UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
AND EXCHANGE ACT OF 1934
For the quarterly period ended April 1, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to _________
COMMISSION FILE NUMBER 0-17060
WLR FOODS, INC.
(Exact name of Registrant as specified in its charter)
Virginia 54-1295923
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
P.O. Box 7000
Broadway, Virginia 22815
(Address including Zip Code of Registrant's
principal executive offices)
(703) 896-7001
(Registrant's telephone number, including area code)
Indicate by cross mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the Registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days. Yes (X) No ()
The number of shares outstanding of Registrant's Common Stock, no par
value, at May 12, 1995 was 17,913,914 shares.
1
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PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
WLR FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
Thirteen Weeks Ended
(unaudited)
Dollars in thousands, except per share data April 1, 1995 April 2, 1994
------------- -------------
Net sales $211,469 $171,090
Cost of sales 184,442 152,559
-------- --------
Gross profit 27,027 18,531
Selling, general and administrative expenses 22,624 15,360
-------- --------
Operating income 4,403 3,171
Other expense:
Interest expense 1,695 1,273
Miscellaneous income (618) (225)
-------- --------
Other expense 1,077 1,048
-------- --------
Earnings before income taxes and minority
interest 3,326 2,123
Income tax expense 1,280 817
Minority interest in net earnings of
consolidated subsidiary 13 3
-------- --------
NET EARNINGS $2,033 $1,303
======== ========
NET EARNINGS PER COMMON SHARE $0.11 $0.08
AVERAGE COMMON SHARES OUTSTANDING 18,238 16,451
DIVIDENDS DECLARED PER COMMON SHARE $0.06 $0.05
Per share and common stock amounts reflect the three-for-two stock split
distributed May 12, 1995. (See Note 6)
See accompanying Notes to Consolidated Financial Statements.
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WLR FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
Thirty-Nine Weeks Ended
(unaudited)
Dollars in thousands, except per share data April 1, 1995 April 2, 1994
------------- -------------
Net sales $669,594 $532,433
Cost of sales 573,458 468,369
-------- --------
Gross profit 96,136 64,064
Selling, general and administrative expenses 66,724 45,699
-------- --------
Operating income 29,412 18,365
Other expense:
Interest expense 4,648 3,775
Miscellaneous income (221) (443)
-------- --------
Other expense 4,427 3,332
-------- --------
Earnings before income taxes and minority 24,985 15,033
interest
Income tax expense 9,619 5,788
Minority interest in net earnings of 40 25
consolidated subsidiary -------- --------
NET EARNINGS $15,326 $9,220
======== ========
NET EARNINGS PER COMMON SHARE $0.86 $0.56
AVERAGE COMMON SHARES OUTSTANDING 17,900 16,443
DIVIDENDS DECLARED PER COMMON SHARE $0.17 $0.16
Per share and common stock amounts reflect the three-for-two stock split
distributed May 12, 1995. (See Note 6)
See accompanying Notes to Consolidated Financial Statements.
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WLR FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
Dollars and shares in thousands
(unaudited)
April 1, 1995 July 2, 1994
------------- ------------
ASSETS
Current Assets
Cash and cash equivalents $472 $771
Accounts receivable, less allowance for 56,290 52,305
doubtful accounts of $615 and $360.
Inventories (Note 2) 128,906 83,047
Other current assets 5,566 2,270
-------- --------
Total current assets 191,234 138,393
Investments 2,420 954
Property, plant and equipment, net 168,048 139,854
Other assets 4,564 3,850
-------- --------
TOTAL ASSETS $366,266 $283,051
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Notes payable to banks (Note 9) $19,700 $9,400
Current maturities of long-term debt
(Notes 4 and 9) 9,953 6,275
Excess checks over bank balances 9,661 8,511
Trade accounts payable 26,783 20,937
Accrued expenses 18,669 16,103
Deferred income taxes 9,694 6,297
Other current liabilities 1,091 881
-------- --------
Total current liabilities 95,551 68,404
Long-term debt, excluding current
maturities (Notes 4 and 9) 64,591 46,368
Deferred income taxes 9,813 9,813
Minority interest in consolidated subsidiary 511 475
Other liabilities and deferred credits 3,243 1,834
-------- --------
Total liabilities 173,709 126,894
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Common stock subject to repurchase (Note 5) 17,750 -
Shareholders' equity:
Common stock, no par value. Authorized
100,000 shares; issued and outstanding
18,049 and 16,514 shares. 67,952 61,416
Additional paid-in capital 3,085 3,253
Retained earnings 103,770 91,488
-------- --------
Total shareholders' equity 174,807 156,157
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $366,266 $283,051
======== ========
Common stock issued and outstanding reflect the three-for-two stock split
distributed May 12, 1995. (See Note 6)
See accompanying Notes to Consolidated Financial Statements.
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WLR FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited) Thirty-Nine Weeks Ended
Dollars in thousands
CASH FLOWS FROM OPERATING ACTIVITIES: April 1, 1995 April 2, 1994
Net earnings $15,326 $9,220
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 18,295 15,901
Gain on sale of property, plant and
equipment (143) (46)
Deferred income taxes 3,397 10,494
Other, net 214 676
Change in operating assets and liabilities: (net of
acquired assets)
(Increase) decrease in accounts
receivable 10,775 (1,176)
Increase in inventories (17,487) (6,177)
Increase in other current assets (3,269) (8,983)
Increase (decrease) in accounts payable (3,913) 1,945
Increase (decrease) in accrued
expenses and other 740 (2,841)
------ ------
Net Cash Provided by Operating Activities 23,935 19,013
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (12,136) (13,700)
Net cash used in acquisition, (inc. costs) (40,130) -
Proceeds from sales of property, plant and
equipment 1,544 83
Investments in other assets (13) (491)
Minority interest in net earnings of
consolidated subsidiary 36 23
------ ------
Net Cash Used in Investing Activities (50,699) (14,085)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt (2,870) (1,044)
Proceeds from long-term debt 25,000 -
Notes payable to banks (net of principal
payments) 10,300 (2,300)
Increase in excess checks 1,150 410
Issuance of common stock 325 368
Repurchase of common stock (4,607) -
Dividends paid (2,833) (2,631)
------ ------
Net Cash Provided by (Used in) Financing
Activities 26,465 (5,197)
------ ------
Decrease in Cash and Cash Equivalents (299) (269)
6
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Cash and Cash Equivalents at Beginning of
Fiscal Year 771 680
------ -------
Cash and Cash Equivalents at End of Period $472 $411
====== ======
Supplemental cash flow information:
Cash paid for:
Interest $3,574 $2,907
Income taxes 8,574 2,193
The Company considers all highly liquid investments of maturity of 3
months or less at purchase to be cash equivalents.
Non cash transactions:
The Company issued 1,775,000 shares of common stock valued at $28.4
million for the acquisition of Cuddy Farms, Inc. USA Foods Division
on August 29, 1994. (Notes 3 and 5)
See accompanying Notes to Consolidated Financial Statements.
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Notes to Consolidated Financial Statements
WLR Foods, Inc. and Subsidiaries
1. Accounting Policies
The consolidated financial statements presented herein, include the
accounts of WLR Foods, Inc. and its wholly-owned and majority-owned
subsidiaries. All material balances have been eliminated in
consolidation. The consolidated balance sheet as of April 1, 1995, the
consolidated statements of earnings for the thirteen week and
thirty-nine week periods ended April 1, 1995 and April 2, 1994, and
the consolidated statements of cash flows for the thirty-nine weeks
ended April 1, 1995 and April 2, 1994 are unaudited. In the opinion of
management, all adjustments necessary for fair presentation of such
consolidated financial statements have been included. Such adjustments
consisted only of normal recurring accruals and the use of estimates.
Interim results are not necessarily indicative of results for the
entire fiscal year.
The consolidated financial statements and notes are presented as
permitted by Form 10-Q and do not contain certain information included
in the Company's annual consolidated financial statements and notes.
The Company's unaudited interim consolidated financial statements
should be read in conjunction with the consolidated financial
statements included in the Annual Report to Shareholders for the
fiscal year ended July 2, 1994. In both, the accounting policies and
principles used are consistent in all material respects. Certain
fiscal 1994 amounts have been reclassified to conform with fiscal 1995
presentations.
2. Inventories
A summary of inventories at April 1, 1995 and July 2, 1994 follows:
(unaudited)
Dollars in thousands April 1, 1995 July 2, 1994
------------- ------------
Live poultry and breeder flocks $56,293 $39,719
Processed poultry and meat products 44,488 22,969
Packaging supplies, parts and other 19,127 11,824
Feed, grain and eggs 8,998 8,535
-------- -------
Total inventories $128,906 $83,047
======== =======
3. Acquisition of Cuddy Farms, Inc. -USA Foods Division
On August 29, 1994, the Company acquired the turkey processing and
production assets of Cuddy Farms, Inc. for $39.1 million in cash and
1,775,000 shares of common stock valued at $28.4 million. The
acquisition was accounted for as a purchase, and, accordingly all
8
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acquired accounts and transactions of Cuddy Foods are included in the
Company's consolidated financial statements subsequent to the
acquisition. The transaction was recorded at fair market values of
assets acquired and liabilities assumed as follows:
Dollars in thousands (Unaudited)
Accounts receivable $14,758
Inventories 28,372
Other current assets 30
Property, plant and equipment, net 35,753
Other assets 2,611
------
Total assets acquired 81,524
Cash paid (including costs of $1,030
for professional fees) (40,130)
Issuance of common stock (28,400)
------
Total operating liabilities assumed $12,994
======
The following table shows the pro forma results of the Company, as if
Cuddy Farms, Inc. USA Foods Division had been acquired at the
beginning of the respective fiscal periods presented. This information
is presented only for comparative purposes and is not indicative of
the results which may have occurred if the transaction had been
consummated at the beginning of the periods presented.
(Unaudited)
Dollars in thousands, Thirty-Nine Weeks Ended
except earnings per share April 1, 1995 April 2, 1994
------------- -------------
Net sales $708,017 $683,302
Net earnings $13,967 $9,546
Net earnings per common share $0.78 $0.52
4. Long-term debt facility
The Company borrowed the $25 million variable rate term debt on August
29, 1994 to fund the acquisition mentioned above. The note is priced
based on LIBOR plus 1.0% with repricing the first of each month.
Monthly principal payments of $308,641 are due along with the interest
payment, with the final payment in 2001. On March 31, 1995 this
facility was refinanced at more favorable rates and terms. (See Note
9)
5. Common stock subject to repurchase
The common stock subject to repurchase arises because Cuddy Farms,
Inc., WLR Foods, Inc. and Cuddy's lenders entered into an agreement
that expires in August,1998 wherein WLR Foods could be required to
purchase the shares held by Cuddy for $17,750,000 in cash, if Cuddy
9
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has a payment default under its credit facilities. The account on the
balance sheet reflects the potential liability under the agreement.
6. Stock split
On February 28, 1995 the Board of Directors declared a three-for-two
stock split to be effective in the form of a50% stock dividend payable
on May 12, 1995 to shareholders of record on April 14, 1995. The split
resulted in the issuance of an additional 6,016,000 shares of common
stock. All numbers of common stock and per share data have been
restated to reflect the stock split.
7. Dividend increase
On February 28, 1995 the Board of Directors declared an increase in
the regular quarterly dividend to $.09 per share from $.08 per share.
Future cash dividends will be adjusted to reflect the three-for-two
stock split above.
8. Stock repurchase program
On February 28, 1995 the Board of Directors authorized the management
of the company to repurchase up to $20 million of outstanding common
stock. Purchases will be made in the open market, and financed through
funds generated from operations or borrowed on established lines of
credit. Through April 1, 1995, $4.6 million has been repurchased
totalling 262,500 shares.
9. Bank refinancing
On March 31, 1995 the Company entered into a $135 million unsecured
variable rate credit agreement with its lenders, consisting of a $110
million revolving credit facility and a $25 million term loan. This
syndicated loan agreement replaces the previous $60 million unsecured
revolving credit and term loan facility with its lenders, and provides
for lower interest rates as well as greater financial and operating
flexibility. The increased borrowing capacity will be used for added
working capital and general corporate purposes, including common stock
repurchases and potential acquisitions.
10. Subsequent events
On April 3, 1995 the Company's wholly owned subsidiary, Cassco Ice &
Cold Storage, acquired the remaining 50% interest in a cold storage
and distribution facility in Marshville, North Carolina, for $2.3
million in cash. The business is a refrigerated distribution center
that operates as a public refrigerated warehouse, located on
approximately 15 acres. The Company acquired its initial 50% interest
in the facility as part of its purchase of Cuddy Farms, Inc. USA Foods
Division and has now placed this business under Cassco's operations.
The Company elected to prepay the outstanding $17,750,000 of variable
rate notes held by Staunton Farm Credit, ACA on April 3, 1995. The
prepayment was at par with the funds provided by the new revolving
credit facility at more favorable rates and terms. There was no
prepayment penalty incurred as a result of this transaction.
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Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
General
WLR Foods, Inc.(the Company) is a fully-integrated poultry
production, processing and marketing business with operations in
Virginia, West Virginia, Pennsylvania and North Carolina.
On February 28, 1995, the Board of Directors announced a three-
for-two stock split in the form of a 50% stock dividend, to be
distributed on May 12, 1995. All share and per share amounts in this
report reflect the effect of the split.
On May 5, 1995, the Company paid a $0.06 dividend per common
share to shareholders of record on April 14, 1995. This dividend
reflects the effect of the 50% stock dividend, and is an increase of
12.5% over the previous dividend.
WLR Foods, Inc. Board of Directors announced a Stock Repurchase
Program on February 28, 1995. The Board authorized management to
repurchase $20 million of the outstanding common stock at market
prices. As of May 5, 1995, 483,750 shares have been repurchased for
$8.1 million. Management intends to actively continue the Stock
Repurchase Program.
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The table of Changes in Results of Operations shows dollar and
percentage changes in the components of operating results for the
thirteen weeks and thirty-nine weeks compared to the corresponding
periods in fiscal 1994.
Thirteen Weeks Thirty-nine Weeks
Ended Ended
Changes In Results of 04/01/1995 vs. 04/01/1995 vs.
Operations 04/02/1994 04/02/1994
In millions except per
share data
$ Increase % $ Increase %
(Decrease) Change (Decrease) Change
Net sales $40.4 23.6% $137.2 25.8%
Cost of sales 31.9 20.9 105.1 22.4
------- ------- ------- -------
Gross profit 8.5 45.9 32.1 50.1
Selling, general and
administrative expenses 7.3 47.3 21.0 46.0
------ ------- ------- -------
Operating profit 1.2 38.9 11.0 60.2
Interest expense 0.4 33.2 0.9 23.1
Other expense/(income),
net (0.4) (174.7) 0.2 50.1
------- ------- ------- -------
Earnings before
income taxes
and minority interest 1.2 56.7 10.0 66.2
Income tax expense and
minority interest 0.5 57.7 3.8 66.2
------- ------- ------- -------
Net earnings $0.7 56.0% $6.1 66.2%
======= ======= ======= =======
Net earnings per common
share $0.03 37.5% $0.30 53.6%
======= ======= ======= =======
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For the periods indicated this table sets forth selected
information from the Company's Consolidated Statements of
Earnings expressed as a percentage of sales.
Thirteen Weeks Thirty-nine
Ended Weeks Ended
04/01/1995 04/02/1994 04/01/1995 04/02/1994
Operations as a
Percentage of Net Sales
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 87.2 89.2 85.6 88.0
------- ------- ------- -------
Gross margin 12.8 10.8 14.4 12.0
Selling, general and
administrative expenses 10.7 9.0 10.0 8.6
------- ------- ------- -------
Operating margin 2.1 1.8 4.4 3.4
Interest expense 0.8 0.7 0.7 0.7
Other expense/(income),
net (0.3) (0.1) 0.0 (0.1)
------- ------- ------- -------
Earnings before income
taxes and minority 1.6 1.2 3.7 2.8
interest
Income tax expense and
minority interest 0.6 0.5 1.4 1.1
------- ------- ------- -------
Net earnings 1.0% 0.8% 2.3% 1.7%
======= ======= ======= =======
Results of Operations
Net sales increased $40.4 million or 23.6%, to $211.5 million for
the thirteen weeks ended April 1, 1995, compared to $171.1 million for
the same period ended April 2, 1994. The increase was the result of a
16.2% increase in total pounds sold. Chicken pounds sold increased
1.3%, while turkey sales pounds were up 45.6% over the same period
last year, with nearly all the increase generated by the acquisition
of the USA Food Division of Cuddy Farms, Inc.(North Carolina
Operation). Although average quoted commodity prices for whole
chickens were down nearly 7.8% compared to the same quarter last year,
the average realized selling price for chicken products offset most of
this decrease. Average quoted commodity prices for whole turkeys were
down 3.2% for the thirteen weeks ended April 1, 1995 compared to the
thirteen weeks ended April 2, 1994.
For the thirty-nine week period ended April 1, 1995, net sales
were up $137.2 million, to $669.6 million, a 25.8% increase over net
sales for the same period last year while total pounds sold increased
16.9%. The change in volumes sold is reflective of a 4.0% increase in
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chicken pounds sold and a 37.3% rise in turkey pounds sold. The
significant rise in turkey volume sold is largely the result of the
August 29, 1994 acquisition of the North Carolina Operation. Average
quoted commodity prices for whole chickens were down 6.2% for the
thirty-nine week period, with average realized prices per pound more
than offsetting this decrease. Average realized prices for chicken
reflect improved export demand for darkmeat products and a
strengthened customer base over last year. The average quoted
commodity price for turkey was the same on a year-to-date comparison
with the same period last year.
Currently, there are abundant supplies of competing meats, which
may impact future market prices of chicken and turkey. Management
anticipates the remainder of calendar 1995 will demonstrate seasonal
strengthening of commodity prices.
Cost of sales for the thirteen weeks ended April 1, 1995,
increased $31.9 million or 20.9% to $184.4 million over the same
period last year. The increase was the result of higher volumes sold,
which was somewhat offset by a 12% decline in feed costs. Corn prices
are somewhat higher than the fall of 1994 harvest low, soybean prices
have moved lower through the quarter, as the impact of the record
South American soybean harvest is realized in the market. At the
present time, the Company does not have any forward priced grain
purchase commitments. Management believes there are adequate supplies
of grain, and as spring planting progresses, favorable price trends
may result. For the thirty-nine weeks ended April 1, 1995, cost of
sales increased $105.1 million or 22.4% over the same period in fiscal
1994. This increase is the result of higher volumes sold offset by a
9.0% decrease in feed costs.
Disease in birds is a risk when raising poultry, but the Company
uses strict biosecurity measures throughout its operations to minimize
the risk. Currently, management is not aware of any serious poultry
disease out-breaks in the areas where the Company grows poultry.
On a period-to-period comparison for the thirteen weeks, gross
profit increased $8.5 million to $27.0 million. The gross profit
margin increased to 12.8% for thirteen week period ended April 1,
1995, compared to 10.8% for same period last year. For the thirty-nine
weeks ended April 1, 1995 gross profit increased $32.1 million to
$96.1 million or 50.0% over last year's $64.1 million. The Company's
operations continue to improve, as added efficiencies are achieved in
the processing operations. Throughout the operation, management
continues to look for ways to lower costs and improve efficiencies
which will improve the returns to shareholders.
Selling, general and administrative expenses were up $7.3 million
to $22.6 million for the thirteen weeks ended April 1, 1995, compared
to $15.4 million for the same period last year. Higher volumes sold
and the inclusion of the North Carolina Operation are factors
contributing to the higher costs. Selling expenses were up $4.1
million due to higher volumes sold, advertising and marketing
increased $0.7 million and delivery was up $2.5 million. For the
thirteen weeks selling, general and administrative costs were 10.7% of
net sales up 1.7% compared to 9.0% from the thirteen weeks ended April
2, 1994.
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For the thirty-nine weeks ended April 1, 1995, selling, general
and administrative expenses increased $21.0 million including $14.7
million in added costs resulting from the addition of the North
Carolina Operation. The remaining $6.3 million includes a $1.6 million
increase in general and administrative expenses including increased
incentive pay accruals due to higher profits. Selling costs rose $0.6
million due to higher volumes sold. Marketing and advertising costs
were up $0.9 million compared to last year as the Company actively
worked at targeting its markets and supporting its brand in the
marketplace. Delivery costs increased $3.4 million as export sales
increased and higher volumes sold domestically. For the thirty-nine
weeks ended April 1, 1995, selling, general and administrative costs
were 10.0% compared to 8.6% for the same period last year. Excluding
the defense costs, year-to-date selling, general and administrative
expenses averaged 9.8% of net sales for fiscal 1995.
Operating income increased $1.2 million for the thirteen week
period or 38.9% due to the higher gross margin, although the increase
was somewhat offset by the higher selling, general and administrative
costs. For the thirty-nine weeks ended April 1, 1995, the operating
profit was up $11.0 million, an increase of 60.2%. Operating margins
were 2.1% and 4.4%, respectively for the thirteen and thirty-nine
weeks ended April 1, 1995 compared to 1.9% and 3.4% for the same
periods last year. The North Carolina Operation continues to
contribute to the operating margins of the Company.
Interest was $0.4 million higher on a thirteen week comparison,
and $0.9 million higher on a thirty-nine week comparison. Higher
interest rates and increased borrowing because of higher inventory
levels generated the higher expense. During the thirteen week period
the Company's other income increased $0.4 million over the same period
last year. For the thirty-nine weeks other income decreased $0.2
million.
Income tax expense increased $0.5 million for the thirteen weeks
and $3.8 million for the thirty-nine weeks ended April 1, 1995 over
the comparable periods last year. The increase is the result of higher
profits. The effective tax rate was 38.5% for all periods presented.
Net income rose $0.7 million, or 56.0%, to $2.0 million for the
thirteen weeks, and $6.1 million or 66.2% for thirty-nine weeks ended
April 1, 1995, compared to the same periods last year. Earnings per
share were up $0.03 or 37.5% for the thirteen weeks, and $0.30 or
53.6% for the thirty-nine weeks ended April 1, 1995.
Financial Condition
The Company closed the third quarter of fiscal 1995 with a strong
balance sheet. Working capital remained strong at $95.7 million while
the current ratio was 2.0 to 1. Total assets were $366.3 million.
Total debt including the common stock subject to repurchase was $112.0
million. Total debt-to-total capitalization was 39.0% as of April 1,
1995. The book value per common share was $10.67, based on $174.8
million of equity plus the $17.8 million of common stock subject to
repurchase, and the shares outstanding of 18,048,821.
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Capital Resources
On March 31, 1995 the Company executed a new $135 million bank
credit facility comprised of three notes. First is a $100 million
three-year, unsecured, variable rate revolving syndicated note placed
with a group of banks. The new note is larger and is priced more
favorable than the one it replaced. Second is a syndicated, unsecured
$25 million, variable rate, seven-year term note with more favorable
rates than the $25 million term loan it replaces. A one-year
unsecured $10 million revolving note makes up the final portion of the
Company's new debt facility. This facility allow the Company future
operating flexibility and adequate borrowing capacity to meet capital
expenditures, common stock repurchases, and other capital needs.
On April 3, 1995, the Company elected to prepay its variable rate
term loan with a balance of $17,750,000 plus accrued interest. The
note was redeemed at par value, with no penalty. The transaction was
funded from the new bank revolver at lower interest rates.
Management is currently negotiating with its other lenders on the
fixed rate term notes. Market conditions are favorable to loosening
covenants and gaining additional flexibility to match the recently
negotiated syndicated bank facility.
As of April 1, 1995 total capital spending was $12.1 million.
The majority of the fiscal 1995 capital spending has been for normal
replacement and enhancement projects to the Company's equipment and
facilities. Spending at the recently acquired North Carolina Operation
to date was $1.8 million. Depreciation expense is $18.3 million with
amortization of intangibles at $0.4 million on a year-to-date basis.
Capital spending was projected to be $23 million with additional
lease financing of $3.7 million for fiscal 1995. The spending estimate
has been reduced to $19 million for the fiscal year. The $4 million
reduction is because of lower required spending in the North Carolina
operation. There were no changes to the lease financing transactions.
The depreciation and amortization expense projection is $24.5 million
for the fiscal year.
The preliminary capital budget for fiscal 1996 is expected to be
$28 to $30 million, up significantly from the fiscal 1995 spending.
The budget includes approximately $18 million for normal replacements
and enhancements with approximately $6 million for the completion of
projects already in progress. The remaining amounts are budgeted for
projects to start in the third and fourth quarters of fiscal 1996, the
specifics of which have yet to be decided.
Management is not aware of any material environmental, legal or
accounting issue or pronouncement that will materially impact the
operations or financial position of the Company.
16
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(b) Form 8-K
Reporting Date March 31, 1995. Item Reported - Item 5,
Other Event, and Item 7, Exhibits. WLR Foods, Inc. reported on its
financing transaction with First Union extending the Company's
borrowing capacity to $135 million, its acquisition of the remaining
50% interest of Modern Cold Storage, and the resignation of Peter A.
W. Green from the Board of Directors and provided a copy of
Mr. Green's resignation letter as an exhibit.
17
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report is signed this 11 day of May, 1995, by the Registrant's
principal financial officer who is also authorized by the Registrant
to sign on its behalf.
WLR FOODS, INC.
/s/ Delbert L. Seitz
Delbert L. Seitz, Chief Financial
Officer and duly authorized signator
for Registrant
18
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
4.1 Loan Agreement
4.2 Credit Agreement
27 Financial Data Schedule
19
<PAGE>
EXHIBIT 4.1
LOAN AGREEMENT
among
WLR FOODS, INC.,
FIRST UNION NATIONAL BANK OF VIRGINIA,
WAMPLER-LONGACRE, INC.
and
CASSCO ICE & COLD STORAGE, INC.
<PAGE>
Dated as of March 1, 1995
TABLE OF CONTENTS
Page
Recitals
ARTICLE I
Definitions and Rules of Construction
Section 1.1 Definitions . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Rules of Construction . . . . . . . . . . . . . . . 3
ARTICLE II
Representations
Section 2.1 Representations by Obligors . . . . . . . . . . . . 3
ARTICLE III
Acceptance of Repayment Obligation
Section 3.1 Acquisition by Bank . . . . . . . . . . . . . . . . 4
Section 3.2 Conditions Precedent to Loan . . . . . . . . . . . . 5
ARTICLE IV
Loan
Section 4.1 Loan . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 4.2 Advances . . . . . . . . . . . . . . . . . . . . . . 5
Section 4.3 Note . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE V
Payments
Section 5.1 Amounts Payable . . . . . . . . . . . . . . . . . . 6
Section 5.2 Default in Payments . . . . . . . . . . . . . . . . 7
Section 5.3 Unconditional Obligations . . . . . . . . . . . . . 7
Section 5.4 Repayment Obligation . . . . . . . . . . . . . . . . 7
ARTICLE VI
Special Covenants
Section 6.1 Incorporation of Credit Agreement . . . . . . . . . 8
Section 6.2 Indemnification . . . . . . . . . . . . . . . . . . 8
Section 6.3 Certificate as to No Default . . . . . . . . . . . . 10
<PAGE>
ARTICLE VII
Guaranty
Section 7.1 Guaranty of Obligations . . . . . . . . . . . . . . 10
Section 7.2 Waivers . . . . . . . . . . . . . . . . . . . . . . 10
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Section 7.3 Forbearance and Modifications . . . . . . . . . . . 10
Section 7.4 Continuing Liability . . . . . . . . . . . . . . . . 11
Section 7.5 Subrogation . . . . . . . . . . . . . . . . . . . . 12
Section 7.6 Subordination . . . . . . . . . . . . . . . . . . . 12
Section 7.7 Further Guaranties . . . . . . . . . . . . . . . . . 12
ARTICLE VIII
Events of Default and Remedies
Section 8.1 Event of Default . . . . . . . . . . . . . . . . . . 12
Section 8.2 Remedies on Default . . . . . . . . . . . . . . . . 13
Section 8.3 No Remedy Exclusive . . . . . . . . . . . . . . . . 13
Section 8.4 Counsel Fees and Other Expenses . . . . . . . . . . 14
Section 8.5 No Additional Waiver Implied by One Waiver . . . . . 14
ARTICLE IX
Miscellaneous
Section 9.1 Term of Agreement . . . . . . . . . . . . . . . . . 14
Section 9.2 Successors and Assigns . . . . . . . . . . . . . . . 14
Section 9.3 Jurisdiction and Venue . . . . . . . . . . . . . . . 14
Section 9.4 Severability . . . . . . . . . . . . . . . . . . . . 15
Section 9.5 Applicable Law; Entire Understanding . . . . . . . . 15
Section 9.6 Counterparts . . . . . . . . . . . . . . . . . . . . 15
Section 9.7 Notices . . . . . . . . . . . . . . . . . . . . . . 15
Section 9.8 Other Agreements . . . . . . . . . . . . . . . . . . 16
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THIS LOAN AGREEMENT, made as of the first day of March, 1995,
among WLR FOODS, INC., a Virginia corporation (the "Borrower"), FIRST
UNION NATIONAL BANK OF VIRGINIA, a national banking association, (the
"Bank"), and WAMPLER-LONGACRE, INC, a Virginia corporation, and CASSCO
ICE & COLD STORAGE, INC., a Virginia corporation (collectively, the
"Guarantors");
WITNESSETH:
WHEREAS, the Bank intends to make a loan, as hereinafter
described, to the Borrower; and
WHEREAS, the Bank, the Borrower and the Guarantors desire to set
forth the terms and conditions with respect to such financing;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
Definitions and Rules of Construction
Section 1.1 Definitions. In addition to other terms defined
elsewhere in this Agreement, the following terms shall have the
following meanings in this Agreement unless the context otherwise
requires:
"Account" shall mean the Borrower's checking account number 208-
111-123-556-1 at the Bank.
"Advances" shall mean the advances of the proceeds of the Loan
made pursuant to Article IV.
"Agreement" shall mean this Loan Agreement, including any
amendments hereto.
"Bank" shall mean First Union National Bank of Virginia, as the
obligee of the Repayment Obligation, or any successor as such obligee.
"Borrower" shall mean WLR Foods, Inc., a Virginia corporation.
"Business Day" shall mean any a Business Day (as defined in the
Credit Agreement) with respect to LIBOR Rate Loans (as defined in the
Credit Agreement).
"Closing Date" shall mean the date of the execution and delivery
of this Agreement.
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"Credit Agreement" shall mean the Credit Agreement dated the date
hereof among the Bank, the Borrower, the Guarantors and the lenders
referred to therein, as the same may hereafter be amended with the
consent of the Bank. If the Credit Agreement shall terminate, whether
by its terms or at the option of any person, the term "Credit
Agreement" shall be deemed to refer to the Credit Agreement as in
effect immediately prior to such termination.
"Event of Default" shall mean any of the events set forth in
Section 8.1.
"Guarantors" shall mean, collectively, Wampler-Longacre, Inc. and
Cassco Ice & Cold Storage, Inc., both of which are Virginia
corporations.
"Guaranty" shall mean the guaranty by the Guarantors provided for
in Article VII.
"LIBOR" shall mean the LIBOR Rate (as defined in the Credit
Agreement) for a period of one month.
"Loan" shall mean a revolving loan in the maximum amount of
$10,000,000 made by the Bank to the Borrower as provided for in this
Agreement.
"Obligors" shall mean, collectively, the Borrower and the
Guarantors.
"Payment of the Loan" shall mean payment in full of the Repayment
Obligation and the making in full of all other Required Payments due
and payable at the time of such payment.
"Prime Rate" shall mean the rate of interest established by First
Union National Bank of Virginia from time to time as its prime rate,
with the effective date of any change in the Prime Rate being the
effective date of the applicable change in the prime rate so
established. The Prime Rate is not the lowest or most favorable rate
of interest charged by First Union National Bank to its customers.
"Repayment Obligation" shall mean the Borrower's obligation to
repay the Loan, together with interest thereon, as provided in Article
V.
"Required Payment" shall mean any payment of money required under
the terms of this Agreement to be made by the Obligors.
"Security" shall mean any funds, agreements, property, rights or
interests of any nature whatsoever, guaranties of and any
subordination and/or standby agreements related to the
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Obligations (as defined in Section 7.1) which have been or hereafter
are mortgaged, pledged, assigned, transferred, executed or delivered,
directly or indirectly, to the Bank as security for or guaranty of the
payment or performance of any Obligation.
"Termination Date" shall mean March 31, 1996, or such later date
as may have been agreed to in writing by the Bank.
Section 1.2 Rules of Construction. The following rules shall
apply to the construction of this Agreement unless the context
otherwise requires:
(a) Words importing the singular number shall include the
plural number and vice versa, and any gender shall connote any other
gender.
(b) All references herein to particular articles or
sections are references to articles or sections of this Agreement
unless otherwise indicated.
(c) The headings and Table of Contents herein are solely
for convenience of reference and shall not constitute a part of this
Agreement, nor shall they affect its meaning, construction or effect.
(d) Words importing the prepayment or calling for
prepayment of the Repayment Obligation shall not be deemed to refer to
or connote the payment of the Repayment Obligation at its stated
maturity.
ARTICLE II
Representations
Section 2.1 Representations by Obligors. Each Obligor makes
the following representations as the basis for its undertakings
hereunder:
(a) Such Obligor is a stock corporation duly organized
under the laws of Virginia and is in good standing therein, has the
power and authority to enter into this Agreement and the transactions
contemplated thereby and to perform its obligations hereunder, and by
proper corporate action has duly authorized the execution and delivery
of this Agreement.
(b) The execution and delivery of, and compliance by such
Obligor with the terms and conditions of, this Agreement will not
constitute or result in a default under or violation of (i) such
Obligor's articles of incorporation or bylaws, (ii) any agreement or
other instrument to which such Obligor is a party or
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by which it or its property is bound, or (iii) any constitutional or
statutory provision or order, rule, regulation, decree or ordinance of
any court, government or governmental authority having jurisdiction
over such Obligor or its property.
(c) Such Obligor has obtained all consents, approvals,
authorizations and orders of any governmental or regulatory authority
that are required to be obtained by such Obligor as a condition
precedent to the execution and delivery of this Agreement or the
performance by such Obligor of its obligations hereunder.
(d) No Event of Default has occurred and is continuing, and
no event has occurred and is continuing which, with notice or lapse of
time or both, would constitute an Event of Default.
ARTICLE III
Acceptance of Repayment Obligation
Section 3.1 Acquisition by Bank. The Bank represents that it
is acquiring the Repayment Obligation for its own account for
investment and has no present intention of reselling or disposing of
the Repayment Obligation or engaging in any "distribution" thereof (as
that term is used in the Securities Act of 1933, as amended, and the
regulations of the Securities and Exchange Commission thereunder).
The Bank represents that it is familiar with the operations and
financial condition of the Obligors based upon information furnished
to the Bank by the Obligors and has made such inquiries as it deems
appropriate in connection with the acquisition of the Repayment
Obligation.
The Bank shall not assign or offer any portion of the Repayment
Obligation, or any participation therein, for sale in any state of the
United States without first (a) either (i) taking all necessary action
to qualify such portion for offer and sale under the securities and
"Blue Sky" laws of the United States and such state or (ii)
determining that no such action is necessary because of a registration
exemption or exemptions, and (b) providing to the purchaser of such
portion, or any participant therein, all material information in the
Bank's possession necessary to evaluate the risks and merits of the
investment represented by the purchase of or participation in such
portion.
The Obligors represent that neither this Agreement nor any
information (financial or otherwise) furnished by or on behalf of the
Obligors in connection with the negotiation or the making of the Loan
contains any untrue statement of a material fact or
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omits (when considered together with all information furnished) a
material fact necessary to make the statements contained therein, in
the light of the circumstances in which they were made, not
misleading. There is no fact that the Obligors have not disclosed in
writing to the Bank that materially affects adversely or, so far as
the Obligors can now foresee, based on facts known to them, will have
a material adverse effect on the properties, business, profits or
condition (financial or otherwise) of any Obligor or the ability of
any Obligor to perform its obligations hereunder.
Section 3.2 Conditions Precedent to Loan. The Bank shall be
required to make the Loan only upon delivery to it, in form and
substance satisfactory to it, of the following:
(a) An executed copy of this Agreement.
(b) Evidence of the due authorization, execution and
delivery of this Agreement by the parties thereto.
(c) Certified copies of (i) the resolutions of the
Obligors' boards of directors authorizing execution and delivery of
this Agreement, (ii) the articles of incorporation of each Obligor,
and (iii) the bylaws of each Obligor.
(d) An opinion of counsel for the Obligors.
(e) Such other documentation, certificates and opinions as
may be reasonably required by the Bank.
ARTICLE IV
Loan
Section 4.1 Loan. The Bank shall make the Loan by making
Advances to the Borrower in such amounts as may be requested from time
to time by the Borrower; provided that no Advance shall be made which
would cause the outstanding principal amount of the Repayment
Obligation to exceed $10,000,000. The Loan shall be a revolving loan,
and the Borrower may reborrow principal amounts of the Repayment
Obligation which have previously been paid, subject to the limitation
set forth in the preceding sentence.
Section 4.2 Advances. An Advance shall be made by one or more
checks or wire transfers paid to the Borrower; provided that the Bank
may elect to make any Advance by crediting the Account with the amount
of the Advance.
The Bank shall not be required to make any requested Advance
until the Bank shall have received all of the items specified in
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Section 3.2, even if the Bank shall have made any earlier Advance
without having received all of such items. The Bank also shall not be
required to make any requested Advance at any time that an event has
occurred and is continuing which constitutes or, with notice or lapse
of time or both, would constitute an Event of Default. As a condition
to the making of any Advance, the Bank may require satisfactory
evidence or representations as to the absence of such an event.
No Advance shall be made after the Termination Date.
Section 4.3 Note. Upon the request of the Bank, the Borrower
shall execute and deliver to the Bank a promissory note, satisfactory
to the Bank, to evidence the Borrower's obligation to make the
principal and interest payments provided for in Section 5.4; provided
that the Borrower shall be required to make such payments regardless
of whether such a promissory note shall have been so executed and
delivered. Any amount at any time paid to the holder of such
promissory note as a payment of principal of or interest on such
promissory note shall be credited against the Borrower's obligations
hereunder (but subject to collection of any instrument, draft, check
or order for payment received by such holder).
ARTICLE V
Payments
Section 5.1 Amounts Payable. (a) The Borrower shall make all
payments of the Repayment Obligation, as and when the same become due
(whether at maturity, by acceleration or otherwise), in the manner set
forth herein and shall make all other Required Payments in the manner
set forth in this Agreement. Payments to the Bank shall be made in
lawful money of the United States of America at the address of the
Bank set forth in Section 9.7 or at such other place as the Bank may
direct in writing.
(b) The Borrower shall pay (i) the reasonable fees and
expenses of the Bank and counsel to the Bank and all other costs, fees
and expenses incidental to the financing hereunder and the costs of
producing this Agreement, (ii) all taxes of any kind whatsoever
lawfully assessed, levied or imposed with respect to the transactions
contemplated by this Agreement, and (iii) all costs of collection
(including reasonable counsel fees) in the event of a default in the
payment of the principal of or interest on the Repayment Obligation or
other charges payable under this Agreement. The obligations of the
Borrower under this subsection shall survive Payment of the Loan.
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Section 5.2 Default in Payments. If the Borrower should fail
to make any Required Payment of principal of and/or interest on the
Repayment Obligation by the date which is seven days after the due
date for such Required Payment, the Borrower shall pay the Bank a late
charge in an amount equal to the lesser of (a) 5% of the amount of
such Required Payment or (b) $200. If the Borrower should fail to
make any other Required Payment when due, the Borrower shall, to the
extent permitted by law, pay interest thereon at the Prime Rate plus
0.5%.
Section 5.3 Unconditional Obligations. The obligations of the
Obligors to make Required Payments and to perform and observe all
other covenants, conditions and agreements hereunder shall be general
obligations of the Obligors and shall be absolute and unconditional,
irrespective of any defense or any rights of setoff, recoupment or
counterclaim any Obligor might otherwise have against the Bank.
Nothing in this section shall be construed as a waiver by the Obligors
of any rights or claims any of them may have against the Bank under
this Agreement or otherwise, but any recovery upon such rights and
claims shall be had from the Bank separately. The Obligors shall not
suspend or discontinue any such payment hereunder or fail to observe
and perform any of their other covenants, conditions and agreements
under this Agreement for any cause, including without limitation any
acts or circumstances that may constitute failure of consideration, or
commercial frustration of purpose, or any change in the tax or other
laws of the United States of America, the Commonwealth of Virginia or
any political subdivision of either, or any failure of the Bank to
observe and perform any covenant, condition or agreement, whether
express or implied, or any duty, liability or obligation contained in
or arising out of or in connection with this Agreement.
Section 5.4 Repayment Obligation. The principal amount of the
Repayment Obligation at any time shall be equal to the aggregate
Advances theretofore made less any principal amount of the Repayment
Obligation which shall theretofore have been paid to the Bank by the
Borrower. Interest shall be payable on the principal amount of the
Repayment Obligation at a variable rate per annum equal to LIBOR plus
0.35%. For purposes of this Agreement, LIBOR as in effect on the
first Business Day of a month shall be deemed to be in effect for the
entirety of such month.
Any payment by the Borrower with respect to the Repayment
Obligation shall be applied first to the payment of interest then
accrued on the Repayment Obligation and then to the payment of the
principal amount of the Repayment Obligation.
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The principal amount of the Repayment Obligation, together with
all interest then accrued, shall be due and payable in full on the
Termination Date.
The Repayment Obligation is subject to prepayment in whole or in
part, without prior notice, on any Business Day by payment of the
principal amount thereof to be prepaid, together with all interest
then accrued.
Interest on the Repayment Obligation shall be payable on the
first day of each month, beginning on the first day of the month
following the month in which the Closing Date occurs.
Unless otherwise agreed by the Borrower and the Bank, the Bank
shall debit the Account for the amount of any payment of principal of
or interest on the Repayment Obligation; provided that the Borrower
shall make any such payment to the extent that the balance in the
Account is insufficient therefor.
ARTICLE VI
Special Covenants
Section 6.1 Incorporation of Credit Agreement. Each of the
covenants set forth in Articles VIII through X, inclusive, of the
Credit Agreement other than Section 10.10 thereof (the "Covenants")
are incorporated herein by reference, and the Bank may enforce the
Covenants in the same manner as through they were set forth in full
herein. If Article VI of the Credit Agreement shall require that any
notice or other writing be delivered to the Agent or any Lender (both
as defined in the Credit Agreement), such notice or writing, or a copy
thereof, shall be delivered to the Bank at the same time that it is
required to be delivered to the Agent or such Lender. Notwithstanding
the fact that the Borrower shall not be required to comply with a
Covenant by reason of a consent or waiver by the Agent and/or one or
more of the Lenders, the Borrower shall nevertheless comply with such
Covenant for the benefit of the Bank unless such compliance shall have
been waived by the Bank. If the Credit Agreement or the Borrower's
obligations thereunder shall have terminated, the Covenants and
Article VI of the Credit Agreement shall be deemed to have continued
in effect for the benefit of the Bank.
Section 6.2 Indemnification. (a) The Borrower shall protect,
indemnify and save harmless the Bank and any person who "controls"
(within the meaning of Section 15 of the Securities Act of 1933, as
amended, or Section 20(a) of the Securities Exchange Act of 1934, as
amended) the Bank (collectively, the "Indemnified Parties") from and
against all liabilities, obligations, claims, damages, penalties,
causes of action, costs
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and expenses (including, without limitation, attorneys' fees and
expenses and settlement amounts) imposed upon or incurred by or
asserted against any Indemnified Party on account of or related to (i)
any failure of the Obligors to comply with any of the terms,
warranties, covenants or representations this Agreement, or (ii) any
loss or damage to property or any injury to or death of any person
that may be occasioned by any cause whatsoever pertaining to any
property of the Obligors or the use thereof; provided that such
indemnity shall be effective only to the extent of any loss that may
be sustained by an Indemnified Party in excess of the proceeds
received by it from any insurance carried with respect to such loss
and provided further that benefits of this section shall not inure to
any person other than the Indemnified Parties. Nothing contained
herein shall require the Borrower to indemnify any Indemnified Party
for any claim or liability resulting from its negligence or willful,
wrongful acts.
(b) The Borrower shall also indemnify and hold harmless the
Indemnified Parties against any and all losses, claims, damages or
liabilities caused by any untrue statement or alleged untrue statement
of a material fact contained in information submitted by any Obligor
to the Bank with respect to the making of the Loan or caused by any
omission or alleged omission of any material fact necessary to be
stated therein in order to make such statements to such Bank not
misleading or incomplete.
(c) If any action is brought against any Indemnified Party in
respect of which indemnity may be sought from the Borrower under
subsection (a) or (b) above, such Indemnified Party shall promptly
notify the Borrower in writing, and the Borrower shall assume the
defense thereof, including the employment of counsel, the payment of
all expenses and the right to negotiate and consent to settlement.
Each Indemnified Party has the right to employ separate counsel in any
such action and to participate in the defense thereof, but the fees
and expenses of such counsel will be at the expense of such
Indemnified Party unless the employment of such counsel has been
specifically authorized by the Borrower. The Borrower will not be
liable for any settlement of any such action made without its consent,
but if such action is settled with the consent of the Borrower or if
there be a final judgment for the plaintiff in such action, the
Borrower shall indemnify and hold harmless the Indemnified Parties
from and against any loss or liability by reason of such settlement or
judgment.
(d) The obligations of the Borrower under this section shall
survive Payment of the Loan. All references in this section to any
Indemnified Party shall include its directors, officers, employees and
agents.
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Section 6.3 Certificate as to No Default. The Borrower shall
deliver to the Bank concurrently with the delivery of each of the
annual financial statements of the Borrower provided for in Section
7.1(b) of the Credit Agreement a certificate signed by the president,
a vice president or the treasurer of the Borrower stating that, during
the period covered by such financial statements and as of the date of
such certificate, no event or condition has occurred or existed, or is
occurring or existing, that constitutes or that, with notice or lapse
of time or both, would constitute an Event of Default, or if such an
event or condition has occurred or existed, or is occurring or
existing, specifying the nature and period of such event or condition
and what action the Obligors have taken, are taking or propose to take
with respect thereto. Each Obligor shall promptly notify the Bank at
any time such Obligor becomes aware of any event or condition
described in the preceding sentence.
ARTICLE VII
Guaranty
Section 7.1 Guaranty of Obligations. The Guarantors hereby
jointly and severally guarantee to the Bank, the prompt payment, when
due, of all obligations of the Borrower under this Agreement (the
"Obligations") and agree that upon default by the Borrower in the
payment when due of any Obligation, the Guarantors will promptly pay
the same. The guaranty obligation of the Guarantors contained in this
section shall be a continuing, absolute and unconditional guaranty.
The foregoing is a guaranty of payment, and not of collection.
Section 7.2 Waivers. (a) The Guarantors hereby waive notice
of the creation, incurrence or extension of any Obligations now
existing or hereafter arising.
(b) The Guarantors hereby waive protest, all demands and all
notices including, but not limited to, any notices in connection with,
related to or associated with, whether by law or agreement, (i) the
failure (whether partial or otherwise) by the Borrower or by any other
person to timely, properly or otherwise pay or perform any Obligation
or (ii) the creation, preservation, perfection or enforcement or lack
thereof, or any failure by any person in respect thereof, regarding
any Security.
Section 7.3 Forbearance and Modifications. The Guarantors
hereby agree that, without further notice or consent, the same hereby
being waived, and without affecting the Guarantors' liabilities
hereunder, the Bank may at any time, in the exercise of its sole
discretion, take or refrain from taking any lawful action, including
without limitation changing any
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terms of all or any part of any Obligations, granting any extensions,
modifications or renewals of any Obligations, effecting any releases,
compromises or settlements or making any other indulgences with
respect to any Obligations, entering into any agreement concerning the
use of any or all of the Security or changing the terms of any
agreement concerning any or all of the Security, consenting to the
substitution, exchange or release of all or any part of the Security
or any person liable to the Bank with respect thereto, realizing upon
all or any part of the Security in any lawful manner, or forbearing
from realizing upon all or any part of the Security.
Section 7.4 Continuing Liability. (a) The Guarantors shall
not be released from any obligations or liability under and shall not
have any rights or recourse against the Bank, for any reason relating
to (i) any default with respect to any Security existing when the
Security is accepted by the Bank or at any time thereafter, (ii) any
failure to convey, create or perfect a valid lien or security interest
in any Security, (iii) any invalidity or defect in any Security, (iv)
the existence of any equities, defenses or claims in favor of others
with respect to any Security, (v) failure to correctly estimate the
value of any Security or the change in value of any Security, (vi) any
deterioration, waste or loss to any Security, and/or (vii) any rights
and consents granted, waivers made or other actions taken or not taken
by the Bank hereunder. THE GUARANTORS HEREBY WAIVE ALL SURETYSHIP AND
OTHER SIMILAR DEFENSES, INCLUDING BUT NOT LIMITED TO THE RIGHT TO
REQUIRE THE BANK TO PROCEED TO ENFORCE THE OBLIGATIONS AGAINST ANY
PERSON BEFORE OR CONTEMPORANEOUSLY WITH THE ENFORCEMENT OF THIS
GUARANTY.
(b) The Guarantors' obligations and liabilities under the
Guaranty shall not be in any way affected or terminated if any other
person liable, primarily or secondarily, directly or indirectly, for
all or any part of any Obligations shall cease to exist, dissolve,
wind up its business, suspend business, make any assignment for the
benefit of creditors generally, become insolvent or admit in writing
its insolvency, generally not pay its debts as they become due, or
become a debtor in a bankruptcy case or if a receiver, trustee or
custodian is appointed for such other person's property or is
authorized to take charge of any of its property to enforce a lien or
security interest against it or for purposes of general administration
for the benefit of its creditors, or if such other person should
petition or apply to any tribunal for any receiver for or any trustee
of it or its estate or for relief under any bankruptcy, arrangement,
reorganization, readjustment of debt, receivership, dissolution or
liquidation proceedings or under any law relating to the relief of
debtors, or have any such action commenced against it, with or without
its consent.
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Section 7.5 Subrogation. The Guarantors shall not assert any
right of subrogation with respect to the Obligations or any Security
prior to Payment of the Loan. No subrogation of the Guarantors shall
require the Bank to proceed against any person or entity or to resort
to any Security or to take any other action of any kind as a result of
subrogation.
Section 7.6 Subordination. The Guarantors hereby (a)
subordinate to the Obligations any present and future debts,
obligations or liabilities, whether contingent or otherwise, of the
Borrower to any Guarantor, alone or with any other person, (b)
subordinate any liens or security interests, whether now existing or
hereafter arising, securing payment of such debts, obligations or
liabilities, and (c) agree that no Guarantor shall ask for, demand,
sue for, take or receive any part of such debts, obligations and
liabilities while payment of any of the Obligations is in default. If
any payment is made to any Guarantor on account of such debts,
obligations or liabilities in violation of the terms hereof, such
Guarantor shall forthwith pay all such amounts to the Bank to be
credited and applied, in the Bank's sole discretion, to the
Obligations then outstanding, whether matured or unmatured, contingent
or otherwise.
Section 7.7 Further Guaranties. Any subsequent guaranty to
or for the benefit of the Bank by any person, including any Guarantor,
shall not supersede or terminate the Guaranty, but shall be an
additional guaranty unless otherwise stated therein. If any Guarantor
has given a previous guaranty to the Bank, the Guaranty shall be in
addition to such previous guaranty.
ARTICLE VIII
Events of Default and Remedies
Section 8.1 Event of Default. Each of the following shall be
an Event of Default:
(a) Failure of the Borrower to make any payment of
principal of or interest on the Repayment Obligations when due and the
continuation of such failure for five days.
(b) Failure of any Obligor to observe or perform any of its
other covenants, conditions or agreements hereunder for a period of 60
days after notice (unless the Borrower and the Bank shall agree in
writing to an extension of such time prior to its expiration)
specifying such failure and requesting that it be remedied, given by
the Bank to the Borrower, or in the case of any such default that can
be cured but cannot with due diligence be cured within such 60-day
period, failure of such Obligor to
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proceed promptly to cure the same and thereafter prosecute the curing
of the same with due diligence.
(c) Reasonable determination by the Bank that any warranty,
representation or other statement by or on behalf of any Obligor
contained in this Agreement or any financial statement or other
information furnished in connection with the making of the Loan was
false or misleading in any material respect at the time it was made or
delivered.
(d) An Event of Default, as defined in the Credit
Agreement.
Section 8.2 Remedies on Default. Upon the occurrence and
continuation of an Event of Default, the Bank may:
(a) Declare all payments hereunder to be due and payable on
a date which is not earlier than 30 days after notice of such
declaration is given to the Borrower by the Bank, whereupon the same
shall become due and payable on such date.
(b) Take whatever action at law or in equity may appear
necessary or desirable to collect the amounts then due and thereafter
to become due hereunder or to enforce observance or performance of any
covenant, condition or agreement of the Obligors under this Agreement.
The Bank shall give notice to the Borrower of the exercise of any
of the rights or remedies under this section (i) in writing in the
manner provided in Section 9.7 and (ii) by telephone or telegram,
provided that failure to give such notice by telephone or telegram
shall not affect the validity of the exercise of any right or remedy
under this section.
Any balance of the moneys collected pursuant to action taken
under this section remaining after payment of all costs and expenses
of collection and amounts due hereunder shall be paid to the Bank and
applied toward the making of Required Payments then due and payable,
provided that after Payment of the Loan and payment of all other sums
required by applicable law any such balance shall be paid to the
Borrower.
Section 8.3 No Remedy Exclusive. No remedy herein conferred
upon or reserved to the Bank is intended to be exclusive of any other
remedy, and every remedy shall be cumulative and in addition to every
other remedy herein or now or hereafter existing at law, in equity or
by statute. No delay or failure to exercise any right or power
accruing upon an Event of Default shall impair any such right or power
or shall be construed to be a waiver thereof, and any such right or
power may
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be exercised from time to time and as often as may be deemed
expedient.
Section 8.4 Counsel Fees and Other Expenses. The Borrower
shall on demand pay to the Bank the reasonable counsel fees and other
reasonable expenses incurred by the Bank in the collection of payments
hereunder or the enforcement of any other obligation of the Borrower
upon an Event of Default.
Section 8.5 No Additional Waiver Implied by One Waiver. If
any party or its assignee waives a default by any other party under
any covenant, condition or agreement herein, such waiver shall be
limited to the particular breach so waived and shall not be deemed to
waive any other breach hereunder.
ARTICLE IX
Miscellaneous
Section 9.1 Term of Agreement. This Agreement shall be
effective upon execution and delivery hereof. Subject to earlier
satisfaction upon prepayment of all of the Borrower's obligations
hereunder and the making in full of all other Required Payments due
and payable at the date of such prepayment (but only if the Borrower
shall have agreed that it shall not be entitled to receive any further
Advances), and subject to any provisions hereof which survive Payment
of the Loan, the Obligors' obligations hereunder shall expire on the
date provided herein for the final payment of principal on the
Repayment Obligation, or if all Required Payments have not been made
on such date, when all Required Payments shall have been made.
Section 9.2 Successors and Assigns. This Agreement shall be
binding upon, inure to the benefit of and be enforceable by the
parties hereto and their respective successors and assigns. No
assignment by any Obligor shall relieve such Obligor of its
obligations hereunder.
Section 9.3 Jurisdiction and Venue. Any judicial proceeding
to enforce performance of any obligation of any Obligor under this
Agreement may be brought before any court of competent jurisdiction
located in Harrisonburg, Virginia or in Roanoke, Virginia or in the
United States District Court for the Western District of Virginia. If
any such proceeding is brought before any such court, no Obligor shall
assert any defense relating to the jurisdiction of such court or the
venue of such proceedings. The Obligors agree that service of process
with respect to any such proceeding may be made upon any employee or
officer of any Obligor who may be located in the Commonwealth of
Virginia at the time such service and that any such service shall
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be deemed to be valid service upon any Obligor named as a party in
such proceeding.
Section 9.4 Severability. If any provision of this Agreement
shall be held invalid by any court of competent jurisdiction, such
holding shall not invalidate any other provision hereof.
Section 9.5 Applicable Law; Entire Understanding. This
Agreement shall be governed by the applicable laws of the Commonwealth
of Virginia. This Agreement expresses the entire understanding and
all agreements between the parties and may not be modified except in a
writing signed by the parties. This Agreement may not be modified
before Payment of the Loan without the consent of the Bank.
Section 9.6 Counterparts. This Agreement may be executed in
several counterparts, each of which shall be an original, and all of
which together shall constitute but one and the same instrument.
Section 9.7 Notices. Except as may otherwise be provided
herein, all demands, notices, approvals, consents, requests and other
communications hereunder shall be in writing and shall be delivered or
given by certified mail, postage prepaid, addressed as follows:
(a) If to the Borrower, at:
For U.S. Mail: For Courier or Other Delivery:
P.O. Box 7000 800 Co-op Drive
Broadway, VA 28815-7000 Timberville, Virginia 22853
Attn: Chief Financial Attn: Chief Financial
Officer Officer;
(b) If to either Guarantor, at:
For U.S. Mail: For Courier or Other Delivery:
c/o WLR Foods, Inc. c/o WLR Foods, Inc.
P.O. Box 7000 800 Co-op Drive
Broadway, VA 28815-7000 Timberville, Virginia 22853
Attn: Chief Financial Attn: Chief Financial
Officer Officer; and
(c) If to the Bank, at:
First Union National Bank of Virginia
201 South Jefferson Street
Roanoke, Virginia 24011
Attn: Commercial Banking
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Any Obligor and the Bank may, by notice given hereunder,
designate any further or different addresses to which subsequent
demands, notices, approvals, consents, requests and other
communications shall be sent or persons to whose attention the same
shall be directed.
Section 9.8 Other Agreements. To the extent that the
execution and delivery of this Agreement by any Obligor or the
performance of its obligations thereunder, would constitute a
violation of or default under any other agreement to which the Bank
and such Obligor are parties, such other agreement is hereby amended
(to the extent such amendment can be effected without the consent of
persons who are not parties to this Agreement) to permit such
execution and delivery or such performance, as the case may be, and
any default under such agreement resulting from such execution and
delivery or such performance is hereby waived.
IN WITNESS WHEREOF, the Bank and the Obligors have caused this
Agreement to be executed in their respective names, all as of the date
first above written.
FIRST UNION NATIONAL BANK OF VIRGINIA
By_________________________________
Vice President
WLR FOODS, INC.
By_________________________________
Its___________________________
WAMPLER-LONGACRE, INC.
By_________________________________
Its___________________________
CASSCO ICE & COLD STORAGE, INC.
By_________________________________
Its___________________________
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EXHIBIT 4.2
CREDIT AGREEMENT
dated as of March 1, 1995,
by and among
WLR FOODS, INC.,
as Borrower,
WAMPLER-LONGACRE, INC.
and
CASSCO ICE & COLD STORAGE, INC.,
as Guarantors,
the Lenders referred to herein,
and
FIRST UNION NATIONAL BANK
OF VIRGINIA,
as Agent
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS . . . . . . . . . . . . 1
SECTION 1.1 Definitions . . . . . . . . . . . . . . . . . 1
SECTION 1.2 General . . . . . . . . . . . . . . . . . . . 14
SECTION 1.3 Other Definitions and Provisions . . . . . . 14
ARTICLE II
CREDIT FACILITY . . . . . . . . . . . 15
SECTION 2.1 Revolving Credit Loans . . . . . . . . . . . 15
SECTION 2.2 Procedure for Advances of Revolving Loans . . 15
SECTION 2.3 Repayment of Loans . . . . . . . . . . . . . 16
SECTION 2.4 Notes . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.5 Permanent Reduction of the Aggregate
Revolving Commitment . . . . . . . . . . . . 17
SECTION 2.6 Termination of Credit Facility . . . . . . . 18
SECTION 2.7 Use of Proceeds . . . . . . . . . . . . . . . 18
SECTION 2.8 Term Loan . . . . . . . . . . . . . . . . . . 18
ARTICLE III
LETTER OF CREDIT FACILITY . . . . . . . . 19
SECTION 3.1 L/C Commitment . . . . . . . . . . . . . . . 19
SECTION 3.2 Procedure for Issuance of Letters of Credit . 19
SECTION 3.3 Commissions and Other Charges . . . . . . . . 20
SECTION 3.4 L/C Participation . . . . . . . . . . . . . . 20
SECTION 3.5 Reimbursement Obligation of the Borrower . . 21
SECTION 3.6 Obligations Absolute . . . . . . . . . . . . 22
SECTION 3.7 Effect of Application . . . . . . . . . . . . 23
SECTION 3.8 Existing Letters of Credit . . . . . . . . . 23
ARTICLE IV
GENERAL LOAN PROVISIONS . . . . . . . . . 23
SECTION 4.1 Interest . . . . . . . . . . . . . . . . . . 23
SECTION 4.2 Notice and Manner of Conversion or
Continuation of Loans . . . . . . . . . . . . 25
SECTION 4.3 Commitment and Agency Fees . . . . . . . . . 26
SECTION 4.4 Manner of Payment . . . . . . . . . . . . . . 27
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SECTION 4.5 Crediting of Payments and Proceeds . . . . . 27
SECTION 4.6 Nature of Obligations of Lenders Regarding
Extensions of Credit; Assumption by the
Agent . . . . . . . . . . . . . . . . . . . . 28
SECTION 4.7 Changed Circumstances . . . . . . . . . . . . 29
SECTION 4.8 Indemnity . . . . . . . . . . . . . . . . . . 31
SECTION 4.9 Capital Requirements . . . . . . . . . . . . 31
SECTION 4.10 Taxes . . . . . . . . . . . . . . . . . . . . 32
ARTICLE V
CLOSING; CONDITIONS OF CLOSING AND BORROWING . . . . 34
SECTION 5.1 Closing . . . . . . . . . . . . . . . . . . . 34
SECTION 5.2 Conditions to Closing and Initial Extensions
of Credit . . . . . . . . . . . . . . . . . . 34
SECTION 5.3 Conditions to All Loans and Letters of
Credit . . . . . . . . . . . . . . . . . . . 37
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE BORROWER . . . 37
SECTION 6.1 Representations and Warranties . . . . . . . 37
SECTION 6.2 Survival of Representations and Warranties
Etc . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE VII
FINANCIAL INFORMATION AND NOTICES . . . . . . 45
SECTION 7.1 Financial Statements and Projections . . . . 45
SECTION 7.2 Officer's Compliance Certificate . . . . . . 46
SECTION 7.3 Accountants' Certificate . . . . . . . . . . 47
SECTION 7.4 Other Reports . . . . . . . . . . . . . . . . 47
SECTION 7.5 Notice of Litigation and Other Matters . . . 48
SECTION 7.6 Accuracy of Information . . . . . . . . . . . 49
ARTICLE VIII
AFFIRMATIVE COVENANTS . . . . . . . . . 50
SECTION 8.1 Preservation of Corporate Existence and
Related Matters . . . . . . . . . . . . . . . 50
SECTION 8.2 Maintenance of Property . . . . . . . . . . . 50
SECTION 8.3 Insurance . . . . . . . . . . . . . . . . . . 50
SECTION 8.4 Accounting Methods and Financial Records . . 51
SECTION 8.5 Payment and Performance of Obligations . . . 51
SECTION 8.6 Compliance With Laws and Approvals . . . . . 51
SECTION 8.7 Environmental Laws . . . . . . . . . . . . . 51
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SECTION 8.8 Compliance with ERISA . . . . . . . . . . . . 52
SECTION 8.9 Compliance With Agreements . . . . . . . . . 52
SECTION 8.10 Conduct of Business . . . . . . . . . . . . . 52
SECTION 8.11 Visits and Inspections . . . . . . . . . . . 52
SECTION 8.12 Further Assurances . . . . . . . . . . . . . 52
SECTION 8.13 Meeting with Lenders . . . . . . . . . . . . 53
ARTICLE IX
FINANCIAL COVENANTS . . . . . . . . . . 53
SECTION 9.1 Fixed Charge Coverage Ratio . . . . . . . . . 53
SECTION 9.2 Minimum Tangible Net Worth . . . . . . . . . 53
SECTION 9.3 Maximum Debt to Capitalization Ratio . . . . 54
SECTION 9.4 Current Ratio . . . . . . . . . . . . . . . . 54
ARTICLE X
NEGATIVE COVENANTS . . . . . . . . . . 54
SECTION 10.1 Limitations on Debt . . . . . . . . . . . . . 54
SECTION 10.2 Limitations on Contingent Obligations . . . . 55
SECTION 10.3 Limitations on Liens . . . . . . . . . . . . 55
SECTION 10.4 Limitations on Acquisitions . . . . . . . . . 56
SECTION 10.5 Limitations on Mergers and Liquidation . . . 57
SECTION 10.6 Limitations on Sale of Assets . . . . . . . . 57
SECTION 10.7 Transactions with Affiliates . . . . . . . . 57
SECTION 10.8 Certain Accounting Changes . . . . . . . . . 58
SECTION 10.9 Compliance with ERISA . . . . . . . . . . . . 58
SECTION 10.10 More Restrictive Agreements . . . . . . . . . 59
SECTION 10.11 Transfers to Subsidiaries . . . . . . . . . . 59
ARTICLE XI
DEFAULT AND REMEDIES . . . . . . . . . . 59
SECTION 11.1 Events of Default . . . . . . . . . . . . . . 59
SECTION 11.2 Remedies . . . . . . . . . . . . . . . . . . 62
SECTION 11.3 Rights and Remedies Cumulative; Non-Waiver;
etc. . . . . . . . . . . . . . . . . . . . . 63
ARTICLE XII
THE AGENT . . . . . . . . . . . . 63
SECTION 12.1 Appointment . . . . . . . . . . . . . . . . . 63
SECTION 12.2 Delegation of Duties . . . . . . . . . . . . 63
SECTION 12.3 Exculpatory Provisions . . . . . . . . . . . 64
SECTION 12.4 Reliance by the Agent . . . . . . . . . . . . 64
SECTION 12.5 Notice of Default . . . . . . . . . . . . . . 65
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SECTION 12.6 Non-Reliance on the Agent and Other Lenders . 65
SECTION 12.7 Indemnification . . . . . . . . . . . . . . . 66
SECTION 12.8 The Agent in Its Individual Capacity . . . . 66
SECTION 12.9 Resignation of the Agent; Successor Agent . . 66
ARTICLE XIII
MISCELLANEOUS . . . . . . . . . . . 67
SECTION 13.1 Notices . . . . . . . . . . . . . . . . . . . 67
SECTION 13.2 Expenses . . . . . . . . . . . . . . . . . . 68
SECTION 13.3 Set-off . . . . . . . . . . . . . . . . . . . 69
SECTION 13.4 Governing Law . . . . . . . . . . . . . . . . 69
SECTION 13.5 Consent to Jurisdiction . . . . . . . . . . . 69
SECTION 13.6 Waiver of Jury Trial . . . . . . . . . . . . 70
SECTION 13.7 Reversal of Payments . . . . . . . . . . . . 70
SECTION 13.8 Injunctive Relief . . . . . . . . . . . . . . 70
SECTION 13.9 Accounting Matters . . . . . . . . . . . . . 70
SECTION 13.10 Successors and Assigns; Participations . . . 71
SECTION 13.11 Amendments, Waivers and Consents; Renewal . . 74
SECTION 13.12 Performance of Duties . . . . . . . . . . . . 75
SECTION 13.13 Indemnification . . . . . . . . . . . . . . . 75
SECTION 13.14 All Powers Coupled with Interest . . . . . . 75
SECTION 13.15 Survival of Indemnities . . . . . . . . . . . 75
SECTION 13.16 Titles and Captions . . . . . . . . . . . . . 75
SECTION 13.17 Severability of Provisions . . . . . . . . . 76
SECTION 13.18 Counterparts . . . . . . . . . . . . . . . . 76
SECTION 13.19 Term of Agreement . . . . . . . . . . . . . . 76
SECTION 13.20 Adjustments . . . . . . . . . . . . . . . . . 76
ARTICLE XIV
GUARANTY . . . . . . . . . . . . . 77
SECTION 14.1 Guaranty of Obligations . . . . . . . . . . . 77
SECTION 14.2 Waivers . . . . . . . . . . . . . . . . . . . 77
SECTION 14.3 Forbearance and Modifications . . . . . . . . 77
SECTION 14.4 Continuing Liability . . . . . . . . . . . . 78
SECTION 14.5 Subrogation . . . . . . . . . . . . . . . . . 78
SECTION 14.6 Subordination . . . . . . . . . . . . . . . . 79
SECTION 14.7 Further Guaranties . . . . . . . . . . . . . 79
SECTION 14.8 Additional Guarantors . . . . . . . . . . . . 79
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EXHIBITS
Exhibit A - Form of Revolving Credit Note
Exhibit B - Form of Notice of Borrowing
Exhibit C - Form of Notice of Conversion/Continuation
Exhibit D - Form of Officer's Certificate
Exhibit E - Form of Assignment and Acceptance
SCHEDULES
Schedule 6.1(a) - Jurisdictions of Organization and Qualification to
Do Business as Foreign Corporation
Schedule 6.1(b) - Subsidiaries and Capitalization
Schedule 6.1(j) - ERISA Plans
Schedule 6.1(v) - Litigation
Schedule 10.1(d) - Anticipated Debt
Schedule 10.3(f) - Existing Liens
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CREDIT AGREEMENT, dated as of the 1st day of March, 1995, by and
among WLR FOODS, INC., a corporation organized under the laws of
Virginia (the "Borrower"), WAMPLER-LONGACRE, INC. and CASSCO ICE &
COLD STORAGE, INC., both corporations organized under the laws of
Virginia (collectively, the "Guarantors"), the Lenders who are or may
become a party to this Agreement, and FIRST UNION NATIONAL BANK OF
VIRGINIA, as Agent for the Lenders.
STATEMENT OF PURPOSE
The Borrower has requested, and the Lenders have agreed, to
extend certain credit facilities to the Borrower on the terms and
conditions of this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged by the parties
hereto, such parties hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. The following terms when used in this
Agreement shall have the meanings assigned to them below:
"Affiliate" means, with respect to the Borrower and its
Subsidiaries, any other Person (other than a Subsidiary) which
directly or indirectly through one or more intermediaries, controls,
or is controlled by, or is under common control with, the Borrower or
any of its Subsidiaries. The term "control" means (a) the power to
vote five percent (5%) or more of the securities or other equity
interests of a Person having ordinary voting power, or (b) the
possession, directly or indirectly, of any other power to direct or
cause the direction of the management and policies of a Person,
whether through ownership of voting securities, by contract or
otherwise.
"Agent" means First Union in its capacity as Agent hereunder, and
any successor thereto appointed pursuant to Section 12.9.
"Agent's Office" means the office of the Agent specified in or
determined in accordance with the provisions of Section 13.1.
"Aggregate Commitment" means the aggregate amount of the Lenders'
Commitments hereunder, as such amount may be reduced at any time or
from time to time pursuant to Section 2.5. On the Closing Date, the
Aggregate Commitment shall be One Hundred Twenty-Five Million Dollars
($125,000,000).
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"Aggregate Revolving Commitment" means the aggregate amount of
the Lenders' Revolving Commitments hereunder, as such amount may be
reduced at any time or from time to time pursuant to Section 2.5. On
the Closing Date, the Aggregate Revolving Commitment shall be One
Hundred Million Dollars ($100,000,000).
"Aggregate Term Commitment" means the aggregate amount of the
Lenders' Term Commitments hereunder, which is Twenty Five Million
Dollars ($25,000,000).
"Agreement" means this Credit Agreement, as amended or modified
from time to time.
"Applicable Law" means all applicable provisions of
constitutions, statutes, rules, regulations and orders of all
Governmental Authorities and all orders and decrees of all courts and
arbitrators.
"Applicable Margin" shall have the meaning assigned thereto in
Section 4.1(c).
"Application" means an application, in the form specified by the
Issuing Lender from time to time, requesting the Issuing Lender to
issue a Letter of Credit.
"Assignment and Acceptance" shall have the meaning assigned
thereto in Section 13.10.
"Available Revolving Commitment" means, as to any Lender at any
time, an amount equal to the excess, if any, of (a) such Lender's
Revolving Commitment over (b) such Lender's Revolving Extensions of
Credit.
"Base Rate" means, at any time, the higher of (a) the Prime Rate
or (b) the Federal Funds Rate plus 1/2 of 1%; each change in the Base
Rate shall take effect simultaneously with the corresponding change or
changes in the Prime Rate or the Federal Funds Rate.
"Base Rate Loan" means any Loan bearing interest at a rate based
upon the Base Rate as provided in Section 4.1(a).
"Borrower" means WLR Foods, Inc, a Virginia corporation, in its
capacity as borrower hereunder.
"Business Day" means (a) for all purposes other than as set forth
in clause (b) below, any day other than a Saturday, Sunday or legal
holiday on which banks in Roanoke, Virginia, Charlotte, North Carolina
and New York, New York, are open for the conduct of their commercial
banking business, and (b) with respect to all notices and
determinations in connection with, and payments of
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principal and interest on, any LIBOR Rate Loan, any day that is a
Business Day described in clause (a) and that is also a day for
trading by and between banks in Dollar deposits in the London
interbank market.
"Capital Asset" means, with respect to the Borrower and its
Subsidiaries, any asset that would, in accordance with GAAP, be
required to be classified and accounted for as a capital asset on a
Consolidated balance sheet of the Borrower and its Subsidiaries.
"Capital Lease" means, with respect to the Borrower and its
Subsidiaries, any lease of any property that would, in accordance with
GAAP, be required to be classified and accounted for as a capital
lease on a Consolidated balance sheet of the Borrower and its
Subsidiaries.
"Change in Control" shall have the meaning assigned thereto in
Section 11.1(m).
"Closing Date" means the date of this Agreement or such later
Business Day upon which each condition described in Article V shall be
satisfied or waived in all respects in a manner acceptable to the
Agent, in its sole discretion.
"Code" means the Internal Revenue Code of 1986, and the rules and
regulations thereunder, each as amended or supplemented from time to
time.
"Commitment" means, as to any Lender at any time, the sum of such
Lender's Revolving Commitment and its Term Commitment.
"Commitment Percentage" means, as to any Lender at any time, the
ratio of (a) the amount of the Commitment of such Lender to (b) the
Aggregate Commitment of all of the Lenders, expressed as a percentage.
"Consolidated" means, when used with reference to financial
statements or financial statement items of the Borrower and its
Subsidiaries, such statements or items on a consolidated basis in
accordance with applicable principles of consolidation under GAAP.
"Contingent Obligation" means, with respect to the Borrower and
its Subsidiaries, without duplication, any obligation, contingent or
otherwise, of any such Person pursuant to which such Person has
directly or indirectly guaranteed any Debt or other obligation of any
other Person and, without limiting the generality of the foregoing,
any obligation, direct or indirect, contingent or otherwise, of any
such Person (a) to purchase or pay (or advance or supply funds for the
purchase or payment of)
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such Debt or other obligation (whether arising by virtue of
partnership arrangements, by agreement to keep well, to purchase
assets, goods, securities or services, to take-or-pay, or to maintain
financial statement condition or otherwise) or (b) entered into for
the purpose of assuring in any other manner the obligee of such Debt
or other obligation of the payment thereof or to protect such obligee
against loss in respect thereof (in whole or in part); provided, that
the term Contingent Obligation shall not include endorsements for
collection or deposit in the ordinary course of business.
"Credit Facility" means the collective reference to the Flexible
Credit Facility and the Term Loan Facility.
"Debt" means, with respect to the Borrower and its Subsidiaries
at any date and without duplication, Capital Leases, Stock-Related
Debt and debt incurred, guaranteed (whether directly or indirectly) or
assumed for money borrowed or for the deferred (for sixty days or
more) purchase price of property or services purchased, excluding (a)
accounts payable (other than for borrowed money) and accrued expenses
incurred in the ordinary course of business if the same are not
overdue in a material amount or are being contested in good faith and
by appropriate proceedings and (b) the Repurchase Obligation. Debt
shall include all obligations of the Borrower or any of its
Subsidiaries pursuant to Hedging Agreements.
"Default" means any of the events specified in Section 11.1 which
with the passage of time, the giving of notice or any other condition,
would constitute an Event of Default.
"Dollars" or "$" means, unless otherwise qualified, dollars in
lawful currency of the United States.
"Eligible Assignee" means, with respect to any assignment of the
rights, interest and obligations of a Lender hereunder, a Person that
is at the time of such assignment (a) a commercial bank organized
under the laws of the United States or any state thereof, having
combined capital and surplus in excess of $500,000,000, (b) a finance
company, insurance company or other financial institution which in the
ordinary course of business extends credit of the type extended
hereunder and that has total assets in excess of $1,000,000,000, (c)
already a Lender hereunder (whether as an original party to this
Agreement or as the assignee of another Lender), (d) the successor
(whether by transfer of assets, merger or otherwise) to all or
substantially all of the commercial lending business of the assigning
Lender, or (e) any other Person that has been approved in writing as
an Eligible Assignee by the Borrower and the Agent.
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"Employee Benefit Plan" means any employee benefit plan within
the meaning of Section 3(3) of ERISA which (a) is maintained for
employees of the Borrower or any ERISA Affiliate or (b) has at any
time within the preceding six years been maintained for the employees
of the Borrower or any current or former ERISA Affiliate.
"Environmental Laws" means any and all federal, state and local
laws, statutes, ordinances, rules, regulations, permits, licenses,
approvals, interpretations and orders of courts or Governmental
Authorities, relating to the protection of the environment, including,
but not limited to, requirements pertaining to the manufacture,
processing, distribution, use, treatment, storage, disposal,
transportation, handling, reporting, licensing, permitting,
investigation or remediation of Hazardous Materials. Environmental
Laws include, without limitation, the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. Section 9601 et. seq.),
the Hazardous Material Transportation Act (49 U.S.C. Section 331 et. seq.),
the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et.
seq.), the Federal Water Pollution Control Act (33 U.S.C. Section 1251 et.
seq.), the Clean Air Act (42 U.S.C. Section 7401 et. seq.), the Toxic
Substances Control Act (15 U.S.C. Section 2601 et. seq.), the Safe Drinking
Water Act (42 U.S.C. Section 300, et. seq.), and the Environmental
Protection Agency's regulations relating to underground storage tanks
(40 C.F.R. Parts 280 and 281), and the rules and regulations
promulgated under each of these statutes, each as amended or modified
from time to time.
"ERISA" means the Employee Retirement Income Security Act of
1974, and the rules and regulations thereunder, each as amended or
modified from time to time.
"ERISA Affiliate" means any Person who together with the Borrower
is treated as a single employer within the meaning of Section 414(b),
(c), (m) or (o) of the Code or Section 4001(b) of ERISA.
"Eurodollar Reserve Percentage" means, for any day, the
percentage (expressed as a decimal and rounded upwards, if necessary,
to the next higher 1/100th of 1%) which is in effect for such day as
prescribed by the Federal Reserve Board (or any successor) for
determining the maximum reserve requirement (including without
limitation any basic, supplemental or emergency reserves) in respect
of Eurocurrency liabilities or any similar category of liabilities for
a member bank of the Federal Reserve System in New York City.
"Event of Default" means any of the events specified in Section
11.1, provided that any requirement for passage of time, giving of
notice, or any other condition, has been satisfied.
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"Extensions of Credit" means, as to any Lender at any time, an
amount equal to the sum of such Lender's Revolving Extensions of
Credit and its Term Extensions of Credit.
"FDIC" means the Federal Deposit Insurance Corporation, or any
successor thereto.
"Federal Funds Rate" means, the rate per annum (rounded upwards,
if necessary, to the next higher 1/100th of 1%) representing the daily
effective federal funds rate as quoted by the Agent and confirmed in
Federal Reserve Board Statistical Release H.15 (519) or any successor
or substitute publication selected by the Agent. If, for any reason,
such rate is not available, then "Federal Funds Rate" shall mean a
daily rate which is determined, in the opinion of the Agent, to be the
rate at which federal funds are being offered for sale in the national
federal funds market at 9:00 a.m. (Charlotte time). Rates for weekends
or holidays shall be the same as the rate for the most immediate
preceding Business Day.
"First Union" means First Union National Bank of Virginia, a
national banking association, and its successors.
"Fiscal Year" means the fiscal year of the Borrower and its
Subsidiaries ending on the Saturday closest to June 30. For purposes
of determining any fiscal quarter hereunder, (a) the first fiscal
quarter of any Fiscal Year (the "Current Year") shall end thirteen
(13) weeks after the end of the preceding Fiscal Year (the "Prior
Year"), (b) the second fiscal quarter of the Current Year shall end
twenty-six (26) weeks after the end of the Prior Year, (c) the third
fiscal quarter of the Current Year shall end thirty-nine (39) weeks
after the end of the Prior Year, and (d) the fourth fiscal quarter of
the Current Year shall end on the last day of the Current Year.
"Flexible Credit Facility" means the collective reference to the
Revolving Credit Facility and the L/C Facility.
"Funded Debt" means all Debt of the Borrower or any of its
Subsidiaries owed or guaranteed which by its terms matures more than
one year from the date of its creation or which is renewable at the
option of the obligor for more than one year from such date, whether
or not theretofore renewed.
"GAAP" means generally accepted accounting principles, as
recognized by the American Institute of Certified Public Accountants
and the Financial Accounting Standards Board, consistently applied and
maintained on a consistent basis for the Borrower and its Subsidiaries
throughout the period indicated and consistent with the prior
financial practice of the Borrower and its Subsidiaries.
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"Governmental Approvals" means all authorizations, consents,
approvals, licenses and exemptions of, registrations and filings with,
and reports to, all Governmental Authorities.
"Governmental Authority" means any nation, province, state or
political subdivision thereof, and any government or any Person
exercising executive, legislative, regulatory or administrative
functions of or pertaining to government, and any corporation or other
entity owned or controlled, through stock or capital ownership or
otherwise, by any of the foregoing.
"Guarantors" means, collectively, Wampler-Longacre, Inc. and
Cassco Ice and Cold Storage, Inc., both of which are Virginia
corporations, and any other Subsidiary of the Borrower which (a) shall
have become a Guarantor pursuant to Section 14.8 or (b) delivers to
the Agent a document which provides that such Subsidiary (i) is a
Guarantor hereunder and (ii) thereby assumes all obligations of the
Guarantors hereunder.
"Guaranty" means the guaranty by the Guarantors provided for in
Article XIV.
"Hazardous Materials" means any substances or materials (a)
defined as hazardous substances in the Comprehensive Environmental
Response Compensation Liability Act of 1980, as amended, 42 USC
Section 9601, et seq. or in regulations issued thereunder, (b) defined
as hazardous wastes in the Resource Conservation and Recovery Act of
1976, as amended, 42 USC Section 6901, et seq. or in regulations
issued thereunder, (c) defined as toxic substances in the Toxic
Substances Control Act, 15 USC Section 2601, et seq., or in
regulations issued thereunder, or (d) animal wastes.
"Hedging Agreement" means any agreement with respect to an
interest rate swap, collar, cap, floor or a forward rate agreement or
other agreement regarding the hedging of interest rate risk exposure
executed in connection with hedging the interest rate exposure of the
Borrower under this Agreement, and any confirming letter executed
pursuant to such hedging agreement, all as amended or modified.
"Interest Period" shall have the meaning assigned thereto in
Section 4.1(b).
"Issuing Lender" means First Union, in its capacity as issuer of
any Letter of Credit, or any successor thereto.
"L/C Commitment" means Fifteen Million Dollars ($15,000,000).
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"L/C Facility" means the letter of credit facility established
pursuant to Article III hereof.
"L/C Obligations" means at any time, an amount equal to the sum
of (a) the aggregate undrawn and unexpired amount of the then
outstanding Letters of Credit and (b) the aggregate amount of drawings
under Letters of Credit which have not then been reimbursed pursuant
to Section 3.5.
"L/C Participants" means the collective reference to all the
Lenders other than the Issuing Lender.
"Lender" means each Person executing this Agreement as a Lender
set forth on the signature pages hereto and each Person that hereafter
becomes a party to this Agreement as a Lender pursuant to Section
13.10.
"Lending Office" means, with respect to any Lender, the office of
such Lender maintaining such Lender's Commitment Percentage of the
Loans.
"Letters of Credit" shall have the meaning assigned thereto in
Section 3.1(a).
"LIBOR" means the rate for deposits in Dollars for a period equal
to the Interest Period selected which appears on the Telerate Page
3750 at approximately 11:00 a.m. London time, two (2) Business Days
prior to the commencement of the applicable Interest Period. If, for
any reason, such rate is not available, then "LIBOR" shall mean the
rate per annum at which, as determined by the Agent, Dollars in the
amount of $5,000,000 are being offered to leading banks at
approximately 11:00 a.m. London time, two (2) Business Days prior to
the commencement of the applicable Interest Period for settlement in
immediately available funds by leading banks in the London interbank
market for a period equal to the Interest Period selected.
"LIBOR Rate" means a rate per annum (rounded upwards, if
necessary, to the next higher 1/100th of 1%) determined by the Agent
pursuant to the following formula:
LIBOR Rate = LIBOR
1.00-Eurodollar Reserve Percentage
"LIBOR Rate Loan" means any Loan bearing interest at a rate based
upon the LIBOR Rate as provided in Section 4.1(a).
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in
respect of such asset. For the purposes of this Agreement, a Person
shall be deemed to own subject to a Lien any asset which
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it has acquired or holds subject to the interest of a vendor or lessor
under any conditional sale agreement, Capital Lease or other title
retention agreement relating to such asset, other than an asset which
the Borrower holds as the lessee under a lease which is not a Capital
Lease.
"Loan" means any Revolving Loan and the Term Loan, and all such
Loans collectively as the context requires.
"Loan Documents" means, collectively, this Agreement, the Notes,
the Applications, any Hedging Agreement executed by any Lender and
each other document, instrument and agreement executed and delivered
by the Borrower, its Subsidiaries or their counsel in connection with
this Agreement or otherwise referred to herein or contemplated hereby,
all as may be amended or modified from time to time.
"Material Adverse Effect" means, with respect to the Borrower or
any of its Subsidiaries, a material adverse effect on the properties,
business, operations or condition (financial or otherwise) of any such
Person or the ability of any such Person to perform its obligations
under the Loan Documents or Material Contracts, in each case to which
it is a party.
"Material Contract" means (a) any contract or other agreement,
written or oral, of the Borrower or any of its Subsidiaries involving
monetary liability of or to any such Person in an amount per annum in
excess of 10% of Tangible Net Worth, or (b) any other contract or
agreement, written or oral, of the Borrower or any of its Subsidiaries
the failure to comply with which could reasonably be expected to have
a Material Adverse Effect.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which the Borrower or any ERISA
Affiliate is making, or is accruing an obligation to make,
contributions within the preceding six years.
"Notes" means the separate Notes made by the Borrower payable to
the order of each Lender, substantially in the form of Exhibit A
hereto, evidencing the Revolving Credit Facility and the Term Loan
Facility, and any amendments and modifications thereto, any
substitutes therefor, and any replacements, restatements, renewals or
extension thereof, in whole or in part; "Note" means any of such
Notes.
"Notice of Borrowing" shall have the meaning assigned thereto in
Section 2.2(a).
"Notice of Conversion/Continuation" shall have the meaning
assigned thereto in Section 4.2.
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"Obligations" means, in each case, whether now in existence or
hereafter arising: (a) the principal of and interest (including
interest accruing after the filing of any bankruptcy or similar
petition) on the Loans, (b) the L/C Obligations, (c) all payment and
other obligations owing by the Borrower to any Lender or the Agent
under any Hedging Agreement and (d) all other fees and commissions
(including attorney's fees), charges, indebtedness, loans,
liabilities, financial accommodations, obligations, covenants and
duties owing by the Borrower to the Lenders or the Agent, of every
kind, nature and description, direct or indirect, absolute or
contingent, due or to become due, contractual or tortious, liquidated
or unliquidated, and whether or not evidenced by any note, and whether
or not for the payment of money under or in respect of this Agreement,
any Note, any Letter of Credit or any of the other Loan Documents.
"Officer's Compliance Certificate" shall have the meaning
assigned thereto in Section 7.2.
"Other Taxes" shall have the meaning assigned thereto in Section
4.10(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor agency.
"Pension Plan" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to the provisions of Title IV of
ERISA or Section 412 of the Code and which (a) is maintained for
employees of the Borrower or any ERISA Affiliates or (b) has at any
time within the preceding six years been maintained for the employees
of the Borrower or any of their current or former ERISA Affiliates.
"Person" means an individual, corporation, partnership,
association, trust, business trust, joint venture, joint stock
company, pool, syndicate, sole proprietorship, unincorporated
organization, Governmental Authority or other entity.
"Prime Rate" means, at any time, the rate of interest per annum
publicly announced from time to time by the Agent as its prime rate.
Each change in the Prime Rate shall be effective as of the opening of
business on the day such change in the Prime Rate occurs. The parties
hereto acknowledge that the rate announced publicly by the Agent as
its Prime Rate is an index or base rate and shall not necessarily be
its lowest or best rate charged to its customers or other banks.
"Register" shall have the meaning assigned thereto in Section
13.10(d).
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"Reimbursement Obligation" means the obligation of the Borrower
to reimburse the Issuing Lender pursuant to Section 3.5 for amounts
drawn under Letters of Credit.
"Repurchase Obligation" means the Borrower's existing obligation
to repurchase certain shares of its capital stock at a price not
exceeding $18,000,000 upon the occurrence of certain conditions, which
obligation was created in connection with the acquisition by the
Borrower of certain assets of another corporation in 1994.
"Required Lenders" means, at any date, any combination of holders
of at least fifty-one percent (51%) of the aggregate unpaid principal
amount of the Notes, or if no amounts are outstanding under the Notes,
any combination of Lenders whose Commitment Percentages aggregate at
least fifty-one percent (51%).
"Revolving Commitment" means, as to any Lender at any time, the
obligation of such Lender to make Revolving Loans to and issue or
participate in Letters of Credit issued for the account of the
Borrower hereunder in an aggregate principal or face amount at any
time outstanding not to exceed the amount so identified beneath such
Lender's name on the signature pages hereof, as the same may be
reduced or modified at any time or from time to time pursuant to
Sections 2.5 and 13.10.
"Revolving Commitment Percentage" means, as to any Lender at any
time, the ratio of (a) the amount of the Revolving Commitment of such
Lender to (b) the Aggregate Revolving Commitment of all of the
Lenders, expressed as a percentage.
"Revolving Credit Facility" means the revolving credit facility
established pursuant to Article II hereof.
"Revolving Extensions of Credit" means, as to any Lender at any
time, an amount equal to the sum of (a) the aggregate principal amount
of all Revolving Loans made by such Lender then outstanding and (b)
such Lender's Revolving Commitment Percentage of the L/C Obligations
then outstanding.
"Revolving Loan" means any Loan made to the Borrower pursuant to
Section 2.1, and all such Loans collectively as the context requires.
"Revolving Loan Termination Date" means the earlier of (a) April
1, 1998, or such later date as may be agreed to in writing by the
Borrower, the Lenders and the Agent, or (b) the date of the reduction
of the Aggregate Revolving Commitment to zero by the Borrower pursuant
to Section 2.5(a).
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"Security" means any funds, agreements, property, rights or
interests of any nature whatsoever, guaranties of and any
subordination and/or standby agreements related to the Obligations
which have been or hereafter are mortgaged, pledged, assigned,
transferred, executed or delivered, directly or indirectly, to the
Agent or any Lender as security for or guaranty of the payment or
performance of any Obligation.
"Security Documents" means the collective reference to each
agreement or writing, if any, pursuant to which the Borrower or any
Subsidiary thereof pledges or grants a security interest in any
property or assets securing the Obligations or any such Person
guaranties the payment and/or performance of the Obligations.
"Solvent" means, as to the Borrower and its Subsidiaries on a
particular date, that any such Person (a) has capital sufficient to
carry on its business and transactions and all business and
transactions in which it is about to engage and is able to pay its
debts as they mature, (b) owns property having a value, both at fair
valuation and at present fair saleable value, greater than the amount
required to pay its probable liabilities (including contingencies),
and (c) does not believe that it will incur debts or liabilities
beyond its ability to pay such debts or liabilities as they mature.
"Stock-Related Debt" means, at any time, (a) the Borrower's
obligation to redeem or repurchase any of its capital stock at the
option of the holder of such stock which is then exercisable (but
excluding the Repurchase Obligation) and (b) the indebtedness which
would come into existence upon the conversion of any of the Borrower's
capital stock to debt of the Borrower which conversion may be effected
at the option of the holder of such stock which is then exercisable.
"Subordinated Debt" means any Debt of the Borrower or any
Subsidiary subordinated in right and time of payment to the
Obligations.
"Subsidiary" means as to any Person, any corporation, partnership
or other entity of which more than fifty percent (50%) of the
outstanding capital stock or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other
managers of such corporation, partnership or other entity is at the
time, directly or indirectly, owned by or the management is otherwise
controlled by such Person (irrespective of whether, at the time,
capital stock of any other class or classes of such corporation shall
have or might have voting power by reason of the happening of any
contingency). Unless otherwise qualified references to
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"Subsidiary" or "Subsidiaries" herein shall refer to those of the
Borrower.
"Tangible Net Worth" means the Consolidated net worth of the
Borrower and its Subsidiaries determined (a) without taking into
account goodwill, trademarks, trade names, copyrights, franchise
rights and other assets of a similar nature (with the exception of
loan closing or similar costs required to be capitalized) and (b)
treating the Repurchase Obligation as equity and not as Debt.
"Taxes" shall have the meaning assigned thereto in Section
4.10(a).
"Term Commitment" means, as to any Lender at any time, the
obligation of such Lender to make a portion of the Term Loan to the
Borrower in the principal amount so identified beneath such Lender's
name on the signature pages hereof, as the same may be modified at any
time or from time to time pursuant to Section 13.10.
"Term Commitment Percentage" means, as to any Lender at any time,
the ratio of (a) the amount of the Term Commitment of such Lender to
(b) the Aggregate Term Commitment of all of the Lenders, expressed as
a percentage.
"Term Extensions of Credit" means, as to any Lender at any time,
the principal amount of the portion of the Term Loan made by such
Lender then outstanding.
"Term Loan" means the loan made to the Borrower pursuant to
Section 2.8.
"Term Loan Facility" means the term loan facility established
pursuant to Article II hereof.
"Termination Date" means the earlier of the dates referred to in
Section 2.6.
"Termination Event" means: (a) a "Reportable Event" described in
Section 4043 of ERISA; or (b) the withdrawal of the Borrower or any
ERISA Affiliate from a defined benefit Pension Plan during a plan year
in which it was a "substantial employer" as defined in Section
4001(a)(2) of ERISA; or (c) the termination of a defined benefit
Pension Plan, the filing of a notice of intent to terminate a defined
benefit Pension Plan or the treatment of a defined benefit Pension
Plan amendment as a termination under Section 4041 of ERISA; or (d)
the institution of proceedings to terminate, or the appointment of a
trustee with respect to, any Pension Plan by the PBGC; or (e) any
other event or condition which would constitute grounds under Section
4042(a) of ERISA for the termination of, or the appointment of a
trustee
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to administer, any Pension Plan; or (f) the partial or complete
withdrawal of the Borrower or any ERISA Affiliate from a Multiemployer
Plan; or (g) the imposition of a Lien pursuant to Section 412 of the
Code or Section 302 of ERISA; or (h) any event or condition which
results in the reorganization or insolvency of a Multiemployer Plan
under Sections 4241 or 4245 of ERISA; or (i) any event or condition
which results in the termination of a Multiemployer Plan under Section
4041A of ERISA or the institution by PBGC of proceedings to terminate
a Multiemployer Plan under Section 4042 of ERISA.
"Total Debt" means, with respect to the Borrower and its
Subsidiaries at any date of determination and without duplication, all
Debt of the Borrower and its Subsidiaries on a Consolidated basis.
"Uniform Customs" the Uniform Customs and Practice for
Documentary Credits (1994 Revision), International Chamber of Commerce
Publication No. 500.
"UCC" means the Uniform Commercial Code as in effect in the
Commonwealth of Virginia.
"United States" means the United States of America.
"Wholly-Owned" means, with respect to a Subsidiary, a Subsidiary
all of the shares of capital stock or other ownership interests of
which are, directly or indirectly, owned or controlled by the Borrower
and/or one or more of its Wholly-Owned Subsidiaries.
SECTION 1.2 General. All terms of an accounting nature not
specifically defined herein shall have the meaning assigned thereto by
GAAP. Unless otherwise specified, a reference in this Agreement to a
particular section, subsection, Schedule or Exhibit is a reference to
that section, subsection, Schedule or Exhibit of this Agreement.
Wherever from the context it appears appropriate, each term stated in
either the singular or plural shall include the singular and plural,
and pronouns stated in the masculine, feminine or neuter gender shall
include the masculine, the feminine and the neuter. Any reference
herein to "Charlotte time" shall refer to the applicable time of day
in Charlotte, North Carolina.
SECTION 1.3 Other Definitions and Provisions.
(a) Use of Capitalized Terms. Unless otherwise defined therein,
all capitalized terms defined in this Agreement shall have the defined
meanings when used in this Agreement, the Notes and the other Loan
Documents or any certificate, report or other document made or
delivered pursuant to this Agreement.
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(b) Miscellaneous. The words "hereof", "herein" and "hereunder"
and words of similar import when used in this Agreement shall refer to
this Agreement as a whole and not to any particular provision of this
Agreement.
ARTICLE II
CREDIT FACILITY
SECTION 2.1 Revolving Credit Loans. Subject to the terms and
conditions of this Agreement, each Lender severally agrees to make
Revolving Loans to the Borrower from time to time from the Closing
Date through the Revolving Loan Termination Date as requested by the
Borrower in accordance with the terms of Section 2.2; provided, that
(a) the aggregate principal amount of all outstanding Revolving Loans
(after giving effect to any amount requested) shall not exceed the
Aggregate Revolving Commitment less the L/C Obligations and (b) the
principal amount of outstanding Revolving Loans from any Lender to the
Borrower shall not at any time exceed such Lender's Revolving
Commitment. Each Revolving Loan by a Lender shall be in a principal
amount equal to such Lender's Revolving Commitment Percentage of the
aggregate principal amount of Revolving Loans requested on such
occasion. Subject to the terms and conditions hereof, the Borrower
may borrow, repay and reborrow Revolving Loans hereunder until the
Revolving Loan Termination Date.
SECTION 2.2 Procedure for Advances of Revolving Loans.
(a) Requests for Borrowing. In order to obtain a Revolving
Loan, the Borrower shall give the Agent irrevocable prior written
notice in the form attached hereto as Exhibit B (a "Notice of
Borrowing") not later than 11:00 a.m. (Charlotte time) (i) on the
same Business Day as each Base Rate Loan, and (ii) at least three (3)
Business Days before each LIBOR Rate Loan, of its intention to borrow,
specifying (A) the date of such borrowing, which shall be a Business
Day, (B) the amount of such borrowing, which shall be (i) with respect
to Base Rate Loans in an aggregate principal amount of $1,000,000 or a
whole multiple of $250,000 in excess thereof, and (ii) with respect to
LIBOR Rate Loans in an aggregate principal amount of $5,000,000 or a
whole multiple of $1,000,000 in excess thereof, (C) whether the
Revolving Loans are to be LIBOR Rate Loans or Base Rate Loans, and (D)
in the case of a LIBOR Loan, the duration of the Interest Period
applicable thereto. Notices received after 11:00 a.m. (Charlotte
time) shall be deemed received on the next Business Day. The Agent
shall promptly notify the Lenders of each Notice of Borrowing.
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(b) Disbursement of Loans. Not later than 1:00 p.m. (Charlotte
time) on the proposed borrowing date for a Revolving Loan, each Lender
will make available to the Agent, for the account of the Borrower, at
the office of the Agent in funds immediately available to the Agent,
such Lender's Revolving Commitment Percentage of the Revolving Loans
to be made on such borrowing date. The Borrower hereby irrevocably
authorizes the Agent to disburse the proceeds of each borrowing
requested pursuant to this Section 2.2 in immediately available funds
by crediting such proceeds to a deposit account of the Borrower
maintained with the Agent or by wire transfer to such account as may
be agreed upon by the Borrower and the Agent from time to time.
Subject to Section 4.6 hereof, the Agent shall not be obligated to
disburse the proceeds of any Revolving Loan requested pursuant to this
Section 2.2 until each Lender shall have made available to the Agent
its Revolving Commitment Percentage of such Revolving Loan.
SECTION 2.3 Repayment of Loans.
(a) Repayment on Termination Date. The Borrower shall repay the
outstanding principal amount of all Revolving Loans in full, together
with all accrued but unpaid interest thereon, on the earlier of the
Termination Date or the Revolving Loan Termination Date.
(b) Mandatory Repayment of Excess Loans. If at any time the
outstanding principal amount of all Revolving Loans exceeds the
Aggregate Revolving Commitment less the L/C Obligations, the Borrower
shall repay immediately upon notice from the Agent, by payment to the
Agent for the account of the Lenders, the Revolving Loans in an amount
equal to such excess. Each such repayment shall be accompanied by
accrued interest on the amount repaid and any amount required to be
paid pursuant to Section 4.8 hereof.
(c) Optional Repayments. The Borrower may at any time and from
time to time repay the Revolving Loans, in whole or in part, upon at
least three (3) Business Days' irrevocable notice to the Agent with
respect to LIBOR Rate Loans and one (1) Business Day's irrevocable
notice with respect to Base Rate Loans, specifying the date and amount
of repayment and whether the repayment is of LIBOR Rate Loans, Base
Rate Loans, or a combination thereof, and, if of a combination
thereof, the amount allocable to each. Upon receipt of such notice,
the Agent shall promptly notify each Lender. If any such notice is
given, the amount specified in such notice shall be due and payable on
the date set forth in such notice. Partial repayments shall be in an
aggregate amount of $1,000,000 or a whole multiple of $250,000 in
excess thereof with respect to Base Rate Loans, and $5,000,000 or a
whole multiple of $1,000,000 in excess thereof with respect to LIBOR
Rate Loans.
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(d) Limitation on Repayment of LIBOR Rate Loans. The Borrower
may not repay any LIBOR Rate Loan on any day other than on the last
day of the Interest Period applicable thereto unless such repayment is
accompanied by any amount required to be paid pursuant to Section 4.8
hereof.
(e) Repayment of Term Loan. On the last Business Day of each
June, September, December and March, beginning June 30, 1995, the
Borrower shall repay $892,857, or such larger amount as the Borrower
may elect, in principal of the Term Loan. If the Borrower shall elect
to repay a larger amount than $892,857, the Borrower shall give such
notice of such repayment as would be required if the same were an
optional repayment of a Revolving Loan pursuant to subsection (c). The
difference between such larger amount and $892,857 shall be applied to
payments of principal due under this subsection in inverse
chronological order. If not sooner paid, the entire remaining
principal of the Term Loan, together with all interest then accrued
thereon, shall be due and payable on the Termination Date.
SECTION 2.4 Notes. Each Lender's Loans and the obligation of
the Borrower to repay such Loans shall be evidenced by a Note executed
by the Borrower payable to the order of such Lender representing the
Borrower's obligation to pay such Lender's Commitment or, if less, the
aggregate unpaid principal amount of all Loans made and to be made by
such Lender to the Borrower hereunder, plus interest and all other
fees, charges and other amounts due thereon. Each Note shall be dated
the date hereof and shall bear interest on the unpaid principal amount
thereof at the applicable interest rate per annum specified in Section
4.1.
SECTION 2.5 Permanent Reduction of the Aggregate Revolving
Commitment.
(a) The Borrower shall have the right at any time and from time
to time, upon at least three (3) Business Days prior written notice to
the Agent, to permanently reduce, in whole at any time or in part from
time to time, without premium or penalty, the Aggregate Revolving
Commitment in an aggregate principal amount not less than $5,000,000
or any whole multiple of $5,000,000 in excess thereof.
(b) Each permanent reduction permitted pursuant to this Section
2.5 shall be accompanied by a payment of principal sufficient to
reduce the aggregate outstanding Revolving Extensions of Credit of the
Lenders after such reduction to the Aggregate Revolving Commitment as
so reduced and by payment of accrued interest on the amount of such
repaid principal. Any reduction of the Aggregate Revolving Commitment
to zero shall be accompanied by payment of all outstanding Obligations
other than
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those relating solely to the Term Loan and furnishing of cash
collateral satisfactory to the Agent for all L/C Obligations. Such
cash collateral shall be applied in accordance with Section 11.2(b).
If the reduction of the Aggregate Revolving Commitment requires the
repayment of any LIBOR Rate Loan, such reduction may be made only on
the last day of the then current Interest Period applicable thereto
unless such repayment is accompanied by any amount required to be paid
pursuant to Section 4.8 hereof.
SECTION 2.6 Termination of Credit Facility. The Credit
Facility shall terminate on the earlier of (i) March 31, 2002 and (ii)
the date of termination by the Agent on behalf of the Lenders pursuant
to Section 11.2(a).
SECTION 2.7 Use of Proceeds. The Borrower shall use the
proceeds of the Loans (a) to finance the acquisition of Capital Assets
and interests in Subsidiaries, (b) to repurchase shares of the
Borrower's capital stock and (c) for working capital and general
corporate requirements of the Borrower and its Subsidiaries, including
the payment of certain fees and expenses incurred in connection with
the transactions provided for herein and the payment of Debt.
SECTION 2.8 Term Loan. The Term Loan shall be in the amount
of $25,000,000, and each Lender shall make a portion of the Term Loan
equal to $25,000,000 multiplied by such Lender's Term Commitment
Percentage as of the Closing Date. The full amount of the Term Loan
shall be advanced to the Borrower by the Lenders on the Closing Date.
The Term Loan shall initially be a Base Rate Loan and shall
automatically be converted to a LIBOR Rate Loan on the third Business
Day after the Closing Date. So long as the Term Loan shall be a LIBOR
Rate Loan, it shall have an Interest Period of three (3) months, and
each Interest Period shall expire on a June 30, September 30, December
31 or March 31, subject to any adjustment provided for in Section
4.1(b)(ii). Notwithstanding the preceding sentence or any provision
herein to the contrary, after the aforesaid conversion the first
Interest Period for the Term Loan shall end on June 30, 1995, even if
such first Interest Period would be a period of less than three (3)
months, but the interest rate for such first Interest Period shall be
determined as though it were a period of three (3) months beginning on
the date of such conversion.
Immediately upon receiving the proceeds of the Term Loan, the
Borrower shall pay in full its promissory note dated July 20, 1994 in
the maximum principal amount of $25,000,000 payable to First Union,
Corestates Bank and Crestar Bank.
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ARTICLE III
LETTER OF CREDIT FACILITY
SECTION 3.1 L/C Commitment. Subject to the terms and
conditions hereof, the Issuing Lender, in reliance on the agreements
of the other Lenders set forth in Section 3.4(a), agrees to issue
standby letters of credit ("Letters of Credit") for the account of the
Borrower on any Business Day from the Closing Date through but not
including the Revolving Loan Termination Date in such form as may be
approved from time to time by the Issuing Lender; provided, that the
Issuing Lender shall have no obligation to issue any Letter of Credit
if, after giving effect to such issuance, (i) the L/C Obligations
would exceed the L/C Commitment or (ii) the Available Revolving
Commitment of any Lender would be less than zero. Each Letter of
Credit shall (A) be denominated in Dollars in a minimum amount of
$1,000,000, (B) be a standby letter of credit issued to support
obligations of the Borrower or any of its Subsidiaries, contingent or
otherwise, incurred in the ordinary course of business, (C) expire on
a date satisfactory to the Issuing Lender, which date shall be no
later than the Revolving Loan Termination Date and (D) be subject to
the Uniform Customs and, to the extent not inconsistent therewith, the
laws of the Commonwealth of Virginia. The Issuing Lender shall not at
any time be obligated to issue any Letter of Credit hereunder if such
issuance would conflict with, or cause the Issuing Lender or any L/C
Participant to exceed any limits imposed by, any Applicable Law.
References herein to "issue" and derivations thereof with respect to
Letters of Credit shall also include extensions or modifications of
any existing Letters of Credit, unless the context otherwise requires.
SECTION 3.2 Procedure for Issuance of Letters of Credit. The
Borrower may from time to time request that the Issuing Lender issue a
Letter of Credit by delivering to the Issuing Lender at the Agent's
Office an Application therefor, completed to the satisfaction of the
Issuing Lender, and such other certificates, documents and other
papers and information as the Issuing Lender may request. Upon receipt
of any Application, the Issuing Lender shall process such Application
and the certificates, documents and other papers and information
delivered to it in connection therewith in accordance with its
customary procedures and shall, subject to Section 3.1 and Article V
hereof, promptly issue the Letter of Credit requested thereby (but in
no event shall the Issuing Lender be required to issue any Letter of
Credit earlier than three Business Days after its receipt of the
Application therefor and all such other certificates, documents and
other papers and information relating thereto) by issuing the original
of such Letter of Credit to the beneficiary thereof or as otherwise
may be agreed by the Issuing
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Lender and the Borrower. The Issuing Lender shall furnish to the
Borrower a copy of such Letter of Credit and furnish to each Lender a
copy of such Letter of Credit and the amount of each Lender's
participation therein, all promptly following the issuance of such
Letter of Credit.
SECTION 3.3 Commissions and Other Charges.
(a) The Borrower shall pay to the Agent, for the account of the
Issuing Lender and the L/C Participants, a letter of credit commission
with respect to each Letter of Credit in an amount equal to 35/100 of
one percent (0.35%) per annum on the face amount of such Letter of
Credit. Such commission shall be payable (i) in advance on the date of
issuance of such Letter of Credit for the period beginning on such
date and ending on the last Business Day of the calendar quarter in
which such date occurs and (ii) thereafter quarterly in arrears on the
last Business Day of each calendar quarter.
(b) In addition to the foregoing commission, the Borrower shall
pay the Issuing Lender (i) an issuance fee of 1/8 of one percent
(0.125%) per annum on the face amount of each Letter of Credit,
payable (A) in advance and on the date of issuance of such Letter of
Credit for the period beginning on such date and ending on the last
Business Day of the calendar quarter in which such date occurs and (B)
thereafter quarterly in arrears on the last Business Day of each
calendar quarter, and (ii) such customary ancillary fees as the
Issuing Lender might charge with respect to each Letter of Credit,
including cable fees and amendment fees.
(c) The Agent shall, promptly following its receipt thereof,
distribute to the Issuing Lender and the L/C Participants all
commissions received by the Agent in accordance with their respective
Revolving Commitment Percentages.
SECTION 3.4 L/C Participation.
(a) The Issuing Lender irrevocably agrees to grant and hereby
grants to each L/C Participant, and, to induce the Issuing Lender to
issue Letters of Credit hereunder, each L/C Participant irrevocably
agrees to accept and purchase and hereby accepts and purchases from
the Issuing Lender, on the terms and conditions hereinafter stated,
for such L/C Participant's own account and risk an undivided interest
equal to such L/C Participant's Revolving Commitment Percentage in
the Issuing Lender's obligations and rights under each Letter of
Credit issued hereunder and the amount of each draft paid by the
Issuing Lender thereunder. Each L/C Participant unconditionally and
irrevocably agrees with the Issuing Lender that, if a draft is paid
under any Letter of Credit for which the Issuing Lender is not
reimbursed
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in full by the Borrower in accordance with the terms of this
Agreement, such L/C Participant shall pay to the Issuing Lender upon
demand at the Issuing Lender's address for notices specified herein an
amount equal to such L/C Participant's Revolving Commitment Percentage
of the amount of such draft, or any part thereof, which is not so
reimbursed.
(b) Upon becoming aware of any amount required to be paid by any
L/C Participant to the Issuing Lender pursuant to Section 3.4(a) in
respect of any unreimbursed portion of any payment made by the Issuing
Lender under any Letter of Credit, the Issuing Lender shall notify
each L/C Participant of the amount and due date of such required
payment and such L/C Participant shall pay to the Issuing Lender the
amount specified on the applicable due date; provided that such L/C
Participant shall not be required to make such payment earlier than
four (4) hours after its receipt of such notification. If any such
amount is paid to the Issuing Lender after the date such payment is
due, such L/C Participant shall pay to the Issuing Lender on demand,
in addition to such amount, the product of (i) such amount, times (ii)
the daily average Federal Funds Rate as determined by the Agent during
the period from and including the date such payment is due to the date
on which such payment is immediately available to the Issuing Lender,
times (iii) a fraction the numerator of which is the number of days
that elapse during such period and the denominator of which is 360. A
certificate of the Issuing Lender with respect to any amounts owing
under this Section shall be conclusive in the absence of manifest
error. With respect to payment to the Issuing Lender of the
unreimbursed amounts described in this Section 3.4(b), if the L/C
Participants receive notice that any such payment is due (A) prior to
1:00 p.m. (Charlotte time) on any Business Day, such payment shall be
due that Business Day, and (B) after 1:00 p.m. (Charlotte time) on any
Business Day, such payment shall be due on the following Business Day.
(c) Whenever, at any time after the Issuing Lender has made
payment under any Letter of Credit and has received from any L/C
Participant its Revolving Commitment Percentage of such payment in
accordance with this Section 3.4, the Issuing Lender receives any
payment related to such Letter of Credit (whether directly from the
Borrower or otherwise), or any payment of interest on account thereof,
the Issuing Lender will distribute to such L/C Participant its pro
rata share thereof; provided, that in the event that any such payment
received by the Issuing Lender shall be required to be returned by the
Issuing Lender, such L/C Participant shall return to the Issuing
Lender the portion thereof previously distributed by the Issuing
Lender to it.
SECTION 3.5 Reimbursement Obligation of the Borrower. The
Borrower agrees to reimburse the Issuing Lender on each date on
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which the Issuing Lender notifies the Borrower of the date and amount
of a draft paid under any Letter of Credit for the amount of (a) such
draft so paid and (b) any taxes, fees, charges or other costs or
expenses incurred by the Issuing Lender in connection with such
payment. Each such payment shall be made to the Issuing Lender at its
address for notices specified herein in lawful money of the United
States and in immediately available funds. Interest shall be payable
on any and all amounts remaining unpaid by the Borrower under this
Article III from the date such amounts become payable (whether at
stated maturity, by acceleration or otherwise) until payment in full
at the rate which would be payable on any outstanding Base Rate Loans
which were then overdue. If the Borrower fails to timely reimburse
the Issuing Lender on the date the Borrower receives the notice
referred to in this Section 3.5, the Borrower shall be deemed to have
timely given a Notice of Borrowing hereunder to the Agent requesting
the Lenders to make a Base Rate Loan on such date in an amount equal
to the amount of such drawing and, subject to the satisfaction or
waiver of the conditions precedent specified in Article V, the Lenders
shall make Base Rate Loans in such amount, the proceeds of which shall
be applied to reimburse the Issuing Lender for the amount of the
related drawing and costs and expenses.
SECTION 3.6 Obligations Absolute. The Borrower's obligations
under this Article III (including without limitation the Reimbursement
Obligation) shall be absolute and unconditional under any and all
circumstances and irrespective of any set-off, counterclaim or defense
to payment which the Borrower may have or have had against the Issuing
Lender or any beneficiary of a Letter of Credit. The Borrower also
agrees with the Issuing Lender that the Issuing Lender shall not be
responsible for, and the Borrower's Reimbursement Obligation under
Section 3.5 shall not be affected by, among other things, the validity
or genuineness of documents or of any endorsements thereon, even
though such documents shall in fact prove to be invalid, fraudulent or
forged, or any dispute between or among the Borrower and any
beneficiary of any Letter of Credit or any other party to which such
Letter of Credit may be transferred or any claims whatsoever of a
Borrower against any beneficiary of such Letter of Credit or any such
transferee. The Issuing Lender shall not be liable for any error,
omission, interruption or delay in transmission, dispatch or delivery
of any message or advice, however transmitted, in connection with any
Letter of Credit, except for errors or omissions caused by the Issuing
Lender's gross negligence or willful misconduct. The Borrower agrees
that any action taken or omitted by the Issuing Lender under or in
connection with any Letter of Credit or the related drafts or
documents, if done in the absence of gross negligence or willful
misconduct and in accordance with the standards of care specified in
the Uniform Customs and, to the extent not inconsistent
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therewith, the UCC shall be binding on the Borrower and shall not
result in any liability of the Issuing Lender to the Borrower. The
responsibility of the Issuing Lender to the Borrower in connection
with any draft presented for payment under any Letter of Credit shall,
in addition to any payment obligation expressly provided for in such
Letter of Credit, be limited to determining that the documents
(including each draft) delivered under such Letter of Credit in
connection with such presentment are in conformity with such Letter of
Credit.
SECTION 3.7 Effect of Application. To the extent that any
provision of any Application related to any Letter of Credit is
inconsistent with the provisions of this Article III, the provisions
of this Article III shall apply.
SECTION 3.8 Existing Letters of Credit. If, on the Closing
Date, there shall be any letters of credit outstanding under the
Revolving Loan Agreement dated as of June 28, 1991 among the Borrower
and the Agent (under its former name of Dominion Bank, National
Association), Corestates Bank, National Association and Crestar Bank
(collectively, the "Prior Lenders") as the same shall have been
amended prior to the Closing Date (the "Prior Agreement"), such
letters of credit shall, as of the Closing Date, be deemed to be
Letters of Credit hereunder, subject to the limitations and other
provisions set forth herein, and shall no longer be subject to the
terms of the Prior Agreement. Any fees with respect to such letters
of credit which shall have been paid in advance with respect to a
period which shall not have expired at the Closing Date shall be
appropriately prorated among the Lenders for the unexpired portion of
such period.
ARTICLE IV
GENERAL LOAN PROVISIONS
SECTION 4.1 Interest.
(a) Interest Rate Options. Subject to the provisions of this
Section 4.1, at the election of the Borrower, the aggregate principal
balance of the Notes or any portion thereof shall bear interest at the
Base Rate or the LIBOR Rate plus, in each case, the Applicable Margin
as set forth below. The Borrower shall select the rate of interest
and Interest Period, if any, applicable to any Loan at the time a
Notice of Borrowing is given pursuant to Section 2.2 or at the time a
Notice of Conversion/ Continuation is given pursuant to Section 4.2.
Each Loan or portion thereof bearing interest based on the Base Rate
shall be a "Base Rate Loan", and each Loan or portion thereof bearing
interest based on the LIBOR Rate shall be a "LIBOR Rate Loan".
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Any Loan or any portion thereof as to which the Borrower has not duly
specified an interest rate as provided herein shall be deemed a Base
Rate Loan.
(b) Interest Periods. In connection with each LIBOR Rate Loan,
the Borrower, by giving notice at the times described in Section
4.1(a), shall elect an interest period (each, an "Interest Period") to
be applicable to such Loan, which Interest Period shall be a period of
one (1), two (2), or three (3) months with respect to each LIBOR Rate
Loan; provided that:
(i) the Interest Period shall commence on the date of
advance of or conversion to any LIBOR Rate Loan and, in the case of
immediately successive Interest Periods, each successive Interest
Period shall commence on the date on which the next preceding Interest
Period expires;
(ii) if any Interest Period would otherwise expire on a day
that is not a Business Day, such Interest Period shall expire on the
next succeeding Business Day; provided, that if any Interest Period
with respect to a LIBOR Rate Loan would otherwise expire on a day that
is not a Business Day but is a day of the month after which no further
Business Day occurs in such month, such Interest Period shall expire
on the next preceding Business Day;
(iii) any Interest Period with respect to a LIBOR Rate 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;
(iv) no Interest Period shall extend beyond the Termination
Date, or the Revolving Loan Termination Date in the case of any
Revolving Loan; and
(v) there shall be no more than six (6) Interest Periods
outstanding at any time.
(c) Applicable Margin. The Applicable Margin provided for in
Section 4.1(a) with respect to the Loans (the "Applicable Margin")
shall be equal to the percentages set forth in the following table:
Applicable Margin Per Annum
Type of Loan Base Rate + LIBOR Rate +
Revolving Loan 0.00% 0.35%
Term Loan 0.00% 0.75%
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(d) Default Rate. Upon the occurrence and during the
continuance of an Event of Default, (i) the Borrower shall no longer
have the option to request LIBOR Rate Loans, (ii) all outstanding
LIBOR Rate Loans shall bear interest at a rate per annum two percent
(2%) in excess of the rate then applicable to LIBOR Rate Loans until
the end of the applicable Interest Period and thereafter at a rate
equal to two percent (2.0%) in excess of the rate then applicable to
Base Rate Loans, and (iii) all outstanding Base Rate Loans shall bear
interest at a rate per annum equal to two percent (2.0%) in excess of
the rate then applicable to Base Rate Loans. Interest shall continue
to accrue on the Notes after the filing by or against the Borrower of
any petition seeking any relief in bankruptcy or under any act or law
pertaining to insolvency or debtor relief, whether state, federal or
foreign.
(e) Interest Payment and Computation. Interest on each Base
Rate Loan shall be payable in arrears on the last Business Day of each
calendar quarter commencing on the last Business Day of the calendar
quarter in which the Closing Date occurs. Interest on each LIBOR
Rate Loan shall be payable on the last day of each Interest Period
applicable thereto. All interest, fees and commissions provided
hereunder shall be computed on the basis of a 360-day year and the
actual number of days elapsed, except that interest with respect to
each Base Rate Loan shall be computed on the basis of a 365/366-day
year and the actual number of days elapsed.
(f) Maximum Rate. In no contingency or event whatsoever shall
the aggregate of all amounts deemed interest hereunder or under any of
the Notes charged or collected pursuant to the terms of this Agreement
or pursuant to any of the Notes exceed the highest rate permissible
under any Applicable Law which a court of competent jurisdiction
shall, in a final determination, deem applicable hereto. In the event
that such a court determines that the Lenders have charged or received
interest hereunder in excess of the highest applicable rate, the rate
in effect hereunder shall automatically be reduced to the maximum rate
permitted by Applicable Law and the Lenders shall at the Agent's
option promptly refund to the Borrower any interest received by
Lenders in excess of the maximum lawful rate or shall apply such
excess to the principal balance of the Obligations. It is the intent
hereof that the Borrower not pay or contract to pay, and that neither
the Agent nor any Lender receive or contract to receive, directly or
indirectly in any manner whatsoever, interest in excess of that which
may be paid by the Borrower under Applicable Law.
SECTION 4.2 Notice and Manner of Conversion or Continuation of
Loans. Provided that no Event of Default has occurred and is then
continuing, the Borrower shall have the
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option to (a) convert at any time all or any portion of its
outstanding Base Rate Loans in a principal amount equal to $5,000,000
or any whole multiple of $1,000,000 in excess thereof into one or more
LIBOR Rate Loans, or (b) upon the expiration of any Interest Period,
(i) convert all or any part of its outstanding LIBOR Rate Loans in a
principal amount equal to $5,000,000 or a whole multiple of $1,000,000
in excess thereof into Base Rate Loans, or (ii) continue such LIBOR
Rate Loans as LIBOR Rate Loans. Whenever the Borrower desires to
convert or continue Loans as provided above, the Borrower shall give
the Agent irrevocable prior written notice in the form attached as
Exhibit C (a "Notice of Conversion/Continuation") not later than 11:00
a.m. (Charlotte time) three (3) Business Days before the day on which
a proposed conversion or continuation of such Loan is to be effective
specifying (i) the Loans to be converted or continued, and, in the
case of any LIBOR Rate Loan to be converted or continued, the last day
of the Interest Period therefor, (ii) the effective date of such
conversion or continuation (which shall be a Business Day), (iii) the
principal amount of such Loans to be converted or continued, and (iv)
the Interest Period to be applicable to such converted or continued
LIBOR Rate Loan. The Agent shall promptly notify the Lenders of such
Notice of Conversion/Continuation.
The Term Loan may be converted only as a whole and not in part
and may be converted regardless of whether the outstanding principal
amount thereof shall be equal to $5,000,000 or any whole multiple of
$1,000,000 in excess thereof. In order to convert the Term Loan from
a Base Rate Loan to a LIBOR Rate Loan, the Borrower must effect such
conversion on a date which would cause the Interest Period for the
Term Loan to expire on a March 31, June 30, September 30, or December
31, subject to any adjustment provided for in Section 4.1(b)(ii).
SECTION 4.3 Commitment and Agency Fees.
(a) Commitment Fee. Commencing on the Closing Date, the
Borrower shall pay to the Agent, for the account of the Lenders, a
non-refundable commitment fee at a rate per annum equal to 0.125% on
the average daily amount of the Aggregate Revolving Commitment. The
commitment fee shall be payable in arrears on the last Business Day of
each calendar quarter during the term of this Agreement commencing on
the last Business Day of the calendar quarter in which the Closing
Date occurs, and on the Revolving Loan Termination Date. Such
commitment fee shall be distributed by the Agent to the Lenders pro
rata in accordance with the Lenders' respective Revolving Commitment
Percentages.
(b) Facility Fee. The Borrower shall pay to the Agent, for the
account of Harris Trust and Savings Bank, a non-refundable facility
fee in an amount equal to 0.15% of such Lender's Term
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Commitment Percentage multiplied by the principal amount of the Term
Loan. Such facility fee shall be paid on the Closing Date.
(c) Agent's and Other Fees. In order to compensate the Agent for
structuring and syndicating the Loans and for its obligations
hereunder, the Borrower agrees to pay to the Agent, for its account,
the fees set forth in the separate fee letter agreement executed by
the Borrower and the Agent dated February 24, 1995.
SECTION 4.4 Manner of Payment. Each payment (including
repayments described in Article II) by the Borrower on account of the
principal of or interest on the Loans or of any fee, commission or
other amounts (including the Reimbursement Obligation) payable to the
Lenders under this Agreement or any Note shall be made not later than
1:00 p.m. (Charlotte time) on the date specified for payment under
this Agreement to the Agent for the account of the Lenders pro rata in
accordance with their respective Revolving Commitment Percentages or
Term Commitment Percentages, as applicable (except as otherwise
explicitly provided herein with respect to fees) at the Agent's
Office, in Dollars, in immediately available funds and shall be made
without any set-off, counterclaim or deduction whatsoever. Any payment
received after such time but before 2:00 p.m. (Charlotte time) on such
day shall be deemed a payment on such date for the purposes of Section
11.1, but for all other purposes shall be deemed to have been made on
the next succeeding Business Day. Any payment received after 2:00
p.m. (Charlotte time) shall be deemed to have been made on the next
succeeding Business Day for all purposes. Upon receipt by the Agent of
each such payment, the Agent shall credit each Lender's account with
its pro rata share of such payment in accordance with such Lender's
Revolving Commitment Percentage or Term Commitment Percentage, as
applicable (except as otherwise explicitly provided herein with
respect to fees) and shall wire advice of the amount of such credit to
each Lender. Each payment to the Agent of the Issuing Lender's fees or
L/C Participants' commissions shall be made in like manner, but for
the account of the Issuing Lender or the L/C Participants, as the case
may be. Subject to Section 4.1(b)(ii), if any payment under this
Agreement or any Note shall be specified to be made upon a day which
is not a Business Day, it shall be made on the next succeeding day
which is a Business Day and such extension of time shall in such case
be included in computing any interest if payable along with such
payment.
SECTION 4.5 Crediting of Payments and Proceeds. In the event
that the Borrower shall fail to pay any of the Obligations when due
and the Obligations have been accelerated pursuant to Section 11.2,
all payments received by the Lenders upon the Notes and the other
Obligations and all net proceeds from the enforcement of the
Obligations shall be applied first to all
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expenses then due and payable by the Borrower hereunder, then to all
indemnity obligations then due and payable by the Borrower hereunder,
then to all Agent's and Issuing Lender's fees then due and payable,
then to all commitment and other fees and commissions then due and
payable, then to accrued and unpaid interest on the Notes, the
Reimbursement Obligation and any termination payments due in respect
of a Hedging Agreement with any Lender (pro rata in accordance with
all such amounts due), then to the principal amount of the Notes and
Reimbursement Obligation and then to the cash collateral account
described in Section 11.2(b) hereof to the extent of any L/C
Obligations then outstanding, in that order.
SECTION 4.6 Nature of Obligations of Lenders Regarding
Extensions of Credit; Assumption by the Agent. The obligations of the
Lenders under this Agreement to make the Loans and issue or
participate in Letters of Credit are several and are not joint or
joint and several. Unless the Agent shall have received notice from a
Lender prior to a proposed borrowing date with respect to a Revolving
Loan that such Lender will not make available to the Agent such
Lender's ratable portion of the amount to be borrowed on such date
(which notice shall not release such Lender of its obligations
hereunder), the Agent may assume that such Lender has made such
portion available to the Agent on the proposed borrowing date in
accordance with Section 2.2(b) and the Agent may, in reliance upon
such assumption, make available to the Borrower on such date a
corresponding amount. If such amount is made available to the Agent on
a date after such borrowing date, such Lender shall pay to the Agent
on demand an amount, until paid, equal to the product of (a) the
amount of such Lender's Revolving Commitment Percentage of such
borrowing, times (b) the daily average Federal Funds Rate during such
period as determined by the Agent, times (c) a fraction the numerator
of which is the number of days that elapse from and including such
borrowing date to the date on which such Lender's Revolving Commitment
Percentage of such borrowing shall have become immediately available
to the Agent and the denominator of which is 360. A certificate of the
Agent with respect to any amounts owing under this Section shall be
conclusive, absent manifest error. If such Lender's Revolving
Commitment Percentage of such borrowing is not made available to the
Agent by such Lender within three (3) Business Days of such borrowing
date, the Agent shall be entitled to recover such amount made
available by the Agent with interest thereon at the rate per annum
applicable to Base Rate Loans hereunder, on demand, from the Borrower.
The failure of any Lender to make its Revolving Commitment Percentage
of any Revolving Loan available shall not relieve it or any other
Lender of its obligation, if any, hereunder to make its Revolving
Commitment Percentage of such Revolving Loan available on such
borrowing date, but no Lender shall be responsible for the failure of
any other Lender to make its Revolving Commitment
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Percentage of such Revolving Loan available on the borrowing date.
SECTION 4.7 Changed Circumstances.
(a) Circumstances Affecting LIBOR Rate Availability. If with
respect to any Interest Period the Agent or any Lender (after
consultation with Agent) shall determine that, by reason of
circumstances affecting the foreign exchange and interbank markets
generally, deposits in Eurodollars, in the applicable amounts are not
being quoted via Telerate Page 3750 or offered to the Agent or such
Lender for such Interest Period, then the Agent shall forthwith give
notice thereof to the Borrower. Thereafter, until the Agent notifies
the Borrower that such circumstances no longer exist, the obligation
of the Lenders to make LIBOR Rate Loans, and the right of the Borrower
to convert any Loan to or continue any Loan as a LIBOR Rate Loan shall
be suspended, and the Borrower shall repay in full (or cause to be
repaid in full) the then outstanding principal amount of each such
LIBOR Rate Loans together with accrued interest thereon, on the last
day of the then current Interest Period applicable to such LIBOR Rate
Loan or convert the then outstanding principal amount of each such
LIBOR Rate Loan to a Base Rate Loan as of the last day of such
Interest Period.
(b) Laws Affecting LIBOR Rate Availability. If, after the date
hereof, the introduction of, or any change in, any Applicable Law or
any change in the interpretation or administration thereof by any
Governmental Authority, central bank or comparable agency charged with
the interpretation or administration thereof, or compliance by any
Lender (or any of their respective Lending Offices) with any request
or directive (whether or not having the force of law) of any such
Authority, central bank or comparable agency, shall make it unlawful
or impossible for any of the Lenders (or any of their respective
Lending Offices) to honor its obligations hereunder to make or
maintain any LIBOR Rate Loan, such Lender shall promptly give notice
thereof to the Agent and the Agent shall promptly give notice to the
Borrower and the other Lenders. Thereafter, until the Agent notifies
the Borrower that such circumstances no longer exist, (i) the
obligations of the Lenders to make LIBOR Rate Loans and the right of
the Borrower to convert any Loan or continue any Loan as a LIBOR Rate
Loan shall be suspended and thereafter the Borrower may select only
Base Rate Loans hereunder, and (ii) if any of the Lenders may not
lawfully continue to maintain a LIBOR Rate Loan to the end of the then
current Interest Period applicable thereto as a LIBOR Rate Loan, the
applicable LIBOR Rate Loan shall immediately be converted to a Base
Rate Loan for the remainder of such Interest Period.
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(c) Increased Costs. If, after the date hereof, the
introduction of, or any change in, any Applicable Law, or in the
interpretation or administration thereof by any Governmental
Authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any of the
Lenders (or any of their respective Lending Offices) with any request
or directive (whether or not having the force of law) of such
Authority, central bank or comparable agency:
(i) shall subject any of the Lenders (or any of their
respective Lending Offices) to any tax, duty or other charge with
respect to any Note, Letter of Credit or Application or shall change
the basis of taxation of payments to any of the Lenders (or any of
their respective Lending Offices) of the principal of or interest on
any Note, Letter of Credit or Application or any other amounts due
under this Agreement in respect thereof (except for changes in the
rate of tax on the overall net income of any of the Lenders or any of
their respective Lending Offices imposed by the jurisdiction in which
such Lender is organized or is or should be qualified to do business
or such Lending Office is located); or
(ii) shall impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the Board of Governors
of the Federal Reserve System), special deposit, insurance or capital
or similar requirement against assets of, deposits with or for the
account of, or credit extended by any of the Lenders (or any of their
respective Lending Offices) or shall impose on any of the Lenders (or
any of their respective Lending Offices) or the foreign exchange and
interbank markets any other condition affecting any Note;
and the result of any of the foregoing is to increase
the costs to any of the Lenders of maintaining any LIBOR Rate Loan or
issuing or participating in Letters of Credit or to reduce the yield
or amount of any sum received or receivable by any of the Lenders
under this Agreement or under the Notes in respect of a LIBOR Rate
Loan or Letter of Credit or Application, then such Lender shall
promptly notify the Agent, and the Agent shall promptly notify the
Borrower of such fact and demand compensation therefor and, within
fifteen (15) days after such notice by the Agent, the Borrower shall
pay to such Lender such additional amount or amounts as will
compensate such Lender for such increased cost or reduction. The Agent
will promptly notify the Borrower of any event of which it has
knowledge which will entitle such Lender to compensation pursuant to
this Section 4.7(c); provided, that the Agent shall incur no liability
whatsoever to the Lenders or the Borrower in the event it fails to do
so. The amount of such compensation shall be determined, in the
applicable Lender's sole discretion, based upon the assumption that
such Lender funded its Revolving Commitment
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Percentage or Term Commitment Percentage, as the case may be, of the
LIBOR Rate Loans in the London interbank market, and using any
reasonable attribution or averaging methods which such Lender deems
appropriate and practical. A certificate of such Lender setting forth
the basis for determining such amount or amounts necessary to
compensate such Lender shall be forwarded to the Borrower through the
Agent and shall be conclusively presumed to be correct save for
manifest error.
SECTION 4.8 Indemnity. The Borrower hereby indemnifies each of
the Lenders against any loss or expense which may arise or be
attributable to each Lender's obtaining, liquidating or employing
deposits or other funds acquired to effect, fund or maintain any Loan
(a) as a consequence of any failure by the Borrower to make any
payment when due of any amount due hereunder in connection with a
LIBOR Rate Loan, (b) due to any failure of the Borrower to borrow on a
date specified therefor in a Notice of Borrowing or Notice of
Continuation/Conversion or (c) due to any payment, prepayment or
conversion of any LIBOR Rate Loan on a date other than the last day of
the Interest Period therefor. The amount of such loss or expense
shall be determined, in the applicable Lender's sole discretion, based
upon the assumption that such Lender funded its Revolving Commitment
Percentage or Term Commitment Percentage, as the case may be, of the
LIBOR Rate Loans in the London interbank market, and using any
reasonable attribution or averaging methods which such Lender deems
appropriate and practical. A certificate of such Lender setting forth
the basis for determining such amount or amounts necessary to
compensate such Lender shall be forwarded to the Borrower through the
Agent and shall be conclusively presumed to be correct save for
manifest error.
SECTION 4.9 Capital Requirements. If either (a) the
introduction of, or any change in, or in the interpretation of, any
Applicable Law or (b) compliance with any guideline or request from
any central bank or comparable agency or other Governmental Authority
(whether or not having the force of law), has or would have the effect
of reducing the rate of return on the capital of, or has affected or
would affect the amount of capital required to be maintained by, any
Lender or any corporation controlling such Lender as a consequence of,
or with reference to the Commitments and other commitments of this
type, below the rate which the Lender or such other corporation could
have achieved but for such introduction, change or compliance, then
within five (5) Business Days after written demand by any such Lender,
the Borrower shall pay to such Lender from time to time as specified
by such Lender additional amounts sufficient to compensate such Lender
or other corporation for such reduction. A certificate as to such
amounts submitted to the Borrower and the Agent by such Lender, shall,
in the absence of manifest error, be presumed to be correct and
binding for all purposes.
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SECTION 4.10 Taxes.
(a) Payments Free and Clear. Any and all payments by the
Borrower hereunder or under the Notes or the Letters of Credit shall
be made free and clear of and without deduction for any and all
present or future taxes, levies, imposts, deductions, charges or
withholding, and all liabilities with respect thereto excluding, (i)
in the case of each Lender and the Agent, income and franchise taxes
imposed by the jurisdiction under the laws of which such Lender or the
Agent (as the case may be) is organized or is or should be qualified
to do business or any political subdivision thereof and (ii) in the
case of each Lender, income and franchise taxes imposed by the
jurisdiction of such Lender's Lending Office or any political
subdivision thereof (all such non-excluded taxes, levies, impost,
deductions, charges, withholdings and liabilities being hereinafter
referred to as "Taxes"). If the Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder or
under any Note or Letter of Credit to any Lender or the Agent, (A) the
sum payable shall be increased as may be necessary so that after
making all required deductions (including deductions applicable to
additional sums payable under this Section 4.10) such Lender or the
Agent (as the case may be) receives an amount equal to the amount such
party would have received had no such deductions been made, (B) the
Borrower shall make such deductions, (C) the Borrower shall pay the
full amount deducted to the relevant taxing authority or other
authority in accordance with applicable law, and (D) the Borrower
shall deliver to the Agent evidence of such payment to the relevant
taxing authority or other authority in the manner provided in Section
4.10(d)
(b) Stamp and Other Taxes. In addition, the Borrower shall pay
any present or future stamp, registration, recordation or documentary
taxes or any other similar fees or charges or excise or property
taxes, levies of the United States or any state or political
subdivision thereof or any applicable foreign jurisdiction which arise
from any payment made hereunder or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement, the
Loans, the Letters of Credit, the other Loan Documents, or the
perfection of any rights or security interest in respect thereto
(hereinafter referred to as "Other Taxes").
(c) Indemnity. The Borrower shall indemnify each Lender and the
Agent for the full amount of Taxes and Other Taxes (including, without
limitation, any Taxes and Other Taxes imposed by any jurisdiction on
amounts payable under this Section 4.10) paid by such Lender or the
Agent (as the case may be) and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally
asserted. Such
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indemnification shall be made within thirty (30) days from the date
such Lender or the Agent (as the case may be) makes written demand
therefor.
(d) Evidence of Payment. Within thirty (30) days after the date
of any payment of Taxes or Other Taxes, the Borrower shall furnish to
the Agent, at its address referred to in Section 13.1, the original or
a certified copy of a receipt evidencing payment thereof or other
evidence of payment satisfactory to the Agent.
(e) Delivery of Tax Forms. Each Lender organized under the laws
of a jurisdiction other than the United States or any state thereof
shall deliver to the Borrower, with a copy to the Agent, on the
Closing Date or concurrently with the delivery of the relevant
Assignment and Acceptance, as applicable, (i) two United States
Internal Revenue Service Forms 4224 or Forms 1001, as applicable (or
successor forms) properly completed and certifying in each case that
such Lender is entitled to a complete exemption from withholding or
deduction for or on account of any United States federal income taxes,
and (ii) an Internal Revenue Service Form W-8 or W-9 or successor
applicable form, as the case may be, to establish an exemption from
United States backup withholding taxes. Each such Lender further
agrees to deliver to the Borrower, with a copy to the Agent, a Form
1001 or 4224 and Form W-8 or W-9, or successor applicable forms or
manner of certification, as the case may be, on or before the 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 Borrower, certifying in the case of a Form 1001
or 4224 that such Lender is entitled to receive payments under this
Agreement without deduction or withholding of any United States
federal income taxes (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 such forms inapplicable or the exemption to
which such forms relate unavailable and such Lender notifies the
Borrower and the Agent that it is not entitled to receive payments
without deduction or withholding of United States federal income
taxes) and, in the case of a Form W-8 or W-9, establishing an
exemption from United States backup withholding tax.
(f) Survival. Without prejudice to the survival of any other
agreement of the Borrower hereunder, the agreements and obligations of
the Borrower contained in this Section 4.10 shall survive the payment
in full of the Obligations and the termination of the Commitments.
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ARTICLE V
CLOSING; CONDITIONS OF CLOSING AND BORROWING
SECTION 5.1 Closing. The closing shall take place at the
offices of Woods, Rogers & Hazlegrove, P.L.C. in Roanoke, Virginia at
10:00 a.m. on March 31, 1995, or on such other date as the parties
hereto shall mutually agree.
SECTION 5.2 Conditions to Closing and Initial Extensions of
Credit. The obligation of the Lenders to close this Agreement and to
make the initial Loan or issue the initial Letter of Credit is subject
to the satisfaction of each of the following conditions:
(a) Executed Loan Documents. This Agreement and the Notes shall
have been duly authorized, executed and delivered to the Agent by the
parties thereto, shall be in full force and effect and no default
shall exist thereunder, and the Borrower shall have delivered original
counterparts thereof to the Agent.
(b) Closing Certificates; etc.
(i) Officers's Certificate of the Borrower. The Agent
shall have received a certificate from the chief executive officer or
chief financial officer of the Borrower, in form and substance
satisfactory to the Agent, to the effect that all representations and
warranties of the Borrower contained in this Agreement and the other
Loan Documents are true, correct and complete; that the Borrower is
not in violation of any of the covenants contained in this Agreement
and the other Loan Documents; that, after giving effect to the
transactions contemplated by this Agreement, no Default or Event of
Default has occurred and is continuing; and that the Borrower has
satisfied each of the closing conditions.
(ii) Certificate of Secretary of the Borrower. The Agent
shall have received a certificate of the secretary or assistant
secretary of the Borrower certifying that attached thereto is a true
and complete copy of the articles of incorporation of the Borrower and
all amendments thereto, certified as of a recent date by the
appropriate Governmental Authority in its jurisdiction of
incorporation; that attached thereto is a true and complete copy of
the bylaws of the Borrower as in effect on the date of such
certification; that attached thereto is a true and complete copy of
resolutions duly adopted by the Board of Directors of the Borrower
authorizing the borrowings contemplated hereunder and the execution,
delivery and performance of this Agreement and the other Loan
Documents to which it is a party; and as to the incumbency and
genuineness of
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the signature of each officer of the Borrower executing Loan Documents
to which it is a party.
(iii) Certificates of Good Standing. The Agent shall have
received long form certificates as of a recent date of the good
standing of the Borrower under the laws of its jurisdiction of
organization and each other jurisdiction where the Borrower is
qualified to do business.
(iv) Opinions of Counsel. The Agent shall have received
favorable opinions of counsel to the Borrower addressed to the Agent
and the Lenders with respect to the Borrower, the Loan Documents and
such other matters as the Lenders shall request.
(v) Tax Forms. The Agent shall have received copies of the
United States Internal Revenue Service forms required by Section
4.10(e) hereof.
(c) Consents; No Adverse Change.
(i) Governmental and Third Party Approvals. All necessary
material approvals, authorizations and consents, if any be required,
of any Person and of all Governmental Authorities and courts having
jurisdiction with respect to the transactions contemplated by this
Agreement and the other Loan Documents shall have been obtained.
(ii) Permits and Licenses. All material permits and
licenses, including permits and licenses required under Applicable
Laws, necessary to the conduct of business by the Borrower and its
Subsidiaries shall have been obtained.
(iii) No Injunction, Etc. No action, proceeding,
investigation, regulation or legislation shall have been instituted,
threatened or proposed before any Governmental Authority to enjoin,
restrain, or prohibit, or to obtain substantial damages in respect of,
or which is related to or arises out of this Agreement or the other
Loan Documents or the consummation of the transactions contemplated
hereby or thereby, or which, in the Agent's discretion, would make it
inadvisable to consummate the transactions contemplated by this
Agreement and such other Loan Documents.
(iv) No Material Adverse Change. There shall not have
occurred any material adverse change in the business, condition
(financial or otherwise), operations, or properties of the Borrower or
any of its Subsidiaries, or any event, condition or state of facts
that will or could be reasonably expected to have a Material Adverse
Effect.
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(v) No Event of Default. No Default or Event of Default
shall have occurred and be continuing.
(d) Financial Matters.
(i) Financial Statements. The Agent shall have received
the most recent audited Consolidated financial statements of the
Borrower and its Subsidiaries, all in form and substance satisfactory
to the Agent.
(ii) Financial Condition Certificate. The Borrower shall
have delivered to the Agent a certificate, in form and substance
satisfactory to the Agent, and certified as accurate in all respects
by the chief executive officer or chief financial officer of the
Borrower, that (A) the Borrower and each of its Subsidiaries are each
Solvent, and (B) the Borrower's payables are current and not past due.
(iii) Payment at Closing; Fee Letters. There shall have been
paid by the Borrower to the Agent and the Lenders the fees set forth
or referenced in Section 4.3 and any other accrued and unpaid fees or
commissions due hereunder (including, without limitation, legal fees
and expenses), and to any other Person such amount as may be due
thereto in connection with the transactions contemplated hereby,
including all taxes, fees and other charges in connection with the
execution, delivery, recording, filing and registration of any of the
Loan Documents. The Agent shall have received duly authorized and
executed copies of the fee letter agreement referred to in Section
4.3(c).
(e) Miscellaneous.
(i) Notice of Borrowing. The Agent shall have received
written instructions from the Borrower to the Agent directing the
payment of any proceeds of Loans made under this Agreement that are to
be paid on the Closing Date.
(ii) Proceedings and Documents. All opinions, certificates
and other instruments and all proceedings in connection with the
transactions contemplated by this Agreement shall be satisfactory in
form and substance to the Lenders. The Lenders shall have received
copies of all other instruments and other evidence as the Lenders may
reasonably request in form and substance satisfactory to the Lenders,
with respect to the transactions contemplated by this Agreement and
the taking of all actions in connection therewith.
(iii) Due Diligence and Other Documents. The Borrower shall
have delivered to the Agent such other documents, certificates and
opinions as the Agent reasonably requests, including without
limitation copies of each document evidencing
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or governing the Subordinated Debt, certified by a secretary or
assistant secretary of the Borrower as a true and correct copy
thereof.
SECTION 5.3 Conditions to All Loans and Letters of Credit. The
obligations of the Lenders to make, continue or convert any Loan or
issue any Letter of Credit is subject to the satisfaction of the
following conditions precedent on the relevant borrowing or issue
date, as applicable:
(i) Continuation of Representations and Warranties. The
representations and warranties contained in Article VI shall be true
and correct on and as of such borrowing or issuance date with the same
effect as if made on and as of such date.
(ii) No Existing Default. No Default or Event of Default
shall have occurred and be continuing hereunder (A) on the borrowing
date with respect to such Loan or after giving effect to the Loans to
be made on such date or (B) on the issue date with respect to such
Letter of Credit or after giving effect to such Letters of Credit on
such date.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE BORROWER
SECTION 6.1 Representations and Warranties. To induce the
Agent to enter into this Agreement and the Lenders to make the Loans
or issue or participate in the Letters of Credit, the Borrower hereby
represents and warrants to the Agent and Lenders that:
(a) Organization; Power; Qualification. Each of the Borrower and
its Subsidiaries is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
formation, has the power and authority to own its properties and to
carry on its business as now being and hereafter proposed to be
conducted and is duly qualified and authorized to do business in each
jurisdiction (other than a jurisdiction in which the failure to so
qualify would not have a Material Adverse Effect) in which the
character of its properties or the nature of its business requires
such qualification and authorization. The jurisdictions in which the
Borrower and its Subsidiaries are organized and qualified to do
business are described on Schedule 6.1(a).
(b) Ownership. Each Subsidiary of the Borrower is listed on
Schedule 6.1(b). The capitalization of the Borrower and its
Subsidiaries consists of the number of shares, authorized, issued and
outstanding, of such classes and series, with or without par
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value, described on Schedule 6.1(b). All outstanding shares have been
duly authorized and validly issued and are fully paid and
nonassessable. The shareholders of the Subsidiaries of the Borrower
and the number of shares owned by each are described on Schedule
6.1(b). There are no outstanding stock purchase warrants,
subscriptions, options, securities, instruments or other rights of any
type or nature whatsoever, which are convertible into, exchangeable
for or otherwise provide for or permit the issuance of capital stock
of the Borrower or its Subsidiaries, except as described on Schedule
6.1(b). Each of the Guarantors is a Wholly-Owned Subsidiary of the
Borrower.
(c) Authorization of Agreement, Loan Documents and Borrowing.
Each of the Borrower and its Subsidiaries has the right, power and
authority and has taken all necessary corporate and other action to
authorize the execution, delivery and performance of this Agreement
and each of the other Loan Documents to which it is a party in
accordance with their respective terms. This Agreement and each of the
other Loan Documents have been duly executed and delivered by the duly
authorized officers of the Borrower and each of its Subsidiaries party
thereto, and each such document constitutes the legal, valid and
binding obligation of the Borrower or its Subsidiary party thereto,
enforceable in accordance with its terms, except as such enforcement
may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar state or federal debtor relief laws from time to time in
effect which affect the enforcement of creditors' rights in general
and the availability of equitable remedies.
(d) Compliance of Agreement, Loan Documents and Borrowing with
Laws. Etc. The execution, delivery and performance by the Borrower and
its Subsidiaries of the Loan Documents to which each such Person is a
party, in accordance with their respective terms, the borrowings
hereunder and the transactions contemplated hereby do not and will
not, by the passage of time, the giving of notice or otherwise, (i)
require any Governmental Approval or violate any Applicable Law
relating to the Borrower or any of its Subsidiaries; (ii) conflict
with, result in a breach of or constitute a default under the articles
of incorporation, bylaws or other organizational documents of the
Borrower or any of its Subsidiaries or any indenture, agreement or
other instrument to which such Person is a party or by which any of
its properties may be bound or any Governmental Approval relating to
such Person; or (iii) result in or require the creation or imposition
of any Lien upon or with respect to any property now owned or
hereafter acquired by such Person other than Liens arising under the
Loan Documents.
(e) Compliance with Law; Governmental Approvals. Each of the
Borrower and each of its Subsidiaries (i) has all material
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Governmental Approvals required by any Applicable Law for it to
conduct its business, each of which is in full force and effect, is
final and not subject to review on appeal and is not the subject of
any pending or, to the best of its knowledge, threatened attack by
direct or collateral proceeding; and (ii) is in compliance in all
material respects with each Governmental Approval applicable to it and
in compliance in all material respects with all other Applicable Laws
relating to it or any of its respective properties.
(f) Tax Returns and Payments. Each of the Borrower and its
Subsidiaries has duly filed or caused to be filed all federal, state,
local and other tax returns required by Applicable Law to be filed
(other than returns the failure of which to be filed would not result
in a Material Adverse Effect), and has paid, or made adequate
provision for the payment of, all federal, state, local and other
taxes, assessments and governmental charges or levies upon it and its
property, income, profits and assets which are due and payable (other
than taxes, assessments, charges and levies the failure of which to be
paid would not result in a Material Adverse Effect). No Governmental
Authority has asserted any Lien or other claim against the Borrower or
any Subsidiary thereof with respect to unpaid taxes which has not been
discharged or resolved. The charges, accruals and reserves on the
books of the Borrower and any of its Subsidiaries in respect of
federal, state, local and other taxes for all Fiscal Years and
portions thereof since the organization of the Borrower and any of its
Subsidiaries are in the judgment of the Borrower adequate, and the
Borrower does not anticipate any additional taxes or assessments for
any of such years.
(g) Copyright Matters. The Borrower and its Subsidiaries have
recorded or deposited with and paid to the United States Copyright
Offices, and the Register of Copyrights all notices, statements of
account, royalty fees and other documents and instruments required
under the United States Copyright Act, and neither the Borrower nor
any Subsidiary thereof is liable to any Person for copyright
infringement under the United States Copyright Act as a result of its
business operations.
(h) Franchises, Licenses, Patents and Trademarks. Each of the
Borrower and its Subsidiaries owns or possesses rights to use all
franchises, licenses, patents, patent rights or licenses, patent
applications, trademarks, trademark rights, trade names, trade name
rights, copyrights and rights with respect to the foregoing which are
required to conduct its business. No event has occurred which permits,
or after notice or lapse of time or both would permit, the revocation
or termination of any such rights.
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(i) Environmental Matters.
(i) The properties of the Borrower and its Subsidiaries do
not contain, and to their knowledge have not previously contained, any
Hazardous Materials (other than animal waste) in amounts or
concentrations which (A) constitute or constituted a violation of, or
(B) could give rise to liability under, applicable Environmental Laws;
(ii) Such properties and all operations conducted in
connection therewith are in compliance in all material respects, and
have been in compliance in all material respects, with all applicable
Environmental Laws, and there is no contamination at, under or about
such properties or such operations which could interfere with the
continued operation of such properties or impair the fair saleable
value thereof;
(iii) Neither the Borrower nor any Subsidiary thereof has
received any notice of any material violation, alleged material
violation, material noncompliance, material liability or potential
material liability regarding environmental matters or compliance with
Environmental Laws with regard to any of their properties or the
operations conducted in connection therewith, nor does the Borrower or
any Subsidiary thereof have knowledge or reason to believe that any
such notice will be received or is being threatened;
(iv) Hazardous Materials have not been transported or
disposed of from the properties of the Borrower and its Subsidiaries
in violation of, or in a manner or to a location which could give rise
to liability under, Environmental Laws, nor have any Hazardous
Materials been generated, treated, stored or disposed of at, on or
under any of such properties in violation of, or in a manner that
could give rise to liability under, any applicable Environmental Laws;
(v) No judicial proceedings or governmental or
administrative action is pending, or, to the knowledge of the
Borrower, threatened, under any Environmental Law to which the
Borrower or any Subsidiary thereof is or will be named as a party with
respect to such properties or operations conducted in connection
therewith, nor are there any consent decrees or other decrees, consent
orders, administrative orders or other orders, or other administrative
or judicial requirements outstanding under any Environmental Law with
respect to such properties or such operations; and
(vi) There has been no release, or to the best of the
Borrower's knowledge, the threat of release, of Hazardous Materials at
or from such properties, in violation of or in
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amounts or in a manner that could give rise to liability under
Environmental Laws.
(j) ERISA.
(i) Neither the Borrower nor any ERISA Affiliate maintains
or contributes to, or has any obligation under, any Employee Benefit
Plans which are defined benefit plans or welfare plans providing post-
retirement medical benefits, other than those identified on Schedule
6.1(j);
(ii) the Borrower and each ERISA Affiliate is in compliance
in all material respects with all applicable provisions of ERISA and
the regulations and published interpretations thereunder with respect
to all Employee Benefit Plans except for any required amendments for
which the remedial amendment period as defined in Section 401(b) of
the Code has not yet expired. Each Employee Benefit Plan that is
intended to be qualified under Section 401(a) of the Code has been
determined by the Internal Revenue Service to be so qualified, and
each trust related to such plan has been determined to be exempt under
Section 501(a) of the Code. No liability has been incurred by the
Borrower or any ERISA Affiliate which remains unsatisfied for any
taxes or penalties with respect to any Employee Benefit Plan or any
Multiemployer Plan;
(iii) No Pension Plan has been terminated, nor has any
accumulated funding deficiency (as defined in Section 412 of the Code)
been incurred (without regard to any waiver granted under Section 412
of the Code), nor has any funding waiver from the Internal Revenue
Service been received or requested with respect to any Pension Plan,
nor has the Borrower or any ERISA Affiliate failed to make any
contributions or to pay any amounts due and owing as required by
Section 412 of the Code, Section 302 of ERISA or the terms of any
Pension Plan prior to the due dates of such contributions under
Section 412 of the Code or Section 302 of ERISA, nor has there been
any event requiring any disclosure under Section 4041(c)(3)(C) or
4063(a) of ERISA with respect to any Pension Plan;
(iv) Neither the Borrower nor any ERISA Affiliate has: (A)
engaged in a nonexempt prohibited transaction described in Section 406
of the ERISA or Section 4975 of the Code; (B) incurred any liability
to the PBGC which remains outstanding other than the payment of
premiums and there are no premium payments which are due and unpaid;
(C) failed to make a required contribution or payment to a
Multiemployer Plan; or (D) failed to make a required installment or
other required payment under Section 412 of the Code;
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(v) No Termination Event has occurred or is reasonably
expected to occur; and
(vi) No proceeding, claim, lawsuit and/or investigation is
existing or, to the best knowledge of the Borrower after due inquiry,
threatened concerning or involving any (A) employee welfare benefit
plan (as defined in Section 3(1) of ERISA) currently maintained or
contributed to by the Borrower or any ERISA Affiliate, (B) Pension
Plan or (C) Multiemployer Plan.
(k) Margin Stock. Neither the Borrower nor any Subsidiary
thereof is engaged principally or as one of its activities in the
business of extending credit for the purpose of "purchasing" or
"carrying" any "margin stock" (as each such term is defined or used in
Regulations G and U of the Board of Governors of the Federal Reserve
System). No part of the proceeds of any of the Loans or Letters of
Credit will be used for purchasing or carrying margin stock or for any
purpose which violates, or which would be inconsistent with, the
provisions of Regulation G, T, U or X of such Board of Governors.
(l) Government Regulation. Neither the Borrower nor any
Subsidiary thereof is an "investment company" or a company
"controlled" by an "investment company" (as each such term is defined
or used in the Investment Company Act of 1940, as amended) and neither
the Borrower nor any Subsidiary thereof is, or after giving effect to
any Extension of Credit will be, subject to regulation under the
Public Utility Holding Company Act of 1935 or the Interstate Commerce
Act, each as amended, or any other Applicable Law which limits its
ability to incur or consummate the transactions contemplated hereby.
(m) Material Contracts. Each Material Contract is, and after
giving effect to the consummation of the transactions contemplated by
the Loan Documents will be, in full force and effect in accordance
with the terms thereof.
(n) Employee Relations. Each of the Borrower and its
Subsidiaries has a stable work force in place and is not party to any
collective bargaining agreement nor has any labor union been
recognized as the representative of its employees. The Borrower knows
of no pending, threatened or contemplated strikes, work stoppage or
other collective labor disputes involving its employees or those of
its Subsidiaries.
(o) Burdensome Provisions. Neither the Borrower nor any
Subsidiary thereof is a party to any indenture, agreement, lease or
other instrument, or subject to any corporate or partnership
restriction, Governmental Approval or Applicable Law which is so
unusual or burdensome as in the foreseeable future could be
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reasonably expected to have a Material Adverse Effect. The Borrower
and its Subsidiaries do not presently anticipate that future
expenditures needed to meet the provisions of any statutes, orders,
rules or regulations of a Governmental Authority will be so burdensome
as to have a Material Adverse Effect.
(p) Financial Statements. The (i) Consolidated balance sheets
of the Borrower and its Subsidiaries as of July 2, 1994 and the
related statements of income and retained earnings and cash flows for
the Fiscal Years then ended and (ii) unaudited Consolidated balance
sheet of the Borrower and its Subsidiaries as of December 31, 1994 and
related unaudited interim statements of revenue and retained earnings,
copies of which have been furnished to the Agent and each Lender,
fairly present the assets, liabilities and financial position of the
Borrower and its Subsidiaries as at such dates, and the results of the
operations and changes of financial position for the periods then
ended. All such financial statements, including the related schedules
and notes thereto, have been prepared in accordance with GAAP. The
Borrower and its Subsidiaries have no Debt, obligation or other
unusual forward or long-term commitment which is not fairly reflected
in the foregoing financial statements or in the notes thereto.
(q) No Material Adverse Change. Since July 2, 1994 there has
been no material adverse change in the properties, business,
operations, or condition (financial or otherwise) of the Borrower and
its Subsidiaries, including, but not limited to, any material adverse
change resulting from any fire, explosion, accident, drought, storm,
hail, earthquake, embargo, act of God, or of the public enemy or other
casualty (whether or not covered by insurance).
(r) Solvency. As of the Closing Date and after giving effect to
each Extension of Credit made hereunder, the Borrower and each of its
Subsidiaries will be Solvent.
(s) Titles to Properties. Each of the Borrower and its
Subsidiaries has such title to the real property owned by it as is
necessary or desirable to the conduct of its business and valid and
legal title to all of its personal property and assets, including, but
not limited to, those reflected on the balance sheets of the Borrower
and its Subsidiaries delivered pursuant to Section 6.1(p), except
those which have been disposed of by the Borrower or its Subsidiaries
subsequent to such date which dispositions have been in the ordinary
course of business or as otherwise expressly permitted hereunder.
(t) Liens. None of the properties and assets of the Borrower or
any Subsidiary thereof is subject to any Lien, except
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Liens permitted pursuant to Section 10.3. No financing statement under
the Uniform Commercial Code of any state which names the Borrower or
any Subsidiary thereof or any of their respective trade names or
divisions as debtor and which has not been terminated, has been filed
in any state or other jurisdiction and neither the Borrower nor any
Subsidiary thereof has signed any such financing statement or any
security agreement authorizing any secured party thereunder to file
any such financing statement, except to perfect those Liens permitted
by Section 10.3 hereof or signed with respect to leases other than
Capital Leases.
(u) Debt and Contingent Obligations. The Borrower and its
Subsidiaries have performed and are in compliance in all material
respects with all of the terms of their Debt and Contingent
Obligations and all instruments and agreements relating thereto, and
no default or event of default, or event or condition which with
notice or lapse of time or both would constitute such a default or
event of default, on the part of the Borrower or its Subsidiaries
exists with respect to any such Debt or Contingent Obligation.
(v) Litigation. Except as set forth on Schedule 6.1(v), there
are no actions, suits or proceedings pending nor, to the knowledge of
the Borrower, threatened against or in any other way relating
adversely to or affecting the Borrower or any Subsidiary thereof or
any of their respective properties in any court or before any
arbitrator of any kind or before or by any Governmental Authority in
which a decision adverse to the Borrower or such Subsidiary can
reasonably be expected to have a Material Adverse Effect.
(w) Absence of Defaults. No event has occurred or is continuing
which constitutes a Default or an Event of Default, or which
constitutes, or which with the passage of time or giving of notice or
both would constitute, a default or event of default by the Borrower
or any Subsidiary thereof under any Material Contract or judgment,
decree or order to which the Borrower or its Subsidiaries is a party
or by which the Borrower or its Subsidiaries or any of their
respective properties may be bound or which would require the Borrower
or its Subsidiaries to make any payment thereunder prior to the
scheduled maturity date therefor.
(x) Accuracy and Completeness of Information. All written
information, reports and other papers and data produced by or on
behalf of the Borrower or any Subsidiary thereof and furnished to the
Lenders were, at the time the same were so furnished, complete and
correct in all respects to the extent necessary to give the recipient
a true and accurate knowledge of the subject matter. No document
furnished or written statement made to the
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Agent or the Lenders by the Borrower or any Subsidiary thereof in
connection with the negotiation, preparation or execution of this
Agreement or any of the Loan Documents contains or will contain any
untrue statement of a fact material to the credit worthiness of the
Borrower or its Subsidiaries or omits or will omit to state a fact
necessary in order to make the statements contained therein not
misleading. The Borrower is not aware of any facts which it has not
disclosed in writing to the Agent having a Material Adverse Effect, or
insofar as the Borrower can now foresee, could reasonably be expected
to have a Material Adverse Effect.
SECTION 6.2 Survival of Representations and Warranties Etc.
All representations and warranties set forth in this Article VI and
all representations and warranties contained in any certificate, or
any of the Loan Documents (including but not limited to any such
representation or warranty made in or in connection with any amendment
thereto) shall constitute representations and warranties made under
this Agreement. All representations and warranties made under this
Agreement shall be made or deemed to be made at and as of the Closing
Date, shall survive the Closing Date and shall not be waived by the
execution and delivery of this Agreement, any investigation made by or
on behalf of the Lenders or any borrowing hereunder.
ARTICLE VII
FINANCIAL INFORMATION AND NOTICES
Until all the Obligations have been finally and indefeasibly paid
and satisfied in full and the Commitments terminated, unless consent
has been obtained in the manner set forth in Section 13.11 hereof, the
Borrower will furnish or cause to be furnished to the Agent at the
Agent's Office (with copies for each Lender) and the Agent at its
address set forth in Section 13.1 hereof, or such other office as may
be designated by the Agent from time to time:
SECTION 7.1 Financial Statements and Projections.
(a) Quarterly Financial Statements. As soon as practicable and
in any event within sixty (60) days after the end of each fiscal
quarter, an unaudited Consolidated balance sheet of the Borrower and
its Subsidiaries as of the close of such fiscal quarter, an unaudited
Consolidated statement of income for the fiscal quarter then ended and
that portion of the Fiscal Year then ended and an unaudited
Consolidated statement of cash flows for that portion of the Fiscal
Year then ended, including the notes thereto, all in reasonable detail
setting forth in comparative form the corresponding figures for the
preceding
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Fiscal Year and prepared by the Borrower in accordance with GAAP and,
if applicable, containing disclosure of the effect on the financial
position or results of operations of any change in the application of
accounting principles and practices during the period, and certified
by the chief financial officer of the Borrower to present fairly in
all material respects the financial condition of the Borrower and its
Subsidiaries as of their respective dates and the results of
operations of the Borrower and its Subsidiaries for the respective
periods then ended, subject to normal year end adjustments.
(b) Annual Financial Statements. As soon as practicable and in
any event within one hundred twenty (120) days after the end of each
Fiscal Year, an audited Consolidated balance sheet of the Borrower and
its Subsidiaries as of the close of such Fiscal Year and audited
Consolidated statements of income, retained earnings and cash flows
for the Fiscal Year then ended, including the notes thereto, all in
reasonable detail setting forth in comparative form the corresponding
figures for the preceding Fiscal Year and certified by an independent
certified public accounting firm acceptable to the Agent in accordance
with GAAP and, if applicable, containing disclosure of the effect on
the financial position or results of operation of any change in the
application of accounting principles and practices during the year,
and accompanied by a report thereon by such certified public
accountants that is not qualified with respect to scope limitations
imposed by the Borrower or any of its Subsidiaries or with respect to
accounting principles followed by the Borrower or any of its
Subsidiaries not in accordance with GAAP.
(c) SEC Filings. Within three (3) Business Days after their
filing with the Securities and Exchange Commission (the "SEC"), copies
of the Borrower's 10-K and 10-Q and any other periodic financial
statements which the Borrower or any of its Subsidiaries is required
to file with the SEC.
(d) Financial Projections. Within thirty (30) days after each
such request, such financial projections for the Borrower and its
Subsidiaries as the Agent may from time to time reasonably request.
SECTION 7.2 Officer's Compliance Certificate. At each time
financial statements are delivered pursuant to Sections 7.1 (a) or (b)
and at such other times as the Agent shall reasonably request, a
certificate of the chief financial officer or the treasurer of the
Borrower in the form of Exhibit D attached hereto (an "Officer's
Compliance Certificate"):
(a) stating that such officer has reviewed such financial
statements and such statements fairly present the financial condition
of the Borrower as of the dates indicated and the
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results of its operations and cash flows for the periods indicated;
(b) stating that to such officer's knowledge, based on a
reasonable examination sufficient to enable him to make an informed
statement, no Default or Event of Default exists, or, if such is not
the case, specifying such Default or Event of Default and its nature,
when it occurred, whether it is continuing and the steps being taken
by the Borrower with respect to such Default or Event of Default; and
(c) setting forth as at the end of such fiscal quarter or Fiscal
Year, as the case may be, the calculations required to establish
whether or not the Borrower and its Subsidiaries were in compliance
with the financial covenants set forth in Article IX hereof as at the
end of each respective period.
SECTION 7.3 Accountants' Certificate. At each time financial
statements are delivered pursuant to Section 7.1(b), a certificate of
the independent public accountants certifying such financial
statements addressed to the Agent for the benefit of the Lenders:
(a) stating that in making the examination necessary for the
certification of such financial statements, they obtained no knowledge
of any Default or Event of Default or, if such is not the case,
specifying such Default or Event of Default and its nature and period
of existence; and
(b) including the calculations certified by such accountants
required to establish whether or not the Borrower and its Subsidiaries
are in compliance with the financial covenants set forth in Article IX
hereof as at the end of each respective period.
SECTION 7.4 Other Reports.
(a) Promptly upon receipt thereof, copies of all reports, if
any, submitted to the Borrower or its Board of Directors by its
independent public accountants in connection with their auditing
function, excluding any management report and any management responses
thereto (which shall nevertheless be made available as provided in
Section 8.11); and
(b) Such other information regarding the operations, business
affairs and financial condition of the Borrower or any of its
Subsidiaries as the Agent or any Lender may reasonably request,
including, without limitation, consolidating financial statements and
summary product sales information as provided on company-prepared fact
sheet.
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SECTION 7.5 Notice of Litigation and Other Matters. Prompt
(but in no event later than ten (10) days after an officer of the
Borrower obtains knowledge thereof) telephonic and written notice of:
(a) the commencement of all proceedings and investigations by or
before any Governmental Authority and all actions and proceedings in
any court or before any arbitrator against or involving the Borrower
or any Subsidiary thereof or any of their respective properties,
assets or businesses in which a decision adverse to the Borrower or
such Subsidiary can reasonably be expected to have a Material Adverse
Effect;
(b) any notice of any violation (including, without limitation,
a violation of Environmental Laws) received by the Borrower or any
Subsidiary thereof from any Governmental Authority which violation
could reasonably be expected to have a Material Adverse Effect;
(c) any labor controversy that has resulted in, or threatens to
result in, a strike or other work action against the Borrower or any
Subsidiary thereof, which strike or work action, if continued, can
reasonably be expected to have a Material Adverse Effect;
(d) any attachment, judgment, lien, levy or order exceeding
$5,000,000 that may be assessed against the Borrower or any Subsidiary
thereof;
(e) any Default or Event of Default, or any event which
constitutes or which with the passage of time or giving of notice or
both would constitute a default or event of default under any Material
Contract to which the Borrower or any of its Subsidiaries is a party
or by which the Borrower or any Subsidiary thereof or any of their
respective properties may be bound, and any corrective action which
the Borrower or any of its Subsidiaries has taken or proposes to take
with respect thereto;
(f) (i) the establishment of any new Employee Benefit Plan which
is a defined benefit plan or a welfare plan providing post-retirement
benefits, the commencement of contributions to any such plan to which
the Borrower or any ERISA Affiliate was not previously contributing or
any increase in the benefits of any such existing Employee Benefit
Plan which would increase the projected liability of the Borrower
and/or one or more ERISA Affiliates by $5,000,000 or more; (ii) each
funding waiver request filed with respect to any Employee Benefit Plan
and all communications received or sent by the Borrower or any ERISA
Affiliate with respect to such request; (iii) the failure of the
Borrower or any ERISA Affiliate to make a required installment or
payment under Section 302 of ERISA or Section 412 of the Code by
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the due date; (iv) any Termination Event or "prohibited transaction",
as such term is defined in Section 406 of ERISA or Section 4975 of the
Code, in connection with any Employee Benefit Plan or any trust
created thereunder which can reasonably be expected to have a Material
Adverse Effect, along with a description of the nature thereof, what
action the Borrower has taken, is taking or proposes to take with
respect thereto and, when known, any action taken or threatened by the
Internal Revenue Service, the Department of Labor or the PBGC with
respect thereto; (v) any unfavorable determination letter from the
Internal Revenue Service regarding the qualification of an Employee
Benefit Plan under Section 401(a) of the Code if the failure of such
Employee Benefit Plan to be qualified can reasonably be expected to
have a Material Adverse Effect (along with a copy thereof); (vi) all
notices received by the Borrower or any ERISA Affiliate of the PBGC's
intent to terminate any Pension Plan or to have a trustee appointed to
administer any Pension Plan; (vii) each Schedule B (Actuarial
Information) to the annual report (Form 5500 Series) filed by the
Borrower or any ERISA Affiliate with the Internal Revenue Service with
respect to each Pension Plan; (viii) all notices received by the
Borrower or any ERISA Affiliate from a Multiemployer Plan sponsor
concerning the imposition or amount of withdrawal liability pursuant
to Section 4202 of ERISA; and (ix) the Borrower obtaining knowledge or
reason to know that the Borrower or any ERISA Affiliate has filed or
intends to file a notice of intent to terminate any Pension Plan under
a distress termination within the meaning of Section 4041(c) of ERISA;
and
(g) any event which makes any of the representations set forth
in Section 6.1 inaccurate in any material respect.
SECTION 7.6 Accuracy of Information. All written information,
reports, statements and other papers and data furnished by or on
behalf of the Borrower to the Agent or any Lender (other than
financial forecasts) whether pursuant to this Article VII or any other
provision of this Agreement, or any of the Security Documents, shall
be, at the time the same is so furnished, complete and correct in all
material respects to the extent necessary to give the Agent or any
Lender complete, true and accurate knowledge of the subject matter
based on the Borrower's knowledge thereof.
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ARTICLE VIII
AFFIRMATIVE COVENANTS
Until all of the Obligations have been finally and indefeasibly
paid and satisfied in full and the Commitments terminated, unless
consent has been obtained in the manner provided for in Section 13.11,
the Borrower will, and will cause each of its Subsidiaries to:
SECTION 8.1 Preservation of Corporate Existence and Related
Matters. Except as permitted by Section 10.5, preserve and maintain
its separate corporate existence and all rights, franchises, licenses
and privileges necessary to the conduct of its business; and qualify
and remain qualified as a foreign corporation and authorized to do
business in each jurisdiction in which the failure to so qualify would
have a Material Adverse Effect; provided that the requirement to
maintain its separate corporate existence shall apply only to the
Borrower and the Guarantors.
SECTION 8.2 Maintenance of Property. Protect and preserve all
properties useful in and material to its business, including
copyrights, patents, trade names and trademarks; maintain in good
working order and condition all buildings, equipment and other
tangible real and personal property; and from time to time make or
cause to be made all renewals, replacements and additions to such
property necessary for the conduct of its business, so that the
business carried on in connection therewith may be properly and
advantageously conducted at all times.
SECTION 8.3 Insurance. Maintain insurance, with financially
sound and reputable insurance companies which have ratings from A. M.
Best & Co. of A or higher (or B++ or higher prior to October 1, 1995)
or are otherwise acceptable to the Agent, against such risks and in
such amounts as are customarily maintained by similar businesses and
as may be required by Applicable Law, and on the Closing Date and from
time to time thereafter deliver to the Agent upon its request a
detailed list of the insurance then in effect, stating the names of
the insurance companies, the amounts of the insurance, the dates of
the expiration thereof and the properties and risks covered thereby,
but the Borrower shall not be required to deliver such a list within
six (6) months after it shall have delivered another such list unless
there shall have been a material change in the information contained
in such other list. The foregoing requirement that an insurance
company have a particular rating shall not apply to any insurance
company which only provides insurance which, under the terms of this
section, the Borrower and its subsidiaries are not required to carry.
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SECTION 8.4 Accounting Methods and Financial Records. Maintain
a system of accounting, and keep such books, records and accounts
(which shall be true and complete in all material respects) as may be
required or as may be necessary to permit the preparation of financial
statements in accordance with GAAP and in compliance with the
regulations of any Governmental Authority having jurisdiction over it
or any of its properties.
SECTION 8.5 Payment and Performance of Obligations. Pay and
perform all Obligations under this Agreement and the other Loan
Documents, and pay or perform (a) all taxes, assessments and other
governmental charges that may be levied or assessed upon it or any of
its property, and (b) all other indebtedness, obligations and
liabilities in accordance with customary trade practices; provided,
that the Borrower or such Subsidiary may contest any item described in
this Section 8.5 in good faith so long as adequate reserves are
maintained with respect thereto in accordance with GAAP.
SECTION 8.6 Compliance With Laws and Approvals. Observe and
remain in compliance in all material respects with all Applicable Laws
and maintain in full force and effect all material Governmental
Approvals, in each case applicable to the conduct of its business.
SECTION 8.7 Environmental Laws. In addition to and without
limiting the generality of Section 8.6, (a) comply in all material
respects with, and ensure such compliance in all material respects by
all tenants and subtenants, if any, with, all applicable Environmental
Laws and obtain and comply with and maintain, and ensure that all
tenants and subtenants obtain and comply with and maintain, any and
all licenses, approvals, notifications, registrations or permits
required by applicable Environmental Laws; (b) conduct and complete
all investigations, studies, sampling and testing, and all remedial,
removal and other actions required under Environmental Laws, and
promptly comply with all lawful orders and directives of any
Governmental Authority regarding Environmental Laws; and (c) defend,
indemnify and hold harmless the Agent and the Lenders, and their
respective parents, Subsidiaries, Affiliates, employees, agents,
officers and directors, from and against any claims, demands,
penalties, fines, liabilities, settlements, damages, costs and
expenses of whatever kind or nature known or unknown, contingent or
otherwise, arising out of, or in any way relating to the violation of,
noncompliance with or liability under any Environmental Laws
applicable to the operations of the Borrower or such Subsidiary, or
any orders, requirements or demands of Governmental Authorities
related thereto, including, without limitation, reasonable attorney's
and consultant's fees, investigation and laboratory fees, response
costs, court costs and litigation expenses, except to the extent that
any of the
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foregoing arise out of the negligence or willful misconduct of the
party seeking indemnification therefor.
SECTION 8.8 Compliance with ERISA. In addition to and without
limiting the generality of Section 8.6, (a) make timely payment of
contributions required to meet the minimum funding standards set forth
in ERISA with respect to any Employee Benefit Plan; (b) not take any
action or fail to take action the result of which could be a liability
to the PBGC or to a Multiemployer Plan; (c) not participate in any
prohibited transaction that could result in any material civil penalty
under ERISA or tax under the Code; (d) furnish to the Agent upon the
Agent's request such additional information about any Employee Benefit
Plan as may be reasonably requested by the Agent; and (e) operate each
Employee Benefit Plan in such a manner that will not incur any tax
liability under Section 4980B of the Code or any liability to any
qualified beneficiary as defined in Section 4980B of the Code.
SECTION 8.9 Compliance With Agreements. Comply in all
material respects with each term, condition and provision of all
leases, agreements and other instruments entered into in the conduct
of its business including, without limitation, any Material Contract;
provided, that the Borrower or such Subsidiary may contest any such
lease, agreement or other instrument in good faith through applicable
proceedings so long as adequate reserves are maintained in accordance
with GAAP.
SECTION 8.10 Conduct of Business. Engage only in businesses in
substantially the same fields as the businesses conducted on the
Closing Date and in lines of business reasonably related thereto.
SECTION 8.11 Visits and Inspections. Permit representatives of
the Agent or any Lender, from time to time, after reasonable notice,
to visit and inspect its properties; inspect, audit and make extracts
from its books, records and files, including, but not limited to,
management letters prepared by independent accountants; and discuss
with its principal officers, and its independent accountants, its
business, assets, liabilities, financial condition, results of
operations and business prospects.
SECTION 8.12 Further Assurances. Make, execute and deliver all
such additional and further acts, things, deeds and instruments as the
Agent or any Lender may reasonably require to document and consummate
the transactions contemplated hereby and to vest completely in and
insure the Agent and the Lenders their respective rights under this
Agreement, the Notes, the Letters of Credit and the other Loan
Documents.
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SECTION 8.13 Meeting with Lenders. Participate in a meeting at
least once annually, within five (5) months after the end of each
Fiscal Year, with all Lenders wishing to participate therein at a
date, time and location satisfactory to all such Lenders and fully
disclose in such meeting the material future business plans of the
Borrower and its Subsidiaries.
ARTICLE IX
FINANCIAL COVENANTS
Until all of the Obligations have been finally and indefeasibly
paid and satisfied in full and the Commitments terminated, unless
consent has been obtained in the manner set forth in Section 13.11
hereof, the Borrower and its Subsidiaries on a Consolidated basis will
not:
SECTION 9.1 Fixed Charge Coverage Ratio. Permit their Fixed
Charge Coverage Ratio to be lower than 1.50 to 1.00 as of the last day
of any fiscal quarter. For purposes of this section, the Fixed Charge
Coverage Ratio of the Borrower and its Subsidiaries shall mean, (a)
their net income for the four fiscal quarters ended on such last day,
plus, to the extent deductible in determining net income, their
interest, taxes, depreciation and amortization for such four fiscal
quarters, divided by (b) the amount of the current maturities of their
Funded Debt as of such last day plus their interest for such four
fiscal quarters.
SECTION 9.2 Minimum Tangible Net Worth. Permit Tangible Net
Worth, on the last day of any fiscal quarter, to be less than the
amount described below in this section,as such amount shall have been
adjusted on or before such day in the manner provided below. Such
amount shall be $150,000,000, as so adjusted. On the last day of each
Fiscal Year, beginning June 29, 1996, such amount shall be adjusted
upward (from the amount in effect immediately prior to such last day)
by an amount equal to the sum of (a) 50% of the Consolidated net
income of the Borrower and its Subsidiaries for such Fiscal Year (with
such net income being determined by deducting (i) dividends paid by
the Borrower during such Fiscal Year and (ii) 50% of the amount paid
by the Borrower during such Fiscal Year to repurchase shares of its
capital stock) and (b) 25% of the value of any shares of its capital
stock issued or otherwise transferred by the Borrower during such
Fiscal Year to any Person as all or part of the consideration for the
acquisition by the Borrower or any of its Subsidiaries of (A) all or
substantially all of the assets of a Person or (B) all or a portion of
the capital stock or other ownership interest in a Person which is a
Subsidiary or becomes a Subsidiary by reason of such acquisition.
Such value shall be the portion of the book value of the property
acquired in such acquisition which is
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attributable to the Borrower's capital stock so transferred. If such
sum shall be less than zero for any Fiscal Year, no adjustment shall
be made on the last day of such Fiscal Year.
SECTION 9.3 Maximum Debt to Capitalization Ratio. Permit the
ratio of their Funded Debt to their Total Capitalization to be greater
than 0.50 to 1.00 at any time. For purposes of this section, (a)
their Total Capitalization shall mean the sum of their shareholders'
equity (determined by treating the Repurchase Obligation as a part of
shareholders' equity) and their Funded Debt, and (b) Funded Debt shall
not be deemed to include the aggregate outstanding principal balance
of the Revolving Loans to the extent such balance does not exceed
$20,000,000.
SECTION 9.4 Current Ratio. Permit the ratio of (a) their
current assets to (b) the sum of (i) their current liabilities and
(ii) the principal balance of the Revolving Loans to the extent such
balance does not exceed $20,000,000 to be less than 1.50 to 1.00 at
any time.
ARTICLE X
NEGATIVE COVENANTS
Until all of the Obligations have been finally and indefeasibly
paid and satisfied in full and the Commitments terminated, unless
consent has been obtained in the manner set forth in Section 13.11
hereof, the Borrower has not and will not, and will not permit any of
its Subsidiaries to:
SECTION 10.1 Limitations on Debt. Create, incur, assume or
suffer to exist any Debt except:
(a) the Obligations;
(b) Debt incurred in connection with a Hedging Agreement with a
counterparty and upon terms and conditions reasonably satisfactory to
the Agent;
(c) Subordinated Debt;
(d) Debt existing on the Closing Date, together with any
anticipated Debt set forth on Schedule 10.1(d), and the renewal and
refinancing (but not the increase) thereof;
(e) Debt of the Borrower and its Subsidiaries incurred in
connection with Capital Leases in an aggregate amount not to exceed
10% of Tangible Net Worth on any date of determination;
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(f) purchase money Debt of the Borrower and its Subsidiaries in
an aggregate amount not to exceed 6% of Tangible Net Worth on any date
of determination;
(g) Debt consisting of Contingent Obligations permitted by
Section 10.2;
(h) other Debt to First Union in a principal amount not
exceeding $11,000,000;
(i) Stock-Related Debt in an aggregate amount not to exceed 6%
of Tangible Net Worth on any date of determination;
(j) any Debt of a Subsidiary not described in any other
subsection of this section (i) which was existing on the date it
became a Subsidiary or (ii) which was Debt of an entity not a
Subsidiary and became Debt of a Subsidiary on the date of, and by
reason of, the merger of such entity into a Subsidiary; provided the
debt described in (i) or (ii) shall no longer be permitted to exist
later than six (6) months after such date; and
(k) other Debt in an aggregate amount not to exceed 10% of
Tangible Net Worth.
SECTION 10.2 Limitations on Contingent Obligations. Create,
incur, assume or suffer to exist any Contingent Obligations except:
(a) Contingent Obligations in favor of the Agent for the benefit
of the Agent and the Lenders;
(b) Contingent Obligations existing on the Closing Date; and
(c) other Contingent Obligations in an aggregate amount not to
exceed 3% of Tangible Net Worth.
SECTION 10.3 Limitations on Liens. Create, incur, assume or
suffer to exist, any Lien on or with respect to any of its assets or
properties (including shares of capital stock), real or personal,
whether now owned or hereafter acquired, except:
(a) Liens for taxes, assessments and other governmental charges
or levies (excluding any Lien imposed pursuant to any of the
provisions of ERISA or environmental Laws) not yet due or as to which
the period of grace (not to exceed thirty (30) days), if any, related
thereto has not expired or which are being contested in good faith and
by appropriate proceedings if adequate reserves are maintained to the
extent required by GAAP;
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(b) the claims of materialmen, mechanics, carriers,
warehousemen, processors or landlords for labor, materials, supplies
or rentals incurred in the ordinary course of business, (i) which are
not overdue for a period of more than thirty (30) days or (ii) which
are being contested in good faith and by appropriate proceedings;
(c) Liens consisting of deposits or pledges made in the ordinary
course of business in connection with, or to secure payment of,
obligations under workers' compensation, unemployment insurance or
similar legislation or obligations (not to exceed $10,000,000);
(d) Liens constituting encumbrances in the nature of zoning
restrictions, easements and rights or restrictions of record on the
use of real property, which in the aggregate are not substantial in
amount and which do not, in any case, detract from the value of such
property or impair the use thereof in the ordinary conduct of
business;
(e) Liens of the Agent for the benefit of the Agent and the
Lenders;
(f) any Lien (i) existing on the Closing Date which (A) secures
the payment of Debt in an amount not exceeding $500,000 or (B) is
described on Schedule 10.3(f), or (ii) anticipated on the Closing Date
which is described on Schedule 10.3(f);
(g) Liens securing Debt permitted under Section 10.1(f);
provided that (i) such Liens shall be created no later than twelve
(12) months after the acquisition of the related Capital Asset, (ii)
such Liens do not at any time encumber any property other than the
property financed by such Debt, (iii) the amount of Debt secured
thereby is not increased and (iv) the principal amount of Debt secured
by any such Lien shall at no time exceed eighty percent (80%) of the
original purchase price of such property at the time it was acquired.
SECTION 10.4 Limitations on Acquisitions. Acquire any
significant part of the assets of any Person which is not a Subsidiary
or acquire sufficient capital stock or other ownership interest in any
Person to cause such Person to become a Subsidiary unless the Borrower
shall furnish to the Agent, not later than the earlier of the date of
such acquisition or the date the Borrower or a Subsidiary of the
Borrower gives public notice that the Borrower and/or one or more of
its Subsidiaries proposes to make such acquisition, (a) a notice of
such acquisition or proposed acquisition, including a general
description of the ownership interest or assets acquired or to be
acquired and, in the case of an acquisition of an ownership interest,
such Person, and (b) pro forma financial statements
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showing the covenants set forth in Article IX would have been met if
such acquisition had occurred prior to the date or period to which
such financial statements pertain; provided that such financial
statements shall not be required to be furnished in the case of an
acquisition the cost of which (including the value of any capital
stock of, or other ownership interest in, the Borrower or any of its
Subsidiaries which is transferred as a part of the consideration for
such acquisition) does not exceed 5% of Tangible Net Worth.
SECTION 10.5 Limitations on Mergers and Liquidation. Merge,
consolidate or enter into any similar combination with any other
Person or liquidate, wind-up or dissolve itself (or suffer any
liquidation or dissolution) except:
(a) The restrictions set forth in this section shall not apply
to any Subsidiary other than a Guarantor; and
(b) The Borrower or any Guarantor may merge with any other
Person if the Borrower or a Guarantor is the surviving entity.
SECTION 10.6 Limitations on Sale of Assets. Convey, sell,
lease, assign, transfer or otherwise dispose of any of its property,
business or assets (including, without limitation, the sale of any
receivables and leasehold interests and any sale leaseback or similar
transaction), whether now owned or hereafter acquired except:
(a) the sale of inventory in the ordinary course of business;
(b) the sale of obsolete assets no longer used or usable in the
business of the Borrower or any of its Subsidiaries;
(c) the sale or discount without recourse of accounts receivable
arising in the ordinary course of business in connection with the
compromise or collection thereof; and
(d) any other disposition during any Fiscal Year of assets
having an aggregate fair market value which does not exceed 10% of
Tangible Net Worth as of the last day of the preceding Fiscal Year.
SECTION 10.7 Transactions with Affiliates. Directly or
indirectly: (a) make any material loan or advance to, or purchase or
assume any note or other obligation in a material amount to or from,
any of its officers, directors, shareholders or other Affiliates, or
to or from any member of the immediate family of any of its officers,
directors, shareholders or other Affiliates, or subcontract any
operations to any of its Affiliates, or (b) enter into, or be a party
to, any transaction with any of its
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Affiliates, except pursuant to the reasonable requirements of its
business and upon fair and reasonable terms that are no less favorable
to it than would obtain in a comparable arm's length transaction with
a Person not its Affiliate.
SECTION 10.8 Certain Accounting Changes. Change its Fiscal
Year end, or make any change in its accounting treatment and reporting
practices except as permitted by GAAP.
SECTION 10.9 Compliance with ERISA. (a) permit the occurrence
of any Termination Event which would result in a liability to the
Borrower or any ERISA Affiliate in excess of $5,000,000; (b) permit
the present value of all benefit liabilities under all Pension Plans
(determined under the actuarial assumptions used for Code and ERISA
funding purposes) to exceed the current value of the assets of such
Pension Plans allocable to such benefit liabilities by more than
$5,000,000; (c) permit any accumulated funding deficiency (as defined
in Section 302 of ERISA and Section 412 of the Code) with respect to
any Pension Plan, whether or not waived; (d) fail to make any
contribution or payment to any Multiemployer Plan which the Borrower
or any ERISA Affiliate may be required to make under any agreement
relating to such Multiemployer Plan, or any law pertaining thereto
which results in or is likely to result in a liability in excess of
$5,000,000; (e) engage, or permit the Borrower or any ERISA Affiliate
to engage, in any prohibited transaction under Section 406 of ERISA or
Section 4975 of the Code for which a civil penalty pursuant to Section
502(i) of ERISA or a tax pursuant to Section 4975 of the Code in
excess of $5,000,000 is imposed; (f) permit the establishment of any
Employee Benefit Plan providing post-retirement welfare benefits
(other than an Employee Benefit Plan which provides such benefits
solely for a select group of present or former management employees)
or establish or amend any Employee Benefit Plan which establishment or
amendment could reasonably be expected to result in liability to the
Borrower or any ERISA Affiliate or increase the obligation of the
Borrower or any ERISA Affiliate to a Multiemployer Plan which
liability or increase, individually or together with all similar
liabilities and increases, is material to the Borrower or any ERISA
Affiliate; or (g) fail, or permit the Borrower or any ERISA Affiliate
to fail, to establish, maintain and operate each Employee Benefit Plan
in compliance in all material respects with the provisions of ERISA,
the Code and all other applicable laws and the regulations and
interpretations thereof.
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SECTION 10.10 More Restrictive Agreements. Enter into any
agreement evidencing Debt which is permitted to be incurred solely by
reason of subsections (d), (h) and (k) of Section 10.1 in a principal
amount exceeding $7,000,000 which contains any provisions more
restrictive than the provisions of Articles VIII, IX, X and XI hereof,
unless, at least thirty (30) days prior to the execution and delivery
of such agreement, the Borrower notifies the Agent thereof and, if the
Agent shall so request in a writing to the Borrower (after a
determination has been made by the Required Lenders that such
agreement contains any provisions which, individually or in the
aggregate, are more restrictive than the provisions of Articles VIII,
IX, X and XI hereof), the Borrower, the Guarantors, the Agent and the
Lenders shall promptly amend this Agreement to incorporate into this
Agreement so many of such provisions as the Agent or the Required
Lenders may specify.
SECTION 10.11 Transfers to Subsidiaries. Transfer any assets
now or hereafter owned by the Borrower or any Guarantor to any
Subsidiary which is not a Guarantor. The restriction set forth in the
preceding sentence shall not apply to any such transfers during the
term hereof of assets which have an aggregate fair market value not
exceeding 5% of Tangible Net Worth.
ARTICLE XI
DEFAULT AND REMEDIES
SECTION 11.1 Events of Default. Each of the following shall
constitute an Event of Default, whatever the reason for such event and
whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment or order of any court or
any order, rule or regulation of any Governmental Authority or
otherwise:
(a) Default in Payment of Principal of Loans and Reimbursement
Obligations. The Borrower shall default in any payment of principal
of any Loan, Note or Reimbursement Obligation when and as due (whether
at maturity, by reason of acceleration or otherwise).
(b) Other Payment Default. The Borrower shall default in the
payment when and as due (whether at maturity, by reason of
acceleration or otherwise) of interest on any Loan, Note or
Reimbursement Obligation or the payment of any other Obligation, and
such default shall continue unremedied for five (5) Business Days.
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(c) Misrepresentation. Any representation or warranty made by
the Borrower or any of its Subsidiaries under this Agreement, any Loan
Document or any amendment hereto or thereto, shall at any time prove
to have been incorrect or misleading in any material respect when
made.
(d) Default in Performance of Certain Covenants. The Borrower
shall default in the performance or observance of any covenant or
agreement contained in Sections 7.5(e) or Articles IX or X of this
Agreement.
(e) Default in Performance of Other Covenants and Conditions.
The Borrower or any Subsidiary thereof shall default in the
performance or observance of any term, covenant, condition or
agreement contained in this Agreement (other than as specifically
provided for otherwise in this Section 11.1) or any other Loan
Document and such default shall continue for a period of thirty (30)
days after written notice thereof has been given to the Borrower by
the Agent.
(f) Hedging Agreement. Any termination payment shall be due by
the Borrower under any Hedging Agreement and such amount is not paid
within five (5) Business Days of the due date thereof.
(g) Debt Cross-Default. The Borrower or any of its Subsidiaries
shall (i) default in the payment of any Debt (other than the Notes or
any Reimbursement Obligation) the aggregate outstanding amount of
which is in excess of $7,000,000 beyond the period of grace if any,
provided in the instrument or agreement under which such Debt was
created; or (ii) default in the observance or performance of any other
agreement or condition relating to any Debt (other than the Notes or
any Reimbursement Obligation) the aggregate outstanding amount of
which is in excess of $7,000,000 or contained in any instrument or
agreement evidencing, securing or relating thereto or any other event
shall occur or condition exist, the effect of which default or other
event or condition is to cause, or to permit the holder or holders of
such Debt (or a trustee or agent on behalf of such holder or holders)
to cause, with the giving of notice if required, any such Debt to
become due prior to its stated maturity (any applicable grace period
having expired).
(h) Voluntary Bankruptcy Proceeding. The Borrower or any
Subsidiary thereof shall (i) commence a voluntary case under the
federal bankruptcy laws (as now or hereafter in effect); (ii) file a
petition seeking to take advantage of any other laws, domestic or
foreign, relating to bankruptcy, insolvency, reorganization, winding
up or composition for adjustment of debts; (iii) consent to or fail to
contest in a timely and appropriate manner any petition filed against
it in an involuntary case under such bankruptcy laws or other laws;
(iv)
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apply for or consent to, or fail to contest in a timely and
appropriate manner, the appointment of, or the taking of possession
by, a receiver, custodian, trustee, or liquidator of itself or of a
substantial part of its property, domestic or foreign; (v) admit in
writing its inability to pay its debts as they become due; (vi) make a
general assignment for the benefit of creditors; or (vii) take any
corporate action for the purpose of authorizing any of the foregoing.
(i) Involuntary Bankruptcy Proceeding. A case or other
proceeding shall be commenced against the Borrower or any Subsidiary
thereof in any court of competent jurisdiction seeking (i) relief
under the federal bankruptcy laws (as now or hereafter in effect) or
under any other laws, domestic or foreign, relating to bankruptcy,
insolvency, reorganization, winding up or adjustment of debts; or (ii)
the appointment of a trustee, receiver, custodian, liquidator or the
like for the Borrower or any Subsidiary thereof or for all or any
substantial part of their respective assets, domestic or foreign, and
such case or proceeding shall continue undismissed or unstayed for a
period of sixty (60) consecutive calendar days, or an order granting
the relief requested in such case or proceeding (including, but not
limited to, an order for relief under such federal bankruptcy laws)
shall be entered.
(j) Failure of Agreements. Any material provision of this
Agreement or of any other Loan Document shall for any reason cease to
be valid and binding on the Borrower or Subsidiary party thereto or
any such Person shall so state in writing, or this Agreement or any
other Loan Document shall for any reason cease to create a valid and
perfected first priority Lien on, or security interest in, any of the
collateral purported to be covered thereby, in each case other than in
accordance with the express terms hereof or thereof.
(k) Judgment. A judgment or order for the payment of money which
exceeds $5,000,000 in amount shall be entered against the Borrower or
any of its Subsidiaries by any court and such judgment or order shall
continue undischarged or unstayed for a period of thirty (30) days.
(l) Attachment. A warrant or writ of attachment or execution or
similar process shall be issued against any property of the Borrower
or any of its Subsidiaries which exceeds $5,000,000 in value and such
warrant or process shall continue undischarged or unstayed for a
period of thirty (30) days.
(m) Change in Control. (a) Any person or group of persons
(within the meaning of Section 13(d) of the Securities Exchange Act of
1934, as amended) other than the current board of directors of the
Borrower, shall obtain ownership or control in
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one or more series of transactions of more than fifty percent (50%) of
the common stock and fifty percent (50%) of the voting power of the
Borrower entitled to vote in the election of members of the board of
directors of the Borrower (a "Change in Control").
SECTION 11.2 Remedies. Upon the occurrence of an Event of
Default, with the consent of the Required Lenders, the Agent may, or
upon the request of the Required Lenders, the Agent shall, by notice
to the Borrower:
(a) Acceleration; Termination of Facilities. Declare the
principal of and interest on the Loans, the Notes and the
Reimbursement Obligations at the time outstanding, and all other
amounts owed to the Lenders and to the Agent under this Agreement or
any of the other Loan Documents (including, without limitation, all
L/C Obligations, whether or not the beneficiaries of the then
outstanding Letters of Credit shall have presented the documents
required thereunder) and all other Obligations, to be forthwith due
and payable, whereupon the same shall immediately become due and
payable without presentment, demand, protest or other notice of any
kind, all of which are expressly waived, anything in this Agreement or
the other Loan Documents to the contrary notwithstanding, and
terminate the Credit Facility and any right of the Borrower to request
borrowings or Letters of Credit thereunder; provided, that upon the
occurrence of an Event of Default specified in Section 11.1(h) or (i),
the Credit Facility shall be automatically terminated and all
Obligations shall automatically become due and payable.
(b) Letters of Credit. With respect to all Letters of Credit
with respect to which presentment for honor shall not have occurred at
the time of an acceleration pursuant to the preceding paragraph,
require the Borrower at such time to deposit in a cash collateral
account opened by the Agent an amount equal to the aggregate then
undrawn and unexpired amount of such Letters of Credit. Amounts held
in such cash collateral account shall be applied by the Agent to the
payment of drafts drawn under such Letters of Credit, and the unused
portion thereof after all such Letters of Credit shall have expired or
been fully drawn upon, if any, shall be applied to repay the other
Obligations. After all such Letters of Credit shall have expired or
been fully drawn upon, the Reimbursement Obligation shall have been
satisfied and all other Obligations shall have been paid in full, the
balance, if any, in such cash collateral account shall be returned to
the Borrower.
(c) Rights of Collection. Exercise on behalf of the Lenders all
of its other rights and remedies under this Agreement, the other Loan
Documents and Applicable Law, in order to satisfy all of the
Borrower's Obligations.
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SECTION 11.3 Rights and Remedies Cumulative; Non-Waiver; etc.
The enumeration of the rights and remedies of the Agent and the
Lenders set forth in this Agreement is not intended to be exhaustive
and the exercise by the Agent and the Lenders of any right or remedy
shall not preclude the exercise of any other rights or remedies, all
of which shall be cumulative, and shall be in addition to any other
right or remedy given hereunder or under the Loan Documents or that
may now or hereafter exist in law or in equity or by suit or
otherwise. No delay or failure to take action on the part of the Agent
or any Lender in exercising any right, power or privilege shall
operate as a waiver thereof, nor shall any single or partial exercise
of any such right, power or privilege preclude other or further
exercise thereof or the exercise of any other right, power or
privilege or shall be construed to be a waiver of any Event of
Default. No course of dealing between the Borrower, the Agent and the
Lenders or their respective agents or employees shall be effective to
change, modify or discharge any provision of this Agreement or any of
the other Loan Documents or to constitute a waiver of any Event of
Default.
ARTICLE XII
THE AGENT
SECTION 12.1 Appointment. Each of the Lenders hereby
irrevocably designates and appoints First Union as Agent of such
Lender under this Agreement and the other Loan Documents and each such
Lender irrevocably authorizes First Union as Agent for such Lender, to
take such action on its behalf under the provisions of this Agreement
and the other Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to the Agent by the terms of
this Agreement and such other Loan Documents, together with such other
powers as are reasonably incidental thereto. Notwithstanding any
provision to the contrary elsewhere in this Agreement or such other
Loan Documents, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein and therein,
or any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or the other Loan
Documents or otherwise exist against the Agent.
SECTION 12.2 Delegation of Duties. The Agent may execute any
of its respective duties under this Agreement and the other Loan
Documents by or through agents or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to
such duties. The Agent shall not be responsible for the negligence or
misconduct of any agents or attorneys-in-fact selected by the Agent
with reasonable care.
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SECTION 12.3 Exculpatory Provisions. Neither the Agent nor any
of its officers, directors, employees, agents, attorneys-in fact,
Subsidiaries or Affiliates shall be (a) liable for any action lawfully
taken or omitted to be taken by it or such Person under or in
connection with this Agreement or the other Loan Documents (except for
actions occasioned solely by its or such Person's own gross negligence
or willful misconduct), or (b) responsible in any manner to any of the
Lenders for any recitals, statements, representations or warranties
made by the Borrower or any of its Subsidiaries or any officer thereof
contained in this Agreement or the other Loan Documents or in any
certificate, report, statement or other document referred to or
provided for in, or received by the Agent under or in connection with,
this Agreement or the other Loan Documents or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this
Agreement or the other Loan Documents or for any failure of the
Borrower or any of its Subsidiaries to perform its obligations
hereunder or thereunder. The Agent shall not be under any obligation
to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of;
this Agreement, or to inspect the properties, books or records of the
Borrower or any of its Subsidiaries.
SECTION 12.4 Reliance by the Agent. The Agent shall be
entitled to rely, and shall be fully protected in relying, upon any
note, writing, resolution, notice, consent, certificate, affidavit,
letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document or conversation believed by it to
be genuine and correct and to have been signed, sent or made by the
proper Person or Persons and upon advice and statements of legal
counsel (including, without limitation, counsel to the Borrower),
independent accountants and other experts selected by the Agent. The
Agent may deem and treat the payee of any Note as the owner thereof
for all purposes unless such Note shall have been transferred in
accordance with Section 13.10 hereof. The Agent shall be fully
justified in failing or refusing to take any action under this
Agreement and the other Loan Documents unless it shall first receive
such advice or concurrence of the Required Lenders (or, when expressly
required hereby or by the relevant other Loan Document, all the
Lenders) as it deems appropriate or it shall first be indemnified to
its satisfaction by the Lenders against any and all liability and
expenses which may be incurred by it by reason of taking or continuing
to take any such action except for its own gross negligence or willful
misconduct. The Agent shall in all cases be fully protected in acting,
or in refraining from acting, under this Agreement and the Notes in
accordance with a request of the Required Lenders (or, when expressly
required hereby, all the Lenders), and such request and any action
taken or failure to act
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pursuant thereto shall be binding upon all the Lenders and all future
holders of the Notes.
SECTION 12.5 Notice of Default. The Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event
of Default hereunder unless it has received notice from a Lender or
the Borrower referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a "notice of
default". In the event that the Agent receives such a notice, it shall
promptly give notice thereof to the Lenders. The Agent shall take such
action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Lenders; provided that unless and
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 in the best interests of the Lenders.
SECTION 12.6 Non-Reliance on the Agent and Other Lenders. Each
Lender expressly acknowledges that neither the Agent nor any of its
respective officers, directors, employees, agents, attorneys-in-fact,
Subsidiaries or Affiliates has made any representations or warranties
to it and that no act by the Agent hereinafter taken, including any
review of the affairs of the Borrower or any of its Subsidiaries,
shall be deemed to constitute any representation or warranty by the
Agent to any Lender. Each Lender represents to the Agent that it has,
independently and without reliance upon the Agent or any other Lender,
and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the
business, operations, property, financial and other condition and
credit worthiness of the Borrower and its Subsidiaries and made its
own decision to make its Loans and issue or participate in Letters of
Credit hereunder and enter into this Agreement. Each Lender also
represents that it will, independently and without reliance upon the
Agent 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 analysis, appraisals and decisions in taking or not taking
action under this Agreement and the other Loan Documents, and to make
such investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and
credit worthiness of the Borrower and its Subsidiaries. Except for
notices, reports and other documents expressly required to be
furnished to the Lenders by the Agent hereunder or by the other Loan
Documents, the Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the
business, operations, property, financial and other condition or
credit worthiness of the Borrower or any of its Subsidiaries which may
come into the possession of the Agent or any of its respective
officers,
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directors, employees, agents, attorneys-in-fact, Subsidiaries or
Affiliates.
SECTION 12.7 Indemnification. The Lenders agree to indemnify
the Agent in its capacity as such and (to the extent not reimbursed by
the Borrower and without limiting the obligation of the Borrower to do
so), ratably according to the respective amounts of their Commitment
Percentages, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of
the Notes or any Reimbursement Obligation) be imposed on, incurred by
or asserted against the Agent in any way relating to or arising out of
this Agreement or the other Loan Documents, or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the
Agent under or in connection with any of the foregoing; provided that
no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting solely
from the Agent's bad faith, gross negligence or willful misconduct.
The agreements in this Section 12.7 shall survive the payment of the
Notes, any Reimbursement Obligation and all other amounts payable
hereunder and the termination of this Agreement.
SECTION 12.8 The Agent in Its Individual Capacity. The Agent
and its respective Subsidiaries and Affiliates may make loans to,
accept deposits from and generally engage in any kind of business with
the Borrower as though the Agent were not an Agent hereunder. With
respect to any Loans made or renewed by it and any Note issued to it
and with respect to any Letter of Credit issued by it or participated
in by it, the Agent shall have the same rights and powers under this
Agreement and the other Loan Documents as any Lender and may exercise
the same as though it were not an Agent, and the terms "Lender" and
"Lenders" shall include the Agent in its individual capacity.
SECTION 12.9 Resignation of the Agent; Successor Agent. Subject
to the appointment and acceptance of a successor as provided below,
the Agent may resign at any time by giving notice thereof to the
Lenders and the Borrower. Upon any such resignation, the Required
Lenders shall have the right to appoint a successor Agent, which
successor shall have minimum capital and surplus of at least
$500,000,000. 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 Agent's giving of notice of resignation,
then the Agent may, on behalf of the Lenders, appoint a successor
Agent, which successor shall have minimum capital and surplus of at
least $500,000,000.
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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 rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its
duties and obligations hereunder. After any retiring Agent's
resignation hereunder as Agent, the provisions of this Section 12.9
shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was acting as Agent.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1 Notices.
(a) Method of Communication. Except as otherwise provided in
this Agreement, all notices and communications hereunder shall be in
writing, or by telephone subsequently confirmed in writing. Any notice
shall be effective if delivered by hand delivery or sent via telecopy,
recognized overnight courier service or certified mail, return receipt
requested, and shall be presumed to be received by a party hereto (i)
on the date of delivery if delivered by hand or sent by telecopy, (ii)
on the next Business Day if sent by recognized overnight courier
service and (iii) on the third Business Day following the date sent by
certified mail, return receipt requested. A telephonic notice to the
Agent as understood by the Agent will be deemed to be the controlling
and proper notice in the event of a discrepancy with or failure to
receive a confirming written notice.
(b) Addresses for Notices. Notices to any party shall be sent to
it at the following addresses, or any other address as to which all
the other parties are notified in writing.
If to the Borrower: WLR Foods, Inc.
800 Co-op Drive
Timberville, Virginia 22853
Attention: Chief Financial Officer
Telephone No.: (703) 896-7001
Telecopy No.: (703) 896-0498
Or, if sent by mail:
WLR Foods, Inc.
P.O. Box 7000
Broadway, Virginia 28815
Attention: Chief Financial Officer
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If to First Union as Lender:
First Union National Bank of
Virginia
201 South Jefferson Street
Roanoke, Virginia 24011
Attention: Commercial Banking
Telephone No.: (703) 563-7769
Telecopy No.: (703) 561-5262
If to Corestates Bank, N.A.
as Lender: Corestates Bank, N.A.
2240 Butler Pike
Plymouth Meeting, Pennsylvania 19462
Attention: Steven A. Henderson
Telephone No.: (610) 834-2013
Telecopy No.: (610) 834-2069
If to Harris Trust and
Savings Bank as Lender: Harris Trust and Savings Bank
111 West Monroe
Chicago, Illinois 60690
Attention: Agribusiness Division
Telephone No.: (312) 461-3795
Telecopy No.: (312) 765-8095
If to Crestar Bank as
Lender: Crestar Bank
510 South Jefferson Street
Roanoke, Virginia 24011
Attention: Martha D. Shifflett
Telephone No.: (703) 982-3362
Telecopy No.: (703) 982-3386
If to the Agent: First Union National Bank of Virginia
c/o First Union National Bank of North
Carolina
One First Union Center, TW-10
301 South College Street
Charlotte, North Carolina 28288
Attention: Syndication Agency Services
Telephone No.: (704) 383-0281
Telecopy No.: (704) 383-0288
SECTION 13.2 Expenses. The Borrower will pay all out-of-pocket
expenses of the Agent in connection with: (i) the preparation,
execution and delivery of this Agreement and each of the other Loan
Documents, whenever the same shall be executed and delivered,
including all out-of-pocket syndication and due diligence expenses,
appraiser's fees, search fees, title insurance premiums, recording
fees, taxes and reasonable fees and disbursements of counsel for the
Agent; (ii) the preparation,
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execution and delivery of any waiver, amendment or consent by the
Agent or the Lenders relating to this Agreement or any of the other
Loan Documents including reasonable fees and disbursements of counsel
for the Agent, search fees, appraiser's fees, recording fees and taxes
imposed in connection therewith; and (iii) administering and enforcing
their respective rights under the Credit Facility, including
consulting with one or more persons, including appraisers,
accountants, engineers and attorneys, concerning or related to the
nature, scope or value of any right or remedy of the Agent or any
Lender hereunder or under any of the other Loan Documents, including
any review of factual matters in connection therewith, which expenses
shall include the reasonable fees and disbursements of such Persons.
SECTION 13.3 Set-off. In addition to any rights now or
hereafter granted under Applicable Law and not by way of limitation of
any such rights, upon and after the occurrence of any Event of Default
and during the continuance thereof, the Lenders and any assignee or
participant of a Lender in accordance with Section 13.10 are hereby
authorized by the Borrower at any time or from time to time, without
notice to the Borrower or to any other Person, any such notice being
hereby expressly waived, to set off and to appropriate and to apply
any and all deposits (general or special, time or demand, including,
but not limited to, indebtedness evidenced by certificates of deposit,
whether matured or unmatured, excluding government securities required
by Applicable Law to be held as security for worker's compensation and
similar claims) and any other indebtedness at any time held or owing
by the Lenders, or any such assignee or participant to or for the
credit or the account of the Borrower against and on account of the
Obligations irrespective of whether or not (a) the Lenders shall have
made any demand under this Agreement or any of the other Loan
Documents or (b) the Agent shall have declared any or all of the
Obligations to be due and payable as permitted by Section 11.2 and
although such Obligations shall be contingent or unmatured.
SECTION 13.4 Governing Law. This Agreement, the Notes and the
other Loan Documents, unless otherwise expressly set forth therein,
shall be governed by, construed and enforced in accordance with the
laws of the Commonwealth of Virginia, without reference to the
conflicts or choice of law principles thereof.
SECTION 13.5 Consent to Jurisdiction. The Borrower hereby
irrevocably consents to the personal jurisdiction of the state and
federal courts located in Harrisonburg, Virginia and Roanoke, Virginia
in any action, claim or other proceeding arising out of any dispute in
connection with this Agreement, the Notes and the other Loan
Documents, any rights or obligations hereunder or thereunder, or the
performance of such rights and obligations. The Borrower hereby
irrevocably consents to the service of a
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summons and complaint and other process in any action, claim or
proceeding brought by the Agent or any Lender in connection with this
Agreement, the Notes or the other Loan Documents, any rights or
obligations hereunder or thereunder, or the performance of such rights
and obligations, on behalf of itself or its property, in the manner
specified in Section 13.1. Nothing in this Section 13.5 shall affect
the right of the Agent or any Lender to serve legal process in any
other manner permitted by Applicable Law or affect the right of the
Agent or any Lender to bring any action or proceeding against the
Borrower or its properties in the courts of any other jurisdictions.
SECTION 13.6 Waiver of Jury Trial. THE AGENT, EACH LENDER AND
THE BORROWER HEREBY IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A
JURY TRIAL WITH RESPECT TO ANY ACTION, CLAIM OR OTHER PROCEEDING
ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE
NOTES OR THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER
OR THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.
SECTION 13.7 Reversal of Payments. To the extent the Borrower
makes a payment or payments to the Agent for the ratable benefit of
the Lenders or the Agent receives any payment or proceeds of the
collateral which payments or proceeds or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential,
set aside and/or required to be repaid to a trustee, receiver or any
other party under any bankruptcy law, state or federal law, common law
or equitable cause, then, to the extent of such payment or proceeds
repaid, the Obligations or part thereof intended to be satisfied shall
be revived and continued in full force and effect as if such payment
or proceeds had not been received by the Agent.
SECTION 13.8 Injunctive Relief. The Borrower recognizes that,
in the event the Borrower fails to perform, observe or discharge any
of its obligations or liabilities under this Agreement, any remedy of
law may prove to be inadequate relief to the Lenders. Therefore, the
Borrower agrees that the Lenders, at the Lenders' option, shall be
entitled to temporary and permanent injunctive relief in any such case
without the necessity of proving actual damages.
SECTION 13.9 Accounting Matters. All financial and accounting
calculations, measurements and computations made for any purpose
relating to this Agreement, including, without limitation, all
computations utilized by the Borrower or any Subsidiary thereof to
determine compliance with any covenant contained herein, shall, except
as otherwise expressly contemplated hereby or unless there is an
express written direction by the Agent to the contrary agreed to by
the Borrower, be performed in accordance with GAAP. In the event that
changes
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in GAAP shall be mandated by the Financial Accounting Standards Board,
or any similar accounting body of comparable standing, or shall be
recommended by the Borrower's certified public accountants, to the
extent that such changes would modify such accounting terms or the
interpretation or computation thereof, such changes shall be followed
in defining such accounting terms only from and after the date the
Borrower, the Agent and the Lenders shall have amended this Agreement
to the extent necessary to reflect any such changes in the financial
covenants and other terms and conditions of this Agreement.
SECTION 13.10 Successors and Assigns; Participations.
(a) Benefit of Agreement. This Agreement shall be binding upon
and inure to the benefit of the Borrower, the Agent and the Lenders,
all future holders of the Notes, and their respective successors and
assigns, except that the Borrower shall not assign or transfer any of
its rights or obligations under this Agreement without the prior
written consent of each Lender. Nothing set forth in any guaranty,
including the Guaranty, shall impair, as between the Borrower, the
Agent and the Lenders, the obligations of the Borrower hereunder and
under the other Loan Documents.
(b) Assignment by Lenders. Each Lender may, with the consent of
the Agent and the Borrower, which consents shall not be unreasonably
withheld, assign to one or more Eligible Assignees all or a portion of
its interests, rights and obligations under this Agreement (including,
without limitation, all or a portion of the Extensions of Credit at
the time owing to it and the Notes held by it); provided that:
(i) each such assignment shall be of a constant, and not a
varying, percentage of all the assigning Lender's rights and
obligations under this Agreement with respect to (A) the Flexible
Credit Facility, (B) the Term Loan Facility or (C) both the Flexible
Credit Facility and the Term Loan Facility;
(ii) if less than all of the assigning Lender's Revolving
Commitment or Term Commitment, as the case may be, is to be assigned,
the Revolving Commitment or Term Commitment so assigned shall not be
less than $10,000,000;
(iii) the parties to each such assignment shall execute and
deliver to the Agent, for its acceptance and recording in the
Register, an Assignment and Acceptance in the form of Exhibit E
attached hereto (an "Assignment and Acceptance"), together with any
Note or Notes subject to such assignment;
(iv) such assignment shall not, without the consent of the
Borrower, require the Borrower to file a registration statement with
the Securities and Exchange Commission or apply to
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or qualify the Loans or the Notes under the blue sky laws of any
state;
(v) the assigning Lender shall pay to the Agent an
assignment fee of $2,500 upon the execution by such Lender of the
Assignment and Acceptance; provided that no such fee shall be payable
upon any assignment by a Lender to an Affiliate thereof.
Upon such execution, delivery, acceptance and recording, from and
after the effective date specified in each Assignment and Acceptance,
which effective date shall be at least five (5) Business Days after
the execution thereof, (A) the assignee thereunder shall be a party
hereto and, to the extent provided in such Assignment and Acceptance,
have the rights and obligations of a Lender hereby and (B) the Lender
thereunder shall, to the extent provided in such assignment, be
released from its obligations under this Agreement.
(c) Rights and Duties Upon Assignment. By executing and
delivering an Assignment and Acceptance, the assigning Lender
thereunder and the assignee thereunder confirm to and agree with each
other and the other parties hereto as set forth in such Assignment and
Acceptance.
(d) Register. The Agent shall maintain a copy of each
Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders and the amount
of the Revolving Extensions of Credit and Term Extensions of Credit
with respect to each Lender from time to time (the "Register"). The
entries in the Register shall be conclusive, in the absence of
manifest error, and the Borrower, the Agent 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 shall be
available for inspection by the Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
(e) Issuance of New Notes. Upon its receipt of an Assignment
and Acceptance executed by an assigning Lender and an Eligible
Assignee together with any Note or Notes subject to such assignment
and the written consent to such assignment, the Agent shall, if such
Assignment and Acceptance has been completed and is substantially in
the form of Exhibit E:
(i) accept such Assignment and Acceptance;
(ii) record the information contained therein in the
Register;
(iii) give prompt notice thereof to the Lenders and the
Borrower; and
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(iv) promptly deliver a copy of such Assignment and
Acceptance to the Borrower.
Within five (5) Business Days after receipt of notice, the Borrower
shall execute and deliver to the Agent, in exchange for the
surrendered Note or Notes, a new Note or Notes to the order of such
Eligible Assignee in amounts equal to the Commitment assumed by it
pursuant to such Assignment and Acceptance and a new Note or Notes to
the order of the assigning Lender in an amount equal to the Commitment
retained by it hereunder. Such new Note or Notes shall be in an
aggregate principal amount equal to the aggregate principal amount of
such surrendered Note or Notes, shall be dated the effective date of
such Assignment and Acceptance and shall otherwise be in substantially
the form of the assigned Notes delivered to the assigning Lender. Each
surrendered Note or Notes shall be canceled and returned to the
Borrower.
(f) Participation. Each Lender may, with the consent of the
Agent and the Borrower, which consents shall not be unreasonably
withheld, sell participations to one or more banks or other entities
in all or a portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Revolving
Commitment and/or its Term Commitment and its Revolving Extensions of
Credit and/or its Term Extensions of Credit and the Notes held by it);
provided that:
(i) each such participation shall be in an amount not less
than $5,000,000;
(ii) such Lender's obligations under this Agreement
(including, without limitation, its Commitment) shall remain
unchanged;
(iii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations;
(iv) such Lender shall remain the holder of the Notes held
by it for all purposes of this Agreement;
(v) the Borrower, 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 Agreement;
(vi) such Lender shall not permit such participant the
right to approve any waivers, amendments or other modifications to
this Agreement or any other Loan Document other than waivers,
amendments or modifications which would reduce the principal of or the
interest rate on any Loan or Reimbursement Obligation, extend the term
or increase the amount of the Revolving
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Commitment or Term Commitment of such participant, reduce the amount
of any fees to which such participant is entitled, extend any
scheduled payment date for principal or, except as expressly
contemplated hereby or thereby, release any collateral securing the
Obligations or any Security Document; and
(vii) any such disposition shall not, without the consent of
the Borrower, require the Borrower to file a registration statement
with the Securities and Exchange Commission to apply to qualify the
Loans or the Notes under the blue sky law of any state.
(g) Disclosure of Information; Confidentiality. The Agent and
the Lenders shall hold all non-public information obtained pursuant to
the Loan Documents in accordance with their customary procedures for
handling confidential information. Any Lender may, in connection with
any assignment, proposed assignment, participation or proposed
participation pursuant to this Section 13.10, disclose to the
assignee, participant, proposed assignee or proposed participant, any
information relating to the Borrower furnished to such Lender by or on
behalf of the Borrower; provided, that prior to any such disclosure,
each such assignee, proposed assignee, participant or proposed
participant shall agree with the Borrower or such Lender (which in the
case of an agreement with only such Lender, the Borrower shall be
recognized as a third party beneficiary thereof) to preserve the
confidentiality of any confidential information relating to the
Borrower received from such Lender.
(h) Certain Pledges or Assignments. Nothing herein shall
prohibit any Lender from pledging or assigning any Note to any Federal
Reserve Bank in accordance with Applicable Law.
SECTION 13.11 Amendments, Waivers and Consents; Renewal.
(a) Except as set forth below, any term, covenant, agreement or
condition of this Agreement or any of the other Loan Documents may be
amended or waived by the Lenders, and any consent given by the
Lenders, if, but only if, such amendment, waiver or consent is in
writing signed by the Required Lenders (or by the Agent with the
consent of the Required Lenders) and delivered to the Agent and, in
the case of an amendment, signed by the Borrower; provided, that no
amendment, waiver or consent shall (i) increase the amount or extend
the time of the obligation of the Lenders to make Loans or issue or
participate in Letters of Credit (including without limitation
pursuant to Section 2.6), (ii) extend the originally scheduled time or
times of payment of the principal of any Loan or Reimbursement
Obligation or the time or times of payment of interest on any Loan or
Reimbursement Obligation, (iii) reduce the rate of interest or fees
payable on any Loan or Reimbursement Obligation,
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(iv) permit any subordination of the principal or interest on any Loan
or Reimbursement Obligation, (v) release any collateral or Security
Document (other than as specifically permitted in this Agreement or
the applicable Security Document) or (vi) amend the provisions of this
Section 13.11 or the definition of Required Lenders, without the prior
written consent of each Lender. In addition, no amendment, waiver or
consent to the provisions of Article XII shall be made without the
written consent of the Agent.
SECTION 13.12 Performance of Duties. The Borrower's obligations
under this Agreement and each of the Loan Documents shall be performed
by the Borrower at its sole cost and expense.
SECTION 13.13 Indemnification. The Borrower agrees to reimburse
the Agent and the Lenders for all reasonable costs and expenses,
including all counsel, appraisal, or other expert or consultant fees
and disbursements incurred, and to indemnify and hold the Agent and
the Lenders harmless from and against all losses suffered by the Agent
and the Lenders in connection with (i) the exercise by the Agent or
the Lenders of any right or remedy granted to them under this
Agreement or any of the other Loan Documents, (ii) any claim, and the
prosecution or defense thereof, arising out of or in any way connected
with this Agreement or any of the other Loan Documents, and (iii) the
collection or enforcement of the Obligations or any of them; provided,
that the Borrower shall not be obligated to reimburse the Agent or any
Lender for costs and expenses, or indemnify the Agent or any Lender
for any loss, resulting from the negligence or willful misconduct of
the Agent or any Lender.
SECTION 13.14 All Powers Coupled with Interest. All powers of
attorney and other authorizations granted to the Lenders, the Agent
and any Persons designated by the Agent or any Lender pursuant to any
provisions of this Agreement or any of the other Loan Documents shall
be deemed coupled with an interest and shall be irrevocable so long as
any of the Obligations remain unpaid or unsatisfied or the Credit
Facility has not been terminated.
SECTION 13.15 Survival of Indemnities. Notwithstanding any
termination of this Agreement, the indemnities to which the Agent and
the Lenders are entitled under the provisions of this Article XIII and
any other provision of this Agreement and the Loan Documents shall
continue in full force and effect and shall protect the Agent and the
Lenders against events arising after such termination as well as
before.
SECTION 13.16 Titles and Captions. Titles and captions of
Articles, Sections and subsections in this Agreement are for
convenience only, and neither limit nor amplify the provisions of this
Agreement.
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SECTION 13.17 Severability of Provisions. Any provision of this
Agreement or any other Loan Document which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective only to the extent of such prohibition or unenforceability
without invalidating the remainder of such provision or the remaining
provisions hereof or thereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
SECTION 13.18 Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an
original and shall be binding upon all parties, their successors and
assigns, and all of which taken together shall constitute one and the
same agreement.
SECTION 13.19 Term of Agreement. This Agreement shall remain in
effect from the Closing Date through and including the date upon which
all Obligations shall have been indefeasibly and irrevocably paid and
satisfied in full. No termination of this Agreement shall affect the
rights and obligations of the parties hereto arising prior to such
termination.
SECTION 13.20 Adjustments. If any Lender (a "Benefitted
Lender") shall at any time receive any payment of all or part of its
Revolving Extensions of Credit or its Term Extensions of Credit, or
interest thereon, or if any Lender shall at any time receive any
collateral in respect to its Revolving Extensions of Credit or its
Term Extensions of Credit (whether voluntarily or involuntarily, by
setoff or otherwise) in a greater proportion than any such payment to
and collateral received by any other Lender, if any, in respect of
such other Lender's Revolving Extensions of Credit or its Term
Extensions of Credit, as applicable, or interest thereon, such
Benefitted Lender shall purchase for cash from the other Lenders such
portion of each such other Lender's Revolving Extensions of Credit or
its Term Extensions of Credit, as applicable, or shall provide such
other Lenders with the benefits of any such collateral, or the
proceeds thereof, as shall be necessary to cause such Benefitted
Lender to share the excess payment or benefits of such collateral or
proceeds ratably with each of the Lenders based upon the Lenders'
Revolving Commitment Percentages or Term Commitment Percentages, as
applicable; provided, that if all or any portion of such excess
payment or benefits is thereafter recovered from such Benefitted
Lender, such purchase shall be rescinded, and the purchase price and
benefits returned to the extent of such recovery, but without
interest. The Borrower agrees that each Lender so purchasing a portion
of another Lender's Revolving Extensions of Credit or its Term
Extensions of Credit may exercise all rights of payment (including,
without limitation,
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rights of set-off) with respect to such portion as fully as if such
Lender were the direct holder of such portion.
For the purposes of this section only, First Union National Bank
of Virginia ("FUNB"), as a creditor of the Borrower under the Loan
Agreement dated the date hereof (the "FUNB Agreement") among FUNB, the
Borrower and the Guarantors, shall be treated as a Lender, and the
outstanding principal owed to FUNB under the FUNB Agreement shall be
treated as Revolving Extensions of Credit of FUNB. For purposes of
this paragraph, FUNB shall be treated as two (2) separate Lenders with
respect to (a) FUNB's Revolving Extensions of Credit hereunder and (b)
principal owed to FUNB under the FUNB Agreement, respectively.
ARTICLE XIV
GUARANTY
SECTION 14.1 Guaranty of Obligations. The Guarantors hereby
jointly and severally guarantee to the Agent, for the benefit of the
Lenders, the prompt payment, when due, of all Obligations and agree
that upon default by the Borrower in the payment when due of any
Obligation, the Guarantors will promptly pay the same. The guaranty
obligation of the Guarantors contained in this section shall be a
continuing, absolute and unconditional guaranty. The foregoing is a
guaranty of payment, and not of collection.
SECTION 14.2 Waivers. (a) The Guarantors hereby waive notice
of the creation, incurrence or extension of any Obligations now
existing or hereafter arising.
(b) The Guarantors hereby waive protest, all demands and all
notices including, but not limited to, any notices in connection with,
related to or associated with, whether by law or agreement, (i) the
failure (whether partial or otherwise) by the Borrower or by any other
person to timely, properly or otherwise pay or perform any Obligation
or (ii) the creation, preservation, perfection or enforcement or lack
thereof, or any failure by any person in respect thereof, regarding
any Security.
SECTION 14.3 Forbearance and Modifications. The Guarantors
hereby agree that, without further notice or consent, the same hereby
being waived, and without affecting the Guarantors' liabilities
hereunder, the Agent or any Lender may at any time, in the exercise of
its sole discretion, take or refrain from taking any lawful action,
including without limitation changing any terms of all or any part of
any Obligations, granting any extensions, modifications or renewals of
any Obligations, effecting any releases, compromises or settlements
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or making any other indulgences with respect to any Obligations,
entering into any agreement concerning the use of any or all of the
Security or changing the terms of any agreement concerning any or all
of the Security, consenting to the substitution, exchange or release
of all or any part of the Security or any person liable to the Agent
or any Lender with respect thereto, realizing upon all or any part of
the Security in any lawful manner, or forbearing from realizing upon
all or any part of the Security.
SECTION 14.4 Continuing Liability. (a) The Guarantors shall
not be released from any obligations or liability, and shall not have
any rights or recourse against the Agent or any Lender, for any reason
relating to (i) any default with respect to any Security existing when
the Security is accepted by the Agent or any Lender or at any time
thereafter, (ii) any failure to convey, create or perfect a valid Lien
in any Security, (iii) any invalidity or defect in any Security, (iv)
the existence of any equities, defenses or claims in favor of others
with respect to any Security, (v) failure to correctly estimate the
value of any Security or the change in value of any Security, (vi) any
deterioration, waste or loss to any Security, and/or (vii) any rights
and consents granted, waivers made or other actions taken or not taken
by the Agent or any Lender hereunder. THE GUARANTORS HEREBY WAIVE ALL
SURETYSHIP AND OTHER SIMILAR DEFENSES, INCLUDING BUT NOT LIMITED TO
THE RIGHT TO REQUIRE THE AGENT OR ANY LENDER TO PROCEED TO ENFORCE THE
OBLIGATIONS AGAINST ANY PERSON BEFORE OR CONTEMPORANEOUSLY WITH THE
ENFORCEMENT OF THIS GUARANTY.
(b) The Guarantors' obligations and liabilities under the
Guaranty shall not be in any way affected or terminated if any other
person liable, primarily or secondarily, directly or indirectly, for
all or any part of any Obligations shall cease to exist, dissolve,
wind up its business, suspend business, make any assignment for the
benefit of creditors generally, become insolvent or admit in writing
its insolvency, generally not pay its debts as they become due, or
become a debtor in a bankruptcy case or if a receiver, trustee or
custodian is appointed for such other person's property or is
authorized to take charge of any of its property to enforce a Lien
against it or for purposes of general administration for the benefit
of its creditors, or if such other person should petition or apply to
any tribunal for any receiver for or any trustee of it or its estate
or for relief under any bankruptcy, arrangement, reorganization,
readjustment of debt, receivership, dissolution or liquidation
proceedings or under any law relating to the relief of debtors, or
have any such action commenced against it, with or without its
consent.
SECTION 14.5 Subrogation. The Guarantors shall not assert any
right of subrogation with respect to the Obligations or any
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<PAGE>
Security until all Obligations shall have been paid in full. No
subrogation of the Guarantors shall require the Agent or any Lender to
proceed against any person or entity or to resort to any Security or
to take any other action of any kind as a result of subrogation.
SECTION 14.6 Subordination. The Guarantors hereby (a)
subordinate to the Obligations any present and future debts,
obligations or liabilities, whether contingent or otherwise, of the
Borrower to any Guarantor, alone or with any other person, (b)
subordinate any Liens, whether now existing or hereafter arising,
securing payment of such debts, obligations or liabilities, and (c)
agree that no Guarantor shall ask for, demand, sue for, take or
receive any part of such debts, obligations and liabilities while
payment of any of the Obligations is in default. If any payment is
made to any Guarantor on account of such debts, obligations or
liabilities in violation of the terms hereof, such Guarantor shall
forthwith pay all such amounts to the Agent to be credited and
applied, in the Agent's sole discretion (but in proportion to the
Revolving Commitment Percentages and/or the Term Commitment
Percentages, as applicable), to the Obligations then outstanding,
whether matured or unmatured, contingent or otherwise.
SECTION 14.7 Further Guaranties. Any subsequent guaranty to
or for the benefit of the Agent or any Lender by any person, including
any Guarantor, shall not supersede or terminate the Guaranty, but
shall be an additional guaranty unless otherwise stated therein. If
any Guarantor has given a previous guaranty to the Agent or any
Lender, the Guaranty shall be in addition to such previous guaranty.
SECTION 14.8 Additional Guarantors. If at any time a
Substantially-Owned Subsidiary owns more than 10% of the total assets,
determined on a Consolidated basis, of the Borrower and its
Subsidiaries, the Borrower shall cause such Substantially-Owned
Subsidiary to execute and deliver to the Agent a document which
provides that such Substantially-Owned Subsidiary (a) is a Guarantor
hereunder and (b) thereby assumes all obligations of the Guarantors
hereunder. On and after the date of such delivery, such
Substantially-Owned Subsidiary shall be a Guarantor. For purposes of
this section, "Substantially-Owned" means, with respect to a
Subsidiary, a Subsidiary at least 67% of the shares of voting common
stock (or other ownership interests, in the case of a Subsidiary which
is not a corporation) of which are, directly or indirectly, owned or
controlled by the Borrower and/or one or more of its Substantially-
Owned Subsidiaries.
M#262687
79
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their duly authorized officers, all as of the day
and year first written above.
[CORPORATE SEAL] WLR FOODS, INC.
By:________________________________
Name:_________________________
Title:________________________
WAMPLER-LONGACRE, INC.
By:________________________________
Name:_________________________
Title:________________________
CASSCO ICE & COLD STORAGE, INC.
By:________________________________
Name:_________________________
Title:________________________
M#262687
<PAGE>
FIRST UNION NATIONAL BANK OF VIRGINIA,
as Agent and Lender
By: _______________________________
Name: ________________________
Title: _______________________
Commitment Percentage: 35%
Revolving Commitment: $35,000,000
Term Commitment: $8,750,000
CORESTATES BANK, N.A., also doing
business as Philadelphia National Bank
By: _______________________________
Name: ________________________
Title: _______________________
Commitment Percentage: 35%
Revolving Commitment: $35,000,000
Term Commitment: $8,750,000
HARRIS TRUST AND SAVINGS BANK
By: _______________________________
Name: ________________________
Title: _______________________
Commitment Percentage: 20%
Revolving Commitment: $20,000,000
Term Commitment: $5,000,000
CRESTAR BANK
By: _______________________________
Name: ________________________
Title: _______________________
Commitment Percentage: 10%
Revolving Commitment: $10,000,000
Term Commitment: $2,500,000
M#262687
<PAGE>
RECEIPT FOR NOTES
Each of the undersigned (collectively, the "Lenders") hereby
acknowledges receipt of a Promissory Note, made by WLR Foods, Inc.
(the "Borrower"), dated as of March 1, 1995, payable to such Lender
and in a principal amount indicated below for such Lender, which has
been delivered pursuant to a Credit Agreement dated as of March 1,
1995 among the Lenders, the Borrower, First Union National Bank of
Virginia as Agent, Wampler-Longacre, Inc. and Cassco Ice & Cold
Storage, Inc.
Dated ________________, 1995.
Principal Amount
$43,750,000 FIRST UNION NATIONAL
BANK OF VIRGINIA
By____________________________
Vice President
$43,750,000 CORESTATES BANK, N.A.,
also doing business as Philadelphia
National Bank
By____________________________
Its______________________
$25,000,000 HARRIS TRUST AND SAVINGS BANK
By____________________________
Its______________________
$12,500,000 CRESTAR BANK
By____________________________
Its______________________
M#262687
2
<PAGE>
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