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 March 29, 1997
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)
(540) 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 9, 1997 was 16,585,834 shares.
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
WLR FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>
(unaudited) Thirteen weeks ended
In thousands, except per share data March 29, March 30,
1997 1996
<S> <C> <C>
Net sales $222,225 $216,263
Cost of sales 211,244 203,543
-------- --------
Gross profit 10,981 12,720
Selling, general and administrative expenses 22,991 21,994
-------- --------
Operating loss (12,010) (9,274)
Other expense:
Interest expense 3,261 2,271
Miscellaneous (income) (124) (65)
-------- --------
Other expense 3,137 2,206
-------- --------
Loss before income taxes and minority interest (15,147) (11,480)
Income tax benefit (5,524) (4,419)
Minority interest in net earnings
of consolidated subsidiary 14 1
-------- --------
NET LOSS ($9,637) ($7,062)
======== ========
NET LOSS PER COMMON SHARE ($0.56) ($0.40)
AVERAGE COMMON SHARES OUTSTANDING 17,107 17,625
CASH DIVIDENDS DECLARED PER COMMON SHARE (Note 6) 0 $0.06
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
<TABLE>
WLR FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>
(unaudited) Thirty-nine weeks ended
In thousands, except per share data March 29, March 30,
1997 1996
<S> <C> <C>
Net sales $758,785 $734,856
Cost of sales 716,065 652,887
-------- --------
Gross profit 42,720 81,969
Selling, general and administrative expenses 70,576 72,377
-------- --------
Operating income (loss) (27,856) 9,592
Other expense:
Interest expense 9,369 6,453
Miscellaneous (income) (916) (268)
-------- --------
Other expense 8,453 6,185
-------- --------
Earnings (loss) before income taxes and minority interest (36,309) 3,407
Income tax expense (benefit) (13,249) 1,308
Minority interest in net earnings of consolidated subsidiary 40 22
-------- --------
NET EARNINGS(LOSS) ($23,100) $2,077
======== ========
NET EARNINGS(LOSS) PER COMMON SHARE ($1.32) $0.12
AVERAGE COMMON SHARES OUTSTANDING 17,514 17,483
CASH DIVIDENDS DECLARED PER COMMON SHARE (Note 6) $0.12 $0.18
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
1
<PAGE>
<TABLE>
WLR FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
Dollars in thousands
March 29, June 29,
1997 1996
(unaudited)
<C> <S> <S>
ASSETS
Current Assets
Cash and cash equivalents $287 $724
Accounts receivable, less allowance for
doubtful accounts of $1,560 and $708 67,659 79,932
Inventories (Note 2) 157,754 171,951
Income taxes receivable 209 10,802
Other current assets 13,490 4,275
-------- --------
Total current assets 239,399 267,684
Property, plant and equipment, net 162,875 177,268
Other assets 7,571 6,751
-------- --------
TOTAL ASSETS $409,845 $451,703
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Notes payable to banks $12 $30,776
Current maturities of long-term debt 4,622 7,983
Excess checks over bank balances 13,462 14,788
Trade accounts payable 31,987 31,997
Accrued expenses 24,115 23,887
Deferred income taxes 10,673 12,574
Other current liabilities 0 1,061
-------- --------
Total current liabilities 84,871 123,066
Long-term debt, excluding current maturities 168,228 138,510
Deferred income taxes 8,406 8,849
Minority interest in consolidated subsidiary 584 552
Other liabilities and deferred credits 3,502 3,392
Common stock subject to repurchase 8,875 17,750
Shareholders' equity:
Common stock, no par value. 62,953 61,981
Additional paid-in capital 2,974 2,974
Retained earnings 69,452 94,629
-------- --------
Total shareholders' equity 135,379 159,584
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $409,845 $451,703
======== =======
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
2
<PAGE>
<TABLE>
WLR FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
(unaudited) Thirty-nine weeks ended
Dollars in thousands March 29, March 30,
1997 1996
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) ($23,100) $2,077
Adjustments to reconcile net earnings (loss) to
net cash provided by (used in)operating activities:
Depreciation and amortization 21,218 20,915
Gain on sale of property, plant and equipment (1) (108)
Deferred income taxes (2,344) (298)
Other, net 547 335
Change in operating assets and liabilities:
(net of acquired businesses):
Decrease in accounts receivable 12,273 3,388
Decrease(Increase) in inventories 14,197 (37,615)
Decrease(Increase) in other current assets 1,378 (3,339)
Increase(Decrease) in accounts payable (10) 3,773
(Decrease)Increase in accrued expenses and other 338 (3,493)
-------- --------
Net Cash Provided by (Used in) Operating Activities 24,496 (14,365)
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (6,978) (16,619)
Cash used in acquisition, (including costs) 0 (10,563)
Proceeds from sales of property, plant and equipment 209 784
(Investments in) disposals of other assets (1,367) 819
Minority interest in net earnings of consolidated
subsidiary 32 16
-------- --------
Net Cash Used in Investing Activities (8,104) (25,563)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt (55,643) (13,892)
Proceeds from long-term debt 81,999 43,000
Notes payable to banks (net of principal payments) (30,764) 3,150
Increase (decrease) in checks drawn not presented (1,326) 12,292
Issuance of common stock 972 977
Repurchase of common stock (8,875) (2,821)
Dividends paid (3,192) (3,148)
-------- --------
Net Cash (Used in) Provided by Financing Activities (16,829) 39,558
-------- --------
Decrease in Cash and Cash Equivalents (437) (370)
Cash and Cash Equivalents at Beginning of Fiscal Year 724 706
-------- --------
Cash and Cash Equivalents at End of Period $287 $336
======== ========
Supplemental cash flow information:
Cash paid (refunded) for:
Interest $6,882 $5,213
Income taxes (10,418) 2,449
</TABLE>
The Company considers all highly liquid investments with maturities of 3 months
or less at purchase to be cash equivalents.
Non cash transactions in:
Fiscal 1997:
The company issued 45,000 shares of common stock valued at $0.6 million for the
acquisition of Jennings Ice, Inc. in December 1996. (Note 3)
Fiscal 1996:
The Company issued 411,216 shares of common stock valued at $5.4 million,
for the acquisition of New Hope Feeds, Inc. on September 29, 1995.
See accompanying Notes to Consolidated Financial Statements.
3
<PAGE>
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 and transactions have been
eliminated in consolidation. The consolidated balance sheet as of
March 29, 1997, and the consolidated statements of operations for the
thirteen and thirty-nine weeks ended March 29, 1997 and March 30,
1996, and the consolidated statements of cash flows for the
thirty-nine weeks ended March 29, 1997 and March 30, 1996 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 in
conformity with the requirements for 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 June 29, 1996. In both, the accounting policies and
principles used are consistent in all material respects. Certain
fiscal 1996 amounts have been reclassified to conform with fiscal 1997
presentations.
2. Inventories
A summary of inventories at March 29, 1997 and June 29, 1996 follows:
(unaudited)
Dollars in thousands March 29, June 29,
1997 1996
Live poultry and breeder flocks $77,131 $71,263
Processed poultry and meat products 49,863 66,895
Packaging supplies, parts and other 18,036 18,051
Feed, grain and eggs 12,724 15,742
-------- --------
Total inventories $157,754 $171,951
======== ========
3. Acquisition
In December 1996, the company issued 45,000 shares of common stock to
acquire an ice operation in Lynchburg, Virginia. The acquisition was
recorded as a purchase by the Company's subsidiary, Cassco Ice & Cold
Storage, Inc. The total value of the transaction including costs was
$581,000.
4. Acquisition of Common Stock
On January 20, 1997, the company entered into an agreement to
repurchase 1,774,999 shares (approximately 10% of the outstanding
shares of its common stock) from Cuddy Farms, Inc. at $10 per share,
in a private transaction. Fifty percent of the shares were
repurchased in January 1997, 25% were repurchased on March 30,
1997(subsequent to the quarter close), and the final 25% is
scheduled to be repurchased in late June 1997.
5. Debt Refinancing and Modification
The Company completed the refinancing of its bank debt during early
February. The new facility is a three year $160 million revolver,
which will be used for general corporate purposes. The new facility
replaces the revolving credit note and two bank term notes. The debt
is unsecured with an interest rate based on the London Inter-Bank
Offering Rate plus a spread determined by WLR Foods, Inc.'s debt to
capital ratio, calculated on a quarterly basis. The loan matures in
February 2000.
4
<PAGE>
WLR Foods, Inc. also modified its long-term private placement debt to
conform to the bank loan mentioned above. Interest payments have
increased by 1% over the original rates of the notes but may be
returned to original levels under the conditions as defined in the
revised agreements.
6. Stock Dividend
On March 20, 1997, the Company's Board of Directors declared a stock
dividend that was distributed on May 2, 1997 to shareholders of record
on April 11, 1997. In lieu of the regular cash dividend, the dividend
was paid in stock with .00525 shares being distributed for each share
of common stock outstanding.
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.
Combined costs of corn and soybean meal in poultry processed during
the quarter remained at levels as high as were seen in the same
quarter of 1996. Higher market prices for grain increased feed costs
for the first three quarters by approximately $46 million over year to
date fiscal 1996 levels. Due to excess supply, commodity prices for
turkey products dropped well below levels experienced last year.
Operating performance in the broiler business has continued to improve
but operating results in turkey will require significant improvement
in order to return to historical levels of profitability. Although
higher than normal feed costs remain a concern to both our chicken and
turkey operations, dramatically improved results in turkey will also
be dependent on selling prices which are more reflective of the costs
to produce the product and improved turkey health; particularly in our
Carolina operations. Recent industry statistics reflect a decline in
the number of turkeys being placed on farms for grow-out. However, it
still remains to be seen if these declines will translate into the
significant reduction in pounds needed to bring supply and demand into
balance and permit reasonable prices to be obtained.
On January 20, 1997 the Company announced it had entered into a
private agreement to purchase 1,774,999 shares (approximately 10% of
the outstanding shares of its common stock) from Cuddy Farms, Inc. for
$10 per share. Fifty percent of the shares were purchased in mid
January, 25% were purchased subsequent to the close of the third
quarter and the remaining shares (25%) are scheduled to be purchased
in June of 1997. The purchase will be financed through the Company's
revolving credit facility.
On February 6, 1997, the Company completed the refinancing of its
Bank Revolving Credit Agreement. Borrowings under the new facility
replace those under the previous revolving credit facility, a $30
million borrowing made in June 1996 and approximately $19 million of
long term debt. The new facility amends certain financial covenants
and will mature in the year 2000.
Prior to the close of the quarter, WLR Foods, Inc. amended the
covenants of the two private placement senior debt facilities that are
currently in place. The amendments align the covenants of the senior
debt and also the Bank Revolving Credit Agreement and give the Company
increased operating flexibility.
On March 20, 1997, the Company s Board of Directors declared a stock
dividend that was distributed on May 2, 1997 to shareholders of record
on April 11, 1997. In lieu of the regular cash dividend, the dividend
was paid in stock with .00525 shares being distributed for each share
of common stock outstanding.
The Company also announced plans to double the capacity of its
Goldsboro, North Carolina chicken complex from 325,000 to 650,000
birds per week. The $8 million expansion will include the building
of a new hatchery and additional growout and processing plant
equipment to handle the increased production. When completed in the
first half of calendar year 1998, the expansion will include the
addition of a second shift at the processing plant and approximately
300 new jobs.
5
<PAGE>
Additionally, the Company announced it would be reducing production at
its Marshville, North Carolina turkey complex in an effort to reduce
the impact of Poult Enteritis Mortality Syndrome (PEMS), a disease
affecting turkeys in that region. Placements of poults to one-
third of North Carolina producers will be suspended until a cure
has been found for PEMS. The Company took a $1.5 million charge
during the third quarter to cover costs associated with the cutback.
Results of Operations
Net sales increased $6.0 million or 2.8%, while sales pounds
increased 9.5% for the quarter ended March 29, 1997 compared to the
same period last year. Chicken sales pounds increased 6.0%, and
the average realized sales price for chicken was up 0.4% compared to
the third quarter last year. Turkey sales pounds increased 18.7%,
while the average realized sales price decreased 12.6% compared to
the same quarter last year. Average quoted commodity prices for
whole chicken and turkey for the third quarter were mixed with chicken
9.0% higher and turkey 8.3% lower.
For the thirty-nine weeks, net sales increased $23.9 million or 3.3%,
primarily due to a 5.6% increase in chicken sales pounds and a 2.5%
increase in the average selling price of chicken. The volume increase
in chicken was due to the acquisition of the Goldsboro operations
early in the second quarter of 1996. A 3.4% increase in sales pounds
for turkey products was offset by a 4.1% decrease in the average
realized selling price. Average quoted commodity poultry prices were
mixed for the first nine months with chicken 8.8% higher and turkey
7.1% lower.
Cost of sales increased $7.7 million or 3.8% for the quarter. Feed
costs in the poultry processed were approximately $2 million lower
compared to the same period last year. Prices for corn averaged
19.1% lower while soybean meal prices were 13.2% higher in the quarter
compared to one year earlier.
For the nine month period cost of sales was up $63.2 million or 9.7%
primarily due to increased feed costs. The delivered costs for grain
which had decreased throughout the second quarter of the fiscal year,
trended higher during the third quarter. The delivered corn and
soybean meal prices were about 7% and 28% higher, respectively, for
the nine months ended March 29, 1997 than in the prior year.
The third quarter gross profit decreased $1.7 million or 13.7%,
and the gross margin decreased from 5.9% to 4.9% as compared to the
same quarter last year. The decrease is primarily attributed to
lower average selling prices for turkey.
For the thirty-nine weeks gross profit decreased $39.3 million or
47.9%. The gross margin decreased from 11.2% to 5.6%. Higher sales
volume and prices for chicken were offset by high feed costs and lower
average realized selling prices for turkey.
Selling, general and administrative expenses increased $1.0 million or
4.5% compared to the third quarter last year, or from 10.2% to 10.3%
as a percent of sales. The third quarter increase is attributed to
freight costs driven by larger volumes of product sold. 0 Year to
date selling, general and administrative expenses decreased $1.8
million or 2.5%, a drop from 9.8% to 9.3% as a percentage of sales,
primarily due to the effects of cost reductions initiated last year.
Interest expense was up $1.0 million for the quarter and $2.9 million
for the fiscal year due to higher levels of borrowing this year.
For the quarter, the income tax benefit increased from $4.4 million to
$5.5 million due to a larger current quarter loss. For the first nine
months, income taxes decreased from an expense of $1.3 million to a
benefit of $13.2 million due to the loss for the year. The tax rate
decrease for both periods was due to limitations on the use of
operating losses in some states where the Company does business.
For the third quarter the Company had a net loss of $9.6 million or
$0.56 per share compared to a net loss of $7.1 million or $0.40 per
share for the same period last year. For the thirty-nine weeks the
Company had a net loss of $23.1 million or $1.32 per share compared to
earnings of $2.1 million or $0.12 per share last year.
Financial Condition and Liquidity
Total inventory was $14.2 million lower compared to the end of
fiscal year 1996. All of the decrease was in finished goods where
holdings were reduced by $17 million. Debt levels have increased
6
<PAGE>
during the third quarter of the fiscal year due to the repurchase
of Cuddy Farms, Inc. stock and seasonal increases in finished
goods inventories. Net working capital was $154.5 million, up from
$144.6 million at June 29, 1996, due largely to the company's debt
refinancing. The ratio of total debt to total capital, including
common stock subject to repurchase as debt, was 57.3% up from 55.1%
at the end of fiscal 1996.
Capital Resources
The Company s capital spending for the quarter was $2.9 million,
primarily for replacements of existing equipment, safety requirements,
and projects with rapid pay backs. Depreciation expense was $6.9
million. On a year to date basis, capital spending was $7.0 million
and depreciation expense was $21.2 million. Looking forward to
fiscal 1998, the Company anticipates spending approximately $15
million for capital projects.
The Company completed the refinancing of its bank debt during early
February. The new facility is a three year $160 million revolver,
which will be used for general corporate purposes. The new facility
replaces the revolving credit note and two bank term notes. The debt
is unsecured with an interest rate based on the London Inter-Bank
Offering Rate plus a spread determined by WLR Foods, Inc. s debt to
capital ratio, calculated on a quarterly basis. The loan matures in
February 2000.
WLR Foods, Inc. also modified its long-term private placement debt to
conform to financial covenants under the bank loan discussed above.
Interest payments have been increased by 1% over the original rates of
the notes but may be returned to original levels under the conditions
as defined in the revised agreements.
The Company remains in material compliance with all regulatory
requirements at the present time. WLR Foods will adopt SFAS No. 123,
Accounting for Stock Based Compensation in fiscal 1997, and will elect
the disclosure provisions of the statement and continue to account for
stock-based compensation in accordance with APB opinion No. 25. This
accounting standard is not anticipated to materially impact the
financial position of the Company or the results of operations at the
time of adoption. The Company will adopt FASB Statement 128,
"Earnings Per Share" in fiscal 1998. The statement serves to simplify
the computation of earnings per share, and will not have an impact on
the Company s operations or financial position.
Company performance expectations or "forward looking statements"
expressed from time to time are always subject to the possible
material impact of any risks of the business. These risks include
weather conditions impacting grain production and harvesting and live
growout of poultry; feed supplies and prices; supplies and selling
prices of poultry and competing meats; consumer preferences;
governmental and regulatory intervention in the export/import of
poultry; changes in the regulations governing production processes;
and fluctuations in the general business climate.
7
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
4.1 Credit Agreement, dated as of January 1, 1997,
with First Union National Bank of Virginia and
others.
4.2 Loan Agreement, dated as of January 1, 1997, with
First Union National Bank of Virginia.
4.3 Agreement of the Company, dated May 6, 1997, to
furnish a copy of the Third Amendment, dated as of
March 1, 1997, to the Note Agreement, dated May 1,
1991, with The Minnesota Mutual Life Insurance
Company and others.
4.4 Agreement of the Company, dated May 6, 1997, to
furnish a copy of the First Amendment, dated as of
March 1, 1997, to the Note Agreement, dated June
1, 1995, with respect to the issuance of certain
long-term debt.
27 Financial Data Schedule
(b) Form 8-K
Reporting Date March 26, 1997. Item Reported.
Item 5. Other Events. WLR Foods, Inc. announced the
declaration of a stock dividend of 0.00525 shares per
outstanding share of stock, the expansion of its
Goldsboro, North Carolina chicken complex and the
reduction of turkey production at its Marshville, North
Carolina facility.
8
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report is signed this 13th day of May, 1997, by the Registrant's
principal financial officer who is also authorized by the Registrant
to sign on its behalf.
WLR FOODS, INC.
___/s/_Robert T. Ritter_________
Robert T. Ritter, Chief Financial
Officer and duly authorized
signatory for Registrant
9
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
4.1 Credit Agreement, dated as of January 1, 1997, with
First Union National Bank of Virginia and others.
4.2 Loan Agreement, dated as of January 1, 1997, with First
Union National Bank of Virginia.
4.3 Agreement of the Company, dated May 6, 1997, to furnish
a copy of the Third Amendment, dated as of March 1,
1997, to the Note Agreement, dated May 1, 1991, with
The Minnesota Mutual Life Insurance Company and others.
4.4 Agreement of the Company, dated May 6, 1997, to furnish
a copy of the First Amendment, dated as of March 1,
1997, to the Note Agreement, dated June 1, 1995, with
respect to the issuance of certain long-term debt.
27 Financial Data Schedule
10
<PAGE>
Exhibit 4.1
CREDIT AGREEMENT
dated as of January 1, 1997,
by and among
WLR FOODS, INC.,
as Borrower,
WAMPLER FOODS, INC.
and
CASSCO ICE & COLD STORAGE, INC.,
as Guarantors,
the Lenders referred to herein,
and
FIRST UNION NATIONAL BANK
OF VIRGINIA,
as Agent
<PAGE>
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 . . . . . . . . . . 14
SECTION 2.1 Revolving Credit Loans . . . . . . . . . 14
SECTION 2.2 Procedure for Advances of Revolving Loans 14
SECTION 2.3 Repayment of Loans . . . . . . . . . . . 15
SECTION 2.4 Notes . . . . . . . . . . . . . . . . . . 16
SECTION 2.5 Permanent Reduction of the Aggregate
Revolving Commitment . . . . . . . . . . 16
SECTION 2.6 Termination of Credit Facility . . . . . 17
SECTION 2.7 Use of Proceeds . . . . . . . . . . . . . 17
ARTICLE III
LETTER OF CREDIT FACILITY . . . . . . . . 17
SECTION 3.1 L/C Commitment . . . . . . . . . . . . . 17
SECTION 3.2 Procedure for Issuance of Letters of
Credit . . . . . . . . . . . . . . . . . 18
SECTION 3.3 Commissions and Other Charges . . . . . . 18
SECTION 3.4 L/C Participation . . . . . . . . . . . . 19
SECTION 3.5 Reimbursement Obligation of the Borrower 20
SECTION 3.6 Obligations Absolute . . . . . . . . . . 21
SECTION 3.7 Effect of Application . . . . . . . . . . 21
SECTION 3.8 Existing Letters of Credit . . . . . . . 21
ARTICLE IV
GENERAL LOAN PROVISIONS . . . . . . . . 22
SECTION 4.1 Interest . . . . . . . . . . . . . . . . 22
SECTION 4.2 Notice and Manner of Conversion or
Continuation of Loans . . . . . . . . . . 25
SECTION 4.3 Facility, Commitment and Agency Fees . . 25
SECTION 4.4 Manner of Payment . . . . . . . . . . . . 27
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
M#368727 i
<PAGE>
SECTION 4.7 Changed Circumstances . . . . . . . . . . 28
SECTION 4.8 Indemnity . . . . . . . . . . . . . . . . 30
SECTION 4.9 Capital Requirements . . . . . . . . . . 31
SECTION 4.10 Taxes . . . . . . . . . . . . . . . . . . 31
ARTICLE V
CLOSING; CONDITIONS OF CLOSING AND BORROWING . . . 33
SECTION 5.1 Closing . . . . . . . . . . . . . . . . . 33
SECTION 5.2 Conditions to Closing and Initial
Extensions of Credit . . . . . . . . . . 33
SECTION 5.3 Conditions to All Loans and Letters of
Credit . . . . . . . . . . . . . . . . . 36
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 . . . . . . . . . . . . . 44
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 . . . . . . . . 46
SECTION 7.4 Other Reports . . . . . . . . . . . . . . 47
SECTION 7.5 Notice of Litigation and Other Matters . 47
SECTION 7.6 Accuracy of Information . . . . . . . . . 49
ARTICLE VIII
AFFIRMATIVE COVENANTS . . . . . . . . . 49
SECTION 8.1 Preservation of Corporate Existence and
Related Matters . . . . . . . . . . . . . 49
SECTION 8.2 Maintenance of Property . . . . . . . . . 49
SECTION 8.3 Insurance . . . . . . . . . . . . . . . . 49
SECTION 8.4 Accounting Methods and Financial Records 50
SECTION 8.5 Payment and Performance of Obligations . 50
SECTION 8.6 Compliance With Laws and Approvals . . . 50
SECTION 8.7 Environmental Laws . . . . . . . . . . . 50
SECTION 8.8 Compliance with ERISA . . . . . . . . . . 51
SECTION 8.9 Compliance With Agreements . . . . . . . 51
SECTION 8.10 Conduct of Business . . . . . . . . . . . 51
SECTION 8.11 Visits and Inspections . . . . . . . . . 51
SECTION 8.12 Further Assurances . . . . . . . . . . . 52
SECTION 8.13 Meeting with Lenders . . . . . . . . . . 52
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ARTICLE IX
FINANCIAL COVENANTS . . . . . . . . . 52
SECTION 9.1 Fixed Charge Coverage Ratio . . . . . . . 52
SECTION 9.2 Minimum Tangible Net Worth . . . . . . . 53
SECTION 9.3 Maximum Debt to Capitalization Ratio . . 53
SECTION 9.4 Current Ratio . . . . . . . . . . . . . . 53
ARTICLE X
NEGATIVE COVENANTS . . . . . . . . . 53
SECTION 10.1 Limitations on Debt . . . . . . . . . . . 53
SECTION 10.2 Limitations on Contingent Obligations . . 54
SECTION 10.3 Limitations on Liens . . . . . . . . . . 54
SECTION 10.4 Limitations on Acquisitions . . . . . . . 55
SECTION 10.5 Limitations on Mergers and Liquidation . 56
SECTION 10.6 Limitations on Sale of Assets . . . . . . 56
SECTION 10.7 Transactions with Affiliates . . . . . . 56
SECTION 10.8 Certain Accounting Changes . . . . . . . 57
SECTION 10.9 Compliance with ERISA . . . . . . . . . . 57
SECTION 10.10 More Restrictive Agreements . . . . . . . 57
SECTION 10.11 Transfers to Subsidiaries . . . . . . . . 58
ARTICLE XI
DEFAULT AND REMEDIES . . . . . . . . . 58
SECTION 11.1 Events of Default . . . . . . . . . . . . 58
SECTION 11.2 Remedies . . . . . . . . . . . . . . . . 61
SECTION 11.3 Rights and Remedies Cumulative;
Non-Waiver; etc. . . . . . . . . . . . . 62
ARTICLE XII
THE AGENT . . . . . . . . . . . . 62
SECTION 12.1 Appointment . . . . . . . . . . . . . . . 62
SECTION 12.2 Delegation of Duties . . . . . . . . . . 63
SECTION 12.3 Exculpatory Provisions . . . . . . . . . 63
SECTION 12.4 Reliance by the Agent . . . . . . . . . . 63
SECTION 12.5 Notice of Default . . . . . . . . . . . . 64
SECTION 12.6 Non-Reliance on the Agent and Other
Lenders . . . . . . . . . . . . . . . . . 64
SECTION 12.7 Indemnification . . . . . . . . . . . . . 65
SECTION 12.8 The Agent in Its Individual Capacity . . 65
SECTION 12.9 Resignation of the Agent; Successor Agent 66
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ARTICLE XIII
MISCELLANEOUS . . . . . . . . . . . 66
SECTION 13.1 Notices . . . . . . . . . . . . . . . . . 66
SECTION 13.2 Expenses . . . . . . . . . . . . . . . . 68
SECTION 13.3 Set-off . . . . . . . . . . . . . . . . . 68
SECTION 13.4 Governing Law . . . . . . . . . . . . . . 69
SECTION 13.5 Consent to Jurisdiction . . . . . . . . . 69
SECTION 13.6 Waiver of Punitive Damages; Waiver of
Jury Trial . . . . . . . . . . . . . . . 69
SECTION 13.7 Reversal of Payments . . . . . . . . . . 69
SECTION 13.8 Injunctive Relief . . . . . . . . . . . . 70
SECTION 13.9 Accounting Matters . . . . . . . . . . . 70
SECTION 13.10 Successors and Assigns; Participations . 70
SECTION 13.11 Amendments, Waivers and Consents; Renewal 73
SECTION 13.12 Performance of Duties . . . . . . . . . . 74
SECTION 13.13 Indemnification . . . . . . . . . . . . . 74
SECTION 13.14 All Powers Coupled with Interest . . . . 74
SECTION 13.15 Survival of Indemnities . . . . . . . . . 75
SECTION 13.16 Titles and Captions . . . . . . . . . . . 75
SECTION 13.17 Severability of Provisions . . . . . . . 75
SECTION 13.18 Counterparts . . . . . . . . . . . . . . 75
SECTION 13.19 Term of Agreement . . . . . . . . . . . . 75
SECTION 13.20 Adjustments . . . . . . . . . . . . . . . 75
ARTICLE XIV
GUARANTY . . . . . . . . . . . . 76
SECTION 14.1 Guaranty of Obligations . . . . . . . . . 76
SECTION 14.2 Waivers . . . . . . . . . . . . . . . . . 76
SECTION 14.3 Forbearance and Modifications . . . . . . 76
SECTION 14.4 Continuing Liability . . . . . . . . . . 77
SECTION 14.5 Subrogation . . . . . . . . . . . . . . . 77
SECTION 14.6 Subordination . . . . . . . . . . . . . . 78
SECTION 14.7 Further Guaranties . . . . . . . . . . . 78
SECTION 14.8 Additional Guarantors . . . . . . . . . . 78
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EXHIBITS
Exhibit A - Form of 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
Exhibit F - Form of Account Designation Direction
Exhibit G - Form of Repayment Notice
Exhibit H - Form of Letter of Credit Application
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 10.3(f) - Existing Liens
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CREDIT AGREEMENT, dated as of the 1st day of January, 1997,
by and among WLR FOODS, INC., a corporation organized under the
laws of Virginia (the "Borrower"), WAMPLER FOODS, 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:
"Account Designation Direction" means either (a) a
direction, in the form attached hereto as Exhibit F,
appropriately completed and signed by the Borrower, which
specifies the account to which the Agent is to disburse the
proceeds of borrowings pursuant to Section 2.2(b), or (b) a
comparable direction, appropriately completed, contained in a
Notice of Borrowing.
"Affiliate" means, with respect to any Person (the "First
Person"), any other Person (other than a Subsidiary of the First
Person) which directly or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common
control with, the First Person 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.
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"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 Sixty
Million Dollars ($160,000,000).
"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 Commitment" means, as to any Lender at any time,
an amount equal to the excess, if any, of (a) such Lender's
Commitment over (b) such Lender's 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 Charlotte, North Carolina and
London, England, 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 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
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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 the Notes are originally executed
and delivered to the Lenders.
"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
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.
"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; provided that, if (a) any amount is to be determined
hereunder on a consolidated basis, (b) under GAAP, an entity
which is not a Guarantor would be consolidated with the Borrower,
and (c) the Borrower and/or one or more of the Guarantors do not,
directly or indirectly, own more than 50% of the ownership
interest in such entity, then such amount shall be determined as
though such entity were not a Subsidiary and were not
consolidated with the Borrower. All financial statements
delivered pursuant to this Agreement shall be prepared without
consolidating such entity with the Borrower or shall include
schedules which clearly reflect the amounts which would have been
shown on such financial statements had such financial statements
been so prepared.
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"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)
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
Revolving Credit Facility and the L/C Facility.
"Debt" means, with respect to the Borrower and its
Subsidiaries at any date and without duplication, Capital Leases
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), deferred
compensation payable to current or former employees and other
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 Derivative
Agreements entered into for speculative purposes but shall not
include any obligations pursuant to Derivative Agreements entered
into in the ordinary course of business for the purpose of
mitigating risk.
"Debt Ratio" means the ratio of (a) Total Debt to (b) the
sum of (i) the shareholders' equity (determined by treating the
Repurchase Obligation as part of the Borrower's shareholders'
equity) of the Borrower and its Subsidiaries, determined on a
Consolidated basis, and (ii) Total Debt.
"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.
"Derivative Agreement" means any agreement with respect to
any exchange-traded or over-the-counter transaction, contract,
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instrument, security, obligation or undertaking of whatever
nature that constitutes (in whole or in part) a forward, future,
option, foreign exchange, swap, cap, collar, floor or combination
thereof, or anything similar to any of the foregoing, whether for
physical delivery or cash settlement, which is entered into for
any purpose, whether to hedge or to speculate, including (without
limitation) any of the foregoing which relates to any interest
rate or index; currency; currency exchange rate or index; debt
security, price or index; depositary instrument, price or index;
equity security, price or index; or commodity or natural resource
price or index.
"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 and whose senior debt is rated BBB or higher by
Standard & Poor's Ratings Group (or has a comparable rating from
another rating agency), (b) a finance company, insurance company
or other financial institution which in the ordinary course of
business extends credit of the type extended hereunder, that has
total assets in excess of $1,000,000,000 and whose senior debt is
rated BBB or higher by Standard & Poor's Ratings Group (or has a
comparable rating from another rating agency), (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.
"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,
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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.
"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 Commitment Percentage of the L/C Obligations
then outstanding.
"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
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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.
"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.
"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 Foods, Inc. (which
was formerly known as 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.
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"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.
"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 Twenty Million Dollars ($20,000,000).
"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 $3,000,000 are
being offered to leading banks at approximately 11:00 a.m. London
time, two (2) Business Days prior to the commencement of the
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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
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 all Revolving Loans
collectively as the context requires.
"Loan Documents" means, collectively, this Agreement, the
Notes, the Applications, any Derivative 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.
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"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.
"1995 Agreement" means the Credit Agreement dated as of
March 1, 1995, among the Borrower, the Guarantors, the Lenders
and the Agent, as the same shall have been modified or amended by
an Amendment to Credit Agreement dated as of July 1, 1995 and a
Modification Agreement dated as of June 1, 1996.
"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 Credit 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.
"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 Derivative 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
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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).
"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
obligations to repurchase certain shares of its capital stock at
a price not exceeding $8,875,000 upon the occurrence of certain
conditions, which obligations relate to 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 sixty-five percent (65%) 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 sixty-five percent
(65%).
"Revolving Credit Facility" means the revolving credit
facility established pursuant to Article II hereof.
"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)
the last Business Day of the month in which occurs the third
anniversary of the Closing Date, 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 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.
"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
"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) by treating the Repurchase Obligation as a liability.
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"Taxes" shall have the meaning assigned thereto in Section
4.10(a).
"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
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. Total Debt shall not include any Debt under
a Derivative Agreement.
"Uniform Customs" means the Uniform Customs and Practice for
Documentary Credits (1993 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.
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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.
(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 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 Commitment. Each Revolving Loan by a Lender
shall be in a principal amount equal to such Lender's 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
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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 $3,000,000 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.
(b) Disbursement of Loans. Not later than 2:00 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 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 such deposit account of the Borrower maintained with
the Agent, or by wire transfer to such other account, as may be
specified in the most recent Account Designation Direction
delivered by the Borrower to the Agent. 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
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
Termination Date.
(b) Mandatory Repayment of Excess Loans. If at any time the
outstanding principal amount of all Revolving Loans exceeds the
Aggregate 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.
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(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 contemporaneous
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 and the
amount of the repayment allocable to each LIBOR Rate Loan being
repaid. Upon receipt of such notice, which shall be in the form
attached hereto as Exhibit G, 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 $3,000,000 or a whole
multiple of $1,000,000 in excess thereof with respect to any
LIBOR Rate Loan.
(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.
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 Commitment in an aggregate principal amount not less
than $3,000,000 or any whole multiple of $3,000,000 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 Extensions of
Credit of the Lenders after such reduction to the Aggregate
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Commitment as so reduced and by payment of accrued interest on
the amount of such repaid principal. Any reduction of the
Aggregate Commitment to zero shall be accompanied by payment of
all outstanding Obligations 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 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) the Revolving Loan
Termination Date and (ii) the date of termination, whether
automatically or 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/or (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. The Borrower shall, on the Closing
Date, pay all amounts owed to the Lenders under the 1995
Agreement and the Notes (as defined in the 1995 Agreement) with
such proceeds or other funds available to the Borrower, except as
otherwise provided in Section 3.8. The Borrower shall not be
required to pay any Lender any amount pursuant to Section 4.8 of
the 1995 Agreement by reason of the payment or prepayment of a
LIBOR Rate Loan (as defined in the 1995 Agreement) on a date
other than the last day of an Interest Period (as defined in the
1995 Agreement) so long as such payment or prepayment is made
under the preceding sentence.
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 and commercial 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
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Obligations would exceed the L/C Commitment or (ii) the Available
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 or commercial 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 an application therefor, in the form attached hereto as
Exhibit H, 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 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 a rate per annum, as specified below, on the face amount
of such Letter of Credit. Such commission shall be payable
quarterly in arrears on the last Business Day of each calendar
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quarter. Such rate shall be the Applicable Margin for LIBOR Rate
Loans as in effect from time to time.
(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 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 pursuant to
subsection (a) in accordance with their respective 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
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 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 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
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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 or at 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 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
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
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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 the 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
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 1995 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 1995
Agreement. Any commission payable with respect to any such
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letter of credit under the 1995 Agreement for the period ending
on the Closing Date shall be payable on the Closing Date,
notwithstanding any contrary provision in the 1995 Agreement, and
no commission shall be payable under Section 3.3(a) with respect
to 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".
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;
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(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
Revolving Loan Termination Date;
(v) there shall be no more than six (6) Interest
Periods outstanding at any time; and
(vi) for any LIBOR Rate Loan made on or within five
Business Days after the Closing Date, the Interest Period may be
a period of (A) not less than 15 days or more than 40 days or (B)
one, two or three months.
(c) Applicable Margin.
(i) The Applicable Margin provided for in Section
4.1(a) with respect to the Loans (the "Applicable Margin") shall
be determined by reference to the Debt Ratio as of the end of the
fiscal quarter to which the Officer's Compliance Certificate most
recently delivered relates, in accordance with the following
table:
Debt Applicable Margin
Ratio Base Rate Loans LIBOR Rate
Loans
Less than 0.45:1 0% 0.75%
Greater than or equal
to 0.45:1 but less
than 0.5:1 0.25% 1.125%
Greater than or equal
to 0.5:1 but less
than 0.55:1 0.5% 1.5%
Greater than or equal
to 0.55:1 0.75% 2.0%
(ii) Adjustments, if any, in the Applicable Margin
shall be made by the Agent on the fifth Business Day after
receipt by the Agent of quarterly financial statements pursuant
to Section 7.1(a) and the accompanying Officer's Compliance
Certificate setting forth the Debt Ratio as of the end of the
applicable fiscal quarter. In the event the Borrower fails to
deliver any such financial statements and Officer's Compliance
Certificate by the date required in Section 7.1(a), then, from
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such date and until the fifth Business Day after delivery to the
Agent of such financial statements and Officer's Compliance
Certificate, the Applicable Margin shall be the Applicable Margin
which would have applied had the Debt Ratio been greater than or
equal to 0.55:1.
(iii) The Applicable Margin as of the Closing Date and
until the next adjustment is made pursuant to paragraph (ii)
above shall be the Applicable Margin which would have applied had
the Debt Ratio been greater than or equal to 0.55:1.
(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 (i) in the
case of a LIBOR Rate Loan, on the basis of a 360-day year and the
actual number of days elapsed, and (ii) in the case of a Base
Rate Loan, 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
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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
option to (a) convert at any time all or any portion of its
outstanding Base Rate Loans in a principal amount equal to
$3,000,000 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
$3,000,000 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 resulting from
a conversion or to be continued, the last day of the Interest
Period therefor, (ii) the effective date of such conversion or
continuation (which shall be a Business Day), and (iii) the
principal amount of such Loans to be converted or continued. The
Agent shall promptly notify the Lenders of such Notice of
Conversion/Continuation.
SECTION 4.3 Facility, Commitment and Agency Fees.
(a) Facility Fee. Commencing on the Closing Date, the
Borrower shall pay to the Agent, for the account of the Lenders,
a non-refundable facility fee at a rate per annum equal to the
average daily Facility Fee Rate (as defined in Section 4.3(d)),
as in effect during the applicable calendar quarter (or portion
thereof ending on the Revolving Loan Termination Date) referred
to in the following sentence, on the average daily amount of the
Aggregate Commitment. The facility 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 facility fee shall be
distributed by the Agent to the Lenders pro rata in accordance
with the Lenders' respective Commitment Percentages.
(b) Commitment Fee. On the Closing Date, the Borrower shall
pay to the Agent, and the Agent shall distribute pro rata to the
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Lenders in accordance with their respective Commitment
Percentages, a commitment fee in an amount equal to the greater
of (i) 0.25% of the original Aggregate Commitment or (ii) the
aggregate fees charged to the Borrower by its other senior
lenders in connection with the execution and delivery of this
Agreement or revisions to the Borrower's agreements with such
other senior lenders made contemporaneously, or essentially
contemporaneously, with the execution and delivery of this
Agreement.
(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 pertaining to
this Agreement.
(d) Facility Fee Rate.
(i) The Facility Fee Rate to be used in calculating
the facility fee provided for in Section 4.3(a) (the "Facility
Fee Rate") shall be determined by reference to the Debt Ratio as
of the end of the fiscal quarter to which the Officer's
Compliance Certificate most recently delivered relates, in
accordance with the following table:
Debt Ratio Facility Fee Rate
Less than 0.45:1 0.25%
Greater than or equal
to 0.45:1 but less
than 0.5:1 0.375%
Greater than or equal
to 0.5:1 0.5%
(ii) Adjustments, if any, in the Facility Fee Rate
shall be made by the Agent on the fifth Business Day after
receipt by the Agent of quarterly financial statements pursuant
to Section 7.1(a) and the accompanying Officer's Compliance
Certificate setting forth the Debt Ratio as of the end of the
applicable fiscal quarter. In the event the Borrower fails to
deliver any such financial statements and Officer's Compliance
Certificate by the date required in Section 7.1(a), then, from
such date and until the fifth Business Day after delivery to the
Agent of such financial statements and Officer's Compliance
Certificate, the Facility Fee Rate shall be the Facility Fee Rate
which would have applied had the Debt Ratio been greater than or
equal to 0.5:1.
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(iii) The Facility Fee Rate as of the Closing Date and
until the next adjustment is made pursuant to paragraph (ii)
above shall be the Facility Fee Rate which would have applied had
the Debt Ratio been greater than or equal to 0.5:1.
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 Commitment Percentages (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 Commitment Percentage
(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
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 Derivative Agreement
with any Lender (pro rata in accordance with all such amounts
M#368727 27
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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
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 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 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 Commitment
Percentage of any Revolving Loan available shall not relieve it
or any other Lender of its obligation, if any, hereunder to make
its 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 Commitment 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
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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 of the Lenders (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.
(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
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(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 Commitment Percentage 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
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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 Commitment Percentage 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.
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, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as
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"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
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
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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.
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 February 6, 1997, 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.
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(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
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.
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(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, since December 28, 1996.
(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 the Borrower and each of its
Subsidiaries are each Solvent.
(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
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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
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.
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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
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
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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 its Subsidiaries (i) has all material
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
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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.
(i) Environmental Matters.
(i) The properties of the Borrower and its
Subsidiaries, to their knowledge, do not contain and have not
previously contained, any Hazardous Materials (other than animal
waste) in amounts or concentrations which (A) constitute or
constituted a material violation of, or (B) could give rise to
material liability under, applicable Environmental Laws;
(ii) To the knowledge of the Borrower and its
Subsidiaries, (A) 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 (B) 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 in a material amount the fair saleable value of any
property which would have a material saleable value in the
absence of such contamination;
(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
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reason to believe that any such notice will be received or is
being threatened;
(iv) To the knowledge of the Borrower and its
Subsidiaries, (A) 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 material liability under, Environmental
Laws, and (B) no Hazardous Materials have 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 material 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 which, if decided adversely to the Borrower
or a Subsidiary, might have a material adverse effect upon the
Borrower or a Subsidiary, 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 which involve a material liability
of the Borrower or any Subsidiary; and
(vi) To the Borrower's knowledge, there has been no
release, or the threat of release, of Hazardous Materials at or
from such properties, in violation of or in amounts or in a
manner that could give rise to material 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
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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;
(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
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"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
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 June 29, 1996
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 the end of the first fiscal quarter of the current Fiscal
Year 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.
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(q) No Material Adverse Change. Since December 28, 1996
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
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 which has not been waived, 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
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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
which has not been waived, or which constitutes, or which with
the passage of time or giving of notice or both would constitute,
a default or event of default, which has not been waived, 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
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.
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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
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
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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
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 and, in the
case of a fiscal quarter, required to determine the Debt Ratio as
of the end of such fiscal quarter.
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
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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.
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;
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(d) any attachment, judgment, lien, levy or order exceeding
$3,000,000 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 $1,000,000 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
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
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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.
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 are otherwise
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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.
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
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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
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
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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.
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 (a) 1.00 to 1.00 as
of the last day of any fiscal quarter ending on September 27,
1997 (or such earlier fiscal quarter as the Borrower may specify
in a writing delivered to the Agent no later than the last day of
such earlier fiscal quarter) or thereafter and before June 1999
or (b) 1.25 to 1.00 as of the last day of any fiscal quarter
ending during or after June 1999. For purposes of this section,
the Fixed Charge Coverage Ratio of the Borrower and its
Subsidiaries shall mean (i) their net income for the period
referred to in the following sentence, determined without taking
into account their interest, taxes and extraordinary items for
such period, divided by (ii) the amount of their interest expense
for such period. Such period shall be the period of eight
consecutive fiscal quarters which ends on such last day; provided
that such period shall not include any fiscal quarter ending
before the first day as of which the Borrower is required to
satisfy the requirement set forth in the first sentence of this
Section.
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SECTION 9.2 Minimum Tangible Net Worth. Permit Tangible
Net Worth, on the last day of any fiscal quarter, to be less than
(a) $130,000,000, if such fiscal quarter occurs during the
current Fiscal Year or is the first or second fiscal quarter of
the Fiscal Year ending in 1998, or (b) if such fiscal quarter
occurs after the second fiscal quarter of the Fiscal Year ending
in 1998, the sum of (i) $130,000,000 and (ii) 50% of the
cumulative Consolidated net after-tax income of the Borrower and
its Subsidiaries for all fiscal quarters after the second fiscal
quarter of the Fiscal Year ending in 1998. For purposes of this
Section, if the Consolidated net income of the Borrower and its
Subsidiaries for any fiscal quarter shall be less than zero, such
Consolidated net income shall be deemed to be zero.
SECTION 9.3 Maximum Debt to Capitalization Ratio. Permit
the ratio of their Total Debt to their Total Capitalization to be
greater than (a) 0.60 to 1.00 on the last day of any fiscal
quarter through and including the third fiscal quarter of the
Fiscal Year ending in 1998, (b) 0.55 to 1.00 on the last day of
any of next four fiscal quarters, or (c) 0.50 on the last day of
any fiscal quarter thereafter. For purposes of this Section, (i)
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 Total
Debt, and (ii) Total Debt shall not be deemed to include any
Subordinated Debt.
SECTION 9.4 Current Ratio. Permit the ratio of their
current assets to their current liabilities to be less than 1.00
to 1.00 at any time prior to the first day as of which the
Borrower is required to satisfy the requirement set forth in the
first sentence of Section 9.1. For purposes of this Section,
their current liabilities shall be deemed to include the
aggregate principal balance of the Revolving Loans to the extent
such balance exceeds $20,000,000.
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;
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(b) Subordinated Debt;
(c) Debt existing on the Closing Date and the renewal and
refinancing (but not the increase) thereof;
(d) Purchase money Debt (including Capital Leases) of the
Borrower and its Subsidiaries in an aggregate amount not to
exceed 8% of Tangible Net Worth on any date of determination;
(e) Debt consisting of Contingent Obligations permitted by
Section 10.2;
(f) Other Debt to First Union in a principal amount not
exceeding $11,000,000; and
(g) 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.
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 2% 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;
(b) The claims of materialmen, mechanics, carriers,
warehousemen, processors or landlords for labor, materials,
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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 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);
(g) Liens securing Debt permitted under Section 10.1(d);
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; and
(h) Liens on personal property held in a margin account by
the counterparty with respect to a Derivative Agreement relating
to commodities or natural resources, so long as (i) such
Derivative Agreement was entered into in the ordinary course of
business solely for the purpose of mitigating risk and (ii) the
aggregate fair market value of all personal property held in all
such margin accounts does not at any time exceed 10% of Tangible
Net Worth.
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 (a) the cost of such acquisition (including the
value of any capital stock of, or other ownership interest in,
the Borrower or any of its Subsidiaries which is transferred as
part of the consideration for such acquisition) does not exceed
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5% of Tangible Net Worth, or (b) 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, (i) 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 (ii) pro forma financial
statements 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.
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 and
such merger would not cause a Default to occur.
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 5% 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
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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
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.
SECTION 10.10 More Restrictive Agreements. (a) Enter into
any agreement evidencing Debt which is permitted to be incurred
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solely by reason of subsection (c) or (f) of Section 10.1 in a
principal amount exceeding $1,000,000 (or any amendment thereto)
which contains any provisions more restrictive than the
provisions of Articles VIII, IX, X and XI hereof (the "Applicable
Covenants") , unless, at least thirty (30) days prior to the
execution and delivery of such agreement (or amendment) , 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, or
amendment, contains any provisions which, individually or in the
aggregate, are more restrictive than the Applicable Covenants),
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.
(b) Continue to be obligated with respect to any Debt
existing on the Closing Date in a principal amount exceeding
$1,000,000 if the agreement evidencing such Debt contains any
provisions more restrictive than the Applicable Covenants, unless
the Borrower either (i) causes such agreement to be amended,
within sixty (60) days after the Closing Date, in such manner
that such agreement will no longer contain provisions more
restrictive than the Applicable Covenants, or (ii) no later than
fifteen (15) days after the Closing Date, notifies the Agent of
the more restrictive provisions 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 Applicable Covenants), 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 2% 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
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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.
(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) Derivative Agreement. Any termination payment shall be
due by the Borrower under any Derivative 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 $3,000,000 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 $3,000,000 or contained in any instrument or agreement
evidencing, securing or relating thereto or any other event shall
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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)
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 a 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.
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(k) Judgment. A judgment or order for the payment of money
which exceeds $2,500,000 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
$2,500,000 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
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
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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.
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
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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.
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
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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
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
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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,
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.
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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.
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.
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If to the Borrower: WLR Foods, Inc.
800 Co-op Drive
Timberville, Virginia 22853
Attention: Chief Financial Officer
Telephone No.: (540) 896-7001
Telecopy No.: (540) 896-0498
Or, if sent by mail:
WLR Foods, Inc.
P.O. Box 7000
Broadway, Virginia 22815
Attention: Chief Financial Officer
If to First Union as Lender:
First Union National Bank of
Virginia
201 South Jefferson Street
Roanoke, Virginia 24011
Attention: Commercial Banking
Telephone No.: (540) 563-7769
Telecopy No.: (540) 561-5262
If to Corestates Bank, N.A.
as Lender: Corestates Bank, N.A.
FC 1-8-3-8
1345 Chestnut Street
Philadelphia, Pennsylvania 19102
Attention: John D. Brady
Telephone No.: (215) 786-2160
Telecopy No.: (215) 973-6745
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.: (540) 982-3362
Telecopy No.: (540) 982-3386
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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,
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
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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
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 Punitive Damages; Waiver of Jury
Trial.
(a) The parties hereto agree that a party shall not have a
remedy of punitive or exemplary damages against any other party
in any dispute, claim or controversy arising out of, connected
with or relating to any Loan Document (a "Dispute") and hereby
waive any right or claim to punitive or exemplary damages they
have now or which may arise in the future in connection with any
Dispute, whether the Dispute is resolved by arbitration or
judicially.
(b) ALL PARTIES HERETO HEREBY IRREVOCABLY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY DISPUTE (AS
DEFINED ABOVE).
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,
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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
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,
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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 the Credit
Facility;
(ii) if less than all of the assigning Lender's
Commitment is to be assigned, the 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
or qualify the Loans or the Notes under the blue sky laws of any
state; and
(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 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
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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
(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 Commitment and its 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;
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(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 Commitment of such
participant, reduce the amount of any fees to which such
participant is entitled or extend any scheduled payment date for
principal; 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 or 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, or in
any other document regarding the transaction herein, shall
prohibit any Lender from pledging or assigning any Note,
including collateral therefor, to any Federal Reserve Bank in
accordance with Applicable Law.
SECTION 13.11 Amendments, Waivers and Consents; Renewal.
Except as set forth below, any term, covenant, agreement or
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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 (a) change
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), (b)
change 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, (c) decrease the rate of interest payable on any Loan
or Reimbursement Obligation, (d) change the amount or time of
payment of any fees payable by the Borrower hereunder, (e) amend
the provisions of this Section 13.11 or the definition of
Required Lenders or (f) release Wampler Foods, Inc. as a
Guarantor, 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.
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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.
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 Extensions of Credit, or interest thereon, or if any Lender
shall at any time receive any collateral in respect to its
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 Extensions of Credit, or
interest thereon, such Benefitted Lender shall purchase for cash
from the other Lenders such portion of each such other Lender's
Extensions of Credit 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' Commitment
Percentages; provided that if all or any portion of such excess
M#368727 75
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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 Extensions of Credit may exercise all
rights of payment (including, without limitation, rights of
set-off) with respect to such portion as fully as if such Lender
were the direct holder of such portion.
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
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,
M#368727 76
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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
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.
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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
order provided in Section 4.5, 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
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 Subsidiary to execute and deliver to
the Agent a document which provides that such 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 Subsidiary shall be a Guarantor.
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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:__/s/ Robert T. Ritter__________
Name:___Robert T. Ritter______
Title:_Treasurer______________
WAMPLER FOODS, INC.
By:___/s/ Robert T. Ritter_________
Name:___Robert T. Ritter______
Title:__Treasurer_____________
CASSCO ICE & COLD STORAGE, INC.
By:_/s/ Daniel R. Detamore-Hunsberger
Name:_Daniel R. Detamore-Hunsberger
Title:_Assistant Treasurer____
FIRST UNION NATIONAL BANK OF
VIRGINIA, as Agent and Lender
By: _/s/ Stewart H. Marley_________
Name: _Stewart H. Marley______
Title: Senior Vice President__
Commitment Percentage: 35%
Commitment: $56,000,000
CORESTATES BANK, N.A.
By: _/s/ John D. Brady_____________
Name: _John D. Brady__________
Title: _Assistant Vice President
Commitment Percentage: 35%
Commitment: $56,000,000
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HARRIS TRUST AND SAVINGS BANK
By: _/s/ Carl A. Blackham__________
Name: _Carl A. Blackham_______
Title: _Vice President________
Commitment Percentage: 20%
Commitment: $32,000,000
CRESTAR BANK
By: /s/_Martha D. Shifflett_______
Name: _Martha D. Shifflett____
Title: _Sr. Vice President____
Commitment Percentage: 10%
Commitment: $16,000,000
M#368727
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EXHIBIT A
to
Credit Agreement dated as of January 1, 1997,
by and among
WLR Foods, Inc.,
Wampler Foods, Inc.,
Cassco Ice & Cold Storage, Inc.,
the Lenders party thereto,
and
First Union National Bank of Virginia,
as Agent
PROMISSORY NOTE
$______ January 1, 1997
FOR VALUE RECEIVED, the undersigned, WLR Foods, Inc., a
corporation organized under the laws of Virginia (the
"Borrower"), hereby promises to pay to the order of
______________________________ (the "Bank"), at the times, at the
place and in the manner provided in the Credit Agreement
hereinafter referred to, the principal sum of up to _____________
Dollars ($_________), or, if less, the aggregate unpaid principal
amount of all Loans disbursed by the Bank under the Credit
Agreement referred to below, together with interest at the rates
as in effect from time to time with respect to each portion of
the principal amount hereof, determined and payable as provided
in Article IV of the Credit Agreement.
This Note is the Note referred to in, and is entitled to the
benefits of, the Credit Agreement dated as of January 1, 1997 as
amended or supplemented from time to time (the "Credit
Agreement") by and among the Borrower, Wampler Foods, Inc.,
Cassco Ice & Cold Storage, Inc., the lenders (including the Bank)
party thereto (the "Lenders") and First Union National Bank of
Virginia, as Agent. The Credit Agreement contains, among other
things, provisions for the time, place and manner of payment of
this Note, the determination of the interest rate borne by and
fees payable in respect of this Note, acceleration of the payment
of this Note upon the happening of certain stated events and the
mandatory repayment of this Note under certain circumstances.
The Borrower agrees to pay on demand all costs of
collection, including reasonable attorneys' fees, if any part of
this Note, principal or interest, is collected after maturity
with the aid of an attorney.
Presentment for payment, notice of dishonor, protest and
notice of protest are hereby waived.
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THIS NOTE IS MADE AND DELIVERED IN THE COMMONWEALTH OF
VIRGINIA AND SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED
BY THE LAWS OF THE COMMONWEALTH OF VIRGINIA.
The Debt evidenced by this Note is senior in right of
payment to all Subordinated Debt referred to in the Credit
Agreement.
IN WITNESS WHEREOF, the Borrower has caused this Note to be
executed under seal by a duly authorized officer as of the day
and year first above written.
WLR FOODS, INC.
[CORPORATE SEAL)
By: _______________________________
Name: ________________________
Title: _______________________
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EXHIBIT B
to
Credit Agreement dated as of January 1, 1997,
by and among
WLR Foods, Inc.,
Wampler Foods, Inc.,
Cassco Ice & Cold Storage, Inc.,
the Lenders party thereto,
and
First Union National Bank of Virginia,
as Agent
NOTICE OF BORROWING
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
Attn: Syndication Agency Services
Ladies and Gentlemen:
This irrevocable Notice of Borrowing is delivered to you
under Section 2.2 (a) of the Credit Agreement dated as of January
1, 1997 (as amended or supplemented from time to time, the
"Credit Agreement"), by and among WLR Foods, Inc. ("the
Borrower"), Wampler Foods, Inc., Cassco Ice & Cold Storage, Inc.,
the lenders party thereto (the "Lenders"), and First Union
National Bank of Virginia, as Agent.
1. The Borrower hereby requests that the Lenders make a
Loan in the aggregate principal amount of $___________ (the
"Loan"). (For LIBOR Rate Loans complete with an amount equal to
at least $3,000,000 and any integral multiple of $1,000,000 in
excess thereof; and for Base Rate Loans complete with an amount
equal to $1,000,000 and any integral multiple of $250,000 in
excess thereof.)
2. The Borrower hereby requests that the Loan be made on
the following Business Day: _______________________. (Complete
with a date on or after the date of this Notice for a Base Rate
Loan and at least three (3) Business Days after the date of this
Notice for a LIBOR Rate Loan.)
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3. The Borrower hereby requests that the Loan bear
interest at the following interest rate, plus the Applicable
Margin, as set forth below: (Complete.)
Termination
Date for
Interest
Principal Period
Component of Interest Interest Period (if
Loan Rate (if applicable) applicable)
Base Rate N/A N/A
LIBOR Rate
4. The principal amount of all Revolving Loans and L/C
Obligations outstanding as of the date hereof (including the
requested Loan) does not exceed the Aggregate Commitment.
5. All of the conditions applicable to the Loan requested
herein as set forth in the Credit Agreement have been satisfied
as of the date hereof and will remain satisfied to the date of
such Loan.
6. No Default or Event of Default exists, and none will
exist upon the making of the Loan requested herein.
7. The representations and warranties of the Borrower
under the Credit Agreement and the other Loan Documents are true
and correct in all material respects as of the date hereof, both
before and after giving effect to the Loan requested herein.
8. The Agent is hereby authorized to disburse proceeds of
each borrowing herewith or hereafter requested pursuant to
Section 2.2 of the Credit Agreement in the following manner:
[By crediting such proceeds to Account Number __________
maintained with the Agent.]
[By wire transferring such proceeds to the following
account:
Bank________________________________________________
ABA Routing Number__________________________________
Account Number ____________________________________.]
9. All capitalized undefined terms used herein have the
meanings assigned thereto in the Credit Agreement.
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IN WITNESS WHEREOF, the undersigned has executed this Notice
of Borrowing this ______ day of __________, _________.
WLR FOODS, INC.
By: ____________________________________
Name:______________________________
Title: ____________________________
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EXHIBIT C
to
Credit Agreement dated as of January 1, 1997,
by and among
WLR Foods, Inc.,
Wampler Foods, Inc.,
Cassco Ice & Cold Storage, Inc.,
the Lenders party thereto,
and
First Union National Bank of Virginia,
as Agent
NOTICE OF CONVERSION/CONTINUATION
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
Attn: Syndication Agency Services
Ladies and Gentlemen:
This irrevocable Notice of Conversion/Continuation (the
"Notice") is delivered to you under Section 4.2 of the Credit
Agreement dated as of January 1, 1997 (as amended or supplemented
from time to time, the "Credit Agreement"), by and among WLR
Foods, Inc. ("the Borrower"), Wampler Foods, Inc., Cassco Ice &
Cold Storage, Inc., the lenders party thereto (the "Lenders"),
and First Union National Bank of Virginia, as Agent.
1. This Notice of Conversion/Continuation is submitted for
the purpose of: (Delete inapplicable bracketed language and
complete applicable information.)
a. [Converting] [continuing] a _______________ Loan [into]
[as] a ____________ Loan.<F1>
b. The aggregate outstanding principal balance of such
Loan is $_______________.
[FN]
<F1>Insert "Base Rate" or "LIBOR Rate", as applicable, in each
blank.
M#368727 1
<PAGE>
c. The last day of the current Interest Period for such
Loan is ____________________.<F2>
d. The principal amount of such Loan to be [converted]
[continued] is $___________________.<F3>
e. The requested effective date of the [conversion]
[continuation] of such Loan is __________________.<F4>
f. The requested Interest Period applicable to the
[converted] [continued] Loan is _________________.<F5>
2. No Default or Event of Default exists, and none will
exist upon the conversion or continuation of the Loan requested
herein.
3. All capitalized undefined terms used herein have the
meanings assigned thereto in the Credit Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Notice
of Conversion/Continuation this ______ day of ___________,
______.
WLR FOODS, INC.
By: _______________________________
Name: ________________________
Title: _______________________
[FN]
<F2> Insert applicable date for any LIBOR Rate Loan being
converted or continued.
<F3> Complete with an amount in compliance with Section 4.2 of
the Credit Agreement.
<F4> Complete with a Business Day at least three (3) Business
Days after the date of this Notice.
<F5> Complete for any LIBOR Rate Loan with an Interest Period in
compliance with Section 4.1(b) or Section 2.8 of the Credit
Agreement.
M#368727 2
<PAGE>
EXHIBIT D
to
Credit Agreement dated as of January 1, 1997,
by and among
WLR Foods, Inc.,
Wampler Foods, Inc.,
Cassco Ice & Cold Storage, Inc.,
the Lenders party thereto,
and
First Union National Bank of Virginia,
as Agent
OFFICER'S COMPLIANCE CERTIFICATE
The undersigned, on behalf of WLR Foods, Inc., a corporation
organized under the laws of Virginia (the "Borrower"), hereby
certifies to First Union National Bank of Virginia, as Agent
("First Union"), as follows:
(i) This Certificate is delivered to you pursuant to
Section 7.2 of the Credit Agreement dated as of January 1, 1997
(as amended or supplemented from time to time, the "Credit
Agreement"), by and among the Borrower, Wampler Foods, Inc.,
Cassco Ice & Cold Storage, Inc., the lenders party thereto (the
"Lenders"), and First Union. Capitalized terms used herein and
not defined herein shall have the meanings assigned thereto in
the Credit Agreement.
(ii) I have reviewed the financial statements of the
Borrower and its Subsidiaries dated as of _______________ and for
the _______________ fiscal quarter[s] then ended and such
statements fairly present the financial condition of the Borrower
and its Subsidiaries as of the dates indicated and the results of
its operations and cash flows for the fiscal quarter[s]
indicated.
(iii) I have reviewed the terms of the Credit
Agreement, the Note and the related Loan Documents and have made,
or caused to be made under my supervision, a review in reasonable
detail of the transactions and the condition of the Borrower and
its Subsidiaries during the accounting period covered by the
financial statements referred to in Paragraph (ii) above. Such
review has not disclosed the existence during or at the end of
such accounting period of any condition or event that constitutes
a Default or an Event of Default, nor do I have any knowledge of
the existence of any such condition or event as at the date of
this Certificate [except, [if such condition or event existed or
exists, describe the nature and period of existence thereof and
what action the Borrower has taken, are taking and propose to
take with respect thereto]].
M#368727 1
<PAGE>
(iv) The Borrower and its Subsidiaries are in
compliance with the covenants contained in Article IX of the
Credit Agreement as shown on the attached Schedule 1 and the
Borrower and its Subsidiaries are in compliance with the other
covenants and restrictions contained in Articles VIII and X of
the Credit Agreement.
(v) The Debt Ratio as of the last day of the fiscal
quarter to which this Certificate relates was ___:1, as shown on
the attached Schedule 1.
WITNESS the following signatures as of the _____ day of
________________, ______.
By:_______________________________
Name:________________________
Title: ______________________
M#368727 2
<PAGE>
EXHIBIT E
to
Credit Agreement dated as of January 1, 1997,
by and among
WLR Foods, Inc.,
Wampler Foods, Inc.,
Cassco Ice & Cold Storage, Inc.,
the Lenders party thereto,
and
First Union National Bank of Virginia,
as Agent
ASSIGNMENT AND ACCEPTANCE
Dated ____________
Reference is made to the Credit Agreement dated as of
January 1, 1997 (as amended or supplemented from time to time,
the "Credit Agreement"), by and among WLR Foods, Inc. ("the
Borrower"), Wampler Foods, Inc., Cassco Ice & Cold Storage, Inc.,
the lenders party thereto (the "Lenders") , and First Union
National Bank of Virginia, as Agent. Capitalized terms which are
defined in the Credit Agreement and which are used herein without
definition shall have the same meanings herein as in the Credit
Agreement.
_______________________________________ (the "Assignor") and
_____________________________________ (the "Assignee") agree as
follows:
1. The Assignor hereby sells and assigns to the Assignee,
and the Assignee hereby purchases and assumes from the Assignor,
as of the Effective Date (as defined below), a ____% interest
(the "Assigned Interest") in and to all of the Assignor's
interests, rights and obligations under the Credit Agreement with
respect to the Credit Facility. The Assignor thereby retains
_____% of its interest therein with respect to the Credit
Facility (the "Retained Interest"). This Assignment and
Acceptance is entered pursuant to, and authorized by, Section
13.10 of the Credit Agreement.
2. The Assignor (a) represents that, as of the date
hereof, (i) its Commitment Percentage (without giving effect to
assignments thereof which have not yet become effective) under
the Credit Agreement, (ii) the outstanding balance of its
Revolving Loans (unreduced by any assignments thereof which have
not yet become effective) under the Credit Agreement, and (iii)
the outstanding balance of its Commitment Percentage of the L/C
Obligations (unreduced by any assignments thereof which have not
yet become effective), are each set forth in Section 2 of
Schedule I hereto; (b) makes no representation or warranty and
M#368727 1
<PAGE>
assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the
Credit Agreement or any other Loan Document or the execution,
legality, validity, enforceability, genuineness, sufficiency or
value of the Credit Agreement or any other instrument or document
furnished pursuant thereto, other than that the Assignor is the
legal and beneficial owner of the interest being assigned by it
hereunder and that such interest is free and clear of any adverse
claim; (c) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the
Borrower or its Subsidiaries or the performance or observance by
the Borrower or its Subsidiaries of any of their obligations
under the Credit Agreement or any other Loan Document; and (d)
attaches the Revolving Credit Note delivered to it under the
Credit Agreement and requests that the Borrower exchange such
Note for new Notes payable to each of the Assignor and the
Assignee as follows:
Note Payable to the Order of: Principal Amount of Note:
_____________________________ $______________
_____________________________ $______________
3. The Assignee (a) represents and warrants that it is
legally authorized to enter into this Assignment and Acceptance;
(b) confirms that it has received a copy of the Credit Agreement,
together with copies of the most recent financial statements
delivered pursuant to Section 7.1 thereof and such other
documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into this
Assignment and Acceptance; (c) agrees that it will, independently
and without reliance upon the Assignor or any other Lender or the
Agent and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under the Credit
Agreement; (d) confirms that it is an Eligible Assignee; (e)
appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers under the Credit Agreement
and the other Loan Documents as are delegated to the Agent by the
terms thereof, together with such powers as are reasonably
incidental thereto; (f) agrees that it will perform in accordance
with their terms all the obligations which by the terms of the
Credit Agreement and the other Loan Documents are required to be
performed by it as a Lender; and (g) agrees that it will keep
confidential all the information with respect to the Borrower
furnished to it by the Borrower or the Assignor (other than
information required or requested to be disclosed by it pursuant
to regulatory requirements or legal process; information
requested by and disclosed to its auditors, accountants and
attorneys, provided that the Assignee shall use its best efforts
M#368727 2
<PAGE>
to have such Persons enter into a confidentiality agreement with
respect to such information; and information generally available
to the public or otherwise available to the Assignee on a
nonconfidential basis).
4. The effective date for this Assignment and Acceptance
shall be as set forth in Section 1 of Schedule I hereto (the
"Effective Date"). Following the execution of this Assignment and
Acceptance, it will be delivered to the Agent for consent thereby
and by the Borrower and acceptance and recording in the Register.
5. Upon such consents, acceptance and recording, from and
after the Effective Date, (i) the Assignee shall be a party to
the Credit Agreement and the other Loan Documents to which
Lenders are parties and, to the extent provided in this
Assignment and Acceptance, have the rights and obligations of a
Lender under each such agreement, and (ii) the Assignor shall, to
the extent provided in this Assignment and Acceptance, relinquish
its rights and be released from its obligations under the Credit
Agreement and the other Loan Documents.
6. Upon such consents, acceptance and recording, from and
after the Effective Date, the Agent shall make all payments in
respect of the interest assigned hereby (including payments of
principal, interest, fees and other amounts) to the Assignee. The
Assignor and Assignee shall make all appropriate adjustments in
payments for periods prior to the Effective Date or with respect
to the making of this assignment directly between themselves.
7. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE DEEMED TO BE A
CONTRACT UNDER SEAL AND SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF VIRGINIA, WITHOUT
REGARD TO CONFLICT OF LAW PRINCIPLES.
M#368727 3
<PAGE>
ASSIGNOR
___________________________________
Commitment Percentage ________
By:________________________________
Title: ____________________________
ASSIGNEE
___________________________________
Commitment Percentage ________
By:________________________________
Title: ____________________________
Acknowledged and Consented to:
WLR FOODS, INC.
By:________________________________
Name:___________________________
Title:__________________________
Consented to and Accepted:
FIRST UNION NATIONAL BANK OF
VIRGINIA, as Agent
By:________________________________
Title:__________________________
M#368727 4
<PAGE>
Schedule I
to
Assignment and Acceptance
1. Effective Date _______________
2. Assignor's Interest
Prior to Assignment
a. Commitment Percentage
of Assignor ______________%
b. Outstanding balance
of Assignor's Revolving Loans $______________
c. Outstanding balance of
Assignor's Commitment
Percentage of the L/C
Obligations $______________
3. a. Assigned Interest
(from Section 1) ______________%
4. Assignee's Extensions of Credit
After Effective Date
a. Outstanding balance of
Assignee's Revolving Loans
(line 2(b) times line 3(a)) $______________
b. Outstanding balance of Assignee's
Commitment Percentage of L/C
Obligations (line 2(c) times
line 3(a)) $______________
5. Retained Interest of Assignor after
Effective Date
a. Retained Interest
(from Section 1) ______________%
b. Outstanding balance of Assignor's
Revolving Loans (line 2(b) times
line 5(a)) $______________
M#368727 5
<PAGE>
c. Outstanding balance of Assignor's
Commitment Percentage
of L/C Obligations (line 2(c) times
line 5(a)) $______________
6. Payment Amount $______________
7. Payment Instructions
a. If payable to Assignor,
to the account of Assignor to:
First Union National Bank of
Virginia, as Agent
201 South Jefferson Street
Roanoke, Virginia 24011
Routing No.: ___________________
Account No.: ___________________
Attn: __________________________
Reference: _____________________
b. If payable to Assignee, to the account
of Assignee to:
______________________________________
______________________________________
______________________________________
Routing No.: _________________________
Account No.: _________________________
Attn: ________________________________
Reference: ___________________________
M#368727 6
<PAGE>
EXHIBIT F
to
Credit Agreement dated as of January 1, 1997,
by and among
WLR Foods, Inc.,
Wampler Foods, Inc.,
Cassco Ice & Cold Storage, Inc.,
the Lenders party thereto,
and
First Union National Bank of Virginia,
as Agent
ACCOUNT DESIGNATION DIRECTION
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
Attn: Syndication Agency Services
Ladies and Gentlemen:
This Account Designation Direction is delivered to you under
Section 2.2 (b) of the Credit Agreement dated as of January 1,
1997 (as amended or supplemented from time to time, the "Credit
Agreement"), by and among WLR Foods, Inc., Wampler Foods, Inc.,
Cassco Ice & Cold Storage, Inc., the lenders party thereto, and
First Union National Bank of Virginia, as Agent (the "Agent").
1. The Agent is hereby authorized to disburse proceeds of
each borrowing herewith or hereafter requested pursuant to
Section 2.2 of the Credit Agreement in the following manner:
[By crediting such proceeds to Account Number __________
maintained with the Agent.]
[By wire transferring such proceeds to the following
account:
Bank________________________________________________
ABA Routing Number__________________________________
Account Number ____________________________________.]
M#368727 1
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this
Account Designation Direction this ______ day of __________,
_________.
WLR FOODS, INC.
By: ____________________________________
Name:______________________________
Title: ____________________________
M#368727 2
<PAGE>
EXHIBIT G
to
Credit Agreement dated as of January 1, 1997,
by and among
WLR Foods, Inc.,
Wampler Foods, Inc.,
Cassco Ice & Cold Storage, Inc.,
the Lenders party thereto,
and
First Union National Bank of Virginia,
as Agent
REPAYMENT NOTICE
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
Attn: Syndication Agency Services
Ladies and Gentlemen:
This Repayment Notice is delivered to you under Section
2.3(c) of the Credit Agreement dated as of January 1, 1997 (as
amended or supplemented from time to time, the "Credit
Agreement"), by and among WLR Foods, Inc. ("the Borrower"),
Wampler Foods, Inc., Cassco Ice & Cold Storage, Inc., the lenders
party thereto, and First Union National Bank of Virginia, as
Agent (the "Agent").
1. The Borrower hereby notifies the Agent that the
Borrower will repay a Loan in a principal amount of $___________.
(For LIBOR Rate Loans complete with an amount equal to at least
$3,000,000 and any integral multiple of $1,000,000 in excess
thereof; and for Base Rate Loans complete with an amount equal to
$1,000,000 and any integral multiple of $250,000 in excess
thereof.)
2. The Borrower will repay such Loan on the following
Business Day: _______________________. (Complete with a date on
or after the date of this Notice for a Base Rate Loan and at
least three (3) Business Days after the date of this Notice for a
LIBOR Rate Loan.)
M#368727 1
<PAGE>
3. Such Loan is a [Base Rate Loan] [LIBOR Rate Loan, and
the date specified above is the last day of the Interest Period
applicable to such Loan].
4. All capitalized undefined terms used herein have the
meanings assigned thereto in the Credit Agreement.
IN WITNESS WHEREOF, the undersigned has executed this
Repayment Notice this ______ day of __________, _________.
WLR FOODS, INC.
By: ____________________________________
Name:______________________________
Title: ____________________________
M#368727 2
<PAGE>
EXHIBIT H
to
Credit Agreement dated as of January 1, 1997,
by and among
WLR Foods, Inc.,
Wampler Foods, Inc.,
Cassco Ice & Cold Storage, Inc.,
the Lenders party thereto,
and
First Union National Bank of Virginia,
as Agent
LETTER OF CREDIT APPLICATION
First Union National Bank
of Virginia
201 South Jefferson Street
Roanoke, Virginia, 24011
Attn: Commercial Banking
Ladies and Gentlemen:
This Letter of Credit Application is delivered to you under
Section 3.2 of the Credit Agreement dated as of January 1, 1997
(as amended or supplemented from time to time, the "Credit
Agreement"), by and among WLR Foods, Inc. ("the Borrower"),
Wampler Foods, Inc., Cassco Ice & Cold Storage, Inc., First Union
National Bank of Virginia (the "Issuing Lender"), the other
lenders party thereto, and First Union National Bank of Virginia,
as Agent.
1. The Borrower requests that the Issuing Lender issue a
[commercial] [standby] Letter of Credit.
2. The date such Letter of Credit is to be issued is
_____________________________.
3. The stated amount of such Letter of Credit shall be
$_______________.
4. The beneficiary of such Letter of Credit shall be
___________________________________.
5. The expiration date of such Letter of Credit shall be
_____________, ______.
6. The principal amount of all Revolving Loans and L/C
Obligations outstanding as of the date hereof (including L/C
Obligations attributable to the requested Letter of Credit) does
M#368727 1
<PAGE>
not exceed the Aggregate Commitment. After giving effect to the
issuance of such Letter of Credit, the L/C Obligations will not
exceed the L/C. Commitment.
7. All of the conditions applicable to the issuance of
the Letter of Credit requested herein as set forth in the Credit
Agreement have been satisfied as of the date hereof and will
remain satisfied to the date of issuance of such Letter of
Credit.
8. No Default or Event of Default exists, and none will
exist upon the issuance of such Letter of Credit.
9. The representations and warranties of the Borrower
under the Credit Agreement and the other Loan Documents are true
and correct in all material respects as of the date hereof, both
before and after giving effect to the issuance of such Letter of
Credit.
10. All capitalized undefined terms used herein have the
meanings assigned thereto in the Credit Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Letter
of Credit Application this ______ day of __________, _________.
WLR FOODS, INC.
By: ____________________________________
Name:______________________________
Title: ____________________________
cc: First Union National Bank
of North Carolina
One First Union Center, TW-10
301 South College Street
Charlotte, North Carolina 28288
Attn: Syndication Agency Services
M#368727 2
<PAGE>
Exhibit 4.2
LOAN AGREEMENT
among
WLR FOODS, INC.,
FIRST UNION NATIONAL BANK OF VIRGINIA,
WAMPLER FOODS, INC.
and
CASSCO ICE & COLD STORAGE, INC.
Dated as of January 1, 1997
<PAGE>
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-
Section 3.3 Existing Agreement . . . . . . . . . . . -5-
ARTICLE IV
Loan
Section 4.1 Loan . . . . . . . . . . . . . . . . . . -6-
Section 4.2 Advances . . . . . . . . . . . . . . . . -6-
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 . . . . . . . . . . -8-
ARTICLE VI
Special Covenants
Section 6.1 Incorporation of Credit Agreement . . . . -9-
Section 6.2 Indemnification . . . . . . . . . . . . . -9-
Section 6.3 Certificate as to No Default . . . . . -10-
ARTICLE VII
<PAGE>
Guaranty
Section 7.1 Guaranty of Obligations . . . . . . . . -11-
Section 7.2 Waivers . . . . . . . . . . . . . . . . -11-
Section 7.3 Forbearance and Modifications . . . . . -11-
Section 7.4 Continuing Liability . . . . . . . . . -11-
Section 7.5 Subrogation . . . . . . . . . . . . . . -12-
Section 7.6 Subordination . . . . . . . . . . . . . -12-
Section 7.7 Further Guaranties . . . . . . . . . . -13-
ARTICLE VIII
Events of Default and Remedies
Section 8.1 Event of Default . . . . . . . . . . . -13-
Section 8.2 Remedies on Default . . . . . . . . . . -13-
Section 8.3 No Remedy Exclusive . . . . . . . . . . -14-
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 . . . . . . . . -15-
Section 9.3 Jurisdiction and Venue . . . . . . . . -15-
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-
M#368872 -ii-
<PAGE>
THIS LOAN AGREEMENT, made as of the first day of January,
1997, among WLR FOODS, INC., a Virginia corporation (the
"Borrower"), FIRST UNION NATIONAL BANK OF VIRGINIA, a national
banking association, (the "Bank"), and WAMPLER FOODS, 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.
"Applicable Margin" shall mean the Applicable Margin (as
defined in the Credit Agreement) for LIBOR Rate Loans, as
specified in the Credit Agreement.
"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.
M#368872 -1-
<PAGE>
"Closing Date" shall mean the date of the execution and
delivery of this Agreement.
"Credit Agreement" shall mean the Credit Agreement dated the
date hereof among the Bank as agent, the Borrower, the Guarantors
and the lenders referred to therein (including the Bank), as the
same may hereafter be modified or 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 Foods, Inc.
(which was formerly known as 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.
"LIBOR Rate Loans" shall mean LIBOR Rate Loans (as defined
in the Credit Agreement).
"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.
M#368872 -2-
<PAGE>
"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
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, 1998, 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.
M#368872 -3-
<PAGE>
(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
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.
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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
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.
Section 3.3 Existing Agreement. On and after the Closing
Date, the Loan Agreement dated as of March 1, 1995 among the
Borrower, the Bank and the Guarantors, as modified by a
Modification Agreement dated as of April 1, 1996 (the "Existing
Agreement") shall be interpreted as though the Closing Date were
the Termination Date (as defined in the Existing Agreement).
Thus, no more advances shall be made to the Borrower under the
Existing Agreement after the Closing Date, and the Borrower shall
pay to the Bank on the Closing Date the principal amount of the
Repayment Obligation (as defined in the Existing Agreement),
together with all interest then accrued.
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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
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),
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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.
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.
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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 the Applicable Margin. For
purposes of this Agreement, (a) 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, and (b) the Applicable Margin 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.
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.
Notwithstanding the foregoing, so long as that certain Sweep Plus
Agreement to which the Bank and the Borrower are parties (the
"Sweep Plus Agreement") is in effect, such payment shall be made
in the manner provided in the Sweep Plus Agreement to the extent
(i) the Sweep Plus Agreement provides for such payment and (ii)
the assets available for such payment pursuant to the Sweep Plus
Agreement are sufficient to make such payment in a timely
fashion.
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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
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 set forth in 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 such Indemnified Party's 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
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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.
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.
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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
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
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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.
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
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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
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.
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(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
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
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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
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
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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 22815-7000 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 22815-7000 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
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.
M#368872 -16-
<PAGE>
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_/s/ Stewart H. Marley___________
Its___Senior Vice President___
WLR FOODS, INC.
By_/s/ Robert T. Ritter_________
Its___Treasurer_______________
WAMPLER FOODS, INC.
By___/s/ Robert T. Ritter__________
Its______Treasurer____________
CASSCO ICE & COLD STORAGE, INC.
By__/s/ Daniel R. Detamore-Hunsberger
Its__Assistant Treasurer______
M#368872
<PAGE>
Exhibit 4.3
Agreement to Furnish Copy of Third Amendment
May 6, 1997
Pursuant to Item 601(b)(4)(3)(A) of Regulation S-K, the Company
hereby agrees to furnish to the Securities and Exchange Commission,
upon request, a copy of the Third Amendment, dated as of March 1,
1997, to the Note Agreement, dated May 1, 1991, with The Minnesota
Mutual Life Insurance Company and others.
WLR FOODS, INC.
By:_/s/ Robert T. Ritter________
ROBERT T. RITTER
Its: Chief Financial Officer
Exhibit 4.4
Agreement to Furnish Copy of First Amendment
May 6, 1997
Pursuant to Item 601(b)(4)(3)(A) of Regulation S-K, the Company
hereby agrees to furnish to the Securities and Exchange Commission,
upon request, a copy of the First Amendment, dated as of March 1,
1997, to the Note Agreement, dated June 1, 1995, for the issuance of
$22 million of 7.47% Senior Notes, Series B due June 1, 2007.
WLR FOODS, INC.
By:___/s/ Robert T. Ritter______
ROBERT T. RITTER
Its: Chief Financial Officer
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