UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM 10 - K
Washington, D.C. 20549
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 30, 1995
______________________________
IBP, inc.
DELAWARE CORPORATION 42-0838666
(State of Incorporation) (Employer Identification Number)
IBP AVENUE
POST OFFICE BOX 515
DAKOTA CITY, NE 68731
(Address) (Zip Code)
Telephone Number: (402) 494-2061
_________________________________________________
Securities registered pursuant to section 12(g) of Act:
Common Stock Registered with the New York
Stock Exchange and the Pacific
Stock Exchange.
Registrant has filed all reports required to be filed by
Section 13 or 15(d) of the Security Exchange Act of 1934 during
the preceding 12 months, and has been subject to such filing
requirements for the past 90 days.
Disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is contained in definitive Proxy Statement
incorporated by reference in Part III of this Form 10-K.
The aggregate market value of the registrant's common
stock held by non-affiliates (94,451,814 shares) based on the
New York Stock Exchange average bid and ask price on March 19,
1996, was approximately $2.35 billion.
As of March 19, 1996, the registrant had outstanding
94,728,350 shares of its common stock.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's 1995 Annual Report
to Stockholders (the "Annual Report") are
incorporated by reference in Parts I, II and IV of this Report.
Portions of the registrant's definitive Proxy Statement dated
March 13, 1996, (the "Proxy Statement") are incorporated by
reference in Part III of this Report. Other documents
incorporated by reference in this Report are listed in the
Exhibit Index on page 22.
PART I
ITEMS 1 AND 2. BUSINESS AND PROPERTIES
General
IBP, inc., ("IBP") a Delaware corporation, principally
produces fresh beef and fresh pork products. IBP's primary
products include boxed beef and fresh pork which are marketed
mainly in the United States to grocery chains, meat
distributors, wholesalers, retailers, restaurant and hotel
chains, and processors who produce cured and smoked products,
such as bacon, ham, luncheon meats and sausage items. IBP also
produces inedible allied products, such as hides and other items
used to manufacture products such as leather, animal feed and
pharmaceuticals, and edible allied products, which include
variety meat items.
IBP operates an extensive sales network to service its
customers with regional sales and service centers in the United
States (including an independently-owned contractor in Los
Angeles that is licensed to use IBP trademarks) as well as
service centers in foreign countries. The mailing address of
IBP's corporate headquarters is IBP Avenue, Post Office Box 515,
Dakota City, Nebraska 68731; its telephone number is (402)
494-2061. All references to "IBP" include IBP, inc. and its
subsidiaries.
IBP operates 12 fed beef carcass production facilities in
eight cattle-producing states and Canada, which reduce live
cattle to dressed carcass form. Seven of these locations
include processing facilities which conduct fabricating
operations to produce boxed beef. IBP also operates three cow
boning facilities in Iowa, Nebraska and Texas, which reduce cows
and bulls to dressed carcass form and boneless meat product.
Fed beef consists primarily of young steers and heifers
specifically raised for beef consumption. Cows and bulls
processed by IBP are primarily breeding or dairy stock which
have been culled for various reasons.
IBP operates seven pork facilities in Indiana, Iowa and
Nebraska that include both carcass production and processing of
fresh pork products employing a production process similar to
that employed in its beef operation.
The following table reflects the approximate
percentages of revenues during the last three fiscal years from
IBP's principal product categories, all of which are within one
industry segment:
1995 1994 1993
Processed Beef Products 64% 66% 67%
Beef Carcasses1 5 4 4
Processed Pork Products 17 17 18
Beef And Pork Allied Products 14 13 11
---- ---- ----
100% 100% 100%
==== ==== ====
1Represents beef carcasses sold to third parties
that are not used in IBP's processing operation.
History of IBP's Business
IBP was first incorporated in 1960. It began operations
in 1961 with a single fed beef carcass production facility
located near Denison, Iowa, in what was then the nation's major
cattle-producing region. IBP grew in the Northern and Central
Plains states over the following nine years and opened beef
plants in Dakota City, Nebraska; Emporia, Kansas; Luverne,
Minnesota; and West Point, Nebraska. IBP expanded into the
Southern Plains in 1975, when it built its Amarillo, Texas,
facility near the large commercial feedlot operations of that
region. In 1976, it moved into the Pacific Northwest through
the acquisition and expansion of plants in Pasco, Washington,
and Boise, Idaho. Company expansion continued in 1980 with
construction of a facility in Finney County, Kansas, and in 1983
with the purchase and expansion of a plant in Joslin, Illinois.
In 1990, IBP opened its Lexington, Nebraska, fed beef plant and
in 1994 IBP purchased Lakeside Farm Industries, Ltd.
("Lakeside"), an agribusiness company with a fed beef carcass
facility in Brooks, Alberta, Canada, IBP's first plant outside
of the United States.
IBP began its cow boning operations in 1995 by acquiring
facilities in Tama, Iowa; Gibbon, Nebraska and Sealy, Texas.
The plants will supplement IBP's expansion into hamburger patty
production.
IBP began pork operations in 1982 when it purchased,
expanded and commenced operation of a pork facility in Storm
Lake, Iowa. Additional pork facilities were added in 1986 in
Louisa County, and Council Bluffs, Iowa; in 1987 in Madison,
Nebraska; in 1989 in Perry, Iowa; in 1990 in Waterloo, Iowa; and
in 1993 in Logansport, Indiana. In 1994 IBP constructed ham
processing facilities at its Council Bluffs, Iowa, and Madison,
Nebraska, locations. The ham facilities are operated by
the Consumer Products Division.
In 1995 IBP's newly formed Allied Group entered into a
joint venture with Sand Livestock Systems, Inc. of Columbus,
Nebraska and China's Shandong Province to develop a fully
integrated pork production operation in China. Plans
tentatively call for the joint venture to begin production in
1997.
In 1994 the Consumer Products Division purchased Prepared
Foods, Inc. from International Multifoods, Inc. Prepared Foods,
Inc. is a wholly-owned subsidiary of IBP with a plant in Santa
Teresa, New Mexico. The Santa Teresa plant and the cooked meats
facility connected to the Waterloo, Iowa, pork facility process
fresh meat into value-added, consumer-ready items. In 1995 the
Consumer Products Division purchased a facility in Columbia,
South Carolina that is currently being renovated. This facility
will also process fresh meat into value-added, consumer-ready
items.
In August 1981, when it was acquired by Occidental
Petroleum Corporation ("Occidental"), IBP was a publicly-held
corporation that was listed on the New York Stock Exchange (the
"NYSE"). From August 1981 to October 1987, IBP was a
wholly-owned subsidiary of Occidental. In October 1987, IBP sold
49.5% of its common stock and was again listed on the NYSE.
On September 4, 1991, Occidental offered all of its
shares of IBP Common Stock to its stockholders and certain
standby underwriters in an underwritten rights offering. As a
result of this transaction, Occidental no longer owns any shares
of IBP Common Stock.
Operations
Cattle and Hog Supplies
IBP does not currently raise cattle or hogs in the United
States. IBP's Canadian subsidiary, Lakeside, has cattle feeding
facilities, other agricultural divisions and a fed beef carcass
production facility. In 1995 Lakeside's feedlots provide
approximately 17% of that facility's live cattle needs. IBP's
main supply of live cattle and hogs is purchased by IBP buyers
who are trained to select high quality animals that are
candidates for higher yields. IBP's buyers purchase cattle and
hogs on a daily basis, generally a few days before the animals
are required for production, and live animals are generally held
in IBP's holding pens for only a few hours.
Production Process
IBP's fed beef carcass production facilities reduce live
fed cattle to dressed carcass form and process allied products,
and its processing facilities conduct fabricating operations
to produce boxed beef. IBP's fed carcass and beef
processing facilities operated in 1995 at approximately 91% and
92%, respectively, of their production capacities.
IBP's cow boning facilities produce beef trimmings and
boneless cuts of beef that are sold to customers who produce
hamburger, sausage and deli meats. IBP's cow boning facilities
operated in 1995 at approximately 81% of their production
capacity.
IBP's pork facilities produce fresh boxed pork for
shipment to retailers and also produce pork bellies, hams and
boneless picnic meat for shipment to customers who further
process the pork into bacon, cooked hams, luncheon meats and
sausage items. In 1995, IBP's pork plants operated at
approximately 84% of their production capacity.
Throughout production, edible beef, cow boning and pork
allied products, such as variety meat items, are segregated and
prepared for shipment or further refinement. Inedible beef, cow
boning and pork products derived from processing operations are
used in the manufacture of leather, animal feed, gelatin,
pharmaceuticals and cosmetics.
Eight of IBP's fed beef and cow boning plants include
hide treatment facilities. The majority of the hides from IBP's
other fed beef and cow boning plants are transported to these
facilities, which include brine curing operations and, in four
locations, chrome hide tanneries. The chrome tanning process
produces a semifinished product that is shipped to leather good
manufacturers worldwide. Brine-cured hides are sold to other
tanneries. IBP is the largest chrome tanner of cattle hides in
the United States.
Consumer Products Division
Management believes that significant opportunities exist
for the sale of value-added, consumer-ready products as consumer
acceptance of such products grows and packaging technology
improves. Currently, the Consumer Products Division produces
cooked meats for food service customers and other consumer-ready
products. The Consumer Products Division is continually
exploring the potential for consumer-ready products.
Facilities
The corporate headquarters of IBP are located primarily
in Dakota City, Nebraska, with some facilities in Dakota Dunes,
South Dakota. IBP believes that its plants are among the most
modern in the world and strives to maintain and enhance its
facilities. Generally, plants and additions are designed and
constructed by IBP's personnel. IBP considers its existing
plants and equipment to be in excellent condition. IBP's
capital spending for 1996 is expected to be in the
range of $175 million, which includes expenditures for
environmental compliance activities. Its principal plants as of
December 30, 1995, are described below.
Beef
IBP's eleven United States fed beef carcass production
facilities are located in the states of Idaho, Illinois, Iowa,
Kansas, Minnesota, Nebraska, Texas and Washington. IBP's
twelfth fed beef carcass production facility is in Alberta,
Canada. At these locations, seven have processing facilities,
eight have hide treatment or tanning operations, two have cold
storage freezer operations and one has a tallow refining plant.
IBP's cow boning facilities are located in Iowa, Nebraska and
Texas.
Pork
IBP's seven pork carcass production and processing
facilities are located in the states of Indiana, Iowa and
Nebraska. At these locations, four have cold storage freezer
operations and two have skinning operations.
Consumer Products
IBP's cooked meats facilities are in Iowa and New Mexico.
IBP's third facility in South Carolina is currently under
renovation. IBP's two ham processing facilities are located
next to pork facilities in Iowa and Nebraska.
Sales and Distribution
IBP's customers include domestic and international
grocery chains, meat distributors, wholesalers, retailers,
restaurant and hotel chains, and meat processors who produce
cured and smoked products, such as bacon, ham, luncheon meat and
sausage items. Most sales are made pursuant to daily orders as
opposed to longterm supply contracts. In each of the past three
years, IBP's largest beef customer accounted for less than 5% of
its annual beef gross sales, and its largest pork customer
accounted for less than 7% of its annual pork gross sales. For
the same periods, IBP's largest customer for beef and pork
combined accounted for less than 5% of its annual gross product
sales.
Most IBP products are shipped by trucks, generally from
plants located closest to the purchaser, although other plants
may supplement such deliveries, depending upon prevailing
supplies and product demand.
IBP sells to international customers through foreign and
domestic sales offices. In fiscal 1995, export sales accounted
for approximately 14.4% of IBP's net sales, which compares to
approximately 12.8% in fiscal 1994 and 11.9% in fiscal 1993.
Some allied products are sold as commodities
in bulk, while other items are trimmed, boxed and frozen by IBP.
Cattle hides are sold for both domestic and international use.
Uncured and brine-cured hides are sold to tanneries for further
processing. Chrome-tanned hides are sold to tanneries and
directly to further processors of leather.
Competition
The industry in which IBP operates is highly competitive
and characterized by very small margins. IBP considers its
principal competition to come from domestic producers of fresh
beef and pork products although IBP also competes with other
suppliers of protein, including other red meats, poultry,
seafood, grain, dairy products, eggs, soya and other protein
products. Competition exists both in the purchase of live
cattle and hogs and in the sale of beef and pork products. The
principal competitive element in both buying and selling is
price.
Failure to accurately assess the quality of cattle and
hogs can result in (i) the payment of an excessive price if the
livestock yields less than expected or (ii) the failure to bid a
price sufficiently high to purchase high quality livestock. To
effectively compete in the purchase of cattle, a cattle buyer
must be able to accurately judge the yield and quality of the
cattle to establish a fair price to the producer. As part of
IBP's cattle buying process, each cattle buyer prepares an
estimate by lot of the yield and quality of the cattle
purchased. IBP's information systems prepare a report on each
lot that compares the actual yield and quality to the buyer's
initial estimate. This enables IBP to monitor the quality of
various cattle producers and to measure the skill of its cattle
buyers, which are critical factors in determining IBP's success
and competitiveness.
IBP's hog buyers generally purchase hogs based upon an
average daily bid price. The average daily bid price is
adjusted for each producer by tracking the producer's yield and
quality results. From the results of the producer's prior
sales, IBP is able to generate a discount or a premium which
adjusts the average daily bid for that individual producer. IBP
believes this purchasing system is one of the most advanced and
accurate methods for establishing fair prices in the industry.
Product quality, product mix, location and service are
important competitive elements, in addition to price, in the
sale of fresh beef and pork products.
IBP is the largest producer of fresh beef and pork
products in the United States. IBP believes that its two
largest beef competitors in 1995 were ConAgra, Inc. ("ConAgra")
and Excel Corporation, a subsidiary of Cargill, Inc. It
believes that its largest pork competitors in 1995 were
Smithfield, ConAgra and Hormel.
Employees
As of December 30, 1995, IBP had approximately 34,000
employees. Whenever possible, production employees are recruited
locally and trained by IBP for specific tasks.
IBP considers its relations with its employees at its
plants to be good. Approximately 13,000 hourly employees at
seven of IBP's 26 production facilities are represented by labor
organizations. The labor contracts applicable to these plants
expire as follows:
Contract Expiration
Plant Union Date
Amarillo, Texas Teamsters (1) April 1998
Pasco, Washington Teamsters (1) May 1999
Tama, Iowa Teamsters (1) January 2001
Dakota City, Nebraska UFCW(2) August 1999
Joslin, Illinois UFCW(2) October 1996
Perry, Iowa UFCW(2) April 1999
Waterloo, Iowa UFCW(2) September 1998
_________________
(1) Teamsters local unions affiliated with The International
Brotherhood of Teamsters, Chauffeurs, Warehousemen, and
Helpers of America.
(2) United Food and Commercial Workers, International Union,
AFL-CIO.
Regulatory Matters
IBP's operations are subject to the constant inspection
and regulation of the United States Department of Agriculture
(the "USDA"), including (i) regulations of the USDA's Packers
and Stockyards Administration, (ii) continuous in-plant
inspection of IBP's production facilities (along with each live
animal, each carcass and all edible products) by USDA employees
to ensure compliance with USDA standards and (iii) grading of
beef carcasses by USDA employees.
IBP is subject to federal, state and local laws and
regulations governing environmental protection, which require
significant expenditures to maintain compliance. IBP
believes that it is in substantial compliance with
such laws and regulations. IBP is not aware of any violations
of, or pending changes in, such laws and regulations that are
likely to result in material penalties or material increases in
compliance costs. IBP incurred $5.3 million in capital
expenditures for environmental control facilities in fiscal 1995
and anticipates capital expenditures of approximately $13
million in fiscal 1996.
EXECUTIVE OFFICERS OF THE REGISTRANT
Age at Positions With IBP and
January 27, Five-Year Employment
Name 1996 History
- ---- ---------- ----------------------------
Richard L. Bond 48 President -- Fresh Meats since 1995;
1994-1995 Executive Vice President --
Beef; 1989-1994 Group Vice President --
Beef Sales and Marketing; 1982-1989 Vice
President -- Boxed Beef Sales and
Marketing
Kenneth W. Browning, Jr. 46 Executive Vice President since 1996;
1989-1996 Senior Vice President -- Hide
Division; 1982-1989 Vice President --
Hides
Lonnie O. Grigsby 56 Executive Vice President and General
Counsel since 1995; Secretary since
1985; 1988-1995 Executive Vice
President -- Finance & Administration;
General Counsel 1985-1990 and since 1993;
1987-1988 Senior Vice President;
1985-1987 Vice President
Craig J. Hart 40 Vice President -- Controller since 1995;
1993-1995 Assistant Vice President,
Controller; 1990-1993 Controller
David C. Layhee 51 President -- Consumer Products since
1995; 1994-1995 Executive Vice
President -- Design Products; 1989-1994
Group Vice President -- Design Products;
1983-1989 Group Vice President -- Sales
& Marketing
Eugene D. Leman 53 President -- Allied Group since 1995;
Director since 1989; 1986-1995 Executive
Vice President -- Pork Division; 1981-
1986 Group Vice President -- Pork
Division
James V. Lochner 43 Executive Vice President -- Technical
Services/Engineering since 1995; 1993-
1995 Senior Vice President -- Technical
Services; 1989-1993 Vice President --
Technical Services; 1986-1989 Assistant
Vice President Quality Control -- Beef;
1984-1986 Director -- Quality Control
Charles F. Mostek 48 Executive Vice President -- Fresh Meat
Sales and Marketing since 1995; 1989-
1995 Vice President -- Beef Sales; 1985-
1989 Vice President -- Slaughter
Division Sales; 1981-1985 Assistant Vice
President -- Carcass Grading and
Administration
Robert L. Peterson 63 Chairman of the Board of Directors since
1981; Chief Executive Officer since 1980;
Director since 1976; 1979-1995 President
Kenneth L. Rose 51 Executive Vice President -- Operations
Services since 1995; 1989-1995 Senior
Vice President -- Logistics Services;
1982-1989 Vice President --
Transportation
Jerry S. Scott 50 Executive Vice President -- Fresh Meat
Operations since 1995; 1986-1995 Vice
President -- Pork Operations
Larry Shipley 40 Executive Vice President -- Corporate
Development since 1995; 1995 Senior Vice
President -- Corporate Development;
1994-1995 Assistant to the Chairman;
1989-1994 Assistant to the President.
ITEM 3. LEGAL PROCEEDINGS
Incorporated by reference from the Annual Report, page
18, section entitled "Notes to Consolidated Financial
Statements," at note "J. Commitments and Contingencies." In
addition, IBP negotiated a settlement with the United Stated
Environmental Protection Agency concerning alleged violations of
permit standards and related issues under both federal and state
water and air statutes related to its Joslin, Illinois beef
complex facility. Such alleged violations were first reported
in IBP's September 26, 1992 quarterly report on Form 10-Q. A
consent decree was entered in October 1995, resulting in the
payment by IBP of fines totaling $280,000.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of IBP's security
holders during the fourth quarter of 1995.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Incorporated by reference from Annual Report, page 13,
section entitled "Consolidated Statements of Changes in
Stockholders' Equity"; from page 19, section entitled "Notes to
Consolidated Financial Statements," at note "K. Quarterly
Financial Data (Unaudited)"; and from page 21, section entitled
"Stockholders and Market Data." The Annual Report is an
exhibit to this Form 10-K.
ITEM 6. SELECTED FINANCIAL DATA
Incorporated by reference from Annual Report, page 22,
section entitled "Selected Financial Data."
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Incorporated by reference from the Annual Report, pages
20-21, section entitled "Management's Discussion and Analysis."
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Incorporated by reference from the Annual Report, pages
9-23, sections entitled "Consolidated Financial Statements,"
"Notes to Consolidated Financial Statements" and "Report of
Independent Accountants."
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Incorporated by reference from the Proxy Statement,
page 15, section entitled "INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS."
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Incorporated by reference from the Proxy Statement,
pages 2-4, section entitled "ELECTION OF DIRECTORS" and
reference is also made to the information regarding executive
officers set forth in "EXECUTIVE OFFICERS OF THE REGISTRANT" in
Part I of this report.
ITEM 11. EXECUTIVE COMPENSATION
Incorporated by reference from the Proxy Statement,
pages 7-13, section entitled "SUMMARY COMPENSATION TABLE";
"OPTION GRANTS TABLE," "AGGREGATED OPTION EXERCISES AND YEAR-END
OPTION VALUE TABLE," "PERFORMANCE GRAPH," "NEW PLANS BENEFITS"
and from page 5, section entitled "ELECTION OF DIRECTORS,"
subsection "Information Regarding Director's Compensation."
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Incorporated by reference from the Proxy Statement, pages 2 and 5,
sections entitled "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS" and
"SECURITY OWNERSHIP OF MANAGEMENT."
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated by reference from the Proxy Statement,
page 4, sections entitled "ELECTION OF DIRECTORS," subsection
"Information Regarding the Board of Directors and its
Committees" and from page 7, section entitled "COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS."
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K
(a) Documents filed as part of this report.
The following financial information is incorporated by reference
from the Annual Report, as identified below, or is found in this
report.
1. Consolidated Financial Location
Statements
Report of Independent Accountants Annual Report, page 23 and
pages 16 and 17 of this
report
Consolidated Statements of Earnings Annual Report, page 9
Consolidated Balance Sheets Annual Report, pages 10-11
Consolidated Statements of Cash Flows Annual Report, page 12
Consolidated Statements of Changes Annual Report, page 13
in Stockholders' Equity
Notes to Consolidated Financial Annual Report, pages 14-19
Statements
2. Financial Statement Schedule
Reports of Independent Accountants on Financial
Statement Schedules
Schedule II Valuation and Qualifying Accounts and
Reserves
All other schedules are omitted because they are not
applicable or not required.
3. Exhibits
3.1* Restated Certificate of Incorporation of IBP (filed as Exhibit
No. 2A to IBP's Registration Statement on Form 8-A, dated
March 9, 1988, File No. 1-6085).
3.2* By-laws of IBP (filed as Exhibit No. 2B to IBP's Registration
Statement on Form 8-A, dated March 9, 1988, File No. 1-6085).
10.5* IBP's 1987 Stock Option Plan (filed as Exhibit No. 28(a) to
IBP's Registration Statement on Form S-8, dated January 5,
1988, File No. 33-19441). (Executive Compensation Plan)
10.5.1* Form of Stock Option Agreement (10/1/87) (filed as Exhibit No.
28(b) to IBP's Registration Statement on Form S-8, dated
January 5, 1988, File No. 33-19441).
10.5.2* Form of Stock Option Agreement (12/31/87) (filed as Exhibit
No. 28(c) to IBP's Registration Statement on Form S-8, dated
January 5, 1988, File No. 33-19441).
10.5.3* IBP Officer Long-Term Stock Plan (filed as Exhibit No. 10.5.3
to the Annual Report on Form 10-K of IBP for the fiscal year
ended December 25, 1993, File No. 1-6085)
10.5.4* IBP Directors Stock Option Plan (filed as Exhibit No. 10.5.4
to the Annual Report on Form 10-K of IBP for the fiscal year
ended December 25, 1993, File No. 1-6085)
10.5.5* IBP 1993 Stock Option Plan (filed as Exhibit No.10.5.5 to the
Annual Report on Form 10-K of IBP for the fiscal year ended
December 25, 1993, File No. 1-6085)
10.14* Form of IBP's Indemnification Agreement with officers and
directors (filed as Exhibit No. 10.18 to IBP's Registration
Statement on Form S-1, dated August 19, 1987, File No. 1-6085).
10.21 Credit Agreement (Revolving/Term Credit Facility) dated as of
December 21, 1995, between IBP, inc. and various lenders with
First Bank National Association as Administrative Agent and
Bank of America National Trust and Savings Association as
Co-Agent.
10.23* Intercompany Agreement, dated as of September 4, 1991, between
IBP and Occidental Petroleum Corporation (filed as Exhibit No.
10.23 to the Annual Report on Form 10-K of IBP for the fiscal
year ended December 28, 1991, File No. 1-6085).
10.24* Employment Agreement, effective as of October 9, 1992,
between IBP and Lonnie O. Grigsby (filed as Exhibit No. 10.24
to the Annual Report on Form 10-K of IBP for the fiscal year
ended December 26, 1992, File No. 1-6085).
10.25 Employment Agreement, effective as of March 1, 1995, between
IBP and Richard L. Bond.
10.26 Employment Agreement, effective as of March 1, 1995, between
IBP and Eugene D. Leman.
10.27 Employment Agreement, effective as of March 1, 1995, between
IBP and David C. Layhee.
10.28* Text of Retirement Income Plan of IBP, inc. (As Amended and
Restated Effective as of January 1, 1992), as amended.
(Executive Compensation Plan) (filed as Exhibit No. 10.28 to
the Annual Report on Form 10-K of IBP for the fiscal year
ended December 26, 1992, File No. 1-6085).
10.29* Employment Agreement, effective January 1, 1993, between IBP
and Dale Tinstman (filed as Exhibit No. 10.29 to the Annual
Report on Form 10-K of IBP for the fiscal year ended December
25, 1993, File No. 1-6085).
11. Statement regarding computation of earnings per share.
13. 1995 Annual Report to Stockholders.
16. Letter regarding change in certifying accountant.
21. Subsidiaries of IBP, inc. as of December 30, 1995.
22.* Matters submitted to vote of security holders (filed as Item 4
to the Quarterly Report on Form 10-Q for the 26 weeks ended
July 1, 1995, File No. 1-6085).
23.1 Consent of Independent Public Accountants (Coopers & Lybrand
L.L.P.).
23.2 Consent of Independent Public Accountants (Price Waterhouse
LLP).
__________________
* Incorporated herein by reference
(b) Reports on Form 8-K
Not Applicable.
(c) Other Matters
With the exception of the information expressly referenced and thereby
incorporated in ITEMS 3, 5, 6, 7 and 8, the Annual Report is not to be deemed
"filed" with the Securities and Exchange Commission or otherwise subject to
the liabilities of Section 18 of the Securities and Exchange Act of 1934.
For the purpose of complying with the amendments to the rules governing
Form S-8 (effective July 13, 1990) under the Securities Act of 1933, IBP
hereby undertakes as follows, which undertaking shall be incorporated by
reference into IBP's Registration Statement on Form S-8 No. 33-19441 (filed
January 5, 1988):
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons
of IBP pursuant to the foregoing provisions, or otherwise, IBP has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by IBP of
expenses incurred or paid by a director, officer or controlling person of IBP
in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, IBP will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of IBP, inc.
Our report on the consolidated financial statements of IBP, inc. and
subsidiaries is included in this Form 10-K. In connection with our audit of
such financial statements, we have also audited the related financial
statement schedule listed in Item 14 of this Form 10-K for the year ended
December 30, 1995.
In our opinion, the financial statement schedule referred to above,
when considered in relation to the basic financial statements taken as a
whole, presents fairly, in all material respects, the information required
to be included therein.
COOPERS & LYBRAND
Omaha, Nebraska
January 22, 1996
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of IBP, inc.
Our audits of the consolidated financial statements referred to
in our report dated February 3, 1995 appearing on page 23 of the
1994 Annual Report to Stockholders of IBP, inc. (which report
and consolidated financial statements are incorporated by
reference in this Annual Report on Form 10_K) also included an
audit of the financial statement schedule at December 31, 1994
and December 25, 1993 and for the fiscal years then ended listed
in Item 14(a)2 of this Form 10_K. In our opinion, this
Financial Statement Schedule presents fairly, in all material
respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.
PRICE WATERHOUSE LLP
Chicago, Illinois
February 3, 1995
IBP, inc. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
AND RESERVES
Fiscal Years 1993, 1994 and 1995
(In thousands)
Allowance for
Doubtful Accounts
-----------------
Balance, December 26, 1992 $3,000
Amounts charged to costs and expenses 1,535
Recoveries of amounts previously
written off 27
Write-off of uncollectible accounts (364)
-----
Balance, December 25, 1993 4,198
Amounts charged to costs and expenses 4,852
Recoveries of amounts previously
written off 89
Write-off of uncollectible accounts (552)
Other 810
-----
Balance, December 31, 1994 9,397
Amounts charged to costs and expenses 478
Recoveries of amounts previously
written off 106
Write-off of uncollectible accounts (508)
Other 21
-----
Balance, December 30, 1995 $9,494
=====
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereto duly authorized.
IBP, inc.
By: /s/ Robert L. Peterson
----------------------
Robert L. Peterson
Chairman of the Board and
Chief Executive Officer
Date: March 28, 1996
--------------
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on
the date indicated.
Signature Title Date
--------- ----- ----
/s/ Robert L. Peterson Chairman of the Board March 28, 1996
- ---------------------- and Chief Executive Officer --------------
(principal executive officer)
/s/ Larry Shipley Executive Vice President - March 27, 1996
- ---------------------- Corporate Development --------------
(principal financial officer)
/s/ Craig J. Hart Vice President and March 25, 1996
- ---------------------- Controller --------------
/s/ Richard L. Bond Director March 26, 1996
- ---------------------- --------------
/s/ John S. Chalsty Director March 28, 1996
- ---------------------- --------------
/s/ Wendy L. Gramm Director March 24, 1996
- ---------------------- --------------
/s/ David C. Layhee Director March 26, 1996
- ---------------------- --------------
/s/ Eugene D. Leman Director March 26, 1996
- ---------------------- --------------
/s/ JoAnn R. Smith Director March 23, 1996
- ---------------------- --------------
/s/ Dale C. Tinstman Director March 25, 1996
- ---------------------- --------------
EXHIBIT INDEX
Exhibit Number Description
- -------------- --------------------------------------------------
Exhibit 10.21 Credit Agreement (Revolving/Term Credit Facility)
Exhibit 10.25 Employment Agreement, effective March 1, 1995, between IBP
and Richard L. Bond
Exhibit 10.26 Employment Agreement, effective March 1, 1995, between IBP
and Eugene D. Leman
Exhibit 10.27 Employment Agreement, effective March 1, 1995, between IBP
and David C. Layhee
Exhibit 11 Statement regarding computation of earnings per share
Exhibit 13 1995 Annual Report to Stockholders
Exhibit 16 Letter regarding change in certifying accountant
Exhibit 21 Subsidiaries of IBP, inc. as of December 30, 1995
Exhibit 23.1 Consent of Independent Accountants
Exhibit 23.2 Consent of Independent Accountants
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-END> DEC-30-1995
<CASH> 116,277
<SECURITIES> 63,851
<RECEIVABLES> 539,290
<ALLOWANCES> 9,494
<INVENTORY> 303,711
<CURRENT-ASSETS> 1,068,890
<PP&E> 1,359,525
<DEPRECIATION> 640,005
<TOTAL-ASSETS> 2,027,601
<CURRENT-LIABILITIES> 641,649
<BONDS> 260,752
<COMMON> 4,750
0
0
<OTHER-SE> 1,018,189
<TOTAL-LIABILITY-AND-EQUITY> 2,027,601
<SALES> 12,667,562
<TOTAL-REVENUES> 12,667,562
<CGS> 12,063,494
<TOTAL-COSTS> 12,063,494
<OTHER-EXPENSES> 123,972
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,784
<INCOME-PRETAX> 459,312
<INCOME-TAX> 179,200
<INCOME-CONTINUING> 280,112
<DISCONTINUED> 0
<EXTRAORDINARY> (22,189)<F1>
<CHANGES> 0
<NET-INCOME> 257,923
<EPS-PRIMARY> 2.67
<EPS-DILUTED> 2.66
<FN>
<F1>Extraordinary loss on early extinguishment of debt, less applicable taxes.
</FN>
</TABLE>
EXHIBIT 10.21
AMENDED AND RESTATED MULTI-YEAR CREDIT AGREEMENT
______ ______ ______ ______
IBP, inc.
and
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Co-Agent
and
FIRST BANK NATIONAL ASSOCIATION,
As Administrative Agent
Arranged By
BA SECURITIES, INC.
______ ______ ______ ______
DATED AS OF December 21, 1995
TABLE OF CONTENTS
1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . .. . .-1-
1.1 Accounting Terms. . . . . . . . . . . . . . .. . . . . . .-1-
1.2 Other Terms . . . . . . . . . . . . .. . . . . . . . . . .-2-
2. THE COMMITTED LOAN FACILITY . . . . . . . . . . . . . . . .. . -20-
2.1 The Committed Loans . . . . . . . . . . . . .. . . . . . -20-
2.2 Borrowing Procedure . . . . . . . . .. . . . . . . . . . -20-
2.3 The Committed Loan Notes. . .. . . . . . . . . . . . . . -21-
2.4 Payment of Principal of Committed Loans; Prepayments . . -22-
2.5 Interest on Committed Loans .. . . . . . . . . . . . . . -22-
2.6 Conversions and Refunding of Committed Loans. . . . . .. -22-
2.7 Interest Payments on Committed Loans. . . . . . . . . . .-23-
2.8 Number of Reference Loans and LIBOR LoansOutstanding . . -23-
2.9 Inability to Determine Rate . . . . . . . . . . . . . . -23-
2.10 Illegality: Termination of Commitment. . . . . . . . . . -24-
2.11 Application of Prepayments. . . . . . . . . . . . . . . .-25-
2.12 Extension of Maturity Date. . . . . . . . . . . . . . . .-25-
3. THE ACCEPTANCE FACILITY . . . . . . . . . . . . . . . . . .. . -25-
3.1 Acceptance Commitment . . . . . . . . . . . .. . . . . . -25-
3.2 Notice of Drawing . . . . . . . . . .. . . . . . . . . . -26-
3.3 Preparation of Drafts and Creation of Acceptances . . . .-26-
3.4 Acceptance Obligation of the Company. . . . . . . . . . .-27-
3.5 Prepayment. . . . . . . . . . . . . . . . . . . . . . . .-27-
3.6 Participations in Acceptances . . . . . . . . . . . . . . -28-
(a) Grant and Acceptance of Participations in Acceptances. .-28-
(b) Participation Interest of Acceptance Participants. . . .-28-
(c) Failure of Company to Pay an Acceptance; Rights and
Obligations of the Administrative Agent and the
Acceptance Participants. . . . . . . . . . . . . . . . .-28-
4. THE BID LOAN FACILITY . . . . . . . . . . . . . . . . . . .. . -29-
4.1 The Bid Loan Facility . . . . . . . . . . . .. . . . . . -29-
4.2 Bid Loan Tender Request Notice. . . . . . . . . . . . . .-29-
4.3 Invitation to Tender for Bid Loans . . . . . . . . . . . -30-
4.4 Submission and Contents of Bid Loan Tenders . . . . . . .-30-
4.5 Notice to the Company . . . . . . . . . . . . . . . . . .-31-
4.6 Acceptance and Rejection of Bid Loan Tenders . . . . . . -32-
(a) Acceptance and Notice by the Company . . . . . . . .-32-
(b) Allocation by the Administrative Agent . . .. . . . -32-
(c) Notification of Acceptances to Banks. . . . . . . . -32-
(d) Notification of LIBO Rate for Money Market Loans . .-33-
4.7 Making the Bid Loans. . . . . . . . . . . . . . . . . . -33-
4.8 The Bid Loan Notes . . . . . . . . . . . . . . . . . . . -33-
4.9 Interest on Bid Loans . . . . . . . . . . . . . . . . . .-33-
4.10 Payments and Prepayments of Bid Loans . . . . . . . . . .-34-
4.11 Reborrowings. . . . . . . . . . . . . . . . . . .. . . . -34-
5. [RESERVED]. . . . . . . . . . . . . . . . . . . . . . . . .. . -34-
6. THE BID BANKERS ACCEPTANCE FACILITY . . . . . . . . . . . . . -34-
6.1 The Bid Bankers Acceptance Facility . . . . .. . . . . . -34-
6.2 Bid Bankers Acceptance Tender Request Notice. . . . . . .-34-
6.3 Invitation to Tender for Bid Bankers Acceptances . . . . -35-
6.4 Submission and Contents of Bid Bankers AcceptancesTenders-35-
6.5 Notice to the Company. . . . . . . . . . . . . . . . . . -37-
6.6 Acceptance and Rejection of Bid Bankers Acceptance Tenders-37-
(a) Acceptance and Notice by the Company . . . . . . . -37-
(b) Allocation by the Administrative Agent . . .. . . . -37-
(c) Notification of Acceptances to Bank.. . . . . . . . -37-
6.7 Preparation of Drafts and Creation and Discount of the
Bid Bankers Acceptance. .. . . . . . . . . . . . . . . . -38-
6.8 Repayment Obligation of the Company; Prepayments . . . . -39-
6.9 Remission of Funds Received by the Administrative Agent .-39-
7. THE FACILITIES IN GENERAL . . . . . . . . . . . . . . . . .. . -40-
7.1 Payments. . . . . . . . . . . . . . . . . . . . . . . . -40-
7.2 Interest on Overdue Payments. . . . . . . . . . . . . . -41-
7.3 Indemnification . . . . . . . . . . . . . . . . . . . . -41-
7.4 Adjustments of Revolving Commitments . . . . . . . . . . -42-
7.5 Determinations of Rates . . . . . . . . . . . . . . . . -42-
7.6 Mandatory Prepayments . . . . . . . . . . . . . . . . . -43-
7.7 Mandatory Prepayments With Respect to Outstanding
Acceptances and Bid Bankers Acceptances . . . . . . .. . -43-
7.8 Capital Adequacy. . . . . . . . . . . . . . .. . . . . . -43-
7.9 Charges: Legal Restrictions. . . . .. . . . . . . . . . -44-
7.10 Replacement Banks . . . . . . . . . . . . . . . . . . . -45-
7.11 Funding . . . . . . .. . . . . . . . . . . . . . . . . . -46-
7.12 Fees. . . . . . . . . . . . . . . . . . . . . . . . . . -46-
7.13 Increase in Facilities . . . . . . . . . . . . . . . . . -47-
8. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . .. . -48-
8.1 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . -48-
8.2 Existence and Power . . . . . . . . . . . . . . . . . . -48-
8.3 Authority . . . . . . . . . .. . . . . . . . . . . . . . -48-
8.4 Binding Agreement . .. . . . . . . . . . . . . . . . . . -49-
8.5 Litigation. .. . . . . . . . . . . . . . . . . . . . . . -49-
8.6 No Conflicting Agreements . . . . . . . . . . . . . . . -49-
8.7 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . .-50-
8.8 Financial Statements. . . . . . . . . . . . . .. . . . . -50-
8.9 Compliance with Applicable Laws;Environmental Matters. . -51-
8.10 Property. . . . . . . .. . . . . . . . . . . . . . . . . -51-
8.11 Federal Reserve Regulations . . . . . . . . . . . . . . -51-
8.12 No Misrepresentation . . . . . . . . . . . . . . . . . . -52-
8.13 Employee Benefit Plans. . . . . . . . . . . . . . . . . .-52-
8.14 Investment Company Act. . . . . . . . . . . . .. . . . . -52-
8.15 Public Utility Holding Company Act. . .. . . . . . . . . -52-
9. CONDITIONS OF LENDING -- INITIAL CREDIT EXTENSIONS. . . . .. . -52-
9.1 Evidence of Execution and Corporate Action. .. . . . . . -53-
9.2 Opinion of Company Counsel. . . . . .. . . . . . . . . . -53-
9.3 Other Instruments andDocuments . . . . . . . . . . . . . -54-
9.4 Other Agreement . . . . . . . . . . . . . . . . . . . . -54-
9.5 Fees. . . . . . . . . . . . . . . . . . . . . . . . . . -54-
10. CONDITIONS OF LENDING -- ALL CREDIT EXTENSIONS. . . . . . .. . -54-
10.1 All Credit Extensions . . . . . . . . . . . .. . . . . . -54-
10.2 Committed Loans . . . . . . . . . . .. . . . . . . . . . -55-
10.3 Bid Loans . . . . . . . . . .. . . . . . . . . . . . . . -55-
10.4 Acceptances . . . . .. . . . . . . . . . . . . . . . . . -55-
10.5 Bid Bankers Acceptances . . . . . . . . . . . . . . . . -55-
11. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . .. . -55-
11.1 Preservation of Corporate Existence, Etc. . .. . . . . . -55-
11.2 Taxes . . . . . . . . . . . . . . . .. . . . . . . . . . -55-
11.3 Insurance . . . . . . . . . .. . . . . . . . . . . . . . -55-
11.4 Maintenance of Properties . . . . . . . . . . . . . . . -56-
11.5 Compliance with Laws Etc . . . . . . . . . . . . . . . . -56-
11.6 Financial Statements and Other Information. . . . . . . .-56-
(a) Interim Reports. . . . . . . . . . . . . . .. . . . -56-
(b) Annual Reports . . . . . . . . . . .. . . . . . . . -56-
(c) Officer's Certificates . . .. . . . . . . . . . . . -57-
(d) Compliance Certificates . . . . . . . . . . . . . . -57-
(e) Accountants' Certificates . . . . . . . . . . . . . -57-
(f) Reports to SEC and to Stockholders . . . . . . . . .-57-
(g) Notice of Default. . . . . . . . . . . . . . . . .. -57-
(h) Debt to Cashflow Ratio . . . . . . . . . .. . . . . -57-
(i) ERISA Notices. . . . . . . . . . .. . . . . . . . . -58-
(j) Other Information. . . . .. . . . . . . . . . . . . -58-
11.7 Inspections:Discussions. . . . . . . . . . . . . . . . . -58-
11.8 Books and Records . . . . . . . . . . . . . . . . . . . -59-
11.9 Use of Proceeds of Loans . . . . . . . . . . . . . . . . -59-
11.10 Environmental Laws . . . . . . . . . . . . . . . . . -59-
12. NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . .. . -59-
12.1 [Reserved]. . . . . . . . . . . . . . . . . .. . . . . . -59-
12.2 [Reserved]. . . . . . . . . . . . . .. . . . . . . . . . -59-
12.3 Minimum Debt Service Coverage. . . . . . . . . . . . . . -59-
12.4 Maximum Total Fixed Asset Debt and Total Senior Fixed
Asset Debt to Consolidated Adjusted Net Worth Ratios . . -59-
12.5 [Reserved] . . . . . . . . . . . . . . . . . . . . . . . -59-
12.6 Debt in Subsidiaries. . . . . . . . . . . . . . . . . . -60-
12.7 Restricted Payments . . . . . . . . . . . . . . .. . . . -60-
12.8 Liens; Sale of Accounts Receivable. . . .. . . . . . . . -60-
12.10 Obligations as Lessee. . . . . . . . . . . . . . . . -61-
12.11 Short-Term Investments, Loans, Etc . . . . . . . . . -61-
12.12 Transactions with Affiliates . . . . . . . . . . . . -62-
12.13 Nature of Business . . . . . . . . . . . . . . . . .-62-
13. DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . .. . -62-
13.1 Events of Default . . . . . . . . . . . . . .. . . . . . -62-
13.2 Waiver of Defaults. . . . . . . . . .. . . . . . . . . . -66-
14. THE AGENTS. . . . . . . . . . . . . . . . . . . . . . . . .. . -66-
14.1 Appointment . . . . . . . . . . . . . . . . .. . . . . . -66-
14.2 Delegation of Duties, Etc . . . . . .. . . . . . . . . . -67-
14.3 Indemnification . . . . . . .. . . . . . . . . . . . . . -67-
14.4 Exculpatory Provisions . . . . . . . . . . . . . . . -67-
14.5 Agents in Their Individual Capacity . . . . . . . . . . -68-
14.6 Knowledge of Default . . . . . . . . . . . . . . . . . . -68-
14.7 Resignation and Removal of Administrative Agent . . . . -68-
14.8 Requests to the Administrative Agent. . . . . . .. . . . -69-
14.9 Other Dealings. . . . . . . . . . . . . .. . . . . . . . -69-
14.10 Calculations . . . . . . . .. . . . . . . . . . . . -69-
14.11 Availability of Funds. . . . . . . . . . . . . . . . -69-
15. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . .. . -70-
15.1 Notices, Etc. . . . . . . . . . . . . . . . .. . . . . . -70-
15.2 Notices by Administrative Agent or a Bank . . . . . . . -70-
15.3 Telephonic Notices; Authority to Act . . . . . . . . . . -70-
16. EXCESS PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . -71-
17. AMENDMENTS AND WAIVERS. . . . . . . . . . . . . . . . . . .. . -71-
18. OTHER PROVISIONS. . . . . . . . . . . . . . . . . . . . . .. . -72-
18.1 Sale of Participations; Assignments . . . . .. . . . . . -72-
18.2 No Waiver of Rights by the Banks. . .. . . . . . . . . . -73-
18.3 Headings; Plurals . . . . . .. . . . . . . . . . . . . . -73-
18.4 Counterparts. . . . .. . . . . . . . . . . . . . . . . . -73-
18.5 Severability.. . . . . . . . . . . . . . . . . . . . . . -73-
18.6 Integration . . . . . . . . . . . . . . . . . . . . . . -74-
18.7 Successors and Assigns; Survival of Representations and
Warranties. . . . . . . . . . . . . . . . . . . . . . . .-74-
18.8 APPLICABLE LAW; WAIVER OF TRIAL BY JURY . . . . .. . . . -74-
18.9 Interest. . . . . . . . . . . . . . . . .. . . . . . . . -74-
18.10 Confidentiality. . . . . . .. . . . . . . . . . . . -74-
18.11 Banks'Representations . . . . . . . . . . . . . . . -75-
18.12 Change in Accounting Principles. . . . . . . . . . . -76-
18.13 Reference Banks. . . . . . . . . . . . . . . . . . .-76-
18.14 Transfer of Credit Documents . . . . . . .. . . . . -76-
18.15 CONSENT TO JURISDICTION. . . . . . . . . . . . . . . -77-
18.16 Waiver of Certain Provisions under Prior Agreements. -77-
19. COSTS . . . . . . . . . . . . . . . . . . . . . . . . . . .. . -77-
(a) Costs of Enforcement . . . . . . . . . . . . . . . -77-
(b) Taxes. . . . . . . . . . . . . . . . . . . . . . . . -77-
(c) Defense of Proceedings . . . . . . . . . . . . . . . -78-
(d) Survival . . . .. . . . . . . . . . . . . . . . . . -78
SCHEDULE 1 NoticeInformation
SCHEDULE 2 Environmental Disclosure
EXHIBIT A Revolving Commitments
EXHIBIT B Form of Draft for Bid Bankers Acceptance
EXHIBIT C Form of Bid Bankers Acceptance Certificate
EXHIBIT D Form of Bid Bankers Acceptance Tender Request Notice
EXHIBIT E Form of Bid Loan Tender
EXHIBIT F Form of Bid Loan Tender Request Notice
EXHIBIT G Form of Bid Invitation to Tender for Bid Bankers Acceptances
EXHIBIT H Form ofInvitation to Tender for Bid Loans
EXHIBIT I Form of Opinion of General Counsel of the Company
EXHIBIT J Form of Subordination Provisions
EXHIBIT K Form of Borrowing Request
EXHIBIT L Form of Committed Loan Note
EXHIBIT M Form of Notice of Drawing
EXHIBIT N Form of Draft
EXHIBIT O Form of Notice of Creation of Acceptance and Grant of
Acceptance Participations
EXHIBIT P Form of Bid Loan Note
EXHIBIT Q IBP, inc. Subsidiaries
EXHIBIT R Form of Supplemental Signature Page
(Bank already a Party)
EXHIBIT S Form of Supplemental Signature Page
(Bank not previously a Party)
AMENDED AND RESTATED MULTI-YEAR CREDIT AGREEMENT
THIS AMENDED AND RESTATED MULTI-YEAR CREDIT AGREEMENT (the
"Agreement"), is made and dated as of December 21, 1995, by and
among IBP, inc., a Delaware corporation (the "Company"), the
BANKS signatories hereto and any other financial institution
which hereafter becomes a party hereto (each a "Bank" and,
collectively, the "Banks"), BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION as Co-Agent (in such capacity, the
"Co-Agent"), and FIRST BANK NATIONAL ASSOCIATION as
Administrative Agent for the Banks (in such capacity, the
"Administrative Agent").
RECITALS
A. The Company, certain of the Banks (and other banks),
the CoAgent and the Administrative Agent are parties to that
certain MultiYear Credit Agreement dated as of August 25, 1994
(the "Existing Credit Agreement").
B. The Company desires (i) to obtain a commitment from
each of the Banks to make loans to the Company and to risk
participate in bankers acceptances drawn by the Company on a
revolving basis and (ii) to have an uncommitted bid facility
providing for loans and bankers acceptances.
C. The Banks are willing to extend such commitments to
the Company and to make such bid facility available on the terms
and subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the above Recitals and
for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto
hereby agree that the Existing Credit Agreement shall, effective
as of the Effective Date, be amended and restated in its
entirety as follows:
1. DEFINITIONS
1.1 Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance
with Generally Accepted Accounting Principles as in effect from
time to time, including, without limitation, applicable
statements, bulletins and interpretations issued by the
Financial Accounting Standards Board and bulletins, opinions,
interpretations and statements issued by the American Institute
of Certified Public Accountants or its committees. When used
herein, the term "financial statements" shall include the notes
and schedules thereto, but need not include such notes or
schedules when used in reference to such statements of any
Person as of any date other than the end of a fiscal year of
such Person.
1.2 Other Terms. The following terms used in this
Agreement and in any exhibits annexed hereto shall have the
following meanings unless the context otherwise requires.
"Absolute Rate" shall have the meaning set forth in
Section 4.4(b).
"Absolute Rate Loan" shall mean a Bid Loan bearing
interest based upon an Absolute Rate.
"Acceptance" shall mean a Draft that is eligible for
discount pursuant to paragraph 7 of Section 13 of the Federal
Reserve Act and that has been duly accepted by the
Administrative Agent pursuant to Section 3.
"Acceptance Availability Period" shall mean the
period from the Effective Date to the Maturity Date.
"Acceptance Commission" shall have the meaning set
forth in Section 3.3.
"Acceptance Obligation" shall mean the obligation of
the Company with respect to matured Acceptances as set forth in
Section 3.4.
"Acceptance Participant" shall have the meaning set
forth in Section 3.6(a).
"Acceptance Participation" shall have the meaning set
forth in Section 3.6(a).
"Accountants" shall mean a firm of independent
certified public accountants of recognized national standing
selected by the Company.
"Accumulated Funding Deficiency" shall have the
meaning assigned to that term in Section 412 of the Code.
"Administrative Agent" shall mean First Bank National
Association, or any successor thereto appointed pursuant to
Section 14.7.
"Affiliate" shall mean, when used with reference to
any Person, a Person (other than a Consolidated Subsidiary)
which directly or indirectly controls, is controlled by, or is
under common control with, such other Person. For purposes of
this definition, "control" (including with correlative meanings,
the terms "controlling," "controlled by" and "under common
control with"), as applied to any Person, means the possession,
directly or indirectly, of the power to direct or cause the
direction of the management and policies of that Person, whether
through the ownership of voting securities or by contract or
otherwise.
"Agent" shall mean the Administrative Agent or the
Co-Agent (collectively, the "Agents").
"Aggregate Outstandings" shall mean at the time of
any determination:
(a) with respect to a Bank, the sum of (i) the
aggregate unpaid principal amount of all Committed Loans made
by such Bank, (ii) such Bank's Pro Rata Share of the sum of
the aggregate unpaid face amount of all outstanding unmatured
Acceptances and the aggregate amount of all outstanding
Acceptance Obligations, (iii) the aggregate unpaid principal
amount of all Bid Loans made by such Bank, and (iv) the sum
of the aggregate unpaid face amount of all unmatured Bid
Bankers Acceptances created by such Bank and the aggregate
amount of all Bid Bankers Acceptance Obligations owed to such
Bank, and
(b) with respect to all Banks, the sum of the
Aggregate Outstandings of all Banks.
"Aggregate Revolving Commitment" shall mean the sum
of the Revolving Commitments set forth in Exhibit A hereto, as
the same may be adjusted as herein provided.
"Allowable Working Capital" shall mean, as of the
date of any determination, 85% of the amount by which (i) the
amount determined pursuant to clause (a) of the definition of
Consolidated Current Assets exceeds (ii) Consolidated Current
Liabilities less any current maturities of Funded Debt and
Short-Term Borrowing of the Company and its Consolidated
Subsidiaries included therein.
"Applicable LIBO Rate" shall mean with respect to any
LIBOR Loan for the applicable Interest Period, the rate per
annum (rounded upward, if necessary, to the next higher 1/10,000
of 1%) equal to the LIBO Rate plus the Applicable Margin.
"Applicable Margin" shall mean:
(i) with respect to Reference Loans, 0%; and
(ii) with respect to LIBOR Loans and Acceptances (A)
0.145% if Level I Status exists on any day, (B) 0.160% if
Level II Status exists on any day, (C) 0.250% if Level III
Status exists on any day, (D) 0.300% if Level IV Status
exists on any day, and (E) 0.400% if Level V Status exists on
any day. As of the Effective Date, Level II Status shall
exist (subject to change as provided herein).
"Applicable Reference Rate" shall mean on any day the
Reference Rate on such day plus the Applicable Margin.
"Arranger" shall mean BA Securities, Inc., a Delaware
corporation.
"Bank of America" shall mean Bank of America National
Trust and Savings Association.
"Bid Bankers Acceptance" shall mean a draft in the
form of Exhibit B hereto that is eligible for discount pursuant
to paragraph 7 of Section 13 of the Federal Reserve Act and that
has been duly accepted by a Bank pursuant to Section 6.7.
"Bid Bankers Acceptance Certificate" shall mean a
properly completed certificate substantially in the form of
Exhibit C hereto.
"Bid Bankers Acceptance Creation Date" shall mean a
Business Day on which the creation of a Bid Bankers Acceptance
occurs or is proposed to occur.
"Bid Bankers Acceptance Facility" shall mean the
uncommitted facility granted by the Banks to the Company
pursuant to Section 6 under which the Company may request the
Banks to make Bid Bankers Acceptance Tenders and the Banks may
create Bid Bankers Acceptances.
"Bid Bankers Acceptance Financing" shall mean a
financing consisting of the simultaneous creation of Bid Banker
Acceptances from each of the Banks whose offer to create a Bid
Bankers Acceptance as part of such financing has been accepted
by the Company under the auction bidding procedures described in
Section 6.
"Bid Bankers Acceptance Obligation" shall mean the
obligation of the Company with respect to a matured Bid Bankers
Acceptance as set forth in Section 6.8.
"Bid Bankers Acceptance Tender" shall have the
meaning set forth in Section 6.4.
"Bid Bankers Acceptance Tender Request Notice" shall
mean a notice substantially in the form of Exhibit D hereto
given by the Company pursuant to Section 6.2.
"Bid Loan" shall mean a loan advance by a Bank to the
Company as part of a Bid Loan Borrowing resulting from the
auction bidding procedure described in Section 4.
"Bid Loan Borrowing" shall mean a borrowing
consisting of simultaneous Bid Loans from each of the Banks
whose offer to make a Bid Loan as part of such borrowing has
been accepted by the Company under the auction procedure
described in Section 4.
"Bid Loan Facility" shall mean the uncommitted
facility granted by the Banks to the Company pursuant to Section
4 under which the Company may request the Banks to make Bid
Loans and the Banks may make offers to make Bid Loans.
"Bid Loan Note" shall have the meaning set forth in
Section 4.8.
"Bid Loan Tender" shall mean the offer or offers of a
Bank pursuant to Section 4.4 to make Bid Loans in a specified
principal amount at a specified interest rate in the form of
Exhibit E hereto.
"Bid Loan Tender Request Notice" shall mean a notice
substantially in the form of Exhibit F hereto given by the
Company pursuant to Section 4.2.
"Borrowing Date" shall have the meaning set forth in
(i) Section 2.2 with respect to Committed Loans and (ii) Section
4.2 with respect to Bid Loans.
"Borrowing Request" shall have the meaning set forth
in Section 2.2.
"Business Day" shall mean any day other than a
Saturday, Sunday or any other day on which commercial banks in
Minneapolis, Minnesota, Chicago, Illinois, or New York, New York
are authorized or required by law or other governmental action
to close.
"Co-Agent" shall mean Bank of America National Trust
and Savings Association in its capacity as Co-Agent hereunder.
"Code" shall mean the Internal Revenue Code of 1986,
as amended, as from time to time in effect.
"Commitment" shall mean, with respect to any Bank,
such Bank's Revolving Commitment.
"Committed Loan" shall have the meaning set forth in
Section 2.1.
"Committed Loan Note" shall have the meaning set
forth in Section 2.3.
"Company" shall have the meaning set forth in the
introduction to this Agreement.
"Consolidated Adjusted Net Worth" shall mean, as of
the date of any determination, the sum of the amounts set forth
on the consolidated balance sheet of the Company and its
Consolidated Subsidiaries as shareholders' equity as determined
in accordance with Generally Accepted Accounting Principles.
"Consolidated Cash Flow" shall mean, for any period
and calculated based upon any four of the five consecutive
fiscal quarters immediately preceding the date of calculation,
at the option of the Company, an amount equal to (x) the sum of
(i) net income before income taxes, (ii) non-cash expenses, and
(iii) interest expense (excluding accretion relating to zero
coupon notes and the amortization of deferred financing costs,
premiums or discounts) less (y) non-cash income, all determined
for the Company and its Consolidated Subsidiaries on a
consolidated basis in accordance with Generally Accepted
Accounting Principles consistently applied.
"Consolidated Current Assets" shall mean, as of the
date of any determination, the total of (a) all assets of the
Company and its Consolidated Subsidiaries which properly may be
classified as current assets in accordance with Generally
Accepted Accounting Principles on a consolidated basis, after
eliminating all inter-company items, provided that notes and
accounts receivable shall be included only if due and payable
within one year from the date as of which Consolidated Current
Assets are to be determined and shall be included at their face
value less reserves (including reserves for doubtful accounts)
determined to be sufficient in accordance with Generally
Accepted Accounting Principles.
"Consolidated Current Liabilities" shall mean, as of
the date of any determination, the total of Current Liabilities
of the Company and its Consolidated Subsidiaries, determined on
a consolidated basis, in accordance with Generally Accepted
Accounting Principles, after eliminating all inter-company items.
"Consolidated Debt Service" shall mean, for any
period, the sum of (a) capitalized interest, (b) interest
expense (excluding accretion relating to zero coupon notes and
the amortization of deferred financing costs, premiums or
discounts) and (c) Mandatory Principal Payments, all determined
for the Company and its Consolidated Subsidiaries on a
consolidated basis in accordance with Generally Accepted
Accounting Principles consistently applied. For purposes of
calculating the ratio of Consolidated Cash Flow to Consolidated
Debt Service as of the last day of any fiscal quarter, amounts
under clauses (a) and (b) above shall be calculated based upon
the same four of the five preceding fiscal quarters as are the
bases of the calculation of Consolidated Cash Flow as of such
day.
"Consolidated Funded Debt" shall mean, as of the date
of any determination, the total of all Funded Debt of the
Company and its Consolidated Subsidiaries, determined on a
consolidated basis in accordance with Generally Accepted
Accounting Principles, after eliminating all inter-company items.
"Consolidated Net Income" shall mean, for any period,
the balance remaining after deducting from the gross revenues of
the Company and its Consolidated Subsidiaries all expenses and
other proper charges (including taxes on income), all determined
on a consolidated basis in accordance with Generally Accepted
Accounting Principles consistently applied.
"Consolidated Senior Funded Debt" shall mean, as of
the date of any determination, all Senior Funded Debt of the
Company and its Consolidated Subsidiaries.
"Consolidated Subordinated Funded Debt" shall mean,
as of the date of any determination, all Subordinated Funded
Debt of the Company and its Consolidated Subsidiaries.
"Consolidated Subsidiary" shall mean, as of the date
of any determination, any Subsidiary of the Company included in
the financial statements of the Company and its Subsidiaries
prepared on a consolidated basis in accordance with Generally
Accepted Accounting principles.
"Consolidated Total Assets" shall mean, as of the
date of any determination, the total of all assets which under
Generally Accepted Accounting Principles would be included on a
consolidated balance sheet of the Company and its Consolidated
Subsidiaries, after eliminating all inter-company items.
"Credit Documents" shall mean the Notes and the
drafts filled in and completed in accordance with Section 3.3
and Section 6.7.
"Credit Extensions" shall mean the Committed Loans,
the Bid Loans, the Acceptances and the Bid Bankers Acceptances.
"Current Liabilities" as applied to a Person, shall
mean, as of the date of any determination, all Indebtedness
(other than any such Indebtedness constituting Funded Debt) of
such Person which may properly be classified as current
liabilities in accordance with Generally Accepted Accounting
Principles.
"Default" shall mean an event, act or occurrence
which, with the giving of notice or the lapse of time (or both),
would become an Event of Default.
"Discount Charge" shall have the meaning set forth in
Section 3.3.
"Discretionary Facilities" shall mean the Bid Loan
Facility and the Bid Bankers Acceptance Facility.
"Dollars" and "$" shall mean lawful currency of the
United States of America.
"Draft" shall have the meaning set forth in Section
3.3.
"Drawing" shall have the meaning set forth in Section
3.1.
"Drawing Date" shall have the meaning set forth in
Section 3.2.
"Effective Date" shall mean the date specified by the
Administrative Agent in a written notice given to the Company,
the CoAgent and the Banks as being the first date on which all
conditions precedent set forth in Section 9 are satisfied or
waived by all Banks.
"Eligible Accounts Receivable" shall have the meaning
set forth in Section 12.8(b).
"Employee Benefit Plan" shall mean "employee benefit
plan" as that term is defined in Section 3(3) of ERISA.
"Environmental Claims" means all claims, however
asserted, by any Governmental Body or other Person alleging
potential liability or responsibility for violation of any
Environmental Law, or for release or injury to the environment.
"Environmental Laws" means all federal, state or
local laws, statutes, common law duties, rules, regulations,
ordinances and codes, together with all administrative orders,
directed duties, requests, licenses, authorizations and permits
of, and agreements with, any Governmental Bodies, in each case
relating to environmental, health, safety and land use matters.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended, as from time to time in effect.
"Eurodollar Business Day" shall mean a Business Day
upon which commercial banks in London, England are open for
domestic and international business.
"Event of Default" shall mean any event set forth in
Section 13.1.
"Excess Payment" shall mean any payment or prepayment
received by a Bank, whether voluntary or involuntary, through
the exercise of the right of setoff or otherwise, in respect of:
(a) any Committed Loan and Acceptance Participation
in excess of its Pro Rata Share of all payments and
prepayments on all Committed Loans of the same type (i.e.
LIBOR Loans and Reference Loans, in each case having the
same Borrowing Date and, with respect to LIBOR Loans, the
same Interest Period) and Acceptance Participations in
Acceptances having the same Drawing Date and the same
maturity date; and
(b) any Bid Loan, Bid Bankers Acceptance and Bid
Bankers Acceptance Obligation in excess of its ratable share
of all payments and prepayments on (i) Absolute Rate Loans
having the same Borrowing Date and the same maturity date,
(ii) Money Market Loans having the same Borrowing Date and
the same Interest Period, and (iii) Bid Bankers Acceptances
or Bid Bankers Acceptance Obligations arising out of the
creation and discount of Bid Bankers Acceptances, in each
case having the same Bid Bankers Acceptance Creation Date
and the same maturity date, such ratable share for purposes
of this clause (b) being (x) in the case of Absolute Rate
Loans, the proportion which the outstanding unpaid principal
balance of such Absolute Rate Loan payable to such Bank at the
time of its receipt of such payment or prepayment bears to
the aggregate outstanding unpaid principal balance of all
outstanding Absolute Rate Loans having the same Borrowing
Date and the same maturity date as such Absolute Rate Loan
at such time, (y) in the case of Money Market Loans, the
proportion which the outstanding unpaid principal balance of
such Money Market Loan payable to such Bank at the time of
its receipt of such payment or prepayment bears to the
aggregate outstanding unpaid principal balance of all Money
Market Loans having the same Borrowing Date and the same
Interest Period as such Money Market Loan at such time, and
(z) in the case of Bid Bankers Acceptances or Bid Bankers
Acceptance Obligations, the proportion which the original
face amount of such Bid Bankers Acceptance, or, in the case
of any Bid Bankers Acceptance Obligations, the Bid Bankers
Acceptance, the creation and discount of which gave rise to
such Bid Bankers Acceptance Obligation, bears to the
aggregate face amount of all Bid Bankers Acceptances having
the same Bid Bankers Acceptance Creation Date and the same
maturity date as such Bid Bankers Acceptance or, in the case
of any Bid Bankers Acceptance Obligation, the Bid Bankers
Acceptance which gave rise to such Bid Bankers Acceptance
Obligation;
provided, that no payment or prepayment received by a Bank as a
result of the remission and application of funds by the
Administrative Agent pursuant to, and in accordance with, the
provisions of the penultimate paragraph of Section 13.1 shall be
an Excess Payment.
"Existing Credit Agreement" shall have the meaning
set forth in the Recitals to this Agreement.
"Facility Fee" shall have the meaning set forth in
Section 7.12(a).
"Federal Funds Rate" shall mean, for any day, a
fluctuating interest rate per annum equal to the weighted
average (rounded upwards, if necessary, to the nearest 1/10,000
of one percent) of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not
so published for any day which is a Business Day, the average
(rounded upwards, if necessary, to the nearest 1/10,000 of one
percent) of the quotations for such day on such transactions
received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by the Administrative
Agent.
"Federal Reserve Board" shall mean the Board of
Governors of the Federal Reserve System or any governmental
authority succeeding to its functions.
"Fee Letters" shall mean the letters referenced in
Sections 7.12(b) and (c).
"Financial Statements" shall have the meaning set
forth in Section 8.8.
"Funded Debt" shall mean, with respect to any Person
and as of the date of any determination, that portion of
Indebtedness of such Person which matures one year or more from
the date of determination thereof, or is renewable or
extendable, at the option of the debtor, by its terms or by the
terms of any instrument or agreement relating thereto, to a date
one year or more from such date of determination. For purposes
of calculating Funded Debt hereunder, Indebtedness of any Person
which is governed by an agreement that provides for the
automatic renewal of the maturity of such Indebtedness subject
only to fulfillment of conditions precedent which the debtor is
capable of immediately fulfilling shall be considered as having
a final maturity of one year or more from the date of
determination thereof to the extent such renewals thereof as
provided in such agreement permit such Indebtedness to mature
one year or more from such date of determination.
"Generally Accepted Accounting Principles" shall mean
generally accepted accounting principles as in effect from time
to time in the United States, which shall include the official
interpretations thereof by the Financial Accounting Standards
Board.
"Governmental Body" shall mean any court or any
federal, state or municipal department, commission, board,
bureau, agency, public authority or instrumentality.
"Indebtedness", as applied to a Person and as of the
date of any determination, shall mean (a) all items (except
items of capital stock or of surplus or of deferred credits and
other liabilities combined with deferred credits for financial
reporting purposes or minority interests in Subsidiaries of such
Person) which in accordance with Generally Accepted Accounting
Principles applied in the preparation of the financial
statements of the Company and its Consolidated Subsidiaries
would be included in determining total liabilities as shown on
the liability side of a balance sheet of such Person; (b) all
indebtedness secured by any Lien on any property or asset owned
or held by such Person subject thereto, whether or not the
indebtedness secured thereby shall have been assumed; and (c)
all indebtedness of others which such Person has directly or
indirectly guaranteed, endorsed (otherwise than for collection
or deposit in the ordinary course of business) discounted with
recourse, or agreed (contingently or otherwise) to purchase or
repurchase or otherwise acquire, or in respect of which such
Person has otherwise become directly or indirectly liable. For
the purpose of computing the Indebtedness of any Person, there
shall be excluded any particular indebtedness which meets one or
more of the following categories:
(i)Indebtedness with respect to which sufficient
cash or cash equivalents or securities shall have been
deposited in trust to provide for the full payment,
redemption or satisfaction of the principal of,
premium, if any, and interest to accrue on, such
Indebtedness to the stated maturity thereof or to the
date of prepayment thereof, as the case may be, and as
a result of such deposit such particular Indebtedness,
in accordance with Generally Accepted Accounting
Principles, shall no longer be required to be reported
on a balance sheet of such Person as a liability and
such cash or cash equivalents or securities shall not be
required to be reported as an asset; or
(ii)Indebtedness which is not classified as
Indebtedness under clause (a) of the definition of
Indebtedness and which is payable solely out of
certain property or assets of such Person, or is
secured by a Lien on certain property or assets owned
or held by such Person, in either case without any
further recourse to or liability of such Person, to the
extent such Indebtedness exceeds (x) if such Person records
such property or assets on its books, the value for such
property or assets recorded on such books or (y) if such
Person does not record such property or assets on its
books, (1) if such Indebtedness is a general
obligation of the entity which does record such
property or assets on its books, the net investment in
or advances to such entity as recorded on the books of
such Person or (2) if such Indebtedness is payable
solely out of certain property or assets of such
entity, the lesser of the value for such property or
assets recorded on the books of such entity or the net
investment in or advances to such entity as recorded
on the books of such Person, in each case determined in
accordance with Generally Accepted Accounting Principles; or
(iii)Indebtedness to the extent payable from
accounts receivable which have been sold, assigned or
otherwise transferred to another Person in a
transaction classified as a sale of accounts
receivable in accordance with Generally Accepted
Accounting Principles.
"Interest Period" shall mean, with respect to any
LIBOR Loan or Money Market Loan, a period from the Borrowing
Date with respect to such Loan (or the date of the expiration of
the then current Interest Period with respect to any LIBOR Loan)
to a date 1, 2, 3, 6, 9 or 12 months thereafter (but only to the
extent Dollar deposits of such duration are generally available
in the inter-bank Eurodollar market), subject in all cases to
the following:
(a) If any Interest Period with respect to a LIBOR
Loan or Money Market Loan would otherwise end on a day which
is not a Eurodollar Business Day, that Interest Period shall
be extended to the next succeeding Eurodollar Business Day,
unless the result of such extension would be to extend such
Interest Period into another calendar month, in which event
such Interest Period shall end on the immediately preceding
Eurodollar Business Day;
(b) subject to the provisions of Sections 2.9 and
2.10, a Borrowing Request selecting a particular Interest
Period once received by the Administrative Agent is
irrevocable and binding on the Company;
(c) no Interest Period for a Loan shall extend beyond
the Maturity Date;
(d) each Interest Period with respect to a LIBOR Loan
or a Money Market Loan shall be determined, and may vary in
regard to the length of period, in accordance with the
customs and practices of the international inter-bank
markets;
(e) the first Interest Period for any LIBOR Loan
shall commence on the date of such Loan, and each succeeding
Interest Period (if any) for such Loan shall commence on the
last day of the preceding Interest Period; and
(f) Interest Periods for LIBOR Loans in excess of
three months are subject to availability by all Banks, as
determined by each Bank.
"Investments" shall have the meaning set forth in
Section 12.11.
"Invitation to Tender for Bid Bankers Acceptances"
shall mean an invitation substantially in the form of Exhibit G
hereto, given by the Administrative Agent on behalf of the
Company pursuant to Section 6.3.
"Invitation to Tender for Bid Loans" shall mean an
invitation substantially in the form of Exhibit H hereto, given
by the Administrative Agent on behalf of the Company pursuant to
Section 4.3.
"Invoked Event of Default" shall mean an Event of
Default which has either resulted in the automatic acceleration
of the obligations of the Company hereunder pursuant to Section
13.1 or on account of which the Administrative Agent, at the
direction of the Majority Banks, has declared the Obligations of
the Company hereunder immediately due and payable pursuant to
Section 13.1.
"Level I Status" shall exist at any date if, at such
date, the Company's senior unsecured long-term debt is rated
either A or higher (or the equivalent) as publicly announced by
S&P or A2 or higher (or the equivalent) as publicly announced by
Moody's; provided that in the event the Company's senior
unsecured long-term debt is not rated by both S&P and Moody's,
Level I Status shall exist at any date if, at such date, the
Company's Debt to Cashflow Ratio as reported pursuant to Section
11.6(h) is less than 1.0 to 1.0.
"Level II Status" shall exist at any date if, at such
date if, at such date, (i) the Company's senior unsecured
long-term debt is rated either A- or higher (or the equivalent)
as publicly announced by S&P or A3 or higher (or the equivalent)
as publicly announced by Moody's and (ii) Level I Status does
not exist; provided that in the event the Company's senior
unsecured long-term debt is not rated by both S&P and Moody's,
Level II Status shall exist at any date if, at such date, the
Company's Debt to Cashflow Ratio as reported pursuant to Section
11.6(h) is less than 3.0 to 1.0 but greater than or equal to 1.0
to 1.0.
"Level III Status" shall exist at any date if, at such
date, (i) the Company's senior unsecured long-term debt is rated
either BBB or higher (or the equivalent) as publicly announced
by S&P or Baa2 or higher (or the equivalent) as publicly
announced Moody's and (ii) neither Level I Status nor Level II
Status exists; provided that in the event the Company's senior
unsecured long-term debt is not rated by both S&P and Moody's,
Level III Status shall exist at any date if, at such date, the
Company's Debt to Cashflow Ratio as reported pursuant to Section
11.6(h) is less than 5.0 to 1.0 but greater than or equal to 3.0
to 1.0.
"Level IV Status" shall exist at any date if, at such
date, (i) the Company's senior unsecured long-term debt is rated
BBB- (or the equivalent) as publicly announced by S&P and Baa3
(or the equivalent) as publicly announced by Moody's and (ii)
neither Level I Status, Level II Status nor Level III Status
exists; provided that in the event the Company's senior
unsecured long-term debt is not rated by both S&P and Moody's,
Level IV Status shall exist at any date if, at such date, the
Company's Debt to Cashflow Ratio as reported pursuant to Section
11.6(h) is less than 5.5 to 1.0 but greater than or equal to 5.0
to 1.0.
"Level V Status" shall exist at any date if, at such
date, (i) the Company's senior unsecured long-term debt is rated
either BB+ or lower (or the equivalent) as publicly announced by
S&P or Bal or lower (or the equivalent) as publicly announced by
Moody's and (ii) neither Level I Status, Level II Status, Level
III Status nor Level IV Status exists; provided that in the
event the Company's senior unsecured longterm debt is not rated
by both S&P and Moody's, Level V Status shall exist at any date
if, at such date, the Company's Debt to Cashflow Ratio as
reported pursuant to Section 11.6(h) is greater than or equal to
5.5 to 1.0 or if the Company has failed to report the Debt to
Cashflow Ratio in a timely manner in accordance with Section
11.6(h) and for so long as such failure shall continue.
"LIBOR Rate" shall mean for any Interest Period for a
LIBOR Loan or a Money Market Loan, the per annum LIBOR rate for
Dollars displayed on the Telerate Systems Inc. screen, page
3750, on the day which is two Eurodollar Business Days prior to
the first day of the proposed Interest Period; provided that in
the event the Telerate display is not available on any day, then
"LIBO Rate" shall mean the rate per annum (rounded upwards if
necessary to the nearest whole 1/10,000 of 1%) equal to the
arithmetic average (as determined by the Administrative Agent on
the basis of quotations, if any, received by the Administrative
Agent from the Reference Banks) of the rates per annum at which
each of the Reference Banks is offered Dollar deposits in the
inter-bank Eurodollar market at approximately 11:00 a.m. London
time two Eurodollar Business Days prior to the first day of the
proposed Interest Period for such LIBOR Loan or Money Market
Loan, for delivery on the first day of such Interest Period for
the number of months or days comprised therein and (i) in the
case of LIBOR Loans, in an amount comparable to the amount of
the LIBOR Loan to be made by such Reference Bank and (ii) in the
case of Money Market Loans, in an amount comparable to the
aggregate amount of the Bid Loan Borrowing consisting of such
Money Market Loan(s);
"LIBOR Loans" shall mean all Committed Loans bearing
interest at a rate based upon the LIBO Rate.
"Lien" shall mean any mortgage, pledge, lien, security
interest, conditional sale or other title retention agreement or
other similar encumbrance.
"Loans" shall mean, collectively and severally, the
Committed Loans and the Bid Loans made by the Banks or a single
Bank (as the context may indicate) (including any continuation
of a Loan based upon a particular interest rate alternative to a
Loan based upon the same interest rate alternative or the
conversion of a Loan based upon a particular interest rate
alternative to a Loan based upon a different interest rate
alternative). "Loan" means a single such loan made by any Bank.
"Majority Banks" shall mean (a) when no Invoked Event
of Default shall exist, Banks having Commitments equal to at
least 60% of the Aggregate Revolving Commitment and (b) when an
Invoked Event of Default shall exist, Banks holding Aggregate
Outstandings equal to at least 60% of the Aggregate Outstandings
held by all of the Banks.
"Mandatory Principal Payments" shall mean, for any
period and calculated based upon the preceding four fiscal
quarters, the quotient of (a) the sum of (i) all mandatory
principal payments made on indebtedness for borrowed money of
the Company or any Consolidated Subsidiary (including accretion
relating to zero coupon notes) plus (ii) the minimum lease
payments under capital leases with respect to which the Company
or any Consolidated Subsidiary is lessee less the portion of
such minimum lease payments which would be expensed as interest,
determined on a consolidated basis for the Company and its
Consolidated Subsidiaries in accordance with Generally Accepted
Accounting Principles consistently applied, divided by (b) the
remainder of 1 minus the Tax Rate.
"Material Subsidiary" shall mean any Subsidiary which
owns 5% or more of the Consolidated Total Assets.
"Maturity Date" shall mean December 20, 2000 unless
extended pursuant to Section 2.12.
"Money Market Loan" shall mean a Bid Loan, the
interest rate on which is determined on the basis of the LIBO
Rate and the Money Market Margin.
"Money Market Margin" shall have the meaning assigned
to such term in Section 4.4(b).
"Moody's" shall mean Moody's Investors Service, Inc.
or any successor thereto.
"Note" shall mean a Bid Loan Note or a Committed Loan
Note (collectively the "Notes").
"Notice of Drawing" shall have the meaning assigned to
such term in Section 3.2.
"Officer's Certificate" shall mean a certificate
executed on behalf of the Company by the President, any
Vice-President, the Treasurer, any Assistant Treasurer, the
Controller or any Assistant Controller of the Company.
"PBGC" shall mean the Pension Benefit Guaranty
Corporation created by Section 4002(a) of ERISA, or any
Governmental Body succeeding to the functions thereof.
"Permitted Liens" shall mean:
(a) Liens given by the Company or a Consolidated
Subsidiary to secure the payment of the purchase price of
fixed assets (all such Liens being called "Purchase Money
Liens") acquired, constructed or improved by the Company or
such Consolidated Subsidiary after the Effective Date,
provided that:
(i) such Purchase Money Liens shall have been
created contemporaneously with or within six months
after the later of the acquisition, construction,
improvement or placing in service of the fixed assets
subject thereto;
(ii) no such Purchase Money Liens shall extend to
or cover any other Property of the Company or such
Consolidated Subsidiary, as the case may be, and
(iii)the aggregate amount of the
Indebtedness secured by any such Purchase Money Liens
in respect of any such Property (whether or not the
Company or such Consolidated Subsidiary assumes or
otherwise becomes liable for such Indebtedness) shall
not exceed 100% of the lesser of the cost or fair
market value of such Property at the time of
acquisition, construction or improvement thereof;
(b) Liens in respect of Property acquired by the
Company or a Consolidated Subsidiary which were created
prior to, and are in existence on the date of, the
acquisition of such Property (whether or not the Company or
such Consolidated Subsidiary assumes or otherwise becomes
liable for any Indebtedness secured thereby) and,in the
case of any Person which becomes a Consolidated Subsidiary
after the date of this Agreement, Liens on its Property or on
the outstanding shares of its capital stock created prior
to, and existing on, the date such Person becomes a
Consolidated Subsidiary, provided that no such Lien shall
extend to or cover any other Property of the Company or such
Consolidated Subsidiary, as the case may be;
(c) Liens and priority claims incidental to the
conduct of business or the ownership of Property and assets
(including warehousemen's, attorneys' and statutory
landlords' liens) and Liens, pledges or deposits in
connection with workmen's compensation, unemployment
insurance, old age benefit or social security obligations,
taxes and duties, governmental charges or levies,
assessments, performance bonds, statutory obligations or
other similar charges, Liens of carriers, contractors,
mechanics, repairmen and materialmen, good faith deposits in
connection with tenders, bids, contracts or leases to which
the Company or any Consolidated Subsidiary is a party or
other deposits required to be made in the ordinary course of
business and not in connection with the borrowing of money;
provided in each case the obligation secured is not overdue
or, if overdue, is being contested in good faith by
appropriate proceedings and subject to appropriate reserves;
(d) The pledge of assets for the purpose of securing
any appeal or stay or discharge in the course of any legal
proceeding and Liens on or resulting from judgments or
awards in respect of which the Company or any of its
Consolidated Subsidiaries shall at any time in good faith be
prosecuting an appeal or proceeding for review, provided,
that the aggregate book value of assets so pledged or
subject to such Lien does not exceed $1,000,000 at any one
time;
(e) Easements, rights-of-way, restrictions and other
similar encumbrances incurred in the ordinary course of
business which, in the aggregate, are not substantial in
amount, and which do not in any case materially detract from
the value of the Property subject thereto or interfere with
the ordinary conduct of the business of the Company and its
Subsidiaries taken as a whole;
(f) Liens created pursuant to applications or
reimbursement agreements pertaining to commercial letters of
credit which encumber only the goods, or documents of title
covering the goods, which are sold or shipped in the
transaction for which such letters of credit were issued;
(g) Liens securing Indebtedness of Consolidated
Subsidiaries if all such Indebtedness is owned by the
Company or another Consolidated Subsidiary;
(h) Liens incurred by the Company after the date of
this Agreement in connection with industrial revenue bond
financing for facilities (including pollution control
equipment) to be used by the Company or any Consolidated
Subsidiary;
(i) Liens on Property or assets of the Company or a
Consolidated Subsidiary existing as of the date of this
Agreement and securing Indebtedness of the Company or such
Consolidated Subsidiary, as the case may be;
(j) Liens relating to accounts receivable of the
Company or any of its Consolidated Subsidiaries which have
been sold, assigned or otherwise transferred to another
Person in a transaction classified as a sale of accounts
receivable in accordance with Generally Accepted Accounting
Principles and in accordance with the limitation set forth
in Section 12.8(b) hereof; and
(k) In addition to those Liens permitted by the
foregoing clauses (a) through (j), other Liens on Property
of the Company or a Consolidated Subsidiary securing
Indebtedness of the Company or such Consolidated Subsidiary
in an aggregate amount at any time outstanding not exceeding
3-1/2% of Consolidated Adjusted Net Worth as set forth in
the most recent financial statements delivered to the Banks
pursuant to Section 11.6.
"Person" shall mean a corporation, an association, a
partnership, an organization, a business, a joint venture, a
trust, an individual, a government or a political subdivision
thereof or a governmental agency.
"Plan" shall mean a pension plan, as defined in
Section 3(2) of ERISA, subject to Title IV of ERISA, which the
Company or any Related Person to the Company or any Subsidiary
sponsors or maintains, or to which the Company or any Related
Person to the Company or Subsidiary makes, is making, or is
obligated to make contributions, or in the case of a multiple
employer plan, as described in Section 4064(a) of ERISA, has
made contributions at any time during the immediately preceding
five plan years; but excluding in all cases any multiemployer
plan within the meaning of Section 4001(a)(3) of ERISA.
"Plan Administrator" shall have the meaning assigned
to the term "administrator" in Section 3(16) (A) of ERISA.
"Plan Sponsor" shall have the meaning assigned to the
term "plan sponsor" in Section 3(16)(B) of ERISA.
"Pre-Existing Acceptances" shall have the meaning set
forth in Section 7.13(e).
"Pre-Existing LIBOR Loans" shall have the meaning set
forth in Section 7.13(d).
"Pro Rata Share" shall mean with respect to a Bank and
at the time of any determination, (a) when no Invoked Event of
Default shall exist, the proportion, expressed as a percentage,
which its Revolving Commitment bears to the Aggregate Revolving
Commitment, and (b) when an Invoked Event of Default shall
exist, the proportion, expressed as a percentage, which its
Aggregate Outstandings bears to the Aggregate Outstandings held
by all of the Banks.
"Prohibited Transaction" shall have the respective
meanings assigned to that term in Section 4975 of the Code and
in Section 406 of ERISA.
"Property" shall mean all types of real, personal,
tangible, intangible or mixed property.
"Rate Notice" shall have the meaning assigned to the
term in Section 2.9.
"Reference Banks" shall mean Bank of America National
Trust and Savings Association, and First Bank National
Association, or any successor Reference Banks pursuant to the
provisions of Sections 2.9 or 18.13 of this Agreement.
"Reference Loans" shall mean all Committed Loans
bearing interest at a rate based upon the Reference Rate.
"Reference Rate" shall mean a fluctuating rate per
annum which is the higher of (a) the Federal Funds Rate in
effect from time to time plus one-half of one percent (1/2%) per
annum and (b) the rate of interest publicly announced from time
to time by the Administrative Agent as its "reference rate."
"Related Person" shall mean, with respect to any
Person, any trade or business (whether or not incorporated)
which, together with such Person, is under common control as
described in Section 414(c) of the Code.
"Reportable Event" shall mean a "reportable event"
described in Section 4043(b) of ERISA as to which the 30 day
notice period has not been waived.
"Restricted Payment" means (i) any dividend or other
distribution, direct or indirect, whether in cash or in property
(other than dividends paid in shares of the capital stock of the
Company), on account of shares of any class of stock of the
Company now or hereafter outstanding or (ii) any redemption,
retirement, sinking fund or similar payment, purchase or other
acquisition for value, direct or indirect, whether in cash or in
property (other than in shares of the capital stock of the
Company), of any shares of any class of stock of the Company, or
of any warrants, options or other rights to acquire any such
shares of stock, now or hereafter outstanding.
"Revolving Commitment" shall mean in respect of any
Bank, the amount set forth next to the name of such Bank in
Exhibit A as the same may be adjusted as herein provided.
"Revolving Credit Availability Period" means the
period from the Effective Date to the earlier of (a) the day on
which the Revolving Commitments are terminated in accordance
with the provisions of this Agreement and (b) the Maturity Date.
"S&P" shall mean Standard & Poor's Ratings Group, a
division of McGraw Hill Corporation or any successor thereto.
"Senior Funded Debt" shall mean, with respect to any
Person as of any date of determination, all Funded Debt of such
Person which is not Subordinated Funded Debt.
"Short-Term Borrowing" as applied to a Person, shall
mean all Indebtedness of such Person in respect of borrowed
money maturing on demand or within one year from the date of the
determination thereof, excluding any such Indebtedness that
shall also constitute Funded Debt.
"Short-Term Investment" shall have the meaning set
forth in Section 12.11.
"Subordinated Funded Debt" shall mean, as of the date
of any determination, Funded Debt of the Company which is
subordinated to the obligations of the Company under this
Agreement at least to the extent of, or on terms substantially
similar to the terms set forth in, Exhibit J hereto.
"Subordinated Short-Term Borrowing" shall mean, as of
the date of any determination, Short-Term Borrowing of the
Company which is subordinated to the obligations of the Company
under this Agreement at least to the extent of, or on terms
substantially similar to the terms set forth in, Exhibit J
hereto.
"Subsidiary" shall mean any corporation, association,
partnership, joint venture or other business entity of which the
Company and/or any subsidiary of the Company either (a) in
respect of a corporation, owns more than 50% of the outstanding
stock having ordinary voting power to elect a majority of the
board of directors or similar managing body, irrespective of
whether or not at the time the stock of any class or classes
shall or might have voting power by reason of the happening of
any contingency, or (b) in respect of an association,
partnership, joint venture or other business entity, is the sole
general partner or is entitled to share in more than 50% of the
profits, however determined.
"Supplemental Signature Page" shall have the meaning
set forth in Section 7.13(b).
"Tax Rate" shall mean, for any period, the maximum
statutory federal rate, expressed as a decimal (rounded, if
necessary, to the nearest one one-thousandth), of income tax
applicable to corporations for such period under Section 11 of
the Code.
"Total Assets" shall mean, with respect to any Person
and as of the date of any determination, the total of all assets
which under Generally Accepted Accounting Principles would be
included on a consolidated balance sheet of such Person.
"Total Debt" shall mean, as of any date of
determination, the sum of (a) Consolidated Funded Debt, (b)
current maturities of Consolidated Funded Debt, (c) the amount
by which the amount payable upon then outstanding zero coupon
notes of the Company and its Consolidated Subsidiaries upon
acceleration of maturity due to default exceeds the amount
included under clause (a) and clause (b) of this definition
related to such notes and (d) Short-Term Borrowing of the
Company and its Consolidated Subsidiaries, all determined for
the Company and its Consolidated Subsidiaries on a consolidated
basis in accordance with Generally Accepted Accounting
Principles after eliminating all inter-company items.
"Total Fixed Asset Debt" shall mean, as of the date of
any determination, Total Debt less Allowable Working Capital.
"Total Senior Debt" shall mean, as of the date of any
determination, the sum of (a) Consolidated Senior Funded Debt,
(b) current maturities of Consolidated Senior Funded Debt, (c)
the amount by which the amount payable upon the then outstanding
zero coupon senior notes of the Company and its Consolidated
Subsidiaries upon acceleration of maturity due to default
exceeds the amount included under clause (a) and clause (b) of
this definition related to such notes and (d) ShortTerm
Borrowing of the Company and its Consolidated Subsidiaries (but
excluding any Subordinated Short-Term Borrowing of the Company
and its Consolidated Subsidiaries), all determined for the
Company and its Consolidated Subsidiaries on a consolidated
basis in accordance with Generally Accepted Accounting
Principles after eliminating all intercompany items.
"Total Senior Fixed Asset Debt" shall mean, as of the
date of any determination, Total Senior Debt less Allowable
Working Capital.
2. THE COMMITTED LOAN FACILITY.
2.1 The Committed Loans.
(a) Subject to the terms and conditions hereof,
each Bank severally agrees to make advances (each a "Committed
Loan" and, collectively, the "Committed Loans") to the Company
during the Revolving Credit Availability Period; provided,
however, that at any time during such period, (i) Aggregate
Outstandings of all Banks shall not exceed the Aggregate
Revolving Commitment, and (ii) the sum of (A) each Bank's Pro
Rata Share multiplied by the sum of the aggregate unpaid face
amount of all unmatured Acceptances and the aggregate amount of
all outstanding Acceptance Obligations plus (B) the aggregate
unpaid principal amount of such Bank's Committed Loans
outstanding hereunder shall not exceed the amount of such Bank's
Revolving Commitment which, for purposes of this clause (ii),
shall be reduced by an amount equal to the product obtained by
multiplying such Bank's Pro Rata Share by the sum of (y) the
aggregate unpaid principal amount of all outstanding Bid Loans
and (z) the sum of the aggregate unpaid face amount of all
unmatured Bid Bankers Acceptances and the aggregate amount of
all outstanding Bid Bankers Acceptance Obligations. The
Committed Loans may be maintained, at the election of the
Company made from time to time as permitted herein, as Reference
Loans or LIBOR Loans or any combination thereof permitted
hereunder.
(b) During the Revolving Credit Availability
Period, the Company may borrow, prepay and reborrow Committed
Loans in accordance with the provisions hereof.
(c) The principal amount of each Bank's
Committed Loan made on a Borrowing Date shall be in an amount
equal to its Pro Rata Share of all such Committed Loans made on
such date. The failure of any Bank to honor its Commitments
hereunder at any time shall not increase or otherwise affect the
Commitment of any other Bank.
2.2 Borrowing Procedure.
(a) The Company shall give to the Administrative
Agent prior notice (by telex or telecopier, or by telephone
(confirmed in writing promptly thereafter)) of its intention to
borrow under this Section 2, by delivery to the Administrative
Agent of a borrowing request substantially in the form of
Exhibit K hereto (each, a "Borrowing Request") specifying: (i)
the proposed date of such borrowing (each, a "Borrowing Date"),
which date shall be a Business Day in the case of Reference
Loans or a Eurodollar Business Day in the case of LIBOR Loans,
(ii) the aggregate principal amount of the Committed Loans to be
made on such date, which shall, in the case of LIBOR Loans, be
in the minimum aggregate amount of $5,000,000 and multiples of
$1,000,000 in excess thereof and, in the case of Reference
Loans, be in the minimum aggregate amount of $1,000,000 and
multiples thereof, (iii) whether such Committed Loans are to be
funded as LIBOR Loans or Reference Loans, and (iv) in the case
of LIBOR Loans, the initial Interest Period therefor.
(b) A Borrowing Request shall be given by (i)
12:00 noon (Minneapolis time) not less than three Eurodollar
Business Days prior to the proposed Borrowing Date if such Loan
is to be a LIBOR Loan and (ii) 10:30 a.m. (Minneapolis time) on
the proposed Borrowing Date if such Loan is to be a Reference
Loan; provided, however, that with respect to a LIBOR Loan
borrowing on the Effective Date, the Borrowing Request shall be
given by 12:00 noon (Minneapolis time) not less than two
Eurodollar Business Days prior to the Effective Date. Subject
to Sections 2.9 and 2.10, upon receipt by the Administrative
Agent, a Borrowing Request shall be irrevocable.
(c) On the date of receipt of such Borrowing
Request by the Administrative Agent, the Administrative Agent
shall give prompt notice by telephone or telecopy to each Bank
of the contents thereof. Each Bank shall make immediately
available funds equal to the amount of its Committed Loan
available to the Administrative Agent for the account of the
Company at First Bank National Association, Minneapolis,
Minnesota, or at such other office designated by the
Administrative Agent from time to time, not later than 12:00
noon (Minneapolis time), on each Borrowing Date. Unless the
Administrative Agent is aware that the conditions precedent to
the making of such Committed Loans set forth in Sections 9 and
10 have not been satisfied (in which event the Administrative
Agent shall promptly notify the Company and all the Banks), the
Administrative Agent shall make available to the Company not
later than 12:30 p.m. (Minneapolis time) on such Borrowing Date,
the amount of funds so received in the type of funds received by
it (or, at the option of the Administrative Agent, in
immediately available funds). On or before the close of
business (Minneapolis time) on the Business Day that the
Administrative Agent determines the LIBO Rate for any Committed
Loans in accordance with the respective definitions thereof, the
Administrative Agent shall use best efforts to notify each Bank
of such LIBO Rate.
2.3 The Committed Loan Notes. On or before the
initial Borrowing Date hereunder, the Company shall duly issue
and deliver to the Administrative Agent for delivery to the
Banks a series of notes substantially in the form of Exhibit L
hereto (each, a "Committed Loan Note" and, collectively, the
"Committed Loan Notes"), with appropriate insertions therein,
one payable to the order of each Bank, in the principal amount
of the Revolving Commitment of such Bank. Each Bank is hereby
authorized by the Company to enter on the schedule attached to
its Committed Loan Note or otherwise in its records, the amount
of each Committed Loan made by it hereunder, each payment
thereon and the other information provided for on such schedule;
provided, however, that the failure to make any such entry or
any error in making such entry with respect to any Committed
Loan or payment shall not limit or otherwise affect the
obligation of the Company hereunder or under any such Committed
Loan Note, and, in all events, the principal amount owing by the
Company in respect of each Bank's Committed Loan Note shall be
the aggregate amount of all Committed Loans made by such Bank
less all payments of principal thereon made by the Company. If
such schedule shall be fully completed, such Bank may attach an
additional schedule or schedules thereto. Each Committed Loan
Note shall evidence that the principal amount of each Committed
Loan shall be due and payable no later than the Maturity Date or
upon acceleration under Section 13.1. Each Bank's Committed
Loan Note shall bear interest as provided in Section 2.5.
2.4 Payment of Principal of Committed Loans;
Prepayments.
(a) The outstanding principal amount of each
Committed Loan shall be payable on the Maturity Date.
(b) Upon at least three Eurodollar Business
Days' (with respect to LIBOR Loans) or one Business Day's (with
respect to Reference Loans) irrevocable prior written notice to
the Administrative Agent (which shall advise each Bank thereof
as soon as practicable thereafter) specifying the amount and the
date of prepayment, the Company shall have the right to prepay
the Committed Loans, in whole at any time or in part from time
to time, in aggregate principal amounts equal to at least
$5,000,000 ($1,000,000 in the case of Reference Loans), or in
integral multiples thereof, with accrued interest on the amount
being prepaid to the date of such prepayment and subject to any
required payments pursuant to Section 7.3. Each prepayment
under this Section 2.4 shall be made to the Administrative Agent
and, promptly upon receipt thereof, the Administrative Agent
shall remit to each Bank its Pro Rata Share thereof. Optional
payments on account of the Committed Loan Notes during the
Revolving Credit Availability Period shall not of themselves
reduce the sum of the respective Revolving Commitments of the
Banks at the time in effect (or any Bank's Revolving
Commitment), the effect thereof being solely to increase the
amount available to be reborrowed.
2.5 Interest on Committed Loans. Except as provided
in Section 7.2, the Committed Loans shall bear interest on the
unpaid principal amount thereof as follows: (i) for Reference
Loans, at a fluctuating rate per annum equal to the Applicable
Reference Rate, and (ii) for LIBOR Loans, at a rate per annum
equal to the Applicable LIBO Rate for the applicable Interest
Period.
2.6 Conversions and Refunding of Committed
Loans. Subject to the terms and conditions of this Agreement,
the Company shall also have the option at any time to convert
any Committed Loans or part thereof (in integral multiples of
$1,000,000 in the aggregate) into a Reference Loan, LIBOR Loan,
or refund any LIBOR Loan or part thereof (in integral multiples
of $1,000,000 in the aggregate); provided, however, that (i) any
LIBOR Loans converted or refunded before the expiration of their
applicable Interest Period shall be accompanied by accrued
interest on the amount being converted or refunded and subject
to any payment required pursuant to Section 7.3, and (ii) no
Reference Loan may be converted into a LIBOR Loan, if an Event
of Default has occurred and is continuing on the proposed date
of conversion. The Company shall notify the Administrative
Agent (which shall advise each Bank thereof as soon as
practicable thereafter) in writing of each proposed conversion
or refunding, the proposed date therefor (which shall be a
Business Day in the case of a Reference Loan and a Eurodollar
Business Day in the case of a LIBOR Loan) and the duration of
the Interest Period therefor, in the case of LIBOR Loans,
pursuant to a duly executed Borrowing Request, in accordance
with the notice provisions of Section 2.2. Subject to Sections
2.9 and 2.10, any notice given by the Company under this Section
2.6 shall be irrevocable. Subject to the terms and conditions
of this Agreement, if the Company shall fail to notify the
Administrative Agent in the manner provided in this Section 2.6
of a conversion or refunding of a LIBOR Loan prior to the last
day of the then applicable Interest Period and has not repaid it
and has the right to convert or refund it, such Committed Loan
shall automatically be converted on such day to a Reference Loan
of equal principal amount.
2.7 Interest Payments on Committed Loans. Except as
provided in Section 7.2, interest on the Reference Loans shall
be payable quarterly, in arrears, on the first Business Day of
each February, May, August and November, commencing in February,
1996, and on the date such Reference Loans are paid in full and
not subject to a further reborrowing under Section 2.1 or 2.2.
Except as provided in Section 7.2, interest on the LIBOR Loans
shall be payable in arrears on the last day of the applicable
Interest Period or such other date as such Committed Loans are
paid in full or converted pursuant to Section 2.6; provided,
however, that accrued interest on LIBOR Loans with an Interest
Period of approximately 6, 9 or 12 months shall also be payable
at the end of the third, sixth and ninth month of such Interest
Period. All interest payable hereunder on Committed Loans shall
be computed on the basis of a year of 360 days and actual days
elapsed, except for interest at the Reference Rate, which shall
be computed on the basis of a year of 365 or 366 days, as
applicable, and actual days elapsed.
2.8 Number of Reference Loans and LIBOR Loans
Outstanding. The total number of Reference Loans and LIBOR
Loans outstanding to any Bank at any time shall not exceed 10.
2.9 Inability to Determine Rate. (a) If any Reference
Bank determines (which determination shall be made in good faith
and shall be conclusive and binding upon the Company in the
absence of manifest error) that (1) by reason of circumstances
then affecting the inter-bank Eurodollar markets, adequate and
reasonable means do not or will not exist for ascertaining the
LIBO Rate applicable to any LIBOR Loan, or (2) Dollar deposits
in the relevant amounts and for the relevant Interest Period of
a LIBOR Loan are not available to such Reference Bank in the
inter-bank Eurodollar markets, then such Reference Bank shall
forthwith give notice (a "Rate Notice") of such determination to
the Company and the Administrative Agent (who shall notify the
Banks), whereupon, until such Reference Bank shall notify the
Company and the Administrative Agent (who shall notify the
Banks) that the circumstances giving rise to such suspension no
longer exist, (x) the obligations of each Bank to make LIBOR
Loans shall be suspended and (y) the Company shall repay in
full, without premium or penalty, the then outstanding principal
amount of the LIBOR Loans affected, together with accrued
interest thereon, on the last day of the then current Interest
Period for such LIBOR Loans. Unless the Company notifies the
Administrative Agent of a conversion in accordance with Section
2.6 after receiving a Rate Notice from one of the Reference
Banks pursuant to this subsection, the Company shall,
concurrently with repaying the LIBOR Loans pursuant to this
subsection, be deemed to have requested and received Reference
Loans in an equal principal amount from each Bank.
(b) Notwithstanding the foregoing, the Company
may (i) prior to the repayment of outstanding LIBOR Loans
pursuant to Section 2.9(a), within two (2) Business Days after
receipt of a Rate Notice from one of the Reference Banks, and
(ii) at any time after the suspension of Banks' obligations to
make LIBOR Loans and the repayment by the Company of outstanding
LIBOR Loans in accordance with the provisions of Section 2.9(a),
with the consent of the Majority Banks, designate one or more
Banks to replace the Reference Bank(s) which delivered such a
Rate Notice. Upon acceptance of such designation as a
replacement Reference Bank, such replacement Reference Bank or
Reference Banks shall promptly notify the Administrative Agent
of such acceptance at which time such replacement Reference Bank
or Reference Banks shall for all purposes be deemed a Reference
Bank hereunder, and at which time such Reference Bank(s) shall
notify the Administrative Agent and the Company as to whether it
will (x) continue the Rate Notice delivered by its predecessor,
in which case the provisions of Section 2.9(a) regarding the
suspension of Banks' obligations to make LIBOR Loans and the
repayment of outstanding LIBOR Loans shall be operative, or (y)
withdraw the Rate Notice delivered by its predecessor, in which
case, no such suspension or repayment shall then occur, or
continue to be operative, as the case may be.
2.10 Illegality: Termination of Commitment.
Notwithstanding any other provisions herein, if, after the date
of this Agreement, the introduction of or any change in any
applicable law, rule or regulation or in the interpretation or
administration thereof by any Governmental Body charged with the
interpretation or administration thereof or compliance by any
Bank with any request or directive (whether or not having the
force of law but, if it does not have the force of law, with
respect to which similarly situated banks generally comply) of
any such Governmental Body shall make it unlawful or
impracticable, in the reasonable judgment of any Bank, for such
Bank to make, maintain or fund LIBOR Loans as contemplated by
this Agreement, (1) the obligations of such Bank hereunder to
make LIBOR Loans shall forthwith be cancelled, (2) Committed
Loans which would otherwise be made by such Bank as LIBOR Loans
shall be made instead as Reference Loans, and (3) the Company
shall pay in full the then outstanding principal amount of all
LIBOR Loans made by such Bank together with accrued interest,
either (x) on the last day of the then current Interest Period
if such Bank may lawfully continue to fund and maintain such
LIBOR Loans to such day or (y) immediately if such Bank may not
lawfully continue to fund and maintain such LIBOR Loans to such
day. Unless the Company notifies such Bank and the
Administrative Agent to the contrary within two (2) Business
Days after receiving a notice from such Bank pursuant to this
subsection, the Company shall, concurrently with repaying the
LIBOR Loans pursuant to this subsection, be deemed to have
requested and received Reference Loans in an equal principal
amount from such Bank. If circumstances subsequently change so
that such Bank is not further affected, such Bank shall so
notify the Company of such change and such Bank's obligation to
make and continue LIBOR Loans shall be reinstated.
2.11 Application of Prepayments. All amounts
paid by the Company in prepayment of Committed Loans pursuant to
Sections 2.4(b) and 7.4 prior to the occurrence of an Event of
Default hereunder shall be applied, subject to Section 2.4(b) or
7.4, as the case may be, as directed by the Company in its
related notice of prepayment and shall be accompanied by, in the
case of any resultant prepayment of Committed Loans being
maintained as LIBOR Loans, all amounts payable with respect
thereto pursuant to Section 7.3.
2.12 Extension of Maturity Date. The Company may
from time to time request the Banks to extend the Maturity Date
to a date not more than one year from the then current Maturity
Date. Such request may not be made earlier than 15 months prior
to the then current Maturity Date and not later than 90 days
prior to the then current Maturity Date. The Administrative
Agent shall promptly notify the Banks of each such request.
Each Bank shall give its response to each such request in
writing to the Administrative Agent no later than 60 days after
each such request. Upon inquiry by the Company, the
Administrative Agent will advise the Company which Banks, if
any, have not responded to any such request. If a Bank fails to
respond, it shall be deemed to have not consented to such
extension. If all Banks consent to such extension, the Maturity
Date shall be so extended and the Administrative Agent shall
notify each Bank of such fact. Subject to the last sentence of
this Section, the Acceptance Availability Period shall also be
deemed extended to the new Maturity Date, commencing on the last
day of the Acceptance Availability Period. If less than all
Banks consent to such extension, the Company shall have an
additional period of up to 120 days from the date of the
Company's original extension request under this Section 2.12
(provided that such additional period shall not extend beyond
the then-existing Maturity Date) (the "Additional Period") in
which to replace all of the non-consenting Bank(s) with either
one or more of the existing Banks (but no existing Bank shall be
required to do so) or with any other bank (in either case, a
"Replacement Bank"), subject to the Administrative Agent's
consent (which shall not be unreasonably withheld). The
replacement of the nonconsenting Bank(s) shall occur promptly
after the last day of the Additional Period but in no event
later than the then-existing Maturity Date and shall be
otherwise subject to Section 18.1 hereof. Any Bank which has
consented to the requested extension of the Maturity Date shall
not withdraw its consent during the Additional Period. If less
than all Banks consent to such extension and if the Company is
unable to replace the non-consenting Bank(s) as described above,
the Maturity Date shall not be extended.
3. THE ACCEPTANCE FACILITY.
3.1 Acceptance Commitment.
(a) Upon the terms and subject to the conditions
hereof, the Administrative Agent agrees, at any time and from
time to time during the Acceptance Availability Period, to
create Acceptances for the Company maturing on a Business Day
not less than 30 days or more than 90 days after the creation
thereof and in any event not later than the last day of the
Acceptance Availability Period; provided, however, that at any
time during the Revolving Credit Availability Period, (i)
Aggregate Outstandings of all Banks shall not exceed the
Aggregate Revolving Commitment, and (ii) the sum of (A) each
Bank's Pro Rata Share multiplied by the sum of the aggregate
unpaid face amount of all unmatured Acceptances and the
aggregate amount of all outstanding Acceptance Obligations plus
(B) the aggregate unpaid principal amount of such Bank's
Committed Loans outstanding hereunder shall not exceed the
amount of such Bank's Revolving Commitment which, for purposes
of this clause (B), shall be reduced by an amount equal to the
product obtained by multiplying such Bank's Pro Rata Share by
the sum of (y) the aggregate unpaid principal amount of all
outstanding Bid Loans and (z) the sum of the aggregate unpaid
face amount of all unmatured Bid Bankers Acceptances and the
aggregate amount of all outstanding Bid Bankers Acceptance
Obligations.
(b) During the Acceptance Availability Period,
the Company may request Acceptances in accordance with the
provisions hereof.
(c) Each Acceptance shall be created by the
Administrative Agent's acceptance of Drafts drawn on it in
accordance with the terms of this Agreement. Each drawing of
one or more Drafts on any Drawing Date (a "Drawing") shall be in
an aggregate face amount of $5,000,000 or an integral multiple
of $1,000,000 in excess thereof.
3.2 Notice of Drawing. Whenever the Company desires
to make a Drawing, it shall prior to 10:00 a.m. (Minneapolis
time) on the proposed date of such requested Drawing (each a
"Drawing Date") give the Administrative Agent notice by
telephone or telecopier of the requested Drawing consisting of
the information and certification set forth substantially in the
form of notice of drawing attached hereto as Exhibit M (a
"Notice of Drawing"). Such notice shall be irrevocable and the
Company shall promptly confirm any such telephonic notice by
transmitting a Notice of Drawing to the Administrative Agent by
telecopier. Upon the Administrative Agent's request, the
Company shall provide such information concerning the underlying
transaction as necessary to establish to the satisfaction of the
Administrative Agent that the document created by the acceptance
of such Draft or Drafts will qualify as an Acceptance as defined
hereunder.
3.3 Preparation of Drafts and Creation of Acceptances.
To enable the Administrative Agent to create Acceptances in the
manner specified in this Section 3.3, the Company hereby
irrevocably designates and appoints the Administrative Agent,
which may from time to time appoint any other bank or financial
institution, as the Company's true and lawful attorney-in-fact,
to execute drafts, in the form of Exhibit N hereto or such other
form as may be acceptable to the Company and the Administrative
Agent (a "Draft"), in the name and on behalf of the Company as
drawer. The Administrative Agent shall promptly notify the
Company of each such designee appointed by the Administrative
Agent to execute drafts under the foregoing power of attorney.
Such power of attorney may only be exercised by the
Administrative Agent or its designee following the
Administrative Agent's receipt of a Notice of Drawing and in
strict accordance with the information contained therein.
The Company hereby authorizes the Administrative Agent
or its designee to complete a Draft in respect of a requested
Drawing in accordance with such information, which Draft shall
be dated the Drawing Date and shall mature on the date specified
in the relevant Notice of Drawing provided such date is a date
permitted under Section 3.1. Not later than 12:00 noon
(Minneapolis time) on the proposed Drawing Date, the
Administrative Agent shall, subject to the satisfaction of the
applicable conditions set forth in Sections 9 and 10, duly
accept and discount such Draft at a price equal to the face
amount thereof less the sum of (i) the bankers acceptance
discount rate for such maturity then being generally quoted by
the Administrative Agent (unless the Administrative Agent quoted
a bankers acceptance discount rate in connection with the
Company's giving of the relevant Notice of Drawing which quoted
rate was accepted by the Company not more than 15 minutes prior
to its giving of such Notice, in which case such quoted rate
shall control) (the "Discount Charge") and (ii) a per annum
acceptance commission (the "Acceptance Commission") equal to the
Applicable Margin, each of the Discount Charge and the
Acceptance Commission being calculated on the face amount of
each Draft so accepted for the actual number of days in the
period from the date thereof to the date of its maturity and on
the basis of a year of 360 days. Not later than 1:00 p.m.
(Minneapolis time) on the Drawing Date, the Administrative Agent
shall make the amount of the proceeds of the discount of each
Draft so accepted and discounted available to the Company. On
the Drawing Date of such Acceptance, the Administrative Agent
shall remit to each Bank such Bank's Pro Rata Share of the
Acceptance Commission applicable to such Acceptance.
Notwithstanding the foregoing, the Administrative Agent shall
not be obligated to create or discount Acceptances hereunder if
such Acceptance would not be eligible for discount at a Federal
Reserve Bank under applicable rules or regulations, would not
meet the requirements of paragraph 7 of Section 13 of the
Federal Reserve Act, as amended, or any liability of the
Administrative Agent that would arise from the creation of such
Acceptance would constitute a deposit for which the
Administrative Agent would be required to maintain reserves
under Regulation D of the Federal Reserve Board as from time to
time in effect. The Company acknowledges that the
Administrative Agent's decision to accept and discount any Draft
offered for acceptance and discount hereunder will be made in
reliance upon the truth of the representations made by the
Company in the related Notice of Drawing establishing the
eligibility for discount of any such Acceptance. The Company
will indemnify and save the Administrative Agent and each
Acceptance Participant harmless from any loss or liability
incurred by the Administrative Agent and such Acceptance
Participants if any Acceptances are determined to be ineligible
for discount or subject to reserves by reason of any
misrepresentation made by the Company.
3.4 Acceptance Obligation of the Company. The Company
hereby unconditionally agrees to pay to the Administrative Agent
in immediately available funds the face amount of each Draft as
to which an Acceptance was created by the Administrative Agent
on the maturity date thereof, or on such earlier date as may be
required pursuant to other provisions of this Agreement.
3.5 Prepayment. Acceptances may not be prepaid.
3.6 Participations in Acceptances.
(a) Grant and Acceptance of Participations in
Acceptances. Upon the terms and subject to the conditions of
this Agreement and effective on the applicable Drawing Date, the
Administrative Agent hereby grants to each Bank (in such
capacity, an "Acceptance Participant"), and each Acceptance
Participant hereby accepts from the Administrative Agent, an
undivided participation in and to each Acceptance and the
Administrative Agent's obligations thereunder (an "Acceptance
Participation") and, to the extent hereinafter provided, the
Company's Acceptance Obligations with respect to each such
Acceptance, equal to each Acceptance Participant's Pro Rata
Share of the face amount of each such Acceptance. The
Administrative Agent shall give each Acceptance Participant
prompt notice of the creation of each Acceptance in the form of
a notice of creation of Acceptance and grant of an Acceptance
Participation substantially in the form of Exhibit O hereto.
Such notice shall specify the face amount of such Acceptance,
the maturity date thereof, the face amount of each Acceptance
Participant's undivided interest therein and the amount of the
Acceptance Commission applicable to such Acceptance.
(b) Participation Interest of Acceptance
Participants. The participation interest of each Acceptance
Participant in each Acceptance shall include its Pro Rata Share
of the Acceptance Commission applicable to such Acceptance on
the Drawing Date of such Acceptance.
(c) Failure of Company to Pay an Acceptance;
Rights and Obligations of the Administrative Agent and the
Acceptance Participants. The Administrative Agent shall, on the
maturity date of the relevant Acceptance, give each Bank notice
(by telex or telecopier, or by telephone (confirmed in writing
promptly thereafter)) of each failure by the Company to pay the
Administrative Agent the related Acceptance Obligation on such
date. Upon receipt of such notice from the Administrative
Agent, each Bank shall, forthwith, make a Reference Loan to the
Company in the amount of such Bank's Pro Rata Share of the
amount of the unpaid Acceptance Obligation and make the proceeds
of such Reference Loan available to the Administrative Agent
before 2:00 p.m. (Minneapolis time) on the day such notice was
given (where the relevant notice was given at or prior to 12:00
noon (Minneapolis time) on any Business Day), and before 10:00
a.m. (Minneapolis time) on the next succeeding day that such
Bank and the Administrative Agent are open at their respective
addresses specified in this Agreement for the purpose of
conducting a commercial banking business (where the relevant
notice was given after 12:00 noon (Minneapolis time) on any
Business Day). If any portion of any such amount paid to the
Administrative Agent should be recovered by or on behalf of the
Company from the Administrative Agent in bankruptcy, by
assignment for the benefit of creditors or otherwise, the loss
of the amount so recovered shall be ratably shared among all the
Banks in the manner contemplated by Section 16. Each Bank's
obligation to make the Reference Loans referred to in this
paragraph shall be absolute and unconditional and shall not be
affected by any circumstance, including, without limitation, (i)
any setoff, counterclaim, recoupment, defense or other right
which such Bank may have against the Administrative Agent, the
Company or anyone else for any reason whatsoever; (ii) the
occurrence or continuance of a Default or an Event of Default;
(iii) any adverse change in the condition (financial or
otherwise) of the Company; (iv) any breach of this Agreement by
the Company or any other Bank; (v) any termination or reduction
of the Commitments; or (vi) any other circumstance, happening or
event whatsoever, whether or not similar to any of the
foregoing. If any Default or Event of Default shall have
occurred and be continuing at the time any Reference Loan is
made pursuant to this Section 3.6(c), then, notwithstanding
Section 2.4(a), such Reference Loan shall be immediately due and
payable.
4. THE BID LOAN FACILITY.
4.1 The Bid Loan Facility. The Banks agree to make
available to the Company during the Revolving Credit
Availability Period the Bid Loan Facility, pursuant to which the
Company may, as provided in this Section 4, request the Banks,
through the Administrative Agent, to make offers to make Bid
Loans to the Company, and the Banks may, at their sole election,
make offers to make Bid Loans to the Company; provided, however,
that at any time the Aggregate Outstandings of all Banks shall
not exceed the Aggregate Revolving Commitment. The Banks may,
but shall have no obligation to, make any such offers and the
Company may, but shall have no obligation to, accept any such
offers. Bid Loans may be Money Market Loans or Absolute Rate
Loans (each, a "type" of Bid Loan).
4.2 Bid Loan Tender Request Notice. When the Company
wishes to request offers to make Bid Loans, it shall transmit to
the Administrative Agent a Bid Loan Tender Request Notice so as
to be received no later than 10:00 a.m. (Minneapolis time) on
(i) the fourth Eurodollar Business Day prior to the proposed
Borrowing Date in the case of Money Market Loans, or (ii) the
second Business Day prior to the proposed Borrowing Date in the
case of Absolute Rate Loans, specifying:
(a) the proposed date of such borrowing (each a
"Borrowing Date"), which date shall be (i) a Eurodollar Business
Day occurring at least one month prior to the last day of the
Revolving Credit Availability Period in the case of Money Market
Loans or (ii) a Business Day occurring at least 30 days prior to
the last day of the Revolving Credit Availability Period in the
case of Absolute Rate Loans;
(b) the aggregate principal amount of the
proposed Bid Loan Borrowing which shall be in a minimum amount
of $10,000,000 or an integral multiple of $1,000,000 in excess
thereof;
(c) in the case of Money Market Loans, the
Interest Period of each Money Market Loan to be made as part of
such Bid Loan Borrowing;
(d) in the case of Absolute Rate Loans, the
maturity date for the repayment of each Absolute Rate Loan to be
made as part of such Bid Loan Borrowing (which maturity date
shall be a Business Day and may not be later than the Maturity
Date);
(e) the interest payment date or dates relating
thereto; and
(f) any other terms to be applicable to such Bid
Loan Borrowing.
Each Bid Loan Tender Request Notice shall not request
offers for more than four Interest Periods or maturity dates, as
the case may be, and shall be given or signed on behalf of the
Company by an employee of the Company previously identified to
the Administrative Agent in a writing satisfactory to the
Administrative Agent as authorized to give Bid Loan Tender
Request Notices.
4.3 Invitation to Tender for Bid Loans. Promptly upon
receipt of a Bid Loan Tender Request Notice and in any event not
later than 11:00 a.m. (Minneapolis time) on the (i) fourth
Eurodollar Business Day prior to the proposed Borrowing Date in
the case of Money Market Loans or (ii) second Business Day prior
to the proposed Borrowing Date in the case of Absolute Rate
Loans, the Administrative Agent shall send to the Banks by telex
or telecopier an Invitation to Tender for Bid Loans which shall
constitute an invitation by the Company to each Bank to submit
Bid Loan Tenders offering to make the Bid Loans to which such
Bid Loan Tender Request Notice relates in accordance with
Section 4.4. Such Bid Loan Tender Request Notice shall not
thereafter be revocable.
4.4 Submission and Contents of Bid Loan Tenders.
(a) Each Bank may submit one or more Bid Loan
Tenders containing an offer or offers to make Bid Loans in
response to any Invitation to Tender for Bid Loans. Each Bid
Loan Tender must comply with the requirements of this Section
4.4 and must be submitted to the Administrative Agent by telex
or telecopier so as to be received not later than (i) 8:45 a.m.
(Minneapolis time) on the third Eurodollar Business Day prior to
the proposed Borrowing Date in the case of Money Market Loans
and (ii) 9:00 a.m. (Minneapolis time) on the proposed Borrowing
Date in the case of Absolute Rate Loans; provided, that if the
Administrative Agent in its capacity as a Bank shall, in its
sole discretion, elect to submit a Bid Loan Tender, it shall
submit the same to the Company not later than 8:15 a.m.
(Minneapolis time) (i) on the third Eurodollar Business Day
prior to the proposed Borrowing Date in the case of Money Market
Loans and (ii) on the proposed Borrowing Date in the case of
Absolute Rate Loans. Subject to the applicable conditions of
Sections 9 and 10, any Bid Loan Tender shall be irrevocable
except with the written consent of the Administrative Agent
given on the written instructions of the Company.
(b) Each Bid Loan Tender may include offers to
make any number of Bid Loans, shall be in substantially the form
of Exhibit E hereto and shall in any case specify:
(i) the applicable Borrowing Date;
(ii) for each Bid Loan offered:
(A) the principal amount of such Bid
Loan (which principal amount shall be
$5,000,000 or an integral multiple of
$1,000,000 in excess thereof);
(B) in the case of Money Market Loans,
the per annum (based on actual days elapsed and a
year of 360 days) interest rate margin above or
below the LIBO Rate (the "Money Market Margin")
for such Bid Loan (expressed to three decimal
places);
(C) in the case of Absolute Rate Loans, the per
annum (based on actual days elapsed and a year
of 360 days) fixed interest rate (the "Absolute
Rate") for such Bid Loan (expressed to three
decimal places); and
(D) the maturity date of such Bid Loan;
(iii) the type of Bid Loan;
(iv) the maximum aggregate principal amount of Bid Loans
offered by such Bank (which shall not exceed the
aggregate principal amount of Bid Loans requested by
the Company) which may be less than the aggregate
principal amount of Bid Loans specified in clause
(ii). The Company may not accept Bid Loans from
such Bank having an aggregate principal amount in
excess of the maximum aggregate amount specified in
this clause (iv); and
(v) the identity of the tendering Bank.
(c) any Bid Loan Tender shall be disregarded that:
(i) is not substantially in the form of Exhibit E hereto
or does not specify all the information required by
Section 4.4(b);
(ii) contains qualifying, conditional or similar language;
(iii)proposes terms other than or in addition to those
set forth in the applicable Invitation to Tender for
Bid Loans; or
(iv) is received by the Administrative Agent after the
times set forth in Section 4.4(a).
4.5 Notice to the Company. As soon as reasonably
practicable, and in no event later than (i) 9:30 a.m.
(Minneapolis time) on the third Eurodollar Business Day prior to
the proposed Borrowing Date in the case of Money Market Loans,
or (ii) 9:20 a.m. (Minneapolis time) on the proposed Borrowing
Date in the case of Absolute Rate Loans, the Administrative
Agent shall notify the Company by telephone (promptly confirmed
by telex or telecopier) of the terms of each Bid Loan Tender
submitted by a Bank that complies with Section 4.4.
4.6 Acceptance and Rejection of Bid Loan Tenders.
(a) Acceptance and Notice by the Company. As
soon as reasonably practicable, and in no event later than (i)
10:00 a.m. (Minneapolis time) on the third Eurodollar Business
Day prior to the proposed Borrowing Date in the case of Money
Market Loans or (ii) 9:30 a.m. (Minneapolis time) on the
proposed Borrowing Date in the case of Absolute Rate Loans, the
Company shall notify the Administrative Agent by telephone
(promptly confirmed by telex or telecopier), of its acceptance
or rejection of the offers contained in the Bid Loan Tenders of
which it was notified pursuant to Section 4.5. Subject to
Sections 2.9 and 2.10 (and unless any Bank shall have given
notice that it is entitled to claim compensation pursuant to
Sections 7.8 or 7.9 between the time the Company gives such
notice of acceptance and the time such Bank makes such Bid
Loan), such notice from the Company shall be irrevocable and
binding on the Company and specify the aggregate principal
amount of offers at each Absolute Rate or Money Market Margin,
as the case may be, that are accepted. The Company may accept
any of such Bid Loan Tenders in whole or in part; provided, that:
(i) the aggregate principal amount of the Bid Loans in
respect of which offers are accepted may not exceed
the aggregate principal amount requested in the
related Bid Loan Tender Request Notice; and
(ii) acceptances of Bid Loan Tenders made in response to
the same Invitation to Tender for Bid Loans may only
be made on the basis that the Company has not
rejected a Bid Loan Tender at a lower competitive
bid rate. If the Company rejects all Bid Loan
Tenders, the proposed Bid Loan Borrowing shall be
cancelled and the Administrative Agent shall give
the Banks prompt notice to that effect.
(b) Allocation by the Administrative Agent. If
offers to make Bid Loans are made by two or more Banks at the
same Absolute Rate or Money Market Margins, as the case may be,
for a greater aggregate principal amount of Bid Loans than the
amount in respect of which offers to make Bid Loans are accepted
at that Absolute Rate or Money Market Margins, as the case may
be, the principal amount of Bid Loans in respect of which such
offers are accepted at such interest rate shall be allocated by
the Administrative Agent as equitably as is practicable between
or among such Banks in integral multiples of $100,000 based upon
the respective principal amounts of such offers.
(c) Notification of Acceptances to Banks. Prior
to (i) 11:00 a.m. (Minneapolis time) on the third Eurodollar
Business Day prior to the proposed Borrowing Date in the case of
Money Market Loans or (ii) 9:45 a.m. (Minneapolis time) on the
proposed Borrowing Date in the case of Absolute Rate Loans, the
Administrative Agent shall notify by telex or telecopier each
Bank that has made a Bid Loan Tender whether its offer or offers
have been accepted, and whether in whole or in part, specifying
the date and principal amount of each Bid Loan to be made by
such Bank as part of the Bid Loan Borrowing and the interest
rate applicable to each such Bid Loan to be made by such Bank.
The Administrative Agent shall also promptly notify all Banks of
the principal amount and maturity date of each Bid Loan made on
such Borrowing Date and the identity of each Bank making such
Bid Loan.
(d) Notification of LIBO Rate for Money Market
Loans. On the second Eurodollar Business Day prior to the
proposed Borrowing Date for Money Market Loans, the
Administrative Agent shall notify by telex or telecopier each
Bank making such Money Market Loan and the Company of the LIBO
Rate to be applicable thereto.
4.7 Making the Bid Loans. Each Bank that is to make a
Bid Loan as part of a Bid Loan Borrowing shall, before 12:00
noon (Minneapolis time) on the date of such Bid Loan Borrowing
specified in the notice received from the Administrative Agent
pursuant to Section 4.6(c), make available to the Administrative
Agent such Bank's portion of such Bid Loan Borrowing in
immediately available funds. Upon satisfaction of the
applicable conditions set forth in Sections 9 and 10 and after
receipt by the Administrative Agent of such funds, the
Administrative Agent promptly will make such funds available to
the Company.
4.8 The Bid Loan Notes. On or before the Effective
Date, the Company shall duly issue and deliver to the
Administrative Agent a series of notes substantially in the form
of Exhibit P hereto (each, a "Bid Loan Note" and, collectively,
the "Bid Loan Notes"), with appropriate insertions therein, one
payable to the order of each Bank. Each Bank is hereby
authorized by the Company to enter on the schedule attached to
its Bid Loan Note or otherwise in its records, the amount of
each Bid Loan made by it hereunder, each payment thereon and the
other information provided for on such schedule; provided,
however, that the failure to make any such entry or any error in
making such entry with respect to any Bid Loan or with respect
to any payment shall not limit or otherwise affect the
obligation of the Company hereunder or under any such Bid Loan
Note, and, in all events, the principal amount owing by the
Company in respect of each Bank's Bid Loan Note shall be the
aggregate amount of all Bid Loans made by such Bank less all
payments of principal thereon made by the Company. If such
schedule shall be fully completed, such Bank may attach an
additional such schedule or schedules thereto. Each Bid Loan
Note shall evidence that the principal amount of each Bid Loan
and shall be due and payable no later than the maturity date
thereof or upon acceleration under Section 13.1. Each Bank's
Bid Loan Note shall bear interest as provided in Section 4.9.
4.9 Interest on Bid Loans. Except as provided in
Section 7.2, the Company shall pay interest on the unpaid
principal amount of each Bid Loan from the date of such Bid Loan
to the date the principal amount of such Bid Loan is repaid in
full, as follows:
(a) in the case of Absolute Rate Loans, at the
Absolute Rate specified by the Bank making such Absolute Rate
Loan in its Bid Loan Tender, payable on the interest payment
date or dates specified by the Company in the related Bid Loan
Tender Request Notice and on the maturity date of such Absolute
Rate Loan; and
(b) in the case of Money Market Loans, at the
LIBO Rate determined in accordance with the definition thereof
plus or minus the Money Market Margin specified by the Bank
making such Money Market Loan in its Bid Loan Tender, payable on
the interest payment date or dates specified by the Company in
the related Bid Loan Tender Request Notice and on the maturity
date of such Money Market Loan.
4.10 Payments and Prepayments of Bid Loans. The
Company shall repay to the Administrative Agent for the account
of each Bank which has made a Bid Loan on the maturity date of
such Bid Loan the then unpaid principal amount of such Bid Loan.
The Company shall have no right to prepay any Bid Loan unless
(a) specified by the Company in the related Bid Loan Tender
Request Notice (and then only upon the terms therein specified),
(b) any Bank shall have requested prepayment of such Bid Loan
pursuant to the provisions of Section 2.10 or (c) any Bank shall
have given notice that it is entitled to claim compensation
pursuant to Section 7.8 or 7.9 with respect to such Bid Loan.
Any such prepayment shall be accompanied by accrued interest on
the Bid Loan so prepaid and any payments required pursuant to
Section 7.3.
4.11 Reborrowings. Within the limits and upon
the conditions set forth in this Section 4, the Company may from
time to time during the Revolving Credit Availability Period
borrow under this Section 4, repay pursuant to Section 4.10 and
reborrow under this Section 4.
5. [RESERVED]
6. THE BID BANKERS ACCEPTANCE FACILITY.
6.1 The Bid Bankers Acceptance Facility. The Banks
agree to make available to the Company during the Revolving
Credit Availability Period the Bid Bankers Acceptance Facility,
pursuant to which the Company may, as provided in this Section
6, request the Banks, through the Administrative Agent, to make
offers to create and discount Bid Bankers Acceptances for the
Company, and the Banks may, at their sole election, make offers
to create and discount Bid Bankers Acceptances for the Company;
provided, however, that at any time the Aggregate Outstandings
of all Banks shall not exceed the Aggregate Revolving
Commitment. The Banks may, but shall have no obligation to,
make any such offers and the Company may, but shall have no
obligation to, accept any such offers.
6.2 Bid Bankers Acceptance Tender Request Notice.
When the Company wishes to request offers to create Bid Bankers
Acceptances, it shall transmit to the Administrative Agent a Bid
Bankers Acceptance Tender Request Notice so as to be received no
later than 10:00 a.m. (Minneapolis time) on the third Business
Day prior to the Bid Bankers Acceptance Creation Date proposed
in such Bid Bankers Acceptance Tender Request Notice, specifying:
(a) the proposed Bid Bankers Acceptance Creation
Date which shall be any Business Day occurring at least 30 days
prior to the last day of the Revolving Credit Availability
Period;
(b) the aggregate face amount of the proposed
Bid Bankers Acceptance Financing which shall be a minimum amount
of $10,000,000 or an integral multiple of $1,000,000 in excess
thereof;
(c) the maturity dates (which shall not exceed
four) of such Bid Bankers Acceptances to be made as part of such
Bid Bankers Acceptance Financing (each of which maturity dates
shall be a Business Day and may not be earlier than the date
occurring 30 days after the proposed Bid Bankers Acceptance
Creation Date or later than the date occurring the earlier of
the last day of the Revolving Credit Availability Period or 90
days after the proposed Bid Bankers Acceptance Creation Date);
(d) that the Company will deliver, no later than
the related Bid Bankers Acceptance Creation Date, a properly
completed form of Bid Bankers Acceptance Certificate; and
(e) any other terms to be applicable to such Bid
Bankers Acceptance Financing.
Each Bid Bankers Acceptance Tender Request Notice
shall be given or signed on behalf of the Company by an employee
of the Company previously identified to the Administrative Agent
in a writing satisfactory to the Administrative Agent as
authorized to give Bid Bankers Acceptance Tender Request Notices.
6.3 Invitation to Tender for Bid Bankers Acceptances.
Promptly upon receipt of a Bid Bankers Acceptance Tender Request
Notice and in any event not later than 3:00 p.m. (Minneapolis
time) on the third Business Day prior to the Bid Bankers
Acceptance Creation Date specified therein, the Administrative
Agent shall send to the Banks by telex or telecopier an
Invitation to Tender for Bid Bankers Acceptances which shall
constitute an invitation by the Company to each Bank to submit
Bid Bankers Acceptance Tenders offering to create Bid Bankers
Acceptances to which such Bid Bankers Acceptance Tender Request
Notice relates in accordance with Section 6.4. Such Bid Bankers
Acceptance Tender Request Notice shall not thereafter be
revocable.
6.4 Submission and Contents of Bid Bankers Acceptances
Tenders.
(a) Each Bank may submit one or more bids (each,
a "Bid Bankers Acceptance Tender") containing an offer or offers
to accept and discount Bid Bankers Acceptances in response to
any Invitation to Tender for Bid Bankers Acceptances. Each Bid
Bankers Acceptance Tender must comply with the requirement of
this Section 6.4 and must be submitted to the Administrative
Agent by telephone (confirmed by telecopy) so as to be received
not later than 9:00 a.m. (Minneapolis time) on the proposed Bid
Bankers Acceptance Creation Date; provided, that if the
Administrative Agent in its capacity as a Bank shall, in its
sole discretion, elect to submit a Bid Bankers Acceptance
Tender, it shall submit the same to the Company by telephone not
later than 8:30 a.m. (Minneapolis time) on the proposed Bid
Bankers Acceptance Creation Date. Subject to satisfaction of
the applicable conditions set forth in Sections 9 and 10, any
Bid Bankers Acceptance Tender shall be irrevocable prior to 9:45
a.m. (Minneapolis time) on the proposed Bid Bankers Acceptance
Creation Date except with the written consent of the
Administrative Agent given on the written instructions of the
Company.
(b) Each Bid Bankers Acceptance Tender shall
specify:
(i) the applicable Bid Bankers Acceptance
Creation Date;
(ii) the face amount of Bid Bankers
Acceptances for which each offer is being made for each
maturity date, which face amount shall be $5,000,000 or
an integral multiple of $1,000,000 in excess thereof
and may not exceed, in the aggregate as to all such Bid
Bankers Acceptances, the face amount of Bid Bankers
Acceptances for which offers were requested (although
such Bid Bankers Acceptance Tender may include any
number of separate offers to create Bid Bankers
Acceptances for different maturity dates at different fixed
discount rates, each of which offers shall be capable of
acceptance hereunder by the Company; provided, that a Bank
may submit not more than one offer for any maturity
date);
(iii) the per annum (based on actual days
elapsed and a year of 360 days) fixed discount rate
(which shall include any acceptance or other
commission) offered on each such face amount of Bid
Bankers Acceptances (expressed to three decimal
places); and
(iv) the identity of the tendering Bank.
(c) any Bid Bankers Acceptance Tender shall be
disregarded that:
(i) does not specify all the information
required by Section 6.4(b);
(ii) contains qualifying, conditional or
similar language;
(iii) contains more than one offer for any
maturity date;
(iv) proposes terms other than or in
addition to those set forth in the applicable
Invitation to Tender for Bid Bankers Acceptances; or
(v) is received by the Administrative Agent
after the time set forth in Section 6.4(a).
6.5 Notice to the Company. As soon as reasonably
practicable, and in no event later than 9:20 a.m. (Minneapolis
time) on the proposed Bid Bankers Acceptance Creation Date, the
Administrative Agent shall notify the Company by telephone of
the terms of each Bid Bankers Acceptance Tender submitted by a
Bank that complies with Section 6.4.
6.6 Acceptance and Rejection of Bid Bankers Acceptance
Tenders.
(a) Acceptance and Notice by the Company. As
soon as reasonably practicable and in no event later than 9:30
a.m. (Minneapolis time) on the proposed Bid Bankers Acceptance
Creation Date, the Company shall notify the Administrative Agent
by telephone of its acceptance or rejection of the offers
contained in the Bid Bankers Acceptance Tenders of which it was
notified pursuant to Section 6.5. Such notification from the
Company shall specify the aggregate face amount of offers at
each discount rate for each maturity date that are accepted.
The Company may accept any of the Bid Bankers Acceptance Tenders
in whole or in part; provided, that:
(i) the aggregate face amount of the Bid
Bankers Acceptances in respect of which offers are
accepted may not exceed the aggregate face amount
requested in the related Bid Bankers Acceptance Tender
Request Notice; and
(ii) acceptances of Bid Bankers Acceptance
Tenders made in response to the same Invitation to
Tender for Bid Bankers Acceptances may only be made on
the basis of ascending discount rates.
If the Company rejects all Bid Bankers Acceptance
Tenders, the proposed Bid Bankers Acceptance Financing shall be
cancelled and the Administrative Agent shall give the Banks
prompt notice to that effect.
(b) Allocation by the Administrative Agent. If
offers to create Bid Bankers Acceptances are made by two or more
of the Banks at the same discount rate for the same maturity
date for a greater aggregate face amount of Bid Bankers
Acceptances than the amount in respect of which offers to create
Bid Bankers Acceptances are accepted at that discount rate for
that maturity date, the face amount of Bid Bankers Acceptances
in respect of which such offers are accepted at such discount
rate for such maturity date shall be allocated by the
Administrative Agent between or among such Banks in integral
multiples of $100,000 based upon the respective face amounts of
such offers as equally as possible.
(c) Notification of Acceptances to Bank. Prior
to 9:45 a.m. (Minneapolis time) on the proposed Bid Bankers
Acceptance Creation Date, the Administrative Agent shall notify
by telephone each Bank that has made a Bid Bankers Acceptance
Tender whether its offer or offers have been accepted, and
whether in whole or in part, specifying the date, face amount
and maturity date of each Bid Bankers Acceptance to be created
by such Bank as part of the applicable Bid Bankers Acceptance
Financing and the discount rate applicable to each such Bid
Bankers Acceptance to be created by such Bank. Promptly
thereafter the Administrative Agent shall transmit by telecopier
to each such Bank a copy of the Bid Bankers Acceptance
Certificate furnished by the Company pursuant to Section 6.2(d).
Any Bank not receiving such notification by the time indicated
in the second preceding sentence may conclusively presume that
its offer or offers were not accepted. The Administrative Agent
shall also promptly notify all Banks of the face amount and
maturity date of each Bid Bankers Acceptance made on such Bid
Bankers Acceptance Creation Date and the identity of each Bank
making such Bid Bankers Acceptance.
6.7 Preparation of Drafts and Creation and Discount of
the Bid Bankers Acceptance. The Company shall supply each Bank,
upon execution of this Agreement and thereafter forthwith upon
request by any such Bank with a sufficient number of signed
blank drafts, in the form of Exhibit B hereto, as any such Bank
may reasonably request. Each Bank shall hold such drafts
supplied to it in safekeeping to be filled in and completed by
such Bank as Bid Bankers Acceptances from information provided
by the Administrative Agent in accordance with Section 6.6(c).
In case any authorized signatory of the Company whose signature
shall appear on any draft shall cease to have such authority
before the creation of a Bid Bankers Acceptance with respect to
such draft, such signature shall nevertheless be valid and
sufficient for all purposes as if such authority had remained in
force at the time of such creation. In lieu of executing such
blank drafts, upon the written request of any Bank, the Company
may irrevocably designate and appoint such Bank, which may from
time to time appoint any other bank or financial institution, as
the Company's true and lawful attorney-in-fact, to execute such
drafts in the name and on behalf of the Company as drawer. Any
Bank that appoints a designee to execute drafts under the
foregoing power of attorney shall promptly notify the Company of
each such designation. Such power of attorney may only be
exercised by a Bank following such Bank's receipt of a notice
from the Administrative Agent that the Company has accepted such
Bank's offer to create Bid Bankers Acceptances pursuant to
Section 6.6(c) and in strict accordance with such notice.
The Company hereby authorizes each Bank, or its
designee, that is to create and discount a Bid Bankers
Acceptance as part of a Bid Bankers Acceptance Financing to, and
each such Bank, or its designee, will, before 12:00 noon
(Minneapolis time) on the proposed Bid Bankers Acceptance
Creation Date specified in the notice received from the
Administrative Agent pursuant to Section 6.6(c), (i) complete a
presigned draft supplied to such Bank pursuant to the next
preceding paragraph of this Section 6.7, or a draft executed by
such Bank or its designee under the power of attorney granted
pursuant to such next preceding paragraph, in accordance with
the information contained in the said notice received from the
Administrative Agent pursuant to Section 6.6(c), which draft
shall be dated the applicable Bid Bankers Acceptance Creation
Date and mature on the date specified in the applicable Bid
Bankers Acceptance Tender Request Notice, (ii) subject to the
satisfaction of the applicable conditions set forth in Sections
9 and 10, duly accept and discount such draft at a price equal
to the face amount thereof less the discount rate with respect
thereto specified in the applicable notice from the
Administrative Agent provided in accordance with Section 6.6(c)
for the period from the date thereof to the date of its
maturity, (iii) give the Administrative Agent telephonic notice
of the creation of such Bid Bankers Acceptance or Acceptances
specifying the date, face amount, maturity and discount thereof
and of the amount paid to the Administrative Agent pursuant to
clause (iv) below, and (iv) pay to the Administrative Agent the
net proceeds of its discount of such Bid Bankers Acceptance by
2:00 p.m. (Minneapolis time) on the applicable Bid Bankers
Acceptance Creation Date. Upon satisfaction of the applicable
conditions set forth in Sections 9 and 10 and promptly after
receipt by the Administrative Agent of such funds and in any
event no later than 3:00 p.m. (Minneapolis time) on such date
the Administrative Agent will make such funds available to the
Company.
Notwithstanding the foregoing, no Bank shall be obligated to
create or discount Bid Bankers Acceptances hereunder if such Bid
Bankers Acceptance would not be eligible for discount at a
Federal Reserve Bank under applicable rules or regulations,
would not meet the requirements of paragraph 7 of Section 13 of
the Federal Reserve Act, as amended, or any liability of such
Bank that would arise from the creation of such Bid Bankers
Acceptance would constitute a deposit for which such Bank would
be required to maintain reserves under Regulation D of the
Federal Reserve Board as from time to time in effect. The
Company acknowledges that a Bank's decision to accept and
discount any draft offered for acceptance and discount under
this Section 6 will be made in reliance upon the truth of the
representations made by the Company in the related Bid Bankers
Acceptance Certificate establishing the eligibility for discount
of any such Bid Bankers Acceptance. The Company will indemnify
and save each Bank harmless from any loss or liability incurred
by such Bank if any Bid Bankers Acceptances created and
discounted by such Bank are determined to be ineligible for
discount or subject to reserves by reason of any
misrepresentation made by the Company.
6.8 Repayment Obligation of the Company; Prepayments.
The Company hereby unconditionally agrees to pay to the
Administrative Agent for the account of the Bank which has
created and discounted a Bid Bankers Acceptance the face amount
of each draft as to which a Bid Bankers Acceptance was created
and discounted by such Bank not later than 12:00 noon
(Minneapolis time) on the maturity date thereof or such earlier
date as may be required pursuant to any other provision of this
Agreement. Bid Bankers Acceptances may not be prepaid.
6.9 Remission of Funds Received by the Administrative
Agent. The Administrative Agent shall no later than 2:00 p.m.
(Minneapolis time) on the maturity date of the Bid Bankers
Acceptances transfer the amount received from the Company
pursuant to Section 6.8 to the Banks which created and
discounted such Bid Bankers Acceptances, ratably according to
the face amount of such Bid Bankers Acceptances created and
discounted by such Banks.
7. THE FACILITIES IN GENERAL.
7.1 Payments.
(a) Each payment, including each prepayment,
payable hereunder (except the arrangement fee under Section
7.12(b)) shall be made by the Company to the Administrative
Agent at First Bank National Association, Minneapolis,
Minnesota, or at such other office designated by the
Administrative Agent from time to time, in immediately available
funds by 1:00 p.m. (Minneapolis time) on the due date for such
payment; provided, that any such payment shall be deemed to have
been received by the Administrative Agent by 1:00 p.m.
(Minneapolis time) on such due date if (i) the Company shall
have irrevocably instructed the Administrative Agent to apply
the proceeds of new Credit Extensions scheduled to be made on
such due date to such payment or payments and (ii) such
proceeds, together with other funds the Company has directed the
Administrative Agent to apply, are sufficient, or would be
sufficient but for the failure of a Bank to fund such new Credit
Extension on such date, to make such payment or payments in
full. Upon receipt or deemed receipt thereof by the
Administrative Agent, the Administrative Agent shall remit to
each Bank entitled to receive such payment in immediately
available funds on the day such funds are received or deemed
received, such Bank's share thereof. The Company shall pay the
arrangement fee directly to the Arranger on the Effective Date.
If any payment hereunder or under the Notes with respect to a
Reference Loan or Absolute Rate Loan or fees or with respect to
any Acceptance or Bid Bankers Acceptance, shall be due and
payable on a day other than a Business Day, the maturity thereof
shall be extended to the next Business Day, and interest shall
be payable at the applicable rate with respect thereto during
such extension. If any payment hereunder or under the Notes
with respect to a LIBOR Loan or a Money Market Loan shall be due
and payable on a day other than a Eurodollar Business Day, the
maturity thereof shall be extended to the next Eurodollar
Business Day (unless such day would fall in another calendar
month, in which event payment shall be made on the next
preceding Eurodollar Business Day), and interest shall be
payable at the applicable rate with respect thereto during such
extension.
(b) (i) All payments or reimbursements required
to be made under this Agreement shall be made free and
clear of and without deduction for any and all taxes,
duties, fees or other charges of any nature whatsoever
imposed or levied by any governmental authority,
domestic or foreign (except for taxes, duties, fees or
other charges based upon or measured by the net income,
net worth or shareholder's capital of any Bank, those
charges which are in substitution for, or relieve any
Bank from, any tax based upon or measured by net income, net
worth or shareholder's capital of such Bank, and changes in
the rate of tax on the overall net income, net worth or
shareholder's capital of such Bank); provided, however,
that if any Bank or holder of any Note hereunder fails
to file when it may lawfully do so with the Company a
properly completed and executed copy of either Internal
Revenue Service Form 4224 or Internal Revenue Service
Form 1001 and Internal Revenue Service Form W-8 or
Internal Revenue Service Form W-9 and any additional
form necessary for claiming complete exemption from
United States withholding taxes (or such other form as is
required to claim complete exemption from United States
withholding taxes) in accordance with the provisions of
Section 7.1(b) (ii), then all such payments to such Bank or
holder shall be net of any amounts the Company is required to
withhold under applicable law. A certificate as to any
additional amounts payable to any Bank under this
Section 7.1(b) submitted to the Company by such Bank
shall show in reasonable detail the amount payable and
the calculations used to determine such amount and
shall be conclusive and binding upon the parties hereto
in the absence of manifest error. With respect to each
deduction or withholding for or on account of any
taxes, the Company shall promptly (and in any event not
less than 45 days thereafter) furnish to each Bank such
certificates, receipts and other documents as may be
required (in the reasonable judgment of such Bank) to
establish any tax credit to which such Bank may be entitled.
(ii) As long as it may lawfully do so, each
Bank or holder of any Note agrees to file with the
Company, in duplicate, for each taxable year of such
Bank or such holder during which interest arising under
this Agreement is received, and before payment by the
Company of any interest during such year on the Loans
made by such Bank, a properly completed and executed
copy of either Internal Revenue Service Form 4224 or
Internal Revenue Service Form 1001 and Internal Revenue
Service Form W-8 or Internal Revenue Service Form W-9
and any additional form necessary for claiming complete
exemption from United States withholding taxes (or such other
form as is required to claim complete exemption from United
States withholding taxes), if and as provided by the
Code, regulations or other pronouncements of the United
States Internal Revenue Service; and the Bank or such
holder, as the case may be, warrants to the Company
that the form so filed will be true and complete;
provided, that such Bank's or such holder's failure to
complete and execute such Form 4224 or Form 1001, or
Form W-8 or Form W-9, as the case may be, and any such
additional form (or any successor form or forms) shall
not relieve the Company of any of its obligations under
this Agreement, except as otherwise provided in this Section
7.1(b).
7.2 Interest on Overdue Payments. All amounts payable
hereunder (other than interest), including, without limitation,
under the Notes, after maturity thereof (whether upon stated
maturity or due date, by acceleration or otherwise), not paid
when due shall bear interest, from the date such amounts become
due to the date of payment, at a fluctuating per annum rate
equal to the then Applicable Reference Rate plus 2%. All
interest provided for in this Section 7.2 shall be payable on
demand.
7.3 Indemnification. The Company hereby agrees to
indemnify and hold the Administrative Agent and each Bank free
and harmless from all reasonable losses, costs and expenses
(including, without limitation, any loss, cost or expense
incurred by reason of the liquidation or redeployment of
deposits or other funds acquired by any Bank to fund or maintain
any LIBOR Loans, Bid Loans, Acceptances, Acceptance
Participations or Bid Bankers Acceptances) which the
Administrative Agent or any Bank may incur, to the extent not
otherwise compensated for under this Agreement and not mitigated
by the redeployment of such deposits or other funds, as a result
of (a) a default by the Company in payment when due of the
principal of or interest on any LIBOR Loan, Bid Loan, Acceptance
Obligation or Bid Bankers Acceptance Obligation (b) the
Company's failure (other than a failure attributable to a
default by such Bank) to make a borrowing, conversion or
refunding with respect to a LIBOR Loan or Bid Loan or to take
down an Acceptance or Bid Bankers Acceptance Financing after
making a request therefor, (c) a prepayment, conversion or
refunding (whether mandatory or otherwise, but excluding a
prepayment under Section 2.10) of a LIBOR Loan or Bid Loan
before the expiration of the related Interest Period or the
maturity date thereof, and (d) any default by the Company under
this Agreement, any demand for payment of a LIBOR Loan or Bid
Loan by the Administrative Agent permitted hereunder before the
expiration of the related Interest Period; provided, however,
that the Company shall not be obligated to pay any such amounts
or amount which are attributable to periods exceeding 180 days
prior to the date of receipt by the Company of the certificate
referred to in the next sentence. A certificate as to any such
loss, cost or expense (including calculations, in reasonable
detail, showing how such Bank computed such loss, cost or
expense) shall be submitted by such Bank to the Company together
with such Bank's request for indemnification (which request
shall set forth the basis for requesting such amounts) and
shall, in the absence of manifest error, be conclusive and
binding as to the amount thereof.
7.4 Adjustments of Revolving Commitments. Upon at
least five Business Days' irrevocable prior written notice to
the Administrative Agent (which shall advise each Bank thereof
as soon as practicable thereafter), the Company may permanently
reduce the Aggregate Revolving Commitment, in whole at any time
or in part from time to time, without premium or penalty,
provided, that (i) each partial reduction of the Aggregate
Revolving Commitments shall be in an aggregate amount equal to
at least $15,000,000, or in integral multiples of $5,000,000 in
excess thereof, (ii) each reduction shall be accompanied by
payment of (a) the Facility Fee accrued on the amount of the
Aggregate Revolving Commitments so reduced through the date of
such reduction, and (b) the amount, if any, by which the
aggregate unpaid principal amount of all Committed Loans
outstanding exceeds the amount of the Aggregate Revolving
Commitments as so reduced, together with accrued interest on the
amount being prepaid to the date of such prepayment, (iii) any
prepayment under clause (ii) above shall be subject to any
required payments pursuant to Section 7.3, (iv) such reduction
shall not cause the Aggregate Outstandings of all Banks to
exceed the Aggregate Revolving Commitment. Reductions of the
Aggregate Revolving Commitment and any accompanying prepayments
of the Committed Loans shall be apportioned among the Banks
according to their Pro Rata Share.
7.5 Determinations of Rates. The Administrative Agent
will, with reasonable promptness, notify the Company and the
Banks of each determination of interest rates and other rates
and fee levels applicable hereunder; provided that any failure
to do so shall not relieve the Company of any liability
hereunder or provide the basis for any claim against the
Administrative Agent. Any change in the interest rate on a Loan
or an Acceptance or in the Facility Fees payable hereunder
resulting from a change in the Company's senior unsecured
long-term debt ratings or the Debt to Cashflow Ratio shall
become effective as of the opening of business on the day on
which such change in debt ratings becomes effective or change in
Debt to Cashflow Ratio is reported to the Administrative Agent
as provided hereunder. The Administrative Agent will with
reasonable promptness notify the Company and the Banks of the
effective date and the amount of each such change, provided that
any failure to do so shall not relieve the Company of any
liability hereunder or provide the basis for any claim against
the Administrative Agent.
7.6 Mandatory Prepayments. If at any time Aggregate
Outstandings owed all of the Banks exceed the Aggregate
Revolving Commitment, the Company shall promptly make a
prepayment of amounts outstanding hereunder in an amount equal
to such excess which amounts shall be applied by the
Administrative Agent in a manner to minimize the payments
required to be made pursuant to Section 7.3.
7.7 Mandatory Prepayments With Respect to Outstanding
Acceptances and Bid Bankers Acceptances. Whenever, by the
application of the provisions of Sections 7.4, 7.6 or 13.1,
Aggregate Outstandings which include outstanding Acceptances or
Bid Bankers Acceptances shall have become due and payable, the
Company shall pay to the Administrative Agent immediately
available funds equal to the aggregate face amount of all such
outstanding Acceptances and Bid Bankers Acceptances, and the
Administrative Agent shall hold such funds as collateral for all
outstanding unmatured Acceptances, all outstanding Acceptance
Obligations, all unmatured Bid Bankers Acceptances and all Bid
Bankers Acceptance Obligations. Thereupon such Acceptances and
Bid Bankers Acceptances for the purposes of this Agreement shall
be deemed to be no longer outstanding and any amounts payable by
the Company hereunder with respect thereto shall be deemed to
have been paid. The Administrative Agent shall apply the funds
so paid to such Acceptances and Bid Bankers Acceptances as they
mature. After the maturity of the last of such Acceptances or
Bid Bankers Acceptances, the Administrative Agent shall promptly
remit to the Company an amount determined by multiplying (x) the
face amount of each of such Acceptances and Bid Bankers
Acceptances by (y) a fraction, the numerator of which is the
actual number of days between the date of payment of such funds
by the Company and the last maturity date of such Acceptances or
Bid Bankers Acceptances and the denominator of which is 360 by
(z) a per annum rate equal to the rate per annum which the
Administrative Agent would offer to pay on its certificates of
deposit issued in the United States at approximately 10:00 a.m.
(Minneapolis time) on the Business Day preceding the payment of
such funds to the Administrative Agent in a dollar amount
comparable to the funds so paid and having a maturity equal to
the weighted average remaining term of such Acceptances and Bid
Bankers Acceptances.
7.8 Capital Adequacy. In the event that compliance by
any Bank with any present or future applicable law or
governmental rule, requirement, regulation, guideline or order
(whether or not having the force of law but, if not having the
force of law, with respect to which similarly situated banks
generally comply) regarding capital adequacy has the effect of
reducing the rate of return on such Bank's capital as a
consequence of its commitment to make, or the making or
maintaining of, any Credit Extensions hereunder to a level below
that which such Bank would have achieved but for such compliance
(taking into consideration such Bank's policies with respect to
capital adequacy) by an amount deemed by such Bank to be
material, then from time to time the Company shall pay to such
Bank such additional amount or amounts as will compensate such
Bank for such reduction; provided, however, that the Company
shall not be obligated to pay any such amount or amounts (i)
unless such Bank shall have first notified the Company in
writing that it intends to seek compensation from the Company
pursuant to this sentence, and (ii) which are attributable to
periods exceeding 90 days prior to the date of receipt by the
Company of such notice. A certificate as to the amount of any
such reduction (including calculations in reasonable detail
showing how such Bank computed such reduction and a statement
that such Bank has not allocated to its Commitments or
outstanding Credit Extensions a proportionately greater amount
of such reduction than is attributable to each of its other
commitments to lend or to each of its other outstanding credit
extensions that are affected similarly by such compliance by
such Bank, whether or not such Bank allocates any portion of
such reduction to such other commitments or credit extensions)
shall be furnished promptly by such Bank to the Company. Any
such certificate setting forth the basis for determining such
reduction or amounts necessary to compensate such Bank shall be
conclusive and binding upon the Company, absent manifest error.
7.9 Charges: Legal Restrictions. If any present or
future applicable law, rule or regulation or any change therein
or in the interpretation or administration thereof by any
Governmental Body, central bank or comparable agency charged
with the interpretation or administration thereof or compliance
by any Bank with any request or directive of any such authority,
central bank or comparable agency, whether or not having the
force of law but, if not having the force of law, with respect
to which similarly situated banks generally comply:
(a) subject to the proviso to Section 7.l(b)(i),
shall subject any Bank to any tax, duty or other charge with
respect to its obligation to make Credit Extensions or shall
change the basis of taxation of payments to such Bank of the
principal of or the interest with respect to its Credit
Extensions, fees or any other amounts due under this Agreement
in respect of its obligation to make Credit Extensions (except
for taxes based upon or measured by the net income, net worth or
shareholder's capital of any Bank, those charges which are in
substitution for, or relieve any Bank from, any tax based upon
or measured by net income, net worth or shareholder's capital of
such Bank, and changes in the rate of tax on the overall net
income, net worth or shareholder's capital of such Bank); or
(b) shall impose, modify or deem applicable any
reserve (including, without limitation, any imposed by the Board
of Governors of the Federal Reserve System), special deposit,
compulsory loan or similar requirements in connection with any
of the Loans, Acceptances, Bid Bankers Acceptances, Acceptance
Obligations or Bid Bankers Acceptance Obligations against assets
of, or deposits or other liabilities with, of or for the account
of, or advances or loans by, or credit extended by, or any
acquisition of funds by or for the account of any office of such
Bank or shall impose on such Bank any other condition affecting
its obligations to make Credit Extensions; and the result of any
of the foregoing would in the reasonable judgment of such Bank
increase the cost to such Bank of making, renewing or
maintaining its Credit Extensions, or reduce the amount of any
sum receivable by such Bank under this Agreement;
then, upon demand by such Bank, the Company agrees to pay to
such Bank such additional amount or amounts as would compensate
such Bank for such increased cost or reduction but only with
respect to the 90-day period immediately preceding the making of
each such demand; provided that there shall be no duplication of
amounts paid to any Bank pursuant to this Section 7.9 and
pursuant to any other provision of this Agreement. A
certificate of such Bank setting forth the basis for determining
such additional amount or amounts necessary to compensate such
Bank shall be conclusive and binding upon the Company, absent
manifest error.
Without limiting the effect of the foregoing, upon any
Bank's written request delivered to the Company, the Company
shall pay to such Bank on the last day of each Interest Period
so long as such Bank is required to maintain reserves against
"Eurocurrency liabilities" as defined in Regulation D (as at any
time amended) of the Board of Governors of the Federal Reserve
System, as additional interest on the unpaid principal amount of
each LIBOR Loan and Money Market Loan by such Bank outstanding
during such Interest Period, an additional amount (determined by
such Bank and notified to the Company) as would, together with
payments of interest on such LIBOR Loan or Money Market Loan for
such Interest Period, result in the receipt by such Bank of
total interest on such LIBOR Loan or Money Market Loan as though
such Bank had funded 100% of its LIBOR Loan or Money Market Loan
in the offshore Dollar market for such Interest Period at a rate
determined by such Bank to be equal to the rate determined in
accordance with the following formula:
LIBO Rate divided by one minus the rate (expressed as
a decimal) of such reserves then required by such
Regulation D in respect of Eurocurrency liabilities for
such Bank, plus, in the case of LIBOR Loans, the
Applicable Margin or, in the case of Money Market
Loans, plus or minus the Money Market Margin.
7.10 Replacement Banks. In the event that any
Bank shall have given notice that it is entitled to claim
compensation pursuant to Sections 7.8 or 7.9, or shall have
given notice of illegality pursuant to Section 2.10, the
Company, with the prior written consent of the Administrative
Agent (which consent will not unreasonably be withheld), may
designate a replacement bank to assume the Commitments and the
other obligations of such Bank hereunder and under any
outstanding Acceptance Participation held by such Bank and to
purchase the outstanding Committed Loan Note and Bid Loan Note
and any outstanding Acceptance Participation and Bid Bankers
Acceptance Obligation payable to such Bank and such Bank's
rights hereunder and with respect thereto, without recourse
upon, or warranty by, or expense to, such Bank for a purchase
price equal to the sum of (a) the aggregate outstanding unpaid
principal amount of such Committed Loan Note and Bid Loan Note
and any outstanding Acceptance Obligation and Bid Bankers
Acceptance Obligation payable to such Bank, together with all
interest accrued and unpaid thereon, (b) any unpaid Facility Fee
payable to such Bank for the period prior to such purchase, (c)
the amount that would have been payable to such Bank pursuant to
Section 7.3 had such purchase of said Committed Loan Note and
Bid Loan Note constituted a prepayment thereof contemplated by
clause (c) of the first sentence of Section 7.3, (d) the portion
of the Acceptance Commission payable to such Bank upon payment
of the related Acceptance Obligation (prorated in the proportion
that the number of days in the period from and including the
date of creation of the related Acceptance to but excluding the
date of the purchase of such Acceptance Participation bears to
the number of days in the period from and including the date of
creation of the related Acceptance to but excluding the date of
the maturity of the related Acceptance), (e) the face amount of
any outstanding Bid Bankers Acceptance created and discounted by
such Bank less unearned discount thereon (as reasonably
determined by such Bank), and (f) the amount that would have
been payable to such Bank pursuant to Section 7.3 had such
purchase of said Bid Bankers Acceptance constituted a prepayment
thereof contemplated by clause (c) of the first sentence of
Section 7.3. Upon such assumption and purchase by the
replacement bank, such replacement bank shall be deemed to be a
"Bank" for purposes of this Agreement and such replaced Bank
shall cease to be a "Bank" for purposes of this Agreement and
shall no longer have any obligations hereunder (except as
provided in Section 18.10) or rights hereunder (except as
provided in Sections 7.3, 7.8, 7.9 and 19).
7.11 Funding. Each Bank may elect to fund all or
any portion of its Loans in any manner it may determine in its
reasonable discretion, including, without limitation, in the
Grand Cayman interbank market, the London inter-bank market, the
Bahamas inter-bank market and within the United States; provided
that in any case in such event the obligations of the Company to
repay such Loan shall nevertheless be to such Bank.
7.12 Fees.
(a) The Company agrees to pay to the Banks a
facility fee (the "Facility Fee") during the Revolving Credit
Availability Period (computed in each case on the basis of a 365
or 366 day year, as applicable, for actual days elapsed) on the
entire amount of the Aggregate Revolving Commitment (whether
utilized or unutilized), equal to (i) 0.085% per annum if Level
I Status exists, (ii) 0.090% per annum if Level II Status
exists, (iii) 0.125% per annum if Level III Status exists, (iv)
0.175% per annum if Level IV Status exists, and (v) 0.200% per
annum if Level V Status exists. The Facility Fee shall be
payable quarterly in arrears on the first Business Day of
February, May, August and November of each year, commencing on
the first Business Day of February, 1996, and ending on the
Maturity Date. Payment of the Facility Fee shall be made to the
Administrative Agent and, upon receipt thereof, the
Administrative Agent shall promptly remit to each Bank its Pro
Rata Share thereof.
(b) The Company agrees to pay directly to the
Arranger for the sole use and benefit of the Arranger, on the
Effective Date, an arrangement fee in an amount set forth in and
subject to a letter agreement dated November 15, 1995 among the
Arranger, Bank of America and the Company.
(c) The Company agrees to pay to the
Administrative Agent a fee (for its sole use and benefit) in an
amount set forth in a letter agreement dated December 18, 1995
between the Administrative Agent and the Company.
7.13 Increase in Facilities.
(a) The Company may, at any time and from time to
time, (i) request any Bank or Banks to increase their respective
Revolving Commitments, or (ii) invite any other bank to become a
party to this Agreement and to provide a revolving commitment,
which revolving commitment shall be at least $10,000,000, to the
Company. Such request may not be made later than 60 days prior
to the then current Maturity Date. The Aggregate Revolving
Commitment shall be increased by the amount of any such
increases in the existing Revolving Commitments and the amount
of any new revolving commitments; provided, however, that at no
time will the Aggregate Revolving Commitment under this
Agreement exceed $600,000,000 without the prior written consent
of all of the Banks.
(b) Each Bank which receives a request from the
Company pursuant to Section 7.13(a) shall notify the Company and
the Administrative Agent of such Bank's acceptance or rejection
of such request, and the Administrative Agent shall promptly
thereafter notify each other Bank of each such acceptance. The
Company shall notify the Administrative Agent (which shall
promptly notify each Bank) of each other bank which has accepted
the Company's invitation to become a party to this Agreement.
The Company, the Administrative Agent and each such bank or Bank
shall execute and deliver to the Administrative Agent (for the
account of the Administrative Agent, the Company and such bank
or Bank) supplemental signature pages, in the form of Exhibit R
hereto if such bank is a Bank already party to this Agreement,
and in the form of Exhibit S hereto if such bank is not already
a party to this Agreement (each, a "Supplemental Signature
Page"). Upon the execution and delivery of each such
Supplemental Signature Page, (i) each such bank (if not already
a Bank) shall become a party to this Agreement, (ii) the Company
shall deliver a Committed Loan Note or a replacement Committed
Loan Note to each such bank or Bank, in the principal amount of
the Revolving Commitment of such bank or Bank, and a Bid Loan
Note or a replacement Bid Loan Note to each such bank or Bank,
substantially in the form of Exhibit P hereto with appropriate
insertions therein, (iii) each such bank or Bank shall
simultaneously make Reference Loans to the Company in an amount
equal to its Pro Rata Share of the then outstanding Reference
Loans, if any, the proceeds of such new Reference Loans to be
paid simultaneously to the Administrative Agent for distribution
to the Banks as a prepayment of such outstanding Reference Loans
in accordance with Section 2.4 (all notices required by such
Section 2.4 being deemed given and the requirement as to the
minimum amount of such prepayment being deemed waived), and (iv)
each such bank or Bank shall thereafter be obligated to make
Committed Loans to the Company up to and including the amount of
such Bank's Revolving Commitment or increased Revolving
Commitment, as the case may be, on the terms and conditions
contained herein.
(c) Upon any increase in the Aggregate Revolving
Commitment pursuant to Section 7.13(b), the Administrative Agent
shall amend Exhibit A hereto to reflect the increased Revolving
Commitment of any Bank and/or the Revolving Commitment of any
bank which has become a party to this Agreement, as the case may
be, and shall deliver a copy of such amended Exhibit A to the
Company and each Bank. Such amended Exhibit A shall supersede
the previous Exhibit A and shall be conclusive and binding,
absent manifest error.
(d) If LIBOR Loans are requested after an
increase in the Aggregate Revolving Commitment pursuant to
Section 7.13(b) but before all LIBOR Loans outstanding (the
"Pre-Existing LIBOR Loans") on the date of such increase have
been repaid, no such Borrowing Request shall specify an Interest
Period longer than the longest remaining term of the Interest
Periods for the Pre-Existing LIBOR Loans.
(e) If Acceptances are requested after an
increase in the Aggregate Revolving Commitment pursuant to
Section 7.13(b) but before all Acceptances outstanding (the
"Pre-Existing Acceptances") on the date of such increase have
matured, no Notice of Drawing shall specify a maturity date that
extends beyond the longest remaining term of the PreExisting
Acceptances.
8. REPRESENTATIONS AND WARRANTIES. In order to induce
the Administrative Agent and the Banks to enter into this
Agreement and to make the Credit Extensions, the Company hereby
makes the following representations and warranties to the
Administrative Agent and to each Bank:
8.1 Subsidiaries. As of the Effective Date, the
Company has only the Subsidiaries set forth in Exhibit Q hereto.
As of the Effective Date, except as set forth in Exhibit Q, all
of the shares of all classes of the stock of each Subsidiary are
owned by the Company free and clear of any Liens and are validly
issued, fully paid for and nonassessable, and there are no
outstanding rights, options, warrants or shareholder agreements,
complete copies of which have not been furnished to the Banks.
As of the Effective Date, no more than 15% of Total Debt is held
by Subsidiaries of the Company.
8.2 Existence and Power. The Company and each
Subsidiary is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation
or organization, has all requisite power and authority to own
its Property and to carry on its business as now conducted, and
is in good standing and authorized to do business in each
jurisdiction in which the character of the Property owned and
leased by it therein or the transaction of its business makes
such qualification necessary except for such jurisdictions where
the failure to be in such standing and so authorized will not
materially adversely affect the financial condition, business or
operations of the Company and its Consolidated Subsidiaries,
taken as a whole, or prevent the enforcement of contracts
entered into.
8.3 Authority. The Company has full power and
authority to enter into, execute, deliver and carry out the
terms of this Agreement, to make the borrowings contemplated
hereby, to execute, deliver and carry out the terms of the
Credit Documents and to incur the obligations provided for
herein and therein, and the execution, delivery and performance
of this Agreement and the Credit Documents have been duly
authorized by all necessary corporate action of the Company. No
consent or approval of, or exemption by, any Governmental Body
is required to authorize, or is required in connection with the
execution and delivery of, and performance by the Company of its
obligations under, this Agreement or the Credit Documents or is
required as a condition to the validity or enforceability of
this Agreement or the Credit Documents (except for such
consents, approvals or exemptions, if any, which may be required
to be obtained or made subsequent to the Effective Date, all of
which, if then required, will have been duly obtained or made on
or before each date on which the foregoing representation and
warranty shall be made or effective or reaffirmed, as the case
may be, will be sufficient for all purposes thereof and will be
in full force and effect on each such date).
8.4 Binding Agreement. This Agreement constitutes,
and the Credit Documents when issued and delivered pursuant
hereto for value received will constitute, the valid and legally
binding obligations of the Company enforceable against the
Company in accordance with their respective terms.
8.5 Litigation. As of the Effective Date, there are
no actions, suits or arbitration proceedings (whether or not
purportedly on behalf of the Company or any Subsidiary) pending
or, to the knowledge of the Company, threatened against the
Company or any Subsidiary, or maintained by the Company or any
Subsidiary, in law or in equity before any Governmental Body
which individually or in the aggregate are likely (to the extent
not covered by insurance) to result in a material adverse change
in the consolidated financial condition of the Company and its
Consolidated Subsidiaries, except as set forth in the Company's
annual report on Form 10-K for the fiscal year ended December
31, 1994 or its quarterly reports on Form 10-Q for the thirteen
weeks ended April 1, 1995, July 1, 1995 and September 30, 1995,
respectively, filed with the Securities and Exchange Commission,
and except as disclosed in writing to the Banks prior to the
Effective Date. As of the Effective Date, there are no
proceedings pending or, to the knowledge of the Company,
threatened against the Company or any Subsidiary which call into
question the validity or enforceability of this Agreement or the
Credit Documents or any document delivered in connection
herewith or therewith, or any action to be taken in connection
with the transactions contemplated hereby or thereby.
8.6 No Conflicting Agreements. Neither the Company
nor any Subsidiary is in default under any agreement to which it
is a party or by which it or any of its Property is bound the
effect of which could reasonably be expected to have a material
adverse effect on the business or operations of the Company and
its Consolidated Subsidiaries taken as a whole, except as
disclosed in writing to the Banks. No provision of (i) the
articles of incorporation, charter, bylaws, preferred stock or
any shareholder agreement of the Company or any Subsidiary, (ii)
subject to the Company's compliance with any applicable
covenants pertaining to its incurrence of unsecured
indebtedness, any existing mortgage or indenture or loan or
credit agreement, (iii) any other contract or agreement (which
is, individually or in the aggregate, material to the
consolidated financial condition, business or operations of the
Company and its Consolidated Subsidiaries), (iv) any statute
(including, without limitation, any applicable usury or similar
law), rule or regulation, and (v) any judgment, decree or order
(which is, individually or in the aggregate, material to the
consolidated financial condition, business or operations of the
Company and its Consolidated Subsidiaries), in either case
binding on the Company or any Subsidiary or affecting the
property of the Company or any Subsidiary; conflicts with, or
requires any consent under, or would in any way prevent the
execution, delivery or carrying out of the terms of, this
Agreement or the Credit Documents, and the taking of any such
action will not constitute a default under (subject as
aforesaid), or result in the creation or imposition of, or
obligation to create, any Lien upon the Property of the Company
or any Subsidiary pursuant to the terms of any such mortgage,
indenture, loan or credit agreement or other contract (other
than any right to setoff or banker's lien or attachment that any
Bank or other holder of Credit Documents may have under
applicable law).
8.7 Taxes. The Company and each Consolidated
Subsidiary has filed or caused to be filed all tax returns
required to be filed, and has paid, or has made adequate
provision for the payment of, all taxes shown to be due and
payable on said returns or in any assessments made against it,
and no tax liens have been filed and no claims are being
asserted with respect to such taxes which are required by
Generally Accepted Accounting principles to be reflected in the
Financial Statements and are not so reflected therein. The
charges, accruals and reserves on the books of the Company and
each Consolidated Subsidiary with respect to all federal, state,
local and other taxes are considered by the management of the
Company to be adequate, and the Company knows of no unpaid
assessment which is due and payable against the Company or any
Consolidated Subsidiary, except (a) those not yet delinquent,
(b) those not substantial in aggregate amount, (c) such thereof
as are being contested in good faith and by appropriate
proceedings diligently conducted, or (d) those involving foreign
taxes and assessments which are involved in a good faith dispute
with respect to tax or other matters (subject, in the case of
clause (c) or (d), to appropriate reserves).
8.8 Financial Statements. The Company has heretofore
delivered to each Bank copies of the consolidated balance sheets
of the Company as of December 31, 1994, and the related
consolidated statements of operations, shareholder's equity and
changes in cash flows for the year then ended (such statements
being sometimes referred to herein as the "Financial
Statements"). The Financial Statements were audited and
reported on by the Accountants. The Financial Statements fairly
present the consolidated financial condition and the
consolidated results of operations of the Company as of the date
and for the period indicated therein, and the Financial
Statements have been prepared in conformity with Generally
Accepted Accounting Principles (except as disclosed in the notes
thereto). As of the Effective Date, except (i) as reflected in
the Financial Statements or in the footnotes thereto, or (ii) as
otherwise disclosed in writing to the Banks prior to the date
hereof, neither the Company nor any Subsidiary has any
obligation or liability of any kind (whether fixed, accrued,
contingent, unmatured or otherwise) which is material to the
Company and the Consolidated Subsidiaries on a consolidated
basis and which, in accordance with Generally Accepted
Accounting Principles consistently applied, should have been
recorded or disclosed in such Financial Statements and were not,
other than those incurred in the ordinary course of their
respective businesses since the date of such Financial
Statements. Since December 31, 1994 to the Effective Date (i)
the Company and each Subsidiary has conducted its business only
in the ordinary course, and (ii) there has been no adverse
change in the financial condition of the Company and its
Subsidiaries taken as a whole which is material to the Company
and its Consolidated Subsidiaries on a consolidated basis,
except in each case as set forth in the Company's annual report
on Form 10-K for the fiscal year ended December 31, 1994 or its
quarterly reports on Form 10-Q for the thirteen weeks ended
April 1, 1994, July 1, 1995 and September 30, 1995,
respectively, filed with the Securities and Exchange Commission,
and except in each case as disclosed in writing to the Banks
prior to the Effective Date; and, since the Effective Date,
there has been no material adverse change in their consolidated
financial condition from the most recent consolidated financial
statements of the Company and its Consolidated Subsidiaries
which have been furnished to the Banks pursuant to this
Agreement, except as disclosed in writing to the Banks.
8.9 Compliance with Applicable Laws; Environmental
Matters.
(a) Neither the Company nor any Subsidiary is in
default with respect to any judgment, order, writ, injunction,
decree or decision of any Governmental Body which default would
have a material adverse effect on the financial condition,
operations or Property of the Company and its Consolidated
Subsidiaries on a consolidated basis except as disclosed in
writing to the Banks. The Company and each Subsidiary is
complying in all material respects with all applicable statutes
and regulations, including without limitation ERISA and
applicable occupational, safety and health and other labor laws,
of all Governmental Bodies, a violation of which could
reasonably be expected to have a material adverse effect on the
financial condition, operations or Property of the Company and
its Subsidiaries on a consolidated basis, except as otherwise
disclosed in writing to the Banks.
(b) The Company conducts in the ordinary course
of business a review of the effect of existing Environmental
Laws and existing Environmental Claims on its business,
operations and properties, and as a result thereof the Company
has reasonably concluded that, except as specifically disclosed
in Schedule 2, such Environmental Laws and Environmental Claims
could not, individually or in the aggregate, reasonably be
expected to have a material adverse effect on the financial
condition, operations or Property of the Company and its
Subsidiaries on a consolidated basis.
8.10 Property. The Company and each Subsidiary
has good and valid title to, or good and valid leasehold
interests in, all of its Property which is material to the
Company and its Consolidated Subsidiaries taken as a whole,
subject to no Liens, except such thereof as are not prohibited
by the terms of this Agreement.
8.11 Federal Reserve Regulations. The Company is
not engaged principally, or as one of its important activities,
in the business of extending credit for the purpose of
purchasing or carrying any margin stock within the meaning of
Regulation U of the Federal Reserve Board, as amended. No part
of the proceeds of the Credit Extensions will be used, directly
or indirectly, for a purpose which violates any law, rule or
regulation of any Governmental Body, including, without
limitation, the provisions of Regulations G, T, U, or X of said
Board, as amended.
8.12 No Misrepresentation. No representation or
warranty contained herein or in any document to be executed and
delivered in connection herewith and no certificate or report
furnished or to be furnished by the Company or any Subsidiary in
connection with the transactions contemplated hereby, contains
or will contain a misstatement of material fact, or omits or
will omit to state a material fact required to be stated in
order to make the statements herein or therein contained (taken
as a whole) not misleading in the light of the circumstances
under which made.
8.13 Employee Benefit Plans.
(a) Each Employee Benefit Plan of the Company is
in compliance in all material respects with the applicable
provisions of ERISA, the Code and other federal or state law.
Each Employee Benefit Plan of the Company which is intended to
qualify under Section 401(a) of the Code has received a
favorable determination letter from the IRS and to the best
knowledge of the Company, nothing has occurred which would cause
the loss of such qualification.
(b) There are no pending or, to the best
knowledge of Company, threatened claims, actions or lawsuits, or
action by any Governmental Body, with respect to any Employee
Benefit Plan which has resulted or could reasonably be expected
to result in liability which is material to the consolidated
financial condition of the Company and its Consolidated
Subsidiaries. There has been no prohibited transaction or
violation of the fiduciary responsibility rules with respect to
any Employee Benefit Plan of the Company which has resulted or
could reasonably be expected to result in liability which is
material to the consolidated financial condition of the Company
and its Consolidated Subsidiaries.
(c) Neither the Company nor any Related Person to
the Company or any Subsidiary maintains or contributes to any
Plan. To the best of the Company's knowledge, neither the
Company nor any Related Person to the Company or any Subsidiary
has ever contributed to any multiemployer plan within the
meaning of Section 4001(a)(3) of ERISA.
8.14 Investment Company Act. The Company is not
an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment
Company Act of 1940, as amended.
8.15 Public Utility Holding Company Act. The
Company is not a "holding company," or a "subsidiary company" of
a "holding company," or an "affiliate" of a "holding company" or
of a "subsidiary company" of a "holding company," within the
meaning of the Public Utility Holding Company Act of 1935, as
amended.
9. CONDITIONS OF LENDING -- INITIAL CREDIT EXTENSIONS.
In addition to the requirements set forth in Section
10, the obligation of each Bank to make its initial Credit
Extension hereunder shall be subject to the fulfillment of the
following conditions precedent:
9.1 Evidence of Execution and Corporate Action.
(a) The Administrative Agent shall have received
written or facsimile notice that counterparts of this Agreement
have been executed by each of the parties hereto and the Company
shall have executed and delivered to the Administrative Agent
for the account of each Bank the Committed Loan Notes and the
Bid Loan Notes (appropriately completed).
(b) State certificates as to the Company:
(i) The Administrative Agent shall have
received (with a photocopy for each Bank) a copy of the
Composite Certificate of Incorporation of the Company
and each amendment, if any, thereto, certified by the
Secretary of State of the State of Delaware (as of a
date reasonably near the date of the initial Credit
Extension hereunder) as being true and correct copies
of such documents on file in his office.
(ii) The Administrative Agent shall have
received (with a photocopy for each Bank) certificates
of good standing for the Company from each of (a) the
Secretary of State of Delaware and the Secretaries of
State of the States where the Company conducts its
principal operations, certifying that the Company is in
good standing in such States and (b) if available, the
appropriate tax authorities of each State listed in (a)
above, certifying that the Company is in good standing
and has no known unpaid tax liability, such
certificates to be dated reasonably near the date of the
initial Credit Extension hereunder.
(c) The Administrative Agent shall have received
(with a signed copy for each Bank) the signed certificate of the
President or a Vice President and the Secretary of the Company,
dated the date of the initial Credit Extension hereunder,
certifying as to (i) a true and correct copy of resolutions
adopted by the Board of Directors (or the duly empowered
Executive Committee of the Board of Directors) of the Company
authorizing the execution, delivery and performance by the
Company of this Agreement and the Credit Documents and
authorizing the issuance by the Company of the Credit Documents
in the manner and for the purpose contemplated by this
Agreement, (ii) a true and correct copy of the by-laws of the
Company as in effect on such date, and (iii) the incumbency and
specimen signatures of officers or employees of the Company
executing the Agreement, the Credit Documents and any other
documents delivered to the Administrative Agent in connection
with this Section 9.
9.2 Opinion of Company Counsel. The Administrative
Agent shall have received (with a signed copy for each Bank) the
signed opinion of Lonnie O. Grigsby, Esq., General Counsel of
the Company, hereby given upon the express instructions of the
Company, dated the date of the initial Credit Extension
hereunder, in the form of Exhibit I hereto, with such changes
(if any) therein as shall be acceptable to the Administrative
Agent, and as to such other matters as the Administrative Agent
may reasonably request.
9.3 Other Instruments and Documents. The
Administrative Agent shall have received (with a photocopy for
each Bank) such other instruments and documents as the
Administrative Agent may have reasonably requested on or before
the Effective Date.
9.4 Other Agreement. Evidence that the Credit
Agreement dated as of August 25, 1994 among the Company, certain
of the Banks (and other banks), the Co-Agent and the
Administrative Agent has been paid off in full and cancelled.
9.5 Fees. The Company shall have paid to the Co-Agent
and the Administrative Agent such fees as are required to be
paid pursuant to the Fee Letters.
10. CONDITIONS OF LENDING -- ALL CREDIT EXTENSIONS.
10.1 All Credit Extensions. The obligations of
the Banks to make any Credit Extension are subject to the
fulfillment of the following conditions precedent:
(a) On each Borrowing Date, Drawing Date and Bid
Bankers Acceptance Creation Date, and after giving effect to the
Credit Extensions to be made on each such date (except, in the
case where the sum of (i) the aggregate principal amount of the
Committed Loans and (ii) the aggregate face amount of Bankers
Acceptances being made or created on such date equals or is less
than the sum of (x) the aggregate principal amount of the
Committed Loans and (y) the aggregate face amount of Bankers
Acceptances, in each case to be repaid on such date), (A) there
shall exist no Default or Event of Default, (B) the
representations and warranties contained in this Agreement shall
be true, correct and complete in all material respects on and as
of such date to the extent as though made on and as of such
date, except with respect to any representation or warranty
which specifically refers to an earlier date, and (C) both
before and after giving effect to such Credit Extension, the
Company shall be in compliance with the requirements of any
applicable covenants pertaining to its incurrence of unsecured
indebtedness. Each Borrowing Request, Bid Loan Tender Request
Notice, Notice of Drawing and Bid Bankers Acceptance Tender
Request Notice submitted by the Company hereunder shall
constitute a representation and warranty by the Company
hereunder, as of the date of each such request or notice and as
of the date of the applicable Credit Extension that the
conditions in this Section 10.1(a) are satisfied.
(b) All documents required by the provisions of
this Agreement to be executed or delivered to the Administrative
Agent on or before the applicable Borrowing Date, Drawing Date
and Bid Bankers Acceptance Creation Date shall have been
executed and shall have been delivered to the Administrative
Agent at its office indicated pursuant to Section 15, or at such
other place designated by the Administrative Agent from time to
time, on or before such date.
10.2 Committed Loans. The obligations of the
Banks to make Committed Loans are subject to the Administrative
Agent having received a Borrowing Request, except in the case of
a conversion pursuant to the last sentence of Section 2.6.
10.3 Bid Loans. The obligation of each Bank which
is to make a Bid Loan as part of a Bid Loan Borrowing (including
the initial Bid Loan Borrowing) to make such Bid Loan is subject
to the Administrative Agent having received the Bid Loan Tender
Request Notice with respect thereto in accordance with Section
4.2.
10.4 Acceptances. The obligations of the
Administrative Agent to accept Drafts and of the Acceptance
Participants to accept from the Administrative Agent Acceptance
Participations with respect thereto are subject to the
Administrative Agent having received a Notice of Drawing
requesting acceptance of such Drafts in accordance with Section
3.2.
10.5 Bid Bankers Acceptances. The obligation of
each Bank which is to create and discount a Bid Bankers
Acceptance under the Bid Bankers Acceptance Facility is subject
to the Administrative Agent having received the Bid Bankers
Acceptance Tender Request Notice with respect thereto in
accordance with Section 6.2.
11. AFFIRMATIVE COVENANTS. The Company covenants and
agrees that, on and after the Effective Date, unless otherwise
expressly provided in this Section 11, and until the later of
the termination of all Commitments and the payment in full of
all principal of and interest on all Loans, all commitment fees,
all outstanding Acceptances and Acceptance Obligations, and all
Bid Bankers Acceptances and Bid Bankers Acceptance Obligations,
and subject to the conditions stated herein, the Company will:
11.1 Preservation of Corporate Existence, Etc.
Subject to Section 12.9, do or cause to be done all things
necessary to preserve and keep in full force and effect its
corporate existence and the rights (charter and statutory) of
the Company and each Subsidiary; provided, however, that the
Company shall not be required to preserve any such right if the
Company shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company
or any Subsidiary and that the loss thereof will not have a
material adverse effect on the business, operations, properties,
assets or condition (financial or otherwise) of the Company and
its Consolidated Subsidiaries taken as a whole.
11.2 Taxes. Pay, or provide adequate reserves or
obtain adequate indemnity for the payment of, and will cause
each Consolidated Subsidiary to pay or provide adequate reserves
or obtain adequate indemnity for the payment of, all taxes and
assessments payable by it which become due, other than (a) those
not yet delinquent, (b) those not substantial in aggregate
amount, (c) those being contested in good faith or (d) those
involving foreign taxes and assessments which are involved in a
good faith dispute with respect to tax or other matters.
11.3 Insurance. (i) To the extent insurance is
available on a commercially reasonable basis, maintain, and
cause each Subsidiary to maintain, insurance with reputable
insurance carriers including, without limitation, Affiliates of
the Company on such of its Property, against such risks, and in
such amounts as is customarily maintained by similar businesses
of similar size with respect to Properties of similar character;
or (ii) in lieu thereof, in the case of itself or of any one or
more Subsidiaries, maintain or cause to be maintained a system
or systems of self-insurance which will accord with the
practices of companies owning or operating Properties of a
similar character.
11.4 Maintenance of Properties. Cause all
Properties used or useful in the conduct of its business or the
business of a Consolidated Subsidiary to be maintained and kept
in good condition, repair and working order and supplied with
all necessary equipment, and cause to be made all necessary
repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgment of the Company may be necessary
so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; provided,
however, that nothing in this Section 11.4 shall prevent the
Company from discontinuing the operation or maintenance, or both
the operation and maintenance, of any of such Properties if such
discontinuance is, in the judgment of the Company, desirable in
the conduct of its business or the business of any Consolidated
Subsidiary and would not result in a material adverse effect on
the business, properties, assets, operations or condition
(financial or otherwise) of the Company and its Consolidated
Subsidiaries taken as a whole.
11.5 Compliance with Laws Etc. Not violate any
laws, rules, regulations, or governmental orders to which it is
subject, which violation could reasonably be expected to have a
material and adverse effect on the business, properties, assets,
operations, condition (financial or otherwise) of the Company
and its Consolidated Subsidiaries taken as a whole; and not
permit any Subsidiary to violate any laws, rules, regulations,
or governmental orders which violation could reasonably be
expected to have a material and adverse effect on the
consolidated financial condition of the Company and its
Consolidated Subsidiaries.
11.6 Financial Statements and Other Information.
Furnish to each Bank:
(a) Interim Reports. Within 60 days after the
end of each of the first three quarterly fiscal periods in each
fiscal year of the Company, its Form 10-Q for said period,
certified, subject to changes resulting from year-end audit
adjustments, by a financial officer of the Company;
(b) Annual Reports. Within 120 days after the
end of each fiscal year of the Company, a consolidated balance
sheet of the Company and its Consolidated Subsidiaries as at the
end of such year, and the related consolidated statements of
operations, stockholders' equity and cash flows for such year,
setting forth in each case in comparative form the consolidated
figures set forth by the Company for comparative purposes in its
Form 10-K for such year, accompanied by the opinion (which is
not qualified as a result of a limitation on the scope of the
audit or nonconformity with Generally Accepted Accounting
Principles) thereon of the Accountants, which opinion shall be
prepared in accordance with United States generally accepted
auditing standards relating to reporting and shall be based upon
an examination by such Accountants of the relevant accounts;
(c) Officer's Certificates. Together with each
delivery of financial statements pursuant to Sections 11.6(a)
and (b) above, an Officer's Certificate stating that the signer
has reviewed the relevant terms of this Agreement and of the
Credit Documents and has made, or caused to be made under such
officer's supervision, a review of the transactions and
condition of the Company and its Consolidated Subsidiaries
covered by such financial statements during the accounting
period in question, and that such review has not disclosed the
existence during such accounting period, and that the signer
does not have knowledge of the existence as at the date of such
Officer's Certificate, of a Default or an Event of Default, or,
if any such Default or Event of Default exists, specifying the
nature and period of existence thereof and what action the
Company has taken or is taking or proposes to take with respect
thereto;
(d) Compliance Certificates. Together with each
delivery of financial statements pursuant to Sections 11.6(a)
and (b) above, a compliance certificate demonstrating in
reasonable detail compliance during such accounting period with
Sections 12.3, 12.4 and 12.6;
(e) Accountants' Certificates. Together with
each delivery of financial statements pursuant to Section
11.6(b) above, a certificate signed by the Accountants reporting
thereon (i) briefly setting forth the scope of their examination
(which shall include a review of the Credit Documents, of this
Section 11.6 and of Sections 12.3, 12.4 and 12.6), (ii) stating
whether or not their examination has disclosed the existence,
during the fiscal year covered by such financial statements, of
any Default or Event of Default and, if their examination has
disclosed such a Default or Event of Default, specifying the
nature and period of existence thereof, and (iii) stating that
they have examined the Officer's Certificate delivered therewith
pursuant to Section 11.6(c) above;
(f) Reports to SEC and to Stockholders. Promptly
upon their becoming available, copies of all financial
statements, reports, notices and proxy statements sent by the
Company to its stockholders, and of all reports filed by the
Company or any of its Subsidiaries with any securities exchange
or with the Securities and Exchange Commission or any
governmental authority succeeding to any of its functions;
(g) Notice of Default. Forthwith upon any
principal officer of the Company obtaining knowledge of the
occurrence of a Default or an Event of Default, an Officer's
Certificate specifying the nature and period of existence
thereof and what action the Company has taken or is taking or
proposes to take with respect thereto;
(h) Debt to Cashflow Ratio. Within 60 days after
the end of each of the first three quarterly fiscal periods in
each fiscal year of the Company and within 90 days after the end
of each fiscal year of the Company, an Officer's Certificate
reporting the Company's Debt to Cashflow Ratio as of the last
day of such fiscal period and demonstrating in reasonable detail
the manner in which such ratio was calculated. For purposes of
this Section 11.6(h), (i) "Debt to Cashflow Ratio" shall mean
the ratio of (A) Debt to (B) Cashflow; (ii) "Debt" shall mean,
for any period and calculated based upon any one of the four
fiscal quarters immediately preceding the date of calculation,
at the option of the Company, Total Debt less all amounts
included in Total Debt as of the date of any calculation
pursuant to clause (c) of the definition of Indebtedness for
which the Company is directly liable; and (iii) "Cashflow" shall
mean, for any period and calculated based upon the eight fiscal
quarters immediately preceding the date of calculation, an
amount equal to (x) the sum of (i) net income after taxes from
continuing operations (exclusive of extraordinary gains or
losses), (ii) depreciation and amortization, (iii) deferred
income taxes and (iv) other non-cash charges divided by (y) two.
Any failure of the Company to report the Debt to Cashflow Ratio
shall not constitute a Default or Event of Default under this
Agreement (but subject to the proviso in the definition of Level
V Status);
(i) ERISA Notices. Notice within 30 days of:
(i) the adoption of or commencement of
contributions to any Plan by the Company or any Related
Person to the Company or any Subsidiary; or
(ii) the commencement of contributions by
the Company or any Related Person Subsidiary to the
Company to any multiemployer plan within the meaning of
Section 4001(c)(3) of ERISA; or
(iii) the occurrence of a Reportable
Event, the commencement of proceedings to terminate a
Plan or the full or partial withdrawal from any
multiemployer plan within the meaning of Section
4001(a)(3) of ERISA by the Company or any Related
Person to the Company or any Subsidiary; and
(j) Other Information. With reasonable
promptness, such other information and data with respect to the
Company or any of its Subsidiaries as from time to time may be
reasonably requested by any Bank.
11.7 Inspections: Discussions. Permit any
authorized representatives designated by the Administrative
Agent (on behalf of the Majority Banks) or any Bank, at the
Banks' or such Bank's expense, to make reasonable inspections of
any of the Properties of the Company or any of its Subsidiaries,
including its and their books of account, and to discuss its and
their affairs, finances and accounts with its and their officers
all at such reasonable times and as often as may be reasonably
requested by such Bank; provided, that, if required by the
Company, the Administrative Agent or any such Bank, as
applicable, shall, as a condition to being permitted to make any
such inspection, certify to the Company that the same is being
made solely in order to assist the Administrative Agent or such
Bank in evaluating its interest in the Notes or its obligations
hereunder.
11.8 Books and Records. Maintain, and cause each
of its Subsidiaries to maintain, a system of accounting
established and administered in accordance with Generally
Accepted Accounting Principles applied on a consistent basis,
and set aside, and cause each of its Subsidiaries to set aside,
on its books all such proper reserves as shall be required by
Generally Accepted Accounting Principles.
11.9 Use of Proceeds of Loans. Use the proceeds
of the Credit Extensions for general corporate purposes, not
otherwise inconsistent with the provisions of this Agreement.
11.10 Environmental Laws. The Company shall, and
shall cause each Subsidiary to, conduct its operations and keep
and maintain its property in compliance with all Environmental
Laws, the noncompliance with which could reasonably be expected
to have a material adverse effect on the financial condition,
operations or Property of the Company and its Subsidiaries on a
consolidated basis.
12. NEGATIVE COVENANTS. The Company covenants and agrees
that, on and after the Effective Date, unless otherwise
expressly provided in this Section 12, and until the later of
the termination of all Commitments or the payment in full of all
principal of and interest on all Loans, all fees, all
outstanding Acceptances and Acceptance Obligations, and all Bid
Bankers Acceptances and Bid Bankers Acceptance Obligations, and
subject to the conditions stated herein, the Company will not:
12.1 [Reserved].
12.2 [Reserved].
12.3 Minimum Debt Service Coverage. Permit, as of
the last day of any fiscal quarter, the ratio of (a)
Consolidated Cash Flow to (b) Consolidated Debt Service to be
less than 1.60 to 1.00.
12.4 Maximum Total Fixed Asset Debt and Total
Senior Fixed Asset Debt to Consolidated Adjusted Net Worth
Ratios.
(a) Issue, guarantee or assume or become liable
in respect of any Funded Debt or Short-Term Borrowing, or permit
any Consolidated Subsidiary so to do, if, after giving effect
thereto, the ratio of Total Fixed Asset Debt to Consolidated
Adjusted Net Worth will exceed the ratio of 0.90 to 1.00 as of
the last day of any fiscal quarter.
(b) Issue, guarantee or assume or become liable
in respect of any Funded Debt or Short-Term Borrowing, or permit
any Consolidated Subsidiary so to do, if, after giving effect
thereto, the ratio of Total Senior Fixed Asset Debt to
Consolidated Adjusted Net Worth will exceed the ratio of 0.75 to
1.00 as of the last day of any fiscal quarter.
12.5 [Reserved]
12.6 Debt in Subsidiaries. Permit Indebtedness of
any Subsidiary, exclusive of intercompany loans, to exceed 30%
of the Total Assets held by such Subsidiary; provided, however,
that if the amount of Indebtedness held by any Subsidiary
acquired after the date hereof would cause the Company to exceed
such percentage, no violation of this Section 12.6 shall arise
as a result thereof until 90 days after the date of such
acquisition.
12.7 Restricted Payments. Declare or make any
Restricted Payment unless, at the time of and immediately after
giving effect to payment of such Restricted Payment, no Default
or Event of Default shall have occurred and be continuing.
12.8 Liens; Sale of Accounts Receivable. (a)
Except for Permitted Liens, create, incur, assume or suffer to
exist any Lien against or in any of the Property now owned or
hereafter acquired by the Company or any Consolidated
Subsidiary, or permit any Consolidated Subsidiary so to do.
(b) With respect to accounts receivable of the
Company or any of its Consolidated Subsidiaries which have been
sold, assigned or otherwise transferred to another Person in a
transaction classified as a sale of accounts receivable in
accordance with Generally Accepted Accounting Principles, at no
time shall the aggregate amount of accounts receivable sold,
assigned or transferred exceed fifty percent (50%) of the
aggregate amount of Eligible Accounts Receivable of the Company
and its Consolidated Subsidiaries in existence at the time of
the first such sale, assignment or transfer. For purposes of
this Section 12.8(b), "Eligible Accounts Receivable" shall have
the meaning assigned to such term in any accounts receivable
purchase/sale agreement entered into after the date of this
Agreement which governs any such sale, assignment or transfer.
12.9 Mergers, Consolidations or Asset Sales.
Consolidate with or merge into any other corporation, or
directly or indirectly sell, assign, lease, convey, transfer or
otherwise dispose of (whether in one or a series of
transactions) its Properties or assets substantially or as an
entirety (the term "substantially" to mean, as used in this
Section 12.9, at any point in time, an amount which exceeds 20%
of the aggregate book value of the assets of the Company and its
Consolidated Subsidiaries) to any Person or Consolidated
Subsidiary, unless:
(a) immediately after giving effect to such
transaction, the Company is the surviving entity and continues,
without interruption, to observe the due and punctual payment of
all obligations of the Company under each Credit Document and
performance of every covenant of this Agreement on the part of
the Company to be performed or observed;
(b) immediately after giving effect to such
transaction, no Default or Event of Default shall have occurred
and be continuing; and
(c) such consolidation or merger shall have been
approved by a majority of the board of directors of the Company.
12.10 Obligations as Lessee. Enter into or suffer
to exist any arrangement as lessee of Property (other than (i)
any arrangement under which the Company or a Consolidated
Subsidiary is lessor and (ii) capitalized leases) for a term in
excess of one year (including any renewal terms at the option of
the lessor), or permit any Consolidated Subsidiary so to do, if,
after giving effect thereto, the aggregate of all such rental
payments (excluding any lease permitting cancellation at the
option of lessee within 60 days or less after giving notice of
such cancellation, without payment by the lessee of any penalty
or charge other than the actual costs of restoring the leased
property to its former condition or returning the leased
property to the lessor) payable by the Company and its
Consolidated Subsidiaries for the next four fiscal quarters
exceeds 5% of Consolidated Adjusted Net Worth.
12.11 Short-Term Investments, Loans, Etc. Make any
loan or advance to, or purchase a futures contract or otherwise
become liable for the purchase or sale of currency or other
commodities at a future date in the nature of a futures
contract, or make any other investment, whether by way of
capital contribution or otherwise, in or with any Person other
than a Subsidiary (all of which are sometimes hereinafter
referred to as "Investments") or permit any Subsidiary so to do
other than with respect to the Company except:
(a) Investment grade Short-Term Investments (or
the indirect equivalent thereof). For purposes of this Section
12.11, "investment grade" shall mean Investments rated at least
A2 or BBB- by S&P, and at least P2 or Baa3 by Moody's; and
"Short-Term Investment" shall mean any Investment which under
Generally Accepted Accounting Principles would be classified as
a "short-term" Investment.
(b) Purchases of futures contracts for the
purpose of protection from commodity price, interest rate or
currency conversion rate fluctuations posed by contract
obligations of the Company; provided that the tenor and amount
of any such futures contract shall be consistent with the
obligations of the Company under any such contract obligations;
(c) Investments in addition to those set forth in
clause (a) and (b) above, in an aggregate amount not to exceed
5% of the Company's Consolidated Adjusted Net Worth at any one
time outstanding; provided that with respect to any futures
contract (other than a futures contract described in clause (b)
above) purchased for the protection from commodity price
fluctuations with respect to commodities either ordinarily used
in the Company's business operations or the price of which
generally approximates the price of commodities ordinarily used
in the Company's business operations only the amount, if any, by
which (x) the aggregate obligations of the Company under all
such futures contacts outstanding at any one time exceeds (y)
the aggregate fair market value of all such outstanding
contracts (as determined by the closing price of each such
contract on the appropriate commodities exchange or exchanges)
shall be included for purposes of this Section 12.11(c); and
(d) Non-investment grade Short-Term Investments (or
the indirect equivalent thereof), the fair market value of
which, on an aggregate basis, does not exceed $5,000,000 at any
time.
12.12 Transactions with Affiliates. Enter into any
material transaction with any Affiliate on any terms more
favorable to such Affiliate than those that would be obtained in
an arm's length transaction.
12.13 Nature of Business. Engage, or permit any of
its Consolidated Subsidiaries to engage, in any business that
would substantially change the general nature of the business
conducted by the Company and its Consolidated Subsidiaries,
taken on a consolidated basis, on the Effective Date; provided
that, without limiting the generality of the foregoing, nothing
in this Section 12.13 shall prevent the Company or any of its
Consolidated Subsidiaries from engaging in any business which
involves or is incidental to the production, purchase,
processing or sale of any agricultural product.
13. DEFAULT.
13.1 Events of Default. The following shall each
constitute an "Event of Default" hereunder:
(a) Default, and continuance thereof for three
Business Days, in the payment when due of any amount owing by
the Company: (i) under the Credit Documents in respect of the
principal of, or interest on, any of the Credit Extensions; or
(ii) in respect of any Facility Fee when due and payable under
this Agreement; provided, that any such default in respect to
principal owing to any Bank which has failed or refused to fund
a Credit Extension at the times prescribed herein, which default
is a direct consequence of such failure or refusal by such Bank,
shall not constitute an Event of Default if the Company has
satisfied all applicable conditions of Sections 9 and 10 and
such Bank is obligated to fund such Credit Extension under the
terms of this Agreement (it being understood that this proviso
does not affect or limit in any way the validity or
enforceability of the obligation of the Company to pay such
defaulted amount, the remedies otherwise available to the holder
of the defaulted Credit Document or the remedies available to
the Company against such defaulting Bank, the purpose of this
proviso being only to preclude termination of the Commitments
and/or acceleration of the Company's obligations hereunder upon
such default in payment); or
(b) Default shall be made in the due observance
or performance of any covenant or agreement contained in Section
11.6(g), or Sections 12.3, 12.4, 12.6, 12.7, 12.8(b), 12.9,
12.12 or 12.13 (other than a Default which would not have
occurred or would not be continuing if the calculations pursuant
to the aforesaid Sections were made without giving effect to
changes in Generally Accepted Accounting Principles which become
effective after the Effective Date); or
(c) Default shall be made in the due observance
or performance by the Company of any other term, covenant, or
agreement on its part to be performed or observed under this
Agreement (and not constituting an Event of Default under any
other clause of this Section 13.1) and such Default shall have
continued unremedied for a period of 30 days after the
Administrative Agent (upon instruction of the Majority Banks)
notifies the Company in writing of such Default; or
(d) Any representation or warranty made by the
Company herein, or in any certificate, report, opinion, or
notice delivered or to be delivered pursuant hereto shall prove
to have been incorrect or misleading (whether because of
misstatement or omission) in any material respect when made or
deemed made; or
(e) The Company or any Consolidated Subsidiary
shall default (subject to applicable notice or grace periods) in
the payment when due of any principal of or interest on any
indebtedness for borrowed money whether such indebtedness now
exists or shall hereafter be created, or any event of default
(with respect to the Company or any Consolidated Subsidiary) as
defined in any mortgage, indenture or instrument under which
there may be issued, or by which there may be secured or
evidenced, any indebtedness for borrowed money of, or guaranteed
by, the Company or any Consolidated Subsidiary shall occur and
shall permit such indebtedness to be accelerated (other than in
respect of any indebtedness (i) which is payable solely out of
the property or assets of a partnership, joint venture or
similar entity of which the Company or any Consolidated
Subsidiary is a participant, or is secured by a mortgage on the
property or assets owned or held by such entity, without further
recourse to or liability of the Company or any Consolidated
Subsidiary, or (ii) if the principal of and interest on such
indebtedness, when added to the principal of and interest on all
other such indebtedness then in default (exclusive of
indebtedness under clause (i) above), does not exceed
$5,000,000); or
(f) The Company or any Material Subsidiary shall:
(i) suspend or discontinue its business, or (ii) make an
assignment for the benefit of creditors, or (iii) generally fail
to pay, or admit in writing its inability to pay, its debts as
they become due, or (iv) file a voluntary petition in
bankruptcy, or (v) file any petition or answer seeking for
itself any reorganization, arrangement, composition,
readjustment of debt, liquidation or dissolution or similar
relief in any proceeding under any present or future statute,
law or regulation of any jurisdiction (except the voluntary
dissolution not under any bankruptcy or insolvency law, of a
Material Subsidiary), or (vi) petition or apply to any tribunal
for any receiver, custodian or any trustee for any substantial
part of its Property, or (vii) have commenced against it any
such proceeding which remains undismissed for a period of 60
days, or (viii) file any answer admitting or not contesting the
material allegations of any such petition filed against it, or
of any order, judgment or decree approving such petition in any
such proceeding, or (ix) seek, approve, consent to, or acquiesce
in any such proceeding, or in the appointment of any trustee,
receiver, custodian, liquidator, or fiscal agent for it, or any
substantial part of its Property, or an order is entered
appointing any such trustee, receiver, custodian, liquidator or
fiscal agent and such order remains in effect for 60 days, or
(x) take any formal action for the purpose of effecting any of
the foregoing or looking to the liquidation or dissolution of
the Company; or
(g) An order for relief is entered under the
United States bankruptcy laws or any other decree or order is
entered by a court having jurisdiction in the premises (i)
adjudging the Company or any Material Subsidiary a bankrupt or
insolvent, or (ii) approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition
of or in respect of the Company or any Material Subsidiary under
the United States bankruptcy laws or any other applicable
federal or state law, or (iii) appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator (or other
similar official) of the Company or any Material Subsidiary or
of any substantial part of the Property of any thereof, or (iv)
ordering the winding up or liquidation of the affairs of the
Company or any Material Subsidiary and any such decree or order
continues unstayed and in effect for a period of 60 days; or
(h) Judgments or decrees against the Company or
any Subsidiary in an aggregate amount in excess of $5,000,000
shall remain unpaid, unstayed on appeal, undischarged, unbonded
or undismissed for a period of 30 days; or
(i) A Reportable Event shall occur or the
commencement of proceedings to terminate a Plan has resulted or
could reasonably be expected to result in liability of the
Company under Title IV of ERISA to the Plan or PBGC in an
aggregate amount which is material to the consolidated financial
condition of the Company and its Consolidated Subsidiaries; or
(j) With respect to any multiemployer Plan as to
which the Company or any Related Person may have any liability,
there shall occur a complete or partial withdrawal resulting in
a liability of the Company that is material to the consolidated
financial condition of the Company and its Consolidated
Subsidiaries and either (y) such liability or any portion
thereof is not paid within thirty days after it becomes due and
payable or (z) payment of such liability according to its terms
is likely to result in a material adverse effect on the business
or operations of the Company and its Consolidated Subsidiaries.
Upon the occurrence of an Event of Default described
in Sections 13.1(f) or 13.1(g), the Commitments, the Bid Loan
Facility and the Bid Bankers Acceptance Facility shall
automatically terminate and the obligations of the Company under
this Agreement and all of the Credit Documents shall become
immediately and automatically due and payable without
declaration or notice to the Company. During the existence of
any other Event of Default, the Administrative Agent, at the
direction of the Majority Banks, shall notify the Company that
the Commitments have been terminated and/or that the obligations
of the Company under this Agreement and all of the Credit
Documents have been declared immediately due and payable in
which event the Commitments, the Bid Loan Facility and the Bid
Bankers Acceptance Facility shall be terminated and/or the
obligations of the Company under this Agreement and all of the
Credit Documents shall be immediately due and payable. Except
for the notice provided for in the preceding sentence, the
Company hereby expressly waives any presentment, demand,
protest, notice of protest or other notice of any kind. The
Company hereby further expressly waives and covenants not to
assert any appraisement, valuation, stay, extension, redemption
or similar laws, now or at any time hereafter in force which
might delay, prevent or otherwise impede the performance or
enforcement of this Agreement or the Credit Documents. Whenever
the maturity of the Credit Documents shall have accelerated or
been declared accelerated pursuant to the provisions of this
Section 13.1, the Company will promptly deposit with the
Administrative Agent funds as required by Section 7.7.
If the Commitments, the Bid Loan Facility and the Bid
Bankers Acceptance Facility shall have been terminated or the
obligations of the Company under this Agreement and all of the
Credit Documents shall have been declared due and payable
pursuant to the provisions of this Section 13.1, the Banks
agree, by and among themselves, that any funds received after
such termination from or on behalf of the Company in respect of
this Agreement or any Credit Document by the Administrative
Agent or any of the Banks (except funds received by any Bank as
a result of a purchase pursuant to the provisions of Section 16)
shall be remitted to the Administrative Agent if received by any
Bank and applied by the Administrative Agent in the following
manner and order:
(i) first, to reimburse the Administrative
Agent and the Banks for any expenses due from the
Company pursuant to the provisions of Section 19;
(ii) second, to the payment (pro rata
according to the Revolving Commitments) of the Facility
Fee accrued pursuant to the provisions of Section 7.12;
(iii) third, to the payment of, without
duplication, the funds obligation as required by Section
7.7 and all outstanding Acceptance Obligations;
(iv) fourth, to the payment to each Bank of
accrued and unpaid interest on the outstanding Loans
and Bid Bankers Acceptance Obligations, ratably in the
proportion which the aggregate accrued and unpaid
interest on the outstanding Loans and Bid Bankers
Acceptance Obligations payable to such Bank bears to
the then aggregate accrued and unpaid interest on all
outstanding Loans and Bid Bankers Acceptance Obligations
payable to any and all of the Banks;
(v) fifth, to the payment to each Bank of
the outstanding unpaid principal balance of the Loans
and, without duplication, the face amount of any
outstanding Bid Bankers Acceptances and any outstanding
unpaid principal balance of the Bid Bankers Acceptance
Obligations, ratably as provided in clause (b) of the
definition of Excess Payment, in such order as the
Administrative Agent in its sole discretion may
determine; and
(vi) sixth, to the payment to each Bank and
the Administrative Agent of any other amount owing
under this Agreement or any of the Credit Documents.
If the obligations of the Company under this Agreement
or any of the Credit Documents shall have been declared due and
payable pursuant to the provisions of this Section 13.1, the
Administrative Agent may, and, upon (a) the direction of the
Majority Banks and (b) the providing by all of the Banks to the
Administrative Agent of an indemnity in form and substance
satisfactory to the Administrative Agent against all expenses
and liabilities, shall proceed to enforce the rights of the
holders of the Credit Documents, the Acceptance Obligations and
the Bid Bankers Acceptance Obligations by suit in equity, action
at law and/or other appropriate proceedings, whether for payment
or the specific performance of any covenant or agreement
contained in this Agreement or the Credit Documents. The
Administrative Agent shall be justified in failing or refusing
to take any action hereunder unless it shall be indemnified to
its satisfaction by the Banks in their respective Pro Rata Share
against any and all liability and expense which may be incurred
by it by reason of taking or continuing to take any such action.
In the event that the Administrative Agent, having been so
indemnified, or not being indemnified to its satisfaction, shall
fail or refuse so to proceed, any Bank shall be entitled to take
such action as it shall deem appropriate to enforce its rights
hereunder and under the Credit Documents, Acceptance
Participations and Bid Bankers Acceptance Obligations held by it.
13.2 Waiver of Defaults. Except as otherwise
specifically provided by the provisions hereof, the
Administrative Agent shall (only if authorized by the Majority
Banks, or in the event of a default in the payment of principal
or interest if authorized by all of the Banks), by written
notice to the Company on behalf of the Banks, at any time and
from time to time, waive in whole or in part, and absolutely or
conditionally, any Event of Default which shall have occurred
hereunder or under the Credit Documents. Any such waiver shall
be for such period and subject to such conditions or limitations
as shall be specified in any such notice. In the case of any
such waiver, the rights of the Company, the Banks and the
Administrative Agent under this Agreement and the Credit
Documents shall be otherwise unaffected, and any Event of
Default so waived shall be deemed to be cured and not continuing
to the but no such waiver shall extend to any subsequent or
other Event of Default, or impair any right, remedy or power
consequent thereupon. The Company may take any action
prohibited, or omit to perform any act required to be performed,
under this Agreement and the Credit Documents if it shall have
obtained the written waiver with respect thereto signed by the
Administrative Agent and containing a representation therein
that such waiver has been authorized in accordance with the
provisions of this Section 13.2 and Section 17.
14. THE AGENTS. The Banks, the Administrative Agent and
the CoAgent agree by and among themselves that:
14.1 Appointment. First Bank National Association
is hereby designated the Administrative Agent by each of the
other Banks to perform such duties on behalf of the other Banks
and itself, and to have such powers, as are set forth herein and
as are reasonably incidental thereto.
14.2 Delegation of Duties, Etc. The
Administrative Agent may execute any of its duties and perform
any of its powers hereunder by or through agents or employees,
and shall be entitled to consult with legal counsel and any
accountant selected by it. Any action taken or omitted to be
taken or suffered in good faith by either Agent in accordance
with the opinion of its counsel or accountant shall be full
justification and protection to it. Under no circumstances
whatsoever shall the Co-Agent have any right, power, obligation,
liability, responsibility or duty hereunder other than those
applicable to all Banks as such. Each Bank acknowledges that it
has not relied, and will not rely, on the Co-Agent in deciding
to enter into this Agreement or in taking or not taking action
hereunder.
14.3 Indemnification. The Banks hereby indemnify
and agree to reimburse both Agents in their capacities as such,
to the extent not indemnified or reimbursed by the Company,
according to their Pro Rata Shares, for, from and against any
and all claims, liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever (including,
without limitation, reasonable legal fees and the reasonable
allocable cost of inside counsel) which may be imposed on,
incurred by, or asserted against either Agent in any way
relating to or arising out of this Agreement or the Credit
Documents or any action taken or omitted to be taken or suffered
in good faith by either Agent under or in connection with this
Agreement or any Credit Document; provided that no Bank shall be
liable for any portion of any of the foregoing items for either
Agent resulting from the gross negligence or willful misconduct
of such Agent.
14.4 Exculpatory Provisions. Neither Agent nor
any of their respective officers, directors, employees or agents
shall be liable for any action taken or omitted to be taken or
suffered by it or them hereunder or in connection herewith,
except that each Agent shall be liable for its own gross
negligence or willful misconduct. Neither Agent shall be liable
in any manner for the effectiveness, enforceability,
collectibility, genuineness, validity or the due execution
(other than its own due execution and delivery) of this
Agreement or any Credit Document or for the due authorization,
authenticity or accuracy of the representations and warranties
of any other Person herein and therein or in any other
certificate, report, notice, consent, opinion, statement, or
other document furnished or to be furnished hereunder or
thereunder, and either Agent shall be entitled to rely upon any
of the foregoing reasonably believed by it to be genuine and
correct and to have been signed and sent or made by the proper
Person. Neither Agent shall be under any duty or responsibility
to any Bank to ascertain or to inquire into the validity,
genuineness, enforceability or due execution (other than its own
due execution and delivery) of this Agreement or any Credit
Document or the performance or observance by the Company or any
Subsidiary of any of the provisions hereof or thereof. Each
Bank expressly acknowledges that neither Agent, nor the
Arranger, has made any representations or warranties to it and
that no act taken by either Agent shall be deemed to constitute
any representation or warranty by either Agent to any Bank. The
Administrative Agent shall be fully protected in acting or
refraining from acting upon the instructions of the Majority
Banks (or all the Banks, if all Banks are specifically required
to consent thereto pursuant to Section 17). Neither Agent shall
be required to take any action that exposes it to personal
liability or is contrary to this Agreement, any Credit Document,
or applicable law. Each Bank acknowledges that it has taken and
will continue to take such action and to make such investigation
as it deems necessary to inform itself of the affairs of the
Company and each Subsidiary, and each Bank acknowledges that it
has made and will continue to make its own independent
investigation of the creditworthiness and the business and
operations of the Company and each Subsidiary, and that, in
entering into this Agreement, and in making its Credit
Extensions, it has not relied and will not rely upon any
information or representations furnished or given by either
Agent, the Arranger or any Bank.
14.5 Agents in Their Individual Capacity. With
respect to all Credit Extensions made by them and any renewals,
extensions or deferrals of the payment thereof and any Credit
Document issued to or held by it, each Agent shall have the same
rights and powers hereunder as any Bank, and may exercise the
same as though it were not an Agent, and the term "Bank" or
"Banks" shall, unless the context otherwise requires, include
each Agent in its individual capacity.
14.6 Knowledge of Default. The Administrative
Agent shall be entitled to assume that no Default or Event of
Default exists, unless the officers of the Administrative Agent
immediately responsible for matters concerning this Agreement
shall have actual knowledge of such occurrence or shall have
been notified in writing by a Bank or the Company that such Bank
or the Company considers that an Event of Default exists and
specifying the nature thereof.
14.7 Resignation and Removal of Administrative
Agent.
(a) The Administrative Agent may, by written
notice to the Banks and the Company, at any time resign its
agency under this Agreement. No such resignation shall become
effective unless and until a successor Administrative Agent
under this Agreement is appointed, such successor to be
appointed by the Majority Banks with prior written consent of
the Company; provided, that if no successor Administrative Agent
shall have been so appointed by the Majority Banks with prior
written consent of the Company, and shall have accepted such
appointment, within 30 days after the retiring Administrative
Agent's giving of notice of resignation, then the retiring
Administrative Agent may appoint any Bank a successor
Administrative Agent which successor Administrative Agent shall
be deemed to be acceptable to the Majority Banks and the
Company. The Co-Agent may, by written notice to the Banks and
the Company, at any time resign as Co-Agent under this Agreement
and such resignation shall become effective immediately.
(b) The Majority Banks may, by 30 days' advance
written notice to the Administrative Agent, the Banks and the
Company, replace the Administrative Agent at any time. No such
replacement shall become effective unless and until a successor
Administrative Agent under this Agreement is appointed, such
successor to be appointed by the Majority Banks with prior
written consent of the Company.
(c) Upon the acceptance of any appointment as
Administrative Agent by a successor Administrative Agent
pursuant to Section 14.7(a) or Section 14.7(b), such successor
Administrative Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the
retiring Administrative Agent, and the retiring Administrative
Agent shall be discharged from its duties and obligations, under
this Agreement. After the retiring Administrative Agent's
resignation or removal hereunder as Administrative Agent, or the
retiring Co-Agent's resignation hereunder as Co-Agent, (i) each
reference herein to a place for giving of notice or deliveries
to the Administrative Agent shall be deemed to refer to the
principal office of the successor Administrative Agent or such
other office of the successor Administrative Agent as it may
specify to each party hereto, and (ii) the provisions of this
Section 14 shall inure to the benefit of the retiring
Administrative Agent or the retiring CoAgent as to any actions
taken or omitted to be taken by such retiring Administrative
Agent or the retiring Co-Agent while it was Administrative Agent
or Co-Agent under this Agreement, as the case may be.
14.8 Requests to the Administrative Agent. Except
as otherwise expressly provided herein, whenever the
Administrative Agent is authorized and empowered hereunder on
behalf of the Banks to give any approval or consent, or to make
any request, or to take any other action on behalf of the Banks,
the Administrative Agent shall be required to give such approval
or consent, or to make such request or to take such other action
only when so requested in writing by the Majority Banks.
14.9 Other Dealings. Each Agent (as a Bank) and
any Bank (and its affiliates), subject to the provisions of
Section 16 may, without liability to account, accept deposits
from, lend money to and generally engage in any kind of banking
or other business with the Company or any other Person.
14.10 Calculations. The Administrative Agent shall
not be liable for any error in computing the amount payable to
any Bank whether in respect of the Credit Extensions, fees or
any other amounts due to the Banks under this Agreement, absent
gross negligence or willful misconduct. In the event an error
in computing any amount payable to any Bank is made, the
Administrative Agent, the Company and each affected Bank shall,
forthwith upon discovery of such error, make such adjustments as
shall be required to correct such error.
14.11 Availability of Funds. Unless the
Administrative Agent shall have been notified by a Bank prior to
any proposed Credit Extension hereunder that such Bank does not
intend to make available to the Administrative Agent such Bank's
Pro Rata Share of any Committed Loan to be made on such date or
any other sum required to be made available to the
Administrative Agent by such Bank hereunder, the Administrative
Agent may assume that such Bank has made such proceeds available
to the Administrative Agent on such date and by the time
specified herein, and the Administrative Agent may in reliance
upon such assumption (but shall not be required to) make
available to the Company a corresponding amount. If such
corresponding amount is not in fact made available to the
Administrative Agent by such Bank, the Administrative Agent
shall be entitled to recover such amount on demand from such
Bank (or, if such Bank fails to pay such amount forthwith upon
such demand, from the Company) together with interest thereon in
respect of each day during the period commencing on the date
such amount was made available to the Company and ending on (but
excluding) the date the Administrative Agent recovers such
amount at a rate per annum equal to (i) the Federal Funds Rate
if such amount is paid within one Business Day of the date it
was to be made available to the Administrative Agent, or (ii) if
such amount is not so paid within one Business Day, the
applicable interest rate in respect of such Credit Extension.
If any amount required to be made available by the
Administrative Agent to any Bank is not in fact made available
to such Bank by the Administrative Agent, such Bank shall be
entitled to recover such amount on demand from the
Administrative Agent, together with interest thereon in respect
of each day during the period commencing on the date such amount
was made available to the Administrative Agent and ending on
(but excluding) the date such Bank recovers such amount at a
rate per annum equal to the Federal Funds Rate.
15. NOTICES.
15.1 Notices, Etc. Except where telephonic
instructions or notices are authorized herein to be given, all
notices, demands, instructions and other communications required
or permitted to be given to or made upon any party hereto shall
be in writing and (except for financial statements and other
documents to be provided pursuant to Section 11.6 (with the
exception of notices of the occurrence of an Event of Default or
a Default which is continuing), which may be sent by first-class
mail, postage prepaid) shall be personally delivered or sent by
certified mail, postage prepaid, return receipt requested, or by
telecopier, and shall be deemed to be given for purposes of this
Agreement on the day that such writing is delivered or sent to
the intended recipient thereof in accordance with the provisions
of this Section 15.1. Unless otherwise specified in a notice
sent or delivered in accordance with the foregoing provisions of
this Section 15.1, notices, demands, instructions and other
communications in writing shall be given to or made upon the
respective parties hereto at their respective addresses (or to
their respective telecopier numbers) indicated on Schedule 1
hereto, and in the case of telephonic instructions or notices,
by calling the telephone number or numbers indicated for such
party on such Schedule.
15.2 Notices by Administrative Agent or a Bank.
In the event that the Administrative Agent or any Bank takes any
action or gives any consent or notice provided for by this
Agreement, notice of such action, consent or notice shall be
given forthwith to all the Banks by the Administrative Agent or
the Bank taking such action or giving such consent or notice,
provided, that the failure to give any such notice shall not
invalidate any such action, consent or notice in respect of the
Company.
15.3 Telephonic Notices; Authority to Act. The
Company acknowledges and agrees that the agreement of the
Administrative Agent herein to receive certain notices by
telephone is solely for the convenience of the Company. The
Administrative Agent shall be entitled to rely on the authority
of the person purporting to be the person authorized by the
Company to give such notice, and the Administrative Agent shall
have no liability to the Company on account of any action taken
by the Administrative Agent in reliance upon such telephonic
notice. The obligations of the Company to repay the Credit
Extensions shall not be affected in any way or to any extent by
any failure by the Administrative Agent to receive written
confirmation of any telephonic notice or the receipt by the
Administrative Agent of a confirmation which is at variance with
the terms understood by the Administrative Agent to be contained
in the telephonic notice.
16. EXCESS PAYMENTS. If any Bank or other holder of an
obligation of the Company hereunder shall at any time receive
any Excess Payment, then such Bank or other holder of an
obligation of the Company hereunder shall purchase, without
recourse, for cash, from each of the other Banks or other
holders of an obligation of the Company hereunder, such
participation in the Notes, Acceptances, Acceptance Obligations,
Bid Bankers Acceptances, Bid Bankers Acceptance Obligations and
other indebtedness under this Agreement, as the case may be,
held by such other Banks or other holders of an obligation of
the Company hereunder as shall be necessary to cause such Excess
Payment to be shared ratably such that no Bank or other holder
of an obligation of the Company hereunder shall retain any
Excess Payment. In the event that at any time any Bank or other
holders of an obligation of the Company hereunder shall be
required to refund any Excess Payment, then, upon notice from
such Bank, or other holder of an obligation of the Company
hereunder, each of the other Banks or other holders of an
obligation of the Company hereunder shall purchase, without
recourse, its portion for cash, to the extent of its ratable
share thereof, of the Credit Extensions held by the Bank or
other holder of an obligation of the Company hereunder required
to make such refund.
17. AMENDMENTS AND WAIVERS. With the written consent of
the Majority Banks, the Administrative Agent and the Company
may, subject to the provisions of this Section 17, from time to
time enter into agreements amendatory or supplemental hereto for
the purpose of changing any provisions of this Agreement or the
Credit Documents, or changing in any manner the rights of the
Banks, the Agents or the Company hereunder and thereunder, or
waiving compliance with any provision hereof or thereof. No
such amendatory or supplemental agreement or waiver shall,
directly or indirectly, without the written consent of all of
the Banks, (a) change the Aggregate Revolving Commitment or the
Commitment of any Bank (except for pro-rata decreases in the
Commitments provided for herein), (b) change the maturity of any
Credit Extension, any Acceptance Obligation, any Bid Bankers
Acceptance Obligation, this Agreement or any Credit Document or
extend the Revolving Credit Termination Date, the Acceptance
Availability Termination Date or the Maturity Date, or reduce
the rate of interest on, change the time or manner of payment
of, or the principal amount of, or any accrued interest on, any
Credit Extension, any Acceptance Obligation, any Bid Bankers
Acceptance Obligation, this Agreement or any Credit Document,
(c) change the amount of any fee or the time of payment thereof,
(d) change the definitions of "Majority Banks," or "Pro Rata
Share" (e) modify the provisions of Sections 9 or 10, or (f)
modify the provisions of this Section 17. Any such amendatory
or supplemental agreement or waiver shall apply equally to each
of the Banks or other holders of an obligation of the Company
hereunder and shall be binding on the Company and all of the
Banks and other holders of an obligation of the Company
hereunder and the Administrative Agent and Co-Agent. No
provision hereof relating to the Administrative Agent or the
Co-Agent shall be amended, modified, or waived without the
written consent of the Agent affected thereby. The Company
shall be entitled to rely upon the provisions of any such
amendatory or supplemental agreement or waiver if it shall have
obtained any of the same in writing from the Administrative
Agent who therein shall have represented that such agreement or
waiver has been authorized in accordance with the provisions of
this Section 17.
18. OTHER PROVISIONS.
18.1 Sale of Participations; Assignments. Each
Bank shall have the right at any time to (a) sell undivided
participating interests in all or any part of its Commitments,
the Credit Documents, any Acceptance Participation and any Bid
Bankers Acceptance Obligation held by it or the obligations of
the Company owing to such Bank under any of such Credit
Documents to one or more commercial banks, merchant banks,
savings and loan associations, mutual funds or any other
financial institutions, (b) with the written consent of the
Administrative Agent (whose consent shall not be unreasonably
withheld) and the written consent of the Company (whose consent
shall not be unreasonably withheld), transfer a portion or all
of its Commitments or assign its interest in the Credit
Documents, any Acceptance Participation and any Bid Bankers
Acceptance Obligation held by it and the obligations of the
Company owing to such Bank under any of such Credit Documents to
another Bank or to one or more parties that are not parties to
this Agreement and (c) pledge any of the foregoing interests for
security purposes to a Federal Reserve Bank; provided, that (i)
such Bank shall remain bound by Section 18.10 and such
transferee or prospective transferee or assignee shall agree to
be bound by said Section; (ii) any sale of a participating
interest shall not relieve such Bank of any obligation or
liability under this Agreement; (iii) such transfer or
assignment will not result in any increased cost to the
Administrative Agent (over and above the fee required in clause
(vii) of this Section 18.1) or the Company (unless, in the case
of assignment, the Company and the Administrative Agent shall
otherwise consent in writing); (iv) with respect to sales of
participating interests, such Bank shall make and receive all
payments for the account of its participants and shall retain
exclusively, and shall continue to exercise exclusively, all
rights of approval, administration, waiver and amendment
available under this Agreement and with respect to such Bank's
Credit Extensions made pursuant to this Agreement and such
Bank's Credit Documents, even after giving effect to such sales,
and such Bank shall not, except with respect only to those items
set forth in clauses (a), (b) and (c) of Section 17, enter into
any agreement with its participants that would require such Bank
to obtain the consent or approval of any of its participants
with respect to such rights, and such Bank shall make such
arrangements with its participants as may be necessary to
accomplish the foregoing; (v) no such disposition shall, without
the consent of the Company, require the Company to file a
registration statement with the Securities and Exchange
Commission or apply to qualify any of the Credit Documents, the
Acceptance Obligations, the Acceptance Participations or the Bid
Bankers Acceptance Obligations under the blue sky law of any
state; (vi) any party purchasing a participation shall not be
entitled to receive any greater amount pursuant to Sections
7.1(b), 7.3, 7.8, 7.9 and 7.11 than the selling Bank in respect
of the amount of such participation sold to such party had no
such sale occurred; and (vii) each Bank effecting a transfer or
assignment under clause (b) of this Section 18.1 shall pay to
the Administrative Agent for its own account a transfer fee in
the amount of $1,250 per assignment and the minimum aggregate
principal amount of such such transfer or assignment shall be
$7,500,000 (unless such Bank is transferring or assigning all of
its remaining interest in its Commitments and the Credit
Documents). Upon the effectiveness of any assignment (A) the
assignee bank shall be deemed a "Bank" for all purposes of this
Agreement, (B) the Commitments of the assignor Bank shall be
reduced in whole or in part, as applicable, (C) the assignor
Bank shall cease to be a "Bank" with respect to its Commitments
so assigned for purposes of this Agreement, and (D) the assignor
Bank shall no longer have any obligations hereunder with respect
to its Commitments so assigned (except as provided in Section
18.10) or rights hereunder with respect to its Commitments so
assigned (except as provided in Sections 7.3, 7.8, 7.9 and 19).
18.2 No Waiver of Rights by the Banks. No failure
on the part of the Administrative Agent or of any Bank to
exercise, and no delay in exercising, any right or remedy
hereunder or under the Credit Documents shall operate as a
waiver thereof, except as provided in Section 17, nor shall any
single or partial exercise by the Administrative Agent or any
Bank of any right, remedy or power hereunder or thereunder
preclude any other or future exercise thereof, or the exercise
of any other right, remedy or power. The rights, remedies and
powers provided herein and in the Credit Documents are
cumulative and not exclusive of any other rights, remedies or
powers which the Administrative Agent or the Banks or any holder
of a Credit Document would otherwise have. Notice to or demand
on the Company in any circumstance in which the terms of this
Agreement or the Credit Documents do not require notice or
demand to be given shall not entitle the Company to any other or
further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the Administrative Agent or
any Bank or the holder of any Credit Document to take any other
or further action in any circumstances without notice or demand.
18.3 Headings; Plurals. Section headings have
been inserted herein for convenience only and shall not be
construed to be a part hereof. Unless the context otherwise
requires, words in the singular number include the plural, and
words in the plural include the singular.
18.4 Counterparts. This Agreement may be executed
in any number of counterparts, each of which shall be an
original and all of which shall constitute one agreement. It
shall not be necessary in making proof of this Agreement or of
any document required to be executed and delivered in connection
herewith or therewith to produce or account for more than one
counterpart if signed by the party against whom the Agreement is
being enforced.
18.5 Severability. Every provision of this
Agreement and the Credit Documents is intended to be severable,
and if any term or provision hereof or thereof shall be invalid,
illegal or unenforceable for any reason, the validity, legality
and enforceability of the remaining provisions hereof or thereof
shall not be affected or impaired thereby, and any invalidity,
illegality or unenforceability in any jurisdiction shall not
affect the validity, legality or enforceability of any such term
or provision in any other jurisdiction.
18.6 Integration. All exhibits to this Agreement
shall be deemed to be a part of this Agreement. This Agreement,
the exhibits hereto, the Credit Documents, the Fee Letters and
the documents and instruments furnished in connection herewith
and therewith from time to time embody the entire agreement and
understanding between the Company, the Administrative Agent, the
Co-Agent and the Banks with respect to the subject matter hereof
and thereof and supersede all prior agreements and
understandings between the Company and the Administrative Agent,
CoAgent and the Banks with respect to the subject matter hereof
and thereof.
18.7 Successors and Assigns; Survival of
Representations and Warranties. This Agreement shall be binding
upon and inure to the benefit of the Banks, the Administrative
Agent, Co-Agent and the Company and their respective successors
and assigns, provided, however, that the Company may not assign
or otherwise dispose of any of its rights or obligations
hereunder except as provided in Section 12.9. The
Administrative Agent may assign its agency to another
institution wholly owned by or under common ownership with the
Administrative Agent upon notice to all parties hereto. All
covenants, agreements, warranties and representations made
herein and in all certificates or other documents delivered in
connection with this Agreement by or on behalf of the Company
shall survive the execution and delivery hereof and thereof, and
all such covenants, agreements, representations and warranties
shall inure to the benefit of the respective successors and
assigns of the Banks, Co-Agent and the Administrative Agent
whether or not so expressed.
18.8 APPLICABLE LAW; WAIVER OF TRIAL BY JURY.
THIS AGREEMENT AND THE CREDIT DOCUMENTS SHALL BE CONSTRUED AND
ENFORCEABLE IN ACCORDANCE WITH, AND BE GOVERNED BY, THE INTERNAL
LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO PRINCIPLES OF
CONFLICT OF LAWS. THE COMPANY, EACH BANK AND THE ADMINISTRATIVE
AGENT EACH WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTER-CLAIM (WHETHER
BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING
TO THIS AGREEMENT, THE CREDIT DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
18.9 Interest. At no time shall the interest rate
payable on, or Discount Charge or Acceptance Commission with
respect to, the Credit Documents, together with the Facility Fee
to the extent the same is construed to constitute interest,
exceed the maximum rate of interest permitted by law.
18.10 Confidentiality. Each Bank shall maintain in
confidence and not publish, disseminate or disclose in any
manner or to any Person and shall not use (x) any material
nonpublic information relating to the Company and its
Subsidiaries or (y) any technical, nonfinancial information,
data or know-how which is identified as confidential by the
Company, in either case which may be furnished pursuant to this
Agreement, including any such information which may be furnished
pursuant to Section 11.7 (hereinafter collectively called
"Confidential Information"), subject to each Bank's (a)
obligation to disclose any such Confidential Information
pursuant to a request or order under applicable laws and
regulations or pursuant to a subpoena or other legal process,
(b) right to disclose any such nontechnical or financial
Confidential Information to bank examiners or any bank
regulatory agency having jurisdiction over such Bank, its
affiliates, auditors, counsel, other professional advisors and
other Banks, (c) right to use any such Confidential Information
in connection with the transactions set forth herein including,
but not limited to, assignments or the sale of participations as
provided in Section 18.1; provided, that any participant or
assignee or prospective participant or assignee to whom
Confidential Information shall be disclosed shall have agreed to
be bound by the provisions of this Section 18.10 and (d) right
to disclose any such Confidential Information in connection with
the transactions set forth herein or in connection with any
litigation or dispute involving the Banks and the Company or any
of its Subsidiaries or any transfer or other disposition by such
Bank of any of its Loans or other extensions of credit to the
Company or any of its Subsidiaries; provided, however, that
Confidential Information disclosed pursuant to clause (b) or (d)
of this sentence shall be so disclosed subject to such
procedures as are reasonably calculated to maintain the
confidentiality thereof; and provided, further, that
Confidential Information disclosed pursuant to applicable laws,
regulations, subpoenas or other legal process shall be so
disclosed subject to such confidentiality provisions, if any, as
may be provided under applicable law. The Banks agree, to the
extent permitted by applicable law, to use their best efforts
promptly to notify the Company in writing of each order,
subpoena or other legal process providing for the disclosure
and/or production of Confidential Information and shall, to the
extent permitted by applicable law, use their best efforts
promptly to supply the Company with a copy of such order,
subpoena or other legal process in order that the Company may
intervene in the relevant administrative or legal proceeding or
take other appropriate legal action to protect the
confidentiality of such Confidential Information.
Notwithstanding the foregoing provisions of this Section 18.10,
(i) the foregoing obligation of confidentiality shall not apply
to any such Confidential Information that was known to such Bank
or any of its affiliates, as evidenced by written records, prior
to the time it received such Confidential Information from the
Company or its Subsidiaries pursuant to this Agreement, other
than as a result of the disclosure thereof by a Person who, to
the knowledge or reasonable belief of such Bank, was prohibited
from disclosing it by any duty of confidentiality arising (under
this Agreement or otherwise) by contract or law; and (ii) the
foregoing obligation of confidentiality shall not apply to any
such Confidential Information that becomes part of the public
domain independently of any act of such Bank not permitted
hereunder (through publication, the issuance of a patent
disclosing such information or otherwise) or when identical or
substantially similar information is received by such Bank
without restriction as to its disclosure or use, from a Person
who, to the knowledge or reasonable belief of such Bank, was not
prohibited from disclosing it by any duty of confidentiality
arising (under this Agreement or otherwise) by contract or law.
18.11 Banks' Representations. Except as
contemplated by Section 18.1, each Bank represents to the
Administrative Agent and the Company that, in acquiring its
Credit Documents hereunder, it is acquiring same for its own
account for the purpose of investment and not with a view to
selling the same in connection with any distribution thereof (as
such term is used in the Securities Act of 1933, as amended),
provided that the disposition of each Bank's own property shall
at all times be and remain within its control.
18.12 Change in Accounting Principles. If any
changes in accounting principles from those used in the
preparation of the Financial Statements referred to in Section
8.8 hereafter occasioned by the promulgation of rules,
regulations, pronouncements and opinions by or required by the
Financial Accounting Standards Board or the American Institute
of Certified Public Accountants (or successors thereto or
agencies with similar functions) result in a change in the
method of calculation of financial covenants, standards or terms
found in Sections 1, 11 and 12, the parties hereto agree to
enter into negotiations in order to amend such provisions so as
to equitably reflect such changes with the desired result that
the criteria for evaluating the financial condition of the
Company and its Subsidiaries shall be the same as if such
changes had not been made.
18.13 Reference Banks. Each Reference Bank agrees
to use its best efforts to furnish quotations to the
Administrative Agent as contemplated hereby by 10:00 a.m.
(Minneapolis time), on the day such quotations are required to
be furnished hereunder. If any Reference Bank assigns or
otherwise transfers its Credit Documents to an unaffiliated
institution, the Administrative Agent shall, in consultation
with the Company, and with the consent of the Majority Banks,
appoint another Bank to act as a Reference Bank hereunder;
provided, that at all times at least one Reference Bank shall be
a Bank organized and existing under the laws of the United
States or any state.
18.14 Transfer of Credit Documents. In the event
that the holder of any Credit Document (including any Bank)
shall transfer such Credit Document pursuant to Section 18.1, it
shall immediately advise the Administrative Agent and the
Company of such transfer; provided, however, that the Company
shall not be liable for any material increase in the amount
which would have been payable by the Company under this
Agreement and the Credit Documents in the absence of such
transfer; and provided, further, that the Administrative Agent
and the Company shall be entitled conclusively to assume that no
transfer of any Credit Document has been made by any holder
(including any Bank), unless and until the Administrative Agent
and the Company shall have received written notice to the
contrary. Subject to the provisions of Section 18.1, no Bank
shall, by reason of the transfer of any Credit Document or
otherwise, be relieved of any of its obligations hereunder.
Each transferee of any Credit Document shall take such Credit
Document subject to the provisions of this Agreement and to any
request made, waiver or consent given or other action taken
hereunder, prior to the receipt by the Administrative Agent and
the Company of written notice of such transfer, by each previous
holder of such Credit Document; and, except as expressly
otherwise provided in such notice, the Administrative Agent and
the Company shall be entitled conclusively to assume that the
transferee named in such notice shall thereafter be vested with
all rights and powers under this Agreement of the Bank named as
the payee of the Credit Document which is the subject of such
transfer.
18.15 CONSENT TO JURISDICTION. ALL ACTIONS OR
PROCEEDINGS WITH RESPECT TO THIS AGREEMENT MAY BE INSTITUTED IN
ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE
STATE OF ILLINOIS, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, THE COMPANY IRREVOCABLY AND UNCONDITIONALLY SUBMITS
TO THE NONEXCLUSIVE JURISDICTION OF EACH SUCH COURT, AND
IRREVOCABLY AND UNCONDITIONALLY WAIVES (A) ANY OBJECTION THE
COMPANY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE IN ANY
OF SUCH COURTS, AND (B) ANY CLAIM THAT ANY ACTION OR PROCEEDING
BROUGHT IN ANY OF SUCH COURTS HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. THE COMPANY AGREES THAT SO LONG AS THE
COMPANY SHALL BE OBLIGATED TO THE BANKS UNDER THIS AGREEMENT,
THE COMPANY SHALL MAINTAIN DULY APPOINTED AGENTS REASONABLY
SATISFACTORY TO THE ADMINISTRATIVE AGENT FOR THE SERVICE OF
PROCESS IN ILLINOIS, AND SHALL KEEP THE ADMINISTRATIVE AGENT
ADVISED IN WRITING OF THE IDENTITY AND LOCATION OF SUCH AGENTS.
THE FAILURE OF SUCH AGENTS TO GIVE NOTICE TO THE COMPANY OF ANY
SUCH SERVICE SHALL NOT IMPAIR OR AFFECT THE VALIDITY OF SUCH
SERVICE OR OF ANY JUDGMENT RENDERED IN ANY ACTION OR PROCEEDING
BASED THEREON.
18.16 Waiver of Certain Provisions under Prior
Agreements. Each Bank which is also a party to any of the
Prior Agreements, including Bank of America National Trust and
Savings Association and First Bank National Association, and the
Company (i) hereby agree that on the Effective Date the
commitments under the Prior Agreements shall be terminated, and
the loans, if any, outstanding thereunder, and accrued interest
thereon, and any accrued commitment fee, shall be prepaid by the
Company, and (ii) hereby waive any provisions of such Prior
Agreements which would require a longer notice period or a
different type of notice.
19. COSTS.
(a) Costs of Enforcement. The Company agrees to
pay to the Administrative Agent, for the account of the
Administrative Agent or the Banks upon receipt of an invoice
therefor, whether or not any Credit Extension is made under this
Agreement, the costs and other expenses (including, without
limitation, reasonable legal fees (including the reasonable
allocable cost of inside counsel) and disbursements) incurred by
the Administrative Agent or any Bank (as a direct or indirect
result of action taken or omitted to be taken by or on behalf of
the Company) in enforcing or seeking to enforce against the
Company any of the rights of the Administrative Agent, the Banks
or any of them under this Agreement or any Credit Document.
(b) Taxes. The Company agrees to pay all stamp,
transfer and other taxes payable or determined to be payable in
connection with the execution and delivery of this Agreement.
The Company shall pay all such taxes payable or determined to be
payable in connection with the issuance of its Credit Documents
and the making of any Credit Extension, and the Company agrees
to save and hold the Administrative Agent and each Bank harmless
from and against any and all liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes.
(c) Defense of Proceedings. If any action, suit
or proceeding arising under or in respect of this Agreement or
any Credit Document is brought against the Administrative Agent,
the Co-Agent, the Arranger, any Bank, or any other Person
indemnified or intended to be indemnified pursuant to this
Section 19, the Company, to the extent and in the manner
directed by the Person or Persons indemnified or intended to be
indemnified, will resist and defend such action, suit or
proceeding or cause the same to be resisted and defended by
counsel designated by the Company (which counsel shall be
acceptable to the Person or Persons indemnified or intended to
be indemnified). If the Company shall fail to do any act or
thing which it has covenanted to do hereunder or any
representation or warranty on the part of the Company contained
herein shall be breached, the Administrative Agent may (but
shall not be obligated to) do the same or cause it to be done or
remedy any such breach, and may expend its funds for such
purpose. Any and all amounts so expended by the Administrative
Agent shall be repayable to it by the Company immediately upon
the Administrative Agent's demand therefor, with interest at a
rate per annum (computed on the basis of a year consisting of
365 or, when appropriate, 366 days and actual days elapsed)
equal to the Reference Rate plus 1/4 of 1%.
(d) Survival. The obligations of the Company
under this Section 19 shall survive the repayment of the Credit
Extensions and the payment of all other sums due under this
Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be duly executed as of the date first written above.
IBP, inc.,
a Delaware corporation
By:______________________________________
Name:____________________________________
Its:______________________________________
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, individually and
as Co-Agent
By:______________________________________
Name:____________________________________
Its:______________________________________
FIRST BANK NATIONAL ASSOCIATION,
in its capacity as Administrative Agent
By: ___________________________________
Name:___________________________________
Its:____________________________________
FIRST BANK NATIONAL ASSOCIATION,
individually
By: ____________________________________
Name:____________________________________
Its:____________________________________
THE BANK OF NEW YORK
By:_____________________________________
Name:____________________________________
Its: ____________________________________
THE BANK OF NOVA SCOTIA
By: ____________________________________
Name:____________________________________
Its: ____________________________________
BANK OF TOKYO, LTD.,
CHICAGO BRANCH
By: ___________________________________
Name:____________________________________
Its:____________________________________
BANQUE NATIONALE DE PARIS,
By:____________________________________
Name:___________________________________
Its:___________________________________
CAISSE NATIONALE DE CREDIT AGRICOLE
By: ____________________________________
Name:____________________________________
Its:____________________________________
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A. "RABOBANK NEDERLAND",
NEW YORK BRANCH
By: ____________________________________
Name:____________________________________
Its:____________________________________
By: ____________________________________
Name:____________________________________
Its: ____________________________________
THE DAI-ICHI KANGYO BANK,LTD.-
LOS ANGELES AGENCY
By: ____________________________________
Name:____________________________________
Its:____________________________________
THE FUJI BANK, LIMITED - CHICAGO BRANCH
By: ____________________________________
Name:____________________________________
Its:____________________________________
THE INDUSTRIAL BANK OF JAPAN TRUST
COMPANY
By:____________________________________
Name:____________________________________
Its:____________________________________
ISTITUTO BANCARIO SAN PAOLO DI
TORINO SpA
By: ____________________________________
Name:____________________________________
Its:____________________________________
MELLON BANK, N.A.
By: ____________________________________
Name:____________________________________
Its:____________________________________
THE MITSUI TRUST & BANKING CO.,LTD.,
NEW YORK BRANCH
By: ____________________________________
Name:____________________________________
Its:____________________________________
NATIONSBANK OF TEXAS, N.A.
By:____________________________________
Name:____________________________________
Its:____________________________________
THE SAKURA BANK, LIMITED
By: ____________________________________
Name:____________________________________
Its:____________________________________
THE SANWA BANK, LIMITED, CHICAGO
BRANCH
By: ____________________________________
Name:____________________________________
Its:____________________________________
THE TOKAI BANK, LIMITED,
CHICAGO BRANCH
By: ____________________________________
Name:____________________________________
Its:____________________________________
TORONTO DOMINION (TEXAS), INC.
By: ____________________________________
Name:____________________________________
Its:____________________________________
BOATMEN'S FIRST NATIONAL BANK OF
KANSAS CITY
By: ____________________________________
Name:____________________________________
Its:____________________________________
Exhibit 10.25
EMPLOYMENT AGREEMENT
PRODUCTION AND ADMINISTRATIVE
This Agreement, effective the 1st day of March 1995 (the
"Effective Date"), by and between IBP, inc., a Delaware
corporation (hereinafter referred to as "Employer"), and Richard
L. Bond (hereinafter referred to as "Employee").
WITNESSETH: Employer hereby
agrees to employ, or agrees to continue to employ Employee, and
Employee agrees to be employed upon the following terms and
conditions.
1. Duties. Employee shall perform the duties of
President- Fresh Meats or shall serve in such other capacity and
with such other duties for Employer as Employer shall hereafter
from time to time prescribe.
2. Term of Employment. The
term of employment shall be for a period of five (5) years,
commencing on the Effective Date of this Agreement, unless
terminated prior thereto in accordance with the provisions of
this Agreement.
3. Compensation. For the services to be
performed hereunder, Employee shall be compensated by Employer
at the rate of not less than Three Hundred Thousand Dollars
($300,000.00) per year payable monthly, and in addition may
receive awards under Employer's Cash Bonus Plan subject to the
discretion of the senior management of Employer. Such
compensation will be subject to review from time to time when
salaries of other officers and managers of Employer are reviewed
for consideration of increases therein.
4. Participation in Benefit Programs. Employee shall be entitled
to participate in any benefit programs generally applicable to officers of
Employer adopted by Employer from time to time.
5. Limitation on Outside Activities. Employee shall devote full
employment energies, interest, abilities and time (except for
personal investments) to the performance of obligations
hereunder and shall not, without the written consent of the
Chief Executive Officer of the Company, render to others any
service of any kind or engage in any activity which conflicts or
interferes with the performance of duties hereunder.
6. Ownership of Employee's Inventions. All ideas, inventions, and
other developments or improvements conceived by Employee, alone
or with others, during the term of his employment, whether or
not during working hours, that are within the scope of
Employer's business operations or that relate to any of
Employer's work or projects, are the exclusive property of
Employer. Employee agrees to assist Employer, at its expense,
to obtain patents on any such patentable ideas, inventions, and
other developments, and agrees to execute all documents
necessary to obtain such patents in the name of Employer.
7. Termination.
(a) Voluntary Termination. Employee may
terminate this Agreement at any time by not less than one year's
prior written notice to Employer. Employee shall not be
entitled to any compensation from Employer for any period beyond
Employee's actual date of termination.
(b) Resignation. In the event Employee shall resign from employment
at the request of Employer, Employer shall compensate Employee
at the rate and in the manner provided in Paragraph 3 above for
a period after termination equivalent to the lesser of (i) one
year, or (ii) the remainder of the term of this Agreement.
During the time Employee is being compensated in lieu of
continued employment, the Employer shall have the right to
require the Employee to perform consulting services from time to
time on behalf of the Employer. Any out-of-pocket expenses
associated with any such assignment shall be, upon proper
documentation, reimbursed by Employer to Employee. In the event
Employer compensates Employee in lieu of continued employment,
all remuneration or wages earned by Employee during such period,
either as an employee, independent contractor or consultant to
any person, firm, or corporation other than Employer, shall be a
set-off to Employer's duty of compensation to Employee.
(c) Company Termination. In the event Employer shall conclude,
in its sole discretion, that it is no longer in the interest of
the Company to continue the employment of Employee, the Employer
may terminate this Agreement, and Employer shall have no further
obligation to pay compensation to Employee after the effective
date of termination.
(d) Incapacity. If Employee is materially incapacitated from
fully performing his or her duties
pursuant to this Agreement by reason of illness or other
incapacity or by reason of any statute, law, ordinance,
regulation, order, judgment or decree, Employer may terminate
this Agreement by 30 days written notice to Employee, but only
in the event that such incapacity shall aggregate not less than
one hundred twenty (120) days during any one year.
8. Confidential Information, Trade Secrets, Limitation on
Solicitation and Non-Compete Clause.
(a) Employee shall receive, in addition to all regular
compensation for services as described in Section 3 of this Employment
Agreement,as additional consideration for signing this Employment
Agreement and for agreeing to abide and be bound by the terms,
provisions and restrictions of this Section 8, the following:
(i) an award of such number of shares of Common
Stock of Employer under the terms and conditions of the
Employer's new IBP Officer Long-Term Stock Plan as
shall be equal to an aggregate value of $550,000 less
amounts due to restrictions on promotional grants (see
Employee Award Letter;
(ii) a grant of options to purchase an aggregate
of Ten Thousand (10,000) shares of Common Stock of
Employer under the terms and conditions of the
Employer's new IBP 1993 Stock Option Plan and each year
on the annual grant date for stock options an Annual
Option Grant of options to purchase shares of Common
Stock of the Employer which is equal to three times
(3x) the Annual Option Level of the Employee's officer-
position band option level, provided that the Employee
has been on the payroll, whether as an officer or
otherwise, at least six months prior to the annual
grant date; and
(iii) the right to receive Bonus Option Grants,
under the terms and conditions of the new IBP 1993
Stock Option Agreement with Bonus Options shall be
executed by the Employer and the Employee pursuant to
the new IBP 1993 Stock Option Plan, upon the Employee's
exercise of any options granted to the Employee which
qualify as Incentive Stock Options (ISOs) under the
Internal Revenue Code of 1990, as amended or superseded.
(b) Employee recognizes that, as a result of his
employment hereunder (and his employment, if any, with Employer
for periods prior to the Effective Date), he has had and will
continue to have access to confidential information, trade
secrets, proprietary information, intellectual property, and
other documents, data, and information concerning methods,
processes, controls, techniques, formulae, production,
distribution, purchasing, financial analysis, returns and
reports which is the property of and integral to the operations
and success of Employer, and therefore agrees to be bound by the
provisions of this Section 8, which Employee agrees and
acknowledges to be reasonable and to be necessary to protect
legitimate and important business interests and concerns of
Employer.
(c) Employee agrees that he will not divulge
to any person, nor use to the detriment of Employer or any of
its subsidiaries, nor use in any business or process of
manufacture competitive with or similar to any business or
process of manufacture of Employer or any of its subsidiaries,
at any time during the term of this Agreement or thereafter, any
of the Employer's trade secrets, without first obtaining the
express written permission of Employer. A trade secret shall
include any formula, pattern, device or compilation of
information used by Employer in its business. For purposes of
this Section 8, the compilation of information shall include,
without limitation, the identity of customers and suppliers and
information reflecting their interests, preferences,
credit-worthiness, likely receptivity to solicitation for
participation in various transactions and related information
obtained during the course of his employment with Employer.
(d) Employee agrees that at the time of leaving the employ
of Employer he will deliver to Employer, and not keep or deliver
to anyone else, any and all notebooks, memoranda, documents and,
in general, any and all materials relating to Employer's
business, or constituting Employer's property. Employee further
agrees that he will not, directly or indirectly, request or
advise any customers or suppliers of Employer or any of its
subsidiaries to withdraw, curtail or cancel its business with
Employer or any of its subsidiaries.
(e) During the term of Employee's employment with the Employer
and for a period of one (1) year from the termination of Employee's employment
for any reason whatsoever, Employee (i) will not directly or
indirectly, in the United States, own, manage, operate, control,
or participate in as a partner, director, holder of more than 5%
of the outstanding voting shares, principal or officer, any
business in direct competition with the business of the Employer
and (ii) will not accept employment or be employed by any such
firm or corporation in any position where he would perform
services materially similar to those which he has provided for
Employer during the term hereof.
(f) Employee recognizes that he possesses confidential information
and trade secrets about other employees of Employer and its subsidiaries
relating to their education, experience, skills, abilities,
salary and benefits, and interpersonal relationships with
customers and suppliers of Employer and its subsidiaries.
Employee recognizes that the information he possesses about
these other employees is not generally known, is of substantial
value to Employer in securing and retaining customers and
suppliers, and was acquired by Employee because of his business
position with Employer. Employee agrees that during his
employment hereunder, and for a period of three (3) years
thereafter, Employee shall not, directly or indirectly, solicit
or contact any employee or agent of Employer or any of its
subsidiaries, with a view to inducing or encouraging such
employee or agent to leave the employ of Employer or any of its
subsidiaries, for the purpose of being hired by Employee, an
employer affiliated with Employee, or any competitor of Employer
or any of its subsidiaries. Employee agrees that he will not
convey any such confidential information or trade secrets about
other employees to anyone affiliated with Employee or to any
competitor of Employer or any of its subsidiaries.
(g) Employee acknowledges that the restrictions contained in this
Section 8 are reasonable and necessary to protect Employer's
interest in this agreement and that any breach thereof will
result in an irreparable injury to Employer for which Employer
has no adequate remedy at law. Employee therefore agrees that,
in the event that Employee breaches any of the provisions
contained in this Section 8, Employer shall be authorized and
entitled to seek from any court of competent jurisdiction (i) a
temporary restraining order, (ii) preliminary and permanent
injunctive relief, (iii) an equitable accounting of all profits
or benefits arising out of such breach, and (iv) direct,
incidental and consequential damages arising from such breach.
(h) Employer and Employee have attempted to specify a
reasonable period of time, a reasonable area and reasonable
restrictions to which this Section 8 shall apply. Employer and
Employee agree that if a court or administrative body should
subsequently determine that the terms of this Section 8 are
greater than reasonably necessary to protect Employer's
interest, Employer agrees to waive those terms which are found
by a court or administrative body to be greater than reasonably
necessary to protect Employer's interest and to request that the
court or administrative body reform this Agreement specifying a
reasonable period of time and such other reasonable restrictions
as the court or administrative body deems necessary.
(i) Employee further agrees that this Section 8 is an integral
part of this agreement, and that should a court fail or refuse
to enforce the restrictions contained herein in such a manner as
to effectively enjoin competitive activity, the Employer shall
recover from Employee, and the court shall award as damages to
the Employer, the consideration provided to and elected by
Employee under the terms of Section 8(a) above (or the monetary
equivalent thereof), its costs and its reasonable attorney's
fees.
9. Modification. This Agreement contains all the
terms and conditions agreed upon by the parties hereto, and no
other agreements, oral or otherwise, regarding the subject
matter of this Agreement shall be deemed to exist or bind either
of the parties hereto, except for a confidentiality agreement
between the parties dated February 1, 1980. This Agreement
cannot be modified except by a writing signed by both parties.
10. Assignment. This Agreement shall be binding upon
Employee, his heirs, executors and assigns and upon Employer,
its successors and assigns.
11. Applicable Law. This agreement is made and entered into
in the State of South Dakota. The validity, interpretation, performance
and enforcement of this agreement shall be governed by the internal laws
of said State of South Dakota, without giving effect to the conflict of
laws provisions thereof.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement effective as of the day and year first above written.
IBP, inc.
By /s/ Robert L. Peterson
----------------------
/s/ Richard L. Bond
----------------------
(Employee)
Exhibit 10.26
EMPLOYMENT AGREEMENT
PRODUCTION AND ADMINISTRATIVE
This Agreement, effective the 1st day of Mrach, 1995 (the
"Effective Date"), by and between IBP, inc., a Delaware
corporation (hereinafter referred to as "Employer"), and Eugene
D. Leman (hereinafter referred to as "Employee").
WITNESSETH:
Employer hereby agrees to employ, or agrees to continue to employ
Employee, and Employee agrees to be employed upon the following terms and
conditions.
1. Duties. Employee shall perform the duties of
President- Allied Products or shall serve in such other capacity
and with such other duties for Employer as Employer shall
hereafter from time to time prescribe.
2. Term of Employment. The term of employment shall be for a period of
five (5) years, commencing on the Effective Date of this
Agreement, unless terminated prior thereto in accordance with
the provisions of this Agreement.
3. Compensation. For the services to be performed hereunder,
Employee shall be compensated by Employer at the rate of not less than Two
Hundred Twenty Thousand Dollars ($220,000.00) per year payable monthly,
and in addition may receive awards under Employer's Cash Bonus
Plan subject to the discretion of the senior management of
Employer. Such compensation will be subject to review from time
to time when salaries of other officers and managers of Employer
are reviewed for consideration of increases therein.
4. Participation in Benefit Programs. Employee shall be entitled
to participate in any benefit programs generally applicable to
officers of Employer adopted by Employer from time to time.
5. Limitation on Outside Activities. Employee shall devote
full employment energies, interest, abilities and time (except
for personal investments) to the performance of obligations
hereunder and shall not, without the written consent of the
Chief Executive Officer of the Company, render to others any
service of any kind or engage in any activity which conflicts or
interferes with the performance of duties hereunder.
6. Ownership of Employee's Inventions. All ideas, inventions, and
other developments or improvements conceived by Employee, alone
or with others, during the term of his employment, whether or
not during working hours, that are within the scope of
Employer's business operations or that relate to any of
Employer's work or projects, are the exclusive property of
Employer. Employee agrees to assist Employer, at its expense,
to obtain patents on any such patentable ideas, inventions, and
other developments, and agrees to execute all documents
necessary to obtain such patents in the name of Employer.
7. Termination.
(a) Voluntary Termination. Employee may
terminate this Agreement at any time by not less than one year's
prior written notice to Employer. Employee shall not be
entitled to any compensation from Employer for any period beyond
Employee's actual date of termination.
(b) Resignation. In the event Employee shall resign from employment
at the request of Employer, Employer shall compensate Employee
at the rate and in the manner provided in Paragraph 3 above for
a period after termination equivalent to the lesser of (i) one
year, or (ii) the remainder of the term of this Agreement.
During the time Employee is being compensated in lieu of
continued employment, the Employer shall have the right to
require the Employee to perform consulting services from time to
time on behalf of the Employer. Any out-of-pocket expenses
associated with any such assignment shall be, upon proper
documentation, reimbursed by Employer to Employee. In the event
Employer compensates Employee in lieu of continued employment,
all remuneration or wages earned by Employee during such period,
either as an employee, independent contractor or consultant to
any person, firm, or corporation other than Employer, shall be a
set-off to Employer's duty of compensation to Employee.
(c) Company Termination. In the event Employer shall conclude,
in its sole discretion, that it is no longer in the interest of
the Company to continue the employment of Employee, the Employer
may terminate this Agreement, and Employer shall have no further
obligation to pay compensation to Employee after the effective
date of termination.
(d) Incapacity. If Employee is
materially incapacitated from fully performing his or her duties
pursuant to this Agreement by reason of illness or other
incapacity or by reason of any statute, law, ordinance,
regulation, order, judgment or decree, Employer may terminate
this Agreement by 30 days written notice to Employee, but only
in the event that such incapacity shall aggregate not less than
one hundred twenty (120) days during any one year.
8. Confidential Information, Trade Secrets, Limitation on
Solicitation and Non-Compete Clause.
(a) Employee shall receive, in addition to all regular compensation for
services as described in Section 3 of this Employment Agreement,
as additional consideration for signing this Employment
Agreement and for agreeing to abide and be bound by the terms,
provisions and restrictions of this Section 8, the following:
(i) an award of such number of shares of Common
Stock of Employer under the terms and conditions of the
Employer's new IBP Officer Long-Term Stock Plan as
shall be equal to an aggregate value of $500,000 less
amounts due restrictions on promotional grants (see
Employee Aeard Letter);
(ii) a grant of options to purchase an aggregate
of Five Thousand (5,000) shares of Common Stock of
Employer under the terms and conditions of the
Employer's new IBP 1993 Stock Option Plan and each year
on the annual grant date for stock options an Annual
Option Grant of options to purchase shares of Common
Stock of the Employer which is equal to three times
(3x) the Annual Option Level of the Employee's officer-
position band option level, provided that the Employee
has been on the payroll, whether as an officer or
otherwise, at least six months prior to the annual
grant date; and
(iii) the right to receive Bonus Option Grants,
under the terms and conditions of the new IBP 1993
Stock Option Agreement with Bonus Options shall be
executed by the Employer and the Employee pursuant to
the new IBP 1993 Stock Option Plan, upon the Employee's
exercise of any options granted to the Employee which
qualify as Incentive Stock Options (ISOs) under the
Internal Revenue Code of 1990, as amended or superseded.
(b) Employee recognizes that, as a result of his
employment hereunder (and his employment, if any, with Employer
for periods prior to the Effective Date), he has had and will
continue to have access to confidential information, trade
secrets, proprietary information, intellectual property, and
other documents, data, and information concerning methods,
processes, controls, techniques, formulae, production,
distribution, purchasing, financial analysis, returns and
reports which is the property of and integral to the operations
and success of Employer, and therefore agrees to be bound by the
provisions of this Section 8, which Employee agrees and
acknowledges to be reasonable and to be necessary to protect
legitimate and important business interests and concerns of
Employer.
(c) Employee agrees that he will not divulge
to any person, nor use to the detriment of Employer or any of
its subsidiaries, nor use in any business or process of
manufacture competitive with or similar to any business or
process of manufacture of Employer or any of its subsidiaries,
at any time during the term of this Agreement or thereafter, any
of the Employer's trade secrets, without first obtaining the
express written permission of Employer. A trade secret shall
include any formula, pattern, device or compilation of
information used by Employer in its business. For purposes of
this Section 8, the compilation of information shall include,
without limitation, the identity of customers and suppliers and
information reflecting their interests, preferences,
credit-worthiness, likely receptivity to solicitation for
participation in various transactions and related information
obtained during the course of his employment with Employer.
(d) Employee agrees that at the time of leaving the employ
of Employer he will deliver to Employer, and not keep or deliver
to anyone else, any and all notebooks, memoranda, documents and,
in general, any and all materials relating to Employer's
business, or constituting Employer's property. Employee further
agrees that he will not, directly or indirectly, request or
advise any customers or suppliers of Employer or any of its
subsidiaries to withdraw, curtail or cancel its business with
Employer or any of its subsidiaries.
(e) During the term of Employee's employment with the Employer and for
a period of one (1) year from the termination of Employee's employment
for any reason whatsoever, Employee (i) will not directly or
indirectly, in the United States, own, manage, operate, control,
or participate in as a partner, director, holder of more than 5%
of the outstanding voting shares, principal or officer, any
business in direct competition with the business of the Employer
and (ii) will not accept employment or be employed by any such
firm or corporation in any position where he would perform
services materially similar to those which he has provided for
Employer during the term hereof.
(f) Employee recognizes that he possesses confidential information and
trade secrets about other employees of Employer and its subsidiaries
relating to their education, experience, skills, abilities,
salary and benefits, and interpersonal relationships with
customers and suppliers of Employer and its subsidiaries.
Employee recognizes that the information he possesses about
these other employees is not generally known, is of substantial
value to Employer in securing and retaining customers and
suppliers, and was acquired by Employee because of his business
position with Employer. Employee agrees that during his
employment hereunder, and for a period of three (3) years
thereafter, Employee shall not, directly or indirectly, solicit
or contact any employee or agent of Employer or any of its
subsidiaries, with a view to inducing or encouraging such
employee or agent to leave the employ of Employer or any of its
subsidiaries, for the purpose of being hired by Employee, an
employer affiliated with Employee, or any competitor of Employer
or any of its subsidiaries. Employee agrees that he will not
convey any such confidential information or trade secrets about
other employees to anyone affiliated with Employee or to any
competitor of Employer or any of its subsidiaries.
(g) Employee acknowledges that the restrictions contained in this
Section 8 are reasonable and necessary to protect Employer's
interest in this agreement and that any breach thereof will
result in an irreparable injury to Employer for which Employer
has no adequate remedy at law. Employee therefore agrees that,
in the event that Employee breaches any of the provisions
contained in this Section 8, Employer shall be authorized and
entitled to seek from any court of competent jurisdiction (i) a
temporary restraining order, (ii) preliminary and permanent
injunctive relief, (iii) an equitable accounting of all profits
or benefits arising out of such breach, and (iv) direct,
incidental and consequential damages arising from such breach.
(h) Employer and Employee have attempted to specify a
reasonable period of time, a reasonable area and reasonable
restrictions to which this Section 8 shall apply. Employer and
Employee agree that if a court or administrative body should
subsequently determine that the terms of this Section 8 are
greater than reasonably necessary to protect Employer's
interest, Employer agrees to waive those terms which are found
by a court or administrative body to be greater than reasonably
necessary to protect Employer's interest and to request that the
court or administrative body reform this Agreement specifying a
reasonable period of time and such other reasonable restrictions
as the court or administrative body deems necessary.
(i) Employee further agrees that this Section 8 is an integral
part of this agreement, and that should a court fail or refuse
to enforce the restrictions contained herein in such a manner as
to effectively enjoin competitive activity, the Employer shall
recover from Employee, and the court shall award as damages to
the Employer, the consideration provided to and elected by
Employee under the terms of Section 8(a) above (or the monetary
equivalent thereof), its costs and its reasonable attorney's
fees.
9. Modification. This Agreement contains all the
terms and conditions agreed upon by the parties hereto, and no
other agreements, oral or otherwise, regarding the subject
matter of this Agreement shall be deemed to exist or bind either
of the parties hereto, except for a confidentiality agreement
between the parties dated October 29, 1981. This Agreement
cannot be modified except by a writing signed by both parties.
10. Assignment. This Agreement shall be binding upon
Employee, his heirs, executors and assigns and upon Employer,
its successors and assigns.
11. Applicable Law. This agreement is made and entered into in the
State of South Dakota. The validity, interpretation, performance and
enforcement of this agreement shall be governed by the internal laws of said
State of South Dakota, without giving effect to the conflict of
laws provisions thereof.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement effective as of the day and year first above written.
IBP, inc.
By /s/ Robert L. Peterson
----------------------
/s/ Eugene D. Leman
----------------------
(Employee)
Exhibit 10.27
EMPLOYMENT AGREEMENT
PRODUCTION AND ADMINISTRATIVE
This Agreement, effective the 1st day of March, 1995 (the
"Effective Date"), by and between IBP, inc., a Delaware
corporation (hereinafter referred to as "Employer"), and David
C. Layhee (hereinafter referred to as "Employee").
WITNESSETH:
Employer hereby agrees to employ, or agrees to continue to employ
Employee, and Employee agrees to be employed upon the following terms and
conditions.
1. Duties. Employee shall perform the duties of
President- Consumer Products or shall serve in such other
capacity and with such other duties for Employer as Employer
shall hereafter from time to time prescribe.
2. Term of Employment. The term of employment shall be for a period of
five (5) years, commencing on the Effective Date of this
Agreement, unless terminated prior thereto in accordance with
the provisions of this Agreement.
3. Compensation. For the services to be performed hereunder, Employee
shall be compensated by Employer at the rate of not less than Two Hundred
Thousand Dollars ($200,000,000) per year payable monthly, and in
addition may receive awards under Employer's Cash Bonus Plan
subject to the discretion of the senior management of Employer.
Such compensation will be subject to review from time to time
when salaries of other officers and managers of Employer are
reviewed for consideration of increases therein.
4. Participation in Benefit Programs. Employee shall be entitled
to participate in any benefit programs generally applicable to
officers of Employer adopted by Employer from time to time.
5. Limitation on Outside Activities. Employee shall devote
full employment energies, interest, abilities and time (except
for personal investments) to the performance of obligations
hereunder and shall not, without the written consent of the
Chief Executive Officer of the Company, render to others any
service of any kind or engage in any activity which conflicts or
interferes with the performance of duties hereunder.
6. Ownership of Employee's Inventions. All ideas, inventions, and
other developments or improvements conceived by Employee, alone
or with others, during the term of his employment, whether or
not during working hours, that are within the scope of
Employer's business operations or that relate to any of
Employer's work or projects, are the exclusive property of
Employer. Employee agrees to assist Employer, at its expense,
to obtain patents on any such patentable ideas, inventions, and
other developments, and agrees to execute all documents
necessary to obtain such patents in the name of Employer.
7. Termination.
(a) Voluntary Termination. Employee may
terminate this Agreement at any time by not less than one year's
prior written notice to Employer. Employee shall not be
entitled to any compensation from Employer for any period beyond
Employee's actual date of termination.
(b) Resignation. In the event Employee shall resign from employment
at the request of Employer, Employer shall compensate Employee
at the rate and in the manner provided in Paragraph 3 above for
a period after termination equivalent to the lesser of (i) one
year, or (ii) the remainder of the term of this Agreement.
During the time Employee is being compensated in lieu of
continued employment, the Employer shall have the right to
require the Employee to perform consulting services from time to
time on behalf of the Employer. Any out-of-pocket expenses
associated with any such assignment shall be, upon proper
documentation, reimbursed by Employer to Employee. In the event
Employer compensates Employee in lieu of continued employment,
all remuneration or wages earned by Employee during such period,
either as an employee, independent contractor or consultant to
any person, firm, or corporation other than Employer, shall be a
set-off to Employer's duty of compensation to Employee.
(c) Company Termination. In the event Employer shall conclude,
in its sole discretion, that it is no longer in the interest of
the Company to continue the employment of Employee, the Employer
may terminate this Agreement, and Employer shall have no further
obligation to pay compensation to Employee after the effective
date of termination.
(d) Incapacity. If Employee is
materially incapacitated from fully performing his or her duties
pursuant to this Agreement by reason of illness or other
incapacity or by reason of any statute, law, ordinance,
regulation, order, judgment or decree, Employer may terminate
this Agreement by 30 days written notice to Employee, but only
in the event that such incapacity shall aggregate not less than
one hundred twenty (120) days during any one year.
8. Confidential Information, Trade Secrets, Limitation on
Solicitation and Non-Compete Clause.
(a) Employee shall receive, in addition to all regular compensation for
services as described in Section 3 of this Employment Agreement,
as additional consideration for signing this Employment
Agreement and for agreeing to abide and be bound by the terms,
provisions and restrictions of this Section 8, the following:
(i) an award of such number of shares of Common
Stock of Employer under the terms and conditions of the
Employer's new IBP Officer Long-Term Stock Plan as
shall be equal to an aggregate value of $500,000 less
amounts due to restrictions on promotional grants (see
Employee Award Letter);
(ii) a grant of options to purchase an aggregate
of Five Thousand (5,000) shares of Common Stock of
Employer under the terms and conditions of the
Employer's new IBP 1993 Stock Option Plan and each year
on the annual grant date for stock options an Annual
Option Grant of options to purchase shares of Common
Stock of the Employer which is equal to three times
(3x) the Annual Option Level of the Employee's officer-
position band option level, provided that the Employee
has been on the payroll, whether as an officer or
otherwise, at least six months prior to the annual
grant date; and
(iii) the right to receive Bonus Option Grants,
under the terms and conditions of the new IBP 1993
Stock Option Agreement with Bonus Options shall be
executed by the Employer and the Employee pursuant to
the new IBP 1993 Stock Option Plan, upon the Employee's
exercise of any options granted to the Employee which
qualify as Incentive Stock Options (ISOs) under the
Internal Revenue Code of 1990, as amended or superseded.
(b) Employee recognizes that, as a result of his
employment hereunder (and his employment, if any, with Employer
for periods prior to the Effective Date), he has had and will
continue to have access to confidential information, trade
secrets, proprietary information, intellectual property, and
other documents, data, and information concerning methods,
processes, controls, techniques, formulae, production,
distribution, purchasing, financial analysis, returns and
reports which is the property of and integral to the operations
and success of Employer, and therefore agrees to be bound by the
provisions of this Section 8, which Employee agrees and
acknowledges to be reasonable and to be necessary to protect
legitimate and important business interests and concerns of
Employer.
(c) Employee agrees that he will not divulge
to any person, nor use to the detriment of Employer or any of
its subsidiaries, nor use in any business or process of
manufacture competitive with or similar to any business or
process of manufacture of Employer or any of its subsidiaries,
at any time during the term of this Agreement or thereafter, any
of the Employer's trade secrets, without first obtaining the
express written permission of Employer. A trade secret shall
include any formula, pattern, device or compilation of
information used by Employer in its business. For purposes of
this Section 8, the compilation of information shall include,
without limitation, the identity of customers and suppliers and
information reflecting their interests, preferences,
credit-worthiness, likely receptivity to solicitation for
participation in various transactions and related information
obtained during the course of his employment with Employer.
(d) Employee agrees that at the time of leaving the employ
of Employer he will deliver to Employer, and not keep or deliver
to anyone else, any and all notebooks, memoranda, documents and,
in general, any and all materials relating to Employer's
business, or constituting Employer's property. Employee further
agrees that he will not, directly or indirectly, request or
advise any customers or suppliers of Employer or any of its
subsidiaries to withdraw, curtail or cancel its business with
Employer or any of its subsidiaries.
(e) During the term of Employee's employment with the Employer and
for a period of one (1) year from the termination of Employee's employment
for any reason whatsoever, Employee (i) will not directly or
indirectly, in the United States, own, manage, operate, control,
or participate in as a partner, director, holder of more than 5%
of the outstanding voting shares, principal or officer, any
business in direct competition with the business of the Employer
and (ii) will not accept employment or be employed by any such
firm or corporation in any position where he would perform
services materially similar to those which he has provided for
Employer during the term hereof.
(f) Employee recognizes that he possesses confidential information and
trade secrets about other employees of Employer and its subsidiaries
relating to their education, experience, skills, abilities,
salary and benefits, and interpersonal relationships with
customers and suppliers of Employer and its subsidiaries.
Employee recognizes that the information he possesses about
these other employees is not generally known, is of substantial
value to Employer in securing and retaining customers and
suppliers, and was acquired by Employee because of his business
position with Employer. Employee agrees that during his
employment hereunder, and for a period of three (3) years
thereafter, Employee shall not, directly or indirectly, solicit
or contact any employee or agent of Employer or any of its
subsidiaries, with a view to inducing or encouraging such
employee or agent to leave the employ of Employer or any of its
subsidiaries, for the purpose of being hired by Employee, an
employer affiliated with Employee, or any competitor of Employer
or any of its subsidiaries. Employee agrees that he will not
convey any such confidential information or trade secrets about
other employees to anyone affiliated with Employee or to any
competitor of Employer or any of its subsidiaries.
(g) Employee acknowledges that the restrictions contained in this
Section 8 are reasonable and necessary to protect Employer's
interest in this agreement and that any breach thereof will
result in an irreparable injury to Employer for which Employer
has no adequate remedy at law. Employee therefore agrees that,
in the event that Employee breaches any of the provisions
contained in this Section 8, Employer shall be authorized and
entitled to seek from any court of competent jurisdiction (i) a
temporary restraining order, (ii) preliminary and permanent
injunctive relief, (iii) an equitable accounting of all profits
or benefits arising out of such breach, and (iv) direct,
incidental and consequential damages arising from such breach.
(h) Employer and Employee have attempted to specify a
reasonable period of time, a reasonable area and reasonable
restrictions to which this Section 8 shall apply. Employer and
Employee agree that if a court or administrative body should
subsequently determine that the terms of this Section 8 are
greater than reasonably necessary to protect Employer's
interest, Employer agrees to waive those terms which are found
by a court or administrative body to be greater than reasonably
necessary to protect Employer's interest and to request that the
court or administrative body reform this Agreement specifying a
reasonable period of time and such other reasonable restrictions
as the court or administrative body deems necessary.
(i) Employee further agrees that this Section 8 is an integral
part of this agreement, and that should a court fail or refuse
to enforce the restrictions contained herein in such a manner as
to effectively enjoin competitive activity, the Employer shall
recover from Employee, and the court shall award as damages to
the Employer, the consideration provided to and elected by
Employee under the terms of Section 8(a) above (or the monetary
equivalent thereof), its costs and its reasonable attorney's
fees.
9. Modification. This Agreement contains all the
terms and conditions agreed upon by the parties hereto, and no
other agreements, oral or otherwise, regarding the subject
matter of this Agreement shall be deemed to exist or bind either
of the parties hereto, except for a confidentiality agreement
between the parties dated February 9, 1978. This Agreement
cannot be modified except by a writing signed by both parties.
10. Assignment. This Agreement shall be binding upon
Employee, his heirs, executors and assigns and upon Employer,
its successors and assigns.
11. Applicable Law. This agreement is made and entered into in the
State of South Dakota. The validity, interpretation, performance and
enforcement of this agreement shall be governed by the internal laws of said
State of South Dakota, without giving effect to the conflict of
laws provisions thereof.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement effective as of the day and year first above written.
IBP, inc.
By /s/ Robert L. Peterson
----------------------
/s/ Dave Layhee
----------------------
(Employee)
Exhibit 11
IBP, inc. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
YEARS ENDED DECEMBER 30, 1995 (52 WEEKS),
DECEMBER 31, 1994 (53 WEEKS) AND DECEMBER 25, 1993 (52 WEEKS)
(Amounts in thousands except per share data)
1995 1994 1993
FINANCIAL STATEMENT COMPUTATIONS
Earnings before extraordinary item
and cumulative effect of accounting
change $280,112 $182,289 $77,457
Extraordinary item (22,189) - -
Cumulative effect of accounting change - - 12,626
------- ------- ------
Net earnings $257,923 $182,289 $90,083
======= ======= ======
PRIMARY EARNINGS PER SHARE
Shares used in this computation:
Weighted average shares outstanding 94,745 94,870 94,989
Dilutive effect of shares under
employee stock plans 1,926 1,293 824
------ ------ ------
Common and common equivalent shares 96,671 96,163 95,813
====== ====== ======
Primary earnings per share:
Earnings before extraordinary item
and cumulative effect of
accounting change $2.90 $1.90 $ .81
Extraordinary item (.23) - -
Cumulative effect of accounting change - - .13
---- ---- ----
Net earnings $2.67 $1.90 $ .94
==== ==== ====
FULLY-DILUTED EARNINGS PER SHARE
Shares used in this computation:
Weighted average shares outstanding 94,745 94,870 94,989
Dilutive effect of shares under
employee stock plans 2,274 1,496 1,356
------ ------ ------
Common and common equivalent shares 97,019 96,366 96,345
====== ====== ======
Fully-diluted earnings per share:
Earnings before extraordinary item and
cumulative effect of accounting
change $2.89 $1.89 $ .80
Extraordinary item (.23) - -
Cumulative effect of accounting change - - .13
----- ----- -----
Net earnings $2.66 $1.89 $ .93
===== ===== =====
Selected Financial Data
(in thousands except per share data)
Fiscal Year Ended
December December December December December
30, 31, 25, 26, 28,
1995 1994(1) 1993 1992 1991
OPERATIONS:
Net sales $12,667,562 $12,075,427 $11,671,397 $11,128,405 $10,387,686
Gross profit 604,068 460,109 258,666 236,791 134,063
Selling,
general and
administrative
expense 123,972 112,772 84,197 76,349 72,993
Earnings from
operations 480,096 347,337 174,469 160,442 61,070
Interest, net (20,784) (38,448) (43,212) (51,826) (58,817)
Earnings before
income taxes,
extraordinary
item and
accounting
change 459,312 308,889 131,257 108,616 2,253
Income taxes 179,200 126,600 53,800 45,000 900
Extraordinary
loss (2) (22,189) - - - -
Accounting
change (3) - - 12,626 - -
Net earnings 257,923 182,289 90,083 63,616 1,353
PER SHARE DATA:
Earnings per
share:
Earnings before
extraordinary
item and
accounting
change $2.90 $1.90 $ .81 $ .67 $ .02
Extraordinary loss (.23) - - - -
Accounting change - - .13 - -
Net earnings 2.67 1.90 .94 .67 .02
Dividends per share .10 .10 .10 .15 .30
FINANCIAL CONDITION:
Working capital $ 427,241 $ 359,238 $ 336,668 $ 329,727 $ 238,163
Total assets 2,027,601 1,865,463 1,538,907 1,499,427 1,450,480
Long-term
obligations 260,752 361,760 460,723 510,900 509,901
Stockholders'
equity 1,022,939 780,494 612,796 534,077 482,643
(1) 53-week year.
(2) Extraordinary loss on early extinguishment of debt.
(3) Cumulative effect of change in accounting for income taxes.
IBP, inc. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands except share and per share data)
December 30, December 31,
1995 1994
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 116,277 $ 84,229
Marketable securities 63,851 76,307
Accounts receivable, less allowance for
doubtful accounts of $9,494 and $9,397 529,796 514,800
Inventories (Note B) 303,711 244,048
Deferred income tax benefits (Note E) 51,482 50,986
Prepaid expenses 3,773 3,552
--------- ---------
TOTAL CURRENT ASSETS 1,068,890 973,922
PROPERTY, PLANT AND EQUIPMENT, at cost (Note F):
Land and land improvements 95,217 83,849
Buildings and stockyards 374,988 343,370
Equipment 802,466 712,325
--------- ---------
1,272,671 1,139,544
Less accumulated depreciation (632,666) (556,769)
--------- ---------
640,005 582,775
Construction in progress 86,854 68,589
--------- ---------
726,859 651,364
--------- ---------
OTHER ASSETS:
Goodwill, net of accumulated amortization
of $113,301 and $103,217 208,434 216,779
Other 23,418 23,398
--------- ---------
231,852 240,177
--------- ---------
$2,027,601 $1,865,463
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses (Note D) $ 548,934 $ 506,417
Federal and state income taxes 81,817 97,414
Deferred income taxes (Note E) 7,916 8,125
Other 2,982 2,728
--------- ---------
TOTAL CURRENT LIABILITIES 641,649 614,684
LONG-TERM OBLIGATIONS (Notes C and F) 260,752 361,760
DEFERRED CREDITS AND OTHER LIABILITIES:
Deferred income taxes (Note E) 69,079 81,348
Other 33,182 27,177
--------- ---------
102,261 108,525
--------- ---------
COMMITMENTS AND CONTINGENCIES (Note J)
STOCKHOLDERS' EQUITY (Notes F and G):
Preferred stock, 25,000,000 shares
authorized; none issued
Common stock, $.05 par value per share;
authorized 100,000,000 shares; issued
95,000,000 shares 4,750 2,375
Additional paid-in capital 432,726 439,567
Retained earnings 589,936 341,492
Currency translation adjustments 116 (1,074)
Treasury stock at cost, 253,252 and 129,712
shares (4,589) (1,866)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 1,022,939 780,494
--------- ---------
$2,027,601 $1,865,463
========= =========
See notes to consolidated financial statements.
-1-
IBP, inc. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands except per share data)
52 Weeks 53 Weeks 52 Weeks
Ended Ended Ended
December 30, December 31, December 25,
1995 1994 1993
Net sales (Note A) $12,667,562 $12,075,427 $11,671,397
Cost of products sold 12,063,494 11,615,318 11,412,731
---------- ---------- ----------
Gross profit 604,068 460,109 258,666
Selling, general and
administrative expense 123,972 112,772 84,197
---------- ---------- ----------
Earnings from operations 480,096 347,337 174,469
Interest:
Incurred (38,551) (45,124) (45,838)
Capitalized 9,039 3,957 1,426
Income 8,728 2,719 1,200
---------- ---------- ----------
(20,784) (38,448) (43,212)
---------- ---------- ----------
Earnings before income taxes,
extraordinary item and
cumulative effect of
accounting change 459,312 308,889 131,257
Income taxes (Note E) 179,200 126,600 53,800
---------- ---------- ----------
Earnings before extraordinary
item and cumulative effect
of accounting change 280,112 182,289 77,457
Extraordinary loss on early
extinguishment of debt,
less applicable taxes
(Note F) (22,189) - -
Cumulative effect of change
in method of accounting for
income taxes (Note E) - - 12,626
---------- ---------- ----------
Net earnings $ 257,923 $ 182,289 $ 90,083
========== ========== ==========
Earnings per share:
Earnings before extraordinary
item and cumulative effect
of accounting change $2.90 $1.90 $ .81
Extraordinary item (.23) - -
Cumulative effect of
accounting change - - .13
---- ---- ----
Net earnings $2.67 $1.90 $ .94
==== ==== ====
See notes to consolidated financial statements.
-2-
IBP, inc. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(In thousands except per share data)
Common Stock Additional Currency
Par Paid-In Retained Translation Treasury
Shares Value Capital Earnings Adjustments Stock
Balances,
December 26, 1992 47,500 $2,375 $443,638 $ 88,112 $ - $ (48)
Net earnings 90,083
Dividends declared,
$.10 per share (9,500)
Treasury shares
purchased (6,804)
Treasury shares
delivered under
employee stock
plans (1,679) 6,619
------ ----- ------- ------- ------- ------
Balances,
December 25, 1993 47,500 2,375 441,959 168,695 - (233)
Net earnings 182,289
Dividends declared,
$.10 per share (9,492)
Treasury shares
purchased (8,928)
Treasury shares
delivered under
employee stock
plans (2,392) 7,295
Foreign currency
translation
adjustments (1,074)
------ ----- ------- ------- ------ ------
Balances,
December 31, 1994 47,500 2,375 439,567 341,492 (1,074) (1,866)
Net earnings 257,923
Dividends declared,
$.10 per share (9,479)
Additional shares
issued in
two-for-one
stock split
effected in the
form of a stock
dividend (Note G) 47,500 2,375 (2,375)
Treasury shares
purchased (13,441)
Treasury shares
delivered under
employee stock
plans (4,466) 10,718
Foreign currency
translation
adjustments 1,190
------ ----- ------ ------ ------ ------
Balances,
December 30, 1995 95,000 $4,750 $432,726 $589,936 $ 116 $(4,589)
====== ===== ======= ======= ===== ======
See notes to consolidated financial statements.
-3-
IBP, inc. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
52 Weeks 53 Weeks 52 Weeks
Ended Ended Ended
December 30, December 31, December 25,
1995 1994 1993
Inflows (outflows)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $257,923 $ 182,289 $ 90,083
Adjustments to reconcile net earnings
to cash flows from operations:
Depreciation and amortization 92,539 63,443 58,784
Extraordinary loss on
extinguishment of debt 22,189 - -
Deferred income tax benefit (11,600) (16,800) (2,400)
Cumulative effect of accounting
change - - (12,626)
Net changes in:
Accounts payable and accrued
liabilities 60,943 143,997 36,961
Inventories (58,705) (6,179) 4,380
Accounts receivable (14,336) (32,811) 3,826
Other adjustments, net 2,676 4,962 3,282
-------- -------- --------
93,706 156,612 92,207
-------- -------- --------
Net cash flows provided by
operating activities 351,629 338,901 182,290
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from disposals of marketable
securities 588,591 80,000 -
Purchases of marketable securities (576,167) (156,307) -
Capital expenditures (160,626) (83,868) (59,584)
Payment for stock of new subsidiaries,
net of cash acquired - (51,973) (14,628)
Other investing activities, net 2,188 860 1,399
-------- -------- --------
Net cash flows used in investing
activities (146,014) (211,288) (72,813)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term
obligations (350,761) (111,766) (50,000)
Net change in borrowings under
revolving credit agreements 250,000 (25,661) (6,000)
Premiums paid on early retirement
of debt (35,420) - -
Net change in checks in process of
clearance (18,135) 82,333 (41,390)
Dividends paid (9,484) (9,495) (9,499)
Other financing activities, net (9,767) (3,991) (2,421)
-------- -------- --------
Net cash flows used in financing
activities (173,567) (68,580) (109,310)
-------- -------- --------
Net increase in cash and cash
equivalents 32,048 59,033 167
Cash and cash equivalents at beginning
of year 84,229 25,196 25,029
-------- -------- --------
Cash and cash equivalents at end
of year $116,277 $ 84,229 $ 25,196
======= ======== =======
See notes to consolidated financial statements.
-4-
IBP, inc. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 30, 1995 (52 weeks), DECEMBER 31, 1994 (53 weeks)
AND DECEMBER 25, 1993 (52 weeks)
A. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
ORGANIZATION AND BASIS OF PRESENTATION - In 1981, IBP, inc. (IBP)
became a wholly-owned subsidiary of Occidental Petroleum Corporation
(Occidental) through a reorganization and plan of merger. The accompanying
financial statements include the assets, liabilities and stockholders' equity
of IBP, after giving effect to the allocation of Occidental's acquisition
cost to the net assets acquired, as determined under the purchase method of
accounting. Occidental no longer controls IBP nor has any person acquired
control of IBP.
NATURE OF OPERATIONS AND INDUSTRY SEGMENT INFORMATION - IBP's
operations relate to the meat packing industry and primarily involve
cattle and hog slaughter, beef and pork fabrication and related allied
product processing activities. The company also produces precooked
meats for the retail and food service industries. IBP's customers
include food retailers, distributors, wholesalers, restaurant and hotel
chains, other food processors and leather makers, as well as
manufacturers of pharmaceuticals and animal feeds. Management
considers its operations to comprise one industry segment.
PRINCIPLES OF CONSOLIDATION - All subsidiaries are wholly-owned
and are consolidated in the accompanying financial statements. All
material intercompany balances, transactions and profits have been
eliminated.
MANAGEMENT'S USE OF ESTIMATES - The preparation of financial
statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the dates of the financial statements and the
reported amounts of revenues and expenses during the reporting periods.
Actual results could differ from those estimates.
FISCAL YEAR - IBP's fiscal year ends on the last Saturday of the
calendar year.
EXPORT SALES - In 1995, 1994 and 1993, net export sales,
principally to customers in Asia and also to destinations in Canada,
Mexico and Europe, amounted to $1.8 billion, $1.5 billion and $1.4
billion, respectively.
STATEMENT OF CASH FLOWS - For purposes of the statement of cash
flows, management considers all highly liquid debt instruments
purchased with original maturities of three months or less to be cash
equivalents. Such investments are carried at cost, which approximates
fair value.
-5-
IBP, inc. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
A. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(cont.):
MARKETABLE SECURITIES - These securities are classified as
available for sale, are highly liquid and are purchased and sold on a
short-term basis as part of IBP's management of working capital. Such
securities consist of auction market preferred stock, which management
does not intend to hold more than one year, and tax-exempt securities
and commercial paper with maturities of less than one year. Marketable
securities are carried at cost, which approximates fair value.
INVENTORIES - Inventories are valued on the basis of the lower of
first-in, first-out cost or market.
PROPERTY, PLANT AND EQUIPMENT - Depreciation is provided for
property, plant and equipment on the straight-line method over the
estimated useful lives of the respective classes of assets as follows:
Land improvements..................8 to 20 years
Buildings and stockyards..........10 to 40 years
Equipment..........................3 to 12 years
Management adjusted its estimate of salvage value for most fixed
assets during 1995 to better reflect actual experience. This
adjustment increased cost of products sold by approximately $18
million.
Leasehold improvements, included in the equipment class, are
depreciated over the life of the lease or the life of the asset,
whichever is shorter.
INCOME TAXES - Effective December 27, 1992, IBP adopted Statement
of Financial Accounting Standards (SFAS) No. 109, "Accounting for
Income Taxes." See Note E for a discussion of the impact in 1993 for
adoption of this standard.
CAPITAL LEASES - Lease arrangements entered into by IBP that
constitute capital lease obligations are capitalized at the present
value of future lease payments. The values assigned to leased assets
are included in property, plant and equipment and accounted for
accordingly. Depreciation on leased assets is included in depreciation
and amortization expense. The capital lease obligations are amortized
over the lease terms as payments are made.
ENVIRONMENTAL LIABILITIES - Environmental expenditures are
accrued, except to the extent costs can be capitalized, based on
estimates of known environmental remediation exposures. Such accruals
are made even if some uncertainties exist over the ultimate cost of the
remediation processes.
-6-
IBP, inc. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
A. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
(cont.):
GOODWILL - Goodwill is amortized on a straight-line basis over
periods ranging from 15 years to 40 years. Management reviews goodwill
as well as other long-lived assets for impairment whenever events or
changes in circumstances indicate that the carrying amount may not be
recoverable.
FOREIGN CURRENCY TRANSLATION - The translation of foreign currency
into U.S. dollars is performed for balance sheet accounts using the
current exchange rate in effect at the balance sheet date and for
revenue and expense accounts using the average exchange rate during the
period. The gains or losses resulting from translation are included
in stockholders' equity. Exchange adjustments resulting from foreign
currency transactions, which were not material in any of the years
presented, are generally recognized in net earnings.
EARNINGS PER SHARE - Earnings per share for 1995, 1994 and 1993
were calculated using average common and common equivalent shares of
96,671,000, 96,163,000 and 95,813,000, respectively.
RECLASSIFICATIONS - Certain reclassifications have been made to
prior financial statements to conform to the current year presentation.
B. INVENTORIES:
Inventories are comprised of the following:
December 30, December 31,
1995 1994
(In thousands)
Held for sale:
Beef products $185,500 $140,697
Pork products 34,788 21,829
Livestock 26,402 27,495
Other 7,431 6,037
------- -------
254,121 196,058
Supplies 49,590 47,990
------- -------
$303,711 $244,048
======= =======
C. CREDIT ARRANGEMENTS:
At December 30, 1995, IBP had a $500,000,000 multi-year credit
agreement (the Multi-Year Facility). This facility replaced the
$200,000,000 Multi-Year Facility and the $100,000,000 Short-Term
Facility which were in place at December 31, 1994. From time to time,
IBP also may use uncommitted lines of credit for some or all of its
short-term borrowing needs.
The Multi-Year Facility is a revolving facility with a maturity
date of December 20, 2000, which may be extended for one-year
increments annually during the revolving period with consent of the
banks involved. Facility fees can vary from .085 to .200 of 1% on the
total amount of the facility.
-7-
IBP, inc. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
C. CREDIT ARRANGEMENTS: (cont.)
Total outstanding borrowings of $250,000,000 at December 30, 1995
under the Multi-Year Facility have been classified as long-term in the
consolidated balance sheet. $200,000,000 of these borrowings were used
to help facilitate a refinancing of a portion of IBP's long-term debt
completed in January 1996 (see Note F). The company intends to
refinance the remaining $50,000,000 on a long-term basis at a later
date. The interest rate at December 30, 1995 on these borrowings was
6.1%.
During fiscal 1995, the maximum amount of borrowings under all of
IBP's credit arrangements, including any amounts considered long-term,
was $250,000,000. Average borrowings under IBP's credit arrangements
and the weighted average interest rate during fiscal 1995 were
$13,327,000 and 6.1%.
D. ACCOUNTS PAYABLE AND ACCRUED EXPENSES:
Accounts payable and accrued expenses are comprised of the
following:
December 30, December 31,
1995 1994
(In thousands)
Accounts payable, principally
trade creditors $210,157 $158,645
------- -------
Checks in process of clearance 96,114 114,173
------- -------
Accrued expenses:
Employee compensation 95,102 76,235
Employee benefits 56,122 58,050
Other 91,439 99,314
------- -------
242,663 233,599
------- -------
$548,934 $506,417
======= =======
E. INCOME TAXES:
Effective December 27, 1992, IBP adopted SFAS No. 109 on a
prospective basis. The cumulative effect of adopting this statement
was to increase net earnings by $12.6 million in fiscal 1993. SFAS No.
109 requires that prior accounting for business combinations, such as
IBP's application of "pushdown accounting" to its acquisition by
Occidental in 1981, be adjusted to reflect remaining assets at fair
value rather than net-of-tax value as under Accounting Principles Board
(APB) Opinion No. 11. Any difference between the adjusted remaining
balance and the tax bases are accounted for as temporary differences.
-8-
IBP, inc. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
E. INCOME TAXES: (cont.)
Income tax expense consists of the following:
1995 1994 1993
(In thousands)
Current:
Federal $173,600 $135,550 $ 54,300
State 12,100 7,275 1,900
Foreign 5,100 575 -
------- ------- -------
190,800 143,400 56,200
------- ------- -------
Deferred
Federal (10,375) (15,350) (2,200)
State (850) (1,300) (200)
Foreign (375) (150) -
------- ------- -------
(11,600) (16,800) (2,400)
------- ------- -------
$179,200 $126,600 $ 53,800
======= ======= =======
Total income tax expense varies from the amount which would be
provided by applying the U.S. federal income tax rate to earnings
before income taxes. The major reasons for this difference (expressed
as a percentage of pre-tax earnings) are as follows:
1995 1994 1993
Federal income tax rate 35.0% 35.0% 35.0%
State income taxes, net
of federal benefit 1.8 1.5 1.0
Goodwill amortization 0.7 0.9 2.1
Foreign Sales Corporation
benefits (0.4) (0.4) (0.9)
Targeted jobs credits - (0.3) (0.5)
Income tax contingencies 2.1 4.6 4.5
Other, net (0.2) (0.3) (0.2)
---- ---- ----
39.0% 41.0% 41.0%
==== ==== ====
The Internal Revenue Service (IRS) has proposed certain income tax
adjustments which are being contested by the company involving the
years 1989, 1990, and 1991. The IRS is currently examining the years
1992 and 1993. In management's opinion, adequate provisions for income
taxes have been made for all years.
-9-
IBP, inc. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
E. INCOME TAXES (cont.):
Deferred income tax liabilities and assets were comprised of:
December 30, December 31,
1995 1994
(In thousands)
Deferred tax liabilities:
Fixed assets basis differences $ 80,928 $ 92,770
Farm accounting basis differences 8,062 8,268
------- -------
88,990 101,038
------- -------
Deferred tax assets:
Nondeductible accrued liabilities (56,927) (54,999)
State tax credit carryforwards (11,949) (13,035)
Bad debt and claims reserves (3,846) (3,992)
Safe harbor leases (1,640) (2,366)
Federal and state operating
loss carryforwards (8) (79)
Other (1,064) (1,194)
------- -------
Gross deferred tax assets (75,434) (75,665)
Valuation allowance 11,957 13,114
------- -------
Net deferred tax assets (63,477) (62,551)
------- -------
$25,513 $38,487
======= =======
The net $1.2 million decrease in the valuation allowance for
deferred tax assets relates to utilization of state tax credit and net
operating loss carryforwards. No benefit has been recognized for these
state tax credit and net operating loss carryforwards, which expire
primarily from 2002 through 2008.
F. LONG-TERM OBLIGATIONS:
Long-term obligations are summarized as follows:
December 30, December 31,
1995 1994
(In thousands)
Multi-Year Facility $ 250,000 $ -
9.82% Senior Notes due 2000 - 275,000
10.39% Senior Subordinated
Debentures due 2002 - 75,000
Present value of minimum
capital lease obligations 9,900 9,900
Other 1,467 2,215
------- -------
261,367 362,115
Less amounts due within one
year 615 355
------- -------
$260,752 $361,760
======= =======
-10-
IBP, inc. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
F. LONG-TERM OBLIGATIONS: (cont.):
In the fourth quarter of 1995, IBP began a process of refinancing
its long-term debt. On December 15, 1995, IBP prepaid its $275 million
principal amount of 9.82% Senior Notes due 2000 and its $75 million
principal amount of 10.39% Senior Subordinated Debentures due 2002.
The prepayments were funded with available cash and $250 million
borrowed under available credit facilities. This amount is classified
as long-term at December 30, 1995, due to IBP's ability and intent to
refinance this amount on a long-term basis. Net prepayment premiums
and the accelerated amortization of unamortized deferred financing
costs totaled $36.4 million, before applicable income tax benefit of
$14.2 million, which has been accounted for as a net extraordinary loss
of $22.2 million.
In January 1996, IBP completed its public offerings of $100
million principal amount of 6 1/8% Senior Notes due 2006 and $100
million principal amount of 7 1/8% Senior Notes due 2026. These
offerings were part of a total shelf registration of $500 million.
Proceeds from the offerings were used to reduce borrowings under the
Multi-Year Facility.
IBP's loan agreements contain certain restrictive covenants which,
among other things, (1) require the maintenance of a minimum debt
service coverage ratio; (2) provide for a maximum funded debt ratio;
and (3) place certain restrictions on the declaration and payment of
dividends and similar distributions.
Aggregate maturities of long-term obligations for each of the five
fiscal years subsequent to 1995 are $615,000; $646,000; $622,000;
$414,000 and $775,000.
Substantially all of the leased assets under capital leases can
be purchased by IBP for nominal consideration at the end of the lease
terms. Leased assets, which are included with owned property in the
consolidated balance sheets, totaled $6.5 million at December 30, 1995,
and $6.7 million at December 31, 1994, net of accumulated depreciation.
The company leases various facilities and equipment under
noncancelable operating lease arrangements. Future minimum payments
under noncancelable operating leases with lease terms in excess of one
year at December 30, 1995 totaled $45,492,000.
G. CAPITAL STOCK AND STOCK PLANS:
The Board of Directors is authorized to issue up to 25,000,000
shares of preferred stock at such time or times, in such series, with
such designations, preferences or other special rights as it may
determine.
On December 18, 1995, the company's Board of Directors authorized
a two-for-one stock split effected in the form of a 100% stock dividend
to be distributed on January 19, 1996 to shareholders of record on
December 28, 1995. All share and per share data included in this
annual report have been restated to reflect the stock split.
-11-
IBP, inc. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
G. CAPITAL STOCK AND STOCK PLANS: (cont.):
IBP has stock option plans under which incentive and non-qualified
stock options may be granted to key employees and directors of IBP and
its subsidiaries. As of December 30, 1995, the plans provide for the
delivery of up to 5,450,000 shares of common stock upon exercise of
options granted at no less than the fair market value of the shares on
the date of grant. The options may be granted for terms up to but not
exceeding ten years from the date granted. At December 30, 1995 and
December 31, 1994, there were 867,000 and 2,463,000 options,
respectively, reserved for future grants.
Stock options under the plan are summarized as follows:
1995 1994 1993
Shares under option,
at beginning of year 3,854,076 3,557,672 3,022,326
Granted 1,526,097 1,049,900 1,284,394
Exercised (466,626) (468,936) (551,730)
Forfeited (329,952) (284,560) (197,318)
--------- --------- ---------
Shares under option,
at end of year 4,583,595 3,854,076 3,557,672
========= ========= =========
Price range of options $6 1/8- $6- $5 7/16-
exercised 16 3/8 12 15/16 12 1/8
Options exercisable,
at end of year 1,489,924 1,256,358 1,212,880
Price range per share, $6 1/16- $6 1/16- $6-
outstanding options 33 5/16 17 1/2 13
In October 1995, the Financial Accounting Standards Board issued
SFAS No. 123, "Accounting for Stock-Based Compensation". This new
standard allows a company to continue its current method of accounting
for stock-based compensation plans under APB Opinion No. 25 or adopt
the fair value-based method under SFAS No. 123. IBP plans to continue
accounting for its stock-based compensation plans under APB Opinion No.
25.
IBP also has an officer long-term stock plan which provides for
awards to key employees of IBP which, subject to certain restrictions,
will vest generally after five years resulting in the delivery of
shares of common stock. Initial awards effective in 1992 were granted
in 1993, totaling approximately 1,110,000 shares at $8.06 per share.
Additional awards totaling approximately 275,000 shares have been
granted through 1995 at an average cost of $19.75 per share. The plan
allows for a maximum of 1,400,000 shares of common stock to be
delivered; at December 30, 1995, there were approximately 58,000 shares
available for future awards.
-12-
IBP, inc. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
G. CAPITAL STOCK AND STOCK PLANS: (cont.):
Shares of common stock to be delivered for approximately 960,000
options under the stock option plans must come from previously issued
shares. All other shares of stock to be delivered pursuant to the
stock option plans and the officer long-term stock plan may
alternatively come from previously authorized but unissued common
stock.
H. SUPPLEMENTAL CASH FLOW INFORMATION:
Supplemental information on cash payments is presented as follows:
1995 1994 1993
(In thousands)
Interest, net of amounts
capitalized $ 34,040 $39,527 $44,229
Income taxes 192,028 68,491 39,797
I. FINANCIAL INSTRUMENTS:
1. Interest and Currency Rate Derivatives:
On a limited basis, the company utilizes a variety of derivative
financial instruments to manage its interest rate and foreign currency
exposures. There were no material realized or unrealized gains or
losses for any derivative financial instruments in any of the fiscal
years presented.
The company enters into foreign currency forward exchange
contracts to hedge its sales denominated in foreign currencies. At
December 30, 1995, the company's Canadian subsidiary had outstanding
forward contracts to sell US$5.5 million through January 1996.
The company's Canadian subsidiary also enters into currency
futures contracts to hedge its exposure on live cattle purchase
commitments in foreign currencies. At December 30, 1995, the company
had outstanding contracts to buy CDN$14.9 million through June 1996.
The company monitors the risk of default by the financial
instrument counterparties, all of which are major financial
institutions, and does not anticipate nonperformance.
2. Fair Value of Financial Instruments:
The following methods and assumptions are used in estimating the
fair value of each class of the company's financial instruments at
December 30, 1995:
For cash and cash equivalents, marketable securities, accounts
receivable and accounts payable, the carrying amount is a reasonable
estimate of fair value because of the short-term nature of these
instruments.
-13-
IBP, inc. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
I. FINANCIAL INSTRUMENTS: (cont.):
For securities included in other assets, fair value is based
upon quoted market prices for these or similar securities. The
carrying amount approximates fair value for these securities.
Of the total $261 million of long-term obligations at December
30, 1995, $250 million consists of short-term obligations expected
to be refinanced. As a result, the carrying amount of IBP's long-
term obligations approximates fair value.
J. COMMITMENTS AND CONTINGENCIES:
IBP is involved in numerous disputes incident to the ordinary
course of its business. In the opinion of management, any
liability for which provision has not been made relative to the
various lawsuits, claims and administrative proceedings pending
against IBP, including those described below, will not have a
material adverse effect on its consolidated results of operations,
financial position or liquidity.
A complaint filed against IBP in April 1988 by the Department
of Labor, Wage and Hour Division, in the United States District
Court in Kansas seeks injunctive relief and back wages, plus
interest, for certain hourly employees of the company. The case
relates to compensation allegedly due for incidental activities of
hourly employees before and after regular working hours. In the
liability phase of the case, the District Court ruled that certain
incidental activities may be compensable time. The Tenth Circuit
Court of Appeals affirmed the District Court's ruling. A trial on
the issue of the extent of damages was held on July 10, 1995. No
decision has been entered to date.
A $15,004,000 jury verdict was returned against IBP in
November 1994 in an Iowa State District Court. The plaintiff, a
former IBP employee, sued the company and another former employee
in February 1993 for slander and breach of fiduciary duty regarding
his treatment as a workers' compensation claimant. The jury
determined that the plaintiff sustained $4,000 in actual damages,
and further returned a punitive damage award against IBP and the
other defendant in the amount of $15,000,000, all of which was
provided for by the company in 1994. On March 2, 1995, the Iowa
State District Court entered an order reducing the punitive damages
to $100,000. Both IBP and the plaintiff have appealed the Court's
March 2, 1995 post-trial order.
-14-
IBP, INC. AND SUBSIDIARIES
NOTES OF CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
K. QUARTERLY FINANCIAL DATA (UNAUDITED):
All quarters presented were thirteen-week periods except for the fourth
quarter 1994, which was a fourteen-week period. Quarterly results are
summarized as follows: (In thousands except per share data)
First Second Third Fourth
1995 Quarter Quarter Quarter Quarter Annual
Net sales $3,006,909 $3,209,345 $3,290,986 $3,160,322 $12,667,562
Gross profit 117,692 182,086 178,044 126,246 604,068
Earnings before
extraordinary
item 51,815 85,844 85,412 57,041 280,112
Net earnings 51,815 85,844 85,412 34,852 257,923
Earnings per share:
Earnings before
extraordinary item .54 .89 .88 .59 2.90
Net earnings .54 .89 .88 .36 2.67
Dividends per share .025 .025 .025 .025 .10
Market price:
High 16 5/8 21 3/4 26 11/16 33 5/16
Low 14 9/16 15 15/16 21 5/8 22 1/16
1994
Net sales $2,819,353 $3,040,077 $2,982,479 $3,233,518 $12,075,427
Gross profit 65,902 94,577 116,487 183,143 460,109
Net earnings 20,850 34,466 49,155 77,818 182,289
Earnings per share .22 .36 .51 .81 1.90
Dividends per share .025 .025 .025 .025 .10
Market price:
High 13 3/16 13 11/16 16 9/16 17 9/16
Low 11 5/8 11 5/8 12 7/8 15 1/8
REPORT of INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of IBP, inc.
We have audited the accompanying consolidated balance sheet of IBP, inc. and
subsidiaries as of December 30, 1995, and the related consolidated statements
of earnings, changes in stockholders' equity, and cash flows for the year
then ended. These financial statements are the responsibility of the
company's management. Our responsibility is to express an opinion on these
financial statements based on our audit. The financial statements of IBP,
inc. and subsidiaries for the years ended December 31, 1994, and December
25, 1993, were audited by other auditors, whose report, dated February 3,
1995, included an explanatory paragraph that described the change in the
company's method of accounting for income taxes in 1993 as discussed in Note
E to the consolidated financial statements.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of IBP, inc.
and subsidiaries as of December 30, 1995, and the consolidated results
of their operations and their cash flows for the year then ended, in
conformity with general accepted accounting principles.
COOPERS & LYBRAND LLP
Omaha, Nebraska
January 22, 1996
MANAGEMENT'S REPORT ON FINANCIAL INFORMATION
The management of IBP, inc. is responsible for the integrity of the
financial data reported by IBP and its subsidiaries. Fulfilling this
responsibility requires the preparation and presentation of consolidated
financial statements in accordance with generally accepted accounting
principles. Management uses internal accounting controls, corporate-wide
policies and procedures, estimates and judgements in order that such
statements reflect fairly the consolidated financial position, results of
operations and cash flows of IBP.
MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
IBP achieved record net sales and earnings in 1995 for the
fourth straight year. The company's beef operations led the way
with a strong performance and all divisions, including newly-
acquired operations, made positive contributions. Net earnings
improved to $257.9 million or $2.67 per share in 1995, after an
extraordinary charge of $.23 for extinguishment of debt, compared
to $182.3 million or $1.90 per share in 1994.
Gross profit increased to 4.8% in 1995 as a percentage of net
sales compared to 3.8% in 1994. Fresh beef operations accounted
for a significant part of this improvement as a result of strong
demand and improved production efficiencies. Pork operations were
negatively impacted by the opening of a new plant in Logansport,
Indiana, and fewer available market-ready hogs in 1995 compared to
1994.
According to the United States Department of Agriculture
(USDA), cattle supplies in 1995 were at their highest level since
1986. The USDA and industry analysts forecast cattle supplies to
remain at expanded levels throughout 1996 and into 1997. This
factor should allow IBP's beef operations to continue to operate at
or near optimal production levels, which creates efficiencies and
results in lower per-unit costs. Fresh beef accounted for
approximately 80% of IBP's sales in 1995.
Meanwhile, available market hog production in the upper
Midwest states, where all of IBP's pork production facilities
currently are located, was estimated to be down 3-4% in 1995 from
1994. Industry analysts expect pork production to increase in 1996
over 1995 levels.
Net earnings were reduced by recurring pushdown accounting
adjustments resulting from IBP's acquisition by Occidental in 1981.
These adjustments consist primarily of goodwill amortization and
depreciation of the higher values assigned to property, plant and
equipment and totaled $12.5 million or $.13 per share in 1995, $9.8
million or $.10 per share in 1994 and $10.3 million or $.11 per
share in 1993. These adjustments had no impact on cash flow.
IBP's selling prices and the prices it pays for live cattle
and hogs are determined by constantly changing market forces of
supply and demand, over which IBP has little or no control.
Therefore, past results will not necessarily be indicative of
future performance.
COMPARISON OF 1995 TO 1994
SALES
The 4.9% increase in net sales from 1994 was attributable
primarily to the additions of its Canadian subsidiary, Lakeside
Farm Industries, Ltd. (Lakeside), purchased in October 1994, and
three beef cow boning plants acquired in 1995. Net sales from
fresh beef and pork operations, excluding Lakeside and the beef
boning plants, were down slightly from the previous year due mainly
to a reduction in pounds of pork products sold.
Net export sales in 1995 totaled $1.8 billion or 14.4% of
total net sales as compared to $1.5 billion and a 12.8% share of
total net sales in 1994. An overall increase in pounds of products
sold, especially of higher-value red meat products to Asian
markets, was the chief factor in the export sales increase.
Exports to the Far East, IBP's most significant export market, have
risen in part due to increased demand, lowered import restrictions,
favorable currency exchange rates and the development of additional
markets.
Meat industry experts believe that U.S. red meat production
increases and the favorable impact of international trade
agreements will have a positive effect on overall industry export
sales in the next few years. Management believes that these
factors plus strengthened foreign income levels will contribute to
continued export sales growth for IBP.
COST OF PRODUCTS SOLD
The Lakeside and beef boning plants acquisitions were the
chief reason for the 3.9% increase in cost of products sold in 1995
compared to 1994. The company's fresh meats division, exclusive of
new operations, experienced a higher average cost of livestock in
1995 which was offset somewhat by a decrease in pounds of products
sold from 1994. Management adjusted the estimated salvage value
for most fixed assets in the second quarter 1995 to better reflect
actual experience, which increased plant costs by approximately $18
million.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE
The principal components of the 9.9% increase in 1995 selling,
general and administrative expense versus 1994 were higher accruals
for earnings-based incentive compensation, incremental selling and
administrative expense associated with new operations and increased
export-related selling expense.
INTEREST EXPENSE
IBP's 1995 net interest expense decreased 45.9% from 1994 due
to several factors. Average outstanding borrowings were 21.0% less
in 1995 than in 1994 due to strong operating cash flows and debt
reductions in the second half of 1994. In addition, an increase in
capital spending caused 1995 capitalized interest to increase $5.1
million (128.4%) over 1994. Finally, a surplus of cash over and
above IBP's working capital needs, especially in the second half of
1995, brought about a $6.0 million (221.0%) increase in interest
income.
Management expects that the favorable impact of lower-rate
long-term debt outstanding as well as reduced average borrowings
will result in lower net interest expense in 1996 compared to 1995.
INCOME TAXES
The higher 1995 income tax provision over 1994 was due
primarily to the increase in pre-tax earnings.
COMPARISON OF 1994 TO 1993
SALES
Net sales in the 53-week fiscal 1994 increased 3.5% from 1993
(52 weeks) as a 12.3% increase in pounds of products sold overrode
an 8.3% decrease in the average price of products sold. The
increase in pounds of products sold in 1994 was due in part to
increased levels of beef and pork production at IBP's existing
facilities, increased sales volume at IBP's new subsidiaries and
the additional week in fiscal 1994.
Net export sales in 1994 increased 11.4% over such sales in
1993 due primarily to a 14.1% increase in pounds of export products
sold. Net export sales accounted for 12.8% of total 1994 net sales
compared to 11.9% in 1993. The export sales growth was
attributable to higher-volume exports of boxed beef, boxed pork and
hides, particularly to Asian and North American destinations.
COST OF PRODUCTS SOLD
The cost of products sold in 1994 increased 1.8% from costs
incurred in 1993. A reduction in the overall average cost of
livestock purchased more than offset the effect of an increase in
pounds of products sold. However, increases in volume-related
plant production and livestock procurement costs, incremental
expense incurred at new subsidiaries and incentive compensation at
IBP's production facilities were the primary causes of the overall
increase in costs.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE
Selling, general and administrative expense increased 33.9% in
1994 versus 1993. The principal reasons for the higher 1994
expense were increased earnings-based incentive compensation,
outside legal costs, bad debt expense and incremental expense
attributable to the company's new subsidiaries.
INTEREST EXPENSE
Increased amounts of capitalized interest and interest income
from investments of available cash helped to decrease 1994 net
interest expense 11.0% from the prior year. Outstanding borrowings
averaged $98 million less in 1994 compared to 1993 due to sustained
earnings strength and other positive operating cash flows.
However, IBP's effective interest rate increased due to a higher
proportion of long-term, higher-rate borrowings.
INCOME TAXES
The higher 1994 income tax provision versus 1993 resulted
almost solely from the increase in pre-tax earnings.
LIQUIDITY AND CAPITAL RESOURCES
The meat processing industry is characterized by high working
capital requirements. This is due largely to statutory provisions
that generally provide for immediate payment for livestock, while
it takes IBP on average about one week to turn its product
inventories and two weeks to convert its trade receivables to cash.
These factors, combined with fluctuations in production levels,
selling prices and prices paid for livestock, can impact cash
requirements substantially on a day-to-day basis. To provide cash
for its working capital requirements, the company's credit facility
(more fully described in Note C to the consolidated financial
statements) provides IBP with same-day access to an aggregate of
$500 million in potential borrowings. The unused portion of the
credit line was $250 million at December 30, 1995. However,
following the issuance of $200 million of long-term debt in January
1996 (more fully described in Note F to the consolidated financial
statements), the unused portion totaled $450 million.
Although IBP has significant working capital requirements, its
accounts receivable and inventories are highly liquid,
characterized by rapid turnover. The following are key indicators
relating to IBP's working capital and asset-based liquidity:
December 30, December 31,
1995 1994
Working capital (in thousands) $427,241 $359,238
Current ratio 1.7:1 1.6:1
Quick ratio 1.1:1 1.1:1
Number of days' sales in accounts
receivable 14.3 13.8
Inventory turnover 42.0 51.2
IBP's working capital increased as a result of strong positive
cash flows, mainly from sustained earnings strength. Inventory
turnover has declined in 1995 from 1994 due to several factors.
The company's Canadian subsidiary maintains a 40,000-head cattle
feedlot, the output of which is utilized by its beef production
facility, resulting in higher overall inventory balances with no
corresponding increase in cost of products sold. In addition, IBP's
growing consumer products and beef boning operations have lower turnover
rates than its core fresh beef and pork operations.
Capital expenditures in 1995 and 1994 totaled $160.6 million
and $83.9 million, respectively. The increased 1995 spending was
due in part to continued expansion and renovation of the
Logansport, Indiana, pork plant, purchases of three beef boning
plants and various other expansion projects in progress.
Management anticipates that 1996 capital spending will be in the
range of $175 million, which will be funded from operating cash
flows and available debt facilities.
STOCKHOLDERS AND MARKET DATA
IBP's common shares were held by approximately 6,850
stockholders of record at year-end 1995. The common stock is
traded on the New York and Pacific Stock Exchanges.
EXHIBIT 21
SUBSIDIARIES OF IBP, inc.
December 30, 1995
IBP Foreign Sales Corporation
IBP Hog Markets, Inc.*
IBP International, Inc.
IBP International, Inc. Asia**
IBP International, Inc. Europe**
IBP of Wisconsin, inc.
IBP Service Center Corp.
IBP Subsidiary, Inc.
Lakeside Farm Industries, Ltd.
Lakeside Packers, Ltd. ***
PBX, inc.
Prepared Foods, Inc.
Rural Energy Systems, Inc.
Southern Beef Processors, Inc.
Supreme Processed Foods, Inc.
Texas Transfer, Inc.
_______________________
* Also doing business as Heinold Hog Market
** Stock is 100% owned by IBP International, Inc.
*** Stock is 100% owned by Lakeside Farm Industries, Ltd.
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the
registration statements of IBP, inc. on Form S-3 (File No.
33-64459) and on Form S-8 (File No. 33-19441) of our report
dated January 22, 1996, on our audit of the consolidated
financial statements and financial statement schedule of IBP,
inc. as of December 30, 1995 and for the year then ended, which
report is included in this Annual Report on Form 10-K.
COOPERS & LYBRAND L.L.P.
Omaha, Nebraska
March 28, 1996
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Registration Statement on Form S-8 (Nos. 33-19441 and 1-6085)
relating to the IBP 1987 and 1993 Stock Option Plans of our
report dated February 3, 1995 appearing on page 23 of the 1994
Annual Report to Stockholders which is incorporated in this
annual report on Form 10-K. We also consent to the
incorporation by reference of our report on the financial
statements, which appears on page 12 of this Form 10-K.
PRICE WATERHOUSE LLP
Chicago, Illinois
March 27, 1996
EXHIBIT 16
August 3, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Ladies and Gentlemen:
IBP, inc.
We have read Item 4 of IBP, inc.'s Form 8-K dated August 3, 1995
and are in agreement with the statements contained in paragraph
4(a) therein.
Yours very truly,
Price Waterhouse LLP
