of this report was 39,923,561.
----------
Total number of pages 47.
---
1
<PAGE>
PART I - FINANCIAL INFORMATION
- - ------------------------------
A. UNAUDITED CONDENSED CONSOLIDATION FINANCIAL STATEMENTS
------------------------------------------------------
Effective May 30, 1994, the name of Green Bay Food Company was
changed to Dean Pickle and Specialty Products Company.
In the opinion of the Registrant, all adjustments, consisting only of
normal recurring adjustments, necessary for a fair presentation of the
following unaudited condensed consolidated financial statements have been
included herein. Certain information and footnote disclosures normally
included in the financial statements have been omitted. These unaudited
condensed consolidated financial statements should be read in conjunction
with the Registrant's 1994 Annual Report on Form 10-K.
2
<PAGE>
ITEM 1.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
-------------------------------------------
FOR THE THREE MONTHS ENDED
--------------------------
AUGUST 28, 1994 AND AUGUST 29, 1993
-----------------------------------
(In Thousands Except for Per Share Amounts)
<TABLE>
<CAPTION>
Three Months Ended
--------------------------
August 28, August 29,
1994 1993
------------ ------------
(Unaudited)
<S> <C> <C>
Net sales $ 614,283 $ 559,651
----------- -----------
Costs and expenses:
Costs of products sold 472,873 442,726
Delivery, selling and administrative
expenses 108,657 94,648
Interest expense 4,743 3,318
Other income, net (736) (610)
----------- -----------
585,537 540,082
----------- -----------
Income before taxes and cumulative
effect of changes in accounting
principles 28,746 19,569
Provision for income taxes 11,786 8,983
----------- -----------
Income before cumulative effect of
changes in accounting principles 16,960 10,586
Cumulative effect of changes in
accounting principles, net of taxes - 1,179
----------- -----------
Net income $ 16,960 $ 11,765
=========== ===========
Earnings per share:
Earnings per common share before
cumulative effect of changes in
accounting principles $ 0.43 $ 0.27
Cumulative effect per common share of
changes in accounting principles - 0.03
----------- -----------
Earnings per common share $ 0.43 $ 0.30
=========== ===========
Dividends per share (Declared and paid) $ 0.17 $ 0.16
=========== ===========
Weighted average common shares outstanding 39,802,598 39,698,480
=========== ===========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements
3
<PAGE>
CONDENSED CONSOLIDATED BALANCE SHEETS
-------------------------------------
AUGUST 28, 1994 AND MAY 29, 1994
--------------------------------
(In Thousands)
<TABLE>
<CAPTION>
August 28, May 29,
1994 1994
---------- ----------
(Unaudited)
<S> <C> <C>
ASSETS
------
CURRENT ASSETS: $ 2,695 $ 10,967
Cash and temporary cash investments
Accounts and notes receivable,
less allowance for doubtful
accounts of $4,067 and $3,875,
respectively 161,665 169,395
Inventories 309,340 233,324
Other current assets 41,591 46,496
---------- ----------
Total Current Assets 515,291 460,182
---------- ----------
PROPERTIES:
Property, plant and equipment, at cost 925,967 906,411
Accumulated depreciation 375,966 363,200
---------- ----------
550,001 543,211
---------- ----------
OTHER ASSETS 111,963 105,761
---------- ----------
Total Assets $1,177,255 $1,109,154
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES: $ 86,000 $ 122,000
Notes payable to banks
Current installments of long-term
obligations 6,921 6,960
Accounts payable and accrued expenses 257,072 227,348
Dividends payable 6,855 6,462
Federal and state income taxes 17,152 4,497
---------- ----------
Total Current Liabilities 374,000 367,267
---------- ----------
LONG-TERM OBLIGATIONS (Less current
installments included above) 185,829 136,150
---------- ----------
DEFERRED CREDITS 81,199 80,963
---------- ----------
SHAREHOLDERS' EQUITY:
Preferred stock - -
Common stock 41,098 41,050
Capital in excess of par value 7,127 5,911
Retained earnings 518,170 507,981
Less - Treasury stock - at cost 30,168 30,168
---------- ----------
Total Shareholders' Equity 536,227 524,774
---------- ----------
Total Liabilities and
Shareholders' Equity $1,177,255 $1,109,154
========== ==========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
4
<PAGE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------------
FOR THE THREE MONTHS ENDED
--------------------------
AUGUST 28, 1994 AND AUGUST 29, 1993
-----------------------------------
(In Thousands)
<TABLE>
<CAPTION>
Three Months Ended
------------------------
August 28, August 29,
1994 1993
----------- -----------
(Unaudited)
<S> <C> <C>
Net cash provided from operations $ 13,208 $ 13,388
-------- --------
Cash flows from investing activities:
Capital expenditures (19,111) (21,673)
Proceeds from disposition of property,
plant and equipment 571 1,043
Acquisition of business, net of
cash acquired (11,581) -
-------- --------
Net cash used in investing activities (30,121) (20,630)
-------- --------
Cash flows from financing activities:
Issuance of long-term obligations 80 -
Repayment of long-term obligations (553) (586)
Issuance of notes payable to banks, 14,000 -
net
Unexpended industrial revenue 97 130
bond proceeds
Cash dividends paid (6,247) (5,953)
Issuance of common stock 1,264 1,044
-------- --------
Net cash provided by (used in) financing
activities 8,641 (5,365)
-------- --------
Decrease in cash and temporary cash
investments (8,272) (12,607)
Cash and temporary cash investments -
beginning of period 10,967 41,572
-------- --------
Cash and temporary cash investments -
end of period $ 2,695 $ 28,965
======== ========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
5
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
- - ----------------------------------------------------
INVENTORIES
- - -----------
The following is a tabulation of inventories by class at
August 28, 1994, August 29, 1993, and May 29, 1994 (In Thousands).
<TABLE>
<CAPTION>
August 28, August 29, May 29,
1994 1993 1994
----------- ----------- ---------
(Unaudited)
<S> <C> <C> <C>
Raw materials and supplies $ 60,007 $ 64,152 $ 69,258
Materials in process 73,594 36,599 31,823
Finished goods 194,494 144,779 151,358
-------- -------- --------
328,095 245,530 252,439
Less: Excess of current cost
over stated value of
last-in, first-out
inventories (18,755) (17,318) (19,115)
-------- -------- --------
Total inventories $309,340 $228,212 $233,324
======== ======== ========
</TABLE>
BORROWING ARRANGEMENTS
- - ----------------------
The Registrant entered into a $150 million revolving credit agreement
with the Bank of Montreal during the quarter. Borrowings under the agreement
are on an unsecured basis at variable interest rates and mature December 31,
1995. The Registrant has classified $50 million of existing debt as long-term
debt, since it is the Registrant's intention to continue that debt for more than
one year.
LEGAL PROCEEDINGS
- - -----------------
See PART II, Item 1 for a discussion of pending legal proceedings.
---------------
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
A.) Liquidity and Capital Resources
As of August 28, 1994, there has been no material overall change
in the Registrant's liquidity or its capital resources from those
described in the Management's Discussion and Analysis contained in the
Registrant's Annual Report on Form 10-K for the fiscal year ended
May 29, 1994. Borrowings outstanding under bank lines of credit at the
end of fiscal 1994 were used principally to fund 1994 business
acquisitions. The Registrant entered into a $150 million bank
revolving credit agreement during the quarter with $50 million of
short-term borrowings classified as long-term debt at August 28, 1994,
reflecting the commitment under said agreement. Cash and temporary
cash investments were $2.7 million at August 28, 1994, a decrease of
$8.3 million from the balance at May 29, 1994. The decrease in cash
and temporary cash investments was principally the result of:
1.) Temporary seasonal cash requirements of the Registrant's
crop-related vegetable and pickle processing operations,
2.) Cash outlays for capital expenditures, and
3.) Funds expended for a business acquired during the first
quarter.
Short-term borrowings outstanding at August 28, 1994, were $86
million, a decrease of $36 million from the balance outstanding at
May 29, 1994. Working capital at August 28, 1994, was $141.3 million
compared to $92.9 million at May 29, 1994. The Registrant's debt-to-
capital ratio was 25.7% at August 28, 1994, compared with 20.6% at May
29, 1994. The decrease in short-term borrowings and the increases in
working capital and the Registrant's debt-to-capital ratio principally
reflect the bank revolving credit borrowing commitment.
B.) Results of Operations
Overall sales for the first quarter ended August 28, 1994,
increased 9.8% over the same period a year ago, principally the result
of sales of fiscal 1994 business acquisitions. Consolidated after-tax
earnings for the quarter increased 44% over the earnings for the same
period a year ago, principally the result of improved earnings of the
Registrant's Specialty Food Products segment. Earnings for the first
quarter last year included a charge of $1.5 million related to the tax
provisions of the Revenue Reconciliation Act of 1993 and a net after-
tax credit of $1.2 million related to the Registrant's adoption of new
accounting principles.
7
<PAGE>
Sales of the Registrant's Dairy Products operations for the first
quarter were $371 million compared with $363 million for the same period
a year ago. The sales increase was principally the result of:
1.) Sales of businesses acquired in fiscal 1994 and the first
quarter this year and
2.) Increased unit sales volumes in certain markets,
offset by lower selling prices reflecting lower raw milk
costs this year compared to the same period a year ago.
Dairy Products operating earnings for the first quarter were
higher than the earnings of the corresponding period a year ago
principally due to:
1.) Improved margins in most market areas as a result of
declining raw milk costs,
2.) Earnings of businesses acquired in fiscal 1994 and first
quarter this year, and
3.) Increased unit sales volumes.
Raw milk supplies are plentiful and unusual raw milk cost increases are
not expected to occur over the balance of the year.
Sales of the Registrant's Specialty Food Products operations for
the first quarter were $236 million, an increase of 23.3% over sales of
the corresponding period a year ago. The increased sales principally
were the result of the sales of a vegetable operation acquired during the
third quarter of fiscal 1994. The Registrant's other Specialty Food
Products operations experienced sales increases, principally the result
of increased unit sales volumes.
Specialty Food Products' first quarter earnings improved
significantly over the earnings for the comparable period a year ago,
principally the result of improved operating earnings of the Registrant's
canned and frozen vegetable operations. The increased earnings
principally were the result of:
1.) Inclusion of the earnings of a vegetable operation acquired
during the third quarter last year,
2.) Higher selling prices for canned and frozen vegetables
reflecting market conditions, and
3.) Improved plant processing costs as a result of normal
growing and harvest conditions.
8
<PAGE>
Margins for the first quarter a year ago were unfavorably impacted by
increased weather-related costs, crop shortages and competitive market
conditions. This year's harvest of some types of vegetables exceeded
normal levels and will result in lowering of selling prices over the
balance of the year.
Delivery, selling and administrative expenses for the quarter
ended August 28, 1994, increased 15% from the same period a year ago
principally the result of the inclusion of expenses of businesses
acquired during fiscal year 1994, and a business acquired during the
first quarter this year.
Interest expense for the first quarter of $4.7 million increased
43% over interest expense for the same period a year ago. The increase
reflects the interest on increased borrowings associated with business
acquisitions and higher prevailing interest rates during the first
quarter as compared with rates during the corresponding period a year
ago.
The effective income tax rate for the first quarter was 41.0%
compared with a rate of 45.9% for the first quarter a year ago. The tax
rate for the first quarter last year included the impact of the
retroactive provisions of the Revenue Reconciliation Act of 1993 and the
adoption of FAS 109, "Accounting for Income Taxes."
9
<PAGE>
PART II - OTHER INFORMATION
---------------------------
ITEM 1. Legal Proceedings
-----------------
There has been no material change in the legal proceedings reported
under Item 3 - Legal Proceedings, of the Registrant's Form 10-K Annual
Report, for the fiscal year ended May 29, 1994.
ITEM 5. Other Information
-----------------
The Registrant issued a press release dated September 28, 1994, titled
"Curtice-Burns Rejects Dean Foods Acquisition Offer" which appears as
an Exhibit under Item 21 - Other Documents.
ITEM 6. Exhibits and Reports on Form 8-K
--------------------------------
a.) Exhibits
Item 10 - Material Contracts
$150 million Credit Agreement dated as of
August 24, 1994
Item 21 - Other Documents
Press release dated September 28, 1994, titled
"Curtice-Burns Rejects Dean Foods Acquisition
Offer"
Item 27 - Financial Data Schedules
b.) Reports on Form 8-K
None were filed during the quarter for which this report is
filed.
10
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
DEAN FOODS COMPANY
------------------
(Registrant)
DATE: October 12, 1994 _________________________
---------------- TIMOTHY J. BONDY
Vice President, Finance
DATE: October 12, 1994 _________________________
---------------- DALE I. HECOX
Treasurer
11
<PAGE>
EXHIBIT 10
================================================================================
$150,000,000
CREDIT AGREEMENT
DATED AS OF
August 24, 1994
AMONG
DEAN FOODS COMPANY,
THE BANKS PARTY HERETO,
AND
BANK OF MONTREAL, CHICAGO BRANCH
as Agent
================================================================================
<PAGE>
TABLE OF CONTENTS
CREDIT AGREEMENT
Page
ARTICLE ONE THE REVOLVING CREDIT FACILITY............................... 1
Section 1.1. The Commitments........................................... 1
Section 1.2. Applicable Interest Rates................................. 1
Section 1.3. Minimum Borrowing Amounts................................. 3
Section 1.4. Manner of Borrowing Loans................................. 3
ARTICLE TWO GENERAL PROVISIONS APPLICABLE TO LOANS...................... 4
Section 2.1. Maturity of Loans......................................... 4
Section 2.2. Prepayments............................................... 4
Section 2.3. Default Rate.............................................. 4
Section 2.4. The Notes................................................. 4
Section 2.5. Commitment Terminations................................... 5
Section 2.6. Funding Indemnity......................................... 5
ARTICLE THREE FEES........................................................ 6
Section 3.1. Commitment Fee............................................ 6
Section 3.2. Closing Fee............................................... 6
ARTICLE FOUR PLACE AND APPLICATION OF PAYMENTS........................... 6
Section 4.1. Place and Application of Payments......................... 6
ARTICLE FIVE DEFINITIONS; INTERPRETATION................................. 6
Section 5.1. Definitions............................................... 6
Section 5.2. Interpretation........................................... 11
ARTICLE SIX REPRESENTATIONS AND WARRANTIES............................. 11
Section 6.1. Organization and Qualification........................... 11
Section 6.2. Subsidiaries............................................. 11
Section 6.3. Corporate Authority and Validity of Obligations.......... 12
Section 6.4. Not an Investment Company................................ 12
Section 6.5. Margin Stock............................................. 12
Section 6.6. Financial Reports........................................ 12
Section 6.7. No Material Adverse Change............................... 12
Section 6.8. Litigation............................................... 12
Section 6.9. Tax Returns.............................................. 12
Section 6.10. Approvals................................................ 13
Section 6.11. Liens.................................................... 13
Section 6.12. ERISA.................................................... 13
Section 6.13. Environmental and Health Matters......................... 13
<PAGE>
ARTICLE SEVEN CONDITIONS PRECEDENT...................................... 13
Section 7.1. Initial Borrowing....................................... 13
Section 7.2. All Loans............................................... 14
ARTICLE EIGHT COVENANTS................................................. 14
Section 8.1. Corporate Existence..................................... 14
Section 8.2. Maintenance............................................. 14
Section 8.3. Taxes................................................... 14
Section 8.4. Insurance............................................... 15
Section 8.5. Financial Reports and Other Information................. 15
Section 8.6. Leverage Ratio.......................................... 16
Section 8.7. Interest Coverage Ratio................................. 16
Section 8.8. Mergers, Consolidations, Leases, and Sales.............. 16
Section 8.9. ERISA................................................... 17
Section 8.10. Conduct of Business..................................... 17
Section 8.11. Liens................................................... 17
Section 8.12. Use of Proceeds......................................... 18
Section 8.13. Compliance with Laws.................................... 18
ARTICLE NINE EVENTS OF DEFAULT AND REMEDIES............................ 18
Section 9.1. Events of Default....................................... 18
Section 9.2. Non-Bankruptcy Defaults................................. 19
Section 9.3. Bankruptcy Defaults..................................... 20
Section 9.4. Expenses................................................ 20
ARTICLE TEN CHANGE IN CIRCUMSTANCES................................... 20
Section 10.1. Change of Law........................................... 20
Section 10.2. Unavailability of Deposits or Inability to Ascertain, or
Inadequacy of, LIBOR.................................... 20
Section 10.3. Increased Cost and Reduced Return....................... 20
Section 10.4. Lending Offices......................................... 22
Section 10.5. Discretion of Bank as to Manner of Funding.............. 22
Section 10.6. Substitution of Bank.................................... 22
ARTICLE ELEVEN THE AGENT................................................. 22
Section 11.1. Appointment and Authorization........................... 22
Section 11.2. Agent and Affiliates.................................... 22
Section 11.3. Action by the Agent..................................... 22
Section 11.4. Consultation with Experts............................... 23
Section 11.5. Liability of Agent...................................... 23
Section 11.6. Indemnification......................................... 23
Section 11.7. Credit Decision......................................... 23
Section 11.8. Resignation of Agent and Successor Agent................ 23
Section 11.9. Payments................................................ 24
-ii-
<PAGE>
ARTICLE TWELVE MISCELLANEOUS............................................. 24
Section 12.1. Withholding Taxes....................................... 24
Section 12.2. No Waiver of Rights..................................... 25
Section 12.3. Non-Business Day........................................ 25
Section 12.4. Documentary Taxes....................................... 25
Section 12.5. Survival of Representations............................. 26
Section 12.6. Survival of Indemnities................................. 26
Section 12.7. Sharing of Set-Off...................................... 26
Section 12.8. Notices................................................. 26
Section 12.9. Counterparts............................................ 26
Section 12.10. Successors and Assigns.................................. 27
Section 12.11. Participants and Note Assignees......................... 27
Section 12.12. Assignment of Commitments by Banks...................... 27
Section 12.13. Amendments.............................................. 27
Section 12.14. Legal Fees and Indemnification.......................... 27
Section 12.15. Governing Law........................................... 28
Section 12.16. Headings................................................ 28
Section 12.17. One Bank................................................ 28
Section 12.18. Entire Agreement........................................ 28
EXHIBIT A - Form of Note
EXHIBIT B - Form of Legal Opinion
EXHIBIT C - Compliance Certificate
SCHEDULE 6.2
-iii-
<PAGE>
CREDIT AGREEMENT
To the Banks party hereto
Ladies and Gentlemen:
The undersigned, Dean Foods Company, a Delaware corporation (the
"Borrower"), applies to you for your several commitments, subject to all the
terms and conditions hereof and on the basis of the representations and
warranties hereinafter set forth, to make available a revolving credit as more
fully hereinafter set forth. Each of you is hereinafter referred to as a "Bank,"
all of you are hereinafter referred to collectively as the "Banks," and Bank of
Montreal, Chicago Branch, in its capacity as agent for the Banks hereunder is
hereinafter referred to as the "Agent".
ARTICLE ONE
THE REVOLVING CREDIT FACILITY
Section 1.1. The Commitments. Subject to the terms and conditions hereof,
each Bank, by its acceptance hereof, severally agrees to make a loan or loans
(individually a "Loan" and collectively, "Loans") to the Borrower from time to
time on a revolving basis in the amount of its commitment to make Loans set
forth on the applicable signature page hereof or pursuant to Section 12.12
hereof (its "Commitment" and cumulatively for all the Banks, the "Commitments")
(subject to any reductions thereof pursuant to the terms hereof) prior to the
Termination Date. The aggregate principal amount of Loans at any one time
outstanding shall in no event exceed the Commitments then in effect, which
Commitments on the date hereof total $150,000,000. Each Borrowing of Loans shall
be made ratably from the Banks in proportion to their respective Commitments.
The Borrower may elect that each Borrowing of loans be made available by means
of Domestic Rate Loans or Eurodollar Loans, which Loans may be repaid and the
principal amount thereof reborrowed prior to the Termination Date, subject to
all reductions in the Commitments pursuant to Article Two hereof and all other
terms and conditions hereof.
Section 1.2. Applicable Interest Rates.
(a) Domestic Rate Loans. Each Domestic Rate Loan made by a Bank shall bear
interest (computed on the basis of a year of 365 or 366 days, as the case may
be, and actual days elapsed) on the unpaid principal amount thereof from the
date such Loan is made until maturity (whether by acceleration or otherwise) at
a rate per annum equal to the Domestic Rate from time to time in effect, payable
quarterly on the 15th day of each September, December, March and June in each
year and at maturity (whether by acceleration or otherwise).
"Domestic Rate" means for any day the greater of:
(i) the rate of interest announced by the Agent from time to time as
its prime commercial rate, or equivalent, for United States Dollar loans to
borrowers located in the United States with any change in the Domestic 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; and
(ii) the sum of (x) the rate for that day set forth opposite the
caption "Federal Fund (Effective)" in the daily statistical release
designated as "Composite 3:30 P.M. Quotations for U.S. Government
Securities," or any successor publication, Published by the Federal Reserve
Bank of
<PAGE>
New York or, if such publication shall be suspended or terminated, the rate
determined by the Agent (based on quotations received from two or more
Federal funds dealers of recognized standing) to be the prevailing rate per
annum (rounded upward, if necessary, to the nearest 1/100 of 1%) at
approximately 10:00 a.m. (Chicago time) (or as soon thereafter as is
practicable) on such day for the purchase at face value of overnight Federal
funds in an amount approximately equal to the principal amount owed to the
Agent for which such rate is being determined, plus (y) 1/2 of 1% (0.50%).
(b) Eurodollar Loans. Each Eurodollar Loan made by a Bank shall bear
interest (computed on the basis of a year of 360 days and actual days elapsed)
on the unpaid principal amount thereof from the date such Loan is made until
maturity (whether by acceleration or otherwise) at a rate per annum equal to the
sum of 1/4 of 1% per annum (the "Eurodollar Margin") plus Adjusted LIBOR
applicable to such Loan, payable on the last day of the applicable Interest
Period and at maturity (whether by acceleration or otherwise). There shall not
be more than six separate Interest Periods applicable to outstanding Borrowings
at any one time.
"Adjusted LIBOR" means, for any Borrowing of Eurodollar Loans, a rate per
annum determined in accordance with the following formula:
LIBOR
------------------------------------
Adjusted LIBOR = 100% - Eurodollar Reserve Percentage
"LIBOR" means, with respect to an Interest Period for a Borrowing of
Eurodollar Loans, the average of the respective rates of interest per annum, as
determined by the Agent (rounded upwards, if necessary, to the nearest whole
multiple of 1/16 of 1%), at which deposits of United States Dollars in
immediately available and freely transferable funds are offered to the Agent at
11:00 a.m. (London, England time) two Business Days prior to the commencement of
such Interest Period by major banks in the interbank eurodollar market for a
period equal to such Interest Period and in an amount equal to the principal
amount of the Eurodollar Loan scheduled to be made by the Agent as part of such
Borrowing.
"Eurodollar Reserve Percentage" means, for any Borrowing of Eurodollar
Loans, the daily average for the applicable Interest Period of the maximum rate
at which reserves (including, without limitation, any supplemental, marginal and
emergency reserves) are imposed during such Interest Period by the Board of
Governors of the Federal Reserve System (or any successor) on "eurocurrency
liabilities," as defined in such Board's Regulation D, (or in respect of any
other category of liabilities that includes deposits by reference to which the
interest rate on Eurodollar Loans is determined or any category of extension of
credit or other assets that include loans by non-United States offices of any
Bank to United States residents) 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 Eurodollar 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.
"Interest Period" means the period commencing on the date a Borrowing of
Eurodollar Loans is made and ending on the date, as the Borrower may select 1, 2
or 3 weeks or 1, 2 or 3 months thereafter; provided, however, that:
(i) the Borrower may not select an Interest Period that extends beyond
the Termination Date; and
(ii) whenever the last day of any Interest Period would otherwise be a
day that is not a Business Day, the last day of such Interest Period shall
be extended to the next succeeding Business Day, provided that, if such
extension would cause the last day of such Interest Period to occur in the
-2-
<PAGE>
following calendar month, the last day of such Interest Period shall be the
immediately preceding Business Day; and
(iii) for purposes of determining Interest Periods, 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. that if
there is no numerically corresponding day in the month in which such an
Interest Period is to end, then such Interest Period shall end on the last
Business Day of the calendar month in which such Interest Period is to end.
(c) Rate Determinations. The Agent shall determine the Domestic Rate and
Adjusted LIBOR as applicable to the Loans hereunder (but the Borrower shall
select which of such rate options is to apply to each such Loan as provided in
Section 1.4 hereof), and its determination thereof shall be conclusive and
binding except in the case of manifest error or willful misconduct.
Section 1.3. Minimum Borrowing Amounts. Each Borrowing of Loans shall be in
an amount not less than $10,000,000, or any larger amount that is an integral
multiple of $1,000,000.
Section 1.4. Manner of Borrowing Loans.
(a) Notice to the Agent. The Borrower shall give telephonic or telecopy
notice to the Agent (which notice shall be irrevocable once given and, if by
telephone, shall be promptly confirmed in writing) by no later than 9:00 am.
(Chicago time) (i) on the date at least three (3) Business Days prior to the
date of each requested Borrowing of Eurodollar Loans and (ii) on the date of any
requested Borrowing of Domestic Rate Loans. Each such notice shall specify the
date of the requested Borrowing (which shall be a Business Day), the amount of
the requested Borrowing, the type of Loans to comprise such Borrowing and, if
such Borrowing is to be comprised of Eurodollar Loans, the Interest Period
applicable thereto. The Borrower agrees that the Agent may rely on any such
telephonic or telecopy notice given by any person it reasonably believes is an
Authorized Representative without the necessity of independent investigation and
in the event any notice by such means conflicts with any written confirmation,
such notice shall govern if the Agent has acted in reliance thereon.
(b) Notice to the Banks. The Agent shall give prompt telephonic, telex or
telecopy notice to each of the Banks of any Borrowing request received pursuant
to Section 1.4(a) above (but, if such notice is given by telephone, the Agent
shall confirm such borrowing request in writing) and, if such notice requests
the Banks to make Eurodollar Loans, the Agent shall give notice to the Borrower
and each of the Banks by like means of the interest rate applicable thereto
(but, if such notice is given by telephone, the Agent shall confirm such rate in
writing) promptly after the Agent has made such determination.
(c) Borrower's Failure to Notify. In the event the Borrower fails to give
notice pursuant to Section 1.4(a) above of the reborrowing of the principal
amount of any maturing Borrowing of Loans and has not notified the Agent by
10:00 a.m. (Chicago time) on the day such Borrowing matures that the Borrower
intends to repay such Borrowing, the Borrower shall be deemed to have requested
a Borrowing of Domestic Rate Loans on such day in the amount of the maturing
Borrowing of Loans, subject to Section 7.2 hereof.
(d) Disbursement of Loans. Not later than noon (Chicago time) on the date of
any Borrowing of Loans, each Bank shall, subject to Article Seven hereof, make
available its Loan in funds immediately available in Chicago, Illinois at the
principal office of the Agent, except to the extent such Borrowing is a
reborrowing, in whole or in part, of the principal amount of a maturing
Borrowing of Loans (a "Refunding Borrowing"), in which case each Bank shall
record the Loan made by it as a part of such Refunding Borrowing on its books
and records or on a schedule to its Note, as provided in Section 2.4(b) hereof,
and shall effect the repayment, in whole or in part, as appropriate, of its
maturing Loan through the proceeds of
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such new Loan. The Agent shall make the proceeds of each Borrowing available to
the Borrower at the Agent's principal office in Chicago, Illinois.
ARTICLE TWO
GENERAL PROVISIONS APPLICABLE TO LOANS;
REDUCTION OF COMMITMENTS
Section 2.1. Maturity of Loans. Each Loan shall, unless required to be
sooner paid pursuant to any of the provisions hereof, mature and become due and
payable by the Borrower as follows: Domestic Rate Loans shall become due and
payable on the 90th day after the date made (but not later than the Termination
Date) and Eurodollar Loans shall become due and payable on the last day of the
Interest Period applicable thereto.
Section 2.2. Prepayments. (a) Loans. The Borrower shall have the privilege
of prepaying without premium or penalty and in whole or in part (but, if in
part, then: (i) in an amount not less than $5,000,000 and in integral multiples
of $1,000,000 and (ii) in an amount such that the minimum amount required for a
Borrowing pursuant to Section 1.3 hereof remains outstanding) any Borrowing of
Loans at any time upon three Business Days', in the case of Eurodollar Loans, or
one Business Day's, in the case of Domestic Rate Loans, prior notice to the
Agent (which shall promptly advise each Bank of the receipt by it of each such
notice), such prepayment to be made by the payment of the principal amount to be
prepaid and accrued interest thereon to the date fixed for prepayment and, in
the case of Eurodollar Loans, any compensation required by Section 2.6 hereof.
(b) Reborrowings. Any amount paid or prepaid before the Termination Date
may, subject to the terms and conditions of this Agreement, be borrowed, repaid
and borrowed again.
Section 2.3. Default Rate. If any payment of principal on any Loan is not
made when due (whether by acceleration or otherwise), such Loan shall bear
interest (computed on the basis of a year of 360 days and actual days elapsed)
from the date such payment was due until paid in full, payable on demand, at a
rate per annum equal to:
(a) with respect to any Domestic Rate Loan, the sum of two percent
(2%) plus the Domestic Rate from time to time in effect; and
(b) with respect to any Eurodollar Loan the sum of two percent (2%)
plus the rate of interest in effect thereon at the time of such default
until the end of the Interest Period applicable thereto and, thereafter, the
sum of two percent (2%) plus the Domestic Rate from time to time in effect.
Section 2.4. The Notes. (a) All Loans made to the Borrower by each Bank
shall be evidenced by a single promissory note of the Borrower payable to such
Bank in the amount of its Commitment and otherwise in the form of Exhibit A
hereto. Each such promissory note is hereinafter referred to as a "Note" and
collectively as the "Notes".
(b) Each Bank shall record on its books and records or on a schedule to its
Note the amount and type of each Loan made by it to the Borrower, all payments
of principal and the principal balance from time to time outstanding thereon and
in respect of any Eurodollar Loan, the Interest Period and interest rate
applicable thereto; provided that prior to the transfer of any Note all such
amounts shall be recorded on a schedule to such Note. The record thereof,
whether shown on such books and records of a Bank or on a schedule to any Note,
shall be prima facie evidence as to all such amounts; provided however, that the
failure of any Bank to record any of the foregoing or any error in any such
record shall not limit or
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otherwise affect the obligation of the Borrower to repay all Loans made to it
hereunder together with accrued interest thereon.
Section 2.5. Commitment Terminations. (a) Optional. The Borrower shall have
the right at any time and from time to time, upon five (5) Business Days' prior
written notice to the Agent, to terminate without premium or penalty, in whole
or in part, the Commitments, any partial termination to be in an amount not less
than $10,000,000 or any larger amount that is an integral multiple of
$1,000,000, and to reduce ratably the respective Commitments of each Bank;
provided that the Commitments may not be reduced to an amount less than the
aggregate principal amount of Loans then outstanding. Any termination of
Commitments pursuant to this Section 2.5 may not be reinstated.
(b) Mandatory. The Commitments shall automatically reduce ratably by the net
proceeds received by the Borrower or any Subsidiary from the issuance of
Indebtedness with a final scheduled maturity of one year or more, exclusive of
Indebtedness issued to finance the acquisition or construction of a fixed asset
(including Indebtedness issued for such purposes in the form of Capitalized
leases and industrial development revenue bonds), Indebtedness of Subsidiaries
existing at the time they become Subsidiaries and notes issued by the Borrower
or any of its Subsidiaries to sellers of stock or other assets to the Borrower
or its Subsidiaries evidencing the deferred portion of the purchase price for
the stock or other assets in question. The Borrower shall promptly notify the
Agent of each incurrence of Indebtedness giving rise to a reduction in the
Commitments pursuant hereto with such reduction to become effective on the date
the Borrower or Subsidiary in question receives the proceeds of the Indebtedness
giving rise to the reduction. On the date of each such reduction the Borrower
shall repay outstanding Loans to the extent the aggregate principal amount of
outstanding Loans exceed the Commitments as so reduced. If any such repayment
would require the Borrower to make a reimbursement payment to the Banks under
Section 2.6 hereof, the Borrower may at its option, in lieu of such payment,
deliver the amount of the required payment to the Agent to be held by it for
application to the Loans on the first date when such a repayment can be effected
without requiring the Borrower to make a payment under Section 2.6 hereof. In
such event, the funds so held by the Agent shall, at the option of the Borrower,
be invested in high-grade investment securities mutually acceptable to the
Borrower and the Agent.
(c) Change in Control. After the occurrence of a Change in Control, the
Required Banks may at any time, but in no event later than 30 days after the
date the Borrower notifies the Banks of such Change in Control, terminate the
Commitments effective on the Business Day after the day the Borrower receives
notice of such termination. Any Loans outstanding on the date the Commitments
are so terminated, together with all other amounts owing hereunder, shall be due
and payable on such date.
Section 2.6. Funding Indemnity. In the event any Bank shall incur any loss,
cost or expense (including, without limitation, any loss of profit, and any
loss, cost or expense incurred by reason of the liquidation or re-employment of
deposits or other funds acquired by such Bank to fund or maintain any Eurodollar
Loan or the relending or reinvesting of such deposits or amounts paid or prepaid
to such Bank) as a result of:
(a) any payment or prepayment of a Eurodollar Loan on a date other
than the last day of its Interest Period for any reason,
(b) any failure (because of a failure to meet the conditions of
Article Seven or otherwise) by the Borrower to borrow a Eurodollar Loan on
the date specified in a notice given pursuant to Section 1.4 hereof.
(c) any failure by the Borrower to make any payment of principal on
any Eurodollar Loan when due (whether by acceleration or otherwise), or
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(d) any acceleration of the maturity of a Eurodollar Loan as a result of
the occurrence of any Event of Default hereunder,
then, upon the demand of such Bank, the Borrower shall pay to such Bank such
amount as will reimburse such Bank for such loss, cost or expense. If any Bank
makes such a claim for compensation, it shall provide to the Borrower, with a
copy to the Agent, a certificate executed by an officer of such Bank 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 the amounts shown on such certificate if reasonably calculated
shall be conclusive.
ARTICLE THREE
FEES
Section 3.1. Commitment Fee. The Borrower shall pay to the Agent for the
ratable account of the Banks a commitment fee at the rate of 1/4 of 1% per annum
(computed on the basis of a year of 365 or 366 days, as the case may be, and the
actual number of days elapsed) on the average daily unused amount of the
Commitments hereunder, such fee being payable in arrears on September 15, 1994,
on the 15th day of each December, March, June and September thereafter and on
the Termination Date, unless the Commitments are terminated in whole on an
earlier date, in which event the commitment fee for the period to the date of
such termination in whole shall be paid on the date of such termination.
Section 3.2. Closing Fee. Upon satisfaction of the conditions to the initial
Borrowing set forth in Section 7.1 hereof, the Borrower shall pay to the Agent
for its own use and benefit the nonrefundable closing fee heretofore agreed to
between the Agent and the Borrower.
ARTICLE FOUR
PLACE AND APPLICATION OF PAYMENTS
Section 4.1. Place and Application of Payments. All payments of principal of
and interest on the Loans, of the commitment fee and of all other amounts
payable under this Agreement by the Borrower shall be made to the Agent by no
later than 12:00 noon (Chicago time) at the principal office of the Agent in
Chicago, Illinois (or such other location in the State of Illinois as the Agent
may designate to the Borrower) for the benefit of the Banks. Any payments
received after such time shall be deemed to have been received by the Agent on
the next Business Day. All such payments shall be made in lawful money of the
United States of America, in immediately available funds at the place of
payment, without setoff or counterclaim. The Agent will promptly thereafter
cause to be distributed like funds relating to the payment of principal or
interest on Loans or fees ratably to the Banks and like funds relating to the
payment of any other amount payable to any Bank to such Bank, in each case to be
applied in accordance with the terms of this Agreement.
ARTICLE FIVE
DEFINITIONS; INTERPRETATION
Section 5.1. Definitions. The following terms when used herein have the
following meanings:
"Adjusted LIBOR" is defined in Section 1.2(b) hereof.
"Agent" means Bank of Montreal, Chicago Branch and any successor pursuant to
Section 11.8 hereof.
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"Authorized Representative" means the list of officers provided by the
Borrower pursuant to Section 7.1.(d) hereof (which list shall also designate the
bank account of the Borrower into which the Agent shall disburse Loan proceeds
until notified of a different account by an Authorized Representative), or any
further or different officer(s) or employee(s) of the Borrower so named by any
Authorized Representative of the Borrower in a written notice to the Agent, each
of which persons shall be authorized to issue Borrowing requests, direct the
deposit of Loan proceeds into bank accounts maintained in the Borrower's name,
and take all other actions hereunder in the Borrower's name.
"Bank" means each bank signatory hereto or that becomes a Bank hereunder
pursuant to Section 12.12 hereof.
"Borrower" means Dean Foods Company, a Delaware corporation.
"Borrowing" means the total of Loans of a single type made by one or more
Banks to the Borrower on a single date and for a single Interest Period.
Borrowings of Loans are made ratably from each of the Banks according to their
Commitments.
"Business Day" means any day other than a Saturday or Sunday on which Banks
are not authorized or required to close in Chicago, Illinois or New York, New
York and, if the applicable Business Day relates to the borrowing or payment of
a Eurodollar Loan, on which banks are dealing in United States Dollar deposits
in the interbank market in London, England.
"Capitalized Lease" means at any date any lease of Property which in
accordance with GAAP at the time in effect would be required to be capitalized
on the balance sheet of the lessee.
"Capitalized Lease Obligations" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be shown as a
liability on a balance sheet of such Person prepared in accordance with GAAP.
"Change of Control" means (i) any person or group of persons (within the
meaning of Section 13 or 14 of the Securities Exchange Act of 1934, as amended)
shall have acquired beneficial ownership (within the meaning of Rule 13d-3
promulgated by the SEC under said Act) of 20% or more in voting power of the
outstanding Voting Stock of the Borrower or (ii) members of the Board of
Directors of the Borrower on the date hereof plus any additional members of such
Board whose nomination for election or election to such Board is recommended or
approved by the then current members of such Board shall at any time fail to
constitute a majority of such Board.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commitment" is defined in Section 1.1 hereof.
"Consolidated Income Before Interest and Taxes" means, for any period,
determined on a consolidated basis for the Borrower and its Subsidiaries in
accordance with GAAP, Consolidated Net Income for such period plus all amounts
deducted in arriving at such Consolidated Net Income for (i) Consolidated
Interest Expense for such period and (ii) taxes imposed on or measured by income
or excess profits.
"Consolidated Indebtedness" means all Indebtedness of the Borrower and its
Subsidiaries determined (without duplication) on a consolidated basis in
accordance with GAAP.
"Consolidated Interest Expense" means, with respect to any period, an amount
equal to interest expense on Consolidated Indebtedness, as determined in
accordance with GAAP.
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"Consolidated Net Income" for any period shall mean the gross revenues from
any source of the Borrower and its Subsidiaries for such period less all
expenses and other proper charges (including taxes on income), determined on a
consolidated basis in accordance with GAAP and after eliminating earnings or
losses attributable to outstanding minority interests in Subsidiaries, but
excluding the following from the computation of Consolidated Net Income in any
event:
(a) any gains (but not losses) on the sale or other disposition of
investments or fixed or capital assets or resulting from discontinued
operations, and any taxes on such excluded gains;
(b) net earnings and losses of any Subsidiary accrued prior to the date
it became a Subsidiary;
(c) net earnings and losses of any Person (other than a Subsidiary),
substantially all the assets of which have been acquired in any manner,
realized by such other Person prior to the date of such acquisition;
(d) net earnings and losses of any Person (other than a Subsidiary)
with which the Borrower or a Subsidiary shall have consolidated or which
shall have merged into or with the Borrower or a Subsidiarv Prior to the
date of such consolidation or merger;
(e) net earnings of any business entity (other than a Subsidiary) in
which the Borrower or any Subsidiary has an ownership interest unless such
net earnings shall have actually been received by the Borrower or such
Subsidiary in the form of cash distributions or distributions in the form of
property of readily determinable objective value;
(f) any portion of the undistributed net earnings of any Subsidiary
which for any reason is unavailable by reason of contract or law for payment
of dividends to the Borrower or any other Subsidiary as a shareholder of
such Subsidiary;
(g) earnings resulting from any reappraisal, revaluation or writeup of
assets, other than revaluations of foreign currency; and
(h) any deferred or other credit representing any excess of the equity
in any Subsidiary at the date of acquisition thereof over the amount
invested in such Subsidiary.
"Consolidated Net Worth" means as of the date of any determination thereof,
the sum of the capital stock (including capital in excess of par and any other
capital surplus) accounts (net of treasury shares) plus (or minus in the case of
a deficit) the retained earnings of the Borrower and its Subsidiaries determined
on a consolidated basis in accordance with GAAP, including the making of
appropriate deductions for minority interest, if any, in Subsidiaries.
"Controlled Group" has the same meaning as in Section 414(b) of the Code.
"Default" means any event or condition the occurrence of which would, with
the passage of time or the giving of notice, or both, constitute an Event of
Default.
"Domestic Rate" is defined in Section 1.2(a) hereof.
"Domestic Rate Loan" means a Loan bearing interest before maturity at the
rate specified in Section 1.2(a) hereof.
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"Environmental and Health Laws" means any and all federal, state, local and
foreign statutes, laws (including case law), regulations, ordinances, judgments,
permits and other governmental rules or restrictions relating to human health,
safety (including without limitation occupational safety and health standards),
and the environment or to emissions, discharges or releases of pollutants,
contaminants, hazardous substances or wastes into the environment, including
without limitation ambient air, surface water, ground water or land, or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of pollutants, contaminants, hazardous
substances or wastes or the clean-up or other remediation thereof.
"ERISA" is defined in Section 6.12 hereof.
"Eurodollar Loan" means a Loan bearing interest before maturity at the rate
specified in Section 1.2(b) hereof.
"Eurodollar Margin" is defined in Section 1.2(b) hereof.
"Eurodollar Reserve Percentage" is defined in Section 1.2(b) hereof.
"Event of Default" means any of the events or circumstances specified in
Section 9.1 hereof.
"GAAP" means generally accepted accounting principles, from time to time in
effect, applied consistently with the accounting principles used in the
preparation of the financial statements referred to in Section 6.6 hereof.
"Guaranty" of a Person means any agreement by which such Person assumes,
guarantees, endorses, contingently agrees to purchase or provide funds for the
payment of, or otherwise becomes liable upon, the obligation of any other
Person, or agrees to maintain the net worth or working capital or other
financial condition of any other Person or otherwise assures any creditor of
such other Person against loss, including, without limitation, any comfort
letter, operating agreement, take-or-pay contract or letter of credit.
"Indebtedness" means for any Person all (i) obligations of such Person for
borrowed money, (ii) obligations of such Person representing the deferred
purchase price of property or services other than accounts payable arising in
the ordinary course of business on terms customary in the trade, (iii)
obligations of such Person evidenced by notes, acceptances, or other instruments
of such Person, (iv) obligations, whether or not assumed, secured by Liens on,
or payable out of the proceeds or production from, Property now or hereafter
owned or acquired by such Person, (v) Capitalized Lease Obligations of such
Person and (vi) obligations for which such Person is obligated pursuant to a
Guaranty.
"Interest Period" is defined in Section 1.2 hereof.
"Lending Office" is defined in Section 10.4 hereof.
"LIBOR" is defined in Section 1.2(b) hereof.
"Lien" means any interest in Property securing an obligation owed to, or a
claim by, a Person other than the owner of the Property, whether such interest
is based on the common law, statute or contract, including, but not limited to,
the security interest lien arising from a mortgage, encumbrance, pledge,
conditional sale, security agreement or trust receipt, or a lease, consignment
or bailment for security purposes. The term "Lien" shall also include
reservations, exceptions, encroachments, easements, rights of way, covenants,
conditions, restrictions, leases and other title exceptions and encumbrances
affecting Property. For the purposes of this definition, a Person shall be
deemed to be the owner of any Property which it has acquired or holds subject to
a conditional sale agreement, Capital Lease or other arrangement
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pursuant to which title to the Property has been retained by or vested in some
other Person for security purposes, and such retention of title shall
constitute a "Lien."
"Loan" is defined in Section 1.1 hereof, and the term "type" of Loan refers
to its status as a Domestic Rate Loan or Eurodollar Loan.
"Margin Stock" means "margin stock" as defined in Regulation U of the Board
of Governors of the Federal Reserve System.
"Material Plan" is defined in Section 9.1(f) hereof.
"Note" is defined in Section 2.4(a) hereof.
"PBGC" is defined in Section 6.12 hereof.
"Person" means an individual, partnership, corporation, association, trust,
unincorporated organization or any other entity or organization, including a
government or agency or political subdivision thereof.
"Plan" means with respect to the Borrower and each Subsidiary at any time an
employee pension benefit plan which is covered by Title IV of ERISA or subject
to the minimum funding standards under Section 412 of the Code and either (i)
is maintained by a member of the Controlled Group for employees of a member of
the Controlled Group of which the Borrower or such Subsidiary is a part, (ii)
is maintained pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes contributions and to which
a member of the Controlled Group of which the Borrower or such Subsidiary is a
part is then making or accruing an obligation to make contributions or has
within the preceding five plan years made contributions, or (iii) under which a
member of the Controlled Group of which the Borrower or such Subsidiary is a
part has any liability, including any liability by reason of having been a
substantial employer within the meaning of Section 4063 of ERISA at any time
during the preceding five years or by reason of being deemed a contributing
sponsor under Section 4069 of ERISA.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible, whether now owned or
hereafter acquired.
"Refunding Borrowing" is defined in Section 1.4(d) hereof.
"Required Banks" means as of the date of determination thereof, those Banks
holding at least 66-2/3% in dollar amount of the Commitments or, in the event
that the Commitments are terminated, those Banks holding at least 66-2/3% in
aggregate principal amount of the Loans outstanding hereunder.
"Security" has the same meaning as in Section 2(1) of the Securities Act of
1933, as amended.
"SEC" means the Securities and Exchange Commission.
"Set-off" is defined in Section 12.7 hereof.
"Subsidiary" means 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 is at the
time
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directly or indirectly owned by the Borrower or by one or more of its
Subsidiaries, or by the Borrower and one or more of its Subsidiaries.
"Termination Date" means December 31, 1995.
"Unfunded Vested Liabilities" means, with respect to any Plan at any time,
the amount (if any) by which (i) the present value of all vested nonforfeitable
accrued benefits under such Plan exceeds (ii) the fair market value of all Plan
assets allocable to such benefits, all determined as of the then most recent
valuation date for such Plan, but only to the extent that such excess represents
a potential liability of a member of the Controlled Group to the PBGC or the
Plan under Title IV of ERISA.
"Voting Stock" of any Person means capital stock of any class or classes or
other equity interests (however designated) having ordinary voting power for the
election of directors or equivalent governing body of such Person, other than
stock or other equity interests having such power only by reason of the
happening of a contingency.
"Welfare Plan" means a "welfare plan," as said term is defined in Section
3(1) of ERISA.
"Wholly-Owned" means a Subsidiary of which all of the issued and outstanding
shares of stock or other equity interests (other than directors' qualifying
shares as required by law) shall be owned by the Borrower directly or indirectly
through one or more of its Wholly-Owned Subsidiaries.
Section 5.2. Interpretation. The foregoing definitions shall be equally
applicable to both the singular and plural forms of the terms defined. All
references to times of day herein shall be references to Chicago, Illinois time
unless otherwise specifically provided. Where the character or amount of any
asset or liability or item of income or expense is required to be determined or
any consolidation or other accounting computation is required to be made for the
purposes of this Agreement, the same shall be done in accordance with GAAP, to
the extent applicable, except where such principles are inconsistent with the
specific provisions of this Agreement.
ARTICLE SIX
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Banks as follows:
Section 6.1. Organization and Qualification. The Borrower is duly organized
and validly existing and in good standing under the laws of the State of
Delaware, has full and adequate corporate power to carry on its business as now
conducted, is duly licensed or qualified and in good standing in each
jurisdiction in which the nature of the business transacted by it or the nature
of the Property owned or leased by it makes such licensing or qualification
necessary, except where the failure to be so licensed or qualified and in good
standing would not have a material adverse effect on the financial condition or
Property, business or operations of the Borrower and the Subsidiaries taken as a
whole.
Section 6.2. Subsidiaries. Each Subsidiary is a corporation duly organized
and validly existing and in good standing under the laws of the jurisdiction in
which it was incorporated, has full and adequate corporate power to carry on its
business as now conducted, and is duly licensed or qualified and in good
standing in each jurisdiction in which the nature of the business transacted by
it or the nature of the Property owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed or qualified
and in good standing would not have a material adverse effect on the financial
condition or Property, business or operations of the Borrower and the
Subsidiaries taken as a whole. Schedule 6.2 correctly sets forth, as to each
Subsidiary which is operating or has material assets, the
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jurisdiction of its incorporation, the percentage of issued and outstanding
shares of each class of its capital stock owned by the Borrower 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 and the number of shares of each class issued and
outstanding. All of the issued and outstanding shares of capital stock of each
Subsidiary are validly issued and outstanding and fully paid and nonassessable
and all such shares indicated in Schedule 6.2 as owned by the Borrower or a
Subsidiary are owned, beneficially and of record, by the Borrower or such
Subsidiary, free of any Lien.
Section 6.3. Corporate Authority and Validity of Obligations. The Borrower
has full right and authority to enter into this Agreement, to make the
borrowings herein provided for, to issue its Notes in evidence thereof and to
perform all of its obligations hereunder and under the Notes; this Agreement and
each Note delivered by the Borrower have been duly authorized, executed and
delivered by the Borrower and constitute valid and binding obligations of the
Borrower enforceable in accordance with their terms; and this Agreement and the
Notes do not, nor does the performance or observance by the Borrower or any
Subsidiary of any of the matters or things therein provided for, contravene any
provision of law or any charter or by-law provision of the Borrower or any
Subsidiary or any material covenant, indenture or agreement of or affecting the
Borrower or any Subsidiary or a substantial portion of their respective
Properties.
Section 6.4. Not an Investment Company. Neither the Borrower nor any of its
Subsidiaries is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
Section 6.5. Margin Stock. Neither the Borrower nor any of its Subsidiaries
is engaged principally, or as one of its primary activities, in the business of
extending credit for the purpose of purchasing or carrying Margin Stock, and
neither the Borrower nor any of its Subsidiaries will use the proceeds of any
Loan in a manner that violates any provision of Regulation U or X of the Board
of Governors of the Federal Reserve System.
Section 6.6. Financial Reports. The consolidated statement of financial
condition of the Borrower and the Subsidiaries as at May 29, 1994 and the
related statements of consolidated income and consolidated cash flows of the
Borrower and the Subsidiaries for the year then ended and accompanying notes
thereto, which financial statements are accompanied by the report of Price
Waterhouse, independent public accountants, and heretofore furnished to the
Banks, fairly presents the consolidated financial condition of the Borrower and
the Subsidiaries as at such date and their consolidated results of operations
and consolidated cash flows for the period then ended in conformity with GAAP.
Section 6.7. No Material Adverse Change. Since May 29, 1994, there has been
no material adverse change in the condition, financial or otherwise, or business
prospects of the Borrower and the Subsidiaries taken as a whole.
Section 6.8. Litigation. There is no litigation or governmental proceeding
pending, nor to the knowledge of the Borrower threatened, against the Borrower
or any Subsidiary which if adversely determined would (a) impair the validity or
enforceability of, or materially impair the ability of the Borrower to perform
its obligations under, this Agreement or the Notes or (b), except as disclosed
in the Borrower's Form IO-K filed with the SEC covering the period through May
29, 1994 (or in any such Reports hereafter delivered to the Banks pursuant to
Section 8.5(a) or 8.5(b) hereof or disclosed from time to time pursuant to
Section 8.5(d)(iii) hereof), result in any material adverse change in the
financial condition or Property, business or operations of the Borrower and the
Subsidiaries taken as a whole.
Section 6.9. Tax Returns. The consolidated United States federal income tax
returns of the Borrower for the taxable year ended May 28, 1989 and for all
taxable years ended prior to said date have been examined by the Internal
Revenue Service and have been approved as filed, and any additional
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assessments in connection with any of such years have been paid or the
applicable statute of limitations therefor has expired. There are no
assessments in respect of the consolidated United States federal income tax
returns of the Borrower and the Subsidiaries of a material nature for any
taxable year ended after May 28, 1989 pending, nor to the knowledge of the
Borrower is any such assessment threatened, other than for those which are
provided for by adequate reserves under GAAP.
Section 6.10. Approvals. No authorization, consent, license, exemption or
filing or registration with any court or governmental department, agency or
instrumentality, or any approval or consent of the stockholders of the Borrower
or from any other Person, is necessary to the valid execution, delivery or
performance by the Borrower of this Agreement or the Notes.
Section 6.11. Liens. There are no Liens on any of the Property of the Borrower
or any SUBSIDIARY, except those permitted by Section 8.11 hereof.
Section 6.12. ERISA. The Borrower and each Subsidiary are in compliance in all
material respects with the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), to the extent applicable to them and have received no notice
to the contrary from the Pension Benefit Guaranty Corporation ("PBGC") or any
other governmental entity or agency. As of May 29, 1994 the Borrower and its
Subsidiaries would not have any liability to PBGC in respect of Unfunded Vested
Liabilities if all employee pension benefit plans maintained by the Borrower and
its Subsidiaries had been terminated as of such date. No condition exists or
event or transaction has occurred with respect to any Plan which could
reasonably be expected to result in the incurrence by the Borrower or any
Subsidiary of any material liability, fine or penalty. Except as disclosed to
the Banks in writing, neither the Borrower nor any Subsidiary has any contingent
liability with respect to any post-retirement benefits under a Welfare Plan,
other than liability for continuation coverage described in Part 6 of Title I of
ERISA.
Section 6.13. Environmental and Health Matters. In the ordinary course of its
business, the Borrower and its Subsidiaries conduct an ongoing review of the
effect of Environmental and Health Laws on the properties and all aspects of the
business and operations of the Borrower and its Subsidiaries in the course of
which the Borrower identifies and evaluates associated liabilities and costs
(including, without limitation, any capital or operating expenditures required
for clean-up or closure of properties currently or previously owned, any capital
or operating expenditures required to achieve or maintain compliance with
standards imposed by law and any actual or potential liabilities to third
parties, including employees or governmental entities, and any related costs and
expenses). On the basis of this review, the Borrower has reasonably concluded
that Environmental and Health Laws are unlikely to have any material adverse
effect on the financial condition or Property, business or operations of the
Borrower or any of its Subsidiaries.
ARTICLE SEVEN
CONDITIONS PRECEDENT
The obligation of each Bank to make any Loan hereunder shall be subject to the
following conditions precedent:
Section 7.1. Initial Borrowing. Prior to the making of the initial Borrowing
hereunder the Agent shall have received for each Bank:
(a) The favorable written opinion of Eric A. Blanchard, Esq., in
substantially the form of Exhibit B hereto;
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(b) Certified copies of resolutions of the Board of Directors of the
Borrower authorizing the Borrowings and indicating the authorized signers of
this Agreement and the Notes and all other documents relating thereto;
(c) A certificate of the Borrower's Secretary or Assistant Secretary
certifying the incumbency and the specimen signatures of such authorized
signers mentioned in (b) above;
(d) A list of the Borrower's Authorized Representatives; and
(e) Such Bank's Note executed by the Borrower.
Section 7.2. All Loans. As of the time of the making of each Borrowing
hereunder (including the initial Borrowing):
(a) The Agent shall have received the notice required by Section 1.4(a)
or deemed given by Section 1.4(c) hereof, as applicable;
(b) Each of the representations and warranties of the Borrower set forth
in Article Six hereof (except Section 6.7 need not be true in the case of a
Refunding Borrowing) shall be true and correct as of said time, except to
the extent that any such representation or warranty relates solely to an
earlier date;
(c) The Borrower shall be in full compliance with all of the terms and
conditions hereof, and no Default or Event of Default shall have occurred
and be continuing or would occur as a result of making such Borrowing;
(d) After giving effect to the Borrowing the aggregate principal amount
of all Loans outstanding hereunder shall not exceed the Commitments then in
effect; and
(e) Such Borrowing shall not violate any order, judgment or decree of
any court or other authority or any provision of law or regulation
applicable to any Bank (including, without limitation, Regulation U of the
Board of Governors of the Federal Reserve System) as then in effect.
Each request for a Borrowing hereunder (including a deemed request under
Section 1.4(c)) shall be deemed to be a representation and warranty by the
Borrower on the date of such Borrowing as to the facts specified in paragraphs
(b)-(d) of this Section 7.2.
ARTICLE EIGHT
COVENANTS
The Borrower agrees that, so long as any Note is outstanding hereunder or any
credit is available to or in use by the Borrower hereunder except to the extent
compliance in any case or cases is waived in writing by the Required Banks:
Section 8.1. Corporate Existence. The Borrower shall, and shall cause each
Subsidiary to, preserve and maintain its corporate existence, subject to the
provisions of Section 8.8 hereof.
Section 8.2. Maintenance. The Borrower will maintain, preserve and keep its
plants, properties and equipment necessary to the proper conduct of its business
in reasonably good repair, working order and condition and will from time to
time make all reasonably necessary repairs, renewals, replacements, additions
and betterments thereto so that at all times such plants, properties and
equipment shall be
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reasonably preserved and maintained, and will cause each Subsidiary so to do in
respect of Property owned or used by it; provided, however, that nothing in this
Section 8.2 shall prevent the Borrower or a Subsidiary from discontinuing the
operation or maintenance of any such properties if such discontinuance is, in
the judgment of the Borrower, desirable in the conduct of its business or the
business of the Subsidiary and not disadvantageous in any material respect to
the Banks or the holders of the Notes.
Section 8.3. Taxes. The Borrower will duly pay and discharge, and will cause
each Subsidiary to pay and discharge, all taxes, rates, assessments, fees and
governmental charges upon or against the Borrower or such Subsidiary or against
their respective Properties, in each case before the same becomes delinquent and
before penalties accrue thereon, unless and to the extent that the same is being
contested in good faith and by appropriate proceedings and adequate reserves
under GAAP are provided therefor.
Section 8.4. Insurance. The Borrower will insure (subject to self-insured
retentions), and keep insured, and will cause each Subsidiary to insure, and
keep insured, with good and responsible insurance companies, all insurable
Property owned by it which is of a character usually insured by companies
similarly situated and operating like Property; and to the extent usually
insured (subject to self-insured retentions) by companies similarly situated and
conducting similar businesses, the Borrower will also insure, and cause each
Subsidiary to insure, employers' and public and product liability risks with
good and responsible insurance companies. The Borrower will upon request of the
Agent furnish a summary setting forth the nature and extent of the insurance
maintained pursuant to this Section 8.4.
Section 8.5. Financial Reports and Other Information. The Borrower will, and
will cause each Subsidiary to, maintain a standard system of accounting in
accordance with GAAP and will furnish to the Banks and their respective duly
authorized representatives such information respecting the business and
financial condition of the Borrower and the Subsidiaries as may be reasonably
requested; and without any request will furnish to the Agent in sufficient
counterparts for the Banks (and the Agent shall promptly distribute same to the
Banks):
(a) within 90 days after the end of each of the first three quarterly
fiscal periods of the Borrower, a copy of the Borrower's Form 10-Q Report
filed with the SEC;
(b) within 120 days after the end of each fiscal year of the Borrower,
a copy of the Borrower's Form 10-K Report filed with the SEC, including a
copy of the annual report of the Borrower and the Subsidiaries for such year
with accompanying financial statements, prepared by the Borrower and
certified by Price Waterhouse, or any other independent public accountants
of recognized standing selected by the Borrower and satisfactory to the
Required Banks, in accordance GAAP;
(c) promptly after the sending or filing thereof, copies of all proxy
statements, financial statements and reports the Borrower sends to its
shareholders, and copies of all other regular, periodic and special reports
and all registration statements the Borrower files with the SEC or any
successor thereto, or with any national securities exchange;
(d) as promptly as possible, and in any event within one Business Day
after the Borrower has knowledge thereof, notice (including a description in
reasonable detail) of:
(i) the occurrence of any Default or Event of Default;
(ii) the occurrence of any Change in Control;
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(iii) any material change in the facts specified on Schedule 6.2
or any litigation described in Section 6.8 not theretofore disclosed in
a reporting delivered pursuant to clause (a) or (b) above;
(iv) any material adverse change in the business, operations,
Property or financial or other condition of the Borrower or any of its
Subsidiaries; and
(e) such other information (including non-financial information) as the
Agent or any Bank may from time to time reasonably request to evaluate the
creditworthiness of the Borrower or its ability to comply with the terms and
conditions of this Agreement.
Each of the financial statements furnished to the Banks pursuant to
subsections (a) and (b) of this Section 8.5 shall be accompanied by a written
certificate signed by the chief financial officer of the Borrower to the effect
that (i) to the best of the knowledge and belief of the signer thereof no
Default or Event of Default has occurred during the period covered by such
statements or, if any such Default or Event of Default has occurred during such
period, setting forth a description of such Default or Event of Default and
specifying the action, if any, taken by the Borrower to remedy the same, (ii)
the representations and warranties contained in Article 6 hereof are true and
correct as though made on the date of such certificate (or identifying any
inaccuracies), (iii) the Borrower is in compliance with all covenants contained
in Article 8 hereof (or identifying any non-compliance), and (iv) a compliance
certificate in the form of Exhibit C hereto showing the calculations necessary
to determine compliance with Sections 8.6 and 8.7 hereof. In the event the
Borrower is no longer required to file Form 10Q and 10K Reports with the SEC,
the Borrower will nevertheless furnish to the Banks at the time hereinabove set
forth all the financial and other information that would have comprised such
filings.
Section 8.6. Leverage Ratio. The Borrower will, at all times, maintain a
ratio of Consolidated Indebtedness to the sum of Consolidated Indebtedness plus
Consolidated Net Worth of not more than 0.50 to 1.00.
Section 8.7. Interest Coverage Ratio. The Borrower will, as of the last day
of each fiscal quarter of the Borrower, have a ratio for the period of four
consecutive fiscal quarters then ending of Consolidated Income Before Interest
and Taxes to Consolidated Interest Expense of not less than 3.00 to 1.00.
Section 8.8. Mergers, Consolidations, Leases, and Sales. The Borrower:
(a) will not be a party to any merger or consolidation unless the
Borrower is the surviving corporation;
(b) except as permitted in Subsection (c) hereof, will not permit any
Subsidiary to be a party to any merger or consolidation unless the
Subsidiary is the surviving corporation and remains a Subsidiary after the
merger or consolidation, except any Subsidiary may merge into the Borrower
or another Subsidiary and except that this Subsection (b) shall not prohibit
any merger where the Subsidiary is not the surviving corporation if, after
giving effect to such merger, the surviving corporation is a Wholly-Owned
Subsidiary; and
(c) will not, and will not permit any Subsidiary to, sell, assign,
lease or otherwise transfer to any Person other than the Borrower or one or
more Subsidiaries any Properties (including, without limitation, any capital
stock of any Subsidiary) other than in the ordinary course of its business
as conducted on the date hereof unless such sale, assignment, lease or
transfer is for a consideration not less than the fair market value thereof
and unless, after giving effect to such sale, assignment, lease or transfer,
the aggregate proceeds to the Borrower and the Subsidiaries of all such
sales, assignments, leases and transfers (other than in the ordinary course
of its business as conducted on the date hereof) shall not from the date
hereof at any time exceed 10% of the consolidated assets of
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the Borrower as shown on the balance sheet of the Borrower and Subsidiaries
most recently delivered as of the time such computation is made.
Section 8.9. ERISA. The Borrower will, and will cause each Subsidiary to,
promptly pay and discharge all obligations and liabilities arising under ERISA
of a character which if unpaid or unperformed might result in the imposition of
a Lien against any of its properties or assets and will promptly notify the
Agent of (i) the occurrence of any reportable event (as defined in ERISA) with
respect to a Plan, other than any such event of which the PBGC has waived notice
by regulation, (ii) receipt of any notice from PBGC of its intention to seek
termination of any Plan or appointment of a trustee therefor, (iii) its or any
Subsidiary's intention to terminate or withdraw from any Plan, and (iv) the
occurrence of any event with respect to any Plan which could result in the
incurrence by the Borrower or any Subsidiary of any material liability, fine or
penalty, or any material increase in the contingent liability of the Borrower or
any Subsidiary with respect to any post-retirement Welfare Plan benefit.
Section 8.10. Conduct of Business. The Borrower and its Subsidiaries will
not engage in any business if, as a result, the general nature of the business,
which would then be engaged in by the Borrower and its Subsidiaries taken as a
whole, would be substantially changed from the general nature of the business
engaged in by the Borrower and its Subsidiaries taken as a whole on the date of
this Agreement.
Section 8.11. Liens. The Borrower will not and will not permit any
Subsidiary to create, incur, permit to exist or to be incurred, any Lien of any
kind on any Property owned by the Borrower or any Subsidiary; provided, however,
that this Section 8.11 shall not apply to nor operate to prevent:
(a) Liens arising by operation of law in connection with worker's
compensation, unemployment insurance, medicare benefits, social security
obligations, taxes, assessments, statutory obligations or other similar
charges, good faith deposits in connection with tenders, contracts or leases
to which the Borrower or any Subsidiary is a party (other than contracts for
Indebtedness), or other deposits required to be made in the ordinary course
of business; provided that in each case the obligation secured is not
overdue or, if overdue, is being contested in good faith by appropriate
proceedings and reserves have been established therefor that are adequate
under GAAP;
(b) mechanics', workmen's, materialmen's, landlords', carriers' or
other similar Liens arising in the ordinary course of business with respect
to obligations which are not due or which are being contested in good faith
by appropriate proceedings;
(c) Liens arising out of judgments or awards against the Borrower or
any Subsidiary with respect to which the Borrower or such Subsidiary shall
be prosecuting an appeal or proceeding for review and with respect to which
it shall have obtained a stay of execution pending such appeal or proceeding
for review; provided that the aggregate amount of liabilities (including
interest and penalties, if any) of the Borrower and the Subsidiaries secured
by such Liens shall not exceed $5,000,000 at any one time outstanding;
(d) Liens for property taxes not yet subject to penalties for
nonpayment, or survey exceptions, encumbrances, mineral or royalty
reservations, easements or reservations of, or rights of others for, rights
of way, sewers, electric lines, pipe lines, telegraph and telephone lines
and other similar purposes, or zoning or other restrictions as to the use of
its properties, which exceptions, encumbrances, easements, reservations,
rights and restrictions do not in the aggregate materially detract from the
value of such properties or materially impair their use in the operation of
the business of the Borrower and its Subsidiaries; and
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(e) Other Liens on fixed assets securing Indebtedness incurred to
finance the acquisition of the fixed assets in question and being in an
aggregate principal amount not exceeding at any time 5% of the Borrower's
and Subsidiaries' consolidated assets.
Section 8.12. Use of Proceeds. The Borrower shall only use the proceeds of
the Loans to refinance short term Indebtedness of the Borrower and for other
general corporate purposes not involving the refinancing of Indebtedness. In no
event will the Borrower use the proceeds of any Loan to finance the acquisition
of equity securities in any Person if such securities are acquired in connection
with an effort to acquire a controlling equity interest in such Person and the
Board of Directors (or other persons exercising similar functions) of the issuer
of such securities disapproves of such acquisition and recommends to the holders
of such securities that they reject such acquisition of a controlling interest.
Section 8.13. Compliance with Laws. Without limiting any of the other
covenants of the Borrower in this Article Eight, the Borrower will, and will
cause each of its Subsidiaries to, conduct its business, and otherwise be, in
compliance with all applicable laws, regulations, ordinances and orders of any
governmental or judicial authorities, non-compliance with which would (a) impair
the validity or enforceability or the ability of the Borrower to perform its
obligations under this Agreement or the Notes or (b) result in any material
adverse change in the financial condition or Properties, business or operations
of the Borrower and the Subsidiaries taken as a whole.
ARTICLE NINE
EVENTS OF DEFAULT AND REMEDIES
Section 9.1. Events of Default. Any one or more of the following shall
constitute an Event of Default:
(a) (i) default in the payment when due of any principal on any Note or
any Loan evidenced thereby, whether at the stated maturity thereof or at any
other time required by this Agreement which is not remedied within one day
after notice thereof to the Borrower by the Agent or any Bank, or (ii)
default in the payment when due of interest on any Note or any Loan
evidenced thereby or of any other sum required to be paid pursuant to this
Agreement which is not remedied within five days after notice thereof to the
Borrower by the Agent or any Bank;
(b) default by the Borrower in the observance or performance of any
covenant set forth in Sections 8.6 through and including 8.8 hereof or
Section 8.12 hereof;
(c) default by the Borrower in the observance or performance of any
other provision hereof not mentioned in (a) or (b) above, which is not
remedied within 30 days after notice thereof to the Borrower by the Agent or
any Bank;
(d) any representation or warranty made (or deemed made) herein by the
Borrower, or in any statement or certificate furnished pursuant hereto by
the Borrower, or in connection with any Loan made hereunder, proves untrue
in any material respect as of the date of the issuance or making (or deemed
making) thereof;
(e) the Borrower or any Subsidiary shall fail within thirty (30) days
to pay, bond or otherwise discharge any judgment or order for the payment of
money in excess of $5,000,000, which is not stayed on appeal; provided,
however, that if the period during which the judgment creditor is stayed
from enforcing its judgment pending payment, bonding or appeal is longer
than 30 days and the Borrower or the affected Subsidiary desires to perfect
such an appeal, such 30 day period shall be extended to the date by which an
appeal must be taken if the Borrower or the affected Subsidiary
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demonstrates to the reasonable satisfaction of the Agent that the judgment
or order in question will be timely appealed and that the Borrower or
affected Subsidiary will and will have the ability to take whatever action
is necessary in order for such judgment to be stayed on appeal;
(f) the Borrower or any other member of its Controlled Group shall
fail to pay when due an amount or amounts aggregating in excess of
$1,000,000 which it shall have become liable to pay to the PBGC or to a
Plan under Title IV of ERISA; or notice of intent to terminate a Plan or
Plans having aggregate Unfunded Vested Liabilities in excess of $1,000,000
(collectively, a "Material Plan") shall be filed under Title IV of ERISA by
the Borrower or any other member of its Controlled Group, any plan
administrator or any combination of the foregoing; or the PBGC shall
institute proceedings under Title IV of ERISA to terminate or to cause a
trustee to be appointed to administer any Material Plan or a proceeding
shall be instituted by a fiduciary of any Material Plan against the
Borrower or any member of its Controlled Group to enforce Section 515 or
4219(c)(5) of ERISA and such proceeding shall not have been dismissed
within thirty (30) days thereafter; or a condition shall exist by reason of
which the PBGC would be entitled to obtain a decree adjudicating that any
Material Plan must be terminated;
(g) (A) default shall occur in the payment when due of any
Indebtedness issued, assumed or guaranteed by the Borrower or any
Subsidiary aggregating in excess of $1,000,000 or (B) default shall occur
under any indenture, agreement or other instrument under which any such
Indebtedness may be issued, assumed or guaranteed, and such default shall
continue for a period of time sufficient to permit the acceleration of the
maturity of any such Indebtedness aggregating in excess of $1,000,000
(whether or not such maturity is in fact accelerated);
(h) the Borrower or any of its Subsidiaries shall (i) have entered
involuntarily against it an order for relief under the United States
Bankruptcy Code, as amended, (ii) not pay, or admit in writing its
inability to pay, its debts generally as they become due, (iii) make an
assignment for the benefit of creditors, (iv) apply for, seek, consent to,
or acquiesce in, the appointment of a receiver, custodian, trustee,
examiner, liquidator or similar official for it or any substantial part of
its property, (v) institute any proceeding seeking to have entered against
it an order for relief under the United States Bankruptcy Code, as amended,
to adjudicate it insolvent, or seeking dissolution, winding up,
liquidation, reorganization, arrangement, adjustment or composition of it
or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors or fail to file an answer or other
pleading denying the material allegations of any such proceeding filed
against it, or (vi) fail to contest in good faith any appointment or
proceeding described in Section 9.1.(i) hereof; or
(i) a custodian, receiver, trustee, examiner, liquidator or similar
official shall be appointed for the Borrower or any of its Subsidiaries or
any substantial part of any of their Property, or a proceeding described in
Section 9.1(h)(iv) or (v) shall be instituted against the Borrower, and
such appointment continues undischarged or such proceeding continues
undismissed or unstayed for a period of sixty (60) days.
Section 9.2. Non-Bankruptcy Defaults. When any Event of Default other than
those described in Sections 9.1.(h) or (i) has occurred and is continuing, the
Agent shall, by notice to the Borrower, (a) if so directed by the Required
Banks, terminate the remaining Commitments of the Banks hereunder on the date
stated in such notice (which may be the date thereof); and (b) if so directed by
the Required Banks, declare the principal of and the accrued interest on all
outstanding Notes of the Borrower to be forthwith due and payable and thereupon
all of said Notes, including both principal and interest, shall be and become
immediately due and payable together with all other amounts payable under this
Agreement without further demand, presentment, protest or notice of any kind.
The Agent, after giving notice to the Borrower pursuant to Section 9.1 or this
Section 9.2, shall also promptly send a copy of such notice to the other Banks,
but the failure to do so shall not impair or annul the effect of such notice.
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Section 9.3. Bankruptcy Defaults. When any Event of Default described in
subsections (h) or (i) of Section 9.1. hereof has occurred and is continuing,
then all outstanding Notes shall immediately become due and payable together
with all other amounts payable under this Agreement without presentment, demand,
protest or notice of any kind, and the obligation of the Banks to extend further
credit pursuant to any of the terms hereof shall immediately terminate.
Section 9.4. Expenses. The Borrower agrees to pay to the Agent and each
Bank, or any other holder of any Note outstanding hereunder, all costs and
expenses incurred or paid by the Agent and such Banks or any such holders,
including reasonable attorneys' fees and court costs, in connection with any
Default or Event of Default by the Borrower hereunder or in connection with the
enforcement of any of the terms hereof or of the Notes.
ARTICLE TEN
CHANGE IN CIRCUMSTANCES
Section 10.1. Change of Law. Notwithstanding any other provisions of this
Agreement or any Note, if at any time after the date hereof any change in
applicable law or regulation or in the interpretation thereof makes it unlawful
for any Bank to make or continue to maintain Eurodollar Loans or to give effect
to its obligations as contemplated hereby, such Bank shall promptly give notice
thereof to the Borrower, with a copy to the Agent, and such Bank's obligations
to make or maintain Eurodollar Loans under this Agreement shall terminate until
it is no longer unlawful for such Bank to make or maintain Eurodollar Loans. The
Borrower shall, if but only if, the continued maintenance of the then
outstanding Eurodollar Loans is unlawful, prepay on demand the outstanding
principal amount of any such affected Eurodollar Loans, together with all
interest accrued thereon and all other amounts then due and payable to such Bank
under this Agreement; provided however, subject to all of the terms and
conditions of this Agreement, the Borrower may then elect to borrow the
principal amount of the affected Eurodollar Loan from such Bank by means of a
Domestic Rate Loan from such Bank that shall not be made ratably by the Banks
but only from such affected Bank.
Section 10.2. Unavailability of Deposits or Inability to Ascertain, or
Inadequacy of, LIBOR. If on or prior to the first day of any Interest Period for
any Borrowing of Eurodollar Loans:
(a) the Agent determines that deposits in United States Dollars (in
the applicable amounts) are not being offered to it in the eurodollar
interbank market for such Interest Period, or
(b) the Required Banks advise the Agent that LIBOR as determined by
the Agent will not adequately and fairly reflect the cost to such Banks of
funding their Eurodollar Loans for such Interest Period,
then the Agent shall forthwith give notice thereof to the Borrower and the
Banks, whereupon until the Agent notifies the Borrower that the circumstances
giving rise to such suspension no longer exist, the obligations of the Banks to
make Eurodollar Loans shall be suspended.
Section 10.3. Increased Cost and Reduced Return. (a) 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 interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Bank (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:
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(i) shall subject any Bank (or its Lending Office) to any tax, duty or
other charge with respect to its Eurodollar Loans, its Notes or its
obligation to make Eurodollar Loans, or shall change the basis of taxation
of payments to any Bank (or its Lending Office) of the principal of or
interest on its Eurodollar Loans or any other amounts due under this
Agreement in respect of its Eurodollar Loans or its obligation to make
Eurodollar Loans (except for changes in the rate of tax on the overall net
income of such Bank or its Lending Office imposed by the jurisdiction in
which such Bank's principal executive office or Lending Office is located);
or
(ii) shall impose, modify or deem applicable any reserve, special
deposit or similar requirement (including, without limitation, any such
requirement imposed by the Board of Governors of the Federal Reserve System,
but excluding with respect to any Eurodollar Loans 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 Bank (or
its Lending Office) or shall impose on any Bank (or its Lending Office) or
on the interbank market any other condition affecting its Eurodollar Loans,
its Notes or its obligation to make Eurodollar Loans;
and the result of any of the foregoing is to increase the cost to such Bank (or
its Lending Office) of making or maintaining any Eurodollar Loan, or to reduce
the amount of any sum received or receivable by such Bank (or its Lending
Office) under this Agreement or under its Notes with respect thereto, by an
amount deemed by such Bank to be material, then, within fifteen (15) days after
demand by such Bank (with a copy to the Agent), the Borrower shall be obligated
to pay to such Bank such additional amount or amounts as will compensate such
Bank for such increased cost or reduction provided, however, that such Bank
shall promptly notify the Borrower of an event which might cause it to seek
compensation, and the Borrower shall be obligated to pay only such
compensation which is incurred or arises subsequent to the date which is 30 days
prior to the date such notice is given.
(b) If after the date hereof, any Bank shall have determined that the
adoption of any applicable law, rule or regulation regarding capital adequacy,
or any change therein (including, without limitation, any revisions in the Final
Risk-Based Capital Guidelines of the Board of Governors of the Federal Reserve
System (12 CFR part 208, Appendix A; 12 CFR Part 225, Appendix A) or of the
Office of the Comptroller of the Currency (12 CFR Part 3, Appendix A), or in any
other applicable capital rules heretofore adopted and issued by any governmental
authority), 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 any Bank (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 Bank's capital, or on the capital of any corporation controlling such
Bank, as a consequence of it obligations hereunder to a level below that which
such Bank could have achieved but for such adoption, change or compliance
(taking into consideration such Bank's policies with respect to capital
adequacy) by an amount deemed by such Bank to be material, then from time to
time, within fifteen (15) days after demand by such Bank (with a copy to the
Agent), the Borrower shall pay to such Bank such additional amount or amounts
as will compensate such Bank for such reduction.
(c) Each Bank that determines to seek compensation under this Section 10.3
shall notify the Borrower and the Agent of the circumstances that entitle the
Bank to such compensation pursuant to this Section 10.3 and will designate a
different Lending Office if such designation will avoid the need for, or reduce
the amount of, such compensation and will not, in the judgment of such Bank, be
otherwise disadvantageous to such Bank. A certificate of any Bank claiming
compensation under this Section 10.3 and setting forth the computation of the
additional amount or amounts to be paid to it hereunder which computation shall
be prima facie correct. In determining such amount, such Bank may use any
reasonable averaging and attribution methods.
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Section 10.4. Lending Offices. Each Bank 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") for each type of
Loan available hereunder 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 Borrower and
the Agent; provided, however, that the Borrower shall not be liable for any
increased cost which a Bank would not have incurred but for its change in
Lending Offices unless the Borrower has consented to such change.
Section 10.5. Discretion of Bank as to Manner of Funding. Notwithstanding
any other provision of this Agreement, each Bank 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 hereunder shall be made as if each Bank had actually funded and
maintained each Eurodollar Loan through the purchase of deposits in the
eurodollar interbank market having a maturity corresponding to such Loan's
Interest Period and bearing an interest rate equal to LIBOR for such Interest
Period.
Section 10.6. Substitution of Bank. If (a) the obligation of any Bank to
make Euro-Dollar Loans has been suspended pursuant to Section 10.1, (b) any Bank
has demanded compensation or given notice of its intention to demand
compensation under Section 10.3 or (c) the Borrower is required to pay any
additional amount to any Bank pursuant to Section 12.1, and in any such case
the Required Banks are not in the same situation, the Borrower shall have the
right, with the assistance of the Agent if desired, to seek a mutually
satisfactory substitute bank or banks (which may be one or more of the Banks) to
replace such Bank under this Agreement. The Bank to be so replaced shall
cooperate with the Borrower and substitute bank to accomplish such substitution
on the terms of Section 12.12 hereof, other than the minimum assignment amount
(which shall not apply), provided that such Bank's entire Commitment is
replaced.
ARTICLE ELEVEN
THE AGENT
Section 11.1. Appointment and Authorization. Each Bank hereby irrevocably
appoints Bank of Montreal, Chicago Branch its Agent under this Agreement and
hereby authorizes the Agent to take such action as Agent on its behalf and to
exercise such powers under this Agreement as are delegated to the Agent by the
terms hereof, together with such powers as are reasonably incidental thereto.
Section 11.2. Agent and Affiliates. The Agent shall have the same rights and
powers under this Agreement as any other Bank and may exercise or refrain from
exercising the same as though it were not the Agent, and the Agent and its
affiliates may accept deposits from, lend money to, and generally engage in any
kind of business with the Borrower or any Subsidiary or affiliate of the
Borrower as if it were not the Agent hereunder. The term Bank as used herein,
unless the context otherwise clearly requires, includes the Agent in its
individual capacity as a Bank. References in Section l hereof to the Agent's
Loans, or to the amount owing to the Agent for which an interest rate is being
determined, refer to the Agent in its individual capacity as a Bank.
Section 11.3. Action by the Agent. The obligations of the Agent under this
Agreement are only those expressly set forth herein. In no event shall the Agent
be required to take any action in violation of applicable law or of any
provision of this Agreement, and the Agent shall in all cases be fully justified
in failing or refusing to act hereunder unless the Agent shall be indemnified to
its reasonable satisfaction by the Banks against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any such action. In all cases in which this Agreement does not require the Agent
to take certain actions, the Agent shall be fully justified in using its
discretion in failing to take or in taking any action hereunder. Without
limiting the generality of the foregoing, the Agent shall not be required to
take any action with respect to any Event of Default, except as expressly
provided in Section 9.2. The Agent
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shall not be deemed to have knowledge of any Default or Event of Default until
it receives written notice thereof from the Borrower or a Bank specifically
identified as a "notice of default". The Agent shall be acting as an
independent contractor hereunder and nothing herein shall be deemed to impose on
the Agent any fiduciary obligations to the Banks or the Borrower.
Section 11.4. Consultation with Experts. The Agent may consult with legal
counsel, independent public accountants and other experts selected by it and
shall not be liable to the Banks for any action taken or omitted to be taken by
it in good faith in accordance with the advice of such counsel, accountants or
experts.
Section 11.5. Liability of Agent. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable for any action taken or
not taken by it in connection herewith (i) with the consent or at the request of
the Required Banks or (ii) in the absence of its own gross negligence or willful
misconduct. Neither the Agent nor any of its directors, officers, agents or
employees shall be responsible for or have any duty to ascertain, inquire into
or verify (i) any statement, warranty or representation made in connection with
this Agreement or any Borrowing hereunder; (ii) the performance or observance of
any of the covenants or agreements of the Borrower; (iii) the satisfaction of
any condition specified in Article Seven, except receipt of items required to be
delivered to the Agent; or (iv) the validity, effectiveness or genuineness of
this Agreement, the Notes or any other instrument or writing furnished in
connection herewith. The Agent shall not incur any liability by acting in
reliance upon any notice, consent, certificate, request or statement (whether
written or oral) or other document believed by it to be genuine or to be sent by
the proper party or parties and, in the case of legal matters, in relying on the
advice of counsel (including counsel for the Borrower). The Agent may treat the
Banks named herein as the holders of the Notes and of the indebtedness
contemplated herein unless and until the Agent receives notice of the assignment
of the Note and the indebtedness held by a Bank hereunder pursuant to an
assignment contemplated by Section 12.11 or 12.12 hereof.
Section 11.6. Indemnification. Each Bank shall, ratably in accordance with
its Commitment (or, if the Commitments have been terminated in whole, ratably in
accordance with its Commitment as of the date of such termination in whole),
indemnify the Agent, its directors, officers, agents, and employees (to the
extent not reimbursed by the Borrower) against any cost, expense (including
counsels' fees and disbursements), claim, demand, action, loss, obligation,
damages, penalties, judgments, suits or liability (except such as result from
the gross negligence or willful misconduct of the party claiming
indemnification) that any of them may suffer or incur in connection with this
Agreement or any action taken or omitted by any of them hereunder or in
connection herewith.
Section 11.7. Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank, 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 Bank also
acknowledges that it will, independently and without reliance upon the Agent or
any other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking any action under this Agreement. Except for notices, reports and
other documents and information expressly required to be furnished to the Banks
by the Agent hereunder the Agent shall not have any duty or responsibility to
provide any Bank with any credit or other information concerning the affairs,
financial condition or business of the Borrower or any of its Subsidiaries (or
any of their affiliates) that may come into the possession of the Agent or any
of its affiliates.
Section 11.8. Resignation of Agent and Successor Agent. Subject to the
appointment and acceptance of a successor Agent as provided below, the Agent may
resign at any time by giving written notice thereof to the Banks and the
Borrower, and the Required Banks may remove the Agent, with the consent of the
Borrower, at any time with or without cause. Upon any such resignation or
removal of the Agent, the Required Banks shall have the right to appoint, with
the consent of the Borrower, a successor Agent. If no
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successor Agent shall have been so appointed by the Required Banks, and shall
have accepted such appointment, within thirty (30) days after the retiring
Agent's giving of notice of resignation or receiving notice of its removal, then
the retiring Agent may, on behalf of the Banks, appoint a successor Agent, which
shall be a commercial bank organized under the laws of the United States of
America or of any State thereof and having a combined capital and surplus of at
least $200,000,000. Upon the acceptance by a successor Agent of its appointment
as Agent hereunder, such successor Agent shall thereupon succeed to and become
vested with all the rights and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations hereunder. After any
retiring Agent's resignation or removal hereunder as Agent, the provisions of
this Article Eleven shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Agent.
Section 11.9. Payments. Unless the Agent shall have been notified by a Bank
prior to the date on which such Bank is scheduled to make payment to the Agent
of the proceeds of a Loan (which notice shall be effective upon receipt) that
such Bank does not intend to make such payment, the Agent may assume that such
Bank has made such payment when due and the Agent may in reliance upon such
assumption (but shall not be required to) make available to the Borrower the
proceeds of the Loan to be made by such Bank and, if any Bank has not in fact
made such payment to the Agent, such Bank shall, on demand, pay to the Agent the
amount made available to the Borrower attributable to such Bank together with
interest thereon in respect of each day during the period commencing on the date
such amount was made available to the Borrower and ending on (but excluding) the
date such Bank pays such amount to the Agent at a rate per annum equal to the
Federal Funds Rate. If such amount is not received from such Bank by the Agent
immediately upon demand, the Borrower will, on demand, repay to the Agent the
proceeds of the Loan attributable to such Bank with interest thereon at a rate
per annum equal to the interest rate applicable to the relevant Loan, but
without such payment being considered a payment or prepayment of a Loan, so that
the Borrower will have no liability under Section 2.7 hereof with respect to
such payment. "Federal Funds Rate" shall mean the "Federal Funds (Effective)"
rate described in clause (ii) of Section 1.2(a) hereof.
ARTICLE TWELVE
MISCELLANEOUS
Section 12.1. Withholding Taxes.
(a) Payments Free of Withholding. Except as otherwise required by law and
subject to Section 12.1(b) hereof, each payment by the Borrower under this
Agreement or the Notes 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 on a Bank by or within the jurisdiction in which the Borrower
is domiciled, any jurisdiction from which the Borrower makes any payment, or any
political subdivision or taxing authority thereof or therein. If any such
withholding is so required, the Borrower shall make the withholding, pay the
amount withheld to the appropriate governmental authority before penalties
attached 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 Bank and the Agent free and clear of such taxes (including such taxes on
such additional amount) is equal to the amount which that Bank or the Agent (as
the case may be) would have received had such withholding not been made. If the
Agent or any Bank pays any amount in respect of any such taxes, penalties or
interest the Borrower shall reimburse the Agent or that Bank for that payment on
demand in the currency in which such payment was made. If the Borrower pays any
such taxes, penalties or interest, it shall deliver official tax receipts
evidencing that payment or certified copies thereof to the Bank or Agent on
whose account such withholding was made (with a copy to the Agent if not the
recipient of the original) on or before the thirtieth day after payment. If any
Bank or the Agent determines it has received or been granted a credit against or
relief or remission for, or repayment of, any taxes paid or payable by it
because of any taxes, penalties or interest paid by the Borrower and evidenced
by such a tax receipt, such Bank or Agent shall, to the extent it can do so
without prejudice to the retention
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of the amount of such credit, relief, remission or repayment, pay to the
Borrower such amount as such Bank or Agent determines is attributable to such
deduction or withholding and which will leave such Bank or Agent (after such
payment) in no better or worse position than it would have been in if the
Borrower had not been required to make such deduction or withholding. Nothing in
this Agreement shall interfere with the right of each Bank and the Agent to
arrange its tax affairs in whatever manner it thinks fit nor oblige any Bank or
the Agent to disclose any information relating to its tax affairs or any
computations in connection with such taxes.
(b) U.S. Withholding Tax Exemptions. Each Bank that is not a United States
person (as such term is defined in Section 7701(a)(30) of the Code) shall submit
to the Borrower and the Agent on or before the earlier of the date the initial
Borrowing is made hereunder and thirty (30) days after the date hereof, two duly
completed and signed copies of either Form 1001 (relating to such Bank and
entitling it to a complete exemption from withholding under the Code on all
amounts to be received by such Bank, including fees, pursuant to this Agreement
and the Loans) or Form 4224 (relating to all amounts to be received by such
Bank, including fees, pursuant to this Agreement and the Loans) of the United
States Internal Revenue Service. Thereafter and from time to time, each Bank
shall submit to the Borrower and the 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 of such Bank by the Borrower, directly or
through the Agent, 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 Bank, including fees, pursuant to
this Agreement or the Loans. Upon the request of the Borrower, each Bank that is
a United States person (as such term is defined in Section 7701(a)(30) of the
Code) shall submit to the Borrower a certificate to the effect that it is such a
United States person.
(c) Inability of Bank to Submit Forms. If any Bank 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
Borrower or Agent any form or certificate that such Bank is obligated to submit
pursuant to subsection (b) of this Section 12.1 or that such Bank 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 Bank shall
promptly notify the Borrower and Agent of such fact and, without affecting the
Borrower's obligations hereunder, the Bank 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 12.2. No Waiver of Rights. No delay or failure on the part of any
Bank or on the part of the holder or holders of any Note in the exercise of any
power or right shall operate as a waiver thereof, nor as an acquiescence in any
default, nor shall any single or partial exercise thereof preclude any other or
further exercise of any other power or right, and the rights and remedies
hereunder of the Banks and of the holder or holders of any Notes are cumulative
to, and not exclusive of, any rights or remedies which any of them would
otherwise have.
Section 12.3. Non-Business Day. If any payment of principal or interest on
any Loan or of any fee hereunder shall fall due on a day which is not a Business
Day, interest at the rate such Loan bears for the period prior to maturity or at
the rate such fee accrues shall continue to accrue from the stated due date
thereof to and including the next succeeding Business Day, on which the same
shall be payable.
Section 12.4. Documentary Taxes. The Borrower agrees that it will pay any
documentary, stamp or similar taxes payable in respect of this Agreement or any
Note, 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.
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Section 12.5. Survival of Representations. All representations and
warranties made herein or in certificates given pursuant hereto shall survive
the execution and delivery of this Agreement and of the Notes, 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 12.6. Survival of Indemnities. All indemnities and all other
provisions relative to reimbursement to the Banks of amounts sufficient to
protect the yield of the Banks with respect to the Loans, including, but not
limited to, Section 2.6 and Section 10.3 hereof, shall survive the termination
of this Agreement and the payment of the Loans and the Notes.
Section 12.7. Sharing of Set-Off. Each Bank agrees with each other Bank that
if such Bank receives and retains any payment of principal or interest, whether
by set-off or application of deposit balances or otherwise ("Set-off"), on any
of its Loans outstanding under this Agreement in excess of its ratable share of
such payments on all Loans, then such Bank shall purchase for cash at face
value, but without recourse, ratably from each of the other Banks such amount of
the Loans held by each such other Bank (or interest therein) as shall be
necessary to cause such Bank to share such excess payment ratably with all the
other Banks; provided, however, that if any such purchase is made by any Bank,
and if such excess payment or part thereof is thereafter recovered from such
purchasing Bank, the related purchases from the other Banks shall be rescinded
ratably and the purchase price restored as to the portion of such excess payment
so recovered, together with any interest assessed against the purchasing Bank
thereon. Each Bank's ratable share of any such Set-off shall be determined by
the proportion that the aggregate amount of Loans then due and payable to such
Bank bears to the total aggregate amount of the Loans then due and payable to
all the Banks.
Section 12.8. Notices. Except as otherwise specified herein, all notices
hereunder shall be in writing (including cable, telecopy or telex) and shall be
given to the relevant party at its address, telecopier number or telex number
set forth below, in the case of the Borrower, or on the appropriate signature
page hereof, in the case of the Banks and the Agent, or such other address,
telecopier number or telex number as such party may hereafter specify by notice
to the Agent and the Borrower, given by United States certified or registered
mail, by telecopy or by other telecommunication device capable of creating a
written record of such notice and its receipt. Notices hereunder to the Borrower
shall be addressed to:
Dean Foods Company
3600 North River Road
Franklin Park, Illinois 60131
Attention: Dale Hecox
Telephone: (708) 678-1680
Telecopy: (708) 671-8744
Each such notice, request or other communication shall be effective (i) if given
by telecopier, when such telecopy is transmitted to the telecopier number
specified in this Section and a confirmation of such telecopy has been received
by the sender, (ii) if given by telex, when such telex is transmitted to the
telex number specified in this Section and the answerback is received by sender,
(iii) if given by mail, five (5) days after such communication is deposited in
the mail, certified or registered with return receipt requested, addressed as
aforesaid or (iv) if given by any other means, when delivered at the addresses
specified in this Section; provided that any notice given pursuant to Article
One or Two hereof shall be effective only upon receipt.
Section 12.9. Counterparts. This Agreement may be executed in any number of
counterpart signature pages, 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.
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Section 12.10. Successors and Assigns. This Agreement shall be binding upon
the Borrower and its successors and assigns, and shall inure to the benefit of
each of the Banks and of the Agent and the benefit of their respective
successors and assigns, including any subsequent holder of any Note. The
Borrower may not assign any of its rights or obligations hereunder without the
written consent of all of the Banks.
Section 12.11. Participants and Note Assignees. Each Bank 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, and/or
Commitment held, by such Bank at any time and from time to time, and to assign
its rights under such Loans or the Note evidencing such Loans to one or more
other Persons; provided that no such participation or assignment shall relieve
any Bank of any of its obligations under this Agreement, and provided further
that no such assignee or participant shall have any rights under this Agreement
except as provided in this Section 12.11, and the Agent shall have no obligation
or responsibility to such participant or assignee, except that nothing herein
provided is intended to affect the rights of an assignee of a Note to enforce
the Note assigned. Any party to which such a participation or assignment has
been granted shall have the benefits of Section 2.6 and Section 10.3 hereof but
shall not be entitled to receive any greater payment under either such Section
than the Bank granting such participation or assignment would have been entitled
to receive with respect to the rights transferred. No assignee shall be entitled
to any of the benefits of subparts (a) and (c) of Section 12.1 hereof unless it
complies with the terms of subpart (b) of Section 12.1.
Section 12.12. Assignment of Commitments by Banks. Bank of Montreal shall
have the right at any time, with the prior written consent of Borrower (which
consent shall not be unreasonably withheld or delayed), to sell, assign,
transfer or negotiate all or any part of its Commitment to one or more
commercial banks or other financial institutions; provided that such assignment
is in an amount of at least $10,000,000. Upon any such assignment, and its
notification to the Agent, the assignee shall become a Bank hereunder, all Loans
and the Commitment it thereby holds shall be governed by all the terms and
conditions hereof, and Bank of Montreal shall have its Commitment, and its
obligations and rights in connection therewith, reduced by the amount of such
assignment and new Notes shall be issued to the assignor and assignee in the
amounts of their respective Commitments after giving effect to the assignment.
If any assignee is not a United States person, the Borrower may withhold its
consent to any assignment unless such assignee complies with Section 12.1(b)
hereof.
Section 12.13. Amendments. Any provision of this Agreement or the Notes may
be amended or waived if, but only if, such amendment or waiver is in writing and
is signed by (a) the Borrower, (b) the Required Banks, and (c) if the rights or
duties of the Agent are affected thereby, the Agent; provided that:
(i) no amendment or waiver pursuant to this Section shall (A) increase
any Commitment of any Bank without the consent of such Bank or (B) reduce
the amount of or postpone the date for payment of any principal of or
interest on any Loan or of any fee payable hereunder without the consent of
the Bank to which such payment is owing or which has committed to make such
Loan hereunder; and
(ii) no amendment or waiver pursuant to this Section shall, unless
signed by each Bank, change the provisions of this Section, the definition
of Required Banks or Termination Date, any condition precedent set forth in
Article Seven hereof or the provisions of Section 9.1.(h), 9.1.(i) or 9.3,
or affect the number of Banks required to take any action under this
Agreement.
Section 12.14. Legal Fees and Indemnification. The Borrower agrees to pay
the reasonable fees and disbursements of Chapman and Cutler, counsel to the
Agent, in connection with the preparation and execution of this Agreement, and
any amendment, waiver or consent related hereto, whether or not the transactions
contemplated herein are consummated. The Borrower further agrees to indemnify
each Bank and the Agent, its directors, officers and employees against all
losses, claims, damages, penalties,
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judgments, liabilities and expenses (including, without limitations, all
expenses of litigation or preparation therefor whether or not any Bank or the
Agent is a party thereto) which any of them may pay or incur arising out of or
relating to this Agreement, any Note, the transactions contemplated hereby or
the direct or indirect application or proposed application of the proceeds of
any Loan hereunder, other than those which arise from the gross negligence or
willful misconduct of the party claiming indemnification. The obligations of the
Borrower under this Section shall survive the termination of this Agreement.
Section 12.15. Governing Law; Submission to Jurisdiction. This Agreement and
the Notes, and the rights and duties of the parties hereto, shall be construed
and determined in accordance with the internal laws of the State of Illinois,
without regard to conflict of laws doctrine. The Borrower hereby submits to the
nonexclusive jurisdiction of the United States District Court for the Northern
District of Illinois and of any Illinois state court sitting in the City of
Chicago for the purposes of all legal proceedings arising out of or relating to
this Agreement or the transactions contemplated hereby. The Borrower irrevocably
waives, to the fullest extent permitted by applicable law, any objection it may
now or hereafter have to the laying of the venue of any such proceeding brought
in such a court and any claim that any such proceeding brought in such a court
has been brought in an inconvenient forum.
Section 12.16. Headings. Article and Section headings used in this Agreement
are for reference only and shall not affect the construction of this Agreement.
Section 12.17. One Bank. If and so long as Bank of Montreal is the only Bank
hereunder, Bank of Montreal shall have all rights, powers and privileges
afforded the Agent, the Banks or the Required Banks hereunder.
Section 12.18. Entire Agreement. This Agreement constitutes the entire
understanding of the parties hereto with respect to the subject matter hereof
and any prior or contemporaneous agreements, whether written or oral, with
respect thereto are superseded hereby.
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Upon your acceptance hereof in the manner hereinafter set forth, this
Agreement shall be a contract between us for the purposes hereinabove set forth.
Dated as of this 24th day of August, 1994.
DEAN FOODS COMPANY
By /s/ T. J. Bondy
---------------------------------
Its Vice President
Accepted and Agreed to as of the day and year last above written.
Address for notices and Amount of Commitment:
115 S. LaSalle Street BANK OF MONTREAL, CHICAGO BRANCH,
Chicago, Illinois 60603 in its individual capacity as a Bank
Attention: J. Donald Higgins and as Agent
Telecopy: (312) 750-4314
Telephone: (312) 750-6043
Commitment: $150,000,000 By __________________________________
Its ______________________________
Lending Offices:
Domestic Rate Loans: 115 South LaSalle Street
Chicago, Illinois 60603
Eurodollar Loans: 115 South LaSalle Street
Chicago, Illinois 60603
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EXHIBIT A
NOTE
U.S. $________________ August 24, 1994
FOR VALUE RECEIVED, the undersigned, Dean Foods Company, a Delaware
corporation (the "Borrower"), promises to pay to the order of __________________
________ (the "Bank") not later than the Termination Date of the hereinafter
defined Credit Agreement, at the principal office of Bank of Montreal, Chicago
Branch, in Chicago, Illinois, in immediately available funds, the principal sum
of ______________________ Dollars ($__________) or, if less, the aggregate
unpaid principal amount of all Loans made by the Bank to the Borrower under its
Commitment pursuant to the Credit Agreement, with each Eurodollar Loan to
mature and become payable on the last day of the Interest Period applicable
thereto, but in no event later than the Termination Date and each Domestic Rate
Loan to mature and become payable 90 days after the date made but not later
than the Termination Date, together with interest on the principal amount of
each Loan from time to time outstanding hereunder at the rates, and payable in
the manner and on the dates, specified in the Credit Agreement.
The Bank shall record on its books and records or on a schedule attached to
this Note, which is a part hereof, each Loan made by it pursuant to its
Commitment, together with all payments of principal and interest and the
principal balances from time to time outstanding hereon, whether the Loan is a
Domestic Rate Loan or a Eurodollar Loan and the interest rate and Interest
Period applicable thereto, 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 and records or on a schedule to this Note,
shall be prima facie evidence of the same; provided, however, that the failure
of the Bank to record any of the foregoing or any error in any such record shall
not limit or otherwise affect the obligation of the Borrower to repay all Loans
made to it pursuant to the Credit Agreement together with accrued interest
thereon.
This Note is one of the Notes referred to in the Credit Agreement dated as
of August 24, 1994, among the Borrower, Bank of Montreal, Chicago Branch, as
Agent, and others (the "Credit Agreement"), and this Note and the holder hereof
are entitled to all the benefits provided for thereby or referred to therein, to
which Credit Agreement reference is hereby made for a statement thereof. All
defined terms used in this Note. except terms otherwise defined herein, shall
have the same meaning herein as in the Credit Agreement. This Note shall be
governed by and construed in accordance with the internal laws of the State of
Illinois.
Prepayments may and are required to be made hereon and this Note may be
declared due prior to the expressed maturity hereof. all in the events, on the
terms and in the manner provided in the Credit Agreement.
The Borrower hereby waives demand, presentment, protest or notice of any
kind hereunder.
DEAN FOODS COMPANY
By ___________________________________
Its________________________________
<PAGE>
EXHIBIT 21
[LETTERHEAD OF DEAN FOODS]
CURTICE-BURNS REJECTS DEAN FOODS ACQUISITION OFFER
FRANKLIN PARK, IL - September 28, 1994 - Dean Foods Company announced today that
the Company has been informed that the Board of Directors of Curtice-Burns
Foods, Inc., Rochester, New York, has rejected Dean Foods' proposal to acquire
the outstanding common stock of Curtice-Burns for a maximum cash price of $20.00
per share, in favor of a $19.00 per share proposal from Pro-Fac Cooperative.
Dean's offer had been subject to the satisfactory resolution of specified
contingencies, including resolution as to amounts due upon termination of the
agreement between Curtice-Burns and Pro-Fac Cooperative covering the purchase of
various assets owned by Pro-Fac but used by Curtice-Burns in the conduct of its
business. As a result of the Curtice-Burns' Board action, Dean Foods has
withdrawn its proposal to acquire Curtice-Burns, which had included a letter of
intent whereby Hormel Foods Corporation of Austin, Minnesota would have acquired
the Nalley's Fine Foods Division of Curtice-Burns.
In commenting on today's announcement, Howard M. Dean, Chairman and Chief
Executive Officer of Dean Foods Company, said, "We are disappointed by this
development because the core businesses of Curtice-Burns would have made a good
strategic fit with Dean Foods. The Company will continue to evaluate acquisition
opportunities that build our businesses and enhance shareholder value."
Dean Foods is a diversified food processor and distributor, producing a full
line of dairy and other food products, including fluid milk, cottage cheese, ice
cream and frozen novelties, frozen yogurt and specialty foods such as canned and
frozen vegetables, dips, pickles, relishes, powdered coffee creamers, peanut
butter, syrups, and aseptic products. Products are sold to supermarkets,
specialty food stores, foodservice facilities, other food processors and
internationally. The Company recently reported first quarter earnings of $17.0
million, or $.43 per share, on sales of $614 million. In its fiscal year ended
May, 1994, the Company reported earnings of $71.9 million or $1.81 per share, on
sales of $2.4 billion.
DEAN FOODS COMPANY 3600 North River Road Franklin Park, Illinois 60131
(312) 625-6200
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from
the Registrants' Quarterly Report on Form 10-Q for the quarterly period ended
August 28, 1994.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> QTR-1
<FISCAL-YEAR-END> MAY-28-1995
<PERIOD-START> MAY-30-1994
<PERIOD-END> AUG-28-1994
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0
0
<OTHER-SE> 495,129
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<SALES> 614,283
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<OTHER-EXPENSES> 108,657
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<INTEREST-EXPENSE> 4,743
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<NET-INCOME> 16,960
<EPS-PRIMARY> .43
<EPS-DILUTED> .43
</TABLE>
