UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTON 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) June 5, 1997
Darling International Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware 0-24620 36-2495346
(State of Incorporation) (Commission (I.R.S. Employer
File Number) Identification
Number)
251 O'Connor Ridge Blvd.
Suite 300
Irving, Texas 75038
(Address of principal executive offices) (Zip Code)
(214) 717-0300
(Registrant's telephone number, including area code)
Page 1
Exhibit Index located at Page 4
<PAGE>
Items 1, 2, 3, 4, 6, 7 and 8. Not applicable.
Item 5. OTHER EVENTS
Effective June 5, 1997, Darling International Inc. (the "Company") entered
into a Credit Agreement (the "Credit Agreement") which provides for borrowings
in the form of a $50,000,000 Term Loan and a $175,000,000 Revolving Credit
Facility. A copy of the Credit Agreement is filed as an exhibit hereto.
Page 2
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DARLING INTERNATIONAL INC.
Date: June 19, 1997 By: /s/ John R. Witt
---------------------------
John R. Witt
Vice President and
Chief Financial Officer
Page 3
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EXHIBIT INDEX
Exhibit Page
Number Description Number
99.1 Press release dated June 6, 1997, regarding
the above named Credit Agreement....................... 5
10.1 Credit Agreement dated as of
June 5, 1997, among Darling International Inc.,
BankBoston, N.A., Comerica Bank, Credit
Lyonnais New York Branch, and Wells Fargo
Bank (Texas), National Association as
Co-Agents, and other banks as named therein. .......... 6
Page 4
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EXHIBIT 99.1
PRESS RELEASE
June 6, 1997
Darling International Inc. Enters New Credit Agreement
Irving, Texas, June 6, 1997: Dr. Dennis Longmire, Chief Executive
Officer of Darling International Inc., announced today that the company has
entered into a $225 million bank credit agreement to refinance all of its
existing senior and subordinated debt.
Under the agreement, the company will retire its existing bank debt as
well as its 11% subordinated debt. The new five-year facility, which was
syndicated by BancBoston Securities, Inc. and will be agented and administered
by BankBoston, N.A., will also provide the company with credit to fund
anticipated internal and external growth.
The company has notified the trustee for the subordinated debt of its
election to retire all existing bonds. It is expected that the bonds will be
retired within the next 30 days. John Witt, Darling's Chief Financial Officer,
stated that "As a result of this refinancing, Darling expects to achieve
significant interest cost reductions as well as considerable flexibility to
manage the company in the best interest of its shareholders."
Darling International Inc. is the largest food processing by-products
recycling company in the United States. The company recycles used restaurant
cooking oil, bakery by-products, and by-products from the beef, pork and poultry
processing industries into useable products such as tallow, feed-grade fats,
meat and bone meal, and dried bakery product. These products are primarily sold
to animal feed and oleo-chemical manufacturers around the world.
# # #
Page 5
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EXHIBIT 10.1
CREDIT AGREEMENT
among
DARLING INTERNATIONAL INC.
as Borrower,
BANKBOSTON, N. A.
as Agent,
COMERICA BANK,
CREDIT LYONNAIS NEW YORK BRANCH
and
WELLS FARGO BANK (TEXAS),
NATIONAL ASSOCIATION
as Co-Agents,
and
the other banks named herein
5 June 1997
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TABLE OF CONTENTS
ARTICLE 1 - Definitions......................................................1
Section 1.1 Definitions................................................1
Section 1.2 Other Definitional Provisions.............................14
Section 1.3 Accounting Terms and Determinations.......................14
Section 1.4 Time of Day...............................................15
ARTICLE 2 - Revolving Credit Facility.......................................15
Section 2.1 Revolving Commitments.....................................15
Section 2.2 Notes.....................................................15
Section 2.3 Repayment of Revolving Loans..............................16
Section 2.4 Use of Proceeds...........................................16
Section 2.5 Revolving Commitment Fee..................................16
Section 2.6 Reduction or Termination of Revolving Commitments.........16
Section 2.7 Letters of Credit.........................................16
(a) Commitment to Issue.......................................16
(b) Letter of Credit Request Procedure........................17
(c) Letter of Credit Fees.....................................17
(d) Funding of Drawings.......................................18
(e) Reimbursements............................................18
(f) Reimbursement Obligations Absolute........................18
(g) Issuer Responsibility.....................................19
Section 2.8 Swingline Loans...........................................19
(a) Swingline Commitment......................................19
(b) Swingline Note............................................20
(c) Repayment of Swingline Loans; Funding of Participation....20
(d) Use of Proceeds...........................................20
(e) Reduction or Termination of Swingline Commitment..........20
ARTICLE 3 - Term Loan.......................................................21
Section 3.1 Term Commitments..........................................21
Section 3.2 Notes.....................................................21
Section 3.3 Repayment of Term Loans...................................21
Section 3.4 Use of Proceeds...........................................21
ARTICLE 4 - Interest and Fees...............................................21
Section 4.1 Interest Rate.............................................21
Section 4.2 Determinations of Libor Rate Margin.......................22
Section 4.3 Payment Dates.............................................23
Section 4.4 Default Interest..........................................23
Section 4.5 Conversions and Continuations of Accounts.................23
Section 4.6 Computations..............................................23
i
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ARTICLE 5 - Administrative Matters...........................................23
Section 5.1 Borrowing Procedure.........................................23
Section 5.2 Minimum Amounts.............................................24
Section 5.3 Certain Notices.............................................24
Section 5.4 Prepayments.................................................25
Section 5.5 Method of Payment...........................................25
Section 5.6 Pro Rata Treatment..........................................26
Section 5.7 Sharing of Payments.........................................26
Section 5.8 Non-Receipt of Funds by the Agent...........................27
Section 5.9 Withholding Taxes...........................................27
Section 5.10 Withholding Tax Exemption...................................27
Section 5.11 Participation Obligations Absolute; Failure to
Fund Participation. ......................................28
ARTICLE 6 - Yield Protection and Illegality................................. 29
Section 6.1 Additional Costs........................................... 29
Section 6.2 Limitation on Libor Accounts............................... 30
Section 6.3 Illegality................................................. 31
Section 6.4 Treatment of Affected Loans............................... 31
Section 6.6 Capital Adequacy.......................................... 32
Section 6.7 Replacement of a Bank...................................... 32
ARTICLE 7 - Conditions Precedent.............................................33
Section 7.1 Initial Loan and Letter of Credit...........................33
Section 7.2 All Loans and Letters of Credit.............................35
ARTICLE 8 - Representations and Warranties.................................. 35
Section 8.1 Corporate Existence.........................................36
Section 8.2 Financial Statements........................................36
Section 8.3 Corporate Action; No Breach.................................36
Section 8.4 Operation of Business.......................................36
Section 8.5 Litigation and Judgments....................................37
Section 8.6 Rights in Properties; Liens; Nonproductive Assets...........37
Section 8.7 Enforceability..............................................37
Section 8.8 Approvals...................................................37
Section 8.9 Debt........................................................37
Section 8.10 Taxes.......................................................37
Section 8.11 Margin Securities...........................................38
Section 8.12 ERISA.......................................................38
Section 8.13 Disclosure..................................................38
Section 8.14 Subsidiaries................................................38
Section 8.15 Agreements..................................................39
Section 8.16 Compliance with Laws........................................39
Section 8.17 Investment Company Act......................................39
Section 8.18 Public Utility Holding Company Act..........................39
Section 8.19 Environmental Matters.......................................39
ii
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<PAGE>
Section 8.20 Indenture...................................................40
ARTICLE 9 - Positive Covenants...............................................40
Section 9.1 Reporting Requirements.....................................40
Section 9.2 Maintenance of Existence; Conduct of Business..............42
Section 9.3 Maintenance of Properties..................................42
Section 9.4 Taxes and Claims...........................................42
Section 9.5 Insurance..................................................43
Section 9.6 Inspection Rights..........................................43
Section 9.7 Keeping Books and Records..................................43
Section 9.8 Compliance with Laws.......................................43
Section 9.9 Compliance with Agreements.................................43
Section 9.10 Further Assurances; Significant Subsidiary Guaranty........43
Section 9.11 ERISA......................................................44
Section 9.12 Packers and Stockyards Act Compliance......................44
Section 9.13 Interest Rate Agreement....................................44
Section 9.14 Redemption of the Subordinated Notes.......................44
ARTICLE 10 - Negative Covenants..............................................45
Section 10.1 Debt......................................................45
Section 10.2 Limitation on Liens and Restrictions on Subsidiaries......46
Section 10.3 Mergers, Etc..............................................47
Section 10.4 Restricted Junior Payments................................53
Section 10.5 Investments...............................................54
Section 10.6 Limitation on Issuance of Capital Stock...................55
Section 10.7 Transactions With Affiliates..............................55
Section 10.8 Disposition of Assets.....................................55
Section 10.9 Sale and Leaseback........................................56
Section 10.10 Lines of Business.........................................56
Section 10.11 Subordinated Notes........................................56
ARTICLE 11 - Financial Covenants............................................56
Section 11.1 Consolidated Net Worth....................................56
Section 11.2 Funded Debt to Adjusted EBITDA............................57
Section 11.3 Fixed Charge Coverage.....................................57
Section 11.4 Capital Expenditure Limits................................58
ARTICLE 12 - Default........................................................59
Section 12.1 Events of Default.........................................59
Section 12.2 Remedies..................................................61
Section 12.3 Cash Collateral...........................................62
Section 12.4 Performance by the Agent..................................62
Section 12.5 Setoff....................................................62
iii
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ARTICLE 13 - The Agent.......................................................63
Section 13.1 Appointment, Powers and Immunities.........................63
Section 13.2 Rights of Agent as a Bank..................................63
Section 13.3 Defaults...................................................64
Section 13.4 Indemnification............................................64
Section 13.5 Independent Credit Decisions...............................65
Section 13.6 Several Commitments........................................65
Section 13.7 Successor Agent............................................65
Section 13.8 Agent Fee. ...............................................66
Section 13.9 Co-Agent. .................................................66
ARTICLE 14 - Miscellaneous...................................................66
Section 14.1 Expenses...................................................66
Section 14.2 Indemnification............................................66
Section 14.3 Limitation of Liability....................................67
Section 14.4 No Duty....................................................67
Section 14.5 No Fiduciary Relationship..................................68
Section 14.6 Equitable Relief...........................................68
Section 14.7 No Waiver; Cumulative Remedies.............................68
Section 14.8 Successors and Assigns.....................................68
Section 14.9 Survival...................................................70
Section 14.10 ENTIRE AGREEMENT...........................................70
Section 14.11 Amendments.................................................71
Section 14.12 Maximum Interest Rate......................................71
Section 14.13 Notices....................................................72
Section 14.14 Governing Law..............................................72
Section 14.15 Counterparts...............................................72
Section 14.16 Severability...............................................72
Section 14.17 Headings...................................................72
Section 14.18 Non-Application of Chapter 15 of Texas Credit Code.........73
Section 14.19 Construction...............................................73
Section 14.20 Independence of Covenants................................73
Section 14.21 WAIVER OF JURY TRIAL.....................................73
Section 14.22 Confidentiality..........................................73
iv
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INDEX TO EXHIBITS
Exhibit Description of Exhibit
"A" Revolving Note
"B" Swingline Note
"C" Term Note
"D" Guaranty
"E" Borrower Pledge Agreement
"F" Assignment and Acceptance
"G" Compliance Certificate
INDEX TO SCHEDULES
Schedule Description of Schedule
2.7(a) Existing Letters of Credit
8.14 List of Subsidiaries
10.1 Existing Debt
10.2 Existing Liens
10.5 Existing Investments
10.8 Nonproductive Assets
v
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT (the "Agreement"), dated as of June 5, 1997, is among
DARLING INTERNATIONAL INC., a corporation duly organized and validly existing
under the laws of the State of Delaware ("Borrower"), each of the banks or other
lending institutions which is or which may from time to time become a signatory
hereto or any successor or assignee thereof (individually, a "Bank" and,
collectively, the "Banks"), COMERICA BANK, CREDIT LYONNAIS NEW YORK BRANCH and
WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION, each individually as a Bank and
as a co-agent and BANKBOSTON, N.A., individually as a Bank and as agent for
itself and the other Banks (in its capacity as agent, together with its
successors in such capacity, the "Agent").
R E C I T A L S:
The Borrower has requested that the Banks extend credit to the Borrower in
the form of a revolving credit facility and a term loan facility. The Banks are
willing to extend such credit to the Borrower upon the terms and conditions
hereinafter set forth.
NOW THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
ARTICLE 1
Definitions
Section 1.1 Definitions. As used in this Agreement, the following terms
have the following meanings:
"Account" means either a Base Rate Account or a Libor Account.
"Additional Costs" has the meaning specified in Section 6.1.
"Adjusted EBITDA" has the meaning specified in Section 11.2.
"Adjusted Libor Rate" means, or any Libor Account for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the nearest 1/16
of 1%) determined by the Agent to be equal to the Libor Rate for such Libor
Account for such Interest Period divided by 1 minus the Reserve Requirement for
such Libor Account for such Interest Period.
"Adjustment Date' has the meaning specified in Section 4.2.
"Affected Account" has the meaning specified in Section 6.4.
CREDIT AGREEMENT - PAGE 1
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"Affiliate" means, as to any Person, any other Person (a) that directly or
indirectly, through one or more intermediaries, controls or is controlled by, or
is under common control with, such Person; (b) that directly or indirectly
beneficially owns or holds five percent (5%) or more of any class of voting
stock of such Person; or (c) five percent (5%) or more of the voting stock of
which is directly or indirectly beneficially owned or held by the Person in
question. The term "control" means the possession, directly or indirectly, of
the power to direct or cause direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract, or
otherwise; provided, however, in no event shall the Agent or any Bank be deemed
an Affiliate of the Borrower or any Subsidiaries.
"Agent" has the meaning set forth in the introductory paragraph of this
Agreement.
"Aggregate Purchase Price" has the meaning specified in subsection
10.3(v)(b)(vi).
"Agreement" has the meaning set forth in the introductory paragraph of
this Agreement.
"Annual Cap" has the meaning specified in Section 10.8.
"Annual Limit" has the meaning specified in Section 11.4.
"Applicable Lending Office" means for each Bank and each Type of Account,
the lending office of such Bank (or of an Affiliate of such Bank) designated for
such Account below its name on the signature pages hereof or such other office
of such Bank (or of an Affiliate of such Bank) as such Bank may from time to
time specify to the Borrower and the Agent as the office by which its Loans
subject to Accounts of such Type are to be made and maintained.
"Assignment and Acceptance" means an assignment and acceptance entered into
by a Bank and its assignee and accepted by the Agent pursuant to Section 14.8,
in substantially the form of Exhibit "F" hereto.
"Bank" has the meaning set forth in the introductory paragraph of this
Agreement.
"Base Rate" means, at any time, the rate of interest per annum then most
recently established by BankBoston, N.A. as its base rate, which rate may not be
the lowest rate of interest charged by BankBoston, N.A. to its borrowers. Each
change in any interest rate provided for herein based upon the Base Rate
resulting from a change in the Base Rate shall take effect without notice to the
Borrower at the time of such change in the Base Rate.
"Base Rate Account" means a portion of a Loan that bears interest at a
rate based upon the Base Rate.
"Borrower" has the meaning set forth in the introductory paragraph of
this Agreement.
CREDIT AGREEMENT - PAGE 2
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"Borrower Pledge Agreement" means the pledge agreement between the Borrower
and the Agent for the benefit of itself and the Banks, in substantially the form
of Exhibit "E", as the same may be amended or otherwise modified.
"Borrowing Availability" means, on any date, the amount by which the
aggregate Revolving Commitments exceed the Outstanding Revolving Credit on such
date.
"Business Day" means (a) any day excluding Saturday, Sunday and any day
which either is a legal holiday under the laws of the States of Massachusetts,
Georgia or Texas or is a day on which banking institutions located in any such
States are closed, and (b), with respect to all borrowings, payments,
Conversions, Continuations, Interest Periods, and notices in connection with
Loans subject to Libor Accounts, any day which is a Business Day described in
clause (a) above and which is also a day on which dealings in Dollar deposits
are carried out in the London interbank market.
"Calculated EBITDA" has the meaning specified in
subsection 10.3(v)(b)(vii).
"Calculation Period" has the meaning specified in Section 4.2.
"Capital Expenditures" means, for any period, all expenditures of the
Borrower and its Subsidiaries which are classified as capital expenditures on
the consolidated statement of cash flows of Borrower in accordance with GAAP,
including all such expenditures so classified as "recurring capital
expenditures" and all such expenditures associated with Capital Lease
Obligations but excluding any expenditures made in connection with a Permitted
Acquisition which are classified as "capital expenditures relating to
acquisitions" on the consolidated statement of cash flows of Borrower in
accordance with GAAP.
"Capital Expenditure Limit" has the meaning specified in Section 11.4.
"Capital Lease Obligations" means, as to any Person, the obligations of
such Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) real and/or personal property, which obligations are
required to be classified and accounted for as a capital lease on a balance
sheet of such Person under GAAP. For purposes of this Agreement, the amount of
such Capital Lease Obligations shall be the capitalized amount thereof,
determined in accordance with GAAP.
"Carryover Amount" has the meaning specified in subsection 10.3(v)(b)(vi).
"Classified Subsidiary" has the meaning as defined in the definition of
Insignificant Subsidiary.
"Clean Star Basket" has the meaning specified in Section 11.4.
"Clean Star Expenditures" has the meaning specified in Section 11.4.
CREDIT AGREEMENT - PAGE 3
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"Closing Date" means June 5, 1997.
"Code" means the Internal Revenue Code of 1986, as amended, and the
regulations promulgated and rulings issued thereunder.
"Collateral" means the property in which Liens have been granted pursuant
to the Borrower Pledge Agreement or pursuant to any pledge agreement executed by
a Subsidiary in accordance with Section 9.10, whether such Liens are now
existing or hereafter arise.
"Commitment Percentage" means, as to any Bank, the percentage equivalent of
a fraction the numerator of which is the amount of the Commitments of such Bank
and the denominator of which is the aggregate amount of the Commitments of all
of the Banks.
"Commitments" means, as to each Bank, such Bank's Revolving Commitment and
Term Commitment and, if such Bank is the Agent (but without duplication for
purposes of determining the Commitment Percentages), the Swingline Commitment.
"Common Stock Securities" has the meaning specified in Section 10.4.
"Compliance Certificate" means a certificate in substantially the form of
Exhibit "G" properly completed and executed by the chief financial officer or
treasurer of the Borrower.
"Consolidated Net Worth" has the meaning specified in Section 11.1.
"Continue", "Continuation", and "Continued" shall refer to the continuation
pursuant to Section 4.5 of a Libor Account as a Libor Account from one Interest
Period to the next Interest Period.
"Convert", "Conversion", and "Converted" shall refer to a conversion
pursuant to Section 4.5 or Article 6 of one Type of Account into the other Type
of Account.
"Debt" means as to any Person at any time (without duplication): (a) all
obligations of such Person for borrowed money; (b) all obligations of such
Person evidenced by bonds, notes, debentures, or other similar instruments; (c)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable of such Person arising in the ordinary
course of business that are not past due by more than ninety (90) days; (d) all
Capital Lease Obligations of such Person; (e) all Debt or other obligations of
others Guaranteed by such Person; (f) all obligations secured by a Lien existing
on property owned by such Person, whether or not the obligations secured thereby
have been assumed by such Person or are non-recourse to the credit of such
Person; (g) all reimbursement obligations of such Person (whether contingent or
otherwise) in respect of letters of credit, bankers' acceptances, surety or
other bonds and similar instruments;(h) all liabilities of such Person in
respect of unfunded vested benefits under any Plan; and (j) all obligations of
such Person arising in connection with noncompete, consulting and similar
agreements which are classified as liabilities on a balance sheet in accordance
with GAAP.
CREDIT AGREEMENT - PAGE 4
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"Default" means an Event of Default or the occurrence of an event or
condition which with notice or lapse of time or both would become an Event of
Default.
"Default Rate" means, in respect of any principal of any Loan, any
Reimbursement Obligation, or any other amount payable by the Borrower under any
Loan Document which is not paid when due (whether at stated maturity, by
acceleration, or otherwise), a rate per annum during the period commencing on
the due date until such amount is paid in full equal to the sum of two percent
(2%) plus the Base Rate as in effect from time to time (provided, that if such
amount in default is principal of a Loan subject to a Libor Account and the due
date is a day other than the last day of an Interest Period therefor, the
"Default Rate" for such principal shall be, for the period from and including
the due date and to but excluding the last day of the Interest Period therefor,
two percent (2%) plus the interest rate for such Loan for such Interest Period
as provided in Section 4.1 hereof, and, thereafter, the rate provided for above
in this definition).
"Dollars" and "$" mean lawful money of the United States of America.
"EBITDA" means, for any period and any Person, the total of the following
each calculated without duplication for such Person on a consolidated basis for
such period: (a) Net Income; plus (b) any provision for (or less any benefit
from) income or franchise taxes included in determining Net Income; plus (c) Net
Interest Expense deducted in determining Net Income; plus (d) amortization and
depreciation expense deducted in determining Net Income.
"Environmental Laws" means any and all federal, state, and local laws,
regulations, and requirements pertaining to health, safety, or the environment,
as such laws, regulations, and requirements may be amended or supplemented from
time to time.
"Environmental Liabilities" means, as to any Person, all liabilities,
obligations, responsibilities, Remedial Actions, losses, damages, punitive
damages, consequential damages, treble damages, costs, and expenses, (including,
without limitation, all fees, disbursements and expenses of counsel, expert and
consulting fees and costs of investigation and feasibility studies), fines,
penalties, sanctions, and interest incurred as a result of any claim or demand,
by any Person, whether based in contract, tort, implied or express warranty,
strict liability, criminal or civil statute, including any Environmental Law,
permit, order or agreement with any Governmental Authority or other Person,
arising from environmental, health or safety conditions or the Release or
threatened Release of a Hazardous Material into the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations and published interpretations
thereunder.
"ERISA Affiliate" means any corporation or trade or business which is a
member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as the Borrower or is under common control (within
the meaning of Section 414(c) of the Code) with the Borrower.
"Event of Default" has the meaning specified in Section 12.1.
CREDIT AGREEMENT - PAGE 5
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"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/16 of 1%) equal to the weighted average
of the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Business Day next succeeding such
day, provided that (a) if the day for which such rate is to be determined is not
a Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Business Day as so published on the next
succeeding Business Day, and (b) if such rate is not so published on such next
succeeding Business Day, the Federal Funds Rate for any day shall be the average
rate charged to the Agent on such day on such transactions as determined by the
Agent.
"Foreign Target" has the meaning specified in subsection 10.3(v)(b)(ix).
"Fiscal Quarters" means the four (4) periods falling in each Fiscal Year,
each such period being thirteen (13) or fourteen (14) weeks in duration, as
applicable, with the first such period in any Fiscal Year beginning on the first
day of such Fiscal Year and the last such period in any Fiscal Year ending on
the last Saturday closest to December 31.
"Fiscal Year" means the fifty-two (52) or fifty-three (53) week period, as
the case may be,beginning on the date which is one day after the date of the end
of the similar preceding period and ending on the Saturday closest to December
31.
"Fixed Charge Coverage Ratio" means the ratio of Operating Cash Flow to
Fixed Charges calculated in accordance with Section 11.3.
"Fixed Charges" has the meaning specified in Section 11.3.
"Funded Debt" has the meaning specified in Section 11.2.
"Funded Debt to Adjusted EBITDA Ratio" means the ratio of Funded Debt to
Adjusted EBITDA calculated in accordance with Section 11.2.
"GAAP" means generally accepted accounting principles, applied on a
consistent basis, as set forth in Opinions of the Accounting Principles Board of
the American Institute of Certified Public Accountants and/or in statements of
the Financial Accounting Standards Board and/or their respective successors and
which are applicable in the circumstances as of the date in question. Accounting
principles are applied on a "consistent basis' when the accounting principles
applied in a current period are comparable in all material respects to those
accounting principles applied in a preceding period.
"General Basket" has the meaning specified in Section 11.4.
"General Capital Expenditures" has the meaning specified in Section 11.4.
CREDIT AGREEMENT - PAGE 6
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"Governmental Authority" means any nation or government, any state or
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory, or administrative functions of or pertaining to
government.
"Guarantee" by any Person means any obligation, contingent or otherwise, of
such Person directly or indirectly guaranteeing 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 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 conditions 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 the obligee
against loss in respect thereof (in whole or in part), provided that the term
Guarantee shall not include endorsements for collection or deposit in the
ordinary course of business. The term "Guarantee" used as a verb has a
corresponding meaning.
"Guaranty" means the guaranty of a Significant Subsidiary in favor of the
Agent and the Banks, in substantially the form of Exhibit "D" hereto, as the
same may be amended or otherwise modified from time to time.
"Hazardous Material" means any substance, product, waste, pollutant,
material, chemical, contaminant, constituent, or other material which is or
becomes listed, regulated, or addressed under any Environmental Law.
"Indenture" means that certain Indenture dated December 29, 1993 between
Borrower and LaSalle National Bank as trustee, as the same may be amended or
otherwise modified.
"Insignificant Subsidiary" means any Subsidiary (other than International
Transportation Service, Inc., The Standard Tallow Corporation or any other
Subsidiary that has executed and delivered a Guaranty) whose (a) net worth
(calculated in accordance with GAAP) at the time of determination does not
exceed Seven Hundred Fifty Thousand Dollars ($750,000) and (b) total assets
(determined in accordance with GAAP) does not exceed an amount equal to five
percent (5%) of the total assets of the Borrower and the Subsidiaries determined
on a consolidated basis in accordance with GAAP (a subsidiary that meets the
foregoing requirements in this definition is referred to as a "Classified
Subsidiary"); provided, however, no Classified Subsidiary shall be deemed an
Insignificant Subsidiary if at the time of determination (a) the aggregate net
worth (calculated in accordance with GAAP) of all Subsidiaries that are then
Classified Subsidiaries exceeds Seven Hundred Fifty Thousand Dollars ($750,000)
and (b) the aggregate total assets (determined in accordance with GAAP) of all
Subsidiaries that are then Classified Subsidiaries exceeds an amount equal to
five percent (5%) of the total assets of the Borrower and the Subsidiaries
determined on a consolidated basis in accordance with GAAP.
"Interest Period" means with respect to any Libor Accounts, each period
commencing on the date such Account is established or Converted from a Base Rate
Account or, in the case of Continuations, the last day of the next preceding
Interest Period with respect to such Libor Account, and ending on the
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numerically corresponding day in the first, second, third, sixth or twelfth
calendar month thereafter, as the Borrower may select as provided in Section 4.5
or 5.1, except that each such Interest Period which commences on the last
Business Day of a calendar month (or on any day for which there is no
numerically corresponding day in the appropriate subsequent calendar month)
shall end on the last Business Day of the appropriate subsequent calendar month.
Notwithstanding the foregoing: (a) each Interest Period which would otherwise
end on a day which is not a Business Day shall end on the next succeeding
Business Day (or if such succeeding Business Day falls in the next succeeding
calendar month, on the next preceding Business Day); (b) any Interest Period
which would otherwise extend beyond the Termination Date shall end on the
Termination Date; (c) no more than six (6) Interest Periods shall be in effect
at the same time; (d) no Interest Period for any Libor Account shall have a
duration of less than one (1) month and, if the Interest Period would otherwise
be a shorter period, the related Libor Account shall not be available hereunder;
and (e) no Interest Period in respect of Term Loans may extend beyond a
principal repayment date thereof unless, after giving effect thereto, the
aggregate principal amount of such Loans, as the case may be, subject to Libor
Accounts having Interest Periods that end after such principal payment date
shall be equal to or less than such Loans to be outstanding hereunder after such
principal payment date.
"Leftover Amount" has the meaning specified in Section 11.4.
"Letter of Credit Liabilities" means, at any time, the aggregate maximum
amount available to be drawn under all outstanding Letters of Credit (in each
case, determined without regard to whether any conditions to drawing could then
be met) and all unreimbursed drawings under Letters of Credit.
"Letters of Credit" has the meaning specified in Section 2.7(a).
"Libor Account" means a portion of a Loan that bears interest at a rate
based upon the Adjusted Libor Rate.
"Libor Rate" means, for any Libor Account for any Interest Period therefor,
the rate per annum (rounded upwards, if necessary, to the nearest 1/16 of 1%)
offered to BankBoston, N.A. at approximately 11:00 a.m. London time (or as soon
thereafter as practicable) two Business Days prior to the first day of such
Interest Period by leading banks in the London interbank market of Dollar
deposits in immediately available funds having a term comparable to such
Interest Period and in an amount comparable to the principal amount of the Libor
Account applicable to BankBoston, N.A. to which such Interest Period relates. If
BankBoston, N.A. is not participating in a Libor Account during any Interest
Period therefor (pursuant to Section 6.4 or for any other reason), the Adjusted
Libor Rate for such Account for such Interest Period shall be determined by
reference to the amount of the Accounts which BankBoston, N.A. would have made
had it been participating in such Account.
"Libor Rate Margin" has the meaning specified in Section 4.2.
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"Lien" means any lien, mortgage, security interest, tax lien, financing
statement, pledge, charge, hypothecation, assignment, preference, priority, or
other encumbrance of any kind or nature whatsoever (including, without
limitation, any conditional sale or title retention agreement), whether arising
by contract, operation of law, or otherwise.
"Loans" means Revolving Loans, Swingline Loans or Term Loans.
"Loan Documents" means this Agreement, the Notes, the Borrower Pledge
Agreement, the Guaranties and all other promissory notes, security agreements,
deeds of trust, assignments, guaranties, letters of credit, and other
instruments, agreements and other documentation executed and delivered pursuant
to or in connection with this Agreement, as such instruments, agreements and
other documentation may be amended or otherwise modified.
"Loan Year" means each period of twelve (12) consecutive months commencing
on June 1, 1997 and on each June 1 thereafter.
"Material Adverse Effect" means (a) a material adverse effect on the
business, condition (financial or otherwise), operations, prospects, or
properties of the Borrower and the Subsidiaries taken as a whole; or (b) a
material adverse effect on the validity, perfection, priority or ability of the
Agent to enforce the Agent's Lien on the Collateral or of the ability of the
Agent or any Bank to enforce a material provision of the Loan Documents. In
determining whether any individual event could reasonably be expected to result
in a Material Adverse Effect, notwithstanding that such event does not itself
have such effect, a Material Adverse Effect shall be deemed to have occurred if
the cumulative effect of such event and all other then existing events could
reasonably be expected to result in a Material Adverse Effect.
"Maximum Rate" means, at any time and with respect to any Bank, the maximum
rate of nonusurious interest under applicable law that such Bank may charge the
Borrower. The Maximum Rate shall be calculated in a manner that takes into
account any and all fees, payments, and other charges contracted for, charged or
received in connection with the Loan Documents that constitute interest under
applicable law. Each change in any interest rate provided for herein based upon
the Maximum Rate resulting from a change in the Maximum Rate shall take effect
without notice to the Borrower at the time of such change in the Maximum Rate.
For purposes of determining the Maximum Rate under Texas law, the applicable
rate ceiling shall be the indicated rate ceiling described in, and computed in
accordance with, Article 5069-1.04, Vernon's Texas Civil Statutes.
"Multiemployer Plan" means a multiemployer plan defined as such in Section
3(37) of ERISA to which contributions have been made by the Borrower or any
ERISA Affiliate and which is covered by Title IV of ERISA.
"Net Income" means, for any period and any Person, such Person's
consolidated net income (or loss) determined in conformity with GAAP, but
excluding: (a) the income of any other Person (other than its subsidiaries) in
which such Person or any of it subsidiaries has an ownership interest, unless
received by such Person or its subsidiary in a cash distribution; (b) any
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after-tax gains or losses attributable to asset disposition; and (c) to the
extent not included in clauses (a) and (b) above, any after-tax extraordinary,
non-cash or nonrecurring gains or extraordinary or non-cash losses or non-cash
charges due to changes in accounting principles required by GAAP.
"Net Interest Expense" means, for any period and any Person, the total of
the following for such Person calculated on a consolidated basis for such period
in accordance with GAAP: (a) interest expense minus (b) interest income.
"Notes" means the Revolving Notes, the Swingline Note and the Term Notes.
"Obligated Party" means the Significant Subsidiaries or any other Person
(exclusive of the Borrower) who is or becomes party to any agreement that
guarantees or secures payment and performance of the Obligations or any part
thereof.
"Obligation" means all obligations, indebtedness, and liabilities of the
Borrower to the Agent and the Banks, or any of them, arising pursuant to any of
the Loan Documents, pursuant to any interest rate swap, interest rate caps,
interest rate collars or other similar agreements entered into with the Borrower
or any Subsidiary enabling it to fix or limit its interest expense or pursuant
to any foreign exchange, currency hedging, commodity hedging or other agreement
entered into with the Borrower or any Subsidiary enabling it to limit the market
risk of holding currency or a commodity in either the cash or futures markets,
whether now existing or hereafter arising, whether direct, indirect, related,
unrelated, fixed, contingent, liquidated, unliquidated, joint, several, or joint
and several, including, without limitation, the obligation of the Borrower to
repay the Loans, the Reimbursement Obligations, interest on the Loans and
Reimbursement Obligations, and all fees, costs, and expenses (including
attorneys' fees) provided for in the Loan Documents or such agreements enabling
Borrower to fix or limit its interest expense or fix or limit its market risk of
holding a currency or a commodity.
"Operating Cash Flow" has the meaning specified in Section 11.3.
"Outstanding Revolving Credit" means, at any time of determination, the sum
of (a) the aggregate amount of Revolving Loans then outstanding; plus (b) the
aggregate amount of Letter of Credit Liabilities (or when calculated with
respect to a Bank, including the Agent as a Bank, such Bank's participation or
other interest in such Letter of Credit Liabilities); plus (c) the aggregate
amount of Swingline Loans (or when calculated with respect to a Bank, including
the Agent as a Bank, such Bank's participation or other interest in such
Swingline Loans) then outstanding.
"Payment Date" has the meaning specified in subsection 2.7(c).
"Payor" has the meaning specified in Section 5.8.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to all or any of its functions under ERISA.
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<PAGE>
"Permitted Acquisitions" shall mean acquisitions of all the equity
interests issued by a Person or all or substantially all of (a) such Person's
assets, (b) the assets of a division or branch of such Person or (c) such
Person's or its branch's or division's right to obtain from third parties the
raw materials utilized in the Borrower's or a Subsidiary's business, in each
case, in a transaction that satisfies all the applicable criteria set out in
Section 10.3.
"Permitted Cumulative Purchase Price Amount' has the meaning specified in
subsection 10.3(v)(b)(vi).
"Permitted Purchase Price Amount" has the meaning specified in
subsection 10.3(v)(b)(vi).
"Person" means any individual, corporation, business trust, association,
company, partnership, joint venture, Governmental Authority, or other entity.
"Plan" means any employee benefit plan established or maintained by the
Borrower or any ERISA Affiliate and which is covered by Title IV of ERISA.
"Previous Senior Debt" means all the obligations, indebtedness and
liabilities of the Borrower and its Subsidiaries arising under or pursuant to
that certain Credit Agreement dated as of May 23, 1995 among the Borrower, The
First National Bank of Boston (now known as BankBoston, N.A.,) as agent, Harris
Trust and Savings Bank, as co-agent and the other lenders named therein, as the
same may have been amended or otherwise modified and any of the documentation
executed in connection therewith, including, without limitation, all such
documentation relating to any interest rate swap, cap or collar agreements or
other agreements enabling Borrower to fix or limit its interest expense.
"Principal Office" means the principal office of the Agent, located at 100
Federal Street, Boston, Massachusetts 02110.
"Prohibited Transaction" means any transaction set forth in Section 406 or
407 of ERISA or Section 4975(c)(1) of the Code for which there does not exist a
statutory or administrative exemption.
"Purchase Agreements" has the meaning specified in subsection 10.3(v)(a).
"Purchase Price" has the meaning specified in subsection 10.3(v)(b)(vi).
"Quarterly Payment Date" means the last day of March, June, September, and
December of each year, the first of which shall be the first such day after the
date of this Agreement.
"Raw Material Supplier" has the meaning specified in subsection 10.1(h).
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System as the same may be amended or supplemented from time to time.
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<PAGE>
"Regulatory Change" means, with respect to any Bank, any change after the
date of this Agreement in United States federal, state, or foreign laws or
regulations (including Regulation D) or the adoption or making after such date
of any interpretations, directives, or requests applying to a class of banks
including such Bank of or under any United States federal or state, or any
foreign, laws or regulations (whether or not having the force of law) by any
court or governmental or monetary authority charged with the interpretation or
administration thereof.
"Reimbursement Obligation" means the obligation of the Borrower to
reimburse the Agent for any demand for payment or drawing under a Letter of
Credit.
"Release" means, as to any Person, any release, spill, emission, leaking,
pumping, injection, deposit, disposal, disbursement, leaching, or migration of
Hazardous Materials into the indoor or outdoor environment or into or out of
property owned by such Person, including, without limitation, the movement of
Hazardous Materials through or in the air, soil, surface water, ground water, or
property in violation of Environmental Laws.
"Remedial Action" means all actions required to (a) cleanup, remove, treat,
or otherwise address Hazardous Materials in the indoor or outdoor environment,
(b) prevent the Release or threat of Release or minimize the further Release of
Hazardous Materials so that they do not migrate or endanger or threaten to
endanger public health or welfare or the indoor or outdoor environment, or (c)
perform pre-remedial studies and investigations and post-remedial monitoring and
care.
"Required Banks" means Banks having (a) fifty-one percent (51%) or more of
the Commitments or (b), if the Term Commitments have terminated or have been
fully funded, fifty-one percent (51%) or more of the Revolving Commitments and
the aggregate outstanding principal amount of the Term Loans or (c) if all
Commitments have terminated, fifty-one percent (51%) or more of the sum of (i)
the outstanding principal amount of the Loans, (ii) the participations in
outstanding Letter of Credit Liabilities and (iii) the participations in
outstanding Swingline Loans.
"Reportable Event" means any of the events set forth in Section 4043 of
ERISA.
"Required Payment" has the meaning specified in Section 5.8.
"Reserve Requirement" means, for any Libor Account for any Interest Period
therefor, the average maximum rate at which reserves (including any marginal,
supplemental or emergency reserves) are required to be maintained during such
Interest Period under Regulation D by member banks of the Federal Reserve System
in New York City with deposits exceeding one billion Dollars against
"Eurocurrency Liabilities" as such term is used in Regulation D. Without
limiting the effect of the foregoing, the Reserve Requirement shall reflect any
other reserves required to be maintained by such member banks by reason of any
Regulatory Change against any category of liabilities which includes deposits by
reference to which the Adjusted Libor Rate is to be determined or any category
of extensions of credit or other assets which include Libor Accounts.
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<PAGE>
"Revolving Commitment" means, as to each Bank, the obligation of such Bank
to make advances of funds and purchase participation interests in (or with
respect to the Agent as a Bank, hold other interests in) Letters of Credit and
Swingline Loans in an aggregate principal amount at any one time outstanding up
to but not exceeding the amount set forth opposite the name of such Bank on the
signature pages hereto under the heading "Revolving Commitment", as the same may
be reduced or terminated pursuant to Section 2.6, 12.2 or 14.8 or, if such Bank
was not an original signatory to this Agreement, in such Bank's Assignment and
Acceptance. The aggregate amount of the Revolving Commitments of all Banks
equals One Hundred Seventy-Five Million Dollars ($175,000,000).
"Revolving Loans" means, as to any Bank, the advances made by such Bank
pursuant to Section 2.1.
"Revolving Notes" means the promissory notes provided for by Section 2.2
and all amendments or other modifications thereof.
"Route Purchase" has the meaning specified in Section 10.3.
"Significant Subsidiary" means any Subsidiary that is organized under the
laws of a state located in the United States of America and is not an
Insignificant Subsidiary.
"Subordinated Debt" means all the obligations, indebtedness and liabilities
of the Borrower and its Subsidiaries arising under or pursuant to the Indenture
and the Subordinated Notes and any of the documentation executed in connection
therewith.
"Subordinated Notes" means the Borrower's $70,000,000 First Priority Senior
Subordinated Notes due July 15, 2000 issued under the terms of the Indenture, as
the same may be amended or otherwise modified.
"Subsidiary" means any corporation (or other entity) of which at least a
majority of the outstanding shares of stock (or other ownership interests)
having by the terms thereof ordinary voting power to elect a majority of the
board of directors (or similar governing body) of such corporation (or other
entity) (irrespective of whether or not at the time stock (or other ownership
interests) of any other class or classes of such corporation (or other entity)
shall have or might have voting power by reason of the happening of any
contingency) is at the time directly or indirectly owned or controlled by the
Borrower or one or more of the Subsidiaries or by the Borrower and one or more
of the Subsidiaries.
"Swingline Commitment" means the obligation of the Agent to make advances
pursuant to Section 2.8(a) in an aggregate principal amount at any one time
outstanding up to but not exceeding Ten Million Dollars ($10,000,000), as such
amount may be reduced pursuant to subsection 2.8(e) or Section 12.2.
"Swingline Loans" means the advances made by the Agent pursuant to
subsection 2.8(a).
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<PAGE>
"Swingline Maturity" has the meaning specified in subsection 2.8(c).
"Swingline Note" means the promissory note provided for by subsection
2.8(b) and all amendments and other modifications thereto.
"Target" has the meaning specified in subsection 10.3(v)(a).
"Term Commitment" means, as to each Bank, the obligation of such Bank to
make an advance of funds under Section 3.1 in an aggregate principal amount up
to but not exceeding the amount set forth opposite the name of such Bank on the
signature pages hereto under the heading "Term Commitment", as the same may be
terminated pursuant to Section 12.2. The aggregate amount of the Term
Commitments of all Banks equals Fifty Million Dollars ($50,000,000).
"Term Loan" means, as to any Bank, the advance made by such Bank pursuant
to Section 3.1.
"Term Notes" means the promissory notes provided for by Section 3.2 and all
amendments and other modifications thereto.
"Termination Date" means June 5, 2002, or such earlier date on which the
Commitments terminate as provided in this Agreement.
"Type" means either type of Account (i.e., either a Base Rate Account or
Libor Account).
"UCC" means the Uniform Commercial Code as in effect in the State of Texas.
Section 1.2 Other Definitional Provisions. All definitions contained in
this Agreement are equally applicable to the singular and plural forms of the
terms defined. The words "hereof", "herein", and "hereunder" and words of
similar import referring to this Agreement refer to this Agreement as a whole
and not to any particular provision of this Agreement. Unless otherwise
specified, all Article and Section references pertain to this Agreement. Terms
used herein that are defined in the UCC, unless otherwise defined herein, shall
have the meanings specified in the UCC.
Section 1.3 Accounting Terms and Determinations. Except as otherwise
expressly provided herein, all accounting terms used herein shall be
interpreted, and all financial statements and certificates and reports as to
financial matters required to be delivered to the Agent and the Banks hereunder
shall be prepared, in accordance with GAAP, on a basis consistent with those
used in the preparation of the financial statements referred to in Section 8.2
hereof. All calculations made for the purposes of determining compliance with
the provisions of this Agreement shall be made by application of GAAP, on a
basis consistent with those used in the preparation of the financial statements
referred to in Section 8.2 hereof. To enable the ready and consistent
determination of compliance by the Borrower with its obligations under this
Agreement, the Borrower will not change the manner in which either the last day
of its Fiscal Year or the last days of the first three Fiscal Quarters of its
Fiscal Years is calculated. In the event any changes in accounting principles
CREDIT AGREEMENT - PAGE 14
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<PAGE>
required by GAAP or recommended by Borrower's certified public accountants and
implemented by Borrower occur and such changes result in a change in the method
of the calculation of financial covenants, standards or terms under this
Agreement, then the Borrower, the Agent and the Banks agree to enter into
negotiations in order to amend such provisions of this Agreement so as to
equitably reflect such changes with the desired result that the criteria for
evaluating such covenants, standards or terms shall be the same after such
changes as if such changes had not been made. Until such time as such an
amendment shall have been executed and delivered by the Agent, the Borrower and
the Banks, all financial covenants, standards and terms in this Agreement shall
continue to be calculated or construed as if such changes had not occurred.
Section 1.4 Time of Day. Unless otherwise indicated, all references
in this Agreement to times of day shall be references to Boston, Massachusetts
time.
ARTICLE 2
Revolving Credit Facility
Section 2.1 Revolving Commitments. Subject to the terms and conditions of
this Agreement, each Bank severally agrees to make one or more Revolving Loans
to the Borrower from time to time from and including the Closing Date to but
excluding the Termination Date in an aggregate principal amount at any time
outstanding up to but not exceeding the amount of such Bank's Revolving
Commitment as then in effect; provided, however, (a) the Outstanding Revolving
Credit applicable to a Bank (including the Agent as a Bank) shall not at any
time exceed such Bank's Revolving Commitment, (b) the Outstanding Revolving
Credit shall not at any time exceed the aggregate Revolving Commitments and (c)
at all times prior to the time that the Subordinated Debt is repaid in full in
accordance with Section 9.14, (i) the Borrowing Availability (calculated
excluding any Revolving Loans the proceeds of which are to be used to redeem the
Subordinated Notes in full) shall equal or exceed Seventy-Five Million Dollars
($75,000,000) and (ii) the total principal amount of the outstanding Obligations
shall not exceed an amount equal to the amount which is permitted under the
Indenture as "Permitted Indebtedness" thereunder. Subject to the foregoing
limitations, and the other terms and provisions of this Agreement, the Borrower
may borrow, prepay, and reborrow hereunder the amount of the Revolving
Commitments and may establish Base Rate Accounts and Libor Accounts thereunder
and, until the Termination Date, the Borrower may Continue Libor Accounts
established under the Revolving Loans or Convert Accounts established under the
Revolving Loans of one Type into Accounts of the other Type. Accounts of each
Type under the Revolving Loan made by each Bank shall be established and
maintained at such Bank's Applicable Lending Office for Revolving Loans of such
Type.
Section 2.2 Notes. The Revolving Loans made by a Bank shall be evidenced by
a single promissory note of the Borrower in substantially the form of Exhibit
"A" hereto, payable to the order of such Bank in a principal amount equal to its
Revolving Commitment as originally in effect and otherwise duly completed.
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Section 2.3 Repayment of Revolving Loans. The Borrower shall pay to the
Agent for the account of the Banks the outstanding principal amount of all of
the Revolving Loans on the Termination Date.
Section 2.4 Use of Proceeds. The proceeds of Revolving Loans shall be used
by the Borrower (a) to repay the Previous Senior Debt and the Subordinated Debt,
(b) for working capital in the ordinary course of business, including, without
limitation, the satisfaction of Reimbursement Obligations in accordance with
subsection 2.7(e) and to repay Swingline Loans; and (c) for other general
corporate purposes including, without limitation, financing Capital Expenditures
and Permitted Acquisitions.
Section 2.5 Revolving Commitment Fee. The Borrower agrees to pay to the
Agent for the account of each Bank a commitment fee on the daily average unused
amount of such Bank's Revolving Commitment for the period from and including the
Closing Date to and including the Termination Date, at a rate equal to one
quarter of one percent (0.25%) per annum. For the purpose of calculating the
commitment fee hereunder, the Revolving Commitments shall be deemed utilized by
all outstanding Revolving Loans and all Letter of Credit Liabilities but shall
not, for purposes of this Section 2.5 only, be deemed utilized by any Swingline
Loans. Accrued commitment fee under this Section 2.5 shall be payable in arrears
on each Quarterly Payment Date and on the Termination Date.
Section 2.6 Reduction or Termination of Revolving Commitments. The Borrower
shall have the right to terminate or reduce in part the unused portion of the
Revolving Commitments at any time and from time to time, provided that: (a) the
Borrower shall give notice of each such termination or reduction as provided in
Section 5.3; (b) each partial reduction shall be in an aggregate amount at least
equal to Five Million Dollars ($5,000,000); and (c) the Revolving Commitments
may not be reduced to an amount less than the sum of the Swingline Commitment
plus the Letter of Credit Liabilities then outstanding. The Revolving
Commitments may not be reinstated after they have been terminated or reduced.
Section 2.7 Letters of Credit.
(a) Commitment to Issue. The Borrower may utilize the Revolving
Commitments by requesting that the Agent issue, and the Agent, subject
to the terms and conditions of this Agreement, shall issue standby or
documentary letters of credit for Borrower's or one of the
Subsidiaries' account (such letters of credit, together with the
letters of credit described on Schedule 2.7(a), being hereinafter
referred to collectively as the "Letters of Credit"); provided,
however, (i) the aggregate amount of outstanding Letter of Credit
Liabilities shall not at any time exceed Twenty-Five Million Dollars
($25,000,000); (ii) the Outstanding Revolving Credit shall not at any
time exceed the aggregate Revolving Commitments; and (iii) the
Outstanding Revolving Credit applicable to a Bank shall not at any
time exceed such Bank's Revolving Commitment. Upon the date of issue
of a Letter of Credit (or, with respect to the Letters of Credit
described on Schedule 2.7(a), on the Closing Date), the Agent shall be
deemed, without further action by any party hereto, to have sold to
each other Bank, and each other Bank shall be
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<PAGE>
deemed, without further action by any party hereto, to have purchased
from the Agent a participation to the extent of such Bank's Commitment
Percentage in such Letter of Credit and the related Letter of Credit
Liabilities.
(b) Letter of Credit Request Procedure. Except with respect to the Letters
of Credit described on Schedule 2.7 (a), the Borrower shall give the
Agent at least five (5) Business Days irrevocable prior notice
(effective upon receipt) specifying the date of each Letter of Credit
to be issued and the nature of the transactions to be supported
thereby. Upon receipt of such notice the Agent shall promptly notify
each other Bank of the contents thereof and of such Bank's Commitment
Percentage of the amount of the proposed Letter of Credit. The Agent
shall provide a Bank a copy of each Letter of Credit issued hereunder
upon such Bank's request. Each Letter of Credit shall have an
expiration date that does not extend beyond a date which is thirty
(30) days prior to the Termination Date, shall be payable in Dollars,
must support a transaction entered into in the ordinary course of the
Borrower's business, must be satisfactory in form and substance to the
Agent, and shall be issued pursuant to such documentation as the Agent
may require, including, without limitation, the Agent's standard form
letter of credit request and reimbursement agreement; provided that,
in the event of any conflict between the terms of such agreement and
the other Loan Documents, the terms of the other Loan Documents shall
control. Each standby Letter of Credit shall have an expiration date
that does not extend beyond one (1) year, provided that any standby
Letter of Credit may contain provisions whereby its expiration date is
automatically extended for additional periods of one (1) year on any
current or thereafter established expiration date unless the Agent
provides notice to the beneficiary of the Letter of Credit that it
will not be so extended. Each such standby Letter of Credit must
permit the Agent to give such notice of nonextension at any time up to
the date which is no greater than ninety (90) days prior to the
applicable expiration date.
(c) Letter of Credit Fees. The Borrower will pay to the Agent for the
account of each Bank an irrevocable letter of credit fee on such
Bank's Commitment Percentage of the amount available for drawings
under each Letter of Credit, such letter of credit fee (i) to be paid
in advance on the date of the issuance of the Letter of Credit (or,
with respect to the Letters of Credit described on Schedule 2.7(a), on
the Closing Date) and on each Quarterly Payment Date thereafter until
the date of expiration or termination thereof (each such date herein a
"Payment Date") and (ii) to be calculated for the period from and
including one Payment Date to and excluding the next at a rate equal
to the Libor Rate Margin in effect on the date of payment (as
determined in accordance with Section 4.2). After receiving any
payment of any letter of credit fees under this clause (c), the Agent
will promptly pay to each Bank the letter of credit fees then due such
Bank. With respect to each Letter of Credit, the Borrower will also
pay to the Agent for its account only the fees and expenses described
in Section 14.1(c), to the extent applicable, and, on the date of the
issuance of the Letter of Credit (excluding any Letters of Credit
described on Schedule 2.7(a)) the fronting fee described in that
certain commitment letter among Borrower, BankBoston, N.A. and
BancBoston Securities, Inc. dated May 15, 1997 calculated on the
maximum amount available to be drawn under the Letter of Credit.
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(d) Funding of Drawings. Upon receipt from the beneficiary of any Letter
of Credit of any demand for payment or other drawing under such Letter
of Credit, the Agent shall promptly notify the Borrower and each Bank
as to the amount to be paid as a result of such demand or drawing and
the respective payment date. Not later than 11:00 a.m. on the
applicable payment date, each Bank will make available to the Agent,
at the Principal Office, in immediately available funds, an amount
equal to such Bank's Commitment Percentage of the amount to be paid as
a result of such demand or drawing even if the conditions to a Loan
under Article 7 have not been satisfied
(e) Reimbursements. The Borrower shall be irrevocably and unconditionally
obligated to immediately reimburse the Agent for any amounts paid by
the Agent upon any demand for payment or drawing under any Letter of
Credit (regardless of whether such Letter of Credit is issued for the
account of Borrower or one of the Subsidiaries), without presentment,
demand, protest, or other formalities of any kind. All payments on the
Reimbursement Obligations shall be made to the Agent at the Principal
Office for the account of the Agent in Dollars and in immediately
available funds, without setoff, deduction or counterclaim not later
than 3:00 pm. on the date of the corresponding payment under the
Letter of Credit by the Agent. Subject to the other terms and
conditions of this Agreement, such reimbursement may be made by
Borrower requesting a Revolving Loan in accordance with Section 5.1
the proceeds of which shall be credited against the Borrower's
Reimbursement Obligations. The Agent will pay to each Bank such Bank's
Commitment Percentage of all amounts received from the Borrower for
application in payment, in whole or in part, to the Reimbursement
Obligation in respect of any Letter of Credit, but only to the extent
such Bank has made payment to the Agent in respect of such Letter of
Credit pursuant to clause (d) of this Section 2.7.
(f) Reimbursement Obligations Absolute. The Reimbursement Obligations of
the Borrower under this Agreement shall be absolute, unconditional,
and irrevocable, and shall be performed strictly in accordance with
the terms of the Loan Documents under all circumstances whatsoever and
the Borrower hereby waives any defense to the payment of the
Reimbursement Obligations based on any circumstance whatsoever,
including without limitation, in either case, the following
circumstances: (i) any lack of validity or enforceability of any
Letter of Credit or any other Loan Document; (ii) any amendment or
waiver of or any consent to departure from any Loan Document; (iii)
the existence of any claim, set-off, counterclaim, defense or other
rights which the Borrower, any Obligated Party, or any other Person
may have at any time against any beneficiary of any Letter of Credit,
the Agent, any Bank, or any other Person, whether in connection with
any Loan Document or any unrelated transaction; (iv) any statement,
draft, or other documentation presented under any Letter of Credit
proving to be forged, fraudulent, invalid, or insufficient in any
respect or any statement therein being untrue or inaccurate in any
respect whatsoever; (v) payment by the Agent under any Letter of
Credit against presentation of a draft or other document that does not
comply with the terms of such Letter of Credit; or (vi) any other
circumstance whatsoever, whether or not similar to any of the
foregoing; provided that Reimbursement Obligations with respect to a
Letter of Credit may be subject to avoidance by the Borrower if the
Borrower proves in a final nonappealable judgment that it was
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damaged and that such damage arose directly from the Agent's willful
misconduct or gross negligence in determining whether the
documentation presented under the Letter of Credit in question
complied with the terms thereof.
(g) Issuer Responsibility. The Borrower assumes all risks of the acts or
omissions of any beneficiary of any Letter of Credit with respect to
its use of such Letter of Credit. Neither the Agent, any Bank nor any
of their respective officers or directors shall have any
responsibility or liability to the Borrower or any other Person for:
(a) the failure of any draft to bear any reference or adequate
reference to any Letter of Credit, or the failure of any documents to
accompany any draft at negotiation, or the failure of any Person to
surrender or to take up any Letter of Credit or to send documents
apart from drafts as required by the terms of any Letter of Credit, or
the failure of any Person to note the amount of any instrument on any
Letter of Credit, each of which requirements, if contained in any
Letter of Credit itself, it is agreed may be waived by the Agent; (b)
errors, omissions, interruptions, or delays in transmission or
delivery of any messages; (c) the validity, sufficiency, or
genuineness of any draft or other document, or any endorsement(s)
thereon, even if any such draft, document or endorsement should in
fact prove to be in any and all respects invalid, insufficient,
fraudulent, or forged or any statement therein is untrue or inaccurate
in any respect; (d) the payment by the Agent to the beneficiary of any
Letter of Credit against presentation of any draft or other document
that does not comply with the terms of the Letter of Credit; or (e)
any other circumstance whatsoever in making or failing to make any
payment under a Letter of Credit. The Borrower shall have a claim
against the Agent, and the Agent shall be liable to the Borrower, to
the extent of any direct, but not indirect, consequential or punitive,
damages suffered by the Borrower which the Borrower proves in a final
nonappealable judgment were caused by (i) the Agent's willful
misconduct or gross negligence in determining whether documents
presented under any Letter of Credit complied with the terms thereof
or (ii) the Agent's willful failure to pay under any Letter of Credit
after presentation to it of documentation strictly complying with the
terms and conditions of such Letter of Credit. The Agent may accept
documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary.
Section 2.8 Swingline Loans.
(a) Swingline Commitment. Subject to the terms and conditions of this
Agreement, the Agent agrees to make one or more Swingline Loans to the
Borrower from time to time from and including the Closing Date to but
excluding the Termination Date in an aggregate principal amount at any
time outstanding up to but not exceeding the Swingline Commitment;
provided, however, (i) the Outstanding Revolving Credit shall never
exceed the aggregate Revolving Commitments and (ii) the Outstanding
Revolving Credit applicable to a Bank (including the Agent as a Bank)
shall never exceed such Bank's Revolving Commitment. Subject to the
foregoing limitations, and the other terms and provisions of this
Agreement, the Borrower may borrow, prepay, and reborrow hereunder the
amount of the Swingline Commitment and may establish Base Rate
Accounts thereunder. On the date a Swingline Loan
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is made by the Agent, the Agent shall be deemed without further deemed
without further action by any party hereto, to have sold to each Bank,
and each Bank shall be deemed, without further action by any party
hereto, to have purchased from the Agent a participation to the extent
of such Bank's Commitment Percentage in the Swingline Loan so made,
such participation to be funded in accordance with clause (c) of this
Section 2.8.
(b) Swingline Note. The Swingline Loans made by the Agent shall be
evidenced by a single promissory note of the Borrower in substantially
the form of Exhibit "B" hereto, payable to the order of the Agent in a
principal amount equal to the Swingline Commitment as originally in
effect and otherwise duly completed.
(c) Repayment of Swingline Loans; Funding of Participation. The Borrower
shall pay to the Agent for its own account the outstanding principal
amount of each Swingline Loan on the earlier of (i) the Termination
Date or (ii) the date which is thirty (30) days after the Swingline
Loan is made (the earlier of such date with respect to a Swingline
Loan herein the "Swingline Maturity"). Subject to the other terms and
conditions of this Agreement, Borrower may repay a Swingline Loan on
its Swingline Maturity or at any time prior thereto by requesting a
Revolving Loan in accordance with Section 5.1 with the proceeds
thereof payable to the Agent for its own account. Agent, at any time
in its sole and absolute discretion and whether or not a Swingline
Maturity shall have occurred, may require that each Bank fund its
participation in the then outstanding principal amount of all
Swingline Loans by giving each Bank notice thereof. Additionally, if
the Borrower shall not have repaid a Swingline Loan by 1:00 p.m. on
the corresponding Swingline Maturity, Agent will notify each Bank of
the aggregate principal amount of the Swingline Loan which has not
been repaid. Upon the giving of any notice by the Agent under either
of the preceding two sentences, each Bank shall make available to the
Agent, at the Principal Office, in immediately available funds, an
amount equal to its Commitment Percentage of the aggregate principal
amount of Swingline Loan or Swingline Loans subject to such notice by
not later than 3:00 p.m. on the date such notice is received if such
notice is received by 1:00 p.m. or by 11:00 am on the next Business
Day, if such notice is received after 1:00 p.m., whether or not the
conditions to a Loan under Article 7 are satisfied.
(d) Use of Proceeds. The proceeds of Swingline Loans shall be used by the
Borrower for the same purposes as Revolving Loans as described in
Section 2.4.
(e) Reduction or Termination of Swingline Commitment. The Borrower shall
have the right to terminate or reduce in part the unused portion of
the Swingline Commitment at any time and from time to time, provided
that: (i) the Borrower shall give notice of each such termination or
reduction as provided in Section 5.3; and (ii) each partial reduction
shall be in an aggregate amount at least equal to One Million Dollars
($1,000,000). The Swingline Commitment may not be reinstated after it
has been terminated or reduced.
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ARTICLE 3
Term Loan
Section 3.1 Term Commitments. Subject to the terms and conditions of this
Agreement, each Bank severally agrees to make an advance of funds to the
Borrower in the amount of its Term Commitment on the Closing Date. The Borrower
may establish Base Rate Accounts or Libor Accounts thereunder and, until the
Termination Date, Borrower may Continue Libor Accounts established under the
Term Loans or Convert Accounts established under the Term Loans of one Type into
Accounts of another Type. Accounts of each Type established under the Term Loans
made by each Bank shall be made and maintained at such Bank's Applicable Lending
Office for Accounts of such Type.
Section 3.2 Notes. The Term Loan made by a Bank shall be evidenced by a
single promissory note of the Borrower in substantially the form of Exhibit "C"
hereto, payable to the order of such Bank in a principal amount equal to its
Term Commitment as originally in effect and otherwise duly completed.
Section 3.3 Repayment of Term Loans. The Borrower shall pay to the Agent
for the account of the Banks the outstanding principal amount of all of the Term
Loans as follows:
(a) Eight (8) consecutive quarterly installments due and payable on each
Quarterly Payment Date commencing June 30, 1997 and continuing until
and including March 31, 1999, each installment to be in an amount
equal to One Million Two Hundred Fifty Thousand Dollars ($1,250,000);
(b) Twelve (12) consecutive quarterly installments due and payable on each
Quarterly Payment Date commencing June 30, 1999 and continuing until
and including March 31, 2002, each installment to be in an amount
equal to Two Million Five Hundred Thousand Dollars ($2,500,000); and
(c) One (1) final installment in the amount of all outstanding principal
of the Term Loans due and payable on the Termination Date.
Section 3.4 Use of Proceeds. The proceeds of Term Loans shall be used by
the Borrower to repay the Previous Senior Debt and for other general corporate
purposes.
ARTICLE 4
Interest and Fees
Section 4.1 Interest Rate. The Borrower shall pay to the Agent for the
account of each Bank interest on the unpaid principal amount of each Loan made
by such Bank for the period commencing on the date of such Loan to but excluding
the date such Loan is due, at a fluctuating rate per annum equal to (a) with
respect to the Revolving Loans or Term Loans, (i) during the period that such
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Loans or portions thereof are subject to a Base Rate Account, the Base Rate and
(ii) during the period that such Loans or portions thereof are subject to a
Libor Account, the Adjusted Libor Rate plus the Libor Rate Margin; and (b) with
respect to the Swingline Loans, the Base Rate.
Section 4.2 Determinations of Libor Rate Margin. The phrase "Libor Rate
Margin" shall mean (i) during the period commencing on the Closing Date and
ending on but not including the first Adjustment Date (as defined below), one
and one quarter percent (1.25%) per annum and (ii) during each period, from and
including one Adjustment Date to but excluding the next Adjustment Date (herein
a "Calculation Period"), the percent per annum set forth in the table below (A)
under the Fixed Charge Coverage Ratio calculated for the completed four (4)
Fiscal Quarters which immediately preceded the beginning of the applicable
Calculation Period, and (B) opposite the Funded Debt to Adjusted EBITDA Ratio
calculated for the completed four (4) Fiscal Quarters which immediately preceded
the beginning of the applicable Calculation Period.
Fixed Charge Coverage Ratio
---------------------------
Funded Debt to
Adjusted EBITDA
Ratio Ratio
greater or equal to less than
1.25 to 1.0 1.25 to 1.0
----------------- -----------
greater or equal to 3.00 1.375% 1.500%
less than 3.00 but greater or equal 2.5 1.250% 1.375%
less than 2.50 but greater or equal 2.00 1.125% 1.250%
less than 2.00 but greater or equal 1.50 0.875% 1.000%
less than 1.50 0.625% .750%
Upon delivery of the Compliance Certificate pursuant to subsection 9.1(c) in
connection with the financial statements of Borrower and the Subsidiaries
required to be delivered pursuant to Section 9.1(b) at the end of each Fiscal
Quarter commencing with such Compliance Certificate delivered at the end of the
Fiscal Quarter ending on or about September 30, 1997, the Libor Rate Margin (for
Interest Periods commencing after the applicable Adjustment Date) shall
automatically be adjusted in accordance with the Funded Debt to Adjusted EBITDA
Ratio and Fixed Charge Coverage Ratio set forth therein and the table set forth
above, such automatic adjustment to take effect as of the first Business Day
after the receipt by the Agent of the related Compliance Certificate pursuant to
Section 9.1(c) (each such Business Day when such margins or fees change pursuant
to this sentence or the next following sentence, herein an "Adjustment Date").
If Borrower fails to deliver such Compliance Certificate which so sets forth the
Funded Debt to Adjusted EBITDA Ratio and Fixed Charge Coverage Ratio within the
period of time required by subsection 9.1(c), the Libor Rate Margin (for
Interest Periods commencing after the applicable Adjustment Date) shall
automatically be adjusted to one and one-half percent (1.50%) per annum, such
automatic adjustments to take effect as of the first Business Day after the last
day on which Borrower was required to deliver the applicable Compliance
Certificate in accordance with Section 9.1(c) and to remain in effect until
subsequently adjusted in accordance herewith upon the delivery of a Compliance
Certificate.
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Section 4.3 Payment Dates. Accrued interest on the Loans shall be due and
payable as follows: (i) in the case of all Loans (including those subject to
Base Rate Accounts and Libor Accounts), on each Quarterly Payment Date; (ii) in
addition to accrued interest paid in accordance with the foregoing clause (i)
and with respect to Loans subject to Libor Accounts and each such Account, on
the last day of the Interest Period with respect thereto; and (iii) on the
Termination Date.
Section 4.4 Default Interest. Notwithstanding the foregoing, the Borrower
will pay to the Agent for the account of each Bank interest at the applicable
Default Rate on any principal of any Loan made by such Bank, any Reimbursement
Obligation, and (to the fullest extent permitted by law) any other amount
payable by the Borrower under any Loan Document to or for the account of the
Agent or such Bank, that is not paid in full when due (whether at stated
maturity, by acceleration, or otherwise), for the period from and including the
due date thereof to but excluding the date the same is paid in full. Interest
payable at the Default Rate shall be payable from time to time on demand.
Section 4.5 Conversions and Continuations of Accounts. Subject to Section
5.2, the Borrower shall have the right from time to time to Convert all or part
of any Base Rate Account in existence under a Loan (other than a Swingline Loan)
into a Libor Account under the same Loan or to Continue Libor Accounts in
existence under a Loan as Libor Accounts under the same Loan, provided that: (a)
the Borrower shall give the Agent notice of each such Conversion or Continuation
as provided in Section 5.3; (b) a Libor Account may only be Converted on the
last day of the Interest Period therefore; (c) except for Conversions into Base
Rate Accounts, no Conversions or Continuations shall be made while a Default has
occurred and is continuing; (d) the Swingline Loan may not be subject to Libor
Accounts; and (e) a Libor Account established under one Loan may not be
Continued as a Libor Account under another Loan.
Section 4.6 Computations. Interest and fees payable by the Borrower
hereunder and under the other Loan Documents shall be computed as follows: (i)
with respect to Libor Accounts and the Default Rate when calculated with respect
to a Libor Account, on the basis of a year of 360 days and the actual number of
days elapsed (including the first day but excluding the last day) occurring in
the period for which payable unless in the case of interest such calculation
would result in a usurious rate, in which case interest shall be calculated on
the basis of a year of 365 or 366 days, as the case may be and (ii) with respect
to Base Rate Accounts, the Default Rate when calculated based on the Base Rate
and all fees payable hereunder, on the basis of a year of 365 or 366 days, as
the case may be and the actual number of days elapsed (including the first day
but excluding the last day) occurring in the period for which payable.
ARTICLE 5
Administrative Matters
Section 5.1 Borrowing Procedure. The Borrower shall give the Agent, and the
Agent will give the Banks, notice of each borrowing under any Commitment in
accordance with Section 5.3. Not later than 1:00 p.m. on the date specified for
each borrowing under the applicable Commitment (other than the Swingline
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<PAGE>
Commitment) each Bank will make available the amount of the Loan to be made by
it on such date to the Agent, at the Principal Office, in immediately available
funds, for the account of the Borrower. The amount so received by the Agent
shall, subject to the terms and conditions of this Agreement, be made available
to the Borrower by (a) depositing the same, in immediately available funds, in
an account of the Borrower (designated by the Borrower) maintained with the
Agent at the Principal Office or (b) wire transferring such funds to a Person or
Persons designated by the Borrower in writing. Not later than 3:00 p.m. on the
date specified for each borrowing under the Swingline Commitment, the Agent will
make available the amount of the Swingline Loan to be made by it on such date to
the Borrower by (i) depositing the same, in immediately available funds, in an
account of the Borrower (designated by the Borrower) maintained with the Agent
at the Principal Office or (ii) wire transferring such funds to a Person or
Persons designated by the Borrower in writing.
Section 5.2 Minimum Amounts. Except for prepayments pursuant to Article 6
and prepayments of Revolving Loans subject to Base Rate Accounts, each borrowing
under a Loan and each prepayment of principal of a Loan shall be in an amount at
least equal to the amount set forth below for the applicable Loan or any larger
amounts in the increments set forth below:
Revolving Loan Swingline Loan Term Loan
-------------- -------------- -------------
$1,000,000 $25,000 $500,000
Increments
-------------
$500,000 $25,000 $100,000
Except for prepayments pursuant to Article 6, each prepayment of Revolving Loans
subject to Base Rate Accounts shall be in an amount at least equal to Five
Hundred Thousand Dollars ($500,000) or any larger amount in increments of One
Hundred Thousand Dollars ($100,000). Except for Conversions pursuant to Article
6, each Libor Account applicable to a Loan shall be in a minimum principal
amount of Two Million Dollars ($2,000,000) or any larger amount in increments of
One Million Dollars ($1,000,000).
Section 5.3 Certain Notices. Notices by the Borrower to the Agent of
terminations or reductions of Commitments, of borrowings and prepayments of
Loans and of Conversion and Continuations of Accounts shall be irrevocable and
shall be effective only if received by the Agent not later than 1:00 p.m. (a) on
the Business Day of the borrowing of a Swingline Loan, (b) on the Business Day
of any repayment of Swingline Loans or Revolving Loans or (c) on the Business
Day prior to the date of the relevant termination, reduction, other borrowing,
Conversion, Continuation or other prepayment specified below:
Notice Number of Business Days Prior
Termination or reduction of Commitments 3
Borrowing, prepayment or repayment of Loans (other
than Swingline Loans) subject to Base Rate Accounts,
or Conversions into Base Rate Accounts 1
Borrowing, prepayment or repayment of Loans subject to
Libor Accounts, Conversions into or Continuations
as Libor Accounts 3
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Any notices of the type described in this Section 5.3 which are received by the
Agent after 1:00 p.m. on a Business Day shall be deemed to be received and shall
be effective on the next Business Day. Each such notice of termination or
reduction shall specify the applicable Commitments to be affected and the amount
of the Commitments to be terminated or reduced. Each such notice of borrowing,
Conversion, Continuation, or prepayment shall (a) specify the Loans to be
borrowed or prepaid or the Accounts to be Converted or Continued; (b) the amount
(subject to Section 5.2 hereof) to be borrowed, Converted, Continued or prepaid;
(c) in the case of a Conversion, the Type of Account to result from such
Conversion; (d) in the case of a borrowing (other than a borrowing under the
Swingline Loan), the Type of Account or Accounts to be applicable to such
borrowing and the amounts thereof; (e) in the event a Libor Account is selected,
the duration of the Interest Period therefor; and (f) the date of borrowing,
Conversion, Continuation, or prepayment (which shall be a Business Day). The
Agent shall notify the Banks of the contents of each such notice on the date of
its receipt of the same or, if received on or after 1:00 p.m. on a Business Day,
on the next Business Day. In the event the Borrower fails to select the Type of
Account applicable to a Loan, or the duration of any Interest Period for any
Libor Account, within the time period and otherwise as provided in this Section
5.3, such Account (if outstanding as Libor Account) will be automatically
Converted into a Base Rate Account on the last day of preceding Interest Period
for such Account or (if outstanding as a Base Rate Account) will remain as, or
(if not then outstanding) will be made as, a Base Rate Account. The Borrower may
not borrow any Loans subject to a Libor Account, Convert any Base Rate Accounts
into Libor Accounts, or Continue any Libor Account as a Libor Account if the
interest rate for such Libor Accounts would exceed the Maximum Rate.
Section 5.4 Prepayments. Subject to Section 5.2 and the provisions of this
Section 5.4, Borrower may, at any time and from time to time without premium or
penalty upon prior notice to the Agent as specified in Section 5.3, prepay or
repay any Loan in full or in part. Any optional prepayment of the Term Loan
shall be accompanied with accrued interest on the amount prepaid to the date of
prepayment and any partial prepayments thereof shall be applied to the principal
installments due under the Term Loan in the inverse order of maturity. Loans
subject to a Libor Account may be prepaid or repaid only on the last day of the
Interest Period applicable thereto unless (i) the Borrower pays to the Agent for
the account of the applicable Banks any amounts due under Section 6.5 as a
result of such prepayment or repayment or (ii) after giving effect to such
prepayment or repayment the aggregate principal amount of the Libor Accounts
applicable to the Loan being prepaid or repaid having Interest Periods that end
after such payment date shall be equal to or less than the principal amount of
such Loan after such prepayment or repayment.
Section 5.5 Method of Payment. Except as otherwise expressly provided
herein, all payments of principal, interest, and other amounts to be made by the
Borrower or any Obligated Party under the Loan Documents shall be made to the
Agent at the Principal Office for the account of each Bank's Applicable Lending
Office in Dollars and in immediately available funds, without setoff, deduction,
or counterclaim, not later than 1:00 p.m. on the date on which such payment
shall become due (each such payment made after such time on such due date to be
deemed to have been made on the next succeeding Business Day). The Borrower and
each Obligated Party shall, at the time of making each such payment, specify to
the Agent the sums payable under the Loan Documents to which such payment is to
be applied (and in the event that the Borrower fails to so specify, or if an
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Event of Default has occurred and is continuing, the Agent may apply such
payment and any proceeds of any Collateral to the Obligations in such order and
manner as it may elect in its sole discretion, subject to Section 5.6 hereof);
provided that any payment made within ten (10) Business Days prior to a
scheduled payment date shall be deemed a "payment" rather than a "prepayment" to
the extent necessary to discharge the next due installment. Each payment
received by the Agent under any Loan Document for the account of a Bank shall be
paid to such Bank by 3:00 p.m. on the date the payment is deemed made to the
Agent in immediately available funds, for the account of such Bank's Applicable
Lending Office. Whenever any payment under any Loan Document shall be stated to
be due on a day that is not a Business Day, such payment may be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of the payment of interest and commitment fee, as
the case may be.
Section 5.6 Pro Rata Treatment. Except to the extent otherwise provided
herein: (a) each Loan (other than the Swingline Loan) shall be made by the
Banks, each payment of commitment fee under Section 2.5 and letter of credit
fees under subsection 2.7 (c) shall be made for the account of the Banks, and
each termination or reduction of the Commitments shall be applied to the
Commitments of the Banks, pro rata according to their respective Commitment
Percentages; (b) the making, Conversion, and Continuation of Accounts of a
particular Type (other than Conversions provided for by Section 6.4) shall be
made pro rata among the Banks holding Accounts of such Type according to their
respective Commitment Percentages; (c) each payment and prepayment of principal
of or interest on Loans or Reimbursement Obligations by the Borrower shall be
made to the Agent for the account of the Agent or the Banks holding such Loans
or Reimbursement Obligations (or participation interests therein) pro rata in
accordance with the respective unpaid principal amounts of such Loans or
participation interests held by the Agent or such Banks (provided that only the
Agent shall be entitled to principal and interest on the Swingline Loan unless
the other Banks have funded their participations therein in accordance with
subsection 2.8(c)); (d) proceeds of Collateral shall be shared by the Agent and
the Banks pro rata in accordance with the respective unpaid principal amounts of
and interest on the Obligations then due the Agent and the Banks; and (e) the
Banks (other than the Agent) shall purchase from the Agent participations in the
Letters of Credit and Swingline Loans to the extent of their respective
Commitment Percentages. If at any time payment, in whole or in part, of any
amount distributed by the Agent hereunder is rescinded or must otherwise be
restored or returned by Agent as a preference, fraudulent conveyance or
otherwise under any bankruptcy, insolvency or similar law, then each Person
receiving any portion of such amount agrees, upon demand, to return the portion
of such amount it has received to the Agent.
Section 5.7 Sharing of Payments. If a Bank shall obtain payment of any
principal of or interest on any of the Obligations due to such Bank hereunder
directly (and not through the Agent) through the exercise of any right of
set-off, banker's lien, counterclaim or similar right, or otherwise, it shall
promptly purchase from the other Banks participations in the Obligations held by
the other Banks in such amounts, and make such other adjustments from time to
time as shall be equitable to the end that all the Banks shall share the benefit
of such payment pro rata in accordance with the unpaid principal of and interest
on the Obligations then due to each of them. To such end, all of the Banks shall
make appropriate adjustments among themselves (by the resale of participations
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sold or otherwise) if all or any portion of such excess payment is thereafter
rescinded or must otherwise be restored. The Borrower agrees, to the fullest
extent it may effectively do so under applicable law, that any Bank so
purchasing a participation in the Obligations held by the other Banks may
exercise all rights of set-off, banker's lien, counterclaim, or similar rights
with respect to such participation as fully as if such Bank were a direct holder
of Obligations in the amount of such participation. Nothing contained herein
shall require any Bank to exercise any such right or shall affect the right of
any Bank to exercise, and retain the benefits of exercising, any such right with
respect to any other indebtedness or obligation of the Borrower.
Section 5.8 Non-Receipt of Funds by the Agent. Unless the Agent shall have
been notified by a Bank or the Borrower (the "Payor") prior to the date on which
such Bank is to make payment to the Agent hereunder or the Borrower is to make a
payment to the Agent for the account of one or more of the Banks, as the case
may be (such payment being herein called the "Required Payment"), which notice
shall be effective upon receipt, that the Payor does not intend to make the
Required Payment to the Agent, the Agent may assume that the Required Payment
has been made and may, in reliance upon such assumption (but shall not be
required to), make the amount thereof available to the intended recipient on
such date and, if the Payor has not in fact made the Required Payment to the
Agent, (a) the recipient of such payment shall, on demand, pay to the Agent the
amount made available to it together with interest thereon in respect of the
period commencing on the date such amount was so made available by the Agent
until the date the Agent recovers such amount at a rate per annum equal to the
Federal Funds Rate for such period and (b) Agent shall be entitled to offset
against any and all sums to be paid to such recipient, the amount calculated in
accordance with the foregoing clause (a).
Section 5.9 Withholding Taxes. All payments by the Borrower of amounts
payable under any Loan Document shall be payable without deduction for or on
account of any present or future taxes, duties or other charges levied or
imposed by the United States of America or by the government of any jurisdiction
outside the United States of America or by any political subdivision or taxing
authority of or in any of the foregoing through withholding or deduction with
respect to any such payments (but excluding any tax imposed on or measured by
the net income or profit of a Bank pursuant to the laws of the jurisdiction in
which it is organized or in which the principal office or Applicable Lending
Office of such Bank is located or any subdivision thereof or therein). If any
such taxes, duties or other charges are so levied or imposed, the Borrower will
make additional payments in such amounts so that every net payment of amounts
payable by it under any Loan Document, after withholding or deduction for or on
account of any such present or future taxes, duties or other charges, will not
be less than the amount provided for herein or therein, provided that the
Borrower may withhold to the extent required by law and shall have no obligation
to pay such additional amounts to any Bank to the extent that such taxes,
duties, or other charges are levied or imposed by reason of the failure or
inability of such Bank to comply with the provisions of Section 5.10. The
Borrower shall furnish promptly to the Agent for distribution to each affected
Bank, as the case may be, official receipts evidencing any such withholding or
reduction.
Section 5.10 Withholding Tax Exemption. Each Bank that is not incorporated
under the laws of the United States of America or a state thereof agrees that it
will deliver to the Borrower and the Agent two duly completed copies of United
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<PAGE>
States Internal Revenue Service Form 1001 or 4224, certifying in either case
that such Bank is entitled to receive payments from the Borrower under any Loan
Document without deduction or withholding of any United States federal income
taxes. Each Bank which so delivers a Form 1001 or 4224 further undertakes to
deliver to Borrower and the Agent two (2) additional copies of such form (or a
successor form) on or before the date such form expires or becomes obsolete or
after the occurrence of any event requiring a change in the most recent form so
delivered by it, and such amendments thereto or extensions or renewals thereof
as may be reasonably requested by the Borrower or the Agent, in each case
certifying that such Bank is entitled to receive payments from the Borrower
under any Loan Document without deduction or withholding of any United States
federal income taxes, unless an event (including without limitation any change
in treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which would prevent such Bank from duly completing and delivering any such
form with respect to it and such Bank advises the Borrower and the Agent that it
is not capable of receiving such payments without any deduction or withholding
of United States federal income tax.
Section 5.11 Participation Obligations Absolute; Failure to Fund
Participation. The obligations of a Bank to fund its participation in the
Swingline Loans and Letters of Credit in accordance with the terms hereof shall
be absolute, unconditional and irrevocable and shall be performed strictly in
accordance with the terms of the Loan Documents under all circumstances
whatsoever, including without limitation, the following circumstances: (a) any
lack of validity of any Loan Document; (b) the occurrence of any Default; (c)
the existence of any claim, set-off, counterclaim, defenses or other rights
which such Bank, the Borrower, any Obligated Party, or any other Person may
have; (d) the occurrence of any event that has or could reasonably be expected
to have a Material Adverse Effect; (e) the failure of any condition to a Loan
under Article 7 to be satisfied; or (f) any other circumstance whatsoever,
whether or not similar to any of the foregoing; provided that, the obligations
of a Bank to fund its participation in a Swingline Loan or a Letter of Credit
may be subject to avoidance by a Bank if such Bank proves in a final
nonappealable judgment that it was damaged and that such damage arose directly
from the Agent's willful misconduct or gross negligence (notwithstanding whether
such misconduct or negligence is proven by the Bank or is proven by the Borrower
pursuant to Section 2.7(f)) in determining whether (i) the conditions set forth
in Article 7 to the issuance of the Letter of Credit in question or the making
of the Swingline Loan in question were satisfied at the time of such issuance or
such Loan or (ii) the documentation presented under the Letter of Credit in
question complied with the terms thereof. If a Bank fails to fund its
participation in a Swingline Loan or a Letter of Credit as required hereby, such
Bank shall, subject to the foregoing proviso, remain obligated to pay to the
Agent the amount it failed to fund on demand together with interest thereon in
respect of the period commencing on the date such amount should have been funded
until the date the amount was actually funded to the Agent at a rate per amount
equal to the Federal Funds Rate for such period and the Agent shall be entitled
to offset against any and all sums to be paid to such Bank hereunder the amount
due the Agent under this sentence.
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<PAGE>
ARTICLE 6
Yield Protection and Illegality
Section 6.1 Additional Costs.
(a) The Borrower shall pay directly to each Bank from time to time such
amounts as such Bank may determine to be necessary to compensate it
for any costs incurred by such Bank which such Bank determines are
attributable to its making or maintaining of any Loans subject to
Libor Accounts or Letters of Credit hereunder or its obligation to
make any of such Loans hereunder or issue or participate in any Letter
of Credit, or any reduction in any amount receivable by such Bank
hereunder in respect of any such Loans or Letters of Credit or such
obligation (such increases in costs and reductions in amounts
receivable being herein called "Additional Costs"), resulting from any
Regulatory Change which:
(i) changes the basis of taxation of any amounts payable to such Bank
under this Agreement or its Notes in respect of any of such Loans
(other than franchise taxes and taxes imposed on the overall net
income of such Bank or its Applicable Lending Office for any of
such Loans by the United States of America or the jurisdiction in
which such Bank has its Principal Office or such Applicable
Lending Office);
(ii) imposes or modifies any reserve, special deposit, minimum
capital, capital ratio or similar requirement relating to any
extensions of credit or other assets of, or any deposits with or
other liabilities or commitments of, such Bank (including any of
such Loans or any deposits referred to in the definition of
"Libor Rate" in Section 1.1 hereof); or
(iii)imposes any other condition affecting this Agreement or the Notes
or any of such extensions of credit or liabilities or
commitments.
Each Bank will notify the Borrower (with a copy to the Agent) of any
event occurring after the date of this Agreement which will entitle
such Bank to compensation pursuant to this subsection 6.1(a) as
promptly as practicable after it obtains knowledge thereof and
determines to request such compensation, and will designate a
different Applicable Lending Office for the Loans affected by such
event if such designation will avoid the need for, or reduce the
amount of, such compensation and will not, in the sole opinion of such
Bank, violate any law, rule, or regulation or be in any way
disadvantageous to such Bank. Each Bank will furnish the Borrower with
a certificate setting forth the basis and the amount of each request
of such Bank for compensation under this subsection 6.1(a). If any
Bank requests compensation from the Borrower under this subsection
6.1(a), the Borrower may, by notice to such Bank (with a copy to the
Agent) suspend the obligation of such Bank to make Loans subject to
Libor Accounts or Continue Libor Accounts as Libor Accounts or Convert
Base Rate Accounts into Libor Accounts until the Regulatory Change
giving rise to such request ceases to
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<PAGE>
be in effect (in which case the provisions of Section 6.4 hereof shall
be applicable with respect to such Libor Accounts). A Bank may only
request compensation under this subsection 6.1(a) for Additional Cost
incurred (i) at any time after the date which is three (3) months
prior to the date the Bank requests such compensation and (ii) at any
time after it has notified the Borrower it will request compensation
under this subsection 6.1(a).
(b) Without limiting the effect of the foregoing provisions of this
Section 6.1, in the event that, by reason of any Regulatory Change,
any Bank either (i) incurs Additional Costs based on or measured by
the excess above a specified level of the amount of a category of
deposits or other liabilities of such Bank which includes deposits by
reference to which the interest rate on the Loans subject to Libor
Accounts is determined as provided in this Agreement or a category of
extensions of credit or other assets of such Bank which includes Loans
subject to Libor Accounts or (ii) becomes subject to restrictions on
the amount of such a category of liabilities or assets which it may
hold, then, if such Bank so elects by notice to the Borrower (with a
copy to the Agent), the obligation of such Bank to make Loans subject
to Libor Accounts or Continue Libor Accounts as Libor Accounts or
Convert Base Rate Accounts into Libor Accounts hereunder shall be
suspended until the Regulatory Change giving rise to such request
ceases to be in effect (in which case the provisions of Section 6.4
hereof shall be applicable).
(c) Determinations and allocations by any Bank for purposes of this
Section 6.1 of the effect of any Regulatory Change on its costs of
maintaining its obligation to make Loans or issue or participate in
Letters of Credit or of making or maintaining Loans or issuing or
participating in Letters of Credit or on amounts receivable by it in
respect of Loans or Letters of Credit, and of the additional amounts
required to compensate such Bank in respect of any Additional Costs,
shall, absent manifest error, be conclusive, provided that such
determinations and allocations are made on a reasonable basis.
Section 6.2 Limitation on Libor Accounts. Anything herein to the contrary
notwithstanding, if with respect to any Libor Accounts under a Loan for any
Interest Period therefor:
(a) The Agent determines (which determination shall be conclusive) that
quotations of interest rates for the relevant deposits referred to in
the definition of "Libor Rate" in Section 1.1 hereof are not being
provided in the relative amounts or for the relative maturities for
purposes of determining the rate of interest for the Loans subject to
such Libor Accounts as provided in this Agreement; or
(b) Required Banks determine (which determination shall be conclusive) and
notify the Agent that the relevant rates of interest referred to in
the definition of "Adjusted Libor Rate" in Section 1.1 hereof on the
basis of which the rate of interest for such Loans for such Interest
Period is to be determined do not accurately reflect the cost to the
Banks of making or maintaining such Loans for such Interest Period;
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<PAGE>
then the Agent shall give the Borrower prompt notice thereof
specifying the relevant Libor Account and the relevant amounts or
periods, and so long as such condition remains in effect, the Banks
shall be under no obligation to make additional Loans subject to a
Libor Account or to Convert Base Rate Accounts into Libor Accounts and
the Borrower shall, on the last day(s) of the then current Interest
Period (s) for the outstanding Libor Accounts, either prepay the Loans
subject to such Libor Accounts or Convert such Libor Accounts into
Base Rate Accounts in accordance with the terms of this Agreement.
Determinations made under this Section 6.2 shall be made on a
reasonable basis.
Section 6.3 Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Bank or its Applicable
Lending Office to (a) honor its obligation to make Loans subject to a Libor
Account hereunder or (b) maintain Loans subject to a Libor Account hereunder,
then such Bank shall promptly notify the Borrower (with a copy to the Agent)
thereof and such Bank's obligation to make or maintain Loans subject to a Libor
Account and to Convert Base Rate Accounts into Libor Accounts hereunder shall be
suspended until such time as such Bank may again make and maintain Loans subject
to a Libor Account (in which case the provisions of Section 6.4 hereof shall be
applicable).
Section 6.4 Treatment of Affected Loans. If the Accounts applicable to a
Loan of any Bank (hereinafter called "Affected Accounts") are to be Converted
pursuant to Section 6.1 or 6.3 hereof, the Bank's Affected Accounts shall be
automatically Converted into Base Rate Accounts on the last day(s) of the then
current Interest Period(s) (or, in the case of a Conversion required by
subsection 6.1(b) or Section 6.3 hereof, on such earlier date as such Bank may
specify to the Borrower with a copy to the Agent) and, unless and until such
Bank gives notice as provided below that the circumstances specified in Section
6.1 or 6.3 hereof which gave rise to such Conversion no longer exist: (a) to the
extent that such Bank's Affected Accounts have been so Converted, all payments
and prepayments of principal which would otherwise be applied to such Bank's
Affected Accounts shall be applied instead to its Base Rate Accounts; and (b)
all Accounts which would otherwise be established or Continued by such Bank as
Libor Accounts shall be made as or Converted into Base Rate Accounts and all
Accounts of such Bank which would otherwise be Converted into Libor Accounts
shall be Converted instead into (or shall remain as) Base Rate Accounts. If such
Bank gives notice to the Borrower (with a copy to the Agent) that the
circumstances specified in Section 6.1 or 6.3 hereof which gave rise to the
Conversion of such Bank's Affected Accounts pursuant to this Section 6.4 no
longer exist (which such Bank agrees to do promptly upon such circumstances
ceasing to exist) at a time when Libor Accounts are outstanding, such Bank's
Base Rate Accounts shall be automatically Converted, on the first day(s) of the
next succeeding Interest Period(s) for such outstanding Libor Accounts to the
extent necessary so that, after giving effect thereto, all Accounts held by the
Banks holding Libor Accounts and by such Bank are held pro rata (as to principal
amounts, Types, and Interest Periods) in accordance with their respective
Commitment Percentages.
Section 6.5 Compensation. The Borrower shall pay to the Agent for the
account of each Bank, upon the request of such Bank, such amount or amounts as
shall be sufficient (in the reasonable opinion of such Bank) to compensate it
for any loss, cost, or expense incurred by it as a result of:
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<PAGE>
(a) Any payment or prepayment of a Loan subject to a Libor Account or
Conversion of a Libor Account for any reason (including, without
limitation, the acceleration of the outstanding Loans pursuant to
subsection 12.2(a)) on a date other than the last day of an Interest
Period for the applicable Libor Account; or
(b) Any failure by the Borrower for any reason (including, without
limitation, the failure of any conditions precedent specified in
Article 7 to be satisfied) to borrow or prepay a Loan subject to a
Libor Account, or Convert a Base Rate Account to a Libor Account on
the date for such borrowing, Conversion, or prepayment specified in
the relevant notice of borrowing, prepayment, or Conversion under this
Agreement.
Without limiting the effect of the preceding sentence, such compensation shall
include an amount equal to the excess, if any, of (i) the amount of interest
which otherwise would have accrued on the principal amount so paid or Converted
or not borrowed for the period from the date of such payment, Conversion, or
failure to borrow to the last day of the Interest Period for such Libor Account
(or, in the case of a failure to borrow, the Interest Period for such Libor
Account which would have commenced on the date specified for such borrowing) at
the applicable rate of interest for such Libor Account provided for herein over
(ii) the interest component of the amount such Bank would have bid in the London
interbank market for Dollar deposits of leading banks and amounts comparable to
such principal amount and with maturities comparable to such period.
Section 6.6 Capital Adequacy. If after the date hereof, any Bank shall have
determined that the adoption or implementation of any applicable law, rule, or
regulation regarding capital adequacy, or any change therein, or any change in
the interpretation or administration thereof by any central bank or other
Governmental Authority charged with the interpretation or administration
thereof, or compliance by such Bank (or its parent) with any guideline, request,
or directive regarding capital adequacy (whether or not having the force of law)
of any central bank or other Governmental Authority has or would have the effect
of reducing the rate of return on such Bank's (or its parent's) capital as a
consequence of its obligations hereunder or the transactions contemplated hereby
to a level below that which such Bank (or its parent) could have achieved but
for such adoption, implementation, change or compliance (taking into
consideration such Bank's policies with respect to capital adequacy) by an
amount deemed by such Bank to be material, then from time to time, within ten
(10) Business Days after demand by such Bank (with a copy to the Agent), the
Borrower shall pay to such Bank such additional amount or amounts as will
compensate such Bank (or its parent) for such reduction. A certificate of such
Bank claiming compensation under this Section and setting forth the additional
amount or amounts to be paid to it hereunder shall be conclusive, provided that
the determination thereof is made on a reasonable basis. In determining such
amount or amounts, such Bank may use any reasonable averaging and attribution
methods. With respect to each demand by a Bank under this Section 6.6, no Bank
shall have the right to demand compensation for amounts attributable to any
reduction in such Bank's rate of return occurring at any time before the date
which is three (3) months prior to the date the Bank gives such demand for
compensation to Borrower.
Section 6.7 Replacement of a Bank. If (i) the obligation of a Bank (other
than the Agent as a Bank) to make or Continue Loans subject to Libor Accounts
has been suspended pursuant to Section 6.1, 6.2 or 6.3 or (ii) a Bank (other
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than the Agent as a Bank) has demanded compensation under Section 6.1 or 6.6,
the Borrower shall have the right to require such Bank to assign to an Eligible
Assignee selected by the Borrower and reasonably satisfactory to the Agent
(which may be one or more of the Banks) the Notes and participation interests in
the Letter of Credit Liabilities and Swingline Loans held by such Bank pursuant
to the terms of an appropriately completed Assignment and Acceptance in
accordance with subsection 14.8(b); provided that, neither the Agent nor any
Bank shall have any obligation to Borrower to find any such Eligible Assignee
and in order for Borrower to replace a Bank, the Borrower must require such
replacement within three (3) months of the date such obligations of the Bank
were suspended or the date the Bank demanded such compensation. Each Bank (other
than the Agent as a Bank) agrees to its replacement at the option of the
Borrower pursuant to this Section 6.7; provided that the Eligible Assignee
selected by Borrower shall purchase such Bank's interest in the Obligations of
the Borrower to such Bank for cash in an aggregate amount equal to the aggregate
unpaid principal thereof, all unpaid interest accrued thereon, all unpaid
commitment and letter of credit fees accrued for the account of such Bank, any
breakage costs incurred by the selling Bank because of the prepayment of any
Libor Accounts, all other fees (if any) applicable thereto and all other amounts
(including any amounts due under Section 6.1 or 6.6) then owing to such Bank
hereunder or under any other Loan Document.
ARTICLE 7
Conditions Precedent
Section 7.1 Initial Loan and Letter of Credit. The obligation of each Bank
to make its initial Loan and the obligation of the Agent to issue the initial
Letter of Credit and make the initial Swingline Loan are subject to the
condition precedent that the Agent shall have received on or before the day of
any such Loan or Letter of Credit all of the following, each dated (unless
otherwise indicated) the date hereof, in form and substance satisfactory to the
Agent:
(a) Resolutions. Resolutions of the Board of Directors of the Borrower and
each Significant Subsidiary certified by its Secretary or an Assistant
Secretary which authorize its execution, delivery, and performance of
the Loan Documents to which it is or is to be a party.
(b) Incumbency Certificate. A certificate of incumbency certified by the
Secretary or an Assistant Secretary of the Borrower and each
Significant Subsidiary certifying the name of each of its officers (i)
who is authorized to sign the Loan Documents to which it is or is to
be a party (including the certificates contemplated herein) together
with specimen signatures of each such officer and (ii) who will, until
replaced by other officers duly authorized for that purpose, act as
its representative for the purposes of signing documentation and
giving notices and other communications in connection with this
Agreement and the transactions contemplated hereby.
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<PAGE>
(c) Articles of Incorporation. The articles of incorporation of the
Borrower and each Significant Subsidiary certified by the Secretary of
State of the state of its incorporation and dated a current date.
(d) Bylaws. The bylaws of the Borrower and each Significant Subsidiary
certified by its Secretary or an Assistant Secretary.
(e) Governmental Certificates. Certificates of the appropriate government
officials of the state of incorporation of the Borrower and each
Subsidiary as to its existence and good standing and certificates of
the appropriate government officials of each state in which the
Borrower and each Significant Subsidiary is required to qualify to do
business and where failure to so qualify could reasonably be expected
to have a Material Adverse Effect, as to the Borrower's and each such
Subsidiary's qualification to do business and good standing in such
state, all dated a current date.
(f) Notes. The Notes executed by the Borrower.
(g) Guaranties. A Guaranty for each Significant Subsidiary, each duly
executed.
(h) Collateral Documents and Collateral. The Borrower Pledge Agreement
executed by the Borrower; certificates representing the capital stock
of the Subsidiaries pledged pursuant to the Borrower Pledge Agreement
together with undated stock powers duly executed in blank; UCC, tax
and judgment Lien search reports listing all documentation on file
against Borrower in the office of the Secretary of State of Texas and
executed documentation as Agent may deem necessary to perfect or
protect its Liens, including, without limitation, financing statements
under the UCC.
(i) Termination of Liens. Duly executed UCC-3 termination statements and
such other documentation as shall be necessary to terminate or release
all Liens other than those permitted by Section 10.2.
(j) Previous Senior Debt. Such documentation as the Agent may require to
evidence that the Previous Senior Debt will be repaid in full on the
Closing Date after giving effect to the initial Loans made hereunder.
(k) Opinion of Counsel. A favorable opinion of legal counsel to the
Borrower and the Guarantors, as to such matters as the Agent or the
Required Banks may reasonably request.
(l) Bank Fees. The underwriting and administrative fees Borrower has
agreed to pay to BankBoston, N.A. under the terms of that certain
commitment letter dated May 15, 1997 among Borrower, BankBoston, N.A.
and BancBoston Securities, Inc.
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(m) Subordinated Notes. An acknowledgment executed by the trustee under
the Indenture confirming that this Agreement is the "Credit Agreement"
under the Indenture and containing all the provisions that are
contained in the acknowledgment executed by such trustee in connection
with the Previous Senior Debt.
(n) Attorneys' Fees and Expenses. Evidence that the costs and expenses
(including attorneys' fees) referred to in Section 14.1, to the extent
incurred, shall have been paid in full by the Borrower.
The obligation of each Bank to make its initial Loan or purchase its initial
participation in any Letter of Credit or Swingline Loan is also subject to the
condition precedent that such Bank shall have received the portion of the fees
that BankBoston, N.A. has agreed to pay to such Bank.
Section 7.2 All Loans and Letters of Credit. The obligation of each Bank to
make any Loan (including the initial Loan) and the obligation of the Agent to
issue any Letter of Credit (including the initial Letter of Credit) or make any
Swingline Loan are subject to the following additional conditions precedent:
(a) No Default. No Default shall have occurred and be continuing, or would
result from such Loan or Letter of Credit;
(b) Representations and Warranties. All of the representations and
warranties contained in Article 8 hereof and in the other Loan
Documents shall be true and correct in all material respects on and as
of the date of such Loan or Letter of Credit with the same force and
effect as if such representations and warranties had been made on and
as of such date except to the extent that such representations and
warranties relate specifically to another date; and
(c) Additional Documentation. The Agent shall have received such
additional approvals, opinions, or documents as the Agent may
reasonably request.
Each notice of borrowing by the Borrower hereunder, and each request for the
issuance of a Letter of Credit, shall constitute a representation and warranty
by the Borrower that the conditions precedent set forth in subsections 7.2 (a)
and (b) have been satisfied (both as of the date of such notice and, unless the
Borrower otherwise notifies the Agent prior to the date of such borrowing or
Letter of Credit, as of the date of such borrowing or Letter of Credit).
ARTICLE 8
Representations and Warranties
To induce the Agent and the Banks to enter into this Agreement, the
Borrower represents and warrants to the Agent and the Banks that:
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Section 8.1 Corporate Existence. The Borrower and each Subsidiary (a) is a
corporation or other entity (as reflected on Schedule 8.14) duly organized,
validly existing, and, except for The Standard Tallow Corporation, in good
standing under the laws of the jurisdiction of its incorporation or
organization; (b) has all requisite power and authority to own its assets and
carry on its business as now being or as proposed to be conducted; and (c) is
qualified to do business in all jurisdictions in which the nature of its
business makes such qualification necessary and where failure to so qualify
would have a Material Adverse Effect. Borrower and each Obligated Party has the
corporate power and authority to execute, deliver, and perform their respective
obligations under the Loan Documents to which it is or may become a party.
Section 8.2 Financial Statements. The Borrower has delivered to the Agent
and the Banks audited consolidated financial statements of the Borrower and the
Subsidiaries as at and for the Fiscal Year ended on or about December 28, 1996
and unaudited consolidated financial statements of the Borrower and the
Subsidiaries for the Fiscal Quarter ended March 29, 1997. Such financial
statements, have been prepared in accordance with GAAP, and present fairly, on a
consolidated basis, the financial condition of the Borrower and the Subsidiaries
as of the respective dates indicated therein and the results of operations for
the respective periods indicated therein. Neither the Borrower nor any of the
Subsidiaries has any material contingent liabilities, liabilities for taxes,
unusual forward or long-term commitments, or unrealized or anticipated losses
from any unfavorable commitments except as referred to or reflected in such
financial statements. There has been no material adverse change in the business,
condition (financial or otherwise), operations, prospects, or properties of the
Borrower and the Subsidiaries taken as a whole since the effective date of the
most recent financial statements referred to in this Section.
Section 8.3 Corporate Action; No Breach. The execution, delivery, and
performance by the Borrower and each Obligated Party of the Loan Documents to
which each is or may become a party and compliance with the terms and provisions
hereof and thereof have been duly authorized by all requisite action on the part
of the Borrower and each Obligated Party and do not and will not (a) violate or
conflict with, or result in a breach of, or require any consent under (i) the
articles of incorporation or bylaws of the Borrower or any of the Subsidiaries,
(ii) any applicable law, rule, or regulation or any order, writ, injunction, or
decree of any Governmental Authority or arbitrator other than such violations,
conflicts and breaches which do not have a Material Adverse Effect, or (iii) any
agreement or instrument to which the Borrower or any of the Subsidiaries is a
party or by which any of them or any of their property is bound or subject other
than such violations, conflicts and breaches which do not have a Material
Adverse Effect, or (b) constitute a default under any such agreement or
instrument, or result in the creation or imposition of any Lien (except as
provided herein) upon any of the revenues or assets of the Borrower or any
Subsidiary other than such defaults which do not have a Material Adverse Effect.
Section 8.4 Operation of Business. The Borrower and each of the
Subsidiaries possess all licenses, permits, franchises, patents, copyrights,
trademarks, and tradenames, or rights thereto, necessary to conduct their
respective businesses substantially as now conducted and as presently proposed
to be conducted except those that the failure to so possess could not reasonably
be expected to have a Material Adverse Effect, and the Borrower and each of its
Subsidiaries are
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not in violation of any valid rights of others with respect to any of the
foregoing except violations that could not reasonably be expected to have a
Material Adverse Effect.
Section 8.5 Litigation and Judgments. Except as disclosed in the Borrower's
Form 10-Q for the Fiscal Quarter ended March 29, 1997, there is no action, suit,
investigation, or proceeding before or by any Governmental Authority or
arbitrator pending, or to the knowledge of the Borrower, threatened against or
affecting the Borrower or any Subsidiary, that is reasonably expected to have a
Material Adverse Effect. As of the Closing Date, there are no outstanding
judgments against the Borrower or any Subsidiary.
Section 8.6 Rights in Properties; Liens; Nonproductive Assets. The Borrower
and each Subsidiary have good title to or valid leasehold interests in their
respective properties and assets, real and personal, including the properties,
assets, and leasehold interests reflected in the financial statements described
in Section 8.2 (except as sold or otherwise disposed of since the date of such
financial statements in the ordinary course of business or as otherwise
permitted by this Agreement or the credit agreement governing the Previous
Senior Debt), and none of the properties, assets, or leasehold interests of the
Borrower or any Subsidiary is subject to any Lien, except as permitted by
Section 10.2. Borrower reasonably believes that as of the Closing Date, the
aggregate estimated fair market value of the properties listed on Schedule 10.8
does not exceed Two Million Dollars ($2,000,000) and such properties are not
utilized by the Borrower or any Subsidiary in the normal course of business and
do not contribute to the cash flow or earnings of the Borrower or any
Subsidiary.
Section 8.7 Enforceability. The Loan Documents to which the Borrower or any
Obligated Party is party, when delivered, shall constitute the legal, valid, and
binding obligations of the Borrower or the Obligated Party, as applicable,
enforceable against Borrower or the applicable Obligated Party in accordance
with their respective terms, except as limited by bankruptcy, insolvency, or
other laws of general application relating to the enforcement of creditors'
rights and general principles of equity.
Section 8.8 Approvals. No authorization, approval, or consent of, and no
filing or registration with, any Governmental Authority or third party is or
will be necessary for the execution, delivery, or performance by the Borrower or
any Obligated Party of the Loan Documents to which each is or may become a party
or for the validity or enforceability thereof except for such authorizations,
approvals, consents, filings and registrations the failure to obtain or make
will not have a Material Adverse Effect.
Section 8.9 Debt. The Borrower and the Subsidiaries have no Debt, except as
permitted by Section 10.1.
Section 8.10 Taxes. The Borrower and each Subsidiary have filed all
material tax returns (federal, state, and local) required to be filed, including
all income, franchise, employment, property, and sales tax returns, and have
paid all of their respective liabilities for taxes, assessments, governmental
charges, and other levies that are due and payable other than those being
contested in good faith by appropriate proceedings diligently pursued for which
adequate reserves have been established. The Borrower knows of no pending
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FINS2DAL:45483.8 05009-00034
investigation of the Borrower or any Subsidiary by any taxing authority or of
any pending but unassessed tax liability of the Borrower or any Subsidiary.
Section 8.11 Margin Securities. Neither the Borrower nor any Subsidiary is
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulations G, T, U, or X of the Board of Governors of the
Federal Reserve System), and no part of the proceeds of any Loan will be used to
purchase or carry any margin stock or to extend credit to others for the purpose
of purchasing or carrying margin stock.
Section 8.12 ERISA. The Borrower and each Subsidiary are in compliance with
all applicable provisions of ERISA except for such events of noncompliance that
will not have a Material Adverse Effect. Neither a Reportable Event nor a
Prohibited Transaction has occurred and is continuing with respect to any Plan.
No notice of intent to terminate a Plan has been filed, nor has any Plan been
terminated. No circumstances exist which constitute grounds entitling the PBGC
to institute proceedings to terminate, or appoint a trustee to administer, a
Plan, nor has the PBGC instituted any such proceedings. Neither the Borrower nor
any ERISA Affiliate has completely or partially withdrawn from a Multiemployer
Plan. The Borrower and each ERISA Affiliate have met their minimum funding
requirements under ERISA with respect to all of their Plans except for those
instances of noncompliance with such requirements that will not have a Material
Adverse Effect. The present value of all vested benefits under each Plan do not
exceed the fair market value of all Plan assets allocable to such benefits, as
determined on the most recent valuation date of the Plan and in accordance with
ERISA, by an amount that will have a Material Adverse Effect. Neither the
Borrower nor any ERISA Affiliate has incurred any liability to the PBGC under
ERISA in an amount that will have a Material Adverse Effect.
Section 8.13 Disclosure. All factual information (taken as a whole)
furnished by or on behalf of the Borrower in writing to the Agent or any Bank
(including, without limitation, all information contained in the Loan Documents)
for purposes of or in connection with this Agreement, the other Loan Documents
or any transaction contemplated herein or therein is, and all other such factual
information (taken as a whole) hereafter furnished by or on behalf of the
Borrower to the Agent or any Bank, will be true and accurate in all material
respects on the date as of which such information is dated or certified and not
incomplete by omitting to state any fact necessary to make such information
(taken as a whole) not misleading in any material respect at such time in light
of the circumstances under which such information was provided.
Section 8.14 Subsidiaries. As of the Closing Date and as of any date
Schedule 8.14 is amended pursuant to Section 9.10, the Borrower has no
Subsidiaries other than those listed on Schedule 8.14 hereto. Schedule 8.14 sets
forth the type of each Subsidiary listed thereon, the jurisdiction of
incorporation or organization of each such Subsidiary, the percentage of the
Borrower's ownership of the outstanding voting stock (or other ownership
interests) of each such Subsidiary, whether the Subsidiary is a Significant
Subsidiary, and with respect to each such Subsidiary that is a corporation, the
authorized, issued and outstanding capital stock of each such Subsidiary. All of
the outstanding capital stock of each Subsidiary listed on Schedule 8.14 has
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been validly issued, is fully paid, and is nonassessable. There are no
outstanding subscriptions, options, warrants, calls, or rights (including
preemptive rights) to acquire, and no outstanding securities or instruments
convertible into, capital stock of any Subsidiary listed on Schedule 8.14.
Section 8.15 Agreements. Neither the Borrower nor any Subsidiary is a party
to any indenture, loan, or credit agreement, or to any lease or other agreement
or instrument, or subject to any charter or corporate restriction that could
reasonably be expected to have a Material Adverse Effect. Neither the Borrower
nor any Subsidiary is in default in any respect in the performance, observance,
or fulfillment of any of the obligations, covenants, or conditions contained in
any agreement or instrument to which it is a party other than defaults which
will not have a Material Adverse Effect.
Section 8.16 Compliance with Laws. Neither the Borrower nor any Subsidiary
is in violation of any law, rule, regulation, order, or decree of any
Governmental Authority or arbitrator other than defaults which will not have a
Material Adverse Effect.
Section 8.17 Investment Company Act. Neither the Borrower nor any
Subsidiary is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
Section 8.18 Public Utility Holding Company Act. Neither the Borrower nor
any Subsidiary is a "holding company" or a "subsidiary company" of a "holding
company" or an "affiliate" of a "holding company" or a "public utility" within
the meaning of the Public Utility Holding Company Act of 1935, as amended.
Section 8.19 Environmental Matters. Except as disclosed in the Borrower's
Form 10-Q for the Fiscal Quarter ended March 29, 1997 and except for those
matters which will not have a Material Adverse Effect:
(a) The Borrower, each Subsidiary, and all of their respective properties,
assets, and operations are in full compliance with all Environmental
Laws. The Borrower is not aware of, nor has the Borrower received
notice of, any past, present, or future conditions, events,
activities, practices, or incidents which may interfere with or
prevent the compliance or continued compliance of the Borrower and the
Subsidiaries with all Environmental Laws;
(b) The Borrower and each Subsidiary have obtained all permits, licenses,
and authorizations that are required under applicable Environmental
Laws, and all such permits are in good standing and the Borrower and
its Subsidiaries are in compliance with all of the terms and
conditions of such permits;
(c) No Hazardous Materials exist on, about, or within or have been used,
generated, stored, transported, disposed of on, or Released from any
of the properties or assets of the Borrower or any Subsidiary except
in compliance with Environmental Laws. The use which the Borrower and
the Subsidiaries make and intend to make of their respective
properties and assets will not result in the use, generation, storage,
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<PAGE>
transportation, accumulation, disposal, or Release of any Hazardous
Material on, in, or from any of their properties or assets except in
compliance with Environmental Laws;
(d) Neither the Borrower nor any of the Subsidiaries nor any of their
respective currently or previously owned or leased properties or
operations is subject to any outstanding or, to the best of its
knowledge, threatened order from or agreement with any Governmental
Authority or other Person or subject to any judicial or administrative
proceeding with respect to (i) failure to comply with Environmental
Laws, (ii) Remedial Action, or (iii) any Environmental Liabilities
arising from a Release or threatened Release;
(e) There are no conditions or circumstances associated with the currently
or previously owned or leased properties or operations of the Borrower
or any of the Subsidiaries that could reasonably be expected to give
rise to any Environmental Liabilities;
(f) Neither the Borrower nor any of the Subsidiaries is a treatment,
storage, or disposal facility requiring a permit under the Resource
Conservation and Recovery Act, 42 U.S.C. S 6901 et seq., regulations
thereunder or any comparable provision of state law. The Borrower and
the Subsidiaries are compliance with all applicable financial
responsibility requirements of all Environmental Laws;
(g) Neither the Borrower nor any of the Subsidiaries has filed or failed
to file any notice required under applicable Environmental Law
reporting a Release; and
(h) No Lien arising under any Environmental Law has attached to any
property or revenues of the Borrower or the Subsidiaries.
Section 8.20 Indenture. Until the Indenture has been satisfied and
discharged, all the Obligations constitute "Permitted Indebtedness" and "Senior
Debt" under the terms of the Indenture.
ARTICLE 9
Positive Covenants
The Borrower covenants and agrees that, as long as the Obligations or any
part thereof are outstanding or any Bank has any Commitment hereunder, the
Borrower will perform and observe the following positive covenants:
Section 9.1 Reporting Requirements. The Borrower will furnish to the Agent
and each Bank:
(a) Annual Financial Statements. As soon as available, and in any event
within one hundred fifteen (115) days after the end of each Fiscal
Year of the Borrower, beginning with the Fiscal Year ending on the
Saturday closest to December 31, 1997, (i) a copy of the annual audit
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<PAGE>
report of the Borrower and the Subsidiaries for such Fiscal Year
containing, on a consolidated basis, balance sheets and statements of
income, retained earnings, and cash flow as at the end of such Fiscal
Year and for the Fiscal Year then ended, in each case setting forth in
comparative form the figures for the preceding Fiscal Year, all in
reasonable detail and audited and certified by independent certified
public accountants of recognized standing acceptable to the Agent, to
the effect that such report has been prepared in accordance with GAAP;
(b) Monthly Financial Statements. As soon as available, and in any event
within forty-five (45) days after the end of each four (4) week period
during its Fiscal Year (or with respect to the last such period in
each such Fiscal Year, within ninety (90) days after the end of such
four (4) or, as the case may be, five (5) week period), a copy of an
unaudited financial report of the Borrower and the Subsidiaries as of
the end of such period and for the portion of the Fiscal Year then
ended containing, on a consolidated basis, balance sheets and
statements of income, retained earnings, and cash flow, in each case
setting forth in comparative form the figures for the corresponding
period of the preceding Fiscal Year, all in reasonable detail
certified by the chief financial officer or treasurer of the Borrower
to have been prepared in accordance with GAAP and to fairly present
(subject to year-end audit adjustments) the financial condition and
results of operations of the Borrower and the Subsidiaries, on a
consolidated basis, at the date and for the periods indicated therein;
(c) Compliance Certificate. Within sixty (60) days after the end of each
Fiscal Quarter of each Fiscal Year, or with respect to the last Fiscal
Quarter of each Fiscal Year, within ninety (90) days of the end of
such Fiscal Quarter, a Compliance Certificate;
(d) Projections. As soon as available and in any event forty-five (45)
days after the beginning of each Fiscal Year of Borrower, Borrower
will deliver a forecasted consolidated balance sheet and statements of
income and cash flow of Borrower and the Subsidiaries on a Fiscal
Quarter by Fiscal Quarter basis, including the assumptions utilized in
the preparation of such projections (in narrative form) for the
forthcoming Fiscal Year and a proforma projection of the Borrower's
compliance with the financial covenants in this Agreement for the same
period;
(e) Management Letters. Promptly upon receipt thereof, a copy of any
management letter or written report submitted to the Borrower or any
Subsidiary by independent certified public accountants with respect to
the business, condition (financial or otherwise), operations,
prospects, or properties of the Borrower or any Subsidiary;
(f) Notice of Litigation. Promptly after the commencement thereof, notice
of all actions, suits, investigations (with respect to investigations
only, of which the Borrower has actual knowledge) and proceedings
before any Governmental Authority or arbitrator affecting the Borrower
or any Subsidiary which could reasonably be expected to have a
Material Adverse Effect;
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<PAGE>
(g) Notice of Default. As soon as possible and in any event within five
(5) Business Days after an officer of the Borrower has knowledge of
the occurrence of each Default, a written notice setting forth the
details of such Default and the action that the Borrower has taken and
proposes to take with respect thereto;
(h) ERISA Reports. If requested by the Agent, promptly after the filing or
receipt thereof, copies of all reports, including annual reports, and
notices which the Borrower or any Subsidiary files with or receives
from the PBGC or the U.S. Department of Labor under ERISA; and as soon
as possible and in any event within five (5) Business Days after the
Borrower or any Subsidiary knows or has reason to know that any
Reportable Event or Prohibited Transaction has occurred with respect
to any Plan or that the PBGC or the Borrower or any Subsidiary has
instituted or will institute proceedings under Title IV of ERISA to
terminate any Plan, a certificate of the chief financial officer of
the Borrower setting forth the details as to such Reportable Event or
Prohibited Transaction or Plan termination and the action that the
Borrower proposes to take with respect thereto;
(i) Notice of Material Adverse Effect. As soon as possible and in any
event within five (5) Business Days after an officer of the Borrower
has knowledge of the occurrence thereof, written notice of any matter
that could reasonably be expected to have a Material Adverse Effect;
(j) Proxy Statements, Etc. As soon as available, one copy of each
financial statement, report, notice or proxy statement sent by the
Borrower or any Subsidiary to its stockholders generally and one copy
of each regular, periodic or special report, registration statement,
or prospectus filed by the Borrower or any Subsidiary with any
securities exchange or the Securities and Exchange Commission or any
successor agency; and
(k) General Information. Promptly, such other information concerning the
Borrower or any Subsidiary as the Agent or any Bank may from time to
time reasonably request.
Section 9.2 Maintenance of Existence; Conduct of Business. Except as
permitted by Section 10.3, the Borrower will, and will cause each Subsidiary to,
preserve and maintain its corporate existence and all of its leases, privileges,
licenses, permits, franchises, qualifications, and rights that are necessary or
desirable in the ordinary conduct of its business. The Borrower will, and will
cause each Subsidiary to, conduct its business in an orderly and efficient
manner in accordance with good business practices.
Section 9.3 Maintenance of Properties. The Borrower will, and will cause
each Subsidiary to, maintain, keep, and preserve all of its material properties
necessary in the conduct of its business in good working order and condition
(exclusive of ordinary wear and tear).
Section 9.4 Taxes and Claims. The Borrower will, and will cause each
Subsidiary to, pay or discharge at or before maturity or before becoming
delinquent (a) all taxes, levies,
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<PAGE>
assessments, and governmental charges imposed on it or its income or profits or
any of its property, and (b) all lawful claims for labor, material, and
supplies, which, if unpaid, might become a Lien upon any of its property;
provided, however, that neither the Borrower nor any Subsidiary shall be
required to pay or discharge any tax, levy, assessment, or governmental charge
which is being contested in good faith by appropriate proceedings diligently
pursued, and for which adequate reserves have been established.
Section 9.5 Insurance. The Borrower will, and will cause each Subsidiary
to, maintain insurance with financially sound and reputable insurance companies
in such amounts and covering such risks as are usually carried by corporations
engaged in similar businesses and owning similar properties in the same general
areas in which the Borrower and the Subsidiaries operate, provided that in any
event the Borrower will maintain and cause each Subsidiary to maintain workmen's
compensation insurance, property insurance, comprehensive general liability
insurance and products liability insurance reasonably satisfactory to the Agent.
Section 9.6 Inspection Rights. At any reasonable time and from time to time
prior to a Default upon one (1) Business Day's prior notice and at any
reasonable time after the occurrence and during the continuance of a Default,
the Borrower will, and will cause each Subsidiary to, permit representatives of
the Agent and each Bank to examine, copy, and make extracts from its books and
records, to visit and inspect its properties, and to discuss its business,
operations, and financial condition with its officers, employees, and
independent certified public accountants.
Section 9.7 Keeping Books and Records. The Borrower will, and will cause
each Subsidiary to, maintain proper books of record and account in which full,
true, and correct entries in conformity with GAAP shall be made of all dealings
and transactions in relation to its business and activities.
Section 9.8 Compliance with Laws. The Borrower will, and will cause each
Subsidiary to, comply with all applicable laws (including, without limitation,
all Environmental Laws), rules, regulations, orders, and decrees of any
Governmental Authority or arbitrator other than such noncompliance which will
not have a Material Adverse Effect.
Section 9.9 Compliance with Agreements. The Borrower will, and will cause
each Subsidiary to, comply with all agreements, contracts, and instruments
binding on it or affecting its properties or business other than such
noncompliance which will not have a Material Adverse Effect.
Section 9.10 Further Assurances; Significant Subsidiary Guaranty. The
Borrower will, and will cause each Subsidiary to, execute and deliver such
further documentation and take such further action as may be requested by the
Agent to carry out the provisions and purposes of the Loan Documents and to
create, preserve, and perfect the Liens of the Agent for the benefit of itself
and the Banks in the Collateral. Without limiting the foregoing, upon the
creation or acquisition of any Significant Subsidiary or if any Insignificant
Subsidiary's (or the aggregate amount of the Insignificant Subsidiaries') net
worth or total assets increases so that it and/or any other such Subsidiary
becomes a Significant Subsidiary, the Borrower shall cause each such
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<PAGE>
Significant Subsidiary to execute and deliver a Guaranty and such other
documentation as the Agent may request to cause such Significant Subsidiary to
evidence, perfect or otherwise implement the guaranty of the Obligations
contemplated by a Guaranty. No Subsidiary organized in a jurisdiction outside
the United States of America shall be required to execute a Guaranty. If any
Subsidiary is created or acquired after the Closing Date, (a) the Borrower shall
execute and deliver to the Agent an amendment to Schedule 8.14 to this Agreement
(which only needs the signature of the Agent to be effective if the only change
is the addition of the new Subsidiary), (b) the Borrowers shall execute and
deliver to the Agent an amendment to the Borrower Pledge Agreement pledging as
collateral thereunder the stock of or other ownership interests in the new
Subsidiary if the Subsidiary is directly owned by Borrower and (c) the Borrower
shall deliver the certificates representing such stock or other interests to the
Agent together with undated stock or other powers duly executed in blank;
provided that, if the new Subsidiary is not directly owned by the Borrower, the
Borrower shall cause the Subsidiary who owns the new Subsidiary directly to
pledge the stock of or other ownership interest in such new Subsidiary to the
Agent pursuant to a pledge agreement in similar form to the Borrower Pledge
Agreement and to deliver the certificates representing such stock or other
ownership interests to the Agent together with undated stock or other powers
duly executed in blank; provided that, neither Borrower nor any Subsidiary shall
be required to pledge more than sixty-six percent (66%) of the stock or other
ownership interests in any Subsidiary organized in a jurisdiction outside of the
United States of America.
Section 9.11 ERISA. The Borrower will, and will cause each Subsidiary to,
comply with all minimum funding requirements and all other requirements of
ERISA, if applicable, so as not to give rise to any liability which will have a
Material Adverse Effect.
Section 9.12 Packers and Stockyards Act Compliance. If the Borrower or any
Subsidiary purchases livestock by purchase or cash sales, the Borrower shall at
its own expense take such steps to insure that any trust established under the
Packers and Stockyards Act, 1921, as amended (7 U.S.C. S 181 et seq.) shall not
arise for the benefit of all unpaid cash sellers on such livestock or on the
inventory derived therefrom.
Section 9.13 Interest Rate Agreement. Within ninety (90) days after the
Closing Date, Borrower shall enter into, and thereafter shall maintain, one or
more interest rate swap agreements, interest rate cap agreements, interest rate
collar agreements or other similar agreements or arrangements designed to
protect Borrower against fluctuations in interest rates with counterparties
acceptable to Agent providing for interest rate protection for an aggregate
notional amount of Seventy Million Dollars ($70,000,000) on terms and conditions
satisfactory to the Agent.
Section 9.14 Redemption of the Subordinated Notes. On the Closing Date
Borrower agrees to (a) send the notice under Section 3.01(b) of the Indenture of
its election to redeem all of the Subordinated Notes on an Optional Redemption
Date (as defined in the Indenture) not later than July 15, 1997 and (b) cause
the trustee under the Indenture to send the "Optional Redemption Notice"
required by Section 3.01(d) of the Indenture. Borrower otherwise agrees to
redeem all Subordinated Notes in full and otherwise satisfy all obligations
arising under the Indenture (other than those surviving obligations specified
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<PAGE>
in Article 8 of the Indenture) on or before July 15, 1997.
ARTICLE 10
Negative Covenants
The Borrower covenants and agrees that, as long as the Obligations or any
part thereof are outstanding or any Bank has any Commitment hereunder, the
Borrower will perform and observe the following negative covenants:
Section 10.1 Debt. The Borrower will not, and will not permit any
Subsidiary to, incur, create, assume, or permit to exist any Debt, except:
(a) Debt to the Banks pursuant to the Loan Documents;
(b) Debt described on Schedule 10.1 hereto (but excluding the Previous
Senior Debt after the Closing Date and the Subordinated Debt after
July 15, 1997), and any extensions, renewals or refinancings thereof
so long as (i) the principal amount of such Debt and the interest rate
charged thereon after such renewal, extension or refinancing shall not
exceed the principal amount of such Debt which was outstanding and the
interest rate which was in effect immediately prior to such renewal,
extension or refinancing and (ii) such Debt shall not be secured by
any assets other than assets securing such Debt, if any, prior to such
renewal, extension or refinancing;
(c) Intercompany Debt among Borrower and the Subsidiaries; provided that
(i) the obligations of each obligor of such Debt shall be subordinated
in right of payment to the Obligations from and after such time as any
portion of the Obligations shall become due and payable (whether at
stated maturity, by acceleration or otherwise) and shall have such
other terms and provisions as Agent may reasonably require; (ii) the
aggregate amount of such Debt outstanding at any time which is owed by
the Insignificant Subsidiaries to Borrower shall not exceed One
Million Dollars ($1,000,000); and (iii) the aggregate amount of such
Debt outstanding at any time which is owed by Subsidiaries organized
in a jurisdiction outside the United States of America shall not
exceed the sum of (A) Three Million Dollars ($3,000,000) minus (B) the
aggregate Purchase Price paid for the equity interests issued by or
assets of all Foreign Targets as of the date of determination;
(d) Debt (including Capital Lease Obligations) not to exceed Five Million
Dollars ($5,000,000) in the aggregate at any time outstanding secured
by purchase money Liens permitted by Section 10.2 and is, as long as
the Indenture has not been satisfied and discharged, permitted by the
Indenture;
(e) Guaranties incurred in the ordinary course of business with respect to
surety and appeal bonds, performance and return-of-money bonds and
other similar obligations not exceeding at any time outstanding One
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<PAGE>
Million Dollars ($1,000,000) in aggregate liability;
(f) unsecured Debt incurred in connection with Permitted Acquisitions and
in accordance with clause (x) of subsection 10.3(b);
(g) Debt arising in connection with non-compete, consulting or other
similar agreements; provided that the non-interest portion of the
total cash payments due in any Fiscal Year under all such agreements
to which the Borrower or any Subsidiary is a party shall not exceed
Five Million Dollars ($5,000,000) in the aggregate; and provided
further that, as long as the Indenture has not been satisfied and
discharged, any such Debt is permitted by the Indenture;
(h) Guarantees incurred in the ordinary course of business of Debt of
Persons who supply Borrower or a Subsidiary with raw materials
utilized in Borrower's or a Subsidiary's business (a "Raw Material
Supplier"); provided that (i) the Debt of the Raw Material Supplier is
incurred to enable such Person to provide raw materials to Borrower or
a Subsidiary and (ii) the aggregate amount of the Debt of Raw Material
Suppliers at any time outstanding which is Guaranteed by Borrower and
the Subsidiaries shall not exceed the sum of (A) Two Million Dollars
($2,000,000) minus (B) the aggregate amount of the advances made to
Raw Material Suppliers as prepayments on raw material purchases by
Borrower and the Subsidiaries pursuant to the permissions of
subsection 10.5(i); and
(i) Debt in addition to that specifically described in clauses (a) through
(h) of this Section 10.1 which in the aggregate does not exceed Two
Million Dollars ($2,000,000) at any time outstanding and is, as long
as the Indenture has not been satisfied and discharged, permitted by
the Indenture.
Section 10.2 Limitation on Liens and Restrictions on Subsidiaries. The
Borrower will not, and will not permit any Subsidiary to, incur, create, assume,
or permit to exist any Lien upon any of its property, assets, or revenues,
whether now owned or hereafter acquired, except the following, none of which
shall encumber the Collateral other than those Liens described in clauses (b)
and (h):
(a) Liens disclosed on Schedule 10.2 hereto but excluding Liens (except
UCC financing statements for which terminations have been signed but
not filed) securing the Previous Senior Debt after the Closing Date;
(b) Liens in favor of the Agent for the benefit of itself and the Banks
pursuant to the Loan Documents;
(c) Encumbrances consisting of minor easements, zoning restrictions, or
other restrictions on the use of real property that do not
(individually or in the aggregate) materially affect the value of the
assets encumbered thereby or materially impair the ability of the
Borrower or the Subsidiaries to use such assets in their respective
businesses, and none of which is violated in any material respect by
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existing or proposed structures or land use;
(d) Liens (other than Liens relating to Environmental Liabilities or
ERISA) for taxes, assessments, or other governmental charges that are
not delinquent or which are being contested in good faith and for
which adequate reserves have been established;
(e) Liens of mechanics, materialmen, warehousemen, carriers, landlords or
other similar statutory Liens securing obligations that are not yet
due and are incurred in the ordinary course of business;
(f) Liens resulting from good faith deposits to secure payments of
workmen's compensation or other social security programs or to secure
the performance of tenders, statutory obligations, surety and appeal
bonds, bids or contracts (other than for payment of Debt);
(g) Liens for purchase money obligations which do not encumber the
Collateral; provided that: (i) the purchase of the asset subject to
any such Lien is permitted under Section 11.4; (ii) the Debt secured
by any such Lien is permitted under Section 10.1; and (iii) any such
Lien encumbers only the asset so purchased;
(h) Any attachment or judgment Lien not constituting an Event of Default;
and
(i) Liens arising from filing UCC financing statements regarding leases
not prohibited by this Agreement.
Neither Borrower nor any Subsidiary shall enter into or assume any agreement
(other than the Loan Documents and, subject to Section 10.11, the Indenture)
prohibiting the creation or assumption of any Lien upon its properties or
assets, whether now owned or hereafter acquired; provided that, in connection
with the creation of purchase money Liens, the Borrower or the Subsidiary may
agree that it will not permit any other Liens to encumber the asset subject to
such purchase money Lien. Except as provided herein, Borrower will not and will
not permit any Subsidiaries directly or indirectly to create or otherwise cause
or suffer to exist or become effective any consensual encumbrance or restriction
of any kind on the ability of any Subsidiary to: (1) pay dividends or make any
other distribution on any of such Subsidiary's capital stock owned by Borrower
or any Subsidiary of Borrower; (2) subject to subordination provisions pay any
Debt owed to Borrower or any other Subsidiary; (3) make loans or advances to
Borrower or any other Subsidiary; or (4) transfer any of its property or assets
to Borrower or any other Subsidiary.
Section 10.3 Mergers, Etc. The Borrower will not, and will not permit any
Subsidiary to, become a party to a merger or consolidation, or purchase or
otherwise acquire all or a substantial part of the business or assets of any
Person or of a division or branch of any Person or any shares or other equity
interest issued by any Person (whether or not certificated), or wind-up,
dissolve, or liquidate itself; provided that, (i) a Subsidiary may wind-up,
dissolve or liquidate if no Default exists or would result therefrom and its
CREDIT AGREEMENT - PAGE 47
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<PAGE>
assets are transferred to Borrower or a Significant Subsidiary; (ii) any
Subsidiary may merge with and into Borrower if Borrower is the surviving entity
and no Default exists or would result therefrom; (iii) any Subsidiary may merge
with and into any other Subsidiary that is organized under the laws of the
United States of America if the Subsidiary organized under the laws of the
United States of America is the surviving entity, no Default exists or would
result therefrom and, to the extent applicable, Section 9.10 is complied with;
(iv) any Subsidiary organized under the laws of a jurisdiction outside the
United States of America may merge with any other Subsidiary organized under the
laws of a jurisdiction outside of the United States of America, if no Default
exists or would result therefrom; and (v) Borrower or a Significant Subsidiary
may acquire 100% of the equity interests issued by a Person and Borrower or a
Subsidiary may acquire all or substantially all of a Person's assets, the assets
of a division or branch of such Person or such Person's or its branch's or
division's right to obtain from third parties the raw materials utilized in the
Borrower's or a Subsidiary's business if the Borrower or such Subsidiary
complies with the following conditions on or prior to the date of the
consummation of such acquisition:
(a) Acquisition Notice. Borrower shall have provided to the Agent and each
Bank at least seven (7) Business Days prior to the date that the
proposed acquisition is to be consummated: (i) the name of the Person
(the "Target") who is to be acquired or whose assets are to be
acquired; (ii) a description of the nature of the Target's business;
(iii) drafts of the documentation intended to effect the proposed
acquisition (the "Purchase Agreements"); (iv) a summary of the terms
and conditions of the proposed acquisition; (v) a certificate of the
chief financial officer or treasurer of the Borrower certifying that
no Default exists or could reasonably be expected to occur as a result
of the proposed acquisition and setting forth the calculations
demonstrating compliance with clauses (vi), (vii), (viii) and, if
applicable, (ix) and (xi) of the following subsection (b); and (vi)
any other information the Agent may reasonably request. Borrower shall
also provide Agent and each Bank drafts of the schedules and exhibits
to the Purchase Agreements as soon as they are available but in any
event prior to the closing of the proposed acquisition.
(b) Acquisition Criteria. Borrower shall provide to the Agent and each
Bank evidence that:
(i) Borrower shall have completed due diligence on the Target and the
assets to be acquired satisfactory to Agent including, without
limitation, if applicable, a due diligence investigation as to
the compliance by the Target and the assets to be acquired with
all Environmental Laws;
(ii) The Target is involved in the same general type of business
activities as the Borrower and the Subsidiaries and, if assets
are being acquired, the assets are located in the United States
of America except to the extent permitted by clause (ix);
(iii)If the proposed acquisition is an acquisition of the stock or
other ownership interest of a Target, the acquisition will be
structured so that the Target will become a wholly-owned
CREDIT AGREEMENT - PAGE 48
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<PAGE>
subsidiary of the Borrower owned directly by Borrower or by a
Significant Subsidiary. If the proposed acquisition is an
acquisition of assets, the acquisition will be the acquisition of
all or substantially all of (A) the assets of the Target, (B) the
assets of a division or branch of the Target or (C) such
Target's, division's or branch's rights to obtain raw materials
of the type utilized in the Borrower's or a Subsidiary's
business. Each asset acquisition will be structured so that
either Borrower, a Significant Subsidiary or, to the extent
permitted by clause (ix) below, a Subsidiary organized in a
jurisdiction located outside the United States of America, shall
acquire the assets;
(iv) Neither the Target nor its assets shall be subject to any
contingent obligations (including contingent obligations arising
from any Environmental Liabilities), Environmental Liabilities,
unsatisfied judgments or any pending action, charge, claim,
demand, suit, proceeding, petition, governmental investigation or
arbitration that could reasonably be expected to have a Material
Adverse Effect;
(v) Borrower shall have provided to the Agent and each Bank (i)
copies of (A) the financial statements of the Target for the
twelve (12) month period prior to the closing of the proposed
acquisition for which financial statements are available (but in
any event financial statements for the most recently completed
fiscal year of such Target) containing at a minimum, a balance
sheet, statement of income and, if available, statement of cash
flow or (B) if no financial statements complying with clause (A)
are available, such other information relating to the Target or
the assets to be acquired that is satisfactory to the Agent and
supports the Borrower's determination of the Calculated EBITDA of
the Target or, as applicable, the assets to be acquired in
accordance with clause (vii) below and (ii) a proforma financial
projection of the Borrower for the twelve (12) month period
following the date of the consummation of the proposed
acquisition which reflects pro forma compliance with the
financial covenants contained in Article 11 of this Agreement;
(vi) The total Purchase Price to be paid by the Borrower or a
Subsidiary to acquire the equity interests issued by the Target
or the assets of the Target does not exceed the Permitted
Purchase Price Amount for the Loan Year in which the acquisition
is to be consummated and the Aggregate Purchase Price calculated
with respect to the acquisition in question does not exceed the
Permitted Cumulative Purchase Price Amount for the Loan Year in
which the acquisition is to be consummated. As used in this
clause (vi) the following terms have the following meanings:
"Purchase Price" means, as of any date of determination and
with respect to any acquisition, the purchase price to be paid
for the equity interests issued by the Target or the assets of
the Target, including all cash consideration paid (whether
classified as purchase price, noncompete payments, consulting
CREDIT AGREEMENT - PAGE 49
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<PAGE>
payments or otherwise and without regard to whether such amount
is paid at closing or paid over time but excluding the amount of
any finance charges attributable to deferred payments and
excluding amounts payable as salary and benefits under any
employment agreement entered into with the seller for the purpose
of retaining the seller as an active officer or employee of
Borrower or a Subsidiary) and the Dollar value of all other
assets to be transferred by the purchaser in connection with such
acquisition to the seller (excluding however the value of all
capital stock of Borrower issued or to be issued to the seller)
all valued in accordance with the applicable Purchase Agreements.
"Permitted Purchase Price Amount" means, in any Loan Year,
the sum of (A) amount set forth in the table below under the
heading "Per Transaction Limit" opposite the Loan Year in which
the proposed acquisition will be consummated plus (B), with
respect to the third Loan Year only, the lesser of the Carryover
Amount or Ten Million Dollars ($10,000,000):
Loan Year Per Transaction Limit
------------ --------------------------
1 $15,000,000
2 $15,000,000
3 $ 5,000,000
4 $ 5,000,000
5 $ 5,000,000
"Carryover Amount" means the sum of (A) the amount by which
the Permitted Cumulative Purchase Price Amount applicable to the
first Loan Year exceeded the Aggregate Purchase Price calculated
with respect to Permitted Acquisitions consummated in the first
Loan Year plus (B) the amount by which the Permitted Cumulative
Purchase Price Amount applicable to the second Loan Year exceeded
the Aggregate Purchase Price calculated with respect to Permitted
Acquisitions consummated in the second Loan Year.
"Aggregate Purchase Price" means, as of any date of
determination and in connection with any proposed acquisition,
the sum of (a) the Purchase Price to be paid for the equity
interests issued by the Target or for the assets of the Target
plus (b) the aggregate amount of the Purchase Prices paid for all
equity interest issued by all the other Targets or for the assets
of all the other Targets purchased in the same Loan Year.
CREDIT AGREEMENT - PAGE 50
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<PAGE>
"Permitted Cumulative Purchase Price Amount" means, in any
Loan Year, the sum of (A) amount set forth in the table below
under the heading "Yearly Limit" opposite the Loan Year in which
the proposed acquisition will be consummated plus (B), with
respect to the third Loan Year only, the lesser of the Carryover
Amount or Ten Million Dollars ($10,000,000):
Loan Year Yearly Limit
----------- ----------------
1 $25,000,000
2 $25,000,000
3 $ 5,000,000
4 $ 5,000,000
5 $ 5,000,000
(vii)the Calculated EBITDA of the Target or, as applicable, the
Calculated EBITDA of the Target attributable to such assets
acquired, for the most recently completed twelve (12) month
period prior to the closing of the proposed acquisition for which
financial statements are available is at least $1.00. The term
"Calculated EBITDA" means, for any period, the sum of the
following, each calculated without duplication for the Target or
the assets acquired for such period: (1) EBITDA; plus (2) all of
those verifiable expenses which have been deducted in calculating
Net Income for such period and which will be eliminated in the
future upon the consummation of the proposed acquisition; minus
(3) all income or gains which have been added in calculating Net
Income for such period and which will be eliminated in the future
upon the consummation of the proposed acquisition;
(viii) The average daily amount of the Borrowing Availability for the
thirty (30) day period prior to the date that Borrower provides
notice to the Agent and the Banks of the proposed acquisition
(which date must not be more than thirty (30) days prior to the
date that the acquisition is actually consummated) and calculated
as if the acquisition was consummated and any borrowing under the
Revolving Loan in connection with such acquisition occurred on
the first (1st) day of such period, shall equal or exceed
Twenty-Five Million Dollars ($25,000,000);
(ix) If the acquisition is an acquisition of the equity interests
issued by or assets of a Target organized in a jurisdiction
located outside of the United States of America (a "Foreign
Target") then the sum of (A) the total of all Purchased Prices
paid to acquire all equity interest issued by all Foreign Targets
and assets of Foreign Targets previously acquired plus (B)the
total Purchase Price to be paid to acquire the equity interest
issued by or assets of the Foreign Target in question shall at no
time exceed the sum of (1) Three Million Dollars ($3,000,000)
minus (2) all loans and advances made by Borrower to all
Subsidiaries organized under
CREDIT AGREEMENT - PAGE 51
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<PAGE>
the laws of a jurisdiction located outside the United States of
America which are outstanding as of the date of determination;
(x) Any Debt (excluding debt of the type described in clause (j) of
the definition of Debt) incurred in connection with the proposed
acquisition owed to third parties must be incurred payable to the
order of the seller in such acquisition, and must be subordinate
to the Obligations on terms and conditions acceptable to Agent
and, as long as the Indenture has not been satisfied and
discharged, must be permitted by the terms of the Indenture; and
(xi) As long as the Indenture has not been satisfied and discharged,
Borrower will be in compliance with Section 4.11 of the Indenture
after giving effect to any advance under the Revolving
Commitments utilized to fund the Purchase Price for the
acquisition in question.
(c) Purchase Agreements. Agent shall have received executed copies of the
Purchase Agreements relating to the acquisition within thirty (30)
days after the acquisition is closed. Prior to or simultaneously with
the closing of the proposed acquisition: (i) the Purchase Agreements
shall be in full force and effect and no material term or condition
thereof shall have been amended, modified or waived after the
execution thereof (other than solely to extend the date by which the
proposed acquisition is required to occur) except those for which
prior written notice was provided to Agent; (ii) none of the parties
to the Purchase Agreements shall have failed to perform any material
obligation or covenant required by the Purchase Agreements to be
performed or complied with by it on or before the date of the closing
of the proposed acquisition; and (iii) Agent shall have received a
certificate from Borrower's chief financial officer or treasurer to
the effect set forth in clauses (i) and (ii) above.
(d) Proposed Acquiree Loan Documents. If the proposed acquisition is an
acquisition of the stock or other equity interests issued by a Target,
then whether or not the Target will be a Significant Subsidiary (i)
the Target shall execute and deliver to Agent a Guaranty unless it is
a Foreign Target, (ii) the Borrower or Subsidiary acquiring the stock
or other equity interest shall execute and deliver to the Agent an
amendment to its pledge agreement (or, if applicable, a pledge
agreement in similar form to the Borrower Pledge Agreement) pledging
as collateral thereunder the stock or other equity interests issued by
the Target or, if the Target is a Foreign Target, sixty-six percent
(66%) of such stock or other equity interests, and (iii) the Borrower
shall deliver to the Agent the certificates representing the stock or
other equity interests issued by the Target as so pledged together
with undated stock powers or assignments, as applicable duly executed
in blank.
Notwithstanding the foregoing, if Borrower or a Subsidiary is acquiring the
right to obtain from third parties the raw materials utilized in the Borrower's
or a Subsidiary's business (a "Route Purchase"), the Purchase Price paid for the
Route Purchase in question does not exceed Two Hundred Fifty Thousand Dollars
($250,000), and the aggregate amount of the Purchase Prices paid for all Route
CREDIT AGREEMENT - PAGE 52
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<PAGE>
Purchases consummated in the same Fiscal Year does not exceed Five Hundred
Thousand Dollars ($500,000), then neither the Borrower nor the applicable
Subsidiary need comply with any of the conditions listed in clauses (a) through
(d) above in this Section 10.3 with respect to the Route Purchase in question.
Section 10.4 Restricted Junior Payments. Borrower will not and will not
permit any Subsidiary to directly or indirectly declare, order, pay, make or set
apart any sum for (a) any dividend or other distribution, direct or indirect, on
account of any shares of any class of stock or other equity interest of Borrower
or any Subsidiary now or hereafter outstanding, except a dividend payable solely
in shares of that class of stock or other equity interest to the holders of that
class; (b) any redemption, conversion, exchange, retirement, sinking fund or
similar payment, purchase or other acquisition for value, direct or indirect, of
any shares of any class of stock or other equity interest of Borrower or any
Subsidiary now or hereafter outstanding; or (c) any payment made to retire, or
to obtain the surrender of, any outstanding warrants, options or other rights to
acquire shares of any class of stock or other equity interest of Borrower or any
of its Subsidiaries now or hereafter outstanding except that:
(i) Borrower may purchase its common stock (or any outstanding
warrants, options or other rights to acquire shares of its common
stock, which together with its common stock are herein referred
to as the "Common Stock Securities") if at the time of such
purchase the following conditions are satisfied:
(A) No Default exists or would result therefrom;
(B) after giving effect to the purchase in question,
the aggregate amount actually paid by Borrower for the
purchase of its Common Stock Securities in any Fiscal Year
of Borrower shall not exceed Ten Million Dollars
($10,000,000);
(C) The average daily amount of the Borrowing
Availability for the thirty (30) day period prior to the
date that Borrower provides notice to the Agent and the
Banks of the proposed purchase and calculated as if the
purchase was consummated and any borrowing under the
Revolving Loan in connection with such purchase occurred on
the first (1st) day of such period, shall equal or exceed
Twenty-Five Million Dollars ($25,000,000); and
(D) Within Ten (10) days after the purchase, Borrower
shall have provided Agent and each Bank written notice of
the purchase, such notice to identify the seller, the number
of shares purchased and the purchase price for such shares
and to be accompanied with calculations demonstrating
compliance with clauses (B) and (C) of this Section 10.4(i);
and
(ii) Subsidiaries of Borrower may make, declare and pay dividends and
make other distributions with respect to their common stock to
the extent necessary to permit Borrower to pay the Obligations,
to make any payments permitted under clause (i) above and to
permit Borrower to pay expenses incurred in the ordinary course
of business.
CREDIT AGREEMENT - PAGE 53
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<PAGE>
Section 10.5 Investments. The Borrower will not, and will not permit any
Subsidiary to, make or permit to remain outstanding any advance, loan, extension
of credit, or capital contribution to or investment in any Person, or purchase
or own any stock, bonds, notes, debentures, or other securities of any Person,
or be or become a joint venturer with or partner of any Person, except:
(a) Capital contributions and investments in a Subsidiary created to
facilitate the acquisition of a Target through the merger of the
Subsidiary with the Target in a Permitted Acquisition; provided that
the aggregate amount contributed or invested in each such Subsidiary
does not exceed One Thousand Dollars ($1,000.00);
(b) Borrower may own stock of the Subsidiaries existing on the Closing
Date and notes payable by Subsidiaries in accordance with the
restrictions set forth in Section 10.1;
(c) readily marketable direct obligations of the United States of America
or any agency thereof with maturities of one year or less from the
date of acquisition;
(d) fully insured certificates of deposit with maturities of one year or
less from the date of acquisition issued by any commercial bank
operating in the United States of America having capital and surplus
in excess of Fifty Million Dollars ($50,000,000);
(e) commercial paper of a domestic issuer if at the time of purchase such
paper is rated in one of the two highest rating categories of Standard
and Poor's Corporation or Moody's Investors Service, Inc.;
(f) loans and advances to employees for business expenses incurred in the
ordinary course of business not to exceed One Hundred Thousand Dollars
($100,000) in the aggregate at any time outstanding;
(g) existing investments described on Schedule 10.5 hereto;
(h) the purchase and ownership of any stock or other equity interests of a
Target acquired in a Permitted Acquisition;
(i) advances to Raw Material Suppliers as prepayments on raw material
purchases; provided that, (i) such raw materials are acquired and
utilized by Borrower or a Subsidiary in the ordinary course of
business and (ii) the aggregate amount of such advances at any time
outstanding shall never exceed the sum of (A) Two Million Dollars
($2,000,000) minus (B) the aggregate principal amount of all Debt of
Raw Material Suppliers which is outstanding on the date of
determination and which is Guaranteed by Borrower or any Subsidiary;
(j) loans evidencing the deferred payment of the purchase price of the
assets disposed of pursuant to subsection 10.8(d); and
CREDIT AGREEMENT - PAGE 54
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<PAGE>
(k) loans, advances or investments in addition to those described in
clauses (a) through (j) of this Section 10.5 if the aggregate
principal amount of such loans and advances outstanding plus the
aggregate acquisition cost of the outstanding investments never
exceeds Four Million Dollars ($4,000,000).
Section 10.6 Limitation on Issuance of Capital Stock. The Borrower will not
permit any Subsidiary to, at any time issue, sell, assign, or otherwise dispose
of (a) any of its capital stock or other equity interests, (b) any securities
exchangeable for or convertible into or carrying any rights to acquire any of
its capital stock or other equity interests, or (c) any option, warrant, or
other right to acquire any of its capital stock or other equity interests.
Section 10.7 Transactions With Affiliates. The Borrower will not, and will
not permit any Subsidiary to, enter into any transaction, including, without
limitation, the purchase, sale, or exchange of property or the rendering of any
service, with any Affiliate of the Borrower or such Subsidiary, except in the
ordinary course of and pursuant to the reasonable requirements of the Borrower's
or such Subsidiary's business and upon fair and reasonable terms no less
favorable to the Borrower or such Subsidiary than would be obtained in a
comparable arms-length transaction with a Person not an Affiliate of the
Borrower or such Subsidiary.
Section 10.8 Disposition of Assets. The Borrower will not, and will not
permit any Subsidiary to, sell, lease, assign, transfer, or otherwise dispose of
any of its assets, except (a) dispositions of inventory in the ordinary course
of business; (b) dispositions of unnecessary, obsolete or worn out equipment;
(c) sales, leases or other dispositions of vehicles so long as the Borrower uses
the net proceeds of such sales to acquire replacement vehicles; (d) the sale of
the assets disclosed on Schedule 10.8 at any time that no Default exists in one
or more arm's length transactions; provided that, each asset is sold for fair
value, the Borrower provides the Agent and the Banks written notice of any such
sale not later than five (5) Business Days after the date of the actual sale and
no Default would result therefrom; and (e) other sales or dispositions of assets
for fair value paid in cash at the closing of the disposition and in arm's
length transactions; provided that with respect to any asset disposed of
pursuant to the permissions of this clause (e):
(i) no Default exists or would result from such disposition;
(ii) Borrower shall have provided the Agent and each Bank written
notice of the proposed disposition not less than ten (10)
Business Days prior to the date of the proposed disposition and a
certification demonstrating compliances with clauses (i), (iii)
and (iv) of this subsection (e);
(iii)the sales price for the assets sold (as determined in accordance
with the applicable sale agreement) in such transaction or group
of related transactions does not exceed Seven Million Five
Hundred Thousand Dollars ($7,500,000); and
(iv) the aggregate sales prices for all the assets sold (as determined
in accordance with the applicable sale agreements) in a Loan Year
under the permissions of this clause (e) does not exceed the
Annual Cap for the Loan Year in which the sale occurred.
CREDIT AGREEMENT - PAGE 55
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<PAGE>
As used in this Section 10.8, "Annual Cap" means, in any Loan Year, the amount
set forth in the table below under the heading "Cap" opposite the Loan Year in
which the proposed sale will be consummated, provided that with respect to the
second Loan Year only, the Annual Cap shall be the lesser of (i) such amount
applicable to Loan Year 2, or (ii) the sum of Ten Million Dollars ($10,000,000)
plus the amount by which the Annual Cap for the first Loan Year exceeded the
aggregate sales prices (as determined in accordance with the applicable sale
agreements) of all the assets disposed of under the permissions of clause (e) of
this Section 10.8 in the first Loan Year.
Loan Year Cap
---------------------- -------------------
1 $15,000,000
2 $15,000,000
3 and each
Loan Year thereafter $10,000,000
Section 10.9 Sale and Leaseback. The Borrower will not, and will not permit
any Subsidiary to, enter into any arrangement with any Person pursuant to which
it leases from such Person real or personal property that has been or is to be
sold or transferred, directly or indirectly, by it to such Person.
Section 10.10 Lines of Business. The Borrower will not, and will not permit
any Subsidiary to, engage in any line or lines of business activity other than
the businesses in which they are engaged on the date hereof and any businesses
which utilize processes similar to those utilized by the Borrower.
Section 10.11 Subordinated Notes. Borrower will not amend the terms of the
Indenture or the Subordinated Notes.
ARTICLE 11
Financial Covenants
The Borrower covenants and agrees that, as long as the Obligations or any
part thereof are outstanding or any Bank has any Commitment hereunder, the
Borrower will perform and observe the following financial covenants:
Section 11.1 Consolidated Net Worth. Borrower will at all times maintain
Consolidated Net Worth in an amount not less than the sum of (a) Sixty-Two
Million Five Hundred Ninety-Four Thousand Dollars ($62,594,000) plus (b) fifty
percent (50%) of the Borrower's Net Income for each Fiscal Quarter, beginning
with the Fiscal Quarter ended on or about June 30, 1997, to the extent the
Fiscal Quarter has been completed. If Net Income for a fiscal quarter is
negative, no adjustment to the requisite level of Consolidated Net Worth shall
be made. The phrase "Consolidated Net Worth" means, at any particular time, all
amounts which, in conformity with GAAP, would be included as stockholders'
equity on a consolidated balance sheet of the Borrower and the Subsidiaries.
CREDIT AGREEMENT - PAGE 56
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<PAGE>
Section 11.2 Funded Debt to Adjusted EBITDA. As of the end of each Fiscal
Quarter, Borrower shall not permit the ratio of Funded Debt as of the date of
determination to Adjusted EBITDA for the four (4) Fiscal Quarters then ending to
exceed (A) 3.25 to 1.0 for each Fiscal Quarter end occurring in the period from
the Closing Date through and including the third Fiscal Quarter of the
Borrower's Fiscal Year ending in 1997; (B) 3.00 to 1.0 for each Fiscal Quarter
end occurring in the period from and excluding the third Fiscal Quarter of
Borrower's Fiscal Year ending in 1997 through and including the Fiscal Year
ending in 1998; and (C) 2.75 to 1.00 for each Fiscal Quarter end after the
Fiscal Year ending in 1998. The phrase "Funded Debt" means, as of any Fiscal
Quarter end, the sum of all the Debt of Borrower and the Subsidiaries determined
on a consolidated basis of the type described in clauses (a), (b) and (d) of the
definition thereof then outstanding. The phrase "Adjusted EBITDA" means, for any
period, the total of the following calculated without duplication for such
period: (i) the Borrower's EBITDA; plus (ii) when calculating Adjusted EBITDA
for any period which includes the first Fiscal Quarter of 1997, but only to the
extent deducted in the calculation of Net Income of Borrower for such period,
One Million Six Hundred Sixty Thousand Dollars ($1,660,000) paid by Borrower to
Ken Ghazey, pursuant to the provisions of Borrower's stock option plan
applicable to Mr. Ghazey in return for the cancellation of the vested portion of
the options granted to Mr. Ghazey to purchase 123,626 shares of Borrower's
common stock; plus (iii) when calculating Adjusted EBITDA for any period which
includes the fourth Fiscal Quarter of 1996, but only to the extent deducted in
calculating Net Income of Borrower for such period, the loss contingency reserve
arising in connection with the settlement entered into by the Borrower with the
United States of America relating to the Borrower's alleged violation of
Environmental Laws at its Blue Earth Minnesota Plant in the amount of Six
Million Seventy-Five Thousand Dollars ($6,075,000).
Section 11.3 Fixed Charge Coverage. As of the end of each Fiscal Quarter,
the Borrower shall not permit the ratio of Operating Cash Flow to Fixed Charges
to be less than the ratio set forth in the table below opposite the period set
forth in the table below during which such Fiscal Quarter end occurs, computed
on the basis of the Operating Cash Flow and Fixed Charges for the four (4)
Fiscal Quarters then ended.
Period
--------------------------------------------------------- Ratio
From and excluding To and including
---------------------- -------------------------- ---------------
Closing Date 2nd Fiscal Quarter of 1998 1.10 to 1
2nd Fiscal Quarter of 1998 2nd Fiscal Quarter of 1999 1.15 to 1
2nd Fiscal Quarter of 1999 Each Fiscal Quarter thereafter 1.20 to 1
The phrase "Operating Cash Flow" means, for any period, the total of the
following for Borrower and the Subsidiaries calculated on a consolidated basis
without duplication for such period: (a) Adjusted EBITDA; minus (b) cash federal
and state income taxes paid; minus (c) all Capital Expenditures. The phrase
"Fixed Charges" means, for any period, the total of the following for Borrower
and the Subsidiaries calculated on a consolidated basis without duplication for
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<PAGE>
such period: (A) the amount of interest expense actually paid in cash, plus (B)
scheduled amortization of Debt paid or payable (excluding, to the extent
included, nonpermanent principal repayments under the Revolving Loans, the
noninterest portion of all payments made under noncompete, consulting and
similar agreements and the optional redemption payments on the Subordinated
Debt).
Section 11.4 Capital Expenditure Limits. The aggregate amount of all
Capital Expenditures of Borrower and the Subsidiaries during any Fiscal Year
will not exceed the applicable Capital Expenditure Limit for such Fiscal Year,
and the aggregate amount of all Capital Expenditures which are not Clean Star
Expenditures (all Capital Expenditures other than the Clean Star Expenditures,
herein the "General Capital Expenditures") shall never exceed the General
Basket. The term "Capital Expenditure Limit" means, for each Fiscal Year set
forth below, the sum of (i) the Dollar amount set forth in the table below in
this Section 11.4 opposite the applicable Fiscal Year (the Dollar amount as set
forth for each Fiscal Year is herein called the "Annual Limit") plus (ii) the
lesser of (a) the portion of the Annual Limit from the immediately preceding
Fiscal Year which was not expended by Borrower for Capital Expenditures in such
preceding Fiscal Year or (b) Five Million Dollars ($5,000,000) (the lesser of
the foregoing, herein the "Leftover Amount," and the sum of clause (i) and (ii)
herein the "General Basket") plus (iii) with respect to Clean Star Expenditures
only, Five Million Dollars ($5,000,000) (the "Clean Star Basket"). In
calculating the Leftover Amount for any Fiscal Year, the Annual Limit applicable
to the previous Fiscal Year shall be deemed to have been utilized first by any
Capital Expenditures made in such Fiscal Year. In calculating the Capital
Expenditure Limit for any Fiscal Year, Clean Star Expenditures shall first be
counted against the General Basket and when the aggregate amount of General
Capital Expenditures and Clean Star Expenditures in a Fiscal Year equal the
General Basket for such Fiscal Year (a) no further General Capital Expenditures
may be made and (b) additional Clean Star Expenditures may be made only in an
amount up to an additional Five Million Dollars ($5,000,000) (i.e., the Clean
Star Basket).
Fiscal Year Annual Limit
======================= ======================
1997 $30,000,000.00
1998 $31,000,000.00
1999 $32,000,000.00
----------------------- ----------------------
2000 $33,000,000.00
----------------------- ----------------------
2001 $34,000,000.00
2002 $14,583,333.00
The term "Clean Star Expenditures" means, for any period, all Capital
Expenditures made in connection with the Borrower's Clean Star 2000TM grease
collection program. Notwithstanding the forgoing, the Leftover Amount and the
Clean Star Basket applicable to the 2002 Fiscal Year shall not exceed an amount
equal to forty-one percent (41%) of the amount thereof otherwise calculated in
accordance with the terms of this Section 11.4.
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<PAGE>
ARTICLE 12
Default
Section 12.1 Events of Default. Each of the following shall be deemed an
"Event of Default":
(a) The Borrower shall fail to pay (i) when due any principal payable
under any Loan Document or any part thereof; (ii) within three (3)
Business Days of the date due any interest or fees payable under the
Loan Documents or any part thereof; and (iii) within five (5) Business
Days of the date due any other Obligation or any part thereof.
(b) Any representation, warranty or certification made or deemed made by
the Borrower or any Obligated Party (or any of their respective
officers) in any Loan Document or in any certificate, report, notice,
or financial statement furnished at any time in connection with any
Loan Document shall be false, misleading, or erroneous in any material
respect when made or deemed to have been made.
(c) The Borrower shall fail to perform, observe, or comply with any
covenant, agreement, or term contained in Section 9.1, Article 10, or
Article 11 of this Agreement or Section 2.4 or 2.6 of the Borrower
Pledge Agreement. Any Subsidiary shall fail to perform, observe or
comply with any covenant, agreement or term contained in paragraph 9
of the Guaranty to which it is a party.
(d) The Borrower or any Obligated Party shall fail to perform, observe, or
comply with any other covenant, agreement, or term contained in any
Loan Document (other than covenants to pay the Obligations and the
covenants described in subsection 12.1(c)) and such failure shall
continue for a period of fifteen (15) Business Days after the earlier
of (i) the date the Agent or any Bank provides Borrower with notice
thereof or (ii) the date the Borrower should have notified the Agent
thereof in accordance with subsection 9.1(g), notice thereof.
(e) The Borrower, any Subsidiary, or any Obligated Party shall (i) apply
for or consent to the appointment of, or the taking of possession by,
a receiver, custodian, trustee, examiner, liquidator or the like of
itself or of all or a substantial part of its property, (ii) make a
general assignment for the benefit of its creditors, (iii) commence a
voluntary case under the United States Bankruptcy Code (as now or
hereafter in effect, the "Bankruptcy Code"), (iv) institute any
proceeding or file a petition seeking to take advantage of any other
law relating to bankruptcy, insolvency, reorganization, liquidation,
dissolution, winding-up, or composition or readjustment of debts, (v)
fail to controvert in a timely and appropriate manner, or acquiesce in
writing to, any petition filed against it in an involuntary case under
the Bankruptcy Code, (vi) admit in writing its inability to, or be
generally unable to pay its debts as such debts become due, or (vii)
take any corporate action for the purpose of effecting any of the
foregoing.
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<PAGE>
(f) A proceeding or case shall be commenced, without the application,
approval or consent of the Borrower, any Subsidiary, or any Obligated
Party, in any court of competent jurisdiction, seeking (i) its
reorganization, liquidation, dissolution, arrangement or winding-up,
or the composition or readjustment of its debts, (ii) the appointment
of a receiver, custodian, trustee, examiner, liquidator or the like of
the Borrower or such Subsidiary or Obligated Party or of all or any
substantial part of its property, or (iii) similar relief in respect
of the Borrower or such Subsidiary or Obligated Party under any law
relating to bankruptcy, insolvency, reorganization, winding-up, or
composition or adjustment of debts, and such proceeding or case shall
continue undismissed, or an order, judgment or decree approving or
ordering any of the foregoing shall be entered and continue unstayed
and in effect, for a period of sixty (60) or more days; or an order
for relief against the Borrower, any Subsidiary, or any Obligated
Party shall be entered in an involuntary case under the Bankruptcy
Code.
(g) The Borrower, any Subsidiary, or any Obligated Party shall fail to
discharge within a period of thirty (30) days after the commencement
thereof any attachment, sequestration, forfeiture, or similar
proceeding or proceedings involving an aggregate amount in excess of
One Million Dollars ($1,000,000) against any of its assets or
properties.
(h) A final judgment or judgments for the payment of money in excess of
One Million Dollars ($1,000,000) in the aggregate shall be rendered by
a court or courts against the Borrower, any Subsidiaries, or any
Obligated Party and the same shall not be discharged (or provision
shall not be made for such discharge), or a stay of execution thereof
shall not be procured, within thirty (30) days from the date of entry
thereof and the Borrower or the relevant Subsidiary or Obligated Party
shall not, within said period of thirty (30) days, or such longer
period during which execution of the same shall have been stayed,
appeal therefrom and cause the execution thereof to be stayed during
such appeal. The Court approval of the Borrower's settlement with the
United States Attorney relating to the alleged violations of
Environmental Laws at the Borrower's Blue Earth, Minnesota plant (as
such settlement is described in Borrower's Form 10-Q filed with the
United States Securities and Exchange Commission for the three (3)
months ended March 29, 1997), shall not, in and of itself, constitute
an Event of Default under this clause (h).
(i) The Borrower, any Subsidiary, or any Obligated Party shall fail to pay
when due any principal of or interest on any Debt if the aggregate
principal amount of the affected Debt equals or exceeds One Million
Dollars ($1,000,000) (other than the Obligations but including the
Subordinated Notes), or the maturity of any such Debt shall have been
accelerated, or any such Debt shall have been required to be prepaid
prior to the stated maturity thereof or any event shall have occurred
with respect to any Debt in the aggregate principal amount equal to or
in excess of Two Million Five Hundred Thousand Dollars ($2,500,000)
that permits (or, with the giving of notice or lapse of time or both,
would permit) any holder or holders of such Debt or any Person acting
on behalf of such holder or holders to accelerate the maturity thereof
or require any such prepayment.
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<PAGE>
(j) This Agreement, the Borrower Pledge Agreement, any Guaranty or any
Note shall cease to be in full force and effect (other than, with
respect to a Guaranty, as a result of a permitted dissolution pursuant
to Section 10.3) or shall be declared null and void or the validity or
enforceability thereof shall be contested or challenged by the
Borrower, any Subsidiary, any Obligated Party or the Borrower or any
Obligated Party shall deny that it has any further liability or
obligation under any of the Loan Documents, or any lien or security
interest created by the Loan Documents shall for any reason (other
than the negligence of the Agent or the release thereof in accordance
with the Loan Documents) cease to be a valid, first priority perfected
security interest in and lien upon any of the Collateral purported to
be covered thereby.
(k) Any of the following events shall occur or exist with respect to the
Borrower or any ERISA Affiliate: (i) any Prohibited Transaction
involving any Plan; (ii) any Reportable Event with respect to any
Plan; (iii) the filing under Section 4041 of ERISA of a notice of
intent to terminate any Plan or the termination of any Plan; (iv) any
event or circumstance that might constitute grounds entitling the PBGC
to institute proceedings under Section 4042 of ERISA for the
termination of, or for the appointment of a trustee to administer, any
Plan, or the institution by the PBGC of any such proceedings; or (v)
complete or partial withdrawal under Section 4201 or 4204 of ERISA
from a Multiemployer Plan or the reorganization, insolvency, or
termination of any Multiemployer Plan; and in each case above, such
event or condition, together with all other events or conditions, if
any, have subjected or could in the reasonable opinion of Required
Banks subject the Borrower to any tax, penalty, or other liability to
a Plan, a Multiemployer Plan, the PBGC, or otherwise (or any
combination thereof) which in the aggregate exceed or could reasonably
be expected to exceed One Million Dollars ($1,000,000).
(l) Any Person or group of related Persons for purposes of Section 13(d)
of the Exchange Act other than Morgens Waterfall Vintiadis & Co., Inc.
and its Affiliates, acquires "beneficial ownership" (within the
meaning of Section 13(d) under the Exchange Act) in excess of fifty
percent (50%) of the total voting power of all classes of capital
stock then outstanding of Borrower entitled (without regard to the
occurrence of any contingency) to vote in elections of directors of
Borrower.
Section 12.2 Remedies. If any Event of Default shall occur and be
continuing, the Agent may (and if directed by Required Banks, shall) do any one
or more of the following:
(a) Acceleration. By notice to the Borrower, declare all outstanding
principal of and accrued and unpaid interest on the Notes and all
other amounts payable by the Borrower under the Loan Documents
immediately due and payable, and the same shall thereupon become
immediately due and payable, without further notice, demand,
presentment, notice of dishonor, notice of acceleration, notice of
intent to accelerate, protest, or other formalities of any kind, all
of which are hereby expressly waived by the Borrower.
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<PAGE>
(b) Termination of Commitments. Terminate the Commitments, including,
without limitation, the obligation of the Agent to issue Letters of
Credit, without notice to the Borrower.
(c) Judgment. Reduce any claim to judgment.
(d) Foreclosure. Foreclose or otherwise enforce any Lien granted to the
Agent for the benefit of itself and the Banks to secure payment and
performance of the Obligations in accordance with the terms of the
Loan Documents.
(e) Rights. Exercise any and all rights and remedies afforded by the laws
of the State of Texas or any other jurisdiction, by any of the Loan
Documents, by equity, or otherwise.
Provided, however, that upon the occurrence of an Event of Default under Section
12.1(e) or (f), the Commitments of all of the Banks shall automatically
terminate (including, without limitation, the obligation of the Agent to issue
Letters of Credit), and the outstanding principal of and accrued and unpaid
interest on the Notes and all other amounts payable by the Borrower under the
Loan Documents shall thereupon become immediately due and payable without
notice, demand, presentment, notice of dishonor, notice of acceleration, notice
of intent to accelerate, protest, or other formalities of any kind, all of which
are hereby expressly waived by the Borrower.
Section 12.3 Cash Collateral. If an Event of Default shall have occurred
and be continuing the Borrower shall, if requested by the Agent or Required
Banks, pledge to the Agent as security for the Obligations an amount in
immediately available funds equal to the then outstanding Letter of Credit
Liabilities, such funds to be held in a cash collateral account at the Agent
without any right of withdrawal by the Borrower.
Section 12.4 Performance by the Agent. If the Borrower or any Obligated
Party shall fail to perform any covenant or agreement in accordance with the
terms of the Loan Documents, the Agent may, at the direction of Required Banks,
perform or attempt to perform such covenant or agreement on behalf of the
Borrower. In such event, the Borrower shall, at the request of the Agent,
promptly pay any amount expended by the Agent or the Banks in connection with
such performance or attempted performance to the Agent at the Principal Office,
together with interest thereon at the applicable Default Rate from and including
the date of such expenditure to but excluding the date such expenditure is paid
in full. Notwithstanding the foregoing, it is expressly agreed that neither the
Agent nor any Bank shall have any liability or responsibility for the
performance of any obligation of the Borrower or any Obligated Party under any
Loan Document or any of the other Loan Documents.
Section 12.5 Setoff. If an Event of Default shall have occurred and be
continuing, each Bank is hereby authorized at any time and from time to time,
without notice to the Borrower (any such notice being hereby expressly waived by
the Borrower), to set off and apply any and all deposits (general, time, demand,
provisional or final) at any time held and other indebtedness at any time owing
by such Bank to or for the credit or the account of the Borrower against any and
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<PAGE>
all of the obligations of the Borrower now or hereafter existing under any Loan
Document, irrespective of whether or not the Agent or such Bank shall have made
any demand under such Loan Documents and although such obligations may be
unmatured. Each Bank agrees promptly to notify the Borrower (with a copy to the
Agent) after any such setoff and application, provided that the failure to give
such notice shall not affect the validity of such setoff and application. The
rights and remedies of each Bank hereunder are in addition to other rights and
remedies (including, without limitation, other rights of setoff) which such Bank
may have.
ARTICLE 13
The Agent
Section 13.1 Appointment, Powers and Immunities. Each Bank hereby appoints
and authorizes BankBoston, N.A. to act as its agent hereunder and under the
other Loan Documents with such powers as are specifically delegated to the Agent
by the terms of the Loan Documents, together with such other powers as are
reasonably incidental thereto. Neither the Agent nor any of its Affiliates,
officers, directors, employees, attorneys, or agents shall be liable for any
action taken or omitted to be taken by any of them hereunder or otherwise in
connection with any Loan Document or any of the other Loan Documents except for
its or their own gross negligence or willful misconduct. Without limiting the
generality of the preceding sentence, the Agent (i) may treat the payee of any
Note as the holder thereof until it receives written notice of the assignment or
transfer thereof signed by such payee and in form satisfactory to the Agent;
(ii) shall have no duties or responsibilities except those expressly set forth
in the Loan Documents, and shall not by reason of any Loan Document be a trustee
or fiduciary for any Bank; (iii) shall not be required to initiate any
litigation or collection proceedings under any Loan Document except to the
extent requested by Required Banks; (iv) shall not be responsible to the Banks
for any recitals, statements, representations or warranties contained in any
Loan Document, or any certificate or other documentation referred to or provided
for in, or received by any of them under, any Loan Document, or for the value,
validity, effectiveness, enforceability, or sufficiency of any Loan Document or
any other documentation referred to or provided for therein or for any failure
by any Person to perform any of its obligations thereunder; (v) may consult with
legal counsel (including counsel for the Borrower), independent public
accountants, and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants, or experts; and (vi) shall incur no
liability under or in respect of any Loan Document by acting upon any notice,
consent, certificate, or other instrument or writing believed by it to be
genuine and signed or sent by the proper party or parties. As to any matters not
expressly provided for by any Loan Document, the Agent shall in all cases be
fully protected in acting, or in refraining from acting, hereunder in accordance
with instructions signed by Required Banks, and such instructions of Required
Banks and any action taken or failure to act pursuant thereto shall be binding
on all of the Banks; provided, however, that the Agent shall not be required to
take any action which exposes it to personal liability or which is contrary to
any Loan Document or applicable law.
Section 13.2 Rights of Agent as a Bank. With respect to its Commitment, the
Loans made by it and the Notes issued to it, BankBoston, N.A. (and any successor
acting as Agent) in its capacity as a Bank hereunder shall have the same rights
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<PAGE>
and powers hereunder as any other Bank and may exercise the same as though it
were not acting as the Agent, and the term "Bank" or "Banks" shall, unless the
context otherwise indicates, include the Agent in its individual capacity. The
Agent and its Affiliates may (without having to account therefor to any Bank)
accept deposits from, lend money to, act as trustee under indentures of, provide
merchant banking services to, and generally engage in any kind of banking,
trust, or other business with the Borrower, any of its Subsidiaries, any
Obligated Party, and any other Person who may do business with or own securities
of the Borrower, any Subsidiary, or any Obligated Party, all as if it were not
acting as the Agent and without any duty to account therefor to the Banks.
Section 13.3 Defaults. The Agent shall not be deemed to have knowledge or
notice of the occurrence of a Default (other than the non-payment of principal
of or interest on the Loans or of commitment fees) unless the Agent has received
notice from a Bank or the Borrower specifying such Default and stating that such
notice is a "Notice of Default." In the event that the Agent receives such a
notice of the occurrence of a Default, the Agent shall give prompt notice
thereof to the Banks (and shall give each Bank prompt notice of each such
non-payment). The Agent shall (subject to Section 13.1) take such action with
respect to such Default as shall be directed by Required Banks, 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 as it shall seem advisable and in the best
interest of the Banks.
Section 13.4 Indemnification. THE BANKS HEREBY AGREE TO INDEMNIFY THE AGENT
FROM AND HOLD THE AGENT HARMLESS AGAINST (TO THE EXTENT NOT REIMBURSED UNDER
SECTIONS 14.1 AND 14.2, BUT WITHOUT LIMITING THE OBLIGATIONS OF THE BORROWER
UNDER SECTIONS 14.1 AND 14.2), RATABLY IN ACCORDANCE WITH THEIR RESPECTIVE
COMMITMENT PERCENTAGES, ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES,
PENALTIES, ACTIONS, JUDGMENTS, DEFICIENCIES, SUITS, COSTS, EXPENSES (INCLUDING
REASONABLE ATTORNEYS' FEES), AND DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER
WHICH MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST THE AGENT IN ANY WAY
RELATING TO OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY ACTION TAKEN OR
OMITTED TO BE TAKEN BY THE AGENT UNDER OR IN RESPECT OF ANY OF THE LOAN
DOCUMENTS; PROVIDED, THAT NO BANK SHALL BE LIABLE FOR ANY PORTION OF THE
FOREGOING TO THE EXTENT CAUSED BY THE AGENT'S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT. WITHOUT LIMITATION OF THE FOREGOING, IT IS THE EXPRESS INTENTION OF
THE BANKS THAT THE AGENT SHALL BE INDEMNIFIED HEREUNDER FROM AND HELD HARMLESS
AGAINST ALL OF SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES,
ACTIONS, JUDGMENTS, DEFICIENCIES, SUITS, COSTS, EXPENSES (INCLUDING REASONABLE
ATTORNEYS' FEES), AND DISBURSEMENTS OF ANY KIND OR NATURE DIRECTLY OR INDIRECTLY
ARISING OUT OF OR RESULTING FROM THE SOLE OR CONTRIBUTORY NEGLIGENCE OF THE
AGENT. WITHOUT LIMITING ANY OTHER PROVISION OF THIS SECTION, EACH BANK AGREES TO
REIMBURSE THE AGENT PROMPTLY UPON DEMAND FOR ITS PRO RATA SHARE (CALCULATED ON
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<PAGE>
THE BASIS OF THE COMMITMENTS PERCENTAGES) OF ANY AND ALL OUT-OF-POCKET EXPENSES
(INCLUDING REASONABLE ATTORNEYS' FEES) INCURRED BY THE AGENT IN CONNECTION WITH
THE PREPARATION, EXECUTION, DELIVERY, ADMINISTRATION, MODIFICATION, AMENDMENT OR
ENFORCEMENT (WHETHER THROUGH NEGOTIATIONS, LEGAL PROCEEDINGS, OR OTHERWISE) OF,
OR LEGAL ADVICE IN RESPECT OF RIGHTS OR RESPONSIBILITIES UNDER, THE LOAN
DOCUMENTS, TO THE EXTENT THAT THE AGENT IS NOT REIMBURSED FOR SUCH EXPENSES BY
THE BORROWER.
Section 13.5 Independent Credit Decisions. Each Bank agrees that it has
independently and without reliance on the Agent or any other Bank, and based on
such documentation and information as it has deemed appropriate, made its own
credit analysis of the Borrower and decision to enter into any Loan Document and
that it will, independently and without reliance upon the Agent or any other
Bank, and based upon such documents and information as it shall deem appropriate
at the time, continue to make its own analysis and decisions in taking or not
taking action under any Loan Document. Except as otherwise specifically set
forth herein, the Agent shall not be required to keep itself informed as to the
performance or observance by the Borrower or any Obligated Party of any Loan
Document or to inspect the properties or books of the Borrower or any Obligated
Party. Except for notices, reports and other documents and information expressly
required to be furnished to the Banks by the Agent hereunder or under the other
Loan Documents, the Agent shall not have any duty or responsibility to provide
any Bank with any credit or other financial information concerning the affairs,
financial condition or business of the Borrower or any Obligated Party (or any
of their Affiliates) which may come into the possession of the Agent or any of
its Affiliates.
Section 13.6 Several Commitments. The Commitments and other obligations of
the Banks under any Loan Document are several. The default by any Bank in making
a Loan in accordance with its Commitment shall not relieve the other Banks of
their obligations under any Loan Document. In the event of any default by any
Bank in making any Loan, each nondefaulting bank shall be obligated to make its
Loan but shall not be obligated to advance the amount which the defaulting Bank
was required to advance hereunder. No Bank shall be responsible for any act or
omission of any other Bank.
Section 13.7 Successor Agent. Subject to the appointment and acceptance of
a successor Agent as provided below, the Agent may resign at any time by giving
notice thereof to the Banks and the Borrower and the Agent may be removed at any
time by Required Banks if it has breached its obligations under the Loan
Documents. Upon any such resignation or removal, Required Banks will have the
right to appoint a successor Agent with the Borrower's consent, which shall not
be unreasonably withheld. If no successor Agent shall have been so appointed by
Required Banks and shall have accepted such appointment within thirty (30) days
after the retiring Agent's giving of notice of resignation or the Required
Banks' removal of the retiring Agent, then the retiring Agent may, on behalf of
the Banks, appoint a successor Agent, which shall be a commercial bank organized
under the laws of the United States of America or any State thereof and having
combined capital and surplus of at least Five Hundred Million Dollars
($500,000,000).
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<PAGE>
Upon the acceptance of its appointment as successor Agent, such successor Agent
shall thereupon succeed to and become vested with all rights, powers,
privileges, immunities, contractual obligation and duties of the resigning or
removed Agent including all obligations under any Letters of Credit and
Swingline Loans, and the resigning or removed Agent shall be discharged from its
duties and obligations under the Loan Documents, including, without limitation,
its obligations under all Letters of Credit and under the Swingline Commitment.
After any Agent's resignation or removal as Agent, the provisions of this
Article 13 shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was the Agent.
Section 13.8 Agent Fee. The Borrower agrees to pay to the Agent on the
Closing Date and each anniversary of the Closing Date the administrative agent
fee described in that certain commitment letter dated May 15, 1997, between the
Borrower and BankBoston, N.A.
Section 13.9 Co-Agent. Comerica Bank, Credit Lyonnais New York Branch and
Wells Fargo Bank (Texas), National Association have each been designated as a
co-agent hereunder for no reason other than in recognition of the level of their
respective Commitments. No such Bank is therefore an agent for the Banks nor
shall any such Bank have any obligations under the Loan Documents other than
those arising in its capacity as a Bank.
ARTICLE 14
Miscellaneous
Section 14.1 Expenses. The Borrower hereby agrees to pay on demand: (a) all
costs and expenses of the Agent arising in connection with the preparation,
negotiation, execution, and delivery of the Loan Documents executed and
delivered on the Closing Date, including, without limitation, the reasonable
fees and expenses of legal counsel for the Agent in accordance with the terms of
that certain legal fee proposal letter from Jenkens & Gilchrist, a Professional
Corporation to BankBoston, N.A. dated April 28, 1997; (b) all costs and expenses
of the Agent arising in connection with the preparation, negotiation, execution
and delivery of any of the Loan Documents executed and delivered after the
Closing Date and any and all amendments or other modifications to the Loan
Documents, including, without limitation, the reasonable fees and expenses of
legal counsel for the Agent; (c) all fees, costs and expenses of the Agent
arising in connection with any Letter of Credit or any Swingline Loan, including
the Agent's customary fees for amendments, transfers and drawings on Letters of
Credit; (d) all costs and expenses of the Agent and the Banks in connection with
any Default and the enforcement of any Loan Document, including, without
limitation, the reasonable fees and expenses of legal counsel for the Agent and
each Bank; (e) all transfer, stamp, documentary, or other similar taxes,
assessments, or charges levied by any Governmental Authority in respect of any
Loan Document; (f) all costs, expenses, assessments, and other charges incurred
in connection with any filing, registration, recording, or perfection of any
security interest or Lien contemplated by any Loan Document; and (g) all other
costs and expenses incurred by the Agent in connection with any Loan Document.
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<PAGE>
Section 14.2 Indemnification. THE BORROWER SHALL INDEMNIFY THE AGENT AND
EACH BANK AND EACH AFFILIATE THEREOF AND THEIR RESPECTIVE OFFICERS, DIRECTORS,
EMPLOYEES, ATTORNEYS, AND AGENTS FROM, AND HOLD EACH OF THEM HARMLESS AGAINST,
ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS,
DISBURSEMENTS, COSTS, AND EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES) TO
WHICH ANY OF THEM MAY BECOME SUBJECT WHICH DIRECTLY OR INDIRECTLY ARISE FROM OR
RELATE TO (A) THE NEGOTIATION, EXECUTION, DELIVERY, PERFORMANCE, ADMINISTRATION,
OR ENFORCEMENT OF ANY OF THE LOAN DOCUMENTS, (B) ANY OF THE TRANSACTIONS
CONTEMPLATED BY THE LOAN DOCUMENTS, (C) ANY BREACH BY THE BORROWER OR ANY
OBLIGATED PARTY OF ANY REPRESENTATION, WARRANTY, COVENANT, OR OTHER AGREEMENT
CONTAINED IN ANY OF THE LOAN DOCUMENTS, (D) THE PRESENCE, RELEASE, THREATENED
RELEASE, DISPOSAL, REMOVAL, OR CLEANUP OF ANY HAZARDOUS MATERIAL LOCATED ON,
ABOUT, WITHIN, OR AFFECTING ANY OF THE PROPERTIES OR ASSETS OF THE BORROWER OR
ANY SUBSIDIARY, (E) THE USE OR PROPOSED USE OF ANY LETTER OF CREDIT OR ANY
PAYMENT OR FAILURE TO PAY WITH RESPECT TO ANY LETTER OF CREDIT, (G) ANY AND ALL
TAXES, LEVIES, DEDUCTIONS, AND CHARGES IMPOSED ON THE AGENT OR ANY BANK IN
RESPECT OF ANY LETTER OF CREDIT, OR (G) ANY INVESTIGATION, LITIGATION, OR OTHER
PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY THREATENED INVESTIGATION,
LITIGATION, OR OTHER PROCEEDING RELATING TO ANY OF THE FOREGOING; PROVIDED THAT
THE PERSON ENTITLED TO BE INDEMNIFIED UNDER THIS SECTION SHALL NOT BE
INDEMNIFIED FROM OR HELD HARMLESS AGAINST ANY LOSSES, LIABILITIES, CLAIMS,
DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS OR EXPENSES ARISING OUT OF
OR RESULTING FROM ITS GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. WITHOUT LIMITING
ANY PROVISION OF ANY LOAN DOCUMENT, IT IS THE EXPRESS INTENTION OF THE PARTIES
HERETO THAT EACH PERSON TO BE INDEMNIFIED UNDER THIS SECTION SHALL BE
INDEMNIFIED FROM AND HELD HARMLESS AGAINST ANY AND ALL LOSSES, LIABILITIES,
CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS, AND EXPENSES
(INCLUDING REASONABLE ATTORNEYS' FEES) ARISING OUT OF OR RESULTING FROM THE SOLE
OR CONTRIBUTORY NEGLIGENCE OF SUCH PERSON.
Section 14.3 Limitation of Liability. None of the Agent, any Bank, or any
Affiliate, officer, director, employee, attorney, or agent thereof shall have
any liability with respect to, and the Borrower and, by the execution of the
Loan Documents, to which it is a party each Obligated Party, hereby waives,
releases, and agrees not to sue any of them upon, any claim for any special,
indirect, incidental, consequential or punitive damages suffered or incurred by
the Borrower or any Obligated Party in connection with, arising out of, or in
any way related to any of the Loan Documents, or any of the transactions
contemplated by any of the Loan Documents.
Section 14.4 No Duty. All attorneys, accountants, appraisers, and other
professional Persons and consultants retained by the Agent or any Bank shall
have the right to act exclusively in the interest of the Agent and the Banks and
shall have no duty of disclosure, duty of loyalty, duty of care, or other duty
or obligation of any type or nature whatsoever to the Borrower or any of the
Borrower's shareholders or any other Person.
CREDIT AGREEMENT - PAGE 67
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<PAGE>
Section 14.5 No Fiduciary Relationship. The relationship between the
Borrower and the Obligated Parties on the one hand and the Agent and each Bank
on the other is solely that of debtor and creditor, and neither the Agent nor
any Bank has any fiduciary or other special relationship with the Borrower or
any Obligated Parties, and no term or condition of any of the Loan Documents
shall be construed so as to deem the relationship between the Borrower and the
Obligated Parties on the one hand and the Agent and each Bank on the other and
any Bank to be other than that of debtor and creditor.
Section 14.6 Equitable Relief. The Borrower recognizes that in the event
the Borrower or any Obligated Party fails to pay, perform, observe, or discharge
any or all of the obligations under the Loan Documents, any remedy at law may
prove to be inadequate relief to the Agent and the Banks. The Borrower therefore
agrees that the Agent and the Banks, if the Agent or the Required Banks so
request, shall be entitled to temporary and permanent injunctive relief in any
such case without the necessity of proving actual damages.
Section 14.7 No Waiver; Cumulative Remedies. No failure on the part of the
Agent or any Bank to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power, or privilege under any Loan Document
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power, or privilege under any Loan Document preclude any other or
further exercise thereof or the exercise of any other right, power, or
privilege. The rights and remedies provided for in the Loan Documents are
cumulative and not exclusive of any rights and remedies provided by law.
Section 14.8 Successors and Assigns.
(a) This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns. The
Borrower may not assign or transfer any of its rights or obligations
hereunder without the prior written consent of the Agent and all of
the Banks. Any Bank may sell participations to one or more banks or
other institutions in or to all or a portion of its rights and
obligations under the Loan Documents (including, without limitation,
all or a portion of its Commitment, the Loans owing to it and the
Letter of Credit Liabilities and Swingline Loans which it has made or
in which it has a participating interest); provided, however, that (i)
such Bank's obligations under the Loan Documents (including, without
limitation, its Commitments) shall remain unchanged, (ii) such Bank
shall remain solely responsible to the Borrower for the performance of
such obligations, (iii) such Bank shall remain the holder of its Notes
and owner of its participation or other interests in Letter of Credit
Liabilities and Swingline Loans for all purposes of any Loan Document,
(iv) the Borrower shall continue to deal solely and directly with such
Bank in connection with such Bank's rights and obligations under the
Loan Documents, and (v) such Bank shall not sell a participation that
conveys to the participant the right to vote or give or withhold
consents under any Loan Document, other than the right to vote upon or
consent to (1) any increase of such Bank's Commitments, (2) any
CREDIT AGREEMENT - PAGE 68
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<PAGE>
Commitments, (2) any reduction of the principal amount of, or interest
to be paid on, the Loans or other Obligations of such Bank, (3) any
reduction of any commitment fee, letter of credit fee, or other amount
payable to such Bank under any Loan Document, (4) any postponement of
any date for the payment of any amount payable in respect of the Loans
or other Obligations of such Bank, or (5) the release of any
Collateral or the release of the Borrower or any Obligated Party from
liability arising under the Loan Documents (except as may otherwise
result from a dissolution permitted under Section 10.3).
(b) The Borrower and each of the Banks agree that any Bank (the "Assigning
Bank") may at any time assign to one or more commercial banks, savings
and loan association, savings bank, finance company, insurance
company, pension fund, mutual fund, or other financial institution
(whether a corporation, partnership, or other entity) (herein an
"Eligible Assignee") all, or a proportionate part of all, of its
rights and obligations under the Loan Documents (including, without
limitation, its Commitments and Loans and participation interests)
(each an "Assignee"); provided, however, that (i) each such assignment
shall be of a consistent, and not a varying, percentage of all of the
assigning Bank's rights and obligations under the Loan Documents, (ii)
except in the case of an assignment of all of a Bank's rights and
obligations under the Loan Documents, the amount of the Commitments of
the assigning Bank being assigned or if any Commitment has terminated,
the outstanding principal amount of the related Loans, pursuant to
each assignment (determined as of the date of the Assignment and
Acceptance with respect to such assignment) shall in no event be less
than Ten Million Dollars ($10,000,000), (iii) the parties to each such
assignment shall execute and deliver to the Agent for its acceptance
and recording in the Register (as defined below), an Assignment and
Acceptance, together with the Notes subject to such assignment, and a
processing and recordation fee of Three Thousand Dollars ($3,000)
payable by the assignor or assignee (and not the Borrower); and (iv)
the Borrower and the Agent must consent to such assignment, which
consent shall not be unreasonably withheld, with such consents to be
evidenced by the Borrower's and the Agent's execution of the
Assignment and Acceptance; provided however, neither the Agent's nor
the Borrower's consent shall be required if the Assignee is an
Affiliate of the Assigning Bank. 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, or, if so
specified in such Assignment and Acceptance, the date of acceptance
thereof by the Agent, (x) the assignee thereunder shall be a party
hereto as a "Bank" and, to the extent that rights and obligations
hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Bank hereunder and
under the Loan Documents and (y) the Bank that is an assignor
thereunder shall, to the extent that rights and obligations hereunder
have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights and be released from its obligations under the
Loan Documents (and, in the case of an Assignment and Acceptance
covering all or the remaining portion of a Bank's rights and
obligations under the Loan Documents, such Bank shall cease to be a
party thereto).
CREDIT AGREEMENT - PAGE 69
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<PAGE>
(c) The Agent shall maintain at its Principal Office a copy of each
Assignment and Acceptance delivered to and accepted by it and a
register for the recordation of the names and addresses of the Banks
and the Commitments of, and principal amount of the Loans owing to and
Letter of Credit Liabilities and Swingline Loans participated in by,
each Bank from time to time (the "Register"). The entries in the
Register shall be conclusive and binding for all purposes, absent
manifest error, and the Borrower, the Agent, and the Banks may treat
each Person whose name is recorded in the Register as a Bank hereunder
for all purposes under the Loan Documents. The Register shall be
available for inspection by the Borrower or any Bank at any reasonable
time and from time to time upon reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance executed by an
Assigning Bank and Assignee representing that it is an Eligible
Assignee, together with any Notes subject to such assignment, the
Agent shall, if such Assignment and Acceptance has been completed and
is in substantially the form of Exhibit "F" hereto, (i) accept such
Assignment and Acceptance, (ii) record the information contained
therein in the Register, and (iii) give prompt written notice thereof
to the Borrower. Within five (5) Business Days after its receipt of
such notice the Borrower, at its expense, shall execute and deliver to
the Agent in exchange for the surrendered Notes new Notes to the order
of such Eligible Assignee in an amount equal to the Commitments or
Loans assumed by it pursuant to such Assignment and Acceptance and, if
the assigning Bank has retained Commitments or Loans, Notes to the
order of the assigning Bank in an amount equal to the Commitments and
Loans retained by it hereunder (each such promissory note shall
constitute a "Note" for purposes of the Loan Documents). Such new
Notes shall be in an aggregate principal amount of the surrendered
Notes, shall be dated the effective date of such Assignment and
Acceptance, and shall otherwise be in substantially the form of the
applicable Exhibit hereto.
(e) Any Bank may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section,
disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Borrower or its
Subsidiaries furnished to such Bank by or on behalf of the Borrower or
its Subsidiaries.
Section 14.9 Survival. All representations and warranties made in any Loan
Document or in any document, statement, or certificate furnished in connection
with any Loan Document shall survive the execution and delivery of the Loan
Documents and no investigation by the Agent or any Bank or any closing shall
affect the representations and warranties or the right of the Agent or any Bank
to rely upon them. Without prejudice to the survival of any other obligation of
the Borrower hereunder, the obligations of the Borrower under Article 6 and
Sections 14.1 and 14.2 shall survive repayment of the Notes and termination of
the Commitments and the Letters of Credit.
CREDIT AGREEMENT - PAGE 70
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<PAGE>
Section 14.10 ENTIRE AGREEMENT. THIS AGREEMENT, THE NOTES, AND THE OTHER
LOAN DOCUMENTS REFERRED TO HEREIN EMBODY THE FINAL, ENTIREAGREEMENT AMONG THE
PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE
SUBJECT MATTER HEREOF (INCLUDING, WITHOUT LIMITATION, THAT CERTAIN COMMITMENT
LETTER DATED MAY 15, 1997 AMONG BORROWER, BANKBOSTON, N.A., AND BANCBOSTON
SECURITIES, INC.) AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES
HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES THERETO.
Section 14.11 Amendments. No amendment or waiver of any provision of any
Loan Document to which the Borrower is a party, nor any consent to any departure
by the Borrower therefrom, shall in any event be effective unless the same shall
be agreed or consented to by Required Banks (except as permitted by Section 9.10
with respect to amendments to Schedule 8.14) and the Borrower, and each such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, that no amendment, waiver, or
consent shall, unless in writing and signed by all of the Banks and the
Borrower, do any of the following: (a) increase Commitments of the Banks; (b)
reduce the principal of, or interest on, the Notes, the Reimbursement
Obligations, or any fees or other amounts payable hereunder; (c) postpone any
date fixed for any payment of principal of, or interest on, the Notes, the
Reimbursement Obligations, or any fees or other amounts payable hereunder; (d)
waive or amend any of the conditions specified in Article 7; (e) change the
percentage of the Commitments or of the aggregate unpaid principal amount of the
Notes or the Letter of Credit Liabilities or the number of Banks which shall be
required for the Banks or any of them to take any action under any Loan
Document; (f) change any provision contained in this Section 14.11; or (g)
release any Collateral or release the Borrower or any Obligated Party from
liability, including, but not limited to, the release of any Obligated Party
from a Guaranty or other Loan Document. Notwithstanding anything to the contrary
contained in this Section, no amendment waiver, or consent shall be made with
respect to Sections 2.7 or 2.8 or Article 13 hereof without the prior written
consent of the Agent.
Section 14.12 Maximum Interest Rate.
(a) No interest rate specified in any Loan Document shall at any time
exceed the Maximum Rate. If at any time the interest rate (the
"Contract Rate") for any Obligation shall exceed the Maximum Rate,
thereby causing the interest accruing on such Obligation to be limited
to the Maximum Rate, then any subsequent reduction in the Contract
Rate for such Obligation shall not reduce the rate of interest on such
Obligation below the Maximum Rate until the aggregate amount of
interest accrued on such Obligation equals the aggregate amount of
interest which would have accrued on such Obligation if the Contract
Rate for such Obligation had at all times been in effect.
(b) No provision of any Loan Document shall require the payment or the
collection of interest in excess of the maximum amount permitted by
applicable law. If any excess of interest in such respect is hereby
provided for, or shall be adjudicated to be so provided, in any Loan
CREDIT AGREEMENT - PAGE 71
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<PAGE>
Document or otherwise in connection with this loan transaction, the
provisions of this Section shall govern and prevail and neither the
Borrower nor the sureties, guarantors, successors, or assigns of the
Borrower shall be obligated to pay the excess amount of such interest
or any other excess sum paid for the use, forbearance, or detention of
sums loaned pursuant hereto. In the event any Bank ever receives,
collects, or applies as interest any such sum, such amount which would
be in excess of the maximum amount permitted by applicable law shall
be applied as a payment and reduction of the principal of the
Obligations; and, if the principal of the Obligations has been paid in
full, any remaining excess shall forthwith be paid to the Borrower. In
determining whether or not the interest paid or payable exceeds the
Maximum Rate, the Borrower and each Bank shall, to the extent
permitted by applicable law, (a) characterize any non-principal
payment as an expense, fee, or premium rather than as interest, (b)
exclude voluntary prepayments and the effects thereof, and (c)
amortize, prorate, allocate, and spread in equal or unequal parts the
total amount of interest throughout the entire contemplated term of
the Obligations so that interest for the entire term does not exceed
the Maximum Rate.
Section 14.13 Notices. All notices and other communications provided for in
any Loan Document to which the Borrower or any Obligated Party is a party shall
be given or made in writing and telecopied, mailed by certified mail return
receipt requested, or delivered to the intended recipient at the "Address for
Notices" specified below its name on the signature pages hereof and, if to an
Obligated Party, at the address for notices for Borrower; or, as to any party at
such other address as shall be designated by such party in a notice to each
other party given in accordance with this Section. Except as otherwise provided
in any Loan Document, all such communications shall be deemed to have been duly
given when transmitted by telecopy, subject to telephone confirmation of
receipt, or when personally delivered or, in the case of a mailed notice, three
(3) Business Days after being duly deposited in the mails, in each case given or
addressed as aforesaid; provided, however, notices to the Agent pursuant to
Section 2.7 or 5.3 shall not be effective until received by the Agent.
Section 14.14 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas and the applicable
laws of the United States of America.
Section 14.15 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
Section 14.16 Severability. Any provision of any Loan Document held by a
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of any Loan Document and the effect thereof shall be
confined to the provision held to be invalid or illegal.
Section 14.17 Headings. The headings, captions, and arrangements used in
this Agreement are for convenience only and shall not affect the interpretation
of this Agreement.
CREDIT AGREEMENT - PAGE 72
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<PAGE>
Section 14.18 Non-Application of Chapter 15 of Texas Credit Code. The
provisions of Chapter 15 of the Texas Credit Code (Vernon's Texas Civil
Statutes, Article 5069-15) are specifically declared by the parties hereto not
to be applicable to any Loan Documents or to the transactions contemplated
thereby.
Section 14.19 Construction. The Borrower, each Obligated Party (by its
execution of the Loan Documents to which it is a party), the Agent and each Bank
acknowledges that each of them has had the benefit of legal counsel of its own
choice and has been afforded an opportunity to review the Loan Documents with
its legal counsel and that the Loan Documents shall be construed as if jointly
drafted by the parties thereto.
Section 14.20 Independence of Covenants. All covenants under the Loan
Documents shall be given independent effect so that if a particular action or
condition is not permitted by any of such covenants, the fact that it would be
permitted by an exception to, or be otherwise within the limitations of, another
covenant shall not avoid the occurrence of a Default if such action is taken or
such condition exists.
Section 14.21 WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND EXPRESSLY
WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM
(WHETHER BASED UPON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO
ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY OR THE
ACTIONS OF THE AGENT OR ANY BANK IN THE NEGOTIATION, ADMINISTRATION, OR
ENFORCEMENT THEREOF.
Section 14.22 Confidentiality. Agent and each Bank (each a "Lending Party")
agrees to keep any Designated Information (as defined below) delivered or made
available by the Borrower to it confidential from anyone other than Persons
employed or retained by such Lending Party who are, or are expected to be,
engaged in evaluating, approving, structuring or administering the credit
facility provided herein; provided that nothing herein shall prevent any Lending
Party from disclosing such Designated Information (a) to any other Lending
Party, (b) to any other Person if reasonably incidental to the administration of
the credit facility provided herein, (c) upon the order of any court or
administrative agency, (d) upon the request or demand of any regulatory agency
or authority, (e) which had been publicly disclosed other than as a result of a
disclosure by any Lending Party prohibited by this Agreement, (f) in connection
with any litigation to which such Lending Party or any of its Affiliates may be
a party, (g) to the extent necessary in connection with the exercise of any
remedy hereunder, (h) to such Lending Party's legal counsel and independent
auditors, (i) to any Affiliate of such Lending Party, solely in connection with
this Agreement, and (j) subject to provisions substantially similar to those
contained in this Section, to any actual or proposed participant or assignee of
any of its rights and obligations under the
CREDIT AGREEMENT - PAGE 73
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<PAGE>
Loan Documents in accordance with the terms hereof. The term "Designated
Information" means any information which has been designated by the Borrower in
writing as confidential.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
BORROWER:
DARLING INTERNATIONAL INC.
By: /s/ Brad Phillips
---------------------------
Brad Phillips
Treasurer
Address for Notices:
251 O'Conner Ridge Blvd., Suite 300
Irving, Texas 75038
Fax No.: 972-717-1588
Telephone No.: 972-717-0300
Attention: Treasurer
CREDIT AGREEMENT - PAGE 74
FINS2DAL:45483.8 05009-00034
<PAGE>
AGENT:
------
Revolving Commitment: BANKBOSTON, N.A.,
individually as a Bank and as the Agent
$19,444,444.46
Swingline Commitment: By: /s/ Stephen Y. McGehee
-----------------------
$10,000,000.00 Stephen Y. McGehee
Director
Term Commitment: Address for Notices:
-------------------
$5,555,555.54 100 Federal Street
Mail Stop 01-09-06
Boston, MA 02110
Fax No. 617-434-2309
Telephone No.:617-434-7860
Attention: Leigh Ann Ingalls
With a copy to:
--------------
115 Perimeter Center Place, N.E.
Suite 500
Atlanta, Georgia 30346
Fax No.: 770-393-4166
Telephone No.: 770-390-6524
Attention: Stephen Y. McGehee
Lending Office for Base Rate
Accounts and Libor Accounts:
-----------------------------
100 Federal Street
Boston, MA 02110
CREDIT AGREEMENT - PAGE 75
FINS2DAL:45483.8 05009-00034
<PAGE>
CO-AGENTS:
---------
Revolving Commitment: CREDIT LYONNAIS NEW YORK BRANCH
$16,333,333.33
By: /s/ Robert Ivosevich
Term Commitment: Name: Robert Ivosevich
Title: Sr. Vice President
$4,666,666.67
Address for Notices:
-------------------
In care of:
Credit Lyonnais Dallas Representative Office
2200 Ross Avenue, Suite 4400W
Dallas, Texas 75201
Fax No.: 214-220-2323
Telephone: 214-220-2300
Attention: Sean Davenport
Lending Office for Base Rate Accounts and
Libor Accounts:
--------------------------------------
Credit Lyonnais New York Branch
1301 Avenue of the Americas
New York, New York 10019
CREDIT AGREEMENT - PAGE 76
FINS2DAL:45483.8 05009-00034
<PAGE>
Revolving Commitment: COMERICA BANK
$16,333,333.33
By: /s/ Reginald M. Goldsmith, III
-----------------------------------
Term Commitment: Reginald M. Goldsmith, III
Vice President
$4,666,666.67
Address for Notices:
--------------------
4100 Spring Valley Road, Suite 900
Dallas, Texas 75244
Fax No.214-818-2550
Telephone No.214-818-2548
Attn: Reginald M. Goldsmith
Lending Office for Base Rate Accounts and
Libor Accounts:
---------------------------------------
500 Woodward Avenue, 9th Floor
Detroit, MI 48266
Attn: Tina Azar
CREDIT AGREEMENT - PAGE 77
FINS2DAL:45483.8 05009-00034
<PAGE>
Revolving Commitment: WELLS FARGO BANK (TEXAS), NATIONAL
ASSOCIATION
$16,333,333.33
Term Commitment: By: /s/ Mary Jo Hoch
------------------------
$4,666,666.67 Mary Jo Hoch
Vice President
Address for Notices:
-------------------
1445 Ross Avenue, 3rd Floor
Dallas, Texas 75202
Fax No. 214-740-1543
Telephone No. 214-740-1551
Attention: Mary Jo Hoch
With a copy to:
--------------
201 3rd Street, 8th Floor
San Francisco, CA 94103
Telecopy No.415-979-0675
Telephone No. 415-477-5433
Attention: Judy Chan
Lending Office for Base Rate Accounts and
Libor Accounts:
------------------------------------
201 3rd Street, 8th Floor
San Francisco, CA 94103
Telecopy No.415-979-0675
Telephone No. 415-477-5433
Attention: Judy Chan
CREDIT AGREEMENT - PAGE 78
FINS2DAL:45483.8 05009-00034
<PAGE>
OTHER BANKS:
-----------
Revolving Commitment: HARRIS TRUST AND SAVINGS BANK
$16,333,333.33
By: /s/ Mary L. Burke
-------------------------
Term Commitment: Mary L. Burke
Vice President
$4,666,666.67
Address for Notices:
-------------------
111 West Monroe Street, 18 West Floor
Chicago, Illinois 60603
Fax No.: 312-461-2744
Telephone No.: 312-461-2121
Attention: Mary L. Burke
Lending Office for Base Rate Accounts and
Libor Accounts:
----------------------------------------
111 West Monroe
Chicago, Illinois 60603
CREDIT AGREEMENT - PAGE 79
FINS2DAL:45483.8 05009-00034
<PAGE>
Revolving Commitment: THE FIRST NATIONAL BANK OF CHICAGO
$16,333,333.33
By: /s/ Courtenay R. Wood
----------------------------
Term Commitment: Name:Courtenay R. Wood
Title: Vice President
$4,666,666.67
Address for Notices:
-------------------
One First National Plaza, Suite 0324/1-10
Chicago, Illinois 60670
Fax No.: 312-732-2991
Telephone: 312-732-1706
Attention: Cory M. Olson
Lending Office for Base Rate Accounts and
Libor Accounts:
----------------------------------------
One First National Plaza
Suite /1-10
Chicago, Illinois 60670
CREDIT AGREEMENT - PAGE 80
FINS2DAL:45483.8 05009-00034
<PAGE>
Revolving Commitment: HIBERNIA NATIONAL BANK
$10,111,111.11
By: /s/ Christopher B. Pitre
--------------------------------
Term Commitment: Name: Christopher B. Pitre
Title: Asst. Vice President
$2,888,888.89
Address for Notices:
-------------------
313 Carondelet, 12th Floor
New Orleans, LA 70131
Fax No. 504-533-5344
Telephone No. 504-533-2878
Attention: Christopher B. Pitre
Lending Office for Base Rate Accounts and
Libor Accounts:
--------------------------------------
313 Carondelet, 12th Floor
New Orleans, LA 70131
CREDIT AGREEMENT - PAGE 81
FINS2DAL:45483.8 05009-00034
<PAGE>
Revolving Commitment: THE SUMITOMO BANK, LIMITED
$10,111,111.11
By: /s/ Julie A. Schell
------------------------------
Term Commitment: Julie A. Schell
Vice President
$2,888,888.89
By: /s/Kirk L. Stites
-------------------------------
Kirk L. Stites
Vice President and Manager
Address for Notices:
-------------------
1601 Elm Street, Suite 4250
Dallas, Texas 75201
Fax No. 214-979-0571
Telephone No.: 214-979-3212
Attention: Julie A. Schell
Lending Office for Base Rate Accounts and
Libor Accounts:
---------------------------------------
233 South Wacker Drive
Chicago, Illinois 60603
CREDIT AGREEMENT - PAGE 82
FINS2DAL:45483.8 05009-00034
<PAGE>
Revolving Commitment: SUNTRUST BANK, ATLANTA
$10,111,111.11
By: /s/ F. Steven Parrish
---------------------------
Term Commitment: F. Steven Parrish
Vice President
$2,888,888.89
By: /s/ Brian M. Davis
---------------------------
Name: Brian M. Davis
Title: Asst. Vice President
Address for Notices:
-------------------
25 Park Place
P.O. Box 4418, Mail Code 176
Atlanta, GA 30302
Fax No.: 404-230-5305
Telephone No.: 404-724-3923
Attention: F. Steven Parrish
Lending Office for Base Rate Accounts and
Libor Accounts:
----------------------------------------
25 Park Place
P.O. Box 4418, Mail Code 176
Atlanta, GA 30302
Fax No.: 404-230-5305
Telephone No. 404-230-4224
CREDIT AGREEMENT - PAGE 83
FINS2DAL:45483.8 05009-00034
<PAGE>
Revolving Commitment: CAISSE NATIONALE DE CREDIT AGRICOLE
$7,777,777.78
By: /s/ W. Leroy Startz
-------------------------------
Term Commitment: Name: W. Leroy Startz
Title: First Vice President
$2,222,222.22
Address for Notices:
--------------------
55 East Monroe, Suite 4700
Chicago, Illinois 60603
Fax: No. 312-372-3455
Telephone: 312-917-7568
Attention: Bradley Peterson
Lending Office for Base Rate Accounts and
Libor Accounts:
---------------------------------------
55 East Monroe, Suite 4700
Chicago, Illinois 60603
CREDIT AGREEMENT - PAGE 84
FINS2DAL:45483.8 05009-00034
<PAGE>
Revolving Commitment: THE FUJI BANK, LIMITED - HOUSTON AGENCY
$10,111,111.11
By: /s/Philip C. Lauinger III
------------------------------------
Philip C. Lauinger III
Term Commitment: Vice President & Manager
$2,888,888.89
Address for Notices:
---------------------
1221 McKinney, Suite 4100
Houston, Texas 77010
Fax: No. 713-759-0048
Telephone No. 713-650-7855
Attn: Jay Fort
Lending Office for Base Rate Accounts and
Libor Accounts:
----------------------------------------
1221 McKinney, Suite 4100
Houston, Texas 77010
CREDIT AGREEMENT - PAGE 85
FINS2DAL:45483.8 05009-00034
<PAGE>
Revolving Commitment: NATIONSBANK OF TEXAS, N.A.
$7,777,777.78
By: /s/ Sharon M. Ellis
-----------------------------
Sharon M. Ellis
Term Commitment: Vice President
$2,222,222.22
Address for Notices:
-------------------
901 Main Street, 67th Floor
Dallas, Texas 75202
Fax No.: 214-508-0980
Telephone: 214-508-0906
Attn: Sharon M. Ellis
Lending Office for Base Rate Accounts and
Libor Accounts:
----------------------------------------
901 Main Street, 67th Floor
Dallas, Texas 75202
CREDIT AGREEMENT - PAGE 86
FINS2DAL:45483.8 05009-00034
<PAGE>
Revolving Commitment: THE BANK OF NOVA SCOTIA
$10,111,111.11
By: /s/ F.C. H. Ashby
---------------------------
Name: F.C.H. Ashby
Term Commitment: Title: Sr. Manager Loan Operations
$2,888,888.89
Address for Notices:
-------------------
600 Peachtree Street, N.E., Suite 2700
Atlanta, Georgia 30308
Fax No.: 404-888-8798
Telephone No.: 404-877-1565
Attn: Dottie Legista
With a copy to:
--------------
1100 Louisiana, Suite 3000
Houston, Texas 77002
Fax No.: 713-752-2425
Telephone No.: 713-759-3443
Attn: Paul Gonan
Lending Office for Base Rate Accounts and
Libor Accounts:
----------------------------------------
600 Peachtree Street, N.E., Suite 2700
Atlanta, Georgia 30308
CREDIT AGREEMENT - PAGE 87
FINS2DAL:45483.8 05009-00034
<PAGE>
Revolving Commitment: BANK ONE, TEXAS, N.A.
$7,777,777.78
By: /s/ Scott Rhea
--------------------------
Term Commitment: Scott Rhea
Vice President
$2,222,222.22
Address for Notices:
-------------------
1717 Main Street, Third Floor
Dallas, Texas 75201
Fax: 214-290-2683
Telephone: 214-290-2540
Attention: Rick Rogers
Lending Office for Base Rate Accounts and
Libor Accounts:
-----------------------------------
1717 Main Street, Third Floor
Dallas, Texas 75201
CREDIT AGREEMENT - PAGE 88
FINS2DAL:45483.8 05009-00034
<PAGE>
INDEX TO EXHIBITS
-----------------
Exhibit Description of Exhibit
-------- ---------------------------
"A" Revolving Note
"B" Swingline Note
"C" Term Note
"D" Guaranty
"E" Borrower Pledge Agreement
"F" Assignment and Acceptance
"G" Compliance Certificate
INDEX TO SCHEDULES
------------------
Schedule Description of Schedule
-------- ---------------------------
2.7(a) Existing Letters of Credit
8.14 List of Subsidiaries
10.1 Existing Debt
10.2 Existing Liens
10.5 Existing Investments
10.8 Nonproductive Assets
CREDIT AGREEMENT - PAGE 89
FINS2DAL:45483.8 05009-00034
<PAGE>
EXHIBIT "A"
TO
DARLING INTERNATIONAL INC.
CREDIT AGREEMENT
Revolving Note
FINS2DAL:45691.3 05009-00034
<PAGE>
REVOLVING NOTE
$________________ Dallas, Texas June 5, 1997
FOR VALUE RECEIVED, the undersigned, DARLING INTERNATIONAL INC., a
Delaware corporation (the "Borrower"), hereby promises to pay to the order of
________________ (the "Bank"), at the Principal Office of the Agent, in lawful
money of the United States of America and in immediately available funds, the
principal amount of ______________________ ($___________) or such lesser amount
as shall equal the aggregate unpaid principal amount of the Revolving Loans made
by the Bank to the Borrower under the Credit Agreement referred to below, on the
dates and in the principal amounts provided in the Credit Agreement, and to pay
interest on the unpaid principal amount of each such Revolving Loan, at such
office, in like money and funds, for the period commencing on the date of such
Revolving Loan until such Revolving Loan shall be paid in full, at the rates per
annum and on the dates provided in the Credit Agreement.
The Borrower hereby authorizes the Bank to record in its records the
amount of each Revolving Loan and Type of Accounts established under each
Revolving Loan and all Continuations, Conversions and payments of principal in
respect thereof, which records shall, in the absence of manifest error, be
conclusive; provided, however, that the failure to make such notation with
respect to any such Revolving Loan or payment shall not limit or otherwise
affect the obligations of the Borrower under the Credit Agreement or this
Revolving Note.
This Revolving Note is one of the Revolving Notes referred to in the
Credit Agreement dated as of June 5, 1997, among the Borrower, the Bank, the
other banks named therein and BankBoston, N.A., as agent for such banks
("Agent") (such Credit Agreement, as the same may be amended or otherwise
modified from time to time, being referred to herein as the "Credit Agreement"),
and evidences Revolving Loans made by the Bank thereunder. The Credit Agreement,
among other things, contains provisions for acceleration of the maturity of this
Revolving Note upon the happening of certain stated events and for prepayments
of Revolving Loans prior to the maturity of this Revolving Note upon the terms
and conditions specified in the Credit Agreement. Capitalized terms used in this
Revolving Note have the respective meanings assigned to them in the Credit
Agreement.
This Revolving Note shall be governed by and construed in accordance
with the laws of the State of Texas and the applicable laws of the United States
of America.
The Borrower and each surety, guarantor, endorser and other party ever
liable for payment of any sums of money payable on this Revolving Note jointly
and severally waive notice, presentment, demand for payment, protest, notice of
protest and non-payment or dishonor, notice of acceleration, notice of intent to
accelerate, notice of intent to demand, diligence in collecting, grace and all
other formalities of any kind, and consent to all extensions without notice for
any period or periods of time and partial payments, before or after maturity,
and any impairment of any collateral securing this Revolving Note, all without
prejudice to the holder. The holder shall similarly have the right to deal in
any way, at any time, with one or more of the foregoing parties without notice
to any other party, and to grant any such party any extensions of time for
payment of any of said indebtedness, or to
REVOLVING NOTE - Page 1
FINS2DAL:45691.3 05009-00034
<PAGE>
release any such party or to release or substitute part or all of the collateral
securing this Revolving Note, or to grant any other indulgences or forbearances
whatsoever, without notice to any other party and without in any way affecting
the personal liability of any party hereunder.
DARLING INTERNATIONAL INC.
By:
----------------------------
Brad Phillips, Treasurer
REVOLVING NOTE - Page 2
FINS2DAL:45691.3 05009-00034
<PAGE>
EXHIBIT "B"
TO
DARLING INTERNATIONAL INC.
CREDIT AGREEMENT
Swingline Note
SWINGLINE NOTE - Page 1
FINS2DAL:45692.2 05009-00034
<PAGE>
SWINGLINE NOTE
$10,000,000 Dallas, Texas June 5, 1997
FOR VALUE RECEIVED, the undersigned, DARLING INTERNATIONAL INC., a
Delaware corporation (the "Borrower"), hereby promises to pay to the order of
BANKBOSTON, N.A. (the "Bank"), at the Principal Office of the Agent, in lawful
money of the United States of America and in immediately available funds, the
principal amount of Ten Million Dollars ($10,000,000) or such lesser amount as
shall equal the aggregate unpaid principal amount of the Swingline Loans made by
the Bank to the Borrower under the Credit Agreement referred to below, on the
dates and in the principal amounts provided in the Credit Agreement, and to pay
interest on the unpaid principal amount of each such Swingline Loan, at such
office, in like money and funds, for the period commencing on the date of such
Swingline Loan until such Swingline Loan shall be paid in full, at the rates per
annum and on the dates provided in the Credit Agreement.
The Borrower hereby authorizes the Bank to record in its records the
amount of each Swingline Loan made to the Borrower by the Bank and all payments
of principal in respect to each such Swingline Loan, which records shall, in the
absence of manifest error, be conclusive; provided, however, that the failure to
make such notation with respect to any such Swingline Loan or payment shall not
limit or otherwise affect the obligations of the Borrower under the Credit
Agreement or this Swingline Note.
This Swingline Note is the Swingline Note referred to in the Credit
Agreement dated as of June 5, 1997, among the Borrower, the Bank, the other
banks named therein and BankBoston, N.A., as agent for such banks ("Agent")
(such Credit Agreement, as the same may be amended, modified, or supplemented
from time to time, being referred to herein as the "Credit Agreement") and
evidences Swingline Loans made by the Bank thereunder. The Credit Agreement,
among other things, contains provisions for acceleration of the maturity of this
Swingline Note upon the happening of certain stated events and for prepayments
of Swingline Loans prior to the maturity of this Swingline Note upon the terms
and conditions specified in the Credit Agreement. Capitalized terms used in this
Swingline Note have the respective meanings assigned to them in the Credit
Agreement.
This Swingline Note shall be governed by and construed in accordance
with the laws of the State of Texas and the applicable laws of the United States
of America.
The Borrower and each surety, guarantor, endorser and other party ever
liable for payment of any sums of money payable on this Swingline Note jointly
and severally waive notice, presentment, demand for payment, protest, notice of
protest and non-payment or dishonor, notice of acceleration, notice of intent to
accelerate, notice of intent to demand, diligence in collecting, grace and all
other formalities of any kind, and consent to all extensions without notice for
any period or periods of time and partial payments, before or after maturity,
and any impairment of any collateral securing this Swingline Note, all without
prejudice to the holder. The holder shall similarly have the right to deal in
any way, at any time, with one or more of the foregoing parties without notice
to any other party, and to grant any such party any extensions of time for
payment of any of said indebtedness, or to
SWINGLINE NOTE - Page 2
FINS2DAL:45692.2 05009-00034
<PAGE>
release any such party or release or substitute part or all of the collateral
securing this Swingline Note, or to grant any other indulgences or forbearances
whatsoever, without notice to any other party and without in any way affecting
the personal liability of any party hereunder.
DARLING INTERNATIONAL INC.
By:
----------------------------
Brad Phillips, Treasurer
SWINGLINE NOTE - Page 3
FINS2DAL:45692.2 05009-00034
<PAGE>
EXHIBIT "C"
TO
DARLING INTERNATIONAL INC.
CREDIT AGREEMENT
Term Note
FINS2DAL:45693.1 05009-00034
<PAGE>
TERM NOTE
$________________ Dallas, Texas June 5, 1997
FOR VALUE RECEIVED, the undersigned, DARLING INTERNATIONAL INC., a
Delaware corporation (the "Borrower"), hereby promises to pay to the order of
________________ (the "Bank"), at the Principal Office of the Agent, in lawful
money of the United States of America and in immediately available funds, the
principal amount of ______________________ ($___________) or such lesser amount
as shall equal the aggregate unpaid principal amount of the Term Loans made by
the Bank to the Borrower under the Credit Agreement referred to below, on the
dates and in the principal amounts provided in the Credit Agreement, and to pay
interest on the unpaid principal amount of each such Term Loan, at such office,
in like money and funds, for the period commencing on the date of such Term Loan
until such Term Loan shall be paid in full, at the rates per annum and on the
dates provided in the Credit Agreement.
The Borrower hereby authorizes the Bank to record in its records the
amount of the Term Loan and Type of Accounts established thereunder and all
Continuations, Conversions and payments of principal in respect thereto, which
records shall, in the absence of manifest error, be conclusive; provided,
however, that the failure to make such notation with respect to any such Term
Loan, Accounts or payment shall not limit or otherwise affect the obligations of
the Borrower under the Credit Agreement or this Term Note.
This Term Note is one of the Term Notes referred to in the Credit
Agreement dated as of June 5, 1997, among the Borrower, the Bank, the other
banks named therein and BankBoston, N.A., as agent for such banks ("Agent")
(such Credit Agreement, as the same may be amended or otherwise modified from
time to time, being referred to herein as the "Credit Agreement"), and evidences
Term Loans made by the Bank thereunder. The Credit Agreement, among other
things, contains provisions for acceleration of the maturity of this Term Note
upon the happening of certain stated events and for prepayments of Term Loans
prior to the maturity of this Term Note upon the terms and conditions specified
in the Credit Agreement. Capitalized terms used in this Term Note have the
respective meanings assigned to them in the Credit Agreement.
This Term Note shall be governed by and construed in accordance with
the laws of the State of Texas and the applicable laws of the United States of
America.
The Borrower and each surety, guarantor, endorser and other party ever
liable for payment of any sums of money payable on this Term Note jointly and
severally waive notice, presentment, demand for payment, protest, notice of
protest and non-payment or dishonor, notice of acceleration, notice of intent to
accelerate, notice of intent to demand, diligence in collecting, grace and all
other formalities of any kind, and consent to all extensions without notice for
any period or periods of time and partial payments, before or after maturity,
and any impairment of any collateral securing this Term Note, all without
prejudice to the holder. The holder shall similarly have the right to deal in
any way, at any time, with one or more of the foregoing parties without notice
to any other party, and to grant any such party any extensions of time for
payment of any of said indebtedness, or to release any
TERM NOTE - Page 1
FINS2DAL:45693.1 05009-00034
<PAGE>
such party or release or substitute part or all of the collateral securing this
Term Note, or to grant any other indulgences or forbearances whatsoever, without
notice to any other party and without in any way affecting the personal
liability of any party hereunder.
DARLING INTERNATIONAL INC.
By:
-------------------------------
Brad Phillips, Treasurer
TERM NOTE - Page 2
FINS2DAL:45693.1 05009-00034
<PAGE>
EXHIBIT "D"
TO
DARLING INTERNATIONAL INC.
CREDIT AGREEMENT
Guaranty Agreement
GUARANTY AGREEMENT - Page 1
FINS2DAL:45701.2 05009-00034
<PAGE>
GUARANTY AGREEMENT
WHEREAS, DARLING INTERNATIONAL INC., a Delaware corporation
("Borrower") has entered into that certain Credit Agreement of even date
herewith, among Borrower, the banks named therein and BankBoston, N.A., as agent
for such banks ("Agent") (such Credit Agreement, as it may hereafter be amended
or otherwise modified from time to time, being hereinafter referred to as the
"Credit Agreement" and capitalized terms not otherwise defined herein shall have
the same meaning as set forth in the Credit Agreement);
WHEREAS, the execution of this Guaranty Agreement is a condition to
each Bank's obligations under the Credit Agreement;
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the undersigned, ________________, a
________________ corporation (the "Guarantor"), hereby irrevocably and
unconditionally guarantees to the Agent and the Banks the full and prompt
payment and performance of the Guaranteed Indebtedness (hereinafter defined),
this Guaranty Agreement being upon the following terms:
1. The term "Guaranteed Indebtedness", as used herein means all of the
"Obligations", as defined in the Credit Agreement and shall include any and all
post-petition interest and expenses (including attorneys' fees) whether or not
allowed under any bankruptcy, insolvency, or other similar law; provided that
the Guaranteed Indebtedness shall be limited to an aggregate amount equal to the
largest amount that would not render Guarantor's obligations hereunder subject
to avoidance under Section 544 or 548 of the United States Bankruptcy Code or
under any applicable state law relating to fraudulent transfers or conveyances.
2. This instrument shall be an absolute, continuing, irrevocable and
unconditional guaranty of payment and performance, and not a guaranty of
collection, and Guarantor shall remain liable on its obligations hereunder until
the payment and performance in full of the Guaranteed Indebtedness. No set-off,
counterclaim, recoupment, reduction, or diminution of any obligation, or any
defense of any kind or nature which Borrower may have against Agent, any Bank or
any other party, or which Guarantor may have against Borrower, Agent, any Bank
or any other party, shall be available to, or shall be asserted by, Guarantor
against Agent, any Bank or any subsequent holder of the Guaranteed Indebtedness
or any part thereof or against payment of the Guaranteed Indebtedness or any
part thereof.
3. If Guarantor becomes liable for any indebtedness owing by Borrower
to Agent or any Bank by endorsement or otherwise, other than under this Guaranty
Agreement, such liability shall not be in any manner impaired or affected
hereby, and the rights of Agent and Banks hereunder shall be cumulative of any
and all other rights that Agent and Banks may ever have against Guarantor. The
exercise by Agent and Banks of any right or remedy hereunder or under any other
instrument, or at law or in equity, shall not preclude the concurrent or
subsequent exercise of any other right or remedy.
GUARANTY AGREEMENT - Page 1
FINS2DAL:45701.2 05009-00034
<PAGE>
4. In the event of default by Borrower in payment or performance of the
Guaranteed Indebtedness, or any part thereof, when such Guaranteed Indebtedness
becomes due, whether by its terms, by acceleration, or otherwise, Guarantor
shall promptly pay the amount due thereon to Agent and Banks without notice or
demand in lawful currency of the United States of America and it shall not be
necessary for Agent and Banks, in order to enforce such payment by Guarantor,
first to institute suit or exhaust its remedies against Borrower or others
liable on such Guaranteed Indebtedness, or to enforce any rights against any
collateral which shall ever have been given to secure such Guaranteed
Indebtedness. In the event such payment is made by Guarantor, then Guarantor
shall be subrogated to the rights then held by Agent and any Bank with respect
to the Guaranteed Indebtedness to the extent to which the Guaranteed
Indebtedness was discharged by Guarantor and, in addition, upon payment by
Guarantor of any sums to Agent and any Bank hereunder, all rights of Guarantor
against Borrower or any Collateral arising as a result therefrom by way of right
of subrogation, reimbursement, or otherwise shall in all respects be subordinate
and junior in right of payment to the prior indefeasible payment in full of the
Guaranteed Indebtedness.
5. If acceleration of the time for payment of any amount payable by
Borrower under the Guaranteed Indebtedness is stayed upon the insolvency,
bankruptcy, or reorganization of Borrower, all such amounts otherwise subject to
acceleration under the terms of the Guaranteed Indebtedness shall nonetheless be
payable by Guarantor hereunder forthwith on demand by Agent or any Bank.
6. Guarantor hereby agrees that its obligations under this Guaranty
Agreement shall not be released, discharged, diminished, impaired, reduced, or
affected for any reason or by the occurrence of any event, including, without
limitation, one or more of the following events, whether or not with notice to
or the consent of Guarantor: (a) the taking or accepting of collateral as
security for any or all of the Guaranteed Indebtedness or the release,
surrender, exchange, or subordination of any collateral now or hereafter
securing any or all of the Guaranteed Indebtedness; (b) any partial release of
the liability of Guarantor hereunder, or the full or partial release of any
other guarantor from liability for any or all of the Guaranteed Indebtedness;
(c) any disability of Borrower, or the dissolution, insolvency, or bankruptcy of
Borrower, Guarantor, or any other party at any time liable for the payment of
any or all of the Guaranteed Indebtedness; (d) any renewal, extension,
modification, waiver, amendment, or rearrangement of any or all of the
Guaranteed Indebtedness or any instrument, document, or agreement evidencing,
securing, or otherwise relating to any or all of the Guaranteed Indebtedness;
(e) any adjustment, indulgence, forbearance, waiver, or compromise that may be
granted or given by Agent or any Bank to Borrower, Guarantor, or any other party
ever liable for any or all of the Guaranteed Indebtedness; (f) any neglect,
delay, omission, failure, or refusal of Agent or any Bank to take or prosecute
any action for the collection of any of the Guaranteed Indebtedness or to
foreclose or take or prosecute any action in connection with any instrument,
document, or agreement evidencing, securing, or otherwise relating to any or all
of the Guaranteed Indebtedness; (g) the unenforceability or invalidity of any or
all of the Guaranteed Indebtedness or of any instrument, document, or agreement
evidencing, securing, or otherwise relating to any or all of the Guaranteed
Indebtedness; (h) any payment by Borrower or any other party to Agent or any
Bank is held to constitute a preference under applicable bankruptcy or
insolvency law or if for any other reason Agent or any Bank is required to
refund any payment or pay the amount thereof to someone else; (i) the settlement
or compromise of any of the Guaranteed Indebtedness; (j) the non-perfection of
any security interest or lien securing any or all of the Guaranteed
Indebtedness; (k)
GUARANTY AGREEMENT - Page 2
FINS2DAL:45701.2 05009-00034
<PAGE>
any impairment of any collateral securing any or all of the Guaranteed
Indebtedness; (l) the failure of Agent or any Bank to sell any collateral
securing any or all of the Guaranteed Indebtedness in a commercially reasonable
manner or as otherwise required by law; (m) any change in the corporate
existence, structure, or ownership of Borrower; or (n) any other circumstance
which might otherwise constitute a defense available to, or discharge of,
Borrower or Guarantor.
7. Guarantor represents and warrants to Agent and Banks as follows:
(a) All representations and warranties in the Credit Agreement
relating to Guarantor are true and correct.
(b) The value of the consideration received and to be received
by Guarantor as a result of Borrower, Agent and Banks entering into the
Credit Agreement and Guarantor executing and delivering this Guaranty
Agreement and the other Loan Documents to which it is a party is
reasonably worth at least as much as the liability and obligation of
Guarantor hereunder and thereunder, and such liability and obligation
of Guarantor and the Credit Agreement have benefitted and may
reasonably be expected to benefit Guarantor directly or indirectly.
(c) Guarantor has, independently and without reliance upon
Agent or any Bank and based upon such documents and information as
Guarantor has deemed appropriate, made its own analysis and decision to
enter into the Loan Documents to which it is a party.
(d) Guarantor has adequate means to obtain from Borrower on a
continuing basis information concerning the financial condition and
assets of Borrower and that Guarantor is not relying upon Agent or the
Banks to provide (and neither the Agent nor any Bank shall have any
duty to provide) any such information to Guarantor either now or in the
future.
8. Guarantor covenants and agrees that, as long as the Guaranteed
Indebtedness or any part thereof is outstanding or any Bank has any commitment
under the Credit Agreement, Guarantor will comply with all covenants set forth
in the Credit Agreement specifically applicable to Guarantor.
9. When an Event of Default exists, Agent and Banks shall have the
right to set-off and apply against this Guaranty Agreement or the Guaranteed
Indebtedness or both, at any time and without notice to Guarantor, any and all
deposits (general or special, time or demand, provisional or final) or other
sums at any time credited by or owing from Agent and Banks to Guarantor whether
or not the Guaranteed Indebtedness is then due and irrespective of whether or
not Agent or any Bank shall have made any demand under this Guaranty Agreement.
The rights and remedies of Agent and the Banks hereunder are in addition to
other rights and remedies (including, without limitation, other rights of
set-off) which Agent or any Bank may have.
10. (a) Guarantor hereby agrees that the Subordinated Indebtedness (as
defined below) shall be subordinate and junior in right of payment to the prior
payment in full of all Guaranteed Indebtedness as herein provided. The
Subordinated Indebtedness shall not be payable, and no payment of principal,
interest or other amounts on account thereof, and no property or guarantee of
GUARANTY AGREEMENT - Page 3
FINS2DAL:45701.2 05009-00034
<PAGE>
any nature to secure or pay the Subordinated Indebtedness shall be made or
given, directly or indirectly by or on behalf of any Debtor (hereafter defined)
or received, accepted, retained or applied by Guarantor unless and until the
Guaranteed Indebtedness shall have been paid in full in cash; except that prior
to occurrence of a Default, Guarantor shall have the right to receive regularly
scheduled installments of principal and interest on any Subordinated
Indebtedness. After the occurrence of a Default, no payments of principal or
interest may be made or given, directly or indirectly, by or on behalf of any
Debtor or received, accepted, retained or applied by Guarantor unless and until
the Guaranteed Indebtedness shall have been paid in full in cash. If any sums
shall be paid to Guarantor by any Debtor or any other Person on account of the
Subordinated Indebtedness when such payment is not permitted hereunder, such
sums shall be held in trust by Guarantor for the benefit of Agent and the Bank
and shall forthwith be paid to Agent without affecting the liability of
Guarantor under this Guaranty Agreement and may be applied by Agent against the
Guaranteed Indebtedness in accordance with the Credit Agreement. Upon the
request of Agent, Guarantor shall execute, deliver, and endorse to Agent such
documentation as Agent may request to perfect, preserve, and enforce its rights
hereunder. For purposes of this Guaranty Agreement, the term "Subordinated
Indebtedness" means all indebtedness, liabilities, and obligations of Borrower
or any Obligated Party other than Guarantor (Borrower and such Obligated Parties
herein the "Debtors") to Guarantor, whether such indebtedness, liabilities, and
obligations now exist or are hereafter incurred or arise, or are direct,
indirect, contingent, primary, secondary, several, joint and several, or
otherwise, and irrespective of whether such indebtedness, liabilities, or
obligations are evidenced by a note, contract, open account, or otherwise, and
irrespective of the Person or Persons in whose favor such indebtedness,
obligations, or liabilities may, at their inception, have been, or may hereafter
be created, or the manner in which they have been or may hereafter be acquired
by Guarantor.
(b) Guarantor agrees that any and all Liens (including any
judgment liens), upon any Debtor's assets securing payment of any Subordinated
Indebtedness shall be and remain inferior and subordinate to any and all Liens
upon any Debtor's assets securing payment of the Guaranteed Indebtedness or any
part thereof, regardless of whether such Liens in favor of Guarantor, Agent or
any Bank presently exist or are hereafter created or attached. Without the prior
written consent of Agent, Guarantor shall not (i) file suit against any Debtor
or exercise or enforce any other creditor's right it may have against any
Debtor, or (ii) foreclose, repossess, sequester, or otherwise take steps or
institute any action or proceedings (judicial or otherwise, including without
limitation the commencement of, or joinder in, any liquidation, bankruptcy,
rearrangement, debtor's relief or insolvency proceeding) to enforce any
obligations of any Debtor to Guarantor or any Liens held by Guarantor on assets
of any Debtor.
(c) In the event of any receivership, bankruptcy,
reorganization, rearrangement, debtor's relief, or other insolvency proceeding
involving any Debtor as debtor, Agent shall have the right to prove and vote any
claim under the Subordinated Indebtedness and to receive directly from the
receiver, trustee or other court custodian all dividends, distributions, and
payments made in respect of the Subordinated Indebtedness until the Guaranteed
Indebtedness has been paid in full in cash. Agent may apply any such dividends,
distributions, and payments against the Guaranteed Indebtedness in accordance
with the Credit Agreement.
GUARANTY AGREEMENT - Page 4
FINS2DAL:45701.2 05009-00034
<PAGE>
(d) Guarantor agrees that all promissory notes, accounts
receivable, ledgers, records, or any other evidence of Subordinated Indebtedness
shall contain a specific written notice thereon that the indebtedness evidenced
thereby is subordinated under the terms of this Guaranty Agreement.
11. No amendment or waiver of any provision of this Guaranty Agreement
or consent to any departure by the Guarantor therefrom shall in any event be
effective unless the same shall be in writing and signed by Agent and Required
Banks except as otherwise provided in the Credit Agreement. No failure on the
part of Agent or any Bank to exercise, and no delay in exercising, 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 preclude
any other or further exercise thereof or the exercise of any other right, power,
or privilege. The remedies herein provided are cumulative and not exclusive of
any remedies provided by law.
12. Any acknowledgment or new promise, whether by payment of principal
or interest or otherwise and whether by Borrower or others (including
Guarantor), with respect to any of the Guaranteed Indebtedness shall, if the
statute of limitations in favor of Guarantor against Agent or any Bank shall
have commenced to run, toll the running of such statute of limitations and, if
the period of such statute of limitations shall have expired, prevent the
operation of such statute of limitations.
13. This Guaranty Agreement is for the benefit of Agent and the Banks
and their successors and assigns, and in the event of an assignment of the
Guaranteed Indebtedness, or any part thereof, the rights and benefits hereunder,
to the extent applicable to the indebtedness so assigned, may be transferred
with such indebtedness. This Guaranty Agreement is binding not only on
Guarantor, but on Guarantor's successors and assigns.
14. Guarantor recognizes that Agent and the Banks are relying upon this
Guaranty Agreement and the undertakings of Guarantor hereunder and under the
other Loan Documents to which it is a party in making extensions of credit to
Borrower under the Credit Agreement and further recognizes that the execution
and delivery of this Guaranty Agreement and the other Loan Documents to which it
is a party is a material inducement to Agent and the Banks in entering into the
Credit Agreement and continuing to extend credit thereunder. Guarantor hereby
acknowledges that there are no conditions to the full effectiveness of this
Guaranty Agreement or any other Loan Document to which it is a party.
15. Any notice or demand to Guarantor under or in connection with this
Guaranty Agreement or any other Loan Document to which it is a party shall be
deemed effective if given to Guarantor, care of Borrower in accordance with the
notice provisions in the Credit Agreement.
16. Guarantor shall pay on demand all attorneys' fees and all other
costs and expenses incurred by Agent and Banks in connection with the
administration, enforcement, or collection of this Guaranty Agreement.
17. Guarantor hereby waives promptness, diligence, notice of any default
under the Guaranteed Indebtedness, demand of payment, notice of acceptance of
this Guaranty Agreement,
GUARANTY AGREEMENT - Page 5
FINS2DAL:45701.2 05009-00034
<PAGE>
presentment, notice of protest, notice of dishonor, notice of the incurring by
Borrower of additional indebtedness, and all other notices and demands with
respect to the Guaranteed Indebtedness and this Guaranty Agreement.
18. The Credit Agreement, and all of the terms thereof, are
incorporated herein by reference, the same as if stated verbatim herein, and
Guarantor agrees that Agent and the Banks may exercise any and all rights
granted to any of them under the Credit Agreement and the other Loan Documents
without affecting the validity or enforceability of this Guaranty Agreement.
19. THIS GUARANTY AGREEMENT EMBODIES THE FINAL, ENTIRE AGREEMENT OF
GUARANTOR, AGENT AND BANKS WITH RESPECT TO GUARANTOR'S GUARANTY OF THE
GUARANTEED INDEBTEDNESS AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS,
AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL,
RELATING TO THE SUBJECT MATTER HEREOF. THIS GUARANTY AGREEMENT IS INTENDED BY
GUARANTOR, AGENT AND BANKS AS A FINAL AND COMPLETE EXPRESSION OF THE TERMS OF
THE GUARANTY AGREEMENT, AND NO COURSE OF DEALING AMONG GUARANTOR, AGENT AND
BANKS, NO COURSE OF PERFORMANCE, NO TRADE PRACTICES, AND NO EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OR OTHER EXTRINSIC
EVIDENCE OF ANY NATURE SHALL BE USED TO CONTRADICT, VARY, SUPPLEMENT OR MODIFY
ANY TERM OF THIS GUARANTY AGREEMENT. THERE ARE NO ORAL AGREEMENTS AMONG
GUARANTOR, AGENT AND BANKS.
EXECUTED as of the___ day of_______
GUARANTOR:
By:
-----------------------------
Brad Phillips
Treasurer
GUARANTY AGREEMENT - Page 6
FINS2DAL:45701.2 05009-00034
<PAGE>
EXHIBIT "E"
TO
DARLING INTERNATIONAL INC.
CREDIT AGREEMENT
Pledge Agreement
FINS2DAL:45704.6 05009-00034
<PAGE>
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (the "Agreement") dated as of June 5, 1997, is by
and between DARLING INTERNATIONAL INC., a Delaware corporation ("Pledgor") and
BANKBOSTON, N.A. (formerly known as The First National Bank of Boston), as agent
for itself and the other Banks (the "Secured Party").
RECITALS:
A. Pledgor, the certain lenders ("Banks") and Secured Party have
entered into that certain Credit Agreement of even date herewith (such Credit
Agreement, as the same may be amended or otherwise modified from time to time,
being hereinafter referred to as the "Credit Agreement"; terms defined in the
Credit Agreement and not otherwise defined herein being used as defined
therein).
B. Secured Party and the Banks have conditioned their obligations
under the Credit Agreement upon the execution and delivery of this Agreement by
Pledgor.
NOW THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 1
Security Interest and Pledge
Section 1.1 Security Interest and Pledge. As collateral security for
the prompt payment in full when due of the Obligations (whether at stated
maturity, by acceleration, or otherwise) and all present and future obligations
of Pledgor under this Agreement, Pledgor hereby pledges and grants to Secured
Party a first priority security interest (and agrees that the security interest
granted in favor of The First National Bank of Boston, as agent pursuant to that
certain Pledge Agreement dated May 23, 1995, the "Prior Pledge Agreement", shall
continue uninterrupted under the terms of this Agreement) in the following
property (such property being hereinafter sometimes called the "Collateral"):
(a) all of Pledgor's right, title and interest in and to all
the capital stock of, or other ownership interests in, the companies
described on Schedule 1 hereto, now owned or hereafter acquired,
including, without limitation, the capital stock of, or other ownership
interests in, such companies described on Schedule 1 hereto;
(b) all of Pledgor's right, title and interest in and to the
capital stock or other ownership interests specifically described on
Schedule 2 hereto (the issuers of such stock or other interests herein
the "Foreign Subsidiaries") and so much of Pledgor's right, title and
interest in any other capital stock or other ownership interests in the
Foreign Subsidiaries, whether now owned or hereafter acquired, as is
necessary so that not more than and not less than sixty-six percent
(66%) of the capital stock or other ownership interest in each such
Foreign Subsidiary is pledged in total hereunder; and
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FINS2DAL:45704.6 05009-00034
<PAGE>
(c) all products, proceeds, revenues, distributions,
dividends, stock dividends, securities and other property, rights and
interests that Pledgor receives or is at any time entitled to receive
on account of the same.
ARTICLE 2
Affirmative and Negative Covenants
Pledgor covenants and agrees with Secured Party that:
Section 2.1 Delivery. Prior to or concurrently with the execution and
delivery of this Agreement, Pledgor shall deliver to Secured Party all
certificate(s) identified in Schedules 1 and 2 hereof, accompanied by undated
stock powers duly executed in blank.
Section 2.2 Encumbrances. Pledgor shall not create, permit, or suffer
to exist, and shall defend the Collateral against, any Lien, security interest,
or other encumbrance on the Collateral except the pledge and security interest
of Secured Party hereunder, and Pledgor shall defend Pledgor's rights in the
Collateral and Secured Party's security interest in the Collateral against the
claims of all Persons.
Section 2.3 Sale of Collateral. Pledgor shall not sell, assign, or
otherwise dispose of the Collateral or any part thereof without the prior
written consent of Secured Party.
Section 2.4 Distributions. If Pledgor shall become entitled to receive
or shall receive: (i) any stock certificate (including, without limitation, any
certificate representing a stock dividend or a distribution in connection with
any reclassification, increase, or reduction of capital or issued in connection
with any reorganization), option or rights, whether as an addition to, in
substitution of, or in exchange for any Collateral; (ii) any sums paid in
respect of the Collateral upon the liquidation or dissolution of the issuer
thereof; (iii) any other distribution of capital made on or in respect of the
Collateral or any other property distributed upon or in respect of the
Collateral pursuant to any recapitalization or reclassification of the capital
of the issuer thereof or pursuant to any reorganization of the issuer thereof;
or (iv), subject to the right of Pledgor to receive cash dividends under Section
3.3 hereof, any other Collateral the possession of which is necessary to perfect
the security interest of Secured Party therein, then Pledgor agrees to accept
the same as Secured Party's agent and to hold the same in trust for Secured
Party, and to deliver the same forthwith to Secured Party in the exact form
received, with the appropriate endorsement of Pledgor when necessary and/or
appropriate undated stock powers duly executed in blank, to be held by Secured
Party as additional Collateral for the Obligations, subject to the terms hereof.
All sums of money and property so paid or distributed in respect of the
Collateral that are received by Pledgor shall, until paid or delivered to
Secured Party, be held by Pledgor in trust as additional security for the
Obligations.
Section 2.5 Additional Securities. Pledgor shall not consent to or
approve the issuance of any additional shares of any class of capital stock of
the issuer of the Collateral, or any securities convertible into, or
exchangeable for, any such shares or any warrants, options, rights, or other
commitments entitling any Person to purchase or otherwise acquire any such
shares.
PLEDGE AGREEMENT - Page 2
FINS2DAL:45704.6 05009-00034
<PAGE>
ARTICLE 3
Rights of Secured Party and Pledgor
Section 3.1 Power of Attorney. PLEDGOR HEREBY IRREVOCABLY CONSTITUTES
AND APPOINTS SECURED PARTY AND ANY OFFICER OR AGENT THEREOF, WITH FULL POWER OF
SUBSTITUTION, AS ITS TRUE AND LAWFUL ATTORNEY-IN-FACT WITH FULL IRREVOCABLE
POWER AND AUTHORITY IN THE PLACE AND STEAD AND IN THE NAME OF PLEDGOR OR IN ITS
OWN NAME, IN SECURED PARTY'S DISCRETION, TO TAKE, AFTER THE OCCURRENCE AND
DURING THE CONTINUANCE OF AN EVENT OF DEFAULT, ANY AND ALL ACTION AND TO EXECUTE
ANY AND ALL DOCUMENTS AND INSTRUMENTS WHICH MAY BE NECESSARY OR DESIRABLE TO
ACCOMPLISH THE PURPOSES OF THIS AGREEMENT AND, WITHOUT LIMITING THE GENERALITY
OF THE FOREGOING, HEREBY GIVES SECURED PARTY THE POWER AND RIGHT ON BEHALF OF
PLEDGOR AND IN ITS OWN NAME TO DO, AFTER THE OCCURRENCE AND DURING THE
CONTINUANCE OF AN EVENT OF DEFAULT, ANY OF THE FOLLOWING (SUBJECT TO THE RIGHTS
OF PLEDGOR UNDER SECTION 3.2 AND 3.3 HEREOF) WITHOUT NOTICE TO OR THE CONSENT OF
PLEDGOR:
(a) to demand, sue for, collect, or receive in the name of
Pledgor or in its own name, any money or property at any time payable
or receivable on account of or in exchange for any of the Collateral
and, in connection therewith, endorse checks, notes, drafts,
acceptances, money orders, or any other instruments for the payment of
money under the Collateral;
(b) to pay or discharge taxes, Liens, security interests,
or other encumbrances levied or placed on or threatened against the
Collateral;
(c) (i) to direct account debtors and any other parties liable
for any payment under any of the Collateral to make payment of any and
all monies due and to become due thereunder directly to Secured Party
or as Secured Party shall direct; (ii) to receive payment of and
receipt for any and all monies, claims, and other amounts due and to
become due at any time in respect of or arising out of any Collateral;
(iii) to sign and endorse any drafts, assignments, proxies, stock
powers, verifications, notices, and other documents relating to the
Collateral; (iv) to commence and prosecute any suit, actions or
proceedings at law or in equity in any court of competent jurisdiction
to collect the Collateral or any part thereof and to enforce any other
right in respect of any Collateral; (v) to defend any suit, action, or
proceeding brought against Pledgor with respect to any Collateral; (vi)
to settle, compromise, or adjust any suit, action, or proceeding
described above and, in connection therewith, to give such discharges
or releases as Secured Party may deem appropriate; (vii) to exchange
any of the Collateral for other property upon any merger,
consolidation, reorganization, recapitalization, or other readjustment
of the issuer thereof and, in connection therewith, deposit any of the
Collateral with any committee, depositary, transfer agent, registrar,
or other designated agency upon such terms as Secured Party may
determine; (viii) to add or release any guarantor, indorser, surety, or
other party to any of the Collateral or the Obligations; (ix) to renew,
extend, or otherwise change the terms and conditions of any of the
Collateral or Obligations; (x) to insure any of the Collateral; and
(xi) to sell, transfer, pledge,
PLEDGE AGREEMENT - Page 3
FINS2DAL:45704.6 05009-00034
<PAGE>
make any agreement with respect to or otherwise deal with any of the
Collateral as fully and completely as though Secured Party were the
absolute owner thereof for all purposes, and to do, at Secured Party's
option and Pledgor's expense, at any time, or from time to time, all
acts and things which Secured Party deems necessary to protect,
preserve, or realize upon the Collateral and Secured Party's security
interest therein.
THIS POWER OF ATTORNEY IS A POWER COUPLED WITH AN INTEREST AND SHALL BE
IRREVOCABLE. Secured Party shall be under no duty to exercise or withhold the
exercise of any of the rights, powers, privileges and options expressly or
implicitly granted to Secured Party in this Agreement, and Secured Party shall
not be liable for any failure to do so or any delay in doing so. Secured Party
shall not be liable for any act or omission or for any error of judgment or any
mistake of fact or law in its individual capacity or in its capacity as
attorney-in-fact except acts or omissions resulting from its willful misconduct.
This power of attorney is conferred on Secured Party solely to protect, preserve
and realize upon its security interest in the Collateral.
Section 3.2 Voting Rights. Unless and until an Event of Default shall
have occurred and is continuing, Pledgor shall be entitled to exercise any and
all voting rights pertaining to the Collateral or any part thereof for any
purpose not inconsistent with the terms of this Agreement or the Credit
Agreement. Secured Party shall execute and deliver to the Pledgor all such
proxies and other instruments as Pledgor may reasonably request for the purpose
of enabling Pledgor to exercise the voting rights which it is entitled to
exercise pursuant to this Section.
Section 3.3 Dividends. Unless and until an Event of Default shall have
occurred and is continuing, Pledgor shall be entitled to receive and retain any
dividends on the Collateral paid in cash out of earned surplus to the extent and
only to the extent that such dividends are permitted by the Credit Agreement.
Section 3.4 Secured Party's Duty of Care. Other than the exercise of
reasonable care in the physical custody of the Collateral while held by Secured
Party hereunder, Secured Party shall have no responsibility for or obligation or
duty with respect to all or any part of the Collateral or any matter or
proceeding arising out of or relating thereto, including, without limitation,
any obligation or duty to collect any sums due in respect thereof or to protect
or preserve any rights against prior parties or any other rights pertaining
thereto, it being understood and agreed that Pledgor shall be responsible for
preservation of all rights in the Collateral. Without limiting the generality of
the foregoing, Secured Party shall be conclusively deemed to have exercised
reasonable care in the custody of the Collateral if Secured Party takes such
action, for purposes of preserving rights in the Collateral, as Pledgor may
reasonably request in writing, but no failure or omission or delay by Secured
Party in complying with any such request by Pledgor, and no refusal by Secured
Party to comply with any such request by Pledgor, shall be deemed to be a
failure to exercise reasonable care.
Section 3.5 Assignment by Secured Party. Subject to the terms of the
Credit Agreement, Secured Party may at any time and from time to time assign the
Obligations and any portion thereof and/or the Collateral and any portion
thereof, and the assignee shall be entitled to all of the rights and remedies of
Secured Party under this Agreement in relation thereto.
PLEDGE AGREEMENT - Page 4
FINS2DAL:45704.6 05009-00034
<PAGE>
ARTICLE 4
Default
Section 4.1 Rights and Remedies. If any Event of Default shall occur
and be continuing, Secured Party shall have the following rights and remedies:
(a) In addition to all other rights and remedies granted to
Secured Party in this Agreement and in any other instrument or
agreement securing, evidencing, or relating to the Obligations, Secured
Party shall have all of the rights and remedies of a secured party
under the Uniform Commercial Code as adopted by the State of Texas.
Without limiting the generality of the foregoing, Secured Party may (i)
without demand or notice to Pledgor, collect, receive, or take
possession of the Collateral or any part thereof, (ii) sell or
otherwise dispose of the Collateral, or any part thereof, in one or
more parcels at public or private sale or sales, at Secured Party's
offices or elsewhere, for cash, on credit, or for future delivery
and/or (iii) bid and become a purchaser at any sale free of any right
or equity of redemption in Pledgor, which right or equity is hereby
expressly waived and released by Pledgor. Upon the request of Secured
Party, Pledgor shall assemble the Collateral and make it available to
Secured Party at any place designated by Secured Party that is
reasonably convenient to Pledgor and Secured Party. Pledgor agrees that
Secured Party shall not be obligated to give more than ten (10) days
written notice of the time and place of any public sale or of the time
after which any private sale may take place and that such notice shall
constitute reasonable notice of such matters. Secured Party shall not
be obligated to make any sale of the Collateral regardless of notice of
sale having been given. Secured Party may adjourn any public or private
sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned. Pledgor shall be liable
for all expenses of retaking, holding, preparing for sale, or the like,
and all attorneys' fees and other expenses incurred by Secured Party in
connection with the collection of the Obligations and the enforcement
of Secured Party's rights under this Agreement, all of which expenses
and fees shall constitute additional Obligations secured by this
Agreement. Secured Party may apply the Collateral against the
Obligations in accordance with the Credit Agreement. Pledgor shall
remain liable for any deficiency if the proceeds of any sale or
disposition of the Collateral are insufficient to pay the Obligations.
Pledgor waives all rights of marshalling in respect of the Collateral.
(b) Secured Party may cause any or all of the Collateral held
by it to be transferred into the name of Secured Party or the name or
names of Secured Party's nominee or nominees.
(c) Secured Party may collect or receive all money or property
at any time payable or receivable on account of or in exchange for any
of the Collateral, but shall be under no obligation to do so.
(d) Secured Party shall have the right, but shall not be
obligated to, exercise or cause to be exercised all voting, consensual
and other powers of ownership pertaining to the Collateral, and Pledgor
shall deliver to Secured Party, if requested by Secured Party,
irrevocable proxies with respect to the Collateral in form satisfactory
to Secured Party.
PLEDGE AGREEMENT - Page 5
FINS2DAL:45704.6 05009-00034
<PAGE>
(e) Pledgor hereby acknowledges and confirms that Secured
Party may be unable to effect a public sale of any or all of the
Collateral by reason of certain prohibitions contained in the
Securities Act of 1933, as amended, and applicable state securities
laws and may be compelled to resort to one or more private sales
thereof to a restricted group of purchasers who will be obligated to
agree, among other things, to acquire any shares of the Collateral for
their own respective accounts for investment and not with a view to
distribution or resale thereof. Pledgor further acknowledges and
confirms that any such private sale may result in prices or other terms
less favorable to the seller than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale
shall be deemed to have been made in a commercially reasonable manner,
and Secured Party shall be under no obligation to take any steps in
order to permit the Collateral to be sold at a public sale. Secured
Party shall be under no obligation to delay a sale of any of the
Collateral for any period of time necessary to permit any issuer
thereof to register such Collateral for public sale under the
Securities Act of 1933, as amended, or under applicable state
securities laws.
(f) On any sale of the Collateral, Secured Party is hereby
authorized to comply with any limitation or restriction with which
compliance is necessary, in the view of Secured Party's counsel, in
order to avoid any violation of applicable law or in order to obtain
any required approval of the purchaser or purchasers by any applicable
governmental authority.
ARTICLE 5
Miscellaneous
Section 5.1 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of Pledgor and Secured Party and their respective
heirs, successors and assigns, except that Pledgor may not assign any of its
rights or obligations under this Agreement without the prior written consent of
Secured Party. Any assignment made in violation of this Section 5.1 shall be
void.
Section 5.2 AMENDMENT; ENTIRE AGREEMENT. THIS AGREEMENT EMBODIES THE
FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDES ANY AND ALL
PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER
WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE
CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS
AMONG THE PARTIES HERETO. The provisions of this Agreement may be amended or
waived only by an instrument in writing signed by the Pledgor, Secured Party and
the number of Banks required by Section 14.11 of the Credit Agreement.
Section 5.3 Notices. All notices and other communications provided for
in this Agreement shall be given or made in accordance with the Credit
Agreement.
Section 5.4 Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas and the applicable
laws of the United States of America.
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FINS2DAL:45704.6 05009-00034
<PAGE>
Section 5.5 Headings. The headings, captions and arrangements used in
this Agreement are for convenience only and shall not affect the interpretation
of this Agreement.
Section 5.6 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 5.7 Severability. Any provision of this 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 of this Agreement, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 5.8 Subrogation to Existing Liens; Assignment. The proceeds of
the Obligations have been used in part to pay indebtedness secured by a security
interest in the Collateral and, as a result, Secured Party shall be subrogated
to any and all rights, security interests and liens in such Collateral only
owned by any owner or holder of such security interests irrespective of whether
said security interests are released, and the same are recognized as valid and
subsisting and are continued and merged herein to secure the Obligations, but
the terms and provisions of this Agreement shall govern and control the manner
and terms of enforcement of the security interests in such Collateral only to
which Secured Party is subrogated hereunder. In furtherance of the foregoing
BankBoston, N.A., as agent and secured party under the Prior Pledge Agreement
hereby assigns to Secured Party all liens and security interests created in the
Prior Pledge Agreement in the Collateral.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first written above.
PLEDGOR:
-------
DARLING INTERNATIONAL INC.
By:
-----------------------------------
Brad Phillips
Treasurer
SECURED PARTY:
-------------
BANKBOSTON, N. A. as Agent
By:
---------------------------------------
Stephen Y. McGehee
Director
PLEDGE AGREEMENT - Page 7
FINS2DAL:45704.6 05009-00034
