<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------------
FORM 8-K
---------------------------------
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 9, 1998
---------------------------------
FRESH FOODS, INC.
(Exact name of registrant as specified in its charter)
NORTH CAROLINA 0-7277 56-0945643
(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification
incorporation) Number)
1 WSMP Drive
CLAREMONT, NORTH CAROLINA 28610
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (704)459-7626
Item 2. Acquisition or Disposition of Assets.
On June 9, 1998, Fresh Foods, Inc. ("Fresh Foods") consummated its
previously reported purchase through a wholly-owned subsidiary (the
"Acquisition") of substantially all of the business in Cincinnati, Ohio, and a
portion of the business in Caryville, Tennessee (collectively, "Pierre"),
conducted by the Pierre Foods Division of Hudson Foods, Inc. ("Hudson"), a
subsidiary of Tyson Foods, Inc. ("Tyson"). As used herein, the term "Company"
refers to Fresh Foods upon consummation of the Acquisition.
Pierre is a value-added food processor focused on the foodservice and
home meal replacement markets. The consideration paid by Fresh Foods for Pierre
was a cash purchase price of $122.0 million and the assumption of certain of
Hudson's liabilities, consisting principally of trade payables and other similar
liabilities (estimated at $8.1 million in the aggregate as of February 28,
1998). The cash purchase price is subject to a post-closing adjustment with
respect to the net book value of the assets.
<PAGE> 2
The $122.0 million cash purchase price of Pierre was financed by the
proceeds of an institutional private placement of $115.0 million aggregate
principal amount of the Company's 10 3/4% Senior Notes Due 2006 (the "Notes")
and an initial borrowing under a new five-year, $75.0 million revolving bank
credit facility, with availability subject to a borrowing base formula (the
"Bank Facility").
The Notes are senior unsecured obligations of the Company,
unconditionally guaranteed on a senior unsecured basis by all existing
subsidiaries of the Company (collectively, the "Guarantors"). Interest on the
Notes is payable on June 1 and December 1 of each year, commencing December 1,
1998. The Notes will mature on June 1, 2006, unless previously redeemed, and are
not subject to any sinking fund requirement. At the option of the Company, the
Notes are redeemable at any time on or after June 1, 2002 at a redemption price
commencing at 105.375% of principal amount, declining to 102.688% of principal
amount at June 1, 2003 and declining further to par at June 1, 2004. Prior to
June 1, 2001, the Company, at its option, may redeem in the aggregate up to
35.0% of the original principal amount of the Notes, at 110.75% of the aggregate
principal amount so redeemed, with the net cash proceeds of one or more
qualified public equity offerings.
The Bank Facility is an arrangement with a syndicate of financial
institutions for whom First Union Commercial Corporation is acting as
Administrative Agent. It provides for a revolving line of credit under which the
Company may borrow up to an amount (including standby letters of credit up to
$2.5 million) equal to the lesser of $75.0 million or a borrowing base
(comprised of eligible accounts receivable, inventory, machinery and equipment
and real property). Borrowings under the Bank Facility bear interest at an
annual rate, at the Company's option, equal to the "Basic Rate" (as defined
therein) or the "Eurodollar Rate" (as defined therein), plus a margin that
varies based upon a leverage ratio set forth therein. Such margin ranges from
0.125% to 1.125%, in the case of a Base Rate loan, and from 1.125% to 2.625%, in
the case of a Eurodollar Rate loan. The Company's obligations under the Bank
Facility are secured by a first priority security interest in substantially all
of the personal property of the Company and its subsidiaries, including a pledge
of the stock of each subsidiary, together with all real property included in the
borrowing base.
The Acquisition, the establishment of the Bank Facility and the offer,
issuance and sale of the Notes (the "Initial Notes Offering") are sometimes
referred to herein collectively as the "Transactions."
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired. Following herewith are
the audited statements of Pierre as of September 27, 1997 and September 26, 1996
and for each of the three years in the period ended September 27, 1997:
<PAGE> 3
INDEPENDENT AUDITORS' REPORT
To the Management of
Pierre Foods Division of Hudson Foods, Inc.:
We have audited the accompanying statements of certain assets and
liabilities of Pierre Foods Division of Hudson Foods, Inc. ("Pierre") as of
September 27, 1997 and September 28, 1996, and the related statements of
revenues and expenses for each of the periods ended September 27, 1997,
September 28, 1996 and September 30, 1995 (collectively, the "statements").
These statements are the responsibility of Pierre's management. Our
responsibility is to express an opinion on the statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the 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 presentation of the statements. We
believe that our audits provide a reasonable basis for our opinion.
The assets, liabilities and operations covered by the statements referred
to above are a part of Hudson Foods, Inc. and have no separate legal status or
existence. As described in Note 1, these statements have been prepared from
Pierre's financial statement records and allocations of certain costs and
expenses have been made. These allocations are not necessarily indicative of the
costs and expenses that would have been incurred by Pierre on a stand-alone
basis.
In our opinion, the statements referred to above present fairly, in all
material respects, the certain assets and liabilities of Pierre as of September
27, 1997 and September 28, 1996, and its revenues and expenses for each of the
periods ended September 27, 1997, September 28, 1996 and September 30, 1995 in
conformity with generally accepted accounting principles.
As discussed in Note 2, the accompanying statements do not include
provisions for income tax expense or benefit or related payables, receivables or
deferrals.
DELOITTE & TOUCHE LLP
Cincinnati, Ohio
May 1, 1998
<PAGE> 4
PIERRE FOODS (A BUSINESS OF HUDSON FOODS)
STATEMENTS OF CERTAIN ASSETS AND LIABILITIES
AS OF SEPTEMBER 28, 1996 AND SEPTEMBER 27, 1997 AND UNAUDITED AS OF FEBRUARY 28,
1998
<TABLE>
<CAPTION>
SEPTEMBER 28, SEPTEMBER 27, FEBRUARY 28,
1996 1997 1998
------------- ------------- ------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash................................................ $ 1,162,496 $ 1,237,000 $ 1,219,476
Accounts receivable, net of allowance for doubtful
accounts: $319,500 in 1996, $469,175 in 1997 and
$382,302 in 1998................................. 11,499,176 13,796,597 10,487,799
Inventories (Notes 2, 3)............................ 20,488,073 18,152,960 21,913,890
Prepaid expenses and other current assets........... 39,765 31,520 16,199
----------- ----------- -----------
Total current assets........................ 33,189,510 33,218,077 33,637,364
PROPERTY, PLANT AND EQUIPMENT, net (Notes 2, 4)....... 26,498,589 24,686,709 24,776,234
----------- ----------- -----------
TOTAL ASSETS.......................................... 59,688,099 57,904,786 58,413,598
----------- ----------- -----------
LIABILITIES AND NET ASSETS
CURRENT LIABILITIES:
Trade accounts payable.............................. 5,543,658 6,619,211 4,221,822
Accrued payroll, bonuses and other compensation..... 1,527,477 1,610,195 946,378
Accrued marketing and advertising................... 784,137 1,282,075 1,763,614
Accrued workers compensation........................ 542,000 765,000 815,000
Other accrued liabilities........................... 110,778 86,972 314,479
----------- ----------- -----------
Total current liabilities................... 8,508,050 10,363,453 8,061,293
----------- ----------- -----------
COMMITMENTS AND CONTINGENCIES (Note 5)
NET ASSETS............................................ $51,180,049 $47,541,333 $50,352,305
=========== =========== ===========
</TABLE>
See notes to statements of certain assets and liabilities and of revenues and
expenses.
<PAGE> 5
PIERRE FOODS (A BUSINESS OF HUDSON FOODS)
STATEMENTS OF REVENUES AND EXPENSES
FOR THE YEARS ENDED SEPTEMBER 30, 1995, SEPTEMBER 28, 1996 AND SEPTEMBER 27,
1997
AND UNAUDITED FOR THE FIVE MONTHS ENDED MARCH 1, 1997 AND FEBRUARY 28, 1998
<TABLE>
<CAPTION>
FIVE MONTHS ENDED
--------------------------
SEPTEMBER 30, SEPTEMBER 28, SEPTEMBER 27, MARCH 1, FEBRUARY 28,
1995 1996 1997 1997 1998
------------- ------------- ------------- ----------- ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUES..................... $148,572,219 $136,632,797 $149,349,685 $64,589,645 $64,686,488
COST OF GOODS SOLD........... 85,384,322 86,672,845 96,474,057 42,479,935 40,160,878
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES.... 36,832,427 34,472,587 40,282,206 17,269,506 17,333,527
DEPRECIATION................. 4,407,170 4,467,491 4,319,906 1,832,326 1,851,747
------------ ------------ ------------ ----------- -----------
EXCESS OF REVENUES OVER
EXPENSES BEFORE CORPORATE
CHARGE..................... 21,948,300 11,019,874 8,273,516 3,007,878 5,340,336
CORPORATE CHARGE (Note 7).... 5,152,721 4,747,727 4,699,222 2,049,262 2,113,351
------------ ------------ ------------ ----------- -----------
EXCESS OF REVENUES OVER
EXPENSES BEFORE INCOME
TAXES...................... $ 16,795,579 $ 6,272,147 $ 3,574,294 $ 958,616 $ 3,226,985
============ ============ ============ =========== ===========
PRO FORMA PROVISION FOR
INCOME TAXES (Note 2)...... $ 1,475,000 $ 1,304,000
============ ===========
PRO FORMA NET EXCESS OF
REVENUES OVER EXPENSES
(Note 2)................... $ 2,099,094 $ 1,922,985
============ ===========
</TABLE>
See notes to statements of certain assets and liabilities and of revenues and
expenses.
<PAGE> 6
PIERRE FOODS (A BUSINESS OF HUDSON FOODS)
NOTES TO STATEMENTS OF CERTAIN ASSETS AND
LIABILITIES AND STATEMENTS OF REVENUES AND EXPENSES
1. BASIS OF PRESENTATION
On April 10, 1998, Hudson Foods, Inc. ("Hudson") (a wholly-owned subsidiary
of Tyson Foods, Inc. ("Tyson")) announced its plans to sell certain assets and
the related business of the Pierre Foods Division of Hudson to Fresh Foods, Inc.
("Fresh Foods"). Such assets and related business are referred to herein as
"Pierre" or the "Pierre Business." Pierre is an unincorporated business of
Hudson, which merged with Tyson in January 1998. The historical basis in assets
and liabilities of Pierre have been carried over. Pierre primarily processes and
markets beef, pork and poultry products which are sold domestically in five
primary markets: schools, foodservice, vending, club stores and convenience
stores. Pierre's products are also sold internationally to wholesalers primarily
in Canada. The accompanying statements present the assets and liabilities of the
Pierre Business that Hudson intends to sell on or before June 19, 1998 to Fresh
Foods and related revenues and expenses for the periods presented.
Hudson does not account for the Pierre Business as a separate entity. The
statements have been prepared from Pierre's financial statement records and
allocations of certain costs and expenses have been made. These allocations are
not necessarily indicative of the costs and expenses that would have been
incurred by Pierre on a stand-alone basis.
The statements of certain assets and liabilities and statements of revenues
and expenses are presented in the accompanying statements in accordance with
generally accepted accounting principles. The unaudited statements of certain
assets and liabilities as of February 28, 1998 and statements of revenues and
expenses for the five-month periods ended March 1, 1997 and February 28, 1998
have been prepared on substantially the same basis as the audited financial
statements, and contain all adjustments, consisting only of normal recurring
adjustments, necessary for a consistent presentation of the financial
information for such periods. Revenues and expenses for interim periods are not
necessarily indicative of results to be expected for an entire year.
2. SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition. Revenue from the sale of products is recognized at
the time the products are shipped.
Use of Estimates. The preparation of the statements of certain assets and
liabilities and statements of operations 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 date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Although these estimates are based on management's best knowledge of current
events and actions Pierre may undertake in the future, actual results could
differ from those estimates.
Concentrations of Credit Risk. Financial instruments which subject Pierre
to concentrations of credit risk consist primarily of trade receivables from
large domestic companies. Pierre generally does not require collateral from its
customers. Such credit risk is considered by management to be limited due to
Pierre's broad customer base.
Inventories. Inventories are stated at the lower of cost (first-in,
first-out method) or market, net of applicable allowances. Inventory cost
includes the cost of raw materials and all applicable costs of processing.
Property, Plant and Equipment. Property, plant and equipment are stated at
cost. When assets are sold or retired, the costs of the assets and the related
accumulated depreciation are removed from the accounts and the resulting gains
or losses are recognized as other income. Depreciation is computed using the
straight-line method over the estimated useful lives of the assets.
<PAGE> 7
PIERRE FOODS (A BUSINESS OF HUDSON FOODS)
NOTES TO STATEMENTS OF CERTAIN ASSETS AND
LIABILITIES AND STATEMENTS OF REVENUES AND EXPENSES -- (CONTINUED)
In 1997, Pierre adopted Statement of Financial Accounting Standards
("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets and
Long-Lived Assets to be Disposed of." Under the pronouncement, the carrying
value of property, plant and equipment is reviewed for possible impairment
whenever events or changes in circumstances indicate that the carrying value may
not be recoverable. Assets determined to be impaired based on estimated future
net cash flows are reduced to estimated fair value.
New Accounting Standard. In June 1997, the Financial Accounting Standards
Board issued SFAS No. 130, "Reporting Comprehensive Income." This standard
establishes standards of reporting and display of comprehensive income and its
components in a full set of general-purpose financial statements. This statement
will be effective for Pierre's fiscal year ending October 2, 1999, and Pierre
does not intend to adopt this statement prior to the effective date. Had Pierre
early adopted this statement, comprehensive income for the years ended September
27, 1997, September 28, 1996 and September 30, 1995, respectively, would not
have differed materially from reported net earnings.
Income Taxes. The operations of Pierre are included in the consolidated
United States federal, state, local and non-United States income tax returns of
Hudson. Hudson did not allocate specific tax liabilities to Pierre. The
accompanying statements do not include provisions for such income taxes or
related payables, receivables or deferrals.
The pro forma provision for income taxes and the pro forma net excess of
revenues over expenses for the year ended September 27, 1997 and the five months
ended February 28, 1998 reflect amounts that would have been recorded had
Pierre's income been taxed for federal and state purposes as if it were a stand
alone corporation.
Fiscal Year. Pierre utilizes a 52-53 week accounting period, which ends on
the Saturday closest to September 30.
Marketing, Advertising and Promotional Allowances. Pierre expenses such
costs in the period incurred. Expenses amounted to approximately $7,400,000,
$6,100,000 and $7,430,000 for fiscal years 1997, 1996 and 1995, respectively.
3. INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
SEPTEMBER 28, SEPTEMBER 27, FEBRUARY 28,
1996 1997 1998
------------- ------------- ------------
(UNAUDITED)
<S> <C> <C> <C>
Raw materials and work in process............... $ 2,601,539 $ 2,896,084 $ 2,464,681
Packaging and other............................. 1,507,660 1,419,253 1,428,740
Finished products............................... 16,378,874 13,837,623 18,020,469
----------- ----------- -----------
Total........................................... $20,488,073 $18,152,960 $21,913,890
=========== =========== ===========
</TABLE>
<PAGE> 8
PIERRE FOODS (A BUSINESS OF HUDSON FOODS)
NOTES TO STATEMENTS OF CERTAIN ASSETS AND
LIABILITIES AND STATEMENTS OF REVENUES AND EXPENSES -- (CONTINUED)
4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is comprised of the following:
<TABLE>
<CAPTION>
SEPTEMBER 28, SEPTEMBER 27, FEBRUARY 28,
1996 1997 1998
------------- ------------- ------------
(UNAUDITED)
<S> <C> <C> <C>
Land............................................ $ 1,274,789 $ 1,274,789 $ 1,274,789
Buildings and improvements...................... 17,484,369 17,619,327 17,719,174
Machinery and equipment......................... 28,185,256 29,656,305 31,664,808
Construction in progress........................ 158,577 1,193,924 1,028,978
----------- ----------- -----------
Total........................................... 47,102,991 49,744,345 51,687,749
Less accumulated depreciation................... 20,604,402 25,057,636 26,911,515
----------- ----------- -----------
Property, plant and equipment, net.............. $26,498,589 $24,686,709 $24,776,234
=========== =========== ===========
</TABLE>
5. COMMITMENTS AND CONTINGENCIES
Pierre leases transportation and delivery equipment, processing equipment
and distribution facilities under operating leases. Management expects that in
the normal course of business, the leases will be renewed or replaced by other
leases or property acquisitions.
Total rental expense was approximately $1,066,000 in 1997; $986,000 in
1996; and $866,000 in 1995.
At September 27, 1997, future minimum rental payments required under leases
that have initial or remaining noncancellable terms in excess of one year are
approximately $305,000 in 1998. Effective with the purchase of Hudson by Tyson
in January 1998, all items used for the manufacturing process which were under
operating leases were purchased by Tyson, thus removing any significant
operating lease liability from Pierre.
Pierre is involved in litigation incidental to its business. Such
litigation is not considered by management to be significant.
6. EMPLOYEE BENEFITS
Hudson's 1990 Employee Stock Purchase Plan (the "Purchase Plan") made
available to eligible employees a means of purchasing up to 1,500,000 shares of
Hudson's common stock at current market prices. Under the terms of the Purchase
Plan, Hudson contributed, annually, cash or Class A stock equal in value to 15%
of the undistributed total of participants' contributions for the past ten
years. All full-time employees of Hudson (except those owning 10% or more of
Hudson's Class A stock) were eligible to participate in the Purchase Plan. The
Purchase Plan was discontinued after the acquisition of Hudson by Tyson.
Hudson provides a 401(k) Plan which includes a matching of 50% of
contributions not exceeding 4% of each participant's salary. Pierre's
contribution was approximately $409,000, $372,000 and $323,000 in fiscal year
1997, 1996 and 1995, respectively.
Self-insurance costs for workers' compensation are accrued based upon the
aggregate of the liability for reported claims and an estimated liability for
claims incurred but not yet reported.
7. RELATED PARTY TRANSACTIONS
Pierre is part of Hudson's vertically integrated business of producing
chicken and turkey products, including the breeding, hatching, growing,
processing and packaging of those product lines. In addition, Hudson processes
beef and pork products. As part of the production process, Pierre received and
shipped
<PAGE> 9
PIERRE FOODS (A BUSINESS OF HUDSON FOODS)
NOTES TO STATEMENTS OF CERTAIN ASSETS AND
LIABILITIES AND STATEMENTS OF REVENUES AND EXPENSES -- (CONTINUED)
product among the various Hudson plants. In conjunction therewith, the Pierre
Business' costs include purchases from other Hudson plants; however, the amounts
are not determinable. Included in revenues in the accompanying statements of
revenues and expenses are revenues to other Hudson plants of approximately
$9,300,000, $10,100,000 and $9,200,000 in fiscal 1997, 1996 and 1995,
respectively.
Hudson directly charges research and development, leases, depreciation,
insurance, employee benefits and other miscellaneous services to Pierre. In the
statements of revenues and expenses, these direct costs are included in costs of
goods sold, selling, general and administrative and depreciation, as
appropriate. In the opinion of management, such direct expenses are reasonable
to cover the services provided to Pierre.
In addition, Hudson charges Pierre an amount which is based primarily on
9.5% times the book value of accounts receivable, inventory, property, plant and
equipment and other assets, less accounts payable, plus certain corporate sales.
This amount is reflected as "Corporate Charge" in the statement of revenues and
expenses.
All services provided to or received from other Hudson divisions are
transferred at cost, with no intercompany profit or loss being recognized
between the divisions. Pierre has historically carried an intercompany payable
for the net services, property and products received from various other Hudson
facilities. Net payables for these intercompany transactions, which are not
included in the statements of certain assets and liabilities, were as follows
for the period ended:
<TABLE>
<CAPTION>
INTERCOMPANY
PAYABLE
BALANCE
------------
<S> <C>
September 30, 1995.......................................... $23,580,188
September 28, 1996.......................................... $16,733,084
September 27, 1997.......................................... $10,963,072
February 28, 1998 (unaudited)............................... $ 7,670,512
March 1, 1997 (unaudited)................................... $14,606,335
</TABLE>
8. SUBSEQUENT EVENT
On April 10, 1998, Hudson entered into an Asset Purchase Agreement (the
"Agreement") with a wholly-owned subsidiary of Fresh Foods, Inc. ("Fresh Foods")
whereby Fresh Foods will purchase substantially all of the assets of Pierre for
$122,000,000. The Agreement provides for a closing date of this transaction on
or before June 19, 1998.
Pierre and Fresh Foods have an existing business relationship whereby
product is shipped from Pierre to Fresh Foods for further manufacturing process.
Such transactions are recorded by Pierre as a transfer of inventory and are not
reflected in gross sales. The product is then shipped back to Pierre for
ultimate sale to a third party. Related payments to Fresh Foods are reflected in
cost of goods sold. Total amounts paid to Fresh Foods which are included in cost
of goods sold were $17,510,338, $15,421,856 and $13,458,921 for fiscal 1997,
1996 and 1995, respectively. Net payables to Fresh Foods were $589,561, $148,096
and $82,418 for fiscal 1997, 1996 and 1995, respectively.
<PAGE> 10
(b) Pro Forma Financial Information. Following herewith is an Unaudited
Pro Forma Combined Statement of Operations of the Company for the twelve months
ended February 27, 1998 (giving effect to the Transactions as if they had
occurred on March 1, 1997) and an Unaudited Pro Forma Combined Balance Sheet of
the Company as of February 27, 1998 (giving effect to the Transactions as if
they had occurred on February 27, 1998):
The Acquisition will be accounted for using the purchase method of
accounting. The total cost of the Acquisition has been preliminarily allocated
to the acquired assets and assumed liabilities on the assumption that the
historical amounts of assets and liabilities recorded in the accompanying pro
forma financial information approximate their respective fair values. The actual
allocation of purchase cost, however, and the resulting effect on income may
differ from the pro forma amounts included herein.
The pro forma combined financial data is presented for illustrative
purposes only and is not necessarily indicative of what the Company's financial
position or results of operations would have been had the Transactions occurred
as of the above-referenced dates or of the financial position or results that
may be reported by the Company in the future. Not included in the accompanying
pro forma financial information are the effects of certain cost reductions and
operating efficiencies expected to result from the Acquisition.
<PAGE> 11
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
TWELVE MONTHS ENDED FEBRUARY 27, 1998
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA PRO FORMA
------------------- PRO FORMA ADJUSTMENTS FOR ADJUSTMENTS FOR
FRESH ADJUSTMENTS FOR THE SAGEBRUSH THE INITIAL
FOODS PIERRE THE ACQUISITION ACQUISITION NOTES OFFERING TOTAL
-------- -------- --------------- --------------- --------------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues.................. $158,412 $149,447 $(38,589)(1) $269,269
Cost of goods sold........ 93,018 94,155 (38,507)(1) 148,666
Restaurant operating
expenses................ 39,796 39,796
Selling, general and
administrative
expenses................ 15,593 40,346 66(2) $ (1,956)(3) 54,049
Depreciation and
amortization............ 5,004 4,339 2,913(4) 12,256
Corporate charge.......... 4,763 (4,763)(5)
-------- -------- -------- -------- -------- --------
Operating income.......... 5,001 5,843 1,702 1,956 14,502
Interest expense.......... 1,762 $ 14,942(6) 15,693
659(7)
(1,670)(8)
Other income (expense).... 739 739
-------- -------- -------- -------- -------- --------
Net earnings (loss) before
income taxes............ 3,978 5,843 1,702 1,956 (13,931) (452)
Provision (benefit) for
income taxes............ 1,728 664(9) 321(9) (5,433)(9) (442)
2,278(10)
-------- -------- -------- -------- -------- --------
Net earnings (loss)....... $ 2,250 $ 5,843 $ (1,240) $ 1,635 $ (8,498) $ (10)
======== ======== ======== ======== ======== ========
EARNINGS PER SHARE:(11)
Basic................... $ 0.40 $ 0.00
======== ========
Diluted................. $ 0.37 $ 0.00
======== ========
WEIGHTED AVERAGE
SHARES:(11)
Basic................... 5,654 5,654
======== ========
Diluted................. 6,117 6,117
======== ========
OTHER DATA:
Capital expenditures................................................................................. $ 13,833
Pro Forma EBITDA(12)................................................................................. 27,497
Adjusted Pro Forma EBITDA(13)........................................................................ 30,002
Cash interest expense................................................................................ 15,034
Ratio of total debt to Adjusted Pro Forma EBITDA(13)................................................. 4.98x
Ratio of Adjusted Pro Forma EBITDA to cash interest expense.......................................... 2.00x
</TABLE>
- ---------------
(1) Reflects the elimination of transactions between Fresh Foods and Pierre
during the twelve months ended February 27, 1998.
(2) Reflects increases in salaries to be paid to two executive officers of
Pierre following the Acquisition.
(3) Represents the nonrecurring transaction expenses incurred relative to Fresh
Foods' acquisition of Sagebrush, Inc. in January 1998.
(4) Reflects the amortization of estimated goodwill generated from the
Acquisition over 25 years. The amount of goodwill and the corresponding
amortization actually recorded may ultimately differ from these amounts,
depending upon the actual fair value of net assets acquired upon
consummation of the Acquisition.
(5) Reflects the elimination of corporate charge for the twelve months ended
February 27, 1998. Corporate charge represents a charge to Pierre by Hudson
based primarily on 9.5% times the book value of
<PAGE> 12
accounts receivable, inventory, property, plant and equipment and other
assets, less accounts payable, plus certain corporate sales. See Note 7 to
Pierre's financial statements.
(6) Reflects the increase in interest expense associated with the Transactions.
The effective interest rates used were 10.75% with respect to the Initial
Notes ($115.0 million) and 7.775% with respect to the Bank Facility ($33.2
million). The Bank Facility bears a variable interest rate; the effect on
net earnings (loss) before income taxes of a 1/8 percentage variance in the
interest rate would be $41,430.
(7) Reflects the amortization of debt issuance costs on the assumed borrowings
made pursuant to the Initial Notes and the Bank Facility.
(8) Reflects the elimination of interest expense on $19.7 million of Fresh
Foods debt repaid with proceeds from the Initial Notes Offering and
borrowings under the Bank Facility.
(9) Reflects the net change in the provision (benefit) for income taxes
resulting from the adjustments to earnings (loss) before income taxes.
(10) Represents a pro forma tax provision on Pierre's historical excess of
revenues over expenses before income taxes at an estimated effective rate
of 39%.
(11) See Note 2 to Fresh Foods' consolidated financial statements for an
explanation of the calculation of earnings per share and the weighted
average number of shares used in such calculation.
(12) EBITDA consists of earnings before income taxes, interest expense,
depreciation and amortization. Corporate charge represents a $4.8 million
charge to Pierre by Hudson based primarily on 9.5% times the book value of
accounts receivable, inventory, property, plant and equipment and other
assets, less accounts payable, plus certain corporate sales. See Note 7 to
Pierre's financial statements. EBITDA before corporate charge is presented
because the Company believes that it is an appropriate financial indicator
of the Company's ability to service and/or incur indebtedness; however,
EBITDA before corporate charge should not be considered as an alternative
to net earnings as a measure of operating results or to cash flows as a
measure of liquidity in accordance with generally accepted accounting
principles. Pro Forma EBITDA is calculated as follows:
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED
FEBRUARY 27, 1998
-------------------
(IN THOUSANDS)
<S> <C>
EBITDA before corporate charge.............................. $25,689
Pro forma adjustments:
Nonrecurring merger expenses(a)........................... 1,956
Elimination of intercompany profit in inventory(b)........ (82)
Executive officer salary increases(c)..................... (66)
-------
Total pro forma adjustments....................... 1,808
-------
Pro Forma EBITDA............................................ $27,497
=======
</TABLE>
(a) Represents nonrecurring costs incurred by Fresh Foods during fiscal
1998 related to its acquisition of Sagebrush, Inc.
(b) Represents elimination of intercompany profit recorded during fiscal
1998 from transactions between Fresh Foods and Pierre.
(c) Reflects increases in salaries to be paid to two executive officers of
Pierre following the Acquisition.
(13) Adjusted Pro Forma EBITDA consists of Pro Forma EBITDA subject to an
additional adjustment believed by the Company to be relevant to evaluating
its future operating performance. Such adjustment, which reflects the
estimated impact of personnel reductions (net of severance payments) at
Pierre realized as of April 30, 1998, is based on estimates and assumptions
made and believed to be reasonable by the Company. There can be no
assurance that the estimated impact of these personnel reductions will be
realized or sustainable in the future. The following calculation should not
be viewed as indicative of actual or future results.
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED
FEBRUARY 27, 1998
-------------------
(IN THOUSANDS)
<S> <C>
Pro Forma EBITDA............................................ $27,497
Personnel reductions (net of severance payments)............ 2,505
-------
Adjusted Pro Forma EBITDA.............................. $30,002
=======
</TABLE>
<PAGE> 13
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF FEBRUARY 27, 1998
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA PRO FORMA
---------------------- ADJUSTMENTS FOR ADJUSTMENTS FOR THE
FRESH FOODS PIERRE THE ACQUISITION INITIAL NOTES OFFERING TOTAL
------------ ------- --------------- ---------------------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents....... $ 2,818 $ 1,219 $(122,994)(1) $148,173(2) $ 4,037
(19,732)(3)
(4,697)(4)
(750)(5)
Marketable equity securities.... 207 207
Accounts receivable, net........ 5,205 10,488 15,693
Notes receivable -- current,
net........................... 1,151 1,151
Inventories..................... 7,361 21,914 (446)(6) 28,829
Income taxes refundable......... 872 872
Deferred income taxes........... 425 425
Prepaid expenses and other
current assets................ 269 16 285
------- ------- --------- -------- --------
Total current assets............ 18,308 33,637 (123,440) 122,994 51,499
Property, plant and equipment,
net........................... 45,024 24,776 69,800
Other assets:
Properties held for sale........ 1,681 1,681
Intangible assets, net.......... 3,736 72,818(1) 4,697(4) 81,251
Notes receivable................ 1,886 1,886
Deferred income taxes........... 685 685
Other........................... 336 336
------- ------- --------- -------- --------
Total other assets.............. 8,324 -- 72,818 4,697 85,839
------- ------- --------- -------- --------
Total assets.................... $71,656 $58,413 $ (50,622) $127,691 $207,138
======= ======= ========= ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable -- banks.......... $ 5,105 $ (5,105)(3)
Current installments of
long-term debt................ 2,189 (1,843)(3) $ 346
Trade accounts payable.......... 6,606 $ 4,222 10,828
Other accrued liabilities....... 4,905 3,839 (277)(5) 8,467
------- ------- --------- -------- --------
Total current liabilities....... 18,805 8,061 (7,225) 19,641
Long-term debt.................. 13,624 148,173(2) 149,013
(12,784)(3)
Shareholders' equity:
Common stock.................... 5,899 5,899
Capital in excess of par
value......................... 23,647 23,647
Retained earnings............... 9,662 50,352 (446)(6) (473)(5) 8,919
(50,176)(1)
Unrealized gain on securities
available for sale............ 19 19
------- ------- --------- -------- --------
Total shareholders' equity...... 39,227 50,352 (50,622) (473) 38,484
------- ------- --------- -------- --------
Total liabilities and
shareholders' equity.......... $71,656 $58,413 $ (50,622) $127,691 $207,138
======= ======= ========= ======== ========
</TABLE>
- ---------------
(1) Reflects the preliminary allocation of the purchase price of Pierre based on
the estimated fair value of the net assets acquired. This assumes that the
historical amounts of assets and liabilities recorded by Pierre as of
February 27, 1998 represent their fair values at that date. The amount of
goodwill and the corresponding amortization actually recorded may ultimately
differ from these amounts, depending upon
<PAGE> 14
the actual fair value of net assets acquired upon consummation of the
Acquisition. The estimated purchase price allocation consists of the
following (in thousands):
<TABLE>
<S> <C>
Purchase price of Pierre.................................... $122,000
Direct costs of the Acquisition............................. 994
--------
122,994
Less estimated fair value of net assets acquired............ 50,176
--------
Excess of purchase price over fair value of net assets
acquired.................................................. $ 72,818
========
</TABLE>
(2) Reflects the proceeds of the Initial Notes Offering and the initial
borrowing under the Bank Facility to finance the Acquisition and repay
existing indebtedness.
(3) Reflects the repayment of Fresh Foods indebtedness made with proceeds of the
Initial Notes Offering and the initial borrowing under the Bank Facility.
(4) Reflects debt issuance costs related to the Initial Notes Offering and the
Bank Facility.
(5) Reflects bonuses to be paid to Messrs. Richardson and Clark upon
consummation of the Acquisition.
(6) Reflects the elimination of profit in ending inventory resulting from sales
between Fresh Foods and Pierre through February 27, 1998.
<PAGE> 15
(c) Exhibits.
<TABLE>
<CAPTION>
Exhibit No. Description
<S> <C>
2.1 Asset Purchase Agreement dated as of April 10, 1998
between Fresh Foods of North Carolina, LLC and Hudson
(schedules and exhibits omitted) (incorporated by
reference to Exhibit 2.1 to Fresh Foods' Current
Report on Form 8-K dated May 13, 1998)
4.1 Note Purchase Agreement dated June 4, 1998 among the
Company, the Guarantors and First Union Capital
Markets, a division of Wheat First Securities, Inc.,
and BancAmerica Robertson Stephens (together, the
"Initial Purchasers")
4.2 Indenture dated as of June 9, 1998 among the Company,
the Guarantors and State Street Bank and Trust
Company, Trustee
4.3 Registration Rights Agreement dated June 9, 1998
among the Company, the Guarantors and the Initial
Purchasers
23.1 Consent of Deloitte & Touche LLP
99.1 Credit Agreement dated as of June 9, 1998 among the
Company, the Guarantors, First Union Commercial
Corporation ("FUCC"), as Agent and a Lender, and
NationsBank, N.A., American National Bank and Trust
Company of Chicago and National City Commercial
Finance, Inc., as Lenders
99.2 Security Agreement dated as of June 9, 1998 among the
Company, the Guarantors and FUCC, as Agent
99.3 Pledge Agreement dated as of June 9, 1998 among the
Company, the Guarantors and FUCC, as Agent
99.4 Press release of the Company dated June 9, 1998
</TABLE>
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FRESH FOODS, INC.
/s/ JAMES E. HARRIS
--------------------------------
JAMES E. HARRIS
Executive Vice President,
Chief Financial Officer,
Treasurer and Secretary
June 24, 1998
<PAGE> 17
Fresh Foods, Inc.
Exhibit Index to Form 8-K
<TABLE>
<CAPTION>
Exhibit No. Description
<S> <C>
2.1 Asset Purchase Agreement dated as of April 10, 1998
between Fresh Foods of North Carolina, LLC and Hudson
(schedules and exhibits omitted) (incorporated by
reference to Exhibit 2.1 to Fresh Foods' Current
Report on Form 8-K dated May 13, 1998)
4.1 Note Purchase Agreement dated June 4, 1998 among the
Company, the Guarantors and First Union Capital
Markets, a division of Wheat First Securities, Inc.,
and BancAmerica Robertson Stephens (together, the
"Initial Purchasers")
4.2 Indenture dated as of June 9, 1998 among the Company,
the Guarantors and State Street Bank and Trust
Company, Trustee
4.3 Registration Rights Agreement dated June 9, 1998
among the Company, the Guarantors and the Initial
Purchasers
23.1 Consent of Deloitte & Touche LLP
99.1 Credit Agreement dated as of June 9, 1998 among the
Company, the Guarantors, First Union Commercial
Corporation ("FUCC"), as Agent and a Lender, and
NationsBank, N.A., American National Bank and Trust
Company of Chicago and National City Commercial
Finance, Inc., as Lenders
99.2 Security Agreement dated as of June 9, 1998 among the
Company, the Guarantors and FUCC, as Agent
99.3 Pledge Agreement dated as of June 9, 1998 among the
Company, the Guarantors and FUCC, as Agent
99.4 Press release of the Company dated June 9, 1998
</TABLE>
<PAGE> 1
EXHIBIT 4.1
FRESH FOODS, INC.
$115,000,000
10 3/4% SENIOR NOTES DUE 2006
NOTE PURCHASE AGREEMENT
June 4, 1998
First Union Capital Markets
BancAmerica Robertson Stephens
c/o First Union Capital Markets
301 South College Street, TW-10
Charlotte, NC 28288-0606
Ladies and Gentlemen:
Fresh Foods, Inc., a North Carolina corporation, proposes to issue and
sell (the "Initial Placement") to First Union Capital Markets, a division of
Wheat First Securities, Inc., and BancAmerica Robertson Stephens (the "Initial
Purchasers"), $115,000,000 principal amount of its 10 3/4% Senior Notes Due 2006
(the "Notes"). The Notes will be unconditionally guaranteed (the "Guarantees"),
on a senior, unsecured basis, by each of the guarantors listed on the signature
pages hereto (collectively, the "Guarantors"). The Notes and the Guarantees are
to be issued under an indenture, to be dated the Closing Date (as defined below)
(the "Indenture"), among the Company (as defined below), the Guarantors and
State Street Bank and Trust Company, as trustee (the "Trustee"). The Initial
Placement is to occur concurrently with, and is conditioned upon, (a) the
acquisition by Fresh Foods of North Carolina, LLC, a wholly-owned subsidiary of
the Company, of Pierre (as defined below) pursuant to the Asset Purchase
Agreement, dated April 10, 1998 (the "Asset Purchase Agreement"), between such
subsidiary and Hudson Foods, Inc. (the "Acquisition") and (b) the initial
borrowing under a credit facility, to be executed on or prior to the date on
which the Notes are issued (the "Senior Credit Facility"), among the Company,
the Guarantors, the Lenders named therein and First Union Commercial
Corporation, as administrative agent. This Agreement, the registration rights
agreement, to be dated the Closing Date (the "Registration Rights Agreement"),
between the Initial Purchasers and the Company, the Notes, the Guarantees, the
Indenture, the Asset Purchase Agreement and the other documents to be entered
into in connection with the Acquisition, and the documents to be entered into in
connection with the Senior Credit Facility are hereinafter collectively referred
to as the "Transaction Documents." The Initial Placement, the offer and sale of
the Notes, the Acquisition and the Company's entering into the Senior Credit
Facility and the initial borrowing thereunder together with all of the other
transactions contemplated by the foregoing are hereinafter referred to as the
"Transactions." Unless the context otherwise requires, all references herein to
(x) the "Company" refers to Fresh Foods, Inc. and its subsidiaries upon the
<PAGE> 2
consummation of the Acquisition, (y) "Pierre" refers to the business and assets
of the Pierre Foods Division of Hudson Foods, Inc. to be acquired by Fresh Foods
pursuant to the Acquisition, and (z) "Fresh Foods" refers to Fresh Foods, Inc.
and its subsidiaries prior to the Acquisition.
The sale of the Notes to the Initial Purchasers will be made without
registration of the Notes under the Securities Act of 1933, as amended (the
"Securities Act"), in reliance upon certain exemptions from the registration
requirements of the Securities Act. You have advised the Company that you will
offer and sell the Notes purchased by you hereunder in accordance with Section 4
hereof as soon as you deem advisable.
In connection with the sale of the Notes, the Company and the
Guarantors prepared preliminary offering memoranda, dated May 19, 1998 and June
1, 1998 (the "Preliminary Memoranda"), and a final offering memorandum, dated
June 4, 1998 (the "Final Memorandum"). The Preliminary Memoranda and the Final
Memorandum all set forth certain information concerning the Company, the
Guarantors, the Transaction Documents and the Transactions. The Company and the
Guarantors hereby confirm that each of them has authorized the use of the
Preliminary Memoranda and the Final Memoranda, and any amendment or supplement
thereto, in connection with the offer and sale of the Notes by the Initial
Purchasers. Unless stated to the contrary, all references herein to the Final
Memorandum are to the Final Memorandum at the Execution Time (as defined below)
and are not meant to include any amendment or supplement, or any information
incorporated by reference therein, subsequent to the Execution Time.
As used herein, "Material Adverse Effect" means (a) a material adverse
effect upon the business, operations, properties, assets, condition (financial
or otherwise) or prospects of the Company and its Subsidiaries, taken as a
whole, whether before or after giving effect to the Transactions or (b) a
material impairment of the ability of the Company and its Subsidiaries, taken as
a whole, to execute, deliver or perform any of its obligations under, or the
material impairment of the ability of the Trustee and the holders of the Notes
(the "Holders") to enforce any obligations under, any of the Transaction
Documents. Other capitalized terms used and not defined herein have the meanings
ascribed to them in the Indenture.
1. Representations and Warranties. The Company and the Guarantors
jointly and severally represent and warrant to the Initial Purchasers the
following:
(a) The Preliminary Memoranda, at the dates thereof, did
not contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Final Memorandum,
at the date hereof, does not and, at the Closing Date, will not (and any
amendment or supplement thereto, at the date thereof and at the Closing Date,
will not) contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that the Company and the Guarantors make no representation or warranty as to the
information contained in or omitted from the Preliminary Memoranda or the Final
Memorandum, or any amendment or supplement thereto, in reliance upon and in
conformity with
2
<PAGE> 3
information relating to either of the Initial Purchasers furnished to the
Company in writing by or on behalf of either of the Initial Purchasers expressly
for use therein.
(b) Except as disclosed in the Preliminary Memoranda or
the Final Memorandum, no holder of securities of the Company or the Guarantors
will be entitled to have such securities registered under any registration
statement required to be filed by the Company or the Guarantors.
(c) None of the Company, the Guarantors or any of their
Affiliates (as defined in Rule 501(b) of Regulation D under the Securities Act
("Regulation D")), nor any person acting on any of their behalf (other than the
Initial Purchasers or any of its Affiliates, as to whom the Company and the
Guarantors make no representation or warranty) has, directly or indirectly:
(i) made offers or sales of any security, or
solicited offers to buy any security, which is or will be integrated with the
sale of the Notes or the Guarantees in a manner that would require their
registration under the Securities Act;
(ii) engaged in any form of general solicitation
or general advertising (within the meaning of Regulation D) in connection with
any offer or sale of the Notes or the Guarantees;
(iii) taken any action designed to cause or result
in, or that has constituted or that might reasonably be expected to constitute,
stabilization or manipulation of the price of any security of the Company or the
Guarantors or facilitate the sale or resale of the Notes;
(iv) taken any action designed to facilitate the
sale or resale of the Notes;
(v) except as disclosed in the Preliminary
Memoranda or the Final Memorandum, paid or agreed to pay to any person any
compensation for soliciting another person to purchase any securities of the
Company or the Guarantors;
(vi) engaged in any directed selling efforts (as
that term is defined in Regulation S under the Securities Act ("Regulation S"))
with respect to the Notes or the Guarantees, and each of the Company and its
Affiliates and any person acting on its or their behalf (other than the initial
Purchasers or any of their Affiliates as to which no representation is made) has
complied with the offering restrictions requirements of Regulation S.
(d) The Notes satisfy the eligibility requirements of
Rule 144A(d)(3) under the Securities Act.
(e) Assuming the accuracy of your representations in
Section 4 hereof and your compliance with your convenants set forth therein, it
is not necessary in connection with the offer, sale and delivery of the Notes in
the manner contemplated by this Agreement and the Final
3
<PAGE> 4
Memorandum to register the Notes or the Guarantees under the Securities Act or
to qualify the Indenture under the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act").
(f) Each of the Company and its Subsidiaries is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization. Each of the Company and its Subsidiaries has the
power and authority to own and operate its properties and to carry on its
business as now conducted and as proposed to be conducted and is duly qualified
to do business and is in good standing under the laws of all jurisdictions in
which it is doing business, except where failure to be so qualified or be in
good standing, individually or in the aggregate, has not had and will not have a
Material Adverse Effect.
(g) All of the outstanding shares of Capital Stock of the
Company have been duly authorized and validly issued and are fully paid and
nonassessable. Exhibit A hereto lists (i) each wholly owned Subsidiary of the
Company (including each Guarantor) along with its jurisdiction of organization;
and (ii) each other non-wholly owned Subsidiary of the Company along with its
jurisdiction of organization, the title and amount of Capital Stock outstanding
and the amount of all such Capital Stock owned by the Company (or any of its
Subsidiaries) expressed both in terms of the number of shares and as a
percentage of all Capital Stock in such shares' class outstanding. Each
Subsidiary of the Company does not and will not on the Closing Date have
outstanding any (i) securities convertible or exchangeable for its Capital
Stock, (ii) rights to subscribe for or to purchase any of its Capital Stock or
(iii) options providing for the purchase of, agreements providing for the
issuance (contingent or otherwise) of, or any calls, commitments or claims of
any character relating to its Capital Stock. All of the Capital Stock of each
wholly owned Subsidiary and the Capital Stock owned by the Company of each
non-wholly owned Subsidiary shown on Schedule A is beneficially owned by the
Company, directly or indirectly, free and clear of all liens other than liens
granted to secure the loan contemplated by the Senior Credit Facility. The
Company does not, directly or indirectly, have any Subsidiaries that are not
Guarantors.
(h) Each of the Company and the Guarantors has the power
and requisite authority to execute, deliver and carry out the terms and
provisions of the Transaction Documents and has taken all necessary action to
authorize the execution, delivery and performance of the Transaction Documents
and the Exchange Notes.
(i) Each of the Transaction Documents and each other
document or instrument to be delivered in connection therewith has been, or as
of the Closing Date will have been, duly authorized by all necessary corporate
action of the Company and the Guarantors. This Agreement has been duly executed
and delivered by the Company and each Guarantor; each of the other Transaction
Documents to be executed and delivered on or prior to the date hereof has been
duly executed and delivered by each of the Company and the Guarantors that are a
party thereto; and each of the Transaction Documents to be executed and
delivered after the date hereof will be duly executed and delivered by the
Company and each of the Guarantors that are a party thereto. This Agreement is,
and such other Transaction Documents and other documents and instruments to
which the Company and each of the Guarantors is a party are or will be, the
legal, valid and binding obligations of the Company and each of the Guarantors,
enforceable in accordance with their respective terms, except to the extent that
the enforceability thereof may be
4
<PAGE> 5
limited by applicable bankruptcy, insolvency, reorganization or similar laws
affecting the enforcement of creditors' rights generally or by general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
(j) The execution, delivery and performance by the
Company of the Transaction Documents do not and on the Closing Date will not (i)
violate any statute, law, ordinance, regulation, rule, order, judgment, writ,
injunction or decree of any state, commonwealth, nation, territory, possession,
province, county, parish, township, village, municipality or other jurisdiction
(collectively, the "Laws") applicable to any of the Company and the Guarantors,
or any judgment, order, writ or decree of any government, any arbitration panel,
any court or any governmental department, commission, board, bureau, agency,
authority or instrumentality of any state, province, commonwealth, nation,
territory, possession, county, parish, town, township, village or municipality,
whether now or hereafter constituted or existing ("Tribunal") binding on any of
them, (ii) conflict with, result in a breach of or constitute (with due notice
or lapse of time or both) a default under the articles of incorporation, bylaws
or other organizational documents of the Company or any Guarantor, (iii)
conflict with, result in a breach of or constitute (with due notice or lapse of
time or both) a default under any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which the Company or any
Guarantor is a party or by which the Company or any Guarantor is bound
("Contracts"), (iv) result in or require the creation or imposition of any lien
upon any of the properties or assets of any of the Company and the Guarantors
(other than any liens created under the Senior Credit Facility), (v) require any
approval of stockholders or (vi) require any approval or consent of any person
under any Contracts, except, with respect to clauses (iii), (iv) and (vi), for
any conflicts, breaches, defaults, liens, approvals and consents that would not
result in a Material Adverse Effect.
(k) No consent, approval, authorization or order of any
Tribunal or other person is required in connection with the execution and
delivery by the Company or the Guarantors of the Transaction Documents or any
other document or instrument to be delivered in connection with the Transactions
or the consummation of the transactions contemplated hereby or thereby, except
for consents, approvals, authorizations and orders that have heretofore been
obtained.
(l) The audited financial statements (including the notes
thereto) of each of Fresh Foods and Pierre included in the Final Memorandum
comply as to form in all material respects with the requirements applicable to
registration statements on Form S-1 under the Securities Act and fairly present
in all material respects the consolidated financial position of each of the
Fresh Food and Pierre and the results of operations and, with respect to Fresh
Foods only, cash flows thereof as of the dates and for the periods therein
specified. Such financial statements have been prepared in accordance with
generally accepted accounting principles ("GAAP") consistently applied
throughout the periods involved. Since the date of the most recent financial
statements included in the Final Memorandum, except as described therein, in the
Notes thereto or in the Final Memorandum, (i) neither the Company nor any of its
Subsidiaries has incurred any liabilities or obligations, direct or contingent,
or entered into or agreed to enter into any transactions or Contracts not in the
ordinary course of business which liabilities, obligations, transactions or
Contracts would, individually or in the aggregate, have a
5
<PAGE> 6
Material Adverse Effect, (ii) the Company has not purchased any of its
outstanding Capital Stock, nor declared, paid or otherwise made any dividend or
distribution of any kind on its Capital Stock, (iii) there has not been any
material change in the long-term indebtedness of the Company or any of its
Subsidiaries and (iv) none of the Assets of the Company have materially
diminished in value. The unaudited pro forma financial statements of the Company
included in the Final Memorandum comply as to form in all material respects with
the requirements of the Securities Act; the pro forma adjustments have been
properly applied to the historical amounts in the compilation of such pro forma
statements; the assumptions described in the notes to such pro forma statements
provide a reasonable basis for presenting the significant effects of the
transactions contemplated therein; and such pro forma adjustments give
appropriate effect to those adjustments, in each case in accordance with
Regulation S-X under the Securities Act ("Regulation S-X").
(m) The Company and each of its Subsidiaries maintains a
system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with management's
general or specific authorizations; (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with GAAP and to
maintain asset accountability; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(n) The Company is not now, and after giving effect to
the consummation of the Transactions will not be, (i) insolvent, (ii) left with
unreasonably small capital with which to engage in its anticipated businesses or
(iii) incurring debts beyond its ability to pay such debts as they become due.
The Company is not in liquidation, administration or receivership nor has any
petition been presented for the winding-up of the Company.
(o) The Company and each of its Subsidiaries has, and
after consummation of the Transactions will have, good, sufficient and legal
title to all their respective properties and assets, and all properties held
under lease by any of them, are, and immediately after the consummation of the
Transactions will be, held under valid, subsisting and enforceable leases, and
none of the Company or any of its Subsidiaries and, to the knowledge of the
Company, any other party thereto, is in default under any lease, except in each
case for such defects or defaults that, individually or in the aggregate, would
not have a Material Adverse Effect. All such properties and assets owned or
leased are so owned or leased free and clear of liens other than liens permitted
under the definition "Permitted Liens" set forth in the Final Memorandum. None
of the material assets of the Company or any of its Subsidiaries is subject to
any restriction that would prevent continuation of the use currently made
thereof or which would materially adversely effect the value thereof.
(p) Both before and after giving effect to the
Transactions, none of the Company or any of its Subsidiaries is (i) in violation
of its charter, by-laws or other organizational documents, (ii) in violation of
any Law or (iii) in breach of or default under (nor has any event occurred
which, with notice or the passage of time or both, would constitute a breach of
or default under) or in violation of any of the terms or provisions of any
Contract,
6
<PAGE> 7
except for any such breach, default, violation or event that would, individually
or in the aggregate, not have a Material Adverse Effect.
(q) There is no litigation pending or, to the best
knowledge of the Company after due investigation, threatened, by, against, or
which may relate to or affect (a) any benefit plan or any fiduciary or
administrator thereof, (b) the Transactions or (c) the Company or any of its
Subsidiaries, which individually or in the aggregate, would have a Material
Adverse Effect. There are no outstanding injunctions or restraining orders
prohibiting consummation of any of the Transactions. Neither the Company nor any
of its Subsidiaries is in default with respect to any judgment, order, writ,
injunction or decree of any Tribunal, and there are no unsatisfied judgments
against the Company or any of its Subsidiaries or their respective businesses or
properties. None of the Company or any of its Subsidiaries has been advised that
there is a reasonable likelihood of an adverse determination of any litigation,
which adverse determination would have a Material Adverse Effect.
(r) The proceeds from the issuance and sale of the Notes
will be used solely for the purposes specified in the Final Memorandum. None of
such proceeds will be used for the purpose of purchasing or carrying any Margin
Stock within the meanings of the applicable provisions of Regulation G, T, U or
X of the Board of Governors of the Federal Reserve System, or for the purpose of
reducing or retiring any indebtedness which was originally incurred to purchase
or carry Margin Stock or for any other purpose that might cause any of the Notes
to be considered a "purpose credit" within the meaning of the applicable
provisions of Regulation G, T, U or X.
(s) All material Tax Returns required to be filed by the
Company and each of its Subsidiaries in any jurisdiction have been filed, and
all material Taxes (whether or not actually shown on such Tax Returns) for which
any of them is directly or indirectly liable or to which any of their respective
properties or assets are subject have been paid other than Taxes being contested
in good faith and for which adequate reserves have been established in
accordance with GAAP. All such Tax Returns are true, correct and complete in all
material respects and accurately set forth all items to the extent required to
be reflected or included in such Tax Returns by applicable federal, state, local
or foreign Tax Laws, regulations or rules. There is no material proposed Tax
assessment against the Company or any of its Subsidiaries, and, to the best
knowledge of the Company, there is no basis for such assessment, except for
contested claims.
As used herein, the following terms shall have the respected meanings
ascribed to them below:
"Tax Return" means a report, return or other information (including any
amendments) required to be supplied to a governmental entity with respect to
Taxes including, where permitted or required, combined or consolidated returns
for any group of entities that includes the Company or any of its Subsidiaries.
"Taxes" means all taxes however denominated, including any interest or
penalties that may become payable in respect thereof, imposed by any federal,
state, local or foreign
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<PAGE> 8
government or any agency or political subdivision of any such government, which
taxes shall include all income taxes (including, but not limited to, United
States federal income taxes and state income taxes), payroll and employee
withholding taxes, unemployment insurance, social security, sales and use taxes,
excise taxes, environmental, franchise taxes, gross receipts taxes, occupation
taxes, real and personal property taxes, stamp taxes, transfer taxes,
withholding taxes, workers' compensation, and other obligations of the same or a
similar nature, whether arising before, on or after the Closing Date.
(t) Both before and after giving effect to the
Transactions, no ERISA Events have occurred or are reasonably expected to occur
which, individually or in the aggregate, resulted in or might reasonably be
expected to result in a liability of the Company or any of its Subsidiaries or
any of their respective ERISA Affiliates which would have a Material Adverse
Effect. In accordance with the most recent actuarial valuations, the Amount of
Unfunded Benefit Liabilities for all Pension Plans (excluding for purposes of
such computation any Pension Plans which have a negative Amount of Unfunded
Benefit Liabilities) is not an amount which would reasonably be expected to have
a Material Adverse Effect.
As used herein, the following terms shall have the respective meaning
ascribed to each below:
"Amount of Unfunded Benefit Liability" means, with respect to any
Pension Plan, (i) if set forth on the most recent actuarial valuation report
with respect to such Pension Plan, the amount of unfunded benefit liabilities
(as defined in Section 4001(a)(18) of ERISA) and (ii) otherwise, the excess of
(a) the greater of the current liability (as defined in Section 412(l)(7) of the
Internal Revenue Code) or the actuarial present value of the accrued benefits
with respect to such Pension Plan over (b) the market value of the assets of
such Pension Plan.
"Employee Pension Benefit Plan" means any "employee pension benefit
plan" as defined in Section 3(2) of ERISA (i) which is, or, at any time within
the five calendar years immediately preceding the date hereof, was at any time,
sponsored, maintained or contributed to by the Company or its Subsidiaries or
any of their respective ERISA Affiliates or (ii) with respect to which any of
the Company or its Subsidiaries retains any liability, including any potential
joint and several liability as a result of an affiliation with an ERISA
Affiliate or a party that would be an ERISA Affiliate except for the fact the
affiliation ceased more than five calendar years prior to the date hereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder and any successor statute, regulations and rulings.
"ERISA Affiliate," as applied to any person, means (i) any corporation
which is, or was at any time within the five calendar years immediately
preceding the date hereof, a member of a controlled group of corporations within
the meaning of Section 414(b) of the Internal Revenue Code of which that person
is, or was at any time within the five calendar years immediately preceding the
date hereof, a member; (ii) any trade or business (whether or not incorporated)
which is, or was at any time within the five calendar years immediately
preceding the date
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<PAGE> 9
hereof, a member of a group of trades or businesses under common control within
the meaning of Section 414(c) of the Internal Revenue Code of which that person
is, or was at any time within the five calendar years immediately preceding the
date hereof, a member; and (iii) any member of an affiliated service group
within the meaning of Section 414(m) or (o) of the Internal Revenue Code of
which that person, any corporation described in clause (i) above or any trade or
business described in clause (ii) above is, or was at any time within the five
calendar years immediately preceding the date hereof, a member.
"ERISA Event" means (i) a "reportable event" within the meaning of
Section 4043 of ERISA and the regulations issued thereunder with respect to any
Pension Plan (excluding those for which the provision for 30-day notice to the
PBGC has been waived by regulation); (ii) the failure to meet the minimum
funding standard of Section 412 of the Internal Revenue Code with respect to any
Pension Plan (whether or not waived) or the failure to make any required
contribution within 30 days of its due date with respect to any Multiemployer
Plan; (iii) the provision by the administrator of any Pension Plan pursuant to
Section 4041 (a) (2) of ERISA of a notice of intent to terminate such plan in a
distress termination described in Section 4041(c) of ERISA; (iv) the withdrawal
by the Company or any of its Subsidiaries or any of their respective ERISA
Affiliates from any Multiple Employer Plan or the termination of any such
Multiple Employer Plan resulting in liability pursuant to Sections 4063 or 4064
of ERISA; (v) the institution by the PBGC of proceedings to terminate any
Pension Plan, or the occurrence of any event or condition which might reasonably
be expected to constitute grounds under ERISA for the termination of, or the
appointment of a trustee to administer, any Pension Plan; (vi) the imposition of
liability on the Company or any of its Subsidiaries or any of their respective
ERISA Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by reason of
the application of Section 4212(c) of ERISA; (vii) the withdrawal by the Company
or any of its Subsidiaries or any of their respective ERISA Affiliates in a
complete or partial withdrawal (within the meaning of Sections 4203 and 4205 of
ERISA) from any Multiemployer Plan if there is any potential liability therefor,
or the receipt by the Company or any of its Subsidiaries or any of their
respective ERISA Affiliates of notice from any Multiemployer Plan that it is in
reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA, or that
it intends to terminate or has terminated under Section 4041A or 4042 of ERISA;
(viii) the occurrence of an act or omission which could reasonably be expected
to give rise to the imposition on the Company or any of its Subsidiaries or any
of their respective ERISA Affiliates of fines, penalties, taxes or related
charges under Chapter 43 of the Internal Revenue Code or under Section 406, 409,
502(i) or 502(1) of ERISA in respect of any Employee Pension Benefit Plan; (ix)
receipt from the Internal Revenue Service of notice of the failure of any
Pension Plan (or any other Employee Pension Benefit Plan intended to be
qualified under Section 401(a) of the Internal Revenue Code) to qualify under
Section 401(a) of the Internal Revenue Code, or the failure of any trust forming
part of any Pension Plan or Employee Pension Benefit Plan to qualify for
exemption from taxation under Section 501(a) of the Internal Revenue Code; or
(x) the imposition of a lien pursuant to Section 401(a)(29) or 412(n) of the
Internal Revenue Code or pursuant to ERISA with respect to any Pension Plan.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended from time to time, and any successor code or statute.
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<PAGE> 10
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA to which any of the Company, its Subsidiaries or any of
their respective ERISA Affiliates is making or accruing an obligation to make
contributions, or has within any of the preceding five years made or accrued an
obligation to make contributions.
"Multiple Employer Plan" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (i) is maintained for employees of the
Company, its Subsidiaries or any of their respective ERISA Affiliates and at
least one person other than employees of the Company, its Subsidiaries and their
respective ERISA Affiliates or (ii) was so maintained and in respect of which
such Company, Subsidiaries or ERISA Affiliates could have liability under
Section 4064 or Section 4069 of ERISA in the event such plan has been or were to
be terminated.
"Pension Plan" means a Single Employer Plan or Multiple Employer Plan.
"PBGC" means the Pension Benefit Guaranty Corporation, and any
successor to all or any of the Pension Benefit Guaranty Corporation's functions
under ERISA.
"Single Employer Plan" means a "single-employer plan," as defined in
Section 4001 (a)(15) of ERISA, that (i) is maintained for employees of the
Company, any of its Subsidiaries or any of their ERISA Affiliates and no person
other than employees of the Company, any of its Subsidiaries or any of their
ERISA Affiliates or (ii) was so maintained and in respect of which such Company,
Subsidiaries or ERISA Affiliates could have liability under Section 4069 of
ERISA in the event such plan has been or were to be terminated.
(u) The Company and each of its Subsidiaries is in
compliance with all Laws, except where the failure to comply, individually or in
the aggregate, would not have a Material Adverse Effect.
(v) None of the Company or any of its Subsidiaries is
subject to regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act, or the Investment Company Act of 1940 (as any of the
preceding acts have been amended).
(w) The Company and its Subsidiaries own or are licensed
to use all patents, trademarks, tradenames, copyrights, technology, know-how and
processes used in or necessary for the conduct of the business of the Company as
currently conducted ("Intellectual Property"). To the Company's knowledge, no
material claim has been asserted by any person with respect to the use of any
such Intellectual Property, or challenging or questioning the validity or
effectiveness of any such Intellectual Property. To the Company's knowledge, the
use of such Intellectual Property by the Company or any of its Subsidiaries does
not infringe on the rights of any person. The consummation of the Transactions
will not in any material manner or to any material extent impair the ownership
of (or the license to use, as the case may be) of such intellectual property by
the Company or any of its Subsidiaries.
(x) Both before and after giving effect to the
Transactions:
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<PAGE> 11
(i) the operations of the Company and each of
its Subsidiaries comply with all Environmental Laws except for any such
noncompliance which would not reasonably be expected to have a Material Adverse
Effect;
(ii) each of the Company and its Subsidiaries has
obtained all Permits under Environmental Laws necessary to their respective
operations, and all such Permits are being maintained in good standing, and each
of the Company and its Subsidiaries is in compliance with all material terms and
conditions of such Permits except for any such failure to obtain, maintain or
comply which would not reasonably be expected to have a Material Adverse Effect;
(iii) none of the Company or its Subsidiaries has
received (a) any notice or claim to the effect that it is or may be liable to
any person under any Environmental Law except as would not reasonably be
expected to have a Material Adverse Effect or (b) any letter or request for
information under Section 104 of the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. ss. 9604) or comparable Environmental
Laws regarding any matter which could reasonably be expected to result in a
Material Adverse Effect, and, to the best of the Company's knowledge, none of
the Company or its Subsidiaries is or will be involved in any investigation,
response or corrective action relating to or in connection with any Hazardous
Materials at any Facility or at any other location except for such of the
foregoing which would not reasonably be expected to have Material Adverse
Effect;
(iv) none of the Company or its Subsidiaries is
subject to any judicial or administrative proceeding alleging the violation of
or liability under any Environmental Laws which if adversely determined could
reasonably be expected to have a Material Adverse Effect;
(v) none of the Company or its Subsidiaries or
any of their respective Facilities or operations is subject to any outstanding
written order or agreement with any governmental authority or private party
relating to (A) any actual or potential violation of or liability under
Environmental Laws or (B) any Environmental Claims except for such of the
foregoing which would not reasonably be expected to have a Material Adverse
Effect;
(vi) none of the Company or its Subsidiaries has
any contingent liability in connection with any Release or threatened Release of
any Hazardous Materials by any of the Company or its Subsidiaries except for
such of the foregoing which would not reasonably be expected to have a Material
Adverse Effect;
(vii) no Hazardous Materials exist on, under or
about any Facility in a manner that would reasonably be expected to give rise to
an Environmental Claim having a Material Adverse Effect, and none of the Company
or its Subsidiaries has filed any notice or report of a Release of any Hazardous
Materials that would reasonably be expected to give rise to an Environmental
Claim having a Material Adverse Effect;
(viii) none of the Company or its Subsidiaries or,
to the best of the Company's knowledge, any of their respective predecessors has
disposed of any Hazardous
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<PAGE> 12
Materials in a manner that would reasonably be expected to give rise to an
Environmental Claim having a Material Adverse Effect;
(ix) to the best of the Company's knowledge, no
underground storage tanks or surface impoundments are on or at any Facility that
could be reasonably expected to give rise to an Environmental Claim having a
Material Adverse Effect; and
(x) no lien in favor of any person relating to or in
connection with any Environmental Claim has been filed or has been attached
to any Facility or other assets of the Company or any of its Subsidiaries except
for any such lien which would not reasonably be expected to have a Material
Adverse Effect.
As used herein, the following terms shall have the respective meanings
ascribed to them below:
"Environmental Claims" means any allegation, notice of violation,
claim, demand, abatement order or other order or direction (conditional or
otherwise) by any governmental authority or any person for any response or
corrective action, any damage, including, without limitation, personal injury,
property damage, contribution, indemnity, indirect or consequential damages,
damage to the environment, nuisance, pollution, contamination or other adverse
effects on the environment, or for fines, penalties or restrictions, in each
case arising under any Environmental Law, including without limitation, relating
to, resulting from or in connection with Hazardous Materials and relating to the
Company, any of its Subsidiaries or any of their respective Facilities or
predecessors in interest.
"Environmental Laws" means the common law and all statutes, ordinances,
orders, rules, regulations, requirements, judgments, plans, policies or decrees
relating to (i) pollution, protection, preservation, cleanup or reclamation of
the environment, natural resources, human, plant or animal health or welfare,
(ii) the Release or threatened Release of Hazardous Materials, or (iii)
manufacture, processing, treatment, handling, recycling, generation, use,
storage, transportation or disposal of Hazardous Materials including, without
limitation, investigation, study, assessment, testing, monitoring, containment,
removal, remediation, or clean-up of any such Release, each as in effect as of
the date of determination.
"Facilities" means any and all real property (including, without
limitation, all buildings, fixtures or other improvements located thereon) now,
hereafter or heretofore owned, leased, operated or used by the Company, its
Subsidiaries or any of their respective predecessors in interest.
"Hazardous Materials" means (i) any chemical, material or substance at
any time defined as or included in the definition of "hazardous substances,"
"hazardous wastes," "hazardous materials," "extremely hazardous waste,"
"restricted hazardous waste," "infectious waste," "toxic substances" or any
other formulations intended to define, list or classify substances by reason of
deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, toxicity, reproductive toxicity, "TCLP toxicity" or "EP
toxicity" or words of similar import under any applicable Environmental Laws or
publications promulgated pursuant thereto; (ii) any
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<PAGE> 13
oil, petroleum, petroleum fraction or petroleum derived substance; (iii) any
flammable substances or explosives; (iv) any radioactive materials; (v) asbestos
in any form; (vi) urea formaldehyde foam insulation; (vii) electrical equipment
which contains any oil or dielectric fluid containing levels of polychlorinated
biphenyls in excess of fifty parts per million; (viii) pesticides; and (ix) any
other chemical, material or substance, exposure to which is prohibited, limited
or regulated by any governmental authority or which may or could pose a hazard
to human health or safety or the environment.
"Permits" has the meaning ascribed to it in Section 1(y) below.
"Release" means any release, spill, emission, leaking, pumping,
pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping,
leaching or migration of Hazardous Materials into the environment (including,
without limitation, the abandonment or disposal of any barrels, containers or
other closed receptacles containing any Hazardous Materials), or onto or out of
any Facility, including the movement of any Hazardous Material through the air,
soil, surface water, groundwater or property.
(y) The Company and its Subsidiaries have, and
immediately after the consummation of the Transactions will have, such
certificates, permits, licenses, franchises, consents, approvals, authorizations
and clearances ("Permits"), and will be after giving effect to the Transactions
in compliance in all material respects with all Laws as are necessary to own,
lease or operate their respective properties and to conduct their businesses in
the manner as presently conducted and to be conducted immediately after the
consummation of the Transactions except where the failure to have such Permits
or to comply with such Laws would not, individually or in the aggregate, have a
Material Adverse Effect, and all such Permits are valid and in full force and
effect and will be valid and in full force and effect immediately upon
consummation of the Transactions. The Company and its Subsidiaries are, and
immediately after the consummation of the Transactions will be, in compliance in
all material respects with their respective obligations under such Permits and
no event has occurred that allows, or after notice or lapse of time would allow,
revocation or termination of such Permits except for any such revocation or
termination as would not, individually or in the aggregate, have a Material
Adverse Effect.
(z) The Company and its Subsidiaries carry or are
entitled to the benefits of insurance (including self-insurance) in such amounts
and covering such risks as is generally maintained by companies of established
repute engaged in the same or similar businesses, and all such insurance is (and
will be immediately after the consummation of the Transactions) in full force
and effect, except where the failure to carry such insurance or be entitled to
the benefits of such insurance does not, individually or in the aggregate, have
a Material Adverse Effect.
(aa) Except as disclosed in the Preliminary Memoranda or
the Final Memorandum, no labor disturbance by the employees of the Company or
its Subsidiaries exists or, to the best knowledge of the Company, is threatened
and the Company is not aware of any existing or imminent labor disturbance by
the employees of the Company's or its Subsidiaries' principal suppliers,
manufacturers or customers that could, individually or in the aggregate, have a
Material Adverse Effect.
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<PAGE> 14
(bb) Except for the fees and expenses payable to the
Initial Purchasers, which will be paid by the Company on the Closing Date, the
Company did not employ any investment banker, broker, finder, consultant,
intermediary or other person in connection with the transactions contemplated by
this Agreement who would be entitled to any investment banking, brokerage,
finder's or other fees or commissions in connection with this Agreement or the
transactions contemplated hereby.
Any certificate signed by any officer of the Company or of any of the
Guarantors and delivered to the Initial Purchasers or its counsel shall be
deemed to be a representation and warranty by the Company or of the Guarantor,
as the case may be, to the Initial Purchasers as to the matters covered thereby.
2. Purchase and Sale. Subject to the terms and conditions and in
reliance upon the representations and warranties herein set forth, the Company
agrees to sell to the Initial Purchasers, and each of the Initial Purchase
agrees to purchase from the Company, severally and not jointly, at a purchase
price equal to 97.25% of the principal amount thereof, Notes in the respective
principal amount set forth opposite its name on Schedule I hereto.
3. Delivery and Payment. Delivery of and payment for the Notes
shall be made at 10:00 a.m., New York City time, on June 9, 1998, which date and
time may be postponed by agreement between the Initial Purchasers and the
Company (such date and time of delivery and payment for the Notes being herein
called the "Closing Date"). Delivery of the Notes shall be made to the Initial
Purchasers against payment by the Initial Purchasers of the purchase price
thereof to or upon the order of the Company by intrabank transfer payable in
same day funds or such other manner of payment as may be agreed by the Company
and the Initial Purchasers. Delivery of the Notes shall be made at such location
as the Initial Purchasers shall reasonably designate at least one Business Day
in advance of the Closing Date and payment for the Notes shall be made at the
office of Kennedy Covington Lobdell & Hickman, L.L.P., 100 North Tryon Street,
Suite 4200, Charlotte, North Carolina 28202. Certificates for the Notes shall be
registered in such names and in such denominations as the Initial Purchasers may
request not less than two full Business Days in advance of the Closing Date.
4. Offering of Notes. Each of the Initial Purchasers, severally
and not jointly, represents and warrants to and agrees with the Company and the
Guarantors that:
(a) It has not offered or sold, and will not offer or
sell, any Notes except (i) within the United States to those persons it
reasonably believes to be qualified institutional buyers (as defined in Rule
144A under the Securities Act) ("QIBs"), and (ii) outside the United States to
persons other than U.S. persons in reliance upon Regulation S under the
Securities Act. In connection with each sale pursuant to clause (i) above, the
Initial Purchasers has taken or will take reasonable steps to ensure that the
purchaser of such Notes is aware that such sale is being made in reliance on
Rule 144A.
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<PAGE> 15
(b) Neither it nor any person acting on its behalf has
made or will make offers or sales of the Notes by means of any form of general
solicitation or general advertising (within the meaning of Regulation D under
the Securities Act).
(c) It is an "accredited investor" (as defined in Rule
501 (a)(1), (2), (3) or (7) under the Securities Act) with such knowledge and
experience in financial and business matters as are necessary in order to
evaluate the merits and risks of an investment in the Notes.
5. Agreements. The Company and its Subsidiaries agree with the
Initial Purchasers that:
(a) The Company will furnish to the Initial Purchasers
and to Kennedy Covington Lobdell & Hickman, L.L.P. ("Counsel for the Initial
Purchasers"), without charge, during the period referred to in paragraph (c)
below, as many copies of the Final Memorandum and any amendments and supplements
thereto as they may reasonably request. The Company will pay the expenses of
printing or other production of all documents relating to the offering of the
Notes and will reimburse the Initial Purchasers for payment of the required
PORTAL filing fee.
(b) The Company will not amend or supplement the Final
Memorandum prior to the completion of the distribution of the Notes by the
Initial Purchasers, without the prior written consent of the Initial Purchasers.
(c) If at any time prior to the completion of the sale of
the Notes acquired by the Initial Purchasers pursuant to this Agreement (as
determined by the Initial Purchasers), any event occurs as a result of which the
Final Memorandum, as then amended or supplemented, would include any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, or if it should be necessary to amend or supplement the
Final Memorandum to comply with applicable law, the Company will promptly notify
the Initial Purchasers of the same and, subject to the requirements of paragraph
(b) of this Section 5, will prepare and provide to the Initial Purchasers
pursuant to paragraph (a) of this Section 5 an amendment or supplement that will
correct such statement or omission or effect such compliance.
(d) The Company will arrange for the qualification of the
Notes and the Guarantees for sale by the Initial Purchasers under the laws of
such jurisdictions as the Initial Purchasers may designate and will maintain
such qualifications in effect so long as required for the sale of the Notes and
the Guarantees by the Initial Purchasers; provided, however, that none of the
Company or the Guarantors will be required to qualify generally to do business
in any jurisdiction in which any of them is not then so qualified, to file any
general consent to service of process or to take any action which would subject
any of them to general service of process or to taxation in any such
jurisdiction where it is not then so subject. The Company will promptly advise
the Initial Purchasers of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Notes and the Guarantees
for sale in any jurisdiction or the initiation or threatening of any proceeding
for such purpose.
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<PAGE> 16
(e) The Company, whenever any of the Company and its
Subsidiaries publishes or makes available to the public (by filing with any
regulatory authority or securities exchange or by publishing a press release or
otherwise) any information that could reasonably be expected to be material in
the context of the issue of Notes under this Agreement, shall promptly notify
the Initial Purchasers as to the nature of such information or event. The
Company will likewise notify the Initial Purchasers of (i) any decrease in the
rating of the Notes or any other debt securities of the Company or its
Subsidiaries by any nationally recognized statistical rating organization (as
defined in Rule 436(g)(2) under the Securities Act) or (ii) any notice given of
any intended or potential decrease in any such rating or of a possible change in
any such rating that does not indicate the direction of the possible change, as
soon as the Company becomes aware of any such decrease or notice. So long as the
Company has any obligations with respect to the Notes or the Holders, the
Company will also deliver to the Initial Purchasers, as soon as available and
without request, copies of all documents it files with or furnishes to the
Securities and Exchange Commission.
(f) The Company will not, and will not permit any of its
Affiliates to, resell any Notes that have been acquired by any of them, other
than pursuant to an effective registration statement under the Securities Act.
(g) Except as contemplated by the Registration Rights
Agreement or otherwise disclosed in the Final Memorandum, none of the Company or
any of its Affiliates, nor any person acting on its or their behalf (other than
the Initial Purchasers or any of their Affiliates, as to whom the Company and
its Subsidiaries make no agreement) will, directly or indirectly, make offers or
sales of any security, or solicit offers to buy any security, under
circumstances that would require the registration of the Notes under the
Securities Act.
(h) None of the Company or any of its Affiliates, nor any
person acting on its or their behalf (other than the Initial Purchasers or any
of its Affiliates, as to whom the Company and its Subsidiaries make no
agreement) will engage in any form of general solicitation or general
advertising (within the meaning of Regulation D) in connection with any offer or
sale of the Notes.
(i) So long as any of the Notes are "restricted
securities" within the meaning of Rule 144(a)(3) under the Securities Act, if
the Company ceases to be subject to the reporting requirements of Sections 13
and 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act"), it will
provide to each holder of the Notes and to each prospective purchaser (as
designated by such holder) of the Notes, upon the request of such holder or
prospective purchaser, any information required to be provided by Rule
144A(d)(4) under the Securities Act. This covenant is intended to be for the
benefit of the holders, and the prospective purchasers designated by such
holders, from time to time of the Notes.
(j) The Company will cooperate with the Initial
Purchasers and use their best efforts to (i) permit the Notes to be designated
PORTAL securities in accordance with the rules and regulations of the NASD
relating to trading in the Private Offerings, Resale and Trading through
Automated Linkages market ("PORTAL") and (ii) permit the Notes to be eligible
for
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<PAGE> 17
clearance and settlement as described under "Book Entry; Delivery and Form" in
the Final Memorandum.
(k) The Company will apply the net proceeds from the sale
of the Notes as set forth under "Use of Proceeds" in the Final Memorandum.
(l) The Company and its Subsidiaries will conduct their
operations in a manner that will not subject the Company or any of its
Subsidiaries to registration as an investment company under the Investment
Company Act.
(m) Each Note will bear a legend substantially to the
following effect until such legend shall no longer be necessary or advisable
because the Notes are no longer subject to the restrictions on transfer
described therein:
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF,
U.S. PERSONS, EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE
HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER"
(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS NOT A
U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION; (2)
AGREES THAT IT WILL NOT WITHIN 2 YEARS AFTER THE ORIGINAL ISSUANCE OF
THIS NOTE RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE
COMPANY OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN ACCREDITED INVESTOR
THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS FURNISHED ON ITS BEHALF
BY A U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO RESTRICTIONS ON
TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM
THE TRUSTEE), (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION
IN COMPLIANCE WITH RULE 904 UNDER THE ACT, (E) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES
ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT; AND (3) AGREES THAT IT WILL GIVE TO
EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO
THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS NOTE
WITHIN TWO YEARS AFTER ORIGINAL ISSUANCE OF THIS NOTE, IF THE PROPOSED
TRANSFEREE IS AN ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH
TRANSFER, FURNISH TO THE TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS,
LEGAL OPINIONS OR OTHER
17
<PAGE> 18
INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT
SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE ACT.
AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND
"U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE
SECURITIES ACT.
6. Conditions to the Obligations of the Initial Purchasers. The
obligations of the Initial Purchasers to purchase the Notes shall be subject to
the accuracy of the representations and warranties on the part of the Company
and the Guarantors contained herein at the date and time that this Agreement is
executed and delivered by the parties hereto (the "Execution Time") and on the
Closing Date, to the accuracy of the statements of the Company and the
Guarantors made in any certificates pursuant to the provisions hereof, to the
performance by the Company and the Guarantors of their obligations hereunder and
to the following additional conditions:
(a) The Company and the Guarantors shall have furnished
to the Initial Purchasers the opinion of McGuire, Woods, Battle & Boothe LLP
("Counsel for the Company"), dated the Closing Date, in form and substance
satisfactory to the Initial Purchasers to the effect set forth in Exhibit B
hereto.
(b) The Initial Purchasers shall have received from
Counsel for the Initial Purchasers such opinion or opinions, dated the Closing
Date, with respect to the issuance and sale of the Notes and other related
matters as the Initial Purchasers may reasonably require, and the Company and
the Guarantors shall have furnished to such counsel such documents as they
reasonably request for the purpose of enabling them to pass upon such matters.
(c) The Company and each of the Guarantors shall have
furnished to the Initial Purchasers a certificate dated the Closing Date, signed
on behalf of each of the Company and the Guarantors by any two of their Chairman
of the Board, Chief Executive Officer, President and Chief Financial Officer to
the effect that the signer of such certificate has carefully examined the Final
Memorandum, any amendment or supplement to the Final Memorandum and this
Agreement and that:
(i) the representations and warranties of the
Company and the Guarantors contained in this Agreement are true and correct in
all respects on and as of the Closing Date with the same effect as if made on
the Closing Date, and the Company and the Guarantors have complied with all the
agreements and satisfied all the conditions on its part to be performed or
satisfied hereunder at or prior to the Closing Date; and
(ii) since the date of the most recent financial
statements included in the Final Memorandum, there has been no change or
development or event involving a prospective change constituting a Material
Adverse Effect.
(d) At the Execution Time and at the Closing Date,
Deloitte & Touche, LLP shall have furnished to the Initial Purchasers a letter
or letters, dated respectively as of the
18
<PAGE> 19
Execution Time and as of the Closing Date, in form and substance satisfactory to
the Initial Purchasers, confirming that they are independent public accountants
within the meaning of Rule 101 of the Code of Professional Conduct of the
American Institute of Certified Public Accountants (the "AICPA") and stating in
effect that:
(i) in their opinion, the audited consolidated
financial statements of Fresh Foods and its Subsidiaries included in the Final
Memorandum comply as to form in all material respects with the applicable
accounting requirements of the Act and the related published rules and
regulations thereunder;
(ii) they have (a) read the unaudited financial
statements of Fresh Foods for February 28, 1998 through March 27, 1998 and
February 29, 1997 through March 28, 1997 prepared by Fresh Foods, (b) read the
minutes of the meetings of the stockholders, directors and committees of the
board of directors of Fresh Foods made available to them by Fresh Foods and (c)
made inquiries of certain officials of Fresh Foods who have responsibility for
financial and accounting matters of Fresh Foods whether the financial statements
referred to in clause (a) above are stated on a basis substantially consistent
with that of the audited combined financial statements included in the Final
Memorandum;
(iii) they have inquired of certain officials of
Fresh Foods who have responsibility for financial and accounting matters whether
(A) at any specified date not more than three Business Days prior to the date of
the letter, there was any change in the capital stock, increase in long-term
debt or any decrease in consolidated total assets or shareholders' equity of
Fresh Foods as compared with amounts shown on the February 27, 1998 audited
balance sheet included in the Final Memorandum or (B) for the period from
February 28, 1998 to any specified date not more than three Business Days prior
to the date of the letter, there were any decreases as compared with the
corresponding period in the preceding year, in revenues, operating income,
earnings before income taxes and extraordinary item or net earnings;
(iv) on the basis of the foregoing, nothing came
to their attention that caused them to believe that there were any such changes,
increases or decreases described in clause (iv), except in all instances for
changes, increases or decreases that the Offering Memorandum discloses have
occurred or may occur;
(v) they have performed certain other specified
procedures as a result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to accounting,
financial or statistical information derived from the general accounting records
of Fresh Foods) set forth in the Final Memorandum, including without limitation
the information set forth on the cover page and under the captions "Offering
Memorandum Summary," "Risk Factors," "The Acquisition," "Use of Proceeds,"
"Capitalization of the Company," "Unaudited Pro Forma Combined Financial
Information of the Company," "Selected Historical Financial Information of Fresh
Foods," "Management's Discussion and Analysis of Financial Condition and Results
of Operations," "Business," "Certain Relationships and Related Party
Transactions," "Management," "Principal Stockholders" and "Description of the
Notes" in the Final Memorandum agrees with the accounting records of Fresh
Foods, excluding any questions of legal interpretation;
19
<PAGE> 20
(vi) as to pro forma financial information;
(A) they have read the unaudited pro
forma combined financial data included in the Final Memorandum;
(B) they have inquired of certain
officials of Fresh Foods and Pierre who have responsibility for financial and
accounting matters as to the basis for their determination of the pro forma
adjustments;
(C) they have compared the estimated
financial information included in the unaudited pro forma balance sheet and the
unaudited pro forma income statement in the Final Memorandum with the historical
information for Fresh Foods and Pierre and found them to be in agreement;
(D) they have proved the arithmetic
accuracy of the application of the pro forma adjustments to the historical
financial amounts in the unaudited pro forma combined consolidated financial
data, and as a result of the procedures specified in (A), (B) and (C), nothing
came to their attention that caused them to believe that the unaudited pro forma
financial statements included in the Final Memorandum do not comply as to form
in all material respects with the applicable accounting requirements of Rule
11-02 of Regulation S-X and that the pro forma adjustments have not been
properly applied to the historical amounts in the compilation of the unaudited
pro forma combined consolidated financial data included in the Final Memorandum;
and
(E) they have performed certain other
specified procedures as a result of which they determined that certain pro forma
information of an accounting, financial, or statistical nature set forth in the
Final Memorandum, including without limitation the information set forth under
the captions "Offering Memorandum Summary," "Risk Factors," "Capitalization of
the Company" and "Unaudited Pro Forma Combined Financial Information of the
Company" in the Final Memorandum, agrees to or can be derived from the pro forma
financial data of the Company or the analysis completed in the preparation of
such pro forma financial data, excluding any questions of legal interpretation.
All references in this Section 6(d) to the Final Memorandum shall be
deemed to include any amendment or supplement thereto at the date of the letter
or letters.
(e) At the Execution Time and at the Closing Date,
Deloitte & Touche, LLP shall have furnished to the Initial Purchasers a letter
or letters, dated respectively as of the Execution Time and as of the Closing
Date, in form and substance satisfactory to the Initial Purchasers, confirming
that they are independent public accountants within the meaning of Rule 101 of
the Code of Professional Conduct of the American Institute of Certified Public
Accountants (the "AICPA") and stating in effect that:
(i) in their opinion, the audited consolidated
financial statements of Pierre included in the Final Memorandum comply as to
form in all material respects with the
20
<PAGE> 21
applicable accounting requirements of the Act and the related published rules
and regulations thereunder;
(ii) they have (a) read the unaudited financial
statements of Pierre as at and for the five months ended February 28, 1998 and
March 1, 1997 and the unaudited statement of revenues and expenses of Pierre for
the twelve months ended February 28, 1998, in each case prepared by management
of Pierre, (b) made inquiries of certain officials of Pierre who have
responsibility for financial and accounting matters of Pierre whether the
financial statements referred to in clause (a) above are stated on a basis
substantially consistent with that of the audited financial statements of Pierre
included in the Final Memorandum, and (c) conducted a limited review in
accordance with the standards established by the AICPA under Statement on
Auditing Standards No. 71 of the unaudited interim financial statements;
(iii) nothing came to their attention as a result
of the procedures performed in (a), (b) and (c) above that caused them to
believe that, (1) any material modifications should be made to the unaudited
financial statements of Pierre described above included in the Final Memorandum
for them to be in conformity with generally accepted accounting principles or
(2) the unaudited financial statements of Pierre described above included in the
Final Memorandum are not stated on a basis substantially consistent with the
audited financial statements of Pierre included in the Final Memorandum;
(iv) they have inquired of certain officials of
Pierre who have responsibility for financial and accounting matters whether (a)
at any specified date not more than three Business Days prior to the date of the
letter, there was any increase in long-term debt or any decrease in total
current assets or net assets of Pierre as compared with amounts shown on the
February 28, 1998 unaudited balance sheet of Pierre included in the Final
Memorandum or (b) for the period from March 1, 1998 to any specified date not
more than three Business Days prior to the date of the letter, there were any
decreases as compared with the corresponding period in the preceding year, in
revenues or excess of revenues over expenses before income taxes. On the basis
of these inquires, nothing came to their attention that caused them to believe
that there was any such change, increases or decrease, except in all instances
for changes, increase, or decreases set forth in such letter, in which case the
letter shall be accompanied by an explanation by Fresh Foods and management of
Pierre as to the significance thereof unless said explanation is not deemed
necessary by the Initial Purchaser;
(v) they have performed certain other specified
procedures as a result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to accounting,
financial or statistical information derived from the general accounting records
of Pierre) set forth in the Final Memorandum, including without limitation the
information set forth under the captions "Offering Memorandum Summary," "Risk
Factors," "The Acquisition," "Use of Proceeds," "Capitalization of the Company,"
"Unaudited Pro Forma Combined Financial Data of the Company," "Selected
Historical Financial Information of Pierre," "Management's Discussion and
Analysis of Financial Condition and Results of Operations," "Business," "Certain
Relationships and Related Party Transactions," "Management," "Principal
Stockholders" and "Description of the Notes" in the Final
21
<PAGE> 22
Memorandum agrees with the accounting records of the Company, excluding any
questions of legal interpretation;
(f) Subsequent to the Execution Time or, if earlier, the
dates as of which information is given in the Final Memorandum, there shall not
have been (i) any change or decrease specified in the letter or letters referred
to in paragraphs (d) and (e) of this Section 6, or (ii) any change, or any
development involving a prospective change, in or affecting the business or
properties of the Company and its Subsidiaries, the effect of which, in any case
referred to in clause (i) or (ii) above, is, in the judgment of the Initial
Purchasers, so material and adverse as to make it impractical or inadvisable to
market the Notes as contemplated by the Final Memorandum.
(g) Subsequent to the respective dates as of which
information is given in the Final Memorandum and giving effect to the
Transaction, (i) the Company and its Subsidiaries shall not have incurred any
material liability or obligation, direct or contingent, or entered into any
material transaction not in the ordinary course of business; (ii) the Company
and its Subsidiaries shall not have purchased any of its outstanding Capital
Stock, nor declared, paid or otherwise made any dividend or distribution of any
kind on its Capital Stock; and (iii) there shall not have been any material
change in the Capital Stock of the Company and its Subsidiaries or in the
short-term debt or long-term debt of the Company and its Subsidiaries, except in
each case as described in or contemplated by the Final Memorandum; and (iv) none
of the assets of the Company and its Subsidiaries shall have materially
diminished in value, except as would not result in a Material Adverse Effect.
(h) Subsequent to the Execution Time, there shall not
have been any decrease in the rating of the Notes by any "nationally recognized
statistical rating organization" (as defined for purposes of Rule 436(g) under
the Securities Act) or any notice given of any intended or potential decrease in
any such rating or of a possible change in any such rating that does not
indicate the direction of the possible change.
(i) Each of the Transaction Documents (including any
amendments thereto) shall have been duly authorized, executed and delivered by
each of the parties thereto, and the Initial Purchasers shall have received
copies of each such Transaction Document (including any amendments thereto) as
so executed and delivered in the form provided to the Initial Purchasers on or
before the date hereof except for changes approved by the Initial Purchasers or
changes which do not materially affect the rights or obligations of the Company
and the Guarantors.
(j) The Company shall have been advised by the National
Association of Securities Dealers, Inc. (the "NASD") that the Notes have been
designated PORTAL-eligible securities in accordance with the rules and
regulations of the NASD relating to trading in the PORTAL Market.
(k) On or before the Closing Date, all conditions to
borrowing under the Bank Facility shall have been satisfied and the initial
borrowings thereunder shall have occurred concurrently with the sale of the
Notes hereunder as contemplated in the Final Memorandum;
22
<PAGE> 23
(l) On or before the Closing Date, all conditions to the
consummation of the Acquisition pursuant to the Asset Purchase Agreement shall
have been satisfied and the consummation of the Acquisition shall have occurred
concurrently with the closing of the sale of the Notes hereunder as contemplated
in the Final Memorandum;
(m) Prior to the Closing Date, the Company and the
Guarantors shall have furnished to the Initial Purchasers such further
information, certificates and documents as the Initial Purchasers may reasonably
request.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be satisfactory in all respects in form and substance to the
Initial Purchasers and Counsel for the Initial Purchasers, this Agreement and
all obligations of the Initial Purchasers hereunder may be canceled at the
Closing Date by the Initial Purchasers. Notice of such cancellation shall be
given to the Company in writing, by telecopier or by telephone confirmed in
writing.
The documents required to be delivered by this Section 6 will be
delivered at the office of Counsel for the Initial Purchasers on the Closing
Date.
7. Reimbursement of Expenses, Fees. The Company and the
Guarantors will, whether or not the sale of the Notes provided for herein is
consummated, pay all expenses incident to the performance of its obligations
under this Agreement and the offering documents and the other Transaction
Documents, including the fees and disbursements of its accountants and counsel,
the cost of printing or other production and delivery of the Preliminary
Memoranda, the Final Memorandum, all amendments thereof and supplements thereto,
and all other documents relating to the offering of the Notes, the cost of
preparing, printing, packaging and delivering the Notes, the fees and
disbursements, including fees of counsel incurred in compliance with Section
5(d), the fees and disbursements of the Trustee and the fees of any agency that
rates the Notes, and the fees and expenses, if any, incurred in connection with
the admission of the Notes for trading in the PORTAL Market.
8. Indemnification and Contribution.
(a) The Company and the Guarantors jointly and severally
agree to indemnify and hold harmless the Initial Purchasers, the directors,
officers, employees and agents of the Initial Purchasers and each person who
controls the Initial Purchasers within the meaning of either the Securities Act
or the Exchange Act against any and all losses, claims, damages or liabilities,
joint or several, to which they or any of them may become subject under the
Securities Act, the Exchange Act or other federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact contained in
the Preliminary Memoranda, the Final Memorandum or any information provided by
the Company and the Guarantors to any Holder or prospective purchaser of Notes
pursuant to Section 5(i), or in any amendment thereof or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein
23
<PAGE> 24
or necessary to make the statements therein, in light of the circumstances under
which they are made, not misleading, and agree to reimburse each such
indemnified party, as incurred, for any legal or other expenses incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company and the Guarantors will
not be liable in any case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made in the Preliminary
Memoranda or the Final Memorandum, or in any amendment thereof or supplement
thereto, in reliance upon and in conformity with written information relating to
the Initial Purchasers furnished to the Company or the Guarantors by or on
behalf of the Initial Purchasers specifically for inclusion therein; and,
provided, further, that with respect to any untrue statement or omission of
material fact made in the Preliminary Memoranda, the indemnity agreement
contained in this Section 8(a) shall not inure to the benefit of the Initial
Purchasers to the extent that any such losses, claims, damages or liabilities
asserted against the Initial Purchasers occurs under circumstances where it
shall have been determined by a court of competent jurisdiction by final and
nonappealable judgment that (x) the Company had previously furnished copies of
the Final Memorandum to the Initial Purchasers as required by this Agreement,
(y) the untrue statement or omission of a material fact contained in either
Preliminary Memorandum was corrected in the Final Memorandum and (z) there was
not sent or given to such person asserting any such losses, claims, damages or
liabilities, at or prior to the written confirmation of the sale of Notes to
such person, a copy of the Final Memorandum.
(b) The Initial Purchasers agree to indemnify and hold
harmless (i) the Company, (ii) each Guarantor, (iii) each of their respective
directors and officers and (iv) each person who controls the Company or any
Guarantor within the meaning of either the Securities Act or the Exchange Act to
the same extent as the foregoing indemnity from the Company and the Guarantors
to the Initial Purchasers, but only with reference to written information
relating to the Initial Purchasers furnished to the Company and the Guarantors
by or on behalf of the Initial Purchasers specifically for inclusion in the
documents referred to in the foregoing indemnity. This indemnity agreement will
be in addition to any liability which the Initial Purchasers may otherwise have.
The Company and the Guarantors acknowledge that the statements set forth in the
last paragraph of the cover page and under the headings "Notice to Investors"
and "Plan of Distribution" in the Preliminary Memoranda and the Final Memorandum
constitute the only information furnished in writing by or on behalf of the
Initial Purchasers for inclusion in the Preliminary Memoranda or Final
Memorandum (or in any amendment or supplement thereto).
(c) Promptly after receipt by an indemnified party under
this Section 8 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the indemnifying
party under this Section 8, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve it from liability under paragraph (a) or (b) above unless and
to the extent it did not otherwise learn of such action and such failure results
in the forfeiture by the indemnifying party of substantial rights and defenses
and (ii) will not, in any event, relieve the indemnifying party from any
obligations to any indemnified party other than the indemnification obligation
provided in paragraph (a) or (b) above. The indemnifying party shall be entitled
to appoint counsel of the indemnifying party's choice at the indemnifying
party's expense to represent the indemnified party in any action for which
indemnification is sought (in
24
<PAGE> 25
which case the indemnifying party shall not thereafter be responsible for the
fees and expenses of any separate counsel retained by the indemnified party or
parties except as set forth below); provided, however, that such counsel shall
be reasonably satisfactory to the indemnified party. Notwithstanding the
indemnifying party's election to appoint counsel to represent the indemnified
party in an action, the indemnified party shall have the right to employ
separate counsel (including local counsel), and the indemnifying party shall
bear the reasonable fees, costs and expenses of such separate counsel (and local
counsel) if (i) the use of counsel chosen by the indemnifying party to represent
the indemnified party would present such counsel with an actual conflict of
interest, (ii) the defendants in any such action include both the indemnified
party and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those available to
the indemnifying party, (iii) the indemnifying party shall not have employed
counsel satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after notice of the institution of such action or (iv)
the indemnifying party shall have authorized the indemnified party to employ
separate counsel at the expense of the indemnifying party. An indemnifying party
will not, without the prior written consent of the indemnified parties, settle
or compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding.
(d) In the event that the indemnity provided in paragraph
(a) or (b) of this Section 8 is unavailable or insufficient to hold harmless an
indemnified party for any reason, the Company and the Guarantors, on the one
hand, and the Initial Purchasers, on the other, agree to contribute to the
aggregate losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating or defending same)
(collectively "Losses") to which the Company and the Guarantors, on the one
hand, and the Initial Purchasers on the other, may be subject in such proportion
as is appropriate to reflect the relative benefits received by the Company and
the Guarantors, on the one hand, and by the Initial Purchasers, on the other,
from the offering of the Notes; provided, however, that in no case shall the
Initial Purchasers be responsible for any amount in excess of the purchase
discount or commission applicable to the Notes purchased by the Initial
Purchasers hereunder. If the allocation provided by the immediately preceding
sentence is unavailable for any reason, the Company and the Guarantors, on the
one hand, and the Initial Purchasers, on the other, shall contribute in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Company and the Guarantors, on the one hand, and of
the Initial Purchasers, on the other, in connection with the statements or
omissions that resulted in such Losses as well as any other relevant equitable
considerations. Benefits received by the Company and the Guarantors shall be
deemed to be equal to the total net proceeds from the offering (before deducting
expenses), and benefits received by the Initial Purchasers shall be deemed to be
equal to the total purchase discounts and commissions received by the Initial
Purchasers from the Company in connection with the purchase of the Notes
hereunder. Relative fault shall be determined by reference to, among other
things, whether any alleged untrue statement or omission relates to information
provided by the Company, the Guarantors or the Initial Purchasers and the
parties' relative intent,
25
<PAGE> 26
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company, the Guarantors and the Initial Purchasers
agree that it would not be just and equitable if contribution were determined by
pro rata allocation or any other method of allocation that does not take account
of the equitable considerations referred to above. The amount paid or payable by
an indemnified party as a result of the losses, claims, damages, liabilities,
expenses or judgments referred to in the immediately preceding paragraph shall
be deemed to include any legal or other expenses incurred by such indemnified
person in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this paragraph (d), no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section 8,
each person who controls the Initial Purchasers within the meaning of either the
Securities Act or the Exchange Act and each director, officer, employee and
agent of the Initial Purchasers shall have the same rights to contribution as
the Initial Purchasers, and each person who controls the Company or any
Guarantor within the meaning of either the Securities Act or the Exchange Act
and each officer, director, employee and agent of the Company or any Guarantor
shall have the same rights to contribution as the Company and the Guarantors,
subject in each case to the applicable terms and conditions of this paragraph
(d).
9. Termination. This Agreement shall be subject to termination by
notice given by the Initial Purchasers to the Company prior to delivery of and
payment for the Notes if, after the date hereof and prior to such time, there
shall have occurred a material adverse change in the condition of the financial,
banking or capital markets the effect of which, in the judgment of the Initial
Purchasers, makes it impractical to market the Notes or to enforce sale
contracts with respect to the Notes.
10. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company, the Guarantors or their officers and of the Initial Purchasers set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation made by or on behalf of the Initial
Purchasers or the Company, the Guarantors or any of their officers, directors or
controlling persons referred to in Section 8 hereof, and will survive delivery
of and payment for the Notes. The provisions of Sections 7 and 8 hereof shall
survive the termination or cancellation of this Agreement.
11. Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Initial Purchasers, will be
mailed, delivered or telecopied and confirmed to it at 301 South College Street,
TW-10, Charlotte, NC 28288-0606, Telecopy No.: (704) 383-5097, Attention: Eric
Lloyd, or, if sent to the Company, will be mailed, delivered or telecopied and
confirmed to them at 1 WSMP Drive, Claremont, NC 28610, Telecopy No.: (919)
459-3148, Attention: David R. Clark.
12. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and assigns and
the officers and directors and controlling persons referred to in Section 8
hereof, and, except as expressly set forth in Section 5(i) hereof, nothing
expressed or mentioned in this Agreement is intended or shall be construed
26
<PAGE> 27
to give any other person, firm, corporation or other entity any legal or
equitable right, remedy or claim under or in respect to this Agreement or any
provisions herein contained. No purchaser of Notes from the Initial Purchasers
shall be deemed to be a successor merely by reason of such purchase.
13. Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED IN SAID STATE.
14. Business Day. For purposes of this Agreement, "Business Day"
means any day excluding Saturday, Sunday and any day which is a legal holiday
under the laws of Charlotte, North Carolina or of New York, New York, or is a
day on which banking institutions therein located are authorized or required by
law or other governmental action to close.
15. Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original, but all such
counterparts will together constitute one and the same instrument.
* * *
27
<PAGE> 28
If the foregoing is in accordance with your understanding of our
agreement please sign and return to us the enclosed duplicate hereof, whereupon
this Agreement and your acceptance shall represent a binding agreement among the
Company, the Guarantors and the Initial Purchasers.
Very truly yours,
FRESH FOODS, INC.
By: /s/ David R. Clark
----------------------------------------
Name: David R. Clark
Title: President
GUARANTORS:
BRUNSWICK ASSOCIATES, INC.
By: /s/ David R. Clark
----------------------------------------
Name: David R. Clark
Title: President
CLAREMONT RESTAURANT GROUP, LLC
By: FRESH FOODS, INC., Sole Member
By: /s/ David R. Clark
----------------------------------------
Name: David R. Clark
Title: President
ELLOREE FOODS, INC.
By: /s/ David R. Clark
----------------------------------------
Name: David R. Clark
Title: President
28
<PAGE> 29
FRESH FOODS PROPERTIES, LLC
By: FRESH FOODS, INC., Sole Member
By: /s/ David R. Clark
----------------------------------------
Name: David R. Clark
Title: President
GEORGIA BUFFET RESTAURANTS, INC.
By: /s/ David R. Clark
----------------------------------------
Name: David R. Clark
Title: President
KNOXVILLE FOODS, INC.
By: /s/ David R. Clark
----------------------------------------
Name: David R. Clark
Title: Vice President
MOM 'N' POP'S COUNTRY HAM, LLC
By: FRESH FOODS, INC., Sole Member
By: /s/ David R. Clark
----------------------------------------
Name: David R. Clark
Title: President
OAK RIDGE FOODS, INC.
By: /s/ David R. Clark
----------------------------------------
Name: David R. Clark
Title: Vice President
SAGEBRUSH, INC.
By: /s/ David R. Clark
----------------------------------------
Name: David R. Clark
Title: Vice President
29
<PAGE> 30
SAGEBRUSH OF SEVIERVILLE, INC.
By: /s/ David R. Clark
----------------------------------------
Name: David R. Clark
Title: Vice President
SAGEBRUSH OF TENNESSEE, L.P.
By: Sagebrush of South Carolina, LLC
General Partner
By: Sagebrush, Inc., Sole Member
By: /s/ David R. Clark
----------------------------------------
Name: David R. Clark
Title: Vice President
SEVEN STARS, INC.
By: /s/ David R. Clark
----------------------------------------
Name: David R. Clark
Title: President
ST. AUGUSTINE FOODS, INC.
By: /s/ David R. Clark
----------------------------------------
Name: David R. Clark
Title: President
TENNESSEE WSMP, INC.
By: /s/ David R. Clark
----------------------------------------
Name: David R. Clark
Title: President
VIRGINIA WSMP, INC.
By: /s/ David R. Clark
----------------------------------------
Name: David R. Clark
Title: President
30
<PAGE> 31
CHARDENT, INC.
By: /s/ David R. Clark
----------------------------------------
Name: David R. Clark
Title: Vice President
PIERRE FOODS, LLC
By: FRESH FOODS, INC., Sole Member
By: /s/ David R. Clark
----------------------------------------
Name: David R. Clark
Title: President
GEORGIA WSMP, INC.
By: /s/ David R. Clark
----------------------------------------
Name: David R. Clark
Title: President
KINGSPORT FOODS, INC.
By: /s/ David R. Clark
----------------------------------------
Name: David R. Clark
Title: Vice President
MATTHEWS PRIME SIRLOIN, INC.
By: /s/ David R. Clark
----------------------------------------
Name: David R. Clark
Title: President
NAPLES FOODS, INC.
By: /s/ David R. Clark
----------------------------------------
Name: David R. Clark
Title: President
31
<PAGE> 32
PRIME SIRLOIN, INC.
By: /s/ David R. Clark
----------------------------------------
Name: David R. Clark
Title: President
SAGEBRUSH OF NORTH CAROLINA, LLC
By: FRESH FOODS, INC., Sole Member
By: /s/ David R. Clark
----------------------------------------
Name: David R. Clark
Title: President
SAGEBRUSH OF SOUTH CAROLINA, LLC
By: FRESH FOODS, INC., Sole Member
By: /s/ David R. Clark
----------------------------------------
Name: David R. Clark
Title: President
SPICEWOOD, INC.
By: /s/ David R. Clark
----------------------------------------
Name: David R. Clark
Title: Vice President
SOUTH CAROLINA WSMP, INC.
By: /s/ David R. Clark
----------------------------------------
Name: David R. Clark
Title: President
SUNSHINE WSMP, INC.
By: /s/ David R. Clark
----------------------------------------
Name: David R. Clark
Title: President
32
<PAGE> 33
TUMBLEWEED OF PIGEON FORGE, INC.
By: /s/ David R. Clark
----------------------------------------
Name: David R. Clark
Title: Vice President
GREENVILLE FOOD SYSTEMS,
INCORPORATED
By: /s/ David R. Clark
----------------------------------------
Name: David R. Clark
Title: President
FRESH FOODS SALES, LLC
By: FRESH FOODS, INC., Sole Member
By: /s/ David R. Clark
----------------------------------------
Name: David R. Clark
Title: President
SAGEBRUSH DTN, INC.
By: /s/ David R. Clark
----------------------------------------
Name: David R. Clark
Title: Vice President
D&S FOOD SYSTEMS, LLC
By: FRESH FOODS, INC., Sole Member
By: /s/ David R. Clark
----------------------------------------
Name: David R. Clark
Title: President
33
<PAGE> 34
The foregoing Agreement is
hereby confirmed and accepted
as of the date first above written.
FIRST UNION CAPITAL MARKETS
A DIVISION OF WHEAT FIRST SECURITIES, INC.
By: /s/ Eric Lloyd
----------------------------------------
Name: Eric Lloyd
Title: Director
BANCAMERICA ROBERTSON STEPHENS
By: /s/ Mark S. Dawley
----------------------------------------
Name: Mark S. Dawley
Title: Managing Director
34
<PAGE> 35
SCHEDULE I
Subject to the terms and conditions set forth in this Agreement, the
Initial Purchasers have agreed, severally and not jointly, to purchase from the
Company, and the Company has agreed to sell to the Initial Purchasers, the
respective principal amount of the Notes set forth opposite their names below:
<TABLE>
<CAPTION>
Initial Purchasers Principal Amount of Notes
------------------ -------------------------
<S> <C>
First Union Capital Markets $103,500,000
BancAmerica Robertson Stephens $ 11,500,000
------------
$115,000,000
============
</TABLE>
<PAGE> 36
EXHIBIT A
SUBSIDIARIES
<TABLE>
<CAPTION>
Name Jurisdiction of Organization
- ---- ----------------------------
<S> <C>
Brunswick Associates, Inc. Georgia
Claremont Restaurant Group, LLC North Carolina
Elloree Foods, Inc. South Carolina
Fresh Foods Properties, LLC North Carolina
Georgia Buffet Restaurants, Inc. Georgia
Knoxville Foods, Inc. Tennessee
Mom `n' Pop's Country Ham, LLC North Carolina
Oak Ridge Foods, Inc. Tennessee
Sagebrush, Inc. North Carolina
Sagebrush of Sevierville, Inc. Tennessee
Sagebrush of Tennessee, L.P. Tennessee
Seven Stars, Inc. Maryland
St. Augustine Foods, Inc. Florida
Tennessee WSMP, Inc. Tennessee
Virginia WSMP, Inc. Virginia
Chardent, Inc. Delaware
Pierre Foods, LLC North Carolina
Georgia WSMP, Inc. Georgia
Kingsport Foods, Inc. Tennessee
Matthews Prime Sirloin, Inc. North Carolina
Naples Foods, Inc. Florida
Prime Sirloin, Inc. Tennessee
Sagebrush of North Carolina, LLC North Carolina
Sagebrush of South Carolina, LLC South Carolina
Spicewood, Inc. Delaware
South Carolina WSMP, Inc. South Carolina
Sunshine WSMP, Inc. Florida
Tumbleweed of Pigeon Forge, Inc. Tennessee
Greenville Food Systems, Incorporated North Carolina
Fresh Foods Sales, LLC North Carolina
Sagebrush DTN, Inc. Tennessee
D&S Food Systems, LLC Georgia
</TABLE>
<PAGE> 37
EXHIBIT B
FORM OF OPINION OF MCGUIRE, WOODS, BATTLE & BOOTHE LLP
The introduction, qualifications and assumptions of this opinion shall be
satisfactory to the Initial Purchasers and Counsel to the Initial Purchasers in
their sole discretion.
1. The Company and the Guarantors are each duly organized and validly
existing in good standing under the laws of their respective jurisdictions of
organization with the power to own their respective properties and assets and to
transact the business in which each is engaged.
2. All of the outstanding shares of Capital Stock of the Company and the
Guarantors have been duly authorized and validly issued, are fully paid and
nonassessable and were not issued in violation of any preemptive rights
contained in their respective certificates of incorporation or otherwise imposed
by law. All of the Capital Stock of each of the Guarantors is owned of record
and, to our knowledge, by the Company or another wholly-owned Subsidiary of the
Company.
3. The Purchase Agreement has been duly and validly authorized, executed
and delivered by the Company and the Guarantors and constitutes the valid and
legally binding agreement of each of the Company and the Guarantors, enforceable
against the Company and the Guarantors in accordance with its terms.
4. The Indenture has been duly and validly authorized by the Company and
the Guarantors and, when duly and validly executed and delivered, will
constitute the valid and legally binding agreement of the Company and the
Guarantors, enforceable against the Company and the Guarantors in accordance
with its terms.
5. The Notes are in the form contemplated by the Indenture. The Notes have
each been duly and validly authorized, executed and delivered by the Company and
the Guarantors (in respect of the Guarantees) and, when duly paid for by the
Initial Purchasers in accordance with the terms of the Purchase Agreement, will
constitute the valid and legally binding obligations of the Company and the
Guarantors (in respect of the Guarantees), entitled to the benefits of the
Indenture, and enforceable against the Company and the Guarantors (in respect of
the Guarantees) in accordance with their terms.
6. The Exchange Notes have been duly and validly authorized by the Company
and the Guarantors, and when the Exchange Notes have been duly executed and
delivered in accordance with the terms of the Indenture, will constitute the
valid and legally binding obligations of the Company and the Guarantors (in
respect of the Guarantees), entitled to the benefits of the Indenture, and
enforceable against the Company and the Guarantors (in respect of the
Guarantees) in accordance with their terms.
7. The Registration Rights Agreement has been duly and validly authorized
by the Company and the Guarantors, and, when duly and validly executed and
delivered, will constitute
<PAGE> 38
the valid and legally binding agreement of the Company and the Guarantors,
enforceable against the Company and the Guarantors in accordance with its terms.
8. Each of (a) the issuance, offering and sale of the Notes to the Initial
Purchasers by the Company pursuant to the Purchase Agreement; (b) the execution,
delivery and performance of each of the other Transaction Documents and each
other document and instrument to be executed, delivered or performed by each of
the Company and the Guarantors in connection with the Transactions and (c) the
consummation of each of the transactions herein or therein contemplated and the
compliance with each of the terms and provisions hereof or thereof, do not and
will not (i) violate or result in any breach of any of the terms, covenants,
conditions or provisions of, constitute a default under, or result in the
creation or imposition of any lien upon any of their properties or assets
pursuant to the terms of any Contracts of which we are aware and to which any of
them is a party or by which they or any of their properties or assets are bound
or to which any of them may be subject, except for such violations, breaches,
defaults or liens that could not be reasonably expected to have a Material
Adverse Effect (ii) violate any provision of applicable Law or regulation or of
its certificate of incorporation or by-laws, or (iii) to our knowledge, violate
or contravene any judgment, writ, order, injunction or decree of any court,
arbitrator, administrative agency or other governmental authority applicable to
the Company, any of the Guarantors or to any of their respective properties or
assets.
9. To our knowledge, there are no actions, suits or proceedings pending or
threatened with respect to any of the Company or the Guarantors which (a) if
adversely determined, could be reasonably expected to result in a Material
Adverse Effect or (b) seeks to restrain, enjoin or prevent the consummation of
or otherwise challenge the Transaction Documents or the consummation of the
Transactions.
10. None of the Company or the Guarantors is (a) an "investment company" or
a company "controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended, without taking into account the
number of holders of securities of the Company and the Guarantors or any company
"controlling" any of them, or (b) 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.
11. No consent, license, approval or authorization of, registration, filing
or declaration with, or notice to any governmental body, official, authority,
bureau or agency is required in connection with the execution, delivery or
performance by the Company or any Guarantor of the Transaction Documents to
which each is a party or in connection with the consummation of the
Transactions, except for such consents, licenses, approvals, authorizations,
registrations, filings, declarations and notices that have already been obtained
or made.
12. It is not necessary in connection with the offer, sale and delivery of
the Notes in the manner contemplated by this Agreement and the Final Memorandum
to register the Notes under the Securities Act or to qualify the Indenture under
the Trust Indenture Act, in each case assuming (a) the accuracy of the
representations and warranties of the Company contained in Section 1 of the
Purchase Agreement, (b) the compliance by the Company of the covenants
<PAGE> 39
contained in Section 5 of the Purchase Agreement, (c) the accuracy of the
Initial Purchasers' representations and warranties in Section 4 of the Purchase
Agreement and (d) the compliance by the Initial Purchasers of their covenants in
Section 4 of the Purchase Agreement.
13. The Transaction Documents conform in all material respects to the
descriptions thereof contained in the Final Memorandum.
In addition, we have participated in conferences with officers and other
representatives of the Company and the Guarantors, representatives of the
independent public accountants for the Company and the Guarantors,
representatives of the Initial Purchasers and counsel for the Initial
Purchasers, at which conferences the contents of the Final Memorandum and
related matters were discussed, and, although we have not independently verified
and do not pass upon and assume no responsibility for the accuracy, completeness
or fairness of the statements contained in the Final Memorandum (except to the
extent specified in Paragraph 13 above), no facts have come to our attention
which lead us to believe that the Final Memorandum, on the date thereof or at
the Closing Date, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading (it being understood that we express no opinion with
respect to the financial statements and related notes thereto and the other
financial, statistical and accounting data included in the Final Memorandum).
<PAGE> 1
EXHIBIT 4.2
================================================================================
FRESH FOODS, INC.
Issuer
$125,000,000
10 3/4% Senior Notes Due 2006
INDENTURE
Dated as of June 9, 1998
STATE STREET BANK AND TRUST COMPANY
Trustee
================================================================================
<PAGE> 2
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Section Indenture Section
----------- -----------------
<S> <C>
310(a)(1) 7.10
(a)(2) 7.10
(a)(3) N.A.
(a)(4) N.A.
(b) 7.08; 7.10
(c) N.A.
311(a) 7.11
(b) 7.11
(c) N.A.
312(a) 2.05
(b) 13.03
(c) 13.03
313(a) 7.06
(b)(1) N.A.
(b)(2) 7.06
(c) 13.02
(d) 7.06
314(a) 4.02; 4.11; 13.02
(b) N.A.
(c)(1) 13.04
(c)(2) 13.04
(c)(3) N.A.
(d) N.A.
(e) 13.05
(f) 4.11
315(a) 7.01
(b) 7.05; 13.02
(c) 7.01
(d) 7.01
(e) 6.11
316(a)(last sentence) 13.06
(a)(1)(A) 6.05
(a)(1)(B) 6.04
(a)(2) N.A.
(b) 6.07
317(a)(1) 6.08
(a)(2) 6.09
(b) 2.04
318(a) 13.01
N.A. means Not Applicable.
</TABLE>
<PAGE> 3
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of this Indenture.
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE............................................................. 1
SECTION 1.01. Definitions............................................................................... 1
SECTION 1.02. Incorporation by Reference of Trust Indenture Act.........................................20
SECTION 1.03. Rules of Construction.....................................................................20
ARTICLE 2 THE NOTES..............................................................................................21
SECTION 2.01. Form and Dating...........................................................................21
SECTION 2.02. Execution and Authentication..............................................................24
SECTION 2.03. Registrar and Paying Agent................................................................25
SECTION 2.04. Paying Agent To Hold Money in Trust.......................................................26
SECTION 2.05. Global Notes..............................................................................26
SECTION 2.06. Transfer and Exchange.....................................................................27
SECTION 2.07. Replacement Notes.........................................................................33
SECTION 2.08. Outstanding Notes.........................................................................33
SECTION 2.09. Temporary Notes...........................................................................34
SECTION 2.10. Cancellation..............................................................................34
SECTION 2.11. Payment of Interest, Interest Rights Preserved............................................34
SECTION 2.12. CUSIP Numbers.............................................................................35
SECTION 2.13. Transfers, etc............................................................................35
ARTICLE 3 REDEMPTION.............................................................................................35
SECTION 3.01. Notices to Trustee........................................................................35
SECTION 3.02. Selection of Notes To Be Redeemed.........................................................36
SECTION 3.03. Notice of Redemption......................................................................36
SECTION 3.04. Effect of Notice of Redemption............................................................37
SECTION 3.05. Deposit of Redemption Price...............................................................37
SECTION 3.06. Notes Redeemed in Part....................................................................37
ARTICLE 4 COVENANTS..............................................................................................37
SECTION 4.01. Payment of Notes..........................................................................37
SECTION 4.02. Maintenance of Office or Agency..........................................................38
SECTION 4.03. Money for the Note to be Held in Trust....................................................39
SECTION 4.04. Corporate Existence.......................................................................39
SECTION 4.05. Maintenance of Property...................................................................39
SECTION 4.06. Payment of Taxes and Other Claims.........................................................39
SECTION 4.07. SEC Reports...............................................................................40
SECTION 4.08. Limitation on Indebtedness................................................................40
SECTION 4.09. Limitation on Restricted Payments.........................................................40
SECTION 4.10. Limitation on Restrictions on Distributions from Restricted
Subsidiaries.............................................................................................42
SECTION 4.11. Limitation on Sales of Assets and Subsidiary Stock........................................43
SECTION 4.12. Limitation on Affiliate Transactions......................................................46
SECTION 4.13. Limitation on the Sale or Issuance of Capital Stock of Restricted
Subsidiaries.............................................................................................47
SECTION 4.14. Change of Control.........................................................................47
</TABLE>
<PAGE> 5
<TABLE>
<S> <C>
SECTION 4.15. Limitation on Liens.......................................................................50
SECTION 4.16. Compliance Certificate....................................................................51
SECTION 4.17. Waiver of Stay, Extension or Usury Laws...................................................51
SECTION 4.18. Investment Company Act....................................................................51
SECTION 4.19. Further Instruments and Acts..............................................................51
ARTICLE 5 SUCCESSOR COMPANY......................................................................................51
SECTION 5.01. When Company May Merge or Transfer Assets.................................................51
ARTICLE 6 DEFAULTS AND REMEDIES..................................................................................52
SECTION 6.01. Events of Default.........................................................................52
SECTION 6.02. Acceleration..............................................................................54
SECTION 6.03. Other Remedies............................................................................55
SECTION 6.04. Waiver of Past Defaults...................................................................55
SECTION 6.05. Control by Majority.......................................................................55
SECTION 6.06. Limitation on Suits.......................................................................55
SECTION 6.07. Rights of Holders To Receive Payment......................................................56
SECTION 6.08. Collection Suit by Trustee................................................................56
SECTION 6.09. Trustee May File Proofs of Claim..........................................................56
SECTION 6.10. Priorities................................................................................57
SECTION 6.11. Undertaking for Costs.....................................................................57
SECTION 6.12. Waiver of Stay or Extension Laws..........................................................57
ARTICLE 7 TRUSTEE................................................................................................57
SECTION 7.01. Duties of Trustee.........................................................................57
SECTION 7.02. Rights of Trustee.........................................................................58
SECTION 7.03. Individual Rights of Trustee..............................................................59
SECTION 7.04. Trustee's Disclaimer......................................................................59
SECTION 7.05. Notice of Defaults........................................................................59
SECTION 7.06. Reports by Trustee to Holders.............................................................60
SECTION 7.07. Compensation and Indemnity................................................................60
SECTION 7.08. Replacement of Trustee....................................................................61
SECTION 7.09. Successor Trustee by Merger...............................................................61
SECTION 7.10. Eligibility; Disqualification.............................................................62
SECTION 7.11. Preferential Collection of Claims Against Company.........................................62
SECTION 7.12. Trustee's Application for Instructions from the Company...................................62
ARTICLE 8 DISCHARGE OF INDENTURE; DEFEASANCE.....................................................................62
SECTION 8.01. Discharge of Liability on Notes; Defeasance...............................................62
SECTION 8.02. Conditions to Defeasance..................................................................64
SECTION 8.03. Application of Trust Money................................................................65
SECTION 8.04. Repayment to Company......................................................................65
</TABLE>
<PAGE> 6
<TABLE>
<S> <C>
SECTION 8.05. Indemnity for Government Obligation.......................................................65
SECTION 8.06. Reinstatement.............................................................................65
ARTICLE 9 AMENDMENTS.............................................................................................66
SECTION 9.01. Without Consent of Holders................................................................66
SECTION 9.02. With Consent of Holders...................................................................66
SECTION 9.03. Compliance with Trust Indenture Act.......................................................67
SECTION 9.04. Revocation and Effect of Consents and Waivers.............................................67
SECTION 9.05. Notation on or Exchange of Notes..........................................................67
SECTION 9.06. Trustee To Sign Amendments................................................................68
SECTION 9.07. Payment for Consent.......................................................................68
ARTICLE 10 GUARANTEES; RELEASE OF GUARANTEES; ADDITIONAL ........................................................68
GUARANTEES........................................................................................................68
SECTION 10.01. Guarantees...............................................................................68
SECTION 10.02. Successors and Assign....................................................................70
SECTION 10.03. No Waiver................................................................................70
SECTION 10.04. Modification.............................................................................70
SECTION 10.05. Limitation of Guarantor's Liability......................................................70
SECTION 10.06. Release of Guarantees....................................................................70
SECTION 10.07. Additional Guarantees....................................................................71
ARTICLE 11 MISCELLANEOUS.........................................................................................71
SECTION 11.01. Trust Indenture Act Controls.............................................................71
SECTION 11.02. Notices..................................................................................71
SECTION 11.03. Communication by Holders with Other Holders..............................................72
SECTION 11.04. Certificate and Opinion as to Conditions Precedent.......................................72
SECTION 11.05. Statements Required in Certificate or Opinion............................................72
SECTION 11.06. When Notes Disregarded...................................................................72
SECTION 11.07. Rules by Trustee, Paying Agent and Registrar.............................................73
SECTION 11.08. Legal Holidays...........................................................................73
SECTION 11.09. Governing Law............................................................................73
SECTION 11.10. No Recourse Against Others...............................................................73
SECTION 11.11. Successors...............................................................................73
SECTION 11.12. Multiple Originals.......................................................................74
SECTION 11.13. Table of Contents, Headings..............................................................74
SECTION 11.14. Severability.............................................................................74
SECTION 11.15. Further Instruments and Acts.............................................................74
</TABLE>
<PAGE> 7
INDENTURE dated as of June 9, 1998, among FRESH FOODS, INC., a Delaware
corporation (the "Company"), each subsidiary of the Company listed on Schedule A
(the "Guarantors") and STATE STREET BANK AND TRUST COMPANY, a Massachusetts
trust company (the "Trustee").
RECITALS
The Company has duly authorized the creation and issue of its ___%
Senior Notes Due 2006 (the "Initial Notes") of substantially the tenor and
amount hereinafter set forth and, to provide therefor and for, if and when
issued in exchange for the Initial Notes pursuant to this Indenture and the
Registration Rights Agreement, the Company's ___% Senior Notes Due 2006 (the
"Exchange Notes" and together with the Initial Notes, the "Notes"), the Company
has duly authorized the execution and delivery of this Indenture.
Each of the Guarantors has duly authorized the execution and delivery
of this Indenture to provide a Guarantee of the Notes and of certain of the
obligations of the Company hereunder.
All things necessary to make the Notes, when executed by the Company
and authenticated and delivered by the Trustee hereunder and duly issued by the
Company, the valid obligations of the Company, and to make this Indenture a
valid instrument of the Company and each of the Guarantors, in accordance with
their respective terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH, that for and in
consideration of the premises and the purchase of the Initial Notes by the
Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Notes, as follows;
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"Acquired Indebtedness" means, with respect to any Person, (i) any
Indebtedness or Disqualified Stock of any other Person existing at the time such
Person is merged with or into or becomes a Restricted Subsidiary of such
specified Person, including, without limitation, Indebtedness Incurred in
connection with, or in contemplation of, such other Person merging with or into
or becoming a Restricted Subsidiary of such specified Person, and (ii)
Indebtedness secured by a Lien encumbering any asset acquired by such specified
Person, and in either case for purposes of this Indenture shall be deemed to be
Incurred by such specified Person at the time such other Person is merged with
or into or becomes a Restricted Subsidiary of such specified Person or at the
time such asset is acquired by such specified Person, as the case may be.
"Additional Guarantee" has the meaning assigned to it in Section 11.07.
1
<PAGE> 8
"Additional Guarantor" has the meaning assigned to it in Section 11.07.
"Affiliate" of any specified Person means any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person, including without limitation, any director
or executive officer of such specified Person. For the purposes of this
definition, "control" (including with correlative meaning, the terms
"controlling," "controlled by" and "under common control with") when used with
respect to any Person, means (i) the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise or (ii) the beneficial ownership of 10% or
more of the total voting power of the Voting Stock (on a fully diluted basis) of
such Person.
"Affiliate Transaction" has the meaning assigned to it in Section 4.12.
"Agent Members" has the meaning assigned to it in Section 2.05(a).
"Asset Acquisition" means (a) an Investment by the Company or any
Restricted Subsidiary in any other Person pursuant to which such Person shall be
merged with or into the Company or any Restricted Subsidiary, or (b) the
acquisition by the Company or any Restricted Subsidiary of the assets of any
Person (other than a Subsidiary of the Company) which constitutes all or
substantially all of the assets of such Person or comprises any division or line
of business of such Person or any other properties or assets of such Person
other than in the ordinary course of business.
"Asset Sale" means any direct or indirect sale, issuance, conveyance,
lease, assignment, transfer or other disposition for value (including, without
limitation, pursuant to any amalgamation, merger or consolidation or pursuant to
any sale and leaseback transaction) by the Company or by any of its Restricted
Subsidiaries to any Person other than the Company or any of its Wholly-Owned
Restricted Subsidiaries (any such transaction, a "disposition") of (i) any of
the stock of any of the Company's Subsidiaries, (ii) substantially all of the
assets of any division or line of business of the Company or of any of its
Subsidiaries, or (iii) any other assets (whether tangible or intangible) of the
Company or of any of its Subsidiaries; excluding (a) any disposition of Cash
Equivalents or inventory in the ordinary course of business or obsolete
equipment in the ordinary course of business consistent with past practices of
the Company or any of its Subsidiaries or the lease or sublease of any real or
personal property in the ordinary course of business, (b) dispositions of stock
or assets the aggregate value of which does not exceed $1,000,000 less the
aggregate value of all other dispositions of stock or assets made subsequent to
the Issue Date pursuant to this clause (b), (c) exchanges of properties or
assets for other properties or assets, excluding cash or Cash Equivalents but
including the Capital Stock of a Person if, as a result of such exchange, such
Person becomes a Restricted Subsidiary; provided, that the property or assets so
acquired, or the property or assets of the Person the Capital Stock of which is
so acquired (1) are used in a Related Business and (2) have a fair market value
at least equal to the fair market value of the assets or properties being
exchanged (as evidenced by a resolution of the Company's Board of Directors) and
(d) for purposes of Section 4.11 only, a disposition made in accordance with
Section 4.09.
2
<PAGE> 9
"Asset Sale Offer" has the meaning assigned to it in Section 4.11.
"Asset Sale Offer Amount" has the meaning assigned to it in Section
4.11.
"Asset Sale Offer Period" has the meaning assigned to it in Section
4.11.
"Asset Sale Purchase Date" has the meaning assigned to it in Section
4.11.
"Bank Facility" means the Credit Agreement dated as of June 9, 1998
among the Company and the Subsidiaries listed therein, the lenders party thereto
and First Union Commercial Corporation as administrative agent thereunder,
pursuant to which the Company may borrow up to $75,000,000 in the aggregate at
any one time outstanding, together with the documents related thereto
(including, without limitation, any guarantee agreements and security
documents), as such agreements may be amended (including any amendment and
restatement thereof), supplemented or otherwise modified from time to time,
including any agreement extending the maturity of, refinancing, replacing or
otherwise restructuring (including adding Subsidiaries of the Company as
additional borrowers thereunder) all or any portion of the Indebtedness under
such agreement or any successor or replacement agreement and whether by the same
or any other agent, lender or group of lenders.
"Bankruptcy Law" means Title 11, United States Code, or any other
applicable federal, state, or foreign bankruptcy, insolvency or similar law as
nor or hereafter constituted.
"Blockage Notice" has the meaning assigned to it in Section 10.03.
"Board of Directors" means, as the context requires, the Board of
Directors of the Company or the applicable Restricted Subsidiary, as the case
may be, or any committee thereof duly authorized to act on behalf of such Board.
In the case of a limited liability company, the comparable governing body shall
be members of such limited liability company or such other body as may be duly
authorized by such members generally to manage the business and affairs of the
limited liability company.
"Board Resolution" means a duly adopted resolution of the Board of
Directors in full force and effect at the time of determination and certified as
such by the Secretary or Assistant Secretary of the Company or a Restricted
Subsidiary, as the case may be.
"Business Day" means any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of Charlotte, North Carolina or New
York, New York or is a day on which banking institutions therein located are
authorized or required by law or other governmental action to close.
"Capitalized Lease Obligation" means, as to any Person, the obligations
of such Person under a lease that are required to be capitalized and accounted
for as capital lease obligations under GAAP and, for purposes of this
definition, the amount of such obligations at any date shall be the capitalized
amount of such obligations at such date, determined in accordance with GAAP.
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<PAGE> 10
"Capital Stock" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) the equity of such Person, including any
Preferred Stock, but excluding any debt securities convertible into such equity.
"Cash Equivalents" means (i) marketable direct obligations issued or
unconditionally guaranteed by the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition thereof, (ii)
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having the highest rating obtainable
from either Standard & Poor's Rating Group ("S&P") or Moody's Investors Service,
Inc. ("Moody's"); (iii) commercial paper maturing no more than one year from the
date of creation thereof and, at the time of acquisition, having the highest
rating obtainable from either S&P or Moody's; (iv) certificates of deposit or
bankers' acceptances maturing within one year from the date of acquisition
thereof issued by any commercial bank organized under the laws of the United
States of America or any state thereof or the District of Columbia that (a) is
at least "adequately capitalized" (as defined in the regulations of its primary
Federal banking regulator) and (b) has Tier I capital (as defined in such
regulations) of not less than $100,000,000; (v) shares of any money market
mutual fund that (a) has its assets invested continuously in the types of
investments referred to in clauses (i) and (ii) above, (b) has net assets of not
less than $500,000,000, and (c) has the highest rating obtainable from either
S&P or Moody's; and (vi) repurchase agreements with respect to, and which are
fully secured by a perfected security interest in, obligations of a type
described in clause (i) or clause (ii) above and are with any commercial bank
described in clause (iv) above.
"Certificated Notes" means Notes in certificated form.
"Change of Control" has the meaning assigned to it in Section 4.14.
"Change of Control Offer" has the meaning assigned to it in Section
4.14.
"Change of Control Payment Date" has the meaning assigned to it in
Section 4.14.
"Change of Control Purchase Price" has the meaning assigned to it in
Section 4.14.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor and, for purposes of
any provision contained herein and required by the TIA, each other obligor on
the indenture securities.
"Company Order" means a written order signed in the name of the Company
by (i) the Chairman of the Board, Chief Executive Officer, President, Chief
Operating Officer or any Vice
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<PAGE> 11
President of the Company and (ii) the Treasurer, an Assistant Treasurer, the
Secretary or an Assistant Secretary of the Company, and delivered to the
Trustee.
"Consolidated Coverage Ratio" as of any date of determination means the
ratio of Consolidated EBITDA of the Company during the four full fiscal quarters
(the "Four Quarter Period") ending on or prior to the date of the transaction
giving rise to the need to calculate the Consolidated Coverage Ratio (the
"Transaction Date") to Consolidated Fixed Charges of the Company for the Four
Quarter Period. In addition to and without limitation of the foregoing, for
purposes of this definition, "Consolidated EBITDA" and "Consolidated Fixed
Charges" shall be calculated after giving effect on a pro forma basis, in
accordance with Article 11 of Regulation S-X under the Securities Act, for the
period of such calculation to (a) the Incurrence or repayment of any
Indebtedness of the Company or any of its Restricted Subsidiaries (and the
application of the proceeds thereof) giving rise to the need to make such
calculation and any Incurrence or repayment of other Indebtedness (and the
application of the proceeds thereof), other than the Incurrence or repayment of
Indebtedness in the ordinary course of business for working capital purposes
pursuant to working capital facilities, occurring during the Four Quarter Period
or at any time subsequent to the last day of the Four Quarter Period and on or
prior to the Transaction Date, as if such Incurrence or repayment, as the case
may be (and the application of the proceeds thereof), occurred on the first day
of the Four Quarter Period and (b) any Asset Sales or Asset Acquisitions
(including, without limitation, any Asset Acquisition giving rise to the need to
make such calculation as a result of the Company or one of its Restricted
Subsidiaries Incurring, assuming or otherwise being liable for Acquired
Indebtedness and also including any Consolidated EBITDA attributable to the
assets which are the subject of the Asset Acquisition or Asset Sale during the
Four Quarter Period) occurring during the Four Quarter Period or at any time
subsequent to the last day of the Four Quarter Period and on or prior to the
Transaction Date, as if such Asset Sale or Asset Acquisition occurred on the
first day of the Four Quarter Period. If the Company or any of its Restricted
Subsidiaries directly or indirectly guarantees Indebtedness of a third Person,
the preceding sentence shall give effect to the Incurrence of such guaranteed
Indebtedness as if the Company or such Restricted Subsidiary, as the case may
be, had directly Incurred or otherwise assumed such guaranteed Indebtedness.
Furthermore, in calculating "Consolidated Fixed Charges" for purposes of
determining the denominator (but not the numerator) of this "Consolidated
Coverage Ratio," (i) interest on outstanding Indebtedness determined on a
fluctuating basis as of the Transaction Date and which will continue to be so
determined thereafter shall be deemed to have accrued at a fixed rate per annum
equal to the rate of interest on such Indebtedness in effect on the Transaction
Date; (h) if interest on any Indebtedness actually Incurred on the Transaction
Date may optionally be determined at an interest rate based upon a factor of a
prime or similar rate, a eurocurrency interbank offered rate, or other rates,
then the interest rate in effect on the Transaction Date will be deemed to have
been in effect during the Four Quarter Period; and (iii) notwithstanding clause
(i) above, interest on Indebtedness determined on a fluctuating basis, to the
extent such interest is covered by agreements relating to Interest Rate
Protection Agreements shall be deemed to accrue at the rate per annum resulting
after giving effect to the operation of such agreements.
"Consolidated EBITDA" means, with respect to the Company, for any
period, the sum (without duplication) of (i) Consolidated Net Income and (ii) to
the extent Consolidated Net Income has been reduced thereby, (A) all income
taxes of the Company and its Restricted
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<PAGE> 12
Subsidiaries paid or accrued in accordance with GAAP for such period (other than
income taxes attributable to extraordinary, unusual or nonrecurring gains or
losses or taxes attributable to sales or dispositions outside the ordinary
course of business), (B) Consolidated Interest Expense and (C) Consolidated
Non-Cash Charges less any non-cash items increasing Consolidated Net Income for
such period, all as determined on a consolidated basis for the Company and its
Restricted Subsidiaries in accordance with GAAP.
"Consolidated Fixed Charges" means, with respect to the Company for any
period, the sum, without duplication, of (a) Consolidated Interest Expense
(including any premium or penalty paid in connection with redeeming or retiring
Indebtedness of the Company and its Restricted Subsidiaries prior to the stated
maturity thereof pursuant to the agreements governing such Indebtedness), plus
(b) the product of (i) the amount of all dividend payments on any series of
Preferred Stock of the Company (other than dividends paid in Capital Stock that
is not Disqualified Stock) paid, accrued or scheduled to be paid or accrued
during such period times (ii) a fraction, the numerator of which is one and the
denominator of which is one minus the then-current effective consolidated
federal, state and local income tax rate of the Company, expressed as a decimal.
"Consolidated Interest Expense" means, with respect to the Company for
any period, the sum of, without duplication: (i) the aggregate of all cash and
non-cash interest expense (minus amortization or write-off of deferred financing
costs included in cash or non-cash interest expense) of the Company and its
Restricted Subsidiaries for such period determined on a consolidated basis in
accordance with GAAP, including, without limitation, (a) any amortization of
debt discount, (b) the net costs under Interest Rate Protection Agreements, (c)
all capitalized interest and (d) the interest portion of any deferred payment
obligation; and (ii) the interest component of Capitalized Lease Obligations
paid, accrued and/or scheduled to be paid or accrued by the Company and its
Restricted Subsidiaries during such period as determined on a consolidated basis
in accordance with GAAP.
"Consolidated Net Income" means, for any period, the aggregate net
income (or loss) of the Company and its Restricted Subsidiaries for such period
on a consolidated basis, determined in accordance with GAAP; provided that there
shall be excluded therefrom (a) after-tax gains and losses from Asset Sales or
abandonment or reserves relating thereto, (b) items classified as extraordinary,
nonrecurring or unusual gains, losses or charges, and the related tax effects,
each determined in accordance with GAAP, (c) the net income of any Person
acquired in a "pooling of interests" transaction accrued prior to the date it
becomes a Restricted Subsidiary of the Company or is merged or consolidated with
the Company or any Restricted Subsidiary of the Company, (d) the net income (but
not loss) of any Restricted Subsidiary of the Company to the extent that the
declaration of dividends or similar distributions by that Restricted Subsidiary
of that income is restricted by a contract, operation of law or otherwise, (e)
the net income of any Person, other than a Restricted Subsidiary of the Company,
except to the extent of cash dividends or distributions paid to the Company or
to a Wholly-Owned Restricted Subsidiary of the Company by such Person, (f) any
restoration to income of any contingency reserve, except to the extent that
provision for such reserve was made out of Consolidated Net Income accrued at
any time after February 27, 1998, (g) income or loss attributable to
discontinued operations (including, without limitation, operations disposed of
during such period whether or not such
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<PAGE> 13
operations were classified as discontinued), and (h) in the case of a successor
to the Company by consolidation or merger or as a transferee of the Company's
assets, any earnings of the successor corporation prior to such consolidation,
merger or transfer of assets.
"Consolidated Net Worth" means the total of the amounts shown on the
balance sheet of the Company and its consolidated Restricted Subsidiaries,
determined on a consolidated basis in accordance with GAAP, as of the end of the
most recent fiscal quarter of the Company ending at least 45 days prior to the
taking of any action for the purpose of which the determination is being made,
as (i) the par or stated value of all outstanding Capital Stock of the Company
plus (ii) paid-in capital or capital surplus relating to such Capital Stock plus
(iii) any retained earnings or earned surplus less (A) any accumulated deficit
and (B) any amounts attributable to Disqualified Stock.
"Consolidated Non-Cash Charges" means with respect to the Company, for
any period, the aggregate depreciation, amortization and other non-cash expenses
of the Company and its Restricted Subsidiaries reducing Consolidated Net Income
of the Company for such period, determined on a consolidated basis in accordance
with GAAP (excluding any such charges constituting an extraordinary item or loss
or any such charge which requires an accrual of or a reserve for cash charges
for any future period).
"Corporate National Trust Office" means the principal office of the
Trustee at which at any particular time its corporate trust business shall be
principally administered, which office is, at the date of execution of this
Indenture, Two International Place, 4th Floor, Boston, MA 02110, Attention:
Corporate Trust Administration (Fresh Foods, Inc. 10 3/4% Senior Notes due
2006), ; provided, that for purposes of Section 4.02 hereof, "Corporate National
Trust Office" shall mean the office State Street Bank and Trust Company, N.A.,
an Affiliate of the Trustee located at 61 Broadway, New York, NY 10006 (Fresh
Foods, Inc. 10 3/4% Senior Notes due 2006).
"Custodian" means any receiver, trustee, assignee, liquidator,
custodian or similar official under any Bankruptcy Law.
"Default" means any event which is, or after notice or passage of time
or both would be, an Event of Default.
"Defaulted Interest" has the meaning set forth in Section 2.11 hereof.
"Depositary" means The Depository Trust Company, its nominees, and
their respective successors.
"Disqualified Stock" means, with respect to any Person, any Capital
Stock which by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable) or upon the happening of any event
(i) matures or is mandatorily redeemable pursuant to a sinking fund obligation
or otherwise, (ii) is convertible or exchangeable for Indebtedness or
Disqualified Stock or (iii) is redeemable at the option of the holder thereof,
in whole or in part, in each case on or prior to the first anniversary of the
Stated Maturity of the Notes; provided, however, that any Capital Stock that
would not constitute Disqualified Stock but for provisions
7
<PAGE> 14
thereof giving holders thereof the right to require such Person to repurchase or
redeem such Capital Stock upon the occurrence of an Asset Sale or Change of
Control occurring prior to the first anniversary of the Stated Maturity of the
Notes shall not constitute Disqualified Stock if the "asset sale" or "change of
control" provisions applicable to such Capital Stock are not more favorable to
the holders of such Capital Stock than the provisions described under Section
4.11 and Section 4.14.
"Event of Default" has the meaning assigned to it in Section 6.01.
"Excess Proceeds" has the meaning assigned to it in Section 4.11.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Certificated Notes" has the meaning assigned to it in Section
2.01.
"Exchange Global Note" has the meaning assigned to it in Section 2.01.
"Exchange Note" has the meaning assigned to it in the recital hereto.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect as of the Issue Date, including those set forth
(i) in the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants, (ii) in statements and
pronouncements of the Financial Accounting Standards Board, (iii) in such other
statements by such other entity as approved by a significant segment of the
accounting profession, and (iv) in the published rules and regulations of the
Commission governing the inclusion of financial statements (including pro forma
financial statements) in periodic reports required to be filed pursuant to
Section 13 of the Exchange Act, including opinions and pronouncements in staff
accounting bulletins and similar written statements from the accounting staff of
the Commission.
"Global Notes" means the Initial Global Note and the Exchange Global
Note.
"Guarantee" means the Guarantee of the Notes by each Guarantor under
Article 10 hereof.
"Guarantor" means each Subsidiary of the Company listed on Schedule A
and each Additional Guarantor.
"Holder" or "Noteholder" means the Person in whose name a Note is
registered on the Registrar's books.
"Incur" means issue, assume, guarantee, incur or otherwise become
liable for; provided, however, that any Indebtedness or Capital Stock of a
Person existing at the time such Person becomes a Restricted Subsidiary (whether
by merger, consolidation, acquisition or otherwise) shall be deemed to be
Incurred by such Subsidiary at the time it becomes a Restricted Subsidiary. The
term "Incurrence" when used as a noun shall have a correlative meaning.
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<PAGE> 15
"Indebtedness" means, with respect to any Person on any date of
determination, (i) all indebtedness, obligations and liabilities of such Person
for borrowed money, (ii) all indebtedness, obligations and liabilities of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all indebtedness, obligations and liabilities of such Person Capitalized Lease
Obligations, (iv) all indebtedness, obligations and liabilities of such Person
notes payable and drafts accepted representing extensions of credit, whether or
not representing obligations for borrowed money, of such Person, (v) any
indebtedness, obligation or liability of such Person owed for all or any part of
the deferred purchase price of property or services (excluding any such
obligations Incurred under ERISA), which purchase price is (a) due more than six
months (or a longer period of up to one year, if such terms are available from
suppliers in the ordinary course of business) from the date of Incurrence of the
obligation in respect thereof or (b) evidenced by a note or similar written
instrument, (vi) all indebtedness, obligations and liabilities secured by any
Lien on any property or asset owned or held by that Person regardless of whether
the indebtedness secured thereby shall have been assumed by that Person or is
nonrecourse to the credit of that Person except that "Indebtedness" shall not
include trade payables and accrued liabilities Incurred in the ordinary course
of business for the purchase of goods or services which are not secured by a
Lien other than a Lien permitted pursuant to clause (viii) of the definition of
Permitted Liens and obligations under Interest Rate Protection Agreements, (vii)
guarantee obligations of such Person in respect of Indebtedness of other Persons
and (viii) all Disqualified Stock issued by such Person with the amount of
Indebtedness represented by such Disqualified Stock being equal to the greater
of its voluntary or involuntary liquidation preference and its maximum fixed
repurchase price, but excluding accrued dividends, if any. For purposes hereof,
the "maximum fixed repurchase price" of any Disqualified Stock which does not
have a fixed repurchase price shall be calculated in accordance with the terms
of such Disqualified Stock as if such Disqualified Stock were purchased on any
date on which Indebtedness shall be required to be determined pursuant to this
Indenture, and if such price is based upon, or measured by, the fair market
value of such Disqualified Stock, such fair market value to be determined
reasonably and in good faith by the board of directors of the issuer of such
Disqualified Stock.
"Indenture" means this Indenture as amended or supplemented from time
to time.
"Initial Certificated Notes" has the meaning assigned to it in Section
2.06(b)(ii)(A).
"Initial Global Note" has the meaning assigned to it in Section 2.01.
"Initial Notes" has the meaning assigned to it in the recital hereto.
"Initial Purchasers" means First Union Capital Markets, a division of
Wheat First Securities, Inc. and BancAmerica Robertson Stephens, Inc.
"Insolvency or Liquidation Proceeding" means (i) any insolvency or
bankruptcy case or proceeding, or any receivership, liquidation, reorganization
or other similar case or proceeding in connection therewith, relating to the
Company or its assets, or (ii) any liquidation, dissolution or other winding up
of the Company, whether voluntary or involuntary or whether or not involving
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<PAGE> 16
insolvency or bankruptcy, or (iii) any assignment for the benefit of creditors
or any other marshaling of assets or liabilities of the Company.
"Institutional Accredited Investors" means institutional "accredited
investors," as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act, other than QIBs.
"Interest Payment Date" means each semiannual Interest Payment Date on
June 1 and December 1 of each year, commencing December 1, 1998, in respect of
the Notes.
"Interest Rate Protection Agreement" of any Person means any interest
rate protection agreement (including, without limitation, interest rate swaps,
caps, floors, collars, derivative instruments and similar agreements) in support
of the Company's business and not of a speculative nature.
"Investment" in any Person means any direct or indirect advance, loan
(other than advances to customers in the ordinary course of business that are,
in conformity with GAAP, recorded as accounts receivable on the balance sheet of
such Person) or other extensions of credit (including by way of a guarantee
obligation or similar arrangement) or capital contribution to (by means of any
transfer of cash or other property to others or any payment for property or
services for the account or use of others), or any purchase or acquisition of
Capital Stock, indebtedness or other similar instruments issued by such Person.
For purposes of the definition of "Unrestricted Subsidiary," the definition of
"Restricted Payment" and the covenant described in Section 4.09, (i)
"Investment" shall include the portion (proportionate to the Company's equity
interest in such Subsidiary) of the fair market value of the net assets of any
Subsidiary of the Company at the time that such Subsidiary is designated an
Unrestricted Subsidiary; provided, however, that upon a redesignation of such
Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue
to have a permanent "Investment" in an Unrestricted Subsidiary equal to an
amount (if positive) equal to (x) the Company's "Investment" in such
Unrestricted Subsidiary at the time of such redesignation as a Restricted
Subsidiary less (y) the portion (proportionate to the Company's equity interest
in such Unrestricted Subsidiary) of the fair market value of the net assets of
such Unrestricted Subsidiary at the time of such redesignation as a Restricted
Subsidiary; and (ii) any property transferred to or from an Unrestricted
Subsidiary shall be valued at its fair market value at the time of such
transfer, in each case as determined in good faith by the Board of Directors.
"Issue Date" means the date on which the Notes are originally issued.
"Legal Holiday" has the meaning assigned to it in Section 11.08.
"Lien" means any mortgage, pledge, assignment, security interest,
encumbrance, lien or charge of any kind (including any conditional sale or other
title retention agreement, any lease in the nature thereof and any agreement to
give any security interest) and any option, trust or other preferential
arrangement having the practical effect of any of the foregoing.
"Liquidated Damage" has the meaning assigned to it in the Registration
Rights Agreement.
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<PAGE> 17
"Net Available Cash" means, with respect to any Asset Sale, payments in
cash or Cash Equivalents received therefrom net of bona fide direct costs of
sale, including, but not limited to, (i) income taxes reasonably estimated to be
actually payable as a result of such Asset Sale within two years of the date of
such Asset Sale, (ii) payment of the outstanding principal amount of, premium or
penalty, if any, and interest on, any Indebtedness that is secured by a Lien on
the stock or assets in question and that is required to be repaid under the
terms thereof as a result of such Asset Sale, (iii) out-of-pocket expenses and
fees relating to such Asset Sale (including, without limitation, legal,
accounting and investment banking fees and sales commissions) and (iv) any
portion of cash proceeds which the Company determines in good faith should be
reserved for post-closing adjustments or liabilities relating to the Asset Sale
retained by the Company or any of its Restricted Subsidiaries, it being
understood and agreed that on the day that all such post-closing adjustments
have been determined, the amount (if any) by which the reserved amount in
respect of such Asset Sale exceeds the actual post-closing adjustments, payable
by the Company or any of its Restricted Subsidiaries, shall constitute Net
Available Cash on such date.
"Net Cash Proceeds" with respect to any issuance or sale of Capital
Stock, mean the proceeds of such issuance or sale in the form of cash or Cash
Equivalents net of attorneys' fees, accountants' fees, underwriters' or
placement agents' fees, discounts or commissions and brokerage, consultant and
other fees actually Incurred in connection with such issuance or sale and net of
taxes paid or payable as a result thereof
"Non-U.S. Person" means any Person who is not a "U.S. Person," as
defined in Rule 902(o) under the Securities Act.
"Note Register" has the meaning assigned to it in Section 2.03.
"Notes" has the meaning assigned to it in the recital hereto.
"Notice of Default" has the meaning assigned to it in Section 6.01.
"Obligation" has the meaning assigned to it in Section 10.01.
"Officer" means the Chairman of the Board, the President, any Vice
President, the Treasurer, or the Secretary of the Company or any Restricted
Subsidiary, as the case may be (or, in the case of any Restricted Subsidiary
that is not a corporation, the respective Persons having the duties and
authority correlative to the foregoing officers of a corporation).
"Officers' Certificate" means a certificate signed by two Officers.
"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to the
Company.
"Paying Agent" has the meaning assigned to it in Section 2.03.
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<PAGE> 18
"Permitted Holders" means any or all of James C. Richardson, Jr., David
R. Clark and James E. Harris or any Person as to which Messrs. Richardson, Clark
and Harris beneficially own, in the aggregate, more than 50% of the Capital
Stock of such Person and control than 50% of the Voting Stock of such Person.
"Permitted Indebtedness" means each of the following:
(i) Indebtedness under the Notes, this Indenture and the Guarantees;
(ii) Indebtedness under the Bank Facility; provided that the aggregate
principal amount of Indebtedness outstanding under the Bank Facility at any one
time shall not exceed the greater of (a) $75.0 million or (b) the sum of (i) 85%
of the book value of accounts receivable of the Company and its Restricted
Subsidiaries, plus (ii) an amount equal to the sum of (A) 45% of the book value
of inventory of the Company and its Restricted Subsidiaries consisting of ham
house raw materials, plus (B) 55% of the book value of inventory of the Company
and its Restricted Subsidiaries consisting of bakery raw materials located in
Claremont, North Carolina, plus (C) 65% of the book value of inventory of the
Company and its Restricted Subsidiaries consisting of raw materials located in
Cincinnati, Ohio, plus (D) 55% of the book value of inventory of the Company and
its Restricted Subsidiaries consisting of ham house finished goods, plus (E) 50%
of the book value of inventory of the Company and its Restricted Subsidiaries
consisting of bakery finished goods located in Claremont, North Carolina, plus
(F) 65% of the book value of inventory of the Company and its Restricted
Subsidiaries consisting of finished goods located in Cincinnati, Ohio, plus
(iii) 70% of the orderly liquidation value of all equipment of the Company and
its Restricted Subsidiaries and the fair market value of all real property of
the Company and its Restricted Subsidiaries, provided that at the end of each
calendar quarter, the amount in clause (iii) shall be reduced by an amount equal
to 1/28th of such amount;
(iii) other Indebtedness of the Company and its Restricted Subsidiaries
outstanding on the Issue Date reduced by the amount of any scheduled
amortization payments or mandatory prepayments when actually paid or permanent
reductions thereon;
(iv) Interest Rate Protection Agreements of the Company covering
Indebtedness of the Company or any of its Restricted Subsidiaries and Interest
Rate Protection Agreements of any Restricted Subsidiary covering Indebtedness of
such Restricted Subsidiary; provided, however, that (a) such Interest Rate
Protection Agreements are entered into to protect the Company and its
Subsidiaries from fluctuations in interest rates on Indebtedness Incurred in
accordance with this Indenture to the extent the notional principal amount of
such Interest Rate Protection Agreements does not exceed the principal amount of
the Indebtedness to which such Interest Rate Protection Agreements relates and
(b) such Interest Rate Protection Agreements do not increase the Indebtedness of
the Company and its Restricted Subsidiaries outstanding other than by reason of
fees, indemnities and compensation payable thereunder;
(v) Indebtedness of a Restricted Subsidiary to the Company or to a
Restricted Subsidiary for so long as such Indebtedness is held by the Company or
a Restricted Subsidiary, in each case subject to no Lien held by a Person other
than the Company or a Restricted
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<PAGE> 19
Subsidiary; provided that if as of any date any Person other than the Company or
a Restricted Subsidiary owns or holds any such Indebtedness or holds a Lien in
respect of such Indebtedness, such date shall be deemed the Incurrence of
Indebtedness not constituting Permitted Indebtedness by the issuer of such
Indebtedness;
(vi) Indebtedness of the Company to Restricted Subsidiary for so long
as such Indebtedness is held by Restricted Subsidiary, subject to no Lien;
provided that (a) any Indebtedness of the Company to any Restricted Subsidiary
is unsecured and subordinated, pursuant to a written agreement, to the Company's
obligations under the Notes and (b) if as of any date any Person other than a
Restricted Subsidiary owns or holds any such Indebtedness or any Person holds a
Lien in respect of such Indebtedness, such date shall be deemed the Incurrence
of Indebtedness not constituting Permitted Indebtedness by the Company;
(vii) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument inadvertently
(except in the case of day-light overdrafts) drawn against insufficient funds in
the ordinary course of business; provided, however, that such Indebtedness is
extinguished within two business days of Incurrence;
(viii) Indebtedness of the Company or any of its Restricted
Subsidiaries represented by letters of credit for the account of the Company or
such Restricted Subsidiary, as the case may be, in order to provide security for
workers' compensation claims, payment obligations in connection with
self-insurance or similar requirements in the ordinary course of business;
(ix) Refinancing Indebtedness Incurred in respect of Indebtedness
originally Incurred pursuant to the second sentence of Section 4.08 or pursuant
to this clause (ix) or clause (i) or (ii) of this definition;
(x) Additional Indebtedness of the Company and its Restricted
Subsidiaries in an aggregate principal amount not to exceed $5,000,000 at any
one time outstanding for Capitalized Lease Obligations or for purposes of
financing the purchase price or construction cost of equipment, fixtures or
similar property; and
(xi) Additional Indebtedness of the Company and its Restricted
Subsidiaries in an aggregate principal amount not to exceed $10,000,000 at any
one time outstanding.
"Permitted Investment" means any of the following:
(i) Investments by the Company or any Restricted Subsidiary in any
Person that is or will become immediately after such Investment a Restricted
Subsidiary or that will merge or consolidate into the Company or a Restricted
Subsidiary;
(ii) Investments in the Company by any Restricted Subsidiary;
provided that any Indebtedness evidencing such Investment is unsecured and
subordinated, pursuant to a written agreement, to the Company's obligations
under the Notes and this Indenture;
(iii) Investments in cash and Cash Equivalents;
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(iv) loans and advances to employees and officers of the Company and
its Subsidiaries in the ordinary course of business for bona fide business
purposes not in excess of $1,000,000 at any one time outstanding;
(v) Interest Rate Protection Agreements entered into in the ordinary
course of the Company's or its Restricted Subsidiaries' businesses and otherwise
in compliance with this Indenture;
(vi) Investments in securities of trade creditors or customers
received pursuant to any plan of reorganization or similar arrangement upon the
bankruptcy or insolvency of such trade creditors or customers;
(vii) consideration other than cash or Cash Equivalents received by
the Company or its Restricted Subsidiaries in connection with an Asset Sale made
in compliance with Section 4.11; and
(viii) Investments not to exceed $5,000,000 at any one time
outstanding.
"Permitted Liens" means any of the following:
(i) Liens for taxes, assessments or governmental charges or claims
either (a) not delinquent or (b) contested in good faith by appropriate
proceedings and as to which the Company or the Subsidiaries shall have set aside
on its books such reserves as may be required pursuant to GAAP;
(ii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, suppliers, materialmen, repairmen and other Liens
imposed by law Incurred in the ordinary course of business for sums not yet
delinquent or being contested in good faith, if such reserve or other
appropriate provision, if any, as shall be required by GAAP shall have been made
in respect thereof,
(iii) Liens Incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance and
other types of social security, including any Lien securing letters of credit
issued in the ordinary course of business consistent with past practice in
connection therewith, or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, government performance and
return-of-money bonds and other similar obligations (exclusive of obligations
for the payment of borrowed money);
(iv) judgment Liens not giving rise to an Event of Default so long as
such Lien is adequately bonded and any appropriate legal proceedings which may
have been duly initiated for the review of such judgment shall not have been
finally terminated or the period within which such proceedings may be initiated
shall not have expired;
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(v) easements, rights-of-way zoning restrictions and other similar
charges or encumbrances in respect of real property not interfering in any
material respect with the ordinary conduct of the business of the Company or any
of its Subsidiaries;
(vi) any interest or title of a lessor under any Capitalized Lease
Obligation; provided that such Liens do not extend to any property or assets
which is not leased property subject to such Capitalized Lease Obligation;
(vii) purchase money Liens to finance property or assets of the
Company or a Restricted Subsidiary acquired in the ordinary course of business;
provided, however, that (A) the related purchase money Indebtedness shall not
exceed the cost of such property or assets and shall not be secured by any
property or assets of the Company or any Restricted Subsidiary other than the
property and assets so acquired and (B) the Lien securing such Indebtedness
shall be created within 90 days of such acquisition;
(viii) Liens upon specific items of inventory or other goods and
proceeds of any Person securing such Person's obligations in respect of bankers'
acceptances issued or created for the account of such Person to facilitate the
purchase, shipment or storage of such inventory or other goods;
(ix) Liens securing reimbursement obligations with respect to
commercial letters of credit which encumber documents and other property
relating to such letters of credit and products and proceeds thereof,
(x) Liens encumbering deposits made to secure obligations arising
from statutory, regulatory, contractual, or warranty requirements of the Company
or a Restricted Subsidiary, including rights of offset and set-off,
(xi) Liens securing Interest Rate Protection Agreements which
Interest Rate Protection Agreements relate to Indebtedness that is Incurred
under this Indenture or the Bank Facility;
(xii) Liens securing Indebtedness under the Bank Facility or pursuant
to clause (xi) of the definition of "Permitted Indebtedness";
(xiii) Liens existing on the Issue Date and Liens to secure any
Refinancing Indebtedness which is Incurred to refinance any Indebtedness which
has been secured by a Lien permitted under Section 4.15 and which Indebtedness
has been Incurred in accordance with Section 4.08; provided that such new Liens
(A) are no less favorable to the Holders of Notes and are not more favorable to
the lienholders with respect to such Liens than the Liens in respect of the
Indebtedness being refinanced and (B) do not extend to any property or assets
other than the property or assets securing the Indebtedness refinanced or
replaced by such Refinancing Indebtedness; and
(xiv) Liens securing Acquired Indebtedness Incurred in accordance
with the second sentence of Section 4.08; provided that (A) such Liens secured
such Acquired Indebtedness at
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the time of and prior to the Incurrence of such Acquired Indebtedness by the
Company or a Restricted Subsidiary and were not granted in connection with, or
in anticipation of the Incurrence of such Acquired Indebtedness by the Company
or a Restricted Subsidiary and (B) such Liens do not extend to or cover any
property or assets of the Company or any Restricted Subsidiary other than the
property or assets that secured the Acquired Indebtedness prior to the time such
Indebtedness became Acquired Indebtedness of the Company or a Restricted
Subsidiary and are no more favorable to the lienholders than the Liens securing
the Acquired Indebtedness prior to the Incurrence of such Acquired Indebtedness
by the Company or a Restricted Subsidiary.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Post-Petition Interest" means all interest accrued or accruing after
the commencement of any Insolvency or Liquidation Proceeding (and interest that
would accrue but for the commencement of any Insolvency or Liquidation
Proceeding) in accordance with and at the contract rate (including, without
limitation, any rate applicable upon default) specified in the agreement or
instrument creating, evidencing or governing any Indebtedness, whether or not,
pursuant to applicable law or otherwise, the claim for such interest is allowed
as a claim in such Insolvency or Liquidation Proceeding.
"Preferred Stock" means, as applied to the Capital Stock of any
corporation, Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"Principal" of a Note means the principal of the Note plus the premium,
if any, payable on the Note which is due or overdue or is to become due at the
relevant time.
"Private Placement Legend" has the meaning assigned to it in Section
2.01.
"Property" means, with respect to any Person, any interest of such
Person in any kind of property or asset, whether real, personal or mixed,
tangible or intangible.
"Public Equity Offering" means an underwritten primary public offering
of any class of common stock of the Company pursuant to an effective
registration statement under the Securities Act.
"Public Market" means any time after (i) an underwritten Public Equity
Offering of the Company has been consummated and (ii) at least 10% of the total
issued and outstanding common stock of the Company has been distributed by means
of an effective registration statement under the Securities Act or sales
pursuant to Rule 144 under the Securities Act.
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"Purchase Agreement" means the purchase agreement relating to the
Notes, dated June 4, 1998, among the Company, the Guarantors and the Initial
Purchasers.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Record Date" means, for the interest payable on any Interest Payment
Date, the date specified in Section 2.11 hereof.
"Redemption Date" means, when used with respect to any Note or part
thereof to be redeemed hereunder, the date fixed for redemption of such Notes
pursuant to the terms of the Notes and this Indenture.
"Redemption Price" means, when used with respect to any Note or part
thereof to be redeemed hereunder, the price fixed for redemption of such Note
pursuant to the terms of the Notes and this Indenture, plus accrued and unpaid
interest thereon, if any, and Liquidated Damages, if any, to the Redemption
Date.
"Refinancing Indebtedness" means any Indebtedness of the Company or any
of its Restricted Subsidiaries issued in exchange for, or the net proceeds of
which are used to extend, refinance, renew, replace, defease or refund other
Indebtedness of the Company or any of its Restricted Subsidiaries; provided
that: (i) the principal amount of such Refinancing Indebtedness does not exceed
the principal amount of the Indebtedness so extended, refinanced, renewed,
replaced, defeased or refunded (plus the amount of reasonable expenses Incurred
in connection therewith); (ii) such Refinancing Indebtedness has a Weighted
Average Life to Maturity equal to or greater than the Weighted Average Life to
Maturity of, the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; (iii) if the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded is subordinated in right of payment to
the Notes, such Refinancing Indebtedness has a final maturity date later than
the final maturity date of, and is subordinated in right of payment to, the
Notes on terms at least as favorable to the Holders of Notes as those contained
in the documentation governing the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded; and (iv) such Indebtedness is Incurred
either by the Company or by the Restricted Subsidiary of the Company that is the
obligor on the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded.
"Registered Exchange Offer" has the meaning set forth in the
Registration Rights Agreement.
"Registrar" has the meaning assigned to it in Section 2.03.
"Registration Rights Agreement" means the Registration Rights Agreement
relating to the Notes, dated June 9, 1998 among the Company, the Guarantors and
the Initial Purchasers, in substantially the form of Exhibit J hereto.
"Regulation S" means Regulation S under the Securities Act (including
any successor regulation thereto), as it may be amended from time to time.
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"Related Business" means the businesses of the Company and the
Restricted Subsidiaries on the Issue Date and any business related, ancillary or
complementary to the businesses of the Company and the Restricted Subsidiaries
on the Issue Date.
"Restricted Payment" with respect to any Person means (i) the
declaration or payment of any dividends or any other distributions in respect of
its Capital Stock (including any payment in connection with any merger or
consolidation involving such Person) or similar payment to the direct or
indirect holders of its Capital Stock (other than dividends or distributions
payable solely in its Capital Stock (other than Disqualified Stock) and
dividends or distributions payable solely to the Company or a Restricted
Subsidiary, and other than pro rata dividends or other distributions made by a
Restricted Subsidiary that is not a Restricted Subsidiary to minority
stockholders (or owners of an equivalent interest in the case of a Subsidiary
that is an entity other than a corporation)), (ii) the purchase, redemption or
other acquisition or retirement for value of any Capital Stock of the Company or
any Restricted Subsidiary held by any Person (other than the Company or a
Restricted Subsidiary), or any warrants, rights or options to acquire shares of
any class of such Capital Stock, (iii) the purchase, repurchase, redemption,
defeasance or other acquisition or retirement for value, prior to scheduled
maturity, scheduled repayment or scheduled sinking fund payment of any
Subordinated Obligations (other than the purchase, repurchase or other
acquisition of Subordinated Obligations purchased in anticipation of satisfying
a sinking fund obligation, principal installment or final maturity, in each case
due within one year of the date of acquisition) or (iv) the making of any
Investment in any Person (other than a Permitted Investment).
"Restricted Subsidiary" means any Subsidiary of the Company that is not
an Unrestricted Subsidiary.
"Rule 144" means Rule 144 under the Securities Act (including any
successor regulation thereto), as it may be amended from time to time.
"Rule 144A" means Rule 144A under the Securities Act (including any
successor regulation thereto), as it may be amended from time to time.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Shelf Registration Statement" has the meaning set forth in the
Registration Rights Agreement.
"Special Record Date" means a date fixed by the Trustee pursuant to
Section 2.11 for the payment of Defaulted Interest.
"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which the final payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision (but excluding any provision
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<PAGE> 25
providing for the repurchase of such security at the option of the holder
thereof upon the happening of any contingency unless such contingency has
occurred).
"Subordinated Obligation" means any Indebtedness of the Company or a
Restricted Subsidiary of the Company (whether outstanding on the Issue Date or
thereafter Incurred) which is subordinate or junior in right of payment to the
Notes or the Guarantees pursuant to a written agreement to that effect.
"Subordinated Reorganization Securities" has the meaning assigned to it
in Section 10.02.
"Subsidiary" means, in respect of any Person, any corporation,
association, partnership or other business entity of which more than 50% of the
total voting power of outstanding shares of Capital Stock or other interests
(including partnership interests) entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by (i) such
Person, (ii) such Person and one or more Subsidiaries of such Person or (iii)
one or more Subsidiaries of such Person.
"Successor Company" has the meaning assigned to it in Section 5.01.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Section
77aaa-77bbbb) as in effect on the date of this Indenture.
"Trustee" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor.
"Trust Officer" means any officer in the Corporate National Trust
Office of the Trustee assigned by the Trustee to administer its corporate trust
matters.
"Uniform Commercial Code" means the New York Uniform Comm in effect
from time to time.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that
at the time of determination shall be designated an Unrestricted Subsidiary by
the Board of Directors in the manner provided below and (ii) any Subsidiary of
an Unrestricted Subsidiary. The Board of Directors may designate any Subsidiary
of the Company (including any newly acquired or newly formed Subsidiary) to be
an Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries
owns any Capital Stock or Indebtedness of, or holds any Lien on any property of,
the Company or any other Subsidiary of the Company that is not a Subsidiary of
the Subsidiary to be so designated; provided, however, that (A) either (1) the
Subsidiary to be so designated has total assets of $1,000 or less or (2) if such
Subsidiary has assets greater than $1,000, such designation would be permitted
under Section 4.09 and (B) such Subsidiary to be so designated and each of its
Subsidiaries has not at the time of such designation, and does not thereafter,
Incur any Indebtedness pursuant to which the lender has recourse to any of the
assets or properties of the Company or any of its Restricted Subsidiaries. The
Board of Directors may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary; provided, however, that immediately after
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giving effect to such designation (x) the Company could Incur $1.00 of
additional Indebtedness pursuant to the second sentence of Section 4.08 and (y)
no Default shall have occurred and be continuing. Any such designation by the
Board of Directors shall be evidenced by the Company to the Trustee by promptly
filing with the Trustee a copy of the board resolution giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the foregoing provisions.
"U.S. Government Obligation" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable at the issuer's option.
"Voting Stock" of a Person means all classes of Capital Stock or other
interests (including partnership interests) of such Person then outstanding and
normally entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the product obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payments at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
SECTION 1.02. Incorporation by Reference of Trust Indenture Act . This
Indenture is subject to the mandatory provisions of the TIA which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"commission" means the SEC.
"indenture securities" means the Notes; "indenture security holder"
means a Noteholder; "indenture to be qualified" means this Indenture; "indenture
trustee" or "institutional trustee" means the Trustee;
"obligor" on the indenture securities means the Company and any other
obligor on the indenture securities. All other TIA terms used in this Indenture
that are defined by the TIA, defined by TIA reference to another statute or
defined by SEC rule have the meanings assigned to them by such definitions.
SECTION 1.03. Rules of Construction Unless the context otherwise
requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
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(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the plural
include the singular;
(6) unsecured Indebtedness shall not be deemed to be subordinate or
junior to Secured Indebtedness merely by virtue of its nature as
unsecured Indebtedness;
(7) the principal amount of any noninterest bearing or other discount
security at any date shall be the principal amount thereof that would
be shown on a balance sheet of the issuer dated such date prepared in
accordance with GAAP and accretion of principal on such security shall
be deemed to be the Incurrence of Indebtedness;
(8) the principal amount of any Preferred Stock shall be (i) the
maximum liquidation value of such Preferred Stock or (h) the maximum
mandatory redemption or mandatory repurchase price with respect to such
Preferred Stock, whichever is greater; and
(9) all references to the date the Notes were originally issued shall
refer to the date the Initial Notes were originally issued.
ARTICLE 2
THE NOTES
SECTION 2.01. Form and Dating (a) The Initial Notes and the certificate
of authentication of the Trustee thereon shall be substantially in the form of
Exhibit A or Exhibit B hereto, as applicable, which are hereby incorporated in
and expressly made a part of this Indenture. The Exchange Notes and the
certificate of authentication of the Trustee thereon shall be substantially in
the form of Exhibit C or Exhibit D hereto, as applicable, which are hereby
incorporated in and expressly made a part of this Indenture.
(b) The Notes may have such letters, numbers or other marks of
identification and such legends and endorsements, stamped, printed, lithographed
or engraved thereon, (i) as the Company may deem appropriate and as are not
inconsistent with the provisions of this Indenture, (ii) as may be required to
comply with this Indenture, any law or any rule of any securities exchange on
which the Notes may be listed and (iii) as may be necessary to conform to
customary usage. Each Note shall be dated the date of its authentication by the
Trustee. The Notes shall be issued only in fully registered form, without
coupons, in denominations of $1,000 and integral multiples thereof, provided
that Initial Certificated Notes transferred to Institutional Accredited
Investors shall be subject to a minimum denomination of $250,000. Definitive
Notes shall be typed, printed, lithographed or engraved or produced by any
combination of such methods or produced in any other manner permitted by the
rules of any securities exchange on which such Notes may be listed, all as
determined by the officers of the Company executing such Notes, as evidenced by
their execution of such Notes.
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(c) Initial Notes offered and sold to QIBs in reliance on Rule 144A or
Non-U.S. Persons in reliance on Regulation S as provided in the Purchase
Agreement shall be issued initially in the form of a single, permanent global
note in definitive, fully registered form, without coupons, substantially in the
form set forth in Exhibit A hereto and shall bear the legends set forth in
Section 2.01(e)(i), Section 2.01(e)(ii) and Section 2.01(e)(iii) hereof (the
"Initial Global Note"). Upon issuance, such Initial Global Note shall be
registered in the name of the Depositary or its nominee, duly executed by the
Company and authenticated by the Trustee as hereinafter provided and deposited
on behalf of the purchasers of the Initial Notes represented thereby with the
Trustee at its Corporate National Trust Office, as custodian for the Depositary.
Owners of beneficial interests in the Initial Global Note shall be entitled to
receive physical delivery of Certificated Notes pursuant to Section 2.06(b)(ii).
Initial Notes transferred to Institutional Accredited Investors shall be issued
in the form of a note in definitive, fully registered form, without coupons,
substantially in the form set forth in Exhibit B hereto and shall bear the
legend set forth in Section 2.01(e)(i) hereof, except as provided in Section
2.06(a) (such Notes together with interest in the Initial Global Note that are
subsequently transferred or exchanged pursuant to Section 2.06(b)(ii),
2.06(iii), 2.06(b)(iv) or 2.06(c), the "Initial Certificated Notes"). Upon
issuance, any such Initial Certificated Note shall be duly executed by the
Company and authenticated by the Trustee as hereinafter provided. Upon transfer
of any Initial Certificated Note to a QIB pursuant to Section 2.06(b)(i) hereof,
such Initial Certificated Note may be exchanged for a beneficial interest in the
Initial Global Note, except as provided in Section 2.06(c).
(d) If the Initial Global Note is tendered in a Registered Exchange
Offer, it shall be exchanged for a single, permanent global note in definitive,
fully registered form, without coupons, substantially in the form set forth in
Exhibit C hereto and shall bear the legends set forth in Section 2.01(e)(ii) and
Section 2.01(e)(iv) hereof (the "Exchange Global Note"). Upon issuance, such
Exchange Global Note shall be registered in the name of the Depositary or its
nominee, duly executed by the Company and authenticated by the Trustee as
hereinafter provided and deposited on behalf of the beneficial owners of the
Exchange Notes represented thereby in accordance with the procedures of the
Depositary.
If Initial Certificated Notes are tendered in a Registered Exchange
Offer, they will be exchanged for Certificated Notes in definitive, fully
registered form, without coupons and without legends, substantially in the form
set forth in Exhibit D hereto ("Exchange Certificated Notes"). Upon issuance,
any such Exchange Certificated Note shall be duly executed by the Company and
authenticated by the Trustee as hereinafter provided.
At the option of the Holder thereof, Exchange Notes may be held either
in the form of a beneficial interest in the Exchange Global Note or as Exchange
Certificated Notes.
(e) The following legends shall appear on each Global Note and each
Certificated Note as indicated below:
(i) Except as provided in Section 2.06(a) hereof, each Initial
Global Note and Initial Certificated Note shall bear the following legend (the
"Private Placement Legend") on the face thereof:
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<PAGE> 29
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND THIS NOTE MAY NOT
BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR IN
ACCORDANCE WITH AN APPLICABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (SUBJECT TO THE DELIVERY OF
SUCH EVIDENCE, IF ANY, REQUIRED UNDER THE INDENTURE PURSUANT
TO WHICH THIS NOTE IS ISSUED) AND IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
OR ANY OTHER JURISDICTION.
(ii) Each Global Note shall bear the following legend on the
face thereof:
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY TO FRESH FOODS, INC. OR A
SUCCESSOR THEREOF OR THE REGISTRAR FOR REGISTRATION OF
TRANSFER OR EXCHANGE AND ANY NOTE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER ENTITY AS HAS BEEN REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS HAS BEEN REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE &
CO., HAS AN INTEREST HEREIN.
(iii) The Initial Global Note shall bear the following legend
on the face thereof:
TRANSFER OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN
WHOLE, AND NOT IN PART, TO NOMINEES OF THE DEPOSITORY TRUST
COMPANY OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE
AND TRANSFERS OF INTERESTS IN THIS GLOBAL NOTE SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS
SET FORTH IN SECTION 2.06 OF THE INDENTURE, DATED AS OF JUNE
9, 1998 AMONG FRESH FOODS, INC., AS ISSUER, THE GUARANTORS
LISTED THEREIN, AND STATE STREET BANK AND TRUST COMPANY, AS
TRUSTEE, PURSUANT TO WHICH THIS NOTE WAS ISSUED.
(iv) The Exchange Global Note shall bear the following legend
on the face thereof:
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TRANSFER OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN
WHOLE, AND NOT IN PART, TO NOMINEES OF THE DEPOSITORY TRUST
COMPANY OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE.
SECTION 2.02. Execution and Authentication. The Notes may be issued in
two series, a series of Initial Notes and a series of Exchange Notes. The
aggregate principal amount of Notes outstanding at any time shall not exceed
$125,000,000 except as provided in Section 2.07 hereof The Notes shall be
executed on behalf of the Company by its Chief Executive Officer, President,
Chief Operating Officer, Treasurer or any Vice President, and shall be attested
by the Company's Secretary or one of its Assistant Secretaries, in each case by
manual or facsimile signature.
The Notes shall be authenticated by manual signature of an authorized
signatory of the Trustee and shall not be valid for any purpose unless so
authenticated.
In case any officer of the Company whose signature shall have been
placed upon any of the Notes shall cease to be such officer of the Company
before authentication of such Notes by the Trustee and the issuance and delivery
thereof, such Notes may, nevertheless, be authenticated by the Trustee and
issued and delivered with the same force and effect as though such Person had
not ceased to be such an officer of the Company.
The Trustee shall, upon receipt of a Company Order requesting such
action, authenticate (a) Initial Notes for original issue up to the aggregate
principal amount not to exceed $125,000,000 outstanding at any given time, or
(b) Exchange Notes for issue pursuant to a Registered Exchange Offer for Initial
Notes in a principal amount equal to the principal amount of Initial Notes
exchanged in such Registered Exchange Offer. Such Company Order shall specify
the amount of Notes to be authenticated and the date on which, in the case of
clause (a) above, the Initial Notes or, in the case of clause (b) above, the
Exchange Notes, are to be authenticated and shall further provide instructions
concerning registration, amounts for each Holder and delivery.
Upon the occurrence of any event specified in Section 2.06(c) hereof,
the Company shall execute and the Trustee shall authenticate and make available
for delivery to each beneficial owner identified by the Depositary, in exchange
for such beneficial owner's interest in the Initial Global Note or Exchange
Global Note, as the case may be, Initial Certificated Notes or Exchange
Certificated Notes, as the case may be, representing Notes theretofore
represented by the Initial Global Note or Exchange Global Note, as the case may
be.
A Note shall not be valid or entitled to any benefits under this
Indenture or obligatory for any purpose unless executed by the Company and
authenticated by the manual signature of one of the authorized signatories of
the Trustee as provided herein. Such signature upon any Note shall be conclusive
evidence, and the only evidence, that such Note has been duly authenticated and
delivered under this Indenture and is entitled to the benefits of this
Indenture.
The Trustee may appoint an authenticating agent reasonably acceptable
to the Company to authenticate the Notes. Unless limited by the terms of such
appointment, an authenticating
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agent may authenticate the Notes whenever the Trustee may do so. Each reference
in this Indenture to authentication by the Trustee includes authentication by
such agent. Any authenticating agent of the Trustee shall have the same rights
hereunder as any Registrar or Paying Agent.
Notwithstanding the foregoing, if any Note shall have been
authenticated and delivered hereunder but never issued and sold by the Company,
and the Company shall deliver such Note to the Trustee for cancellation as
provided in Section 2.10 together with a written statement (which need not be
accompanied by an Opinion of Counsel) stating that such Note has never been
issued and sold by the Company, for all purposes of this Indenture such Note
shall be deemed never to have been authenticated and delivered hereunder and
shall not be entitled to the benefits of this Indenture.
SECTION 2.03. Registrar and Paying Agent. The Company shall maintain,
pursuant to Section 4.02 hereof, an office or agency where the Notes may be
presented for registration of transfer or for exchange (the "Registrar"), an
office or agency where Notes may be presented for payment (the "Paying Agent")
and an office or agency where notices and demands to or upon the Company in
respect of the Notes and this Indenture may be served.
The Company shall cause to be kept at such office a register (the "Note
Register") in which, subject to such reasonable regulations as it may prescribe,
the Company shall provide for the registration of Notes and of transfers of
Notes entitled to be registered or transferred as provided herein. The Trustee,
at its Corporate National Trust Office, is initially appointed Registrar for the
purpose of registering Notes and transfers of Notes as herein provided. The
Company may, upon written notice to the Trustee, change the designation of the
Trustee as Registrar and appoint another Person to act as Registrar for purposes
of this Indenture. If any Person other than the Trustee acts as Registrar, the
Trustee shall have the right at any time, upon reasonable notice, to inspect or
examine the Note Register and to make such inquiries of the Registrar as the
Trustee shall in its discretion deem necessary or desirable in performing its
duties hereunder.
The Company shall enter into an appropriate agency agreement with any
Person designated by the Company as Registrar or Paying Agent that is not a
party to this Indenture, which agreement shall incorporate the provisions of the
TIA and shall implement the provisions of this Indenture that relate to such
Registrar or Paying Agent. Prior to the designation of any such Person, the
Company shall, by written notice (which notice shall include the name and
address of such Person), inform the Trustee of such designation. The Trustee, at
its Corporate National Trust Office, is initially appointed Paying Agent under
this Indenture. If the Company fails to maintain a Registrar or Paying Agent,
the Trustee shall act as such.
Subject to Section 2.06 hereof, upon surrender for registration of
transfer of any Note at an office or agency of the Company designated for such
purpose, the Company shall execute, and the Trustee shall authenticate and make
available for delivery, in the name of the designated transferee or transferees,
one or more new Initial Notes or Exchange Notes, as the case may be, of any
authorized denomination or denominations, of like tenor and aggregate principal
amount, all as requested by the transferor.
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Every Note presented or surrendered for registration of transfer or for
exchange shall (if so required by the Company, the Trustee or the Registrar) be
duly endorsed, or be accompanied by a duly executed instrument of transfer in
form satisfactory to the Company, the Trustee and the Registrar, by the Holder
thereof or such Holder's attorney duly authorized in writing.
SECTION 2.04. Paying Agent To Hold Money in Trust. On or prior to each
due date of the principal, premium, if any, or any payment of interest or
Liquidated Damages, if any, with respect to any Note, the Company shall deposit
with the Paying Agent a sum sufficient to pay such principal, premium, if any,
or interest or Liquidated Damages, if any, when so becoming due.
The Company shall require each Paying Agent (other than the Trustee) to
agree in writing that such Paying Agent shall hold in trust for the benefit of
Holders or the Trustee all money held by such Paying Agent for the payment of
principal, premium, if any, or interest or Liquidated Damages, if any, with
respect to the Notes, shall notify the Trustee of any default by the Company in
making any such payment and at any time during the continuance of any such
default, upon the written request of the Trustee, shall forthwith pay to the
Trustee all sums held in trust by such Paying Agent.
The Company at any time may require a Paying Agent to pay all money
held by it to the Trustee and to account for any funds disbursed by such Paying
Agent. Upon complying with this Section 2.04, the Paying Agent shall have no
further liability for the money delivered to the Trustee.
SECTION 2.05. Global Notes
. (a) So long as a Global Note is registered in the name of the Depositary or
its nominee, members of, or participants in, the Depositary ("Agent Members")
shall have no rights under this Indenture with respect to the Global Note held
on their behalf by the Depositary or the Trustee as its custodian, and the
Depositary may be treated by the Company, the Guarantors, the Trustee and any
agent of the Company, the Guarantors or the Trustee as the absolute owner of
such Global Note for all purposes. Notwithstanding the foregoing, nothing herein
shall (i) prevent the Company, the Guarantors, the Trustee or any agent of the
Company, the Guarantors or the Trustee, from giving effect to any written
certification, proxy or other authorization furnished by the Depositary or (ii)
impair, as between the Depositary and its Agent Members, the operation of
customary practices governing the exercise of the rights of a Holder.
(b) The Holder of a Global Note may grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold
interests in such Global Note through Agent Members, to take any action which a
Holder is entitled to take under this Indenture or the Notes.
(c) Whenever, as a result of an optional redemption of Notes by the
Company, a Change of Control Offer, an Asset Sale Offer, a Registered Exchange
Offer or an exchange for Certificated Notes pursuant to the provisions of
Section 2.06(b) or Section 2.06(c) hereof, a Global Note is redeemed,
repurchased or exchanged in part, such Global Note shall be
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surrendered by the Holder thereof to the Trustee who shall cause an adjustment
to be made to Schedule A thereof so that the principal amount of such Global
Note will be equal to the portion of such Global Note not redeemed, repurchased
or exchanged and shall thereafter return such Global Note to such Holder,
provided that each such Global Note shall be in a principal amount of $1,000 or
an integral multiple thereof.
SECTION 2.06. Transfer and Exchange. (a) By its acceptance of any
Initial Note represented by a certificate bearing the Private Placement Legend,
each Holder of, and beneficial owner of an interest in, such Initial Note
acknowledges the restrictions on transfer of such Initial Note set forth in the
Private Placement Legend and agrees that it will transfer such Initial Note only
in accordance with the Private Placement Legend. Upon the registration of
transfer, exchange or replacement of an Initial Note not bearing the Private
Placement Legend, the Trustee shall deliver an Initial Note or Initial Notes
that do not bear the Private Placement Legend. Upon the transfer, exchange or
replacement of an Initial Note bearing the Private Placement Legend, the Trustee
shall deliver an Initial Note or Initial Notes bearing the Private Placement
Legend, unless such legend may be removed from such Note as provided in this
Section 2.06(a). If the Private Placement Legend has been removed from an
Initial Note, as provided herein, no other Initial Note issued in exchange for
all or any part of such Initial Note shall bear such legend, unless the Company
has reasonable cause to believe that such other Initial Note represents a
"restricted security" within the meaning of Rule 144 and instructs the Trustee
in writing to cause a legend to appear thereon. Each Initial Note shall bear the
Private Placement Legend unless and until:
(i) a transfer of such Initial Note is made pursuant to an effective
Shelf Registration Statement, in which case the Private Placement
Legend shall be removed from such Initial Note so transferred at the
request of the Holder; or
(ii) there is delivered to the Company such satisfactory evidence,
which may include an opinion of independent counsel licensed to
practice law in the State of New York, as may reasonably be requested
by the Company confirming that neither such legend nor the restrictions
on transfer set forth therein are required to ensure that transfers of
such Initial Note will not violate the registration and prospectus
delivery requirements of the Securities Act; provided that the Trustee
shall not be required to determine (but may rely on a determination
made by the Company with respect to) the sufficiency of any such
evidence; and upon provision of such evidence, the Trustee shall
authenticate and deliver in exchange for such Initial Note, an Initial
Note or Initial Notes (representing the same aggregate principal amount
of the Initial Note being exchanged) without such legend.
(b) Special Transfer Provisions. The following provisions of this
paragraph (b) are applicable only to Initial Notes bearing the Private Placement
Legend:
(i) Transfers to QIBs. If the Holder of an Initial Certificated Note
wishes to transfer such Initial Certificated Note to a QIB pursuant to
Rule 144A, such Holder may, subject to the rules and procedures of the
Depositary, cause the exchange of such Initial Certificated Note for an
equivalent beneficial interest in the Initial Global Note. Upon receipt
by the Trustee, as Registrar, at its Corporate National Trust Office of
(A) such
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Initial Certificated Note, duly endorsed as provided herein, (B)
instructions from such Holder directing the Trustee, as Registrar, to
credit or cause to be credited a beneficial interest in the Initial
Global Note equal to the principal amount of the Initial Certificated
Note to be exchanged, such instructions to contain information
regarding the participant account with the Depositary to be credited
with such increase and (C) a certificate in the form of Exhibit E
attached hereto from the transferor, then the Trustee, as Registrar,
shall cancel or cause to be canceled such Initial Certificated Note and
shall instruct the Depositary to increase or cause to be increased such
Initial Global Note by the aggregate principal amount of the beneficial
interest in the Initial Certificated Note to be exchanged and to credit
or cause to be credited to the account of the Person specified in such
instructions a beneficial interest in the Initial Global Note equal to
the principal amount of the Initial Certificated Note so canceled;
(ii) Transfers to Institutional Accredited Investors and Exchange of
Interests in Global Notes:
(A) If a Holder of a beneficial interest in the Initial Global
Note deposited with the Depositary or the Trustee as custodian
for the Depositary wishes at any time to transfer its interest
in such Initial Global Note to an Institutional Accredited
Investor or to exchange such interest for an Initial
Certificated Note evidencing such interest, such Holder may,
subject to the rules and procedures of the Depositary, cause
the transfer or exchange of such interest for one or more
Initial Certified Notes of any authorized denomination or
denominations and of the same aggregate principal amount. Upon
receipt by the Trustee, as Registrar, at its Corporate
National Trust Office of (I) instructions from the Depositary
directing the Trustee, as Registrar, to authenticate and
deliver one or more Initial Certificated Notes of the same
aggregate principal amount as the beneficial interest in the
Initial Global Note to be transferred or exchanged, such
instructions to contain the name or names of the designated
transferee or transferees, if any, the authorized denomination
or denominations of the Initial Certificated Notes to be so
issued and appropriate delivery instructions and (II) in the
case of a transfer, (x) a certificate in the form of Exhibit F
attached hereto from the transferor, (y) a certificate in the
form of Exhibit G attached hereto from the transferee and (z)
such other certifications, legal opinions or other information
as the Company or the Trustee may reasonably require to
confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act, then the
Trustee, as Registrar, will instruct the Depositary to reduce
or cause to be reduced such Initial Global Note by the
aggregate principal amount of the beneficial interest therein
to be exchanged or transferred and to debit or cause to be
debited from the account of the Person making such exchange or
transfer the beneficial interest in the Initial Global Note
that is being exchanged or transferred, and concurrently with
such reduction and debit the Company shall execute, and the
Trustee shall authenticate and deliver, one or more Initial
Certificated Notes of the same aggregate principal amount in
accordance with the instructions referred to above; and
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(B) if a Holder of an Initial Certificated Note wishes to
transfer such Note to an Institutional Accredited Investor,
such Holder may, subject to the restrictions on transfer set
forth herein and in such Initial Certificated Note, cause the
exchange of such Initial Certificated Note for one or more
Initial Certificated Notes of any authorized denomination or
denominations and of the same aggregate principal amount. Upon
receipt by the Trustee, as Registrar, at its Corporate
National Trust Office of (I) such Initial Certificated Note,
duly endorsed as provided herein, (II) instructions from such
Holder directing the Trustee, as Registrar, to authenticate
and deliver one or more Initial Certificated Notes of the same
aggregate principal amount as the Initial Certificated Notes
to be exchanged, such instructions to contain the name or
names of the designated transferee or transferees, the
authorized denomination or denominations of the Initial
Certificated Notes to be so issued and appropriate delivery
instructions, (III) a certificate in the form of Exhibit F
attached hereto from the transferor, (IV) a certificate in the
form of Exhibit G attached hereto from the transferee and (V)
such other certifications, legal opinions or other information
as the Company or the Trustee may reasonably require to
confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act, then the
Trustee, as Registrar, shall cancel or cause to be canceled
such Initial Certificated Note and concurrently therewith, the
Company shall execute, and the Trustee shall authenticate and
deliver, one or more Initial Certificated Notes of the same
aggregate principal amount, in accordance with the
instructions referred to above;
(iii) Transfers to Non-U.S. Persons:
(A) If a Holder of a beneficial interest in the Initial Global
Note deposited with the Depositary or the Trustee as custodian
for the Depositary wishes at any time to transfer its interest
in such Initial Global Note to a Non-U. S. Person pursuant to
Regulation S who wishes to take delivery thereof in the form
of a Certificated Note, such Holder may, subject to the rules
and procedures of the Depositary, cause the exchange of such
interest for one or more Initial Certificated Notes of any
authorized denomination or denominations and of the same
aggregate principal amount. Upon receipt by the Trustee, as
Registrar, at its Corporate National Trust Office of (I)
instructions from the Depositary directing the Trustee, as
Registrar, to authenticate and deliver one or more Initial
Certificated Notes of the same aggregate principal amount as
the beneficial interest in the Initial Global Note to be
exchanged, such instructions to contain the name or names of
the designated transferee or transferees, the authorized
denomination or denominations of the Initial Certificated
Notes to be so issued and appropriate delivery instructions,
(II) a certificate in the form of Exhibit H attached hereto
from the transferor and (III) a certificate in the form of
Exhibit I attached hereto from the transferee, then the
Trustee, as Registrar, will instruct the Depositary to reduce
or cause to be reduced such Initial Global Note by the
aggregate principal amount of the beneficial interest therein
to be exchanged and to debit or cause to be debited from the
account of the Person making such transfer the beneficial
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interest in the Initial Global Note that is being transferred,
and concurrently with such reduction and debit the Company
shall execute, and the Trustee shall authenticate and deliver,
one or more Initial Certificated Notes of the same aggregate
principal amount in accordance with the instructions referred
to above; and
(B) if a Holder of an Initial Certificated Note wishes to
transfer such Note to a Non-U. S. Person pursuant to
Regulation S who wishes to take delivery thereof in the form
of a Certificated Note, such Holder may, subject to the
restrictions on transfer set forth herein and in such Initial
Certificated Note, cause the exchange of such Initial
Certificated Note for one or more Initial Certificated Notes
of any authorized denomination or denominations and of the
same aggregate principal amount. Upon receipt by the Trustee,
as Registrar, at its Corporate National Trust Office of (1)
such Initial Certificated Note, duly endorsed as provided
herein, (II) instructions from such Holder directing the
Trustee, as Registrar, to authenticate and deliver one or more
Initial Certificated Notes of the same aggregate principal
amount as the Initial Certificated Notes to be exchanged, such
instructions to contain the name or names of the designated
transferee or transferees, the authorized denomination or
denominations of the Initial Certificated Notes to be so
issued and appropriate delivery instructions, (III) a
certificate in the form of Exhibit H attached hereto from the
transferor and (IV) a certificate in the form of Exhibit I
attached hereto from the transferee, then the Trustee, as
Registrar, shall cancel or cause to be canceled such Initial
Certificated Note and concurrently therewith, the Company
shall execute, and the Trustee shall authenticate and deliver,
one or more Initial Certificated Notes of the same aggregate
principal amount, in accordance with the instructions referred
to above;
(iv) Transfers Pursuant to Other Exemptions.
(A) If a Holder of a beneficial interest in the Initial Global
Note deposited with the Depositary or the Trustee as custodian
for the Depositary wishes at any time to transfer its interest
in such Initial Global Note pursuant to another applicable
exemption from the registration requirements of the Securities
Act, such Holder may, subject to the rules and procedures of
the Depositary, cause the exchange of such interest for one or
more Initial Certificated Notes of any authorized denomination
or denominations and of the same aggregate principal amount.
Upon receipt by the Trustee, as Registrar, at its Corporate
National Trust Office of (I) instructions from the Depositary
directing the Trustee, as Registrar, to authenticate and
deliver one or more Initial Certificated Notes of the same
aggregate principal amount as the beneficial interest in the
Initial Global Note to be exchanged, such instructions to
contain the name or names of the designated transferee or
transferees, the authorized denomination or denominations of
the Initial Certificated Notes to be so issued and appropriate
delivery instructions and (II) such certifications, legal
opinions or other information as the Company or the Trustee
may reasonably require to confirm that such transfer is being
made pursuant to an exemption from, or in a transaction not
subject to, the registration
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requirements of the Securities Act, then the Trustee, as
Registrar, will instruct the Depositary to reduce or cause to
be reduced such Initial Global Note by the aggregate principal
amount of the beneficial interest therein to be exchanged and
to debit or cause to be debited from the account of the Person
making such transfer the beneficial interest in the Initial
Global Note that is being transferred, and concurrently with
such reduction and debit the Company shall execute, and the
Trustee shall authenticate and deliver, one or more Initial
Certificated Notes of the same aggregate principal amount in
accordance with the instructions referred to above; and
(B) if a Holder of an Initial Certificated Note wishes to
transfer such Initial Certificated Note pursuant to another
applicable exemption from the registration requirements of the
Securities Act, such Holder may, subject to the restrictions
on transfer set forth herein and in such Initial Certificated
Note, cause the exchange of such Initial Certificated Note for
one or more Initial Certificated Notes of any authorized
denomination or denominations and of the same aggregate
principal amount. Upon receipt by the Trustee, as Registrar,
at its Corporate National Trust Office of (I) such Initial
Certificated Note, duly endorsed as provided herein, (II)
instructions from such Holder directing the Trustee, as
Registrar, to authenticate and deliver one or more Initial
Certificated Notes of the same aggregate principal amount as
the Initial Certificated Notes to be exchanged, such
instructions to contain the name or names of the designated
transferee or transferees, the authorized denomination or
denominations of the Initial Certificated Notes to be so
issued and appropriate delivery instructions and (III) such
certifications, legal opinions or other information as the
Company or the Trustee may reasonably require to confirm that
such transfer is being made pursuant to an exemption from, or
in a transaction not subject to, the registration requirements
of the Securities Act, then the Trustee, as Registrar, shall
cancel or cause to be canceled such Initial Certificated Note
and concurrently therewith, the Company shall execute, and the
Trustee shall authenticate and deliver, one or more Initial
Certificated Notes of the same aggregate principal amount, in
accordance with the instructions referred to above.
The Company shall deliver to the Trustee, and the Trustee shall retain
for two years, copies of all documents received pursuant to this Section
2.06(b). The Company shall have the right to inspect and make copies of all such
documents at its sole expense at any reasonable time upon the giving of
reasonable written notice to the Trustee.
(c) The Initial Global Note or Exchange Global Note, as the case may
be, shall be exchanged by the Company for one or more Initial Certificated Notes
or Exchange Certificated Notes, as the case may be, if (i) the Depositary has
notified the Company that it is unwilling or unable to continue as, or ceases to
be, a clearing agency registered under Section 17A of the Exchange Act and a
successor to the Depositary registered as a clearing agency under Section 17A of
the Exchange Act is not able to be appointed by the Company within 90 calendar
days, or (ii) the Depositary is at any time unwilling or unable to continue as
Depositary and a successor to the Depositary is not able to be appointed by the
Company within 90 calendar days, or (iii) the
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Company, at its option, notifies the Trustee in writing that it elects to cause
the issuance of Notes in the form of Certificated Notes. If an Event of Default
occurs and is continuing, the Company shall, at the request of the Holder
thereof, exchange all or part of the Initial Global Note or Exchange Global
Note, as the case may be, for one or more Initial Certificated Notes or Exchange
Certificated Notes, as the case may be; provided that the principal amount of
each of such Initial Certificated Note or Exchange Certificated Note, as the
case may be, and such Global Note, after such exchange, shall be $1,000 or an
integral multiple thereof. Whenever a Global Note is exchanged as a whole for
one or more Initial Certificated Notes or Exchange Certificated Notes, as the
case may be, it shall be surrendered by the Holder thereof to the Trustee for
cancellation. Whenever a Global Note is exchanged in part for one or more
Initial Certificated Notes or Exchange Certificated Notes, as the case may be,
it shall be surrendered by the Holder thereof to the Trustee and the Trustee
shall make the appropriate notations thereon pursuant to Section 2.05(c) hereof.
All Initial Certificated Notes or Exchange Certificated Notes, as the case may
be, issued in exchange for a Global Note or any portion thereof shall be
registered in such names, and delivered, as the Depositary shall instruct the
Trustee. Any Initial Certificated Notes issued pursuant to this Section 2.06(c)
shall include the Private Placement Legend, except as set forth in Section
2.06(a) hereof.
(d) Any Initial Notes that are presented to the Registrar for exchange
pursuant to a Registered Exchange Offer shall be exchanged for Exchange Notes of
equal principal amount upon surrender to the Registrar of the Initial Notes to
be exchanged in accordance with the terms of the Registered Exchange Offer;
provided that the Initial Notes so surrendered for exchange are accompanied by a
letter of transmittal and duly endorsed or accompanied by a written instrument
of transfer in form satisfactory to the Company, the Trustee and the Registrar
and duly executed by the Holder thereof or such Holder's attorney who shall be
duly authorized in writing to execute such document on behalf of such Holder.
Whenever any Initial Notes are so surrendered for exchange, the Company shall
execute, and the Trustee shall authenticate and deliver to the surrendering
Holder thereof, Exchange Notes in the same aggregate principal amount as the
Initial Notes so surrendered.
(e) A Holder may transfer a Note only upon the surrender of such Note
for registration of transfer. No such transfer shall be effected until, and the
transferee shall succeed to the rights of a Holder only upon, final acceptance
and registration of the transfer in the Note Register by the Registrar. When
Notes are presented to the Registrar with a request to register the transfer of,
or to exchange, such Notes, the Registrar shall register the transfer or make
such exchange as requested if its requirements for such transactions and any
applicable requirements hereunder are satisfied. To permit registrations of
transfers and exchanges, the Company shall execute and the Trustee shall
authenticate and deliver Certificated Notes at the Registrar's request.
(f) The Company shall not be required to make and the Registrar need
not register the transfer or exchange of Certificated Notes or portions thereof
selected for redemption (except, in the case of a Certificated Note to be
redeemed in part, the portion of such Note not to be redeemed) or any
Certificated Notes for a period of 15 calendar days before a selection of Notes
to be redeemed.
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(g) No service charge shall be made for any registration of transfer or
exchange of Notes, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer of Notes (other than in respect of a
Registered Exchange Offer, except as provided in the Registration Rights
Agreement).
(h) All Notes issued upon any registration of transfer or exchange
pursuant to the terms of this Indenture will evidence the same debt and will be
entitled to the same benefits under this Indenture as the Notes surrendered for
such registration of transfer or exchange.
(i) Any Holder of a Global Note shall, by acceptance of such Global
Note, agree that transfers of beneficial interests in such Global Note may be
effected only through a bookentry system maintained by such Holder (or its
agent), and that ownership of a beneficial interest in the Notes represented
thereby shall be required to be reflected in book-entry form. Transfers of a
Global Note shall be limited to transfers in whole and not in part, to the
Depositary, its successors, and their respective nominees. Interests of
beneficial owners in a Global Note shall be transferred in accordance with the
rules and procedures of the Depositary (or its successors), which shall, in the
case of the Initial Global Note, include restrictions designed to ensure that
the beneficial owners of such Initial Global Note are QIBs.
SECTION 2.07. Replacement Notes. If a mutilated Note is surrendered to
the Registrar or if the Holder of a Note claims that the Note has been lost,
destroyed or wrongfully taken, the Company shall issue and the Trustee shall
authenticate a replacement Note if the requirements of Section 8-405 of the
Uniform Commercial Code are met and the Holder satisfies any other reasonable
requirements of the Trustee. If required by the Trustee or the Company, such
Holder shall furnish an indemnity bond sufficient in the judgment of the Company
and the Trustee to protect the Company, the Trustee, the Paying Agent, the
Registrar and any co-registrar from any loss which any of them may suffer if a
Note is replaced. The Company and the Trustee may charge the Holder for their
expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company.
SECTION 2.08. Outstanding Notes. Notes outstanding at any time are all
Notes authenticated by the Trustee except for those canceled by it, those
delivered to it for cancellation and those described in this Section as not
outstanding. A Note does not cease to be outstanding because the Company or an
Affiliate of the Company holds the Note.
If a Note is replaced pursuant to Section 2.07, it ceases to be
outstanding unless the Trustee and the Company receive proof satisfactory to
them that the replaced Note is held by a bona fide purchaser.
If the Paying Agent segregates and holds in trust, in accordance with
this Indenture, on a Redemption Date or maturity date money sufficient to pay
all principal, premium, if any, and interest and Liquidated Damages, if any,
payable on that date with respect to the Notes (or portions thereof) to be
redeemed or maturing, as the case may be, and the Paying Agent is not prohibited
from paying such money to the Noteholders on that date pursuant to the terms of
this
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Indenture, then on and after that date such Notes (or portions thereof)
cease to be outstanding and interest on them ceases to accrue.
SECTION 2.09. Temporary Notes. Until definitive Notes are ready for
delivery the Company may prepare and the Trustee shall authenticate and deliver
temporary Notes. Temporary Notes shall be substantially in the form of
definitive Notes but may have variations that the Company considers appropriate
for temporary Notes. Without unreasonable delay, the Company shall prepare and
the Trustee shall authenticate definitive Notes and deliver them in exchange for
temporary Notes.
SECTION 2.10. Cancellation. The Company at any time may deliver Notes
to the Trustee for cancellation. The Registrar and the Paying Agent shall
forward to the Trustee any Notes surrendered to them for registration of
transfer, exchange or payment. The Trustee and no one else shall cancel and
destroy (subject to the record retention requirements of the Exchange Act) all
Notes surrendered for registration of transfer, exchange, payment or
cancellation and deliver a certificate of such destruction to the Company unless
the Company directs the Trustee to deliver canceled Notes to the Company;
provided, however, that the Trustee shall not be required to destroy any Notes.
The Company may not issue new Notes to replace Notes it has redeemed, paid or
delivered to the Trustee for cancellation.
SECTION 2.11. Payment of Interest, Interest Rights Preserved. Interest
on any Note which is payable, and is paid or duly provided for, on any Interest
Payment Date shall be paid to the Person in whose name such Note is registered
at the close of business on the Record Date for such interest payment, which
shall be the May 15 or November 15 (whether or not a Business Day) immediately
preceding such Interest Payment Date.
Any interest on any Note which is payable, but is not paid or duly
provided for, on any Interest Payment Date (herein called "Defaulted Interest")
shall forthwith cease to be payable to the registered Holder on the relevant
Record Date, and, except as hereinafter provided, such Defaulted Interest, and
any interest payable on such Defaulted Interest, may be paid by the Company, at
its election, as provided in clause (a) or (b) below:
(a) The Company may elect to make payment of any Defaulted Interest,
and any interest payable on such Defaulted Interest, to the Persons in whose
names the Notes are registered at the close of business on a Special Record Date
for the payment of such Defaulted Interest, which shall be fixed in the
following manner. The Company shall notify the Trustee in writing of the amount
of Defaulted Interest proposed to be paid on the Notes and the date of the
proposed payment, and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall make arrangements satisfactory to
the Trustee for such deposit prior to the date of the proposed payment, such
money when deposited to be held in trust for the benefit of the Persons entitled
to such Defaulted Interest as provided in this Section 2.1 l(a). Thereupon the
Trustee shall fix a Special Record Date for the payment of such Defaulted
Interest which shall be not more than 15 calendar days and not less than 10
calendar days prior to the date of the proposed payment and not less than 10
calendar days after the receipt by the Trustee of the notice of the proposed
payment. The Trustee shall promptly notify the Company of such Special Record
Date
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and, in the name and at the expense of the Company, shall cause notice of the
proposed payment of such Defaulted Interest and the Special Record Date therefor
to be sent, first-class mail, postage prepaid, to each Holder at such Holder's
address as it appears in the Note Register, not less than 10 calendar days prior
to such Special Record Date. Notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor having been mailed as aforesaid,
such Defaulted Interest shall be paid to the Persons in whose names the Notes
are registered at the close of business on such Special Record Date and shall no
longer be payable pursuant to the following clause (b); or
(b) The Company may make payment of any Defaulted Interest, and any
interest payable on such Defaulted Interest, on the Notes in any other lawful
manner not inconsistent with the requirements of any securities exchange on
which the Notes may be listed, and upon such notice as may be required by such
exchange, if, after notice given by the Company to the Trustee of the proposed
payment pursuant to this clause (b), such manner of payment shall be deemed
practicable by the Trustee.
Subject to the foregoing provisions of this Section 2.11, each Note
delivered under this Indenture upon registration of transfer of, or in exchange
for, or in lieu of, any other Note, shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Note.
SECTION 2.12. CUSIP Numbers. The Company in issuing the Notes may use
"CUSIP" numbers (if then generally in use) and, if so, the Trustee shall use
"CUSIP" numbers in notices of redemption as a convenience to Holders; provided,
however, that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Notes or as contained in
any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Notes, and any such redemption shall not
be affected by any defect in or omission of such numbers.
SECTION 2.13. Transfers, etc. Each Holder of a Note agrees to indemnify
the Company and the Trustee against any liability that may result from the
transfer, exchange or assignment by such Holder of such Holder's Note in
violation of any provision of this Indenture and/or applicable U.S. Federal or
state securities law.
ARTICLE 3
REDEMPTION
SECTION 3.01. Notices to Trustee. If the Company elects to redeem Notes
pursuant to paragraph 7 of the Initial Notes or paragraph 6 of the Exchange
Notes, it shall notify the Trustee in writing of the Redemption Date and the
principal amount of Notes to be redeemed.
The Company shall give each notice to the Trustee provided for in this
Section 3.01 not less than 30 days nor more than 60 days before the Redemption
Date unless the Trustee consents to a shorter period. Such notice shall be
accompanied by an Officers' Certificate and an Opinion
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of Counsel from the Company to the effect that such redemption will comply with
the conditions herein.
SECTION 3.02. Selection of Notes To Be Redeemed. If fewer than all the
Notes are to be redeemed, the Trustee shall select the Notes to be redeemed pro
rata or by lot or by a method that complies with applicable legal and securities
exchange requirements, if any, and that the Trustee considers fair and
appropriate and in accordance with methods generally used at the time of
selection by fiduciaries in similar circumstances. The Trustee shall make the
selection from outstanding Notes not previously called for redemption. The
Trustee may select for redemption portions of the principal of Notes that have
denominations larger than $1,000. Notes and portions of them the Trustee selects
shall be in amounts of $1,000 or a whole multiple of $1,000. Provisions of this
Indenture that apply to Notes called for redemption also apply to portions of
Notes called for redemption. The Trustee shall notify the Company promptly of
the Notes or portions of Notes to be redeemed.
SECTION 3.03. Notice of Redemption. At least 20 days but not more than
60 days before a Redemption Date, the Company shall mail a notice of redemption
by first-class mail, postage prepaid, to each Holder of Notes to be redeemed.
The notice shall identify the Notes to be redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) the name and address of the Paying Agent;
(4) that Notes called for redemption must be surrendered to the Paying
Agent to collect the Redemption Price;
(5) if any Global Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the
Redemption Date, the Global Note, with a notation on Schedule A thereof
adjusting the principal amount thereof to be equal to the unredeemed
portion, will be returned to the Holder thereof,
(6) if any Certificated Note is being redeemed in part, the portion of
the principal amount of such Note to be redeemed and that, after the
Redemption Date, a new Certificated Note or Certificated Notes in
principal amount equal to the unredeemed portion will be issued;
(7) if fewer than all the outstanding Notes are to be redeemed, the
identification and principal amounts of the particular Notes to be
redeemed;
(8) that, unless the Company defaults in making such redemption payment
or the Paying Agent is prohibited from making such payment pursuant to
the terms of this Indenture,
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interest on Notes (or portion thereof) called for redemption ceases to
accrue on and after the Redemption Date; and
(9) that no representation is made as to the correctness or accuracy of
the CUSIP number, if any, listed in such notice or printed on the
Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. In such event,
the Company shall provide the Trustee with the information required by this
Section 3.03.
SECTION 3.04. Effect of Notice of Redemption. Once notice of redemption
is mailed, Notes called for redemption become due and payable on the Redemption
Date and at the Redemption Price stated in the notice. Upon surrender to the
Paying Agent, such Notes shall be paid at the Redemption Price stated in the
notice, plus accrued interest to the Redemption Date. Failure to give notice or
any defect in the notice to any Holder shall not affect the validity of the
notice to any other Holder.
SECTION 3.05. Deposit of Redemption Price. On or prior to the
Redemption Date, the Company shall deposit with the Paying Agent (or, if the
Company or a domestically incorporated Wholly-Owned Subsidiary is the Paying
Agent, shall segregate and hold in trust) money in immediately available funds,
sufficient to pay the Redemption Price of and accrued interest on all Notes to
be redeemed on that date other than Notes or portions of Notes called for
redemption which have been delivered by the Company to the Trustee for
cancellation.
So long as the Company complies with the preceding paragraph and the
other provisions of this Article 3, interest on the Notes or portions thereof to
be redeemed on the applicable Redemption Date shall cease to accrue from and
after such date and such Notes or portions thereof shall be deemed not to be
entitled to any benefit under this Indenture except to receive payment of the
Redemption Price on the Redemption Date (subject to the right of each Holder of
record on the relevant Record Date to receive interest due on the relevant
Interest Payment Date). If any Note called for redemption shall not be so paid
upon surrender for redemption, then, from the Redemption Date until such
Redemption Price is paid, interest shall be paid on the unpaid principal and
premium and, to the extent permitted by law, on any accrued but unpaid interest
thereon, in each case at the rate prescribed therefor by such Notes.
SECTION 3.06. Notes Redeemed in Part. Upon surrender of a Note that is
redeemed in part, the Company shall execute and the Trustee shall authenticate
for the Holder of the Note being surrendered (at the Company's expense) a new
Note equal in principal amount to the unredeemed portion of the Note
surrendered.
ARTICLE 4
COVENANTS
SECTION 4.01. Payment of Notes. The Company shall promptly pay the
principal of, premium, if any, and interest and Liquidated Damages, if any, on
the Notes on the dates and in
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the manner provided in the Notes and in this Indenture. Principal, premium, if
any, and interest and Liquidated Damages, if any, shall be considered paid on
the date due if on such date the Trustee or the Paying Agent holds in accordance
with this Indenture money sufficient to pay all principal, premium, if any, and
interest and Liquidated Damages, if any, then due and the Trustee or the Paying
Agent, as the case may be, is not prohibited from paying such money to the
Noteholders on that date pursuant to the terms of this Indenture.
To the extent lawful, the Company shall pay interest on overdue
principal, overdue premium, Defaulted Interest and Liquidated Damages (without
regard to any applicable grace period) at the interest rate borne on the Notes.
The Company's obligation pursuant to the previous sentence shall apply whether
such overdue amount is due at its maturity, as a result of the Company's
obligations pursuant to Sections 3.05, Section 4.11 or Section 4.14 hereof, or
otherwise.
All payments with respect to a Global Note or a Certificated Note
(including principal, premium, if any, interest and Liquidated Damages, if any)
the Holders of which have given wire transfer instructions to the Company will
be required to be made by wire transfer of immediately available funds to the
account or (in the case of a Global Note) accounts specified by the Holders
thereof or, if no such account is specified, by sending via first-class mail,
postage prepaid, a check to each such Holders' registered address.
SECTION 4.02. Maintenance of Office or Agency
. The Company shall maintain in the Borough of Manhattan, The City of New York,
an office or agency where Notes may be presented or surrendered for payment,
where Notes may be surrendered for registration of transfer or exchange and
where notices and demands to or upon the Company in respect of the Notes and
this Indenture may be served, which office shall be initially the Corporate
National Trust Office designated in the proviso of the definition of "Corporate
National Trust Office." The Company shall give prompt written notice to the
Trustee of the location, and any change in the location, of such office or
agency. If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at the
Corporate National Trust Office of the Trustee, and the Company hereby appoints
the Trustee its agent to receive all presentations, surrenders, notices and
demands.
The Company may also from time to time designate one or more other
offices or agencies (in or outside of The City of New York) where the Notes may
be presented or surrendered for any or all of such purposes, and may from time
to time rescind such designations; provided that no such designation or
rescission shall in any manner relieve the Company of its obligation to maintain
an office or agency in The City of New York for such purposes. The Company shall
give prompt written notice to the Trustee of any such designation and any change
in the location of any such other office or agency.
The Company hereby designates the Corporate National Trust Office of
the Trustee as one such office or agency of the Company in accordance with
Section 2.03 hereof.
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SECTION 4.03. Money for the Notes to be Held in Trust. If the Company,
any Subsidiary of the Company or any of their respective Affiliates shall at any
time act as Paying Agent with respect to the Notes, such Paying Agent shall, on
or before each due date of the principal of, premium, if any, or interest or
Liquidated Damages, if any, on any of the Notes, segregate and hold in trust for
the benefit of the Persons entitled thereto money sufficient to pay the
principal, premium, if any, or interest or Liquidated Damages, if any, so
becoming due until such money shall be paid to such Persons or otherwise
disposed of as herein provided, and shall promptly notify the Trustee of its
action or failure so to act.
Whenever the Company shall have one or more Paying Agents with respect
to the Notes, it shall, prior to 10:00 a.m. New York City time on each due date
of the principal of, premium, if any, or interest or Liquidated Damages, if any,
on any of the Notes, deposit with a Paying Agent a sum sufficient to pay the
principal, premium, if any, or interest or Liquidated Damages, if any, so
becoming due, such sum to be held in trust for the benefit of the Persons
entitled to such principal, premium or interest or Liquidated Damages, if any,
and (unless such Paying Agent is the Trustee) the Paying Agent shall promptly
notify the Trustee of the Company's action or failure so to act.
SECTION 4.04. Corporate Existence. Subject to the provisions of Article
5 hereof, the Company shall do or cause to be done all things necessary to
preserve and keep in full force and effect the corporate existence, rights
(charter and statutory) and franchises of the Company and each of its Restricted
Subsidiaries; provided that the Company and any such Restricted Subsidiary shall
not be required to preserve the corporate existence of any such Subsidiary or
any such right or franchise if the Board shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company and
that the loss thereof is not disadvantageous in any material respect to the
Holders.
SECTION 4.05. Maintenance of Property. The Company shall cause all
Property used or useful in the conduct of its business or the business of any of
its Restricted Subsidiaries to be maintained and kept in good condition, repair
and working order and supplied with all necessary equipment and shall 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 that nothing in this Section
4.05 shall prevent the Company from discontinuing the operation or maintenance
of any of such Property if such discontinuance is, in the judgment of the
Company, desirable in the conduct of its business or the business of any of its
Subsidiaries and not disadvantageous in any material respect to the Holders.
SECTION 4.06. Payment of Taxes and Other Claims. The Company shall pay
or discharge or cause to be paid or discharged, before the same shall become
delinquent, (a) all taxes, assessments and governmental charges levied or
imposed upon the Company or any of its Subsidiaries or upon the income, profits
or Property of the Company or any of its Subsidiaries and (b) all material
lawful claims for labor, materials and supplies which, if unpaid, might by law
become a Lien upon the Property of the Company or any of its Subsidiaries;
provided that the Company shall not be required to pay or discharge or cause to
be paid or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in
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good faith by appropriate proceedings and for which adequate reserves in
accordance with GAAP or other appropriate provision has been made.
SECTION 4.07. SEC Reports. Notwithstanding that the Company may not be
required to remain subject to the reporting requirements of Section 13 or 15(d)
of the Exchange Act, the Company shall file with the Commission and provide the
Trustee and Noteholders with such annual reports and such information, documents
and other reports as are specified in Sections 13 and 15(d) of the Exchange Act
and applicable to a U.S. corporation subject to such Sections, such information,
documents and other reports to be so filed and provided at the times specified
for the filing of such information, documents and reports under such Sections.
In addition, the Company will make available, upon request, to any Holder and
any prospective purchaser of Notes the information required pursuant to Rule
144A(d)(4) under the Securities Act during any period in which the Company is
not subject to Section 13 or 15(d) of the Exchange Act. The Company also shall
comply with the other provisions of TIA Section 314(a). Delivery of such
reports, information and documents to the Trustee is for informational purposes
only and the Trustee's receipt of such shall not constitute constructive notice
of any information contained therein, including the Company's compliance with
any of its covenants hereunder (as to which the Trustee is entitled to rely
exclusively on Officers' Certificates).
SECTION 4.08. Limitation on Indebtedness. The Company shall not, and
shall not permit any Restricted Subsidiary to, Incur, directly or indirectly,
any Indebtedness (including without limitation, any Acquired Indebtedness) other
than Permitted Indebtedness. Notwithstanding the foregoing, in addition to
Permitted Indebtedness, the Company or any Restricted Subsidiary may Incur
Indebtedness (including, without limitation, Acquired Indebtedness) if (i) no
Default or Event of Default shall have occurred and be continuing on the date of
the proposed Incurrence thereof or would result as a consequence of such
proposed Incurrence and (ii) immediately after giving effect to such proposed
Incurrence, the Consolidated Coverage Ratio of the Company is at least 2.0 to
1.0 for Incurrences on or before June 1, 2000 and 2.25 to 1.0 for all
Incurrences thereafter.
SECTION 4.09. Limitation on Restricted Payments. (a) The Company shall
not, and shall not permit any Restricted Subsidiary, directly or indirectly, to
make a Restricted Payment if at the time the Company or such Restricted
Subsidiary makes such Restricted Payment:
(i) a Default or Event of Default shall have occurred and be
continuing (or would result therefrom);
(ii) the Company or such Restricted Subsidiary is not able to Incur,
after giving effect to such Restricted Payment, an additional $1.00 of
Indebtedness pursuant to the second sentence of Section 4.08; or
(iii) the aggregate amount of such Restricted Payment and any other
Restricted Payments since the Issue Date would exceed the sum of
(A) 50% of the Consolidated Net Income accrued on a cumulative
basis during the period (treated as one accounting period) beginning on
the first day of the fiscal
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quarter beginning immediately following the Issue Date to the end of
the most recent fiscal quarter ending at least 45 days prior to the
date of such Restricted Payment (or, in case such Consolidated Net
Income shall be a deficit, minus 100% of such deficit);
(B) the aggregate Net Cash Proceeds received by the Company
from the issuance or sale of, or as a capital contribution in respect
of, its Capital Stock (other than Disqualified Stock) subsequent to the
Issue Date (other than an issuance or sale to a Subsidiary of the
Company and other than an issuance or sale to an employee stock
ownership plan or to a trust established by the Company or any of its
Subsidiaries for the benefit of their employees);
(C) the amount by which Indebtedness of the Company is reduced
on the Company's balance sheet upon the conversion or exchange (other
than by a Subsidiary of the Company) subsequent to the Issue Date of
any Indebtedness of the Company convertible or exchangeable for Capital
Stock (other than Disqualified Stock) of the Company (less the amount
of any cash, or the fair value of any other property, distributed by
the Company upon such conversion or exchange); and
(D) an amount equal to the sum of (i) the net reduction in
Investments in any Person resulting from dividends, repayments of loans
or advances or other transfers of assets, in each case to the Company
or any Restricted Subsidiary from such Person, and (ii) the portion
(proportionate to the Company's equity interest in such Subsidiary) of
the fair market value of the net assets of an Unrestricted Subsidiary
at the time such Unrestricted Subsidiary is designated a Restricted
Subsidiary; provided, however, that the foregoing sum shall not exceed,
in the case of any Unrestricted Subsidiary, the amount of Investments
previously made (and treated as a Restricted Payment) by the Company or
any Restricted Subsidiary in such Unrestricted Subsidiary.
(b) The provisions of the foregoing paragraph (a) shall not prohibit:
(i) if no Default or Event of Default shall have occurred and be
continuing, any purchase or redemption of Capital Stock or Subordinated
Obligations of the Company made by exchange for, or out of the proceeds of the
substantially concurrent sale of, or capital contribution in respect of, Capital
Stock of the Company (other than Disqualified Stock and other than Capital Stock
issued or sold to a Subsidiary of the Company); provided, however, that (A) such
purchase or redemption shall be excluded in the calculation of the amount of
Restricted Payments and (B) the Net Cash Proceeds from such sale or capital
contribution shall be excluded from the calculation of amounts under clause (3)
(B) of paragraph (a) above;
(ii) if no Default or Event of Default shall have occurred and be
continuing, any purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value of Subordinated Obligations made by exchange
for, or out of the proceeds of the substantially concurrent sale of,
Indebtedness of the Company which is permitted to be Incurred under Section
4.08; provided, however, that such purchase, repurchase, redemption, defeasance
or other acquisition or retirement for value shall be excluded in the
calculation of the amount of Restricted Payments;
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(iii) dividends paid within 60 days after the date of declaration
thereof if at such date of declaration such dividend would have complied with
this covenant; provided, however, that at the time of payment of such dividend,
no other Default shall have occurred and be continuing (or result therefrom);
provided further, that such dividend shall be included in the calculation of the
amount of Restricted Payments; and
(iv) if no Default or Event of Default shall have occurred and be
continuing or would result therefrom, any purchase of any fractional share of
Capital Stock of the Company resulting from (A) any dividend or other
distribution on outstanding shares of Capital Stock that is payable in shares of
such Capital Stock (including any stock split or subdivision of the outstanding
Capital Stock of the Company), (B) any combination of all of the outstanding
shares of Capital Stock of the Company, (C) any reorganization or consolidation
of the Company in any merger of the Company with or into any other Person or (D)
the conversion of any securities of the Company into shares of Capital Stock of
the Company; provided, however, that such purchases shall be included in the
calculation of the amount of Restricted Payments.
SECTION 4.10. Limitation on Restrictions on Distributions from
Restricted Subsidiaries. The Company shall not, and shall not permit any
Restricted Subsidiary to, create or otherwise cause or permit to exist or become
effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary:
(a) to pay dividends or make any other distributions on its Capital
Stock or any other interest or participation in, or measured by the profits of
the Company or such Restricted Subsidiary or pay any Indebtedness owed to the
Company,
(b) to make any loans or advances to the Company or to any Restricted
Subsidiary or
(c) to transfer any of its property or assets to the Company or to any
Restricted Subsidiary, except any encumbrance or restriction existing under or
by reason of
(i) the Bank Facility as in effect on the Issue Date;
(ii) the Notes, this Indenture or the Guarantees;
(iii) any instrument governing Acquired Indebtedness, which
encumbrance or restriction is not applicable to any Person or the
properties or assets of any Person, other than the Person or the
properties or assets of the Person so acquired;
(iv) Refinancing Indebtedness Incurred pursuant to an
agreement referred to in clause (i) (ii) or (iii); provided, however,
that the encumbrances and restrictions contained in any such
refinancing agreement are no less favorable to the Noteholders than
encumbrances and restrictions contained in such agreements governing
the Indebtedness being refinanced;
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(v) customary nonassignment provisions in leases governing
leasehold interests to the extent such provisions restrict the transfer
of the lease or the property leased thereunder;
(vi) security agreements or mortgages securing Indebtedness of
a Restricted Subsidiary to the extent such restrictions restrict the
transfer of the property subject to such security agreements or
mortgages; and
(vii) applicable law.
SECTION 4.11. Limitation on Sales of Assets and Subsidiary Stock. (a)
The Company shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, consummate any Asset Sale unless:
(i) the Company or such Restricted Subsidiary receives consideration
at the time of such Asset Sale at least equal to the fair market value
(including as to the value of all non-cash consideration) of the shares and
assets subject to such Asset Sale (which fair market value shall be determined
in good faith by the Board of Directors for any transaction (or series of
transactions) involving in excess of $1,000,000) and at least 75% of the
consideration received therefor by the Company or such Restricted Subsidiary is
in the form of cash or Cash Equivalents and is received at the time of such sale
and
(ii) an amount equal to 100% of the Net Available Cash from such Asset
Sale is applied by the Company (or such Restricted Subsidiary, as the case may
be) within 270 days from the date of such Asset Sale either:
(A) to prepay, repay, redeem or purchase any Indebtedness that
by its terms is not subordinate to the Notes or any Guarantee and, in
the case of any such Indebtedness under any revolving credit facility,
effect a permanent reduction in the availability under such revolving
credit facility; and
(B) to:
(1) make an investment in properties or assets that
replace the properties or assets that were the subject of such
Asset Sale or in properties or assets that will be used in a
Related Business or
(2) acquire the Capital Stock of a Person that
becomes a Restricted Subsidiary as a result of the acquisition
of such Capital Stock; provided that such Person is, at the
time it becomes a Restricted Subsidiary, engaged in a Related
Business; or
(C) a combination of prepayment and investment permitted by
clauses (A) and (B).
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(b) Any Net Available Cash not applied within 270 days after
the consummation of an Asset Sale as provided in clauses (A), (B) or
(C) of paragraph (a) above will be deemed to constitute "Excess
Proceeds." When the aggregate amount of Excess Proceeds exceeds $5.0
million, the Company will be required to make an offer to an Holders
(an "Asset Sale Offer"), to purchase, on a pro rata basis the principal
amount of Notes equal in amount to the Excess Proceeds (and not just
the amount thereof that exceeds $5.0 million) (the "Asset Sale Offer
Amount"), at a purchase price in cash in an amount equal to 100% of the
principal amount thereof plus accrued and unpaid interest and
Liquidated Damages thereon to the date of purchase (subject to the
right of each Holder of record on the relevant Record Date to receive
interest due on the relevant Interest Payment Date), in accordance with
the procedures set forth in this Indenture, and in accordance with the
following standards:
(i) If the aggregate principal amount of Notes surrendered by
Holders thereof exceeds the amount of Excess Proceeds, the Trustee
shall select the Notes to be purchased on a pro rata basis, based on
the principal amount of Notes tendered, with such adjustments as may be
deemed appropriate by the Trustee, so that only Notes in denominations
of $1,000 or integral multiples thereof shall be purchased.
(ii) If the aggregate principal amount of Notes tendered
pursuant to such Asset Sale Offer is less than the Excess Proceeds, the
Company may use any remaining Excess Proceeds following the completion
of the Asset Sale Offer for general corporate purposes (subject to the
other provisions of this Indenture).
Upon completion of an Asset Sale Offer, the amount of Excess Proceeds
then required to be otherwise applied in accordance with this covenant shall be
reset to zero, subject to any subsequent Asset Sale.
(c) In the event of the transfer of substantially all (but not
all) of the property and assets of the Company and its Subsidiaries as
an entirety to a Person in a transaction permitted under Section 5.01
below, the successor corporation shall be deemed to have sold the
properties and assets of the Company and its Subsidiaries not so
transferred for purposes of this covenant, and shall comply with the
provisions of this covenant with respect to such deemed sale as if it
were an Asset Sale. In addition, the fair market value of such
properties and assets of the Company or its Subsidiaries deemed to be
sold shall be deemed to be Net Available Cash for purposes of this
covenant.
(d) If at any time any non-cash consideration received by the
Company or any Subsidiary in connection with any Asset Sale is
converted into or sold or otherwise disposed of for cash, then such
conversion or disposition shall be deemed to constitute an Asset Sale
hereunder and the Net Available Cash thereof shall be applied in
accordance with this covenant.
(e) Within 30 calendar days after the date the amount of
Excess Proceeds exceeds $5.0 million, the Company, or the Trustee at
the request and expense of the Company, shall send to each Holder by
first-class mail, postage prepaid, a notice prepared by the Company
stating:
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(i) that an Asset Sale Offer is being made pursuant to this
Section 4.11 and that all Notes that are timely tendered will be
accepted for payment, subject to proration if the amount of Excess
Proceeds is less than the aggregate principal amount of all Notes
timely tendered pursuant to the Asset Sale Offer;
(ii) the Asset Sale Offer Amount, the amount of Excess
Proceeds that are available to be applied to purchase tendered Notes,
and the date Notes are to be purchased pursuant to the Asset Sale Offer
(the "Asset Sale Purchase Date"), which date shall be a Business Day no
earlier than 30 calendar days nor later than 60 calendar days
subsequent to the date such notice is mailed;
(iii) that any Notes or portions thereof not tendered or
accepted for payment will continue to accrue interest;
(iv) that, unless the Company defaults in the payment of the
Asset Sale Offer Amount with respect thereto, all Notes or portions
thereof accepted for payment pursuant to the Asset Sale Offer shall
cease to accrue interest from and after the Asset Sale Purchase Date;
(v) that any Holder electing to have any Notes or portions
thereof purchased pursuant to the Asset Sale Offer will be required to
surrender such Notes, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of such Notes completed, to the Paying Agent
at the address specified in the notice prior to the close of business
on the third Business Day preceding the Asset Sale Purchase Date;
(vi) that any Holder shall be entitled to withdraw such
election if the Paying Agent receives, not later than the close of
business on the second Business Day preceding the Asset Sale Purchase
Date, a facsimile transmission or letter, setting forth the name of the
Holder, the principal amount of Notes delivered for purchase, and a
statement that such Holder is withdrawing such Holder's election to
have such Notes or portions thereof purchased pursuant to the Asset
Sale Offer;
(vii) that any Holder electing to have Notes purchased
pursuant to the Asset Sale Offer must specify the principal amount that
is being tendered for purchase, which principal amount must be $1,000
or an integral multiple thereof,
(viii) if Certificated Notes have been issued hereunder, that
any Holder of Certificated Notes whose Certificated Notes are being
purchased only in part will be issued new Certificated Notes equal in
principal amount to the unpurchased portion of the Certificated Note or
Notes surrendered, which unpurchased portion will be equal in principal
amount to $1,000 or an integral multiple thereof,
(ix) that the Trustee will return to the Holder of a Global
Note that is being purchased in part, such Global Note with a notation
on Schedule A thereof adjusting the principal amount thereof to be
equal to the unpurchased portion of such Global Note; and
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(x) any other information necessary to enable any Holder to
tender Notes and to have such Notes purchased pursuant to this Section
4.11.
(f) On the Asset Sale Payment Date, the Company shall (i) accept for
payment any Notes or portions thereof properly tendered and selected for
purchase pursuant to the Asset Sale Offer and Section 4.11(e) hereof, (ii)
irrevocably deposit with the Paying Agent, by 10:00 a.m., New York City time, on
such date, in immediately available funds, an amount equal to the Asset Sale
Offer Amount in respect of all Notes or portions thereof so accepted; and (iii)
deliver, or cause to be delivered, to the Trustee the Notes so accepted together
with an Officers' Certificate listing the Notes or portions thereof tendered to
the Company and accepted for payment. Subject to the provisions of Section 4.01,
the Paying Agent shall promptly send by first class mail, postage prepaid, to
each Holder or portions thereof so accepted for payment the Asset Sale Offer
Amount for such Notes or portions thereof. The Company shall publicly announce
the results of the Asset Sale Offer on or as soon as practicable after the Asset
Sale Purchase Date. For purposes of this Section 4.11, the Trustee shall act as
the Paying Agent.
(g) Upon surrender and cancellation of a Certificated Note that is
purchased in part, the Company shall promptly issue and the Trustee shall
authenticate and deliver to the surrendering Holder of such Certificated Note, a
new Certificated Note equal in principal amount to the unpurchased portion of
such surrendered Certificated Note; provided that each such new Certificated
Note shall be in a principal amount of $1,000 or an integral multiple thereof.
(h) Upon surrender of a Global Note that is purchased in part, the
Paying Agent shall forward such Global Note to the Trustee who shall make a
notation on Schedule A thereof to reduce the principal amount of such Global
Note, as provided in Section 2.05(c) hereof.
(i) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes pursuant to this
Section 4.11. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section, the Company shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under this Section 4. 11 by virtue thereof.
SECTION 4.12. Limitation on Affiliate Transactions . (a) Except for
transactions entered into or existing prior to the Issue Date, the Company shall
not, and shall not permit any Restricted Subsidiary to, enter into or permit to
exist any transaction (including the purchase, sale, lease or exchange of any
property, employee compensation arrangements or the rendering of any service)
with any Affiliate of the Company (an "Affiliate Transaction") unless the terms
thereof:
(i) are no less favorable to the Company or such Restricted
Subsidiary than those that could be obtained at the time of such transaction in
arm's-length dealings with a Person who is not such an Affiliate;
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(ii) if such Affiliate Transaction involves an amount in
excess of $500,000, (A) are set forth in writing and (B) have been approved by a
majority of the disinterested members of the Board of Directors; and
(iii) if such Affiliate Transaction involves an amount in
excess of $3,000,000, been determined by a nationally recognized investment
banking or accounting firm having experience in such matters to be fair, from a
financial point of view, to the Company and its Restricted Subsidiaries.
(b) The provisions of the foregoing paragraph (a) shall not
prohibit:
(i) any Restricted Payment permitted to be paid pursuant to
Section 4.09;
(ii) any issuance of securities, or other payments, awards or
grants in cash, securities or otherwise pursuant to, or the funding of,
employment arrangements, stock options and stock ownership plans or similar
employee benefit plans or arrangements approved by the Board of Directors;
(iii) the grant of stock options or similar rights to
employees and directors of the Company pursuant to plans approved by the Board
of Directors;
(iv) loans or advances to employees in the ordinary course of
business in accordance with the past practices of the Company or its Restricted
Subsidiaries, but in any event not to exceed $1,000,000 in the aggregate
outstanding at any one time;
(v) the payment of reasonable fees to directors of the
Company and its Restricted Subsidiaries who are not employees of the Company or
its Restricted Subsidiaries; and
(vi) any Affiliate Transaction (x) between the Company and a
Restricted Subsidiary or (y) between Restricted Subsidiaries; provided that, no
Affiliate of the Company other than a Restricted Subsidiary owns any Capital
Stock in or otherwise has a material financial interest in any such Restricted
Subsidiary.
SECTION 4.13. Limitation on the Sale or Issuance of Capital Stock of
Restricted Subsidiaries . The Company shall not sell or otherwise dispose of any
shares of Capital Stock of a Restricted Subsidiary, and shall not permit any
Restricted Subsidiary, directly or indirectly, to issue or sell or otherwise
dispose of any shares of its Capital Stock except to the Company or a Restricted
Subsidiary; provided, however, that this covenant will not prohibit the sale of
100% of the shares of the Capital Stock of any Restricted Subsidiary owned by
the Company or any Restricted Subsidiary effected in accordance with Section
4.11 and Section 5.01.
SECTION 4.14. Change of Control. (a) Upon the occurrence of any of the
following events (each a "Change of Control"), each Holder shall have the right
to require that the Company repurchase such Holder's Notes pursuant to the offer
described in Section 4.14(b) hereof (the "Change of Control Offer") at a
purchase price (the "Change of Control Purchase
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Price") in cash equal to 101% of the aggregate principal amount of such Notes
(or portions thereof) to be redeemed plus accrued and unpaid interest and
Liquidated Damages, if any, thereon, to the purchase date (the "Change of
Control Payment Date") (subject to the right of holders of record on the
relevant Record Date to receive interest due on the relevant Interest Payment
Date):
(i) any "person" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act), other than one or more Permitted Holders, is or becomes the
beneficial owner (as defined in Rules 13d-3 and l3d-5 under the Exchange Act,
except that for purposes of this clause (i) such person shall be deemed to have
"beneficial ownership" of all shares that any such person has the right to
acquire, whether such right is exercisable immediately or only after the passage
of time), directly or indirectly, of more than 50.0% of the total voting power
of the Voting Stock of the Company;
(ii) the Company merges with or into another Person or sells, assigns,
conveys, transfers, leases or otherwise disposes of all or substantially all of
its assets to any Person, or any Person merges with or into the Company, in any
such event pursuant to a transaction in which the outstanding Voting Stock of
the Company is converted into or exchanged for cash, securities or other
property, other than any such transaction where (x) the outstanding Voting Stock
of the Company is converted into or exchanged for (1) Voting Stock (other than
Disqualified Stock) of the surviving or transferee corporation and/or (2) cash,
securities or other property in an amount which could be paid by the Company as
a Restricted Payment under Section 4.09 and (y) immediately after such
transaction no "person" or "group" (within the meaning of Section 13(d) or 14(d)
of the Exchange Act) (other than the Permitted Holders) is the "beneficial
owner" (as defined in Rules 13d-3 and l3d-5 under the Exchange Act, except that
a person shall be deemed to have "beneficial ownership" of all shares that any
such Person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of (1)
50.0% or more of the voting power of the Voting Stock of the surviving or
transferee corporation on a fully diluted basis, after giving effect to the
conversion or exercise of all outstanding warrants, options and other securities
of such surviving or transferee corporation, convertible into or exercisable for
Voting Stock of such surviving or transferee corporation (whether or not such
securities are then currently convertible or exercisable) and (2) a greater
percentage of the voting power of the Voting Stock of such surviving or
transferee corporation calculated on such fully diluted basis, than the
percentage beneficially owned by the Permitted Holders; or
(iii) during any period of two consecutive years, individuals who at
the beginning of such period constituted the Board of Directors (together with
any new directors whose election by such Board of Directors or whose nomination
for election by the shareholders of the Company was approved by a vote of 66
2/3% of the directors of the Company then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors then in office.
(b) Within 30 days following any Change of Control, the Company shall
mail a notice to each Holder with a copy to the Trustee stating:
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(i) that a Change of Control has occurred and a Change of
Control Offer is being made pursuant to this Section 4.14, and that all
Notes that are timely tendered will be accepted for payment;
(ii) the Change of Control Purchase Price, and the Change of
Control Payment Date, which date shall be a Business Day no earlier
than 30 calendar days nor later than 60 calendar days subsequent to the
date such notice is mailed;
(iii) that any Notes or portions thereof not tendered or
accepted for payment will continue to accrue interest;
(iv) that, unless the Company defaults in the payment of the
Change of Control Purchase Price with respect thereto, all Notes or
portions thereof accepted for payment pursuant to the Change of Control
Offer shall cease to accrue interest from and after the Change of
Control Payment Date;
(v) that any Holder electing to have any Notes or portions
thereof purchased pursuant to a Change of Control Offer will be
required to tender such Notes, with the form entitled "Option of Holder
to Elect Purchase" on the reverse of such Notes completed, to the
Paying Agent at the address specified in the notice prior to the close
of business on the third Business Day preceding the Change of Control
Payment Date;
(vi) that any Holder shall be entitled to withdraw such
election if the Paying Agent receives, not later than the close of
business on the second Business Day preceding the Change of Control
Payment Date, a facsimile transmission or letter, setting forth the
name of the Holder, the principal amount of Notes delivered for
purchase, and a statement that such Holder is withdrawing such Holder's
election to have such Notes or portions thereof purchased pursuant to
the Change of Control Offer;
(vii) that any Holder electing to have Notes purchased
pursuant to the Change of Control Offer must specify the principal
amount that is being tendered for purchase, which principal amount must
be $1,000 or an integral multiple thereof,
(viii) if Certificated Notes have been issued, that any Holder
of Certificated Notes whose Certificated Notes are being purchased only
in part will be issued new Certificated Notes equal in principal amount
to the unpurchased portion of the Certificated Note or Notes
surrendered, which unpurchased portion will be equal in principal
amount to $1,000 or an integral multiple thereof,
(ix) that the Trustee will return to the Holder of a Global
Note that is being purchased in part, such Global Note with a notation
on Schedule A thereof adjusting the principal amount thereof to be
equal to the unpurchased portion of such Global Note; and
(x) any other information necessary to enable any Holder to
tender Notes and to have such Notes purchased pursuant to this Section
4.14.
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(c) On the Change of Control Payment Date, the Company shall (i) accept
for payment all Notes or portions thereof properly tendered pursuant to the
Change of Control Offer, (ii) irrevocably deposit with the Paying Agent, by
10:00 a.m., New York City time, on such date, in immediately available funds, an
amount equal to the Change of Control Purchase Price in respect of all Notes or
portions thereof so tendered and (iii) deliver or cause to be delivered to the
Trustee the Notes so tendered together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being purchased by the
Company. Subject to the provisions of Section 4.01 hereof, the Paying Agent
shall promptly send by first class mail, postage prepaid, to each Holder or
portions thereof so accepted for payment the Change of Control Purchase Price
for such Notes or portions thereof. The Company shall publicly announce the
results of the Change of Control Offer on or as soon as practicable after the
Change of Control Payment Date. For purposes of this Section 4.14, the Trustee
shall act as the Paying Agent.
(d) Upon surrender and cancellation of a Certificated Note that is
purchased in part pursuant to the Change of Control Offer, the Company shall
promptly issue and the Trustee shall authenticate and deliver to the
surrendering Holder of such Certificated Note a new Certificated Note equal in
principal amount to the unpurchased portion of such surrendered Certificated
Note; provided that each such new Certificated Note shall be in a principal
amount of $1,000 or an integral multiple thereof.
Upon surrender of a Global Note that is purchased in part pursuant to a
Change of Control Offer, the Paying Agent shall forward such Global Note to the
Trustee who shall make a notation on Schedule A thereof to reduce the principal
amount of such Global Note to an amount equal to the unpurchased portion of such
Global Note, as provided in Section 2.05(c) hereof.
(e) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes pursuant to this
Section 4.14. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 4.14, the Company shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under this Section 4.14 by virtue
thereof
SECTION 4.15. Limitation on Liens. The Company shall not, and shall not
cause or permit any Restricted Subsidiary to, directly or indirectly, create,
Incur, assume or permit to exist any Lien on or with respect to any property or
asset (including any document or instrument in respect of goods or accounts
receivable) of the Company or of any Restricted Subsidiary, whether now owned or
hereafter acquired, or assign or otherwise convey any right to receive any
income or profits therefrom, or file or permit the filing of, or permit to
remain in effect, any financing statement or other similar notice of any Lien
with respect to any such property, asset, income or profits under the Uniform
Commercial Code of any State or under any similar recording or notice statute,
other than Permitted Liens, unless (i) in the case of Liens securing
Indebtedness that is expressly subordinate or junior in right of payment to the
Notes, the Notes are secured by a Lien on such property, assets or proceeds that
is senior in priority to such Liens and (ii) in all other cases, the Notes are
equally and ratably secured.
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SECTION 4.16. Compliance Certificate
. The Company shall deliver to the Trustee within 120 days after the end of each
fiscal year of the Company an Officers' Certificate stating that in the course
of the performance by the signers of their duties as Officers of the Company
they would normally have knowledge of any Default and whether or not the signers
know of any Default that occurred during such period. If they do, the
certificate shall describe the Default, its status and what action the Company
is taking or proposes to take with respect thereto. The Company also shall
comply with TIA Section 314(a)(4).
SECTION 4.17. Waiver of Stay, Extension or Usury Laws . The Company and
each of the Guarantors will not at any time, to the extent that they may
lawfully not do so, insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law or any usury law or
other law that would prohibit or forgive the Company or the Note from paying all
or any portion of the principal of or premium, if any, or interest or Liquidated
Damages, if any, on the Notes as contemplated herein, wherever enacted, now or
at any time hereafter in force, or that may affect the covenants or the
performance of this Indenture; and, to the extent that they may lawfully do so,
the Company and the Guarantors hereby expressly waive all benefit or advantage
of any such law and expressly agree that they will not hinder, delay or impede
the execution of any power herein granted to the Trustee, but will suffer and
permit the execution of every such power as though no such law had been enacted.
SECTION 4.18. Investment Company Act. None of the Company or its
Subsidiaries shall become an investment company subject to registration under
the Investment Company Act of 1940, as amended.
SECTION 4.19. Further Instruments and Acts. Upon request of the
Trustee, the Company will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
ARTICLE 5
SUCCESSOR COMPANY
SECTION 5.01. When Company May Merge or Transfer Assets. (a) The
Company shall not, and shall not permit any Restricted Subsidiary to,
consolidate with or merge with or into any Person (other than the consolidation
or merger of a Restricted Subsidiary with another Restricted Subsidiary or into
the Company), or sell, assign, convey, transfer, lease or otherwise dispose of
(or permit any Subsidiary to sell, assign, convey, transfer, lease or otherwise
dispose of), in one transaction or a series of transactions, all or
substantially all its assets (determined on a consolidated basis for the Company
and its Subsidiaries) to, any Person, unless:
(i) the Company, in the case of a transaction involving the
Company, or such Restricted Subsidiary in the case of a transaction
involving a Restricted Subsidiary, shall be the resulting, surviving or
transferee Person or the resulting, surviving or transferee Person (in
either case, the "Successor Company") shall be a Person organized and
existing under the laws of the United States of America, any State
thereof or the District
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of Columbia and the Successor Company (if not the Company or such
Restricted Subsidiary) shall expressly assume, by an indenture
supplemental thereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, all the obligations of the Company under
the Notes and this Indenture, or the obligation of such Restricted
Subsidiary under its Guarantee, as the case may be;
(ii) immediately after giving effect to such transaction (and
treating any Indebtedness which becomes an obligation of the Successor
Company as a result of such transaction as having been Incurred by such
Successor Company at the time of such transaction), no Default shall
have occurred and be continuing,
(iii) immediately after giving effect to such transaction, the
Company, if the transaction involves a Restricted Subsidiary, or the
Successor Company would be able to Incur an additional $1.00 of
Indebtedness pursuant to the second sentence of Section 4.08,
(iv) in the case of a transaction involving the Company,
immediately after giving effect to such transaction, the Successor
Company shall have Consolidated Net Worth in an amount that is not less
than the Consolidated Net Worth of the Company prior to such
transaction;
(v) if, as a result of any such transaction, property or
assets of the Company or a Restricted Subsidiary would become subject
to a Lien securing Indebtedness not excepted from the provisions of
this Indenture described above under Section 4.15, the Company, any
such Restricted Subsidiary or the Successor Company, as the case may
be, shall have secured the Notes and the relevant Guarantees, as
required by such provisions; and
(vi) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that
such consolidation, merger or transfer and such supplemental indenture
(if any) comply with this Indenture.
(b) the Successor Company shall be the successor to the Company or
such Restricted Subsidiary, as the case may be, and shall succeed to, and be
substituted for, and may exercise every right and power of, the Company or such
Restricted Subsidiary under this Indenture, but the predecessor Company or
Restricted Subsidiary in the case of a conveyance, transfer or lease shall not
be released from the obligation to pay the principal of and interest on the
Notes.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. Events of Default. The term "Event of Default," wherever
used herein with respect to the Notes, means any one of the following events
(whatever the reason for such event, and whether it shall be voluntary or
involuntary, or be effected by operation of law,
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pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(a) the Company defaults in any payment of interest on or Liquidated
Damages with respect to any Note when the same becomes due and payable, whether
or not such payment shall be prohibited by Article 10, and such default
continues for a period of 30 days;
(b) the Company (i) defaults in the payment of the principal of, or
premium, if any, on any Note when the same becomes due and payable at its Stated
Maturity, upon redemption, upon declaration or otherwise, whether or not such
payment shall be prohibited by Article 10 or (ii) fails to redeem or purchase
Notes when required pursuant to this Indenture or the Notes, whether or not such
redemption or purchase shall be prohibited by Article 10;
(c) the Company fails to observe or perform any covenant, condition or
agreement on the part of the Company to be observed or performed pursuant to
Sections 4.08, 4.09, 4.11, 4.14 and 5.01;
(d) the Company fails to comply with any of its other agreements or
covenants in or provisions of the Notes or this Indenture and such failure
continues for 30 days after the notice specified below;
(e) Indebtedness of the Company or any Subsidiary is not paid within
any applicable grace period after final maturity or is accelerated by the
holders thereof because of a default and the total amount of such Indebtedness
unpaid or accelerated exceeds $5,000,000 or its foreign currency equivalent at
the time;
(f) the entry by a court having jurisdiction in the premises of (i) a
decree or order for relief in respect of the Company or any Subsidiary of the
Company in an involuntary case or proceeding under any Bankruptcy Law or (ii) a
decree or order (A) adjudging the Company or any Subsidiary of the Company a
bankrupt or insolvent, or (B) approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of, or in respect of, the
Company or any Subsidiary of the Company under any Bankruptcy Law, or (C)
appointing a Custodian of the Company or any Subsidiary of the Company or of any
substantial part of the Property of the Company or any Subsidiary of the
Company, or (D) ordering the winding-up or liquidation of the affairs of the
Company or any Subsidiary of the Company, and in each case, the continuance of
any such decree or order for relief or any such other decree or order unstayed
and in effect for a period of 60 consecutive calendar days; or
(g) (i) the commencement by the Company or any Subsidiary of the
Company of a voluntary case or proceeding under any Bankruptcy Law or of any
other case or proceeding to be adjudicated a bankrupt or insolvent; or (ii) the
consent by the Company or any Subsidiary of the Company to the entry of a decree
or order for relief in respect of the Company or any Subsidiary of the Company
in an involuntary case or proceeding under any Bankruptcy Law or to the
commencement of any bankruptcy or insolvency case or proceeding against the
Company or any Subsidiary of the Company; or (iii) the filing by the Company or
any Subsidiary of the Company of a petition or answer or consent seeking
reorganization or relief under any Bankruptcy Law; or
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(iv) the consent by the Company or any Subsidiary of the Company to the filing
of such petition or to the appointment of or taking possession by a Custodian of
the Company or any Subsidiary of the Company or of any substantial part of the
Property of the Company or any Subsidiary of the Company, or (v) the making by
the Company or any Subsidiary of the Company of an assignment for the benefit of
creditors; or (vi) the admission by the Company or any Subsidiary of the Company
in writing of its inability to pay its debts generally as they become due; or
(vii) the approval by stockholders of the Company or any Subsidiary of the
Company of any plan or proposal for the liquidation or dissolution of the
Company or any Subsidiary of the Company; or (viii) the taking of corporate
action by the Company or any Subsidiary of the Company in furtherance of any
such action; or
(h) any judgment or decree for the payment of money in excess of
$5,000,000 or its foreign currency equivalent at the time is entered against the
Company or any Subsidiary, remains outstanding for a period of 60 days following
the entry of such judgment or decree and is not discharged, waived or the
execution thereof stayed within 10 days after the notice specified below; or
(i) the Guarantee of any Guarantor ceases to be in full force and
effect (other than in accordance with the terms of such Guarantee) or any
Guarantor denies or disaffirms its obligations under its Guarantee.
A Default under clause (d) or (h) is not an Event of Default until the
Trustee or the Holders of at least 25% in principal amount of the Notes notify
the Company of the Default and the Company does not cure such Default within the
time specified after receipt of such notice. Such notice must specify the
Default, demand that it be remedied and state that such notice is a "Notice of
Default".
The Company shall deliver to the Trustee, within 30 days after the
occurrence thereof, written notice in the form of an Officers' Certificate of
any Event of Default under clause (c), (e) or (i) and any event which with the
giving of notice or the lapse of time would become an Event of Default under
clause (d) or (h), its status and what action the Company is taking or proposes
to take with respect thereto.
SECTION 6.02. Acceleration. If an Event of Default (other than an Event
of Default specified in Section 6.01(f) or (g) with respect to the Company)
occurs and is continuing, the Trustee by written notice to the Company, or the
Holders of at least 25% in principal amount of the Notes by written notice to
the Company and the Trustee, may declare the principal of, premium, if any, and
accrued but unpaid interest and Liquidated Damages, if any, on all the Notes to
be due and payable. Upon such a declaration, such principal, premium, if any,
and interest and Liquidated Damages, if any, shall be due and payable
immediately. If an Event of Default specified in Section 6.01(f) or (g) with
respect to the Company occurs, the principal of, premium, if any, and interest
and Liquidated Damages, if any, on all the Notes shall ipso facto become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Noteholders. The Holders of a majority in principal amount of
the Notes by notice to the Trustee and the Company may rescind an acceleration
and its consequences if the rescission would not conflict with any judgment or
decree and if all existing Events of Default
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have been cured or waived except nonpayment of principal, premium, if any, or
interest and Liquidated Damages, if any, that has become due solely because of
such acceleration. No such rescission shall affect any subsequent Default or
impair any right consequent thereto.
SECTION 6.03. Other Remedies. The Company covenants that if an Event of
Default specified in Section 6.01(a) or 6.01(b) occurs, the Company shall, upon
demand of the Trustee, pay to the Trustee, for the benefit of the Holders, the
whole amount then due and payable on the Notes for principal, premium, if any,
and interest and Liquidated Damages, if any, and, to the extent that payment of
such interest shall be legally enforceable, interest upon the overdue principal
(and premium, if any) and upon Defaulted Interest (and Liquidated Damages, if
any) at the rate or rates prescribed therefor in the Notes, and, in addition
thereto, such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel and all other
amounts due to the Trustee pursuant to Section 7.07 hereof.
If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy to collect the payment of principal of, premium, if any, or
interest or Liquidated Damages, if any, on the Notes or to enforce the
performance of any provision of the Notes or this Indenture. The Trustee may
maintain a proceeding even if it does not possess any of the Notes or does not
produce any of them in the proceeding. A delay or omission by the Trustee or any
Noteholder in exercising any right or remedy accruing upon an Event of Default
shall not impair the right or remedy or constitute a waiver of or acquiescence
in the Event of Default. No remedy is exclusive of any other remedy. All
available remedies are cumulative.
SECTION 6.04. Waiver of Past Defaults. The Holders of not less than a
majority in principal amount of the Notes by notice to the Trustee may, on
behalf of the Holders of all the Notes, waive an existing Default or Event of
Default and its consequences except a continuing Default or Event of Default (i)
in the payment of the principal of, premium, if any or interest or Liquidated
Damages, if any, on a Note (except a payment default resulting from an
acceleration that has been rescinded) or (ii) in respect of a provision that
under Section 9.02 cannot be amended without the consent of each Noteholder
affected.
SECTION 6.05. Control by Majority. The Holders of not less than a
majority in principal amount of the Notes may direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture or,
subject to Section 7.01, that the Trustee determines is unduly prejudicial to
the rights of other Noteholders or would involve the Trustee in personal
liability; provided, however, that the Trustee may take any other action deemed
proper by the Trustee that is not inconsistent with such direction. Prior to
taking any action hereunder, the Trustee shall be entitled to indemnification
satisfactory to it in its sole discretion against all losses and expenses caused
by taking or not taking such action.
SECTION 6.06. Limitation on Suits. A Noteholder may not pursue any
remedy with respect to this Indenture or the Notes unless:
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(a) the Holder has previously given to the Trustee written notice
stating that an Event of Default is continuing;
(b) the Holders of at least 25% in principal amount of the Notes have
made a written request to the Trustee to pursue the remedy in respect of such
Event of Default in its own name as Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee reasonable
security or indemnity against any loss, liability or expense to be Incurred in
compliance with such request;
(d) the Trustee has not complied with the request within 60 days after
receipt of the request and the offer of security or indemnity; and
(e) the Holders of a majority in principal amount of the Notes have not
given the Trustee a direction inconsistent with the request during such 60-day
period.
A Noteholder may not use this Indenture to prejudice the rights of
another Noteholder or to obtain a preference or priority over another
Noteholder.
SECTION 6.07. Rights of Holders To Receive Payment . Notwithstanding
any other provision of this Indenture, the right of any Holder to receive
payment of principal of, premium, if any, and interest and Liquidated Damages,
if any, on the Notes held by such Holder, on or after the respective due dates
expressed in the Notes, or the Redemption Dates or purchase dates provided for
therein or to bring suit for the enforcement of any such payment on or after
such respective dates, shall not be impaired or affected without the consent of
such Holder.
SECTION 6.08. Collection Suit by Trustee. If an Event of Default
specified in Section 6.01(a) or (b) occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company for the whole amount then due and owing on the Notes for principal,
premium, if any, and interest and Liquidated Damages, if any, and, to the extent
that payment of such interest shall be legally enforceable, interest upon the
overdue principal (and premium, if any) and upon Defaulted Interest (and
Liquidated Damages, if any) and the amounts provided for in Section 7.07.
SECTION 6.09. Trustee May File Proofs of Claim. The Trustee may file
such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee and the Noteholders allowed
in any judicial proceedings relative to the Company, its creditors or its
property and, unless prohibited by law or applicable regulations, may vote on
behalf of the Holders in any election of a trustee in bankruptcy or other Person
performing similar functions, and any Custodian in any such judicial proceeding
is hereby authorized by each Holder to make payments to the Trustee and, in the
event that the Trustee shall consent to the making of such payments directly to
the Holders, to pay to the Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and its counsel, and any other amounts due the Trustee under Section 7.07.
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SECTION 6.10. Priorities. If the Trustee collects any money or property
pursuant to this Article 6, it shall pay out the money or property in the
following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to Noteholders for amounts due and unpaid on the Notes
for principal of, premium, if any, and interest and Liquidated
Damages, if any, ratably, without preference or priority of
any kind, according to the amounts due and payable on the
Notes for principal and interest, respectively; and
THIRD: to the Company.
The Trustee may fix a Record Date and payment date for any payment to
Noteholders pursuant to this Section 6.10. At least 15 days before such Record
Date, the Company shall mail to each Noteholder and the Trustee a notice that
states the record date, the payment date and amount to be paid.
SECTION 6.11. Undertaking for Costs. In any suit for the enforcement of
any right or remedy under this Indenture or in any suit against the Trustee for
any action taken or omitted by it as Trustee, a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees, against any party litigant in the
suit, having due regard to the merits and good faith of the claims or defenses
made by the party litigant. This Section 6.11 does not apply to a suit by the
Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by Holders of
more than 10% in principal amount of the Notes.
SECTION 6.12. Waiver of Stay or Extension Laws. The Company (to the
extent it may lawfully do so) shall not at any time insist upon, or plead, or in
any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of this Indenture, and the Company (to
the extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and shall not hinder, delay or impede the execution
of any power herein granted to the Trustee, but shall suffer and permit the
execution of every such power as though no such law had been enacted.
ARTICLE 7
TRUSTEE
SECTION 7.01. Duties of Trustee. (a) If an Event of Default has
occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in
their exercise as a prudent Person would exercise or use under the circumstances
in the conduct of such Person's own affairs.
(b) Except during the continuance of an Event of Default:
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(1) the Trustee undertakes to perform such duties and
only such duties as are specifically set forth in this
Indenture and no implied covenants or obligations shall be
read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture.
However, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the
requirements of this Indenture (but need not confirm or
investigate the accuracy of mathematical calculations or other
facts stated therein).
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(1) this paragraph does not limit the effect of paragraph (b)
of this Section 7.01;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05.
(d) the Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with
the Company.
(e) money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.
(f) no provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(g) every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section 7.01 and to the provisions of the TIA.
SECTION 7.02. Rights of Trustee. (a) The Trustee may rely on any
document believed by it to be genuine and to have been signed or presented by
the proper Person. The Trustee need not investigate any fact or matter stated in
the document.
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(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel. The Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on any
Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be responsible for
the misconduct or negligence of any agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers; provided, however, that the Trustee's conduct does not constitute
willful misconduct or negligence.
(e) The Trustee may consult with counsel of its selection, and the
advice or opinion of counsel with respect to legal matters relating to this
Indenture and the Notes shall be full and complete authorization and protection
from liability in respect to any action taken, omitted or suffered by it
hereunder in good faith and in accordance with the advice or opinion of such
counsel.
(f) Any request or direction of the Company mentioned herein shall be
sufficiently evidenced by an Officers' Certificate and any resolution of the
Board of Directors may be sufficiently evidenced by a Board Resolution.
(g) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be Incurred by it in compliance with such
request or direction.
SECTION 7.03. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Notes and
may otherwise deal with the Company, the Guarantors or their Affiliates with the
same rights it would have if it were not Trustee. Any Paying Agent, Registrar,
co-registrar or co-paying agent may do the same with like rights. However, the
Trustee must comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Notes, it shall not be accountable for the Company's use
of the proceeds from the Notes, and it shall not be responsible for any
statement of the Company in this Indenture or in any document issued in
connection with the sale of the Notes or in the Notes other than the Trustee's
certificate of authentication.
SECTION 7.05. Notice of Defaults. If a Default occurs and is continuing
and if it is actually known to the Trustee, the Trustee shall mail to each
Noteholder notice of the Default within 90 days after it occurs. Except in the
case of a Default in the payment of principal of, premium, if any, or interest
or Liquidated Damages, if any, on any Note (including payments pursuant to the
mandatory redemption provisions of such Note, if any), the Trustee may withhold
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the notice if and so long as a committee of its Trust Officers in good faith
determines that withholding the notice is in the interests of Noteholders.
SECTION 7.06. Reports by Trustee to Holders . As promptly as
practicable after each May 15 beginning with the May 15 following the date of
this Indenture, and in any event prior to July 15 in each year, the Trustee
shall mail to each Noteholder a brief report dated as of May 15 that complies
with TIA Section 313(a). The Trustee also shall comply with TIA Section 313(b).
A copy of each report at the time of its mailing to Noteholders shall
be filed with the SEC and each stock exchange (if any) on which the Notes are
listed. The Company agrees to notify promptly the Trustee whenever the Notes
become listed on any stock exchange and of any delisting thereof.
SECTION 7.07. Compensation and Indemnity. The Company shall pay to the
Trustee from time to time compensation for its services as the Company and the
Trustee shall from time to time agree in writing. The Trustee's compensation
shall not be limited by any law on compensation of a trustee of an express
trust. The Company shall reimburse the Trustee upon request for all reasonable
out-of-pocket expenses Incurred or made by it, including costs of collection, in
addition to the compensation for its services. Such expenses shall include the
reasonable compensation and expenses, disbursements and advances of the
Trustee's agents and counsel. The Company shall indemnify the Trustee against
any and all loss, liability or expense (including reasonable attorneys' fees)
Incurred by it in connection with the administration of this trust and the
performance of its duties hereunder. The Trustee shall notify the Company
promptly of any claim for which it may seek indemnity. Failure by the Trustee to
so notify the Company shall not relieve the Company of its obligations
hereunder. The Company shall defend the claim and the Trustee shall cooperate in
the defense of the claim; provided that the Trustee may have separate counsel
and the Company shall pay the reasonable fees and expenses of such counsel if
the actual or potential defendants in, or the targets of, any such claim include
both the Trustee and the Company and the Trustee shall have reasonably concluded
that there may be legal defenses available to it which are different from or
additional to those available to the Company. The Trustee will not, without the
prior written consent of the Company, settle or compromise or consent to the
entry of any judgment with respect to any claim in respect of which
indemnification may be sought hereunder. The Company need not reimburse any
expense or indemnify against any loss, liability or expense Incurred by the
Trustee through the Trustee's own willful misconduct, negligence or bad faith.
To secure the Company's payment obligations in this Section 7.07, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee other than money or property held in trust to pay
principal of, premium, if any, and interest and Liquidated Damages, if any, on
particular Notes.
The Company's payment obligations pursuant to this Section 7.07 shall
survive the discharge of this Indenture. When the Trustee Incurs expenses after
the occurrence of a Default specified in Section 6.01(f) or (g) with respect to
the Company, the expenses are intended to constitute expenses of administration
under the Bankruptcy Law.
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SECTION 7.08. Replacement of Trustee. The Trustee may resign at any
time by so notifying the Company. The Holders of not less than a majority in
principal amount of the Notes may remove the Trustee by so notifying the Trustee
and may appoint a successor Trustee. The Company shall remove the Trustee if.
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by the Company or by the Holders of
a majority in principal amount of the Notes and such Holders do not reasonably
promptly appoint a successor Trustee, or if a vacancy exists in the office of
Trustee for any reason (the Trustee in such event being referred to herein as
the retiring Trustee), the Company shall promptly appoint a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Noteholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the Lien
provided for in Section 7.07.
If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee or the Holders of
not less than 10% in principal amount of the Notes may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Noteholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to this Section
7.08, the Company's obligations under Section 7.07 shall continue for the
benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger. If the Trustee consolidates
with, merges or converts into, or transfers all or substantially all its
corporate trust business or assets (including the trust created by this
Indenture) to, another corporation or banking association, the resulting,
surviving or transferee corporation without any further act shall be the
successor Trustee.
In case at the time such successor or successors by merger, conversion
or consolidation to the Trustee shall succeed to the trusts created by this
Indenture any of the Notes shall have been
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authenticated but not delivered, any such successor to the Trustee may adopt the
certificate of authentication of any predecessor trustee, and deliver such Notes
so authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Trustee may authenticate such Notes either
in the name of any predecessor hereunder or in the name of the successor to the
Trustee, and in all such cases such certificates shall have the full force which
it is anywhere in the Notes or in this Indenture provided that the certificate
of authentication of the Trustee shall have.
SECTION 7.10. Eligibility; Disqualification. The Trustee shall at all
times satisfy the requirements of TIA Section 310(a). The Trustee shall have a
combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition. The Trustee shall comply with TIA
Section 310(b); provided, however, that there shall be excluded from the
operation of TIA Section 310(b)(1) any indenture or indentures under which other
securities or certificates of interest or participation in other securities of
the Company are outstanding if the requirements for such exclusion set forth in
TIA Section 310(b)(1) are met.
SECTION 7.11. Preferential Collection of Claims Against Company . The
Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated.
SECTION 7.12. Trustee's Application for Instructions from the Company .
Any application by the Trustee for written instructions from the Company may, at
the option of the Trustee, be set forth in writing and shall state any action
proposed to be taken or omitted by the Trustee under this Indenture and the date
on and/or after which such action shall be taken or such omission shall be
effective. The Trustee shall not be liable for any action taken by, or omission
of, the Trustee in accordance with a proposal included in such application on or
after the date specified in such application (which date shall not be less than
three Business Days after the date any Officer of the Company actually receives
such application, unless any such Officer shall have consented in writing to any
earlier date) unless prior to taking any such action (or the effective date in
the case of an omission), the Trustee shall have received written instructions
in response to such application specifying the action to be taken or omitted.
ARTICLE 8
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01. Discharge of Liability on Notes; Defeasance. (a) When
(i) the Company delivers to the Trustee all
outstanding Notes (other than Notes replaced pursuant to
Section 2.07) for cancellation or
(ii) all outstanding Notes have become due and
payable, whether at Stated Maturity or as a result of the
mailing of a notice of redemption pursuant to Article 3 hereof
and the Company irrevocably deposits with the Trustee funds
sufficient to pay at Stated Maturity or upon redemption all
outstanding Notes,
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including interest accrued and unpaid thereon to Stated
Maturity or such Redemption Date (other than Notes replaced
pursuant to Section 2.07), and if in either case the Company
pays all other sums payable hereunder by the Company, then
this Indenture shall, subject to Section 8.01(c), cease to be
of further effect. The Trustee shall acknowledge satisfaction
and discharge of this Indenture on demand of the Company
accompanied by an Officers' Certificate and an Opinion of
Counsel and at the cost and expense of the Company.
(b) Subject to Sections 8.01(c) and 8.02, the Company at any time
may terminate:
(i) all its obligations under the Notes and this
Indenture ("legal defeasance option") subject to the following
which shall survive until otherwise terminated or discharged
hereunder:
(A) the rights of Holders of outstanding Notes to
receive payments in respect of the principal of
premium, if any, and interest and Liquidated Damages,
if any, on such Notes when payments are due from the
trust referred to below,
(B) the Company's obligations with respect to such
Notes under Sections 2.03, 2.04, 2.06, 2.07, 2.09,
4.02, 4.03 and 4.04 hereof,
(C) the Company's obligations under the Registration
Rights Agreement,
(D) the rights, powers, trusts, duties and immunities
of the Trustee under this Indenture and the Company's
obligations in connection therewith,
(E) Article III hereof, and
(F) this Article VIII; or
(ii) its obligations under Sections 4.05 through 4.15 and
the operation of Section 6.01(c) (but only as it applies to
Section 5.01(a)(iii) and (iv)), 6.01(e), 6.01(f), 6.01(g) and
6.01(h) or contained in Section 5.01(a)(iii) and (iv)
("covenant defeasance option"). The Company may exercise its
legal defeasance option notwithstanding its prior exercise of
its covenant defeasance option.
If the Company exercises its legal defeasance option, payment of the
Notes may not be accelerated because of an Event of Default. If the Company
exercises its covenant defeasance option, payment of the Notes may not be
accelerated because of an Event of Default specified in Sections 6.01(c),
6.01(d), and 6.01(i) or because of the failure of the Company to comply with
Section 5.01(a)(iii) and (iv). If the Company exercises its legal defeasance
option or its covenant defeasance option, each Guarantor shall be released from
all of its obligations under its Guarantee.
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Upon satisfaction of the conditions set forth herein and upon request
of the Company, the Trustee shall acknowledge in writing the discharge of those
obligations that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above, the Company's
obligations in Sections 8.04, 8.05 and 8.06 shall survive.
SECTION 8.02. Conditions to Defeasance. The Company may exercise its
legal defeasance option or its covenant defeasance option only if
(a) the Company irrevocably deposits in trust with the Trustee money or
U. S. Government Obligations for the payment of principal of and interest on the
Notes to maturity or redemption, as the case may be;
(b) the Company delivers to the Trustee a certificate from a nationally
recognized firm of independent accountants expressing their opinion that the
payments of principal and interest when due and without reinvestment on the
deposited U.S. Government Obligations plus any deposited money without
investment will provide cash at such times and in such amounts as will be
sufficient to pay principal of, premium, if any, and interest and Liquidated
Damages, if any, when due on all the Notes to Stated Maturity or redemption, as
the case may be;
(c) 123 days pass after the deposit is made and during the 123-day
period no Default specified in Sections 6.01(f) or (g) with respect to the
Company occurs which is continuing at the end of the period;
(d) the deposit does not result in a breach or violation of, or
constitute a default under any other agreement or instrument binding on the
Company or any of its Subsidiaries and is not prohibited by Article 10;
(e) the Company delivers to the Trustee an Opinion of Counsel to the
effect that the trust resulting from the deposit does not constitute, or is
qualified as, a regulated investment company under the Investment Company Act of
1940;
(f) in the case of the legal defeasance option, the Company shall have
delivered to the Trustee an Opinion of Counsel stating that (i) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling, or (ii) since the date of this Indenture there has been a change in the
applicable Federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Noteholders will not
recognize income, gain or loss for Federal income tax purposes as a result of
such defeasance and will be subject to Federal income tax on the same amounts,
in the same manner and at the same times as would have been the case if such
defeasance had not occurred;
(g) in the case of the covenant defeasance option, the Company shall
have delivered to the Trustee an Opinion of Counsel to the effect that the
Noteholders will not recognize income, gain or loss for Federal income tax
purposes as a result of such covenant defeasance and
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will be subject to Federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such covenant defeasance
had not occurred;
(h) the Company delivers to the Trustee an Officers' Certificate and an
Opinion of Counsel, each stating that all conditions precedent to the defeasance
and discharge of the Notes as contemplated by this Article 8 have been complied
with;
(i) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the intent
of preferring the Holders over any other creditors of the Company or the Note or
with the intent of defeating, hindering, delaying or defrauding any other
creditors of the Company, the Note or others; and
(j) such legal defeasance or covenant defeasance shall not cause the
Trustee to have a conflicting interest within the meaning of the TIA (assuming
for the purpose of this clause (j) that all Notes are in default within the
meaning of such Act).
Before or after a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption of Notes at a future date in
accordance with Article 3.
SECTION 8.03. Application of Trust Money. The Trustee shall hold in
trust money or U.S. Government Obligations deposited with it pursuant to this
Article 8. It shall apply the deposited money and the money from U.S. Government
Obligations through the Paying Agent and in accordance with this Indenture to
the payment of principal of, premium, if any, and interest and Liquidated
Damages, if any, on the Notes.
SECTION 8.04. Repayment to Company. The Trustee and the Paying Agent
shall promptly turn over to the Company upon request any excess money or
securities held by them at any time. Subject to any applicable abandoned
property law, the Trustee and the Paying Agent shall pay to the Company upon
request any money held by them for the payment of principal of, premium, if any,
or interest or Liquidated Damages, if any, that remains unclaimed for two years,
and, thereafter, Noteholders entitled to the money must look to the Company for
payment as general creditors.
SECTION 8.05. Indemnity for Government Obligation. The Company shall
pay and shall indemnify the Trustee against any tax, fee or other charge imposed
on or assessed against deposited U.S. Government Obligations or the principal
and interest received on such U.S. Government Obligations.
SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is unable
to apply any money or U. S. Government Obligations in accordance with this
Article 8 by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Notes shall be revived and reinstated as though no deposit had
occurred pursuant to this Article 8 until such time as the Trustee or Paying
Agent is permitted to apply all such money or U.S. Government Obligations in
accordance with this Article 8; provided, however, that, if the Company has made
any payment of interest on or principal of any Notes
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because of the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Notes to receive such payment from the
money or U. S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE 9
AMENDMENTS
SECTION 9.01. Without Consent of Holders. The Company and the Trustee
may amend this Indenture or the Notes without notice to or consent of any
Noteholder:
(a) to cure any ambiguity, omission, defect or inconsistency;
(b) to comply with Article 5;
(c) to provide for uncertificated Notes in addition to or in place of
Certificated Notes; provided, however, that the uncertificated Notes are issued
in registered form for purposes of Section 163(f) of the Code or in a manner
such that the uncertificated Notes are described in Section 163(f)(2)(B) of the
Code;
(d) to add Guarantees with respect to the Notes or to secure the Notes;
(e) to add to the covenants of the Company for the benefit of the
Holders or to surrender any right or power herein conferred upon the Company;
(f) to comply with any requirements of the SEC in connection with
qualifying, or maintaining the qualification of, this Indenture under the TIA;
or
(g) to make any change that does not adversely affect the rights of any
Noteholder.
After an amendment under this Section 9.01 becomes effective, the
Company shall mail to Noteholders a notice briefly describing such amendment.
The failure to give such notice to all Noteholders, or any defect therein, shall
not impair or affect the validity of an amendment under this Section 9.01.
SECTION 9.02. With Consent of Holders. The Company and the Trustee may
amend this Indenture or the Notes without notice to any Noteholder but with the
written consent of the Holders of at least a majority in principal amount of the
Notes then outstanding and any past Default or compliance with any provisions
may also be waived with the consent of the Holders of not less than a majority
of the principal amount of Notes then outstanding. However, without the consent
of each Noteholder affected, an amendment may not:
(a) reduce the amount of Notes whose Holders must consent to an
amendment;
(b) reduce the rate of or extend the time for payment of interest on
any Note;
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(c) reduce the principal of or extend the Stated Maturity of any Note;
(d) reduce the premium payable upon the redemption of any Note or
change the time at which any Note may be redeemed in accordance with Article 3;
(e) make any Note payable in money other than that stated in the Note;
(f) make any change in Section 6.04 or 6.07 or the second sentence of
this Section 9.02; or
(g) make any change in any Guarantee that would adversely affect the
Noteholders.
It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent approves the substance thereof
After an amendment under this Section 9.02 becomes effective, the
Company shall mail to Noteholders a notice briefly describing such amendment.
The failure to give such notice to all Noteholders, or any defect therein, shall
not impair or affect the validity of an amendment under this Section.
SECTION 9.03. Compliance with Trust Indenture Act. Every amendment to
this Indenture or the Notes shall comply with the TIA as then in effect.
SECTION 9.04. Revocation and Effect of Consents and Waivers. A consent
to an amendment or a waiver by a Holder of a Note shall bind the Holder and
every subsequent Holder of that Note or portion of the Note that evidences the
same debt as the consenting Holder's Note, even if notation of the consent or
waiver is not made on the Note. However, any such Holder or subsequent Holder
may revoke the consent or waiver as to such Holder's Note or portion of the Note
if the Trustee receives the notice of revocation before the date the amendment
or waiver becomes effective. After an amendment or waiver becomes effective, it
shall bind every Noteholder. An amendment or waiver becomes effective upon the
execution of such amendment or waiver by the Trustee.
The Company may, but shall not be obligated to, fix a Record Date for
the purpose of determining the Noteholders entitled to give their consent or
take any other action described above or required or permitted to be taken
pursuant to this Indenture. If a Record Date is fixed, then notwithstanding the
immediately preceding paragraph, those Persons who were Noteholders at such
record date (or their duly designated proxies), and only those Persons, shall be
entitled to give such consent or to revoke any consent previously given or to
take any such action, whether or not such Persons continue to be Holders after
such Record Date. No such consent shall be valid or effective for more than 120
days after such Record Date.
SECTION 9.05. Notation on or Exchange of Notes. If an amendment
changes the terms of a Note, the Trustee may require the Holder of the Note to
deliver it to the Trustee. The Trustee may place an appropriate notation on the
Note regarding the changed terms and return it to the
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Holder. Alternatively, if the Company or the Trustee so determines, the Company
in exchange for the Note shall issue and the Trustee shall authenticate and
deliver a new Note that reflects the changed terms. Failure to make the
appropriate notation or to issue a new Note shall not affect the validity of
such amendment.
SECTION 9.06. Trustee To Sign Amendments. The Trustee shall sign any
amendment authorized pursuant to this Article 9 if the amendment does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may but need not sign it. In signing such amendment the
Trustee shall be entitled to receive indemnity reasonably satisfactory to it and
to receive, and (subject to Section 7.01) shall be fully protected in relying
upon, an Officers' Certificate and an Opinion of Counsel stating that such
amendment is authorized or permitted by this Indenture and that such amendment
constitutes the legal, valid and binding obligation of the Company and each
Guarantor, subject to customary exceptions.
SECTION 9.07. Payment for Consent. Neither the Company nor any
Affiliate of the Company shall, directly or indirectly, pay or cause to be paid
any consideration, whether by way of interest, fee or otherwise, to any Holder
for or as an inducement to any consent, waiver or amendment of any of the terms
or provisions of this Indenture or the Notes unless such consideration is
offered to be paid to all Holders that so consent, waive or agree to amend in
the time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
ARTICLE 10
GUARANTEES; RELEASE OF GUARANTEES; ADDITIONAL
GUARANTEES
SECTION 10.01. Guarantees. (a) Each Guarantor hereby unconditionally
and irrevocably guarantees to each Holder and to the Trustee and its successors
and assigns (a) the full and punctual payment of principal of, premium, if any,
and interest and Liquidated Damages, if any, on the Notes when due, whether at
maturity, by acceleration, by redemption or otherwise, and all other monetary
obligations of the Company under this Indenture and the Notes and (b) the full
and punctual performance within applicable grace periods of all other
obligations of the Company under this Indenture and the Notes (all the foregoing
being hereinafter collectively called the "Obligations"). Each Guarantor further
agrees that the Obligations may be extended or renewed, in whole or in part,
without notice or further assent from such Guarantor and that such Guarantor
will remain bound under this Article 10 notwithstanding any extension or renewal
of any Obligation.
(b) Each Guarantor waives presentation to, demand of, payment from and
protest to the Company of any of the Obligations and also waives notice of
protest for nonpayment. Each Guarantor waives notice of any default under the
Notes or the Obligations. The obligations of each Guarantor hereunder shall not
be affected by (a) the failure of any Holder or the Trustee to assert any claim
or demand or to enforce any right or remedy against the Company or any other
Person under this Indenture, the Notes or any other agreement or otherwise; (b)
any extension or renewal of any thereof, (c) any rescission, waiver, amendment
or modification of any of the terms or provisions of this Indenture, the Notes
or any other agreement; (d) the release of any
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security held by any Holder or the Trustee for the Obligations or any of them;
(e) the failure of any Holder or Trustee to exercise any right or remedy against
any other guarantor of the Obligations; or (f) any change in the ownership of
any Guarantor.
(c) Each Guarantor further agrees that its Guarantee herein constitutes
a guarantee of payment, performance and compliance when due (and not a guarantee
of collection) and waives any right to require that any resort be had by any
Holder or the Trustee to any security held for payment of the Obligations.
(d) Except as expressly set forth in Section 8.01(b), the obligations
of each Guarantor hereunder shall not be subject to any reduction, limitation,
impairment or termination for any reason, including any claim of waiver,
release, surrender, alteration or compromise, and shall not be subject to any
defense of setoff, counterclaim, recoupment or termination whatsoever or by
reason of the invalidity, illegality or unenforceability of the Obligations or
otherwise. Without limiting the generality of the foregoing, (i) the obligations
of each Guarantor herein shall not be discharged or impaired or otherwise
affected by the failure of any Holder or the Trustee to assert any claim or
demand or to enforce any remedy under this Indenture, the Notes or any other
agreement, by any waiver or modification of any thereof, by any default, failure
or delay, willful or otherwise, in the performance of the Obligations, or by any
other act or thing or omission or delay to do any other act or thing which may
or might in any manner or to any extent vary the risk of each Guarantor or would
otherwise operate as a discharge of such Guarantor as a matter of law or equity
and (ii) each Guarantor hereby waives any rights such Guarantor may have under
Sections 26.7 through 26.9 of the North Carolina General Statutes.
(e) Each Guarantor further agrees that its Guarantee herein shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of principal, premium, if any, or interest or
Liquidated Damages, if any, on any Obligation is rescinded or must otherwise be
restored by any Holder or the Trustee upon the bankruptcy or reorganization of
the Company or otherwise.
(f) In furtherance of the foregoing and not in limitation of any other
right which any Holder or the Trustee has at law or in equity against any
Guarantor by virtue hereof, upon the failure of the Company to pay the principal
of, premium, if any or interest or Liquidated damages, if any, on any Obligation
when and as the same shall become due, whether at maturity, by acceleration, by
redemption or otherwise, or to perform or comply with any other Obligation, each
Guarantor hereby promises to and will, upon receipt of written demand by the
Trustee, forthwith pay, or cause to be paid, in cash, to the Holders or the
Trustee an amount equal to the sum of (i) the unpaid amount of such Obligations,
(ii) accrued and unpaid interest on such Obligations (but only to the extent not
prohibited by law) and (iii) all other monetary Obligations of the Company to
the Holders and the Trustee.
(g) Each Guarantor agrees that it shall not be entitled to any right of
subrogation in respect of any Obligations guaranteed hereby until payment in
full of all Obligations. Each Guarantor further agrees that, as between it, on
the one hand, and the Holders and the Trustee, on the other hand, (x) the
maturity of the Obligations guaranteed hereby may be accelerated as provided in
Article 6 for the purposes of such Guarantor's Guarantee herein, notwithstanding
any
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stay, injunction or other prohibition preventing such acceleration in respect of
the Obligations guaranteed hereby, and (y) in the event of any declaration of
acceleration of such Obligations as provided in Article 6, such Obligations
(whether or not due and payable) shall forthwith become due and payable by such
Guarantor for the purposes of this Section 10.01.
(h) Each Guarantor also agrees to pay any and all costs and expenses
(including reasonable attorneys' fees) Incurred by the Trustee or any Holder in
enforcing any rights under this Section 10.01.
SECTION 10.02. Successors and Assigns. This Article 10 shall be binding
upon each Guarantor and its successors and assigns and shall inure to the
benefit of the successors and assigns of the Trustee and the Holders and, in the
event of any transfer or assignment of rights by any Holder or the Trustee, the
rights and privileges conferred upon that party in this Indenture and in the
Notes shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions of this Indenture.
SECTION 10.03. No Waiver. Neither a failure nor a delay on the part of
either the Trustee or the Holders in exercising any right, power or privilege
under this Article 10 shall operate as a waiver thereof, nor shall a single or
partial exercise thereof preclude any other or further exercise of any right,
power or privilege. The rights, remedies and benefits of the Trustee and the
Holders herein expressly specified are cumulative and not exclusive of any other
rights, remedies or benefits which either may have under this Article 10 at law,
in equity, by statute or otherwise.
SECTION 10.04. Modification. No modification, amendment or waiver of
any provision of this Article 10, nor the consent to any departure by any
Guarantor therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Trustee, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice to or demand on any Guarantor in any case shall entitle such Guarantor to
any other or further notice or demand in the same, similar or other
circumstances.
SECTION 10.05. Limitation of Guarantor's Liability. Each Guarantor,
and by its acceptance hereof each Holder, hereby confirms that it is the
intention of all such parties that the Guarantee of such Guarantor not
constitute a fraudulent transfer or conveyance for purposes of the Bankruptcy
Law, federal and state fraudulent conveyance laws or any similar federal, state
or foreign law. To effectuate the foregoing intention, the Holders and each
Guarantor hereby irrevocably agree that the obligations of each Guarantor under
this Article 10 shall be limited to the maximum amount as will, after giving
effect to all other contingent and fixed liabilities of such Guarantor and after
giving effect to any collections from or payments made by or on behalf of any
other Guarantor in respect of the obligations of such other Guarantor under this
Article 10, result in the obligations of such Guarantor under its Guarantee not
constituting a fraudulent transfer or conveyance under applicable federal, state
or foreign law.
SECTION 10.06. Release of Guarantees. In the event of a sale or other
disposition of all or substantially all of the assets of any Guarantor, by way
of merger, consolidation or otherwise, or a sale or other disposition of all of
the Capital Stock of any Guarantor, by way of merger,
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consolidation or otherwise, such Guarantor (in the event of a sale or other
disposition of all of the Capital Stock of such Guarantor) will be released and
relieved of any obligations under its Guarantee or the Person acquiring the
property (in the event of a sale or other disposition of all or substantially
all of the assets of such Guarantor) will not be required to enter into a
Guarantee; provided, in each case, that such transaction is carried out pursuant
to and in accordance with Section 4.11 and Section 5.01 (if applicable) hereof.
Upon delivery by the Company to the Trustee of an Officers' Certificate and
Opinion of Counsel, to the effect that such sale or other disposition was made
by the Company in accordance with the provisions of this Indenture, including
without limitation Section 4.11 and Section 5.01 (if applicable) hereof, the
Trustee shall execute any documents reasonably required in order to evidence the
release of any such Guarantor from its obligations under its Guarantee.
SECTION 10.07. Additional Guarantees. The Company will cause any Person
that shall become a Restricted Subsidiary (an "Additional Guarantor") to
concurrently guarantee (an "Additional Guarantee") the Company's obligations
under this Indenture and the Notes to the same extent that the Guarantors have
guaranteed the Company's obligations under this Indenture and the Notes;
provided, however, that each Additional Guarantor will be automatically and
unconditionally released and discharged from its obligations under such
Additional Guarantee only in accordance with Section 10.06 above.
ARTICLE 11
MISCELLANEOUS
SECTION 11.01. Trust Indenture Act Controls. If any provision of this
Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control.
SECTION 11.02. Notices. Any notice or communication shall be in writing
and delivered in person or mailed by first-class mail addressed as follows:
if to the Company or any Guarantor:
Fresh Foods, Inc.
P.O. Box 399
WSMP Drive
Claremont, NC 28610
Attention: Chief Financial Officer
if to the Trustee:
State Street Bank and Trust Company
Two International Place, 4th Floor
Boston, MA 02110
Attention: Corporate Trust Administration
(Fresh Foods, Inc. 10 3/4% Senior Notes due 2006)
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The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications. Any
notice or communication mailed to a Noteholder shall be mailed to the Noteholder
at the Noteholder's address as it appears on the registration books of the
Registrar and shall be sufficiently given if so mailed within the time
prescribed. Failure to mail a notice or communication to a Noteholder or any
defect in it shall not affect its sufficiency with respect to other Noteholders.
If a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
SECTION 11.03. Communication by Holders with Other Holders .
Noteholders may communicate pursuant to TIA Section 312(b) with other
Noteholders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar and anyone else shall have the protection of
TIA Section 312(c).
SECTION 11.04. Certificate and Opinion as to Conditions Precedent .
Upon any request or application by the Company to the Trustee to take or refrain
from taking any action under this Indenture, the Company shall furnish to the
Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the signers, all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably satisfactory
to the Trustee stating that, in the opinion of such counsel, all such conditions
precedent have been complied with.
SECTION 11.05. Statements Required in Certificate or Opinion . Each
certificate or opinion with respect to compliance with a covenant or condition
provided for in this Indenture shall include:
(1) a statement that the individual making such certificate or opinion
has read such covenant or condition;
(2) a statement that, in the opinion of such individual, he has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(3) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
SECTION 11.06. When Notes Disregarded. In determining whether the
Holders of the required principal amount of Notes have concurred in any
direction, waiver or consent, Notes owned by the Company or by any Affiliate of
the Company shall be disregarded and deemed not to be outstanding, except that,
for the purpose of determining whether the Trustee shall be protected in relying
on any such direction, waiver or consent, only Notes which the Trustee
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knows are so owned shall be so disregarded. Also, subject to the foregoing, only
Notes outstanding at the time shall be considered in any such determination.
SECTION 11.07. Rules by Trustee, Paying Agent and Registrar. The
Trustee may make reasonable rules for action by or a meeting of Noteholders. The
Registrar and the Paying Agent may make reasonable rules for their functions.
SECTION 11.08. Legal Holidays. A "Legal Holiday" is a Saturday, a
Sunday or a day on which banking institutions are not required to be open in the
State of New York or the State of North Carolina. If a payment date is a Legal
Holiday, payment shall be made on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period. If a regular
record date is a Legal Holiday, the record date shall not be affected.
SECTION 11.09. Governing Law. (a) THIS INDENTURE AND THE NOTES SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SAID STATE.
(b) Each of the Company and each Guarantor hereby (i) agrees that any
suit, action or proceeding against it arising out of or relating to this
Indenture or the Notes, as the case may be, may be instituted in any Federal or
state court sitting in The City of New York, (ii) waives, to the extent
permitted by applicable law, any objection which it may now or hereafter have to
the laying of venue of any such suit, action or proceeding, and any claim that
any suit, action or proceeding in such a court has been brought in an
inconvenient forum, (iii) irrevocably submits to the non-exclusive jurisdiction
of such courts in any suit, action or proceeding, (iv) agrees that final
judgment in any such suit, action or proceeding brought in such a court shall be
conclusive and binding upon each and may be enforced in the courts of the
jurisdiction of which each is subject, respectively, by a suit upon judgment,
(v) agrees that service of process by mail to the addressed specified in Section
11.02 hereof shall constitute personal service of such process on it in any such
suit, action or proceeding.
SECTION 11.10. No Recourse Against Others. No director, officer,
employee, incorporator or stockholder of the Company or any Guarantor, as such,
shall have any liability for any obligations of the Company or such Guarantor
under the Notes, the Guarantees or this Indenture or for any claim based on, in
respect of, or by reason of, such obligations or their creation, solely by
reason of its status as a director, officer, employee, incorporator or
stockholder of the Company or such Guarantor. By accepting a Note, each Holder
waives and releases all such liability (but only such liability) as part of the
consideration for issuance of such Note to such Holder.
SECTION 11.11. Successors. All agreements of the Company and each
Guarantor in this Indenture and the Notes shall bind their respective
successors. All agreements of the Trustee in this Indenture shall bind its
successors.
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SECTION 11.12. Multiple Originals. The parties may sign any number of
copies of this Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement. One signed copy is enough to prove this
Indenture.
SECTION 11.13. Table of Contents, Headings. The table of contents,
cross-reference table and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not intended
to be considered a part hereof and shall not modify or restrict any of the terms
or provisions hereof.
SECTION 11.14. Severability. In case any provision in this Indenture
or in the Notes shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
SECTION 11.15. Further Instruments and Acts. Upon request of the
Trustee, the Company and each Guarantor will execute and deliver such further
instruments and do such further acts as may be reasonably necessary or proper to
carry out more effectively the purposes of this Indenture.
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<PAGE> 81
IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed as of the date first written above.
FRESH FOODS, INC.,
as Issuer,
By: /s/ David R. Clark
-----------------------------------------
Name: David R. Clark
Title: President
BRUNSWICK ASSOCIATES, INC.,
as Guarantor
By: /s/ David R. Clark
-----------------------------------------
Name: David R. Clark
Title: President
CLAREMONT RESTAURANT GROUP, LLC,
as Guarantor
By: FRESH FOODS, INC., Sole Member
By: /s/ David R. Clark
-----------------------------------------
Name: David R. Clark
Title: President
ELLOREE FOODS, INC.,
as Guarantor
By: /s/ David R. Clark
-----------------------------------------
Name: David R. Clark
Title: President
FRESH FOODS PROPERTIES, LLC,
as Guarantor
By: FRESH FOODS, INC., Sole Member
By: /s/ David R. Clark
-----------------------------------------
Name: David R. Clark
Title: President
<PAGE> 82
GEORGIA BUFFET RESTAURANTS, INC.,
as Guarantor
By: /s/ David R. Clark
-----------------------------------------
Name: David R. Clark
Title: President
KNOXVILLE FOODS, INC.,
as Guarantor
By: /s/ David R. Clark
-----------------------------------------
Name: David R. Clark
Title: Vice President
MOM `N' POP'S COUNTRY HAM, LLC,
as Guarantor
By: FRESH FOODS, INC., Sole Member
By: /s/ David R. Clark
-----------------------------------------
Name: David R. Clark
Title: President
OAK RIDGE FOODS, INC.,
as Guarantor
By: /s/ David R. Clark
-----------------------------------------
Name: David R. Clark
Title: Vice President
SAGEBRUSH, INC.,
as Guarantor
By: /s/ David R. Clark
-----------------------------------------
Name: David R. Clark
Title: Vice President
<PAGE> 83
SAGEBRUSH OF SEVIERVILLE, INC.,
as Guarantor
By: /s/ David R. Clark
-----------------------------------------
Name: David R. Clark
Title: Vice President
SAGEBRUSH OF TENNESSEE, L.P.,
as Guarantor
By: Sagebrush of South Carolina, LLC,
Its General Partner
By: Sagebrush, Inc., Sole Member
By: /s/ David R. Clark
-----------------------------------------
Name: David R. Clark
Title: Vice President
SEVEN STARS, INC.,
as Guarantor
By: /s/ David R. Clark
-----------------------------------------
Name: David R. Clark
Title: President
ST. AUGUSTINE FOODS, INC.,
as Guarantor
By: /s/ David R. Clark
-----------------------------------------
Name: David R. Clark
Title: President
TENNESSEE WSMP, INC.,
as Guarantor
By: /s/ David R. Clark
-----------------------------------------
Name: David R. Clark
Title: President
<PAGE> 84
VIRGINIA WSMP, INC.,
as Guarantor
By: /s/ David R. Clark
-----------------------------------------
Name: David R. Clark
Title: President
CHARDENT, INC.,
as Guarantor
By: /s/ David R. Clark
-----------------------------------------
Name: David R. Clark
Title: Vice President
PIERRE FOODS, LLC,
as Guarantor
By: FRESH FOODS, INC., Sole Member
By: /s/ David R. Clark
-----------------------------------------
Name: David R. Clark
Title: President
GEORGIA WSMP, INC.,
as Guarantor
By: /s/ David R. Clark
-----------------------------------------
Name: David R. Clark
Title: President
KINGSPORT FOODS, INC.,
as Guarantor
By: /s/ David R. Clark
-----------------------------------------
Name: David R. Clark
Title: Vice President
<PAGE> 85
MATTHEWS PRIME SIRLOIN, INC.,
as Guarantor
By: /s/ David R. Clark
-----------------------------------------
Name: David R. Clark
Title: President
NAPLES FOODS, INC.,
as Guarantor
By: /s/ David R. Clark
-----------------------------------------
Name: David R. Clark
Title: President
PRIME SIRLOIN, INC.,
as Guarantor
By: /s/ David R. Clark
-----------------------------------------
Name: David R. Clark
Title: President
SAGEBRUSH OF NORTH CAROLINA, LLC,
as Guarantor
By: FRESH FOODS, INC., Sole Member
By: /s/ David R. Clark
-----------------------------------------
Name: David R. Clark
Title: President
SAGEBRUSH OF SOUTH CAROLINA, LLC,
as Guarantor
By: FRESH FOODS, INC., Sole Member
By: /s/ David R. Clark
-----------------------------------------
Name: David R. Clark
Title: President
<PAGE> 86
SPICEWOOD, INC.,
as Guarantor
By: /s/ David R. Clark
-----------------------------------------
Name: David R. Clark
Title: Vice President
SOUTH CAROLINA WSMP, INC.,
as Guarantor
By: /s/ David R. Clark
-----------------------------------------
Name: David R. Clark
Title: President
SUNSHINE WSMP, INC.,
as Guarantor
By: /s/ David R. Clark
-----------------------------------------
Name: David R. Clark
Title: President
TUMBLEWEED OF PIGEON FORGE, INC.,
as Guarantor
By: /s/ David R. Clark
-----------------------------------------
Name: David R. Clark
Title: Vice President
GREENVILLE FOOD SYSTEMS,
INCORPORATED,
as Guarantor
By: /s/ David R. Clark
-----------------------------------------
Name: David R. Clark
Title: President
<PAGE> 87
FRESH FOODS SALES, LLC,
as Guarantor
By: FRESH FOODS, INC., Sole Member
By: /s/ David R. Clark
-----------------------------------------
Name: David R. Clark
Title: President
SAGEBRUSH DTN, INC.,
as Guarantor
By: /s/ David R. Clark
-----------------------------------------
Name: David R. Clark
Title: Vice President
D&S FOOD SYSTEMS, LLC,
as Guarantor
By: FRESH FOODS, INC., Sole Member
By: /s/ David R. Clark
-----------------------------------------
Name: David R. Clark
Title: President
<PAGE> 88
STATE STREET BANK AND TRUST COMPANY,
as Trustee,
By: /s/ Roland S. Gustafsen
-----------------------------------------
Name: Roland S. Gustafsen
Title: Assistant Vice President
<PAGE> 89
SCHEDULE A
LIST OF GUARANTORS
Brunswick Associates, Inc.
Claremont Restaurant Group, LLC
Elloree Foods, Inc.
Fresh Foods Properties, LLC
Georgia Buffet Restaurants, Inc.
Knoxville Foods, Inc.
Mom `n' Pop's Country Ham, LLC
Oak Ridge Foods, Inc.
Sagebrush, Inc.
Sagebrush of Sevierville, Inc.
Sagebrush of Tennessee, L.P.
Seven Stars, Inc.
St. Augustine Foods, Inc.
Tennessee WSMP, Inc.
Virginia WSMP, Inc.
Chardent, Inc.
Pierre Foods, LLC
Georgia WSMP, Inc.
Kingsport Foods, Inc.
Matthews Prime Sirloin, Inc.
Naples Foods, Inc.
<PAGE> 90
Prime Sirloin, Inc.
Sagebrush of North Carolina, LLC
Sagebrush of South Carolina, LLC
Spicewood, Inc.
South Carolina WSMP, Inc.
Sunshine WSMP, Inc.
Tumbleweed of Pigeon Forge, Inc.
Greenville Food Systems, Incorporated
Fresh Foods Sales, LLC
Sagebrush DTN, Inc.
D&S Food Systems, LLC
<PAGE> 91
EXHIBIT A
FORM OF INITIAL GLOBAL NOTE
FACE OF INITIAL GLOBAL NOTE
FRESH FOODS, INC.
No. CUSIP No.
----- -------------
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OF BENEFIT OF,
U.S. PERSONS, EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE
HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER"
(AS DEFINED IN RULE 144A UNDER THE ACT) OR (B) IT IS NOT A U.S. PERSON
AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION, (2) AGREES THAT
IT WILL NOT WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS NOTE
RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY
SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE ACT, (C)
INSIDE THE UNITED STATES TO AN ACCREDITED INVESTOR THAT, PRIOR TO SUCH
TRANSFER, FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A U.S.
BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO RESTRICTIONS ON TRANSFER OF
THIS NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE),
(D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE
WITH RULE 904 UNDER THE ACT, (E) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE ACT (IF AVAILABLE) OR (F)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND (3)
AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS NOTE IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN
CONNECTION WITH ANY TRANSFER OF THIS NOTE WITHIN TWO YEARS AFTER
ORIGINAL ISSUANCE OF THIS NOTE, IF THE PROPOSED TRANSFEREE IS AN
ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH
TO THE TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR
OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM
THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM OR IN A
TRANSACTION NOT SUBJECT TO THE REGISTRATION REQUIREMENTS OF THE ACT. AS
USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND
"U.S. PERSON" HAVE THE MEANING GIVEN TO THEM BY REGULATION S UNDER THE
ACT.
<PAGE> 92
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY TO FRESH FOODS, INC. OR A SUCCESSOR THEREOF OR
THE REGISTRAR FOR REGISTRATION OF TRANSFER OR EXCHANGE AND ANY NOTE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER ENTITY AS
HAS BEEN REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH
OTHER ENTITY AS HAS BEEN REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFER OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE,
AND NOT IN PART, TO NOMINEES OF THE DEPOSITORY TRUST COMPANY OR TO A
SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF
INTERESTS IN THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS MADE IN
ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTION 2.06 OF THE
INDENTURE, DATED AS OF JUNE 9,1998, AMONG FRESH FOODS, INC., AS ISSUER,
AND THE GUARANTORS LISTED ON ANNEX A HERETO AND STATE STREET BANK AND
TRUST COMPANY, AS TRUSTEE, PURSUANT TO WHICH THIS NOTE WAS ISSUED.
A-2
<PAGE> 93
GLOBAL NOTE
REPRESENTING 10 3/4% SENIOR NOTES DUE 2006
Fresh Foods, Inc., a Delaware corporation, for value received, hereby
promises to pay to Cede & Co., or its registered assigns, the principal sum
indicated on Schedule A hereof, on June 1, 2006.
Interest Payment: Dates: June 1 and December 1, commencing, December 1.
1998.
Record Dates: May 15 and November 15.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been duly executed
by the Trustee referred to on the reverse by manual signature, this Note shall
not be entitled to any benefit under the Indenture or be valid or obligatory for
any purposes.
A-3
<PAGE> 94
IN WITNESS WHEREOF, Fresh Foods, Inc. has caused this Note to be duly
executed.
FRESH FOODS, INC.
By:
-------------------------------
Name:
Title:
Attest:
------------------------------
Dated:
------------------------------
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
State Street Bank and Trust Company,
as Trustee, certifies that this is one of
the Notes referred to in the Indenture.
By:
------------------------------
Authorized Signatory
A-4
<PAGE> 95
REVERSE SIDE OF INITIAL GLOBAL NOTE
FRESH FOODS, INC.
GLOBAL NOTE
REPRESENTING 10 3/4% SENIOR NOTES DUE 2006
1. Indenture.
This Note is one of a duly authorized issue of debt securities of the
Company (as defined below) designated as its "10 3/4% Senior Notes Due 2006"
(herein called the "Notes") limited in aggregate principal amount to
$115,000,000, issued under an indenture dated as of June 9, 1998 (as amended or
supplemented from time to time, the "Indenture") among the Company, as issuer,
and the guarantors listed on Annex A hereto (collectively, the "Guarantors"),
and State Street Bank and Trust Company, as trustee (the "Trustee," which term
includes any successor trustee under the Indenture). The terms of the Notes
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code ss.ss.
77aaa-77bbbb). The Notes are subject to all such terms, and Holders of Notes are
referred to the Indenture and such Act for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Company, the
Guarantors, the Trustee and each Holder and of the terms upon which the Notes
are, and are to be, authenticated and delivered. The summary of the terms of
this Note contained herein does not purport to be complete and is qualified by
reference to the Indenture. To the extent permitted by applicable law, in the
event of any inconsistency between the terms of this Note and the terms of the
Indenture, the terms of the Indenture shall control. All capitalized terms used
in this Note which are not defined herein shall have the meanings assigned to
them in the Indenture.
The Indenture restricts, among other things, the Company's ability to
incur additional indebtedness, pay dividends or make certain other restricted
payments, incur liens to secure pari passu or subordinated indebtedness, sell
stock of Restricted Subsidiaries, apply net proceeds from certain asset sales,
merge or consolidate with any other person, sell, assign, transfer, lease,
convey or otherwise dispose of substantially all of the assets of the Company or
enter into certain transactions with affiliates. The Indenture permits, under
certain circumstances, Restricted Subsidiaries of the Company to be deemed
Unrestricted Subsidiaries and thus not subject to the restrictions of the
Indenture.
2. Principal and Interest.
Fresh Foods, Inc., a Delaware corporation (such corporation, and its
successors and assigns under the Indenture hereinafter referred to, being herein
called the "Company"), promises to pay the principal amount set forth on
Schedule A of this Note to the Holder hereof on June 1, 2006.
A-5
<PAGE> 96
The Company shall pay interest at a rate of 10.75% per annum, from the
Issue Date or from the most recent Interest Payment Date thereafter to which
interest has been paid or duly provided for, semiannually in arrears on June 1
and December 1 of each year, commencing on December 1, 1998, in cash, to the
Holder hereof until the principal amount hereof is paid or made available for
payment. The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, subject to certain exceptions provided in the
Indenture, be paid to the Person in whose name this Note (or the Note in
exchange or substitution for which this Note was issued) is registered at the
close of business on the Record Date for interest payable on such Interest
Payment Date. The Record Date for any interest payment is the close of business
on May 15 or November 15, as the case may be, whether or not a Business Day,
immediately preceding the Interest Payment Date on which such interest is
payable. Any such interest not so punctually paid or duly provided for
("Defaulted Interest") shall forthwith cease to be payable to the Holder on such
Record Date and shall be paid as provided in Section 2.11 of the Indenture.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
Each payment of interest in respect of an Interest Payment Date will
include interest accrued through the day before such Interest Payment Date. If
an Interest Payment Date falls on a day that is not a Business Day, the interest
payment to be made on such Interest Payment Date will be made on the next
succeeding Business Day with the same force and effect as if made on such
Interest Payment Date, and no additional interest will accrue as a result of
such delayed payment.
If this Note is exchanged in a Registered Exchange Offer prior to the
Record Date for the first Interest Payment Date following such exchange, accrued
and unpaid interest, if any, on this Note, up to but not including the date of
issuance of the Exchange Note or Exchange Notes issued in exchange for this
Note, shall be paid on the first Interest Payment Date for such Exchange Note or
Exchange Notes to the Holder or Holders of such Exchange Note or Exchange Notes
on the first Record Date with respect to such Exchange Note or Exchange Notes.
If this Note is exchanged in a Registered Exchange Offer subsequent to the
Record Date for the first Interest Payment Date following such exchange but on
or prior to such Interest Payment Date, then any such accrued and unpaid
interest with respect to this Note and any accrued and unpaid interest on the
Exchange Note or Exchange Notes issued in exchange for this Note, through the
day before such Interest Payment Date, shall be paid on such Interest Payment
Date to the Holder of this Note on such Record Date.
To the extent lawful, the Company shall pay interest on overdue
principal, overdue premium, Defaulted Interest and overdue Liquidated Damages
(without regard to any applicable grace period) at the interest rate borne on
this Note. The Company's obligation pursuant to the previous sentence shall
apply whether such overdue amount is due at its maturity, as a result of the
Company's obligations pursuant to Section 3.05, Section 4.11 or Section 4.14 of
the Indenture, or otherwise.
A-6
<PAGE> 97
3. Registration Rights, Liquidated Damages.
The Holder of this Note is entitled to the benefits of the Registration
Rights Agreement, dated June 9, 1998, among the Company, the Guarantors and the
Initial Purchasers (the "Registration Rights Agreement"), which agreement is
attached to the Indenture as Exhibit J thereto. Such benefits include the right
of the Holder to receive Liquidated Damages in the event of a failure on the
part of the Company to comply with certain registration covenants, as provided
in Section 4 of the Registration Rights Agreement.
4. Method of Payment.
The Company, through the Paying Agent, shall pay interest on this Note
to the registered Holder of this Note, as provided above. The Holder must
surrender this Note to a Paying Agent to collect principal payments. The Company
will pay principal, premium, if any, and interest and Liquidated Damages, if
any, in money of the United States of America that at the time of payment is
legal tender for payment of all debts public and private. Principal, premium, if
any, and interest and Liquidated Damages, if any, shall be paid by check mailed
to the registered Holders at their registered addresses; provided that all
payments with respect to Notes the Holders of which have given wire transfer
instructions to the Company will be required to be made by wire transfer of
immediately available funds to the accounts specified by the Holders thereof.
5. Paying Agent and Registrar.
Initially, the Trustee will act as Paying Agent and Registrar under the
Indenture. The Company may, upon written notice to the Trustee, appoint and
change any Paying Agent or Registrar. The Company or any of its Affiliates may
act as Paying Agent or Registrar, provided that if the Company or such Affiliate
is acting as Paying Agent, the Company or such Affiliate shall segregate all
funds held by it as Paying Agent and hold them in trust for the benefit of the
Holders or the Trustee.
6. Guarantees.
This Note is initially entitled to the benefits of the Guarantees made
by the Guarantors listed on Annex A hereto and may thereafter be entitled to
Guarantees made by other Guarantors for the benefit of the Holders of Notes.
Each present Guarantor has, and each future Guarantor will, irrevocably and
unconditionally, jointly and severally, guarantee on a senior unsecured basis
the punctual payment when due, whether at Stated Maturity, by acceleration, in
connection with a Change of Control Offer, an Asset Sale Offer or redemption, or
otherwise, of all obligations of the Company under the Indenture and this Note,
whether for payment of principal of, premium, if any, interest or Liquidated
Damages, if any, on the Notes expenses, indemnification or otherwise. A
Guarantor shall be released from its Guarantee upon the terms and subject to the
conditions set forth in the Indenture.
7. Redemption.
Except as set forth in the following paragraph, the Notes are not
redeemable at the option of the Company prior to June 1, 2002. Thereafter, the
Notes will be subject to redemption at the option of the Company, in whole or in
part, on at least 30 calendar days, but not more than 60 calendar days, prior
notice, at the redemption prices (expressed as percentages of principal amount)
set forth below, plus accrued and unpaid interest thereon, if any, and
Liquidated Damages, if any, to the applicable Redemption Date (subject to the
right of each Holder of record on the relevant Record Date to receive interest
due on the relevant Interest Payment Date), if redeemed during the twelve-month
period beginning June 1 of the years indicated below:
Year Percentage
---- ----------
2002 105.375%
2003 102.688%
2004 and thereafter 100.000%
A-7
<PAGE> 98
In addition, at any time and from time to time prior to June 1, 2001
the Company, at its option, may redeem in the aggregate up to 35.0% of the
original principal amount of the Notes with the Net Cash Proceeds of one or more
Public Equity Offerings following which there is a Public Market, at a
redemption price (expressed as a percentage of principal amount) of 110.75% of
the aggregate principal amount so redeemed, plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the redemption date (subject to the right
of Holders of record on the relevant Record Date to receive interest due on the
relevant Interest Payment Date); provided, however, that at least 65.0% of the
original principal amount of the Notes must remain outstanding after each such
redemption; and provided, further, that each such redemption shall occur within
60 days of the date of closing of the related Public Equity Offering.
8. Notice of Redemption.
At least 20 calendar days but not more than 60 calendar days before a
Redemption Date, the Company shall deliver to the Trustee and send, by
first-class mail, postage prepaid, to Holders of Notes to be redeemed at the
addresses of such Holders as they appear in the Note Register, a notice of
redemption.
If fewer than all the Notes are to be redeemed at any time, the Trustee
shall select the Notes to be redeemed pro rata or by lot or by a method that
complies with applicable legal and securities exchange requirements, if any, and
that the Trustee considers fair and appropriate and in accordance with methods
generally used at the time of selection by fiduciaries in similar circumstances.
The Trustee shall make the selection from outstanding Notes not previously
called for redemption; provided that the Trustee may select for redemption
portions (equal to $1,000 or any integral multiple thereof) of the principal of
Notes that have denominations larger than $1,000 (Notes in denominations of
$1,000 or less may be redeemed only in whole). If any Note is redeemed
subsequent to a Record Date with respect to any Interest Payment Date specified
above and on or prior to such Interest Payment Date, then any accrued interest
will be paid on such Interest Payment Date to the Holder of the Note on such
Record Date. If money in an amount sufficient to pay the Redemption Price of all
Notes (or portions thereof) to be redeemed on the Redemption Date is deposited
with the Paying Agent on or before the applicable Redemption Date and certain
other conditions are satisfied, interest on the Notes or portions thereof to be
redeemed on the applicable Redemption Date will cease to accrue.
9. Repurchase at the Option of Holders upon Change of Control.
Upon the occurrence of a Change of Control, each Holder shall have the
right in accordance with the terms hereof and the Indenture to require the
Company to purchase such Holder's Notes, in whole or in part, in a principal
amount that is an integral multiple of $1,000, pursuant to a Change of Control
Offer, at a purchase price in cash equal to 101% of the principal amount of such
Notes (or portions thereto plus accrued and unpaid interest and Liquidated
Damages, if any, to the Change of Control Payment Date.
A-8
<PAGE> 99
Within 30 calendar days following any Change of Control, the Company
shall send, or cause to be sent, by first-class mail, postage prepaid, a notice
regarding the Change of Control Offer to each Holder with a copy to the Trustee.
The Holder of this Note may elect to have this Note or a portion hereof in an
authorized denomination purchased by completing the form entitled "Option of
Holder to Elect Purchase" appearing below and tendering this Note pursuant to
the Change of Control Offer. Unless the Company defaults in the payment of the
Change of Control Purchase Price with respect thereto, all Notes or portions
thereof accepted for payment pursuant to the Change of Control Offer will cease
to accrue interest from and after the Change of Control Payment Date.
10. Repurchase at the Option of Holders upon Asset Sale.
If at any time the Company or any Restricted Subsidiary engages in any
Asset Sale, as a result of which the aggregate amount of Excess Proceeds exceeds
$5.0 million, the Company shall, within 30 calendar days of the date the amount
of Excess Proceeds exceeds $5.0 million, use the then-existing Excess Proceeds
to make an offer to purchase from all Holders of Notes, on a pro rata basis,
Notes in an aggregate principal amount equal in amount to the then-existing
Excess Proceeds, at a purchase price in cash in an amount equal to 100% of the
principal amount thereof plus accrued and unpaid interest thereon and Liquidated
Damages to the Asset Sale Purchase Date (subject to the right of each Holder of
record on the relevant Record Date to receive interest due on the relevant
Interest Payment Date). Upon completion of an Asset Sale Offer (including
payment of the Asset Sale Purchase Price for accepted Notes), any surplus Excess
Proceeds that were the subject of such offer shall cease to be Excess Proceeds,
and the Company may then use such amounts for general corporate purposes.
Within 30 calendar days of the date the amount of Excess Proceeds
exceeds $5.0 million, the Company shall send, or cause to be sent, by
first-class mail, postage prepaid, a notice regarding the Asset Sale Offer to
each Holder. The Holder of this Note may elect to have this Note or a portion
hereof in an authorized denomination purchased by completing the form entitled
"Option of Holder to Elect Purchase" appearing below and tendering this Note
pursuant to the Asset Sale Offer. Unless the Company defaults in the payment of
the Asset Sale Purchase Price with respect thereto, all Notes or portions
thereof selected for payment pursuant to the Asset Sale Offer will cease to
accrue interest from and after the Asset Sale Purchase Date.
11. The Global Note.
So long as this Global Note is registered in the name of the Depositary
or its nominee, members of, or participants in, the Depositary ("Agent Members")
shall have no rights under the Indenture with respect to this Global Note held
on their behalf by the Depositary or the Trustee as its custodian, and the
Depositary may be treated by the Company, the Guarantors, the Trustee and any
agent of the Company, the Guarantors or the Trustee as the absolute owner of
this Global Note for all purposes. Notwithstanding the foregoing, nothing herein
shall (i) prevent the Company, the Guarantors, the Trustee or any agent of the
Company, the Guarantors or the Trustee, from giving effect to any written
certification, proxy or other authorization furnished by the Depositary or (ii)
impair, as between the Depositary and its Agent Members, the operation of
customary practices governing the exercise of the rights of a Holder.
A-9
<PAGE> 100
The Holder of this Global Note may grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold
interests in this Global Note through Agent Members, to take any action which a
Holder is entitled to take under the Indenture or the Notes.
Whenever, as a result of optional redemption by the Company, a Change
of Control Offer, an Asset Sale Offer, a Registered Exchange Offer or an
exchange for Certificated Notes, this Global Note is redeemed, repurchased or
exchanged in part, this Global Note shall be surrendered by the Holder thereof
to the Trustee who shall cause an adjustment to be made to Schedule A hereof so
that the principal amount of this Global Note will be equal to the portion not
redeemed, repurchased or exchanged and shall thereafter return this Global Note
to such Holder; provided that this Global Note shall be in a principal amount of
$1,000 or an integral multiple of $1,000.
12. The Registered Exchange Offer.
Any Initial Notes represented by this Global Note that are presented to
the Registrar for exchange pursuant to the Registered Exchange Offer (as defined
in the Registration Rights Agreement) shall be exchanged for a Global Note
representing Exchange Notes of equal principal amount upon surrender of this
Global Note to the Registrar in accordance with the terms of the Registered
Exchange Offer and the Indenture.
13. Transfer and Exchange.
The transfer of this Note is subject to certain restrictions, including
those to which reference is made in the Private Placement Legend. A Holder may
transfer or exchange Notes as provided in the Indenture and subject to certain
limitations therein set forth. The Registrar may require a Holder, among other
things, to furnish appropriate endorsements or transfer documents and to pay any
taxes, fees and expenses required by law or permitted by the Indenture.
14. Denominations.
The Notes are issuable only in registered form without coupons in
denominations of $1,000 and integral multiples thereof of principal amount.
15. Discharge and Defeasance.
Subject to certain conditions, the Company at any time may terminate
some or all of the obligations of the Company and the Guarantors under the
Notes, the Guarantees and the Indenture if the Company irrevocably deposits in
trust with the Trustee cash or U.S. Government Obligations for the payment of
principal, premium, if any, interest and Liquidated Damages, if any, on the
Notes to redemption or maturity, as the case may be.
A-10
<PAGE> 101
16. Amendment, Waiver.
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Notes may be amended with the written consent of the Holders of
at least a majority in principal amount of the outstanding Notes (which consent
may, but need not, be given in connection with any tender offer or exchange
offer for the Notes) and (ii) any past Default and its consequences or any
compliance with any provisions of the Indenture may be waived with the written
consent of the Holders of at least a majority in principal amount of the
outstanding Notes. Subject to certain exceptions set forth in the Indenture,
without the consent of any Holder, the Company and the Trustee may amend the
Indenture or the Notes (i) to evidence the succession of another Person to the
Company and the assumption by such successor of the covenants of the Company
under the Indenture and contained in the Notes; (ii) to add to the covenants of
the Company, for the benefit of the Holders of all of the Notes, or to surrender
any right or power conferred on the Company under the Indenture; (iii) to
provide for uncertificated Notes in addition to or in place of Certificated
Notes; (iv) to secure the Notes; (v) to cure any ambiguity, omission, defect or
inconsistency in the Indenture, provided that such actions shall not adversely
affect the interests of the Holders of Notes in any material respect; (vi) to
comply with the requirements of the SEC in order to effect or maintain the
qualification of the Indenture under the TIA; or (vii) to evidence the agreement
or acknowledgment of a Restricted Subsidiary that it is a Guarantor for all
purposes under the Indenture (including, without limitation, Article 11
thereof).
17. Defaults and Remedies.
Under the Indenture, Events of Default include: (i) a default for 30
days in the payment when due of interest on, or Liquidated Damages with respect
to, the Notes (whether or not prohibited by the subordination provisions of the
Indenture); (ii) a default in the payment when due of the principal of or
premium, if any, on the Notes (whether or not prohibited by the subordination
provisions of the Indenture); (iii) failure by the Company to observe or perform
certain covenants, conditions, agreements or other provisions of the Indenture
or this Note (and, in the case of certain covenants, agreements or other
provisions, such failure has continued for 30 calendar days after written notice
by the Trustee or the Holders of at least 25% in principal amount of the Notes);
(iv) a default in the payment of Indebtedness of the Company or any of its
Significant Subsidiaries within any applicable grace period after final maturity
or acceleration of such Indebtedness in an amount in excess of $5.0 million in
the aggregate; (v) certain events of bankruptcy or insolvency with respect to
the Company or any of its Significant Subsidiaries; (vi) certain undischarged
judgments in excess of $5.0 million against the Company or any of its
Significant Subsidiaries; or (vii) the Guarantee of any Guarantor ceasing for
any reason to be in full force and effect (other than in accordance with the
terms of the Indenture) or any Guarantor denying or disaffirming its obligations
under its Guarantee.
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the Notes, subject to certain
limitations, may declare all the Notes to be immediately due and payable.
Certain events of bankruptcy or insolvency shall result in the Notes being
immediately due and payable upon the occurrence of such Events of Default
without any further act of the Trustee or any Holder.
A-11
<PAGE> 102
Holders of Notes may not enforce the Indenture or the Notes except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Notes unless it receives reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in principal amount of the Notes may
direct the Trustee in its exercise of any trust or power under the Indenture.
The Holders of a majority in principal amount of the then outstanding Notes, by
written notice to the Trustee and the Company, may rescind any declaration of
acceleration and its consequences if the rescission would not conflict with any
judgment or decree, and if all existing Events of Default have been cured or
waived, except nonpayment of principal, interest, premium or Liquidated Damages
that has become due solely because of acceleration. No such rescission shall
affect any subsequent Default or impair any right consequent thereto.
18. Individual Rights of Trustee.
Subject to certain limitations imposed by the TIA, the Trustee or any
Paying Agent or Registrar, in its individual or any other capacity, may become
the owner or pledgee of Notes and may otherwise deal with the Company, the
Guarantors or their Affiliates with the same rights it would have if it were not
Trustee, Paying Agent or Registrar, as the case may be, under the Indenture.
19. No Recourse Against Certain Others.
No director, officer, employee, incorporator or stockholder of the
Company or any Guarantor, as such, shall have any liability for any obligations
of the Company or such Guarantor under the Notes, the Guarantees or the
Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation, solely by reason of its status as a director,
officer, employee, incorporator or stockholder of the Company or such Guarantor.
By accepting a Note, each Holder waives and releases all such liability (but
only such liability) as part of the consideration for issuance of such Note to
such Holder.
20. Authentication.
This Note shall not be valid until the Trustee or an authenticating
agent manually signs the certificate of authentication on the other side of this
Note.
21. Abbreviations.
Customary abbreviations may be used in the name of a Holder or an
assignee, such as TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with rights of survivorship and not as
tenants in common), CUST (= custodian), and U/G/M/A (= Uniform Gift to Minors
Act).
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<PAGE> 103
22. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Notes and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Holders of Notes. No representation is
made as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
23. Governing Law.
THE INDENTURE AND THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED IN SAID STATE.
The Company will furnish to any Holder upon written request and without
charge to the Holder a copy of the Indenture. Requests may be made to:
Fresh Foods, Inc.
PO Box 399
WSMP Drive
Claremont, NC 28610
Attention: Chief Financial Officer
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<PAGE> 104
SCHEDULE A
SCHEDULE OF PRINCIPAL AMOUNT
The initial principal amount at maturity of this Note shall be
$____________________. The following decreases/increases in the principal amount
in denominations of $1,000 or integral multiples thereof at maturity of this
Note have been made:
Total Principal
Amount at Notation
Decrease in Increase in Maturity Made by
Date of Principal Principal Following such or on
Decrease/ Amount at Amount at Decrease/ Behalf of
Increase Maturity Maturity Increase Trustee
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<PAGE> 105
ASSIGNMENT
(To be executed by the registered Holder
if such Holder desires to transfer this Note)
FOR VALUE RECEIVED _________________________________ hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
TAX IDENTIFYING NUMBER OF TRANSFEREE
- ---------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please print name and address of transferee)
- --------------------------------------------------------------------------------
this Note, together with all right, title and interest herein, and does hereby
irrevocably constitute and appoint ________________________________ Attorney to
transfer this Note on the Note Register, with full power of substitution.
Dated:_________________________
- --------------------------------- -----------------------------------
Signature of Holder Signature Guaranteed:
NOTICE: The signature to the foregoing Assignment must correspond to the Name as
written upon the face of this Note in every particular, without alteration or
any change whatsoever.
SIGNATURE GUARANTEED: Signature must be guaranteed by an Eligible Guarantor
Institution (banks, stockbrokers, savings and loan associations and credit
unions) with membership in an approved signature guarantee medallion program
pursuant to Securitites and Exchange Commission Rule 17Ad-15.
A-15
<PAGE> 106
OPTION OF HOLDER TO ELECT PURCHASE
(check as appropriate)
(TM) In connection with the Change of Control Offer made pursuant to Section
4.14 of the Indenture, the undersigned hereby elects to have
(TM) the entire principal amount
(TM) $______________________ ($1,000 in principal amount or an
integral multiple thereof) of this Note repurchased by the Company. The
undersigned hereby directs the Trustee or Paying Agent to pay it or
___________________________ an amount in cash equal to 101% of the
principal amount indicated in the preceding sentence plus accrued and
unpaid interest and Liquidated Damages thereon, if any, to the Change
of Control Payment Date.
(TM) In connection with the Asset Sale Offer made pursuant to Section 4.11
of the Indenture, the undersigned hereby elects to have
(TM) the entire principal amount
(TM) $_______________ ($1,000 in principal amount or an integral
multiple thereof) of this Note repurchased by the Company. The
undersigned hereby directs the Trustee or Paying Agent to pay it or
_______________________ an amount in cash equal to 100% of the
principal amount indicated in the preceding sentence plus accrued and
unpaid interest and Liquidated Damages thereon, if any, to the Asset
Sale Purchase Date.
Dated:
----------------------------
- ------------------------------- ----------------------------------
Signature of Holder Signature Guaranteed:
NOTICE: The signature to the foregoing must correspond to the Name as written
upon the face of this Note in every particular, without alteration or any change
whatsoever.
SIGNATURE GUARANTEED: Signature must be guaranteed by an Eligible Guarantor
Institution (banks, stockbrokers, savings and loan associations and credit
unions) with membership in an approved signature guarantee medallion program
pursuant to Securitites and Exchange Commission Rule 17Ad-15.
A-16
<PAGE> 107
ANNEX A
LIST OF GUARANTORS
Brunswick Associates, Inc.
Claremont Restaurant Group, LLC
Elloree Foods, Inc.
Fresh Foods Properties, LLC
Georgia Buffet Restaurants, Inc.
Knoxville Foods, Inc.
Mom `n' Pop's Country Ham, LLC
Oak Ridge Foods, Inc.
Sagebrush, Inc.
Sagebrush of Sevierville, Inc.
Sagebrush of Tennessee, L.P.
Seven Stars, Inc.
St. Augustine Foods, Inc.
Tennessee WSMP, Inc.
Virginia WSMP, Inc.
Chardent, Inc.
Pierre Foods, LLC
Georgia WSMP, Inc.
Kingsport Foods, Inc.
Matthews Prime Sirloin, Inc.
Naples Foods, Inc.
A-17
<PAGE> 108
Prime Sirloin, Inc.
Sagebrush of North Carolina, LLC
Sagebrush of South Carolina, LLC
Spicewood, Inc.
South Carolina WSMP, Inc.
Sunshine WSMP, Inc.
Tumbleweed of Pigeon Forge, Inc.
Greenville Food Systems, Incorporated
Fresh Foods Sales, LLC
Sagebrush DTN, Inc.
D&S Food Systems, LLC
A-18
<PAGE> 109
EXHIBIT B
FORM OF INITIAL CERTIFICATED NOTE
FACE OF INITIAL CERTIFICATED NOTE
FRESH FOODS, INC.
No. CUSIP No.
------- -----------------
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OF BENEFIT OF,
U.S. PERSONS, EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE
HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER"
(AS DEFINED IN RULE 144A UNDER THE ACT) OR (B) IT IS NOT A U.S. PERSON
AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION, (2) AGREES THAT
IT WILL NOT WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS NOTE
RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY
SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE ACT, (C)
INSIDE THE UNITED STATES TO AN ACCREDITED INVESTOR THAT, PRIOR TO SUCH
TRANSFER, FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A U.S.
BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO RESTRICTIONS ON TRANSFER OF
THIS NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE),
(D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE
WITH RULE 904 UNDER THE ACT, (E) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE ACT (IF AVAILABLE) OR (F)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND (3)
AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS NOTE IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN
CONNECTION WITH ANY TRANSFER OF THIS NOTE WITHIN TWO YEARS AFTER
ORIGINAL ISSUANCE OF THIS NOTE, IF THE PROPOSED TRANSFEREE IS AN
ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH
TO THE TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR
OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM
THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM OR IN A
TRANSACTION NOT SUBJECT TO THE REGISTRATION REQUIREMENTS OF THE ACT. AS
USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND
"U.S. PERSON" HAVE THE MEANING GIVEN TO THEM BY REGULATION S UNDER THE
ACT.
B-1
<PAGE> 110
10 3/4% SENIOR NOTE DUE 2006
Fresh Foods, Inc., a Delaware corporation, for value received, hereby
promises to pay to ________________, or its registered assigns, the principal
amount of ___________, on June 1, 2006.
Interest Payment Dates: June 1 and December 1, commencing December 1,
1998.
Record Dates: May 15 and November 15.
B-2
<PAGE> 111
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been duly executed
by the Trustee referred to on the reverse hereof by manual signature, this Note
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purposes.
IN WITNESS WHEREOF, Fresh Foods, Inc. has caused this Note to be duly
executed.
FRESH FOODS, INC.
By:
----------------------------
Name:
Title:
Attest:
-------------------------
Dated:
-------------------------
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
State Street Bank and Trust Company,
as Trustee, certifies that this is one of
the Notes referred to in the Indenture.
By:
-------------------------
Authorized Signatory
B-3
<PAGE> 112
REVERSE SIDE OF INITIAL CERTIFICATED NOTE
FRESH FOODS, INC.
10 3/4% SENIOR NOTE DUE 2006
1. Indenture.
This Note is one of a duly authorized issue of debt securities of the
Company (as defined below) designated as its "10 3/4% Senior Notes Due 2006"
(herein called the "Notes") limited in aggregate principal amount to
$115,000,000, issued under an indenture dated as of June 9, 1998 (as amended or
supplemented from time to time, the "Indenture") among the Company, as issuer,
and the guarantors listed on Annex A hereto (collectively, the "Guarantors"),
and State Street Bank and Trust Company, as trustee (the "Trustee," which term
includes any successor trustee under the Indenture). The terms of the Notes
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code ss.ss.
77aaa-77bbbb). The Notes are subject to all such terms, and Holders of Notes are
referred to the Indenture and such Act for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Company, the
Guarantors, the Trustee and each Holder and of the terms upon which the Notes
are, and are to be, authenticated and delivered. The summary of the terms of
this Note contained herein does not purport to be complete and is qualified by
reference to the Indenture. To the extent permitted by applicable law, in the
event of any inconsistency between the terms of this Note and the terms of the
Indenture, the terms of the Indenture shall control. All capitalized terms used
in this Note which are not defined herein shall have the meanings assigned to
them in the Indenture.
The Indenture restricts, among other things, the Company's ability to
incur additional indebtedness, pay dividends or make certain other restricted
payments, incur liens to secure pari passu or subordinated indebtedness, sell
stock of Restricted Subsidiaries, apply net proceeds from certain asset sales,
merge or consolidate with any other person, sell, assign, transfer, lease,
convey or otherwise dispose of substantially all of the assets of the Company or
enter into certain transactions with affiliates. The Indenture permits, under
certain circumstances, Restricted Subsidiaries of the Company to be deemed
Unrestricted Subsidiaries and thus not subject to the restrictions of the
Indenture.
2. Principal and Interest.
Fresh Foods, Inc., a Delaware corporation (such corporation, and its
successors and assigns under the Indenture hereinafter referred to, being herein
called the "Company"), promises to pay the principal amount set forth on
Schedule A of this Note to the Holder hereof on June 1, 2006.
B-4
<PAGE> 113
The Company shall pay interest at a rate of 10.75% per annum, from the
Issue Date or from the most recent Interest Payment Date thereafter to which
interest has been paid or duly provided for, semiannually in arrears on June 1
and December 1 of each year, commencing on December 1, 1998, in cash, to the
Holder hereof until the principal amount hereof is paid or made available for
payment. The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, subject to certain exceptions provided in the
Indenture, be paid to the Person in whose name this Note (or the Note in
exchange or substitution for which this Note was issued) is registered at the
close of business on the Record Date for interest payable on such Interest
Payment Date. The Record Date for any interest payment is the close of business
on May 15 or November 15 as the case may be, whether or not a Business Day,
immediately preceding the Interest Payment Date on which such interest is
payable. Any such interest not so punctually paid or duly provided for
("Defaulted Interest") shall forthwith cease to be payable to the Holder on such
Record Date and shall be paid as provided in Section 2.11 of the Indenture.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
Each payment of interest in respect of an Interest Payment Date will
include interest accrued through the day before such Interest Payment Date. If
an Interest Payment Date falls on a day that is not a Business Day, the interest
payment to be made on such Interest Payment Date will be made on the next
succeeding Business Day with the same force and effect as if made on such
Interest Payment Date, and no additional interest will accrue as a result of
such delayed payment.
If this Note is exchanged in a Registered Exchange Offer prior to the
Record Date for the first Interest Payment Date following such exchange, accrued
and unpaid interest, if any, on this Note, up to but not including the date of
issuance of the Exchange Note or Exchange Notes issued in exchange for this
Note, shall be paid on the first Interest Payment Date for such Exchange Note or
Exchange Notes to the Holder or Holders of such Exchange Note or Exchange Notes
on the first Record Date with respect to such Exchange Note or Exchange Notes.
If this Note is exchanged in a Registered Exchange Offer subsequent to the
Record Date for the first Interest Payment Date following such exchange but on
or prior to such Interest Payment Date, then any such accrued and unpaid
interest with respect to this Note and any accrued and unpaid interest on the
Exchange Note or Exchange Notes issued in exchange for this Note, through the
day before such Interest Payment Date, shall be paid on such Interest Payment
Date to the Holder of this Note on such Record Date.
To the extent lawful, the Company shall pay interest on overdue
principal, overdue premium, Defaulted Interest and overdue Liquidated Damages
(without regard to any applicable grace period) at the interest rate borne on
this Note. The Company's obligation pursuant to the previous sentence shall
apply whether such overdue amount is due at its maturity, as a result of the
Company's obligations pursuant to Section 3.05, Section 4. 11 or Section 4.14 of
the Indenture, or otherwise.
3. Registration Rights; Liquidated Damages.
The Holder of this Note is entitled to the benefits of the Registration
Rights Agreement, dated June 9, 1998, among the Company, the Guarantors and the
Initial Purchasers (the "Registration Rights Agreement"), which agreement is
attached to the Indenture as Exhibit J thereto. Such benefits include the right
of the Holder to receive Liquidated Damages in the event of a failure on the
part of the Company to comply with certain registration covenants, as provided
in Section 4 of the Registration Rights Agreement.
B-5
<PAGE> 114
4. Method of Payment.
The Company, through the Paying Agent, shall pay interest on this Note
to the registered Holder of this Note, as provided above. The Holder must
surrender this Note to a Paying Agent to collect principal payments. The Company
will pay principal, premium, if any, and interest and Liquidated Damages, if
any, in money of the United States of America that at the time of payment is
legal tender for payment of all debts public and private. Principal, premium, if
any, and interest and Liquidated Damages, if any, shall be paid by check mailed
to the registered Holders at their registered addresses; provided that all
payments with respect to Notes the Holders of which have given wire transfer
instructions to the Company will be required to be made by wire transfer of
immediately available funds to the accounts specified by the Holders thereof.
5. Paying Agent and Registrar.
Initially, the Trustee will act as Paying Agent and Registrar under the
Indenture. The Company may, upon written notice to the Trustee, appoint and
change any Paying Agent or Registrar. The Company or any of its Affiliates may
act as Paying Agent or Registrar, provided that if the Company or such Affiliate
is acting as Paying Agent, the Company or such Affiliate shall segregate all
funds held by it as Paying Agent and hold them in trust for the benefit of the
Holders or the Trustee.
6. Guarantees.
This Note is initially entitled to the benefits of the Guarantees made
by the Guarantors listed on Annex A hereto and may thereafter be entitled to
Guarantees made by other Guarantors for the benefit of the Holders of Notes.
Each present Guarantor has, and each future Guarantor will, irrevocably and
unconditionally, jointly and severally, guarantee on a senior unsecured basis
the punctual payment when due, whether at Stated Maturity, by acceleration, in
connection with a Change of Control Offer, an Asset Sale Offer or redemption, or
otherwise, of all obligations of the Company under the Indenture and this Note,
whether for payment of principal of, premium, if any, interest or Liquidated
Damages, if any, on the Notes, expenses, indemnification or otherwise. A
Guarantor shall be released from its Guarantee upon the terms and subject to the
conditions set forth in the Indenture.
7. Redemption.
Except as set forth in the following paragraph, the Notes are not
redeemable at the option of the Company prior to June 1, 2002. Thereafter, the
Notes will be subject to redemption at the option of the Company, in whole or in
part, on at least 30 calendar days, but not more than 60 calendar days, prior
notice, at the redemption prices (expressed as percentages of principal amount)
set forth below, plus accrued and unpaid interest thereon, if any, and
Liquidated Damages, if any, to the applicable Redemption Date (subject to the
right of each Holder of record on the relevant Record Date to receive interest
due on the relevant Interest Payment Date), if redeemed during the twelve-month
period beginning June 1 of the years indicated below:
Year Percentage
---- ----------
2002 105.375%
2003 102.688%
2004 and thereafter 100.000%
B-6
<PAGE> 115
In addition, at any time and from time to time prior to June 1, 2001
the Company, at its option, may redeem in the aggregate up to 35.0% of the
original principal amount of the Notes with the Net Cash Proceeds of one or more
Public Equity Offerings following which there is a Public Market, at a
redemption price (expressed as a percentage of principal amount) of 110.75% of
the aggregate principal amount so redeemed, plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the redemption date (subject to the right
of Holders of record on the relevant Record Date to receive interest due on the
relevant Interest Payment Date); provided, however, that at least 65.0% of the
original principal amount of the Notes must remain outstanding after each such
redemption; and provided, further, that each such redemption shall occur within
60 days of the date of closing of the related Public Equity Offering.
8. Notice of Redemption.
At least 20 calendar days but not more than 60 calendar days before a
Redemption Date, the Company shall deliver to the Trustee and send, by
first-class mail, postage prepaid, to Holders of Notes to be redeemed at the
addresses of such Holders as they appear in the Note Register, a notice of
redemption. If fewer than all the Notes are to be redeemed at any time, the
Trustee shall select the Notes to be redeemed pro rata or by lot or by a method
that complies with applicable legal and securities exchange requirements, if
any, and that the Trustee considers fair and appropriate and in accordance with
methods generally used at the time of selection by fiduciaries in similar
circumstances. The Trustee shall make the selection from outstanding Notes not
previously called for redemption; provided that the Trustee may select for
redemption portions (equal to $1,000 or any integral multiple thereof) of the
principal of Notes that have denominations larger than $1,000 (Notes in
denominations of $1,000 or less may be redeemed only in whole). If any Note is
redeemed subsequent to a Record Date with respect to any Interest Payment Date
specified above and on or prior to such Interest Payment Date, then any accrued
interest will be paid on such Interest Payment Date to the Holder of the Note on
such Record Date. If money in an amount sufficient to pay the Redemption Price
of all Notes (or portions thereof) to be redeemed on the Redemption Date is
deposited with the Paying Agent on or before the applicable Redemption Date and
certain other conditions are satisfied, interest on the Notes or portions
thereof to be redeemed on the applicable Redemption Date will cease to accrue.
9. Repurchase at the Option of Holders upon Change of Control.
Upon the occurrence of a Change of Control, each Holder shall have the
right in accordance with the terms hereof and the Indenture to require the
Company to purchase such Holder's Notes, in whole or in part, in a principal
amount that is an integral multiple of $ 1,000, pursuant to a Change of Control
Offer, at a purchase price in cash equal to 101% of the principal amount of such
Notes (or portions thereof) plus accrued and unpaid interest and Liquidated
Damages, if any, to the Change of Control Payment Date.
B-7
<PAGE> 116
Within 30 calendar days following any Change of Control, the Company
shall send, or cause to be sent, by first-class mail, postage prepaid, a notice
regarding the Change of Control Offer to each Holder with a copy to the Trustee.
The Holder of this Note may elect to have this Note or a portion hereof in an
authorized denomination purchased by completing the form entitled "Option of
Holder to Elect Purchase" appearing below and tendering this Note pursuant to
the Change of Control Offer. Unless the Company defaults in the payment of the
Change of Control Purchase Price with respect thereto, all Notes or portions
thereof accepted for payment pursuant to the Change of Control Offer will cease
to accrue interest from and after the Change of Control Payment Date.
10. Repurchase at the Option of Holders upon Asset Sale.
If at any time the Company or any Restricted Subsidiary engages in any
Asset Sale, as a result of which the aggregate amount of Excess Proceeds exceeds
$5.0 million, the Company shall, within 30 calendar days of the date the amount
of Excess Proceeds exceeds $5.0 million, use the then-existing Excess Proceeds
to make an offer to purchase from all Holders of Notes, on a pro rata basis,
Notes in an aggregate principal amount equal in amount to the then-existing
Excess Proceeds, at a purchase price in cash in an amount equal to 100% of the
principal amount thereof plus accrued and unpaid interest thereon and Liquidated
Damages to the Asset Sale Purchase Date (subject to the right of each Holder of
record on the relevant Record Date to receive interest due on the relevant
Interest Payment Date). Upon completion of an Asset Sale Offer (including
payment of the Asset Sale Purchase Price for accepted Notes), any surplus Excess
Proceeds that were the subject of such offer shall cease to be Excess Proceeds,
and the Company may then use such amounts for general corporate purposes.
Within 30 calendar days of the date the amount of Excess Proceeds exceeds $5.0
million, the Company shall send, or cause to be sent, by first-class mail,
postage prepaid, a notice regarding the Asset Sale Offer to each Holder. The
Holder of this Note may elect to have this Note or a portion hereof in an
authorized denomination purchased by completing the form entitled "Option of
Holder to Elect Purchase" appearing below and tendering this Note pursuant to
the Asset Sale Offer. Unless the Company defaults in the payment of the Asset
Sale Purchase Price with respect thereto, all Notes or portions thereof selected
for payment pursuant to the Asset Sale Offer will cease to accrue interest from
and after the Asset Sale Purchase Date.
11. The Registered Exchange Offer.
Any Initial Notes (including this Note) that are presented to the
Registrar for exchange pursuant to the Registered Exchange Offer (as defined in
the Registration Rights Agreement) shall be exchanged for Exchange Notes of
equal principal amount upon surrender of such Notes to the Registrar in
accordance with the terms of the Registered Exchange Offer and the Indenture.
B-8
<PAGE> 117
12. Transfer and Exchange.
The transfer of this Note is subject to certain restrictions, including
those to which reference is made in the Private Placement Legend. A Holder may
transfer or exchange Notes as provided in the Indenture and subject to certain
limitations therein set forth. The Registrar may require a Holder, among other
things, to furnish appropriate endorsements or transfer documents and to pay any
taxes, fees and expenses required by law or permitted by the Indenture. The
Registrar need not register the transfer or exchange of Certificated Notes or
portions thereof selected for redemption (except, in the case of a Certificated
Note to be redeemed in part, the portion of such Certificated Note not to be
redeemed) or any Certificated Notes for a period of 15 calendar days before a
selection of Notes to be redeemed.
13. Denominations.
The Notes are issuable only in registered form without coupons in
denominations of $1,000 and integral multiples thereof of principal amount;
provided that Initial Certificated Notes originally purchased by or transferred
to Institutional Accredited Investors shall be subject to a minimum denomination
of $250,000.
14. Discharge and Defeasance.
Subject to certain conditions, the Company at any time may terminate
some or all of the obligations of the Company and the Guarantors under the
Notes, the Guarantees and the Indenture if the Company irrevocably deposits in
trust with the Trustee cash or U.S. Government Obligations for the payment of
principal, premium, if any, interest and Liquidated Damages, if any, on the
Notes to redemption or maturity, as the case may be.
15. Amendment, Waiver.
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Notes may be amended with the written consent of the Holders of
at least a majority in principal amount of the outstanding Notes (which consent
may, but need not, be given in connection with any tender offer or exchange
offer for the Notes) and (ii) any past Default and its consequences or any
compliance with any provisions of the Indenture may be waived with the written
consent of the Holders of at least a majority in principal amount of the
outstanding Notes. Subject to certain exceptions set forth in the Indenture,
without the consent of any Holder, the Company and the Trustee may amend the
Indenture or the Notes (i) to evidence the succession of another Person to the
Company and the assumption by such successor of the covenants of the Company
under the Indenture and contained in the Notes; (ii) to add to the covenants of
the Company, for the benefit of the Holders of all of the Notes, or to surrender
any right or power conferred on the Company under the Indenture; (iii) to
provide for uncertificated Notes in addition to or in place of Certificated
Notes; (iv) to secure the Notes; (v) to cure any ambiguity, omission, defect or
inconsistency in the Indenture, provided that such actions shall not adversely
affect the interests of the Holders of Notes in any material respect; (vi) to
comply with the requirements of the SEC in order to effect or maintain the
qualification of the Indenture under the TIA; or (vii) to evidence the agreement
or acknowledgment of a Restricted Subsidiary that it is a Guarantor for all
purposes under the Indenture (including, without limitation, Article 11
thereof).
B-9
<PAGE> 118
16. Defaults and Remedies.
Under the Indenture, Events of Default include: (i) a default for 30
days in the payment when due of interest on, or Liquidated Damages with respect
to, the Notes (whether or not prohibited by the subordination provisions of the
Indenture); (ii) a default in the payment when due of the principal of or
premium, if any, on the Notes (whether or not prohibited by the subordination
provisions of the Indenture); (iii) failure by the Company to observe or perform
certain covenants, conditions, agreements or other provisions of the Indenture
or this Note (and, in the case of certain covenants, agreements or other
provisions, such failure has continued for 30 calendar days after written notice
by the Trustee or the Holders of at least 25% in principal amount of the Notes);
(iv) a default in the payment of Indebtedness of the Company or any of its
Significant Subsidiaries within any applicable grace period after final maturity
or acceleration of such Indebtedness in an amount in excess of $5.0 million in
the aggregate; (v) certain events of bankruptcy or insolvency with respect to
the Company or any of its Significant Subsidiaries; (vi) certain undischarged
judgments in excess of $5.0 million against the Company or any of its
Significant Subsidiaries; or (vii) the Guarantee of any Guarantor ceasing for
any reason to be in full force and effect (other than in accordance with the
terms of the Indenture) or any Guarantor denying or disaffirming its obligations
under its Guarantee.
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25 % in principal amount of the Notes, subject to certain
limitations, may declare all the Notes to be immediately due and payable.
Certain events of bankruptcy or insolvency shall result in the Notes being
immediately due and payable upon the occurrence of such Events of Default
without any further act of the Trustee or any Holder.
Holders of Notes may not enforce the Indenture or the Notes except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Notes unless it receives reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in principal amount of the Notes may
direct the Trustee in its exercise of any trust or power under the Indenture.
The Holders of a majority in principal amount of the then outstanding Notes, by
written notice to the Trustee and the Company, may rescind any declaration of
acceleration and its consequences if the rescission would not conflict with any
judgment or decree, and if all existing Events of Default have been cured or
waived, except nonpayment of principal, interest, premium or Liquidated Damages
that has become due solely because of acceleration. No such rescission shall
affect any subsequent Default or impair any right consequent thereto.
17. Individual Rights of Trustee.
Subject to certain limitations imposed by the TIA, the Trustee or any
Paying Agent or Registrar, in its individual or any other capacity, may become
the owner or pledgee of Notes and may otherwise deal with the Company, the
Guarantors or their Affiliates with the same rights it would have if it were not
Trustee, Paying Agent or Registrar, as the case may be, under the Indenture.
B-10
<PAGE> 119
18. No Recourse Against Certain Others.
No director, officer, employee, incorporator or stockholder of the
Company or any Guarantor, as such, shall have any liability for any obligations
of the Company or such Guarantor under the Notes, the Guarantees or the
Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation, solely by reason of its status as a director,
officer, employee, incorporator or stockholder of the Company or such Guarantor.
By accepting a Note, each Holder waives and releases all such liability (but
only such liability) as part of the consideration for issuance of such Note to
such Holder.
19. Authentication.
This Note shall not be valid until the Trustee or an authenticating
agent manually signs the certificate of authentication on the other side of this
Note.
20. Abbreviations.
Customary abbreviations may be used in the name of a Holder or an
assignee, such as TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (= Uniform Gift to Minors
Act).
21. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Notes and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Holders of Notes. No representation is
made as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
22. Governing Law.
THE INDENTURE AND THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED IN SAID STATE.
The Company will furnish to any Holder upon written request and without
charge to the Holder a copy of the Indenture. Requests may be made to:
Fresh Foods, Inc.
PO Box 399
WSMP Drive
Claremont, NC 28610
Attention: Chief Financial Officer
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<PAGE> 120
ASSIGNMENT
(To be executed by the registered Holder
if such Holder desires to transfer this Note)
FOR VALUE RECEIVED _________________________________ hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
TAX IDENTIFYING NUMBER OF TRANSFEREE
- ---------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please print name and address of transferee)
- --------------------------------------------------------------------------------
this Note, together with all right, title and interest herein, and does hereby
irrevocably constitute and appoint ________________________________ Attorney to
transfer this Note on the Note Register, with full power of substitution.
Dated:_________________________
- ------------------------------------ ----------------------------------
Signature of Holder Signature Guaranteed:
NOTICE: The signature to the foregoing Assignment must correspond to the Name as
written upon the face of this Note in every particular, without alteration or
any change whatsoever.
SIGNATURE GUARANTEED: Signature must be guaranteed by an Eligible Guarantor
Institution (banks, stockbrokers, savings and loan associations and credit
unions) with membership in an approved signature guarantee medallion program
pursuant to Securitites and Exchange Commission Rule 17Ad-15.
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OPTION OF HOLDER TO ELECT PURCHASE
(check as appropriate)
(TM) In connection with the Change of Control Offer made pursuant to Section
4.14 of the Indenture, the undersigned hereby elects to have
(TM) the entire principal amount
(TM) $______________________ ($1,000 in principal amount or an
integral multiple thereof) of this Note repurchased by the Company. The
undersigned hereby directs the Trustee or Paying Agent to pay it or
___________________________ an amount in cash equal to 101% of the
principal amount indicated in the preceding sentence plus accrued and
unpaid interest and Liquidated Damages thereon, if any, to the Change
of Control Payment Date.
(TM) In connection with the Asset Sale Offer made pursuant to Section 4.11
of the Indenture, the undersigned hereby elects to have
(TM) the entire principal amount
(TM) $_______________ ($1,000 in principal amount or an integral
multiple thereof) of this Note repurchased by the Company. The
undersigned hereby directs the Trustee or Paying Agent to pay it or
_______________________ an amount in cash equal to 100% of the
principal amount indicated in the preceding sentence plus accrued and
unpaid interest and Liquidated Damages thereon, if any, to the Asset
Sale Purchase Date.
Dated:
----------------------------
- ------------------------------------ ----------------------------------
Signature of Holder Signature Guaranteed:
NOTICE: The signature to the foregoing must correspond to the Name as written
upon the face of this Note in every particular, without alteration or any change
whatsoever.
SIGNATURE GUARANTEED: Signature must be guaranteed by an Eligible Guarantor
Institution (banks, stockbrokers, savings and loan associations and credit
unions) with membership in an approved signature guarantee medallion program
pursuant to Securitites and Exchange Commission Rule 17Ad-15.
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ANNEX A
LIST OF GUARANTORS
Brunswick Associates, Inc.
Claremont Restaurant Group, LLC
Elloree Foods, Inc.
Fresh Foods Properties, LLC
Georgia Buffet Restaurants, Inc.
Knoxville Foods, Inc.
Mom `n' Pop's Country Ham, LLC
Oak Ridge Foods, Inc.
Sagebrush, Inc.
Sagebrush of Sevierville, Inc.
Sagebrush of Tennessee, L.P.
Seven Stars, Inc.
St. Augustine Foods, Inc.
Tennessee WSMP, Inc.
Virginia WSMP, Inc.
Chardent, Inc.
Pierre Foods, LLC
Georgia WSMP, Inc.
Kingsport Foods, Inc.
Matthews Prime Sirloin, Inc.
Naples Foods, Inc.
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Prime Sirloin, Inc.
Sagebrush of North Carolina, LLC
Sagebrush of South Carolina, LLC
Spicewood, Inc.
South Carolina WSMP, Inc.
Sunshine WSMP, Inc.
Tumbleweed of Pigeon Forge, Inc.
Greenville Food Systems, Incorporated
Fresh Foods Sales, LLC
Sagebrush DTN, Inc.
D&S Food Systems, LLC
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EXHIBIT C
FORM OF EXCHANGE GLOBAL NOTE
FACE OF EXCHANGE GLOBAL NOTE
FRESH FOODS, INC.
No. ____ CUSIP No._________________
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY TO FRESH FOODS, INC. OR A SUCCESSOR THEREOF OR
THE REGISTRAR FOR REGISTRATION OF TRANSFER OR EXCHANGE AND ANY NOTE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER ENTITY AS
HAS BEEN REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH
OTHER ENTITY AS HAS BEEN REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFER OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE,
AND NOT IN PART, TO NOMINEES OF THE DEPOSITORY TRUST COMPANY OR TO A
SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE.
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GLOBAL NOTE
REPRESENTING 10 3/4% SENIOR NOTES DUE 2006
Fresh Foods, Inc., a Delaware corporation, for value received, hereby
promises to pay to Cede & Co., or its registered assigns, the principal sum
indicated on Schedule A hereof, on June 1, 2006.
Interest Payment Dates: June 1 and December 1, commencing December 1,
1998.
Record Dates: May 15 and November 15.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been duly executed
by the Trustee referred to on the reverse hereof by manual signature, this Note
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purposes.
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IN WITNESS WHEREOF, Fresh Foods, Inc. has caused this Note to be duly
executed.
FRESH FOODS, INC.
By:
-----------------------------
Name:
Title:
Attest:
--------------------
Dated:
--------------------
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
State Street Bank and Trust Company,
as Trustee, certifies that this is one of
the Notes referred to in the Indenture.
By:
--------------------
Authorized Signatory
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REVERSE SIDE OF EXCHANGE GLOBAL NOTE
FRESH FOODS, INC.
GLOBAL NOTE
REPRESENTING 10 3/4% SENIOR NOTES DUE 2006
1. Indenture.
This Note is one of a duly authorized issue of debt securities of the
Company (as defined below) designated as its "10 3/4% Senior Notes Due 2006"
(herein called the "Notes") limited in aggregate principal amount to
$115,000,000, issued under an indenture dated as of June 9, 1998 (as amended or
supplemented from time to time, the "Indenture") among the Company, as issuer,
and the guarantors listed on Annex A hereto (collectively, the "Guarantors"),
and State Street Bank and Trust Company, as trustee (the "Trustee," which term
includes any successor trustee under the Indenture). The terms of the Notes
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code ss.ss.
77aaa-77bbbb). The Notes are subject to all such terms, and Holders of Notes are
referred to the Indenture and such Act for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Company, the
Guarantors, the Trustee and each Holder and of the terms upon which the Notes
are, and are to be, authenticated and delivered. The summary of the terms of
this Note contained herein does not purport to be complete and is qualified by
reference to the Indenture. To the extent permitted by applicable law, in the
event of any inconsistency between the terms of this Note and the terms of the
Indenture, the terms of the Indenture shall control. All capitalized terms used
in this Note which are not defined herein shall have the meanings assigned to
them in the Indenture.
The Indenture restricts, among other things, the Company's ability to
incur additional indebtedness, pay dividends or make certain other restricted
payments, incur liens to secure pari passu or subordinated indebtedness, sell
stock of Restricted Subsidiaries, apply net proceeds from certain asset sales,
merge or consolidate with any other person, sell, assign, transfer, lease,
convey or otherwise dispose of substantially all of the assets of the Company or
enter into certain transactions with affiliates. The Indenture permits, under
certain circumstances, Restricted Subsidiaries of the Company to be deemed
Unrestricted Subsidiaries and thus not subject to the restrictions of the
Indenture.
2. Principal and Interest.
Fresh Foods, Inc., a Delaware corporation (such corporation, and its
successors and assigns under the Indenture hereinafter referred to, being herein
called the "Company"), promises to pay the principal amount set forth on
Schedule A of this Note to the Holder hereof on June 1, 2006.
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The Company shall pay interest at a rate of 10.75% per annum, from the
Issue Date or from the most recent Interest Payment Date thereafter to which
interest has been paid or duly provided for, semiannually in arrears on June 1
and December 1 of each year, commencing on December 1, 1998, in cash, to the
Holder hereof until the principal amount hereof is paid or made available for
payment. The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, subject to certain exceptions provided in the
Indenture, be paid to the Person in whose name this Note (or the Note in
exchange or substitution for which this Note was issued) is registered at the
close of business on the Record Date for interest payable on such Interest
Payment Date. The Record Date for any interest payment is the close of business
on May 15 or November 15, as the case may be, whether or not a Business Day,
immediately preceding the Interest Payment Date on which such interest is
payable. Any such interest not so punctually paid or duly provided for
("Defaulted Interest") shall forthwith cease to be payable to the Holder on such
Record Date and shall be paid as provided in Section 2.11 of the Indenture.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
Each payment of interest in respect of an Interest Payment Date will
include interest accrued through the day before such Interest Payment Date. If
an Interest Payment Date falls on a day that is not a Business Day, the interest
payment to be made on such Interest Payment Date will be made on the next
succeeding Business Day with the same force and effect as if made on such
Interest Payment Date, and no additional interest will accrue as a result of
such delayed payment.
If this Note is issued pursuant to a Registered Exchange Offer on or
prior to the Record Date for the first Interest Payment Date following such
exchange, accrued and unpaid interest, if any, on the equivalent principal
amount of the Initial Note in exchange for which this Note was issued, up to but
not including the date of issuance of this Note, shall be paid on the first
Interest Payment Date for this Note to the Holder of this Note on the first
Record Date with respect to this Note. If this Note is issued pursuant to a
Registered Exchange Offer subsequent to the Record Date for the first Interest
Payment Date following such exchange but on or prior to such Interest Payment
Date, then any such accrued and unpaid interest with respect to the equivalent
principal amount of the Initial Note in exchange for which this Note was issued
and any accrued and unpaid interest on this Note, through the day before such
Interest Payment Date, shall be paid on such Interest Payment Date to the Holder
of such Initial Note on such Record Date.
To the extent lawful, the Company shall pay interest on overdue
principal, overdue premium, Defaulted Interest and overdue Liquidated Damages
(without regard to any applicable grace period) at the interest rate borne on
this Note. The Company's obligation pursuant to the previous sentence shall
apply whether such overdue amount is due at its maturity, as a result of the
Company's obligations pursuant to Section 3.05, Section 4.11 or Section 4.14 of
the Indenture, or otherwise.
3. Method of Payment.
The Company, through the Paying Agent, shall pay interest on this Note
to the registered Holder of this Note, as provided above. The Holder must
surrender this Note to a Paying Agent to collect principal payments. The Company
will pay principal, premium, if any, and interest and Liquidated Damages, if
any, in money of the United States of America that at the time of payment is
legal tender for payment of all debts public and private. Principal, premium, if
any, and interest and Liquidated Damages, if any, shall be paid by check mailed
to the registered Holders at their registered addresses; provided that all
payments with respect to Notes the Holders of which have given wire transfer
instructions to the Company will be required to be made by wire transfer of
immediately available funds to the accounts specified by the Holders thereof.
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4. Paying Agent and Registrar.
Initially, the Trustee will act as Paying Agent and Registrar under the
Indenture. The Company may, upon written notice to the Trustee, appoint and
change any Paying Agent or Registrar. The Company or any of its Affiliates may
act as Paying Agent or Registrar, provided that if the Company or such Affiliate
is acting as Paying Agent, the Company or such Affiliate shall segregate all
funds held by it as Paying Agent and hold them in trust for the benefit of the
Holders or the Trustee.
5. Guarantees.
This Note is initially entitled to the benefits of the Guarantees made by the
Guarantors listed on Annex A hereto and may thereafter be entitled to Guarantees
made by other Guarantors for the benefit of the Holders of Notes. Each present
Guarantor has, and each future Guarantor will, irrevocably and unconditionally,
jointly and severally, guarantee on a senior unsecured basis the punctual
payment when due, whether at Stated Maturity, by acceleration, in connection
with a Change of Control Offer, an Asset Sale Offer or redemption, or otherwise,
of all obligations of the Company under the Indenture and this Note, whether for
payment of principal of, premium, if any, interest or Liquidated Damages, if
any, on the Notes, expenses, indemnification or otherwise. A Guarantor shall be
released from its Guarantee upon the terms and subject to the conditions set
forth in the Indenture.
6. Redemption.
Except as set forth in the following paragraph, the Notes are not
redeemable at the option of the Company prior to June 1, 2002. Thereafter, the
Notes will be subject to redemption at the option of the Company, in whole or in
part, on at least 30 calendar days, but not more than 60 calendar days, prior
notice, at the redemption prices (expressed as percentages of principal amount)
set forth below, plus accrued and unpaid interest thereon, if any, and
Liquidated Damages, if any, to the applicable Redemption Date (subject to the
right of each Holder of record on the relevant Record Date to receive interest
due on the relevant Interest Payment Date), if redeemed during the twelve-month
period beginning June 1 of the years indicated below:
Year Percentage
---- ----------
2002 105.375%
2003 102.688%
2004 and thereafter 100.000%
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In addition, at any time and from time to time prior to June 1, 2001
the Company, at its option, may redeem in the aggregate up to 35. 0% of the
original principal amount of the Notes with the Net Cash Proceeds of one or more
Public Equity Offerings following which there is a Public Market, at a
redemption price (expressed as a percentage of principal amount) of 110.75% of
the aggregate principal amount so redeemed, plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the redemption date (subject to the right
of Holders of record on the relevant Record Date to receive interest due on the
relevant Interest Payment Date); provided, however, that at least 65.0% of the
original principal amount of the Notes must remain outstanding after each such
redemption; and provided, further, that each such redemption shall occur within
60 days of the date of closing of the related Public Equity Offering.
7. Notice of Redemption.
At least 20 calendar days but not more than 60 calendar days before a
Redemption Date, the Company shall deliver to the Trustee and send, by
first-class mail, postage prepaid, to Holders of Notes to be redeemed at the
addresses of such Holders as they appear in the Note Register, a notice of
redemption.
If fewer than all the Notes are to be redeemed at any time, the Trustee
shall select the Notes to be redeemed pro rata or by lot or by a method that
complies with applicable legal and securities exchange requirements, if any, and
that the Trustee considers fair and appropriate and in accordance with methods
generally used at the time of selection by fiduciaries in similar circumstances.
The Trustee shall make the selection from outstanding Notes not previously
called for redemption; provided that the Trustee in select for redemption
portions (equal to $1,000 or any integral multiple thereof) of the principal of
Notes that have denominations larger than $1,000 (Notes in denominations of
$1,000 or less may be redeemed only in whole). If any Note is redeemed
subsequent to a Record Date with respect to any Interest Payment Date specified
above and on or prior to such Interest Payment Date, then any accrued interest
will be paid on such Interest Payment Date to the Holder of the Note on such
Record Date. If money in an amount sufficient to pay the Redemption Price of all
Notes (or portions thereof) to be redeemed on the Redemption Date is deposited
with the Paying Agent on or before the applicable Redemption Date and certain
other conditions are satisfied, interest on the Notes or portions thereof to be
redeemed on the applicable Redemption Date will cease to accrue.
8. Repurchase at the Option of Holders upon Change of Control.
Upon the occurrence of a Change of Control, each Holder shall have the
right in accordance with the terms hereof and the Indenture to require the
Company to purchase such Holder's Notes, in whole or in part, in a principal
amount that is an integral multiple of $1,000, pursuant to a Change of Control
Offer, at a purchase price in cash equal to 101% of the principal amount of such
Notes (or portions thereof) plus accrued and unpaid interest and Liquidated
Damages, if any, to the Change of Control Payment Date.
Within 30 calendar days following any Change of Control, the Company
shall send, or cause to be sent, by first-class mail, postage prepaid, a notice
regarding the Change of Control Offer to each Holder with a copy to the Trustee.
The Holder of this Note may elect to have this Note or a portion hereof in an
authorized denomination purchased by completing the form entitled "Option of
Holder to Elect Purchase" appearing below and tendering this Note pursuant to
the Change of Control Offer. Unless the Company defaults in the payment of the
Change of Control Purchase Price with respect thereto, all Notes or portions
thereof accepted for payment pursuant to the Change of Control Offer will cease
to accrue interest from and after the Change of Control Payment Date.
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9. Repurchase at the Option of Holders upon Asset Sale.
If at any time the Company or any Restricted Subsidiary engages in any
Asset Sale, as a result of which the aggregate amount of Excess Proceeds exceeds
$5.0 million, the Company shall, within 30 calendar days of the date the amount
of Excess Proceeds exceeds $5.0 million, use the then-existing Excess Proceeds
to make an offer to purchase from all Holders of Notes, on a pro rata basis,
Notes in an aggregate principal amount equal in amount to the then-existing
Excess Proceeds, at a purchase price in cash in an amount equal to 100% of the
principal amount thereof plus accrued and unpaid interest thereon and Liquidated
Damages to the Asset Sale Purchase Date (subject to the right of each Holder of
record on the relevant Record Date to receive interest due on the relevant
Interest Payment Date). Upon completion of an Asset Sale Offer (including
payment of the Asset Sale Purchase Price for accepted Notes), any surplus Excess
Proceeds that were the subject of such offer shall cease to be Excess Proceeds,
and the Company may then use such amounts for general corporate purposes.
Within 30 calendar days of the date the amount of Excess Proceeds
exceeds $5.0 million, the Company shall send, or cause to be sent, by
first-class mail, postage prepaid, a notice regarding the Asset Sale Offer to
each Holder. The Holder of this Note may elect to have this Note or a portion
hereof in an authorized denomination purchased by completing the form entitled
"Option of Holder to Elect Purchase" appearing below and tendering this Note
pursuant to the Asset Sale Offer. Unless the Company defaults in the payment of
the Asset Sale Purchase Price with respect thereto, all Notes, or portions
thereof selected for payment pursuant to the Asset Sale Offer will cease to
accrue interest from and after the Asset Sale Purchase Date.
10. The Global Note.
So long as this Global Note is registered in the name of the Depositary
or its nominee, members of, or participants in, the Depositary ("Agent Members")
shall have no rights under the Indenture with respect to this Global Note held
on their behalf by the Depositary or the Trustee as its custodian, and the
Depositary may be treated by the Company, the Guarantors, the Trustee and any
agent of the Company, the Guarantors or the Trustee as the absolute owner of
this Global Note for all purposes. Notwithstanding the foregoing, nothing herein
shall (i) prevent the Company, the Guarantors, the Trustee or any agent of the
Company, the Guarantors or the Trustee, from giving effect to any written
certification, proxy or other authorization furnished by the Depositary or (ii)
impair, as between the Depositary and its Agent Members, the operation of
customary practices governing the exercise of the rights of a Holder.
The Holder of this Global Note may grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold
interests in this Global Note through Agent Members, to take any action which a
Holder is entitled to take under the Indenture or the Notes.
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Whenever, as a result of optional redemption by the Company, a Change
of Control Offer, an Asset Sale Offer, a Registered Exchange Offer or an
exchange for Certificated Notes, this Global Note is redeemed, repurchased or
exchanged in part, this Global Note shall be surrendered by the Holder thereof
to the Trustee who shall cause an adjustment to be made to Schedule A hereof so
that the principal amount of this Global Note will be equal to the portion not
redeemed, repurchased or exchanged and shall thereafter return this Global Note
to such Holder; provided that this Global Note shall be in a principal amount of
$1,000 or an integral multiple of $1,000.
11. Transfer and Exchange.
A Holder may transfer or exchange Notes as provided in the Indenture
and subject to certain limitations therein set forth. The Registrar may require
a Holder, among other things, to furnish appropriate endorsements or transfer
documents and to pay any taxes, fees and expenses required by law or permitted
by the Indenture.
12. Denominations.
The Notes are issuable only in registered form without coupons in
denominations of $1,000 and integral multiples thereof of principal amount.
13. Discharge and Defeasance.
Subject to certain conditions, the Company at any time may terminate
some or all of the obligations of the Company and the Guarantors under the
Notes, the Guarantees and the Indenture if the Company irrevocably deposits in
trust with the Trustee cash or U.S. Government Obligations for the payment of
principal, premium, if any, interest and Liquidated Damages, if any, on the
Notes to redemption or maturity, as the case may be.
14. Amendment, Waiver.
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Notes may be amended with the written consent of the Holders of
at least a majority in principal amount of the outstanding Notes (which consent
may, but need not, be given in connection with any tender offer or exchange
offer for the Notes) and (ii) any past Default and its consequences or any
compliance with any provisions of the Indenture may be waived with the written
consent of the Holders of at least a majority in principal amount of the
outstanding Notes. Subject to certain exceptions set forth in the Indenture,
without the consent of any Holder, the Company and the Trustee may amend the
Indenture or the Notes (i) to evidence the succession of another Person to the
Company and the assumption by such successor of the covenants of the Company
under the Indenture and contained in the Notes; (ii) to add to the covenants of
the Company, for the benefit of the Holders of all of the Notes, or to surrender
any right or power conferred on the Company under the Indenture; (iii) to
provide for uncertificated Notes in addition to or in place of Certificated
Notes; (iv) to secure the Notes; (v) to cure any ambiguity, omission, defect or
inconsistency in the Indenture, provided that such actions shall not adversely
affect the interests of the Holders of Notes in any material respect; (vi) to
comply with the requirements of the SEC in order to effect or maintain the
qualification of the Indenture under the TIA; or (vii) to evidence the agreement
or acknowledgment of a Restricted Subsidiary that it is a Guarantor for all
purposes under the Indenture (including, without limitation, Article 11
thereof).
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15. Defaults and Remedies.
Under the Indenture, Events of Default include: (i) a default for 30
days in the payment when due of interest on, or Liquidated Damages with respect
to, the Notes (whether or not prohibited by the subordination provisions of the
Indenture); (ii) a default in the payment when due of the principal of or
premium, if any, on the Notes (whether or not prohibited by the subordination
provisions of the Indenture); (iii) failure by the Company to observe or perform
certain covenants, conditions, agreements or other provisions of the Indenture
or this Note (and, in the case of certain covenants, agreements or other
provisions, such failure has continued for 30 calendar days after written notice
by the Trustee or the Holders of at least 25% in principal amount of the Notes);
(iv) a default in the payment of Indebtedness of the Company or any of its
Significant Subsidiaries within any applicable grace period after final maturity
or acceleration of such Indebtedness in an amount in excess of $5.0 million in
the aggregate; (v) certain events of bankruptcy or insolvency with respect to
the Company or any of its Significant Subsidiaries; (vi) certain undischarged
judgments in excess of $5.0 million against the Company or any of its
Significant Subsidiaries; or (vii) the Guarantee of any Guarantor ceasing for
any reason to be in full force and effect (other than in accordance with the
terms of the Indenture) or any Guarantor denying or disaffirming its obligations
under its Guarantee.
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the Notes, subject to certain
limitations, may declare all the Notes to be immediately due and payable.
Certain events of bankruptcy or insolvency shall result in the Notes being
immediately due and payable upon the occurrence of such Events of Default
without any further act of the Trustee or any Holder.
Holders of Notes may not enforce the Indenture or the Notes except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Notes unless it receives reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in principal amount of the Notes may
direct the Trustee in its exercise of any trust or power under the Indenture.
The Holders of a majority in principal amount of the then outstanding Notes, by
written notice to the Trustee and the Company, may rescind any declaration of
acceleration and its consequences if the rescission would not conflict with any
judgment or decree, and if all existing Events of Default have been cured or
waived, except nonpayment of principal, interest, premium or Liquidated Damages
that has become due solely because of acceleration. No such rescission shall
affect any subsequent Default or impair any right consequent thereto.
16. Individual Rights of Trustee.
Subject to certain limitations imposed by the TIA, the Trustee or any
Paying Agent or Registrar, in its individual or any other capacity, may become
the owner or pledgee of Notes and may otherwise deal with the Company, the
Guarantors or their Affiliates with the same rights it would have if it were not
Trustee, Paying Agent or Registrar, as the case may be, under the Indenture.
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17. No Recourse Against Certain Others.
No director, officer, employee, incorporator or stockholder of the
Company or any Guarantor, as such, shall have any liability for any obligations
of the Company or such Guarantor under the Notes, the Guarantees or the
Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation, solely by reason of its status as a director,
officer, employee, incorporator or stockholder of the Company or such Guarantor.
By accepting a Note, each Holder waives and releases all such liability (but
only such liability) as part of the consideration for issuance of such Note to
such Holder.
18. Authentication.
This Note shall not be valid until the Trustee or an authenticating
agent signs the certificate of authentication on the other side of this Note.
19. Abbreviations.
Customary abbreviations may be used in the name of a Holder or an
assignee, such as TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with rights of survivorship and not as
tenants in common), CUST (= custodian), and U/G/M/A (= Uniform Gift to Minors
Act).
20. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Notes and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Holders of Notes. No representation is
made as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
21. Governing Law.
THE INDENTURE AND THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED IN SAID STATE.
The Company will furnish to any Holder upon written request and without
charge to the Holder a copy of the Indenture. Requests may be made to:
Fresh Foods, Inc.
PO Box 399
WSMP Drive
Claremont, NC 28610
Attention: Chief Financial Officer
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SCHEDULE A
SCHEDULE OF PRINCIPAL AMOUNT
The initial principal amount at maturity of this Note shall be
$____________________. The following decreases/increases in the principal amount
in denominations of $1,000 or integral multiples thereof at maturity of this
Note have been made:
Total Principal
Amount at Notation
Decrease in Increase in Maturity Made by
Date of Principal Principal Following such or on
Decrease/ Amount at Amount at Decrease/ Behalf of
Increase Maturity Maturity Increase Trustee
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ASSIGNMENT
(To be executed by the registered Holder
if such Holder desires to transfer this Note)
FOR VALUE RECEIVED _________________________________ hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
TAX IDENTIFYING NUMBER OF TRANSFEREE
- ---------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please print name and address of transferee)
- --------------------------------------------------------------------------------
this Note, together with all right, title and interest herein, and does hereby
irrevocably constitute and appoint ________________________________ Attorney to
transfer this Note on the Note Register, with full power of substitution.
Dated:_________________________
- ------------------------------- ---------------------------------
Signature of Holder Signature Guaranteed:
NOTICE: The signature to the foregoing Assignment must correspond to the Name as
written upon the face of this Note in every particular, without alteration or
any change whatsoever.
SIGNATURE GUARANTEED: Signature must be guaranteed by an Eligible Guarantor
Institution (banks, stockbrokers, savings and loan associations and credit
unions) with membership in an approved signature guarantee medallion program
pursuant to Securitites and Exchange Commission Rule 17Ad-15.
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OPTION OF HOLDER TO ELECT PURCHASE
(check as appropriate)
(TM) In connection with the Change of Control Offer made pursuant to Section
4.14 of the Indenture, the undersigned hereby elects to have
(TM) the entire principal amount
(TM) $______________________ ($1,000 in principal amount or an
integral multiple thereof) of this Note repurchased by the Company. The
undersigned hereby directs the Trustee or Paying Agent to pay it or
___________________________ an amount in cash equal to 101% of the
principal amount indicated in the preceding sentence plus accrued and
unpaid interest and Liquidated Damages thereon, if any, to the Change
of Control Payment Date.
(TM) In connection with the Asset Sale Offer made pursuant to Section 4.11
of the Indenture, the undersigned hereby elects to have
(TM) the entire principal amount
(TM) $_______________ ($1,000 in principal amount or an integral
multiple thereof) of this Note repurchased by the Company. The
undersigned hereby directs the Trustee or Paying Agent to pay it or
_______________________ an amount in cash equal to 100% of the
principal amount indicated in the preceding sentence plus accrued and
unpaid interest and Liquidated Damages thereon, if any, to the Asset
Sale Purchase Date.
Dated:
-------------------------
- -------------------------------- ---------------------------------
Signature of Holder Signature Guaranteed:
NOTICE: The signature to the foregoing must correspond to the Name as written
upon the face of this Note in every particular, without alteration or any change
whatsoever.
SIGNATURE GUARANTEED: Signature must be guaranteed by an Eligible Guarantor
Institution (banks, stockbrokers, savings and loan associations and credit
unions) with membership in an approved signature guarantee medallion program
pursuant to Securitites and Exchange Commission Rule 17Ad-15.
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ANNEX A
LIST OF GUARANTORS
Brunswick Associates, Inc.
Claremont Restaurant Group, LLC
Elloree Foods, Inc.
Fresh Foods Properties, LLC
Georgia Buffet Restaurants, Inc.
Knoxville Foods, Inc.
Mom `n' Pop's Country Ham, LLC
Oak Ridge Foods, Inc.
Sagebrush, Inc.
Sagebrush of Sevierville, Inc.
Sagebrush of Tennessee, L.P.
Seven Stars, Inc.
St. Augustine Foods, Inc.
Tennessee WSMP, Inc.
Virginia WSMP, Inc.
Chardent, Inc.
Pierre Foods, LLC
Georgia WSMP, Inc.
Kingsport Foods, Inc.
Matthews Prime Sirloin, Inc.
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Naples Foods, Inc.
Prime Sirloin, Inc.
Sagebrush of North Carolina, LLC
Sagebrush of South Carolina, LLC
Spicewood, Inc.
South Carolina WSMP, Inc.
Sunshine WSMP, Inc.
Tumbleweed of Pigeon Forge, Inc.
Greenville Food Systems, Incorporated
Fresh Foods Sales, LLC
Sagebrush DTN, Inc.
D&S Food Systems, LLC
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EXHIBIT D
FORM OF EXCHANGE CERTIFICATED NOTE
FACE OF EXCHANGE CERTIFICATED NOTE
FRESH FOODS, INC.
No. _____ CUSIP No._____________
10 3/4% SENIOR NOTE DUE 2006
Fresh Foods, Inc., a Delaware corporation, for value received, hereby
promises to pay to __________________, or its registered assigns, the principal
amount of _______________ on June 1, 2006.
Interest Payment Dates: June 1 and December 1, commencing December 1,
1998.
Record Dates: May 15 and November 15.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
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Unless the certificate of authentication hereon has been duly executed
by the Trustee referred to on the reverse hereof by manual signature, this Note
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purposes.
IN WITNESS WHEREOF, Fresh Foods, Inc. has caused this Note to be duly
executed.
FRESH FOODS, INC.
By:
---------------------------------
Name:
Title:
Attest:
----------------------------
Dated:
----------------------------
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
State Street Bank and Trust Company,
as Trustee, certifies that this is one of
the Notes referred to in the Indenture.
By:
----------------------------
Authorized Signatory
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<PAGE> 142
REVERSE SIDE OF EXCHANGE CERTIFICATED NOTE
FRESH FOODS, INC.
10 3/4% SENIOR NOTE DUE 2006
1. Indenture.
This Note is one of a duly authorized issue of debt securities of the
Company (as defined below) designated as its "10 3/4% Senior Notes Due 2006"
(herein called the "Notes") limited in aggregate principal amount to
$115,000,000, issued under an indenture dated as of June 9, 1998 (as amended or
supplemented from time to time, the "Indenture") among the Company, as issuer,
and the guarantors listed on Annex A hereto (collectively, the "Guarantors"),
and State Street Bank and Trust Company, as trustee (the "Trustee," which term
includes any successor trustee under the Indenture). The terms of the Notes
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code ss.ss.
77aaa-77bbbb). The Notes are subject to all such terms, and Holders of Notes are
referred to the Indenture and such Act for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Company, the
Guarantors, the Trustee and each Holder and of the terms upon which the Notes
are, and are to be, authenticated and delivered. The summary of the terms of
this Note contained herein does not purport to be complete and is qualified by
reference to the Indenture. To the extent permitted by applicable law, in the
event of any inconsistency between the terms of this Note and the terms of the
Indenture, the terms of the Indenture shall control. All capitalized terms used
in this Note which are not defined herein shall have the meanings assigned to
them in the Indenture.
The Indenture restricts, among other things, the Company's ability to
incur additional indebtedness, pay dividends or make certain other restricted
payments, incur liens to secure pari passu or subordinated indebtedness, sell
stock of Restricted Subsidiaries, apply net proceeds from certain asset sales,
merge or consolidate with any other person, sell, assign, transfer, lease,
convey or otherwise dispose of substantially all of the assets of the Company or
enter into certain transactions with affiliates. The Indenture permits, under
certain circumstances, Restricted Subsidiaries of the Company to be deemed
Unrestricted Subsidiaries and thus not subject to the restrictions of the
Indenture.
2. Principal and Interest.
Fresh Foods, Inc., a Delaware corporation (such corporation, and its
successors and assigns under the Indenture hereinafter referred to, being herein
called the "Company"), promises to pay the principal amount set forth on
Schedule A of this Note to the Holder hereof on June 1, 2006.
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The Company shall pay interest at a rate of 10.75% per annum, from the
Issue Date or from the most recent Interest Payment Date thereafter to which
interest has been paid or duly provided for, semiannually in arrears on June 1
and December 1 of each year, commencing on December 1, 1998, in cash, to the
Holder hereof until the principal amount hereof is paid or made available for
payment. The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, subject to certain exceptions provided in the
Indenture, be paid to the Person in whose name this Note (or the Note in
exchange or substitution for which this Note was issued) is registered at the
close of business on the Record Date for interest payable on such Interest
Payment Date. The Record Date for any interest payment is the close of business
on May 15 or November 15, as the case may be, whether or not a Business Day,
immediately preceding the Interest Payment Date on which such interest is
payable. Any such interest not so punctually paid or duly provided for
("Defaulted Interest") shall forthwith cease to be payable to the Holder on such
Record Date and shall be paid as provided in Section 2.11 of the Indenture.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
Each payment of interest in respect of an Interest Payment Date will
include interest accrued through the day before such Interest Payment Date. If
an Interest Payment Date falls on a day that is not a Business Day, the interest
payment to be made on such Interest Payment Date will be made on the next
succeeding Business Day with the same force and effect as if made on such
Interest Payment Date, and no additional interest will accrue as a result of
such delayed payment.
If this Note is issued pursuant to a Registered Exchange Offer on or
prior to the Record Date for the first Interest Payment Date following such
exchange, accrued and unpaid interest on the equivalent principal amount of the
Initial Note in exchange for which this Note was issued, up to but not including
the date of issuance of this Note, shall be paid on the first Interest Payment
Date for this Note to the Holder of this Note on the first Record Date with
respect to this Note. If this Note is issued pursuant to a Registered Exchange
Offer subsequent to the Record Date for the first Interest Payment Date
following such exchange but on or prior to such Interest Payment Date, then any
such accrued and unpaid interest with respect to the equivalent principal amount
of the Initial Note in exchange for which this Note was issued and any accrued
and unpaid interest on this Note through the day before such Interest Payment
Date shall be paid on such Interest Payment Date to the Holder of such Initial
Note on such Record Date.
To the extent lawful, the Company shall pay interest on overdue
principal, overdue premium, Defaulted Interest and overdue Liquidated Damages
(without regard to any applicable grace period) at the interest rate borne on
this Note. The Company's obligation pursuant to the previous sentence shall
apply whether such overdue amount is due at its maturity, as a result of the
Company's obligations pursuant to Section 3.05, Section 4.11 or Section 4.14 of
the Indenture, or otherwise.
3. Method of Payment.
The Company, through the Paying Agent, shall pay interest on this Note
to the registered Holder of this Note, as provided above. The Holder must
surrender this Note to a Paying Agent to collect principal payments. The Company
will pay principal, premium, if any, and interest and Liquidated Damages, if
any, in money of the United States of America that at the time of payment is
legal tender for payment of all debts public and private. Principal, premium, if
any, and interest and Liquidated Damages, if any, shall be paid by check mailed
to the registered Holders at their registered addresses; provided that all
payments with respect to Notes the Holders of which have given wire transfer
instructions to the Company will be required to be made by wire transfer of
immediately available funds to the accounts specified by the Holders thereof.
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4. Paying Agent and Registrar.
Initially, the Trustee will act as Paying Agent and Registrar under the
Indenture. The Company may, upon written notice to the Trustee, appoint and
change any Paying Agent or Registrar. The Company or any of its Affiliates may
act as Paying Agent or Registrar, provided that if the Company or such Affiliate
is acting as Paying Agent, the Company or such Affiliate shall segregate all
funds held by it as Paying Agent and hold them in trust for the benefit of the
Holders or the Trustee.
5. Guarantees.
This Note is initially entitled to the benefits of the Guarantees made
by the Guarantors listed on Annex A hereto and may thereafter be entitled to
Guarantees made by other Guarantors for the benefit of the Holders of Notes.
Each present Guarantor has, and each future Guarantor will, irrevocably and
unconditionally, jointly and severally, guarantee on a senior unsecured basis
the punctual payment when due, whether at Stated Maturity, by acceleration, in
connection with a Change of Control Offer, an Asset Sale Offer or redemption, or
otherwise, of all obligations of the Company under the Indenture and this Note,
whether for payment of principal of, premium, if any, interest or Liquidated
Damages, if any, on the Notes, expenses, indemnification or otherwise. A
Guarantor shall be released from its Guarantee upon the terms and subject to the
conditions set forth in the Indenture.
6. Redemption.
Except as set forth in the following paragraph, the Notes are not
redeemable at the option of the Company prior to June 1, 2002. Thereafter, the
Notes will be subject to redemption at the option of the Company, in whole or in
part, on at least 30 calendar days, but not more than 60 calendar days, prior
notice, at the redemption prices (expressed as percentages of principal amount)
set forth below, plus accrued and unpaid interest thereon, if any, and
Liquidated Damages, if any, to the applicable Redemption Date (subject to the
right of each Holder of record on the relevant Record Date to receive interest
due on the relevant Interest Payment Date), if redeemed during the twelve-month
period beginning June 1 of the years indicated below:
Year Percentage
---- ----------
2002 105.375%
2003 102.688%
2004 and thereafter 100.000%
In addition, at any time and from time to time prior to June 1, 2001
the Company, at its option, may redeem in the aggregate up to 35.0% of the
original principal amount of the Notes with the Net Cash Proceeds of one or more
Public Equity Offerings following which there is a Public Market, at a
redemption price (expressed as a percentage of principal amount) of 110.75% of
the aggregate principal amount so redeemed, plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the redemption date (subject to the right
of Holders of record on the relevant Record Date to receive interest due on the
relevant Interest Payment Date); provided, however, that at least 65.0% of the
original principal amount of the Notes must remain outstanding after each such
redemption; and provided, further, that each such redemption shall occur within
60 days of the date of closing of the related Public Equity Offering.
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<PAGE> 145
7. Notice of Redemption.
At least 20 calendar days but not more than 60 calendar days before a
Redemption Date, the Company shall deliver to the Trustee and send, by
first-class mail, postage prepaid, to Holders of Notes to be redeemed at the
addresses of such Holders as they appear in the Note Register, a notice of
redemption.
If fewer than all the Notes are to be redeemed at any time, the Trustee
shall select the Notes to be redeemed pro rata or by lot or by a method that
complies with applicable legal and securities exchange requirements, if any, and
that the Trustee considers fair and appropriate and in accordance with methods
generally used at the time of selection by fiduciaries in similar circumstances.
The Trustee shall make the selection from outstanding Notes not previously
called for redemption; provided that the Trustee may select for redemption
portions (equal to $1,000 or any integral multiple thereof) of the principal of
Notes that have denominations larger than $1,000 (Notes in denominations of
$1,000 or less may be redeemed only in whole). If any Note is redeemed
subsequent to a Record Date with respect to any Interest Payment Date specified
above and on or prior to such Interest Payment Date, then any accrued interest
will be paid on such Interest Payment Date to the Holder of the Note on such
Record Date. If money in an amount sufficient to pay the Redemption Price of all
Notes (or portions thereof) to be redeemed on the Redemption Date is deposited
with the Paying Agent on or before the applicable Redemption Date and certain
other conditions are satisfied, interest on the Notes or portions thereof to be
redeemed on the applicable Redemption Date will cease to accrue.
8. Repurchase at the Option of Holders upon Change of Control.
Upon the occurrence of a Change of Control, each Holder shall have the
right in accordance with the terms hereof and the Indenture to require the
Company to purchase such Holder's Notes, in whole or in part, in a principal
amount that is an integral multiple of $1,000, pursuant to a Change of Control
Offer, at a purchase price in cash equal to 101% of the principal amount of such
Notes (or portions thereof plus accrued and unpaid interest and Liquidated
Damages, if any, to the Change of Control Payment Date).
Within 30 calendar days following any Change of Control, the Company
shall send, or cause to be sent, by first-class mail, postage prepaid, a notice
regarding the Change of Control Offer to each Holder with a copy to the Trustee.
The Holder of this Note may elect to have this Note or a portion hereof in an
authorized denomination purchased by completing the form entitled "Option of
Holder to Elect Purchase" appearing below and tendering this Note pursuant to
the Change of Control Offer. Unless the Company defaults in the payment of the
Change of Control Purchase Price with respect thereto, all Notes or portions
thereof accepted for payment pursuant to the Change of Control Offer will cease
to accrue interest from and after the Change of Control Payment Date.
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<PAGE> 146
9. Repurchase at the Option of Holders upon Asset Sale.
If at any time the Company or any Restricted Subsidiary engages in any
Asset Sale, as a result of which the aggregate amount of Excess Proceeds exceeds
$5.0 million, the Company shall, within 30 calendar days of the date the amount
of Excess Proceeds exceeds $5.0 million, use the then-existing Excess Proceeds
to make an offer to purchase from all Holders of Notes, on a pro rata basis,
Notes in an aggregate principal amount equal in amount to the then-existing
Excess Proceeds, at a purchase price in cash in an amount equal to 100% of the
principal amount thereof plus accrued and unpaid interest thereon and Liquidated
Damages to the Asset Sale Purchase Date (subject to the right of each Holder of
record on the relevant Record Date to receive interest due on the relevant
Interest Payment Date). Upon completion of an Asset Sale Offer (including
payment of the Asset Sale Purchase Price for accepted Notes), any surplus Excess
Proceeds that were the subject of such offer shall cease to be Excess Proceeds,
and the Company may then use such amounts for general corporate purposes.
Within 30 calendar days of the date the amount of Excess Proceeds
exceeds $5.0 million, the Company shall send, or cause to be sent, by
first-class mail, postage prepaid, a notice regarding the Asset Sale Offer to
each Holder. The Holder of this Note may elect to have this Note or a portion
hereof in an authorized denomination purchased by completing the form entitled
"Option of Holder to Elect Purchase" appearing below and tendering this Note
pursuant to the Asset Sale Offer. Unless the Company defaults in the payment of
the Asset Sale Purchase Price with respect thereto, all Notes or portions
thereof selected for payment pursuant to the Asset Sale Offer will cease to
accrue interest from and after the Asset Sale Purchase Date.
10. Transfer and Exchange.
A Holder may transfer or exchange Notes as provided in the Indenture
and subject to certain limitations therein set forth. The Registrar may require
a Holder, among other things, to furnish appropriate endorsements or transfer
documents and to pay any taxes, fees and expenses required by law or permitted
by the Indenture. The Registrar need not register the transfer or exchange of
Certificated Notes or portions thereof selected for redemption (except, in the
case of a Certificated Note to be redeemed in part, the portion of such
Certificated Note not to be redeemed) or any Certificated Notes for a period of
15 calendar days before a selection of Notes to be redeemed.
11. Denominations.
The Notes are issuable only in registered form without coupons in
denominations of $1,000 and integral multiples thereof of principal amount.
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12. Discharge and Defeasance.
Subject to certain conditions, the Company at any time may terminate
some or all of the obligations of the Company and the Guarantors under the
Notes, the Guarantees and the Indenture if the Company irrevocably deposits in
trust with the Trustee cash or U.S. Government Obligations for the payment of
principal, premium, if any, interest and Liquidated Damages, if any, on the
Notes to redemption or maturity, as the case may be.
13. Amendment, Waiver.
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Notes may be amended with the written consent of the Holders of
at least a majority in principal amount of the outstanding Notes (which consent
may, but need not, be given in connection with any tender offer or exchange
offer for the Notes) and (ii) any past Default and its consequences or any
compliance with any provisions of the Indenture may be waived with the written
consent of the Holders of at least a majority in principal amount of the
outstanding Notes. Subject to certain exceptions set forth in the Indenture,
without the consent of any Holder, the Company and the Trustee may amend the
Indenture or the Notes (i) to evidence the succession of another Person to the
Company and the assumption by such successor of the covenants of the Company
under the Indenture and contained in the Notes; (ii) to add to the covenants of
the Company, for the benefit of the Holders of all of the Notes, or to surrender
any right or power conferred on the Company under the Indenture; (iii) to
provide for uncertificated Notes in addition to or in place of Certificated
Notes; (iv) to secure the Notes; (v) to cure any ambiguity, omission, defect or
inconsistency in the Indenture, provided that such actions shall not adversely
affect the interests of the Holders of Notes in any material respect; (vi) to
comply with the requirements of the SEC in order to effect or maintain the
qualification of the Indenture under the TIA; or (vii) to evidence the agreement
or acknowledgment of a Restricted Subsidiary that it is a Guarantor for all
purposes under the Indenture (including, without limitation, Article 11
thereof).
14. Defaults and Remedies.
Under the Indenture, Events of Default include: (i) a default for 30
days in the payment when due of interest on, or Liquidated Damages with respect
to, the Notes (whether or not prohibited by the subordination provisions of the
Indenture); (ii) a default in the payment when due of the principal of or
premium, if any, on the Notes (whether or not prohibited by the subordination
provisions of the Indenture), (iii) failure by the Company to observe or perform
certain covenants, conditions, agreements or other provisions of the Indenture
or this Note (and, in the case of certain covenants, agreements or other
provisions, such failure has continued for 30 calendar days after written notice
by the Trustee or the Holders of at least 25% in principal amount of the Notes);
(iv) a default in the payment of Indebtedness of the Company or any of its
Significant Subsidiaries within any applicable grace period after final maturity
or acceleration of such Indebtedness in an amount in excess of $5.0 million in
the aggregate; (v) certain events of bankruptcy or insolvency with respect to
the Company or any of its Significant Subsidiaries, (vi) certain undischarged
judgments in excess of $5.0 million against the Company or any of its
Significant Subsidiaries; or (vii) the Guarantee of any Guarantor ceasing for
any reason to be in full force and effect (other than in accordance with the
terms of the Indenture) or any Guarantor denying or affirming its obligations
under its Guarantee.
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<PAGE> 148
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the Notes, subject to certain
limitations, may declare all the Notes to be immediately due and payable.
Certain events of bankruptcy or insolvency shall result in the Notes being
immediately due and payable upon the occurrence of such Events of Default
without any further act of the Trustee or any Holder.
Holders of Notes may not enforce the Indenture or the Notes except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Notes unless it receives reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in principal amount of the Notes may
direct the Trustee in its exercise of any trust or power under the Indenture.
The Holders of a majority in principal amount of the then outstanding Notes, by
written notice to the Trustee and the Company, may rescind any declaration of
acceleration and its consequences if the rescission would not conflict with any
judgment or decree, and if all existing Events of Default have been cured or
waived, except nonpayment of principal, interest, premium or Liquidated Damages
that has become due solely because of acceleration. No such rescission shall
affect any subsequent Default or impair any right consequent thereto.
15. Individual Rights of Trustee.
Subject to certain limitations imposed by the TIA, the Trustee or any
Paying Agent or Registrar, in its individual or any other capacity, may become
the owner or pledgee of Notes and may otherwise deal with the Company, the
Guarantors or their Affiliates with the same rights it would have if it were not
Trustee, Paying Agent or Registrar, as the case may be, under the Indenture.
16. No Recourse Against Certain Others.
No director, officer, employee, incorporator or stockholder of the
Company or any Guarantor, as such, shall have any liability for any obligations
of the Company or such Guarantor under the Notes, the Guarantees or the
Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation, solely by reason of its status as a director,
officer, employee, incorporator or stockholder of the Company or such Guarantor.
By accepting a Note, each Holder waives and releases all such liability (but
only such liability) as part of the consideration for issuance of such Note to
such Holder.
17. Authentication.
This Note shall not be valid until the Trustee or an authenticating
agent manually signs the certificate of authentication on the other side of this
Note.
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18. Abbreviations.
Customary abbreviations may be used in the name of a Holder or an
assignee, such as TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with rights of survivorship and not as
tenants in common), CUST (= custodian), and U/G/M/A (= Uniform Gift to Minors
Act).
19. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Notes and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Holders of Notes. No representation is
made as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
20. Governing Law.
THE INDENTURE AND THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED IN SAID STATE.
The Company will furnish to any Holder upon written request and without
charge to the Holder a copy of the Indenture. Requests may be made to:
Fresh Foods, Inc.
PO Box 399
WSMP Drive
Claremont, NC 28610
Attention: Chief Financial Officer
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ASSIGNMENT
(To be executed by the registered Holder
if such Holder desires to transfer this Note)
FOR VALUE RECEIVED _________________________________ hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
TAX IDENTIFYING NUMBER OF TRANSFEREE
- ---------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please print name and address of transferee)
- --------------------------------------------------------------------------------
this Note, together with all right, title and interest herein, and does hereby
irrevocably constitute and appoint ________________________________ Attorney to
transfer this Note on the Note Register, with full power of substitution.
Dated:_________________________
- ---------------------------------- -------------------------------
Signature of Holder Signature Guaranteed:
NOTICE: The signature to the foregoing Assignment must correspond to the Name as
written upon the face of this Note in every particular, without alteration or
any change whatsoever.
SIGNATURE GUARANTEED: Signature must be guaranteed by an Eligible Guarantor
Institution (banks, stockbrokers, savings and loan associations and credit
unions) with membership in an approved signature guarantee medallion program
pursuant to Securitites and Exchange Commission Rule 17Ad-15.
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OPTION OF HOLDER TO ELECT PURCHASE
(check as appropriate)
(TM) In connection with the Change of Control Offer made pursuant to Section
4.14 of the Indenture, the undersigned hereby elects to have
(TM) the entire principal amount
(TM) $______________________ ($1,000 in principal amount or an
integral multiple thereof) of this Note repurchased by the Company. The
undersigned hereby directs the Trustee or Paying Agent to pay it or
___________________________ an amount in cash equal to 101% of the
principal amount indicated in the preceding sentence plus accrued and
unpaid interest and Liquidated Damages thereon, if any, to the Change
of Control Payment Date.
(TM) In connection with the Asset Sale Offer made pursuant to Section 4.11
of the Indenture, the undersigned hereby elects to have
(TM) the entire principal amount
(TM) $_______________ ($1,000 in principal amount or an integral
multiple thereof) of this Note repurchased by the Company. The
undersigned hereby directs the Trustee or Paying Agent to pay it or
_______________________ an amount in cash equal to 100% of the
principal amount indicated in the preceding sentence plus accrued and
unpaid interest and Liquidated Damages thereon, if any, to the Asset
Sale Purchase Date.
Dated:
-------------------------
- ------------------------------- --------------------------------
Signature of Holder Signature Guaranteed:
NOTICE: The signature to the foregoing must correspond to the Name as written
upon the face of this Note in every particular, without alteration or any change
whatsoever.
SIGNATURE GUARANTEED: Signature must be guaranteed by an Eligible Guarantor
Institution (banks, stockbrokers, savings and loan associations and credit
unions) with membership in an approved signature guarantee medallion program
pursuant to Securitites and Exchange Commission Rule 17Ad-15.
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ANNEX A
LIST OF GUARANTORS
Brunswick Associates, Inc.
Claremont Restaurant Group, LLC
Elloree Foods, Inc.
Fresh Foods Properties, LLC
Georgia Buffet Restaurants, Inc.
Knoxville Foods, Inc.
Mom `n' Pop's Country Ham, LLC
Oak Ridge Foods, Inc.
Sagebrush, Inc.
Sagebrush of Sevierville, Inc.
Sagebrush of Tennessee, L.P.
Seven Stars, Inc.
St. Augustine Foods, Inc.
Tennessee WSMP, Inc.
Virginia WSMP, Inc.
Chardent, Inc.
Pierre Foods, LLC
Georgia WSMP, Inc.
Kingsport Foods, Inc.
Matthews Prime Sirloin, Inc.
Naples Foods, Inc.
D-13
<PAGE> 153
Prime Sirloin, Inc.
Sagebrush of North Carolina, LLC
Sagebrush of South Carolina, LLC
Spicewood, Inc.
South Carolina WSMP, Inc.
Sunshine WSMP, Inc.
Tumbleweed of Pigeon Forge, Inc.
Greenville Food Systems, Incorporated
Fresh Foods Sales, LLC
Sagebrush DTN, Inc.
D&S Food Systems, LLC
D-14
<PAGE> 154
EXHIBIT E
FORM OF TRANSFER CERTIFICATE
FOR TRANSFER TO A QIB
State Street Bank and Trust Company
Two International Place, 4th Floor
Boston, MA 02110
Attention: Corporate Trust Administration
Re: Fresh Foods, Inc. (the "Company") 10 3/4% Senior
Notes Due 2006 (the "Notes")
Ladies and Gentlemen:
Reference is hereby made to the Indenture dated as of June 9, 1998 (as
amended and supplemented from time to time, the "Indenture") among the Company,
the Guarantors named therein, and State Street Bank and Trust Company, as
Trustee. Capitalized terms used but not defined herein shall have the meanings
given them in the Indenture. This letter relates to $_______________ aggregate
principal amount of Notes which are held in the name of [name of transferor]
(the "Transferor") to effect the transfer of such Notes in exchange for an
equivalent beneficial interest in the Initial Global Note.
In connection with such request, and with respect to such Notes, the
Transferor does hereby certify that such Notes are being transferred in
accordance with (i) the transfer restrictions set forth in the Notes and (ii)
Rule 144A under the United States Securities Act of 1933, as amended ("Rule
144A"), to a transferee that the Transferor reasonably believes is purchasing
the Notes for its own account or an account with respect to which the transferee
exercises sole investment discretion, and the transferee, as well as any such
account, is a "qualified institutional buyer" within the meaning of Rule 144A,
in a transaction meeting the requirements of Rule 144A and in accordance with
applicable securities laws of any state of the United States or any other
jurisdiction.
E-1
<PAGE> 155
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceeding or official inquiry with respect
to the matters covered hereby.
Very truly yours,
------------------------------------
[Name of Transferor]
By:
-------------------------------
Name:
Title:
Date:
-------------------------------
cc: Fresh Foods, Inc.
PO Box 399
WSMP Drive
Claremont, NC 28610
Attention: Chief Financial Officer
E-2
<PAGE> 156
EXHIBIT F
FORM OF TRANSFER CERTIFICATE FOR TRANSFER TO AN
INSTITUTIONAL ACCREDITED INVESTOR
State Street Bank and Trust Company
Two International Place, 4th Floor
Boston, MA 02110
Attention: Corporate Trust Administration
Re: Fresh Foods, Inc. (the "Company") 10 3/4% Senior
Notes Due 2006 (the "Notes")
Ladies and Gentlemen:
Reference is hereby made to the Indenture dated as of June 1, 1998 (as
amended and supplemented from time to time, the "Indenture") among the Company,
the Guarantors named therein, and State Street Bank and Trust Company, as
Trustee. Capitalized terms used but not defined herein shall have the meanings
given them in the Indenture.
This letter relates to U.S. $______________ aggregate principal amount
of Notes which are held [in certificated form in the name of [name of
transferor] (the "Transferor")] [through the beneficial interest of [name of
transferor] (the "Transferor") in the Initial Global Note] to effect the
transfer of such Notes to an institutional "accredited investor" as defined in
Rule 501 (a)(1), (2), (3) or (7) of Regulation D under the Securities Act of
1933, as amended ("Institutional Accredited Investor").
In connection with such request, and with respect to such Notes, the
Transferor does hereby certify that such Notes are being transferred (i) in
accordance with the transfer restrictions set forth in the Notes and (ii) to a
transferee that the Transferor reasonably believes is an Institutional
Accredited Investor that is acquiring at least $250,000 principal amount of
Notes for its own account or for one or more accounts as to which the transferee
exercises sole investment discretion and (iii) in accordance with applicable
securities laws of any state of the United States or any other jurisdiction.
F-1
<PAGE> 157
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
Very truly yours,
--------------------------------
[Name of Transferor]
By:
----------------------------
Name:
Title:
Date:
----------------------------
cc: Fresh Foods, Inc.
PO Box 399
WSMP Drive
Claremont, NC 28610
Attention: Chief Financial Officer
F-2
<PAGE> 158
EXHIBIT G
FORM OF INVESTMENT LETTER
FOR INSTITUTIONAL ACCREDITED INVESTORS
State Street Bank and Trust Company
Two International Place, 4th Floor
Boston, MA 02110
Attention: Corporate Trust Administration
Re: Fresh Foods, Inc. (the "Company") 10 3/4% Senior
Notes Due 2006 (the "Notes")
Ladies and Gentlemen:
Reference is hereby made to the Indenture dated as of June 1, 1998 (as
amended and supplemented from time to time, the "Indenture") among the Company,
the Guarantors named therein, and State Street Bank and Trust Company, as
Trustee. Capitalized terms used but not defined herein shall have the meanings
given them in the Indenture.
In connection with our proposed purchase of $___________ aggregate
principal amount of Notes, we confirm that:
1. We understand that the Notes have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), and may not be sold
except as permitted in the following sentence. We understand and agree, on our
own behalf and on behalf of any accounts for which we are acting as hereinafter
stated, (x) that such Notes are being offered only in a transaction not
involving any public offering within the meaning of the Securities Act, (y) that
if we should resell, pledge or otherwise transfer such Notes within two years
after the later of the date of the original issuance of the Notes and the last
date on which the Company or any affiliate (within the meaning of Rule 144 under
the Securities Act ("Rule 144")) of the Company was the owner of such Notes (or
any predecessor of such Notes), or within three months after we cease to be an
affiliate of the Company, such Notes may be resold, pledged or transferred only
(i) to the Company or any Subsidiary thereof, (ii) so long as Notes are eligible
for resale pursuant to Rule 144A under the Securities Act ("Rule 144A") to a
person whom we reasonably believe is a "qualified institutional buyer" (as
defined in Rule 144A) ("QIB") that purchases for its own account or for the
account of a QIB to whom notice is given that the resale, pledge or transfer is
being made in reliance on Rule 144A, (iii) outside the United States in an
offshore transaction in accordance with Regulation S under the Securities Act,
(iv) to an institution that is an "accredited investor" as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act
("Institutional Accredited Investor") that has certified to the Company and the
Trustee that it is such an accredited investor and is acquiring the Notes for
investment purposes and not for distribution, (v) pursuant to an effective
registration statement under the Securities Act or (vi) pursuant to any other
available exemption from the registration requirements of the Securities Act, in
each case in accordance with any applicable securities laws of any state of the
United States, and we will notify any purchaser of the Notes from us of the
above resale restrictions, if then applicable. We further understand that, in
connection with any transfer of the Notes by us, the Company and the Trustee may
request, and if so requested we will furnish, such certificates, legal opinions
and other information as they may reasonably require to confirm that any such
transfer complies with the foregoing restrictions. We understand that the Notes
will be issued in registered form only and that any certificates issued will
bear a legend substantially to the effect set forth in the Indenture.
G-1
<PAGE> 159
2. We are able to fend for ourselves in this transaction, we have such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of our investment in the Notes, and we and any
accounts for which we are acting are each able to bear the economic risk of our
or its investment and can afford the complete loss of such investment.
3. We understand that the minimum principal amount of Notes purchased
by an Institutional Accredited Investor is $250,000.
4. We understand that the Company, the Trustee and others will rely
upon the truth and accuracy of the foregoing acknowledgments, representations
and agreements, and we agree that if any of the acknowledgments, representations
and warranties deemed to have been made by us by our purchase of Notes, for our
own account or for one or more accounts as to each of which we exercise sole
investment discretion, are no longer accurate, we shall promptly notify the
Company and the Trustee.
5. We are acquiring the Notes purchased by us for investment purposes,
and not for distribution, for our own account or for one or more accounts as to
each of which we exercise sole investment discretion and we are or such account
is an Institutional Accredited Investor.
G-2
<PAGE> 160
6. You are entitled to rely upon this letter and you are irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal proceeding or official inquiry with respect to the
matters covered hereby.
Very truly yours,
--------------------------------
[Name of Purchaser]
By:
----------------------------
Name:
Title:
Date:
----------------------------
cc: Fresh Foods, Inc.
PO Box 399
WSMP Drive
Claremont, NC 28610
Attention: Chief Financial Officer
G-3
<PAGE> 161
EXHIBIT H
FORM OF TRANSFER CERTIFICATE FOR TRANSFER
TO A NON-U. S. PERSON
State Street Bank and Trust Company
Two International Place, 4th Floor
Boston, MA 02110
Attention: Corporate Trust Administration
Re: Fresh Foods, Inc. (the "Company") 10 3/4% Senior
Notes Due 2006 (the "Notes")
Ladies and Gentlemen:
Reference is hereby made to the Indenture dated as of June 9, 1998 (as
amended and supplemented from time to time, the "Indenture") among the Company,
the Guarantors named therein, and State Street Bank and Trust Company, as
Trustee. Capitalized terms used but not defined herein shall have the meanings
given them in the Indenture.
This letter relates to $______________ aggregate principal amount of
Notes which are held [in certificated form in the name of [name of transferor]
(the "Transferor")] [through the beneficial interest of [name of transferor]
(the "Transferor") in the Initial Global Note] to effect the transfer of such
Notes in exchange for Initial Certificated Notes.
In connection with such request, the Transferor does hereby certify
that such Notes are being transferred in accordance with (i) the transfer
restrictions set forth in the Notes and (ii) Regulation S ("Regulation S") under
the United States Securities Act of 1933, as amended (the "Securities Act") and
does hereby further certify that:
(1) the offer of the Notes was not made to a person in the United
States;
(2) the transaction was executed in, on or through the facilities of a
designated offshore securities market, and neither the Transferor, nor
any person acting on its behalf knows that the transaction was
pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in contravention of the
requirements of Rule 903(b) or 904(b)of Regulation S, as applicable;
and
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act.
In addition, if the sale is made during a Restricted Period (as defined
in Regulation S) and the provisions of Rule 903(c)(2) or (3) or Rule 904(c)(1)
of Regulation S are applicable thereto, we confirm that such sale has been made
in accordance with the applicable provisions of Rule 903(c)(2) or (3) or Rule
904(c)(1), as the case may be.
H-1
<PAGE> 162
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceeding or official inquiry with respect
to the matters covered hereby.
Very truly yours,
--------------------------------
[Name of Purchaser]
By:
----------------------------
Name:
Title:
Date:
----------------------------
cc: Fresh Foods, Inc.
PO Box 399
WSMP Drive
Claremont, NC 28610
Attention: Chief Financial Officer
H-2
<PAGE> 163
EXHIBIT I
FORM OF INVESTMENT LETTER
FOR REGULATION S PURCHASERS
State Street Bank and Trust Company
Two International Place, 4th Floor
Boston, MA 02110
Attention: Corporate Trust Administration
Re: Fresh Foods, Inc. (the "Company") 10 3/4% Senior
Notes Due 2006 (the "Notes")
Ladies and Gentlemen:
Reference is hereby made to the Indenture dated as of June 9, 1998 (as
amended and supplemented from time to time, the "Indenture") among the Company,
the Guarantors named therein, and State Street Bank and Trust Company, as
Trustee. Capitalized terms used but not defined herein shall have the meanings
given them in the Indenture.
In connection with our proposed purchase of $_____________ aggregate
principal amount of the Notes which are held [in certificated form in the name
of [name of transferor] (the "Transferor")] [through the beneficial interest of
[name of transferor] (the "Transferor") in the Initial Global Note], we hereby
certify that we are (or we will hold such Notes on behalf of) a person outside
the United States to whom the Notes could be transferred in accordance with Rule
904 of Regulation S promulgated under the United States Securities Act of 1933,
as amended.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceeding or official inquiry with respect
to the matters covered hereby.
Very truly yours,
--------------------------------
[Name of Purchaser]
By:
----------------------------
Name:
Title:
Date:
----------------------------
cc: Fresh Foods, Inc.
PO Box 399
WSMP Drive
Claremont, NC 28610
Attention: Chief Financial Officer
I-1
<PAGE> 164
EXHIBIT J
[REGISTRATION RIGHTS AGREEMENT]
[OMITTED]
J-1
<PAGE> 1
EXHIBIT 4.3
FRESH FOODS, INC.
$115,000,000
10 3/4% SENIOR NOTES DUE 2006
REGISTRATION RIGHTS AGREEMENT
Charlotte, North Carolina
June 9, 1998
First Union Capital Markets
BancAmerica Robertson Stephens
As Initial Purchasers under the Purchase Agreement
c/o First Union Capital Markets
301 South College Street, TW-10
Charlotte, NC 28288-0606
Ladies and Gentlemen:
This Registration Rights Agreement is dated as of June 9, 1998
(the "Agreement"), by and among Fresh Foods, Inc., a North Carolina corporation
(the "Issuer"), and each of the subsidiaries of the Company listed on the
signature pages hereto (collectively, the "Guarantors") and First Union Capital
Markets, a division of Wheat First Securities, Inc. and BancAmerica Robertson
Stephens (together, the "Initial Purchasers").
This Agreement is being entered into in connection with a
certain purchase agreement, dated June 4, 1998, by and among the Issuer, the
Guarantors and the Initial Purchasers (the "Purchase Agreement"), which provides
for the issuance and sale (the "Initial Placement") by the Issuer to the Initial
Purchasers of $115,000,000 aggregate principal amount of the Issuer's 10 3/4%
Senior Notes Due 2006 (the "Notes"). The Notes are to be unconditionally
guaranteed, on a senior, unsecured basis (the "Note Guarantees"), by the
Guarantors. In order to induce the Initial Purchasers to enter into the Purchase
Agreement, the Issuer has agreed to provide the registration rights set forth in
this Agreement for the benefit of the Initial Purchasers and their direct and
indirect transferees. The execution and delivery of this Agreement is a
condition to the obligation of the Initial Purchasers to purchase the Notes
under the Purchase Agreement. The parties hereby agree as follows:
1. Definitions. Capitalized terms used herein without
definition shall have their respective meanings set forth in the Purchase
Agreement. As used in this Agreement, the following capitalized defined terms
shall have the following meanings:
<PAGE> 2
"Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.
"Affiliate" means, with respect to any specified person, any
other person that, directly or indirectly, is in control of, is controlled by,
or is under common control with, such specified person. For purposes of this
definition, "control" of a person means the power, directly or indirectly, to
direct or cause the direction of the management and policies of such person
whether by contract or otherwise; and the terms "controlling" and "controlled"
have meanings correlative to the foregoing.
"Agreement" has the meaning set forth in the preamble hereto.
"Business Day" means any day excluding Saturday, Sunday or any
other day which is a legal holiday under the laws of Charlotte, North Carolina
or New York, New York or is a day on which banking institutions located therein
are authorized or required by law or other governmental action to close.
"Closing Date" has the meaning set forth in the Purchase
Agreement.
"Commission" means the Securities and Exchange Commission.
"Consummate" means, with respect to a Registered Exchange
Offer, the occurrence of (a) the filing and effectiveness under the Act of the
Exchange Offer Registration Statement relating to the Exchange Notes to be
issued in the Registered Exchange Offer, (b) the maintenance of such
Registration Statement continuously effective and the keeping of the Registered
Exchange Offer open for a period not less than the minimum period required
pursuant to Section 2(c)(ii) hereof, (c) the Issuer's acceptance for exchange of
all Registrable Notes duly tendered and not validly withdrawn pursuant to the
Registered Exchange Offer and (d) the delivery by the Issuer to the Registrar
under the Indenture of Exchange Notes in the same aggregate principal amount as
the aggregate principal amount of Registrable Notes tendered by Holders thereof
pursuant to the Registered Exchange Offer. The term "Consummation" has a meaning
correlative to the foregoing.
"Credit Agreement" means the Credit Agreement, dated as of the
date hereof, by and among the Company, the Guarantors, the lenders named therein
and First Union Commercial Corporation, as administrative agent.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder.
"Exchange Notes" means debt securities of the Issuer identical
in all material respects to the Notes (except that the Liquidated Damages
provisions and the transfer restrictions pertaining to the Notes will be
modified or eliminated, as appropriate), to be issued under the Indenture.
<PAGE> 3
"Exchange Offer Registration Period" means the 180-day period
following the Consummation of the Registered Exchange Offer, exclusive of any
period during which any stop order shall be in effect suspending the
effectiveness of the Exchange Offer Registration Statement; provided, however,
that in the event that all resales of Exchange Notes (including, subject to the
time periods set forth herein, any resales by Exchanging Dealers) covered by
such Exchange Offer Registration Statement have been made, the Exchange Offer
Registration Statement need not thereafter remain continuously effective for
such period.
"Exchange Offer Registration Statement" means a registration
statement of the Issuer on an appropriate form under the Act with respect to the
Registered Exchange Offer, all amendments and supplements to such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material incorporated
by reference therein.
"Exchanging Dealer" means any Holder (which may include the
Initial Purchasers) that is a broker-dealer, electing to exchange Notes acquired
for its own account as a result of market-making activities or other trading
activities for Exchange Notes.
"Final Memorandum" has the meaning set forth in the Purchase
Agreement.
"Guarantors" has the meaning set forth in the preamble hereto.
"Holder" means any holder from time to time of Registrable
Notes (including the Initial Purchasers).
"Indenture" means the indenture relating to the Notes and the
Exchange Notes, to be dated as of the Closing Date, among the Issuer, the
Guarantors and State Street Bank and Trust Company, as trustee, as the same may
be amended, supplemented, waived or otherwise modified from time to time in
accordance with the terms thereof. The Indenture shall include the provisions of
the Trust Indenture Act that are deemed to be part of and govern the indenture.
"Initial Placement" has the meaning set forth in the preamble
hereto.
"Initial Purchasers" has the meaning set forth in the preamble
hereto.
"Issuer" has the meaning set forth in the preamble hereto.
"Liquidated Damages" has the meaning set forth in Section 4
hereto.
"Losses" has the meaning set forth in Section 7(d) hereto.
"Majority Holders" means the Holders of a majority of the
aggregate principal amount of Registrable Notes registered under a Registration
Statement.
<PAGE> 4
"Managing Underwriters" means the investment banker or
investment bankers and manager or managers that shall administer an underwritten
offering under a Shelf Registration Statement.
"Notes" has the meaning set forth in the preamble hereto.
"Note Guarantees" has the meaning set forth in the preamble
hereto.
"Prospectus" means the prospectus included in any Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A under the Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Registrable Notes covered by such Registration
Statement, and all amendments and supplements to the Prospectus, including
post-effective amendments.
"Purchase Agreement" has the meaning set forth in the preamble
hereto.
"Registered Exchange Offer" means the proposed offer to the
Holders to issue and deliver to such Holders, in exchange for the Notes, a like
principal amount of Exchange Notes.
"Registrable Notes" means each Note upon original issuance of
the Notes and, at all times subsequent thereto, each Exchange Note as to which
clauses (iii), (iv) or (v) of the first paragraph of Section 3 hereof are
applicable upon original issuance and at all times subsequent thereto, until in
the case of any such Note or Exchange Note, as the case may be, the earliest to
occur of (i) a Registration Statement (other than, with respect to any Exchange
Note as to which clauses (iii), (iv) or (v) of the first paragraph of Section 3
hereof are applicable, the Exchange Registration Statement) covering such Note
or Exchange Note, as the case may be, has been declared effective by the SEC and
such Note (unless such Note was not tendered for exchange by the Holder thereof)
or Exchange Note, as the case may be, has been disposed of in accordance with
such effective Registration Statement, (ii) such Note or Exchange Note, as the
case may be, is sold in compliance with Rule 144, or (iii) such Note or Exchange
Note, as the case may be, ceases to be outstanding for purposes of the
Indenture.
"Registration Statement" means any Exchange Offer Registration
Statement or Shelf Registration Statement that covers any of the Registrable
Notes (including any Note Guarantees of each thereof) pursuant to the provisions
of this Agreement, amendments and supplements to such registration statement,
including post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto, and all material incorporated by
reference therein.
"Shelf Registration" means a registration effected pursuant to
Section 3 hereof.
"Shelf Registration Period" has the meaning set forth in
Section 3(b) hereof.
"Shelf Registration Statement" means a "shelf" registration
statement of the Issuer pursuant to the provisions of Section 3 hereof, which
covers some or all of the Registrable Notes,
<PAGE> 5
as applicable, on an appropriate form under Rule 415 under the Act, or any
similar rule that may be adopted by the Commission, all amendments and
supplements to such registration statement, including post-effective amendments,
in each case including the Prospectus contained therein, all exhibits thereto
and all material incorporated by reference therein.
"Shelf Registration Trigger Date" means the date on which the
filing of a Shelf Registration is requested or required under Section 3 hereof
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended.
"Trustee" means the trustee with respect to the Notes or
Exchange Notes, as applicable, under the Indenture.
"Underwriter" means any underwriter of Registrable Notes in
connection with an offering thereof under a Shelf Registration Statement.
2. Registered Exchange Offer; Resales of Exchange Notes by
Exchanging Dealers; Private Exchange. (a) The Issuer and the Guarantors shall
prepare and, not later than 30 days from the date of original issuance of the
Notes (or, if such 30th day is not a Business Day, by the first Business Day
thereafter), shall file with the Commission the Exchange Offer Registration
Statement with respect to the Registered Exchange Offer. The Issuer and the
Guarantors shall use their best efforts (i) to cause the Exchange Offer
Registration Statement to be declared effective under the Act within 150 days
from the date of original issuance of the Notes (or, if such 150th day is not a
Business Day, by the first Business Day thereafter), and (ii) to Consummate the
Registered Exchange Offer within 30 Business Days from the date the Exchange
Offer Registration Statement becomes effective.
(b) Upon the effectiveness of the Exchange Offer Registration
Statement, the Issuer and the Guarantors shall promptly commence and Consummate
the Registered Exchange Offer. The objective of such Registered Exchange Offer
is to enable each Holder electing to exchange Registrable Notes for Exchange
Notes (assuming that such Holder (x) is not an "affiliate" of the Issuer or the
Guarantors within the meaning of the Act, (y) is not a broker-dealer that
acquired the Registrable Notes in a transaction other than as a part of its
market-making or other trading activities and (z) if such Holder is not a
broker-dealer, acquires the Exchange Notes in the ordinary course of such
Holder's business, is not participating in the distribution of the Exchange
Notes and has no arrangements or understandings with any person to participate
in the distribution of the Exchange Notes) to resell such Exchange Notes from
and after their receipt without any limitations or restrictions under the Act
and without material restrictions under the securities laws of a substantial
proportion of the several states of the United States.
(c) In connection with the Registered Exchange Offer, the
Issuer and the Guarantors shall:
<PAGE> 6
(i) mail to each Holder a copy of the Prospectus forming
part of the Exchange Offer Registration Statement, together with an
appropriate letter of transmittal and related documents;
(ii) keep the Registered Exchange Offer open for acceptance
for not less than 20 Business Days after the date notice thereof is
mailed to the Holders;
(iii) utilize the services of a depositary for the Registered
Exchange Offer with an address in the Borough of Manhattan, The City of
New York; and
(iv) comply in all material respects with all applicable laws
relating to the Registered Exchange Offer.
(d) The Issuer and the Guarantors may suspend the use of the
Prospectus for a period not to exceed 30 days in any three-month period or for
three periods not to exceed an aggregate of 90 days in any twelve-month period
for valid business reasons, to be determined by the Issuer and the Guarantors in
their sole reasonable judgment (not including avoidance of their obligations
hereunder), including, without limitation, the acquisition or divestiture of
assets, public filings with the Commission, pending corporate developments and
similar events; provided, that the Issuer and the Guarantors promptly thereafter
comply with the requirements of Section 5(k) hereof, if applicable.
(e) As soon as practicable after the Consummation of the
Registered Exchange Offer, the Issuer and the Guarantors shall cause the Trustee
promptly to authenticate and deliver to each Holder Exchange Notes equal in
principal amount to the Registrable Notes of such Holder so accepted for
exchange.
(f) The Initial Purchasers, the Issuer and the Guarantors
acknowledge that, pursuant to interpretations by the staff of the Commission of
Section 5 of the Act, and in the absence of an applicable exemption therefrom,
each Exchanging Dealer is required to deliver a Prospectus in connection with a
sale of any Exchange Notes received by such Exchanging Dealer pursuant to the
Registered Exchange Offer in exchange for Registrable Notes acquired for its own
account as a result of market-making activities or other trading activities.
Accordingly, the Issuer and the Guarantors shall:
(i) include the information set forth in Annex A hereto on
the cover of the Prospectus forming a part of the Exchange Offer
Registration Statement, in Annex B hereto in the forepart of the
Exchange Offer Registration Statement in a section setting forth
details of the Registered Exchange Offer, in Annex C hereto in the
underwriting or plan of distribution section of the Prospectus forming
a part of the Exchange Offer Registration Statement, and in Annex D
hereto in the letter of transmittal delivered pursuant to the
Registered Exchange Offer; and
(ii) use their best efforts to keep the Exchange Offer
Registration Statement continuously effective under the Act during the
Exchange Offer Registration Period for delivery of the prospectus
included therein by Exchanging Dealers in connection with
<PAGE> 7
sales of Exchange Notes received pursuant to the Registered Exchange
Offer, as contemplated by Section 5(h) below.
(g) In the event that either Initial Purchaser determines that
it is not eligible to participate in the Registered Exchange Offer with respect
to the exchange of Registrable Notes constituting any portion of an unsold
allotment, upon the effectiveness of the Shelf Registration Statement as
contemplated by Section 3 hereof and at the request of either Initial Purchaser,
the Issuer and the Guarantors shall issue and deliver to the Initial Purchasers,
or to the party purchasing Registrable Notes registered under the Shelf
Registration Statement from the Initial Purchasers, in exchange for such
Registrable Notes, a like principal amount of Exchange Notes. The Issuer and the
Guarantors shall use their best efforts to cause the CUSIP Service Bureau to
issue the same CUSIP number for such Exchange Notes as for Exchange Notes issued
pursuant to the Registered Exchange Offer.
3. Shelf Registration. If, (i) because of any change in law or
applicable interpretations thereof by the Commission's staff, any of the Issuer
or the Guarantors determines upon advice of its outside counsel that it is not
permitted to effect the Registered Exchange Offer as contemplated by Section 2
hereof, or (ii) the Registered Exchange Offer is not Consummated within 30
Business Days from the date the Exchange Offer Registration Statement becomes
effective (or, if such 30th day is not a Business Day, by the first Business Day
thereafter), or (iii) either Initial Purchasers so requests with respect to
Registrable Notes held by it as a result of the purchase of such Registrable
Notes directly from the Issuer and the Guarantors following Consummation of the
Registered Exchange Offer and such Initial Purchaser is not eligible to receive
Exchange Notes pursuant to the Registered Exchange Offer in respect of such
Registrable Securities, or (iv) any Holder (other than the Initial Purchasers)
is not eligible to participate in the Registered Exchange Offer or the Exchange
Notes such Holder would receive in the Registered Exchange Offer could only be
reoffered and resold by such Holder upon compliance with the registration and
prospectus delivery requirements of the Act and the delivery of the Prospectus
contained in the Exchange Offer Registration Statement, as appropriately
amended, is not a legally available alternative, or (v) in the case where either
Initial Purchaser participates in the Registered Exchange Offer or acquires
Exchange Notes pursuant to Section 2(g) hereof, such Initial Purchaser does not
receive freely tradable Exchange Notes in exchange for Notes constituting any
portion of an unsold allotment (it being understood that, for purposes of this
Section 3, (x) the requirement that the Initial Purchasers deliver a Prospectus
containing the information required by Items 507 and/or 508 of Regulation S-K
under the Act in connection with sales of Exchange Notes acquired in exchange
for such Registrable Notes shall result in such Exchange Notes being not "freely
tradable" and (y) the requirement that an Exchanging Dealer deliver a Prospectus
in connection with sales of Exchange Notes acquired in the Registered Exchange
Offer in exchange for Registrable Notes acquired as a result of market-making
activities or other trading activities shall not result in such Exchange Notes
being not "freely tradable"), the following provisions shall apply:
(a) The Issuer and the Guarantors shall prepare, and not later
than 30 days following the Shelf Registration Trigger Date (or, if such 30th day
is not a Business Day, by the first Business Day thereafter), shall file with
the Commission and thereafter, but not later than 150 days following the Shelf
Registration Trigger Date (or, if such 150th day is not a Business
<PAGE> 8
Day, by the first Business Day thereafter), shall use their best efforts to
cause to be declared effective under the Act a Shelf Registration Statement
relating to the offer and sale of the Registrable Notes by the Holders from time
to time in accordance with the methods of distribution elected by such Holders
and set forth in such Shelf Registration Statement, provided, that with respect
to Exchange Notes received by the Initial Purchasers in exchange for Notes
constituting any portion of an unsold allotment, the Issuer and the Guarantors
may, if permitted by current interpretations by the Commission's staff, file a
post-effective amendment to the Exchange Offer Registration Statement containing
the information required by Regulation S-K Items 507 and/or 508, as applicable,
in satisfaction of their obligations under this paragraph (a) with respect
thereto, and any such Exchange Offer Registration Statement, as so amended,
shall be referred to herein as, and governed by the provisions herein applicable
to, a Shelf Registration Statement.
(b) The Issuer and the Guarantors shall use their best efforts
to keep such Shelf Registration Statement continuously effective in order to
permit the Prospectus forming a part thereof to be usable by Holders until the
earliest of (i) the second anniversary of the date on which the filing of a
Shelf Registration Statement was required or requested pursuant to this Section
3, (ii) the date on which the Registrable Notes may be sold pursuant to Rule
144(k) (or any successor provision) promulgated by the Commission under the Act
and (iii) such date as of which all the Registrable Notes have been sold
pursuant to the Shelf Registration Statement (in any such case, such period
being called the "Shelf Registration Period"). The Issuer and the Guarantors
shall be deemed not to have used their best efforts to keep the Shelf
Registration Statement effective during the requisite period if any of them
voluntarily takes any action that would result in Holders of Registrable Notes
covered thereby not being able to offer and sell such notes during that period,
unless such action is (x) required by applicable law or (y) pursuant to Section
3(c) hereof, and, in either case, so long as the Issuer or the Guarantors
promptly thereafter comply with the requirements of Section 5(k) hereof, if
applicable.
(c) The Issuer and the Guarantors may suspend the use of the
Prospectus for a period not to exceed 30 days in any three-month period or for
three periods not to exceed an aggregate of 90 days in any twelve-month period
for valid business reasons, to be determined by the Issuer and the Guarantors in
their sole reasonable judgment (not including avoidance of their obligations
hereunder), including, without limitation, the acquisition or divestiture of
assets, public filings with the Commission, pending corporate developments and
similar events; provided, that the Issuer and the Guarantors promptly thereafter
comply with the requirements of Section 5(k) hereof, if applicable.
(d) No Holder of Registrable Notes may include any of its
Registrable Notes in any Shelf Registration Statement pursuant to this Agreement
unless and until such Holder furnishes to the Issuer in writing, within 20
Business Days after receipt of a request therefor, such information as the
Issuer may reasonably request for use in connection with any Shelf Registration
Statement or Prospectus or preliminary Prospectus included therein. No Holder of
Registrable Notes shall be entitled to Liquidated Damages pursuant to Section 4
hereof unless and until such Holder shall have used its best efforts to provide
all such reasonably requested information. Each Holder as to which any Shelf
Registration Statement is being effected agrees
<PAGE> 9
to furnish promptly to the Issuer all information required to be disclosed in
order to make the information previously furnished to the Issuer by such Holder
not misleading.
4. Liquidated Damages.
(a) The parties hereto agree that the Holders of the Exchange
Notes or the Registrable Notes, as the case may be, will suffer damages, and
that it would not be feasible to ascertain the extent of such damages with
precision, if (i) either the Exchange Offer Registration Statement or the Shelf
Registration Statement has not been filed on or prior to the date specified for
such filing in this Agreement, (ii) the Exchange Offer Registration Statement or
the Shelf Registration Statement has not been declared effective under the Act
on or prior to the target date specified for such effectiveness in this
Agreement (the "Effectiveness Target Date"), (iii) the Registered Exchange Offer
has not been Consummated within 30 Business Days after the Effectiveness Target
Date with respect to the Exchange Offer Registration Statement, (iv) prior to
the end of the Exchange Offer Registration Period or the Shelf Registration
Period, the Commission shall have issued a stop order suspending the
effectiveness of the Exchange Offer Registration Statement or the Shelf
Registration Statement, as the case may be, or proceedings have been initiated
with respect to the Registration Statement under Section 8(d) or 8(e) of the
Act, (v) the aggregate number of days in any one such suspension period exceeds
the period permitted pursuant to Section 2(d) or 3(c) hereof, as each may be
applicable, or (vi) the number of suspension periods exceeds the number
permitted pursuant to Section 2(d) or 3(c) hereof, as each may be applicable
(each of the events of a type described in any of the foregoing clauses (i)
through (vi) are individually referred to herein as an "Event"; and the date
specified for the filing of the Registration Statement in the case of clause
(i), the target date specified for the declaration of the effectiveness of the
Registration Statement in the case of clause (ii), the date specified for the
Consummation of the Registered Exchange Offer in the case of clause (iii), the
date on which the effectiveness of a Registration Statement has been suspended
or proceedings with respect to the Registration Statement under Section 8(d) or
8(e) of the Act have been commenced in the case of clause (iv), the date on
which the duration of a suspension period exceeds the periods permitted by
Section 2(d) or 3(c) hereof, as each may be applicable, in the case of clause
(v), and the date of the commencement of a suspension period that causes the
limit on the number of suspension periods under Section 2(d) or 3(c) hereof, as
each may be applicable, to be exceeded in the case of clause (vi), are referred
to herein as an "Event Date"). Events shall be deemed to continue until the date
of the termination of such Event, which shall be the following date with respect
to the respective types of Events: the date the Registration Statement is filed
in the case of an Event of the type described in clause (i), the date the
Registration Statement is declared effective under the Act in the case of an
Event described in clause (ii), the date a Registered Exchange Offer is
Consummated in the case of an Event described in clause (iii), the date that all
stop orders suspending effectiveness of the Registration Statement have been
removed and the proceedings initiated with respect to the Registration Statement
under Section 8(d) or 8(e) of the Act have terminated, as the case may be, in
the case of Events of the types described in clause (iv), termination of the
suspension period which caused the aggregate number of days in any one
suspension period to exceed the number permitted by Section 2(d) or 3(c) to be
exceeded in the case of Events of the type described in clause (v), and
termination of the suspension period the commencement of which caused the number
of suspension periods permitted by Section 2(d) or 3(c) to be exceeded in the
case of Events of the type described in clause (vi).
<PAGE> 10
(b) Accordingly, upon the occurrence of any Event and until
such time as there are no Events which have occurred and have not terminated (a
"Damages Accrual Period"), commencing on the Event Date on which such Damages
Accrual Period began, the Borrower and the Guarantors jointly and severally
agree to pay to each Holder, as liquidated damages (the "Liquidated Damages"),
and not as a penalty, with respect to the first 90-day period immediately
following the Event Date, an additional amount equal to $0.05 per week per
$1,000 principal amount of Exchange Notes or Registrable Notes held by such
Holder. The amount of the liquidated damages shall increase by an additional
$0.05 per week per $ 1, 000 principal amount of notes with respect to each
subsequent 90-day period until such Event have terminated, up to a maximum
amount of liquidated damages of $0.30 per week per $1,000 principal amount of
notes. Notwithstanding the foregoing, no Liquidated Damages shall accrue after
the expiration of the Registration Period.
(c) Liquidated Damages due on any Exchange Note or Registrable
Note, as the case may be, shall be payable on each date falling during the
Damage Accrual Period on which interest is due on such notes, and on the date
immediately following (or which would have followed) the termination of such
Period on which interest is due on the notes (the "Damages Payment Dates"). The
Issuer shall pay the Liquidated Damages due on any Registrable Notes or Exchange
Notes by depositing with the Trustee under the appropriate Indenture, in trust,
for the benefit of the Holders of Exchange Notes or Registrable Notes, as the
case may be, entitled thereto, at least one Business Day prior to the applicable
Damages Payment Date, sums sufficient to pay the Liquidated Damages accrued or
accruing since the last preceding Damages Payment Date to such Damages Payment
Date. The Trustee shall be entitled, on behalf of the Holders of Exchange Notes
or Registrable Notes, as the case may be, to seek any available remedy for the
enforcement of this Agreement, including for the payment of such Liquidated
Damages. Notwithstanding the foregoing, the parties agree that the sole remedy
payable for a violation of the terms of this Agreement with respect to which
Liquidated Damages are expressly provided shall be such Liquidated Damages.
Nothing shall preclude a Holder of Exchange Notes or Registrable Notes from
pursuing or obtaining specific performance or other equitable relief with
respect to any violation of this Agreement for which liquidated damages are not
expressly provided by this Agreement.
(d) All of the Issuer's and Guarantors' obligations set forth
in this Section 4 which are outstanding with respect to any Exchange Note or
Registrable Note at the time such note ceases to be covered by an effective
Registration Statement shall survive until such time as all such obligations
with respect to such security have been satisfied in full (notwithstanding
termination of the Agreement).
5. Registration Procedures. In connection with any Shelf
Registration Statement and, to the extent applicable, any Exchange Offer
Registration Statement, the following provisions shall apply:
(a) The Issuer and the Guarantors shall furnish to the Initial
Purchasers, prior to the filing thereof with the Commission, a copy of any
Registration Statement, and each amendment thereof and each amendment or
supplement, if any, to the Prospectus included
<PAGE> 11
therein and shall use their best efforts to reflect in each such document, when
so filed with the Commission, such comments as the Initial Purchasers reasonably
may propose.
(b) The Issuer and the Guarantors shall ensure that:
(i) any Registration Statement and any amendment thereto and
any Prospectus contained therein and any amendment or supplement
thereto complies in all material respects with the Act;
(ii) any Registration Statement and any amendment thereto
does not, when it becomes effective, contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; and
(iii) any Prospectus forming part of any Registration
Statement, including any amendment or supplement to such Prospectus,
does not include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading;
provided, that no representation or agreement shall be required to be made
hereby with respect to information with respect to the Initial Purchasers, any
Underwriter or any Holder required to be included in any Registration Statement
or Prospectus pursuant to the Act or the rules and regulations thereunder or
provided in writing by the Initial Purchasers, any Holder or any Underwriter
specifically for inclusion in any Registration Statement or Prospectus.
(c) (1) The Issuer and the Guarantors shall advise the
Initial Purchasers and, in the case of a Shelf Registration Statement, the
Holders of Registrable Notes covered thereby, and, if requested by the Initial
Purchasers or any such Holder, confirm such advice in writing:
(i) when a Registration Statement and any amendment thereto
has been filed with the Commission and when the Registration Statement
or any post-effective amendment thereto has become effective; and
(ii) of any request by the Commission for amendments or
supplements to the Registration Statement or the Prospectus included
therein or for additional information.
(2) The Issuer and the Guarantors shall advise the Initial
Purchasers and, in the case of a Shelf Registration Statement, the Holders of
Registrable Notes covered thereby, and, in the case of an Exchange Offer
Registration Statement, any Exchanging Dealer that has provided in writing to
the Issuer a telephone or facsimile number and address for notices, and, if
requested by the Initial Purchasers or any such Holder or Exchanging Dealer,
confirm such advice in writing:
(i) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose;
<PAGE> 12
(ii) of the receipt by the Issuer or the Guarantors of any
notification with respect to the suspension of the qualification of the
Registrable Notes included in any Registration Statement for sale in
any jurisdiction or the initiation or threatening of any proceeding for
such purpose; and
(iii) of the suspension of the use of the Prospectus pursuant
to Section 5(c) hereof or of the happening of any event that requires
the making of any changes in the Registration Statement or the
Prospectus so that, as of such date, the statements therein are not
misleading and do not omit to state a material fact required to be
stated therein or necessary to make the statements therein (in the case
of the Prospectus, in light of the circumstances under which they were
made) not misleading (which advice shall be accompanied by an
instruction to suspend the use of the Prospectus until the requisite
changes have been made).
(d) The Issuer and the Guarantors shall use their best efforts
to obtain the withdrawal of any order suspending the effectiveness of any
Registration Statement at the earliest possible time and in any event shall
within 30 days of any such order (or, if such 30th day is not a Business Day, by
the first Business Day thereafter) amend the Registration Statement covering all
of the Registrable Notes (whereupon references herein to the Registration
Statement shall be deemed to include reference to such additional filing).
(e) The Issuer and the Guarantors shall furnish to each Holder
of Registrable Notes included within the coverage of any Shelf Registration
Statement, without charge, at least one copy of such Shelf Registration
Statement and any post-effective amendment thereto, including financial
statements and schedules, and, if the Holder so requests in writing, all
exhibits thereto (including those incorporated by reference).
(f) The Issuer and the Guarantors shall, during the Shelf
Registration Period, deliver to each Holder of Registrable Notes included within
the coverage of any Shelf Registration Statement, without charge, as many copies
of the Prospectus (including each preliminary Prospectus) included in such Shelf
Registration Statement and any amendment or supplement thereto as such Holder
may reasonably request; and the Issuer and the Guarantors consent to the use of
the Prospectus or any amendment or supplement thereto by each of the selling
Holders of Registrable Notes in connection with the offering and sale of the
Registrable Notes covered by the Prospectus or any amendment or supplement
thereto.
(g) The Issuer and the Guarantors shall furnish to each
Exchanging Dealer that so requests, without charge, at least one copy of the
Exchange Offer Registration Statement and any post-effective amendment thereto,
including financial statements and schedules, any documents incorporated by
reference therein and, if the Exchanging Dealer so requests in writing, all
exhibits thereto (including those incorporated by reference).
(h) The Issuer and the Guarantors shall, during the Exchange
Offer Registration Period, deliver to each Exchanging Dealer, without charge, as
many copies of the Prospectus (including each preliminary Prospectus) included
in such Exchange Offer Registration Statement
<PAGE> 13
and any amendment or supplement thereto as such Exchanging Dealer may reasonably
request; and the Issuer and the Guarantors consent to the use of the Prospectus
or any amendment or supplement thereto by any such Exchanging Dealer in
connection with the offering and sale of the Exchange Notes, as provided in
Section 2(f) above.
(i) Prior to the Registered Exchange Offer or any other
offering of Registrable Notes pursuant to any Registration Statement, the Issuer
and the Guarantors shall register, qualify or cooperate with the Holders of
Registrable Notes included therein and their respective counsel in connection
with the registration or qualification of such Registrable Notes for offer and
sale under the securities or blue sky laws of such states as any such Holders
reasonably request in writing and do any and all other acts or things necessary
or advisable to enable the offer and sale in such jurisdictions of the
Registrable Notes covered by such Registration Statement; provided, however,
that none of the Issuer or Guarantors will be required to qualify generally to
do business in any jurisdiction in which any of them is not then so qualified,
to file any general consent to service of process or to take any action which
would subject any of them to general service of process or to taxation in any
such jurisdiction where it is not then so subject.
(j) The Issuer and the Guarantors shall cooperate with the
Holders to facilitate the timely preparation and delivery of certificates
representing Registrable Notes to be sold pursuant to any Registration Statement
free of any restrictive legends and in denominations and registered in such
names as Holders may request prior to sales of Registrable Notes pursuant to
such Registration Statement.
(k) Upon the occurrence of any event contemplated by paragraph
(c)(2)(iii) of this Section 5, the Issuer and the Guarantors shall promptly
prepare and file a post-effective amendment to any Registration Statement or an
amendment or supplement to the related Prospectus or any other required document
so that, as thereafter delivered to purchasers of the Registrable Notes included
therein, the Prospectus will not include an untrue statement of a material fact
or omit to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(l) The Issuer and the Guarantors shall use their best efforts
to cause The Depository Trust Company ("DTC") on the first Business Day
following the effective date of any Registration Statement hereunder or as soon
as possible thereafter to remove (i) from any existing CUSIP number assigned to
the Registrable Notes or Exchange Notes, as the case may be, any designation
indicating that such notes are "restricted securities," which efforts shall
include delivery to DTC of a letter executed by the Issuer substantially in the
form of Annex E hereto and (ii) any other stop or restriction on DTC's system
with respect to the Registrable Notes or Exchange Notes, as the case may be. In
the event the Issuer and the Guarantors are unable to cause DTC to take actions
described in the immediately preceding sentence, the Issuer and the Guarantors
shall take such actions as the Initial Purchasers may reasonably request to
provide, as soon as practicable, a CUSIP number for the Registrable Notes or
Exchange Notes registered under such Registration Statement and to cause such
CUSIP number to be assigned to the Registrable Notes or Exchange Notes (or to
the maximum aggregate principal amount of the securities to which such number
may be assigned). Upon compliance with the foregoing requirements of this
Section 5(l), the Issuer shall provide the Trustee with global certificates for
<PAGE> 14
such Registrable Notes or Exchange Notes, in a form eligible for deposit with
The Depository Trust Company.
(m) The Issuer and the Guarantors shall use their best efforts
to comply with all applicable rules and regulations of the Commission and shall
make generally available to their security holders as soon as practicable after
the effective date of the applicable Registration Statement an earnings
statement satisfying the provisions of Section 11(a) of the Act and Rule 158
promulgated thereunder.
(n) The Issuer and the Guarantors shall cause the Indenture to
be qualified under the Trust Indenture Act in a timely manner.
(o) The Issuer and the Guarantors may require each Holder of
Registrable Notes to be sold pursuant to any Shelf Registration Statement to
furnish to the Issuer such information regarding the Holder and the distribution
of such Registrable Notes as may, from time to time, be reasonably required by
the Act and the rules and regulations promulgated thereunder, and the
obligations of the Issuer and the Guarantors to any Holder hereunder shall be
expressly conditioned on the compliance of such Holder with such request.
(p) The Issuer and the Guarantors shall, if requested,
promptly incorporate in a Prospectus supplement or post-effective amendment to a
Shelf Registration Statement (i) such information as the Majority Holders
provide or, if the Registrable Notes are being sold in an underwritten offering,
as the Managing Underwriters and the Majority Holders reasonably agree should be
included therein and provide to the Issuer or Guarantors in writing for
inclusion in the Shelf Registration Statement or Prospectus, and (ii) such
information as a Holder may provide from time to time to the Issuer or
Guarantors in writing for inclusion in a Prospectus or any Shelf Registration
Statement concerning such Holder and the distribution of such Holder's
Registrable Notes and, in either case, shall make all required filings of such
Prospectus supplement or post-effective amendment as soon as practicable after
being notified in writing of the matters to be incorporated in such Prospectus
supplement or post-effective amendment.
(q) In the case of any Shelf Registration Statement, the
Issuer and the Guarantors shall enter into such agreements (including
underwriting agreements) and take all other customary and appropriate actions as
may be reasonably requested in order to expedite or facilitate the registration
or the disposition of any Registrable Notes, and in connection therewith, if an
underwriting agreement is entered into, cause the same to contain
indemnification provisions and procedures no less favorable than those set forth
in Section 7 (or such other provisions and procedures acceptable to the Majority
Holders and the Managing Underwriters, if any, with respect to all parties to be
indemnified pursuant to Section 7 from Holders of Exchange Notes to the Issuer
and the Guarantors).
(r) In the case of any Shelf Registration Statement, the
Issuer and the Guarantors shall:
(i) make reasonably available for inspection by the Holders of
Registrable Notes to be registered thereunder, any Underwriter
participating in any disposition pursuant to
<PAGE> 15
such Shelf Registration Statement, and any attorney, accountant or
other agent retained by the Holders or any such Underwriter, all
relevant financial and other records, pertinent corporate documents and
properties of the Issuer, the Guarantors and their subsidiaries;
(ii) cause the Issuer's and the Guarantors' officers,
directors and employees to supply all relevant information reasonably
requested by the Holders or any such Underwriter, attorney, accountant
or agent in connection with any such Registration Statement as is
customary for similar due diligence examinations; provided, however,
that any information that is designated in writing by the Issuer or the
Guarantors, in their sole discretion, as confidential at the time of
delivery of such information shall be kept confidential by the Holders
or any such Underwriter, attorney, accountant or agent, unless
disclosure thereof is made in connection with a court proceeding or
required by law, or such information becomes available to the public
generally through the Issuer or the Guarantors or through a third party
without an accompanying obligation of confidentiality;
(iii) make such representations and warranties to the Holders
of Registrable Notes registered thereunder and the Underwriters, if
any, in form, substance and scope as are customarily made by issuers to
Underwriters and covering matters including, but not limited to, those
set forth in the Purchase Agreement;
(iv) obtain opinions of counsel to the Issuer and the
Guarantors and updates thereof (which counsel and opinions, in form,
scope and substance, shall be reasonably satisfactory to the Managing
Underwriters, if any) addressed to each selling Holder and the
Underwriters, if any, covering such matters as are customarily covered
in opinions requested in underwritten offerings and such other matters
as may be reasonably requested by such Holders and Underwriters;
(v) obtain "cold comfort" letters and updates thereof from
the independent certified public accountants of the Issuer and the
Guarantors (and, if necessary, any other independent certified public
accountants of any subsidiary of the Issuer or the Guarantors or of any
business acquired by the Issuer and the Guarantors for which financial
statements and financial data are, or are required to be, included in
the Registration Statement), addressed to each selling Holder of the
Registrable Notes covered by such Shelf Registration Statement
(provided such Holder furnishes the accountants with such
representations as the accountants customarily require in similar
situations) and the Underwriters, if any, in customary form and
covering matters of the type customarily covered in "cold comfort"
letters in connection with primary underwritten offerings; and
(vi) deliver such documents and certificates as may be
reasonably requested by the Majority Holders and the Managing
Underwriters, if any, including those to evidence compliance with
Section 5(i) and with any customary conditions contained in the
underwriting agreement or other agreement entered into by the Issuer
and the Guarantors.
(vii) The foregoing actions set forth in clauses (iii), (iv),
(v) and (vi) of this Section 5(r) shall be performed at (A) the
effectiveness of such Shelf Registration
<PAGE> 16
Statement and each post-effective amendment thereto and (B) each
closing under any underwriting or similar agreement as and to the
extent required thereunder.
(s) The Issuer shall, if and to the extent required under the
Act and/or the Trust Indenture Act and the rules and regulations thereunder in
order to register the Registrable Notes (including the Note Guarantees, if any)
under the Act and qualify the Indenture under the Trust Indenture Act, cause
each Guarantor, if any, to sign any Registration Statement and take all other
action necessary to register the Note Guarantees, if any, under the applicable
Registration Statement.
6. Registration Expenses. The Issuer and the Guarantors shall
bear all expenses incurred in connection with the performance of their
obligations under Sections 2, 3, 4 and 5 hereof (other than brokers', dealers'
and underwriters' discounts and commissions and brokers', dealers' and
underwriters' counsel fees) and shall reimburse the Holders for the reasonable
fees and disbursements of one firm or counsel designated by the Majority Holders
to act as counsel for the Holders in connection therewith.
7. Indemnification and Contribution.
(a) (i) In connection with any Registration Statement, the
Issuer and the Guarantors jointly and severally agree to indemnify and
hold harmless each Holder of Registrable Notes covered thereby, the
directors, officers, employees and agents of each such Holder and each
person who controls any such Holder within the meaning of either the
Act or the Exchange Act against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become
subject under the Act, the Exchange Act or other Federal or state
statutory law or regulation, at common law or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement as originally filed or in any amendment thereof, in any
preliminary Prospectus or Prospectus or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and
agree to reimburse each such indemnified party, as incurred, for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Issuer and the Guarantors will not
be liable in any case to the extent that any such loss, claim, damage
or liability arises out of or is based upon (A) any such untrue
statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written
information furnished to the Issuer or the Guarantors by or on behalf
of any such Holder specifically for inclusion therein, (B) use of a
Registration Statement or the related Prospectus during a period when a
stop order has been issued in respect of such Registration or any
proceedings for that purpose have been initiated or use of a Prospectus
when use of such Prospectus has been suspended pursuant to Section
5(c); provided, further, in each case, that Holders received prior
notice of such stop order, initiation of proceedings or
<PAGE> 17
suspension or (C) the Holder failing to deliver a Prospectus or the
then current Prospectus.
(ii) The Issuer and the Guarantors also agree to indemnify or
contribute to Losses, as provided in Section 7(d), of any Underwriters
of Registrable Notes registered under a Registration Statement, their
officers and directors and each person who controls such Underwriters
on substantially the same basis as that of the indemnification of the
selling Holders provided in this Section 7(a) and shall, if requested
by any Holder, enter into an underwriting agreement reflecting such
agreement, as provided in Section 5(q) hereof.
(b) Each Holder of Registrable Notes covered by a Registration
Statement severally agrees to indemnify and hold harmless (i) the Issuer, (ii)
each Guarantor, (iii) each of their respective directors, (iv) each of their
respective officers who signs such Registration Statement and (v) each person
who controls the Issuer or any Guarantor within the meaning of either the Act or
the Exchange Act to the same extent as the foregoing indemnity from the Issuer
and the Guarantors to each such Holder, but only with reference to written
information relating to such Holder furnished to the Issuer and the Guarantors
by or on behalf of such Holder specifically for inclusion in the documents
referred to in the foregoing indemnity.
(c) Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 7, notify the indemnifying party in writing of the
commencement thereof, but the failure so to notify the indemnifying party (i)
will not relieve it from liability under paragraph (a) or (b) above unless and
to the extent it did not otherwise learn of such action and such failure results
in the forfeiture by the indemnifying party of substantial rights and defenses
and (ii) will not, in any event, relieve the indemnifying party from any
obligations to any indemnified party other than the indemnification obligation
provided in paragraph (a) or (b) above. The indemnifying party shall be entitled
to appoint counsel of the indemnifying party's choice at the indemnifying
party's expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be reasonably satisfactory to the
indemnified party. Notwithstanding the indemnifying party's election to appoint
counsel to represent the indemnified party in an action, the indemnified party
shall have the right to employ separate counsel (including local counsel), and
the indemnifying party shall bear the reasonable fees, costs and expenses of
such separate counsel (and local counsel) if (i) the use of counsel chosen by
the indemnifying party to represent the indemnified party would present such
counsel with an actual conflict of interest, (ii) the defendants in any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of the institution of such action or (iv) the indemnifying party
shall have authorized the indemnified party to employ separate counsel at the
expense of the indemnifying party; provided, further, that the indemnifying
party shall not be responsible for the fees and expenses
<PAGE> 18
of more than one separate counsel (together with appropriate local counsel)
representing all the indemnified parties under paragraph (a)(i), paragraph
(a)(ii) or paragraph (b) above. An indemnifying party will not, without the
prior written consent of the indemnified parties, settle or compromise or
consent to the entry of any judgment with respect to any pending or threatened
claim, action, suit or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified parties are
actual or potential parties to such claim or action) unless such settlement,
compromise or consent includes an unconditional release of each indemnified
party from all liability arising out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a)
or (b) of this Section 7 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, then each applicable indemnifying party, in
lieu of indemnifying such indemnified party, shall have a joint and several
obligation to contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in connection
with investigating or defending same) (collectively "Losses") to which such
indemnified party may be subject in such proportion as is appropriate to reflect
the relative benefits received by such indemnifying party, on the one hand, and
such indemnified party, on the other hand, from the Registration Statement which
resulted in such Losses; provided, however, that in no case shall any
Underwriter be responsible for any amount in excess of the underwriting discount
or commission applicable to the Registrable Notes purchased by such Underwriter
under the Registration Statement which resulted in such Losses. If the
allocation provided by the immediately preceding sentence is unavailable for any
reason, the indemnifying party and the indemnified party shall contribute in
such proportion as is appropriate to reflect not only such relative benefits but
also the relative fault of such indemnifying party, on the one hand, and such
indemnified party, on the other hand, in connection with the statements or
omissions which resulted in such Losses as well as any other relevant equitable
considerations. Benefits received by the Issuer and the Guarantors shall be
deemed to be equal to the sum of (x) the aggregate principal amount of the Notes
and (y) the total amount of Liquidated Damages which the Issuer was not required
to pay as a result of registering the Registrable Notes covered by the
Registration Statement which resulted in such Losses. Benefits received by any
Holder shall be deemed to be equal to the value of receiving Registrable Notes
registered under the Act. Benefits received by any Underwriter shall be deemed
to be equal to the total underwriting discounts and commissions, as set forth on
the cover page of the Prospectus forming a part of the Registration Statement
which resulted in such Losses. Relative fault shall be determined by reference
to whether any alleged untrue statement or omission relates to information
provided by the indemnifying party, on the one hand, or by the indemnified
party, on the other hand. The parties agree that it would not be just and
equitable if contribution were determined by pro rata allocation or any other
method of allocation which does not take account of the equitable considerations
referred to above. Notwithstanding the provisions of this paragraph (d), no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section 7,
each person who controls a Holder within the meaning of either the Act or the
Exchange Act and each director, officer, employee and agent of such Holder shall
have the same rights to contribution as such Holder, and each person who
controls the Issuer or any Guarantor within the meaning of either the Act or the
Exchange Act, each officer of the Issuer or any Guarantor who shall have signed
the Registration Statement and each director of the Issuer or any Guarantor
shall have the same
<PAGE> 19
rights to contribution as the Issuer or such Guarantor, subject in each case to
the applicable terms and conditions of this paragraph (d).
(e) The provisions of this Section 7 will remain in full force
and effect, regardless of any investigation made by or on behalf of any Holder,
the Issuer or any Guarantor or any of the officers, directors or controlling
persons referred to in Section 7 hereof, and will survive the sale by a Holder
of Registrable Notes covered by a Registration Statement.
8. Rules 144 and 144A
The Issuer covenants that it will file the reports required to
be filed by it under the Act and the Exchange Act and the rules and regulations
adopted by the SEC thereunder in a timely manner in accordance with the
requirements of the Act and the Exchange Act and, if at any time the Issuer is
not required to file such reports, it will, upon the request of any Holder of
Registrable Notes, make publicly available annual reports and such information,
documents and other reports of the type specified in Sections 13 and 15(d) of
the Exchange Act. The Issuer further covenants, for so long as any Registrable
Notes remain outstanding, to make available to any Holder or beneficial owner of
Registrable Notes in connection with any sale thereof and any prospective
purchaser of such Registrable Notes from such Holder or beneficial owner the
information required by Rule 144A(d)(4) under the Act in order to permit resales
of such Registrable Notes pursuant to Rule 144A.
9. Miscellaneous.
(a) No Inconsistent Agreements. None of the Issuer or the
Guarantors has, as of the date hereof, entered into nor shall any of them, on or
after the date hereof, enter into any agreement that is inconsistent with the
rights granted to the Holders herein or otherwise conflicts with the provisions
hereof
(b) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, qualified,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the Issuer and the Guarantors have
obtained the written consent of the Majority Holders. Notwithstanding the
foregoing, a waiver or consent to departure from the provisions hereof with
respect to a matter that relates exclusively to the rights of Holders whose
Registrable Notes are being sold pursuant to a Shelf Registration Statement or
whose Notes are being exchanged pursuant to an Exchange Offer Registration
Statement, as the case may be, and which does not directly or indirectly affect
the rights of other Holders may be given by such Holders, determined on the
basis of notes being sold rather than registered; and, furthermore, the
signatories hereto may make any amendment that does not, in the good faith
opinion of the board of directors of the Issuer (as evidenced by a resolution of
such board) materially affect any Holder. Notwithstanding any of the foregoing,
no amendment, modification, supplement, waiver or consents to any departure from
the provisions of Section 7 hereof shall be effective as against any Holder of
Registrable Notes unless consented to in writing by such Holder.
<PAGE> 20
(c) Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, first-class
mail, telex, telecopier, or air courier guaranteeing overnight delivery:
(i) if to the Initial Purchasers, as follows:
First Union Capital Markets
BancAmerica Robertson Stephens
c/o First Union Capital Markets
301 South College Street, TW-10
Charlotte, NC 28288-0606
Attention: Corporate Finance Department
(ii) if to any other Holder, at the most current address given
by such Holder to the Issuer in accordance with the provisions of this
Section 9(c), which address initially is, with respect to each Holder,
the address of such Holder maintained by the registrar under the
Indenture, with a copy in like manner to the Initial Purchasers; and
(iii) if to the Issuer, as follows:
Fresh Foods, Inc.
1 WSMP Drive
Claremont, North Carolina 28610
Attention: David R. Clark
All such notices and communications shall be deemed to have
been duly given when received, if delivered by hand or air courier, and when
sent, if sent by first-class mail, telex or telecopier.
The Issuer by notice to the others may designate additional or
different addresses for subsequent notices or communications.
(d) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including, without the need for an express assignment or any consent by
the Issuer or any Guarantor thereto, subsequent Holders. The Issuer and the
Guarantors hereby agree to extend the benefits of this Agreement to any Holder
and any such Holder may specifically enforce the provisions of this Agreement as
if an original party hereto.
(e) Counterparts. This agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) Heading. The headings in this agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
<PAGE> 21
(g) Governing Law. This agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed in said State, without regard to the
conflicts of law rules thereof
(h) Severability. In the event that any one of more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way impaired
or affected thereby, it being intended that all of the rights and privileges of
the parties shall be enforceable to the fullest extent permitted by law.
(i) Notes Held by the Issuer, etc. Whenever the consent or
approval of Holders of a specified percentage of principal amount of Registrable
Notes or Exchange Notes is required hereunder, Registrable Notes or Exchange
Notes held by the Issuer, the Guarantors or their Affiliates (other than
subsequent Holders of Registrable Notes or Exchange Notes if such subsequent
Holders are deemed to be Affiliates solely by reason of their holdings of such
notes) shall not be counted in determining whether such consent or approval was
given by the Holders of such required percentage.
* * * * *
<PAGE> 22
Please confirm that the foregoing correctly sets forth the
agreement between the Issuer and the Initial Purchasers.
Very truly yours,
FRESH FOODS, INC.
By: /s/ David R. Clark
---------------------------------------
Name: David R. Clark
Title: President
GUARANTORS:
BRUNSWICK ASSOCIATES, INC.
By: /s/ David R. Clark
---------------------------------------
Name: David R. Clark
Title: President
CLAREMONT RESTAURANT GROUP, LLC
By: FRESH FOODS, INC., Sole Member
By: /s/ David R. Clark
---------------------------------------
Name: David R. Clark
Title: President
ELLOREE FOODS, INC.
By: /s/ David R. Clark
---------------------------------------
Name: David R. Clark
Title: President
<PAGE> 23
FRESH FOODS PROPERTIES, LLC
By: FRESH FOODS, INC., Sole Member
By: /s/ David R. Clark
---------------------------------------
Name: David R. Clark
Title: President
GEORGIA BUFFET RESTAURANTS, INC.
By: /s/ David R. Clark
---------------------------------------
Name: David R. Clark
Title: President
KNOXVILLE FOODS, INC.
By: /s/ David R. Clark
---------------------------------------
Name: David R. Clark
Title: Vice President
MOM `N' POP'S COUNTRY HAM, LLC
By: FRESH FOODS, INC., Sole Member
By: /s/ David R. Clark
---------------------------------------
Name: David R. Clark
Title: President
OAK RIDGE FOODS, INC.
By: /s/ David R. Clark
---------------------------------------
Name: David R. Clark
Title: Vice President
SAGEBRUSH, INC.
By: /s/ David R. Clark
---------------------------------------
Name: David R. Clark
Title: Vice President
<PAGE> 24
SAGEBRUSH OF SEVIERVILLE, INC.
By: /s/ David R. Clark
---------------------------------------
Name: David R. Clark
Title: Vice President
SAGEBRUSH OF TENNESSEE, L.P.
By: Sagebrush of South Carolina, LLC
General Partner
By: Sagebush, Inc., Sole Member
SEVEN STARS, INC.
By: /s/ David R. Clark
---------------------------------------
Name: David R. Clark
Title: President
ST. AUGUSTINE FOODS, INC.
By: /s/ David R. Clark
---------------------------------------
Name: David R. Clark
Title: President
TENNESSEE WSMP, INC.
By: /s/ David R. Clark
---------------------------------------
Name: David R. Clark
Title: President
VIRGINIA WSMP, INC.
By: /s/ David R. Clark
---------------------------------------
Name: David R. Clark
Title: President
<PAGE> 25
CHARDENT, INC.
By: /s/ David R. Clark
---------------------------------------
Name: David R. Clark
Title: Vice President
PIERRE FOODS, LLC
By: FRESH FOODS, INC. Sole Member
By: /s/ David R. Clark
---------------------------------------
Name: David R. Clark
Title: President
GEORGIA WSMP, INC.
By: /s/ David R. Clark
---------------------------------------
Name: David R. Clark
Title: President
KINGSPORT FOODS, INC.
By: /s/ David R. Clark
---------------------------------------
Name: David R. Clark
Title: Vice President
MATTHEWS PRIME SIRLOIN, INC.
By: /s/ David R. Clark
---------------------------------------
Name: David R. Clark
Title: President
NAPLES FOODS, INC.
By: /s/ David R. Clark
---------------------------------------
Name: David R. Clark
Title: President
<PAGE> 26
PRIME SIRLOIN, INC.
By: /s/ David R. Clark
---------------------------------------
Name: David R. Clark
Title: President
SAGEBRUSH OF NORTH CAROLINA, LLC
By: FRESH FOODS, INC., Sole Member
By: /s/ David R. Clark
---------------------------------------
Name: David R. Clark
Title: President
SAGEBRUSH OF SOUTH CAROLINA, LLC
By: FRESH FOODS, INC., Sole Member
By: /s/ David R. Clark
---------------------------------------
Name: David R. Clark
Title: President
SPICEWOOD, INC.
By: /s/ David R. Clark
---------------------------------------
Name: David R. Clark
Title: Vice President
SOUTH CAROLINA WSMP, INC.
By: /s/ David R. Clark
---------------------------------------
Name: David R. Clark
Title: President
SUNSHINE WSMP, INC.
By: /s/ David R. Clark
---------------------------------------
Name: David R. Clark
Title: President
<PAGE> 27
TUMBLEWEED OF PIGEON FORGE, INC.
By: /s/ David R. Clark
---------------------------------------
Name: David R. Clark
Title: Vice President
GREENVILLE FOOD SYSTEMS,
INCORPORATED
By: /s/ David R. Clark
---------------------------------------
Name: David R. Clark
Title: President
FRESH FOODS SALES, LLC
By: FRESH FOODS, INC., Sole Member
By: /s/ David R. Clark
---------------------------------------
Name: David R. Clark
Title: President
SAGEBRUSH DTN, INC.
By: /s/ David R. Clark
---------------------------------------
Name: David R. Clark
Title: Vice President
D&S FOOD SYSTEMS, LLC
By: FRESH FOODS, INC., Sole Member
By: /s/ David R. Clark
---------------------------------------
Name: David R. Clark
Title: President
<PAGE> 28
The foregoing Agreement is
hereby confirmed and accepted
as of the date first above written.
FIRST UNION CAPITAL MARKETS
A DIVISION OF WHEAT FIRST SECURITIES, INC.
By: /s/ Eric Lloyd
---------------------------------------
Name: Eric Lloyd
Title: Director
BANCAMERICA ROBERTSON STEPHENS
By: /s/ Mark S. Dawley
---------------------------------------
Name: Mark S. Dawley
Title: Managing Director
<PAGE> 29
ANNEX A
Each broker-dealer that receives Exchange Notes for its own account pursuant to
the Registered Exchange Offer must acknowledge that it will deliver a prospectus
in connection with any resale of such Exchange Notes. The Letter of Transmittal
states that by so acknowledging and by delivering a prospectus, a broker-dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Act. This Prospectus, as it may be amended or supplemented from time to
time, may be used by a broker-dealer in connection with resales of Exchange
Notes received in exchange for Notes where such Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities. The Company has agreed that, starting on the Expiration Date and
ending on the close of business one year after the Expiration Date, it will make
this Prospectus available to any broker-dealer for use in connection with any
such resale. See "Plan of Distribution."
<PAGE> 30
ANNEX B
Each broker-dealer that receives Exchange Notes for its own account in exchange
for Notes, where such Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities, must acknowledge that it
will deliver a prospectus in connection with any resale of such Exchange Notes.
See "Plan of Distribution."
<PAGE> 31
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Notes for its own
account pursuant to the Registered Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Notes. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Notes received in
exchange for Notes where such Notes were acquired as a result of market-making
activities or other trading activities. The Company has agreed that, starting on
the Expiration Date and ending on the close of business one year after the
Expiration Date, it will make this Prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with any such resale. In
addition, until _____________,1999, all dealers effecting transactions in the
Exchange Notes may be required to deliver a prospectus.
The Company will not receive any proceeds from any sale of
Exchange Notes by broker-dealers. Exchange Notes received by broker-dealers for
their own account pursuant to the Registered Exchange Offer may be sold from
time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the Exchange Notes or
a combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer and/or the purchasers of any such
Exchange Notes. Any broker-dealer that resells Exchange Notes that were received
by it for its own account pursuant to the Registered Exchange Offer and any
broker or dealer that participates in a distribution of such Exchange Notes may
be deemed to be an "underwriter" within the meaning of the Act and any profit
from any such resale of Exchange Notes and any commissions or concessions
received by any such persons may be deemed to be underwriting compensation under
the Act. The Letter of Transmittal states that by acknowledging that it will
deliver and by delivering a prospectus, a broker-dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Act.
For a period of one year after the Expiration Date, the
Company will promptly send additional copies of this Prospectus and any
amendment or supplement to this Prospectus to any broker-dealer that requests
such documents in the Letter of Transmittal. The Company has agreed to pay all
expenses incident to the Registered Exchange Offer (including the expenses of
one counsel for the holders of the Notes) other than dealers' and brokers'
discounts, commissions and counsel fees) and will indemnify the holders of the
Notes (including any broker-dealers) against certain liabilities, including
liabilities under the Act.
[If applicable, add information required by Regulation S-K
Items 507 and/or 508.]
<PAGE> 32
ANNEX D
CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY
AMENDMENTS OR SUPPLEMENTS THERETO.
TM
Name:
---------------------------------------------
Address:
---------------------------------------------
---------------------------------------------
The undersigned represents that it is not an affiliate of the
Company, that any Exchange Notes to be received by it will be acquired in the
ordinary course of business and that at the time of the commencement of the
Registered Exchange Offer it had no arrangement with any person to participate
in a distribution of the Exchange Notes.
In addition, if the undersigned is not a broker-dealer, the
undersigned represents that it is not engaged in, and does not intend to engage
in, a distribution of Exchange Notes. If the undersigned is a broker-dealer that
will receive Exchange Notes for its own account in exchange for Notes, it
represents that the Notes to be exchanged for Exchange Notes were acquired by it
as a result of market-making activities or other trading activities and
acknowledges that it will deliver a prospectus in connection with any resale of
such Exchange Notes; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Act.
<PAGE> 33
ANNEX E
FORM OF LETTER TO BE PROVIDED BY ISSUER TO
THE DEPOSITORY TRUST COMPANY
The Depository Trust Company
7 Hanover Square, 23rd Floor
New York, NY 10004
Re: 10 3/4% Senior Notes Due 2006 (the "Notes") of Fresh
Foods, Inc.
Ladies and Gentlemen:
Please be advised that the Securities and Exchange Commission
has declared effective a Registration Statement under the Securities Act of
1933, as amended, with regard to all of the Notes referenced above. Accordingly,
there is no longer any restriction as to whom such Notes may be sold and any
restrictions on the CUSIP designation are no longer appropriate and may be
removed. I understand that, upon receipt of this letter, DTC will remove any
stop or restriction on its system with respect to this issue.
As always, please do not hesitate to call if we can be of
further assistance.
Very truly yours,
Authorized Officer
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Post-Effective Amendment No. 11
to Registration Statement No. 33-15017, Post-Effective Amendment No. 1 to
Registration Statement No. 333-29111, Post-Effective Amendment No. 5 to
Registration Statement No. 33-79014, Post-Effective Amendment No. 2 to
Registration Statement No. 333-32455, and Post-Effective Amendment No. 2 to
Registration Statement No. 333-33439 on Forms S-8 of our report dated May 1,
1998, appearing in this Current Report on Form 8-K of Fresh Foods, Inc.
DELOITTE & TOUCHE LLP
Charlotte, North Carolina
June 24, 1998
<PAGE> 1
EXHIBIT 99.1
- --------------------------------------------------------------------------------
$75,000,000
CREDIT AGREEMENT
Dated as of June 9, 1998
among
FRESH FOODS, INC.,
and
Certain of its U.S. Subsidiaries,
as Borrowers,
EACH OF THE FINANCIAL INSTITUTIONS
INITIALLY A SIGNATORY HERETO,
TOGETHER WITH THOSE ASSIGNEES
PURSUANT TO SECTION 14.6 HEREOF,
as Lenders,
and
FIRST UNION COMMERCIAL CORPORATION,
as Agent
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I DEFINITIONS............................................................................................1
1.1 General Definitions..................................................................................1
1.2 Accounting Terms and Determinations.................................................................27
1.3 Other Definitional Terms............................................................................28
ARTICLE II REVOLVING LOANS......................................................................................28
2.1 Revolving Loans.....................................................................................28
2.2 [intentionally left blank]..........................................................................34
2.3 Optional and Mandatory Prepayments; Reduction of Commitments........................................34
2.4 Payments and Computations...........................................................................35
2.5 Maintenance of Account..............................................................................37
2.6 Statement of Account................................................................................38
2.7 Taxes...............................................................................................38
2.8 Sharing of Payments.................................................................................40
2.9 Pro Rata Treatment..................................................................................40
2.10 Extensions and Conversions.........................................................................40
ARTICLE III LETTERS OF CREDIT...................................................................................41
3.1 Issuance............................................................................................41
3.2 Notice and Reports..................................................................................41
3.3 Participation.......................................................................................42
3.4 Reimbursement.......................................................................................42
3.5 Repayment with Revolving Loans......................................................................43
3.6 Renewal, Extension..................................................................................44
3.7 Uniform Customs and Practices.......................................................................44
3.8 Indemnification; Nature of Issuing Bank's Duties....................................................44
3.9 Responsibility of Issuing Bank......................................................................46
3.10 Conflict with Letter of Credit Documents...........................................................46
ARTICLE IV INTEREST AND FEES....................................................................................46
4.1 Interest on Loans...................................................................................46
4.2 Interest After Event of Default.....................................................................46
4.3 Unused Line Fee.....................................................................................47
4.4 Lenders' Fees/Agent's Fees..........................................................................47
4.5 Letter of Credit Fees...............................................................................47
4.6 Authorization to Charge Account.....................................................................48
4.7 Indemnification in Certain Events...................................................................48
4.8 Inability To Determine Interest Rate................................................................48
4.9 Illegality..........................................................................................49
4.10 Funding Indemnity..................................................................................49
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C>
ARTICLE V CONDITIONS PRECEDENT..................................................................................50
5.1 Closing Conditions..................................................................................50
5.2 Material Adverse Change.............................................................................50
5.3 Fees................................................................................................50
5.4 Representations and Warranties; No Default..........................................................50
5.5 Notice of Borrowing.................................................................................51
5.6 Additional Documents................................................................................51
ARTICLE VI REPRESENTATIONS AND WARRANTIES.......................................................................51
6.1 Organization and Qualification......................................................................51
6.2 Solvency............................................................................................52
6.3 Liens; Inventory....................................................................................52
6.4 No Conflict.........................................................................................52
6.5 Enforceability......................................................................................53
6.6 Financial Data......................................................................................53
6.7 Locations of Offices, Records and Inventory.........................................................54
6.8 Fictitious Business Names...........................................................................54
6.9 Subsidiaries........................................................................................54
6.10 No Judgments or Litigation.........................................................................54
6.11 No Defaults........................................................................................55
6.12 No Employee Disputes...............................................................................55
6.13 Compliance with Law................................................................................55
6.14 ERISA..............................................................................................55
6.15 Compliance with Environmental Laws.................................................................56
6.16 Use of Proceeds....................................................................................56
6.17 Intellectual Property..............................................................................57
6.18 Licenses and Permits...............................................................................57
6.19 Title to Property..................................................................................58
6.20 Labor Matters......................................................................................58
6.21 Investment Company.................................................................................59
6.22 Margin Security....................................................................................59
6.23 No Event of Default................................................................................59
6.24 Taxes and Tax Returns..............................................................................59
6.25 No Other Indebtedness..............................................................................60
6.26 Status of Accounts.................................................................................60
6.27 Representations and Warranties.....................................................................60
6.28 Material Contracts.................................................................................61
6.29 Survival of Representations........................................................................61
6.30 Affiliate Transactions.............................................................................61
6.31 Key Members of Management..........................................................................61
6.32 Accuracy and Completeness of Information...........................................................61
6.33 Farm Products, etc.................................................................................61
ARTICLE VII AFFIRMATIVE COVENANTS...............................................................................62
7.1 Financial Information...............................................................................62
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
<S> <C>
7.2 Inventory/ Equipment................................................................................64
7.3 Corporate Existence.................................................................................64
7.4 ERISA...............................................................................................65
7.5 Proceedings or Adverse Changes......................................................................66
7.6 Environmental Matters...............................................................................66
7.7 Books and Records...................................................................................67
7.8 Collateral Records..................................................................................68
7.9 Security Interests..................................................................................68
7.10 Insurance; Casualty Loss...........................................................................69
7.11 Taxes..............................................................................................70
7.12 Compliance With Laws...............................................................................70
7.13 Use of Proceeds....................................................................................70
7.14 Fiscal Year........................................................................................70
7.15 Notification of Certain Events.....................................................................71
7.16 Additional Borrowers...............................................................................71
7.17 Schedules of Accounts and Purchase Orders..........................................................72
7.18 Collection of Accounts.............................................................................72
7.19 Notice; Credit Memoranda; and Returned Goods.......................................................72
7.20 Acknowledgment Agreements..........................................................................73
7.21 Trademarks.........................................................................................73
7.22 Maintenance of Property............................................................................73
7.23 Covenants Relating to Packers and Stockyard Act....................................................73
7.24 Covenants Relating to Food Security Act............................................................73
7.25 Year 2000 Compliance...............................................................................74
7.26 Additional Eligible Real Property..................................................................74
7.27 Reorganization.....................................................................................74
7.28 Post-Closing Matters...............................................................................74
ARTICLE VIII FINANCIAL COVENANTS................................................................................75
8.1 Leverage Ratio......................................................................................75
8.2 Fixed Charge Coverage Ratio.........................................................................75
8.3 Capital Expenditures................................................................................75
8.4 Restaurant Capital Expenditures.....................................................................76
8.5 Availability........................................................................................76
ARTICLE IX NEGATIVE COVENANTS...................................................................................76
9.1 Restrictions on Liens...............................................................................76
9.2 Restrictions on Additional Indebtedness.............................................................76
9.3 Restrictions on Sale of Assets......................................................................76
9.4 No Corporate Changes................................................................................77
9.5 No Guarantees.......................................................................................77
9.6 No Restricted Payments..............................................................................77
9.7 No Investments......................................................................................77
9.8 No Affiliate Transactions...........................................................................77
9.9 No Prohibited Transactions Under ERISA..............................................................78
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
<S> <C>
9.10 No Additional Bank Accounts........................................................................79
9.11 No Excess Cash.....................................................................................79
9.12 Restrictions on the Company........................................................................79
9.13 Issuance of Stock..................................................................................79
9.14 Material Amendments of Material Contracts..........................................................79
9.15 Additional Negative Pledges........................................................................79
9.16 Senior Unsecured Debt..............................................................................80
9.17 Sale and Leaseback.................................................................................80
9.18 Licenses, Etc......................................................................................80
9.19 Limitations........................................................................................80
ARTICLE X POWERS................................................................................................81
10.1 Appointment as Attorney-in-Fact....................................................................81
10.2 Limitation on Exercise of Power....................................................................81
ARTICLE XI EVENTS OF DEFAULT AND REMEDIES.......................................................................82
11.1 Events of Default..................................................................................82
11.2 Acceleration.......................................................................................84
ARTICLE XII TERMINATION.........................................................................................84
ARTICLE XIII THE AGENT..........................................................................................85
13.1 Appointment of Agent...............................................................................85
13.2 Nature of Duties of Agent..........................................................................85
13.3 Lack of Reliance on Agent..........................................................................86
13.4 Certain Rights of the Agent........................................................................86
13.5 Reliance by Agent..................................................................................86
13.6 Indemnification of Agent...........................................................................87
13.7 The Agent in its Individual Capacity...............................................................87
13.8 Holders of Notes...................................................................................87
13.9 Successor Agent....................................................................................88
13.10 Collateral Matters................................................................................88
13.11 Actions with Respect to Defaults..................................................................90
13.12 Delivery of Information...........................................................................90
ARTICLE XIV MISCELLANEOUS.......................................................................................90
14.1 Waivers............................................................................................90
14.2 JURY TRIAL.........................................................................................91
14.3 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE...................................................91
14.4 Arbitration........................................................................................91
14.5 Notices............................................................................................93
14.6 Assignability......................................................................................93
14.7 Information........................................................................................96
14.8 Payment of Expenses; Indemnification...............................................................97
14.9 Entire Agreement, Successors and Assigns...........................................................98
</TABLE>
iv
<PAGE> 6
<TABLE>
<CAPTION>
<S> <C>
14.10 Amendments, Etc...................................................................................98
14.11 Nonliability of Agent and Lenders.................................................................98
14.12 Independent Nature of Lenders' Rights.............................................................99
14.13 Counterparts......................................................................................99
14.14 Effectiveness.....................................................................................99
14.15 Severability......................................................................................99
14.16 Headings Descriptive..............................................................................99
14.17 Maximum Rate......................................................................................99
14.18 Right of Setoff..................................................................................100
14.19 Concerning Joint and Several Liability of the Borrowers..........................................100
14.20 Power of Attorney................................................................................103
</TABLE>
EXHIBITS AND SCHEDULES
EXHIBITS
Exhibit A Form of Acknowledgment Agreement
Exhibit B Form of Assignment and Acceptance
Exhibit C Form of Solvency Certificate
Exhibit D Form of Landlord Lien Waiver Agreement
Exhibit E Form of Pledge Agreement
Exhibit F Form of Security Agreement
Exhibit G Form of Revolving Note
Exhibit H Form of Notice of Borrowing
Exhibit I Form of Lockbox Agreement
Exhibit J Form of Notice of Extension/Conversion
Exhibit K Form of Compliance Certificate
Exhibit L Form of Borrowing Base Certificate
Exhibit M Form of Joinder Agreement
Exhibit N Form of Mortgagee Lien Waiver Agreement
SCHEDULES
Schedule 1.1A Lenders and Commitments
Schedule 1.1B Closing Conditions
Schedule 1.1C Liens
Schedule 1.1D Indebtedness
Schedule 1.1E Investments
Schedule 1.1F Corporate Structure
Schedule 1.1G Equipment Appraisals
Schedule 1.1H Unsecured Letters of Credit
Schedule 6.1 Jurisdictions of Organization
Schedule 6.7 Collateral Locations
Schedule 6.8 Fictitious Business Names
v
<PAGE> 7
Schedule 6.9 Subsidiaries
Schedule 6.10 Litigation
Schedule 6.14 ERISA
Schedule 6.15 Environmental Disclosures
Schedule 6.17 Intellectual Property
Schedule 6.19 Real Estate
Schedule 6.24 Taxes
Schedule 6.28 Material Contracts
Schedule 6.30 Affiliate Transactions
Schedule 6.31 Key Members of Management
Schedule 6.34 Restaurant Business
Schedule 9.3 Sales of Assets
Schedule 9.10 Bank Accounts
vi
<PAGE> 8
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is entered into as of June 9, 1998 among FRESH
FOODS, INC., a North Carolina corporation (the "Company"), the Subsidiary
Borrowers (as defined herein) (hereinafter, the Company and the Subsidiary
Borrowers collectively referred to as the "Borrowers" or individually referred
to as a "Borrower"), each of those financial institutions identified as Lenders
on Schedule 1.1A hereto (together with each of their successors and assigns,
referred to individually as a "Lender" and, collectively, as the "Lenders"), and
FIRST UNION COMMERCIAL CORPORATION ("FUCC"), acting in the manner and to the
extent described in Article XIII hereof (in such capacity, the "Agent").
W I T N E S S E T H:
WHEREAS, the Borrowers wish to obtain a revolving credit facility to
provide for the acquisition by the Company of the Pierre Foods Division of
Hudson Foods, Inc., a subsidiary of Tyson Foods, Inc., and to provide for the
working capital, letter of credit and general corporate needs of the Borrowers;
and
WHEREAS, upon the terms and subject to the conditions set forth herein,
the Lenders are willing to make loans and advances to the Borrowers;
NOW, THEREFORE, the Borrowers, the Lenders and the Agent hereby agree
as follows:
ARTICLE I
DEFINITIONS.
1.1 GENERAL DEFINITIONS.
As used herein, the following terms shall have the meanings herein
specified:
"Accounts" shall mean all of each Borrower's accounts, whether now
existing or existing in the future, including, without limitation, all (i)
accounts receivable (whether or not specifically listed on schedules furnished
to the Agent), including without limitation, all accounts created by or arising
from all of each Borrower's sales of goods or rendition of services made under
any of each Borrower's trade names or styles, or through any of each Borrower's
divisions; (ii) unpaid seller's rights (including rescission, replevin,
reclamation and stopping in transit) relating to the foregoing or arising
therefrom; (iii) rights to any goods represented by any of the foregoing,
including returned or repossessed goods; (iv) reserves and credit balances held
by each Borrower with respect to any such accounts receivable or account
debtors; (v) guarantees or collateral for any of the foregoing; and (vi)
insurance policies or rights relating to any of the foregoing.
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<PAGE> 9
"Acknowledgment Agreements" shall mean (i) the Acknowledgment
Agreements, substantially in the form of Exhibit A hereto, between each
Borrower's warehousemen, fillers, packers and processors and the Agent, in each
case acknowledging and agreeing, among other things, (A) that such warehousemen,
fillers, packers and processors do not have any Liens on any of the property of
any Borrower or any Subsidiary, other than for customary fees and storage
charges, and (B) to the collateral assignment by each Borrower to the Agent of
each such Borrower's interest in the contracts with each of such warehousemen,
fillers, packers and processors and (ii) Landlord Agreements.
"Acquired Company" shall mean the Person (or the assets thereof) which
is acquired pursuant to an Acquisition.
"Acquisition" shall mean the purchase of (i) the Capital Stock of a
Person, (ii) the assets of such Person through merger or consolidation with such
Person or (iii) the plant, property and equipment of such Person, or a portion
thereof, together with the related current assets and intangible assets of such
Person.
"Acquisition Documents" shall mean an asset purchase agreement pursuant
to which an Acquisition is made in accordance with the terms hereof, including
the exhibits and schedules thereto, and all agreements, documents and
instruments executed and delivered pursuant thereto or in connection therewith.
"Affiliate" shall mean any entity which directly or indirectly
controls, is controlled by, or is under common control with, any Borrower or any
Subsidiary. For purposes of this definition, "control" shall mean the
possession, directly or indirectly, of the power to (i) vote ten percent (10%)
or more of the securities having ordinary voting power for the election of
directors of such Person or (ii) direct or cause the direction of management and
policies of a business, whether through the ownership of voting securities, by
contract or otherwise and either alone or in conjunction with others or any
group.
"Agent" shall mean FUCC as provided in the preamble to this Credit
Agreement or any successor to FUCC.
"Agent's Fees" shall mean the fees payable by the Borrowers to the
Agent as described in the Fee Letter.
"Applicable Percentage" shall mean for Eurodollar Loans, Base Rate
Loans and Unused Line Fees, the appropriate applicable percentages corresponding
to the Leverage Ratio in effect as of the most recent Calculation Date as shown
below:
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<PAGE> 10
<TABLE>
<CAPTION>
- ----------- --------------------- ---------------------------- ---------------------------- --------------------------
Tier Applicable Percentage for Applicable Percentage for Applicable Percentage
Levels Leverage Ratio Eurodollar Loans Base Rate Loans for Unused Line Fee
- ----------- --------------------- ---------------------------- ---------------------------- --------------------------
<S> <C> <C> <C> <C>
1 > 5.5:1.0 2.625% 1.125% .50%
- ----------- --------------------- ---------------------------- ---------------------------- --------------------------
2 > 5.0:1.0 <= 5.5:1.0 2.375% 0.875% .50%
- ----------- --------------------- ---------------------------- ---------------------------- --------------------------
3 > 4.5:1.0 <= 5.0:1.0 2.125% 0.625% .375%
- ----------- --------------------- ---------------------------- ---------------------------- --------------------------
4 > 4.0:1.0 <= 4.5:1.0 1.875% 0.375% .375%
- ----------- --------------------- ---------------------------- ---------------------------- --------------------------
5 > 3.5:1.0 <= 4.0:1.0 1.625% 0.125% .25%
- ----------- --------------------- ---------------------------- ---------------------------- --------------------------
6 > 3.0:1.0 <= 3.5:1.0 1.375% 0.00% .25%
- ----------- --------------------- ---------------------------- ---------------------------- --------------------------
7 <= 3.0:1.0 1.125% 0.00% .25%
- ----------- --------------------- ---------------------------- ---------------------------- --------------------------
</TABLE>
The Applicable Percentages shall be determined and adjusted quarterly on the
date (each a "Calculation Date") which is the first Business Day of the calendar
month immediately following the calendar month in which the Company provides the
quarterly officer's certificate in accordance with the provisions of Section
7.1(f); provided, however, that (i) the initial Applicable Percentages shall be
based on Tier Level 3 (as shown above) and shall remain at Tier Level 3 until
the first Calculation Date subsequent to the Closing Date, and, thereafter, the
Tier Level shall be determined by the then current Leverage Ratio, and (ii) if
the Company fails to provide the officer's certificate to the Agent for any
fiscal quarter as required by and within the time limits set forth in Section
7.1(f), the Applicable Percentages from the applicable date of such failure
shall be based on Tier Level 1 until the first Business Day of the calendar
month immediately following the calendar month in which an appropriate officer's
certificate is provided, whereupon the Tier Level shall be determined by the
then current Leverage Ratio. Except as set forth above, each Applicable
Percentage shall be effective from one Calculation Date until the next
Calculation Date.
"Approved Restaurants" shall have the meaning given to such term in the
definition of Eligible Real Property herein.
"Asset Disposition" shall mean the disposition of any or all of the
assets (including without limitation the Capital Stock of a Borrower or
Subsidiary of a Borrower) of any Borrower or its Subsidiaries whether by sale,
lease, transfer or otherwise .
"Assignment and Acceptance" shall mean an assignment and acceptance
entered into by an assigning Lender and an assignee Lender, accepted by the
Agent, in accordance with Section 14.6(f), in the form attached hereto as
Exhibit B.
"Availability" shall mean as of any date of determination, the lesser
of the Revolving Credit Committed Amount and the Borrowing Base as of such date,
minus the outstanding principal amount of the Revolving Loans then outstanding
minus the Letter of Credit Obligations then outstanding.
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<PAGE> 11
"Base Rate" shall mean, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest whole multiple of 1/100 of 1%) equal to
the greater of (i) the Federal Funds Rate in effect on such day plus 1/2 of 1%
or (ii) the Prime Rate in effect on such day. If for any reason the Agent shall
have determined (which determination shall be conclusive absent manifest error)
that it is unable after due inquiry to ascertain the Federal Funds Rate for any
reason, including the inability or failure of the Agent to obtain sufficient
quotations in accordance with the terms hereof, the Base Rate shall be
determined without regard to clause (i) of the first sentence of this definition
until the circumstances giving rise to such inability no longer exist. Any
change in the Base Rate due to a change in the Prime Rate or the Federal Funds
Rate shall be effective on the effective date of such change in the Prime Rate
or the Federal Funds Rate, respectively.
"Base Rate Loan" shall mean any Loan bearing interest at a rate
determined by reference to the Base Rate.
"Benefit Plan" shall mean a defined benefit plan as defined in Section
3(35) of ERISA (other than a Multiemployer Plan) in respect of which any
Borrower, any Subsidiary or any ERISA Affiliate is, or within the immediately
preceding six (6) years was, an "employer" as defined in Section 3(5) of ERISA.
"Borrower" and "Borrowers" shall have the meaning given such terms in
the preamble of this Credit Agreement.
"Borrowing Base" shall have the meaning given to such term in Section
2.1(b)(i).
"Borrowing Base Certificate" shall have the meaning given to such term
in Section 7.1(e).
"Business Day" shall mean any day other than a Saturday, a Sunday, a
legal holiday or a day on which banking institutions are authorized or required
by law or other governmental action to close in Charlotte, North Carolina or New
York, New York; provided that in the case of Eurodollar Loans, such day is also
a day on which dealings between banks are carried on in U.S. dollar deposits in
the London interbank market.
"Capital Lease" shall mean, as applied to any Person, any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
accordance with GAAP, is or should be accounted for as a capital lease on the
balance sheet of that Person.
"Capital Stock" shall mean (i) in the case of a corporation, capital
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of capital stock, (iii) in the case of a partnership, partnership
interests (whether general or limited), (iv) in the case of a limited liability
company, membership interests and (v) any other interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, the issuing Person.
-4-
<PAGE> 12
"Cash Collateral Accounts" shall mean the FUNB NonRestaurant Cash
Collateral Account and the FUNB Claremont Restaurant Cash Collateral Account.
"Cash Equivalents" shall mean, as to any Person, (i) securities issued
or directly and fully guaranteed or insured by the United States or any agency
or instrumentality thereof (provided that the full faith and credit of the
United States is pledged in support thereof) having maturities of not more than
one year from the date of acquisition, (ii) time deposits or certificates of
deposit of any commercial bank incorporated under the laws of the United States
or any state thereof, of recognized standing having capital and unimpaired
surplus in excess of $1,000,000,000 and whose short-term commercial paper rating
at the time of acquisition is at least A-1 or the equivalent thereof by Standard
& Poor's Corporation or at least P-1 or the equivalent thereof by Moody's
Investors Services, Inc. (any such bank, an "Approved Bank"), with such deposits
or certificates having maturities of not more than one year from the date of
acquisition, (iii) repurchase obligations with a term of not more than seven
days for underlying securities of the types described in clauses (i) and (ii)
above entered into with any Approved Bank, (iv) commercial paper or finance
company paper issued by any Person incorporated under the laws of the United
States or any state thereof and rated at least A-1 or the equivalent thereof by
Standard & Poor's Corporation or at least P-1 or the equivalent thereof by
Moody's Investors Service, Inc., and in each case maturing not more than one
year after the date of acquisition, and (v) investments in money market funds
that are registered under the Investment Company Act of 1940, which have net
assets of at least $1,000,000,000 and at least 85% of whose assets consist of
securities and other obligations of the type described in clauses (i) through
(iv) above. All such Cash Equivalents must be denominated solely for payment in
U.S. Dollars.
"Casualty Loss" shall have the meaning given to such term in Section
7.10.
"Change of Control" shall mean the occurrence of any of the following:
(i) any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act), other than one or more Permitted Holders, is or becomes the
beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act,
except that for purposes of this clause (i) such person shall be deemed to have
"beneficial ownership" of all shares that any such person has the right to
acquire, whether such right is exercisable immediately or only after the passage
of time), directly or indirectly, of more than 50% of the total voting power of
the Voting Stock of the Borrower; (ii) the Borrower merges with or into another
Person or sells, assigns, conveys, transfers, leases or otherwise disposes of
all or substantially all of its assets to any Person, or any Person merges with
or into the Borrower, in any such event pursuant to a transaction in which the
outstanding Voting Stock of the Borrower is converted into or exchanged for
cash, securities or other property, other than any such transaction where (x)
the outstanding Voting Stock of the Borrower is converted into or exchanged for
(1) Voting Stock of the surviving or transferee corporation and/or (2) cash,
securities or other property in an amount which could be paid by the Borrower as
a "restricted payment" under the indenture governing the Senior Unsecured Debt
and (y) immediately after such transaction no "person" or "group" (within the
meaning of Section 13(d) or 14(d) of the Exchange Act) (other than the Permitted
Holders) is the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under
the Exchange Act, except that a person shall be deemed to have "beneficial
ownership" of all shares that any such Person has the right to acquire, whether
such
-5-
<PAGE> 13
right is exercisable immediately or only after the passage of time), directly or
indirectly, of (1) 50% or more of the voting power of the Voting Stock of the
surviving or transferee corporation on a fully diluted basis, after giving
effect to the conversion or exercise of all outstanding warrants, options and
other securities of such surviving or transferee corporation, convertible into
or exercisable for Voting Stock of such surviving or transferee corporation
(whether or not such securities are then currently convertible or exercisable)
and (2) a greater percentage of the Voting Stock of such surviving or transferee
corporation, calculated on a fully diluted basis, than the percentage
beneficially owned by the Permitted Holders; or (iii) during any period of two
consecutive years, individuals who at the beginning of such period constituted
the board of directors of the Borrower (together with any new directors whose
election by such board of directors or whose nomination for election by the
shareholders of the Borrower was approved by a vote of 66 2/3% of the directors
of the Borrower then still in office who were either directors at the beginning
of such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the board of
directors of the Borrower then in office.
"Closing" shall mean the consummation of the making of the initial loan
or advance by the Lenders to the Borrowers under this Credit Agreement.
"Closing Conditions" shall mean the list of Closing Conditions attached
hereto as Schedule 1.1B.
"Closing Date" shall mean the date on which the Closing occurs.
"Collateral" shall mean any and all assets and rights and interests in
or to property of the Borrowers pledged from time to time as security for the
Obligations pursuant to the Security Documents whether now owned or hereafter
acquired, including, without limitation, (i) all of the Accounts, Chattel Paper,
Deposit Accounts, Documents, Equipment, Fixtures, General Intangibles (including
all intellectual property), Inventory, Instruments and Proceeds of each
Borrower, as defined in the Security Agreement, (ii) all Pledged Stock and all
Proceeds thereof pledged pursuant to the Pledge Agreement and (iii) all of the
real property subject to the Mortgages.
"Consolidated or consolidated" with reference to any term defined
herein, shall mean that term as applied to the accounts of the Company and all
Subsidiaries, consolidated in accordance with GAAP.
"Consolidated Capital Expenditures" shall mean, for any applicable
period of computation, an amount equal to the consolidated aggregate
expenditures of the Company and its Subsidiaries during such fiscal period for
the acquisition (including the acquisition by capitalized lease) or improvement
of capital assets, as determined in accordance with GAAP.
"Consolidated Cash Taxes" shall mean, for any applicable period of
computation, the aggregate of all taxes of the Company and its Subsidiaries on a
consolidated basis for such period,
-6-
<PAGE> 14
as determined in accordance with GAAP, to the extent the same are paid in cash
during such period.
"Consolidated EBITDA" shall mean, for any applicable period of
computation, the sum of (i) Consolidated Net Income for such period, but
excluding therefrom all extraordinary non-cash items of income or loss, plus
(ii) the aggregate amount of depreciation, amortization and other non-cash
charges made in calculating Consolidated Net Income for such period, plus (iii)
aggregate consolidated interest expense for such period, plus (iv) the aggregate
amount of all income taxes reflected on the consolidated statements of income of
the Company and its Subsidiaries for such period plus transaction, integration
and systems related charges up to $2,000,000 related to the acquisition of the
Pierre Foods Division and taken during the four fiscal quarterly periods
subsequent to such acquisition. Consolidated EBITDA shall include gains or
losses on the sale of assets.
"Consolidated Fixed Charges" shall mean, for any applicable period of
computation, the sum of (i) all Consolidated Interest Expense for the applicable
period plus (ii) all Consolidated Cash Taxes paid during the applicable period
plus (iii) Consolidated Scheduled Funded Debt Payments for the applicable period
plus (iv) cash dividends paid by the Company pursuant to Section 9.6 in the
applicable period.
"Consolidated Funded Debt" shall mean, as of the date of determination,
all Funded Indebtedness of the Company and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" shall mean, for any applicable period
of computation, interest expense on Consolidated Funded Debt of the Company and
its Subsidiaries for such period, as determined in accordance with GAAP.
"Consolidated Net Income" shall mean the consolidated net income (or
net deficit) of the Company and its Subsidiaries for any period, after deduction
of all expenses, taxes and other proper charges, all as determined in accordance
with GAAP.
"Consolidated Restaurant Capital Expenditures" shall mean Consolidated
Capital Expenditures incurred in connection with the opening of new, or the
conversion of existing, restaurants of the Company and its Subsidiaries.
"Consolidated Scheduled Funded Debt Payments" shall mean, as of the end
of each fiscal quarter of the Company and its Subsidiaries on a consolidated
basis, the sum of all scheduled payments of principal on Consolidated Funded
Indebtedness for the applicable period ending on such date (including the
principal component of payments due on Capital Leases during the applicable
period ending on such date); it being understood that Consolidated Scheduled
Funded Debt Payments shall not include voluntary prepayments or the mandatory
prepayments required pursuant to Section 2.4.
-7-
<PAGE> 15
"Contractual Obligations" shall mean, with respect to any Person, any
term or provision of any securities issued by such Person, or any indenture,
mortgage, deed of trust, contract, undertaking, document, instrument or other
agreement to which such Person is a party or by which it or any of its
properties is bound or to which it or any of its properties is subject.
"Credit Agreement" shall mean this credit agreement, dated as of the
date hereof, as the same may be modified, amended, extended, restated or
supplemented from time to time.
"Credit Documents" shall mean, collectively, this Credit Agreement, the
Revolving Notes, the Letters of Credit, the Security Documents and all other
documents, agreements, instruments, opinions and certificates executed and
delivered in connection herewith or therewith, as the same may be modified,
amended, extended, restated or supplemented from time to time.
"Default" shall mean an event, condition or default which, with the
giving of notice, the passage of time or both would be an Event of Default.
"Defaulting Lender" shall have the meaning given to such term in
Section 2.1(d)(iii).
"DOL" shall mean the United States Department of Labor and any
successor department or agency.
"Dollars" and "$" shall mean dollars in lawful currency of the United
States of America.
"Eligible Accounts Receivable" shall mean the aggregate face amount of
the Borrowers' Accounts that conform to the warranties contained herein and at
all times continue to be acceptable to the Agent in its reasonable discretion,
less the aggregate amount of all returns, discounts, claims, credits, charges
(including warehousemen's charges) and allowances of any nature (whether issued,
owing, granted or outstanding), and less the aggregate amount of all reserves
for slow paying accounts, foreign sales, bill and hold (or deferred shipment)
transactions and the Lenders' charges as set forth in this Credit Agreement.
Unless otherwise approved in writing by the Agent, no Account shall be deemed to
be an Eligible Account Receivable if:
(i) it arises out of a sale made by any Borrower to an
Affiliate; or
(ii) (A) the Account is unpaid more than 60 days after the
original invoice date, with respect to Accounts the invoice for which
provides that payment is due in 60 days or less from the date of such
invoice (for purposes hereof, a "Regular Account"), (B) the Account is
unpaid more than 30 days after the original due date, with respect to
Accounts the invoice for which provides that payment is due 90 days or
less, but more than 60 days, from the date of such invoice or (C) any
Account the invoice for which provides that payment is due more than 90
days from the date of such invoice; or
(iii) such Account is from the same account debtor (or any
affiliate thereof) and fifty percent (50%) or more, in face amount, of
other Accounts from such account
-8-
<PAGE> 16
debtor (or any affiliate thereof) are due or unpaid more than 60 days
after the original invoice date; or
(iv) the Account, when aggregated with all other Accounts of
such account debtor, exceeds twenty percent (20%) in face value of all
Accounts of the Borrowers then outstanding, to the extent of such
excess, or such Account, on an individual basis, exceeds fifteen
percent (15%) in face value of all Accounts of any one Borrower; or
(v) (A) the account debtor is also a creditor of any Borrower,
to the extent of the amount owed by the Borrower to the account debtor,
(B) the account debtor has disputed its liability on, or the account
debtor has made any claim with respect to, such Account or any other
Account due from such account debtor to such Borrower, which has not
been resolved or (C) the Account otherwise is or may become subject to
any right of setoff by the account debtor, to the extent of the amount
of such setoff; or
(vi) the account debtor has commenced a voluntary case under
the federal bankruptcy laws, as now constituted or hereafter amended,
or made an assignment for the benefit of creditors, or if a decree or
order for relief has been entered by a court having jurisdiction in the
premises in respect to the account debtor in an involuntary case under
the federal bankruptcy laws, as now constituted or hereafter amended,
or if any other petition or other application for relief under the
federal bankruptcy laws has been filed by or against the account
debtor, or if the account debtor has failed, suspended business, ceased
to be solvent, or consented to or suffered a receiver, trustee,
liquidator or custodian to be appointed for it or for all or a
significant portion of its assets or affairs; or
(vii) the sale is to an account debtor outside the continental
United States, unless the sale is (A) on letter of credit, guaranty or
acceptance terms, in each case acceptable to the Agent in its
reasonable discretion, or (B) otherwise approved by and acceptable to
the Agent in its reasonable discretion; or
(viii) the sale to the account debtor is on a bill-and-hold,
guaranteed sale, sale-and-return, sale on approval or consignment basis
or made pursuant to any other written agreement providing for
repurchase or return; or
(ix) Agent believes, in its commercially reasonable judgment,
that collection of such Account is insecure or that such Account may
not be paid by reason of the account debtor's financial inability to
pay; or
(x) the account debtor is the United States of America or any
department, agency or instrumentality thereof, unless the applicable
Borrower duly assigns its rights to payment of such Account to the
Agent pursuant to the Assignment of Claims Act of 1940, as amended (31
U.S.C. ss. 3727 et seq.); or
(xi) the goods giving rise to such Account have not been
shipped and delivered to and accepted by the account debtor or the
services giving rise to such Account have not
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been performed by the applicable Borrower and accepted by the account
debtor or the Account otherwise does not represent a final sale; or
(xii) the Account exceeds a credit limit determined by the
Agent, in its reasonable discretion, to the extent such Account exceeds
such limit; or
(xiii) the Agent does not have a first priority, perfected
security interest in the Account; or
(xiv) the Agent, in the exercise of its reasonable discretion,
determines it to be ineligible.
In addition to the foregoing, Eligible Accounts Receivable shall
include such Accounts as the Borrowers shall request and that the Agent approves
in advance, in writing and in its commercially reasonable judgment.
"Eligible Equipment" shall mean (A) the Orderly Liquidation Value of
the gross amount of each Borrower's Equipment (which as of the Closing Date
shall be limited to Equipment located at the Claremont, North Carolina and
Cincinnati, Ohio facilities of the Company and its Subsidiaries), which (i) is
owned solely by such Borrower and with respect to which such Borrower has good,
valid and marketable title; (ii) is located on property that is either owned or
leased by such Borrower (provided, that, with respect to Equipment located on
property leased by such Borrower, such Borrower shall have delivered in favor of
the Agent an Acknowledgment Agreement from the landlord of such leased
property); (iii) is subject to a valid, enforceable and first priority perfected
Lien (and no other Liens) in favor of the Agent; (iv) is located in the United
States; and (v) is not obsolete or slow moving, and which otherwise conforms to
the warranties contained herein; and (B) less any Equipment that the Agent
determines in its reasonable judgment to be ineligible. Notwithstanding the
foregoing, any increase in Eligible Equipment after the Closing Date shall only
constitute Eligible Equipment for purposes of calculating the Borrowing Base if
approved in writing by the Lenders in their reasonable discretion.
"Eligible Inventory" shall mean (i) the aggregate gross amount of each
Borrower's Inventory (excluding work-in-progress other than work-in-progress
consisting of smoked hams during the curing process), valued at the lower of
cost (on a FIFO basis) or market, which (A) is owned solely by such Borrower and
with respect to which such Borrower has good, valid and marketable title, (B) is
stored on property that is either (1) owned or leased by such Borrower or (2)
owned or leased by a warehouseman that has contracted with such Borrower to
store Inventory on such warehouseman's property or by a filler, processor or
packer of such Borrower (provided that, with respect to Inventory stored on
property leased by such Borrower, such Borrower shall have delivered in favor of
the Agent an Acknowledgment Agreement from the landlord of such leased location,
and, with respect to Inventory stored on property owned or leased by a
warehouseman, filler, processor or packer, such Borrower shall have delivered to
the Agent an Acknowledgment Agreement executed by such warehouseman, filler,
processor or packer); (C) is subject to a valid, enforceable and first priority
Lien in favor of Agent except,
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<PAGE> 18
with respect to Eligible Inventory stored at sites described in clause (B)(2)
above for normal and customary warehouseman, filler, packer and processor
charges); (D) is located in the United States; and (E) is not obsolete or slow
moving and for which a markdown reserve has not been made, and which otherwise
conforms to the warranties contained herein and which at all times continues to
be acceptable to the Agent in its reasonable discretion; (ii) less Inventory
consisting of manufacturing supplies (other than raw materials), expense
supplies or shipping supplies; (iii) less markdown reserves; (iv) less any goods
returned or rejected by such Borrower's customers for which a credit has not yet
been issued and goods in transit to third parties (other than to such Borrower's
agents, warehouses, fillers, processors or packers that comply with clause
(i)(B)(2) above); (v) less damaged Inventory or any Inventory that the Agent
determines in its commercially reasonable judgment to be a no charge or sample
item; (vi) less a reserve equal to the amount of all accounts payable of such
Borrower owed or owing to any filler, packer or processor of such Borrower;
(vii) less any reserves required by the Agent in its reasonable discretion for
special order goods and market value declines; (viii) less any Inventory which
is held by a Borrower pursuant to consignment, sale or return, sale on approval
or similar arrangement; and (ix) less any Inventory that the Agent determines in
its commercially reasonable judgment to be ineligible. In addition to the
foregoing, Eligible Inventory shall include such items of such Borrower's
Inventory as such Borrower shall request and that the Agent approves in advance,
in writing and in its commercially reasonable judgment.
"Eligible Real Property" shall mean the Fair Market Value of the owned
properties noted as such on Schedule 6.19 hereto and which are subject to a
valid, enforceable and first priority Lien in favor of Agent, together with
additional properties consisting of new restaurants acquired by the Company or
any of its Subsidiaries during the first two years following the Closing Date
which have been approved by the Agent ("Approved Restaurants"), which approval
shall not be unreasonably withheld. Notwithstanding the foregoing, any additions
of Eligible Real Property, other than Approved Restaurants, after the Closing
Date shall only constitute Eligible Real Property for purposes of calculating
the Borrowing Base if approved in writing by the Lenders in their reasonable
discretion.
"Equipment" shall mean all of each Borrower's equipment and machinery,
including, without limitation, all appliances, parts, instruments,
appurtenances, accessories, furnishings, spare parts constituting part of the
equipment and machinery and other equipment or property of whatever nature which
may from time to time be incorporated or installed in or attached to any
property of any Borrower or any portion thereof, and any replacements of the
foregoing.
"Equipment Appraisals" shall mean the appraisals of Equipment listed on
Schedule 1.1G hereto.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and any successor statute.
"ERISA Affiliate" shall mean any (i) corporation which is or was at any
time a member of the same controlled group of corporations (within the meaning
of Section 414(b) of the Internal Revenue Code) as the Borrowers or any
Subsidiary; (ii) partnership or other trade or
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<PAGE> 19
business (whether or not incorporated) at any time under common control (within
the meaning of Section 414(c) of the Internal Revenue Code) with the Borrowers
or any Subsidiary; and (iii) member of the same affiliated service group (within
the meaning of Section 414(m) of the Internal Revenue Code) as the Borrowers or
any Subsidiary, any corporation described in clause (i) above, or any
partnership or trade or business described in clause (ii) above.
"Eurodollar Loan" shall mean a Loan bearing interest based at a rate
determined by reference to the Eurodollar Rate.
"Eurodollar Rate" shall mean, for the Interest Period for each
Eurodollar Loan comprising part of the same borrowing (including conversions,
extensions and renewals), a per annum interest rate determined pursuant to the
following formula:
Eurodollar Rate = London Interbank Offered Rate
---------------------------------
1 - Eurodollar Reserve Percentage
"Eurodollar Reserve Percentage" shall mean for any day, that percentage
(expressed as a decimal) which is in effect from time to time under Regulation D
of the Board of Governors of the Federal Reserve System (or any successor), as
such regulation may be amended from time to time or any successor regulation, as
the maximum reserve requirement (including, without limitation, any basic,
supplemental, emergency, special, or marginal reserves) applicable with respect
to Eurocurrency liabilities as that term is defined in Regulation D (or against
any other category of liabilities that includes deposits by reference to which
the interest rate of Eurodollar Loans is determined), whether or not any Lender
has any Eurocurrency liabilities subject to such reserve requirement at that
time. Eurodollar Loans shall be deemed to constitute Eurocurrency liabilities
and as such shall be deemed subject to reserve requirements without benefits of
credits for proration, exceptions or offsets that may be available from time to
time to a Lender. The Eurodollar Rate shall be adjusted automatically on and as
of the effective date of any change in the Eurodollar Reserve Percentage.
"Event(s) of Default" shall have the meaning given such term in Article
XI.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Excluded Taxes" shall have the meaning given to such term in Section
2.7.
"Fair Market Value" shall mean, with respect to Real Estate, the most
probable price which a parcel of Real Estate should bring in a competitive and
open market under all conditions requisite to a fair sale assuming that buyer
and seller are each acting prudently and knowledgeably and that the price is not
affected by undue stimulus. Implicit in this definition is that the sale will be
consummated by a specified date and that the passing of the title from seller to
buyer will occur under the following conditions: (i) buyer and seller are
typically motivated, well informed, well advised and acting in their best
interests, respectively, (ii) a reasonable time is allowed for marketing of the
Real Estate in the open market, (iii) payment is made in U.S. Dollars or upon
other financial arrangements comparable thereto and (iv) the price represents
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<PAGE> 20
normal consideration for the Real Estate sold, unaffected by special or creative
financing or sales concessions granted by any party associated with the sale.
"Federal Funds Rate" shall mean, for any period, a fluctuating interest
rate per annum equal, for each day during such period, to the weighted average
of the rates on overnight Federal Funds transactions with members of the Federal
Reserve System arranged by Federal Funds brokers, as published 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 that is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three Federal Funds brokers of
recognized standing selected by it.
"Fee Letter" shall mean the letter agreement, dated April 7, 1998, by
and between the Agent and the Borrowers regarding the fees to be paid by the
Borrowers to the Agent.
"Fees" shall mean, collectively, the Agent's Fees, the Lenders' Fees,
the Unused Line Fee, the Standby Letter of Credit Fee, Trade Letter of Credit
Fee and the Issuing Bank Fees payable hereunder.
"Financials" shall have the meaning given to such term in Section 6.6.
"First Union" shall mean First Union National Bank, having its
principal office in North Carolina, and its successors and permitted assigns.
"Fixed Charge Coverage Ratio" shall mean, (i) as of the last day of the
fiscal quarter ending November 26, 1998, the ratio of Consolidated EBITDA minus
Unfinanced Consolidated Capital Expenditures (computed for the two fiscal
quarterly periods then ending) to Consolidated Fixed Charges (computed for the
two fiscal quarterly periods then ending), (ii) as of the last day of the fiscal
quarter ending February 26, 1999, the ratio of Consolidated EBITDA minus
Unfinanced Consolidated Capital Expenditures (computed for the three fiscal
quarterly periods then ending) to Consolidated Fixed Charges (computed for the
three fiscal quarterly periods then ending) and (iii) as of the last day of the
fiscal quarter ending May 21, 1999 and as of the last day of each fiscal quarter
ending thereafter, the ratio of Consolidated EBITDA minus Unfinanced
Consolidated Capital Expenditures (computed for the four fiscal quarterly
periods then ending) to Consolidated Fixed Charges (computed for the four fiscal
quarterly periods then ending).
"Food Security Act" shall mean the Food Security Act of 1985, as
amended, and any successor statute thereto, including all rules and regulations
thereunder, all as the same may be in effect from time to time.
"Foreign Lender" shall have the meaning given to such term in Section
2.8(a).
"FUNB Claremont Restaurant Cash Collateral Account" shall mean account
number 2000000754228, established and maintained in the name of the Agent at
First Union, for the benefit of the Lenders.
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<PAGE> 21
"FUNB Leverage Account" shall mean account number 2070482789126,
established and maintained in the name of the Agent at First Union, for the
benefit of the Lenders.
"FUNB NonRestaurant Cash Collateral Account" shall mean account number
2000000754231, established and maintained in the name of the Agent at First
Union, for the benefit of the Lenders.
"Funded Indebtedness" shall mean, with respect to any Person, without
duplication, (a) all Indebtedness of such Person other than Indebtedness of the
types referred to in clause (e), (f), (g), (i), (k), (l) and (m) of the
definition of "Indebtedness" set forth in this Section 1.1, (b) all Indebtedness
of another Person of the type referred to in clause (a) above secured by (or for
which the holder of such Funded Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien on, or payable out of the proceeds of
production from, property owned or acquired by such Person, whether or not the
obligations secured thereby have been assumed, (c) all guaranties of such Person
with respect to Indebtedness of the type referred to in clause (a) above of
another Person and (d) Indebtedness of the type referred to in clause (a) above
of any partnership or unincorporated joint venture in which such Person is
legally obligated or has a reasonable expectation of being liable with respect
thereto.
"Funding Bank" shall have the meaning given to such term in Section
4.7.
"GAAP" shall mean generally accepted accounting principles in the
United States of America, as in effect on the date hereof and applied on a
consistent basis with the Financials.
"Governmental Authority" shall mean any Federal, state, local or
foreign court or governmental agency, authority, instrumentality or regulatory
body.
"Hedging Agreements" shall mean any Interest Rate Protection Agreement
or other interest rate protection agreement, foreign currency exchange
agreement, commodity purchase or option agreement or other interest or exchange
rate or commodity price hedging agreements
"Highest Lawful Rate" shall mean, at any given time during which any
Obligations shall be outstanding hereunder, the maximum nonusurious interest
rate, if any, that at any time or from time to time may be contracted for,
taken, reserved, charged or received on the indebtedness under this Credit
Agreement, under the laws of the State of North Carolina (or the law of any
other jurisdiction whose laws may be mandatorily applicable notwithstanding
other provisions of this Credit Agreement and the other Credit Documents), or
under applicable federal laws which may presently or hereafter be in effect and
which allow a higher maximum nonusurious interest rate than under North Carolina
or such other jurisdiction's law, in any case after taking into account, to the
extent permitted by applicable law, any and all relevant payments or charges
under this Credit Agreement and any other Credit Documents executed in
connection herewith, and any available exemptions, exceptions and exclusions.
"Indebtedness" shall mean, with respect to any Person, without
duplication, (a) all obligations of such Person for borrowed money, (b) all
obligations of such Person evidenced by
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<PAGE> 22
bonds, debentures, notes or similar instruments, or upon which interest payments
are customarily made, (c) all obligations of such Person under conditional sale
or other title retention agreements relating to property purchased by such
Person (other than customary reservations or retentions of title under
agreements with suppliers entered into in the ordinary course of business), (d)
all obligations of such Person issued or assumed as the deferred purchase price
of property or services purchased by such Person (other than trade debt incurred
in the ordinary course of business and due within six months of the incurrence
thereof) which would appear as liabilities on a balance sheet of such Person,
(e) all obligations of such Person under take-or-pay or similar arrangements or
under commodities agreements, (f) all Indebtedness of others secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on, or payable out of the proceeds of
production from, property owned or acquired by such Person, whether or not the
obligations secured thereby have been assumed, (g) all guaranties of such Person
with respect to Indebtedness of the type referred in this definition of another
Person, (h) the principal portion of all obligations of such Person under
Capital Leases, (i) all obligations of such Person under Interest Rate
Protection Agreements, (j) the maximum amount of all standby letters of credit
issued or bankers' acceptances facilities created for the account of such Person
and, without duplication, all drafts drawn thereunder (to the extent
unreimbursed), (k) all preferred Capital Stock issued by such Person and
required by the terms thereof to be redeemed, or for which mandatory sinking
fund payments are due, by a fixed date, (l) with respect to the Borrower or any
of its Subsidiaries, the principal portion of all obligations of such Person
under off-balance sheet financing arrangements and (m) the Indebtedness of any
partnership or unincorporated joint venture in which such Person is a general
partner or a joint venturer.
"Independent Accountant" shall mean a firm of independent public
accountants of nationally recognized standing selected by the Board of Directors
of the Company, which is "independent" as that term is defined in Rule 2-01 of
Regulation S-X promulgated by the Securities and Exchange Commission.
"Interest Period" shall mean, as to Eurodollar Loans, a period of one
month, two months, three months or six months, as selected by the Borrowers,
commencing on the date of the borrowing (including continuations and conversions
thereof); provided, however, (i) if any Interest Period would end on a day which
is not a Business Day, such Interest Period shall be extended to the next
succeeding Business Day (except that where the next succeeding Business Day
falls in the next succeeding calendar month, then on the next preceding Business
Day), (ii) no Interest Period shall extend beyond the Maturity Date, (iii) any
Interest Period with respect to a Eurodollar Loan that begins on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall end on the last Business Day of the relevant calendar month at the end of
such Interest Period and (iv) if the Revolving Loans and Revolving Commitments
hereunder have not been fully syndicated by the Closing Date, during the 60-day
period after the Closing Date, the Borrowers shall only be permitted to select
Eurodollar Loans with Interest Periods of one month or Base Rate Loans.
"Interest Rate Protection Agreement" shall mean any interest rate
protection agreement, foreign currency exchange agreement, commodity purchase or
option agreement or other interest
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<PAGE> 23
or exchange rate or commodity price hedging agreements between any Borrower and
any Lender, or any affiliate of a Lender.
"Internal Revenue" shall mean the Internal Revenue Service and any
successor agency.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time, and any successor statute thereto and all rules
and regulations promulgated thereunder.
"Inventory" shall mean all of each Borrower's inventory, including
without limitation, (i) all raw materials, work in process, parts, components,
assemblies, supplies and materials used or consumed in the Borrowers' business;
(ii) all goods, wares and merchandise, finished or unfinished, held for sale or
lease or leased or furnished or to be furnished under contracts of service; and
(iii) all goods returned to or repossessed by the Borrowers.
"Investment" in any Person shall mean (i) the acquisition (whether for
cash, property, services, assumption of Indebtedness, securities or otherwise,
but exclusive of the acquisition of inventory, supplies, equipment and other
assets used or consumed in the ordinary course of business of the applicable
Borrower and Consolidated Capital Expenditures not otherwise prohibited
hereunder) of assets, shares of capital stock, bonds, notes, debentures,
partnership, joint ventures or other ownership interests or other securities of
such Person, (ii) any deposit (other than deposits made in connection with the
purchase of equipment or other assets in the ordinary course of business) with,
or advance, loan or other extension of credit (other than sales of inventory on
credit in the ordinary course of business and payable or dischargeable in
accordance with customary trade terms) to, such Person or (iii) any other
capital contribution to or investment in such Person, including, without
limitation, any obligation incurred for the benefit of such Person. In
determining the aggregate amount of Investments outstanding at any particular
time, (i) the amount of any Investment represented by a guaranty shall be taken
at not less than the principal amount of the obligations guaranteed and still
outstanding; (ii) there shall be deducted in respect of each such Investment any
amount received as a return of capital (but only by repurchase, redemption,
retirement, repayment, liquidating dividend or liquidating distribution); (iii)
there shall not be deducted in respect of any Investment any amounts received as
earnings on such Investment, whether as dividends, interest or otherwise; and
(iv) there shall not be deducted from the aggregate amount of Investments any
decrease in the market value thereof.
"Issuing Bank" shall mean First Union.
"Issuing Bank Fees" shall have the meaning given to such term in
Section 4.5(c).
"Joinder Agreement" shall mean an agreement substantially in the form
of Exhibit M hereto.
"Landlord Agreements" shall mean the Landlord Lien Waiver Agreements,
substantially in the form of Exhibit D hereto, between each of the Borrower's
landlords and the Agent, in each
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case acknowledging and agreeing, among other things, (i) that such landlords do
not have any Liens on any of the property of any Borrower or any Subsidiary and
(ii) to permit the Agent access to the property for the purposes of exercising
its remedies under the Security Agreement.
"Leases" shall have the meaning given to such term in Section 6.19.
"Lender" shall have the meaning given to such term in the preamble of
this Credit Agreement.
"Lenders' Fees" shall mean the non-refundable fees payable to each of
the Lenders as set forth in each of the Lender's respective fee letter with the
Agent.
"Letter of Credit Documents" shall mean, with respect to any Letter of
Credit, such Letter of Credit, any amendments thereto, any documents delivered
in connection therewith, any application therefor, and any agreements,
instruments, guarantees or other documents (whether general in application or
applicable only to such Letter of Credit) governing or providing for (i) the
rights and obligations of the parties concerned or at risk or (ii) any
collateral security for such obligations.
"Letter of Credit Committed Amount" shall have the meaning given to
such term in Section 3.1.
"Letter of Credit Obligations" shall mean, at any time, the sum of (i)
the aggregate undrawn amount of all Letters of Credit outstanding at such time,
plus (ii) the aggregate amount of all drawings under Letters of Credit for which
the Issuing Bank has not at such time been reimbursed, plus (iii) without
duplication, the aggregate amount of all payments made by each Lender to the
Issuing Bank with respect to such Lender's participation in Letters of Credit as
provided in Section 3.3 for which the Borrowers have not at such time reimbursed
the Lenders, whether by way of a Revolving Loan or otherwise.
"Letters of Credit" shall mean all letters of credit (whether
documentary or stand-by and whether for the purchase of inventory, equipment or
otherwise) issued by an Issuing Bank for the account of the Borrowers pursuant
to this Credit Agreement, and all amendments, renewals, extensions or
replacements thereof.
"Leverage Ratio" shall mean (i) as of the last day of the fiscal
quarter ending August 31, 1998, the ratio of (a) Consolidated Funded Debt
(computed as of the last day of such fiscal quarter) to (b) Consolidated EBITDA
(computed for the fiscal quarterly period then ending) times four (4), (ii) as
of the last day of the fiscal quarter ending November 30, 1998, the ratio of (a)
Consolidated Funded Debt (computed as of the last day of such fiscal quarter) to
Consolidated EBITDA (computed for the two fiscal quarterly periods then ending)
times two (2), (iii) as of the last day of the fiscal quarter ending February
28, 1999, the ratio of (a) Consolidated Funded Debt (computed as of the last day
of such fiscal quarter) to Consolidated EBITDA (computed for the three fiscal
quarterly periods then ending) times one and one-third (1 1/3) and (iv) as of
the last day of the fiscal quarter ending May 31, 1999 and as of the last day of
each
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<PAGE> 25
fiscal quarter ending thereafter, the ratio of (a) Consolidated Funded Debt
(computed as of the last day of such fiscal quarter) to (b) Consolidated EBITDA
(computed for the four fiscal quarterly periods then ending).
"Lien(s)" shall mean any lien, claim, charge, pledge, security
interest, deed of trust, mortgage, or other encumbrance.
"Lockbox Accounts" shall have the meaning given to such term in Section
2.4(b)(ii).
"Lockbox Agreement" shall have the meaning given to such term in
Section 2.4(b)(ii).
"Lockbox Bank" shall have the meaning given to such term in Section
2.4(b)(ii).
"Lockboxes" shall have the meaning given to such term in Section
2.4(b)(ii).
"London Interbank Offered Rate" shall mean, with respect to any
Eurodollar Loan for the Interest Period applicable thereto, the rate of interest
per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing
on Telerate Page 3750 (or any successor page) as the London interbank offered
rate for deposits in Dollars at approximately 11:00 A.M. (London time) two
Business Days prior to the first day of such Interest Period for a term
comparable to such Interest Period; provided, however, if more than one rate is
specified on Telerate Page 3750, the applicable rate shall be the arithmetic
mean of all such rates. If, for any reason, such rate is not available, the term
"London Interbank Offered Rate" shall mean, with respect to any Eurodollar Loan
for the Interest Period applicable thereto, the rate of interest per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters
Screen LIBO Page as the London interbank offered rate for deposits in Dollars at
approximately 11:00 A.M. (London time) two Business Days prior to the first day
of such Interest Period for a term comparable to such Interest Period; provided,
however, if more than one rate is specified on Reuters Screen LIBO Page, the
applicable rate shall be the arithmetic mean of all such rates.
"Management Services Agreement" shall mean the Management Services
Agreement dated as of June 23, 1995, between Herth Management, Inc. and the
Company, as amended by a certain Extension Agreement dated August 29, 1997.
"Material Adverse Change" shall mean a material adverse change in (a)
the business, prospects, operations, results of operations, assets, liabilities
or condition (financial or otherwise) of the Borrowers, taken as a whole, (b)
the Collateral, (c) the Borrowers' ability to perform their respective
obligations under the Credit Documents, or (d) the rights and remedies of the
Lenders hereunder, in each case as determined by the Agent in its reasonable
discretion.
"Material Adverse Effect" shall mean a material adverse effect on (a)
the business, prospects, operations, results of operations, assets, liabilities
or condition (financial or otherwise) of the Borrowers, taken as a whole, (b)
the Collateral, (c) the Borrowers' ability to perform their respective
obligations under the Credit Documents, or (d) the rights and remedies of the
Lenders hereunder, in each case as determined by the Agent in its reasonable
discretion.
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<PAGE> 26
"Material Contract" shall mean any contract or other arrangement (other
than any of the Leases or the Credit Documents), whether written or oral, to
which any Borrower or any Subsidiary is a party as to which the breach,
nonperformance, cancellation or failure to renew by any party thereto could have
a Material Adverse Effect.
"Maturity Date" shall mean June 1, 2003.
"Merchandise Returns" shall mean any of the products manufactured and
sold by the Borrowers or any of their Subsidiaries that is returned.
"Mortgages" shall mean the mortgages granted by the Borrowers to secure
the Obligations on all owned Real Estate.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA and (i) which is, or within the immediately
preceding six (6) years was, contributed to by any Borrower, any Subsidiary or
any ERISA Affiliate or (ii) with respect to which any Borrower or any Subsidiary
may incur any liability.
"Net Cash Proceeds" shall mean the aggregate cash proceeds received by
the Borrowers in respect of any Asset Disposition, net of (a) direct costs
(including, without limitation, legal, accounting and investment banking fees,
and sales commissions) and (b) taxes paid or payable as a result thereof; it
being understood that "Net Cash Proceeds" shall include, without limitation, any
cash received upon the collection, sale or other disposition of any non-cash
consideration received by the Borrowers in any Asset Disposition.
"NonRestaurant Business" shall mean all operations of the Company other
than the Restaurant Business.
"Notice of Borrowing" shall have the meaning given to such term in
Section 2.1(d)(i).
"Notice of Extension/Conversion" shall have the meaning given to such
term in Section 2.10.
"Obligations" shall mean the Loans, any other loans and advances or
extensions of credit made or to be made by any Lender to any Borrower, or to
others for any Borrower's account in each case pursuant to the terms and
provisions of this Credit Agreement, together with interest thereon (including
interest which would be payable as post-petition interest in connection with any
bankruptcy or similar proceeding) and, including, without limitation, any
reimbursement obligation or indemnity of the Borrowers on account of Letters of
Credit and all other Letter of Credit Obligations, and all indebtedness, fees,
liabilities and obligations which may at any time be owing by any Borrower to
any Lender in each case pursuant to this Credit Agreement or any other Credit
Document, whether now in existence or incurred by a Borrower from time to time
hereafter, whether unsecured or secured by pledge, Lien upon or security
interest in any of a Borrower's assets or property or the assets or property of
any other Person, whether such
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indebtedness is absolute or contingent, joint or several, matured or unmatured,
direct or indirect and whether such Borrower is liable to such Lender for such
indebtedness as principal, surety, endorser, guarantor or otherwise. Obligations
shall also include any other indebtedness owing to any Lender by any Borrower
under this Credit Agreement and the other Credit Documents, any Borrower's
liability to any Lender pursuant to this Credit Agreement as maker or endorser
of any promissory note or other instrument for the payment of money, any
Borrower's liability to any Lender pursuant to this Credit Agreement or any
other Credit Document under any instrument of guaranty or indemnity, or arising
under any guaranty, endorsement or undertaking which any Lender may make or
issue to others for any such Borrower's account pursuant to this Credit
Agreement, including any accommodation extended with respect to applications for
Letters of Credit, and all liabilities and obligations owing from any Borrower
to any Lender, or any affiliate of a Lender, arising under Interest Rate
Protection Agreements entered into for the purpose of hedging interest rate risk
under this Credit Agreement and the other Credit Documents.
"Operative Documents" shall mean the Credit Documents, the Security
Documents, the Acquisition Documents, the Management Services Agreement, any
employment contracts, and any documents or instruments evidencing Senior
Unsecured Debt.
"Orderly Liquidation Value" shall mean, with respect to the Equipment,
the estimated gross proceeds that could be expected to be obtained from a
"forced piecemeal" privately negotiated sale (and removal) of such Equipment.
The terms of any such sale and removal are based on the following assumptions:
(i) the seller of such Equipment would be provided a term of six to nine months
to effect such sale, (ii) all such sales would be made on an "as is" - "where
is" basis and on cash terms and (iii) the buyer of such Equipment would be
responsible for the removal of any such Equipment. In addition, attributes of
the Equipment taken into consideration to determine value would include age,
physical condition, geographical location, removal costs, quantities brought
into the marketplace and overall psychological appeal.
"Other Taxes" shall have the meaning given to such term in Section
2.7(c).
"Packers and Stockyard Act" shall mean the Packers and Stockyards Act
of 1921, as amended, and any successor statute thereto, including all rules and
regulations thereunder, all as the same may be in effect from time to time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and any
Person succeeding to the functions thereof.
"Permitted Acquisitions" shall mean an Acquisition by any Borrower of
an Acquired Company which Acquisition complies with the following requirements
(in each case to the satisfaction of the Agent): (i) the Acquired Company shall
be an operating company that engages in the food processing line of business,
(ii) the aggregate purchase price for all Acquired Companies (including cash,
stock and/or assumption of liabilities) shall not exceed $10,000,000, (iii) the
Agent shall have received the "Board Paper" for the Acquired Company (i.e. a
short memo prepared by the applicable Borrower with respect to the Acquired
Company), (iv) the Agent shall have received a review of the financial condition
of the Acquired Company conducted by a firm of
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independent certified public accountants of nationally recognized standing
reasonably acceptable to the Agent, (v) the Agent shall have received an
appraisal from an appraiser satisfactory to the Agent setting forth the Orderly
Liquidation Value of the Equipment of the Acquired Company and the Fair Market
Value of the owned real estate of the Acquired Company to be included in the
Borrowing Base, subject to the prior written approval of the Lenders, (vi) the
Agent shall have completed a field examination with respect to the working
capital assets of the Acquired Company to be included in the Borrowing Base,
(vii) the Agent shall have received all items required by Sections 7.9 and 7.16
in connection with the Acquired Company, (viii) in the case of an Acquisition of
the Capital Stock of another Person, the board of directors (or other comparable
governing body) of such other Person shall have duly approved such Acquisition,
(ix) the Company shall have delivered to the Agent a Pro Forma Compliance
Certificate demonstrating that, upon giving effect to such Acquisition on a pro
forma Basis, the Company and its Subsidiaries shall be in compliance with all of
the covenants set forth in Article VIII, (x) no Default or Event of Default
shall exist immediately prior to or immediately after the consummation of the
Acquisition, (xi) after giving effect to any Acquisition with a purchase price
(including cash, stock and/or assumption of liabilities) of less than
$5,000,000, Availability shall be at least $10,000,000 and after giving effect
to any Acquisition with a purchase price (including cash, stock and/or
assumption of liabilities) of equal to or greater than $5,000,000, Availability
shall be at least $20,000,000 and (xii) the Company shall have delivered to the
Agent all Acquisition Documents in connection with such Permitted Acquisition
which documents shall be satisfactory to the Agent.
"Permitted Holders" shall mean any or all of James C. Richardson, David
R. Clark and James E. Harris or any Person as to which Messrs. Richardson, Clark
and Harris beneficially own, in the aggregate, more than 50% of the Capital
Stock of such Person and control more than 50% of the Voting Stock of such
Person.
"Permitted Indebtedness" shall mean:
(i) Indebtedness to the Lenders with respect to the Revolving
Loans and the Letters of Credit pursuant to the Credit Documents;
(ii) trade payables incurred in the ordinary course of the
Borrowers' business;
(iii) purchase money Indebtedness (including Capital Leases)
hereafter incurred by the Borrowers or any of their Subsidiaries to
finance the purchase of fixed assets provided that (A) the total of all
such Indebtedness for all such Persons taken together shall not exceed
an aggregate principal amount of $15,000,000 at any one time
outstanding (including any such Indebtedness referred to in clause (v)
immediately below); (B) such Indebtedness when incurred shall not
exceed the purchase price of the asset(s) financed; and (C) no such
Indebtedness shall be refinanced for a principal amount in excess of
the principal balance outstanding thereon at the time of such
refinancing;
(iv) obligations of the Borrowers in respect of Hedging
Agreements entered into in order to manage existing or anticipated
interest rate or exchange rate risks and not for speculative purposes;
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(v) Indebtedness described on Schedule 1.1D attached hereto
and any refinancings of such Indebtedness; provided that the aggregate
principal amount of such Indebtedness is not increased, the scheduled
maturity dates of such Indebtedness are not shortened and such
refinancing is on terms and conditions no more restrictive than the
terms and conditions of the Indebtedness being refinanced; and
provided, further, that the Unsecured Letters of Credit may only be
refinanced as Letters of Credit hereunder;
(vi) Senior Unsecured Debt;
(viii) Indebtedness incurred to finance the acquisition,
construction and development of new restaurant locations provided that
such Indebtedness does not exceed $1,500,000 for any new restaurant
location and does not exceed $4,500,000 in the aggregate for all such
new restaurant locations; and
(viii) other Indebtedness not to exceed $1,000,000 in the
aggregate at any time outstanding.
"Permitted Investments" shall mean:
(i) Cash Equivalents;
(ii) interest-bearing demand or time deposits (including
certificates of deposit) which are insured by the Federal Deposit
Insurance Corporation ("FDIC") or a similar federal insurance program;
provided, however, that the Borrowers may, in the ordinary course of
their respective businesses, maintain in their disbursement accounts
from time to time amounts in excess of then applicable FDIC or other
program insurance limits;
(iii) Investments existing on the Closing Date and set forth
on Schedule 1.1E attached hereto;
(iv) advances to officers, directors and employees for travel
or other expenses incurred or anticipated to be incurred in the
ordinary course and other loans and advances to officers, directors and
employees not to exceed $500,000 in the aggregate at any time
outstanding;
(v) Permitted Acquisitions; and
(vi) such other investments as the Required Lenders may
approve in their sole discretion.
"Permitted Liens" shall mean
(i) Liens granted to the Agent by the Borrowers pursuant to
any Credit Document;
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(ii) Liens listed on Schedule 1.1C attached hereto;
(iii) Liens on fixed assets securing purchase money
Indebtedness (including Capital Leases) to the extent permitted under
Section 9.2, provided that (A) any such Lien attaches to such assets
concurrently with or within 30 days after the acquisition thereof and
only to the assets to be acquired and (B) a description of the assets
so acquired is furnished to the Agent;
(iv) Liens for taxes, assessments or governmental charges or
claims either (A) not delinquent or (B) contested in good faith by
appropriate proceedings and as to which the Borrower shall have set
aside on its books such reserves as may be required pursuant to GAAP;
(v) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, suppliers, materialmen, repairmen and other
Liens imposed by law incurred in the ordinary course of business for
sums not yet delinquent or being contested in good faith, if such
reserve or other appropriate provision, if any, as shall be required by
GAAP shall have been made in respect thereof;
(vi) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment
insurance and other types of social security, including any Lien
securing letters of credit issued in the ordinary course of business
consistent with past practice in connection therewith, or to secure the
performance of tenders, statutory obligations, surety and appeal bonds,
bids, leases, government performance and return-of-money bonds and
other similar obligations (exclusive of obligations for the payment of
borrowed money);
(vii) judgment Liens not giving rise to an Event of Default so
long as such Lien is adequately bonded and any appropriate legal
proceedings which may have been duly initiated for the review of such
judgment shall not have been finally terminated or the period within
which such proceedings may be initiated shall not have expired;
(viii) easements, rights-of-way, zoning restrictions and other
similar charges or encumbrances in respect of real property not
interfering in any material respect with the ordinary conduct of the
business of the Borrower;
(ix) Liens upon specific items of inventory or other goods and
proceeds of any Person securing such Person's obligations in respect of
bankers' acceptances issued or created for the account of such Person
to facilitate the purchase, shipment or storage of such inventory or
other goods;
(x) Liens securing reimbursement obligations with respect to
commercial letters of credit which encumber documents and other
property relating to such letters of credit and products and proceeds
thereof;
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(xi) Liens encumbering deposits made to secure obligations
arising from statutory, regulatory, contractual, or warranty
requirements of a Borrower, including rights of offset and set-off; and
(xii) Liens to secure any Indebtedness which is incurred to
refinance any Permitted Indebtedness which has been secured by a
Permitted Lien; provided that such new Liens (A) are no less favorable
to the Lenders and are not more favorable to the lienholders with
respect to such Liens than the Liens in respect of the Indebtedness
being refinanced and (B) do not extend to any property or assets other
than the property or assets securing the Indebtedness refinanced or
replaced by such refinancing Indebtedness.
"Person" shall mean any individual, sole proprietorship, partnership,
joint venture, limited liability company, trust, unincorporated organization,
association, corporation, institution, entity, party or government (including
any division, agency or department thereof), and, as applicable, the successors,
heirs and assigns of each.
"Pierre Foods Division" shall mean the assets and liabilities of the
Pierre Foods Division of Hudson Foods, Inc., a wholly-owned subsidiary of Tyson
Foods, Inc., to be acquired and assumed by the Company pursuant to the Purchase
Agreement.
"Plan" shall mean any employee benefit plan, program or arrangement,
whether oral or written, maintained or contributed to by any Borrower or any
Subsidiary, or with respect to which any Borrower or any such Subsidiary may
incur liability.
"Pledge Agreement" shall mean the Pledge Agreement, of even date
herewith, between the Agent and the Borrowers, in the form attached hereto as
Exhibit E .
"Pledged Collateral" shall have the meaning given to such term in the
Pledge Agreement.
"Prime Rate" shall mean the rate which First Union announces from time
to time as its prime lending rate, as in effect from time to time. The Prime
Rate is a reference rate and does not necessarily represent the lowest or best
rate actually charged to any customer. First Union (and its affiliates) may make
commercial loans or other loans at rates of interest at, above or below the
Prime Rate.
"Proprietary Rights" shall have the meaning given to such term in
Section 6.17.
"Purchase Agreement" shall mean the Asset Purchase Agreement dated as
of April 10, 1998 between Fresh Foods of North Carolina, LLC, a wholly-owned
subsidiary of the Company, and Hudson Foods, Inc., as the same may from time to
time be amended, modified or supplemented in accordance with the terms hereof
and thereof.
"Real Estate" shall mean the real property owned or leased by the
Borrowers described in Schedule 6.19 attached hereto, together with all
Structures thereon.
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"Reorganization" shall mean the corporate reorganization of the Company
and its Subsidiaries as described on Schedule 1.1F.
"Reportable Event" shall mean any of the events described in Section
4043 of ERISA and the regulations thereunder.
"Required Lenders" shall mean, at any time, Lenders which are then in
compliance with their obligations hereunder (as determined by the Agent) and
holding in the aggregate at least 51% of (i) the Revolving Credit Commitments
(and participation interests therein) or (ii) if the Commitments have been
terminated, the outstanding Loans and participation interests (including the
participation interests of the Issuing Bank in any Letters of Credit).
"Restaurant Business" shall mean the restaurant operations of the
Company, comprised of the Sagebrush, Western Steer, Prime Sirloin and Bennett's
Concepts.
"Restricted Payment" shall mean (i) any cash dividend or other cash
distribution, direct or indirect, on account of any shares of any class of
Capital Stock of any Borrower or any Subsidiary, as the case may be, now or
hereafter outstanding, (ii) any redemption, retirement, sinking fund or similar
payment, purchase or other acquisition for value, direct or indirect, of any
shares of any class of Capital Stock of any Borrower or any Subsidiary now or
hereafter outstanding by such Borrower or any Subsidiary, as the case may be,
except for any redemption, retirement, sinking funds or similar payment payable
solely in such shares of that class of stock or in any class of stock junior to
that class, (iii) any cash payment made to redeem, purchase, repurchase or
retire, or to obtain the surrender of, any outstanding warrants, options or
other rights to acquire any shares of any class of Capital Stock of any Borrower
or any Subsidiary now or hereafter outstanding, or (iv) any payment to any
Affiliate of any Borrower except to the extent expressly permitted in this
Credit Agreement.
"Retiree Health Plan" shall mean an "employee welfare benefit plan"
within the meaning of Section 3(1) of ERISA that provides benefits to persons
after termination of employment, other than as required by Section 601 of ERISA.
"Revolving Credit Commitment" shall mean, with respect to each Lender,
the commitment of such Lender to make its portion of the Revolving Loans in a
principal amount up to such Lender's Revolving Credit Commitment Percentage of
the Revolving Credit Committed Amount.
"Revolving Credit Commitment Percentage" shall mean, for any Lender,
the percentage identified as its Revolving Credit Commitment Percentage on
Schedule 1.1A, as such percentage may be modified in connection with any
assignment made in accordance with the provisions of Section 14.6.
"Revolving Credit Committed Amount" shall mean the aggregate revolving
credit line extended by the Lenders to the Borrowers for Revolving Loans and
Letters of Credit pursuant to
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and in accordance with the terms of this Credit Agreement, in an amount up to
$75,000,000, as such revolving credit line may be reduced from time to time in
accordance with Section 2.3(c).
"Revolving Loans" shall have the meaning given to such term in Section
2.1(b) and shall include Base Rate Loans and Eurodollar Loans.
"Revolving Notes" shall have the meaning given to such term in Section
2.1(c).
"Security Agreement" shall mean the Security Agreement, of even date
herewith, between the Agent and the Borrowers, in the form attached hereto as
Exhibit F.
"Security Documents" shall mean, collectively, the Pledge Agreement,
the Mortgages, the Security Agreement, any Acknowledgment Agreements and any
Lockbox Agreement.
"Senior Unsecured Debt" shall mean the unsecured senior notes issued by
the Company on the Closing Date in an original amount no less than $110,000,000
but no greater than $125,000,000.
"Settlement Period" shall have the meaning given to such term in
Section 2.1(d)(ii).
"Standby Letter of Credit Fee" shall have the meaning given to such
term in Section 4.5(a).
"Structures" shall mean all plants, offices, manufacturing facilities,
warehouses, administration buildings and related facilities of the Borrowers
located in the Real Estate described on Schedule 6.19 attached hereto.
"Subsidiary" shall mean, as to any Person, (a) any corporation more
than 50% of whose Capital Stock of any class or classes having by the terms
thereof ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time, any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person directly or
indirectly through Subsidiaries, (b) any partnership, association, limited
liability company, joint venture or other entity in which such Person directly
or indirectly through Subsidiaries has more than a 50% interest in the total
capital, total income and/or total ownership interests of such entity at any
time and (c) any partnership in which such Person is a general partner.
"Subsidiary Borrower" and "Subsidiary Borrowers" shall mean each of the
Persons identified as a "Subsidiary Borrower" on the signature pages hereto and
each additional Subsidiary of the Company which may hereafter execute a Joinder
Agreement, together with their successors and permitted assigns, and "Subsidiary
Borrower" means any one of them.
"Taxes" shall mean any federal, state, local or foreign income, sales,
use, transfer, payroll, personal, property, occupancy, franchise or other tax,
levy, impost, fee, imposition, assessment or similar charge, together with any
interest or penalties thereon.
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"Termination Event" shall mean (i) a Reportable Event with respect to
any Benefit Plan or Multiemployer Plan; (ii) the withdrawal of any Borrower, any
Subsidiary or any ERISA Affiliate from a Benefit Plan during a plan year in
which such entity was a "substantial employer" as defined in Section 4001(a)(2)
of ERISA; (iii) the providing of notice of intent to terminate a Benefit Plan
pursuant to Section 4041 of ERISA; (iv) the institution by the PBGC of
proceedings to terminate a Benefit Plan or Multiemployer Plan; (v) any event or
condition (a) which might constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Benefit Plan
or Multiemployer Plan, or (b) that may result in termination of a Multiemployer
Plan pursuant to Section 4041A of ERISA; or (vi) the partial or complete
withdrawal within the meaning of Sections 4203 and 4205 of ERISA, of any
Borrower, any Subsidiary or any ERISA Affiliate from a Multiemployer Plan.
"Trade Letter of Credit Fee" shall have the meaning given to such term
in Section 4.5(b).
"Unfinanced Consolidated Capital Expenditures" shall mean, for any
period, the sum of (i) during the first two years following the Closing Date,
thirty percent (30%) of all Consolidated Capital Expenditures made in connection
with the opening of new restaurants during such period provided, that the
financed portion of all such Consolidated Capital Expenditures shall not exceed
$2,500,000 per year in each of such first two years following the Closing Date
and (ii) one hundred percent (100%) of all other Consolidated Capital
Expenditures made during such period.
"Unsecured Letters of Credit" shall mean those letters of credit listed
on Schedule 1.1H
"Unused Line Fee" shall mean the fee required to be paid to the Agent
for the benefit of the Lenders at the end of each calendar month as partial
compensation for extending the Revolving Credit Committed Amount to the
Borrowers, and shall be determined by multiplying (i) the positive difference,
if any, between (A) the Revolving Credit Committed Amount in effect at such time
and (B) the average daily Revolving Loans of the Borrowers and the Letter of
Credit Obligations outstanding during such calendar month by (ii) the Applicable
Percentage then in effect for the number of days in said calendar month.
"Voting Stock" shall mean, with respect to any Person, Capital Stock
issued by such Person the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of directors (or persons
performing similar functions) of such Person, even though the right so to vote
has been suspended by the happening of such a contingency.
1.2 ACCOUNTING TERMS AND DETERMINATIONS.
Unless otherwise defined or specified herein, all accounting terms
shall be construed herein and all accounting determinations for purposes of
determining compliance with Sections 8.1 through 8.5 hereof and otherwise to be
made under this Credit Agreement shall be made in accordance with GAAP applied
on a basis consistent in all material respects with the Financials. All
financial statements required to be delivered hereunder from and after the
Closing Date and
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all financial records shall be maintained in accordance with GAAP as in effect
as of the date of the Financials. If GAAP shall change from the basis used in
preparing the Financials, the certificates required to be delivered pursuant to
Section 7.1 demonstrating compliance with the covenants contained herein shall
include calculations setting forth the adjustments necessary to demonstrate how
the Borrowers are in compliance with the financial covenants based upon GAAP as
in effect on the Closing Date. If the Borrowers shall change their method of
inventory accounting, all calculations necessary to determine compliance with
the covenants contained herein shall be made as if such method of inventory
accounting had not been so changed.
1.3 OTHER DEFINITIONAL TERMS.
Terms not otherwise defined herein which are defined in the Uniform
Commercial Code as in effect in the State of North Carolina (the "Code") shall
have the meanings given them in the Code unless the context otherwise requires.
The words "hereof", "herein" and "hereunder" and words of similar import when
used in this Credit Agreement shall refer to the Credit Agreement as a whole and
not to any particular provision of this Credit Agreement, unless otherwise
specifically provided. References in this Agreement to "Articles", "Sections",
"Schedules" or "Exhibits" shall be to Articles, Sections, Schedules or Exhibits
of or to this Agreement unless otherwise specifically provided. Any of the terms
defined in Section 1.1 may, unless the context otherwise requires, be used in
the singular or plural depending on the reference. "Include", "includes" and
"including" shall be deemed to be followed by "without limitation" whether or
not they are in fact followed by such words or words of like import. "Writing",
"written" and comparable terms refer to printing, typing and other means of
reproducing words in a visible form. References to any agreement or contract are
to such agreement or contract as amended, modified or supplemented from time to
time in accordance with the terms hereof and thereof. References to any Person
include the successors and permitted assigns of such Person. References "from"
or "through" any date mean, unless otherwise specified, "from and including" or
"through and including", respectively. References to any times herein shall
refer to Charlotte, North Carolina time.
ARTICLE II
REVOLVING LOANS
2.1 REVOLVING LOANS.
(a) Revolving Credit Commitments. Subject to the terms and
conditions hereof and in reliance upon the representations and
warranties set forth herein, each of the Lenders severally agrees to
lend to the Borrowers at any time or from time to time on or after the
Closing Date and before the Maturity Date, such Lender's Revolving
Credit Commitment Percentage of the Revolving Loans as may be requested
or deemed requested by the Borrowers.
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(b) Determination of Borrowing Base.
(i) The Lenders agree, subject to the terms and
conditions of this Credit Agreement, from time to time, to
make loans and advances to the Borrowers hereunder on a
revolving basis. Such loans and advances to the Borrowers
(each, a "Revolving Loan"; and collectively, the "Revolving
Loans"), together with the Letter of Credit Obligations
outstanding, shall not in the aggregate exceed the lesser of:
(A) the Revolving Credit Committed Amount
then in effect; or
(B) the following amount (the "Borrowing
Base") calculated as follows:
(1) an amount equal to up to 85% of
the then Eligible Accounts Receivable; plus
(2) an amount equal to the sum of
(a) up to 45% of the Eligible Inventory
consisting of Mom and Pops country hams,
plus (b) up to 55% of the Eligible Inventory
consisting of Pierre Foods/Claremont
location raw materials, plus (c) up to 65%
of the Eligible Inventory consisting of
Pierre Foods/Cincinnati location raw
materials, plus (d) up to 55% of the
Eligible Inventory consisting of Smokehouse
finished goods, plus (e) up to 50% of the
Eligible Inventory consisting of Pierre
Foods/Claremont location bakery finished
goods, plus (f) up to 65% of the Eligible
Inventory consisting of Pierre
Foods/Cincinnati location finished goods;
plus
(3) an amount equal to up to 70% of
the Eligible Equipment and Eligible Real
Property determined as of its initial
inclusion into the Borrowing Base; provided,
however, that on the last day of each
calendar quarter such initial amount shall
be reduced by an amount equal to 1/28th of
such initial amount; and provided, further,
that no more than $2,500,000 shall be
included in the Borrowing Base with respect
to Approved Restaurants during each of the
first two years following the Closing Date;
minus
(4) reserves established by the
Agent from time to time in its reasonable
discretion, including, without limitation,
reserves against the Unsecured Letters of
Credit.
Subject to the relevant terms and provisions set forth herein,
the Agent at all times shall be entitled to reduce or increase
the advance rates (but not in excess of the
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advance rates set forth in clauses (1) through (3) immediately
above) and standards of eligibility under this Credit
Agreement, in each case in its reasonable discretion.
(ii) No Lender shall be obligated at any time to make
available to the Borrowers its Revolving Credit Commitment
Percentage of any requested Revolving Loan if such amount plus
its Revolving Credit Commitment Percentage of all Revolving
Loans and its Revolving Credit Commitment Percentage of all
Letter of Credit Obligations then outstanding would exceed
such Lender's Revolving Credit Commitment at such time. The
aggregate balance of Revolving Loans and the aggregate amount
of all Letter of Credit Obligations outstanding shall not at
any time exceed the Revolving Credit Committed Amount. No
Lender shall be obligated to make available, nor shall the
Agent make available, any Revolving Loans to any of the
Borrowers to the extent such Revolving Loan when added to the
then outstanding Revolving Loans and all Letter of Credit
Obligations would cause the aggregate outstanding Revolving
Loans and all Letter of Credit Obligations to exceed the
Borrowing Base. The Borrowers shall promptly repay to the
Agent for the account of the Lenders from time to time the
full amount of the excess, if any of (A) the amount of all
Revolving Loans and Letter of Credit Obligations outstanding
over (B) the lesser of (1) the Revolving Credit Committed
Amount and (2) the Borrowing Base.
(c) Revolving Notes. The obligations to repay the Revolving
Loans and to pay interest thereon shall be evidenced by separate
promissory notes of the Borrowers to each Lender in substantially the
form of Exhibit G attached hereto (the "Revolving Notes"), with
appropriate insertions, one Revolving Note being payable to the order
of each Lender in a principal amount equal to such Lender's Revolving
Credit Commitment and representing the obligations of the Borrowers to
pay such Lender the amount of such Lender's Revolving Credit Commitment
or, if less, the aggregate unpaid principal amount of all Revolving
Loans made by such Lender hereunder, plus interest accrued thereon, as
set forth herein. The Borrowers irrevocably authorize each Lender to
make or cause to be made appropriate notations on its Revolving Note,
or on a record pertaining thereto, reflecting Revolving Loans and
repayments thereof. The outstanding amount of the Revolving Loans set
forth on such Lender's Revolving Note or record shall be prima facie
evidence of the principal amount thereof owing and unpaid to such
Lender, but the failure to make such notation or record, or any error
in such notation or record shall not limit or otherwise affect the
obligations of the Borrowers hereunder or under any Revolving Note to
make payments of principal of or interest on any Revolving Note when
due.
(d) Borrowings under Revolving Notes.
(i) Each request for borrowings hereunder shall be made by
notice in the form attached hereto as Exhibit H from the Company on
behalf of the Borrowers to the Agent (the "Notice of Borrowing"), given
not later than 11:00 a.m. (A) on the Business Day on
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which the proposed borrowing is requested to be made for Revolving
Loans that will be Base Rate Loans and (B) three Business Days prior to
the date of the requested borrowing of Revolving Loans that will be
Eurodollar Loans. Each Notice of Borrowing shall be given by either
telephone, telecopy, telex or cable, and, if requested by the Agent,
confirmed in writing if by telephone, setting forth (1) the requested
date of such borrowing, (2) the aggregate amount of such requested
borrowing, (3) whether such Revolving Loans will be Base Rate Loans or
the Eurodollar Rate Loans, and if appropriate, the applicable Interest
Period, (4) certification by the Company on behalf of the Borrowers
that they have complied in all respects with Article V, all of which
shall be specified in such manner as is necessary to comply with all
limitations on Revolving Loans outstanding hereunder (including,
without limitation, availability under the Borrowing Base) and (5) the
account at which such requested funds should be made available. Each
Notice of Borrowing shall be irrevocable by and binding on the
Borrowers. Revolving Loans consisting of less than $1,000,000 shall be
made as Base Rate Loans. Revolving Loans of $1,000,000 or more may be
made as Base Rate Loans or Eurodollar Loans, or a combination thereof,
as the Borrowers may request; provided that no more than five (5)
Eurodollar Loans shall be outstanding hereunder at any one time; and
provided, further, that Eurodollar Loans shall be in a minimum
principal amount of at least $1,000,000 and integral multiples of
$500,000 in excess thereof. Revolving Loans may be repaid and
reborrowed in accordance with the provisions hereof.
The Agent shall give to each Lender prompt notice (but in no
event later than 1:00 p.m. on the date of the Agent's receipt of notice
from the Borrowers) of each Notice of Borrowing by telecopy, telex or
cable (other than any Notice of Borrowing which will be funded by the
Agent in accordance with subsection (d)(ii) below). No later than 3:00
p.m. on the date on which a borrowing is requested to be made pursuant
to the applicable Notice of Borrowing, each Lender will make available
to the Agent at the address of the Agent set forth on the signature
pages hereto, in immediately available funds, its Revolving Credit
Commitment Percentage of such borrowing requested to be made. Unless
the Agent shall have been notified by any Lender prior to the date of
borrowing that such Lender does not intend to make available to the
Agent its portion of the borrowing to be made on such date, the Agent
may assume that such Lender will make such amount available to the
Agent as required herein above and the Agent may, in reliance upon such
assumption, make available the amount of the borrowing to be provided
by such Lender. Upon fulfillment of the conditions set forth in Article
V for such borrowing, the Agent will make such funds available to the
Borrowers at the account specified by the Borrowers in such Notice of
Borrowing.
(ii) Because the Borrowers anticipate requesting borrowings of
Revolving Loans on a daily basis and repaying Revolving Loans on a
daily basis through the collection of Accounts and the proceeds of
other Collateral, resulting in the amount of outstanding Revolving
Loans fluctuating from day to day, in order to administer the Revolving
Loans in an efficient manner and to minimize the transfer of funds
between the Agent and the Lenders, the Lenders hereby instruct the
Agent, and the Agent may (but is not obligated to) (A) make available,
on behalf of the Lenders, the full amount of all
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Revolving Loans requested by the Borrowers not to exceed $10,000,000 in
the aggregate at any one time outstanding without requiring that the
Borrowers give the Agent a Notice of Borrowing with respect to such
borrowing and without giving each Lender prior notice of the proposed
borrowing, of such Lender's Revolving Credit Commitment Percentage
thereof and the other matters covered by the Notice of Borrowing and
(B) if the Agent has made any such amounts available as provided in
clause (A), upon repayment of Revolving Loans by the Borrowers, apply
such amounts repaid directly to the amounts made available by the Agent
in accordance with clause (A) and not yet settled as described below;
provided that the Agent shall not advance funds as described in clause
(A) above if the Agent has actually received prior to such borrowing
(1) an officers' certificate from the Company or any other Borrower
pursuant to and in accordance with Section 7.1(k) that a Default or
Event of Default is in existence or (2) a Notice of Borrowing from any
Borrower wherein the certification provided therein states that the
conditions to the making of the requested Revolving Loans have not been
satisfied or (3) a written notice from any Lender that the conditions
to such borrowing have not been satisfied, which officers' certificate,
Notice of Borrowing or notice, in each case, shall not have been
rescinded. If the Agent advances Revolving Loans on behalf of the
Lenders, as provided in the immediately preceding sentence, the amount
of outstanding Revolving Loans and each Lender's Revolving Credit
Commitment Percentage thereof shall be computed weekly rather than
daily and shall be adjusted upward or downward on the basis of the
amount of outstanding Revolving Loans as of 5:00 p.m. on the Business
Day immediately preceding the date of each computation; provided,
however, that the Agent retains the absolute right at any time or from
time to time to make the aforedescribed adjustments at intervals more
frequent than weekly. The Agent shall deliver to each of the Lenders
after the end of each week, or such lesser period or periods as the
Agent shall determine, a summary statement of the amount of outstanding
Revolving Loans for such period (such week or lesser period or periods
being hereafter referred to as a "Settlement Period"). If the summary
statement is sent by the Agent and received by the Lenders prior to
12:00 Noon on any Business Day each Lender shall make the transfers
described in the next succeeding sentence no later than 3:00 p.m. on
the day such summary statement was sent; and if such summary statement
is sent by the Agent and received by the Lenders after 12:00 Noon on
any Business Day, each Lender shall make such transfers no later than
3:00 p.m. on the next succeeding Business Day. If in any Settlement
Period, the amount of a Lender's Revolving Credit Commitment Percentage
of the Revolving Loans is in excess of the amount of Revolving Loans
actually funded by such Lender, such Lender shall forthwith (but in no
event later than the time set forth in the next preceding sentence)
transfer to the Agent by wire transfer in immediately available funds
the amount of such excess; and, on the other hand, if the amount of a
Lender's Revolving Credit Commitment Percentage of the Revolving Loans
in any Settlement Period is less than the amount of Revolving Loans
actually funded by such Lender, the Agent shall forthwith transfer to
such Lender by wire transfer in immediately available funds the amount
of such difference. The obligation of each of the Lenders to transfer
such funds shall be irrevocable and unconditional and without recourse
to or warranty by the Agent. Each of the Agent and the Lenders agree to
mark their respective books and records at the end of each Settlement
Period to show at all times the dollar
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amount of their respective Revolving Credit Commitment Percentages of
the outstanding Revolving Loans. Because the Agent on behalf of the
Lenders may be advancing and/or may be repaid Revolving Loans prior to
the time when the Lenders will actually advance and/or be repaid
Revolving Loans, interest with respect to Revolving Loans shall be
allocated by the Agent to each Lender (including the Agent) in
accordance with the amount of Revolving Loans actually advanced by and
repaid to each Lender (including the Agent) during each Settlement
Period and shall accrue from and including the date such Revolving
Loans are advanced by the Agent to but excluding the date such
Revolving Loans are repaid by the Borrowers in accordance with Section
2.4 or actually settled by the applicable Lender as described in this
Section 2.1(d)(ii). All such Revolving Loans shall be made as Base Rate
Loans.
(iii) If the amounts described in subsection (d)(i) or (d)(ii)
of this Section 2.1 are not in fact made available to the Agent by a
Lender (such Lender being hereinafter referred to as a "Defaulting
Lender") and the Agent has made such amount available to the Borrowers,
the Agent shall be entitled to recover such corresponding amount on
demand from such Defaulting Lender. If such Defaulting Lender does not
pay such corresponding amount forthwith upon the Agent's demand
therefor, the Agent shall promptly notify the Borrowers and the
Borrowers shall immediately (but in no event later than five Business
Days after such demand) pay such corresponding amount to the Agent. The
Agent shall also be entitled to recover from such Defaulting Lender and
the Borrowers, (A) interest on such corresponding amount in respect of
each day from the date such corresponding amount was made available by
the Agent to the Borrowers to the date such corresponding amount is
recovered by the Agent, at a rate per annum equal to either (1) if paid
by such Defaulting Lender, the overnight Federal Funds Rate or (2) if
paid by the Borrowers, the then applicable rate of interest, calculated
in accordance with Section 4.1, plus (B) in each case, an amount equal
to any costs (including legal expenses) and losses incurred as a result
of the failure of such Defaulting Lender to provide such amount as
provided in this Credit Agreement. Nothing herein shall be deemed to
relieve any Lender from its obligation to fulfill its commitments
hereunder or to prejudice any rights which the Borrowers may have
against any Lender as a result of any default by such Lender hereunder,
including, without limitation, the right of the Borrowers to seek
reimbursement from any Defaulting Lender for any amounts paid by the
Borrowers under clause (B) above on account of such Defaulting Lender's
default.
(iv) The failure of any Lender to make the Revolving Loan to
be made by it as part of any borrowing shall not relieve any other
Lender of its obligation, if any, hereunder to make its Revolving Loan
on the date of such borrowing, but no Lender shall be responsible for
the failure of any other Lender to make the Revolving Loan to be made
by such other Lender on the date of any borrowing.
(v) Each Lender shall be entitled to earn interest at the then
applicable rate of interest, calculated in accordance with Article IV,
on outstanding Revolving Loans which it has funded to the Agent from
the date such Lender funded such Revolving Loan to, but excluding, the
date on which such Lender is repaid with respect to such Revolving
Loan.
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(vi) Notwithstanding the obligation of the Borrowers to send
written confirmation of a Notice of Borrowing made by telephone if and
when requested by the Agent, in the event that the Agent agrees to
accept a Notice of Borrowing made by telephone, such telephonic Notice
of Borrowing shall be binding on the Borrowers whether or not written
confirmation is sent by the Borrowers or requested by the Agent. The
Agent may act prior to the receipt of any requested written
confirmation, without any liability whatsoever, based upon telephonic
notice believed by the Agent in good faith to be from a Borrower or its
agents. The Agent's records of the terms of any telephonic Notices of
Borrowing shall be conclusive on the Borrowers in the absence of gross
negligence or willful misconduct on the part of the Agent in connection
therewith.
2.2 [INTENTIONALLY LEFT BLANK].
2.3 OPTIONAL AND MANDATORY PREPAYMENTS; REDUCTION OF COMMITMENTS.
(a) Voluntary Prepayments. The Borrowers shall have the right
to prepay Revolving Loans in whole or in part from time to time, but
otherwise without premium or penalty; provided, however, that (i)
Revolving Loans that are Eurodollar Loans may only be prepaid on three
Business Days' prior written notice to the Agent specifying the
applicable Revolving Loans to be prepaid; (ii) any prepayment of
Revolving Loans that are Eurodollar Loans will be subject to Section
4.10; (iii) each such partial prepayment of Revolving Loans shall be in
a minimum principal amount of $1,000,000 and integral multiples of
$1,000,000. Prepayments on Revolving Loans shall be applied first to
Base Rate Loans and then to Eurodollar Loans in direct order of
Interest Period maturities. Notwithstanding the foregoing to the
contrary, this Section 2.3(a) shall not be applicable to payments on
the Revolving Loans effected pursuant to Section 2.4(b)(ii) hereof.
(b) Mandatory Prepayments.
(i) Revolving Credit Committed Amount. If at any
time, the sum of the aggregate principal amount of outstanding
Revolving Loans plus Letter of Credit Obligations outstanding
shall exceed the lesser of (A) the Revolving Credit Committed
Amount and (B) the Borrowing Base, the Borrowers immediately
shall prepay the Revolving Loans and (after all Revolving
Loans have been repaid) cash collateralize the Letter of
Credit Obligations, in an amount sufficient to eliminate such
excess.
(ii) Asset Dispositions. Promptly and in any event
within five (5) days following the occurrence of any Asset
Disposition, the Borrowers shall prepay the Revolving Loans in
an aggregate amount equal to the Net Cash Proceeds of the
related Asset Disposition. Such prepayment shall be applied as
set forth in clause (iii) below.
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(iii) Application of Mandatory Prepayments. All
amounts required to be paid pursuant to this Section 2.3(b)
shall be applied to Revolving Loans and (after all Revolving
Loans have been repaid) to a cash collateral account in
respect of Letter of Credit Obligations. Prepayments shall be
applied first to Base Rate Loans and then to Eurodollar Loans
in direct order of Interest Period maturities. All prepayments
under this Section 2.3(b) shall be subject to Section 4.10.
(c) Voluntary Reductions. The Borrowers may from time to time
permanently reduce or terminate the Revolving Credit Committed Amount
in whole or in part (in minimum aggregate amounts of $5,000,000 or in
integral multiples of $5,000,000 in excess thereof (or, if less, the
full remaining amount of the then applicable Revolving Credit Committed
Amount)) upon three Business Days' prior written notice to the Agent;
provided, however, no such termination or reduction shall be made which
would cause the aggregate principal amount of outstanding Revolving
Loans plus Letter of Credit Obligations outstanding to exceed the
lesser of (A) the Revolving Credit Committed Amount and (B) the
Borrowing Base, unless, concurrently with such termination or
reduction, the Revolving Loans are repaid to the extent necessary to
eliminate such excess. The Agent shall promptly notify each affected
Lender of receipt by the Agent of any notice from the Borrowers
pursuant to this Section 2.3(c).
(d) Maturity Date. The Commitments of the Lenders and the
Letter of Credit Commitment of the Issuing Bank shall automatically
terminate on the Maturity Date.
(e) General. The Borrowers shall pay to the Agent for the
account of the Lenders in accordance with the terms of Section 4.3, on
the date of each termination or reduction of the Revolving Credit
Committed Amount, the Unused Line Fee accrued through the date of such
termination or reduction on the amount of the Revolving Credit
Committed Amount so terminated or reduced.
2.4 PAYMENTS AND COMPUTATIONS.
(a) The Borrowers shall make each payment hereunder and under
the Revolving Notes not later than 2:00 p.m. on the day when due or by
direct charge against the Revolving Credit Commitment, if available,
pursuant to Section 2.4(b)(ii) hereof. Payments made by the Borrowers
shall be in Dollars to the Agent at its address referred to in Section
14.5 hereof in immediately available funds. Payments made with respect
to the Revolving Loans shall be applied to repay Revolving Loans
consisting of Base Rate Loans first and then Revolving Loans consisting
of Eurodollar Loans. As soon as practicable after the Agent receives
payment from the Borrowers, but in no event later than one Business Day
after such payment has been made, subject to Section 2.1(d)(ii), the
Agent will cause to be distributed like funds relating to the payment
of principal, interest, or Fees (other than amounts payable to the
Agent to reimburse the Agent and the Issuing Bank for fees and expenses
payable solely to them pursuant to Article IV hereof) or expenses
payable to the Agent and the Lenders in accordance with Section 14.8
hereof ratably to the Lenders, and like funds relating to the payment
of any other amounts
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payable to such Lender. The Borrowers' obligations to the Lenders with
respect to such payments shall be discharged by making such payments to
the Agent pursuant to this Section 2.4(a) or if not timely paid or any
Event of Default then exists, may be added to the principal amount of
the Revolving Loans outstanding.
(b) (i) The Borrowers, individually or through the Company,
shall have each established and shall maintain lockboxes (the
"Lockboxes") with financial institutions, including First
Union, selected by the Company and reasonably acceptable to
the Agent (the "Lockbox Banks") and shall instruct all account
debtors on the Accounts of each Borrower to remit all payments
to its respective Lockboxes. Separate Lockboxes shall be
maintained for the NonRestaurant Business and the Restaurant
Business of the Borrowers. All amounts received by the
Borrowers from any account debtor, in addition to all other
cash received from any other source including but not limited
to proceeds from asset sales and judgments, shall be promptly
deposited into the applicable Lockbox Account (as defined
below).
(ii) Each Borrower, individually or through the
Company, the Agent and each Lockbox Bank shall enter into
three party agreements in the form of Exhibit I hereto (the
"Lockbox Agreements"), providing, among other things, for the
following:
(A) The Borrowers, individually or through
the Company, will open and establish for the benefit
of the Agent on behalf of the Lenders an account at
each Lockbox Bank (each a "Lockbox Account").
(B) All receipts held in the Lockboxes shall
be remitted daily to the appropriate Lockbox
Account. All funds deposited into the Lockbox
Accounts pertaining to the Restaurant Business on
any Business Day shall be transferred to the FUNB
Claremont Restaurant Cash Collateral Account. All
funds deposited into the Lockbox Accounts pertaining
to the NonRestaurant Business on any Business Day
shall be transferred to the FUNB NonRestaurant Cash
Collateral Account. All funds transferred to the
Cash Collateral Accounts on any Business Day shall
be immediately credited to the FUNB Leverage
Account. All funds credited on any Business Day to
the FUNB Leverage Account shall be applied by the
Agent on such Business Day to reduce the then
outstanding balance of the Revolving Loans and to
pay accrued interest thereon and to pay any other
outstanding Obligations which are then due and
payable. All amounts received directly by the
Borrowers from any account debtor, in addition to
all other cash received from any other source
including but not limited to proceeds from asset
sales and judgments, shall be held in trust by the
Borrowers and promptly deposited into the applicable
Lockbox Account.
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(iii) All funds deposited into the Cash Collateral
Accounts shall immediately become the property of the Agent
and the Borrowers shall obtain the agreement by the Lockbox
Banks to waive any offset rights against the funds so
deposited. The Agent assumes no responsibility for the Lockbox
arrangements, including, without limitation, any claim of
accord and satisfaction or release with respect to deposits
accepted by the Lockbox Banks thereunder.
(iv) The Borrowers may close Lockboxes and/or open
new lockboxes with the prior written consent of the Agent and
subject to prior execution and delivery to the Agent of
lockbox agreements consistent with the provisions of this
Section 2.4(b) and in form and substance satisfactory to the
Agent and its counsel.
(c) The Borrowers hereby authorize each Lender to charge from
time to time against any or all of the Borrowers' accounts with such
Lender any of the Obligations which are then due and payable. Each
Lender receiving any payment as a result of charging any such account
shall promptly notify the Agent thereof and make such arrangements as
the Agent shall request to share the benefit thereof in accordance with
Section 2.8.
(d) Except as otherwise provided herein with respect to
Eurodollar Loans, any payments falling due under this Credit Agreement
on a day other than a Business Day shall be due and payable on the next
succeeding Business Day and shall accrue interest at the applicable
interest rate provided for in this Credit Agreement to but excluding
such Business Day. Except as otherwise provided herein, computation of
interest and fees hereunder shall be made on the basis of actual number
of days elapsed over a 360 day year.
2.5 MAINTENANCE OF ACCOUNT.
The Agent shall maintain an account on its books in the name of the
Borrowers in which the Borrowers will be charged with all loans and advances
made by the Lenders to the Borrowers or for the Borrowers' account, including
the Revolving Loans, the Letter of Credit Obligations and any other Obligations,
including any and all costs, expenses and attorney's fees which the Agent may
incur, including, without limitation, in connection with the exercise by or for
the Lenders of any of the rights or powers herein conferred upon the Agent
(other than in connection with any assignments or participations by any Lender)
or in the prosecution or defense of any action or proceeding by or against any
Borrower or the Lenders concerning any matter arising out of, connected with, or
relating to this Credit Agreement or the Accounts, or any Obligations owing to
the Lenders by any Borrower. The Borrowers will be credited in accordance with
Section 2.4(b)(ii)(B) above, with all amounts received by the Lenders from the
Borrowers or from others for the Borrowers' account, including, as above set
forth, all amounts received by the Agent in payment of Accounts. In no event
shall prior recourse to any Accounts or other Collateral be a prerequisite to
the Agent's right to demand payment of any Obligation upon its maturity.
Further, it is understood that the Agent shall have no obligation whatsoever to
perform in any respect any of the Borrowers' contracts or obligations relating
to the Accounts.
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2.6 STATEMENT OF ACCOUNT.
After the end of each month the Agent shall send the Borrowers a
statement showing the accounting for the charges, loans, advances and other
transactions occurring between the Lenders and the Borrowers during that month.
The monthly statements shall be deemed correct and binding upon the Borrowers
and shall constitute an account stated between the Borrowers and the Lenders
unless the Agent receives a written statement of the Borrowers' exceptions
within thirty (30) days after same is mailed to the Borrowers.
2.7 TAXES.
(a) Any and all payments by the Borrowers hereunder or under
the Revolving Notes to or for the benefit of any Lender shall be made,
in accordance with Section 2.4, free and clear of and without deduction
for any and all present or future Taxes, deductions, charges or
withholdings and all liabilities with respect thereto, excluding, in
the case of each such Lender and the Agent, Taxes imposed on or
measured by the Agent's or any Lender's net income or receipts in its
jurisdiction of organization or those jurisdictions in which it is
doing business (any such excluded Taxes, collectively, "Excluded
Taxes"). If any Borrower shall be required by law to deduct any Taxes
(other than Excluded Taxes) from or in respect of any sum payable
hereunder or under any Revolving Note to or for the benefit of any
Lender or the Agent, (i) the sum payable shall be increased as may be
necessary so that after making all required deductions of Taxes
(including deductions of Taxes applicable to additional sums payable
under this Section 2.7) such Lender or the Agent, as the case may be,
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) such Borrower shall make such deductions and
(iii) such Borrower shall pay the full amount so deducted to the
relevant taxation authority or other authority in accordance with
applicable law; provided, however, that such Borrower shall be under no
obligation to increase the sum payable to any Lender not organized
under the laws of the United States or a state thereof (a "Foreign
Lender") by an amount equal to the amount of the United States Tax
required to be withheld under United States law from the sums paid to
such Foreign Lender, if such withholding is caused by the failure of
such Foreign Lender to be engaged in the active conduct of a trade or
business in the United States or all amounts of interest and fees to be
paid to such Foreign Lender hereunder are not effectively connected
with such trade or business within the meaning of United States
Treasury Regulation 1.1441-4(a).
(b) Each Foreign Lender agrees that it will deliver to the
Borrowers and the Agent (i) two duly completed copies of United States
Internal Revenue Service Form 1001 or 4224 or successor applicable
form(s), as the case may be, and (ii) an Internal Revenue Service Form
W-8 or W-9 or successor applicable form, together with any other
certificate or statement of exemption required under the Code or
regulations issued thereunder. Each such Lender also agrees to deliver
to the Borrowers and the Agent two further copies of the said Form 1001
or 4224 and Form W-8 or W-9, or successor applicable forms or other
manner of certification, as the case may be, on or before the
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date that any such form expires or becomes obsolete or after the
occurrence of any event requiring a change in the most recent form
previously delivered by it to the Borrowers, and such extensions or
renewals thereof as may reasonably be requested by the Borrowers or the
Agent, unless in any such case an event (including, without limitation,
any change in treaty, law or regulation) has occurred prior to the date
on which any such delivery would otherwise be required which renders
all such forms inapplicable or which would prevent such Lender from
duly completing and delivering any such form with respect to it and
such Lender so advises the Borrowers and the Agent. Such Lender shall
certify (A) in the case of a Form 1001 or 4224, that it is entitled to
receive payments under this Credit Agreement without deduction or
withholding of any United States federal income taxes and (B) in the
case of a Form W-8 or W-9, that it is entitled to an exemption from
United States backup withholding tax.
(c) In addition, the Borrowers agree to pay any present or
future stamp, documentary, privilege, intangible or similar Taxes or
any other excise or property Taxes, charges or similar levies that
arise at any time or from time to time (other than Excluded Taxes) (i)
from any payment made under any and all Credit Documents, (ii) from the
transfer of the rights of any Lender under any Credit Documents to any
other Lender or Lenders or (iii) from the execution or delivery by any
Borrower of, or from the filing or recording or maintenance of, or
otherwise with respect to, any and all Credit Documents (hereinafter
referred to as "Other Taxes").
(d) The Borrowers will indemnify each Lender and the Agent for
the full amount of Taxes (including, without limitation and without
duplication, any Taxes imposed by any jurisdiction on amounts payable
under this Section 2.7), subject to (i) the exclusion set out in the
first sentence of Section 2.7(a), (ii) the provisions of Section
2.7(b), and (iii) the provisions of the proviso set forth in Section
2.7(a), and will indemnify each Lender and the Agent for the full
amount of Other Taxes (including, without limitation and without
duplication, any Taxes imposed by any jurisdiction on amounts payable
under this Section 2.7) paid by such Lender or the Agent (on its own
behalf or on behalf of any Lender), as the case may be, in respect of
payments made or to be made hereunder, and any liability (including
penalties, interest and expenses) arising solely therefrom or with
respect thereto, whether or not such Taxes or Other Taxes were
correctly or legally asserted. Payment of this indemnification shall be
made within 30 days from the date such Lender or the Agent, as the case
may be, makes written demand therefor.
(e) Within 30 days after the date of any payment of Taxes or
Other Taxes, the applicable Borrower shall furnish to the Agent, at its
address referred to in Section 14.5, the original or certified copy of
a receipt evidencing payment thereof.
(f) Without prejudice to the survival of any other agreement
of the Borrowers hereunder, the agreements and obligations of the
Borrowers contained in this Section 2.7 shall survive the payment in
full of all Obligations hereunder and under the Revolving Notes.
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2.8 SHARING OF PAYMENTS.
If any Lender shall obtain any payment (whether voluntary, involuntary,
through the exercise of any right of set-off or otherwise) on account of the
Revolving Loans made by it or its participation in Letters of Credit in excess
of its pro rata share of such payment as provided for in this Credit Agreement,
such Lender shall forthwith purchase from the other Lenders such participations
in the Revolving Loans made by them or in their participation in Letters of
Credit as shall be necessary to cause such purchasing Lender to share the excess
payment accruing all Lenders in accordance with their respective ratable shares
as provided for in this Credit Agreement; provided, however, that if all or any
portion of such excess is thereafter recovered from such purchasing Lender, such
purchase from each Lender shall be rescinded and each such Lender shall repay to
the purchasing Lender the purchase price to the extent of such recovery together
with an amount equal to such Lender's ratable share (according to the proportion
of (i) the amount of such Lender's required repayment to (ii) the total amount
so recovered from the purchasing Lender) or any interest or other amount paid or
payable by the purchasing Lender in respect to the total amount so recovered.
The Borrowers agree that any Lender so purchasing a participation from another
Lender pursuant to this Section 2.8 may, to the fullest extent permitted by law,
exercise all of its rights of payment (including the right of set-off) with
respect to such participation as fully as if such Lender were the direct
creditor of the Borrowers in the amount of such participation.
2.9 PRO RATA TREATMENT.
Each Revolving Loan, each payment or prepayment of principal of any
Revolving Loan or reimbursement obligations arising from drawings under Letters
of Credit, each payment of interest on the Revolving Loans, each payment of the
Unused Line Fee, each payment of the Standby Letter of Credit Fee, each payment
of the Trade Letter of Credit Fee, each reduction of the Revolving Credit
Commitment and each conversion or extension of any Revolving Loan, shall be
allocated pro rata among the Lenders in accordance with the respective principal
amounts of their outstanding Revolving Loans and their participation interests
in the Letters of Credit; provided, however, that the foregoing fees payable
hereunder to the Lenders shall be allocated to each Lender based on such
Lender's Revolving Credit Commitment Percentage.
2.10 EXTENSIONS AND CONVERSIONS.
Subject to the terms of Article V, the Borrowers shall have the option,
on any Business Day, to extend existing Eurodollar Loans into a subsequent
permissible Interest Period, to convert Base Rate Loans into Eurodollar Loans,
or to convert Eurodollar Loans into Base Rate Loans; provided, however, that (i)
except as provided in Section 4.10, Eurodollar Loans may be converted into Base
Rate Loans only on the last day of the Interest Period applicable thereto, (ii)
Eurodollar Loans may be extended, and Base Rate Loans may be converted into
Eurodollar Loans, only if no Default or Event of Default is in existence on the
date of extension or conversion, (iii) Loans extended as, or converted into,
Eurodollar Loans shall be subject to the terms of the definition of "Interest
Period" and shall be in such minimum amounts as provided in
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with respect to Revolving Loans, Section 2.1(d)(i), and (iv) no more than five
(5) separate Eurodollar Loans shall be outstanding hereunder at any time. Each
such extension or conversion shall be effected by the Borrowers by giving a
written notice in the form of Exhibit J hereto (a "Notice of
Extension/Conversion") (or telephone notice promptly confirmed in writing) to
the Agent prior to 11:00 A.M. on the Business Day of, in the case of the
conversion of a Eurodollar Loan into a Base Rate Loan, and on the third Business
Day prior to, in the case of the extension of a Eurodollar Loan as, or
conversion of a Base Rate Loan into, a Eurodollar Loan, the date of the proposed
extension or conversion, specifying the date of the proposed extension or
conversion, the Revolving Loans to be so extended or converted, the types of
Revolving Loans into which such Revolving Loans are to be converted and, if
appropriate, the applicable Interest Periods with respect thereto. Each request
for extension or conversion shall constitute a representation and warranty by
the Borrowers of the matters specified in Article 5. In the event the Borrowers
fail to request extension or conversion of any Eurodollar Loan in accordance
with this Section, or any such conversion or extension is not permitted or
required by this Section, then such Loan shall be automatically converted into a
Base Rate Loan at the end of the Interest Period applicable thereto. The Agent
shall give each Lender notice as promptly as practicable of any such proposed
extension or conversion affecting any Loan.
ARTICLE III
LETTERS OF CREDIT
3.1 ISSUANCE.
Subject to the terms and conditions hereof and of the Letter of Credit
Documents, if any, and any other terms and conditions which the Issuing Bank may
reasonably require, the Lenders will participate in the issuance by the Issuing
Bank from time to time of such Letters of Credit in Dollars from the Closing
Date until the Maturity Date as the Borrowers may request, in a form acceptable
to the Issuing Bank; provided, however, that (a) the Letter of Credit
Obligations outstanding shall not at any time exceed THREE MILLION DOLLARS
($3,000,000) (the "Letter of Credit Committed Amount") and (b) the sum of the
aggregate principal amount of outstanding Revolving Loans plus Letter of Credit
Obligations outstanding shall not at any time exceed the lesser of (i) the
Revolving Credit Committed Amount and (ii) the Borrowing Base. No Letter of
Credit shall (x) have an original expiry date or renewal date more than one year
from the date of issuance or (y) as originally issued or as extended, have an
expiry date extending beyond the Maturity Date. Each Letter of Credit shall
comply with the related Letter of Credit Documents. The issuance and expiry date
of each Letter of Credit shall comply with the related Letter of Credit
Documents. The issuance and expiry date of each Letter of Credit shall be a
Business Day.
3.2 NOTICE AND REPORTS.
The request for the issuance of a Letter of Credit shall be submitted
by the Borrowers to the Issuing Bank at least three (3) Business Days prior to
the requested date of issuance. The
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Issuing Bank will, upon request, disseminate to each of the Lenders a detailed
report specifying the Letters of Credit which are then issued and outstanding
and any activity with respect thereto which may have occurred since the date of
the prior report, and including therein, among other things, the beneficiary,
the face amount and the expiry date as well as any payment or expirations which
may have occurred.
3.3 PARTICIPATION.
Each Lender, upon issuance of a Letter of Credit, shall be deemed to
have purchased without recourse a risk participation from the Issuing Bank in
such Letter of Credit and the obligations arising thereunder, in each case in an
amount equal to its Revolving Credit Commitment Percentage of such Letter of
Credit, and shall absolutely, unconditionally and irrevocably assume, as primary
obligor and not as surety, and be obligated to pay to the Issuing Bank therefor
and discharge when due, its Revolving Credit Commitment Percentage of the
obligations arising under such Letter of Credit. Without limiting the scope and
nature of each Lender's participation in any Letter of Credit, to the extent
that the Issuing Bank has not been reimbursed as required hereunder or under any
such Letter of Credit, each such Lender shall pay to the Issuing Bank its
Revolving Credit Commitment Percentage of such unreimbursed drawing pursuant to
the provisions of Section 3.4. The obligation of each Lender to so reimburse the
Issuing Bank shall be absolute and unconditional and shall not be affected by
the occurrence of a Default, an Event of Default or any other occurrence or
event. Any such reimbursement shall not relieve or otherwise impair the
obligation of the Borrowers to reimburse the Issuing Bank under any Letter of
Credit, together with interest as hereinafter provided.
3.4 REIMBURSEMENT.
In the event of any drawing under any Letter of Credit, the Issuing
Bank will promptly notify the Borrowers. Unless the Borrowers shall immediately
notify the Issuing Bank that the Borrowers intend to otherwise reimburse the
Issuing Bank for such drawing, the Borrowers shall be deemed to have requested
that the Lenders make a Revolving Loan in the amount of the drawing as provided
in Section 3.5 on the related Letter of Credit, the proceeds of which will be
used to satisfy the related reimbursement obligations. The Borrowers promise to
reimburse the Issuing Bank on the day of drawing under any Letter of Credit
(either with the proceeds of a Revolving Loan obtained hereunder or otherwise)
in same day funds. If the Borrowers shall fail to reimburse the Issuing Bank as
provided hereinabove, the unreimbursed amount of such drawing shall bear
interest at a per annum rate equal to the Base Rate plus the sum of (i) the
Applicable Percentage for Base Rate Loans and (ii) two percent (2%). The
Borrowers' reimbursement obligations hereunder shall be absolute and
unconditional under all circumstances irrespective of any rights of setoff,
counterclaim or defense to payment the Borrowers may claim or have against the
Issuing Bank, the Agent, the Lenders, the beneficiary of the Letter of Credit
drawn upon or any other Person, including without limitation any defense based
on any failure of the Borrowers to receive consideration or the legality,
validity, regularity or unenforceability of the Letter of Credit. The Issuing
Bank will promptly notify the other Lenders of the amount of any unreimbursed
drawing and each Lender shall promptly pay to the Agent for the account of the
Issuing Bank in Dollars and in immediately available funds, the amount of such
Lender's
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Revolving Credit Commitment Percentage of such unreimbursed drawing. Such
payment shall be made on the Business Day such notice is received by such Lender
from the Issuing Bank if such notice is received at or before 2:00 P.M.
otherwise such payment shall be made at or before 12:00 Noon on the Business Day
next succeeding the day such notice is received. If such Lender does not pay
such amount to the Issuing Bank in full upon such request, such Lender shall, on
demand, pay to the Agent for the account of the Issuing Bank interest on the
unpaid amount during the period from the date of such drawing until such Lender
pays such amount to the Issuing Bank in full at a rate per annum equal to, if
paid within two (2) Business Days of the date that such Lender is required to
make payments of such amount pursuant to the preceding sentence, the Federal
Funds Rate and thereafter at a rate equal to the Base Rate. Each Lender's
obligation to make such payment to the Issuing Bank, and the right of the
Issuing Bank to receive the same, shall be absolute and unconditional, shall not
be affected by any circumstance whatsoever and without regard to the termination
of this Credit Agreement or the Revolving Credit Commitments hereunder, the
existence of a Default or Event of Default or the acceleration of the
obligations of the Borrowers hereunder and shall be made without any offset,
abatement, withholding or reduction whatsoever. Simultaneously with the making
of each such payment by a Lender to the Issuing Bank, such Lender shall,
automatically and without any further action on the part of the Issuing Bank or
such Lender, acquire a participation in an amount equal to such payment
(excluding the portion of such payment constituting interest owing to the
Issuing Bank) in the related unreimbursed drawing portion of the Letter of
Credit Obligation and in the interest thereon and in the related Letter of
Credit Documents, and shall have a claim against the Borrowers with respect
thereto.
3.5 REPAYMENT WITH REVOLVING LOANS.
On any day on which the Borrowers shall have requested, or been deemed
to have requested, a Revolving Loan advance to reimburse a drawing under a
Letter of Credit, the Agent shall give notice to the Lenders that a Revolving
Loan has been requested or deemed requested by the Borrowers to be made in
connection with a drawing under a Letter of Credit, in which case a Revolving
Loan advance comprised of Base Rate Loans (or Eurodollar Loans to the extent the
Borrower has complied with the procedures of Section 2.1(d)(i) with respect
thereto) shall be immediately made to the Borrowers by all Lenders
(notwithstanding any termination of the Revolving Credit Commitments pursuant to
Section 11.2) pro rata based on the respective Revolving Credit Commitment
Percentages of the Lenders (determined before giving effect to any termination
of the Commitments pursuant to Section 11.2) and the proceeds thereof shall be
paid directly by the Agent to the Issuing Bank for application to the respective
Letter of Credit Obligations. Each such Lender hereby irrevocably agrees to make
its Revolving Credit Commitment Percentage of each such Revolving Loan
immediately upon any such request or deemed request in the amount, in the manner
and on the date specified in the preceding sentence notwithstanding (i) the
amount of such borrowing may not comply with the minimum amount for advances of
Revolving Loans otherwise required hereunder, (ii) whether any conditions
specified in Article V are then satisfied, (iii) whether a Default or an Event
of Default then exists, (iv) failure for any such request or deemed request for
Revolving Loan to be made by the time otherwise required hereunder, (v) whether
the date of such borrowing is a date on which Revolving Loans are otherwise
permitted to be made hereunder or (vi) any termination of the
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Revolving Credit Commitments relating thereto immediately prior to or
contemporaneously with such borrowing. In the event that any Revolving Loan
cannot for any reason be made on the date otherwise required above (including,
without limitation, as a result of the commencement of a bankruptcy or
insolvency proceeding with respect to any Borrower), then each such Lender
hereby agrees that it shall forthwith purchase (as of the date such borrowing
would otherwise have occurred, but adjusted for any payments received from the
Borrowers on or after such date and prior to such purchase) from the Issuing
Bank such participation in the outstanding Letter of Credit Obligations as shall
be necessary to cause each such Lender to share in such Letter of Credit
Obligations ratably (based upon the respective Revolving Credit Commitment
Percentages of the Lenders (determined before giving effect to any termination
of the Revolving Credit Commitments pursuant to Section 11.2)), provided that at
the time any purchase of participation pursuant to this sentence is actually
made, the purchasing Lender shall be required to pay to the Issuing Bank, to the
extent not paid to the Issuing Bank by the Borrowers in accordance with the
terms of Section 3.4, interest on the principal amount of participation
purchased for each day from and including the day upon which such borrowing
would otherwise have occurred to but excluding the date of payment for such
participation, at the rate equal to, if paid within two (2) Business Days of the
date of the Revolving Loan advance, the Federal Funds Rate, and thereafter at a
rate equal to the Base Rate.
3.6 RENEWAL, EXTENSION.
The renewal or extension of any Letter of Credit shall, for purposes
hereof, be treated in all respects the same as the issuance of a new Letter of
Credit hereunder.
3.7 UNIFORM CUSTOMS AND PRACTICES.
The Issuing Bank may have the Letters of Credit be subject to The
Uniform Customs and Practice for Documentary Credits, as published as of the
date of issue by the International Chamber of Commerce (the "UCP"), in which
case the UCP may be incorporated therein and deemed in all respects to be a part
thereof.
3.8 INDEMNIFICATION; NATURE OF ISSUING BANK'S DUTIES.
(a) In addition to its other obligations under this Article
III, the Borrowers hereby agree to protect, indemnify, pay and save the
Issuing Bank harmless from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including
reasonable attorneys' fees) that the Issuing Bank may incur or be
subject to as a consequence, direct or indirect, of (A) the issuance of
any Letter of Credit or (B) the failure of the Issuing Bank to honor a
drawing under a Letter of Credit as a result of any act or omission,
whether rightful or wrongful, of any present or future de jure or de
facto government or Governmental Authority (all such acts or omissions,
herein called "Government Acts").
(b) As between the Borrowers and the Issuing Bank, the
Borrowers shall assume all risks of the acts, omissions or misuse of
any Letter of Credit by the beneficiary
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thereof. The Issuing Bank shall not be responsible: (i) for the form,
validity, sufficiency, accuracy, genuineness or legal effect of any
document submitted by any party in connection with the application for
and issuance of any Letter of Credit, even if it should in fact prove
to be in any or all respects invalid, insufficient, inaccurate,
fraudulent or forged; (ii) for the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or
assign any Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, that may prove to be invalid or
ineffective for any reason; (iii) for errors, omissions, interruptions
or delays in transmission or delivery of any messages, by mail, cable,
telegraph, telex or otherwise, whether or not they be in cipher; (iv)
for any loss or delay in the transmission or otherwise of any document
required in order to make a drawing under a Letter of Credit or of the
proceeds thereof; and (v) for any consequences arising from causes
beyond the control of the Issuing Bank, including, without limitation,
any Government Acts. None of the above shall affect, impair, or prevent
the vesting of the Issuing Bank's rights or powers hereunder.
(c) In furtherance and extension and not in limitation of the
specific provisions hereinabove set forth, any action taken or omitted
by the Issuing Bank, under or in connection with any Letter of Credit
or the related certificates, if taken or omitted in good faith, shall
not put such Issuing Bank under any resulting liability to any
Borrower. It is the intention of the parties that this Credit Agreement
shall be construed and applied to protect and indemnify the Issuing
Bank against any and all risks involved in the issuance of the Letters
of Credit, all of which risks are hereby assumed by the Borrowers,
including, without limitation, any and all Government Acts. The Issuing
Bank shall not, in any way, be liable for any failure by the Issuing
Bank or anyone else to pay any drawing under any Letter of Credit as a
result of any Government Acts or any other cause beyond the control of
the Issuing Bank.
(d) Nothing in this Section 3.8 is intended to limit the
reimbursement obligations of the Borrower contained in Section 3.4
above. The obligations of the Borrowers under this Section 3.8 shall
survive the termination of this Credit Agreement. No act or omission of
any current or prior beneficiary of a Letter of Credit shall in any way
affect or impair the rights of the Issuing Bank to enforce any right,
power or benefit under this Credit Agreement.
(e) Notwithstanding anything to the contrary contained in this
Section 3.8, the Borrowers shall have no obligation to indemnify the
Issuing Bank in respect of any liability incurred by the Issuing Bank
(i) arising solely out of the gross negligence or willful misconduct of
the Issuing Bank, as determined by a court of competent jurisdiction,
or (ii) caused by the Issuing Bank's failure to pay under any Letter of
Credit after presentation to it of a request strictly complying with
the terms and conditions of such Letter of Credit, as determined by a
court of competent jurisdiction, unless such payment is prohibited by
any law, regulation, court order or decree.
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3.9 RESPONSIBILITY OF ISSUING BANK.
It is expressly understood and agreed that the obligations of the
Issuing Bank hereunder to the Lenders are only those expressly set forth in this
Credit Agreement and that the Issuing Bank shall be entitled to assume that the
conditions precedent set forth in Articles III or V have been satisfied unless
it shall have acquired actual knowledge that any such condition precedent has
not been satisfied; provided, however, that nothing set forth in this Article
III shall be deemed to prejudice the right of any Lender to recover from the
Issuing Bank any amounts made available by such Lender to the Issuing Bank
pursuant to this Article III in the event that it is determined by a court of
competent jurisdiction that the payment with respect to a Letter of Credit
constituted gross negligence or willful misconduct on the part of the Issuing
Bank.
3.10 CONFLICT WITH LETTER OF CREDIT DOCUMENTS.
In the event of any conflict between this Credit Agreement and any
Letter of Credit Document (including any letter of credit application), this
Credit Agreement shall control.
ARTICLE IV
INTEREST AND FEES
4.1 INTEREST ON LOANS.
Subject to the provisions of Section 4.2, interest on the Revolving
Loans shall be payable (a) for Base Rate Loans, monthly in arrears as of the end
of each calendar month and the interest rate shall be equal to the Base Rate
plus the Applicable Percentage on the average balances of the Base Rate Loans
owing to the Lenders in the Borrowers' Revolving Loan accounts at the close of
business for each day during each calendar month and (b) for Eurodollar Loans,
on the last day of the applicable Interest Period (and with respect to any
Eurodollar Loan with an Interest Period of six (6) months, on the date three (3)
months after the making of such Eurodollar Loan) and the interest rate shall be
equal to the Eurodollar Rate plus the Applicable Percentage on the outstanding
amount of each such Eurodollar Loan. In the event of any change in the Base
Rate, the rate hereunder shall change, effective as of the day the Base Rate
changes. The interest rates hereunder shall be calculated based on a 360 day
year for the actual number of days elapsed.
4.2 INTEREST AFTER EVENT OF DEFAULT.
Interest on any amount of matured principal under the Revolving Loans,
and interest on the amount of principal under the Revolving Loans outstanding as
of the date an Event of Default occurs, and at all times thereafter until the
earlier of the date upon which (a) all Obligations have been paid and satisfied
in full or (b) such Event of Default shall have been cured or waived, shall be
payable on demand at a rate equal to the rate at which the Revolving Loans are
then bearing interest pursuant to Section 4.1 above, plus two percent (2%). In
the event of any change in said applicable interest rate, the rate hereunder
shall change, effective as of the day the applicable
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interest rate changes, so as to remain two percent (2%) above the then
applicable interest rate. Interest shall be payable on any other amount due
hereunder and shall accrue at the Base Rate, plus two percent (2%) from the date
due until paid in full. The rates hereunder shall be calculated based on a 360
day year for the actual number of days elapsed.
4.3 UNUSED LINE FEE.
At the end of each calendar month the Borrowers shall pay to the Agent
for the benefit of the Lenders the Unused Line Fee due in respect of such
calendar month.
4.4 LENDERS' FEES/AGENT'S FEES.
On the Closing Date the Agent shall pay to each Lender its respective
Lender's Fees that are required to be paid on the Closing Date pursuant to the
terms of such Lender's fee letter with the Agent. The Borrowers shall pay all
fees required to be paid to the Agent under the Fee Letter at the times and in
the amounts set forth therein.
4.5 LETTER OF CREDIT FEES.
(a) Standby Letter of Credit Fee. In consideration of the
issuance of standby Letters of Credit hereunder, the Borrowers promise
to pay to the Agent for the account of each Lender a fee (the "Standby
Letter of Credit Fee") on such Lender's Revolving Credit Commitment
Percentage of the stated amount of each such standby Letter of Credit
computed at a per annum rate for the period from and including the date
of issuance to and including the date of expiration equal to the
Applicable Percentage for Eurodollar Loans. The Standby Letter of
Credit Fee shall be due and payable in full on the date of issuance
thereof.
(b) Trade Letter of Credit Drawing Fee. In consideration of
the issuance of trade Letters of Credit hereunder, the Borrowers
promise to pay to the Agent for the account of each Lender a fee (the
"Trade Letter of Credit Fee") equal to the Applicable Percentage for
Eurodollar Loans less 0.50% on such Lender's Revolving Credit
Commitment of the amount of each drawing under any such trade Letter of
Credit. The Trade Letter of Credit Fee will be payable on each date of
drawing under the applicable trade Letter of Credit.
(c) Issuing Bank Fees. In addition to the Standby Letter of
Credit Fee payable pursuant to clause (a) above and the Trade Letter of
Credit Fee payable pursuant to clause (b) above, the Borrowers promise
to pay to the Issuing Bank for its own account without sharing by the
other Lenders (i) a letter of credit fronting fee equal to 0.125% of
the stated amount of each Letter of Credit payable in full upon
issuance of each such Letter of Credit and (ii) negotiation fees agreed
to by the Borrowers and the Issuing Bank from time to time and the
customary charges from time to time of the Issuing Bank with respect to
the amendment, transfer, administration, cancellation and conversion
of, and drawings under, such Letters of Credit (collectively, the
"Issuing Bank Fees").
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4.6 AUTHORIZATION TO CHARGE ACCOUNT.
The Borrowers hereby authorize the Agent to charge the Borrowers'
Revolving Loan accounts with the amount of all payments and fees due hereunder
to the Lenders, the Agent and the Issuing Bank as and when such payments become
due. The Borrowers confirm that any charges which the Agent may so make to the
Borrowers' Revolving Loan accounts as herein provided will be made as an
accommodation to the Borrowers and solely at the Agent's discretion.
4.7 INDEMNIFICATION IN CERTAIN EVENTS.
If after the Closing Date, either (a) any change in or in the
interpretation of any law or regulation is introduced, including, without
limitation, with respect to reserve requirements, applicable to FUCC or any
other banking or financial institution from whom any of the Lenders borrow funds
or obtain credit (a "Funding Bank") or any of the Lenders, or (b) a Funding Bank
or any of the Lenders complies with any future guideline or request from any
central bank or other Governmental Authority or (c) a Funding Bank or any of the
Lenders determines that the adoption of any applicable law, rule or regulation
regarding capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any Governmental Authority, central
bank or comparable agency charged with the interpretation or administration
thereof has or would have the effect described below, or a Funding Bank or any
of the Lenders complies with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, and in the case of any event set forth in this clause (c),
such adoption, change or compliance has or would have the direct or indirect
effect of reducing the rate of return on any of the Lenders' capital as a
consequence of its obligations hereunder to a level below that which such Lender
could have achieved but for such adoption, change or compliance (taking into
consideration the Funding Bank's or Lenders' policies with respect to capital
adequacy) by an amount deemed by such Lender to be material, and the result of
any of the foregoing events described in clauses (a), (b) or (c) is or results
in an increase in the cost to any of the Lenders of funding or maintaining the
Revolving Credit Committed Amount, the Revolving Loans or the Letters of Credit,
then the Borrowers shall from time to time upon demand by the Agent, pay to the
Agent additional amounts sufficient to indemnify the Lenders against such
increased cost. A certificate as to the amount of such increased cost shall be
submitted to the Borrowers by the Agent and shall be conclusive and binding
absent manifest error.
4.8 INABILITY TO DETERMINE INTEREST RATE.
If prior to the first day of any Interest Period, (a) the Agent shall
have determined in good faith (which determination shall be conclusive and
binding upon the Borrowers) that, by reason of circumstances affecting the
relevant market, adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate for such Interest Period, (b) the Agent has received notice from
the Required Lenders that the Eurodollar Rate determined or to be determined for
such Interest Period will not adequately and fairly reflect the cost to such
Lenders of making or maintaining
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their Eurodollar Loans during such Interest Period, or (c) Dollar deposits in
the principal amounts of the Eurodollar Loans to which such Interest Period is
to be applicable are not generally available in the London interbank market, the
Agent shall give telecopy or telephonic notice thereof to the Borrowers and the
Lenders as soon as practicable thereafter, and will also give prompt written
notice to the Borrowers when such conditions no longer exist. If such notice is
given, (a) any Eurodollar Loans requested to be made on the first day of such
Interest Period shall be made as Base Rate Loans, (b) any Revolving Loans that
were to have been converted on the first day of such Interest Period to or
continued as Eurodollar Loans shall be converted to or continued as Base Rate
Loans and (c) each outstanding Eurodollar Loan shall be converted, on the last
day of the then-current Interest Period thereof, to Base Rate Loans. Until such
notice has been withdrawn by the Agent, no further Eurodollar Loans shall be
made or continued as such, nor shall the Borrowers have the right to convert
Base Rate Loans to Eurodollar Loans.
4.9 ILLEGALITY.
Notwithstanding any other provision herein, if the adoption of or any
change in any law, treaty, rule or regulation or final, non-appealable
determination of an arbitrator or a court or other Governmental Authority or in
the interpretation or application thereof occurring after the Closing Date shall
make it unlawful for any Lender to make or maintain Eurodollar Loans as
contemplated by this Credit Agreement, (a) such Lender shall promptly give
written notice of such circumstances to the Borrowers and the Agent (which
notice shall be withdrawn whenever such circumstances no longer exist), (b) the
commitment of such Lender hereunder to make Eurodollar Loans, continue
Eurodollar Loans as such and convert a Base Rate Loan to Eurodollar Loans shall
forthwith be canceled and, until such time as it shall no longer be unlawful for
such Lender to make or maintain Eurodollar Loans, such Lender shall then have a
commitment only to make a Base Rate Loan when a Eurodollar Loan is requested and
(c) such Lender's Loans then outstanding as Eurodollar Loans, if any, shall be
converted automatically to Base Rate Loans on the respective last days of the
then current Interest Periods with respect to such Revolving Loans or within
such earlier period as required by law. If any such conversion of a Eurodollar
Loan occurs on a day which is not the last day of the then current Interest
Period with respect thereto, the Borrowers shall pay to such Lender such
amounts, if any, as may be required pursuant to Section 4.10.
4.10 FUNDING INDEMNITY.
The Borrowers, jointly and severally, promise to indemnify each Lender
and to hold each Lender harmless from any loss or expense which such Lender may
sustain or incur (other than through such Lender's gross negligence or willful
misconduct) as a consequence of (a) default by the Borrowers in making a
borrowing of, conversion into or extension of Eurodollar Loans after the
Borrowers have given a notice requesting the same in accordance with the
provisions of this Credit Agreement, (b) default by the Borrowers in making any
prepayment of a Eurodollar Loan after the Borrowers have given a notice thereof
in accordance with the provisions of this Credit Agreement, and (c) the making
of a prepayment of Eurodollar Loans on a day which is not the last day of an
Interest Period with respect thereto. With respect to Eurodollar Loans, such
indemnification may include an amount equal to the excess, if any, of (i) the
amount of interest
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which would have accrued on the amount so prepaid, or not so borrowed, converted
or extended, for the period from the date of such prepayment or of such failure
to borrow, convert or extend to the last day of the applicable Interest Period
(or, in the case of a failure to borrow, convert or extend, the Interest Period
that would have commenced on the date of such failure) in each case at the
applicable rate of interest for such Eurodollar Loans provided for herein over
(ii) the amount of interest (as reasonably determined by such Lender) which
would have accrued to such Lender on such amount by placing such amount on
deposit for a comparable period with leading banks in the interbank Eurodollar
market. This covenant shall survive the termination of this Credit Agreement and
the payment of the Revolving Loans and all other amounts payable hereunder.
ARTICLE V
CONDITIONS PRECEDENT
The obligation of the Lenders to make any Revolving Loan or of the
Issuing Bank to issue any Letter of Credit hereunder is subject to the
satisfaction of, or waiver of, the Required Lenders immediately prior to or
concurrently with the making of such Revolving Loan or issuance of such Letter
of Credit, the following conditions precedent:
5.1 CLOSING CONDITIONS.
On or prior to the Closing Date, the Lenders shall have received each
of the documents, opinions and certificates set forth in the list of Closing
Conditions attached hereto as Schedule 1.1B and the conditions set forth therein
shall have been satisfied or waived.
5.2 MATERIAL ADVERSE CHANGE.
(a) No Material Adverse Change, or development reasonably likely to
have a Material Adverse Effect, shall have occurred, (b) no occurrence or event
which is reasonably likely to have a Material Adverse Effect shall have occurred
and be continuing and (c) on or prior to the Closing Date, there shall not have
occurred a substantial impairment of the financial markets generally which, in
the opinion of the Lenders, has materially and adversely affected the
transactions contemplated hereby.
5.3 FEES.
On or prior to the Closing Date, the Lenders shall have received
payment in full of the fees required to be paid to the Lenders on the Closing
Date.
5.4 REPRESENTATIONS AND WARRANTIES; NO DEFAULT.
On the date of the making of any Revolving Loan or the issuance of any
Letter of Credit, both before and after giving effect thereto and to the
application of the proceeds therefrom, the
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following statements shall be true to the satisfaction of the Agent (and each
request for a Revolving Loan and request for a Letter of Credit, and the
acceptance by the Borrower of the proceeds of such Revolving Loan or issuance of
such Letter of Credit, shall constitute a representation and warranty by the
Borrowers that on the date of such Revolving Loan or issuance of such Letter of
Credit before and after giving effect thereto and to the application of the
proceeds therefrom, such statements are true): (a) the representations and
warranties contained in this Credit Agreement are true and correct in all
material respects on and as of the date of such Revolving Loan or issuance of
such Letter of Credit as though made on and as of such date, except to the
extent that such representations and warranties expressly relate solely to an
earlier date (in which case such representations and warranties shall have been
true and complete on and as of such earlier date); (b) no event has occurred and
is continuing, or would result from such Revolving Loan or issuance of such
Letter of Credit or the application of the proceeds thereof, which would
constitute a Default or an Event of Default under this Credit Agreement; and (c)
no Material Adverse Change, or development reasonably likely to have a Material
Adverse Effect shall have occurred and be continuing.
5.5 NOTICE OF BORROWING.
On the date of the making of any Revolving Loan, the Agent shall have
received a Notice of Borrowing to the extent such Notice of Borrowing is
required to be given with respect to the making of such Revolving Loan.
5.6 ADDITIONAL DOCUMENTS.
On or prior to the Closing Date, the Borrowers shall have executed and
delivered to the Agent all documents which the Agent determines are reasonably
necessary to consummate the lending arrangements contemplated hereby.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders to enter into this Credit Agreement and
the Issuing Bank to issue the Letters of Credit, and to make available the
credit facilities contemplated hereby, each Borrower hereby represents and
warrants to the Lenders and the Issuing Bank as of the Closing Date, and on the
date of each extension of credit hereunder, as follows:
6.1 ORGANIZATION AND QUALIFICATION.
Such Borrower and each of its Subsidiaries (i) is duly organized,
validly existing and in good standing under the laws of the state in which it
was organized, (ii) has the power and authority to own its properties and assets
and to transact the businesses in which it is presently, or proposes to be,
engaged, and (iii) is duly qualified and is authorized to do business and is in
good standing in every jurisdiction in which the failure to be so qualified
could have a Material
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Adverse Effect. Schedule 6.1 contains a true, correct and complete list of all
jurisdictions in which such Borrower and its Subsidiaries are qualified to do
business as a foreign corporation or foreign limited liability company as of the
Closing Date.
6.2 SOLVENCY.
The fair saleable value of such Borrower's assets exceeds all probable
liabilities, including those to be incurred pursuant to this Credit Agreement.
Such Borrower (i) does not have unreasonably small capital in relation to the
business in which it is or proposes to be engaged or (ii) has not incurred, and
does not believe that it will incur after giving effect to the transactions
contemplated by this Credit Agreement, debts beyond its ability to pay such
debts as they become due.
6.3 LIENS; INVENTORY.
There are no Liens (other than Permitted Liens) in favor of third
parties with respect to any of the Collateral, including, without limitation,
with respect to the Inventory, wherever located. To the best of such Borrower's
knowledge, no lessor, warehouseman, filler, processor or packer of such Borrower
has granted any Lien with respect to the Inventory maintained by such Borrower
at the property of any such lessor, warehousemen, filler, processor or packer.
Upon the proper filing of financing statements and the proper recordation of
other applicable documents with the appropriate filing or recordation offices in
each of the necessary jurisdictions, the security interests granted pursuant to
the Credit Documents constitute and shall at all times constitute valid and
enforceable first, prior and perfected Liens on the Collateral (other than
Permitted Liens). The Borrowers are or will be at the time additional Collateral
is acquired by them, the absolute owners of the Collateral with full right to
pledge, sell, consign, transfer and create a Lien therein, free and clear of any
and all Liens in favor of third parties, except Permitted Liens. The Borrowers
and the Subsidiaries will at their expense forever warrant and, at the Agent's
request, defend the Collateral from any and all Liens (other than Permitted
Liens) of any third party. The Borrowers will not, and will not permit any of
their Subsidiaries to, grant, create or permit to exist, any Lien upon the
Collateral, or any proceeds thereof, in favor of any third party (other than
Permitted Liens).
6.4 NO CONFLICT.
The execution and delivery by such Borrower of this Credit Agreement
and each of the other Credit Documents executed and delivered in connection
herewith and the performance of the obligations of such Borrower hereunder and
thereunder and the consummation by such Borrower of the transactions
contemplated hereby and thereby: (i) are within the powers of such Borrower;
(ii) are duly authorized by the Board of Directors or members of such Borrower
and, if necessary with respect to the Company, its stockholders; (iii) are not
in contravention of the terms of the articles or certificate of incorporation or
bylaws or other organizational documents of such Borrower or of any indenture,
contract, lease, agreement instrument or other commitment to which such Borrower
is a party or by which such Borrower or any of its properties are bound; (iv) do
not require the consent, registration or approval of any governmental entity or
any other
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Person (except such as have been duly obtained, made or given, and are in full
force and effect, and except such as would not reasonably be expected to have a
Material Adverse Effect if not obtained, given or made); (v) do not contravene
any statute, law, ordinance regulation, rule, order or other governmental
restriction applicable to or binding upon such Borrower; and (vi) will not,
except as contemplated herein for the benefit of the Agent on behalf of the
Lenders, result in the imposition of any Liens upon any property of such
Borrower under any indenture, mortgage, deed of trust, loan or credit agreement
or other material agreement or instrument to which such Borrower is a party or
by which it or any of its property may be bound or affected.
6.5 ENFORCEABILITY.
The Credit Agreement and all of the other Credit Documents executed and
delivered in connection herewith are the legal, valid and binding obligations of
such Borrower, and with respect to those Credit Documents executed and delivered
by any Subsidiary, of each such Subsidiary, and are enforceable against such
Borrower and such Subsidiaries, as the case may be, in accordance with their
terms except as such enforceability may be limited by (i) the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally and (ii) general principles of equity.
6.6 FINANCIAL DATA.
The Company has furnished to the Lenders the following financial
statements (the "Financials"): (i) the consolidated balance sheets of the
Company as of February 28, 1997 and February 27, 1998, and consolidated
statements of earnings, shareholders' equity and cash flow of the Company for
the fiscal years ended February 28, 1996, February 28, 1997 and February 27,
1998, audited by Deloitte & Touche LLP, (ii) the unaudited consolidated balance
sheet of the Company as of, and consolidated statement of earnings of the
Company for the period ended, April 30, 1998, (iii) the statements of certain
assets and liabilities of the Pierre Foods Division as of September 28, 1996 and
September 27, 1997, and statements of revenues and expenses of the Pierre Foods
Division for the fiscal years ended September 30, 1995, September 28, 1996 and
September 27, 1997, audited by Deloitte & Touche LLP, and (iv) an unaudited pro
forma combined balance sheet of the Company (including the Pierre Foods
Division) as of February 27, 1998 and an unaudited pro forma combined statement
of operations of the Company (including the Pierre Foods Division) for the
twelve months ended February 27, 1998, together with the comfort letter of
Deloitte & Touche LLP relating thereto, with respect to items (iii) and (iv)
above, showing no material changes from the representations of senior management
of the Company with respect thereto. The Financials are and the historical
financial statements to be furnished to the Lenders in accordance with
subsection 7.1 below will be in accordance with the books and records of such
predecessor corporations and the Borrowers and fairly present the financial
condition of such predecessor corporations and each of the Borrowers at the
dates thereof and the results of operations for the periods indicated (subject,
in the case of unaudited financial statements, to normal year-end adjustments),
and such financial statements have been and will be prepared in conformity with
GAAP consistently applied throughout the periods involved. Since the date of the
Financials, there have been no changes in the condition, financial or otherwise,
of such predecessor corporations or any of the Borrowers as shown on the
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respective balance sheets of such predecessor corporations and each of the
Borrowers described above, except (a) as contemplated herein and (b) for changes
in the ordinary course of business (none of which individually or in the
aggregate has been materially adverse).
6.7 LOCATIONS OF OFFICES, RECORDS AND INVENTORY.
The Borrowers' principal places of business and chief executive offices
are set forth in Schedule 6.7 hereto, and the books and records of the Borrowers
and all chattel paper and all records of accounts are located at the principal
places of business and chief executive offices of the Borrowers. There is no
jurisdiction in which any Borrower or any of its Subsidiaries has any assets,
equipment or Inventory (except for vehicles, Inventory in transit for
processing, or immaterial items) other than those jurisdictions listed on
Schedule 6.7 attached hereto. Attached hereto as Schedule 6.7 is a true, correct
and complete list of (i) the legal names and addresses of each warehouseman,
filler, processor and packer at which Inventory is stored, (ii) the address of
the chief executive offices of the Borrowers and each of their Subsidiaries and
(iii) the address of all offices where records and books of account of the
Borrowers and each of their Subsidiaries are kept. None of the receipts received
by any of the Borrowers from any warehouseman, filler, processor or packer
states that the goods covered thereby are to be delivered to bearer or to the
order of a named person or to a named person and such named person's assigns.
6.8 FICTITIOUS BUSINESS NAMES.
Neither such Borrower nor any of its Subsidiaries has used any
corporate or fictitious name during the five (5) years preceding the date
hereof, other than the corporate name shown on its or such Subsidiary's Articles
or Certificate of Incorporation and as set forth on Schedule 6.8.
6.9 SUBSIDIARIES.
The only direct or indirect Subsidiaries of the Borrowers are those
listed on Schedule 6.9 attached hereto. The Borrowers are the record and
beneficial owner of all of the shares of Capital Stock of each of the
Subsidiaries listed on Schedule 6.9 as being owned by the Borrowers, there are
no proxies, irrevocable or otherwise, with respect to such shares, and no equity
securities of any of the Subsidiaries are or may become required to be issued by
reason of any options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, shares of any Capital Stock of any
Subsidiary, and there are no contracts, commitments, understandings or
arrangements by which any Subsidiary is or may become bound to issue additional
shares of its Capital Stock or securities convertible into or exchangeable for
such shares. All of such shares so owned by the Borrowers are owned by them free
and clear of any Liens other than Permitted Liens.
6.10 NO JUDGMENTS OR LITIGATION.
Except as set forth on Schedule 6.10 hereto, no judgments, orders,
writs or decrees are outstanding against such Borrower or any of its
Subsidiaries nor is there now pending or, to the best of such Borrower's
knowledge after diligent inquiry, threatened any litigation, contested
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claim, investigation, arbitration, or governmental proceeding by or against such
Borrower or any of its Subsidiaries except judgments and pending or threatened
litigation, contested claims, investigations, arbitrations and governmental
proceedings which could not reasonably be expected to have a Material Adverse
Effect.
6.11 NO DEFAULTS.
Neither such Borrower nor any of its Subsidiaries is in default under
any term of any material indenture, contract, lease, agreement, instrument or
other commitment to which any of them is a party or by which any of them is
bound. Such Borrower knows of no dispute regarding any indenture, contract,
lease, agreement, instrument or other commitment which could reasonably be
expected to have a Material Adverse Effect.
6.12 NO EMPLOYEE DISPUTES.
There are no controversies pending or, to the best of such Borrower's
knowledge after diligent inquiry, threatened between such Borrower or any of its
Subsidiaries and any of their respective employees, other than employee
grievances arising in the ordinary course of business which would not, in the
aggregate, have a Material Adverse Effect.
6.13 COMPLIANCE WITH LAW.
Neither such Borrower nor any of its Subsidiaries has violated or
failed to comply with any statute, law, ordinance, regulation, rule or order of
any foreign, federal, state or local government, or any other governmental
department or agency or any self regulatory organization, or any judgment,
decree or order of any court, applicable to its business or operations except
where the aggregate of all such violations or failures to comply could not
reasonably be expected to have a Material Adverse Effect. The conduct of the
business of such Borrower and each of the Subsidiaries is in conformity with all
securities, commodities, energy, public utility, zoning, building code, health,
OSHA and environmental requirements and all other foreign, federal, state and
local governmental and regulatory requirements and requirements of any self
regulatory organizations, except where the aggregate of all such
non-conformities could not reasonably be expected to have a Material Adverse
Effect. Neither such Borrower nor any of its Subsidiaries has received any
notice to the effect that, or otherwise been advised that, it is not in
compliance with, and neither such Borrower nor any of its Subsidiaries has any
reason to anticipate that any presently existing circumstances are likely to
result in the violation of any such statute, law, ordinance, regulation, rule,
judgment, decree or order which failure or violation could reasonably be
expected to have a Material Adverse Effect.
6.14 ERISA.
Neither such Borrower, any Subsidiary nor any ERISA Affiliate maintains
or contributes to any Benefit Plan other than those listed on Schedule 6.14
annexed hereto. Each Benefit Plan has been and is being maintained and funded in
accordance with its terms and in compliance in all material respects with all
provisions of ERISA and the Internal Revenue Code applicable
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thereto. Such Borrower, each of the Subsidiaries and each ERISA Affiliate have
fulfilled all obligations related to the minimum funding standards of ERISA and
the Internal Revenue Code for each Benefit Plan, are in compliance in all
material respects with the currently applicable provisions of ERISA and of the
Internal Revenue Code and have not incurred any liability (other than routine
liability for premiums) under Title IV of ERISA. No Termination Event has
occurred nor has any other event occurred that may result in such a Termination
Event. No event or events have occurred in connection with which such Borrower,
any of the Subsidiaries, any ERISA Affiliate, any fiduciary of a Benefit Plan or
any Benefit Plan, directly or indirectly, could be subject to any material
liability, individually or in the aggregate, under ERISA, the Internal Revenue
Code or any other law, regulation or governmental order or under any agreement,
instrument, statute, rule of law or regulation pursuant to or under which any
such entity has agreed to indemnify or is required to indemnify any person
against liability incurred under, or for a violation or failure to satisfy the
requirements of, any such statute, regulation or order.
6.15 COMPLIANCE WITH ENVIRONMENTAL LAWS.
Except as disclosed on Schedule 6.15 attached hereto, (a) the
operations of such Borrower and each of its Subsidiaries comply with all
applicable federal, state or local environmental, health and safety statutes,
regulations, directions, ordinances, criteria or guidelines and (b) none of the
operations of such Borrower or any of its Subsidiaries is the subject of any
judicial or administrative proceeding alleging the violation of any federal,
state or local environmental, health or safety statute, regulation, direction,
ordinance, criteria or guidelines. Except as disclosed on Schedule 6.15, none of
the operations of such Borrower or any of its Subsidiaries is the subject of any
federal or state investigation evaluating whether such Borrower or any of its
Subsidiaries disposed any hazardous or toxic waste, substance or constituent or
other substance at any site that may require remedial action, or any federal or
state investigation evaluating whether any remedial action is needed to respond
to a release of any hazardous or toxic waste, substance or constituent, or other
substance into the environment. Except as disclosed on Schedule 6.15, neither
such Borrower nor any of its Subsidiaries have filed any notice under any
federal or state law indicating past or present treatment, storage or disposal
of a hazardous waste or reporting a spill or release of a hazardous or toxic
waste, substance or constituent, or other substance into the environment. Except
as disclosed on Schedule 6.15, neither such Borrower nor any of its Subsidiaries
have any contingent liability of which such Borrower has knowledge or reasonably
should have knowledge in connection with any release of any hazardous or toxic
waste, substance or constituent, or other substance into the environment, nor
has such Borrower or any of its Subsidiaries received any notice, letter or
other indication of potential liability arising from the disposal of any
hazardous or toxic waste, substance or constituent or other substance into the
environment.
6.16 USE OF PROCEEDS.
All proceeds of the Loans will be used only in accordance with Section
7.13. All proceeds of the Senior Unsecured Debt shall be used to finance the
acquisition by the Company of the Pierre Foods Division and to the extent of any
surplus proceeds, to repay the Revolving Loans.
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6.17 INTELLECTUAL PROPERTY.
Such Borrower possesses adequate assets, licenses, patents, patent
applications, copyrights, service marks, trademarks and tradenames to continue
to conduct its business as heretofore conducted by it. Schedule 6.17 attached
hereto sets forth (a) all of the material federal, state and foreign
registrations of trademarks, service marks and other marks, trade names or other
trade rights of such Borrower and its Subsidiaries, and all material pending
applications for any such registrations, (b) all of the material patents and
copyrights of such Borrower and its Subsidiaries and all material pending
applications therefor and (c) all other material trademarks, service marks and
other marks, trade names and other trade rights used by such Borrower or any of
its Subsidiaries in connection with their businesses (collectively, the
"Proprietary Rights"). Such Borrower and its Subsidiaries are collectively the
owners of each of the trademarks listed on Schedule 6.17 as indicated on such
schedule, and no other Person has the right to use any of such marks in commerce
either in the identical form or in such near resemblance thereto as may be
likely to cause confusion or to cause mistake or to deceive. Each of the
trademarks listed on Schedule 6.17 is a federally registered trademark of such
Borrower or its Subsidiaries having the registration number and issue date set
forth on Schedule 6.17. The Proprietary Rights listed on Schedule 6.17 are all
those used in the businesses of such Borrower and its Subsidiaries. Except as
disclosed on Schedule 6.17, no person has a right to receive any royalty or
similar payment in respect of any Proprietary Rights pursuant to any contractual
arrangements entered into by such Borrower, or any of its Subsidiaries and no
person otherwise has a right to receive any royalty or similar payment in
respect of any such Proprietary Rights except as disclosed on Schedule 6.17.
Neither such Borrower nor any of its Subsidiaries has granted any license or
sold or otherwise transferred any interest in any of the Proprietary Rights to
any other person. The use of each of the Proprietary Rights by such Borrower and
its Subsidiaries is not infringing upon or otherwise violating the rights of any
third party in or to such Proprietary Rights, and no proceeding has been
instituted against or notice received by such Borrower or any of its
Subsidiaries that are presently outstanding alleging that the use of any of the
Proprietary Rights infringes upon or otherwise violates the rights of any third
party in or to any of the Proprietary Rights. Neither such Borrower nor any of
its Subsidiaries have given notice to any Person that it is infringing on any of
the Proprietary Rights and to the best of such Borrower's knowledge, no Person
is infringing on any of the Proprietary Rights. All of the Proprietary Rights of
such Borrower and its Subsidiaries are valid and enforceable rights of such
Borrower and its Subsidiaries and will not cease to be valid and in full force
and effect by reason of the execution and delivery of this Credit Agreement or
the Credit Documents or the consummation of the transactions contemplated hereby
or thereby.
6.18 LICENSES AND PERMITS.
Such Borrower and each of its Subsidiaries have obtained, and hold in
full force and effect, all material franchises, licenses, leases, permits,
certificates, authorizations, qualifications, easements, rights of way and other
rights and approvals which are necessary or appropriate for the operation of
their businesses as presently conducted and as proposed to be conducted. Neither
of such Borrower nor any of its Subsidiaries is in violation of the terms of any
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such franchise, license, lease, permit, certificate, authorization,
qualification, easement, right of way, right or approval in any such case which
could reasonably be expected to have a Material Adverse Effect.
6.19 TITLE TO PROPERTY.
Such Borrower has (i) good and marketable fee simple title to or valid
leasehold interests in all of its real property, including, without limitation,
the Real Estate (all such real property and the nature of such Borrower's or any
Subsidiary's interest therein is disclosed on Schedule 6.19) and (ii) good and
marketable title to all of its other property (including without limitation, all
real and other property in each case as reflected in the Financial Statements
delivered to the Agent hereunder), other than, with respect to properties
described in clause (ii) above, properties disposed of in the ordinary course of
business or in any manner otherwise permitted under this Credit Agreement since
the date of the most recent audited consolidated balance sheet of such Borrower,
and in each case subject to no Liens other than Permitted Liens. Such Borrower
and its Subsidiaries enjoy peaceful and undisturbed possession of all its real
property, including, without limitation, the Real Estate, and there is no
pending or, to the best of their knowledge, threatened condemnation proceeding
relating to any such real property. The leases with respect to the leased
property, together with any leases of real property entered into by such
Borrower after the date hereof, are referred to collectively as the "Leases". No
material default exists under any Lease. To the best knowledge of such Borrower,
all of the Structures and other tangible assets owned, leased or used by such
Borrower or any of its Subsidiaries in the conduct of their respective
businesses are (a) insured to the extent and in a manner customary in the
industry in which such Borrower or such Subsidiaries are engaged, (b)
structurally sound with no known material defects, (c) in good operating
condition and repair, subject to ordinary wear and tear, (d) not in need of
maintenance or repair except for ordinary, routine maintenance and repair the
cost of which would not be material, (e) sufficient for the operation of the
businesses of such Borrower and its Subsidiaries as presently conducted and (f)
in conformity with all applicable laws, ordinances, orders, regulations and
other requirements (including applicable zoning, environmental, motor vehicle
safety, occupational safety and health laws and regulations) relating thereto,
except where the failure to conform could not be reasonably be expected to have
a Material Adverse Effect.
6.20 LABOR MATTERS.
Neither such Borrower nor any of its Subsidiaries is engaged in any
unfair labor practice. There is (a) no material unfair labor practice complaint
pending against such Borrower or any of its Subsidiaries or, to the best
knowledge of such Borrower, threatened against any of them, before the National
Labor Relations Board, and no material grievance or significant arbitration
proceeding arising out of or under collective bargaining agreements is so
pending against such Borrower or any of its Subsidiaries or, to the best
knowledge of such Borrower, threatened against any of them, (b) no strike, labor
dispute, slowdown or stoppage pending against either of such Borrower or any of
its Subsidiaries or, to the best knowledge of such Borrower, threatened against
any of them, and (c) no union representation questions with respect to the
employees of such Borrower or any Subsidiaries and no union organizing
activities.
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6.21 INVESTMENT COMPANY.
Neither such Borrower nor any of its Subsidiaries is (a) an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended, or (b) 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.
6.22 MARGIN SECURITY.
Such Borrower does not own any margin stock., other than Permitted
Investments, and no portion of the proceeds of any Loans or Letters of Credit
shall be used by the Borrowers for the purpose of purchasing or carrying any
"margin stock" (as defined in Regulation U of the Board of Governors of the
Federal Reserve System) other than Permitted Investments or for any purpose
which violates the provisions or Regulation T, U or X of said Board of Governors
or for any purpose in violation of any other applicable statute or regulation or
of the terms and conditions of this Credit Agreement.
6.23 NO EVENT OF DEFAULT.
No Default or Event of Default has occurred and is continuing.
6.24 TAXES AND TAX RETURNS.
(a) Except as set forth on Schedule 6.24, such Borrower and
its Subsidiaries (and any affiliated group of which such Borrower or
any of its Subsidiaries are now or have been members) has timely filed
(inclusive of any permitted extensions) with the appropriate taxing
authorities all returns (including without limitation, information
returns and other material information, in respect of Taxes required to
be filed through the date hereof and will timely file (inclusive of any
permitted extensions) any such returns required to be filed on and
after the date hereof. The information filed is complete and accurate
in all material respects. All deductions taken by such Borrower as
reflected in such income tax returns have been taken in accordance with
applicable laws and regulations. Except as specified in Schedule 6.24
hereto, neither such Borrower nor any of its Subsidiaries, nor any
group of which such Borrower or any of its Subsidiaries are now or were
members, have requested any extension of time within which to file
returns (including without limitation information returns) in respect
of any Taxes.
(b) All Taxes, in respect of periods beginning prior to the
date hereof, have been timely paid, or will be timely paid, or an
adequate reserve has been established therefor, as set forth in
Schedule 6.24 or in the Financial Statements, and neither such Borrower
nor any of its Subsidiaries has any material liability for Taxes in
excess of the amounts so paid or reserves so established.
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(c) Except as set forth in Schedule 6.24, no material
deficiencies for Taxes have been claimed, proposed or assessed by any
taxing or other Governmental Authority against such Borrower or any of
their Subsidiaries and no material tax liens have been filed. Except as
set forth in Schedule 6.24, there are no pending or, to the best of
such Borrower's knowledge, threatened audits, investigations or claims
for or relating to any material liability in respect of Taxes, and
there are no matters under discussion with any governmental authorities
with respect to Taxes which are likely to result in a material
additional liability for Taxes. Either the federal income tax returns
of such Borrower have been audited by the Internal Revenue Service and
such audits have been closed (including with respect to the Taxes of
the Borrowers' respective predecessor corporations), or the period
during which any assessments may be made by the Internal Revenue
Service has expired without waiver or extension, for all years up to
and including the fiscal year ended February 25, 1994. Except as set
forth in Schedule 6.24, no extension of a statute of limitations
relating to Taxes is in effect with respect to such Borrower or any of
their Subsidiaries (including with respect to the Taxes of the
Borrowers' respective predecessor corporations).
6.25 NO OTHER INDEBTEDNESS.
Such Borrower has no Indebtedness that is senior, pari passu or
subordinated in right of payment to their Indebtedness to the Lenders hereunder,
except for Permitted Indebtedness.
6.26 STATUS OF ACCOUNTS.
Each Account is based on an actual and bona fide sale and delivery of
goods or rendition of services to customers, made by such Borrower in the
ordinary course of its business; the goods and inventory being sold and the
Accounts created are its exclusive property and are not and shall not be subject
to any Lien, consignment arrangement, encumbrance, security interest or
financing statement whatsoever, other than the Permitted Liens; and such
Borrower's customers have accepted the goods or services, owe and are obligated
to pay the full amounts stated in the invoices according to their terms, without
any dispute, offset, defense, counterclaim or contra that could have, when
aggregated with any such other disputes, offsets, defenses, counterclaims or
contras, a Material Adverse Effect. Such Borrower confirms to the Lenders that
any and all taxes or fees relating to its business, its sales, the Accounts or
the goods relating thereto, are its sole responsibility and that same will be
paid by such Borrower when due (unless duly contested and adequately reserved
for) and that none of said taxes or fees is or will become a lien on or claim
against the Accounts.
6.27 REPRESENTATIONS AND WARRANTIES.
As of the Closing Date, each of the representations and warranties made
in the Operative Documents by each of the parties thereto is true and correct in
all material respects, and such representations and warranties are hereby
incorporated herein by reference with the same effect as though set forth in
their entirety herein, as qualified therein.
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6.28 MATERIAL CONTRACTS.
Attached hereto as Schedule 6.28 is a true, correct and complete list
of all the Material Contracts currently in effect on the date hereof. None of
the Material Contracts contains provisions which could have a Material Adverse
Effect. All of the Material Contracts are in full force and effect, and no
material defaults currently exist thereunder.
6.29 SURVIVAL OF REPRESENTATIONS.
All representations made by such Borrower in this Credit Agreement and
in any other Credit Document executed and delivered in connection herewith shall
survive the execution and delivery hereof and thereof.
6.30 AFFILIATE TRANSACTIONS.
Except as set forth on Schedule 6.30 hereto, neither such Borrower nor
any Subsidiaries is a party to or bound by any agreement or arrangement (whether
oral or written) to which any Affiliate of such Borrower or of any Subsidiary is
a party except (a) in the ordinary course of and pursuant to the reasonable
requirements of such Borrower's or such Subsidiary's business and (b) upon fair
and reasonable terms no less favorable to such Borrower and such Subsidiary than
it could obtain in a comparable arm's-length transaction with an unaffiliated
Person.
6.31 KEY MEMBERS OF MANAGEMENT.
Attached hereto as Schedule 6.31 is a true, correct and complete list
of the key members of management of such Borrower as of the date hereof.
6.32 ACCURACY AND COMPLETENESS OF INFORMATION.
All factual information heretofore, contemporaneously or hereafter
furnished by or on behalf of the Borrowers or any of the Subsidiaries in writing
to the Agent, any Lender, or the Independent Accountant for purposes of or in
connection with this Credit Agreement or any Credit Documents, or any
transaction contemplated hereby or thereby is or will be true and accurate in
all material respects on the date as of which such information is dated or
certified and not incomplete by omitting to state any material fact necessary to
make such information not misleading at such time. There is no fact now known to
any officer of any Borrower or any of its Subsidiaries which has, or would have,
a Material Adverse Effect which fact has not been set forth herein, in the
Financials, or any certificate, opinion or other written statement made or
furnished by any Borrower to the Agent.
6.33 FARM PRODUCTS, ETC.
(a) None of the Collateral constitutes farm products, or proceeds
thereof.
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(b) Neither such Borrower nor any of its Subsidiaries is a live
poultry dealer (as defined in the Packers and Stockyard Act).
6.34 RESTAURANT BUSINESS. The Restaurant Business is described on
Schedule 6.34.
ARTICLE VII
AFFIRMATIVE COVENANTS
Until termination of this Credit Agreement and the Commitment hereunder
and payment and satisfaction of all Obligations due or to become due hereunder,
each Borrower agrees that, unless the Required Lenders shall have otherwise
consented in writing:
7.1 FINANCIAL INFORMATION.
The Company will furnish to the Lenders the following information
within the following time periods:
(a) within one hundred twenty (120) days after the close of
the fiscal year of the Company, (i) the audited consolidated and
consolidating balance sheets and statements of income and retained
earnings and of changes in cash flow of the Company and its
Subsidiaries, for such year, each in reasonable detail, each setting
forth in comparative form the corresponding figures for the preceding
year, prepared in accordance with GAAP, and accompanied by a report and
unqualified opinion of Deloitte & Touche LLP or other Independent
Accountant selected by the Company and approved by the Required Lenders
and (ii) a divisional operating income analysis for such year, in
reasonable detail, setting forth in comparative form the corresponding
analysis for the preceding year, prepared by the Company;
(b) within forty-five (45) days after the end of each fiscal
quarter of the Company other than the final fiscal quarter, unaudited
consolidated financial statements and divisional operating income
analyses similar to those required by clause (a) above as of the end of
such period and for such period then ended and for the period from the
beginning of the current fiscal year to the end of such period, setting
forth in comparative form the corresponding figures for the comparable
period in the preceding fiscal year, prepared in accordance with GAAP
(except that such quarterly statements need not include footnotes) and
certified by any two of the officers described in paragraph (d) below;
(c) within thirty (30) days after the end of each fiscal month
of the Company other than the final month of each fiscal quarter,
unaudited consolidated financial statements and divisional operating
income analyses similar to those required by clause (a) above as of the
end of such period and for such period then ended and for the period
from the beginning of the current fiscal year to the end of such period
(except that no
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statements of cash flow shall be required), setting forth in
comparative form the corresponding figures for the comparable period in
the preceding fiscal year, prepared in accordance with GAAP (except
that such monthly statements need not include footnotes) and certified
by any two of the officers described in paragraph (d) below;
(d) at the time of delivery of each monthly, quarterly and
annual statement, a certificate, executed by the Chief Financial
Officer, Controller or Treasurer of the Company, stating that such
officer has caused this Credit Agreement to be reviewed and has no
knowledge of any default by the Company in the performance or
observance of any of the provisions of this Credit Agreement, during
such month or quarter or at the end of such year, or, if such officer
has such knowledge, specifying each default and the nature thereof;
(e) not later than the 25th day of the end of the prior
four-week accounting period, a borrowing base certificate (the
"Borrowing Base Certificate") in substantially the form of Exhibit L
hereto, duly completed and certified by the Company's chief executive
officer or chief financial officer, detailing the Borrowers' Eligible
Accounts Receivable and Eligible Inventory as of the most recent date
of determination which shall be determined not less frequently than at
the end of every four-week accounting period. In addition, on the 25th
day after the end of the prior four-week accounting period, the Company
shall furnish a written report to the Lenders setting forth (i) the
accounts receivable aged trial balance for such prior accounting period
indicating which Accounts are current, up to 30, 30 to 60 and over 60
days past due and listing the names and addresses of all applicable
Account Debtors and (ii) a summary schedule of each category of
Inventory owned by each Borrower. The Agent may, but shall not be
required to, rely on each Borrowing Base Certificate delivered
hereunder as accurately setting forth the available Borrowing Base for
all purposes of this Credit Agreement until such time as a new
Borrowing Base Certificate is delivered to the Agent in accordance
herewith; Borrowing Base Certificates may be prepared and submitted to
the Lenders on a more frequent basis than each four-week accounting
period at the option of the Company and may be requested more
frequently by the Agent in its reasonable discretion, provided that
such certificate complies with the requirements set forth elsewhere
herein;
(f) within forty-five (45) days after the end of each fiscal
quarter of the Company, a certificate in substantially the form of
Exhibit K attached hereto (the "Compliance Certificate") executed by
the Chief Financial Officer, Controller or Treasurer of the Company,
demonstrating compliance with the financial covenants contained in
Article VIII by calculation thereof as of the end of each such fiscal
period and the other provisions contained in the Compliance
Certificate;
(g) promptly upon receipt thereof, copies of all management
letters and other material reports which are submitted to the Company
by its Independent Accountant in connection with any annual or interim
audit of the books of the Company made by such accountants;
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(h) as soon as practicable but, in any event, within ten (10)
Business Days after the issuance thereof, copies of such other
financial statements and reports as the Company shall send to its
stockholders as such, and copies of all regular and periodic reports
which the Company may be required to file with the Securities and
Exchange Commission or any similar or corresponding governmental
commission, department or agency substituted therefor, or any similar
or corresponding governmental commission, department, board, bureau, or
agency, federal or state;
(i) no later than the last Business Day of February during
each year when this Credit Agreement is in effect, a business plan for
such fiscal year of the Company which includes a projected consolidated
balance sheet and statement of income for such fiscal year and a
projected consolidated statement of cash flows for such fiscal year
and, no later than the last Business Day of March during each year when
this Credit Agreement is in effect, a business plan for such fiscal
year of the Company which includes projected consolidated balance
sheets and statements of income on a quarterly basis for such fiscal
year and projected consolidated statements of cash flows on a quarterly
basis for such fiscal year;
(j) promptly upon receipt thereof, copies of all notices
delivered to the Company or sent by the Company with respect to Senior
Unsecured Debt, including, without limitation, any notice of default
(the Company expressly agreeing to furnish all such notices by
telecopy);
(k) promptly and in any event within two (2) Business Days
after becoming aware of the occurrence of a Default or Event of
Default, a certificate of the chief executive officer or chief
financial officer of the Company specifying the nature thereof and the
Borrowers' proposed response thereto, each in reasonable detail; and
(l) with reasonable promptness, such other data as the Agent
or any of the Lenders may reasonably request.
7.2 INVENTORY/EQUIPMENT.
Within thirty (30) days after the end of each month, upon the request
of the Agent from time to time, the Borrowers will provide to the Agent written
statements listing items of Inventory and Equipment in reasonable detail as
requested by the Agent. The Borrowers will conduct annually a physical count of
their Inventory and a copy of such count will be promptly supplied to the Agent
accompanied by a report of the value (valued at FIFO) of such Inventory;
provided that the Borrowers will conduct such a physical count at such other
times and as of such dates as the Agent shall reasonably request.
7.3 CORPORATE EXISTENCE.
Each Borrower and each of the Subsidiaries (a) will maintain their
corporate existence, will maintain in full force and effect all material
licenses, bonds, franchise, leases, trademarks
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and qualifications to do business, (b) will obtain or maintain patents,
contracts and other rights necessary or desirable to the profitable conduct of
their businesses, (c) will continue in, and limit their operations to, the food
service business and (d) will comply with all applicable laws and regulations of
any federal, state or local Governmental Authority, except in each case when
noncompliance with the foregoing would not, in the aggregate, have a Material
Adverse Effect.
7.4 ERISA.
The Borrowers will deliver to the Agent, at the Borrowers' expense, the
following information at the times specified below:
(a) within ten (10) Business Days after any Borrower, any
Subsidiary or any ERISA Affiliate knows or has reason to know that a
Termination Event has occurred, a written statement of the chief
financial officer of the Company describing such Termination Event and
the action, if any, which the Borrowers or other such entities have
taken, are taking or propose to take with respect thereto, and when
known, any action taken or threatened by the Internal Revenue Service,
DOL or PBGC with respect thereto;
(b) within ten (10) Business Days after any Borrower, any
Subsidiary or any ERISA Affiliate knows or has reason to know that a
prohibited transaction (as defined in Sections 406 of ERISA and 4975 of
the Internal Revenue Code) has occurred, a statement of the chief
financial officer of the Company describing such transaction and the
action which the Borrowers or other such entities have taken, are
taking or propose to take with respect thereto;
(c) within three (3) Business Days after the filing thereof
with the Internal Revenue Service, a copy of each funding waiver
request filed with respect to any Benefit Plan and all communications
received by any Borrower, any Subsidiary or any ERISA Affiliate with
respect to such request;
(d) within ten (10) Business Days upon the occurrence thereof,
notification of any increase in the benefits of any existing Plan or
the establishment of any new Plan or the commencement of contributions
to any Plan to which any Borrower, any Subsidiary or any ERISA
Affiliate was not previously contributing;
(e) within three (3) Business Days after receipt by any
Borrower, any Subsidiary or any ERISA Affiliate of the PBGC's intention
to terminate a Benefit Plan or to have a trustee appointed to
administer a Benefit Plan, copies of each such notice;
(f) within ten (10) Business Days after receipt by any
Borrower, any Subsidiary or any ERISA Affiliate of any unfavorable
determination letter from the Internal Revenue Service regarding the
qualification of a Plan under Section 401(a) of the Internal Revenue
Code, copies of each such letter;
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(g) within ten (10) Business Days after receipt by any
Borrower, any Subsidiary or any ERISA Affiliate of a notice regarding
the imposition of withdrawal liability, copies of each such notice;
(h) within ten (10) Business Days after any Borrower, any
Subsidiary or any ERISA Affiliate fail to make a required installment
or any other required payment under Section 412 of the Internal Revenue
Code on or before the due date for such installment or payment, a
notification of such failure; and
(i) within three (3) Business Days after any Borrower, any
Subsidiary or any ERISA Affiliate know (a) a Multiemployer Plan has
been terminated, (b) the administrator or plan sponsor of a
Multiemployer Plan intends to terminate a Multiemployer Plan, or (c)
the PBGC has instituted or will institute proceedings under Section
4042 of ERISA to terminate a Multiemployer Plan, a written statement
setting forth any such event or information.
For purposes of this Section 7.4, any Borrower, any Subsidiary and any
ERISA Affiliate shall be deemed to know all facts known by the administrator of
any Plan of which such entity is the plan sponsor.
The Borrowers will establish, maintain and operate all Plans to comply
in all material respects with the provisions of ERISA, Internal Revenue Code,
and all other applicable laws, and the regulations and interpretations
thereunder other than to the extent that the Borrowers are in good faith
contesting by appropriate proceedings the validity or implication of any such
provision, law, rule, regulation or interpretation.
7.5 PROCEEDINGS OR ADVERSE CHANGES.
The Borrowers will as soon as possible, and in any event within five
(5) days after any Borrower learns of the following, give written notice to the
Agent of (i) any material proceeding(s) being instituted or threatened to be
instituted by or against any Borrower or any of its Subsidiaries in any federal,
state, local or foreign court or before any commission or other regulatory body
(federal, state, local or foreign), and (ii) any Material Adverse Change.
Provision of such notice by the Borrowers will not constitute a waiver or excuse
of any Default or Event of Default occurring as a result of such changes or
events.
7.6 ENVIRONMENTAL MATTERS.
Each Borrower will conduct its business and the businesses of each of
the Subsidiaries so as to comply in all material respects with all environmental
laws, regulations, directions, ordinances, criteria and guidelines in all
jurisdictions in which any of them is or may at any time be doing business
including, without limitation, environmental land use, occupational safety or
health laws, regulations, directions, ordinances, criteria, guidelines,
requirements or permits in all jurisdictions in which any of them is or may at
any time be doing business, except to the extent that any Borrower or any of its
Subsidiaries are contesting, in good faith by appropriate legal
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proceedings, any such law, regulation, direction, ordinance, criteria,
guideline, or interpretation thereof or application thereof; provided, further,
that each Borrower and each of the Subsidiaries will comply with the order of
any court or other governmental body of the applicable jurisdiction relating to
such laws unless such Borrower or the Subsidiaries shall currently be
prosecuting an appeal or proceedings for review and shall have secured a stay of
enforcement or execution or other arrangement postponing enforcement or
execution pending such appeal or proceedings for review. If any Borrower or any
of its Subsidiaries shall (a) receive notice that any violation of any federal,
state or local environmental law, regulation, direction, ordinance, criteria or
guideline may have been committed or is about to be committed by such Borrower
or any of its Subsidiaries, (b) receive notice that any administrative or
judicial complaint or order has been filed or is about to be filed against such
Borrower or any of its Subsidiaries alleging violations of any federal, state or
local environmental law, regulation, direction, ordinance, criteria or guideline
or requiring such Borrower or any of its Subsidiaries to take any action in
connection with the release of toxic or hazardous substances into the
environment or (c) receive any notice from a federal, state, or local
governmental agency or private party alleging that such Borrower or any of its
Subsidiaries may be liable or responsible for costs associated with a response
to or cleanup of a release of a toxic or hazardous substance into the
environment or any damages caused thereby, the Borrowers will provide the Agent
with a copy of such notice within fifteen (15) days after the receipt thereof by
the applicable Borrower or any of its Subsidiaries. Each Borrower will promptly
take all actions necessary to prevent the imposition of any Liens on any of its
properties arising out of or related to any environmental matters. At the
reasonable request of the Agent from time to time, but in any event not more
frequently than once in any twelve month period, and at the sole cost and
expense of the Borrowers, the Borrowers will retain an environmental consulting
firm, satisfactory to the Agent in its commercially reasonable judgment, to
conduct an environmental review and audit of the properties of the Borrowers and
the Subsidiaries located in the United States and provide to the Agent and each
Lender a copy of any reports delivered in connection therewith.
7.7 BOOKS AND RECORDS.
Each Borrower will, and will cause each of the Subsidiaries to,
maintain books and records pertaining to the Collateral in such detail, form and
scope as is consistent with good business practice. Each Borrower agrees that
the Agent or its agents may enter upon the premises of each Borrower or any of
its Subsidiaries at any time and from time to time, during normal business
hours, and at any time at all on and after the occurrence of an Event of Default
which continues beyond the expiration of any grace or cure period applicable
thereto, and which has not otherwise been waived by the Agent, for the purpose
of (a) enabling the Agent's internal auditors to conduct quarterly field
examinations at the Borrower's expense, (b) inspecting the Collateral, (c)
inspecting and/or copying (at Borrowers' expense) any and all records pertaining
thereto, (d) discussing the affairs, finances and business of any Borrower or
with any officers, employees and directors of any Borrower with the Independent
Accountant and (e) verifying Eligible Accounts Receivable and/or Eligible
Inventory. The Lenders, in the reasonable discretion of the Agent, may accompany
the Agent at their sole expense in connection with the foregoing inspections.
Each Borrower agrees to afford the Agent prior written notice of any change in
the location of any Collateral or in the location of its chief executive office
or place of
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business from the locations specified in Schedule 6.7, and to execute in advance
of such change, cause to be filed and/or delivered to the Agent any financing
statements or other documents required by the Agent, all in form and substance
satisfactory to the Agent. Each Borrower agrees to advise the Agent promptly, in
sufficient detail, of any substantial change relating to the type, quantity or
quality of the Collateral or any event which could have a material adverse
effect on the value of the Collateral or on the security interests granted to
the Lenders therein. Each Borrower agrees to furnish any Lender with such other
information regarding its business affairs and financial condition as such
Lender may reasonably request from time to time.
7.8 COLLATERAL RECORDS.
Each Borrower will, and will cause each of the Subsidiaries to, execute
and deliver to the Agent, from time to time, solely for the Agent's convenience
in maintaining a record of the Collateral, such written statements and schedules
as the Agent may reasonably require, including without limitation those
described in Section 7.1 of this Credit Agreement, designating, identifying or
describing the Collateral pledged to the Lenders hereunder. Each Borrower's or
any Subsidiary's failure, however, to promptly give the Agent such statements or
schedules shall not affect, diminish, modify or otherwise limit the Lenders'
security interests in the Collateral. Such Borrower agrees to maintain such
books and records regarding Accounts and the other Collateral as the Agent may
reasonably require, and agrees that such books and records will reflect the
Lenders' interest in the Accounts and such other Collateral.
7.9 SECURITY INTERESTS.
Each Borrower will defend the Collateral against all claims and demands
of all Persons at any time claiming the same or any interest therein. Each
Borrower agrees to comply with the requirements of all state and federal laws in
order to grant to the Lenders valid and perfected first security interest in the
Collateral. The Agent is hereby authorized by each Borrower to file any
financing statements covering the Collateral whether or not any Borrower's
signature appears thereon. Each Borrower agrees to do whatever the Agent may
reasonably request, from time to time, by way of: filing notices of liens,
financing statements, fixture filings and amendments, renewals and continuations
thereof; cooperating with the Agent's custodians; keeping stock records;
obtaining waivers from landlords and mortgagees and from warehousemen, fillers,
processors and packers and their respective landlords and mortgagees; paying
claims, which might if unpaid, become a Lien (other than a Permitted Lien) on
the Collateral; and performing such further acts as the Agent may reasonably
require in order to effect the purposes of this Credit Agreement and the other
Credit Documents. Any and all fees, costs and expenses of whatever kind and
nature (including any Taxes, reasonable attorneys' fees or costs for insurance
of any kind), which the Agent may incur with respect to the Collateral or the
Obligations: in filing public notices; in preparing or filing documents; making
title examinations or rendering opinions; in protecting, maintaining, or
preserving the Collateral or its interest therein; in enforcing or foreclosing
the Liens hereunder, whether through judicial procedures or otherwise; or in
defending or prosecuting any actions or proceedings arising out of or relating
to its transactions with any Borrower or any of its Subsidiaries under this
Credit Agreement or any other Credit Document, will be borne and paid by the
Borrowers. If same are not promptly paid
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by the Borrowers, the Agent may pay same on the Borrowers' behalf, and the
amount thereof shall be an Obligation secured hereby and due to the Agent on
demand.
7.10 INSURANCE; CASUALTY LOSS.
Each Borrower will, and will cause each of the Subsidiaries to,
maintain public liability insurance, third party property damage insurance and
replacement value insurance on the Collateral under such policies of insurance,
with such insurance companies, in such amounts and covering such risks as are at
all times satisfactory to the Agent in its commercially reasonable judgment. All
policies covering the Collateral are to name the Borrowers and the Agent as
additional insureds and loss payees in case of loss, as their interests may
appear, and are to contain such other provisions as the Agent may reasonably
require to fully protect the Agent's interest in the Collateral and to any
payments to be made under such policies. True copies of all original insurance
policies are to be delivered to the Agent on or prior to the Closing Date,
premium prepaid, with the loss payable endorsement in the Agent's favor, and
shall provide for not less than ten (10) days prior written notice to the Agent,
of the exercise of any right of cancellation. In the event any Borrower or any
of its Subsidiaries fail to respond in a timely and appropriate manner (as
determined by the Agent in its sole discretion) with respect to collecting under
any insurance policies required to be maintained under this Section 7.10, the
Agent shall have the right, in the name of the Agent, any Borrower or any
Subsidiary, to file claims under such insurance policies, to receive and give
acquittance for any payments that may be payable thereunder, and to execute any
and all endorsements, receipts, releases, assignments, reassignments or other
documents that may be necessary to effect the collection, compromise or
settlement of any claims under any such insurance policies. Each Borrower will
provide written notice to the Lenders of the occurrence of any of the following
events within five (5) Business Days after the occurrence of such event: any
asset or property owned or used by any Borrower or any of its Subsidiaries is
(i) materially damaged or destroyed, or suffers any other loss or (ii) is
condemned, confiscated or otherwise taken, in whole or in part, or the use
thereof is otherwise diminished so as to render impracticable or unreasonable
the use of such asset or property for the purpose to which such asset or
property were used immediately prior to such condemnation, confiscation or
taking, by exercise of the powers of condemnation or eminent domain or
otherwise, and in either case the amount of the damage, destruction, loss or
diminution in value of the Collateral which is in excess of $500,000
(collectively, a "Casualty Loss"). Each Borrower will diligently file and
prosecute its claim or claims for any award or payment in connection with a
Casualty Loss. In the event of a Casualty Loss, the Borrowers will pay to the
Agent, promptly upon receipt thereof, any and all insurance proceeds and
payments received by any Borrower or any of its Subsidiaries on account of
damage, destruction or loss of all or any portion of the Collateral. The Agent
may, at its election and in its sole discretion, either (a) apply the proceeds
realized from Casualty Losses to payment of accrued and unpaid interest or
outstanding principal of the Revolving Loans or (b) pay such proceeds to the
Borrowers to be used to repair, replace or rebuild the asset or property or
portion thereof that was the subject of the Casualty Loss. After the occurrence
and during the continuance of an Event of Default, (i) no settlement on account
of any such Casualty Loss shall be made without the consent of the Required
Lenders and (ii) the Agent may participate in any such proceedings and the
Borrowers will deliver to the Agent such documents as may be requested by the
Agent to permit such
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participation and will consult with the Agent, its attorneys and agents in the
making and prosecution of such claim or claims. Each Borrower hereby irrevocably
authorizes and appoints the Agent its attorney-in-fact, after the occurrence and
continuance of an Event of Default, to collect and receive for any such award or
payment and to file and prosecute such claim or claims, which power of attorney
shall be irrevocable and shall be deemed to be coupled with an interest, and
each Borrower shall, upon demand of the Agent, make, execute and deliver any and
all assignments and other instruments sufficient for the purpose of assigning
any such award or payment to the Agent for the benefit of the Lenders, free and
clear of any encumbrances of any kind or nature whatsoever.
7.11 TAXES.
Each Borrower will, and will cause each of the Subsidiaries to, pay,
when due and in any event prior to delinquency, all Taxes lawfully levied or
assessed against any Borrower, any Subsidiary or any of the Collateral;
provided, however, that unless such Taxes have become a federal tax or ERISA
Lien on any of the assets of any Borrower or any Subsidiary, no such Tax need be
paid if the same is being contested in good faith, by appropriate proceedings
promptly instituted and diligently conducted and if an adequate reserve or other
appropriate provision shall have been made therefor as required in order to be
in conformity with GAAP.
7.12 COMPLIANCE WITH LAWS.
Each Borrower will, and will cause each of the Subsidiaries to, comply
with all acts, rules, regulations, orders, directions and ordinances of any
legislative, administrative or judicial body or official applicable to the
Collateral or any part thereof, or to the operation of its business; provided
that any Borrower and any Subsidiary may contest any acts, rules, regulations,
orders, directions and ordinances of such bodies or officials in any reasonable
manner that would not be reasonably likely to have a Material Adverse Effect.
7.13 USE OF PROCEEDS.
The proceeds of any advances made hereunder shall be used by the
Borrowers solely to finance the acquisition by the Company of the Pierre Foods
Division and to finance the working capital, letter of credit and general
corporate needs of the Borrowers; provided, however, that in any event, no
portion of the proceeds of any such advances shall be used by the Borrowers for
the purpose of purchasing or carrying any "margin stock" (as defined in
Regulation U of the Board of Governors of the Federal Reserve System) other than
Permitted Investments or for any purpose which violates the provisions or
Regulation U or X of said Board of Governors or for any purpose in violation of
any applicable statute or regulation, or of the terms and conditions of this
Credit Agreement.
7.14 FISCAL YEAR.
Each Borrower agrees that it will not change its current fiscal year
unless required by law, in which case such Borrower will give the Agent at least
30 days prior written notice thereof.
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7.15 NOTIFICATION OF CERTAIN EVENTS.
Each Borrower agrees that it will promptly notify the Agent of the
occurrence of any of the following events:
(a) any Material Contract of any Borrower or any of its
Subsidiaries is terminated or amended in any material respect or any
new Material Contract is entered into (in which event each Borrower
shall provide the Agent with a copy of such Material Contract); or
(b) any of the material terms upon which suppliers to any
Borrower or any of its Subsidiaries do business with any Borrower or
any Subsidiary are changed or amended in any material respect; or
(c) any order, judgment or decree in excess of $250,000 shall
have been entered against any Borrower or any of its Subsidiaries or
any of their respective properties or assets, or
(d) any notification of violation of any law or regulation or
any material inquiry shall have been received by any Borrower or any of
its Subsidiaries from any local, state, federal or foreign Governmental
Authority or agency.
7.16 ADDITIONAL BORROWERS.
As soon as practicable and in any event within 60 days after any Person
becomes a direct or indirect U.S. Subsidiary of the Company, the Borrowers will
provide the Agent with written notice thereof setting forth information in
reasonable detail describing all of the assets of such Person and shall (a)
cause such Person to execute a Joinder Agreement in substantially the same form
as Exhibit M hereto, (b) cause such Person to pledge all of its assets to the
Agent pursuant to a security agreement in substantially the form of the Security
Agreement and otherwise in a form acceptable to the Agent, (c) cause all of its
Capital Stock to be delivered to the Agent (together with undated stock powers
signed in blank and pledged to the Agent pursuant to an appropriate pledge
agreement(s) in substantially the form of the Pledge Agreement and otherwise in
form acceptable to the Agent, (d) cause such Person to execute Revolving Notes
in favor of the Lenders and (e) deliver such other documentation as the Agent
may reasonably request in connection with the foregoing, including, without
limitation, appropriate UCC-1 financing statements, Acknowledgment Agreements,
certified resolutions and other organizational and authorizing documents of such
Person and favorable opinions of counsel to such Person (which shall cover,
among other things, the legality, validity, binding effect and enforceability of
the documentation referred to above), all in form, content and scope reasonably
satisfactory to the Agent.
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7.17 SCHEDULES OF ACCOUNTS AND PURCHASE ORDERS.
In furtherance of the continuing assignment and security interest in
the Accounts of each Borrower granted pursuant to the Security Agreement, upon
the creation of Accounts, each Borrower will execute and deliver to the Agent in
such form and manner as the Agent may require, solely for its convenience in
maintaining records of collateral, such confirmatory schedules of Accounts, and
other appropriate reports designating, identifying and describing the Accounts
as the Agent may require. In addition, upon the Agent's request, each Borrower
will provide the Agent with copies of agreements with, or purchase orders from,
the customers of each Borrower and its Subsidiaries, and copies of invoices to
customers, proof of shipment or delivery and such other documentation and
information relating to said Accounts and other collateral as the Agent may
require. Failure to provide the Agent with any of the foregoing shall in no way
affect, diminish, modify or otherwise limit the security interests granted
herein. Each Borrower hereby authorizes the Agent to regard such Borrower's or
any Subsidiary's printed name or rubber stamp signature on assignment schedules
or invoices as the equivalent of a manual signature by such Borrower's or such
Subsidiary's authorized officers or agents.
7.18 COLLECTION OF ACCOUNTS.
Unless an Event of Default has occurred which continues beyond the
expiration of the applicable grace or cure period, or has not otherwise been
waived by the Agent, each Borrower may and will enforce, collect and receive all
amounts owing on the Accounts, for the Lenders' benefit and on the Lenders'
behalf but at the Borrowers' expense in accordance with the provisions of
Section 2.4; such privilege shall terminate automatically, however, without
notice to the Borrowers which is hereby expressly waived by the Borrowers, upon
the occurrence of any Event of Default which continues beyond the expiration of
any applicable grace or cure period, or which has not otherwise been waived by
the Required Lenders. Any checks, cash, notes or other instruments or property
received by any Borrower or any of its Subsidiaries with respect to any Accounts
shall be held by such Borrower or such Subsidiary in trust for the benefit of
the Lenders, separate from such Borrower's or Subsidiary's own property and
funds, and immediately turned over to the Agent with proper assignments or
endorsements. No checks, drafts or other instruments received by the Agent shall
constitute final payment unless and until such instruments have actually been
collected.
7.19 NOTICE; CREDIT MEMORANDA; AND RETURNED GOODS.
Each Borrower will notify the Agent promptly of any matters materially
affecting the value, enforceability or collectibility of any Account, and of all
material customer disputes, offsets, defenses, counterclaims, returns and
rejections, and all reclaimed or repossessed merchandise or goods, provided,
however, that such notice shall only be required as to any such matter that
affects Accounts outstanding at any one time from any account debtor having a
value greater than $250,000. Each Borrower will issue credit memoranda promptly
(with duplicates to the Agent upon its request for same) upon accepting returns
or granting allowances, and may continue to do so until the occurrence of an
Event of Default which continues beyond the expiration of the applicable grace
or cure period, or which has not otherwise been waived by the
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Required Lenders. After the occurrence and during the continuance of an Event of
Default, each Borrower agrees that all returned, reclaimed or repossessed
merchandise or goods shall be set aside by such Borrower, marked with the
Lenders' name and held by such Borrower for the Lenders' account as owner and
assignee.
7.20 ACKNOWLEDGMENT AGREEMENTS.
Each Borrower will assist the Agent in obtaining executed
Acknowledgment Agreements from each of the warehousemen, processors, packers,
fillers, landlords and mortgagees with whom such Borrower conducts business from
time to time.
7.21 TRADEMARKS.
Each Borrower will do and cause to be done all things necessary to
preserve and keep in full force and effect all registrations of material
trademarks, service marks and other marks, trade names or other trade rights.
7.22 MAINTENANCE OF PROPERTY.
Each Borrower will, and will cause each of the Subsidiaries to, keep
all property useful and necessary to its respective business in good working
order and condition (ordinary wear and tear excepted) in accordance with their
past operating practices and not to commit or suffer any waste with respect to
any of its properties, except for properties which either individually or in the
aggregate are not material.
7.23 COVENANTS RELATING TO PACKERS AND STOCKYARD ACT.
Unless the failure to do so would not have a Material Adverse Effect,
each of the Borrowers shall:
(a) Comply with all applicable provisions of the Packers and
Stockyard Act, including, without limitation, those governing bond
requirements and prompt repayment.
(b) Maintain written records pertaining to livestock and
by-products in its possession to which it does not yet have title,
including, without limitation, livestock for which payment is not yet
made.
All terms used in this Section 7.23 and defined in the Packers and Stockyard Act
shall have the meanings ascribed to such terms therein.
7.24 COVENANTS RELATING TO FOOD SECURITY ACT.
Unless the failure to do so would not have a Material Adverse Effect,
each Borrower shall:
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(a) Promptly provide the Agent with a copy of any notice
received by such Borrower with respect to a security interest created
by a seller of farm products.
(b) With respect to any farm products produced in a state with
a central filing system, register with the secretary of state of such
state prior to the purchase of such farm products.
All terms used in this Section 7.23 and defined in the Food Security Act shall
have the meanings ascribed to such terms therein.
7.25 YEAR 2000 COMPLIANCE.
The Borrowers shall take all action necessary to assure that the
Borrowers' computer based systems are able to operate and effectively process
data including dates on and after January 1, 2000. At the request of the Agent,
the Borrowers shall provide the Lenders with assurance acceptable to the Agent
of the Borrowers' Year 2000 compatibility.
7.26 ADDITIONAL ELIGIBLE REAL PROPERTY.
If the Borrowers request that any additional real property consisting
of new restaurants be included within "Eligible Real Property", the Borrowers
agree to provide the Agent with an appraisal regarding such property and
additional items reasonably requested by the Agent (including environmental
audits and the other items described in Section 7 of Schedule 1.1B hereto).
7.27 REORGANIZATION.
The Company shall cause the Reorganization to occur within sixty (60)
days following the Closing Date.
7.28 POST-CLOSING MATTERS.
(a) Claremont IRB Property. Promptly but not later than 45
days following the Closing Date, subject to the reasonable approval of
the Agent, the Company shall either (i) cause any and all Liens on its
Claremont, North Carolina facility (the "Claremont Property") in favor
the trustee for the Catawba County Industrial Facilities and Pollution
Control Financing Authority $4,000,000 1992 Industrial Revenue Bonds
(WSMP, Inc. Project) to be removed and released and shall provide
satisfactory evidence to the Agent that any such Liens have been
released and that the Mortgage Instrument securing the Claremont
Property in favor of the Agent for the benefit of the Lenders is in
full force and effect and is subject to no prior Liens or (ii) deliver
any necessary Acknowledgment Agreements to perfect the Agents security
interest in the personal property Collateral located at the Claremont
Property.
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(b) Other Real Estate Issues. Promptly but not later than 60
days following the Closing Date, the Company shall deliver, or cause to
be delivered, to the Agent (i) surveys on all Eligible Real Properties,
(ii) title exceptions on all Eligible Real Properties, (iii)
satisfactory evidence of removal of survey exceptions from all title
policies delivered in connection with the Eligible Real Properties and
(iv) satisfactory evidence of flood insurance on the Elizabeth City,
North Carolina property.
ARTICLE VIII
FINANCIAL COVENANTS
Until termination of this Credit Agreement and the Commitment hereunder
and payment and satisfaction of all Obligations due or to become due hereunder,
each Borrower agrees that, unless the Required Lenders shall have otherwise
consented in writing:
8.1 LEVERAGE RATIO.
The Borrowers shall maintain a Leverage Ratio, as of the last day of
each fiscal quarter of the Borrowers, of no greater than the following amounts
for the periods set forth below:
<TABLE>
<CAPTION>
Leverage Ratio Period
-------------- ------
<S> <C>
5.75 to 1.0 Closing Date through February 25, 1999
5.50 to 1.0 February 26, 1999 through February 24, 2000
5.00 to 1.0 February 25, 2000 through February 22, 2001
4.50 to 1.0 February 23, 2001 through February 21, 2002
4.00 to 1.0 February 22, 2002 and all periods ending thereafter
</TABLE>
8.2 FIXED CHARGE COVERAGE RATIO.
The Borrowers shall, on and after November 26, 1998, maintain a Fixed
Charge Coverage Ratio of not less than (a) for any fiscal quarter ending on or
before May 21, 1999, 1.0 to 1.0 as of the last day of each such fiscal quarter
and (b) thereafter, 1.2 to 1.0 as of the last day of each such fiscal quarter.
8.3 CAPITAL EXPENDITURES.
The Borrowers shall not make Consolidated Capital Expenditures
(including Consolidated Restaurant Capital Expenditures) during any fiscal year
in excess of the following amounts (on a non-cumulative basis) for the fiscal
year periods set forth below:
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<TABLE>
<CAPTION>
Amount Period
------ ------
<S> <C>
$17,000,000 Closing Date through February 26, 1999
$17,000,000 February 27, 1999 through February 25, 2000
$10,000,000 February 26, 2000 through February 24, 2001
and all fiscal year periods thereafter
</TABLE>
8.4 RESTAURANT CAPITAL EXPENDITURES.
The Borrowers shall not make Consolidated Restaurant Capital
Expenditures in excess of the following amounts (on a non-cumulative basis) for
the periods set forth below:
<TABLE>
<CAPTION>
Amount Period
------ ------
<S> <C>
$9,000,000 Closing Date through February 26, 1999
$9,000,000 February 27, 1999 through February 25, 2000
$2,000,000 February 26, 2000 through February 24, 2001
and all fiscal year periods thereafter
</TABLE>
8.5 AVAILABILITY.
Availability shall at all times be at least $6,000,000.
ARTICLE IX
NEGATIVE COVENANTS
Until termination of this Credit Agreement and the Commitment hereunder
and payment and satisfaction of all Obligations due to become due hereunder,
each Borrower agrees that, unless the Required Lenders shall have otherwise
consented in writing, it will not, and will not permit any of the Subsidiaries
to:
9.1 RESTRICTIONS ON LIENS.
Mortgage, assign, pledge, transfer or otherwise permit any Lien or
judgment (whether as a result of a purchase money or title retention
transaction, or other security interest, or otherwise) to exist on any of its
assets or goods, whether real, personal or mixed, whether now owned or hereafter
acquired, except for Permitted Liens.
9.2 RESTRICTIONS ON ADDITIONAL INDEBTEDNESS.
Incur or create any liability or Indebtedness other than Permitted
Indebtedness.
9.3 RESTRICTIONS ON SALE OF ASSETS.
Sell, lease, assign, transfer or otherwise dispose of any assets
(including stock of any Subsidiary of the Company) other than (i) sales of
Inventory in the ordinary course of business,
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(ii) sale-leaseback transactions permitted by Section 9.17, (iii) sales in the
ordinary course of business of assets that are obsolete or that are no longer
used or useful in the conduct of such Borrower's or Subsidiary's business, (iv)
sales in the ordinary course of business of assets (other than Inventory) used
in such Borrower's or Subsidiary's business that are worn out or in need of
replacement and that are replaced with assets of reasonably equivalent value or
utility and (v) sales of the assets listed on Schedule 9.3. Any assets disposed
of pursuant to this Section 9.3 shall be excluded from the Borrowing Base.
9.4 NO CORPORATE CHANGES.
Merge, consolidate with any Person or otherwise alter or modify any
Borrower's or any Subsidiary's Articles or Certificate of Incorporation or any
operating agreement, names, mailing addresses, principal places of business,
structure, status or existence or enter into or engage in any business,
operation or activity materially different from that presently being conducted
by any Borrower or Subsidiary; provided, however, the Company and its
Subsidiaries may consummate the Reorganization so long as the Company takes any
and all steps and executes any and all documents requested by the Agent in
connection therewith and pay all costs and expenses incurred by the Agent
(including reasonable attorneys' fees) in connection therewith.
9.5 NO GUARANTEES.
Assume, guarantee, endorse, or otherwise become liable upon the
obligations of any other Person, including, without limitation, any Subsidiary
or Affiliate of any Borrower, except (a) by the endorsement of negotiable
instruments in the ordinary course of business, (b) by the giving of indemnities
in connection with the sale of Inventory or other asset dispositions permitted
hereunder and (c) in connection with the incurrence of Permitted Indebtedness.
9.6 NO RESTRICTED PAYMENTS.
Make a Restricted Payment, other than Restricted Payments consisting of
(a) dividends from any Subsidiary to any Borrower, (b) payments pursuant to the
Management Services Agreement, (c) payments which are Permitted Investments and
(d) payments to repurchase Capital Stock of the Company provided the aggregate
amount of such payments do not exceed $2,500,000 and provided that there is
Availability of at least $10,000,000 immediately after the making of such
payment, so long as in the case of clause (b), (c) or (d) hereof, no Event of
Default then exists or would result from the making of any such Restricted
Payment.
9.7 NO INVESTMENTS.
Make any Investment other than Permitted Investments.
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9.8 NO AFFILIATE TRANSACTIONS.
Enter into any transaction with, including, without limitation, the
purchase, sale or exchange of property or the rendering of any service to any
Subsidiary or Affiliate of any Borrower except (a) in the ordinary course of and
pursuant to the reasonable requirements of such Borrower's business and upon
fair and reasonable terms no less favorable to such Borrower than could be
obtained in a comparable arm's-length transaction with an unaffiliated Person
and (b) as permitted under Section 9.6.
9.9 NO PROHIBITED TRANSACTIONS UNDER ERISA.
(a) Engage, or permit any ERISA Affiliate to engage, in any
prohibited transaction which could result in a civil penalty or excise
tax described in Sections 406 of ERISA or 4975 of the Internal Revenue
Code for which a statutory or class exemption is not available or a
private exemption has not been previously obtained from the DOL;
(b) permit to exist with respect to any Benefit Plan any
accumulated funding (as defined in Sections 302 of ERISA and 412 of the
Internal Revenue Code), whether or not waived;
(c) fail, or permit any ERISA Affiliate to fail, to pay timely
required contributions or annual installments due with respect to any
waived funding deficiency to any Benefit Plan;
(d) terminate, or permit any ERISA Affiliate to terminate, any
Benefit Plan where such event would result in any liability of the
Borrower, any Subsidiary or any ERISA Affiliate under Title IV of
ERISA;
(e) fail, or permit any ERISA Affiliate to fail to make any
required contribution or payment to any Multiemployer Plan;
(f) fail, or permit any ERISA Affiliate to fail, to pay any
required installment or any other payment required under Section 412 of
the Internal Revenue Code on or before the due date for such
installment or other payment;
(g) amend, or permit any ERISA Affiliate to amend, a Benefit
Plan resulting in an increase in current liability for the plan year
such that either of the Borrowers, any Subsidiary or any ERISA
Affiliate is required to provide security to such Benefit Plan under
Section 401(a)(29) of the Internal Revenue Code;
(h) withdraw, or permit any ERISA Affiliate to withdraw, from
any Multiemployer Plan where such withdrawal may result in any
liability of any such entity under Title IV of ERISA; or
(i) allow any representation made in Section 6.14 to be untrue
at any time during the term of this Agreement.
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9.10 NO ADDITIONAL BANK ACCOUNTS.
Open, maintain or otherwise have any checking, savings or other
accounts at any bank or other financial institution, or any other account where
money is or may be deposited or maintained with any Person, other than the
accounts set forth on Schedule 9.10 hereto.
9.11 NO EXCESS CASH.
Maintain in the aggregate in all of the checking, savings or other
accounts of the Borrowers, total cash balances and Permitted Investments in
excess of $500,000 at any time during which any Revolving Loans are outstanding
hereunder.
9.12 RESTRICTIONS ON THE COMPANY.
On and after consummation of the Reorganization, the Company may not
hold any assets other than the stock of the Borrowers and the Subsidiaries
listed on Schedule 6.9 and may not have any liabilities other than (a) the
liabilities contemplated by the Credit Documents and (b) tax and routine
administrative liabilities in the ordinary course of business. The Company may
not sell, transfer or otherwise dispose of any shares of Capital Stock of or
other ownership interests in the Borrowers or such Subsidiaries. On and after
consummation of the Reorganization, the Company may not engage in any business
other than owning the stock of the Borrowers and such Subsidiaries.
9.13 ISSUANCE OF STOCK.
Issue or distribute any Capital Stock or other securities for
consideration or otherwise if any Default or Event of Default exists immediately
before or after giving effect to such issuance or distribution.
9.14 MATERIAL AMENDMENTS OF MATERIAL CONTRACTS.
Without the prior written consent of the Agent, amend, modify, cancel
or terminate or permit the amendment, modification, cancellation or termination
of any of the Material Contracts, except in the event that such amendments,
modifications, cancellations or terminations would not reasonably be expected to
have a Material Adverse Effect.
9.15 ADDITIONAL NEGATIVE PLEDGES.
Create or otherwise cause or suffer to exist or become effective, or
permit any of the Subsidiaries to create or otherwise cause or suffer to exist
or become effective, directly or indirectly (i) any prohibition or restriction
(including any agreement to provide equal and ratable security to any other
Person in the event a Lien is granted to or for the benefit of the Agent and the
Lenders) on the creation or existence of any Lien upon the assets of any
Borrower or the Subsidiaries, other than Permitted Liens, or (ii) any
Contractual Obligation which may restrict or
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inhibit the Agent's rights or ability to sell or otherwise dispose of the
Collateral or any part thereof after the occurrence of an Event of Default.
9.16 SENIOR UNSECURED DEBT.
Effect or permit any change in or amendment to any document or
instrument pertaining to the terms of payment or required prepayments of any
Senior Unsecured Debt, effect or permit any change in or amendment to any
document or instrument pertaining to the covenants or events of default of any
Senior Unsecured Debt if the effect of any such change or amendment is to make
such covenants or events of default more restrictive, give any notice of
optional redemption or optional prepayment or offer to repurchase under any such
document or instrument, or, directly or indirectly, make any payment of
principal of or interest on or in redemption, retirement or repurchase of any
Senior Unsecured Debt, except for the scheduled payments required by the terms
of the documents and instruments evidencing Senior Unsecured Debt.
9.17 SALE AND LEASEBACK.
Enter into any arrangement, directly or indirectly, whereby the Company
or any Subsidiary shall sell or transfer any property owned by it to a Person
(other than the Company or any Subsidiary) in order then or thereafter to lease
such property or lease other property which the Company or any Subsidiary
intends to use for substantially the same purpose as the property being sold or
transferred. Notwithstanding the foregoing provisions of this Section 9.17, the
Company may sell or transfer any property owned by it as described in the
preceding sentence provided that the aggregate current market value of all
assets so sold or transferred (in each case determined at the time of such sale
or transfer) shall not at any time exceed $250,000.
9.18 LICENSES, ETC.
Enter into licenses of, or otherwise restrict the use of, any patents,
trademarks or copyrights which would prevent the Company or any Subsidiary from
selling, transferring, encumbering or otherwise disposing of any such patent,
trademark or copyright.
9.19 LIMITATIONS.
Create, nor will it permit any of its Subsidiaries to, directly or
indirectly, create or otherwise cause, incur, assume, suffer or permit to exist
or become effective any consensual encumbrance or restriction of any kind on the
ability of any such Person to (a) pay dividends or make any other distribution
on any of such Person's Capital Stock, (b) pay any Indebtedness owed to the
Borrowers, (c) make loans or advances to any other Borrower or (d) transfer any
of its property to any other Borrower, except for encumbrances or restrictions
existing under or by reason of (i) customary non-assignment provisions in any
lease governing a leasehold interest, (ii) any agreement or other instrument of
a Person existing at the time it becomes a Subsidiary of a Borrower; provided
that such encumbrance or restriction is not applicable to any other Person, or
any property of any other Person, other than such Person becoming a Subsidiary
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of a Borrower and was not entered into in contemplation of such Person becoming
a Subsidiary of a Borrower and (iii) this Credit Agreement and the other Credit
Documents.
ARTICLE X
POWERS
10.1 APPOINTMENT AS ATTORNEY-IN-FACT.
Each Borrower hereby irrevocably authorizes and appoints the Agent, or
any Person or agent the Agent may designate, as such Borrower's
attorney-in-fact, at the Borrowers' cost and expense, to exercise, subject to
the limitations set forth in Section 10.2, all of the following powers, which
being coupled with an interest, shall be irrevocable until all of the
Obligations to the Lenders have been paid and satisfied in full and all of the
Commitments have been terminated:
(a) To receive, take, endorse, sign, assign and deliver, all
in the name of the Agent, the Lenders or such Borrower, any and all
checks, notes, drafts, and other documents or instruments relating to
the Collateral;
(b) To receive, open and dispose of all mail addressed to such
Borrower and to notify postal authorities to change the address for
delivery thereof to such address as the Agent may designate;
(c) To request at any time from customers indebted on
Accounts, in the name of such Borrower or a third party designee of the
Agent, information concerning the Accounts and the amounts owing
thereon;
(d) To give customers indebted on Accounts notice of the
Lenders' interest therein, and/or to instruct such customers to make
payment directly to the Agent for such Borrower's account;
(e) To take or bring, in the name of the Agent, the Lenders or
such Borrower, all steps, actions, suits or proceedings deemed by the
Agent necessary or desirable to enforce or effect collection of the
Accounts; and
(f) To file, record and register any or all of the Lenders'
security interest in intellectual property of the Borrowers with the
United States Patent and Trademark Office.
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10.2 LIMITATION ON EXERCISE OF POWER.
Notwithstanding anything hereinabove to the contrary, the powers set
forth in subparagraphs (b), (d) and (e) above may only be exercised by the Agent
on and after the occurrence of an Event of Default which continues beyond the
expiration of the applicable grace or cure period, and which has not otherwise
been waived by the Agent. The powers set forth in subparagraphs (a), (c) and (f)
above may be exercised by the Agent at any time.
ARTICLE XI
EVENTS OF DEFAULT AND REMEDIES
11.1 EVENTS OF DEFAULT.
The occurrence of any of the following events shall constitute an Event
of Default hereunder:
(a) failure of any Borrower to pay (i) any interest or Fees
hereunder within three (3) Business Days of when due hereunder, in each
case whether at stated maturity, by acceleration, or otherwise, (ii)
any principal of the Revolving Loans or the Letter of Credit
Obligations when due, whether at stated maturity, by acceleration or
otherwise or (iii) any expenses hereunder within five (5) Business Days
after receipt by the Borrowers from the Agent or any applicable Lender
that such expenses are payable;
(b) any representation or warranty, contained in this Credit
Agreement, the other Credit Documents or any other agreement, document,
instrument or certificate among any Borrower, the Agent and the Lenders
or executed by any Borrower in favor of the Agent or the Lenders shall
prove untrue in any material respect on the date as of which it was
made or was deemed to have been made;
(c) failure of any Borrower to perform, comply with or observe
any term, covenant or agreement applicable to it contained in Section
7.1(k), Section 7.5, Section 7.7, Article VIII or Article IX;
(d) failure to comply with any other covenant, contained in
this Credit Agreement, the other Credit Documents or any other
agreement, document, instrument or certificate among any Borrower, the
Agent and the Lenders or executed by any Borrower in favor of the Agent
or the Lenders, and in the event such breach or failure to comply is
capable of cure, is not cured within thirty (30) days of its
occurrence;
(e) dissolution, liquidation, winding up or cessation of any
Borrower's or any Subsidiary's businesses, or the failure of any
Borrower or any Subsidiary to meet its debts as they mature, or the
calling of a meeting of any Borrower's or any Subsidiary's creditors
for purposes of compromising any Borrower's or any Subsidiary's debts;
(f) the commencement by or against any Borrower or any
Subsidiary of any bankruptcy, insolvency, arrangement, reorganization,
receivership or similar proceedings under any federal or state law and,
in the event any such proceeding is commenced against any Borrower or
any Subsidiary, such proceeding is not dismissed within sixty (60)
days;
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(g) the occurrence of a Change of Control;
(h) the occurrence of a default or event of default (in each
case which shall continue beyond the expiration of any applicable grace
periods) under, or the occurrence of any event that results in or would
permit the acceleration of the maturity of, or that would require any
Borrower to purchase, acquire or redeem (or make an offer to purchase,
acquire or redeem) any note, agreement or instrument evidencing (i) any
Senior Unsecured Debt or (ii) any other Indebtedness of any Borrower or
any of its Subsidiaries and the aggregate principal amount of all such
other Indebtedness with respect to which a default or an event of
default has occurred, or the maturity of which is accelerated or
permitted to be accelerated, exceeds $1,000,000; or
(i) any covenant, agreement or obligation of any party
contained in or evidenced by any of the Credit Documents shall cease to
be enforceable in accordance with its terms, or any party (other than
the Agent or the Lenders) to any Credit Document shall deny or
disaffirm its obligations under any of the Credit Documents, or any
Credit Document shall be canceled, terminated, revoked or rescinded
without the express prior written consent of the Agent, or any action
or proceeding shall have been commenced by any Person (other than the
Agent or any Lender) seeking to cancel, revoke, rescind or disaffirm
the obligations of any party to any Credit Document, or any court or
other Governmental Authority shall issue a judgment, order, decree or
ruling to the effect that any of the obligations of any party to any
Credit Document are illegal, invalid or unenforceable;
(j) one or more judgments or decrees shall be entered against
one or more of the Borrowers or any Subsidiary involving a liability of
$1,000,000 or more in the aggregate (to the extent not paid or covered
by insurance (i) provided by a carrier who has acknowledged coverage
and has the ability to perform or (ii) as determined by the Agent in
its reasonable discretion) and any such judgments or decrees shall not
have been vacated, discharged or stayed or bonded pending appeal within
30 days from the entry thereof; or.
(k) any Termination Event with respect to a Benefit Plan shall
have occurred and be continuing thirty (30) days after notice thereof
shall have been given to the Company by the Agent or any Lender, and
the then current value of such Benefit Plan's benefits guaranteed under
Title IV of ERISA exceeds the then current value of such Benefit Plan's
assets allocable to such benefits by more than $250,000 (or in the case
of a Termination Event involving the withdrawal of a substantial
employer, the withdrawing employer's proportionate share of such excess
exceeds such amount).
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11.2 ACCELERATION.
Upon the occurrence of an Event of Default which has not been cured by
the Borrowers or waived by the Agent at the direction of the Required Lenders,
the Agent shall, upon the written, telecopied or telex request of the Required
Lenders, and by delivery of written notice to the Borrowers from the Agent, take
any or all of the following actions, without prejudice to the rights of the
Agent, any Lender or the holder of any Revolving Note to enforce its claims
against any Borrower: (a) declare all Obligations to be immediately due and
payable (except with respect to any Event of Default set forth in Section
11.1(f) in which case all Obligations shall automatically become immediately due
and payable without the necessity of any notice or other demand) without
presentment, demand, protest or any other action or obligation of the Agent or
any Lender, (b) immediately terminate this Credit Agreement and the Revolving
Commitments hereunder; and (c) enforce any and all rights and interests created
and existing under the Credit Documents or arising under applicable law,
including, without limitation, all rights and remedies existing under the
Security Documents and all rights of set-off. The enumeration of the foregoing
rights is not intended to be exhaustive and the exercise of any right shall not
preclude the exercise of any other rights, all of which shall be cumulative.
In addition, upon demand by the Agent or the Required Lenders after the
occurrence of any Event of Default, the Borrowers shall deposit with the Agent
for the benefit of the Lenders with respect to each Letter of Credit then
outstanding, promptly upon such demand, cash or Cash Equivalents in an amount
equal to the greatest amount for which such Letter of Credit may be drawn. Such
deposit shall be held by the Agent for the benefit of the Issuing Bank and the
other Lenders as security for, and to provide for the payment of, outstanding
Letters of Credit.
ARTICLE XII
TERMINATION
Except as otherwise provided in Article XI of this Credit Agreement,
the Revolving Commitments made hereunder shall terminate on the Maturity Date
and all then outstanding Revolving Loans shall be immediately due and payable in
full and all outstanding Letters of Credit shall immediately terminate. Unless
sooner demanded, all Obligations shall become due and payable as of any
termination hereunder or under Article XI and, pending a final accounting, the
Agent may withhold any balances in the Borrowers' Revolving Loan accounts,
unless supplied with a satisfactory indemnity to cover all of the Obligations,
whether absolute or contingent. All of the Agent's and the Lenders' rights,
liens and security interests shall continue after any termination until all
Obligations have been paid and satisfied in full.
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ARTICLE XIII
THE AGENT
13.1 APPOINTMENT OF AGENT.
(a) Each Lender hereby designates FUCC as Agent to act as
herein specified. Each Lender hereby irrevocably authorizes, and each
holder of any Revolving Note or participation in any Letter of Credit
by the acceptance of a Note or participation shall be deemed
irrevocably to authorize, the Agent to take such action on its behalf
under the provisions of this Credit Agreement and the Revolving Notes
and any other instruments and agreements referred to herein and to
exercise such powers and to perform such duties hereunder and
thereunder as are specifically delegated to or required of the Agent by
the terms hereof and thereof and such other powers as are reasonably
incidental thereto. The Agent shall hold all Collateral and all
payments of principal, interest, Fees, charges and expenses received
pursuant to this Credit Agreement or any other Credit Document for the
ratable benefit of the Lenders. The Agent may perform any of its duties
hereunder by or through its agents or employees.
(b) The provisions of this Article XIII are solely for the
benefit of the Agent and the Lenders, and none of the Borrowers shall
have any rights as a third party beneficiary of any of the provisions
hereof (other than Section 13.9). In performing its functions and
duties under this Credit Agreement, the Agent shall act solely as agent
of the Lenders and does not assume and shall not be deemed to have
assumed any obligation toward or relationship of agency or trust with
or for any Borrower.
(c) Without limiting the generality of this Section 13.1, each
Lender expressly authorizes the Agent to determine, subject to the
terms of this Credit Agreement, on behalf of such Lender whether or not
Inventory or Accounts shall be deemed to constitute Eligible Accounts
Receivable, Eligible Equipment, Eligible Inventory and Eligible Real
Property. Such authorization may be withdrawn by the Required Lenders;
provided, however, that unless otherwise agreed by the Agent such
withdrawal of authorization shall not become effective until the
thirtieth Business Day after receipt of such notice by the Agent.
Thereafter, the Required Lenders shall jointly instruct the Agent in
writing regarding such matters with such frequency as the Required
Lenders shall jointly determine.
13.2 NATURE OF DUTIES OF AGENT.
The Agent shall have no duties or responsibilities except those
expressly set forth in this Credit Agreement. Neither the Agent nor any of its
officers, directors, employees or agents shall be liable for any action taken or
omitted by it as such hereunder or in connection herewith, unless caused by its
or their gross negligence or willful misconduct. The duties of the Agent shall
be mechanical and administrative in nature; the Agent shall not have by reason
of this Credit Agreement a fiduciary relationship in respect of any Lender; and
nothing in this Credit Agreement, expressed or implied, is intended to or shall
be so construed as to impose upon the Agent any obligations in respect of this
Credit Agreement except as expressly set forth herein.
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13.3 LACK OF RELIANCE ON AGENT.
(a) Independently and without reliance upon the Agent, each
Lender, to the extent it deems appropriate, has made and shall continue
to make (i) its own independent investigation of the financial or other
condition and affairs of each Borrower in connection with the taking or
not taking of any action in connection herewith and (ii) its own
appraisal of the creditworthiness of each Borrower, and, except as
expressly provided in this Credit Agreement, the Agent shall have no
duty or responsibility, either initially or on a continuing basis, to
provide any Lender with any credit or other information with respect
thereto, whether coming into its possession before the making of the
Revolving Loans or at any time or times thereafter.
(b) The Agent shall not be responsible to any Lender for any
recitals, statements, information, representations or warranties herein
or in any document, certificate or other writing delivered in
connection herewith or for the execution, effectiveness, genuineness,
validity, enforceability, collectibility, priority or sufficiency of
this Credit Agreement or the Notes or the financial or other condition
of any Borrower. The Agent shall not be required to make any inquiry
concerning either the performance or observance of any of the terms,
provisions or conditions of this Credit Agreement or the Notes, or the
financial condition of any Borrower, or the existence or possible
existence of any Default or Event of Default, unless specifically
requested to do so in writing by any Lender.
13.4 CERTAIN RIGHTS OF THE AGENT.
The Agent shall have the right to request instructions from the
Required Lenders or, as required, each of the Lenders. If the Agent shall
request instructions from the Required Lenders or each of the Lenders, as the
case may be, with respect to any act or action (including the failure to act) in
connection with this Credit Agreement, the Agent shall be entitled to refrain
from such act or taking such action unless and until the Agent shall have
received instructions from the Required Lenders or each of the Lenders, as the
case may be, and the Agent shall not incur liability to any Person by reason of
so refraining. Without limiting the foregoing, no Lender shall have any right of
action whatsoever against the Agent as a result of the Agent acting or
refraining from acting hereunder in accordance with the instructions of the
Required Lenders or each of the Lenders, as the case may be.
13.5 RELIANCE BY AGENT.
The Agent shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, statement, certificate,
telex teletype or telecopier message, cablegram, radiogram, order or other
documentary, teletransmission or telephone message believed by it to be genuine
and correct and to have been signed, sent or made by the proper person. The
Agent may consult with legal counsel (including counsel for the Borrowers with
respect to matters concerning the Borrowers), independent public accountants and
other experts selected by it and shall not be liable for any action taken or
omitted to be taken by it in good faith in accordance with the advice of such
counsel, accountants or experts.
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13.6 INDEMNIFICATION OF AGENT.
To the extent the Agent is not reimbursed and indemnified by the
Borrowers, each Lender will reimburse and indemnify the Agent, in proportion to
its respective Commitment, for and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
(including counsel fees and disbursements) or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against the
Agent in performing its duties hereunder, in any way relating to or arising out
of this Credit Agreement, provided that no Lender shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the Agent's
gross negligence or willful misconduct.
13.7 THE AGENT IN ITS INDIVIDUAL CAPACITY.
With respect to its obligation to lend under this Credit Agreement, the
Loans made by it and the Revolving Notes issued to it, its participation in
Letters of Credit issued hereunder, and all of its rights and obligations as a
Lender hereunder and under the other Credit Documents, the Agent shall have the
same rights and powers hereunder as any other Lender or holder of a Note or
participation interests and may exercise the same as though it was not
performing the duties specified herein; and the terms "Lenders", "Required
Lenders", "holders of Notes", or any similar terms shall, unless the context
clearly otherwise indicates, include the Agent in its individual capacity. The
Agent may accept deposits from, lend money to, acquire equity interests in, and
generally engage in any kind of banking, trust, financial advisory or other
business with the Borrowers or any Affiliate of the Borrowers as if it were not
performing the duties specified herein, and may accept fees and other
consideration from the Borrowers for services in connection with this Credit
Agreement and otherwise without having to account for the same with the Lenders.
13.8 HOLDERS OF NOTES.
The Agent may deem and treat the payee of any Note as the owner thereof
for all purposes hereof unless and until a written notice of the assignment or
transfer thereof shall have been filed with the Agent. Any request, authority or
consent of any Person who, at the time of making such request or giving such
authority or consent, is the holder of any Note, shall be conclusive and binding
on any subsequent holder, transferee or assignee of such Note or of any Note or
Notes issued in exchange therefor.
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13.9 SUCCESSOR AGENT.
(a) The Agent may, upon five (5) Business Days' notice to the
Lenders and the Borrowers, resign at any time (effective upon the
appointment of a successor Agent pursuant to the provisions of this
Section 13.9(a)) by giving written notice thereof to the Lenders and
the Borrowers. Upon any such resignation, the Required Lenders shall
have the right, upon five (5) days' notice to the Company, to appoint a
successor Agent. If no successor Agent shall have been so appointed by
the Required Lenders, and shall have accepted such appointment, within
thirty (30) days after the retiring Agent's giving of notice of
resignation, then, upon five (5) days' notice , the retiring Agent may,
on behalf of the Lenders, appoint a successor Agent, which shall be a
bank or a trust company or other financial institution which maintains
an office in the United States, or a commercial bank organized under
the laws of the United States of America or of any State thereof, or
any affiliate of such bank or trust company or other financial
institution which is engaged in the banking business, having a combined
capital and surplus of at least $500,000,000. Notwithstanding anything
herein to the contrary, so long as no Event of Default shall have
occurred and be continuing, any successor Agent (whether appointed by
the Required Lenders or the Agent) shall have been approved in writing
by the Company (such approval not to be unreasonably withheld).
(b) Upon the acceptance of any appointment as Agent hereunder
by a successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of
the retiring Agent, and the retiring Agent shall be discharged from its
duties and obligations under this Credit Agreement. After any retiring
Agent's resignation hereunder as Agent, the provisions of this Article
XIII shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Agent under this Credit Agreement.
13.10 COLLATERAL MATTERS.
(a) Each Lender authorizes and directs the Agent to enter into
the Security Documents for the benefit of the Lenders. Each Lender
authorizes and directs the Agent to make such changes to the form
Acknowledgment Agreement attached hereto as Exhibit A as the Agent
deems necessary in order to obtain any Acknowledgment Agreement from
any landlord, warehouseman, filler, packer or processor of any
Borrower. Each Lender also authorizes and directs the Agent to review
and approve all agreements regarding the Lockboxes and the Lockbox
Accounts (including the Lockbox Agreements) on such terms as the Agent
deems necessary. Each Lender hereby agrees, and each holder of any
Revolving Note by the acceptance thereof will be deemed to agree, that,
except as otherwise set forth herein, any action taken by the Required
Lenders or each of the Lenders, as applicable, in accordance with the
provisions of this Credit Agreement or the Security Documents, and the
exercise by the Required Lenders or each of the Lenders, as applicable,
of the powers set forth herein or therein, together with such other
powers as are reasonably incidental thereto, shall be authorized and
binding upon all of the Lenders. The Agent is hereby authorized on
behalf of all of the Lenders,
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without the necessity of any notice to or further consent from any
Lender, from time to time prior to an Event of Default, to take any
action with respect to any Collateral or Security Document which may be
necessary or appropriate to perfect and maintain perfected the security
interest in and liens upon the Collateral granted pursuant to the
Security Documents.
(b) The Lenders hereby authorize the Agent, at its option and
in its discretion, to release any Lien granted to or held by the Agent
upon any Collateral (i) upon termination of the Commitments and payment
in cash and satisfaction of all of the Obligations (including the
Letter of Credit Obligations) at any time arising under or in respect
of this Credit Agreement or the Credit Documents or the transactions
contemplated hereby or thereby, (ii) constituting property being sold
or disposed of upon receipt of the proceeds of such sale by the Agent
if the applicable Borrower certifies to the Agent that the sale or
disposition is made in compliance with Section 9.3 (and the Agent may
rely conclusively on any such certificate, without further inquiry) or
(iii) if approved, authorized or ratified in writing by the Required
Lenders, unless such release is required to be approved by all of the
Lenders hereunder. Upon request by the Agent at any time, the Lenders
will confirm in writing the Agent's authority to release particular
types or items of Collateral pursuant to this Section 13.10(b).
(c) Upon any sale and transfer of Collateral which is
expressly permitted pursuant to the terms of this Credit Agreement, or
consented to in writing by the Required Lenders or all of the Lenders,
as applicable, and upon at least five (5) Business Days' prior written
request by the applicable Borrower, the Agent shall (and is hereby
irrevocably authorized by the Lenders to) execute such documents as may
be necessary to evidence the release of the Liens granted to the Agent
for the benefit of the Lenders herein or pursuant hereto upon the
Collateral that was sold or transferred; provided that (i) the Agent
shall not be required to execute any such document on terms which, in
the Agent's opinion, would expose the Agent to liability or create any
obligation or entail any consequence other than the release of such
Liens without recourse or warranty and (ii) such release shall not in
any manner discharge, affect or impair the Obligations or any Liens
upon (or obligations of such Borrower or any Subsidiary in respect of)
all interests retained by such Borrower or any Subsidiary, including
(without limitation) the proceeds of the sale, all of which shall
continue to constitute part of the Collateral. In the event of any sale
or transfer of Collateral, or any foreclosure with respect to any of
the Collateral, the Agent shall be authorized to deduct all of the
expenses reasonably incurred by the Agent from the proceeds of any such
sale, transfer or foreclosure.
(d) The Agent shall have no obligation whatsoever to the
Lenders or to any other Person to assure that the Collateral exists or
is owned by the Borrowers or any Subsidiary or is cared for, protected
or insured or that the liens granted to the Agent herein or pursuant
hereto have been properly or sufficiently or lawfully created,
perfected, protected or enforced or are entitled to any particular
priority, or to exercise or to continue exercising at all or in any
manner or under any duty of care, disclosure or fidelity any of the
rights, authorities and powers granted or available to the Agent in
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this Section 13.10 or in any of the Security Documents, it being
understood and agreed that in respect of the Collateral, or any act,
omission or event related thereto, the Agent may act in any manner it
may deem appropriate, in its sole discretion, given the Agent's own
interest in the Collateral as one of the Lenders and that the Agent
shall have no duty or liability whatsoever to the Lenders, except for
its gross negligence or willful misconduct.
13.11 ACTIONS WITH RESPECT TO DEFAULTS.
In addition to the Agent's right to take actions on its own accord as
permitted under this Credit Agreement, the Agent shall take such action with
respect to a Default or Event of Default as shall be directed by the Required
Lenders; provided that, until the Agent shall have received such directions, the
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable and in the best interests of the Lenders.
13.12 DELIVERY OF INFORMATION.
The Agent shall not be required to deliver to any Lender originals or
copies of any documents, instruments, notices, communications or other
information received by the Agent from the Borrowers, any Subsidiary, the
Required Lenders, any Lender or any other Person under or in connection with
this Credit Agreement or any other Credit Document except (a) as specifically
provided in this Credit Agreement or any other Credit Document and (b) as
specifically requested from time to time in writing by any Lender with respect
to a specific document instrument, notice or other written communication
received by and in the possession of the Agent at the time of receipt of such
request and then only in accordance with such specific request.
ARTICLE XIV
MISCELLANEOUS
14.1 WAIVERS.
Each Borrower hereby waives due diligence, demand, presentment and
protest and any notices thereof as well as notice of nonpayment. No delay or
omission of the Agent or the Lenders to exercise any right or remedy hereunder,
whether before or after the happening of any Event of Default, shall impair any
such right or shall operate as a waiver thereof or as a waiver of any such Event
of Default. No single or partial exercise by the Agent or the Lenders of any
right or remedy shall preclude any other or further exercise thereof, or
preclude any other right or remedy.
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14.2 JURY TRIAL.
TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH BORROWER, THE AGENT AND
THE LENDERS EACH HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING ARISING OUT OF THIS CREDIT AGREEMENT, THE CREDIT DOCUMENTS OR ANY
OTHER AGREEMENTS OR TRANSACTIONS RELATED HERETO OR THERETO.
14.3 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE.
(a) THIS CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER
SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NORTH CAROLINA. Any legal action or proceeding
with respect to this Credit Agreement or any other Credit Document
shall be brought in the courts of the State of North Carolina in
Mecklenburg County or of the United States for the Western District of
North Carolina, and, by execution and delivery of this Credit
Agreement, each of the Borrowers hereby irrevocably accepts for itself
and in respect of its property, generally and unconditionally, the
nonexclusive jurisdiction of such courts. Each of the Borrowers further
irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing
of copies thereof by registered or certified mail, postage prepaid, to
it at the address set out for notices pursuant to Section 14.5, such
service to become effective three (3) days after such mailing. Nothing
herein shall affect the right of the Agent or any Lender to serve
process in any other manner permitted by law or to commence legal
proceedings or to otherwise proceed against any Borrower in any other
jurisdiction.
(b) Each of the Borrowers hereby irrevocably waives any
objection which it may now or hereafter have to the laying of venue of
any of the aforesaid actions or proceedings arising out of or in
connection with this Credit Agreement or any other Credit Document
brought in the courts referred to in subsection (a) above and hereby
further irrevocably waives and agrees not to plead or claim in any such
court that any such action or proceeding brought in any such court has
been brought in an inconvenient forum.
14.4 ARBITRATION.
(a) Notwithstanding the provisions of Section 14.3 to the
contrary, upon demand of any party hereto, whether made before or after
institution of any judicial proceeding, any dispute, claim or
controversy arising out of, connected with or relating to this Credit
Agreement and other Credit Documents ("Disputes") between or among
parties to this Credit Agreement shall be resolved by binding
arbitration as provided herein. Institution of a judicial proceeding by
a party does not waive the right of that party to demand arbitration
hereunder. Disputes may include, without limitation, tort claims,
counterclaims, disputes as to whether a matter is subject to
arbitration, claims
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brought as class actions, claims arising from Credit Documents executed
in the future, or claims arising out of or connected with the
transaction reflected by this Credit Agreement.
Arbitration shall be conducted under and governed by the
Commercial Financial Disputes Arbitration Rules (the "Arbitration
Rules") of the American Arbitration Association (the "AAA") and Title 9
of the U.S. Code. All arbitration hearings shall be conducted in
Charlotte, North Carolina. A hearing shall begin within 90 days of
demand for arbitration and all hearings shall be concluded within 120
days of demand for arbitration. These time limitations may not be
extended unless a party shows cause for extension and then no more than
a total extension of 60 days. The expedited procedures set forth in
Rule 51 et seq. of the Arbitration Rules shall be applicable to claims
of less than $1,000,000. All applicable statutes of limitation shall
apply to any Dispute. A judgment upon the award may be entered in any
court having jurisdiction. The panel from which all arbitrators are
selected shall be comprised of licensed attorneys selected from the
Commercial Financial Dispute Arbitration Panel of the AAA. The single
arbitrator selected for expedited procedure shall be a retired judge
from the highest court of general jurisdiction, state or federal, of
the state where the hearing will be conducted or if such person is not
available to serve, the single arbitrator may be a licensed attorney.
The parties hereto do not waive applicable Federal or state substantive
law except as provided herein. Notwithstanding the foregoing, this
arbitration provision does not apply to disputes under or related to
Hedging Agreements.
(b) Notwithstanding the preceding binding arbitration
provisions, the Agent, the Lenders and the Borrowers agree to preserve,
without diminution, certain remedies that the Agent on behalf of the
Lenders may employ or exercise freely, independently or in connection
with an arbitration proceeding or after an arbitration action is
brought. The Agent on behalf of the Lenders shall have the right to
proceed in any court of proper jurisdiction or by self-help to exercise
or prosecute the following remedies, as applicable (i) all rights to
foreclose against any real or personal property or other security by
exercising a power of sale granted under Credit Documents or under
applicable law or by judicial foreclosure and sale, including a
proceeding to confirm the sale; (ii) all rights of self-help including
peaceful occupation of real property and collection of rents, set-off,
and peaceful possession of personal property; (iii) obtaining
provisional or ancillary remedies including injunctive relief,
sequestration, garnishment, attachment, appointment of receiver and
filing an involuntary bankruptcy proceeding; and (iv) when applicable,
a judgment by confession of judgment. Preservation of these remedies
does not limit the power of an arbitrator to grant similar remedies
that may be requested by a party in a Dispute.
(c) The parties hereto agree that they shall not have a remedy
of punitive or exemplary damages against the other in any Dispute and
hereby waive any right or claim to punitive or exemplary damages they
have now or which may arise in the future in connection with any
Dispute whether the Dispute is resolved by arbitration or judicially.
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(d) By execution and delivery of this Credit Agreement, each
of the parties hereto accepts, for itself and in connection with its
properties, generally and unconditionally, the non-exclusive
jurisdiction relating to any arbitration proceedings conducted under
the Arbitration Rules in Charlotte, North Carolina and irrevocably
agrees to be bound by any final judgment rendered thereby in connection
with this Credit Agreement from which no appeal has been taken or is
available.
14.5 NOTICES.
Except as otherwise provided herein, all notices and correspondences
hereunder shall be in writing and sent by certified or registered mail return
receipt requested, or by overnight delivery service, with all charges prepaid,
if to the Agent, then to First Union Commercial Corporation, One First Union
Center, 301 South College Street, DC-5, Charlotte, North Carolina 28288-0737,
Attention: Terri K. Lins, Director; if to the Borrowers, then to Borrowers at
P.O. Box 399, One WSMP Drive, Claremont, North Carolina 28610, Attention: James
E. Harris, Executive Vice President and Chief Financial Officer, and to any
Lender, at the address set forth beneath the signature of such Lender contained
herein, or by facsimile transmission, promptly confirmed in writing sent by
first class mail, if to the Agent, at (704) 374-2703, and if to the Borrowers at
(704) 459-3148 and if to any Lender at the facsimile number set forth beneath
the signature of such Lender contained herein. All such notices and
correspondence shall be deemed given (i) if sent by certified or registered
mail, three (3) Business Days after being postmarked, (ii) if sent by overnight
delivery service, when received at the above stated addresses or when delivery
is refused and (iii) if sent by facsimile transmission, when receipt of such
transmission is acknowledged; provided that notices to the Agent shall not be
effective until received.
14.6 ASSIGNABILITY.
(a) No Borrower shall have the right to assign this Credit
Agreement or any interest therein except with the prior written consent
of the Agent.
(b) Notwithstanding subsection (c) of this Section 14.6,
nothing herein shall restrict, prevent or prohibit any Lender from (i)
pledging its Loans hereunder to a Federal Reserve Bank in support of
borrowings made by such Lender from such Federal Reserve Bank or (ii)
granting assignments or participations in such Lender's Loans and/or
Commitments hereunder to its parent company and/or to any affiliate of
such Lender or to any existing Lender or affiliate thereof. Any Lender
may make, carry or transfer Loans at, to or for the account of, any of
its branch offices or the office of an affiliate of such Lender except
to the extent such transfer would result in increased costs to the
Borrowers.
(c) Each Lender may, with the consent of the Agent (such
consent not to be unreasonably withheld or delayed) and concurrent
notice to the Borrowers, but without the consent of the Borrowers or
any other Lender, assign to one or more banks or other financial
institutions all or a portion of its rights and obligations under this
Credit Agreement and the Notes; provided that (i) for each such
assignment, the parties thereto shall execute and deliver to the Agent,
for its acceptance and recording in the Register (as
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defined below), an Assignment and Acceptance, together with any Note or
Notes subject to such assignment and a processing and recordation fee
of $3,500 to be paid by the assignee, (ii) no such assignment shall be
for less than $5,000,000, or if less the entire remaining Revolving
Credit Commitment of such Lender, (iii) if such assignee is a Foreign
Lender, all of the requirements of Section 2.7(b) shall have been
satisfied as a condition to such assignment and (iv) each such
assignment shall be of a uniform, and not a varying, percentage of all
rights and obligations under and in respect of the Revolving Credit
Commitment and all Revolving Loans of such Lender. Upon such execution
and delivery of the Assignment and Acceptance to the Agent, from and
after the date specified as the effective date in the Assignment and
Acceptance (the "Acceptance Date"), (x) the assignee thereunder shall
be a party hereto, and, to the extent that rights and obligations
hereunder have been assigned to it pursuant to such Assignment and
Acceptance, such assignee shall have the rights and obligations of a
Lender hereunder and (y) the assignor thereunder shall, to the extent
that rights and obligations hereunder have been assigned by it pursuant
to such Assignment and Acceptance, relinquish its rights (other than
any rights it may have pursuant to Section 14.8 which will survive) and
be released from its obligations under this Credit Agreement (and, in
the case of an Assignment and Acceptance covering all or the remaining
portion of an assigning Lender's rights and obligations under this
Credit Agreement, such Lender shall cease to be a party hereto).
(d) By executing and delivering an Assignment and Acceptance,
the assignee thereunder confirms and agrees as follows: (i) other than
as provided in such Assignment and Acceptance, the assigning Lender
makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with this Credit Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this
Credit Agreement, the Revolving Notes or any other instrument or
document furnished pursuant hereto, (ii) such assigning Lender makes no
representation or warranty and assumes no responsibility with respect
to the financial condition of the Borrowers or the performance or
observance by the Borrowers of any of its obligations under this Credit
Agreement or any other instrument or document furnished pursuant
hereto, (iii) such assignee confirms that it has received a copy of
this Credit Agreement, together with copies of the financial statements
referred to in Section 7.1 and such other documents and information as
it has deemed appropriate to make its own credit analysis and decision
to enter into such Assignment and Acceptance, (iv) such assignee will,
independently and without reliance upon the Agent, such assigning
Lender or any other Lender and based on such documents and information
as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Credit
Agreement, (v) such assignee appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers under
this Credit Agreement as are delegated to the Agent by the terms
hereof, together with such powers as are reasonably incidental thereto
and (vi) such assignee agrees that it will perform in accordance with
their terms all of the obligations which by the terms of this Credit
Agreement are required to be performed by it as a Lender.
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(e) The Agent shall maintain at its address referred to in
Section 14.5 a copy of each Assignment and Acceptance delivered to and
accepted by it and a register for the recordation of the names and
addresses of the Lenders and the Revolving Commitments of, and
principal amount of the Revolving Loans owing to, each Lender from time
to time (the "Register"). The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error, and the
Borrowers, the Agent and the Lenders may treat each Person whose name
is recorded in the Register as a Lender hereunder for all purposes of
this Agreement. The Register and copies of each Assignment and
Acceptance shall be available for inspection by the Borrowers or any
Lender at any reasonable time and from time to time upon reasonable
prior notice.
(f) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender, together with the Revolving Note or Revolving
Notes subject to such assignment, the Agent shall, if such Assignment
and Acceptance has been completed and is in substantially the form of
Exhibit B hereto, (i) accept such Assignment and Acceptance, (ii)
record the information contained therein in the Register and (iii) give
prompt notice thereof to the Borrowers. Within five (5) Business Days
after its receipt of such notice, the Borrowers shall execute and
deliver to the Agent in exchange for the surrendered Revolving Note or
Revolving Notes (which the assigning Lender agrees to promptly deliver
to the Company) a new Revolving Note or Revolving Notes to the order of
the assignee in an amount equal to the Revolving Commitment or
Revolving Commitments assumed by it pursuant to such Assignment and
Acceptance and, if the assigning Lender has retained a Revolving
Commitment or Revolving Commitments hereunder, a new Revolving Note or
Revolving Notes to the order of the assigning Lender in an amount equal
to the Revolving Commitment or Revolving Commitments retained by it
hereunder. Such new Revolving Note or Revolving Notes shall re-evidence
the indebtedness outstanding under the old Revolving Notes or Revolving
Notes and shall be in an aggregate principal amount equal to the
aggregate principal amount of such surrendered Revolving Note or
Revolving Notes, shall be dated the Closing Date and shall otherwise be
in substantially the form of the Revolving Note or Revolving Notes
subject to such assignments.
(g) Each Lender may sell participations (without the consent
of the Agent, the Borrowers or any other Lender) to one or more parties
in or to all or a portion of its rights and obligations under this
Credit Agreement (including, without limitation, all or a portion of
its Revolving Commitments, the Revolving Loans owing to it and the
Revolving Note or Revolving Notes held by it); provided that (i) such
Lender's obligations under this Credit Agreement (including, without
limitation, its Revolving Commitments to the Borrowers hereunder) shall
remain unchanged, (ii) such Lender shall remain solely responsible to
the other parties hereto for the performance of such obligations, (iii)
such Lender shall remain the holder of any such Revolving Note for all
purposes of this Credit Agreement, (iv) the Borrowers, the Agent, and
the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under
this Credit Agreement and (v) such Lender shall not transfer, grant,
assign or sell any participation under which the participant shall have
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rights to approve any amendment or waiver of this Credit Agreement
except to the extent such amendment or waiver would (A) extend the
final maturity date or the date for the payments of any installment of
fees or principal or interest of any Revolving Loans or Letter of
Credit reimbursement obligations in which such participant is
participating, (B) reduce the amount of any installment of principal of
the Revolving Loans or Letter of Credit reimbursement obligations in
which such participant is participating, (C) except as otherwise
expressly provided in this Credit Agreement, reduce the interest rate
applicable to the Revolving Loans or Letter of Credit reimbursement
obligations in which such participant is participating, or (D) except
as otherwise expressly provided in this Credit Agreement, reduce any
Fees payable hereunder.
(h) Each Lender agrees that, without the prior written consent
of the Borrowers and the Agent, it will not make any assignment or sell
a participation hereunder in any manner or under any circumstances that
would require registration or qualification of, or filings in respect
of, any Revolving Loan, Revolving Note or other Obligation under the
securities laws of the United States of America or of any jurisdiction.
(i) In connection with the efforts of any Lender to assign its
rights or obligations or to participate interests, such Lender may
disclose any information in its possession regarding the Borrowers.
14.7 INFORMATION.
The Agent and each Lender (each, a "Lending Party") agrees to keep
confidential any information furnished or made available to it by the Borrowers
pursuant to this Credit Agreement that is marked confidential; provided that
nothing herein shall prevent any Lending Party from disclosing such information
(a) to any other Lending Party or any affiliate of any Lending Party, or any
officer, director, employee, agent, or advisor of any Lending Party or affiliate
of any Lending Party, (b) to any other Person if reasonably incidental to the
administration of the credit facility provided herein, (c) as required by any
law, rule, or regulation, (d) upon the order of any court or administrative
agency, (e) upon the request or demand of any regulatory agency or authority;
provided, however, that, to the extent permitted by law, the affected Lending
Party shall provide prior written notice to the affected Borrower of any such
request or demand, (f) that is or becomes available to the public or that is or
becomes available to any Lending Party other than as a result of a disclosure by
any Lending Party prohibited by this Credit Agreement, (g) in connection with
any litigation to which such Lending Party or any of its affiliates may be a
party, (h) to the extent necessary in connection with the exercise of any remedy
under this Credit Agreement or any other Credit Document, (i) subject to
provisions substantially similar to those contained in this Section 14.7, to any
actual or proposed participant or assignee and (j) to Gold Sheets and other
similar bank trade publications; such information to consist of deal terms and
other information customarily found in such publications.
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14.8 PAYMENT OF EXPENSES; INDEMNIFICATION.
The Borrowers agree to: (a) pay all reasonable out-of-pocket costs and
expenses of (i) the Agent in connection with (A) the negotiation, preparation,
execution and delivery and administration of this Credit Agreement and the other
Credit Documents and the documents and instruments referred to therein
(including, without limitation, the reasonable fees and expenses of special
counsel to the Agent and the fees and expenses of counsel for the Agent in
connection with collateral issues), and (B) any amendment, waiver or consent
relating hereto and thereto and (ii) the Agent and the Lenders after the
occurrence and during the continuation of an Event of Default or in connection
with enforcement of the Credit Documents and the documents and instruments
referred to therein, including but not limited to, any work-out, re-negotiation
or restructure relating to the performance by the Borrowers under this Credit
Agreement and any amendment, waiver or consent relating thereto and, including,
without limitation, in connection with any such enforcement, the reasonable fees
and disbursements of counsel for the Agent and each of the Lenders (including
the allocated costs of internal counsel). The Borrowers shall and hereby agree
to indemnify, defend and hold harmless the Agent, the Issuing Bank and each of
the Lenders and their respective directors, officers, agents, employees and
counsel from and against (x) any and all losses, claims, damages, liabilities,
deficiencies, judgments or expenses incurred by any of them (except to the
extent that it is finally judicially determined to have resulted from their own
gross negligence or willful misconduct) arising out of or by reason of any
litigation, investigation, claim or proceeding which arises out of or is in any
way related to (i) this Credit Agreement, any Letter of Credit or the
transactions contemplated thereby, (ii) any actual or proposed use by any
Borrower of the proceeds of the Loans or (iii) the Agent's, the Issuing Bank's
or the Lenders' entering into this Credit Agreement, the other Credit Documents
or any other agreements and documents relating hereto, including, without
limitation, amounts paid in settlement, court costs and the fees and
disbursements of counsel incurred in connection with any such litigation,
investigation, claim or proceeding or any advice rendered in connection with any
of the foregoing and (y) any such losses, claims, damages, liabilities,
deficiencies, judgments or expenses incurred in connection with any remedial or
other action taken by any Borrower or any of the Lenders in connection with
compliance by any Borrower or any of its Subsidiaries, or any of their
respective properties, with any federal, state or local environmental laws,
acts, rules, regulations, orders, directions, ordinances, criteria or
guidelines. If and to the extent that the obligations of any Borrower hereunder
are unenforceable for any reason, such Borrower hereby agrees to make the
maximum contribution to the payment and satisfaction of such obligations which
is permissible under applicable law. The Borrowers' obligations under this
Section 14.8 shall survive any termination of this Credit Agreement and the
other Credit Documents and the payment in full of the Obligations, and are in
addition to, and not in substitution of, any other of their obligations set
forth in this Credit Agreement. In addition, the Borrowers shall, upon demand,
pay to the Agent and any Lender all costs and expenses (including the reasonable
fees and disbursements of counsel and other professionals) paid or incurred by
the Agent, the Issuing Bank or such Lender in (1) enforcing or defending its
rights under or in respect of this Credit Agreement, the other Credit Documents
or any other document or instrument now or hereafter executed and delivered in
connection herewith, (2) in collecting the Loans, (3) in foreclosing or
otherwise collecting upon the Collateral or any part thereof and (4) obtaining
any legal, accounting or other advice in connection with any of the foregoing.
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14.9 ENTIRE AGREEMENT, SUCCESSORS AND ASSIGNS.
This Credit Agreement along with the other Credit Documents and the Fee
Letter constitutes the entire agreement among the Borrowers, the Agent and the
Lenders, supersedes any prior agreements among them, and shall bind and benefit
the Borrowers and the Lenders and their respective successors and permitted
assigns.
14.10 AMENDMENTS, ETC.
No amendment or waiver of any provision of this Credit Agreement or any
other Credit Document, nor consent to any departure by any Borrower therefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Required Lenders, or if the Lenders shall not be parties thereto, by the
parties thereto and consented to by the Required Lenders, and each such
amendment, waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given; provided that no amendment, waiver
or consent shall unless in writing and signed by all the Lenders, do any of the
following: (a) increase the Revolving Credit Committed Amount, the Revolving
Commitments of the Lenders or subject the Lenders to any additional obligations,
(b) except as otherwise expressly provided in this Credit Agreement, reduce the
principal of, or interest on, any Revolving Note or any Letter of Credit
reimbursement obligations or any fees hereunder, (c) postpone any date fixed for
any payment in respect of principal of, or interest on, any Revolving Note or
any Letter of Credit reimbursement obligations or any fees hereunder, (d) change
the percentage of the Revolving Commitments, or any minimum requirement
necessary for the Lenders or the Required Lenders to take any action hereunder,
(e) amend or waive this Section 14.10, or change the definition of Required
Lenders or the definition of Borrowing Base or (f) except as otherwise expressly
provided in this Credit Agreement, and other than in connection with the
financing, refinancing, sale or other disposition of any asset of the Borrowers
permitted under this Credit Agreement, release any Liens in favor of the Lenders
on any material portion of the Collateral and, provided, further, that no
amendment, waiver or consent affecting the rights or duties of the Agent or the
Issuing Bank under any Credit Document shall in any event be effective, unless
in writing and signed by the Agent and/or the Issuing Bank, as applicable, in
addition to the Lenders required hereinabove to take such action.
Notwithstanding any of the foregoing to the contrary, the consent of the
Borrowers shall not be required for any amendment, modification or waiver of the
provisions of Article XIII (other than the provisions of Section 13.9). In
addition, the Borrowers and the Lenders hereby authorize the Agent to modify
this Credit Agreement by unilaterally amending or supplementing Schedule 1.1A
from time to time in the manner requested by the Borrowers, the Agent or any
Lender in order to reflect any assignments or transfers of the Loans as provided
for hereunder; provided, however, that the Agent shall promptly deliver a copy
of any such modification to the Borrowers and each Lender.
14.11 NONLIABILITY OF AGENT AND LENDERS.
The relationship between any Borrower on the one hand and the Lenders
and the Agent on the other hand shall be solely that of borrower and lender.
Neither the Agent nor any Lender
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shall have any fiduciary responsibilities to any Borrower. Neither the Agent nor
any Lender undertakes any responsibility to any Borrower to review or inform
such Borrower of any matter in connection with any phase of such Borrower's
business or operations.
14.12 INDEPENDENT NATURE OF LENDERS' RIGHTS.
The amounts payable at any time hereunder to each Lender under such
Lender's Revolving Note or Revolving Notes shall be a separate and independent
debt.
14.13 COUNTERPARTS.
This Credit Agreement may be executed in any number of counterparts and
by the different parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument.
14.14 EFFECTIVENESS.
This Credit Agreement shall become effective on the date on which all
of the parties have signed a copy hereof (whether the same or different copies)
and shall have delivered the same to the Agent pursuant to Section 14.5 or, in
the case of the Lenders, shall have given to the Agent written, telecopied or
telex notice (actually received) at such office that the same has been signed
and mailed to it.
14.15 SEVERABILITY.
In case any provision in or obligation under this Credit Agreement or
the Revolving Notes or the other Credit Documents shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining provisions or obligations, or of such provision or obligation in
any other jurisdiction, shall not in any way be affected or impaired thereby.
14.16 HEADINGS DESCRIPTIVE.
The headings of the several sections and subsections of this Credit
Agreement, and the Table of Contents, are inserted for convenience only and
shall not in any way affect the meaning or construction of any provision of this
Credit Agreement.
14.17 MAXIMUM RATE.
Notwithstanding anything to the contrary contained elsewhere in this
Credit Agreement or in any other Credit Document, the Borrowers, the Agent and
the Lenders hereby agree that all agreements among them under this Credit
Agreement and the other Credit Documents, whether now existing or hereafter
arising and whether written or oral, are expressly limited so that in no
contingency or event whatsoever shall the amount paid, or agreed to be paid, to
the Agent or any Lender for the use, forbearance, or detention of the money
loaned to any Borrower and evidenced
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hereby or thereby or for the performance or payment of any covenant or
obligation contained herein or therein, exceed the Highest Lawful Rate. If due
to any circumstance whatsoever, fulfillment of any provisions of this Credit
Agreement or any of the other Credit Documents at the time performance of such
provision shall be due shall exceed the Highest Lawful Rate, then,
automatically, the obligation to be fulfilled shall be modified or reduced to
the extent necessary to limit such interest to the Highest Lawful Rate, and if
from any such circumstance any Lender should ever receive anything of value
deemed interest by applicable law which would exceed the Highest Lawful Rate,
such excessive interest shall be applied to the reduction of the principal
amount then outstanding hereunder or on account of any other then outstanding
Obligations and not to the payment of interest, or if such excessive interest
exceeds the principal unpaid balance then outstanding hereunder and such other
then outstanding Obligations, such excess shall be refunded to the applicable
Borrower. All sums paid or agreed to be paid to the Agent or any Lender for the
use, forbearance, or detention of the Obligations and other indebtedness of the
Borrowers to the Agent or any Lender shall, to the extent permitted by
applicable law, be amortized, prorated, allocated and spread throughout the full
term of such indebtedness until payment in full so that the actual rate of
interest on account of all such indebtedness does not exceed the Highest Lawful
Rate throughout the entire term of such indebtedness. The terms and provisions
of this Section shall control every other provision of this Credit Agreement and
all agreements among the Borrowers, the Agent and the Lenders.
14.18 RIGHT OF SETOFF.
In addition to and not in limitation of all rights of offset that any
Lender or other holder of a Note may have under applicable law, each Lender or
other holder of a Note shall, if any Event of Default has occurred and is
continuing and whether or not such Lender or such holder has made any demand or
the Obligations of any Borrower are matured, have the right to appropriate and
apply to the payment of the Obligations of such Borrower all deposits (general
or special, time or demand, provisional or final) then or thereafter held by and
other indebtedness or property then or thereafter owing by such Lender or other
holder, including, without limitation, any and all amounts in any Cash
Collateral Account. Any amount received as a result of the exercise of such
rights shall be reallocated among the Lenders as set forth in Section 3.8.
14.19 CONCERNING JOINT AND SEVERAL LIABILITY OF THE BORROWERS.
(a) Each of the Borrowers is accepting joint and several
liability hereunder in consideration of the financial accommodation to
be provided by the Lenders under this Credit Agreement, for the mutual
benefit, directly and indirectly, of each of the Borrowers and in
consideration of the undertakings of each of the Borrowers to accept
joint and several liability for the obligations of each of them.
(b) Each of the Borrowers jointly and severally hereby
irrevocably and unconditionally accepts, not merely as a surety but
also as a co-debtor, joint and several liability with the other
Borrowers with respect to the payment and performance of all of the
Obligations, it being the intention of the parties hereto that all the
Obligations shall be the joint and several obligations of each of the
Borrowers without preferences or distinction among them.
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(c) If and to the extent that any of the Borrowers shall fail
to make any payment with respect to any of the Obligations as and when
due or to perform any of the Obligations in accordance with the terms
thereof, then in each such event, the other Borrowers will make such
payment with respect to, or perform, such Obligation.
(d) The obligations of each Borrower under the provisions of
this Section 14.19 constitute full recourse obligations of such
Borrower, enforceable against it to the full extent of its properties
and assets, irrespective of the validity, regularity or enforceability
of this Credit Agreement or any other circumstances whatsoever.
(e) Except as otherwise expressly provided herein, each
Borrower hereby waives notice of acceptance of its joint and several
liability, notice of any Loan made under this Credit Agreement, notice
of occurrence of any Event of Default, or of any demand for any payment
under this Credit Agreement, notice of any action at any time taken or
omitted by any Lender under or in respect of any of the Obligations,
any requirement of diligence and, generally, all demands, notices and
other formalities of every kind in connection with this Credit
Agreement. Each Borrower hereby assents to, and waives notice of, any
extension or postponement of the time for the payment of any of the
Obligations, the acceptance of any partial payment thereon, any waiver,
consent or other action or acquiescence by any Lender at any time or
times in respect of any default by any Borrower in the performance or
satisfaction of any term, covenant, condition or provision of this
Credit Agreement, any and all other indulgences whatsoever by any
Lender in respect of any of the Obligations, and the taking, addition,
substitution or release, in whole or in part, at any time or times, of
any security for any of the Obligations or in part, at any time or
times, of any security for any of the Obligations or the addition,
substitution or release, in whole or in part, of any Borrower. Without
limiting the generality of the foregoing, each Borrower assents to any
other action or delay in acting or failure to act on the part of any
Lender, including, without limitation, any failure strictly or
diligently to assert any right or to pursue any remedy or to comply
fully with the applicable laws or regulations thereunder which might,
but for the provisions of this Section 14.19, afford grounds for
terminating, discharging or relieving such Borrower, in whole or in
part, from any of its obligations under this Section 14.19, it being
the intention of each Borrower that, so long as any of the Obligations
remain unsatisfied, the obligations of such Borrower under this Section
14.19 shall not be discharged except by performance and then only to
the extent of such performance. The Obligations of each Borrower under
this Section 14.19 shall not be diminished or rendered unenforceable by
any winding up, reorganization, arrangement, liquidation,
reconstruction or similar proceeding with respect to any Borrower or
any Lender. The joint and several liability of the Borrowers hereunder
shall continue in full force and effect notwithstanding any absorption,
merger, amalgamation or any other change whatsoever in the name,
membership, constitution or place of formation of any Borrower or any
Lender.
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(f) The provisions of this Section 14.19 are made for the
benefit of the Lenders and their respective successors and assigns, and
may be enforced by any such Person from time to time against any of the
Borrowers as often as occasion therefor may arise and without
requirement on the part of any Lender first to marshal any of its
claims or to exercise any of its rights against any of the other
Borrowers or to exhaust any remedies available to it against any of the
other Borrowers or to resort to any other source or means of obtaining
payment of any of the Obligations or to elect any other remedy. The
provisions of this Section 14.19 shall remain in effect until all the
Obligations shall have been paid in full or otherwise fully satisfied.
If at any time, any payment, or any part thereof, made in respect of
any of the Obligations, is rescinded or must otherwise be restored or
returned by any Lender upon the insolvency, bankruptcy or
reorganization of any of the Borrowers, or otherwise, the provisions of
this Section 14.19 will forthwith be reinstated in effect, as though
such payment had not been made.
(g) Notwithstanding any provision to the contrary contained
herein or in any other of the Credit Documents, to the extent the joint
obligations of a Borrower shall be adjudicated to be invalid or
unenforceable for any reason (including, without limitation, because of
any applicable state or federal law relating to fraudulent conveyances
or transfers) then the obligations of each Borrower hereunder shall be
limited to the maximum amount that is permissible under applicable law
(whether federal or state and including, without limitation, the
federal Bankruptcy Code).
(h) The Borrowers hereby agree, as among themselves, that if
any Borrower shall become an Excess Funding Borrower (as defined
below), each other Borrower shall, on demand of such Excess Funding
Borrower (but subject to the next sentence hereof and to subsection (B)
below), pay to such Excess Funding Borrower an amount equal to such
Borrower's Pro Rata Share (as defined below and determined, for this
purpose, without reference to the properties, assets, liabilities and
debts of such Excess Funding Borrower) of such Excess Payment (as
defined below). The payment obligation of any Borrower to any Excess
Funding Borrower under this Section 14.19(h) shall be subordinate and
subject in right of payment to the prior payment in full of the
Obligations of such Borrower under the other provisions of this Credit
Agreement, and such Excess Funding Borrower shall not exercise any
right or remedy with respect to such excess until payment and
satisfaction in full of all of such Obligations. For purposes hereof,
(i) "Excess Funding Borrower" shall mean, in respect of any Obligations
arising under the other provisions of this Credit Agreement (hereafter,
the "Joint Obligations"), a Borrower that has paid an amount in excess
of its Pro Rata Share of the Joint Obligations; (ii) "Excess Payment"
shall mean, in respect of any Joint Obligations, the amount paid by an
Excess Funding Borrower in excess of its Pro Rata Share of such Joint
Obligations; and (iii) "Pro Rata Share", for the purposes of this
Section 14.19(h), shall mean, for any Borrower, the ratio (expressed as
a percentage) of (A) the amount by which the aggregate present fair
salable value of all of its assets and properties exceeds the amount of
all debts and liabilities of such Borrower (including contingent,
subordinated, unmatured, and unliquidated liabilities, but excluding
the obligations of such Borrower hereunder) to (B)
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the amount by which the aggregate present fair salable value of all
assets and other properties of such Borrower and all of the other
Borrowers exceeds the amount of all of the debts and liabilities
(including contingent, subordinated, unmatured, and unliquidated
liabilities, but excluding the obligations of such Borrower and the
other Borrowers hereunder) of such Borrower and all of the other
Borrowers, all as of the Closing Date (if any Borrower becomes a party
hereto subsequent to the Closing Date, then for the purposes of this
Section 14.19(h) such subsequent Borrower shall be deemed to have been
a Borrower as of the Closing Date and the information pertaining to,
and only pertaining to, such Borrower as of the date such Borrower
became a Borrower shall be deemed true as of the Closing Date).
14.20 POWER OF ATTORNEY.
Each of the Subsidiary Borrowers appoints each of David R. Clark and
James E. Harris, each senior officers of the Company, to be its attorneys ("its
Attorneys") and in its name and on its behalf and as its act and deed or
otherwise to sign all documents and carry out all such acts as are necessary or
appropriate in connection with executing any Notice of Borrowing, Notice of
Extension/Conversion or any Borrowing Base Certificate or any security documents
(the "Documents") in connection with this Credit Agreement, provided that such
Documents are in substantially the form provided therefor in the applicable
exhibits thereto. This Power of Attorney shall be valid for the duration of the
term of this Credit Agreement. Each Subsidiary Borrower hereby undertakes to
ratify everything which any of its Attorneys shall do in order to execute the
Documents mentioned herein.
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IN WITNESS WHEREOF the parties hereto have caused this Credit Agreement
to be executed and delivered by their proper and duly authorized officers as of
the date set forth above.
COMPANY: FRESH FOODS, INC.
By: /s/ David R. Clark
---------------------------------
Name: David R. Clark
Title: President
SUBSIDIARY BORROWERS: BRUNSWICK ASSOCIATES, INC.
By: /s/ David R. Clark
---------------------------------
Name: David R. Clark
Title: President
CLAREMONT RESTAURANT GROUP, LLC
BY: FRESH FOODS, INC.,
its Sole Member
By: /s/ David R. Clark
---------------------------------
Name: David R. Clark
Title: President
ELLOREE FOODS, INC.
By: /s/ David R. Clark
---------------------------------
Name: David R. Clark
Title: President
<PAGE> 112
FRESH FOODS PROPERTIES, LLC
BY: FRESH FOODS, INC.,
its Sole Member
By: /s/ David R. Clark
---------------------------------
Name: David R. Clark
Title: President
GEORGIA BUFFET RESTAURANTS, INC.
By: /s/ David R. Clark
---------------------------------
Name: David R. Clark
Title: President
KNOXVILLE FOODS, INC.
By: /s/ David R. Clark
---------------------------------
Name: David R. Clark
Title: Vice President
MOM `n' POP'S COUNTRY HAM, LLC
BY: PIERRE FOODS, INC.,
its Sole Member
BY: FRESH FOODS, INC.,
its Sole Member
By: /s/ David R. Clark
---------------------------------
Name: David R. Clark
Title: President
<PAGE> 113
OAK RIDGE FOODS, INC.
By: /s/ David R. Clark
---------------------------------
Name: David R. Clark
Title: Vice President
SAGEBRUSH, INC.
By: /s/ David R. Clark
---------------------------------
Name: David R. Clark
Title: Vice President
SAGEBRUSH OF SEVIERVILLE, INC.
By: /s/ David R. Clark
---------------------------------
Name: David R. Clark
Title: Vice President
SAGEBRUSH DTN, INC.
By: /s/ David R. Clark
---------------------------------
Name: David R. Clark
Title: Vice President
SAGEBRUSH OF TENNESSEE, L.P.
BY: SAGEBRUSH OF SOUTH CAROLINA,
LLC, General Partner
BY: SAGEBRUSH, INC.
its Sole Member
By: /s/ David R. Clark
---------------------------------
Name: David R. Clark
Title: Vice President
<PAGE> 114
SEVEN STARS, INC.
By: /s/ David R. Clark
---------------------------------
Name: David R. Clark
Title: President
ST. AUGUSTINE FOODS, INC.
By: /s/ David R. Clark
---------------------------------
Name: David R. Clark
Title: President
TENNESSEE WSMP, INC.
By: /s/ David R. Clark
---------------------------------
Name: David R. Clark
Title: President
VIRGINIA WSMP, INC.
By: /s/ David R. Clark
---------------------------------
Name: David R. Clark
Title: President
CHARDENT, INC.
By: /s/ David R. Clark
---------------------------------
Name: David R. Clark
Title: President
<PAGE> 115
D & S FOODS, LLC
BY: GEORGIA WSMP, INC.,
its Sole Member
By: /s/ David R. Clark
---------------------------------
Name: David R. Clark
Title: President
GEORGIA WSMP, INC.
By: /s/ David R. Clark
---------------------------------
Name: David R. Clark
Title: President
KINGSPORT FOODS, INC.
By: /s/ David R. Clark
---------------------------------
Name: David R. Clark
Title: Vice President
MATTHEWS PRIME SIRLOIN, INC.
By: /s/ David R. Clark
---------------------------------
Name: David R. Clark
Title: President
NAPLES FOODS, INC.
By: /s/ David R. Clark
---------------------------------
Name: David R. Clark
Title: President
<PAGE> 116
PRIME SIRLOIN, INC.
By: /s/ David R. Clark
---------------------------------
Name: David R. Clark
Title: President
SAGEBRUSH OF NORTH CAROLINA, LLC
BY: SAGEBRUSH, INC.
its Sole Member
By: /s/ David R. Clark
---------------------------------
Name: David R. Clark
Title: Vice President
SAGEBRUSH OF SOUTH CAROLINA, LLC
BY: SAGEBRUSH, INC.
its Sole Member
By: /s/ David R. Clark
---------------------------------
Name: David R. Clark
Title: Vice President
SPICEWOOD, INC.
By: /s/ David R. Clark
---------------------------------
Name: David R. Clark
Title: President
SOUTH CAROLINA WSMP, INC.
By: /s/ David R. Clark
---------------------------------
Name: David R. Clark
Title: President
<PAGE> 117
SUNSHINE WSMP, INC.
By: /s/ David R. Clark
---------------------------------
Name: David R. Clark
Title: President
TUMBLEWEED OF PIGEON FORGE, INC.
By: /s/ David R. Clark
---------------------------------
Name: David R. Clark
Title: Vice President
GREENVILLE FOODS SYSTEMS, INC.
By: /s/ David R. Clark
---------------------------------
Name: David R. Clark
Title: President
FRESH FOODS SALES, LLC
BY: FRESH FOODS, INC.,
its Sole Member
By: /s/ David R. Clark
---------------------------------
Name: David R. Clark
Title: President
PIERRE FOODS, LLC
BY: FRESH FOODS, INC.,
its Sole Member
By: /s/ David R. Clark
---------------------------------
Name: David R. Clark
Title: President
<PAGE> 118
AGENT AND LENDERS: FIRST UNION COMMERCIAL CORPORATION,
as Agent and a Lender
By: /s/ Todd A. Witmer
--------------------------------
Name: Todd A. Witmer
Title: Director
Lending Office (Base Rate Loans)
Address: Charlotte Plaza Building
201 S. College Street, CP-17
Charlotte, NC 28288
Attention: Scott Eberhardt
Telephone: (704) 383-1409
Facsimile: (704) 374-6352
Lending Office (Eurodollar Loans)
Address: Charlotte Plaza Building
201 S. College Street, CP-17
Charlotte, NC 28288
Attention: Scott Eberhardt
Telephone: (704) 383-1409
Facsimile: (704) 374-6352
Notice Address
Address: One First Union Center,
5th Floor
301 S. College Street, DC-5
Charlotte, NC 28288-0737
Attention: Terri K. Lins,
Vice President
Telephone: (704) 383-1251
Facsimile: (704) 374-2703
<PAGE> 119
NATIONSBANK, N.A.,
as a Lender
By: /s/ Scott R. McGeein
-------------------------------
Name: Scott R. McGeein
-----------------------------
Title: Vice President
----------------------------
Lending Office (Base Rate Loans)
Address: 600 Peachtree Street, N.E.
2nd Floor
Atlanta, Georgia 30308
Attention: Michele Buehnke
Telephone: (404) 607-5361
Facsimile: (404) 607-6431
Lending Office (Eurodollar Loans)
Address: 600 Peachtree Street, N.E.
2nd Floor
Atlanta, Georgia 30308
Attention: Michele Buehnke
Telephone: (404) 607-5361
Facsimile: (404) 607-6431
Notice Address
Address: 600 Peachtree Street, NE
13th Floor
Atlanta, Georgia 30308
Attention: Angela Leake
Vice President
Telephone: (404) 607-5372
Facsimile: (404) 607-6437
<PAGE> 120
NATIONAL CITY COMMERCIAL
FINANCE, INC.,
as a Lender
By: /s/ Joseph L. White
-------------------------------
Name: Joseph L. White
Title: Senior Vice President
Lending Office (Base Rate Loans)
Address: 1965 E. Sixth Street
Suite 400
Cleveland, Ohio 44114
Attention: Kate George, AVP
Telephone: (216) 575-2951
Facsimile: (216) 575-9555
Lending Office (Eurodollar Loans)
Address: 1965 E. Sixth Street
Suite 400
Cleveland, Ohio 44114
Attention: Kate George, AVP
Telephone: (216) 575-2951
Facsimile: (216) 575-9555
Notice Address
Address: 35 Technology Parkway South
Suite 170
Norcross, Georgia 30092
Attention: Joseph L. White, SVP
Telephone: (770) 613-5350
Facsimile: (770) 613-5349
<PAGE> 121
AMERICAN NATIONAL BANK AND
TRUST COMPANY OF CHICAGO,
as a Lender
By: /s/ Lee LaBine
-------------------------------
Name: Lee LaBine
-----------------------------
Title: AVP
----------------------------
Lending Office (Base Rate Loans)
Address: One North LaSalle Street
9th Floor
Chicago, Illinois 60690
Attention: Lee LaBine
Telephone: (312) 661-3599
Facsimile: (312) 661-6929
Lending Office (Eurodollar Loans)
Address: One North LaSalle Street
9th Floor
Chicago, Illinois 60690
Attention: Lee LaBine
Telephone: (312) 661-3599
Facsimile: (312) 661-6929
Notice Address
Address: One North LaSalle Street
9th Floor
Chicago, Illinois 60690
Attention: Dennis Harrison
Senior Vice President
Telephone: (312) 661-5728
Facsimile: (312) 661-5292
<PAGE> 122
EXHIBIT A
FORMS OF ACKNOWLEDGMENT AGREEMENT
[Alternative A]
THIS ACKNOWLEDGMENT AGREEMENT is made by _______________________, a
_______________ (together with its successors and assigns, the "Acknowledgor"),
for the benefit of FIRST UNION COMMERCIAL CORPORATION, as Agent (together with
all successors and assigns, the "Agent") for the Lenders (as defined in the
Credit Agreement described below).
WHEREAS, the Acknowledgor holds certain property of Fresh Foods, Inc.
(the "Borrower") at the location described in Exhibit A attached hereto (the
"Premises"); and
WHEREAS, the Lenders have provided a $________________ credit facility
(the "Credit Facility") in favor of the Borrower, as evidenced and secured by,
among other things, (i) a credit agreement, dated as of June 9, 1998 (together
with all modifications, renewals or replacements, the "Credit Agreement"),
executed by Borrower, certain other borrowing entities parties thereto, the
Lenders, and the Agent; and (ii) a security agreement, dated as of June 9, 1998
(together with all modifications, renewals or replacements, the "Security
Agreement"), on all inventory now or hereafter delivered to or located or
installed at the Premises (the "Inventory;" the Credit Agreement, the Security
Agreement, UCC financing statements relating to the Security Agreement (the
"Financing Statements") and all other documents relating to, evidencing or
securing the Credit Facility being referred to herein collectively as the
"Credit Documents"); and
WHEREAS, the Lenders have requested the Acknowledgor to furnish the
Lenders certain assurances and agreements regarding the Inventory, which
assurances and agreements the Acknowledgor is willing to give as set forth
herein;
NOW, THEREFORE, for and in consideration of the sum of One Dollar
($1.00) paid by each party to the other, receipt of which is hereby
acknowledged, and other good and valuable consideration, the Acknowledgor hereby
certifies to and agrees with the Agent and the Lenders as follows:
1. The Acknowledgor consents to the extensions of credit under the
Credit Facility, the execution of the Credit Documents, the collateral
assignment of any contracts between the Acknowledgor and the Borrower and the
recordation of the Financing Statements.
2. The Acknowledgor agrees that: (a) the Borrower is the owner of the
Inventory; (b) the Agent's lien upon or security interest in the Inventory is
prior and superior to any interest, lien or claim of any nature the Acknowledgor
may now have or hereafter obtain in the Inventory whether by operation of law,
contract or otherwise; and (c) either the Borrower or the Agent may remove the
Inventory from the Premises at any time without hindrance on the part of the
Acknowledgor. The Acknowledgor hereby waives any rights it may now or hereafter
have in the Inventory, including without limitation any lien rights available
under applicable law.
3. The Acknowledgor shall send to the Agent (in the manner provided
herein) a copy of any notice or statement sent to the Borrower by the
Acknowledgor with respect to the Inventory or amounts owed in connection
therewith. Such copy shall be sent to the Agent at the same time such notice or
statement is sent to the Borrower. Notices shall be sent to the Agent by
prepaid, registered or certified mail, addressed to the Agent at the following
address, or such other address as the Agent shall designate to the Acknowledgor
in writing:
-1-
<PAGE> 123
FIRST UNION COMMERCIAL CORPORATION
One First Union Center
301 South College Street, 5th Floor
Charlotte, NC 28288
Attention: [__________]
Telephone: (704) [_______]
Facsimile: (704) [_______]
The Acknowledgor shall not pursue any right or remedy against the
Borrower until the Acknowledgor shall have given thirty (30) days' prior written
notice to the Agent as provided above.
EXECUTED under seal this _____ day of _________________, 199_.
ACKNOWLEDGOR:
-------------------------------------
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
-2-
<PAGE> 124
[Alternative B]
[Date]
[Name and address of warehouse owner]
Re: [Name of Borrower]
Dear _________:
The undersigned, First Union Commercial Corporation, as Agent for
certain lenders ("First Union") has been informed by [Name of Borrower] (the
"Borrower") that the Borrower has delivered and will, from time to time
hereafter, deliver certain goods and other inventory (the "Goods") to you for
storage in your facility located at the address set forth above.
First Union is engaged in a financing of the Borrower, which financing
is secured by a security interest in certain personal property of the Borrower,
including the Goods.
By execution of this letter, you agree that First Union's security
interest in the Goods shall be senior to all liens, claims and interests you may
now have or hereafter obtain in the Goods whether by operation of law, contract
or otherwise, other than your lien for any accrued and unpaid storage fees
charged by you for the actual storage of the Goods. To protect First Union's
security interest in the Goods, all warehouse receipts and other documents of
title, if any, which evidence any Goods now or hereafter delivered by the
Borrower to you shall be non-negotiable and issued to or for the account of
First Union. You agree to provide First Union with a copy of such warehouse
receipts and other documents upon First Union's request therefor.
Notwithstanding the issuance of such receipts or other documents to or
for the account of First Union, First Union hereby authorizes you, subject to
the conditions described below, to release any of the Goods to any authorized
agent of the Borrower upon the Borrower's request. Your authority to release the
Goods to the Borrower or the Borrower's customers is subject to the following
conditions: (i) upon the written request of First Union, within one day after
your release of the Goods, you shall mail to First Union at One First Union
Center, 301 South College Street, DC-5, Charlotte, NC 28288-0737, Attention:
Terri Lins, Vice President, a copy of a receipt describing the agent to whom
such Goods were released and the quantity and description of the released Goods,
and (ii) upon the oral or written direction of First Union, you shall refuse to
release the Goods to the Borrower or the Borrower's customers and you shall only
release such Goods to First Union or the party designated by First Union in such
oral or written direction.
The Borrower agrees that you shall have no liability to the Borrower if
you comply with First Union's oral or written direction as described above. The
Borrower further agrees that it will continue to pay all storage fees and other
expenses related to the storage of the Goods and will reimburse you for all
reasonable costs or expenses incurred as a direct result of your compliance with
the terms and provisions of this letter.
-3-
<PAGE> 125
Please confirm your agreement with the terms of this letter by signing
the enclosed copy of this letter as indicated and returning it to First Union at
First Union at One First Union Center, 301 South College Street, DC-5,
Charlotte, NC 28288-0737, Attention: Terri Lins, Vice President,.
Very truly yours,
FIRST UNION COMMERCIAL CORPORATION
By:
----------------------------------
Title:
-------------------------------
ACKNOWLEDGED AND AGREED TO:
[NAME OF BORROWER]
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
Date:
--------------------------------
ACKNOWLEDGED AND AGREED TO:
[NAME OF WAREHOUSE OWNER]
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
Date:
--------------------------------
-4-
<PAGE> 126
EXHIBIT B
FORM OF ASSIGNMENT AND ACCEPTANCE
THIS ASSIGNMENT AND ACCEPTANCE dated as of ________, 199_ is entered
into between ________________ ("Assignor") and ____________________
("Assignee").
Reference is made to the Credit Agreement, dated as of June 9, 1998
(together with all modifications, renewals or replacements, the "Credit
Agreement"), among Fresh Foods, Inc., certain other borrowing entities party
thereto, the financial institutions party thereto, and First Union Commercial
Corporation, as Agent. Terms defined in the Credit Agreement are used herein
with the same meanings.
1. The Assignor hereby sells and assigns, without recourse, to the
Assignee, and the Assignee hereby purchases and assumes, without recourse, from
the Assignor, effective as of the Effective Date set forth below, the interests
set forth below (the "Assigned Interest") in the Assignor's rights and
obligations under the Credit Agreement, including, without limitation, the
interests set forth below in the Revolving Credit Commitments of the Assignor on
the effective date of the assignment designated below (the "Effective Date") and
the Revolving Loans and other extensions of credit owing to the Assignor which
are outstanding on the Effective Date, together with unpaid interest accrued on
the assigned Revolving Loans and other extensions of credit to the Effective
Date and the amount, if any, set forth below of the Fees accrued to the
Effective Date for the account of the Assignor. Each of the Assignor and the
Assignee hereby makes and agrees to be bound by all the representations,
warranties and agreements set forth in Section 14.6(d) of the Credit Agreement,
a copy of which has been received by each such party. From and after the
Effective Date (i) the Assignee, if it is not already a Lender under the Credit
Agreement, shall be a party to and be bound by the provisions of the Credit
Agreement and, to the extent of the interests assigned by this Assignment and
Acceptance, have the rights and obligations of a Lender thereunder and (ii) the
Assignor shall, to the extent of the interests assigned by this Assignment and
Acceptance, relinquish its rights (other than any rights it may have pursuant to
Section 14.8 of the Credit Agreement which will survive) and be released from
its obligations under the Credit Agreement (and, in the case of an assignment of
all or the remaining portion of the Assignor's rights and obligations under the
Credit Agreement, the Assignor shall cease to be a party to the Credit
Agreement).
2. The Assignor represents and warrants to the Assignee that (i) it is
the legal and beneficial owner of the interest being assigned hereby free and
clear of any adverse claim and (ii) it is legally authorized to enter into this
Assignment and Acceptance.
3. This Assignment and Acceptance shall be governed by and construed in
accordance with the laws of the State of North Carolina.
4. Terms of Assignment
(a) Date of Assignment:
(b) Legal Name of Assignor:
(c) Legal Name of Assignee:
(d) Effective Date of Assignment:
(e) Revolving Credit Commitment
of Assignee after Assignment $
------
<PAGE> 127
(f) Revolving Credit Commitment Percentage
of Assignee after Assignment %
------
(g) Revolving Loans of Assignee after Assignment $
------
(h) Revolving Credit Commitment
of Assignor after Assignment $
------
(i) Revolving Credit Commitment Percentage
of Assignor after Assignment %
------
(j) Revolving Loans of Assignor after Assignment $
------
The terms set forth above
are hereby agreed to:
, as Assignor
- ---------------------------
By:
----------------------------------
Title:
-------------------------------
, as Assignor
- ---------------------------
By:
----------------------------------
Title:
-------------------------------
CONSENTED TO:
FIRST UNION COMMERCIAL CORPORATION,
as Agent
By:
----------------------------------
Title:
-------------------------------
-2-
<PAGE> 128
EXHIBIT C
FORM OF SOLVENCY CERTIFICATE
The undersigned treasurer of [name of Borrower] ("______"), a
_________________, is familiar with the properties, businesses, assets and
liabilities of [name of Borrower] and is duly authorized to execute this
certificate on behalf of [name of Borrower].
Reference is made to that Credit Agreement dated as of June 9, 1998
among Fresh Foods, Inc. and [certain Subsidiary Borrowers] (the "Borrowers"),
First Union Commercial Corporation, as Agent (the "Agent"), and the lenders from
time to time parties thereto (the "Lenders") (as the same may be amended,
modified, extended or restated from time to time, the "Credit Agreement"). All
capitalized terms used and not defined herein have the meanings stated in the
Credit Agreement.
1. The undersigned certifies that he has made such investigation and
inquiries as to the financial condition of [name of Borrower] as he deems
necessary and prudent for the purpose of providing this Certificate. The
undersigned acknowledges that the Agent and the Lenders are relying on the truth
and accuracy of this Certificate in connection with making of the Revolving
Loans under the Credit Agreement.
2. The undersigned certifies that the financial information,
projections and assumptions which underlie and form the basis for the
representations made in this Certificate were reasonable when made and were made
in good faith and continue to be reasonable as of the date hereof.
BASED ON THE FOREGOING, the undersigned certifies that, both before and
after giving effect to the Revolving Loans:
A. [Name of Borrower] and its Subsidiaries, on a consolidated basis,
are able to pay their debts and other liabilities, contingent
obligations and other commitments as they mature in the normal course
of business.
B. [Name of Borrower] and its Subsidiaries, on a consolidated basis, do
not intend to, and do not believe that they will, incur debts or
liabilities beyond their ability to pay as such debts and liabilities
mature in their ordinary course.
C. [Name of Borrower] and its Subsidiaries, on a consolidated basis,
are not engaged in any business or transaction, and are not about to
engage in any business or transaction, for which the assets of [name of
Borrower] and its Subsidiaries, on a consolidated basis, would
constitute unreasonably small capital after giving due consideration to
the prevailing practice in the industry in which [name of Borrower] and
its Subsidiaries are engaged or are to engage.
D. The present fair saleable value of the consolidated assets of [name
of Borrower] and its Subsidiaries, taken on a going concern basis, is
not less than the amount that will be required to pay the probable
liability on the debts of [name of Borrower] and its Subsidiaries, on a
consolidated basis, as they become absolute and matured.
<PAGE> 129
IN WITNESS WHEREOF, the undersigned has executed this Certificate this
_____ day of June, 1998, in his capacity as the treasurer of [name of Borrower].
-------------------------------------
Name: [name of Treasurer]
Title: Treasurer of [name of Borrower]
-2-
<PAGE> 130
STATE OF ______________ )
)
COUNTY OF _____________ )
VERIFICATION
The undersigned, being first duly sworn, deposes and says that he is
the treasurer of [name of Borrower], a ________________, that he has read the
foregoing and to his personal knowledge the matters and statements contained
therein are true and accurate.
This the ____ day of June, 1998.
----------------------------
Sworn to and subscribed before
me this ___ day of June, 1998.
- ----------------------------------
Notary Public
My Commission Expires:
- ----------------------------------
-3-
<PAGE> 131
EXHIBIT D
FORM OF LANDLORD LIEN WAIVER AGREEMENT
Drawn by and return to:
Moore & Van Allen, PLLC (_____)
100 North Tryon St., 47th Floor
Charlotte, N. C. 28202-4003
THIS LANDLORD LIEN WAIVER AGREEMENT (the "Agreement") is entered as of
this <<DATE>> by and between ______________________, a _________________ (the
"Landlord"), the owner of certain real property, buildings and improvements
located in _______________, and First Union Commercial Corporation, in its
capacity as agent (the "Agent") for itself and the other lenders (the "Lenders")
providing revolving credit and letter of credit facilities to Fresh Foods, Inc.
and certain other borrowing entities (collectively, the "Borrowers") pursuant to
that certain Credit Agreement dated as of June 9, 1998 (as it may be amended
from time to time, the "Credit Agreement").
RECITALS:
1. The Lenders have agreed to provide the Borrowers with credit
facilities (the "Loans") up to an aggregate amount of $75,000,000 under the
terms and conditions of the Credit Agreement. The Borrowers have secured the
repayment of the Loans inter alia by granting the Agent, for the ratable benefit
of the Lenders, a first priority security interest in all of the Borrowers'
accounts receivable, general intangibles, patents, trademarks and inventory,
whether now owned or hereafter acquired, including without limitation, all raw
materials, work-in-process, finished goods, packaging materials and all other
materials and supplies of any nature related thereto, and all proceeds of any of
the foregoing (collectively, the "Collateral").
2. ____________________ has assumed lease obligations with respect to
the Premises (as hereinafter defined) for the purpose of storing and warehousing
the Collateral.
3. As a condition to extending the Loans, the Lenders and the Agent
have requested the Borrowers to obtain, and cause Landlord to provide,
Landlord's waiver and subordination all of its rights as a lessor against any of
the Collateral for so long as the Loans remain outstanding. Landlord has agreed
to execute this Agreement upon request by the Borrowers.
NOW, THEREFORE, in consideration of the foregoing, and the mutual
benefits accruing to the Agent and Landlord as a result of the credit facilities
provided by the Lenders, the sufficiency and receipt of such consideration being
hereby acknowledged, the parties hereto agree as follows:
1. For so long as any of the Loans remain outstanding, Landlord hereby
waives, releases, and quitclaims in favor of the Agent and each and every party
now or hereafter participating as a Lender under the Credit Agreement all rights
that Landlord, or its successors and assigns, may now or hereafter have to a
lien, claim, charge or encumbrance of any kind or nature, arising by statute,
contract, common law or otherwise, relating to the storage of the Collateral at
any premises owned or controlled by Landlord (the "Premises").
2. For so long as any of the Loans remain outstanding, Landlord hereby
agrees that the liens and security interests existing in favor of the Agent, for
the ratable benefit of each and every party now or hereafter participating as a
Lender under the Credit Agreement, shall be prior and superior to (i) any and
-1-
<PAGE> 132
all rights of distraint, levy, and execution which Landlord may now or hereafter
have against the Collateral, (ii) any and all liens and security interests which
Landlord may now or hereafter have on and in the Collateral, and (iii) any and
all other rights, demands and claims of every nature whatsoever which Landlord
may now or hereafter have on or against the Collateral for any rent, storage
charge, or similar expense, cost or sum due or to become due Landlord by any of
the Borrowers under the provisions of any lease, storage agreement or otherwise,
and Landlord hereby subordinates all of its foregoing rights and interests in
the Collateral to the security interest of the Agent in the Collateral.
3. Upon notice from the Agent that a default or event of default has
occurred under the Credit Agreement, Landlord agrees that the Agent or its
delegates or assigns may enter upon the Premises at any time or times, during
normal business hours, to inspect or remove the Collateral, or any part thereof,
from the Premises, without charge. The Agent shall repair or pay reasonable
compensation to Landlord for damage, if any, to the Premises caused by the
removal of Collateral.
4. Landlord represents and warrants: (a) that it has not assigned its
claims for payment, if any, nor its right to perfect or assert a lien of any
kind whatsoever against the Inventory; (b) that it has the right, power and
authority to execute this Agreement; (c) that it holds legal title to the
Premises. Landlord further agrees to provide the Agent with prompt written
notice in the event that Landlord sells the Premises, or any portion thereof
where any of the Borrowers stores any Collateral; and (d) that it is not aware
of any breach or default by _____________________ of its lease obligations with
respect to the Premises.
5. This Agreement shall continue in effect during the term of the
Credit Agreement, and any extensions, renewals or modifications thereof and any
substitutions therefor, shall be binding upon the successors, assigns and
transferees of Landlord, and shall inure to the benefit of the transferees of
Landlord, and shall inure to the benefit of the Agent, each Lender, and their
respective successors and assigns. Landlord hereby waives notice of the Agent's
acceptance of and reliance on this Agreement.
-2-
<PAGE> 133
IN WITNESS WHEREOF, Landlord and the Agent have each caused this
Agreement to be duly executed by their respective authorized representatives as
of the date first above written.
FIRST UNION COMMERCIAL CORPORATION,
as Agent for the Lenders
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
[LANDLORD] '
---------------------------
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
Acknowledged and Agreed:
, as Lessee
- --------------------------------
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
-3-
<PAGE> 134
EXHIBIT E
FORM OF PLEDGE AGREEMENT
<PAGE> 135
EXHIBIT F
FORM OF SECURITY AGREEMENT
<PAGE> 136
EXHIBIT G
FORM OF REVOLVING NOTE
$ [DATE]
----------------
FOR VALUE RECEIVED, the undersigned, FRESH FOODS, INC., a North Carolina
corporation (the "Company") and ________________________ (the "Subsidiary
Borrower") (hereinafter, the Company and the Subsidiary Borrower collectively
referred to as the "Borrowers" or individually referred to as a "Borrower"),
jointly and severally promise to pay to the order of [Payee Lender] (the
"Lender") at c/o First Union Commercial Corporation, as Agent for the Lender,
One First Union Center, 301 South College Street, 5th Floor, Charlotte, North
Carolina 28288 in lawful money of the United States of America and in
immediately available funds, the principal amount of _____________ Million
Dollars ($____________), or such lesser amount as may then constitute the unpaid
aggregate principal amount of all Revolving Loans made by the Lender to the
Borrowers pursuant to the Credit Agreement (as defined below), at the times set
forth in the Credit Agreement, but no later than the Maturity Date.
The Borrowers further agree to jointly and severally pay interest at said
office, in like money, on the unpaid principal amount owing hereunder from time
to time outstanding from the date of disbursement on the dates and at the rates
specified in Article 4 of the Credit Agreement.
This promissory note is one of the Revolving Notes referred to in the Credit
Agreement, dated as of June 9, 1998 (together with all modifications, renewals
or replacements, the "Credit Agreement"), among the Borrowers, the Lender,
certain other financial institutions parties thereto, and First Union Commercial
Corporation, as agent ("Agent"), and is subject to, and entitled to, all
provisions and benefits thereof and is subject to optional and mandatory
prepayment in whole or in part as provided therein. Capitalized terms used
herein without definition shall have the meanings given to such terms in the
Credit Agreement. The Credit Agreement, among other things, provides [after
giving effect to the Assignment and Acceptance executed by the Lender and [name
of assigning Lender] as of the date hereof]1 for the making of Revolving Loans
by the Lender to the Borrowers from time to time in an aggregate amount not to
exceed at any time outstanding the U.S. dollar amount first above mentioned.
Upon the occurrence of any one or more of the Events of Default specified in the
Credit Agreement which have not been cured by the Borrowers or waived by the
Agent at the direction of the Required Lenders, the Agent shall, upon the
written, telecopied or telex request of the Required Lenders, and by delivery of
written notice to the Borrowers from the Agent, take any or all of the following
actions, without prejudice to the rights of the Agent, the Lender or any holder
of this promissory note to enforce its claims against the Borrowers: (a) declare
all Obligations due hereunder to be immediately due and payable (except with
respect to any Event of Default set forth in Section 11.1(e) of the Credit
Agreement, in which case all Obligations due hereunder shall automatically
become immediately due and payable without the necessity of any notice or other
demand) without presentment, demand, protest or any other action or obligation
of the Lender; and (b) immediately terminate the Credit Agreement and the
Revolving Credit Commitments thereunder.
- -------
(1) To be used for replacement Revolving Notes.
<PAGE> 137
This promissory note is secured by security agreements and other collateral
documents dated as of June 9, 1998 [and re-evidences the indebtedness
outstanding on the date hereof with respect to the Revolving Loans which
indebtedness has been assigned to the Lender pursuant to Section 14.6 of the
Credit Agreement].2
The Borrowers hereby waive presentment, demand, protest and notice of any kind.
No failure to exercise, and no delay in exercising any rights hereunder on the
part of the holder hereof shall operate as a waiver of such rights.
THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS PROMISSORY NOTE
SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NORTH CAROLINA WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.
FRESH FOODS, INC.
By:
---------------------------------
Title:
------------------------------
[SUBSIDIARY BORROWER]
By:
---------------------------------
Title:
------------------------------
- -------
(2) To be used for replacement Revolving Notes.
-2-
<PAGE> 138
EXHIBIT H
FORM OF NOTICE OF BORROWING
_________, 199__
First Union Commercial Corporation
as Agent for the Lenders
One First Union Center
301 South College Street, 5th Floor
Charlotte, North Carolina 28202
Attention: [________________]
Ladies and Gentlemen:
The undersigned, Fresh Foods, Inc., a North Carolina corporation (the
"Company"), on behalf of itself and on behalf of the other borrowing entities
parties to the Credit Agreement, dated as of June 9, 1998, among the Company,
such other Borrowers, certain financial institutions parties thereto, and First
Union Commercial Corporation, as agent (together with all modifications,
renewals or replacements, the "Credit Agreement"; capitalized terms used herein
shall have the meanings given such terms in the Credit Agreement), hereby gives
you notice, irrevocably, pursuant to Section 2.1(d) of the Credit Agreement that
the Company hereby requests, on behalf of the Borrowers, borrowings under the
Credit Agreement, and in that connection sets forth below the information
relating to such borrowings (the "Proposed Borrowings") as required by Sections
2.1(d) of the Credit Agreement:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
Interest Interest
Borrower Date of Borrowing Amount Rate Period
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Company $101,616,559.03 N/A
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
</TABLE>
The requested funds shall be made available to the following accounts
in the amounts set forth below:
The Company hereby certifies, on behalf of the Borrowers, that the
following statements are true on the date hereof, and will be true on the date
of the Proposed Borrowing:
(A) the representations and warranties contained in the Credit
Agreement and in each other document executed in connection therewith are true
and correct in all material respects before and after giving effect to the
Proposed Borrowings and to the application of the proceeds therefrom, as though
made on and as of such date, except to the extent that such representations and
warranties expressly relate solely to an earlier date (in which case such
representations and warranties shall have been true and accurate on and as of
such earlier date);
(B) no event has occurred and is continuing, or would result from such
Proposed Borrowings or from the application of the proceeds therefrom, which
constitutes a Default or an Event of Default;
(C) all of the other conditions to the Proposed Borrowings set forth in
Article 5 of the Credit Agreement have been fulfilled; and
(D) the Proposed Borrowings satisfy all limitations set forth in the
Credit Agreement (including, without limitation, availability under the
Borrowing Base).
<PAGE> 139
If notice of this Proposed Borrowing has been given previously by
telephone, then this notice should be considered a written confirmation of such
telephone notice as required by Section 2.1(d) of the Credit Agreement.
FRESH FOODS, INC.
By:
---------------------------------
Title:
------------------------------
-2-
<PAGE> 140
EXHIBIT I
FORM OF LOCKBOX AGREEMENT
This Lock Box Agreement is made as of the ____ day of ______________,
19__, by and among [Borrower], a ________________ corporation (the "Borrower"),
First Union Commercial Corporation, as agent (the "Agent"), and [Lockbox Bank]
(the "Bank").
WHEREAS, the Agent and certain financial institutions ("Lenders") have
entered into a Credit Agreement, dated as of June 9, 1998 (together with all
modifications, renewals or replacements, the "Credit Agreement"), with the
Borrower and certain other borrowing entities; and
WHEREAS, to secure its obligations under the Credit Agreement, the
Borrower has granted the Lenders a security interest in, inter alia, its present
and future accounts receivable, and all proceeds thereof and the Borrower has
agreed that all collections and proceeds of such accounts receivable shall be
remitted in kind to the Agent; and
WHEREAS, in order to provide for a more efficient and faster collection
and deposit of said collections and proceeds the Agent and the Borrower desire
to use the lock box service of the Bank; and
WHEREAS, the Bank is willing to provide said service for the Borrower
and the Agent commencing as of ___________________,
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Post Office Box. The Bank will rent P.O. Box _______ (the "Lock
Box") of the post office located at in the name of the Borrower. Customers of
the Borrower have been, or will be, instructed to mail their remittances to the
Lock Box.
2. Access to Mail. Subject to the provisions contained elsewhere
herein, the Bank will have exclusive and unrestricted access to the Lock Box and
will have complete and exclusive authority to receive, pick up and open all
regular, registered, certified or insured mail addressed to the Lock Box. On
written demand of the Agent, the Bank shall cease its processing of said mail,
and shall release same, in kind, to the Agent, and the Agent shall thereafter
process said mail promptly in accordance with this Agreement. The Bank shall not
inquire into the Agent's right to make such a demand under any agreement among
the Agent, the Lenders and the Borrower, and shall be forever released of all
obligations with respect to said remittances upon release to the Agent. The
Borrower shall have no control whatsoever over any mail, checks, money orders,
collections or other forms of remittances received in the Lock Box except as
aforesaid. Appropriate instructions have been, or will be, given by the Bank to
the United States Post Office where the Lock Box is maintained, and such
instructions shall not be revoked without the prior written consent of the
Agent. Any instruction given to the Bank by the Borrower without the prior or
concurrent written agreement of the Agent shall be void and of no force or
effect. All mail addressed to the Lock Box will be picked up by the Bank
according to its regular collection schedule.
3. Remittance Collection. On the day received the Bank will open all
mail addressed to the Lock Box and remove and inspect the enclosures. All
checks, money orders and other forms or orders for the payment of money and
other collection remittances (hereinafter collectively referred to as "checks")
shall be processed by the Bank as follows:
-1-
<PAGE> 141
a. Missing Date. All undated checks will be dated by the Bank
as of the postmark date and processed as hereafter provided.
b. Postdated. Checks postdated up to three days from date of
receipt shall be processed on the date indicated on the check. The Bank shall
not deposit checks postdated more than three days and which are in excess of
$______________, but shall notify the Agent by telephone of such checks and
follow the Agent's instructions for disposition of such checks.
c. Stale Date. The Bank shall notify the Agent of checks dated
six months or more prior to the date of collection and which exceed $__________.
The Agent may, in its reasonable discretion, require that any such checks be
forwarded promptly to the Agent.
d. Different Amount. Where written and numeric amounts differ,
a check will be processed by the Bank only if the correct amount can be
determined from the accompanying documents; otherwise the check will not be
deposited and, if any such check is for an amount in excess of $________, it
shall be sent to the Agent.
e. Signature Missing. Checks which do not bear the drawer's
signature and do not indicate the drawer's identity will not be deposited. If,
as determined by the Bank, the drawer can be identified from the face of the
check, the Bank will deposit and process the check by affixing a stamped
impression requesting the drawer bank to contact the drawer for authority to
pay. The Bank shall notify the Agent of any checks in excess of $____________
which cannot be deposited pursuant to this clause (e).
f. Alterations and Restrictions. Checks with alterations and
checks bearing restrictive notations such as "Payment in Full" will not be
deposited, and the Bank shall notify the Agent of such checks which exceed
$_________________ by telephone on the day of receipt and will deposit, hold or
forward such checks with accompanying written matter, if any, as requested by
the Agent.
g. Foreign Banks and Currency. Checks drawn in foreign
currency will be processed in accordance with the Bank's normal procedure for
such checks and the Agent will be notified by advice of any such checks which
exceed $_______________ on the date received by the Bank.
h. Other Items. Any items which the Agent has specifically
instructed the Bank in writing not to process will not be deposited and shall be
sent to the Agent.
Notwithstanding anything to the contrary contained in this Agreement,
the Bank shall have no obligation to perform services on a basis any different
than it performs lockbox services in the normal course of business, except with
respect to receiving instructions from the Agent rather than the Borrower.
4. Processing Acceptable Checks. All checks, except those not
acceptable for deposit under the terms of this Agreement, shall be deposited on
the day of receipt by the Bank to Account No. ______________________ (the
"Depository Account"), and all such checks shall be endorsed as follows:
credited to account number ________________: absence of
endorsement hereby supplied and guaranteed by [Lock Box Bank]
-2-
<PAGE> 142
Any funds in the Depository Account will be wired on a daily
basis with the following instructions:
First Union Commercial Corporation
One First Union Center
301 South College Street
Charlotte, North Carolina 28288
Attn:
Account No.______________
For the account of the Borrower
; provided, however, that no funds shall be required to be wired unless and
until the amount of funds in the Depository Account shall be in excess of an
aggregate of $1000, unless the Agent shall, in its sole discretion, otherwise
instruct the Bank.
All remittance advices, envelopes, and written matter (except as expressly
provided herein) received in the Lock Box together with photocopies of all
checks shall be sent to the Borrower and, if requested by the Agent, copies of
same shall be sent to the Agent. The Bank shall mail a statement of account, on
a monthly basis, to both the Agent and the Borrower. If no deposit is made on a
bank business day, a deposit advice, correctly dated, will be sent to the Agent
and the Borrower with the notation "No Deposit" appearing thereon. In addition,
the Bank shall indicate by telephone to the Agent on each Bank business day by
2:30 P.M. (Eastern time zone) the amount of each day's deposit total. The
Depository Account shall be opened and established by the Borrower for the
benefit of the Agent on behalf of the Lenders and shall be subject to the terms
and provisions of the Credit Agreement and Security Agreement (as such term is
defined in the Credit Agreement). Neither the Bank nor the Borrower shall have
the right to withdraw funds from the Depository Account, except that the Bank
may make such debits therefrom as provided in Section 5 hereof.
5. Returned Checks. Checks deposited in the Depository Account which
are returned unpaid because of "Insufficient Funds," "Uncollected Funds," etc.
will be redeposited by the Bank only once, except that if a returned check
exceeds $1,000 the Bank shall not redeposit such check but shall telephone the
Agent for further instructions on the day such check is received. If redeposit
is not warranted for reasons such as "account closed" or "payment stopped" or if
a check is returned a second time, the Bank will charge the Depository Account
and send a debit advice with the item to the Agent with copies of same to the
Borrower.
6. Remittance Received by the Borrower. Remittances which are sent
directly to or received by the Borrower shall be forwarded to the Lock Box on
the day received.
7. Record Maintenance. All deposit checks will be microfilmed (on front
and back) by the Bank and retained for five years by the Bank prior to
destruction. Photocopies of filmed items will be provided to the Agent or the
Borrower on request, within the five-year period.
8. Bank Charges. All charges of the Bank for services rendered pursuant
to this agreement shall be billed to and paid directly by the Borrower. Said
charges shall not be charged against remittances nor shall they be debited to
the Depository Account.
9. No Offset. The Bank hereby agrees that it will treat all remittances
received in the Lock Box in accordance with the terms of this agreement. The
Bank will not offset or assert any claim against the Lock Box or the Depository
Account or divert such remittances on account of any obligations owed to the
Bank by the Borrower or by the party making the remittance, except as provided
in Section 5 hereof.
10. Bank Liability. In acting under this agreement the Bank shall not
be liable to the Agent, the Lenders or the Borrower for any error of judgment,
or for any act done or step taken or omitted by it in good faith, except for
gross negligence or willful misconduct.
-3-
<PAGE> 143
11. Term. This Agreement shall continue in full force and effect until
termination by the Bank on 60 days' prior written notice to all other parties.
The Agent may terminate this Agreement at any time which termination shall be
effective on receipt of written notice by the Bank and in the event of such
termination, the Agent shall at its option have the sole right to remove mail
from the Lock Box. The Borrower shall have no right to unilaterally terminate
this Agreement.
12. Modification. This Agreement may only be modified by a writing
signed by all of the parties hereto.
13. Addresses.
a. All notices, including phone notice, any daily deposit
advices, monthly statements of account and copies of all checks and the
documents which are to be given or sent to the Agent shall be sent to the
following address, and, where applicable, given at the following phone number:
First Union Commercial Corporation
One First Union Center
301 South College Street, 5th Floor
Charlotte, North Carolina 28288
Attention:
Telephone:
Telecopier:
b. All notices to the Bank shall be sent to:
[Bank]
------------------------------
------------------------------
------------------------------
Attention:
Telephone:
Telecopier:
-4-
<PAGE> 144
c. All notices and items which are to be sent to the Borrower
shall be sent to:
[Borrower]
------------------------------
------------------------------
------------------------------
Attention:
Telephone:
Telecopier:
14. Agent Agreement.
The Agent agrees that it will indemnify and hold the Bank harmless from
any and all loss, liability, expense or damage that the Bank may incur in
processing lockbox items in accordance with this Agreement, including, without
limitation, any loss that the Bank experiences as a result of returned items to
the extent the balances in the Depository Account referenced in paragraph 4 are
insufficient to cover such losses or in the event the balances in such
Depository Account are insufficient to cover the Bank charges referenced in
paragraph 8.
15. Limitation on Liability.
The Agent and the Borrower acknowledge that the Bank undertakes to
perform only such duties as are expressly set forth in this Agreement and those
which are normally undertaken by the Bank in connection with lockbox processing.
Notwithstanding any other provision of this Agreement, it is agreed by the
parties that the Bank shall not be liable for any action taken by the Bank or
any of its directors, officers, agents (including specifically the Borrower and
any of its directors, officers, agents or employees) or employees in accordance
with this Agreement, except for the Bank's or such natural person's gross
negligence or willful misconduct. In no event shall the Bank be liable for
losses or delays resulting from force majeure, computer malfunction,
interruption of communication facilities, labor difficulties or other causes
beyond its reasonable control or for any indirect, special or consequential
damages.
-5-
<PAGE> 145
This Agreement shall become effective upon its receipt by the Agent,
properly executed by all of the parties hereto.
FIRST UNION COMMERCIAL CORPORATION
By:
-------------------------------
Title:
[LOCKBOX BANK]
By:
-------------------------------
Title:
[BORROWER]
By:
-------------------------------
Title:
-6-
<PAGE> 146
EXHIBIT J
FORM OF NOTICE OF EXTENSION/CONVERSION
___________, 199__
First Union Commercial Corporation,
as Agent for the Lenders
One First Union Center
301 South College Street, 5th Floor
Charlotte, North Carolina 28288
Attention: [_______________]
Ladies and Gentlemen:
The undersigned, Fresh Foods, Inc., a North Carolina corporation (the
"Company"), on behalf of itself and the other borrowing entities parties to the
Credit Agreement, dated as of June 9, 1998, among the Company, such other
Borrowers, certain financial institutions parties thereto, and First Union
Commercial Corporation, as agent (together with all modifications, renewals or
replacements, the "Credit Agreement"; capitalized terms used herein shall have
the meanings given such terms in the Credit Agreement). The Company, on behalf
of the Borrowers, hereby gives you notice, irrevocably, pursuant to Section 2.10
of the Credit Agreement that the Borrowers hereby request extensions and/or
conversions under the Credit Agreement, and in that connection set forth below
the information relating to such extensions and/or conversions (the
"Extensions/Conversions") as required by Sections 2.10 of the Credit Agreement:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
Interest Interest
Borrower Date of Borrowing Amount Rate Period
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Company $101,616,559.03 N/A
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
</TABLE>
The Company, on behalf of the Borrowers, hereby certifies that the
following statements are true on the date hereof, and will be true on the date
of the Extension/Conversion:
(A) the representations and warranties contained in the Credit
Agreement and in each other document executed in connection therewith are true
and correct in all material respects before and after giving effect to the
Extensions/Conversions and to the application of the proceeds therefrom, as
though made on and as of such date, except to the extent that such
representations and warranties expressly relate solely to an earlier date (in
which case such representations and warranties shall have been true and accurate
on and as of such earlier date);
(B) no event has occurred and is continuing, or would result from such
Extensions/Conversions or from the application of the proceeds therefrom, which
constitutes a Default or an Event of Default;
(C) all of the other conditions to the Extensions/Conversions set forth
in Article 2 of the Credit Agreement have been fulfilled; and
(D) the Extensions/Conversions satisfy all limitations set forth in the
Credit Agreement (including, without limitation, availability under the
Borrowing Base).
If notice of these Extensions/Conversions has been given previously by
telephone, then this notice should be considered a written confirmation of such
telephone notice as required by Section 2.10 of the Credit Agreement.
<PAGE> 147
FRESH FOODS, INC.
By:
-----------------------------------
Title:
--------------------------------
-2-
<PAGE> 148
EXHIBIT K
FORM OF COMPLIANCE CERTIFICATE
[Letterhead of Company]
____________, 199__
First Union Commercial Corporation,
as Agent for the Lenders
One First Union Center
301 South College Street, 5th Floor
Charlotte, North Carolina 28288
Ladies and Gentlemen:
I hereby certify to you as follows:
(a) I am the duly elected [Title] of Fresh Foods, Inc., a North
Carolina corporation (the "Company"). Capitalized but undefined terms used in
this Certificate shall have the meanings assigned to them in the Credit
Agreement, dated as of June 9, 1998 (together with all modifications, renewals
or replacements, the "Credit Agreement"), among the Company, certain other
borrowing entities parties thereto (together with the Company, the "Borrowers"),
the financial institutions parties thereto, and you, as Agent.
(b) I have reviewed the terms of the Credit Agreement, and have made,
or have caused to be made under my supervision, a review in reasonable detail of
the transactions and the condition of the Borrowers during the immediately
preceding [month] [fiscal quarter] [fiscal year].
(c) The review described in paragraph (b) above did not disclose the
existence during or at the end of such period, and I have no knowledge of the
existence as of the date hereof, of any condition or event which constitutes a
Default or an Event of Default, except as hereinafter set forth. Described in a
separate attachment to this Certificate are (i) detailed calculations
demonstrating compliance by the Borrowers with the financial covenants contained
in Section 8 of the Credit Agreement and (ii) the exceptions, if any, to this
paragraph (c) (listing, in detail, the nature of the condition or event, the
period during which it has existed and the action which the Company or
applicable Borrower has taken, is taking, or proposes to take with respect to
such condition or event).
I further certify that, based on the review described in paragraph (b)
above, neither the Company, any other Borrower nor any of the Subsidiaries at
any time during or at the end of such period, except as specifically described
in paragraph (k) below, did any of the following:
(d) Changed its respective corporate name, or transacted business under
any trade name, style, or fictitious name, other than those previously described
to you and set forth in the Credit Agreement.
(e) Changed the location of its chief executive office, or changed the
location of or disposed of any of its assets (other than as permitted under the
Credit Agreement) or established any new inventory locations.
<PAGE> 149
(f) Changed its capital structure (other than as permitted under the
Credit Agreement).
(g) Materially changed the terms upon which it sells goods (including
sales on consignment) or provides services, nor has any vendor or trade supplier
to any of the Borrowers during or at the end of such month decreased the terms
upon which it supplies goods to any of such Borrowers.
(h) Permitted or suffered to exist any Liens or encumbrances on any of
its properties, whether real or personal, other than as specifically permitted
in the Credit Agreement.
(i) Received any notices of any kind from any federal, state or local
agency, tribunal or other authority regulating or having responsibility for any
environmental matters.
(j) Became aware of, obtained knowledge of, or received notification
of, any breach or violation of any material covenant contained in any instrument
or agreement in respect of indebtedness for money borrowed by any of the
Borrowers or any of the Subsidiaries.
(k) [List exceptions, if any, to paragraphs (d) through (j) above].
I further certify that Herth Management, Inc. is not in default or in
arrears under any of its indebtedness which is secured by any of the Company's
capital stock.
The foregoing certifications are made and delivered this ____ day of
___________, 199__.
Very truly yours,
FRESH FOODS, INC.
By:
-----------------------------------
Title:
-------------------------------
-2-
<PAGE> 150
Schedule A
[set forth evidence of compliance with financial covenants showing the
calculations therefor in reasonable detail]
-3-
<PAGE> 151
EXHIBIT L
FORM OF BORROWING BASE CERTIFICATE
<PAGE> 152
EXHIBIT M
FORM OF BORROWER JOINDER AGREEMENT
THIS BORROWER JOINDER AGREEMENT (the "Agreement"), dated as of , 19__,
is by and between ____________ , a ____________(the "Applicant Borrower"), and
FIRST UNION COMMERCIAL CORPORATION, in its capacity as Agent (the "Agent") under
that certain Credit Agreement (as amended and modified, the "Credit Agreement")
dated as of June 9, 1998 by and among Fresh Foods, Inc., a North Carolina
corporation and certain related borrowing entities (the "Borrowers"), the
Lenders party thereto and the Agent. All of the defined terms in the Credit
Agreement are incorporated herein by reference.
The Applicant Borrower has indicated its desire to become a Borrower
pursuant to the terms of the Credit Agreement.
Accordingly the Applicant Borrower hereby agrees as follows with the
Agent, for the benefit of the Lenders:
1. The Applicant Borrower hereby acknowledges, agrees and confirms
that, by its execution of this Agreement, the Applicant Borrower will be deemed
to be a party to the Credit Agreement and a "Borrower" for all purposes of the
Credit Agreement and the other Credit Documents, and shall have all of the
obligations of a Borrower thereunder as if it has executed the Credit Agreement
and the other Credit Documents. The Applicant Borrower hereby ratifies, as of
the date hereof, and agrees to be bound by, all of the terms, provisions and
conditions contained in the Credit Agreement and in the Credit Documents,
including without limitation (i) all of the representations and warranties of
the Credit Parties set forth in Section 6 of the Credit Agreement, as
supplemented from time to time in accordance with the term thereof, and (ii) all
of the affirmative and negative covenants set forth in Sections 7, 8, and 9 of
the Credit Agreement.
2. The Applicant Borrower hereby acknowledges, agrees and confirms
that, by its execution of this Agreement, the Applicant Borrower will be deemed
to be a party to the Security Agreement, and shall have all the obligations of
an "Obligor" (as such term is defined in the Security Agreement) thereunder as
if it had executed the Security Agreement. The Applicant Borrower hereby
ratifies, as of the date hereof, and agrees to be bound by, all of the terms,
provisions and conditions contained in the Security Agreement. Without limiting
generality of the foregoing terms of this paragraph 2, the Applicant Borrower
hereby grants to the Agent, for the benefit of the Lenders, a continuing
security interest in, and a right of set off against any and all right, title
and interest of the Applicant Borrower in and to the Collateral (as such term is
defined in Section 2 of the Security Agreement) of the Applicant Borrower.
3. The Applicant Borrower hereby acknowledges, agrees and confirms
that, by its execution of this Agreement, the Applicant Borrower will be deemed
to be a party to the Pledge Agreement, and shall have all the obligations of a
"Pledgor" thereunder as if it had executed the Pledge Agreement. The Applicant
Borrower hereby ratifies, as of the date hereof, and agrees to be bound by, all
the terms, provisions and conditions contained in the Pledge Agreement. Without
limiting the generality of the foregoing terms of this paragraph 3, the
Applicant Borrower hereby pledges and assigns to the Agent, for the benefit of
the Lenders, and grants to the Agent, for the benefit of the Lenders, a
continuing security interest in any and all right, title and interest of the
Applicant Borrower in and to Pledged Stock (as such term is defined in Section 1
of the Pledge Agreement) and the other Collateral (as such term is defined in
Section 1 of the Pledge Agreement).
<PAGE> 153
4. The Applicant Borrower acknowledges and confirms that it has
received a copy of the Credit Agreement and the schedules and exhibits thereto,
the Pledge Agreement and the schedules and exhibits thereto and the Security
Agreement and the schedules and exhibits relating thereto. The information on
the Schedules to the Credit Agreement, the Pledge Agreement and the Security
Agreement are amended to provide the information shown on the attached Schedule
A.
5. Fresh Foods, Inc. confirms that all of its and its Subsidiaries'
obligations under the Credit Agreement are, and upon the Applicant Borrower
becoming a Borrower shall continue to be, in full force and effect. Fresh Foods,
Inc. further confirms that immediately upon the Applicant Borrower becoming a
Borrower the term "Obligations", as used in the Credit Agreement, shall include
all Obligations of such Applicant Borrower under the Credit Agreement and under
each other Credit Document.
6. The Applicant Borrower hereby agrees that upon becoming a Borrower
it will assume all Obligations of a Borrower as set forth in the Credit
Agreement. By its execution of this Agreement, the Applicant Borrower appoints
each of __________________, [title] and _________________, [title], of Fresh
Foods, Inc., to be its attorneys ("its Attorneys") and in its name and on its
behalf and as its act and deed or otherwise to sign all documents and carry out
all such acts as are necessary or appropriate in connection with executing any
Notice of Borrowing, Notice of Extension/Conversion or any Borrowing Base
Certificate or any security documents (the "Documents") in connection with the
Credit Agreement, provided that such Documents are in substantially the form
provided therefor in the applicable exhibits thereto. This Power of Attorney
shall be valid for the duration of the term of the Credit Agreement. The
Applicant Borrower hereby undertakes to ratify everything which either of its
Attorneys shall do in order to execute the Documents mentioned herein.
7. Each of Fresh Foods, Inc. and the Applicant Borrower agrees that at
any time and from time to time, upon the written request of the Agent, it will
execute and deliver such further documents and do such further acts and things
as the Agent may reasonably request in order to effect the purposes of this
Agreement.
8. This Agreement may be executed in two or more counterparts, each of
which shall constitute an original but all of which when taken together shall
constitute one contract.
9. This Agreement shall be governed by and construed and interpreted in
accordance with the laws of the State of North Carolina.
IN WITNESS WHEREOF, the Applicant Borrower has caused this Borrower
Joinder Agreement to be duly executed by its authorized officers, and the Agent,
for the benefit of the Lenders, has caused the same to be accepted by its
authorized officer, as of the day and year first above written.
<<APPLICANT BORROWER>>
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
-2-
<PAGE> 154
FRESH FOODS, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
FIRST UNION COMMERCIAL CORPORATION
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
-3-
<PAGE> 155
SCHEDULE A
to
Borrower Joinder Agreement
Schedules to Credit Agreement
-----------------------------------
(to be updated as necessary)
Schedule 1(b) to Security Agreement
-----------------------------------
Intellectual Property
Schedule 3(a) to Security Agreement
-----------------------------------
Chief Executive Office
Schedule 3(b) to Security Agreement
-----------------------------------
Location of Collateral
Schedule 3(c) to Security Agreement
-----------------------------------
Mergers, Consolidations, Changes in
Structure or Use of Tradenames
Schedule 1 to Pledge Agreement
-----------------------------------
Pledged Stock
-4-
<PAGE> 156
EXHIBIT N
FORM OF MORTGAGEE LIEN WAIVER
MORTGAGEE WAIVER
[DEBTOR OWNED REAL ESTATE]
WHEREAS, FIRST UNION COMMERCIAL CORPORATION (the "Agent"), has or is
about to enter into certain financing agreements with FRESH FOODS, INC., a North
Carolina corporation (the "Company") and [SUBSIDIARY BORROWER] (the "Subsidiary
Borrower") pursuant to which the Agent has been or may be granted a security
interest in any or all of [Company's] [Subsidiary Borrower's] personal property
including, but not limited to, [Company's] [Subsidiary Borrower's] inventory
(hereinafter "Personal Property") and,
WHEREAS, the Personal Property has or may become affixed to or be
located on, wholly or in part, the certain real estate located at
___________________________________, the legal description of which is (include
metes and bounds, lot and block, range and section):
SEE EXHIBIT A ANNEXED HERETO AND MADE A PART HEREOF
(hereinafter "Premises") and,
WHEREAS, the undersigned has an interest in the Premises as mortgagee,
NOW, THEREFORE, in consideration of any financial accommodation
extended by the Agent to [Company] [Subsidiary Borrower], at any time, and other
good and valuable consideration, the undersigned agrees as follows:
(a) That it waives and relinquishes any lien, all rights of levy or
distraint, security interest or other interest the undersigned may now or
hereafter have in any of the Personal Property;
(b) That the Personal Property may be installed in or located on the
Premises and the undersigned agrees that the Personal Property is not and shall
not be deemed a fixture or part of the real estate but shall at all times be
considered personal property;
(c) That it disclaims any interest in the Personal Property and agrees
to assert no claim to the Personal Property while [Company] [Subsidiary
Borrower] is indebted to Lenders;
(d) That Lenders or their representatives may enter upon the Premises
at any time to inspect or remove the Personal Property, and may advertise or
conduct a public or private auction thereon;
(e) That Lenders, at their option, may enter the Premises for the
purpose of repossessing, removing, selling or otherwise dealing with said
Personal Property, and such license shall be irrevocable and shall continue
without charge from the date Lenders enter the Premises for as long as Lenders
deem necessary but not to exceed a period of 90 days after the receipt by
Lenders of written notice by the undersigned directing removal of the Personal
Property. Lenders may, subsequent to the 90 day period, remain on said Premises
for an additional period not to exceed 180 days at a rental equal to the
interest owed the undersigned by the [Company] [Subsidiary Borrower] relating to
such Premises (at the rate prior to any default by the [Company] [Subsidiary
Borrower]), prorated on a per diem basis to be
-5-
<PAGE> 157
determined on a 30 day month, without incurring any other obligations of
[Company] [Subsidiary Borrower];
(f) The undersigned agrees to give notice in writing by certified or
registered mail of any default by [Company] [Subsidiary Borrower] of any of the
provisions of the mortgage or deed of trust upon the premises held by the
undersigned, as the case may be to:
Agent: First Union Commercial Corporation
One First Union Center
301 South College Street, 5th Floor
Charlotte, NC 28288
Attention: [__________]
Telephone: (704) [_______]
Facsimile: (704) [_______]
Upon receipt of said notice, Lenders shall thereupon have the right, but not the
obligation, to cure said default within any cure period available to [Company]
[Subsidiary Borrower], and within 10 days thereafter. Any payment made or act
done by Lenders to cure any such default shall not constitute an assumption of
any obligations of [Company] [Subsidiary Borrower].
This waiver may not be changed or terminated orally and is binding upon the
undersigned and the heirs, personal representatives, successors and assigns of
the undersigned and inures to the benefit of the Lenders and the successors and
assigns of Lenders.
Dated this ___ day of June, 1998.
WITNESSED BY: MORTGAGEE:
----------------------------------
By:
-------------------------------
Title:
----------------------------
Address:
-6-
<PAGE> 158
CORPORATE ACKNOWLEDGMENT
STATE OF
------------------------
COUNTY OF
----------------------
Personally appeared before me, the undersigned a Notary Public in and
for said State and County aforesaid, _____________________________, who
acknowledged himself to be, the __________________________________ of
_____________________, a corporation and as such officer duly authorized and
empowered to execute the above instrument for and on behalf of the said
corporation for the consideration, uses and purposes therein specified.
WITNESS my hand and Notarial Seal at office this ___ day of June, 1998.
-----------------------------------
NOTARY PUBLIC
My Commission Expires:
- ---------------------
-7-
<PAGE> 159
SCHEDULE 1.1A
LENDERS AND COMMITMENTS
<TABLE>
<CAPTION>
REVOLVING
REVOLVING CREDIT LETTER OF
CREDIT COMMITMENT CREDIT
LENDER COMMITMENT PERCENTAGE COMMITMENT
- ------ ---------- ---------- ----------
<S> <C> <C> <C>
First Union Commercial $22,500,000 30.00001% $3,000,000
Corporation
American National Bank & $17,500,000 23.33333%
Trust Company
National City Bank $17,500,000 23.33333%
NationsBank, N.A. $17,500,000 23.33333%
TOTAL $75,000,000 100.00000% $3,000,000
</TABLE>
<PAGE> 160
SCHEDULE 1.1B
CLOSING CONDITIONS
The obligation of each Lender to make Revolving Loans and/or of the Issuing Bank
to issue Letters of Credit shall be subject to the satisfaction, on or prior to
the Closing Date, of the following conditions precedent:
1. Executed Credit Documents. Receipt by the Agent of duly executed
copies of:
(a) this Credit Agreement;
(b) the Revolving Notes;
(c) the Security Documents; and
(d) all other Credit Documents,
each in form and substance acceptable to the Lenders in their sole
discretion.
2. Corporate Documents. Receipt by the Agent of the following:
(a) Charter Documents. Copies of the articles or certificates of
incorporation or other charter documents of each Borrower certified to be true
and complete as of a recent date by the appropriate Governmental Authority of
the state or other jurisdiction of its incorporation and certified by a
secretary or assistant secretary of such Borrower to be true and correct as of
the Closing Date.
(b) Bylaws. A copy of the bylaws of each Borrower certified by a
secretary or assistant secretary of such Borrower to be true and correct as of
the Closing Date.
(c) Resolutions. Copies of resolutions of the Board of Directors of
each Borrower approving and adopting the Credit Documents to which it is a
party, the transactions contemplated therein and authorizing execution and
delivery thereof, certified by a secretary or assistant secretary of such
Borrower to be true and correct and in force and effect as of the Closing Date.
(d) Good Standing. Copies of (i) certificates of good standing,
existence or its equivalent with respect to each Borrower certified as of a
recent date by the appropriate governmental authorities of the state or other
jurisdiction of incorporation and each other jurisdiction in which the failure
to so qualify and be in good standing could reasonably be expected to have a
Material Adverse Effect and (ii) to the extent available, a certificate
indicating payment of all corporate franchise taxes certified as of a recent
date by the appropriate governmental taxing authorities.
(e) Incumbency. An incumbency certificate of each Borrower certified
by a secretary or assistant secretary to be true and correct as of the Closing
Date.
3. Financial Statements. Receipt by the Agent and the Lenders of the
financial statements and the accountants' unqualified opinion and management
letter prepared in connection therewith described in Section 6.6 of the Credit
Agreement and such other information relating to the Borrowers as the Agent may
reasonably require in connection with the structuring and syndication of credit
facilities of the type described herein. The Borrowers shall certify as of the
Closing Date that such financial statements have been prepared in accordance
with the books and records of the Borrowers and fairly
-1-
<PAGE> 161
present in all material respects the financial condition of each of the
Borrowers (including the Pierre Foods Division) at the dates thereof and the
results of operations for the periods indicated (subject, in the case of
unaudited financial statements, to normal year-end adjustments and the absence
of footnote disclosures ), and such financial statements have been prepared in
conformity with GAAP consistently applied throughout the periods involved.
4. Opinions of Counsel. Receipt by the Agent of an opinion, or opinions
(which shall cover, among other things, authority, legality, validity, binding
effect, enforceability and attachment and perfection of liens), satisfactory to
the Agent, addressed to the Agent and the Lenders and dated the Closing Date,
from legal counsel to the Borrowers.
5. Environmental Reports. Receipt by the Agent in form and substance
satisfactory to it of the environmental assessment reports and related documents
prepared in connection with the Real Estate.
6. Personal Property Collateral. The Agent shall have received:
(a) searches of Uniform Commercial Code filings in the jurisdiction
of the chief executive office of each Borrower and each jurisdiction where any
Collateral is located or where a filing would need to be made in order to
perfect the Agent's security interest in the Collateral, copies of the financing
statements on file in such jurisdictions and evidence that no Liens exist other
than Permitted Liens;
(b) duly executed UCC financing statements for each appropriate
jurisdiction as is necessary, in the Agent's sole discretion, to perfect the
Agent's security interest in the Collateral;
(c) searches of ownership of intellectual property in the
appropriate governmental offices and such patent/trademark/copyright filings as
requested by the Agent in order to perfect the Agent's security interest in the
Collateral;
(d) all stock certificates evidencing the Capital Stock pledged to
the Agent pursuant to the Pledge Agreement, together with duly executed in blank
undated stock powers attached thereto;
(e) such patent/trademark/copyright filings as requested by the
Agent in order to perfect the Agent's security interest in the Collateral;
(f) all instruments and chattel paper in the possession of any of
the Borrowers, together with allonges or assignments as may be necessary or
appropriate to perfect the Agent's security interest in the Collateral to the
extent required under the Security Agreement; and
(g) duly executed consents as are necessary, in the Agent's sole
discretion, to perfect the Lenders' security interest in the Collateral.
7. Real Property Collateral. Receipt by Lender of the following:
a. Fully executed and notarized mortgages, deeds of trust or deeds
to secure debt (each, as the same may be amended, modified, restated or
supplemented from time to time, a and collectively the "Mortgage
Instruments") encumbering the fee interest of Borrowers in each real
property asset designated in Schedule 6.19 (each a "Mortgaged Property"
and collectively the "Mortgaged Properties".
-2-
<PAGE> 162
b. A title report obtained by Borrower in respect of each of the
Mortgaged Properties.
c. Lender shall have received, and the title insurance company
issuing the title policies (the "Title Insurance Company") shall have
received, maps or plats of an as-built survey of the sites of the real
property covered by the Mortgage Instruments certified to Lender and the
Title Insurance Company in a manner reasonably satisfactory to each of
Lender and the Title Insurance Company, dated a date reasonably
satisfactory to Lender and the Title Insurance Company by an independent
professional licensed land surveyor, which maps or plats and the surveys
on which they are based shall be made in accordance with standards that
enable the Title Insurance Company to issue the title policies without
exception for "Survey matters", except for matters as are reasonably
acceptable to Lender.
d. ALTA mortgagee title insurance policies issued by Chicago Title
Insurance Company (the "Mortgage Policies"), in amounts not less than the
respective amounts designated in Schedule 6.19 with respect to any
particular Mortgaged Property, assuring Lender that each of the Mortgage
Instruments creates a valid and enforceable first priority mortgage lien
on the applicable Mortgaged Property, free and clear of all defects and
encumbrances except Permitted Liens, which Mortgage Policies shall be in
form and substance reasonably satisfactory to Lender and shall provide for
affirmative insurance and such reinsurance as Lender may reasonably
request, all of the foregoing in form and substance reasonably
satisfactory to Lender.
e. Evidence, which may be in the form of a letter from an insurance
broker or a municipal engineer, as to whether (i) any Mortgaged Property
(a "Flood Hazard Property") is in an area designated by the Federal
Emergency Management Agency as having special flood or mud slide hazards
and (ii) the community in which such Flood Hazard Property is located is
participating in the National Flood Insurance Program.
f. If there are any Flood Hazard Properties, Borrower's written
acknowledgment of receipt of written notification from Lender (i) as to
the existence of each such Flood Hazard Property and (ii) as to whether
the community in which each such Flood Hazard Property is located is
participating in the National Flood Insurance Program.
g. Evidence satisfactory to Lender that each of the Mortgaged
Properties, and the uses of the Mortgaged Properties, are in compliance in
all material respects with all applicable laws, regulations and ordinances
including without limitation health and environmental protection laws,
erosion control ordinances, storm drainage control laws, doing business
and/or licensing laws, zoning laws (the evidence submitted as to zoning
should include the zoning designation made for each of the Mortgaged
Properties, the permitted uses of each such Mortgaged Property under such
zoning designation and zoning requirements as to parking, lot size,
ingress, egress and building setbacks) and laws regarding access and
facilities for disabled persons.
h. Duly executed UCC fixture financing statements for each Mortgaged
Property to be filed in the appropriate jurisdiction as is necessary, in
Lender's sole discretion, to perfect Lender's lien on such Mortgaged
Property.
i. Real estate appraisals for each Mortgaged Property satisfactory
in form and substance to the Agent.
-3-
<PAGE> 163
8. Priority of Liens. The Agent shall have received satisfactory evidence
that (a) the Agent, on behalf of the Lenders, holds a perfected, first priority
Lien on all Collateral (subject to clause (b)) and (b) none of the Collateral is
subject to any other Liens other than Permitted Liens.
9. Equipment Appraisals. The Agent shall have received and approved
appraisals of the Equipment prepared by each of the appraisers listed on
Schedule 1.1(G) to the Credit Agreement. ------
10. Opening Borrowing Base Certificate. Receipt by the Agent of a
Borrowing Base Certificate as of the Closing Date, substantially in the form of
Exhibit L, certified by the chief financial officer of the Company to be true
and correct as of the Closing Date and demonstrating availability of Loans
permitted to be borrowed under the Credit Agreement, after giving effect to the
Acquisition of the Pierre Foods Division and the Loans made on the Closing Date,
of at least $17,000,000.
11. Evidence of Insurance. Receipt by the Agent of copies of insurance
policies or certificates of insurance of the Borrowers evidencing liability and
casualty insurance meeting the requirements set forth in the Credit Documents,
including, but not limited to, naming the Agent as loss payee on behalf of the
Lenders and as additional insured.
12. Corporate Structure. The corporate capital and ownership structure of
the Company and its Subsidiaries shall be as described in Schedule 6.9.
13. Subordinated Debt. (a) the Company shall have issued the Subordinated
Debt and such which shall contain subordination provisions satisfactory to the
Agent, (b) the Agent shall have received a copy, certified by an officer of the
Company as true and complete, of the indenture governing the Subordinated Debt
as originally executed and delivered, and no amendment or modification thereof
shall have been entered into on or prior to the Closing Date which shall not
have been approved by each of the Lenders and (c) the Borrowers shall have
received gross cash proceeds from the issuance of the Subordinated Debt in an
aggregate principal amount of $100,000,000.
14. Consents. Receipt by the Agent of evidence that all governmental,
shareholder and third party consents and approvals, if any, required in
connection with the financings and other transactions contemplated by the Credit
Agreement and expiration of all applicable waiting periods without any action
being taken by any authority that could restrain, prevent or impose any material
adverse conditions on such transactions or that could seek or threaten any of
the foregoing, and no law or regulation shall be applicable which in the
judgment of the Agent could have such effect.
15. Litigation. There shall not exist any pending or threatened action,
suit, investigation or proceeding against a Borrower that could reasonably be
expected to have a Material Adverse Effect.
16. Other Indebtedness. Receipt by the Agent of evidence that, after
giving effect to the making of the Revolving Loans made on the Closing Date, the
Borrowers shall have no Funded Indebtedness other than the Indebtedness under
(a) the Credit Documents, and (b) the Subordinated Debt.
17. Solvency Certificate. Receipt by the Agent of an officer's certificate
for each Borrower prepared by the chief financial officer of each such Borrower
as to the financial condition, solvency and related matters of each such
Borrower, in each case after giving effect to the initial borrowings under the
Credit Documents, in substantially the form of Exhibit C hereto.
18. Officer's Certificates. The Agent shall have received a certificate or
certificates executed by an Executive Officer of the Company as of the Closing
Date stating that (a) each Borrower is in compliance with all existing financial
obligations, (b) all governmental, shareholder and third party
-4-
<PAGE> 164
consents and approvals, if any, with respect to the Credit Documents and the
transactions contemplated thereby have been obtained, (c) no action, suit,
investigation or proceeding is pending or threatened in any court or before any
arbitrator or governmental instrumentality that purports to affect any Borrower
or any transaction contemplated by the Credit Documents, if such action, suit,
investigation or proceeding could reasonably be expected to have a Material
Adverse Effect, (d) the transactions contemplated by the Separation Agreement
have been consummated in accordance with the terms thereof and (e) immediately
after giving effect to this Credit Agreement, the other Credit Documents and all
the transactions contemplated therein to occur on such date, (i) each of the
Borrowers is solvent, (ii) no Default or Event of Default exists, (iii) all
representations and warranties contained herein and in the other Credit
Documents are true and correct in all material respects, and (iv) the Borrowers
are in compliance with each of the financial covenants set forth in Section 8.
19. Fees and Expenses. Payment by the Borrowers of all fees and expenses
owed by them to the Lenders and the Agent, including, without limitation,
payment to the Agent of the fees set forth in the Fee Letter.
20. Sources and Uses; Payment Instructions. Receipt by the Agent of (a) a
statement of sources and uses of funds covering all payments reasonably expected
to be made by the Company in connection with the transactions contemplated by
the Credit Documents to be consummated on the Closing Date, including an
itemized estimate of all fees, expenses and other closing costs and (b) payment
instructions with respect to each wire transfer to be made by the Agent on
behalf of the Lenders or the Company or the Subsidiary Borrower on the Closing
Date setting forth the amount of such transfer, the purpose of such transfer,
the name and number of the account to which such transfer is to be made, the
name and ABA number of the bank or other financial institution where such
account is located and the name and telephone number of an individual that can
be contacted to confirm receipt of such transfer.
21. Purchase Agreement. There shall not have been any material
modification, amendment, supplement or waiver to the Purchase Agreement without
the prior written consent of the Agent, including, but not limited to, any
modification, amendment, supplement or waiver relating to the amount or type of
consideration to be paid in connection with the Acquisition of the Pierre Foods
Division and the contents of all disclosure schedules and exhibits, and the
Acquisition of the Pierre Foods Division shall have been consummated in
accordance with the terms of the Purchase Agreement (without waiver of any
conditions precedent to the obligations of the buyer thereunder). The Agent
shall have received the final Purchase Agreement, together with all exhibits and
schedules thereto, certified by an officer of the Company.
22. Year 2000 Compliance. Receipt by the Agent of the Company's plan to
assure that its computer-based systems will be able to operate and effectively
process data including dates on and after January 1, 2000.
23. Regulatory Compliance. Receipt by the Agent of copies of the Company's
licenses from applicable federal, state and local regulatory agencies.
24. Other. Receipt by the Lenders of such other documents, instruments,
agreements or information as reasonably requested by any Lender, including, but
not limited to, information regarding litigation, tax, accounting, labor,
insurance, pension liabilities (actual or contingent), real estate leases,
material contracts, debt agreements, property ownership and contingent
liabilities of the Borrowers.
The documents referred to in this Schedule shall be delivered to the Agent
and the Lenders no later than the Closing Date. The certificates and opinions
referred to in this Schedule shall be dated the Closing Date and shall be
satisfactory in all material respects to the Agent and the Lenders.
-5-
<PAGE> 165
SCHEDULE 1.1C
LIENS
Lienor Equipment
- ------ ---------
Waldorf Corporation One (1) Adco Cavity Load Cartoner
Two (2) Waldorf Hot Melt Midget Sealers
One (1) Adco Top Loading Cartoner
Refco Investments Inc. Two (2) Waldorf Hoerner Cartoners
The Catawba County Industrial Facilities and Pollution Control Financing
Authority $4,000,000 1992 Industrial Revenue Bond (WSMP, Inc. Project), First
Union National Bank of North Carolina, Trustee, with a balance of $2,352,132.43,
will be paid in full at closing, but the lien will not be released for up to 30
days after payoff.
The following are liens of record which may apply to Pierre Foods, LLC assets
and which will be released post-closing by Tyson Foods, Inc. or Hudson Foods,
Inc., as applicable:
Lienor Equipment
- ------ ---------
Shawmut Bank N.A. Automatic finished frozen patty stacker
BOT Financial Corporation Rheon sandwich line
Formax patty forming and shaping plates
IBM Corp. IBM equipment
In addition, all of the lessors with whom the Borrowers have capital leases have
filed security interests in the leased machinery and equipment. See
Schedule 1.1D, Indebtedness.
<PAGE> 166
SCHEDULE 1.1D
INDEBTEDNESS
<TABLE>
<CAPTION>
Principal Balance
as of June 9, 1998
------------------
<S> <C>
Creditor
- --------
Western Steer of North Carolina, Inc. $ 700,000
Davidson Foods, Inc. 100,000
Industrial Revenue Bonds 2,352,132
Capital Lease Lessor
- --------------------
CITIF 92,881
Siemens Credit 45,420
Amplicon Financial 227,992
Hudson Foods 29,702
Textron Financial #1 219,086
Textron Financial #2 28,509
Capital Associates 439,456
</TABLE>
The Borrowers also have two unsecured letters of credit. See Schedule 1.1H,
Unsecured Letters of Credit.
<PAGE> 167
SCHEDULE 1.1E
INVESTMENTS
Money Fund Account with J.C. Bradford & Company. Balance as of May 31, 1998 was
$213,874.
<PAGE> 168
SCHEDULE 1.1F
CORPORATE STRUCTURE
Fresh Foods, Inc. has begun a project to simplify its corporate
structure and to obtain state tax savings through reorganization.
The Company's structure in the past has been one with all operations in
Fresh Foods, Inc. - food processing, ham-curing and restaurant operations. A
group of 14 subsidiaries (11 of which are wholly owned) was created over the
years by acquisitions and joint ventures and to hold restaurant real estate in
other states.
The reorganization will result in four principal subsidiaries:
1) Pierre Foods, LLC ("Pierre"). Pierre will own the Company's
headquarters and manufacturing facilities and will operate
the Company's Claremont and Cincinnati-based food processing
business.
2) Mom `n' Pop's Country Ham, LLC ("MPCH"). MPCH will operate
the Company's ham-curing business. It will lease the facility
where it conducts its ham-curing operations from Pierre.
3) Claremont Restaurant Group, LLC ("CRG"). CRG will hold the
Company's restaurant properties and operate the Company's
restaurants. All 14 presently-existing subsidiaries will be
merged into CRG.
4) Fresh Foods Properties, LLC ("FFP"). FFP will hold the
Company's manufacturing-related intellectual property and
will license such intellectual property to FFNC and MPCH.
Fresh Foods, Inc. acquired Sagebrush, Inc. and its subsidiaries in
January, 1998. Sagebrush, Inc. has its own state tax-planned corporate
structure. Sagebrush, Inc. owns Virginia restaurant properties and has three
principal restaurant subsidiaries: (1) Sagebrush of South Carolina, LLC, which
owns all South Carolina restaurant properties, (2) Sagebrush of North Carolina,
LLC, which owns all North Carolina restaurant properties, and (3) Sagebrush of
Tennessee, LP, which owns all Tennessee restaurant properties. Sagebrush also
owns Chardent, Inc., a Delaware captive finance corporation, and Spicewood,
Inc., a Delaware corporation which serves as the limited partner of Sagebrush of
Tennessee, LP.
The Company plans to merge Sagebrush, Inc. into CRG, which will result
in its restaurant properties being held as follows:
<PAGE> 169
North Carolina Sagebrush restaurants: Sagebrush of North Carolina, LLC
South Carolina Sagebrush restaurants: Sagebrush of South Carolina, LLC
Tennessee Sagebrush restaurants: Sagebrush of Tennessee, LP
Virginia Sagebrush restaurants: CRG
Florida real estate: Fresh Foods, Inc.
Other restaurants and restaurant properties: CRG
The Company anticipates that (i) FFNC and MPCH will issue promissory
notes to Fresh Foods, Inc. as dividends, (ii) upon merger into CRG, the 14
original subsidiaries will issue promissory notes to Fresh Foods, Inc. as
dividends, (iii) the Sagebrush subsidiaries will issue promissory notes to CRG
as dividends, and (iv) Fresh Foods, Inc. and CRG will contribute these
promissory notes as capital to the captive finance company, Chardent, Inc. All
promissory notes will secured by the assets of the entity issuing the notes.
At present, all four proposed subsidiaries of Fresh Foods, Inc. (plus a
fifth, Fresh Foods Sales, LLC) have been formed. The mergers discussed above
have not yet been consummated.
<PAGE> 170
[ORGANIZATIONAL CHART OF
FRESH FOODS, INC. AND
SUBSIDIARIES -- OMITTED]
<PAGE> 171
SCHEDULE 1.1G
EQUIPMENT APPRAISALS
Machinery and equipment located at Cincinnati facility $6,413,025
Machinery and equipment located at Claremont facility 3,407,615
<PAGE> 172
SCHEDULE 1.1H
UNSECURED LETTERS OF CREDIT
1. People's Bank for $450,000
2. People's Bank for $700,000
<PAGE> 173
SCHEDULE 6.1
JURISDICTIONS OF ORGANIZATION
<TABLE>
<CAPTION>
States where Qualified to do
State of Business as a Foreign
Entity Organization Corporation or LLC
<S> <C> <C>
Brunswick Associates, Inc. Georgia North Carolina
Claremont Restaurant Group, LLC North Carolina None
Elloree Foods, Inc. South Carolina North Carolina
Fresh Foods, Inc. North Carolina None
Fresh Foods Properties, LLC North Carolina None
Georgia Buffet Restaurants, Inc. Georgia North Carolina
Knoxville Foods, Inc. Tennessee North Carolina
Mom `n' Pop's Country Ham, LLC North Carolina None
Oak Ridge Foods, Inc. Tennessee North Carolina
Sagebrush, Inc. North Carolina Virginia, Tennessee
Sagebrush of Sevierville, Inc. Tennessee North Carolina
Sagebrush of Tennessee, LP Tennessee North Carolina
Seven Stars, Inc. Maryland North Carolina
St. Augustine Foods, Inc. Florida North Carolina
Tennessee WSMP, Inc. Tennessee North Carolina
Virginia WSMP, Inc. Virginia North Carolina
Chardent, Inc. Delaware North Carolina
D & S Food Systems, LLC Georgia North Carolina
Pierre Foods, LLC North Carolina Ohio, New Hampshire
Georgia WSMP, Inc. Georgia North Carolina
Kingsport Foods, Inc. Tennessee North Carolina
Matthews Prime Sirloin, Inc. North Carolina None
</TABLE>
<PAGE> 174
<TABLE>
<S> <C> <C>
Naples Foods, Inc. Florida North Carolina, Georgia
Prime Sirloin, Inc. Tennessee North Carolina
Sagebrush of North Carolina, LLC North Carolina None
Sagebrush of South Carolina, LLC South Carolina North Carolina
Spicewood, Inc. Delaware North Carolina
South Carolina WSMP, Inc. South Carolina North Carolina
Sunshine WSMP, Inc. Florida North Carolina
Tumbleweed of Pigeon Forge, Inc. Tennessee North Carolina
Fresh Foods Sales, LLC North Carolina None
Greenville Foods Systems, North Carolina None
Incorporated
Sagebrush DTN, Inc. Tennessee North Carolina
</TABLE>
<PAGE> 175
SCHEDULE 6.7
COLLATERAL LOCATIONS
(i) The name and address of each warehouseman, filler, processor and packer
at which Pierre Foods, LLC stores Inventory is as follows:
<TABLE>
<CAPTION>
Name Address
---- -------
<S> <C>
Cincinnati Freezer 2881 E. Sharon Road
Cincinnati, OH 45241
Buckles Warehouse Ohio 11880 Enterprise Avenue
Cincinnati, OH 45241
Cicom/Cincinnati Commercial CS Unknown
Cloverleaf Cold Storage 3110 Homeward Way
Fairfield, OH 45018-0550
CS Integrated LLC 2750 Orbitor Drive
Brea, CA 92621
CS Integrated LLC 325 Blake Road North
Hopkins, MN 55343-8209
US Cold Storage Campbell 4302 South 30th Street
Omaha, NE 68107
CS Integrated LLC 8 Lee Boulevard
Malvern, PA 19355
Wash. Whslrs 999 Montague Expressway
Milpitas, CA 95035
Costco Whlsle Consignment Center 7635 Cent. Industrial Drive, #18
Riviera Beach, FL 33404
US Cold Storage/Dallas Sams 3300 East Park Row
Arlington, TX 76010
United Refrig. (Westgate)/Sams 1740 A. Westgate Parkway
Atlanta, GA 30336
Henderson C.S./Sams Las Vegas 830 Horizon Drive
Henderson, NV 80-14
</TABLE>
<PAGE> 176
<TABLE>
<S> <C>
Trenton Cold Storage Limited P.O. Box 100
Trenton Ontario CN K8V 5R1
K & N Distribution/Price Costco 601 S. W. 7th
Renton, WA 98055
Polar Cold Storage 3776 Taylorsville Highway
Statesville, NC 28625
United Refrigerated/Sams Indy 3320 S. Arlington Avenue
Indianapolis, IN 46203
Wiscold, Inc./Sams Rochelle 600 Wiscold Drive
Rochelle, IL 61068
Columbia Farms/Price Costco 16 Sutton Road
Webster, MA 01570
Burris Maryland/Price Costco Rte 313 N. Federalsburg Road
Federalsburg, MD 21632
Jay D.C.S./Oregon Commodity 8830 Southeast Herbert Court
Clackamas, OR 97015
Nordic C.S./Price Costco 647 Occidental Avenue South
Seattle, WA 98104
Mirlo/Washington Wholesales 11600 Riverside Dr. `B'
Mira Loma, CA 91752
C & S Wholesale Grocers/BJ's Old Ferry Road
Brattleboro, VT 05301
Commodity/Surplus District 12 Hills Avenue
Concorde, NH 03301-4899
United Refrig./Sams Leesport RD #2 Orchard Lane
Leesport, PA 19533
PFS Miami/Cost-U-Less 501 NE 183rd Street
Miami, FL 33269
Interstate Distribution 110 Distribution Drive
Hamilton, OH 45014
</TABLE>
<PAGE> 177
<TABLE>
<S> <C>
PFS West Sacramento P.O. Box 1325
West Sacramento, CA 95691
Security Capital Industrial Trust 4770 Interstate Drive
Cincinnati, OH 45246
The name and address of each warehouseman, filler, processor and
packer at which Fresh Foods, Inc. stores Inventory is as follows:
Polar Cold Storage 3736 Taylorsville Highway
Statesville, NC 28625
</TABLE>
(ii) The chief executive offices of all Borrowers and Subsidiaries are
located at One WSMP Drive, Claremont, North Carolina 28610.
(iii) The books and accounts of the Borrowers and each of their Subsidiaries
are kept at One WSMP Drive, Claremont, North Carolina 28610. Pierre
Foods, LLC also maintains books and accounts at 9990 Princeton Road,
Cincinnati, OH 45246.
Also see Schedule 6.19, Real Estate for a listing of additional
jurisdictions in which the Borrowers and its Subsidiaries have assets, equipment
and inventory.
<PAGE> 178
SCHEDULE 6.8
FICTITIOUS BUSINESS NAMES
Mom `n' Pop's
Mom `n' Pop's Smokehouse
Mom `n' Pop's Buffet & Bakery
Mom `n' Pop's Country Biscuits
Mom `n' Pop's Retail Outlets
Mom `n' Pop's Country Collections
Mom `n' Pop's Racing
Mom `n' Pop's Ham House
Mom `n' Pop's Bakery
Mom `n' Pop's Bakery - WSMP, Inc.
Mom `n' Pop's Bakery #18
Mom `n' Pop's Country Ham
Western Steer Family Steakhouse
Western Steer Steaks, Buffet & Bakery
WSMP, Inc.
WSMP, Inc. #9
WSMP, Inc. #18
WSMP, Inc. - Manufacturing
WSMP/Mom `n' Pop's
WSMP - Smokehouse Division
WSMP, Inc. DBA - Mom `n' Pop's Smokehouse
Bennett's Smokehouse & Saloon
Bennett's Barbeque
Bennett's Pit Bar-B-Que
Bennett's
Bennett's Catering
Prime Sirloin Steak & Buffet
Prime Sirloin Steaks, Buffet & Bakery
Prime Sirloin
Prime Sirloin of (location)
Western Steer Mom `n' Pop's
Mom's Kitchen
WSMP Real Estate
Sagebrush
Sagebrush Steakhouse & Saloon
<PAGE> 179
Pierre Foods, LLC used the following names prior to its acquisition by Fresh
Foods, Inc:
Hudson Foods
Pierre Frozen Foods, a division of Hudson Foods
Hudson Specialty Foods
Pierre
Hudson
Pierre Foods
<PAGE> 180
SCHEDULE 6.9
SUBSIDIARIES
Brunswick Associates, Inc.
Claremont Restaurant Group, LLC
Elloree Foods, Inc.
Fresh Foods Properties, LLC
Georgia Buffet Restaurants, Inc.
Knoxville Foods, Inc.
Mom `n' Pop's Country Ham, LLC
Oak Ridge Foods, Inc.
Sagebrush, Inc.
Sagebrush of Sevierville, Inc.
Sagebrush of Tennessee, LP
Seven Stars, Inc.
St. Augustine Foods, Inc.
Tennessee WSMP, Inc.
Virginia WSMP, Inc.
Chardent, Inc.
D & S Food Systems, LLC
Pierre Foods, LLC
Georgia WSMP, Inc.
Kingsport Foods, Inc.
Matthews Prime Sirloin, Inc.
Naples Foods, Inc.
Prime Sirloin, Inc.
Sagebrush of North Carolina, LLC
Sagebrush of South Carolina, LLC
Spicewood, Inc.
South Carolina WSMP, Inc.
Sunshine WSMP, Inc.
Tumbleweed of Pigeon Forge, Inc.
Fresh Foods Sales, LLC
Greenville Food Systems, Incorporated
Sagebrush DTN, Inc.
<PAGE> 181
SCHEDULE 6.10
LITIGATION
None
<PAGE> 182
SCHEDULE 6.14
ERISA
Fresh Foods Employee Health Plan
WSMP Flexible Benefits Plan
Fresh Foods Employee Stock Purchase Plan
WSMP 401(k) Profit Sharing Plan
Pierre Foods 401(k) Profit Sharing Plan
Pierre Foods Life Insurance AD&D Plan
Pierre Foods Short and Long-Term Disability Plan
Pierre Foods Business Travel Insurance Plan
Hudson Foods Employee Health, Medical and Dental Plan
<PAGE> 183
SCHEDULE 6.15
ENVIRONMENTAL DISCLOSURES
1. Prior to 1996, the Claremont facility was subject to surcharges for its
level of BODs in discharges to a municipal sewer. The facility
installed sewage pretreatment equipment to prevent such discharges.
2. The Pierre facility, in accordance with its county-issued industrial
pretreatment permit, is currently paying a surcharge of approximately
$67,000 per year for its level of BODs in discharge of waste water to a
municipal sewer.
<PAGE> 184
SCHEDULE 6.17
INTELLECTUAL PROPERTY
<TABLE>
<CAPTION>
Registration Issue
Trademark Type No. Date
- --------- ------- ------------- --------
<S> <C> <C> <C>
Breakfast on the Go! federal 2,005,805 10/08/96
Cafe Pierre federal 1,876,055 01/24/95
Cafeteria Adventures federal 1,797,362 10/05/93
Commodity Magic federal 1,331,238 04/16/85
Dine `n With federal 1,912,699 08/15/95
Fast Choice federal 2,052,455 04/15/97
French Toast Boat federal 1,554,935 09/05/89
French Toast Boat & Design federal 1,626,155 12/04/90
Global Grill federal 2,112,383 11/11/97
GoldDiggers federal 1,121,101 06/26/79
Hot Diggity Subs federal 1,388,435 04/01/86
Hot Diggity Subs & Design federal 1,387,648 03/25/86
Lean Magic federal 1,677,773 03/03/92
Like Mom's & Design federal 1,517,327 12/20/88
Link-N-Dog federal 1,917,400 09/05/95
Micro-Wiches federal 1,505,035 09/20/88
Pierre & Design state (Ohio) TM7315 05/22/86
Pierre Classics federal 2,052,456 04/15/97
Pierre Main Street Diner federal 2,016,292 11/12/96
Pizza Parlor Sandwich federal 1,270,140 03/13/84
Pizza Parlor Sandwich federal 1,642,199 04/23/91
Pizza Parlor Sub federal 1,926,623 10/10/95
Quick-Wiches federal 1,784,320 07/27/93
Rib-B-Q federal 1,257,730 11/15/83
Rib-B-Q federal 1,270,954 03/20/84
Rib-B-Q federal 1,598,832 05/29/90
Rib-B-Q & Design federal 1,276,424 05/01/84
Rib-B-Q & Design federal 1,275,419 04/24/84
Rib-B-Q & Design foreign (Canada) 305,056 07/19/85
Rib-B-Q foreign (Canada) 305,055 07/19/85
Saus-A-Rage federal 1,928,706 10/17/95
Tastes of the World Logo (copyright) VA613-418 12/16/93
Two-Fers federal 1,505,013 09/20/88
Two-Fers federal 1,599,764 06/05/90
Villa Cinti federal 1,772,497 05/18/93
Wonderbites federal 1,781,595 07/13/98
</TABLE>
<PAGE> 185
<TABLE>
<CAPTION>
Registration Issue
Trademark Type No. Date
- --------- ------- ------------- --------
<S> <C> <C> <C>
Mom `n' Pop's Buffet & Bakery and Design federal 1,802,454 11/02/93
Western Steer Steaks Buffet Bakery
and Design federal 1,773,290 05/25/93
Western Steer Family Retaurant
and Design federal 1,674,648 02/04/92
Western Steer and Design federal 1,626,425 12/04/90
Mom `n' Pop's Country Store and
Restaurant federal 1,460,268 10/06/87
Mom `n' Pop's Country Store and
Restaurant federal 1,460,250 10/06/87
All-American Food Bar federal 1,436,858 04/14/87
For an All-American Family Meal federal 1,428,857 02/10/87
Western Steer Family Steakhouse federal 1,403,394 07/29/86
Western Steer federal 1,391,171 04/22/86
Mom `n' Pop's and Design federal 1,346,951 07/02/85
Mom `n' Pop's and Design federal 1,346,950 07/02/85
Steer and Design federal 1,384,755 02/25/86
Design Only federal 1,333,815 04/30/85
Steerburger federal 1,343,067 06/18/85
Super Stuffed federal 1,364,706 10/08/85
Western Steer Family Steakhouse and
Design federal 1,322,741 02/26/85
Mom `n' Pop's and Design federal 1,341,238 06/11/85
Mom `n' Pop's and Design federal 1,335,749 05/14/85
Mom `n' Pop's federal 1,341,236 06/11/85
`Fluffy' and Design federal 1,272,996 04/03/84
Little Richard the Western Steer
WS and Design federal 1,179,634 11/24/81
Design Only federal 1,214,411 10/26/82
Waltzing Matilda federal 1,165,051 08/11/81
Mom's Kitchen federal 1,146,516 01/27/81
Mom `n' Pop's and Design federal 1,095,528 07/04/78
Mom `n' Pop's and Design federal 1,095,364 07/04/78
Mom `n' Pop's federal 1,065,988 05/17/77
Mom `n' Pop's federal 1,071,065 08/09/77
Western Steer Family Steakhouse federal 1,068,735 06/28/77
Fast Choice federal 2,152,895 [need date]
Rib-B-Q and Design federal 2,132,710 [need date]
Sagebrush Steakhouse & Saloon federal 1,743,755 12/29/92
[Others from Eric Fingerhut]
</TABLE>
<PAGE> 186
<TABLE>
<CAPTION>
Application Serial
Pending Trademark Applications Type Date No.
- ------------------------------ ---- ----------- -------
<S> <C> <C> <C>
H.E.L.P.S. Healthcare Entree
Low Prep Selections federal 11/19/97 75/392520
Pierre & Design foreign (Mexico)
Pierre foreign (Mexico)
Rib-B-Q & Design foreign (Japan) 34095/89
Rib-B-Q & Design foreign (Mexico)
Rib-B-Q foreign (Japan) 34094/89
Rib-B-Q foreign (Mexico)
Boomerang federal 06/14/90 75-119,119
Quick Classics federal 02/26/90 74-032,512
</TABLE>
Patents:
- --------
Exclusive, royalty-free, worldwide and perpetual patent license to be granted by
Hudson Foods, Inc. on June 9, 1998 in the invention entitled "Process for
Preparing Pureed Meat Products" set forth in an application for United States
Letters Patent, Serial No. 08/959,485 recorded in the U.S. Patent and Trademark
Office on October 10, 1997, and which was assigned to Hudson Foods, Inc. by
Assignment dated October 16, 1997 recorded in the U.S. Patent and Trademark
Office on October 28, 1997 at Reel/Frame: 8806/0691.
Copyrights:
- -----------
<TABLE>
<CAPTION>
Registration Registration
Title Type No. Date
- ----- ---- ------------ ------------
<S> <C> <C> <C>
Western Steer Steaks, Buffet,
Bakery: Operations Manual federal Txu618984 08/11/94
Cafeteria Adventures Tastes of
the World Logo federal VA613418 12/16/93
Tastes of the World Promotion
Program: Manager's Kit federal TX3738877 12/27/93
Cafeteria Adventures Radical
Chicken federal VA528350 10/08/92
Cafeteria Adventures Stars &
Stripes General federal VA528349 10/08/92
Cafeteria Adventures Hamburger Man federal VA528348 10/08/92
Cafeteria Adventures Stars & Stripes
Promotion Program federal TX3421700 10/08/92
Cafeteria Adventures Rock `n Roll
Promotion Program federal TX3421699 10/08/92
Cafeteria Adventures Radical
Promotion Program federal TX3421698 10/08/92
</TABLE>
<PAGE> 187
<TABLE>
<S> <C> <C> <C>
Barnyard Basics of Good
Nutrition Questions and Answers federal TX3390603 08/07/92
Barnyard Basics of Good
Nutrition Hunch-Out Toys federal VA524973 08/07/92
Today's Nutritious Lunch:
It's Barnyard Bonus Day! federal VA519990 08/07/92
Barnyard Scene Bulletin Board
Display: Barnyard Basics of
Good Nutrition federal VA519989 08/07/92
Barnyard Basics of Good
Nutrition: For Grades 1 & 2:
Educator's Guide federal TX3380555 08/07/92
Barnyard Basics of Good
Nutrition: For Grades 1 & 2:
Educator's Guide federal TX3291538 04/02/92
</TABLE>
<PAGE> 188
SCHEDULE 6.19
REAL ESTATE
Owned Properties:
- -----------------
<TABLE>
<CAPTION>
Property Address City State Zip
- -------- ------- ---- ----- ---
<S> <C> <C> <C> <C>
Claremont manufacturing facility One WSMP Drive Claremont NC 28610
Cincinnati manufacturing facility 9990 Princeton Road Cincinnati OH 45246
Western Steer #22 1190 Lenoir Rhyne Blvd., SE Hickory NC 28602
Western Steer #51 3062 Hickory Blvd. Hudson NC 28638
Western Steer #111 316 Ehring House St. Elizabeth City NC 27909
Western Steer #292 101 Bost Road Morganton NC 28655
Western Steer #329 314 Blowing Rock Blvd. Lenoir NC 28645
Bennett's #345 1819 Fairgrove Church Road Conover NC 28613
Prime Sirloin #376 3302 S. I-85 Service Road Charlotte NC 28208
Prime Sirloin #382 10450 E. Independence Blvd. Matthews NC 28105
Sagebrush #511 110 Cedar Lane Knoxville TN 37912
Sagebrush #527 566 Arbor Hill Road Kernersville NC 27284
Sagebrush #531 2468 Alcoa Highway Alcoa TN 37701
Sagebrush #532 482 By-Pass 72 NW Greenwood SC 29649
Sagebrush #535 2000 Woodland Drive Mt. Airy NC 27030
Sagebrush #536 428 Jake Alexander Blvd. S. Salisbury NC 28144
Sagebrush #537 5030 Valley View Blvd., NW Roanoke VA 24012
Sagebrush #538 954 Blowing Rock Blvd., NE Lenoir NC 28645
Sagebrush #539 6170 South NC 16 Highway Denver NC 28037
Sagebrush #540 190 Aiken Mall Drive Aiken SC 29803
</TABLE>
<PAGE> 189
<TABLE>
<S> <C> <C> <C> <C>
Sagebrush #541 2100 Dalrymple Street Sanford NC 27330
Sagebrush #546 623 NC 24-27 By-Pass East Albemarle NC 28001
Sagebrush #547 1529 Freeway Drive Reidsville NC 27320
Closed Restaurant 2225 12th Avenue NE Hickory NC
Closed Restaurant 1603 US-1 Ft. Pierce FL
Closed Restaurant 2005 US-1 S St. Augustine FL
Closed Restaurant 997 Sunset Blvd. Jessup FL
Closed Restaurant 1336 Andrew Johnson Highway Morristown TN
Closed Restaurant 2911 Cypress Mill Road Brunswick GA
</TABLE>
<PAGE> 190
Leased Properties:
- ------------------
<TABLE>
<CAPTION>
Property Address City State Zip
- -------- ------- ---- ----- ---
<S> <C> <C> <C> <C>
Western Steer #52 334 SW Blvd. Newton NC 28658
Prime Sirloin #377 19601 Statesville Road Cornelius NC 28031
Prime Sirloin #379 3103 Taylorsville Road Statesville NC 28677
Western Steer #420 26 Radio Road Lexington NC 27292
Western Steer #425 1018 Rockford Street Mt. Airy NC 27030
Western Steer #426 1580 Yadkinville Road Mocksville NC 27028
Western Steer #427 825 E. Main Street Jefferson NC 28640
Western Steer #428 Corner 601 & 421 Yadkinville NC 27055
Western Steer #431 955 Stuart Drive Galax VA 24333
Western Steer #433 112 N. Generals Blvd. Lincolnton NC 28093
Western Steer #434 1675 Blowing Rock Road Boone NC 28607
Western Steer #435 1750 S. Stratford Road Winston-Salem NC 27103
Sagebrush #507 1520 Highway 70, SE Hickory NC 28601
Sagebrush #508 3909 Parkway Pigeon Forge TN 37863
Sagebrush #509 117 Turnersberg Road Statesville NC 28677
Sagebrush #510 390 South Illinois Avenue Oak Ridge TN 37830
Sagebrush #513 1420 Second Street, NE Hickory NC 28601
Sagebrush #514 1111 Highway 105 Boone NC 28607
Sagebrush #515 2445 Cherry Road Rock Hill SC 29730
Sagebrush #516 1600 East Stone Drive Kingsport TN 37660
Sagebrush #517 101 Steakhouse Road Morganton NC 28655
Sagebrush #518 2905 Reynolda Road Winston-Salem NC 27106
Sagebrush #519 2560 Lewisville-Clemmons Road Clemmons NC 27012
Sagebrush #520 895 Russ Avenue Waynesville NC 28786
</TABLE>
<PAGE> 191
<TABLE>
<S> <C> <C> <C> <C>
Sagebrush #521 985 West Asheville Highway Brevard NC 28712
Sagebrush #522 815 Parkway Sevierville TN 37862
Sagebrush #523 2250 Hendersonville Road Arden NC 28704
Sagebrush #524 1302 Collegiate Drive Wilkesboro NC 28697
Sagebrush #525 608 C West Roosevelt Blvd. Monroe NC 28110
Sagebrush #526 217 Airport Road Gatlinburg TN 37738
Sagebrush #528 1541 West Floyd Baker Blvd. Gaffney SC 29341
Sagebrush #529 2614 North Roan Johnson City TN 37601
Sagebrush #530 7815 Timberlake Road Lynchburg VA 24502
Sagebrush #533 204 Southgate Square Shopping Center Colonial Heights VA 23834
Sagebrush #534 2323 East Morris Blvd. Morristown TN 37814
Sagebrush #542 801 N. Lake Drive Lexington SC 29072
Sagebrush #543 201 Heritage Blvd. Newport TN 37821
Sagebrush #544 800 South Main Street Graham NC 27253
Sagebrush #545 5920 University Parkway Stanleyville NC 27105
Sagebrush #548 190 Nye Road Wytheville NC 24382
Sagebrush #549 630 Randolph Mall Asheboro NC 27203
Sagebrush #550 1432 N. Bridge Street Elkin NC 28621
Sagebrush #551 1006 East Cumberland Street Dunn NC 28335
Closed restaurant 504 Leming Drive Morganton NC
Closed restaurant 536 Highway 64-70 Hickory NC
Closed restaurant 1600 N. Queen St. Kinston NC
Closed restaurant 835 S. Main St. Kernersville NC
Closed restaurant Route 3 Tobbaccoville NC
Closed restaurant 751 W. Elk Ave. Elizabethton TN
</TABLE>
<PAGE> 192
SCHEDULE 6.24
TAXES
(a) The Borrowers and Subsidiaries routinely file permitted requests for
extensions for their federal and state tax returns.
(b) The state of North Carolina is currently auditing WSMP, Inc. in
connection with its state income tax returns for the 1992, 1993, 1994
and 1995 tax years. No material liability is expected to result from
such audits.
<PAGE> 193
SCHEDULE 6.28
MATERIAL CONTRACTS
1. License Agreement between WSMP, Inc. and Hardee's Food Systems, Inc.
dated January 30, 1998.
2. License Agreement between WSMP, Inc. and Checkers Drive-In Restaurants,
Inc. dated January 30, 1998.
3. License Agreement between WSMP, Inc. and Rally' Hamburgers, Inc. dated
January 30, 1998.
4. License Agreement between WSMP, Inc. and GB Foods Corp. dated January
30, 1998.
5. Production/Pricing Agreement between WSMP, Inc. and Hormel Company.
6. Procurement Agreement between Fresh Foods, Inc. and Institutional Food
House, Inc. dated May 28, 1998.
7. Management Contract between WSMP, Inc. and HERTH Management, Inc. dated
June 23, 1995, extended by an Extension Agreement dated August 29,
1997.
8. Employment Agreement between WSMP, Inc. and David R. Clark dated June
30, 1996 and subsequently amended on February 23, 1998.
9. Employment Agreement between WSMP, Inc. and L. Dent Miller dated
January 29, 1998.
10. Consulting and Noncompetition Agreement between WSMP, Inc. and Charles
F. Connor, Jr. dated January 29, 1998.
11. Employment Agreement between WSMP, Inc. and Norbert E. Woodhams dated
February 1998.
The following Material Contracts are to be assigned to Pierre Foods, LLC by
Hudson Foods, Inc. on June 9, 1998:
1. Trademark License Agreement between Hudson Foods, Inc. and Nathan's
Famous dated October 14, 1997.
2. Trademark Agreement between Hudson Foods, Inc. and Sysco Corporation.
3. Custom Manufacturing Agreement between Hudson Foods, Inc. and E.A.
Sween Company dated July 7, 1997.
4. Custom Manufacturing Agreement between Hudson Foods, Inc. and Fairmont
Foods of Minnesota dated March 25, 1997.
5. Custom Manufacturing Agreement between Hudson Foods, Inc. and Suzanna's
Kitchen, Inc. dated August 6, 1997.
6. Master Processing Agreements for the period from July 1, 1998 through
June 30, 1999 between Hudson Foods, Inc. (and variations of such name)
and the following state agencies:
Arkansas Department of Human Services
California Department of Education
Colorado State Department of Human Services
Connecticut DAS Food Distribution Program
Florida Department of Agriculture
Georgia State Board of Education
Idaho Department of Education
Illinois State Board of Education
Kentucky Division of Food Distribution
Louisiana Department of Agriculture and Forestry
Maryland Department of Education
Massachusetts Department of Education
Michigan Department of Education
Missouri Department of Education
Nebraska Health and Human Services
Nevada Department of Administration
New Hampshire Surplus Distribution Section
New Jersey Department of Agriculture
New Mexico Human Services Department
<PAGE> 194
New York Office of General Services
Ohio Department of Education
North Carolina Department of Agriculture
Oklahoma Department of Human Services
Oregon Department of Education
Pennsylvania Department of Agriculture
Rhode Island Food Distribution Program
South Carolina Department of Agriculture
Texas Department of Human Services
Wyoming Department of Education
Wisconsin Department of Public Information
Virginia Department of Agriculture
Utah State Office of Education
<PAGE> 195
SCHEDULE 6.30
AFFILIATE TRANSACTIONS
None.
<PAGE> 196
SCHEDULE 6.31
KEY MEMBERS OF MANAGEMENT
The key members of management of the Borrowers and Subsidiaries are as follows:
<TABLE>
<CAPTION>
Name Position(s) with the Company
- ---- ----------------------------
<S> <C>
Richard F. Howard Chairman of the Board, Fresh Foods, Inc.
James C. Richardson, Jr. Vice Chairman of the Board and Chief Executive Officer,
Fresh Foods, Inc.
David R. Clark President and Chief Operating Officer, Fresh Foods, Inc.
James E. Harris Executive Vice President, Chief Financial Officer,
Treasurer and Secretary, Fresh Foods, Inc.
Norbert E. Woodhams President, Pierre Foods, LLC
L. Dent Miller President, Claremont Restaurant Group, LLC
Larry D. Hefner President, Mom `n' Pop's Country Ham, LLC
Noland M. Mewborn Vice President of Finance, Fresh Foods, Inc.
</TABLE>
<PAGE> 197
SCHEDULE 6.34
RESTAURANT BUSINESS
The Company's restaurant operations are located primarily in smaller
cities and suburban areas in the southeastern United States, a market niche
where the primary competitors are economy steakhouses. At May 1, 1998, the
Company owned and operated 38 Sagebrush steakhouse restaurants, which provide
family-oriented, full-service, casual dining in an atmosphere suggestive of a
Texas roadhouse. The Company also owned and operated 17 Western Steer and five
Prime Sirloin restaurants, which are more mature family steakhouses using the
"buffet and bakery" format, and one Bennett's barbecue-style restaurant.
Sagebrush restaurants are the only causal dining steakhouses in a majority of
the local markets in which they operate. The Company intends to convert all but
seven of its family steakhouse restaurants to the Sagebrush concept within two
years based on the historically attractive unit economics of the Sagebrush
format. A typical Sagebrush restaurant generates 44% more revenue and 99% more
EBITDA than a typical Western Steer restaurant. The Company has extensive
experience in converting restaurants to the Sagebrush format as 27 of the
Company's 38 Sagebrush restaurants were originally converted from other
restaurant concepts. Since Fresh Foods acquired Sagebrush, Inc. in January 1998,
the Company has converted three Western Steer restaurants to the Sagebrush
concept and has realized a significant increase in weekly sales volume at these
locations. Other than the restaurants currently being converted and three new
Sagebrush restaurants in development, the company has no plans to build other
Sagebrush restaurants.
<PAGE> 198
SCHEDULE 9.3
SALES OF ASSETS
None.
<PAGE> 199
SCHEDULE 9.10
BANK ACCOUNTS
WSMP, Inc.
Bank Confirmation Control
For the Year Ended Feb. 27, 1998
<TABLE>
<CAPTION>
===================================================================================================================================
Bank
Corporation Store Name Account
Name # & Address #
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
WSMP, Inc. 1 HOME OFFICE NationsBank 511242489
P.O. Box 30120
104-11
Charlotte, NC 28255
WSMP, Inc. Sinking Fund 1 HOME OFFICE NationsBank 510086325
P.O. Box 30120
104-11
Charlotte, NC 28255
WSMP, Inc. 1 HOME OFFICE Rosie Erb 5800003289
NationsBank
ARP Dept C015-2
P O Box 31590
Tampa,FL 33631
WSMP, Inc. 1 HOME OFFICE Rosie Erb 5800003297
NationsBank
ARP Dept C015-2
P O Box 31590
Tampa,FL 33631
WSMP, Inc. Certificate Deposit 1 HOME OFFICE Bank of Granite 142580
Jo Wagoner
P.O. Box 189
Newton, NC 28658
WSMP, Inc. Payroll Acct. 1 HOME OFFICE Peoples Bank 534828745
P O Box 467
Newon, NC 28658
</TABLE>
<PAGE> 200
<TABLE>
<S> <C> <C> <C> <C>
WSMP, INC. 1 HOME OFFICE Rosie Erb 5800003262
NationsBank
ARP Dept C015-2
P O Box 31590
Tampa,FL 33631
WSMP, INC. 1 HOME OFFICE Rosie Erb 5800003270
NationsBank
ARP Dept C015-2
P O Box 31590
Tampa,FL 33631
WSMP, Inc. 1 HOME OFFICE Peoples Bank 558053356
P O Box 467
Newon, NC 28658
WSMP, Inc. 1 HOME OFFICE Peoples Bank 350180751
P O Box 467
Newon, NC 28658
WSMP, Inc. 1 HOME OFFICE Peoples Bank 534822052
P O Box 467
Newon, NC 28658
WSMP, Inc. Deposit Acct. 1 HOME OFFICE South Trust 60929918
P O Box 563975
Charlotte, NC 28256
WSMP, Inc. Investment Acct. 1 HOME OFFICE South Trust 60929929
P O Box 563975
Charlotte, NC 28256
WSMP, Inc. Disbursement Acct 1 HOME OFFICE South Trust 64007168
P O Box 2425
Ft. Myers, FL 33902
</TABLE>
<PAGE> 201
<TABLE>
<S> <C> <C> <C> <C>
WSMP, Inc. CD 1 HOME OFFICE Lincoln Bank 8957
P O Box 657
Lincolnton, NC 28093
WSMP, Inc. CD 1 HOME OFFICE First Century 6001520
P O Box 879
Wytheville, VA 23482
WSMP, Inc. 1 HOME OFFICE J.C. Bradford & Co. 139-84421-
(Western Steer Gift Cert. Acct.) P.O. Box 3857 1-9-792
Hickory, NC 28603
WSMP,Inc. Money Market 1 HOME OFFICE Peoples Bank 534800645
P O Box 467
Newon, NC 28658
WSMP, Inc. 1 FRANCHISE PAYROLL Carolina First 1010058546
P O Box 1029
Greenville, SC 29602
WSMP, Inc. 6 ACCOUNTING SERVICE Carolina First 1010055740
P O Box 1029
Greenville, SC 29602
WSMP, Inc. 6 ACCOUNTING SERVICE Carolina First 1010058554
P O Box 1029
Greenville, SC 29602
WSMP, Inc. 17-292- MOM'S KITCH-MORG First Union National Bank 2000000437079
329 W/S MORGANTON P.O. Box 279
W/S LENOIR Hickory, NC 28603
22 L R BLVD- HICKORY Peoples Bank 53-480076-9
P.O. Box 467
Newton, NC 28658
WSMP, Inc. 51 W/S HUDSON Bank of Granite 1606549
Jo Wagoner
P O Box 189
Newton, NC 28658
</TABLE>
<PAGE> 202
<TABLE>
<S> <C> <C> <C> <C>
WSMP, Inc. 51 W/S HUDSON Centura Bank 0430006525
P O Box 1220
Rocky Mount, NC 27802
WSMP, Inc. 52 W/S NEWTON Peoples Bank 53-480089-2
P.O. Box 467
Newton, NC 28658
WSMP, Inc. 111 W/S ELIZABETH CITY First Citizens Bank 595-18-02-953
P.O. Box 1588
Elizabeth City, NC 27906
WSMP, Inc. 111 W/S ELIZABETH CITY B B & T 5115548893
P O Box 819
Wilson, NC 27894-0819
WSMP, Inc. 291 W/S SPRINGS ROAD Peoples Bank 534800777
P.O. Box 467
Newton, NC 28658
WSMP, Inc. 329 W/S LENOIR Bank of Granite 160-653-0
Jo Wagoner
P.O. Box 189
Newton, NC 28658
WSMP, Inc. 331 WSMP SPORTS Peoples Bank 53-482159-1
AFFILIATION P.O. Box 467
Newton, NC 28658
WSMP, Inc. 345 BENNETT'S CONOVER Peoples Bank 53-481939-7
P.O. Box 467
Newton, NC 28658
</TABLE>
<PAGE> 203
<TABLE>
<S> <C> <C> <C> <C>
WSMP, Inc. 345 BENNETT'S CONOVER Peoples Bank 534826699
BEVERAGE ACCT. P.O. Box 467
Newton, NC 28658
WSMP, Inc. 376 PRIME- BILLY GRAHAM Lincoln Bank 0034185
P O Box 657
Lincolnton, NC 28093
WSMP, Inc. 377 PRIME-CORNELIUS Lincoln Bank 0034193
P O Box 657
Lincolnton, NC 28093
WSMP, Inc. 378 PRIME-ASHEBORO First National Bank & Trust 0180998
P O Box 1328
Asheboro , NC 27204
WSMP, Inc. 379 PRIME - STATESVILLE Peoples Bank 534822094
P.O. Box 467
Newton, NC 28658
WSMP, Inc 379 PRIME - STATESVLLE Centura Bank 097000-317-3
P O Box 6057
Rocky Mount, NC 27802-6057
WSMP, Inc. 420 W/S-LEXINGTON First Union National Bank 2000000581624
P.O. Box 279
Hickory, NC 28603
WSMP, Inc. 421 W/S-STANLEYVILLE First Citizen's Bank 4851435102
P O Box 27131
Raleigh, NC 27611-7131
WSMP, Inc. 422 W/S-KERNERSVILLE Centura Bank 0402064250
P O Box 1220
Rocky Mount, NC 27802
</TABLE>
<PAGE> 204
<TABLE>
<S> <C> <C> <C> <C>
WSMP, Inc. 423 W/S-GRAHAM Wachovia 1447035020
212 S. Main St.
Graham. NC 27253
WSMP, Inc. 424 W/S-ELKIN First Union National Bank 2000000261436
P.O. Box 279
Hickory, NC 28603
WSMP, Inc. 425 W/S-MT. AIRY First Union National Bank 2000000824763
P.O. Box 279
Hickory, NC 28603
WSMP, Inc. 426 W/S-MOCKSVILLE B B & T 5113863406
P O Box 1626
Wilson, NC 27893
WSMP, Inc. 427 W/S-JEFFERSON First Union National Bank 2000000796325
P.O. Box 279
Hickory, NC 28603
WSMP, Inc. 428 W/S-YADKINVILLE Central Carolina Bank 58-1038715
P O Box 427
Yadkinville, NC 27055
WSMP, Inc. 429 W/S-TOBACCOVILLE First Union National Bank 2000000382085
P.O. Box 279
Hickory, NC 28603
WSMP, Inc. 430 W/S-ELIZABETHTON Carter County Bank 62278
P O Box 1990
Elizabethton, TN 37644-1990
WSMP, Inc. 431 W/S-GALAX Mountain National Bank 090221130000
P O Box 165
Galax, VA 24333
</TABLE>
<PAGE> 205
<TABLE>
<S> <C> <C> <C> <C>
WSMP, Inc. 431 W/S-GALAX Bank of Carroll 160154701
P O Box 407
Galax, VA 24333
WSMP, Inc. 432 W/S-WYTHEVILLE First Century Bank 83000283
P O Box 879
Wytheville, VA 24382
WSMP, Inc. 433 W/S-LINCOLNTON Lincoln Bank 34363
P O Box 657
Lincolnton, NC 28093
WSMP, Inc. 434 W/S-BOONE First Union National Bank 2000000988159
P.O. Box 279
Hickory, NC 28603
WSMP, Inc. 435 W/S-WINSTON SALEM First Citizen's Bank 4851435209
P O Box 27131
Raleigh, NC 27611-7131
OPERATING ACCOUNTS - CONSOLIDATED SUBS.
South Carolina WSMP, Inc. 58 S. C. WSMP, INC.-HO Peoples Bank 534830444
P.O. Box 467
Newton, NC 28658
Sunshine WSMP, Inc. 95 SUNSHINE WSMP-H.O. Peoples Bank 534827085
P.O. Box 467
Newton, NC 28658
Georgia WSMP, Inc. 141 GEORGIA WSMP, INC Peoples Bank 534827028
HOME OFFICE P.O. Box 467
Newton, NC 28658
Elloree Foods, Inc. 208 LEXINGTON, SC Carolina First Bank 1040057770
P.O. Box 1029
Greenville, SC 29602
</TABLE>
<PAGE> 206
<TABLE>
<S> <C> <C> <C> <C>
Tennessee WSMP, Inc. 233 TENN. WSMP - H. O. Peoples Bank 534828869
P.O. Box 467
Newton, NC 28658
Tennessee WSMP, Inc. 244 NEWPORT, TN Union Planters Bank 0590001173
P O Box 1217
Morristown, TN 37816-1217
Naples Food, Inc. 267 NAPLES FOODS, INC. Peoples Bank 534826954
HOME OFFICE P.O. Box 467
Newton, NC 28658
Seven Stars, Inc. 272 WALDORF, MD NationsBank 2593006042
P O Box 27025
Richmond, VA 23261-7025
Prime Sirloin, Inc. 360 PRIME SIRLOIN, INC. Peoples Bank 558537908
P.O. Box 467
Newton, NC 28658
Matthews Prime Sirloin, Inc. 382 PRIME-MATTHEWS BB & T 5110423901
P.O. Box 1626
Wilson, NC 27893
St. Augustine Foods, Inc. 416 ST. AUGUSTINE, FL First Union National Bank 2090000394135
P O Box 279
Hickory, NC 28603
D & S Food Systems, L L C 417 JESUP, GA SunTrust Bank 9800273360
P O Box 129
Jesup, GA 31545-3509
Brunswick Associates, Inc. 465 BRUNSWICK ASSOC. First Union National Bank 2074380537421
P O Box 279
Hickory, NC 28603
</TABLE>
<PAGE> 207
<TABLE>
<S> <C> <C> <C> <C>
OPERATING ACCOUNTS - UNCONSOLIDATED SUBS.
Georgia Buffet Restaurants, Inc. 412 BUFORD, GA SouthTrust Bank 68-960-083
4325 Hwy 20
Buford, Ga. 30518
Georgia Buffet Restaurants, Inc. 413 CANTON, GA Security State Bank 105502
P.O. Box 351
Canton, GA 30114
BANK ACCOUNTS: PIERRE FOODS
- ----------------------------
Pierre Foods Depository Star Bank 48079-7117
Account Checking Business
Pierre Foods Payroll Star Bank 48079-7125
Account Checking Business
</TABLE>
<PAGE> 1
EXHIBIT 99.2
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Security Agreement") is entered into as
of June 9, 1998 among FRESH FOODS INC., a Delaware corporation (the "Company"),
the Subsidiary Borrowers identified on the signature pages hereto (the
"Subsidiary Borrower") and such other subsidiaries of the Company as may from
time to time become party hereto (hereinafter, the Company and the Subsidiary
Borrower are collectively referred to as the "Obligors" and, individually, as an
"Obligor") and FIRST UNION COMMERCIAL CORPORATION, in its capacity as agent (in
such capacity, the "Agent") for the financial institutions from time to time
party to the Credit Agreement described below (the "Lenders").
RECITALS
WHEREAS, pursuant to that certain Credit Agreement, dated as of the
date hereof (as amended, modified, extended, renewed or replaced from time to
time, the "Credit Agreement"), among the Company, the Subsidiary Borrowers, the
Lenders and the Agent, the Lenders have agreed to make Revolving Loans and issue
Letters of Credit upon the terms and subject to the conditions set forth
therein; and
WHEREAS, it is a condition precedent to the effectiveness of the Credit
Agreement and the obligations of the Lenders to make their respective Revolving
Loans and to issue Letters of Credit under the Credit Agreement that the
Obligors shall have executed and delivered this Security Agreement to the Agent
for the ratable benefit of the Lenders.
NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Definitions.
(a) Unless otherwise defined herein, capitalized terms used
herein shall have the meanings ascribed to such terms in the Credit
Agreement, and the following terms which are defined in the Uniform
Commercial Code in effect in the State of North Carolina on the date
hereof are used herein as so defined: Accounts, Chattel Paper, Deposit
Accounts, Documents, Equipment, Farm Products, Fixtures, General
Intangibles, Instruments, Inventory, Investment Property, Money and
Proceeds. For purposes of this Security Agreement, the term "Lender"
shall include any affiliate of any Lender which has entered into any
Interest Rate Protection Agreement entered into with respect to the
Obligations.
(b) In addition, the following terms shall have the following
meanings:
"Contracts": (a) the Asset Purchase Agreement dated as of
April 10, 1998 between Fresh Foods of North Carolina, LLC, a
wholly-owned subsidiary of Fresh Foods, Inc., and Hudson Foods, Inc.,
as the same may from time to time be amended, modified or supplemented
and (b) all other contracts and agreements to which an Obligor is a
party, as
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<PAGE> 2
each may be amended, supplemented or otherwise modified from time to
time, including, without limitation, (i) all rights of such Obligor to
receive moneys due and to become due to it thereunder or in connection
therewith, (ii) all rights of such Obligor to damages arising out of or
for breach or default in respect thereof and (iii) all rights of such
Obligor to exercise all remedies thereunder.
"Copyright Licenses": any written agreement, naming any
Obligor as licensor, granting any right under any Copyright including,
without limitation, any thereof referred to in Schedule 1(b) hereto.
"Copyrights": (a) all registered United States copyrights in
all Works, now existing or hereafter created or acquired, all
registrations and recordings thereof, and all applications in
connection therewith, including, without limitation, registrations,
recordings and applications in the United States Copyright office
including, without limitation, any thereof referred to in Schedule 1(b)
hereto, and (b) all renewals thereof including, without limitation, any
thereof referred to in Schedule 1(b) hereto.
"Patent License": all agreements, whether written or oral,
providing for the grant by or to an Obligor of any right to
manufacture, use or sell any invention covered by a Patent, including,
without limitation, any thereof referred to in Schedule 1(b) hereto.
"Patents": (a) all letters patent of the United States or any
other country and all reissues and extensions thereof, including,
without limitation, any thereof referred to in Schedule 1(b) hereto,
and (b) all applications for letters patent of the United States or any
other country and all divisions, continuations and
continuations-in-part thereof, including, without limitation, any
thereof referred to in Schedule 1(b) hereto.
"Secured Obligations": (a) all Obligations and (b) all
expenses and charges, legal and otherwise, reasonably incurred by the
Agent and/or the Lenders in collecting or enforcing any Obligations or
in realizing on or protecting any security therefor, including without
limitation the security afforded hereunder.
"Trademark License": means any agreement, written or oral,
providing for the grant by or to an Obligor of any right to use any
Trademark, including, without limitation, any thereof referred to in
Schedule 1(b) hereto.
"Trademarks": (a) all trademarks, trade names, corporate
names, company names, business names, fictitious business names, trade
styles, service marks, logos and other source or business identifiers,
and the goodwill associated therewith, now existing or hereafter
adopted or acquired, all registrations and recordings thereof, and all
applications in connection therewith, whether in the United States
Patent and Trademark Office or in any similar office or agency of the
United States, any State thereof or any other country or any political
subdivision thereof, or otherwise, including, without limitation, any
thereof referred to in Schedule 1(b) hereto, and (b) all renewals
thereof.
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<PAGE> 3
"Work": any work which is subject to copyright protection
pursuant to Title 17 of the United States Code.
2. Grant of Security Interest in the Collateral. To secure the
prompt payment and performance in full when due, whether by lapse of time,
acceleration or otherwise, of the Secured Obligations, each Obligor hereby
grants to the Agent, for the benefit of the Lenders, a continuing security
interest in, and a right to set off against, any and all right, title and
interest of such Obligor in and to the following, whether now owned or existing
or owned, acquired, or arising hereafter (collectively, the "Collateral"):
(a) all Accounts;
(b) all Chattel Paper;
(c) all Copyrights;
(d) all Copyright Licenses;
(e) all Deposit Accounts;
(f) all Documents;
(g) all Equipment;
(h) all Fixtures;
(i) all General Intangibles including, without
limitation, all rights under the Contracts;
(j) all Instruments;
(k) all Inventory;
(l) all Investment Property;
(m) all Money;
(n) all Patents;
(o) all Patent Licenses;
(p) all Trademarks;
(q) all Trademark Licenses;
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<PAGE> 4
(r) the Lockbox Accounts, the FUCC Account and any
replacement or successor accounts relating thereto;
(s) all books, records, ledger cards, files,
correspondence, computer programs, tapes, disks, and
related data processing software (owned by such
Obligor or in which it has an interest) that at any
time evidence or contain information relating to any
Collateral or are otherwise necessary or helpful in
the collection thereof or realization thereupon; and
(t) to the extent not otherwise included, all Proceeds
and products of any and all of the foregoing.
The Obligors and the Agent, on behalf of the Lenders, hereby
acknowledge and agree that the security interest created hereby in the
Collateral (i) constitutes continuing collateral security for all of the Secured
Obligations, whether now existing or hereafter arising and (ii) is not to be
construed as an assignment of any Copyrights, Copyright Licenses, Patents,
Patent Licenses, Trademarks or Trademark Licenses.
3. Representations and Warranties. Each Obligor hereby represents
and warrants to the Agent, for the benefit of the Lenders, that so long as any
of the Secured Obligations remain outstanding or any Credit Document is in
effect or any Letter of Credit shall remain outstanding, and until all of the
Commitments shall have been terminated:
(a) Chief Executive Office; Books & Records. Each
Obligor's chief executive office and chief place of business is (and
for the prior four months have been) located at the locations set forth
on Schedule 3(a) hereto, and each Obligor keeps its books and records
at such locations.
(b) Location of Collateral. The location of all
Collateral owned by each Obligor is as shown on Schedule 3(b) hereto.
(c) Ownership. Each Obligor is the legal and beneficial
owner of its Collateral and has the right to pledge, sell, assign or
transfer the same. Each Obligor's legal name is as shown in this
Security Agreement and no Obligor has in the past four months changed
its name, been party to a merger, consolidation or other change in
structure or used any tradename except as set forth in Schedule 3(c)
attached hereto.
(d) Security Interest/Priority. This Security Agreement
creates a valid security interest in favor of the Agent, for the
benefit of the Lenders, in the Collateral of such Obligor and, when
properly perfected by filing, shall constitute a valid perfected
security interest in such Collateral, to the extent such security can
be perfected by filing under the UCC, free and clear of all Liens
except for Permitted Liens.
(e) Farm Products. None of the Collateral constitutes, or
is the Proceeds of, Farm Products.
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<PAGE> 5
(f) Accounts. (i) Each Account of the Obligors and the
papers and documents relating thereto are genuine and in all material
respects what they purport to be, (ii) each Account arises out of (A) a
bona fide sale of goods sold and delivered by such Obligor (or is in
the process of being delivered) or (B) services theretofore actually
rendered by such Obligor to, the account debtor named therein, (iii) no
Account of an Obligor is evidenced by any Instrument or Chattel Paper
unless such Instrument or Chattel Paper has been theretofore endorsed
over and delivered to the Agent and (iv) no surety bond was required or
given in connection with any Account of an Obligor or the contracts or
purchase orders out of which they arose.
(g) Inventory. No Inventory is held by an Obligor
pursuant to consignment, sale or return, sale on approval or similar
arrangement.
(h) Copyrights, Patents and Trademarks.
(i) Schedule 1(b) hereto includes all Copyrights,
Copyright Licenses, Patents, Patent Licenses, Trademarks and
Trademark Licenses owned by the Obligors in their own names as
of the date hereof.
(ii) To the best of each Obligor's knowledge, each
Copyright, Patent and Trademark of such Obligor is valid,
subsisting, unexpired, enforceable and has not been abandoned.
(iii) Except as set forth in Schedule 1(b) hereto,
none of such Copyrights, Patents and Trademarks is the subject
of any licensing or franchise agreement.
(iv) No holding, decision or judgment has been
rendered which would limit, cancel or question the validity of
any Copyright, Patent or Trademark.
(v) No action or proceeding is pending seeking
to limit, cancel or question the validity of any Copyright,
Patent or Trademark, or which, if adversely determined, would
have a material adverse effect on the value of any Copyright,
Patent or Trademark.
(vi) All applications pertaining to the
Copyrights, Patents and Trademarks of each Obligor have been
duly and properly filed, and all registrations or letters
pertaining to such Copyrights, Patents and Trademarks have
been duly and properly filed and issued, and all of such
Copyrights, Patents and Trademarks are valid and enforceable.
(vii) No Obligor has made any assignment or
agreement in conflict with the security interest in the
Copyrights, Patents or Trademarks of each Obligor hereunder.
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<PAGE> 6
4. Covenants. Each Obligor covenants that, so long as any of the
Secured Obligations remain outstanding or any Credit Document is in effect or
any Letter of Credit shall remain outstanding, and until all of the Commitments
shall have been terminated, such Obligor shall:
(a) Other Liens. Defend the Collateral against the claims
and demands of all other parties claiming an interest therein, keep the
Collateral free from all Liens, except for Permitted Liens, and not
sell, exchange, transfer, assign, lease or otherwise dispose of the
Collateral or any interest therein, except as permitted under the
Credit Agreement.
(b) Preservation of Collateral. Keep the Collateral in
good order, condition and repair and not use the Collateral in
violation of the provisions of this Security Agreement or any other
agreement relating to the Collateral or any policy insuring the
Collateral or any applicable statute, law, bylaw, rule, regulation or
ordinance.
(c) Instruments/Chattel Paper. If any amount payable
under or in connection with any of the Collateral shall be or become
evidenced by any Instrument or Chattel Paper, immediately deliver such
Instrument or Chattel Paper to the Agent, duly indorsed in a manner
satisfactory to the Agent, to be held as Collateral pursuant to this
Security Agreement.
(d) Change in Location. Not, without providing 30 days
prior written notice to the Agent and without filing such amendments to
any previously filed financing statements as the Agent may require, (a)
change the location of its chief executive office and chief place of
business (as well as its books and records) from the locations set
forth on Schedule 3(a) hereto, (b) change the location of its
Collateral from the locations set forth for such Obligor on Schedule
3(b) hereto, or (c) change its name, be party to a merger,
consolidation or other change in structure or use any tradename other
than as set forth on Schedule 3(c) attached hereto.
(e) Inspection. Upon reasonable notice, at such
reasonable times and as often as may be reasonably desired, allow the
Agent, any Lender or their respective representatives free access to
and right of inspection of the tangible Collateral.
(f) Perfection of Security Interest. Execute and deliver
to the Agent such agreements, assignments or instruments (including
affidavits, notices, reaffirmations and amendments and restatements of
existing documents, as the Agent may reasonably request) and do all
such other things as the Agent may reasonably deem necessary or
appropriate (i) to assure to the Agent its security interests
hereunder, including (A) such financing statements (including renewal
statements) or amendments thereof or supplements thereto or other
instruments as the Agent may from time to time reasonably request in
order to perfect and maintain the security interests granted hereunder
in accordance with the UCC, (B) with regard to Copyrights, a Notice of
Grant of Security Interest in Copyrights in the form of Schedule
4(f)(i), (C) with regard to Patents, a Notice of Grant of Security
Interest in Patents for filing with the United States Patent and
Trademark Office in the form of Schedule 4(f)(ii) attached hereto and
(D) with regard to Trademarks, a Notice of Grant of Security Interest
in Trademarks for filing with the United States Patent and Trademark
Office in the
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<PAGE> 7
form of Schedule 4(f)(iii) attached hereto, (ii) to consummate the
transactions contemplated hereby and (iii) to otherwise protect and
assure the Agent of its rights and interests hereunder. To that end,
each Obligor agrees that the Agent may file one or more financing
statements disclosing the Agent's security interest in any or all of
the Collateral of such Obligor without, to the extent permitted by law,
such Obligor's signature thereon, and further each Obligor also hereby
irrevocably makes, constitutes and appoints the Agent, its nominee or
any other person whom the Agent may designate, as such Obligor's
attorney in fact with full power and for the limited purpose to sign in
the name of such Obligor any such financing statements, or amendments
and supplements to financing statements, renewal financing statements,
notices or any similar documents which in the Agent's reasonable
discretion would be necessary, appropriate or convenient in order to
perfect and maintain perfection of the security interests granted
hereunder, such power, being coupled with an interest, being and
remaining irrevocable so long as the Credit Agreement is in effect or
any amounts payable thereunder or under any other Credit Document or
any Letter of Credit shall remain outstanding, and until all of the
Commitments thereunder shall have terminated. Each Obligor hereby
agrees that a carbon, photographic or other reproduction of this
Security Agreement or any such financing statement is sufficient for
filing as a financing statement by the Agent without notice thereof to
such Obligor wherever the Agent may in its sole discretion desire to
file the same. In the event for any reason the law of any jurisdiction
other than North Carolina becomes or is applicable to the Collateral of
any Obligor or any part thereof, or to any of the Secured Obligations,
such Obligor agrees to execute and deliver all such instruments and to
do all such other things as the Agent in its sole discretion reasonably
deems necessary or appropriate to preserve, protect and enforce the
security interests of the Agent under the law of such other
jurisdiction (and, if an Obligor shall fail to do so promptly upon the
request of the Agent, then the Agent may execute any and all such
requested documents on behalf of such Obligor pursuant to the power of
attorney granted hereinabove). If any Collateral is in the possession
or control of an Obligor's agents and the Agent so requests, such
Obligor agrees to notify such agents in writing of the Agent's security
interest therein and, upon the Agent's request, instruct them to hold
all such Collateral for the Lenders' account and subject to the Agent's
instructions. Each Obligor agrees to mark its books and records to
reflect the security interest of the Agent in the Collateral.
(g) Covenants Relating to Accounts.
(i) Comply with all provisions of the Credit
Agreement relating to the establishment and maintenance of the
Lockboxes.
(ii) Comply with all reporting requirements set
forth in the Credit Agreement with respect to Accounts.
(iii) Upon the occurrence of any Event of Default
and during the continuation thereof, set aside and hold as
trustee for the Agent any merchandise which is returned by a
customer or account debtor or otherwise recovered. Unless and
until an Event of Default occurs and is continuing, each
Obligor may settle and adjust disputes and claims with its
customers and account debtors, handle
7
<PAGE> 8
returns and recoveries and grant discounts, credits and
allowances in the ordinary course of its business as presently
conducted and otherwise for amounts and on terms which such
Obligor in good faith considers advisable. However, upon the
occurrence of any Event of Default and during the continuation
thereof, if so instructed by the Agent, such Obligor shall
settle and adjust disputes and claims at no expense to the
Agent, but no discount, credit or allowance other than on
normal trade terms in the ordinary course of business shall be
granted to any customer or account debtor and no returns of
merchandise shall be accepted by such Obligor without the
Agent's consent. The Agent may (but shall not be required to),
at all times upon the occurrence of any Event of Default and
during the continuance thereof, settle or adjust disputes and
claims directly with customers or account debtors for amounts
and upon terms which the Agent considers advisable.
(h) Covenants Relating to Inventory.
(i) Maintain, keep and preserve the Inventory in
good saleable condition at its own cost and expense.
(ii) Comply with all reporting requirements set
forth in the Credit Agreement with respect to Inventory.
(iii) If any of the Inventory is at any time
evidenced by a document of title, immediately upon request by
the Agent, deliver such document of title to the Agent.
(i) Covenants Relating to Copyrights.
(i) Employ the Copyright for each Work with such
notice of copyright as may be required by law to secure
copyright protection.
(ii) Not do any act or knowingly omit to do any
act whereby any material Copyright may become invalidated and
(A) not do any act, or knowingly omit to do any act, whereby
any material Copyright may become injected into the public
domain; (B) notify the Agent immediately if it knows, or has
reason to know, that any material Copyright may become
injected into the public domain or of any adverse
determination or development (including, without limitation,
the institution of, or any such determination or development
in, any court or tribunal in the United States or any other
country) regarding an Obligor's ownership of any such
Copyright or its validity; (C) take all necessary steps as it
shall deem appropriate under the circumstances, to maintain
and pursue each application (and to obtain the relevant
registration) and to maintain each registration of each
material Copyright owned by an Obligor including, without
limitation, filing of applications for renewal where
necessary; and (D) promptly notify the Agent of any material
infringement of any material Copyright of an Obligor of which
it becomes aware and take such actions as it shall reasonably
deem appropriate under the circumstances to protect
8
<PAGE> 9
such Copyright, including, where appropriate, the bringing of
suit for infringement, seeking injunctive relief and seeking
to recover any and all damages for such infringement.
(iii) Not make any assignment or agreement in
conflict with the security interest in the Copyrights of each
Obligor hereunder.
(j) Covenants Relating to Patents and Trademarks.
(i) (A) Continue to use each Trademark on each
and every trademark class of goods applicable to its current
line as reflected in its current catalogs, brochures and price
lists in order to maintain such Trademark in full force free
from any claim of abandonment for non-use, (B) maintain as in
the past the quality of products and services offered under
such Trademark, (C) employ such Trademark with the appropriate
notice of registration, (D) not adopt or use any mark which is
confusingly similar or a colorable imitation of such Trademark
unless the Agent, for the ratable benefit of the Lenders,
shall obtain a perfected security interest in such mark
pursuant to this Security Agreement, and (E) not (and not
permit any licensee or sublicensee thereof to) do any act or
knowingly omit to do any act whereby any Trademark may become
invalidated.
(ii) Not do any act, or omit to do any act,
whereby any Patent may become abandoned or dedicated.
(iii) Notify the Agent and the Lenders immediately
if it knows, or has reason to know, that any application or
registration relating to any Patent or Trademark may become
abandoned or dedicated, or of any adverse determination or
development (including, without limitation, the institution
of, or any such determination or development in, any
proceeding in the United States Patent and Trademark Office or
any court or tribunal in any country) regarding an Obligor's
ownership of any Patent or Trademark or its right to register
the same or to keep and maintain the same.
(iv) Whenever an Obligor, either by itself
or through an agent, employee, licensee or designee, shall
file an application for the registration of any Patent or
Trademark with the United States Patent and Trademark Office
or any similar office or agency in any other country or any
political subdivision thereof, an Obligor shall report such
filing to the Agent and the Lenders within five Business Days
after the last day of the fiscal quarter in which such filing
occurs. Upon request of the Agent, an Obligor shall execute
and deliver any and all agreements, instruments, documents and
papers as the Agent may request to evidence the Agent's and
the Lenders' security interest in any Patent or Trademark and
the goodwill and general intangibles of an Obligor relating
thereto or represented thereby.
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<PAGE> 10
(v) Take all reasonable and necessary steps,
including, without limitation, in any proceeding before the
United States Patent and Trademark Office, or any similar
office or agency in any other country or any political
subdivision thereof, to maintain and pursue each application
(and to obtain the relevant registration) and to maintain each
registration of the Patents and Trademarks, including, without
limitation, filing of applications for renewal, affidavits of
use and affidavits of incontestability.
(vi) Promptly notify the Agent and the Lenders
after it learns that any Patent or Trademark included in the
Collateral is infringed, misappropriated or diluted by a third
party and promptly sue for infringement, misappropriation or
dilution, to seek injunctive relief where appropriate and to
recover any and all damages for such infringement,
misappropriation or dilution, or take such other actions as it
shall reasonably deem appropriate under the circumstances to
protect such Patent or Trademark.
(vii) Not make any assignment or agreement
in conflict with the security interest in the Patents or
Trademarks of each Obligor hereunder.
(k) New Patents, Copyrights and Trademarks. Promptly
provide the Agent with (i) a listing of all applications, if any, for
new Copyrights, Patents or Trademarks (together with a listing of the
issuance of registrations or letters on present applications), which
new applications and issued registrations or letters shall be subject
to the terms and conditions hereunder, and (ii) (A) with respect to
Copyrights, a duly executed Notice of Security Interest in Copyrights,
(B) with respect to Patents, a duly executed Notice of Security
Interest in Patents, (C) with respect to Trademarks, a duly executed
Notice of Security Interest in Trademarks or (D) such other duly
executed documents as the Agent may request in a form acceptable to
counsel for the Agent and suitable for recording to evidence the
security interest in the Copyright, Patent or Trademark which is the
subject of such new application.
(l) Insurance. Have and maintain at all times with
respect to the Collateral the same types and amounts of insurance as
the Obligors are required to maintain pursuant to the Credit Agreement.
All insurance proceeds shall be subject to the Lien of the Agent
hereunder; provided that any such insurance proceeds may be retained by
the Obligors to the extent permitted under the Credit Agreement.
(m) Bank Accounts. At all times, maintain the Lockbox
Accounts, the FUCC Account and any replacement or successor accounts
relating thereto in accordance with the terms of the Lockbox Agreements
and the Credit Agreement, as applicable, and cause all amounts received
in the Lockboxes relating thereto to be deposited into the applicable
Lockbox Account or FUCC Account, as the case may be, and to be applied
as set forth in the applicable Lockbox Agreement and the Credit
Agreement, as applicable. All amounts on deposit in the Lockbox
Accounts, the FUCC Account and any replacement or successor accounts
relating thereto shall be subject to the Lien of the Agent hereunder.
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<PAGE> 11
5. Special Provisions Relating to Accounts. Anything herein to
the contrary notwithstanding, each of the Obligors shall remain liable
under each of the Accounts to observe and perform all the conditions
and obligations to be observed and performed by it thereunder, all in
accordance with the terms of any agreement giving rise to each such
Account. Neither the Agent nor any Lender shall have any obligation or
liability under any Account (or any agreement giving rise thereto) by
reason of or arising out of this Security Agreement or the receipt by
the Agent or any Lender of any payment relating to such Account
pursuant hereto, nor shall the Agent or any Lender be obligated in any
manner to perform any of the obligations of an Obligor under or
pursuant to any Account (or any agreement giving rise thereto), to make
any payment, to make any inquiry as to the nature or the sufficiency of
any payment received by it or as to the sufficiency of any performance
by any party under any Account (or any agreement giving rise thereto),
to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have
been assigned to it or to which it may be entitled at any time or
times.
6. Special Provisions Regarding Inventory.
(a) Notwithstanding anything to the contrary contained in
this Security Agreement, each Obligor may, unless and until an Event of
Default occurs and is continuing and the Agent instructs such Obligor
otherwise, without further consent or approval of the Agent, use,
consume, sell, lease and exchange the Inventory in the ordinary course
of its business as presently conducted, whereupon, in the case of such
a sale or exchange, the security interest created hereby in the
Inventory so sold or exchanged (but not in any proceeds arising from
such sale or exchange) shall cease immediately without any further
action on the part of the Agent.
(b) Upon the Lenders' making any Revolving Loan pursuant
to the Credit Agreement or the Issuing Bank issuing any Letter of
Credit pursuant to the Credit Agreement, each Obligor shall be deemed
to have warranted that all warranties of such Obligor set forth in this
Security Agreement with respect to its Inventory are true and correct
in all material respects with respect to such Inventory, including
without limitation that such Inventory is located at a location
permitted by Section 3(b) or 4(d) hereof.
7. Advances by Lenders. On failure of any Obligor to perform any
of the covenants and agreements contained herein, the Agent may, at its sole
option and in its sole discretion, perform the same and in so doing may expend
such sums as the Agent may reasonably deem advisable in the performance thereof,
including, without limitation, the payment of any insurance premiums, the
payment of any taxes, a payment to obtain a release of a Lien or potential Lien
(other than a Permitted Lien), expenditures made in defending against any
adverse claim (other than a Permitted Lien) and all other expenditures which the
Agent or the Lenders may make for the protection of the security hereof or which
may be compelled to make by operation of law. All such sums and amounts so
expended shall be repayable by the Obligors on a joint and several basis
promptly upon timely notice thereof and demand therefor, shall constitute
additional Secured Obligations and shall bear interest from the date said
amounts are expended at the default rate specified in Section 4.2 of the Credit
Agreement for Revolving Loans that are Base Rate Loans. No such performance of
any covenant or agreement by the Agent or the Lenders on behalf of any
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<PAGE> 12
Obligor, and no such advance or expenditure therefor, shall relieve the Obligors
of any default under the terms of this Security Agreement or the other Credit
Documents. The Lenders may make any payment hereby authorized in accordance with
any bill, statement or estimate procured from the appropriate public office or
holder of the claim to be discharged without inquiry into the accuracy of such
bill, statement or estimate or into the validity of any tax assessment, sale,
forfeiture, tax lien, title or claim except to the extent such payment is being
contested in good faith by an Obligor in appropriate proceedings and against
which adequate reserves are being maintained in accordance with GAAP.
8. Events of Default.
The occurrence of an event which under the Credit Agreement would
constitute an Event of Default shall be an Event of Default hereunder (an "Event
of Default").
9. Remedies.
(a) General Remedies. Upon the occurrence of an Event of
Default and during continuation thereof, the Lenders shall have, in
addition to the rights and remedies provided herein, in the Credit
Documents or by law (including, but not limited to, the rights and
remedies set forth in the Uniform Commercial Code of the jurisdiction
applicable to the affected Collateral), the rights and remedies of a
secured party under the UCC (regardless of whether the UCC is the law
of the jurisdiction where the rights and remedies are asserted and
regardless of whether the UCC applies to the affected Collateral), and
further, the Agent may, with or without judicial process or the aid and
assistance of others, (i) enter on any premises on which any of the
Collateral may be located and, without resistance or interference by
the Obligors, take possession of the Collateral, (ii) dispose of any
Collateral on any such premises, (iii) require the Obligors to assemble
and make available to the Agent at the expense of the Obligors any
Collateral at any place and time designated by the Agent which is
reasonably convenient to both parties, (iv) remove any Collateral from
any such premises for the purpose of effecting sale or other
disposition thereof, and/or (v) without demand and without
advertisement, notice, hearing or process of law, all of which each of
the Obligors hereby waives to the fullest extent permitted by law, at
any place and time or times, sell and deliver any or all Collateral
held by or for it at public or private sale, by one or more contracts,
in one or more parcels, for cash, upon credit or otherwise, at such
prices and upon such terms as the Agent deems advisable, in its sole
discretion (subject to any and all mandatory legal requirements). In
addition to all other sums due the Agent and the Lenders with respect
to the Secured Obligations, the Obligors shall pay the Agent and each
of the Lenders all reasonable documented costs and expenses incurred by
the Agent or any such Lender, including, but not limited to, reasonable
attorneys' fees and court costs, in obtaining or liquidating the
Collateral, in enforcing payment of the Secured Obligations, or in the
prosecution or defense of any action or proceeding by or against the
Agent or the Lenders or the Obligors concerning any matter arising out
of or connected with this Security Agreement, any Collateral or the
Secured Obligations, including, without limitation, any of the
foregoing arising in, arising under or related to a case under any
bankruptcy, insolvency or similar law. To the extent the rights of
notice cannot be legally waived hereunder, each Obligor agrees that any
requirement of reasonable notice shall be
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<PAGE> 13
met if such notice is personally served on or mailed, postage prepaid,
to the Obligors in accordance with the notice provisions of Section
14.5 of the Credit Agreement at least 10 days before the time of sale
or other event giving rise to the requirement of such notice. The Agent
and the Lenders shall not be obligated to make any sale or other
disposition of the Collateral regardless of notice having been given.
To the extent permitted by law, any Lender may be a purchaser at any
such sale. To the extent permitted by applicable law, each of the
Obligors hereby waives all of its rights of redemption with respect to
any such sale. Subject to the provisions of applicable law, the Agent
and the Lenders may postpone or cause the postponement of the sale of
all or any portion of the Collateral by announcement at the time and
place of such sale, and such sale may, without further notice, to the
extent permitted by law, be made at the time and place to which the
sale was postponed, or the Agent and the Lenders may further postpone
such sale by announcement made at such time and place.
(b) Remedies relating to Accounts. Upon the occurrence of
an Event of Default and during the continuation thereof, whether or not
the Agent has exercised any or all of its rights and remedies
hereunder, the Agent or its designee may notify any Obligor's customers
and account debtors that the Accounts of such Obligor have been
assigned to the Agent or of the Agent's security interest therein, and
may (either in its own name or in the name of an Obligor or both)
demand, collect (including without limitation through the Lockboxes),
receive, take receipt for, sell, sue for, compound, settle, compromise
and give acquittance for any and all amounts due or to become due on
any Account, and, in the Agent's discretion, file any claim or take any
other action or proceeding to protect and realize upon the security
interest of the Lenders in the Accounts. Each Obligor acknowledges and
agrees that the Proceeds of its Accounts remitted to or on behalf of
the Agent in accordance with the provisions hereof shall be solely for
the Agent's own convenience and that such Obligor shall not have any
right, title or interest in such Accounts or in any such other amounts
except as expressly provided herein. The Agent may apply all or any
part of any Proceeds of Accounts or other Collateral received by it
from any source to the payment of the Secured Obligations (whether or
not then due and payable). The Agent shall have no obligation to apply
or give credit for any item included in proceeds of Accounts or other
Collateral until the applicable Lockbox Bank has received final payment
therefor at its offices in cash. However, if the Agent does permit
credit to be given for any item prior to a Lockbox Bank receiving final
payment therefor and such Lockbox Bank fails to receive such final
payment or an item is charged back to the Agent or any Lockbox Bank for
any reason, the Agent may at its election in either instance charge the
amount of such item back against any such Lockbox Accounts, together
with interest thereon at a rate per annum equal to the default rate
specified in Section 4.2 of the Credit Agreement for Revolving Loans
that are Base Rate Loans. Each Obligor hereby indemnifies the Agent
from and against all liabilities, damages, losses, actions, claims,
judgments, costs, expenses, charges and reasonable attorneys' fees
(except such as result from the Agent's gross negligence or willful
misconduct) suffered or incurred by the Agent because of the
maintenance of the foregoing arrangements. The Agent shall have no
liability or responsibility to any Obligor for a Lockbox Bank accepting
any check, draft or other order for payment of money bearing the legend
"payment in full" or words of similar import or any other restrictive
legend or
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<PAGE> 14
endorsement whatsoever or be responsible for determining the
correctness of any remittance (it being understood that this sentence
shall in no way affect the liability or responsibility of any such
Lockbox Bank).
(c) Access. In addition to the rights and remedies
hereunder, upon the occurrence of an Event of Default and during the
continuance thereof, the Agent shall have the right to take physical
possession of any and all of the Collateral and anything found therein,
the right for that purpose to enter without legal process and without
breach of the peace any premises where the Collateral may be found
(provided such entry be done lawfully), and the right to maintain such
possession on any Obligor's premises (each Obligor hereby agreeing to
lease warehouses and storage facilities to the Agent or its designee if
the Agent so requests) or to remove the Collateral or any part thereof
to such other places as the Agent may desire. Upon the occurrence of
any Event of Default and at any time thereafter, unless and until such
Event of Default has been waived by the Lenders or cured to the
satisfaction of the Lenders, each Obligor shall, upon the Agent's
demand, assemble the Collateral and make it available to the Agent at a
place reasonably designated by the Agent. If the Agent exercises its
right to take possession of the Collateral, each Obligor shall also at
its expense perform any and all other steps reasonably requested by the
Agent to preserve and protect the security interest hereby granted in
the Collateral, such as placing and maintaining signs indicating the
security interest of the Agent, appointing overseers for the Collateral
and maintaining inventory records.
(d) Nonexclusive Nature of Remedies. Failure by the Agent
or the Lenders to exercise any right, remedy or option under this
Security Agreement, any other Credit Document or as provided by law, or
any delay by the Agent or the Lenders in exercising the same, shall not
operate as a waiver of any such right, remedy or option. No waiver
hereunder shall be effective unless it is in writing, signed by the
party against whom such waiver is sought to be enforced and then only
to the extent specifically stated, which in the case of the Agent or
the Lenders shall only be granted as provided herein. To the extent
permitted by law, neither the Agent, the Lenders, nor any party acting
as attorney for the Agent or the Lenders, shall be liable hereunder for
any acts or omissions or for any error of judgment or mistake of fact
or law other than their gross negligence or willful misconduct
hereunder. The rights and remedies of the Agents and the Lenders under
this Security Agreement shall be cumulative and not exclusive of any
other right or remedy which the Agent or the Lenders may have.
(e) Retention of Collateral. The Agent may, after
providing the notices required by Section 9-505(2) of the UCC or
otherwise complying with the requirements of applicable law of the
relevant jurisdiction, to the extent the Agent is in possession of any
of the Collateral, retain the Collateral in satisfaction of the Secured
Obligations. Unless and until the Agent shall have provided such
notices, however, the Agent shall not be deemed to have retained any
Collateral in satisfaction of any Secured Obligations for any reason.
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<PAGE> 15
(f) Deficiency. In the event that the proceeds of any
sale, collection or realization are insufficient to pay all amounts to
which the Agent or the Lenders are legally entitled, the Obligors shall
be jointly and severally liable for the deficiency, together with
interest thereon at the default rate specified in Section 4.2 of the
Credit Agreement for Revolving Loans that are Base Rate Loans, together
with the costs of collection and the reasonable fees of any attorneys
employed by the Agent to collect such deficiency. Any surplus remaining
after the full payment and satisfaction of the Secured Obligations
shall be returned to the Obligors or to whomsoever a court of competent
jurisdiction shall determine to be entitled thereto.
10. Rights of the Agent.
(a) Power of Attorney. In addition to other powers of
attorney contained herein, each Obligor hereby designates and appoints
the Agent, on behalf of the Lenders, and each of its designees or
agents, as attorney-in-fact of such Obligor, irrevocably and with power
of substitution, with authority to take any or all of the following
actions upon the occurrence and during the continuance of an Event of
Default:
(i) to demand, collect or settle, compromise,
adjust, give discharges and releases, all as the Agent may
reasonably determine;
(ii) to commence and prosecute any actions at any
court for the purposes of collecting any Collateral and
enforcing any other right in respect thereof;
(iii) to defend, settle or compromise any action
brought and, in connection therewith, give such discharge or
release as the Agent may deem reasonably appropriate;
(iv) receive, open and dispose of mail addressed to
an Obligor and endorse checks, notes, drafts, acceptances,
money orders, bills of lading, warehouse receipts or other
instruments or documents evidencing payment, shipment or
storage of the goods giving rise to the Collateral of such
Obligor on behalf of and in the name of such Obligor, or
securing, or relating to such Collateral;
(v) sell, assign, transfer, make any agreement in
respect of, or otherwise deal with or exercise rights in
respect of, any Collateral or the goods or services which have
given rise thereto, as fully and completely as though the
Agent were the absolute owner thereof for all purposes;
(vi) adjust and settle claims under any insurance
policy relating thereto;
(vii) execute and deliver all assignments,
conveyances, statements, financing statements, renewal
financing statements, security agreements, affidavits, notices
and other agreements, instruments and documents that the Agent
may determine necessary in order to perfect and
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<PAGE> 16
maintain the security interests and liens granted in this
Security Agreement and in order to fully consummate all of the
transactions contemplated therein;
(viii) institute any foreclosure proceedings that the
Agent may deem appropriate; and
(ix) do and perform all such other acts and things
as the Agent may reasonably deem to be necessary, proper or
convenient in connection with the Collateral.
This power of attorney is a power coupled with an interest and shall be
irrevocable (i) for so long as any of the Secured Obligations remain
outstanding or any Credit Document is in effect or any Letter of Credit
shall remain outstanding and (ii) until all of the Commitments shall
have been terminated. The Agent shall be under no duty to exercise or
withhold the exercise of any of the rights, powers, privileges and
options expressly or implicitly granted to the Agent in this Security
Agreement, and shall not be liable for any failure to do so or any
delay in doing so. The Agent shall not be liable for any act or
omission or for any error of judgment or any mistake of fact or law in
its individual capacity or its capacity as attorney-in-fact except acts
or omissions resulting from its gross negligence or willful misconduct.
This power of attorney is conferred on the Agent solely to protect,
preserve and realize upon its security interest in the Collateral.
(b) Performance by the Agent of Obligations. If any
Obligor fails to perform any agreement or obligation contained herein,
the Agent itself may perform, or cause performance of, such agreement
or obligation, and the expenses of the Agent incurred in connection
therewith shall be payable by the Obligors on a joint and several basis
pursuant to Section 25 hereof.
(c) Assignment by the Agent. Subject to Section 13.9 and
14.6(b) of the Credit Agreement, the Agent may from time to time assign
the Secured Obligations and any portion thereof and/or the Collateral
and any portion thereof, and the assignee shall be entitled to all of
the rights and remedies of the Agent under this Security Agreement in
relation thereto.
(d) The Agent's Duty of Care. Other than the exercise of
reasonable care to assure the safe custody of the Collateral while
being held by the Agent hereunder, the Agent shall have no duty or
liability to preserve rights pertaining thereto, it being understood
and agreed that the Obligors shall be responsible for preservation of
all rights in the Collateral, and the Agent shall be relieved of all
responsibility for the Collateral upon surrendering it or tendering the
surrender of it to the Obligors. The Agent shall be deemed to have
exercised reasonable care in the custody and preservation of the
Collateral in its possession if the Collateral is accorded treatment
substantially equal to that which the Agent accords its own property,
which shall be no less than the treatment employed by a reasonable and
prudent agent in the industry, it being understood that the Agent shall
not have responsibility for
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<PAGE> 17
taking any necessary steps to preserve rights against any parties with
respect to any of the Collateral.
11. Application of Proceeds. Any amounts on deposit in the Lockbox
Accounts, the FUCC Account and any replacement or successor accounts relating
thereto as applicable shall be applied by the Agent in accordance with the terms
of the Credit Agreement and the Lockbox Agreement relating thereto. Upon the
occurrence and during the continuation of an Event of Default, the Proceeds and
avails of the Collateral at any time received by the Agent shall, when received
by the Agent in cash or its equivalent, be applied as follows: first, to all
reasonable costs and expenses of the Agent (including without limitation
reasonable attorneys' fees and expenses) incurred in connection with the
implementation and/or enforcement of this Security Agreement and/or any of the
other Credit Documents; second, to all costs and expenses of the Lenders
(including without limitation reasonable attorneys' fees and expenses) incurred
in connection with the implementation and/or enforcement of this Security
Agreement and/or any of the other Credit Documents; third, to the principal
amount of the Secured Obligations; fourth, to such of the Secured Obligations
consisting of accrued but unpaid interest and fees; fifth, to all other amounts
payable with respect to the Secured Obligations; and sixth, to the payment of
the surplus, if any, to whoever may be lawfully entitled to receive such
surplus. The Obligors shall remain liable to the Agent and the Lenders for any
deficiency.
12. Costs of Counsel. If at any time hereafter, whether upon the
occurrence of an Event of Default or not, the Agent employs counsel to prepare
or consider amendments, waivers or consents with respect to this Security
Agreement, or to take action or make a response in or with respect to any legal
or arbitral proceeding relating to this Security Agreement or relating to the
Collateral, or to protect the Collateral or exercise any rights or remedies
under this Security Agreement or with respect to the Collateral, then the
Obligors agree to promptly pay upon demand any and all such reasonable
documented costs and expenses of the Agent or the Lenders, all of which costs
and expenses shall constitute Secured Obligations hereunder.
13. Continuing Agreement.
(a) This Security Agreement shall be a continuing
agreement in every respect and shall remain in full force and effect so
long as the Credit Agreement is in effect or any amounts payable
thereunder or under any other Credit Document or any Letter of Credit
shall remain outstanding, and until all of the Commitments thereunder
shall have terminated (other than any obligations with respect to the
indemnities and the representations and warranties set forth in the
Credit Documents). Upon such payment and termination, this Security
Agreement shall be automatically terminated and the Lenders shall, upon
the request and at the expense of the Obligors, forthwith release all
of its liens and security interests hereunder and shall execute and
deliver all UCC termination statements and/or other documents
reasonably requested by the Obligors evidencing such termination.
Notwithstanding the foregoing all releases and indemnities provided
hereunder shall survive termination of this Security Agreement.
(b) This Security Agreement shall continue to be
effective or be automatically reinstated, as the case may be, if at any
time payment, in whole or in part, of any of the
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<PAGE> 18
Secured Obligations is rescinded or must otherwise be restored or
returned by the Agent or any Lender as a preference, fraudulent
conveyance or otherwise under any bankruptcy, insolvency or similar
law, all as though such payment had not been made; provided that in the
event payment of all or any part of the Secured Obligations is
rescinded or must be restored or returned, all reasonable costs and
expenses (including without limitation any reasonable legal fees and
disbursements) incurred by the Agent or any Lender in defending and
enforcing such reinstatement shall be deemed to be included as a part
of the Secured Obligations.
14. Amendments; Waivers; Modifications. This Security Agreement
and the provisions hereof may not be amended, waived, modified, changed,
discharged or terminated except as set forth in Section 14.10 of the Credit
Agreement.
15. Successors in Interest. This Security Agreement shall create a
continuing security interest in the Collateral and shall be binding upon each
Obligor, its successors and assigns and shall inure, together with the rights
and remedies of the Agent and the Lenders hereunder, to the benefit of the Agent
and the Lenders and their successors and permitted assigns; provided, however,
that none of the Obligors may assign its rights or delegate its duties hereunder
without the prior written consent of the Agent. To the fullest extent permitted
by law, each Obligor hereby releases the Agent and each Lender, and its
successors and permitted assigns, from any liability for any act or omission
relating to this Security Agreement or the Collateral, except for any liability
arising from the gross negligence or willful misconduct of the Agent, or such
Lender, or its officers, employees or agents.
16. Notices. All notices required or permitted to be given under
this Security Agreement shall be in conformance with Section 14.5 of the Credit
Agreement.
17. Counterparts. This Security Agreement may be executed in any
number of counterparts, each of which where so executed and delivered shall be
an original, but all of which shall constitute one and the same instrument. It
shall not be necessary in making proof of this Security Agreement to produce or
account for more than one such counterpart.
18. Headings. The headings of the sections and subsections hereof
are provided for convenience only and shall not in any way affect the meaning or
construction of any provision of this Security Agreement.
19. Governing Law; Submission to Jurisdiction; Venue. THIS
SECURITY AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL
BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NORTH CAROLINA. THE PROVISIONS OF THE CREDIT AGREEMENT RELATING TO
SUBMISSION TO JURISDICTION, VENUE AND ARBITRATION ARE HEREBY INCORPORATED BY
REFERENCE HEREIN, MUTATIS MUTANDIS.
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20. Waiver of Jury Trial. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, EACH OBLIGOR AND THE AGENT HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY
ACTION OR PROCEEDING ARISING OUT OF THIS SECURITY AGREEMENT, THE CREDIT
DOCUMENTS OR ANY OTHER AGREEMENTS OR TRANSACTIONS RELATED HERETO OR THERETO.
21. Severability. If any provision of any of the Security
Agreement is determined to be illegal, invalid or unenforceable, such provision
shall be fully severable and the remaining provisions shall remain in full force
and effect and shall be construed without giving effect to the illegal, invalid
or unenforceable provisions.
22. Entirety. This Security Agreement and the other Credit
Documents represent the entire agreement of the parties hereto and thereto, and
supersede all prior agreements and understandings, oral or written, if any,
including any commitment letters or correspondence relating to the Credit
Documents or the transactions contemplated herein and therein.
23. Survival. All representations and warranties of the Obligors
hereunder shall survive the execution and delivery of this Security Agreement
and the other Credit Documents, the delivery of the Revolving Notes and the
making of the Revolving Loans and the issuance of the Letters of Credit under
the Credit Agreement.
24. Other Security. To the extent that any of the Secured
Obligations are now or hereafter secured by property other than the Collateral
(including, without limitation, real property and securities owned by an
Obligor), or by a guarantee, endorsement or property of any other Person, then
the Agent and the Lenders shall have the right to proceed against such other
property, guarantee or endorsement upon the occurrence of any Event of Default,
and the Agent and the Lenders have the right, in their sole discretion, to
determine which rights, security, liens, security interests or remedies the
Agent and the Lenders shall at any time pursue, relinquish, subordinate, modify
or take with respect thereto, without in any way modifying or affecting any of
them or any of the Agent's and the Lenders' rights or the Secured Obligations
under this Security Agreement, under any other of the Credit Documents.
25. Joint and Several Obligations of Obligors.
(a) Each of the Obligors is accepting joint and several
liability hereunder in consideration of the financial accommodation to
be provided by the Lenders under the Credit Agreement, for the mutual
benefit, directly and indirectly, of each of the Obligors and in
consideration of the undertakings of each of the Obligors to accept
joint and several liability for the obligations of each of them.
(b) Each of the Obligors jointly and severally hereby
irrevocably and unconditionally accepts, not merely as a surety but
also as a co-debtor, joint and several liability with the other
Obligors with respect to the payment and performance of all of the
Secured Obligations arising under this Security Agreement or the other
Credit Documents, it being the intention of the parties hereto that all
the Obligations shall be the joint and several obligations of each of
the Obligors without preferences or distinction among them.
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25. Rights of Required Lenders. All rights of the Agent hereunder,
if not exercised by the Agent, may be exercised by the Required Lenders.
[remainder of page intentionally left blank]
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Each of the parties hereto has caused a counterpart of this Security
Agreement to be duly executed and delivered as of the date first above written.
COMPANY: FRESH FOODS, INC.
By: /s/ David R. Clark
-----------------------------------------
Name: David R. Clark
Title: President
SUBSIDIARY BORROWERS: BRUNSWICK ASSOCIATES, INC.
By: /s/ David R. Clark
-----------------------------------------
Name: David R. Clark
Title: President
CLAREMONT RESTAURANT GROUP, LLC
BY: FRESH FOODS, INC.,
its Sole Member
By: /s/ David R. Clark
-----------------------------------------
Name: David R. Clark
Title: President
ELLOREE FOODS, INC.
By: /s/ David R. Clark
--------------------------------------
Name: David R. Clark
Title: President
FRESH FOODS PROPERTIES, LLC
BY: FRESH FOODS, INC.,
its Sole Member
By: /s/ David R. Clark
--------------------------------------
Name: David R. Clark
Title: President
<PAGE> 22
GEORGIA BUFFET RESTAURANTS, INC.
By: /s/ David R. Clark
--------------------------------------
Name: David R. Clark
Title: President
KNOXVILLE FOODS, INC.
By: /s/ David R. Clark
--------------------------------------
Name: David R. Clark
Title: Vice President
MOM `n' POP'S COUNTRY HAM, LLC
BY: PIERRE FOODS, INC.,
its Sole Member
BY: FRESH FOODS, INC.,
its Sole Member
By: /s/ David R. Clark
--------------------------------------
Name: David R. Clark
Title: President
OAK RIDGE FOODS, INC.
By: /s/ David R. Clark
--------------------------------------
Name: David R. Clark
Title: Vice President
SAGEBRUSH, INC.
By: /s/ David R. Clark
--------------------------------------
Name: David R. Clark
Title: Vice President
<PAGE> 23
SAGEBRUSH OF SEVIERVILLE, INC.
By: /s/ David R. Clark
--------------------------------------
Name: David R. Clark
Title: Vice President
SAGEBRUSH DTN, INC.
By: /s/ David R. Clark
--------------------------------------
Name: David R. Clark
Title: Vice President
SAGEBRUSH OF TENNESSEE, L.P.
BY: SAGEBRUSH OF SOUTH CAROLINA,
LLC, General Partner
BY: SAGEBRUSH, INC.
its Sole Member
By: /s/ David R. Clark
--------------------------------------
Name: David R. Clark
Title: Vice President
SEVEN STARS, INC.
By: /s/ David R. Clark
--------------------------------------
Name: David R. Clark
Title: President
ST. AUGUSTINE FOODS, INC.
By: /s/ David R. Clark
--------------------------------------
Name: David R. Clark
Title: President
<PAGE> 24
TENNESSEE WSMP, INC.
By: /s/ David R. Clark
--------------------------------------
Name: David R. Clark
Title: President
VIRGINIA WSMP, INC.
By: /s/ David R. Clark
--------------------------------------
Name: David R. Clark
Title: President
CHARDENT, INC.
By: /s/ David R. Clark
--------------------------------------
Name: David R. Clark
Title: President
D & S FOODS, LLC
BY: GEORGIA WSMP, INC.,
its Sole Member
By: /s/ David R. Clark
--------------------------------------
Name: David R. Clark
Title: President
GEORGIA WSMP, INC.
By: /s/ David R. Clark
--------------------------------------
Name: David R. Clark
Title: President
<PAGE> 25
KINGSPORT FOODS, INC.
By: /s/ David R. Clark
--------------------------------------
Name: David R. Clark
Title: Vice President
MATTHEWS PRIME SIRLOIN, INC.
By: /s/ David R. Clark
--------------------------------------
Name: David R. Clark
Title: President
NAPLES FOODS, INC.
By: /s/ David R. Clark
--------------------------------------
Name: David R. Clark
Title: President
PRIME SIRLOIN, INC.
By: /s/ David R. Clark
--------------------------------------
Name: David R. Clark
Title: President
SAGEBRUSH OF NORTH CAROLINA, LLC
BY: SAGEBRUSH, INC.
its Sole Member
By: /s/ David R. Clark
--------------------------------------
Name: David R. Clark
Title: Vice President
<PAGE> 26
SAGEBRUSH OF SOUTH CAROLINA, LLC
BY: SAGEBRUSH, INC.
ITS SOLE MEMBER
By: /s/ David R. Clark
--------------------------------------
Name: David R. Clark
Title: Vice President
SPICEWOOD, INC.
By: /s/ David R. Clark
--------------------------------------
Name: David R. Clark
Title: President
SOUTH CAROLINA WSMP, INC.
By: /s/ David R. Clark
--------------------------------------
Name: David R. Clark
Title: President
SUNSHINE WSMP, INC.
By: /s/ David R. Clark
--------------------------------------
Name: David R. Clark
Title: President
TUMBLEWEED OF PIGEON FORGE, INC.
By: /s/ David R. Clark
--------------------------------------
Name: David R. Clark
Title: Vice President
<PAGE> 27
GREENVILLE FOODS SYSTEMS, INC.
By: /s/ David R. Clark
--------------------------------------
Name: David R. Clark
Title: President
FRESH FOODS SALES, LLC
BY: FRESH FOODS, INC.,
its Sole Member
By: /s/ David R. Clark
--------------------------------------
Name: David R. Clark
Title: President
PIERRE FOODS, LLC
BY: FRESH FOODS, INC.,
its Sole Member
By: /s/ David R. Clark
--------------------------------------
Name: David R. Clark
Title: President
<PAGE> 28
Accepted and agreed to in Charlotte, North Carolina as of the date
first above written.
FIRST UNION COMMERCIAL CORPORATION,
as Agent
By: /s/ Todd A. Witmer
--------------------------------------
Name: Todd A. Witmer
Title: Director
<PAGE> 29
SCHEDULE 1(B)
INTELLECTUAL PROPERTY
<TABLE>
<CAPTION>
Registration Issue
Trademark Type No. Date
- --------- ---- --- ----
<S> <C> <C> <C>
Breakfast on the Go! federal 2,005,805 10/08/96
Cafe Pierre federal 1,876,055 01/24/95
Cafeteria Adventures federal 1,797,362 10/05/93
Commodity Magic federal 1,331,238 04/16/85
Dine `n With federal 1,912,699 08/15/95
Fast Choice federal 2,052,455 04/15/97
French Toast Boat federal 1,554,935 09/05/89
French Toast Boat & Design federal 1,626,155 12/04/90
Global Grill federal 2,112,383 11/11/97
GoldDiggers federal 1,121,101 06/26/79
Hot Diggity Subs federal 1,388,435 04/01/86
Hot Diggity Subs & Design federal 1,387,648 03/25/86
Lean Magic federal 1,677,773 03/03/92
Like Mom's & Design federal 1,517,327 12/20/88
Link-N-Dog federal 1,917,400 09/05/95
Micro-Wiches federal 1,505,035 09/20/88
Pierre & Design state (Ohio) TM7315 05/22/86
Pierre Classics federal 2,052,456 04/15/97
Pierre Main Street Diner federal 2,016,292 11/12/96
Pizza Parlor Sandwich federal 1,270,140 03/13/84
Pizza Parlor Sandwich federal 1,642,199 04/23/91
Pizza Parlor Sub federal 1,926,623 10/10/95
Quick-Wiches federal 1,784,320 07/27/93
Rib-B-Q federal 1,257,730 11/15/83
Rib-B-Q federal 1,270,954 03/20/84
Rib-B-Q federal 1,598,832 05/29/90
Rib-B-Q & Design federal 1,276,424 05/01/84
Rib-B-Q & Design federal 1,275,419 04/24/84
Rib-B-Q & Design foreign (Canada) 305,056 07/19/85
Rib-B-Q foreign (Canada) 305,055 07/19/85
Saus-A-Rage federal 1,928,706 10/17/95
Tastes of the World Logo (copyright) VA613-418 12/16/93
Two-Fers federal 1,505,013 09/20/88
Two-Fers federal 1,599,764 06/05/90
Villa Cinti federal 1,772,497 05/18/93
Wonderbites federal 1,781,595 07/13/98
</TABLE>
<PAGE> 30
<TABLE>
<CAPTION>
Registration Issue
Trademark Type No. Date
- --------- ---- ---- ----
<S> <C> <C> <C>
Mom `n' Pop's Buffet & Bakery and Design federal 1,802,454 11/02/93
Western Steer Steaks Buffet Bakery
and Design federal 1,773,290 05/25/93
Western Steer Family Retaurant
and Design federal 1,674,648 02/04/92
Western Steer and Design federal 1,626,425 12/04/90
Mom `n' Pop's Country Store and
Restaurant federal 1,460,268 10/06/87
Mom `n' Pop's Country Store and
Restaurant federal 1,460,250 10/06/87
All-American Food Bar federal 1,436,858 04/14/87
For an All-American Family Meal federal 1,428,857 02/10/87
Western Steer Family Steakhouse federal 1,403,394 07/29/86
Western Steer federal 1,391,171 04/22/86
Mom `n' Pop's and Design federal 1,346,951 07/02/85
Mom `n' Pop's and Design federal 1,346,950 07/02/85
Steer and Design federal 1,384,755 02/25/86
Design Only federal 1,333,815 04/30/85
Steerburger federal 1,343,067 06/18/85
Super Stuffed federal 1,364,706 10/08/85
Western Steer Family Steakhouse and
Design federal 1,322,741 02/26/85
Mom `n' Pop's and Design federal 1,341,238 06/11/85
Mom `n' Pop's and Design federal 1,335,749 5/14/85
Mom `n' Pop's federal 1,341,236 06/11/85
`Fluffy' and Design federal 1,272,996 4/03/84
Little Richard the Western Steer
WS and Design federal 1,179,634 11/24/81
Design Only federal 1,214,411 10/26/82
Waltzing Matilda federal 1,165,051 08/11/81
Mom's Kitchen federal 1,146,516 01/27/81
Mom `n' Pop's and Design federal 1,095,528 07/04/78
Mom `n' Pop's and Design federal 1,095,364 07/04/78
Mom `n' Pop's federal 1,065,988 05/17/77
Mom `n' Pop's federal 1,071,065 08/09/77
Western Steer Family Steakhouse federal 1,068,735 06/28/77
Fast Choice federal 2,152,895
Rib-B-Q and Design federal 2,132,710
Sagebrush Steakhouse & Saloon federal 1,743,755 12/29/92
</TABLE>
<PAGE> 31
<TABLE>
<CAPTION>
Application Serial
Pending Trademark Applications Type Date No.
<S> <C> <C> <C>
H.E.L.P.S. Healthcare Entree
Low Prep Selections federal 11/19/97 75/392520
Pierre & Design foreign (Mexico)
Pierre foreign (Mexico)
Rib-B-Q & Design foreign (Japan) 34095/89
Rib-B-Q & Design foreign (Mexico)
Rib-B-Q foreign (Japan) 34094/89
Rib-B-Q foreign (Mexico)
Boomerang federal 06/14/90 75-119,119
Quick Classics federal 02/26/90 74-032,512
</TABLE>
Patents:
Exclusive, royalty-free, worldwide and perpetual patent license to be granted by
Hudson Foods, Inc. on June 9, 1998 in the invention entitled "Process for
Preparing Pureed Meat Products" set forth in an application for United States
Letters Patent, Serial No. 08/959,485 recorded in the U.S. Patent and Trademark
Office on October 10, 1997, and which was assigned to Hudson Foods, Inc. by
Assignment dated October 16, 1997 recorded in the U.S. Patent and Trademark
Office on October 28, 1997 at Reel/Frame: 8806/0691.
<TABLE>
<CAPTION>
Copyrights:
Registration Registration
Title Type No. Date
- ----- ---- --- ----
<S> <C> <C> <C>
Western Steer Steaks, Buffet,
Bakery: Operations Manual federal Txu618984 08/11/94
Cafeteria Adventures Tastes of
the World Logo federal VA613418 12/16/93
Tastes of the World Promotion
Program: Manager's Kit federal TX3738877 12/27/93
Cafeteria Adventures Radical
Chicken federal VA528350 10/08/92
Cafeteria Adventures Stars &
Stripes General federal VA528349 10/08/92
Cafeteria Adventures Hamburger Man federal VA528348 10/08/92
Cafeteria Adventures Stars & Stripes
Promotion Program federal TX3421700 10/08/92
Cafeteria Adventures Rock `n Roll
Promotion Program federal TX3421699 10/08/92
Cafeteria Adventures Radical
Promotion Program federal TX3421698 10/08/92
</TABLE>
<PAGE> 32
<TABLE>
<S> <C> <C> <C>
Barnyard Basics of Good
Nutrition Questions and Answers federal TX3390603 08/07/92
Barnyard Basics of Good
Nutrition Hunch-Out Toys federal VA524973 08/07/92
Today's Nutritious Lunch:
It's Barnyard Bonus Day! federal VA519990 08/07/92
Barnyard Scene Bulletin Board
Display: Barnyard Basics of
Good Nutrition federal VA519989 08/07/92
Barnyard Basics of Good
Nutrition: For Grades 1 & 2:
Educator's Guide federal TX3380555 08/07/92
Barnyard Basics of Good
Nutrition: For Grades 1 & 2:
Educator's Guide federal TX3291538 04/02/92
</TABLE>
<PAGE> 33
SCHEDULE 3(A)
CHIEF EXECUTIVE OFFICES
The chief executive office and chief place of business of all Obligors is
located at One WSMP Drive, Claremont, North Carolina 28610. Pierre Foods, LLC
also maintains books and records at 9990 Princeton Road, Cincinnati, OH 45246.
<PAGE> 34
SCHEDULE 3(B)
LOCATIONS OF COLLATERAL
The name and address of each warehouseman, filler, processor and packer at which
Pierre Foods, LLC stores Inventory is as follows:
<TABLE>
<CAPTION>
Name Address
---- -------
<S> <C>
Cincinnati Freezer 2881 E. Sharon Road
Cincinnati, OH 45241
Buckles Warehouse Ohio 11880 Enterprise Avenue
Cincinnati, OH 45241
Cicom/Cincinnati Commercial CS Unknown
Cloverleaf Cold Storage 3110 Homeward Way
Fairfield, OH 45018-0550
CS Integrated LLC 2750 Orbitor Drive
Brea, CA 92621
CS Integrated LLC 325 Blake Road North
Hopkins, MN 55343-8209
US Cold Storage Campbell 4302 South 30th Street
Omaha, NE 68107
CS Integrated LLC 8 Lee Boulevard
Malvern, PA 19355
Wash. Whslrs 999 Montague Expressway
Milpitas, CA 95035
Costco Whlsle Consignment Center 7635 Cent. Industrial Drive, #18
Riviera Beach, FL 33404
US Cold Storage/Dallas Sams 3300 East Park Row
Arlington, TX 76010
United Refrig. (Westgate)/Sams 1740 A. Westgate Parkway
Atlanta, GA 30336
Henderson C.S./Sams Las Vegas 830 Horizon Drive
Henderson, NV 80-14
</TABLE>
<PAGE> 35
<TABLE>
<S> <C>
Trenton Cold Storage Limited P.O. Box 100
Trenton Ontario CN K8V 5R1
K & N Distribution/Price Costco 601 S. W. 7th
Renton, WA 98055
Polar Cold Storage 3776 Taylorsville Highway
Statesville, NC 28625
United Refrigerated/Sams Indy 3320 S. Arlington Avenue
Indianapolis, IN 46203
Wiscold, Inc./Sams Rochelle 600 Wiscold Drive
Rochelle, IL 61068
Columbia Farms/Price Costco 16 Sutton Road
Webster, MA 01570
Burris Maryland/Price Costco Rte 313 N. Federalsburg Road
Federalsburg, MD 21632
Jay D.C.S./Oregon Commodity 8830 Southeast Herbert Court
Clackamas, OR 97015
Nordic C.S./Price Costco 647 Occidental Avenue South
Seattle, WA 98104
Mirlo/Washington Wholesales 11600 Riverside Dr. `B'
Mira Loma, CA 91752
C & S Wholesale Grocers/BJ's Old Ferry Road
Brattleboro, VT 05301
Commodity/Surplus District 12 Hills Avenue
Concorde, NH 03301-4899
United Refrig./Sams Leesport RD #2 Orchard Lane
Leesport, PA 19533
PFS Miami/Cost-U-Less 501 NE 183rd Street
Miami, FL 33269
Interstate Distribution 110 Distribution Drive
Hamilton, OH 45014
</TABLE>
<PAGE> 36
<TABLE>
<S> <C>
PFS West Sacramento P.O. Box 1325
West Sacramento, CA 95691
Security Capital Industrial Trust 4770 Interstate Drive
Cincinnati, OH 45246
</TABLE>
The name and address of each warehouseman, filler, processor and
packer at which Fresh Foods, Inc. stores Inventory is as follows:
<TABLE>
<S> <C>
Polar Cold Storage 3736 Taylorsville Highway
Statesville, NC 28625
</TABLE>
<PAGE> 37
OWNED PROPERTIES:
<TABLE>
<CAPTION>
Property Address City State Zip
- -------- ------- ---- ----- ---
<S> <C> <C> <C> <C>
Claremont manufacturing One WSMP Drive Claremont NC 28610
facility
Owner: Fresh Foods, Inc.
Cincinnati manufacturing facility 9990 Princeton Road Cincinnati OH 45246
Owner: Pierre Foods, Inc.
Western Steer #22 1190 Lenoir Rhyne Blvd., SE Hickory NC 28602
Owner: Fresh Foods, Inc.
Western Steer #51 3062 Hickory Blvd. Hudson NC 28638
Owner: Fresh Foods, Inc.
Western Steer #111 316 Ehring House St. Elizabeth City NC 27909
Owner: Fresh Foods, Inc.
Western Steer #292 101 Bost Road Morganton NC 28655
Owner: Fresh Foods, Inc.
Western Steer #329 314 Blowing Rock Blvd. Lenoir NC 28645
Owner: Fresh Foods, Inc.
Bennett's #345 1819 Fairgrove Church Road Conover NC 28613
Owner: Fresh Foods, Inc.
Prime Sirloin #376 3302 S. I-85 Service Road Charlotte NC 28208
Owner: Fresh Foods, Inc.
Prime Sirloin #382 10450 E. Independence Blvd. Matthews NC 28105
Owner: Matthews Prime
Sirloin, Inc.
Sagebrush #511 110 Cedar Lane Knoxville TN 37912
Owner: Sagebrush of
Tennessee, LP
Sagebrush #527 566 Arbor Hill Road Kernersville NC 27284
Owner: Sagebrush of North
Carolina, LLC
Sagebrush #531 2468 Alcoa Highway Alcoa TN 37701
Owner: Sagebrush of
Tennessee, LP
</TABLE>
<PAGE> 38
<TABLE>
<S> <C> <C> <C> <C>
Sagebrush #532 482 By-Pass 72 NW Greenwood SC 29649
Owner: Sagebrush of South
Carolina, LLC
Sagebrush #535 2000 Woodland Drive Mt. Airy NC 27030
Owner: Sagebrush of North
Carolina, LLC
Sagebrush #536 428 Jake Alexander Blvd. S. Salisbury NC 28144
Owner: Sagebrush of
Tennessee, LP
Sagebrush #537 5030 Valley View Blvd., NW Roanoke VA 24012
Owner: Sagebrush, Inc.
Sagebrush #538 954 Blowing Rock Blvd., NE Lenoir NC 28645
Owner: Sagebrush of North
Carolina, LLC
Sagebrush #539 6170 South NC 16 Highway Denver NC 28037
Owner: Sagebrush of North
Carolina, LLC
Sagebrush #540 190 Aiken Mall Drive Aiken SC 29803
Owner: Sagebrush of South
Carolina, LLC
Sagebrush #541 2100 Dalrymple Street Sanford NC 27330
Owner: Sagebrush of North
Carolina, LLC
Sagebrush #546 623 NC 24-27 By-Pass East Albemarle NC 28001
Owner: Sagebrush of North
Carolina, LLC
Sagebrush #547 1529 Freeway Drive Reidsville NC 27320
Owner: Sagebrush of North
Carolina, LLC
Closed Restaurant 2225 12th Avenue NE Hickory NC
Owner: Fresh Foods, Inc.
Closed Restaurant 1603 US-1 Ft. Pierce FL
Owner: Sunshine WSMP, Inc.
Closed Restaurant 2005 US-1 S St. Augustine FL
Owner: Sunshine WSMP, Inc.
</TABLE>
<PAGE> 39
<TABLE>
<S> <C> <C> <C>
Closed Restaurant 997 Sunset Blvd. Jessup GA
Owner: Georgia WSMP, Inc.
Closed Restaurant 1336 Andrew Johnson Highway Morristown TN
Owner: Tennessee WSMP, Inc.
Closed Restaurant 2911 Cypress Mill Road Brunswick GA
Owner: Brunswick
Associates, Inc.
</TABLE>
<PAGE> 40
Leased Properties:
- -----------------
<TABLE>
<CAPTION>
Property Address City State Zip
- -------- ------- ---- ----- ---
<S> <C> <C> <C> <C>
Western Steer #52 334 SW Blvd. Newton NC 28658
Lessee: Fresh Foods, Inc.
Prime Sirloin #377 19601 Statesville Road Cornelius NC 28031
Lessee: Fresh Foods, Inc.
Prime Sirloin #379 3103 Taylorsville Road Statesville NC 28677
Lessee: Fresh Foods, Inc.
Western Steer #420 26 Radio Road Lexington NC 27292
Lessee: Fresh Foods, Inc.
Western Steer #425 1018 Rockford Street Mt. Airy NC 27030
Lessee: Fresh Foods, Inc.
Western Steer #426 1580 Yadkinville Road Mocksville NC 27028
Lessee: Fresh Foods, Inc.
Western Steer #427 825 E. Main Street Jefferson NC 28640
Lessee: Fresh Foods, Inc.
Western Steer #428 Corner 601 & 421 Yadkinville NC 27055
Lessee: Fresh Foods, Inc.
Western Steer #431 955 Stuart Drive Galax VA 24333
Lessee: Fresh Foods, Inc.
Western Steer #433 112 N. Generals Blvd. Lincolnton NC 28093
Lessee: Fresh Foods, Inc.
Western Steer #434 1675 Blowing Rock Road Boone NC 28607
Lessee: Fresh Foods, Inc.
Western Steer #435 1750 S. Stratford Road Winston-Salem NC 27103
Lessee: Fresh Foods, Inc.
Sagebrush #507 1520 Highway 70, SE Hickory NC 28601
Lessee: Sagebrush of North
Carolina, LLC
Sagebrush #508 3909 Parkway Pigeon Forge TN 37863
Lessee: Sagebrush of
Tennessee, LP
Sagebrush #509 117 Turnersberg Road Statesville NC 28677
Lessee: Sagebrush of North
Carolina, LLC
</TABLE>
<PAGE> 41
<TABLE>
<S> <C> <C> <C> <C>
Sagebrush #510 390 South Illinois Avenue Oak Ridge TN 37830
Lessee: Sagebrush
of Tennesse, LP
Sagebrush #513 1420 Second Street, NE Hickory NC 28601
Lessee: Sagebrush of North
Carolina, LLC
Sagebrush #514 1111 Highway 105 Boone NC 28607
Lessee: Sagebrush of North
Carolina, LLC
Sagebrush #515 2445 Cherry Road Rock Hill SC 29730
Lessee: Sagebrush of South
Carolina, LLC
Sagebrush #516 1600 East Stone Drive Kingsport TN 37660
Lessee: Sagebrush of
Tennessee, LP
Sagebrush #517 101 Steakhouse Road Morganton NC 28655
Lessee: Sagebrush of North
Carolina, LLC
Sagebrush #518 2905 Reynolda Road Winston-Salem NC 27106
Lessee: Sagebrush of North
Carolina, LLC
Sagebrush #519 2560 Lewisville-Clemmons Road Clemmons NC 27012
Lessee: Sagebrush of North
Carolina, LLC
Sagebrush #520 895 Russ Avenue Waynesville NC 28786
Lessee: Sagebrush of North
Carolina, LLC
Sagebrush #521 985 West Asheville Highway Brevard NC 28712
Lessee: Sagebrush of North
Carolina, LLC
Sagebrush #522 815 Parkway Sevierville TN 37862
Lessee: Sagebrush of
Tennessee, LP
Sagebrush #523 2250 Hendersonville Road Arden NC 28704
Lessee: Sagebrush of North
Carolina, LLC
Sagebrush #524 1302 Collegiate Drive Wilkesboro NC 28697
Lessee: Sagebrush of North
Carolina, LLC
</TABLE>
<PAGE> 42
<TABLE>
<S> <C> <C> <C> <C>
Sagebrush #525 608 C West Roosevelt Blvd. Monroe NC 28110
Lessee: Sagebrush of North
Carolina, LLC
Sagebrush #526 217 Airport Road Gatlinburg TN 37738
Lessee: Sagebrush of
Tennessee, LP
Sagebrush #528 1541 West Floyd Baker Blvd. Gaffney SC 29341
Lessee: Sagebrush of South
Carolina, LLC
Sagebrush #529 2614 North Roan Johnson City TN 37601
Lessee: Sagebrush of
Tennessee, LP
Sagebrush #530 7815 Timberlake Road Lynchburg VA 24502
Lessee: Sagebrush, Inc.
Sagebrush #533 204 Southgate Square Shopping Center Colonial Heights VA 23834
Lessee: Sagebrush, Inc.
Sagebrush #534 2323 East Morris Blvd. Morristown TN 37814
Lessee: Sagebrush of
Tennessee, LP
Sagebrush #542 801 N. Lake Drive Lexington SC 29072
Lessee: Sagebrush of South
Carolina, LLC
Sagebrush #543 201 Heritage Blvd. Newport TN 37821
Lessee: Sagebrush of
Tennessee, LP
Sagebrush #544 800 South Main Street Graham NC 27253
Lessee: Sagebrush of North
Carolina, LLC
Sagebrush #545 5920 University Parkway Stanleyville NC 27105
Lessee: Sagebrush of North
Carolina, LLC
Sagebrush #548 190 Nye Road Wytheville VA 24382
Lessee: Sagebrush, Inc.
Sagebrush #549 630 Randolph Mall Asheboro NC 27203
Lessee: Sagebrush of North
Carolina, LLC
Sagebrush #550 1432 N. Bridge Street Elkin NC 28621
Lessee: Fresh Foods, Inc.
</TABLE>
<PAGE> 43
<TABLE>
<S> <C> <C> <C> <C>
Sagebrush #551 1006 East Cumberland Street Dunn NC 28335
Lessee: Sagebrush of North
Carolina, LLC
Closed restaurant 504 Leming Drive Morganton NC
Lessee: Fresh Foods, Inc.
Closed restaurant 536 Highway 64-70 Hickory NC
Lessee: Fresh Foods, Inc.
Closed restaurant 1600 N. Queen St. Kinston NC
Lessee: Fresh Foods, Inc.
Closed restaurant 835 S. Main St. Kernersville NC
Lessee: Fresh Foods, Inc.
Closed restaurant: Route 3 Tobbaccoville NC
Lessee: Fresh Foods, Inc.
Closed restaurant 751 W. Elk Ave. Elizabethton TN
Lessee: Fresh Foods, Inc.
</TABLE>
<PAGE> 44
SCHEDULE 3(C)
OWNERSHIP
During the last four months, the following Obligors changed their names:
WSMP, Inc. changed its name to Fresh Foods, Inc.
Fresh Foods of North Carolina, LLC changed its name to Pierre Foods,
LLC
The Obligors have used the following trade names:
Mom `n' Pop's
Mom `n' Pop's Smokehouse
Mom `n' Pop's Buffet & Bakery
Mom `n' Pop's Country Biscuits
Mom `n' Pop's Retail Outlets
Mom `n' Pop's Country Collections
Mom `n' Pop's Racing
Mom `n' Pop's Ham House
Mom `n' Pop's Bakery
Mom `n' Pop's Bakery - WSMP, Inc.
Mom `n' Pop's Bakery #18
Mom `n' Pop's Country Ham
Western Steer Family Steakhouse
Western Steer Steaks,
Buffet & Bakery WSMP, Inc.
WSMP, Inc. #9
WSMP, Inc. #18
WSMP, Inc. - Manufacturing
WSMP/Mom `n' Pop's
WSMP - Smokehouse Division
WSMP, Inc. DBA - Mom `n' Pop's Smokehouse
Bennett's Smokehouse & Saloon
Bennett's Barbeque
Bennett's Pit Bar-B-Que
Bennett's
Bennett's Catering
Prime Sirloin Steak & Buffet
Prime Sirloin Steaks, Buffet & Bakery
Prime Sirloin
Prime Sirloin of (location)
Western Steer Mom `n' Pop's
Mom's Kitchen
WSMP Real Estate
Sagebrush
Sagebrush Steakhouse & Saloon
Pierre Foods, LLC used the following names prior to its acquisition by
Fresh Foods, Inc:
Hudson Foods
Pierre Frozen Foods, a division of Hudson Foods
Hudson Specialty Foods
Pierre
Hudson
Pierre Foods
<PAGE> 45
SCHEDULE 4(f)(i)
NOTICE
OF
GRANT OF SECURITY INTEREST
IN
COPYRIGHTS
United States Copyright Office
Gentlemen:
Please be advised that pursuant to the Security Agreement dated as of
June 9, 1998 (as the same may be amended, modified, extended or restated from
time to time, the "Security Agreement") by and among the Obligors party thereto
(each an "Obligor" and collectively, the "Obligors") and First Union Commercial
Corporation, as Agent (the "Agent") for the financial institutions referenced
therein (the "Lenders"), the undersigned Obligor has granted a continuing
security interest in and continuing lien upon, the copyrights and copyright
applications shown below to the Agent for the ratable benefit of the Lenders:
<TABLE>
COPYRIGHTS
-----------------------------
<S> <C> <C>
Date of
Copyright No. Description of Copyright Copyright
------------- ------------------------ ---------
Copyright Applications
-----------------------------
Copyright Description of Copyright Date of Copyright
Applications No. Applied For Applications
---------------- ----------- ------------
</TABLE>
1
<PAGE> 46
The Obligors and the Agent, on behalf of the Lenders, hereby
acknowledge and agree that the security interest in the foregoing copyrights and
copyright applications (i) may only be terminated in accordance with the terms
of the Security Agreement and (ii) is not to be construed as an assignment of
any copyright or copyright application.
Very truly yours,
----------------------------------------
[Obligor]
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Acknowledged and Accepted:
FIRST UNION COMMERCIAL CORPORATION,
as Agent
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
2
<PAGE> 47
SCHEDULE 4(f)(ii)
NOTICE
OF
GRANT OF SECURITY INTEREST
IN
PATENTS
United States Patent and Trademark Office
Gentlemen:
Please be advised that pursuant to the Security Agreement dated as of
June 9, 1998 (the "Security Agreement") by and among the Obligors party thereto
(each an "Obligor" and collectively, the "Obligors") and First Union Commercial
Corporation, as Agent (the "Agent") for the financial institutions referenced
therein (the "Lenders"), the undersigned Obligor has granted a continuing
security interest in and continuing lien upon, the patents and patent
applications shown below to the Agent for the ratable benefit of the Lenders:
<TABLE>
<CAPTION>
PATENTS
----------------------------
<S> <C> <C>
Description of Patent Date of
Patent No. Item Patent
---------- ---- ------
Patent Applications
----------------------------
Patent Description of Patent Date of Patent
Applications No. Applied For Applications
- ---------------- ----------- ------------
</TABLE>
<PAGE> 48
The Obligors and the Agent, on behalf of the Lenders, hereby
acknowledge and agree that the security interest in the foregoing patents and
patent applications (i) may only be terminated in accordance with the terms of
the Security Agreement and (ii) is not to be construed as an assignment of any
patent or patent application.
Very truly yours,
----------------------------------
[Obligor]
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
Acknowledged and Accepted:
FIRST UNION COMMERCIAL CORPORATION,
as Agent
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
2
<PAGE> 49
SCHEDULE 4(f)(iii)
NOTICE
OF
GRANT OF SECURITY INTEREST
IN
TRADEMARKS
United States Patent and Trademark Office
Gentlemen:
Please be advised that pursuant to the Security Agreement dated as of
June 9, 1998 (the "Security Agreement") by and among the Obligors party thereto
(each an "Obligor" and collectively, the "Obligors") and First Union Commercial
Corporation, as Agent (the "Agent") for the financial institutions referenced
therein (the "Lenders"), the undersigned Obligor has granted a continuing
security interest in and continuing lien upon, the trademarks and trademark
applications shown below to the Agent for the ratable benefit of the Lenders:
<TABLE>
<CAPTION>
TRADEMARKS
--------------------------
<S> <C> <C>
Description of Trademark Date of
Trademark No. Item Trademark
------------- ---- ---------
Trademark Applications
---------------------------
Trademark Description of Trademark Date of Trademark
Applications No. Applied For Applications
---------------- ----------- ------------
</TABLE>
1
<PAGE> 50
The Obligors and the Agent, on behalf of the Lenders, hereby
acknowledge and agree that the security interest in the foregoing trademarks and
trademark applications (i) may only be terminated in accordance with the terms
of the Security Agreement and (ii) is not to be construed as an assignment of
any trademark or trademark application.
Very truly yours,
-------------------------------------
[Obligor]
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
Acknowledged and Accepted:
FIRST UNION COMMERCIAL CORPORATION,
as Agent
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
2
<PAGE> 1
EXHIBIT 99.3
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "Pledge Agreement") is entered into as of
June 9, 1998 among FRESH FOODS, INC., a Delaware corporation (the "Company"),
the Subsidiary Borrowers identified on the signature pages hereto (the
"Subsidiary Borrower") and such other subsidiaries of the Company as may from
time to time become party hereto (hereinafter, the Company and the Subsidiary
Borrower are collectively referred to as the "Pledgors" and, individually, as a
"Pledgor") and FIRST UNION COMMERCIAL CORPORATION, in its capacity as agent (in
such capacity, the "Agent") for the financial institutions from time to time
party to the Credit Agreement described below (the "Lenders").
RECITALS
WHEREAS, pursuant to that certain Credit Agreement, dated as of the
date hereof (as amended, modified, extended, renewed or replaced from time to
time, the "Credit Agreement"), among the Company, the Subsidiary Borrower, the
Lenders and the Agent, the Lenders have agreed to make Revolving Loans and issue
Letters of Credit upon the terms and subject to the conditions set forth
therein; and
WHEREAS, it is a condition precedent to the effectiveness of the Credit
Agreement and the obligations of the Lenders to make their respective Revolving
Loans and to issue Letters of Credit under the Credit Agreement that the
Pledgors shall have executed and delivered this Pledge Agreement to the Agent
for the ratable benefit of the Lenders.
1. Definitions.
(a) Unless otherwise defined herein, capitalized terms used
herein shall have the meanings ascribed to such terms in the Credit
Agreement. For purposes of this Pledge Agreement, the term "Lender"
shall include any affiliate of any Lender which has entered into any
Interest Rate Protection Agreement entered into with respect to the
Obligations.
(b) In addition, the following terms shall have the following
meanings:
"Domestic Subsidiary" means, with respect to any Person, any
Subsidiary of such Person which is incorporated or organized under the
laws of any State of the United States or the District of Columbia.
"Foreign Subsidiary" means, with respect to any Person, any
Subsidiary of such Person which is not a Domestic Subsidiary of such
Person.
2. Pledge and Grant of Security Interest. To secure the prompt
payment and performance in full when due, whether by lapse of time or otherwise,
of the Pledgor Obligations (as defined in Section 3 hereof), each Pledgor hereby
pledges and assigns to the Agent, for the benefit of the Lenders, and grants to
the Agent, for the benefit of the Lenders, a continuing security interest in any
and all right, title and interest of such Pledgor in and to the following,
<PAGE> 2
whether now owned or existing or owned, acquired, or arising hereafter
(collectively, the "Pledged Collateral"):
(a) Pledged Shares. (i) 100% (or, if less, the full amount
owned by such Pledgor) of the issued and outstanding shares of Capital
Stock owned by such Pledgor of each Domestic Subsidiary set forth on
Schedule 2(a) attached hereto and (ii) 65% (or, if less, the full
amount owned by such Pledgor) of the issued and outstanding shares of
each class of Capital Stock or other ownership interests entitled to
vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)) ("Voting
Equity") and 100% (or, if less, the full amount owned by such Pledgor)
of the issued and outstanding shares of each class of Capital Stock or
other ownership interests not entitled to vote (within the meaning of
Treas. Reg. Section 1.956-2(c)(2)) ("Non-Voting Equity") owned by such
Pledgor of each Foreign Subsidiary set forth on Schedule 2(a) attached
hereto, in each case together with the certificates (or other
agreements or instruments), if any, representing such shares, and all
options and other rights, contractual or otherwise, with respect
thereto (collectively, together with the shares of Capital Stock
described in Section 2(b) and 2(c) below, the "Pledged Shares"),
including, but not limited to, the following:
(y) all shares, securities or certificates
representing a dividend on any of the Pledged Shares, or
representing a distribution or return of capital upon or in
respect of the Pledged Shares, or resulting from a stock
split, revision, reclassification or other exchange therefor,
and any subscriptions, warrants, rights or options issued to
the holder of, or otherwise in respect of, the Pledged Shares;
and
(z) without affecting the obligations of such Pledgor
under any provision prohibiting such action hereunder, in the
event of any consolidation or merger in which a Pledgor is not
the surviving corporation, all shares of each class of the
Capital Stock of the successor corporation formed by or
resulting from such consolidation or merger.
(b) Additional Shares. 100% (or, if less, the full amount
owned by such Pledgor) of the issued and outstanding shares of Capital
Stock owned by such Pledgor of any Person which hereafter becomes a
Domestic Subsidiary and 65% (or, if less, the full amount owned by such
Pledgor) of the Voting Equity and 100% (or, if less, the full amount
owned by such Pledgor) of the Non-Voting Equity owned by such Pledgor
of any Person which hereafter becomes a Foreign Subsidiary, including,
without limitation, the certificates representing such shares.
(c) Other Equity Interests. Any and all other equity interests
of each Pledgor in any Domestic Subsidiary or any Foreign Subsidiary.
(d) Proceeds. All proceeds and products of the foregoing,
however and whenever acquired and in whatever form.
2
<PAGE> 3
Without limiting the generality of the foregoing, it is hereby
specifically understood and agreed that a Pledgor may from time to time
hereafter deliver additional shares of Capital Stock to the Agent as collateral
security for the Pledgor Obligations. Upon delivery to the Agent, such
additional shares of Capital Stock shall be deemed to be part of the Pledged
Collateral of such Pledgor and shall be subject to the terms of this Pledge
Agreement whether or not Schedule 2(a) is amended to refer to such additional
shares.
3. Security for Pledgor Obligations. The security interest created
hereby in the Pledged Collateral of each Pledgor constitutes continuing
collateral security for all of the following, whether now existing or hereafter
incurred (the "Pledgor Obligations"):
(a) all Obligations; and
(b) all expenses and charges, legal and otherwise, reasonably
incurred by the Agent and/or the Lenders in collecting or enforcing any
Obligations or in realizing on or protecting any security therefor,
including without limitation the security afforded hereunder.
4. Delivery of the Pledged Collateral. Each Pledgor hereby agrees that:
(a) Delivery of Certificates. Each Pledgor shall deliver to
the Agent (i) simultaneously with or prior to the execution and
delivery of this Pledge Agreement, all certificates representing the
Pledged Shares of such Pledgor and (ii) promptly upon the receipt
thereof by or on behalf of a Pledgor, all other certificates and
instruments constituting Pledged Collateral of a Pledgor. Prior to
delivery to the Agent, all such certificates and instruments
constituting Pledged Collateral of a Pledgor shall be held in trust by
such Pledgor for the benefit of the Agent pursuant hereto. All such
certificates shall be delivered in suitable form for transfer by
delivery or shall be accompanied by duly executed instruments of
transfer or assignment in blank, substantially in the form provided in
Exhibit 4(a) attached hereto.
(b) Additional Securities. If such Pledgor shall receive by
virtue of its being or having been the owner of any Pledged Collateral,
any (i) stock certificate or other certificate evidencing an ownership
interest, including without limitation, any certificate representing a
dividend or distribution in connection with any increase or reduction
of capital, reclassification, merger, consolidation, sale of assets,
combination of shares, stock splits, spin-off or split-off, promissory
notes or other instrument; (ii) option or right, whether as an addition
to, substitution for, or an exchange for, any Pledged Collateral or
otherwise; (iii) dividends payable in securities or other certificate
evidencing an ownership interest; or (iv) distributions of securities
or other certificate evidencing an ownership interest in connection
with a partial or total liquidation, dissolution or reduction of
capital, capital surplus or paid-in surplus, then such Pledgor shall
receive such security, certificate, instrument, option, right or
distribution in trust for the benefit of the Agent, shall segregate it
from such Pledgor's other property and shall deliver it forthwith to
the Agent in the exact form received together with any necessary
3
<PAGE> 4
endorsement and/or appropriate stock power duly executed in blank,
substantially in the form provided in Exhibit 4(a), to be held by the
Agent as Pledged Collateral and as further collateral security for the
Pledgor Obligations.
(c) Acknowledgment and Consent; Authorization and Transaction
Statements. If necessary to perfect the Lenders' security interest in
the Pledged Collateral, concurrently with the execution of this Pledge
Agreement, (i) the Pledgor shall send to each issuer of Pledged Shares
("Issuer") an Authorization Statement substantially in the form
provided in Exhibit 4(c)(i) and (ii) the Pledgor shall cause each
Issuer of uncertificated Pledged Shares to, and each such Issuer shall,
deliver to the Agent (A) an Acknowledgment and Consent substantially in
the form provided in Exhibit 4(c)(ii)(A) and (B) a Transaction
Statement substantially in the form provided in Exhibit 4(c)(ii)(B),
confirming that each such Issuer has registered the pledge effected by
this Pledge Agreement on its books.
(d) Financing Statements. Each Pledgor shall execute and
deliver to the Agent such UCC or other applicable financing statements
as may be reasonably requested by the Agent in order to perfect and
protect the security interest created hereby in the Pledged Collateral
of such Pledgor.
5. Representations and Warranties. Each Pledgor hereby represents and
warrants to the Agent, for the benefit of the Lenders, that so long as any of
the Pledgor Obligations remain outstanding or any Credit Document is in effect
or any Letter of Credit shall remain outstanding, and until all of the
Commitments shall have been terminated:
(a) Authorization of Pledged Shares. The Pledged Shares are
duly authorized and validly issued, are fully paid and nonassessable
and are not subject to the preemptive rights of any Person. All other
shares of Capital Stock constituting Pledged Collateral will be duly
authorized and validly issued, fully paid and nonassessable and not
subject to the preemptive rights of any Person.
(b) Title. Each Pledgor has good and indefeasible title to the
Pledged Collateral of such Pledgor and will at all times be the legal
and beneficial owner of such Pledged Collateral free and clear of any
Lien, other than Permitted Liens. There exists no "adverse claim"
within the meaning of Section 8-302 of the Uniform Commercial Code as
in effect in the State of North Carolina (the "UCC") with respect to
the Pledged Shares of such Pledgor.
(c) Exercising of Rights. The exercise by the Agent of its
rights and remedies hereunder will not violate any law or governmental
regulation or any material contractual restriction binding on or
affecting a Pledgor or any of its property.
(d) Pledgor's Authority. No authorization, approval or action
by, and no notice or filing with any governmental authority or with the
Issuer of any Pledged Shares (except as provided herein) is required
either (i) for the pledge made by a Pledgor or for
4
<PAGE> 5
the granting of the security interest by a Pledgor pursuant to this
Pledge Agreement or (ii) for the exercise by the Agent or the Lenders
of their rights and remedies hereunder (except as may be required by
laws affecting the offering and sale of securities).
(e) Security Interest/Priority. This Pledge Agreement creates
a valid security interest in favor of the Agent for the benefit of the
Lenders, in the Pledged Collateral. The taking possession by the Agent
of the certificates representing the certificated Pledged Shares and
all other certificates and instruments constituting Pledged Collateral
will perfect and establish the first priority of the Agent's security
interest in the certificated Pledged Shares and, when properly
perfected by filing or registration, in all other Pledged Collateral
represented by such Pledged Shares and instruments securing the Pledgor
Obligations. The registration of the interest created by this Pledge
Agreement with respect to the uncertificated Pledged Shares on the
books of each Issuer of such uncertificated Pledged Shares and the
filing of properly completed financing statements in all necessary
jurisdictions will perfect and establish the first priority of the
Agent's security interest in the uncertificated Pledged Shares. Except
as set forth in this Section 5(e), no action is necessary to perfect or
otherwise protect such security interest.
(f) No Other Shares. No Pledgor owns any shares of Capital
Stock other than as set forth on Schedule 2(a) attached hereto.
6. Covenants. Each Pledgor hereby covenants, that so long as any of the
Pledgor Obligations remain outstanding or any Credit Document is in effect or
any Letter of Credit shall remain outstanding, and until all of the Commitments
shall have been terminated, such Pledgor shall:
(a) Books and Records. Mark its books and records (and shall
cause the Issuer of the Pledged Shares of such Pledgor to mark its
books and records) to reflect the security interest granted to the
Agent, for the benefit of the Lenders, pursuant to this Pledge
Agreement.
(b) Defense of Title. Warrant and defend title to and
ownership of the Pledged Collateral of such Pledgor at its own expense
against the claims and demands of all other parties claiming an
interest therein, keep the Pledged Collateral free from all Liens,
except for Permitted Liens, and not sell, exchange, transfer, assign,
lease or otherwise dispose of Pledged Collateral of such Pledgor or any
interest therein, except as permitted under the Credit Agreement and
the other Credit Documents.
(c) Further Assurances. Promptly execute and deliver at its
expense all further instruments and documents and take all further
action that may be necessary and desirable or that the Agent may
reasonably request in order to (i) perfect and protect the security
interest created hereby in the Pledged Collateral of such Pledgor
(including without limitation any and all action necessary to satisfy
the Agent that the Agent has obtained a first priority perfected
security interest in any Capital Stock); (ii) enable the Agent to
exercise and enforce its rights and remedies hereunder in respect of
the Pledged
5
<PAGE> 6
Collateral of such Pledgor; and (iii) otherwise effect the purposes of
this Pledge Agreement, including, without limitation and if requested
by the Agent, delivering to the Agent irrevocable proxies in respect of
the Pledged Collateral of such Pledgor.
(d) Amendments. Not make or consent to any amendment or other
modification or waiver with respect to any of the Pledged Collateral of
such Pledgor or enter into any agreement or allow to exist any
restriction with respect to any of the Pledged Collateral of such
Pledgor other than pursuant hereto or as may be permitted under the
Credit Agreement.
(e) Compliance with Securities Laws. File all reports and
other information now or hereafter required to be filed by such Pledgor
with the United States Securities and Exchange Commission and any other
state, federal or foreign agency in connection with the ownership of
the Pledged Collateral of such Pledgor.
7. Advances by Lenders. On failure of any Pledgor to perform any of the
covenants and agreements contained herein, the Agent may, at its sole option and
in its sole discretion, perform the same and in so doing may expend such sums as
the Agent may reasonably deem advisable in the performance thereof, including,
without limitation, the payment of any insurance premiums, the payment of any
taxes, a payment to obtain a release of a Lien or potential Lien (other than a
Permitted Lien), expenditures made in defending against any adverse claim (other
than a Permitted Lien) and all other expenditures which the Agent or the Lenders
may make for the protection of the security hereof or which may be compelled to
make by operation of law. All such sums and amounts so expended shall be
repayable by the Pledgors on a joint and several basis promptly upon timely
notice thereof and demand therefor, shall constitute additional Pledgor
Obligations and shall bear interest from the date said amounts are expended at
the default rate specified in Section 4.2 of the Credit Agreement for Revolving
Loans that are Base Rate Loans. No such performance of any covenant or agreement
by the Agent or the Lenders on behalf of any Pledgor, and no such advance or
expenditure therefor, shall relieve the Pledgors of any default under the terms
of this Pledge Agreement or the other Credit Documents. The Lenders may make any
payment hereby authorized in accordance with any bill, statement or estimate
procured from the appropriate public office or holder of the claim to be
discharged without inquiry into the accuracy of such bill, statement or estimate
or into the validity of any tax assessment, sale, forfeiture, tax lien, title or
claim except to the extent such payment is being contested in good faith by a
Pledgor in appropriate proceedings and against which adequate reserves are being
maintained in accordance with GAAP.
8. Events of Default. The occurrence of an event which under the Credit
Agreement would constitute an Event of Default shall be an Event of Default
hereunder (an "Event of Default").
9. Remedies.
(a) General Remedies. Upon the occurrence of an Event of
Default and during the continuation thereof, the Agent and the Lenders
shall have, in respect of the
6
<PAGE> 7
Pledged Collateral of any Pledgor, in addition to the rights and
remedies provided herein, in the Credit Documents or by law, the rights
and remedies of a secured party under the UCC or any other applicable
law.
(b) Sale of Pledged Collateral. Upon the occurrence of an
Event of Default and during the continuation thereof, without limiting
the generality of this Section and without notice, the Agent may, in
its sole discretion, sell or otherwise dispose of or realize upon the
Pledged Collateral, or any part thereof, in one or more parcels, at
public or private sale, at any exchange or broker's board or elsewhere,
at such price or prices and on such other terms as the Agent may deem
commercially reasonable, for cash, credit or for future delivery or
otherwise in accordance with applicable law. To the extent permitted by
law, any Lender may in such event, bid for the purchase of such
securities or certificates. Each Pledgor agrees that, to the extent
notice of sale shall be required by law and has not been waived by such
Pledgor, any requirement of reasonable notice shall be met if notice,
specifying the place of any public sale or the time after which any
private sale is to be made, is personally served on or mailed, postage
prepaid, to such Pledgor, in accordance with the notice provisions of
Section 14.5 of the Credit Agreement at least 10 days before the time
of such sale. The Agent shall not be obligated to make any sale of
Pledged Collateral of such Pledgor regardless of notice of sale having
been given. The Agent may adjourn any public or private sale from time
to time by announcement at the time and place fixed therefor, and such
sale may, without further notice, be made at the time and place to
which it was so adjourned.
(c) Private Sale. Upon the occurrence of an Event of Default
and during the continuation thereof, the Pledgors recognize that the
Agent may deem it impracticable to effect a public sale of all or any
part of the Pledged Shares or any of the securities or certificates
constituting Pledged Collateral and that the Agent may, therefore,
determine to make one or more private sales of any such securities or
certificates to a restricted group of purchasers who will be obligated
to agree, among other things, to acquire such securities or
certificates for their own account, for investment and not with a view
to the distribution or resale thereof. Each Pledgor acknowledges that
any such private sale may be at prices and on terms less favorable to
the seller than the prices and other terms which might have been
obtained at a public sale and, notwithstanding the foregoing, agrees
that such private sale shall be deemed to have been made in a
commercially reasonable manner and that the Agent shall have no
obligation to delay sale of any such securities or certificates for the
period of time necessary to permit the Issuer of such securities or
certificates to register such securities or certificates for public
sale under the Securities Act of 1933. Each Pledgor further
acknowledges and agrees that any offer to sell such securities which
has been (i) publicly advertised on a bona fide basis in a newspaper or
other publication of general circulation in the financial community of
New York, New York (to the extent that such offer may be advertised
without prior registration under the Securities Act of 1933), or (ii)
made privately in the manner described above shall be deemed to involve
a "public sale" under the UCC, notwithstanding that such sale may not
constitute a "public offering" under the Securities Act of 1933, and
the Agent may, in such event, bid for the purchase of such securities
or certificates.
7
<PAGE> 8
(d) Retention of Pledged Collateral. In addition to the rights
and remedies hereunder, upon the occurrence of an Event of Default, the
Agent may, after providing the notices required by Section 9-505(2) of
the UCC or otherwise complying with the requirements of applicable law
of the relevant jurisdiction, retain all or any portion of the Pledged
Collateral in satisfaction of the Pledgor Obligations. Unless and until
the Agent shall have provided such notices, however, the Agent shall
not be deemed to have retained any Pledged Collateral in satisfaction
of any Pledgor Obligations for any reason.
(e) Deficiency. In the event that the proceeds of any sale,
collection or realization are insufficient to pay all amounts to which
the Agent or the Lenders are legally entitled, the Pledgors shall be
jointly and severally liable for the deficiency, together with interest
thereon at the default rate specified in Section 4.2 of the Credit
Agreement for Revolving Loans that are Base Rate Loans, together with
the costs of collection and the reasonable fees of any attorneys
employed by the Agent to collect such deficiency. Any surplus remaining
after the full payment and satisfaction of the Pledgor Obligations
shall be returned to the Pledgors or to whomsoever a court of competent
jurisdiction shall determine to be entitled thereto.
10. Rights of the Agent.
(a) Power of Attorney. In addition to other powers of attorney
contained herein, each Pledgor hereby designates and appoints the
Agent, on behalf of the Lenders, and each of its designees or agents as
attorney-in-fact of such Pledgor, irrevocably and with power of
substitution, with authority to take any or all of the following
actions upon the occurrence and during the continuance of an Event of
Default:
(i) to demand, collect or settle, compromise,
adjust and give discharges and releases concerning the Pledged
Collateral of such Pledgor, all as the Agent may reasonably
determine;
(ii) to commence and prosecute any actions at any
court for the purposes of collecting any of the Pledged
Collateral of such Pledgor and enforcing any other right in
respect thereof;
(iii) to defend, settle or compromise any action
brought and, in connection therewith, give such discharge or
release as the Agent may deem reasonably appropriate;
(iv) to pay or discharge taxes, liens, security
interests, or other encumbrances levied or placed on or
threatened against the Pledged Collateral of such Pledgor;
8
<PAGE> 9
(v) to direct any parties liable for any payment
under any of the Pledged Collateral to make payment of any and
all monies due and to become due thereunder directly to the
Agent or as the Agent shall direct;
(vi) to receive payment of and receipt for any and
all monies, claims, and other amounts due and to become due at
any time in respect of or arising out of any Pledged
Collateral of such Pledgor;
(vii) to sign and endorse any drafts, assignments,
proxies, stock powers, verifications, notices and other
documents relating to the Pledged Collateral of such Pledgor;
(viii) to settle, compromise or adjust any suit,
action or proceeding described above and, in connection
therewith, to give such discharges or releases as the Agent
may deem reasonably appropriate;
(ix) execute and deliver all assignments,
conveyances, statements, financing statements, renewal
financing statements, pledge agreements, affidavits, notices
and other agreements, instruments and documents that the Agent
may determine necessary in order to perfect and maintain the
security interests and liens granted in this Pledge Agreement
and in order to fully consummate all of the transactions
contemplated therein;
(x) to exchange any of the Pledged Collateral of
such Pledgor or other property upon any merger, consolidation,
reorganization, recapitalization or other readjustment of the
Issuer thereof and, in connection therewith, deposit any of
the Pledged Collateral of such Pledgor with any committee,
depository, transfer agent, registrar or other designated
agency upon such terms as the Agent may determine;
(xi) to vote for a shareholder or member
resolution, or to sign an instrument in writing, sanctioning
the transfer of any or all of the Pledged Shares of such
Pledgor into the name of the Agent or one or more of the
Lenders or into the name of any transferee to whom the Pledged
Shares of such Pledgor or any part thereof may be sold
pursuant to Section 10 hereof; and
(xii) to do and perform all such other acts and
things as the Agent may reasonably deem to be necessary,
proper or convenient in connection with the Pledged Collateral
of such Pledgor.
This power of attorney is a power coupled with an interest and shall be
irrevocable (i) for so long as any of the Pledgor Obligations remain
outstanding, any Credit Document is in effect or any Letter of Credit
shall remain outstanding and (ii) until all of the Commitments shall
have been terminated. The Agent shall be under no duty to exercise or
withhold the exercise of any of the rights, powers, privileges and
options expressly or
9
<PAGE> 10
implicitly granted to the Agent in this Pledge Agreement, and shall not
be liable for any failure to do so or any delay in doing so. The Agent
shall not be liable for any act or omission or for any error of
judgment or any mistake of fact or law in its individual capacity or
its capacity as attorney-in-fact except acts or omissions resulting
from its gross negligence or willful misconduct. This power of attorney
is conferred on the Agent solely to protect, preserve and realize upon
its security interest in Pledged Collateral.
(b) Performance by the Agent of Pledgor's Obligations. If any
Pledgor fails to perform any agreement or obligation contained herein,
the Agent itself may perform, or cause performance of, such agreement
or obligation, and the expenses of the Agent incurred in connection
therewith shall be payable by the Pledgors on a joint and several basis
pursuant to Section 25 hereof.
(c) Assignment by the Agent. Subject to Sections 13.9 and
14.6(b) of the Credit Agreement, the Agent may from time to time assign
the Pledgor Obligations and any portion thereof and/or the Pledged
Collateral and any portion thereof, and the assignee shall be entitled
to all of the rights and remedies of the Agent under this Pledge
Agreement in relation thereto.
(d) The Agent's Duty of Care. Other than the exercise of
reasonable care to assure the safe custody of the Pledged Collateral
while being held by the Agent hereunder, the Agent shall have no duty
or liability to preserve rights pertaining thereto, it being understood
and agreed that Pledgors shall be responsible for preservation of all
rights in the Pledged Collateral of such Pledgor, and the Agent shall
be relieved of all responsibility for Pledged Collateral upon
surrendering it or tendering the surrender of it to the Pledgors. The
Agent shall be deemed to have exercised reasonable care in the custody
and preservation of the Pledged Collateral in its possession if such
Pledged Collateral is accorded treatment substantially equal to that
which the Agent accords its own property, which shall be no less than
the treatment employed by a reasonable and prudent agent in the
industry, it being understood that the Agent shall not have
responsibility for (i) ascertaining or taking action with respect to
calls, conversions, exchanges, maturities, tenders or other matters
relating to any Pledged Collateral, whether or not the Agent has or is
deemed to have knowledge of such matters; or (ii) taking any necessary
steps to preserve rights against any parties with respect to any
Pledged Collateral.
(e) Voting Rights in Respect of the Pledged Collateral.
(i) So long as no Event of Default shall have
occurred and be continuing, to the extent permitted by law,
each Pledgor may exercise any and all voting and other
consensual rights pertaining to the Pledged Collateral of such
Pledgor or any part thereof for any purpose not inconsistent
with the terms of this Pledge Agreement or the Credit
Agreement; and
10
<PAGE> 11
(ii) Upon the occurrence and during the continuance
of an Event of Default, all rights of a Pledgor to exercise
the voting and other consensual rights which it would
otherwise be entitled to exercise pursuant to paragraph (i) of
this Section shall cease and all such rights shall thereupon
become vested in the Agent which shall then have the sole
right to exercise such voting and other consensual rights.
(f) Dividend Rights in Respect of the Pledged Collateral.
(i) So long as no Event of Default shall have
occurred and be continuing and subject to Section 4(b) hereof,
each Pledgor may receive and retain any and all dividends
(other than stock dividends and other dividends constituting
Pledged Collateral which are addressed hereinabove) or
interest paid in respect of the Pledged Collateral to the
extent they are allowed under the Credit Agreement.
(ii) Upon the occurrence and during the continuance
of an Event of Default:
(A) all rights of a Pledgor to receive the
dividends and interest payments which it would
otherwise be authorized to receive and retain
pursuant to paragraph (i) of this Section shall cease
and all such rights shall thereupon be vested in the
Agent which shall then have the sole right to receive
and hold as Pledged Collateral such dividends and
interest payments; and
(B) all dividends and interest payments
which are received by a Pledgor contrary to the
provisions of paragraph (A) of this Section shall be
received in trust for the benefit of the Agent, shall
be segregated from other property or funds of such
Pledgor, and shall be forthwith paid over to the
Agent as Pledged Collateral in the exact form
received, to be held by the Agent as Pledged
Collateral and as further collateral security for the
Pledgor Obligations.
(g) Release of Pledged Collateral. The Agent may release any
of the Pledged Collateral from this Pledge Agreement or may substitute
any of the Pledged Collateral for other Pledged Collateral without
altering, varying or diminishing in any way the force, effect, lien,
pledge or security interest of this Pledge Agreement as to any Pledged
Collateral not expressly released or substituted, and this Pledge
Agreement shall continue as a first priority lien on all Pledged
Collateral not expressly released or substituted.
11. Application of Proceeds. Upon the occurrence of and during the
continuance of an Event of Default, any payments in respect of the Pledgor
Obligations and any proceeds of any Pledged Collateral, when received by the
Agent or any of the Lenders in cash or its equivalent, will be applied as
follows: first, to all reasonable costs and expenses of the Agent (including
11
<PAGE> 12
without limitation reasonable attorneys' fees and expenses) incurred in
connection with the implementation and/or enforcement of this Pledge Agreement
and/or any of the other Credit Documents; second, to all costs and expenses of
the Lenders (including without limitation reasonable attorneys' fees and
expenses) incurred in connection with the implementation and/or enforcement of
this Pledge Agreement and/or any of the other Credit Documents; third, to the
principal amount of the Pledgor Obligations; fourth, to such of the Pledgor
Obligations consisting of accrued but unpaid interest and fees; fifth, to all
other amounts payable with respect to the Pledgor Obligations; and sixth, to the
payment of the surplus, if any, to whoever may be lawfully entitled to receive
such surplus. The Pledgors shall remain liable to the Agent and the Lenders for
any deficiency.
12. Costs of Counsel. If at any time hereafter, whether upon the
occurrence of an Event of Default or not, the Agent employs counsel to prepare
or consider amendments, waivers or consents with respect to this Pledge
Agreement, or to take action or make a response in or with respect to any legal
or arbitral proceeding relating to this Pledge Agreement or relating to the
Pledged Collateral, or to protect the Pledged Collateral or exercise any rights
or remedies under this Pledge Agreement or with respect to the Pledged
Collateral, then the Pledgors agree to promptly pay upon demand any and all such
reasonable documented costs and expenses of the Agent or the Lenders, all of
which costs and expenses shall constitute Pledgor Obligations hereunder.
13. Continuing Agreement.
(a) This Pledge Agreement shall be a continuing agreement in
every respect and shall remain in full force and effect so long the
Credit Agreement is in effect or any amounts payable thereunder or
under any other Credit Document or any Letter of Credit shall remain
outstanding, and until all of the Commitments thereunder shall have
terminated (other than any obligations with respect to the indemnities
and the representations and warranties set forth in the Credit
Documents). Upon such payment and termination, this Pledge Agreement
shall be automatically terminated and the Lenders shall, upon the
request and at the expense of the Pledgors, forthwith release all of
its liens and security interests hereunder and shall executed and
deliver all UCC termination statements and/or other documents
reasonably requested by the Pledgors evidencing such termination.
Notwithstanding the foregoing all releases and indemnities provided
hereunder shall survive termination of this Pledge Agreement.
(b) This Pledge Agreement shall continue to be effective or be
automatically reinstated, as the case may be, if at any time payment,
in whole or in part, of any of the Pledgor Obligations is rescinded or
must otherwise be restored or returned by the Agent or any Lender as a
preference, fraudulent conveyance or otherwise under any bankruptcy,
insolvency or similar law, all as though such payment had not been
made; provided that in the event payment of all or any part of the
Pledgor Obligations is rescinded or must be restored or returned, all
reasonable costs and expenses (including without limitation any
reasonable legal fees and disbursements) incurred by the Agent or any
Lender in defending and enforcing such reinstatement shall be deemed to
be included as a part of the Pledgor Obligations.
12
<PAGE> 13
14. Amendments; Waivers; Modifications. This Pledge Agreement and the
provisions hereof may not be amended, waived, modified, changed, discharged or
terminated except as set forth in Section 14.10 of the Credit Agreement.
15. Successors in Interest. This Pledge Agreement shall create a
continuing security interest in the Pledged Collateral and shall be binding upon
each Pledgor, its successors and assigns and shall inure, together with the
rights and remedies of the Agent and the Lenders hereunder, to the benefit of
the Agent and the Lenders and their successors and permitted assigns; provided,
however, that none of the Pledgors may assign its rights or delegate its duties
hereunder without the prior written consent of the Agent. To the fullest extent
permitted by law, each Pledgor hereby releases the Agent and each Lender, and
its successors and permitted assigns, from any liability for any act or omission
relating to this Pledge Agreement or the Pledged Collateral, except for any
liability arising from the gross negligence or willful misconduct of the Agent,
or such Lender, or its officers, employees or agents.
16. Notices. All notices required or permitted to be given under this
Pledge Agreement shall be in conformance with Section 14.5 of the Credit
Agreement.
17. Counterparts. This Pledge Agreement may be executed in any number
of counterparts, each of which where so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument. It
shall not be necessary in making proof of this Pledge Agreement to produce or
account for more than one such counterpart.
18. Headings. The headings of the sections and subsections hereof are
provided for convenience only and shall not in any way affect the meaning or
construction of any provision of this Pledge Agreement.
19. Governing Law; Submission to Jurisdiction; Venue. THIS PLEDGE
AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NORTH CAROLINA. THE PROVISIONS OF THE CREDIT AGREEMENT RELATING TO
SUBMISSION TO JURISDICTION, VENUE AND ARBITRATION ARE HEREBY INCORPORATED BY
REFERENCE HEREIN, MUTATIS MUTANDIS.
20. Waiver of Jury Trial. TO THE EXTENT PERMITTED BY APPLICABLE LAW,
EACH PLEDGOR AND THE AGENT HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY
ACTION OR PROCEEDING ARISING OUT OF THIS PLEDGE AGREEMENT, THE CREDIT DOCUMENTS
OR ANY OTHER AGREEMENTS OR TRANSACTIONS RELATED HERETO OR THERETO.
21. Severability. If any provision of any of the Pledge Agreement is
determined to be illegal, invalid or unenforceable, such provision shall be
fully severable and the remaining
13
<PAGE> 14
provisions shall remain in full force and effect and shall be construed without
giving effect to the illegal, invalid or unenforceable provisions.
22. Entirety. This Pledge Agreement and the other Credit Documents
represent the entire agreement of the parties hereto and thereto, and supersede
all prior agreements and understandings, oral or written, if any, including any
commitment letters or correspondence relating to the Credit Documents or the
transactions contemplated herein and therein.
23. Survival. All representations and warranties of the Pledgors
hereunder shall survive the execution and delivery of this Pledge Agreement and
the other Credit Documents, the delivery of the Revolving Notes and the making
of the Revolving Loans and the issuance of the Letters of Credit under the
Credit Agreement.
24. Other Security. To the extent that any of the Pledgor Obligations
are now or hereafter secured by property other than the Pledged Collateral
(including, without limitation, real and other personal property owned by a
Pledgor), or by a guarantee, endorsement or property of any other Person, then
the Agent and the Lenders shall have the right to proceed against such other
property, guarantee or endorsement upon the occurrence of any Event of Default,
and the Agent and the Lenders have the right, in their sole discretion, to
determine which rights, security, liens, security interests or remedies the
Agent and the Lenders shall at any time pursue, relinquish, subordinate, modify
or take with respect thereto, without in any way modifying or affecting any of
them or any of the Agent's and the Lenders' rights or the Pledgor Obligations
under this Pledge Agreement or under any other of the Credit Documents.
25. Joint and Several Obligations of Pledgors.
(a) Each of the Pledgors is accepting joint and several
liability hereunder in consideration of the financial accommodation to
be provided by the Lenders under the Credit Agreement, for the mutual
benefit, directly and indirectly, of each of the Pledgors and in
consideration of the undertakings of each of the Pledgors to accept
joint and several liability for the obligations of each of them.
(b) Each of the Pledgors jointly and severally hereby
irrevocably and unconditionally accepts, not merely as a surety but
also as a co-debtor, joint and several liability with the other
Pledgors with respect to the payment and performance of all of the
Pledgor Obligations arising under this Pledge Agreement and the other
Credit Documents, it being the intention of the parties hereto that all
the Pledgor Obligations shall be the joint and several obligations of
each of the Pledgors without preferences or distinction among them.
26. Rights of Required Lenders. All rights of the Agent hereunder, if
not exercised by the Agent, may be exercised by the Required Lenders.
27. Irrevocable Authorization and Instruction to Issuers. Each of the
Pledgors hereby authorizes and instructs each of the Issuers to comply with any
instruction received by it from the Agent in writing that (a) states that an
Event of Default has occurred and is continuing and (b) is
14
<PAGE> 15
otherwise in accordance with the terms of this Pledge Agreement, without any
other or further instructions from such Pledgor, and such Pledgor agrees that
such Issuer shall be fully protected in so complying.
[remainder of page intentionally left blank]
15
<PAGE> 16
Each of the parties hereto has caused a counterpart of this Pledge
Agreement to be duly executed and delivered as of the date first above written.
COMPANY: FRESH FOODS, INC.
By: /s/ David R. Clark
-------------------------------------
Name: David R. Clark
Title: President
SUBSIDIARY BORROWERS: BRUNSWICK ASSOCIATES, INC.
By: /s/ David R. Clark
-------------------------------------
Name: David R. Clark
Title: President
CLAREMONT RESTAURANT GROUP, LLC
BY: FRESH FOODS, INC.,
its Sole Member
By: /s/ David R. Clark
-------------------------------------
Name: David R. Clark
Title: President
ELLOREE FOODS, INC.
By: /s/ David R. Clark
-------------------------------------
Name: David R. Clark
Title: President
<PAGE> 17
FRESH FOODS PROPERTIES, LLC
BY: FRESH FOODS, INC.,
its Sole Member
By: /s/ David R. Clark
-------------------------------------
Name: David R. Clark
Title: President
GEORGIA BUFFET RESTAURANTS, INC.
By: /s/ David R. Clark
-------------------------------------
Name: David R. Clark
Title: President
KNOXVILLE FOODS, INC.
By: /s/ David R. Clark
-------------------------------------
Name: David R. Clark
Title: Vice President
MOM `n' POP'S COUNTRY HAM, LLC
BY: PIERRE FOODS, INC.,
its Sole Member
BY: FRESH FOODS, INC.,
its Sole Member
By: /s/ David R. Clark
-------------------------------------
Name: David R. Clark
Title: President
<PAGE> 18
OAK RIDGE FOODS, INC.
By: /s/ David R. Clark
-------------------------------------
Name: David R. Clark
Title: Vice President
SAGEBRUSH, INC.
By: /s/ David R. Clark
-------------------------------------
Name: David R. Clark
Title: Vice President
SAGEBRUSH OF SEVIERVILLE, INC.
By: /s/ David R. Clark
-------------------------------------
Name: David R. Clark
Title: Vice President
SAGEBRUSH DTN, INC.
By: /s/ David R. Clark
-------------------------------------
Name: David R. Clark
Title: Vice President
SAGEBRUSH OF TENNESSEE, L.P.
BY: SAGEBRUSH OF SOUTH CAROLINA,
LLC, General Partner
BY: SAGEBRUSH, INC.
its Sole Member
By: /s/ David R. Clark
-------------------------------------
Name: David R. Clark
Title: Vice President
<PAGE> 19
SEVEN STARS, INC.
By: /s/ David R. Clark
-------------------------------------
Name: David R. Clark
Title: President
ST. AUGUSTINE FOODS, INC.
By: /s/ David R. Clark
-------------------------------------
Name: David R. Clark
Title: President
TENNESSEE WSMP, INC.
By: /s/ David R. Clark
-------------------------------------
Name: David R. Clark
Title: President
VIRGINIA WSMP, INC.
By: /s/ David R. Clark
-------------------------------------
Name: David R. Clark
Title: President
CHARDENT, INC.
By: /s/ David R. Clark
-------------------------------------
Name: David R. Clark
Title: President
<PAGE> 20
D & S FOODS, LLC
BY: GEORGIA WSMP, INC.,
its Sole Member
By: /s/ David R. Clark
-------------------------------------
Name: David R. Clark
Title: President
GEORGIA WSMP, INC.
By: /s/ David R. Clark
-------------------------------------
Name: David R. Clark
Title: President
KINGSPORT FOODS, INC.
By: /s/ David R. Clark
-------------------------------------
Name: David R. Clark
Title: Vice President
MATTHEWS PRIME SIRLOIN, INC.
By: /s/ David R. Clark
-------------------------------------
Name: David R. Clark
Title: President
NAPLES FOODS, INC.
By: /s/ David R. Clark
-------------------------------------
Name: David R. Clark
Title: President
<PAGE> 21
PRIME SIRLOIN, INC.
By: /s/ David R. Clark
-------------------------------------
Name: David R. Clark
Title: President
SAGEBRUSH OF NORTH CAROLINA, LLC
BY: SAGEBRUSH, INC.
its Sole Member
By: /s/ David R. Clark
-------------------------------------
Name: David R. Clark
Title: Vice President
SAGEBRUSH OF SOUTH CAROLINA, LLC
BY: SAGEBRUSH, INC.
its Sole Member
By: /s/ David R. Clark
-------------------------------------
Name: David R. Clark
Title: Vice President
SPICEWOOD, INC.
By: /s/ David R. Clark
-------------------------------------
Name: David R. Clark
Title: President
SOUTH CAROLINA WSMP, INC.
By: /s/ David R. Clark
-------------------------------------
Name: David R. Clark
Title: President
<PAGE> 22
SUNSHINE WSMP, INC.
By: /s/ David R. Clark
-------------------------------------
Name: David R. Clark
Title: President
TUMBLEWEED OF PIGEON FORGE, INC.
By: /s/ David R. Clark
-------------------------------------
Name: David R. Clark
Title: Vice President
GREENVILLE FOODS SYSTEMS, INC.
By: /s/ David R. Clark
-------------------------------------
Name: David R. Clark
Title: President
FRESH FOODS SALES, LLC
BY: FRESH FOODS, INC.,
its Sole Member
By: /s/ David R. Clark
-------------------------------------
Name: David R. Clark
Title: President
PIERRE FOODS, LLC
BY: FRESH FOODS, INC.,
its Sole Member
By: /s/ David R. Clark
-------------------------------------
Name: David R. Clark
Title: President
<PAGE> 23
Accepted and agreed to in Charlotte, North Carolina as of the date
first above written.
FIRST UNION COMMERCIAL CORPORATION,
as Agent
By: /s/ Todd A. Witmer
--------------------------------
Name: Todd A. Witmer
Title: Director
<PAGE> 24
SCHEDULE 1
To Pledge Agreement
Dated as of June 9, 1998
in favor of First Union Commercial Corporation
as Agent
PLEDGED STOCK
Pledgor: FRESH FOODS, INC.
<TABLE>
<CAPTION>
Number of Certificate Percentage
Name of Subsidiary Shares Number Ownership
- ------------------ --------- ----------- ----------
<S> <C> <C> <C>
Greenville Food Systems, Incorporated 26,500 34 100%
17,500 26
5,000 28
4,000 31
Matthews Prime Sirloin, Inc. 30,000 2 100%
Georgia WSMP, Inc. 1,000 1 100%
Prime Sirloin, Inc. 100 14 100%
Brunswick Associates, Inc. 470 5 100%
Sunshine WSMP, Inc. 1,000 1 100%
Seven Stars, Inc. 100 3 100%
South Carolina WSMP, Inc. 25,000 13 100%
Virginia WSMP, Inc. 1,000 01 100%
Tennessee WSMP, Inc. 1,000 1 100%
Sagebrush, Inc. 100 1 100%
</TABLE>
Pledgor: GEORGIA WSMP, INC.
<TABLE>
<CAPTION>
Number of Certificate Percentage
Name of Subsidiary Shares Number Ownership
- ------------------ --------- ----------- ----------
<S> <C> <C> <C>
Georgia Buffet Restaurants, Inc. 2,000 3 100%
</TABLE>
1
<PAGE> 25
Pledgor: SOUTH CAROLINA WSMP, INC.
<TABLE>
<CAPTION>
Number of Certificate Percentage
Name of Subsidiary Shares Number Ownership
- ------------------ --------- ----------- ----------
<S> <C> <C> <C>
Elloree Foods, Inc. 15,000 4 100%
</TABLE>
Pledgor: SUNSHINE WSMP, INC.
<TABLE>
<CAPTION>
Number of Certificate Percentage
Name of Subsidiary Shares Number Ownership
- ------------------ --------- ----------- ----------
<S> <C> <C> <C>
St. Augustine Foods, Inc. 5,000 1 100%
4,000 2
Naples Foods, Inc. 55 1 100%
</TABLE>
Pledgor: SAGEBRUSH, INC.
<TABLE>
<CAPTION>
Number of Certificate Percentage
Name of Subsidiary Shares Number Ownership
- ------------------ --------- ----------- ----------
<S> <C> <C> <C>
Chardent, Inc. 100 2 100%
Sagebrush DTN, Inc. 100 1 100%
Sagebrush of Sevierville, Inc. 100,000 12 100%
Knoxville Foods, Inc. 1,000 9 100%
Kingsport Foods, Inc. 10,000 11 100%
Oak Ridge Foods, Inc. 10,000 17 100%
Tumbleweed of Pigeon Forge, Inc. 10,000 15 100%
Spicewood, Inc. 100 8 50.3%
</TABLE>
Pledgor: KNOXVILLE FOODS, INC.
<TABLE>
<CAPTION>
Number of Certificate Percentage
Name of Subsidiary Shares Number Ownership
- ------------------ --------- ----------- ----------
<S> <C> <C> <C>
Spicewood, Inc. 7.17 3 3.6%
</TABLE>
2
<PAGE> 26
Pledgor: KINGSPORT FOODS, INC.
<TABLE>
<CAPTION>
Number of Certificate Percentage
Name of Subsidiary Shares Number Ownership
- ------------------ --------- ----------- ----------
<S> <C> <C> <C>
Spicewood, Inc. 14.20 4 7.1%
</TABLE>
Pledgor: SAGEBRUSH DTN, INC.
<TABLE>
<CAPTION>
Number of Certificate Percentage
Name of Subsidiary Shares Number Ownership
- ------------------ --------- ----------- ----------
<S> <C> <C> <C>
Spicewood, Inc. 20.91 2 10.5%
</TABLE>
Pledgor: SAGEBRUSH OF SEVIERVILLE, INC.
<TABLE>
<CAPTION>
Number of Certificate Percentage
Name of Subsidiary Shares Number Ownership
- ------------------ --------- ----------- ----------
<S> <C> <C> <C>
Spicewood, Inc. 13.64 5 6.9%
</TABLE>
Pledgor: TUMBLEWEED OF PIGEON FORGE, INC.
<TABLE>
<CAPTION>
Number of Certificate Percentage
Name of Subsidiary Shares Number Ownership
- ------------------ --------- ----------- ----------
<S> <C> <C> <C>
Spicewood, Inc. 24.79 6 12.5%
</TABLE>
Pledgor: OAK RIDGE FOODS, INC.
<TABLE>
<CAPTION>
Number of Certificate Percentage
Name of Subsidiary Shares Number Ownership
- ------------------ --------- ----------- ----------
<S> <C> <C> <C>
Spicewood, Inc. 18.28 7 9.2%
</TABLE>
<PAGE> 27
Exhibit 4(a)
to
Pledge Agreement
dated as of June 9, 1998
in favor of First Union Commercial Corporation
as Agent
Irrevocable Stock Power
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers to
the following shares of Capital Stock of _____________________, a ____________
corporation:
<TABLE>
<CAPTION>
No. of Shares Certificate No.
------------- ---------------
<S> <C>
</TABLE>
and irrevocably appoints __________________________________ its agent and
attorney-in-fact to transfer all or any part of such Capital Stock and to take
all necessary and appropriate action to effect any such transfer. The agent and
attorney-in-fact may substitute and appoint one or more persons to act for him.
The effectiveness of a transfer pursuant to this stock power shall be subject to
any and all transfer restrictions referenced on the face of the certificates
evidencing such interest or in the certificate of incorporation or bylaws of the
subject corporation, to the extent they may from time to time exist.
---------------,
a corporation
--------------
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
1
<PAGE> 28
Exhibit 4(c)(i)
to
Pledge Agreement
dated as of June 9, 1998
in favor of First Union Commercial Corporation,
as Agent
Acknowledgment and Consent
The undersigned Issuer referred to in the foregoing Pledge Agreement
hereby acknowledges receipt of a copy thereof and agrees to be bound thereby and
to comply with the terms thereof insofar as such terms are applicable to it.
Each Issuer agrees to notify the Agent promptly in writing of the occurrence of
any of the events described in Section 4(b) of the Pledge Agreement.
[INSERT ISSUER]
By:
-----------------------------------
Its:
----------------------------------
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
[INSERT ADDITIONAL ISSUERS IF NECESSARY]
<PAGE> 29
Exhibit 4(c)(ii)(A)
to
Pledge Agreement
dated as of June 9, 1998
in favor of First Union Commercial Corporation,
as Agent
Form of Authorization Statement
[INSERT DATE]
To: [INSERT]
You are hereby instructed to register the pledge of the following
uncertificated security:
All member or other ownership interests of the undersigned in [INSERT
ISSUER] in favor of:
First Union Commercial Corporation, as Agent
One First Union Center
301 South College Street, DC-5
Charlotte, North Carolina 28226
Attention: Terri K. Lins, Director
Telephone: (704) 704) 383-7440
Telecopy: (704) 374-2703
Very truly yours,
[INSERT PLEDGOR]
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
<PAGE> 30
Exhibit 4(c)(ii)(B)
to
Pledge Agreement
dated as of June 9, 1998
in favor of First Union Commercial Corporation,
as Agent
Form of Transaction Statement
[INSERT DATE]
To: [INSERT PLEDGOR]
and
First Union Commercial Corporation, as Agent
One First Union Center
301 South College Street, DC-5
Charlotte, North Carolina 28226
Attention: Terri K. Lins, Director
Telephone: (704) 383-7440
Telecopy: (704) 374-2703
This statement is to advise you that a pledge of the following
uncertificated securities has been registered in the name of First Union
Commercial Corporation, as Agent:
1. Uncertificated security: All member or other ownership
interests of [INSERT PLEDGOR] in the undersigned.
2. Registered Owner:
[INSERT PLEDGOR]
Taxpayer Identification Number:________________
1
<PAGE> 31
3. Registered Pledgee:
First Union Commercial Corporation, as Agent
One First Union Center
301 South College Street, DC-5
Charlotte, North Carolina 28226
Attention: Terri K. Lins, Director
Telephone: (704) 383-7440
Telecopy: (704) 374-2703
Taxpayer Identification Number:_________________
4. There are no liens, restrictions or other encumbrances on the
interest of [INSERT PLEDGOR] in the undersigned, and no
adverse claims to which the uncertificated security is or may
be subject are known to the undersigned.
5. The pledge was registered on [INSERT DATE OF REGISTRATION].
THIS STATEMENT IS MERELY A RECORD OF THE RIGHTS OF THE ADDRESSEES AS OF
THE TIME OF ITS ISSUANCE. DELIVERY OF THIS STATEMENT, OF ITSELF, CONFERS NO
RIGHTS ON THE RECIPIENT. THIS STATEMENT IS NEITHER A NEGOTIABLE INSTRUMENT NOR A
SECURITY.
Very truly yours,
[INSERT ISSUER]
By:
--------------------------------
Its:
-------------------------------
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
2
<PAGE> 1
EXHIBIT 99.4
[PR NEWSWIRE NEWSFAX LOGO]
Fresh Foods, Inc. Finalizes Acquisition of Pierre Foods From Tyson Foods
CLAREMONT, N.C., June 9 /PRNewswire/ -- Fresh Foods, Inc. (Nasdaq: FOOD)
has completed its purchase of the core business of Pierre Foods from Tyson
Foods, Inc. (NYSE: TSN) in a move that nearly doubles the size of Fresh Foods.
The acquisition was finalized today when Fresh Foods paid $122 million in
cash to Tyson Foods to acquire the brand name and assets of Pierre Foods and to
assume its liabilities. The transaction was initially announced March 9 when
Tyson and Fresh Foods, which operated under the name WSMP, Inc. until May 8,
signed a letter of intent. Then, on April 10, the companies signed a definitive
asset purchase agreement.
The core portion of Pierre Foods that Fresh Foods acquired represents
approximately $150 million in annual revenue. Pierre is primarily engaged in
producing and distributing packaged, fully cooked food products to the
foodservice and home meal replacement markets. Pierre Foods' current primary
customers include a broad cross-section of schools, vending services,
warehouse clubs, restaurants, grocery stores, convenience stores, and other
foodservice providers across North America.
This purchase positions Fresh Foods as a leading fully integrated producer
and marketer of fully cooked branded and private label meat products and
packaged microwaveable sandwiches. It provides these products to both the
foodservice and home meal replacement markets. The purchase also is the
culmination of a 10-year partnership, during which Pierre was Fresh Foods'
largest customer.
"The acquisition of Pierre combines two strong management teams with
diverse experience in food processing, which will be very important as we
devote our efforts to the successful integration of Pierre into our total
company," said David R. Clark, president and chief operating officer of Fresh
Foods.
Pierre Foods will operate as a wholly owned subsidiary of Fresh Foods,
Inc. and will comprise plants in Cincinnati, Ohio and Claremont, North
Carolina. It is headed by Norbert E. "Norb" Woodhams, who has spent 30 years in
the foodservice business and who had served as president of Hudson Specialty
Foods, including Pierre Foods, since 1994. Three of Pierre's other senior
executives each have in excess of 20 years experience with Pierre.
"One of the important reasons that this acquisition is such a great fit is
the excellent working relationship we have had with Pierre Foods and Norb for
years," said James C. Richardson, Jr., Fresh Foods' vice chairman and chief
executive officer. "Our new management team has complementary skills in product
development, production, quality control, sales, and marketing. We expect the
infusion of the management talent headed by Norb will help us expand our range
of opportunities."
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Richardson also said, "Our Pierre subsidiary plans to continue to develop
and expand licensing agreements with nationally recognized restaurant chains to
produce and distribute ready-to-eat products marketed under restaurant brands.
We have recently entered into licensing agreements to produce and market
microwaveable Hardee's, Checkers, Rally's, and Nathan's Famous sandwiches and
to market Green Burrito products through our existing distribution channels."
Pierre Foods, which is based in Cincinnati, Ohio, had been a part of Tyson
Foods only since January 9, 1998, when Tyson acquired Hudson Foods, Inc. Pierre
was founded in 1946 and for many years operated independently before becoming a
part of Hudson Foods in 1990.
In addition to its Pierre Foods, LLC subsidiary, Fresh Foods is comprised
of other subsidiaries including Claremont Restaurant Group, LLC and Mom 'n'
Pop's Country Ham, LLC.
Through its restaurant subsidiary, the company owns and operates 61
restaurants and franchises an additional 42 units. It owns and operates 40
Sagebrush(R) Steakhouse and Saloon restaurants, which provide family-oriented,
full-service, casual dining in an atmosphere suggestive of a Texas roadhouse.
The company also owns and operates 16 Western Steer(R) and four Prime
Sirloin(R) locations, which are family steakhouses using a "buffet and bakery"
format, and one Bennett(TM) barbecue-style restaurant. The franchised locations
are Western Steer, Prime Sirloin, and Bennett's units.
SOURCE Fresh Foods, Inc.
-0- 06/09/98
/CONTACT: James E. "Jamie" Harris, Executive Vice President and Chief
Financial Officer, Fresh Foods, Inc., 828-459-7626/
/Company News On-Call: http://www.prnewswire.com or fax, 800-758-5804,
ext. 964375/
(FOOD TSN)
