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
EXCHANGE ACT OF 1934
For the quarterly period ended March 28, 1998
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 6, 1998 was 16,379,041 shares.
1
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PART 1. 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 28, 1998 MARCH 29, 1997
<S> <C> <C>
Net sales $215,133 $222,225
Cost of sales 203,151 211,244
------- -------
Gross profit 11,982 10,981
Selling, general and administrative expenses 23,522 22,991
------- -------
Operating loss (11,540) (12,010)
Other expense:
Interest expense 6,262 3,261
Other, net (202) (124)
------- -------
Other expense 6,060 3,137
------- -------
Loss before income taxes and minority interest (17,600) (15,147)
Income tax benefit (6,336) (5,524)
Minority interest in net earnings of consolidated
subsidiary 0 14
------- -------
NET LOSS ($11,264) ($9,637)
======= =======
BASIC AND DILUTED LOSS PER COMMON SHARE (NOTE 6) ($0.69) ($0.56)
See accompanying Notes to Consolidated Financial
Statements.
</TABLE>
2
<PAGE>
<TABLE>
WLR FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>
(unaudited) Thirty-nine weeks ended
In thousands, except per share data MARCH 28, 1998 MARCH 29, 1997
<S> <C> <C>
Net sales $718,041 $758,785
Cost of sales 666,516 716,065
------- -------
Gross profit 51,525 42,720
Selling, general and administrative expenses 73,378 70,576
------- -------
Operating loss (21,853) (27,856)
Other expense:
Interest expense 15,575 9,369
Other, net (659) (916)
------- -------
Other expense 14,916 8,453
------- -------
Loss before income taxes and minority interest (36,769) (36,309)
Income tax benefit (13,237) (13,249)
Minority interest in net earnings of
consolidated subsidiary 66 40
------- -------
NET LOSS ($23,598) ($23,100)
======= =======
BASIC AND DILUTED LOSS PER COMMON SHARE (NOTE 6) ($1.45) ($1.30)
CASH DIVIDENDS DECLARED PER COMMON SHARE (Note 5) 0 $0.12
See accompanying Notes to Consolidated Financial
Statements.
</TABLE>
3
<PAGE>
<TABLE>
WLR FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
Dollars in thousands
March 28, 1998 June 28, 1997
(unaudited)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $284 $283
Accounts receivable, less allowance for
doubtful accounts of $1,243 and $1,550. 60,584 72,462
Inventories (Note 2) 142,357 165,551
Income taxes receivable 1,032 4,567
Other current assets 2,307 2,301
------- -------
Total current assets 206,564 245,164
Property, plant and equipment, net 154,497 159,426
Deferred income taxes 18,553 4,996
Other assets 6,612 7,142
------- -------
TOTAL ASSETS $386,226 $416,728
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Notes payable to banks -- $4,031
Current maturities of long-term debt 1,997 186,391
Excess checks over bank balances 7,993 12,118
Trade accounts payable 27,614 35,005
Accrued expenses 27,870 26,657
Deferred income taxes 12,155 12,359
------- -------
Total current liabilities 77,629 276,561
Long-term debt, excluding current maturities 199,487 5,040
Minority interest in consolidated subsidiary -- 592
Other liabilities and deferred credits 3,656 3,539
Common stock subject to repurchase -- 4,438
Shareholders' equity :
Common stock, no par value. 67,658 64,206
Additional paid-in capital 2,974 2,974
Retained earnings 34,822 59,378
------- -------
Total shareholders' equity 105,454 126,558
------- -------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $386,226 $416,728
======= =======
See accompanying Notes to Consolidated Financial
Statements.
</TABLE>
4
<PAGE>
<TABLE>
WLR FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
(unaudited) Thirty-nine weeks ended
Dollars in thousands March 28,1998 March 29,1997
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($23,598) ($23,100)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation 19,592 21,218
Gain on sale of property, plant and equipment (52) (1)
Deferred income taxes (13,761) (2,344)
Other, net (287) 32
Change in operating assets and liabilities:
Decrease in accounts receivable 11,878 12,273
Decrease in inventories 23,194 14,197
Decrease in other current assets 3,529 1,378
(Increase) decrease in long term assets 630 (820)
Decrease in accounts payable (7,391) (10)
Increase in accrued expenses and other 1,330 338
------- -------
Net Cash Provided by Operating Activities 15,064 23,161
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (16,193) (6,978)
Proceeds from sales of property, plant and equipment 1,582 209
------- -------
Net Cash Used in Investing Activities (14,611) (6,769)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of revolver debt 23,040 81,999
Payments on long-term debt (6,423) (55,643)
Financing Cost Paid (5,174) 0
Notes payable to banks (net of principal payments) (4,031) (30,764)
Decrease in checks drawn not presented (4,125) (1,326)
Issuance of common stock 699 972
Repurchase of common stock (4,438) (8,875)
Dividends paid -- (3,192)
------- -------
Net Cash Used in Financing Activities (452) (16,829)
------- -------
Increase (decrease) in Cash and Cash Equivalents 1 (437)
Cash and Cash Equivalents at Beginning of Fiscal Year 283 724
------- -------
Cash and Cash Equivalents at End of Period $284 $287
======= =======
Supplemental cash flow information:
Cash paid (refunded) for :
Interest $13,026 $6,882
Income taxes refunded (3,149) (10,418)<PAGE>
The Company considers all highly liquid investments with maturities of 3 months or
less at purchase to be cash equivalents.
</TABLE>
5
<PAGE>
Non-cash transactions in:
Fiscal 1998:
The Company issued 102,296 shares of stock in lieu of the regular cash
dividend in the first quarter.
The Company issued 889,898 stock warrants in the third quarter relating
to the debt refinancing; of these 266,969 were immediately exercisable
and were recorded at a
value of $1,695,256.
See accompanying Notes to Consolidated Financial Statements.
6
<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 subsidiaries. All
material intercompany balances and transactions have been eliminated
in consolidation. The consolidated balance sheet as of March 28, 1998,
and the consolidated statements of operations for the thirteen and
thirty-nine weeks ended March 28, 1998 and March 29, 1997, and the
consolidated statements of cash flows for the thirty-nine weeks ended
March 28, 1998 and March 29, 1997 are unaudited. In the opinion of
management, all adjustments necessary for the fair presentation of
such consolidated financial statements have been included.
Such adjustments consisted only of normal recurring accruals. 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, accordingly, 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 28, 1997.
In both, the accounting policies and principles used are consistent in
all material respects. Certain fiscal 1997 amounts have been
reclassified to conform with fiscal 1998 presentations.
2. Inventories
A summary of inventories at March 28, 1998 and June 28, 1997 follows:
(unaudited)
Dollars in thousands March 28, 1998 June 28, 1997
Live poultry and breeder flocks $ 63,656 $ 74,984
Processed poultry and meat products 45,948 53,981
Packaging supplies, parts and other 16,305 17,188
Feed, grain and eggs 16,448 19,398
------- -------
Total inventories $142,357 $165,551
======= =======
3. Acquisition of Common Stock
The Company completed the final repurchase of its common stock from
Cuddy Farms, Inc. early in fiscal year 1998 by purchasing
approximately 446,000 shares of stock for $10 per share.
4. Debt Refinancing and Modification
As of February 26, 1998, the Company restructured its fixed rate
Senior Unsecured Notes and variable rate Unsecured Bank Notes. The
Company's new facility consists of a $110 million term loan, $42
million in bonds, and a $105 million revolving line of credit. The
term loan, bonds, and line of credit have an initial maturity of
January 1, 2000, which may be extended for another year under certain
circumstances. The debt is secured by essentially all of the
7
<PAGE>
Company's assets with interest on approximately half of the revolver
and the term loan based on prime plus 225 basis points. The remaining
amount of the outstanding revolver is priced according to the London
Inter-Bank Offering rate plus 300 basis points or prime plus 175 basis
points. In conjunction with the debt modification, the Company issued
warrants to purchase 889,898 shares of common stock of the Company at
$.01 per share. The warrants may be reduced if the debt is paid off
by certain dates prior to maturity. Warrants totaling 266,969 were
immediately exercisable and resulted in the recording of additional
debt discount of $1.7 million. The Company also incurred
approximately $5 million of fees and costs to the lenders in
conjunction with the refinancing which are being amortized as
additional interest costs over the term of the debt. In addition, the
Company expensed approximately $1.1 million of legal, consulting and
appraisal costs incurred in the refinancing.
5. Stock Dividend
On June 24, 1997, the Company's Board of Directors declared a stock
dividend that was distributed on August 1, 1997 to shareholders of
record on July 11, 1997. In lieu of the regular cash dividend, the
dividend was paid in stock with .0064 shares being distributed for
each share of common stock outstanding.
6. Earnings Per Share
The Company adopted FASB No. 128, "Earnings Per Share," which
supersedes APB Opinion No. 15, on December 27, 1997. This statement
serves to simplify the computation of earnings per share and requires
restatement of all prior periods presented in conformity with the
statement. Options and contingent warrants to purchase shares of the
Company's common stock were outstanding during the periods presented,
but these options were not included in the computation of diluted
earnings per share because the effect of including these options would
have been anti-dilutive. Contingent shares, such as stock warrants,
are included in the computation. The following table illustrates the
computation:
3rd Qtr 3rd Qtr YTD YTD
03/28/98 03/29/97 03/28/98 03/29/97
Numerator - Net loss ($11,264) ($9,637) ($23,598) ($23,100)
Denominator:
Common shares outstanding 16,334 17,295 16,291 17,702
Effect of outstanding stock
warrants 82 0 28 0
------- ------- ------- -------
Basic and diluted weighted
average common shares
outstanding 16,416 17,295 16,319 17,702
------- ------- ------- -------
Basic and diluted earnings
per share ($0.69) ($0.56) ($1.45) ($1.30)
======= ======= ======= =======
8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
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.
For the third fiscal quarter, net sales decreased $7.1 million when
compared to the same quarter last year. This decrease was primarily
due to lower chicken and turkey prices approximating $8 million.
Lower grain costs of approximately $6 million and improved live
performance resulted in an increase in gross profit to 5.6% in the
third quarter versus 4.9% for the same quarter last year. Increased
interest costs, resulting from a combination of higher rates and
borrowing levels, lowered net earnings despite the improvement in
operating income.
Results of Operations
Net sales for the quarter decreased 3.2% to $215.1 million as compared
to $222.2 million for the same quarter last year. Third fiscal
quarter chicken revenues as compared to last year s third quarter
decreased 1%, the result of a 4% decrease in prices offset by a 3%
increase in volume sold. Turkey revenues were down 3% as prices
declined 5% and volume increased about 2% from the same quarter last
year.
For the first three quarters of fiscal 1998, net sales decreased 5%
when compared to the same period last year. For the year to date in
comparison to the same period last year, chicken and turkey pricing
both declined, while volumes increased in chicken and declined
slightly in turkey.
Improved grain costs and live performance resulted in savings of
approximately $6 million and $3 million, respectively, for the third
quarter of 1998 versus the same quarter of 1997 and were the primary
factors in the increase in gross profits of $1.0 million. Gross
profits as a percent of sales increased to 5.6% from 4.9% for the same
quarter last year.
On a year-to-date basis, gross profits increased $8.8 million when
compared to prior year-to-date results. Gross margins improved 1.6%,
from the 5.6% earned in the thirty-nine weeks ended March 29, 1997 to
7.2% in the thirty-nine weeks ended March 28, 1998.
Selling, general and administrative expenses increased $0.5 million or
2.3% compared to the third quarter last year, or from 10.3% to 10.9%
as a percent of sales. The increase was primarily due to
approximately $1.1 million in one-time costs and expenses related to
the debt refinancing partially offset by proceeds realized from the
stock demutualization of the Company's health insurance administrator.
Year to date selling, general and administrative expenses increased
$2.8 million, or 0.9% as a percent of sales when compared to the same
period last year. The increase is primarily due to higher program
costs related to sales of further processed product, and lower sales
prices in both chicken and turkey.
Interest expense was $3.0 million higher for the current quarter, and
$6.2 million higher on a year to date basis. The increase is
directly related to increased borrowing levels and higher interest
rates.
For the quarter, the Company had a net loss of $11.3 million or $.69
per share compared to a net loss of $9.6 million or $.56 per share for
the same period last year. For the thirty-nine weeks ended March 28,
1998, the Company had a net loss of $23.6 million or $1.45 per share
9
<PAGE>
compared to a net loss of $23.1 million or $1.30 per share for the
thirty-nine weeks ended March 29, 1997. The effects of fewer shares
outstanding due to the contractual repurchase of shares increased the
loss per share in the current quarter and nine months year to date
versus the same period in fiscal 1997 by four cents and eleven cents,
respectively.
Financial Condition and Liquidity
The Company restructured its debt in February, 1998. The new facility
consists of a $110 million term loan, $42 million in bonds, and a $105
million revolving line of credit. The debt is secured by essentially
all of the Company's assets. Warrants were issued to purchase 889,898
shares of common stock of the Company at $.01 per share. The warrants
may be reduced if the debt is paid off by certain dates prior to
maturity.
Accounts receivable balances have decreased $11.9 million and
inventories have decreased $23.2 million as compared to the end of
fiscal year 1997. The majority of the decrease in inventory was in
live poultry where inventories were reduced by $11.3 million. Debt
levels have increased $6.0 million on a year to date basis and $1.8
million in the current quarter.
Capital Resources
The Company s capital spending for the quarter and for the nine months
was $5.4 million and $16.2 million, respectively, primarily for
replacements of existing equipment, safety requirements, and projects
with rapid pay backs. Depreciation expense was $6.7 million for the
quarter, and $19.6 million for the nine months. Projected capital
spending for fiscal year 1998 is expected to total $20 to $25 million.
The Company is aware of the issues associated with the Year 2000
problem as the millennium approaches. Given the recent implementation
and ongoing upgrading of most of the Company s information systems,
management does not feel that costs related to the Year 2000 issue
will have a material impact on its financial condition or results of
operations.
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.
10
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
See attached Exhibit Index
(b) Form 8-K
Reporting Date January 27, 1998. Item Reported -
Item 5, Other Events. WLR Foods, Inc. announced its plans to
convert the Marshville, North Carolina turkey complex to chicken
production by Fall of 1998.
Reporting Date February 26, 1998. Item Reported -
Item 5, Other Events. WLR Foods, Inc. announced the
restructuring of its debt and the securing of an additional
$55 million of borrowing capacity with a syndicate of lenders.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report is signed this _11_ day of May, 1998, 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 signator for
Registrant
11
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
2.1 Revolving Credit Agreement, dated as of February
25, 1998
2.2 Form of Revolving Credit Note, dated as of
February 25, 1998
2.3 Term Loan Agreement, dated as of February 25, 1998
2.4 Form of Term Note, dated as of February 25, 1998
2.5 Warrant Holders Rights Agreement, dated as of
February 25, 1998
2.6 Form of Warrant to Purchase Common Stock at $0.1
Per Share
2.7 Security Agreement, dated as of February 25, 1998
2.8 WLR Foods, Inc. Pledge Agreement, dated as of
February 25, 1998
2.9 Wampler Foods, Inc. Pledge Agreement, dated as of
February 25, 1998
2.10 Note Purchase Agreement, dated as of February 25,
1998
2.11 Form of Variable Rate Note, dated as of February
25, 1998
2.12 Form of Subsidiaries Guaranty Agreement, dated as
of February 25, 1998
27 Financial Data Schedule
12
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Exhibit 2.1
REVOLVING CREDIT AGREEMENT
dated as of February 25, 1998,
by and among
WLR FOODS, INC.,
WAMPLER FOODS, INC.,
CASSCO ICE & COLD STORAGE, INC.,
WAMPLER SUPPLY COMPANY, INC.,
VALLEY RAIL SERVICE, INC.,
as Borrowers,
the Revolving Credit Lenders referred to herein,
and
FIRST UNION NATIONAL BANK,
as Agent.
1
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.1 Definitions . . . . . . . . . . . . . 2
SECTION 1.2 General . . . . . . . . . . . . . . 21
SECTION 1.3 Other Definitions and Provisions . . 21
ARTICLE II
CREDIT FACILITY . . . . . . . . . . . . . . . . . . . . 22
SECTION 2.1 Revolving Credit Loans . . . . . . 22
SECTION 2.2 Procedure for Advances of Revolving
Loans . . . . . . . . . . . . . . . 22
SECTION 2.3 Repayment of Loans . . . . . . . . . 23
SECTION 2.4 Revolving Credit Notes . . . . . . . 24
SECTION 2.5 Permanent Reduction of the Aggregate
Revolving Commitment . . . . . . . . 24
SECTION 2.6 Termination of Credit Facility . . . 24
SECTION 2.7 Use of Proceeds . . . . . . . . . . . 25
SECTION 2.8 Lockbox/Cash Collateral Account . . . 25
SECTION 2.9 Division of Revolving Credit Loans . 25
SECTION 2.10 Interim Borrowing Base Reporting
Standard . . . . . . . . . . . . . . 26
ARTICLE III
LETTER OF CREDIT FACILITY . . . . . . . . . . . . . . . . 26
SECTION 3.1 L/C Commitment
SECTION 3.2 Procedure for Issuance of Letters of
Credit . . . . . . . . . . . . . . . 27
SECTION 3.3 Commissions and Other Charges . . . . 27
SECTION 3.4 L/C Participation . . . . . . . . . . 28
SECTION 3.5 Reimbursement Obligation of the
Borrower . . . . . . . . . . . . . . 29
SECTION 3.6 Obligations Absolute . . . . . . . . 29
SECTION 3.7 Effect of Application . . . . . . . . 30
SECTION 3.8 Existing Letters of Credit . . . . . 30
ARTICLE IV
GENERAL REVOLVING LOAN PROVISIONS . . . . . . . . . . . . 30
SECTION 4.1 Interest . . . . . . . . . . . . . . 30
SECTION 4.2 Notice and Manner of Conversion or
Continuation of Revolving Loans . . . 33
SECTION 4.3 Facility, Commitment and Agency Fees 34
SECTION 4.4 Manner of Payment . . . . . . . . . . 35
2
<PAGE>
SECTION 4.5 Crediting of Payments and Proceeds . 35
SECTION 4.6 Nature of Obligations of Revolving
Credit Lenders Regarding Extensions of
Credit; Assumption by the Agent . . . 36
SECTION 4.7 Changed Circumstances . . . . . . . . 36
SECTION 4.8 Indemnity . . . . . . . . . . . . . . 38
SECTION 4.9 Capital Requirements . . . . . . . . 39
SECTION 4.10 Taxes . . . . . . . . . . . . . . . . 39
SECTION 4.11 Mandatory Prepayments . . . . . . . . 41
SECTION 4.12 Approved Miscellaneous Asset Sales . 42
ARTICLE V
CLOSING; CONDITIONS OF CLOSING AND BORROWING . . . . . . 42
SECTION 5.1 Closing . . . . . . . . . . . . . . . 42
SECTION 5.2 Conditions to Closing and Initial
Extensions of Credit . . . . . . . . 42
SECTION 5.3. Conditions to All Revolving Loans and
Letters of Credit . . . . . . . . . . 45
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE BORROWER . . . . . 46
SECTION 6.1 Representations and Warranties . . . 46
SECTION 6.2 Survival of Representations and
Warranties Etc . . . . . . . . . . . 53
ARTICLE VII
FINANCIAL INFORMATION AND NOTICES . . . . . . . . . . . . 53
SECTION 7.1 Financial Statements and Projections 53
SECTION 7.2 Officer's Compliance Certificate . . 55
SECTION 7.3 Accountants' Certificate . . . . . . 55
SECTION 7.4 Other Reports . . . . . . . . . . . . 56
SECTION 7.5 Notice of Litigation and Other Matters56
SECTION 7.6 Accuracy of Information . . . . . . . 57
ARTICLE VIII
AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . 58
SECTION 8.1 Preservation of Corporate Existence and
Related Matters . . . . . . . . . . . 58
SECTION 8.2 Maintenance of Property . . . . . . . 58
SECTION 8.3 Insurance . . . . . . . . . . . . . . 58
SECTION 8.4 Accounting Methods and Financial
Records . . . . . . . . . . . . . . . 59
SECTION 8.5 Payment and Performance of Obligations59
SECTION 8.6 Compliance With Laws and Approvals . 59
SECTION 8.7 Environmental Laws . . . . . . . . . 59
SECTION 8.8 Compliance with ERISA . . . . . . . . 60
SECTION 8.9 Compliance With Agreements . . . . . 60
3
<PAGE>
SECTION 8.10 Conduct of Business . . . . . . . . . 60
SECTION 8.11 Visits and Inspections . . . . . . . 60
SECTION 8.12 Further Assurances . . . . . . . . . 60
SECTION 8.13 Meeting with Revolving Credit Lender 61
SECTION 8.14 Year 2000 Issues . . . . . . . . . . 61
SECTION 8.15 Employment of Outside Accountants and
Financial Consultants . . . . . . . . 61
SECTION 8.16 Maintenance of Bank Accounts . . . . 61
SECTION 8.17 Interest Rate Protection . . . . . . 61
ARTICLE IX
FINANCIAL COVENANTS . . . . . . . . . . . . . . . . . . . 62
SECTION 9.1 Minimum Monthly EBITDA . . . . . . . 62
SECTION 9.2 Minimum Quarterly EBITDA . . . . . . 62
SECTION 9.3 Limitation on Capital Expenditures . 63
ARTICLE X
NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . 63
SECTION 10.1 Limitations on Debt . . . . . . . . . 63
SECTION 10.2 Limitations on Contingent Obligations 64
SECTION 10.3 Limitations on Liens . . . . . . . . 64
SECTION 10.4 Limitations on Acquisitions . . . . . 65
SECTION 10.5 Limitations on Mergers and Liquidation65
SECTION 10.6 Limitations on Sale of Assets . . . . 65
SECTION 10.7 Transactions with Affiliates . . . . 66
SECTION 10.8 Certain Accounting Changes . . . . . 66
SECTION 10.9 Compliance with ERISA . . . . . . . . 66
SECTION 10.10 Limitations on New Equity, Dividends
and Distributions . . . . . . . . . . 67
SECTION 10.11 Transfers to Subsidiaries . . . . . . 67
SECTION 10.12 Limitations on Investments . . . . . 67
SECTION 10.13 Limitations on Certain Agreements . . 67
ARTICLE XI
DEFAULT AND REMEDIES . . . . . . . . . . . . . . . . . . 68
SECTION 11.1 Events of Default . . . . . . . . . . 68
SECTION 11.2 Remedies . . . . . . . . . . . . . . 70
SECTION 11.3 Rights and Remedies Cumulative; Non-
Waiver; etc . . . . . . . . . . . . . 71
ARTICLE XII
THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 12.1 Appointment . . . . . . . . . . . . . 72
SECTION 12.2 Delegation of Duties . . . . . . . . 72
SECTION 12.3 Exculpatory Provisions . . . . . . . 72
SECTION 12.4 Reliance by the Agent . . . . . . . . 73
SECTION 12.5 Notice of Default . . . . . . . . . . 73
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SECTION 12.6 Non-Reliance on the Agent and other
Revolving Credit Lenders . . . . . . 73
SECTION 12.7 Indemnification . . . . . . . . . . . 74
SECTION 12.8 The Agent in Its Individual Capacity 74
SECTION 12.9 Resignation of the Agent; Successor
Agent . . . . . . . . . . . . . . . . 75
SECTION 12.10 Settlement . . . . . . . . . . . . . 75
ARTICLE XIII
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . 76
SECTION 13.1 Notices . . . . . . . . . . . . . . . 76
SECTION 13.2 Expenses . . . . . . . . . . . . . . 78
SECTION 13.3 Set-off . . . . . . . . . . . . . . . 79
SECTION 13.4 Governing Law . . . . . . . . . . . . 79
SECTION 13.5 Consent to Jurisdiction . . . . . . . 79
SECTION 13.6 Waiver of Jury Trial; Waiver of
Punitive Damages . . . . . . . . . . 80
SECTION 13.7 Reversal of Payments . . . . . . . . 80
SECTION 13.8 Injunctive Relief . . . . . . . . . . 80
SECTION 13.9 Accounting Matters . . . . . . . . . 80
SECTION 13.10 Successors and Assigns; Participations81
SECTION 13.11 Amendments, Waivers and Consents;
Renewal . . . . . . . . . . . . . . . 84
SECTION 13.12 Performance of Duties . . . . . . . . 85
SECTION 13.13 Indemnification . . . . . . . . . . . 85
SECTION 13.14 All Powers Coupled with Interest . . 85
SECTION 13.15 Survival of Indemnities . . . . . . . 85
SECTION 13.16 Titles and Captions . . . . . . . . . 86
SECTION 13.17 Severability of Provisions . . . . . 86
SECTION 13.18 Counterparts . . . . . . . . . . . . 86
SECTION 13.19 Term of Agreement . . . . . . . . . . 86
SECTION 13.20 Adjustments . . . . . . . . . . . . . 86
5
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EXHIBITS
Exhibit A - Form of Revolving Credit Note
Exhibit B - Form of Notice of Borrowing
Exhibit C - Form of Borrowing Base Certificate
Exhibit D - Form of Repayment Notice
Exhibit E - Form of Letter of Credit Application
Exhibit F - Form of Notice of Conversion/Continuation
Exhibit G - Form of Quarterly Unaudited Consolidated and Consolidating
Balance Sheet
Exhibit H - Form of Officer's Compliance Certificate
Exhibit I - Form of Assignment and Acceptance
SCHEDULES
Schedule 4.11(b) - Existing Stock Incentive Programs
Schedule 6.1(a) - Jurisdictions of Organization and Qualification
to Do Business as Foreign Corporation
Schedule 6.1(b) - Subsidiaries, Capitalization and Shareholders
Schedule 6.1(h) - Franchise, Licenses, Patents and Tradenames
Schedule 6.1(j) - ERISA Plans
Schedule 6.1(n) - Collective Bargaining Agreements
Schedule 6.1(s) - Schedule of Leased Real Property
Schedule 6.1(v) - Litigation
Schedule 6.1(z) - Outstanding Options, Warrants or Other Rights
Schedule 8.15 - Work Plan
Schedule 10.1(c) - Existing Debt
Schedule 10.2(b) - Existing Contingent Obligations
Schedule 10.3(f) - Existing Liens
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This REVOLVING CREDIT AGREEMENT (the "Agreement"), dated as of
February 25, 1998, is made and entered into by and among WLR FOODS,
INC., ("WLR"), WAMPLER FOODS, INC. ("Wampler"), CASSCO ICE & COLD
STORAGE, INC. ("Cassco"), WAMPLER SUPPLY COMPANY, INC. ("Wampler
Supply"), and VALLEY RAIL SERVICE, INC. ("Valley Rail"), all
corporations organized under the laws of the Commonwealth of Virginia,
the Revolving Credit Lenders who are or may become a party to this
Agreement, and FIRST UNION NATIONAL BANK, for itself and as Agent for
the Revolving Credit Lenders. WLR, Wampler, Cassco, Wampler Supply
and Valley Rail are referred to herein jointly and severally as the
"Borrower." The liabilities and obligations of WLR, Wampler, Cassco,
Wampler Supply and Valley Rail hereunder are joint and several, and
the word "Borrower," as used herein, means each of them, any of them
and/or all of them as the context may require.
BACKGROUND
A. WLR, as borrower, and Cassco and Wampler, as guarantors, are
parties to that certain Credit Agreement, dated January 1, 1997,
pursuant to which the Revolving Credit Lenders extended a revolving
credit facility (the "Existing Revolving Credit Facility") to WLR in
an amount not to exceed One Hundred Sixty Million Dollars
($160,000,000).
B. WLR, as borrower, and Cassco and Wampler, as guarantors, and
First Union are parties to a certain Loan Agreement dated as of
January 1, 1997 (the "Time Loan Agreement") which has terminated
undrawn by mutual consent of the parties.
C. WLR, Cassco, Wampler, Wampler Supply and Valley Rail are
part of an integrated financial enterprise and have requested the
Lenders to: (i) provide a new revolving credit facility in the maximum
amount of $105,000,000; (ii) restructure a portion of the Existing
Revolving Credit Facility, after the principal amount outstanding
(including the aggregate face amount of all outstanding letters of
credit) has been reduced to $110,000,000, into a term loan; (iii)
provide the new revolving credit facility pursuant to the terms of
this Agreement; and (iv) restructure the Existing Revolving Credit
Facility as provided in the other Loan Documents executed as of the
date hereof.
D. The Revolving Credit Lenders have agreed to this request
subject to the terms and conditions of this Agreement and the other
Loan Documents.
E. The Borrower will materially benefit from the restructure of
the Existing Revolving Credit Facility and the new revolving credit to
be provided as set forth in the Loan Documents.
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NOW, THEREFORE, for good and valuable consideration, the receipt
and legal 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" shall have the meaning given to that term in the
Uniform Commercial Code and, in addition, shall include any right to
payment for goods sold or leased or services rendered which is
evidenced by an instrument or chattel paper.
"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. The term Affiliate shall not include, in
the case of the Borrower, Pioneering Management Corporation.
"Agent" means First Union in its capacity as Agent hereunder, and
any successor thereto appointed pursuant to Section 12.9.
"Agent's Office" means the office of the Agent specified in or
determined in accordance with the provisions of Section 13.1.
"Aggregate Revolving Credit Commitment" means the aggregate
amount of the Revolving Credit 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 Revolving Credit
Commitment shall be One Hundred and Five Million Dollars
($105,000,000).
"Agreement" means this Revolving Credit Agreement, as amended or
modified from time to time.
"Amendment Fee" shall have the meaning ascribed in Section
4.3(b).
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"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.
"Approved Contract Growers" shall mean those Persons who, from
time to time, hold live chicken and turkey inventory owned by Wampler
under and subject to grower contracts which preserve and in every way
maintain the title of Wampler in and to such inventory to the
satisfaction of Wampler and its counsel.
"Approved Miscellaneous Asset Sale" shall mean any sale or sales
by the Borrower of any real or personal property which (i) for the
first year following the Closing Date do(es) not generate Net Proceeds
of more than $7,500,000 in the aggregate, or more than $2,500,000 for
any individual sale; and (ii) for each one-year period thereafter
do(es) not generate Net Proceeds of more than $1,000,000 in the
aggregate for such twelve-month period.
"Asset Sale" means any sale, sale-leaseback, mortgage of real
property or any other disposition (including the grant of any option,
warrant or other right to purchase such property) by any Person of any
of its real or tangible personal property or assets (other than sales
permitted by subsections (a), (b), and (c) of Section 10.6 and the
sale of Equipment, the proceeds of which are applied to the prepayment
of any Purchase Money Debt secured by a Lien on such Equipment).
"Assignment and Acceptance" shall have the meaning assigned
thereto in Section 13.10.
"Available Commitment" means, as to any Revolving Credit Lender
at any time, an amount equal to the excess, if any, of (a) such
Revolving Credit Lender's Commitment over (b) such Revolving Credit
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).
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<PAGE>
"Borrower" means WLR, Wampler, Cassco, Wampler Supply, and Valley
Rail, in their capacities as joint and several borrowers hereunder,
and each of them, any of them and/or all of them as the context may
require.
"Borrowing Base" means, at any time, a dollar amount equal to the
sum of the following amounts as they exist at that time:
(a) eighty five percent (85%) of all Eligible Accounts; plus
(b) the sum of (A) sixty percent (60%) of Eligible Processed
Inventory; plus (B) sixty percent (60%) of Eligible Packaging Supplies
Inventory; plus (C) sixty percent (60%) of Eligible Feed, Grain and
Eggs Inventory; plus (D) forty-five percent (45%) of Eligible Live
Poultry Inventory; minus
(c) the amount of any Borrowing Base Reserve.
"Borrowing Base Reserve" means a dollar reserve established from
time to time by the Agent in the exercise of its reasonable discretion
following written notice to the Borrower describing in reasonable
detail the reason for the establishment of such reserve.
"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
required to be classified and accounted for as a capital asset on a
Consolidated balance sheet of the Borrower and its Subsidiaries.
"Capital Expenditures" means, with respect to the Borrower and
its Subsidiaries for any period, the aggregate cost of all capital
assets acquired by any such Person during such period, determined
without duplication on a Consolidated basis in accordance with GAAP.
"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.
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<PAGE>
"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 Revolving Credit Lenders.
"Code" means the Internal Revenue Code of 1986, and the rules and
regulations thereunder, each as amended or supplemented from time to
time.
"Collateral" means all of the assets, property and interests in
property of the Borrower and its Subsidiaries, whether now owned or
hereafter acquired, that shall, from time to time, secure the
Obligations, including without limitation the Collateral described in
the Security Documents and any property or interests provided in
addition to or in substitution for any of the foregoing.
"Collateral Agent" means First Union in its capacity as
Collateral Agent under the Security Documents.
"Commitment" means, as to any Revolving Credit Lender at any
time, the obligation of such Revolving Credit 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 Revolving Credit 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 Revolving Credit Lender
at any time, the ratio of (a) the amount of the Commitment of such
Revolving Credit Lender to (b) the Aggregate Revolving Credit
Commitment of all of the Revolving Credit Lenders, expressed as a
percentage.
"Consolidated" means, when used with reference to financial
statements or financial statement items of the Borrower and its
Subsidiaries, such statements or items on a consolidated basis in
accordance with applicable principles of consolidation under GAAP.
"Contingent Obligation" means, with respect to the Borrower and
its Subsidiaries, without duplication, any obligation, contingent or
otherwise, of any such Person pursuant to which such Person has
directly or indirectly guaranteed any Debt or other obligation of any
other Person and, without limiting the generality of the foregoing,
any obligation, direct or indirect, contingent or otherwise, of any
such Person (a) to purchase or pay (or advance or supply funds for the
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<PAGE>
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 or executory contracts.
"Coverage Ratio" means, as of the close of any Fiscal Quarter,
the Borrower's Consolidated cumulative four quarter EBITDA ending with
the close of such Fiscal Quarter divided by the Borrower's
Consolidated cumulative four quarter Interest Expense ending with the
close of such Fiscal Quarter.
"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 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.
Debt shall include all obligations of the Borrower or any of its
Subsidiaries pursuant to Derivative Agreements entered into in the
ordinary course of business for the purpose of mitigating risk.
"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, instrument,
security, obligation or undertaking of whatever nature that
constitutes (in whole or in part) a forward, future, option, 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 the purpose of mitigating risk in connection
with a commodity price or index.
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"Dollars" or "$" means, unless otherwise qualified, dollars in
lawful currency of the United States.
"EBITDA" means, for any period, (a) Net Income of the Borrower
and its Subsidiaries on a Consolidated basis for such period, plus (b)
the sum of the following for such period to the extent deducted in the
determination of Net Income: (i) Interest Expense, (ii) income and
franchise taxes, and (iii) amortization, depreciation and other non-
cash charges (including amortization of good will and other intangible
assets).
"Eligible Accounts" means the aggregate face amount of all of the
Borrower's Accounts to the extent each individual Account meets all of
the following criteria:
(a) The Account arose from a bona fide outright sale of
goods by Wampler and/or Cassco, under an enforceable contract, within
the United States, to a Person located within the United States (or
elsewhere if accompanied by an irrevocable letter of credit reasonably
acceptable to the Agent issued in favor of Wampler and/or Cassco at
the request of such Person), and such goods have been shipped to the
appropriate account debtor, or the sale has otherwise been
consummated, in accordance with such contract;
(b) The Account is at all times subject to a valid,
enforceable and first priority perfected Lien in favor of the
Collateral Agent for the benefit of the Lenders except to the extent
such Lien may be subject to Limited Grower Payable Liens;
(c) The title of Wampler and/or Cassco to the Account, and,
except as to the account debtor, to any goods to be sold or leased in
connection with the Account, is absolute and is not subject to any
prior assignment or Lien except to the extent such Lien may be subject
to Limited Grower Payable Liens;
(d) The amount of the Account shown on the books of Wampler
and/or Cassco and on any invoice or statement delivered to the Agent
is owing to Wampler and/or Cassco and net of any partial payment that
has been made thereon by any Person;
(e) The Account is not a contra account and the amount of
the Account stated on the Borrowing Base is net of: any claim of
reduction, counterclaim, set-off, recoupment, or any claim for
credits, allowances or adjustments by the account debtor because of
returned, inferior or damaged goods or unsatisfactory services and any
customary discounts allowed for prompt payment;
(f) The account debtor has not returned or refused to
accept or retain any of the goods from the sale or furnishing of which
the Account arose;
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(g) The Account does not when aggregated with all other
Accounts of such account debtor, exceed fifteen percent (15%) of the
face value of all Accounts of either Wampler or Cassco in the
aggregate then outstanding;
(h) The Account is due and payable not more than thirty
(30) days from the date of the invoice therefor;
(i) The age of the Account, calculated from the due date
therefor, is not more than twenty eight (28) days in the case of
Wampler, or thirty (30) days in the case of Cassco;
(j) Not more than fifty percent (50%) of all Accounts
payable by the account debtor (or any affiliate of such account
debtor) are older than twenty eight (28) days from the invoice due
date, in the case of Wampler, and thirty (30) days from the invoice
due date, in the case of Cassco;
(k) The Account does not arise out of a contract with, or
order from, an account debtor that, by its terms, forbids or makes the
assignment of that Account to the Agent void or unenforceable;
(l) The Borrower has not received any note, trade
acceptance, draft or other instrument or chattel paper with respect to
or in payment of the Account, and, if any such instrument is received,
the Borrower will immediately notify the Agent and at the latter's
request, endorse or assign and deliver the same to the Agent;
provided, however, that upon such endorsement or assignment and
delivery to the Agent, if the Account is otherwise eligible, the
Account shall be deemed to be an Eligible Account;
(m) The account debtor is not insolvent nor the subject of
any dissolution, termination of existence, insolvency, business
failure, appointment of a receiver for any part of its property,
assignment for the benefit of creditors by, or the filing of any
petition in bankruptcy or the commencement of any proceeding under any
bankruptcy or insolvency laws by or against such account debtor;
(n) The account debtor is not the United States of America,
or any department, agency or instrumentality thereof, unless the
Borrower has complied in all respects with the Federal Assignment of
Claims Act of 1940;
(o) The account debtor is not an Affiliate of the Borrower;
and
(p) The Account is not one which the Agent, in its
reasonable discretion, has determined to be disputed, compromised or
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otherwise uncollectible for the full face amount of such Account.
"Eligible Assignee" means, with respect to any assignment of the
rights, interest and obligations of a Revolving Credit Lender
hereunder, a Person that is at the time of such assignment (a) a bank
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 entity which
does or can extend credit of the type extended hereunder, that has
total assets 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), (c) already a Revolving Credit
Lender hereunder (whether as an original party to this Agreement or as
the assignee of another Revolving Credit 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
Revolving Credit Lender, or (e) any other Person that has been
approved in writing as an Eligible Assignee by the Agent, which
approval shall not unreasonably be withheld, provided, that for
purposes of this clause (e), if such Person is a direct competitor of
the Borrower, such Person must also be approved in writing as an
Eligible Assignee by the Borrower.
"Eligible Feed, Grain and Eggs Inventory" means that portion of
Eligible Inventory consisting of feed, grain, and turkey and chicken
eggs ready for use in the ordinary course of the Borrower's business.
"Eligible Inventory" means the gross amount of the Borrower's
Inventory valued at the lower of cost (on a first in, first out basis)
or market which meets all of the following criteria:
(a) The Inventory is owned solely by the Borrower and the
Borrower holds good, valid and marketable title to such Inventory;
(b) Except for Permitted Liens, the Inventory is at all
times subject to a valid, enforceable and first priority perfected
Lien in favor of the Agent for the benefit of the Lenders;
(c) The Inventory is readily saleable in a bona fide arm's
length transaction, or is usable, in the ordinary course of business
of Wampler and/or Cassco;
(d) Except for Permitted Liens, the title of Wampler and/or
Cassco to the inventory is absolute and is not subject to any prior
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assignment or Lien, except the security interests of the Lenders;
(e) The Inventory is in a facility located in the United
States and within a jurisdiction in which the Lenders' security
interests have attached and are perfected by the filing of financing
statements under Applicable Law;
(f) If the Inventory is located on leased premises or in a
warehouse not owned by the Borrower, a landlord's or warehouseman's
waiver satisfactory in form and substance to the Agent shall have been
delivered to the Agent for such premises;
(g) If the Inventory consists of eggs, live chicken or
turkeys, other livestock or other Farm Products (as defined in the
Security Agreement), such Farm Products Inventory is not: (i) deemed
to be diseased, out-of-condition and unmerchantable according to
standards promulgated by the United States Department of Agriculture
or any other federal, state or local governmental agency or any
department or division thereof having regulatory authority over the
Borrower or any of Borrower's assets or activities; (ii) except for
Approved Contract Growers, in the possession of third parties not
covered by negotiable warehouse receipts or negotiable ocean bills of
lading issued by either (a) warehouseman licensed and bonded by the
United States Department of Agriculture or (b) a recognized ocean
carrier having an office in the United States and a financial
condition reasonably acceptable to the Revolving Credit Lenders, which
receipts or bills designate the Revolving Credit Lender directly or by
endorsement as the only person to whom or to whose order the
warehouseman or carrier is legally obligated to deliver such goods;
and
(h) If the Inventory is located with an Approved Contract
Grower, no account payable owed by the Borrower to such Approved
Contract Grower shall be past due for more than fifteen days.
"Eligible Live Poultry Inventory" means that portion of Eligible
Inventory consisting of live chickens and turkeys ready for sale or
use in the ordinary course of the Borrower's business.
"Eligible Processed Inventory" means that portion of Eligible
Inventory consisting of finished chicken, turkey, and other meat
products which are ready for sale in the ordinary course of the
Borrower's business.
"Eligible Packaging Supplies Inventory" means that portion of
Eligible Inventory consisting of packaging supplies ready for use in
the ordinary course of the Borrower's business.
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"Employee Benefit Plan" means any employee benefit plan within
the meaning of Section 3(3) of ERISA which (a) is maintained for
employees of the Borrower or any ERISA Affiliate or (b) has at any
time within the preceding six years been maintained for the employees
of the Borrower or any current or former ERISA Affiliate.
"Environmental Laws" means any and all federal, state and local
laws, statutes, ordinances, rules, regulations, permits, licenses,
approvals, interpretations and orders of courts or Governmental
Authorities, relating to the protection of the environment, including,
but not limited to, requirements pertaining to the manufacture,
processing, distribution, use, treatment, storage, disposal,
transportation, handling, reporting, licensing, permitting,
investigation or remediation of Hazardous Materials. Environmental
Laws include, without limitation, the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. Section 9601 et.
seq.) , the Hazardous Material Transportation Act (49 U.S.C. Section
331 et. seq.) , the Resource Conservation and Recovery Act (42 U.S.C.
Section 6901 et. seq.) , the Federal Water Pollution Control Act (33
U.S.C. Section 1251 et. seq.) , the Clean Air Act (42 U.S.C. Section
7401 et. seq.) , the Toxic Substances Control Act (15 U.S.C. Section
2601 et. seq.), the Safe Drinking Water Act (42 U.S.C. Section 300,
et. seq.), and the Environmental Protection Agency's regulations
relating to underground storage tanks (40 C.F.R. Parts 280 and 281),
and the rules and regulations promulgated under each of these
statutes, each as amended or modified from time to time.
"ERISA" means the Employee Retirement Income Security Act of
1974, and the rules and regulations thereunder, each as amended or
modified from time to time.
"ERISA Affiliate" means any Person who, together with the
Borrower, is treated as a single employer within the meaning of
Section 414 (b), (c), (m) or (o) of the Code or Section 4001(b) of
ERISA.
"Eurodollar Reserve Percentage" means, for any day, the
percentage (expressed as a decimal and rounded upwards, if necessary,
to the next higher 1/100th of 1%) which is in effect for such day as
prescribed by the Federal Reserve Board (or any successor) for
determining the maximum reserve requirement (including without
limitation any basic, supplemental or emergency reserves) in respect
of Eurocurrency liabilities or any similar category of liabilities for
a member bank of the Federal Reserve System in New York City.
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"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.
"Extension Criteria" means that at the time of any request by the
Borrower to extend the Non-Default Maturity Date of the Revolving
Credit Loans in accordance with Section 2.1(b) of this Agreement and
as of the Extension Date that: (i) there exists no Default or Event
of Default under the Agreement; (ii) at all times prior to the
Extension Date there has not occurred any Default or Event of Default
which has not been cured or been waived in writing by the Agent, on
behalf of the Revolving Credit Lenders during the applicable cure
period, if any; (iii) the Borrower shall have simultaneously extended
the maturity date of the Note Obligations as provided in the Note
Agreement; and (iv) the Borrower shall have paid the Extension Fee.
"Extensions of Credit" means, as to any Revolving Credit Lender
at any time, an amount equal to the sum of: (a) the aggregate
principal amount of all Revolving Loans made by such Revolving Credit
Lender then outstanding; and (b) such Revolving Credit Lender's
Commitment Percentage of the L/C Obligations then outstanding.
"Extension Fee" means, in the event that the Borrower elects to
exercise the Revolving Credit Extension Option, a fee payable to the
Agent for the ratable benefit of the Revolving Credit Lenders on or
prior to the Extension Date equal to one percent (1%) of the Aggregate
Revolving Credit Commitment as of the Extension Date.
"FDIC" means the Federal Deposit Insurance Corporation, or any
successor thereto.
"Federal Funds Rate" means, the rate per annum (rounded upwards,
if necessary, to the next higher 1/100th of 1%) representing the daily
effective federal funds rate as quoted by the Agent and confirmed in
Federal Reserve Board Statistical Release H.15 (519) or any successor
or substitute publication selected by the Agent. If, for any reason,
such rate is not available, then "Federal Funds Rate" shall mean a
daily rate which is determined, in the opinion of the Agent, to be the
rate at which federal funds are being offered for sale in the national
federal funds market at 9:00 a.m. (Charlotte time). Rates for
weekends or holidays shall be the same as the rate for the most
immediate preceding Business Day.
"First Union" means First Union National Bank, a national banking
association, and its successors.
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"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 "Fiscal Quarter"): (a)
the first fiscal quarter ("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 ("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 ("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 ("Fourth Fiscal Quarter") of the Current Year
shall end on the last day of the Current Year. For purposes of
determining any fiscal month-end hereunder (a "Fiscal Month"), any
Fiscal Month shall end on the Saturday closest to the last day of such
month.
"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.
"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 U.S.C.
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 U.S.C. Section 6901, et seq. or in regulations
issued thereunder; (c) defined as toxic substances in the Toxic
Substances Control Act, 15 U.S.C. Section 2601, et seq., or in
regulations issued thereunder; or (d) animal wastes.
"Intercreditor Agreement" means that certain Collateral Agency
and Intercreditor Agreement dated as of the Closing Date by and among
the Revolving Credit Lenders and the other parties thereto.
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"Interest Expense" means, with respect to the Borrower and its
Subsidiaries for any period, the gross interest expense (including
without limitation interest expense attributable to Capital Leases) of
the Borrower and its Subsidiaries, all determined for such period on a
Consolidated basis in accordance with GAAP.
"Interest Period" shall have the meaning assigned thereto in
Section 4.1(b).
"Interest Rate Protection Agreements" means any interest rate or
currency hedging agreement or arrangement approved by the Agent (such
approval not to be unreasonably withheld) entered into by the Borrower
and designed to protect against fluctuations in interest rates.
"Inventory" shall have the meaning given to that term in the
Uniform Commercial Code.
"Issuing Lender" means First Union, in its capacity as issuer of
any Letter of Credit, or any successor thereto.
"Leased Real Property" shall mean real property owned by the
Borrower and leased to one or more Persons as more fully set forth on
Schedule 6.1(s).
"Lenders" means the collective reference to the Revolving Credit
Lenders, the Term Lenders, and the Note Lenders.
"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
Revolving Credit Lenders other than the Issuing Lender.
"Lending Office" means, with respect to any Revolving Credit
Lender, the office of such Revolving Credit Lender maintaining such
Revolving Credit Lender's Commitment Percentage of the Loans.
"Letters of Credit" shall have the meaning assigned thereto in
Section 3.1.
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"Leverage Ratio" shall mean, as of the close of any Fiscal
Quarter, Total Debt divided by the Borrower's Consolidated cumulative
four quarter EBITDA ending with the close of such Fiscal Quarter.
"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 lending banks at
approximately 11:00 a.m. London time, two (2) Business Days prior to
the commencement of the applicable Interest Period for settlement in
immediately available funds by lending 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/l00th of l%) 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.
"Limited Grower Payable Liens" means any lien arising in favor
of any Approved Contract Grower with respect to any inventory or other
property owned by the Borrower under the Packers and Stockyards Act,
Va. Code section 43-32, and/or other comparable state statutes, unless
such liens arise in connection with accounts payable over 15 days past
due and have an aggregate value in excess of $1,500,000.
"Loan" means any Revolving Loan, the Term Loan, and all Revolving
Loans and the Term Loan collectively as the context requires.
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"Loan Documents" means, collectively, this Agreement, the Term
Loan Agreement, the Notes, the Applications, the Security Documents,
the Lockbox Agreement, the Warrant Agreement, the Intercreditor
Agreement, any Derivative Agreement executed by any Revolving Credit
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.
"Lock Box Agreement" shall mean an agreement or agreements
between the Borrower and any one or more of the Revolving Credit
Lenders, as required under Section 2.8 of this Agreement, together
with all amendments, modifications, exhibits and schedules thereto as
may be in effect from time to time.
"Material Adverse Effect" means, with respect to the Borrower, a
material adverse effect on the properties, business, operations or
condition (financial or otherwise) of the Borrower, taken as a whole,
or the ability of the Borrower, taken as a whole, to perform its
obligations under the Loan Documents or Material Contracts to which it
is a party.
"Material Contract" means: (a) any contract or other agreement,
instrument, lease, or other evidence of understanding, 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
$2,000,000; or (b) any other contract or other agreement, instrument,
lease, or other evidence of understanding, 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.
"Mortgages" mean, collectively, those Mortgages and Deeds of
Trust executed and delivered to or for the benefit of the Lenders as
of the Closing Date.
"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.
"Net Income" means, with respect to the Borrower and its
Subsidiaries for any period, the Consolidated net income (or loss) of
the Borrower and its Subsidiaries for such period determined in
accordance with GAAP; provided, that there shall be excluded from
Consolidated net income (or loss): (a) the income (or loss) of any
Person (other than a Subsidiary of the Borrower) in which the Borrower
has an ownership interest unless received by the Borrower in a cash
distribution; (b) the income (or loss) of any Person accrued prior to
the date it became a Subsidiary of the Borrower or is merged into or
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consolidated with the Borrower; and (c) extraordinary items.
"Net Proceeds" means, with respect to any sale, lease, transfer
or other disposition of assets by the Borrower or any of its
Subsidiaries, or any issuance by the Borrower or any of its
Subsidiaries of any capital stock or other debt or equity securities
permitted hereunder, the aggregate amount of cash received for such
assets or securities (including, without limitation, any payments
received for non-competition covenants, consulting or management fees,
and any portion of the amount received evidenced by a seller
promissory note or other evidence of Debt), net of (i) amounts
reserved, if any, for taxes payable with respect to any such sale
(after application of any available losses, credits or other offsets),
(ii) reasonable. and customary transaction costs properly attributable
to such transaction and payable by the Borrower or any of its
Subsidiaries (other than to an Affiliate) in connection with such
sale, lease, transfer or other disposition of assets or issuance of
any capital stock or other securities, including, without limitation,
commissions and underwriting discounts, and (iii) until actually
received by the Borrower or any of its Subsidiaries, any portion of
the amount received held in escrow or evidenced by a seller promissory
note or non-compete agreement or covenant for which compensation is
paid over time. Upon receipt by the Borrower or any of its
Subsidiaries of amounts referred to in item (iii) of the preceding
sentence, such amounts shall then be deemed to be "Net Proceeds."
"Net Revenue" means, with respect to the Borrower and its
subsidiaries for any period, net revenue for such period determined on
a Consolidated basis in accordance with GAAP.
"1997 Agreement" means the Credit Agreement dated as of January
1, 1997, among WLR, as Borrower, Cassco and Wampler, as guarantors,
the Revolving Credit Lenders and the Agent.
"Non-Default Maturity Date" shall have the meaning set forth
below in the definition of "Revolving Loan Termination Date."
"Notes" means, collectively, the Revolving Credit Notes and the
Term Notes.
"Note Agreement" means that certain Note Purchase Agreement dated
as of the date hereof by and between WLR and various note lenders
thereunder.
"Note Lenders" means, collectively, each Person executing the
Note Agreement as a lender, together with the successors and assigns
of each Note Lender.
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"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, collectively, the Term Loan Obligations, the
Revolving Credit Obligations.
"Officer's Compliance Certificate" shall have the meaning
assigned thereto in Section 7.2.
"Other Taxes" shall have the meaning assigned thereto in Section
4.10 (b).
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor agency.
"Pension Plan" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to the provisions of Title IV of
ERISA or Section 412 of the Code and which: (a) is maintained for
employees of the Borrower or any ERISA Affiliates; or (b) has at any
time within the preceding six years been maintained for the employees
of the Borrower or any of their current or former ERISA Affiliates.
"Permitted Liens" shall mean those liens and encumbrances (other
than those in favor of the Collateral Agent) permitted pursuant to
Section 10.3.
"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.
"Pledge Agreements" means, collectively, the WLR Pledge Agreement
and the Wampler Pledge Agreement.
"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.
"Purchase Money Debt" means any Debt incurred by the Borrower in
the ordinary course of business for the purpose of and actually used
in acquiring any Capital Asset and such Debt is either (i) held by a
seller of such Capital Asset to the Borrower to secure all or part of
the purchase price thereof, or (ii) held by a Person who, by making
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advances to, or incurring an obligation on behalf of, the Borrower
gives value to the Borrower to enable the Borrower to acquire rights
in or the use of such Capital Asset.
"Ratable Share" shall have the meaning assigned thereto in the
Intercreditor Agreement.
"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.
"Required Revolving Credit Lenders" means, at any date, any
combination of holders of at least seventy-five percent (75%) of the
aggregate unpaid principal amount of the Revolving Credit Notes, or if
no amounts are outstanding under the Revolving Credit Notes, any
combination of Lenders whose Commitment Percentages aggregate at least
seventy-five percent (75%).
"Revolving Credit Extension Option" means the option of the
Borrower as set forth in Section 2.1(b) hereof to extend the Non-
Default Maturity Date for a one year period.
"Revolving Credit Facility" means the revolving credit facility
established pursuant to Article II hereof.
"Revolving Credit Lender" means each Person executing this
Agreement as a Revolving Credit Lender set forth on the signature
pages hereto and each Person that hereafter becomes a party to this
Agreement as a Revolving Credit Lender pursuant to Section 13.10.
"Revolving Credit Notes" means the separate Revolving Credit
Notes made by the Borrower payable to the order of each Revolving
Credit Lender, substantially in the form of Exhibit "A" hereto,
evidencing the Revolving Credit Facility, and any amendments and
modifications thereto, any substitutes therefor, and any replacements,
restatements, renewals or extension thereof, in whole or in part.
"Revolving Credit 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 Revolving Loans; (b) the L/C Obligations; (c)
all payment and other obligations owing by the Borrower to any
Revolving Credit Lender or the Agent under any Derivative Agreement as
permitted pursuant to Section 10.3(h); and (d) all other fees and
commissions (including attorney's fees), charges, indebtedness, loans,
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liabilities, financial accommodations, obligations, covenants and
duties owing by the Borrower to the Revolving Credit Lenders or the
Agent, of every kind, nature and description, direct or indirect,
absolute or contingent, due or to become due under the Loan Documents,
except to the extent such Obligations arise solely under the Term Loan
Agreement and the Term Notes.
"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)
January 1, 2000, or, if the Borrower exercises the Revolving Credit
Extension Option, January 1, 2001 (as the case may be, the "Non-
Default Maturity Date"); (b) the date of the reduction of the
Aggregate Revolving Credit Commitment to zero by the Borrower pursuant
to Section 2.5(a); or (c) the date upon which any one or more Events
of Default shall have occurred.
"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 Agreement" means the Security Agreement by the Borrower
in favor of the Collateral Agent for the benefit of the Lenders, as
amended, restated, modified or otherwise supplemented.
"Security Documents" means the collective reference to the
Security Agreement, the Pledge Agreements, the Mortgages, the
Trademark Assignment, the Valley Rail Assignment, the Intercreditor
Agreement and each other agreement or writing, if any, pursuant to
which the Borrower or any Subsidiary thereof pledges or grants a
security interest, lien, mortgage, encumbrance or charge in any
property or assets securing 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),
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and (c) does not reasonably believe that it will incur debts or
liabilities beyond its ability to pay such debts or liabilities as
they mature.
"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 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).
"Taxes" shall have the meaning assigned thereto in Section
4.10(a).
"Term Lenders" means, collectively, each Person executing the
Term Loan Agreement as a Term Lender.
"Term Loan" means the term loan facility established pursuant to
the Term Loan Agreement.
"Term Loan Agreement" means the Term Loan Agreement dated as of
the Closing Date by and among the Agent, the Term Lenders, and the
Borrower.
"Term Loan Notes" means the separate Notes made by the Borrower
payable to the order of each Term Lender, substantially in the form of
Exhibit "B" to the Term Loan Agreement, evidencing the Term Loan, and
any amendments and modifications thereto, any substitutes therefor,
and any replacements, restatements, renewals or extension thereof, in
whole or in part.
"Term Loan Obligations" means, in each case, whether now in
existence or hereafter arising, the principal of and interest on the
Term Loan and all other fees and commissions (including attorney's
fees), charges, indebtedness, loans, liabilities, financial
accommodations (including all payments and other obligations owing by
the Borrower to any Term Lender or the Agent under any Derivative
Agreement), obligations, covenants and duties owing by the Borrower to
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the Term Lenders or the Agent, of every kind, nature and description,
direct or indirect, absolute or contingent, due or to become due under
the Loan Documents, except to the extent such Obligations arise solely
under the Revolving Credit Agreement and the Revolving Credit Notes.
"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.
"Trademark Assignment" means the Assignment of Trademarks by the
Borrower in favor of the Collateral Agent for the benefit of the
Lenders, as amended, restated, modified, or otherwise supplemented.
"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 State
of New York.
"United States" means the United States of America.
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"Valley Rail Assignment" means that Assignment of Partnership
Interest executed by Valley Rail in favor of the Collateral Agent for
the ratable benefit of the Lenders.
"Wampler Pledge Agreement" means the Pledge Agreement executed by
Wampler, as pledgor, in favor of the Collateral Agent, for the ratable
benefit of the Lenders, as amended, restated, modified, or otherwise
supplemented.
"Warrant Agreement" means collectively, the Warrant Holders
Agreement and the Warrant each dated as of the Closing Date executed
by WLR, in favor of the Collateral Agent for ratable benefit of the
Lenders, as amended, restated, modified or otherwise supplemented.
"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.
"WLR Pledge Agreement" means the Pledge Agreement executed by
WLR, as Pledgor, in favor of the Collateral Agent for ratable benefit
of the Lenders, as amended, restated, modified or otherwise
supplemented.
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.
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ARTICLE II
CREDIT FACILITY
SECTION 2.1 Revolving Credit Loans.
(a) General Provisions. 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 the aggregate
principal amount of all outstanding Revolving Loans (after giving
effect to any amount requested) shall not exceed the lesser of: (i)
the Aggregate Revolving Credit Commitment less the L/C Obligations; or
(ii) the Borrowing Base less the L/C Obligations; and provided further
that the principal amount of outstanding Revolving Loans from any
Revolving Credit Lender to the Borrower shall not at any time exceed
such Revolving Credit Lender's Commitment less the L/C Obligations
attributable to such Revolving Credit Lender. Each Revolving Loan by
a Revolving Credit Lender shall be in a principal amount equal to such
Revolving Credit 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.
(b) Extension Option. As of June 30, 1999 (the "Extension
Date"), the Borrower may elect to extend the Non-Default Maturity date
of the Revolving Credit Facility from January 1, 2000 to January 1,
2001 (the "Extension Option"); provided that on and at all times prior
to the Extension Date, the Borrower is in compliance with the
Extension Criteria. The Borrower shall provide the Revolving Credit
Lenders with written notification of its intention to exercise the
Extension Option prior to the Extension Date.
SECTION 2.2 Procedure for Advances of Revolving Loans.
(a) Requests for Borrowing. In order to obtain a Revolving
Loan, the Borrower shall give the Agent irrevocable prior written
notice in the form attached hereto as Exhibit "B" (a "Notice of
Borrowing") not later than 11:00 a.m. (Charlotte time) (i) on the same
Business Day as each Base Rate Loan, and (ii) at least three (3)
Business Days before each LIBOR Rate Loan, of its intention to borrow,
specifying: (A) the date of such borrowing, which shall be a Business
Day; (B) the amount of such borrowing, which shall be (i) with respect
to Base Rate Loans in an aggregate principal amount of $1,000,000 or a
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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; (D) in
the case of a LIBOR Rate Loan, the duration of the Interest Period
applicable thereto; and (E) a Borrowing Base Certificate in the form
attached as Exhibit "C." Notices received after 11:00 a.m. (Charlotte
time) shall be deemed received on the next Business Day. The Agent
shall promptly notify the Revolving Credit Lenders of each Notice of
Borrowing.
(b) Disbursement of Revolving Loans. Not later than 2:00 p.m.
(Charlotte time) on the proposed borrowing date for a Revolving Loan,
each Revolving Credit 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 Revolving Credit 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 Revolving Credit Lender shall
have made available to the Agent its Commitment Percentage of such
Revolving Loan.
SECTION 2.3 Repayment of Loans.
(a) Repayment on Revolving Loan 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
Revolving Loan Termination Date.
(b) Mandatory Repayment of Excess Revolving Loans. If at any
time the outstanding principal amount of all Revolving Loans exceeds
the lesser of (i) the Aggregate Revolving Credit Commitment less the
L/C Obligations, or (ii) the Borrowing Base 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 Revolving Credit Lenders,
the Revolving Loans in an amount equal to such excess. Each such
repayment shall be accompanied by accrued interest on the amount
repaid and any amount required to be paid pursuant to Section 4.8
hereof.
(c) Optional Repayments. The Borrower may at any time and from
time to time repay the Revolving Loans, in whole or in part, upon at
least three (3) Business Days' irrevocable notice to the Agent with
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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 "D," the Agent shall
promptly notify each Revolving Credit 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 Revolving Credit Notes. Each Revolving Credit
Lender's Revolving Loans and the obligation of the Borrower to repay
such Revolving Loans shall be evidenced by a Revolving Credit Note
executed by the Borrower payable to the order of such Revolving Credit
Lender representing the Borrower's obligation to pay such Revolving
Credit Lender's Commitment or, if less, the aggregate unpaid principal
amount of all Revolving Loans made and to be made by such Revolving
Credit Lender to the Borrower hereunder, plus interest and all other
fees, charges and other amounts due thereon. Each Revolving Credit
Note shall be dated as of the date hereof and shall bear interest on
the unpaid principal amount thereof at the applicable interest rate
per annum specified in Section 4.1.
SECTION 2.5 Permanent Reduction of the Aggregate Revolving
Commitment.
(a) The Borrower shall have the right at any time and from time
to time, upon at least three (3) Business Days prior written notice to
the Agent, to permanently reduce, in whole at any time or in part from
time to time, without premium or penalty, the Aggregate Revolving
Credit 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 Revolving
Credit Lenders after such reduction to the Aggregate Revolving Credit
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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
Revolving Credit 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 Revolving Credit 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; (ii) the date of termination, whether automatically
or by the Agent on behalf of the Revolving Credit Lenders, pursuant to
Section 11.2 (a); or (iii) on such prior date as the Borrower, by
notice to the Agent, shall have repaid the Obligations in full.
SECTION 2.7 Use of Proceeds. The Borrower shall, on the
Closing Date, pay: (i) the amount of $50,000,000 less the face amount
of all Existing 1997 Letters of Credit (as hereafter defined) to the
Revolving Credit Lenders on account of Obligations as defined in the
1997 Agreement with the remaining principal balance under the 1997
Agreement becoming the Term Loan; and (ii) the balance, if any, due to
First Union under the Time Loan Facility shall be paid and thereupon
be terminated. The Borrower shall use the balance of proceeds under
the Revolving Loans 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 not be required to pay any Revolving Credit Lender any
amount pursuant to Section 4.8 of the 1997 Agreement by reason of the
payment or prepayment of a LIBOR Rate Loan (as defined in the 1997
Agreement) on a date other than the last day of an Interest Period (as
defined in the 1997 Agreement) so long as such payment or prepayment
is made under the preceding sentence.
SECTION 2.8 Lockbox/Cash Collateral Account. The Borrower
shall establish a lockbox with one or more of the Revolving Credit
Lenders for the receipt of all remittances from its account debtors,
and shall immediately direct all of its account debtors to remit
payments directly to such lockbox; and shall sign all agreements
reasonably necessary to establish a lockbox and pay all reasonable
charges of the Revolving Credit Lenders associated therewith. The
Borrower shall not have any right of access to, or withdrawal from
such lockbox or the cash collateral account described below. All
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collections of Accounts or remittances representing proceeds of other
Collateral received at any time by the Borrower shall be held in trust
for the Agent and the Revolving Credit Lenders and shall be promptly
delivered, in specie, to the Agent, for the benefit of the Revolving
Credit Lenders. All collections delivered to any Revolving Credit
Lender shall be deposited on the same Business Day as delivered to
such Revolving Credit Lender, and thereafter promptly transferred by
such Revolving Credit Lender to the Borrower's cash collateral account
with the Agent. Provided no Event of Default shall have occurred
under this Agreement, the Agent shall apply such collections to reduce
the outstanding balance of the Revolving Loans on the Business Day
when such collections are deemed to be treated as collected funds.
The Agent is not, however, required to credit the Borrower's cash
collateral account for the amount of any item of payment which is
unsatisfactory to the Agent and the Agent may charge the Borrower's
account for the amount of any payment which is returned to the Agent
unpaid.
SECTION 2.9 Division of Revolving Credit Loans. The Revolving
Credit Lenders and the Borrower acknowledge and agree that the
Aggregate Revolving Credit Commitment consists of two distinct
Tranches including a principal commitment of $50,000,000 attributable
to principal amounts advanced by the Revolving Credit Lenders under
the 1997 Agreement (the "Tranche I Portion") and a principal
commitment of $55,000,000 attributable to the new revolving credit
provided by the Revolving Credit Lenders as of the Closing Date (the
"Tranche II Portion"). Except as otherwise explicitly set forth in
this Agreement, the Tranche I Portion and the Tranche II Portion will
be treated as one and the same Aggregate Revolving Credit Commitment;
provided however, that: (i) the aggregate of all Revolving Loans
outstanding from time to time shall be deemed drawn first from the
Tranche I Portion and drawn second from the Tranche II Portion only to
the extent the Tranche I Portion is fully drawn; and (ii) ordinary
course repayments and reductions received from time to time on account
of the Revolving Loans shall be applied first to the Tranche II
Portion and second to the Tranche I Portion.
SECTION 2.10 Interim Borrowing Base Reporting Standard.
Notwithstanding anything to the contrary contained in this Agreement,
at any time prior to March 31, 1998, the Borrower may supply Borrowing
Base information based upon previous month-end balances updated
pursuant to a roll-forward calculation in form satisfactory to the
Agent.
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ARTICLE III
LETTER OF CREDIT FACILITY
SECTION 3.1 L/C Commitment. Subject to the terms and
conditions hereof, the Issuing Lender, in reliance on the agreements
of the other Revolving Credit 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 Obligations would exceed the L/C Commitment or (ii) the
Available Commitment of any Revolving Credit Lender would be less than
zero. Each Letter of Credit shall (A) be denominated in Dollars in a
minimum amount of $1,000,000 for standby Letters of Credit and $25,000
for commercial Letters of Credit, (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 Non-Default Maturity
Date and (D) be subject to the Uniform Customs and, to the extent not
inconsistent therewith, the laws of the State of New York. 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 "E," 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 Revolving
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Credit Lender a copy of such Letter of Credit and the amount of each
Revolving Credit Lender's participation therein, all promptly
following the issuance of such Letter of Credit.
SECTION 3.3 Commissions and Other Charges.
(a) With regard to standby Letters of Credit, 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
standby Letter of Credit in an amount equal to a rate per annum, as
specified below, on the face amount of such standby Letter of Credit.
Such standby Letter of Credit commission shall be payable quarterly in
advance. In the case of commercial Letters of Credit, the Borrower
shall pay to the Agent for the account of the Issuing Lender and the
L/C Participants, a commercial Letter of Credit commission with
respect to each commercial Letter of Credit in an amount equal to the
rate specified below multiplied by the face amount of such commercial
Letter of Credit. Such commercial Letter of Credit commission shall
be payable in full upon negotiation. In each case, such rate shall be
the Applicable Margin for Tranche I LIBOR Rate Loans as in effect from
time to time.
(b) In addition to the foregoing commission, the Borrower shall
pay the Issuing Lender an issuance fee in accordance with the Issuing
Lender's normal and customary practices, and such other 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 right 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
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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 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
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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 Revolving
Credit 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
Revolving Credit Lenders shall make Base Rate Loans in such amount,
the proceeds of which shall be applied to reimburse the Issuing Lender
for the amount of the related drawing and costs and expenses.
SECTION 3.6 Obligations Absolute. The Borrower's obligations
under this Article III (including without limitation the Reimbursement
Obligation) shall be absolute and unconditional under any and all
circumstances and irrespective of any set-off, counterclaim or defense
to payment which the Borrower may have or have had against the Issuing
Lender or any beneficiary of a Letter of Credit. The Borrower also
agrees with the Issuing Lender that the Issuing Lender shall not be
responsible for, and the Borrower's Reimbursement Obligation under
Section 3.5 shall not be affected by, among other things, the validity
or genuineness of documents or of any endorsements thereon, even
though such documents shall in fact prove to be invalid, fraudulent or
forged, or any dispute between or among the Borrower and any
beneficiary of any Letter of Credit or any other party to which such
Letter of Credit may be transferred or any claims whatsoever of 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
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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 are any letters of credit outstanding under the 1997
Agreement (as the case may be, the "Existing 1997 Letters of Credit"),
such Existing 1997 Letters of Credit shall be deemed to be Letters of
Credit outstanding under this Agreement within the limitations of the
L/C Commitment set forth in this Agreement, provided that the fees
payable with respect to any Existing 1997 Letter of Credit, until such
time as such Existing 1997 Letter of Credit expires or is renewed,
will be subject to the fee structure in effect on the Closing date
under the 1997 Agreement.
ARTICLE IV
GENERAL REVOLVING 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 Revolving Credit Notes or any portion thereof shall
earn 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
Revolving 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 Revolving Loan or portion thereof
bearing interest based on the Base Rate shall be a "Base Rate Loan,"
and each Revolving Loan or portion thereof bearing interest based on
the LIBOR Rate shall be a "LIBOR Rate Loan." Any Revolving 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.
Notwithstanding anything to the contrary contained in this Agreement
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or in any of the other Loan Documents, except for LIBOR Rate Loans in
effect as of the Closing Date, the Borrower may not elect the LIBOR
Rate for any Tranche I Revolving Loan hereunder unless and until the
Borrower shall have delivered its quarterly Financial Statements as of
September 26, 1998 to the Agent demonstrating that the Borrower is in
full compliance with the Loan Documents.
(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 Revolving Loan, which Interest Period shall be a
period of one (1), two (2) or three (3) months with respect to each
LIBOR Rate Loan; provided that:
(i) the Interest Period shall commence on the date of
advance of or conversion to any LIBOR Rate Loan and, in the case of
immediately successive Interest Periods, each successive Interest
Period shall commence on the date on which the next preceding Interest
Period expires;
(ii) if any Interest Period would otherwise expire on a
day that is not a Business Day, such Interest Period shall expire on
the next succeeding Business Day; provided that if any Interest Period
with respect to a LIBOR Rate Loan would otherwise expire on a day that
is not a Business Day but is a day of the month after which no further
Business Day occurs in such month, such Interest Period shall expire
on the next preceding Business Day;
(iii) any Interest Period with respect to a LIBOR Rate
Loan that begins on the last Business Day of a calendar month (or on a
day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on the
last Business Day of the relevant calendar month at the end of such
Interest Period;
(iv) no Interest Period shall extend beyond the
Revolving Loan Termination Date;
(v) there shall be no more than six (6) Interest
Periods outstanding at any time; provided, that if the Borrower is in
compliance with and permitted to choose the LIBOR Rate for new
Revolving Loans under Section 4.1(a), there shall be no more than ten
(10) 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.
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Subject in every way to the restriction on availability of
Tranche I LIBOR Rate Loans in Section 4.1(a), the Applicable Margin
provided for in Section 4.1 with respect to the Revolving Loans (the
"Applicable Margin") shall be as follows:
(i) Tranche I Applicable Margin. With respect to the
Tranche I Portion of the Revolving Credit Obligations:
(A) as of and at all times following the Closing Date
unless modified pursuant to subparagraph (B) hereof:
Base Rate Loans: two and one-fourths
percent (2 1/4%)
LIBOR Rate Loans: three and one-half
percent (3 1/2%)
(B) for each Fiscal Quarter thereafter beginning with
the First Fiscal Quarter of 1999, determined by reference to the
Leverage Ratio and the Coverage Ratio as of the end of the Fiscal
Quarter immediately preceding the delivery of the Applicable Officer's
compliance certificate, in accordance with the following pricing
matrix:
Leverage Ratio Coverage Ratio Base Rate + LIBOR Rate +
greater than or less than or 2.25% 3.50%
equal to 5.0 to equal to 2.25 to
1.00 1.00
less than 5.00 greater than 2.25 1.50% 2.50%
to 1.00 but equal to 1.00 but less
to or greater than than or equal to
4.00 to 1.00 3.00 to 1.00
less than 4.0 to greater than 3.00 0.75% 1.75%
1.00 to 1.00
Adjustments, if any, in the Applicable Margin shall be made
by the Agent on the tenth (10th) Business Day after receipt
by the Agent of quarterly financial statements for the
Borrower and the accompanying Officer's Compliance
Certificate setting forth the Leverage Ratio and Coverage Ratio
of the Borrower as of the most recent Fiscal Quarter end. Subject
to Section 4.1(d), in the event the Borrower fails to deliver
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such financial statements and certificate within the time required
by Section 7.1(a) hereof, the Applicable Margin shall be the
highest Applicable Margin set forth above until the delivery of
such financial statements and certificate.
(ii) Tranche II Applicable Margin. With respect to the
Tranche II Portion of the Revolving Credit Obligations at all times:
Base Rate Loans: one and three-
fourths percent (1 3/4%)
LIBOR Rate Loans: three percent (3%)
(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 Revolving Credit 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 Revolving Credit Notes charged or collected pursuant to the terms
of this Agreement or pursuant to any of the Revolving Credit 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
Revolving Credit Lenders have charged or received interest hereunder
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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 Revolving Credit Lenders shall at the Agent's
option promptly refund to the Borrower any interest received by
Revolving Credit Lenders in excess of the maximum lawful rate or shall
apply such excess to the principal balance of the Obligations. It is
the intent hereof that the Borrower not pay or contract to pay, and
that neither the Agent nor any Revolving Credit 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
Revolving 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 Revolving
Loans as provided above, the Borrower shall give the Agent irrevocable
prior written notice in the form attached as Exhibit "F" (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 Revolving Loan is to be effective specifying
(i) the Revolving 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 Revolving Loans to be converted
or continued. The Agent shall promptly notify the Revolving Credit
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 Revolving Credit
Lenders, a nonrefundable 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 unused daily amount of the
Aggregate Revolving Credit Commitment. The facility fee shall be
payable in arrears on the last Business Day of each calendar quarter
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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 Revolving Credit Lenders pro rata in
accordance with the Revolving Credit Lenders, respective Commitment
Percentages.
(b) Amendment Fee. In order to compensate the Agent and the
Revolving Credit Lenders for restructuring and syndicating the
Revolving Loans and for its obligations hereunder, the Borrower agrees
to pay to the Agent, for the account of the Revolving Credit Lenders,
a non-refundable amendment fee (the "Amendment Fee") in an amount
equal to one percent (1%) of each Revolving Credit Lender's Revolving
Credit Commitment in full on the Closing Date.
(c) Agent's and Other Fees. The Borrower shall 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 the
Loan Documents.
(d) Facility Fee Rate.
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
one-half of one percent (1/2%).
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 Revolving Loans or of any fee,
commission or other amounts (including the Reimbursement Obligation)
payable to the Revolving Credit Lenders under this Agreement or any
Revolving Credit 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 Revolving Credit 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 Revolving Credit Lender's account with its pro rata share of such
payment in accordance with such Revolving Credit Lender's Commitment
Percentage (except as otherwise explicitly provided herein with
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respect to fees) and shall wire advice of the amount of such credit to
each Revolving Credit 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 Revolving Credit 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 Revolving Credit Lenders upon the
Revolving Credit 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 Revolving Credit
Notes, the Reimbursement Obligation and any termination payments due
in respect of a Derivative Agreement with any Revolving Credit Lender
pro rata in accordance with all such amounts due, then to the
principal amount of the Revolving Credit 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 Revolving Credit Lenders
Regarding Extensions of Credit; Assumption by the Agent. The
obligations of the Revolving Credit Lenders under this Agreement to
make the Revolving 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 Revolving Credit Lender prior to a
proposed borrowing date with respect to a Revolving Loan that such
Revolving Credit Lender will not make available to the Agent such
Revolving Credit Lender's ratable portion of the amount to be borrowed
on such date (which notice shall not release such Revolving Credit
Lender of its obligations hereunder), the Agent may assume that such
Revolving Credit 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
Revolving Credit Lender shall pay to the Agent on demand an amount,
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until paid, equal to the product of (a) the amount of such Revolving
Credit 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 Revolving Credit 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 Revolving Credit Lender's Commitment
Percentage of such borrowing is not made available to the Agent by
such Revolving Credit 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 Revolving Credit Lender to make its
Commitment Percentage of any Revolving Loan available shall not
relieve it or any other Revolving Credit Lender of its obligation, if
any, hereunder to make its Commitment Percentage of such Revolving
Loan available on such borrowing date, but no Revolving Credit Lender
shall be responsible for the failure of any other Revolving Credit
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 Revolving Credit
Lender (after consultation with Agent) shall determine that, by reason
of circumstances affecting the foreign exchange and interbank markets
generally, deposits in Eurodollars, in the applicable amounts, are not
being quoted via Telerate Page 3750 or offered to the Agent or such
Revolving Credit 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 Revolving Credit Lenders to make LIBOR Rate
Loans, and the right of the Borrower to convert any Revolving Loan to
or continue any Revolving 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
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Governmental Authority, central bank or comparable agency charged with
the interpretation or administration thereof, or compliance by any of
the Revolving Credit 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 Revolving
Credit Lenders (or any of their respective Lending Offices) to honor
its obligations hereunder to make or maintain any LIBOR Rate Loan,
such Revolving Credit Lender shall promptly give notice thereof to the
Agent and the Agent shall promptly give notice to the Borrower and the
other Revolving Credit Lenders. Thereafter, until the Agent notifies
the Borrower that such circumstances no longer exist, (i) the
obligations of the Revolving Credit Lenders to make LIBOR Rate Loans
and the right of the Borrower to convert any Revolving Loan or
continue any Revolving 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 Revolving Credit 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
Revolving Credit 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 Revolving Credit Lenders (or
any of their respective Lending Offices) to any tax, duty or other
charge with respect to any Revolving Credit Note, Letter of Credit or
Application or shall change the basis of taxation of payments to any
of the Revolving Credit Lenders (or any of their respective Lending
Offices) of the principal of or interest on any Revolving Credit 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 Revolving Credit Lenders or any
of their respective Lending Offices imposed by the jurisdiction in
which such Revolving Credit 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
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or similar requirement against assets of, deposit with or for the
account of, or credit extended by any of the Revolving Credit Lenders
(or any of their respective Lending Offices) or shall impose on any of
the Revolving Credit Lenders (or any of their respective Lending
Offices) or the foreign exchange and interbank markets any other
condition affecting any Revolving Credit Note;
and the result of any of the foregoing is to increase
the costs to any of the Revolving Credit 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 Revolving Credit Lenders under this Agreement or under the
Revolving Credit Notes in respect of a LIBOR Rate Loan or Letter of
Credit or Application, then such Revolving Credit 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 Revolving Credit Lender such additional amount or amounts
as will compensate such Revolving Credit 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 Revolving
Credit Lender to compensation pursuant to this Section 4.7(c);
provided that the Agent shall incur no liability whatsoever to the
Revolving Credit Lenders or the Borrower in the event it fails to do
so. The amount of such compensation shall be determined, in the
applicable Revolving Credit Lender's sole discretion, based upon the
assumption that such Revolving Credit 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
Revolving Credit Lender deems appropriate and practical. A
certificate of such Revolving Credit Lender setting forth the basis
for determining such amount or amounts necessary to compensate such
Revolving Credit 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 Revolving Credit Lenders against any loss or expense which may
arise or be attributable to each Revolving Credit Lender's obtaining,
liquidating or employing deposits or other funds acquired to effect,
fund or maintain any Revolving Loan (a) as a consequence of any
failure by the Borrower to make any payment when due of any amount due
hereunder in connection with a LIBOR Rate Loan, (b) due to any failure
of the Borrower to borrow on a date specified therefor in a Notice of
Borrowing or Notice of Conversion/Continuation 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
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of such loss or expense shall be determined, in the applicable
Revolving Credit Lender's sole discretion, based upon the assumption
that such Revolving Credit 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 Revolving
Credit Lender deems appropriate and practical. A certificate of such
Revolving Credit Lender setting forth the basis for determining such
amount or amounts necessary to compensate such Revolving Credit 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
Revolving Credit Lender or any corporation controlling such Revolving
Credit Lender as a consequence of, or with reference to the
Commitments and other commitments of this type, below the rate which
the Revolving Credit Lender or such other corporation could have
achieved but for such introduction, change or compliance, then within
fifteen (15) Business Days after written demand by any such Revolving
Credit Lender, the Borrower shall pay to such Revolving Credit Lender
from time to time as specified by such Revolving Credit Lender
additional amounts sufficient to compensate such Revolving Credit
Lender or other corporation for such reduction. A certificate as to
such amounts submitted to the Borrower and the Agent by such Revolving
Credit 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 Revolving Credit 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 Revolving Credit Lender and the
Agent, income and franchise taxes imposed by the jurisdiction under
the laws of which such Revolving Credit 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
Revolving Credit Lender, income and franchise taxes imposed by the
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jurisdiction of such Revolving Credit 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 "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 Revolving Credit Note or Letter of
Credit to any Revolving Credit 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 Revolving Credit 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
Revolving 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 Revolving
Credit 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 Revolving Credit 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 Revolving Credit 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.
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(e) Delivery of Tax Forms. Each Revolving Credit Lender
organized under the laws of a jurisdiction other than the United
States or any state thereof shall deliver to the Borrower, with a copy
to the Agent, on the Closing Date or concurrently with the delivery of
the relevant Assignment and Acceptance, as applicable, (i) two United
States Internal Revenue Service Forms 4224 or Forms 1001, as
applicable (or successor forms) properly completed and certifying in
each case that such Revolving Credit 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 Revolving Credit 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
Revolving Credit 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 Revolving Credit 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.
SECTION 4.11 Mandatory Prepayments.
(a) Asset Sales. Within two (2) Business Days after the
consummation by the Borrower or any Subsidiary of any Asset Sale, the
Borrower shall apply ninety percent (90%) of the Net Proceeds realized
from such Asset Sale to permanently reduce the Term Loan Obligations,
the Note Obligations, and the Revolving Credit Obligations by
forwarding such Net Proceeds (the "Asset Sale Net Proceeds") to the
Agent and the Note Lenders in the respective percentages as set forth
in Section 7(e) of the Intercreditor Agreement; provided that if no
Event of Default has occurred under this Agreement as of the date such
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Net Proceeds are made available, the Borrower may apply the first
twelve million dollars ($12,000,000) in Net Proceeds generated from
Asset Sales, reduced by the Net Proceeds applied from Miscellaneous
Asset Sales, to either: (i) its bona fide costs and expenses actually
incurred in connection with the conversion of its Marshville Facility
(collectively, "Marshville Conversion Expenses"); or (ii) if at any
time on or before November 30, 1998, no such expenses have been
incurred or are outstanding and no Event of Default has occurred, then
to the projected Marshville Conversion Expenses pursuant to the
financial projections supplied to the Agent by the Borrower on
February 4, 1998, provided that if on November 30, 1998, any funds are
held in reserve pursuant to this subsection (ii) such funds will be
released to the Agent and the Note Lenders for distribution in
accordance with the Intercreditor Agreement. The Borrower shall
provide to the Agent an accounting of the Marshville Conversion
Expenses at the time of such application certified as true and correct
by the Chief Financial Officer of the Borrower.
(b) New Equity. Within two (2) Business Days after the
consummation of any issuance by the Borrower or any of its
Subsidiaries of any capital stock or other equity securities (as the
case may be, a "New Equity Issue"), the Borrower shall apply an amount
equal to fifty percent (50%) of the Net Proceeds of such New Equity
Issue to permanently reduce the Term Loan Obligations, the Note
Obligations, and the Revolving Credit Obligations by forwarding such
Net Proceeds (the "New Equity Net Proceeds") to the Agent and the Note
Lenders in the respective percentages as set forth in Section 7 (e) of
the Intercreditor Agreement, provided that the Borrower's existing
stock incentive programs, as more fully described in Schedule 4.11(b)
hereof, to the extent limited to aggregate equity values of $2,000,000
or less on an annual basis, shall not constitute a New Equity Issue
for purposes hereof.
(c) New Subordinated Debt. Within two (2) Business Days after
the consummation of any transaction pursuant to which the Borrower or
any subsidiary obtains unsecured Debt subordinated to the prior
payment and performance of the Borrower's Obligations to the Revolving
Credit Lenders, the Term Lenders, and the Note Lenders and on terms
satisfactory to the Agent (as the case may be, an "Approved
Subordinated Debt Transaction"), the Borrower shall apply an amount
equal to one hundred percent (100%) of the Net Proceeds of such
Approved Subordinated Debt Transaction to permanently reduce the Term
Loan Obligations, the Revolving Credit Obligations, and the Note
Obligations by forwarding such Net Proceeds (the "Subordinated Debt
Net Proceeds") to the Agent and the Note Lenders in the respective
percentages as set forth in Section 7 (e) of the Intercreditor
Agreement.
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SECTION 4.12 Approved Miscellaneous Asset Sales. From and
after the Closing Date, the Borrower may, without the prior consent of
the Agent or any Revolving Credit Lender, consummate any Approved
Miscellaneous Asset Sale, provided that the full amount of all
Approved Miscellaneous Asset Sales shall be applied to reduce dollar
for dollar the $12,000,000 allowance for the Marshville Conversion
Expenses and further provided that if on the date any Net Proceeds
from Miscellaneous Asset Sales are made available, the Marshville
Conversion Expenses have been fully credited, the Borrower shall apply
ninety percent (90%) of the balance of such Miscellaneous Asset Sale
Net Proceeds to permanently reduce the Term Loan Obligations, the
Revolving Credit Obligations and the Note Obligations, by forwarding
such Net Proceeds (the "Miscellaneous Asset Sale Net Proceeds") to the
Agent and the Note Lenders in the respective percentages as set forth
in Section 7 (e) of the Intercreditor Agreement.
ARTICLE V
CLOSING; CONDITIONS OF CLOSING AND BORROWING
SECTION 5.1 Closing. The closing shall take place at the
offices of Duane, Morris & Heckscher LLP at 2:00 p.m. on February 25,
1998, 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 Revolving Credit Lenders to close this
Agreement and to make the initial Revolving 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, the Revolving
Credit Notes and each of the other Loan Documents shall have been duly
authorized, executed and delivered to the Agent by the parties
thereto, shall be in full force and effect and no default shall exist
thereunder, and the Borrower shall have delivered original
counterparts thereof to the Agent.
(b) Closing Certificates; etc.
(i) Officers's Certificate of 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
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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 bor-
rowings contemplated hereunder and the execution, delivery and perform-
ance 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 Revolving Credit Lenders with respect to the Borrower, the
Loan Documents and such other matters as the Revolving Credit Lenders
shall request.
(v) Tax Forms. The Agent shall have received copies of the
United States Internal Revenue Service forms required by Section
4.10(e) hereof.
(c) Consents; No Adverse Change.
(i) Governmental and Third Party Approvals. All necessary
material approvals, authorizations and consents, if any be required,
of any Person and of all Governmental Authorities and courts having
jurisdiction with respect to the transactions contemplated by this
Agreement and the other Loan Documents shall have been obtained.
(ii) Permits and Licenses. All material permits and
licenses, including permits and licenses required under Applicable
Laws, necessary to the conduct of business by the Borrower and its
Subsidiaries shall have been obtained.
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(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
taken as a whole, or any event, condition or state of facts that will
or could be reasonably expected to have a Material Adverse Effect,
since June 28, 1997, except as disclosed in the Borrower's unaudited
quarterly financial statements dated as of December 27, 1997.
(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 and consolidating financial
statements of the Borrower and its Subsidiaries and the quarterly
unaudited financial statements of the Borrower as of December 27,
1997, 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 Revolving Credit
Lenders the fees set forth or referenced in Section 4.3 and any other
accrued and unpaid fees or commissions due hereunder (including,
without limitation, legal fees and expenses), and to any other Person
such amount as may be due thereto in connection with the transactions
contemplated hereby, including all taxes, fees and other charges in
connection with the execution, delivery, recording, filing and
registration of any of the Loan Documents. The Agent shall have
received duly authorized and executed copies of the fee letter
agreement referred to in Section 4.3(c).
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(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 Revolving 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 Revolving Credit Lenders. The Revolving
Credit Lenders shall have received copies of all other instruments and
other evidence as the Revolving Credit Lenders may reasonably request
in form and substance satisfactory to the Revolving Credit 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, certified by a secretary or
assistant secretary of the Borrower as a true and correct copy
thereof.
(iv) Insurance Company Documents. The Borrower shall have
delivered to the Agent fully-executed copies of the Note Agreement (as
defined in the Intercreditor Agreement) and all other documents
executed in connection therewith.
SECTION 5.3 Conditions to All Revolving Loans and Letters of
Credit. The obligations of the Revolving Credit Lenders to make,
continue or convert any Revolving 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, except that the foregoing
shall not apply to the representations and warranties set forth with
respect to Section 6.1(o) hereof, nor with respect to Section 6.1(p)
hereof except as Section 6.1(p) relates to the most recent Financial
Statements delivered by the Borrower to the Agent.
(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 Revolving Loan or after giving effect to the
Revolving Loans to be made on such date or (B) on the issue date with
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respect to such Letter of Credit or after giving effect to such
Letters of Credit on such date.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE BORROWER
SECTION 6.1 Representations and Warranties. To induce the
Agent to enter into this Agreement and the Revolving Credit Lenders to
make the Revolving Loans or issue or participate in the Letters of
Credit, the Borrower hereby represents and warrants to the Agent and
Revolving Credit 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).
(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
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duly authorized officers of the Borrower and each of its Subsidiaries
party thereto, and each such document constitutes the legal, valid and
binding obligation of the Borrower or its Subsidiary party thereto,
enforceable in accordance with its terms, except as such enforcement
may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar state or federal debt or 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). Except as set
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forth on Schedule 6.1(f), no Governmental Authority has asserted any
Lien or other claim against the Borrower or any Subsidiary thereof
with respect to unpaid taxes which has not been discharged or
resolved. The charges, accruals and reserves on the books of the
Borrower and any of its Subsidiaries in respect of federal, state,
local and other taxes for all Fiscal Years and portions thereof since
the organization of the Borrower and any of its Subsidiaries are in
the judgment of the Borrower adequate, and the Borrower does not
anticipate any additional taxes or assessments for any of such years.
(g) Copyright Matters. The Borrower and its Subsidiaries have
recorded or deposited with and paid to the United States Copyright
Offices, and the Register of Copyrights all notices, statements of
account, royalty fees and other documents and instruments required
under the United States Copyright Act, and neither the Borrower nor
any Subsidiary thereof is liable to any Person for copyright
infringement under the United States Copyright Act as a result of its
business operations.
(h) Franchises, Licenses, Patents and Trademarks. Each of the
Borrower and its Subsidiaries owns or possesses rights to use all
franchises, licenses, patents, patent rights or licenses, patent
applications, trademarks, trademark rights, trade names, trade name
rights, copyrights and rights with respect to the foregoing which are
required to conduct its business, and all such franchises, licenses,
patents, patent rights or licenses, patent applications, trademarks,
trademark rights, trade names, trade name rights, copyrights and
rights are described on Schedule 6.1(h). 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 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
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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 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);
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(ii) the Borrower and each ERISA Affiliate is in compliance
in all material respects with all applicable provisions of ERISA and
the regulations and published interpretations thereunder with respect
to all Employee Benefit Plans except for any required amendments for
which the remedial amendment period as defined in Section 401(b) of
the Code has not yet expired. Each Employee Benefit Plan that is
intended to be qualified under Section 401(a) of the Code has been
determined by the Internal Revenue Service to be so qualified, and
each trust related to such plan has been determined to be exempt under
Section 501(a) of the Code. No liability has been incurred by the
Borrower or any ERISA Affiliate which remains unsatisfied for any
taxes or penalties with respect to any Employee Benefit Plan or any
Multiemployer Plan;
(iii) No Pension Plan has been terminated, nor has any
accumulated funding deficiency (as defined in Section 412 of the Code)
been incurred (without regard to any waiver granted under Section 412
of the Code), nor has any funding waiver from the Internal Revenue
Service been received or requested with respect to any Pension Plan,
nor has the Borrower or any ERISA Affiliate failed to make any
contributions or to pay any amounts due and owing as required by
Section 412 of the Code, Section 302 of ERISA or the terms of any
Pension Plan prior to the due dates of such contributions under
Section 412 of the Code or Section 302 of ERISA, nor has there been
any event requiring any disclosure under election 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(i) 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
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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 Revolving Loans or
Letters of Credit will be used for purchasing or carrying margin stock
or for any purpose which violates, or which would be, inconsistent
with, the provisions of Regulation G, T, U or X of such Board of
Governors.
(l) Government Regulation. Neither the Borrower nor any
Subsidiary thereof is an "investment company" or a company
"controlled" by an "investment company" (as each such term is defined
or used in the Investment Company Act of 1940, as amended), and
neither the Borrower nor any Subsidiary thereof is, or after giving
effect to any Extension of Credit will be, subject to regulation under
the Public Utility Holding Company Act of 1935 or the Interstate
Commerce Act, each as amended, or any other Applicable Law which
limits its ability to incur or consummate the transactions
contemplated hereby.
(m) Material Contracts. Each Material Contract is, and after
giving effect to the consummation of the transactions contemplated by
the Loan Documents will be, in full force and effect in accordance
with the terms thereof.
(n) Employee Relations. Except as set forth on Schedule
6.1(n), the Borrower is not party to any collective bargaining
agreement, nor has any labor union been recognized as the
representative of its employees. Each of the Borrower and its
Subsidiaries has a stable work force in place. 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 Consolidated and consolidating
audited financial statements of the Borrower and its Subsidiaries
dated June 28, 1997 and the Consolidated and consolidating balance
sheets of the Borrower and its Subsidiaries as of December 27, 1997
and the related statements of income and retained earnings and cash
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flows for the periods then ended, copies of which have been furnished
to the Agent and each Revolving Credit Lender, fairly present the
assets, liabilities and financial position of the Borrower and its
Subsidiaries as at such dates, and the results of the operations and
changes of financial position for the periods then ended. All such
financial statements, including the related schedules and notes
thereto, have been prepared in accordance with GAAP. The Borrower and
its Subsidiaries have no Debt, obligation or other unusual forward or
long-term commitment which is not fairly reflected in the foregoing
financial statements or in the notes thereto.
(q) No Material Adverse Change. Since June 28, 1997 except as
disclosed in the Borrower's unaudited quarterly financial statements
dated as of December 27, 1997, 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). Any real
property owned by the Borrower that is currently subject to any lease,
is listed together with a description of all such leases on Schedule
6.1(s).
(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 and except for Liens in favor of the Agent for the
benefit of the Revolving Credit Lenders.
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(u) Debt and Contingent Obligations. Except with respect to the
1997 Credit Agreement and any noteholder agreement which is superseded
as of the Closing Date, 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 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
Revolving Credit 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
Revolving Credit 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
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insofar as the Borrower can now foresee, could reasonably be expected
to have a Material Adverse Effect.
(y) Rockingham Subsidiaries. Rockingham Poultry, Inc. is not an
active corporate entity and does not own or otherwise hold any assets.
Rockingham Poultry, Inc. (VI) holds only one asset consisting of a
bank account at Banco Popular (Puerto Rico) in the name of Rockingham
Poultry, Inc. (VI) (the "RVI Account") which RVI Account shall at no
time contain an amount more than $15,000.
(z) WLR Common Stock. As of the date hereof, there are
16,335,058 shares of the Common Stock, no par value, of WLR issued and
outstanding. Except as set forth on Schedule 6.1(z) attached hereto:
(a) there are no outstanding options, warrants or other rights to
acquire shares of WLR Common Stock, whether or not presently
exercisable; (b) there are no outstanding securities convertible into
shares of WLR Common Stock, whether or not presently convertible; and
(c) there are no understandings, agreements or commitments with
respect to the issuance of any such securities.
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 Revolving Credit Lenders or any borrowing hereunder.
ARTICLE VII
FINANCIAL INFORMATION AND NOTICES
Until all the Obligations have been finally and indefeasibly paid
and satisfied in full and the Commitments terminated, unless consent
has been obtained in the manner set forth in Section 13.11 hereof, the
Borrower will furnish or cause to be furnished to the Agent at the
Agent's Office (with copies for each Revolving Credit 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:
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SECTION 7.1 Financial Statements and Projections.
(a) Quarterly Financial Statements. As soon as practicable and
in any event within forty-five (45) days after the end of each fiscal
quarter, an unaudited Consolidated and consolidating balance sheet of
the Borrower and its Subsidiaries as of the close of such fiscal
quarter in the form as attached as Exhibit "G," an unaudited
Consolidated and consolidating statement of income for the fiscal
quarter then ended and that portion of the Fiscal Year then ended and
an unaudited Consolidated and consolidating statement of cash flows
for that portion of the Fiscal Year then ended, including the notes,
if any, 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 material 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 ninety (90) days after the end of each Fiscal Year,
an audited Consolidated and unaudited consolidating balance sheet of
the Borrower and its Subsidiaries as of the close of such Fiscal Year
and audited Consolidated and unaudited consolidating statements of
income, retained earnings and cash flows for the Fiscal Year then
ended, including the notes thereto, all in reasonable detail setting
forth in comparative form the corresponding figures for the preceding
Fiscal Year and certified by an independent certified public
accounting firm acceptable to the Agent in accordance with GAAP and,
if applicable, containing disclosure of the effect on the financial
position or results of operation of any change in the application of
accounting principles and practices during the year, and accompanied
by a report thereon by such certified public accountants that is not
qualified with respect to scope limitations imposed by the Borrower or
any of its Subsidiaries or with respect to accounting principles
followed by the Borrower or any of its Subsidiaries not in accordance
with GAAP.
(c) Monthly Financial Statements. As soon as practicable and in
any event within thirty days after the end of each calendar month,
such financial information as may be required by written notification
to the Borrower from the Agent on or before March 31, 1998.
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(d) 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.
(e) 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.
(f) Three Year Business Plan. On or before June 1, 1998, a copy
of the Borrower's three year business plan (the "Three Year Business
Plan") in form and substance satisfactory to the Required Revolving
Credit Lenders and the Agent.
(g) Weekly Borrowing Base Certificates and Information. On each
Monday before 2:00 p.m., for the immediately preceding week ending
Friday, a Borrowing Base Certificate together with such additional
information relating to the Collateral and the calculation of the
Borrowing Base as may be required by the Agent by written notification
to the Borrower on or before March 31, 1998.
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 "H" 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 Month, 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, with the delivery of the
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calculations as at the end of any Fiscal Quarter or Fiscal Year, the
actual Coverage Ratio and Leverage Ratio for purposes of calculating
the Applicable Margin for Tranche I Loans.
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 Consolidated
financial statements addressed to the Agent for the benefit of the
Revolving Credit Lenders:
(a) stating that in making the examination necessary for the
certification of such financial statements, they obtained no knowledge
of any Default or Event of Default or, if such is not the case,
specifying such Default or Event of Default and its nature and period
of existence; and
(b) including the calculations certified by such accountants
required to establish whether or not the Borrower and its Subsidiaries
are in compliance with the financial covenants set forth in Article IX
hereof as at the end of each respective period.<PAGE>
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 Revolving Credit Lender may
reasonably request, including, without limitation, consolidating
financial statements and summary product sales information as provided
on company-prepared fact sheets.
SECTION 7.5 Notice of Litigation and Other Matters. Prompt
(but in no event later than five (5) days after the Chief Executive
Officer, Chief Financial Officer, or any Vice President of WLR 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;
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(b) any notice of any violation (including, without limitation,
a violation of Environmental Laws) received by the Borrower or any
Subsidiary thereof from any Governmental Authority which violation
could reasonably be expected to have a Material Adverse Effect;
(c) any labor controversy that has resulted in, or threatens to
result in, a strike or other work action against the Borrower or any
Subsidiary thereof, which strike or work action, if continued, can
reasonably be expected to have a Material Adverse Effect;
(d) any attachment, judgment, lien (except Permitted Liens),
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
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have a Material Adverse Effect (along with a copy thereof); (vi) all
notices received by the Borrower or any ERISA Affiliate of the PBGC's
intent to terminate any Pension Plan or to have a trustee appointed to
administer any Pension Plan; (vii) each Schedule B (Actuarial
Information) to the annual report (Form 5500 Series) filed by the
Borrower or any ERISA Affiliate with the Internal Revenue Service with
respect to each Pension Plan; (viii) all notices received by the
Borrower or any ERISA Affiliate from a Multiemployer Plan sponsor
concerning the imposition or amount of withdrawal liability pursuant
to Section 4202 of ERISA; and (ix) the Borrower obtaining knowledge or
reason to know that the Borrower or any ERISA Affiliate has filed or
intends to file a notice of intent to terminate any Pension Plan under
a distress termination within the meaning of Section 4041 (c) of
ERISA; and
(g) any event which makes any of the representations set forth
in Section 6.1 inaccurate in any material respect.
SECTION 7.6 Accuracy of Information. All written information,
reports, statements and other papers and data furnished by or on
behalf of the Borrower to the Agent or any Revolving Credit 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 Revolving Credit 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 time failure to so qualify
would have a Material Adverse Effect.
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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. Carry at all times with financially
sound and reputable insurance companies which have ratings from A. M.
Best & Co. of "A" or higher or are otherwise acceptable to the Agent:
(a) all workers' compensation or similar insurance as may be required
under the laws of any jurisdiction; (b) public liability insurance
against claims for personal injury, death or property damage suffered
upon, in or about any premises occupied by it or occurring as a result
of the ownership, maintenance or operation by it of any automobile,
truck or other vehicle or as a result of the use of products
manufactured, constructed or sold by it, or services rendered by it;
(c) business interruption insurance covering risk of loss as a result
of the cessation for all or any part of one year of any substantial
part of the business conducted by it; (d) hazard insurance against
such other hazards as are usually insured against by business entities
of established reputation engaged in like businesses and similarly
situated, including, without limitation, fire (flood, if applicable)
and extended coverage; and (e) such other insurance as the Agent may
from time to time reasonably require, and pay all premiums on the
policies for all such insurance when and as they become due and take
all other actions necessary to maintain such policies in full force
and effect at all times. CIGNA is an acceptable insurer for purposes
of this Section unless the Agent, at the request of the Required
Revolving Credit Lenders, notifies the Borrower that CIGNA is
unacceptable. The Borrower shall cause each hazard insurance policy
to provide, and the insurer issuing each such policy to certify to the
Agent, that (a) if such insurance be proposed to be canceled or
materially changed for any reason whatsoever, such insurer will
promptly notify the Agent and such cancellation or change shall not be
effective for 30 days after receipt by the Agent of such notice,
unless the effect of such change is to extend or increase coverage
under the policy; (b) the Agent, for the benefit of the Revolving
Credit Lenders, shall be named as lender loss payee with respect to
personal property and mortgagee with respect to real property; and (c)
the Agent will have the right, at its election, to remedy any default
in the payment of premiums within 30 days of notice from the insurer
of such default. The foregoing covenants regarding insurance are in
addition to, and not intended to supersede, those covenants regarding
insurance set forth in the Security Documents. In the event and to
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the extent of any conflict between the provisions of this Agreement
and the provisions of the Security Documents regarding the insuring of
Collateral, the provisions of the Security Documents with respect
thereto shall govern.
SECTION 8.4 Accounting Methods and Financial Records.
Maintain a system of accounting, and keep such books, records and
accounts (which shall be true and complete in all material respects)
as may be required or as may be necessary to permit the preparation of
financial statements in accordance with GAAP and in compliance with
the regulations of any Governmental Authority having jurisdiction over
it or any of its properties.
SECTION 8.5 Payment and Performance of Obligations. Pay and
perform all Obligations under this Agreement and the other Loan
Documents, and pay or perform (a) all taxes, assessments and other
governmental charges that may be levied or assessed upon it or any of
its property, and (b) all other indebtedness, obligations and
liabilities in accordance with customary trade practices; provided
that the Borrower or such Subsidiary may contest any item described in
this Section 8.5 in good faith so long as adequate reserves are
maintained with respect thereto in accordance with GAAP.
SECTION 8.6 Compliance With Laws and Approvals. Observe and
remain in compliance in all material respects with all Applicable Laws
and maintain in full force and effect all material Governmental
Approvals, in each case applicable to the conduct of its business.
SECTION 8.7 Environmental Laws. In addition to and without
limiting the generality of Section 8.6, (a) comply in all material
respects with, and ensure such compliance in all material respects by
all tenants and subtenants, if any, with, all applicable Environmental
Laws and obtain and comply with and maintain, and ensure that all
tenants and subtenants obtain and comply with and maintain, any and
all licenses, approvals, notifications, registrations or permits
required by applicable Environmental Laws; (b) conduct and complete
all investigations, studies, sampling and testing, and all remedial,
removal and other actions required under Environmental Laws, and
promptly comply with all lawful orders and directives of any
Governmental Authority regarding Environmental Laws; and (c) defend,
indemnify and hold harmless the Agent and the Revolving Credit
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
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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 Revolving Credit Lender, from time to time, after
reasonable notice, to visit and inspect its properties; inspect, audit
and make extracts from its books, records and files, including, but
not limited to, management letters prepared by independent
accountants; and discuss with its principal officers, and its
independent accountants, its business, assets, liabilities, financial
condition, results of operations and business prospects.
SECTION 8.12 Further Assurances. Make, execute and deliver all
such additional and further acts, things, deeds and instruments as the
Agent or any Revolving Credit Lender may reasonably require to
document and consummate the transactions contemplated hereby and to
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vest completely in and insure the Agent and the Revolving Credit
Lenders their respective rights under this Agreement, the Revolving
Credit Notes, the Letters of Credit and the other Loan Documents.
SECTION 8.13 Meeting with Revolving Credit Lenders.
Participate in meetings at least twice annually with all Revolving
Credit Lenders wishing to participate therein at a date, time and
location satisfactory to the Agent and fully disclose in such meeting
the material future business plans of the Borrower and its
Subsidiaries.
SECTION 8.14 Year 2000 Issues. Take all action necessary to
assure that the Borrower's computer based systems are able to operate
and effectively process data including dates on and after January 1,
2000. At the request of the Agent, the Borrower shall provide the
Agent assurance acceptable to the Agent of the Borrower's Year 2000
compatibility.
SECTION 8.15 Employment of Outside Accountants and Financial
Consultants. Employ Ernst & Young LLP or another outside accounting
firm and/or financial consulting firm acceptable to the Agent for the
purpose of providing consulting and related financial services to the
Borrower as more fully described in the work plan attached as Schedule
8.15. The Borrower will continuously employ a chief financial officer
and related accounting and financial employees reasonably acceptable
to the Agent until the Obligations have been paid in full. For
purposes of this Section 8.15, current Chief Financial Officer is
acceptable to the Agent as chief financial officer of the Borrower.
If the Borrower fails to employ continuously a chief financial officer
and related accounting and financial employees reasonably acceptable
to the Agent, the Borrower will employ an outside accounting and/or
financial consulting firm acceptable to the Agent to perform such
tasks as the Agent may designate. If the Borrower wishes to terminate
the accounting firm and/or financial consulting firm which is
performing the services described in the work plan attached as
Schedule 8.15 prior to its completion, the Borrower must obtain the
prior written consent of the Agent.
For purposes of computing EBITDA under the financial covenants
contained in Article IX of this Agreement and the Term Loan Agreement,
fees and expenses which have been paid prior to the date of this
Agreement and which may be paid after the date of this Agreement to
the outside accounting firm and/or financial consulting firm referred
to in this Section 8.15 will not be considered an expense in
calculating EBITDA.
SECTION 8.16 Maintenance of Bank Accounts. Except for a
deposit account with a balance at no time to exceed $15,000 maintained
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in the name of Rockingham Poultry (VI) at Banco Popular (Puerto Rico),
maintain all of its depository, disbursement and other accounts with
the Agent and/ or any Revolving Credit Lender.
SECTION 8.17 Interest Rate Protection. As promptly as
practicable, and in any event within 60 days after the Closing Date,
enter into, and thereafter for a period of not less than two years
from the Closing Date maintain in effect, one or more Interest Rate
Protection Agreements on such terms and with such parties as shall be
reasonably satisfactory to the Agent, the effect of which shall be to
fix or limit the interest costs to the Borrower with respect to at
least fifty percent (50%) of the amount outstanding under the Term
Loan, the Note Agreement, and projected outstanding amount for
Revolving Credit Loans.
ARTICLE IX
FINANCIAL COVENANTS
Commencing on June 27, 1998, and continuing 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 Minimum Monthly EBITDA. As of the end of any
Fiscal Month, permit the Borrower's Consolidated Cumulative twelve
month EBITDA ending with such Fiscal Month, to be less than the dollar
amount corresponding to such period set forth below:
Minimum Cumulative
Fiscal Month Ended Twelve Month EBITDA
July 1998 $10,701,000
August 1998 $15,248,000
September 1998 $17,048,000
October 1998 $21,089,000
November 1998 $23,646,000
December 1998 $29,821,000
SECTION 9.2 Minimum Quarterly EBITDA. As of the end of any
Fiscal Quarter, permit the Borrower's Consolidated cumulative four-
quarter EBITDA ending with such Fiscal Quarter to be less than the
dollar amount corresponding to the period set forth below:
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Minimum Cumulative
Fiscal Quarter Ended Four Quarter EBITDA
Third Fiscal Quarter 1999 $41,456,000
Fourth Fiscal Quarter 1999 $53,830,000
First Fiscal Quarter 2000 $62,646,000
Second Fiscal Quarter 2000 $69,333,000
Third Fiscal Quarter 2000 $71,082,000
Fourth Fiscal Quarter 2000 $74,151,000
First Fiscal Quarter 2001 $75,963,000
Second Fiscal Quarter 2001 $77,852,000
SECTION 9.3 Limitation on Capital Expenditures. Make or incur
Capital Expenditures in any cumulative four Fiscal Quarter period
ending with such Fiscal Quarter, which would exceed an aggregate
amount for such period corresponding to such period as set forth
below:
Maximum Capital
Quarter Ended Expenditures
Fourth Fiscal Quarter 1998 $30,856,000
First Fiscal Quarter 1999 $36,562,000
Second Fiscal Quarter 1999 $35,800,000
Third Fiscal Quarter 1999 $32,500,000
Fourth Fiscal Quarter 1999 $27,700,000
First Fiscal Quarter 2000 $24,000,000
Second Fiscal Quarter 2000 $24,000,000
Third Fiscal Quarter 2000 $24,000,000
Fourth Fiscal Quarter 2000 $24,000,000
First Fiscal Quarter 2001 $24,000,000
Second Fiscal Quarter 2001 $24,000,000
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;
(b) Debt created under the Note Agreement and related
documents;
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(c) Debt existing on the Closing Date as described on
Schedule 10.1(c) and the renewal and refinancing (but not the
increase) thereof; provided, however, that until such time as the
Obligations are indefeasibly paid in full, the Borrower shall not
refinance any portion of the Debt on a secured basis;
(d) [intentionally left blank]
(e) Debt consisting of Contingent Obligations permitted by
Section 10.2(b);
(f) Debt from Approved Subordinated Debt Transaction(s) as
provided in Article IV hereof;
(g) Purchase Money Debt (including Capital Leases) in an
aggregate amount not to exceed $5,000,000 on any date of
determination.
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 Revolving Credit Lenders and/or the Term
Lenders;
(b) Contingent Obligations existing on the Closing Date as
described on Schedule 10.2(b) (but not the increase) thereof; and
(c) Other Contingent Obligations in an aggregate amount not
to exceed $1,000,000 at any time.
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, supplies
or rentals, and/or statutory liens incurred in the ordinary course of
business which in the aggregate do not at any time exceed $1,000,000,
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and (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 Collateral Agent for the benefit of the
Agent and the Revolving Credit Lenders, the Term Lenders and/or the
Note Lenders;
(f) Any Lien existing on the Closing Date which is
described on Schedule 10.3(f);
(g) Limited Grower Payable Liens;
(h) Liens on personal property held in a margin account by
the counter party with respect to a Derivative Agreement relating to
commodities, 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 $10,000,000; and
(i) Liens created on account of Purchase Money Debt
authorized pursuant to Section 10.1(g) hereof.
SECTION 10.4 Limitations on Acquisitions. Without the prior
written consent of each Revolving Credit Lender, acquire any
significant part of the assets of any Person which is not a Subsidiary
or acquire the capital stock or other ownership interest in any
Person.
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); or enter into any new business activities
or ventures (including joint ventures) not related to its present
business; except that Wampler Supply may be merged or liquidated into
any Borrower.
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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;
(d) Asset Sales as proposed in the Three Year Business Plan
to the extent approved and accepted by each of the Revolving Credit
Lenders;
(e) Approved Miscellaneous Asset Sales; and
(f) Any asset sales agreed to in writing between the
Borrower and each of the Revolving Credit Lenders.
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
(which is/are not a Borrower), or to or from any member of the
immediate family of any of its officers, directors, shareholders or
other Affiliates (which is/are not a Borrower), or subcontract any
operations to any of its Affiliates (which is/are not a Borrower), or
(b) enter into, or be a party to, any transaction with any of its
Affiliates (which is/are not a Borrower), 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
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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 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 Limitations on New Equity, Dividends and
Distributions. Except as provided in the Warrant Agreement and
related documents, declare or pay any dividend, or make any
distributions of cash or property, to holders of any shares of its
capital stock on account of such shares, or, directly or indirectly,
redeem or otherwise acquire any such shares or any option, warrant or
right to acquire any such shares except for the reacquisition of the
shares held in an escrow account in connection with the acquisition of
the Goldsboro facility.
SECTION 10.11 Transfers to Subsidiaries. Transfer any assets
now or hereafter owned by the Borrower to any Subsidiary which is not
a Borrower, except to the extent WLR may transfer funds to Rockingham
Poultry, Inc. (VI) to maintain a balance in the RVI Account of no more
than $15,000.
SECTION 10.12 Limitations on Investments. Purchase, invest in,
or make any loan in the nature of an investment in the stocks, bonds,
notes or other securities or evidence of Debt of any Person, or make
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any loan or advance to or for the benefit of any Person except for the
following (collectively, "Permitted Investments"): (i) short-term
obligations of the Treasury of the United States of America; (ii)
certificates of deposit issued by banks with shareholders' equity of
at least $100,000,000; (iii) repurchase agreements not exceeding 29
days in duration issued by banks with shareholders' equity of at least
$100,000,000; (iv) notes and other instruments generally known as
"commercial paper" which arise out of current transactions, which have
maturities at the time of issuance thereof not exceeding nine months
and which have, at the time of such purchase, investment or other
acquisition, the highest credit rating of Standard & Poor's
Corporation or Moody's Investors Service, Inc.; provided that to the
extent the Borrower shall seek to make any of the foregoing Permitted
Investments, it shall notify the Agent in writing in advance and shall
comply with such steps as the Agent may require to evidence the
perfected security interests of the Revolving Credit Lenders therein.
SECTION 10.13 Limitations on Certain Agreements. Enter into any
Derivative Agreement or Interest Rate Protection Agreement with any
Revolving Credit Lender to the extent that any liability created
thereunder would be secured by any Collateral.
ARTICLE XI
DEFAULT AND REMEDIES
SECTION 11.1 Events of Default. Each of the following shall
constitute an Event of Default, whatever the reason for such event and
whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment or order of any court or
any order, rule or regulation of any Governmental Authority or
otherwise:
(a) Default in Payment of Principal of Revolving Loans and
Reimbursement Obligations. The Borrower shall default in any payment
of principal of any Revolving Loan, Revolving Credit Note or
Reimbursement Obligation as and when due (whether at maturity, by
reason of acceleration or otherwise).
(b) Other Payment Default. The Borrower shall default in the
payment as and when due (whether at maturity, by reason of
acceleration or otherwise) of interest on any Revolving Loan,
Revolving Credit Note or Reimbursement Obligation or the payment of
any other Obligation, and such a default shall continue unremedied for
five (5) Business Days provided, that if the default referenced in
this paragraph (b) arises only under a Mortgage, the five (5) Business
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Days referenced in this paragraph (b) will commence after written
notice of such default shall have been given by the Agent to the
Borrower.
(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 Agreements and Interest Rate Protection
Agreements. Any termination payment shall be due by the Borrower
under any Derivative Agreement or Interest Rate Protection 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 Revolving
Credit Notes or any Reimbursement Obligation) the aggregate
outstanding amount of which is equal to or 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 Obligations) the aggregate outstanding
amount of which is equal to or in excess of $3,000,000 or contained in
any instrument or agreement evidencing, securing or relating thereto
or any other event shall occur or condition exist, the effect of which
default or other event or condition is to cause, or to permit the
holder or holders of such Debt (or a trustee or agent on behalf of
such holder or holders) to cause, with the giving of notice if
required, any such Debt to become due prior to its stated maturity
(any applicable grace period having expired).
(h) Voluntary Bankruptcy Proceeding. The Borrower or any
Subsidiary thereof shall (i) commence a voluntary case under the
federal bankruptcy laws (as now or hereafter in effect); (ii) file a
petition seeking to take advantage of any other laws, domestic or
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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. (i) 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 (ii) 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, provided
that no Event of Default shall have occurred pursuant to this
subparagraph (j)(ii) if the Borrower, within five (5) Business Days
notice from the Agent, takes such steps as are necessary to create a
valid and perfected first priority Lien in such Collateral.
(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) calendar days.
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(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) calendar 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").
(n) Term Loan Events of Default. Any one or more Events of
Default occurs under the Term Loan Agreement.
(o) Note Agreement Events of Default. Any one or more Events of
Default occurs under the Note Agreement.
SECTION 11.2 Remedies. Upon the occurrence of an Event of
Default and at the request of each of the Revolving Credit Lenders,
the Agent shall, by notice to the Borrower:
(a) Acceleration; Termination of Facilities. Declare the
principal of and interest on the Revolving Loans, the Revolving Credit
Notes and the Reimbursement Obligations at the time outstanding, and
all other amounts owed to the Revolving Credit 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, without notice, declaration or demand of any
kind.
(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,
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require the Borrower at such time to deposit in a cash collateral
account opened by the Agent an amount equal to the aggregate then
undrawn and unexpired amount of such Letters of Credit. Amounts held
in such cash collateral account shall be applied by the Agent to the
payment of drafts drawn under such Letters of Credit, and the unused
portion thereof after all such Letters of Credit shall have expired or
been fully drawn upon, if any, shall be applied to repay the other
Obligations. After all such Letters of Credit shall have expired or
been fully drawn upon, the Reimbursement Obligation shall have been
satisfied and all other Obligations shall have been paid in full, the
balance, if any, in such cash collateral account shall be returned to
the Borrower.
(c) Rights of Collection. Exercise on behalf of the Revolving
Credit 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.
(d) Setoff. Exercise or direct any Revolving Credit Lender to
exercise any and all setoff rights as described in Section 13.3 hereof
or as otherwise provided under Applicable Law.
SECTION 11.3 Rights and Remedies Cumulative; Non-Waiver; etc.
The enumeration of the rights and remedies of the Agent and the
Revolving Credit Lenders set forth in this Agreement is not intended
to be exhaustive and the exercise by the Agent and the Revolving
Credit 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 Revolving Credit 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 Revolving Credit 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.<PAGE>
ARTICLE XII
THE AGENT
SECTION 12.1 Appointment. Each of the Revolving Credit Lenders
hereby irrevocably designates and appoints First Union as Agent of
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such Revolving Credit Lender under this Agreement and the other Loan
Documents and each such Revolving Credit Lender irrevocably authorizes
First Union as Agent for such Revolving Credit Lender, to take such
action on its behalf under the provisions of this Agreement and the
other Loan Documents and to exercise such powers and perform such
duties as are expressly delegated to the Agent by the terms of this
Agreement and such other Loan Documents, together with such other
powers as are reasonably incidental thereto. Notwithstanding any
provision to the contrary elsewhere in this Agreement or such other
Loan Documents, the Agent shall not have any duties or
responsibilities, except-those expressly set forth herein and therein,
or any fiduciary relationship with any Revolving Credit 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.
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
Revolving Credit 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 Revolving Credit 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.
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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 Revolving Credit Note as the
owner thereof for all purposes unless such Revolving Credit Note shall
have been transferred in accordance with Section 13.10 hereof. The
Agent shall be fully justified in failing or refusing to take any
action under this Agreement and the other Loan Documents unless it
shall first receive such advice or concurrence of the Required
Revolving Credit Lenders (or, when expressly required hereby or by the
relevant other Loan Document, all the Revolving Credit Lenders) as it
deems appropriate or it shall first be indemnified to its satisfaction
by the Revolving Credit 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
Revolving Credit Notes in accordance with a request of the Required
Revolving Credit Lenders (or, when expressly required hereby, all the
Revolving Credit Lenders), and such request and any action taken or
failure to act pursuant thereto shall be binding upon all the
Revolving Credit Lenders and all future holders of the Revolving
Credit 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 Revolving
Credit 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 Revolving Credit
Lenders. The Agent shall take such action with respect to such
Default or Event of Default as shall be reasonably directed by the
Required Revolving Credit 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.
SECTION 12.6 Non-Reliance on the Agent and other Revolving
Credit Lenders. Each Revolving Credit Lender expressly acknowledges
that neither the Agent nor any of its respective officers, directors,
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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 Revolving Credit
Lender. Each Revolving Credit Lender represents to the Agent that it
has, independently and without reliance upon the Agent or any other
Revolving Credit 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 Revolving Credit Lender also represents that it will,
independently and without reliance upon the Agent or any other
Revolving Credit Lender, and based on such documents and information
as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking
action under this Agreement and the other Loan Documents, and to make
such investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and
credit worthiness of the Borrower and its Subsidiaries. Except for
notices, reports and other documents expressly required to be
furnished to the Revolving Credit Lenders by the Agent hereunder or by
the other Loan Documents, the Agent shall not have any duty or
responsibility to provide any Revolving Credit 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 Revolving Credit 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 Revolving Credit 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 Revolving
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Credit 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
Revolving Credit 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 Revolving Loans made or renewed by it and any Revolving
Credit 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 Revolving Credit Lender and may exercise the same as though it
were not an Agent, and the terms "Revolving Credit Lender" and
"Revolving Credit Lenders" shall include the Agent in its individual
capacity.
SECTION 12.9 Resignation of the Agent; Successor Agent.
Subject to the appointment and acceptance of a successor as provided
below, the Agent may resign at any time by giving notice thereof to
the Revolving Credit Lenders and the Borrower. Upon any such
resignation, the Required Revolving Credit 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 Revolving Credit 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 Revolving Credit 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.
SECTION 12.10 Settlement. The Agent and the Revolving Credit
Lenders hereby agree that each Revolving Credit Lender's funded
portion of the Revolving Loans is intended to be equal at all times to
such Revolving Credit Lender's Commitment Percentage of the
outstanding Revolving Loans. The Agent and the Revolving Credit
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Lenders agree (which agreement shall not be for the benefit of or
enforceable by any Borrower) that in order to facilitate the
administration of this Agreement and the other Loan Documents, at the
option of the Agent, notwithstanding anything in this Agreement to the
contrary, settlement among them as to the Revolving Loans may take
place on a periodic basis in accordance with the following provisions:
(a) The Agent shall request settlement ("Settlement") with
the Revolving Credit Lenders on a basis not less frequently than once
during each seven (7) day period, or on a more frequent basis if so
determined by the Agent, with respect to each outstanding Revolving
Loan by notifying the other Revolving Credit Lenders by telecopy,
telephone or other similar form of transmission, of such requested
Settlement, no later than 11:00 a.m. (Charlotte, North Carolina time)
on the date of such requested Settlement (the "Settlement Date").
Each Revolving Credit Lender shall make the amount of such Revolving
Credit Lender's Commitment Percentage of the outstanding principal
amount of the Revolving Loans with respect to which Settlement is
requested available to the Agent, in same day funds, to such account
of the Agent as the Agent may designate, not later than 11:00 a.m.
(Charlotte, North Carolina time), on the Settlement Date applicable
thereto. Such amounts made available to the Agent shall be applied
against the amounts of the Revolving Loans and shall constitute
Revolving Loans of such Revolving Credit Lenders. If any such amount
is not made available to the Agent by any Revolving Credit Lender on
the Settlement Date applicable thereto, the Agent shall be entitled to
recover such amount on demand from such Revolving Credit Lender
together with interest thereon at the Federal Funds Rate for the first
three (3) days from and after the Settlement Date and thereafter at
the interest rate then applicable to the Revolving Loans with respect
to which Settlement is to be made.
(b) If any payments are received by the Agent which, in
accordance with the terms of this Agreement are to be applied to the
reduction of the Revolving Loans, the Agent may apply such payments to
its Revolving Loans. If, as of any Settlement Date, payments received
since the then immediately preceding Settlement Date have been applied
to the Agent's Revolving Loans as provided for in the immediately
preceding sentence, then the Agent shall pay such amounts to the
Revolving Credit Lenders, to be applied to the outstanding Revolving
Loans of such Revolving Credit Lenders, such that each Revolving
Credit Lender shall have outstanding, as of such Settlement Date,
after giving effect to such payments, its Commitment Percentage of
such Revolving Loans; provided, that the Agent may offset payments due
its pursuant to this sentence against payments due to the Agent
pursuant to subsection (a) hereof on the applicable Settlement Date,
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and require the other Revolving Credit Lenders, as applicable, to make
only the net amount of the payment due.
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.
(b) Addresses for Notices. Notices to any party shall be sent
to it at the following addresses, or any other address as to which all
the other parties are notified in writing.
If to the Borrower: WLR Foods, Inc.
800 Co-op Drive
Timberville, Virginia 22853
Attention: Robert Ritter, CFO
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: Robert Ritter, CFO
If to First Union
as Revolving Credit Lender:
First Union National Bank
301 College Street, DC-5
NC 0737
Charlotte, NC 28288-0737
Attention: Julie Bouhuys, SVP
Telephone No.: (704) 383-0349
Telecopy No.: (704) 374-3300; and
First Union National Bank
201 South Jefferson Street
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Roanoke, Virginia 24011
Attention: George Calfo
Telephone No.: (540) 563-7769
Telecopy No.: (540) 561-5262
If to CoreStates Bank, N.A.
as Revolving Credit 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<PAGE>
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If to Harris Trust and Savings Bank
as Revolving Credit 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 Crestar Bank
Revolving Credit Lender: 510 S. Jefferson Street
Roanoke, VA 24011
Attention: George W. Coleman, Jr.
Telephone No.: 540-982-3285
Telecopy No.: 540-982-3056
If to the Agent: First Union National Bank
301 College Street, DC-5
NC 0737
Charlotte, NC 28288-0737
Attention: Julie Bouhuys, SVP
Telephone No.: (704) 383-0349
Telecopy No.: (704) 374-3300; and
First Union National Bank
201 South Jefferson Street
Roanoke, Virginia 24011
Attention: George Calfo
Telephone No.: (540) 563-7769
Telecopy No.: (540) 561-5262
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 Revolving Credit 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, monitoring, negotiating
and/or 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 Collateral or any right or remedy of the
Agent or any Revolving Credit Lender hereunder or under any of the
other Loan Documents, including any review of factual matters in
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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 Revolving Credit Lenders and
any assignee or participant of a Revolving Credit 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 Revolving Credit 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 Revolving Credit Lenders shall have made any
demand under this Agreement or any of the other Loan Documents or
(b) the Agent shall have declared any or all of the Obligations to be
due and payable as permitted by Section 11.2 and although such
obligations shall be contingent or unmatured.
SECTION 13.4 Governing Law. This Agreement, the Revolving
Credit 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 State of New York, 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 United States
District Court for the Southern District of New York and the Supreme
Court of the State of New York - County of New York in any action,
claim or other proceeding arising out of any dispute in connection
with this Agreement, the Revolving Credit 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 Revolving Credit Lender in connection with this Agreement, the
Revolving Credit 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 Revolving Credit Lender to serve legal
process in any other manner permitted by Applicable Law or affect the
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right of the Agent or any Revolving Credit Lender to bring any action
or proceeding against the Borrower or its properties in the courts of
any other jurisdictions.
SECTION 13.6 Waiver of Jury Trial; Waiver of Punitive Damages.
(a) WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, THE AGENT, EACH REVOLVING CREDIT LENDER AND THE BORROWER HEREBY
IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT
TO ANY ACTION, CLAIM OR OTHER PROCEEDING ARISING, OUT OF OR ANY
DISPUTE IN CONNECTION WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS
HEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.
(b) Waiver of Punitive Damages. The Borrower and the Agent, on
behalf of itself and the Revolving Credit Lenders, agree that they
shall not have a remedy of punitive or exemplary damages against the
other in any Dispute and hereby waive any right or claim to punitive
or exemplary damages they have now or which may arise in the future in
connection with any Dispute whether the Dispute is resolved by
arbitration or judicially.
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 Revolving Credit Lenders or the Agent receives any payment or
proceeds of the Collateral which payments or proceeds or any part
thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a trustee,
receiver or any other party under any bankruptcy law, state or federal
law, common law or equitable cause, then, to the extent of such
payment or proceeds repaid, the obligations or part thereof intended
to be satisfied shall be revived and continued in full force and
effect as if such payment or proceeds had not been received by the
Agent.
SECTION 13.8 Injunctive Relief. The Borrower recognizes that,
in the event the Borrower fails to perform, observe or discharge any
of its obligations or liabilities under this Agreement, any remedy of
law may prove to be inadequate relief to the Revolving Credit Lenders.
Therefore, the Borrower agrees that the Revolving Credit Lenders, at
the Revolving Credit 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
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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 Revolving Credit
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 Revolving
Credit Lenders, all future holders of the Revolving Credit 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 Revolving
Credit Lender. Nothing set forth in any guaranty shall impair, as
between the Borrower, the Agent and the Revolving Credit Lenders, the
obligations of the Borrower hereunder and under the other Loan
Documents.
(b) Assignment by Revolving Credit Lenders. Each Revolving
Credit Lender may, with the consent of the Agent, which consent shall
not be unreasonably withheld, assign to one or more Eligible Assignees
all or a portion of its interests, rights and obligations under this
Agreement (including, without limitation, all or a portion of the
Extensions of Credit at the time owing to it and the Revolving Credit
Notes held by it); provided that:
(i) each such assignment shall be of a constant, and not a
varying, percentage of all the assigning Revolving Credit Lender's
rights and obligations under this Agreement with respect to the Credit
Facility and shall be accompanied by a like assignment on a pro rata
basis of any Term Loan attributable to such Revolving Credit Lender in
its capacity as a Term Lender under the Term Loan Agreement;
(ii) if less than all of the assigning Revolving Credit
Lender's Commitment is to be assigned, the Commitment so assigned
(plus, if applicable, the amount of any Term Loan or any portion
thereof also assigned by such Revolving Credit Lender in its capacity
as a Term Lender under the Term Loan Agreement) shall not be less than
$5,000,000;
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(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 "I"
attached hereto (an "Assignment and Acceptance"), together with any
Revolving Credit Note or Revolving Credit 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
Revolving Loans or the Revolving Credit Notes under the blue sky laws
of any state; and
(v) the assigning Revolving Credit Lender shall pay to the
Agent an assignment fee of $5,000 upon the execution by such Revolving
Credit Lender of the Assignment and Acceptance; provided that no such
fee shall be payable upon any assignment by a Revolving Credit 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 Revolving Credit Lender hereby
and (B) the assigning Revolving Credit 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 Revolving
Credit 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 Revolving Credit Lenders
and the amount of the Extensions of Credit with respect to each
Revolving Credit 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 Revolving Credit
Lenders may treat each person whose name is recorded in the Register
as a Revolving Credit Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the
Borrower or any Revolving Credit Lender at any reasonable time and
from time to time upon reasonable prior notice.
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(e) Issuance of New Revolving Credit Notes. Upon its receipt of
an Assignment and Acceptance executed by an assigning Revolving Credit
Lender and an Eligible Assignee together with any Revolving Credit
Note or Revolving Credit 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 "I":
(i) accept such Assignment and Acceptance;
(ii) record the information contained therein in the
Register;
(iii) give prompt notice thereof to the Revolving Credit
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 Revolving Credit Note or Revolving Credit Notes, a new
Revolving Credit Note or Revolving Credit Notes to the order of such
Eligible Assignee in amounts equal to the Commitment assigned to it
pursuant to such Assignment and Acceptance and a new Revolving Credit
Note or Revolving Credit Notes to the order of the assigning Revolving
Credit Lender in an amount equal to the Commitment retained by it
hereunder. Such new Revolving Credit Note or Revolving Credit Notes
shall be in an aggregate principal amount equal to the aggregate
principal amount of such surrendered Revolving Credit Note or
Revolving Credit Notes, shall be dated the effective date of such
Assignment and Acceptance and shall otherwise be in substantially the
form of the assigned Revolving Credit Notes delivered to the assigning
Revolving Credit Lender. The new Revolving Credit Note or Revolving
Credit Notes shall be in substitution for and not in cancellation of,
release or satisfaction of the surrendered Revolving Credit Note or
Revolving Credit Notes.
(f) Participation. Each Revolving Credit Lender may, with the
consent of the Agent, which consent 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 Revolving Credit Notes held by it);
provided that:
(i) each such participation shall be in an amount not less
than $5,000,000;
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(ii) such Revolving Credit Lender's obligations under this
Agreement including, without limitation, its Commitment, shall remain
unchanged;
(iii) such Revolving Credit Lender shall remain solely
responsible to the other parties hereto for the performance of such
obligations;
(iv) such Revolving Credit Lender shall remain the holder of
the Revolving Credit Notes held by it for all purposes of this
Agreement;
(v) the Borrower, the Agent and the other Revolving Credit
Lenders shall continue to deal solely and directly with such Revolving
Credit Lender in connection with such Revolving Credit Lender's rights
and obligations under this Agreement;
(vi) such Revolving Credit 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 Revolving 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
Revolving Loans or the Revolving Credit Notes under the blue sky law
of any state.
(g) Disclosure of Information; Confidentiality. The Agent and
the Revolving Credit Lenders shall hold all non-public information
obtained pursuant to the Loan Documents in accordance with their
customary procedures for handling confidential information. Any
Revolving Credit 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 Revolving Credit 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 Revolving Credit Lender (which in the
case of an agreement with only such Revolving Credit 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 Revolving Credit Lender.
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(h) Certain Pledges or Assignments. Nothing herein, or in any
other document regarding the transaction herein, shall prohibit any
Revolving Credit Lender from pledging or assigning any Revolving
Credit 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 condition of this
Agreement or any of the other Loan Documents may be amended or waived
by the Required Revolving Credit Lenders, and any consent given by the
Required Revolving Credit Lenders, if, but only if, such amendment,
waiver or consent is in writing signed by the Required Revolving
Credit Lenders (or by the Agent with the consent of the Required
Revolving Credit 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 Revolving Credit Lenders to make Revolving Loans
or issue or participate in Letters of Credit (including without
limitation pursuant to Section 2.6 but not including changes or
adjustments to the Borrowing Base), (b) change the originally
scheduled time or times of payment of the principal of any Revolving
Loan or Reimbursement Obligation or the time or times of payment of
interest on any Revolving Loan or Reimbursement Obligation, (c)
decrease the rate of interest payable on any Revolving Loan or
Reimbursement Obligation, (d) change the amount or time of payment of
any fees payable by the Borrower hereunder, (e) release the Borrower
(or any of them) from all or any portion of the Obligations hereunder;
(f) release any Collateral except as specifically authorized in the
Loan Documents and in connection with the approved asset sales set
forth in Article X hereof; (g) amend, waive or alter any provision of
Article I (Definitions), Article IX (Financial Covenants), Article X
(Negative Covenants) or Article XI (Default and Remedies) hereof; or
(h) amend the provisions of this Section 13.11 or the definition of
Required Revolving Credit Lenders, without the prior written consent
of each Revolving Credit 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 Revolving Credit 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 Revolving Credit Lenders harmless from and against
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all losses suffered by the Agent and the Revolving Credit Lenders in
connection with (i) the exercise by the Agent or the Revolving Credit
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
Revolving Credit Lender for costs and expenses, or indemnify the Agent
or any Revolving Credit Lender for any loss, resulting from the gross
negligence or willful misconduct of the Agent or any Revolving Credit
Lender.
SECTION 13.14 All Powers Coupled with Interest. All powers of
attorney and other authorizations granted to the Revolving Credit
Lenders, the Agent and any Persons designated by the Agent or any
Revolving Credit Lender pursuant to any provisions of this Agreement
or any of the other Loan Documents shall be deemed coupled with an
interest and shall be irrevocable so long as any of the Obligations
remain unpaid or unsatisfied or the Credit Facility has not been
terminated.
SECTION 13.15 Survival of Indemnities. Notwithstanding any
termination of this Agreement, the indemnities to which the Agent and
the Revolving Credit 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 Revolving Credit 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.
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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 Revolving Credit 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
Revolving Credit 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 Revolving
Credit Lender, if any, in respect of such other Revolving Credit
Lender's Extensions of Credit, or interest thereon, such Benefitted
Lender shall purchase for cash from the other Revolving Credit Lenders
such portion of each such other Revolving Credit Lender's Extensions
of Credit or shall provide such other Revolving Credit 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 Revolving Credit Lenders based upon the Revolving Credit
Lenders, Commitment Percentages; provided that if all or any portion
of such excess payment or benefits is thereafter recovered from such
Benefitted Lender, such purchase shall be rescinded, and the purchase
price and benefits returned to the extent of such recovery, but
without interest. The Borrower agrees that each Revolving Credit
Lender so purchasing a portion of another Revolving Credit 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 Revolving Credit Lender were the direct holder of
such portion.
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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.
WLR FOODS, INC.
By:__/S/ Robert T. Ritter__
Robert T. Ritter
Vice President
WAMPLER FOODS, INC.
By:__/S/ Robert T. Ritter__
Robert T. Ritter
Treasurer
CASSCO ICE & COLD STORAGE, INC.
By:__/S/ Robert T. Ritter__
Robert T. Ritter
Vice President
WAMPLER SUPPLY COMPANY, INC.
By:__/S/ Robert T. Ritter__
Robert T. Ritter
Vice President
VALLEY RAIL SERVICE, INC.
By:__/S/ Robert T. Ritter__
Robert T. Ritter
Vice President
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FIRST UNION NATIONAL BANK,
as Agent and Revolving Credit
Lender
By:__/S/ Julie Bouhuys__
Name: Julie Bouhuys
Title: Senior Vice President
Tranche I Commitment Percentage:
35%
Tranche I Commitment: $17,500,000
Tranche II Commitment Percentage:
38.8235%
Tranche II Commitment: $21,352,941
CORESTATES BANK, N.A.
By:__/S/ Carol A. Williams__
Name: Carol A. Williams
Title: Senior Vice President
Tranche I Commitment Percentage:
35%
Tranche I Commitment: $17,500,000
Tranche II Commitment Percentage:
32.9412%
Tranche II Commitment: $18,117,647
HARRIS TRUST AND SAVINGS BANK
By:__/S/ Carl A. Blackham__
Name: Carl A. Blackham
Title: Vice President
Tranche I Commitment Percentage:
20%
Tranche I Commitment: $10,000,000
Tranche II Commitment Percentage:
18.8235%
Tranche II Commitment: $10,352,941
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CRESTAR BANK
By:__/S/ George W. Coleman, Jr.__
Name: George W. Coleman, Jr.
Title: Senior Vice President
Tranche I Commitment Percentage:
10%
Tranche I Commitment: $5,000,000
Tranche II Commitment Percentage:
9.4118%
Tranche II Commitment: $5,176,471
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Exhibit 2.2
REVOLVING CREDIT NOTE
(First Union National Bank-Tranche II)
$21,352,941 February 25, 1998
FOR VALUE RECEIVED, the undersigned, WLR Foods, Inc., a corporation
organized under the laws of the Commonwealth of Virginia ("WLR"),
Cassco Ice & Cold Storage, Inc., a corporation organized under the
laws of the Commonwealth of Virginia ("Cassco"), Wampler Foods, Inc.,
a corporation organized under the laws of the Commonwealth of Virginia
("Wampler"), Wampler Supply Company, Inc., a corporation organized
under the laws of the Commonwealth of Virginia ("Wampler Supply"), and
Valley Rail Service, Inc., a corporation organized under the laws of
the Commonwealth of Virginia ("Valley," and, together with WLR,
Cassco, Wampler, and Wampler Supply, the "Borrower"), hereby promise
to pay to the order of First Union National Bank (the "Bank"), at the
times, at the place and in the manner provided in the Revolving Credit
Agreement, defined herein, the principal sum of up to TWENTY-ONE
MILLION THREE HUNDRED AND FIFTY-TWO THOUSAND NINE HUNDRED AND FORTY-
ONE Dollars ($21,352,941), or, if less, the aggregate unpaid principal
amount of all Revolving Credit Loans disbursed by the Bank under the
Revolving Credit Agreement (as defined herein) 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 the Revolving Credit Agreement.
This Note is a Revolving Credit Note referred to in, and is entitled
to the benefits of, the Revolving Credit Agreement dated as of
February 25, 1998 (as amended, restated or otherwise modified, the
"Revolving Credit Agreement") by and among the Borrower, the Lenders
(including the Bank) which are or may become parties thereto (the
"Lenders"), and First Union National Bank, as Agent. The Revolving
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 terms of the Revolving Credit Agreement are
incorporated herein by reference.
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 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 REVOLVING CREDIT NOTE SHALL BE GOVERNED, CONSTRUED AND ENFORCED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT
REFERENCE TO CONFLICTS OR CHOICE OF LAW PRINCIPLES THEREOF.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Borrower has caused this Revolving Credit
Note to be executed under seal by a duly authorized officer as of the
day and year first above written.
WLR FOODS, INC.
By:__/S/ Robert T. Ritter__
Robert T. Ritter
Vice President
CASSCO ICE & COLD STORAGE, INC.
By:__/S/ Robert T. Ritter__
Robert T. Ritter
Vice President
WAMPLER FOODS, INC.
By:__/S/ Robert T. Ritter
Robert T. Ritter
Treasurer
WAMPLER SUPPLY COMPANY, INC.
By:__/S/ Robert T. Ritter
Robert T. Ritter
Vice President
VALLEY RAIL SERVICE, INC.
By:__/S/ Robert T. Ritter
Robert T. Ritter
Vice President
3
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Exhibit 2.3
TERM LOAN AGREEMENT
dated as of February 25, 1998,
by and among
WLR FOODS, INC.,
WAMPLER FOODS, INC.,
CASSCO ICE & COLD STORAGE, INC.,
WAMPLER SUPPLY COMPANY, INC.,
VALLEY RAIL SERVICE, INC.,
as Borrowers,
the Term Lenders referred to herein,
and
FIRST UNION NATIONAL BANK,
as Agent
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.1 Definitions . . . . . . . . . . 2
SECTION 1.2 General . . . . . . . . . . . . 15
SECTION 1.3 Other Definitions and Provisions16
ARTICLE II
TERM LOAN FACILITY . . . . . . . . . . . . . . . . . . . 16
SECTION 2.1 Term Loan . . . . . . . . . . . 16
SECTION 2.2 Term Loan Principal
Classification . . . . . . . . 16
SECTION 2.3 Repayment of Term Loan . . . . 16
SECTION 2.4 Optional Prepayments of Term
Loan . . . . . . . . . . . . . 17
SECTION 2.5 Term Notes . . . . . . . . . . 17
SECTION 2.6 Termination of Term Loan . . . 17
SECTION 2.7 Use of Proceeds . . . . . . . . 17
ARTICLE III
[RESERVED] . . . . . . . . . . . . . . . . . . . . 17
ARTICLE IV
GENERAL LOAN PROVISIONS . . . . . . . . . . . . . . . . 18
SECTION 4.1 Interest . . . . . . . . . . . 18
SECTION 4.2 Amendment and Agency Fees . . 19
SECTION 4.3 Manner of Payment . . . . . . 19
SECTION 4.4 Crediting of Payments and
Proceeds . . . . . . . . . . . 20
SECTION 4.5 [RESERVED] . . . . . . . . . . 20
SECTION 4.6 Capital Requirements . . . . . 20
SECTION 4.7 Taxes . . . . . . . . . . . . . 20
SECTION 4.8 Mandatory Prepayments . . . . . 22
SECTION 4.9 Approved Miscellaneous Asset
Sales . . . . . . . . . . . . . 23
ARTICLE V
CLOSING; CONDITIONS OF CLOSING AND BORROWING . . . . . 23
SECTION 5.1 Closing . . . . . . . . . . . . 23
SECTION 5.2 Conditions to Closing and
Initial Term Loan . . . . . . . 24
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE BORROWER . . . . . 26
SECTION 6.1 Representations and Warranties 26
SECTION 6.2 Survival of Representations
and Warranties Etc . . . . . . 33
ARTICLE VII
FINANCIAL INFORMATION AND NOTICES . . . . . . . . . . . 33
SECTION 7.1 Financial Statements and
Projections . . . . . . . . . . 33
SECTION 7.2 Officer's Compliance
Certificate . . . . . . . . . 35
SECTION 7.3 Accountants' Certificate . . . 35
SECTION 7.4 Other Reports . . . . . . . . . 35
SECTION 7.5 Notice of Litigation and
Other Matters . . . . . . . . . 36
SECTION 7.6 Accuracy of Information . . . . 37
ARTICLE VIII
AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . 37
SECTION 8.1 Preservation of Corporate
Existence and Related Matters . 37
SECTION 8.2 Maintenance of Property . . . . 37
SECTION 8.3 Insurance . . . . . . . . . . . 38
SECTION 8.4 Accounting Methods and
Financial Records . . . . . . . 38
SECTION 8.5 Payment and Performance of
Obligations . . . . . . . . . . 38
SECTION 8.6 Compliance With Laws and
Approvals . . . . . . . . . . . 39
SECTION 8.7 Environmental Laws . . . . . . 39
SECTION 8.8 Compliance with ERISA . . . . . 39
SECTION 8.9 Compliance With Agreements . . 39
SECTION 8.10 Conduct of Business . . . . . . 40
SECTION 8.11 Visits and Inspections . . . . 40
SECTION 8.12 Further Assurances . . . . . . 40
SECTION 8.13 Meeting with Term Lenders . . . 40
SECTION 8.14 Year 2000 Issues . . . . . . . 40
SECTION 8.15 Employment of Outside
Accountants and Financial
Consultants . . . . . . . . . . 40
SECTION 8.16 Maintenance of Bank Accounts . 41
SECTION 8.17 Interest Rate Protection . . . 41
ARTICLE IX
FINANCIAL COVENANTS . . . . . . . . . . . . . . . . . . 41
SECTION 9.1 Minimum Monthly EBITDA . . . . 41
SECTION 9.2 Minimum Quarterly EBITDA . . . 42
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SECTION 9.3 Limitation on Capital
Expenditures . . . . . . . . . 42
ARTICLE X
NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . 42
SECTION 10.1 Limitations on Debt . . . . . . 43
SECTION 10.2 Limitations on Contingent
Obligations . . . . . . . . . 43
SECTION 10.3 Limitations on Liens . . . . . 43
SECTION 10.4 Limitations on Acquisitions . . 44
SECTION 10.5 Limitations on Mergers,
Liquidation and New Business
Ventures . . . . . . . . . . . 44
SECTION 10.6 Limitations on Sale of Assets . 44
SECTION 10.7 Transactions with Affiliates . 45
SECTION 10.8 Certain Accounting Changes . . 45
SECTION 10.9 Compliance with ERISA . . . . . 45
SECTION 10.10 Limitations on New Equity,
Dividends and Distributions . . 46
SECTION 10.11 Transfers to Subsidiaries . . . 46
SECTION 10.12 Limitations on Investments . . 46
SECTION 10.13 Limitations on Certain
Agreements . . . . . . . . . . 46
ARTICLE XI
DEFAULT AND REMEDIES . . . . . . . . . . . . . . . . . . 47
SECTION 11.1 Events of Default . . . . . . . 47
SECTION 11.2 Remedies . . . . . . . . . . . 49
SECTION 11.3 Rights and Remedies Cumulative;
Non-Waiver; etc . . . . . . . . 50
ARTICLE XII
THE AGENT . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 12.1 Appointment . . . . . . . . . . 50
SECTION 12.2 Delegation of Duties . . . . . 50
SECTION 12.3 Exculpatory Provisions . . . . 50
SECTION 12.4 Reliance by the Agent . . . . . 51
SECTION 12.5 Notice of Default . . . . . . . 51
SECTION 12.6 Non-Reliance on the Agent and
other Term Lenders . . . . . . 51
SECTION 12.7 Indemnification . . . . . . . 52
SECTION 12.8 The Agent in Its Individual
Capacity . . . . . . . . . . . 52
SECTION 12.9 Resignation of the Agent;
Successor Agent . . . . . . . . 53
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ARTICLE XIII
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . 53
SECTION 13.1 Notices . . . . . . . . . . . . 53
SECTION 13.2 Expenses . . . . . . . . . . . 55
SECTION 13.3 Set-off . . . . . . . . . . . . 55
SECTION 13.4 Governing Law . . . . . . . . . 56
SECTION 13.5 Consent to Jurisdiction . . . . 56
SECTION 13.6 Waiver of Jury Trial; Waiver
of Punitive Damages . . . . . . 56
SECTION 13.7 Reversal of Payments . . . . . 57
SECTION 13.8 Injunctive Relief . . . . . . . 57
SECTION 13.9 Accounting Matters . . . . . . 57
SECTION 13.10 Successors and Assigns;
Participations . . . . . . . . 58
SECTION 13.11 Amendments, Waivers and
Consents; Renewal . . . . . . . 61
SECTION 13.12 Performance of Duties . . . . . 61
SECTION 13.13 Indemnification . . . . . . . . 61
SECTION 13.14 All Powers Coupled with
Interest . . . . . . . . . . . 62
SECTION 13.15 Survival of Indemnities . . . . 62
SECTION 13.16 Titles and Captions . . . . . . 62
SECTION 13.17 Severability of Provisions . . 62
SECTION 13.18 Counterparts . . . . . . . . . 62
SECTION 13.19 Term of Agreement . . . . . . . 62
SECTION 13.20 Adjustments . . . . . . . . . . 62
5
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EXHIBITS
Exhibit A - Form of Revolving Credit Note (referenced in Section 1.1)
Exhibit B - Form of Term Loan Note (referenced in Section 1.1)
Exhibit C - Form of Prepayment Notice (referenced in Section 2.4(a))
Exhibit D - Form of Quarterly Unaudited Consolidated and Consolidating
Balance Sheet (referenced in Section 7.1(a))
Exhibit E - Form of Officer's Compliance Certificate (referenced in
Section 7.2)
Exhibit F - Form of Assignment and Acceptance (referenced in Section
13.10(b)(iii))
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SCHEDULES
Schedule 4.8(b) - Existing Stock Incentive Programs
Schedule 6.1(a) - Jurisdictions of Organization and Qualification to
Do Business as Foreign Corporation
Schedule 6.1(b) - Subsidiaries, Capitalization and Shareholders
Schedule 6.1(f) - Government Lien Assertions
Schedule 6.1(h) - Franchise, Licenses, Patents and Tradenames
Schedule 6.1(j) - ERISA Plans
Schedule 6.1(n) - Collective Bargaining Agreements
Schedule 6.1(s) - Leased Real Property
Schedule 6.1(v) - Litigation
Schedule 6.1(z) - Outstanding Options, Warrants or Other Rights
Schedule 8.15 - Work Plan
Schedule 10.1(c) - Existing Debt
Schedule 10.2(b) - Existing Contingent Obligations
Schedule 10.3(f) - Existing Liens
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This TERM LOAN AGREEMENT (the "Agreement"), dated as of February
25, 1998, is made and entered into by and among WLR FOODS, INC.,
("WLR"), WAMPLER FOODS, INC. ("Wampler"), CASSCO ICE & COLD STORAGE,
INC. ("Cassco"), WAMPLER SUPPLY COMPANY, INC. ("Wampler Supply"), and
VALLEY RAIL SERVICE, INC. ("Valley Rail"), all corporations organized
under the laws of the Commonwealth of Virginia, the Term Lenders who
are or may become a party to this Agreement, and FIRST UNION NATIONAL
BANK, for itself and as Agent for the Term Lenders. WLR, Wampler,
Cassco, Wampler Supply and Valley Rail are referred to herein jointly
and severally as the "Borrower." The liabilities and obligations of
WLR, Wampler, Cassco, Wampler Supply and Valley Rail hereunder are
joint and several, and the word "Borrower," as used herein, means each
of them, any of them and/or all of them as the context may require.
BACKGROUND
A. WLR, as borrower, and Cassco and Wampler, as guarantors, are
parties to that certain Credit Agreement, dated January 1, 1997,
pursuant to which the Term Lenders extended a revolving credit
facility (the "Existing Revolving Credit Facility") to WLR in an
amount not to exceed One Hundred Sixty Million Dollars ($160,000,000).
B. WLR, as borrower, and Cassco and Wampler, as guarantors, and
First Union are parties to a certain Loan Agreement dated as of
January 1, 1997 (the "Time Loan Agreement") which has terminated
undrawn by mutual consent of the parties.
C. WLR, Cassco, Wampler, Wampler Supply and Valley Rail are
part of an integrated financial enterprise and have requested the Term
Lenders to: (i) provide a revolving credit facility in the maximum
amount of $105,000,000; (ii) restructure a portion of the Existing
Revolving Credit Facility, after the principal amount outstanding
(including the aggregate face amount of all outstanding letters of
credit) has been reduced to $110,000,000, into a term loan as provided
herein; (iii) provide the new revolving credit facility pursuant to
the terms of the Revolving Credit Agreement (hereafter defined); and
(iv) restructure the Existing Revolving Credit Facility as provided in
this Agreement and the other Loan Documents executed as of the date
hereof.
D. The Term Lenders have agreed to this request subject to the
terms and conditions of this Agreement and the other Loan Documents.
E. The Borrower will materially benefit from the restructure of
the Existing Revolving Credit Facility and the new revolving credit to
be provided as set forth in the Loan Documents.
8
<PAGE>
E. THIS AGREEMENT IS ISSUED IN ORDER TO AMEND, RESTATE AND
EVIDENCE, AND TO BE A SUBSTITUTE FOR, BUT NOT TO BE A PAYMENT,
SATISFACTION, CANCELLATION OR A NOVATION OF THAT PORTION OF EXISTING
REVOLVING CREDIT FACILITY BEING CONVERTED TO A TERM LOAN HEREUNDER.
THE EXECUTION OF THIS AGREEMENT BY THE PARTIES HERETO DOES NOT
EXTINGUISH THE OBLIGATIONS EVIDENCED BY THE EXISTING REVOLVING CREDIT
FACILITY OR ANY PORTION THEREOF AND THE LIABILITIES OF THE BORROWER
THEREUNDER AND HEREUNDER ARE CONTINUOUS. THIS AGREEMENT DOES NOT
EVIDENCE ANY NEW ADVANCES OF CREDIT AND DOES NOT REFLECT ANY AGREEMENT
BY THE TERM LENDERS FOR THE EXTENSION OF ANY ADDITIONAL CREDIT TO THE
BORROWER.
NOW, THEREFORE, for good and valuable consideration, the receipt
and legal sufficiency of which are hereby acknowledged by the parties
hereto, such parties hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. The following terms when used in
this Agreement shall have the meanings assigned to them below:
"Affiliate" means, with respect to 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. The term Affiliate shall not include, in
the case of the Borrower, Pioneering Management Corporation.
"Agent" means First Union in its capacity as Agent hereunder, and
any successor thereto appointed pursuant to Section 12.9.
"Agent's Office" means the office of the Agent specified in or
determined in accordance with the provisions of Section 13.1.
"Aggregate Term Loan" means the aggregate amount of the Term
Lenders' Term Loans under this Agreement, as such amount may be
reduced at any time or from time to time pursuant to Article II
hereof. On the Closing Date, the Aggregate Term Loan shall be One
Hundred Ten Million Dollars ($110,000,000).
9
<PAGE>
"Agreement" means this Term Loan Agreement, as amended or
modified from time to time.
"Amendment Fee" shall have the meaning ascribed in Section 4.2
hereof.
"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.
"Approved Contract Growers" shall mean those persons who, from
time to time, hold live chicken and turkey inventory owned by Wampler
under and subject to grower contracts which preserve and in every way
maintain the title of Wampler in and to such inventory to the
satisfaction of Wampler and its counsel.
"Approved Miscellaneous Asset Sale" shall mean any sale or sales
by the Borrower of any real or personal property which (i) for the
first year following the Closing Date do(es) not generate Net Proceeds
of more than $7,500,000 in the aggregate, or more than $2,500,000 for
any individual sale; and (ii) for each one-year period thereafter
do(es) not generate Net Proceeds of more than $1,000,000 in the
aggregate for such twelve-month period.
"Asset Sale" means any sale, sale-leaseback, mortgage of real
property or any other disposition (including the grant of any option,
warrant or other right to purchase such property) by any Person of any
of its real or tangible personal property or assets (other than
permitted by subsections (a), (b), and (c) of Section 10.6 and the
sale of Equipment, the proceeds of which are applied to the prepayment
of any Purchase Money Debt secured by a Lien on such Equipment).
"Assignment and Acceptance" shall have the meaning assigned
thereto in Section 13.10.
"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.
"Borrower" means WLR, Wampler, Cassco, Wampler Supply, and Valley
Rail, in their capacities as joint and several borrowers hereunder,
and each of them, any of them and/or all of them as the context may
require.
"Business Day" means for all purposes any day other than a
Saturday, Sunday or legal holiday on which banks in Charlotte, North
10
<PAGE>
Carolina and London, England, are open for the conduct of their
commercial banking business.
"Capital Asset" means, with respect to the Borrower and its
Subsidiaries, any asset that would, in accordance with GAAP, be
required to be classified and accounted for as a capital asset on a
Consolidated balance sheet of the Borrower and its Subsidiaries.
"Capital Expenditures" means, with respect to the Borrower and
its Subsidiaries for any period, the aggregate cost of all capital
assets acquired by any such Person during such period, determined
without duplication on a Consolidated basis in accordance with GAAP.
"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 Term Notes are originally executed and
delivered to the Term Lenders.
"Code" means the Internal Revenue Code of 1986, and the rules and
regulations thereunder, each as amended or supplemented from time to
time.
"Collateral" means all of the assets, property and interests in
property of the Borrower and its Subsidiaries, whether now owned or
hereafter acquired, that shall, from time to time, secure the
Obligations, including without limitation the Collateral described in
the Security Documents and any property or interests provided in
addition to or in substitution for any of the foregoing.
"Collateral Agent" means First Union in its capacity as
Collateral Agent under the Security Documents.
"Consolidated" means, when used with reference to financial
statements or financial statement items of the Borrower and its
Subsidiaries, such statements or items on a consolidated basis in
accordance with applicable principles of consolidation under GAAP.
"Contingent Obligation" means, with respect to the Borrower and
its Subsidiaries, without duplication, any obligation, contingent or
11
<PAGE>
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 or executory contracts.
"Coverage Ratio" means, as of the close of any Fiscal Quarter,
the Borrower's Consolidated cumulative four quarter EBITDA ending with
the close of such Fiscal Quarter divided by the Borrower's
Consolidated cumulative four quarter Interest Expense ending with the
close of such Fiscal Quarter.
"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 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.
Debt shall include all obligations of the Borrower or any of its
Subsidiaries pursuant to Derivative Agreements entered into in the
ordinary course of business for the purpose of mitigating risk.
"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, instrument,
security, obligation or undertaking of whatever nature that
constitutes (in whole or in part) a forward, future, option, 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 the purpose of mitigating risk in connection
with a commodity price or index.
12
<PAGE>
"Dispute" means any dispute, claim or controversy arising out of,
connected with or relating to this Agreement.
"Dollars" or "$" means, unless otherwise qualified, dollars in
lawful currency of the United States.
"EBITDA" means, for any period, (a) Net Income of the Borrower
and its Subsidiaries on a Consolidated basis for such period, plus (b)
the sum of the following for such period to the extent deducted in the
determination of Net Income: (i) Interest Expense, (ii) income and
franchise taxes, and (iii) amortization, depreciation and other non-
cash charges (including amortization of good will and other intangible
assets).
"Eligible Assignee" means, with respect to any assignment of the
rights, interest and obligations of a Term Lender hereunder, a Person
that is at the time of such assignment (a) a bank 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 entity which does or can extend
credit of the type extended hereunder, that has total assets 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), (c) already a Term Lender hereunder (whether
as an original party to this Agreement or as the assignee of another
Term 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 Term Lender, or (e) any other Person that
has been approved in writing as an Eligible Assignee by the Agent,
which approval shall not be unreasonably withheld, provided, that for
purposes of this clause (e), if such Person is a direct competitor of
the Borrower, such Person must also be approved in writing as an
Eligible Assignee by the Borrower.
"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,
13
<PAGE>
transportation, handling, reporting, licensing, permitting,
investigation or remediation of Hazardous Materials. Environmental
Laws include, without limitation, the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. Section 9601 et.
seq.) , the Hazardous Material Transportation Act (49 U.S.C. Section
331 et. seq.) , the Resource Conservation and Recovery Act (42 U.S.C.
Section 6901 et. seq.) , the Federal Water Pollution Control Act (33
U.S.C. Section 1251 et. seq.) , the Clean Air Act (42 U.S.C. Section
7401 et. seq.) , the Toxic Substances Control Act (15 U.S.C. Section
2601 et. seq.), the Safe Drinking Water Act (42 U.S.C. Section 300,
et. seq.), and the Environmental Protection Agency's regulations
relating to underground storage tanks (40 C.F.R. Parts 280 and 281),
and the rules and regulations promulgated under each of these
statutes, each as amended or modified from time to time.
"ERISA" means the Employee Retirement Income Security Act of
1974, and the rules and regulations thereunder, each as amended or
modified from time to time.
"ERISA Affiliate" means any Person who, together with the
Borrower, is treated as a single employer within the meaning of
Section 414 (b), (c), (m) or (o) of the Code or Section 4001(b) of
ERISA.
"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.
"Extension Criteria" means that at the time of any request by the
Borrower to extend the Non-Default Maturity Date of the Term Loan in
accordance with Section 2.1 (b) of this Agreement and as of the
Extension Date that: (i) there exists no Default or Event of Default
under the Agreement; (ii) at all times prior to the Extension Date
there has not occurred any Default or Event of Default which has not
been cured or been waived in writing by the Agent, on behalf of the
Term Lenders during the applicable cure period, if any; (iii) the
Borrower shall have simultaneously extended the maturity date of the
Note Obligations as provided in the Note Agreement; and (iv) the
Borrower shall have paid the Extension Fee.
"Extension Fee" means, in the event that the Borrower elects to
exercise the Term Loan Extension Option, a fee payable to the Agent
for the ratable benefit of the Term Lenders on or prior to the
Extension Date equal to one percent (1%) of the principal balance
outstanding under the Term Loan as of the Extension Date.
"FDIC" means the Federal Deposit Insurance Corporation, or any
successor thereto.
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"Federal Funds Rate" means, the rate per annum (rounded upwards,
if necessary, to the next higher 1/100th of 1%) representing the daily
effective federal funds rate as quoted by the Agent and confirmed in
Federal Reserve Board Statistical Release H.15 (519) or any successor
or substitute publication selected by the Agent. If, for any reason,
such rate is not available, then "Federal Funds Rate" shall mean a
daily rate which is determined, in the opinion of the Agent, to be the
rate at which federal funds are being offered for sale in the national
federal funds market at 9:00 a.m. (Charlotte time). Rates for
weekends or holidays shall be the same as the rate for the most
immediate preceding Business Day.
"First Union" means First Union National Bank, a national banking
association, and its successors and assigns.
"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 "Fiscal Quarter")
(a) the first fiscal quarter ("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 ("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 ("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 ("Fourth Fiscal Quarter") of the Current Year
shall end on the last day of the Current Year. For purposes of
determining any fiscal month-end hereunder (a "Fiscal Month"), any
Fiscal Month shall end on the Saturday closest to the last day of such
month.
"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.
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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 U.S.C.
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 U.S.C. Section 6901, et seq. or in regulations
issued thereunder; (c) defined as toxic substances in the Toxic
Substances Control Act, 15 U.S.C. Section 2601, et seq., or in
regulations issued thereunder; or (d) animal wastes.
"Intercreditor Agreement" means that certain Collateral Agency
and Intercreditor Agreement dated as of the Closing Date by and among
the Term Lenders and the other parties thereto.
"Interest Expense" means, with respect to the Borrower and its
Subsidiaries for any period, the gross interest expense (including
without limitation interest expense attributable to Capital Leases) of
the Borrower and its Subsidiaries, all determined for such period on a
Consolidated basis in accordance with GAAP.
"Interest Rate Protection Agreements" means any interest rate or
currency hedging agreement or arrangement approved by the Agent (such
approval not to be unreasonably withheld) entered into by the Borrower
and designed to protect against fluctuations in interest rates.
"Leased Real Property" shall mean real property owned by the
Borrower and leased to one or more Persons as more fully set forth on
Schedule 6.1(s).
"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 of the Revolving Credit Agreement.
"Lenders" means the collective reference to the Revolving Credit
Lenders, the Term Lenders, and the Note Lenders.
"Lending Office" means, with respect to any Term Lender, the
office of such Term Lender maintaining such Term Lender's Term Loan.
"Letters of Credit" shall have the meaning assigned thereto in
Section 3.1(a) of the Revolving Credit Agreement.
"Leverage Ratio" shall mean, as of the close of any Fiscal
Quarter, Total Debt divided by the Borrower's Consolidated cumulative
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four quarter EBITDA ending with the close of such Fiscal Quarter.
"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.
"Limited Grower Payable Liens" means any lien arising in favor of
any Approved Contract Grower with respect to any inventory or other
property owned by the Borrower under the Packers and Stockyards Act,
Va. Code Section 43-32, and/or other comparable state statutes, unless such
liens arise in connection with accounts payable over fifteen (15) days
past due and have an aggregate value in excess of $1,500,000.
"Loan" means any Revolving Loan, the Term Loan, and all Revolving
Loans and the Term Loan collectively as the context requires.
"Loan Documents" means, collectively, this Agreement, the
Revolving Credit Agreement, the Notes, the Applications, the Security
Documents, the Lockbox Agreement, the Warrant Agreement, the
Intercreditor Agreement, any Derivative Agreement executed by any Term
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.
"Lock Box Agreement" shall mean an agreement or agreements
between the Borrower and any one or more of the Revolving Credit
Lenders, as required under the Revolving Credit Agreement, together
with all amendments, modifications, exhibits and schedules thereto may
be in effect from time to time.
"Mandatory Prepayment Net Proceeds" means, collectively, the
Asset Sale Net Proceeds, New Equity Net Proceeds, Subordinated Debt
Net Proceeds, and Miscellaneous Asset Sale Net Proceeds.
"Material Adverse Effect" means, with respect to the Borrower, a
material adverse effect on the properties, business, operations or
condition (financial or otherwise) of the Borrower, taken as a whole,
or the ability of the Borrower, taken as a whole, to perform its
obligations under the Loan Documents or Material Contracts, to which
it is a party.
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"Material Contract" means: (a) any contract or other agreement,
instrument, lease or other evidence of understanding, 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
$2,000,000; or (b) any other contract or other agreement, instrument,
lease or other evidence of understanding, 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.
"Mortgages" mean, collectively, those Mortgages and Deeds of
Trust executed and delivered to or for the benefit of the Term Lenders
as of the Closing Date.
"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.
"Net Income" means, with respect to the Borrower and its
Subsidiaries for any period, the Consolidated net income (or loss) of
the Borrower and its Subsidiaries for such period determined in
accordance with GAAP; provided, that there shall be excluded from
Consolidated net income (or loss): (a) the income (or loss) of any
Person (other than a Subsidiary of the Borrower) in which the Borrower
has an ownership interest unless received by the Borrower in a cash
distribution; (b) the income (or loss) of any Person accrued prior to
the date it became a Subsidiary of the Borrower or is merged into or
consolidated with the Borrower; and (c) extraordinary items.
"Net Proceeds" means, with respect to any sale, lease, transfer
or other disposition of assets by the Borrower or any of its
Subsidiaries, or any issuance by the Borrower or any of its
Subsidiaries of any capital stock or other debt or equity securities
permitted hereunder, the aggregate amount of cash received for such
assets or securities (including, without limitation, any payments
received for non-competition covenants, consulting or management fees,
and any portion of the amount received evidenced by a seller
promissory note or other evidence of Debt), net of (i) amounts
reserved, if any, for taxes payable with respect to any such sale
(after application of any available losses, credits or other offsets),
(ii) reasonable. and customary transaction costs properly attributable
to such transaction and payable by the Borrower or any of its
Subsidiaries (other than to an Affiliate) in connection with such
sale, lease, transfer or other disposition of assets or issuance of
any capital stock or other securities, including, without limitation,
commissions and underwriting discounts, and (iii) until actually
received by the Borrower or any of its Subsidiaries, any portion of
the amount received held in escrow or evidenced by a seller promissory
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note or non-compete agreement or covenant for which compensation is
paid over time. Upon receipt by the Borrower or any of its
Subsidiaries of amounts referred to in item (iii) of the preceding
sentence, such amounts shall then be deemed to be "Net Proceeds."
"Net Revenue" means, with respect to the Borrower and its
subsidiaries for any period, net revenue for such period determined on
a Consolidated basis in accordance with GAAP.
"1997 Agreement" means the Credit Agreement dated as of January
1, 1997, among WLR, as Borrower, Cassco and Wampler, as guarantors,
the lenders thereunder, and the Agent.
"Non-Default Maturity Date" shall have the meaning set forth
below in the definition of "Term Loan Termination Date."
"Notes" means, collectively, the Revolving Credit Notes and the
Term Notes.
"Note Agreement" means that certain Note Purchase Agreement dated
as of the date hereof by and between WLR and various note lenders
thereunder.
"Note Lenders" means, collective, each Person executing the Note
Agreement as a lender.
"Obligations" means, collectively, the Term Loan Obligations and
the Revolving Credit Obligations.
"Officer's Compliance Certificate" shall have the meaning
assigned thereto in Section 7.2.
"Other Taxes" shall have the meaning assigned thereto in Section
4.10 (b) .
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor agency.
"Pension Plan" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to the provisions of Title IV of
ERISA or Section 412 of the Code and which: (a) is maintained for
employees of the Borrower or any ERISA Affiliates; or (b) has at any
time within the preceding six years been maintained for the employees
of the Borrower or any of their current or former ERISA Affiliates.
"Permitted Liens" shall mean those liens and encumbrances (other
than those in favor of the Collateral Agent) permitted pursuant to
Section 10.3
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"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.
"Pledge Agreements" means, collectively, the WLR Pledge Agreement
and the Wampler Pledge Agreement.
"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.
"Purchase Money Debt" means any Debt incurred by the Borrower in
the ordinary course of business for the purpose of and actually used
in acquiring any Capital Asset and such Debt is either (i) held by a
seller of such Capital Asset to the Borrower to secure all or part of
the purchase price thereof, or (ii) held by a Person who, by making
advances to, or incurring an obligation on behalf of, the Borrower
gives value to the Borrower to enable the Borrower to acquire rights
in or the use of such Capital Asset.
"Ratable Share" shall have the meaning given to such term in the
Intercreditor Agreement.
"Register" shall have the meaning assigned thereto in Section
13.10(d).
"Reimbursement Obligation" means the obligation of the Borrower
to reimburse the Issuing Revolving Credit Lender pursuant to Section
3.5 of the Revolving Credit Agreement.
"Required Term Lenders" means, at any date, any combination of
holders of at least seventy five percent (75%) of the aggregate unpaid
principal amount of the Term Notes, or if no amounts are outstanding
under the Term Notes, any combination of Term Lenders whose Term Loan
Percentages aggregate at least seventy five percent (75%).
"Revolving Credit Agreement" means the Revolving Credit Agreement
dated as of the date hereof by and among the Agent, the Revolving
Credit Lenders, and the Borrower, as amended or modified from time to
time.
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"Revolving Credit Facility" means the revolving credit facility
established pursuant to Article II of the Revolving Credit Agreement.
"Revolving Credit Lenders" means each Person executing the
Revolving Credit Agreement as a Revolving Credit Lender and each
Person that hereafter becomes a Revolving Credit Lender.
"Revolving Credit Notes" means the separate Revolving Credit
Notes made by the Borrower payable to the order of each Revolving
Credit Lender, substantially in the form of Exhibit "A" hereto,
evidencing the Revolving Credit Facility, and any amendments and
modifications thereto, any substitutes therefor, and any replacements,
restatements, renewals or extension thereof, in whole or in part.
"Revolving Credit 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 Revolving Loans; (b) the L/C Obligations; (c)
all payment and other obligations owing by the Borrower to any
Revolving Credit Lender or the Agent under any Derivative Agreement as
permitted pursuant to Section 10.3(h); 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 Revolving Credit Lenders or the
Agent, of every kind, nature and description, direct or indirect,
absolute or contingent, due or to become due, under the Loan
Documents, except to the extent such obligations arise solely under
the Term Loan Agreement and the Term Notes.
"Revolving Loan" means any Loan made to the Borrower pursuant to
Section 2.1 of the Revolving Credit Agreement.
"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
Collateral Agent, any Revolving Credit Lender and/or any Term Lender
as security for or guaranty of the payment or performance of any
Obligation.
"Security Agreement" means the Security Agreement by the Borrower
in favor of the Collateral Agent for the benefit of the Lenders, as
amended, restated, modified or otherwise supplemented.
"Security Documents" means the collective reference to the
Security Agreement, the Pledge Agreements, the Mortgages, the
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Trademark Assignment, the Valley Rail Assignment, the Intercreditor
Agreement and each other agreement or writing, if any, pursuant to
which the Borrower or any Subsidiary thereof pledges or grants a
security interest, lien, mortgage, encumbrance or charge in any
property or assets securing 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 reasonably believe that it will incur debts or
liabilities beyond its ability to pay such debts or liabilities as
they mature.
"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 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).
"Taxes" shall have the meaning assigned thereto in Section
4.7(a).
"Term Lender" means each Person executing this Agreement as a
Term Lender set forth on the signature pages hereto and each Person
that hereafter becomes a party to this Agreement as a Term Lender
pursuant to Section 13.10.
"Term Loan" means, as to any individual Term Lender at any time,
an amount equal to the aggregate principal amount of the Term Loan
made by such Term Lender then outstanding, and, as to the Term Lenders
collectively at any time, the amount equal to the aggregate principal
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amount of all Term Loans made by all Term Lenders then outstanding.
"Term Loan Extension Option" means the option of the Borrower as
set forth in Section 2.1(b) hereof to extend the Non-Default Maturity
Date for a one year period.
"Term Loan Percentage" means, as to any Term Lender at any time,
the ratio of (a) the amount of the Term Loan of such Term Lender to
(b) the Aggregate Term Loans of all of the Term Lenders, expressed as
a percentage.
"Term Loan Termination Date" means the earlier of: (a) January
1, 2000, or, if the Borrower exercises the Term Loan Extension Option,
January 1, 2001 (as the case may be, the "Non-Default Maturity Date");
(b) the date of the indefeasible payment in full of the Term Loan by
the Borrower; or (c) the date upon which any one or more Events of
Default shall have occurred.
"Term Notes" means the separate Notes made by the Borrower
payable to the order of each Term Lender, substantially in the form of
Exhibit "B" hereto, evidencing the Term Loan, and any amendments and
modifications thereto, any substitutes therefor, and any replacements,
restatements, renewals or extension thereof, in whole or in part.
"Term Loan Obligations" means, in each case, whether now in
existence or hereafter arising, the principal of and interest on the
Term Loan and all other fees and commissions (including attorney's
fees), charges, indebtedness, loans, liabilities, financial
accommodations (including all payment and other obligations owing by
the Borrower to any Term Lender or the Agent under any Derivative
Agreement), obligations, covenants and duties owing by the Borrower to
the Term Lenders or the Agent, of every kind, nature and description,
direct or indirect, absolute or contingent, due or to become due,
under the Loan Documents, except to the extent such obligations arise
solely under the Revolving Credit Agreement and the Revolving Credit
Notes.
"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
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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.
"Trademark Assignment" means, collectively the Assignment of
Trademarks by WLR in favor of the Collateral Agent for the ratable
benefit of the Lenders, as amended, restated, modified, or otherwise
supplemented.
"UCC" means the Uniform Commercial Code as in effect in the State
of New York.
"United States" means the United States of America.
"Valley Rail Assignment" means that Assignment of Partnership
Interest executed by Valley Rail in favor of the Collateral Agent for
the ratable benefit of the Lenders.
"Wampler Pledge Agreement" means the Pledge Agreement executed by
Wampler, as pledgor, in favor of the Collateral Agent, for the ratable
benefit of the Lenders, as amended, restated, modified, or otherwise
supplemented.
"Warrant Agreement" means collectively the Warrant Holders
Agreement and the Warrant each dated as of the Closing Date executed
by WLR, in favor of the Collateral Agent for ratable benefit of the
Lenders, as amended, restated, modified or otherwise supplemented.
"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.
"WLR Pledge Agreement" means the Pledge Agreement executed by
WLR, as Pledgor, in favor of the Collateral Agent for ratable benefit
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of the Lenders, as amended, restated, modified or otherwise
supplemented.
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 Revolving Credit 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
TERM LOAN FACILITY
SECTION 2.1 Term Loan.
(a) Generally. Subject to the terms and conditions of this
Agreement, each Term Lender severally agrees to make a Term Loan to
the Borrower as of the Closing Date through the Term Loan Termination
Date in an original principal amount equal to the amount set forth in
the Term Note attributable to such Term Lender.
(b) Term Loan Extension Option. As of June 30, 1999 (the
"Extension Date"), the Borrower may elect to extend the Non-Default
Maturity date of the Term Loan from January 1, 2000 to January 1, 2001
(the "Term Loan Extension Option"); provided that on and at all times
prior to the Extension Date, the Borrower is in compliance with the
Extension Criteria. The Borrower shall provide the Lenders with
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written notification of its intention to exercise the Extension Option
prior to the Extension Date.
SECTION 2.2 Term Loan Principal Classification. The Term Loan
shall be established solely by a partial reclassification and
restructure of each Term Lender's Loans under the 1997 Agreement.
Neither the Agent nor any of the Term Lenders will be required to
advance new funds to the Borrower for the Term Loan under this
Agreement.
SECTION 2.3 Repayment of Term Loan. Beginning on March 31,
1999, and continuing on the last day of each calendar quarter
thereafter (that is, each June 30, September 30, December 31, and
March 31 thereafter), the Borrower will pay principal under the Term
Loan in an amount equal to $989,902.50 (a "Mandatory Term Loan
Principal Payment"), provided that any Mandatory Prepayment Net
Proceeds received by the Term Lenders shall be applied to reduce
Mandatory Term Loan Principal Payments in the order of maturity. The
Borrower will submit all Mandatory Term Loan Principal Payments to the
Agent for the ratable benefit of the Term Lenders. The Borrower shall
pay interest on the Term Loan in accordance with Section 4.1. If not
sooner paid, the entire amount of the Term Loan Obligations will be
immediately due and payable to the Agent upon the occurrence of the
Term Loan Termination Date.
SECTION 2.4 Optional Prepayments of Term Loan.
(a) Optional Prepayments. The Borrower may at any time and from
time to time prepay the Term Loan, in whole or in part, upon at least
one (1) Business Day's irrevocable notice in the form attached hereto
as Exhibit "C." Upon receipt of such notice, the Agent shall promptly
notify each Term 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 prepayments shall be in an aggregate
amount of $1,000,000 or a whole multiple of $500,000 in excess thereof
(b) Manner of Application. Each prepayment under this Section
2.4 shall be applied to the principal installments due on the Term
Loan on a pro rata basis according to the Term Loan Percentage of each
Term Lender and in the inverse order of maturity.
SECTION 2.5 Term Notes. The obligation of the Borrower to repay
the Term Loan made by each Term Lender shall be evidenced by a Term
Note in the form attached hereto as Exhibit "B," payable to the order
of such Term Lender. Each Term Note issued on the Closing Date shall
be dated the Closing Date and shall bear interest on the unpaid
principal amount thereof at the applicable interest rate per annum
specified in Section 4.1.
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SECTION 2.6 Termination of Term Loan. The Term Loan shall
terminate on the earlier of (i) the Term Loan Termination Date; or
(ii) the date of termination, whether automatically or by the Agent on
behalf of the Term Lenders, pursuant to Section 11.2 (a).
SECTION 2.7 Use of Proceeds. The Borrower acknowledges and
agrees that the principal amount of the Term Loan as of the Closing
Date represents a restructuring of amounts outstanding under the 1997
Agreement. No Term Lender shall be required to make any advance to
the Borrower on account of the Term Loan. To the extent that any
principal amount restructured hereunder constitutes a LIBOR Loan (as
defined in the 1997 Agreement), such LIBOR Loan shall be deemed
converted to a Base Rate Loan as of the Closing Date. The Borrower
shall not be required to pay any Term Lender any amount pursuant to
Section 4.8 of the 1997 Agreement by reason of the payment or
prepayment of a LIBOR Rate Loan (as defined in the 1997 Agreement) on
a date other than the last day of an Interest Period (as defined in
the 1997 Agreement).
ARTICLE III
[RESERVED]
ARTICLE IV
GENERAL LOAN PROVISIONS
SECTION 4.1 Interest.
(a) Interest Rate. The aggregate principal balance of the Term
Notes or any portion thereof shall earn interest at the Base Rate plus
the Applicable Margin as set forth below.
(b) Applicable Margin. The Applicable Margin provided for in
Section 4.1(a) with respect to the Term Loan (the "Applicable Margin")
shall be as follows:
(i) as of and at all times following the Closing Date
unless modified pursuant to subparagraph (B) hereof, the Base Rate
plus two and one-fourths percent (2-1/4%);
(ii) if the Borrower shall have delivered its quarterly
Financial Statements as of September 26, 1998 to the Agent and the
Agent shall have confirmed that the Borrower is in compliance with the
Loan Documents, for each Fiscal Quarter thereafter beginning with the
First Fiscal Quarter of 1999, determined by reference to the Leverage
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Ratio and the Coverage Ratio as of the end of the Fiscal Quarter
immediately preceding the delivery of the Applicable Officer's
compliance certificate, in accordance with the following pricing
matrix:
Leverage Ratio Coverage Ratio Base Rate +
greater than or equal less than or equal 2.25%
to 5.0 to 1.00 to 2.25 to 1.00
less than 5.00 to 1.00 greater than 2.25 to 1.50%
but equal to or greater but less than or
than 4.00 to 1.00 1.00 equal to 3.00 to 1.00
less than 4.0 to 1.00 greater than 3.00 to 1.00 0.75%
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Adjustments, if any, in the Applicable Margin shall be made by the
Agent on the tenth (10th) Business Day after receipt by the Agent of
quarterly financial statements for the Borrower and the accompanying
Officer's Compliance Certificate setting forth the Leverage Ratio and
Coverage Ratio of the Borrower as of the most recent Fiscal Quarter
end. Subject to Section 4.1(c), in the event the Borrower fails to
deliver such financial statements and certificate within the time
required by Section 7.1(a) hereof, the Applicable Margin shall be the
highest Applicable Margin set forth above until the delivery of such
financial statements and certificate.
(c) Default Rate. Upon the occurrence and during the
continuance of an Event of Default, the Term Loan shall bear interest
at a rate per annum equal to the Base Rate plus four and one-fourths
percent (4-1/4%) (the "Default Rate"). Default Rate interest shall
continue to accrue on the Term 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.
(d) Interest Payment and Computation. Interest on the Term 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. All interest, fees and commissions
provided hereunder shall be computed on the basis of a 365/366-day
year and the actual number of days elapsed.
(e) Maximum Rate. In no contingency or event whatsoever shall
the aggregate of all amounts deemed interest hereunder or under any of
the Term Notes charged or collected pursuant to the terms of this
Agreement or pursuant to any of the Term 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 Term 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 Term
Lenders shall at the Agent's option promptly refund to the Borrower
any interest received by Term Lenders in excess of the maximum lawful
rate or shall apply such excess to the principal balance of the Term
Loan Obligations. It is the intent hereof that the Borrower not pay
or contract to pay, and that neither the Agent nor any Term 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.
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SECTION 4.2 Amendment and Agency Fees.
(a) Amendment Fee. In order to compensate the Agent and the Term
Lenders for restructuring and syndicating the Loans and for its
obligations hereunder, the Borrower agrees to pay to the Agent, for
the account of the Term Lenders, a non-refundable amendment fee (the
"Amendment Fee") in an amount equal to one percent (1%) of each Term
Lender's Term Loan payable in full on the Closing Date.
(b) Agent's Other Fees. The Borrower shall 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 the
Loan Documents.
SECTION 4.3 Manner of Payment. Each payment (including
repayments described in Article II) by the Borrower on account of the
principal of or interest on the Term Loan or of any fee, commission or
other amounts payable to the Term Lenders under this Agreement or any
Term 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 Term Lenders pro rata in accordance with their
respective Term Loan 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 Term Lender's
account with its pro rata share of such payment in accordance with
such Term Lender's Term Loan Percentage (except as otherwise
explicitly provided herein with respect to fees) and shall wire advice
of the amount of such credit to each Term Lender.
SECTION 4.4 Crediting of Payments and Proceeds. In the event
that the Borrower shall fail to pay any of the obligations when due
and the Term Loan Obligations have been accelerated pursuant to
Section 11.2, all payments received by the Term Lenders upon the Term
Notes and the other Term Loan 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 fees then due and payable, then to all commitment
and other fees and commissions then due and payable, then to accrued
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and unpaid interest on the Term Notes, with any Term Lender pro rata
in accordance with all such amounts due, then to the principal amount
of the Term Notes.
SECTION 4.5 [RESERVED]
SECTION 4.6 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
Term Lender or any corporation controlling such Term Lender as a
consequence of, or with reference to the Term Loan, below the rate
which the Term Lender or such other corporation could have achieved
but for such introduction, change or compliance, then within fifteen
(15) Business Days after written demand by any such Term Lender, the
Borrower shall pay to such Term Lender from time to time as specified
by such Term Lender additional amounts sufficient to compensate such
Term Lender or other corporation for such reduction. A certificate as
to such amounts submitted to the Borrower and the Agent by such Term
Lender, shall, in the absence of manifest error, be presumed to be
correct and binding for all purposes.
SECTION 4.7 Taxes.
(a) Payments Free and Clear. Any and all payments by the
Borrower hereunder or under the Term Notes 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
Term Lender and the Agent, income and franchise taxes imposed by the
jurisdiction under the laws of which such Term 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 Term Lender, income and franchise taxes imposed by the
jurisdiction of such Term 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 "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 Term Note to any Term 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 4.7(a)) such Term Lender or the Agent
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(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 this Section.
(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
Term Loan, 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 Term 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) paid by such Term
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 Term 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 Term Lender organized under the
laws of a jurisdiction other than the United States or any state
thereof shall deliver to the Borrower, with a copy to the Agent, on
the Closing Date or concurrently with the delivery of the relevant
Assignment and Acceptance, as applicable, (i) two United States
Internal Revenue Service Forms 4224 or Forms 1001, as applicable (or
successor forms) properly completed and certifying in each case that
such Term 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 Term
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
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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 Term 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 Term
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 4.7 shall survive the payment
in full of the Obligations and the termination of the Term Loan.
SECTION 4.8 Mandatory Prepayments.
(a) Asset Sales. Within two (2) Business Days after the
consummation by the Borrower or any Subsidiary of any Asset Sale, the
Borrower shall apply ninety percent (90%) of the Net Proceeds realized
from such Asset Sale to permanently reduce the Term Loan Obligations,
the Note Obligations, and the Revolving Credit Obligations by
forwarding such Net Proceeds (the "Asset Sale Net Proceeds") to the
Agent and the Note Lenders in the respective percentages as set forth
in Section 7(e) of the Intercreditor Agreement; provided that if no
Event of Default has occurred under this Agreement as of the date such
Net Proceeds are made available, the Borrower may apply the first
twelve million dollars ($12,000,000) in Net Proceeds generated from
Asset Sales, reduced by the Net Proceeds applied from Miscellaneous
Asset Sales, to either: (i) its bona fide costs and expenses actually
incurred in connection with the conversion of its Marshville Facility
(collectively, "Marshville Conversion Expenses"); or (ii) if at any
time on or before November 30, 1998, no such expenses have been
incurred or are outstanding and no Event of Default has occurred, then
to the projected Marshville Conversion Expenses pursuant to the
financial projections provided to the Agent on February 4, 1998,
provided that if on November 30, 1998, any funds are held in reserve
pursuant to this subsection (ii), then such funds will be released to
the Agent and the Note Lenders for distribution in accordance with the
Intercreditor Agreement. The Borrower shall provide to the Agent an
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accounting of the Marshville Conversion Expenses at the time of such
application certified as true and correct by the Chief Financial
Officer of the Borrower.
(b) New Equity. Within two (2) Business Days after the
consummation of any issuance by the Borrower or any of its
Subsidiaries of any capital stock or other equity securities (as the
case may be, a "New Equity Issue"), the Borrower shall apply an amount
equal to fifty percent (50%) of the Net Proceeds of such New Equity
Issue to permanently reduce the Term Loan Obligations, the Note
Obligations, and the Revolving Credit Obligations by forwarding such
Net Proceeds (the "New Equity Net Proceeds") to the Agent and the Note
Lenders in the respective percentages as set forth in Section 7(e) of
the Intercreditor Agreement, provided that the Borrower's existing
stock incentive programs, as more fully described in Schedule 4.8(b)
hereof, to the extent limited to aggregate equity values of $2,000,000
or less on an annual basis, shall not constitute a New Equity Issue
for purposes hereof.
(c) New Subordinated Debt. Within two (2) Business Days after
the consummation of any transaction pursuant to which the Borrower or
any subsidiary obtains unsecured Debt subordinated to the prior
payment and performance of the Borrower's Obligations to the Revolving
Credit Lenders, the Term Lenders, and the Note Lenders and on terms
satisfactory to the Agent (as the case may be, an "Approved
Subordinated Debt Transaction"), the Borrower shall apply an amount
equal to one hundred percent (100%) of the Net Proceeds of such
Approved Subordinated Debt Transaction to permanently reduce the Term
Loan Obligations, the Revolving Credit Obligations, and the Note
Obligations by forwarding such Net Proceeds (the "Subordinated Debt
Net Proceeds") to the Agent and the Note Lenders in the respective
percentages as set forth in Section 7(e) of the Intercreditor
Agreement.
SECTION 4.9 Approved Miscellaneous Asset Sales. From and
after the Closing Date, the Borrower may, without the prior consent of
the Agent or any Term Lender, consummate any Approved Miscellaneous
Asset Sale, provided that the full amount of all Approved
Miscellaneous Asset Sales shall be applied to reduce dollar for dollar
the $12,000,000 allowance for the Marshville Conversion Expenses and
further provided that if on the date any Net Proceeds from
Miscellaneous Asset Sales are made available, the Marshville
Conversion Expenses have been fully credited, the Borrower shall apply
ninety percent (90%) of the balance of such Miscellaneous Asset Sale
Net Proceeds to permanently reduce the Term Loan Obligations, the
Revolving Credit Obligations and the Note Obligations, by forwarding
such Net Proceeds (the "Miscellaneous Asset Sale Net Proceeds") to the
Agent and the Note Lenders in the respective percentages as set forth
in Section 7(e) of the Intercreditor Agreement.
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ARTICLE V
CLOSING; CONDITIONS OF CLOSING AND BORROWING
SECTION 5.1 Closing. The closing shall take place at the
offices of Duane, Morris & Heckscher LLP at 2:00 p.m. on February 25,
1998, or on such other date as the parties hereto shall mutually
agree.
SECTION 5.2 Conditions to Closing and Initial Term Loan. The
obligation of the Term Lenders to close this Agreement and to make the
Term Loan is subject to the satisfaction of each of the following
conditions:
(a) Executed Loan Documents. This Agreement, the Term Notes and
each of the other Loan Documents shall have been duly authorized,
executed and delivered to the Agent by the parties thereto, shall be
in full force and effect and no default shall exist thereunder, and
the Borrower shall have delivered original counterparts thereof to the
Agent.
(b) Closing Certificates; etc.
(i) Officer's Certificate of 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.
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(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 Term Lenders with respect to the Borrower, the Loan Documents
and such other matters as the Term Lenders shall request.
(v) Tax Forms. The Agent shall have received copies of the
United States Internal Revenue Service forms required by Section
4.7(e) hereof.
(c) Consents; No Adverse Change.
(i) Governmental and Third Party Approvals. All necessary
material approvals, authorizations and consents, if any be required,
of any Person and of all Governmental Authorities and courts having
jurisdiction with respect to the transactions contemplated by this
Agreement and the other Loan Documents shall have been obtained.
(ii) Permits and Licenses. All material permits and
licenses, including permits and licenses required under Applicable
Laws, necessary to the conduct of business by the Borrower and its
Subsidiaries shall have been obtained.
(iii) No Injunction, Etc. No action, proceeding,
investigation, regulation or legislation shall have been instituted,
threatened or proposed before any Governmental Authority to enjoin,
restrain, or prohibit, or to obtain substantial damages in respect of,
or which is related to or arises out of this Agreement or the other
Loan Documents or the consummation of the transactions contemplated
hereby or thereby, or which, in the Agent's discretion, would make it
inadvisable to consummate the transactions contemplated by this
Agreement and such other Loan Documents.
(iv) No Material Adverse Change. There shall not have
occurred any material adverse change in the business, condition
(financial or otherwise), operations, or properties of the Borrower
taken as a whole, or any event, condition or state of facts that will
or could be reasonably expected to have a Material Adverse Effect,
since June 28, 1997 except as disclosed in the Borrower's unaudited
quarterly financial statements dated as of December 27, 1997.
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(v) No Event of Default. No Default or Event of Default
shall have occurred and be continuing.
(d) Financial Matters.
(i) Financial Statements. The Agent shall have received
the most recent audited consolidated and consolidating financial
statements of the Borrower and its Subsidiaries and the quarterly
unaudited financial statements of the Borrower as of December 27,
1997, 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 Term Lenders the fees
set forth or referenced in Section 4.2 and any other accrued and
unpaid fees or commissions due hereunder (including, without
limitation, legal fees and expenses), and to any other Person such
amount as may be due thereto in connection with the transactions
contemplated hereby, including all taxes, fees and other charges in
connection with the execution, delivery, recording, filing and
registration of any of the Loan Documents. The Agent shall have
received duly authorized and executed copies of the fee letter
agreement referred to in Section 4.2.
(e) Miscellaneous.
(i) 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 Term Lenders. The Term Lenders shall have
received copies of all other instruments and other evidence as the
Term Lenders may reasonably request in form and substance satisfactory
to the Term Lenders, with respect to the transactions contemplated by
this Agreement and the taking of all actions in connection therewith.
(ii) Due Diligence and Other Documents. The Borrower shall
have delivered to the Agent such other documents, certificates and
opinions as the Agent reasonably requests, certified by a secretary or
assistant secretary of the Borrower as a true and correct copy
thereof.
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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 Term Lenders to make the
Term Loan, the Borrower hereby represents and warrants to the Agent
and Term 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).
(c) Authorization of Agreement, Loan Documents and Borrowing.
Each of the Borrower and its Subsidiaries has the right, power and
authority and has taken all necessary corporate and other action to
authorize the execution, delivery and performance of this Agreement
and each of the other Loan Documents to which it is a party in
accordance with their respective terms. This Agreement and each of
the other Loan Documents have been duly executed and delivered by the
duly authorized officers of the Borrower and each of its Subsidiaries
party thereto, and each such document constitutes the legal, valid and
binding obligation of the Borrower or its Subsidiary party thereto,
enforceable in accordance with its terms, except as such enforcement
may be limited by bankruptcy, insolvency, reorganization, moratorium
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or similar state or federal debt or 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). Except as set
forth on Schedule 6.1(f), 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
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Borrower and any of its Subsidiaries in respect of federal, state,
local and other taxes for all Fiscal Years and portions thereof since
the organization of the Borrower and any of its Subsidiaries are in
the judgment of the Borrower adequate, and the Borrower does not
anticipate any additional taxes or assessments for any of such years.
(g) Copyright Matters. The Borrower and its Subsidiaries have
recorded or deposited with and paid to the United States Copyright
Offices, and the Register of Copyrights all notices, statements of
account, royalty fees and other documents and instruments required
under the United States Copyright Act, and neither the Borrower nor
any Subsidiary thereof is liable to any Person for copyright
infringement under the United States Copyright Act as a result of its
business operations.
(h) Franchises, Licenses, Patents and Trademarks. Each of the
Borrower and its Subsidiaries owns or possesses rights to use all
franchises, licenses, patents, patent rights or licenses, patent
applications, trademarks, trademark rights, trade names, trade name
rights, copyrights and rights with respect to the foregoing which are
required to conduct its business, and all such franchises, licenses,
patents, patent rights or licenses, patent applications, trademarks,
trademark rights, trade names, trade name rights, copyrights and
rights are described on Schedule 6.1(h). 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 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
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violation, material noncompliance, material liability or potential
material liability regarding environmental matters or compliance with
Environmental Laws with regard to any of their properties or the
operations conducted in connection therewith, nor does the Borrower or
any Subsidiary thereof have knowledge or reason to believe that any
such notice will be received or is being threatened;
(iv) 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
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which the remedial amendment period as defined in Section 401(b) of
the Code has not yet expired. Each Employee Benefit Plan that is
intended to be qualified under Section 401(a) of the Code has been
determined by the Internal Revenue Service to be so qualified, and
each trust related to such plan has been determined to be exempt under
Section 501(a) of the Code. No liability has been incurred by the
Borrower or any ERISA Affiliate which remains unsatisfied for any
taxes or penalties with respect to any Employee Benefit Plan or any
Multiemployer Plan;
(iii) No Pension Plan has been terminated, nor has any
accumulated funding deficiency (as defined in Section 412 of the Code)
been incurred (without regard to any waiver granted under Section 412
of the Code), nor has any funding waiver from the Internal Revenue
Service been received or requested with respect to any Pension Plan,
nor has the Borrower or any ERISA Affiliate failed to make any
contributions or to pay any amounts due and owing as required by
Section 412 of the Code, Section 302 of ERISA or the terms of any
Pension Plan prior to the due dates of such contributions under
Section 412 of the Code or Section 302 of ERISA, nor has there been
any event requiring any disclosure under election 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(i) 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 the Term Loan will be used for
purchasing or carrying margin stock or for any purpose which violates,
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or which would be, inconsistent with, the provisions of Regulation G,
T, U or X of such Board of Governors.
(l) Government Regulation. Neither the Borrower nor any
Subsidiary thereof is an "investment company" or a company
"controlled" by an "investment company" (as each such term is defined
or used in the Investment Company Act of 1940, as amended), and
neither the Borrower nor any Subsidiary thereof is, or after giving
effect to any Extension of Credit will be, subject to regulation under
the Public Utility Holding Company Act of 1935 or the Interstate
Commerce Act, each as amended, or any other Applicable Law which
limits its ability to incur or consummate the transactions
contemplated hereby.
(m) Material Contracts. Each Material Contract is, and after
giving effect to the consummation of the transactions contemplated by
the Loan Documents will be, in full force and effect in accordance
with the terms thereof.
(n) Employee Relations. Except as set forth on Schedule
6.1(n), the Borrower is not party to any collective bargaining
agreement, nor has any labor union been recognized as the
representative of its employees. Each of the Borrower and its
Subsidiaries has a stable work force in place. 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 Consolidated and consolidating
audited financial statements of the Borrower and its subsidiaries
dated June 28, 1997 and the Consolidated and consolidating balance
sheets of the Borrower and its Subsidiaries as of December 27, 1997
and the related statements of income and retained earnings and cash
flows for the periods then ended, copies of which have been furnished
to the Agent and each Term 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
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changes of financial position for the periods then ended. All such
financial statements, including the related schedules and notes
thereto, have been prepared in accordance with GAAP. The Borrower and
its Subsidiaries have no Debt, obligation or other unusual forward or
long-term commitment which is not fairly reflected in the foregoing
financial statements or in the notes thereto.
(q) No Material Adverse Change. Since June 28, 1997, except as
disclosed in the Borrower's unaudited quarterly financial statements
dated as of December 27, 1997, 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). Any real
property owned by the Borrower that is currently subject to any lease
is listed together with a description of all such leases in Schedule
6.1(s).
(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 and except for Liens in favor of the Agent for the
benefit of the Term Lenders.
(u) Debt and Contingent Obligations. Except with respect to the
1997 Credit Agreement and any noteholder agreement which is superseded
as of the Closing Date, the Borrower and its Subsidiaries have
performed and are in compliance in all material respects with all of
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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 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
Term 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 Term
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.
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(y) Rockingham Subsidiaries. Rockingham Poultry, Inc. is not an
active corporate entity and does not own or otherwise hold any assets.
Rockingham Poultry, Inc. (VI) holds only one asset consisting of a
bank account at Banco Popular (Puerto Rico) in the name of Rockingham
Poultry, Inc. (VI) (the "RVI Account") which RVI Account shall at no
time contain an amount more than $15,000.
(z) WLR Common Stock. As of the date hereof, there are
16,335,058 shares of the Common Stock, no par value, of WLR issued and
outstanding. Except as set forth on Schedule 6.1(z) attached hereto:
(a) there are no outstanding options, warrants or other rights to
acquire shares of WLR Common Stock, whether or not presently
exercisable; (b) there are no outstanding securities convertible into
shares of WLR Common Stock, whether or not presently convertible; and
(c) there are no understandings, agreements or commitments with
respect to the issuance of any such securities.
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 Term Lenders or any borrowing hereunder.
ARTICLE VII
FINANCIAL INFORMATION AND NOTICES
Until all the Obligations have been finally and indefeasibly paid
and satisfied in full, 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 Term 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 forty-five (45) days after the end of each fiscal
quarter, an unaudited Consolidated and consolidating balance sheet of
the Borrower and its Subsidiaries as of the close of such fiscal
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quarter in the form as attached as Exhibit "D," an unaudited
Consolidated and consolidating statement of income for the fiscal
quarter then ended and that portion of the Fiscal Year then ended and
an unaudited Consolidated and consolidating statement of cash flows
for that portion of the Fiscal Year then ended, including the notes,
if any, 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 material 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 ninety (90) days after the end of each Fiscal Year,
an audited Consolidated and unaudited consolidating balance sheet of
the Borrower and its Subsidiaries as of the close of such Fiscal Year
and audited Consolidated and unaudited consolidating statements of
income, retained earnings and cash flows for the Fiscal Year then
ended, including the notes thereto, all in reasonable detail setting
forth in comparative form the corresponding figures for the preceding
Fiscal Year and certified by an independent certified public
accounting firm acceptable to the Agent in accordance with GAAP and,
if applicable, containing disclosure of the effect on the financial
position or results of operation of any change in the application of
accounting principles and practices during the year, and accompanied
by a report thereon by such certified public accountants that is not
qualified with respect to scope limitations imposed by the Borrower or
any of its Subsidiaries or with respect to accounting principles
followed by the Borrower or any of its Subsidiaries not in accordance
with GAAP.
(c) Monthly Financial Statements. As soon as practicable and in
any event within thirty days after the end of each calendar month,
such financial information as may be required by written notification
to the Borrower from the Agent on or before March 31, 1998.
(d) 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.
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(e) 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.
(f) Three Year Business Plan. On or before June 1, 1998, a copy
of the Borrower's three year business plan (the "Three Year Business
Plan") in form and substance satisfactory to the Required Term Lenders
and the Agent.
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 "E" 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 Month, Fiscal
Quarter, 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 with the delivery of the
calculations as at the end of any Fiscal Quarter or Fiscal Year the
actual Coverage Ratio and Leverage Ratio for purposes of calculating
the Applicable Margin for Term Loans.
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 Term Lenders:
(a) stating that in making the examination necessary for the
certification of such financial statements, they obtained no knowledge
of any Default or Event of Default or, if such is not the case,
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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 Term Lender may reasonably request,
including, without limitation, consolidating financial statements and
summary product sales information as provided on company-prepared fact
sheets.
SECTION 7.5 Notice of Litigation and Other Matters. Prompt
(but in no event later than five (5) days after the Chief Executive
Officer, Chief Financial Officer, or any Vice President of WLR 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 (except Permitted Liens),
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
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intends to file a notice of intent to terminate any Pension Plan under
a distress termination within the meaning of Section 4041 (c) of
ERISA; and
(g) any event which makes any of the representations set forth
in Section 6.1 inaccurate in any material respect.
SECTION 7.6 Accuracy of Information. All written information,
reports, statements and other papers and data furnished by or on
behalf of the Borrower to the Agent or any Term 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
Term 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 Term Loan 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 time failure to so qualify
would have a Material Adverse Effect.
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. Carry at all times with financially
sound and reputable insurance companies which have ratings from A. M.
Best & Co. of "A" or higher or are otherwise acceptable to the Agent:
(a) all workers' compensation or similar insurance as may be required
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under the laws of any jurisdiction; (b) public liability insurance
against claims for personal injury, death or property damage suffered
upon, in or about any premises occupied by it or occurring as a result
of the ownership, maintenance or operation by it of any automobile,
truck or other vehicle or as a result of the use of products
manufactured, constructed or sold by it, or services rendered by it;
(c) business interruption insurance covering risk of loss as a result
of the cessation for all or any part of one year of any substantial
part of the business conducted by it; (d) hazard insurance against
such other hazards as are usually insured against by business entities
of established reputation engaged in like businesses and similarly
situated, including, without limitation, fire (flood, if applicable)
and extended coverage; and (e) such other insurance as the Agent may
from time to time reasonably require, and pay all premiums on the
policies for all such insurance when and as they become due and take
all other actions necessary to maintain such policies in full force
and effect at all times. CIGNA is an acceptable insurer for purposes
of this Section unless the Agent, at the request of the Required Term
Lenders, notifies the Borrower that CIGNA is unacceptable. The
Borrower shall cause each hazard insurance policy to provide, and the
insurer issuing each such policy to certify to the Agent, that (a) if
such insurance be proposed to be canceled or materially changed for
any reason whatsoever, such insurer will promptly notify the Agent and
such cancellation or change shall not be effective for 30 days after
receipt by the Agent of such notice, unless the effect of such change
is to extend or increase coverage under the policy; (b) the Agent, for
the benefit of the Term Lenders, shall be named as lender loss payee
with respect to personal property and mortgagee with respect to real
property; and (c) the Agent will have the right, at its election, to
remedy any default in the payment of premiums within 30 days of notice
from the insurer of such default. The foregoing covenants regarding
insurance are in addition to, and not intended to supersede, those
covenants regarding insurance set forth in the Security Documents. In
the event and to the extent of any conflict between the provisions of
this Agreement and the provisions of the Security Documents regarding
the insuring of Collateral, the provisions of the Security Documents
with respect thereto shall govern.
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.
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SECTION 8.5 Payment and Performance of Obligations. Pay and
perform all Obligations under this Agreement and the other Loan
Documents, and pay or perform (a) all taxes, assessments and other
governmental charges that may be levied or assessed upon it or any of
its property, and (b) all other indebtedness, obligations and
liabilities in accordance with customary trade practices; provided
that the Borrower or such Subsidiary may contest any item described in
this Section 8.5 in good faith so long as adequate reserves are
maintained with respect thereto in accordance with GAAP.
SECTION 8.6 Compliance With Laws and Approvals. Observe and
remain in compliance in all material respects with all Applicable Laws
and maintain in full force and effect all material Governmental
Approvals, in each case applicable to the conduct of its business.
SECTION 8.7 Environmental Laws. In addition to and without
limiting the generality of Section 8.6, (a) comply in all material
respects with, and ensure such compliance in all material respects by
all tenants and subtenants, if any, with, all applicable Environmental
Laws and obtain and comply with and maintain, and ensure that all
tenants and subtenants obtain and comply with and maintain, any and
all licenses, approvals, notifications, registrations or permits
required by applicable Environmental Laws; (b) conduct and complete
all investigations, studies, sampling and testing, and all remedial,
removal and other actions required under Environmental Laws, and
promptly comply with all lawful orders and directives of any
Governmental Authority regarding Environmental Laws; and (c) defend,
indemnify and hold harmless the Agent and the Term 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
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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 Term Lender, from time to time, after reasonable
notice, to visit and inspect its properties; inspect, audit and make
extracts from its books, records and files, including, but not limited
to, management letters prepared by independent accountants; and
discuss with its principal officers, and its independent accountants,
its business, assets, liabilities, financial condition, results of
operations and business prospects.
SECTION 8.12 Further Assurances. Make, execute and deliver all
such additional and further acts, things, deeds and instruments as the
Agent or any Term Lender may reasonably require to document and
consummate the transactions contemplated hereby and to vest completely
in and insure the Agent and the Term Lenders their respective rights
under this Agreement, the Term Notes and the other Loan Documents.
SECTION 8.13 Meeting with Term Lenders. Participate in
meetings at least twice annually with all Term Lenders wishing to
participate therein at a date, time and location satisfactory to the
Agent and fully disclose in such meeting the material future business
plans of the Borrower and its Subsidiaries.
SECTION 8.14 Year 2000 Issues. Take all action necessary to
assure that the Borrower's computer based systems are able to operate
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and effectively process data including dates on and after January 1,
2000. At the request of the Agent, the Borrower shall provide the
Agent assurance acceptable to the Agent of the Borrower's Year 2000
compatibility.
SECTION 8.15 Employment of Outside Accountants and Financial
Consultants. Employ Ernst & Young LLP or another outside accounting
firm and/or financial consulting firm acceptable to the Agent for the
purpose of providing consulting and related financial services to the
Borrower as more fully described in the work plan attached as Schedule
8.15. The Borrower will continuously employ a chief financial officer
and related accounting and financial employees reasonably acceptable
to the Agent until the Obligations have been paid in full. For
purposes of this Section 8.15, current Chief Financial Officer is
acceptable to the Agent as chief financial officer of the Borrower.
If the Borrower fails to employ continuously a chief financial officer
and related accounting and financial employees reasonably acceptable
to the Agent, the Borrower will employ an outside accounting and/or
financial consulting firm acceptable to the Agent to perform such
tasks as the Agent may designate. If the Borrower wishes to terminate
the accounting firm and/or financial consulting firm which is
performing the services described in the work plan attached as
Schedule 8.15 prior to its completion, the Borrower must obtain the
prior written consent of the Agent.
For purposes of computing EBITDA under the financial covenants
contained in Article IX of this Agreement and the Term Loan Agreement,
fees and expenses which have been paid prior to the date of this
Agreement and which may be paid after the date of this Agreement to
the outside accounting firm and/or financial consulting firm referred
to in this Section 8.15 will not be considered an expense in
calculating EBITDA.
SECTION 8.16 Maintenance of Bank Accounts. Except for a deposit
account with a balance at no time to exceed $15,000 maintained in the
name of Rockingham Poultry (VI) at Banco Popular (Puerto Rico),
maintain all of its depository, disbursement and other accounts with
the Agent and/or any Lender.
SECTION 8.17 Interest Rate Protection. As promptly as
practicable, and in any event within 60 days after the Closing Date,
enter into, and thereafter for a period of not less than two years
maintain in effect, one or more Interest Rate Protection Agreements on
such terms and with such parties as shall be reasonably satisfactory
to the Agent, the effect of which shall be to fix or limit the
interest costs to the Borrower with respect to at least fifty percent
(50%) of the amount outstanding under the Term Loan, the Note
Agreement, and projected outstanding amount for Revolving Credit Loans.
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ARTICLE IX
FINANCIAL COVENANTS
Commencing on June 27, 1998, and continuing until all of the
Obligations have been finally and indefeasibly paid and satisfied in
full, 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 Minimum Monthly EBITDA. As of the end of any
Fiscal Month, permit the Borrower's Consolidated Cumulative twelve
month EBITDA ending with such Fiscal Month, to be less than the dollar
amount corresponding to such period set forth below:
Minimum Cumulative
Fiscal Month Ended Twelve Month EBITDA
July 1998 $10,701,000
August 1998 $15,248,000
September 1998 $17,048,000
October 1998 $21,089,000
November 1998 $23,646,000
December 1998 $29,821,000
SECTION 9.2 Minimum Quarterly EBITDA. As of the end of any
Fiscal Quarter, permit the Borrower's Consolidated cumulative four-
quarter EBITDA ending with such Fiscal Quarter to be less than the
dollar amount corresponding to such period set forth below:
Fiscal Quarter Ended Minimum Cumulative
Four Quarter EBITDA
Third Fiscal Quarter 1999 $41,456,000
Fourth Fiscal Quarter 1999 $53,830,000
First Fiscal Quarter 2000 $62,646,000
Second Fiscal Quarter 2000 $69,333,000
Third Fiscal Quarter 2000 $71,082,000
Fourth Fiscal Quarter 2000 $74,151,000
First Fiscal Quarter 2001 $75,963,000
Second Fiscal Quarter 2001 $77,852,000
SECTION 9.3 Limitation on Capital Expenditures. Make or incur
Capital Expenditures in any cumulative four Fiscal Quarter period
ending with such Fiscal Quarter, which would exceed an aggregate
amount for such period corresponding to such period as set forth below:
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Quarter Ended Maximum Capital Expenditures
Fourth Fiscal Quarter 1998 $30,856,000
First Fiscal Quarter 1999 $36,562,000
Second Fiscal Quarter 1999 $35,800,000
Third Fiscal Quarter 1999 $32,500,000
Fourth Fiscal Quarter 1999 $27,700,000
First Fiscal Quarter 2000 $24,000,000
Second Fiscal Quarter 2000 $24,000,000
Third Fiscal Quarter 2000 $24,000,000
Fourth Fiscal Quarter 2000 $24,000,000
First Fiscal Quarter 2001 $24,000,000
Second Fiscal Quarter 2001 $24,000,000
ARTICLE X
NEGATIVE COVENANTS
Until all of the Obligations have been finally and indefeasibly
paid and satisfied in full, unless consent has been obtained in the
manner set forth in Section 13.11 hereof, the Borrower has not and
will not, and will not permit any of its Subsidiaries to:
SECTION 10.1 Limitations on Debt. Create, incur, assume or
suffer to exist any Debt except:
(a) The Obligations;
(b) Debt created under the Note Agreement and related
documents.
(c) Debt existing on the Closing Date as described on
Schedule 10.1(c) and the renewal and refinancing (but not the
increase) thereof; provided, however, that until such time as the
Obligations are indefeasibly paid in full, the Borrower shall not
refinance any portion of the Debt on a secured basis;
(d) [intentionally left blank]
(e) Debt consisting of Contingent Obligations permitted by
Section 10.2(b);
(f) Debt from Approved Subordinated Debt Transaction(s) as
provided in Article IV hereof; and
(g) Purchase Money Debt (including Capital Leases) in an
aggregate amount not to exceed $5,000,000 on any date of
determination.
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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 Term Lenders and/or the Revolving Credit
Lenders;
(b) Contingent Obligations existing on the Closing Date as
described on Schedule 10.2(b) (but not any increase thereof); and
(c) Other Contingent Obligations in an aggregate amount not
to exceed $1,000,000 at any time.
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, supplies
or rentals and/or other statutory liens incurred in the ordinary
course of business which in the aggregate do not at any time exceed
$1,000,000; and (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;
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(e) Liens of the Collateral Agent for the benefit of the
Agent and the Term Lenders, the Revolving Credit Lenders, and/or the
Note Lenders;
(f) Any Lien existing on the Closing Date which is
described on Schedule 10.3(f);
(g) Limited Grower Payable Liens; and
(h) Liens on personal property held in a margin account by
the counter party 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 $10,000,000; and
(i) Liens created on account of Purchase Money Debt
authorized pursuant to Section 10.1(g) hereof.
SECTION 10.4 Limitations on Acquisitions. Without the prior
written consent of each Term Lender, acquire any significant part of
the assets of any Person which is not a Subsidiary or acquire the
capital stock or other ownership interest in any Person.
SECTION 10.5 Limitations on Mergers, Liquidation and New
Business Ventures. 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); or enter into any
new business activities or ventures (including joint ventures) not
related to its present business except that Wampler Supply may be
merged or liquidated into any Borrower.
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;
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(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;
(d) Asset Sales as proposed in the Three Year Business Plan
to the extent approved and accepted by each of the Term Lenders;
(e) Approved Miscellaneous Asset Sales; and
(f) Any asset sales agreed to in writing between the
Borrower and each of the Term Lenders.
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
(which is/are not a Borrower), or to or from any member of the
immediate family of any of its officers, directors, shareholders or
other Affiliates (which is/are not a Borrower), or subcontract any
operations to any of its Affiliates (which is/are not a Borrower), or
(b) enter into, or be a party to, any transaction with any of its
Affiliates (which is/are not a Borrower), 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
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502(i) of ERISA 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 Limitations on New Equity, Dividends and
Distributions. Except as provided in the Warrant Agreement and
related documents, declare or pay any dividend, or make any
distributions of cash or property, to holders of any shares of its
capital stock on account of such shares, or, directly or indirectly,
redeem or otherwise acquire any such shares or any option, warrant or
right to acquire any such shares except for the reacquisition of the
shares held in an escrow account in connection with the acquisition of
the Goldsboro facility.
SECTION 10.11 Transfers to Subsidiaries. Transfer any assets
now or hereafter owned by the Borrower to any Subsidiary which is not
a Borrower, except to the extent WLR may transfer funds to Rockingham
Poultry, Inc. (VI) to maintain a balance in the RVI Account of no more
than $15,000.
SECTION 10.12 Limitations on Investments. Purchase, invest in,
or make any loan in the nature of an investment in the stocks, bonds,
notes or other securities or evidence of Debt of any Person, or make
any loan or advance to or for the benefit of any Person except for the
following (collectively, "Permitted Investments"): (i) short-term
obligations of the Treasury of the United States of America; (ii)
certificates of deposit issued by banks with shareholders' equity of
at least $100,000,000; (iii) repurchase agreements not exceeding 29
days in duration issued by banks with shareholders' equity of at least
$100,000,000; (iv) notes and other instruments generally known as
"commercial paper" which arise out of current transactions, which have
maturities at the time of issuance thereof not exceeding nine months
and which have, at the time of such purchase, investment or other
acquisition, the highest credit rating of Standard & Poor's
Corporation or Moody's Investors Service, Inc.; provided that to the
extent the Borrower shall seek to make any of the foregoing Permitted
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Investments, it shall notify the Agent in writing in advance and shall
comply with such steps as the Agent may require to evidence the
perfected security interests of the Term Lenders therein.
SECTION 10.13 Limitations on Certain Agreements. Enter into any
Interest Rate Protection Agreement with any Term Lender to the extent
that any liability created thereunder would be secured by any
Collateral.
ARTICLE XI
DEFAULT AND REMEDIES
SECTION 11.1 Events of Default. Each of the following shall
constitute an Event of Default, whatever the reason for such event and
whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment or order of any court or
any order, rule or regulation of any Governmental Authority or
otherwise:
(a) Default in Payment of Principal of Term Loans. The Borrower
shall default in any payment of principal due under the Term Loan or
any Term Note as and when due (whether at maturity, by reason of
acceleration or otherwise).
(b) Other Payment Default. The Borrower shall default in the
payment as and when due (whether at maturity, by reason of
acceleration or otherwise) of interest on the Term Loan or any Term
Note or the payment of any other Obligation, and such a default shall
continue unremedied for five (5)Business Days provided that if the
default referenced in this paragraph (b) arises only under a Mortgage,
the five (5) Business Days referenced in this paragraph (b) will
commence after written notice of such default shall have been given by
the Agent to the Borrower.
(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
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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 Debt
evidenced by the this Agreement and the Term Notes) the aggregate
outstanding amount of which is equal to or 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 Term Loan and the Revolving Loan) the
aggregate outstanding amount of which is equal to or in excess of
$3,000,000 or contained in any instrument or agreement evidencing,
securing or relating thereto or any other event shall occur or
condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such Debt
(or a trustee or agent on behalf of such holder or holders) to cause,
with the giving of notice if required, any such Debt to become due
prior to its stated maturity (any applicable grace period having
expired).
(h) Voluntary Bankruptcy Proceeding. The Borrower or any
Subsidiary thereof shall (i) commence a voluntary case under the
federal bankruptcy laws (as now or hereafter in effect); (ii) file a
petition seeking to take advantage of any other laws, domestic or
foreign, relating to bankruptcy, insolvency, reorganization, winding
up or composition for adjustment of debts; (iii) consent to or fail to
contest in a timely and appropriate manner any petition filed against
it in an involuntary case under such bankruptcy laws or other laws;
(iv) 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
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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. (i) 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 (ii) 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, provided
that no Event of Default shall have occurred pursuant to this
subparagraph (j)(ii) if the Borrower, within five (5) Business Days'
notice from the Agent, takes such steps as are necessary to create a
valid and perfected first priority Lien in such Collateral.
(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) calendar 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) calendar 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").
(n) Revolving Credit Events of Default. Any one or more Events
of Default occurs under the Revolving Credit Agreement.
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(o) Note Agreement Default. Any one or more Events of Default
occurs under the Note Agreement.
SECTION 11.2 Remedies. Upon the occurrence of an Event of
Default and at the request of the Required Term Lenders, the Agent
shall, by notice to the Borrower:
(a) Acceleration; Termination of Facilities. Declare the
principal of and interest on the Term Loan and the Term Notes at the
time outstanding, and all other amounts owed to the Term Lenders and
to the Agent under this Agreement or any of the other Loan Documents
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 Term Loan
and any rights of the Borrower thereunder; provided, that upon the
occurrence of an Event of Default specified in Section 11.1(h) or (i),
the Term Loan shall be automatically terminated and all obligations
shall automatically become due and payable, without notice,
declaration or demand of any kind.
(b) Rights of Collection. Exercise on behalf of the Term
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.
(c) Setoff. Exercise or direct any Term Lender to exercise any
and all setoff rights as described in Section 13.3 hereof or as
otherwise provided under Applicable Law.
SECTION 11.3 Rights and Remedies Cumulative; Non-Waiver; etc.
The enumeration of the rights and remedies of the Agent and the Term
Lenders set forth in this Agreement is not intended to be exhaustive
and the exercise by the Agent and the Term 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 Term 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
Term Lenders or their respective agents or employees shall be
effective to change, modify or discharge any provision of this
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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 Term Lenders hereby
irrevocably designates and appoints First Union as Agent of such Term
Lender under this Agreement and the other Loan Documents and each such
Term Lender irrevocably authorizes First Union as Agent for such Term
Lender, to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and
perform such duties as are expressly delegated to the Agent by the
terms of this Agreement and such other Loan Documents, together with
such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this
Agreement or such other Loan Documents, the Agent shall not have any
duties or responsibilities, except those expressly set forth herein
and therein, or any fiduciary relationship with any Term 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.
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
Term 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
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obligations hereunder or thereunder. The Agent shall not be under any
obligation to any Term 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 Term Note as the owner
thereof for all purposes unless such Term Note shall have been
transferred in accordance with Section 13.10 hereof. The Agent shall
be fully justified in failing or refusing to take any action under
this Agreement and the other Loan Documents unless it shall first
receive such advice or concurrence of the Required Term Lenders (or,
when expressly required hereby or by the relevant other Loan Document,
all the Term Lenders) as it deems appropriate or it shall first be
indemnified to its satisfaction by the Term 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 Term Notes in accordance with a request of the
Required Term Lenders (or, when expressly required hereby, all the
Term Lenders), and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Term Lenders and all
future holders of the Term 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 Term 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 Term Lenders. The Agent
shall take such action with respect to such Default or Event of
Default as shall be reasonably directed by the Required Term 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.
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SECTION 12.6 Non-Reliance on the Agent and other Term Lenders.
Each Term 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 Term Lender. Each Term Lender represents
to the Agent that it has, independently and without reliance upon the
Agent or any other Term 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 Term Lender also represents that it will,
independently and without reliance upon the Agent or any other Term
Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this
Agreement and the other Loan Documents, and to make such investigation
as it deems necessary to inform itself as to the business, operations,
property, financial and other condition and credit worthiness of the
Borrower and its Subsidiaries. Except for notices, reports and other
documents expressly required to be furnished to the Term Lenders by
the Agent hereunder or by the other Loan Documents, the Agent shall
not have any duty or responsibility to provide any Term 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 Term 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 Term Loan 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 Term Notes) 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;
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provided that no Term 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 Term Notes 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 Term Loan made or renewed by it, the Agent shall have
the same rights and powers under this Agreement and the other Loan
Documents as any Term Lender and may exercise the same as though it
were not an Agent, and the terms "Term Lender" and "Term Lenders"
shall include the Agent in its individual capacity.
SECTION 12.9 Resignation of the Agent; Successor Agent.
Subject to the appointment and acceptance of a successor as provided
below, the Agent may resign at any time by giving notice thereof to
the Term Lenders and the Borrower. Upon any such resignation, the
Required Term 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 Term 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 Term 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
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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.
(b) Addresses for Notices. Notices to any party shall be sent
to it at the following addresses, or any other address as to which all
the other parties are notified in writing.
If to the Borrower: WLR Foods, Inc.
800 Co-op Drive
Timberville, Virginia 22853
Attention: Robert Ritter, CFO
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: Robert Ritter, CFO
If to First Union
as Term Lender:
First Union National Bank
301 College Street, DC-5
NC 0737
Charlotte, NC 28288-0737
Attention: Julie Bouhuys, SVP
Telephone No.: (704) 383-0349
Telecopy No.: (704) 374-3300; and
First Union National Bank
201 South Jefferson Street
Roanoke, Virginia 24011
Attention: George Calfo
Telephone No.: (540) 563-7769
Telecopy No.: (540) 561-5262
If to CoreStates Bank, N.A. as Term 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
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Telecopy No.: (215) 973-6745
If to Harris Trust and
Savings Bank as Term 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 Term Lender:
Crestar Bank
510 South Jefferson Street
Roanoke, Virginia 24011
Attention: George Coleman, Jr.
Telephone No.: (540) 982-3285
Telecopy No.: (540) 982-3056
If to the Agent: First Union National Bank
301 College Street, DC-5
NC 0737
Charlotte, NC 28288-0737
Attention: Julie Bouhuys, SVP
Telephone No.: (704) 383-0349
Telecopy No.: (704) 374-3300; and
First Union National Bank
201 South Jefferson Street
Roanoke, Virginia 24011
Attention: George Calfo
Telephone No.: (540) 563-7769
Telecopy No.: (540) 561-5262
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 Term 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, monitoring, negotiating and/or enforcing their
respective rights under the Credit Facility, including consulting with
one or more persons, including appraisers, accountants, engineers and
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attorneys, concerning or related to the nature, scope or value of any
right or remedy of the Agent or any Term 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 Term
Lenders and any assignee or participant of a Term 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 Term 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 Term Lenders shall have made any demand under
this Agreement or any of the other Loan Documents or (b) the Agent
shall have declared any or all of the Obligations to be due and
payable as permitted by Section 11.2 and although such obligations
shall be contingent or unmatured.
SECTION 13.4 Governing Law. This Agreement, the Term 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 State of New York, 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 United States
District Court for the Southern District of New York and the Supreme
Court of the State of New York - County of New York, in any action,
claim or other proceeding arising out of any dispute in connection
with this Agreement, the Term 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 Term Lender in
connection with this Agreement, the Term 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 Term Lender to
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serve legal process in any other manner permitted by Applicable Law or
affect the right of the Agent or any Term Lender to bring any action
or proceeding against the Borrower or its properties in the courts of
any other jurisdictions.
SECTION 13.6 Waiver of Jury Trial; Waiver of Punitive Damages.
(a) WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, THE AGENT, EACH TERM LENDER AND THE BORROWER HEREBY IRREVOCABLY
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY
ACTION, CLAIM OR OTHER PROCEEDING ARISING, OUT OF OR ANY DISPUTE IN
CONNECTION WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER,
OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.
(b) Waiver of Punitive Damages. The Borrower, the Agent, and
the Term Lenders, agree that they shall not have a remedy of punitive
or exemplary damages against the other in any Dispute and hereby waive
any right or claim to punitive or exemplary damages they have now or
which may arise in the future in connection with any Dispute whether
the Dispute is resolved by arbitration or judicially.
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 Term Lenders or the Agent receives any payment or proceeds of the
Collateral which payments or proceeds or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential,
set aside and/or required to be repaid to a trustee, receiver or any
other party under any bankruptcy law, state or federal law, common law
or equitable cause, then, to the extent of such payment or proceeds
repaid, the obligations or part thereof intended to be satisfied shall
be revived and continued in full force and effect as if such payment
or proceeds had not been received by the Agent.
SECTION 13.8 Injunctive Relief. The Borrower recognizes that,
in the event the Borrower fails to perform, observe or discharge any
of its obligations or liabilities under this Agreement, any remedy of
law may prove to be inadequate relief to the Term Lenders. Therefore,
the Borrower agrees that the Term Lenders, at the Term 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
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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 Term 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. The Borrower, the Agent, the Revolving Credit
Lenders and the Term Lenders agree that, as a result of the delivery
of the warrants in accordance with the terms of this Agreement, the
Revolving Credit Agreement and the Warrant Agreement, any original
issue discount attributable to any Revolving Credit Note and/or Term
Note is less than the product of (i) one-quarter of one percent
(.25%), multiplied by (ii) the product of the weighted average
maturity of such Note multiplied by the stated redemption price at
maturity of such Note (as determined in accordance with section 1273
of the Code). The Borrower, the Agent, the Revolving Credit Lenders
and the Term Lenders agree to consistently use the foregoing
assumptions as to original issue discount and redemption premium for
all United States federal, state and local income tax purposes with
respect to the transactions contemplated by the Loan Documents unless
the IRS or a change in law requires otherwise. The Borrower, the
Agent, the Revolving Credit Lenders and the Term Lenders acknowledge
that the fair market value of such warrants as of the Closing Date is
no greater than the amount determined by the calculations in this
subsection.
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 Term
Lenders, all future holders of the Term 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 Term Lender. Nothing set forth in
any guaranty shall impair, as between the Borrower, the Agent and the
Term Lenders, the obligations of the Borrower hereunder and under the
other Loan Documents.
(b) Assignment by Term Lenders. Each Term Lender may, with the
consent of the Agent, which consent shall not be unreasonably
withheld, assign to one or more Eligible Assignees all or a portion of
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its interests, rights and obligations under this Agreement (including,
without limitation, all or a portion of the Obligations at the time
owing to it and the Term Notes held by it); provided that:
(i) each such assignment shall be of a constant, and not a
varying, percentage of all the assigning Term Lender's rights and
obligations under this Agreement with respect to the Term Loan and
shall be accompanied by a like assignment on a pro rata basis of any
Revolving Loan attributable to such Term Lender in its capacity as a
Revolving Credit Lender under the Revolving Credit Agreement;
(ii) if less than all of the assigning Term Lender's Term
Loan is to be assigned, the Term Loan so assigned (plus, if
applicable, the amount of any Revolving Loan or any portion thereof
also assigned by such Term Lender in its capacity as a Revolving
Credit Lender under the Revolving Credit Agreement) shall not be less
than $5,000,000;
(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 "F"
attached hereto (an "Assignment and Acceptance"), together with any
Term Note or Term 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 Term
Loan or any of the Term Notes under the blue sky laws of any state;
and
(v) the assigning Term Lender shall pay to the Agent an
assignment fee of $5,000 upon the execution by such Term Lender of the
Assignment and Acceptance; provided that no such fee shall be payable
upon any assignment by a Term 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
assigning Term 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 Term Lender
thereunder and the assignee thereunder confirm to and agree with each
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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 Term Lenders and the
amount of the Term Loan with respect to each Term 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 Term Lenders may treat each person whose name is
recorded in the Register as a Term Lender hereunder for all purposes
of this Agreement. The Register shall be available for inspection by
the Borrower or any Term Lender at any reasonable time and from time
to time upon reasonable prior notice.
(e) Issuance of New Term Notes. Upon its receipt of an
Assignment and Acceptance executed by an assigning Term Lender and an
Eligible Assignee together with any Term Note Term 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 "F":
(i) accept such Assignment and Acceptance;
(ii) record the information contained therein in the
Register;
(iii) give prompt notice thereof to the Term 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 Term Note or Term Notes, a new Term Note or Term Notes to
the order of such Eligible Assignee in amounts equal to the Term Loan
assigned to it pursuant to such Assignment and Acceptance and a new
Term Note or Term Notes to the order of the assigning Term Lender in
an amount equal to the Term Loan retained by it hereunder. Such new
Term Note or Term Notes shall be in an aggregate principal amount
equal to the aggregate principal amount of such surrendered Term Note
or Term Notes, shall be dated the effective date of such Assignment
and Acceptance and shall otherwise be in substantially the form of the
assigned Term Note delivered to the assigning Term Lender. The new
Term Note or Term Notes shall be in substitution for and not in
cancellation of, release or satisfaction of the surrendered Term Note
or Term Notes.
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(f) Participation. Each Term Lender may, with the consent of
the Agent, which consent 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 rights under the Term
Notes held by it); provided that:
(i) each such participation shall be in an amount not less
than $5,000,000;
(ii) such Term Lender's obligations under this Agreement
including, without limitation, its Term Loan, shall remain unchanged;
(iii) such Term Lender shall remain solely responsible
to the other parties hereto for the performance of such obligations;
(iv) such Term Lender shall remain the holder of the Term
Notes held by it for all purposes of this Agreement;
(v) the Borrower, the Agent and the other Term Lenders
shall continue to deal solely and directly with such Term Lender in
connection with such Term Lender's rights and obligations under this
Agreement;
(vi) such Term 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 the Term Loan, extend the term or increase the amount
of the Term Loan 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 Term Loan or the Term Notes under the blue sky law of any
state.
(g) Disclosure of Information; Confidentiality. The Agent and
the Term Lenders shall hold all non-public information obtained
pursuant to the Loan Documents in accordance with their customary
procedures for handling confidential information. Any Term 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 Term Lender by or on behalf of the Borrower;
provided that prior to any such disclosure, each such assignee,
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proposed assignee, participant or proposed participant shall agree
with the Borrower or such Term Lender (which in the case of an
agreement with only such Term 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 Term Lender.
(h) Certain Pledges or Assignments. Nothing herein, or in any
other document regarding the transaction herein, shall prohibit any
Term Lender from pledging or assigning any Term 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 condition of this
Agreement or any of the other Loan Documents may be amended or waived
by the Term Lenders, and any consent given by the Term Lenders, if,
but only if, such amendment, waiver or consent is in writing signed by
the Required Term Lenders (or by the Agent with the consent of the
Required Term 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 Term Lenders to provide the Term Loan, (b)
change the originally scheduled time or times of payment of the
principal of the Term Loan or the time or times of payment of interest
on the Term Loan, (c) decrease the rate of interest payable on the
Term Loan, (d) change the amount or time of payment of any fees
payable by the Borrower hereunder, (e) release the Borrower (or any of
them) from all or any portion of the Obligations hereunder, (f)
release any Collateral except as specifically authorized in the Loan
Documents and in connection with the approved asset sales set forth in
Article X hereof; (g) amend, waive or alter any provision of Article I
(Definitions), Article IX (Financial Covenants), Article X (Negative
Covenants), or Article XI (Defaults and Remedies) hereof; or (g) amend
the provisions of this Section 13.11 or the definition of Required
Term Lenders, without the prior written consent of each Term 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 Term 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
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the Term Lenders harmless from and against all losses suffered by the
Agent and the Term Lenders in connection with (i) the exercise by the
Agent or the Term 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 Term Lender for costs and expenses, or indemnify the
Agent or any Term Lender for any loss, resulting from the gross
negligence or willful misconduct of the Agent or any Term Lender.
SECTION 13.14 All Powers Coupled with Interest. All powers of
attorney and other authorizations granted to the Term Lenders, the
Agent and any Persons designated by the Agent or any Term 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 Term Loan has not been terminated.
SECTION 13.15 Survival of Indemnities. Notwithstanding any
termination of this Agreement, the indemnities to which the Agent and
the Term 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 Term 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.
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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 Term Lender (a "Benefitted
Term Lender") shall at any time receive any payment of all or part of
its Term Loan, or interest thereon, or if any Term Lender shall at any
time receive any collateral in respect to its Term Loan (whether
voluntarily or involuntarily, by setoff or otherwise) in a greater
proportion than any such payment to and collateral received by any
other Term Lender, if any, in respect of such other Term Lender's Term
Loan, or interest thereon, such Benefitted Term Lender shall purchase
for cash from the other Term Lenders such portion of each such other
Term Lender's Term Loan or shall provide such other Term Lenders with
the benefits of any such collateral, or the proceeds thereof, as shall
be necessary to cause such Benefitted Term Lender to share the excess
payment or benefits of such collateral or proceeds ratably with each
of the Term Lenders based upon the Term Lenders' Term Loan
Percentages; provided that if all or any portion of such excess
payment or benefits is thereafter recovered from such Benefitted Term
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 Term Lender so purchasing a
portion of another Term Lender's Term Loan may exercise all rights of
payment (including, without limitation, rights of set-off) with
respect to such portion as fully as if such Term Lender were the
direct holder of such portion.
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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.
WLR FOODS, INC.
By: __/S/ Robert T. Ritter
Robert T. Ritter
Vice President
WAMPLER FOODS, INC.
By:__/S/ Robert T. Ritter
Robert T. Ritter
Treasurer
CASSCO ICE & COLD STORAGE, INC.
By:__/S/ Robert T. Ritter
Robert T. Ritter
Vice President
WAMPLER SUPPLY COMPANY, INC.
By:__/S/ Robert T. Ritter__
Robert T. Ritter
Vice President
VALLEY RAIL SERVICE, INC.
By:__/S/ Robert T. Ritter__
Robert T. Ritter
Vice President
FIRST UNION NATIONAL BANK,
as Agent and Term Lender
By:__/S/ Julia Bouhuys__
Name: Julia Bouhuys
Title: Senior Vice President
Term Loan Percentage: 35%
Term Loan: $38,500,000
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CORESTATES BANK, N.A.
By:__/S/ Carol A. Williams__
Name: Carol A. Williams
Title:Senior vice President
Term Loan Percentage: 35%
Term Loan: $38,500,000
HARRIS TRUST AND SAVINGS BANK
By:__/S/ Carl A. Blackham__
Name: Carl A. Blackham
Title:Vice President
Term Loan Percentage: 20%
Term Loan: $22,000,000
CRESTAR BANK
By:__/S/ George Coleman, Jr.__
Name: George Coleman, Jr.
Title:Senior Vice President
Term Loan Percentage: 10%
Term Loan: $11,000,000
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Exhibit 2.4
TERM LOAN NOTE
(First Union National Bank)
$38,500,000 February 25, 1998
FOR VALUE RECEIVED, the undersigned, WLR Foods, Inc., a
corporation organized under the laws of the Commonwealth of Virginia
("WLR"), Cassco Ice & Cold Storage, Inc., a corporation organized
under the laws of the Commonwealth of Virginia ("Cassco"), Wampler
Foods, Inc., a corporation organized under the laws of the
Commonwealth of Virginia ("Wampler"), Wampler Supply Company, Inc., a
corporation organized under the laws of the Commonwealth of Virginia
("Wampler Supply"), and Valley Rail Service, Inc., a corporation
organized under the laws of the Commonwealth of Virginia ("Valley,"
and, together with WLR, Cassco, Wampler and Wampler Supply, the
"Borrower"), hereby promise to pay to the order of First Union
National Bank (the "Bank"), the principal sum of THIRTY-EIGHT MILLION
FIVE HUNDRED THOUSAND Dollars ($38,500,000), in the installments and
the place and times and in the manner provided in the Term Loan
Agreement dated as of February 25, 1998, (together with all amendments
and modifications, if any, from time to time hereafter made thereto,
the "Term Loan Agreement"), among the Borrower, the Term Lenders
(including the Bank) who are or may become parties thereto (the "Term
Lenders"), and First Union National Bank, as Agent. Capitalized terms
used herein and not defined herein shall have the meanings ascribed to
them in the Term Loan Agreement.
The Borrower further promises to pay 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 the Term Loan
Agreement.
The unpaid principal amount of this Term Note is subject to
mandatory repayment from time to time as provided in the Term Loan
Agreement. All payments of principal of and interest on this Term
Note shall be payable in lawful currency of the United States of
America in immediately available funds to the account designated in
the Term Loan Agreement.
This Note is a Term Note referred to in, is entitled to the
benefits of, and evidences the obligation to repay the Term Loan made
under the Term Loan Agreement, to which reference is made for a
description of the security for this Term Note, for a statement of the
terms and conditions on which the Borrower is permitted and required
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to make prepayments and repayments of principal of the Term Loan, the
events on which such Term Loan may be declared to be immediately due
and payable, and for all other matters involving this Term Loan. The
terms of the Term Loan Agreement are incorporated herein by reference.
Presentment for payment, notice of dishonor, protest and notice
of protest are hereby waived.
The Borrower agrees to pay on demand all costs of collection,
including reasonable attorneys' fees, if any part of this Term Note,
principal or interest, is collected with the aid of an attorney.
THIS TERM NOTE SHALL BE GOVERNED, CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT
REFERENCE TO THE CONFLICTS OR CHOICE OF LAW PRINCIPLES THEREOF.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Borrower has caused this Term Note to be
executed under seal by a duly authorized officer as of the day and
year first above written.
WLR FOODS, INC.
By:__/S/ Robert T. Ritter__
Robert T. Ritter
Vice President
CASSCO ICE & COLD STORAGE,INC.
By:__/S/ Robert T. Ritter__
Robert T. Ritter
Vice President
WAMPLER FOODS, INC.
By:__/S/ Robert t. Ritter__
Robert T. Ritter
Treasurer
WAMPLER SUPPLY COMPANY, INC.
By:__/S/ Robert T. Ritter__
Robert T. Ritter
Vice President
VALLEY RAIL SERVICE, INC.
By:__/S/ Robert T. Ritter__
Robert T. Ritter
Vice President
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Exhibit 2.5
WARRANTHOLDERS RIGHTS AGREEMENT
WARRANTHOLDERS RIGHTS AGREEMENT (the "Agreement") dated as of
February 25, 1998 among WLR Foods, Inc., a Virginia corporation
(together with its successors, "WLR"), and the other parties named on
the signature pages hereto (such other parties and such other
warrantholders of WLR as may, from time to time, become parties to
this Agreement in accordance with the provisions hereof, the
"Warrantholders"; any holder of Conversion Shares (as defined herein)
and such other stockholders of WLR as may, from time to time, become
parties to this Agreement in accordance with the provisions hereof,
the "Stockholders").
WHEREAS, on the date hereof, the Warrantholders purchased and are
the beneficial owners of the Warrants (as defined herein) to purchase
an aggregate of 889,898 shares of Common Stock; and
WHEREAS, WLR wishes to provide to the Warrantholders and the
holders of the Conversion Shares the rights described herein;
NOW THEREFORE the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions. Unless otherwise defined herein, the
following terms used in this Agreement shall have the meanings
specified below.
"Affiliate" means, with respect to any Person, any of (i) a
director or executive officer of such Person, (ii) a spouse, parent,
sibling or descendant of such Person (or a spouse, parent, sibling or
descendant of any director or executive officer of such Person) and
(iii) any other Person that, directly or indirectly, through one or
more intermediaries controls, or is controlled by or is under common
control with such Person. For the purpose of this definition,
"control" (including the terms "controlling", "controlled by" and
"under common control with"), as used with respect to any Person,
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 the
power to direct or cause the direction of the management or policies
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of such Person, whether through the ownership of voting securities or
by contract or agency or otherwise.
"BHC Act" means the Bank Holding Company Act of 1956, as amended.
"Business Day" means for all purposes 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.
"Commission" means the Securities and Exchange Commission or any
other Federal agency at the time administering the Securities Act.
"Common Stock" means the Class A Common Stock, no par value, of
WLR.
"Conversion Shares" means (i) any shares of Common Stock or other
securities issued upon the exercise of any Warrants and (ii) any
securities issued with respect to any of such shares or other
securities referred to in clause (i) by way of stock dividend or stock
split or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization or otherwise; provided
that any of such securities shall cease to be Conversion Shares when
such securities shall have (x) been disposed of pursuant to a Public
Sale or (y) ceased to be outstanding.
"Credit Agreement" means the Revolving Credit Agreement and the
Term Loan Agreement, each dated as of February 25, 1998, among WLR,
Wampler Foods, Inc., Cassco Ice & Cold Storage, Inc., Wampler Supply
Company, Inc., Valley Rail Service, Inc., the Lenders and First Union,
as Agent, as amended from time to time.
"Dispute" means any dispute, claim or controversy arising out of,
connected with or relating to this Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, or any
successor Federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
Reference to a particular section of the Securities Exchange Act of
1934 shall include a reference to the comparable section, if any, of
any such successor Federal statute.
"Initiating Holders" has the meaning set forth in Section 3.01
(a) hereof.
"Inspector" has the meaning set forth in Section 3.03(a)(xi)
hereof.
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"Lenders" means, collectively, the Term Lenders and the Lenders,
in each case as defined in the Credit Agreement.
"Note Purchase Agreement" means the Note Purchase Agreement dated
as of February 25, 1998 by and among WLR and the Purchasers.
"Other Shares" means shares of Common Stock other than Conversion
Shares.
"Permitted Transferee" has the meaning set forth in Section 2.03
hereof.
"Person" means any natural person, corporation, limited
partnership, general partnership, joint stock company, joint venture,
association, company, trust, bank, trust company, land trust, business
trust or other organization, whether or not a legal entity, and any
governmental agency or political subdivision thereof.
"Public Sale" means any sale of Common Stock to the public
pursuant to an offering registered under the Securities Act or to the
public through a broker, dealer or market maker pursuant to the
provisions of Rule 144 (or any successor provision then in effect)
adopted under the Securities Act.
"Purchasers" means the parties listed on Exhibit A attached
hereto.
"Records" has the meaning set forth in Section 3.03(a)(xi)
hereof.
"Registrable Securities" means any Conversion Shares until the
date (if any) on which (i) such Conversion Shares shall have been
transferred or exchanged and new certificates for them not bearing a
legend restricting further transfer shall have been delivered by WLR
and subsequent disposition of them shall not require registration or
qualification of them under the Securities Act or any similar state
law then in force or (ii) such Conversion Shares may be sold pursuant
to Rule 144(k) under the Securities Act.
"Registration Expenses" means all expenses incident to WLR s
performance of or compliance with Sections 3.01 through 3.05 hereof,
including (i) all registration, filing and NASD fees, (ii) all fees
and expenses of complying with securities or blue sky laws, (iii) all
word processing, duplicating and printing expenses, (iv) all messenger
and delivery expenses, (v) the fees and disbursements of counsel for
WLR and of its independent public accountants, including the expenses
of any special audits or "cold comfort" letters required by or
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<PAGE>
incident to such performance and compliance, (vi) premiums and other
costs of policies of insurance (if any) against liabilities arising
out of the public offering of the Registrable Securities being
registered if WLR desires such insurance and (vii) any fees and
disbursements of underwriters customarily paid by issuers or sellers
of securities, but not including underwriting discounts and
commissions and transfer taxes, if any, provided that, in any case
where Registration Expenses are not to be borne by WLR, such expenses
shall not include (i) salaries of WLR personnel or general overhead
expenses of WLR, (ii) auditing fees, (iii) premiums or other expenses
relating to liability insurance required by underwriters of WLR or
(iv) other expenses for the preparation of financial statements or
other data, to the extent that any of the foregoing either is normally
prepared by WLR in the ordinary course of its business or would have
been incurred by WLR had no public offering taken place.
"Regulation Y Holder" means any Warrant Securityholder that is a
bank holding company within the meaning of the BHC Act, or a
subsidiary thereof subject to Regulation Y under the BHC Act.
"Regulatory Change" means, with respect to any Regulation Y
Holder, (i) any change on or after the date hereof in United States
federal or state or foreign laws or regulations (including the BHC Act
and Regulation Y thereunder); (ii) the adoption on or after the date
hereof of any interpretation or ruling applying to such Regulation Y
Holder, individually or as a member of a class, under any United
States federal or state or foreign laws or regulations by any court or
governmental or regulatory authority charged with the interpretation
or administration thereof; or (iii) the modification on or after the
date hereof of any agreement or commitment with any such governmental
or regulatory authority that is applicable to or binding upon such
Regulation Y Holder.
"Restricted Securities" means the Warrants, the Conversion Shares
and any securities obtained upon exchange for or upon conversion or
transfer of or as a distribution on the Warrants, the Conversion
Shares or any such securities; provided that particular securities
shall cease to be Restricted Securities when such securities shall
have (x) been disposed of pursuant to a Public Sale, (y) been
otherwise transferred or exchanged and new certificates for them not
bearing a legend restricting further transfer shall have been
delivered by WLR and subsequent disposition of them shall not require
registration or qualification of them under the Securities Act or any
similar state law then in force or (z) ceased to be outstanding.
Whenever any particular outstanding securities cease to be Restricted
Securities, the holder thereof shall be entitled to receive from the
issuer thereof or its transfer agent, without expense (other than
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<PAGE>
transfer taxes, if any), new securities of like tenor not bearing a
legend of the character set forth in Section 2.02.
"Securities Act" means the Securities Act of 1933, or any similar
Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. Reference
to a particular section of the Securities Act of 1933 shall include a
reference to the comparable section, if any, of any such similar
Federal statute.
"Stockholder" has the meaning set forth in the introductory
paragraph.
"Warrant Securityholder" means at any time any Warrantholder or
any holder of Conversion Shares.
"Warrantholders" has the meaning set forth in the introductory
paragraph.
"Warrants" means the Warrant or Warrants originally issued to
First Union, as such Warrants may be transferred or otherwise
assigned, but only to the extent not theretofore exercised, redeemed
or expired in accordance with their respective terms.
All references herein to "days" shall mean calendar days unless
otherwise specified.
ARTICLE 2
TRANSFER OF SHARES; PAYMENTS TO WARRANT SECURITYHOLDERS
SECTION 2.01. General. Except as otherwise provided in this
Agreement or by law, each Stockholder may transfer its shares of
Common Stock at any time to any Person.
SECTION 2.02. Restrictions on Transfer; Legend on Certificates.
(a) Except as otherwise provided in this Agreement, Restricted
Securities shall not be transferable except (i) pursuant to an
effective registration statement under the Securities Act, (ii)
pursuant to Rule 144 (or any successor provisions) under the
Securities Act or (iii) pursuant to a transaction that is otherwise
exempt from the registration requirements of the Securities Act.
(b) Unless otherwise expressly provided herein, each
certificate for Restricted Securities and each certificate issued in
exchange for or upon transfer of any thereof shall be stamped or
otherwise imprinted with a legend in substantially the following form:
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"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY
NOT BE SOLD OR OFFERED FOR SALE UNLESS REGISTERED UNDER SAID ACT AND
ANY APPLICABLE STATE SECURITIES LAWS OR UNLESS AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE ALSO SUBJECT TO AND THE HOLDER OF SUCH SECURITIES HAS
THE BENEFIT OF A WARRANTHOLDERS RIGHTS AGREEMENT DATED AS OF FEBRUARY
25, 1998 AMONG WLR FOODS, INC. AND THE STOCKHOLDERS AND WARRANTHOLDERS
PARTIES THERETO, COPIES OF WHICH ARE ON FILE WITH WLR FOODS, INC."
(c) Any other provision of this Agreement to the contrary
notwithstanding, no transfer of any Restricted Securities other than
pursuant to a Public Sale may be made to any Person unless such Person
shall have agreed in writing that such Person, as a holder of
Restricted Securities, and the Restricted Securities it acquires shall
be bound by and be entitled to the benefits of all the provisions of
this Agreement applicable to such Restricted Securities (and upon such
agreement such Person shall be entitled to such benefits). Any
purported transfer of Restricted Securities without compliance with
the applicable provisions of this Agreement shall be void and of no
effect, and the purported transferee shall have no rights as a
Warrantholder or Stockholder (as applicable) or under this Agreement.
In the event of such non-complying transfer, WLR shall not transfer
any such Restricted Securities on its books or recognize the purported
transferee as a Stockholder or Warrantholder, as the case may be, for
any purpose, until all applicable provisions of this Agreement have
been complied with.
SECTION 2.03. Permitted Transfers. The restrictions on transfer
provided in Section 2.02(a) shall not be applicable to (i) any
transfer in compliance with federal and all applicable state
securities laws to an Affiliate of the holder of Restricted
Securities, from an Affiliate of such holder to such holder or between
Affiliates of such holder (provided that if any such Affiliate to whom
shares of Restricted Securities have been transferred by a holder
thereof ceases to be an Affiliate of such holder of Restricted
Securities, such Restricted Securities shall immediately be
transferred back to the transferor thereof) or (ii) any transfer to a
Lender or a Purchaser (any transferee referred to in (i) or (ii) above
being referred to herein as a "Permitted Transferee"); provided that
no such transfer shall be made to any Permitted Transferee unless such
Permitted Transferee shall have agreed in writing that such Permitted
Transferee, as a Stockholder or Warrantholder (as the case may be),
and the shares of Common Stock or Warrants it acquires, shall be bound
by and be entitled to the benefits of all the provisions of this
Agreement applicable to Common Stock or Warrants (as the case may be),
and upon such agreement such Permitted Transferee shall be entitled to
such benefits.
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SECTION 2.04. Restrictions on Transfer by Regulation Y Holders.
No Regulation Y Holder may transfer any Warrant or any Conversion
Shares; provided that such Regulation Y Holder may transfer such
Warrant or Conversion Shares (i) to WLR, (ii) to the public in an
offering registered under the Securities Act, (iii) in a transaction
pursuant to Rule 144 (or any successor provisions) under the
Securities Act or otherwise exempt from the registration requirements
of the Securities Act in which no single purchaser receives an
interest (treating any such Warrant as exercised) equivalent to more
than two percent of the outstanding Common Stock; (iv) in a single
transaction to a third party who acquires at least a majority of the
Common Stock without regard to the transfer of such Warrant or
Conversion Shares or (v) to a Lender. In the event of a Regulatory
Change, the effect of which is to permit such Regulation Y Holder to
transfer such Warrant or Conversion Shares in any other manner, the
foregoing proviso shall be deemed modified to permit a transfer of
such Warrant or Conversion Shares in such other manner.
SECTION 2.05. No Inconsistent Agreements. WLR has not entered
into and will not enter into any registration rights agreement or
similar arrangements the performance by WLR of the terms of which
would in any manner conflict with, restrict or be inconsistent with
the performance by WLR of its obligations under this Agreement.
Without the prior written consent of the Warrantholders, WLR will not
take or permit to be taken any action that would establish a par value
per share of Common Stock in excess of $.01.
ARTICLE 3
REGISTRATION RIGHTS
SECTION 3.01. Registration on Request.
(a) At any time on and after September 1, 1998 or from time
to time thereafter, upon the written request of the holder or holders
of two-thirds of all outstanding Conversion Shares and Warrants held
by either the Lenders (including any transferee(s) thereof) or the
Purchasers (including any transferee(s) thereof) (such majority
determined, for purposes of this Section 3.01, by calculating the
number of Conversion Shares for which such Warrants are then
exercisable) (the "Initiating Holders"), requesting that WLR effect
the registration under the Securities Act of all or part of such
Initiating Holders' Registrable Securities and specifying the intended
method of disposition thereof, WLR will promptly give written notice
of such requested registration to all holders of Warrants and
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Registrable Securities, and thereupon WLR will use its best efforts to
effect the registration under the Securities Act of:
(i) the Registrable Securities which WLR has been so
requested to register by such Initiating Holders for disposition in
accordance with the intended method of disposition stated in such
request;
(ii) all other Registrable Securities the holders of
which shall have made a written request to WLR for registration
thereof within 30 days after the giving of such written notice by WLR
(which request shall specify the intended method of disposition of
such Registrable Securities); and
(iii) all shares of Common Stock which WLR may
elect to register in connection with the offering of Registrable
Securities pursuant to this Section 3.01, whether for its own account
or for the account of a holder of Common Stock, all to the extent
requisite to permit the disposition (in accordance with the intended
methods thereof as aforesaid) of the Registrable Securities and the
additional shares of Common Stock, if any, to be so registered;
provided, however, that the Lenders (including any transferee(s)
thereof) and the Purchasers (including any transferee(s) thereof)
shall each be entitled to request not more than two registrations
pursuant to this Section 3.01.
(b) Registrations under this Section 3.01 shall be on such
appropriate registration form of the Commission (i) as shall be
selected by WLR and (ii) as shall permit the disposition of such
Registrable Securities in accordance with the intended method or
methods of disposition specified in their request for such
registration. WLR agrees to include in any such registration
statement all information which holders of Registrable Securities
being registered shall reasonably request.
(c) If any of the Initiating Holders request that WLR
register that Holder's Registrable Securities pursuant to an
underwritten offering, the underwriting discounts and commissions and
transfer taxes, if any, and the underwriter's expenses (including
counsel's fees) and out of pocket charges (collectively, the
"Initiating Shareholders Underwriting Expenses") shall be borne on a
pro rata basis by the Initiating Holders which request WLR to register
their Registrable Securities pursuant to the underwritten offering and
any other person whose securities are included in such underwritten
offering, and the Initiating Shareholders Underwriting Expenses will
not constitute Registration Expenses for purposes of this Section
3.01. If the Initiating Shareholders which request WLR to make an
underwritten offering agree to bear the Initiating Shareholders
Underwriting Expenses in accordance with the foregoing, WLR will
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register those Initiating Shareholders' Registrable Shares pursuant to
an underwritten offering.
(d) WLR will pay all Registration Expenses in connection
with any registration requested pursuant to this Section 3.01,
provided that, in addition, WLR shall pay all Registration Expenses in
connection with any registration upon request pursuant to which less
than 50% of the Registrable Shares requested to be registered by such
Initiating Holders are registered, but no such registration shall be
counted as a requested registration for purposes of this Section 3.01.
The Registration Expenses (and underwriting discounts and commissions
and transfer taxes, if any allocable to the Registrable Shares
requested to be registered by the participating Holders) in connection
with each other registration requested under this Section 3.01 shall
be paid for by the participating Holders requesting to join such
registration.
(e) A registration requested pursuant to this Section 3.01
shall not be deemed to have been effected (i) unless a registration
statement with respect thereto has become effective, provided that a
registration which does not become effective after WLR has filed a
registration statement with respect thereto solely by reason of the
refusal to proceed by any Holder taking part therein (other than a
refusal to proceed based upon the advice of counsel relating to a
matter with respect to WLR) shall be deemed to have been effected by
WLR at the request of the Initiating Holders unless the Initiating
Holders shall have elected to pay all Registration Expenses in
connection with such registration, (ii) if, after it has become
effective, such registration is interfered with by any stop order,
injunction or other order or requirement of the Commission or other
governmental agency or court for any reason, other than by reason of
some act or omission by any Warrantholder or Warrant Securityholder,
or (iii) the conditions to closing specified in the purchase agreement
or underwriting agreement entered into in connection with such
registration are not satisfied, other than by reason of some act or
omission by any Warrantholder or Warrant Securityholder.
(f) If a requested registration pursuant to this Section
3.01 involves an underwritten offering, the underwriter or
underwriters thereof shall be selected by WLR with the approval of the
holders of at least a majority (by a number of shares) of the
Registrable Securities as to which underwritten registration has been
requested.
(g) If a requested registration pursuant to this Section
3.01 involves an underwritten offering, and the managing underwriter
shall advise WLR (with a copy of any such notice to each holder of
Registrable Securities requesting an underwritten registration) that,
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in its opinion, the number of securities requested to be included in
such registration (including securities proposed to be sold for the
account of WLR and any shareholder of WLR) exceeds the number which
can be sold in such offering within a price range acceptable to the
Initiating Holders, WLR will reduce pro rata among the holders of such
securities (other than the holders of the Registrable Securities as to
which the underwritten registration has been requested) and the
holders of Other Shares requested to be included in such registration
the number of securities to be so included to the number which, when
added to the Registrable Securities as to which registration has been
requested, is equal to the number which WLR is so advised can be sold
in such offering.
SECTION 3.02. Incidental Registration. (a) If WLR at any time
proposes to register any of its securities under the Securities Act
(other than (x) by a registration on Form S-4 or S-8 or any successor
or similar forms or (y) pursuant to Section 3.01) whether for its own
account or for the account of the holder or holders of any Other
Shares, it will each such time give prompt written notice to all
Warrant Securityholders of its intention to do so and of such holders'
rights under this Section 3.02. Upon the written request of any such
holder made within 20 days after the receipt of any such notice (which
request shall specify the Registrable Securities intended to be
disposed of by such holder and the intended method of disposition
thereof), WLR will use its best efforts to effect the registration
under the Securities Act of all Registrable Securities which WLR has
been so requested to register by the holders thereof, to the extent
requisite to permit the disposition (in accordance with the intended
methods thereof as aforesaid) of the Registrable Securities so to be
registered, by inclusion of such Registrable Securities in the
registration statement which covers the securities which WLR proposes
to register; provided that if, at any time after giving written notice
of its intention to register any securities and prior to the effective
date of the registration statement filed in connection with such
registration, WLR shall determine for any reason either not to
register or to delay registration of such securities, WLR may, at its
election, give written notice of such determination to each holder of
Registrable Securities and, thereupon, (i) in the case of a
determination not to register, shall be relieved of its obligation to
register any Registrable Securities in connection with such
registration (but not from its obligation to pay the Registration
Expenses in connection therewith), without prejudice, however, to the
rights of any Warrant Securityholder or Warrant Securityholders
entitled to do so to request that such registration be effected as a
registration under Section 3.01, and (ii) in the case of a
determination to delay registering, shall be permitted to delay
registering any Registrable Securities, for the same period as the
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delay in registering such other securities. No registration effected
under this Section 3.02 shall relieve WLR of its obligation to effect
any registration upon request under Section 3.01, nor shall any such
registration hereunder be deemed to have been effected pursuant to
Section 3.01. WLR will pay all Registration Expenses in connection
with each registration of Registrable Securities pursuant to this
Section 3.02.
(b) If WLR at any time proposes to register any of its
securities under the Securities Act as contemplated by Section 3.02
and such securities are to be distributed by or through one or more
underwriters, WLR will, if requested by any holder of Registrable
Securities as provided in this Section 3.02, use its best efforts to
arrange for such underwriters to include all the Registrable
Securities to be offered and sold by such holder among the securities
to be distributed by such underwriters, provided that if the managing
underwriter of such underwritten offering shall inform WLR and holders
of the Registrable Securities requesting such registration and all
holders of any Other Shares requesting such registration by letter of
its belief that inclusion in such distribution of all or a specified
number of such securities proposed to be distributed by such
underwriters would interfere with the successful marketing of the
securities being distributed by such underwriters (such letter to
state the basis of such belief and the approximate number of such
Registrable Securities and such Other Shares proposed so to be
registered which may be distributed without such effect), then WLR
may, upon written notice to all holders of such Registrable Securities
and holders of such Other Shares, reduce pro rata (if and to the
extent stated by such managing underwriter to be necessary to
eliminate such effect) the number of such Registrable Securities and
Other Shares the registration of which shall have been requested by
each holder thereof so that the resultant aggregate number of such
Registrable Securities and Other Shares so included in such
registration, together with the number of securities to be included in
such registration for the account of WLR, shall be equal to the number
of shares stated in such managing underwriter's letter.
SECTION 3.03. Registration Procedures. (a) If and whenever WLR
is required to effect the registration of any Registrable Securities
under the Securities Act as provided in Sections 3.01 and 3.02, WLR
shall, as expeditiously as possible:
(i) prepare and (within 75 days after the end of the
period within which requests for registration may be given to WLR or
in any event as soon thereafter as possible; provided that, in the
case of a registration pursuant to Section 3.01, such filing to be
made within 75 days after the initial request of an Initiating Holder
of Registrable Securities or in any event as soon thereafter as
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possible) file with the Commission the requisite registration
statement to effect such registration (including such audited
financial statements as may be required by the Securities Act) and
thereafter use its best efforts to cause such registration statement
to become and remain effective; provided that WLR may discontinue any
registration of its securities which are not Registrable Securities at
any time prior to the effective date of the registration statement
relating thereto; provided further that before filing such
registration statement or any amendments thereto, WLR will furnish to
the counsel selected by the holders of Registrable Securities which
are to be included in such registration copies of all such documents
proposed to be filed, which documents will be subject to the review of
such counsel;
(ii) prepare and file with the Commission such
amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep
such registration statement effective and to comply with the
provisions of the Securities Act with respect to the disposition of
all securities covered by such registration statement until the
earlier of (x) in the case of a registration pursuant to Section 3.01,
the expiration of 180 days after such registration statement becomes
effective, or (y) in the case of a registration pursuant to Section
3.02, the expiration of 120 days after such registration statement
becomes effective;
(iii) furnish to each seller of Registrable
Securities covered by such registration statement and each
underwriter, if any, of the securities being sold by such seller such
number of conformed copies of such registration statement and of each
such amendment and supplement thereto (in each case including all
exhibits), such number of copies of the prospectus contained in such
registration statement (including each preliminary prospectus and any
summary prospectus) and any other prospectus filed under Rule 424
under the Securities Act, in conformity with the requirements of the
Securities Act, and such other documents, as such seller and
underwriter, if any, may reasonably request in order to facilitate the
public sale or other disposition of the Registrable Securities owned
by such seller;
(iv) use its best efforts to register or qualify all
Registrable Securities and other securities covered by such
registration statement under blue sky or similar laws of such
jurisdictions as any seller thereof and any underwriter of the
securities being sold by such seller shall reasonably request, to keep
such registrations or qualifications in effect for so long as such
registration statement remains in effect and take any other action
which may be reasonably necessary or advisable to enable such seller
and underwriter to consummate the disposition in such jurisdictions of
the securities owned by such seller, except that WLR shall not for any
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such purpose be required to qualify generally to do business as a
foreign corporation in any jurisdiction wherein it would not but for
the requirements of this subdivision (iv) be obligated to be so
qualified, to subject itself to taxation in any such jurisdiction or
to consent to general service of process in any such jurisdiction;
(v) use its best efforts to cause all Registrable
Securities covered by such registration statement to be registered
with or approved by such other governmental agencies or authorities as
may be necessary to enable the seller or sellers thereof to consummate
the disposition of such Registrable Securities;
(vi) furnish to each seller of Registrable Securities a
signed counterpart, addressed to such seller and the underwriters, if
any, of
(A) an opinion of counsel for WLR, dated the
effective date of such registration statement (and, if such
registration includes an underwritten public offering, an opinion
dated the date of the closing under the underwriting agreement),
reasonably satisfactory in form and substance to such seller, and
(B) a "comfort" letter, dated the effective date
of such registration statement (and, if such registration includes an
underwritten public offering, a letter dated the date of the closing
under the underwriting agreement), signed by the independent public
accountants who have certified WLR s financial statements included in
such registration statement; provided that no comfort letter shall be
required to be delivered if such comfort letter is not, at such time,
customarily delivered to shareholders registering securities under the
Securities Act,
covering substantially the same matters with respect to such
registration statement (and the prospectus included therein) and, in
the case of the accountants' letter, with respect to events subsequent
to the date of such financial statements, as are customarily covered
in opinions of issuer's counsel and in accountants letters delivered
to the underwriters in underwritten public offerings of securities;
(vi) notify the holders of Registrable Securities and
the managing underwriter or underwriters, if any, promptly and confirm
such advice in writing promptly thereafter:
(A) when the registration statement, the
prospectus or any prospectus supplement related thereto or post-
effective amendment to the registration statement has been filed, and,
with respect to the registration statement or any post-effective
amendment thereto, when the same has become effective;
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(B) of any request by the Commission for
amendments or supplements to the registration statement or the
prospectus or for additional information;
(C) of the issuance by the Commission of any stop
order suspending the effectiveness of the registration or the
initiation of any proceedings by any Person for that purpose; and
(D) of the receipt by WLR of any notification
with respect to the suspension of the qualification of any Registrable
Securities for sale under the securities or blue sky laws of any
jurisdiction or the initiation or threat of any proceeding for such
purpose;
(viii) notify each seller of Registrable Securities
covered by such registration statement, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act,
upon WLR's discovery that, or upon the happening of any event as a
result of which, the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing, and at the
request of any such seller promptly prepare and furnish to such seller
and each underwriter, if any, a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary
so that, as thereafter delivered to the purchasers of such securities,
such prospectus shall not include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light
of the circumstances then existing;
(ix) make every reasonable effort to obtain the
withdrawal of any order suspending the effectiveness of the
registration statement at the earliest possible moment;
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(x) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available
to its security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least twelve months, but
not more than eighteen months, beginning with the first full calendar
quarter after the effective date of such registration statement, which
earnings statement shall satisfy the provisions of Section 11 (a) of
the Securities Act;
(xi) make available for inspection by a representative
of the holders of Registrable Securities participating in the
offering, any underwriter participating in any disposition pursuant to
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the registration and any attorney or accountant retained by such
selling holders or underwriter (each, an "Inspector"), all financial
and other records, pertinent corporate documents and properties of WLR
(the "Records"), and cause WLR's officers, directors and employees to
supply all information reasonably requested by any such Inspector in
connection with such registration;
(xii) provide and cause to be maintained a transfer
agent and registrar for all Registrable Securities covered by such
registration statement from and after a date not later than the
effective date of such Registration Statement;
(xiii) use its best efforts to list all Registrable
Securities covered by such registration statement on any securities
exchange on which any of the Common Stock is then listed; and
(xiv) use its best efforts to provide a CUSIP number
for the Registrable Securities, not later than the effective date of
the registration.
WLR may require each seller of Registrable Securities as to which any
registration is being effected to furnish WLR such information
regarding such seller and the distribution of such securities as WLR
may from time to time reasonably request in writing for purposes of
preparing the relevant registration statement and amendments and
supplements thereto.
(b) Each holder of Registrable Securities agrees by
acquisition of such Registrable Securities that, upon receipt of any
notice from WLR of the occurrence of any event of the kind described
in subdivision (viii) of Section 3.03(a). such holder will forthwith
discontinue such holder's disposition of Registrable Securities
pursuant to the registration statement relating to such Registrable
Securities until such holder's receipt of the copies of the
supplemented or amended prospectus contemplated by subdivision (viii)
of Section 3.03(a). In the event WLR shall give any such notice, the
periods specified in subdivision (ii) of Section 3.03(a) shall be
extended by the length of the period from and including the date when
each seller of any Registrable Securities covered by such registration
statement shall have received such notice to the date on which each
such seller has received the copies of the supplemented or amended
prospectus contemplated by subdivision (viii) of Section 3.03(a).
(c) If any such registration or comparable statement refers
to any holder of Registrable Securities by name or otherwise as the
holder of any securities of WLR, then such holder shall have the right
to require, in the event that such reference to such holder by name or
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otherwise is not required by the Securities Act or any similar federal
statute then in force, the deletion of the reference to such holder.
SECTION 3.04. Underwritten Offerings. (a) If requested by the
underwriters for any underwritten offering by holders of Registrable
Securities pursuant to a registration requested under Section 3.01,
WLR will enter into an underwriting agreement with such underwriters
for such offering, such agreement to be satisfactory in substance and
form to WLR, each such holder and the underwriters, and to contain
such representations and warranties by WLR and such other terms as are
generally prevailing in agreements of such type, including, without
limitation, indemnities to the effect and to the extent provided in
Section 3.05. The holders of the Registrable Securities will cooperate
with WLR in the negotiation of the underwriting agreement.
(b) Each holder of Registrable Securities agrees by
acquisition of such Registrable Securities not to sell, make any short
sale of, loan, grant any option for the purchase of, effect any public
sale or distribution of or otherwise dispose of any equity securities
of WLR, during the ten days prior to and the 90 days after the
effective date of any underwritten registration pursuant to Section
3.01 or 3.02 has become effective, except as part of such underwritten
registration, whether or not such holder participates in such
registration, and except as otherwise permitted by the managing
underwriter of such underwriting (if any). Each holder of Registrable
Securities agrees that WLR may instruct its transfer agent to place
stop transfer notations in its records to enforce this Section
3.04(b).
(c) WLR agrees (x) not to sell, make any short sale of,
loan, grant any option for the purchase of, effect any public sale or
distribution of or otherwise dispose of its equity securities or
securities convertible into or exchangeable or exercisable for any of
such securities during the ten days prior to and the 90 days after the
effective date of any registration pursuant to Section 3.01 or 3.02
has become effective, except (i) as part of such registration, (ii)
pursuant to registrations on Form S-4 or S-8 or any successor or
similar forms thereto or (iii) as otherwise permitted by the managing
underwriter of such offering (if any), and (y) to use all reasonable
efforts to cause each holder of its equity securities or any
securities convertible into or exchangeable or exercisable for any of
such securities, in each case purchased from WLR at any time after the
date of this Agreement (other than in a public offering) to agree not
to sell, make any short sale of, loan, grant any option for the
purchase of, effect any public sale or distribution of or otherwise
dispose of such securities during such period except as part of such
underwritten registration.
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(d) Each holder of Registrable Securities agrees not to
sell, make any short sell of, loan, grant any option for the purchase
of, effect any public sale or distribution of or otherwise dispose of
its Registrable Securities for a period of time, not to exceed 90 days
in the aggregate, after the effective date of any underwritten
registration of shares of Common Stock, if such holdback shall be
required by the managing underwriter of such underwritten registration
(if any), except (i) as part of such registration, (ii) pursuant to
registrations on Form S-4 or S-8 or any successor or similar forms
thereto or (iii) as otherwise permitted by the managing underwriter of
such registration (if any).
(e) No Person may participate in any underwritten offering
hereunder unless such Person (i) agrees to sell such Person's
securities on the basis provided in any underwriting arrangements
approved, subject to the terms and conditions hereof, by the Person or
a majority of the Persons entitled to approve such arrangements and
(ii) completes and executes all agreements, questionnaires,
indemnities and other documents (other than powers of attorney)
required under the terms of such underwriting arrangements.
SECTION 3.05. Indemnification. (a) WLR agrees to indemnify and
hold harmless each holder of Registrable Securities whose Registrable
Securities are covered by any registration statement, its directors
and officers and each other Person, if any, who controls such holder
within the meaning of the Securities Act, against any losses, claims,
damages or liabilities, joint or several, to which any such
indemnified party may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in any
registration statement under which such securities were registered
under the Securities Act, any preliminary prospectus, final prospectus
or summary prospectus contained therein, or any amendment or
supplement thereto, or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, and WLR will reimburse
each such indemnified party for any legal or any other expenses
reasonably incurred by them in connection with investigating or
defending any such loss, claim, liability, action or proceeding;
provided that WLR shall not be liable in any such case to the extent
that any such loss, claim, damage, liability (or action or proceeding
in respect thereof) or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or
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supplement in reliance upon and in conformity with written information
furnished to WLR by or on behalf of such holder specifically for use
in the preparation thereof. In addition, WLR shall indemnify any
underwriter of such offering and each other Person, if any, who
controls any such underwriter within the meaning of the Securities Act
in substantially the same manner and to substantially the same extent
as the indemnity herein provided to each Indemnified Party. Such
indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such holder or any such
director, officer, underwriter or controlling person and shall survive
the transfer of such securities by such holder.
(b) Each prospective seller of Registrable Securities
hereunder shall indemnify and hold harmless (in the same manner and to
the same extent as set forth in subdivision (a) of this Section 3.05)
WLR, each director of WLR, each officer of WLR and each other person,
if any, who controls WLR within the meaning of the Securities Act,
with respect to any statement or alleged statement in or omission or
alleged omission from such registration statement, any preliminary
prospectus, final prospectus or summary prospectus contained therein,
or any amendment or supplement thereof, if such statement or alleged
statement or omission or alleged omission was made in reliance upon
and in conformity with written information furnished to WLR by or on
behalf of such seller specifically for use in the preparation of such
registration statement, preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement. Any such indemnity shall
remain in full force and effect, regardless of any investigation made
by or on behalf of WLR or any such director, officer or controlling
person and shall survive the transfer of such securities by such
seller. The amount payable by any prospective seller of Registrable
Securities with respect to the indemnification set forth in this
subsection (b) in connection with any offering of securities will not
exceed the amount of net proceeds received by such prospective seller
pursuant to such offering.
(c) Promptly after receipt by an indemnified party of
notice of the commencement of any action or proceeding involving a
claim referred to in the preceding subdivisions of this Section 3.05,
such indemnified party will, if a claim in respect thereof is to be
made against an indemnifying party, give written notice to the latter
of the commencement of such action; provided that the failure of any
indemnified party to give notice as provided herein shall not relieve
the indemnifying party of its obligations under the preceding
subdivisions of this Section 3.05, except to the extent that the
indemnifying party is actually prejudiced by such failure to give
notice. In case any such action is brought against an indemnified
party, unless in such indemnified party's reasonable judgment a
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conflict of interest between such indemnified and indemnifying parties
may exist in respect of such claim, the indemnifying party shall be
entitled to participate in and to assume the defense thereof, jointly
with any other indemnifying party similarly notified, to the extent
that the indemnifying party may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party shall not be liable
to such indemnified party for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof. No
indemnifying party shall, without the consent of the indemnified
party, consent to entry of any judgment or enter into any settlement
of any such action which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified
party of a release from all liability in respect to such claim or
litigation. No indemnified party shall consent to entry of any
judgment or enter into any settlement of any such action the defense
of which has been assumed by an indemnifying party without the consent
of such indemnifying party.
(d) If the indemnification provided for in the preceding
subdivisions of this Section 3.05 is unavailable to an indemnified
party in respect of any expense, loss, claim, damage or liability
referred to therein, then each indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such expense,
loss, claim, damage or liability (i) in such proportion as is
appropriate to reflect the relative benefits received by WLR on the
one hand and the holder or underwriter, as the case may be, on the
other from the distribution of the Registrable Securities or (ii) if
the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also
the relative fault of WLR on the one hand and of the holder or
underwriter, as the case may be, on the other in connection with the
statements or omissions which resulted in such expense, loss, damage
or liability, as well as any other relevant equitable considerations.
The relative benefits received by WLR on the one hand and the holder
or underwriter, as the case may be, on the other in connection, with
the distribution of the Registrable Securities shall be deemed to be
in the same proportion as the total net proceeds received by WLR from
the initial sale of the Registrable Securities by WLR to the purchaser
bear to the gain realized by the selling holder or the underwriting
discounts and commissions received by the underwriter, as the case may
be. The relative fault of WLR on the one hand and of the holder or
underwriter, as the case may be, on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue
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statement of a material fact or omission to state a material fact
relates to information supplied by WLR, by the holder or by the
underwriter and parties relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission; provided that the foregoing contribution agreement shall not
inure to the benefit of any indemnified party if indemnification would
be unavailable to such indemnified party by reason of the proviso
contained in the first sentence of subdivision (a) of this Section
3.05, and in no event shall the obligation of any indemnifying party
to contribute under this subdivision (d) exceed the amount that such
indemnifying party would have been obligated to pay by way of
indemnification if the indemnification provided for under subdivisions
(a) or (b) of this Section 3.05 had been available under the
circumstances.
WLR and the holders of Registrable Securities agree that it would
not be just and equitable if contribution pursuant to this subdivision
(d) were determined by pro rata allocation (even if the holders and
any underwriters were treated as one entity for such purpose) or by
any other method of allocation that does not take account of the
equitable considerations referred to in the immediately preceding
paragraph and subdivision (c) of this Section 3.05. The amount paid or
payable by an indemnified party as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any
such action or claim.
Notwithstanding the provisions of this subdivision (d), no holder
of Registrable Securities or underwriter shall be required to
contribute any amount in excess of the amount by which (i) in the case
of any such holder, the net proceeds received by such holder from the
sale of Registrable Securities or (ii) in the case of an underwriter,
the total price at which the Registrable Securities purchased by it
and distributed to the public were offered to the public exceeds, in
any such case, the amount of any damages that such holder or
underwriter has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission. No Person guilty of
fraudulent misrepresentation (within the meaning of Section II(f) of
the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
SECTION 3.06. Rule 144. WLR will file the reports required to
be filed by it under the Securities Act and the Exchange Act and the
rules and regulations adopted by the Commission thereunder and will
take such further action as any holder of Registrable Securities may
reasonably request, all to the extent required from time to time to
enable such holder to sell Registrable Securities without registration
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under the Securities Act within the limitation of the exemptions
provided by (a) Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or (b) any similar rule or regulation
hereafter adopted by the Commission. Upon the request of any holder
of Registrable Securities, WLR will deliver to such holder a written
statement as to whether it has complied with such requirements.
ARTICLE 4
MISCELLANEOUS
SECTION 4.01 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.
(b) Addresses for Notices. Notices to any party shall be sent
to it at the following addresses, or any other address as to which all
the other parties are notified in writing.
If to WLR: WLR Foods, Inc.
800 Co-op Drive
Timberville, Virginia 22853
Attention: Robert Ritter, CFO
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: Robert Ritter, CFO
If to First Union: First Union National Bank
301 College Street, DC-5
NC 0737
Charlotte, NC 28288-0737
Attention: Julie Bouhuys, SVP
Telephone No.: (704) 383-0349
Telecopy No.: (704) 374-3300; and
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First Union National Bank
201 South Jefferson Street
Roanoke, Virginia 24011
Attention: George Calfo
Telephone No.: (540) 563-7769
Telecopy No.: (540) 561-5262
If to CoreStates: 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: 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: Crestar Bank
510 South Jefferson Street
Roanoke, Virginia 24011
Attention: George Coleman, Jr.
Telephone No.: (540) 982-3285
Telecopy No.: (540) 982-3056
If to a Purchaser: At such Purchaser's respective
address as set forth on Exhibit A
attached hereto.
SECTION 4.02. Expenses. WLR will pay all out-of -pocket
expenses of the Warrantholders in connection with: (i) the
preparation, execution and delivery of this Agreement and the Warrants
whenever the same shall be executed and delivered, including all out-
of-pocket due diligence expenses, taxes and reasonable fees and
disbursements of counsel for the Warrantholders; and (ii) the
preparation, execution and delivery of any waiver, amendment or
consent by the Warrantholders relating to this Agreement or any of the
Warrants, including reasonable fees and disbursements of counsel for
the Warrantholders, and taxes imposed in connection therewith.
SECTION 4.03. Governing Law. This Agreement shall be governed
by, construed and enforced in accordance with the laws of the State of
New York, without reference to the conflicts or choice of law
principles thereof.
SECTION 4.04. Consent to Jurisdiction. WLR hereby irrevocably
consents to the personal jurisdiction of the United States District
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Court for the Southern District of New York and the Supreme Court of
the State of New York, County of New York in any action, claim or
other proceeding arising out of any dispute in connection with this
Agreement and the Warrants, any rights or obligations hereunder or
thereunder, or the performance of such rights and obligations. WLR
hereby irrevocably consents to the service of a summons and complaint
and other process in any action, claim or proceeding brought by any
Warrantholder in connection with this Agreement or the Warrants, 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 4.01. Nothing in this Section 4.04
shall affect the right of any Warrantholder to serve legal process in
any other manner permitted by Applicable Law (as defined in the Credit
Agreement) or affect the right of any Warrantholders to bring any
action or proceeding against WLR or its properties in the courts of
any other jurisdictions.
SECTION 4.05. Waiver of Jury Trial; Waiver of Punitive Damages.
(a) WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, EACH WARRANTHOLDER AND WLR HEREBY IRREVOCABLY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY ACTION, CLAIM OR
OTHER PROCEEDING ARISING OUT OF, OR ANY DISPUTE IN CONNECTION WITH,
THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER, OR THE
PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.
(b) Waiver of Punitive Damages. WLR and the Warrantholders
agree that they shall not have a remedy of punitive or exemplary
damages against the other in any Dispute and hereby waive any right or
claim to punitive or exemplary damages they have now or which may
arise in the future in connection with any Dispute whether the Dispute
is resolved by arbitration or judicially.
SECTION 4.06. Injunctive Relief. WLR recognizes that, in the
event WLR 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 Warrantholders. Therefore, WLR
agrees that the Warrantholders, at the Warrantholders' option, shall
be entitled to temporary and permanent injunctive relief in any such
case without the necessity of proving actual damages.
SECTION 4.07. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of WLR and the Warrantholders,
and their respective successors and assigns (including the holders of
any Conversion Shares), except that WLR shall not assign or transfer
any of its rights or obligations under this Agreement without the
prior written consent of each Warrantholder.
23
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SECTION 4.08. Amendments, Waivers and Consents. Any term,
agreement or condition of this Agreement may be amended or waived by
the Warrantholders, and any consent given by the Warrantholders, if,
but only if, such amendment, waiver or consent is in writing signed by
each Warrantholder and, in the case of an amendment, signed by WLR.
SECTION 4.09. Performance of Duties. WLR's obligations under
this Agreement shall be performed by WLR at its sole cost and expense.
SECTION 4.10. Indemnification. WLR agrees to reimburse the
Warrantholders 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 Warrantholders
harmless from and against all losses suffered by the Warrantholders in
connection with (i) the exercise by the Warrantholders of any right or
remedy granted to them under this Agreement and (ii) any claim, and
the prosecution or defense thereof, arising out of or in any way
connected with this Agreement; provided that WLR shall not be
obligated to reimburse any Warrantholder for costs and expenses, or
indemnify any Warrantholder for any loss, resulting from the gross
negligence or willful misconduct of such Warrantholder.
SECTION 4.11. Survival of Indemnities. Notwithstanding any
termination of this Agreement, the indemnities to which the
Warrantholders are entitled under the provisions of this Article 4 and
any other provision of this Agreement shall continue in full force and
effect and shall protect the Warrantholders against events arising
after such termination as well as before.
SECTION 4.12. 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 4.13. Severability of Provisions. Any provision of this
Agreement 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 4.14. 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.
24
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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.
WLR FOODS, INC.
By:__/S/ Robert T. Ritter__
Name: Robert T. Ritter
Title:Vice President
FIRST UNION NATIONAL BANK
By:__/S/ Julie Bouhuys__
Name: Julie Bouhuys
Title:Senior Vice President
CORESTATES BANK, N.A.
By:__/S/ Carol A. Williams__
Carol A. Williams, Senior Vice
President
HARRIS TRUST AND SAVINGS BANK
By:__/S/ Carl A. Blackham__
Carl A. Blackham, Vice
President
CRESTAR BANK
By:__/S/ George W. Coleman, Jr.__
George W. Coleman, Jr., Senior
Vice President
25
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NATIONWIDE LIFE INSURANCE COMPANY
By:__/S/ James W. Purden
Name: James W. Purden
Title:Vice President Municipal
Securities
NATIONWIDE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT OH
By:__/S/ James W. Purden__
Name: James W. Purden
Title:Vice President Municipal
Securities
SECURITY LIFE INSURANCE COMPANY
By:__/S/ Joseph R. Betlej__
Name: Joseph R. Betlej
Title:Vice President
GREAT WESTERN INSURANCE COMPANY
By:__/S/ Joseph R. Betlej__
Name:Joseph R. Betlej
Title:Vice President
NATIONAL TRAVELERS LIFE COMPANY
By:__/S/ Joseph R. Betlej__
Name: Joseph R. Betlej
Title:Vice President
26
<PAGE>
PIONEER MUTUAL LIFE INSURANCE
COMPANY
By:__/S/ Joseph R. Betlej__
Name: Joseph R. Betlej
Title:Vice President
GUARANTEE RESERVE LIFE INSURANCE
COMPANY
By:__/S/ Joseph R. Betlej__
Name: Joseph R. Betlej
Title:Vice President
THE CATHOLIC AID ASSOCIATION
By:__/S/ Joseph R. Betlej__
Name: Joseph R. Betlej
Title:Vice President
MUTUAL TRUST LIFE INSURANCE COMPANY
By:__/S/ Joseph R. Betlej__
Name: Joseph R. Betlej
Title:Vice President
THE FEDERATED MUTUAL INSURANCE
COMPANY
By:__/S/ Joseph R. Betlej__
Name: Joseph R. Betlej
Title:Vice President
THE FEDERATED LIFE INSURANCE
COMPANY
By:__/S/ Joseph R. Betlej__
Name: Joseph R. Betlej
Title:Vice President
STATE MUTUAL INSURANCE COMPANY
By:__/S/ Joseph R. Betlej__
Name: Joseph R. Betlej
Title:Vice President
27
<PAGE>
COLORADO BANKERS LIFE INSURANCE
COMPANY
By:__/S/ Joseph R. Betlej__
Name: Joseph R. Betlej
Title:Vice President
THE RELIABLE LIFE INSURANCE COMPANY
& ASSOCIATES RETIREMENT PLAN
By:__/S/ Joseph R. Betlej__
Name: Joseph R. Betlej
Title:Vice President
THE MINNESOTA MUTUAL LIFE INSURANCE
COMPANY
By:__/S/ Joseph R. Betlej__
Name: Joseph R. Betlej
Title:Vice President
THE RELIABLE LIFE INSURANCE COMPANY
By:__/S/ Joseph R. Betlej__
Name: Joseph R. Betlej
Title:Vice President
TEXAS LIFE INSURANCE COMPANY
By:__/S/ Charles Scully__
Name: Charles Scully
Title:Investment Officer
MIMLIC FUNDING, INC.
By:__/S/ Joseph R. Betlej__
Name: Joseph R. Betlej
Title:Vice President
EMPLOYERS LIFE INSURANCE COMPANY OF
WAUSAU
By:__/S/ James W. Purden__
Name: James W. Purden
Title:Attorney-in-Fact
28
<PAGE>
STAUNTON FARM CREDIT, ACA
By:__/S/ Richard E. Reeves__
Name: Richard E. Reeves
Title:President
29
<PAGE>
EXHIBIT "A"
LIST OF PURCHASERS
NATIONWIDE LIFE INSURANCE COMPANY
Nationwide Insurance Company
One Nationwide Plaza (1-33-07)
Columbus, Ohio 43215-2220
Attn: Corporate Fixed-Income Securities
NATIONWIDE LIFE INSURANCE COMPANY SEPARATE ACCOUNT OH
Nationwide Insurance Company - S/A OH
One Nationwide Plaza (1-33-07)
Columbus, Ohio 43215-2220
Attn: Corporate Fixed-Income Securities
VAR & CO.
Security Life Insurance Company
c/o MIMLIC Asset Management Company
400 North Robert Street
St. Paul, MN 55101
Attn: Client Administrator
ZIONS FIRST NATIONAL BANK FOR GREAT WESTERN INSURANCE COMPANY
Great Western Insurance Company
c/o MIMLIC Asset Management Company
400 North Robert Street
St. Paul, MN 55101
Attn: Client Administrator
VAR & CO.
National Travelers Life Company
c/o MIMLIC Asset Management Company
400 North Robert Street
St. Paul, MN 55101
Attn: Client Administrator
POLLY & CO.
Pioneer Mutual Life Insurance Company
c/o MMLIC Asset Management Company
400 North Robert Street
St. Paul, MN 55101
Attn: Client Administrator
GANT & CO.
Guarantee Reserve Life Insurance Company
c/o MIMLIC Asset Management Company
400 North Robert Street
St. Paul, MN 55101
Attn: Client Adminstrator
30
<PAGE>
VAR & CO.
Catholic Aid Association
c/o MIMLIC Asset Management Company
400 North Robert Street
St. Paul, MN 55101
Attn: Client Administrator
ELL & CO.
Mutual Trust Life Insurance Company
c/o MIMLIC Asset Management Company
400 North Robert Street
St. Paul, MN 55101
Attn: Client Administrator
FEDERATED MUTUAL INSURANCE COMPANY
Federated Mutual Insurance Company
c/o MIMLIC Asset Management Company
400 North Robert Street
St. Paul, MN 55101
Attn: Client Administrator
31
<PAGE>
FEDERATED LIFE INSURANCE COMPANY
Federated Life Insurance Company
c/o MIMLIC Asset Management Company
400 North Robert Street
St. Paul, MN 55101
Attn: Client Administrator
FIRST UNION & CO.
State Mutual Insurance Company
c/o MIMLIC Asset Management Company
400 North Robert Street
St. Paul, MN 55101
Attn: Client Administrator
SALKELD & CO.
Colorado Bankers Life Insurance Company
c/o MIMLIC Asset Management Company
400 North Robert Street
St. Paul, MN 55101
Attn: Client Administrator
THE RELIABLE LIFE INSURANCE COMPANY
The Reliable Life Insurance Company
c/o MIMLIC Asset Management Company
400 Robert Street North
St. Paul, MN 55101
Attn: Client Administrator
THE RELIABLE LIFE INSURANCE COMPANY & ASSOCIATES RETIREMENT PLAN
Reliable Life Insurance Company & Associates Retirement Plan
c/o MIMLIC Asset Management Company
400 North Robert Street
St. Paul, MN 55101
Attn: Client Administrator
32
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
The Minnesota Mutual Life Insurance Company
400 North Robert Street
St. Paul, MN 55101
Attn: Investment Department
TEXAS LIFE INSURANCE COMPANY
Metropolitan Life Insurance Company
334 Madison Avenue
Convent Station, NJ 07961
Attn: Private Placement Unit
and to:
Texas Life Insurance Company
900 Washington Avenue
Waco, TX 76701
Attn: Virginia Crunk
VAR & CO.
MMLIC Funding, Inc.
c/o MMLIC Asset Management Company
400 North Robert Street
St. Paul, MN 55101
EMPLOYERS LIFE INSURANCE COMPANY OF WAUSAU
Employers Life Insurance Company of Wausau
One Nationwide Plaza (1-33-07)
Columbus, Ohio 43215-2220
Attn: Corporate Fixed-Income Securities
STAUNTON FARM CREDIT, ACA
Staunton Farm Credit, ACA
306 East Market Street
Harrisonburg, Virginia 22801
33
<PAGE>
Exhibit 2.6
[FORM OF BANK WARRANT]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT
BE SOLD OR OFFERED FOR SALE UNLESS REGISTERED UNDER SAID ACT AND ANY
APPLICABLE STATE SECURITIES LAWS OR UNLESS AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE ALSO SUBJECT TO AND THE HOLDER OF SUCH SECURITIES HAS
THE BENEFIT OF A WARRANTHOLDERS RIGHTS AGREEMENT DATED AS OF FEBRUARY
25, 1998 AMONG WLR FOODS, INC. AND THE WARRANTHOLDERS PARTIES THERETO,
COPIES OF WHICH ARE ON FILE WITH WLR FOODS, INC.
No. 98-FIELD (No.) Dated February 25, 1998
WARRANT
To purchase FIELD (Shares) Shares of Common Stock of
WLR FOODS, INC.
Expiring January 1, 2002
THIS IS TO CERTIFY THAT, for value received, FIELD(NAME) or
registered assigns ("Holder") is entitled to purchase from WLR FOODS,
INC., a Virginia corporation ("WLR"), at any time or from time to time
after 9:00 a.m., Charlotte, North Carolina time, on the date hereof
with respect to 30% of the shares for which this Warrant is
exercisable and at any time or from time to time after 9:00 a.m.
Charlotte, North Carolina time, on February 28, 1999 with respect to
all shares for which this Warrant is exercisable and, in either case,
prior to 5:00 p.m., Charlotte, North Carolina time, on the earlier of
January 1, 2002 and the Business Day preceding the date of redemption
of this Warrant, at the place where the Warrant Agency is located, at
the Exercise Price, the number of shares of Class A Common Stock, no
par value, of WLR (the "Common Stock") shown above, all subject to
adjustment and upon the terms and conditions hereinafter provided, and
is entitled also to exercise the other appurtenant rights, powers and
privileges hereinafter described.
This Warrant is one of one or more warrants (the "Warrants") of
the same form and having the same terms as this Warrant, entitling the
holders initially to purchase up to an aggregate of 889,898 shares of
Common Stock. The Warrants have been issued pursuant to the Revolving
Credit Agreement and the Term Loan Agreement, each dated as of
February 25, 1998 (as amended from time to time, collectively, the
"Credit Agreement") among WLR, Wampler Foods, Inc., Cassco Ice & Cold
Storage, Inc., Wampler Supply Company, Inc., Valley Rail Service,
Inc., and First Union National Bank ("First Union"), CoreStates Bank,
N.A. ("CoreStates"), Harris Trust and Savings Bank ("Harris"), and
Crestar Bank ("Crestar") or pursuant to the Note Purchase Agreement
dated as of February 25, 1998 (the "Note Purchase Agreement") among
WLR and the purchasers named on the signature page thereto (the
"Purchasers"), and the Holder is entitled to certain benefits as set
forth therein and to certain benefits described in the Warrantholders
Rights Agreement dated as of February 25, 1998 among WLR and the
Warrantholders party thereto (the "Warrantholders Rights Agreement").
WLR shall keep a copy of the Credit Agreement and the Warrantholders
Rights Agreement, and any amendments thereto, at the Warrant Agency
and shall furnish, without charge, copies thereof to the Holder upon
request.
Certain terms used in this Warrant are defined in Article 6.
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<PAGE>
ARTICLE 1
EXERCISE OF WARRANTS
SECTION 1.01. Method of Exercise. To exercise this Warrant in
whole or in part, the Holder shall deliver on any Business Day to WLR,
at the Warrant Agency, (a) this Warrant, (b) a written notice of such
Holder's election to exercise this Warrant, which notice shall specify
the number of shares of Common Stock to be purchased (which shall be a
whole number of shares if for less than all the shares then issuable
hereunder), the denominations of the share certificate or certificates
desired and the name or names in which such certificates are to be
registered, and (c) payment of the Exercise Price with respect to such
shares. Such payment may be made, at the option of the Holder, by any
of the following methods: (a) by cash, certified or bank cashier's
check or wire transfer in an amount equal to the product of (i) the
Exercise Price times (ii) the number of Warrant Shares as to which
this Warrant is being exercised; or (b) by receiving from WLR the
number of Warrant Shares equal to (i) the number of Warrant Shares as
to which this Warrant is being exercised minus (ii) the number of
Warrant Shares having a value, based on the Closing Price on the
trading day immediately prior to the date of such exercise, equal to
the product of (x) the Exercise Price times (y) the number of Warrant
Shares as to which this Warrant is being exercised; or (c) by
cancellation of an amount of principal or interest owing under the
Credit Agreement or the Note Agreement, as the case may be, in an
amount equal to the product of (i) the Exercise Price times (ii) the
number of Warrant Shares as to which this Warrant is being executed.
WLR shall, as promptly as practicable and in any event within
seven days after receipt of such notice and payment, execute and
deliver or cause to be executed and delivered, in accordance with such
notice, a certificate or certificates representing the aggregate
number of shares of Common Stock specified in said notice together
with cash in lieu of any fractions of a shares as providtificate or
certificates so delivered shall be in such denominations as may be
specified in such notice, and shall be issued in the name of the
Holder or such other name as shall be designated in such notice. This
Warrant shall be deemed to have been exercised, and such Holder or any
other Person so designated to be named therein shall be deemed for all
purposes to have become a holder of record of shares, as of the date
the aforementioned notice and payment is received by WLR. If this
Warrant shall have been exercised only in part, WLR shall, at the time
of delivery of such certificate or certificates, deliver to the Holder
a new Warrant evidencing the rights to purchase the remaining shares
of Common Stock called for by this Warrant, which new Warrant shall in
all other respects be identical with this Warrant, or, at the request
of the Holder, appropriate notation may be made on this Warrant which
shall then be returned to the Holder. WLR shall pay all expenses,
taxes and other charges payable in connection with the preparation,
issuance and delivery of share certificates and new Warrants, except
that, if share certificates or new Warrants shall be registered in a
name or names other than the name of the Holder, funds sufficient to
pay all transfer taxes payable as a result of such transfer shall be
paid by the Holder at the time of delivery of the aforementioned
notice of exercise or promptly upon receipt of a written request of
WLR for payment.
SECTION 1.02. Shares to Be Fully Paid and Nonassessable. All
shares of Common Stock issued upon the exercise of this Warrant shall
be validly issued, fully paid and nonassessable and, if such class of
Common Stock is then listed on any national securities exchange (as
defined in the Exchange Act) or quoted on NASDAQ, shall be duly listed
or quoted thereon, as the case may be.
SECTION 1.03. No Fractional Shares Required to Be Issued. WLR
shall not be required to issue fractions of shares of Common Stock
upon exercise of this Warrant. If any fraction of a share would, but
for this Section, be issuable upon partial exercise, such fraction of
a share shall be carried over until the final exercise of this
Warrant, at which time in lieu of such fractional share WLR shall pay
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<PAGE>
to the Holder, in cash, an amount equal to the same fraction of the
Fair Market Value of WLR per share of outstanding Common Stock on the
Business Day immediately prior to the date of such exercise.
SECTION 1.04. Share Legend. Each certificate for shares of
Common Stock issued upon exercise of this Warrant, unless at the time
of exercise such shares are registered under the Securities Act, shall
bear the following legend:
"The securities represented by this certificates have not been
registered under the Securities Act of 1933, as amended, and may not
be sold or offered for sale unless an exemption from such registration
is available. The securities represented by this certificate are also
subject to and the holder of such securities has the benefit of a
Warrantholders Rights Agreement dated as of February 25, 1998 among
WLR Foods, Inc. and the Warrantholders parties thereto, copies of
which are on file with WLR Foods, Inc."
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon
completion of a public offering pursuant to a registration statement
under the Securities Act) shall also bear such legend unless, in the
opinion of counsel selected by the holder of such certificate (who may
be an employee of such holder) and reasonably acceptable to WLR, the
securities represented thereby need no longer be subject to
restrictions on resale under the Securities Act.
SECTION 1.05. Reservation. WLR has duly reserved and will keep
available for issuance upon exercise of the Warrants the total number
of Warrant Shares deliverable from time to time upon exercise of all
Warrants from time to time outstanding.
ARTICLE 2
WARRANT AGENCY; TRANSFER, EXCHANGE AND REPLACEMENT OF WARRANTS
SECTION 2.01. Warrant Agency. As long as any of the Warrants
remain outstanding, WLR shall perform the obligations of and be the
warrant agency with respect to the Warrants (the "Warrant Agency") at
its address set forth in Section 7.01 hereof or at such other address
as WLR shall specify by notice to all Warrantholders.
SECTION 2.02. Ownership of Warrant. WLR may deem and treat the
person in whose name this Warrant is registered as the holder and
owner hereof (notwithstanding any notations of ownership or writing
hereon made by any person other than WLR) for all purposes and shall
not be affected by any notice to the contrary, until due presentment
of this Warrant for registration of transfer as provided in this
Article 2.
SECTION 2.03. Transfer of Warrant. WLR agrees to maintain at the
Warrant Agency books for the registration of transfers of the
Warrants, and transfer of this Warrant and all rights hereunder shall
be registered, in whole or in part, on such books, upon surrender of
this Warrant at the Warrant Agency, together with a written assignment
of this Warrant duly executed by the Holder or its duly authorized
agent or attorney, with (if the Holder is a natural person) signatures
guaranteed by a bank or trust company or a broker or dealer registered
with the NASD, and funds sufficient to pay any transfer taxes payable
upon such transfer. Upon surrender and, if required, such payment,
WLR shall execute and deliver a new Warrant or Warrants in the name of
the assignee or assignees and in the denominations specified in the
instrument of assignment (which shall be whole numbers of shares only)
and shall issue to the assignor a new Warrant evidencing the portion
of this Warrant not so assigned, and this Warrant shall promptly be
canceled.
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SECTION 2.04. Division or Combination of Warrants. This Warrant
may be divided or combined with other Warrants upon presentment hereof
and of any Warrant or Warrants with which this Warrant is to be
combined at the Warrant Agency, together with a written notice
specifying the names and denominations (which shall be whole numbers
of shares only) in which the new Warrant or Warrants are to be issued,
signed by the holders hereof and thereof or their respective duly
authorized agents or attorneys. Subject to compliance with Section
2.03 as to any transfer or assignment which may be involved in the
division or combination, WLR shall execute and deliver a new Warrant
or Warrants in exchange for the Warrant or Warrants to be divided or
combined in accordance with such notice.
SECTION 2.05. Loss, Theft, Destruction of Warrant Certificates.
Upon receipt of evidence satisfactory to WLR of the ownership of and
the loss, theft, destruction or mutilation of any Warrant and, in the
case of any such loss, theft or destruction, upon receipt of indemnity
or security satisfactory to WLR (it being understood and agreed that
if the holder of such Warrant is First Union, CoreStates, Harris,
Crestar or a Purchaser, then a written agreement of indemnity given by
such holder alone shall be satisfactory to WLR and no further security
shall be required) or, in the case of any such mutilation, upon
surrender and cancellation of such Warrant, WLR will make and deliver,
in lieu of such lost, stolen, destroyed or mutilated Warrant, a new
Warrant of like tenor and representing the right to purchase the same
aggregate number of shares of Common Stock.
SECTION 2.06. Expenses of Delivery of Warrants. WLR shall pay
all expenses, taxes (other than transfer taxes) and other charges
payable in connection with the preparation, issuance and delivery of
Warrants hereunder.
ARTICLE 3
CERTAIN RIGHTS
SECTION 3.01. Right and Obligations under the Warrantholders
Rights Agreement. The holder of this Warrant is entitled to the
benefits and subject to the terms of the Warrantholders Rights
Agreement dated as of February 25, 1998 among WLR and the
Warrantholders listed on the signature pages thereof (as amended from
time to time, the "Warrantholders Rights Agreement"). WLR shall keep
or cause to be kept a copy of the Warrantholders Rights Agreement, and
any amendments thereto, at the Warrant Agency and shall furnish,
without charge, copies thereof to the Holder upon request.
SECTION 3.02. Determination of Fair Market Value. Subject to
Section 3.03 hereof, each determination of Fair Market Value hereunder
shall be made in good faith by WLR. Upon each determination of Fair
Market Value by WLR hereunder WLR shall promptly give notice thereof
to all Warrantholders, setting forth in reasonable detail the
calculation of such Fair Market Value and the method and basis of
determination thereof (the "WLR Determination").
SECTION 3.03. Contest and Appraisal Rights. (a) If the holders
of Warrants entitling such holders to purchase a majority of the
Common Stock subject to purchase upon exercise of Warrant at the time
outstanding (exclusive of Warrants then owned by WLR or any Subsidiary
or Affiliate thereof) (the "Required Interest") shall disagree with
the WLR Determination and shall by notice to WLR given within ten
Business Days after WLR's notice of the WLR Determination (an
"Appraisal Notice") elect to dispute the WLR's Determination, such
dispute shall be resolved as set forth in subsection (b) of this
Section.
(b) WLR shall within 30 days after an Appraisal Notice shall have
been given pursuant to subsection (a) of this Section engage an
investment bank or other qualified appraisal firm acceptable to the
Required Interest (the "Appraiser") to make an independent
determination of Fair Market Value (the "Appraiser Determination").
The Appraiser Determination shall be final and binding on WLR and all
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Warrantholders. If the WLR Determination and the Appraiser
Determination differ by an amount of 10% or less of the WLR
Determination, then the costs of conducting the appraisal shall be
borne equally by WLR and the Warrantholders; if the WLR Determination
is greater than the Appraiser Determination by more than 10% of the
WLR Determination, then the costs of conducting the appraisal shall be
borne entirely by the Warrantholders; and if the Appraiser
Determination is greater than the WLR Determination by more than 10%
of the WLR Determination, then the costs of conducting the appraisal
shall be borne entirely by WLR; provided that in each case costs
separately incurred by WLR and any Warrantholders shall be separately
borne by them.
ARTICLE 4
ANTIDULUTION PROVISIONS
SECTION 4.01. Adjustment Generally. The number of shares of
Common Stock (or other securities or property) issuable upon exercise
of this Warrant shall be subject to adjustment from time to time upon
the occurrence of certain events as provided in this Article 4.
SECTION 4.02. Common Stock Reorganization. If WLR shall
subdivide its outstanding shares of Common Stock (or any class
thereof) into a greater number of shares or consolidate its
outstanding shares of Common Stock (or any class thereof) into a
smaller number of shares or make any other distribution upon any
capital stock of WLR payable in Common Stock, Options or Convertible
Securities (any such event being called a "Common Stock
Reorganization"), then the number of shares of Common Stock subject to
purchase upon exercise of this Warrant shall be adjusted, effective at
such time, to a number determined by multiplying the number of shares
of Common Stock subject to purchase immediately before such Common
Stock Reorganization by a fraction, the numerator of which shall be
the number of shares of Common Stock outstanding after giving effect
to such Common Stock Reorganization and the denominator of which shall
be the number of shares of Common Stock outstanding immediately before
such Common Stock Reorganization.
SECTION 4.03. Common Stock Distribution. (a) If WLR shall issue,
sell or otherwise distribute any shares of Common Stock, other than
pursuant to a Common Stock Reorganization (which is governed by
Section 4.02 hereof) (any such event, including any event described in
paragraphs (b) and (c) below, being herein called a "Common Stock
Distribution"), for a consideration per share less than the Exercise
Price then in effect or less than the Fair Market Value of WLR per
share of outstanding Common Stock on a Fully Diluted Basis on the date
of such Common Stock Distribution (before giving effect to such Common
Stock Distribution), then, effective upon such Common Stock
Distribution, the number of shares of Common Stock subject to purchase
upon exercise of this Warrant shall be increased to a number
determined by multiplying the number of shares of Common Stock subject
to purchase immediately before such Common Stock Distribution by a
fraction, the numerator of which shall be the number of shares of
Common Stock outstanding immediately after giving effect to such
Common Stock Distribution and the denominator of which shall be the
sum of the number of shares outstanding immediately before giving
effect to such Common Stock Distribution (both calculated on a Fully
Diluted Basis) plus the number of shares of Common Stock which the
aggregate consideration received by WLR with respect to such Common
Stock Distribution would purchase at the Fair Market Value of WLR per
share of outstanding Common Stock on a Fully Diluted Basis on the date
of such Common Stock Distribution before giving effect to such Common
Stock Distribution. In computing adjustments under this paragraph,
fractional interests in Common Stock shall be taken into account to
the nearest one-thousandth of a share.
The provisions of this paragraph (a), including by operation of
paragraph (b) or (c) below, shall not operate to reduce the number of
shares of Common Stock subject to purchase upon exercise of this
Warrant.
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(b) If WLR shall issue, sell, distribute or otherwise grant in
any manner (including by assumption) any rights to subscribe for or to
purchase, or any warrants or options for the purchase of Common Stock
("Options") or any stock or securities convertible into or
exchangeable for Common Stock (such rights, warrants or options being
herein called "Convertible Securities"), whether or not such Options
or the rights to convert or exchange any such Convertible Securities
in respect of such Option are immediately exercisable, and the price
per share for which Common Stock is issuable upon the exercise of such
Options or upon conversion or exchange of such Convertible Securities
in respect of such Options (determined by dividing (i) the aggregate
amount, if any, received or receivable by WLR as consideration for the
granting of such Options, plus the minimum aggregate amount of
additional consideration payable to WLR upon the exercise of all such
Options, plus, in the case of Options to acquire Convertible
Securities, the minimum aggregate amount of additional consideration,
if any, payable upon the issuance or sale of such Convertible
Securities and upon the conversion or exchange thereof, by (ii) the
total maximum number of shares of Common Stock issuable upon the
exercise of such Options or upon the conversion or exchange of all
such Convertible Securities issuable upon the exercise of such
Options) shall be less than the Exercise Price then in effect or less
than the Fair Market Value of WLR per share of outstanding Common
Stock on a Fully Diluted Basis on the date of granting such Options
(before giving effect to such grant), then, for purposes of paragraph
(a) above, the total maximum number of shares of Common Stock issuable
upon the exercise oxchange of the total maximum amount of such
Convertible Securities issuable upon the exercise of such Options
shall be deemed to have been issued as of the date of granting of such
Options and thereafter shall be deemed to be outstanding and WLR shall
be deemed to have received as consideration such price per share,
determined as provided above, therefor. Except as otherwise provided
in paragraph (d) below, no additional adjustment of the number of
shares subject to purchase upon exercise of this Warrant shall be made
upon the actual exercise of such Options or upon conversion or
exchange of such Convertible Securities.
(c) If WLR shall issue, sell or otherwise distribute (including
by assumption) any Convertible Securities, whether or not the rights
to exchange or convert thereunder are immediately exercisable, and the
price per share for which Common Stock is issuable upon such
conversion or exchange (determined by dividing (i) the aggregate
amount received or receivable by WLR as consideration for the
issuance, sale or distribution of such Convertible Securities, plus
the minimum aggregate amount of additional consideration, if any,
payable to WLR upon the conversion or exchange thereof, by (ii) the
total maximum number of shares of Common Stock issuable upon the
conversion or exchange of all such Convertible Securities) shall be
less than the Exercise Price then in effect or less than the Fair
Market Value of WLR per share of outstanding Common Stock on a Fully
Diluted Basis on the date of such issuance, sale or distribution
(before giving effect to such issuance, sale or distribution), then,
for purposes of paragraph (a) above, the total maximum number of
shares of Common Stock issuable upon conversion or exchange of all
such Convertible Securities shall be deemed to have been issued as of
the date of the issuance, sale or distribution of such Convertible
Securities and thereafter shall be deemed to be outstanding and WLR
shall be deemed to have received as consideration such pricas provided
above, therefor. Except as otherwise provided in paragraph (d) below,
no additional adjustment of the number of shares subject to purchase
upon exercise of this Warrant shall be made upon the actual conversion
or exchange of such Convertible Securities.
(d) If (i) the purchase price provided for in any Option referred
to in paragraph (b) above or the additional consideration, if any,
payable upon the conversion or exchange of any Convertible Securities
referred to in paragraph (b) or (c) above or the rate at which any
Convertible Securities referred to in paragraph (b) or (c) above are
convertible into or exchangeable for Common Stock shall change at any
time (other than under or by reason of provisions designed to protect
against dilution upon an event which results in a related adjustment
pursuant to this Article 4), (ii) any of such Options or Convertible
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Securities shall have terminated, lapsed or expired, or (iii) any
Options or Convertible Securities outstanding on February 25, 1998
shall have terminated, lapsed or expired, then the number of shares
which are then subject to purchase upon exercise of this Warrant shall
forthwith be readjusted (effective only with respect to any exercise
of this Warrant after such readjustment) to the number of shares which
would have been subject to purchase upon exercise of this Warrant (A)
had the adjustment made upon the issuance, sale, distribution or grant
of such Options or Convertible Securities been made based upon such
changed purchase price, additional consideration or conversion rate,
as the case may be (in the case of any event referred to in clause (i)
of this paragraph (d)) or (B) had such adjustment not been made (in
the case of any event referred to in clause (ii) of this paragraph
(d)) or (C) had the shares of Common Stock issuable upon the exercise
or conversion of such Options or Convertible Securities not been
deemed outstanding for purposes of calculating the number of shares
for which the Warrants originally issuwere exercisable (in the case of
any event referred to in clause (iii) of this paragraph (d)).
(e) If any shares of Common Stock, Options or Convertible
Securities shall be issued, sold or distributed for cash, the
consideration received therefor shall be deemed to be the amount
received by WLR therefor, after deduction therefrom of any expenses
incurred in connection therewith. If any shares of Common Stock,
Options or Convertible Securities shall be issued, sold or distributed
for a consideration other than cash, the amount of the consideration
other than cash received by WLR shall be deemed to be the Fair Market
Value of such consideration, after deduction of any expenses incurred
in connection therewith. If any shares of Common Stock, Options or
Convertible Securities shall be issued in connection with any merger
in which WLR is the surviving corporation, the amount of consideration
therefor shall be deemed to be the Fair Market Value of such portion
of the assets and business of the non-surviving corporation as shall
be attributable to such Common Stock, Options or Convertible
Securities, as the case may be. If any Options shall be issued in
connection with the issuance and sale of other securities of WLR,
together comprising one integral transaction in which no specific
consideration is allocated to such Options by the parties thereto,
such Options shall be deemed to have been issued without
consideration.
SECTION 4.04. Special Dividends. If WLR shall issue or
distribute to any holder or holders of shares of Common Stock evidence
of indebtedness, any other securities of WLR or any cash, property, or
other assets (excluding a Common Stock Reorganization or a Common
Stock Distribution), whether or not accompanied by a purchase,
redemption or other acquisition of shares of Common Stock (any such
nonexcluded event being herein called a "Special Dividend"), the
number of shares of Common Stock subject to purchase upon exercise of
this Warrant shall be increased to a number determined by multiplying
the number of shares of Common Stock subject to purchase immediately
before such Special Dividend by a fraction, the numerator of which
shall be the Fair Market Value of WLR per share of outstanding Common
Stock as of the effective date of such Special Dividend and the
denominator of which shall be such Fair Market Value per share less
any cash and the then Fair Market Value of any evidence of
indebtedness, securities or property or other assets issued or
distributed in such Special Dividend with respect to one share of
Common Stock. A reclassification of Common Stock (other than a change
in par value, or from par value to no par value or from no par value
to par value) into shares of Common Stock and shares of any other
class of stock shall be deemed a distribution by WLR to holders of
such Common Stock of such shares of such other class of stock and, if
the outstanding shares of Common Stock shall be changed into a larger
or smaller number of shares of Common Stock as part of such
reclassification, a Common Stock Reorganization.
SECTION 4.05. Capital Reorganizations. If there shall be any
consolidation or merger to which WLR is a party, other than a
consolidation or a merger of which WLR is the continuing corporation
and which does not result in any reclassification of, or change (other
than a Common Stock Reorganization) in, outstanding shares of Common
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Stock, or any sale or conveyance of the property of WLR as an entirety
or substantially as an entirety, or any recapitalization of WLR (any
such event being called a "Capital Reorganization"), then, effective
upon the effective date of such Capital Reorganization, the Holder
shall no longer have the right to purchase Common Stock, but shall
have instead the right to purchase, upon exercise of this Warrant, the
kind and amount of shares of stock and other securities and property
(including cash) which the Holder would have owned or have been
entitled to receive pursuant to such Capital Reorganization if this
Warrant had been exercised immediately prior to the effective date of
such Capital Reorganization. As a condition to effecting any Capital
Reorganization, WLR or the successor or surviving corporation, as the
case may be, shall (a) execute and deliver to each Warrantholder and
to the Warrant Agency an agreement as to the Warrantholders' rights in
accordance with this Section 4.05, providing, to the extent of any
right to purchase equity securities hereunder, for subsequent
adjustments as nearly equivalent as may be practicable to the
adjustments provided for in this Article 4 and (b) provide each
Regulation Y Holder with an opinion of counsel reasonably satisfactory
to such Regulation Y Holder and such other assurances as any
Regulation Y Holder may reasonably request to the effect that the
ownership and exercise by any Regulation Y Holder of this Warrant
after giving effect to such Capital Reorganization shall not be
prohibited by the BHC Act or the regulations thereunder. The
provisions of this Section 4.05 shall similarly apply to successive
Capital Reorganizations.
SECTION 4.06. Adjustment Rules. Any adjustments pursuant to this
Article 4 shall be made successively whenever an event referred to
herein shall occur, except that, notwithstanding any other provision
of this Article 4, no adjustment shall be made to the number of shares
of Common Stock to be delivered to each Holder (or to the Exercise
Price) if such adjustment represents less that 1% of the number of
shares previously required to be so delivered, but any lesser
adjustment shall be carried forward and shall be made at the time and
together with the next subsequent adjustment which together with any
adjustments so carried forward shall amount to 1% or more of the
number of shares to be so delivered. No adjustment shall be made
pursuant to this Article 4 in respect of the issuance from time to
time of shares of Common Stock upon the exercise of any of the
Warrants or any Options listed in Schedule 6.1(z) to the Credit
Agreement or upon the conversion or exchange of any Convertible
Securities listed in such Schedule 6.1(z), in each case in accordance
with the terms of such Options or Convertible Securities as in effect
on the date of the Warrantholders' Rights Agreement. If WLR shall
take a record of the holders of its Common Stock for any purpose
referred to in this Article 4, then (i) such record date shall be
deemed to be the date of issuance, sale, distribution or grant in
question and (ii) if WLR shall legally abandon such action prior to
effecting such action, no adjustment shall be made pursuant to this
Section 4 in respect of such action.
SECTION 4.07. Proceedings Prior to Any Action Requiring
Adjustment. As a condition precedent to the taking of any action
which would require an adjustment pursuant to this Article 4, WLR
shall take any action which may be necessary, including obtaining
regulatory approvals or exemptions, in order that (a) WLR may
thereafter validly and legally issue as fully paid and nonassessable
all shares of Common Stock which the holders of Warrants are entitled
to receive upon exercise thereof and (b) the ownership and exercise of
any Warrant by any Regulation Y Holder shall not be prohibited by the
BHC Act or the regulations thereunder.
SECTION 4.08. Notice of Adjustment. Not less than 10 nor more
than 30 days prior to the record date or effective date, as the case
may be, of any action which requires or might require an adjustment or
readjustment pursuant to this Article 4, WLR shall give notice to each
Warrantholder of such event, describing such event in reasonable
detail and specifying the record date or effective date, as the case
may be, and, if determinable, the required adjustment and the
computation thereof. If the required adjustment is not determinable
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at the time of such notice, WLR shall give notice to each
Warrantholder of such adjustment and computation promptly after such
adjustment becomes determinable.
ARTICLE 5
PURCHASE, REDEMPTION, GIVEB ACK AND CANCELLATION OF WARRANTS
SECTION 5.01. Purchases of Warrants by WLR. WLR shall have the
obligation to purchase or otherwise acquire Warrants at such times, in
such manner and for such consideration as set forth below.
SECTION 5.02. Optional Redemption of Warrants. The Holder may,
by notice to WLR, demand a determination of the Redemption Price (a
"Determination Notice") for purposes of this Section 5.02: (a) at any
time and from time to time on or after the repayment in full of all
principal of and premium and interest on the Notes (as defined in the
Credit Agreement) and the Insurance Company Notes and the termination
of the Commitment under the Credit Agreement and (b) on or within 30
days after the date on which WLR shall have delivered a Refinancing
Notice (any such redemption pursuant to this clause (b), a
"Refinancing Redemption"). Within 30 days (or, in the case of a
Refinancing Redemption, five Business Days) after the receipt of any
Determination Notice from the Holder, WLR shall give to the Holder
notice of the Redemption Price, including a reasonably detailed
description of the method of calculation thereof, determined as of the
day preceding such notice of the Redemption Price. At any time within
ten Business Days after receipt of notice of the Redemption Price and
the resolution of any dispute with respect thereto pursuant to Section
3.03 hereof, WLR may redeem this Warrant, in whole or in part, after
giving effect to any giveback of this Warrant pursuant to Section 5.03
hereof that has occurred or that would result from the consummation of
the refinancing described in any Refinancing Notice on the proposed
closing date set forth in such Refinancing Notice, at the Redemption
Price by notice to the Holder, payable on the third Business Day after
notice of such exercise (or, in the case of a Refinancing Redemption,
on the closing date of such refinancing) (any such date, the
"Redemption Due Date") in immediately available funds to the Holder
upon surrender of this Warrant at the Warrant Agency or, if requested
by the Holder, by wire transfer to any account in the United States of
America specified by such Holder by notice to WLR. Thereupon, the
right to purchase shares of Common Storant as to which WLR has
exercised its right of redemption shall terminate, and this Warrant
shall represent the right of the Holder to receive the full Redemption
Price from WLR in accordance with this Section. WLR's right to redeem
this Warrant pursuant to this Section 5.02 shall be referred to
hereinafter as the WLR's "Optional Redemption Right."
SECTION 5.03. Warrant Giveback.
In the event that WLR repays in full all principal of and premium
and interest on the Term Loan Notes (as defined in the Credit
Agreement) and the Insurance Company Notes, on or before any of the
dates set forth below, then the number of Warrant Shares for which
this Warrant is exercisable shall be automatically reduced, without
any other action by WLR or the Holder and without any change in the
Exercise Price, by the number of Warrant Shares equal to the product
of (i) the number of Warrant Shares for which this Warrant is then
exercisable multiplied by (ii) the percentage set forth opposite the
applicable date below:
Date Percentage
August 31, 1998 70%
January 31, 1999 50%
May 31, 1999 25%
SECTION 5.04. Cancellation of Warrants. All warrants purchased,
redeemed or otherwise acquired by WLR shall thereupon be canceled and
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retired. The Warrant Agency shall cancel any Warrant surrendered for
exercise or registration of transfer or exchange and deliver such
canceled Warrants to WLR.
ARTICLE 6
DEFINITIONS
The following terms, as used in this Warrant, have the following
meanings:
"Affiliate" means, with respect to any Person, any of (i) a
director or executive officer of such Person, (ii) a spouse, parent,
sibling or descendant of such Person (or a spouse, parent, sibling or
descendant of any director or executive officer of such Person) and
(iii) any other Person that, directly or indirectly, through one or
more intermediaries controls, or is controlled by or is under common
control with such Person. For the purpose of this definition,
"control" (including the terms "controlling", "controlled by" and
"under common control with"), as used with respect to any Person,
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 the
power to direct or cause the direction of the management or policies
of such Person, whether through the ownership of voting securities or
by contract or agency or otherwise.
"Appraisal Notice" has the meaning set forth in Section 3.03(a).
"Appraiser" has the meaning set forth in Section 3.03(b).
"Appraiser Determination" has the meaning set forth in Section
3.03(b).
"BHC Act" means the Bank Holding Company Act of 1956, as amended.
"Business Day" means (a) if Common Stock is listed or admitted to
trading on a national securities exchange or quoted on NASDAQ, a day
on which the principal national securities exchange on which the
Common Stock is listed or admitted to trading or NASDAQ is open for
business or (b) if Common Stock is not so listed or admitted to
trading or quoted, a day on which the New York Stock Exchange is open
for business.
"Capital Reorganization" has the meaning set forth in Section
4.05.
"Closing Price" on any day means (a) if Common Stock is listed or
admitted for trading on a national securities exchange or quoted on
NASDAQ, the reported last sales price or, if no such reported sale
occurs on such day, the reported last sales price on the most recent
day on which any reported sale has occurred, in each case on the
principal national securities exchange on which Common Stock is listed
or admitted to trading or on NASDAQ, or (b) if Common Stock is not
listed or admitted to trading on any national securities exchange or
quoted on NASDAQ, the average of the closing bid and asked prices in
the over-the-counter market on such day as reported by the NASD or any
comparable system or, if not so reported, as reported by any New York
Stock Exchange member firm selected by WLR for such purpose.
"Common Stock" means the Class A Common Stock, no par value, of
WLR.
"Common Stock Distribution" has the meaning set forth in Section
4.03(a).
"Common Stock Reorganization" has the meaning set forth in
Section 4.02.
"Convertible Securities" has the meaning set forth in Section
4.03(b).
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"Credit Agreement" has the meaning set forth in the second
paragraph of this Warrant.
"Determination Notice" has the meaning set forth in Section 5.02.
"Dispute" means any dispute, claim or controversy arising out of,
connected with or relating to this Warrant.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and any successor Federal statute, and the rules and
regulations of the Securities and Exchange Commission (or its
successor) thereunder, all as the same shall be in effect at the time.
"Exercise Price" means $.01 per Warrant Share.
"Fair Market Value" as at any date of determination means the
fair market value of the business or property or services in question
as of such date, as determined in good faith by the Board of Directors
of WLR or otherwise in accordance with Section 3.03 hereof.
Notwithstanding the foregoing, if, at any date of determination of the
Fair Market Value of WLR, the Common Stock shall then be publicly
traded, the Fair Market Value of WLR on such date shall be the Market
Price on such date multiplied by the number of shares of Common Stock
then outstanding on a Fully Diluted Basis. Determination of the Fair
Market Value of WLR per share of Common Stock, shall be made without
giving effect to any discount for (i) minority interest or (ii) any
lack of liquidity of the Common Stock due to the fact that there may
be no or a limited public market for the Common Stock.
"Fully Diluted Basis" means, with respect to any determination or
calculation, that such determination or calculation is performed on a
fully diluted basis determined in accordance with generally accepted
accounting principles as in effect from time to time.
"Holder" has the meaning set forth in the first paragraph of this
Warrant.
"Insurance Company Notes" mean the notes issued by WLR pursuant
to the Note Purchase Agreement.
"Market Price" as at any date of determination means the average
of the daily Closing Prices of a share of Common Stock for the shorter
of (i) the 20 consecutive Business Days ending on the most recent
Business Day prior to the Time of Determination and (ii) the period
commencing on the date next succeeding the first public announcement
of the issuance, sale, distribution, grant or exercise in question
through such most recent Business Day prior to the Time of
Determination. "Time of Determination" means the time and date of the
earliest of (x) the determination of the stockholdders to exercise
their rights set forth in Section 5.02 hereof and (z) the commencement
of "ex-dividend" trading in respect thereof.
"NASD" means The National Association of Securities Dealers, Inc.
"NASDAQ" means The NASDAQ Stock Market.
"Note Purchase Agreement" has the meaning set forth in the second
paragraph of this Warrant.
"Optional Redemption Right" has the meaning set forth in Section
5.02.
"Options" has the meaning set forth in Section 4.03(b).
"Person" means any natural person, corporation, limited
partnership, general partnership, joint stock company, joint venture,
association, company, trust, bank, trust company, land trust, business
trust or other organization, whether or not a legal entity, and any
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governmental agency or political subdivision thereof.
"Purchasers" has the meaning set forth in the second paragraph of
this Warrant.
"Redemption Due Date" has the meaning set forth in Section 5.02
hereof.
"Redemption Price" means, as of any date of determination, a
price equal to the excess of (a) the Fair Market Value per share of
Common Stock of WLR over (b) the Exercise Price then in effect.
"Refinancing Notice" has the meaning set forth in Section 5.05
hereof.
"Regulation Y Holder" means the Holder or a holder of Warrant
Shares, if such Holder or holder of Warrant Shares is a bank holding
company within the meaning of the BHC Act or a subsidiary thereof
subject to Regulation Y under the BHC Act.
"Required Interest" has the meaning set forth in Section 3.03(a).
"Securities Act" means the Securities Act of 1933, as amended,
and rules and regulations of the Securities Exchange Commission
thereunder.
"Special Dividend" has the meaning set forth in Section 4.04.
"Subsidiary" of any Person means any corporation, partnership,
joint venture, association or other business entity of which more than
50% of the total voting power of shares of stock or other interests
therein entitled to vote in the election of members of the board of
directors, partnership committee, board of managers or trustees or
other managerial body thereof is at the time owned or controlled,
directly or indirectly, by such Person or one or more of the other
Subsidiaries of such Person or a combination thereof. Unless
otherwise specified, "Subsidiary" means a Subsidiary of WLR and
"Subsidiaries" means all Subsidiaries of WLR.
"Warrant Agency" has the meaning set forth in section 2.01.
"Warrant Shares" means the shares of Common Stock issuable upon
the exercise of the Warrants.
"Warrantholder" means a holder of a Warrant.
"Warrantholders Rights Agreement" has the meaning set forth in
Section 3.01.
"Warrants" has the meaning set forth in the second paragraph of
this Warrant.
"WLR" has the meaning set forth in the first paragraph of this
Warrant.
"WLR Determination" has the meaning set forth in Section 3.02(a).
All references herein to "days" shall mean calendar days unless
otherwise specified.
ARTICLE 7
MISCELLANEOUS
SECTION 7.01. Notices.
(a) Method of Communication. Except as otherwise provided in
this Warrant, all notices and communications hereunder shall be in
writing, or by telephone subsequently confirmed in writing. Any
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<PAGE>
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.
(b) Addresses for Notices. Notices to any party shall be sent
to it at the following addresses, or any other address as to which all
the other parties are notified in writing.
If to WLR: WLR Foods, Inc.
800 Co-op Drive
Timberville, Virginia 22853
Attention: Robert Ritter, CFO
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: Robert Ritter, CFO
If to the Holder:
(FIELD)Address
SECTION 7.02. Expenses. WLR will pay all out-of-pocket expenses
of the Holder in connection with: (i) the preparation, execution and
delivery of this Warrant, including all out-of-pocket due diligence
expenses, taxes and reasonable fees and disbursements of counsel for
the Holder; and (ii) the preparation, execution and delivery of any
waiver, amendment or consent by the Holder relating to this Warrant,
including reasonable fees and disbursements of counsel for the Holder
and taxes imposed in connection therewith.
SECTION 7.03. Governing Law. This Warrant shall be governed by,
construed and enforced in accordance with the laws of the State of New
York, without reference to the conflicts or choice of law principles
thereof.
SECTION 7.04. Consent to Jurisdiction. WLR hereby irrevocably
consents to the personal jurisdiction of the United States District
Court for the Southern District of New York and the Supreme Court of
the State of New York, County of New York in any action, claim or
other proceeding arising out of any dispute in connection with this
Warrant, any rights or obligations hereunder, or the performance of
such rights and obligations. WLR hereby irrevocably consents to the
service of a summons and complaint and other process in any action,
claim or proceeding brought by the Holder in connection with this
Warrant, any rights or obligations hereunder, or the performance of
such rights and obligations, on behalf of itself or its property, in
the manner specified in Section 7.01. Nothing in this Section 7.04
shall affect the right of Holder to serve legal process in any other
manner permitted by Applicable Law (as defined in the Credit
Agreement) or affect the right of the Holder to bring any action or
proceeding against WLR or its properties in the courts of any other
jurisdictions.
SECTION 7.05. Waiver of Jury Trial; Waiver of Punitive Damages.
(a) WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, THE HOLDER AND WLR HEREBY IRREVOCABLY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY ACTION, CLAIM OR OTHER
PROCEEDING ARISING OUT OF, OR ANY DISPUTE IN CONNECTION WITH, THIS
WARRANT, ANY RIGHTS OR OBLIGATIONS HEREUNDER, OR THE PERFORMANCE OF
SUCH RIGHTS AND OBLIGATIONS.
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(b) Waiver of Punitive Damages. The Holder and WLR agree that
they shall not have a remedy of punitive or exemplary damages against
the other in any Dispute and hereby waive any right or claim to
punitive or exemplary damages they have now or which may arise in the
future in connection with any Dispute whether the Dispute is resolved
by arbitration or judicially.
SECTION 7.06. Injunctive Relief. WLR recognizes that, in the
event WLR fails to perform, observe or discharge any of its
obligations or liabilities under this Warrant, any remedy of law may
prove to be inadequate relief to the Holder. Therefore, WLR agrees
that the Holder, at the Holder's option, shall be entitled to
temporary and permanent injunctive relief in any such case without the
necessity of proving actual damages.
SECTION 7.07 Successors and Assigns. This Warrant shall be
binding upon and inure to the benefit of WLR and the Holder, and their
respective successors and assigns, except that WLR shall not assign or
transfer any of its rights or obligations under this Warrant without
the prior written consent of the Holder.
SECTION 7.08. Amendments, Waivers and Consents; Renewal. Any
term, covenant, agreement or condition of this Warrant may be amended
or waived by the Holder, and any consent given by the Holder, if, but
only if, such amendment, waiver or consent is in writing signed by the
Holder and, in the case of an amendment, signed by WLR.
SECTION 7.09. Performance of Duties. WLR's obligations under
this Warrant shall be performed by WLR at its sole cost and expense,
except as otherwise expressly provided herein.
SECTION 7.10. Indemnification. WLR agrees to reimburse the
Holder for all reasonable costs and expenses, including all counsel or
other expert or consultant fees and disbursements incurred, and to
indemnify and hold the Holder harmless from and against all losses
suffered by the Holder in connection with (i) the exercise by the
Holder of any right or remedy granted to it under this Warrant and
(ii) any claim, and the prosecution or defense thereof, arising out of
or in any way connected with this Warrant; provided that WLR shall not
be obligated to reimburse the Holder for costs and expenses, or
indemnify the Holder for any loss, resulting from the gross negligence
or willful misconduct of the Holder.
SECTION 7.11. Survival of Indemnities. Notwithstanding any
exercise or expiration of this Warrant, the indemnities to which the
Holder is entitled under the provisions of this Article 7 and any
other provision of this Warrant shall continue in full force and
effect and shall protect the Holder against events arising after such
termination as well as before.
SECTION 7.12. Titles and Captions. Titles and captions of
Articles, Sections and subsections in this Warrant are for convenience
only, and neither limit nor amplify the provisions of this Warrant.
SECTION 7.13. Severability of Provisions. Any provision of this
Warrant 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.
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IN WITNESS WHEREOF, WLR has caused this Warrant to be executed by
its duly authorized officers, all as of the day and year first written
above.
WLR FOODS, INC.
By:____________
Name:__________
Title:_________
[CORPORATE SEAL]
Attest:__________
Name:____________
Title:___________
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Exhibit 2.7
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (as amended, restated, modified or
otherwise supplemented, the "Agreement"), dated as of February 25,
1998, is made and entered into by and among WLR FOODS, INC., CASSCO
ICE & COLD STORAGE, INC., WAMPLER FOODS, INC., WAMPLER SUPPLY COMPANY,
INC. AND VALLEY RAIL SERVICE, INC. (collectively, the "Grantors;"
individually, a "Grantor"), and FIRST UNION NATIONAL BANK, successor
to First Union National Bank of Virginia, a national banking
association, as Collateral Agent (the "Collateral Agent"), for the
ratable benefit of itself and the financial institutions
(collectively, the "Secured Parties") as are, or may from time to time
become, parties to one or more of the Credit Agreements and the
Intercreditor Agreement (as defined below).
BACKGROUND STATEMENT
A. Pursuant to the terms of the Revolving Credit Agreement and
the Term Loan Agreement each dated as of February 25, 1998 (as
amended, restated, modified or otherwise supplemented, the "Bank
Credit Agreements"), by and among the Grantors, the Bank Lenders, and
and the Collateral Agent, the Bank Lenders have agreed to extend
and/or restructure certain loans to the Grantors as more particularly
described therein.
B. Pursuant to the terms of a Note Purchase Agreement dated as
of February 25, 1998 (as amended, restated, modified or otherwise
supplemented, the "Note Agreement," and, together with the Bank Credit
Agreements, the "Credit Agreements") by and among WLR, as borrower,
and the remaining Grantors, as guarantors, the Note Lenders (as
defined in the Intercreditor Agreement) have agreed to extend and/or
restructure certain credit accommodations to the Grantors as more
particularly described therein.
C. As of the date hereof, the Secured Parties and the Grantors
have entered into that certain Collateral Agency and Intercreditor
Agreement (the "Intercreditor Agreement") to, among other things, set
forth the relative rights of the Secured Parties with respect to the
Collateral.
D. The Grantors comprise one integrated financial enterprise,
and any loans made to any of them individually will inure, directly or
indirectly, to the benefit of all of them.
E. To induce the Secured Parties and the Collateral Agent to
provide and to continue to provide financial accommodations under the
Credit Agreements, and as a condition to the making of future loans
thereunder, the Secured Parties require that the Grantors each grant a
continuing security interest in and to the "Collateral" (as
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hereinafter defined) to secure the "Secured Obligations" (as
hereinafter defined).
NOW, THEREFORE, in consideration of the foregoing Background
Statement, and other good and valuable consideration, the receipt and
legal sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. Definitions. Terms defined in the Intercreditor
Agreement or the Credit Agreements and not otherwise defined herein,
when used in this Agreement including its preamble and recitals, shall
have the respective meanings provided for in the Intercreditor
Agreement or if not defined in the Intercreditor Agreement, the Credit
Agreements. The following additional terms, when used in this
Agreement, shall have the following meanings:
"Account Debtor" means any Person who is or may become obligated
to any Grantor under, with respect to, or on account of, an Account.
"Accounts" means all "accounts" (as defined in the UCC) now or
hereafter owned or acquired by any Grantor or in which any Grantor now
or hereafter has or acquires any right or interest, and, in any event,
shall also include, without limitation, all accounts receivable,
contract rights, notes, drafts and other obligations or indebtedness
owing to any Grantor arising from the sale or lease of goods or other
property by it or the performance of services by it, or to be
performed, and all of any Grantor's rights to any goods, services or
other property represented by any of the foregoing and all monies due
to or to become due to any Grantor under all contracts for the sale,
lease, consignment or exchange of goods or other property or the
performance of services by it (whether or not yet earned by
performance on the part of such Grantor), in each case whether now in
existence or hereafter arising or acquired, including, without
limitation, the right to receive the proceeds of such contracts and
all collateral security and guarantees of any kind given by any Person
with respect to any of the foregoing.
"Affiliate" means any direct and indirect affiliates and
subsidiaries of the Collateral Agent or any of the Secured Parties.
"Approved Contract Growers" shall have the meaning ascribed in
the Credit Agreements.
"Collateral" means the collective reference to:
(a) Accounts;
(b) Inventory;
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(c) Documents;
(d) Equipment;
(e) Farm Products;
(f) Fixtures;
(g) Instruments;
(h) Intellectual Property;
(i) General Intangibles;
(j) Vehicles;
(k) Rights Against Growers;
(l) Monies and property of any kind of any Grantor in the
possession or under the control of the Collateral Agent or any Secured
Party;
(m) All books and records (including, without limitation,
customer lists, credit files, computer programs, printouts and other
computer materials and records) of any Grantor pertaining to any of
the Collateral;
(n) Investment Property;
(o) All other goods and personal property of any Grantor,
whether tangible or intangible; and
(p) All products and Proceeds of all or any of the
Collateral described in clauses (a) through (o) hereof.
"Documents" means all "documents" (as defined in the UCC) or
other receipts covering, evidencing or representing goods or services,
now or hereafter owned or acquired by any Grantor or in which any
Grantor now or hereafter has or acquires any right or interest.
"Equipment" means all "equipment" (as defined in the UCC) of any
Grantor, wherever located, and all other machinery, equipment and
goods (other than Inventory) of any Grantor used or bought for use
primarily in the business of such Grantor, including all accessions,
additions, attachments, improvements, substitutions and replacements
thereto and therefor, in all such cases whether now owned or hereafter
acquired by any Grantor or in which any Grantor now has or hereafter
acquires any right or interest.
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"Event of Default" shall have the meaning set forth in the
Intercreditor Agreement.
"Farm Products" shall mean all crops or seed of any Grantor now
or hereafter growing or grown and all other personal property of any
Grantor used or for use in farming or related business operations
including, without limitation, native grass, grain, fertilizer, hay,
silage, livestock (including, without limitation, any and all turkeys,
chickens, and other poultry or farm animals as well as the offspring
of the same), and supplies now or hereafter owned by any Grantor or
now or hereafter purchased by or for the benefit of any Grantor. Farm
Products shall also include, but shall not be limited to, all now
owned or hereafter acquired feed additives, feed supplements,
veterinary supplies, and related products of any Grantor whether
purchased by or for the benefit of such Grantor, and any other "farm
products" as defined in the UCC.
"Financing Statements" means the Uniform Commercial Code Form
UCC-1 Financing Statements executed by each Grantor with respect to
the Collateral and to be filed in the jurisdictions set forth in the
Perfection Certificate or otherwise in the discretion of the
Collateral Agent.
"Fixtures" means all "fixtures" (as defined in the UCC) of any
Grantor, whether now owned or hereafter acquired, or in which any
Grantor now has or hereafter acquires any right or interest.
"General Intangibles" means all "general intangibles" (as defined
in the UCC) now or hereafter owned or acquired by any Grantor or in
which any Grantor now or hereafter has or acquires any right or
interest, and, in any event, shall mean and include, without
limitation, all rights to indemnification, and all rights, title and
interest which any Grantor may now or hereafter have in or under all
contracts (excluding contracts described in the definition of
Accounts), agreements, permits, licenses (which contracts, agreements,
permits and licenses may be pledged pursuant to the terms thereof and
Applicable Law), causes of action, franchises, tax refund claims,
insurance policies, customer lists, Intellectual Property, license
royalties, goodwill trade secrets, data bases, business records and
all other intangible property of every kind and nature.
"Instruments" means all "instruments," "chattel paper," or
"letters of credit" (each as defined in the UCC), including, without
limitation, instruments, chattel paper and letters of credit
evidencing, representing, arising from or existing in respect of,
relating to, securing or otherwise supporting the payment of, any of
the Accounts, including (but not limited to) promissory notes, drafts,
bills of exchange and trade acceptances, now or hereafter owned or
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acquired by any Grantor or in which any Grantor now or hereafter has
or acquires any right or interest.
"Intellectual Property" means, collectively, (a) all systems
software and applications software, including, but not limited to,
screen displays and formats, program structures, sequence and
organization, all documentation for such software, including, but not
limited to, user manuals, flowcharts, programmer's notes, functional
specifications, and operations manuals, all formulas, processes, ideas
and know-how embodied in any of the foregoing, and all program
materials, flowcharts, notes and outlines created in connection with
any of the foregoing, whether or not patentable or copyrightable, (b)
concepts, discoveries, improvements and ideas, (c) any useful
information relating to the items described in clause (a) or (b),
including know-how, technology, engineering drawings, reports, design
information, trade secrets, practices, laboratory notebooks,
specifications, test procedures, maintenance manuals, research,
development, manufacturing, marketing, merchandising, selling,
purchasing and accounting, (d) trademark applications, trademarks
(whether registered, unregistered or for which any application to
register has been filed), service mark applications, service marks
(whether registered, unregistered or for which any application to
register has been filed) and trade names, including, without
limitation, all renewals thereof and all proceeds thereof (such as, by
way of example, license royalties and proceeds of infringement suits),
the right to sue for past, present and future infringements, all
rights owned by any Grantor corresponding thereto throughout the world
(all of the foregoing are collectively called the "Marks"), together
with the goodwill of the business symbolized by each of the Marks and
the registrations (if any) thereof and (e) all licenses to use any of
the items described in the foregoing clauses (a), (b), (c) and (d) or
any other similar items of any Grantor necessary for the conduct of
its business.
"Inventory" means all "inventory" (as defined in the UCC) now or
hereafter owned or acquired by any Grantor or in which any Grantor now
or hereafter has or acquires any right or interest, wherever located
and, in any event, shall mean and include, without limitation, all raw
materials, inventory and other materials and supplies, work-in-
process, finished goods, all accessions thereto, documents therefor
and any products made or processed therefrom, all substances, if any,
commingled therewith or added thereto (including, without limitation,
any of the foregoing in which the Grantor has an interest as a
consignor).
"Investment Property" means all "Investment Property" (as defined
in the UCC) now or hereafter owned or acquired by any Grantor or in
which any Grantor now or hereafter has or acquires any right or
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interest, wherever located and, in any event, shall mean and include,
any and all of the following:
(a) securities, whether certificated or uncertificated;
(b) security entitlements;
(c) securities accounts;
(d) commodity contracts; and
(e) commodity accounts.
"Perfection Certificate" means a certificate dated as of even
date herewith and attached hereto as Exhibit "A", setting forth the
corporate names, chief executive office or principal place of business
in each state and other current locations of Collateral of each
Grantor and such other information as the Collateral Agent deems
pertinent to the perfection of security interests, completed and
supplemented with the schedules and attachments contemplated thereby
to the satisfaction of the Collateral Agent, and duly certified by the
chief executive or chief financial officer of each Grantor so
authorized to act.
"Permitted Liens" shall have the meaning ascribed in the Credit
Agreements.
"Proceeds" means all proceeds of, and all other profits, rentals
or receipts, in whatever form, arising from the collection, sale,
lease, exchange, assignment, licensing or other disposition of, or
realization upon, the Collateral, including, without limitation, all
claims of any Grantor against third parties for loss of, damage to or
destruction of, or for proceeds payable under, or unearned premiums
with respect to, policies of insurance in respect of, any Collateral,
and any condemnation or requisition payments with respect to any
Collateral and all Collateral acquired with the cash proceeds of any
other Collateral.
"Rights Against Growers" means all claims and rights of the
Grantor, whether now existing or hereafter arising, under any contract
or agreement with any other person, firm, corporation or other entity
providing for the care and maintenance of any live poultry (including
chickens and/or turkeys), other livestock and eggs now or at any time
hereafter owned by the Grantor, and all claims or rights now existing
or hereafter arising, against other persons, firms, corporations or
other entities in connection with the care, custody and maintenance of
any live poultry (including chickens and/or turkeys), other livestock
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and eggs now owned or hereafter acquired by the Grantor, whether such
rights and claims are based upon contract, tort or otherwise.
"Schedule of Inventory" means a schedule of Inventory based upon
each Grantor's most recent physical inventory and its perpetual
inventory records, showing each Grantor's cost of all such Inventory
with a monthly reconciliation to the general ledger inventory account
of each Grantor, as may be requested by the Collateral Agent pursuant
to Section 4(c)(i) hereof.
"Schedule of Vehicles" means a schedule of Vehicles as may be
requested by the Collateral Agent pursuant to Section 4(e) hereof.
"Secured Obligations" means the "Secured Obligations" as defined
under the Intercreditor Agreement and any renewals or extensions of
any of the Secured Obligations.
"Security Interests" means the security interests granted
pursuant to Section 2, as well as all other security interests created
or assigned as additional security for the Secured Obligations
pursuant to the provisions of this Agreement.
"Transaction Documents" shall have the meaning set forth in the
Intercreditor Agreement.
"UCC" means the Uniform Commercial Code as in effect in the State
of New York; provided, that if by reason of mandatory provisions of
law, the perfection or the effect of perfection or non-perfection of
the Security Interests in any Collateral is governed by the Uniform
Commercial Code as in effect in a jurisdiction other than New York.
"UCC" means the Uniform Commercial Code as in effect in such other
jurisdiction for purposes of the provisions hereof relating to such
perfection or effect of perfection or non-perfection.
"Vehicles" means all cars, trucks, trailers, construction and
earth moving equipment of any Grantor and other vehicles covered by a
certificate of title law of any state, and all tires, accessions,
additions, attachments, substitutions, replacements and other
appurtenances to any of the foregoing.
SECTION 2. The Security Interests.
(a) To secure the payment and performance of all of the Secured
Obligations, each Grantor hereby grants to the Collateral Agent, for
the ratable benefit of the Collateral Agent and the Secured Parties, a
continuing security interest in and to all of such Grantor's estate,
right, title and interest in and to all Collateral whether now or
hereafter owned or acquired by such Grantor or in which such Grantor
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now has or hereafter has or acquires any rights, and wherever located,
and in all cases, to the extent that the grant of a security interest
therein is permitted pursuant to Applicable Law.
(b) The Security Interests are granted as security only and
shall not subject the Collateral Agent or any Secured Party to, or
transfer to the Collateral Agent or any Secured Party, or in any way
affect or modify, any obligation or liability of any Grantor with
respect to any of the Collateral or any transaction in connection
therewith.
SECTION 3. Representations and Warranties. Each Grantor
represents and warrants as follows:
(a) Such Grantor has the corporate power and authority and the
legal right to execute and deliver, to perform its obligations under,
and to grant the Security Interests in the Collateral pursuant to,
this Agreement and has taken all necessary corporate action to
authorize its execution, delivery and performance of, and grant of the
Security Interests in the Collateral pursuant to, this Agreement.
(b) This Agreement constitutes a legal, valid and binding
obligation of such Grantor enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally.
(c) The execution, delivery and performance of this Agreement
will not violate any provision of any Applicable Law or Material
Contract of such Grantor and will not result in the creation or
imposition of any Lien on any of the properties or revenues of such
Grantor pursuant to any Applicable Law or Material Contract of such
Grantor, except as contemplated hereby.
(d) No consent or authorization of, filing with, or other act by
or in respect of, any arbitrator or Governmental Authority and no
consent of any other Person (including, without limitation, any
stockholder or creditor of such Grantor), is required in connection
with the execution, delivery, performance, validity or enforceability
of this Agreement, except for the filing of Financing Statements and,
except to the extent applicable to any Collateral, filings with the
United States Copyright Office or the United States Patent and
Trademark Office, filings with state transportation authorities with
respect to liens on Vehicles, and any filing or action in compliance
with the Federal Assignment of Claims Act.
(e) Except as otherwise disclosed in or permitted under the
Credit Agreements, no litigation, investigation or proceeding of or
before any arbitrator or Governmental Authority is pending or, to the
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knowledge of such Grantor after due inquiry, threatened by or against
such Grantor or against any of its properties or revenues with respect
to this Agreement or any of the transactions contemplated hereby.
(f) Except for Permitted Liens, such Grantor has good and
marketable title to all of its respective Collateral, free and clear
of any Liens other than in favor of the Collateral Agent and the
Secured Parties as conveyed herein.
(g) Such Grantor has not performed or failed to perform any acts
that would prevent or hinder the Collateral Agent from enforcing any
of the terms of this Agreement. Other than financing statements or
other similar or equivalent documents or instruments with respect to
Liens in favor of the Collateral Agent or the Secured Parties as
provided herein, no financing statement, mortgage, security agreement
or similar or equivalent document or instrument covering all or any
part of the Collateral of such Grantor is on file or of record in any
jurisdiction except as disclosed on the schedule of liens attached
hereto as Schedule 3(g). No Collateral of such Grantor is in the
possession of any Person (other than such Grantor) asserting any claim
thereto or security interest therein, except that the Collateral Agent
or its designee may have possession of the Collateral as contemplated
hereby and a bailee may have possession of the Collateral as
contemplated by, and so long as, the Grantor has complied with Section
4(a)(iv) and 4(a)(v) hereof.
(h) All of the information set forth in the Perfection
Certificate with respect to such Grantor is true and correct as of the
date hereof.
(i) Such Grantor has, contemporaneously herewith, delivered to
the Collateral Agent possession of all originals of all negotiable
instruments, documents and chattel paper constituting Collateral with
an aggregate face amount in excess of $2,000,000, on an individual
basis currently owned or held by such Grantor, if any (duly endorsed
in blank, if requested by the Collateral Agent).
(j) With respect to any Inventory of such Grantor: (i) except
for ice merchandisers owned by Cassco located in the states listed on
schedule 3(j) attached hereto, all Inventory is, and shall be at all
times, located at places of business listed in the Perfection
Certificate or as to which such Grantor has complied with the
provisions of Section 4(a)(i) hereof, except Inventory in transit from
one such location to another such location; (ii) except for Permitted
Liens, no Inventory is, nor shall at any time or times be, subject to
any Lien whatsoever other than in favor of the Collateral Agent and
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the Secured Parties as conveyed herein; (iii) except to the extent
live inventory may be held with one or more Approved Contract Growers,
no Inventory in aggregate value exceeding $100,000 at any time is, nor
shall at any time or times be, kept, stored or maintained with a
bailee, warehouseman, carrier or similar party (other than a carrier
delivering Inventory to a purchaser in the ordinary course of such
Grantor's business) unless the Collateral Agent shall have received
prior written notice of such storage and such Grantor has complied
with the provisions of Section 4(a)(iv) hereof; (iv) no Inventory is,
nor shall at any time or times be, in transit for more than 90 days;
(v) all Inventory (except for Inventory otherwise described in
subsection (iii) above) shall at any time or times be delivered to a
location owned or leased by any Grantors as set forth in the
Perfection Certificate where the Collateral Agent has previously filed
Financing Statements against such Grantor; and (vi) no Inventory in
aggregate value exceeding $100,000 at any time is, nor shall at any
time or times be, kept, stored or maintained with a consignee unless
the Collateral Agent shall have received prior written notice of such
consignment and such Grantor has complied with the provisions of
Section 4(a)(v) hereof.
(k) The Financing Statements executed by such Grantor are in
appropriate form and when filed in the appropriate filing offices, the
Security Interests will constitute valid and perfected security
interests in the Collateral of such Grantor, prior to all other Liens
(except for Permitted Liens) and rights of others therein (to the
extent that a security interest therein may be perfected by filing
pursuant to the UCC) and all filings and other actions necessary or
desirable to perfect and protect such Security Interests have been
duly taken.
(l) The Inventory, Fixtures, Equipment and Vehicles of such
Grantor are insured in accordance with the requirements of Section
4(a)(vi) hereof and of the Bank Credit Agreements.
(m) Wampler Foods, Inc. is the only Grantor which owns Farm
Products.
SECTION 4. Further Assurances; Covenants.
(a) General.
(i) Each Grantor agrees not to change the location of its
chief executive office or principal place of business in any state
unless it shall have given the Collateral Agent thirty (30) days prior
written notice thereof, executed and delivered to the Collateral Agent
all financing statements and financing statement amendments which the
Collateral Agent may request in connection therewith and, if requested
by the Collateral Agent, delivered an opinion of counsel with respect
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thereto in accordance with Section 4(a)(viii) hereof. Each Grantor
agrees not to change the locations where it keeps or holds any
Collateral or any records relating thereto from the applicable
location described in the Perfection Certificate unless such Grantor
shall have given the Collateral Agent thirty (30) days prior written
notice of such change of location, executed and delivered to the
Collateral Agent all financing statements and financing statement
amendments which the Collateral Agent may request in connection
therewith and, if requested by the Collateral Agent, delivered an
opinion of counsel with respect thereto in accordance with Section
4(a)(viii) hereof; provided, however, that such Grantor may keep
Inventory at, or in transit to, any location described in the
Perfection Certificate. Each Grantor agrees not to, in any event,
change the location of any Collateral if such change would cause the
Security Interests in such Collateral to lapse or cease to be
perfected.
(ii) Each Grantor agrees not to change its name, identity or
corporate or partnership structure in any manner unless it shall have
given the Collateral Agent thirty (30) days prior written notice
thereof, executed and delivered to the Collateral Agent all financing
statements and financing statement amendments which the Collateral
Agent may request in connection therewith and, if requested by the
Collateral Agent, delivered an opinion of counsel with respect thereto
in accordance with Section 4(a)(viii) hereof.
(iii) Each Grantor will, from time to time, at its expense,
execute, deliver, file and record any statement, assignment,
instrument, document, agreement or other paper and take any other
action that from time to time may be necessary, or that the Collateral
Agent may reasonably request, in order to create, preserve, upgrade in
rank (to the extent required hereby), perfect, confirm or validate the
Security Interests or to enable the Collateral Agent and the Secured
Parties to obtain the full benefits of this Agreement, or to enable
the Collateral Agent to exercise and enforce any of its rights, powers
and remedies hereunder with respect to any of the Collateral. Prior
to the irrevocable payment in full of the Secured Obligations, each
Grantor hereby authorizes the Collateral Agent to execute and file
financing statements, financing statement amendments or continuation
statements without such Grantor's signature appearing thereon. Each
Grantor agrees that a photographic, photostatic or other reproduction
of this Agreement or of a financing statement is sufficient as a
financing statement. Each Grantor shall pay the costs of, or
incidental to, any recording or filing of the Financing Statements and
any other financing statements, financing statement amendments or
continuation statements concerning the Collateral.
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(iv) If any Collateral exceeding in value $100,000 in the
aggregate is at any time in the possession or control of any
warehouseman, bailee, or any Grantor's agents or processors, such
Grantor shall notify in writing such warehouseman, bailee, agent or
processor of the Security Interests created hereby, shall use its best
efforts to obtain such warehouseman's, bailee's, agent's or
processor's agreement in writing to hold all such Collateral for the
Collateral Agent's account subject to the Collateral Agent's
instructions, and shall use its best efforts to cause such
warehouseman, bailee, agent or processor to issue and deliver to the
Collateral Agent warehouse receipts, bills of lading or any similar
documents relating to such Collateral in the Collateral Agent's name
and in form and substance reasonably acceptable to the Collateral
Agent; provided that this subparagraph shall not apply to live chicken
or live turkey Inventory located with Approved Contract Growers.
(v) If any Collateral exceeding in value $50,000 in the
aggregate is at any time in the possession or control of any consignee
(other than another Grantor), such Grantor shall notify in writing
such consignee of the Security Interests created hereby, shall use its
best efforts to obtain such consignee's agreement in writing to hold
all such Collateral for the Collateral Agent's account subject to the
Collateral Agent's instructions, and shall use its best efforts to
cause such consignee to issue and deliver to the Collateral Agent
warehouse receipts, bills of lading or any similar documents relating
to such Collateral in the Collateral Agent's name and in form and
substance reasonably acceptable to the Collateral Agent. Further,
such Grantor shall perfect and protect such Grantor's ownership
interests in all Inventory stored with a consignee (other than another
Grantor) against creditors of the consignee by filing and maintaining
financing statements against the consignee reflecting the consignment
arrangement filed in all appropriate filing offices, providing any
written notices required to notify any prior creditors of the
consignee of the consignment arrangement, and taking such other
actions as may be appropriate to perfect and protect the Grantor's
interests in such inventory under Section 2-326, Section 9-114 and
Section 9-408 of the UCC or otherwise. All such financing statements
filed pursuant to this Section 4(a)(v) shall be assigned, on the face
thereof, to the Collateral Agent, for the ratable benefit of itself
and the Secured Parties.
(vi) Each Grantor shall bear the full risk of any loss of
any nature whatsoever with respect to its respective Collateral. At
such Grantor's own cost and expense in amounts and with carriers
reasonably acceptable to the Collateral Agent, each Grantor shall (a)
keep all its insurable properties and properties in which such Grantor
has an interest insured against the hazards of fire, flood, those
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hazards covered by extended coverage insurance and such other hazards,
and for such amounts, as is customary in the case of companies engaged
in businesses similar to such Grantor including, without limitation,
business interruption insurance; (b) maintain a bond in such amounts
as is customary in the case of companies engaged in businesses similar
to such Grantor insuring against larceny, embezzlement or other
criminal misappropriation of insured's officers and employees who may
either singly or jointly with others at any time have access to the
assets or funds of such Grantor either directly or through authority
to draw upon such funds or to direct generally the disposition of such
assets; (c) maintain public and product liability insurance against
claims for personal injury, death or property damage suffered by
others; (d) maintain all such worker's compensation or similar
insurance as may be required under the laws of any state or
jurisdiction in which such Grantor is engaged in business; (e) furnish
the Collateral Agent with (i) copies of all policies (or binders) and
evidence of the maintenance of such policies by the renewal thereof at
least thirty (30) days before any expiration date, and (ii)
appropriate loss payable endorsements in form and substance
satisfactory to the Collateral Agent, naming the Collateral Agent as a
co-insured and loss payee, as applicable, on behalf of itself and the
Secured Parties with respect to all insurance coverage referred to in
clauses (a) and (b) above, and providing (A) that all proceeds
thereunder shall be payable to the Collateral Agent, on behalf of
itself and the Secured Parties, (B) no such insurance shall be
affected by any act or neglect of the insured or owner of the property
described in such policy absent the Collateral Agent receiving sixty
(60) days prior written notice of such act or neglect from such
Grantor's insurance company, and (C) that such policy and loss payable
clauses may not be canceled, amended or terminated unless at least
thirty (30) days' prior written notice is sent to the Collateral
Agent. In the event of any loss thereunder, the carriers named
therein hereby are directed by the Collateral Agent and such Grantor
to make payment for such loss under clauses (a) and (b) above to the
Collateral Agent, on behalf of itself and the Secured Parties, and not
to such Grantor and the Collateral Agent jointly. If any insurance
losses are paid by check, draft or other instrument payable to such
Grantor and the Collateral Agent jointly, the Collateral Agent may
endorse such Grantor's name thereon and do such other things as the
Collateral Agent may deem advisable to reduce the same to cash. At
any time following the occurrence of an Event of Default, the
Collateral Agent is hereby authorized in its good faith discretion to
adjust and compromise claims under insurance coverage referred to in
clauses (a) and (b). Any insurance proceeds shall be applied first to
the payment of all costs and expenses incurred by the Collateral
Agent, if any, in obtaining such proceeds. The balance of the
proceeds, if any, shall be applied (1) if the Collateral Agent
determines in its reasonable judgment that (A) the proceeds together
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with such other sums as the applicable Grantor shall deposit with the
Collateral Agent to pay the costs of restoration, repair or
replacement of the applicable Collateral or such portion thereof which
may have been altered, damaged or destroyed, are sufficient to pay
such costs in full, (B) no Event of Default shall have occurred and be
continuing under the Credit Agreements or any of them, (C) following
completion of such restoration, repair or replacement, the applicable
Collateral will be equal in value and economic viability to its status
prior to such casualty, (D) such restoration, repair or replacement
can be completed on or prior to the maturity of the Secured
Obligations or any portion thereof, and (E) the applicable Grantor
will have sufficient income pending the completion of such
restoration, repair or replacement to pay all debt service due the
Collateral Agent and the Secured Parties with respect to the Secured
Obligations, toward restoring, repairing or replacing the applicable
Collateral or such portion thereof which may have been altered,
damaged or destroyed, on the same or similar conditions and
requirements as are customarily required for construction loans made
by the Collateral Agent, or (2) otherwise, to the repayment of the
Secured Obligations to be applied in the order and manner set forth in
section 7 of the Intercreditor Agreement. Notwithstanding anything to
the contrary contained in this subparagraph (vi), provided that no
Event of Default shall have occurred, the Collateral Agent shall not
restrict the Borrower's use of insurance proceeds related to any
single loss which, in any individual instance does not exceed $250,000
(the "De Minimis Proceeds"), and such De Minimis Proceeds shall be
made available to the Borrower in the same way as other cash
collections upon receipt thereof by the Collateral Agent.
(vii) Each Grantor will, promptly upon request, provide to
the Collateral Agent all information and evidence the Collateral Agent
may reasonably request concerning the Collateral, and in particular
the Accounts, to enable the Collateral Agent to enforce the provisions
of this Agreement.
(viii) If requested by the Collateral Agent or the Required
Secured Parties, prior to each date on which any Grantor proposes to
take any action contemplated by Section 4(a)(i) or Section 4(a)(ii)
hereof, such Grantor shall, at its cost and expense, cause to be
delivered to the Collateral Agent and the Secured Parties an opinion
of counsel, in form and content reasonably satisfactory to the
Collateral Agent.
(ix) Each Grantor will comply with all Applicable Laws
applicable to the Collateral or any part thereof or to the operation
of such Grantor's business, except where such non-compliance could not
reasonably be expected to have a Material Adverse Effect.
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(x) Each Grantor will pay promptly when due all taxes,
assessments and governmental charges or levies imposed upon the
Collateral or in respect of its income or profits therefrom, as well
as all claims of any kind (including, without limitation, claims for
labor, materials and supplies) against or with respect to the
Collateral, except that no such charge need be paid if (A) the
validity thereof is being contested in good faith by appropriate
proceedings, (B) such proceedings have resulted in the stay or
prohibition of the enforcement of any sale, forfeiture or Lien on any
of the Collateral or any interest therein and such stay or prohibition
is currently in effect and such charge is adequately reserved against
on such Grantor's books in accordance with GAAP.
(xi) Except as authorized in the Credit Agreements, no
Grantor shall:
(A) sell, assign (by operation of law or otherwise) or
otherwise dispose of any of the Collateral, except in the ordinary
course of its business; or
(B) create or suffer to exist any Lien or other charge
or encumbrance upon or with respect to any of the Collateral to secure
indebtedness of any Person or entity.
(b) Accounts, Etc.
(i) Each Grantor shall use all reasonable efforts to cause
to be collected from its Account Debtors, as and when due, any and all
amounts owing under or on account of each Account (including, without
limitation, Accounts which are delinquent, such Accounts to be
collected in accordance with lawful collection procedures) and to
apply forthwith upon receipt thereof all such amounts as are so
collected to the outstanding balance of such Account. The costs and
expenses (including, without limitation, attorney's fees), of
collection of Accounts incurred by such Grantor or, if applicable, the
Collateral Agent shall be borne by such Grantor.
(ii) Upon the occurrence and during the continuance of any
Event of Default, the Collateral Agent may notify (and each Grantor
hereby authorizes the Collateral Agent so to notify) each Account
Debtor in respect of any Account that such Account has been assigned
to the Collateral Agent hereunder and that any payments due or to
become due in respect of such Account are to be made directly to the
Collateral Agent or its designee. Each Grantor hereby appoints the
Collateral Agent as its lawful attorney-in-fact to do, at the
Collateral Agent's option and at the Grantor's expense and liability,
all acts and things which the Collateral Agent may deem necessary or
desirable to effectuate its rights under this Security Agreement,
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including without limitation, upon the occurrence of an Event of
Default, to communicate with Account Debtors and other third parties
for the purpose of collecting, protecting, or preserving any Account
or any other Collateral and, in the Grantor's or the Collateral
Agent's name, to receive and endorse any checks or other items to be
presented for payment with respect to any Account.
(iii) Each Grantor will perform and comply in all
material respects with all of its obligations in respect of Accounts
and General Intangibles and the exercise by the Collateral Agent of
any of its rights hereunder shall not release any Grantor from any of
its duties or obligations.
(iv) No Grantor will (A) amend, modify, terminate or waive
any material provision of any agreement giving rise to an Account in
any manner which could reasonably be expected to materially adversely
affect the value of such Account as Collateral, except with respect to
such Accounts with any single Account debtor which, in the aggregate,
do not exceed $25,000 in any Fiscal Year, (B) fail to exercise
promptly and diligently each and every material right which it may
have under each agreement giving rise to an Account (other than any
right of termination), except with respect to such Accounts with any
single Account debtor which, in the aggregate, do not exceed $15,000
in any Fiscal Year, (the Aggregate Amount of the Accounts excepted
from Section 4(b)(iv)(A) and (B) shall not exceed $100,000 in any
Fiscal Year), or (C) fail to deliver to the Collateral Agent a copy of
each material demand, notice or document received by it relating in
any way to any agreement giving rise to an Account with a face amount
in excess of $100,000.
(v) Each Grantor agrees that the Collateral Agent, at any
time and from time to time, may confirm orders or verify any and all
of such Grantor's Accounts in the Collateral Agent's name, or in any
fictitious name used by the Collateral Agent for verifications, or
through any public accountants.
(vi) At such intervals as the Collateral Agent shall
require, the Grantor shall deliver to the Secured Party copies of
purchase orders, invoices, contracts, shipping and delivery receipts
and any other documents or instrument which evidence or give rise to
an Account.
(c) Inventory, Etc.
(i) At the request of the Collateral Agent, each Grantor
shall deliver to the Collateral Agent a Schedule of Inventory. Unless
otherwise indicated in writing by such Grantor or as otherwise
disclosed in the Credit Agreements, each Schedule of Inventory
delivered by any Grantor to the Collateral Agent shall constitute a
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representation with respect to the Inventory listed thereon or
referred to therein that: (A) all such Inventory is located at places
of business listed in the Perfection Certificate or as to which the
applicable Grantor has complied with the provisions of Section 4(a)(i)
hereof or on the premises identified on the then current Schedule of
Inventory or is Inventory in transit from one such location to another
such location and the period of transit is less than 10 days; (B) no
such Inventory is subject to any Lien whatsoever other than in favor
of the Collateral Agent and the Secured Parties as conveyed herein;
(C) except for Inventory located with Approved Contract Growers, no
such Inventory in aggregate value exceeding $50,000 at any time is,
nor shall at any time or times be, kept, stored or maintained with a
bailee, warehouseman, carrier or similar party (other than a carrier
delivering Inventory to a purchaser in the ordinary course of such
Grantor's business) unless the Required Secured Parties have given
their prior written consent and such Grantor has complied with the
provisions of Section 4(a)(iv) hereof.
(ii) If at any time during the term of this Agreement, any
Inventory is placed by any Grantor on consignment with any consignee,
such Grantor shall, prior to the delivery of any such consigned
Inventory: (A) provide the Collateral Agent with all consignment
agreements and other instruments and documentation to be used in
connection with such consignment, all of which agreements, instruments
and documentation shall be reasonably acceptable in form and substance
to the Collateral Agent; (B) prepare, execute and file appropriate
financing statements with respect to any consigned Inventory showing
the consignee as debtor, the Grantor as secured party and the
Collateral Agent as assignee of secured party; (C) prepare, execute
and file appropriate financing statements with respect to any
consigned Inventory showing the Grantor as debtor and the Collateral
Agent as secured party; (D) after all financing statements referred to
in clauses (B) and (C) above shall have been filed, conduct a search
of all filings made against the consignee in all jurisdictions in
which the Inventory to be consigned is to be located while on
consignment, and deliver to the Collateral Agent copies of the results
of all such searches; (E) notify, in writing, all creditors of the
consignee which would be holders of security interests in the
Inventory to be consigned that the Grantor expects to deliver certain
Inventory to the consignee, all of which Inventory shall be described
in such notice by item or type, and (F) if requested by the Collateral
Agent, deliver an opinion of counsel to the effect that all financing
statements and amendments or supplements thereto, continuation
statements and other documents required to be recorded or filed in
order to perfect and protect the Security Interests and priority
thereof against all creditors of and purchasers of the Grantor and
such consignee have been filed in each filing office necessary or
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desirable for such purposes and that all filing fees and taxes, if
any, payable in connection with such filings have been paid in full.
(d) Equipment, Etc. Except as otherwise provided in the Credit
Agreements, each Grantor will maintain each item of Equipment in the
same condition, repair and working order as when acquired, ordinary
wear and tear and immaterial impairments of value and damage by the
elements excepted, and will as quickly as practicable provide all
maintenance, service and repairs necessary for such purpose and will
promptly furnish to the Collateral Agent a statement respecting any
material loss or damage to any of the Equipment, to the extent such
loss or damage constitutes a Material Adverse Change (as defined in
the Credit Agreements) in the Borrower, taken as a whole.
(e) Vehicles. As of the Closing Date, each Grantor shall deliver to
the Collateral Agent with a copy for each Secured Party a Schedule of
Vehicles together with the original certificate of title for each
Vehicle. Each Grantor will maintain each Vehicle in good operating
condition ordinary wear and tear excepted, and will provide all
maintenance, service and repairs necessary for such purpose. As of
the Closing Date, all applications for certificates of title or
ownership indicating the Collateral Agent's first priority Lien on the
Vehicle covered by such certificate, and any other necessary
documentation, shall be filed in each office in each jurisdiction
where necessary to perfect the Collateral Agent's Liens on the
Vehicles. Each certificate of title or ownership relating to each
Vehicle shall be maintained by the applicable Grantor in accordance
with Applicable Law to reflect the ownership interest of such Grantor.
(f) Farm Products. Except as promptly disclosed to the
Collateral Agent from time to time in writing, the Grantors shall
maintain all Farm Products in good and merchantable quality, free from
any diseases and other defects which would render such Farm Products
unmerchantable. The Grantors will keep correct and accurate records
itemizing and describing the kind, type, quality, quantity, and
location of Farm Products, the Grantor's cost therefor, the selling
price thereof, daily withdrawals therefrom, and additions thereto.
(g) Indemnification. Each Grantor agrees to pay, and to save
the Collateral Agent and the Secured Parties, harmless from, any and
all liabilities, costs and expenses (including, without limitation,
legal fees and expenses) (i) with respect to, or resulting from any
and all excise, sales or other taxes which may be payable or
determined to be payable with respect to any of the Collateral, (ii)
with respect to, or resulting from, complying with any Applicable Law
applicable to any of the Collateral or (iii) in connection with any of
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the transactions contemplated by this Agreement (except to the extent
any such liabilities, costs and expenses result from the gross
negligence or willful misconduct of the Collateral Agent or Secured
Parties). In any suit, proceeding or action brought by the Collateral
Agent under any Account for any sum owing thereunder, or to enforce
any provisions of any Account, each Grantor will save, indemnify and
keep the Collateral Agent and the Secured Parties harmless from and
against all expense, loss or damage suffered by reason of any defense,
setoff, counterclaim, recoupment or reduction or liability whatsoever
of the Account Debtor or any other obligor thereunder, arising out of
a breach by such Grantor of any obligation thereunder or arising out
of any other agreement, indebtedness or liability at any time owing to
or in favor of such Account Debtor or obligor or its successors from
such Grantor (except to the extent any such expense, loss or damage
results from the gross negligence or willful misconduct of the
Collateral Agent or Secured Parties). The obligations of each Grantor
under this Section 4(g) shall survive the termination of the other
provisions of this Agreement.
(h) Grower Inventory. To the extent that the Grantor maintains
Inventory with any Approved Contract Grower, grower, or any other
Person pursuant to a grower contract or otherwise, the Grantor will
take all steps necessary to preserve and maintain the security
interests of the Secured Parties in such Inventory, and to preserve
and maintain the ownership interest of the Grantor in such Inventory.
SECTION 5. Reporting and Record Keeping. Each Grantor
respectively covenants and agrees with the Collateral Agent and the
Secured Parties that from and after the date of this Agreement and
until all Secured Obligations have been fully satisfied:
(a) Maintenance of Records Generally. Such Grantor will keep
and maintain at its own cost and expense complete and accurate records
of the Collateral, including, without limitation, record of all
payments received and all credits granted with respect to the
Collateral and all other dealings with the Collateral. All chattel
paper given to such Grantor with respect to any Accounts will be
marked with the following legend: "This writing and the obligations
evidenced or secured hereby are subject to the security interest of
First Union National Bank, as Collateral Agent."
(b) Further Identification of Collateral. Such Grantor will, if
so requested by the Collateral Agent, furnish to the Collateral Agent
statements and schedules further identifying and describing the
Collateral and such other reports in connection with the Collateral as
the Collateral Agent may reasonably request, all in reasonable detail.
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(c) Notices. Such Grantor will advise the Collateral Agent
promptly, in reasonable detail, (i) of any Lien or claim made or
asserted against any material portion of the Collateral, (ii) of any
material adverse change in the composition of the Collateral, and
(iii) of the occurrence of any other event which could reasonably be
expected to have a material adverse effect on the Collateral or on the
validity, perfection or priority of the Security Interests.
SECTION 6. General Authority.
(a) Each Grantor hereby irrevocably appoints the Collateral
Agent its true and lawful attorney, with full power of substitution,
in the name of such Grantor, the Collateral Agent, the Secured Parties
or otherwise, for the sole use and benefit of the Collateral Agent and
the Secured Parties, but at such Grantor's expense, to exercise, at
any time from time to time all or any of the following powers:
(i) to file the Financing Statements and any financing
statements, financing statement amendments and continuation statements
necessary, appropriate or convenient to maintain the rights and
benefits of the Collateral Agent and/or the Secured Parties under this
Agreement and/or the Credit Agreements including, without limitation,
the benefits of Sections 4(a)(i), 4(a)(ii) and 4(a)(iii) of this
Agreement,
(ii) at any time following the occurrence of an Event of
Default, to demand, sue for, collect, receive and give acquittance for
any and all monies due or to become due with respect to any Collateral
or by virtue thereof,
(iii) at any time following the occurrence of an Event of
Default, to settle, compromise, compound, prosecute or defend any
action or proceeding with respect to any Collateral,
(iv) at any time following the occurrence of an Event of
Default, to sell, transfer, assign or otherwise deal in or with the
Collateral and the Proceeds thereof, as fully and effectually as if
the Collateral Agent were the absolute owner thereof, and
(v) at any time following the occurrence of an Event of
Default, to extend the time of payment and to make any allowance and
other adjustments with reference to the Collateral.
(b) Each Grantor hereby ratifies all that said attorney shall
lawfully do or cause to be done by virtue hereof. This power of
attorney is a power coupled with an interest and shall be irrevocable.
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(c) Each Grantor also authorizes the Collateral Agent at any
time and from time to time, to execute, in connection with the sale
provided for in Section 7 hereof, any endorsements, assignments or
other instruments of conveyance or transfer with respect to the
Collateral.
SECTION 7. Remedies Upon Event of Default. If any Event of
Default has occurred and is continuing, the Collateral Agent may
exercise on behalf of itself and the Secured Parties all rights of a
secured party under the UCC (whether or not in effect in the
jurisdiction where such rights are exercised) and, in addition,
without limitation, the Collateral Agent may exercise the following
rights and remedies, which rights and remedies are cumulative and are
in addition to any rights and remedies available to the Collateral
Agent under the Credit Agreements or any other Transaction Document.
(a) The Collateral Agent may sell the Collateral or any part
thereof at public or private sale, for cash, upon credit or for future
delivery, and at such price or prices as the Collateral Agent may deem
satisfactory. The Collateral Agent or any Secured Party may be the
purchaser of any or all of the Collateral so sold at any public sale
(or, if the Collateral is of a type customarily sold in a recognized
market or is of a type which is the subject of widely distributed
standard price quotations or if otherwise permitted under applicable
law, at any private sale) and thereafter hold the same, absolutely,
free from any right or claim of whatsoever kind. Each Grantor will
execute and deliver such documents and take such other action as the
Collateral Agent deems reasonably necessary or advisable in order that
any such sale may be made in compliance with law. Upon any such sale
the Collateral Agent shall have the right to deliver, assign and
transfer to the purchaser thereof the Collateral so sold (without
warranty). Each purchaser at any such sale shall hold the Collateral
so sold to it absolutely, free from any claim or right of whatsoever
kind, including any equity or right of redemption of any Grantor. To
the extent permitted by law, each Grantor hereby specifically waives
all rights of redemption, stay or appraisal which it has or may have
under any law now existing or hereafter adopted. The notice of such
sale shall be given to the applicable Grantor ten (10) Business Days
prior to such sale (or one (1) day notice by telephone with respect to
Collateral that is perishable or threatens to decline rapidly in value
and for Collateral which is marketable securities) and (A) in case of
a public sale, state the time and place fixed for such sale, and (B)
in the case of a private sale, state the day after which sale may be
consummated. Any such public sale shall be held at such time or times
within ordinary business hours and at such place or places as the
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Collateral Agent may fix in the notice of such sale. At any such sale
the Collateral may be sold in one lot as an entirety or in separate
parcels, as the Collateral Agent may determine. The Collateral Agent
shall not be obligated to make any such sale pursuant to any such
notice. The Collateral Agent may, without notice or publication,
adjourn any public or private sale or cause the sale to be adjourned
from time to time by announcement at the time and place fixed for the
sale, and such sale may be made at any time or place to which the same
may be so adjourned. In case of any sale of all or any part of the
Collateral on credit or for future delivery, the Collateral so sold
may be retained by the Collateral Agent until the selling price is
paid by the purchaser thereof, but the Collateral Agent shall not
incur any liability in case of the failure of such purchaser to take
up and pay for the Collateral so sold and, in case of any such
failure, such Collateral may again be sold upon like notice. The
Collateral Agent, instead of exercising the power of sale herein
conferred upon it, may proceed by a suit or suits at law or in equity
to foreclose the Security Interests and sell the Collateral, or any
portion thereof, under a judgment or decree of a court or courts of
competent jurisdiction. The Grantors shall, under all circumstances,
remain liable for any deficiency.
(b) The Collateral Agent may, without notice to any of the
Grantors, and is specifically authorized hereby to set off against and
apply to the then unpaid balance of the Secured Obligations any items
or funds of any of the Grantors held by the Collateral Agent, any of
the Secured Parties or any Affiliate, any and all deposits (whether
general or special, time or demand, matured or unmatured) or any other
property of any Grantor, including, without limitation, securities
and/or certificates of deposit, now or hereafter maintained by any
Grantor for its or their own account with the Collateral Agent, any of
the Secured Parties or any Affiliate, and any other indebtedness at
any time held or owing by the Collateral Agent, any of the Secured
Parties or any Affiliate to or for the credit or the account of any
Grantor, even if effecting such setoff results in a loss or reduction
of interest or the imposition of a penalty applicable to the early
withdrawal of time deposits. For such purpose, the Collateral Agent
shall have, and each of the Grantors hereby grants to the Collateral
Agent, for the ratable benefit of itself and the Secured Parties, a
first lien on and continuing security interest in such deposits,
property, funds, and accounts, and the proceeds thereof. Each of the
Grantors further authorizes any Affiliate, upon and following the
occurrence of an Event of Default, at the request of the Collateral
Agent, and without notice to the Grantors, to turn over to the
Collateral Agent any property of any of the Grantors, including,
without limitation, funds and securities held by the Affiliate for the
account of any of the Grantors, and to debit any deposit account
maintained by any of the Grantors with such Affiliate (even if such
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deposit account is not then due or there results a loss or reduction
of interest or the imposition of a penalty in accordance with law
applicable to the early withdrawal of time deposits), in the amount
requested by the Collateral Agent up to the amount of the Secured
Obligations, and to pay or transfer such amount or property to the
Collateral Agent for application to the Secured Obligations.
(c) The Collateral Agent may retain the Collateral in full or
partial satisfaction of the Secured Obligations, as permitted by
applicable law.
(d) For the purpose of enforcing any and all rights and remedies
under this Agreement, the Collateral Agent may (i) require each
Grantor to, and each Grantor agrees that it will, at its expense and
upon the request of the Collateral Agent, forthwith assemble all or
any part of the Collateral as directed by the Collateral Agent and
make it available at a place designated by the Collateral Agent which
is, in the Collateral Agent's opinion, reasonably convenient to the
Collateral Agent and such Grantor, whether at the premises of such
Grantor or otherwise, (ii) to the extent permitted by applicable law,
enter, with or without process of law and without breach of the peace,
any premises where any of the Collateral is or may be located and,
without charge or liability to the Collateral Agent, seize and remove
such Collateral from such premises, (iii) have access to and use such
Grantor's books and records relating to the Collateral and (iv) prior
to the disposition of the Collateral, store or transfer such
Collateral without charge in or by means of any storage or
transportation facility owned or leased by such Grantor, process,
repair or recondition such Collateral or otherwise prepare it for
disposition in any manner and to the extent the Collateral Agent deems
appropriate and, in connection with such preparation and disposition,
use without charge any trade name or technical process used by such
Grantor.
SECTION 8. Limitation on Duty of Collateral Agent in Respect of
Collateral. Beyond reasonable care in the custody thereof, the
Collateral Agent shall have no duty as to any Collateral in its
possession or control or in the possession or control of any agent or
bailee or any income thereon or as to the preservation of rights
against prior parties or any other rights pertaining thereto. The
Collateral Agent shall be deemed to have exercised reasonable care in
the custody of the Collateral in its possession if the Collateral is
accorded treatment substantially equal to that which the Collateral
Agent accords its own property, and the Collateral Agent shall not be
liable or responsible for any loss or damage to any of the Collateral,
or for any diminution in the value thereof, by reason of the act or
omission of any warehouseman, carrier, forwarding agency, consignee or
other agent or bailee selected by the Collateral Agent in good faith.
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SECTION 9. Application of Proceeds. Upon the occurrence and
during the continuance of an Event of Default, the proceeds of any
sale of, or other realization upon, all or any part of the Collateral
shall be applied by the Collateral Agent in accordance with the
Intercreditor Agreement.
SECTION 10. Expenses. In the event that any Grantor fails to
comply with the provisions of the this Agreement or any other
Transaction Document, such that the value of any Collateral or the
validity, perfection, rank or value of the Security Interests are
thereby diminished or potentially diminished or put at risk, the
Collateral Agent may, but shall not be required to, upon reasonable
prior notice to such Grantor, effect such compliance on behalf of such
Grantor, and such Grantor shall reimburse the Collateral Agent for the
costs thereof on demand. All insurance expenses and all reasonable
expenses of protecting, storing, warehousing, insuring, handling,
maintaining and shipping the Collateral, any and all excise, stamp,
intangibles, transfer, property, sales, and use taxes imposed by any
state, federal, or local authority or any other Governmental Authority
on any of the Collateral, or in respect of the sale or other
disposition thereof, shall be borne and paid by the Grantors; and if
any Grantor fails promptly to pay any portion thereof when due, the
Collateral Agent or any Secured Party may, at its option, but shall
not be required to, pay the same and charge such Grantor's account
therefor, and such Grantor agrees to reimburse, the Collateral Agent
or such Secured Party therefor on demand. All sums so paid or
incurred by the Collateral Agent or any Secured Party for any of the
foregoing and any and all other sums for which any Grantor may become
liable hereunder and all costs and expenses (including reasonable
attorneys' fees, legal expenses and court costs) incurred by the
Collateral Agent or any Secured Party in enforcing or protecting the
Security Interests or any of their rights or remedies thereon shall be
payable by the Grantors on demand and shall bear interest (after as
well as before judgment) until paid at the rate then applicable to
Base Rate Loans under the Bank Credit Agreements or the applicable
interest rate under the Note Agreement, as the case may be, and shall
be additional Secured Obligations hereunder.
SECTION 11. Concerning the Collateral Agent. The provisions of
Article XII of each of the Bank Credit Agreements shall inure to the
benefit of the Collateral Agent in respect of this Agreement and shall
be binding upon the parties to the Bank Credit Agreements in such
respect. In furtherance and not in derogation of the rights,
privileges and immunities of the Collateral Agent therein set forth:
(a) The Collateral Agent is authorized to take all such action
as is provided to be taken by it as Collateral Agent hereunder and all
other action incidental thereto. As to any matters not expressly
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provided for herein, the Collateral Agent may request instructions
from the Secured Parties and shall act or refrain from acting in
accordance with written instructions from the Required Secured Parties
(or, when expressly required by this Agreement or the Intercreditor
Agreement, all the Secured Parties) or, in the absence of such
instructions, in accordance with its discretion.
(b) The Collateral Agent shall not be responsible for the
existence, genuineness or value of any of the Collateral or for the
validity, perfection, priority or enforceability of the Security
Interests, whether impaired by operation of law or by reason of any
action or omission to act on its part (other than any such action or
inaction constituting gross negligence or willful misconduct). The
Collateral Agent shall have no duty to ascertain or inquire as to the
performance or observance of any of the terms of this Agreement by any
Grantor.
SECTION 12. Appointment of Collateral Agents. At any time or
times, in order to comply with any legal requirement in any
jurisdiction or in order to effectuate any provision of the
Transaction Documents, the Collateral Agent may appoint another bank
or trust company or one or more other Persons, either to act as
collateral agent or agents, jointly with the Collateral Agent or
separately, on behalf of the Collateral Agent and the Secured Parties
with such power and authority as may be necessary for the effectual
operation of the provisions hereof and specified in the instrument of
appointment (which may, in the discretion of the Collateral Agent,
include provisions for the protection of such collateral agent similar
to the provisions of Section 11 hereof).
SECTION 13. Notices. All notices, communications and
distributions hereunder shall be given or made in accordance with the
Intercreditor Agreement.
SECTION 14. Waivers, Non-Exclusive Remedies. No failure on the
part of the Collateral Agent or any Secured Party to exercise, and no
delay in exercising and no course of dealing with respect to any right
under the Credit Agreements, this Agreement or any other Transaction
Document shall operate as a waiver thereof or hereof; nor shall any
single or partial exercise by the Collateral Agent or any Secured
Party of any right under the Credit Agreement, this Agreement or any
other Transaction Document preclude any other or further exercise
thereof, and the exercise of any rights in this Agreement, the Credit
Agreements and the other Transaction Documents are cumulative and are
not exclusive of any other remedies provided by law. This Agreement
is both a Loan Document executed pursuant to the Bank Credit
Agreements and a Transaction Document under the Intercreditor
Agreement.
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SECTION 15. Successors and Assigns. This Agreement is for the
benefit of the Collateral Agent and the Secured Parties and their
successors and assigns, and in the event of an assignment of all or
any of the Secured Obligations, the rights hereunder, to the extent
applicable to the indebtedness so assigned, may be transferred with
such indebtedness. This Agreement shall be binding on each Grantor
and its successor and assigns; provided, however, that such Grantor
may not assign any of its rights or obligations hereunder without the
prior written consent of the Collateral Agent.
SECTION 16. Changes in Writing. Neither this Agreement nor any
provision hereof may be changed, waived, discharged or terminated
orally, but only in writing signed by each Grantor and the Collateral
Agent with the consent of the Required Secured Parties (or, when
expressly required by this Agreement, the Intercreditor Agreement, or
the Credit Agreements, all of the Secured Parties).
SECTION 17. Powers Coupled with an Interest. All authorizations
and agencies herein contained with respect to the Collateral are
irrevocable and powers coupled with an interest.
SECTION 18. Governing Law. This Agreement shall be governed by,
construed and enforced in accordance with the internal laws of the
State of New York, without reference to the conflicts or choice of law
principles thereof, except that matters involving perfection of
security interests in the Collateral shall be governed by the
applicable provisions of the UCC depending upon the location of the
Collateral.
SECTION 19. Consent to Jurisdiction. Each Grantor hereby
irrevocably consents to the personal jurisdiction of the United States
District Court for the Southern District of New York and the Supreme
Court of the State of New York - County of New York, in any action,
claim or other proceeding arising out of or any dispute in connection
with this Agreement, any rights or obligations hereunder, or the
performance of such rights and obligations. Each Grantor hereby
irrevocably consents to the service of a summons and complaint and
other process in any action, claim or proceeding brought by the
Collateral Agent or any Secured Party in connection with this
Agreement, any rights or obligations hereunder, or the performance of
such rights and obligations, on behalf of itself or its property, with
respect to the Bank Lenders, in the manner provided in Sections 13.1
of the Bank Credit Agreements, and with respect to the Note Lenders,
in the manner provided in the Note Agreement, as applicable. Nothing
in this Section 19 shall affect the right of the Collateral Agent or
any Secured Party to serve legal process in any other manner permitted
by Applicable Law or affect the right of the Collateral Agent or any
26
<PAGE>
Secured Party to bring any action or proceeding against any Grantor or
its properties in the courts of any other jurisdictions.
SECTION 20. Waiver of Jury Trial; Waiver of Certain Damages.
(a) WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, THE COLLATERAL AGENT, EACH SECURED PARTY AND EACH GRANTOR HEREBY
IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT
TO ANY ACTION, CLAIM OR OTHER PROCEEDING ARISING, OUT OF OR ANY
DISPUTE IN CONNECTION WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS
HEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.
(b) Waiver of Certain Damages. The Grantors and the Collateral
Agent on behalf of itself and the Secured Parties agree that they
shall not have a remedy of punitive or exemplary damages against the
other in any judicial proceeding, any dispute, claim or controversy
arising out of, connected with or relating to this Agreement
("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.
SECTION 21. Severability. If any provision hereof is invalid
and unenforceable in any jurisdiction, then, to the fullest extent
permitted by law, (a) the other provisions hereof shall remain in full
force and effect in such jurisdiction and shall be liberally construed
in favor of he Collateral Agent and the Secured Parties in order to
carry out the intentions of the parties hereto as nearly as may be
possible; and (b) the invalidity or unenforceability of any provisions
hereof in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction.
SECTION 22. Headings. The various headings of this Agreement
are inserted for convenience only and shall not affect the meaning or
interpretation of this Agreement or any provisions hereof.
SECTION 23. Counterparts. This Agreement may be executed by the
parties hereto in several counterparts, each of which shall be deemed
to be an original and all of which shall constitute together one and
the same agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
27
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed under seal by their duly authorized officers, all as of
the day and year first written above.
WLR FOODS, INC.
By:__/S/ Robert T. Ritter__
Robert T. Ritter
Vice President
CASSCO ICE & COLD STORAGE, INC.
By:__/S/ Robert T. Ritter__
Robert T. Ritter
Vice President
WAMPLER FOODS, INC.
By:__/S/ Robert T. Ritter__
Robert T. Ritter
Treasurer
WAMPLER SUPPLY COMPANY, INC.
By:__/S/ Robert T. Ritter__
Robert T. Ritter
Vice President
28
<PAGE>
VALLEY RAIL SERVICE, INC.
By:__/S/ Robert T. Ritter__
Robert T. Ritter
Vice President
FIRST UNION NATIONAL BANK,
as Collateral Agent for itself and
the Secured Parties
By:__/S/ Julie Bouhuys__
Julie Bouhuys
Senior Vice President
29
<PAGE>
EXHIBIT "A"
Perfection Certificate
The undersigned, WLR Roods, Inc., a Virginia corporation (the
"Company"), hereby represents and warrants to First Union National
Bank, successor to First Union National Bank of Virginia, a national
banking association, as Collateral Agent (the "Collateral Agent"), for
the ratable benefit of itself and the financial institutions
(collectively, the "Secured Parties") as are, or may from time to time
become, parties to the Credit Agreements (as defined in the attached
Security Agreement), and its successors and assigns that the following
information is true, accurate and complete:
(i) Names.
a) The exact corporate name of the Company as it appears
in its Certificate or Articles of Incorporation is as follows:
WLR Foods, Inc.
b) The following is a list of all other names (including
trade names or similar appellations) used by the Company or any of its
divisions or other unincorporated business unites during the past five
(5) years:__None________________________________________________
________________________________________________________________.
(c) The following are the names of all corporations which
have been merged into the Company during the past five (5)
years:__None___________________________________________________
_______________________________________________________________.
(d) The following are the names and addresses of all
entities from whom the Company has acquired any personal property
during the past five (5) years, other than entities that in the
ordinary course of business sell the type of personal property
acquired from such entity, together with the date of such acquisition
and the type of personal property acquired (e.g., equipment,
inventory, etc.)
Date of Type of
Name Address Acquisition Property
None
(ii) Current Locations.
30
<PAGE>
(a) The chief executive office of the Company is located at
the following address:
Name of
City or Mailing
Location Address County State
Timberville PO Box 7000 Rockingham Virginia
Broadway, VA
22815-7000
(b) The following are the locations in the United States of
America where the Company maintains any books or records relating to
any of its accounts receivable:
Name of
City or Mailing
Location Address County State
None
(c) The following are all of the locations in the United
States of America where the Company maintains any equipment, fixtures
or inventory:
Name of
City or Mailing Record Owner
Location Address County State of Real Estate
None
(d) The following are all the locations in the United
States of American where the Company owns, leases, or occupies any
realty:
Name of
City or Mailing Record Owner
Location Address County State of Real Estate
None
(e) The following are the names and address of all
consignees of the Company:
Name Street Address County State
None
31
<PAGE>
(f) The following are the names and addresses of all
warehouseman or bailees who have possession of any of the Company's
inventory:
Are
Documents If So,
Street of Title Are They
Name Address County State Issued? Negotiable?
None
(iii) Special Types of Collateral.
(a) The following are all of the trademarks or trademark
applications of the Company, together with the trademark numbers and
dates of registration with the U.S. Patent and Trademark Office, if
applicable:
If Foreign
Trademark -
Trademark Number Date What Country?
None
(b) The following are all of the patents or patent
applications of the Company, together with the patent numbers, names
of inventors and dates of registration with the U.S. Patent and
Trademark Office, if applicable:
If Foreign
Patent -
Patents Number Date What Country?
None
(c) The following are all of the copyrights or copyright
applications of the Company, together with the patent numbers, names
of inventors and dates of registration with the U.S. Copyright Office,
if applicable:
If Foreign
Copyright -
Copyright Number Date What Country?
None
32
<PAGE>
(d) The Company owns the following kinds of assets:
Motor Vehicles - Yes __X__ No _____
Aircraft - Yes _____ No __X__
Vessels, Boats or Ships - Yes _____ No __X__
Railroad Rolling Stock - Yes _____ No __X__
WLR Foods, Inc.
Dated as of: February 25, 1998 By:__/S/ Robert T. Ritter__
Name: Robert T. Ritter
Title: Vice President<PAGE>
33
<PAGE>
SCHEDULE 3(g)-Disclosure of Liens
Original Current
Company Debt Amount Maturity Balance1 Security
A. Wampler Foods, Inc.
Pennsylvania Industrial Real
Development Authority 995,000 2005 574,917 Estate and
Equipment
at New
Oxford, Pa
Farmers Bank and Trust
Co. of Hanover 1,300,000 2004 900,678 Real
Estate and
Equipment
at New
Oxford, Pa
Bank of Hanover &
Trust Company (2 notes)
$1.5M + $0.3M 1,800,000 2002 441,667 Real
Estate at
New
Oxford, Pa
Huffman's Old Car Farm 200,000 2000 77,510 Real
Estate at
Rockingham
County, Va
B. Cassco Ice & Cold Storage, Inc.
Crestar Mortgage
Harrisonburg Revenue
Bond 1,200,000 2001 451,777 Real
Estate and
Equipment at
Harrisonburg,
Inc.
Receivables
NationsBank of
South Carolina, N.A. 3,400,000 2003 2,202,920 Real Estate and
Equipment at
Marshville, NC
34
<PAGE>
Harry Anderson 255,000 2004 104,000 Real
Estate at
City of
Radford, Va
C. Wampler Supply Company, Inc.
None
D. WLR Foods, Inc.
None
E. Valley Rail Service, Inc.
None
F. All those liens evidenced by UCC-1 financing statements, as the
same may be amended from time to time, filed at such times and in such
jurisdictions as fully set forth in Exhibit "A" to Schedules 10.3(f)
of the Credit Agreements, which is attached thereto and incorporated
therein by reference, which is to be attached post-closing.
G. All those liens evidenced by those certain Title Commitments as set
forth in Exhibit "B" to Schedules 10.3(f) of the Credit Agreements,
which is attached thereto and incorporated therein by reference, which
is to be attached post-closing.
1 As of December 27, 1997.
35
<PAGE>
SCHEDULE 4(c)(i)-Schedule of Inventory
To be delivered by the Borrower post-closing.
36
<PAGE>
SCHEDULE 4(e) - Schedule of Vehicles
Schedule 4(e) begins on the following page.
37
<PAGE>
Exhibit 2.8
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (the "Pledge Agreement"), dated as of
February 25, 1998, is made by WLR FOODS, INC., a corporation organized
under the laws of the Commonwealth of Virginia (the "Pledgor"), in
favor of FIRST UNION NATIONAL BANK, a national banking association, as
Collateral Agent (the "Collateral Agent") for the ratable benefit of
itself and the financial institutions (the "Secured Parties") as are,
or may from time to time become, parties to one or more of the
Intercreditor Agreement and the Credit Agreements (as hereinafter
defined).
BACKGROUND STATEMENT
A. Pursuant to the terms of the Revolving Credit Agreement and
the Term Loan Agreement each dated as of February 25, 1998 (as
amended, restated, modified or otherwise supplemented, the "Bank
Credit Agreements"), by and among the Pledgor, Cassco Ice & Cold
Storage, Inc., Wampler Foods, Inc., Wampler Supply Company, Inc. and
Valley Rail Service, as borrowers (collectively, the "Obligors," and
each of the Obligors individually, an "Obligor"), the Bank Lenders and
the Collateral Agent, the Bank Lenders have agreed to extend and/or
restructure certain loans to the Obligors as more fully described
therein.
B. Pursuant to the terms of a Note Purchase Agreement dated as
of February 25, 1998 (as amended, restated, modified or otherwise
supplemented, the "Note Agreement," and, together with the Bank Credit
Agreements, the "Credit Agreements") by and among WLR Foods, Inc., as
borrower, and the remaining Obligors, as guarantors, the Note Lenders
(as defined in the Intercreditor Agreement) have agreed to extend
and/or restructure certain credit accommodations to the Obligors as
more particularly described therein.
C. As of the date hereof, the Secured Parties and the Obligors
have entered into that certain Collateral Agency and Intercreditor
Agreement (the "Intercreditor Agreement") to, among other things, set
forth the relative rights of the Secured Parties with respect to the
Pledged Stock (hereinafter defined) and the other Collateral described
therein.
D. The Obligors comprise one integrated financial enterprise,
and any loans made to any of them individually will inure, directly or
indirectly, to the benefit of all of them.
E. The Pledgor is the legal and beneficial owner of the shares
of Pledged Stock (as hereinafter defined) issued by the certain
Subsidiaries as specified on Schedule I attached hereto and
incorporated herein by reference (singly, the "Issuer," and,
collectively, the "Issuers").
F. To induce the Secured Parties and the Collateral Agent to
provide and to continue to provide financial accommodations under the
1
<PAGE>
Credit Agreements, and as a condition to the making of future loans
thereunder, the Secured Parties require that the Pledgor execute and
deliver this Pledge Agreement with the Pledged Stock to the Collateral
Agent to secure the "Secured Obligations" (as hereinafter defined).
Now, THEREFORE, in consideration of the foregoing Background
Statement, and other good and valuable consideration, the receipt and
legal sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Defined Terms. Terms defined in the Security Agreement and
not otherwise defined herein, when used in this Pledge Agreement
including its preamble and recitals, shall have the respective
meanings provided for in the Security Agreement. The following
additional terms, when used in this Pledge Agreement, shall have the
following meanings:
"Code" means the Uniform Commercial Code from time to time in
effect in the State of New York.
"Collateral" means the Stock Collateral.
"Lien" shall have the meaning assigned thereto in Credit
Agreements.
"Material Adverse Effect" shall have the meaning assigned thereto
in Credit Agreements.
"Material Contract" shall have the meaning assigned thereto in
Credit Agreements.
"Pledge Agreement" means this Pledge Agreement, as amended or
modified.
"Pledged Stock" means the shares of capital stock of each Issuer
listed on Schedule I hereto, together with all stock certificates,
options or rights of any nature whatsoever that may be issued or
granted by such Issuer to the Pledgor while this Pledge Agreement is
in effect.
"Proceeds" means all "proceeds" as such term is defined in
Section 9-306(l) of the Code on the date hereof and, in any event,
shall include, without limitation, all dividends or other income from
the Pledged Stock, collections thereon, proceeds of sale thereof or
distributions with respect thereto.
"Secured Obligations" means the Secured Obligations as defined in
the Intercreditor Agreement, and any renewals or extensions of the
Secured Obligations.
"Stock Collateral" means the Pledged Stock and all Proceeds
therefrom.
2
<PAGE>
"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 Pledgor.
2. Pledge and Grant of Security Interest. The Pledgor hereby
delivers to the Collateral Agent, for the ratable benefit of the
Collateral Agent and the Secured Parties, all the Pledged Stock and
hereby grants to the Collateral Agent, for the ratable benefit of the
Collateral Agent and the Secured Parties, a security interest in the
Collateral, as collateral security for the prompt and complete payment
and performance when due (whether at the stated maturity, by
acceleration or otherwise) of the Secured Obligations.
3. Powers; Register of Pledge. Concurrently with the delivery
to the Collateral Agent of any certificate representing any Pledged
Stock, the Pledgor shall deliver an undated power covering such
certificate, duly executed in blank by the Pledgor with, if the
Collateral Agent so requests, signatures guaranteed.
4. Representations and Warranties. To induce the Collateral
Agent and the Secured Parties to execute the Credit Agreements and
make any Loans and to accept the security contemplated hereby, the
Pledgor hereby, represents and warrants that:
(a) the Pledgor has the corporate power, authority and
legal right to execute and deliver, to perform its
obligations under, and to grant the Lien on the Collateral
pursuant to, this Pledge Agreement and has taken all necessary
corporate action to authorize its execution, delivery and
performance of, and grant of the Lien on the Collateral pursuant
to, this Pledge Agreement;
(b) this Pledge Agreement constitutes a legal, valid and
binding obligation of the Pledgor enforceable against the Pledgor
in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement cf creditors' rights
generally and by the availability of equitable remedies;
(c) the execution, delivery and performance of this
Pledge Agreement will not violate any provision of any
3
<PAGE>
Applicable Law or contractual obligation of the Pledgor and
will not result in the creation or imposition of any Lien on
any of the properties or revenues of the Pledgor pursuant to
any Applicable Law or contractual obligation, except as
contemplated hereby;
(d) no consent or authorization of, filing with, or other
act by or in respect of, any arbitrator or Governmental Authority
and no consent of any other Person (including, without
limitation, any stockholder or creditor of the Pledgor or any
Issuer), is required in connection with the execution, delivery,
performance, validity or enforceability against the Pledgor of
this Pledge Agreement, except (i) consents which have been
obtained and which remain in full force and effect, (ii) as may
be required in connection with the disposition of the Pledged
Stock by laws affecting the offering and sale of securities
generally, and (iii) filings under the Code;
(e) no litigation, investigation or proceeding of or
before any arbitrator or Governmental Authority is pending or, to
the knowledge of the Pledgor, threatened by or against the
Pledgor or against any of its properties or revenues (i) with
respect to this Pledge Agreement or any of the transactions
contemplated hereby or (ii) which could reasonably be expected to
have a Material Adverse Effect;
(f) the shares of Pledged Stock listed on Schedule I
constitute all the issued and outstanding shares owned by the
Pledgor of all classes of the capital stock of each of the
Issuers;
(g) all the shares of the Pledged Stock have been duly
and validly issued and are fully paid;
(h) the Pledgor is the record and beneficial owner of,
and has good and marketable title to, the Pledged Stock
listed on Schedule I, free of any and all Liens or options in
favor of, or claims of, any other person, except the Lien created
by this Pledge Agreement; and
(i) upon (i) delivery to the Collateral Agent of the stock
certificates evidencing the Pledged Stock, and (ii) filing of
UCC-1 financing statements in the appropriate filing offices,
the Lien granted pursuant to this Pledge Agreement will
constitute a valid Lien on the collateral, enforceable as such
against all creditors of the Pledgor and any Persons purporting
to purchase any of the Collateral from the Pledgor.
5. Certain Covenants. The Pledgor covenants and agrees with
the Collateral Agent for the ratable benefit of itself and the Secured
Parties that, from and after the date of this Pledge Agreement until
4
<PAGE>
the Secured Obligations are paid in full and the Commitments are
terminated:
(a) If the Pledgor shall, as a result of its ownership
of the Collateral, become entitled to receive or shall
receive any certificate (including, without limitation, any
certificate representing a stock dividend or a distribution
in connection with any reclassification, increase or reduction of
capital or any certificate issued in connection with any
reorganization), option or rights, whether in addition to, in
substitution of, as a conversion of, or in exchange for any
shares of the Collateral, or otherwise in respect thereof, the
Pledgor shall accept the same as the agent of the Collateral
Agent, hold the same in trust for the Collateral Agent and
deliver the same forthwith to the Collateral Agent in the exact
form received, duly indorsed by the Pledgor to the Collateral
Agent, if required, together with an undated power covering such
certificate duly executed in blank by the Pledgor and with, if
the Collateral Agent so requests, signature guaranteed, to be
held by the Collateral Agent, subject to the terms hereof, as
additional collateral security for the Secured Obligations. In
addition, any sums paid upon or in respect of the Collateral upon
the liquidation or dissolution of any Issuer shall be held by the
Collateral Agent as additional collateral security for the
Secured Obligations.
(b) Without the prior written consent of the Collateral
Agent, the Pledgor will not (i) vote to enable, or take any other
action to permit, any Issuer to issue any stock or other equity
securities of any nature or to issue any other securities
convertible into or granting the right to purchase or exchange
for any stock or other equity securities of any nature of such
Issuer, (ii) sell, assign, transfer, exchange, or otherwise
dispose of, or grant any option with respect to, the Collateral,
or (iii) create, incur or permit to exist any Lien or option in
favor of, or any claim of any Person with respect to, any of the
Collateral, or any interest therein, except for the Lien provided
for by this Pledge Agreement. The Pledgor will defend the right,
title and interest of the Collateral Agent in and to the
Collateral against the claims and demands of all Persons
whomsoever.
(c) At any time and from time to time, upon the written
request of the Collateral Agent, and at the sole expense of the
Pledgor, the Pledgor will promptly and duly execute and deliver
such further instruments and documents and take such further
actions as the Collateral Agent may reasonably request for the
purposes of obtaining or preserving the full benefits of this
Pledge Agreement and of the rights and powers herein granted.
If any amount payable under or in connection with any of the
Collateral shall be or become evidenced by any promissory note,
5
<PAGE>
other instrument or chattel paper, such note, instrument or
chattel paper shall be immediately delivered to the Collateral
Agent, duly endorsed in a manner satisfactory to the Collateral
Agent, to be held as Collateral pursuant to this Pledge
Agreement.
(d) The Pledgor agrees to pay, and to save the Collateral
Agent and the Secured Parties harmless from, any and all
liabilities with respect to, or resulting from any delay in
paying, any and all stamp, excise, sales or other similar taxes
which may be payable or determined to be payable with respect
to any of the Collateral or in connection with any of the
transactions contemplated by this Pledge Agreement.
(e) On or prior to the formation or acquisition of any
Subsidiary of the Pledgor, the Pledgor agrees to execute such
amendments and supplements to this Pledge Agreement, including,
without limitation, the Pledge Agreement Supplement attached
hereto, and such other documents and instruments and to take any
and all actions, all as shall be necessary, in the reasonable
judgment of the Collateral Agent, to pledge the Pledgor's
interest therein to the Collateral Agent for the ratable benefit
of itself and the Secured Parties.
6. Cash Dividends and Distributions; Voting Rights. Unless an
Event of Default shall have occurred and the Collateral Agent shall
have given notice to the Pledgor of the Collateral Agent's intent to
exercise its rights pursuant to Paragraph 8 below, the Pledgor shall
be permitted to receive all cash dividends and shareholder
distributions paid in accordance with the terms of the Credit
Agreements in respect of the Collateral and to exercise all voting and
corporate rights, as applicable, with respect to the Collateral;
provided, that no vote shall be cast or corporate right exercised or
other action taken which, in the Collateral Agent's reasonable
judgment, would impair the Collateral or which would be inconsistent
with or result in any violation of any provision of the Credit
Agreements, the Notes, any other Transaction Documents or this Pledge
Agreement.
7. Rights of the Collateral Agent.
(a) If an Event of Default shall occur and the Collateral Agent
shall give notice of its intent to exercise such right to the Pledgor,
(i) the Collateral Agent shall have the right to receive any and all
cash dividends paid in respect of the Pledged Stock and make
application thereof to the Secured Obligations in the order set forth
in Section 7 of the Intercreditor Agreement and (ii) all shares of the
Pledged Stock shall be registered in the name of the Collateral Agent
or its nominee, and the Collateral Agent or its nominee may thereafter
exercise (A) all voting, corporate and other rights pertaining to such
shares of the Pledged Stock at any meeting of shareholders of the
applicable Issuer, and (B) any and all rights of conversion, exchange,
6
<PAGE>
subscription and any other rights, privileges or options pertaining to
such shares of the Pledged Stock as if it were the absolute owner
thereof (including, without limitation, the right to exchange at its
discretion any and all of the Pledged Stock interests upon the merger,
consolidation, reorganization, recapitalization or other fundamental
change in the corporate structure of the applicable Issuer or, or upon
the exercise by the Pledgor or the Collateral Agent of any right,
privilege or option pertaining to such shares of the Pledged Stock,
and in connection therewith, the right to deposit and deliver any and
all of the Pledged Stock with any committee, depositary, transfer
agent, registrar or other designated agency upon such terms and
conditions as it may determine), all without liability except to
account for property actually received by it, but the Collateral Agent
shall have no duty to the Pledgor to exercise any such right,
privilege or option and shall not be responsible for any failure to do
so or delay in so doing.
(b) The rights of the Collateral Agent and the Secured Parties
hereunder shall not be conditioned or contingent upon the pursuit by
the Collateral Agent or any Secured Party of any right or remedy
against the Pledgor or against any other Person which may be or become
liable in respect of all or any part of the Secured Obligations or
against any collateral security therefor, guarantee therefor or right
of offset with respect thereto. Neither the Collateral Agent nor any
Secured Party shall be liable for any failure to demand, collect or
realize upon all or any part of the Collateral or for any delay in
doing so, nor shall the Collateral Agent be under any obligation to
sell or otherwise dispose of any Collateral upon the request of the
Pledgor or any other Person or to take any other action whatsoever
with regard to the Collateral or any part thereof.
8. Remedies. If an Event of Default shall occur and be
continuing, the Collateral Agent may, and upon the request of the
Required Secured Parties, the Collateral Agent shall, exercise on
behalf of itself and the Secured Parties, all rights and remedies
granted in this Pledge Agreement and in any other instrument or
agreement securing, evidencing or relating to the Secured Obligations,
and in addition thereto, all rights and remedies of a secured party
under the Code. Without limiting the generality of the foregoing with
regard to the scope of the Collateral Agent's remedies, the Collateral
Agent, without demand of performance or other demand, presentment,
protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon the Pledgor, any Issuer
or any other Person (all and each of which demands, defenses,
advertisements and notices are hereby waived), may in such
circumstances forthwith collect, receive, appropriate and realize upon
the Collateral, or any part thereof, and/or may forthwith sell,
assign, give option or options to purchase or otherwise dispose of and
deliver the Collateral or any part thereof (or contract to do any of
the foregoing), in one or more parcels at public or private sale or
sales, in the over-the-counter market, at any exchange, broker's board
7
<PAGE>
or office of the Collateral Agent or any Secured Party or elsewhere
upon such terms and conditions as it may deem advisable and at such
prices as it may deem best, for cash or on credit or for future
delivery without assumption of any credit risk. The Collateral Agent
or any Secured Party shall have the right upon any such public sale or
sales, and, to the extent permitted by law, upon any such private sale
or sales, to purchase the whole or any part of the Collateral so sold,
free of any right or equity of redemption in the Pledgor, which right
or equity is hereby waived or released. The Collateral Agent shall
apply any Proceeds from time to time held by it and the net proceeds
of any such collection, recovery, receipt, appropriation, realization
or sale to the payment in whole or in part of the Secured Obligations,
in the order set forth in the Intercreditor Agreement, and only after
such application and after the payment by the Collateral Agent of any
other amount required by any provision of law, including, without
limitation, Section 9-504(l)(c) of the Code, need the Collateral Agent
account for the surplus, if any, to the Pledgor. To the extent
permitted by Applicable Law, the Pledgor waives all claims, damages
and demands it may acquire against the Collateral Agent or any Secured
Party arising out of the exercise by them of any rights hereunder. If
any notice of a proposed sale or other disposition of Collateral shall
be required by law, such notice shall be deemed reasonable and proper
if given at least (10) Business Days prior to such sale or other
disposition (or one (1) day notice by telephone with respect to
Collateral that is perishable or threatens to decline rapidly in value
and for Collateral which is marketable securities). To the extent
permitted by Applicable Law, the Pledgor further waives and agrees not
to assert any rights or privileges which it may acquire under Section
9-112 of the Code.
9. Registration Rights; Private Sales.
(a) If the Collateral Agent shall determine to exercise its
right to sell any or all of the Pledged Stock pursuant to Paragraph 9
hereof, and if in the opinion of the Collateral Agent it is necessary
or advisable to have the Pledged Stock, or that portion thereof to be
sold, registered under the provisions of the Securities Act of 1933,
as amended (the "Securities Act"), the Pledgor will, to the extent the
Issuer is a Subsidiary of the Pledgor, cause and, to the extent the
Issuer is not a Subsidiary of the Pledgor, use its best efforts to
cause, the applicable Issuer to (i) execute and deliver, and cause the
directors and officers of the applicable Issuer, to execute and
deliver, all such instruments and documents, and do or cause to be
done all such other acts as may be, in the reasonable opinion of the
Collateral Agent, necessary or advisable to register the Pledged
Stock, or that portion thereof to be sold, under the provisions of the
Securities Act, (ii) to use its best efforts to cause the registration
statement relating thereto to become effective and to remain effective
for a period of one year from the date of the first public offering of
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the Pledged Stock, or that portion thereof to be sold, and (iii) to
make all amendments thereto and/or to the related prospectus which, in
the reasonable opinion of the Collateral Agent, are necessary or
advisable, all in conformity with the requirements of the Securities
Act and the rules and regulations of the Securities and Exchange
Commission applicable thereto. The Pledgor agrees to cause the
applicable Issuer to comply with the provisions of the securities or
"Blue Sky" laws of any and all jurisdictions which the Collateral
Agent shall designate and to make available to its security holders,
as soon as practicable, an earnings statement (which need not be
audited) which will satisfy the provisions of Section 11(a) of the
Securities Act; provided, that such Issuer shall not for any such
purpose be required (A) to qualify as a dealer in securities, (B) to
qualify generally to do business as a foreign corporation in any
jurisdiction wherein it would not but for the requirements of this
Section 9(a) be obligated to be so qualified, (C) to consent to
general service of process in any such jurisdiction or (D) to subject
itself to taxation in any such jurisdiction.
(b) The Pledgor recognizes that the Collateral Agent may be
unable to effect a public sale of any or all the Collateral, by reason
of certain prohibitions contained in the Securities Act and applicable
state securities laws or otherwise, and may be compelled to resort to
one or more private sales thereof to a restricted group of purchasers
which will be obliged to agree, among other things, to acquire such
securities for their own account for investment and not with a view to
the distribution or resale thereof. The Pledgor acknowledges and
agrees that any such private sale may result in prices and other terms
less favorable than if such sale were a public sale and agrees that a
determination of whether any such private sale shall be deemed to have
been made in a commercially reasonable manner shall not in any event
be based on such circumstances. The Collateral Agent shall be under
no obligation to delay a sale of any of the Collateral for the period
of time necessary to permit the applicable Issuer to register such
securities for public sale under the Securities Act, or under
applicable state securities laws, even if the applicable Issuer would
agree to do so.
(c) The Pledgor further agrees to use its best efforts to do or
cause to be done all such other acts as may be necessary to make such
sale or sales of all or any portion of the Collateral pursuant to this
Paragraph 9 valid and binding and in compliance with any and all other
Applicable Laws. The Pledgor further agrees that a breach of any of
the covenants contained in this Paragraph 9 will cause irreparable
injury to the Collateral Agent and the Secured Parties not compensable
in damages, that the Collateral Agent and the Secured Parties have no
adequate remedy at law in respect of such breach and, as a
consequence, that each and every covenant contained in this Paragraph
9 shall be specifically enforceable against the Pledgor, and the
Pledgor hereby waives and agrees not to assert any defenses against an
action for specific performance of such covenants except for a defense
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that no Event of Default has occurred under the Credit Agreements.
10. Amendments, etc. With Respect to the Secured Obligations.
The Pledgor shall remain obligated hereunder, and the Collateral shall
remain subject to the Lien granted hereby, notwithstanding that,
without any reservation of rights against the Pledgor, and without
notice to or further assent by the Pledgor, any demand for payment of
any of the Secured Obligations made by the Collateral Agent or any
Secured Party, may be rescinded by the Collateral Agent, and any of
the Secured Obligations continued, and the Secured Obligations, or the
liability of the Pledgor or any other Person upon or for any part
thereof, or any collateral security or guarantee therefor or right of
offset with respect thereto, may, from time to time, in whole or in
part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered, or released by the Collateral Agent,
and the Credit Agreements, the Notes, any other Transaction Documents
and any other documents executed and delivered in connection therewith
may be amended, modified, supplemented or terminated, in whole or
part, as the Secured Parties (or the Required Secured Parties, as the
case may be) may deem advisable from time to time, and any guarantee,
right of offset or other collateral security at any time held by the
Collateral Agent for the payment of the Secured Obligations may be
sold, exchanged, waived, surrendered or released. Neither the
Collateral Agent nor any Secured Party shall have any obligation to
protect, secure, perfect or insure any other Lien at any time held by
it as security for the Secured Obligations or any property subject
thereto. The Pledgor waives any and all notice of the creation,
renewal, extension or accrual of any of the Secured Obligations and
notice of or proof of reliance by the Collateral Agent or any Secured
Party upon this Pledge Agreement; the Secured Obligations, and any of
them, shall conclusively be deemed to have been created, contracted or
incurred in reliance upon this Pledge Agreement; and all dealings
between the Pledgor, on the one hand, and the Collateral Agent and the
Secured Parties, on the other, shall likewise be conclusively presumed
to have been had or consummated in reliance upon this Pledge
Agreement. The Pledgor waives diligence, presentment, protest, demand
for payment and notice of default or nonpayment to or upon the Pledgor
with respect to the Secured Obligations.
11. Limitation on Duties Regarding Collateral. The Collateral
Agent's sole duty with respect to the custody, safekeeping and
physical preservation of the Collateral in its possession, under
Section 9-207 of the Code or otherwise, shall be to deal with it in
the same manner as the Collateral Agent deals with similar securities
and property for its own account. Neither the Collateral Agent, any
Secured Party nor any of their respective directors, officers,
employees or agents shall be liable for failure to demand, collect or
realize upon any of the Collateral or for any delay in doing so or
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shall be under any obligation to sell or otherwise dispose of any
Collateral upon the request of the Pledgor or otherwise.
12. Powers Coupled with an Interest. All authorizations and
agencies herein contained with respect to the Collateral constitute
irrevocable powers coupled with an interest.
13. Severability. Any provision of this Pledge Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof,
and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other
jurisdiction.
14. Paragraph Headings. The paragraph headings used in this
Pledge Agreement are for convenience of reference only and are not to
affect the construction hereof or be taken into consideration in the
interpretation hereof.
15. No Waiver; Cumulative Remedies. Neither the Collateral
Agent nor any Secured Party shall by any act (except by a written
instrument pursuant to Paragraph 17 hereof) be deemed to have waived
any right or remedy hereunder or to have acquiesced in any Default or
Event of Default or in any breach of any of the terms and conditions
hereof. No failure to exercise, nor any delay in exercising, on the
part of the Collateral Agent or any Secured Party, any right, power or
privilege hereunder shall operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall
preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. A waiver by the Collateral Agent or
any Secured Party of any right or remedy hereunder on any one occasion
shall not be construed as a bar to any right or remedy which the
Collateral Agent or such Secured Party would otherwise have on any
future occasion. The rights and remedies herein provided are cumula-
tive, may be exercised singly or concurrently and are not exclusive of
any other rights or remedies provided by law.
16. Waivers. Except as otherwise expressly provided herein,
Pledgor, on its behalf and on behalf of its respective successors and
assigns, hereby waives presentment, demand, notice, protest and all
other demands and notices in connection with this Agreement, with the
enforcement of Collateral Agent's rights hereunder or with any of the
Secured Obligations or the Collateral; waives all rights to require a
marshalling of assets by Collateral Agent; and consents to and waives
notice of (i) the granting of renewals, extensions of time for payment
or other indulgences to the Borrower or the Pledgor, (ii)
substitution, release or surrender of the Collateral, (iii) the
addition or release of persons primarily or secondarily liable on any
of the Secured Obligations, (iv) the acceptance of partial payments on
any of the Secured Obligations or the Collateral and/or the settlement
or compromise thereof. The rights of Collateral Agent hereunder shall
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not be affected by (i) any extension, renewal, acceleration,
indulgence, settlement, compromise or any other change in the time of
payment or the terms of any of the Secured Obligations or any part
thereof; (ii) the release or substitution of any party primarily or
secondarily liable respecting any of the Secured Obligations or any
part thereof; (iii) the taking and holding of additional security,
other than the Collateral, for the Secured Obligations or any part
thereof, or the exchange, enforcement, waiver or release of the
Collateral or any part thereof or any other security for the Secured
Obligations. Except as otherwise expressly provided herein, Pledgor
hereby further waives any right it may have under the constitution of
the State of New York (or under the constitution of any other state in
which the Collateral may be located), or under the Constitution of the
United States of America, to notice or to a judicial hearing prior to
the exercise of any right or remedy provided by this Pledge Agreement
by Collateral Agent and waives its rights, if any, to set aside or
invalidate any sale duly consummated in accordance with the foregoing
provisions hereof on the grounds (if such be the case) that the sale
was consummated without a prior judicial hearing. Pledgor's waivers
under this Section have been made voluntarily, intelligently and
knowingly and after Pledgor has been apprised and counseled by its
attorneys as to the nature thereof and their possible alternative
rights. No delay or omission on the part of Collateral Agent in
exercising any right hereunder shall operate as a waiver of such right
or of any other right hereunder. Any waiver of any such right on any
one occasion shall not be construed as a bar to or waiver of any such
right on any such future occasion. No course of dealing between
Pledgor and Collateral Agent nor any failure to exercise, nor any
delay in exercising, on the part of Collateral Agent, any right, power
or privilege hereunder shall operate as a waiver thereof; nor shall
any single or partial exercise of any right, power or privilege
hereunder or thereunder preclude any other or further exercise thereof
or the exercise of any other right, power or privilege.
17. Waivers and Amendments; Successors and Assigns; Governing
Law. None of the terms or provisions of this Pledge Agreement may be
amended, supplemented or otherwise modified except by a written
instrument executed by the Pledgor and the Collateral Agent; provided
that any consent by the Collateral Agent to any waiver, amendment,
supplement or modification hereto shall be subject to Section 18 of
the Intercreditor Agreement. This Pledge Agreement shall be binding
upon the successors and assigns of the Pledgor and shall inure to the
benefit of the Collateral Agent and the Secured Parties and their
respective successors and assigns. This Pledge Agreement shall be
governed by, and construed and interpreted in accordance with, the
internal laws of the State of New York without regard to conflict of
laws principles.
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18. Notices. All notices and communications hereunder shall be
given in writing to the addresses and otherwise in accordance with the
Credit Agreements.
19. Irrevocable Authorization and Instruction to Issuers. The
Pledgor hereby authorizes and instructs each Issuer to comply with any
instruction received by it from the Collateral Agent in writing that
(a) states that an Event of Default has occurred and (b) is otherwise
in accordance with the terms of this Pledge Agreement, without any
other or further instructions from the Pledgor, and the Pledgor agrees
that such Issuer shall be fully protected in so complying.
20. Authority of Collateral Agent. The Pledgor acknowledges
that the rights and responsibilities of the Collateral Agent under
this Pledge Agreement with respect to any action taken by the
Collateral Agent or the exercise or non-exercise by the Collateral
Agent of any option, voting right, request, judgment or other right or
remedy provided for herein or resulting or arising out of this Pledge
Agreement shall, as between the Collateral Agent and the Secured
Parties, be governed by the Intercreditor Agreement but, as between
the Collateral Agent and the Pledgor, the Collateral Agent shall be
conclusively presumed to be acting as agent for itself and the Secured
Parties with full and valid authority so to act or refrain from
acting, and neither the Pledgor nor any Issuer shall be under
obligation, or entitlement, to make any inquiry respecting such
authority.
21. Consent to Jurisdiction. The Pledgor hereby irrevocably
consents to the personal jurisdiction of the United States District
Court for the Southern District of New York and the Supreme Court of
the State of New York - County of New York, in any action, claim or
other proceeding arising out of or any dispute in connection with this
Pledge Agreement, any rights or obligations hereunder, or the
performance of such rights and obligations. The Pledgor hereby
irrevocably consents to the service of a summons and complaint and
other process in any action, claim or proceeding brought by the
Collateral Agent or any Secured Party in connection with this Pledge
Agreement, any rights or obligations hereunder, or the performance of
such rights and obligations, on behalf of itself or its property, in
the manner provided in the Credit Agreements. Nothing in this
Paragraph 21 shall affect the right of the Collateral Agent or any
Secured Party to serve legal process in any other manner permitted by
Applicable Law or affect the right of the Collateral Agent or any
Secured Party to bring any action or proceeding against the Pledgor or
its properties in the courts of any other jurisdictions.
22. Termination. This Agreement shall terminate and be of no
further force and effect from and after repayment of the Secured
Obligations and the permanent termination of the Commitments.
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23. Waiver of Jury Trial. NOTWITHSTANDING ANY OTHER PROVISION
CONTAINED HEREIN, IN THE EVENT ANY JUDICIAL PROCEEDING IS INSTITUTED
IN CONNECTION WITH THIS PLEDGE AGREEMENT, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THE COLLATERAL AGENT AND EACH SECURED PARTY BY THEIR
ACCEPTANCE OF THIS PLEDGE AGREEMENT OR THE BENEFITS HEREOF AND THE
PLEDGOR EACH HEREBY IRREVOCABLY WAIVES ITS RESPECTIVE RIGHT TO A JURY
TRIAL WITH RESPECT TO ANY ACTION, CLAIM OR OTHER PROCEEDING ARISING
OUT OF OR ANY DISPUTE IN CONNECTION WITH THIS PLEDGE AGREEMENT, ANY
RIGHTS OR OBLIGATIONS HEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND
OBLIGATIONS.
24. Counterparts. This Pledge Agreement may be executed by the
parties hereto in several counterparts, each of which shall be deemed
to be an original and all of which shall constitute together one and
the same agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the undersigned has caused this Pledge
Agreement to be duly executed and delivered as of the date first above
written.
(CORPORATE SEAL) WLR FOODS, INC.
By:__/S/ Robert T. Ritter__
Robert T. Ritter
Vice President
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ACKNOWLEDGMENT AND CONSENT
Each Issuer of Pledged Stock referred to in the foregoing Pledge
Agreement hereby acknowledges receipt of a copy thereof and agrees to
be bound thereby and to comply with the terms thereof insofar as such
terms are applicable to it. Each Issuer agrees to notify the
Collateral Agent promptly in writing of the occurrence of any of the
events described in Paragraph 5(c) of the Pledge Agreement. Each
Subsidiary further agrees that the terms of Paragraph 9 of the Pledge
Agreement shall apply to it with respect to all actions that may be
required of it under or pursuant to or arising out of Paragraph 9 of
the Pledge Agreement.
CASSCO ICE & COLD STORAGE, INC.
By:__/S/ Robert T. Ritter__
Robert T. Ritter
Vice President
WAMPLER FOODS, INC.
By:__/S/ Robert T. Ritter
Robert T. Ritter
Treasurer
WAMPLER SUPPLY COMPANY, INC.
By:__Robert T. Ritter__
Robert T. Ritter
Vice President
VALLEY RAIL SERVICE, INC.
By:__/S/ Robert T. Ritter__
Robert T. Ritter
Vice President
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SCHEDULE I
To Pledge Agreement
DESCRIPTION OF PLEDGED STOCK
Subsidiaries
Issuer Class of Certificate No. No. of
Stock Shares
Cassco Ice & Common 1 1000
Cold Storage
Wampler Foods, Common 1 1000
Inc.
Wampler Supply Common 1-9 6500
company, Inc.
Valley Rail Common 1 1000
Services, Inc.
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PLEDGE AGREEMENT SUPPLEMENT
PLEDGE AGREEMENT SUPPLEMENT, dated as of_____________,(the
"Supplement"), made by WLR FOODS, INC., a corporation organized under
the laws of the State of Virginia (the "Pledgor"), in favor of FIRST
UNION NATIONAL BANK, a national banking association, as Collateral
Agent (in such capacity, the "Collateral Agent"), under the Credit
Agreements (as defined in the Pledge Agreement referred to below) for
the benefit of itself and the Secured Parties (as so defined).
1. Reference is hereby made to that Pledge Agreement, dated as
of _________, 1998, made by the Pledgor in favor of the Collateral
Agent (as amended, supplemented or otherwise modified as of the date
hereof, the "Pledge Agreement"). This Supplement supplements the
Pledge Agreement, forms a part thereof and is subject to the terms
thereof. Terms defined in the Pledge Agreement are used herein as
therein defined.
2. The Pledgor hereby confirms and reaffirms the security
interest in the Collateral granted to the Collateral Agent for the
ratable benefit of itself and the Secured Parties under the Pledge
Agreement, and, as additional collateral security for the prompt and
complete payment when due (whether at stated maturity, by acceleration
or otherwise) of the Secured Obligations and in order to induce the
Secured Parties to make their Loans under the Credit Agreements, the
Pledgor hereby delivers to the Collateral Agent, for the ratable
benefit of itself and the Secured Parties, all of the issued and
outstanding shares of capital stock of [INSERT NAME OF NEW SUBSIDIARY]
(the "New Issuer") listed below, which stock, together with all stock
certificates, options, or rights of any nature whatsoever which may be
issued or granted by the New Issuer, is subject to the terms and
conditions of the Pledge Agreement, as supplemented hereby, (the
"Additional Pledged Stock"; as used in the Pledge Agreement as
supplemented by this Supplement, "Pledged Stock" shall be deemed to
include the Additional Pledged Stock) and hereby grants to the
Collateral Agent, for the ratable benefit of itself and the Secured
Parties, a security interest in the Additional Pledged Stock and all
Proceeds thereof.
3. The Pledgor hereby represents and warrants that the
representations and warranties contained in Paragraph 4 of the Pledge
Agreement are true and correct on the date of this Supplement with
references therein to the "Pledged Stock" to include the Additional
Pledged Stock, with references therein to the "Issuer" to include the
New Issuer, and with references to the "Pledge Agreement" to mean the
Pledge Agreement as supplemented by this Supplement.
4. The Pledgor shall deliver to the Collateral Agent the
Acknowledgment and Consent attached hereto duly executed by the New
Issuer. The Additional Pledged Stock pledged hereby is as follows
which Pledged Stock shall be deemed part of Schedule I thereto:
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DESCRIPTION OF PLEDGED STOCK
Issuer Class of Certificate No. No. of
Stock Shares
New Issuer
5. The Pledgor hereby agrees to deliver to the Collateral Agent
such certificates and other documents and take such other action as
shall be reasonably requested by the Collateral Agent in order to
effectuate the terms hereof and the Pledge Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Supplement to
be duly executed under seal and delivered as of the date first above
written.
(CORPORATE SEAL) [NAME OF NEW ISSUER]
By:__________________
Name:________________
Title:_______________
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ACKNOWLEDGMENT AND CONSENT OF NEW ISSUER
The undersigned hereby acknowledges receipt of a copy of the
foregoing Supplement and the Pledge Agreement referred to therein (the
"Pledge Agreement"). The undersigned agrees for the benefit of the
Collateral Agent and the Secured Parties as follows:
1. The undersigned will be bound by the terms of the Pledge
Agreement and will comply with such terms insofar as such terms are
applicable to the undersigned.
2. The undersigned will notify the Collateral Agent promptly in
writing of the occurrence of any of the events described in Paragraph
5(c) of the Pledge Agreement.
3. The Issuer further agrees that the terms of Paragraph 9 of
the Pledge Agreement shall apply to it with respect to all actions
that may be required of it under or pursuant to or arising out of
Paragraph 9 of the Pledge Agreement.
(CORPORATE SEAL) [NAME OF NEW ISSUER]
By:__________________
Name:________________
Title:_______________
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Exhibit 2.9
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (the "Pledge Agreement"), dated as of
February 25, 1998, is made by WAMPLER FOODS, INC., a corporation
organized under the laws of the Commonwealth of Virginia (the
"Pledgor"), in favor of FIRST UNION NATIONAL BANK, a national banking
association, as Collateral Agent (the "Collateral Agent") for the
ratable benefit of itself and the financial institutions (the "Secured
Parties") as are, or may from time to time become, parties to the
Intercreditor Agreement and the Credit Agreements (as hereinafter
defined).
BACKGROUND STATEMENT
A. Pursuant to the terms of the Revolving Credit Agreement and
the Term Loan Agreement each dated as of February 25, 1998 (as
amended, restated, modified or otherwise supplemented, the "Bank
Credit Agreements"), by and among the Pledgor, WLR Foods, Inc., Cassco
Ice & Cold Storage, Inc., Wampler Supply Company, Inc., and Valley
Rail Service, as borrowers (collectively, the "Obligors," and each of
the Obligors individually, an "Obligor"), the Bank Lenders and the
Collateral Agent, the Bank Lenders have agreed to extend and/or
restructure certain loans to the Obligors as more fully described
therein.
B. Pursuant to the terms of a Note Purchase Agreement dated as
of February 25, 1998 (as amended, restated, modified or otherwise
supplemented, the "Note Agreement," and, together with the Bank Credit
Agreements, the "Credit Agreements") by and among WLR Foods, Inc., as
borrower, and the remaining Obligors, as guarantors, the Note Lenders
(as defined in the Intercreditor Agreement) have agreed to extend
and/or restructure certain credit accommodations to the Obligors as
more particularly described therein.
C. As of the date hereof, the Secured Parties and the Obligors
have entered into that certain Collateral Agency and Intercreditor
Agreement (the "Intercreditor Agreement") to, among other things, set
forth the relative rights of the Secured Parties with respect to the
Pledged Stock (hereinafter defined) and the other Collateral described
therein.
D. The Obligors comprise one integrated financial enterprise,
and any loans made to any of them individually will inure, directly or
indirectly, to the benefit of all of them.
E. The Pledgor is the legal and beneficial owner of the shares
of Pledged Stock (as hereinafter defined) issued by the certain
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Subsidiaries as specified on Schedule I attached hereto and
incorporated herein by reference (singly, the "Issuer," and,
collectively, the "Issuers").
F. To induce the Secured Parties and the Collateral Agent to
provide and to continue to provide financial accommodations under the
Credit Agreements, and as a condition to the making of future loans
thereunder, the Secured Parties require that the Pledgor execute and
deliver this Pledge Agreement with the Pledged Stock to the Collateral
Agent to secure the "Secured Obligations" (as hereinafter defined).
Now, THEREFORE, in consideration of the foregoing Background
Statement, and other good and valuable consideration, the receipt and
legal sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Defined Terms. Terms defined in the Security Agreement and
not otherwise defined herein, when used in this Pledge Agreement
including its preamble and recitals, shall have the respective
meanings provided for in the Security Agreement. The following
additional terms, when used in this Pledge Agreement, shall have the
following meanings:
"Code" means the Uniform Commercial Code from time to time in
effect in the State of New York.
"Collateral" means the Stock Collateral.
"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.
"Lien" shall have the meaning assigned thereto in the Credit
Agreements.
"Material Adverse Effect" shall have the meaning assigned thereto
in the Credit Agreements.
"Material Contract" shall have the meaning assigned thereto in
the Credit Agreements.
"Pledge Agreement" means this Pledge Agreement, as amended or
modified.
"Pledged Stock" means the shares of capital stock of each Issuer
listed on Schedule I hereto, together with all stock certificates,
options or rights of any nature whatsoever that may be issued or
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granted by such Issuer to the Pledgor while this Pledge Agreement is
in effect.
"Proceeds" means all "proceeds" as such term is defined in
Section 9-306(l) of the Code on the date hereof and, in any event,
shall include, without limitation, all dividends or other income from
the Pledged Stock, collections thereon, proceeds of sale thereof or
distributions with respect thereto.
"Secured Obligations" means the Secured Obligations as defined in
the Intercreditor Agreement and any renewals or extensions of the
Secured Obligations.
"Stock Collateral" means the Pledged Stock and all Proceeds
therefrom.
"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 Pledgor.
2. Pledge and Grant of Security Interest. The Pledgor hereby
delivers to the Collateral Agent, for the ratable benefit of the
Collateral Agent and the Secured Parties all the Pledged Stock and
hereby grants to the Collateral Agent, for the ratable benefit of the
Collateral Agent and the Secured Parties, a security interest in the
Collateral, as collateral security for the prompt and complete payment
and performance when due (whether at the stated maturity, by
acceleration or otherwise) of the Secured Obligations.
3. Powers; Register of Pledge. Concurrently with the delivery
to the Collateral Agent of any certificate representing any Pledged
Stock, the Pledgor shall deliver an undated power covering such
certificate, duly executed in blank by the Pledgor with, if the
Collateral Agent so requests, signature guaranteed.
4. Representations and Warranties. To induce the Collateral
Agent and the Secured Parties to execute the Credit Agreements and
make any Loans and to accept the security contemplated hereby, the
Pledgor hereby, represents and warrants that:
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(a) the Pledgor has the corporate power, authority and
legal right to execute and deliver, to perform its obligations under,
and to grant the Lien on the Collateral pursuant to, this Pledge
Agreement and has taken all necessary corporate action to authorize
its execution, delivery and performance of, and grant of the Lien on
the Collateral pursuant to, this Pledge Agreement;
(b) this Pledge Agreement constitutes a legal, valid and
binding obligation of the Pledgor enforceable against the Pledgor in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement cf creditors' rights generally and by the
availability of equitable remedies;
(c) the execution, delivery and performance of this Pledge
Agreement will not violate any provision of any Applicable Law or
contractual obligation of the Pledgor and will not result in the
creation or imposition of any Lien on any of the properties or
revenues of the Pledgor pursuant to any Applicable Law or contractual
obligation, except as contemplated hereby;
(d) no consent or authorization of, filing with, or other
act by or in respect of, any arbitrator or Governmental Authority and
no consent of any other Person (including, without limitation, any
stockholder or creditor of the Pledgor or any Issuer), is required in
connection with the execution, delivery, performance, validity or
enforceability against the Pledgor of this Pledge Agreement, except
(i) consents which have been obtained and which remain in full force
and effect, (ii) as may be required in connection with the disposition
of the Pledged Stock by laws affecting the offering and sale of
securities generally, and (iii) filings under the Code;
(e) no litigation, investigation or proceeding of or before
any arbitrator or Governmental Authority is pending or, to the
knowledge of the Pledgor, threatened by or against the Pledgor or
against any of its properties or revenues (i) with respect to this
Pledge Agreement or any of the transactions contemplated hereby or
(ii) which could reasonably be expected to have a Material Adverse
Effect;
(f) the shares of Pledged Stock listed on Schedule I
constitute all the issued and outstanding shares owned by the Pledgor
of all classes of the capital stock of each of the Issuers;
(g) all the shares of the Pledged Stock have been duly and
validly issued and are fully paid;
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(h) the Pledgor is the record and beneficial owner of, and
has good and marketable title to, the Pledged Stock listed on Schedule
I, free of any and all Liens or options in favor of, or claims of, any
other person, except the Lien created by this Pledge Agreement; and
(i) upon (i) delivery to the Collateral Agent of the stock
certificates evidencing the Pledged Stock, and (ii) filing of UCC-1
financing statements in the appropriate filing offices, the Lien
granted pursuant to this Pledge Agreement will constitute a valid Lien
on the collateral, enforceable as such against all creditors of the
Pledgor and any Persons purporting to purchase any of the Collateral
from the Pledgor;
5. Certain Covenants. The Pledgor covenants and agrees with
the Collateral Agent for the ratable benefit of itself and the Secured
Parties that, from and after the date of this Pledge Agreement until
the Secured Obligations are paid in full and the Commitments are
terminated:
(a) If the Pledgor shall, as a result of its ownership of
the Collateral, become entitled to receive or shall receive any
certificate (including, without limitation, any certificate
representing a stock dividend or a distribution in connection with any
reclassification, increase or reduction of capital or any certificate
issued in connection with any reorganization), option or rights,
whether in addition to, in substitution of, as a conversion of, or in
exchange for any shares of the Collateral, or otherwise in respect
thereof, the Pledgor shall accept the same as the agent of the
Collateral Agent, hold the same in trust for the Collateral Agent and
deliver the same forthwith to the Collateral Agent in the exact form
received, duly indorsed by the Pledgor to the Collateral Agent, if
required, together with an undated power covering such certificate
duly executed in blank by the Pledgor and with, if the Collateral
Agent so requests, signature guaranteed, to be held by the Collateral
Agent, subject to the terms hereof, as additional collateral security
for the Secured Obligations. In addition, any sums paid upon or in
respect of the Collateral upon the liquidation or dissolution of any
Issuer shall be held by the Collateral Agent as additional collateral
security for the Secured Obligations.
(b) Without the prior written consent of the Collateral
Agent, the Pledgor will not (i) vote to enable, or take any other
action to permit, any Issuer to issue any stock or other equity
securities of any nature or to issue any other securities convertible
into or granting the right to purchase or exchange for any stock or
other equity securities of any nature of such Issuer, (ii) sell,
assign, transfer, exchange, or otherwise dispose of, or grant any
option with respect to, the Collateral, or (iii) create, incur or
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<PAGE>
permit to exist any Lien or option in favor of, or any claim of any
Person with respect to, any of the Collateral, or any interest
therein. The Pledgor will defend the right, title and interest of the
Collateral Agent in and to the Collateral against the claims and
demands of all Persons whomsoever.
(c) At any time and from time to time, upon the written
request of the Collateral Agent, and at the sole expense of the
Pledgor, the Pledgor will promptly and duly execute and deliver such
further instruments and documents and take such further actions as the
Collateral Agent may reasonably request for the purposes of obtaining
or preserving the full benefits of this Pledge Agreement and of the
rights and powers herein granted. If any amount payable under or in
connection with any of the Collateral shall be or become evidenced by
any promissory note, other instrument or chattel paper, such note,
instrument or chattel paper shall be immediately delivered to the
Collateral Agent, duly endorsed in a manner satisfactory to the
Collateral Agent, to be held as Collateral pursuant to this Pledge
Agreement.
(d) The Pledgor agrees to pay, and to save the Collateral
Agent and the Secured Parties harmless from, any and all liabilities
with respect to, or resulting from any delay in paying, any and all
stamp, excise, sales or other similar taxes which may be payable or
determined to be payable with respect to any of the Collateral or in
connection with any of the transactions contemplated by this Pledge
Agreement.
(e) On or prior to the formation or acquisition of any
Subsidiary of the Pledgor, the Pledgor agrees to execute such
amendments and supplements to this Pledge Agreement, including,
without limitation, the Pledge Agreement Supplement attached hereto,
and such other documents and instruments and to take any and all
actions, all as shall be necessary, in the reasonable judgment of the
Collateral Agent, to pledge the Pledgor's interest therein to the
Collateral Agent for the ratable benefit of itself and the Secured
Parties.
6. Cash Dividends and Distributions; Voting Rights. Unless an
Event of Default shall have occurred and the Collateral Agent shall
have given notice to the Pledgor of the Collateral Agent's intent to
exercise its rights pursuant to Paragraph 8 below, the Pledgor shall
be permitted to receive all cash dividends and shareholder
distributions paid in accordance with the terms of the Credit
Agreements in respect of the Collateral and to exercise all voting and
corporate rights, as applicable, with respect to the Collateral;
provided, that no vote shall be cast or corporate right exercised or
other action taken which, in the Collateral Agent's reasonable
judgment, would impair the Collateral or which would be inconsistent
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with or result in any violation of any provision of the Credit
Agreements, the Notes, any other Transaction Documents or this Pledge
Agreement.
7. Rights of the Collateral Agent.
(a) If an Event of Default shall occur and the Collateral Agent
shall give notice of its intent to exercise such right to the Pledgor,
(i) the Collateral Agent shall have the right to receive any and all
cash dividends paid in respect of the Pledged Stock and make
application thereof to the Secured Obligations in the order set forth
in Section 7 of the Intercreditor Agreement and (ii) all shares of the
Pledged Stock shall be registered in the name of the Collateral Agent
or its nominee, and the Collateral Agent or its nominee may thereafter
exercise (A) all voting, corporate and other rights pertaining to such
shares of the Pledged Stock at any meeting of shareholders of the
applicable Issuer, and (B) any and all rights of conversion, exchange,
subscription and any other rights, privileges or options pertaining to
such shares of the Pledged Stock as if it were the absolute owner
thereof (including, without limitation, the right to exchange at its
discretion any and all of the Pledged Stock interests upon the merger,
consolidation, reorganization, recapitalization or other fundamental
change in the corporate structure of the applicable Issuer or, or upon
the exercise by the Pledgor or the Collateral Agent of any right,
privilege or option pertaining to such shares of the Pledged Stock,
and in connection therewith, the right to deposit and deliver any and
all of the Pledged Stock with any committee, depositary, transfer
agent, registrar or other designated agency upon such terms and
conditions as it may determine), all without liability except to
account for property actually received by it, but the Collateral Agent
shall have no duty to the Pledgor to exercise any such right,
privilege or option and shall not be responsible for any failure to do
so or delay in so doing.
(b) The rights of the Collateral Agent and the Secured Parties
hereunder shall not be conditioned or contingent upon the pursuit by
the Collateral Agent or any Secured Party of any right or remedy
against the Pledgor or against any other Person which may be or become
liable in respect of all or any part of the Secured Obligations or
against any collateral security therefor, guarantee therefor or right
of offset with respect thereto. Neither the Collateral Agent nor any
Secured Party shall be liable for any failure to demand, collect or
realize upon all or any part of the Collateral or for any delay in
doing so, nor shall the Collateral Agent be under any obligation to
sell or otherwise dispose of any Collateral upon the request of the
Pledgor or any other Person or to take any other action whatsoever
with regard to the Collateral or any part thereof.
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8. Remedies. If an Event of Default shall occur, the
Collateral Agent may, and upon the request of the Required Secured
Parties, the Collateral Agent shall, exercise on behalf of itself and
the Secured Parties, all rights and remedies granted in this Pledge
Agreement and in any other instrument or agreement securing,
evidencing or relating to the Secured Obligations, and in addition
thereto, all rights and remedies of a secured party under the Code.
Without limiting the generality of the foregoing with regard to the
scope of the Collateral Agent's remedies, the Collateral Agent,
without demand of performance or other demand, presentment, protest,
advertisement or notice of any kind (except any notice required by law
referred to below) to or upon the Pledgor, any Issuer or any other
Person (all and each of which demands, defenses, advertisements and
notices are hereby waived), may in such circumstances forthwith
collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or may forthwith sell, assign, give option or
options to purchase or otherwise dispose of and deliver the Collateral
or any part thereof (or contract to do any of the foregoing), in one
or more parcels at public or private sale or sales, in the over-the-
counter market, at any exchange, broker's board or office of the
Collateral Agent or any Secured Party or elsewhere upon such terms and
conditions as it may deem advisable and at such prices as it may deem
best, for cash or on credit or for future delivery without assumption
of any credit risk. The Collateral Agent or any Secured Party shall
have the right upon any such public sale or sales, and, to the extent
permitted by law, upon any such private sale or sales, to purchase the
whole or any part of the Collateral so sold, free of any right or
equity of redemption in the Pledgor, which right or equity is hereby
waived or released. The Collateral Agent shall apply any Proceeds
from time to time held by it and the net proceeds of any such
collection, recovery, receipt, appropriation, realization or sale to
the payment in whole or in part of the Secured Obligations, in the
order set forth in the Intercreditor Agreement, and only after such
application and after the payment by the Collateral Agent of any other
amount required by any provision of law, including, without
limitation, Section 9-504(l)(c) of the Code, need the Collateral Agent
account for the surplus, if any, to the Pledgor. To the extent
permitted by Applicable Law, the Pledgor waives all claims, damages
and demands it may acquire against the Collateral Agent or any Secured
Party arising out of the exercise by them of any rights hereunder. If
any notice of a proposed sale or other disposition of Collateral shall
be required by law, such notice shall be deemed reasonable and proper
if given at least (10) Business Days prior to such sale or other
disposition (or one (1) day notice by telephone with respect to
Collateral that is perishable or threatens to decline rapidly in value
and for Collateral which is marketable securities). To the extent
permitted by Applicable Law, the Pledgor further waives and agrees not
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to assert any rights or privileges which it may acquire under Section
9-112 of the Code.
9. Registration Rights; Private Sales.
(a) If the Collateral Agent shall determine to exercise its
right to sell any or all of the Pledged Stock pursuant to Paragraph 9
hereof, and if in the opinion of the Collateral Agent it is necessary
or advisable to have the Pledged Stock, or that portion thereof to be
sold, registered under the provisions of the Securities Act of 1933,
as amended (the "Securities Act"), the Pledgor will, to the extent the
Issuer is a Subsidiary of the Pledgor, cause and, to the extent the
Issuer is not a Subsidiary of the Pledgor, use its best efforts to
cause, the applicable Issuer to (i) execute and deliver, and cause the
directors and officers of the applicable Issuer, to execute and
deliver, all such instruments and documents, and do or cause to be
done all such other acts as may be, in the reasonable opinion of the
Collateral Agent, necessary or advisable to register the Pledged
Stock, or that portion thereof to be sold, under the provisions of the
Securities Act, (ii) to use its best efforts to cause the registration
statement relating thereto to become effective and to remain effective
for a period of one year from the date of the first public offering of
the Pledged Stock, or that portion thereof to be sold, and (iii) to
make all amendments thereto and/or to the related prospectus which, in
the reasonable opinion of the Collateral Agent, are necessary or
advisable, all in conformity with the requirements of the Securities
Act and the rules and regulations of the Securities and Exchange
Commission applicable thereto. The Pledgor agrees to cause the
applicable Issuer to comply with the provisions of the securities or
"Blue Sky" laws of any and all jurisdictions which the Collateral
Agent shall designate and to make available to its security holders,
as soon as practicable, an earnings statement (which need not be
audited) which will satisfy the provisions of Section 11(a) of the
Securities Act; provided, that such Issuer shall not for any such
purpose be required (A) to qualify as a dealer in securities, (B) to
qualify generally to do business as a foreign corporation in any
jurisdiction wherein it would not but for the requirements of this
Section 9(a) be obligated to be so qualified, (C) to consent to
general service of process in any such jurisdiction or (D) to subject
itself to taxation in any such jurisdiction.
(b) The Pledgor recognizes that the Collateral Agent may be
unable to effect a public sale of any or all the Collateral, by reason
of certain prohibitions contained in the Securities Act and applicable
state securities laws or otherwise, and may be compelled to resort to
one or more private sales thereof to a restricted group of purchasers
which will be obliged to agree, among other things, to acquire such
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securities for their own account for investment and not with a view to
the distribution or resale thereof. The Pledgor acknowledges and
agrees that any such private sale may result in prices and other terms
less favorable than if such sale were a public sale and agrees that a
determination of whether any such private sale shall be deemed to have
been made in a commercially reasonable manner shall not in any event
be based on such circumstances. The Collateral Agent shall be under
no obligation to delay a sale of any of the Collateral for the period
of time necessary to permit the applicable Issuer to register such
securities for public sale under the Securities Act, or under
applicable state securities laws, even if the applicable Issuer would
agree to do so.
(c) The Pledgor further agrees to use its best efforts to do or
cause to be done all such other acts as may be necessary to make such
sale or sales of all or any portion of the Collateral pursuant to this
Paragraph 9 valid and binding and in compliance with any and all other
Applicable Laws. The Pledgor further agrees that a breach of any of
the covenants contained in this Paragraph 9 will cause irreparable
injury to the Collateral Agent and the Secured Parties not compensable
in damages, that the Collateral Agent and the Secured Parties have no
adequate remedy at law in respect of such breach and, as a
consequence, that each and every covenant contained in this Paragraph
9 shall be specifically enforceable against the Pledgor, and the
Pledgor hereby waives and agrees not to assert any defenses against an
action for specific performance of such covenants except for a defense
that no Event of Default has occurred under the Credit Agreements.
10. Amendments, etc. With Respect to the Secured Obligations.
The Pledgor shall remain obligated hereunder, and the Collateral shall
remain subject to the Lien granted hereby, notwithstanding that,
without any reservation of rights against the Pledgor, and without
notice to or further assent by the Pledgor, any demand for payment of
any of the Secured Obligations made by the Collateral Agent or any
Secured Party, may be rescinded by the Collateral Agent, and any of
the Secured Obligations continued, and the Secured Obligations, or the
liability of the Pledgor or any other Person upon or for any part
thereof, or any collateral security or guarantee therefor or right of
offset with respect thereto, may, from time to time, in whole or in
part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered, or released by the Collateral Agent,
and the Credit Agreements, the Notes, any other Transaction Documents
and any other documents executed and delivered in connection therewith
may be amended, modified, supplemented or terminated, in whole or
part, as the Secured Parties (or the Required Secured Parties, as the
case may be) may deem advisable from time to time, and any guarantee,
right of offset or other collateral security at any time held by the
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Collateral Agent for the payment of the Secured Obligations may be
sold, exchanged, waived, surrendered or released. Neither the
Collateral Agent nor any Secured Party shall have any obligation to
protect, secure, perfect or insure any other Lien at any time held by
it as security for the Secured Obligations or any property subject
thereto. The Pledgor waives any and all notice of the creation,
renewal, extension or accrual of any of the Secured Obligations and
notice of or proof of reliance by the Collateral Agent or any Secured
Party upon this Pledge Agreement; the Secured Obligations, and any of
them, shall conclusively be deemed to have been created, contracted or
incurred in reliance upon this Pledge Agreement; and all dealings
between the Pledgor, on the one hand, and the Collateral Agent and the
Secured Parties, on the other, shall likewise be conclusively presumed
to have been had or consummated in reliance upon this Pledge
Agreement. The Pledgor waives diligence, presentment, protest, demand
for payment and notice of default or nonpayment to or upon the Pledgor
with respect to the Secured Obligations.
11. Limitation on Duties Regarding Collateral. The Collateral
Agent's sole duty with respect to the custody, safekeeping and
physical preservation of the Collateral in its possession, under
Section 9-207 of the Code or otherwise, shall be to deal with it in
the same manner as the Collateral Agent deals with similar securities
and property for its own account. Neither the Collateral Agent, any
Secured Party nor any of their respective directors, officers,
employees or agents shall be liable for failure to demand, collect or
realize upon any of the Collateral or for any delay in doing so or
shall be under any obligation to sell or otherwise dispose of any
Collateral upon the request of the Pledgor or otherwise.
12. Powers Coupled with an Interest. All authorizations and
agencies herein contained with respect to the Collateral constitute
irrevocable powers coupled with an interest.
13. Severability. Any provision of this Pledge Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof,
and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other
jurisdiction.
14. Paragraph Headings. The paragraph headings used in this
Pledge Agreement are for convenience of reference only and are not to
affect the construction hereof or be taken into consideration in the
interpretation hereof.
15. No Waiver; Cumulative Remedies. Neither the Collateral
Agent nor any Secured Party shall by any act (except by a written
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instrument pursuant to Paragraph 17 hereof) be deemed to have waived
any right or remedy hereunder or to have acquiesced in any Default or
Event of Default or in any breach of any of the terms and conditions
hereof. No failure to exercise, nor any delay in exercising, on the
part of the Collateral Agent or any Secured Party, any right, power or
privilege hereunder shall operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall
preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. A waiver by the Collateral Agent or
any Secured Party of any right or remedy hereunder on any one occasion
shall not be construed as a bar to any right or remedy which the
Collateral Agent or such Secured Party would otherwise have on any
future occasion. The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not
exclusive of any other rights or remedies provided by law.
16. Waivers. Except as otherwise expressly provided herein,
Pledgor, on its behalf and on behalf of its respective successors and
assigns, hereby waives presentment, demand, notice, protest and all
other demands and notices in connection with this Pledge Agreement,
with the enforcement of Collateral Agent's rights hereunder or with
any of the Secured Obligations or the Collateral; waives all rights to
require a marshalling of assets by Collateral Agent; and consents to
and waives notice of (i) the granting of renewals, extensions of time
for payment or other indulgences to the Borrower or the Pledgor, (ii)
substitution, release or surrender of the Collateral, (iii) the
addition or release of persons primarily or secondarily liable on any
of the Secured Obligations, (iv) the acceptance of partial payments on
any of the Secured Obligations or the Collateral and/or the settlement
or compromise thereof. The rights of Collateral Agent hereunder shall
not be affected by (i) any extension, renewal, acceleration,
indulgence, settlement, compromise or any other change in the time of
payment or the terms of any of the Secured Obligations or any part
thereof; (ii) the release or substitution of any party primarily or
secondarily liable respecting any of the Secured Obligations or any
part thereof; (iii) the taking and holding of additional security,
other than the Collateral, for the Secured Obligations or any part
thereof, or the exchange, enforcement, waiver or release of the
Collateral or any part thereof or any other security for the Secured
Obligations. Except as otherwise expressly provided herein, Pledgor
hereby further waives any right it may have under the constitution of
the State of New York (or under the constitution of any other state in
which the Collateral may be located), or under the Constitution of the
United States of America, to notice or to a judicial hearing prior to
the exercise of any right or remedy provided by this Assignment by
Collateral Agent and waives its rights, if any, to set aside or
invalidate any sale duly consummated in accordance with the foregoing
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provisions hereof on the grounds (if such be the case) that the sale
was consummated without a prior judicial hearing. Pledgor's waivers
under this Section have been made voluntarily, intelligently and
knowingly and after Pledgor has been apprised and counseled by its
attorneys as to the nature thereof and their possible alternative
rights. No delay or omission on the part of Collateral Agent in
exercising any right hereunder shall operate as a waiver of such right
or of any other right hereunder. Any waiver of any such right on any
one occasion shall not be construed as a bar to or waiver of any such
right on any such future occasion. No course of dealing between
Pledgor and Collateral Agent nor any failure to exercise, nor any
delay in exercising, on the part of Collateral Agent, any right, power
or privilege hereunder shall operate as a waiver thereof; nor shall
any single or partial exercise of any right, power or privilege
hereunder or thereunder preclude any other or further exercise thereof
or the exercise of any other right, power or privilege.
17. Waivers and Amendments; Successors and Assigns; Governing
Law. None of the terms or provisions of this Pledge Agreement may be
amended, supplemented or otherwise modified except by a written
instrument executed by the Pledgor and the Collateral Agent; provided
that any consent by the Collateral Agent to any waiver, amendment,
supplement or modification hereto shall be subject to Section 18 of
the Intercreditor Agreement. This Pledge Agreement shall be binding
upon the successors and assigns of the Pledgor and shall inure to the
benefit of the Collateral Agent and the Secured Parties and their
respective successors and assigns. This Pledge Agreement shall be
governed by, and construed and interpreted in accordance with, the
internal laws of the State of New York without regard to conflict of
laws principles.
18. Notices. Unless specified otherwise, all notices and
communications hereunder shall be given in writing to the addresses
and otherwise in accordance with the Credit Agreements.
19. Irrevocable Authorization and Instruction to Issuers. The
Pledgor hereby authorizes and instructs each Issuer to comply with any
instruction received by it from the Collateral Agent in writing that
(a) states that an Event of Default has occurred and (b) is otherwise
in accordance with the terms of this Pledge Agreement, without any
other or further instructions from the Pledgor, and the Pledgor agrees
that such Issuer shall be fully protected in so complying.
20. Authority of Collateral Agent. The Pledgor acknowledges
that the rights and responsibilities of the Collateral Agent under
this Pledge Agreement with respect to any action taken by the
Collateral Agent or the exercise or non-exercise by the Collateral
Agent of any option, voting right, request, judgment or other right or
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remedy provided for herein or resulting or arising out of this Pledge
Agreement shall, as between the Collateral Agent and the Secured
Parties, be governed by the Intercreditor Agreement but, as between
the Collateral Agent and the Pledgor, the Collateral Agent shall be
conclusively presumed to be acting as agent for itself and the Secured
Parties with full and valid authority so to act or refrain from
acting, and neither the Pledgor nor any Issuer shall be under
obligation, or entitlement, to make any inquiry respecting such
authority.
21. Consent to Jurisdiction. The Pledgor hereby irrevocably
consents to the personal jurisdiction of the United States District
Court for the Southern District of New York and the Supreme Court of
the State of New York - County of New York, in any action, claim or
other proceeding arising out of or any dispute in connection with this
Pledge Agreement, any rights or obligations hereunder, or the
performance of such rights and obligations. The Pledgor hereby
irrevocably consents to the service of a summons and complaint and
other process in any action, claim or proceeding brought by the
Collateral Agent or any Secured Party in connection with this Pledge
Agreement, any rights or obligations hereunder, or the performance of
such rights and obligations, on behalf of itself or its property, in
the manner provided in the Credit Agreements. Nothing in this
Paragraph 21 shall affect the right of the Collateral Agent or any
Secured Party to serve legal process in any other manner permitted by
Applicable Law or affect the right of the Collateral Agent or any
Secured Party to bring any action or proceeding against the Pledgor or
its properties in the courts of any other jurisdictions.
22. Termination. This Pledge Agreement shall terminate and be
of no further force and effect from and after repayment of the Secured
Obligations and the permanent termination of the Commitments.
23. Waiver of Jury Trial. NOTWITHSTANDING ANY OTHER PROVISION
CONTAINED HEREIN, IN THE EVENT ANY JUDICIAL PROCEEDING IS INSTITUTED
IN CONNECTION WITH THIS PLEDGE AGREEMENT, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THE COLLATERAL AGENT AND EACH SECURED PARTY BY THEIR
ACCEPTANCE OF THIS PLEDGE AGREEMENT OR THE BENEFITS HEREOF AND THE
PLEDGOR EACH HEREBY IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A
JURY TRIAL WITH RESPECT TO ANY ACTION, CLAIM OR OTHER PROCEEDING
ARISING OUT OF OR ANY DISPUTE IN CONNECTION WITH THIS PLEDGE
AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER, OR THE PERFORMANCE OF
SUCH RIGHTS AND OBLIGATIONS.
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24. Counterparts. This Pledge Agreement may be executed by the
parties hereto in several counterparts, each of which shall be deemed
to be an original and all of which shall constitute together one and
the same agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the undersigned has caused this Pledge
Agreement to be duly executed and delivered as of the date first above
written.
(CORPORATE SEAL) WAMPLER FOODS, INC.
By:__/S/ Robert T. Ritter__
Robert T. Ritter
Treasurer
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ACKNOWLEDGMENT AND CONSENT
Each Issuer of Pledged Stock referred to in the foregoing Pledge
Agreement hereby acknowledges receipt of a copy thereof and agrees to
be bound thereby and to comply with the terms thereof insofar as such
terms are applicable to it. Each Issuer agrees to notify the
Collateral Agent promptly in writing of the occurrence of any of the
events described in Paragraph 5(c) of the Pledge Agreement. Each
Subsidiary further agrees that the terms of Paragraph 9 of the Pledge
Agreement shall apply to it with respect to all actions that may be
required of it under or pursuant to or arising out of Paragraph 9 of
the Pledge Agreement.
ROCKINGHAM POULTRY, INC.,
a Virginia corporation
By:__/S/ Robert T. Ritter__
Robert T. Ritter
Vice President
ROCKINGHAM POULTRY, INC.,
a Virgin Islands corporation (F.S.C.)
By:__/S/ Ruth J. Mack
Ruth J. Mack
Vice President
17
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SCHEDULE I
To Pledge Agreement
DESCRIPTION OF PLEDGED STOCK
Subsidiaries
Issuer Class of Stock Certificate No. No. of Shares
Rockingham Common 1 1000
Poultry, Inc.
(VA)
Rockingham Common 1 100
Poultry, Inc.
(VI)
18
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PLEDGE AGREEMENT SUPPLEMENT
PLEDGE AGREEMENT SUPPLEMENT, dated as of_________________,__
(the "Supplement"), made by WAMPLER FOODS, INC., a corporation
organized under the laws of the State of Virginia (the "Pledgor"), in
favor of FIRST UNION NATIONAL BANK, a national banking association, as
Collateral Agent (in such capacity, the "Collateral Agent"), under the
Credit Agreements (as defined in the Pledge Agreement referred to
below) for the benefit of itself and the Secured Parties (as so
defined).
1. Reference is hereby made to that Pledge Agreement, dated as
of February ____ , 1998, made by the Pledgor in favor of the
Collateral Agent (as amended, supplemented or otherwise modified as of
the date hereof, the "Pledge Agreement"). This Supplement supplements
the Pledge Agreement, forms a part thereof and is subject to the terms
thereof. Terms defined in the Pledge Agreement are used herein as
therein defined.
2. The Pledgor hereby confirms and reaffirms the security
interest in the Collateral granted to the Collateral Agent for the
ratable benefit of itself and the Secured Parties under the Pledge
Agreement, and, as additional collateral security for the prompt and
complete payment when due (whether at stated maturity, by acceleration
or otherwise) of the Secured Obligations and in order to induce the
Secured Parties to make their Loans under the Credit Agreements, the
Pledgor hereby delivers to the Collateral Agent, for the ratable
benefit of itself and the Secured Parties, all of the issued and
outstanding shares of capital stock of [INSERT NAME OF NEW SUBSIDIARY]
(the "New Issuer") listed below, which stock, together with all stock
certificates, options, or rights of any nature whatsoever which may be
issued or granted by the New Issuer, is subject to the terms and
conditions of the Pledge Agreement, as supplemented hereby, (the
"Additional Pledged Stock"; as used in the Pledge Agreement as
supplemented by this Supplement, "Pledged Stock" shall be deemed to
include the Additional Pledged Stock) and hereby grants to the
Collateral Agent, for the ratable benefit of itself and the Secured
Parties, a security interest in the Additional Pledged Stock and all
Proceeds thereof.
3. The Pledgor hereby represents and warrants that the
representations and warranties contained in Paragraph 4 of the Pledge
Agreement are true and correct on the date of this Supplement with
references therein to the "Pledged Stock" to include the Additional
Pledged Stock, with references therein to the "Issuer" to include the
New Issuer, and with references to the "Pledge Agreement" to mean the
Pledge Agreement as supplemented by this Supplement.
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4. The Pledgor shall deliver to the Collateral Agent the
Acknowledgment and Consent attached hereto duly executed by the New
Issuer. The Additional Pledged Stock pledged hereby is as follows
which Pledged Stock shall be deemed part of Schedule I thereto:
20
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DESCRIPTION OF PLEDGED STOCK
Issuer Class of Stock Certificate No. No. of Shares
New Issuer
5. The Pledgor hereby agrees to deliver to the Collateral Agent
such certificates and other documents and take such other action as
shall be reasonably requested by the Collateral Agent in order to
effectuate the terms hereof and the Pledge Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Supplement to
be duly executed under seal and delivered as of the date first above
written.
(CORPORATE SEAL) [NAME OF NEW ISSUER]
By:_________________
Name:_______________
Title:______________
21
<PAGE>
ACKNOWLEDGMENT AND CONSENT OF NEW ISSUER
The undersigned hereby acknowledges receipt of a copy of the
foregoing Supplement and the Pledge Agreement referred to therein (the
"Pledge Agreement"). The undersigned agrees for the benefit of the
Collateral Agent and the Secured Parties as follows:
1. The undersigned will be bound by the terms of the Pledge
Agreement and will comply with such terms insofar as such terms are
applicable to the undersigned.
2. The undersigned will notify the Collateral Agent promptly in
writing of the occurrence of any of the events described in Paragraph
5(c) of the Pledge Agreement.
3. The Issuer further agrees that the terms of Paragraph 9 of
the Pledge Agreement shall apply to it with respect to all actions
that may be required of it under or pursuant to or arising out of
Paragraph 9 of the Pledge Agreement.
(CORPORATE SEAL) [NAME OF NEW ISSUER]
By:________________
Name:______________
Title:_____________
22
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Exhihit 2.10
WLR FOODS, INC.
Dated as of February 25, 1998
Note Purchase Agreement
$42,040,162.73 Variable Rate Senior Notes Due December 31, 1999
177,980 Warrants to Acquire Common Stock
1
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TABLE OF CONTENTS
PAGE
1. BACKGROUND . . . . . . . . . . . . . . . . . . . . . . . 1
2. AUTHORIZATION OF NOTES . . . . . . . . . . . . . . . . . 2
3. EXCHANGE OF EXISTING NOTES . . . . . . . . . . . . . . . 2
3.1 The Closing . . . . . . . . . . . . . . . . . . 2
4. CONDITIONS TO CLOSING . . . . . . . . . . . . . . . . . . 4
4.1 Representations and Warranties . . . . . . . . 4
4.2 Performance; No Default . . . . . . . . . . . . 4
4.3 Compliance Certificates . . . . . . . . . . . . 4
4.4 Opinions of Counsel . . . . . . . . . . . . . . 4
4.5 Exchange Permitted By Applicable Law, etc . . . 5
4.6 Exchange of Notes and Issuance of Warrants . . 5
4.7 Payment of Fees and Expenses . . . . . . . . . 5
4.8 Private Placement Number . . . . . . . . . . . 5
4.9 Changes in Corporate Structure . . . . . . . . 5
4.10 Payment of Fees . . . . . . . . . . . . . . . . 5
4.11 Subsidiary Guarantees . . . . . . . . . . . . . 6
4.12 Payment of Interest on Existing Notes . . . . . 6
4.13 Security Documents . . . . . . . . . . . . . . 6
4.14 Perfection of Liens . . . . . . . . . . . . . . 6
4.15 Bank Credit Agreements . . . . . . . . . . . . 6
4.16 Warrantholders Rights Agreement . . . . . . . . 7
4.17 Proceedings and Documents . . . . . . . . . . . 7
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . 7
5.1 Organization; Power and Authority . . . . . . . 7
5.2 Authorization, etc . . . . . . . . . . . . . . 7
5.3 Disclosure . . . . . . . . . . . . . . . . . . 8
5.4 Organization and Ownership of Shares of
Subsidiaries; Affiliates . . . . . . . . . . . 8
5.5 Financial Statements . . . . . . . . . . . . . 9
5.6 Compliance with Laws, Other Instruments, etc . 9
5.7 Governmental Authorizations, etc . . . . . . . 9
5.8 Litigation; Observance of Agreements, Statutes
and Orders . . . . . . . . . . . . . . . . . . 10
5.9 Taxes . . . . . . . . . . . . . . . . . . . . . 10
5.10 Title to Property; Leases . . . . . . . . . . . 10
5.11 Licenses, Permits, etc . . . . . . . . . . . . 11
5.12 Compliance with ERISA . . . . . . . . . . . . . 11
5.13 Private Offering by the Company . . . . . . . . 12
5.14 Use of Proceeds; Margin Regulations . . . . . . 12
5.15 Existing Indebtedness; Future Liens . . . . . . 13
5.16 Foreign Assets Control Regulations, etc . . . . 13
5.17 Status under Certain Statutes . . . . . . . . . 13
5.18 Environmental Matters . . . . . . . . . . . . . 13
2
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5.19 No Defaults . . . . . . . . . . . . . . . . . . 14
5.20 Company and Subsidiary Guarantors . . . . . . . 14
5.21 Solvency . . . . . . . . . . . . . . . . . . . 14
5.22 Inactive Subsidiaries . . . . . . . . . . . . . 15
5.23 WLR Common Stock . . . . . . . . . . . . . . . 15
6. REPRESENTATIONS OF THE PURCHASER . . . . . . . . . . . . 15
6.1 Acquisition for Investment . . . . . . . . . . 15
6.2 Source of Funds . . . . . . . . . . . . . . . . 15
7. INFORMATION AS TO COMPANY . . . . . . . . . . . . . . . . 17
7.1 Financial and Business Information . . . . . . 17
7.2 Officer's Certificate . . . . . . . . . . . . . 20
7.3 Inspection . . . . . . . . . . . . . . . . . . 20
8. PAYMENT OF THE NOTES . . . . . . . . . . . . . . . . . . 20
8.1 Required Prepayments; Payment at Maturity;
Extension of Maturity . . . . . . . . . . . . . 20
8.2 Optional Prepayments . . . . . . . . . . . . . 22
8.3 Allocation of Partial Prepayments . . . . . . . 22
8.4 Maturity; Surrender, etc . . . . . . . . . . . 23
8.5 No Other Optional Prepayments or Purchase of
Notes . . . . . . . . . . . . . . . . . . . . . 23
8.6 Interest on Notes . . . . . . . . . . . . . . . 23
9. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . 24
9.1 Compliance with Law . . . . . . . . . . . . . . 24
9.2 Insurance . . . . . . . . . . . . . . . . . . . 25
9.3 Maintenance of Properties . . . . . . . . . . . 25
9.4 Payment of Taxes and Claims . . . . . . . . . . 25
9.5 Corporate Existence, etc . . . . . . . . . . . 25
9.6 Subsidiaries as Guarantors . . . . . . . . . . 26
9.7 Current Public Information . . . . . . . . . . 26
10. NEGATIVE AND FINANCIAL COVENANTS . . . . . . . . . . . . 26
10.1 Negative Covenants . . . . . . . . . . . . . . 26
10.2 Financial Covenants . . . . . . . . . . . . . . 27
10.3 Transactions with Affiliates . . . . . . . . . 27
10.4 Inactive Subsidiaries . . . . . . . . . . . . . 27
11. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . 27
12. REMEDIES ON DEFAULT, ETC . . . . . . . . . . . 30
12.1 Acceleration . . . . . . . . . . . . . . . . . 30
12.2 Other Remedies . . . . . . . . . . . . . . . . 31
12.3 Rescission . . . . . . . . . . . . . . . . . . 31
12.4 No Waivers or Election of Remedies, Expenses,
etc . . . . . . . . . . . . . . . . . . . . . . 31
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES . . . . . . 32
13.1 Registration of Notes . . . . . . . . . . . . . 32
3
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13.2 Transfer and Exchange of Notes . . . . . . . . 32
13.3 Replacement of Notes . . . . . . . . . . . . . 32
14. PAYMENTS ON NOTES . . . . . . . . . . . . . . . . . . . . 33
14.1 Place of Payment . . . . . . . . . . . . . . . 33
14.2 Home Office Payment . . . . . . . . . . . . . . 33
15. EXPENSES, ETC . . . . . . . . . . . . . . . . . . . . . . 33
15.1 Transaction Expenses . . . . . . . . . . . . . 33
15.2 Survival . . . . . . . . . . . . . . . . . . . 34
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE
AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . 34
17. AMENDMENT AND WAIVER . . . . . . . . . . . . . . . . . . 34
17.1 Requirements . . . . . . . . . . . . . . . . . 34
17.2 Solicitation of Holders of Notes . . . . . . . 35
17.3 Binding Effect, etc . . . . . . . . . . . . . . 35
17.4 Notes held by Company, etc . . . . . . . . . . 35
18. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . 35
19. REPRODUCTION OF DOCUMENTS . . . . . . . . . . . . . . . . 36
20. SUBSTITUTION OF PURCHASER . . . . . . . . . . . . . . . . 36
21. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 37
21.1 Successors and Assigns . . . . . . . . . . . . . . . . . 37
21.2 Payments Due on Non-Business Days; When Payments
Deemed Received . . . . . . . . . . . . . . . . . . . . . 37
21.3 Severability . . . . . . . . . . . . . . . . . 37
21.4 Construction . . . . . . . . . . . . . . . . . 37
21.5 Counterparts . . . . . . . . . . . . . . . . . 37
21.6 Governing Law . . . . . . . . . . . . . . . . . 38
SCHEDULE A -- Information Relating to Purchasers
SCHEDULE B -- Defined Terms
SCHEDULE 4.9 -- Changes in Corporate Structure
SCHEDULE 5.3 -- Disclosure Materials
SCHEDULE 5.4 -- Subsidiaries of the Company and Ownership of
Subsidiary Stock
SCHEDULE 5.5 -- Financial Statements
SCHEDULE 5.8 -- Certain Litigation
4
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SCHEDULE 5.11 -- Patents, etc.
SCHEDULE 5.12 -- ERISA Affiliates
SCHEDULE 5.14 -- Use of Proceeds
SCHEDULE 5.15 -- Existing Indebtedness and Liens
SCHEDULE 5.23 -- WLR Common Stock
SCHEDULE 8.1(d)-- Existing Stock Incentive Program
SCHEDULE 10.1 -- Negative Covenants
SCHEDULE 10.2 -- Financial Covenants
EXHIBIT 2(a) -- Form of Variable Rate Senior Note due
December 31, 1999
EXHIBIT 2(b) -- Form of Warrant Certificate
EXHIBIT 4.4(a) -- Form of Opinion of Special Counsel for the
Company
EXHIBIT 4.4(b) -- Form of Opinion of Special Counsel for the
Purchasers
EXHIBIT 4.11(a) -- Form of Guaranty Agreement
EXHIBIT 4.11(b) -- Form of Certificate of Vice
President/Treasurer of Subsidiary Guarantor
EXHIBIT 4.13(b) -- Form of Collateral Agency and Intercreditor
Agreement
EXHIBIT 4.16 -- Form of Warrantholders Rights Agreement
5
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WLR FOODS, INC.
800 Co-op Drive
Timberville, Virginia 22853
$42,040,162.73 Variable Rate Senior Notes Due December 31, 1999
177,980 Warrants to Acquire Common Stock
Dated as of February 25, 1998
To each of the Purchasers Named on
the Signature Page Hereto
Ladies and Gentlemen:
WLR FOODS, INC. , a Virginia corporation (together with its
successors and assigns, the "Company"), agrees with you as follows:
1. BACKGROUND.
The Company has heretofore issued its
(a) 9.41% Senior Notes due May 1, 2001 (collectively,
as in effect immediately prior to the Closing Date, the
"Existing 1991 Notes") in the aggregate original principal
amount of Thirty Million Dollars ($30,000,000) pursuant to that
certain Note Agreement (as amended and in effect immediately
prior to the Closing Date, the "Existing 1991 Note Agreement"),
dated as of May 1, 1991, between the Company and the purchasers
identified on Schedule 1 thereto (the "Existing 1991
Purchasers"), the aggregate outstanding principal amount of the
Existing 1991 Notes on the Closing Date is Eighteen Million
Dollars ($18,000,000), and
(b) 7.47% Senior Notes, Series B, due June 1, 2007
(collectively, as in effect immediately prior to the Closing
Date, the "Existing 1995 Notes"; and together with the
Existing 1991 Notes, the "Existing Notes") in the aggregate
original principal amount of Twenty-Two Million Dollars
($22,000,000) pursuant to that certain Note Agreement (as
amended and in effect immediately prior to the Closing Date,
the "Existing 1995 Note Agreement"; and together with the
Existing 1991 Note Agreement, the "Existing Note Agreements"),
dated as of June 1, 1995, between the Company and the purchasers
identified on Schedule 1 thereto (the "Existing 1995 Purchasers";
and together with the Existing 1991 Purchasers and their
respective transferees, the "Purchasers"), all of the principal
6
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amount of the Existing 1995 Notes being outstanding on the
Closing Date.
The Purchasers own 100% of the Existing Notes outstanding on the
Closing Date. The Company wishes to exchange the Existing Notes for
new senior notes and, in connection therewith, issue to the Purchasers
Warrants (as defined herein), in each case, on the terms and
conditions contained herein. References to a "Schedule" or an
"Exhibit" are, unless otherwise specified, to a Schedule or an Exhibit
attached to this Agreement; and references to a "Section" are, unless
otherwise specified, to a Section of this Agreement. Certain
capitalized terms used in this Agreement (including Schedule 10.1 and
Schedule 10.2) are defined in Schedule B.
2. AUTHORIZATION OF NOTES AND WARRANTS.
The Company will authorize the issuance and sale of
(a) $42,040,162.73 in aggregate principal amount of its
Variable Rate Senior Notes Due December 31, 1999 (all such notes,
whether initially issued, or issued in exchange or substitution
for, any such note, in each case in accordance with this
Agreement, and as amended from time to time, the "Notes"), which
notes shall be substantially in the form of Exhibit 2(a) and
shall have the terms as herein and therein provided, and
(b) An aggregate of 177,980 warrants (the "Warrants")
to purchase shares of Common Stock, which Warrants shall be
issued pursuant to a warrant certificate (as may be amended,
restated or otherwise modified from time to time, the "Warrant
Certificate") in the form of Exhibit-2(b). The Warrant
Certificates provide that a holder thereof may tender Notes to
the Company in partial or complete payment of the purchase price
for the shares of Common Stock issued upon exercise. Promptly
following the receipt of any Note so tendered, the Company shall
immediately cancel and retire the same (and no such Note shall be
reissued), and shall issue to the holder thereof a new Note in
the principal amount of the tendered Note remaining after
deduction of the principal amount thereof applied to payment of
the exercise price. For purposes of Rule 144 under the
Securities Act, 17 C.F.R. Section 230.144, the Company and you
agree that a tender of Notes in payment of the exercise price in
respect of the Warrant Certificates shall not be deemed a
prepayment of the Notes, but rather a conversion of such Notes,
pursuant to the terms of the Warrant Certificates, into Common
Stock.
7
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3. EXCHANGE OF EXISTING NOTES.
3.1 The Closing.
(a) Exchange of Existing Notes. The Company hereby
agrees to deliver to you and you hereby agree to accept from
the Company, in accordance with the provisions hereof, the
aggregate principal amount of Notes indicated below your name on
Schedule A in exchange for one or more Existing Notes having an
aggregate outstanding principal balance, at the time of such
exchange, equal to the principal amount of Existing Notes
indicated below your name in Schedule A. The Company hereby
further agrees to issue in consideration of your exchange of
Existing Notes, in accordance with the provisions hereof, the
aggregate number of Warrants set forth below your name on
Schedule A. The Company acknowledges and agrees that the
aggregate principal amount of the Notes on the Closing Date
represents a restructuring of amounts owed to the Purchasers
pursuant to the Existing Note Agreements. No Purchasers shall be
required to make any advance of funds to the Company on account
of the Notes.
(b) The Closing. The closing (the "Closing") of the
exchange described in Section 3.1(a) will be held on February 25,
1998 (the "Closing Date") at 10:00 a.m., local time, at the
offices of Duane, Morris & Heckscher LLP, One Liberty Place,
Philadelphia, PA 19103. At the Closing, the Company will deliver
to you
(i) one or more Notes (as indicated below your
name on Schedule A) in the denominations indicated on
Schedule A, registered in your name or the name of your
nominee (as indicated below your name on Schedule A),
in the aggregate principal amount set forth on Schedule
A, each dated the Closing Date, and
(ii) one or more Warrant Certificates (as set
forth below your name on Schedule A), representing the
number of Warrants indicated on such Schedule A and
registered in the name of the holder indicated on
Schedule A,
against your delivery to the Company of Existing Notes
having an aggregate outstanding principal balance equal to the
aggregate principal amount of Existing Notes indicated below your
name on Schedule A. If at the Closing the Company shall fail to
tender such Notes and Warrants to you as provided above in this
Section 3, or any of the conditions specified in Section 4 shall
not have been fulfilled to your satisfaction, you shall, at your
election, be relieved of all further obligations under this
8
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Agreement, without thereby waiving any rights you may have by
reason of such failure or such nonfulfillment, and the Existing
Note Agreements shall remain in full force and effect.
(c) Original Issue Discount. You and the Company agree
that, as a result of the delivery of the Warrants in accordance
with the terms of this Agreement, any original issue discount
attributable to any Note is less than the product of (i) one-
quarter of one percent (.25%), multiplied by (ii) the product of
the weighted average maturity of such Note multiplied by the
stated redemption price at maturity of such Note (as determined
in accordance with section 1273 of the Code). You and the
Company agree to consistently use the foregoing assumptions as to
original issue discount and redemption premium for all United
States federal, state and local income tax purposes with respect
to the transactions contemplated by this Agreement and the
Warrant Certificates held by you unless the IRS or a change in
law requires otherwise. You and the Company acknowledge that the
Fair Market Value of such Warrants as of the Closing Date is no
greater than the amount determined by the calculations in the
first sentence of this subsection.
(d) Other Purchasers. The obligations of the Purchasers
and the Company hereunder are subject to the execution and
delivery of this Agreement by each of the Persons set forth on
the signature pages hereto. The obligations of each Purchaser
shall be several and not joint and no Purchaser shall be liable
or responsible for the act of any other Purchaser.
(e) Effect of Exchange. Upon the issuance by the
Company of the Notes and delivery thereof to the Purchaser as
provided for in this Section 3, the Existing Notes shall be
deemed cancelled and the obligations of the Company under the
Existing Note Agreements (except those which expressly survive
the payment of the Existing Notes) shall be terminated and of no
further force and effect.
4. CONDITIONS TO CLOSING.
Your obligation to exchange your Existing Notes for the Notes and
Warrants set forth below your name on Schedule A at the Closing is
subject to the conditions precedent set forth in this Section 4. The
failure of the Company to satisfy such conditions shall not operate to
waive any of your rights against the Company.
9
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4.1 Representations and Warranties.
The representations and warranties of the Company in this
Agreement shall be correct when made and at the time of the Closing.
4.2 Performance; No Default.
The Company shall have performed and complied with all agreements
and conditions contained in this Agreement required to be performed or
complied with by it prior to or at the Closing, and after giving
effect to the issue of the Notes and Warrants no Default or Event of
Default shall have occurred and be continuing.
4.3 Compliance Certificates.
(a) Officer's Certificate. The Company shall have
delivered to you an Officer's Certificate, dated the Closing
Date, certifying that the conditions specified in Sections 4.1,
4.2 and 4.9 have been fulfilled.
(b) Secretary's Certificate. The Company shall have
delivered to you a certificate of its Secretary or one of its
Assistant Secretaries, dated the Closing Date, certifying as to
the resolutions attached thereto and other corporate proceedings
relating to the authorization, execution and delivery of the
Financing Documents to which it is a party.
4.4 Opinions of Counsel.
You shall have received opinions in form and substance
satisfactory to you, dated the Closing Date, from
(a) Wharton, Aldhizer & Weaver, P.L.C., counsel for the
Company, substantially in the form set out in Exhibit 4.4(a) and
covering such other matters incident to the transactions
contemplated hereby as you or your counsel may reasonably request
(and the Company hereby instructs such counsel to deliver such
opinion to you), and
(b) Hebb & Gitlin, your special counsel in connection
with such transactions, substantially in the form set out in
Exhibit 4.4(b) and covering such other matters incident to such
transactions as you may reasonably request.
4.5 Exchange Permitted By Applicable Law, etc.
On the Closing Date your acquisition of the Notes and Warrants
shall (a) be permitted by the laws and regulations of each
10
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jurisdiction to which you are subject, without recourse to provisions
(such as section 1405(a)(8) of the New York Insurance Law) permitting
limited investments by insurance companies without restriction as to
the character of the particular investment, (b) not violate any
applicable law or regulation (including, without limitation,
Regulation G, T or X of the Board of Governors of the Federal Reserve
System) and (c) not subject you to any tax, penalty or liability under
or pursuant to any applicable law or regulation. If requested by you,
you shall have received an Officer's Certificate certifying as to such
matters of fact as you may reasonably specify to enable you to
determine whether such purchase is so permitted.
4.6 Exchange of Notes and Issuance of Warrants.
The Company shall have delivered all Notes and Warrants scheduled
to be issued to the Purchasers and the Purchasers shall have delivered
their Existing Notes to the Company at the Closing as specified in
Schedule A.
4.7 Payment of Fees and Expenses.
In addition, without limiting the provisions of Section 15.1, the
Company shall have paid on or before the Closing the fees, charges and
disbursements of your special counsel referred to in Section 4.4(b) to
the extent reflected in a statement of such counsel rendered to the
Company at least one Business Day prior to the Closing Date.
4.8 Private Placement Number.
Private Placement Numbers issued by Standard & Poor's CUSIP
Service Bureau (in cooperation with the Securities Valuation Office of
the National Association of Insurance Commissioners) shall have been
obtained for the Notes and the Warrants.
4.9 Changes in Corporate Structure.
Except as specified in Schedule 4.9, the Company shall not have
changed its jurisdiction of incorporation or been a party to any
merger or consolidation and shall not have succeeded to all or any
substantial part of the liabilities of any other entity, at any time
following the date of the most recent financial statements referred to
in Schedule 5.5.
4.10 Payment of Fees.
The Company shall have paid to each Purchaser, as consideration
of its consent to the exchange of Notes as provided herein, a fee (the
"Restructure Fee") equal to the amount equal to the product of (a) the
aggregate principal amount of Existing Notes held by such Purchaser
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and being exchanged herein multiplied by (b) one percent (1.00%). The
Restructure Fee shall have been paid to each Purchaser in immediately
available funds to the account of such Purchaser designated for
payments on Schedule A.
4.11 Subsidiary Guarantees.
You shall have received
(a) a guaranty agreement (as amended from time to time, a
"Subsidiary Guaranty") substantially in the form of Exhibit
4.11(a), executed and delivered by each Subsidiary Guarantor,
(b) a certificate dated the Closing Date and signed by
a Vice President or Treasurer of each Subsidiary Guarantor,
substantially in the form of Exhibit 4.11(b), and
(c) a certificate dated the Closing Date and signed by
the Secretary or an Assistant Secretary of each Subsidiary
Guarantor, certifying as to the resolutions attached thereto
and other corporate proceedings relating to the authorization,
execution and delivery of the Financing Documents to which such
Subsidiary Guarantor is a party.
4.12 Payment of Interest on Existing Notes.
The Company shall have paid to each Purchaser all interest
accrued and unpaid on its Existing Notes as of the Closing Date.
4.13 Security Documents.
(a) The Company and each of the Subsidiary Guarantors
shall have executed and delivered to the Collateral Agent each of
the Security Documents, the forms of which must be acceptable to
you.
(b) The Company, the Subsidiary Guarantors, the
Purchasers, the Lenders, the Bank Agent and the Collateral Agent
shall have executed and delivered a collateral agency and
intercreditor agreement (as amended from time to time, the
"Intercreditor Agreement") substantially in the form of Exhibit
4.13(b).
4.14 Perfection of Liens.
Confirmation that (i) all actions necessary to perfect the Liens
of the Collateral Agent in the Collateral, including, without
limitation, the filing of all appropriate Uniform Commercial Code
financing statements, the recording of all appropriate documents with
12
public officials and the delivery of any appropriate items of
Collateral to the Collateral Agent shall have been taken in accordance
with the provisions of the relevant Security Documents, and (ii) the
Liens of the Collateral Agent in the Collateral shall be valid,
enforceable and perfected and such Collateral shall be subject to no
other Liens not otherwise permitted under this Agreement.
4.15 Bank Credit Agreements.
(a) Bank Credit Agreements. The Company, the Bank Agent
and the Lenders shall have entered into the Bank Credit
Agreements, which agreements, and all documents and instruments
executed and delivered in connection therewith, shall be in form
and substance satisfactory to you. The Company shall deliver to
you a copy of a fully executed counterpart of the Bank Credit
Agreements and each such document and instrument executed
therewith, certified as true and correct by an officer of the
Company.
(b) No Defaults; Satisfaction of Conditions Precedent.
No event shall have occurred and no condition shall exist that
shall prohibit the Company from borrowing under the Bank Credit
Agreements, and all conditions precedent to closing specified in
the Bank Credit Agreements shall have been satisfied on or prior
to the Closing Date, and you shall have received such evidence of
the satisfaction of such conditions precedent as you shall deem
appropriate.
4.16 Warrantholders Rights Agreement.
The Company, the Purchasers, the Bank Agent and the Stockholders
(as defined therein) shall have entered into a warrantholders rights
agreement (as amended from time to time, the "Warrantholders Rights
Agreement") substantially in the form of Exhibit 4.16.
4.17 Proceedings and Documents.
All corporate and other proceedings in connection with the
transactions contemplated by this Agreement and all documents and
instruments incident to such transactions shall be satisfactory to you
and your special counsel, and you and your special counsel shall have
received all such counterpart originals or certified or other copies
of such documents as you or they may reasonably request.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to you, as of the Closing
Date, that:
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5.1 Organization; Power and Authority.
The Company is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation,
and is duly qualified as a foreign corporation and is in good standing
in each jurisdiction in which such qualification is required by law,
other than those jurisdictions as to which the failure to be so
qualified or in good standing could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
The Company has the corporate power and authority to own or hold under
lease the properties it purports to own or hold under lease, to
transact the business it transacts and proposes to transact, to
execute and deliver this Agreement, the Notes and each Warrant
Certificate and to perform the provisions hereof and thereof.
5.2 Authorization, etc.
This Agreement, the Notes and the Warrants have been duly
authorized by all necessary corporate action on the part of the
Company, and this Agreement constitutes, and upon execution and
delivery thereof each Note and each Warrant Certificate will
constitute, a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except
as such enforceability may be limited by (a) applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
the enforcement of creditors' rights generally and (b) general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
5.3 Disclosure.
The Company has delivered to you a copy of WLR Foods, Inc.
Financial Plan -- Management's Assumptions, dated January 28, 1998 and
the WLR Foods, Inc. Marshville Conversion, dated February 4, 1998
(collectively, the "Memorandum"), relating to the transactions
contemplated hereby. The Memorandum fairly describes, in all material
respects, the general nature of the business and principal properties
of the Company and its Subsidiaries. Except as disclosed in Schedule
5.3, this Agreement, the Memorandum, the documents, certificates or
other writings delivered to you by or on behalf of the Company in
connection with the transactions contemplated hereby and the financial
statements listed in Schedule 5.5, taken as a whole, do not contain
any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein not misleading in light
of the circumstances under which they were made. Except as disclosed
in the Memorandum or as expressly described in Schedule 5.3, or in one
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of the documents, certificates or other writings identified therein,
or in the financial statements listed in Schedule 5.5, since June 28,
1997, there has been no change in the financial condition, operations,
business, properties or prospects of the Company or any Subsidiary
except changes that individually or in the aggregate could not
reasonably be expected to have a Material Adverse Effect. There is no
fact known to the Company that could reasonably be expected to have a
Material Adverse Effect that has not been set forth herein or in the
Memorandum or in the other documents, certificates and other writings
delivered to you by or on behalf of the Company specifically for use
in connection with the transactions contemplated hereby.
5.4 Organization and Ownership of Shares of Subsidiaries;
Affiliates.
(a) Schedule 5.4 contains (except as noted therein)
complete and correct lists of (i) the Company's Subsidiaries,
showing, as to each Subsidiary, the correct name thereof, the
jurisdiction of its organization, and the percentage of shares of
each class of its capital stock or similar equity interests
outstanding owned by the Company and each other Subsidiary and
(ii) the Company's Affiliates, other than Subsidiaries.
(b) All of the outstanding shares of capital stock or
similar equity interests of each Subsidiary shown in Schedule 5.4
as being owned by the Company and its Subsidiaries have been
validly issued, are fully paid and nonassessable and are owned by
the Company or another Subsidiary free and clear of any Lien
(except as otherwise disclosed in Schedule 5.4).
(c) Each Subsidiary identified in Schedule 5.4 is a
corporation or other legal entity duly organized, validly
existing and in good standing under the laws of its
jurisdiction of organization, and is duly qualified as a
foreign corporation or other legal entity and is in good
standing in each jurisdiction in which such qualification is
required by law, other than those jurisdictions as to which
the failure to be so qualified or in good standing could not,
individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect. Each such Subsidiary has the
corporate or other power and authority to own or hold under lease
the properties it purports to own or hold under lease and to
transact the business it transacts and proposes to transact.
(d) No Subsidiary is a party to, or otherwise subject
to any legal restriction or any agreement (other than this
Agreement, the Bank Credit Agreements, the agreements listed
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in Schedule 5.4 and customary limitations imposed by corporate
law statutes) restricting the ability of such Subsidiary to pay
dividends out of profits or make any other similar distributions
of profits to the Company or any of its Subsidiaries that owns
outstanding shares of capital stock or similar equity interests
of such Subsidiary.
5.5 Financial Statements.
The Company has delivered to you copies of the financial
statements of the Company and its Subsidiaries listed in Schedule 5.5.
All of said financial statements (including in each case the related
schedules and notes) fairly present in all material respects the
consolidated financial position of the Company and its Subsidiaries as
of the respective dates specified in such Schedule and the
consolidated results of their operations and cash flows for the
respective periods so specified and have been prepared in accordance
with GAAP consistently applied throughout the periods involved except
as set forth in the notes thereto (subject, in the case of any interim
financial statements, to normal year-end adjustments).
5.6 Compliance with Laws, Other Instruments, etc.
The execution, delivery and performance by the Company of the
Financing Documents to which it is a party will not
(a) contravene, result in any breach of, or constitute
a default under, or result in the creation of any Lien in
respect of any property of the Company or any Subsidiary
under, any indenture, mortgage, deed of trust, loan, purchase or
credit agreement, lease, corporate charter or by-laws, or any
other agreement or instrument to which the Company or any
Subsidiary is bound or by which the Company or any Subsidiary or
any of their respective properties may be bound or affected,
(b) conflict with or result in a breach of any of the
terms, conditions or provisions of any order, judgment,
decree, or ruling of any court, arbitrator or Governmental
Authority applicable to the Company or any Subsidiary, or
(c) violate any provision of any statute or other rule or
regulation of any Governmental Authority applicable to the
Company or any Subsidiary.
5.7 Governmental Authorizations, etc.
No consent, approval or authorization of, or registration, filing
or declaration with, any Governmental Authority is required in
connection with the execution, delivery or performance by the Company
16
<PAGE>
of the Financing Documents to which it is a party except for the
filing of financing statements in favor of the Collateral Agent and,
to the extent applicable to any Collateral, filings with the United
States Copyright Office or the United States Patent and Trademark
Office, filings with state transportation authorities with respect to
liens on motor vehicles and any filing or action in compliance with
the Federal Assignment of Claims Act.
5.8 Litigation; Observance of Agreements, Statutes and Orders.
(a) Except as disclosed in Schedule 5.8, there are no
actions, suits or proceedings pending or, to the knowledge of the
Company, threatened against or affecting the Company or any
Subsidiary or any property of the Company or any Subsidiary in
any court or before any arbitrator of any kind or before or by
any Governmental Authority that, individually or in the
aggregate, could reasonably be expected to have a Material
Adverse Effect.
(b) Except with respect to the 1997 Credit Agreement (as
defined in the Bank Credit Agreements) and the Existing Note
Agreements, neither the Company nor any Subsidiary is in default
under any term of any agreement or instrument to which it is a
party or by which it is bound, or any order, judgment, decree or
ruling of any court, arbitrator or Governmental Authority or is
in violation of any applicable law, ordinance, rule or regulation
(including, without limitation, Environmental Laws) of any
Governmental Authority, which default or violation, individually
or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
5.9 Taxes.
The Company and its Subsidiaries have filed all tax returns that
are required to have been filed in any jurisdiction, and have paid all
taxes shown to be due and payable on such returns and all other taxes
and assessments levied upon them or their properties, assets, income
or franchises, to the extent such taxes and assessments have become
due and payable and before they have become delinquent, except for any
taxes and assessments (a) the amount of which is not individually or
in the aggregate Material or (b) the amount, applicability or validity
of which is currently being contested in good faith by appropriate
proceedings and with respect to which the Company or a Subsidiary, as
the case may be, has established adequate reserves in accordance with
GAAP. The Company knows of no basis for any other tax or assessment
that could reasonably be expected to have a Material Adverse Effect.
The charges, accruals and reserves on the books of the Company and its
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<PAGE>
Subsidiaries in respect of Federal, state or other taxes for all
fiscal periods are adequate. The Federal income tax liabilities of
the Company and its Subsidiaries have been paid for all fiscal years
up to and including the fiscal year ended June 28, 1997.
5.10 Title to Property; Leases.
The Company and its Subsidiaries have good and sufficient title
to their respective properties that individually or in the aggregate
are Material, including all such properties reflected in the most
recent audited balance sheet referred to in Section 5.5 or purported
to have been acquired by the Company or any Subsidiary after said date
(except as sold or otherwise disposed of in the ordinary course of
business), in each case free and clear of Liens prohibited by this
Agreement. All leases that individually or in the aggregate are
Material are valid and subsisting and are in full force and effect in
all material respects.
5.11 Licenses, Permits, etc.
Except as disclosed in Schedule 5.11,
(a) the Company and its Subsidiaries own or possess all
licenses, permits, franchises, authorizations, patents,
copyrights, service marks, trademarks and trade names, or
rights thereto, that individually or in the aggregate are
Material, without known conflict with the rights of others;
(b) to the best knowledge of the Company, no product or
practice of the Company or any Subsidiary infringes in any
material respect any license, permit, franchise, authorization,
patent, copyright, service mark, trademark, trade name or other
right owned by any other Person; and
(c) to the best knowledge of the Company, there is no
Material violation by any Person of any right of the Company
or any of its Subsidiaries with respect to any patent,
copyright, service mark, trademark, trade name or other right
owned or used by the Company or any of its Subsidiaries.
5.12 Compliance with ERISA.
(a) The Company and each ERISA Affiliate have operated
and administered each Plan in compliance with all applicable
laws except for such instances of noncompliance as have not
resulted in and could not reasonably be expected to result in a
Material Adverse Effect. Neither the Company nor any ERISA
Affiliate has incurred any liability pursuant to Title I or IV of
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<PAGE>
ERISA or the penalty or excise tax provisions of the Code
relating to employee benefit plans (as defined in section 3 of
ERISA), and no event, transaction or condition has occurred or
exists that could reasonably be expected to result in the
incurrence of any such liability by the Company or any ERISA
Affiliate, or in the imposition of any Lien on any of the rights,
properties or assets of the Company or any ERISA Affiliate, in
either case pursuant to Title I or IV of ERISA or to such penalty
or excise tax provisions or to section 401(a)(29) or 412 of the
Code, other than such liabilities or Liens as would not be
individually or in the aggregate Material.
(b) The present value of the aggregate benefit
liabilities under each of the Plans (other than Multiemployer
Plans), determined as of the end of such Plan's most recently
ended plan year on the basis of the actuarial assumptions
specified for funding purposes in such Plan's most recent
actuarial valuation report, did not exceed the aggregate current
value of the assets of such Plan allocable to such benefit
liabilities. The term "benefit liabilities" has the meaning
specified in section 4001 of ERISA and the terms "current value"
and "present value" have the meaning specified in section 3 of
ERISA.
(c) The Company and the ERISA Affiliates have not
incurred withdrawal liabilities (and are not subject to
contingent withdrawal liabilities) under section 4201 or 4204 of
ERISA in respect of Multiemployer Plans that individually or in
the aggregate are Material.
(d) The expected postretirement benefit obligation
(determined as of the last day of the Company's most recently
ended fiscal year in accordance with Financial Accounting
Standards Board Statement No. 106, without regard to liabilities<PAGE>
attributable to continuation coverage mandated by section 4980B
of the Code) of the Company and its Subsidiaries is not Material.
(e) The execution and delivery of this Agreement and the
issuance of the Notes and the Warrant Certificates hereunder will
not involve any transaction that is subject to the prohibitions
of section 406 of ERISA or in connection with which a tax could
be imposed pursuant to section 4975(c)(1)(A)-(D) of the Code.
The representation by the Company in the first sentence of this
Section 5.12(e) is made in reliance upon and subject to the
accuracy of your representation in Section 6.2 as to the Sources
used to pay the purchase price of the Notes to be purchased by
you.
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(f) Schedule 5.12 sets forth all ERISA Affiliates and
all "employee benefit plans" maintained by the Company (or any
"affiliate" thereof) or in respect of which the Notes could
constitute an "employer security" ("employee benefit plan" has
the meaning specified in section 3 of ERISA, "affiliate" has the
meaning specified in section 407(d) of ERISA and section V of the
Department of Labor Prohibited Transaction Exemption 95-60 (60 FR
35925, July 12, 1995) and "employer security" has the meaning
specified in section 407(d) of ERISA).
5.13 Private Offering by the Company.
Neither the Company nor anyone acting on its behalf has offered
the Notes, the Warrants or any similar securities for sale to, or
solicited any offer to buy any of the same from, or otherwise
approached or negotiated in respect thereof with, any Person other
than each Purchaser and the Lenders. Neither the Company nor anyone
acting on its behalf has taken, or will take, any action that would
subject the issuance or sale of the Notes or Warrants to the
registration requirements of section 5 of the Securities Act.
5.14 Use of Proceeds; Margin Regulations.
The Company will apply the proceeds of the Notes as set forth in
Schedule 5.14. No additional proceeds are being funded by the
exchange of Existing Notes for Notes hereunder. The proceeds of the
Existing Notes were not used, directly or indirectly, for the purpose
of buying or carrying any margin stock within the meaning of
Regulation G of the Board of Governors of the Federal Reserve System
(12 CFR 207), or for the purpose of buying or carrying or trading in
any securities under such circumstances as to involve the Company in a
violation of Regulation X of said Board (12 CFR 224) or to involve any
broker or dealer in a violation of Regulation T of said Board (12 CFR
220). Margin stock does not constitute more than 1% of the value of
the consolidated assets of the Company and its Subsidiaries and the
Company does not have any present intention that margin stock will
constitute more than 1% of the value of such assets. As used in this
Section, the terms "margin stock" and "purpose of buying or carrying"
shall have the meanings assigned to them in said Regulation G.
5.15 Existing Indebtedness; Future Liens.
(a) Except as described therein, Schedule 5.15 sets forth a
complete and correct list of all outstanding Indebtedness of the
Company and its Subsidiaries as of December 27, 1997 (and
specifying, as to each such Indebtedness, the collateral, if any,
20
<PAGE>
securing such Indebtedness), since which date there has been no
Material change in the amounts, interest rates, sinking funds,
installment payments or maturities of the Indebtedness of the
Company or its Subsidiaries. Neither the Company nor any
Subsidiary is in default and no waiver of default is currently in
effect, in the payment of any principal or interest on any
Indebtedness of the Company or such Subsidiary and no event or
condition exists with respect to any Indebtedness of the Company
or any Subsidiary that would permit (or that with notice or the
lapse of time, or both, would permit) one or more Persons to
cause such Indebtedness to become due and payable before its
stated maturity or before its regularly scheduled dates of
payment.
(b) Except as disclosed in Schedule 5.15, neither the
Company nor any Subsidiary has agreed or consented to cause
or permit in the future (upon the happening of a contingency
or otherwise) any of its property, whether now owned or
hereafter acquired, to be subject to a Lien not permitted by
paragraph C of Schedule 10.1.
5.16 Foreign Assets Control Regulations, etc.
Neither the issuance of the Notes and Warrants by the Company
hereunder nor its use of the proceeds from the Existing Notes has or
will violate the Trading with the Enemy Act, as amended, or any of the
foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto.
5.17 Status under Certain Statutes.
Neither the Company nor any Subsidiary is subject to regulation
under the Investment Company Act of 1940, as amended, the Public
Utility Holding Company Act of 1935, as amended, the Transportation
Acts (49 U.S.C.), as amended, or the Federal Power Act, as amended.
5.18 Environmental Matters.
Neither the Company nor any Subsidiary has knowledge of any claim
or has received any notice of any claim, and no proceeding has been
instituted raising any claim against the Company or any of its
Subsidiaries or any of their respective real properties now or
formerly owned, leased or operated by any of them or other assets,
alleging any damage to the environment or violation of any
Environmental Laws, except, in each case, such as could not reasonably
be expected to result in a Material Adverse Effect. Except as
otherwise disclosed to you in writing,
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(a) neither the Company nor any Subsidiary has knowledge of
any facts which would give rise to any claim, public or private,
of violation of Environmental Laws or damage to the environment
emanating from, occurring on or in any way related to real
properties now or formerly owned, leased or operated by any of
them or to other assets or their use, except, in each case, such
as could not reasonably be expected to result in a Material
Adverse Effect;
(b) neither the Company nor any of its Subsidiaries has
stored any Hazardous Materials on real properties now or formerly
owned, leased or operated by any of them and has not disposed of
any Hazardous Materials in a manner contrary to any Environmental
Laws in each case in any manner that could reasonably be expected
to result in a Material Adverse Effect; and
(c) all buildings on all real properties now owned,
leased or operated by the Company or any of its Subsidiaries
are in compliance with applicable Environmental Laws, except
where failure to comply could not reasonably be expected to
result in a Material Adverse Effect.
5.19 No Defaults.
No event has occurred and no condition exists that, upon the
execution and delivery of the Financing Documents and the Bank Credit
Agreements by the Company and the Subsidiary Guarantors and the
issuance of the Notes by the Company and the Subsidiary Guarantors of
the Guaranty, would constitute a Default or an Event of Default.
5.20 Company and Subsidiary Guarantors.
The Company and the Subsidiary Guarantors are operated as part of
one consolidated business entity. The Subsidiary Guarantors are
directly dependent upon the Company for and in connection with their
respective business activities and their respective financial
resources. The Company and the Subsidiary Guarantors each will
receive a direct economic and financial benefit from the Indebtedness
incurred under this Agreement, the Notes and the Bank Credit
Agreements by the Company and under the Subsidiary Guaranty by the
Subsidiary Guarantors, and the incurrence of such Indebtedness is in
the best interests of the Company and each of the Subsidiary
Guarantors. The Subsidiary Guaranty is a valid and binding obligation
of each of the Subsidiary Guarantors enforceable against each
Subsidiary Guarantor in accordance with its terms.
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5.21 Solvency.
The fair value of the business and assets of the Company and each
Subsidiary Guarantor is in excess of the amount that will be required
to pay its liabilities (including, without limitation, contingent,
subordinated, unmatured and unliquidated liabilities on existing
debts, as such liabilities may become absolute and matured), in each
case both prior to and after giving effect to the transactions
contemplated by the Financing Documents and the Bank Credit
Agreements. After giving effect to the transactions contemplated by
the Financing Documents and the Bank Credit Agreements, neither the
Company nor any of the Subsidiary Guarantors will be engaged in any
business or transaction, or about to engage in any business or
transaction, for which such Person has unreasonably small capital, and
none of such Persons has or had any intent to hinder, delay or defraud
any entity to which it is, or will become, on or after the Closing
Date, indebted or to incur debts that would be beyond its ability to
pay as such debts mature.
5.22 Inactive Subsidiaries.
Rockingham Poultry, Inc., a Virginia corporation, conducts no
business and has no assets. Rockingham Poultry, Inc. (VI) conducts a
foreign sales business and maintains a bank account with not more than
$15,000 on deposit therein.
5.23 WLR Common Stock.
As of the date hereof, there are 16,335,058 shares of Common
Stock issued and outstanding. Except as set forth on Schedule 5.23:
(a) there are no outstanding options, warrants or other rights to
acquire shares of Common Stock, whether or not presently exercisable;
(b) there are no outstanding securities convertible into shares of
Common Stock, whether or not presently convertible; and (c) there are
no understandings, agreements or commitments with respect to the
issuance of any such Securities.
6. REPRESENTATIONS OF THE PURCHASERS.
6.1 Acquisition for Investment.
You represent that you are acquiring the Notes for your own
account or for one or more separate accounts maintained by you or for
the account of one or more pension or trust funds and not with a view
to the distribution thereof, provided that the disposition of your or
their property shall at all times be within your or their control.
You understand that the Notes have not been registered under the
Securities Act and may be resold only if registered pursuant to the
provisions of the Securities Act or if an exemption from registration
is available, except under circumstances where neither such
23
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registration nor such an exemption is required by law, and that the
Company is not required to register the Notes.
6.2 Source of Funds.
You represent that at least one of the following statements is an
accurate representation as to each source of funds (a "Source") used
by you to pay the purchase price of the Existing Notes purchased by
you under the Existing Note Agreements (and that each of such
statements is accurate with respect to the account (it being deemed
for the purposes herein as being a Source) which now holds such
Existing Note):
(a) the Source is an "insurance company general account" as
defined in United States Department of Labor Prohibited
Transaction Exemption ("PTE") 95-60 (60 FR 35925, July 12, 1995)
and in respect thereof you represent that there is no "employee
benefit plan" (as defined in section 3(3) of ERISA and section
4975(e)(1) of the Code, treating as a single plan all plans
maintained by the same employer or employee organization or
affiliate thereof) with respect to which the amount of the
general account reserves and liabilities of all contracts held by
or on behalf of such plan exceeds 10% of the total reserves and
liabilities of such general account (exclusive of separate
account liabilities) plus surplus, as set forth in the National
Association of Insurance Commissioners' Annual Statement filed
with your state of domicile and that such acquisition is eligible
for and satisfies the other requirements of such exemption; or
(b) if you are an insurance company, the Source does not
include assets allocated to any separate account maintained by
you in which any employee benefit plan (or its related trust) has
any interest, other than a separate account that is maintained
solely in connection with your fixed contractual obligations
under which the amounts payable, or credited, to such plan and to
any participant or beneficiary of such plan (including any
annuitant) are not affected in any manner by the investment
performance of the separate account; or
(c) the Source is either (i) an insurance company
pooled separate account, within the meaning of PTE 90-1
(issued January 29, 1990), or (ii) a bank collective investment
fund, within the meaning of the PTE 91-38 (issued July 12, 1991)
and, except as you have disclosed to the Company in writing
pursuant to this paragraph (c), no employee benefit plan or group
of plans maintained by the same employer or employee organization
beneficially owns more than 10% of all assets allocated to such
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pooled separate account or collective investment fund; or
(d) the Source constitutes assets of an "investment fund"
(within the meaning of part V of PTE 84-14 (the "QPAM
Exemption")) managed by a "qualified professional asset manager"
or "QPAM" (within the meaning of part V of the QPAM Exemption),
no employee benefit plan's assets that are included in such
investment fund, when combined with the assets of all other
employee benefit plans established or maintained by the same
employer or by an affiliate (within the meaning of section
V(c)(1) of the QPAM Exemption) of such employer or by the same
employee organization and managed by such QPAM, exceed 20% of the
total client assets managed by such QPAM, the conditions of part
I(c) and (g) of the QPAM Exemption are satisfied, neither the
QPAM nor a person controlling or controlled by the QPAM (applying
the definition of "control" in section V(e) of the QPAM
Exemption) owns a 5% or more interest in the Company and
(i) the identity of such QPAM and
(ii) the names of all employee benefit plans whose
assets are included in such investment fund
have been disclosed to the Company in writing pursuant to this
paragraph (d); or
(e) the Source is a governmental plan; or
(f) the Source is one or more employee benefit plans,
or a separate account or trust fund comprised of one or more
employee benefit plans, each of which has been identified to
the Company in writing pursuant to this paragraph (f) or
pursuant to the Existing Note Agreements; or
(g) the Source does not include assets of any employee
benefit plan, other than a plan exempt from the coverage of
ERISA.
As used in this Section 6.2, the terms "employee benefit plan",
"governmental plan" and "separate account" shall have the respective
meanings assigned to such terms in Section 3 of ERISA.
7. INFORMATION AS TO COMPANY.
7.1 Financial and Business Information.
The Company shall deliver to each holder of Notes that is an
Institutional Investor:
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(a) Monthly Statements -- as soon as practicable and in
any event within thirty days after the end of each calendar
month, such financial information as may be required to be
delivered to the Lenders pursuant to Section 7.1(c) of the Bank
Credit Agreements;
(b) Quarterly Statements -- within 45 days after the
end of each quarterly fiscal period in each fiscal year of the
Company (other than the last quarterly fiscal period of each such
fiscal year), duplicate copies of,
(i) a consolidated balance sheet of the Company
and its Subsidiaries as at the end of such quarter, and
(ii) consolidated statements of income, changes in
shareholders' equity and cash flows of the Company and
its Subsidiaries, for such quarter and (in the case of
the second and third quarters) for the portion of the
fiscal year ending with such quarter,
setting forth in each case in comparative form the figures for
the corresponding periods in the previous fiscal year, all in
reasonable detail, prepared in accordance with GAAP applicable to
quarterly financial statements generally, and certified by a
Senior Financial Officer as fairly presenting, in all material
respects, the consolidated financial position of the companies
being reported on and their consolidated results of operations
and cash flows, subject to changes resulting from year-end
adjustments;
(c) Annual Statements -- within 90 days after the end
of each fiscal year of the Company, duplicate copies of,
(i) a consolidated balance sheet of the Company
and its Subsidiaries, as at the end of such year, and
(ii) consolidated statements of income, changes in
shareholders' equity and cash flows of the Company and
its Subsidiaries, for such year,
setting forth in each case in comparative form the figures for
the previous fiscal year, all in reasonable detail, prepared in
accordance with GAAP, and accompanied by
(A) an opinion thereon of independent
certified public accountants of recognized
national standing, which opinion shall state that
such financial statements present fairly, in all
material respects, the consolidated financial
position of the companies being reported upon and
their consolidated results of operations and cash
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flows and have been prepared in conformity with
GAAP, and that the examination of such accountants
in connection with such financial statements has
been made in accordance with generally accepted
auditing standards, and that such audit provides a
reasonable basis for such opinion in the
circumstances, and
(B) a certificate of such accountants
stating that they have reviewed this Agreement and
stating further whether, in making their audit,
they have become aware of any condition or event
that then constitutes a Default or an Event of
Default, and, if they are aware that any such
condition or event then exists, specifying the
nature and period of the existence thereof (it
being understood that such accountants shall not
be liable, directly or indirectly, for any failure
to obtain knowledge of any Default or Event of
Default unless such accountants should have
obtained knowledge thereof in making an audit in
accordance with generally accepted auditing
standards or did not make such an audit);
(d) SEC and Other Reports -- promptly upon their
becoming available, one copy of (i) each financial statement,
report (including, without limitation, the Company's annual
report to shareholders, if any, prepared pursuant to Rule 14a-3
under the Exchange Act), notice or proxy statement sent by the
Company or any Subsidiary to public securities holders generally,
and (ii) each regular or periodic report, each registration
statement (without exhibits except as expressly requested by such
holder), and each prospectus and all amendments thereto filed by
the Company or any Subsidiary with the Securities and Exchange
Commission;
(e) Notice of Default or Event of Default -- promptly, and
in any event within five days after a Responsible Officer
becoming aware of the existence of any Default or Event of
Default or that any Person has given any notice or taken any
action with respect to a claimed default hereunder or that any
Person has given any notice or taken any action with respect to a
claimed default of the type referred to in Section 11(f), a
written notice specifying the nature and period of existence
thereof and what action the Company is taking or proposes to take
with respect thereto;
(f) ERISA Matters -- promptly, and in any event within
five days after a Responsible Officer becoming aware of any
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<PAGE>
of the following, a written notice setting forth the nature
thereof and the action, if any, that the Company or an ERISA
Affiliate proposes to take with respect thereto:
(i) with respect to any Plan, any reportable
event, as defined in section 4043(b) of ERISA and the
regulations thereunder, for which notice thereof has
not been waived pursuant to such regulations as in
effect on the Closing Date; or
(ii) the taking by the PBGC of steps to institute,
or the threatening by the PBGC of the institution of,
proceedings under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to
administer, any Plan, or the receipt by the Company or
any ERISA Affiliate of a notice from a Multiemployer<PAGE>
Plan that such action has been taken by the PBGC with
respect to such Multiemployer Plan; or
(iii) any event, transaction or condition that
could result in the incurrence of any liability by the
Company or any ERISA Affiliate pursuant to Title I or
IV of ERISA or the penalty or excise tax provisions of
the Code relating to employee benefit plans, or in the
imposition of any Lien on any of the rights, properties
or assets of the Company or any ERISA Affiliate
pursuant to Title I or IV of ERISA or such penalty or
excise tax provisions, if such liability or Lien, taken
together with any other such liabilities or Liens then
existing, could reasonably be expected to have a
Material Adverse Effect;
(g) Notices from Governmental Authority -- promptly, and in
any event within 30 days of receipt thereof, copies of any notice
to the Company or any Subsidiary from any Federal or state
Governmental Authority relating to any order, ruling, statute or
other law or regulation that could reasonably be expected to have
a Material Adverse Effect;
(h) Actions, Proceedings -- promptly after a
Responsible Officer becomes aware of the commencement thereof,
notice of any action or proceeding relating to the Company or any
Subsidiary in any court or before any Governmental Authority or
arbitration board or tribunal as to which there is a reasonable
possibility of an adverse determination and that, if adversely
determined, could reasonably be expected to have a Material
Adverse Effect;
(i) Financial Projections -- within thirty (30) days after
each such request, such financial projections for the Company and
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the Subsidiaries as the Required Holders may from time to time
reasonably request;
(j) Three Year Business Plan -- on or before June 1, 1998,
a copy of the Company's three year business plan (the "Three Year
Business Plan") in form and substance satisfactory to the
Required Holders;
(k) Bank Credit Agreements and Security Documents -- to the
extent not otherwise required herein, promptly upon the receipt
or delivery thereof, a copy of each notice or other communication
received by the Company from the Bank Agent or Collateral Agent,
or delivered to the Bank Agent or Collateral Agent by the
Company, in connection with a "Default" or "Event of Default"
under the Bank Credit Agreements or the enforcement of any
remedies under the Bank Credit Agreements or any of the Security
Documents; and
(l) Requested Informationwith reasonable promptness, such
other data and information relating to the business, operations,
affairs, financial condition, assets or properties of the Company
or any of its Subsidiaries or relating to the ability of the
Company to perform its obligations hereunder and under the Notes
as from time to time may be reasonably requested by any such
holder of Notes, or such information regarding the Company
required to satisfy the requirements of 17 C.F.R. Section 230.144A, as
amended from time to time, in connection with any contemplated
transfer of the Notes.
7.2 Officer's Certificate.
Each set of financial statements delivered to a holder of Notes
pursuant to Section 7.1(a) or Section 7.1(b) hereof shall be
accompanied by a certificate of a Senior Financial Officer setting
forth:
(a) Covenant Compliance -- the information (including
detailed calculations) required in order to establish whether the
Company was in compliance with the requirements of the covenants
set forth on Schedule 10.1 and Schedule 10.2 and, during the
quarterly or annual period covered by the statements then being
furnished (including with respect to each such , where
applicable, the calculations of the maximum or minimum amount,
ratio or percentage, as the case may be, permissible under the
terms of such Sections, and the calculation of the amount, ratio
or percentage then in existence); and
(b) Event of Default -- a statement that such officer
has reviewed the relevant terms hereof and has made, or
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<PAGE>
caused to be made, under his or her supervision, a review of
the transactions and conditions of the Company and its
Subsidiaries from the beginning of the quarterly or annual
period covered by the statements then being furnished to the
date of the certificate and that such review has not disclosed
the existence during such period of any condition or event that
constitutes a Default or an Event of Default or, if any such
condition or event existed or exists (including, without
limitation, any such event or condition resulting from the
failure of the Company or any Subsidiaryto comply with any
Environmental Law), specifying the nature and period of existence
thereof and what action the Company shall have taken or proposes
to take with respect thereto.
7.3 Inspection.
The Company shall permit the representatives of each holder of
Notes that is an Institutional Investor, at the expense of the
Company, to visit and inspect any of the offices or properties of the
Company or any Subsidiary, to examine all their respective books of
account, records, reports and other papers, to make copies and
extracts therefrom, and to discuss their respective affairs, finances
and accounts with their respective officers and independent public
accountants (and by this provision the Company authorizes said
accountants to discuss the affairs, finances and accounts of the
Company and its Subsidiaries), all at such times as the Required
Holders may reasonably request not more often than twice during any
calendar year.
8. PAYMENT OF THE NOTES.
8.1 Required Prepayments; Payment at Maturity; Extension of
Maturity.
(a) Required Quarterly Prepayments. The Company shall
prepay, and there shall become due and payable, on March 31,
June 30, September 30 and December 31 in each year until the
Notes have been paid in full, commencing on March 31, 1999,
$260,098 principal amount (or such lesser principal amount as
shall then be outstanding) of the Notes, at par. Each partial
prepayment of the Notes pursuant to Section 8.1(b), Section
8.1(c), Section 8.1(d) or Section 8.2 will be applied to the
mandatory prepayments applicable to the Notes set forth in this
Section 8.1 in the order of the maturity thereof.
(b) Required Prepayments upon Asset Sales. Within two
(2) Business Days (except as set forth below) after the
consummation by the Company or any Subsidiary of any Asset Sale
(including, without limitation, any Approved Miscellaneous Asset
Sale), the Company shall apply 90% of the Net Proceeds in respect
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<PAGE>
of such Asset Sale to permanently reduce the Term Loan
Obligations, the Revolving Credit Obligations and the obligations
outstanding under the Notes and this Agreement by forwarding such
Net Proceeds (the "Asset Sale Proceeds") to the Agent and the
holders of the Notes in the respective percentages set forth in
Section 7(e) of the Intercreditor Agreement; provided that if no
Event of Default has occurred under this Agreement as of the date
such Net Proceeds are made available, the Company may apply the
first $12,000,000 of such Net Proceeds to either (i) its bona
fide costs and expenses (collectively, the "Marshville Conversion
Expenses") associated with the Marshville Facility Conversion, or
(ii) if, at any time on or before November 30, 1998, no such
expenses have been incurred or are outstanding and no Event of
Default has occurred, then to a reserve for the projected
Marshville Conversion Expenses pursuant to the financial
projections supplied by the Company on February 4, 1998, provided
further that, if on November 30, 1998, any funds are held in
reserve pursuant to this subsection (ii), such funds will be
released immediately to the Agent and the holders of the Notes in
the respective percentages set forth in Section 7(e) the
Intercreditor Agreement. The Company shall provide to each
holder of Notes an accounting of the Marshville Conversion
Expenses at the time of such application certified as true and
correct by the Chief Financial Officer of the Company. With
respect to a sale yielding Asset Sale Proceeds aggregating less
than $1,000,000, the Company may delay distribution to the
holders of Notes until the later of (i) the thirtieth (30th) day
following such sale, or (ii) the date on which the aggregate
amount of undistributed proceeds owed to the holders of Notes
pursuant to this Section 8.1(b) equals or exceeds $250,000.
(c) Required Prepayments upon Issuance of Subordinated
Debt. Within two (2) Business Days after the consummation of the
issuance of any Subordinated Debt by the Company or any
Subsidiary, the Company shall apply an amount equal to 100% of
the Net Proceeds of such Subordinated Debt to permanently reduce
the Term Loan Obligations, the Revolving Credit Obligations and
the obligations outstanding under the Notes and this Agreement by
forwarding such Net Proceeds to the Agent and the holders of the
Notes in the respective percentages set forth in Section 7(e) of
the Intercreditor Agreement.
(d) Required Prepayments upon Issuance of Company
Securities. Within two (2) Business Days after the
consummation of any issuance of Company Securities by the
Company or any Subsidiary, the Company shall apply an amount
equal to 50% of the Net Proceeds of such Company Securities to
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<PAGE>
permanently reduce the Term Loan Obligations, the Revolving
Credit Obligations and the obligations outstanding under the
Notes and this Agreement by forwarding such Net Proceeds to the
Agent and the holders of the Notes in the respective percentages
set forth in Section 7(e) of the Intercreditor Agreement;
provided that the Company's existing stock incentive programs, as
more fully described in Schedule 8.1(d) hereof, to the extent
limited to aggregate equity values of $2,000,000 or less on an
annual basis, shall not constitute new equity for purposes
hereof.
(e) Maturity of the Notes. The Company shall pay all
of the principal amount of the Notes remaining outstanding, if
any, on December 31, 1999; provided that the Company shall be
permitted to elect to extend the maturity of the Notes until
December 31, 2000 if the Company gives written notice of such
election to each holder of Notes at any time before June 30,
1999, and provided further that
(i) on the date of such notice and on December
31, 1999, there exists no Default or Event of Default;
(ii) at all times prior to December 31, 1999 there
has not occurred any Default or Event of Default which
has not been cured or been waived in writing by the
Required Holders during the applicable cure period, if
any;
(iii) the Company shall have paid the Extension
Fee to each holder of Notes; and
(iv) the Company shall have simultaneously
extended the "Non-Default Maturity Date" under each of
the Bank Credit Agreements in accordance with their
respective terms.
If the Company shall elect to extend the maturity of the Notes
pursuant to this Section 8.1(e) and such extension shall be
permitted hereunder, the principal amount of the Notes
outstanding on December 31, 2000, together with interest accrued
thereon shall become due and payable on December 31, 2000 and
Section 8.1 shall continue to apply in all respects.
8.2 Optional Prepayments.
The Company may, at its option, upon notice as provided below,
prepay at any time all, or from time to time any part of, the Notes
(but if in part, in an amount not less than Two Hundred Thousand
Dollars ($200,000) or such lesser amount as shall then be
outstanding), at 100% of the principal amount so prepaid. The Company
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<PAGE>
will give each holder of Notes written notice of each optional
prepayment under this Section 8.2 not less than 30 days and not more
than 60 days prior to the date fixed for such prepayment. Each such
notice shall specify such prepayment date, the aggregate principal
amount of the Notes to be prepaid on such date, the principal amount
of each Note held by such holder to be prepaid (determined in
accordance with Section 8.3), and the interest to be paid on the
prepayment date with respect to such principal amount being prepaid.
8.3 Allocation of Partial Prepayments.
In the case of each partial prepayment of the Notes, the
principal amount of the Notes to be prepaid shall be allocated among
all of the Notes at the time outstanding in proportion, as nearly as
practicable, to the respective unpaid principal amounts thereof not
theretofore called for prepayment.
8.4 Maturity; Surrender, etc.
In the case of each prepayment of Notes pursuant to this Section
8, the principal amount of each Note to be prepaid shall mature and
become due and payable on the date fixed for such prepayment, together
with interest on such principal amount accrued to such date. From and
after such date, unless the Company shall fail to pay such principal
amount when so due and payable, together with the interest thereon,
interest on such principal amount shall cease to accrue. Any Note
paid or prepaid in full shall be surrendered to the Company and
cancelled and shall not be reissued, and no Note shall be issued in
lieu of any prepaid principal amount of any Note.
8.5 No Other Optional Prepayments or Purchase of Notes.
The Company will not prepay (whether directly or indirectly by
purchase, redemption or other acquisition) any of the outstanding
Notes except upon the payment or prepayment of the Notes in accordance
with the terms of this Section 8. The Company will promptly cancel
all Notes acquired by it or any Affiliate pursuant to any payment,
prepayment or purchase of Notes pursuant to any provision of this
Section 8 and no Notes may be issued in substitution or exchange for
any such Notes.
8.6 Interest on Notes.
(a) Interest Rate on Notes. Each Note shall bear
interest on the outstanding principal amount thereof at a rate
per annum equal to the Base Rate plus two and twenty-five one-
hundredths percent (2.25%). Such interest shall be payable in
arrears on the last day of each calendar quarter, commencing with
March 31, 1998. The Base Rate shall be determined by the Bank
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<PAGE>
Agent and the Company shall cause the Bank Agent to notify, in
writing, each holder of Notes, at the address set forth on
Schedule A (or at such other address that any such holder shall
give the Company and the Bank Agent in writing) of any change in
the Base Rate within two (2) Business Days of any change thereof.
(b) Overdue Sums. Any overdue principal of, or interest
on, any Note shall bear interest, payable on demand, for each day
from and including the date payment thereof was due to, but
excluding, the date of actual payment, at a rate per annum (the
"Default Rate") equal to the lesser of
(A) the Maximum Legal Rate of Interest, or
(B) the then applicable Base Rate with
respect to such Note plus four and twenty-five
one-hundredths percent (4.25%).
(c) Basis of Computation. Interest on the Notes shall
be computed on the basis of a 365/366 day year and paid for
the actual number of days elapsed. Interest determined at the
Maximum Legal Rate of Interest shall be determined in accordance
with Applicable Interest Law.
(d) Maximum Rate of Interest.
It is the intention of the Company and the holders of the
Notes to conform strictly to the Applicable Interest Law.
Accordingly, notwithstanding any provisions to the contrary in
this Agreement or in any Note, the aggregate of all interest, and
any other charges or consideration constituting interest under
Applicable Interest Law, that is taken, reserved, contracted for,
charged or received pursuant to this Agreement or any Notes shall
under no circumstances exceed the maximum amount of interest
allowed by the Applicable Interest Law. If any interest in
excess of such amount is provided for in this Agreement or in any
Note, then in such event
(i) the provisions of this Section 8.6(d) shall
govern and control,
(ii) the Company shall not be obligated to pay the
amount of such interest to the extent that it is in
excess of the maximum amount of interest allowed by the
Applicable Interest Law,
(iii) any interest paid on any Notes which is in
excess of what is allowed by the Applicable Interest
Law shall be deemed a mistake and cancelled
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automatically and, if theretofore paid, shall be
credited to the outstanding principal amount of such
Notes, pro rata, by each holder of such Notes, and
(iv) the effective rate of interest on the Notes
shall be automatically subject to reduction to the
Maximum Legal Rate of Interest.
If at any time thereafter, the Maximum Legal Rate of
Interest is increased, then, to the extent that it shall be
permissible under Applicable Interest Law, the Company shall
forthwith pay to the holders of the Notes subject to a prior
reduction, all amounts (or the permissible part thereof) of such
excess interest that the holders of such Notes would have been
entitled to receive pursuant to the terms of this Agreement and
such Notes had such increased Maximum Legal Rate of Interest been
in effect at all times when such excess interest accrued. To the
extent permitted by the Applicable Interest Law, all sums paid or
agreed to be paid to the holders of any Notes for the use,
forbearance or detention of the indebtedness evidenced by the
Notes shall be amortized, prorated, allocated and spread
throughout the full term of such Notes.
9. AFFIRMATIVE COVENANTS.
The Company covenants that so long as any of the Notes are
outstanding:
9.1 Compliance with Law.
The Company will and will cause each of its Subsidiaries to
comply with all laws, ordinances or governmental rules or regulations
to which each of them is subject, and will obtain and maintain in
effect all licenses, certificates, permits, franchises and other
governmental authorizations necessary to the ownership of their
respective properties or to the conduct of their respective
businesses, in each case to the extent necessary to ensure that non-
compliance with such laws, ordinances or governmental rules or
regulations or failures to obtain or maintain in effect such licenses,
certificates, permits, franchises and other governmental
authorizations could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.
9.2 Insurance.
The Company will maintain, and will cause each Subsidiary to
maintain, insurance coverage in such forms and amounts and against
such risks, including without limitation insurance with respect to its
property, the operation thereof and its business against casualties,
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contingencies and risks and insurance against loss or damage from such
hazard and risks to the Person or property of others, as are customary
for corporations similarly situated and engaged in the same or a
similar business and owning and operating similar properties. All
such insurance shall be carried with (i) CIGNA or an affiliate
thereof, or (ii) financially sound and reputable insurers rated A or
better by A.M. Best Company, Inc.
9.3 Maintenance of Properties.
The Company will and will cause each of its Subsidiaries to
maintain and keep, or cause to be maintained and kept, their
respective properties in good repair, working order and condition
(other than ordinary wear and tear), so that the business carried on
in connection therewith may be properly conducted at all times,
provided that this Section shall not prevent the Company or any
Subsidiary from discontinuing the operation and the maintenance of any
of its properties if such discontinuance is desirable in the conduct
of its business and the Company has concluded that such discontinuance
could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
9.4 Payment of Taxes and Claims.
The Company will and will cause each of its Subsidiaries to file
all tax returns required to be filed in any jurisdiction and to pay
and discharge all taxes shown to be due and payable on such returns
and all other taxes, assessments, governmental charges, or levies
imposed on them or any of their properties, assets, income or
franchises, to the extent such taxes, assessments, charges or levies
have become due and payable and before they have become delinquent and
all claims for which sums have become due and payable that have or
might become a Lien on properties or assets of the Company or any
Subsidiary, provided that neither the Company nor any Subsidiary need
pay any such tax or assessment or claims if (a) the amount,
applicability or validity thereof is contested by the Company or such
Subsidiary on a timely basis in good faith and in appropriate
proceedings, and the Company or a Subsidiary has established adequate
reserves therefor in accordance with GAAP on the books of the Company
or such Subsidiary or (b) the nonpayment of all such taxes,
assessments, charges and levies in the aggregate could not reasonably
be expected to have a Material Adverse Effect.
9.5 Corporate Existence, etc.
The Company will at all times preserve and keep in full force and
effect its corporate existence. Subject to paragraphs E and F of
Schedule 10.1, the Company will at all times preserve and keep in full
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force and effect the corporate existence of each of its Subsidiaries
(unless merged into the Company or a Subsidiary) and all rights and
franchises of the Company and its Subsidiaries unless, in the good
faith judgment of the Company, the termination of or failure to
preserve and keep in full force and effect such corporate existence,
right or franchise could not, individually or in the aggregate, have a
Material Adverse Effect.
9.6 Subsidiaries as Guarantors.
The Company will, not later than three (3) Business Days after
any Person becomes a Subsidiary after the Closing Date or any
Subsidiary becomes an obligor under either of the Bank Credit
Agreements or an obligor with respect to any other Indebtedness, cause
such Person to execute and deliver:
(a) to each holder of Notes, manually signed originals
of an acknowledgment and agreement in respect of the Subsidiary
Guaranty in the form of Exhibit A thereto, and
(b) to the Collateral Agent, manually signed originals
(with copies thereof to any holder of Notes upon such holder's
request) of all Security Documents and such Uniform Commercial
Code financing statements and other instruments and documents as
shall be necessary to perfect the Liens against Property of such
Person which is Collateral.
The foregoing items shall be accompanied by (i) a written notice,
signed by a Senior Financial Officer of the Company, making reference
to this Section of this Agreement, stating that such Person is
required to become a Subsidiary Guarantor and specifying the manner in
which such Person shall have become a Subsidiary Guarantor, the
jurisdiction of incorporation of such Person and the percentage of its
capital stock owned by the Company and the other Subsidiaries, (ii)
copies of the corporate charter and bylaws of such Person and
resolutions of the board of directors of such Person authorizing its
execution and delivery of the foregoing agreements and the
transactions contemplated thereby (in each case, certified as correct
and complete copies by the secretary or an assistant secretary of such
Person) and (iii) a legal opinion, satisfactory in form, scope and
substance to the Required Holders, of independent counsel to the
effect (A) that the Financing Documents to which such Person is then
becoming a party are enforceable in accordance with their terms and
(B) that the Liens against Property which is Collateral shall have
been created and perfected in accordance with the requirements of the
Security Documents.
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9.7 Current Public Information.
The Company will at all times have on file with the Securities
and Exchange Commission "current public information" of the type
required in order to make Rule 144 under the Securities Act available
to the holders of its Common Stock.
10. NEGATIVE AND FINANCIAL COVENANTS.
10.1 Negative Covenants.
The Company covenants that so long as any of the Notes are
outstanding that it shall comply with each of the negative covenants
set forth in Schedule 10.1 which covenants are incorporated herein by
this reference.
10.2 Financial Covenants.
The Company covenants that at all times after June 30, 1998 and
so long as any of the Notes are outstanding that it shall comply with
each of the financial covenants set forth in Schedule 10.2 which
covenants are incorporated herein by this reference.
10.3 Transactions with Affiliates.
The Company will not, and will not permit any Subsidiary to,
enter into directly or indirectly any transaction or group of related
transactions (including, without limitation, the purchase, lease, sale
or exchange of properties of any kind or the rendering of any service)
with any Affiliate (other than the Company or another Subsidiary),
except in the ordinary course and pursuant to the reasonable
requirements of the Company's or such Subsidiary's business and upon
fair and reasonable terms no less favorable to the Company or such
Subsidiary than would be obtainable in a comparable arm's-length
transaction with a Person not an Affiliate.
10.4 Inactive Subsidiaries.
The Company will not, at any time, permit any Inactive Subsidiary
to
(a) own any Property,
(b) conduct any business or business operations, or
(c) be or become obligated in respect of any
liabilities or other obligations;
provided; that Rockingham Poultry, Inc (VI) may maintain a bank
account, so long as the maximum amount on deposit therein does not at
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any time exceed $15,000, and conduct its foreign sales operations.
11. EVENTS OF DEFAULT.
An "Event of Default" shall exist if any of the following
conditions or events shall occur and be continuing:
(a) the Company defaults in the payment of any principal on
any Note when the same becomes due and payable, whether at
maturity or at a date fixed for prepayment or by declaration or
otherwise; or
(b) the Company defaults in the payment of any interest on
any Note for more than five (5) Business Days after the same
becomes due and payable; or
(c) the Company defaults in the performance of or
compliance with any term contained in any of Section 7.1(e),
Section 7.1(i), Section 7.1(j), Schedule 10.1 or Schedule 10.2,
inclusive; or
(d) the Company defaults in the performance of or
compliance with any term contained herein (other than those
referred to in paragraphs (a), (b) and (c) of this Section 11)
and such default is not remedied within 30 days after the earlier
of (i) a Responsible Officer obtaining actual knowledge of such
default and (ii) the Company receiving written notice of such
default from any holder of a Note; or
(e) any representation or warranty made in writing by
or on behalf of the Company or any Subsidiary Guarantor, or
by any officer of the Company or any Subsidiary Guarantor, in
this Agreement, any other Financing Document or in any writing
furnished in connection with the transactions contemplated hereby
proves to have been false or incorrect in any material respect on
the date as of which made; or
(f) (i) the Company or any Subsidiary is in default
(as principal or as guarantor or other surety) in the
payment of any principal of or premium or make-whole
amount or interest on any Indebtedness (other than
Indebtedness under this Agreement and the Notes) beyond
any period of grace provided with respect thereto, that
individually or together with such other Indebtedness
as to which any such failure exists has an aggregate
outstanding principal amount of at least Three Million
Dollars ($3,000,000), or
(ii) the Company or any Subsidiary is in default
in the performance of or compliance with any term of
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any Indebtedness (other than Indebtedness under this
Agreement and the Notes), that individually or together
with such other Indebtedness as to which any such
failure exists has an aggregate outstanding principal
amount of at least Three Million Dollars ($3,000,000),
or of any mortgage, indenture or other agreement
relating thereto, or any other condition exists, and as
a consequence of such default or condition such
Indebtedness has become, or has been declared (or one
or more Persons are entitled to declare such
Indebtedness to be), due and payable before its stated
maturity or before its regularly scheduled dates of
payment, or
(iii) as a consequence of the occurrence or
continuation of any event or condition (other than the
passage of time or the right of the holder of
Indebtedness to convert such Indebtedness into equity
interests),
(A) the Company or any Subsidiary has become
obligated to purchase or repay Indebtedness before
its regular maturity or before its regularly
scheduled dates of payment in an aggregate
outstanding principal amount of at least Three
Million Dollars ($3,000,000), or
(B) one or more Persons have the right to
require the Company or any Subsidiary so to
purchase or repay such Indebtedness; or
(g) the Company or any Subsidiary (i) is generally not
paying, or admits in writing its inability to pay, its debts
as they become due, (ii) files, or consents by answer or
otherwise to the filing against it of, a petition for relief
or reorganization or arrangement or any other petition in
bankruptcy, for liquidation or to take advantage of any
bankruptcy, insolvency, reorganization, moratorium or other
similar law of any jurisdiction, (iii) makes an assignment for
the benefit of its creditors, (iv) consents to the appointment of
a custodian, receiver, trustee or other officer with similar
powers with respect to it or with respect to any substantial part
of its property, (v) is adjudicated as insolvent or to be
liquidated, or (vi) takes corporate action for the purpose of any
of the foregoing; or
(h) a court or Governmental Authority of competent
jurisdiction enters an order appointing, without consent by
the Company or any Subsidiary, a custodian, receiver, trustee or
other officer with similar powers with respect to the Company or
any Subsidiary or with respect to any substantial part of the
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property of the Company or any Subsidiary, or constituting an
order for relief or approving a petition for relief or
reorganization or any other petition in bankruptcy or for
liquidation or to take advantage of any bankruptcy or insolvency
law of any jurisdiction, or ordering the dissolution, winding-up
or liquidation of the Company or any Subsidiary, or any such
petition shall be filed against the Company or any Subsidiary and
such petition shall not be dismissed within 60 days; or
(i) a final judgment or judgments for the payment of money
aggregating in excess of Two Million Five Hundred Thousand
Dollars ($2,500,000) are rendered against one or more of the
Company and its Subsidiaries and which judgments are not, within
30 days after entry thereof, bonded, discharged or stayed pending
appeal, or are not discharged within 30 days after the expiration
of such stay; or
(i) the Subsidiary Guaranty shall cease to be in
full force and effect or shall be declared by a court
or Governmental Authority of competent jurisdiction to
be void, voidable or unenforceable against any
Subsidiary Guarantor;
(ii) the validity or enforceability of the
Subsidiary Guaranty against any Subsidiary Guarantor
shall be contested by any such Subsidiary Guarantor, or
any Subsidiary or Affiliate thereof; or
(iii) any Subsidiary Guarantor, or any Subsidiary
or Affiliate thereof, shall deny that such Subsidiary
Guarantor has any further liability or obligation under
the Subsidiary Guaranty; or
(k) any person or group of persons (within the meaning
of Section 13(d) of the Exchange Act) other than the current
board of directors of the Company, 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 Company entitled to vote in the election of
members of the board of directors of the Company; or
(l) any security interest or Lien granted to the
Collateral Agent pursuant to the Security Documents shall fail at
any time to constitute a perfected first priority security
interest in or Lien on any material portion of the Collateral
subject only to Liens permitted thereunder, or any of the
Security Documents shall cease to be in full force and effect in
whole or in part for any reason whatsoever except as specified
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therein, provided that no Event of Default shall have occurred
pursuant to this subparagraph (l) if the Company, within five (5)
Business Days of receiving notice from the Collateral Agent,
takes such steps as are necessary to create a valid and perfected
first priority Lien in such Collateral in favor of the Collateral
Agent; or
(m)if (i) any Plan shall fail to satisfy the
minimum funding standards of ERISA or the Code for any
plan year or part thereof or a waiver of such standards
or extension of any amortization period is sought or
granted under section 412 of the Code,
(ii) a notice of intent to terminate any Plan
shall have been or is reasonably expected to be
filed with the PBGC or the PBGC shall have
instituted proceedings under section 4042 of ERISA
to terminate or appoint a trustee to administer
any Plan or the PBGC shall have notified the
Company or any ERISA Affiliate that a Plan may
become a subject of any such proceedings,
(iii) the aggregate amount of "unfunded
benefit liabilities" (within the meaning of
section 4001(a)(18) of ERISA) under all Plans,
determined in accordance with Title IV of ERISA,
shall exceed Five Million Dollars ($5,000,000),
(iv) the Company or any ERISA Affiliate shall
have incurred or is reasonably expected to incur
any liability pursuant to Title I or IV of ERISA
or the penalty or excise tax provisions of the
Code relating to employee benefit plans (as
defined in section 3 of ERISA),
(v) the Company or any ERISA Affiliate
withdraws from any Multiemployer Plan, or
(vi) the Company or any Subsidiary
establishes or amends any employee welfare benefit
plan (as defined in section 3 of ERISA) that
provides post-employment welfare benefits in a
manner that would increase the liability of the
Company or any Subsidiary thereunder;
and any such event or events described in clauses (i)
through (vi) above, either individually or together with any
other such event or events, could reasonably be expected to have
a Material Adverse Effect.
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<PAGE>
12. REMEDIES ON DEFAULT, ETC.
12.1 Acceleration.
(a) If an Event of Default with respect to the Company
described in paragraph (g) or paragraph (h) of Section 11
(other than an Event of Default described in clause (i) of
paragraph (g) or described in clause (vi) of paragraph (g) by
virtue of the fact that such clause encompasses clause (i) of
paragraph (g)) has occurred, all the Notes then outstanding shall
automatically become immediately due and payable.
(b) If any other Event of Default has occurred and is
continuing, any holder or holders of more than 35% in principal
amount of the Notes at the time outstanding may at any time at
its or their option, by notice or notices to the Company, declare
all the Notes then outstanding to be immediately due and payable.
(c) If any Event of Default described in paragraph (a)
or (b) of Section 11 has occurred and is continuing, any
holder or holders of Notes at the time outstanding affected
by such Event of Default may at any time, at its or their
option, by notice or notices to the Company, declare all the
Notes held by it or them to be immediately due and payable.
Upon any Notes becoming due and payable under this Section 12.1,
whether automatically or by declaration, such Notes will forthwith
mature and the entire unpaid principal amount of such Notes, plus all
accrued and unpaid interest thereon, shall all be immediately due and
payable, in each and every case without presentment, demand, protest
or further notice, all of which are hereby waived.
12.2 Other Remedies.
If any Default or Event of Default has occurred and is
continuing, and irrespective of whether any Notes have become or have
been declared immediately due and payable under Section 12.1, the
holder of any Note at the time outstanding may proceed to protect and
enforce the rights of such holder by an action at law, suit in equity
or other appropriate proceeding, whether for the specific performance
of any agreement contained herein or in any Note, or for an injunction
against a violation of any of the terms hereof or thereof, or in aid
of the exercise of any power granted hereby or thereby or by law or
otherwise.
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12.3 Rescission.
At any time after any Notes have been declared due and payable
pursuant to clause (b) or clause (c) of Section 12.1, the holders of
not less than 67% in principal amount of the Notes then outstanding,
by written notice to the Company, may rescind and annul any such
declaration and its consequences if (a) the Company has paid all
overdue interest on the Notes, all principal of, and all interest on
such overdue principal, and (to the extent permitted by applicable
law), except as otherwise provided in Section 8.6(b), any overdue
interest in respect of the Notes, at the Default Rate, (b) all Events
of Default and Defaults, other than non-payment of amounts that have
become due solely by reason of such declaration, have been cured or
have been waived pursuant to Section 17, and (c) no judgment or decree
has been entered for the payment of any monies due pursuant hereto or
to the Notes. No rescission and annulment under this Section 12.3
will extend to or affect any subsequent Event of Default or Default or
impair any right consequent thereon.
12.4 No Waivers or Election of Remedies, Expenses, etc.
No course of dealing and no delay on the part of any holder of
any Note in exercising any right, power or remedy shall operate as a
waiver thereof or otherwise prejudice such holder's rights, powers or
remedies. No right, power or remedy conferred by this Agreement or by
any Note upon any holder thereof shall be exclusive of any other
right, power or remedy referred to herein or therein or now or
hereafter available at law, in equity, by statute or otherwise.
Without limiting the obligations of the Company under Section 15, the
Company will pay to the holder of each Note on demand such further
amount as shall be sufficient to cover all costs and expenses of such
holder incurred in any enforcement or collection under this Section
12, including, without limitation, reasonable attorneys' fees,
expenses and disbursements.
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
13.1 Registration of Notes.
The Company shall keep at its principal executive office a
register for the registration and registration of transfers of Notes.
The name and address of each holder of one or more Notes, each
transfer thereof and the name and address of each transferee of one or
more Notes shall be registered in such register. Prior to due
presentment for registration of transfer, the Person in whose name any
Note shall be registered shall be deemed and treated as the owner and
holder thereof for all purposes hereof, and the Company shall not be
affected by any notice or knowledge to the contrary. The Company
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<PAGE>
shall give to any holder of a Note that is an Institutional Investor
promptly upon request therefor, a complete and correct copy of the
names and addresses of all registered holders of Notes.
13.2 Transfer and Exchange of Notes.
Upon surrender of any Note at the principal executive office of
the Company for registration of transfer or exchange (and in the case
of a surrender for registration of transfer, duly endorsed or
accompanied by a written instrument of transfer duly executed by the
registered holder of such Note or his attorney duly authorized in
writing and accompanied by the address for notices of each transferee
of such Note or part thereof), the Company shall execute and deliver,
at the Company's expense (except as provided below), one or more new
Notes (as requested by the holder thereof) in exchange therefor, in an
aggregate principal amount equal to the unpaid principal amount of the
surrendered Note. Each such new Note shall be payable to such Person
as such holder may request and shall be substantially in the form of
Exhibit 1. Each such new Note shall be dated and bear interest from
the date to which interest shall have been paid on the surrendered
Note or dated the date of the surrendered Note if no interest shall
have been paid thereon. The Company may require payment of a sum
sufficient to cover any stamp tax or governmental charge imposed in
respect of any such transfer of Notes. Notes shall not be transferred
in denominations of less than One Hundred Thousand Dollars ($100,000),
provided that if necessary to enable the registration of transfer by a
holder of its entire holding of Notes, one Note may be in a
denomination of less than One Hundred Thousand Dollars ($100,000).
Any transferee, by its acceptance of a Note registered in its name (or
the name of its nominee), shall be deemed to have made the
representation set forth in Section 6.2.
13.3 Replacement of Notes.
Upon receipt by the Company of evidence reasonably satisfactory
to it of the ownership of and the loss, theft, destruction or
mutilation of any Note (which evidence shall be, in the case of an
Institutional Investor, notice from such Institutional Investor of
such ownership and such loss, theft, destruction or mutilation), and
(a) in the case of loss, theft or destruction, of
indemnity reasonably satisfactory to it (provided that if the
holder of such Note is, or is a nominee for, an original
purchaser or a Qualified Institutional Buyer, such Person's own
unsecured agreement of indemnity shall be deemed to be
satisfactory), or
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(b) in the case of mutilation, upon surrender and
cancellation thereof,
the Company at its own expense shall execute and deliver, in lieu
thereof, a new Note, dated and bearing interest from the date to which
interest shall have been paid on such lost, stolen, destroyed or
mutilated Note or dated the date of such lost, stolen, destroyed or
mutilated Note if no interest shall have been paid thereon.
14. PAYMENTS ON NOTES.
14.1 Place of Payment.
Subject to Section 14.2, payments of principal, and interest
becoming due and payable on the Notes shall be made in New York, New
York at the principal office of The Chase Manhattan Bank in such
jurisdiction. The Company may at any time, by notice to each holder
of a Note, change the place of payment of the Notes so long as such
place of payment shall be either the principal office of the Company
in such jurisdiction or the principal office of a bank or trust
company in such jurisdiction.
14.2 Home Office Payment.
So long as you or your nominee shall be the holder of any Note,
and notwithstanding anything contained in Section 14.1 or in such Note
to the contrary, the Company will pay all sums becoming due on such
Note for principal and interest by the method and at the address
specified for such purpose below your name in Schedule A, or by such
other method or at such other address as you shall have from time to
time specified to the Company in writing for such purpose, without the
presentation or surrender of such Note or the making of any notation
thereon, except that upon written request of the Company made
concurrently with or reasonably promptly after payment or prepayment
in full of any Note, you shall surrender such Note for cancellation,
reasonably promptly after any such request, to the Company at its
principal executive office or at the place of payment most recently
designated by the Company pursuant to Section 14.1. Prior to any sale
or other disposition of any Note held by you or your nominee you will,
at your election, either endorse thereon the amount of principal paid
thereon and the last date to which interest has been paid thereon or
surrender such Note to the Company in exchange for a new Note or Notes
pursuant to Section 13.2. The Company will afford the benefits of
this Section 14.2 to any Institutional Investor that is the direct or
indirect transferee of any Note purchased by you under this Agreement
and that has made the same agreement relating to such Note as you have
made in this Section 14.2.
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15. EXPENSES, ETC.
15.1 Transaction Expenses.
Whether or not the transactions contemplated hereby are
consummated, the Company will pay all costs and expenses (including
reasonable attorneys' fees of a special counsel and, if reasonably
required, local or other counsel) incurred by you and each other
Purchaser or holder of a Note in connection with such transactions and
in connection with any amendments, waivers or consents under or in
respect of this Agreement or the Notes (whether or not such amendment,
waiver or consent becomes effective), including, without limitation:
(a) the costs and expenses incurred in enforcing or defending (or
determining whether or how to enforce or defend) any rights under this
Agreement, the Notes or any other Financing Document or in responding
to any subpoena or other legal process or informal investigative
demand issued in connection with this Agreement, the Notes or any
other Financing Document, or by reason of being a holder of any Note,
(b) the costs and expenses, including attorney's and financial
advisors' fees and costs and expenses, incurred in connection with the
insolvency or bankruptcy of the Company or any Subsidiary or in
connection with any work-out or restructuring of the transactions
contemplated hereby and by the Notes and (c) the costs and expenses
(including travel expenses) incurred in connection with the review,
evaluation, negotiation, analysis, due diligence investigation or
other activity related to any of the Financing Documents and the
holders' and the Collateral Agent's rights and remedies thereunder
(including any such activity occurring during any work-out or
restructuring of the transactions contemplated hereby and by the Notes
or during a bankruptcy, insolvency, reorganization or similar
proceeding). The Company will pay, and will save you and each other
holder of a Note harmless from, all claims in respect of any fees,
costs or expenses if any, of brokers and finders (other than those
retained by you).
15.2 Survival.
The obligations of the Company under this Section 15 will survive
the payment or transfer of any Note, the enforcement, amendment or
waiver of any provision of this Agreement or the Notes, and the
termination of this Agreement.
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein shall survive
the execution and delivery of this Agreement and the Notes, the
purchase or transfer by you of any Note or portion thereof or interest
therein and the payment of any Note, and may be relied upon by any
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<PAGE>
subsequent holder of a Note, regardless of any investigation made at
any time by or on behalf of you or any other holder of a Note. All
statements contained in any certificate or other instrument delivered
by or on behalf of the Company pursuant to this Agreement shall be
deemed representations and warranties of the Company under this
Agreement.
17. AMENDMENT AND WAIVER.
17.1 Requirements.
This Agreement and the Notes may be amended, and the observance
of any term hereof or of the Notes may be waived (either retroactively
or prospectively), with (and only with) the written consent of the
Company and the Required Holders, except that (a) no amendment or
waiver of any of the provisions of any of Sections 1, 2, 3, 4, 5, 6
and 21, or any defined term (as it is used therein), will be effective
as to you unless consented to by you in writing, and (b) no such
amendment or waiver may, without the written consent of the holder of
each Note at the time outstanding affected thereby, (i) subject to the
provisions of Section 12 relating to acceleration or rescission,
change the amount or time of any prepayment or payment of principal
of, or reduce the rate or change the time of payment or method of
computation of interest on the Notes, (ii) change the percentage of
the principal amount of the Notes the holders of which are required to
consent to any such amendment or waiver, or (iii) amend any of
Sections 8, 11(a), 11(b), 12, 17 and 20.
17.2 Solicitation of Holders of Notes.
(a) Solicitation. The Company will provide each
holder of the Notes (irrespective of the amount of Notes then
owned by it) with sufficient information, sufficiently far in
advance of the date a decision is required, to enable such holder
to make an informed and considered decision with respect to any
proposed amendment, waiver or consent in respect of any of the
provisions hereof or of the Notes. The Company will deliver
executed or true and correct copies of each amendment, waiver or
consent effected pursuant to the provisions of this Section 17 to
each holder of outstanding Notes promptly following the date on
which it is executed and delivered by, or receives the consent or
approval of, the requisite holders of Notes.
(b) Payment. The Company will not directly or indirectly
pay or cause to be paid any remuneration, whether by way of
supplemental or additional interest, fee or otherwise, or grant
any security, to any holder of Notes as consideration for or as
an inducement to the entering into by any holder of Notes of any
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waiver or amendment of any of the terms and provisions hereof
unless such remuneration is concurrently paid, or security is
concurrently granted, on the same terms, ratably to each holder
of Notes then outstanding even if such holder did not consent to
such waiver or amendment.
17.3 Binding Effect, etc.
Any amendment or waiver consented to as provided in this Section
17 applies equally to all holders of Notes and is binding upon them
and upon each future holder of any Note and upon the Company without
regard to whether such Note has been marked to indicate such amendment
or waiver. No such amendment or waiver will extend to or affect any
obligation, covenant, agreement, Default or Event of Default not
expressly amended or waived or impair any right consequent thereon.
No course of dealing between the Company and the holder of any Note
nor any delay in exercising any rights hereunder or under any Note
shall operate as a waiver of any rights of any holder of such Note.
As used herein, the term "this Agreement" and references thereto shall
mean this Agreement as it may from time to time be amended or
supplemented.
17.4 Notes held by Company, etc.
Solely for the purpose of determining whether the holders of the
requisite percentage of the aggregate principal amount of Notes then
outstanding approved or consented to any amendment, waiver or consent
to be given under this Agreement or the Notes, or have directed the
taking of any action provided herein or in the Notes to be taken upon
the direction of the holders of a specified percentage of the
aggregate principal amount of Notes then outstanding, Notes directly
or indirectly owned by the Company or any of its Affiliates shall be
deemed not to be outstanding.
18. NOTICES.
All notices and communications provided for hereunder shall be in
writing and sent (a) by telecopy if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery
service (charges prepaid), or (b) by registered or certified mail with
return receipt requested (postage prepaid), or (c) by a recognized
overnight delivery service (with charges prepaid). Any such notice
must be sent:
(i) if to you or your nominee, to you or it at the
address specified for such communications in Schedule A, or
at such other address as you or it shall have specified to the
Company in writing,
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(ii) if to any other holder of any Note, to such holder
at such address as such other holder shall have specified to
the Company in writing, or
(iii) if to the Company, to the Company at its address
set forth at the beginning hereof (or if by United States
Postal Service to P.O. Box 7000, Broadway, Virginia 22815) to the
attention of Robert Ritter, telecopier: (540) 896-0498, or at
such other address as the Company shall have specified to the
holder of each Note in writing.
Notices under this Section 18 will be deemed given only when actually
received.
19. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating hereto, including,
without limitation, (a) consents, waivers and modifications that may
hereafter be executed, (b) documents received by you at the Closing
(except the Notes themselves), and (c) financial statements,
certificates and other information previously or hereafter furnished
to you, may be reproduced by you by any photographic, photostatic,
microfilm, microcard, miniature photographic or other similar process
and you may destroy any original document so reproduced. The Company
agrees and stipulates that, to the extent permitted by applicable law,
any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding (whether or not
the original is in existence and whether or not such reproduction was
made by you in the regular course of business) and any enlargement,
facsimile or further reproduction of such reproduction shall likewise
be admissible in evidence. This Section 19 shall not prohibit the
Company or any other holder of Notes from contesting any such
reproduction to the same extent that it could contest the original, or
from introducing evidence to demonstrate the inaccuracy of any such
reproduction.
20. SUBSTITUTION OF PURCHASER.
You shall have the right to substitute any one of your Affiliates
as the purchaser of the Notes that you have agreed to purchase
hereunder, by written notice to the Company, which notice shall be
signed by both you and such Affiliate, shall contain such Affiliate's
agreement to be bound by this Agreement and shall contain a
confirmation by such Affiliate of the accuracy with respect to it of
the representations set forth in Section 6. Upon receipt of such
notice, wherever the word "you" is used in this Agreement (other than
in this Section 20), such word shall be deemed to refer to such
Affiliate in lieu of you. In the event that such Affiliate is so
substituted as a purchaser hereunder and such Affiliate thereafter
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transfers to you all of the Notes then held by such Affiliate, upon
receipt by the Company of notice of such transfer, wherever the word
"you" is used in this Agreement (other than in this Section 20), such
word shall no longer be deemed to refer to such Affiliate, but shall
refer to you, and you shall have all the rights of an original holder
of the Notes under this Agreement.
21. MISCELLANEOUS.
21.1 Successors and Assigns.
All covenants and other agreements contained in this Agreement by
or on behalf of any of the parties hereto bind and inure to the
benefit of their respective successors and assigns (including, without
limitation, any subsequent holder of a Note) whether so expressed or
not.
21.2 Payments Due on Non-Business Days; When Payments Deemed
Received.
(a)Payments Due on Non-Business DaysAnything in this
Agreement or the Notes to the contrary notwithstanding, any
payment of principal of or interest on any Note that is due
on a date other than a Business Day shall be made on the next
succeeding Business Day without including the additional days
elapsed in the computation of the interest payable on such next
succeeding Business Day.
(b) Payments, When ReceivedAny payment to be made to the
holders of Notes hereunder or under the Notes shall be deemed to
have been made on the Business Day such payment actually becomes
available to such holder at such holder's bank prior to 12:00
noon (local time of such bank).<PAGE>
21.3 Severability.
Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall (to the full
extent permitted by law) not invalidate or render unenforceable such
provision in any other jurisdiction.
21.4 Construction.
Each covenant contained herein shall be construed (absent express
provision to the contrary) as being independent of each other covenant
contained herein, so that compliance with any one covenant shall not
(absent such an express contrary provision) be deemed to excuse
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compliance with any other covenant. Where any provision herein refers
to action to be taken by any Person, or which such Person is
prohibited from taking, such provision shall be applicable whether
such action is taken directly or indirectly by such Person.
21.5 Counterparts.
This Agreement may be executed in any number of counterparts,
each of which shall be an original but all of which together shall
constitute one instrument. Each counterpart may consist of a number
of copies hereof, each signed by less than all, but together signed by
all, of the parties hereto.
21.6 Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF
THE STATE OF NEW YORK EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF
SUCH STATE THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A
JURISDICTION OTHER THAN SUCH STATE.
[Remainder of page intentionally blank. Next page is signature page.]
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If you are in agreement with the foregoing, please sign the
form of agreement on the accompanying counterpart of this Agreement
and return it to the Company, whereupon the foregoing shall become a
binding agreement between you and the Company.
Very truly yours,
WLR FOODS, INC
By:__/s/ Robert T. Ritter__
Name: Robert T. Ritter
Title:Vice President
The foregoing is hereby
agreed to as of the
date thereof.
NATIONWIDE LIFE INSURANCE COMPANY
By:__/s/ James W. Pruden__
Name: James W. Pruden
Title:Vice President
Municipal Securities
NATIONWIDE LIFE INSURANCE COMPANY SEPARATE ACCOUNT OH
By:__/s/ James W. Pruden__
Name: James W. Pruden
Title:Vice President
Municipal Securities
EMPLOYERS LIFE INSURANCE COMPANY OF WAUSAU
By:__/s/ James W. Pruden__
Name: James W. Pruden
Title:Attorney-In-Fact
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SECURITY LIFE INSURANCE COMPANY
By: MIMLIC Asset Management Company
By:__/s/ Joseph R. Betlej__
Name: Joseph R. Betlej
Title:Vice President
GREAT WESTERN INSURANCE COMPANY
By: MIMLIC Asset Management Company
By:__/s/ Joseph R. Betlej__
Name: Joseph R. Betlej
Title:Vice President
NATIONAL TRAVELERS LIFE COMPANY
By: MIMLIC Asset Management Company
By:__/s/ Joseph R. Betlej__
Name: Joseph R. Betlej
Title:Vice President
PIONEER MUTUAL LIFE INSURANCE COMPANY
By: MIMLIC Asset Management Company
By:__/s/ Joseph R. Betlej__
Name: Joseph R. Betlej
Title:Vice President
GUARANTEE RESERVE LIFE INSURANCE COMPANY
By: MIMLIC Asset Management Company
By:__/s/ R. Worthing__
Name: R. Worthing
Title:Vice President
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THE CATHOLIC AID ASSOCIATION
By: MIMLIC Asset Management Company
By:__/s/ R. Worthing__
Name: R. Worthing
Title:Vice President
MUTUAL TRUST LIFE INSURANCE COMPANY
By: MIMLIC Asset Management Company
By:__/s/ R. Worthing__
Name: R. Worthing
Title:Vice President
FEDERATED MUTUAL INSURANCE COMPANY
By: MIMLIC Asset Management Company
By:__/s/ R. Worthing__
Name: R. Worthing
Title:Vice President
FEDERATED LIFE INSURANCE COMPANY
By: MIMLIC Asset Management Company
By:__/s/ Loren Haugland__
Name: Loren Haugland
Title:Vice President
STATE MUTUAL INSURANCE COMPANY
By: MIMLIC Asset Management Company
By:__/s/ Loren Haugland__
Name: Loren Haugland
Title:Vice President
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COLORADO BANKERS LIFE INSURANCE COMPANY
By: MIMLIC Asset Management Company
By:__/s/ Loren Haugland__
Name: Loren Haugland
Title:Vice President
THE RELIABLE LIFE INSURANCE COMPANY
& ASSOCIATES RETIREMENT PLAN
By: MIMLIC Asset Management Company
By:__/s/ Loren Haugland__
Name: Loren Haugland
Title:Vice President
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
By: MIMLIC Asset Management Company
By:__/s/ Steven M. Laude__
Name: Steven Laude
Title:Vice President
MIMLIC FUNDING, INC.
By: MIMLIC Asset Management Company
By:__/s/ Steven M. Laude__
Name: Steven Laude
Title:Vice President
TEXAS LIFE INSURANCE COMPANY
By:__/s/ Charles Scully__
Name: Charles Scully
Title:Investment Officer
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STAUNTON FARM CREDIT, ACA
By:__/s/ Richard E. Reeves__
Name: Richard E. Reeves
Title:President
THE RELIABLE LIFE INSURANCE COMPANY
By: MIMLIC Asset Management Company
By:__/s/ Dianne Orbison__
Name: Dianne Orbison
Title:Vice President
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Exhihit 2.11
EXHIBIT 2(a)
FORM OF SENIOR NOTE
WLR FOODS, INC.
VARIABLE RATE SENIOR NOTE
DUE DECEMBER 31, 1999
No. R- February ___, 1998
$ PPN: 929286 B* 2
FOR VALUE RECEIVED, the undersigned, WLR FOODS, INC. (herein
called the "Company"), a corporation organized and existing under the
laws of the Commonwealth of Virginia, hereby promises to pay to
_____________________, or registered assigns, the principal sum of
___________ DOLLARS ($__________) on December 31, 1999 unless extended
pursuant to Section 8.1(e) of the Note Purchase Agreement (defined
below), with interest (computed on the basis of a 365/366 day year and
paid for the actual number of days elapsed) on the unpaid balance from
the date hereof at an annual rate equal to the Base Rate as provided
in the Note Purchase Agreement plus two and twenty-five one-hundredths
percent (2.25%), payable in arrears on the last Business Day of each
calendar quarter, commencing on the later of March 31, 1998 or the
last Business Day of the calendar quarter in which this Note is
issued, until the principal hereof shall have become due and payable,
and to the extent permitted by law on any overdue payment of principal
or interest at a rate per annum equal to the lesser of (i) the Maximum
Legal Rate of Interest, or (ii) the then applicable Base Rate with
respect to this Note plus four and twenty-five one-hundredths percent
(4.25%).
Payments of principal of and interest on this Note are to be made in
lawful money of the United States of America at the address shown in
the register maintained by the Company for such purpose or at such
other place as the Company shall have designated by written notice to
the holder of this Note as provided in the Note Purchase Agreements
referred to below.
This Note is one of a series of Senior Notes issued pursuant to that
certain Note Purchase Agreement, dated as of February 25, 1998 (as
from time to time amended, the "Note Purchase Agreement"), between the
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Company and the purchasers named therein and is entitled to the
benefits thereof. Capitalized terms used herein and not defined
herein shall have the respective meanings ascribed to them in the Note
Purchase Agreement.
This Note is a registered Note and, as provided in the Note
Purchase Agreement, upon surrender of this Note for registration of
transfer duly endorsed or accompanied by a written instrument of
transfer duly executed by the registered holder hereof or such
holder's attorney duly authorized in writing, a new Note for a like
principal amount will be issued to, and registered in the name of, the
transferee. Prior to due presentment for registration of transfer,
the Company may treat the person in whose name this Note is registered
as the owner hereof for the purpose of receiving payment and for all
other purposes, and the Company will not be affected by any notice to
the contrary.
The Company will make required prepayments of principal on the
dates and in the amounts specified in the Note Purchase Agreement.
This Note is also subject to optional prepayment, in whole or from
time to time in part, at the times and on the terms specified in the
Note Purchase Agreement, but not otherwise.
If an Event of Default exists, the principal of this Note may be
declared or otherwise become due and payable in the manner, at the
price and with the effect provided in the Note Purchase Agreement.
THIS NOTE AND THE NOTE PURCHASE AGREEMENT ARE GOVERNED BY, AND
SHALL BE CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK, EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT
WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN
SUCH STATE.
WLR FOODS, INC.
By:___________________
Name:
Title:
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Exhiit 2.12
Exhibit 4.11 (a)
Wampler Foods, Inc.
Cassco Ice & Cold Storage, Inc.
Wampler Supply Company, Inc.
Valley Rail Service, Inc.
GUARANTY AGREEMENT
Dated as of February 25, 1998
In Respect of:
WLR FOODS, INC.
$42,040,162.73 Variable Rate Senior Notes due December 31, 1999
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GUARANTY AGREEMENT
GUARANTY AGREEMENT (as amended, supplemented, restated or otherwise
modified from time to time, this "Guaranty Agreement"), dated as of
February 25, 1998, by WAMPLER FOODS, INC., a Virginia corporation,
CASSCO ICE & COLD STORAGE, INC., a Virginia corporation, WAMPLER
SUPPLY COMPANY, INC., a Virginia corporation, and VALLEY RAIL SERVICE,
INC., a Virginia corporation (all of the foregoing, together with
their respective successors and assigns, referred to herein,
individually, as a "Guarantor," and, collectively, as the "Guarantors"),
in favor of each of the Noteholders (as hereinafter defined).
PRELIMINARY STATEMENTS:
A. Certain capitalized terms used in this Guaranty Agreement
shall have the meanings ascribed to them in Section 2.1 hereof.
B. WLR Foods, Inc. (together, with its successors and assigns,
the "Company"), a Virginia corporation, has heretofore issued its
(c) 9.41% Senior Notes due May 1, 2001 (collectively,
as in effect immediately prior to the Closing Date, the
"Existing 1991 Notes") in the aggregate original principal
amount of Thirty Million Dollars ($30,000,000) pursuant to that
certain Note Agreement (as amended and in effect immediately
prior to the Closing Date, the "Existing 1991 Note Agreement"),
dated as of May 1, 1991, between the Company and the purchasers
identified on Schedule 1 thereto (the "Existing 1991 Purchasers"),
and
(d) 7.47% Senior Notes, Series B, due June 1, 2007
(collectively, as in effect immediately prior to the Closing
Date, the "Existing 1995 Notes") in the aggregate original
principal amount of Twenty-Two Million Dollars ($22,000,000)
pursuant to that certain Note Agreement (as amended and in
effect immediately prior to the Closing Date, the "Existing
1995 Note Agreement"; and together with Existing 1991 Note
Agreement, the "Existing Note Agreements"), dated as of June
1, 1995, between the Company and the purchasers identified on
Schedule 1 thereto (the "Existing 1995 Purchasers"; and together
with the Existing 1991 Purchasers, the "Purchasers").
The Company wishes to exchange the Existing Notes for new senior
notes to be issued to the Noteholders on the terms and conditions
contained in the Note Purchase Agreement.
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C. The Company, pursuant to that certain Note Purchase
Agreement (as amended from time to time, the "Note Purchase
Agreement"), dated as of February 25, 1998, with the Purchasers, has
authorized the issuance and sale of Forty Million Dollars
($40,000,000) in aggregate principal amount of its Variable Rate
Senior Notes Due December 31, 1999 (all such notes, whether initially
issued, or issued in exchange or substitution for, any such note, in
each case in accordance with this Agreement, and as amended from time
to time, the "Notes").
C. In order to induce the Purchasers to acquire the Notes, each
of the Guarantors has agreed to unconditionally guaranty all of the
obligations of the Company under and in respect of the Notes, the Note
Purchase Agreement and each of the other Financing Documents pursuant
to the terms and provisions hereof.
D. To secure their respective obligations hereunder, under the
Financing Documents and under the Bank Credit Agreements (as defined
in the Note Purchase Agreement) the Guarantors have granted and shall
grant, as the case may be, to the Collateral Agent, for the equal and
ratable benefit of the Noteholders and the other holders, from time to
time of the Notes, a security interest in, and Lien on, all of the
right, title and interest of the Guarantors in the collateral more
particularly described in the Security Documents.
E. All acts and proceedings required by law and by the
certificate or articles of incorporation and by-laws of each of the
Guarantors, necessary to constitute this Guaranty Agreement a valid
and binding agreement for the uses and purposes set forth herein, in
accordance with its terms, have been done and taken, and the execution
and delivery hereof has been in all respects duly authorized.
F. The Guarantors and the Company are operated as part of one
consolidated business entity. The Guarantors are directly dependent
upon the Company for and in connection with their respective business
activities and their respective financial resources. Each of the
Guarantors will receive a direct economic and financial benefit from
the Debt incurred under the Note Purchase Agreement and the Notes by
the Company and under this Guaranty Agreement by the Guarantors, and
the incurrence of such Debt is in the best interests of the
Guarantors.
G. The Company provides financial assistance to each of the
Guarantors as needed from time to time and is responsible for
supplying the recurring working capital needs and other financial
support of the Guarantors on an ongoing basis.
H. By agreeing to enter into this Guaranty Agreement and the
Security Documents, each of the Guarantors will gain substantial
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financial and other benefits, both direct and indirect.
NOW THEREFORE, in consideration of the foregoing and other good
and valuable consideration, the receipt of which is hereby
acknowledged, each Guarantor does hereby covenant and agree, for the
benefit of all present and future Noteholders, as follows:
AGREEMENT:
1. GUARANTY AND OTHER RIGHTS AND UNDERTAKINGS
1.1 Guarantied Obligations.
Each of the Guarantors hereby irrevocably, unconditionally,
absolutely, jointly and severally guarantees to each Noteholder, as
and for each such Guarantor's own debt, until final and indefeasible
payment has been made:
(a) the due and punctual payment of the principal of and
interest on the Notes at any time outstanding and the due and
punctual payment of all other amounts payable, and all other
indebtedness owing, by the Company to any Noteholder under the Note
Purchase Agreement, the Notes and the other Financing Documents (all
such obligations so guarantied are herein collectively referred
to as the "Guarantied Obligations"), in each case when and as the
same shall become due and payable, whether at maturity, pursuant
to mandatory or optional prepayment, by acceleration or
otherwise, all in accordance with the terms and provisions
thereof; it being the intent of each of the Guarantors that
the guaranty set forth in this Section 1 shall be a guaranty
of payment and not a guaranty of collection; and
(b) the punctual and faithful performance, keeping,
observance, and fulfillment by the Company of all duties,
agreements, covenants and obligations of the Company contained
in the Notes, the Note Purchase Agreement and the other Financing
Documents.
1.2 Payments and Performance.
In the event that the Company fails to make, on or before the due
date thereof, any payment to be made of any principal amount of, or
interest on, or in respect of, the Notes or of any other amounts due
to any Noteholder under the Notes, the Note Purchase Agreement or any
other Financing Document or if the Company shall fail to perform,
keep, observe, or fulfill any other obligation referred to in clause
(a) or clause (b) of Section 1.1 in the manner provided in the Notes,
the Note Purchase Agreement or the other Financing Documents after in
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each case giving effect to any applicable grace periods or cure
provisions or waivers or amendments, each of the Guarantors shall
cause forthwith to be paid the moneys, or to be performed, kept,
observed, or fulfilled each of such obligations, in respect of which
such failure has occurred in accordance with the terms and provisions
of the Note Purchase Agreement, the Notes and the other Financing
Documents. In furtherance of the foregoing, if an Event of Default
shall exist, all of the Guarantied Obligations shall, in the manner
and subject to the limitations provided in the Note Purchase Agreement
for the acceleration of the Notes (including, without limitation, the
provisions related to the annulment thereof), forthwith become due and
payable without notice, regardless of whether the acceleration of the
Notes shall be stayed, enjoined, delayed or otherwise prevented.
Nothing shall discharge or satisfy the obligations of any
Guarantor hereunder except the full and final performance and
indefeasible payment of the Guarantied Obligations.
1.3 Joint and Several Liability.
Each of the Guarantors acknowledges and agrees that the
liabilities of each of the Guarantors under this Guaranty Agreement
for the due and punctual payment of the Guarantied Obligations and the
performance of the other obligations specified in Section 1.1 shall be
joint and several.
1.4 Waivers.
To the fullest extent permitted by law, each Guarantor does
hereby waive:
(a) notice of acceptance of this Guaranty Agreement;
(b) notice of any purchase or acceptance of the Notes
under the Note Purchase Agreement, or the creation, existence
or acquisition of any of the Guarantied Obligations, subject to
such Guarantor's right to make inquiry of each Noteholder to
ascertain the amount of the Guarantied Obligations at any reasonable
time;
(c) notice of the amount of the Guarantied Obligations,
subject to such Guarantor's right to make inquiry of each
Noteholder to ascertain the amount of the Guarantied Obligations at
any reasonable time;
(d) notice of adverse change in the financial condition
of the Company, any of the Guarantors or any other guarantor or
any other fact that might increase such Guarantor's risk
hereunder;
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(e) notice of presentment for payment, demand, protest,
and notice thereof as to the Notes or any other instrument;
(f) notice of any Default or Event of Default except such
notice as may be specifically required by any one or more of the
Financing Documents;
(g) all other notices and demands to which such Guarantor
might otherwise be entitled (except if such notice or demand is
specifically otherwise required to be given to such Guarantor under
this Guaranty Agreement or any other Financing Document);
(h) the right by statute or otherwise to require any or
each Noteholder to institute suit against the Company, the
Guarantors or any other guarantor or to exhaust the rights and
remedies of any or each Noteholder against the Company, the
Guarantors or any other guarantor, such Guarantor being bound to
the payment of each and all Guarantied Obligations, whether now
existing or hereafter accruing, as fully as if such Guarantied
Obligations were directly owing to each Noteholder by such
Guarantor;
(i) any defense arising by reason of any disability or
other defense (other than the defense that the Guarantied
Obligations shall have been fully and finally performed and
indefeasibly paid) of the Company or by reason of the cessation
from any cause whatsoever of the liability of the Company in
respect thereof;
(j) any stay (except in connection with a pending
appeal), valuation, appraisal, redemption or extension law now
or at any time hereafter in force that, but for this waiver, might
be applicable to any sale of Property of such Guarantor made under
any judgment, order or decree based on this Guaranty Agreement, and
such Guarantor covenants that it will not at any time insist upon
or plead, or in any manner claim or take the benefit or advantage
of any such law; and
(k) at all times prior to the full and final
performance and indefeasible payment of the Guarantied
Obligations, any claim of any nature arising out of any right
of indemnity, contribution, reimbursement, indemnification or any
similar right or any claim of subrogation (whether such right or
claim arises under contract, state or federal common law or state or
federal statutory law (including, without limitation, Section 509 of
the United States Bankruptcy Code)) arising in respect of any
payment made under this Guaranty Agreement or in connection with this
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Guaranty Agreement, against the Company or the estate of the
Company (including Liens on the Property of the Company or the
estate of the Company), in each case whether or not the Company at
any time shall be the subject of any proceeding brought under any
bankruptcy, reorganization, compromise, arrangement, insolvency,
readjustment of debt, dissolution or liquidation or similar
law, whether now or hereafter in effect, and such Guarantor
further agrees that it will not file any claims against the
Company or the estate of the Company in the course of any such
proceeding or otherwise, and further agrees that each Noteholder may
specifically enforce the provisions of this clause (k).
1.5 Releases.
Each Guarantor hereby consents and agrees that, without notice to
or by such Guarantor and without affecting or impairing the
obligations of such Guarantor under this Guaranty Agreement, each
Noteholder, by action or inaction, may:
(a) compromise or settle, in whole or in part, renew or
extend the period of duration or the time for the payment, or
discharge the performance of, or may refuse to, or otherwise not,
enforce, or may, by action or inaction, release all or any one or
more parties to, any one or more of the Notes, this Guaranty
Agreement or any of the other Financing Documents;
(b) assign, sell or transfer, or otherwise dispose of,
any one or more of the Notes;
(C) grant waivers, extensions, consents and other
indulgences to the Company or any other Guarantor in respect
of any one or more of the Notes, the Note Purchase Agreement
or any of the other Financing Documents;
(d) amend, modify or supplement in any manner and at any
time (or from time to time) any one or more of the Notes, this
Guaranty Agreement or the other Financing Documents;
(e) release or substitute any one or more of the
endorsers or guarantors of the Guarantied Obligations whether
parties hereto or not;
(f) sell, exchange, release or surrender any Property
at any time pledged or granted as security in respect of the
Guarantied Obligations, whether so pledged or granted by such
Guarantor or another guarantor of the obligations of the Company
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under the Note Purchase Agreement, the Notes and the other Financing
Documents, and
(g) exchange, enforce, waive, or release, by action or
inaction, any security for the Guarantied Obligations or any
other guaranty of any of the Notes.
1.6 Marshaling.
Each Guarantor consents and agrees:
(a) that each Noteholder, and each Person acting for the
benefit of the Noteholders, shall be under no obligation to marshal
any assets in favor of such Guarantor or against or in payment of any
or all of the Guarantied Obligations; and
(b) that, to the extent that the Company makes a
payment or payments to any Noteholder, which payment or
payments or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside or
required, for any of the foregoing reasons or for any other
reason, to be repaid or paid over to a custodian, trustee,
receiver or any other party under any bankruptcy law, common
law, or equitable cause, then, to the extent of such payment
or repayment, the obligation or part thereof intended to be
satisfied thereby shall be revived and continued in full force
and effect as if such payment or payments had not been made and
such Guarantor shall be primarily liable for such obligation.
1.7 Immediate Liability.
Each Guarantor agrees that the liability of such Guarantor in
respect of this Section 1 shall be immediate and shall not be
contingent upon the exercise or enforcement by any Noteholder or any
other Person of whatever remedies such Noteholder or other Person may
have against the Company or any other guarantor or the enforcement of
any Lien or realization upon any security such Noteholder or other
Person may at any time possess.
1.8 Primary Obligations.
The guaranty set forth in this Section 1 is a primary and
original obligation of each Guarantor and is an absolute,
unconditional, continuing and irrevocable guaranty of payment and
performance and shall remain in full force and effect without respect
to future changes in conditions, including, without limitation, change
of law or any invalidity or irregularity with respect to the issuance
or assumption of any obligations (including, without limitation, the
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Notes) of or by the Company or any other guarantor, or with respect to
the execution and delivery of any agreement (including, without
limitation, the Notes, the Note Purchase Agreement and the other
Financing Documents) of the Company or any other Person.
1.9 No Election.
Each Noteholder shall, individually or collectively, have the
right to seek recourse against each Guarantor to the fullest extent
provided for herein for its obligations under this Guaranty Agreement.
No election to proceed in one form of action or proceeding, or against
any party, or on any obligation, shall constitute a waiver of such
Noteholder's right to proceed in any other form of action or
proceeding or against other parties unless such Noteholder has
expressly waived such right in writing. Specifically, but without
limiting the generality of the foregoing, no action or proceeding by
or on behalf of any Noteholder against the Company or any other Person
under any document or instrument evidencing obligations of the Company
or such other Person to or for the benefit of such Noteholder shall
serve to diminish the liability of any of the Guarantors under this
Guaranty Agreement except to the extent that such Noteholder
unconditionally shall have realized payment by such action or
proceeding.
1.10 Severability.
Each of the rights and remedies granted under this Section 1 to
each Noteholder in respect of the Notes held by such Noteholder may be
exercised by such Noteholder without notice to, or the consent of or
any other action by, any other Noteholder.
1.11 Other Enforcement Rights.
Each Noteholder may proceed to protect and enforce this Guaranty
Agreement by suit or suits or proceedings in equity, at law or in
bankruptcy, and whether for the specific performance of any covenant
or agreement contained herein or in execution or aid of any power
herein granted; or for the recovery of judgment for the obligations
hereby guarantied or for the enforcement of any other proper, legal or
equitable remedy available under applicable law.
1.12 Delay or Omission; No Waiver.
No course of dealing on the part of any Noteholder or any other
Person and no delay or failure on the part of any Noteholder or such
other Person to exercise any right under this Guaranty Agreement shall
impair such right or operate as a waiver of such right or otherwise
prejudice any Noteholder's rights, powers and remedies hereunder or
under any other Financing Document. Every right and remedy given by
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this Guaranty Agreement or by law to any Noteholder or any other
Person may be exercised from time to time as often as may be deemed
expedient by such Noteholder or other Person.
1.13 Restoration of Rights and Remedies.
If any Noteholder shall have instituted any proceeding to enforce
any right or remedy under this Guaranty Agreement or under any Note
held by such Noteholder and such proceeding shall have been
discontinued or abandoned for any reason, or shall have been
determined adversely to such Noteholder, then and in every such case
each such Noteholder, the Company and the Guarantors shall, except as
may be limited or affected by any determination in such proceeding, be
restored severally and respectively to its respective former position
hereunder and thereunder, and thereafter the rights and remedies of
such Noteholders shall continue as though no such proceeding had been
instituted.
1.14 Cumulative Remedies.
No remedy under this Guaranty Agreement or any other Financing
Document is intended to be exclusive of any other remedy, but each and
every remedy shall be cumulative and in addition to any and every
other remedy given under this Guaranty Agreement or under any other
Financing Document.
1.15 Limitation on Guarantied Obligations.
It is the intention of the Guarantors and each Noteholder that
the maximum amount of the obligations of each such Guarantor hereunder
shall be equal to, but not in excess of, the amount equal to the
lesser of
(a) its Guarantied Obligations, and
(b) the maximum amount permitted by applicable law.
To that end, with respect to the determination of the "maximum amount
permitted by applicable law," but only to the extent such obligations
would otherwise be avoidable, the obligations of the Guarantors
hereunder shall be limited to the maximum amount that, after giving
effect to the incurrence thereof, would not render any such Guarantor
insolvent or unable to pay its debts (within the meaning of Title 11
of the United States Code or as defined in the analogous applicable
law) as they mature or leave such Guarantor with an unreasonably small
capital. The need for any such limitation shall be determined, and
any such needed limitation shall be effective, at the time or times
that such Guarantor is deemed, under applicable law, to incur
obligations hereunder. Any such limitation shall be apportioned
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amongst the Guarantied Obligations owed to the Noteholders pro rata.
This Section 1.15 is intended solely to preserve the rights of each
Noteholder hereunder to the maximum extent permitted by applicable
law, and neither the Guarantors nor any other Person shall have any
rights under this Section 1.15 that it would not otherwise have under
applicable law. For the purposes of this Section 1.15, "insolvency",
"unreasonably small capital" and "inability to pay debts (as so
defined) as they mature" shall be determined in accordance with
applicable law.
1.16 Survival.
So long as the Guarantied Obligations shall not have been fully
and finally performed and indefeasibly paid, the obligations of each
Guarantor under this Section 1 shall survive the transfer and payment
of any Note and the payment in full of all the Notes.
1.17 No Setoff, Counterclaim or Withholding; Gross-Up.
Except as otherwise required by law, each payment by each
Guarantor shall be made without setoff or counterclaim and without
withholding for or on account of any present or future taxes imposed
by or within the United States of America, or by or within any other
jurisdiction, or any political subdivision or taxing authority thereof
or therein. If any such withholding is so required, such Guarantor
will make the withholding, pay the amount withheld to the appropriate
Governmental Authority before penalties attach thereto or interest
accrues thereon and pay each Noteholder the same amount that such
Noteholder would be entitled to receive from such Guarantor hereunder
if such withholding had not been required.
1.18 Maintenance of Office.
Each Guarantor will maintain an office at the address of such
Guarantor referred to in Section 3.3 hereof, or in any Acknowledgment
and Agreement delivered in respect of this Guaranty Agreement, as the
case may be, where notices, presentations and demands in respect
hereof or the Guarantied Obligations may be made upon such Guarantor.
Such office will be maintained at such address until such time as such
Guarantor shall notify each Noteholder of any change of location of
such office, which will in any event be located in the United States
of America.
1.19 Representations and Warranties; Covenants Contained in Note
Purchase Agreement.
Without in any way limiting the generality of the warranties and
representations contained in Section 5 of the Note Purchase Agreement,
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each of such warranties and representations is, insofar as it refers
to a Guarantor specifically or to the Obligors or any Subsidiary
generally, true and correct with respect to each Guarantor.
2. INTERPRETATION OF THIS GUARANTY AGREEMENT.
2.1 Terms Defined.
As used in this Guaranty Agreement, the following terms have the
respective meanings specified below or set forth in the section of
this Guaranty Agreement referred to immediately following such term
(such definitions, unless otherwise expressly provided, to be equally
applicable to both the singular and plural forms of the terms
defined):
Closing Date -- has the meaning assigned to such term in the Note
Purchase Agreement.
Collateral Agent -- has the meaning assigned to such term in the
Note Purchase Agreement.
Company -- has the meaning assigned to such term in Preliminary
Statement B.
Debt -- has the meaning assigned to such term in the Note
Purchase Agreement.
Default -- has the meaning assigned to such term in the Note
Purchase Agreement.
Event of Default -- has the meaning assigned to such term in the
Note Purchase Agreement.
Existing 1991 Noteshas the meaning assigned to such term in
Preliminary Statement B.
Existing 1991 Note Purchase Agreementhas the meaning assigned to
such term in Preliminary Statement B.
Existing 1991 Purchasershas the meaning assigned to such term in
Preliminary Statement B.
Existing 1995 Noteshas the meaning assigned to such term in
Preliminary Statement B.
Existing 1995 Note Purchase Agreementhas the meaning assigned to
such term in Preliminary Statement B.
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Existing 1995 Purchasershas the meaning assigned to such term in
Preliminary Statement B.
Financing Documents -- has the meaning assigned to such term in
the Note Purchase Agreement.
Governmental Authority -- has the meaning assigned to such term
in the Note Purchase Agreement.
Guarantied Obligations -- has the meaning assigned to such term
in Section 1.1.
Guarantor; Guarantors -- has the meaning assigned to such term in
the introductory paragraph hereof.
Guaranty Agreement, this -- has the meaning assigned to such term
in the introductory paragraph hereof.
Lien -- has the meaning assigned to such term in the Note
Purchase Agreement.
Note Purchase Agreement -- has the meaning assigned to such term
in Preliminary Statement C.
Noteholder -- means, at any time, each Person that is the holder
of any Note at such time.
Notes -- has the meaning assigned to such term in Preliminary
Statement C.
Obligors -- means any one or all of the Company and the
Guarantors, as the context may require.
Person -- has the meaning assigned to such term in the Note
Purchase Agreement.
Property -- has the meaning assigned to such term in the Note
Purchase Agreement.
Purchasers -- has the meaning assigned to such term in Recital B.
Security Documents -- has the meaning assigned to such term in
the Note Purchase Agreement.
Subsidiary has the meaning assigned to such term in the Note
Purchase Agreement.
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2.2 Directly or Indirectly.
Where any provision herein refers to action to be taken by any
Person, or that such Person is prohibited from taking, such provision
shall be applicable whether such action is taken directly or
indirectly by such Person, including, without limitation, actions
taken by or on behalf of any partnership in which such Person is a
general partner.
2.3 Section Headings and Construction.
(a) Section Headings, etc. The titles of the Sections
appear as a matter of convenience only, do not constitute a
part hereof and shall not affect the construction hereof. The
words "herein," "hereof," "hereunder" and "hereto" refer to this
Guaranty Agreement as a whole and not to any particular Section
or other subdivision.
(b) Construction. Each covenant contained herein shall
be construed (absent an express contrary provision herein) as
being independent of each other covenant contained herein, and
compliance with any one covenant shall not (absent such an express
contrary provision) be deemed to excuse compliance with one or more
other covenants.
2.4 Separate Instruments.
Notwithstanding that each of the Guarantors is a party to this
Guaranty Agreement, each of the Guarantied Obligations of each
Guarantor hereunder shall be deemed to be contained in a separate
instrument and any invalidity or unenforceability of this Guaranty
Agreement in respect of any Guarantor shall have no effect on the
validity or enforceability of this Guaranty Agreement in respect of
the other Guarantors.
3. MISCELLANEOUS.
3.1 Successors and Assigns.
Whenever any Guarantor or any of the parties to any of the other
Financing Documents is referred to, such reference shall be deemed to
include the successors and assigns of such party, and all the
covenants, promises and agreements contained in this Guaranty
Agreement by or on behalf of each Guarantor shall bind the successors
and assigns of such Guarantor and shall inure to the benefit of each
of the Noteholders from time to time whether so expressed or not and
whether or not an assignment of the rights hereunder shall have been
delivered in connection with any assignment or other transfer of
Notes.
14
<PAGE>
3.2 Partial Invalidity.
The unenforceability or invalidity of any provision or provisions
hereof shall not render any other provision or provisions contained
herein unenforceable or invalid.
3.3 Communications.
All communications provided for hereunder to any Guarantor or any
Noteholder shall be in writing and to the applicable address or
addresses, and with the effect, provided for in Annex 1 hereto or in
any Acknowledgment and Agreement delivered in respect of this Guaranty
Agreement, as the case may be.
3.4 Governing Law.
THIS GUARANTY AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD
TO ANY CONFLICTS-OF-LAW PRINCIPLES).
3.5 Amendment.
This Guaranty Agreement may only be amended by written instrument
executed and delivered by all of the Guarantors and all of the
Noteholders.
3.6 Counterparts.
This Guaranty Agreement may be executed and delivered in any
number of counterparts, each of such counterparts constituting an
original but altogether only one Guaranty Agreement.
3.7 Benefits of Guaranty Agreement Restricted to Noteholders.
Nothing express or implied in this Guaranty Agreement is intended
or shall be construed to give to any Person other than the Guarantors
and the Noteholders any legal or equitable right, remedy or claim
under or in respect hereof or any covenant, condition or provision
contained herein; and all such covenants, conditions and provisions
are and shall be held to be for the sole and exclusive benefit of the
Guarantors and the Noteholders.
3.8 Survival of Representations and Warranties; Entire
Agreement.
All representations and warranties contained herein or made in
writing by the Guarantors in connection herewith shall survive the
execution and delivery hereof and of each other Financing Document.
This Guaranty Agreement constitutes the final written expression of
all of the terms hereof and is a complete and exclusive statement of
those terms.
15
<PAGE>
3.9 Additional Parties.
Any Person which becomes a Subsidiary after the Closing Date and
which is required, pursuant to Section 9.6 of the Note Purchase
Agreement, to become a party to this Guaranty Agreement shall execute
and deliver an acknowledgement and agreement in the form of Exhibit A
hereto and, upon delivery thereof, such Subsidiary shall become a
"Guarantor" under this Guaranty Agreement for all purposes and shall
be deemed to have made the covenants and agreements of each Guarantor
set forth herein as of the date of the execution and delivery of such
acknowledgment and agreement and shall comply with all other
obligations to be performed by a Guarantor party hereto.
16
<PAGE>
IN WITNESS WHEREOF, each Guarantor has caused this Guaranty
Agreement to be executed on its behalf by one of its duly authorized
officers as of the date first set forth above.
WAMPLER FOODS, INC.
By:_______________
Name:
Title:
CASSCO ICE & COLD STORAGE,
INC.
By:________________
Name:
Title:
WAMPLER SUPPLY COMPANY, INC.
By:_________________
Name:
Title:
VALLEY RAIL SERVICE, INC.
By:___________________
Name:
Title:
17
<PAGE>
EXHIBIT A
FORM OF ACKNOWLEDGMENT AND AGREEMENT
Guaranty Agreement, dated as of February 25, 1998, delivered by each
of the Guarantors of the Variable Rate Senior Notes due December 31,
1999 issued by WLR Foods, Inc. (as amended from time to time, the
"Guaranty Agreement")
[DATE]
Reference is made to Section 3.9 of the Guaranty Agreement as defined
above; capitalized terms used herein and not otherwise defined herein
shall have the meanings given to such terms in, or by reference in,
the Guaranty Agreement. The undersigned is a Subsidiary and, in
accordance with the terms of the Note Purchase Agreement, is required
to become a party to the Guaranty Agreement. By execution and
delivery of this acknowledgment and agreement the undersigned hereby
becomes a party to the Guaranty Agreement for all purposes, makes the
covenants and agreements of each Guarantor set forth in the Guaranty
Agreement as of the date hereof and agrees to comply with all other
obligations to be performed by a Guarantor under the Guaranty
Agreement.
This acknowledgment and agreement hereby incorporates by reference the
provisions of the Guaranty Agreement, which are deemed to be a part
hereof, and this acknowledgment and agreement shall also be deemed to
be a part of the Guaranty Agreement.
[NAME OF GUARANTOR]
By:______________________
Name:
Title:
[Address of Guarantor]
Tel.: [ ]
Fax.: [ ]
18
<PAGE>
ANNEX 1
As to each Guarantor:
Wampler Foods, Inc.
[Address]
Tel.: [ ]
Fax.: [ ]
Cassco Ice & Cold Storage, Inc.
[Address]
Tel.: [ ]
Fax.: [ ]
Wampler Supply Company, Inc.
[Address]
Tel.: [ ]
Fax.: [ ]
Valley Rail Service, Inc.
[Address]
Tel.: [ ]
Fax.: [ ]
19
<PAGE>
EXHIBIT 4.11(b)
[FORM OF SUBSIDIARY VICE PRESIDENT/TREASURER CERTIFICATE]
[Name of Subsidiary Guarantor]
CERTIFICATE OF VICE PRESIDENT/TREASURER
I, ______ hereby certify that I am the [Vice President/Treasurer
of [NAME OF SUBSIDIARY GUARANTOR] (the "Guarantor"), a Virginia
corporation, and that, as such, I have responsibility for the
management of the financial affairs of the Guarantor and the
preparation of the financial statements of the Guarantor and its
subsidiaries, am familiar with the matters herein certified, and I am
authorized to execute and deliver this Certificate in the name and on
behalf of the Guarantor, and that:
4. This certificate is being delivered pursuant to Section
4.11(b) of the Note Purchase Agreement (the "Note Purchase
Agreement"), dated as of February 25, 1998, among WLR Foods, Inc. (the
"Company") and each of the purchasers listed on Schedule A thereto
(collectively, the "Purchasers"). The terms used in this Certificate
and not defined herein have the respective meanings specified in the
Note Purchase Agreement. Pursuant to the Note Purchase Agreement, the
Company will issue
(a) Forty-Two Million Forty Thousand One Hundred
Sixty-Two and 73/00 Dollars ($42,040,162.73) in aggregate
principal amount of its Variable Rate Senior Notes Due
December 31, 1999 (all such notes, whether initially issued,
or issued in exchange or substitution for, any such note, in
each case in accordance with this Agreement, and as amended
from time to time, the "Notes"), and
(b) the Guarantor will enter into a certain Guaranty
Agreement, dated as of February 25, 1998 (the "Guaranty
Agreement"), to unconditionally guaranty the obligations
evidenced by the Notes.
5. I have reviewed the most current financial statements of the
Guarantor and I have prepared a pro forma balance sheet (the "Balance
Sheet") of the Guarantor, which Balance Sheet gives effect to the
transactions contemplated by the Guaranty Agreement and the Note
Purchase Agreement.
6. In connection with the preparation of the Balance Sheet, I
have made such investigation and inquiries as I deem necessary and
prudent therefor. The assumptions upon which the Balance Sheet is
based are stated therein, which assumptions are reasonable.
20
<PAGE>
Based on the foregoing, I have reached the following conclusions:
The execution and delivery of the Guaranty Agreement by the
Guarantor and the guaranty of the obligations of the Guarantor therein
pursuant to the terms and provisions of the Guaranty Agreement will
not render the Guarantor "insolvent," nor will the value of the
liabilities of the Guarantor, determined in accordance with generally
accepted accounting principles, immediately thereafter exceed the
value of the assets of the Guarantor, determined in accordance with
generally accepted accounting principles, in each case after given<PAGE>
effect to the transactions contemplated by the Guaranty Agreement and
the Note Purchase Agreement. In this context, "insolvent" means that
(a) the present fair salable value of assets of the
Guarantor is less than the amount that will be required to pay
the probable liability on existing debts of the Guarantor as they
become absolute and matured, or
(b) the Guarantor will not otherwise be able to pay its
debts as they become absolute and matured.
I also understand that the term "debts" includes any legal liability,
whether matured or unmatured, liquidated or unliquidated, absolute,
fixed or contingent.
IN WITNESS WHEREOF, I have executed this Certificate in the name
and on behalf of the Guarantor on February ___, 1998.
[SUBSIDIARY GUARANTOR]
By:_______________
Name:
Title:
21
<PAGE>
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<PERIOD-END> MAR-28-1998
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0
0
<COMMON> 67,658
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<SALES> 215,133
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<INCOME-PRETAX> (17,600)
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