FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended Commission File
May 31, 1994 Number 2-67985
FARMLAND INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Kansas 44-0209330
(State of Incorporation) (I.R.S. Employer Identification No.)
3315 North Oak Trafficway, Kansas City, Missouri
(Address of principal executive offices)
64116
(Zip Code)
816-459-6000
(Registrant's telephone number, including area code)
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 { }
FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
May 31 August 31
1994 1993
(Amounts in Thousands)
<S> <C> <C>
CURRENT ASSETS
Cash and Cash Equivalents . . . . . . . . . . . . . . . . . . . . . $ 7,000 $ 28,373
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . 438,537 320,980
Inventories (note 2) . . . . . . . . . . . . . . . . . . . . . . . 510,242 496,690
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . 11,990 4,610
Other current assets . . . . . . . . . . . . . . . . . . . . . . . 99,971 64,747
. . . . . . . . . . . . . . . . . . . . . . . . . . . . --------------- --------------
TOTAL CURRENT ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,067,740 $ 915,400
NET PROPERTY, PLANT AND EQUIPMENT . . . . . . . . . . . . . . . . . . . . $ 499,203 $ 504,378
. . . . . . . . . . . . . . . . . . . . . . . . . . . . --------------- --------------
OTHER ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 126,562 $ 116,891
. . . . . . . . . . . . . . . . . . . . . . . . . . . . --------------- --------------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,873,542 $ 1,719,981
. . . . . . . . . . . . . . . . . . . . . . . . . . . . =============== ===============
<FN>
See Accompanying notes to condensed consolidated financial statements.
</TABLE>
FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES AND EQUITIES
<TABLE>
<CAPTION>
May 31 August 31
1994 1993
---------- -----------
(Amounts in Thousands)
<S> <C> <C>
CURRENT LIABILITIES
Accounts and notes payable . . . . . . . . . . . . . . . . . . . . $ 408,664 $ 504,497
Current maturities of long-term debt . . . . . . . . . . . . . . . 198,383 31,947
Customers' advances on product purchases . . . . . . . . . . . . . 17,034 11,586
Other current liabilities . . . . . . . . . . . . . . . . . . . . . 175,735 106,851
. . . . . . . . . . . . . . . . . . . . . . . . . . . . -------------- --------------
TOTAL CURRENT LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . $ 799,816 $ 654,881
. . . . . . . . . . . . . . . . . . . . . . . . . . . . -------------- --------------
LONG-TERM DEBT (excluding current maturities) . . . . . . . . . . . . . . $ 459,116 $ 485,861
. . . . . . . . . . . . . . . . . . . . . . . . . . . . -------------- --------------
DEFERRED INCOME TAXES (note 1) . . . . . . . . . . . . . . . . . . . . . $ 3,402 $ 2,169
. . . . . . . . . . . . . . . . . . . . . . . . . . . . -------------- --------------
MINORITY OWNERS' EQUITY IN SUBSIDIARIES . . . . . . . . . . . . . . . . . $ 14,457 $ 15,363
. . . . . . . . . . . . . . . . . . . . . . . . . . . . --------------- --------------
INCOME BEFORE INCOME TAXES, PATRONAGE REFUNDS AND
APPROPRIATION FOR EARNED SURPLUS (note 1) . . . . . . . . . . . . . $ 43,687 $ -0-
. . . . . . . . . . . . . . . . . . . . . . . . . . . . --------------- --------------
CAPITAL SHARES AND EQUITIES
Common shares, $25 par value - Authorized 50,000,000 shares . . . . $ 373,451 $ 379,996
Other equities . . . . . . . . . . . . . . . . . . . . . . . . . . 179,613 181,711
. . . . . . . . . . . . . . . . . . . . . . . . . . . . --------------- --------------
TOTAL CAPITAL SHARES AND EQUITIES . . . . . . . . . . . . . . . . . . . . $ 553,064 $ 561,707
. . . . . . . . . . . . . . . . . . . . . . . . . . . . --------------- --------------
TOTAL LIABILITIES AND EQUITIES . . . . . . . . . . . . . . . . . . . . . $ 1,873,542 $ 1,719,981
. . . . . . . . . . . . . . . . . . . . . . . . . . . . =============== ================
</TABLE>
FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Nine Months Ended
May 31 May 31
1994 1993
(Amounts in Thousands)
<S> <C> <C>
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,981,747 $ 3,360,033
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,700,939 3,141,330
. . . . . . . . . . . . . . . . . . . . . . . . . . . . --------------- --------------
Gross income . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 280,808 $ 218,703
. . . . . . . . . . . . . . . . . . . . . . . . . . . . --------------- --------------
Selling, general & administrative expenses . . . . . . . . . . . . . . . $ 218,372 $ 179,704
. . . . . . . . . . . . . . . . . . . . . . . . . . . . --------------- --------------
Other income (deductions):
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . $ (38,310) $ (25,097)
Operations of joint ventures . . . . . . . . . . . . . . . . . . . 4,568 (10,147)
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,037 7,881
. . . . . . . . . . . . . . . . . . . . . . . . . . . . --------------- --------------
Total other income (deductions) . . . . . . . . . . . . . . . . . . . . . $ (23,705) $ (27,363)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . --------------- --------------
Income before income taxes, minority owners' interest
and patronage refunds (note 1) . . . . . . . . . . . . . . . . . . $ 38,731 $ 11,636
Minority owners' interest in net (income) loss of subsidiaries . . . . . $ 4,956 $ (636)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . --------------- --------------
Income before income taxes and patronage refunds (note 1) . . . . . . . . $ 43,687 $ 11,000
. . . . . . . . . . . . . . . . . . . . . . . . . . . . =============== ==============
<FN>
See Accompanying notes to condensed consolidated financial statements.
</TABLE>
FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended
May 31 May 31
1994 1993
(Amounts in Thousands)
<S> <C> <C>
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,980,844 $ 1,444,526
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,859,360 1,343,788
. . . . . . . . . . . . . . . . . . . . . . . . . . . . --------------- --------------
Gross income . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 121,484 $ 100,738
. . . . . . . . . . . . . . . . . . . . . . . . . . . . --------------- --------------
Selling, general & administrative expenses . . . . . . . . . . . . . . . $ 83,146 $ 57,177
. . . . . . . . . . . . . . . . . . . . . . . . . . . . --------------- --------------
Other income (deductions):
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . $ (11,199) $ (8,167)
Operations of joint ventures . . . . . . . . . . . . . . . . . . . 5,474 (3,564)
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,377 4,060
. . . . . . . . . . . . . . . . . . . . . . . . . . . . --------------- --------------
Total other income (deductions) . . . . . . . . . . . . . . . . . . . . . $ (2,348) $ (7,671)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . --------------- --------------
Income before income taxes, minority owners' interest
and patronage refunds (note 1) . . . . . . . . . . . . . . . . . . $ 35,990 $ 35,890
Minority owners' interest in net (income) loss of subsidiaries . . . . . $ 1,504 $ (636)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . --------------- --------------
Income before income taxes and patronage refunds (note 1) . . . . . . . . $ 37,494 $ 35,254
. . . . . . . . . . . . . . . . . . . . . . . . . . . . =============== ==============
<FN>
See Accompanying notes to condensed consolidated financial statements.
</TABLE>
FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended
May 31 May 31
1994 1993
-------------- --------------
(Amounts in Thousands)
<S> <C> <C>
Cash flows from operating activities:
Income before income taxes and patronage refunds . . . . . . . . . $ 43,687 $ 11,000
Adjustments to reconcile income before income taxes and
patronage refunds to net cash used in operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . 49,591 40,827
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . (8,081) (1,897)
Changes in assets and liabilities:
Accounts receivable . . . . . . . . . . . . . . . . . . . (54,617) (88,662)
Inventories . . . . . . . . . . . . . . . . . . . . . . . 23,380 (64,735)
Other assets . . . . . . . . . . . . . . . . . . . . . . (39,007) (27,327)
Accounts payable . . . . . . . . . . . . . . . . . . . . 54,916 55,303
Advances on product purchases . . . . . . . . . . . . . . 5,448 3,649
Accrued interest and other liabilities . . . . . . . . . 46,146 2,043
. . . . . . . . . . . . . . . . . . . . . . . . . . . . --------------- --------------
Net cash provided by (used in) operating activities . . . . . . . . . . . $ 121,463 $ (69,799)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . --------------- --------------
Cash flows from investing activities:
Advances to borrowers by finance companies . . . . . . . . . . . . $ -0- $ (490,677)
Collections from borrowers by finance companies . . . . . . . . . . -0- 464,321
Proceeds from disposal of investments and notes receivable . . . . 27,056 8,740
Acquisition of investments and notes receivable . . . . . . . . . . (14,935) (20,309)
Acquisition of businesses (note 4) . . . . . . . . . . . . . . . . (33,251) (10,500)
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . (47,782) (78,845)
Proceeds from sale of fixed assets . . . . . . . . . . . . . . . . 14,399 11,796
. . . . . . . . . . . . . . . . . . . . . . . . . . . . --------------- --------------
Net cash used in investing activities . . . . . . . . . . . . . . . . . . $ (54,513) $ (115,474)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . --------------- --------------
Cash flows from financing activities:
Net decrease of demand loan certificates . . . . . . . . . . . . . $ (1,484) $ (13,477)
Proceeds from bank loans and notes payable . . . . . . . . . . . . 1,183,819 696,225
Payments on bank loans and notes payable . . . . . . . . . . . . . (1,287,651) (572,194)
Proceeds from issuance of subordinated debt certificates . . . . . 43,868 59,562
Payments for redemption of subordinated debt certificates . . . . . (29,026) (13,916)
Increase of checks and drafts outstanding . . . . . . . . . . . . . -0- 25,439
Payments for redemption of equities . . . . . . . . . . . . . . . . (158) (13,489)
Payments of patronage refunds and dividends . . . . . . . . . . . . -0- (17,946)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,309 330
. . . . . . . . . . . . . . . . . . . . . . . . . . . . --------------- --------------
Net cash provided by (used in) financing activities . . . . . . . . . . . $ (88,323) $ 150,534
. . . . . . . . . . . . . . . . . . . . . . . . . . . . -------------- --------------
Net decrease in cash and cash equivalents . . . . . . . . . . . . . . . . $ (21,373) $ (34,739)
Cash and cash equivalents at beginning of period . . . . . . . . . . . . 28,373 34,739
. . . . . . . . . . . . . . . . . . . . . . . . . . . . --------------- --------------
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . $ 7,000 $ -0-
. . . . . . . . . . . . . . . . . . . . . . . . . . . . =============== ===============
<FN>
See accompanying notes to condensed consolidated financial statements
</TABLE>
FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(1) INTERIM FINANCIAL STATEMENTS
The information included in these condensed consolidated financial
statements reflects all adjustments (consisting only of normal recurring
accruals) which, in the opinion of management, are necessary for a fair
statement of the results for the interim periods presented. Certain
reclassifications have been made to the condensed consolidated statements of
operations of the prior year to conform with the current year presentation.
In accordance with the bylaws of Farmland Industries, Inc. ("Farmland") and
its cooperative subsidiaries, patronage refunds are apportioned and distributed
or patronage losses are apportioned at the end of each fiscal year. As this
apportionment is determined only at the end of each fiscal year, and since the
provision for income taxes, dividends, and the resultant amount of net income
(loss) transferred to surplus are dependent upon the determination of the amount
of the patronage refund or patronage loss, Farmland Industries, Inc. and
subsidiaries ("the Company") has historically made no provisions for income
taxes or patronage refunds in its interim financial statements. Therefore, the
amount of interim income before income taxes and patronage refunds has been
reflected as a separate item in the accompanying May 31, 1994 condensed
consolidated balance sheet.
(2) INVENTORIES
Major components of inventories at May 31, 1994, and August 31, 1993, are as
follows:
<TABLE>
<CAPTION>
May 31 August 31
1994 1993
(Amounts in Thousands)
<S> <C> <C>
Finished and in-process products . . . . . . . . . . . $ 285,521 $ 285,947
Materials . . . . . . . . . . . . . . . . . . . . . . 41,888 43,857
Supplies . . . . . . . . . . . . . . . . . . . . . . . 39,612 41,388
Beef . . . . . . . . . . . . . . . . . . . . . . . . 23,064 27,754
Grain . . . . . . . . . . . . . . . . . . . . . . . . 110,152 91,990
. . . . . . . . . . . . . . . . . . . . . . . . --------------- --------------
$ 500,237 $ 490,936
LIFO adjustment . . . . . . . . . . . . . . . . . . . 10,005 5,754
. . . . . . . . . . . . . . . . . . . . . . . . --------------- --------------
$ 510,242 $ 496,690
=============== ===============
</TABLE>
All inventories, other than supplies, grain and certain beef and petroleum
inventories, are valued at the lower of first-in, first-out (FIFO) cost or
market. Supplies are valued at cost. The Company follows a policy of hedging
its grain inventory and transactions. Grain inventories are valued at market
adjusted for the net unrealized gains or losses on open grain contracts. Crude
oil, refined petroleum products, beef and beef by-products are valued at the
lower of last-in, first-out (LIFO) cost or market. In applying the lower of cost
or market valuation method in the case of petroleum LIFO inventory, the general
practice is modified to conform to the integral view of interim financial
statements. Accordingly, a seasonal market value decline below cost of LIFO
inventories, at an interim date, which is reasonably expected to be restored by
year-end, is not recognized in interim results of operations since no loss is
expected to be incurred in the annual period. At May 31, 1994, the carrying
value of petroleum inventories stated under the LIFO method was $88,432,000.
This exceeded the market value of such inventory by $564,000. However, based on
historical prices of energy products and seasonal market price variations, the
market value decline below cost is expected to be a temporary seasonal price
fluctuation.
Had the lower of first-in, first-out (FIFO) cost or market been used to
value these petroleum products, inventories at May 31, 1994 would have been
lower by $10,005,000. The LIFO valuation method had the effect of increasing
income before income taxes and patronage for the nine months ended May 31, 1994
and 1993 by $4,251,000 and $5,901,000, respectively and had the effect of
decreasing income before income taxes and patronage refunds for the three months
ended May 31, 1994 and 1993 by $9,265,000 and $2,414,000, respectively.
The carrying value of beef inventories stated under the LIFO method was
$20,712,000 at May 31, 1994. The LIFO method of accounting for beef inventories
had no effect on the carrying value of inventories or on the income reported for
the three and nine months ended May 31, 1994 and 1993, because market value of
these inventories was lower than LIFO or FIFO cost.
(3) CONTINGENCIES
On July 28, 1983, Farmland sold the stock of Terra Resources, Inc.
("Terra"), a wholly-owned subsidiary engaged in oil and gas exploration and
production operations, and exited its oil and gas exploration and production
activities. The gain from the sale of Terra amounted to $237,200,000 for tax
reporting purposes. During 1983, and prior to the sale of the Terra stock,
Farmland received certain distributions from Terra totaling $24,800,000. For tax
purposes, Farmland claimed intercorporate dividends-received deductions for the
entire amount of such distributions.
On March 24, 1993, the Internal Revenue Service ("IRS") issued a statutory
notice to Farmland asserting deficiencies in federal income taxes (exclusive of
statutory interest thereon) in the aggregate amount of $70,775,000. The
asserted deficiencies relate primarily to the Company's tax treatment of the
sale of the Terra stock and the distributions received from Terra prior to the
sale. The IRS asserts that Farmland incorrectly treated the Terra sale gain as
income against which certain patronage-sourced operating losses could be offset,
and that, as a nonexempt cooperative, Farmland was not entitled to an
intercorporate dividends-received deduction in respect of the 1983 distribution
by Terra. It further asserts that Farmland incorrectly characterized gains for
tax purposes aggregating approximately $14,600,000, and a loss of approximately
$2,300,000, from the disposition of certain other assets. On June 11, 1993,
Farmland filed a petition in the United States Tax Court contesting the asserted
deficiencies in their entirety. March 6, 1995 is the date set for trial.
If the IRS ultimately prevails on all of the adjustments asserted in the
statutory notice, Farmland would have additional federal and state income tax
liabilities aggregating approximately $85,800,000 plus accumulating statutory
interest thereon through May 31, 1994, of approximately $145,000,000. In
addition, such adjustments would affect the computation of Farmland's taxable
income for its 1989 tax year and, as a result, could increase Farmland's federal
and state income taxes for that year by approximately $5,000,000 plus applicable
statutory interest thereon.
No provision has been made in the consolidated financial statements for
federal or state income taxes (or interest thereon) in respect of the IRS claims
described above. Farmland believes that it has meritorious positions with
respect to all of these claims and will continue to vigorously pursue their
favorable resolution through the pending litigation.
In the opinion of Bryan Cave, Farmland's special tax counsel, it is more
likely than not that the courts will ultimately conclude that (i) Farmland's
treatment of the Terra sale gain was substantially, if not entirely, correct;
and (ii) Farmland properly claimed a dividends-received deduction in respect of
the 1983 distributions which it received from Terra prior to the sale of the
Terra stock. Counsel has further advised, however, that none of the issues
involved in these disputes is free from doubt, and that there can be no
assurance that the courts will ultimately rule in favor of Farmland on any of
these issues.
Should the IRS ultimately prevail on all of its asserted claims, the
claimed federal and state income taxes as well as accrued interest would become
immediately due and payable, and would be charged to current operations. In
such case, the Company would be required to renegotiate its agreements with
banks to maintain compliance with various provisions of such agreements,
including working capital, minimum net worth and funded indebtedness
provisions. However, no assurance can be given that such renegotiation would be
successful. Alternatives could include other financing arrangements or the
possible sale of assets.
(4) ACQUISITION OF BUSINESSES
In December 1993, Farmland acquired 100% ownership of seven international
grain trading companies (collectively referred to as "Tradigrain"), for
approximately $31,028,000 in cash and in October 1993, Farmland acquired
approximately 53% of the common stock of National Carriers, Inc. in Liberal,
Kansas for approximately $2,223,000 in cash.
The purchase method of accounting has been used to account for these
acquisitions. The results of operations of the acquired enterprises have been
included in the accompanying consolidated statements of operation from the dates
of acquisition. The pro forma effects of these acquisitions on the accompanying
consolidated financial statements are not significant.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
GENERAL
Farmland Industries, Inc. ("Farmland") is a regional farm supply and
marketing cooperative. Farmland and subsidiaries (the"Company") conducts
business primarily in two operating areas. On the input side of the
agricultural industry, the Company operates as a farm supply cooperative. On
the output side of the agricultural industry, the Company operates as a
processing and marketing cooperative.
Farm supply operations consists of three product divisions--petroleum, crop
production and feed. Products of the petroleum division are principally refined
fuels, propane, by-products of petroleum refining and a complete line of car,
truck and tractor tires and accessories. Principal products of the crop
production division are nitrogen, phosphate and potash based plant nutrients and
a complete line of plant protection products. Products of the feed division
include swine, beef, poultry, mineral and specialty feeds, feed ingredients and
animal health products. The Company distributes farm supply products at
wholesale. Its customers are primarily local farm cooperative associations
which are members and owners of Farmland. These local cooperatives distribute
products primarily to farmers and ranchers who utilize the products in the
production of farm crops and livestock.
Cooperative marketing operations include the storage and marketing of
grain, processing pork and beef, and marketing fresh pork, processed pork, fresh
beef and boxed beef. Hogs and grain are supplied to the Company primarily by
members. Cattle are purchased from producers in the proximity of beef plants at
Liberal and Dodge City, Kansas. The Company has made arrangements for beef
producers to become members and supply cattle to the Company on a patronage
basis.
Geographically, the Company's markets are mid-western states which comprise
the corn belt and the wheat belt. A substantial portion of the Company's supply
and marketing products are produced in facilities owned by the Company or
operated by the Company under long-term lease arrangements. No material part of
the business of any segment of the Company is dependent on a single customer or
a few customers.
The Company's revenues depend to a large extent on conditions in
agriculture and may be volatile due to factors beyond the Company's control,
such as weather, crop failures, federal agricultural programs, production
efficiencies, and direct imports or exports. In addition, global variables
which affect supply, demand and price of crude oil and refined fuels impact the
Company's petroleum operations. Management cannot determine the extent to which
future operations of the Company may be impacted by these factors. The
Company's cash flow and net income may be volatile as conditions affecting
agriculture and markets for the Company's products change.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
The Company maintains two primary sources for debt capital: a continuous
public offering of its debt securities and bank lines of credit.
The Company's debt securities are offered through a wholly-owned
broker/dealer subsidiary on a best-efforts basis. The types of securities
offered include certificates payable on demand and subordinated debt
certificates which mature in five, ten and twenty years. The total amount of
such debt outstanding and the flow of funds to, or from, the Company as a result
of this public offering are influenced by the rate of interest which Farmland
establishes for each type of debt certificate offered and by options of Farmland
to call for redemption certain of its outstanding debt certificates. During the
nine months ended May 31, 1994, the outstanding balance of demand loan and
subordinated debt certificates increased $13,358,000.
In May 1994, Farmland entered into a $650 million syndicated credit
facility provided by The National Bank for Cooperatives, Rabobank Nederland and
other domestic and international banking institutions. Under this syndicated
loan agreement, short-term borrowings of up to $450 million are available to the
Company to finance seasonal operating and inventory levels and to support
letters of credit issued by participating banks on behalf of Farmland. In
addition, revolving term loans of up to $200 million are available for facility
additions. At May 31, 1994, $186.0 million was borrowed under the short-term
credit line, $25.8 million was being utilized for support of letters of credit
issues on behalf of Farmland by participating banks and $50.0 million was
borrowed under revolving term loans.
The syndicated credit facility contains provisions which require the
Company to maintain consolidated working capital of not less than $150 million
and to maintain consolidated net worth of not less than $475 million. In
addition, the agreement requires the Company to maintain funded indebtedness and
senior funded indebtedness of not more than 52% and 43% of capitalization,
respectively. All computations are based on consolidated financial data
adjusted to exclude nonrecourse subsidiaries as defined in the credit agreement.
Computed in accordance with the loan agreements, at May 31, 1994, working
capital was $192.5 million, net worth was $596.8 million and funded indebtedness
and senior funded indebtedness were 43.7% and 19.5% of capitalization,
respectively.
In addition to the syndicated credit facility, Farmland maintains other
borrowing agreements. At May 31, 1994, $42.0 million was borrowed under such
agreements. Financial covenants of these arrangements are not more restrictive
than Farmland's syndicated credit facility.
Management considers these arrangements for debt capital to be adequate for
the Company's present operating and capital plans. However, alternative
financing arrangements are continuously evaluated.
In December 1993, Farmland acquired 100% ownership of seven international
grain brokerage companies (collectively referred to as "Tradigrain").
Tradigrain has borrowing agreements with various international banks which
provide financing and letters of credit to support current international grain
trading transactions. Obligations of Tradigrain under these loan agreements are
nonrecourse to the Company.
National Beef Packing Company L.P. ("NBPC"), 58%-owned by Farmland,
completed a restructuring of its bank credit facility in May 1994. Borrowings
covered by this loan agreement are nonrecourse to Farmland or its other
affiliates. Repayments to Farmland of the subordinated notes and distributions
to NBPC's partners are restricted under the bank credit agreement to prior
payment in full to the bank of all principal of and interest on the nonrecourse
debt. At May 31, 1994, Farmland had advanced $38.2 million to NBPC.
Leveraged leasing has been utilized to finance railcars, and a substantial
portion of plant nutrients production equipment. Under the most restrictive
covenants of its leases, the Company has agreed to maintain working capital of
at least $75 million, consolidated funded indebtedness not greater than 65% of
consolidated capitalization, and consolidated senior funded indebtedness not
greater than 50% of consolidated capitalization.
Major uses of cash during the nine months ended May 31, 1994 include
payments of $103.8 million on bank loans and other notes, $47.8 million for
capital expenditures, $33.3 million for acquisition of businesses and $14.9
million for acquisition of investments. Major sources of cash include $121.5
million from operations, $13.4 million from an increase in the balance of demand
loan and subordinated debt certificates outstanding, $41.5 million from
dispositions of investments, a dragline and other assets, and $21.4 million
provided from the 1993 year end cash balance.
The Internal Revenue Service issued a statutory notice to Farmland
asserting significant deficiencies in federal income taxes and statutory
interest thereon. Farmland filed a petition in the United States Tax Court
contesting the asserted deficiencies in their entirety. See note 3 of the notes
to the condensed consolidated financial statements.
RESULTS OF OPERATIONS
Operating results for any quarter are not necessarily indicative of the
results expected for the full year. The principal businesses of the Company are
highly seasonal. The majority of sales of farm supply products occurs in the
spring months, revenues in the beef business and in grain marketing historically
are concentrated in the summer months and summer is the lowest sales period for
pork products. In view of the seasonality of the Company's businesses, it must
be emphasized that the results for the three months and nine months ended May
31, 1994 should not be annualized to project a full year's results.
NINE MONTHS ENDED MAY 31, 1994 COMPARED WITH NINE MONTHS ENDED MAY 31, 1993
SALES
Sales for the nine months ended May 31, 1994 increased $1.62 billion or
48.3% compared with the corresponding period of the prior year. The increase
includes $1.39 billion higher sales of agricultural output products, $201.1
million higher sales of farm production input products and $29.8 million higher
sales of other products and services.
Sales of output products increased primarily because of business
acquisitions. Food marketing sales increased $903.9 million principally because
beef operations, acquired on April 15, 1993, had sales of $143.2 million in the
one and one-half month period ended May 31, 1993, and sales of $885.2 million in
the nine months ended May 31, 1994. Sales of pork products increased $162
million primarily due to the acquisition of a plant at Monmouth, Illinois in
February 1993. In addition, grain sales increased $486.9 million primarily due
to higher unit sales of corn and milo.
Sales of input products increased due to $199.4 million higher sales of
crop production products and $48.8 million higher sales of formula feed and feed
ingredients. Petroleum sales decreased $47.1 million.
Sales of crop production products increased because unit sales of plant
nutrients increased approximately 18% and because the average price of these
products increased approximately 10%. Feed sales increased because unit sales
of formula feeds and ingredients increased approximately 12% and 11%,
respectively. In addition, feed ingredients prices increased 7%.
Sales of petroleum products decreased mostly because of $11.9 million lower
sales of propane, $6.2 million lower sales of natural gas liquids ("NGL's") and
$30.2 million lower sales of refined fuels. Propane sales decreased principally
because grain drying activities were less extensive in the current year than in
the prior year reflecting the decline in the amount of grain harvested. Sales
of NGL's decreased because these products were consumed in 1994 in processing
activities at the refinery. During the prior year, production at the refinery
was suspended approximately 40 days for scheduled maintenance and during the
maintenance period NGL's were sold. Refined fuel sales decreased because the
average selling price was 12% lower than in the prior year. Unit sales of
refined fuels exceeded the prior year by approximately 6%.
INCOME BEFORE INCOME TAXES AND PATRONAGE REFUNDS
Income before income taxes and patronage refunds for the nine months ended
May 31,1994 increased $32.7 million compared with the corresponding period of
the prior year. Results in the Company's crop production and in petroleum
operations increased $38.2 million and $23.3 million, respectively. In
addition, the Company's share of net income from joint ventures engaged in plant
nutrients operations increased $17.6 million. These increases were partly
offset by a $24.6 million decrease in results from grain marketing, a $9.1
million decrease in results from food marketing and by $13.2 million higher
interest expense.
Results from petroleum operations increased $23.3 million primarily because
unit margins on diesel fuels with low levels of sulfur (required by the
Environmental Protection Agency for diesel fuel sold after September 30, 1993)
were higher than in the corresponding period of the prior year. These margins
were significantly higher immediately after the crossover to the low sulfur
level diesel. In addition, margins on other refined fuels improved because
crude oil costs decreased and because production at the Coffeyville, Kansas
refinery was substantially higher than in the prior year.
Operating profits of the crop production business in the nine months ended
May 31, 1994 increased $38.2 million compared with the corresponding period of
the prior year. This increase resulted from higher unit sales and unit margins
which increased in response to stronger market conditions. Demand for plant
nutrients in 1994 was stronger than in 1993 due to an increase in the number of
acres under cultivation, principally corn acreage (corn acreage harvested was
relatively low in 1993 due to wet weather and the resulting floods). In
addition, demand for plant nutrients was stimulated by favorable weather
conditions during the fall and spring application seasons. The increased demand
for plant nutrients translated into higher unit sales and margins and
contributed significantly to the Company's increased operating results for the
nine months ended May 31, 1994.
The grain marketing business had a loss of $24.4 million in the nine months
ended May 31, 1994 compared with an operating profit of $.2 million in the
corresponding period of the prior year. The loss is attributable to negative
unit margins on domestic and international grain transactions and higher
domestic operating expenses.
Operating profit of the food marketing business in the nine months ended
May 31, 1994 decreased $9.1 million compared with the corresponding period of
the prior year. The Company's beef operations, acquired on April, 15, 1993, had
an operating loss of $8.2 million in the current nine-month period compared with
an operating profit of $2.5 million in the one and one-half month period ending
May 31, 1993. The loss in the current nine months was primarily a result of
intense competition in the beef industry and unusually high cattle prices.
Operating profit from pork processing and marketing in the nine months
ended May 31, 1994 increased $1.6 million compared with the corresponding period
of the previous year. This increase was principally due to higher unit sales
mostly offset by $23.7 million higher selling, general and administrative
expenses. These expenses increased primarily because operations of the
Monmouth, Illinois pork plant were included in the Company's operations
for the full nine-month period ended May 31, 1994. This plant was
acquired in February 1993.
Selling, general and administrative expenses in the nine months ended May
31, 1994 increased $38.6 million compared with the corresponding period of the
prior year. Approximately, $23.7 million of the increase is in pork marketing,
$4.1 million of the increase is in grain marketing, and $10.8 million is a
result of business acquisitions, principally Tradigrain, NBPC and National
Carriers, Inc.
Interest expense increased primarily due to an increase of the level of
borrowed funds.
THREE MONTHS ENDED MAY 31, 1994 COMPARED WITH THE THREE MONTHS ENDED MAY 31,
1993.
The changes in sales and income before income taxes and patronage refunds
for the three months ended May 31, 1994, compared to the corresponding period of
the prior year, are primarily as discussed in the nine months comparison, except
for operating profit in the petroleum business. Operating profit in the
petroleum business decreased in the three months ended May 31, 1994 compared
with the corresponding period of 1993 due to higher crude oil costs.
RECENT ACCOUNTING PRONOUNCEMENTS
In the first quarter of fiscal year 1994, the Company adopted the
provisions of Statement of Financial Accounting Standards (SFAS) 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions." Under
SFAS 106, the expected costs of providing such benefits are accrued during the
active service period of the employee rather than accounting for such costs on a
pay-as-you-go (cash) basis. The effect of implementation of SFAS 106, including
amortization (over 20 years) of previously unrecognized costs related to the
service period already rendered (the transition obligation) was insignificant.
In the first quarter of fiscal year 1994, the Company adopted the
provisions of Statement of Financial Accounting Standards (SFAS) 109,
"Accounting for Income Taxes." Under SFAS 109, deferred tax assets and
liabilities are determined based upon the tax effect of differences between the
financial statement and tax basis of assets and liabilities using enacted tax
rates in effect for the year in which the differences are expected to reverse.
SFAS 109 generally allows recognition of deferred tax assets if future
realization of the tax benefit is more likely than not. The effect of
implementation of SFAS 109 at September 1, 1993 was insignificant.
Statement of Financial Accounting Standards (SFAS) 112, "Employer's
Accounting for Postemployment Benefits", was issued by the Financial Accounting
Standards Board (FASB) in November 1992 and is effective for fiscal years
beginning after December 15, 1993 (the Company's 1995 fiscal year). SFAS 112
establishes standards of accounting and reporting for the estimated cost of
benefits provided to former or inactive employees. Management expects that the
adoption of SFAS 112 will not have a significant impact on the Company's
consolidated financial statements.
Statement of Financial Accounting Standards (SFAS) 115, "Accounting for
Certain Investments in Debt and Equity Securities," was issued by the Financial
Accounting Standards Board (FASB) in May 1993 and is effective for fiscal years
beginning after December 15, 1993 (the Company's 1995 fiscal year). SFAS 115
expands the use of fair value accounting and the reporting for certain
investments in debt and equity securities. Management expects the adoption of
SFAS 115 will not have a significant impact on the Company's consolidated
financial statements.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
The exhibits listed below are filed as part of Form 10-Q for quarter ended
May 31, 1994.
Exhibit No. Exhibit
Instruments Defining Rights of Owners of Indebtedness not Registered:
4.B(1) Credit Agreement for Farmland Industries, Inc., dated May 19, 1994.
4.B(2) List identifying contents of all omitted exhibits, schedules, and
other documents.
(b) No reports on Form 8-K were filed during the quarter ended May 31, 1994.
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 hereunto duly authorized.
FARMLAND INDUSTRIES, INC.
(Registrant)
By: /s/ JOHN F. BERARDI
John F. Berardi
Executive Vice President
and Chief Financial Officer
Date: July 14, 1994
Exhibits Index EXHIBIT 99
The exhibits listed below are filed as part of Form 10-Q for quarter ended May
31, 1994.
Exhibit No. Exhibit
Instruments Defining Rights of Owners of Indebtedness no
Registered:
4.B(1) Credit Agreement for Farmland Industries, Inc., dated May 19,
1994.
4.B(2) List identifying contents of all omitted exhibits, schedules, and
other documents.
CREDIT AGREEMENT dated as of May 19, 1994 among FARMLAND
INDUSTRIES, INC., a Kansas cooperative corporation ("Borrower"), THE NATIONAL
BANK FOR COOPERATIVES ("CoBank"), COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A. "RABOBANK NEDERLAND", NEW YORK BRANCH ("Rabobank"), ABN AMRO
BANK N.V., THE BANK OF NOVA SCOTIA, BOATMEN'S FIRST NATIONAL BANK OF KANSAS
CITY, THE CHASE MANHATTAN BANK, N.A., COMMERCE BANK OF KANSAS CITY, N.A., NBD
BANK, N.A., and each other lender which may hereafter execute and deliver an
Assignment and Assumption Agreement pursuant to Section 11.04 of this Agreement
(each a "Bank" and collectively, the "Banks"), CoBank, as administrative agent
for the Banks (in such capacity, together with its successors in such capacity,
"Administrative Agent"), and Rabobank, as agent for the Banks (in such capacity,
together with its successors in such capacity, "Agent"). The Administrative
Agent and the Agent are each individually a "Co-Agent" and collectively the "Co-
Agents".
ARTICLE I. DEFINITIONS, ACCOUNTING TERMS, COMPUTATION
OF TIME PERIODS, AND RULES OF CONSTRUCTION
Section 1.01. Definitions. As used in this Agreement the
following terms have the following meanings (terms defined in the singular to
have a correlative meaning when used in the plural and vice versa):
"Additional Cost" has the meaning specified in Section 2.19.
"Administrative Agent" has the meaning specified in the
preamble.
"Administrative Agent's Office" means the Administrative
Agent's address as set forth on the signature page of this Agreement, or such
other address as the Administrative Agent may designate from time to time by
written notice to the Borrower, the Banks and the Agent.
"Advance" means a Line of Credit Advance or Swing Line Advance
or Revolving Credit Advance or Bid Rate Advance
or any or all of the foregoing, as the context may require.
"Affected Loan" has the meaning specified in Section 2.22.
"Affiliate" means, as to any Person, any other Person which
directly or indirectly controls, or is controlled by, or is under common control
with such Person. The term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract, or otherwise.
"Agent" has the meaning specified in the preamble.
"Agent's Office" means the Agent's address as set forth on the
signature page of this Agreement, or such other address as the Agent may
designate from time to time by written notice to the Borrower, the Banks and the
Administrative Agent.
"Agreement" means this Credit Agreement.
"Applicable Lending Office" means, for each Bank and for each
type of Loan, the lending office of such Bank designated as such for such type
of Loan on its signature page hereof or in the applicable Assignment and
Assumption Agreement or such other office of such Bank as such Bank may from
time to time specify to the Administrative Agent, the Agent and the Borrower as
the office by which its Loans of such type are to be made and maintained.
"Applicable Margin" means:
(1) Line of Credit
(a) CD Advances Loans. With respect to Line of Credit
Advances which are CD Advances, seventy-two hundredths of one
percent (0.72%); and
(b) LIBOR. With respect to Line of Credit Advances
which are LIBOR Advances, six hundred twenty-five thousandths
of one percent (0.625%);
(2) Revolving Credit.
(a) CD Advances. With respect to Revolving Credit
Advances which are CD Advances, ninety-three hundredths of one
percent (0.93%); and
(b) LIBOR Advances. With respect to Revolving Credit
Advances which are LIBOR Advances, eight tenths of one percent
(0.8%);
"Assessment Rate" means, for any Interest Period for any CD
Advance, the average of the highest and lowest annual assessment rates
(determined by the CD Reference Bank as at the first day of such Interest Period
and rounded upwards, if necessary, to the nearest 1/100 of 1%) that the Federal
Deposit Insurance Corporation (or any successor) charges members of the Bank
Insurance Fund pursuant to 12 C.F.R. part 327 (or any successor provision) for
such Corporation's (or such successor's) insuring time deposits at offices of
such members in the United States of America.
"Assignee" has the meaning specified in Section 11.04.
"Asset Acquisition Obligation" means any and all payment
obligations under any of the following: (1) a conditional sale or title
retention agreement, (2) a Capital Lease, or (3) an Operating Lease of the type
referred to and covered by subsection 2(b) of the definition of Combined Funded
Debt.
"Assignment and Assumption Agreement" means an Assignment and
Assumption Agreement, substantially in the form of Exhibit K, pursuant to which
a Bank assigns and an Assignee assumes rights and obligations in accordance with
Section 11.04.
"Bank" or "Banks" has the meaning specified in the preamble to
this Agreement.
"Bank's Office" means in the case of each Bank the office of
such Bank designated on the signature page hereof, or as designated in the
applicable Assignment and Assumption Agreement or such other office as such Bank
may from time to time specify by notice to the Borrower and each of the Co-
Agents.
"Bank Parties" means each of the Co-Agents and each of the
Banks.
"Banking Day" means (1) any day on which commercial banks are
not authorized or required to close in Denver, Colorado, Kansas City, Missouri,
or New York, New York, and (2) whenever such day relates to a LIBOR Advance, an
Interest Period with respect to a LIBOR Advance, or notice with respect to any
LIBOR Advance, a day on which dealings in Dollar deposits are also carried on in
the London interbank market.
"Base Rate" means, for any day, that rate defined as the
"prime rate" as published from time to time in the Eastern Edition of the Wall
Street Journal as the average base rate for corporate loans for at least
seventy-five percent (75%) of the United States thirty (30) largest commercial
banks, or if the Wall Street Journal shall cease publication or cease publishing
the "prime rate" on a regular basis, such other regularly published average
prime rate applicable to such commercial banks as is acceptable to the
Administrative Agent in its reasonable discretion with the consent of the
Borrower which will not be unreasonably withheld.
"Base Rate Advance" means any Advance when and to the extent
the interest rate for such Advance is determined in relation to the Base Rate.
"Base Rate Loan" means a Loan when and to the extent the
interest rate for the Advances made as part of such Loan are determined in
relation to the Base Rate.
"Bid Rate" means the rate of interest offered by a Bank in
response to a Bid Rate Quote Request that is accepted by the Borrower in
accordance with Section 2.08.
"Bid Rate Advance" has the meaning specified in Section 2.08.
"Bid Rate Loan" has the meaning specified in Section 2.08.
"Bid Rate Maturity Date" has the meaning specified in Section
2.08.
"Bid Rate Note" has the meaning specified in Section 2.12.
"Bid Rate Notes" has the meaning specified in Section 2.12.
"Bid Rate Notice of Borrowing" has the meaning specified in
Section 2.08.
"Bid Rate Quote" has the meaning specified in Section 2.08.
"Bid Rate Quote Request" has the meaning specified in Section
2.08.
"Board of Governors" means the Board of Governors of the
Federal Reserve System.
"Borrower" has the meaning specified in the preamble.
"Borrower's Annual Operating Budget" means the annual
operating budget for the Borrower and its Consolidated Subsidiaries in
substantially the form of, and containing substantially the same or similar
information as set forth in, the Annual Operating Budget (Business Plan) for the
Borrower and its Consolidated Subsidiaries included in the Offering Memorandum
dated April 7, 1994 delivered to the Banks prior to the Closing Date.
"Borrower's Monthly Financial Management Report" means the
Borrower's unaudited monthly financial management report in substantially the
form of, and containing substantially the same or similar information as set
forth in, Exhibit J.
"Borrower's Office" means the office of the Borrower located
at 3315 North Oak Trafficway, Kansas City, Missouri 64106, or such other office
as Borrower may from time to time designate by written notice to each of the
Bank Parties.
"Borrower's Funding Account" means the following account:
Commerce Bank of Kansas City, N.A., ABA Number 1010-00019, Beneficiary Account
Number 1113170, or such other account as may be designated by the Borrower in a
written notice to each of the Bank Parties.
"Cash Collateral" means a deposit by the Borrower, made in
immediately available funds, to a savings, checking or time deposit account at a
Bank or the purchase by the Borrower of a certificate of deposit issued by a
Bank and the execution of all documents and the taking of all steps required to
give such Bank a perfected security interest in such deposit or certificate of
deposit.
"Capital Lease" means any lease which has been or should be
capitalized on the books of the lessee in accordance with GAAP.
"CD Advance" means any Advance when and to the extent the
interest rate thereof is determined by reference to the CD Rate.
"CD Loan" means a Loan when and to the extent the interest
rate for the Advances made as part of such Loan are determined in relation to
the CD Rate.
"CD Base Rate" means a rate published in the Eastern Edition
of the Wall Street Journal as the average top rates paid by major New York banks
for a specified Interest Period on primary new issues of negotiable certificates
of deposit usually in amounts of One Million Dollars ($1,000,000) or more, or if
the Wall Street Journal shall cease publication or cease publishing the "CD
rate" on a regular basis, such other regularly published average CD rate payable
by such commercial banks as is acceptable to the Administrative Agent in its
reasonable discretion with the consent of the Borrower which will not be
unreasonably withheld.
"CD Rate" means, for any CD Advance, that rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) determined by the
Administrative Agent to be equal to the sum of (1) the quotient of (a) the CD
Base Rate for such CD Advance for such Interest Period divided by (b) one minus
the CD Reserve Requirement for such CD Advance for such Interest Period; plus
(2) the Assessment Rate for such Interest Period.
CD Rate = CD Base Rate + Assessment 1 - CD
Reserve Requirement Rate
"CD Reference Bank" means The Chase Manhattan Bank, N.A.
"CD Reserve Requirement" means, for any CD Advance for any
Interest Period therefor, the daily average of the stated average rate
(expressed as a decimal) at which reserves (including any marginal,
supplemental, or emergency reserves) are required to be maintained during such
Interest Period under Regulation D by member banks of the Federal Reserve System
against new nonpersonal Dollar time deposits in the amount of One Hundred
Thousand Dollars ($100,000) or more and with a maturity comparable to the
Interest Period for such CD Advance. Without limiting the effect of the
foregoing, but without duplication, the CD Reserve Requirement shall reflect any
other reserves required to be maintained against (1) any category of liabilities
that includes deposits by reference to which the CD Rate for CD Advances is to
be determined; or (2) any category of extension of credit or other assets that
include CD Advances.
"Closing Date" means May 19, 1994.
"Co-Agent" has the meaning specified in the preamble.
"Code" means the Internal Revenue Code of 1986.
"Combined Current Assets" means total current assets of the
Borrower and its Restricted Subsidiaries, on a combined basis, all as determined
in accordance with GAAP.
"Combined Current Liabilities" means total current liabilities
of the Borrower and its Restricted Subsidiaries, on a combined basis, all as
determined in accordance with GAAP.
"Combined Deferred Income Taxes" means the deferred income
taxes of the Borrower and its Restricted Subsidiaries, on a combined basis, all
as determined in accordance with GAAP.
"Combined Funded Debt" shall mean the sum of: (1) all
Combined Long-Term Debt; plus (without duplication of any Debt covered by (1))
(2) each of the following with respect to the Borrower or any of its Restricted
Subsidiaries (a) all indebtedness for borrowed money or for the deferred
purchase price for property or services which matures one year or less from the
date of determination but is extendable or renewable at the option of the
Borrower or a Restricted Subsidiary, as the case may be, in such a manner that
it may become payable more than one year from the date of determination; (b) the
net present value of lease rentals not due within one year from the date of
determination for those leases which are not Capital Leases or otherwise
included in Combined Long-Term Debt for which aggregate rentals during the term
of any such lease exceeds One Million Dollars ($1,000,000), determined by
utilizing as a discount rate the interest rate implicit in the particular lease,
and if none, eight percent (8%) per annum; and (c) all indebtedness and
obligations of the type or nature referred to in clauses (1), (2)(a) and (2)(b)
above of another Person if such indebtedness or obligations have been directly
assumed or guaranteed by the Borrower or any Restricted Subsidiary (other than
by endorsement for collection in the ordinary course of business).
Notwithstanding the foregoing, "Combined Funded Debt" shall not include: (1)
any indebtedness or obligation under (1), (2)(a) or (2)(b) above in respect of
which all required payments or redemptions have been made or deposited with the
Person (other than Borrower) to receive such payments or redemptions under the
terms of the documents, if any, evidencing such indebtedness or obligation, or
have been set aside and segregated in trust by Borrower; and (2) any
indebtedness or obligations described on Schedule 1.01A hereto.
"Combined Interim Income" means the income before income
taxes, patronage refunds and appropriations for earned surplus of the Borrower
and the Restricted Subsidiaries, on a combined basis, all as determined in
accordance with GAAP and reflected on the combined balance sheet of the Borrower
and the Restricted Subsidiaries.
"Combined Long-Term Debt" means the long-term debt (excluding
current maturities) of the Borrower and its Restricted Subsidiaries, on a
combined basis, all as determined in accordance with GAAP.
"Combined Non-Current Assets" means the sum of (1) the total
assets of the Borrower and its Restricted Subsidiaries, on a combined basis, all
as determined in accordance with GAAP, minus (2) Combined Current Assets.
"Combined Senior Debt" means the sum of (1) Combined Funded
Debt, minus (2) Combined Subordinated Debt (other than the Current Portion of
Combined Subordinated Debt).
"Combined Short Term Debt" means indebtedness for borrowed
money of the Borrower which is (1) due either on demand or within one year of
the issuance thereof where such indebtedness is not extendable or renewable at
the option of the Borrower in a manner that it may become payable more than one
year from the date of issuance thereof and (2) issued or incurred under the
Indenture dated November 20, 1981 (as amended) from the Borrower to Commerce
Bank of Kansas City, N.A., as Trustee.
"Combined Short Term Institutional Debt" means: (1)
indebtedness or liability for borrowed money of the Borrower or any Restricted
Subsidiary to any bank, insurance company, finance company or other financial
institution, and (2) obligations under letters of credit issued for the account
of the Borrower or any Restricted Subsidiary by any bank, insurance company,
finance company or other financial institution.
"Combined Subordinated Debt" means indebtedness for borrowed
money of the Borrower which is any of the following: (1) indebtedness for
borrowed money issued pursuant to and subject to the terms of any Indenture
listed on Schedule 1.01B, Existing Subordinated Indentures, (2) indebtedness for
borrowed money issued or incurred after the Closing Date but subject to
subordination provisions no less favorable to the Banks than the subordination
provisions specified in Section 4.05 of the Indenture dated November 11, 1985
from Borrower to Commerce Bank of Kansas City, National Association, as Trustee,
or (3) indebtedness for borrowed money subordinated on terms acceptable to the
Requisite Banks in their sole discretion.
"Combined Total Assets" means the total assets of the Borrower
and its Restricted Subsidiaries, on a combined basis, all as determined in
accordance with GAAP.
"Combined Total Capitalization" means the sum of the
following: (1) Combined Funded Debt, (2) Combined Deferred Income Taxes, and (3)
Combined Total Capital Shares and Equities.
"Combined Total Capital Shares and Equities" means the total
of (1) the total capital shares and equities of the Borrower and its Restricted
Subsidiaries, on a combined basis (which in the case of the Borrower and its
Restricted Subsidiaries includes the combined retained earnings of the Borrower
and its Restricted Subsidiaries), all as determined in accordance with GAAP plus
(2) Combined Interim Income which is not included under (1) of this definition.
"Combined Total Liabilities" means total liabilities of the
Borrower and its Restricted Subsidiaries, on a combined basis, all as determined
in accordance with GAAP, provided, however, Combined Total Liabilities does not
include Combined Total Capital Shares and Equities.
"Commitment" means the Line of Credit Commitment, the Swing
Line Commitment, or the Revolving Credit Commitment, or any or all of the
foregoing, all as the context may require.
"Commitment Fees" means the Line of Credit Commitment Fees or
the Revolving Credit Commitment Fees, or both, all as the context may require.
"Committed Loan" means a Base Rate Advance, CD Advance, or
LIBOR Advance, or any or all of the foregoing, all as the context may require.
"Committed Line of Credit Loan" means a Line of Credit Loan
which is any of a Base Rate Advance, CD Advance, or LIBOR Advance.
"Committed Loan Borrowing Notice" has the meaning specified in
Section 2.06.
"Consolidated Subsidiary" means any Subsidiary of the Borrower
that should be included in the Borrower's consolidated financial statements, all
as determined in accordance with GAAP.
"Continue", "Continuation" and "Continued" shall refer to
either the continuation pursuant to Section 2.16 hereof of a CD Advance as a CD
Advance from one Interest Period to the next Interest Period or the continuation
pursuant to Section 2.16 hereof of a LIBOR Advance as a LIBOR Advance from one
Interest Period to the next Interest Period.
"Convert", "Conversion" and "Converted" shall refer to a
conversion pursuant to Section 2.16 hereof of Base Rate Advances into CD
Advances or LIBOR Advances or CD Advances into Base Rate Advances or LIBOR
Advances or LIBOR Advances into Base Rate Advances or CD Advances, each of which
may be accompanied by the transfer by a Bank (at its sole discretion) of
Advances from one Applicable Lending Office to another.
"Credit Facilities" means any or all of the Line of Credit
Loans, the Swing Line Loans, the Revolving Credit Loans, the Line of Credit
Letter of Credit Loans, the Revolving Credit Letter of Credit Loans and the
Letters of Credit.
"Current Portion of Combined Funded Debt" means, as of the
date of determination, all Combined Funded Debt which matures within one (1)
year or less from the date of determination and is not extendable or renewable
at the option of the Borrower or a Restricted Subsidiary in a manner that it may
become payable more than one (1) year from the date of determination.
"Current Portion of Combined Subordinated Debt" means, as of
the date of determination, all Combined Subordinated Debt which is due and
payable within one (1) year or less from the date of determination and is not
extendable or renewable at the option of the Borrower in a manner that it may
become payable more than one (1) year from the date of determination.
"Debt" means: (1) indebtedness or liability for borrowed
money, or for the deferred purchase price of property or services (including
trade obligations); (2) obligations as lessee under Capital Leases; (3)
obligations under letters of credit issued for the account of any Person; (4)
all obligations arising under bankers' or trade acceptance facilities; (5) all
guarantees, endorsements (other than for collection or deposit in the ordinary
course of business), and other contingent obligations to purchase any of the
items included in this definition, to provide funds for payment, to supply funds
to invest in any Person, or otherwise to assure a creditor against loss; (6) all
obligations secured by any Lien on property owned by such Person, whether or not
the obligations have been assumed; and (7) all obligations under any agreement
providing for a swap, ceiling rates, ceiling and floor rates, contingent
participation or other hedging mechanisms with respect to interest payable on
any of the items described above in this definition.
"Default" means any event which with the giving of notice or
lapse of time, or both, would become an Event of Default.
"Default Rate" means, with respect to an amount of any Advance
not paid when due, a rate per annum equal to: (1) if such Advance is a Base
Rate Advance, a variable rate two percent (2%) above the rate of interest then
in effect thereon; (2) if such Advance is a CD Advance, a fixed rate two percent
above the rate of interest then in effect thereon (including the Applicable
Margin) at the time of default until the end of the then current Interest Period
therefor and, thereafter, a variable rate two percent (2%) above the rate of
interest for a Base Rate Advance; (3) if such Advance is a LIBOR Advance, a
fixed rate two percent (2%) above the rate of interest in effect thereon
(including the Applicable Margin) at the time of default until the end of the
then current Interest Period therefor and, thereafter, a variable rate two
percent (2%) above the rate of interest for a Base Rate Advance; and (4) if such
Advance is a Bid Rate Advance, a fixed rate two percent (2%) above the rate of
interest in effect thereon at the time of default until the applicable Bid Rate
Maturity Date and, thereafter, a variable rate two percent (2%) above the rate
of interest for a Base Rate Advance.
"Dollars" and the sign "$" mean lawful money of the United
States of America.
"Environmental Discharge" means any discharge or release of
any Hazardous Materials in violation of any applicable Environmental Law.
"Environmental Law" means any Law relating to pollution or the
environment, including Laws relating to noise or to emissions, discharges,
releases or threatened releases of Hazardous Materials into the workplace, the
community or the environment, or otherwise relating to the generation,
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials.
"Environmental Notice" means any written complaint, order,
citation, letter, inquiry, notice or other written communication from any Person
(1) affecting or relating to the Borrower's or any of its Restricted
Subsidiaries' compliance with any Environmental Law in connection with any
activity or operations at any time conducted by the Borrower or such Subsidiary,
(2) relating to the occurrence or presence of or exposure to or possible or
threatened or alleged occurrence or presence of or exposure to Environmental
Discharges or Hazardous Materials at any of the Borrower's or such Subsidiary's
locations or facilities, including, without limitation: (a) the existence of any
contamination or possible or threatened contamination at any such location or
facility; and (b) remediation of any Environmental Discharge or Hazardous
Materials at any such location or facility or any part thereof; and (3) any
violation or alleged violation of any applicable Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of
1974, including any rules and regulation promulgated thereunder.
"ERISA Affiliate" means any corporation or trade or business
which is a member of the same controlled group of corporations (within the
meaning of Section 414(b) of the Code) as the Borrower or is under common
control (within the meaning of Section 414(c) of the Code) with the Borrower;
provided, however, that for purposes of provisions herein concerning minimum
funding obligations (imposed under Section 412 of the Code or Section 302 of
ERISA), the term "ERISA Affiliate" shall also include any entity required to be
aggregated with the Borrower under Section 414(m) or 414(o) of the Code.
"Event of Default" has the meaning specified in Section 9.01.
"Exercise Date" has the meaning specified in the definition of
"Permitted Cash Collateral Amount" in this Section 1.01.
"Facility Fee" has the meaning specified in Section 2.11.
"Fee Letter" means the fee letter dated February 28, 1994 from
each of the Co-Agents to the Borrower.
"Fiscal Year" means each period from September 1 to August 31.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect from time to time.
"Good Faith Contest" means the contest of an item if: (1) the
item is diligently contested in good faith by appropriate proceedings timely
instituted; (2) either the item is (a) bonded or (b) adequate reserves are
established with respect to the contested item if and to the extent required in
accordance with GAAP; (3) during the period of such contest, the enforcement of
any contested item is effectively stayed; and (4) the failure to pay or comply
with the contested item could not reasonably be expected to result in a Material
Adverse Change.
"Governmental Approvals" means any authorization, consent,
approval, license, permit, certification, or exemption of, registration or
filing with or report or notice to, any Governmental Authority.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Hazardous Materials" means any pollutant, effluents,
emissions, contaminants, toxic or hazardous wastes or substances, as any of
those terms are defined from time to time in or for the purposes of any
applicable Environmental Law, including asbestos fibers and friable asbestos,
polychlorinated biphenyls, and any petroleum or hydrocarbon-based products or
derivatives.
"Individual Line of Credit Commitment" means, with respect to
each Bank, the commitment of each Bank to make Line of Credit Advances hereunder
in an amount set forth opposite such Bank's name on the signature page hereto,
or as designated in the applicable Assignment and Assumption Agreement;
provided, however, that the aggregate of all the Individual Bank Line of Credit
Commitments shall at no time exceed the Total Line of Credit Commitment.
"Individual Line of Credit Letter of Credit Obligations"
means, with respect to each Bank, the total of (1) the aggregate undrawn face
amount of all outstanding Line of Credit Letters of Credit issued by such Bank,
(2) the aggregate amount of all unreimbursed obligations on all such Line of
Credit Letters of Credit, (3) the aggregate unpaid principal amount of all Line
of Credit Letter of Credit Loans owed to such Bank, and (4) the aggregate amount
of all outstanding overdrafts created to satisfy any of the foregoing
obligations under (1), (2) or (3) above.
"Individual Revolving Credit Commitment" means, with respect
to each Bank, the commitment of each Bank to make Revolving Credit Advances
hereunder in an amount set forth opposite such Bank's name on the signature page
hereto, or as designated in the applicable Assignment and Assumption Agreement;
provided, however, that the aggregate of all the Individual Revolving Credit
Commitments shall at no time exceed the Total Revolving Credit Commitment.
"Individual Revolving Credit Letter of Credit Obligations"
means, with respect to each Bank, the total of (1) the aggregate undrawn face
amount of all outstanding Revolving Credit Letters of Credit issued by such
Bank, (2) the aggregate amount of all unreimbursed obligations on all such
Revolving Credit Letters of Credit, (3) the aggregate unpaid principal amount of
all Revolving Credit Letter of Credit Loans owed to such Bank, and (4) the
aggregate amount of all outstanding overdrafts created to satisfy any of the
foregoing obligations under (1), (2) or (3) above.
"Interest Period" means (1) with respect to any LIBOR Advance,
the period commencing on the date such Advance is made, converted from a Base
Rate Advance or CD Advance, or renewed, as the case may be, and ending, as the
Borrower may select pursuant to Section 2.09 on the numerically corresponding
day in the first, second, third or sixth calendar month thereafter, provided
that each such Interest Period which commences on the last Banking Day of a
calendar month (or on any day for which there is no numerically corresponding
day in the appropriate subsequent calendar month) shall end on the last Banking
Day of the appropriate calendar month; and (2) with respect to any CD Advance
the period commencing on the date such Advance is made, converted from a Base
Rate Advance or LIBOR Advance, or renewed, and ending, as the Borrower may
select pursuant to Section 2.09, 30, 60, 90 or 180 days thereafter.
"Investment" means any loan or advance to any Person or the
purchase or other acquisition of any capital stock, obligations or securities
of, or any capital contribution to, or investment in, or the acquisition of all
or substantially all of the assets of, or any interest in, any Person.
"Law" means any federal, state or local statute, law, rule,
regulation, ordinance, order, code, policy or rule of common law, now or
hereafter in effect, and any judicial or administrative interpretation thereof
by a Governmental Authority, including any judicial or administrative order,
consent decree or judgment.
"Letters of Credit" means the Line of Credit Letters of Credit
or the Revolving Credit Letters of Credit, or both, all as the context may
require.
"Letter of Credit Obligations" means the aggregate of all
Total Line of Credit Letter of Credit Obligations and Total Revolving Credit
Letter of Credit Obligations.
"LIBOR Base Rate" means a rate for deposits in Dollars, with
maturities comparable to the selected LIBOR Interest Period, that appears on the
display designated as page "3750" of the Telerate Service (or such other page as
may replace the 3750 page of that service or such other service or services as
may be nominated by the British Bankers' Association for the purpose of
displaying London interbank offered rates for Dollar deposits), determined as of
1:00 P.M. (New York time), two (2) Banking Days prior to the commencement of
such Interest Period.
"LIBOR Rate" means, for each LIBOR Advance, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) determined by the
Administrative Agent to be equal to the quotient of (1) the LIBOR Base Rate for
such LIBOR Advance for such Interest Period divided by (2) one minus the LIBOR
Reserve Requirement for such Interest Period.
LIBOR Rate = LIBOR Base Rate
1- LIBOR Reserve Requirement
"LIBOR Advance" means any Advance when and to the extent the
interest rate therefor is determined by reference to the LIBOR Rate.
"LIBOR Loan" means a Loan when and to the extent the interest
rate for the Advances made as part of such Loan are determined in relation to
the LIBOR Rate.
"LIBOR Reserve Requirement" means, for any LIBOR Advance, the
average actual rate at which reserves (including any marginal, supplemental or
emergency reserves) are required to be maintained during the Interest Period for
such LIBOR Advance under Regulation D by member banks of the Federal Reserve
System in New York City with deposits exceeding One Billion Dollars
($1,000,000,000) against "Eurocurrency liabilities" (as such term is used in
Regulation D). Without limiting the effect of the foregoing, but without
duplication, the LIBOR Reserve Requirement shall also reflect any other reserves
required to be maintained by such member banks by reason of any Regulatory
Change against (1) any category of liabilities which includes deposits by
reference to which the LIBOR Base Rate is to be determined as provided in the
definition of LIBOR Base Rate in this Section 1.01 or (2) any category of
extensions of credit or other assets which include LIBOR Advances.
"Lien" means any mortgage, deed of trust, pledge, security
interest, hypothecation, assignment for security purposes, encumbrance, lien
(statutory or other), or other security agreement or charge, or encumbrance of
any kind or nature whatsoever (including, without limitation, any conditional
sale or other title retention agreement, any financing lease having substan-
tially the same economic effect as any of the foregoing, and the filing of any
financing statement under the Uniform Commercial Code or comparable Law of any
jurisdiction to evidence any of the foregoing).
"Line of Credit Advance" has the meaning specified in Section
2.01.
"Line of Credit Commitment" means the obligation of the Banks
to make Line of Credit Loans pursuant to Section 2.01.
"Line of Credit Commitment Fees" has the meaning specified in
Section 2.11.
"Line of Credit Letter of Credit" has the meaning specified in
Section 3.01.
"Line of Credit Letter of Credit Agreement" means the
application for a letter of credit and/or reimbursement agreement entered into
between the Borrower and the Bank issuing the applicable Line of Credit Letter
of Credit with regard to such Line of Credit Letter of Credit.
"Line of Credit Letter of Credit Loan" has the meaning
specified in Section 3.05.
"Line of Credit Loans" has the meaning specified in Section
2.01.
"Line of Credit Maturity Date" means May 18, 1995.
"Line of Credit Note" has the meaning specified in Section
2.12.
"Line of Credit Notes" has the meaning specified in Section
2.12.
"Loans" means the Line of Credit Loans or Swing Line Loans or
the Revolving Credit Loans, or any or all of the foregoing, all as the context
may require.
"Loan Documents" means each and every one of this Agreement,
the Notes, the Line of Credit Letter of Credit Agreements, and the Revolving
Credit Letter of Credit Agreements.
"Material Adverse Change" means either (1) a material adverse
change in the status of the business, assets, liabilities, results of
operations, condition (financial or otherwise), property or prospects of the
Borrower and its Restricted Subsidiaries taken as a whole, or (2) any event or
occurrence of whatever nature which could reasonably be expected to have a
material adverse effect on the Borrower's ability to perform its obligations
under the Loan Documents.
"Monthly Date" means the first Banking Day of each month
occurring on or after the Closing Date.
"Multiemployer Plan" means a Plan defined as such in Section
3(37) of ERISA.
"Notes" means the Line of Credit Notes, Swing Line Note,
Revolving Credit Notes or the Bid Rate Notes, or any or all of the foregoing,
all as the context may require.
"Operating Lease" means any lease of the Borrower or any
Restricted Subsidiary under which the Borrower or such Restricted Subsidiary is
the lessee, other than a Capital Lease.
"Outstanding Line of Credit Facilities" means at any time an
amount equal to the sum of (1) the aggregate principal amount of all outstanding
Line of Credit Loans (other than Line of Credit Letter of Credit Loans), and (2)
the Total Line of Credit Letter of Credit Obligations.
"Outstanding Revolving Credit Facilities" means at any time an
amount equal to the sum of (1) the aggregate principal amount of all outstanding
Revolving Credit Loans (other than Revolving Credit Letter of Credit Loans), and
(2) the Total Revolving Credit Letter of Credit Obligations.
"Parent" means, with respect to any Bank, any Person
controlling such Bank.
"Participant" has the meaning specified in Section 11.04.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Cash Collateral Amount" means with respect to each
Bank an amount equal to (1) the aggregate amount of all principal payments made
on Advances made by such Bank and Cash Collateral provided to secure Letters of
Credit issued by such Bank, in both cases, after the exercise by the Banks of
any of their remedies ("Exercise Date") multiplied by (2) a fraction, the
numerator of which is equal to (i) the sum of (a) such Bank's Line of Credit
Letter of Credit Obligations plus (b) such Bank's Revolving Credit Letter of
Credit Obligations, and the denominator of which is equal to (ii) the sum of (a)
the aggregate principal amount of all outstanding Loans (other than Line of
Credit Letter of Credit Loans and Revolving Credit Letter of Credit Loans) on
the Exercise Date plus (b) the Total Line of Credit Letter of Credit Obligations
on the Exercise Date plus (c) the Total Revolving Credit Letter of Credit
Obligations on the Exercise Date.
"Permitted Investments" means: (1) marketable obligations
issued or unconditionally guaranteed by the United States of America, or issued
by any agency thereof and backed by the full faith and credit of the United
States of America, in each case maturing within one (1) year from the date of
acquisition thereof; (2) certificates of deposit maturing within one (1) year
from the date of acquisition thereof issued by (i) any Bank, or (ii) any
commercial bank with a short term credit rating of either of the two highest
short term credit ratings provided by either Standard & Poor's Corporation or
Moody's Investors Service, Inc.; (3) commercial paper payable in the United
States of America in Dollars and rated as at any date of determination A-1 or
better (or comparably if the rating system is changed) by Standard & Poor's
Corporation or P-1 or better (or comparably if the rating system is changed) by
Moody's Investors Service, Inc.; (4) travel and other similar advances to
officers and employees of the Borrower or a Restricted Subsidiary in the
ordinary course of business; (5) payments of amounts required to satisfy
patronage refunds or equity redemptions of Borrower or any Restricted Subsidiary
as determined by the Board of Directors of the Borrower or such Restricted
Subsidiary, as the case may be; and (6) Investments in CoBank.
"Person" means an individual, partnership, corporation,
business trust, joint stock company, trust, unincorporated association, joint
venture, Governmental Authority or other entity of whatever nature.
"Plan" means any plan, agreement, arrangement or commitment
which is an employee benefit plan, as defined in section 3(3) of ERISA,
maintained by the Borrower or any Restricted Subsidiary or any ERISA Affiliate
or with respect to which the Borrower or any Restricted Subsidiary or any ERISA
Affiliate at any relevant time has any liability or obligation to contribute.
"presence", when used in connection with any Environmental
Discharge or Hazardous Materials, means and includes presence, generation,
manufacture, installation, treatment, use, storage, handling, encapsulation,
disposal, transportation, spill, discharge and release.
"Prohibited Transaction" means any transaction prohibited
under Section 406 of ERISA or Section 4975 of the Code.
"Quarterly Date" means each March 31, June 30, September 30
and December 31.
"Regulation D" means Regulation D of the Board of Governors.
"Regulatory Change" means, with respect to any Bank, any
change after the date of this Agreement in United States federal, state, or
municipal Laws or foreign Laws or regulations (including Regulation D) or the
adoption or making after such date of any interpretations, directives or
requests applying to a class of banks including such Bank of or under any United
States, federal, state, or municipal Law or foreign Laws or regulations (whether
or not having the force of Law) by any court or governmental or monetary
authority charged with the interpretation or administration thereof.
"Reportable Event" means any of the events set forth in
Section 4043(b) of ERISA or in the regulations thereunder.
"Requisite Banks" means at any time the Banks that are
providing at least sixty-seven percent (67%) of all the Commitments taken as a
whole, provided, however, that at least one (1) such Bank is not a Co-Agent.
"Restricted Subsidiary" means each Subsidiary of the Borrower
listed on Schedule 1.01C and each Subsidiary of the Borrower or a Restricted
Subsidiary formed, created or acquired in accordance with the terms of this
Agreement after the Closing Date and designated in a written notice from the
Borrower to each of the Bank Parties as a Restricted Subsidiary.
"Revolving Credit Advance" has the meaning specified in
Section 2.04.
"Revolving Credit Commitment" means the obligation of the
Banks to make Revolving Credit Loans pursuant to Section 2.04.
"Revolving Credit Commitment Fees" has the meaning specified
in Section 2.11.
"Revolving Credit Letter of Credit" has the meaning specified
in Section 3.02.
"Revolving Credit Letter of Credit Agreement" means the
application for a letter of credit and/or reimbursement agreement entered into
between the Borrower and the applicable Bank with regard to a Revolving Credit
Letter of Credit.
"Revolving Credit Letter of Credit Loan" has the meaning
specified in Section 3.05.
"Revolving Credit Loans" has the meaning specified in Section
2.04.
"Revolving Credit Maturity Date" means May 19, 1997.
"Revolving Credit Note" has the meaning specified in Section
2.12.
"Revolving Credit Notes" has the meaning specified in Section
2.12.
"Subsidiary" means, as to any Person, a corporation of which
shares of stock having ordinary voting power (other than stock having such power
only by reason of the happening of a contingency) to elect a majority of the
board of directors or other managers of such corporation are at the time owned,
or the management of which is otherwise controlled, directly, or indirectly
through one or more intermediaries, or both, by such Person.
"Substantial Subsidiary" shall mean a Restricted Subsidiary or
a Subsidiary of a Restricted Subsidiary where the book value of its total assets
(as determined in accordance with GAAP) is equal to or greater than five percent
(5%) of the book value of the combined total assets of the Borrower and its
Restricted Subsidiaries on a combined basis (as determined in accordance with
GAAP).
"Supermajority Banks" means at any time the Banks that are
providing at least ninety percent (90%) of all the Commitments taken as a whole.
"Swing Line Advance" has the meaning specified in Section
2.03.
"Swing Line Bank" means CoBank.
"Swing Line Bid Rate" has the meaning specified in Section
2.07.
"Swing Line Bid Rate Maturity Date" has the meaning specified
in Section 2.07.
"Swing Line Bid Rate Quote Request" has the meaning specified
in Section 2.07.
"Swing Line Borrowing Notice" has the meaning specified in
Section 2.07.
"Swing Line Commitment" means the obligation of the Swing Line
Bank to make Swing Line Loans pursuant to Section 2.03.
"Swing Line Facility" means Ten Million Dollars ($10,000,000).
"Swing Line Loans" has the meaning specified in Section 2.03.
"Swing Line Note" has the meaning specified in Section 2.12.
"Total Line of Credit Commitment" means Four Hundred Fifty
Million Dollars ($450,000,000), as such amount may be reduced in accordance with
Section 2.02, and in any event shall include the Swing Line Commitment.
"Total Line of Credit Letter of Credit Obligations" means at
any time an amount equal to the sum of (1) the aggregate undrawn face amount of
all outstanding Line of Credit Letters of Credit, (2) the aggregate amount of
all unreimbursed obligations on Line of Credit Letters of Credit, (3) the
aggregate principal amount of all outstanding Line of Credit Letter of Credit
Loans and (4) the aggregate amount of all outstanding overdrafts created to
satisfy any of the foregoing obligations.
"Total Revolving Credit Commitment" means Two Hundred Million
Dollars ($200,000,000).
"Total Revolving Credit Letter of Credit Obligations" means at
any time an amount equal to the sum of (1) the aggregate undrawn face amount of
all outstanding Revolving Credit Letters of Credit, (2) the aggregate amount of
all unreimbursed obligations on Revolving Credit Letters of Credit, (3) the
aggregate principal amount of all outstanding Revolving Credit Letter of Credit
Loans and (4) the aggregate amount of all outstanding overdrafts created to
satisfy any of the foregoing obligations.
"Unrestricted Entities" means all Persons in which the
Borrower or any Consolidated Subsidiary holds an Investment other than the
Restricted Subsidiaries.
"Unused Line of Credit Commitment" means at any time, with
respect to any Bank, the amount (which in no event shall be less than zero) that
is equal to (1) such Bank's Individual Line of Credit Commitment minus (2) the
total of (a) the aggregate outstanding principal amount of such Bank's Line of
Credit Loans (other than Line of Credit Letter of Credit Loans) and (b) all Line
of Credit Letter of Credit Obligations of the Borrower to such Bank.
"Unused Revolving Credit Commitment" means at any time, with
respect to any Bank, the amount (which in no event shall be less than zero) that
is equal to (1) such Bank's Individual Revolving Credit Commitment minus (2) the
total of (a) the aggregate outstanding principal amount of such Bank's Revolving
Credit Loans (other than Revolving Credit Letter of Credit Loans) and (b) all
Revolving Credit Letter of Credit Obligations of the Borrower to such Bank.
Section 1.02. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP (except
in the case of the combined and combining financial statements of the Borrower
and its Restricted Subsidiaries it is assumed that the only Subsidiaries of the
Borrower are the Restricted Subsidiaries), and all financial data required to be
delivered hereunder shall be prepared in accordance with GAAP (except as
specified above).
Section 1.03. Computation of Time Periods. Except as
otherwise provided herein, in this Agreement, in the computation of periods of
time from a specified date to a later specified date, the word "from" means
"from and including" and words "to" and "until" each means "to but excluding".
Section 1.04. Rules of Construction. When used in this
Agreement: (1) a reference to a Law includes any amendment or modification to
such law; (2) a reference to a Person includes its permitted successors and
permitted assigns and a reference to a Person in a particular capacity excludes
such Person in any other capacity; (3) a reference to an agreement, instrument
or document shall include such agreement, instrument or document as the same may
be amended, modified or supplemented from time to time in accordance with its
terms and, if applicable, as permitted by the Loan Documents, and reference to
any Note includes any note issued pursuant hereto in extension or renewal
thereof and in substitution or replacement therefor; (4) reference to any gender
includes each other gender; (5) the words "herein," "hereof" and "hereunder" and
other words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision; (6) unless the context
indicates otherwise, reference to any Article, Section, Schedule or Exhibit
means such Article or Section hereof or such Schedule or Exhibit hereto; and (7)
the words "including" (and with correlative meaning "include") means including,
without limiting the generality of any description preceding such term. The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof. Any reference to
Central time shall mean such time as in effect in the United States of America.
ARTICLE II. LOANS
Section 2.01. Line of Credit. Subject to the terms and
conditions of this Agreement, each of the Banks severally agrees to make loans
(each loan made by an individual Bank a "Line of Credit Advance" and the total
of all such loans made by all the Banks at the same time, the "Line of Credit
Loans") to Borrower from time to time during the period from the Closing Date to
the Line of Credit Maturity Date, provided that (1) with respect to all
Banks, the aggregate principal amount of all Line of Credit Loans outstanding at
any time does not exceed the total of (a) the Total Line of Credit Commitment
minus (b) the Total Line of Credit Letter of Credit Obligations minus (c) the
aggregate principal amount of all outstanding Swing Line Loans, and (2) with
respect to each Bank (other than the Swing Line Bank), the aggregate principal
amount of all Line of Credit Advances made by such Bank does not exceed such
Bank's Individual Line of Credit Commitment minus such Bank's Individual Line of
Credit Letter of Credit Obligations, and (3) with respect to the Swing Line
Bank, the aggregate principal amount of all Line of Credit Advances made by such
Bank does not exceed such Bank's Individual Line of Credit Commitment minus such
Bank's Individual Line of Credit Letter of Credit Obligations minus the
aggregate principal amount of all outstanding Swing Line Loans.
Each Committed Line of Credit Loan will be made by the Banks
ratably in proportion to their Unused Line of Credit Commitment as of the close
of business on the Business Day the Borrower delivers the Committed Loan
Borrowing Notice pursuant to which the Borrower requests such Committed Line of
Credit Loan. Each Bid Rate Loan which is a Line of Credit Loan will be made by
the applicable Banks in the amount of their respective bids that are accepted by
the Borrower in accordance with Section 2.08. Each Line of Credit Loan which
shall not utilize the Total Line of Credit Commitment in full shall be in the
minimum amount set forth in Section 2.17. Within the limits of the Total Line
of Credit Commitment, the Borrower may borrow, make an optional prepayment
pursuant to Section 2.13, and reborrow under this Section 2.01.
Section 2.02. Reduction of Total Line of Credit Commitment.
Once during the period from May 19, 1994 to August 31, 1994, the Borrower may,
upon at least three (3) Banking Days' notice to the Administrative Agent and
each Bank, reduce in part the unused portion of the Total Line of Credit
Commitment, provided, however, that such reduction shall be in the amount of not
less than Five Million Dollars ($5,000,000) nor more than Fifty Million Dollars
($50,000,000) and must be in integral multiples of Five Million Dollars
($5,000,000). Any reduction in part of the unused portion of the Total Line of
Credit Commitment shall be made on a pro rata basis with respect to each Bank's
Individual Line of Credit Commitment and without regard to the amount of
outstanding Line of Credit Advances of each such Bank at the time of such
reduction. The Total Line of Credit Commitment, once reduced pursuant to this
Section 2.02, will automatically be reinstated on September 1, 1994.
Section 2.03. Swing Line. Subject to the terms and
conditions of this Agreement, the Swing Line Bank agrees to make loans (each
loan made by the Swing Line Bank a "Swing Line Advance" and the total of all
such loans the "Swing Line Loans") to Borrower from time to time during the
period from the Closing Date to the Line of Credit Maturity Date, provided that
the aggregate principal amount of all Swing Line Loans outstanding at any time
does not exceed the Swing Line Facility. Each Swing Line Advance which shall
not utilize the Swing Line Commitment in full shall be in the minimum amount set
forth in Section 2.17. Within the limits of the Swing Line Commitment, the
Borrower may borrow, make an optional prepayment pursuant to Section 2.13, and
reborrow under this Section 2.03.
Section 2.04. Revolving Credit. Subject to the terms and
conditions of this Agreement, each of the Banks severally agrees to make loans
(each loan made by an individual Bank a "Revolving Credit Advance" and the total
of all such loans made by all the Banks at the same time, the "Revolving Credit
Loans") to Borrower from time to time during the period from the Closing Date to
the Revolving Credit Maturity Date, provided that (1) with respect to all Banks,
the aggregate principal amount of all Revolving Credit Loans outstanding at any
time does not exceed the Total Revolving Credit Commitment minus the Total
Revolving Credit Letter of Credit Obligations, and (2) with respect to each
Bank, the aggregate principal amount of all Revolving Credit Advances made by
such Bank does not exceed such Bank's Individual Revolving Credit Commitment
minus such Bank's Individual Revolving Credit Letter of Credit Obligations.
Each Revolving Credit Loan will be made by the Banks ratably
in proportion to their Unused Revolving Credit Commitment at the time of making
such Revolving Credit Loan. Each Revolving Credit Loan which shall not utilize
the Total Revolving Credit Commitment in full shall be in the minimum amount set
forth in Section 2.17. Within the limits of the Total Revolving Credit
Commitment, the Borrower may borrow, make an optional prepayment pursuant to
Section 2.13, and reborrow under this Section 2.04.
Section 2.05. All Loans. The failure of any Bank to make any
requested Line of Credit Advance or Revolving Credit Advance or Swing Line
Advance to be made by it on the date specified for such Advance shall not
relieve any other Bank of its obligation (if any) to make any Advance on such
date, but no Bank shall be responsible for the failure of any other Bank to make
any such Advance to be made by such other Bank. In addition, no Bank shall be
responsible for the failure of the Swing Line Bank to make a Swing Line Advance.
Section 2.06. Notice and Manner of Borrowing for Committed
Line of Credit Loans and Revolving Credit Loans. The Borrower shall give the
Administrative Agent and each Bank on or before 12:30 p.m. (Central time) in the
case of Base Rate Loans and 3:00 p.m. (Central time) in the case of CD Loans and
LIBOR Loans at least the number of Banking Days prior written or telegraphic or
facsimile notice (effective upon receipt) specified below for each type of Loan:
Number of Banking
Type of Loan Days Prior Notice
Base Rate Loan same day
CD Loan two (2)
LIBOR Loan three (3)
Each of the foregoing notices, substantially in the form of Exhibit E (a
"Committed Loan Borrowing Notice"), must specify: (1) whether the Loan is a Line
of Credit Loan or a Revolving Credit Loan, (2) the amount of such Loan, (3) the
date of such Loan, (4) whether the Loan will bear interest at (a) the Base Rate,
or (b) the LIBOR Rate plus the Applicable Margin, or (c) the CD Rate plus the
Applicable Margin; and (d) in the case of a LIBOR or CD Loan, the initial
Interest Period applicable thereto. Upon fulfillment of the applicable
conditions set forth in Article IV, not later than 2:00 P.M. (Central time) on
the date of a Loan, each Bank will make available such Bank's share of such Loan
to the Borrower at its counters, in immediately available funds, and will
transmit such funds by wire transfer to the Borrower's Account.
Section 2.07. Notice and Manner of Borrowing for Swing Line Advances.
The Borrower shall give the Swing Line Bank prior oral notice (effective upon
receipt) on or before 2:30 P.M. (Central time) on the date of making each Swing
Line Advance.
Each of the foregoing notices (a "Swing Line Borrowing Notice") must
specify: (1) the amount of such Advance; (2) the date of such Advance; (3) the
proposed maturity date (if any) ("Swing Line Bid Rate Maturity Date"), and (4)
whether the Borrower is requesting that the Swing Line Bank quote an interest
rate (other than the Base Rate) on such Advance ("Swing Line Bid Rate Quote
Request"). If the Swing Line Bank receives a Swing Line Bid Rate Quote Request
then it will provide the Borrower with a proposed interest rate for such Swing
Line Advance ("Swing Line Bid Rate"). If the Borrower accepts the Swing Line
Bid Rate then such Rate will be the rate of interest on such Advance and if the
Borrower rejects such Swing Line Bid Rate then the interest rate on such Advance
will be the Base Rate. In addition, if a Swing Line Advance is not prepaid on
its Swing Line Bid Rate Maturity Date then it will bear interest at the Base
Rate. Upon fulfillment of the applicable conditions set forth in Article IV,
not later than 3:00 P.M. (Central time) on the date of a Swing Line Advance the
Swing Line Bank will make available such Swing Line Advance to the Borrower at
its counters in immediately available funds, and will transmit such funds by
wire transfer to the Borrower's Account.
Section 2.08. Notice and Manner of Requesting Bid Rate Loans. During
the period from and including the Closing Date to and including May 25, 1994 and
at any time thereafter that the aggregate principal amount of all outstanding
Committed Line of Credit Loans is equal to or exceeds Seventy-Five Million
Dollars ($75,000,000), then the Borrower may request offers from all of the
Banks, acting severally and not jointly, to make Bid Rate Loans. For purposes
of this Agreement, (1) each such loan made by an individual Bank is a "Bid Rate
Advance" and the total of all such loans made by all the selected Banks at the
same time is a "Bid Rate Loan," and (2) each Bid Rate Advance will be a Line of
Credit Advance and each Bid Rate Loan will be a Line of Credit Loan.
The Borrower shall give written or telegraphic or facsimile notice
(effective upon receipt), substantially in the form of Exhibit F (a "Bid Rate
Quote Request"), of a proposed Bid Rate Loan on or before 9:00 A.M. (Central
time) on the date of the proposed Bid Rate Loan.
Each Bid Rate Quote Request must specify; (1) the total amount of such
requested Bid Rate Loan, (2) the individual amount of each requested Bid Rate
Loan, (3) the date of such Bid Rate Loan, and (4) the proposed maturity date
("Bid Rate Maturity Date") for such Bid Rate Loan. The Borrower may request
offers to make more than one Bid Rate Loan, each with a different Bid Rate
Maturity Date, in a single Bid Rate Quote Request.
Each Bank may, in its sole discretion, submit a written quote,
substantially in the form of Exhibit G (a "Bid Rate Quote"), containing an offer
or offers to make Bid Rate Advances in response to any Bid Rate Quote Request
(but may elect to bid any Bid Rate Maturities specified in the Bid Rate Quote
Request), provided, however, each Bank is limited to one Bid Rate Quote
submission per day (which may cover more than one Bid Rate Maturity Date). Each
Bid Rate Quote must be submitted to the Borrower's Office by facsimile not later
than 10:00 A.M. (Central time) on the proposed date of making the proposed Bid
Rate Loan. Each Bid Rate Quote so made shall be irrevocable. A Bid Rate Quote
may set forth offers for up to five (5) separate Bid Rates for the applicable
Bid Rate Advances; provided that each Bid Rate Quote shall specify the aggregate
principal amount of Bid Rate Advances for all Bid Rate Maturity Dates that the
Bank submitting such Bid Rate Quote is willing to make pursuant to such Bid Rate
Quote. The Borrower shall disregard a Bid Rate Quote if it (1) is not
substantially in conformity with Exhibit G, (2) contains qualifying or
conditional language, (3) proposes terms other than or in addition to those set
forth in the applicable Bid Rate Quote Request, or (4) arrives after the
applicable time set forth in this Section 2.08.
Not later than 12:30 P.M. (Central time) on the proposed date for making
a Bid Rate Loan, the Borrower shall notify each Bank that has submitted a Bid
Rate Quote of its acceptance or non-acceptance of the offers submitted to it
pursuant to this Section 2.08, and shall provide notice to the Administrative
Agent of the offers accepted by the Borrower and the terms thereof. In the case
of acceptance, such notice, which shall be in the form of Exhibit H (a "Bid Rate
Notice of Borrowing"), shall specify the aggregate principal amount of offers
for each of the Bid Rate Advances that are accepted. Regardless of the amounts
or interest rates bid by any or all Banks, the Borrower may accept any Bid Rate
Quote in whole or in part; provided that, (1) the aggregate principal amount of
Bid Rate Loans may not exceed the applicable amount set forth in the related Bid
Rate Quote Request, (2) the Borrower may not accept any offer that fails to
comply with this Section 2.08 and (3) the Borrower may not accept any offer that
results in a Bank having Individual Line of Credit Advances (after taking into
account all Committed Line of Credit Loans still required to be made under all
delivered Committed Loan Borrowing Notices) greater than the amount permitted
under Section 2.01.
Not later than 2:00 P.M. (Central time) on the date of making each Bid
Rate Loan, each Bank that is to make a Bid Rate Advance will make available to
the Borrower its Bid Rate Advance in immediately available funds at its
counters, and will transmit such funds by wire transfer to the Borrower's
Account, unless such Bank determines that any applicable condition in Article IV
has not been satisfied (in which event, such Bank shall immediately notify the
Borrower, the Administrative Agent, and the other Banks of such a determination,
and the requested Bid Rate Loan shall not be made). If any Bank has disbursed
funds to the Borrower prior to receiving notification that an applicable
condition in Article IV has not been satisfied, the Borrower shall be obligated
to return such disbursed funds to such Bank upon demand, and if such funds are
not returned on the same day by 3:00 p.m. (Central time) such Bank shall be
entitled to interest on the disbursed funds at the Default Rate until the
Borrower has repaid the disbursed funds to such Bank.
Notwithstanding anything to the contrary in this Agreement, the Borrower
and the Banks agree that a loan outstanding on the Closing Date made prior to
such Date by The Bank of Nova Scotia to the Borrower in the amount of Twenty-
Five Million Dollars ($25,000,000) is a Bid Rate Advance with a fixed rate of
interest thereon through June 9, 1994, shall be a Bid Rate Loan with a Bid Rate
Maturity Date of June 9, 1994.
Section 2.09. Interest Periods. In the case of each CD Advance or
LIBOR Advance, the Borrower shall select an Interest Period of any duration in
accordance with the definition of Interest Period in Section 1.01, subject to
the following limitations: (1) for each Line of Credit Advance, no Interest
Period may extend beyond the Line of Credit Maturity Date; (2) for each
Revolving Credit Advance, no Interest Period may extend beyond the Revolving
Credit Maturity Date; (3) no Interest Period shall have a duration of less than
one (1) month, and if any such proposed Interest Period would otherwise be for a
shorter period, such Interest Period shall not be available; and (4) if an
Interest Period would end on a day which is not a Banking Day, such Interest
Period shall be extended to the next Banking Day, unless, in the case of a LIBOR
Loan, such Banking Day would fall in the next calendar month, in which event
such Interest Period shall end on the immediately preceding Banking Day.
Notwithstanding anything herein to the contrary, no Bank will be
required to have with respect to such Bank's share of the first Seventy-Five
Million Dollars ($75,000,000) of Committed Line of Credit Loans more than five
(5) different Interest Periods outstanding at any time or Revolving Credit
Advances with more than fifteen (15) different Interest Periods outstanding at
any time.
Section 2.10. Interest. The Borrower shall pay interest to each Bank
on the outstanding and unpaid principal amount of such Bank's Advances, at a
rate per annum as follows: (1) for a Base Rate Advance at a rate equal to the
Base Rate; (2) for a LIBOR Advance at a rate equal to the LIBOR Rate plus the
Applicable Margin; (3) for a CD Advance at a rate equal to the CD Rate plus the
Applicable Margin; (4) for a Bid Rate Advance at a rate per annum equal to the
Bid Rate set forth in the Bid Rate Quote for such Bid Rate Advance accepted by
the Borrower in its Bid Rate Notice of Borrowing and (5) for a Swing Line
Advance at a rate per annum equal, as applicable, to the Base Rate or the Swing
Line Bid Rate applicable to such Advance accepted by the Borrower. Any
principal amount not paid when due (at maturity, by acceleration or otherwise)
shall bear interest thereafter, payable on demand, at the applicable Default
Rate.
The interest rate on each Base Rate Advance shall change when the Base
Rate changes. Interest on each Loan shall not exceed the maximum amount
permitted under applicable Law and shall be calculated on the basis of a year of
three hundred sixty (360) days for the actual number of days elapsed.
Accrued interest shall be due and payable in arrears upon any payment or
prepayment of principal and (1) for each Base Rate Loan, on each Monthly Date,
commencing with the first such date after such Loan, (2) for each CD Advance, on
the last day of the Interest Period with respect thereto and, in the case of an
Interest Period greater than 90 days, at 90-day intervals after the first day of
such Interest Period, (3) for each LIBOR Advance, on the last day of the
Interest Period with respect thereto and, in the case of an Interest Period
greater than three (3) months, at three (3) month intervals after the first day
of such Interest Period, (4) for each Bid Rate Loan, on the applicable Bid Date
Maturity Date, and in the case of a Bid Rate Loan with a period from the date of
making the Bid Rate Loan to a Bid Rate Maturity Date of greater than 90 days, at
90 day intervals after the first day of making such Bid Rate Advance, and (5)
interest accruing at the Default Rate shall be due and payable on demand.
Notwithstanding anything to the contrary contained in this Agreement, accrued
interest on the Swing Line Loans, whether interest accrues at the Base Rate or a
Swing Line Bid Rate, shall be due and payable in arrears, on each Monthly Date
and on the Line of Credit Maturity Date.
Each Bank shall provide to the Borrower at least three (3) Banking Days
prior to the date interest is due and payable to such Bank written notice of the
amount of interest to be due and payable; provided, however, if there is any
change during such three (3) Banking Day period that results in a change in such
interest, the applicable Bank will advise the Borrower by telephone of such
change and the Borrower will be required to pay such adjusted amount of
interest. Failure of any Bank to provide such prior written notice, however,
shall not affect the Borrower's obligation to make such interest payments when
due.
Section 2.11. Fees. On the Closing Date, the Borrower agrees to pay to
each Bank a facility fee ("Facility Fee") equal to Two Hundred Fifty Thousand
Dollars ($250,000) multiplied by a fraction the numerator of which is equal to
such Bank's Individual Revolving Credit Commitment and the denominator of which
is the Total Revolving Credit Commitment.
The Borrower agrees to pay to each Bank a commitment fee on the average
daily difference during the period from the Closing Date to the Line of Credit
Maturity Date between (1) such Bank's Line of Credit Commitment and (2) the sum
of (a) the aggregate outstanding principal amount of all Line of Credit Advances
made by such Bank, including in the case of the Swing Line Bank, any Swing Line
Advances, and (b) such Bank's portion of the Total Line of Credit Letter of
Credit Obligations, at the rate of one hundred twenty-five thousandths of one
percent (.125%) per annum, based on a year of three hundred sixty (360) days,
payable in arrears on the Banking Day immediately following each Quarterly Date
during the period from the Closing Date to the Line of Credit Maturity Date,
commencing July 1, 1994, and ending on the Line of Credit Maturity Date
(collectively, the "Line of Credit Commitment Fees"). The Borrower and the
Banks agree that if the Total Line of Credit Commitment is reduced in accordance
with Section 2.02 then during such reduction the Line of Credit Commitments Fees
are computed based upon such reduced Total Line of Credit Commitment.
The Borrower agrees to pay to each Bank a commitment fee on the average
daily difference during the period from the Closing Date to the Revolving Credit
Maturity Date between (1) such Bank's Individual Revolving Credit Commitment and
(2) the sum of (a) the aggregate outstanding principal amount of all Revolving
Credit Advances made by such Bank, and (b) such Bank's portion of the Total
Revolving Credit Letter of Credit Obligations, at the rate of one quarter of one
percent (.25%) per annum, based on a year of three hundred sixty (360) days,
payable in arrears on the Banking Day immediately following each Quarterly Date
during the period from the Closing Date to the Revolving Credit Maturity Date,
commencing July 1, 1994, and ending on the Revolving Credit Maturity Date
(collectively, the "Revolving Credit Commitment Fees").
Each Bank shall provide to the Borrower as of each Quarterly Date
written notice of the amount of Commitment Fees to be due and payable on the
next Banking Day. Failure of any Bank to provide such written notice, however,
shall not affect the Borrower's obligation to pay such Commitment Fees.
The Borrower agrees to pay to the Co-Agents the fees set forth in the
Fee Letter.
Section 2.12. Notes. All Line of Credit Advances made by each Bank
under this Agreement shall be evidenced by, and repaid with interest in
accordance with, a single promissory note of the Borrower in substantially the
form of Exhibit A duly completed, in the stated maximum principal amount equal
to such Bank's Individual Line of Credit Commitment, dated the date such Bank
becomes a Bank, payable to such Bank for the account of its Applicable Lending
Office, and maturing as to principal on the Line of Credit Maturity Date (each a
"Line of Credit Note" and, collectively, the "Line of Credit Notes").
All Swing Line Advances made by the Swing Line Bank under this Agreement
shall be evidenced by, and repaid with interest in accordance with, a single
promissory note of the Borrower in substantially the form of Exhibit B duly
completed, in the stated maximum principal amount equal to the Swing Line
Commitment, dated the Closing Date, payable to such Bank for the account of its
Applicable Lending Office, and maturing as to principal on the Line of Credit
Maturity Date (a "Swing Line Note").
All Revolving Credit Advances made by each Bank under this Agreement
shall be evidenced by, and repaid with interest in accordance with, a single
promissory note of the Borrower in substantially the form of Exhibit C duly
completed, in the stated maximum principal amount equal to such Bank's
Individual Revolving Credit Commitment, dated the date such Bank becomes a Bank,
payable to such Bank for the account of its Applicable Lending Office, and
maturing as to principal on the Revolving Credit Maturity Date (each a
"Revolving Credit Note" and, collectively, the "Revolving Credit Notes").
All Bid Rate Advances made by any Bank under this Agreement shall be
evidenced by, and repaid with interest in accordance with, a single promissory
note in substantially the form of Exhibit D duly completed, in the stated
maximum principal amount equal to such Bank's Individual Line of Credit
Commitment, dated the date such Bank becomes a Bank, payable to such Bank for
the account of its Applicable Lending Office, and each Bid Rate Loan will mature
as to principal on the applicable Bid Rate Loan Maturity Date (each a "Bid Rate
Note" and collectively, the "Bid Rate Notes").
Each Bank is hereby authorized by the Borrower to endorse on each
schedule attached to the Notes held by it the amount of each Advance, the type
of the Advance, the applicable Interest Period, if any, and in the case of the
Bid Rate Notes the interest rate on such Advance, the applicable Bid Rate
Maturity Date, and in the case of the Swing Line Note the interest rate on a
Swing Line Advance and (if applicable) the applicable Swing Line Bid Rate
Maturity Date, and in the case of the Line of Credit Notes and Revolving Credit
Notes each Conversion, Continuation and payment of principal amount received by
such Bank for the account of its Applicable Lending Office on account of the
applicable Advance, which endorsement shall, in the absence of manifest error,
be conclusive as to the outstanding balance of the Advances evidenced by such
Note and made by such Bank; provided, however, that the failure to make such
notation with respect to any Advance, interest rate, Interest Period, Bid Loan
Maturity Date, or Conversion, Continuation or payment shall not limit or
otherwise affect the obligations of the Borrower under this Agreement or the
Notes held by such Bank. Notwithstanding the foregoing, the Borrower will never
be required to pay as principal more than the principal amount of the Loans made
by the Banks. Each Bank agrees that prior to any assignment of any Note it will
endorse the schedule attached to such Note.
Section 2.13. Optional Prepayments. The Borrower may, upon giving the
Administrative Agent and each Bank at least the number of Banking Days prior
written or telegraphic or facsimile notice (effective upon receipt) specified
below for each Committed Loan prepay such Advance.
Number of Banking
Type of Loan Days Prior Notice
Base Rate Loan same day
CD Loan two (2)
LIBOR Loan three (3)
Each such prepayment of the Loans may be, in whole or in part, and will
be, with accrued interest to the date of such prepayment on the amount prepaid,
provided that (1) each partial prepayment shall be in a principal amount of not
less than One Million Dollars ($1,000,000) and integral multiples of One Hundred
Thousand Dollars ($100,000); (2) unless the Borrower pays compensation in
accordance with Section 2.23 Certain Compensation, Loans to which the LIBOR Rate
or CD Rate applies may be prepaid only on the last day of the Interest Period
for such Loan; and (3) Bid Rate Loans may not be prepaid. In addition, each
such prepayment of the Loans shall be paid to the Banks ratably based upon the
amount each such Bank's outstanding Advances bears to such Loan.
Notwithstanding anything to the contrary contained in this Agreement, if
on or after May 25, 1994, there are any Bid Rate Loans outstanding at the time
of a proposed prepayment of Committed Line of Credit Loans, the Borrower will
not be permitted to prepay such Line of Credit Loans to the extent such
prepayment would reduce the aggregate outstanding principal amount of the
Committed Line of Credit Loans to Seventy-Five Million Dollars ($75,000,000) or
less.
Section 2.14. Method of Payment. The Borrower shall make each payment
under this Agreement and under each Note not later than 2:30 P.M. (Central time)
on the date when due in Dollars to each Bank at each Bank's Office in
immediately available funds.
The Borrower hereby authorizes each Bank, if and to the extent payment of
the Loans or interest thereon or any Commitment Fee is not made when due under
this Agreement or under the Notes, to charge from time to time against any
account it maintains with such Bank any such amount so due to such Bank and/or
the Banks.
Except to the extent provided in this Agreement, whenever any payment to
be made under this Agreement or under the Notes shall be stated to be due on any
day other than a Banking Day, such payment shall be made on the next succeeding
Banking Day, and such extension of time shall in such case be included in the
computation of the payment of interest and the Commitment Fees.
Section 2.15. Use of Proceeds. The proceeds of the Loans will be used
by the Borrower for general corporate purposes. The Borrower will not, directly
or indirectly, use any part of such proceeds for the purpose of purchasing or
carrying any margin stock within the meaning of Regulation U of the Board of
Governors or to extend credit to any Person for the purpose of purchasing or
carrying any such margin stock.
Section 2.16. Conversions of Advances or Continuation of CD and LIBOR
Loans. Subject to Section 2.17 hereof and provided that no Default or Event of
Default has occurred and is continuing, the Borrower shall have the right to
Convert all or a part of one type of Loan into another type of Loan or to
Continue all or any part of LIBOR or CD Loans, at any time or from time to time,
provided that: (1) the Borrower shall give the Administrative Agent and each
Bank notice of each such Conversion or Continuation as provided in Section 2.18;
and (2) LIBOR and CD Loans may be Converted or Continued only on the last day of
an Interest Period for such Loans. Notwithstanding anything to the contrary in
this Agreement, Swing Line Advances may only be Base Rate Advances or Swing Line
Bid Rate Advances.
Section 2.17. Minimum Amounts. Each Loan (other than a Swing Line
Advance) and each Conversion or Continuation thereof shall be in an amount at
least equal to Five Million Dollars ($5,000,000) and in integral multiples of
One Hundred Thousand Dollars ($100,000) (LIBOR Loans or CD Loans having
different Interest Periods at the same time hereunder to be deemed separate
Loans and Conversions and Continuation for purposes of the foregoing, one for
each Interest Period). Anything in this Agreement to the contrary
notwithstanding, the aggregate principal amount of LIBOR Loans and CD Loans
having the same Interest Period shall be at least equal to Five Million Dollars
($5,000,000) and integral multiples of One Hundred Thousand Dollars ($100,000),
and, if any LIBOR or CD Loan, as the case may be, would otherwise be in a lesser
principal amount for any period, such LIBOR Loan or CD Loan shall be a Base Rate
Loan during such period.
In the case of Bid Rate Loans, each Bid Rate Quote Request shall be in an
amount at least equal to Five Million Dollars ($5,000,000) and in integral
multiples of One Hundred Thousand Dollars ($100,000), and each Bid Rate Quote
shall be in an amount at least equal to the lesser of (a) Five Million Dollars
($5,000,000) or (b) such Bank's Unused Line of Credit Commitment.
In the case of Swing Line Advances, each Swing Line Advance shall be in
an amount at least equal to One Hundred Thousand Dollars ($100,000) and in
integral multiples of Ten Thousand Dollars ($10,000).
Section 2.18. Certain Notices. Notices by the Borrower to the
Administrative Agent and each Bank of Conversions and Continuations of LIBOR or
CD Loans and of the duration of Interest Periods shall be irrevocable and shall
be effective only if received by the Administrative Agent and each Bank not
later than 12:30 P.M. (Central time) in the case of Base Rate Loans and 3:00
P.M. (Central time) in the case of CD Loans and LIBOR Loans on the number of
Banking Days prior to the date of the relevant Conversion and Continuation or
the first day of such Interest Period specified below:
Number of Banking
Notice Days Prior Notice
Conversions into Base Rate Loans same day
Conversions into, Continuations two (2)
as, or duration of Interest
Period for, CD Loans
Conversions into, Continuations
as, or duration of Interest
Period for, LIBOR Loans three (3)
Each such notice of Conversion or Continuation shall specify the Loan to be
Converted or Continued and the amount (subject to Section 2.17 hereof) thereof
and the date of Conversion or Continuation (which shall be a Banking Day). Each
such notice of the duration of an Interest Period shall specify the LIBOR or CD
Loan, as the case may be, to which such Interest Period is to relate. In the
event that the Borrower fails to select the type of Loan, or the duration of any
Interest Period for any LIBOR or CD Loan, as the case may be, within the time
period and otherwise as provided in this Section 2.18, such Loan (if outstanding
as a LIBOR or CD Loan, as the case may be) will be automatically Converted into
a Base Rate Loan on the last day of the then current Interest Period for such
LIBOR or CD Loan, as the case may be.
Section 2.19. Additional Costs. The Borrower shall pay directly to
each Bank within ten (10) days of a request for payment under this Section 2.19
(which request shall be accompanied by a statement setting forth the basis for
the request), such amounts as such Bank may determine to be necessary to
compensate it for any increased costs which such Bank determines are
attributable to its making or maintaining any LIBOR or CD Advance, or its
obligation to Convert any Base Rate Advance to a LIBOR Advance or CD Advance, as
the case may be, hereunder, or any reduction in any amount receivable by such
Bank hereunder in respect of any of such LIBOR or CD Advances or such obligation
(such increases in costs and reductions in amounts receivable being herein
called "Additional Costs"), resulting from any Regulatory Change which:
(1) changes the basis of taxation of any amounts payable to such Bank
under this Agreement or the Notes in respect of any of such LIBOR or CD
Advances (other than changes in the rate of income tax imposed on such Bank
or its Applicable Lending Office by the jurisdiction in which such Bank has
its principal office or such Applicable Lending Office); or
(2) imposes or modifies any reserve, special deposit, deposit insurance
or assessment, minimum capital, capital ratio or similar requirements
relating to any extensions of credit of the type specified herein or other
assets of, or any deposits with or other liabilities of, such Bank
(including any LIBOR or CD Advances or any deposits referred to in the
definition of "LIBOR Rate" or "CD Rate", respectively, in Section 1.01
hereof), or any commitment of the Bank; or
(3) imposes any other condition affecting this Agreement or the Notes
(or any of such extensions of credit or liabilities).
Without limiting the effect of the provisions of the first paragraph of
this Section 2.19, in the event that, by reason of any Regulatory Change, any
Bank either (1) incurs Additional Costs based on or measured by the excess above
a specified level of the amount of a category of deposits or other liabilities
of such Bank which includes deposits by reference to which the LIBOR or CD Rate
is determined as provided in this Agreement or a category of extensions of
credit or other assets of such Bank which includes loans based on the LIBOR or
CD Rate or (2) becomes subject to restrictions on the amount of such a category
of liabilities or assets which it may hold, then, if such Bank so elects by
notice to the Borrower (with a copy to the Administrative Agent), the obligation
of such Bank to make or Continue, or to Convert Base Rate Advances into LIBOR or
CD Advances, as the case may be, shall be suspended until such Regulatory Change
ceases to be in effect (in which case the provisions of Section 2.22 hereof
shall be applicable).
Determinations and allocations by such Bank for purposes of this Section
2.19 of the effect of any Regulatory Change pursuant to the first or second
paragraph of this Section 2.19, on its costs or rate of return of maintaining
the Advances or on amounts receivable by it in respect of the Advances, and the
amounts required to compensate such Bank under this Section 2.19, shall be
conclusive absent manifest error. However, to the extent Additional Costs
relate to a Bank's loans in general and not specifically to a Loan hereunder,
such Bank shall use reasonable averaging and attribution methods. In addition,
each Bank agrees that, as promptly as practical after it becomes aware of the
occurrence of an event or the existence of a condition that would entitle it to
exercise its rights under this Section 2.19, that it will use commercially
reasonable efforts to make, fund or maintain the affected Advance through
another lending office of such Bank if (a) as a result thereof the additional
money that would otherwise be required to be paid in respect of such Advance
could be reduced and (b) the making, funding or maintaining of such Advance
through such other lending office would not adversely affect such Advance or
such Bank. Finally, if a Bank is to require the Borrower to pay Additional
Costs under this Section 2.19 then such Bank must make a demand on the Borrower
to pay such Additional Costs within ninety (90) days of the later of (1) the
date on which such Additional Costs are actually incurred by such Bank, or (2)
the date on which such Bank knows, or should have known, that such Additional
Costs have been incurred by such Bank.
Section 2.20. Limitation on Types of Advances. Anything herein to the
contrary notwithstanding, if, on or prior to the determination of the LIBOR or
CD Rate for any Interest Period:
(1) the Administrative Agent determines (which determination shall be
conclusive) that quotations of interest rates in the definition of "LIBOR or
CD Rate" in Section 1.01 hereof are not being provided in the relevant
amounts or for the relevant maturities for purposes of determining rates of
interest for LIBOR or CD Loans, as the case may be, as provided in this
Agreement; or
(2) any Bank determines (which determination shall be conclusive) that
the relevant rates of interest referred to in the definition of "LIBOR Rate"
or "CD Rate" in Section 1.01 hereof upon the basis of which the rate of
interest for LIBOR Loans or CD Loans, as the case may be, for such Interest
Period is to be determined do not adequately cover the cost to the Banks of
making or maintaining such LIBOR Loans or CD Loans, as the case may be, for
such Interest Period;
then the Administrative Agent shall give the Borrower prompt notice thereof, and
so long as such condition remains in effect, in the case of subsection (1)
above, the Banks, and in the case of subsection (2) above, the Bank that makes
the determination, shall be under no obligation to make LIBOR Loans or CD Loans,
as the case may be, Convert Base Rate Loans into LIBOR Loans or CD Loans, as the
case may be, or Continue LIBOR Loans or CD Loans, as the case may be, and the
Borrower shall, on the last day(s) of the then current applicable Interest
Period(s) for the outstanding LIBOR Loans or CD Loans, as the case may be,
either prepay such LIBOR Loans or CD Loans, as the case may be, or Convert such
LIBOR Loans or CD Loans, as the case may be, into a Base Rate Loan in accordance
with Section 2.16.
Section 2.21. Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Bank or its Applicable
Lending Office to honor its obligation to make or maintain LIBOR Loans hereunder
or Convert Base Rate Loans or CD Loans into LIBOR Loans, then such Bank shall
promptly notify the Administrative Agent and the Borrower thereof and such
Bank's obligation to make or Continue, or to Convert Base Rate Loans or CD Loans
into LIBOR Loans shall be suspended until such time as such Bank may again make
and maintain LIBOR Loans (in which case the provisions of Section 2.22 hereof
shall be applicable).
Section 2.22. Treatment of Affected Loans. If the obligations of any
Bank to make or Continue CD Loans, or to make or Continue LIBOR Loans, or to
Convert Base Rate Loans or LIBOR Loans into CD Loans, or to Convert Base Rate
Loans or CD Loans into LIBOR Loans are suspended pursuant to Section 2.20 or
2.21 hereof (CD Loans and LIBOR Loans so affected being herein called "Affected
Loans"), such Bank's Affected Loans shall be automatically Converted into Base
Rate Loans on the last day(s) of the then current Interest Period(s) for the
Affected Loans (or, in the case of a Conversion required by Section 2.20 or
2.21, on such earlier date as such Bank may specify to the Borrower).
To the extent that such Bank's Affected Loans have been so Converted,
all payments and prepayments of principal which would otherwise be applied to
such Bank's Affected Loans shall be applied instead to its Base Rate Loans. All
Loans which would otherwise be made or Continued by such Bank as CD Loans or
LIBOR Loans, as the case may be, shall be made or Continued instead as Base Rate
Loans and, in the case of CD Loans, all Base Rate Loans or LIBOR Loans of such
Bank which would otherwise be Converted into CD Loans shall remain as Base Rate
Loans, and, in the case of LIBOR Loans, all Base Rate Loans or CD Loans of such
Bank which would otherwise be Converted into LIBOR Loans shall remain as Base
Rate Loans.
Section 2.23. Certain Compensation. The Borrower shall pay to each
Bank the amount specified below to compensate it for any loss, cost or expense
which such Bank determines is attributable to:
(1) any payment, prepayment, Conversion or Continuation of a LIBOR or
CD Loan made to such Bank on a date other than the last day of an Interest
Period for such Loan whether by reason of acceleration or otherwise; or
(2) any failure by the Borrower for any reason to borrow, Convert or
Continue a LIBOR or CD Loan to be made, Converted or Continued by such Bank
on the date specified therefor in the relevant notice issued by the Borrower
(except for any default by any Bank or either Co-Agent); or
(3) any payment or prepayment, whether by reason of acceleration or
otherwise, of a Bid Rate Loan or Swing Line Bid Rate Loan, or any failure by
the Borrower for any reason (after acceptance thereof) to borrow, on the
date specified therefor for a Bid Rate Loan or Swing Line Bid Rate Loan.
Such compensation shall be in an amount equal to the present value
(assuming an interest rate equal to the rate specified under (2) below) of the
difference between (1) the amount of interest which otherwise would have accrued
on the principal amount of the Loan so prepaid or not borrowed over the period
equal to the remaining portion of the applicable Interest Period and (2) the
amount of interest the Bank would earn if such principal amount were reinvested
for such remaining portion of the applicable Interest Period in the highest
quality U.S. Treasury obligations in an amount equal to the prepaid or
unborrowed principal amount and with a maturity approximately equal to such
remaining portion of the applicable Interest Period. A determination of a Bank
as to the amounts payable pursuant to this Section 2.23 shall be conclusive
absent manifest error.
Section 2.24. Capital Adequacy. If any Bank shall have determined
that, after the date hereof, the adoption of any applicable Law, rule or
regulation regarding capital adequacy, or any change therein, or any change in
the interpretation or administration thereof by any Governmental Authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or any request or directive regarding capital adequacy
(whether or not having the force of law) of any such Governmental Authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return on capital of such Bank (or its Parent) as a consequence of such
Bank's obligations hereunder to a level below that which such Bank (or its
Parent) could have achieved but for such adoption, change, request or directive
(taking into consideration its policies with respect to capital adequacy
existing on the date of this Agreement) 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 Administrative Agent), the Borrower shall pay to such
Bank such additional amount or amounts as will compensate such Bank (or its
Parent) for such reduction. A certificate of any Bank claiming compensation
under this Section, setting forth in reasonable detail the basis therefor, shall
be conclusive in the absence of manifest error.
However, to the extent capital costs relate to a Bank's loans in general
and not specifically to a Loan hereunder, such Bank shall use reasonable
averaging and attribution methods. In addition, each Bank agrees that, as
promptly as practical after it becomes aware of the occurrence of an event or
the existence of a condition that would entitle it to exercise its right under
this Section 2.24, that it will use commercially reasonable efforts to make,
fund or maintain the affected Advances through another lending office of such
Bank if (1) as a result thereof the additional money that would otherwise be
required to be paid in respect of such Advances would be reduced, and (2) the
making, funding or maintaining of such Advances through such other lending
office would not adversely affect such Advances or such Bank. Finally, if a
Bank is to require the Borrower to make payments under this Section 2.24 Capital
Adequacy than the Bank must make a demand on the Borrower to make such payment
within ninety (90) days of the later of (1) the date on which such capital costs
are actually incurred by such Bank, or (2) the date on which such Bank knows, or
should have known, that such capital costs have been incurred by such Bank.
Section 2.25. Right of Substitution. The Borrower and the Banks agree
that if (1) a Bank requests compensation pursuant to Section 2.19 Additional
Costs or Section 2.24 Capital Adequacy or (2) Section 2.21 Illegality applies,
that the Borrower shall have the right to substitute a bank to replace the Bank
in question, provided, that, (1) all the terms and requirements of Section 11.04
are complied with, (2) the Borrower compensates the Bank being removed for the
losses, costs and expenses incurred by such Bank as a result of such
substitution, which shall be limited to, the costs and expenses of substituting
the new bank as the issuer of all Letters of Credit issued by the Bank to be
replaced, and payment to the replaced Bank of compensation in accordance with
Section 2.23 as if all Loans transferred to the new bank by the replaced Bank
were prepaid on the date of such assignment and the payment of the principal and
interest owed to such replaced Bank.
ARTICLE III. LETTERS OF CREDIT
Section 3.01. Line of Credit Letters of Credit. Any Bank may, in its
sole discretion, issue for the account of the Borrower either (1) a trade or
commercial letter of credit or (2) a performance or standby letter of credit
with a maturity date of one (1) year or less (without regard to any renewal
provisions thereof) from the date of issuance of such letter of credit (each of
the letters of credit under (1) and (2) a "Line of Credit Letters of Credit") on
terms and conditions agreed to by such Bank and the Borrower from time to time
during the period from the Closing Date to the Line of Credit Maturity Date,
provided, that (1) with regard to all Banks, at no time will the outstanding
Total Line of Credit Letter of Credit Obligations exceed the lesser of (a) One
Hundred Twenty-Five Million Dollars ($125,000,000), or (b) the Total Line of
Credit Commitment less the Outstanding Line of Credit Facilities, and (2) with
respect to each Bank, at no time will the Individual Line of Credit Letter of
Credit Obligations of such Bank exceed such Bank's Individual Line of Credit
Commitment minus the aggregate principal amount of all Line of Credit Loans.
The terms and conditions relating to each Line of Credit Letter of Credit will
be set forth in a Line of Credit Letter of Credit Agreement, and such Line of
Credit Letter of Credit Agreement will provide that all draws under such Line of
Credit Letter of Credit will be reimbursed at the time of such draw. The
maturity date of a Line of Credit Letter of Credit may be after the Line of
Credit Maturity Date. Each Line of Credit Letter of Credit will be for the
account of the Bank issuing such Line of Credit Letter of Credit and the other
Banks are not required to purchase participations in such Line of Credit Letter
of Credit. Prior to the issuance of each Line of Credit Letter of Credit, the
Bank proposing to issue such Letter of Credit will confirm with the
Administrative Agent that such Letter of Credit will not exceed the limitations
set forth in this Section 3.01.
Section 3.02. Revolving Credit Letters of Credit. Any Bank may, in its
sole discretion, issue for the account of the Borrower a performance or standby
letter of credit with a maturity date of more than one (1) year from the date of
issuance of such letter of credit (a "Revolving Credit Letter of Credit") on
terms and conditions agreed to by the Borrower and such Bank from time to time
during the period from the Closing Date to the Revolving Credit Maturity Date,
provided, that (1) with regard to all Banks, at no time will the outstanding
Total Revolving Credit Letter of Credit Obligations exceed the lesser of (a)
Fifty Million Dollars ($50,000,000), or (b) the Total Revolving Credit
Commitment less the Outstanding Revolving Credit Facilities, and (2) with
respect to each Bank, at no time will the Individual Revolving Credit Letter of
Credit Obligations of such Bank exceed such Bank's Individual Revolving Credit
Commitment minus the aggregate principal amount of all Revolving Credit Loans.
The terms and conditions relating to each such Revolving Credit Letter of Credit
will be set forth in a Revolving Credit Letter of Credit Agreement and such
Agreement will provide that all draws under such Revolving Credit Letter of
Credit will be reimbursed at the time of such draw. The maturity date of a
Revolving Credit Letter of Credit may be after the Revolving Credit Maturity
Date. Each Revolving Credit Letter of Credit will be for the account of the
Bank issuing such Revolving Credit Letter of Credit and the other Banks are not
required to purchase participations in such Revolving Credit Letter of Credit.
Prior to the issuance of each Revolving Credit Letter of Credit, the Bank
proposing to issue such Letter of Credit will confirm with the Administrative
Agent that such Letter of Credit will not exceed the limitations set forth in
this Section 3.02.
Section 3.03. Relationship between this Agreement and Each Line of
Credit Letter of Credit Agreement and Each Revolving Credit Letter of Credit
Agreement. Each Bank agrees that to the extent its Line of Credit Letter of
Credit Agreement or Revolving Credit Letter of Credit Agreement (including with
respect to any Letters of Credit listed on Schedule 3.04) contains (1)
representations and warranties, covenants or events of default covering
substantially the same matters or items that are covered by the representations
and warranties, covenants or Events of Default set forth in this Agreement, or
(2) any of the items covered by Section 11.07 of this Agreement, such as
jurisdiction, service of process, waivers of immunity and so forth, that in all
such cases the terms of this Agreement supersede such provisions and the terms
of this Agreement are controlling. In addition, each Bank and the Borrower
agree that the reimbursement obligation on all Letters of Credit are not, and
will not be, secured by a Lien on any assets of the Borrower or any Restricted
Subsidiary, except for the Cash Collateral permitted under Section 9.02
Remedies.
Section 3.04. Outstanding Letters of Credit. The Borrower and each
Bank agrees that all letters of credit previously issued by such Bank for the
account of the Borrower which remain outstanding as of the Closing Date, all of
which are set forth in Schedule 3.04, will automatically as of such Date be
deemed to be Line of Credit Letters of Credit or Revolving Credit Letters of
Credit, as applicable and as set forth in such Schedule, and, as such, all such
Letters of Credit will be subject to the terms of this Agreement.
Section 3.05. Reimbursement Obligations on Letters of Credit. The
Borrower and each Bank agree that all reimbursement obligations of the Borrower
under a Letter of Credit will immediately and automatically be satisfied by the
Bank's making a loan to the Borrower (in the case of a Line of Credit Letter of
Credit a "Line of Credit Letter of Credit Loan" and in the case of a Revolving
Credit Letter of Credit a "Revolving Credit Letter of Credit Loan") and that all
such Line of Credit Letter of Credit Loans and Revolving Credit Letter of Credit
Loans shall be demand obligations and will bear interest at the Base Rate.
ARTICLE IV. CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent to Initial Use of a Credit Facility
on and after the Closing Date. The obligations of the Banks on or after the
Closing Date to make a Loan or, in their sole discretion, issue a Letter of
Credit is subject to the condition precedent that the Banks shall have received
on or before the Closing Date each of the following documents, in form and
substance satisfactory to the Co-Agents and their counsel, and each of the
following requirements shall have been fulfilled:
(1) Evidence of Due Organization and all Corporate Actions by the
Borrower. A certificate of the Secretary or Assistant Secretary of the
Borrower, dated the Closing Date, attesting to the certificate of
incorporation of the Borrower and all amendments thereto, to the amended by-
laws of the Borrower, and to all corporate actions taken by the Borrower,
including resolutions of its board of directors, authorizing the execution,
delivery and performance of the Loan Documents, and each other document to
be delivered pursuant to the Loan Documents;
(2) Incumbency and Signature Certificate of the Borrower. A
certificate of the Secretary or Assistant Secretary of the Borrower, dated
the Closing Date, certifying the names and true signatures of the officers
of the Borrower authorized to sign the Loan Documents, and the other
documents to be delivered pursuant to the Loan Documents;
(3) Good Standing Certificate of the Borrower. A certificate, dated
within ten (10) Banking Days of the Closing Date, from the Secretary of
State (or other appropriate official) of the jurisdiction of incorporation
of the Borrower certifying as to the due incorporation and good standing of
the Borrower;
(4) Notes. For each of the Banks each of its Notes, duly executed by
the Borrower;
(5) Opinion of Counsel for Borrower. A favorable opinion of Robert
Terry, Esq., general counsel for the Borrower, dated the Closing Date
substantially in the form of Exhibit I;
(6) Payment of Fees. Payment in full to the Co-Agents of all fees
required to be paid as of such date to each of the Co-Agents pursuant to the
terms of the Fee Letter; and payment in full to the Banks of all other fees
required to be paid as of such date in accordance with the Loan Documents,
including but not limited to the Facility Fee;
(7) Officer's Certificate. The following statements shall be true and
the Administrative Agent shall have received a certificate signed by a duly
authorized officer of the Borrower dated the Closing Date stating that:
(a) The representations and warranties contained in this Agreement
are, as of the Closing Date as though made on and as of such Date, correct
in all material respects in the case of such representations and warranties
which are not subject to a materiality or Material Adverse Change exception,
and in all cases where such representation and warranty is subject to such
an exception, are correct; and
(b) No Default or Event of Default has occurred and is continuing;
and
(8) Additional Documentation. Such other approvals, opinions or
documents as any Bank Party may reasonably request.
Section 4.02. Conditions Precedent to Each Credit Facility. The
obligations of the Banks to make each Loan after the Closing Date or, in their
sole discretion, issue a Letter of Credit, shall be subject to the further
conditions precedent that on the date of providing such Credit Facility:
(1) The following statements shall be true:
(a) all the representations and warranties contained in this
Agreement and in each of the other Loan Documents are, as of the
date of providing such Credit Facility as though made on and as
of such date, correct in all material respects in the case of
such representations and warranties which are not subject to a
materiality or Material Adverse Change exception, and in all
cases where such representation or warranty is subject to such
an exception, are correct; and
(b) no Default or Event of Default has occurred and is continuing,
or could result from providing such Credit Facility;
(2) The Administrative Agent shall have received such other approvals,
opinions or documents as the Agent or any Bank may reasonably
request.
Section 4.03. Deemed Representation. Each request for a Credit
Facility and acceptance by the Borrower of any proceeds of such Loan or the
issuance of any Letter of Credit, as the case may be, shall constitute a
representation and warranty that the statements contained in Section 4.02(1) are
true and correct both on the date of such notice and as of the date of the
providing of such Loan or issuance of such Letter of Credit, as the case may be.
ARTICLE V. REPRESENTATIONS AND WARRANTIES
The Borrower hereby represents and warrants that:
Section 5.01. Incorporation, Good Standing and Due Qualification. The
Borrower and each Restricted Subsidiary is duly incorporated, validly existing
and in good standing under the laws of the jurisdiction of its incorporation,
has the corporate power and authority to own its assets and to transact the
business in which it is now engaged or proposed to be engaged, and is duly
qualified as a foreign corporation and in good standing under the laws of each
other jurisdiction in which such qualification is required, except to the extent
that its failure to be so qualified has not, and could not reasonably be
expected to, result in a Material Adverse Change.
Section 5.02. Corporate Power and Authority; No Conflicts. The
execution, delivery and performance by the Borrower of the Loan Documents to
which it is a party have been duly authorized by all necessary corporate action
and do not and will not: (1) require any consent or approval of its stockholders
which has not been obtained; (2) contravene its certificate of incorporation or
by-laws; (3) violate any provision of, or require any filing, registration,
consent or approval under any Law (including, without limitation, Regulations G,
T, U and X of the Board of Governors), order, writ, judgment, injunction,
decree, determination or award presently in effect having applicability to the
Borrower or any Consolidated Subsidiary; (4) result in a breach of or constitute
a default under or, except for any obtained, require any consent under any
indenture or loan or credit agreement or any other agreement, lease or
instrument to which the Borrower or any Consolidated Subsidiary is a party or by
which it or its properties may be bound or affected; (5) except as contemplated
by this Agreement, result in, or require, the creation or imposition of any
Lien, upon or with respect to any of the properties now owned or hereafter
acquired by the Borrower or any Consolidated Subsidiary; or (6) cause the
Borrower or any Consolidated Subsidiary to be in default under any such Law,
order, writ, judgment, injunction, decree, determination or award or any such
indenture, agreement, lease or instrument (upon obtaining all consents which
have been obtained on or before the date hereof).
Section 5.03. Legally Enforceable Agreements. Assuming each Loan
Document is the legal, valid and binding obligation of each Person (other than
the Borrower or a Restricted Subsidiary) a party thereto, each Loan Document is,
or when executed and delivered will be, a legal, valid and binding obligation of
the Borrower, enforceable against the Borrower in accordance with its terms,
except (1) to the extent that such enforcement may be limited by applicable
bankruptcy, insolvency and other similar Laws affecting creditors' rights
generally and (2) as enforcement thereof is subject to general principles of
equity (whether applicable in a proceeding at law or in equity).
Section 5.04. Litigation. Except as specified on Schedule 5.04, there
are no actions, suits or proceedings (private or governmental) pending or, to
the knowledge of the Borrower, threatened, against or affecting the Borrower or
any Restricted Subsidiary before any Governmental Authority or arbitrator, which
have resulted in, or could be reasonably expected to result in, in any one case
or in the aggregate, a Material Adverse Change.
Section 5.05. Financial Statements. The consolidated balance sheet of
the Borrower and its Consolidated Subsidiaries as of August 31, 1993, and the
related consolidated statements of cash flows and consolidated statements of
capital shares and equities for the Fiscal Year then ended, and the accompanying
footnotes, together with the opinion thereon, dated October 29, 1993 of KPMG
Peat Marwick, independent certified public accountants, copies of which have
been furnished to the Banks, fairly present the financial condition of the
Borrower and its Consolidated Subsidiaries as at such dates and the results of
the operations of the Borrower and the Consolidated Subsidiaries for the periods
covered by such statements, all in accordance with GAAP consistently applied.
The consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as of February 28, 1994, and the related consolidated statements of
cash flows and consolidated statements of capital shares and equities for the
six (6) month period then ended, and the accompanying footnotes, copies of which
have been furnished to the Banks, fairly present the financial condition of the
Borrower and its Consolidated Subsidiaries as at such dates and the results of
the operations of the Borrower and the Consolidated Subsidiaries for the periods
covered by such statements (subject to year end adjustments), all in accordance
with GAAP consistently applied.
The combined balance sheet of the Borrower and its Restricted
Subsidiaries as of August 31, 1993, a copy of which has been presented to the
Banks, fairly presents the financial condition of the Borrower and its
Restricted Subsidiaries as of such date, all in accordance with GAAP
consistently applied (assuming that the Restricted Subsidiaries are the only
Subsidiaries of the Borrower).
The combined balance sheet of the Borrower and its Restricted
Subsidiaries as of February 28, 1994, a copy of which has been furnished to the
Banks, fairly presents the financial condition of the Borrower and its
Restricted Subsidiaries as of such date, all in accordance with GAAP
consistently applied (subject to year end adjustments and assuming that the
Restricted Subsidiaries are the only Subsidiaries of the Borrower).
Since August 31, 1993, there has been no Material Adverse Change.
There are no liabilities of the Borrower or any of the Restricted
Subsidiaries, fixed or contingent, which are material but are not reflected in
the financial statements of the Borrower and the Restricted Subsidiaries
referred to above or in the notes thereto, other than liabilities arising in the
ordinary course of business since February 28, 1994. No information, exhibit,
or report furnished by the Borrower or any of the Consolidated Subsidiaries to
any Bank Party in connection with the negotiation of this Agreement contained
any material misstatement of fact or omitted to state a material fact or any
fact necessary to make the statements contained therein not materially
misleading in light of the circumstances in which they were made and taken
together with the other information, exhibits and reports furnished to the Bank
Parties.
Section 5.06. Ownership and Liens. The Borrower and each Restricted
Subsidiary have title to, or valid leasehold interests in, all of their material
properties and assets, real and personal, including the properties and assets,
and leasehold interests reflected in the financial statements of the Borrower
and the Restricted Subsidiaries referred to in Section 5.05, except (1) any
properties or assets disposed of in the ordinary course of business, and (2) for
minor defects in title and minor encumbrances not in any case materially
detracting from the value or use of the assets affected thereby; and none of the
properties and assets owned by the Borrower and each Restricted Subsidiary and
none of their leasehold interests are subject to any Lien, except as may be
permitted under this Agreement.
Section 5.07. Taxes. The Borrower and each Consolidated Subsidiary
have filed all tax returns (federal, state and local) required to be filed (or
obtained extensions with respect thereto) and have paid all taxes, assessments
and governmental charges and levies thereon prior to the time they are
delinquent, including interest and penalties, except (1) to the extent they are
the subject of a Good Faith Contest and (2) as otherwise disclosed in Schedule
5.07.
Section 5.08. ERISA. Except with regard to each representation and
warranty set forth under this Section 5.08 as set forth in Schedule 5.08, each
Plan is administered in compliance in all material respects with all applicable
provisions of ERISA and the Code, neither a Reportable Event nor a Prohibited
Transaction has occurred with respect to any Plan; no notice of intent to
terminate a defined benefit pension Plan has been filed nor has any defined
benefit pension Plan been terminated except for such Plans terminated on or
before May 19, 1992 and in which neither the Borrower nor any Consolidated
Subsidiary nor any ERISA Affiliate has any outstanding or ongoing obligations
with regard to such Plan; no circumstance exists which constitutes grounds under
Section 4042 of ERISA entitling the PBGC to institute proceedings to terminate,
or appoint a trustee to administer, a Plan, nor has the PBGC instituted any such
proceedings; neither the Borrower nor any Consolidated Subsidiary nor any ERISA
Affiliate has completely or partially withdrawn under Section 4201 or 4204 of
ERISA from a Multiemployer Plan; and no Plan which is a Multiemployer Plan is in
reorganization (within the meaning of Section 4241 of ERISA), is insolvent
(within the meaning of Section 4245 of ERISA) or is terminating; the Borrower,
each Consolidated Subsidiary and each ERISA Affiliate has met its minimum
funding requirements under ERISA with respect to all of its Plans and there are
no unfunded vested liabilities; and neither the Borrower nor any Consolidated
Subsidiary nor any ERISA Affiliate has incurred any liability to the PBGC under
ERISA; and neither the Borrower, nor any Consolidated Subsidiary, nor any ERISA
Affiliate has liability for retiree medical, life insurance or other death
benefits (contingent or otherwise) other than as a result of a continuation of
medical coverage required under Section 4980B of the Code.
Section 5.09. Operation of Business. The Borrower and each Restricted
Subsidiary possess all licenses, permits, franchises, and trade names, or rights
thereto, to conduct their business substantially as now conducted and as
presently proposed to be conducted, and the Borrower and each Restricted
Subsidiary are not in violation of any valid rights of others with respect to
any of the foregoing, except to the extent such lack of possession or violation
has not resulted in, and could not reasonably be expected to result in, a
Material Adverse Change.
Section 5.10. No Default on Outstanding Judgments or Orders. The
Borrower and each Restricted Subsidiary have satisfied all judgments and the
Borrower and each Restricted Subsidiary are not in default with respect to any
judgment, writ, injunction, decree, rule or regulation of any court, arbitrator
or federal, state, municipal or other Governmental Authority, commission, board,
bureau, agency or instrumentality, domestic or foreign, except to the extent
such failure to satisfy any or all such judgments or to be in such a default has
not resulted in, and could not reasonably be expected to result in, a Material
Adverse Change.
Section 5.11. No Defaults on Other Agreements. Neither the Borrower
nor any Restricted Subsidiary is a party to any indenture, loan or credit
agreement or any lease or other agreement or instrument or subject to any
certificate of incorporation or corporate restriction which has resulted in, or
could reasonably be expected to result in, a Material Adverse Change. Neither
the Borrower nor any Restricted Subsidiary is in default in any respect in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any agreement or instrument where such failure to
perform, observe or fulfill has resulted in, or could reasonably be expected to
result in, a Material Adverse Change.
Section 5.12. Labor Disputes and Acts of God. Neither the business
nor the properties of the Borrower or any Restricted Subsidiary are affected by
any fire, explosion, accident, strike, lockout or other labor dispute, drought,
storm, hail, earthquake, embargo, act of God or of the public enemy or other
casualty (whether or not covered by insurance) which has resulted in, or could
reasonably be expected to result in, a Material Adverse Change.
Section 5.13. Governmental Regulation. Neither the Borrower nor any
Restricted Subsidiary is subject to regulation under the Public Utility Holding
Company Act of 1935, the Investment Company Act of 1940, the Interstate Commerce
Act, the Federal Power Act or any statute or regulation, in each case, limiting
its ability to incur indebtedness for money borrowed as contemplated hereby.
Section 5.14. Partnerships and Joint Ventures. As of the Closing Date,
Schedule 5.14 is a complete list of both (1) the Persons organized as
partnerships (a) which are actively engaged in a business, (b) in which the
Borrower or any Restricted Subsidiary is a partner and (c) in which the Borrower
and all the Restricted Subsidiaries have in the aggregate an Investment of One
Hundred Thousand Dollars ($100,000) or more, and (2) all joint ventures in which
the Borrower or any Restricted Subsidiary is involved (a) which are actively
engaged in a business, and (b) in which the Borrower and all the Restricted
Subsidiaries have in the aggregate an Investment of One Hundred Thousand Dollars
($100,000) or more.
Section 5.15. Environmental Protection. The Borrower and each
Restricted Subsidiary have obtained all permits, licenses and other
authorizations which are required under all applicable Environmental Laws,
except to the extent failure to have any such permit, license or authorization
could not reasonably be expected to result in, a Material Adverse Change. The
Borrower and each Restricted Subsidiary are in compliance with all Environmental
Laws and the terms and conditions of the required permits, licenses and
authorizations, and is also in compliance with all other limitations,
restrictions, obligations, schedules and timetables contained in those Laws or
contained in any plan, order, decree, judgment, injunction, notice or demand
letter issued, entered, promulgated or approved thereunder, except to the
extent, in each case, failure to comply has not resulted in, and could not
reasonably be expected to result in, a Material Adverse Change.
ARTICLE VI. AFFIRMATIVE COVENANTS
So long as any of the Notes shall remain unpaid or any Letter of Credit
Obligation shall remain outstanding or any Bank shall have any Commitment
hereunder or any other amount is owing by the Borrower to any Bank Party
hereunder or under any other Loan Document, the Borrower shall:
Section 6.01. Maintenance of Eligibility and Capitalization. Preserve
and maintain its status as an entity eligible to borrow from CoBank; and for any
such Advances made by CoBank purchase such equity in CoBank as CoBank may from
time to time require in accordance with CoBank's bylaws and capital plan. The
Borrower hereby acknowledges receipt prior to the execution of this Agreement of
a written description of the terms and conditions under which equity in CoBank
is issued.
Section 6.02. Maintenance of Existence. Preserve and maintain, and
cause each Substantial Subsidiary to preserve and maintain, its corporate
existence and good standing in the jurisdiction of its incorporation, and
qualify and remain qualified as a foreign corporation in each jurisdiction in
which such qualification is required except (1) where the failure to so qualify
has not and is not reasonably to be expected to result in a Material Adverse
Change, and (2) for any mergers permitted under Section 7.08.
Section 6.03. Maintenance of Properties. Except to the extent
permitted by either Section 7.03 or Section 7.05, maintain, keep and preserve,
and cause each Restricted Subsidiary to maintain, keep and preserve, all of its
material properties (tangible and intangible) necessary or used in the proper
conduct of its business in good working order and condition, ordinary wear and
tear excepted, and shall cause to be made all repairs, renewals, replacements,
betterments and improvements thereof, all as in the sole judgment of the
Borrower may be reasonably necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times.
Section 6.04. Maintenance of Records. Keep, and cause each of its
Restricted Subsidiaries to keep, adequate records and books of account, in which
complete entries will be made in accordance with GAAP, reflecting all of its and
their financial transactions.
Section 6.05. Maintenance of Insurance. Maintain, and cause each
Restricted Subsidiary to maintain, insurance with financially sound and
reputable insurance companies or associations in such amounts and covering such
risks as are usually carried by companies engaged in the same or a similar
business and similarly situated; provided, however, that the Borrower may, to
the extent permitted by Law provide for appropriate self-insurance with respect
to worker's compensation. At the request of the Administrative Agent, copies of
all policies (or such other proof of compliance with this Section 6.05 as may be
reasonably satisfactory) shall be delivered to the Banks.
Section 6.06. Compliance with Laws. Comply in all material respects,
and cause each Restricted Subsidiary to comply in all material respects, with
all applicable Laws, such compliance to include, without limitation, paying
before the same become delinquent all taxes, assessments and governmental
charges imposed upon it or upon its property, unless such failure to comply is
the subject of a Good Faith Contest.
Section 6.07. Right of Inspection. At any time during normal business
hours and from time to time upon reasonable notice to the Borrower, permit, and
cause its Restricted Subsidiaries to permit, any Bank Party or any agent or
representative thereof, to examine and make copies and abstracts from the
financial records and books of account of, and visit the properties of, the
Borrower and any Restricted Subsidiary, and to discuss the affairs, finances and
accounts of the Borrower and any Restricted Subsidiary with any of their
respective officers and directors and independent accountants, provided, that,
in the case of each meeting with the independent accountants the Borrower is
given an opportunity to have a representative present at such meeting.
Section 6.08. Employee Benefit Plans. Make or cause to be made, and
cause each Consolidated Subsidiary to make or cause to be made, all payments or
contributions to all Plans covered by Title IV of ERISA, which are necessary to
enable those Plans to continuously meet all minimum funding standards or
requirements.
Section 6.09. Reporting Requirements. Furnish directly to the
Administrative Agent:
(1) Borrower's Monthly Financial and Management Report. As soon as
available and in any event within thirty five (35) days after the end of
each fiscal quarter of each Fiscal Year of the Borrower, the Borrower's
Monthly Financial and Management Report as of the end of such quarter which
will present information both for the last month of such quarter and for
the period from the start of the applicable Fiscal Year to the end of
such month.
As soon as available and in any event within fifty (50) days after the
end of each of the first three fiscal quarters of each Fiscal Year of the
Borrower, a copy of the Form 10-Q (or any successor form thereto) filed by
the Borrower with the Securities and Exchange Commission;
(2) Borrower's Annual Financial Statements. As soon as available and in
any event within one hundred twenty (120) days after the end of each Fiscal
Year of the Borrower, the consolidated balance sheets of the Borrower and
its Consolidated Subsidiaries as of the end of such Fiscal Year, and the
related consolidated statements of operations, statements of capital shares
and equities and cash flow statements for such Fiscal Year, all in
reasonable detail and stating in comparative form the consolidated figures
for the corresponding date and period in the prior Fiscal Year, and all
prepared in accordance with GAAP consistently applied, reported on by KPMG
Peat Marwick or another nationally recognized firm of independent
accountants;
As soon as available and in any event within one hundred twenty (120)
days after the end of each Fiscal Year of the Borrower, a copy of the Form
10-K (or any successor form thereto) filed by the Borrower with the
Securities and Exchange Commission; and
As soon as available and in any event within one hundred twenty (120)
days after the end of each Fiscal Year of the Borrower, the combined and
combining balance sheets of the Borrower and its Restricted Subsidiaries as
of the end of such Fiscal Year, and the related combined and combining
statements of operations for such Fiscal Year, all in reasonable detail and
stating in comparative form the respective combined figures for the
corresponding date and period in the prior Fiscal Year and all prepared in
accordance with GAAP consistently applied (assuming that the Restricted
Subsidiaries are the only Subsidiaries of the Borrower), certified by the
chief financial officer or treasurer of the Borrower.
(3) Certificate of No Default. At the time of the delivery of each of
the financial statements referred to under (1) and (2) of this Section 6.09,
a certificate of the chief financial officer or treasurer of the Borrower
(a) certifying that no Default or Event of Default has occurred and is
continuing or, if a Default or Event of Default has occurred and is
continuing, a statement as to the nature thereof and the action which is
proposed to be taken with respect thereto, and (b) with computations
demonstrating compliance with the financial covenants contained in Article
VIII.
(4) Notice of Litigation. Promptly after the commencement thereof,
notice of all actions, suits, and proceedings before any Governmental
Authority, affecting the Borrower or any Restricted Subsidiary which, if
determined adversely to the Borrower or any Restricted Subsidiary, could
reasonably be expected to require the Borrower or any Restricted Subsidiary
to have to pay or deliver assets having a value of Ten Million Dollars
($10,000,000) or more (whether or not the claim is covered by insurance) or
could reasonably be expected to result in a Material Adverse Change.
(5) Notices of Defaults and Events of Default. As soon as possible and
in any event within three (3) days after the occurrence of each Default or
Event of Default a written notice setting forth the details of such Default
or Event of Default and the action which is proposed to be taken by the
Borrower and the Consolidated Subsidiaries with respect thereto.
(6) ERISA Reports. As soon as possible and in any event within twenty
(20) days after the Borrower or any Consolidated Subsidiary knows or has
reason to know that any Reportable Event or Prohibited Transaction has
occurred with respect to any Plan or that the PBGC or the Borrower or any
Consolidated Subsidiary has instituted or will institute proceedings under
Title IV of ERISA to terminate any Plan, or that the Borrower, any
Consolidated Subsidiary or any ERISA Affiliate has completely or partially
withdrawn from a Multiemployer Plan, or that a Plan which is a Multiemployer
Plan is in reorganization (within the meaning of Section 4241 of ERISA), is
insolvent (within the meaning of Section 4245 of ERISA) or is terminating,
the Borrower or such Consolidated Subsidiary will deliver to each of the
Banks a certificate of the chief financial officer or treasurer of the
Borrower or such Consolidated Subsidiary setting forth details as to such
Reportable Event or Prohibited Transaction or Plan termination or withdrawal
or reorganization or insolvency and the action the Borrower or such
Consolidated Subsidiary proposes to take with respect thereto; provided,
however, that notwithstanding the foregoing, no reporting is required under
this subsection (6) unless the matter(s), individually or in the aggregate,
result, or could be reasonably expected to result, in aggregate obligations
or liabilities of the Borrower and/or the Restricted Subsidiaries in excess
of One Million Dollars ($1,000,000).
(7) Annual Budget. Promptly upon becoming available, but in no event
later than September 30 in any year (or such later date as the Borrower and
the Requisite Banks may agree), a copy of the Borrower's Annual Operating
Budget approved by the Borrower's board of directors, together with the
assumptions and projections on which the budget is based. In addition, if
any material changes are made to such Budget during the year, then Borrower
will furnish copies of any such changes promptly after such changes have
been approved.
(8) Material Adverse Change. As soon as possible and in any event
within five (5) days after the occurrence of any event or circumstance which
could reasonably be expected to result in or has resulted in a Material
Adverse Change, written notice thereof.
(9) Liens. As soon as possible and in any event within five (5) days
after the Borrower or any Restricted Subsidiary obtains knowledge of any
assertion of any Lien which secures obligations of One Million Dollars
($1,000,000) or more, other than Liens permitted under Section 7.02 of this
Agreement.
(10) Environmental Notices. As soon as possible and in any event
within five (5) days after receipt, copies of all Environmental Notices
received by the Borrower or any Restricted Subsidiary which indicate a
potential liability of Ten Million Dollars ($10,000,000) or more for the
Borrower and all its Restricted Subsidiaries taken together or which could
reasonably be expected to result in or has resulted in a Material Adverse
Change.
(11) Investments. Within thirty (30) days after the making of each
Investment of the type permitted by Section 7.10(4) or (5) where the
aggregate amount of such Investment and all Investments related thereto
equals or exceeds Ten Million Dollars ($10,000,000), the terms and
provisions of each such Investment provided, however, the failure to give
such notice will not be a violation of this provision if the Borrower uses
its best efforts to give such notice but then fails to provide such notice.
(12) General Information. With reasonable promptness, such other
information respecting the condition or operations, financial or otherwise,
of the Borrower or any Restricted Subsidiary as any Bank Party may from time
to time reasonably request.
Section 6.10. Compliance With Environmental Laws. Comply in all
respects with all applicable Environmental Laws where the failure to comply
could reasonably be expected to result in a Material Adverse Change, except
where the failure to comply is the subject of a Good Faith Contest, and promptly
pay or cause to be paid all costs and expenses incurred in connection with such
compliance.
Section 6.11. Unrestricted Entities. Cause, or in the case where the
Borrower cannot exercise control over any Unrestricted Entity, use its best
efforts to cause, all Unrestricted Entities to comply in all material respects
with all Laws and to pay or perform all obligations which, if not complied with
or if not paid or performed, could reasonably be expected to result in liability
to the Borrower or any Restricted Subsidiary and such liability does, or could
be reasonably expected to, result in a Material Adverse Change.
ARTICLE VII. NEGATIVE COVENANTS
So long as any of the Notes shall remain unpaid or any Letter of Credit
Obligation shall remain outstanding or any Bank shall have any Commitment
hereunder or any other amount is owing by the Borrower to any Bank Party
hereunder or under any other Loan Document, the Borrower shall not and shall not
permit any of its Restricted Subsidiaries to:
Section 7.01. Debt. Create, incur, assume or suffer to exist any
Combined Short Term Institutional Debt, except:
(1) Combined Short Term Institutional Debt of the Borrower under short
term lines of credit, provided, that, (a) the aggregate principal amount of all
such Debt outstanding at any time is equal to or less than Thirty-Five Million
Dollars ($35,000,000), and (b) such Debt is not secured by a Lien on any assets
of the Borrower or any Restricted Subsidiary;
(2) Combined Short Term Institutional Debt of the Borrower under this
Agreement, the Notes, the Letters of Credit, or any other Loan Document;
(3) any of the Current Portion of Combined Fund Debt permitted under
any of the exceptions to Combined Funded Debt as provided below;
(4) any of the Combined Short Term Debt;
(5) If the Line of Credit Facility is no longer provided pursuant to
the terms of this Agreement, Combined Short Term Institutional Debt of the
Borrower, provided, that, (a) the aggregate principal amount of all such
Combined Short Term Institutional Debt outstanding at any time is equal to or
less than Four Hundred Fifty Million Dollars ($450,000,000) less the amount of
Funded Debt outstanding under subsection (12) of the exceptions to the Combined
Funded Debt limitation provided below, and (b) such Combined Short Term
Institutional Debt is not secured by a Lien on any assets of the Borrower or any
Restricted Subsidiary; and
(6) Combined Short Term Institutional Debt under repurchase agreements
with reputable financial institutions involving securities of the type covered
by the definition of Permitted Investments and having a market value at least
equal to the amount so invested.
Create, incur, assume or suffer to exist or guarantee any Combined
Funded Debt, except:
(1) Combined Funded Debt of the Borrower under this Agreement, the
Notes, the Letters of Credit, or any other Loan Document;
(2) Combined Funded Debt of the Borrower, provided, that, (a) the
aggregate principal amount of all such Combined Funded Debt outstanding at the
time is equal to or less than One Hundred Million Dollars ($100,000,000) and (b)
such Combined Funded Debt is not secured by a Lien on any assets of the Borrower
or any Restricted Subsidiary;
(3) any of the Combined Subordinated Debt which is Combined Funded
Debt;
(4) Combined Funded Debt of any Restricted Subsidiary owed to the
Borrower or any other Restricted Subsidiary;
(5) Combined Funded Debt of the Borrower owed to any Restricted
Subsidiary;
(6) Combined Funded Debt of the Borrower or any Restricted Subsidiary
for any or all of the following: non-compete agreements, deferred compensation
agreements, capital stock refunds payable, obligations under any settlement
agreements, retiree death claims, and any other similar obligations;
(7) Combined Funded Debt of the Borrower or any Restricted Subsidiary
under any and all Asset Acquisition Obligations if at the time of the incurrence
thereof and at all times thereafter the Borrower and the Restricted Subsidiaries
are in compliance with the terms of Section 8.02 Ratio of Combined Long Term
Debt to Combined Total Capitalization;
(8) Combined Funded Debt of the Borrower, provided, that, the aggregate
principal amount of all such Combined Funded Debt at any time outstanding is
equal to or less than One Million Dollars ($1,000,000);
(9) Combined Funded Debt of the Borrower in the amount of up to Ten
Million Dollars ($10,000,000) owed to CoBank under and pursuant to the terms of
the Amended and Restated Note dated May 19, 1994 from the Borrower to CoBank;
(10) Combined Funded Debt of the Borrower incurred in connection with
or pursuant to any industrial revenue bonds where the proceeds of such bonds are
used to provide financing to the Borrower and/or any Restricted Subsidiary;
(11) Patronage refunds; and
(12) If the Line of Credit Facility is no longer provided pursuant to
the terms of this Agreement, Combined Funded Debt of the Borrower, provided,
that, (a) the aggregate principal amount of all such Combined Funded Debt
outstanding at any time is equal to or less than Four Hundred Fifty Million
Dollars ($450,000,000) less the amount of Combined Short Term Institutional Debt
outstanding under subsection (5) of the exceptions to the Combined Short Term
Institutional Debt limitations noted above, and (b) such Combined Funded Debt is
not secured by a Lien on any assets of the Borrower or any Restricted
Subsidiary.
Section 7.02. Liens. Create, incur, assume or suffer to exist any
Lien, upon or with respect to any of its real or personal properties (including,
without limitation, leasehold interests, leasehold improvements and any other
interest in real property or fixtures), now owned or hereafter acquired, except:
(1) Liens for taxes or assessments or other government charges or
levies relating to real property if not delinquent or if delinquent they are the
subject of a Good Faith Contest but in no event past the time when a penalty
would be incurred;
(2) Liens for taxes or assessments or other charges or levies of any
Governmental Authority provided, that such taxes or assessments or other charges
or levies in the aggregate at any time do not secure more than Thirty Million
Dollars ($30,000,000) of such taxes or assessments or other charges;
(3) Liens imposed by Law, such as mechanic's, worker's, repairman's,
miner's, agister's, attorney's, materialmen's, landlord's, warehousemen's and
carrier's Liens and other similar Liens securing aggregate amounts outstanding
(other than indebtedness for borrowed money or the deferred purchase price of
property or services) of up to Ten Million Dollars ($10,000,000) and which are
securing obligations incurred in the ordinary course of business for sums not
yet due and payable or if due and payable which are the subject of a Good Faith
Contest;
(4) Liens under workmen's compensation, unemployment insurance, social
security or similar legislation (other than ERISA), or to secure payments of
premiums for insurance purchased in the ordinary course of business, or to
secure the performance of tenders, statutory obligations, surety and appearance
bonds and bids, bonds for release of an attachment, stay of execution or
injunction, leases, government contracts, performance and return-of-money bonds
and other similar obligations, all of which are incurred in the ordinary course
of business and not in connection with the borrowing of money;
(5) any attachment or judgment Lien, the time for appeal or petition
for rehearing of which shall not have expired or in respect of which the
Borrower or the Restricted Subsidiary is protected in all material respects by
insurance or for the payment of which adequate reserves have been provided;
provided, however, that the execution or other enforcement of such Liens is
effectively stayed and the claims secured thereby are the subject of a Good
Faith Contest; provided, further, the maximum amount of such Liens for which the
Borrower and its Restricted Subsidiaries are not protected by insurance that
may, at any one time, exist hereunder shall not exceed Twenty Million Dollars
($20,000,000) in the aggregate;
(6) easements, rights-of-way, restrictions, encroachments, covenants,
servitudes, zoning and other similar encumbrances which, in the aggregate, do
not materially interfere with the occupation, use and enjoyment by the Borrower
or any Restricted Subsidiary of the property or assets encumbered thereby in the
normal course of its business or materially impair the value of the property
subject thereto;
(7) Liens arising in the ordinary course of business and created in
connection with amounts on deposit in charge card and like accounts (such as
Visa or MasterCard);
(8) purchase money Liens on any real property, fixtures or equipment or
the assumption of any Lien on real property, fixtures or equipment existing at
the time of such acquisition, or a Lien incurred in connection with any Asset
Acquisition Obligation; provided that:
(a) any property subject to any of the foregoing is acquired or
constructed by the Borrower or any Restricted Subsidiary in the ordinary
course of its business and the Lien on any such property is created
contemporaneously or within ninety (90) days of such acquisition or
construction;
(b) the regularly scheduled payments on the Asset Acquisition
Obligation secured by any Lien so created, assumed or existing shall not
exceed one hundred percent (100%) of the lesser of cost or fair market
value as of the time of acquisition or construction of the property
covered thereby;
(c) each such Lien shall attach only to the property so acquired
and fixed improvements thereon (and proceeds thereof); and
(d) at the time of the incurrence of any Asset Acquisition Obligation
secured by any such Liens and at all times that any such Asset Acquisition
Obligation is outstanding such Obligation is Combined Funded Debt permitted
under subsection (7) of Section 7.01;
(9) purchase money Liens of the Borrower arising in favor of an issuer
of a letter of credit (other than any Bank providing a Letter of Credit) by
virtue of its having honored any drafts on such letter of credit provided that
the obligation secured by such Lien is permitted under subsection (1) of the
limitation on Combined Short Term Institutional Debt set forth in Section 7.01;
(10) Liens assumed in connection with mergers and acquisitions, but
only to the extent that such Liens: (a) existed prior to the merger and
acquisition; (b) secure real property, plant or equipment being acquired; (c)
do not exceed (A) in the aggregate in any Fiscal Year ten percent (10%) of the
Combined Non-Current Assets as of the last day of the immediately preceding
Fiscal Year and (B) in the aggregate in any three (3) consecutive Fiscal Years
taken together twenty percent (20%) of the average of the Combined Non-Current
Assets as of the last day of each Fiscal Year which preceded each such Fiscal
Year included in such three (3) Fiscal Year period; and (d) at the time of the
occurrence of and after giving effect to such merger or acquisition the Borrower
is in compliance with the terms of Section 8.02 Ratio of Combined Long Term Debt
to Combined Total Capitalization; and
(11) after the occurrence of an Event of Default and the exercise of
the remedies of the Banks, Cash Collateral to secure Letters of Credit provided
that the Cash Collateral provided to any Bank does not exceed that Bank's
Permitted Cash Collateral Amount;
(12) Liens on property or assets of a Restricted Subsidiary to secure
Debt of such Restricted Subsidiary to the Borrower or another Restricted
Subsidiary;
(13) Liens of CoBank on Investments by the Borrower in the stock,
participation certificates, or allocated reserves of CoBank owned by Borrower;
(14) Liens of any issuer of capital shares or equities on such capital
shares or equities owned by the Borrower or a Restricted Subsidiary provided
such Liens are created by the statute under which such issuer was incorporated
or by the articles of incorporation or bylaws of such issuer;
(15) Liens arising out of or incurred in connection with oil or gas
leases and interests and mineral interests, or in real property pertaining
thereto, provided that the aggregate amount of all obligations secured by all
such Liens is equal to or less than One Million Dollars ($1,000,000);
(16) all precautionary filings of financing statements under the Uniform
Commercial Code which cover property that is made available to or used by the
Borrower or any Restricted Subsidiary pursuant to the terms of an Operating
Lease or Capital Lease; and
(17) Liens incurred in connection with any indemnity or repurchase
obligations contemplated by transactions involving the Borrower or any
Restricted Subsidiary and any financial institution pursuant to the export
credit guarantee program of the Commodity Credit Corporation (or any successor)
or other program designed to assist or enhance export sales.
Notwithstanding the foregoing, the maximum amount of claims that may, in
the aggregate and at any one time, be secured by Liens under Section 7.02(2),
(3) or (5) hereof, may not exceed Fifty Million Dollars ($50,000,000).
Section 7.03. Subsidiaries' Stock. Take any action which would result
in a decrease in the percentage (and such decrease does not result in the
Subsidiary no longer qualifying as a Substantial Subsidiary) of the outstanding
shares of stock of any Substantial Subsidiary owned by the Borrower or any
Substantial Subsidiary, except as the result of (1) the issuance of directors'
qualifying shares, (2) the declaration and payment of patronage refunds, (3) the
issuance of capital stock to new members, (4) the purchase or retirement of
shares with the proceeds of newly issued shares, or (5) the sale of capital
stock at a price determined by the Borrower to be the fair value thereof and
which is otherwise not restricted by this Agreement.
Section 7.04. Fiscal Year. Change its Fiscal Year to a period other
than its Fiscal Year in effect on the Closing Date.
Section 7.05. Sale of Assets. Except as permitted under Section 7.01,
7.03 or 7.10, sell, lease, assign, transfer or otherwise dispose of any of its
now owned or hereafter acquired assets, except: (1) the sale of inventory,
equipment and fixtures disposed of in the ordinary course of business, (2) the
sale or other disposition of assets no longer necessary or useful for the
conduct of its business that either (i) as a result of such sale or disposition
and after giving effect thereto the ratio of Combined Long-Term Debt to Combined
Total Capitalization is improved; or (ii) does not exceed (A) in the aggregate
in any Fiscal Year ten percent (10%) of the Combined Non-Current Assets as of
the last day of the immediately preceding Fiscal Year and (B) in the aggregate
in any three (3) consecutive Fiscal Years taken together twenty percent (20%) of
the average of the Combined Non-Current Assets as of the last day of each Fiscal
Year which preceded each such Fiscal Year included in such three (3) Fiscal Year
period; provided, however, that after giving effect to such sale or disposition,
no Default or Event of Default would occur, and (3) any Restricted Subsidiary
may sell, lease, transfer or otherwise dispose of any of its assets to the
Borrower or another Restricted Subsidiary.
Section 7.06. Transactions with Affiliates. Enter into any
transaction, including, without limitation, the purchase, sale or exchange of
property or the rendering of any service, with any Affiliate of the Borrower or
any Restricted Subsidiary except in the ordinary course of and pursuant to the
reasonable requirements of the Borrower's or the Restricted Subsidiaries'
business and upon fair and reasonable terms taking into account the nature of
the Borrower's or the Restricted Subsidiary's business.
Section 7.07. Mergers, Etc. Merge or consolidate with, or sell,
assign, lease or otherwise dispose of (whether in one transaction or in a series
of related transactions) all or substantially all of its assets (whether now
owned or hereafter acquired) to, any Person, or acquire all or substantially all
of the assets or the business of any Person (or enter into any agreement to do
any of the foregoing) except (1) mergers or consolidations between the Borrower
and a Restricted Subsidiary in which the Borrower is the surviving entity, (2)
mergers or consolidations between two or more Restricted Subsidiaries, (3)
mergers or consolidations with other agricultural cooperatives, or (4) mergers,
consolidations or purchases of all or substantially all the assets of a Person
which either (i) as a result of such transaction and after giving effect thereto
the Ratio of Combined Long Term Debt to Combined Total Capitalization is
improved or (ii) the aggregate of assets acquired by the Borrower and its
Restricted Subsidiaries as a result of all such transactions and after giving
effect thereto, does not exceed (A) in any single Fiscal Year ten percent (10%)
of the Non-Current Assets as of the last day of the immediately preceding Fiscal
Year or (B) in the aggregate in any three (3) consecutive Fiscal Years twenty
percent (20%) of the average of the Combined Non-Current Assets as of the last
day of each Fiscal Year which preceded each such Fiscal Year included in such
three (3) Fiscal Year period. Notwithstanding (3) or (4) above, neither the
Borrower nor any Restricted Subsidiary may merge or consolidate with or purchase
all or substantially all of the assets of any other Person unless: (1) the
Borrower or such Restricted Subsidiary is the surviving entity; and (2) after
giving effect to the merger or consolidation or purchase of assets, no Default
or Event of Default exists or would occur as the result of such merger or
consolidation or purchase of assets.
Section 7.08. Change in Business. Engage in any material respects in
any business activity or operations which are substantially different from or
unrelated to its present business activities or operations.
Section 7.09. Combined Subordinated Debt. Change any of the
subordination terms of any of the Combined Subordinated Debt; or repay, prepay
or purchase, redeem or otherwise acquire any or all of the Combined Subordinated
Debt, except (1) a regularly scheduled payment thereof, (2) any mandatory
prepayment required under the terms of the subordination agreement related to
such Combined Subordinated Debt, and (3) purchases, redemptions or acquisitions
of some Combined Subordinated Debt provided that at the time of such purchase,
redemption or acquisition and after giving effect thereto (a) the principal
amount of all outstanding Combined Subordinated Debt is equal to or greater than
Two Hundred Million Dollars ($200,000,000), and (b) there are no Defaults or
Events of Default.
Section 7.10. Investments. Make, or suffer to exist, any Investment
except (1) Investments outstanding on March 31, 1994, of which all those in an
amount equal to or greater than One Million Dollars ($1,000,000) are set forth
on Schedule 7.10, (2) Permitted Investments, (3) Investments in Restricted
Subsidiaries, (4) subject to the limitation noted below, Investments in National
Beef Packing Company, L.P. or Hyplains Beef, L.C. or both or any successor to
either or both of them made on and after March 31, 1994 where the aggregate
amount of all such Investments is equal to or less than Thirty-Three Million
Dollars ($33,000,000), (5) Investments made on or after March 31, 1994, in any
Person (other than a Restricted Subsidiary) where the aggregate amount of all
such Investments is equal to or less than One Hundred Twenty Million Dollars
($120,000,000); provided, that (1) of such permitted Investments under
subsection (5) above no more than Thirty Million Dollars ($30,000,000) can be
invested in any Person that is an Unrestricted Entity as of the Closing Date;
(2) to the extent any Investment under subsection (1), (4) or (5) above is in
the form of Debt and such Debt is repaid then the amount of such repayment is
again available to be used to make an Investment, (3) that at the time of making
each Investment permitted under subsection (4) of this Section 7.10 at least
fifty percent (50%) of the aggregate of all Investments made on or after March
31, 1994 pursuant to such subsection and after giving effect to each new
Investment under such subsection must be in the form of Debt, and (4) to the
extent the Borrower or a Restricted Subsidiary makes or receives an Investment
in exchange for or in substitution for or as a result of a conversion of an
existing Investment then, to the extent that neither the Borrower nor the
Restricted Subsidiary provides any additional cash or other consideration for
such new Investment that such transaction will not count as a new Investment for
purposes of this Section (and any additional cash or other consideration shall
be permitted in connection with such Investment only to the extent otherwise
permitted under this Section 7.10).
ARTICLE VIII. FINANCIAL COVENANTS
So long as any of the Notes shall remain unpaid or any Letter of Credit
Obligation shall remain outstanding or any Bank shall have any Commitment
hereunder or any other amount is owing by the Borrower to any Bank Party
hereunder or under any other Loan Document:
Section 8.01. Combined Working Capital. The Borrower and its
Restricted Subsidiaries shall have as of the end of each fiscal quarter Combined
Current Assets over Combined Current Liabilities of not less than One Hundred
Fifty Million Dollars ($150,000,000).
Section 8.02. Ratio of Combined Funded Debt to Combined Total
Capitalization. The Borrower and its Restricted Subsidiaries shall have as of
the end of each fiscal quarter a ratio (expressed as a percentage) of Combined
Funded Debt to Combined Total Capitalization of equal to or less than fifty-two
percent (52%).
Section 8.03. Ratio of Combined Senior Debt to Combined Total
Capitalization. The Borrower and its Restricted Subsidiaries shall have as of
the end of each fiscal quarter a ratio (expressed as a percentage) of Combined
Senior Debt to Combined Total Capitalization of equal to or less than forty-
three percent (43%).
Section 8.04. Combined Minimum Net Worth. The Borrower and its
Restricted Subsidiaries shall have as of the end of each fiscal quarter an
excess of Combined Total Assets over Combined Total Liabilities of not less than
Four Hundred Seventy-Five Million Dollars ($475,000,000).
ARTICLE IX. EVENTS OF DEFAULT
Section 9.01. Events of Default. Any of the following events shall be
an "Event of Default":
(1) the Borrower shall: (a) fail to pay the principal of any Note or
shall fail to reimburse any Bank on a Letter of Credit as and when due and
payable; (b) fail to pay interest on or fail to pay any Commitment Fees within
two (2) days after such interest or Fees are due and payable; or (c) fail to pay
within ten (10) days after the request for payment is made any fees (other than
Commitment Fees) or expenses required to be paid under the terms of any of the
Loan Documents;
(2) any representation or warranty made or deemed made by the Borrower
in this Agreement or in any other Loan Document or which is contained in any
instrument, certificate, document, schedule, financial statement, report, notice
or other statement furnished at any time by the Borrower or any Restricted
Subsidiary to the Banks under or in connection with any Loan Document is, in the
case of such representation, warranty or other information which is not subject
to a materiality or Material Adverse Change exception, materially false or
incorrect, and in the case such representation, warranty or other information
which is subject to a materiality or Material Adverse Change exception, false or
incorrect, except that it will no longer be an Event of Default under this
subsection (2) if, at any time prior to the Banks exercise of any or all of
their rights and remedies, such representation and warranty, if made at that
time, would not then be an Event of Default under this subsection (2);
(3) The Borrower or any Restricted Subsidiary shall fail to perform or
observe any term, covenant or agreement contained in Article VII or Article VIII
or Section 6.05 on its part to be performed or observed; or the Borrower or any
Restricted Subsidiary, as the case may be, shall fail to perform or observe any
term, covenant or agreement contained in Article VI (other than Section 6.05 and
the items covered by subsection (4) below) or otherwise contained in this
Agreement or any Loan Document (other than obligations specifically referred to
elsewhere in this Section 9.01) to which it is a party on its part to be
performed or observed and such failure shall remain unremedied for thirty (30)
consecutive calendar days after the occurrence thereof;
(4) The Borrower shall fail to provide any financial statements or
certificates required by Section 6.09 (1),(2) and (12) of this Agreement within
five (5) Banking Days after notice from any Bank to the Borrower of such
failure;
(5) The Borrower or any Substantial Subsidiary shall: (a) fail to pay
all or any portion of a Debt (other than the payment obligations described in
(1) above), of the Borrower or any Substantial Subsidiary when due (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise)
where the aggregate amount of all such Debt is equal to or in excess of Ten
Million Dollars ($10,000,000) except for the failure to pay such Debt where (i)
such Debt constitutes trade obligations, and (ii) such failure to pay is subject
to a Good Faith Contest; or (b) fail to perform or observe any term, covenant or
condition on its part to be performed or observed under any agreement or
instrument relating to any such Debt, when required to be performed or observed,
and such failure shall not be waived and shall continue after the applicable
grace period, if any, if the effect of such failure to perform or observe is to
accelerate, or to permit the acceleration of, after the giving of notice or the
lapse of time, or both, of the maturity of such Debt; or any such Debt shall be
declared to be due and payable, or required to be prepaid (other than by a
regularly scheduled required prepayment or voluntary prepayment), prior to the
stated maturity thereof, unless such failure is subject to a Good Faith Contest;
(6) The Borrower or any Substantial Subsidiary shall fail to pay or to
perform any obligations of Ten Million Dollars ($10,000,000) or more under or
with respect to any material lease of goods (except to the extent that the
existence of any such default is subject to a Good Faith Contest);
(7) The Borrower or any Substantial Subsidiary: (a) shall generally
not, or be unable to, or shall admit in writing its inability to, pay its debts
as such debts become due; or (b) shall make an assignment for the benefit of
creditors, petition or apply to any tribunal for the appointment of a custodian,
receiver or trustee for it or a substantial part of its assets; or (c) shall
commence any proceeding under any bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction, whether now or hereafter in effect; or (d) shall have had any such
petition or application filed or any such proceeding shall have been commenced,
against it, in which an adjudication or appointment is made or order for relief
is entered and continues unstayed for a period of sixty (60) days or more; or
shall be the subject of any proceeding under which its assets may be subject to
seizure, forfeiture or divestiture; or (e) by any act or omission shall indicate
its consent to, approval of or acquiescence in any such petition, application or
proceeding or order for relief or the appointment of a custodian, receiver or
trustee for all or any substantial part of its property;
(8) any of the following events shall occur or exist with respect to
the Borrower or any Consolidated Subsidiary or any ERISA Affiliate: (a) any
Prohibited Transaction involving any Plan; (b) any Reportable Event shall occur
with respect to any Plan; (c) the filing under Section 4041 of ERISA of a notice
of intent to terminate any Plan or the termination of any Plan; (d) any event or
circumstance exists which are reasonably likely to constitute grounds entitling
the PBGC to institute proceedings under Section 4042 of ERISA for the
termination of, or for the appointment of a trustee to administer, any Plan, or
the institution by the PBGC of any such proceedings; (e) complete or partial
withdrawal under Section 4201 or 4204 of ERISA from a Multiemployer Plan or the
reorganization, insolvency, or termination of any Multiemployer Plan; (f) an
accumulated funding deficiency (as defined in Section 302 of ERISA or
section 412 of the Code) exists with respect to a Plan, whether or not waived;
and in each case above, such event or condition, together with all other events
or conditions, if any, could in the opinion of the Requisite Banks reasonably be
expected to result in a Material Adverse Change; or
(9) if at any time the Borrower and/or its Consolidated Subsidiaries are
required to pay on or after the Closing Date federal, state and/or local taxes
which in the aggregate for all such taxes paid on or after the Closing Date
exceed by Thirty-Five Million Dollars ($35,000,000) or more the amount of taxes
the Borrower and/or its Consolidated Subsidiaries stated were due and payable on
all tax returns filed by the Borrower and/or its Consolidated Subsidiaries.
Section 9.02. Remedies. If any Event of Default shall occur and be
continuing, the Administrative Agent shall, upon request of the Requisite Banks,
by notice to the Borrower, (1) declare the Commitments, to be terminated,
whereupon the same shall forthwith terminate; (2) declare the outstanding Notes,
all interest thereon, and all other amounts payable under this Agreement, and
any other Loan Documents to be forthwith due and payable, whereupon the Notes,
all such interest, and all such amounts due under this Agreement, and under any
other Loan Document shall become and be forthwith due and payable, without
presentment, demand, protest, or further notice of any kind, all of which are
hereby expressly waived by the Borrower; (3) require the Borrower to provide
Cash Collateral to each Bank with an outstanding Letter of Credit up to the
Permitted Cash Collateral Amount with respect to all such outstanding Letters of
Credit; (4) exercise any remedies provided in any of the Loan Documents, and/or
(5) exercise any rights and remedies provided by Law; provided, however, that
upon the occurrence of an Event of Default referred to in Section 9.01(7), the
Commitments shall automatically terminate and the outstanding Notes, Letters of
Credit and any other amounts payable under this Agreement or any of the other
Loan Documents, and all interest on any of the foregoing, shall be forthwith due
and payable without presentment, demand, protest or further notice of any kind,
all of which are hereby expressly waived by the Borrower. The parties hereto
agree that all payments on Loans after the occurrence of an Event of Default and
the exercise of remedies by the Banks will be applied ratably based upon the
amount of each Loan to all Loans. In addition, the parties hereto also agree
that all Cash Collateral held on Letters of Credit that expire undrawn or on
which the reimbursement obligation is satisfied will be applied to all the Loans
as provided in the prior sentence.
At any time after the principal of, and interest accrued on, any or all
of the Notes are declared due and payable, the Supermajority Banks, by written
notice to the Borrower, may rescind and annul any such declaration and its
consequences if (1) the Borrower has paid all overdue interest on the Notes and
the principal of any Notes which have become due otherwise than by reason of
such declaration, and (to the extent permitted by applicable Law) interest on
such overdue principal and any overdue interest in respect of such Notes at a
rate or rates per annum from time to time equal to the Default Rate(s), (2) all
Events of Default and Defaults, other than nonpayment of amounts which have
become due solely by reason of such declaration, have been cured or waived, and
(3) no judgment or decree has been entered for the payment of any monies due
pursuant to the Notes or this Agreement; but no such rescission and annulment
shall extend to or affect any subsequent Event of Default or Default or impair
any right consequent thereon.
ARTICLE X. THE ADMINISTRATIVE AGENT
Section 10.01. Appointment, Powers and Immunities of Administrative
Agent. Each Bank hereby irrevocably appoints and authorizes the Administrative
Agent to act as its agent hereunder and under any other Loan Document with such
powers as are specifically delegated to the Administrative Agent by the terms of
this Agreement and any other Loan Document, together with such other powers as
are reasonably incidental thereto. The Administrative Agent shall have no
duties or responsibilities except those expressly set forth in this Agreement
and any other Loan Document, and shall not by reason of this Agreement be a
trustee or fiduciary for any Bank or for the Agent. The Administrative Agent
shall not be responsible to the Banks or the Agent for any recitals, statements,
representations or warranties made by the Borrower or any Consolidated
Subsidiary or any officer or official of the Borrower or any Consolidated
Subsidiary or any other Person contained in this Agreement or any other Loan
Document, or in any certificate or other document or instrument referred to or
provided for in, or received by any of them under, this Agreement or any other
Loan Document, or for the value, legality, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document, or
any other document or instrument referred to or provided for herein or therein,
or for any failure by the Borrower or any Consolidated Subsidiary to perform any
of its obligations hereunder or thereunder. The Administrative Agent may employ
agents and attorneys-in-fact and shall not be responsible, except as to money or
securities received by it or its authorized agents, for the negligence or
misconduct of any such agents or attorneys-in-fact selected by it with
reasonable care. Neither the Administrative Agent nor any of its directors,
officers, employees or agents shall be liable or responsible for any action
taken or omitted to be taken by it or them hereunder or under any other Loan
Document or in connection herewith or therewith, except for its or their own
gross negligence or willful misconduct. The Borrower shall pay any fee agreed
to by the Borrower and the Administrative Agent with respect to the
Administrative Agent's services hereunder.
Section 10.02. Reliance by Agent. The Administrative Agent shall be
entitled to rely upon any certification, notice or other communication
(including any thereof by telephone, telex, facsimile, telegram or cable)
believed by it to be genuine and correct and to have been signed or sent by or
on behalf of the proper Person or Persons, and upon advice and statements of
legal counsel, independent accountants and other experts selected by the
Administrative Agent. The Administrative Agent may deem and treat each Bank as
the holder of the Advances made by it and Letters of Credit issued by it for all
purposes hereof unless and until a notice of the assignment or transfer thereof
satisfactory to the Administrative Agent signed by such Bank shall have been
furnished to the Administrative Agent, but the Administrative Agent shall not be
required to deal with any Person who has acquired a participation in any Loan or
a Letter of Credit from a Bank. As to any matters not expressly provided for by
this Agreement or any other Loan Document, the Administrative Agent shall in all
cases be fully protected in acting, or in refraining from acting, hereunder in
accordance with instructions signed by the Requisite Banks or Supermajority
Banks, as the case may be, and such instructions of the Requisite Banks or
Supermajority Banks, as the case may be, and any action taken or failure to act
pursuant thereto shall be binding on all of the Banks and the Agent and any
other holder of all or any portion of any Loan or the issuer of any Letter of
Credit.
Section 10.03. Defaults. The Administrative Agent shall not be deemed
to have knowledge of the occurrence of a Default or Event of Default unless the
Administrative Agent has received notice from a Bank, the Agent, or the Borrower
specifying such Default or Event of Default and stating that such notice is a
"Notice of Default." In the event that the Administrative Agent receives such a
Notice of Default, the Administrative Agent shall give prompt notice thereof to
the Banks. The Administrative Agent shall take such action with respect to such
Default or Event of Default which is continuing as shall be directed by the
Requisite Banks or Supermajority Banks, as the case may be; provided that,
unless and until the Administrative Agent shall have received such directions,
the Administrative Agent may take such action, or refrain from taking such
action, with respect to such Default or Event of Default as it shall deem
advisable in the best interest of the Banks; and provided further that the
Administrative Agent shall not be required to take any such action which it
determines to be contrary to Law.
Section 10.04. Rights of Administrative Agent as a Bank. With respect
to its Individual Line of Credit Commitment and Individual Revolving Credit
Commitment and Swing Line Commitment and the Advances and Letters of Credit
provided by it, the Administrative Agent in its capacity as a Bank hereunder
shall have the same rights and powers hereunder as any other Bank and may
exercise the same as though it were not acting as the Administrative Agent, and
the term "Bank" or "Banks" shall, unless the context otherwise indicates,
include the Administrative Agent in its capacity as a Bank. The Administrative
Agent and its Affiliates may (without having to account therefor to any Bank or
the Agent) accept deposits from, lend money to (on a secured or unsecured
basis), and generally engage in any kind of banking, trust or other business
with the Borrower or any Subsidiary of the Borrower or any of their Affiliates
as if it were not acting as the Administrative Agent, and the Administrative
Agent may accept fees and other consideration from the Borrower or any
Subsidiary of the Borrower for services in connection with this Agreement or
otherwise without having to account for the same to the Banks or the Agent.
Section 10.05. Indemnification of Administrative Agent . The Banks
agree to indemnify the Administrative Agent (to the extent not reimbursed under
Section 11.03 or under the applicable provisions of any other Loan Document, but
without limiting the obligations of the Borrower under Section 11.03 or such
provisions), for its proportionate share (based upon each Bank's Individual Line
of Credit Commitment to the Total Line of Credit Commitment) of any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind and nature whatsoever which may be
imposed on, incurred by or asserted against the Administrative Agent in any way
relating to or arising out of this Agreement, any other Loan Document or any
other documents contemplated by or referred to herein or therein, or the
transactions contemplated hereby or thereby (including, without limitation, the
costs and expenses which the Borrower is obligated to pay under Section 11.03)
or under the applicable provisions of any other Loan Document or the enforcement
of any of the terms hereof or thereof or of any such other documents or
instruments; provided that no Bank shall be liable for any of the foregoing to
the extent they arise from the gross negligence or willful misconduct of the
Administrative Agent or its directors, officers, employees or agents.
Section 10.06. Non-Reliance on Co-Agents and Other Banks. Each Bank
agrees that it has, independently and without reliance on the Administrative
Agent, the Agent, or any other Bank, and based on such documents and information
as it has deemed appropriate, made its own credit analysis of the Borrower and
its Subsidiaries and the decision to enter into this Agreement and the other
Loan Documents that it will, independently and without reliance upon the
Administrative Agent, 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 analysis and decisions in taking or not taking action under this Agreement
or any other Loan Document. The Administrative Agent shall not be required to
keep itself informed as to the performance or observance by the Borrower or any
of its Subsidiaries of this Agreement or any other Loan Document or any other
document referred to or provided for herein or therein or to inspect the
properties or books of the Borrower or any Consolidated Subsidiary (or any of
their Affiliates). The Administrative 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
Consolidated Subsidiary (or any of their Affiliates) which may come into the
possession of the Administrative Agent or any of its affiliates. The
Administrative Agent shall not be required to file this Agreement, any other
Loan Document or any document or instrument referred to herein or therein, for
record or give notice of this Agreement, any other Loan Document or any document
or instrument referred to herein or therein, to anyone. Each of the Banks
acknowledges and agrees that the Agent only has the duties and responsibilities
explicitly set forth in the Loan Documents.
Section 10.07. Failure of Administrative Agent to Act. Except for
action expressly required of the Administrative Agent hereunder, the
Administrative Agent shall in all cases be fully justified in failing or
refusing to act hereunder unless it shall have received further assurances
(which may include cash collateral) of the indemnification obligations of the
Banks under Section 10.05 in respect of any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such action.
Section 10.08. Resignation or Removal of Administrative Agent. Subject
to the appointment and acceptance of a successor Administrative Agent as
provided below, the Administrative Agent may resign at any time by giving
written notice thereof to the Banks, the Borrower, and the Agent, and the
Administrative Agent may be removed at any time with or without cause by the
Requisite Banks; provided that the Borrower, the Agent, and the other Banks
shall be promptly notified thereof. Upon any such resignation or removal, the
Requisite Banks shall have the right to appoint a successor Administrative Agent
which must be located in the United States. If no successor Administrative
Agent shall have been so appointed by the Requisite Banks and shall have
accepted such appointment within thirty (30) days after the retiring
Administrative Agent's giving of notice of resignation or the Requisite Banks'
removal of the retiring Administrative Agent, then the retiring Administrative
Agent may, on behalf of the Banks, appoint a successor Administrative Agent
which must be located in the United States. The Requisite Banks or the retiring
Administrative Agent, as the case may be, shall upon the appointment of a
successor Administrative Agent promptly so notify the Borrower, the Agent, and
the other Banks. Upon the acceptance of any appointment as Administrative Agent
hereunder by a successor Administrative Agent, such successor Administrative
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder. After any retiring Administrative Agent's resignation or removal
hereunder as Administrative Agent, the provisions of this Article X shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was acting as the Administrative Agent.
Section 10.09. Amendments Concerning Agency Function. The
Administrative Agent shall not be bound by any waiver, amendment, supplement or
modification of this Agreement or any other Loan Document which affects its
duties hereunder or thereunder unless it shall have given its prior consent
thereto.
Section 10.10. Liability of Administrative Agent. The Administrative
Agent shall not have any liabilities or responsibilities to the Borrower or any
Consolidated Subsidiary or any of their Affiliates on account of the failure of
any Bank or the Agent to perform its obligations hereunder or to any Bank or the
Agent on account of the failure of the Borrower or any Consolidated Subsidiary
or any of their Affiliates to perform their respective obligations hereunder or
under any other Loan Document.
Section 10.11. Transfer of Agency Function. Without the consent of the
Borrower, the Agent, or any Bank, the Administrative Agent may at any time or
from time to time transfer its functions as Administrative Agent hereunder to
any of its offices located in the United States, provided that the
Administrative Agent shall promptly notify the Borrower, the Agent, and the
Banks thereof.
Section 10.12. Notices to Administrative Agent. On or prior to 2:30
p.m. (Central time) on each Banking Day each Bank will notify the Administrative
Agent of each Advance made by such Bank on such Day, all payments or prepayments
of Advances received by such Bank on such Day, all Letters of Credit issued by
the Bank on such Day, and all payments on, reimbursements made to such Bank, or
terminations of Letters of Credit on such Day.
Section 10.13. Monthly Reports. Within fifteen (15) days of the end of
each month the Administrative Agent will send to Borrower and each Bank a report
for the prior month indicating as of the end of such month all Credit Facilities
provided by such Bank.
Section 10.14. Withholding Taxes. Each Bank
represents that it is entitled to receive any payments to be made to it
hereunder without the withholding of any tax and will furnish to the
Administrative Agent and to the Borrower such forms, certifications, statements
and other documents as the Administrative Agent or Borrower may request from
time to time to evidence such Bank's exemption from the withholding of any tax
imposed by any jurisdiction or to enable the Administrative Agent or Borrower,
as the case may be, to comply with any applicable Laws or regulations relating
thereto. Without limiting the effect of the foregoing, if any Bank is not
created or organized under the Laws of the United States of America or any state
thereof, such Bank will furnish to the Administrative Agent and the Borrower
Form 4224 or Form 1001 of the Internal Revenue Service, or such other forms,
certifications, statements or documents, duly executed and completed by such
Bank as evidence of such Bank's exemption from the withholding of United States
tax with respect thereto. Notwithstanding anything herein to the contrary, the
Borrower shall not be obligated to make any payments hereunder to such Bank in
respect of any Advance and reimbursements of Letters of Credit until such Bank
shall have furnished to the Administrative Agent and the Borrower the requested
form, certification, statement or document.
ARTICLE XI. MISCELLANEOUS
Section 11.01. Amendments and Waivers. No amendment or waiver of any
provision of this Agreement or any other Loan Document, nor consent to any
departure by the Borrower therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Administrative Agent, the Agent and
the Requisite Banks and in the case of the waiver provided for under the second
paragraph of Section 9.02, Supermajority Banks, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given; provided, however, that no amendment, waiver or consent, shall,
unless in writing and signed by all Banks do any of the following: (1) increase
any Commitment (other than a reinstatement of a Commitment authorized by the
Supermajority Banks); (2) reduce the principal of, or interest on, the Notes or
the Commitment Fees; (3) postpone the date fixed for the payment of principal
of, or interest on, the Notes or such Commitment Fees or any other amount due
hereunder or under any Loan Document, or, except as specifically provided for
under Section 9.02 with regard to a waiver by the Supermajority Banks, waive any
default in the payment of principal, interest, reimbursement obligations, or any
other amount due hereunder or under any Loan Document; (4) change the definition
of "Requisite Banks", (5) change the definition of "Supermajority Bank" or (6)
amend this Section. No failure on the part of the Administrative Agent, or any
Bank to exercise, and no delay in exercising, any right hereunder shall operate
as a waiver thereof or preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and
not exclusive of any remedies provided by Law.
Section 11.02. Usury. Anything herein to the contrary notwithstanding,
the obligations of the Borrower under this Agreement and the Notes shall be
subject to the limitation that payments of interest shall not be required to the
extent that receipt thereof would be contrary to provisions of Law applicable to
a Bank limiting rates of interest which may be charged or collected by such
Bank.
Section 11.03. Expenses; Indemnification. The Borrower agrees to
reimburse each of the Co-Agents, on demand for all costs, expenses, and charges
(including, without limitation, all fees and charges of external legal counsel
for either Co-Agent) up to a combined maximum amount of Twenty-Five Thousand
Dollars ($25,000) incurred by such Co-Agents, in connection with the preparation
of the Loan Documents. The Borrower agrees to reimburse the Administrative
Agent, Agent and each of the Banks on demand for all costs, expenses, and
charges (including, without limitation, all fees and charges of external legal
counsel for the Administrative Agent, Agent and each Bank) incurred by the
Administrative Agent, Agent or any Bank in connection with compliance with any
of the Loan Documents, or enforcement of this Agreement, the Notes, the Letters
of Credit, or any other Loan Documents. The Borrower agrees to and hereby does
indemnify each Bank Party and their respective directors, officers, employees
and agents from, and hold each of them harmless against, any and all losses,
liabilities, claims, damages or expenses incurred by any of them arising out of
or by reason of any investigation or litigation or other proceedings (including
any threatened investigation or litigation or other proceedings) relating to
this Agreement or any of the Loan Documents or to any actual or proposed use by
the Borrower of the proceeds of the Loans or use of the Letters of Credit or to
any violation or alleged violation of any Environmental Law by the Borrower or
any Restricted Subsidiary, including without limitation, the reasonable fees and
disbursements of counsel incurred in connection with any such investigation or
litigation or other proceedings (but excluding any such losses, liabilities,
claims, damages or expenses incurred by reason of the gross negligence or
willful misconduct of the Person to be indemnified or its directors, officers,
employees or agents).
Notwithstanding anything to the contrary contained in this Agreement,
the cost of each wire transfer to be made by each Bank in connection with this
Agreement will be borne by the Bank making such transfer, except that if the
Borrower requests a Bank to wire transfer the proceeds of such Bank's Advance to
more than one location the Borrower will pay such Bank's wire transfer charges
for such additional transfers.
The obligations of the Borrower under this Section shall survive the
repayment of the Loans, the reimbursement of all Letters of Credit, and payment
of all amounts due under or in connection with any of the Loan Documents and the
termination of the Commitments.
Section 11.04. Assignment; Participation. This Agreement shall be
binding upon, and shall inure to the benefit of, the Borrower, the
Administrative Agent, the Agent, and the Banks and their respective successors
and permitted assigns. The Borrower may not assign or transfer its rights or
obligations hereunder. With the consent of the Borrower (which consent shall
not be unreasonably withheld or delayed), any Bank may at any time grant to one
or more banks or other financial institutions (each a "Participant")
participating interests in its portion of the Loans, and its Letters of Credit.
In no event shall a Participant constitute a Bank for purposes hereof. In the
event of any such grant by a Bank of a participating interest to a Participant,
whether or not upon notice to the Borrower and the Administrative Agent, such
Bank shall remain responsible for the performance of its obligations hereunder,
and the Borrower and the Co-Agents shall continue to deal solely and directly
with such Bank in connection with such Bank's rights and obligations hereunder.
Any agreement pursuant to which any Bank may grant such a participating interest
shall provide that such Bank shall retain the sole right and responsibility to
enforce the obligations of the Borrower hereunder and under any other Loan
Document including, without limitation, the right to approve any amendment,
modification or waiver of any provision of this Agreement or any other Loan
Document; provided that such participation agreement may provide that such Bank
will not agree to any modification, amendment or waiver of this Agreement
described in the proviso in Section 11.01 without the consent of the
Participant.
Any Bank may at any time assign to one or more banks or other financial
institutions (each an "Assignee") all, or a proportionate part of all (including
an equal percentage of its Line of Credit Commitment and Revolving Credit
Commitment), of its rights and obligations under this Agreement and its Notes,
and such Assignee shall assume rights and obligations, pursuant to an Assignment
and Assumption Agreement executed by such Assignee and the Bank, with and
subject to the consent of each of the Co-Agents and the Borrower (which consent
shall not be unreasonably withheld or delayed) provided, that, if the Assignee
of any Bank is an Affiliate of such Bank, neither the consent of the Co-Agents
nor the consent of the Borrower shall be required for such assignment; provided
that, in each case, (1) after giving effect to such assignment the aggregate
total of each of the following assigned to the Assignee will be equal to or
greater than Ten Million Dollars ($10,000,000) (a) the Unused Line of Credit
Commitment, (b) the Unused Revolving Credit Commitment, (c) the outstanding
principal amount of the outstanding Line of Credit Advances assigned to such
Assignee and (d) the outstanding principal amount of the Revolving Credit
Advances assigned to such Assignee, (2) the minimum aggregate amount of the
following retained by the Bank making the assignment will be equal to or greater
than Ten Million Dollars ($10,000,000), (a) Unused Line of Credit Commitment,
(b) Unused Revolving Credit Commitment, (c) the outstanding principal amount of
the Line of Credit Advances, and (d) the outstanding principal amount of the
Revolving Credit Advances and (3) the assigning Bank and Assignee shall pay the
Administrative Agent a processing and recordation fee of Two Thousand Dollars
($2,000). The Bank making the assignment and the Assignee will make whatever
arrangement they decide to with regard to the outstanding Letters of Credit of
the Bank making the assignment. If the assigning Bank continues to be the
issuer of any Letters of Credit then it shall remain a Bank under this Agreement
with regard to such Letters of Credit. Upon execution and delivery of such
instrument and payment by such Assignee to the Bank of an amount equal to the
purchase price agreed between the Bank and such Assignee, such Assignee shall be
a Bank Party to this Agreement and shall have all the rights and obligations of
a Bank with the Commitments as set forth in such Assignment and Assumption
Agreement, and the assigning Bank shall be released from its obligations
hereunder to a corresponding extent, and no further consent or action by any
party shall be required. Upon the consummation of any assignment pursuant to
this paragraph, a new Note or Notes shall be issued by the Borrower. If the
Assignee is not incorporated under the laws of the United States of America or a
state thereof, it shall, prior to the first date on which interest or fees are
payable hereunder for its account, deliver to the Borrower and the
Administrative Agent certification as to exemption from deduction or withholding
of any United States federal income taxes in accordance with Section 10.14.
Any Bank may at any time assign all or any portion of its rights under
this Agreement and its Note to a Federal Reserve Bank. No such assignment shall
release the transferor Bank from its obligations hereunder.
The Borrower agrees to provide all assistance reasonably requested by a
Bank to enable such Bank either to sell participations in or make assignments of
its portion of the Loans and Letters of Credit as permitted by this Section
11.04.
Section 11.05. Notices. Unless the party to be notified otherwise
notifies each other party in writing as provided in this Section, and except as
otherwise provided in this Agreement, notices shall be given to each of the Co-
Agents by telephone, confirmed by telex, facsimile, or other writing, and to the
Banks and to the Borrower by ordinary mail, facsimile, telecopy or telex
addressed to such party at its address on the signature page of this Agreement.
Notices shall be effective: (1) if given by mail, upon receipt; and (2) if given
by telex or facsimile, when the telex or facsimile is transmitted to the telex
or facsimile number as aforesaid; provided that notices to each of the Co-Agent
and the Banks shall be effective upon receipt.
Section 11.06. Setoff. The Borrower agrees that, in addition to (and
without limitation of) any right of setoff, bankers' lien or counterclaim a Bank
may otherwise have, each Bank shall be entitled, at its option, to offset
balances (general or special, time or demand, provisional or final) held by it
for the account of the Borrower at any of such Bank's offices, in Dollars or in
any other currency, against any amount payable by the Borrower to such Bank
under this Agreement or such Bank's Note, or any other Loan Document which is
not paid when due (regardless of whether such balances are then due to the
Borrower), in which case such Bank shall promptly notify the Borrower and the
Administrative Agent thereof; provided that such Bank's failure to give such
notice shall not affect the validity thereof. Each Bank agrees that to the
extent any such payment is received by it as the result of a set-off or
otherwise and such payment results in such Bank receiving a greater payment than
it would have been entitled to, had the total amount of such payment been paid
to each of the Banks, then such Bank shall immediately purchase for cash from
the other Banks participations sufficient in amount so that such payment shall
effectively be shared pro rata with the other Banks in accordance with the
amount, and to the extent, of their respective interests in all the Loans and
Letters of Credit; provided, however, that if all or any portion of such payment
is thereafter recovered from such Bank at any time, the purchase shall be
rescinded and the purchase price returned to the extent of such recovery, but
without interest or other return thereof.
Section 11.07. Jurisdiction; Immunities. The Borrower hereby
irrevocably submits to the jurisdiction of any New York State or United States
Federal court sitting in New York City over any action or proceeding arising out
of or relating to this Agreement, the Notes, the Letters of Credit, or any other
Loan Document, and the Borrower hereby irrevocably agrees that all claims in
respect of such action or proceeding may be heard and determined in such New
York State or Federal court. The Borrower irrevocably consents to the service
of any and all process in any such action or proceeding by the mailing of copies
of such process to the Borrower at its addresses specified in Section 11.05.
The Borrower agrees that a final judgment in any such action or proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by Law. The Borrower further waives any
objection to venue in such State and any objection to an action or proceeding in
such State on the basis of forum non convenience. The Borrower agrees that any
action or proceeding brought against any Bank Party shall be brought only in New
York State or United States Federal court sitting in New York County.
Nothing in this Section 11.07 shall affect the right of any Bank Party
to serve legal process in any other manner permitted by Law or affect the right
of any Bank Party to bring any action or proceeding against the Borrower or its
property in the courts of any other jurisdiction.
To the extent that the Borrower has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether from
service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property, the
Borrower hereby irrevocably waives such immunity in respect of its obligations
under this Agreement, the Notes, the Letters or Credit, and any other Loan
Document.
Section 11.08. Governing Law. This Agreement shall be governed by and
construed in accordance with the Laws of the State of New York applicable to
agreements made and to be performed entirely within such State.
Section 11.09. Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which, when so executed and
delivered, shall be an original, but all such counterparts shall together
constitute one and the same instrument. Each counterpart may consist of a
number of copies hereof, each signed by less than all, but together signed by
all of the parties hereto.
Section 11.10. Exhibits and Schedules. The Exhibits and Schedules are
a part of this Agreement as if fully set forth herein. All references herein
to Sections, subsections, clauses, Exhibits and Schedules shall be deemed
references to such parts of this Agreement, unless the context shall otherwise
require.
Section 11.11. Table of Contents; Headings. The headings in the Table
of Contents and in this Agreement are for reference only, and shall not affect
the interpretation or construction of this Agreement.
Section 11.12. Severability. If any word, phrase, sentence, paragraph,
provision or section of this Agreement shall be held, declared, pronounced or
rendered invalid, void, unenforceable or inoperative for any reason by any
court of competent jurisdiction, Governmental Authority, statute or otherwise,
such holding, declaration, pronouncement or rendering shall not adversely
affect any other word, phrase, sentence, paragraph, provision or section of
this Agreement, which shall otherwise remain in full force and effect and be
enforced in accordance with its terms.
Section 11.13. Integration. The Loan Documents set forth the entire
agreement among the parties hereto relating to the transactions contemplated
thereby and, except with regard to the Fee Letter, supersede any prior oral or
written statements or agreements with respect to such transactions.
Section 11.14. Renewal and Substitution of Line of Credit Facilities.
The Borrower may request a renewal of the Line of Credit Commitment, not less
than sixty (60) days nor more than ninety (90) days prior to the Line of Credit
Maturity Date, for an additional three hundred sixty-four (364) days, which
request shall be made by notice to the Administrative Agent (which shall
promptly send a copy of such notice to each of the Banks and to the Agent).
Each Bank may determine, in its sole discretion, whether to agree to such
renewal and shall give notice to the Administrative Agent (which shall promptly
send a copy of such notice to the Borrower) of such determination within thirty
(30) days after delivery by the Borrower of its notice requesting such renewal;
provided, that, any failure of a Bank to give such notice of determination
shall be deemed to be a rejection of the Borrower's request by such Bank. If
all of the Banks do not agree to such renewal within such thirty (30) day
period, the Borrower may seek to replace any non-approving Bank with a new or
existing Bank by way of an assignment by the non-approving Bank to such new or
existing Bank in accordance with Section 11.04. Each of the parties hereto
recognizes that in accordance with such Section if a Bank assigns all of its
Line of Credit Advances and its Line of Credit Commitment then it must also
assign to the Assignee at the same time all of its Revolving Credit Advances
and Revolving Credit Commitment. If all of the Banks (including such new or
existing Banks that have replaced any non-approving Banks) agree to such
renewal on or before the Line of Credit Maturity Date, then the Line of Credit
Facility shall be renewed for an additional three hundred sixty-four (364) day
period commencing on the Line of Credit Maturity Date, and the Line of Credit
Maturity Date shall be extended by three hundred sixty-four (364) days.
Section 11.15. Consents and Terminations. Each Bank that is a party to
this Agreement hereby consents, to the extent required under any agreement
between the Bank and the Borrower, to the Borrower entering into this Agreement
and obtaining the Credit Facilities provided under this Agreement. The Borrower
and each Bank that is a party to an agreement listed in Schedule 11.15 hereby
agrees that such agreement (including all amendments and supplements) is
terminated as of the closing, on the Closing Date.
Section 11.16. Designation as Senior Indebtedness. It is agreed that
the indebtedness of the Borrower for the payment of the principal of and
interest on any Loan or Advance or, to the extent permitted by any indenture to
which such subordinated debt is subject, any obligation under any Letter of
Credit, including but not limited to any reimbursement obligation thereon,
constitutes indebtedness of the Borrower to the Bank that made the Loan or
Advance or issued the Letter of Credit which is superior in right of payment to
all present or future indebtedness of the Borrower which by the terms of the
instrument or instruments creating or evidencing such indebtedness is
subordinated to any indebtedness of any kind of the Borrower owing to such Bank,
including, without limitation, indebtedness of the Borrower evidenced by
subordinated certificates of investment and subordinated capital investment
certificates issued under the existing subordinated indentures and amendments
which are set forth on Schedule 1.01B hereto.
Section 11.17. Confidentiality. Each Bank Party shall maintain the
confidential nature of, and shall not use or disclose, any of the Borrower's
financial information, confidential information or trade secrets without first
obtaining the Borrower's written consent. Nothing in this Section 11.17 shall
require any Bank Party to obtain the consent of the Borrower before exercising
any of its respective rights under the Loan Documents upon the occurrence of an
Event of Default. The obligations of the Bank Parties shall in no event apply
to: (1) providing information about the Borrower to any financial institution
contemplated in Section 11.04 or to such Bank Party's parent holding company or
any of such Bank Party's Affiliates; (2) any situation in which any Bank Party
is required by Law or required by any Governmental Authority to disclose
information; (3) providing information to counsel to any Bank Party in
connection with the transactions contemplated by the Loan Documents; (4)
providing information to independent auditors retained by the Banks; (5) any
information that is in or becomes part of the public domain otherwise than
through a wrongful act of such Bank Party or any of its employees or agents
thereof; (6) any information that is in the possession of any Bank Party prior
to receipt thereof from the Borrower or any other Person known to such Bank
Party to be acting on behalf of the Borrower; (7) any information that is
independently developed by any Bank Party; and (8) any information that is
disclosed to any Bank Party by a third party that has no obligation of
confidentiality with respect to the information disclosed. A Bank's
confidentiality requirements continue after it is no longer a Bank under this
Agreement.
Section 11.18. Agreement in Writing. ORAL AGREEMENTS OR COMMITMENTS TO
LOAN MONEY, EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT
INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE. TO PROTECT
YOU (BORROWER) AND US (CREDITORS) FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY
AGREEMENTS WE REACH COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH
IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS
WE MAY LATER AGREE IN WRITING TO MODIFY IT.
THIS AGREEMENT, TOGETHER WITH THE OTHER LOAN DOCUMENTS BETWEEN FARMLAND
INDUSTRIES, INC. AND THE BANKS AND CO-AGENTS LISTED BELOW, IS THE FINAL
EXPRESSION OF THE AGREEMENT BETWEEN SUCH PARTIES. THE LOAN DOCUMENTS MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR OR CONTEMPORANEOUS ORAL CREDIT AGREEMENTS OR
PRIOR WRITTEN CREDIT AGREEMENTS BETWEEN SUCH PARTIES RELATING TO THE SUBJECT
MATTER HEREOF. ANY ADDITIONAL TERMS OF THE LOAN DOCUMENTS BETWEEN SUCH PARTIES
ARE SET FORTH BELOW.
THERE ARE NO SUCH ORAL AGREEMENTS BETWEEN SUCH PARTIES.
DEBTOR: FARMLAND INDUSTRIES, INC.
By: JOHN F. BERARDI
Title: EXECUTIVE VICE PRESIDENT
AND CHIEF FINANCIAL OFFICER
Date: May 19, 1994
CREDITORS:
THE NATIONAL BANK FOR COOPERATIEVE CENTRALE
COOPERATIVES, as Bank RAIFFEISEN-
BOERENLEENBANK B.A.,
"RABOBANK NEDERLAND",
By: ELIZABETH L. HUND New York Branch,
Name: Elizabeth L. Hund as Bank
Title: VICE PRESIDENT By: LAWRENCE W. SIDWELL
Name: Lawrence W. Sidwell
Title: VICE PRESIDENT
Date: May 19, 1994
By: ROBERT B. BENDIT
Name: Robert B. Bendit
ABN AMRO BANK N.V., Title: SENIOR VICE PRESIDENT
as Bank
By: JAMES R. MORGAN
Name: James R. Morgan
Title: VICE PRESIDENT
By: MICHAEL A. JACKSON
Name: Michael A. Jackson
Title: VICE PRESIDENT
Date: May 19, 1994 Date: May 19, 1994
BOATMEN'S FIRST NATIONAL BANK THE BANK OF NOVA SCOTIA,
OF KANSAS CITY, as Bank as Bank
By: MARTHA C. SMITH By: M. D. SMITH
Name: Martha C. Smith Name: M. D. Smith
Title: SENIOR VICE PRESIDENT Title: AGENT OPERATIONS
Date: May 19, 1994 Date: May 19, 1994
COMMERCE BANK OF KANSAS CITY, THE CHASE MANHATTAN BANK, N.A., as Bank
N.A., as Bank
By: KEVIN BARTH By: JODI STARBECKER
Name: Kevin Barth Name: Jodi Starbecker
Title: SENIOR VICE PRESIDENT Title: VICE PRESIDENT
Date: May 19, 1994 Date: May 19, 1994
NBD BANK, N.A.,
as Bank
By: THOMAS A. LEVASSEUR
Name: Thomas A. Levasseur
Title: VICE PRESIDENT
Date: May 19, 1994
THE BORROWER WAIVES ANY RIGHT IT MAY HAVE TO A JURY TRIAL.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
FARMLAND INDUSTRIES, INC.
By JOHN F. BERARDI
Name: John F. Berardi
Title: EXECUTIVE VICE PRESIDENT
AND CHIEF FINANCIAL
OFFICER
Address for Notices:
3315 North Oak Trafficway
Kansas City, Missouri 64116
Attn: Terry Campbell
Telecopy No.: (816) 459-5961
THE NATIONAL BANK FOR COOPERATIVES,
as Bank
Commitments:
Line of Credit
Commitment: $213,000,000
Revolving Credit
Commitment: $97,000,000
Swing Line
Commitment: $10,000,000
By ELIZABETH L. HUND
Name: Elizabeth L. Hund
Title: VICE PRESIDENT
Applicable Lending Office for Base Rate,
CD and
LIBOR Advances:
5500 South Quebec Street
Englewood, Colorado 80111
Address for Notices:
5500 South Quebec Street
Englewood, Colorado 80111
Attention: Elizabeth L. Hund
Telephone No.: (303) 740-4020
Telecopy No.: (303) 694-5827
Telex No.: 3720469
Answerback: NALBKCOOP
Bank's Office:
CoBank-National Bank for Cooperatives
Department 167
Denver, Colorado 80291-0167
ABA No. 3070-8875-4
Online Short Name: NATL BK COOP ENGWD
COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A.,
"RABOBANK NEDERLAND",
New York Branch, as Bank
Commitments:
Line of Credit
Commitment: $90,000,000
Revolving Credit
Commitment: $40,000,000
By: LAWRENCE W. SIDWELL
Name: Lawrence W. Sidwell
Title: VICE PRESIDENT
By: ROBERT B. BENOIT
Name: Robert B. Benoit
Title: SENIOR VICE PRESIDENT
Applicable Lending Office Applicable Lending Office for Base
for LIBOR Loans: Rate and CD Loans:
Rabobank Nederland, Rabobank Nederland,
Cayman Islands Branch New York Branch
245 Park Avenue 245 Park Avenue
New York, New York 10167 New York, New York 10167
Address for Notices:
245 Park Avenue
New York, New York 10167
Attention: Credit Department
Telecopy No.: (212) 916-7880
Telex No.: 424337
Answerback: RABO NY
4401 Westown Parkway
Suite 104
West DesMoines, Iowa 50266
Attention: Larry Sidwell
Telecopy No.: (515) 226-0364
Bank's Office:
245 Park Avenue
New York, New York 10167
ABA No. 021000018
Account Name: Rabobank New York
Account No.: 8026002533
Reference: Farmland Industries, Inc.
ABN AMRO BANK N.V.,
as Bank
Commitments:
Line of Credit
Commitment: $35,000,000
Revolving Credit
Commitment: $15,000,000
By: JAMES R. MORGAN
Name: James R. Morgan
Title:VICE PRESIDENT
By: MICHAEL A. JACKSON
Name:Michael A. Jackson
Title: VICE PRESIDENT
Applicable Lending Office for Base Rate, CD and
LIBOR Loans:
135 South LaSalle Street
Suite 425
Chicago, Illinois 60603
Address for Notices:
135 South LaSalle Street
Suite 425
Chicago, Illinois 60603
Attention: Loan Administration
Telecopy No.: (312) 606-8435
Telex No.: 6732700
Answerback: ABN AMRO CGO
Bank's Office:
ABN AMRO Bank N.V.
New York, New York
ABA No. 026009580
Account Name: ABN AMRO Bank N.V.-
Chicago Branch
Account No.: 651-0-010111-42
Reference: Farmland Industries, Inc.
THE BANK OF NOVA SCOTIA,
as Bank
Commitments:
Line of Credit
Commitment: $35,000,000
Revolving Credit
Commitment: $15,000,000
By: M. D. SMITH
Name: M. D. Smith
Title: AGENT OPERATIONS
Applicable Lending Office for Base Rate, CD and
LIBOR Loans:
600 Peachtree Street N.E.
Suite 2700
Atlanta, Georgia 30308
Address for Notices:
600 Peachtree Street N.E.
Suite 2700
Atlanta, Georgia 30308
Attention: Joseph Legista
Telecopy No.: (404) 888-8998
Telex No.: 00542319
Answerback: SCOTIABANK ATL
181 West Madison Street
Suite 3700
Chicago, Illinois 60602
Attention: Robert J. Gaviglio
Telecopy No.: (312) 201-4108
Bank's Office:
The Bank of Nova Scotia,
New York Agency
ABA No. 026002532
Account Name: The Bank of Nova Scotia,
Atlanta Agency
Account No.: 0606634
Reference: Farmland Industries, Inc.
BOATMEN'S FIRST NATIONAL BANK
OF KANSAS CITY,
as Bank
Commitments:
Line of Credit
Commitment: $28,000,000
Revolving Credit
Commitment: $12,000,000
By: MARTHA C. SMITH
Name: Martha C. Smith
Title: SENIOR VICE PRESIDENT
Applicable Lending Office for Base Rate, CD and
LIBOR Loans:
Tenth & Baltimore
P.O. Box 419038
Kansas City, Missouri 64183
Address for Notices:
Tenth & Baltimore
P.O. Box 419038
Kansas City, Missouri 64183
Attention: Ellen M. Isch
Telecopy No.: (816) 691-7426
Telex No.: 42246
Answerback: FNBINTLKSC
Bank's Office:
Tenth & Baltimore
P.O. Box 419038
Kansas City, Missouri 64183
ABA No.: 101000035
Account Name: Commercial Loans Operations
Reference: Farmland Industries, Inc.
Attn: Larry Moss
THE CHASE MANHATTAN BANK, N.A.,
as Bank
Commitments:
Line of Credit
Commitment: $21,000,000
Revolving Credit
Commitment: $9,000,000
By: JODI STARBECKER
Name: Jodi Starbecker
Title: VICE PRESIDENT
Applicable Lending Office for Base Rate, CD and
LIBOR Loans:
Commodity Financing Division
One Chase Manhattan Plaza
18th Floor
New York, New York 10081
Address for Notices:
Commodity Financing Division
One Chase Manhattan Plaza
18th Floor
New York, New York 10081
Attention: Jodi Starbecker
Pamela Lambiase
Telecopy No.: (212) 344-0246
Telex No.: 6716691
Answerback: 6716691 CFDUW
Bank's Office:
Commodity Financing Division
One Chase Manhattan Plaza
18th Floor
New York, New York 10081
ABA No. 021000021
Account Name: Proof 69
Commodity Loan
Account No.: 900-9-001216
Reference: Farmland Industries, Inc.
Attn: Amany Ibrahim
COMMERCE BANK OF KANSAS CITY, N.A.,
as Bank
Commitments:
Line of Credit
Commitment: $14,000,000
Revolving Credit
Commitment: $6,000,000
By KEVIN BARTH
Name: Kevin Barth
Title: SENIOR VICE PRESIDENT
Applicable Lending Office for Base Rate, CD and
LIBOR Loans:
Tenth & Walnut
P.O. Box 419248
Kansas City, Missouri 64141-6248
Address for Notices:
Tenth & Walnut
P.O. Box 419248
Kansas City, Missouri 64141-6248
Attention: Kevin Barth
Diane Jones
Telecopy No.: (816) 234-8648
Telex No.: 6715509
Answerback: COMBANK KCI KSC
Bank's Office:
Tenth & Walnut
P.O. Box 419248
Kansas City, Missouri 64141-6248
ABA No.: 101000019
Account Name: IDT
Reference: Farmland Industries, Inc.
Attn: Diane Jones
NBD BANK, N.A., as Bank
Commitments:
Line of Credit
Commitment: $14,000,000
Revolving Credit
Commitment: $6,000,000
By THOMAS A. LEVASSEUR
Name: Thomas A. Levasseur
Title: VICE PRESIDENT
Applicable Lending Office for Base Rate, CD and
LIBOR Loans:
611 Woodward Avenue
Detroit, Michigan 48226
Address for Notices:
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Thomas A. Levasseur
Telecopy No.: (313) 225-2649
Bank's Office:
611 Woodward Avenue
Detroit, Michigan 48226
ABA No. 0720 00326
Account Name: Farmland Industries, Inc.
Account No.: 1807494
Reference: Farmland Industries, Inc.
Attn: Commercial Loan Department
THE NATIONAL BANK FOR COOPERATIVES,
as Administrative Agent
By ELIZABETH L. HUND
Name: Elizabeth L. Hund
Title: VICE PRESIDENT
Address for Notices:
5500 South Quebec
Englewood, Colorado 80111
Attention: Elizabeth L. Hund
Telecopy No.: (303) 694-5827
Telex No.: 3720469
Answerback: NALBKCOOP
COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK, B.A.
"RABOBANK NEDERLAND", New York
Branch,
as Agent
By LAWRENCE W. SIDWELL
Name: Lawrence W. Sidwell
Title: VICE PRESIDENT
By ROBERT B. BENOIT
Name: Robert B. Benoit
Title: SENIOR VICE PRESIDENT
Address for Notices:
245 Park Avenue
New York, New York 10167
Attention: Credit Department
Telecopy No.: (212) 916-7880
Telex No.: 424337
Answerback: RABO NY
4401 Western Parkway
Suite 104
West DesMoines, Iowa 50266
Attention: Larry Sidwell
Telecopy No.: (515) 226-0364
(EXECUTION COPY)
CREDIT AGREEMENT
dated as of May 19, 1994
among
FARMLAND INDUSTRIES, INC.,
as Borrower
ABN AMRO BANK N.V.,
THE BANK OF NOVA SCOTIA,
BOATMEN'S FIRST NATIONAL BANK OF KANSAS CITY,
THE CHASE MANHATTAN BANK, N.A.,
COMMERCE BANK OF KANSAS CITY, N.A.,
NBD BANK, N.A.,
as Banks
and
THE NATIONAL BANK FOR COOPERATIVES,
COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A.
"RABOBANK NEDERLAND", NEW YORK BRANCH,
as Banks and as Co-Agents
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS, ACCOUNTING TERMS, COMPUTATION OF TIME
PERIODS, AND RULES OF CONSTRUCTION . . . . . . . . . . 1
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02. Accounting Terms . . . . . . . . . . . . . . . . . . . 21
Section 1.03. Computation of Time Periods . . . . . . . . . . . . . . 22
Section 1.04. Rules of Construction . . . . . . . . . . . . . . . . . 22
ARTICLE II.
LOANS . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 2.01. Line of Credit . . . . . . . . . . . . . . . . . . . . 22
Section 2.02. Reduction of Total Line of Credit
Commitment . . . . . . . . . . . . . . . . . . . . . . 23
Section 2.03. Swing Line . . . . . . . . . . . . . . . . . . . . . . 24
Section 2.04. Revolving Credit. . . . . . . . . . . . . . . . . . . . 24
Section 2.05. All Loans . . . . . . . . . . . . . . . . . . . . . . . 24
Section 2.06. Notice and Manner of Borrowing for
Committed Line of Credit Loans and
Revolving Credit Loans . . . . . . . . . . . . . . . . 25
Section 2.07. Notice and Manner of Borrowing for
Swing Line Advances . . . . . . . . . . . . . . . . . . 25
Section 2.08. Notice and Manner of Requesting Bid
Rate Loans . . . . . . . . . . . . . . . . . . . . . . 26
Section 2.09. Interest Periods . . . . . . . . . . . . . . . . . . . 28
Section 2.10. Interest . . . . . . . . . . . . . . . . . . . . . . . 28
Section 2.11. Fees . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 2.12. Notes . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 2.13. Optional Prepayments . . . . . . . . . . . . . . . . . 32
Section 2.14. Method of Payment . . . . . . . . . . . . . . . . . . . 32
Section 2.15. Use of Proceeds . . . . . . . . . . . . . . . . . . . . 33
Section 2.16. Conversions of Advances or
Continuation of CD and LIBOR Loans . . . . . . . . . . 33
Section 2.17. Minimum Amounts . . . . . . . . . . . . . . . . . . . . 33
Section 2.18. Certain Notices . . . . . . . . . . . . . . . . . . . . 34
Section 2.19. Additional Costs . . . . . . . . . . . . . . . . . . . 35
Section 2.20. Limitation on Types of Advances . . . . . . . . . . . . 36
Section 2.21. Illegality . . . . . . . . . . . . . . . . . . . . . . 37
Section 2.22. Treatment of Affected Loans . . . . . . . . . . . . . . 37
Section 2.23. Certain Compensation . . . . . . . . . . . . . . . . . 38
Section 2.24. Capital Adequacy . . . . . . . . . . . . . . . . . . . 39
Section 2.25. Right of Substitution . . . . . . . . . . . . . . . . . 40
ARTICLE III. LETTERS OF CREDIT . . . . . . . . . . . . . . . . . . . 40
Section 3.01. Line of Credit Letters of Credit . . . . . . . . . . . 40
Section 3.02. Revolving Credit Letters of Credit . . . . . . . . . . 41
Section 3.03. Relationship between this Agreement
and Each Line of Credit Letter of Credit
Agreement and Each Revolving Credit
Letter of Credit Agreement . . . . . . . . . . . . . . 41
Section 3.04. Outstanding Letters of Credit . . . . . . . . . . . . . 42
Section 3.05. Reimbursement Obligations on Letters
of Credit . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE IV. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . 42
Section 4.01. Conditions Precedent to Initial Use of
a Credit Facility on and after the
Closing Date . . . . . . . . . . . . . . . . . . . . . 42
Section 4.02. Conditions Precedent to Each Credit
Facility . . . . . . . . . . . . . . . . . . . . . . . 44
Section 4.03. Deemed Representation . . . . . . . . . . . . . . . . . 44
ARTICLE V. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . 45
Section 5.01. Incorporation, Good Standing and Due
Qualification . . . . . . . . . . . . . . . . . . . . . 45
Section 5.02. Corporate Power and Authority; No
Conflicts . . . . . . . . . . . . . . . . . . . . . . . 45
Section 5.03. Legally Enforceable Agreements . . . . . . . . . . . . 45
Section 5.04. Litigation . . . . . . . . . . . . . . . . . . . . . . 46
Section 5.05. Financial Statements . . . . . . . . . . . . . . . . . 46
Section 5.06. Ownership and Liens . . . . . . . . . . . . . . . . . . 47
Section 5.07. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 5.08. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 5.09. Operation of Business . . . . . . . . . . . . . . . . . 48
Section 5.10. No Default on Outstanding Judgments or
Orders . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 5.11. No Defaults on Other Agreements . . . . . . . . . . . . 49
Section 5.12. Labor Disputes and Acts of God . . . . . . . . . . . . 49
Section 5.13. Governmental Regulation . . . . . . . . . . . . . . . . 49
Section 5.14. Partnerships and Joint Ventures . . . . . . . . . . . . 49
Section 5.15. Environmental Protection . . . . . . . . . . . . . . . 49
ARTICLE VI. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . 50
Section 6.01. Maintenance of Eligibility and
Capitalization . . . . . . . . . . . . . . . . . . . . 50
Section 6.02. Maintenance of Existence . . . . . . . . . . . . . . . 50
Section 6.03. Maintenance of Properties . . . . . . . . . . . . . . . 50
Section 6.04. Maintenance of Records . . . . . . . . . . . . . . . . 51
Section 6.05. Maintenance of Insurance . . . . . . . . . . . . . . . 51
Section 6.06. Compliance with Laws . . . . . . . . . . . . . . . . . 51
Section 6.07. Right of Inspection . . . . . . . . . . . . . . . . . . 51
Section 6.08. Employee Benefit Plans . . . . . . . . . . . . . . . . 51
Section 6.09. Reporting Requirements . . . . . . . . . . . . . . . . 52
Section 6.10. Compliance With Environmental Laws . . . . . . . . . . 55
Section 6.11. Unrestricted Entities . . . . . . . . . . . . . . . . . 55
ARTICLE VII. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . 55
Section 7.01. Debt . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 7.02. Liens . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 7.03. Subsidiaries' Stock . . . . . . . . . . . . . . . . . . 61
Section 7.04. Fiscal Year . . . . . . . . . . . . . . . . . . . . . . 61
Section 7.05. Sale of Assets . . . . . . . . . . . . . . . . . . . . 61
Section 7.06. Transactions with Affiliates . . . . . . . . . . . . . 61
Section 7.07. Mergers, Etc. . . . . . . . . . . . . . . . . . . . . . 62
Section 7.08. Change in Business. . . . . . . . . . . . . . . . . . . 62
Section 7.09. Combined Subordinated Debt . . . . . . . . . . . . . . 62
Section 7.10. Investments . . . . . . . . . . . . . . . . . . . . . . 63
ARTICLE VIII. FINANCIAL COVENANTS . . . . . . . . . . . . . . . . . . 64
Section 8.01. Combined Working Capital . . . . . . . . . . . . . . . 64
Section 8.02. Ratio of Combined Funded Debt to
Combined Total Capitalization . . . . . . . . . . . . . 64
Section 8.03. Ratio of Combined Senior Debt to
Combined Total Capitalization . . . . . . . . . . . . . 64
Section 8.04. Combined Minimum Net Worth . . . . . . . . . . . . . . 64
ARTICLE IX. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . 64
Section 9.01. Events of Default . . . . . . . . . . . . . . . . . . . 64
Section 9.02. Remedies . . . . . . . . . . . . . . . . . . . . . . . 67
ARTICLE X. THE ADMINISTRATIVE AGENT . . . . . . . . . . . . . . . 68
Section 10.01. Appointment, Powers and Immunities of
Administrative Agent . . . . . . . . . . . . . . . . . 68
Section 10.02. Reliance by Agent . . . . . . . . . . . . . . . . . . . 69
Section 10.03. Defaults . . . . . . . . . . . . . . . . . . . . . . . 69
Section 10.04. Rights of Administrative Agent as a
Bank . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 10.05. Indemnification of Administrative
Agent . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 10.06. Non-Reliance on Co-Agents and Other
Banks . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 10.07. Failure of Administrative Agent to
Act . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 10.08. Resignation or Removal of
Administrative Agent . . . . . . . . . . . . . . . . . 71
Section 10.09. Amendments Concerning Agency Function . . . . . . . . . 72
Section 10.10. Liability of Administrative Agent . . . . . . . . . . . 72
Section 10.11. Transfer of Agency Function . . . . . . . . . . . . . . 72
Section 10.12. Notices to Administrative Agent . . . . . . . . . . . . 73
Section 10.13. Monthly Reports . . . . . . . . . . . . . . . . . . . . 73
Section 10.14. Withholding Taxes . . . . . . . . . . . . . . . . . . . 73
ARTICLE XI. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . 73
Section 11.01. Amendments and Waivers . . . . . . . . . . . . . . . . 73
Section 11.02. Usury . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 11.03. Expenses; Indemnification . . . . . . . . . . . . . . . 74
Section 11.04. Assignment; Participation . . . . . . . . . . . . . . . 75
Section 11.05. Notices. . . . . . . . . . . . . . . . . . . . . . . . 77
Section 11.06. Setoff. . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 11.07. Jurisdiction; Immunities . . . . . . . . . . . . . . . 78
Section 11.08. Governing Law . . . . . . . . . . . . . . . . . . . . . 79
Section 11.09. Counterparts . . . . . . . . . . . . . . . . . . . . . 79
Section 11.10. Exhibits and Schedules . . . . . . . . . . . . . . . . 79
Section 11.11. Table of Contents; Headings . . . . . . . . . . . . . . 79
Section 11.12. Severability . . . . . . . . . . . . . . . . . . . . . 79
Section 11.13. Integration. . . . . . . . . . . . . . . . . . . . . . 79
Section 11.14. Renewal and Substitution of Line of
Credit Facilities. . . . . . . . . . . . . . . . . . . 79
Section 11.15. Consents and Terminations. . . . . . . . . . . . . . . 80
Section 11.16. Designation as Senior Indebtedness. . . . . . . . . . . 80
Section 11.17. Confidentiality. . . . . . . . . . . . . . . . . . . . 81
Section 11.18. Agreement in Writing . . . . . . . . . . . . . . . . . 81
Exhibits
Exhibit A - Line of Credit Note
Exhibit B - Swing Line Note
Exhibit C - Revolving Credit Note
Exhibit D - Bid Rate Note
Exhibit E - Committed Loan Borrowing Notice
Exhibit F - Bid Rate Quote Request
Exhibit G - Bid Rate Quote
Exhibit H - Bid Rate Notice of Borrowing
Exhibit I - Form of Opinion of Robert Terry, general counsel for
Borrower
Exhibit J - Form of Borrower's Monthly Financial Management Report
Exhibit K - Assignment and Assumption Agreement
Schedule 1.01A - Excluded Funded Debt
Schedule 1.01B - Existing Subordinated Indentures
Schedule 1.01C - Restricted Subsidiaries
Schedule 3.04 - Outstanding Letters of Credit
Schedule 5.04 - Litigation
Schedule 5.07 - Taxes
Schedule 5.08 - ERISA
Schedule 5.14 - Partnerships and Joint Ventures
Schedule 7.10 - Investments as of March 31, 1994
Schedule 11.15 - Consents and Terminations of Credit Facilities
PC DOCUMENT IDENTIFICATION / WORD PROCESSING WORK REQUEST
FILENAME: 210333.4
ATTORNEY: R. TIGHE ROOM: 2506 EXT: 6490
RETURN TO: ROOM: EXT:
DRAFT NEEDED BY: DATE: ____ /____ /____ TIME:____________
NAME NUMBER
CLIENT: 030358
MATTER: 50724
DESCRIPTION: CREDIT AGREEMENT
CREATED BY: DATE: 03/05/94
REVISED BY: DATE: 05/01/94 TIME:
PAPER LENGTH: 11" 14" REMOVE FOOTER DOC ID
LINE SPACING: TYPE OF PAPER: PROOFREADING:
SINGLE BOND FULL READ
DOUBLE LETTERHEAD CHANGES ONLY
JUSTIFY RED RULED DO NOT PROOF
OTHER OTHER REDLINING:
MANUAL SYSTEM
FOR OPERATORS' USE ONLY
CALLED: TIME:
LAWYER LEGAL ASSISTANT SECRETARY RECEPTIONIST
SPECIAL INSTRUCTIONS FROM ATTORNEY REGARDING DOCUMENT:
EXHIBIT 4.B(2)
EXHIBITS, SCHEDULES, AND OTHER CLOSING DOCUMENTS NOT FILED WITH THIS 10-Q
FOR THE QUARTER ENDED MAY 31, 1994
The contents of all exhibits, schedules, and other closing documents
referenced in and not filed with the Credit Agreement for Farmland Industries,
Inc. dated May 19, 1994, are identified below. A copy of any omitted
exhibits, schedules, or other closing documents will be furnished to the
Security and Exchange Commission upon request.
EXHIBITS
Exhibit A, referenced in Section 2.12, is a specimen copy of a Line of
Credit Note.
Exhibit B, referenced in Section 2.12, is a specimen copy of a Swing Line
Note.
Exhibit C, referenced in Section 2.12, is a specimen copy of a Revolving
Credit Note.
Exhibit D, referenced in Section 2.12, is a specimen copy of a Bid Rate
Note.
Exhibit E, referenced in Section 2.06, is a specimen copy of a Committed
Loan Borrowing Notice.
Exhibit F, referenced in Section 2.08, is a specimen copy of a Bid Rate
Quote Request.
Exhibit G, referenced in Section 2.08, is a specimen copy of a Bid Rate
Quote.
Exhibit H, referenced in Section 2.08, is a specimen copy of a Bid Rate
Notice of Borrowing.
Exhibit I, referenced in Section 4.01(5), is the Form of Opinion of Robert
Terry, general counsel for Borrower.
Exhibit J, referenced in Section 1.01, contains certain unaudited financial
information summaries, Consolidated Balance Sheet, and Debt Covenant
Compliances as of January 31, 1994.
Exhibit K, referenced in Section 1.01, is a specimen copy of an Assignment
and Assumption Agreement.
SCHEDULES
Schedule 1.01A, referenced in Section 1.01, is a schedule, as of May 31,
1994, of the present value of lease commitments excluded from funded debt.
Schedule 1.01B, referenced in Section 1.01, is a schedule of existing
subordinated indentures.
Schedule 1.01C, referenced in Section 1.01, is a schedule of restricted
subsidiaries as of the Closing Date.
Schedule 3.04, referenced is Section 3.04, is a schedule of outstanding
Letters of Credit as of the Closing Date.
Schedule 5.04, referenced in Section 5.04, is a reference to Litigation,
footnote #7 and such other information disclosed in Borrower's Form 10-K
dated August 31, 1993, and footnote #3 in Borrower's Form 10-Q dated
February 28, 1994.
Schedule 5.07, referenced in Section 5.07, is a reference to Taxes, footnote
#7 in Borrower's Form 10-K dated August 31, 1993, and footnote #3 in
Borrower's Form 10-Q dated February 28, 1994.
Schedule 5.08, referenced in Section 5.08, is a schedule of ERISA
information.
Schedule 5.14, referenced in Section 5.14, is a schedule of Partnerships and
Joint Ventures of Farmland Industries, Inc.
Schedule 7.10, referenced in Section 7.10, is a schedule of Investments as
of March 31, 1994.
Schedule 11.15, referenced in Section 11.15, is a schedule of Consents and
Terminations of Credit Facilities.
OTHER CLOSING DOCUMENTS
Copy of Secretary's Certificate of the Borrower, By-Laws of the Borrower and
Resolutions of the Borrower related to this Credit Agreement
Copy of Incumbency and Signature Certificate of the Borrower
Copy of Certificate of Good Standing of the Borrower from the State of
Kansas
Copy of Swing Line Note with:
The National Bank for Cooperatives
Copy of Line of Credit Notes with:
The National Bank for Cooperatives
RABOBANK NEDERLAND
ABN AMRO Bank N.V.
The Bank of Nova Scotia
Boatman's First National Bank of Kansas City
The Chase Manhattan Bank, N.A.
Commerce Bank of Kansas City, N.A.
NBD Bank, N.A.
Copy of Revolving Credit Notes with:
The National Bank for Cooperatives
RABOBANK NEDERLAND
ABN AMRO Bank N.V.
The Bank of Nova Scotia
Boatman's First National Bank of Kansas City
The Chase Manhattan Bank, N.A.
Commerce Bank of Kansas City, N.A.
NBD Bank, N.A.
Copy of Bid Rate Notes with:
The National Bank for Cooperatives
RABOBANK NEDERLAND
ABN AMRO Bank N.V.
The Bank of Nova Scotia
Boatman's First National Bank of Kansas City
The Chase Manhattan Bank, N.A.
Commerce Bank of Kansas City, N.A.
NBD Bank, N.A.
Copy of Opinion of Counsel for Borrower
Copy of the Officer's Certificate
Schedule I, referenced in Exhibit I and the Opinion of Counsel for Borrower,
is a schedule of the Bank parties.
