SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20579
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 25, 1994
____________
Doskocil Companies Incorporated
______________________________________________________
(Exact name of registrant as specified in its charter)
Delaware 0-7803 13-2535513
_______________ ____________ ___________________
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
2601 Northwest Expressway, Suite 1000W, Oklahoma City, OK 73112
_________________________________________________________ ________
(Address of principal executive offices) (Zip Code)
(405)879-5500
___________________________________________________
Registrant's telephone number, including area code:
(Former name or former address, if changed since last report)
Item 2. Acquisition or Disposition of Assets.
On June 1, 1994, Doskocil Companies Incorporated (the
"Company") consummated the acquisition (the "Acquisition") of the
Frozen Specialty Foods Division ("Frozen Specialty Foods") of
International Multifoods Corporation. The Acquisition was
financed with borrowings under a $186 million senior secured
credit facility provided pursuant to the Credit Agreement, dated
as of May 25, 1994, among the Company, the lenders named therein,
and Chemical Bank (the "Credit Agreement"). Following the
Acquisition, Frozen Specialty Foods was renamed "Doskocil
Specialty Brands Company" ("Specialty Brands"). The Company
plans to continue to operate Specialty Brands as a manufacturer
of frozen specialty foods. The Credit Agreement is attached
hereto as Exhibit 1 and is incorporated herein by reference.
Item 5. Other Events.
(a) On May 3, 1994, the Company entered into an
agreement with Robert S. Wright, President of the Prepared Foods
Division of IMC (the "Wright Agreement"), with respect to Mr.
Wright's employment with the Company with responsibility for
managing Specialty Brands. Pursuant to the Wright Agreement, Mr.
Wright was appointed Senior Vice President of the Company and
President of Specialty Brands for an initial term of three years.
The effectiveness of the Wright Agreement was conditioned upon
the consummation of the Acquisition.
(b) On June 2, 1994, the Company issued a press
release with respect to the Acquisition, a copy of which is
attached hereto as Exhibit 2 and is incorporated herein by
reference. The terms of the transaction described in such press
release are qualified in their entirety by reference to (a) the
Stock Purchase Agreement, dated as of March 17, 1994, between
International Multifoods Corporation and the Company, which is
described in the Annual Report on Form 10-K of the Company for
the fiscal year ended January 1, 1994 and is attached thereto as
Exhibit 10.36 and is incorporated herein by reference, and (b)
the Credit Agreement.
(c) Financial Statements of Business Acquired.
The balance sheet of Frozen Specialty Foods as of
February 28, 1994 and November 27, 1993 and the related
statements of operations and cash flows for the three months
ended February 28, 1994 and February 27, 1993 are attached hereto
as Exhibit 3 and are incorporated herein by reference.
(c) Pro Forma Financial Information.
The following pro forma condensed consolidated
balance sheet has been prepared assuming the Acquisition had been
consummated on April 2, 1994. The pro forma condensed
consolidated balance sheet includes the historical consolidated
accounts of the Company as of April 2, 1994 and Frozen Specialty
Foods as of February 28, 1994. The purchase price consisted of
$70,500,000 plus the net book value, at date of closing, of the
net assets acquired. Accordingly, pro forma adjustments were
recorded to reduce the historical amounts of assets and
liabilities as of February 28, 1994 to the net book value of the
assets acquired and liabilities assumed at date of closing and to
eliminate from the historical amounts assets not acquired and
liabilities not assumed. Additional pro forma adjustments were
made to adjust the assets acquired and liabilities assumed to
their estimated fair values based on preliminary valuations.
The following pro forma condensed consolidated
statement of operations for the three months ended April 2, 1994
has been prepared assuming the Acquisition had been consummated
on January 2, 1994. The pro forma condensed consolidated
statement of operations for the three months ended April 2, 1994
includes the historical consolidated results of operations of the
Company for the three months ended April 2, 1994 and the
historical results of Frozen Specialty Foods for the three months
ended February 28, 1994.
The pro forma combined results of operations are not
necessarily indicative of results of operations that would have
resulted had the Acquisition actually occurred on January 2, 1994
nor are they necessarily indicative of future results of
operations.
These statements should be read in conjunction with the
April 2, 1994 Consolidated Financial Statements of the Company
and the financial statements of Frozen Specialty Foods attached
hereto as Exhibit 3.
DOSKOCIL COMPANIES INCORPORATED
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
Historical
____________________
Frozen
The Specialty
Company Foods Pro Forma Adjustments
April February _____________________ Pro Forma
2,1994 28, 1994 Increase Decrease Combined
________ ________ ________ ________ _________
Assets
______
Current Assets:
Cash and cash
equivalents $ 6,920 $ 5 $ $ $ 6,925
Receivables 33,307 11,609 2,203(a) 42,713
Inventory 38,942 23,767 1,392(b) 61,317
Other current
assets 3,568 2,208 1,838(c) 3,938
________ ________ _______
Total current
assets 82,737 37,589 114,893
Property, plant and
equipment, net 80,709 44,434 1,634(d) 123,509
72,400(e) 29,417(e)
Intangible and other
assets, net 150,654 29,417 4,900(f) 1,447(f) 226,507
_______ ________ _______
Total assets $314,100 $111,440 $464,909
======== ======== ========
Liabilities and Stockholders' Equity
____________________________________
Current liabilities: Decrease Increase
________ ________
Current maturities
of long-term debt $ 2,745 $ 172 $ $ 8,000(h) 10,917
Accounts payable 10,892 7,003 1,768(g) 16,127
Accrued liabilities 33,292 5,987 912(g) 38,367
Total current _______ ________ _______
liabilities 46,929 13,162 65,411
Long-term debt 131,654 --- 133,774(h) 265,428
Other long-term
liabilities 80,070 16,028 16,028(i) 80,070
Stockholders' equity:
Common stock 79 --- 79
Other stockholders'
equity 1,447(f)
55,368 82,250 82,250(j) 53,921
_______ _______ _______
Total stockholders'
equity 55,447 82,250 54,000
Total liabilities
and stockholders'
equity ________ ________ _______
$314,100 $111,440 $464,909
======== ======== ========
See accompanying notes to the Pro Forma Condensed Consolidated Balance Sheet
DOSKOCIL COMPANIES INCORPORATED
NOTES TO PRO FORMA CONDENSED CONSOLIDATED
BALANCE SHEET
Note 1. Basis of Presentation
The pro forma condensed consolidated balance sheet has
been prepared assuming the Acquisition had been consummated on
April 2, 1994 and includes the historical consolidated accounts
of the Company as of April 2, 1994 and Frozen Specialty Foods
as of February 28, 1994. The Acquisition will be accounted for
as a purchase in accordance with the provisions of Accounting
Principles Board Opinion No. 16, and, accordingly, the purchase
price has been preliminarily allocated to the assets acquired
and liabilities assumed based on information available to
management and preliminary estimates of the fair value of
assets acquired and liabilities assumed.
Note 2. Pro Forma Adjustments
The excess of purchase price over the net book value of
tangible assets acquired was calculated as follows (in
thousands):
Purchase price:
Cash paid (bank term loan) $135,800
Direct costs of acquisition 1,100
Liabilities assumed 10,500
______
Total purchase price 147,400
Less: Net book value of tangible
assets acquired (75,800)
______
Excess of purchase price over the
net book value of tangible
assets acquired $ 71,600
======
The excess of purchase price over the net book value of
assets acquired was allocated as follows (in thousands):
Goodwill $ 62,400
Trademarks 10,000
Property, Plant and Equipment (800)
______
$71,600
======
Note 3. Pro Forma Adjustments
(a) To reduce historical accounts receivable at February 28,
1994 to amounts actually acquired at closing.
(b) To decrease historical inventory at February 28, 1994 to
amounts actually acquired at closing.
(c) To adjust for current assets not acquired by the Company.
(d) To decrease by $834,000 the historical net property, plant
and equipment at February 28, 1994 to the net book value
at closing and to decrease this net book value by $800,000
to the estimated fair value, based on a preliminary
valuation.
(e) To eliminate historical goodwill of Frozen Specialty Foods
and to record the fair value of identifiable intangible
assets acquired and the excess of cost over the fair value
of tangible and intangible assets acquired.
(f) To record estimated debt issue costs relating to the term
loan and new revolving line of credit and write off
unamortized debt issue costs relating to the old revolving
line of credit.
(g) To adjust for liabilities not assumed by the Company.
(h) To record the additional bank debt to be incurred to
finance the Acquisition, and the estimated current
maturities of such debt.
(i) To eliminate deferred income taxes and liabilities not
assumed by the Company.
(j) To eliminate the acquired company's net equity.
DOSKOCIL COMPANIES INCORPORATED
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Historical
____________________
The Frozen
Company Specialty
Three Foods Pro Forma Adjustments Pro Forma
months Three Adjustments
ended months Increase Decrease Combined
April 2, ended __________ ________ __________
1994 February
28, 1994
________ _______
Net sales $156,223 $46,447 $202,670
Cost of sales 129,482 32,174 161(a) 161,495
_______ ______ _______
Gross profit 26,741 14,273 41,175
Selling expenses 16,114 9,270 25,384
General and
administrative
expenses 6,605 914 21(a) 7,498
Amortization of
intangible assets 1,546 403 490(b) 403(b) 2,036
________ _______ _______
Operating income 2,476 3,686 6,257
Other income (expense):
Interest and
financing costs (3,579) (4) 2,400(c) (5,983)
Other, net (157) 31 (126)
_____ _____ _____
Income (loss) before
income taxes (1,260) 3,713 148
Income tax benefit
(expense) 782 (1,562) 922(d) 142
_____ _____ ____
Net Income (loss) $ (478) $ 2,151 $ 290
======== ========= ======
Earnings (loss) per $ (.06) $ .04
=== ===
See notes to the Pro Forma Condensed Consolidated Statement of Operations
DOSKOCIL COMPANIES INCORPORATED
NOTES TO PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
Note 1. Basis of Presentation
The pro forma condensed consolidated statement of
operations for the three months ended April 2, 1994 has been
prepared assuming the Acquisition had been consummated on January
2, 1994 and includes the historical consolidated results of
operations of the Company for the three months ended April 2,
1994 and the historical results of Frozen Specialty Foods for the
three months ended February 28, 1994. The pro forma combined
results of operations are not necessarily indicative of results
of operations that would have resulted had the Acquisition
actually occurred on January 2, 1994 nor are they necessarily
indicative of future results of operations.
The pro forma combined statement of operations does not give
effect to the loss on early extinguishment of debt resulting from
the consummation of a new bank term loan and revolving line of
credit and early extinguishment of the existing revolving line of
credit. The estimated loss of $2.7 million, before income taxes
of $1.1 million (assuming a statutory (federal and state) tax
rate of 40%), resulting from the early extinguishment of this
debt, will be recorded as an extraordinary item during the period
the debt is extinguished (second quarter of fiscal 1994).
Note 2. Pro Forma Adjustments
(a) To record the net change in depreciation expense based on
the fair value of depreciable assets, versus their
historical cost, using the straight line method over their
estimated useful lives.
(b) To record amortization of trademarks over 25 years and
goodwill over a period of 40 years, and eliminate
amortization of the historical goodwill of Frozen Specialty
Foods.
(c) To record additional interest attributable to the increase
in bank debt to finance the Acquisition, record amortization
of debt issue costs over the term of the new bank debt and
eliminate amortization of debt issue costs attributable to
debt which will be extinguished.
(d) To record the tax benefit attributable to the net pro forma
adjustments based on the statutory (federal and state) tax
rate of 40%. The effective tax rate in future years is
expected to be in excess of the statutory rate due to non-
deductible amortization of previously recorded intangible
assets.
(e) The weighted average number of common and common equivalent
shares used in the pro forma earnings per share computation
were 7,921,000 (historical).
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(c) Exhibits.
(1) Credit Agreement, dated as of May 25, 1994,
among the Company, the lenders named therein, and Chemical Bank.
(2) Form of Press Release issued by the Company
on June 2, 1994.
(3) Balance sheet of the Frozen Specialty Foods
Business (a unit of the Prepared Foods Division of International
Multifoods Corporation) as of February 28, 1994 and November 27,
1993 and the related statements of operations and cash flows for
the three months ended February 28, 1994 and February 27, 1993.
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.
DOSKOCIL COMPANIES INCORPORATED
By:/s/ William L. Brady
William L. Brady
Vice President and Controller
Dated June 13, 1994
EXHIBIT INDEX
EXHIBIT DESCRIPTION PAGE NO.
NUMBER
1 Credit Agreement, dated as of May 13
25, 1994, among the Company, the
lenders named therein, and
Chemical Bank
2 Form of Press Release issued by 114
the Company on June 2, 1994
3 Balance sheet of the Frozen 117
Specialty Foods Business (a unit
of the Prepared Foods Division of
International Multifoods
Corporation) as of February 28,
1994 and November 27, 1993 and
the related statements of
operations and cash flows for the
three months ended February 28,
1994 and February 27, 1993
Exhibit 1
CREDIT AGREEMENT dated as of May 25, 1994, among
DOSKOCIL COMPANIES INCORPORATED, a Delaware
corporation (the Borrower ), the financial
institutions party hereto (the Lenders ), CHEMICAL
BANK, a New York banking corporation, as agent for the
Lenders (in such capacity, the Agent ) and as
fronting bank (in such capacity, the Fronting Bank ).
The Borrower has entered into a Stock Purchase Agreement dated as
of March 17, 1994 (the Stock Purchase Agreement ), with International
Multifoods Corporation, a Delaware corporation (the Seller ), to
purchase all the outstanding equity securities of International
Multifoods Foodservice Corp., a Delaware corporation ( Foodservice
Corp. ) and wholly owned subsidiary of the Seller, for an aggregate
purchase price equal to the sum of (a) $70,500,000 and (b) the lesser of
(i) the amount of Closing Net Assets (as defined in, and determined in
accordance with the terms and provisions of, the Stock Purchase
Agreement) and (ii) $72,000,000. The purchase pursuant to the Stock
Purchase Agreement is referred to herein as the Acquisition .
The Borrower has requested (a) the Lenders to extend credit in
order to enable the Borrower, on the terms and subject to the conditions
of this Agreement, to borrow (i) on a term basis on the Closing Date,
Term Loans (such term and each other capitalized term used but not
defined in this introductory statement having the meaning given to such
terms in Article I) in an aggregate principal amount not to exceed
$146,000,000 and (ii) on a revolving basis, at any time and from time to
time prior to the Maturity Date, an aggregate principal amount at any
time outstanding not in excess of the excess of (A) the lesser of
(I) $40,000,000 and (II) the Borrowing Base at such time over (B) the LC
Exposure at such time and (b) the Fronting Bank to issue, on the terms
and subject to the conditions of this Agreement, Letters of Credit in an
aggregate face amount at any time outstanding not in excess of
$5,000,000.
The proceeds of the Term Loans will be used by the Borrower solely
(a) to finance the purchase price for Foodservice Corp. to be paid
pursuant to the Stock Purchase Agreement, (b) to pay fees and expenses
in connection with the Acquisition, (c) to pay amounts outstanding under
the Existing Credit Agreement and (d) to repay all the Borrower's
obligations under the Interest Rate Swap Agreement dated October 31,
1991 (the "Swap Agreement"), between the Borrower and Chemical Bank.
The proceeds of the Revolving Loans made on the Closing Date will
be used to pay amounts outstanding under the Existing Credit Agreement.
The proceeds of the Revolving Loans made after the Closing Date will be
used (a) for general corporate purposes in the ordinary course of the
Borrower's business, including funding the working capital requirements
of the Borrower and its Subsidiaries, and (b) in an amount not to exceed
$15,000,000 from and including the Closing Date, to finance all or part
of the purchase price to be paid in connection with any Permitted
Acquisition. Any standby letter of credit (each, a Standby Letter of
Credit ) issued hereunder will be used to support the obligations of the
Borrower or the Subsidiaries, contingent or otherwise, in respect of
insurance, worker's compensation and similar obligations incurred in the
ordinary course of the business of the Borrower or the Subsidiaries, as
applicable. Any commercial letter of credit (each, a Commercial Letter
of Credit ) issued hereunder will be used to provide the primary means
of payment for the purchase of goods or services by the Borrower in the
ordinary course of its business.
Accordingly, the Borrower, the Lenders, the Agent and the Fronting
Bank agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this Agreement, the
following terms shall have the meanings specified below:
ABR Borrowing shall mean a Borrowing comprised of ABR Loans.
ABR Loan shall mean any ABR Term Loan or ABR Revolving Loan.
ABR Revolving Loan shall mean any Revolving Loan bearing
interest at a rate determined by reference to the Alternate Base Rate in
accordance with the provisions of Article II.
ABR Spread shall mean 1-1/2% per annum, subject to adjustment
pursuant to Section 2.06(c).
ABR Term Loan shall mean any Term Loan bearing interest at a
rate determined by reference to the Alternate Base Rate in accordance
with the provisions of Article II.
Acquisition shall have the meaning assigned to such term in the
introductory statement to this Agreement.
Adjusted LIBO Rate shall mean, with respect to any Eurodollar
Borrowing for any Interest Period, an interest rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the product of
(a) the LIBO Rate in effect for such Interest Period and (b) Statutory
Reserves. For purposes hereof, the term LIBO Rate shall mean the rate
at which dollar deposits approximately equal in principal amount to the
Agent's portion of such Eurodollar Borrowing and for a maturity
comparable to such Interest Period are offered to the principal London
office of the Agent in immediately available funds in the London
interbank market at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period.
Administrative Fees shall have the meaning assigned to such term
in Section 2.05(b).
Administrative Questionnaire shall mean an Administrative
Questionnaire in the form of Exhibit C.
Affiliate shall mean, when used with respect to a specified
Person, another Person that directly, or indirectly through one or more
intermediaries, Controls or is Controlled by or is under common Control
with the Person specified.
Agent shall have the meaning assigned to such term in the
introductory statement to this Agreement.
Alternate Base Rate shall mean, for any day, a rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the
greatest of (a) the Prime Rate in effect on such day, (b) the Base CD
Rate in effect on such day plus 1% and (c) the Federal Funds Effective
Rate in effect on such day plus 1/2 of 1%. For purposes hereof, the term
Prime Rate shall mean the rate of interest per annum publicly
announced from time to time by the Agent as its prime rate in effect at
its principal office in New York City; each change in the Prime Rate
shall be effective on the date such change is publicly announced as
being effective. The term Base CD Rate shall mean the sum of (a) the
product of (i) the Three-Month Secondary CD Rate and (ii) Statutory
Reserves and (b) the Assessment Rate. The term Three-Month Secondary CD
Rate shall mean, for any day, the secondary market rate for three-month
certificates of deposit reported as being in effect on such day (or, if
such day shall not be a Business Day, the next preceding Business Day)
by the Board through the public information telephone line of the
Federal Reserve Bank of New York (which rate will, under the current
practices of the Board, be published in Federal Reserve Statistical
Release H.15(519) during the week following such day) or, if such rate
shall not be so reported on such day or such next preceding Business
Day, the average of the secondary market quotations for three-month
certificates of deposit of major money center banks in New York City
received at approximately 10:00 a.m., New York City time, on such day
(or, if such day shall not be a Business Day, on the next preceding
Business Day) by the Agent from three New York City negotiable
certificate of deposit dealers of recognized standing selected by it.
The term Federal Funds Effective Rate shall mean, for any day, the
weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds
brokers, as published on the next succeeding Business Day by the Federal
Reserve Bank of New York or, if such rate is not so published for any
day that is a Business Day, the average of the quotations for the day of
such transactions received by the Agent from three Federal funds brokers
of recognized standing selected by it. If for any reason the Agent shall
have determined (which determination shall be conclusive absent manifest
error) that it is unable to ascertain the Base CD Rate or the Federal
Funds Effective Rate or both for any reason, including the inability or
failure of the Agent to obtain sufficient quotations in accordance with
the terms thereof, the Alternate Base Rate shall be determined without
regard to clause (b) or (c), or both, of the first sentence of this
definition, as appropriate, until the circumstances giving rise to such
inability no longer exist. Any change in the Alternate Base Rate due to
a change in the Prime Rate, the Three-Month Secondary CD Rate or the
Federal Funds Effective Rate shall be effective on the effective date of
such change in the Prime Rate, the Three-Month Secondary CD Rate or the
Federal Funds Effective Rate, respectively.
Amount Due shall mean, with respect to any Receivable, the
actual amount due and to become due to the Borrower or any Subsidiary
Guarantor on account of such Receivable, as determined by the Borrower
or such Subsidiary Guarantor in accordance with its customary business
practices and as reported in any Borrowing Base Certificate.
Applicable Percentage of any Participating Lender shall mean the
percentage of the aggregate Revolving Credit Commitments represented by
such Participating Lender's Revolving Credit Commitment.
Assessment Rate shall mean for any date the annual rate (rounded
upwards, if necessary, to the next 1/100 of 1%) most recently estimated
by the Agent as the then-current net annual assessment rate that will be
employed in determining amounts payable by the Agent to the Federal
Deposit Insurance Corporation (or any successor) for insurance by such
Corporation (or such successor) of time deposits made in dollars at the
Agent's domestic offices.
Assignment and Acceptance shall mean an assignment and
acceptance entered into by a Lender and an assignee, and accepted by the
Agent, in the form of Exhibit B or such other form as shall be approved
by the Agent.
Assignments of Leases and Rents shall mean the Assignments of
Leases and Rents, each substantially in the form of Exhibit J, between
the Borrower or any Subsidiary Guarantor and the Collateral Agent.
Board shall mean the Board of Governors of the Federal Reserve
System of the United States.
Borrower shall have the meaning assigned to such term in the
introductory paragraph hereof.
"Borrower's Portion of Excess Cash Flow" shall mean, at any date
of determination, the amount of Excess Cash Flow for the applicable
fiscal year of the Borrower, commencing with the fiscal year ending
December 31, 1994, that was not required to be applied to the
prepayment of Loans under Section 2.13(d).
Borrowing shall mean a group of Loans of a single Type made by
the Lenders on a single date and as to which a single Interest Period is
in effect.
Borrowing Base shall mean at the time of any determination an
amount equal to the sum, without duplication, of (a) 75% of (i) the
aggregate Amount Due in respect of all Eligible Accounts Receivable at
such time minus (ii) the aggregate amount under clause (c) below at such
time and (b) 50% of the lower of the aggregate cost or the aggregate
market value of all Eligible Inventory at such time and (c) the
aggregate amount of all Uncollected Friday Receipts at such time. All
determinations in connection with the Borrowing Base shall be made by
the Borrower and certified to the Agent by a Responsible Officer and
delivered pursuant to Section 6.04(e); provided, however, that the Agent
shall have the final right to review and adjust, in its reasonable
judgment, any such determination to the extent such determination is not
in accordance with this Agreement.
Borrowing Base Certificate shall mean a certificate in the form
of Exhibit D, duly completed and executed by a Responsible Officer of
the Borrower.
Business Day shall mean any day (other than a Saturday, Sunday
or legal holiday in the State of New York) on which banks are open for
business in New York City; provided, however, that, when used in
connection with a Eurodollar Loan, the term Business Day shall also
exclude any day on which banks are not open for dealings in dollar
deposits in the London interbank market.
Capital Expenditures shall mean, for any period, the sum of all
amounts that would, in accordance with GAAP, be included as additions to
property, plant and equipment and other capital expenditures on a
consolidated statement of cash flows for the Borrower and its
consolidated subsidiaries during such period (including the amount of
assets leased under any Capital Lease Obligation but excluding, for
purposes of determining compliance with Section 7.14 only, Permitted
Acquisitions).
Capital Lease Obligations of any Person shall mean the
obligations of such Person to pay rent or other amounts under any lease
of (or other arrangement conveying the right to use) real or personal
property, or a combination thereof, which obligations are required to be
classified and accounted for as capital leases on a balance sheet of
such Person under GAAP and, for the purposes of this Agreement, the
amount of such obligations at any time shall be the capitalized amount
thereof at such time determined in accordance with GAAP.
Casualty shall have the meaning assigned to such term in
Section 10.16.
A Change in Control shall be deemed to have occurred if:
(a) any Person or group (within the meaning of Rule 13d-5 of
the Securities and Exchange Commission as in effect on the date
hereof), other than JLL and its Affiliates, shall own directly or
indirectly, beneficially or of record, shares representing 30% or
more (or, at any time that JLL and its Affiliates shall own
directly, beneficially and of record, shares representing at least
15% of the aggregate ordinary voting power represented by the
issued and outstanding capital stock of the Borrower, 50% or more)
of the aggregate ordinary voting power represented by the issued
and outstanding capital stock of the Borrower;
(b) during any period of two consecutive calendar years,
individuals who at the beginning of such period constituted the
Borrower's board of directors (together with any new directors
whose election to the Borrower's board of directors or whose
nomination for election to the Borrower's Board of Directors by
the Borrower's shareholders was approved by a vote of at least
two-thirds of the Borrower's directors then still in office who
either were directors at the beginning of such period or whose
election or nomination for election was previously so approved)
cease for any reason to constitute a majority of the Borrower's
directors then in office;
(c) any Change of Control Triggering Event (as defined in
the Subordinated Note Indenture) shall have occurred;
(d) the Borrower shall cease to own and control directly, of
record and beneficially, 100% of each class of outstanding capital
stock of Foodservice Corp. free and clear of all Liens (other than
any Lien under the Security Documents); or
(e) Foodservice Corp. shall issue any class of capital stock
(or security convertible into any of its capital stock) that is
not pledged to the Collateral Agent for the ratable benefit of the
Secured Parties.
CERCLA shall have the meaning assigned to such term in the
definition of the term Environmental and Safety Laws .
Closing Date shall mean the date of the first Borrowing
hereunder.
Code shall mean the Internal Revenue Code of 1986, or any
successor statute thereto, as the same may be amended from time to time.
Collateral shall mean all the Collateral as defined in any
Security Document and shall also include the Mortgaged Properties.
Collateral Agent shall mean Chemical Bank, as Collateral Agent
under the Security Documents and the Guarantee Agreement.
Collateral Assignment shall mean the Collateral Assignment,
substantially in the form of Exhibit H, from the Borrower and the
Subsidiary Guarantors to the Collateral Agent, providing for the
assignment to the Collateral Agent of the Stock Purchase Agreement and
certain other agreements specified in such Collateral Assignment.
Commitment shall mean, with respect to each Lender, such
Lender's Term Loan Commitment and Revolving Credit Commitment.
Commitment Fee shall have the meaning assigned to such term in
Section 2.05(a).
Concentration Limit shall mean, (a) for any Obligor (other than
any Obligor set forth on Schedule 1.01(d)), in the aggregate with
respect to all Receivables payable by such Obligor, $5,000,000 or such
higher or lower amount for such Obligor as may be reasonably specified
in writing by the Required Lenders and (b) for any Obligor set forth on
Schedule 1.01(d), in the aggregate with respect to all Receivables
payable by such Obligor, the amount set forth on such Schedule with
respect to such Obligor; provided, however, that the Concentration Limit
for any Obligor and its Affiliates and subsidiaries shall be calculated
as if such Persons were a single Obligor.
Condemnation Proceeds shall have the meaning assigned to such
term in Section 10.16.
Confidential Information Memorandum shall mean the Confidential
Information Memorandum of the Borrower dated April, 1994.
Consolidated Interest Expense shall mean (without duplication),
with respect to any Person for any period, total interest expense
(including the interest component of Capital Lease Obligations), whether
paid or accrued, of such Person and its consolidated subsidiaries for
such period, all as determined in conformity with GAAP, but only to the
extent that such interest expense is payable in cash.
Consolidated Interest Expense Coverage Ratio shall mean with
respect to the Borrower and its consolidated subsidiaries for any
period, the ratio of (a) EBITDA for such period to (b) Consolidated
Interest Expense for such period. For purposes of calculating the
foregoing ratio only, there shall be added to EBITDA for any period
ending on or prior to the last day of the second fiscal quarter of the
fiscal year ending December 29, 1996, nonrecurring or extraordinary cash
provisions for the restructuring of the Borrower's and Foodservice
Corp.'s operations after the Closing Date to the extent such cash
charges were deducted in determining Net Income for any such period,
provided that the amount of such cash charges so added to EBITDA shall
not exceed $4,000,000 in the aggregate for all such periods .
Consolidated Net Worth shall mean, at any date, on a
consolidated basis for the Borrower and its subsidiaries, (a) the sum of
(i) common stock taken at par or stated value, (ii) capital surplus
relating to common stock and (iii) retained earnings (or deficit) at
such date minus (b) the sum of treasury stock at such date, all
determined in accordance with GAAP and after giving effect to all
adjustments required thereby.
Contract shall mean any written agreement or invoice between the
Borrower or any Subsidiary Guarantor on the one hand and any Obligor on
the other hand, pursuant to or under which such Obligor may obtain goods
or services from time to time from the Borrower or any such Subsidiary
Guarantor and under which such Obligor is obligated to pay for such
goods or services.
Control shall mean the possession, directly or indirectly, of
the power to direct or cause the direction of the management or policies
of a Person, whether through the ownership of voting securities, by
contract or otherwise, and the terms Controlling and Controlled
shall have meanings correlative thereto.
Credit and Collection Policy shall mean the Credit and
Collection Policies and Practices of the Borrower and the Subsidiary
Guarantors relating to Receivables and Contracts as set forth on
Schedule 1.01(c).
Credit Event shall have the meaning assigned to such term in
Article V.
Default shall mean any event or condition that upon notice,
lapse of time or both would constitute an Event of Default.
Default Rate shall have the meaning assigned to such term in
Section 2.07.
dollars or $ shall mean lawful money of the United States.
EBITDA shall mean, with respect to the Borrower and its
consolidated subsidiaries for any period, the sum of (a) Net Income for
such period, (b) all Federal, state, local and foreign income taxes
deducted in determining such Net Income, (c) interest expense deducted
in determining such Net Income, (d) depreciation and amortization of the
write-up of assets resulting from the Acquisition deducted in
determining such Net Income, (e) other depreciation, amortization and
other noncash charges deducted in determining such Net Income and
(f) noncash provisions for the restructuring of the Borrower's and
Foodservice Corp.'s operations after the Closing Date to the extent such
provisions were deducted in determining such Net Income.
Eligible Accounts Receivable shall mean at the time of any
determination, all Receivables of the Borrower and the Subsidiary
Guarantors arising in the ordinary course of their respective
businesses, except:
(a) any Receivable that (i) remains unpaid as of the date
that is 60 days after the date of the original invoice for such
Receivable, (ii) is from an Obligor that has more than 30% of its
accounts with the Borrower and the Subsidiary Guarantors
outstanding more than 60 days after the date payment was due in
accordance with terms of the original invoices, (iii) is from an
Obligor that is, to the Borrower's or any Subsidiary Guarantor's
knowledge, not Solvent, (iv) is from an Obligor previously
disapproved by the Agent in the exercise of its reasonable
discretion after consultation with and notice to the Borrower,
(v) is in dispute (to the extent of such dispute), (vi) consistent
with the Credit and Collection Policy, would be classified as
delinquent or written-off as uncollectible, or (vii) is in excess
of the applicable Obligor's Concentration Limit;
(b) any Receivable that (i) is, to the Borrower's or any
Subsidiary Guarantor's knowledge, not free and clear of all Liens
(other than Liens created by or pursuant to the Security
Documents), (ii) does not arise under a Contract representing the
legal, valid and binding payment obligation of the Obligor
thereunder, enforceable by the Borrower or any Subsidiary
Guarantor in accordance with its terms, (iii) together with the
related Contract does not comply in all material respects with all
legal requirements of the federal, state and local jurisdictions
where it originated, (iv) is not payable in dollars (unless
previously approved in writing by the Agent, which approval the
Agent may withhold in its sole discretion), (v) does not provide,
according to its original terms, that the amount payable
thereunder will be due within 31 days following the date upon
which the related Obligor became obligated thereon, or 45 days in
the case of special promotions that are conducted by the Borrower
or any Subsidiary Guarantor from time to time in the ordinary
course of business, (vi) is payable by an Obligor which is located
in any jurisdiction outside of the United States of America,
Puerto Rico or Canada, (vii) is payable by an Obligor that is an
Affiliate of the Borrower or any of the Subsidiary Guarantors,
(viii) is payable by an Obligor that is an agency or
instrumentality of the federal government of the United States of
America unless all applicable requirements of the Assignment of
Claims Act of 1940, as amended, including the giving of all
requisite notices of assignment (in form satisfactory to the
Agent) to all Persons to whom such notice must be given and the
acknowledgement of receipt thereof by all such Persons, shall have
been complied with in all respects and unless the Agent shall have
been provided with evidence thereof in form and substance
satisfactory to the Agent, (ix) is payable by an Obligor as to
which a case (voluntary or involuntary) has been commenced under
any law relating to bankruptcy, insolvency, reorganization or
relief of debtors or that has made a general assignment for the
benefit of creditors (unless the Agent shall have reasonably
determined that Receivables payable by such Obligor shall
constitute Eligible Receivables) or (x) is not subject to the
valid and perfected Liens created by or pursuant to the Security
Documents in favor of the Agent for the ratable benefit of the
Secured Parties;
(c) any Receivable with respect to which the Borrower or
any Subsidiary Guarantor has received a guaranty or a letter of
credit providing credit support therefor or collateral security
therefor unless the Borrower or such Subsidiary Guarantor shall
have granted a security interest to the Agent (for the ratable
benefit of the Secured Parties in form and substance satisfactory
to the Agent and the Required Lenders) in such guaranty, letter of
credit or collateral security (that constitutes a first perfected
security interest in the case of any such guaranty or collateral
security) and such guaranty, letter of credit or collateral
security is not, to the Borrower's or such Subsidiary Guarantor's
knowledge, subject to any Lien in favor of any other Person, but
only to the extent of any Amount Due in respect of such
Receivables in excess of $500,000 in the aggregate from the same
Obligor;
(d) any Receivable that shall be subject to any requirement
of law or regulation, whether federal, state or local (including
usury laws, the Federal Truth in Lending Act and Regulation Z of
the Board), unless such laws and regulations shall have been duly
complied with in all material respects;
(e) any Receivable that is subject to a matured offset,
counterclaim, or other defense, to the extent of such offset,
counterclaim or defense;
(f) any Receivable that the Borrower or any Subsidiary
Guarantor rescinds or cancels or modifies (except that the
Borrower or the applicable Subsidiary Guarantor may, in the
ordinary course of business in a manner consistent with the Credit
and Collection Policy and provided that the same is reflected in
the next Borrowing Base Certificate delivered to the Agent
pursuant to Section 6.04(e), grant rebates, refunds or adjustments
with respect to Receivables, including as a result of the
application of any special or other discounts or any
reconciliation);
(g) any and all Receivables as to which any representation
or warranty applicable thereto contained herein or in any other
Loan Document shall not be true and correct in any material
respect or as to which any covenant applicable thereto contained
herein or in any other Loan Document shall not have been complied
with in any material respect; or
(h) any and all Receivables that the Agent in its
reasonable judgment after consultation with the Borrower shall
deem not to be Eligible Receivables, based on such credit and
collateral considerations as the Agent may reasonably deem
appropriate.
Eligible Inventory shall mean, at any date of determination
thereof, all Inventory of the Borrower and the Subsidiary Guarantors
classified as raw materials, finished goods or Work in Process, but
shall exclude (a) all Inventory that in the reasonable opinion of the
Agent is obsolete or unmerchantable, (b) all Inventory that is not to
the Borrower's or any Subsidiary Guarantor's knowledge free and clear of
all Liens (other than Liens created by or pursuant to the Security
Documents), (c) all Inventory that is not subject to the valid and
perfected Liens created by or pursuant to the Security Documents in
favor of the Agent for the ratable benefit of the Secured Parties, and
(d) all Inventory that the Agent in its reasonable judgment after
consultation with the Borrower shall deem not to be Eligible Inventory,
based on such credit and collateral considerations as the Agent may
reasonably deem appropriate.
Environmental and Safety Laws shall mean any and all applicable
current and future treaties, laws, regulations, enforceable
requirements, binding determinations, orders, decrees, judgments,
injunctions, permits, approvals, authorizations, licenses, permissions,
notices or binding agreements issued, promulgated or entered by any
Governmental Authority, relating to the environment, to employee health
or safety as it pertains to the use or handling of, or exposure to,
Hazardous Substances, to preservation or reclamation of natural
resources or to the management, release or threatened release of
contaminants or noxious odors, including the Hazardous Materials
Transportation Act, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986 ( CERCLA ), the Solid Waste
Disposal Act, as amended by the Resource Conservation and Recovery Act
of 1976 and the Hazardous and Solid Waste Amendments of 1984, the
Federal Water Pollution Control Act, as amended by the Clean Water Act
of 1977, the Clean Air Act of 1970, as amended, the Toxic Substances
Control Act of 1976, the Occupational Safety and Health Act of 1970, as
amended, the Emergency Planning and Community Right-to-Know Act of 1986,
the Safe Drinking Water Act of 1974, as amended, and any similar or
implementing state law and all amendments or regulations promulgated
thereunder.
Environmental Claim shall mean any written notice of any
Governmental Authority alleging potential liability for damage to the
environment or by any Person alleging potential liability for personal
injury (including sickness, disease or death), in either case, resulting
from or based upon (a) the presence or Release (including intentional
and unintentional, negligent and nonnegligent, sudden or nonsudden,
accidental or nonaccidental leaks or spills) of any Hazardous Substance
at, in or from the property of, whether owned or leased by, the Borrower
or any Subsidiary, or (b) any other circumstances forming the basis of
any violation, or alleged violation, by the Borrower or any Subsidiary
of any Environmental and Safety Law.
Environmental Reports shall mean the reports of GaiaTech Inc.
and ENSR Consulting and Engineering delivered to the Lenders prior to
the date hereof with respect to properties that shall be owned or leased
by the Borrower or any Subsidiary upon consummation of the Acquisition.
ERISA shall mean the Employee Retirement Income Security Act of
1974, or any successor statute, together with the regulations
thereunder, as the same may be amended from time to time.
ERISA Affiliate shall mean any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single
employer under Section 414 of the Code.
Eurodollar Borrowing shall mean a Borrowing comprised of
Eurodollar Loans.
Eurodollar Loan shall mean any Eurodollar Term Loan or
Eurodollar Revolving Loan.
Eurodollar Revolving Loan shall mean any Revolving Loan bearing
interest at a rate determined by reference to the Adjusted LIBO Rate in
accordance with the provisions of Article II.
Eurodollar Term Loan shall mean any Term Loan bearing interest
at a rate determined by reference to the Adjusted LIBO Rate in
accordance with the provisions of Article II.
Event of Default shall have the meaning assigned to such term in
Article VIII.
Excess Cash Flow shall mean, for any period, without
duplication, an amount equal to the excess, if any, of (a) the sum of
(i) the consolidated net cash flow from operations for such period of
the Borrower and its consolidated subsidiaries determined on a
consolidated basis in accordance with GAAP, (ii) to the extent deducted
in determining such net cash flow from operations, the aggregate amount
of repurchases or redemptions of the Subordinated Notes under
Section 7.09(a) during such period, (iii) net cash provided (used) by
investing activities during such period (excluding cash received as
proceeds of any sale, transfer or other disposition of any business
unit, asset or other property to the extent such sale, transfer or other
disposition constitutes a Prepayment Event hereunder) and (iv) the
aggregate proceeds of all Indebtedness incurred under Sections 7.01(d)
and (e) during such period over (b) the sum of (i) scheduled payments
during such period of the principal of Term Loans, (ii) scheduled
payments during such period of the principal of permitted Indebtedness
other than the Loans, but only to the extent that such payments cannot
by their terms be reborrowed or redrawn, (iii) prepayments during such
period of Term Loans pursuant to Section 2.12 and (iv) $1,000,000, in
each case determined in accordance with GAAP.
Existing Credit Agreement shall mean the Credit Agreement dated
as of April 28, 1993, among the Borrower, the lenders named therein and
Chemical Bank, as Agent for such lenders.
Facilities shall mean, collectively, the Term Facility and the
Revolving Facility.
Fees shall mean the Administrative Fees, the Commitment Fees,
the LC Fees, the fees specified in Section 2.05(c) and the fees
specified in Section 3.08.
Financial Officer of any corporation shall mean the chief
financial officer, principal accounting officer, Treasurer, Assistant
Treasurer or Controller of such corporation.
Fronting Bank shall have the meaning assigned to such term in
the introductory paragraph hereof.
GAAP shall mean generally accepted accounting principles in the
United States.
Governmental Authority shall mean any Federal, state, local or
foreign court or governmental agency, authority, instrumentality or
regulatory body.
Guarantee of or by any Person shall mean any obligation,
contingent or otherwise, of such Person guaranteeing or having the
economic effect of guaranteeing any Indebtedness of any other Person
(the primary obligor ) in any manner, whether directly or indirectly,
including any obligation of such Person, direct or indirect, (a) to
purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or to purchase (or to advance or supply funds for
the purchase of) any security for the payment of such Indebtedness,
(b) to purchase property, securities or services for the purpose of
assuring the owner of such Indebtedness of the payment of such
Indebtedness or (c) to maintain working capital, equity capital or other
financial statement condition or liquidity of the primary obligor so as
to enable the primary obligor to pay such Indebtedness; provided,
however, that the term Guarantee shall not include endorsements for
collection or deposit, in either case in the ordinary course of
business.
Guarantee Agreement shall mean the Guarantee Agreement,
substantially in the form of Exhibit E, between the Subsidiary
Guarantors and the Collateral Agent.
Hazardous Substances shall mean any toxic, radioactive,
mutagenic, carcinogenic, noxious, caustic or otherwise hazardous
substance, material or waste, including petroleum, its derivatives,
by-products and other hydrocarbons, or any substance having any
constituent elements displaying any of the foregoing characteristics,
including, without limitation, polychlorinated biphenyls ( PCBs ),
asbestos or asbestos-containing material, and any substance, waste or
material regulated under Environmental and Safety Laws.
Indebtedness of any Person shall mean, without duplication,
(a) all obligations of such Person for borrowed money or with respect to
deposits or advances of any kind, (b) all obligations of such Person
evidenced by bonds, debentures, notes or similar instruments, (c) all
obligations of such Person under conditional sale or other title
retention agreements relating to assets purchased by such Person,
(d) all obligations of such Person issued or assumed as the deferred
purchase price of property or services (excluding trade accounts payable
and accrued expenses arising in the ordinary course of business in
accordance with customary trade terms), (e) all Indebtedness of others
secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien on property
owned or acquired by such Person, whether or not the obligations secured
thereby have been assumed by such Person, (f) all Guarantees by such
Person of Indebtedness of others, (g) all Capital Lease Obligations of
such Person, (h) all obligations of such Person in respect of interest
rate protection agreements, foreign currency exchange agreements or
other interest or exchange rate hedging arrangements and (i) all
obligations of such Person as an account party to reimburse any bank or
any other Person in respect of letters of credit and bankers'
acceptances. The Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture in which such Person is
a general partner or member, other than to the extent that the
instrument or agreement evidencing such Indebtedness expressly limits
the liability of such Person in respect thereof pursuant to provisions
and terms reasonably satisfactory to the Agent.
Indemnity, Subrogation and Contribution Agreement shall mean the
Indemnity, Subrogation and Contribution Agreement, substantially in the
form of Exhibit M, between the Borrower, the Subsidiary Guarantors and
the Collateral Agent.
Interest Expense Ratio shall mean, with respect to the Borrower
and its consolidated subsidiaries, for any fiscal quarter, the ratio of
(a) EBITDA for the period of four consecutive fiscal quarters ending on
the last day of such fiscal quarter less Capital Expenditures for such
four-fiscal-quarter period to (b) Consolidated Interest Expense for such
four-fiscal-quarter period.
Interest Payment Date shall mean, with respect to any Loan, the
last day of the Interest Period applicable to the Borrowing of which
such Loan is a part and, in the case of a Eurodollar Borrowing with an
Interest Period of more than three months' duration, each day that would
have been an Interest Payment Date had successive Interest Periods of
three months' duration been applicable to such Borrowing and, in
addition, the date of any refinancing or conversion of such Borrowing
with or to a Borrowing of a different Type.
Interest Period shall mean (a) as to any Eurodollar Borrowing,
the period commencing on the date of such Borrowing or on the last day
of the immediately preceding Interest Period applicable to such
Borrowing, as the case may be, and ending on the numerically
corresponding day (or, if there is no numerically corresponding day, on
the last day) in the calendar month that is 1, 2, 3 or 6 months
thereafter, as the Borrower may elect, and (b) as to any ABR Borrowing,
the period commencing on the date of such Borrowing or on the last day
of the immediately preceding Interest Period applicable to such
Borrowing, as the case may be, and ending on the earliest of (i) the
next succeeding March 31, June 30, September 30 or December 31, (ii) the
Maturity Date and (iii) the date such Borrowing is converted to a
Borrowing of a different Type in accordance with Section 2.10 or repaid
or prepaid in accordance with Section 2.11, 2.12 or 2.13; provided,
however, that, if any Interest Period would end on a day other than a
Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless, in the case of a Eurodollar Borrowing
only, such next succeeding Business Day would fall in the next calendar
month, in which case such Interest Period shall end on the next
preceding Business Day. Interest shall accrue from and including the
first day of an Interest Period to but excluding the last day of such
Interest Period.
Inventory shall mean all goods now owned or hereafter acquired
by the Borrower or any Subsidiary Guarantor (wherever located, whether
in the possession of the Borrower or any Subsidiary Guarantor or of a
bailee or other person for sale, storage, transit, processing or use or
otherwise consisting of whole goods, components, supplies, materials, or
consigned, returned or repossessed goods) that are held for sale or
lease or to be furnished (or have been furnished) under any contract of
service or that are raw materials, Work in Process, farm products or
materials used or consumed in the Borrower's or any Subsidiary
Guarantor's business or processed by or on behalf of the Borrower or
such Subsidiary Guarantor.
JLL shall mean Joseph Littlejohn & Levy Fund, L.P., a Delaware
limited partnership.
Joint Venture shall mean a joint venture, partnership or other
similar arrangement, whether in corporate, partnership or other legal
form.
LC Commitment shall mean $5,000,000, as the same may be reduced
from time to time pursuant to Section 3.07. The LC Commitment shall
automatically and permanently terminate on the LC Maturity Date.
LC Disbursement shall mean any payment or disbursement made by
the Fronting Bank under or pursuant to a Letter of Credit.
LC Exposure shall mean, at any time of determination, the sum of
(a) the aggregate undrawn amount of all Letters of Credit outstanding at
such time and (b) the aggregate amount that has been drawn under such
Letters of Credit but for which the Fronting Bank or the Lenders, as the
case may be, have not been reimbursed by the Borrower at such time.
LC Fees shall have the meaning given such term in Section 3.03.
LC Maturity Date shall mean the fifth Business Day prior to the
Maturity Date.
Leasehold Mortgage shall mean any Mortgage that is a leasehold
or subleasehold mortgage.
Lenders shall have the meaning assigned to such term in the
introductory paragraph hereof.
Letters of Credit shall mean the Standby Letters of Credit and
the Commercial Letters of Credit issued by the Fronting Bank for the
account of the Borrower pursuant to Section 3.01(a).
LIBOR Spread shall mean 2-1/2% per annum, subject to adjustment
pursuant to Section 2.06(c).
Lien shall mean, with respect to any asset, (a) any mortgage,
deed of trust, lien, pledge, assignment for security (whether collateral
or otherwise), hypothecation, encumbrance, easement, lease, sublease,
charge or security interest in or on such asset, (b) the interest of a
vendor or a lessor under any conditional sale agreement, capital lease
or title retention agreement or financing lease having substantially the
same economic effect as any of the foregoing relating to such asset and
(c) in the case of securities, any purchase option, call or similar
right of a third party with respect to such securities.
Loan Documents shall mean this Agreement, the Letters of Credit,
the Security Documents, the Guarantee Agreement and the Indemnity,
Subrogation and Contribution Agreement.
Loans shall mean the Revolving Loans and the Term Loans.
Margin Stock shall have the meaning assigned to such term under
Regulation U.
Material Adverse Effect shall mean (a) a materially adverse
effect on the business, assets, operations or condition, financial or
otherwise, of the Borrower and the Subsidiaries, taken as a whole, (b) a
material impairment of the ability of the Borrower or any Subsidiary
Guarantor to perform any of its obligations under any Transaction
Document to which it is or will be a party or (c) a material impairment
of the rights of or benefits available to the Agent, the Fronting Bank,
the Collateral Agent or the Lenders under any Loan Document.
Maturity Date shall mean January 15, 2000.
Mortgaged Properties shall mean the owned real properties and
leasehold and subleasehold interests of the Borrower and the Subsidiary
Guarantors specified on Schedule 1.01(a).
Mortgages shall mean the mortgages, deeds of trust, leasehold
mortgages, assignments of leases and rents (including any Assignments of
Leases and Rents, substantially in the form of Exhibit J), modifications
and other security documents delivered pursuant to clause (i) of
Section 5.02(i) or pursuant to Section 6.10, each (except in the case of
any Leasehold Mortgage) substantially in the form of Exhibit I.
Multiemployer Plan shall mean a multiemployer plan as defined in
Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate
(other than one considered an ERISA Affiliate only pursuant to
subsection (m) or (o) of Section 414 of the Code) is making or accruing
an obligation to make contributions, or has within any of the preceding
five plan years made or accrued an obligation to make contributions.
Net Cash Proceeds shall mean, with respect to any Prepayment
Event, (a) the gross cash proceeds (including insurance proceeds,
condemnation awards and payments from time to time in respect of
installment obligations, if applicable) received by or on behalf of the
Borrower or any Subsidiary in respect of such Prepayment Event, less
(b) the sum of (i) the amount, if any, of all taxes (other than income
taxes) payable by the Borrower or any Subsidiary in connection with such
Prepayment Event and the Borrower's or such Subsidiary's good-faith best
estimate of the amount of all income taxes payable in connection with
such Prepayment Event (to the extent that such amount shall have been
set aside for the purpose of paying such income taxes), (ii) in the case
of a Prepayment Event that is an asset sale or disposition, (A) the
amount of any reasonable reserve established in accordance with GAAP
against any liabilities associated with the assets sold or disposed of
and retained by the Borrower or any Subsidiary, provided that the amount
of any subsequent reduction of such reserve (other than in connection
with a payment in respect of any such liability) shall be deemed to be
Net Cash Proceeds of a Prepayment Event occurring on the date of such
reduction, and (B) the amount applied to repay any Indebtedness (other
than the Loans) to the extent such Indebtedness is required by its terms
to be repaid as a result of such Prepayment Event and (iii) reasonable
and customary fees, commissions and expenses and other costs paid by the
Borrower or any Subsidiary in connection with such Prepayment Event
(other than those payable to the Borrower or any Affiliate of the
Borrower), including any such expenses and other costs incurred by the
Borrower or the applicable Subsidiary in connection with any attempt to
sell, within the twelve months preceding such sale, any asset the sale
of which has given rise to such Prepayment Event, in each case only to
the extent not already deducted in arriving at the amount referred to in
clause (a).
Net Income shall mean, for any period, the net earnings (or
loss) of the Borrower and its subsidiaries determined on a consolidated
basis for such period in accordance with GAAP.
Obligations shall mean all obligations defined as Obligations
in the Guarantee Agreement and the Security Documents.
Obligor shall mean any purchaser of goods or services from, or
any other Person obligated to make payment to, the Borrower or any
Subsidiary Guarantor in respect of a purchase of such goods or services.
Outstanding Letters of Credit shall mean at any time the Letters
of Credit outstanding at such time.
Participating Lender shall mean at any time any Lender with a
Revolving Credit Commitment at such time.
PBGC shall mean the Pension Benefit Guaranty Corporation
referred to and defined in ERISA or any successor thereto.
Perfection Certificate shall mean the Perfection Certificate,
substantially in the form of Annex 2 to the Security Agreement, prepared
by the Borrower.
Permitted Acquisition shall have the meaning assigned to such
term in Section 7.05(d).
Permitted Investments shall mean:
(a) direct obligations of, or obligations the principal of
and interest on which are unconditionally guaranteed by, the
United States of America (or by any agency thereof to the extent
such obligations are backed by the full faith and credit of the
United States of America), in each case maturing within three
months from the date of acquisition thereof;
(b) without limiting the provisions of paragraph (d) below,
investments in commercial paper maturing within three months from
the date of acquisition thereof and having, at such date of
acquisition, the highest credit rating obtainable from Standard &
Poor's Corporation and from Moody's Investors Service, Inc.;
(c) investments in certificates of deposit, banker's
acceptances and time deposits (including eurodollar time deposits)
maturing within three months from the date of acquisition thereof
issued or guaranteed by or placed with, and money market deposit
accounts issued or offered by, (i) any domestic office of the
Agent or (ii) any domestic office of any other commercial bank of
recognized standing organized under the laws of the United States
of America or any state thereof that has a combined capital and
surplus and undivided profits of not less than $250,000,000 and
which is rated (or the senior debt securities of the holding
company of which are rated) A or better (or BBB+ or better in the
case of the domestic office of any Lender) by Standard & Poor's
Corporation or A2 or better (or Baa2 or better in the case of the
domestic office of any Lender) by Moody's Investors Service, Inc.,
or carrying an equivalent rating by another nationally recognized
rating agency if neither of the two named rating agencies shall
rate such commercial bank (or the holding company of such
commercial bank);
(d) investments in commercial paper maturing within three
months from the date of acquisition thereof and issued by (i) the
holding company of the Agent or (ii) the holding company of any
other commercial bank of recognized standing organized under the
laws of the United States of America or any state thereof that has
(A) a combined capital and surplus in excess of $250,000,000 and
(B) commercial paper rated at least A-1 or the equivalent thereof
(or A-2 or the equivalent thereof in the case of the holding
company of any Lender) by Standard & Poor's Corporation or at
least P-1 or the equivalent thereof (or P-2 or the equivalent
thereof in the case of the holding company of any Lender) by
Moody's Investors Service, Inc., or carrying an equivalent rating
by another nationally recognized rating agency, if both of the two
named rating agencies cease publishing ratings of investments;
(e) repurchase agreements having a term of seven days or
less with (i) any domestic office of the Agent or (ii) any
domestic office of any other commercial bank of recognized
standing organized under the laws of the United States of America
or any state thereof that has a combined capital and surplus and
undivided profits of not less than $250,000,000 and which is rated
(or the senior debt securities of the holding company of such
commercial bank are rated) A or better (or BBB+ or better in the
case of the domestic office of any Lender) by Standard & Poor's
Corporation or A2 or better (or Baa2 or better in the case of the
domestic office of any Lender) by Moody's Investor Services Inc.
or carrying an equivalent rating by another nationally recognized
rating agency if neither of the two named rating agencies shall
rate such bank relating to marketable direct obligations issued or
unconditionally guaranteed by the United States but only if the
securities collateralizing such repurchase agreements are
delivered to or to the order of the Collateral Agent;
(f) investments in mutual funds investing solely in
instruments of the types described in clauses (a) through (e) above;
(g) other investment instruments approved in writing by the
Required Lenders and offered by financial institutions that have a
combined capital and surplus and undivided profits of not less
than $250,000,000; and
(h) investments in mutual funds that are sold by nationally
recognized registered broker-dealers, which mutual funds invest in
repurchase agreements having a term of seven days or less and
relating to debt securities issued by corporations (i) organized
and validly existing under the laws of the United States of
America, any state thereof or the District of Columbia and
(ii) the senior debt securities of which are rated AA or better by
Standard & Poor's Corporation or Aa or better by Moody's Investor
Services Inc. or carrying an equivalent rating by another
nationally recognized rating agency if neither of the two named
rating agencies shall rate such debt securities.
Person shall mean any natural person, corporation, business
trust, joint venture, association, company, partnership or government,
or any agency or political subdivision thereof.
Plan shall mean any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or
Section 412 of the Code that is maintained for current or former
employees, or any beneficiary thereof, of the Borrower or any ERISA
Affiliate.
Pledge Agreement shall mean the Pledge Agreement, substantially
in the form of Exhibit F, among the Borrower, the Subsidiary Guarantors
and the Collateral Agent.
Prepayment Event shall mean (a) any sale, transfer or other
disposition of any business units, assets or other properties of the
Borrower or any Subsidiary (including dispositions in the nature of
casualties (to the extent covered by insurance) or condemnations
(including any Casualty or Condemnation in respect of a Mortgaged
Property as contemplated in Section 10.16)), (b) any sale and leaseback
of any asset or the mortgaging of any real property other than pursuant
to a Mortgage (or a modification thereof) by the Borrower or any
Subsidiary, (c) the issuance or incurrence by the Borrower or any
Subsidiary of any Indebtedness (excluding Indebtedness permitted under
Sections 7.01(d), 7.01(f), 7.01(h) and 7.01(k) and Specified Permitted
Debt), or the issuance or sale by the Borrower or any Subsidiary of any
debt securities or any obligations convertible into or exchangeable for,
or giving any Person or entity any right, option or warrant to acquire
from the Borrower or any Subsidiary any Indebtedness or any such debt
securities or any such convertible or exchangeable obligations
(excluding Specified Permitted Debt) or (d) the issuance or incurrence
by the Borrower of any Specified Permitted Debt. Notwithstanding the
foregoing, the term Prepayment Event shall not include:
(i) sales, transfers and other dispositions of used or
surplus equipment, vehicles and other assets in the ordinary
course of business permitted pursuant to Section 7.05(b) not
exceeding in the aggregate $250,000 in any fiscal year, provided
that (A) at any time when such sales, transfers and other
dispositions in the ordinary course of business shall exceed
$250,000 in any fiscal year, the resultant Prepayment Event shall
include the entire amount of such sales, transfers and
dispositions since the date of such most recent payment, if any,
with respect to such fiscal year and not just amounts above such
dollar threshold and (B) to the extent that the Borrower or any
Subsidiary shall have reinvested on the date of such Prepayment
Event (or certified to the Agent that it intends to reinvest
within 360 days of such Prepayment Event) any of the proceeds of
such sales, transfers and dispositions in equipment, vehicles or
other assets used in the principal lines of business of the
Borrower or such Subsidiary, the resultant Prepayment Event shall
be reduced by the lesser of (I) $250,000 and (II) the amount so
reinvested or to be reinvested;
(ii) sales of inventory in the ordinary course of business;
(iii) the receipt of insurance or condemnation proceeds
(other than Condemnation Proceeds and Insurance Proceeds in
respect of Mortgaged Properties), provided that (A) such proceeds
are reinvested in equipment, vehicles or other assets used in the
Borrower's or any Subsidiary's principal lines of business within
360 days after the receipt thereof and (B) if the aggregate of
such proceeds exceeds $2,000,000, the Borrower or any Subsidiary,
pending such reinvestment, promptly deposits the entire aggregate
amount of such proceeds so received and unreinvested, if such
proceeds exceed $2,000,000, in a cash collateral account
established with the Collateral Agent for the benefit of the
Secured Parties;
(iv) the receipt of Condemnation Proceeds and Insurance
Proceeds in respect of Mortgaged Properties to the extent that (A)
such Condemnation Proceeds or Insurance Proceeds are used to
restore, repair or locate, acquire and replace the related
Mortgaged Property in accordance with Section 10.16, (B) such
Condemnation Proceeds or Insurance Proceeds, pursuant to
Section 10.16, are not otherwise required to be applied as a
mandatory prepayment pursuant to Section 2.13(c) or (C) to the
extent permitted by Section 10.16, any Condemnation Proceeds or
Insurance Proceeds are (I) reinvested in equipment, vehicles or
other assets used in the Borrower's or any Subsidiary's principal
lines of business within 360 days after the receipt thereof and
(II) the Borrower or any Subsidiary, pending such reinvestment,
has deposited such amounts in an escrow account with the
Collateral Agent as contemplated in Section 10.16; and
(v) the receipt of proceeds of business interruption
insurance.
Pro Forma Balance Sheet shall have the meaning given such term
in Section 4.05(a).
Rate Protection Agreement shall mean any interest rate
protection agreement, foreign currency exchange agreement or other
interest or exchange rate hedging arrangement designed to protect the
Borrower from fluctuations in interest or currency rates.
Receivables shall mean all rights to receive payment for goods
sold or leased or for services rendered in the ordinary course of
business to the extent not evidenced by an instrument or chattel paper,
together with all interest, finance charges or other amounts payable by
an Obligor in respect thereof.
Register shall have the meaning given such term in Section
10.04(d).
Regulation G shall mean Regulation G of the Board as from time
to time in effect and all official rulings and interpretations
thereunder or thereof.
Regulation U shall mean Regulation U of the Board as from time
to time in effect and all official rulings and interpretations
thereunder or thereof.
Regulation X shall mean Regulation X of the Board as from time
to time in effect and all official rulings and interpretations
thereunder or thereof.
Release means any discharge, emission, release, or threat
thereof, including a Release as defined in CERCLA at 42 U.S.C.
SECTION 9601(22), and the term Released has a meaning correlative
thereto.
Reportable Event shall mean any reportable event as defined in
Section 4043(b) of ERISA or the regulations issued thereunder with
respect to a Plan (other than a Plan maintained by an ERISA Affiliate
that is considered an ERISA Affiliate only pursuant to subsection (m) or
(o) of Section 414 of the Code), other than any reportable event for
which the requirement to deliver notice within 30 days to the PBGC has
been waived by the PBGC.
Required Lenders shall mean, at any time, Lenders holding Loans,
a share of the used LC Commitment and unused Commitments representing
more than 51% of the aggregate of (a) the aggregate principal amount of
the Loans at such time, (b) the LC Exposure at such time and (c) the
aggregate unused Commitments at such time.
Responsible Officer of any corporation shall mean any executive
officer or Financial Officer of such corporation and any other officer
or similar official thereof responsible for the administration of the
obligations of such corporation in respect of this Agreement.
Revolving Credit Borrowing shall mean a Borrowing comprised of
Revolving Loans.
Revolving Credit Commitment shall mean, with respect to each
Lender, the commitment of such Lender to make Revolving Loans hereunder
as set forth in clause (b) of Section 2.01, as the same may be reduced
from time to time pursuant to Section 2.09.
Revolving Credit Utilization shall mean, at any time of
determination, the sum of (a) the aggregate principal amount of
Revolving Loans outstanding at such time and (b) the LC Exposure at such
time.
Revolving Facility shall mean the aggregate of the Lenders'
Revolving Credit Commitments.
Revolving Loans shall mean the revolving loans made by the
Lenders to the Borrower pursuant to clause (b) of Section 2.01. Each
Revolving Loan shall be a Eurodollar Revolving Loan or an ABR Revolving
Loan.
Secured Parties shall have the meaning assigned to such term in
the Security Agreement.
Security Agreement shall mean the Security Agreement,
substantially in the form of Exhibit G, among the Borrower, the
Subsidiary Guarantors and the Collateral Agent.
Security Documents shall mean the Mortgages (including any
Assignment of Leases and Rents and any Leasehold Mortgage), the
Security Agreement, the Pledge Agreement, the Collateral Assignment, the
Trademark Security Agreement and each of the security agreements,
mortgages and other instruments and documents executed and delivered
pursuant to any of the foregoing or pursuant to Section 6.10.
Solvent shall mean, with respect to any Person at any time,
that (a) the fair saleable value of such Person's assets at such time is
greater than the amount that would be required to pay its probable
liability on its then-existing legal liabilities, either matured or
unmatured, liquidated or unliquidated, absolute, fixed or contingent, as
they become absolute or matured, and (b) such Person does not have
unreasonably small capital at such time for the business or transaction
in which it is engaged or is about to engage.
Specified Permitted Debt shall have the meaning assigned to such
term in Section 7.01.
Statutory Reserves shall mean a fraction (expressed as a
decimal), the numerator of which is the number one and the denominator
of which is the number one minus the aggregate of the maximum applicable
reserve percentages, including any marginal, special, emergency or
supplemental reserves (expressed as a decimal) established by the Board
and any other banking authority to which the Agent is subject (a) with
respect to the Base CD Rate (as such term is used in the definition of
the term Alternate Base Rate ) for new negotiable nonpersonal time
deposits in dollars of over $100,000 with maturities approximately equal
to three months and (b) with respect to the Adjusted LIBO Rate, for
Eurocurrency Liabilities (as defined in Regulation D of the Board). Such
reserve percentages shall include those imposed pursuant to Regulation D
of the Board. Eurodollar Loans shall be deemed to constitute
Eurocurrency Liabilities and to be subject to such reserve requirements
without benefit of or credit for proration, exemptions or offsets that
may be available from time to time to any Lender under such
Regulation D. Statutory Reserves shall be adjusted automatically on and
as of the effective date of any change in any reserve percentage.
Stock Purchase Agreement shall have the meaning assigned to such
term in the preamble to this Agreement.
Subordinated Note Indenture shall mean the Indenture dated as
of April 28, 1993, among the Borrower and First Fidelity Bank, National
Association, New York, as Trustee, relating to the Subordinated Notes,
as the same may be amended, modified or supplemented in accordance with
the provisions of this Agreement.
Subordinated Notes shall mean $110,000,000 aggregate principal
amount of the Borrower's 9-3/4% Senior Subordinated Redeemable
Securities due 2000 issued under the Subordinated Note Indenture.
subsidiary shall mean, with respect to any Person (herein
referred to as the parent ), any corporation, partnership, association
or other business entity (a) of which securities or other ownership
interests representing more than 50% of the equity or more than 50% of
the ordinary voting power or more than 50% of the general partnership
interests are, at the time any determination is being made, owned,
controlled or held or (b) that is, at the time any determination is
made, otherwise Controlled by the parent or one or more subsidiaries of
the parent or by the parent and one or more subsidiaries of the parent.
Subsidiary shall mean any subsidiary of the Borrower, including
Foodservice Corp.
Subsidiary Guarantor shall mean each of Foodservice Corp.,
Wilson Foods Corporation, Stoppenbach, Inc., Concordia Foods
Corporation, Pafco Importing Company, Inc., National Service
Center, Inc., Dixie Foods Company, Shreveport Foods Company, Wilson
Certified Express, Inc. and Minnesota Food Services, Inc., and each
person that shall be required to become a Subsidiary Guarantor pursuant
to Section 6.10.
"Swap Agreement" shall have the meaning assigned to such term in
the preamble to this Agreement.
Term Borrowing shall mean a Borrowing comprised of Term Loans.
Term Facility shall mean the aggregate amount of the Lenders'
Term Loan Commitments.
Term Loan Commitment shall mean, with respect to each Lender,
the commitment of such Lender to make Term Loans hereunder as set forth
in clause (a) of Section 2.01, as the same may be reduced from time to
time pursuant to Section 2.09.
Term Loan Repayment Amount shall have the meaning set forth in
Section 2.11(a).
Term Loan Repayment Date shall have the meaning set forth in
Section 2.11(a).
Term Loans shall mean the term loans made by the Lenders to the
Borrower pursuant to clause (a) of Section 2.01. Each Term Loan shall be
a Eurodollar Term Loan or an ABR Term Loan.
Total Debt Ratio shall mean, with respect to the Borrower and
its consolidated subsidiaries for any fiscal quarter, the ratio of
(a) the aggregate amount of Indebtedness of the Borrower and its
consolidated subsidiaries outstanding as of the last day of such fiscal
quarter, determined in accordance with GAAP, to (b) EBITDA for the
period of four consecutive fiscal quarters ending on the last day of
such fiscal quarter.
Trademark Security Agreement shall mean the Trademark Security
Agreement, substantially in the form of Exhibit K, among the Borrower,
the Subsidiary Guarantors and the Collateral Agent.
Transaction Documents shall mean the Stock Purchase Agreement
and the Loan Documents.
Transactions shall have the meaning assigned to such term in
Section 4.02.
Type when used in respect of any Loan or Borrowing, shall refer
to the Rate by reference to which interest on such Loan or on the Loans
comprising such Borrowing is determined. For purposes hereof, the term
Rate shall include the Adjusted LIBO Rate and the Alternate Base Rate.
"Uncollected Friday Receipts" shall mean remittances received from
Obligors in respect of Receivables that are deposited in a lockbox
account of the Borrower on the applicable Friday and which are
transferred electronically to the Borrower's concentration account on
such Friday, but which are not credited to such concentration account
until the following Monday.
Work in Process shall mean any item of inventory (not otherwise
obsolete or unmerchantable) that is neither a raw material nor a
finished good as accounted for by the Borrower or the applicable
Subsidiary Guarantor in a manner consistent with the accounting
practices of the Borrower or such Subsidiary Guarantor during the period
of twelve consecutive months immediately preceding the Closing Date.
Withdrawal Liability shall mean liability to a Multiemployer
Plan as a result of a complete or partial withdrawal from such
Multiemployer Plan, as such terms are defined in Part I of Subtitle E of
Title IV of ERISA.
SECTION 1.02. Terms Generally. The definitions in Section 1.01
shall apply equally to both the singular and plural forms of the terms
defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words include ,
includes and including shall be deemed to be followed by the phrase
without limitation . All references herein to Articles, Sections,
Exhibits and Schedules shall be deemed to be references to Articles and
Sections of, and Exhibits and Schedules to, this Agreement unless the
context shall otherwise require. Unless otherwise specified herein, all
accounting terms used herein shall be interpreted, all accounting
determinations hereunder shall be made and all financial statements
required to be delivered hereunder shall be prepared in accordance with
GAAP (subject, where provided herein, to normal year-end audit
adjustments and to the absence of footnotes required thereby) as in
effect from time to time; provided, however, that, for purposes of
determining compliance with any covenant set forth in Article VII, such
terms shall be construed in accordance with GAAP as in effect on the
date of this Agreement applied on a basis consistent with the
application used in the financial statements referred to in
Section 4.05(b).
ARTICLE II
The Credits
SECTION 2.01. Commitments. On the terms and subject to the
conditions and relying upon the representations and warranties herein
set forth, each Lender agrees, severally and not jointly, (a) to make
Term Loans to the Borrower on the Closing Date in an aggregate principal
amount not to exceed the Term Loan Commitment set forth opposite such
Lender's name on Schedule 2.01, and (b) to make Revolving Loans to the
Borrower, at any time and from time to time (subject to Section 2.13(f))
on or after the Closing Date and prior to the earlier of the Maturity
Date and the termination of the Revolving Credit Commitment of such
Lender in accordance with the terms hereof, in an aggregate principal
amount at any time outstanding not to exceed an amount equal to the
difference between (i) the lesser of (A) the Revolving Credit Commitment
set forth opposite such Lender's name on Schedule 2.01, as the same may
be reduced from time to time pursuant to Section 2.09, and (B) such
Lender's Applicable Percentage of the Borrowing Base at such time and
(ii) such Lender's Applicable Percentage of the LC Exposure at such
time. Within the limits set forth in clause (b) of the preceding
sentence, the Borrower may borrow, pay or prepay and reborrow Revolving
Loans on or after the Closing Date and prior to the Maturity Date, on
the terms and subject to the conditions and limitations set forth
herein. Amounts paid or prepaid in respect of Term Loans may not be
reborrowed.
SECTION 2.02. Loans. (a) Each Loan shall be made as part of a
Borrowing consisting of Loans made by the Lenders ratably in accordance
with their respective Term Loan Commitments or Revolving Credit
Commitments, as the case may be; provided, however, that the failure of
any Lender to make any Loan shall not in itself relieve any other Lender
of its obligation to lend hereunder (it being understood, however, that
no Lender shall be responsible for the failure of any other Lender to
make any Loan required to be made by such other Lender). The Loans
comprising each Borrowing shall be in an aggregate principal amount that
is (i) in the case of ABR Borrowings, an integral multiple of $500,000
and not less than $1,000,000 and (ii) in the case of Eurodollar
Borrowings, an integral multiple of $1,000,000 and not less than
$7,000,000 (or if less in the case of any Revolving Credit Borrowing, an
aggregate principal amount equal to the remaining balance of the
Revolving Credit Commitments).
(b) Each Borrowing shall be comprised entirely of ABR Loans or
Eurodollar Loans, as the Borrower may request pursuant to Section 2.03;
provided that, notwithstanding anything to the contrary contained in
this Agreement, no Borrowing comprised of Eurodollar Loans having an
Interest Period the duration of which is six months may be requested
until the earlier of (i) the date that is 180 days after the Closing
Date and (ii) the date on which Chemical Bank shall notify the Borrower
that the syndication of the Facilities has been completed. Each Lender
may at its option fulfill its Commitment with respect to any Eurodollar
Loan by causing any domestic or foreign branch or Affiliate of such
Lender to make such Loan, provided that any exercise of such option
shall not affect the obligation of the Borrower to repay such Loan in
accordance with the terms of this Agreement. Borrowings of more than one
Type may be outstanding at the same time; provided, however, that the
Borrower shall not be entitled to request any Borrowing that, if made,
would result in an aggregate of more than five separate Eurodollar
Loans of any Lender being outstanding hereunder at any one time. For
purposes of the foregoing, Loans having different Interest Periods,
regardless of whether they commence on the same date, shall be
considered separate Loans.
(c) Subject to paragraph (e) below, each Lender shall make a Loan
in the amount of its pro rata portion, as determined under Section 2.17,
of each Borrowing hereunder on the proposed date thereof by wire
transfer of immediately available funds to the Agent in New York, New
York, not later than 12:00 noon, New York City time, and the Agent shall
by 3:00 p.m., New York City time, credit the amounts so received to the
general deposit account of the Borrower with the Agent or, if a
Borrowing shall not occur on such date because any condition precedent
herein specified shall not have been met, return the amounts so received
to the respective Lenders. Unless the Agent shall have received notice
from a Lender prior to the date of any Borrowing that such Lender will
not make available to the Agent such Lender's portion of such Borrowing,
the Agent may assume that such Lender has made such portion available to
the Agent on the date of such Borrowing in accordance with this
paragraph (c) and the Agent may, in reliance upon such assumption, make
available to the Borrower on such date a corresponding amount. If and to
the extent that such Lender shall not have made such portion available
to the Agent, such Lender and the Borrower severally agree to repay to
the Agent forthwith on demand such corresponding amount together with
interest thereon, for each day from the date such amount is made
available to the Borrower until the date such amount is repaid to the
Agent at (i) in the case of the Borrower, the interest rate applicable
at the time to the Loans comprising such Borrowing and (ii) in the case
of such Lender, the Federal Funds Effective Rate. If such Lender shall
repay to the Agent such corresponding amount, such amount shall
constitute such Lender's Loan as part of such Borrowing for purposes of
this Agreement.
(d) Notwithstanding any other provision of this Agreement, the
Borrower shall not be entitled to request any Revolving Credit Borrowing
if the Interest Period requested with respect thereto would end after
the Maturity Date.
(e) The Borrower may refinance all or any part of any Revolving
Credit Borrowing with a Revolving Credit Borrowing of the same or a
different Type, subject to the conditions and limitations set forth in
this Agreement. Any Revolving Credit Borrowing or part thereof so
refinanced shall be deemed to be repaid or prepaid in accordance with
Section 2.04 or 2.12, as applicable, with the proceeds of a new
Revolving Credit Borrowing, and the proceeds of the new Revolving Credit
Borrowing, to the extent they do not exceed the principal amount of the
Revolving Credit Borrowing being refinanced, shall not be paid by the
Lenders to the Agent or by the Agent to the Borrower pursuant to
paragraph (c) above.
(f) If the Agent has not received evidence of the payment required
by Section 3.04(a) by 11:00 a.m., New York City time, on the date on
which the Fronting Bank has notified the Borrower that payment of a
draft presented under any Letter of Credit will be made (or such later
time as is not later than one hour after the Borrower shall have
received such notice or, if the Borrower shall have received such notice
later than 4:00 p.m., New York City time, on such Business Day, not
later than 10:00 a.m., New York City time, on the immediately following
Business Day), as provided in Section 3.04(a), the Agent will notify not
later than 12:00 noon, New York City time, the Fronting Bank and each
Participating Lender of the LC Disbursement and, in the case of each
Participating Lender, its Applicable Percentage of such LC Disbursement.
Each Participating Lender will pay to the Agent not later than
4:00 p.m., New York City time, on such date an amount equal to such
Participating Lender's Applicable Percentage of such LC Disbursement (it
being understood that such amount shall constitute an ABR Revolving Loan
of such Lender and shall be deemed to have reduced the LC Exposure at
such time), and the Agent will promptly pay such amount to the Fronting
Bank. The Agent will promptly remit to each Participating Lender its
Applicable Percentage of any amounts subsequently received by the Agent
from the Borrower in respect of such LC Disbursement. If any Lender
shall not have made its Applicable Percentage of such LC Disbursement
available to the Fronting Bank as provided above, such Lender agrees to
pay interest on such amount, for each day from and including the date
such amount is required to be paid in accordance with this paragraph (f)
to but excluding the date an amount equal to such amount is paid to the
Agent for prompt payment to the Fronting Bank at, for the first such
day, the Federal Funds Effective Rate, and thereafter, the Alternate
Base Rate.
SECTION 2.03. Notice of Borrowings. The Borrower shall give the
Agent written or telex notice (or telephone notice promptly confirmed in
writing or by telex) (a) in the case of a Eurodollar Borrowing, not
later than 10:00 a.m., New York City time, three Business Days before a
proposed Borrowing and (b) in the case of an ABR Borrowing, not later
than 12:00 noon, New York City time, on the Business Day of a proposed
Borrowing. Such notice shall be irrevocable and shall in each case refer
to this Agreement and specify (a) whether the Borrowing then being
requested is to be a Term Borrowing or a Revolving Credit Borrowing, and
whether such Borrowing is to be a Eurodollar Borrowing or an ABR
Borrowing; (b) the date of such Borrowing (which shall be a Business
Day) and the amount thereof; and (c) if such Borrowing is to be a
Eurodollar Borrowing, the Interest Period with respect thereto. If no
election as to the Type of Borrowing is specified in any such notice,
then the requested Borrowing shall be an ABR Borrowing. If no Interest
Period with respect to any Eurodollar Borrowing is specified in any such
notice, then the Borrower shall be deemed to have selected an Interest
Period of one month's duration. If the Borrower shall not have given
notice in accordance with this Section 2.03 of its election to refinance
a Revolving Credit Borrowing prior to the end of the Interest Period in
effect for such Borrowing, then the Borrower shall (unless such
Borrowing is repaid at the end of such Interest Period) be deemed to
have given notice of an election to refinance such Borrowing with an ABR
Borrowing. The Agent shall promptly advise the Lenders of any notice
given pursuant to this Section 2.03 and of each Lender's portion of the
requested Borrowing.
SECTION 2.04. Repayment of Loans. The outstanding principal
balance of each Loan shall be payable (a) in the case of a Revolving
Loan, on the last day of the Interest Period applicable to such Loan and
on the Maturity Date and (b) in the case of a Term Loan, as provided in
Section 2.11. The Loans shall bear interest from and including the
Closing Date on the outstanding principal balance thereof as set forth
in Section 2.06. Each Lender shall, and each hereby is authorized by the
Borrower to, record in its internal records, an appropriate notation
evidencing the date and amount of each Loan from such Lender, each
payment and prepayment of principal of any such Loan, each payment of
interest on any such Loan and the other information provided for on such
schedule; provided, however, that the failure of any Lender to make such
a notation or any error therein shall not affect the obligation of the
Borrower to repay the Loans made by such Lender in accordance with the
terms of this Agreement.
SECTION 2.05. Fees. (a) The Borrower agrees to pay to each Lender,
through the Agent, the following fees (each, a Commitment Fee ): on the
Closing Date and on the last day of January, April, July and October in
each year, commencing July 31, 1994, and on each date on which any of
the Commitments of such Lender shall expire or be terminated as provided
herein, a commitment fee of 1/2 of 1% per annum on the average daily
unused amount of each of the Term Loan Commitment and the Revolving
Credit Commitment of such Lender during the preceding quarter (or other
period commencing with the date upon which such Lender's Commitments
were accepted or the Closing Date, as applicable, or ending with the
date on which any of such Commitments of such Lender shall expire or be
terminated). The Commitment Fee due to each Lender in respect of its
Term Loan Commitment and Revolving Credit Commitment pursuant to the
immediately preceding sentence shall accrue from and including the date
upon which such Commitments of such Lender were accepted. For purposes
of calculating Commitment Fees in respect of Revolving Credit
Commitments, any portion of such Revolving Credit Commitments
unavailable due to outstanding Letters of Credit shall be deemed to be
used amounts. All Commitment Fees shall be computed on the basis of the
actual number of days elapsed in a year of 360 days.
(b) The Borrower agrees to pay to the Agent, for its own account,
administrative fees (the Administrative Fees ) at the time and in the
amounts agreed upon in the fee letter agreement dated March 11, 1994,
between the Borrower and the Agent.
(c) The Borrower agrees to pay to the Agent on the Closing Date
the other fees specified in the fee letter agreement referred to in
paragraph (b) above.
(d) The Borrower agrees to pay to the Fronting Bank, for its own
account, the fees specified in Section 3.08.
(e) All Fees (other than the fees payable to the Fronting Bank
under Section 3.08) shall be paid on the dates due, in immediately
available funds, to the Agent for distribution, if and as appropriate,
among the Lenders. Once paid, none of the Fees shall be refundable under
any circumstances (other than corrections of error in payment).
SECTION 2.06. Interest on Loans. (a) Subject to the provisions of
Section 2.07, the Loans comprising each ABR Borrowing shall bear
interest (computed on the basis of the actual number of days elapsed
over a year of 365 or 366 days, as the case may be, when the Alternate
Base Rate is determined by reference to the Prime Rate and over a year
of 360 days at all other times) at a rate per annum equal to the
Alternate Base Rate plus the ABR Spread.
(b) Subject to the provisions of Section 2.07, the Loans
comprising each Eurodollar Borrowing shall bear interest (computed on
the basis of the actual number of days elapsed over a year of 360 days)
at a rate per annum equal to the Adjusted LIBO Rate for the Interest
Period in effect for such Borrowing plus the LIBOR Spread.
(c) So long as no Default or Event of Default shall have occurred
and be continuing, the ABR Spread shall decrease to 1-1/4% per annum and
the LIBOR Spread shall decrease to 2-1/4% per annum on each occasion
that, as of the end of any fiscal quarter, (i) the Interest Expense
Ratio shall equal or exceed 2.25 to 1.00 and (ii) the Total Debt Ratio
for such fiscal quarter shall be less than or equal to 4.00 to 1.00,
with such decrease in the ABR Spread to be effective with respect to
ABR Loans outstanding on, or made on or after, the date of the delivery
to the Agent of the certificate described in Section 6.04(c) relating to
such fiscal quarter and with such decrease in the LIBOR Spread to be
effective with respect to Eurodollar Loans made on or after the date of
the delivery of such certificate relating to such fiscal quarter. In the
event that either of the conditions that gave rise to any decrease in
the ABR Spread and the LIBOR Spread pursuant to the immediately
preceding sentence is no longer satisfied as of the end of any
subsequent fiscal quarter, (i) the decreases in the ABR Spread and the
LIBOR Spread provided for in the preceding sentence shall cease to be
effective for all purposes on and after the date of delivery to the
Agent of the certificate described in Section 6.04(c) relating to such
subsequent fiscal quarter and (ii) the ABR Spread to be effective from
and including such date shall be 1-1/2% per annum and the LIBOR Spread
to be effective from and including such date shall be 2-1/2% per annum.
Notwithstanding the foregoing, at any time during which the Borrower has
failed to deliver the certificate described in Section 6.04(c) in
accordance with the provisions thereof, the ABR Spread shall be deemed
to be 1-1/2% per annum and the LIBOR Spread shall be deemed to be 2-1/2%
per annum from and including the date on which the Borrower was required
to deliver such certificate pursuant to Section 6.04(c) to but excluding
the date on which the Borrower shall deliver such certificate in
accordance with the provisions of Section 6.04(c).
(d) Interest on each Loan shall be payable on the Interest Payment
Dates applicable to such Loan except as otherwise provided in this
Agreement. The applicable ABR Spread or LIBOR Spread for each Interest
Period or day within an Interest Period, as the case may be, shall be
determined by the Agent, and such determination shall be presumptively
correct absent manifest error.
SECTION 2.07. Default Interest. If the Borrower shall default in
the payment of the principal of or interest on any Loan or any other
amount becoming due hereunder or under any Security Document, by
acceleration or otherwise, the Borrower shall on demand from time to
time pay interest, to the extent permitted by law, on such defaulted
amount up to (but not including) the date of actual payment (after as
well as before judgment) at a rate per annum (the Default Rate )
(computed on the basis of the actual number of days elapsed over a year
of 360 days) equal to (a) in the case of any Loan, the rate applicable
to such Loan under Section 2.06 plus 2% per annum and (b) in the case of
any other amount, the rate that would be applicable to an ABR Loan under
Section 2.06 plus 2% per annum.
SECTION 2.08. Alternate Rate of Interest. In the event, and on
each occasion, that on the day two Business Days prior to the
commencement of any Interest Period for a Eurodollar Borrowing the Agent
shall have determined that dollar deposits in the principal amounts of
the Loans comprising such Borrowing are not generally available in the
London interbank market, or that the rates at which such dollar deposits
are being offered will not adequately and fairly reflect the cost to any
Lender of making or maintaining its Eurodollar Loan during such Interest
Period, or that reasonable means do not exist for ascertaining the
Adjusted LIBO Rate, the Agent shall, as soon as practicable thereafter,
give written or telex notice of such determination to the Borrower and
the Lenders. In the event of any such determination, any request by the
Borrower for a Eurodollar Borrowing pursuant to Section 2.03 or 2.10
shall, until the Agent shall have advised the Borrower and the Lenders
that the circumstances giving rise to such notice no longer exist, be
deemed to be a request for an ABR Borrowing. Each determination by the
Agent hereunder shall be conclusive absent manifest error.
SECTION 2.09. Termination and Reduction of Commitments. (a) The
Term Loan Commitments shall be automatically terminated at 5:00 p.m.,
New York City time, on the Closing Date. The Revolving Credit
Commitments and the LC Commitment shall be automatically terminated at
5:00 p.m., New York City time, on the Maturity Date and the LC Maturity
Date, respectively. Notwithstanding the foregoing, all the Commitments
and the LC Commitment shall be automatically terminated at 5:00 p.m.,
New York City time, on August 31, 1994, if the initial borrowing under
the Facilities has not occurred by such time.
(b) Upon at least three Business Days' prior irrevocable written
or telex notice to the Agent, the Borrower may at any time in whole
permanently terminate, or from time to time in part permanently reduce,
the Revolving Credit Commitments; provided, however, that (i) each
partial reduction of the Revolving Credit Commitments shall be in an
integral multiple of $1,000,000 and in a minimum principal amount of
$3,000,000 and (ii) the Borrower shall not be permitted to terminate or
reduce the Revolving Credit Commitments if, as the result of such
termination or reduction, (A) the LC Commitment would exceed the
aggregate remaining amount of the Revolving Credit Commitments or
(B) the Revolving Credit Utilization would exceed the aggregate
remaining Revolving Credit Commitments. The LC Commitment may be
voluntarily terminated or reduced by the Borrower as provided in
Section 3.07.
(c) Each reduction in the Revolving Credit Commitments and the LC
Commitment hereunder shall be made ratably among the applicable Lenders
in accordance with their respective applicable Commitments. The Borrower
shall pay to the Agent for the account of the applicable Lenders, on the
date of each termination or reduction, the Commitment Fees on the amount
of the Commitments so terminated or reduced accrued to but excluding the
date of such termination or reduction.
SECTION 2.10. Conversion and Continuation of Term Borrowings. The
Borrower shall have the right at any time (subject to Section 2.08) upon
prior irrevocable notice to the Agent (i) not later than 12:00 noon, New
York City time, on the Business Day of such conversion, to convert any
Eurodollar Term Borrowing into an ABR Term Borrowing, (ii) not later
than 10:00 a.m., New York City time, three Business Days prior to
conversion or continuation, to convert any ABR Term Borrowing into a
Eurodollar Term Borrowing or to continue any Eurodollar Term Borrowing
as a Eurodollar Term Borrowing for an additional Interest Period and
(iii) not later than 10:00 a.m., New York City time, three Business Days
prior to conversion, to convert the Interest Period with respect to any
Eurodollar Term Borrowing to another permissible Interest Period,
subject in each case to the following:
(a) each conversion or continuation shall be made pro rata
among the Lenders in accordance with the respective principal
amounts of the Loans comprising the converted or continued Term
Borrowing;
(b) if less than all the outstanding principal amount of any
Term Borrowing shall be converted or continued, the aggregate
principal amount of such Term Borrowing converted or continued
shall be an integral multiple of $1,000,000 and not less than
$3,000,000;
(c) each conversion shall be effected by each Lender by
applying the proceeds of the new Term Loan of such Lender
resulting from such conversion to the Term Loan (or portion
thereof) of such Lender being converted, and accrued interest on a
Term Loan (or portion thereof) being converted shall be paid by
the Borrower at the time of conversion;
(d) if any Eurodollar Term Borrowing is converted at a time
other than the end of the Interest Period applicable thereto, the
Borrower shall pay, upon demand, any amounts due to the Lenders
pursuant to Section 2.16;
(e) any portion of a Term Borrowing maturing or required to
be repaid in less than one month may not be converted into or
continued as a Eurodollar Term Borrowing;
(f) any portion of a Eurodollar Term Borrowing that cannot
be converted into or continued as a Eurodollar Term Borrowing by
reason of subparagraph (e) above shall be automatically converted
at the end of the Interest Period in effect for such Borrowing
into an ABR Term Borrowing; and
(g) no Interest Period may be selected for any Eurodollar
Term Borrowing that would end later than a Term Loan Repayment
Date occurring on or after the first day of such Interest Period
if, after giving effect to such selection, the aggregate
outstanding amount of (i) the Eurodollar Term Borrowings with
Interest Periods ending on or prior to such Term Loan Repayment
Date and (ii) the ABR Term Borrowings would not be at least equal
to the principal amount of Term Borrowings to be paid on such Term
Loan Repayment Date.
Each notice pursuant to this Section 2.10 shall be irrevocable and
shall refer to this Agreement and specify (i) the identity and amount of
the Term Borrowing that the Borrower requests be converted or continued,
(ii) whether such Term Borrowing is to be converted to or continued as a
Eurodollar Term Borrowing or an ABR Term Borrowing, (iii) if such notice
requests a conversion, the date of such conversion (which shall be a
Business Day) and (iv) if such Term Borrowing is to be converted to or
continued as a Eurodollar Term Borrowing, the Interest Period with
respect thereto. If no Interest Period is specified in any such notice
with respect to any conversion to or continuation as a Eurodollar Term
Borrowing, the Borrower shall be deemed to have selected an Interest
Period of one month's duration. The Agent shall advise the other Lenders
of any notice given pursuant to this Section 2.10 and of each Lender's
portion of any converted or continued Term Borrowing. If the Borrower
shall not have given notice in accordance with this Section 2.10 to
continue any Term Borrowing into a subsequent Interest Period (and shall
not otherwise have given notice in accordance with this Section 2.10 to
convert such Term Borrowing), such Term Borrowing shall, at the end of
the Interest Period applicable thereto (unless repaid pursuant to the
terms hereof), automatically be continued into a new Interest Period as
an ABR Term Borrowing.
SECTION 2.11. Repayment of Term Borrowings. (a) The Borrower shall
pay to the Agent, for the account of the Lenders, on each date set
forth below (each such date being a Term Loan Repayment Date ) a
principal amount of the Term Loans (such amount, as adjusted from time
to time pursuant to Sections 2.12(b) and 2.13(e), being called the Term
Loan Repayment Amount ) equal to the amount set forth below for such
date, together in each case with accrued and unpaid interest on the
principal amount to be paid to but excluding the date of such payment:
Date: Amount:
December 31, 1994 $ 8,000,000
June 30, 1995 9,000,000
December 31, 1995 10,000,000
June 30, 1996 11,000,000
December 31, 1996 12,000,000
June 30, 1997 14,500,000
December 31, 1997 15,500,000
June 30, 1998 15,500,000
December 31, 1998 15,500,000
June 30, 1999 17,500,000
December 31, 1999 17,500,000
On each Term Loan Repayment Date, the Agent shall apply the Term Loan
Repayment Amount paid to the Agent to pay the Term Loans.
(b) To the extent not previously paid, all Term Borrowings shall
be due and payable on the Maturity Date, together with accrued and
unpaid interest on the principal amount to be paid to but excluding the
date of payment.
(c) All repayments pursuant to this Section 2.11 shall be subject
to Section 2.16, but shall otherwise be without premium or penalty.
SECTION 2.12. Optional Prepayment. (a) The Borrower shall have the
right at any time and from time to time to prepay (i) Revolving Credit
Borrowings and (ii) Term Borrowings, in each case in whole or in part,
upon (A) in the case of prepayments of ABR Revolving Loans, at least
same-day prior written or telex notice (or telephone notice promptly
confirmed by written or telex notice) to the Agent and (B) in the case
of all other loans, at least three Business Days' prior written or
telex notice (or telephone notice promptly confirmed by written or telex
notice) to the Agent; provided, however, that each partial prepayment
shall be in an amount that is an integral multiple of $500,000 and not
less than $1,000,000.
(b) Each prepayment of principal of the Term Borrowings pursuant
to paragraph (a) above shall be applied pro rata to reduce the scheduled
payments of principal due under Section 2.11(a) after the date of such
prepayment, provided that prepayments of principal of the Term
Borrowings pursuant to paragraph (a) above with the proceeds of the
issuance of equity securities by the Borrower after the Closing Date
will be applied to reduce the scheduled payments of principal due under
Section 2.11(a) after the date of such prepayment in the order of
maturity.
(c) Each notice of prepayment shall specify (i) the amount to be
prepaid, (ii) the prepayment date, (iii) whether the prepayment relates
to Revolving Credit Borrowings or to Term Borrowings and (iv) the
principal amount to be prepaid of (A) Revolving Credit Borrowings (or
portion thereof) or (B) Term Borrowings (or portion thereof). Each such
notice shall be irrevocable and shall commit the Borrower to prepay such
obligations by the amount specified therein on the date specified
therein. All prepayments of Borrowings under this Section 2.12 shall be
subject to Section 2.16 but otherwise without premium or penalty. All
prepayments under this Section 2.12 shall be accompanied by accrued
interest on the principal amount being prepaid to but excluding the date
of payment.
(d) No optional prepayment of Term Borrowings made by the Borrower
pursuant to this Section 2.12 shall reduce the Borrower's obligation to
make mandatory prepayments pursuant to Section 2.13(c) or
Section 2.13(d).
SECTION 2.13. Mandatory Prepayments. (a) On the date of any
termination or reduction of the Revolving Credit Commitments pursuant to
Section 2.09, the Borrower shall pay or prepay so much of the Revolving
Credit Borrowings as shall be necessary in order that (i) the aggregate
principal amount of the Revolving Loans outstanding at such time will
not exceed (ii) the aggregate Revolving Credit Commitments (after giving
effect to such termination or reduction) less the aggregate LC Exposure
at such time.
(b) In the event and on each occasion that the Revolving Credit
Utilization exceeds the then-current Borrowing Base, the Borrower shall
forthwith pay or prepay Revolving Credit Borrowings in a principal
amount at least equal to such excess; provided, however, that if the
aggregate principal amount of Revolving Credit Borrowings then
outstanding is less than the amount of such excess (because of any
LC Exposure), the Borrower shall, to the extent of any remaining excess
(after the prepayment of Revolving Credit Borrowings), replace
outstanding Letters of Credit and/or deposit an amount in cash in a cash
collateral account established with the Agent for the benefit of the
Secured Parties.
(c) In the event and on each occasion that a Prepayment Event
occurs, the Borrower shall apply (i) in the case of any Prepayment Event
other than a Prepayment Event arising solely from the issuance or
incurrence by the Borrower of any Specified Permitted Debt, an amount
equal to 100% of the Net Cash Proceeds therefrom or (ii) in the case of
a Prepayment Event arising solely from the issuance or incurrence by the
Borrower of any Specified Permitted Debt, (A) 100% of the Net Cash
Proceeds from the first $75,000,000 of Specified Permitted Debt issued
after the Closing Date, (B) 75% of the Net Cash Proceeds from the next
$25,000,000 of Specified Permitted Debt issued after the Closing Date
and (C) 50% of the Net Cash Proceeds from any other Specified Permitted
Debt, in each case to prepay obligations outstanding under this
Agreement in accordance with this paragraph (c). Substantially
simultaneously with (and in any event not later than the Business Day
next following) the occurrence of a Prepayment Event, the Borrower
shall pay to the Agent (for application to the prepayment of obligations
outstanding under this Agreement in accordance with paragraph (e) below)
an amount equal to the percentage of the Net Cash Proceeds from such
Prepayment Event specified in the preceding sentence.
(d) No later than the earlier of (i) 105 days after the end of
each fiscal year, commencing with the fiscal year ending on December 31,
1994, and (ii) the date on which the financial statements with respect
to such period are delivered pursuant to 6.04(a), the Borrower shall
prepay obligations outstanding under this Agreement in accordance with
paragraph (e) below in an aggregate principal amount equal to the Excess
Cash Flow Percentage (as defined below) of Excess Cash Flow for such
period. The Excess Cash Flow Percentage shall equal (i) 75% for any
fiscal year if at the end of such fiscal year the outstanding principal
amount of the Term Loans exceeds $87,600,000 and (ii) 50% for any other
fiscal year.
(e) Mandatory prepayments of outstanding obligations under this
Agreement made by the Borrower pursuant to paragraphs (c) and (d) above
and paragraph (g) below shall be applied first, to prepay scheduled
payments of principal due on the Term Borrowings under Section 2.11(a)
after the date of such prepayment in the manner described in the
immediately following sentence and second, to prepay Revolving Credit
Borrowings. Each such mandatory prepayment of principal of the Term
Borrowings shall be applied pro rata to reduce the scheduled payments
of principal due under Section 2.11(a) after the date of such
prepayment.
(f) In addition to, and not in limitation of, the obligations of
the Borrower under paragraphs (a), (b), (c) and (d) of this
Section 2.13, the Borrower shall pay or prepay so much of the Revolving
Credit Borrowings as shall be necessary in order that the aggregate
principal amount of Revolving Loans outstanding does not exceed
$20,000,000 for a period of at least 30 consecutive days during the
period from and including January 1 of each calendar year to but
excluding April 1 of each calendar year, commencing with the calendar
year 1995.
(g) The Borrower shall deliver to the Agent, (i) at the time of
each prepayment required under paragraph (c) or paragraph (d) of this
Section 2.13, a certificate signed by a Financial Officer of the
Borrower setting forth in reasonable detail the calculation of the
amount of such prepayment and (ii) at least three Business Days prior to
the time of each prepayment required under this Section 2.13 (if known
at such time), a notice of such prepayment. Each required notice of
prepayment shall specify the prepayment date, the Type of each Borrowing
being prepaid and the principal amount of each Borrowing (or portion
thereof) to be prepaid, shall be irrevocable and shall commit the
Borrower to prepay such obligations by the amount stated therein on the
date stated therein. All prepayments of Borrowings under this
Section 2.13 shall be subject to Section 2.16, but shall otherwise be
without premium or penalty. All prepayments of Borrowings under this
Section 2.13 (other than prepayments pursuant to paragraph (d) above)
shall be accompanied by accrued interest on the principal amount being
prepaid to but excluding the date of payment. All prepayments of
Borrowings pursuant to paragraph (d) of this Section 2.13 shall be
applied first to the payment of accrued interest and then to the payment
of principal.
(h) Net Cash Proceeds and such other amounts to be applied
pursuant to this Section 2.13 to the prepayment of Term Borrowings and
Revolving Credit Borrowings shall be applied, as applicable, first to
reduce outstanding ABR Term Borrowings and ABR Revolving Credit
Borrowings. Any amounts remaining after each such application shall, at
the option of the Borrower, be applied to prepay Eurodollar Term
Borrowings or Eurodollar Revolving Credit Borrowings, as the case may
be, immediately or shall be deposited in the Prepayment Account (as
defined below). The Agent shall apply any cash deposited in the
Prepayment Account (i) allocable to Term Borrowings to prepay Eurodollar
Term Borrowings and (ii) allocable to Revolving Credit Borrowings to
prepay Eurodollar Revolving Credit Borrowings, in each case on the last
day of their respective Interest Periods (or, at the direction of the
Borrower, on any earlier date) until all outstanding Term Borrowings or
Revolving Credit Borrowings, as the case may be, have been prepaid or
until all the allocable cash on deposit with respect to such Borrowings
has been exhausted. For purposes of this Agreement,the term Prepayment
Account shall mean an account established by the Borrower with the
Agent and over which the Agent shall have exclusive dominion and
control, including the exclusive right of withdrawal for application in
accordance with this paragraph (h). The Agent will, at the request of
the Borrower, invest amounts on deposit in the Prepayment Account in
Permitted Investments maturing prior to the last day of the applicable
Interest Periods of the Eurodollar Term Borrowings or Eurodollar
Revolving Credit Borrowings to be prepaid, as the case may be; provided,
however, that (i) the Agent shall not be required to make any investment
that, in its sole judgment, would require or cause the Agent to be in,
or would result in any, violation of any law, statute, rule or
regulation and (ii) the Agent shall have no obligation to invest amounts
on deposit in the Prepayment Account if a Default or Event of Default
shall have occurred and be continuing. The Borrower shall indemnify the
Agent for any losses relating to the investments so that the amount
available to prepay Eurodollar Borrowings on the last day of the
applicable Interest Periods is not less than the amount that would have
been available had no investments been made pursuant thereto. Other than
any interest earned on such investments, the Prepayment Account shall
not bear interest. Interest or profits, if any, on such investments
shall be deposited in the Prepayment Account and reinvested as specified
above. If the maturity of the Loans has been accelerated pursuant to
Article VIII, the Agent may, in its sole discretion, apply all amounts
on deposit in the Prepayment Account to satisfy any of the Obligations.
The Borrower hereby grants to the Agent, for its benefit and the benefit
of the Fronting Bank and the Lenders, a security interest in the
Prepayment Account to secure the Obligations.
SECTION 2.14. Reserve Requirements; Change in Circumstances. (a)
Notwithstanding any other provision herein, if after the date of this
Agreement any change in applicable law or regulation or in the
interpretation or administration thereof by any governmental authority
charged with the interpretation or administration thereof (whether or
not having the force of law) shall change the basis of taxation of
payments to any Lender or the Fronting Bank of the principal of or
interest on any Eurodollar Loan made by such Lender or any Letter of
Credit reimbursement obligations, Fees or other amounts payable
hereunder (other than changes in respect of income and franchise taxes
imposed on such Lender or the Fronting Bank by the jurisdiction in which
such Lender or the Fronting Bank is organized or has its principal
office or by any political subdivision or taxing authority thereof or
therein), or shall impose, modify or deem applicable any reserve,
special deposit or similar requirement against assets of, deposits with
or for the account of or credit extended by such Lender or the Fronting
Bank (except any such reserve requirement that is reflected in the
Adjusted LIBO Rate or in the Alternate Base Rate) or shall impose on
such Lender or the Fronting Bank or the London interbank market any
other condition affecting this Agreement or Eurodollar Loans made by
such Lender or any Letter of Credit issued hereunder, and the result of
any of the foregoing shall be to increase the cost to such Lender of
making or maintaining any Eurodollar Loan or increase the cost of
issuing or maintaining any Letter of Credit or to reduce the amount of
any sum received or receivable by such Lender or the Fronting Bank
hereunder (whether of principal, interest or otherwise) by an amount
deemed by such Lender or the Fronting Bank to be material, then the
Borrower will pay to such Lender or the Fronting Bank following receipt
of a certificate of such Lender or the Fronting Bank to such effect in
accordance with Section 2.14(c) such additional amount or amounts as
will compensate such Lender or the Fronting Bank on an after-tax basis
for such additional costs incurred or reduction suffered.
(b) If any Lender or the Fronting Bank shall have determined that
the adoption after the date hereof of any law, rule, regulation,
agreement or guideline regarding capital adequacy, or any change in any
of the foregoing or in the interpretation or administration of any of
the foregoing by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or
compliance by any Lender (or any lending office of such Lender) or the
Fronting Bank or any Lender's or the Fronting Bank's holding company
with any request or directive regarding capital adequacy issued under
any law, rule, regulation or guideline (whether or not having the force
of law) of any such authority, central bank or comparable agency, has or
would have the effect of reducing the rate of return on such Lender's or
the Fronting Bank's capital or on the capital of such Lender's or the
Fronting Bank's holding company, if any, as a consequence of this
Agreement or the Loans made by such Lender or the Letters of Credit
issued by the Fronting Bank pursuant hereto to a level below that which
such Lender or the Fronting Bank or such Lender's or the Fronting Bank's
holding company could have achieved but for such applicability,
adoption, change or compliance (taking into consideration such Lender's
or the Fronting Bank's policies and the policies of such Lender's or the
Fronting Bank's holding company with respect to capital adequacy) by an
amount deemed by such Lender or the Fronting Bank to be material, then
from time to time the Borrower shall pay to such Lender or the Fronting
Bank such additional amount or amounts as will compensate such Lender or
the Fronting Bank or such Lender's or the Fronting Bank's holding
company on an after-tax basis for any such reduction suffered.
Notwithstanding any other provision in this paragraph (b), no Lender or
the Fronting Bank shall be entitled to demand compensation pursuant to
this paragraph (b) if it shall not be the general practice of such
Lender or the Fronting Bank, as applicable, to demand such compensation
in similar circumstances under comparable provisions of other comparable
credit agreements.
(c) A certificate of each Lender or the Fronting Bank setting
forth such amount or amounts as shall be necessary to compensate such
Lender or the Fronting Bank or its holding company as specified in
paragraph (a) or (b) above, as the case may be, and setting forth in
reasonable detail an explanation of the basis of requesting such
compensation in accordance with paragraph (a) or (b) above, including
calculations in reasonable detail, shall be delivered to the Borrower
and shall be conclusive absent manifest error. The Borrower shall pay
each Lender or the Fronting Bank the amount shown as due on any such
certificate delivered by it within 10 days after its receipt of the
same.
(d) Failure on the part of any Lender or the Fronting Bank to
demand compensation for any increased costs or reduction in amounts
received or receivable or reduction in return on capital with respect to
any period shall not constitute a waiver of such Lender's or the
Fronting Bank's right to demand compensation with respect to such period
or any other period, except that no Lender or the Fronting Bank shall be
entitled to compensation under this Section 2.14 for any costs incurred
or reduction suffered with respect to any date unless such Lender or the
Fronting Bank, as applicable, shall have notified the Borrower that it
will demand compensation for such costs or reductions under paragraph
(c) above, not more than six months after the later of (i) such date and
(ii) the date on which such Lender or the Fronting Bank, as applicable,
shall have become aware of such costs or reductions. The protection of
this Section 2.14 shall be available to each Lender or the Fronting Bank
regardless of any possible contention of the invalidity or
inapplicability of the law, rule, regulation, guideline or other change
or condition that shall have occurred or been imposed.
(e) Each Lender and the Fronting Bank will, at the request of the
Borrower, designate a different lending office if such designation
(i) will avoid the need for, or minimize the amount of, any compensation
to which such Lender or the Fronting Bank is entitled pursuant to this
Section 2.14 and (ii) will not, in the sole judgment of such Lender or
the Fronting Bank, be otherwise disadvantageous to such Lender or the
Fronting Bank, as the case may be.
SECTION 2.15. Change in Legality. (a) Notwithstanding any other
provision herein, if any change in any law or regulation or in the
interpretation thereof by any governmental authority charged with the
administration or interpretation thereof shall make it unlawful for any
Lender to make or maintain any Eurodollar Loan or to give effect to its
obligations as contemplated hereby with respect to any Eurodollar Loan,
then, by written notice to the Borrower and to the Agent, such Lender
may:
(i) declare that Eurodollar Loans will not thereafter be
made by such Lender hereunder, whereupon any request by the
Borrower for a Eurodollar Borrowing shall, as to such Lender only,
be deemed a request for an ABR Loan unless such declaration shall
be subsequently withdrawn; and
(ii) require that all outstanding Eurodollar Loans made by
it be converted to ABR Loans, in which event all such Eurodollar
Loans shall be automatically converted to ABR Loans as of the
effective date of such notice as provided in paragraph (b) below.
In the event any Lender shall exercise its rights under (i) or (ii)
above, all payments and prepayments of principal that would otherwise
have been applied to repay the Eurodollar Loans that would have been
made by such Lender or the converted Eurodollar Loans of such Lender
shall instead be applied to repay the ABR Loans made by such Lender in
lieu of, or resulting from the conversion of, such Eurodollar Loans.
(b) For purposes of this Section 2.15, a notice to the Borrower by
any Lender shall be effective as to each Eurodollar Loan, if lawful, on
the last day of the Interest Period currently applicable to such
Eurodollar Loan; in all other cases such notice shall be effective on
the date of receipt by the Borrower.
SECTION 2.16. Indemnity. The Borrower shall indemnify each Lender
against any loss or expense that such Lender may sustain or incur as a
consequence of (a) any failure by the Borrower to fulfill on the date of
any borrowing hereunder the applicable conditions set forth in
Article V, (b) any failure by the Borrower to borrow or to refinance,
convert or continue any Loan hereunder after irrevocable notice of such
borrowing, refinancing, conversion or continuation has been given
pursuant to Section 2.03 or 2.10, (c) any payment, prepayment or
conversion of a Eurodollar Loan required by any other provision of this
Agreement or otherwise made or deemed made on a date other than the last
day of the Interest Period applicable thereto, (d) any default in
payment or prepayment of the principal amount of any Loan or any part
thereof or interest accrued thereon, as and when due and payable (at the
due date thereof, whether by scheduled maturity, acceleration,
irrevocable notice of prepayment or otherwise) or (e) the occurrence of
any Event of Default, including, in each such case, any loss or
reasonable expense sustained or incurred or to be sustained or incurred
in liquidating or employing deposits from third parties acquired to
effect or maintain such Loan or any part thereof as a Eurodollar Loan.
Such loss or reasonable expense shall include an amount equal to the
excess, if any, as reasonably determined by such Lender of (a) its cost
of obtaining the funds for the Loan being paid, prepaid, converted or
not borrowed, converted or continued (assumed to be the Adjusted LIBO
Rate applicable thereto) for the period from and including the date of
such payment, prepayment, conversion or failure to borrow, convert or
continue to but excluding the last day of the Interest Period for such
Loan (or, in the case of a failure to borrow, convert or continue, the
Interest Period for such Loan that would have commenced on the date of
such failure) over (b) the amount of interest (as reasonably determined
by such Lender) that would be realized by such Lender in reemploying the
funds so paid, prepaid, converted or not borrowed, converted or
continued for such period or Interest Period, as the case may be. A
certificate of any Lender setting forth any amount or amounts that such
Lender is entitled to receive pursuant to this Section 2.16 shall be
delivered to the Borrower and shall be conclusive absent manifest error.
SECTION 2.17. Pro Rata Treatment. Except as required under Section
2.15, each Borrowing, each payment or prepayment of principal of any
Borrowing, each payment of interest on the Loans, each payment of the
Commitment Fees, each payment of the LC Fees, each reduction of the Term
Loan Commitments or the Revolving Credit Commitments and each
refinancing of any Borrowing with, conversion of any Borrowing to or
continuation of any Borrowing as a Borrowing of any Type shall be
allocated pro rata among the Lenders in accordance with their respective
applicable Commitments (or, if such Commitments shall have expired or
been terminated, in accordance with the respective principal amounts of
their applicable outstanding Loans). Each Lender agrees that in
computing such Lender's portion of any Borrowing to be made hereunder,
the Agent may, in its discretion, round each Lender's percentage of such
Borrowing, computed in accordance with Section 2.01, to the next higher
or lower whole dollar amount.
SECTION 2.18. Sharing of Setoffs. Each Lender agrees that if it
shall, through the exercise of a right of banker's lien, setoff or
counterclaim against the Borrower, or pursuant to a secured claim under
Section 506 of Title 11 of the United States Code or other security or
interest arising from, or in lieu of, such secured claim, received by
such Lender under any applicable bankruptcy, insolvency or other similar
law or otherwise, or by any other means, obtain payment (voluntary or
involuntary) in respect of any Loan or Loans or LC Exposure as a result
of which the unpaid principal portion of its Loans or its LC Exposure
shall be proportionately less than the unpaid principal portion of the
Loans of any other Lender or any other Lender's LC Exposure, such Lender
shall be deemed simultaneously to have purchased from such other Lender
at face value, and shall promptly pay to such other Lender the purchase
price for, a participation in the Loans of such other Lender or the
LC Exposure of such other Lender, so that the aggregate unpaid principal
amount of the Loans, LC Exposures and participation in Loans and LC
Exposures held by each Lender shall be in the same proportion to the
aggregate unpaid principal amount of all Loans and LC Exposures then
outstanding as the principal amount of such Lender's Loans and LC
Exposures prior to such exercise of banker's lien, setoff or
counterclaim or other event was to the principal amount of all Loans and
LC Exposures outstanding prior to such exercise of banker's lien, setoff
or counterclaim or other event; provided, however, that, if any such
purchase or purchases or adjustments shall be made pursuant to this
Section 2.18 and the payment giving rise thereto shall thereafter be
recovered, such purchase or purchases or adjustments shall be rescinded
to the extent of such recovery and the purchase price or prices or
adjustment restored without interest. The Borrower expressly consents to
the foregoing arrangements and agrees that any Lender holding a
participation in a Loan or LC Exposure deemed to have been so purchased
may exercise any and all rights of banker's lien, setoff or counterclaim
with respect to any and all moneys owing by the Borrower to such Lender
by reason thereof as fully as if such Lender had made a Loan directly to
the Borrower in the amount of such participation.
SECTION 2.19. Payments. (a) Except as provided in Section 2.05(d),
the Agent shall have received evidence that the Borrower has made each
payment (including principal of or interest on any Borrowing or any Fees
or other amounts) hereunder and under any other Loan Document not later
than 12:00 noon, New York City time, on the date when due in dollars to
the Agent (for the account of the Agent, the Fronting Bank or the
Lenders, as the case may be), at its offices at 270 Park Avenue, New
York, New York, in immediately available funds. The Agent shall promptly
remit in dollars to the Agent, the Fronting Bank or the Lenders, as the
case may be, its share of such payments received by the Agent.
(b) Whenever any payment (including principal of or interest on
any Borrowing or any Fees or other amounts) hereunder or under any other
Loan Document shall become due, or otherwise would occur, on a day that
is not a Business Day, such payment may be made on the next succeeding
Business Day, and such extension of time shall in such case be included
in the computation of interest or Fees, if applicable.
SECTION 2.20. Taxes. (a) Any and all payments by the Borrower
hereunder shall be made, in accordance with Section 2.19, free and clear
of and without deduction for any and all current or future taxes,
levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding taxes imposed on the net
income of the Agent, the Fronting Bank or any Lender (or any transferee
or assignee thereof, including a participation holder (any such entity
being called a Transferee )) and franchise taxes imposed on the Agent,
the Fronting Bank or any Lender (or Transferee), in each case by the
United States or any jurisdiction under the laws of which the Agent, the
Fronting Bank or any such Lender (or Transferee) is organized or has its
principal office or lending office or any political subdivision or
taxing authority thereof or therein (all such nonexcluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as Taxes ). If any Taxes are required to be
deducted from or in respect of any sum payable hereunder to any Lender
(or any Transferee), the Agent or the Fronting Bank, (i) the sum payable
shall be increased by the amount necessary so that after making all
required deductions (including deductions applicable to additional sums
payable under this Section 2.20) such Lender (or Transferee), the Agent
or the Fronting Bank (as the case may be) shall receive an amount equal
to the sum it would have received had no such deductions been made,
(ii) the Borrower shall make such deductions and (iii) the Borrower
shall pay the full amount deducted to the relevant taxing authority or
other Governmental Authority in accordance with applicable law;
provided, however, that no Transferee of any Lender shall be entitled to
receive any greater payment under this paragraph (a) than such Lender
would have been entitled to receive with respect to the rights assigned,
participated or otherwise transferred unless (x) such assignment,
participation or transfer shall have been made at a time when the
circumstances (including a Change of Law as defined in Section 2.20(f))
giving rise to such greater payment did not exist or had not yet
occurred or (y) such assignment, participation or transfer shall have
been at the request of the Borrower.
(b) In addition, the Borrower agrees to pay any current or future
stamp, intangible or documentary taxes or any other excise or property
taxes, charges or similar levies (including, without limitation,
mortgage recording taxes and similar fees) that arise from any payment
made hereunder or from the execution, delivery or registration of, or
otherwise with respect to, this Agreement or any other Loan Document
(hereinafter referred to as Other Taxes ).
(c) The Borrower will indemnify each Lender (or Transferee), the
Agent and the Fronting Bank for the full amount of Taxes and Other Taxes
(including any Taxes or Other Taxes on amounts payable under this
Section 2.20) paid by such Lender (or Transferee), the Agent or the
Fronting Bank, as the case may be, and any liability (including
penalties, interest and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted by the relevant taxing authority or other Governmental
Authority; provided, however, that the Borrower shall not indemnify any
Lender (or Transferee), the Agent or the Fronting Bank for Taxes,
penalties, additions to tax, interest and expenses arising as a result
of its own wilful misconduct or gross negligence. Such indemnification
shall be made within 30 days after the date any Lender (or Transferee),
the Agent or the Fronting Bank, as the case may be, makes written demand
therefor and provides the Borrower with either a copy of any assessment
thereof from the relevant taxing authority (deleting any confidential
information contained therein) or proof of payment of a tax for which
the Borrower is liable hereunder. If a Lender (or Transferee), the
Agent or the Fronting Bank shall become aware that it is entitled to
receive a refund (including interest and penalties, if any) in respect
of Taxes or Other Taxes as to which it has been indemnified by the
Borrower pursuant to this Section 2.20, it shall promptly notify the
Borrower of the availability of such refund (including interest and
penalties, if any) and shall, within 30 days after receipt of a request
by the Borrower, apply for such refund at the Borrower's expense. If a
Lender (or Transferee), the Agent or the Fronting Bank shall become
aware that it is entitled to receive a refund (including interest and
penalties, if any) in respect of any Taxes or Other Taxes as to which it
has been indemnified by the Borrower pursuant to this Section 2.20, it
shall promptly notify the Borrower of the availability of such refund
(including interest and penalties, if any) and shall, within 30 days
after receipt of a request by the Borrower, apply for such refund at
the Borrower's expense. If any Lender (or Transferee), the Agent or the
Fronting Bank receives a refund (including interest and penalties, if
any) in respect of any Taxes or Other Taxes as to which it has been
indemnified by the Borrower pursuant to this Section 2.20, it shall
promptly notify the Borrower of such refund and shall, within 15 days of
receipt, repay such refund to the Borrower (but only to the extent of
amounts that have been paid by the Borrower under this Section 2.20 with
respect to such refund and not reimbursed), net of all out-of-pocket
expenses of such Lender, the Agent or the Fronting Bank and without any
interest (other than the interest, if any, included in such refund);
provided, however, that the Borrower, upon the request of such Lender
(or Transferee), the Agent or the Fronting Bank, agrees to return such
refund (plus penalties, interest or other charges) to such Lender (or
Transferee), the Agent or the Fronting Bank in the event such Lender (or
Transferee), the Agent or the Fronting Bank is required to repay such
refund. The Borrower shall return such refund within 30 days after such
Lender (or Transferee), the Agent or the Fronting Bank provides the
Borrower with a copy of any notice or assessment from the relevant
taxing authority (deleting any confidential information contained
therein) requiring repayment of such refund. Nothing contained in this
paragraph (c) shall require any Lender (or Transferee), the Agent or the
Fronting Bank to make available any of its tax returns (or any other
information relating to its taxes that it deems to be confidential).
(d) Within 30 days after the date of any payment of Taxes or Other
Taxes withheld by the Borrower in respect of any payment to any Lender
(or Transferee), the Agent or the Fronting Bank, the Borrower will
furnish to the Agent, such Lender (or Transferee) or the Fronting Bank,
at its respective address referred to in Section 10.01, the original or
a certified copy of a receipt evidencing payment thereof or other
evidence of such payment reasonably satisfactory to such Lender (or
Transferee), the Agent or the Fronting Bank, as the case may be.
(e) Without prejudice to the survival of any other agreement
contained herein, the agreements and obligations contained in this
Section 2.20 shall survive the payment in full of the principal of and
interest on all Loans made hereunder until the expiration of the
relevant statute of limitations.
(f) Each of the Agent, the Fronting Bank and any Lender (or
Transferee) that is not incorporated or otherwise formed under the laws
of the United States of America or a state thereof (a Non-U.S. Person )
agrees that, within one month after the Closing Date or, if later, the
date it becomes a Lender (or Transferee), the Agent or the Fronting Bank
hereunder, it will deliver to each of the Borrower and the Agent one
duly completed copy of United States Internal Revenue Service Form 1001
or 4224, or, in the case of any Lender (or Transferee) exempt from
United States Federal withholding tax pursuant to Sections 871(h) or
881(c) of the Code, Form W-8, or any successor applicable form (a Form
1001, 4224 or W-8 ), as the case may be, certifying in each case that
such Lender (or Transferee), the Agent or the Fronting Bank is entitled
to receive payments hereunder payable to it without deduction or
withholding of any United States Federal income taxes, or subject to a
reduced rate thereof. Each of the Agent, the Fronting Bank or any
Lender (or Transferee) that delivers to the Borrower and the Agent a
Form 1001, 4224 or W-8 pursuant to the immediately preceding sentence
further undertakes to deliver to the Borrower and the Agent further
copies of such Form 1001, 4224 or W-8, as the case may be, or other
manner of certification reasonably satisfactory to the Borrower on or
before the date that any such form or certification expires or becomes
obsolete or of the occurrence of any event requiring a change in the
most recent form or certification previously delivered by it to the
Borrower or the Agent, and such extensions or renewals thereof as may
reasonably be requested by the Borrower or the Agent, certifying that
such Agent, Fronting Bank or Lender (or Transferee), as the case may be,
is entitled to receive payments hereunder without deduction or
withholding of any United States Federal income taxes, or subject to a
reduced rate thereof. If at any time there has occurred, on or prior to
the date on which any delivery of such Form 1001, 4224 or W-8, as the
case may be, would otherwise be required, any change in law, rule,
regulation, treaty, convention or directive, or any change in the
interpretation or application of any thereof ( Change of Law ), that
renders all such forms inapplicable or which would prevent such Agent,
Fronting Bank or Lender (or Transferee), as the case may be, from duly
completing and delivering any such form or certification with respect to
it, such Agent, Fronting Bank or Lender (or Transferee), as the case may
be, shall advise the Borrower that it shall be subject to withholding of
United States Federal income tax at the full statutory rate. A Non-U.S.
Person shall be required to furnish a Form 1001, 4224 or W-8 only if it
is entitled to claim an exemption from or reduced rate of withholding.
Each of the Agent, the Fronting Bank and any Lender that is a Non-U.S.
Person and that is a party hereto as of the Closing Date hereby
represents and warrants that, as of the Closing Date, payments made to
it hereunder are exempt from the withholding of United States Federal
income taxes (i) because such payments are effectively connected with a
United States trade or business conducted by such Non-U.S Person;
(ii) pursuant to the terms of an income tax treaty between the United
States and such Non-U.S. Person's country of residence; or (iii) because
such payments are portfolio interest exempt pursuant to Sections 871(h)
or 881(c) of the Code. Notwithstanding any provision of paragraph (a)
above to the contrary, the Borrower shall not have any obligation to pay
any Taxes or Other Taxes or to indemnify any Lender (or Transferee), the
Agent or the Fronting Bank for such Taxes or Other Taxes pursuant to
this Section 2.20 to the extent that such Taxes or Other Taxes result
from (i) the failure of any Lender (or Transferee), the Agent, or the
Fronting Bank to comply with its obligations pursuant to this paragraph
(f) or (ii) any representation made on Form 1001, 4224 or W-8 or
successor applicable form or certification by any Lender (or
Transferee), the Agent or the Fronting Bank incurring such Taxes or
Other Taxes proving to have been incorrect, false or misleading in any
material respect when so made or deemed to be made.
(g) Any of the Agent, the Fronting Bank or any Lender (or
Transferee) claiming any additional amounts payable pursuant to this
Section 2.20 shall use reasonable efforts (consistent with legal and
regulatory restrictions) (including reasonable efforts to change the
jurisdiction of its applicable lending office) to avoid the need for or
reduce the amount of any such additional amounts that may thereafter
accrue, provided that such efforts would not, in the sole determination
of such Lender (or Transferee), Agent or Fronting Bank, as the case may
be, be otherwise disadvantageous to such Lender (or Transferee), the
Agent or the Fronting Bank.
(h) In the event any Lender (or Transferee) changes its applicable
lending office as provided in Section 2.14(e), such Lender (or
Transferee) shall not be entitled to receive any greater payment under
this Section 2.20 than such Lender (or Transferee) would have been
entitled to receive had such change not occurred, unless (i) such
greater payment rises as a result of a Change in Law occurring after the
date of such change in applicable lending office or (ii) such change in
applicable lending office shall have been made at the request of the
Borrower.
SECTION 2.21. Assignment of Commitments under Certain
Circumstances. In the event that (a) any Lender (i) shall have
delivered a notice or certificate pursuant to Section 2.14, (ii) shall
become subject to the provisions of Section 2.15 or (iii) shall fail or
refuse to fund its portion of any Loan for any reason other than the
failure of the Borrower to satisfy the conditions precedent to the
making of such Loan hereunder, (b) the Borrower shall be required to
make additional payments to any Lender under Section 2.20 or (c) any
Lender shall fail or refuse, for any reason, to approve any amendment,
waiver or consent hereunder that has been approved by Lenders holding
more than 85% of the aggregate principal amount of (i) the Loans at such
time, (ii) the LC Exposure at such time and (iii) the aggregate unused
Commitments at such time, the Borrower shall have the right, but not the
obligation, at its own expense, upon notice to such Lender and the
Agent, to replace such Lender with an assignee (in accordance with and
subject to the restrictions contained in Section 10.04(b)), and such
Lender hereby agrees to transfer and assign to such assignee without
recourse (in accordance with and subject to the restrictions contained
in Section 10.04(b)) all its interests, rights and obligations under
this Agreement; provided, however, that (A) no such assignment shall
conflict with any law or any rule, regulation or order of any
Governmental Authority, (B) such assignee shall pay to the affected
Lender in immediately available funds on the date of such assignment the
principal of the Loans made by such Lender hereunder, (C) in the case of
an assignment pursuant to clause (c) above, the Borrower must exercise
its right to replace such Lender within 90 days of such Lender's failure
to approve the applicable amendment, waiver or consent, as applicable,
and (D) the Borrower shall pay to the affected Lender in immediately
available funds on the date of such assignment the interest accrued to
the date of payment on the Loans made by such Lender hereunder and all
other amounts accrued for such Lender's account or owed to it hereunder.
ARTICLE III
Letters of Credit
SECTION 3.01. Issuance of Letters of Credit. (a) The Fronting Bank
agrees, on the terms and subject to the conditions hereinafter set
forth, to issue Letters of Credit, in a form reasonably acceptable to
the Agent and the Fronting Bank, appropriately completed, for the
account of the Borrower, at any time and from time to time on and after
the Closing Date until the earlier of the LC Maturity Date and the
termination of the LC Commitment in accordance with the terms hereof;
provided, however, that any Letter of Credit shall be issued by the
Fronting Bank only if, and each request by the Borrower for the issuance
of any Letter of Credit shall be deemed a representation and warranty of
the Borrower that, immediately following the issuance of any such Letter
of Credit, (i) the LC Exposure shall not exceed the LC Commitment in
effect at such time and (ii) the Revolving Credit Utilization at such
time shall not exceed the aggregate Revolving Credit Commitments at such
time.
(b) Each Letter of Credit shall expire at the close of business on
the LC Maturity Date, unless such Letter of Credit expires by its terms
on an earlier date. Each Letter of Credit shall provide for payments of
drawings in dollars.
(c) Each issuance of any Letter of Credit shall be made on at
least two Business Days' prior written or facsimile notice from the
Borrower to the Fronting Bank and the Agent (which shall give prompt
notice thereof to each Participating Lender) specifying the date of
issuance, the date on which such Letter of Credit is to expire (which
shall not be later than the earlier of (i) the LC Maturity Date and
(ii) subject to extension, 360 days, in the case of Standby Letters of
Credit, and 180 days, in the case of Commercial Letters of Credit, after
the date of any such Letter of Credit), the amount of such Letter of
Credit, the name and address of the beneficiary of such Letter of Credit
and such other information as may be necessary or desirable to complete
such Letter of Credit. The Fronting Bank will give the Agent and the
Agent will give to each Participating Lender reasonably prompt notice of
the issuance and amount of each Letter of Credit and the expiration of
each Letter of Credit.
SECTION 3.02. Participation; Unconditional Obligations. (a) By the
issuance of a Letter of Credit and without any further action on the
part of the Fronting Bank or the Participating Lenders in respect
thereof, the Fronting Bank hereby grants to each Participating Lender,
and each Participating Lender hereby agrees to acquire from the Fronting
Bank, a participation in such Letter of Credit equal to such
Participating Lender's Applicable Percentage of the face amount of such
Letter of Credit, effective upon the issuance of such Letter of Credit.
In consideration and in furtherance of the foregoing, each Participating
Lender hereby absolutely and unconditionally agrees to pay to the Agent,
on behalf of the Fronting Bank, in accordance with Section 2.02(f), such
Participating Lender's Applicable Percentage of each LC Disbursement
made by the Fronting Bank; provided, however, that the Participating
Lenders shall not be obligated to make any such payment to the Fronting
Bank with respect to any wrongful payment or disbursement made under any
Outstanding Letter of Credit as a result of the gross negligence or
wilful misconduct of the Fronting Bank.
(b) Each Participating Lender acknowledges and agrees that its
obligation to acquire participations pursuant to paragraph (a) of this
Section 3.02 in respect of Letters of Credit is absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including the occurrence and continuance of an Event of Default or
Default hereunder, and that each such payment shall be made without any
offset, abatement, withholding or reduction whatsoever.
SECTION 3.03. LC Fee. The Borrower agrees to pay to the Agent for
the account of the Participating Lenders for each calendar quarter (or
shorter period commencing with the date hereof or ending with the first
date on which the LC Commitment shall have expired or been terminated
and there shall be no Outstanding Letters of Credit) fees (the LC
Fees ) equal to 2 1/2% per annum on the average daily aggregate face
amount of the Outstanding Letters of Credit. The LC Fees shall be
computed on the basis of the actual number of days elapsed over a year
of 360 days. The LC Fees shall be paid in arrears on the last day of
January, April, July and October of each year and on the LC Maturity
Date (or, if earlier, the first date on which the LC Commitment shall
have expired or been terminated and there shall be no Outstanding
Letters of Credit), commencing on the first such date following the
Closing Date. Once paid, the LC Fees shall not be refundable in any
circumstances (other than corrections of error in payment).
SECTION 3.04. Agreement To Repay LC Disbursements. (a) If the
Fronting Bank shall pay any draft presented under a Letter of Credit,
the Borrower shall pay to the Agent, on behalf of the Fronting Bank, an
amount equal to the amount of such draft before 11:00 a.m., New York
City time, on the Business Day on which the Fronting Bank shall have
notified the Borrower that payment of such draft will be made (or such
later time as is not later than one hour after the Borrower shall have
received such notice or, if the Borrower shall have received such notice
later than 4:00 p.m., New York City time, on any Business Day, not later
than 10:00 a.m., New York City time, on the immediately following
Business Day). The Agent will promptly pay any such amounts received by
it to the Fronting Bank. In the event that, after the payment of any
such amount to the Fronting Bank, the Fronting Bank shall not pay such
amount in respect of such draft, the Fronting Bank shall return to the
Agent, for the account of the Borrower, any such unpaid amount, together
with interest thereon accrued at the Federal Funds Effective Rate then
in effect from and including the date such amount was paid by the
Borrower to the Agent to but excluding the date such amount was repaid
by the Fronting Bank to the Agent.
(b) The Borrower's obligation to repay the Fronting Bank for LC
Disbursements made by the Fronting Bank under the Outstanding Letters of
Credit shall be absolute, unconditional and irrevocable under any and
all circumstances and irrespective of, without limitation, the
following:
(i) any lack of validity or enforceability of any Letter of
Credit;
(ii) the existence of any claim, setoff, defense or other
right that the Borrower or any other Person may at any time have
against the beneficiary under any Letter of Credit, the Fronting
Bank, the Agent or any other Lender or any other Person (other
than the defense of payment in accordance with the terms of this
Agreement or a defense based on the gross negligence or wilful
misconduct of the Fronting Bank) in connection with this
Agreement or any other agreement or transaction;
(iii) any draft or other document presented under a Letter
of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue
or inaccurate in any respect, provided that payment by the
Fronting Bank under such Letter of Credit against presentation of
such draft or document shall not have constituted gross negligence
or wilful misconduct of the Fronting Bank;
(iv) payment by the Fronting Bank under a Letter of Credit
against presentation of a draft or other document that does not
comply with the terms of such Letter of Credit, provided that such
payment shall not have constituted gross negligence or wilful
misconduct of the Fronting Bank; and
(v) any other circumstance or event whatsoever, whether or
not similar to any of the foregoing, provided that such
circumstance shall not have been the result of the gross
negligence or wilful misconduct of the Fronting Bank.
It is understood that in making any payment under a Letter of
Credit (A) the Fronting Bank's exclusive reliance on the documents
presented to it under such Letter of Credit as to any and all matters
set forth therein, including reliance on the amount of any draft
presented under such Letter of Credit, whether or not the amount due to
the beneficiary equals the amount of such draft and whether or not any
document presented pursuant to such Letter of Credit proves to be
insufficient in any respect, if such document on its face appears to be
in order, and whether or not any other statement or any other document
presented pursuant to such Letter of Credit proves to be forged or
invalid or any statement therein proves to be inaccurate or untrue in
any respect whatsoever, and (B) any noncompliance in any immaterial
respect of the documents presented under a Letter of Credit with the
terms thereof shall, in each case, not be deemed wilful misconduct or
gross negligence of the Fronting Bank.
SECTION 3.05. Letter of Credit Operations. The Fronting Bank
shall, promptly following its receipt thereof, examine all documents
purporting to represent a demand for payment under an Outstanding Letter
of Credit to ascertain that the same appear on their face to be in
conformity with the terms and conditions of such Outstanding Letter of
Credit. The Fronting Bank shall as promptly as possible, but in no event
later than two hours after such demand for payment, give oral
notification, confirmed by facsimile notice, to the Agent and the
Borrower of such demand for payment and shall as promptly as possible,
but in no event later than two hours prior to any payment in respect of
such demand, give oral notification, confirmed by facsimile notice, to
the Agent and the Borrower of the determination by the Fronting Bank as
to whether such demand for payment was in accordance with the terms and
conditions of such Outstanding Letter of Credit and whether the Fronting
Bank has made or will make an LC Disbursement thereunder, provided that
the failure to give such notice shall not relieve the Borrower of its
obligation to reimburse the Fronting Bank with respect to any such LC
Disbursement, and the Agent shall promptly give each Participating
Lender notice thereof.
SECTION 3.06. Cash Collateralization. If any Event of Default
shall occur and be continuing, the Borrower shall on the Business Day it
receives notice from the Agent or the Required Lenders (or, if the
maturity of the Loans has been accelerated, Participating Lenders
holding participation in Outstanding Letters of Credit representing at
least 51% of the aggregate undrawn amount of all Outstanding Letters of
Credit) therefor, deposit in an account with the Collateral Agent, for
the benefit of the Participating Lenders, an amount in cash equal to the
LC Exposure as of such date. Such deposit shall be held by the
Collateral Agent as collateral for the payment and performance of the
Obligations. The Collateral Agent shall have exclusive dominion and
control, including the exclusive right of withdrawal, over such account.
Other than any interest earned on the investment of such deposits in
Permitted Investments, which investments shall be made at the option and
sole discretion of the Collateral Agent, such deposits shall not bear
interest. Interest or profits, if any, on such investments shall
accumulate in such account. Moneys in such account shall
(a) automatically be applied by the Agent to reimburse the Fronting Bank
for LC Disbursements, (b) be held for the satisfaction of the
reimbursement obligations of the Borrower for the then-outstanding
LC Exposure and (c) if the maturity of the Loans has been accelerated
(but subject to the consent of Participating Lenders holding
participation in Outstanding Letters of Credit representing at least 51%
of the aggregate undrawn amount of all Outstanding Letters of Credit),
such amount (to the extent not applied as aforesaid) shall be applied to
satisfy the Obligations. Any cash collateral provided by the Borrower
hereunder (to the extent not applied as aforesaid) shall be returned to
the Borrower within three Business Days after all Events of Default have
been cured or waived.
SECTION 3.07. Termination of LC Commitment. The Borrower may
permanently terminate, or from time to time in part permanently reduce,
the LC Commitment, in each case upon at least three Business Days' prior
written or facsimile notice to the Agent and the Fronting Bank, provided
that (a) after giving effect to such termination or reduction, the LC
Commitment shall not be less than the LC Exposure at such time or
greater than the aggregate Revolving Credit Commitments at such time and
(b) no reduction of the LC Commitment shall have the effect of reducing
the Revolving Credit Commitment of any Lender.
SECTION 3.08. Fronting Bank Fees. (a) The Borrower shall pay to
the Fronting Bank, for its own account, such commissions, issuance fees,
transfer fees and other fees and charges in connection with the issuance
or administration of each Letter of Credit as the Borrower and the
Fronting Bank shall agree.
(b) The Borrower shall pay to the Fronting Bank, for its own
account, a fronting fee on the average daily aggregate maximum amount
available to be drawn (assuming compliance with all conditions to
drawing) under all Outstanding Letters of Credit at the rate of 1/4 of
1% per annum, payable in arrears on the last day of January, April, July
and October of each year, commencing July 31, 1994, and on the LC
Maturity Date.
SECTION 3.09. Resignation or Removal of Fronting Bank. (a) The
Fronting Bank may, subject to the appointment of a successor Fronting
Bank hereunder, resign at any time by giving at least 180 days' prior
written notice to the Agent, the Lenders and the Borrower, and may be
removed at any time by the Borrower by notice to the Fronting Bank, the
Agent and the Lenders. The Borrower shall use commercially reasonable
efforts to appoint a successor Fronting Bank within 180 days after
receipt from the Fronting Bank of a notice of resignation contemplated
by the preceding sentence. Upon any such removal, the Borrower shall
(within 180 days after such notice of removal) either appoint a Lender
(with the consent of such Lender) as successor, or (subject to the
proviso contained in Section 3.07) terminate the unutilized
LC Commitment; provided, however, that, if the Borrower elects to
terminate the unutilized LC Commitment, the Borrower may at any time
thereafter that the Revolving Credit Commitments are in effect reinstate
by notice to the Agent and the Lenders the LC Commitment in connection
with the appointment of a successor Fronting Bank. Subject to
paragraph (b) below, upon the acceptance of any appointment as Fronting
Bank hereunder by a successor Fronting Bank, such successor shall
succeed to and become vested with all the interests, rights and
obligations of the retiring Fronting Bank and the retiring Fronting Bank
shall be discharged from its obligations to issue additional Letters of
Credit hereunder. At the time such removal or resignation shall become
effective, the Borrower shall pay all accrued and unpaid fees pursuant
to Section 2.05(d). The acceptance of any appointment as Fronting Bank
hereunder by a successor issuing bank shall be evidenced by an agreement
entered into by such successor, in a form satisfactory to the Borrower
and the Agent, and, from and after the effective date of such agreement,
(i) such successor shall be a party hereto and have all the rights and
obligations of the Fronting Bank under this Agreement and the other Loan
Documents and (ii) references herein and in the other Loan Documents to
the Fronting Bank shall be deemed to refer to such successor or to any
previous Fronting Bank, or to such successor and all previous Fronting
Banks, as the context shall require.
(b) After the resignation or removal of the Fronting Bank
hereunder, the retiring Fronting Bank shall remain a party hereto and
shall continue to have all the rights and obligations of the Fronting
Bank under this Agreement and the other Loan Documents with respect to
Letters of Credit issued by it prior to such resignation or removal, but
shall not be required to issue additional Letters of Credit.
SECTION 3.10. Existing Letters of Credit. On the Closing Date,
each letter of credit issued pursuant to the Existing Credit Agreement
and then remaining outstanding shall be deemed to have been issued
hereunder and to constitute a Letter of Credit for all purposes hereof
and, in furtherance of the foregoing, the Fronting Bank hereby grants to
each Participating Lender, and each Participating Lender hereby agrees
to acquire from the Fronting Bank, a participation in each such letter
of credit equal to such Participating Lender's Applicable Percentage of
the face amount of such letter of credit, effective on the Closing Date.
The Fronting Bank will give the Agent and the Agent shall give each
Participating Lender the notice contemplated by the last sentence of
Section 3.01(c) with respect to such letters of credit promptly
following the Closing Date. By executing this Agreement, the Fronting
Bank agrees that on the Closing Date the lenders under the Existing
Credit Agreement that acquired participations in such letters of credit
issued pursuant to the Existing Credit Agreement that are deemed to
constitute Letters of Credit hereunder shall be released from all
further obligations and liabilities with respect thereto, other than
liabilities that accrued prior to the Closing Date.
ARTICLE IV
Representations and Warranties
The Borrower represents and warrants to each of the Lenders, the
Agent and the Fronting Bank that:
SECTION 4.01. Organization; Powers. Each of the Borrower and the
Subsidiaries (a) is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its
incorporation, (b) has all requisite power and authority to own its
property and assets and to carry on its business as now conducted and as
proposed to be conducted, (c) is qualified to do business and in good
standing in every jurisdiction where such qualification is required
(after giving effect to the Acquisition), except where the failure so to
qualify or be in good standing would not result in a Material Adverse
Effect and (d) has the corporate power and authority to execute, deliver
and perform its obligations under each of the Transaction Documents and
each other agreement or instrument contemplated thereby to which it is
or will be a party and, in the case of Borrower, to borrow hereunder.
SECTION 4.02. Authorization. The execution, delivery and
performance by the Borrower and each Subsidiary Guarantor of each of the
Transaction Documents to which it is a party, the borrowings hereunder,
the creation of the security interests contemplated by the Security
Documents, the termination of the Existing Credit Agreement and all
agreements related thereto and the repayment of all amounts outstanding
thereunder and the other transactions contemplated by the Transaction
Documents (including the Acquisition) (all the foregoing, collectively,
the Transactions ) (a) have been duly authorized by all requisite
corporate and, if required, stockholder action and (b) will not
(i) violate (A) any provision of law, statute, rule or regulation, or of
the Certificate of Incorporation or other constitutive documents or By-
laws of the Borrower or any Subsidiary, (B) any order of any
Governmental Authority or (C) any provision of any indenture or other
material agreement or instrument to which the Borrower or any
Subsidiary is a party or by which any of them or any of their property
(including the Mortgaged Properties) or assets is or may be bound,
(ii) be in conflict with, result in a breach of or constitute (alone or
with notice or lapse of time or both) a default under any such
indenture, agreement or instrument or (iii) result in the creation or
imposition of any Lien (other than any Lien created under the Security
Documents) upon or with respect to any property or assets now owned or
hereafter acquired by the Borrower or any Subsidiary.
SECTION 4.03. Enforceability. This Agreement has been duly
executed and delivered by the Borrower and constitutes, and each other
Transaction Document to which the Borrower or any Subsidiary Guarantor
is a party when executed and delivered by it will constitute, a legal,
valid and binding obligation of the Borrower or such Subsidiary
Guarantor, as the case may be, enforceable against it in accordance with
its terms except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium
or other similar laws affecting creditors' rights generally and by
general principles of equity (regardless of whether such enforceability
is considered in a proceeding at law or in equity).
SECTION 4.04. Governmental Approvals. No action, consent or
approval of, registration or filing with or any other action by any
Governmental Authority is or will be required to be made or obtained by
the Borrower or any Subsidiary in connection with the Transactions,
except such as have been made or obtained and are in full force and
effect and other than filings, recordings and approvals (i) to record
deeds and leases with respect to real properties, (ii) to record and/or
perfect the security interest created by the Security Documents and
(iii) to record a leasehold memorandum, if currently unrecorded, in
respect of any leasehold interest to which a Leasehold Mortgage relates.
SECTION 4.05. Financial Statements. (a) The unaudited pro forma
consolidated balance sheet of the Borrower and the Subsidiaries as of
the Closing Date (including the notes thereto) (the Pro Forma Balance
Sheet ), copies of which have heretofore been furnished to each Lender,
has been prepared giving effect (as if such events had occurred on such
date) to (i) the Transactions (including the Acquisition and the
Borrowings under this Agreement contemplated to be made on the Closing
Date) and (ii) the payment of fees and expenses in connection with the
foregoing. The Pro Forma Balance Sheet has been prepared based on the
assumptions used to prepare the pro forma financial information
contained in the Confidential Information Memorandum, is based on the
best information available to the Borrower as of the date of delivery
thereof, and presents fairly on a pro forma basis the estimated
consolidated financial position of the Borrower and the Subsidiaries as
of the Closing Date, assuming that the events specified in the preceding
sentence had actually occurred at the Closing Date.
(b) The Borrower has heretofore furnished to the Lenders
consolidated financial statements of Foodservice Corp. as of and for the
fiscal years ended February 1992 and February 1993 and as of and for the
nine months ended November 27, 1993, audited by and accompanied by the
opinion of KPMG Peat Marwick, independent public accountants. Such
financial statements present fairly the financial condition and results
of operations of Foodservice Corp. and its consolidated subsidiaries as
of such dates and for such periods. Such financial statements and the
notes thereto disclose all material liabilities required under GAAP to
be disclosed, direct or contingent, of Foodservice Corp. and its
consolidated subsidiaries as of the dates thereof. Such financial
statements were prepared in accordance with GAAP applied on a consistent
basis.
(c) The Borrower has heretofore furnished to the Lenders
consolidated financial statements of the Borrower as of and for the
fiscal year ended January 1, 1994, audited by and accompanied by the
opinion of Coopers & Lybrand, independent public accountants. Such
financial statements present fairly the financial condition and results
of operations of the Borrower and its consolidated subsidiaries as of
such date and for such period. Such financial statements and the notes
thereto disclose all material liabilities required under GAAP to be
disclosed, direct or contingent, of the Borrower and its Consolidated
Subsidiaries as of the date thereof. Such financial statements were
prepared in accordance with GAAP applied on a consistent basis.
SECTION 4.06. No Material Adverse Change. There has been no
material adverse change in the business, assets, operations, properties,
financial condition or contingent liabilities of the Borrower and the
Subsidiaries, taken as a whole, since January 1, 1994.
SECTION 4.07. Title to Properties; Possession Under Leases. (a)
After giving effect to the consummation of the Acquisition on the
Closing Date: each of the Borrower and the Subsidiaries will have good
and marketable title to, or valid leasehold interests in, all its
material properties and assets (including each Mortgaged Property); all
such material properties and assets shall be free and clear of Liens,
other than Liens expressly permitted by Section 7.02; and no material
portion of any Mortgaged Property shall be subject to any lease,
license, sublease or other agreement granting to any Person any right to
use, occupy or enjoy the same, except as set forth on Schedule 4.07(a).
(b) After giving effect to the consummation of the Acquisition on
the Closing Date, (i) all material leases shall be in full force and
effect and (ii) the Borrower and the Subsidiaries shall enjoy peaceful
and undisturbed possession under all such material leases under which it
is tenant.
(c) Except as set forth on Schedule 4.07(c), neither the Borrower
nor any Subsidiary has received any notice of, or has any knowledge of,
any pending or contemplated condemnation proceeding affecting the
Mortgaged Properties or any material properties or assets to be acquired
in connection with the Acquisition, or any sale or disposition thereof
in lieu of condemnation.
(d) Neither the Borrower nor any Subsidiary is obligated under any
right of first refusal, option or other contractual right to sell,
assign or otherwise dispose of any Mortgaged Property or any interest
therein.
(e) Dixie Foods Company is not in default in any manner under any
provision of (i) the mortgage dated July 1, 1993, by Dixie Foods Company
to Worthen Trust Company, Inc. and (ii) the mortgage dated July 13,
1993, by Dixie Foods Company to The City of Forrest City, Arkansas.
SECTION 4.08. Subsidiaries. Schedule 4.08 sets forth all the
subsidiaries of the Borrower as of the Closing Date and the percentage
ownership of the Borrower therein.
SECTION 4.09. Litigation; Compliance with Laws. (a) Except as set
forth on Schedule 4.09, there are no actions, suits or proceedings at
law or in equity or by or before any Governmental Authority now pending
or, to the knowledge of the Borrower, threatened against or affecting
the Borrower or any Subsidiary or any business, property, assets or
rights of any such Person (i) that involve any Transaction Document or
the Transactions or (ii) as to which there is a reasonable possibility
of an adverse determination and which, if adversely determined, could
reasonably be expected to, individually or in the aggregate, result in a
Material Adverse Effect.
(b) None of the Borrower, any Subsidiary or any of their
respective properties or assets, are in violation of, nor will the
continued operation of their properties and assets violate any law,
rule, regulation or statute (including any zoning, building,
Environmental and Safety Law, ordinance, code or approval or any
building permits) or any restrictions of record or agreements affecting
the Mortgaged Property or in default with respect to any judgment, writ,
injunction, decree or order of any Governmental Authority, where such
violation or default could reasonably be expected to result in a
Material Adverse Effect.
(c) The issuance of the Letters of Credit will not violate any
applicable law or regulation or violate or be prohibited by any
judgment, writ, injunction, decree or order of any Governmental
Authority.
(d) Certificates of occupancy and permits (or other documents
expressly provided for under applicable law in lieu thereof) are in
effect for each Mortgaged Property as currently constructed, and true
and complete copies of such certificates of occupancy have been
delivered to the Collateral Agent as mortgagee with respect to each
Mortgaged Property.
SECTION 4.10. Federal Reserve Regulations. (a) None of the
Borrower or any Subsidiary is engaged principally, or as one of its
important activities, in the business of extending credit for the
purpose of purchasing or carrying Margin Stock.
(b) No part of the proceeds of any Letter of Credit or any Loan
will be used by the Borrower or any Subsidiary, whether directly or
indirectly, and whether immediately, incidentally or ultimately, (i) to
purchase or carry Margin Stock or to extend credit to others for the
purpose of purchasing or carrying Margin Stock or to refund indebtedness
originally incurred for such purpose or (ii) for any purpose that
entails a violation of, or is inconsistent with, the provisions of the
Regulations of the Board, including Regulations G, U and X.
SECTION 4.11. Investment Company Act; Public Utility Holding
Company Act. None of the Borrower or any Subsidiary (a) is an
investment company as defined in, or is subject to regulation under,
the Investment Company Act of 1940 or (b) is a holding company as
defined in, or is subject to regulation under, the Public Utility
Holding Company Act of 1935.
SECTION 4.12. Use of Proceeds. The Borrower will use the Letters
of Credit and the proceeds of the Loans only for the purposes specified
in the preamble to this Agreement.
SECTION 4.13. Tax Returns. Each of the Borrower and the
Subsidiaries has filed or caused to be filed all Federal, state and
material local tax returns required to have been filed by it or with
respect to it and has paid or caused to be paid all material taxes shown
to be due and payable on such returns or on any assessments received by
it or with respect to it, except taxes that are being contested in good
faith by appropriate proceedings and for which the Borrower or the
applicable Subsidiary shall have set aside on its books adequate
reserves in accordance with GAAP. Each of the Borrower and the
Subsidiaries has filed or made adequate provision in accordance with
GAAP on its books for any taxes payable by it in connection with the
Transactions (including, without limitation, any such taxes payable in
respect of indemnities).
SECTION 4.14. No Material Misstatements. The written information,
reports, financial statements, exhibits and schedules furnished by or on
behalf of the Borrower or any of the Subsidiaries to the Agent or any
Lender in connection with the negotiation of any Loan Document or
included therein or delivered pursuant thereto, when taken as a whole,
did not contain, does not contain and will not contain any material
misstatement of fact and did not omit, does not omit and will not omit
to state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were, are or will be
made, not misleading. The projections and pro forma financial
information contained in such materials are based on good faith
estimates and assumptions believed by the Borrower to be reasonable as
of the date such projections and pro forma financial information were
furnished by the Borrower. Such pro forma financial information was
prepared in accordance with GAAP applied on a basis consistent with the
financial statements referred to in Section 4.05(b).
SECTION 4.15. Employee Benefit Plans. Each of the Borrower and its
ERISA Affiliates is in compliance in all material respects with the
applicable provisions of ERISA and the regulations and published
interpretations thereunder. Except as set forth on Schedule 4.15, no
Reportable Event has occurred in respect of any Plan of the Borrower or
any ERISA Affiliate. The present value of all benefit liabilities under
each Plan (based on those assumptions used to fund such Plan and
calculated on an ongoing basis) did not, as of the last annual valuation
date applicable thereto, exceed by more than $19,000,000 (or, in the
event of an increase in the underfunding of such Plan solely as a result
of a change after the date hereof in any discount rate applicable to
such Plan, $23,000,000) the value of the assets of such Plan, and the
present value of all benefit liabilities of all underfunded Plans (based
on those assumptions used to fund each such Plan) did not, as of the
last annual valuation dates applicable thereto, exceed by more than
$19,000,000 (or, in the event of an increase in the underfunding of
such Plan solely as a result of a change after the date hereof in any
discount rate applicable to such Plans, $23,000,000) the value of the
assets of all such underfunded Plans. Neither the Borrower nor any ERISA
Affiliate has incurred any Withdrawal Liability that materially
adversely affects the financial condition of the Borrower and its ERISA
Affiliates, taken as a whole. Neither the Borrower nor any ERISA
Affiliate has received any notification that any Multiemployer Plan is
in reorganization or has been terminated within the meaning of Title IV
of ERISA, and no Multiemployer Plan is reasonably expected to be in
reorganization or to be terminated where such reorganization or
termination has resulted or could reasonably be expected to result in an
increase in the contributions required to be made to such Plan that
would materially adversely affect the financial condition of the
Borrower and its ERISA Affiliates, taken as a whole.
SECTION 4.16. Environmental and Safety Matters. (a) After giving
effect to the Acquisition, each of the Borrower and the Subsidiaries is
in compliance with all Environmental and Safety Laws, with the
exceptions of instances that will not in the aggregate result in any
Material Adverse Effect.
(b) Except as set forth on Schedule 4.16(b), (i) none of the
Borrower or any Subsidiary has received notice of any failure to comply
with Environmental and Safety Laws except for any such failure to comply
that has been remedied; (ii) after giving effect to the Acquisition, the
Borrower's and the Subsidiaries' plants and facilities do not use,
manage, treat, store or dispose of any Hazardous Substances in violation
of any Environmental and Safety Laws; (iii) after giving effect to the
Acquisition, all material licenses, permits or registrations (or any
extensions thereof) required under any Environmental and Safety Law for
the business of the Borrower and the Subsidiaries as conducted or as
contemplated by the Stock Purchase Agreement have been obtained and each
of the Borrower and the Subsidiaries is in compliance therewith; and
(iv) neither the Borrower nor any Subsidiary is in noncompliance with,
breach of or default under any applicable writ, order, judgment,
injunction or decree where such noncompliance, breach or default will
materially and adversely affect the ability of the Borrower or any
Subsidiary, as applicable, to operate any real property owned or leased
by it, and, to the best knowledge of the Borrower, no event has
occurred and is continuing that, with the passage of time or the giving
of notice or both, will constitute such noncompliance, breach or default
thereunder.
(c) Except as set forth on Schedule 4.16(c), (i) no Hazardous
Substance has been Released at, on or under any property owned, leased
or operated by the Borrower or any Subsidiary during the period of
Borrower's or any Subsidiary's ownership, lease or operation of such
property, or to the knowledge of the Borrower at any time previous to
such ownership, lease or operation, under conditions that require
remedial action under applicable Environmental and Safety Laws,
(ii) neither the Borrower nor any of the Subsidiaries, to the best
knowledge of the Borrower and the Subsidiaries, transported or arranged
for the transportation of any Hazardous Substances to any site listed,
or proposed for listing, on the National Priorities List promulgated
pursuant to CERCLA, on CERCLIS (as defined in CERCLA) or on any similar
state or foreign list of sites requiring investigation or cleanup and
(iii) the Borrower is not aware of any event, condition or circumstance
involving environmental pollution or contamination, or employee safety
or health relating to the use or handling of, or exposure to, Hazardous
Substances, that could reasonably be expected to result in any material
liability on the part of the Borrower or any Subsidiary, individually or
collectively.
SECTION 4.17. Solvency. After giving effect to the Transactions to
occur on the Closing Date, (a) the fair salable value of the assets of
each of (i) the Borrower and the Subsidiaries on a consolidated basis
and (ii) the Borrower will exceed the amount that will be required to be
paid on or in respect of the existing debts and other liabilities
(including contingent liabilities) of the Borrower and the Subsidiaries
on a consolidated basis, and the Borrower, respectively, as they mature,
(b) the assets of (i) the Borrower and the Subsidiaries on a
consolidated basis and (ii) the Borrower will not constitute
unreasonably small capital to carry out their businesses as conducted or
as proposed to be conducted, including satisfying the capital needs of
the Borrower and the Subsidiaries on a consolidated basis, or the
Borrower, respectively (taking into account, in each case, the
particular capital requirements of the businesses conducted by such
entities and the projected capital requirements and capital availability
of such businesses), and (c) none of the Borrower or the Subsidiaries
intends to, nor do they believe that they will, incur debts beyond their
ability to pay such debts as they mature (taking into account the timing
and amounts of cash to be received by them and the amounts to be payable
on or in respect of their obligations).
SECTION 4.18. Employment and Management Agreements. Except as
disclosed on Schedule 4.18, as of the Closing Date there are no
(a) employment agreements covering management employees of the Borrower
or any Subsidiary or other material agreements relating to the
compensation of management employees (including the issuance of
securities of the Borrower or any Subsidiary to management employees),
(b) agreements for management or consulting services to which the
Borrower or any Subsidiary is a party or by which any of them is bound
or (c) collective bargaining agreements or other labor agreements
covering any of the employees of the Borrower or any Subsidiary.
SECTION 4.19. Capitalization. (a) As of the Closing Date, the
authorized capital stock of the Borrower consists of 20,000,000 shares
of common stock and 4,000,000 shares of preferred stock.
(b) As of the Closing Date and after giving effect to the
Transactions, the authorized capital stock of Foodservice Corp. consists
of 1,000 shares of common stock, all of which will be issued and
outstanding. All outstanding shares of capital stock of Foodservice
Corp. are fully paid and nonassessable. As of the Closing Date and
after giving effect to the Transactions, the Borrower will own and
control, directly, of record and beneficially, 100% of each class of
outstanding capital stock of Foodservice Corp. free and clear of all
adverse claims or Liens (other than any Lien under the Security
Documents).
(c) Except as set forth on Schedule 4.19(c), as of the Closing
Date there are, and thereafter there will be, no outstanding
subscriptions, options, warrants, calls, rights (including preemptive
rights) or other agreements or commitments (including pursuant to
management or employee stock plan or similar plan) of any nature
relating to any capital stock of any Subsidiary.
SECTION 4.20. Security Documents. (a) The Pledge Agreement is
effective to create in favor of the Collateral Agent, for the ratable
benefit of the Secured Parties, a legal, valid and enforceable security
interest in the Collateral (as defined in the Pledge Agreement) and
proceeds thereof and, when the Collateral is delivered to the Collateral
Agent, the Pledge Agreement shall constitute a fully perfected first
priority Lien on, and security interest in, all right, title and
interest of the Borrower and the Subsidiary Guarantors in such
Collateral and the proceeds thereof, in each case prior and superior in
right to any other Person.
(b) The Security Agreement is effective to create in favor of the
Collateral Agent, for the ratable benefit of the Secured Parties, a
legal, valid and enforceable security interest in the Collateral (as
defined in the Security Agreement) and proceeds thereof, and when
financing statements in appropriate form are filed in the offices
specified on Schedule 4.20, the Security Agreement shall constitute a
fully perfected Lien on, and security interest in, all right, title and
interest of the Borrower and the Subsidiary Guarantors in such
Collateral and the proceeds thereof, in each case prior and superior in
right to any other Person, other than with respect to Liens expressly
permitted by Section 7.02.
(c) The Mortgages are effective to create in favor of the
Collateral Agent, for the ratable benefit of the Secured Parties, a
legal, valid and enforceable Lien on all of Borrower's and the
Subsidiary Guarantors' right, title and interest in and to the Mortgaged
Properties thereunder and the proceeds thereof, and, when the Mortgages
are filed in the offices specified on Schedule 1.01(b), the Mortgages
shall constitute fully perfected Liens on, and security interests in,
all right, title and interest of the Borrower and the Subsidiary
Guarantors in such Mortgaged Properties and the proceeds thereof, in
each case prior and superior in right to any other Person, other than
with respect to the rights of Persons pursuant to Liens expressly
permitted by Section 7.02.
(d) The Trademark Security Agreement is effective to
create in favor of the Collateral Agent, for the ratable benefit of the
Secured Parties, a legal, valid and enforceable security interest in the
Collateral (as defined in the Trademark Security Agreement) and the
proceeds thereof, and upon the filing of assignment statements with the
United States Patent and Trademark Office, together with financing
statements in appropriate form filed in the offices specified on
Schedule 4.20, the Trademark Security Agreement shall constitute a fully
perfected Lien on, and security interest in, all right title and
interest of the Borrower and the Subsidiary Guarantors in such
Collateral and the proceeds thereof, in each case prior and superior in
right to any other Person, other than with respect to Liens expressly
permitted by Section 7.02.
(e) The Collateral Assignment is effective to create in favor of
the Collateral Agent, for the ratable benefit of the Secured Parties, a
legal, valid and enforceable assignment of, transfer of all right, title
and interest of the Borrower and the Subsidiary Guarantors in, and
security interest in, the Assigned Contracts (as defined in the
Collateral Agreement) and proceeds thereof, and when financing
statements in appropriate form are filed in the offices specified on
Schedule 4.20, the Collateral Assignment shall constitute a fully
perfected Lien on, and security interest in, all right, title and
interest of the Borrower and the Subsidiary Guarantors in such Assigned
Contracts and the proceeds thereof, in each case prior and superior in
right to any other Person, other than with respect to Liens expressly
permitted by Section 7.02.
SECTION 4.21. Labor Matters. As of the Closing Date, there are no
strikes, lockouts or slowdowns against the Borrower or any Subsidiary
pending or, to the Borrower's knowledge, threatened. The hours worked by
and payment made to employees of the Borrower and each Subsidiary have
not been in violation of the Fair Labor Standards Act or any other
applicable Federal, state, local or foreign law dealing with such
matters, where such violations could reasonably be expected to result in
a Material Adverse Effect. The consummation of the Transactions will not
give rise to a right of termination or right of renegotiation on the
part of any union under any collective bargaining agreement to which the
Borrower or any Subsidiary is a party or by which the Borrower or any
Subsidiary is bound on the Closing Date.
SECTION 4.22. Location of Real Property and Leased Premises. (a)
Schedule 4.22(a) lists completely and correctly as of the Closing Date
all real property owned by the Borrower and the Subsidiaries and the
addresses thereof. The Borrower or the applicable Subsidiary own in fee
all the real property set forth on Schedule 4.22(a).
(b) Schedule 4.22(b) lists completely and correctly as of the
Closing Date all real property leased or subleased by the Borrower and
the Subsidiaries and the addresses thereof. The Borrower or the
applicable Subsidiary has a valid lease or sublease in all the real
property set forth on Schedule 4.22(b).
SECTION 4.23. Insurance. Each of the Borrower and the Subsidiaries
maintains with financially sound insurance companies insurance on all
its properties in at least such amounts and against at least such risks
(but, including in any event, all-risk casualty, public liability,
product liability and business interruption) as are usually insured
against in the same general geographic area by companies engaged in the
same or similar business.
SECTION 4.24. Delivery of Documents. (a) The Borrower has
previously made available to the Agent true, correct and complete copies
of all real property leases or subleases, easement agreements, option
agreements and other agreements, instruments and documents (whether or
not recorded) that encumber or otherwise affect the real property listed
on Schedules 4.22(a) and 4.22(b).
(b) On or prior to the Closing Date, each Lender has received
complete certified copies (as certified to by the Secretary of the
Borrower) of the Stock Purchase Agreement, including all exhibits,
schedules and disclosure letters referred to therein or delivered
pursuant thereto (if any), and all amendments thereto, waivers relating
thereto and other side letters or agreements affecting the terms
thereof. None of such documents and agreements has been amended,
supplemented or otherwise modified in any respect, nor have any of the
provisions thereof been waived, except pursuant to a written agreement
or instrument that has heretofore been consented to by the Required
Lenders.
(c) The Stock Purchase Agreement has been duly executed and
delivered by each party thereto and each of the material terms and
provisions thereof is in full force and effect. Except as set forth on
Schedule 4.24(c), to the Borrower's knowledge, each of the
representations and warranties of the Borrower, as successor in interest
to the Seller, set forth in the Stock Purchase Agreement is true and
correct on and as of the date hereof. To the Borrower's knowledge, each
of the representations and warranties relating to Foodservice Corp. set
forth in the Stock Purchase Agreement is true and correct on and as of
the date hereof.
SECTION 4.25. Fees and Expenses. The aggregate amount of fees and
expenses incurred in connection with the Transactions by the Borrower
and the Subsidiaries has not and will not exceed $7,000,000.
SECTION 4.26. Designated Senior Indebtedness. The Obligations and
the guarantees thereof pursuant to the Guarantee Agreement constitute
"Designated Senior Indebtedness" under the Subordinated Note Indenture.
ARTICLE V
Conditions of Lending and Issuance of Letters of Credit
The obligations of the Lenders to make Loans hereunder and the
obligation of the Fronting Bank to issue any Letter of Credit (each, a
Credit Event ) hereunder are subject to the satisfaction of the
following conditions:
SECTION 5.01. All Credit Events. On the date of each Credit Event,
other than any Revolving Loan made pursuant to Section 2.02(f):
(a) The Agent and, where applicable, the Fronting Bank shall
have received a notice of such Credit Event as required by
Section 2.03 and Section 3.01(c), respectively.
(b) The representations and warranties set forth in
Article IV hereof shall be true and correct in all respects on
and as of the date of such Credit Event with the same effect as
though made on and as of such date, except to the extent such
representations and warranties expressly relate to an earlier
date.
(c) The Borrower and each Subsidiary Guarantor shall be in
compliance with all terms and provisions set forth herein and in
each other Loan Document on its part to be observed or performed,
and at the time of and immediately after such Credit Event no
Event of Default or Default shall have occurred and be continuing.
(d) In the case of each Revolving Credit Borrowing or
issuance of a Letter of Credit, (i) the Agent shall have received
a Borrowing Base Certificate in accordance with Section 6.04(e)
and (ii) at such time, the Revolving Credit Utilization (after
giving effect to such Credit Event) shall not exceed the then-
current Borrowing Base.
(e) In the case of a Borrowing all or part of the proceeds
of which are to be used to finance all or part of the purchase
price to be paid in connection with any Permitted Acquisition, the
principal amount of such Borrowing so applied shall not exceed the
lesser of (i) the purchase price paid in connection with such
Permitted Acquisition, together with the costs and reasonable
expenses related to such Permitted Acquisition, and (ii) the
difference between (A) $15,000,000 and (B) the amount of all
Borrowings used to finance all or part of the purchase price to be
paid and such related costs and expenses in connection with
Permitted Acquisitions since the Closing Date.
Each Credit Event shall be deemed to constitute a representation and
warranty by the Borrower on the date of such Credit Event as to the
matters specified in paragraphs (b) and (c) of this Section 5.01.
Neither (a) continuations and conversions of Term Borrowings pursuant to
Section 2.10 nor (b) Revolving Credit Borrowings pursuant to Section
2.02(e) in which Revolving Loans are refinanced without any increase in
the aggregate principal amount of Revolving Loans outstanding shall be
deemed to be Borrowings for purposes of this Section 5.01.
SECTION 5.02. First Borrowing. On the Closing Date:
(a) The Agent shall have received a favorable written
opinion of (i) Skadden, Arps, Slate, Meagher & Flom, counsel for
the Borrower and the Subsidiary Guarantors, to the effect set
forth in Exhibit L-1, (ii) Frank W. Bonvino, General Counsel of
the Seller, to the effect set forth in Exhibit L-2, (iii) Foley &
Lardner, special Wisconsin counsel to the Borrower and the
Subsidiary Guarantors, to the effect set forth in Exhibit L-3,
(iv) Shook, Hardy & Bacon P.C., Missouri counsel to the Borrower
and the Subsidiary Guarantors, to the effect set forth in
Exhibit L-4, (v) Popham, Haik, Schnobrich & Kaufman, special
Minnesota counsel to the Borrower and the Subsidiary Guarantors,
to the effect set forth in Exhibit L-5 and (vi) each local
counsel listed on Schedule 5.02(a) to the effect set forth in
Exhibit L-6, in each case (A) dated the Closing Date,
(B) addressed to the Agent, the Fronting Bank, the Lenders and the
Collateral Agent and (C) covering such other matters incidental to
the Loan Documents and the Transactions as the Agent shall
request. The Borrower hereby instructs each such counsel to
deliver its opinion to the Agent.
(b) All legal matters incident to this Agreement and the
Borrowings hereunder shall be satisfactory to the Lenders and
their counsel and to Cravath, Swaine & Moore, counsel for the
Agent.
(c) The Agent shall have received (i) a copy of the
certificate of incorporation, including all amendments thereto, of
each of the Borrower and each Subsidiary Guarantor, certified as
of a recent date by the Secretary of State of the state of its
incorporation, and a certificate as to the good standing of each
of the Borrower and each Subsidiary Guarantor as of a recent date,
from such Secretary of State; (ii) a certificate of the Secretary
or Assistant Secretary of each of the Borrower and each Subsidiary
Guarantor dated the Closing Date and certifying (A) that attached
thereto is a true and complete copy of the by-laws of the Borrower
or such Subsidiary Guarantor, as the case may be, as in effect on
the Closing Date and at all times since a date prior to the date
of the resolutions described in clause (B) below, (B) that
attached thereto is a true and complete copy of resolutions duly
adopted by the Board of Directors of the Borrower or such
Subsidiary Guarantor, as the case may be, authorizing the
execution, delivery and performance of the Transaction Documents
and the borrowings hereunder, and that such resolutions have not
been modified, rescinded or amended and are in full force and
effect, (C) that the certificate of incorporation of the Borrower
or such Subsidiary Guarantor, as the case may be, has not been
amended since the date of the last amendment thereto shown on the
certificate of good standing furnished pursuant to clause (i)
above and (D) as to the incumbency and specimen signature of each
officer executing any Transaction Document or any other document
delivered in connection herewith on behalf of the Borrower or such
Subsidiary Guarantor, as the case may be; (iii) a certificate of
another officer as to the incumbency and specimen signature of the
Secretary or Assistant Secretary executing the certificate
pursuant to (ii) above; and (iv) such other documents as the
Lenders or their counsel or Cravath, Swaine & Moore, counsel for
the Agent, may reasonably request.
(d) The Agent shall have received a certificate, dated the
Closing Date and signed by a Financial Officer of the Borrower,
confirming compliance with the conditions precedent set forth in
paragraphs (b) and (c) of Section 5.01.
(e) The Agent shall have received all Fees and other amounts
due and payable on or prior to the Closing Date.
(f) (i) The Existing Credit Agreement and all commitments
thereunder to lend shall have been terminated, all amounts
outstanding thereunder shall have been paid in full and all Liens
on the property or assets of the Borrower or any Subsidiary
securing any obligations thereunder or under any related agreement
shall have been released and (ii) the Agent shall have received
evidence satisfactory in form and substance to it demonstrating
such termination, payment and release.
(g) The Guarantee Agreement shall have been duly executed by
the Subsidiary Guarantors and the Collateral Agent, and shall be
in full force and effect. The Indemnity, Subrogation and
Contribution Agreement shall have been duly executed by the
Borrower, the Subsidiary Guarantors and the Collateral Agent and
shall be in full force and effect.
(h) The Pledge Agreement shall have been duly executed by
the parties thereto and delivered to the Collateral Agent and
shall be in full force and effect, and all capital stock and debt
securities to be pledged thereunder shall have been duly and
validly pledged to the Collateral Agent for the ratable benefit of
the Secured Parties and certificates representing such shares and
securities, accompanied by instruments of transfer and stock
powers endorsed in blank, shall be in the actual possession of the
Collateral Agent.
(i) Each of the Security Agreement, the Trademark Security
Agreement and the Collateral Assignment required to be executed by
the Collateral Agent shall have been duly executed by the Borrower
and all other parties thereto and shall have been delivered to the
Collateral Agent and shall be in full force and effect on such
date and each document (including each Uniform Commercial Code
financing statement) required by law or reasonably requested by
the Agent to be filed, registered or recorded in order to create
in favor of the Collateral Agent for the benefit of the Secured
Parties a valid, legal and perfected first-priority security
interest in or lien on the Collateral (subject to any Lien
expressly permitted by Section 7.02) described in each of such
agreements shall have been delivered to the Collateral Agent.
(j) The Collateral Agent shall have received the results of
a search of the Uniform Commercial Code filings (or equivalent
filings) made with respect to the Borrower and the Subsidiary
Guarantors in the States (or other jurisdictions) in which are
located the chief executive offices of such Persons, any offices
of such Persons in which records have been kept relating to
Receivables and the other jurisdictions in which Uniform
Commercial Code filings (or equivalent filings) are to be made
pursuant to the preceding paragraph, together with copies of the
financing statements (or similar documents) disclosed by such
search, and accompanied by evidence satisfactory to the Agent that
the Liens indicated in any such financing statement (or similar
document) would be permitted under Section 7.02 or have been
released.
(k) The Collateral Agent shall have received a Perfection
Certificate with respect to each of the Borrower and each
Subsidiary Guarantor dated the Closing Date and duly executed by a
Responsible Officer of the Borrower.
(l) (i) Each of the Security Documents, in form and
substance satisfactory to the Lenders, relating to each of the
Mortgaged Properties (including each Mortgage) shall have been
duly executed by the parties thereto and delivered to the
Collateral Agent and shall be in full force and effect, (ii) each
of such Mortgaged Properties shall not be subject to any Lien
other than those permitted under Section 7.02, (iii) each of such
Security Documents shall have been filed and recorded in the
recording office as specified on Schedule 1.01(b) (or a lender's
title insurance policy, in form and substance acceptable to Agent,
insuring such Security Document as a first lien on such Mortgaged
Property (subject to any Lien expressly permitted by Section 7.02)
shall have been received by Agent) and, in connection therewith,
the Agent shall have received evidence satisfactory to it of each
such filing and recordation and (iv) the Collateral Agent shall
have received such other documents, including a policy or policies
of title insurance issued by a nationally recognized title
insurance company, together with such endorsements, coinsurance
and reinsurance as may be requested by the Agent, the Fronting
Bank and the Lenders, insuring the Mortgages as valid first liens
on the Mortgaged Properties, free of Liens other than those
permitted under Section 7.02, together with such surveys,
abstracts, appraisals and legal opinions required to be furnished
pursuant to the terms of the Mortgages or as reasonably requested
by the Agent, the Fronting Bank or the Lenders.
(m) The Borrower and the Subsidiaries shall have obtained
insurance on their respective properties and assets in compliance
with Section 6.02 and the applicable provisions of the Security
Documents.
(n) All policies of insurance maintained by the Borrower
and the Subsidiaries pursuant to Section 6.02 shall have been
endorsed or otherwise amended to include a standard or New
York lender's loss payable endorsement, in form and substance
reasonably satisfactory to the Agent and the Collateral Agent,
which endorsement shall provide that, from and after the Closing
Date, the insurance carrier shall pay all proceeds otherwise
payable to the Borrower or the Subsidiaries under such policies
directly to the Collateral Agent if the insurance carrier shall
have received written notice from the Agent or the Collateral
Agent that an Event of Default has occurred.
(o) After giving effect to the Transactions, the amount
available to be borrowed under the Revolving Facility shall not be
less than $25,000,000.
(p) The Acquisition shall have been consummated or shall be
consummated simultaneously with the closing of the Facilities in
accordance with applicable law and the Stock Purchase Agreement
(as in effect on March 17, 1994) and on terms satisfactory to the
Lenders.
(q) After giving effect to the Acquisition and the other
Transactions, the Borrower and the Subsidiaries shall have no
liabilities other than (i) the Loans under the Facilities,
(ii) the Subordinated Notes and (iii) other liabilities
satisfactory to the Lenders and Indebtedness permitted under
Section 7.01.
(r) The Lenders shall have received a pro forma consolidated
balance sheet of the Borrower and the Subsidiaries as of the
Closing Date, after giving effect to the Acquisition and the other
Transactions, and the Lenders shall be satisfied with such balance
sheet.
(s) The Lenders shall have received audited consolidated
financial statements of Foodservice Corp. for the fiscal years
ended February 1992 and February 1993 and for the nine months
ended November 27, 1993, which financial statements shall have
been prepared in accordance with GAAP and shall be in form and
substance satisfactory to the Lenders and be accompanied by a
report thereon prepared by KPMG Peat Marwick.
(t) The Lenders shall have received unaudited consolidated
financial statements of (i) the Borrower for the three-month
period ending April 2, 1994, and (ii) Foodservice Corp. for the
periods beginning (A) November 28, 1993, and ending on
February 26, 1994, and (B) February 27, 1994, and ending on
April 30, 1994, which financial statements shall have been
prepared in accordance with GAAP applied on a basis consistent
with the financial statements referred to in paragraph (t) above,
subject to normal year-end audit adjustments and to the absence of
footnotes required thereby.
(u) The Lenders shall be satisfied with the results of an
examination of the accounts receivable and inventory of the
Borrower and the Subsidiary Guarantors.
(v) The Borrower and the Subsidiaries shall have established
cash management procedures, including concentration accounts,
satisfactory to the Lenders.
(w) The Lenders shall be satisfied with all arrangements to
be in place following the Closing Date between the Borrower
(and/or Foodservice Corp.) and the Seller, including arrangements
relating to trademark licensing, agreements not to compete and
agreements to provide transitional services. Unless otherwise
agreed to by the Lenders, all such arrangements shall be on an
arm's-length basis.
(x) The Lenders shall be satisfied with all legal, tax and
accounting matters relating to the Acquisition, the financing
therefor and all other transactions contemplated hereby.
(y) All requisite Governmental Authorities and third parties
shall have approved or consented (excluding any consent relating
to the Borrower's facility located at Cherokee, Iowa) to the
Acquisition and the other Transactions to the extent required, all
applicable appeal periods shall have expired and there shall be no
governmental or judicial action, actual or threatened, that has or
would have a reasonable likelihood of restraining, preventing or
imposing burdensome conditions on the transactions contemplated
hereby.
(z) There shall be no litigation or administrative
proceedings or other legal or regulatory developments, actual or
threatened (including any proposed statute, rule or regulation),
that, in the judgment of the Lenders, involve a reasonable
possibility of a Material Adverse Effect or a material adverse
effect on the Acquisition.
(aa) There shall not have occurred, since November 27, 1993,
any change that in the judgment of the Lenders could reasonably be
expected to result in a Material Adverse Effect or a material
adverse effect on the Acquisition.
(bb) The Mortgaged Properties shall each be in substantial
compliance with all applicable material laws, rules, regulations,
statutes (including any zoning, building, Environmental and Safety
Law, ordinance, code or approval or any building permits) and all
restrictions of record and all material agreements affecting the
Mortgaged Property and all decrees or orders of any Governmental
Authority with jurisdiction with respect thereto.
(cc) Each Lender shall have received the certified documents
required to be delivered to it pursuant to Section 4.24(b).
(dd) The Agent shall have received for each of the Mortgaged
Properties the following:
(i) (A) a copy of the original permanent or temporary
certificate of occupancy, if any, issued upon completion of
each Mortgaged Property (or any amendment issued upon
completion of any alteration) by the appropriate
Governmental Authority or appropriate evidence that the use
and occupancy of each Mortgaged Property is authorized or
(B) a letter from an appropriate Governmental Authority
stating that at the time of construction certificates of
occupancy were not required for each such Mortgaged Property
for which a certificate as described above has not been
delivered and, if reasonably requested by the Agent or
Collateral Agent, suitable evidence of the date of
construction of each improvement on such Mortgaged Property;
(ii) a copy of all material applications, licenses,
permits and authorizations which are necessary for the
construction and operation of the Mortgaged Property; and
(iii) one of the following: (A) a written
confirmation from the applicable zoning commission or other
appropriate Governmental Authority stating that each
Mortgaged Property complies with existing land use and
zoning ordinances, regulations and restrictions applicable
to such Mortgaged Property, (B) an opinion from local
counsel acceptable to the Agent to the same effect as
covered by clause (A) above, or (C) a zoning endorsement
satisfactory to the Agent in connection with the Collateral
Agent's mortgagee title insurance policy of such Mortgaged
Property.
(ee) None of the Borrower or any Subsidiary shall be in
default in any manner under any provision of any indenture or
other agreement or instrument evidencing Indebtedness, or any
other material agreement or instrument to which it is a party or
by which it or any of its properties are or may be bound, where
such default could reasonably be expected to result in a Material
Adverse Effect.
ARTICLE VI
Affirmative Covenants
The Borrower covenants and agrees with each Lender, the Agent and
the Fronting Bank that, so long as the principal of or interest on any
Loan or LC Disbursement, any Fees or any other expenses or amounts
payable under any Loan Document shall be unpaid, unless the Required
Lenders shall otherwise consent in writing, the Borrower will and will
cause each of the Subsidiaries to:
SECTION 6.01. Existence; Businesses and Properties. (a) Except as
expressly permitted by Section 7.05, do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence.
(b) Do or cause to be done all things necessary to obtain,
preserve, renew, extend and keep in full force and effect the rights,
licenses, permits, franchises, authorizations, patents, copyrights,
trademarks and trade names material to the conduct of its business;
maintain and operate such business in substantially the manner in which
it is currently conducted and operated (or, in the case of any business
acquired in a Permitted Acquisition, in substantially the manner in
which it is conducted and operated as of the date on which such
Permitted Acquisition is consummated); comply in all material respects
with all material applicable laws, rules, regulations and statutes
(including any zoning, building, Environmental and Safety Law,
ordinance, code or approval or any building permits or any restrictions
of record or agreements affecting the Mortgaged Property) and decrees
and orders of any Governmental Authority, whether now in effect or
hereafter enacted; and at all times maintain and preserve all property
material to the conduct of such business and keep such property in good
repair, working order and condition and from time to time make, or cause
to be made, all needful and proper repairs, renewals, additions,
improvements and replacements thereto necessary in order that the
business carried on in connection therewith may be properly conducted at
all times.
(c) Maintain all financial records in accordance with GAAP.
SECTION 6.02. Insurance. (a) Keep its properties (including
Improvements and Personal Property (each as defined in the Mortgages))
insured at all times by financially sound and reputable insurers against
loss by fire, casualty and such other hazards as may be afforded by an
all risk policy or a fire policy covering special causes of loss,
including building ordinance law endorsements; cause all such policies
to be endorsed or otherwise amended to include a standard or New
York lender's loss payable endorsement, in form and substance
reasonably satisfactory to the Agent and the Collateral Agent, which
endorsement shall provide that, from and after the Closing Date, the
insurance carrier shall pay all proceeds otherwise payable to the
Borrower or the applicable Subsidiary under such policies directly to
the Collateral Agent if the insurance carrier shall have received
written notice from the Agent or the Collateral Agent that an Event of
Default has occurred); cause all such policies to provide that neither
the Borrower, the Agent, the Collateral Agent nor any other party shall
be a coinsurer thereunder and to contain a Replacement Cost
Endorsement , without any deduction for depreciation, and such other
provisions as the Agent or the Collateral Agent may reasonably require
from time to time to protect its interest; deliver original or certified
copies of all such policies to the Collateral Agent at its request;
cause each such policy to provide that it shall not be canceled,
modified or not renewed (i) by reason of nonpayment of premium upon not
less than 10 days' prior written notice thereof by insurer to the Agent
and the Collateral Agent or (ii) for any other reason upon not less than
30 days' prior written notice thereof by insurer to the Agent and the
Collateral Agent; deliver to the Agent and the Collateral Agent, prior
to the cancellation, modification or nonrenewal of any such policy of
insurance, a copy of a renewal or replacement policy (or other evidence
of renewal of a policy previously delivered to the Agent and the
Collateral Agent) together with evidence satisfactory to the Agent and
the Collateral Agent of payment of the premium therefor; and cause each
all risk policy to be endorsed to provide for a waiver by the related
insurer of all its rights to recovery against the Borrower or any
Subsidiary for damage covered by such policy.
(b) If at any time the area in which the Premises (as defined in
the Mortgages) are located is designated (i) a flood hazard area in
any Flood Insurance Rate Map published by the Federal Emergency
Management Agency, obtain flood insurance in such total amount as the
Collateral Agent or the Agent may from time to time reasonably require,
and otherwise comply with the National Flood Insurance Program as set
forth in said Flood Disaster Protection Act of 1973, as it may be
amended from time to time or (ii) a Zone 1 area, obtain earthquake
insurance in such total amount as the Agent, the Collateral Agent or the
Required Lenders may from time to time require.
(c) With respect to any Mortgaged Property, carry and maintain
comprehensive general liability insurance including the broad form CGL
endorsement and coverage on an occurrence basis against claims made for
personal injury (including bodily injury, death and property damage) and
umbrella liability insurance against any and all claims, in no event for
a combined single limit of less than $5,000,000, naming the Collateral
Agent as an additional insured, on forms reasonably satisfactory to the
Collateral Agent.
(d) Notify the Agent and the Collateral Agent immediately whenever
any separate insurance concurrent in form or contributing in the event
of loss with that required to be maintained under this Section 6.02 is
taken out by the Borrower or any Subsidiary; and promptly deliver to the
Agent and the Collateral Agent a duplicate original copy of such policy
or policies.
(e) In connection with the covenants set forth in this
Section 6.02, it is understood and agreed that:
(i) neither the Agent, the Lenders, the Fronting Bank, nor
their agents or employees shall be liable for any loss or damage
insured by the insurance policies required to be maintained under
this Section 6.02, it being understood that (A) the Borrower and
the Subsidiaries shall look solely to its insurance company or any
other parties other than the aforesaid parties for the recovery of
such loss or damage and (B) such insurance company shall have no
rights of subrogation against the Agent, the Collateral Agent, the
Lenders, the Fronting Bank or their agents or employees. If,
however, the insurance policies do not provide waiver of
subrogation rights against such parties, as requested above, then
the Borrower hereby agrees, to the extent permitted by law, to
waive (or cause the applicable Subsidiary to waive) its right of
recovery, if any, against the Agent, the Collateral Agent, the
Lenders, the Fronting Bank and their agents and employees; and
(ii) the designation of any form, type or amount of insurance
coverage by the Agent or the Collateral Agent under this
Section 6.02, shall in no event be deemed a representation,
warranty or advice by the Agent or the Collateral Agent or any
Lender that such insurance is adequate for the purposes of the
Borrower's or any Subsidiary's business or the protection of the
Borrower's or any Subsidiary's properties.
SECTION 6.03. Obligations and Taxes. Pay and discharge promptly
when due all material taxes, assessments and governmental charges or
levies imposed upon it or upon its income or profits or in respect of
its property, before the same shall become delinquent or in default, as
well as all lawful claims for labor, materials and supplies or otherwise
that, if unpaid, might give rise to a Lien upon such properties or any
part thereof; provided, however, that such payment and discharge shall
not be required with respect to any such obligation, tax, assessment,
charge, levy or claim so long as the validity or amount thereof shall be
contested in good faith by appropriate proceedings and the Borrower or
the applicable Subsidiary shall have set aside on its books adequate
reserves with respect thereto in accordance with GAAP and such contest
operates to suspend collection of the contested obligation, tax,
assessment or charge and enforcement of a Lien and, in the case of a
Mortgaged Property, there is no risk of forfeiture of such property.
SECTION 6.04. Financial Statements, Reports, etc. Furnish to the
Agent and each Lender:
(a) as soon as available, and in no event later than 90 days
after the end of each fiscal year (or 105 days if the Securities
and Exchange Commission has granted an extension to the Borrower
of the time to file its financial statements for such fiscal
period), the consolidated and consolidating balance sheets and
related statements of income and cash flow, showing the
consolidated financial condition of the Borrower and its
consolidated subsidiaries as of the close of such fiscal year and
the results of their operations during such year, audited by
Coopers & Lybrand or other independent public accountants of
recognized national standing reasonably acceptable to the Required
Lenders and accompanied by an opinion of such accountants (which
shall not be qualified in any material respect) to the effect that
such consolidated financial statements fairly present the
consolidated financial condition and results of operations of the
Borrower and its consolidated subsidiaries on a consolidated basis
in accordance with GAAP consistently applied;
(b) as soon as available, and in no event later than 45 days
(or 50 days if the Securities and Exchange Commission has granted
an extension to the Borrower of the time to file its financial
statements for such fiscal period) after the end of each of the
first three fiscal quarters of each fiscal year, the unaudited
consolidated and consolidating balance sheets and related
statements of income and changes in financial position, showing
the consolidated financial condition of the Borrower and its
consolidated subsidiaries as of the close of such fiscal quarter
and the results of their operations during such fiscal quarter and
the then elapsed portion of the fiscal year, all certified by a
Financial Officer of the Borrower as fairly presenting the
consolidated financial condition and results of operations of the
Borrower and its consolidated subsidiaries in accordance with GAAP
consistently applied, subject to normal year-end audit
adjustments;
(c) concurrently with any delivery of financial statements
under (a) or (b) above, a certificate of the accounting firm or a
Financial Officer of the Borrower opining on or certifying such
statements (which certificate, when furnished by an accounting
firm, may be limited to accounting matters and disclaim
responsibility for legal interpretations) (i) certifying that no
Event of Default or Default has occurred or, if such an Event of
Default or Default has occurred, specifying the nature and extent
thereof and any corrective action taken or proposed to be taken
with respect thereto and (ii) setting forth computations in
reasonable detail satisfactory to the Agent demonstrating
compliance with the covenants contained in Sections 7.14, 7.15 and
7.16;
(d) promptly after the same become publicly available,
copies of all periodic and other reports, proxy statements and
other materials filed by Borrower or any of the Subsidiaries with
the Securities and Exchange Commission, or any governmental
authority succeeding to any of or all the functions of said
Commission, or with any national securities exchange, or
distributed to any of their shareholders or holders of their debt
securities, as the case may be;
(e) promptly after the end of each fiscal month (but in no
event later than the sixth Business Day of the following month) a
Borrowing Base Certificate as of the last day of the fiscal month
most recently ended (it being understood that nothing in this
paragraph (e) shall limit the ability of the Borrower to deliver a
Borrowing Base Certificate more frequently than once each fiscal
month):
(f) promptly following the preparation thereof, copies of
each management letter prepared by the Borrower's auditors
(together with any response thereto prepared by the Borrower);
(g) not later than 30 days (or 60 days in the case of the
fiscal year ending December 30, 1995) after the commencement of
each fiscal year, forecasted financial projections through the end
of such fiscal year, in substantially the same form and format as
set forth in Section 9 of the Confidential Information Memorandum
(including a specification of the underlying assumptions), all
certified by a Financial Officer of the Borrower to be a good
faith estimate of the forecasted financial projections for such
fiscal year;
(h) at least ten Business Days prior to any Permitted
Acquisition, financial projections covering the period from the
date of such Permitted Acquisition through the Maturity Date
giving effect to such Permitted Acquisition and demonstrating
compliance by the Borrower on a pro forma basis with the covenants
set forth in Article VII from and after the date of, and after
giving effect to, such Permitted Acquisition through the Maturity
Date;
(i) upon the earlier of (i) 105 days after the end of each
fiscal year of the Borrower and (ii) the date on which the
financial statements with respect to such period are delivered
pursuant to paragraph (a) above, a certificate of a Financial
Officer of the Borrower setting forth, in detail reasonably
satisfactory to the Agent, the amount of Excess Cash Flow, if any,
for such period;
(j) promptly, from time to time, such other information
regarding the operations, business affairs and financial condition
of the Borrower and the Subsidiaries, or compliance with the terms
of any Loan Document, as the Agent, the Fronting Bank or any
Lender may reasonably request;
(k) promptly, a copy of any notice of a default received by
the Borrower or any Subsidiary Guarantor under any other Loan
Document;
(l) promptly, notice of any material change in or addition
to the types of Inventory maintained on the date hereof.
SECTION 6.05. Litigation and Other Notices. Furnish to the Agent,
the Fronting Bank, the Collateral Agent and each Lender prompt written
notice of the occurrence of the following:
(a) any Event of Default or Default, specifying the nature
and extent thereof and the corrective action (if any) proposed to
be taken with respect thereto;
(b) the filing or commencement of, or any threat or notice
of intention of any Person to file or commence, any action, suit
or proceeding, whether at law or in equity or by or before any
Governmental Authority, against the Borrower or any Affiliate
thereof that, if adversely determined, could reasonably be
expected to result in a Material Adverse Effect; and
(c) any development that has resulted in, or could
reasonably be anticipated to result in, a Material Adverse Effect.
SECTION 6.06. ERISA. (a) Comply in all material respects with the
applicable provisions of ERISA and the Code and (b) furnish to the
Agent, the Fronting Bank and each Lender (i) as soon as possible, and in
any event within 30 days after any Responsible Officer of the Borrower
or any ERISA Affiliate either knows or has reason to know that any
Reportable Event has occurred that alone or together with any other
Reportable Event could reasonably be expected to result in liability of
the Borrower or any ERISA Affiliate to the PBGC in an aggregate amount
exceeding $19,000,000 (or, in the event of an increase in the
underfunding of any Plan solely as a result of a change after the date
hereof in any discount rate applicable to such Plan, $23,000,000), a
statement of a Financial Officer of the Borrower setting forth details
as to such Reportable Event and the action proposed to be taken by the
Borrower with respect thereto, together with a copy of the notice, if
any, of such Reportable Event given to the PBGC, (ii) promptly after
receipt thereof, a copy of any notice the Borrower or any ERISA
Affiliate may receive from the PBGC relating to the intention of the
PBGC to terminate any Plan or Plans (other than a Plan maintained by an
ERISA Affiliate that is considered an ERISA Affiliate only pursuant to
subsection (m) or (o) of Section 414 of the Code) or to appoint a
trustee to administer any such Plan, (iii) promptly, and in any event
within 20 days after the due date for filing with the PBGC pursuant to
Section 412(n) of the Code of a notice of failure to make a required
installment or other payment with respect to a Plan, a statement of a
Financial Officer of the Borrower setting forth details as to such
failure and the action proposed to be taken with respect thereto,
together with a copy of such notice given to the PBGC and (iv) promptly
and in any event within 30 days after receipt thereof by the Borrower or
any ERISA Affiliate from the sponsor of a Multiemployer Plan, a copy of
each notice received by the Borrower or any ERISA Affiliate concerning
(A) the imposition of Withdrawal Liability or (B) a determination that a
Multiemployer Plan is, or is expected to be, terminated or in
reorganization, in each case within the meaning of Title IV of ERISA.
SECTION 6.07. Maintaining Records; Access to Properties and
Inspections. Maintain all financial records in accordance with GAAP and
permit, upon reasonable notice and during business hours, any
representatives designated by the Agent, the Fronting Bank, the
Collateral Agent or any Lender to visit and inspect the financial
records and the properties of the Borrower and any Subsidiary as often
as reasonably requested and to make extracts from and copies of such
financial records, and permit any representatives designated by the
Agent, the Fronting Bank, the Collateral Agent or any Lender to discuss
the affairs, finances and condition of the Borrower and any Subsidiary
or any properties of Borrower and any Subsidiary with the officers
thereof and independent accountants therefor (it being understood that
the Borrower may participate in any such discussion); and permit the
Agent, at the Borrower's expense, to audit the computations in any
Borrowing Base Certificate and to audit the existence and condition of
accounts receivable and inventory included in the Borrowing Base.
SECTION 6.08. Use of Proceeds. Use the Letters of Credit and the
proceeds of the Loans only for the purposes set forth in the preamble to
this Agreement.
SECTION 6.09. Fiscal Year. Cause its fiscal year to end on the
Saturday closest to January 1 of each year.
SECTION 6.10. Further Assurances. (a) Execute any and all further
documents, financing statements, agreements and instruments, and take
all further action (including filing Uniform Commercial Code and other
financing statements, mortgages and deeds of trust) that may be required
under applicable law, or which the Required Lenders, the Agent or the
Collateral Agent may reasonably request, in order to effectuate the
transactions contemplated by the Transaction Documents and in order to
grant, preserve, protect and perfect the validity and first priority of
the security interests created or intended to be created by the Security
Documents. In addition, from time to time, the Borrower will, and will
cause the Subsidiaries to, at the Borrower's or such Subsidiary's cost
and expense, promptly secure the Obligations by pledging or creating, or
causing to be pledged or created, perfected security interests with
respect to such of its assets and properties as the Agent or the
Required Lenders shall designate (it being understood that it is the
intent of the parties that the Obligations shall be secured by, among
other things, substantially all the assets of the Borrower and the
Subsidiaries (including (i) any real property and improvements thereon
acquired after the Closing Date the fair market value of which equals or
exceeds $3,000,000 on the date of acquisition thereof, (ii) any
leasehold interest in property acquired after the Closing Date upon
which the Borrower or any Subsidiary intends, as of the date of such
acquisition, to conduct material operations and (iii) any other material
properties (other than any properties the acquisition of which was
financed with Indebtedness under Section 7.01(d) or 7.01(e)) acquired
after the Closing Date)). Such security interests and Liens will be
created under the Security Documents and other security agreements,
mortgages, deeds of trust and other instruments and documents in form
and substance satisfactory to the Required Lenders, and each of the
Borrower and the Subsidiaries shall deliver or cause to be delivered to
the Lenders all such instruments and documents (including legal
opinions, title insurance policies and lien searches) as the Required
Lenders shall reasonably request to evidence compliance with this
Section 6.10. Each of the Borrower and the Subsidiaries agrees to
provide such evidence as the Required Lenders shall reasonably request
as to the perfection and priority status of each such security interest
and Lien.
(b)(i) Without limiting the generality of paragraph (a) above,
promptly cause each subsidiary created or acquired by it from time to
time in accordance with the terms of this Agreement to undertake the
obligation of and to become (A) a Subsidiary Guarantor under the
Guarantee Agreement pursuant to one or more instruments or agreements
substantially in the form of Annex 1 to the Guarantee Agreement, (B) a
Subsidiary Guarantor under the Indemnity, Subrogation and Contribution
Agreement pursuant to one or more instruments or agreements
substantially in the form of Annex 1 to the Indemnity, Subrogation and
Contribution Agreement, (C) a Pledgor under the Pledge Agreement
pursuant to one or more instruments or agreements substantially in the
form of Annex 1 to the Pledge Agreement, (D) to the extent such
subsidiary owns or leases any real property, a Mortgagor under a
Mortgage or Leasehold Mortgage, as applicable, (E) a Grantor under the
Security Agreement pursuant to one or more instruments or agreements
substantially in the form of Annex 3 to the Security Agreement, (F) a
Grantor under the Trademark Security Agreement pursuant to one or more
instruments or agreements substantially in the form of Annex 1 to the
Trademark Security Agreement and (G) a Grantor under the Collateral
Assignment pursuant to one or more instruments or agreements
substantially in the form of Annex 1 to the Collateral Assignment and
(ii) pledge the shares of capital stock of each such subsidiary to the
Collateral Agent for the benefit of the Lenders pursuant to the Pledge
Agreement.
(c) Without limiting the generality of paragraphs (a) and (b)
above, cause each Subsidiary that shall deliver a guarantee pursuant to
Section 4.17 of the Subordinated Note Indenture to become (to the extent
not already a party thereto) a Subsidiary Guarantor under the Guarantee
Agreement pursuant to one or more instruments or agreements
substantially in the form of Annex 1 to the Guarantee Agreement.
SECTION 6.11. Environmental and Safety Laws. (a) Comply with, and
ensure compliance by all tenants and subtenants with, all Environmental
and Safety Laws and obtain and comply with and maintain, and ensure that
all tenants and subtenants obtain and comply with and maintain, any and
all licenses, approvals, registrations or permits required by
Environmental and Safety Laws, except to the extent that failure to so
comply or to obtain and comply with and maintain such licenses,
approvals, registrations and permits does not have, and could not
reasonably be expected to result in, a Material Adverse Effect.
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions, required under
Environmental and Safety Laws and promptly comply with all lawful orders
and directives of all Governmental Authorities respecting Environmental
and Safety Laws, except to the extent that the same are being contested
in good faith by appropriate proceedings and the pendency of such
proceedings and the failure to so conduct, complete or comply would not
have a Material Adverse Effect.
(c) Promptly notify the Agent of any of the following that is
reasonably likely to have a Material Adverse Effect:
(i) any Environmental Claim that the Borrower or any
Subsidiary receives, including one to take or pay for any
remedial, removal, response or cleanup or other action with
respect to any Hazardous Substance contained on any property
owned, leased or operated by the Borrower or any Subsidiary;
(ii) any notice of any alleged violation of any
Environmental and Safety Law; and
(iii) any commencement or threatened commencement of any
judicial or administrative proceeding or investigation alleging a
violation or potential violation of any requirement of
Environmental and Safety Law.
(d) Without limiting the generality of Section 10.05(b), indemnify
the Agent, the Fronting Bank, the Collateral Agent and each Lender and
each of their respective directors, officers, employees, agents and
Affiliates (each such Person being called an Indemnitee ) against, and
to hold each Indemnitee harmless from, any claims, demands, penalties,
fines, liabilities, settlements, damages, costs and expenses (including
reasonable counsel fees, charges and disbursements) of whatever kind or
nature arising out of, or in any way relating to, the violation of,
noncompliance with or liability under any Environmental and Safety Laws
applicable to the operations of the Borrower or any Subsidiary on the
Mortgaged Properties, or any orders, requirements or demands of
Governmental Authorities related thereto, including, without limitation,
reasonable attorney's and consultant's fees, reasonable investigation
and laboratory fees, response costs, court costs and litigation
expenses, except to the extent that any of the foregoing are found by a
final and nonappealable decision of a court of competent jurisdiction to
have resulted from the gross negligence or wilful misconduct of the
Indemnitee seeking indemnification therefor. This indemnity shall
continue in full force and effect regardless of the termination of this
Agreement and the other Loan Documents.
SECTION 6.12 Collection Account Arrangements. (a) In the case of
the Borrower and each Subsidiary Guarantor, establish as of the Closing
Date and thereafter maintain at all times all its collection or deposit
accounts with the Collateral Agent or one or more Lenders.
(b) Cause all payments and remittances in respect of Receivables
and Inventory that are collected by or on behalf of the Borrower or any
Subsidiary Guarantor to be promptly deposited on a daily basis in the
collection or deposit accounts referred to in paragraph (a) above.
ARTICLE VII
Negative Covenants
The Borrower covenants and agrees with each Lender, the Agent and
the Fronting Bank that, so long as the principal of or interest on any
Loan or LC Disbursement, any Fees or any other expenses or amounts
payable under any Loan Document shall be unpaid, unless the Required
Lenders shall otherwise consent in writing, the Borrower will not and
will not permit any of the Subsidiaries to, directly or indirectly:
SECTION 7.01. Indebtedness. Incur, create, assume or permit to
exist any Indebtedness, except:
(a) Indebtedness for borrowed money existing on the date
hereof (other than the Subordinated Notes) and set forth on
Schedule 7.01 (and any extensions, renewals or replacements of
such Indebtedness to the extent that the aggregate principal
amount of such Indebtedness is not at any time increased);
(b) in the case of the Borrower, the Loans;
(c) in the case of the Subsidiary Guarantors, their
respective guarantees of the Obligations pursuant to the Guarantee
Agreement;
(d) Indebtedness consisting of purchase money Indebtedness
incurred in the ordinary course of business after the Closing Date
to finance Capital Expenditures permitted under Section 7.14;
provided, however, that (i) for purposes of Section 7.14, the
aggregate principal amount of any such Indebtedness shall be
deemed to be a Capital Expenditure at the time incurred or
assumed, (ii) the sum of (A) the aggregate principal amount of
Indebtedness permitted pursuant to this Section 7.01(d), (B) any
Capital Lease Obligations permitted pursuant to Sections 7.01(e)
and 7.11(b) and (C) the aggregate principal amount of Indebtedness
permitted pursuant to Section 7.01(k) shall not exceed $15,000,000
at any time outstanding and (iii) such Indebtedness is incurred
within 120 days after the making of the Capital Expenditures
financed thereby;
(e) Indebtedness in respect of Capital Lease Obligations
permitted under Section 7.11(b);
(f) in the case of the Borrower, the Subordinated Notes and
any Indebtedness ( Subordinated Note Refinancing Debt ) the
proceeds of which are used to refinance all or any portion of the
Subordinated Notes, provided that (i) the maximum principal amount
of such Subordinated Note Refinancing Debt shall not exceed the
sum of (x) the then-outstanding principal amount of the
Subordinated Notes so refinanced, (y) the amount of accrued and
unpaid interest thereon and (z) the amount of any premium payable
in connection with such refinancing, (ii) the weighted average
life to maturity of the Subordinated Note Refinancing Debt shall
be greater than or equal to the weighted average life to maturity
of the Subordinated Notes and the first scheduled principal
payment in respect of such Subordinated Note Refinancing Debt
shall be no earlier than the first scheduled principal payment in
respect of the Subordinated Notes, (iii) the stated maturity of
such Subordinated Note Refinancing Debt shall be no earlier than
the stated maturity of the Subordinated Notes, (iv) no material
terms applicable to such Subordinated Note Refinancing Debt
(including the subordination provisions thereof) shall be more
favorable to the refinancing lenders than the terms that are
applicable to the holders of the Subordinated Notes, (v) such
Subordinated Note Refinancing Debt shall be Indebtedness of the
Borrower, (vi) such Subordinated Note Refinancing Debt shall be
unsecured and shall not be guaranteed by any Subsidiary in any
respect, (vii) after giving effect to the incurrence of such
Subordinated Note Refinancing Debt as if it had been incurred on
first day of the Borrower's most recently completed period of four
consecutive fiscal quarters, the Borrower would have been in
compliance with the covenant set forth in Section 7.15 as of the
last day of such four-fiscal-quarter period and the covenant set
forth in Section 7.16 for such four-fiscal-quarter period and
(viii) such Subsidiary Note Refinancing Debt may not be incurred
if, at the time of such incurrence, a Default or Event of Default
has occurred and is continuing or would result therefrom;
(g) open-account advances among the Borrower and any
Subsidiary Guarantor the capital stock of which is pledged under
the Pledge Agreement, or among any Subsidiary that is not a
Subsidiary Guarantor and any other Subsidiary that is not a
Subsidiary Guarantor, which advances shall be made in the ordinary
course of business and consistent with past practice;
(h) Indebtedness incurred or assumed in connection with any
Permitted Acquisition, provided that such Indebtedness is
permitted to be so incurred or assumed under Section 7.05(d);
(i) In the case of any Subsidiary, any guarantee delivered
or incurred pursuant to Section 4.17 of the Subordinated Note
Indenture;
(j) In the case of the Borrower, unsecured senior or
subordinated Indebtedness having terms and conditions (including
terms and conditions relating to interest rate, principal amount,
maturity, fees, covenants, defaults, remedies and, if applicable,
subordination) satisfactory in all respects to the Required
Lenders if, after giving effect to the incurrence of such
Indebtedness as if it had been incurred on the first day of the
most recently completed period of four consecutive fiscal
quarters, the Borrower and the Subsidiaries would be in compliance
with Section 7.16 with respect to such period of four consecutive
fiscal quarters (any Indebtedness satisfying each of the criteria
set forth in this clause (j) is referred to herein as Specified
Permitted Debt );
(k) other unsecured Indebtedness in an aggregate principal
amount at any time outstanding not in excess of $15,000,000 less
the sum of (i) the aggregate principal amount of Indebtedness
permitted pursuant to Section 7.01(d) and (ii) any Capital Lease
Obligations permitted pursuant to Sections 7.01(e) and 7.11(b);
and
(l) in the case of the Borrower, any Rate Protection
Agreement entered into after consultation with the Agent.
SECTION 7.02. Liens. Create, incur, assume or permit to exist any
Lien on any property or assets (including stock or other securities of
any Person) now owned or hereafter acquired by it or on any income or
revenues or rights in respect of any thereof, except:
(a) Liens on property or assets of the Borrower and the
Subsidiaries existing on the date hereof and set forth on
Schedule 7.02, provided that such Liens shall secure only those
obligations that they secure on the date hereof;
(b) any Lien existing on any property or asset prior to the
acquisition thereof (other than any property or assets acquired in
connection with a Permitted Acquisition) by the Borrower or any
Subsidiary, provided that (i) such Lien is not created in
contemplation of or in connection with such acquisition, (ii) such
Lien does not apply to any other property or assets of the
Borrower or any Subsidiary and (iii) such Lien does not
(A) materially interfere with the use, occupancy and operation of
any property, (B) materially reduce the fair market value of such
property but for such Lien or (C) result in any material increase
in the cost of operating, occupying or owning (or leasing) such
property;
(c) Liens for taxes, assessments or governmental charges not
yet due and payable or which are being contested in compliance
with Section 6.03;
(d) carriers', warehousemen's, mechanics', materialmen's,
repairmen's, landlord's or other like Liens arising in the
ordinary course of business and securing obligations that are not
due and payable or which are being contested in compliance with
Section 6.03;
(e) pledges and deposits made in the ordinary course of
business in compliance with workmen's compensation, unemployment
insurance and other social security laws or regulations;
(f) pledges and deposits to secure the performance of bids,
trade contracts (other than for Indebtedness), leases, statutory
obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of
business;
(g) zoning restrictions, easements, rights-of-way,
restrictions on use of real property and other similar
encumbrances that do not materially impair the current use or the
value of the property subject thereto;
(h) purchase money security interests in real property,
improvements thereto or equipment hereafter acquired (or, in the
case of improvements, constructed) (other than any such real
property, improvements or equipment acquired in connection with a
Permitted Acquisition) by the Borrower or any Subsidiary,
provided that (i) such security interests secure Indebtedness
permitted by Section 7.01(i), (ii) such security interests are
incurred, and the Indebtedness secured thereby is created, within
120 days after such acquisition (or construction), (iii) the
Indebtedness secured thereby does not exceed 90% of the lesser of
the cost or the fair market value of such real property,
improvements or equipment at the time of such acquisition (or
construction) and (iv) such security interests do not apply to any
other property or assets of the Borrower or any Subsidiary;
(i) Liens in connection with Capital Lease Obligations
incurred pursuant to Section 7.01(e);
(j) any Lien created under the Loan Documents; and
(k) extensions, renewals and replacements of Liens referred
to in clauses (a), (b), (h) and (i) above, provided that any such
extension, renewal or replacement Lien is limited to the property
or assets covered by the Lien so extended, renewed or replaced and
does not secure any Indebtedness in addition to that secured
immediately prior to such extension, renewal or replacement.
SECTION 7.03. Sale and Leaseback Transactions. Enter into any
arrangement, directly or indirectly, with any Person whereby it shall
sell or transfer any property, real or personal, used or useful in its
business, whether now owned or hereafter acquired, and thereafter rent
or lease such property or other property that it intends to use for
substantially the same purpose or purposes as the property being sold or
transferred.
SECTION 7.04. Investments, Loans and Advances. Purchase, hold or
acquire any capital stock, evidences of Indebtedness or other securities
of, make or permit to exist any loans or advances to, or make or permit
to exist any investment or any other interest in, any other Person,
except:
(a) (i) investments by the Borrower and the Subsidiaries
existing on the date hereof in the capital stock of the
Subsidiaries and (ii) investments after the date hereof by the
Borrower and the Subsidiaries in the capital stock of any
Subsidiary Guarantor the capital stock of which is pledged under
the Pledge Agreement;
(b) Permitted Investments;
(c) pledges and deposits permitted under paragraph (f) of
Section 7.02;
(d) investments by the Borrower or any Subsidiary Guarantor
that is a wholly owned Subsidiary in capital stock in connection
with any Permitted Acquisition, so long as the Borrower, such
Subsidiary Guarantor and any subsidiary formed or acquired in
connection with such Permitted Acquisition shall have complied
with Section 6.10;
(e) loans or advances among the Borrower and the
Subsidiaries to the extent permitted under Section 7.01(g);
(f) investments received in connection with the bankruptcy
or reorganization of suppliers and customers in settlement of
delinquent obligations of, and other disputes with, customers and
suppliers arising in the ordinary course of business;
(g) loans or advances to employees of the Borrower or any
Subsidiary in an aggregate principal amount not to exceed
$1,000,000 at any time outstanding;
(h) investments in promissory notes issued by a purchaser as
consideration for the purchase of assets or property from the
Borrower or any Subsidiary, provided that (i) the principal amount
of any such promissory note does not exceed 25% of the purchase
price paid by such purchaser in connection with such purchase,
(ii) such sale of assets or property is permitted under Section
7.05, (iii) the aggregate principal amount of all such notes held
by the Borrower and its Subsidiaries shall not exceed $5,000,000
at any time and (iv) such notes shall have been pledged to the
Collateral Agent under the Pledge Agreement for the ratable
benefit of the Secured Parties;
(i) investments in Joint Ventures (or other similar
investments outside the United States) in the Borrower's primary
line of business or a related business, provided that the
aggregate amount of such investments, determined on the basis of
the original cost of such investments on the respective dates of
such investments, shall not at any time exceed the sum of (i)
$2,000,000 (excluding the cost of the Borrower's currently
contemplated investment in Delicias, State of Chihuahua, Mexico)
and (ii) the amount of cash received by the Borrower by way of
dividend or distribution as a return on such investments
(excluding amounts received in respect of the Borrower's
aforementioned investment in Mexico); and
(j) investments in futures contracts in the ordinary course
of business pursuant to an Inventory hedging program developed
after consultation with the Agent.
SECTION 7.05. Mergers, Consolidations, Sales of Assets and
Acquisitions. Merge into or consolidate with any other Person, or permit
any other Person to merge into or consolidate with it, or sell,
transfer, assign, lease, sublease or otherwise dispose of (in one
transaction or in a series of transactions) all or any substantial part
of any asset (whether now owned or hereafter acquired) or any capital
stock of any Subsidiary, or purchase, lease or otherwise acquire (in one
transaction or a series of transactions) all or any substantial part (to
the extent such assets constitute one or more distinct business units or
operations) of the assets of any other Person; provided, however, that:
(a) the Borrower and any Subsidiary may sell Permitted
Investments for cash;
(b) the Borrower and any Subsidiary may sell, transfer or
otherwise dispose of used or surplus equipment, vehicles and other
assets in the ordinary course of business (to the extent that the
Borrower shall have complied with the provisions of
Section 2.13(c));
(c) the Borrower and any Subsidiary may purchase and sell
inventory in the ordinary course of business;
(d) the Borrower or any Subsidiary Guarantor that is a
wholly owned Subsidiary may make acquisitions of assets or capital
stock of any corporation organized and validly existing under the
laws of the United States, any State thereof or the District of
Columbia, so long as (i) such acquisition shall not have been
preceded by an unsolicited tender offer for such capital stock by
the Borrower or any of its Affiliates; (ii) such acquisition and
all transactions related thereto shall be consummated in
accordance with applicable laws, including Regulations of the
Board; (iii) such acquisition shall constitute an acquisition of
all or a portion of the assets of, or 100% of the common stock of,
a corporation engaged primarily in the Borrower's primary line of
business as of the Closing Date or a related business;
(iv) simultaneously with the acquisition thereof, all capital
stock acquired in connection with such acquisition shall be duly
and validly pledged to the Collateral Agent for the ratable
benefit of the Secured Parties; (v)(A) a valid and perfected first
priority security interest or lien in favor of the Collateral
Agent for the ratable benefit of the Secured Parties shall be
created in all assets acquired in connection with such acquisition
simultaneously with the acquisition thereof and (B) a valid and
perfected first priority security interest or lien in favor of the
Collateral Agent for the ratable benefit of the Secured Parties
shall be created in all the assets of any Subsidiary the capital
stock of which is acquired in connection with such acquisition,
and any Subsidiary acquired or created in connection with such
acquisition shall become a Grantor under the Security Agreement,
the Trademark Security Agreement and the Collateral Assignment, a
Pledgor under the Pledge Agreement and a Subsidiary Guarantor
under the Guarantee Agreement and the Indemnity, Subrogation and
Contribution Agreement, in each case in accordance with
Section 6.10, and the Borrower and any Subsidiary shall execute
and/or deliver any documents, financing statements, agreements and
instruments (including a Mortgage and, if requested by the
Collateral Agent, an appraisal of any real property acquired in
such acquisition) and take all action (including filing Uniform
Commercial Code and other financing statements) that may be
required under applicable law, or that the Collateral Agent may
request, in order to grant, preserve, protect and perfect any
security interest or lien contemplated by this clause (v); (vi) no
capital stock or assets acquired in connection with such
acquisition shall be subject to any Lien (other than Liens created
under the Security Documents and Liens permitted under
Section 7.02); (vii) neither the Borrower nor any Subsidiary may
assume or incur, directly or indirectly, any Indebtedness or other
liability (including any contingent liability) in connection with
such acquisition (other than (a) the Borrowings hereunder used to
finance all or part of the purchase price of such acquisition and
(b) other liabilities of the acquired business, provided that the
aggregate amount of liabilities assumed or incurred by the
Borrower and the Subsidiary Guarantors, collectively, under this
clause (b) shall not exceed $5,000,000 outstanding at any time);
(viii) the Borrower and its consolidated subsidiaries shall
satisfy, on a pro forma basis as of the date on which such
acquisition is consummated, after giving effect to such
acquisition as if it had occurred on the first day of the most
recently completed period of four consecutive fiscal quarters
preceding the date on which such acquisition is consummated, the
covenants set forth in Sections 7.15 and 7.16; and (ix) after
giving effect to such acquisition, there shall not have occurred
any Material Adverse Effect (any acquisition satisfying each of
the criteria set forth in this sentence is referred to herein as a
Permitted Acquisition ); and
(e)(i) any Subsidiary Guarantor may merge into or be
liquidated into the Borrower in a transaction in which the
Borrower is the surviving corporation, (ii) any Subsidiary
Guarantor may merge into or be liquidated into or consolidate with
any other Subsidiary Guarantor, in either case in a transaction in
which no person other than the Borrower or a Subsidiary Guarantor
receives any consideration and (iii) any Subsidiary that is not a
Subsidiary Guarantor may merge into or be liquidated into or
consolidate with any other Subsidiary that is not a Subsidiary
Guarantor.
SECTION 7.06. Dividends and Distributions. Declare or pay,
directly or indirectly, any dividend or make any other distribution (by
reduction of capital or otherwise), whether in cash, property,
securities (other than capital stock or the right to acquire capital
stock) or a combination thereof, with respect to any shares of its
capital stock or directly or indirectly redeem, purchase, retire or
otherwise acquire for value any shares of any class of its capital stock
or set aside any amount for any such purpose; provided, however, that
any Subsidiary may declare and pay dividends or make other distributions
to any other Subsidiary and to the Borrower (except that no Subsidiary
Guarantor may declare or pay dividends or make other distributions to
any Subsidiary that is not a Subsidiary Guarantor).
SECTION 7.07. Transactions with Affiliates. Sell or transfer any
property or assets to, or purchase or acquire any property or assets
from, or otherwise engage in any other transactions with, any of its
Affiliates (other than the Borrower and its Subsidiaries), except that
as long as no Default or Event of Default shall have occurred and be
continuing, the Borrower and any Subsidiary may engage in any of the
foregoing transactions in the ordinary course of business at prices and
on terms and conditions no less favorable to the Borrower or such
Subsidiary as the case may be, than could be obtained on an arm's-length
basis from unrelated third parties.
SECTION 7.08. Business of Borrower and the Subsidiaries. Engage at
any time in any business or business activity other than the business
currently conducted by it or any other business related thereto and
business activities reasonably incidental or related thereto.
SECTION 7.09. Limitations on Debt Prepayments. (a) Optionally
prepay, repurchase or redeem or otherwise defease or segregate funds
with respect to any Specified Permitted Debt, the Subordinated Notes or
any guarantee delivered in accordance with Section 4.17 of the
Subordinated Note Indenture; provided, however, that the Borrower may
repurchase or redeem with cash Subordinated Notes in an amount not to
exceed in any fiscal year the Borrower's Portion of Excess Cash Flow for
the preceding fiscal year.
(b) Permit any amendment or modification to the terms of any
Specified Permitted Debt, the Subordinated Notes, the Subordinated Note
Indenture or any guarantee delivered or incurred pursuant to
Section 4.17 of the Subordinated Note Indenture if the effect of such
amendment or modification is to impose additional or increased scheduled
or mandatory repayment, retirement, repurchase or redemption obligations
in respect of such Indebtedness or to require any scheduled or mandatory
payment to be made in respect of such Indebtedness prior to the date
that such payment would otherwise be due.
(c) Take any action in violation of, or permit any amendment or
modification that is adverse in any respect to the Lenders with respect
to, any applicable subordination provisions of any Indebtedness.
(d) Pay interest, principal or premium on, or the purchase price
of, the Subordinated Notes to any holder thereof or trustee therefor
prior to the date on which any such principal, premium, interest or
purchase price is due.
(e) Deliver any notice to the trustee under the Subordinated Note
Indenture or the holders of the Subordinated Notes of its offer to
purchase the Subordinated Notes under Section 4.13 of the Subordinated
Note Indenture.
SECTION 7.10. Amendment of Certain Documents and Subordinated
Notes. Permit any termination of, or any amendment or modification that
in the reasonable judgment of the Agent is adverse in any material
respect to the Lenders to, (i) the Certificate of Incorporation of the
Borrower or any Subsidiary, (ii) the By-laws of the Borrower or any
Subsidiary, (iii) the Subordinated Notes and/or the Subordinated Note
Indenture, (iv) the Stock Purchase Agreement and (v) any instrument or
agreement governing any Specified Permitted Debt or pursuant to which
any Specified Permitted Debt is issued, in each case without the prior
written consent of the Required Lenders. Without limiting the generality
of the foregoing, with respect to the Subordinated Notes and the
Subordinated Note Indenture, it is understood that any increase in the
interest, fees or other amounts payable in connection therewith, or any
amendment that imposes additional covenants or events of default or
makes more restrictive the covenants or events of default contained
therein, shall require the consent of the Required Lenders.
SECTION 7.11. Limitation on Leases. Create or suffer to exist any
obligations for the payment of rents for any property under leases or
agreements to lease, except:
(a) leases in existence on the date hereof and listed on
Schedule 7.11(a) (and any extensions, renewals or replacements of
such leases, provided that the annual lease payment under any such
extension, renewal or replacement shall be no greater than the
fair market rental value of the leased property, as of the date of
such extension, renewal or replacement for the term of such
extension, renewal or replacement);
(b) Capital Lease Obligations incurred to finance the
acquisition of equipment and other property, provided that (i) the
aggregate of (A) the aggregate annual rental payments in respect
of all such Capital Lease Obligations, (B) any purchase money
Indebtedness permitted pursuant to Section 7.01(d) and (c) any
Indebtedness permitted pursuant to Section 7.01(k) shall not
exceed $15,000,000 at any time outstanding, (ii) each Capital
Lease Obligation (other than (i) any Capital Lease Obligation set
forth on Schedule 7.11(a) and (ii) any Capital Lease Obligation
the Indebtedness in respect of which is less than $100,000) at the
time of its incurrence shall have an average life to maturity
greater than the average life to maturity of the outstanding Term
Loans, (iii) none of the related leases shall contain financial
covenants and (iv) for purposes of Section 7.14, the amount of
such aggregate annual rental payments shall be deemed to be
Capital Expenditures in the year in which they are incurred; and
(c) other operating leases entered into after the Closing
Date.
SECTION 7.12. Credit Standards. Modify in any respect materially
adverse to the interests of the Secured Parties the Credit and
Collection Policy.
SECTION 7.13. Limitation on Negative Pledge Clauses. Enter into
with any Person any agreement, other than (a) this Agreement and the
Subordinated Note Indenture, and (b) any purchase money mortgage or
Capital Lease Obligation permitted by this Agreement (which prohibition
or limitation shall, in the case of this clause (b), be effective only
against the assets financed thereby), which prohibits or limits the
ability of the Borrower or any of the Subsidiaries to create, incur,
assume or suffer to exist any Lien upon any of their respective
property, assets or revenues, whether now owned or hereafter acquired.
SECTION 7.14. Capital Expenditures. Make or permit Capital
Expenditures during any fiscal year, commencing with the fiscal year
ending December 31, 1994, to exceed the amount set forth opposite such
fiscal year below:
Fiscal Year Amount
1994 $19,000,000
1995 16,000,000
1996 16,000,000
1997 16,000,000
1998 16,000,000
1999 16,000,000
2000 16,000,000
provided that (a) up to $5,000,000 of any such amount not so expended
in the fiscal year for which it is permitted above may be carried over
for expenditures into succeeding fiscal years and (b) the maximum amount
of expenditures in any fiscal year shall in no event exceed $25,000,000.
SECTION 7.15. Consolidated Net Worth. Permit at any time the sum
of (a) Consolidated Net Worth and (b) to the extent deducted from Net
Income for any fiscal quarter specified below, (i) noncash provisions
for restructuring of the Borrower's and Foodservice Corp's operations
after the Closing Date, (ii) cash provisions for restructuring of
Foodservice Corp.'s operations after the Closing Date and (iii) cash
provisions for restructuring of the Borrower's operations after the
Closing Date in an aggregate amount under this clause (iii) not to
exceed $5,000,000 since the Closing Date, (iv) the depreciation and
amortization related to the write-up of plant, property and equipment
and intangibles and noncash charges related to the write-up of
Inventory, in each case resulting from purchase accounting treatment of
the Acquisition and (v) any loss incurred in connection with the
cancellation of the Borrower's obligations under the Swap Agreement, to
be less than the sum of (a) $40,000,000 and (b) 50% of Net Income for
each fiscal quarter (beginning with the fiscal quarter ending
December 31, 1994) that shall have been completed during the period from
the Closing Date through the date as of which compliance with this
covenant is being determined .
SECTION 7.16. Consolidated Interest Expense Coverage Ratio. Permit
the Consolidated Interest Expense Coverage Ratio for any period of four
consecutive fiscal quarters ending on the last day of or during any
period indicated below to be less than the ratio set forth opposite such
period:
From and Including: To and Including: Ratio:
March 31, 1994 December 31, 1994 2.10 to 1.00
January 1, 1995 June 30, 1995 2.25 to 1.00
July 1, 1995 January 4, 1997 2.50 to 1.00
January 5, 1997 January 3, 1998 2.75 to 1.00
January 4, 1998 January 2, 1999 3.25 to 1.00
January 3, 1999 Maturity Date 3.50 to 1.00
ARTICLE VIII
Events of Default
In case of the happening of any of the following events ( Events
of Default ):
(a) any representation or warranty made or deemed made in or
in connection with any Loan Document or the borrowings hereunder,
or any representation, warranty, statement or information
contained in any report, certificate, financial statement or other
instrument furnished in connection with or pursuant to any Loan
Document, shall prove to have been false or misleading in any
material respect when so made, deemed made or furnished;
(b) default shall be made in the payment of any principal of
any Loan or LC Disbursement when and as the same shall become due
and payable, whether at the due date thereof or at a date fixed
for prepayment thereof or by acceleration thereof or otherwise;
(c) default shall be made in the payment of any interest on
any Loan or any Fee or any other amount (other than an amount
referred to in (b) above) due under any Loan Document, when and as
the same shall become due and payable, and such default shall
continue unremedied for a period of three Business Days;
(d) default shall be made in the due observance or
performance by the Borrower of any covenant, condition or
agreement contained in Section 2.13(c), 2.13(d), 6.01(a), 6.05,
6.08, or 10.16 or in Article VII;
(e) default shall be made in the delivery of a Borrowing
Base Certificate when due pursuant to Section 6.04(e) and such
default shall continue unremedied for a period of five Business
Days;
(f) default shall be made in the due observance or
performance by the Borrower or any Subsidiary Guarantor of any
covenant, condition or agreement contained in any Loan Document
(other than those defaults specified in (b), (c), (d) or (e)
above) and such default shall continue unremedied for a period of
the earlier of (i) 15 days after an executive officer of the
Borrower or any Subsidiary Guarantor first becomes aware or should
have become aware thereof and (ii) seven Business Days after
notice thereof from the Agent or any Lender to the Borrower or the
applicable Subsidiary Guarantor;
(g) the Borrower or any of the Subsidiaries shall (i) fail
to pay any principal or interest, regardless of amount, due in
respect of any Indebtedness in a principal amount in excess of
$5,000,000, when and as the same shall become due and payable or
(ii) fail to observe or perform any other term, covenant,
condition or agreement contained in any agreement or instrument
evidencing or governing any such Indebtedness if the effect of any
failure referred to in this clause (ii) is to cause, or to permit
the holder or holders of such Indebtedness or a trustee on its or
their behalf (after giving effect to any applicable grace period)
to cause, such Indebtedness to become due prior to its stated
maturity;
(h) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent
jurisdiction seeking (i) relief in respect of the Borrower or any
of the Subsidiaries, or of a substantial part of the property or
assets of the Borrower or any of the Subsidiaries, under Title 11
of the United States Code, as now constituted or hereafter
amended, or any other Federal or state bankruptcy, insolvency,
receivership or similar law, (ii) the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official
for the Borrower or any of the Subsidiaries or (iii) the
winding-up or liquidation of the Borrower or any of the
Subsidiaries; and such proceeding or petition shall continue
undismissed for 30 days or an order or decree approving or
ordering any of the foregoing shall be entered;
(i) the Borrower or any of the Subsidiaries shall
(i) voluntarily commence any proceeding or file any petition
seeking relief under Title 11 of the United States Code, as now
constituted or hereafter amended, or any other Federal or state
bankruptcy, insolvency, receivership or similar law, (ii) consent
to the institution of, or fail to contest in a timely and
appropriate manner (but within 30 days in any event), any
proceeding or the filing of any petition described in paragraph
(h) above, (iii) apply for or consent to the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar
official for the Borrower or any of the Subsidiaries or for a
substantial part of the property or assets of the Borrower or any
of the Subsidiaries, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding,
(v) make a general assignment for the benefit of creditors,
(vi) become unable, admit in writing its inability or fail
generally to pay its debts as they become due or (vii) take any
action for the purpose of effecting any of the foregoing;
(j) one or more judgments for the payment of money in an
aggregate amount in excess of $5,000,000 (exclusive of any amount
thereof covered by insurance) shall be rendered against the
Borrower, any Subsidiary or any combination thereof and the same
shall remain undischarged for a period of 30 consecutive days
during which execution shall not be effectively stayed, or any
action shall be legally taken by a judgment creditor to levy upon
assets or properties of the Borrower or any Subsidiary to enforce
any such judgment;
(k)(i) a Reportable Event or Reportable Events, or a failure
to make a required installment or other payment (within the
meaning of Section 412(n)(l) of the Code), shall have occurred
with respect to any Plan or Plans that reasonably could be
expected to result in liability of the Borrower or any ERISA
Affiliate to the PBGC or to a Plan in an aggregate amount
exceeding $19,000,000 (or, in the event of an increase in the
underfunding of any Plan solely as a result of a change after the
date hereof in any discount rate applicable to such Plan,
$23,000,000) and, within 30 days after the reporting of any such
Reportable Event to the Agent or after the receipt by the Agent of
the statement required pursuant to Section 6.06(b)(iii), the Agent
shall have notified the Borrower in writing that (A) the Required
Lenders have determined that, on the basis of such Reportable
Event or Reportable Events or the failure to make a required
payment, there are reasonable grounds for the termination of such
Plan or Plans by the PBGC, the appointment by the appropriate
United States District Court of a trustee to administer such Plan
or Plans or the imposition of a lien in favor of a Plan and (B) as
a result thereof an Event of Default exists hereunder; or (ii) a
trustee shall be appointed by a United States District Court to
administer any such Plan or Plans; or (iii) the PBGC shall
institute proceedings (including giving notice of intent thereof)
to terminate any Plan or Plans;
(l) (i) the Borrower or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that it has
incurred Withdrawal Liability to such Multiemployer Plan, (ii) the
Borrower or such ERISA Affiliate does not have reasonable grounds
for contesting such Withdrawal Liability or is not in fact
contesting such Withdrawal Liability in a timely and appropriate
manner and (iii) the amount of the Withdrawal Liability specified
in such notice, when aggregated with all other amounts required to
be paid to Multiemployer Plans in connection with Withdrawal
Liabilities (determined as of the date or dates of such
notification), either (A) exceeds $1,000,000 or requires payments
exceeding $250,000 in any year or (B) is less than $1,000,000 but
any Withdrawal Liability payment remains unpaid 30 days after such
payment is due;
(m) the Borrower or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plan is in reorganization or is being terminated,
within the meaning of Title IV of ERISA, if solely as a result of
such reorganization or termination the aggregate annual
contributions of the Borrower and its ERISA Affiliates to all
Multiemployer Plans that are then in reorganization or have been
or are being terminated have been or will be increased over the
amounts required to be contributed to such Multiemployer Plans for
their most recently completed plan years by an amount exceeding
$1,000,000;
(n) there shall have occurred a Change in Control;
(o) any material security interest purported to be created
by any Security Document shall cease to be, or shall be asserted
by the Borrower or any Subsidiary not to be, a valid, perfected,
first priority (except as otherwise expressly provided in this
Agreement or such Security Document) security interest in the
securities, assets or properties covered thereby, except to the
extent that any such loss of perfection or priority results from
the failure of the Collateral Agent to maintain possession of
certificates representing securities pledged under the Pledge
Agreement;
(p) any Loan Document shall not be for any reason or shall
be asserted by the Borrower or any Subsidiary not to be in full
force and effect and enforceable in all material respects in
accordance with its terms;
(q) the Obligations and the guarantees thereof pursuant to
the Guarantee Agreement shall cease to constitute, or shall be
asserted by the Borrower or any Subsidiary not to constitute,
senior indebtedness under the subordination provisions of the
Subordinated Notes and of all other subordinated Indebtedness
(including any guarantee delivered or incurred in accordance with
Section 4.17 of the Subordinated Note Indenture) of the Borrower
or any Subsidiary or such subordination provisions shall be
invalidated or otherwise cease to be a legal, valid and binding
obligation of the parties thereto, enforceable in accordance with
their terms; or
(r) any material provision of the Guarantee Agreement or any
other Loan Document shall cease to be in full force and effect and
enforceable in accordance with its terms for any reason whatsoever
or any Subsidiary Guarantor shall contest or deny in writing the
validity or enforceability of any of its obligations under the
Guarantee Agreement or the Obligations hereunder shall cease to be
entitled to the benefits of any Security Document or this
Agreement for any reason whatsoever;
then, and in every such event (other than an event with respect to the
Borrower or any Subsidiary Guarantor described in paragraph (h) or (i)
above), and at any time thereafter during the continuance of such event,
the Agent may and, at the request of the Required Lenders, shall, by
notice to the Borrower, take any of or all the following actions, at the
same or different times: (i) terminate forthwith the Commitments and the
LC Commitment, (ii) declare the Loans then outstanding to be forthwith
due and payable in whole or in part, whereupon the principal of the
Loans so declared to be due and payable, together with accrued interest
thereon and any unpaid accrued Fees and all other liabilities of the
Borrower accrued hereunder and under any other Loan Document, shall
become forthwith due and payable, without presentment, demand, protest
or any other notice of any kind, all of which are hereby expressly
waived by the Borrower, anything contained herein or in any other Loan
Document to the contrary notwithstanding, (iii) require cash collateral
as contemplated by Section 3.06 and (iv) exercise any remedies available
under any Loan Document or otherwise; and in any event with respect to
the Borrower or any Subsidiary Guarantor described in paragraph (h) or
(i) above, the Commitments and the LC Commitment shall automatically
terminate and the principal of the Loans then outstanding, together with
accrued interest thereon and any unpaid accrued Fees and all other
liabilities of the Borrower accrued hereunder and under any other Loan
Document, shall automatically become due and payable, without
presentment, demand, protest or any other notice of any kind, all of
which are hereby expressly waived by the Borrower, anything contained
herein or in any other Loan Document to the contrary notwithstanding.
ARTICLE IX
The Agent
In order to expedite the transactions contemplated by this
Agreement, Chemical Bank is hereby appointed to act as Agent (which term
for purposes of this Article shall be deemed to refer to the Agent and
the Collateral Agent) on behalf of the Fronting Bank and the Lenders.
Each of the Lenders, and each subsequent holder of any Loan by its
acceptance thereof and the Fronting Bank hereby irrevocably authorize
the Agent to take such actions on their behalf and to exercise such
powers as are specifically delegated to the Agent by the terms and
provisions hereof and of the other Loan Documents, together with such
actions and powers as are reasonably incidental thereto. The Agent is
hereby expressly authorized by the Lenders and the Fronting Bank,
without hereby limiting any implied authority, (a) to receive on behalf
of the Lenders and the Fronting Bank all payments of principal of and
interest on the Loans and LC Disbursements and all other amounts due to
the Lenders and the Fronting Bank hereunder, and promptly to distribute
to each Lender and the Fronting Bank its proper share of each payment so
received; (b) to give notice on behalf of each of the Lenders and the
Fronting Bank to the Borrower of any Event of Default specified in this
Agreement of which the Agent has actual knowledge acquired in connection
with its agency hereunder; and (c) to promptly distribute to each Lender
and the Fronting Bank copies of all notices, financial statements and
other materials delivered by the Borrower pursuant to this Agreement as
received by the Agent (including notices of an occurrence of any Event
of Default). Nothing in the preceding sentence shall be construed to
relieve the Borrower of its obligation to furnish any notice, financial
statement or other materials directly to the Lenders as required
hereunder.
Neither the Agent nor any of its directors, officers, employees or
agents shall be liable as such for any action taken or omitted by any of
them except for its, his or her own gross negligence or wilful
misconduct, or be responsible for any statement, warranty or
representation herein or the contents of any document delivered in
connection herewith, or be required to ascertain or to make any inquiry
concerning the performance or observance by the Borrower or any
Subsidiary Guarantor of any of the terms, conditions, covenants or
agreements contained in any Loan Document. The Agent shall not be
responsible to the Lenders or the holders of the Loans or the Fronting
Bank for the due execution, genuineness, validity, enforceability or
effectiveness of this Agreement or any other Loan Documents or other
instruments or agreements. The Agent shall in all cases be fully
protected in acting, or refraining from acting, in accordance with
written instructions signed by the Required Lenders and, except as
otherwise specifically provided herein, such instructions and any action
or inaction pursuant thereto shall be binding on all the Lenders and
each subsequent holder of any Loan and the Fronting Bank. The Agent
shall, in the absence of knowledge to the contrary, be entitled to rely
on any instrument or document believed by it in good faith to be genuine
and correct and to have been signed or sent by the proper Person or
Persons. Neither the Agent nor any of its directors, officers, employees
or agents shall have any responsibility to the Borrower or any
Subsidiary on account of the failure of or delay in performance or
breach by any Lender or the Fronting Bank of any of its obligations
hereunder or to any Lender or to the Fronting Bank on account of the
failure of or delay in performance or breach by any other Lender or the
Fronting Bank or the Borrower or any Subsidiary Guarantor of any of
their respective obligations hereunder or under any other Loan Document
or in connection herewith or therewith. The Agent may execute any and
all duties hereunder by or through agents or employees and shall be
entitled to rely upon the advice of legal counsel selected by it with
respect to all matters arising hereunder and shall not be liable for any
action taken or suffered in good faith by it in accordance with the
advice of such counsel.
The Lenders and the Fronting Bank hereby acknowledge that the
Agent shall be under no duty to take any discretionary action permitted
to be taken by it pursuant to the provisions of this Agreement unless it
shall be requested in writing to do so by the Required Lenders.
Subject to the appointment and acceptance of a successor Agent as
provided below, the Agent may resign at any time by notifying the
Lenders, the Fronting Bank and the Borrower. Upon any such resignation,
the Required Lenders shall have the right to appoint a successor. If no
successor shall have been so appointed by the Required Lenders and shall
have accepted such appointment within 30 days after the retiring Agent
gives notice of its resignation, then the retiring Agent may, on behalf
of the Lenders and the Fronting Bank, appoint a successor Agent, which
shall be a bank with an office in New York, New York, having a combined
capital and surplus of at least $500,000,000 or an Affiliate of any such
bank. Upon the acceptance of any appointment as Agent hereunder by a
successor bank, such successor shall succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Agent and
the retiring Agent shall be discharged from its duties and obligations
hereunder. After the Agent's resignation hereunder, the provisions of
this Article and Sections 6.11(d) and 10.05 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 Agent.
With respect to the Loans made by it hereunder, the Agent, in its
individual capacity and not as Agent, shall have the same rights and
powers as any other Lender and may exercise the same as though it were
not the Agent, and the Agent and its Affiliates may accept deposits
from, lend money to and generally engage in any kind of business with
the Borrower, any Subsidiary or any Affiliate thereof as if the Agent
were not the Agent.
Each Lender and the Fronting Bank recognizes that applicable laws,
rules, regulations or guidelines of Governmental Authorities may require
the Agent to determine whether the transactions contemplated hereby
should be classified as highly leveraged or assigned any similar or
successor classification and that such determination may be binding upon
the other Lenders and the Fronting Bank. Each Lender and the Fronting
Bank understands that any such determination shall be made solely by the
Agent based upon such factors (which may include, without limitation,
the Agent's internal policies and prevailing market practices) as the
Agent shall deem relevant and agrees that the Agent shall have no
liability for the consequences of any such determination.
Each Lender and the Fronting Bank agree (a) to reimburse the
Agent, on demand, in the amount of its pro rata share (based on its
Commitment hereunder) of any expenses incurred for the benefit of the
Lenders and the Fronting Bank by the Agent, including counsel fees and
compensation of agents and employees paid for services rendered on
behalf of the Lenders and the Fronting Bank, that shall not have been
reimbursed by the Borrower and (b) to indemnify and hold harmless the
Agent and any of its directors, officers, employees or agents, on
demand, in the amount of such pro rata share, from and against any and
all liabilities, taxes, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind
or nature whatsoever that may be imposed on, incurred by or asserted
against it in its capacity as the Agent or any of them in any way
relating to or arising out of this Agreement or any other Loan Document
or any action taken or omitted by it or any of them under this Agreement
or any other Loan Document, to the extent the same shall not have been
reimbursed by the Borrower; provided that no Lender shall be liable to
the Agent for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the gross negligence or wilful misconduct
of the Agent or any of its directors, officers, employees or agents.
Each Lender and the Fronting Bank acknowledge that they have,
independently and without reliance upon the Agent, any other Lender and
the Fronting Bank and based on such documents and information as they
have deemed appropriate, made their own credit analysis and decision to
enter into this Agreement. Each Lender and the Fronting Bank also
acknowledge that they will, independently and without reliance upon the
Agent or any other Lender and based on such documents and information as
they shall from time to time deem appropriate, continue to make their
own decisions in taking or not taking action under or based upon this
Agreement or any other Loan Document, any related agreement or any
document furnished hereunder or thereunder.
ARTICLE X
Miscellaneous
SECTION 10.01. Notices. Notices and other communications provided
for herein shall be in writing and shall be delivered by hand or
overnight courier service, mailed or sent by telex, graphic scanning or
other telegraphic communications equipment of the sending party, as
follows:
(a) If to the Borrower or any Subsidiary Guarantor, at
2601 Northwest Expressway, Suite 1000 West, Oklahoma City,
Oklahoma 73112, Attention of Bryant P. Bynum, Telecopy
No. ((405)879-5458).
(b) If to the Agent or the Fronting Bank, at 10 South
LaSalle, Suite 2300, Chicago, Illinois 60603, Attention of
Steven J. Faliski (Telecopy No. (312) 807-4077); with a copy to
Chemical Bank Agency Services Corporation, Grand Central Tower,
140 East 45th Street, New York, New York 10017, Attention: Janet
Belden (Telecopy No. (212) 622-0002).
(c) If to a Lender, at its address (or telecopy number) set
forth on Schedule 2.01 or in the Assignment and Acceptance
pursuant to which such Lender shall have become a party hereto.
All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have
been given on the date of receipt if delivered by hand or overnight
courier service or sent by telex, telecopy or other telegraphic
communications equipment of the sender, or on the date five Business
Days after dispatch by certified or registered mail if mailed, in each
case delivered, sent or mailed (properly addressed) to such party as
provided in this Section 10.01 or in accordance with the latest
unrevoked direction from such party given in accordance with this
Section 10.01.
SECTION 10.02. Survival of Agreement. All covenants, agreements,
representations and warranties made by the Borrower or any Subsidiary
Guarantor herein and/or in the certificates or other instruments
prepared or delivered in connection with or pursuant to this Agreement
or any other Loan Document shall be considered to have been relied upon
by the Lenders and the Fronting Bank and shall survive the making by the
Lenders of the Loans and the issuance of Letters of Credit by the
Fronting Bank, regardless of any investigation made by the Lenders and
the Fronting Bank or on their behalf, and shall continue in full force
and effect as long as the principal of or any accrued interest on any
Loan or any Fee or any other amount payable under this Agreement or any
other Loan Document is outstanding and unpaid or any Letter of Credit is
outstanding and so long as the Commitments and the LC Commitment have
not been terminated.
SECTION 10.03. Binding Effect. This Agreement shall become
effective when it shall have been executed by the Borrower, the Agent
and the Fronting Bank and when the Agent shall have received copies
hereof that, when taken together, bear the signatures of each Lender,
and thereafter shall be binding upon and inure to the benefit of the
Borrower, the Agent, the Fronting Bank and each Lender and their
respective successors and assigns, except that the Borrower shall not
have the right to assign its rights hereunder or any interest herein
without the prior consent of all the Lenders.
SECTION 10.04. Successors and Assigns. (a) Whenever in this
Agreement any of the parties hereto is referred to, such reference shall
be deemed to include the successors and assigns of such party; and all
covenants, promises and agreements by or on behalf of the Borrower, the
Agent, the Fronting Bank or the Lenders that are contained in this
Agreement shall bind and inure to the benefit of their respective
successors and assigns.
(b) Each Lender may assign to one or more assignees all or a
portion of its interests, rights and obligations under this Agreement
(including all or a portion of its Commitments and the Loans at the time
owing to it and the Loans held by it); provided, however, that (i)
except in the case of (A) any assignment to a Lender or an Affiliate of
such Lender or (B) any assignment to an assignee reasonably acceptable
to the Borrower (it being understood that any Lender and any Affiliate
of any Lender shall be deemed to be acceptable to the Borrower for
purposes of this clause) if such assignment was required by any
Governmental Authority having jurisdiction over the assigning Lender,
each of the Borrower (the consent of which shall not be unreasonably
withheld), the Agent and, if any such assignment includes all or a
portion of any Lender's Revolving Credit Commitment, the Fronting Bank,
must give its prior written consent to such assignment, (ii) the amount
of the Commitment of the assigning Lender subject to each such
assignment (determined as of the date the Assignment and Acceptance with
respect to such assignment is delivered to the Agent) shall not be less
than $10,000,000 (or, if the amount of the assigning Lender's Commitment
is less than $10,000,000, an amount equal to the amount of such
Commitment), (iii) the parties to each such assignment shall execute
and deliver to the Agent an Assignment and Acceptance, together with a
processing and recordation fee of $3,500 (which shall be paid by the
Borrower in the case of any assignment pursuant to Section 2.21) and
(iv) the assignee, if it shall not be a Lender, shall deliver to the
Agent an Administrative Questionnaire. Upon acceptance and recording
pursuant to paragraph (e) of this Section 10.04, from and after the
effective date specified in each Assignment and Acceptance, which
effective date shall be (unless this clause is waived by the Agent) at
least five Business Days after the execution thereof, (i) the assignee
thereunder shall be a party hereto and, to the extent of the interest
assigned by such Assignment and Acceptance, have the rights and
obligations of a Lender under this Agreement and (ii) the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all
or the remaining portion of an assigning Lender's rights and obligations
under this Agreement, such Lender shall cease to be a party hereto but
shall continue to be entitled to the benefits of Sections 2.14, 2.16,
2.20, 6.11(d) and 10.05, as well as to any Fees accrued for its account
and not yet paid).
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the assignee thereunder shall be deemed
to confirm to and agree with each other and the other parties hereto as
follows: (i) such assigning Lender warrants that it is the legal and
beneficial owner of the interest being assigned thereby free and clear
of any adverse claim and that its Commitments and LC Commitment, and the
outstanding balances of its Term Loans and Revolving Loans, in each case
without giving effect to assignments thereof that have not become
effective, are as set forth in such Assignment and Acceptance;
(ii) except as set forth in clause (i) above, such assigning Lender
makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with this Agreement, or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement, any
other Loan Document or any other instrument or document furnished
pursuant hereto, or the financial condition of the Borrower or any
Subsidiary or the performance or observance by the Borrower or any
Subsidiary Guarantor of any of its obligations under this Agreement, any
other Loan Document or any other instrument or document furnished
pursuant hereto; (iii) such assignee represents and warrants that it is
legally authorized to enter into such Assignment and Acceptance;
(iv) such assignee confirms that it has received a copy of this
Agreement, together with copies of the most recent financial statements
delivered pursuant to Section 6.04 and such other documents and
information as it has deemed appropriate to make its own credit analysis
and decision to enter into such Assignment and Acceptance; (v) such
assignee will independently and without reliance upon the Agent, such
assigning Lender or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make
its own credit decisions in taking or not taking action under this
Agreement; (vi) such assignee appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers under
this Agreement as are delegated to the Agent by the terms hereof,
together with such powers as are reasonably incidental thereto; and
(vii) such assignee agrees that it will perform in accordance with their
terms all the obligations that by the terms of this Agreement are
required to be performed by it as a Lender.
(d) The Agent, acting for this purpose as agent of the Borrower,
shall maintain at one of its offices in The City of New York a copy of
each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the
Commitments and LC Commitment of, and principal amount of the Loans
owing to, each Lender pursuant to the terms hereof from time to time
(the Register ). The entries in the Register shall be conclusive in the
absence of manifest error and the Borrower, the Agent, the Fronting Bank
and the Lenders shall treat each Person whose name is recorded in the
Register pursuant to the terms hereof as a Lender hereunder for all
purposes of this Agreement. The Register shall be available for
inspection by the Borrower, the Fronting Bank and any Lender, at any
reasonable time and from time to time upon reasonable prior notice.
(e) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, an Administrative
Questionnaire completed in respect of the assignee (unless the assignee
shall already be a Lender hereunder), the processing and recordation fee
referred to in paragraph (b) above and the written consent of the Agent
to such assignment, the Agent shall (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the
Register and (iii) give prompt notice thereof to the Lenders and the
Fronting Bank.
(f) Each Lender may without the consent of the Borrower, the Agent
or the Fronting Bank sell participation to one or more banks or other
entities in all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitments and the Loans
owing to it and the Loans held by it); provided, however, that (i) such
Lender's obligations under this Agreement shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, (iii) the participating
banks or other entities shall be entitled to the benefit of the cost
protection provisions contained in Sections 2.14, 2.16 and 2.20 to the
same extent as if they were Lenders, provided that the Borrower shall
not be required to reimburse the participating lenders or other entities
pursuant to Section 2.14, 2.16 or 2.20 in an amount which exceeds the
amount that would have been payable thereunder to such Lender had such
Lender not sold such participation and (iv) the Borrower, the Agent, the
Fronting Bank and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement, and such Lender shall retain the sole
right to enforce the obligations of the Borrower relating to the Loans
or LC Disbursements and to approve any amendment, modification or waiver
of any provision of this Agreement (provided that the participating bank
or other entity may be provided with the right to approve amendments,
modifications or waivers affecting it with respect to (A) any decrease
in the Fees payable hereunder with respect to Loans in which the
participating bank or other entity has purchased a participation,
(B) any change in the amount of principal of, or decrease in the rate at
which interest is payable, on the Loans in which the participating bank
or other entity has purchased a participation, (C) any extension of the
dates fixed for scheduled payments of principal of or interest on the
Loans in which the participating bank or other entity has purchased a
participation or (D) any release of all or substantially all the
Collateral).
(g) Any Lender or participant may, in connection with any
assignment or participation or proposed assignment or participation
pursuant to this Section 10.04, disclose to the assignee or participant
or proposed assignee or participant any information relating to the
Borrower and the Subsidiaries furnished to such Lender by or on behalf
of the Borrower; provided that, prior to any such disclosure of
information designated by the Borrower as confidential, each such
assignee or participant or proposed assignee or participant shall
execute an agreement whereby such assignee or participant shall agree
(subject to customary exceptions) to preserve the confidentiality of
such confidential information.
(h) In the event that Standard & Poor's Corporation, Moody's
Investors Service, Inc., and Thompson's BankWatch (or InsuranceWatch
Ratings Service, in the case of Lenders that are insurance companies (or
Best's Insurance Reports, if such insurance company is not rated by
InsuranceWatch Ratings Service)) shall, after the date that any Lender
becomes a Lender, downgrade the long-term certificate of deposit ratings
of such Lender, and the resulting ratings shall be below BBB-, Baa3 and
C (or BB, in the case of a Lender that is an insurance company (or B, in
the case of an insurance company not rated by InsuranceWatch Ratings
Service)), then the Fronting Bank shall have the right, but not the
obligation, at its own expense, upon notice to such Lender and the
Agent, to replace (or to request the Borrower to use its reasonable
efforts to replace) such Lender with an assignee (in accordance with and
subject to the restrictions contained in paragraph (b) above), and such
Lender hereby agrees to transfer and assign without recourse (in
accordance with and subject to the restrictions contained in paragraph
(b) above) all its interests, rights and obligations in respect of its
Revolving Credit Commitment to such assignee; provided, however, that
(i) no such assignment shall conflict with any law, rule and regulation
or order of any Governmental Authority and (ii) the Fronting Bank or
such assignee, as the case may be, shall pay to such Lender in
immediately available funds on the date of such assignment the principal
of and interest accrued to the date of payment on the Loans made by such
Lender hereunder and all other amounts accrued for such Lender's account
or owed to it hereunder.
(i) Any Lender may at any time assign all or any portion of its
rights under this Agreement to a Federal Reserve Bank provided that no
such assignment shall release a Lender from any of its obligations
hereunder. In order to facilitate such an assignment to a Federal
Reserve Bank, the Borrower shall, at the request of the assigning
Lender, promptly execute and deliver to the assigning Lender a note, in
a form reasonably acceptable to such Lender, the Agent and the Borrower,
evidencing the Loans made to the Borrower by the assigning Lender
hereunder.
(j) The Borrower shall not assign or delegate any of its rights or
duties hereunder without the prior written consent of the Agent, the
Fronting Bank and each Lender. Except as provided in Section 3.09, the
Fronting Bank may not assign or delegate any of its respective rights
and duties hereunder without the prior written consent of the Borrower
and the Agent.
SECTION 10.05. Expenses; Indemnity. (a) The Borrower agrees to pay
all out-of-pocket expenses incurred by the Agent, the Fronting Bank and
the Collateral Agent in connection with the preparation of this
Agreement and the other Loan Documents or in connection with any
amendments, modifications or waivers of the provisions hereof or thereof
(whether or not the transactions hereby contemplated shall be
consummated) or incurred by the Agent, the Fronting Bank, the Collateral
Agent or any Lender in connection with the enforcement or protection of
their rights in connection with this Agreement and the other Loan
Documents or in connection with the Loans made or the Letters of Credit
issued hereunder, including the reasonable fees, other charges and
disbursements of Cravath, Swaine & Moore, counsel for the Agent, the
Collateral Agent and the Fronting Bank and of local counsel, and, in
connection with any such enforcement or protection, the reasonable fees,
other charges and disbursements of any other counsel for the Agent, the
Fronting Bank, the Collateral Agent or any Lender. The Borrower further
agrees that it shall indemnify (i) the Agent, the Fronting Bank, the
Collateral Agent and the Lenders from and hold them harmless against any
documentary taxes, assessments or charges made by any Governmental
Authority by reason of the execution and delivery and/or recordation of
this Agreement or any of the other Loan Documents and (ii) to reimburse
the Agent for any out-of-pocket expenses and charges incurred by it in
connection with its initial and on-going examinations of the Collateral.
(b) The Borrower agrees to indemnify the Agent, the Fronting Bank,
the Collateral Agent and each Lender and each of their respective
directors, officers, employees, agents and Affiliates (each such Person
being called an Indemnitee ) against, and to hold each Indemnitee
harmless from, any and all losses, claims, damages, liabilities and
related expenses, including reasonable counsel fees, charges and
disbursements, incurred by or asserted against any Indemnitee arising
out of, in any way connected with, or as a result of (i) the execution
or delivery of this Agreement or any other Loan Document or any
agreement or instrument contemplated hereby or thereby, the performance
by the parties hereby or thereto of their respective obligations
hereunder or thereunder or the consummation of the Transactions and the
other transactions contemplated hereby or thereby, (ii) the use of the
Letters of Credit or the proceeds of the Loans or (iii) any claim,
litigation, investigation or proceeding relating to any of the
foregoing, whether or not any Indemnitee is a party thereto; provided
that such indemnity shall not, as to any Indemnitee, be available to the
extent that such losses, claims, damages, liabilities or related
expenses are determined by a court of competent jurisdiction by final
and nonappealable judgment to have resulted from the gross negligence or
wilful misconduct of such Indemnitee.
(c) The provisions of this Section 10.05 shall remain operative
and in full force and effect regardless of the expiration of the term of
this Agreement, the consummation of the transactions contemplated
hereby, the repayment of any of the Loans, the invalidity or
unenforceability of any term or provision of this Agreement or any other
Loan Document, or any investigation made by or on behalf of the Agent,
the Fronting Bank, the Collateral Agent, the Fronting Bank or any
Lender. All amounts due under this Section 10.05 shall be payable on
written demand therefor.
SECTION 10.06. Right of Setoff. If an Event of Default shall have
occurred and be continuing, each Lender is hereby authorized at any time
and from time to time, to the fullest extent permitted by applicable
law, to set off and apply any and all deposits (general or special, time
or demand, provisional or final) at any time held and other indebtedness
at any time owing by such Lender to or for the credit or the account of
the Borrower against any of and all the obligations of the Borrower now
or hereafter existing under this Agreement and other Loan Documents held
by such Lender, irrespective of whether such Lender shall have made any
demand under this Agreement or such other Loan Document and although
such obligations may be unmatured. The rights of each Lender under this
Section 10.06 are in addition to other rights and remedies (including
other rights of setoff) that such Lender may have.
SECTION 10.07. APPLICABLE LAW. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS (OTHER THAN AS EXPRESSLY PROVIDED IN THE MORTGAGES AND THE
TRADEMARK SECURITY AGREEMENT) SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 10.08. Waivers; Amendment. (a) No failure or delay on the
part of the Agent, the Fronting Bank, the Collateral Agent or any Lender
in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a
right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of the
Agent, the Fronting Bank, the Collateral Agent and the Lenders hereunder
and under the other Loan Documents are cumulative and are not exclusive
of any rights or remedies that they would otherwise have. No waiver of
any provision of this Agreement or any other Loan Document or consent to
any departure by the Borrower therefrom shall in any event be effective
unless the same shall be permitted by paragraph (b) below, and then such
waiver or consent shall be effective only in the specific instance and
for the purpose for which given. No notice or demand on the Borrower in
any case shall entitle the Borrower to any other or further notice or
demand in similar or other circumstances.
(b) Neither this Agreement, the Guarantee Agreement or any of the
Security Documents nor any provision hereof or thereof may be waived,
amended or modified except, in the case of this Agreement, pursuant to
an agreement or agreements in writing entered into by the Borrower and
the Required Lenders, or, in the case of the Guarantee Agreement or any
of the Security Documents, pursuant to an agreement or agreements in
writing entered into by the Borrower, the Subsidiary Guarantors and the
Collateral Agent and consented to by the Required Lenders; provided,
however, that no such agreement shall (i) reduce the principal amount
of, or extend the scheduled maturity of, any principal of or interest
on, any Loan, or forgive any such payment or any part thereof, or reduce
the rate of interest on any Loan, without the prior written consent of
each holder of a Loan affected thereby, (ii) increase the Commitment of
any Lender as specified on Schedule 2.01 or reduce the Commitment Fees
of any Lender without the prior written consent of such Lender,
(iii) amend or modify the provisions of Section 2.17, the provisions of
this Section 10.08(b) or the definition of the term Required Lenders
without the prior written consent of each Lender or (iv) release all or
substantially all of the Collateral under any Security Document other
than as expressly permitted hereunder or under such Security Document
without the prior written consent of each Lender; provided further that
no such agreement shall amend, modify or otherwise affect the rights or
duties of the Agent or the Fronting Bank hereunder without the prior
written consent of the Agent or the Fronting Bank, as the case may be.
SECTION 10.09. Interest Rate Limitation. Notwithstanding anything
herein to the contrary, if at any time the applicable interest rate,
together with all fees and charges that are treated as interest under
applicable law (collectively, the Charges ), as provided for herein or
in any other document executed in connection herewith, or otherwise
contracted for, charged, received, taken or reserved by any Lender,
shall exceed the maximum lawful rate (the Maximum Rate ) that may be
contracted for, charged, taken, received or reserved by such Lender in
accordance with applicable law, the rate of interest payable under the
Loans held by such Lender, together with all Charges payable to such
Lender, shall be limited to the Maximum Rate.
SECTION 10.10. Entire Agreement. This Agreement and the other Loan
Documents and the fee letter referred to in Section 2.05(c) constitute
the entire contract between the parties relative to the subject matter
hereof. Any previous agreement among the parties with respect to the
subject matter hereof is superseded by this Agreement and the other Loan
Documents. Nothing in this Agreement or in the other Loan Documents,
expressed or implied, is intended to confer upon any party other than
the parties hereto and thereto any rights, remedies, obligations or
liabilities under or by reason of this Agreement or the other Loan
Documents.
SECTION 10.11. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR
ANY OF THE OTHER LOAN DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 10.11.
SECTION 10.12. Severability. In the event any one or more of the
provisions contained in this Agreement or in any other Loan Document
should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions
contained herein and therein shall not in any way be affected or
impaired thereby. The parties shall endeavor in good-faith negotiations
to replace the invalid, illegal or unenforceable provisions with valid
provisions, the economic effect of which comes as close as possible to
that of the invalid, illegal or unenforceable provisions.
SECTION 10.13. Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall constitute an original but all
of which when taken together shall constitute but one contract, and
shall become effective as provided in Section 10.03.
SECTION 10.14. Headings. Article and Section headings and the
Table of Contents used herein are for convenience of reference only, are
not part of this Agreement and are not to affect the construction of, or
to be taken into consideration in interpreting, this Agreement.
SECTION 10.15. Jurisdiction; Consent to Service of Process. (a)
The Borrower hereby irrevocably and unconditionally submits, for itself
and its property, to the nonexclusive jurisdiction of any New York State
court or Federal court of the United States of America sitting in
New York City, and any appellate court from any thereof, in any action
or proceeding arising out of or relating to this Agreement or the other
Loan Documents, or for recognition or enforcement of any judgment, and
each of the parties hereto hereby irrevocably and unconditionally agrees
that all claims in respect of any such action or proceeding may be heard
and determined in such New York State or, to the extent permitted by
law, in such Federal court. Each of the parties hereto 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. Nothing in this Agreement shall affect any
right that any Lender may otherwise have to bring any action or
proceeding relating to this Agreement or the other Loan Documents
against the Borrower or its properties in the courts of any
jurisdiction.
(b) The Borrower hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection
that it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this agreement or the
other Loan Documents in any New York State or Federal court. Each of the
parties hereto hereby irrevocably waives, to the fullest extent
permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service
of process in the manner provided for notices in Section 10.01. Nothing
in this Agreement will affect the right of any party to this Agreement
to serve process in any other manner permitted by law.
SECTION 10.16. Mortgaged Property Casualty and Condemnation.
(a) Notwithstanding any other provision of this Agreement or the
Security Documents, the Collateral Agent is authorized, at its option
(for the benefit of the Secured Parties), to collect and receive, to the
extent payable to the Borrower or any Subsidiary Guarantor, all
insurance proceeds, damages, claims and rights of action and the right
thereto under any insurance policies with respect to any casualty or
other insured damage ( Casualty ) to any portion of any Mortgaged
Property (collectively, Insurance Proceeds ), unless an Event of
Default shall not have occurred and be continuing. The Borrower agrees
to notify, and to cause each Subsidiary Guarantor to notify, the
Collateral Agent and the Agent, in writing, promptly after the Borrower
or any Subsidiary Guarantor obtains notice or knowledge of any Casualty
to a Mortgaged Property, which notice shall set forth a description of
such Casualty and the Borrower's or such Subsidiary Guarantor's good
faith estimate of the amount of related damages. If the Borrower or any
Subsidiary Guarantor shall receive any Insurance Proceeds, the Borrower
agrees, subject to the foregoing limitations, to endorse and transfer,
and to cause any Subsidiary Guarantor to endorse and transfer, any
Insurance Proceeds it receives to the Collateral Agent.
(b) The Borrower will notify, and cause each Subsidiary Guarantor
to notify, the Collateral Agent and the Agent immediately upon obtaining
knowledge of the institution of any action or proceeding for the taking
of any Mortgaged Property, or any part thereof or interest therein, for
public or quasi-public use under the power of eminent domain, by reason
of any public improvement or condemnation proceeding, or in any other
manner (a Condemnation ). No settlement or compromise of any claim in
connection with any such action or proceeding shall be made without the
consent of the Collateral Agent, which consent shall not be unreasonably
withheld. The Collateral Agent is authorized, at its option (for the
benefit of the Secured Parties), to collect and receive all proceeds of
any such Condemnation (in each case, the Condemnation Proceeds ). The
Borrower agrees to execute, and to cause any Subsidiary Guarantor to
execute, such further assignments of any Condemnation Proceeds as the
Collateral Agent may reasonably require.
(c) In the event of a Condemnation of all or substantially all
of any Mortgaged Property (which determination shall be made by the
Collateral Agent in its reasonable discretion), unless the Borrower
shall have notified the Collateral Agent in writing promptly after such
Condemnation that it or the applicable Subsidiary Guarantor intends to
replace the related Mortgaged Property (and no Default or Event of
Default shall have occurred and be continuing at the time of such
election), the Collateral Agent may deem such event to be a Prepayment
Event, and shall apply the Condemnation Proceeds received as a result of
such Condemnation (less the reasonable costs, if any, incurred by the
Collateral Agent or the Borrower or any Subsidiary Guarantor in the
recovery of such Condemnation Proceeds, including reasonable attorneys'
fees, other charges and disbursements (the Collateral Agent having
agreed to reimburse the Borrower or such Subsidiary Guarantor from such
Condemnation Proceeds for such costs incurred by the Borrower or such
Subsidiary Guarantor)) to prepay obligations outstanding under this
Agreement to the extent required under Section 2.13(c), with any
remaining Condemnation Proceeds being returned to the Borrower or such
Subsidiary Guarantor. If the Borrower or the applicable Subsidiary
Guarantor shall elect to replace a Mortgaged Property as contemplated
above, (i) the replacement property shall be of utility comparable to
that of the replaced Mortgaged Property and (ii) the insufficiency of
any Condemnation Proceeds to defray the entire expense of the related
location, acquisition and replacement of such replacement property shall
in no way relieve the Borrower or such Subsidiary Guarantor of its
obligation to complete the construction of any replacement property if
the Borrower or such Subsidiary Guarantor shall have made such election
and shall have acquired the related real property.
(d) In the event of any Condemnation of the Mortgaged Property, or
any part thereof (other than a Condemnation described in paragraph (c)
above (unless such Condemnation shall not be deemed to be a Prepayment
Event or the Borrower or the applicable Subsidiary Guarantor shall be
permitted and shall have elected to replace the related Mortgaged
Property, in each case, as provided in paragraph (c) above) and subject
to the provisions of paragraph (f) below, the Collateral Agent shall
apply the Condemnation Proceeds, first, in the case of a partial
Condemnation, to the repair or restoration of any integrated structure
subject to such Condemnation or, in the case of a total or
substantially all Condemnation, to the location of a replacement
property, acquisition of such replacement property and construction of
the replacement structures, in each case, under the conditions specified
in paragraph (f) below, and, second, shall apply the remainder of such
Condemnation Proceeds (less the reasonable costs, if any, incurred by
the Collateral Agent or the Borrower or the applicable Subsidiary
Guarantor in the recovery of such Condemnation Proceeds, including
reasonable attorneys' fees (the Collateral Agent having agreed to
reimburse the Borrower or such Subsidiary Guarantor from such
Condemnation Proceeds for such costs incurred by the Borrower or such
Subsidiary Guarantor)) to prepay obligations outstanding under this
Agreement to the extent required under Section 2.13(c), with any
remaining Condemnation Proceeds being returned to the Borrower or such
Subsidiary Guarantor.
(e) In the event of any Casualty of less than 50% of the useable
square footage of the improvements of any Mortgaged Property, the
Borrower shall, and shall cause each Subsidiary Guarantor to, subject to
the conditions contained in clause (f), restore the Mortgaged Property
to substantially its same condition immediately prior to such Casualty.
In the event of any Casualty of greater than 50% of the useable square
footage of the improvements of any Mortgaged Property and so long as no
Default or Event of Default has occurred and is continuing, the Borrower
shall have the option to either:
(i) restore (or cause the applicable Subsidiary Guarantor to
restore) the Mortgaged Property to a condition substantially
similar to its condition immediately prior to such Casualty and to
invest the balance, if any, of any Insurance Proceeds, in
equipment, vehicles or other assets used in the Borrower's or such
Subsidiary Guarantor's principal lines of business within 180 days
after the receipt thereof, provided that the Borrower or such
Subsidiary Guarantor, pending such reinvestment, promptly deposits
such excess Insurance Proceeds in a cash collateral account
established with the Collateral Agent for the benefit of the
Secured Parties;
(ii) replace (or cause the applicable Subsidiary Guarantor
to replace) the Mortgaged Property with property of utility
comparable to that of the replaced Mortgage Property and to invest
the balance, if any, of any Insurance Proceeds, in equipment,
vehicles or other assets used in the Borrower's or such Subsidiary
Guarantor's principal lines of business within 180 days after the
receipt thereof, provided that the Borrower or such Subsidiary
Guarantor, pending such reinvestment, promptly deposits such
excess Insurance Proceeds in a cash collateral account established
with the collateral Agent for the benefit of the Secured Parties;
or
(iii) direct (or cause the applicable Subsidiary Guarantor
to direct) the Collateral Agent to apply the related Insurance
Proceeds to prepay obligations outstanding under this Agreement to
the extent required under Section 2.13(c), with any remaining
Insurance Proceeds being returned to the Borrower or such
Subsidiary Guarantor.
It is understood that any excess Insurance Proceeds that are not
reinvested in the Borrower's or the applicable Subsidiary Guarantor's
principal lines of business as contemplated above will be applied to
prepay obligations outstanding under this Agreement to the extent
required under Section 2.13(c).
If required to do so, the Borrower shall make, or cause the
applicable Subsidiary Guarantor to make, the election contemplated by
the immediately preceding paragraph by notifying the Collateral Agent
and the Agent promptly after the later to occur of (A) five days after
the Borrower or such Subsidiary Guarantor and their respective insurance
carriers reach a final determination of the amount of any Insurance
Proceeds and (B) 30 days after the occurrence of the Casualty. If the
Borrower or such Subsidiary Guarantor shall be required or shall elect
to restore or replace the Mortgaged Property, the insufficiency of any
Insurance Proceeds or Condemnation Proceeds to defray the entire expense
of such restoration or replacement shall in no way relieve the Borrower
or such Subsidiary Guarantor of such obligation to so restore or so
replace if it is so required or once such election has been made. In the
event the Borrower or such Subsidiary Guarantor shall be required to
restore or replace or shall notify the Collateral Agent and the Agent of
its election to restore or replace, the Borrower shall diligently and
continuously prosecute, or cause such Subsidiary Guarantor to so
prosecute, the restoration or replacement of the Mortgaged Property to
completion. In the circumstance where the Borrower or such Subsidiary
Guarantor shall be required to restore or replace or shall so elect to
restore or replace and no Default or Event of Default has occurred and
is continuing the Borrower or such Subsidiary Guarantor shall not be
required to comply with the requirements of paragraph (f) below in
connection with such restoration or replacement (except as required by
clause (f)(ii)(A) and (B)), so long as the cost of such restoration or
replacement shall be less than $200,000. In the event of a Casualty
where the Borrower or such Subsidiary Guarantor is required to make the
election set forth above and the Borrower either shall fail to notify or
to cause such Subsidiary Guarantor to notify the Collateral Agent and
the Agent of its election within the period set forth above or the
Borrower or such Subsidiary Guarantor shall elect not to restore or
replace the Mortgaged Property, the Collateral Agent shall (after being
reimbursed for all reasonable costs of recovery of such Insurance
Proceeds including reasonable attorneys' fees and after reimbursing the
Borrower or such Subsidiary Guarantor for all such reasonable costs
incurred by the Borrower or such Subsidiary Guarantor) apply such
Insurance Proceeds to prepay obligations outstanding under this
Agreement to the extent required under Section 2.13(c). In addition,
upon such prepayment, the Borrower shall be obligated to place, or cause
such Subsidiary Guarantor to place, the remaining portion, if any, of
the Mortgaged Property in a safe condition that is otherwise in
compliance with the requirements of applicable Governmental Authorities
and the provisions of this Agreement and the applicable Mortgage.
(f) Except as otherwise specifically provided in this
Section 10.16, all Insurance Proceeds and all Condemnation Proceeds
recovered by the Collateral Agent (A) are to be applied to the
restoration or replacement of the applicable Mortgaged Property (or, if
permitted in the event of a total or substantially all Condemnation as
contemplated in paragraph (c) above, to the replacement of the
applicable Mortgaged Property) (less the reasonable cost, if any, to the
Collateral Agent of such recovery and of paying out such proceeds,
including reasonable attorneys' fees, other charges and disbursements
and costs allocable to inspecting the Work (as defined below) and
(B) shall be applied by the Collateral Agent to the payment of the cost
of restoring or replacing the Mortgaged Property so damaged, destroyed
or taken or of the portion or portions of the Mortgaged Property not so
taken (the Work ) and (C) shall be paid out from time to time to the
Borrower or the applicable Subsidiary Guarantor as and to the extent the
Work (or the location and acquisition of any replacement of any
Mortgaged Property) progresses for the payment thereof, but subject to
each of the following conditions:
(i) the Borrower or the applicable Subsidiary Guarantor must
promptly commence the restoration process or the replacement
process in connection with the Mortgaged Property;
(ii) the Work shall be in the charge of an architect or
engineer and before the Borrower or the applicable Subsidiary
Guarantor commences any Work, other than temporary work to protect
property or prevent interference with business, the Collateral
Agent shall have received the plans and specifications and the
general contract for the Work from the Borrower or the applicable
Subsidiary Guarantor. Said plans and specifications shall provide
for such Work that, upon completion thereof, the improvements
shall (A) be in compliance with all requirements of applicable
Governmental Authorities such that all representations or
warranties of the Borrower or such Subsidiary Guarantor relating
to the compliance of such Mortgaged Property with applicable laws,
rules or regulations in this Credit Agreement or the Security
Documents will be correct in all respects and (B) be at least
equal in value and general utility to the improvements that were
on such Mortgaged Property (or that were on the Mortgaged Property
that has been replaced, if applicable) prior to the Casualty or
Taking, and in the case of a Taking, subject to the effect of such
Taking;
(iii) except as provided in (iv) below, each request for
payment shall be made on seven days' prior notice to the
Collateral Agent and shall be accompanied by a certificate to be
made by such architect or engineer, stating (A) that all the Work
completed has been done in substantial compliance with the plans
and specifications, (B) that the sum requested is justly required
to reimburse the Borrower or the applicable Subsidiary Guarantor
for payments by the Borrower or such Subsidiary Guarantor to, or
is justly due to, the contractor, subcontractors, materialmen,
laborers, engineers, architects or other Persons rendering
services or materials for the Work (giving a brief description of
such services and materials) and that, when added to all sums
previously paid out by the Collateral Agent, does not exceed the
value of the Work done to the date of such certificate;
(iv) each request for payment in connection with the
acquisition of a replacement Mortgaged Property shall be made on
30 days' prior notice to the Collateral Agent and, in connection
therewith, (A) each such request shall be accompanied by a copy of
the sales contract or other document governing the acquisition of
the replacement property by the Borrower or the applicable
Subsidiary Guarantor and a certificate of the Borrower or such
Subsidiary Guarantor stating that the sum requested represents the
sales price under such contract or document and the related
reasonable transaction fees and expenses (including brokerage
fees) and setting forth in sufficient detail the various
components of such requested sum and (B) the Borrower shall (and
shall cause such Subsidiary Guarantor to) (I) in addition to any
other items required to be delivered under this Section 10.16,
provide the Agent and the Collateral Agent with such opinions,
documents, certificates, title insurance policies (as required by
Section 5.02(m)), surveys and other insurance policies as they may
reasonably request and (II) take such other actions as the Agent
and the Collateral Agent may reasonably deem necessary or
appropriate (including actions with respect to the delivery to the
Collateral Agent of a first priority Mortgage as required by
Section 5.02(m) and assignment with respect to such real property
for ratable benefit of the Secured Parties);
(v) each request shall be accompanied by waivers of lien
satisfactory to the Collateral Agent covering that part of the
Work for which payment or reimbursement is being requested and, if
required by the Collateral Agent, by a search prepared by a title
company or licensed abstractor or by other evidence satisfactory
to the Collateral Agent, that there has not been filed with
respect to such Mortgaged Property any mechanics' or other lien or
instrument for the retention of title in respect of any part of
the Work not discharged of record or bonded to the reasonable
satisfaction of the Collateral Agent;
(vi) there shall be no Default or Event of Default that has
occurred and is continuing;
(vii) the request for any payment after the Work has been
completed shall be accompanied by a copy of any certificate or
certificates required by law to render occupancy of the
improvements being rebuilt, repaired or restored legal; and
(viii) after commencing the Work, the Borrower shall (and
shall cause the applicable Subsidiary Guarantor to) continue to
perform the Work diligently and in good faith to completion in
accordance with the approved plans and specifications.
Upon completion of the Work and payment in full therefor, the Collateral
Agent will disburse to the Borrower or the applicable Subsidiary
Guarantor the amount of any Insurance Proceeds or Condemnation Proceeds
then or thereafter in the hands of the Collateral Agent on account of
the Casualty or Taking that necessitated such Work to be applied (x) to
prepay obligations outstanding under this Agreement to the extent
required under Section 2.13(c), with any excess being returned to the
Borrower or the applicable Subsidiary Guarantor, or (y) to be reinvested
in the Borrower's or such Subsidiary Guarantor's principal lines of
business within 180 days after the receipt thereof, provided that the
Borrower, pending such reinvestment, promptly deposits (or causes the
applicable Subsidiary Guarantor to so deposit) such amounts in a cash
collateral account established with the Collateral Agent for the benefit
of the Secured Parties.
(g) Notwithstanding any other provisions of this Section 10.16, if
the Borrower or the applicable Subsidiary Guarantor shall have elected
to replace a Mortgaged Property as contemplated in paragraphs (c) and
(e) above, all Condemnation Proceeds or Insurance Proceeds held by the
Collateral Agent in connection therewith shall be applied to prepay
obligations outstanding under this Agreement to the extent required
under Section 2.13(c) if (i) the Borrower notifies the Collateral Agent
and the Agent that it or the applicable Subsidiary Guarantor does not
intend to replace the related Mortgaged Property, (ii) a Responsible
Officer of the Borrower shall not have notified the Agent and the
Collateral Agent in writing that the Borrower or the applicable
Subsidiary Guarantor has acquired or has entered into a binding contract
to acquire land upon which it will construct the replacement property
within six months after the related Condemnation or Casualty or
(iii) the Borrower shall have not notified the Agent and the Collateral
Agent in writing that it or the applicable Subsidiary Guarantor has
begun construction of the replacement structures within one year after
the related Condemnation or Casualty. Any funds not required to be
applied in accordance with Section 2.13(c) shall be returned to the
Borrower or the applicable Subsidiary Guarantor.
(h) Nothing in this Section 10.16 shall prevent the Collateral
Agent from applying at any time all or any part of the Insurance
Proceeds or Condemnation Proceeds to the curing of any Event of Default
under this Credit Agreement.
(i) The execution of a Mortgage or a Leasehold Mortgage by any
Subsidiary Guarantor shall be deemed to be an acknowledgement and
acceptance of the provisions of this Section 10.16 and the provisions of
Section 10.17.
SECTION 10.17. Investment of Certain Escrowed Amounts. (a) In the
event that the Borrower deposits (or causes any Subsidiary to deposit)
money with the Collateral Agent, or such money is received directly by
the Collateral Agent, pursuant to or in connection with (a) the
definition of the term Prepayment Event (in connection with any
deposit of Net Cash Proceeds pending any permitted reinvestment
contemplated by such definition (other than with respect to any
Mortgaged Property Casualty or Condemnation governed by Section 10.16))
or (b) Section 10.16 (in connection with any Mortgaged Property Casualty
or Condemnation), the Borrower and each applicable Subsidiary
understands and agrees that (i) such amounts shall be held as collateral
for the payment of the Obligations in separate escrow accounts (or sub-
accounts of a single escrow account) with the Collateral Agent for the
benefit of the Secured Parties, (ii) the Collateral Agent shall have
exclusive dominion and control over such accounts (or subaccounts),
(iii) other than any interest earned on the investment of such deposits
in Permitted Investments, which investments shall be made at the option
and sole discretion of the Collateral Agent, such deposits shall not
bear interest, (iv) interest or profits, if any, on such investments
shall accumulate in such accounts (or sub-accounts) and (v) amounts held
in such accounts (or sub-accounts) shall be released or applied (A) in
the case of Section 10.16, as provided in (and subject to the provisions
of) such Section and (B) in all other cases, upon the demand by the
Borrower in connection with the Borrower's or the applicable
Subsidiary's reinvestment of such amounts within the specified period of
time.
(b) Nothing in this Section 10.17 shall prevent the Collateral
Agent from applying at any time all or any part of the amounts on
deposit in the above-contemplated accounts (or sub-accounts) to the
curing of any Event of Default under this Credit Agreement.
SECTION 10.18. Confidentiality. Except as otherwise provided in
Section 10.04(g), each of the Agent, the Fronting Bank, and each of the
Lenders agrees to keep confidential (and (i) to cause its respective
officers, directors and employees to keep confidential and (ii) to use
its best efforts to cause its respective agents and representatives to
keep confidential) the Information (as defined below) and all copies
thereof, extracts therefrom and analyses or other materials based
thereon, except that the Agent, the Fronting Bank or any Lender shall be
permitted to disclose Information (a) to such of its respective
officers, directors, employees, agents and representatives as need to
know such Information, (b) to the extent requested by any bank
regulatory authority, (c) (i) to the extent otherwise required by
applicable laws and regulations or by any subpoena or similar legal
process or (ii) in connection with the enforcement of this Agreement or
any other Loan Document, (d) to the extent such Information (i) becomes
publicly available other than as a result of a breach of this Agreement
or (ii) becomes available to the Agent, the Fronting Bank or any Lender
on a nonconfidential basis from a source other than the Borrower or
(e) to the extent the Borrower shall have consented to such disclosure
in writing. For the purposes of this Section, Information shall mean
all information that is received from the Borrower and relates to the
Borrower or the Subsidiaries, other than any such information available
to the Agent, the Fronting Bank or any Lender on a nonconfidential basis
prior to its disclosure thereto by the Borrower, and which is clearly
identified at the time of delivery as confidential. The provisions of
this Section 10.18 shall remain operative and in full force and effect
regardless of the expiration of this Agreement. Notwithstanding the
foregoing, the parties hereto agree that the filing of any of the Loan
Documents (to the extent necessary in the judgment of the Collateral
Agent) to properly assure the validity or priority of the Collateral
Agent's Lien under any Security Document or to the extent required by
local counsel in order to render an opinion in form and substance
reasonably satisfactory to the Collateral Agent in connection with such
Lien will not result in a violation of the foregoing confidentiality
provisions.
SECTION 10.19 Sharing of Proceeds of Certain Collateral. (a) If
the Collateral Agent receives any amounts in respect of any Mortgaged
Property and the related Mortgage omits as a secured obligation the
Revolving Loans (including the Letters of Credit) (each such Mortgage
being a Partial Mortgage ), and the application by the Collateral Agent
of such amounts in accordance with the terms of such Partial Mortgage
would result in the unpaid principal portion of any Lender's Loans being
proportionately less than the unpaid principal portion of any other
Lender's Loans, then the Collateral Agent shall be permitted to
reallocate such amounts so that the aggregate unpaid principal amount of
the Loans and LC Exposures and participations in Loans and LC Exposures
held by each Lender shall be in the same proportion to the aggregate
unpaid principal amount of all Loans and LC Exposures then outstanding
as the principal amount of such Lender's Loans and LC Exposures prior to
the initial application of the amounts by the Collateral Agent was to
the principal amount of all Loans and LC Exposures prior to the initial
application of such amounts. The Borrower expressly consents to the
foregoing arrangements.
IN WITNESS WHEREOF, the Borrower, the Agent, the Fronting Bank and
the Lenders have caused this Agreement to be duly executed by their
respective authorized officers as of the day and year first above
written.
DOSKOCIL COMPANIES INCORPORATED,
by
/s/Bryant P. Bynum
Name: Bryant P. Bynum
Title: V.P. Treasurer
CHEMICAL BANK, individually, as
Agent and as Fronting Bank,
by
/s/Brian Comiskey
Name: Brian Comiskey
Title: Vice President
BANQUE PARIBAS,
by
/s/Pierre-Jean de Filippis
Name: Pierre-Jean de Filippis
Title: General Manager
by
/s/Bruce A. Cauley
Name: Bruce A. Cauley
Title: Deputy General
Manager
CREDIT LYONNAIS, CAYMAN ISLAND
BRANCH,
by
/s/Raymond Whiteman
Name: Raymond Whiteman
Title: Authorized Signature
FIRST BANK NATIONAL ASSOCIATION,
by
/s/John E. Besse
Name: John E. Besse
Title: Vice President
THE FIRST NATIONAL BANK OF BOSTON,
by
/s/Peter R. White
Name: Peter R. White
Title: Managing Director
GIROCREDIT BANK AKTIENGESELLSCHAFT
DER SPARKASSEN, GRAND CAYMAN ISLAND
BRANCH,
by
/s/Patricia Hogan
Name: Patricia Hogan
Title: Vice President
by
/s/Anca Trifan
Name: Anca Trifan
Title: Vice President
HARRIS TRUST AND SAVINGS BANK,
by
/s/Edward Boyd Jones
Name: Edward Boyd Jones
Title: Vice President
HELLER FINANCIAL, INC.,
by
/s/V. Robert Rotering
Name: V. Robert Rotering
Title: AVP
THE LONG TERM CREDIT BANK OF JAPAN,
LTD., CHICAGO BRANCH,
by
/s/Armund J. Schoen, Jr.
Name: Armund J. Schoen, Jr.
Title: Vice President &
Deputy General
Manager
THE MITSUBISHI TRUST AND BANKING
CORPORATION,
by
/s/Patricia Loret de Mola
Name: Patricia Loret de Mola
Title: Senior Vice President
NATIONSBANK OF TEXAS, N.A.,
by
/s/Susan Ray
Name: Susan Ray
Title: Vice President
Exhibit 2
For: DOSKOCIL COMPANIES INC.
Contact: Bryant Bynum
Vice President Planning
Corporate Finance
(405) 879-5500
FOR IMMEDIATE RELEASE
Naomi Rosenfeld/Eileen English
Media Contact: Stephanie Ferrell
Morgen-Walke Associates
(212) 850-5600
OKLAHOMA CITY, Okla., June 2, 1994 -- Doskocil Companies
Incorporated (NASDAQ:DOSK) announced today that it has completed
the previously announced acquisition of the Frozen Specialty
Foods division of International Multifoods Corporation
(NYSE:IMC). The purchase price was approximately $135 million.
The business, which has been named Doskocil Specialty Brands
Company, will operate as a fourth operating division of Doskocil.
Specialty Brands markets frozen food products, including ethnic
foods in the Mexican and Italian segments, as well as appetizers,
entrees and portioned meats. Sales are primarily to the
foodservice industry.
Financing for the transaction was provided by Chemical Bank.
Robert S. Wright, who ran the Frozen Specialty Foods
division at International Multifoods, has been named President
and General Manager of Doskocil Specialty Brands and Senior Vice
President of Doskocil Companies Incorporated.
Commenting on the acquisition, John T. Hanes, Chairman, CEO,
and President of Doskocil stated, "This acquisition is a natural
extension of our existing business and positions us well to
become a leader in the food industry. The complementary product
lines and channels of distribution will allow us to leverage the
strengths of both businesses. The acquisition also furthers our
presence in the foodservice market, especially the fast-growing
ethnic segment of the food industry."
Robert S. Wright commented, "The addition of the Frozen
Specialty Foods business represents an important step in
Doskocil's evolution into a leading diversified food company. My
colleagues and I are looking forward to being a part of the
Doskocil team. We will continue to provide our customers with
quality products, a dedication to service and targeted new
product introductions."
Doskocil produces, markets and distributes branded and
processed meat products under proprietary brand names that
include Wilson Foods , Corn King , Wilson's Continental Deli ,
American Favorite (TM), Doskocil Foods(TM) and Jefferson
Meats(TM). The Company's products include pepperoni, beef and
pork toppings marketed to the pizza industry as well as boneless
hams, sausage, bacon and other branded and processed meat
products for the foodservice, delicatessen and retail markets.
# # #
Exhibit 3
FROZEN SPECIALTY FOODS BUSINESS
(A UNIT OF THE PREPARED FOODS DIVISION
OF INTERNATIONAL MULTIFOODS CORPORATION)
Condensed Balance Sheets
(In thousands)
February 28, November 27,
ASSETS 1994 1993
____________ ____________
(Unaudited)
Current assets:
Cash $ 5 $ 5
Trade accounts receivable, net 11,609 9,401
Inventories 23,767 23,083
Other current assets 2,208 2,450
______ ______
Total current assets 37,589 34,939
Property, plant and equipment, net 44,434 45,284
Intangibles, net 29,417 29,820
_______ _______
Total assets $111,440 $110,043
======= =======
LIABILITIES AND INVESTMENT AND ADVANCES BY PARENT
Current liabilities:
Current portion of long-term debt $ 172 $ 171
Accounts payable 7,003 5,429
Accrued expenses 5,987 7,576
______ ______
Total current liabilities 13,162 13,176
Long-term debt, net of current portion - 172
Deferred income taxes 9,807 9,807
Employee benefits and other non-current
liabilities 6,221 6,221
______ ______
Total liabilities 29,190 29,376
______ ______
Investment and advances by parent 82,250 80,667
______ ______
Total liabilities and investment and
advances by parent $111,440 $110,043
======= =======
See accompanying notes to condensed financial statements.
FROZEN SPECIALTY FOODS BUSINESS
(A UNIT OF THE PREPARED FOODS DIVISION
OF INTERNATIONAL MULTIFOODS CORPORATION)
Condensed Statements of Earnings - Unaudited
(In thousands)
Three Months Ended
February 28, February 27,
1994 1993
____________ ____________
Net sales $46,447 $45,001
Cost of sales 32,174 33,006
______ ______
Gross profit 14,273 11,995
Selling expenses 9,270 7,132
General and administrative expenses 914 1,577
Amortization of intangibles 403 410
Other income (31) (20)
Interest expense 4 7
_____ _____
Earnings before income taxes 3,713 2,889
Income taxes 1,562 1,144
_____ _____
Net earnings $ 2,151 $ 1,745
====== ======
See accompanying notes to condensed financial statements.
FROZEN SPECIALTY FOODS BUSINESS
(A UNIT OF THE PREPARED FOODS DIVISION
OF INTERNATIONAL MULTIFOODS CORPORATION)
Condensed Statements of Cash Flows - Unaudited
(In thousands)
Three Months Ended
February 28, February 27,
1994 1993
Cash flows from operations:
Net earnings $ 2,151 $ 1,745
Adjustments to reconcile net
earnings to net cash flows from
operations:
Depreciation and amortization 1,692 1,690
Deferred income tax expense 128 243
Loss on property disposals 24 97
Changes in operating assets and
liabilities:
(Increase) decrease in accounts
receivable (2,208) (818)
(Increase) decrease in inventories (684) 1,084
(Increase) decrease in other current
assets 242 (814)
Increase (decrease) in accounts
payable 1,574 (1,293)
Increase (decrease) in accrued
expenses (1,589) 3,954
Increase (decrease) in employee
benefits and other non-current
liabilities - (559)
_____ _____
Net cash flows provided by
operations 1,330 5,329
_____ _____
Cash flows from investing activities:
Capital expenditures (463) (474)
_____ _____
Net cash flows used for investing (463) (474)
_____ _____
Cash flows from financing activities:
Decrease in intercompany account (696) (4,283)
Payments on long-term debt (171) (572)
_____ ______
Net cash flows used for financing (867) (4,855)
Increase (decrease) in cash - -
Cash at beginning of period 5 4
______ ______
Cash at end of period $ 5 $ 4
______ ______
See accompanying notes to condensed financial statements.
FROZEN SPECIALTY FOODS BUSINESS
(A UNIT OF THE PREPARED FOODS DIVISION
OF INTERNATIONAL MULTIFOODS CORPORATION)
Notes to Condensed Financial Statements - Unaudited
February 28, 1994 and February 27, 1993
(In thousands)
(1) Summary of Significant Accounting Policies
General Information and Basis of Presentation
Frozen Specialty Foods Business ("Frozen Specialty" or the
"Company") is a unit of the Prepared Foods Business Division (the
"Division") of International Multifoods Corporation ("Multifoods"
or the "Corporation"). Frozen Specialty is a nationwide processor
of prepared frozen food products for the United States foodservice
and consumer markets.
The accompanying condensed financial statements have been prepared
without audit. The Balance Sheet at November 27, 1993, has been
derived from audited financial statements as of November 27, 1993
and for the nine months then ended. In the opinion of the Company,
the accompanying unaudited condensed financial statements contain
all adjustments (adjustments are of a normal, recurring nature)
necessary for a fair presentation of the financial position as of
February 28, 1994, and the results of operations and cash flows for
the three months ended February 28, 1994 and February 27, 1993.
The accompanying financial statements do not necessarily reflect
the financial position and results of operations of Frozen
Specialty in the future, or what the financial position and results
of operations would have been had it been an independent entity
during the periods presented. The financial statements should be
read in conjunction with the Company's audited financial statements
as of November 27, 1993 and for the nine months then ended.
FROZEN SPECIALTY FOODS BUSINESS
(A UNIT OF THE PREPARED FOODS DIVISION
OF INTERNATIONAL MULTIFOODS CORPORATION)
Notes to Condensed Financial Statements - Unaudited
(2) Inventories
Inventories at February 28, 1994 and November 27, 1993 are
summarized as follows:
February 28, November 27,
1994 1993
____________ ____________
Raw materials $ 4,051 $ 4,283
Finished and in-process goods 16,798 15,745
Packaging and supplies 2,918 3,055
______ ______
Total inventories $23,767 $23,083
====== ======
(3) Related Party Transactions
Transactions with Multifoods includes certain disbursements by
Multifoods made on behalf of Frozen Specialty and charges for
certain operating expenses.
Expenses are charged based upon the specific identification of
applicable costs, and in certain instances, a proportional cost
allocation. Management believes that the basis of all such
charges is reasonable. The amount of operating expenses charged
by Multifoods to Frozen Specialty are as follows:
Three Months Ended
__________________
February 28, February 27,
1994 1993
____________ ____________
Cost of sales $450 $515
Selling expenses 180 169
General and administrative 120 118
___ ___
$750 $802
=== ===
Sales to and purchases from other Multifoods business units
amounted to the following for each period presented:
Three Months Ended
__________________
February 28, February 27,
1994 1993
____________ ____________
Sales $741 $742
=== ===
Purchases $137 $191
=== ===
(4) Income Taxes
The Company files a consolidated federal income tax return with
Multifoods and is allocated a federal tax provision as if the
Company filed a separate return. The state tax provision is
allocated by applying a weighted-average state tax rate to the
Company's federal taxable income. Additional tax provision items
pertaining to the Company are maintained in the Multifoods
financial statements.
Income tax expense was allocated as follows:
Federal State Total
_______ _____ _____
Three Months ended February 28, 1994:
Current expense $1,192 $242 $1,434
Deferred expense 119 9 128
_____ ___ _____
Total tax expense $1,311 $251 $1,562
===== === =====
Three Months ended February 27, 1993:
Current expense $ 748 $153 $ 901
Deferred expense 216 27 243
___ ___ _____
Total tax expense $ 964 $180 $1,144
=== === =====
Deferred income tax expense reflects the impact of temporary
differences between the amounts of assets and liabilities for
financial reporting purposes and such amounts as measured by
currently enacted tax laws.
